[Federal Register Volume 77, Number 105 (Thursday, May 31, 2012)]
[Proposed Rules]
[Pages 32057-32060]
[FR Doc No: 2012-13169]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2012-0497; Directorate Identifier 2011-NM-140-AD]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to supersede an existing airworthiness directive
(AD) that applies to certain The Boeing Company Model 777-200, -200LR,
-300, and -300ER series airplanes. The existing AD currently requires
inspecting for scribe lines in the skin along lap joints, butt joints,
certain external doublers, and the large cargo door hinges, and related
investigative and corrective actions if necessary. Since we issued that
AD, we have determined that scribe lines could occur where external
decals are installed or removed across lap joints, large cargo door
hinges, or external doublers. This proposed AD would add inspecting for
scribe lines where external decals have been applied or removed across
lap joints, large cargo door hinges, and external doublers, and related
investigative and corrective actions if necessary. We are proposing
this AD to detect and correct scribe lines which can develop into
fatigue cracks in the skin. Undetected fatigue cracks can grow and
cause sudden decompression of the airplane.

DATES: We must receive comments on this proposed AD by July 16, 2012.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room

W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For service information identified in this proposed AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; phone: 206-
544-5000, extension 1; fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
Internet: https://www.myboeingfleet.com. You may review copies of the
referenced service information at the FAA, Transport Airplane
Directorate, 1601 Lind Avenue SW., Renton, Washington. For information
on the availability of this material at the FAA, call<PHONE_NUMBER>.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Management Facility
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this proposed AD, the regulatory
evaluation, any comments received, and other information. The street
address for the Docket Office (phone:<PHONE_NUMBER>) is in the ADDRESSES
section. Comments will be available in the AD docket shortly after
receipt.

FOR FURTHER INFORMATION CONTACT: Berhane Alazar, Aerospace Engineer,
Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office
(ACO), 1601 Lind Avenue SW., Renton, Washington 98057-3356; phone: 425-
917-6577; fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2012-0497;
Directorate Identifier 2011-NM-140-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD because 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 we
receive about this proposed AD.

Discussion

    On November 12, 2009, we issued AD 2009-24-08, Amendment 39-16096
(74 FR 62217, November 27, 2009), for certain Model 777-200, -200LR, -
300, and -300ER series airplanes. That AD requires inspections for
scribe lines in the skin along lap joints, butt joints, certain
external doublers, and the large cargo door hinges, and related
investigative and corrective actions if necessary. That AD resulted
from reports of scribe lines found at lap joints and butt joints,
around external doublers, and at locations where external decals had
been removed. We issued that AD to detect and correct scribe lines,
which can develop into fatigue cracks in the skin. Undetected fatigue
cracks can grow and cause sudden decompression of the airplane.

Actions Since Existing AD 2009-24-08, Amendment 39-16096 (74 FR 62217,
November 27, 2009) Was Issued

    Since we issued AD 2009-24-08, Amendment 39-16096 (74 FR 62217,
November 27, 2009), we have determined that scribe lines could occur
where external decals are installed or removed across lap joints, large
cargo door hinges, and external doublers. AD 2009-24-08 had exempted
those areas from the required inspections. Those areas need to be
inspected in order to address the identified unsafe condition.

Relevant Service Information

    We reviewed Boeing Service Bulletin 777-53A0054, Revision 1, dated
November 4, 2010. We referred to Boeing Alert Service Bulletin 777-
53A0054, dated August 7, 2008, as the appropriate source of service
information for accomplishing the required actions of AD 2009-24-08,
Amendment 39-16096 (74 FR 62217, November 27, 2009). Boeing Service
Bulletin 777-53A0054, Revision 1, dated November 4, 2010, describes an
additional inspection to determine where external decals have been
applied or removed across lap joints, large cargo door hinges, and
external doublers on airplanes and areas that were previously
determined to not require inspections as specified by the original
issue of this service information (because the airplane had never been
stripped or repainted). Where external decals have been applied or
removed, Boeing Service Bulletin 777-53A0054, Revision 1, dated
November 4, 2010, describes inspecting for scribe lines, and related
investigative and corrective actions previously specified in the
original issue of this service information.

FAA's Determination

    We are proposing this AD because we evaluated all the relevant
information and determined the unsafe condition described previously is
likely to exist or develop in other products of the same type design.

Proposed AD Requirements

    This proposed AD would retain all requirements of AD 2009-24-08,
Amendment 39-16096 (74 FR 62217, November 27, 2009). This proposed AD
would add an inspection to determine where external decals have been
applied or removed across affected lap joints, large cargo door hinges,
and external doublers. For locations where the inspections determine
that external decals have been applied or removed, this proposed AD
would require inspecting for scribe lines, and related investigative
and corrective actions as described in AD 2009-24-08.

Differences Between the Proposed AD and the Service Information

    Where Boeing Service Bulletin 777-53A0054, Revision 1, dated
November 4, 2010, specifies contacting the manufacturer for
instructions on how to repair certain conditions, this proposed AD
would require repairing those conditions in one of the following ways:
     Using a method that we approve; or
     Using data that meet the certification basis of the
airplane, and that have been approved by an Authorized Representative
for The Boeing Commercial Airplanes Organization Designation
Authorization (ODA) whom we have authorized to make those findings.
    Boeing Service Bulletin 777-53A0054, Revision 1, dated November 4,
2010, does not specify a compliance time for doing the Part 11 actions
of the Accomplishment Instructions. This proposed AD would require
doing the Part 11 actions within 24 months after the effective date of
the AD.

Costs of Compliance

    We estimate that this proposed AD affects 163 airplanes of U.S.
registry.
    We estimate the following costs to comply with this proposed AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
            Action                Labor cost      Parts cost     Cost per product      Cost on U.S.  operators
----------------------------------------------------------------------------------------------------------------
Exploratory inspection         Up to 1,234 work-          $0  Up to $104,890.......  Up to $17,097,070.
 [retained action from AD       hours x $85 per
 2009-24-08, Amendment 39-      hour = $104,890.
 16096 (74 FR 62217, November
 27, 2009)].
Inspection for decals [new     Up to 4 work-               0  Up to $340...........  Up to $55,420.
 proposed action].              hours x $85 per
                                hour = $340.
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    We have received no definitive data that would enable us to provide
cost estimates for the on-condition actions specified in this proposed
AD.

Authority for This Rulemaking

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

Regulatory Findings

    We have determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify 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),
    (3) Will not affect intrastate aviation in Alaska, and
    (4) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

    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. The FAA amends Sec.  39.13 by removing airworthiness directive
(AD) 2009-24-08, Amendment 39-16096 (74 FR 62217, November 27, 2009),
and adding the following new AD:

The Boeing Company:
     Docket No. FAA-2012-0497; Directorate Identifier 2011-NM-140-
AD.

(a) Comments Due Date

    The FAA must receive comments on this AD action by July 16,
2012.

(b) Affected ADs

    This AD supersedes AD 2009-24-08, Amendment 39-16096 (74 FR
62217, November 27, 2009).

