[Federal Register Volume 80, Number 187 (Monday, September 28, 2015)]
[Notices]
[Pages 58323-58326]
[FR Doc No: 2015-24516]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75962; File No. SR-MIAX-2015-57]

Self-Regulatory Organizations: Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Exchange Rule 503

September 22, 2015.
    Pursuant to the provisions of 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 September 21, 2015, Miami International
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to amend Exchange Rule 503.
    The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at
MIAX's principal office, 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
    The Exchange proposes to amend Rule 503 to codify existing
functionality during the Exchange's Opening Process. Specifically, the
Exchange is amending Rule 503(f) to address a discrepancy between the
rule text description of how this process works and how it is actually
working in production. Specifically, the Exchange proposes to amend the
rule to provide that the System will use the Expanded Quote Range
(``EQR'') when there are quotes and orders that lock or cross each
other. The proposal codifies the actual existing functionality during
the Exchange's Opening Process. In addition, the Exchange proposes to
relocate the EQR subsection that is currently in Rule 503(f)(5) to
proposed Rule 503(f)(2)(i).
    Currently Rule 503(f) provides that when there are quotes and
orders that lock or cross an order, the System will use the highest bid
and the lowest offer among valid width quotations received that have a
bid/ask differential that is compliant with Rule 603(b)(4) to determine
the highest quote bid and lowest quote offer.\3\ If that price is
within the highest valid width quote bid and lowest valid width quote
offer and leaves no imbalance, the Exchange will open at that price,
executing marketable trading interest, as long as the opening price
includes only Exchange interest. Current Rule 503(f) also provides that
the EQR \4\ is only calculated when an imbalance occurs due to
insufficient liquidity to satisfy all trading interest due an execution
at a certain price.\5\ In contrast, the System calculates and uses an
EQR in all situations during the Exchange's Opening Process when there
are quotes and orders that lock or cross--whether the lock or cross
involves an order or a quote and whether or not there is an order
imbalance.
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    \3\ See Exchange Rule 603(b)(4). See also Exchange Rule
503(e)(3), which states that ``valid width quotations'' are
quotations that are compliant with Rule 603(b)(4) which provides the
following criteria: (i) To price option contracts fairly by, among
other things, bidding and offering so as to create differences of no
more than $5 between the bid and offer (``bid/ask differentials'')
following the opening rotation in an equity option contract; and
(ii) Exchange may establish differences other than the bid/ask
differentials described in (i) above for one or more option series
or classes.
    \4\ See Exchange Rule 503(f)(5).
    \5\ See Exchange Rule 503(f)(5). Where there is an imbalance at
the price at which the maximum number of contracts can trade that is
also at or within the highest valid width quote bid and lowest valid
width quote offer, the System will calculate an EQR. The EQR will be
recalculated any time a Route Timer or Imbalance Timer expires if
material conditions of the market (imbalance size, ABBO price or
size, liquidity price or size, etc.) have changed during the timer.
Once calculated, the EQR will represent the limits of the range in
which transactions may occur during the opening process.
    The EQR calculation itself varies depending upon the specific
situation, as specified in current Rule 503(f)(5). The EQR
calculation will differ depending upon whether one or more away
markets have disseminated valid width quotes in the affected series
(or) no away markets have disseminated valid width quotes in the
affected series. See Exchange Rule 503(f).
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    While the System calculates EQR in either situation, it does not
necessarily use the EQR in determining the calculated opening price
where the maximum quantity of contracts may trade. For example,
proposed Rule 503(f)(2)(iii) would state that in situations where there
is matched interest that does not represent an imbalance and there is
no valid width NBBO, the System will calculate a ``quality opening
market range'' (as defined in a table to be determined by

the Exchange and published in a Regulatory Circular) in such option
series. If the matched interest would trade at a price outside of the
quality opening market range, the imbalance process will be used.
    The Exchange notes that in most situations there is no impact in
the outcome of the opening due to the proposed change in the rule text
to use the EQR instead of the highest bid and the lowest offer among
valid width quotations received that have a bid/ask differential that
is compliant with Rule 603(b)(4). For example--assume a quote bid of
$1.00 for 5 contracts and a quote offer of $0.90 for 5 contracts on
MIAX; away market 1 has a bid $0.01; away market 2 has an offer of
$5.05. The Exchange should open because $.90-$1.00 for 5 contracts on
either side is within a $5 bid/ask differential and leaves no
imbalance. Instead, however, the System in this situation calculates a
price range for the open based on an EQR to include the one or more
away markets. After determining that the away markets do not have a
valid width quote and that it is a crossed market ($0.01 bid by $5.05
offer is not a valid quote range), the System will calculate the EQR
using the Exchange's highest valid width bid and lowest valid width
offer ($.90 offer by $1.00 bid is a valid quote range). In this
example, the Exchange would open the same under the proposed changes to
Rule 503 as it does in the current version of the rule.
    If the current rule were applied in situations where quotes or
orders lock or cross, and there are no valid-width away markets, the
System would have nonetheless calculated the highest bid and the lowest
offer among valid width quotations received on MIAX that have a bid/ask
differential that is compliant with Rule 603(b)(4). The following
example illustrates this scenario.
Invalid Width ABBO
    Assume a quote bid of $1.00 for 5 contracts and quote offer of
$0.90 for 5 contracts on MIAX; assume away market 1 has a bid $0.10;
away market 2 has an offer of $5.20 (an invalid width ABBO). The System
in this situation calculates a price range for the open based on an EQR
that does not include the one or more away markets. In this example,
the System sets the EQR to $0.90-$1.00, using the lowest quote offer
and the highest quote bid.
Valid Width ABBO
    Assume again a quote bid of $1.00 for 5 contracts and a quote offer
of $0.90 for 5 contracts on MIAX; assume away market 1 has a bid $0.85;
away market 2 has an offer of $1.10 (a valid width ABBO). The System in
this situation calculates a price range for the open based on an EQR
that includes the one or more away markets. After determining that the
away markets have a valid width quote and that the MIAX market is
crossed, the System sets the EQR to $0.85-$1.10, using the valid-width
ABBO.
    If the current rule were applied, the System would have calculated
the EQR if there had been an imbalance, using the Exchange's highest
valid width bid and lowest valid width offer ($.90 offer by $1.00 bid
is a valid quote range), and would open only within the limited $0.90-
$1.00 range. In each of the above examples, under the current rule and
under the proposed change, the System would open with a trade of 5
contracts at $0.95, the price at which the greatest number of contracts
can trade.
    The following examples illustrate that the EQR is calculated in all
situations, i.e., whether there is an imbalance or not. In the first
example, assume quote bids of $0.90 and $0.80 for 5 contracts each, and
quote offers of $1.00 and $1.10 of 5 contracts each on MIAX; assume
away market 1 has a bid $0.10; away market 2 has an offer of $5.20
(invalid width ABBO). No Imbalance exists. Under the proposed Rule, an
EQR calculation occurs, setting the EQR Minimum at the lowest bid minus
the allowance per EQR Table ($0.75 in this case), and the EQR Maximum
at the highest bid plus the allowance per EQR Table ($1.15 in this
case). With no Imbalance and no crossing liquidity, no trade takes
place.
    Assume again quote bids of $0.90 and $0.80 for 5 contracts each,
and quote offers of $1.00 and $1.10 of 5 contracts each on MIAX; assume
away market 1 has a bid $0.10; away market 2 has an offer of $5.20
(invalid width ABBO). No Imbalance exists. If the current Rule were to
be applied, since there is no Imbalance, an EQR calculation would not
occur. With no Imbalance and no crossing quotes or orders, no trade
would occur. In each of these examples, because there is no trade, the
Exchange would open by disseminating a quote as described in current
Rule 503(f)(1).\6\
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    \6\ Current Rule 503(f)(1) states that if there are no quotes or
orders that lock or cross each other, the System will open by
disseminating the Exchange's best bid and offer among quotes and
orders that exist in the System at that time.
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    In Examples 3 and 4, the only difference is whether an EQR is
calculated or not. But no trade takes place in either case.
    The Exchange believes that using the EQR instead of the current
price range in Rule 503(f) is beneficial to market participants because
the EQR provides a more accurate measure as to whether there is
sufficient available liquidity in the broader market system to provide
a fair and orderly opening process and sufficient price discovery for
the options to open for trading because it incorporates the prices on
away markets into its evaluation.
    The Exchange also proposes to amend current Rule 503(f)(3) to
provide that the provision applies to situations when the lock or cross
involves an order or a quote, not just an order. Specifically, the
Exchange proposes to provide that if there are quotes or orders that
lock or cross, the System will use the EQR to determine the highest and
lowest price of the opening price range. Currently, to calculate the
opening price, the System will take into consideration all valid
Exchange quotes and all valid orders, together with other exchanges'
markets for the series and identify the price at which the maximum
number of contracts can trade. If that price is within the EQR and
leaves no imbalance, the Exchange will open at that price, executing
marketable trading interest, as long as the opening price includes only
Exchange interest.
    In addition, the Exchange proposes relocating the EQR subsection
that is currently in Rule 503(f)(5) to proposed Rule 503(f)(2)(i). The
Exchange believes that this change will reduce the potential for any
confusion on the part of its members as to when the EQR is calculated
and used during the Exchange's Opening Process. The Exchange also
proposes deleting language regarding the imbalance from current Rule
503(f)(7) and relocating the subsection that is currently in Rule
503(f)(7) to proposed Rule 503(f)(2)(iii). In addition, the Exchange
also proposes technical changes to the number formatting in current
Rule 503(f) in order to reduce the potential for confusion as to which
provisions in Rule 503(f) apply to situations where there are quotes
and orders that lock and cross each other.
2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with
section 6(b) of the Act \7\ in general, and furthers the objectives of
section 6(b)(5) of the Act \8\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the

mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    The proposed amendments remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, protect investors and the public interest by amending the
rules regarding the Exchange's Opening Process. The inclusion of the
functionality of the System in the rules promotes transparency and
clarity in the Exchange's Opening Process. The transparency and
accuracy resulting from the codification of this functionality is
consistent with the Act because it removes impediments to and perfects
the mechanism of a free and open market and a national market system,
and, in general, protects investors and the public interest, by
accurately describing the steps taken by the System in the limited
scenario where the Exchange's opening quote is crossed by orders that
have the same size. Participants in the Exchange's opening will have a
better understanding of the Exchange's opening process when there are
quotes and orders that lock and cross each other. In addition, the
Exchange believes that the function of the EQR itself is designed to
promote just and equitable principles of trade by providing a clear and
objective method to enable a fair and orderly opening on the exchange
to the benefits of investors and the public interest.
    The Exchange believes that using the EQR instead of the current
price range in Rule 503(f) is beneficial to market participants because
the EQR represents a more accurate measure of the true market for an
option on the opening (especially after providing participants with an
opportunity to submit new quotes before the EQR is calculated). This
step providing that opportunity, now codified in the Rule should reduce
the probability of imbalances and will assure participants in the
Exchange's opening process that they have the ability to submit new
opening quotes in response to an imbalance message. This process is
fair because it provides such an opportunity for all participants, and
is orderly because that opportunity must take place before the EQR is
calculated. Moreover, the imbalance message followed by the EQR
calculation is more efficient because it functions to eliminate
unnecessary delays in the opening process by allowing participants to
submit new quotations against which opening orders and quotes may
trade.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the Exchange
believes the proposed changes will not impose any burden on intra-
market competition because it applies to all MIAX participants equally.
In addition, the Exchange does not believe the proposal will impose any
burden on inter-market competition as the proposal is intended to
protect investors by providing further transparency regarding the
Exchange's Opening Process. The Exchange believes that using the EQR
instead of the current price range in Rule 503(f) is beneficial to
market participants because the EQR provides a more accurate measure as
to whether there is sufficient available liquidity in the broader
market system to provide a fair and orderly opening process and
sufficient price discovery for the options to open for trading to the
benefit of investors. As such, the Exchange believes that the EQR will
not be a burden on competition, but rather promote more trading
opportunities and competition during the opening since it is designed
to promote just and equitable principles of trade by providing a clear
and objective method to enable a fair and orderly opening on the
exchange to the benefits of investors and the public interest.

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 after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\
thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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    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- MIAX-2015-57 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-MIAX-2015-57. 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
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments

received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-MIAX-2015-57 and should be
submitted on or before October 19, 2015.

    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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-24516 Filed 9-25-15; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 148 (Friday, July 31, 2020)]
[Notices]
[Page 46202]
[FR Doc No: 2020-16570]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89399; File No. SR-CBOE-2020-051]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Designation of a Longer Period for Commission Action on a Proposed Rule
Change, as Modified by Amendment No. 1, To Amend Its Automated Price
Improvement Auction Rules in Connection With Agency Order Size
Requirements

July 27, 2020.
    On June 11, 2020, Cboe Exchange, Inc. (``Exchange'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change to amend Rules
5.37 and 5.38 to allow the Exchange to determine maximum size
requirements for agency orders in SPX submitted though the Automated
Improvement Mechanism (``AIM'') and Complex Automated Improvement
Mechanism (``C-AIM'') auctions. The proposed rule change was published
for comment in the Federal Register on June 18, 2020.\3\ On July 23,
2020, the Exchange submitted Amendment No. 1 to the proposed rule
change, which replaced and superseded the proposed rule change in its
entirety.\4\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 89058 (June 12,
2020), 85 FR 36918. Comments on the proposed rule change can be
found at: https://www.sec.gov/comments/sr-cboe-2020-051/srcboe2020051.htm.
    \4\ In Amendment No. 1, the Exchange: (1) Amended its proposal
to modify the proposed maximum size requirement for AIM and C-AIM
agency orders in SPX from 100 contracts to 10 contracts, specify
that this size requirement would apply to all agency orders in SPX,
and make related conforming changes to its proposed rule text; and
(2) provided additional data, justification, and support for its
modified proposal. The full text of Amendment No. 1 is available on
the Commission's website at: https://www.sec.gov/comments/sr-cboe-2020-051/srcboe2020051-7470738-221292.pdf.
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    Section 19(b)(2) of the Act \5\ provides that within 45 days of the
publication of notice of the filing of a proposed rule change, or
within such longer period up to 90 days as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding, or as to which the self-regulatory organization
consents, the Commission shall either approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether the proposed rule change should be disapproved. The
45th day after publication of the notice for this proposed rule change
is August 2, 2020. The Commission is extending this 45-day time period.
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    \5\ 15 U.S.C. 78s(b)(2).
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    The Commission finds it appropriate to designate a longer period
within which to take action on the proposed rule change so that it has
sufficient time to consider the proposed rule change, as modified by
Amendment No. 1, and the comments received. Accordingly, the
Commission, pursuant to Section 19(b)(2) of the Act,\6\ designates
September 16, 2020 as the date by which the Commission shall either
approve or disapprove, or institute proceedings to determine whether to
disapprove, the proposed rule change, as modified by Amendment No. 1
(File No. SR-CBOE-2020-051).
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    \6\ Id.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(31).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16570 Filed 7-30-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 203 (Monday, October 23, 2023)]
[Notices]
[Page 72743]
[FR Doc No: 2023-23289]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER24-100-000]

Adams Solar LLC; Supplemental Notice That Initial Market-Based
Rate Filing Includes Request for Blanket Section 204 Authorization

    This is a supplemental notice in the above-referenced proceeding of
Adams Solar LLC's application for market-based rate authority, with an
accompanying rate tariff, noting that such application includes a
request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is November 6, 2023.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically may mail similar pleadings to
the Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426. Hand delivered submissions in docketed
proceedings should be delivered to Health and Human Services, 12225
Wilkins Avenue, Rockville, Maryland 20852.
    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov) using
the ``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. At this time,
the Commission has suspended access to the Commission's Public
Reference Room, due to the proclamation declaring a National Emergency
concerning the Novel Coronavirus Disease (COVID-19), issued by the
President on March 13, 2020. For assistance, contact the Federal Energy
Regulatory Commission at [email protected] or call toll-free,
(886) 208-3676 or TYY,<PHONE_NUMBER>.
    The Commission's Office of Public Participation (OPP) supports
meaningful public engagement and participation in Commission
proceedings. OPP can help members of the public, including landowners,
environmental justice communities, Tribal members and others, access
publicly available information and navigate Commission processes. For
public inquiries and assistance with making filings such as
interventions, comments, or requests for rehearing, the public is
encouraged to contact OPP at<PHONE_NUMBER> or [email protected].

