[Federal Register Volume 85, Number 233 (Thursday, December 3, 2020)]
[Notices]
[Pages 78153-78157]
[FR Doc No: 2020-26597]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90525; File No. SR-LCH SA-2020-005]

Self-Regulatory Organizations; LCH SA; Notice of Filing of
Partial Amendment No. 1 and Order Granting Accelerated Approval of
Proposed Rule Change, as Modified by Partial Amendment No. 1, Relating
to the Clearing of Options on Index Credit Default Swaps in Respect of
North American Indices (More Specifically, CDX.NA.IG and CDX.NA.HY)

November 27, 2020.

I. Introduction

    On September 24, 2020, Banque Centrale de Compensation, which
conducts business under the name LCH SA (``LCH SA''), 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,\2\ a proposed rule change to permit the clearing of
options on index credit default swaps (``CDS'') in respect of North
American indices (more specifically, CDX.NA.IG and CDX.NA.HY) (``CDX
Swaptions''). The proposed rule change was published for comment in the
Federal Register on October 13, 2020.\3\ The Commission did not receive
comments on the proposed rule change. On November 27, 2020, LCH SA
filed Partial Amendment No. 1 to the proposed rule change.\4\ The
Commission is publishing this notice to solicit comments on Partial
Amendment No. 1 from interested persons and is approving the proposed
rule change, as modified by Partial Amendment No. 1 (hereinafter,
``proposed rule change''), on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Self-Regulatory Organizations; LCH SA; Notice of Filing of
Proposed Rule Change Relating to the Clearing of Options on Index
Credit Default Swaps in Respect of North American Indices (More
Specifically, CDX.NA.IG and CDX.NA.HY), Exchange Act Release No.
90099 (October 6, 2020); 85 FR 64551 (October 13, 2020) (SR-LCH SA-
2020-005) (``Notice'').
    \4\ Partial Amendment No. 1 amends the LCH SA Reference Guide:
CDS Margin Framework to reflect all of the changes discussed herein.
Partial Amendment No. 1 also includes Exhibit 4 (Text of the
proposed change with the differences from the initial Exhibit 5C).
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II. Description of the Proposed Rule Change

    LCH SA is proposing to amend its rules to permit the clearing of
CDX Swaptions.\5\ As LCH SA currently clears options in which certain
European index CDS are the underlying asset, i.e., CDS on Markit
iTraxx[supreg] Europe Index and iTraxx[supreg] Crossover Index
(``iTraxx Swaptions''), the proposed introduction of CDX Swaptions
requires minimal changes to extend LCH SA's existing risk framework to
this new product.\6\ As described below, LCH SA is proposing such
changes in its (i) Reference Guide: CDS Margin Framework (``CDSClear
Margin Framework''); \7\ (ii) CDS Clearing Supplement (``Supplement'');
and (iii) CDS Clearing Procedures (``Procedures'').\8\ In addition, LCH
SA proposes to make other changes unrelated to the introduction of CDX
Swaptions, including changes to the Vega Margin that will apply to both
iTraxx Swaptions and CDX Swaptions, which are also described below.\9\
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    \5\ The description herein is substantially excerpted from the
Notice.
    \6\ See Notice, 85 FR at 64552.
    \7\ Capitalized terms used but not defined herein have the same
definitions as in the CDSClear Margin Framework or Default Fund
Methodology, as applicable.
    \8\ See Notice, 85 FR at 64552.
    \9\ Id.
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A. Proposed Changes With Respect to CDX Swaptions

1. CDSClear Margin Framework
    LCH SA is proposing to amend Paragraph 2.3.4, which concerns the
Daily Contributions Assessment, to include CDX Swaptions. The Daily
Contributions Assessment is the primary method by which LCH SA obtains
Members' daily price contributions to update implied volatilities on
options. These price contributions, in turn, would be used by LCH SA
for marking the options book, if certain conditions are met. The
proposed change to the Daily Contributions Assessment will require
Members to make price contributions on CDX Swaptions for all strikes
that are multiples of 2.5 basis points for CDX.NA.IG and 0.5 cents for
CDX.NA.HY of a given expiry when Members have at least one open
position on one strike for that expiry. This change would ensure that
daily updates are available for LCH SA's implied volatility
measurements. Without this change, LCH SA would rely on Markit's
composite prices or use pre-defined rules to fill in missing data in
accordance with section <IP_ADDRESS> (Missing Data Points) of the CDSClear
Margin Framework, consistent with what LCH does for other options that
it currently clears.
    LCH SA is also proposing changes in paragraph 4.1.9 of the CDSClear
Margin Framework, as outlined below:
    (a) LCH SA would add a comment to highlight that although the given
example pertains to iTraxx Swaptions, the same logic applies to CDX
Swaptions.
    (b) In the description of Step 2 regarding the calculation of the
cost of vega hedging, LCH SA would specify that the volume of delta
neutral Swaption notional that it can unwind in a day will be derived
from a clearing member survey.
    (c) In the description of Step 3 regarding the contributions to the
macro-hedge cost, LCH SA would specify that the volume of principal
index 5YR Off-The-Run-1 series Swaption notional that one can
reasonably unwind in a day is defined in the previous section on
indices. LCH SA would also add CDX Swaptions to the description of the
variable beta (``[beta]'') that defines an index sub-family, either
Main or Xover for iTraxx and IG or HY for CDX.
    (d) In the description of Step 4 regarding the final Liquidity
Charge and to aggregate the costs of delta hedging and vega hedging,
LCH SA would add a formula to clarify that the existing methodology
would also apply and to incorporate the Foreign Exchange rate into the
final Liquidity Charge formula to address CDX Swaptions. LCH SA
determined that no changes are required to its liquidity and
concentration risk margin methodology, as set forth in the CDSClear
Margin Framework, in connection with clearing CDX Swaptions.\10\
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    \10\ See Notice, 85 FR at 64552.
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    Currently, in the event of a clearing member default and the
calculation of a liquidity charge, LCH SA attempts to source hedges
from the CDS part of the defaulting member's portfolio using a delta-
hedging algorithm to ensure minimal hedging costs before sourcing the
hedges from the market.\11\ In this connection, LCH SA proposes to
amend Section 4.1.9 to reflect use of a member survey to determine the
volume of the delta neutral package of the selected option that can be
reasonably unwound per day. LCH SA is also proposing additional
language to confirm how currency conversion from USD to EUR will apply
in circumstances where options priced in USD form part of the delta-
hedged package.
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    \11\ Id. (noting that in the event of a clearing member default,
market feedback indicates that it is optimal from a friction cost
standpoint for swaptions to be liquidated as a delta-hedged package
intended to trade and hedge an option along with an index).
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    Paragraph 4.2 sets forth the accrued coupon liquidation risk margin
(i.e., margin covering the risk that a