(c) Applicability

    This AD applies to The Boeing Company Model 777-200, -200LR, -
300, and -300ER series airplanes; certificated in any category; as
identified in Boeing Service Bulletin 777-53A0054, Revision 1, dated
November 4, 2010.

(d) Subject

    Joint Aircraft System Component (JASC)/Air Transport Association
(ATA) of America Code 53, Fuselage.

(e) Unsafe Condition

    This AD was prompted by reports of scribe lines found at lap
joints and butt joints, around external doublers, at locations where
external decals had been cut, and at locations where external decals
have been installed or removed. We are issuing this AD to detect and
correct scribe lines which can develop into fatigue cracks in the
skin. Undetected fatigue cracks can grow and cause sudden
decompression of the airplane.

 (f) Compliance

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

(g) Retained Inspection With New Service Information and Additional
Reporting

    This paragraph restates the requirements of paragraph (g) of AD
2009-24-08, Amendment 39-16096 (74 FR 62217, November 27, 2009),
with new service information and additional reporting. At the
applicable times specified in paragraph 1.E., ``Compliance,'' of
Boeing Alert Service Bulletin 777-53A0054, dated August 7, 2008,
except as provided in paragraphs (h) and (j) of this AD: Do detailed
exploratory inspections for scribe lines in the skin along lap
joints, butt joints, certain external doublers, and the large cargo
door hinges. Do all applicable related investigative and corrective
actions at the times specified in Boeing Alert Service Bulletin 777-
53A0054, dated August 7, 2008, by accomplishing all actions
specified in the Accomplishment Instructions of Boeing Alert Service
Bulletin 777-53A0054, dated August 7, 2008; or Boeing Service
Bulletin 777-53A0054, Revision 1, dated November 4, 2010; except as
provided by paragraph (i) of this AD. As of the effective date of
this AD, use only Boeing Service Bulletin 777-53A0054, Revision 1,
dated November 4, 2010, to do the actions required by this
paragraph.

    Note 1 to paragraph (g) of this AD:  The inspection exceptions
described in NOTES 1.-5. in Paragraph 1.E., ``Compliance,'' of
Boeing Alert Service Bulletin 777-53A0054, dated August 7, 2008,
apply to paragraph (g) of this AD.

(h) Retained Exception to Service Bulletin Specifications, Compliance
Time

    This paragraph restates the requirements of paragraph (h) of AD
2009-24-08, Amendment 39-16096 (74 FR 62217, November 27, 2009).
Where Boeing Alert Service Bulletin 777-53A0054, dated August 7,
2008, specifies a compliance time after the date on that service
bulletin, paragraph (g) of this AD requires compliance within the
specified compliance time after January 4, 2010 (the effective date
of AD 2009-24-08).

(i) Retained Exception to Service Bulletin Specifications, Contact for
Appropriate Action With New Service Information

    This paragraph restates the requirements of paragraph (i) of AD
2009-24-08, Amendment 39-16096 (74 FR 62217, November 27, 2009),
with new service information. Where Boeing Alert Service Bulletin
777-53A0054, dated August 7, 2008; and Boeing Service Bulletin

777-53A0054, Revision 1, dated November 4, 2010; specify to contact
Boeing for appropriate action, accomplish applicable actions using a
method approved in accordance with the procedures specified in
paragraph (q) of this AD.

(j) Retained Exception to Service Bulletin Specifications, Contact for
Inspection Requirements

    This paragraph restates the requirements of paragraph (j) of AD
2009-24-08, Amendment 39-16096 (74 FR 62217, November 27, 2009).
Where paragraph 1.E. ``Compliance,'' of Boeing Alert Service
Bulletin 777-53A0054, dated August 7, 2008, specifies to ``contact
Boeing for inspection requirements for operation beyond 60,000 total
flight-cycles after first repaint,'' for those airplanes, this AD
requires contacting the Manager, Seattle Aircraft Certification
Office (ACO), for all inspection requirements of this AD and doing
the requirements.

(k) Retained Reporting

    This paragraph restates the requirements of paragraph (k) of AD
2009-24-08, Amendment 39-16096 (74 FR 62217, November 27, 2009). At
the applicable time specified in paragraph (k)(1) or (k)(2) of this
AD: Submit a report of positive findings of cracks found during the
inspection required by paragraphs (g) and (m) of this AD to the
Boeing Commercial Airplane Group, P.O. Box 3707, Seattle, Washington
98124-2207. Alternatively, operators may submit reports to their
Boeing field service representatives. The report must contain, at a
minimum, the inspection results, a description of any discrepancies
found, the airplane serial number, and the number of flight cycles
and flight hours on the airplane. Under the provisions of the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the Office of
Management and Budget (OMB) has approved the information collection
requirements contained in this AD and has assigned OMB Control
Number 2120-0056.
    (1) If the inspection was done on or after the effective date of
this AD: Submit the report within 30 days after the inspection.
    (2) If the inspection was done before the effective date of this
AD: Submit the report within 30 days after the effective date of
this AD.

(l) New Inspection for External Decals

    Within 24 months after the effective date of this AD: Inspect to
determine the locations where external decals have been applied or
removed across affected lap joints, large cargo door hinges, and
external doublers, in accordance with the Accomplishment
Instructions of Boeing Service Bulletin 777-53A0054, Revision 1,
dated November 4, 2010.

(m) New Inspection for Scribe Lines and Related Investigative and
Corrective Actions

    If, during the inspection required by paragraph (l) of this AD,
any location is found where external decals have been applied or
removed across lap joints, large cargo door hinges, or external
doublers: Before further flight, do a detailed exploratory
inspection for scribe lines at all affected locations, in accordance
with the Accomplishment Instructions of Boeing Service Bulletin 777-
53A0054, Revision 1, dated November 4, 2010. Do all applicable
related investigative and corrective actions at the times specified
in Boeing Service Bulletin 777-53A0054, Revision 1, dated November
4, 2010, by accomplishing all actions specified in the
Accomplishment Instructions of Boeing Service Bulletin 777-53A0054,
Revision 1, dated November 4, 2010, except as provided by paragraph
(i) of this AD.

 (n) Exceptions to Service Information

    (1) Where Boeing Service Bulletin 777-53A0054, Revision 1, dated
November 4, 2010, specifies a compliance time after the date on that
service bulletin, paragraphs (l) and (m) of this AD require
compliance within the specified compliance time after the effective
date of this AD.
    (2) Where paragraph 1.E., ``Compliance,'' of Boeing Service
Bulletin 777-53A0054, Revision 1, dated November 4, 2010, specifies
to ``contact Boeing for inspection requirements for operation beyond
60,000 total flight-cycles after first repaint,'' for those
airplanes, this AD requires contacting the Manager, Seattle ACO, for
all inspection requirements of this AD and doing the requirements.

(o) Credit for Previous Actions

    This paragraph provides credit for the actions required by
paragraph (m) of this AD, if those actions were performed before the
effective date of this AD using Boeing Alert Service Bulletin 777-
53A0054, dated August 7, 2008.