    Dated: October 16, 2023.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2023-23289 Filed 10-20-23; 8:45 am]
BILLING CODE 6717-01-P


Comment Info: =================

General Comment:Dear Mr. Zeller:

As a consumer of e-cigarette products, I would like to request that the comment period be extended for the Food and Drug Administration's ("FDA") Proposed Rule Deeming Tobacco Products to be Subject to the Federal Food, Drug, and Cosmetic Act, as amended by the Family Smoking and Prevention and Tobacco Control Act (the "Proposed Rule") published at 79 Fed. Reg. 23,142 and Federal Register No. 2014-09491. I am requesting that the comment period for the Proposed Rule be extended by the FDA for an additional 105 days from its current 75-day period.  This would equate to a more reasonable 180 days.

Documented in the Proposed rule are a great number of questions that directly affect my change in lifestyle having moved on to what I believe is a far more safer alternative to health diminishing combustible tobacco products.  There are many questions brought up that I may want to respond to; however, due to personal responsibilites my time for research is limited.  For this case I hope you consider my request as I would like to research further and provide an educated response to the issues proposed.  It has taken several years for the FDA to introduce their Proposed Rule, thus I do not feel it to be unreasonable to request an approval for six months to respond with comments.

I would be glad to provide you with details regarding my belief that e-cigarettes are not only a healthier alternative to tobacco products, but how I believe they saved my life.  For this case the additional time I am requesting is crucially essential.  I have learned that the FDA has the authority under 21 CFR 10.40 to extend the proposed 75-day period and understand that they have already exercised this in the past, so I ask that you please approve my request for this extension.  I truly appreciate your time and consideration.

Thanks so much


[Federal Register: June 10, 2010 (Volume 75, Number 111)]
[Notices]
[Page 32984-32987]
[DOCID:fr10jn10-86]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2010-0168]

Policy on the Retention of Supporting Documents and the Use of
Electronic Mobile Communication/Tracking Technology in Assessing Motor
Carriers' and Commercial Motor Vehicle Drivers' Compliance With the
Hours of Service Regulations

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice of Regulatory Guidance and Policy Change.

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SUMMARY: The Federal Motor Carrier Safety Administration (FMCSA)
provides notice to the motor carrier industry and the public of
regulatory guidance and policy changes regarding the retention of
supporting documents and the use of electronic mobile communication/
tracking technology in assessing motor carriers' and commercial motor
vehicle drivers' compliance with the hours of service regulations.

DATES: Effective Date: This change in policy is effective July 12,
2010. Comments should be submitted on or before July 9, 2010. Late-
filed comments will be considered to the extent practicable.

ADDRESSES: You may submit comments (identified by Docket Number FMCSA-
2010-0168) using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments.
     Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., West Building, Ground
Floor, Room W12-140, Washington, DC 20590-0001.
     Hand Delivery or Courier: West Building, Ground Floor,
Room W12-140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m.
E.T., Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    Privacy Act: Anyone is able to search the electronic form of all
comments received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
Privacy Act Statement for the Federal Docket Management System
published in the Federal Register on January 17, 2008 (73 FR 3316), or
you may visit http://edocket.access.gpo.gov/2008/pdf/E8-785.pdf.

FOR FURTHER INFORMATION CONTACT: Mr. David Mancl, Team Leader,
Enforcement and Compliance Division, MC-ECE, Federal Motor Carrier
Safety Administration, 1200 New Jersey Avenue, SE., Washington, DC
20590. Telephone:<PHONE_NUMBER>. Web site address: http://
www.fmcsa.dot.gov.

SUPPLEMENTARY INFORMATION:

Background

    In 1997, the Federal Highway Administration (FHWA), FMCSA's
predecessor agency, issued a policy memorandum recognizing that
advanced technologies, which were

emerging and being implemented within the industry, offered an
opportunity to improve operational and safety performance. To promote
and encourage the use of these new technologies in the industry's
operations and overall safety management, the Agency limited the use of
the data and records generated by advanced technologies for checking
hours of service compliance during reviews and regulatory enforcement
actions.
    After more than a decade, the Agency's policy achieved its purpose;
the once emerging technologies are today a widely accepted and
essential component of the industry's logistics, operations and safety
management systems. FMCSA therefore rescinded the 1997 policy on
November 19, 2008, effective December 19, 2008. (73 FR 69717)
    On December 24, 2008, the Associate Administrator for Enforcement
and Program Delivery issued an internal Agency policy memorandum
titled: ``Use of Advanced Information Technology Policy.'' This
memorandum informed FMCSA and State enforcement personnel that FMCSA
would exercise its full statutory authority under 49 U.S.C. 504(c) to
inspect and copy records of a motor carrier. If a motor carrier uses
Global Positioning Systems (GPS) or other electronic mobile
communication/tracking technology during the ordinary course of its
business, FMCSA has the authority to request these records and use them
during the course of an investigation. FMCSA considers electronic
mobile communication/tracking records to be supporting documents, as
they record the time, date, and/or location of motor vehicles and/or
drivers.
    Since December 2008, there has been some confusion concerning
FMCSA's use of these technologies for enforcement purposes and the
requirements for motor carriers to retain and produce related records
upon demand. The Agency has identified the need for further guidance
regarding the use of electronic mobile communication/tracking records
to verify compliance with 49 CFR Part 395, Hours of Service Drivers.
Today's Policy, therefore, supersedes the December 2008 Policy.
    Following up its commitment as stated in the April 2010 final rule,
Electronic On-Board Recorders (EOBRs) for Hours-of-Service (HOS)
Compliance, 75 FR 17208, FMCSA is drafting a notice of proposed
rulemaking (NPRM) to further advance motor carrier safety through
improved HOS compliance. This NPRM will have three components: (1)
Proposing that EOBRs be required for considerably more motor carriers
and drivers, (2) proposing that motor carriers be required to develop
and maintain systematic and effective HOS oversight for their drivers,
and (3) proposing, pursuant to Sec. 113 of the Hazardous Materials
Transportation Authorization Act of 1994, title I of Public Law 103-
311, 108 Stat. 1673 (Aug. 26, 1994) (HMTAA), requirements for motor
carriers to retain HOS supporting documents. The Agency anticipates
publishing the NPRM by the end of 2010 and publishing a final rule
within 24 months. In clarifying current enforcement practices, today's
guidance moves toward the anticipated NPRM.

Policy

    This Policy is intended to be used by enforcement personnel as
guidance in making enforcement decisions. Nothing in this Policy is
intended to alter a motor carrier's duty to ensure that its employees
and agents are complying with all applicable regulations. A motor
carrier is responsible for the acts and omissions of its employees and
agents with respect to regulatory compliance.
    Previous policy statements have used the terms ``GPS'' and
``Advanced Information Technology'' to describe electronic mobile
communication/tracking technology. FMCSA recognizes that these terms
are no longer adequate to describe electronic mobile communication/
tracking technology. Such technologies can no longer be considered
``advanced'' as they are now widely accepted and used in the industry.
Likewise, electronic mobile communication/tracking systems may rely on
technology other than GPS to determine the time, date, and/or location
of motor vehicles and/or drivers. For ease of discussion in this
Policy, the use of the phrases ``electronic mobile communication/
tracking technology,'' ``electronic mobile communication/tracking
systems,'' and ``electronic mobile communication/tracking records''
shall be deemed to include those technologies and records that allow a
motor carrier to identify the location of a motor vehicle or driver, or
that allow a motor carrier to send or receive messages to or from its
drivers. The application of this Policy to a technology or record does
not depend on the method of communication or the technology used to
obtain the time and/or position location information.