protection buyer will not be paying any accrued coupon via the
Variation Margin (``VM'') between the time it defaults and the end of
the liquidation of its portfolio) for both CDS and CDS Options. The
accrued coupon liquidation risk margin with respect to CDS Options
remains the same, but would be amended to reflect that any such amount
for CDX Swaptions contracts is converted from USD to EUR.
    As a result of the foregoing proposed changes, LCH SA would update
the Content table and the summary of changes and make corresponding
changes to provision numbering throughout the CDSClear Margin
Framework.
2. Supplement
    To allow for the clearing of CDX Swaptions, LCH SA is proposing a
number of changes in Part C of the Supplement to add or modify a number
of relevant definitions. Specifically, in Section 1.2 (Terms defined in
the CDS Clearing Supplement):
    (a) The proposed definition of the term ``CDX Swaption Standard
Terms Supplement'' would refer to the applicable documentation for the
CDX Swaptions, as published by Markit North America, Inc. and as
amended by the Supplement.
    (b) The definition of the term ``Index Swaption Cleared Transaction
Confirmation'' would refer to the applicable form of confirmation for
CDX Swaptions in new indent (b), and would make some minor corrections
in new indent (a) and in the last paragraph of the definition.
    (c) The proposed definition of the term ``Submission Deadline''
would provide for both the Markit iTraxx and CDX exercise windows in
respect of different swaptions.
    (d) The definition of ``Transaction Data'' would include a new
reference to the Option Type that is relevant for CDX Swaptions.
    In addition, LCH SA proposes to replace all references to the
standard fixed time of 4:00 p.m. (London time) or 5:00 p.m. (Central
European Time), which apply only to iTraxx Swaptions, with the new
defined term ``Submission Deadline'' in Sections 6.3, 6.4, 6.5
(paragraph (c)), 6.10 (paragraph (b)) and Sections 5.3, 5.5 and 5.7 of
Appendix VIII (CCM Client Transaction Requirements).
    For consistency purposes, LCH SA would amend Section 7.2 (Creation
of Initial Single Name Cleared Transactions for Settlement purposes in
respect of Credit Events other than M(M)R Restructuring) to include
references to the relevant paragraph of the CDX Swaption Standard Terms
Supplement.
    LCH SA would also add references to a CDX as an Underlying Index
and the Swaption Type to the Schedules of Appendix I (Form of Exercise
Notice) and Appendix II (Form of Abandonment Notice) to Part C of the
Supplement.
    In Appendix VIII (CCM Client Transaction Requirements) to Part C of
the Supplement, LCH SA proposes to amend Section 1 to refer to the CDX
Swaption Standard Terms Supplement and to remove the definition of
``STS Supplement.'' LCH SA would make a related change in Section 8.2
of this Appendix by replacing the current reference to the ``STS
Supplement'' with a reference to the ``iTraxx[supreg] Swaption Standard
Terms Supplement'' as this section concerns only iTraxx Swaptions. LCH
SA would also add references to the iTraxx[supreg] Swaption Standard
Terms Supplement and the CDX Swaption Standard Terms Supplement or the
relevant section of such Supplement, as applicable, and remove any
reference to the STS Supplement in Sections 8.3 and 8.4 of this
Appendix.
3. Procedures
    LCH SA also proposes to modify Section 5 of the Procedures (CDS
Clearing Operations) to include CDX Swaptions in the scope of the End
of Day Price Contribution as set out in Paragraph 5.18.
    LCH SA would change references from ``CDS'' to ``CDS and an Index
Swaption'' in paragraphs 5.18.3 and 5.18.5, for instruments with a CDS
Contractual Currency in U.S. Dollar. In paragraph 5.18.4 (Use of
composite spreads/prices), LCH SA would modify the first sentence to
ensure similar clarity. In the same paragraph, LCH SA would expand the
scope of the End of Day Contributed Prices in respect of CDS with a
Contractual Currency in U.S. Dollar to include Index Swaptions.
    In paragraph 5.18.5(b), LCH SA would remove the restriction to
Index Swaptions with a CDS Contractual Currency in Euro, and separate
the Delta Hedged Swaption Package into two sub-sections in order to
allow for the two different timings of iTraxx Swaptions and CDX
Swaptions.

B. Other Changes Unrelated to CDX Swaptions

    LCH SA is also proposing changes in the CDSClear Margin Framework
and the Supplement that LCH SA represented are unrelated to the CDX
Swaptions initiative.
    In section 3.9 of the CDSClear Margin Framework, LCH SA proposes
changes to align the methodology for calculating Vega Margin with LCH
SA's approach across all products and business segments. Vega Margin
captures the risk of volatility changes in the options premium relative
to the strikes, i.e., the skew risk and the risk of changes in the
volatility of volatility.\12\ To address a risk model validation
finding, LCH SA is proposing to change its risk model from a parametric
model to a historical model, using predefined scenarios to simulate the
risk of volatility change. This change in risk model would introduce
shocks on the volatility itself rather than solely on the calculation's
model parameters, as the current parametric model does. The proposed
historical model would use a new methodology that relies on four
regular and four stressed historical scenarios for each index family,
calibrated based on the worst skew risk and the volatility-of-
volatility risk at given confidence levels, as outlined below. Under
both models, Vega Margin represents an add-on amount to Spread Margin
(i.e., a component of Total Initial Margin that covers the worst losses
in the event of unfavorable credit spread and volatility moves) that
accounts for potential moves in implied volatility. LCH SA does not
expect that the proposed change from a parametric to a historical model
will have a significant Profit and Loss (``P&L'') impact on the
calculation of Vega Margin.\13\
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    \12\ See Notice, 85 FR at 64552.
    \13\ Id.
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    (a) LCH SA will develop the volatility scenarios using historical
data since April 3, 2007. For each index family, LCH SA would identify
historical scenarios by estimating the largest 5-day shifts in
volatility distance, at a given percentile, between At-The-Money
strikes and implied volatilities for options with a delta of 10%, 25%,
75% and 90%, to capture the deformation of volatility surface across
strikes.
    (b) LCH SA would calibrate the skew and smile scenarios related to
the option pricing against the worst volatility surface distortion
(i.e., the largest changes of the volatility distance as explained
above) at a given confidence level. LCH SA would derive these scenarios
from volatility shocks at each delta level described above, which LCH
SA will use to shift the end of day volatilities, at the corresponding
delta levels, to calibrate a set of shifted or Stochastic Volatility
Inspired (``SVI'') scenarios as shown in the updated table in paragraph
3.9.2.
    (c) LCH SA proposes to adjust the number of scenarios calculated
for each index family from eight to four, because