(p) Paperwork Reduction Act Burden Statement

    A federal agency may not conduct or sponsor, and a person is not
required to respond to, nor shall a person be subject to a penalty
for failure to comply with a collection of information subject to
the requirements of the Paperwork Reduction Act unless that
collection of information displays a current valid OMB Control
Number. The OMB Control Number for this information collection is
2120-0056. Public reporting for this collection of information is
estimated to be approximately 5 minutes per response, including the
time for reviewing instructions, completing and reviewing the
collection of information. All responses to this collection of
information are mandatory. Comments concerning the accuracy of this
burden and suggestions for reducing the burden should be directed to
the FAA at: 800 Independence Ave. SW., Washington, DC 20591, Attn:
Information Collection Clearance Officer, AES-200.

(q) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle ACO, FAA, has the authority to approve
AMOCs for this AD, if requested using the procedures found in 14 CFR
39.19. In accordance with 14 CFR 39.19, send your request to your
principal inspector or local Flight Standards District Office, as
appropriate. If sending information directly to the manager of the
ACO, send it to the attention of the person identified in the
Related Information section of this AD. Information may be emailed
to<EMAIL_ADDRESS>    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair required by this AD if it is approved by the
Boeing Commercial Airplanes Organization Designation Authorization
(ODA) that has been authorized by the Manager, Seattle ACO to make
those findings. For a repair method to be approved, the repair must
meet the certification basis of the airplane, and the approval must
specifically refer to this AD.
    (4) AMOCs approved for AD 2009-24-08, Amendment 39-16096 (74 FR
62217, November 27, 2009), are approved as AMOCs for the
corresponding provisions of this AD, except that AMOCs approved for
AD 2009-24-08 are not approved for fuselage areas where any decals
may have been installed or removed on airplanes that have never been
stripped or repainted since they left the factory.

(r) Related Information

    (1) For more information about this AD, contact Berhane Alazar,
Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle ACO,
1601 Lind Avenue SW., Renton, Washington 98057-3356; phone: 425-917-
6577; fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>    (2) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Data & Services Management,
P.O. Box 3707, MC 2H-65, Seattle, Washington 98124-2207; phone: 206-
544-5000, extension 1; fax:<PHONE_NUMBER>; email:
<EMAIL_ADDRESS>Internet: https://www.myboeingfleet.com. You
may review copies of the referenced service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue SW., Renton,
Washington. For information on the availability of this material at
the FAA, call<PHONE_NUMBER>.

    Issued in Renton, Washington, on May 21, 2012.
Michael Kaszycki,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.

[FR Doc. 2012-13169 Filed 5-30-12; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 81, Number 176 (Monday, September 12, 2016)]
[Notices]
[Pages 62784-62787]
[FR Doc No: 2016-21801]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78772; File No. SR-MIAX-2016-31]

Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Expand the Short Term Option Series Program

September 6, 2016.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on September 2, 2016, Miami International Securities Exchange LLC
(``MIAX'' or ``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 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 Rule 404, Series of
Option Contracts Open for Trading, Interpretations and Policies .02, to
expand the Short Term Option Series Program to allow Wednesday
expirations for SPDR S&P 500 ETF Trust (``SPY'') options. Additionally,
the Exchange proposes to amend the definition of Short Term Option
Series in Rule 100.
    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 expand the Short Term Option Series
Program outlined in Rule 404, Interpretations and Policies .02, to
allow the listing and trading of SPY options with Wednesday
expirations. This is a competitive filing based on a filing submitted
by the BOX Options Exchange, LLC (``BOX''), which the Commission
recently approved.\3\
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    \3\ See Securities Exchange Act Release No. 78668 (August 24,
2016), 81 FR 59696 (August 30, 2016) (order approving SR-BOX-2016-
28).
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    Currently, under the Short Term Option Series Program the Exchange
may open for trading on any Thursday or Friday that is a business day
(``Short Term Option Opening Date'') series of options on that class
that expire at the close of business on each of the next five Fridays
that are business days, and are not Fridays in which monthly option
series or Quarterly Options Series expire (``Short Term Option
Expiration Dates''). The Exchange is now proposing to amend Rule 404,
Interpretations and Policies .02, to permit the listing of SPY options
expiring on Wednesdays. Specifically, the Exchange is proposing that it
may open for trading on any Tuesday or Wednesday that is a business
day, series of SPY options that expire on any Wednesday of the month
that is a business day, and is not a Wednesday on which Quarterly
Options Series expire (``Wednesday SPY Expirations''). The proposed
Wednesday SPY Expiration series would be similar to the current Short
Term Option Series, with certain exceptions, as explained in greater
detail below. The Exchange notes that Wednesday expirations are not a
novel proposal. Specifically, the U.S. Securities and Exchange
Commission (``Commission'') approved a CBOE proposal to list Wednesday
expirations for broad-based indexes.\4\ Additionally, BOX recently
received approval to list Wednesday SPY Expirations.\5\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 76909 (January 14,
2016), 81 FR 3512 (January 21, 2016) (Order approving SR-CBOE-2015-
106).
    \5\ See supra note 3.
---------------------------------------------------------------------------

    In regards to Wednesday SPY Expirations, the Exchange is proposing
to remove the current restriction preventing MIAX from listing Short
Term Option Series that expire in the same week in which monthly option
series in the same class expire. Specifically, the Exchange would be
allowed to list Wednesday SPY Expirations in the same week in which
monthly option series in SPY expire. The current restriction to
prohibit the expiration of monthly and Short Term Option Series from
expiring on the same trading day is reasonable to avoid investor
confusion. This confusion would not apply with Wednesday SPY
Expirations and standard monthly options because they would not expire
on the same trading day, as standard monthly options do not expire on
Wednesdays. Additionally, it would lead to investor confusion if
Wednesday SPY Expirations were not listed for one week every month
because there was a monthly SPY expiration on the Friday of that week.
The existing restriction that a Short Term Option Series may not expire
on the same day that a Quarterly Option Series expires would apply to
Wednesday SPY Expirations.
    Under the proposal, the Exchange may open for trading on any
Tuesday or Wednesday that is a business day, series of SPY options that
expire at the close of business on each of the next five Wednesdays
that are business days and are not Wednesdays on which Quarterly
Options Series expire. The Exchange may have no more than a total of
five Wednesday SPY Expirations listed. This is similar to the listing
procedures for Short Term Option Series that expire on Fridays. If the
Exchange is not open for business on the respective Tuesday or
Wednesday, the Wednesday SPY Expiration Opening Date will be the first
business day immediately prior to that respective Tuesday or Wednesday.
Similarly, if the Exchange is not open for business on a Wednesday, the
expiration date for a Wednesday SPY Expiration will be the first
business day immediately prior to that Wednesday. This is also similar
to the procedures for Short Term Option Series that expire on Fridays.
    The Exchange is also proposing to clarify that the five expirations
limit in the current Short Term Option Series Program Rule would not
include any Wednesday SPY Expirations and vice versa.\6\ This means,
under the proposal, the Exchange would be allowed to list five Short
Term Option Series expirations for SPY expiring on Friday under the
current rule and five Wednesday SPY Expirations. The interval between
strike prices for the proposed Wednesday SPY Expirations would be the
same as those for the current Short Term Option Series. Specifically,
the Wednesday SPY Expirations would have $0.50 strike intervals.\7\
---------------------------------------------------------------------------