Supporting Documents Requirements for Motor Carriers Without Qualifying
Electronic Mobile Communication/Tracking Technology

    Supporting documents are motor carriers' records that are
maintained in the ordinary course of business and may be used by the
motor carrier to verify information recorded on the driver's RODS. On
April 4, 1997, as part of a set of guidance and policy statements,
FHWA, FMCSA's predecessor agency, published a list of more than thirty
examples of supporting documents that motor carriers needed to retain
pursuant to 49 CFR 395.8(k)(1) (62 FR 16370, 16425) (Guidance Question
10). Based on its enforcement experience since 1997, FMCSA recognizes
that certain documents in that list are not regularly used by
enforcement staff to verify the accuracy of records of duty status
(RODS) and that requiring motor carriers to retain these documents is
no longer necessary. FMCSA will therefore no longer consider the
following to be ``supporting documents'' and will not require motor
carriers to maintain and produce such documents pursuant to 49 CFR
395.8(k)(1):
     Driver call-in records;
     International registration plan receipts;
     International fuel tax agreement receipts;
     Trip permits;
     Cash advance receipts; and
     Driver fax reports (cover sheets).
    The Agency rescinds the list of examples of supporting documents in
the April 4, 1997, Guidance Question 10 and provides the following
updated, shorter list: Bills of lading, carrier pros, freight bills,
dispatch records, electronic mobile communication/tracking records (as
explained below), gate record receipts, weigh/scale tickets, fuel
receipts, fuel billing statements, toll receipts, toll billing
statements, port of entry receipts, delivery receipts, lumper receipts,
interchange and inspection reports, lessor settlement sheets, over/
short and damage reports, agricultural inspection reports, driver and
vehicle examination reports, crash reports, telephone billing
statements, credit card receipts, border crossing reports, customs
declarations, traffic citations and overweight/oversize permits and
traffic citations.
    Motor carriers without qualifying electronic mobile communication/
tracking technology must continue to retain other supporting documents
that may be used to verify information on the driver's RODS. If the
motor carrier has multiple offices or terminals and these records are
maintained at motor

carrier locations other than the motor carrier's principal place of
business, see Regulatory Guidance on the Definition of ``Principal
Place of Business,'' July 29, 2009 (74 FR 37653), they must be
forwarded to the principal place of business, or other location
specified, upon a request by an authorized FMCSA representative or
State official in accordance with 49 CFR 390.29.

Supporting Documents Requirements for Motor Carriers That Use
Qualifying Electronic Mobile Communication/Tracking Technology

    If a motor carrier uses a paper RODS system and also uses
electronic mobile communication/tracking technology on specific
vehicles and can produce electronic mobile communication/tracking
records acceptable to the Agency under this Policy, FMCSA will permit
the motor carrier to maintain and submit fewer paper supporting
documents.
    Whether the electronic mobile communication/tracking records are
acceptable to the Agency under this Policy or not, the investigator has
the authority to demand those records, and he or she may accept them in
either printed or electronic form from the motor carrier. These records
will be used to assess motor carrier and commercial motor vehicle
driver compliance with the HOS regulations and for other evaluations
into the safety performance or regulatory compliance of the motor
carrier. Electronic mobile communication/tracking records may also be
used by the Agency as evidence in any proceeding to enforce Federal
motor carrier statutes and regulations.
    For each vehicle a motor carrier uses for which the motor carrier
can produce electronic mobile communication/tracking records acceptable
under this Policy, the motor carrier is no longer required to maintain
or produce the following supporting documents pursuant to 49 CFR
395.8(k)(1) for the driver of that vehicle:
     Gate record receipts;
     Weigh/scale tickets;
     Port of entry receipts;
     Delivery receipts;
     Toll receipts;
     Agricultural inspection reports;
     Over/short and damage reports;
     Driver and vehicle examination reports; \1\
---------------------------------------------------------------------------

    \1\ This notice does not affect motor carriers' duty to maintain
driver and vehicle examination reports in accordance with the
retention requirements of 49 CFR part 396. See 49 CFR 396.11(c)(2)
and 396.9(d)(3)(ii).
---------------------------------------------------------------------------

     Traffic citations;
     Overweight/oversize reports and citations;
     Carrier pros;
     Credit card receipts;
     Border Crossing Reports;
     Customs declarations; and
     Telephone billing statements.
    Motor carriers that seek to take advantage of the less burdensome
supporting documents retention requirements available under this Policy
are precluded in HOS enforcement proceedings from challenging the
accuracy of their own electronic mobile communication/tracking records.

Qualifying Electronic Mobile Communication/Tracking Technology

    For each vehicle for which a motor carrier seeks to take advantage
of the less burdensome supporting documents retention requirements
available under this Policy, the motor carrier must show that the
electronic mobile communication/tracking records have the
characteristics below:
    Positioning Frequency: The system must be set up to communicate
position location at a rate of at least one time per hour, per vehicle,
while the vehicle is in motion.
    Vehicle Integration: The system must be integrally synchronized
with the vehicle.
    Report Functionality: The system must be capable of generating upon
demand a document/record, either printed (paper) or electronically
rendered (spreadsheet, portable document format, tagged image file
format or other commonly available software format), showing the
required Report Content.
    Report Content: The position history report must include, at a
minimum, vehicle identification information, date, time, proximity
location (reference points), and latitude and longitude for each
position communication.
    Retention: Motor carriers must maintain position history reports
for a period of six months in accordance with 49 CFR 395.8(k)(1).
    If the motor carrier's electronic mobile communication/tracking
records for a particular vehicle do not qualify under this Policy, the
motor carrier must maintain all supporting documents that may be used
to assess motor carrier and commercial motor vehicle driver compliance
with the HOS regulations, pursuant to 49 CFR 395.8(k)(1). A motor
carrier that uses electronic mobile communication/tracking technology
in the ordinary course of business for any purpose is expected to
include the use of records and information generated by that technology
in its HOS oversight activities.

Related Information

    A motor carrier's responsibility to ensure the accuracy of its
drivers' RODS is not limited by the list of examples of supporting
documents in this Policy. A motor carrier is liable for false RODS
submitted by its drivers and other HOS violations if the motor carrier
had or should have had the means by which to detect the violations,
regardless of whether the means to detect the violations is included in
the list of examples of supporting documents.
    All motor carriers that use electronic mobile communications/
tracking technology, whether or not such technology is qualifying
technology under this Policy, must continue to retain data generated by
that system in the ordinary course of business. The motor carrier is
not required, for purposes of responding to investigations by FMCSA or
State enforcement personnel, to convert the data from the format in
which it is ordinarily retained. However, if the motor carrier receives
in the ordinary course of business electronic or printed reports or
other communications in which the data is converted to a more readable
or usable format, the motor carrier must retain such reports or
communications and provide them to investigators upon demand.
    If a motor carrier denies the Agency access to its supporting
documents, including, without limitation, electronic mobile
communication/tracking records, the motor carrier's action shall be
considered a denial of access under 49 U.S.C. 521(b)(2)(E). As with all
supporting documents, a failure to maintain electronic mobile
communication/tracking records may be cited under 49 CFR 395.8(k)(1).
    FMCSA recognizes that motor carriers may use electronic mobile
communication/tracking technologies for applications other than
recording the time, date and/or location of a motor vehicle and/or
driver. An electronic record of vehicle performance trends and events
such as speeding or hard-braking, or vehicle performance measures such
as fuel consumption (MPG) or engine speed (RPM), which may be captured
through on-board sensors and transmitted via electronic mobile
communication/tracking technology, is not required to be maintained as
a supporting document under 49 CFR Part 395. However, if a triggering
event or performance measure creates a record of the time, date, and/or
location of a motor vehicle and/or driver, then the time, date and/or
location of that event or measure must be retained.

    Other statutes and/or regulations may require the retention of
certain listed documents. This Policy does not affect a motor carrier's
responsibility to comply with these other statutes and/or regulations.
    This Policy is not intended to address motor carriers that use
EOBRs under the terms of a remedial directive and EOBRs or Automatic
On-Board Recording Devices (AOBRDs) under the terms of a settlement
agreement. Carriers subject to a remedial directive or settlement
agreement must comply with the terms of that directive or agreement,
including requirements to retain particular documents.

    Issued on: June 4, 2010.
William A. Quade,
Associate Administrator for Enforcement and Program Delivery.
[FR Doc. 2010-13901 Filed 6-9-10; 8:45 am]
BILLING CODE 4910-EX-P


[Federal Register Volume 83, Number 90 (Wednesday, May 9, 2018)]
[Notices]
[Pages 21320-21324]
[FR Doc No: 2018-09806]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83163; File No. SR-BOX-2018-13]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Adopt Price Protections for Complex Orders

May 3, 2018.
    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 April 25, 2018, BOX Options Exchange LLC (the ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. 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.

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

I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    The Exchange proposes to adopt price protections for Complex
Orders. The text of the proposed rule change is available from the
principal office of the Exchange, at the Commission's Public Reference
Room and also on the Exchange's internet website at http://boxoptions.com.