of the shocks that the new historical risk model will apply at
volatility level.
    In addition, LCH SA is proposing the following miscellaneous
changes in the CDSClear Margin Framework:
    (a) Section 3 provides the Total Initial Margin framework with
respect to both CDS and CDS Options. One component of the Total Initial
Margin framework is the Short Charge, an amount which accounts for the
risk of default by the underlying constituent entities of the relevant
index.\14\ While the methodology for calculating Short Charge margin in
section 3.1 would remain the same, LCH SA would amend the summary
language to specify that it includes the P&L impact of liquidating a
defaulting member's portfolio under one or two credit events.
Currently, the number of credit events that LCH SA considers is set to
two. The Risk Overview table in paragraph 3.2 also would reflect this
change. As per the model used for linear U.S. products, the Short
Charge amount would also cover the possibility of a default in respect
of an exposure representing the average net short exposure of the ten
(10) riskiest exposures with the defined recovery rate cap. Since the
approach in respect of iTraxx Swaptions only accounts for the risk of
default of the entity with the largest net short exposure, LCH SA is
amending the language to include the additional default risk that it
must take into account in respect of CDX Swaptions on CDX.NA.HY. As a
result of these changes, LCH SA would also remove the specific rule to
calculate the Financial Short Charge on Financial entities (which
covered the default risk by the two largest Financials entities
comprising the underlying constituent entities of the relevant index).
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    \14\ See Notice, 85 FR at 64553.
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    (b) LCH SA would remove a reference to a 10-year sample for the
Foreign Exchange rate from paragraph <IP_ADDRESS>, because it was not an
accurate description of how LCH SA computes the Foreign Exchange rate.
    (c) LCH SA also proposes to correct a typographical error in
paragraph 3.8.2 (double parenthesis and period missing).
    LCH SA also proposes several miscellaneous changes in the
Supplement for purposes of clarification or harmonization, as described
below.
    Specifically, in Part C of the Supplement, Section 9.1 (Creation of
Matched Pairs), LCH SA would add a principle governing the size of the
Matched Pairs that it would create in the context of a Restructuring or
an Exercise to align with equivalent provisions of Parts A and B of the
Supplement. LCH SA also proposes to remove the amounts of the Matched
Pair from Section 8.1 (Creation of Matched Pairs) of Parts A and Part B
of the Supplement, because LCH SA proposes that such amounts would be
set forth in a new Clearing Notice that outlines the maximum applicable
Matched Pair notional amounts. LCH SA represents that this proposed
change would allow for greater flexibility in adapting these amounts
according to market conditions and evolving open interest.\15\
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    \15\ See Notice, 85 FR at 64553.
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    In addition, LCH SA proposes to remove the conditional references
to ``if'' from Section 2.4 and Appendix XIII (Section 2.6) of Part B of
the Supplement and from Section 2.3 and Appendix VIII (Section 2.4) of
Part C of the Supplement, given that the Protocol Effectiveness
Condition as defined in the ISDA 2019 Narrowly Tailored Credit Event
(``NTCE'') Protocol published by the International Swaps and
Derivatives Association, Inc. (``ISDA'') on August 27, 2019 is now
satisfied. For consistency purposes, LCH SA would make an equivalent
amendment to Appendix XIII of Part A of the Supplement (Section 2.6) in
respect of the 2014 ISDA Credit Derivatives Definitions Protocol
published by ISDA on August 21, 2014.
    LCH SA would also remove references to the Implementation Date as
provided for in the 2019 ISDA NTCE Protocol from the definition of the
``iTraxx[supreg] Swaption Standard Terms Supplement'' in Section 1.2 of
Part C of the Supplement to refer to the current version of this
document which was published on March 20, 2017. LCH SA stated that at
the time that ISDA had drafted the 2019 ISDA NTCE Protocol-related
amendments and submitted them to the regulatory process, there was an
initial draft Swaption Standard Terms Supplement that took account of
this Protocol.\16\ LCH SA also stated that this draft did not progress,
and that the most recent, applicable version remains the version
published in 2017.\17\ Consequently, in Section 2.2 (Index Swaption
Cleared Transaction Confirmation) of Part C of the Supplement, LCH SA
would amend any confirmation in respect of a Swaption by specifying in
a new indent (d) that the Standard Terms Date applicable to the
underlying transaction of a Swaption will be the most updated version
of the Standard Terms Supplement. This change will ensure that the
applicable version is the one that has taken into account the 2019 ISDA
NTCE Protocol (i.e., the versions applicable to Markit iTraxx and CDX
published on the Implementation Date of such Protocol). As a result of
this change, LCH SA would renumber the indents in Section 2.2 from (e)
to (i).
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    \16\ See Notice, 85 FR at 64554.
    \17\ Id.
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    LCH SA also proposes to make the following corrections to the
Supplement:
    (a) In Sections 7.10 of Parts A and B, LCH SA would replace the
reference to a ``CDS Clearing Member'' with ``Clearing Member'' to use
the correct defined term.
    (b) In Sections 9.1 of Parts A and B, paragraph (c), LCH SA would
specify that the Self Referencing Transaction is a Clearing Member Self
Referencing Transaction to be consistent with the title of Section 9.1.
    (c) In Section 1.2 of Part B, in the definition of ``Index Cleared
Transaction Confirmation,'' LCH SA would insert the correct name of the
publisher of the documentation for Markit CDX.
    (d) In Section 1.2 of Part C, LCH SA would correct a typographical
error in the definition of ``Swaption Restructuring Cleared
Transaction'' and remove the word ``Eligible'' from the definition of
``Underlying Index Transaction'' as an Eligible Index Swaption is not a
defined term.
    (e) In Appendix VIII of Part C, LCH SA would remove the definitions
from Section 1 as these terms are already defined in Section 1.2 of
Part C.