    \6\ Specifically, the Exchange proposes to add the following
text to Rule 404, Interpretations and Policies .02, in the
appropriate paragraph, ``Wednesday SPY expirations (described in the
paragraph below) are not included as part of this count [ ]'' and
``Non-Wednesday SPY Expirations (described in the paragraph above)
are not included as part of this count.''
    \7\ This is because SPY options have $1 strike price intervals
for non-Short Term Option series. See Exchange Rule 404,
Interpretations and Policies .10. Pursuant to Rule 404,
Interpretations and Policies .02(e), the strike price interval for
Short Term Option Series may be $0.50 or greater for option classes
that trade in $1 strike price intervals and are in the Short Term
Option Series Program.
---------------------------------------------------------------------------

    Currently, for each Short Term Option Expiration Date, the Exchange
is limited to opening thirty (30) series for each expiration date for
the specific class.\8\ The thirty (30) series restriction does not
include series that are opened by other securities exchanges under
their respective short term option rules; MIAX may list these
additional series that are listed by other exchanges.\9\ The thirty
(30) series restriction would apply to Wednesday SPY Expiration series
as well. In addition, the Exchange would be able to list series that
are listed by other exchanges, assuming they file similar rules with
the Commission to list SPY options expiring on Wednesdays.
---------------------------------------------------------------------------

    \8\ See Exchange Rule 404, Interpretations and Policies .02(a).
    \9\ See Exchange Rule 404, Interpretations and Policies .02(a).
---------------------------------------------------------------------------

    As is the case with current Short Term Option Series, the Wednesday
SPY Expiration series would be P.M.-settled. The Exchange does not
believe that any market disruptions would be encountered with the
introduction of P.M.-settled Wednesday SPY Expirations. The Exchange
currently trades P.M.-settled Short Term Option Series that expire
almost every Friday, which provide market participants a tool to hedge
special events and to reduce the premium cost of buying protection. The
Exchange seeks to introduce Wednesday SPY Expirations to, among other
things, expand hedging tools available to market participants and to
continue the reduction of the premium cost of buying protection. The
Exchange believes that Wednesday expirations, similar to Friday
expirations, would allow market participants to purchase an option
based on their timing as needed and allow them to tailor their
investment and hedging needs more effectively.
    The Exchange is also proposing to amend Rule 100, which sets forth
the definition of Short Term Option Series. The definition set forth in
Rule 100 is redundant to the terms for Short Term Option Series set
forth in Rule 404, Interpretations and Policies .02. As a result, the
Exchange believes that amending Rule 100 by including an

internal cross reference to Rule 404, Interpretations and Policies .02
and by deleting redundant language would result in a clearer definition
and would make the Rulebook more precise and user friendly.
    The Exchange is taking this opportunity to amend Rule 404,
Interpretations and Policies .02 with respect to Exchange closures on
Fridays that would otherwise be eligible as Short Term Option
Expiration Dates. Specifically, the Exchange is cleaning up outdated
language that previously tied listings to Fridays in the following
business week, i.e., ``if the Exchange is not open for business on the
Friday of the following business week. . . .'' Since Short Term Option
Series may be listed out over five consecutive Fridays, the existing
language is unnecessarily restrictive. Also, this proposed change
harmonizes the Exchange's rule text with existing BOX rule text, i.e.,
``if the [Exchange] is not open for business on a Friday . . .''
    The Exchange proposes to add the new rule text language regarding
Wednesday SPY Expirations at the beginning of Rule 404, Interpretations
and Policies .02, before the provisions governing classes, expiration,
initial series, additional series, and strike interval. The Exchange
believes that placement of Wednesday SPY Expirations at the start of
Rule 404, Interpretations and Policies .02, would make it apparent that
the rest of Rule 404, Interpretations and Policies .02 applies to
Wednesday SPY Expirations. To make this point clear, the Exchange
proposes to add the sentence, ``References to `Short Term Option
Series' below shall be read to include `Wednesday SPY Expirations,'
except where indicated otherwise[ ]'' before the alphabetically listed
paragraphs set forth in Rule 404, Interpretations and Policies .02.
    The Exchange believes that the introduction of Wednesday SPY
Expirations would provide investors with a flexible and valuable tool
to manage risk exposure, minimize capital outlays, and be more
responsive to the timing of events affecting the industry.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of section 6(b) of the Act.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \11\ requirements that the rules of an exchange be
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 regulating, clearing,
settling, processing information with respect to, and 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 16 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes the Short Term Option Series
Program has been successful to date and that Wednesday SPY Expirations
simply expand the ability of investors to hedge risk against market
movements stemming from economic releases or market events that occur
throughout the month in the same way that the Short Term Option Series
Program has expanded the landscape of hedging. Similarly, the Exchange
believes Wednesday SPY Expirations should create greater trading and
hedging opportunities and flexibility, and provide customers with the
ability to more closely tailor their investment objectives. The
Exchange believes that allowing Wednesday SPY Expirations and monthly
SPY expirations in the same week would benefit investors and minimize
investor confusion by providing Wednesday SPY Expirations in a
continuous and uniform manner.
    In addition to the substantive proposal to permit Wednesday SPY
Expirations, the Exchange is proposing to make a minor change to the
text of Rule 404, Interpretations and Policies .02, that would benefit
investors and the public by providing clarity and accuracy in the
Exchange's Rules. It is in the public interest for rules to be accurate
and concise so as to eliminate the potential for confusion.
    The Exchange represents that it has an adequate surveillance
program in place to detect manipulative trading in Wednesday SPY
Expirations in the same way it monitors trading in the current Short
Term Option Series. Finally, the Exchange also represents that it has
the necessary systems capacity to support the new options series.