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

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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
    The Exchange is proposing to adopt price protections for Complex
Orders executed on BOX. The Exchange notes that the proposed change is
similar to the rules of another exchange.\3\ The Exchange is proposing
debit/credit checks and price validation for eligible Complex
Orders.\4\ The proposed Complex Order price check parameters will apply
to all Complex Orders, including auctions (COPIP, Facilitation, and
Solicitation) and Complex Qualified Open Outcry Orders (``Complex QOO
Orders'').\5\
---------------------------------------------------------------------------

    \3\ See Chicago Board Options Exchange, Incorporated (``Cboe'')
Interpretations and Polices .08(c) and (g) to Rule 6.53C. The
Exchange notes that the proposed rules determine whether a Complex
Order is debit or credit by using a slightly different process than
that employed by Cboe. Specifically, CBOE will group the legs of a
Complex Order into pairs and compare multiple pairs to determine
whether the Complex Order is a credit or debit while the Exchange is
proposing to create groups (which may include more than two legs)
based on expiration date. However, the ultimate determination of
whether a Complex Order is a debit or credit is the same under the
different processes. Therefore, the Exchange believes the proposed
rule change is substantially similar to the rules of Cboe. The
proposed Maximum Price protection is based on Cboe Rule 6.53C.08(g).
    \4\ See proposed IM-7240-1.
    \5\ Under Exchange rules, a Complex QOO Order is not executed
until it is processed by the system. See Rule 7600(a). The system
applies the proposed price check parameters upon receipt of a
Complex QOO Order. Therefore, the proposed protections apply to
Complex QOO Orders in the same way as any other Complex Order
received by the system.
---------------------------------------------------------------------------

Debit/Credit Checks
    The Exchange is proposing a debit/credit check that will prevent
the execution of certain Complex Orders at erroneous prices.\6\
Specifically, the system will reject a Complex Limit Order for a credit
strategy with a net debit price or a Complex Limit Order for a debit
strategy with a net credit price.
---------------------------------------------------------------------------

    \6\ See proposed IM-7240-1(a).
---------------------------------------------------------------------------

    The system determines whether an order is a debit or credit based
on general options volatility and pricing principles, which the
Exchange understands are used by market participants in their option
pricing models. With respect to options with the same underlying:
     If two calls have the same expiration date, the price of
the call with the lower exercise price is more than the price of the
call with the higher exercise price;
     if two puts have the same expiration date, the price of
the put with the higher exercise price is more than the price of the
put with the lower exercise price; and
     if two calls (puts) have the same exercise price, the
price of the call (put) with the near expiration is less than the price
of the call (put) with the farther expiration.
    In other words, a call (put) with a lower (higher) exercise price
is more expensive than a call (put) with a higher (lower) exercise
price, because the ability to buy stock at a lower price is more
valuable than the ability to buy stock at a higher price, and the
ability to sell stock at a higher price is more valuable than the
ability to sell stock at a lower price. A call (put) with a farther
expiration is more expensive than the price of a call (put) with a
nearer expiration, because locking in a price further in the future
involves more risk for the buyer and seller and thus is more valuable,
making an option (call or put) with a farther expiration more expensive
than an option with a nearer expiration.
    Pursuant to the aforementioned principles, the Exchange will reject
an eligible Complex Order that is a Limit Complex Order for a credit
strategy with a net debit price, or a Limit Complex Order for a debit
strategy with a net credit price. The system will identify the strategy
as a debit or credit based on the potential profit or loss of the
Complex Order. The system accomplishes this by first grouping the legs
of the Complex Order by expiration date. The system then calculates the
potential profit or loss of each group for a range of price levels of
the underlying security. The specific price levels are equal to the
strike price of each leg in the group.
    If, at all price levels, the profit or loss for the group is break-
even or profit, then the group is a debit.\7\ If, at all price levels,
the profit or loss for the group is break-even or loss, then the group
is a credit.\8\ If all the groups of a Complex Order are a
debit(credit), then the Complex Order is a debit(credit).\9\
---------------------------------------------------------------------------

    \7\ See proposed IM-7240-1(a)(1)(i). The reason that the group
is a debit is because an investor would expect to pay for a strategy
that produced a profit.
    \8\ See proposed IM-7240-1(a)(1)(ii). The reason that the group
is a credit is because an investor would expect to be compensated
for a strategy that produced a loss.
    \9\ See proposed IM-7240-1(a)(2).
---------------------------------------------------------------------------

    For example, assume a Complex Order to buy 50 Jan $1 XYZ calls,
sell 50 Jan $2 XYZ calls, sell 50 Jan $3 XYZ calls, and buy 50 Jan $4
XYZ calls is entered at a net credit price (i.e., the net sale proceeds
from the Jan $2 and $3 calls are larger than the net purchase cost from
the Jan $1 and $4 calls). Since all legs have the same expiration, they
will be grouped together and the potential profit or loss will be
calculated for the group. If, at all price levels, the profit or loss
for the group is break-even or profit, then the Complex Order is a
debit. If, at all price levels, the profit or loss for the group is
break-even or loss, then the Complex Order is a credit. Upon evaluating
the group, the system will determine that the Complex Order appears to
be erroneously priced as a net credit; it should instead be a net debit
because the profit or loss for the group is break-even or profit for
each price level. Specifically, as shown in the table below, the net
purchase cost of the Jan $1 and $4 XYZ calls is larger than or equal to
the net sale proceeds from the Jan $2 and $3 calls at each strike price
level.

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

----------------------------------------------------------------------------------------------------------------
                                                 Profit or Loss
----------------------------------------------------------------------------------------------------------------
Strike Price Level ($)..........................               1               2               3               4
Buy $1 Call.....................................               0               1               2               3

Sell $2 Call....................................               0               0              -1              -2
Sell $3 Call....................................               0               0               0              -1
Buy $4 Call.....................................               0               0               0               0
                                                 ---------------------------------------------------------------
    Total Profit & Loss.........................               0               1               1               0
----------------------------------------------------------------------------------------------------------------

    If not all groups of a Complex Order are a debit or credit, the
system, for American-style options only, will determine if the Complex
Order is a debit or a credit by comparing legs across expiration
dates.\10\ The system will first convert all legs to the same
expiration and then compare the profit or loss, as provided in proposed
IM-7240-1(a)(i), while taking into account the conversion of the
expiration date of the leg(s). The system will evaluate the converted
leg(s) based on the fact that an option with a farther expiration has a
higher value when compared to an option with the same exercise price
but a closer expiration. For example, if a sell leg is converted to a
farther expiration and the strategy still yields a profit when the
system evaluates the potential profit or loss of the strategy, the
strategy is a debit because even by increasing the value of a sell leg
the strategy still yields a profit.
---------------------------------------------------------------------------

    \10\ See proposed IM-7240-1(a)(3).
---------------------------------------------------------------------------

    For example, assume a Complex Order to buy 50 Feb $1 XYZ calls,
sell 50 Jan $2 XYZ calls, sell 50 Jan $3 XYZ calls, and buy 50 Feb $4
XYZ calls, is entered at a net credit price (i.e., the net sale
proceeds from the Jan $2 and $3 calls is larger than the net purchase
cost from the Feb $1 and $4 calls). Since not all legs have the same
expiration, they will be grouped by expiration date first. The Feb $1
and $4 calls would be one group and the Jan $2 and $3 calls would be
the other group. This would yield one group as a debit (Feb $1 and $4
calls) and one as a credit (Jan $2 and $3 calls). Therefore, the system
would not be able to determine if the Complex Order is a debit or
credit based on the groups since not all of the groups are a debit or
credit. Instead, the system will determine if the Complex Order is a
debit or credit by comparing all the legs of the Complex Order
together. The first step is to convert the Jan $2 and $3 calls to Feb
$2 and $3 calls so all legs have the same expiration and therefore the
potential profit or loss can be calculated pursuant to proposed IM-
7240-1(a)(1). Upon evaluating all legs collectively, the system will
determine that the Complex Order appears to be erroneously priced as a
net credit; it should instead be a net debit because the profit or loss
for all the legs is break-even or profit for each price level.
Specifically, as shown in the table below, the net purchase cost of the
Feb $1 and $4 XYZ calls are larger than or equal to the net sale
proceeds from the converted Feb $2 and$3 calls at each underlying price
level. After calculating the profit or loss, the system will determine
if the outcome would change based on the converted leg (i.e., the Jan
$2 and $3 calls being converted to Feb $2 and $3 calls). The system
will determine that the outcome is correct because the conversion of
the Jan $2 and $3 calls to more expensive Feb $2 and $3 calls still
yielded a break-even or profit for each price level even though the
converted Feb $2 and $3 calls are more expensive than the actual Jan $2
and $3 calls. Therefore, since selling more expensive call options
(i.e., Feb $2 and $3 calls) still yielded a break-even or profit at all
price levels, it can easily be deduced that selling the actual, less
expensive, Jan $2 and $3 calls would yield the same result.