III. Commission Findings

    Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
the proposed rule change is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to the
organization.\18\ For the reasons given below, the Commission finds
that the proposed rule change is consistent with Section 17A(b)(3)(F)
of the Act \19\ and Rule 17Ad-22(e)(6)(i) thereunder.\20\
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    \18\ 15 U.S.C. 78s(b)(2)(C).
    \19\ 15 U.S.C. 78q-1(b)(3)(F).
    \20\ 17 CFR 240.17Ad-22(e)(6)(i).
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A. Consistency With Section 17A(b)(3)(F) of the Act

    Section 17A(b)(3)(F) of the Act requires, among other things, that
the rules of LCH SA be designed to promote the prompt and accurate
clearance and settlement of securities transactions and, to the extent
applicable, derivative agreements, contracts, and transactions and to
assure the safeguarding of securities and funds which are in the

custody or control of LCH SA or for which it is responsible.\21\
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    \21\ 15 U.S.C. 78q-1(b)(3)(F).
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    As described above in Section II.A, LCH SA is proposing to revise
its CDSClear Margin Framework, Supplement, and Procedures in order to
extend their applicability to CDX Swaptions. For example, the proposed
change to the Daily Contributions Assessment in the CDSClear Margin
Framework would require Members to make price contributions on CDX
Swaptions for all strikes that are multiples of 2.5 basis points for
CDX.NA.IG and 0.5 cents for CDX.NA.HY of a given expiry when Members
have at least one open position on one strike for that expiry. The
revisions to the Supplement would allow the clearing of CDX Swaptions
by amending various definitions to make them applicable to CDS
Swaptions. The Procedures similarly would be revised to include CDX
Swaptions in, for example, the scope of the End of Day Price
Contribution. The language in the Short Charge component of the total
initial margin has also been amended to include the additional default
risk that must be taken into account with CDX Swaptions. The Commission
understands that, taken together, these changes would amend LCH SA's
risk management system and clearing procedures to ensure that LCH SA
can appropriately manage the risks of transactions in CDX Swaptions
and, in turn, to help ensure that LCH SA has sufficient financial
resources. The Commission therefore believes that these changes would
promote the prompt and accurate clearance and settlement of CDX
Swaptions. Similarly, given that mismanagement of the risks associated
with clearing CDX Swaptions could cause LCH SA to realize losses on
such transactions and threaten its ability to operate, thereby
threatening access to securities and funds in LCH SA's control, the
Commission believes that the proposed rule change would help assure the
safeguarding of securities and funds which are in the custody or
control of LCH SA or for which it is responsible.
    LCH SA is also proposing miscellaneous changes that are unrelated
to CDX Swaptions. For instance, LCH SA is proposing corrections to
various terminology in the Supplement (replacing reference in Section
7.10 of Parts A and B to a ``CDS Clearing Member'' with the correct
defined term ``Clearing Member,'' specifying in Section 9.1 of Parts A
and B that the Self Referencing Transaction is a Clearing Member Self
Referencing Transaction, removing the term ``Eligible'' from the
definition of ``Underlying Index Transaction'' in Section 1.2 of Part C
as a typographical error), as well as wording changes to reflect the
fact that the Protocol Effectiveness Condition with regard to the 2019
ISDA NTCE Protocol published by ISDA on August 27, 2019 is now
satisfied along with the various clean-up and typographical changes.
The Commission believes that these clarifications strengthen LCH SA's
risk management documents with clear and up-to-date information, which
in turn is consistent with protecting investors and the public
interest.
    LCH SA is also proposing changes to the Vega Margin methodology.
Specifically, LCH SA is proposing to transition from a parametric model
to a historical model, using predefined scenarios to simulate the risk
of volatility change. The Commission believes that this proposed change
will enable LCH SA to more accurately capture changes in option value
due to volatility and generate margins commensurate with the risks and
attributes of CDS and CDS options, which in turn will enhance LCH SA's
ability to manage the risks of transactions in CDX Swaptions and
ultimately to promptly and accurately settle securities transactions
and safeguard funds and securities.
    For the reasons stated above, the Commission finds that the
proposed rule change is consistent with Section 17A(b)(3)(F) of the
Act.\22\
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    \22\ 15 U.S.C. 78q-1(b)(3)(F).
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B. Consistency With Rule 17Ad-22(e)(6)(i)

    Rule 17Ad-22(e)(6)(i) requires that LCH SA establish, implement,
maintain, and enforce written policies and procedures reasonably
designed, as applicable, to cover its credit exposures to its
participants by establishing a risk-based margin system that, at a
minimum considers, and produces margin levels commensurate with, the
risks and particular attributes of each relevant product, portfolio,
and market.\23\
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    \23\ 17 CFR 240.17Ad-22(e)(6)(i).
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    As noted above, the proposal would amend the CDSClear Margin
Framework with respect to the Short Charge component of the total
initial margin to include the additional default risk that must be
taken into account with options on CDX.NA.HY. Such a change is
necessary because the current approach with iTraxx Swaptions only
accounts for the risk of default of the entity with the largest net
short exposure, and the CDX Swaptions approach covers the possibility
of a default in respect of an exposure representing the average net
short exposure of the ten riskiest exposures with the defined recovery
rate cap, which is an additional default risk posed by CDX Swaptions.
The Commission therefore believes that this proposed change would
enhance LCH SA's risk-based margin system by considering and producing
margin levels commensurate with the risks and particular attributes of
CDX Swaptions.
    The Commission also believes that the proposed rule changes to add
the new methodology for calculating Vega Margin, based on a historical
model approach rather than a parametric model, to account for the skew
risk and volatility-of-volatility risk specific to CDS Options would
likewise strengthen LCH SA's ability to produce margins commensurate
with these products because this proposed approach would be based on
known, rather than unobservable, parameters used in assessing the value
of an option.
    For these reasons, the Commission finds that the proposed rule
change is consistent with Rule 17Ad-22(e)(6)(i).\24\
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    \24\ 17 CFR 240.17Ad-22(e)(6)(i).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as modified by Partial Amendment No. 1, 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-LCH SA-2020-005 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-LCH SA-2020-005. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the

Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of LCH SA and on LCH SA's website
at: https://www.lch.com/resources/rulesand-regulations/proposed-rule-changes-0. 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-LCH SA-2020-005 and should
be submitted on or before December 24, 2020.

V. Accelerated Approval of the Proposed Rule Change, as Modified by
Partial Amendment No. 1

    The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\25\ to approve the proposed rule change prior to the 30th day
after the date of publication of Partial Amendment No. 1 in the Federal
Register. As discussed above, Partial Amendment No. 1 amends the
Reference Guide: CDS Margin Framework to reflect all of the changes
discussed in this Order. By updating the Reference Guide: CDS Margin
Framework to reflect all of the changes being made, Partial Amendment
No. 1 ensures that the exhibit 5C accurately reflects all intended rule
changes and is designed, in general, to protect investors and the
public interest, consistent with Section 17A(b)(3)(F) of the Act.
Accordingly, the Commission finds good cause for approving the proposed
rule change, as modified by Partial Amendment No. 1, on an accelerated
basis, pursuant to Section 19(b)(2) of the Exchange Act.\26\
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).
    \26\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act,
and in particular, with the requirements of Section 17A(b)(3)(F) of the
Act \27\ and Rule 17Ad-22(e)(6)(i) thereunder.\28\
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78q-1(b)(3)(F).
    \28\ 17 CFR 240.17Ad-22(e)(6)(i).
---------------------------------------------------------------------------

    It is therefore ordered pursuant to Section 19(b)(2) of the Act
\29\ that the proposed rule change, as modified by Partial Amendment
No. 1 (SR-LCH SA-2020-005), be, and hereby is, approved.\30\
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78s(b)(2).
    \30\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-26597 Filed 12-2-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 197 (Friday, October 13, 2017)]
[Rules and Regulations]
[Pages 47629-47630]
[FR Doc No: 2017-22094]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2017-0454; FRL-9969-28-Region 4]

Air Plan Approval: North Carolina; Transportation Conformity

AGENCY: Environmental Protection Agency (EPA).