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. The Exchange notes that
having Wednesday expirations is not a novel proposal.\12\ The Exchange
does not believe the proposal will impose any burden on intramarket
competition, as all market participants will be treated in the same
manner as they are with respect to existing Short Term Option Series.
Additionally, the Exchange does not believe the proposal will impose
any burden on intermarket competition, as nothing prevents the other
options exchanges from proposing similar rules to those that the
Exchange is currently proposing.
---------------------------------------------------------------------------

    \12\ See supra note 4.
---------------------------------------------------------------------------

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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, the proposed rule
change has become effective pursuant to section 19(b)(3)(A) of the Act
\13\ and Rule 19b-4(f)(6) thereunder.\14\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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 intention 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days from the date of filing. However, Rule
19b-4(f)(6)(iii) \15\ 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 proposal may become operative
immediately upon filing. The Commission notes that it recently approved
BOX's substantially similar proposal to list and trade Wednesday SPY
Expirations.\16\ The Exchange has stated that waiver of the operative
delay will allow the Exchange to list and trade Wednesday SPY
Expirations as soon as possible, and therefore, promote competition
among the option

exchanges. For these reasons, the Commission believes that the proposed
rule change presents no novel issues and that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest, and will allow the Exchange to remain competitive with
other exchanges. Therefore, the Commission hereby waives the 30-day
operative delay and designates the proposal effective upon filing.\17\
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.
---------------------------------------------------------------------------

    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra note 3.
    \17\ 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).
---------------------------------------------------------------------------

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-2016-31 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-2016-31. 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-2016-31 and should be
submitted on or before October 3, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-21801 Filed 9-9-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 51 (Friday, March 17, 2017)]
[Notices]
[Pages 14240-14243]
[FR Doc No: 2017-05338]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80223; File No. SR-IEX-2016-18]

Self-Regulatory Organizations; Investors Exchange, LLC; Order
Granting Approval to a Proposed Rule Change To: (i) Amend Rules
11.190(a)(3) and 11.190(b)(8) To Modify the Operation of the Primary
Peg Order Type; (ii) Amend Rule 11.190(h)(3)(C)(ii) and (D)(ii)
Regarding Price Sliding in Locked and Crossed Markets To Simplify the
Price Sliding Process for Both Primary Peg Orders and Discretionary Peg
Orders Resting on or Posting to the Order Book; and (iii) Make Minor
Technical Changes To Conform Certain Terminology

March 13, 2017.

I. Introduction

    On November 29, 2016, the Investors Exchange LLC (``Exchange'')
filed with

the Securities and Exchange Commission (``SEC'' or ``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:
(i) Amend IEX Rules 11.190(a)(3) and 11.190(b)(8) to modify the
operation of the primary peg order type; (ii) amend IEX Rule
11.190(h)(3)(C)(ii) and (D)(ii) regarding price sliding in locked and
crossed markets to modify the price sliding process for both primary
peg orders and discretionary peg orders resting on or posting to the
IEX order book; and (iii) make minor technical changes to conform
certain terminology. The proposed rule change was published for comment
in the Federal Register on December 13, 2016.\3\ On January 26, 2017,
pursuant to Section 19(b)(2) of the Act,\4\ the Commission designated a
longer period within which to approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to approve or disapprove the proposed rule change.\5\
The Commission received no comment letters on the proposed rule change.
This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 79502 (December 7,
2016), 81 FR 90035 (December 13, 2016) (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 79883, 82 FR 9083
(February 2, 2017). The Commission designated March 13, 2017 as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to approve or disapprove,
the proposed rule change.
---------------------------------------------------------------------------

II. Description of the Proposal

Primary Peg Order Type Functionality

    The Exchange has proposed to amend Rules 11.190(a)(3) and
11.190(b)(8) to modify the operation of the primary peg order type
offered by the Exchange. Currently, a primary peg order is a non-
displayed order that the Exchange system automatically adjusts (upon
entry and when posting to the Exchange order book) to be equal to and
ranked at the less aggressive of the near-side primary quote (i.e., the
national best bid (``NBB'') for buy orders and the national best offer
(``NBO'') for sell orders) or the order's limit price, if any.\6\ While
resting on the Exchange's order book, the order is automatically
adjusted by the system in response to changes in the NBB (NBO) for buy
(sell) orders up (down) to the order's limit price, if any.\7\
---------------------------------------------------------------------------

    \6\ See Rules 11.190(a)(3) and (b)(8); see also Notice, supra
note 3, at 90035.
    \7\ See id.
---------------------------------------------------------------------------

    Under the proposal, the operation of the primary peg order type
would be amended such that the Exchange system would automatically
adjust a primary peg order, upon entry and when the order is posting to
the Exchange order book, to be equal to and ranked at the less
aggressive of one (1) minimum price variant (``MPV'') less aggressive
than the primary quote (i.e., one MPV below (above) the NBB (NBO) for
buy (sell) orders) or the order's limit price, as applicable.\8\ The
primary peg order would continue to be a non-displayed order type, and
the Exchange's system would continue to automatically adjust a primary
peg order in response to changes in the NBB (NBO) for buy (sell) orders
up (down) to the order's limit price, if any.\9\
---------------------------------------------------------------------------

    \8\ See proposed Rules 11.190(a)(3) and (b)(8); see also Notice,
supra note 3, at 90036. In its proposal, the Exchange noted that the
BATS BZX exchange's primary pegged order type has an offset feature
that allows primary pegged orders on that exchange to rest more
passively than the primary quote. See Notice, supra note 3, at
90036-37.
    \9\ See proposed Rules 11.190(a)(3) and 11.190(b)(8). The
Exchange has not proposed to amend the order modifiers and
parameters currently applicable to primary peg orders as set forth
in Rule 11.190(b)(8)(A)-(J), and such order modifiers and parameters
would continue apply to the amended primary peg order type. See
Notice, supra note 3, at 90037 and n.13.
---------------------------------------------------------------------------

    In addition, under the proposal, in order to meet the limit price
of active orders on the Exchange order book, a primary peg order would
be able to exercise price discretion from its resting price to a
discretionary price (defined as the primary quote), except during
periods of quote instability as defined in Rule 11.190(g) \10\ or where
the primary peg order is resting at its limit price.\11\ Specifically,
as set forth in proposed Rule 11.190(b)(8)(K), if the Exchange system
were to determine the NBB for a particular security to be an unstable
quote in accordance with Rule 11.190(g), it would restrict buy primary
peg orders in that security from exercising price discretion to trade
against interest at the NBB (and thus they would be executable only at
their resting price one MPV less aggressive than the NBB, subject to
any limit price); likewise, if the Exchange system were to determine
the NBO for a particular security to be an unstable quote in accordance
with Rule 11.190(g), it would restrict sell primary peg orders in that
security from exercising price discretion to trade against interest at
the NBO (and thus they would be executable only at their resting price
one MPV less aggressive than the NBO, subject to any limit price).\12\
---------------------------------------------------------------------------

    \10\ As set forth in Rule 11.190(g), the Exchange utilizes real
time relative quoting activity of protected quotations and a
proprietary mathematical calculation (the ``quote instability
calculation'') to assess the probability of an imminent change to
the current protected NBB to a lower price or protected NBO to a
higher price for a particular security (``quote instability
factor''). See Rule 11.190(g); see also Notice, supra note 3, at
90036 n.12. When the quoting activity meets predefined criteria and
the quote instability factor calculated is greater than the
Exchange's defined threshold (``quote instability threshold''), the
system treats the quote as not stable (``quote instability'' or a
``crumbling quote''). See id. During all other times, the quote is
considered stable (``quote stability''). The system independently
assesses the quote stability of the protected NBB and protected NBO
for each security. See id. When the system determines that a quote,
either the protected NBB or the protected NBO, is unstable, the
determination remains in effect at that price level for ten (10)
milliseconds. See id. The system will only treat one side of the
protected NBBO as unstable in a particular security at any given
time. See id.
    \11\ See proposed Rules 11.190(a)(3) and (b)(8). In its
proposal, the Exchange represented that the manner in which a
primary peg order would exercise discretion is similar to the manner
in which the Exchange's discretionary peg order exercises
discretion. See Notice, supra note 3, at 90036.
    \12\ See proposed Rule 11.190(b)(8)(K).
---------------------------------------------------------------------------