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

----------------------------------------------------------------------------------------------------------------
                                                 Profit or Loss
----------------------------------------------------------------------------------------------------------------
Strike Price Level ($)..........................               1               2               3               4
Buy $1 Call.....................................               0               1               2               3
Sell $2 Call....................................               0               0              -1              -2
Sell $3 Call....................................               0               0               0              -1
Buy $4 Call.....................................               0               0               0               0
                                                 ---------------------------------------------------------------
    Total Profit & Loss.........................               0               1               1               0
----------------------------------------------------------------------------------------------------------------

    If the system cannot identify whether the Complex Order is a credit
or debit pursuant to proposed IM-7240-1(a)(2) or (3), the system will
not apply the check in proposed IM-7240-1(a).\11\
---------------------------------------------------------------------------

    \11\ See proposed IM-7240-1(a)(4).
---------------------------------------------------------------------------

Maximum Price
    After a Complex Order passes the debit/credit check, the system
will then calculate a maximum price for certain Complex Orders.\12\
Specifically, the system will calculate a maximum price for true
butterfly spreads, vertical spreads, and box spreads. After calculating
the maximum price, the system will reject a Complex Limit Order that is
a true butterfly spread, vertical spread, or a box spread if the
absolute value of the Complex Order's limit price is greater than the
maximum price. For a Complex Market Order that is a true butterfly
spread, vertical spread, or a box spread, the system will reject the
Complex Market Order if the absolute value of the execution price is
greater than the maximum price. As described in greater detail below,
the maximum price value is calculated by adding a price buffer to the
absolute value of a true butterfly spread, vertical spread, or box
spread.
---------------------------------------------------------------------------

    \12\ See proposed IM-7240-1(b).
---------------------------------------------------------------------------

    The price buffer is calculated by taking a specified percentage of
the absolute value of the strategy.\13\ The system will provide a
minimum and maximum value for the price buffer. If the price buffer is
below the minimum value, then the minimum is used by the system when
calculating the maximum price value. If the price buffer is above the
maximum value, then the maximum is used by the system when calculating
the maximum price value. The specified percentage, minimum value, and
maximum value shall be the same for all classes. Unless determined
otherwise by the Exchange and announced to Participants via Circular,
the specified percentage is 5%, the minimum value is $0.10, and the
maximum value is $1.00.
---------------------------------------------------------------------------

    \13\ See proposed IM-7240-1(b)(1).
---------------------------------------------------------------------------

    An absolute value will be calculated for those strategies to which
the Maximum Price protection applies. The absolute value for a vertical
spread is the absolute difference between the exercise prices of the
two legs.\14\ The absolute value for a true butterfly spread

is the absolute difference between the middle leg exercise price and
the exercise price of the leg on either side.\15\ The absolute value
for a box spread is the absolute difference between the exercise prices
of each pair of legs.\16\
---------------------------------------------------------------------------

    \14\ See proposed IM-7240-1(b)(2).
    \15\ See proposed IM-7240-1(b)(3).
    \16\ See proposed IM-7240-1(b)(4).
---------------------------------------------------------------------------

Vertical Spread Example
    Assume a Complex Limit Order to buy 10 Dec $30 XYZ puts and sell 10
Dec $20 XYZ puts at $10.60. The absolute value for the vertical spread
is $10 (the absolute value of 30-20). The specified percentage is set
to 5%, the minimum value is set to $0.10, and the maximum value is set
to $1.00. The price buffer for the vertical spread would be $0.50
($10.00 * .05). Therefore the system will reject any Complex Limit
Order because the price ($10.60) is greater than the Maximum Price of
$10.50 for the strategy.
True Butterfly Spread Example
    Assume a Complex Limit Order to buy 10 Dec $10 XYZ calls, sell 20
Dec $40 XYZ calls, and buy 10 Dec $70 XYZ calls at $30.50. The absolute
value for the butterfly spread is $30 (the absolute value of 10-40 or
40-70). The specified percentage is set to 5%, the minimum value is set
to $0.10, and the maximum value is set to $1.00. The price buffer for
the butterfly spread would be $1.50 ($30.00 * .05); however, since that
amount is above the maximum value, the system would use the maximum
value ($1.00) as the price buffer instead. Therefore the system would
accept the Complex Limit Order because the price ($30.50) is less than
the Maximum Price of $31.00 for the strategy.
Box Spread Example
    Assume a Complex Limit Order to buy 10 Dec $4 XYZ calls, sell 10
Dec $5 XYZ calls, buy 10 Dec $5 XYZ puts, and sell 10 Dec $4 puts at
$1.09. The absolute value for the box spread is $1.00 (the absolute
value of 5-4). The specified percentage is set to 5%, the minimum value
is set to $0.10, and the maximum value is set to $1.00. The price
buffer for the box spread would be $0.05 ($1.00 * .05); however, since
that amount is below the minimum value, the system would use the
minimum value ($0.10) as the price buffer instead. Therefore the system
would accept the Complex Limit Order because the price ($1.09) is less
than the Maximum Price of $1.10 for the strategy.
    The Exchange will provide notice of the exact implementation date
of the proposed protections, via Circular, at least two weeks prior to
implementing the proposed change. The Exchange anticipates implementing
the proposed protections during Q2 of 2018.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\17\ in general, and Section 6(b)(5) of the Act,\18\ in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the proposed rule change to implement a debit/credit
check for Complex Orders for which the Exchange can determine whether a
Complex Order is a debit or credit is consistent with the Act. With the
use of debit/credit checks, the Exchange can further assist with the
maintenance of a fair and orderly market by mitigating the potential
risks associated with Complex Orders trading at prices that are
inconsistent with their strategies (which may result in executions at
prices that are extreme and potentially erroneous), which ultimately
protects investors. This proposed implementation of the debit/credit
check promotes just and equitable principles of trade, as it is based
on the same general option and volatility pricing principles which the
Exchange understands are used by market participants in their option
pricing models.
    Additionally, the Exchange also believes that calculating a maximum
price for true butterfly spreads, vertical spreads, and box spreads
will assist with the maintenance of fair and orderly markets by helping
to mitigate the potential risks associated with Complex Orders trading
at extreme and potentially erroneous prices that are inconsistent with
particular Complex Order strategies. Further, the Exchange notes that
the maximum price is designed to mitigate the potential risks of
executions at prices that are not within an acceptable price range, as
a means to help mitigate the potential risks associated with Complex
Orders trading at prices that are inconsistent with their strategies,
in addition to the debit/credit check. As such, the proposed rule
change is designed to protect investors and the public interest.

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

    The Exchange does not believe that the proposed Complex Order
protections will impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. In this regard
and as indicated above, the Exchange notes that the rule change is
being proposed as a competitive response to the rules of another
exchange.\19\ Additionally, the Exchange believes the proposed rule
change is beneficial to Participants as it will provide increased
protections that will prevent the execution of certain Complex Orders
that were entered in error. The Exchange believes the proposal is pro-
competitive and should serve to attract additional Complex Orders to
the Exchange. Further, the Exchange does not believe the proposed
change will not impose a burden on intramarket competition because it
is available to all Participants.
---------------------------------------------------------------------------

    \19\ See supra, note 3.
---------------------------------------------------------------------------

    For the reasons stated, the Exchange does not believe that the
proposed rule changes will impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act, and
the Exchange believes the proposed change will, in fact, enhance
competition.

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

    The Exchange has neither solicited nor received comments on the
proposed rule change.

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

    Because the 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 \20\ and Rule 19b-4(f)(6) thereunder.\21\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.

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

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \22\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \23\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposed rule change may become operative upon filing. The Exchange
states that waiver of the operative delay would be consistent with the
protection of investors and the public interest because it will allow
the Exchange to immediately provide Participants with additional
protections for Complex Orders submitted and executed on the Exchange.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the operative delay and
designates the proposal as operative upon filing.\24\
---------------------------------------------------------------------------

    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
    \24\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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 protected]. Please include
File Number SR-BOX-2018-13 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-BOX-2018-13. 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 such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. 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-BOX-2018-13, and should be submitted on
or before May 30, 2018.
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-09806 Filed 5-8-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 160 (Tuesday, August 19, 2014)]
[Rules and Regulations]
[Pages 48949-48952]
[FR Doc No: 2014-19540]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 27

[Docket No. FAA-2014-0595; Special Conditions No. 27-031-SC]

Special Conditions: Airbus Helicopters Deutschland GmbH Model
EC135 Series Helicopters, Installation of HeliSAS Autopilot and
Stabilization Augmentation System (AP/SAS)

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final special conditions; request for comments.