ACTION: Withdrawal of direct final rule.

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

SUMMARY: Due to the receipt of an adverse comment, the Environmental
Protection Agency (EPA) is withdrawing the August 16, 2017, direct
final rule that approves a North Carolina state implementation plan
(SIP) revision related to transportation conformity requirements. EPA
will address the comment in a subsequent final action

based upon the proposed rulemaking action, also published on August 16,
2017. EPA will not institute a second comment period on this action.

DATES: The direct final rule published at 82 FR 38838, on August 16,
2017, is withdrawn, effective October 13, 2017.

FOR FURTHER INFORMATION CONTACT: Kelly Sheckler, Air Regulatory
Management Section, Air Planning and Implementation Branch, Air,
Pesticides and Toxics Management Division, U.S. Environmental
Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia
30303-8960. The telephone number is<PHONE_NUMBER>. Ms. Sheckler can
also be reached via electronic mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: On August 16, 2017 (82 FR 38838), EPA
published a direct final rule approving portions of a SIP revision
submitted by the State of North Carolina through the North Carolina
Department of Environment and Natural Resources (now the North Carolina
Department of Environmental Quality) to clarify the applicability of
the State's transportation conformity rules. EPA took a direct final
action to approve changes to regulation 15A NCAC Subchapter 2D, section
.2001, purpose, scope and applicability related to North Carolina's
transportation conformity provisions.
    In the direct final rule, EPA explained that the Agency was
publishing the rule without prior proposal because the Agency viewed
the submittal as a non-controversial SIP amendment and anticipated no
adverse comments. Further, EPA explained that the Agency was publishing
a separate document in the proposed rules section of the Federal
Register to serve as the proposal to approve the SIP revision should an
adverse comment be filed. EPA also noted that the rule would be
effective generally 30 days after the close of the public comment
period, without further notice unless the Agency received adverse
comment by the close of the public comment period. EPA explained that
if the Agency received such comments, then EPA would publish a document
withdrawing the final rule and informing the public that the rule would
not take effect. It was also explained that all public comments
received would then be addressed in a subsequent final rule based on
the proposed rule, and that EPA would not institute a second comment
period on this action.
    EPA received one adverse comment from a single Commenter on the
aforementioned rule. As a result of the comment received, EPA is
withdrawing the direct final rule approving the aforementioned changes
to the North Carolina SIP. EPA will address the comment in a separate
final action based on the proposed action also published on August 16,
2017 (82 FR 38864). EPA will not open a second comment period for this
action.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Particulate matter, Reporting
and recordkeeping requirements.

    Dated: September 29, 2017.
Onis ``Trey'' Glenn, III,
Regional Administrator, Region 4.

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
Accordingly, the amendment to 40 CFR 52.1770(c) published on August 16,
2017 (82 FR 38838), is withdrawn effective October 13, 2017.

[FR Doc. 2017-22094 Filed 10-12-17; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register Volume 76, Number 212 (Wednesday, November 2, 2011)]
[Proposed Rules]
[Pages 67628-67631]
[FR Doc No: 2011-28361]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2011-1188; Directorate Identifier 2008-SW-46-AD]
RIN 2120-AA64

Airworthiness Directives; Bell Helicopter Textron, Inc. (Bell)
Model 204B, 205A, 205A-1, 205B, and 212 Helicopters

AGENCY: Federal Aviation Administration, DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: This document proposes superseding four existing airworthiness
directives (ADs) for the specified Bell model helicopters. Two of the
existing ADs require an initial and repetitive inspection of certain
part-numbered main rotor yokes installed on Bell Model 204B, 205A-1,
and 212 helicopters. Two other existing ADs also establish a retirement
life of 3,600 hours time-in-service (TIS) for certain part-numbered
main rotor yokes installed on the Bell Model 204, 205 series, and 212
series helicopters. Those ADs were prompted by reports of cracks in the
main rotor yoke (yoke). This action would retain the requirements of
the existing ADs and would apply these inspections and retirement lives
to additional part-numbered yokes. This action would also increase the
inspection frequency for certain yokes installed on a Bell Model 205B
or 212 helicopter and would require replacing any unairworthy yoke.
This proposal is prompted by the need to expand the applicability to
include yokes produced under a Parts Manufacturing Approval (PMA) whose
design approval was based on identicality with the affected Bell yoke
parts and a recent discovery of a cracked yoke. The actions specified
by the proposed AD are intended to prevent cracking of a yoke, failure
of the yoke, and subsequent loss of control of the helicopter.

DATES: Comments must be received on or before January 3, 2012.

ADDRESSES: Use one of the following addresses to submit comments on
this proposed AD:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
    You may get the service information identified in this proposed AD
from Bell Helicopter Textron, Inc., P.O. Box 482, Fort Worth, TX 76101,
telephone<PHONE_NUMBER>, fax<PHONE_NUMBER>, or at http://www.bellcustomer.com/files/.

FOR FURTHER INFORMATION CONTACT: Michael Kohner, Aviation Safety
Engineer, FAA, Rotorcraft Directorate, Rotorcraft Certification Office,
2601 Meacham Blvd., Fort Worth, Texas 76137, telephone<PHONE_NUMBER>,
fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to submit any written data, views, or arguments
regarding this proposed AD. Send your comments to the address listed
under the caption ADDRESSES. Include the docket number ``FAA-2011-1188,
Directorate Identifier 2008-SW-46-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of the proposed AD. We will
consider all comments received by the closing date and may amend the
proposed AD in light of those comments.
    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact
with FAA personnel concerning this proposed rulemaking. Using the
search function of our docket web site, you can find and read the
comments to any of our dockets, including the name of the individual
who sent or signed the comment. You may review the DOTs complete
Privacy Act Statement in the Federal Register published on April 11,
2000 (65 FR 19477-78).