    Further, as proposed, when exercising price discretion, a primary
peg order would maintain its time priority position among non-displayed
orders (and behind any displayed orders) at its resting price and would
be prioritized behind any non-displayed (and displayed) interest
resting at the discretionary price for the duration of that book
processing action.\13\ If multiple primary peg orders were to exercise
price discretion during the same book processing action, they would
maintain their relative time priority at the discretionary price.\14\
---------------------------------------------------------------------------

    \13\ See proposed Rule 11.190(b)(8); see also Notice, supra note
3, at 90036. Displayed orders have precedence over non-displayed
orders at a given price level in the IEX order book. See Rule
11.220(a)(1)(B).
    \14\ See proposed Rule 11.190(b)(8); see also Notice, supra note
3, at 90036. In its proposal, the Exchange represented that the
proposed priority rules for the primary peg order are identical to
those for the Exchange's discretionary peg order. See Notice, supra
note 3, at 90037.
---------------------------------------------------------------------------

    According to the Exchange, the primary peg order type, as proposed,
is designed to offer Exchange members an opportunity to rest orders one
MPV less aggressive than the primary quote but remain eligible to
exercise price discretion up (down) to the NBB (NBO) for buy (sell)
orders, and to protect such orders from unfavorable executions by
preventing the exercise of such price discretion when the Exchange has
determined that the market is moving against the order (i.e., a
crumbling quote is detected).\15\
---------------------------------------------------------------------------

    \15\ See Notice, supra note 3, at 90036.
---------------------------------------------------------------------------

Price Sliding in Locked or Crossed Markets

    The Exchange also has proposed to amend Rule 11.190(h)(3)(C)(ii)
and

(D)(ii) regarding the price sliding process for both primary peg and
discretionary peg orders in locked and crossed markets. Currently, in
the event the NBBO becomes locked or crossed, primary peg and
discretionary peg orders resting on or posting to the order book are
priced to the less aggressive of either: (i) The prior non-locked or
non-crossing near side quote (i.e., the prior unlocked or uncrossed NBB
(NBO) for buy (sell) orders), or (ii) one MPV less aggressive than the
locking or crossing price.\16\ Under the proposal, the first
alternative under the current rule would be eliminated such that in
locked or crossed markets, primary peg and discretionary peg orders
would slide to one MPV less aggressive than the locking or crossing
price rather than remaining at the prior non-locked or non-crossed
price when such price is less aggressive.\17\
---------------------------------------------------------------------------

    \16\ See Rule 11.190(h)(3)(C)(ii) and (D)(ii); see also Notice,
supra note 3, at 90035-36.
    \17\ See proposed Rule 11.190(h)(3)(C)(ii) and (D)(ii); see also
Notice, supra note 3, at 90036.
---------------------------------------------------------------------------

    Specifically, proposed Rule 11.190(h)(3)(C)(ii) would provide that
in the event the market becomes locked, primary peg orders and
discretionary peg orders resting on or posting to the order book would
be priced one MPV less aggressive than the locking price.\18\ Proposed
Rule 11.190(h)(3)(D)(ii) would provide that in the event that the
market becomes crossed, primary peg orders and discretionary peg orders
resting on or posting to the order book would be priced one MPV less
aggressive than the crossing price, i.e., the lowest protected offer
for buy orders and the highest protected bid for sell orders, before
posting.\19\ In addition, proposed Rule 11.190(h)(3)(D)(ii) would
specify that if a primary peg order is submitted to the Exchange while
the market is crossed, the order would post to the order book priced
one MPV less aggressive than the crossing price.\20\ In its proposal,
the Exchange noted that its goal with respect to its rules for price
sliding primary peg and discretionary peg orders in locked or crossed
markets is to ensure that such orders do not rest at locking or
crossing prices.\21\
---------------------------------------------------------------------------

    \18\ See proposed Rule 11.190(h)(3)(C)(ii).
    \19\ See proposed Rule 11.190(h)(3)(D)(ii).
    \20\ See id.; see also Notice, supra note 3, at 90036-37.
    \21\ See Notice, supra note 3, at 90037.
---------------------------------------------------------------------------

Technical Change

    Lastly, the Exchange has proposed to make a technical change to
Rule 11.190(h)(3)(D)(ii) to refer to the ``crossing price'' rather than
the ``crossed quote'' in order to be consistent with other references
within the rule.\22\
---------------------------------------------------------------------------

    \22\ See proposed Rule 11.190(h)(3)(D)(ii); see also Notice,
supra note 3, at 90037.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\23\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\24\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------

    \23\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange has described the proposed amendments to its primary
peg order type as combining an offset feature offered by another
exchange that allows primary pegged orders on that exchange to rest
more passively than the primary quote, with the discretionary feature
of the Exchange's discretionary peg order type.\25\ As noted above,
according to the Exchange, its amended primary peg order type would be
designed to enable a member (or customer thereof) to rest non-displayed
trading interest on the Exchange order book at a price inferior to the
primary quote and remain available to execute against an incoming order
seeking to cross the spread and execute at prices equal to or more
aggressive (from the taker's perspective) than such quote, while
minimizing adverse selection to the poster (if its resting order were
to ``jump'' to the primary quote) when the market appears to be moving
against the resting primary peg order (i.e., moving lower in the case
of a buy order or higher in the case of a sell order).\26\ The Exchange
believes that adding to its primary peg order type both an offset
feature and the discretionary functionality that currently is applied
to the discretionary peg order type would incentivize members and their
customers to post more passive resting liquidity on the Exchange that
is priced to execute at the primary quote during periods of quote
stability, and consequently may result in greater execution
opportunities at the far side quote for members entering spread-
crossing orders.\27\
---------------------------------------------------------------------------

    \25\ See Notice, supra note 3, at 90036-37.
    \26\ See id.
    \27\ See Notice, supra note 3, at 90036.
---------------------------------------------------------------------------