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

SUMMARY: These special conditions are issued for the modification of
the Airbus Helicopters Deutschland GmbH (Airbus Helicopters) Model
EC135 series helicopters. These model helicopters will have a novel or
unusual design feature after installation of the S-TEC Corporation (S-
TEC) HeliSAS helicopter autopilot/stabilization augmentation system
(AP/SAS) that has potential failure conditions with more severe adverse
consequences than those envisioned by the existing applicable
airworthiness regulations. These special conditions contain the added
safety standards the Administrator considers necessary to ensure the
failures and their effects are sufficiently analyzed and contained.

DATES: The effective date of these special conditions is August 7,
2014. We must receive your comments on or before October 3, 2014.

ADDRESSES: Send comments identified by docket number [FAA-2014-0595]
using any of the following methods:
     Federal eRegulations Portal: Go to http://www.regulations.gov and follow the online instructions for sending your
comments electronically.
     Mail: Send comments to Docket Operations, M-30, U.S.
Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room
W12-140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery of Courier: Deliver comments to the Docket
Operations, in Room W12-140 of the West Building Ground Floor at 1200
New Jersey Avenue SE., Washington, DC between 9 a.m., and 5 p.m.,
Monday through Friday, except federal holidays.
     Fax: Fax comments to Docket Operations at<PHONE_NUMBER>.
    Privacy: The FAA will post all comments it receives, without
change, to http://regulations.gov, including any personal information
the commenter provides. Using the search function of the docket Web
site, anyone can find and read the electronic form of all comments
received into any FAA docket, including the name of the individual
sending the comment (or signing the comment for an association,
business, labor union, etc.). DOT's complete Privacy Act Statement can
be found in the Federal Register published on April 11, 2000 (65 FR
19477-19478), as well as at http://DocketsInfo.dot.gov.
    Docket: Background documents or comments received may be read at
http://www.regulations.gov. Follow the online instructions for
accessing the docket or go to the Docket Operations in Room W12-140 of
the West Building Ground Floor at 1200 New Jersey Avenue SE.,
Washington, DC, between 9 a.m., and 5 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Matt Wilbanks, Aviation Safety
Engineer, FAA, Rotorcraft Directorate, Regulations and Policy Group
(ASW-111), 2601 Meacham Blvd., Fort Worth, Texas 76137; telephone (817)
222-5051; facsimile<PHONE_NUMBER>; or email to<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Reason for No Prior Notice and Comment Before Adoption

    The FAA has determined that notice and opportunity for public
comment are unnecessary because the substance of these special
conditions has been subjected to the notice and comment period
previously and has been derived without substantive change from those
previously issued. As it is unlikely that we will receive new comments,
the FAA finds that good cause exists for making these special
conditions effective upon issuance.

Comments Invited

    While we did not precede this with a notice of proposed special
conditions, we invite interested people to take part in this action by
sending written comments, data, or views. The most helpful comments
reference a specific portion of the special conditions, explain the
reason for any recommended change, and include supporting data.
    We will consider all comments we receive by the closing date for
comments. We will consider comments filed late if it is possible to do
so without incurring expense or delay. We may change these special
conditions based on the comments we receive.
    If you want us to let you know we received your mailed comments on
these special conditions, send us a pre-addressed, stamped postcard on
which

the docket number appears. We will stamp the date on the postcard and
mail it back to you.

Background

    On June 18, 2013, S-TEC submitted an application to the FAA's Los
Angeles Aircraft Certification Office for a supplemental type
certificate (STC) to install a HeliSAS AP/SAS on the Airbus Helicopters
model EC135 series (EC135P1, EC135T1, EC135P2, EC135T2, EC135P2+, and
EC135T2+) helicopters. The Airbus Helicopters model EC135 series
helicopters are 14 CFR part 27 normal category, twin turbine engine,
conventional helicopters designed for civil operation. These helicopter
models are capable of carrying up to seven passengers with one pilot,
and have a maximum gross weight of up to 6,504 pounds, depending on the
model configuration. The major design features include a 3-blade, fully
articulated main rotor, an anti-torque tail rotor system, a skid
landing gear, and a visual flight rule basic avionics configuration. S-
TEC proposes to modify these model helicopters by installing a two-axis
HeliSAS AP/SAS.

Type Certification Basis

    Under 14 CFR 21.115, S-TEC must show that the Airbus Helicopters
model EC135 series helicopters, as modified by the installed HeliSAS
AP/SAS, continue to meet the requirements specified in 14 CFR 21.101.
The baseline of the certification basis for the unmodified Airbus
Helicopters model EC135 series helicopters is listed in Type
Certificate Number H88EU. Additionally, compliance must be shown to any
applicable equivalent level of safety findings, exemptions, and special
conditions prescribed by the Administrator as part of the certification
basis.
    The Administrator has determined the applicable airworthiness
regulations (that is, 14 CFR part 27), as they pertain to this STC, do
not contain adequate or appropriate safety standards for the Airbus
Helicopters model EC135 series helicopters because of a novel or
unusual design feature. Therefore, special conditions are prescribed
under Sec.  21.16.
    In addition to the applicable airworthiness regulations and special
conditions, S-TEC must show compliance of the HeliSAS AP/SAS STC
altered Airbus Helicopters model EC135 series helicopters with the
noise certification requirements of 14 CFR part 36.
    The FAA issues special conditions, as defined in Sec.  11.19, in
accordance with Sec.  11.38 and they become part of the type
certification basis under Sec.  21.101(d).

Novel or Unusual Design Features

    The HeliSAS AP/SAS incorporates novel or unusual design features
for installation in an Airbus Helicopters model EC135 series
helicopter, Type Certificate Number H88EU. This HeliSAS AP/SAS performs
non-critical control functions. However, the possible failure
conditions for this system, and their effect on the continued safe
flight and landing of the helicopters, are more severe than those
envisioned by the present rules.

Discussion

    The effect on safety is not adequately covered under Sec.  27.1309
for the application of new technology and new application of standard
technology. Specifically, the present provisions of Sec.  27.1309(c) do
not adequately address the safety requirements for systems whose
failures could result in catastrophic or hazardous/severe-major failure
conditions, or for complex systems whose failures could result in major
failure conditions. The current regulations are inadequate because when
Sec.  27.1309(c) were promulgated, it was not envisioned that this type
of rotorcraft would use systems that are complex or whose failure could
result in ``catastrophic'' or ``hazardous/severe-major'' effects on the
rotorcraft. This is particularly true with the application of new
technology, new application of standard technology, or other
applications not envisioned by the rule that affect safety.
    To comply with the provisions of the special conditions, we require
that S-TEC provide the FAA with a systems safety assessment (SSA) for
the final HeliSAS AP/SAS installation configuration that will
adequately address the safety objectives established by a functional
hazard assessment (FHA) and a preliminary system safety assessment
(PSSA), including the fault tree analysis (FTA). This will ensure that
all failure conditions and their resulting effects are adequately
addressed for the installed HeliSAS AP/SAS. The SSA process, FHA, PSSA,
and FTA are all parts of the overall safety assessment process
discussed in FAA Advisory Circular 27-1B (Certification of Normal
Category Rotorcraft) and Society of Automotive Engineers document
Aerospace Recommended Practice 4761 (Guidelines and Methods for
Conducting the Safety Assessment Process on Civil Airborne Systems and
Equipment).
    These special conditions require that the HeliSAS AP/SAS installed
on an Airbus Helicopters model EC135 series helicopter meet the
requirements to adequately address the failure effects identified by
the FHA, and subsequently verified by the SSA, within the defined
design integrity requirements.
    Failure Condition Categories. Failure conditions are classified,
according to the severity of their effects on the rotorcraft, into one
of the following categories:
    1. No Effect--Failure conditions that would have no effect on
safety. For example, failure conditions that would not affect the
operational capability of the rotorcraft or increase crew workload;
however, could result in an inconvenience to the occupants, excluding
the flight crew.
    2. Minor--Failure conditions which would not significantly reduce
rotorcraft safety, and which would involve crew actions that are well
within their capabilities. Minor failure conditions would include, for
example, a slight reduction in safety margins or functional
capabilities, a slight increase in crew workload such as routine flight
plan changes or result in some physical discomfort to occupants.
    3. Major--Failure conditions which would reduce the capability of
the rotorcraft or the ability of the crew to cope with adverse
operating conditions to the extent that there would be, for example, a
significant reduction in safety margins or functional capabilities, a
significant increase in crew workload or result in impairing crew
efficiency, physical distress to occupants, including injuries, or
physical discomfort to the flight crew.
    4. Hazardous/Severe-Major.
    a. Failure conditions which would reduce the capability of the
rotorcraft or the ability of the crew to cope with adverse operating
conditions to the extent that there would be:
    (1) A large reduction in safety margins or functional capabilities;
    (2) physical distress or excessive workload that would impair the
flight crew's ability to the extent that they could not be relied on to
perform their tasks accurately or completely; or
    (3) possible serious or fatal injury to a passenger or a cabin
crewmember, excluding the flight crew.
    b. ``Hazardous/severe-major'' failure conditions can include events
that are manageable by the crew by the use of proper procedures, which,
if not implemented correctly or in a timely manner, may result in a
catastrophic event.
    5. Catastrophic--Failure conditions which would result in multiple
fatalities to occupants, fatalities or incapacitation