Examining the Docket

    You may examine the docket that contains the proposed AD, any
comments, and other information on the internet at http://www.regulations.gov or in person at the Docket Operations office
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The Docket Operations office (telephone<PHONE_NUMBER>) is
located in Room W12-140 on the ground floor of the West Building at the
street address stated in the ADDRESSES section. Comments will be
available in the AD docket shortly after receipt.

Discussion

    On September 13, 1979, we issued AD 79-20-05, Docket No. 79-ASW-25,
Amendment 39-3572 (44 FR 55556, September 27, 1979) for Bell Model
204B, 205A-1, and 212 helicopters. That AD requires an initial and
repetitive inspection at 2,400-hour intervals and corrosion protection
and sealing of the yoke, P/N 204-011-102, of the main rotor hub
assembly (hub), P/N 204-012-101. We issued Amendment 39-3626, November
21, 1979 (44 FR 70123, December 6, 1979) and Amendment 39-3662 January
3, 1980 (45 FR 6922, January 31, 1980) to AD 79-20-05. The amendments
to the AD deleted references to the radius in the bottom of the pillow
block bushing holes because the cracks did not initiate there. The
cracks originated in the side of the hole near the top or through the
center section of the yoke adjacent to the data plate.
    On August 26, 1981, we issued AD 81-19-01, Amendment 39-4207,
Docket 81-ASW-38 (46 FR 45595, September 14, 1981) for Bell Model 212
series helicopters. We also issued AD 81-19-02, Amendment 39-4208,
Docket 81-ASW-40 (46 FR 45595, September 14, 1981) for Bell Model 204
and 205 series helicopters. These ADs established a retirement life of
3,600 hours TIS for certain yokes installed on these model helicopters.
These yokes previously did not have a retirement life. AD 81-19-01 also
reduced the yoke retirement life below 3,600 hours TIS for those yokes
installed on Model 212 helicopters used in external load operations
involving more than four lifts per hour by requiring the operators to
log additional hours for these type operations against the retirement
life of the yoke. These ADs were prompted by three field reports of
cracked yokes. These ADs were intended to establish retirement lives to
prevent yoke failure and subsequent loss of control of the helicopter.
    On March 4, 1993, we issued AD 93-05-01, Amendment 39-8507, Docket
No. 92-ASW-13 (58 FR 13700, March 15, 1993), for the Bell Model 212
helicopters to require repetitive inspections of yoke, P/N 204-011-102

(all dash numbers). That action was prompted by 12 reports of cracking
at the pillow block holes on yokes installed on Model 212 helicopters.
That AD was intended to detect corrosion pitting and a crack in the
pillow block bolt bushing holes of the yoke and to prevent failure of
the main rotor system and subsequent loss of control of the helicopter.
    After issuing ADs 79-20-05, 81-19-01, and 81-19-02, Bell has
introduced a replacement stainless steel yoke, P/N 212-011-102. Bell
issued Alert Service Bulletins (ASBs) Nos. 204-92-36, 205-92-51, and
212-92-80, all dated October 23, 1992. The ASBs specify replacing the
yoke, P/N 204-011-102 (all dash numbers), by December 31, 1993. These
ASBs also specify replacing the yoke with yoke, P/N 212-011-102-105 or
-109, depending on the helicopter configuration. The replacement
stainless steel yokes have improved design characteristics addressing
the corrosion problems and are not subject to any heavy lift cycle
counting required for previous yokes installed on the Model 205B and
212 helicopters.
    The FAA also issued PMAs to Air Services International (ASI) for
yokes, P/N ASI-4011-102, and to Arizona Aeroparts International (AAI)
for yokes, P/N AAI-4011-102, both based on identicality with the Bell-
manufactured yoke, P/N 204-011-102. The yokes manufactured under the
PMAs are eligible for installation on Bell Model 204B, 205A, 205A-1,
and 212 helicopters.
    Transport Canada recently contacted the FAA about a PMA yoke, P/N
AAI-4011-102-125, manufactured by AAI. A Canadian operator reported
this part was no longer supported by the PMA-manufacturer. The Canadian
operator was trying to determine if the inspections in the existing ADs
applicable to the Bell yoke, P/N 204-011-102, needed to be performed on
the PMA-manufactured yokes as well. Both of these PMA companies have
gone out of business. There is no longer an FAA-approved PMA holder for
these PMA yokes. This results in no continued operational safety
oversight of the PMA parts by the manufacturer that produced the parts
that were sold to operators. Because the PMA yokes are identical to the
Bell parts, these yokes are susceptible to the same cracking conditions
found in the same Bell part-numbered yokes.
    This AD action proposes to give operators credit for the
accumulated operating time on yokes, P/N 204-011-102 (all dash
numbers), previously determined and recorded by following ADs 81-19-01
or 81-19-02; or the applicable Bell Model 204B, 205A-1, 205B, or 212
maintenance manuals, which results in equal or higher accumulated
factored hours TIS. However, these values must be included for
previously accumulated service time in the calculations of the
accumulated total factored hours TIS. Any additional factored hours TIS
would be determined for each yoke using the hours TIS factors in the
proposed AD.
    This proposal is prompted by the need to expand the applicability
to include yokes produced under a PMA whose design approval was based
on identicality with the affected Bell yoke parts and also a recent
discovery of a cracked yoke on a Bell Model 212 helicopter.
    The previously described unsafe condition is likely to exist or
develop on other helicopters of these same type designs. We estimate 25
to 30 of the yokes manufactured under a PMA may still be installed on
helicopters operating in the U.S. Therefore, the proposed AD would
supersede the previously issued ADs and would require:
     For helicopters with yoke, P/N AAI-4011-102 (all dash
numbers) and ASI-4011-102 (all dash numbers), installed, within 100
hours TIS, unless accomplished previously, creating a component history
card or equivalent record for each yoke; determining the model for each
helicopter on which the yoke has been installed from the time the yoke
had zero hours TIS; calculating the factored hours TIS for each type of
operation and rate of external load lifts and takeoffs for each hour
TIS accumulated on each yoke; and recording the accumulated total
factored hours TIS on the component history card or equivalent record
for each yoke. Continuing to factor the hours TIS for each yoke and
recording the additional factored hours TIS on the component history
card or equivalent record. Tracking these factored hours TIS is only
for the purpose of establishing a retirement life and not to be counted
against the hours TIS used to track inspection intervals.
     For helicopters with yoke, P/N 204-011-102 (all dash
numbers), installed, before further flight, unless accomplished
previously:
    [cir] Calculating the total factored hours TIS on the yoke for
hours TIS accumulated before the effective date of this AD using the
same requirements as ADs 81-19-01 and 81-19-02, which establishes the
starting point for the new factoring of hours TIS contained in this AD.
    [cir] Calculating and recording the factored hours TIS on the yoke
for hours TIS accumulated after the effective date of this AD using the
same requirements as used for calculating the total factored hours TIS
in this AD for yokes, P/N AAI-4011-102 (all dash numbers) and ASI-4011-
102 (all dash numbers).
     Revising the Airworthiness Limitations section of the
applicable maintenance manuals or the Instructions for Continued
Airworthiness (ICAs) by establishing or continuing a retirement life of
3,600 Total Factored Hours TIS for each yoke.
     Recording a life limit of 3,600 Total Factored Hours TIS
for each yoke on the component history card or equivalent record.
     Within 100 hours TIS or 600 hours TIS since the last
magnetic particle inspection (MPI) of the yoke, whichever occurs later,
and thereafter at intervals not to exceed 600 hours TIS, for any yoke
installed on any Model 205B or 212 helicopter:
    [cir] Removing the yoke from the hub. Using a 5-power or higher
magnifying glass, visually inspecting each pillow block bushing hole,
spindle radius, and center section web for any corrosion or mechanical
damage.
    [cir] Performing an MPI of each yoke for a crack.
     Within 100 hours TIS or 2,400 hours TIS since the last MPI
of the yoke, whichever occurs later, and thereafter at intervals not to
exceed 2,400 hours TIS, for any yoke installed on any Model 204B, 205A,
or 205A-1 helicopter:
    [cir] Removing the yoke from the hub. Using a 5-power or higher
magnifying glass, visually inspect each pillow block bushing hole,
spindle radius, and center section web for any corrosion or mechanical
damage.
    [cir] Performing an MPI of each yoke for a crack.
     Before further flight, replacing each yoke with an
airworthy yoke if:
    [cir] The yoke has 3,600 or more Total Factored Hours TIS;
    [cir] The Total Factored Hours TIS for the yoke is unknown and
cannot be determined;
    [cir] The yoke has any corrosion or mechanical damage that exceeds
any of the maximum repair damage limits; or
    [cir] The yoke has a crack.
    We estimate that this proposed AD would affect about 15 helicopters
of U.S. registry and would take about:
     3 work hours to review the helicopter records and
determine the total factored hours TIS (the cost of tracking the total
factored flight hours will be negligible),
     35 work hours to remove the yoke from the helicopter and
do a visual inspection and MPI, and