    The Commission does not believe that the Exchange's proposed
amendments to its primary peg order type raise any novel issues that
the Commission has not previously considered, and notes in this regard
that the Commission received no comments on the Exchange's proposed
rule change. The Commission's approval of IEX's Form 1 application
included, among other things, approval of IEX's discretionary peg order
type, which utilizes the same discretionary feature (though a different
discretionary price) that the Exchange proposes to apply to its primary
peg order type.\28\ As with the Exchange's discretionary peg order
type, the amended primary peg order type would be eligible to exercise
price ``discretion'' to move itself to a price that is more aggressive
than its resting/ranked price (subject to the constraints of a limit
price, if any), except during periods of ``quote instability'' as
defined in Rule 11.190(g).\29\ Rule 11.190(g) sets forth the formula
that the Exchange utilizes for determining quote stability for purposes
of exercising discretion to move a resting order to a more aggressive
price, and is the same formula that the Exchange already utilizes for
the quote stability determinations relative to it discretionary peg
order type.\30\ In the IEX Form 1 Approval, the Commission stated that
Rule 11.190(g) delineates the specific conditions under which IEX
discretionary peg orders are eligible to exercise discretion by setting
forth the mathematical formula that IEX uses to determine quote
stability.\31\ The Commission believes that, as with the Exchange's
discretionary peg order, the Exchange has set forth in its rule the
totality of the discretionary feature of

the proposed primary peg order type, and that it is hardcoded
conditionality based on pre-determined, objective factors.\32\ In
addition, as the Commission observed in the IEX Form 1 Approval, other
exchanges offer both discretion and pegging functionalities, including
the combination of both of those functionalities in a single order
type, and thus an order type that offers both discretion and pegging
features is not novel.\33\
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release No. 78101 (June 17,
2016), 81 FR 41142, 41152-53 (June 23, 2016) (File No. 10-222; In
the Matter of the Application of: Investors' Exchange, LLC for
Registration as a National Securities Exchange; Findings, Opinion,
and Order of the Commission) (``IEX Form 1 Approval''); see also
Rule 11.190(b)(10).
    \29\ See proposed Rule 11.190(b)(8); Rule 11.190(b)(10). See
also Notice, supra note 3, at 90036. In addition, as the Exchange
has noted, the priority scheme that would be applied to the proposed
primary peg order when it exercises discretion is identical to that
applied to the Exchange's discretionary peg order when it exercises
discretion. See proposed Rule 11.190(b)(8); Rule 11.190(b)(10). See
also Notice, supra note 3, at 90037.
    \30\ Compare proposed Rule 11.190(b)(8) and Rule 11.190(b)(10).
    \31\ See IEX Form 1 Approval, supra note 30, at 41153.
    \32\ See proposed Rule 11.190(b)(8) and Rule 11.190(g); see also
IEX Form 1 Approval, supra note 28, at 41153.
    \33\ See IEX Form 1 Approval, supra note 28, at 41153; see also,
e.g., Nasdaq Rule 4703(g); NYSE Arca Equities Rule 7.31P(h)(3). In
addition, as the Exchange has noted, primary pegged orders on other
exchanges may be pegged to prices less aggressive than the near-side
primary quote. See Notice, supra note 3, at 90036-37; see also,
e.g., BZX Rule 11.9(c)(8)(A).
---------------------------------------------------------------------------

    Importantly, the Commission notes that the Exchange's amended
primary peg order type would remain a non-displayed order type, like
all of the Exchange's pegged order types, including the discretionary
peg order type.\34\ Thus, the proposed amended primary peg order type,
with its added discretionary and crumbling quote determination
functionalities, should not impact the Exchange's dissemination of a
protected quotation, which must be displayed,\35\ or market
participants' ability to execute against the Exchange's protection
quotation, and does not appear otherwise designed to impede the
mechanism of a free and open market. Accordingly, the Commission
believes that the proposed amendments to the Exchange's primary peg
order type are consistent with the Act and, in particular, the Section
6(b)(5) requirement that a national securities exchange's rules be
designed to promote just and equitable principles of trade, remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and protect investors and the public
interest.\36\
---------------------------------------------------------------------------

    \34\ See Rules 11.190(a)(3) and (b)(8)(H). The Commission also
notes that primary pegged orders on other exchanges may be non-
displayed. See, e.g., BZX Rule 11.9(c)(8)(A).
    \35\ See 17 CFR 242.600(b)(57) and (58).
    \36\ The Commission notes that the Exchange would be required to
submit a proposed rule change pursuant to Section 19(b) of the Act
prior to implementing any changes to the proposed primary peg order
type.
---------------------------------------------------------------------------

    The Commission also believes that the proposed amendments to the
Exchange's price sliding process for primary peg orders and
discretionary peg orders in locked or crossed markets are consistent
with the Act. The Exchange has stated that its existing approach to
price sliding for such orders in locked or crossed markets is
unnecessarily complicated, without any material benefit, and that the
proposed amendments to the approach would remove the variability of a
primary peg order's booked price in locked or crossed market
situations, and make the Exchange's rules more clear and
transparent.\37\ The Commission believes these changes should help
lessen the complexity in the Exchange's price sliding rules, which may
reduce the potential for investor confusion as to how primary peg and
discretionary peg orders would price slide in locked or crossed
markets, and thereby help protect investors and the public interest
consistent with Section 6(b)(5) of the Act. In addition, the proposed
amendments appear to be consistent with the requirements of Rule 610(d)
of Regulation NMS which, among other things, requires that the rules of
a national securities exchange be reasonably designed to assure the
reconciliation of locked or crossed quotations in an NMS stock.\38\
---------------------------------------------------------------------------

    \37\ See Notice, 81 FR at 90037.
    \38\ See 17 CFR 242.610(d).
---------------------------------------------------------------------------

    Lastly, the Commission believes that the Exchange's proposed
technical change to conform certain terminology in its proposed rules
is intended to enhance the clarity of its rules, which should reduce
the potential for investor confusion, and thereby help protect
investors and the public interest consistent with Section 6(b)(5) of
the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\39\ that the proposed rule change (SR-IEX-2016-18) be and hereby
is approved.
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    \39\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
---------------------------------------------------------------------------

    \40\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05338 Filed 3-16-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 224 (Monday, November 21, 2016)]
[Proposed Rules]
[Pages 83182-83184]
[FR Doc No: 2016-27765]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2016-3257; Directorate Identifier 2015-SW-072-AD]
RIN 2120-AA64

Airworthiness Directives; Airbus Helicopters Deutschland GmbH

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to adopt a new airworthiness directive (AD) for
Airbus Helicopters Deutschland GmbH (Airbus Helicopters) MBB-BK 117 D-2
helicopters. This proposed AD would require repetitively inspecting the
bushings of the inner and outer forward trusses of both engines. This
proposed AD is prompted by reports of delaminated and worn engine mount
bushings. The proposed actions are intended to detect delaminated
engine mount bushings, which can lead to excessive vibration, cracking,
failure of the engine mount front support pins, and loss of helicopter
control.

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

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your
comments electronically.
     Fax:<PHONE_NUMBER>.
     Mail: Send comments to the U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.
     Hand Delivery: Deliver to the ``Mail'' address between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-
3257; or in person at the Docket Operations Office between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays. The AD docket
contains this proposed AD, European Aviation Safety Agency (EASA) AD,
the economic evaluation, any comments received, and other information.
The street address for the Docket Operations Office (telephone 800-647-
5527) is in the ADDRESSES section. Comments will be available in the AD
docket shortly after receipt.
    For service information identified in this proposed rule, contact
Airbus Helicopters, 2701 N. Forum Drive, Grand Prairie, TX 75052;
telephone<PHONE_NUMBER> or<PHONE_NUMBER>; fax<PHONE_NUMBER>; or at
http://www.airbushelicopters.com/techpub. You may review the referenced
service information at the FAA, Office of the Regional Counsel,
Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX
76177.