to the flight crew, or result in loss of the rotorcraft.
    Radio Technical Commission for Aeronautics, Inc. (RTCA) Document
DO-178C (Software Considerations in Airborne Systems And Equipment
Certification) provides software design assurance levels most commonly
used for the major, hazardous/severe-major, and catastrophic failure
condition categories. The HeliSAS AP/SAS system equipment must be
qualified for the expected installation environment. The test
procedures prescribed in RTCA Document DO-160G (Environmental
Conditions and Test Procedures for Airborne Equipment) are recognized
by the FAA as acceptable methodologies for finding compliance with the
environmental requirements. Equivalent environment test standards may
also be acceptable. This is to show that the HeliSAS AP/SAS system
performs its intended function under any foreseeable operating
condition, which includes the expected environment in which the HeliSAS
AP/SAS is intended to operate. Some of the main considerations for
environmental concerns are installation locations and the resulting
exposure to environmental conditions for the HeliSAS AP/SAS system
equipment, including considerations for other equipment that may be
affected environmentally by the HeliSAS AP/SAS equipment installation.
The level of environmental qualification must be related to the
severity of the considered failure conditions and effects on the
rotorcraft.

Applicability

    These special conditions are applicable to the HeliSAS AP/SAS
installed as an STC approval in Airbus Helicopters model EC135P1,
EC135T1, EC135P2, EC135T2, EC135P2+, and EC135T2+ helicopters, Type
Certificate Number H88EU.

Conclusion

    This action affects only certain novel or unusual design features
for a HeliSAS AP/SAS STC installed on the specified model series of
helicopters. It is not a rule of general applicability and affects only
the applicant who applied to the FAA for approval of these features.

List of Subjects in 14 CFR Part 27

    Aircraft, Aviation safety.

    The authority citation for these special conditions is as follows:

    Authority: 42 U.S.C. 7572, 49 U.S.C. 106(g), 40105, 40113,
44701-44702, 44704, 44709, 44711, 44713, 44715, 45303.

The Special Conditions

0
Accordingly, pursuant to the authority delegated to me by the
Administrator, the following special conditions are issued as part of
the S-TEC Corporation (S-TEC) supplemental type certificate basis for
the installation of a HeliSAS helicopter autopilot/stabilization
augmentation system (AP/SAS) on Airbus Helicopters model EC135P1,
EC135T1, EC135P2, EC135T2, EC135P2+, and EC135T2+ helicopters, Type
Certificate Number H88EU. In addition to the requirement of Sec.
27.1309(c), HeliSAS AP/SAS installations on Airbus Helicopters model
EC135P1, EC135T1, EC135P2, EC135T2, EC135P2+, and EC135T2+ helicopters
must be designed and installed so that the failure conditions
identified in the functional hazard assessment (FHA) and verified by
the system safety assessment (SSA), after design completion, are
adequately addressed in accordance with the following requirements.

Requirements

    S-TEC must comply with the existing requirements of Sec.  27.1309
for all applicable design and operational aspects of the HeliSAS AP/SAS
with the failure condition categories of ``no effect,'' and ``minor,''
and for non-complex systems whose failure condition category is
classified as ``major.'' S-TEC must comply with the requirements of
these special conditions for all applicable design and operational
aspects of the HeliSAS AP/SAS with the failure condition categories of
``catastrophic'' and ``hazardous severe/major,'' and for complex
systems whose failure condition category is classified as ``major.'' A
complex system is a system whose operations, failure conditions, or
failure effects are difficult to comprehend without the aid of
analytical methods (for example, FTA, Failure Modes and Effect
Analysis, FHA).

System Design Integrity Requirements

    Each of the failure condition categories defined in these special
conditions relate to the corresponding aircraft system integrity
requirements. The system design integrity requirements, for the HeliSAS
AP/SAS, as they relate to the allowed probability of occurrence for
each failure condition category and the proposed software design
assurance level, are as follows:
    1. ``Major''--For systems with ``major'' failure conditions,
failures resulting in these major effects must be shown to be remote, a
probability of occurrence on the order of between 1 x 10-\5\
to 1 x 10-\7\ failures/hour, and associated software must be
developed, at a minimum, to the Level C software design assurance
level.
    2. ``Hazardous/Severe-Major''--For systems with ``hazardous/severe-
major'' failure conditions, failures resulting in these hazardous/
severe-major effects must be shown to be extremely remote, a
probability of occurrence on the order of between 1 x 10-7
to 1 x 10-9 failures/hour, and associated software must be
developed, at a minimum, to the Level B software design assurance
level.
    3. ``Catastrophic''--For systems with ``catastrophic'' failure
conditions, failures resulting in these catastrophic effects must be
shown to be extremely improbable, a probability of occurrence on the
order of 1 x 10-9 failures/hour or less, and associated
software must be developed, at a minimum, to the Level A design
assurance level.

System Design Environmental Requirements

    The HeliSAS AP/SAS system equipment must be qualified to the
appropriate environmental level for all relevant aspects to show that
it performs its intended function under any foreseeable operating
condition, including the expected environment in which the HeliSAS AP/
SAS is intended to operate. Some of the main considerations for
environmental concerns are installation locations and the resulting
exposure to environmental conditions for the HeliSAS AP/SAS system
equipment, including considerations for other equipment that may be
affected environmentally by the HeliSAS AP/SAS equipment installation.
The level of environmental qualification must be related to the
severity of the considered failure conditions and effects on the
rotorcraft.

Test and Analysis Requirements

    Compliance with the requirements of these special conditions may be
shown by a variety of methods, which typically consist of analysis,
flight tests, ground tests, and simulation, as a minimum. Compliance
methodology is related to the associated failure condition category. If
the HeliSAS AP/SAS is a complex system, compliance with the
requirements for failure conditions classified as ``major'' may be
shown by analysis, in combination with appropriate testing to validate
the analysis. Compliance with the requirements for failure conditions
classified as ``hazardous/severe-major'' may be shown by flight-testing
in combination with analysis and simulation, and the appropriate
testing to validate the analysis. Flight tests may

be limited for ``hazardous/severe-major'' failure conditions and
effects due to safety considerations. Compliance with the requirements
for failure conditions classified as ``catastrophic'' may be shown by
analysis, and appropriate testing in combination with simulation to
validate the analysis. Very limited flight tests in combination with
simulation are used as a part of a showing of compliance for
``catastrophic'' failure conditions. Flight tests are performed only in
circumstances that use operational variations, or extrapolations from
other flight performance aspects to address flight safety.
    These special conditions require that the HeliSAS AP/SAS system
installed on an Airbus Helicopters model EC135P1, EC135T1, EC135P2,
EC135T2, EC135P2+, or EC135T2+ helicopter, Type Certificate Number
H88EU, meet these requirements to adequately address the failure
effects identified by the FHA, and subsequently verified by the SSA,
within the defined design system integrity requirements.

    Issued in Fort Worth, Texas, on August 7, 2014.
Lance T. Gant,
Acting Manager, Rotorcraft Directorate, Aircraft Certification Service.
[FR Doc. 2014-19540 Filed 8-18-14; 8:45 am]
BILLING CODE 4910-13-P