     32 work hours to replace a yoke, at an average labor rate
of $85 per work hour per helicopter.
     Required parts would cost about $40,157 per helicopter.

Based on these figures, we estimate the total cost of the proposed AD
on U.S. operators to be $48,450, assuming 15 helicopters have a yoke
installed requiring a review of the helicopter records and to determine
the hours TIS with one visual inspection and MPI, and no yoke needs to
be replaced. If we assume all the yokes in the fleet are replaced, the
total cost would be about $643,155.

Regulatory Findings

    We have determined that this proposed AD would not have federalism
implications under Executive Order 13132. Additionally, this proposed
AD would not have a substantial direct effect on the States, on the
relationship between the national Government and the States, or on the
distribution of power and responsibilities among the various levels of
government.
    For the reasons discussed above, I certify that the proposed
regulation:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a draft economic evaluation of the estimated costs to
comply with this proposed AD. See the AD docket to examine the draft
economic evaluation.

Authority for This Rulemaking

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

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Safety.

The Proposed Amendment

    Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

    2. Section 39.13 is amended by removing Amendments 39-8507 (58 FR
13700, March 15, 1993); 39-4208 (46 FR 45595, September 14, 1981); 39-
4207 (46 FR 45595, September 14, 1981); 39-3662 (45 FR 6922, January
31, 1980); 39-3626 (44 FR 70123, December 6, 1979); and 39-3572 (44 FR
55556, September 27, 1979); and by adding a new airworthiness directive
(AD) to read as follows:

Bell Helicopter Textron, Inc (Bell): Docket No. FAA-2011-1188;
Directorate Identifier 2008-SW-46-AD. Supersedes AD 93-05-01,
Amendment 39-8507, Docket No. 92-ASW-13; AD 81-19-02, Amendment 39-
4208, Docket No. 81-ASW-40; AD 81-19-01, Amendment 39- 4207, Docket
No. 81-ASW-38; and AD 79-20-05, Amendments 39-3662, 39-3626, and 39-
3572, Docket No. 79-ASW-25.

    Applicability: Model 204B, 205A, 205A-1, 205B, and 212
helicopters, with a main rotor yoke (yoke), part number (P/N) AAI-
4011-102 (all dash numbers), ASI-4011-102 (all dash numbers), or
204-011-102 (all dash numbers), installed, certificated in any
category.
    Compliance: Required as indicated.
    To prevent cracking of a yoke, failure of a yoke, and subsequent
loss of control of the helicopter, do the following:
    (a) For helicopters with yoke, P/N AAI-4011-102 (all dash
numbers) and ASI-4011-102 (all dash numbers), installed, within 100
hours time-in-service (TIS), unless accomplished previously:
    (1) Create a component history card or equivalent record for
each yoke.
    (2) Determine the model for each helicopter on which the yoke
has been installed from the time the yoke had zero hours TIS.
    (3) In accordance with the rate per hour categories shown in
Table 1 of this AD, categorize the accumulated ``Unfactored Hours
TIS'' on each yoke by determining the types of operation AND the
rate per hour of external load lifts and takeoffs for each hour TIS
accumulated on each yoke. One external load lift occurs each time
the helicopter picks up an external load and drops it off. For
determining the proper rate per hour category for external load
operations, any external load lift in which the helicopter achieves
a vertical altitude difference of greater than 200 feet indicated
altitude between the pickup and drop-off point counts as two
external load lifts.

                                     Table 1--Factored Hours TIS for a Yoke
----------------------------------------------------------------------------------------------------------------
                                                                                Factored hours
                                                   Rate per hour of                               TIS on yoke
       Helicopter model              Types of        external load    Unfactored   Hours TIS   (unfactored hours
                                    operation          lifts and      hours TIS      factor     TIS x hours TIS
                                                       takeoffs                                     factor)
----------------------------------------------------------------------------------------------------------------
Yokes installed on any Model    All Operations...  All.............          120            1                120
 204B, 205A, or 205A-1
 helicopter.
Yokes installed on any Model    External Load      1 to 5..........          105            1                105
 205B or 212 helicopter.         Operations \1\.
                                                   5.1 to 8........  ...........          1.5  .................
                                                   8.1 to 12.......  ...........            2  .................
                                                   12.1 to 18......  ...........            3  .................
                                                   18.1 to 32......          170            5                850
                                                   32.1 to 48......  ...........            7  .................
                                                   48.1 or above...  ...........            9  .................
                                                   Unknown.........           50            7                350

                                Internal Load      All Takeoffs....        2,025            1              2,025
                                 Operations.
                               ---------------------------------------------------------------------------------
    Total Factored Hours TIS    .................  ................  ...........  ...........              3,450
     on Yoke (Summation of the
     Factored Hours TIS).
----------------------------------------------------------------------------------------------------------------
\1\ For the purposes of this AD, an external load operation occurs each time a helicopter picks up an external
  load and drops it off. Any external load lift in which the helicopter achieves a vertical altitude difference
  of greater than 200 feet indicated attitude between the pick-up and drop-off point counts as two external load
  lifts in determining the proper rate per hour category.