FOR FURTHER INFORMATION CONTACT: Matt Fuller, Senior Aviation Safety
Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101
Hillwood Pkwy, Fort Worth, TX 76177; telephone<PHONE_NUMBER>; email
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to participate in this rulemaking by submitting
written comments, data, or views. We also invite comments relating to
the economic, environmental, energy, or

federalism impacts that might result from adopting the proposals in
this document. The most helpful comments reference a specific portion
of the proposal, explain the reason for any recommended change, and
include supporting data. To ensure the docket does not contain
duplicate comments, commenters should send only one copy of written
comments, or if comments are filed electronically, commenters should
submit only one time.
    We will file in the docket all comments that we receive, as well as
a report summarizing each substantive public contact with FAA personnel
concerning this proposed rulemaking. Before acting on this proposal, we
will consider all comments we receive on or before the closing date for
comments. We will consider comments filed after the comment period has
closed if it is possible to do so without incurring expense or delay.
We may change this proposal in light of the comments we receive.

Discussion

    EASA, which is the Technical Agent for the Member States of the
European Union, has issued EASA AD No. 2015-0198, dated September 30,
2015, to correct an unsafe condition for Airbus Helicopters Model MBB-
BK 117 D-2 helicopters. EASA advises that during a pre-flight check of
an MBB-BK 117 D-2 helicopter, an engine mount bushing was found
delaminated. More cases of delaminated engine mount bushings were
reported following additional investigations. According to EASA, this
condition could lead to cracks and eventually failure of the engine
mount front support pins, possibly resulting in loss of helicopter
control.
    The EASA AD consequently requires repetitive inspections of the
engine mount bushings and depending of the findings, repairing or
replacing the bushings.

FAA's Determination

    These helicopters have been approved by the aviation authority of
Germany and are approved for operation in the United States. Pursuant
to our bilateral agreement with Germany, EASA, its technical
representative, has notified us of the unsafe condition described in
its AD. We are proposing this AD because we evaluated all known
relevant information and determined that an unsafe condition is likely
to exist or develop on other products of the same type design.

Related Service Information

    We reviewed Airbus Helicopters Alert Service Bulletin (ASB) MBB-
BK117 D-2-71A-002, Revision 0, dated September 28, 2015, for Model MBB-
BK 117 D-2 helicopters. The ASB introduces repetitive visual
inspections of the engine mount bushings for defects, deformation,
separation of the rubber, and missing rubber after reports of
delaminated engine mount bushings and bushings with damage to the metal
inner sleeve. If there is any deformation or separation of the rubber,
the ASB specifies performing a detailed inspection of the bushing in
accordance with the aircraft maintenance manual.

Proposed AD Requirements

    This proposed AD would require within 50 hours time-in-service
(TIS) and at intervals not to exceed 50 hours TIS thereafter, visually
inspecting the bushings of the inner and outer forward trusses of both
engines, and depending on the outcome of the inspections, replacing or
repairing the bushings before further flight.

Differences Between This Proposed AD and the EASA AD

    The EASA AD allows for a 10 hour time-in-service, non-cumulative
tolerance for its required compliance times. This proposed AD would
not.

Costs of Compliance

    We estimate that this proposed AD would affect 5 helicopters of
U.S. Registry and that labor costs average $85 per work hour. Based on
these estimates, we expect the following costs:
     Inspecting the bushings would require 1 work hour. No
parts would be needed, for a total cost of $85 per helicopter and $425
for the U.S. fleet.
     Replacing a bushing would require 1 work hour and $373 for
parts, for a total cost of $458 per bushing.

Authority for This Rulemaking

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

Regulatory Findings

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

List of Subjects in 14 CFR Part 39

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

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13   [Amended]

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

Airbus Helicopters Deutschland GmbH: Docket No. FAA-2016-3257;
Directorate Identifier 2015-SW-072-AD.

(a) Applicability

    This AD applies to Airbus Helicopters Deutschland GmbH Model
MBB-BK 117 D-2 helicopters with a bushing part number 105-60386
installed, certificated in any category.

(b) Unsafe Condition

    This AD defines the unsafe condition as a delaminated engine
mount bushing. This

condition could result in excessive vibration, which could lead to
cracking and failure of the engine mount front support pins, and
loss of helicopter control.

(c) Comments Due Date

    We must receive comments by January 20, 2017.

(d) Compliance

    You are responsible for performing each action required by this
AD within the specified compliance time unless it has already been
accomplished prior to that time.

(e) Required Actions

    Within 50 hours time-in-service (TIS) and thereafter at
intervals not to exceed 50 hours TIS:
    (1) Visually inspect each engine mount bushing (bushing) for
separation of the rubber from the metal or missing rubber.
    (2) If any rubber has separated from the metal or if there is
missing rubber, inspect the bushing for deformation, corrosion, and
mechanical damage.
    (i) Replace the bushing with an airworthy bushing if there is
any deformation, separation of the rubber from the metal, corrosion,
or mechanical damage, or repair the bushing if the deformation,
separation of the rubber, corrosion, or mechanical damage is within
the maximum repair damage limitations.
    (ii) If the inner and outer parts of the bushing are separated
with missing rubber, replace the bushing with an airworthy bushing.

(f) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Group, FAA, may approve AMOCs
for this AD. Send your proposal to: Matt Fuller, Senior Aviation
Safety Engineer, Safety Management Group, Rotorcraft Directorate,
FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222-
5110; email<EMAIL_ADDRESS>    (2) For operations conducted under a 14 CFR part 119 operating
certificate or under 14 CFR part 91, subpart K, we suggest that you
notify your principal inspector, or lacking a principal inspector,
the manager of the local flight standards district office or
certificate holding district office before operating any aircraft
complying with this AD through an AMOC.

(g) Additional Information

    (1) Airbus Helicopters Alert Service Bulletin ASB MBB-BK117 D-2-
71A-002, Revision 0, dated September 28, 2015, which is not
incorporated by reference, contains additional information about the
subject of this proposed rule. For service information identified in
this proposed rule, contact Airbus Helicopters, 2701 N. Forum Drive,
Grand Prairie, TX 75052; telephone<PHONE_NUMBER> or<PHONE_NUMBER>;
fax<PHONE_NUMBER>; or at http://www.airbushelicopters.com/techpub.
You may review the referenced service information at the FAA, Office
of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room
6N-321, Fort Worth, TX 76177.
    (2) The subject of this AD is addressed in European Aviation
Safety Agency (EASA) AD No. 2015-0198, dated September 30, 2015. You
may view the EASA AD on the Internet at http://www.regulations.gov
in the AD Docket.

 (h) Subject

    Joint Aircraft Service Component (JASC) Code: 7200, Engine
(Turbine, Turboprop).

    Issued in Fort Worth, Texas, on November 10, 2016.
Lance T. Gant,
Manager, Rotorcraft Directorate, Aircraft Certification Service.
[FR Doc. 2016-27765 Filed 11-18-16; 8:45 am]
 BILLING CODE 4910-13-P