    Note 1: The number of unfactored hours TIS and factored hours
TIS contained in Table 1 of this AD are examples and presented for
illustration purposes only.

    (4) By reference to Table 1 of this AD, enter the ``Unfactored
Hours TIS'' for each category as determined by paragraph (a)(3) of
this AD. Calculate the ``Factored Hours TIS'' by multiplying the
``Unfactored Hours TIS'' by the ``Hours TIS Factor.'' Determine the
accumulated ``Total Factored Hours TIS'' on each yoke by adding the
factored hours TIS for each type of operation and helicopter model.
Tracking the Total Factored Hours TIS is only for establishing a
retirement life and not for tracking inspection intervals.
    (5) Record the accumulated Total Factored Hours TIS on the
component history card or equivalent record for each yoke.
    (6) Continue to factor the hours TIS for each yoke by following
paragraph (a)(2) through (a)(4) of this AD, and record the
additional factored hours TIS on the component history card or
equivalent record.
    (b) For helicopters with yoke, P/N 204-011-102 (all dash
numbers), installed, before further flight, unless accomplished
previously:
    (1) For hours TIS accumulated before the effective date of this
AD, calculate and record the Total Factored Hours TIS as follows:
    (i) For the Model 212 helicopters, 1 hour TIS in which passenger
or internal cargo was carried equals 1 factored hour TIS; 1 hour TIS
where more than 4 external load lifts occurred equals 5 factored
hours TIS.
    (ii) For the Model 204 and 205 series helicopters, 1 hour TIS
equals 1 factored hour TIS.

    Note 2: Paragraph (b)(1) gives credit to the operators for
compliance with ADs 81-19-01 and 81-19-02 in establishing the
starting point for the new factoring of hours TIS contained in this
AD.

    Note 3: The accumulated Total Factored Hours TIS for yoke, P/N
204-011-102 (all dash numbers), calculated in accordance with the
applicable Bell Model 204B, 205A-1, 205B, or 212 maintenance
manuals, which results in an equal or higher accumulated Total
Factored Hours TIS is an acceptable alternative to meeting the
factoring requirements of AD 81-19-01 (contained in Bell ASB 212-81-
23, dated June 22, 1981, for the Model 212 helicopters) and AD 81-
19-02 (contained in Bell ASBs 204-81-11 and 205-81-16, both dated
June 22, 1981, for the Model 204 and 205 series helicopters).

    (2) For hours TIS accumulated after the effective date of this
AD, calculate and record the factored hours TIS on the yoke in
accordance with the requirements of paragraphs (a)(1) thorough
(a)(6) of this AD.
    (c) Revise the Airworthiness Limitations section of the
applicable maintenance manuals or the Instructions for Continued
Airworthiness (ICAs) by establishing a new retirement life of 3,600
Total Factored Hours TIS for each yoke, P/N AAI-4011-102 (all dash
numbers), ASI-4011-102 (all dash numbers), or 204-011-102 (all dash
numbers), by making pen and ink changes or inserting a copy of this
AD into the Airworthiness Limitations section of the maintenance
manual or ICAs.
    (d) Unless accomplished previously, record a life limit of 3,600
Total Factored Hours TIS for each yoke, P/N AAI-4011-102 (all dash
numbers), ASI-4011-102 (all dash numbers), or 204-011-102 (all dash
numbers), on the component history card or equivalent record.
    (e) Within 100 hours TIS or 600 hours TIS since the last
magnetic particle inspection (MPI) of the yoke, whichever occurs
later, and thereafter at intervals not to exceed 600 hours TIS, for
any yoke installed on any Model 205B or 212 helicopter:
    (1) Remove the yoke from the main rotor hub assembly (hub).
Using a 5-power or higher magnifying glass, visually inspect each
pillow block bushing hole, spindle radius, and center section web
for any corrosion or mechanical damage.
    (2) Perform an MPI of each yoke for a crack.

    Note 4: MPI procedures are contained in Bell Standard Practices
Manual BHT-ALL-SPM.

    (f) Within 100 hours TIS or 2,400 hours TIS since the last MPI
of the yoke, whichever occurs later, and thereafter at intervals not
to exceed 2,400 hours TIS, for any yoke installed on any Model 204B,
205A, or 205A-1 helicopter:
    (1) Remove the yoke from the hub. Using a 5-power or higher
magnifying glass, visually inspect each pillow block bushing hole,
spindle radius, and center section web for any corrosion or
mechanical damage.
    (2) Perform an MPI of each yoke for a crack.
    (g) Before further flight, replace each yoke with an airworthy
yoke if:
    (1) The yoke has 3,600 or more Total Factored Hours TIS; or
    (2) The Total Factored Hours TIS for the yoke is unknown and
cannot be determined; or
    (3) The yoke has any corrosion or mechanical damage that exceeds
any of the maximum repair damage limits; or

    Note 5: The applicable Bell Component and Repair Overhaul Manual
contains the maximum repair damage limitations.

    (4) The yoke has a crack.
    (h) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Contact the Manager, Rotorcraft Certification Office, FAA, ATTN:
Michael Kohner, Aviation Safety Engineer, Rotorcraft Directorate,
2601 Meacham Blvd., Fort Worth, Texas 76137, telephone (817) 222-
5170, fax<PHONE_NUMBER>, for information about previously approved
alternative methods of compliance.
    (i) Special flight permits may only be issued under 14 CFR
21.197 and 21.199 for the purpose of operating the helicopter to a
location where the MPI requirements of paragraphs (e) or (f) of this
AD can be performed.
    (j) The Joint Aircraft System Component (JASC) Code is 6220:
Main Rotor Head Issued in Fort Worth, Texas, on October 21, 2011.

Lance T. Gant,
Acting Manager, Rotorcraft Directorate, Aircraft Certification Service.
[FR Doc. 2011-28361 Filed 11-1-11; 8:45 am]
BILLING CODE 4910-13-P