[Federal Register: January 28, 2010 (Volume 75, Number 18)]
[Rules and Regulations]
[Page 4475-4477]
[DOCID:fr28ja10-3]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2009-1146; Directorate Identifier 2008-SW-38-AD;
Amendment 39-16184; AD 2010-03-01]
RIN 2120-AA64

Airworthiness Directives; Eurocopter France Model AS332L1,
AS332L2, and EC225LP Helicopters

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

ACTION: Final rule; request for comments.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for the
specified Eurocopter France (ECF) model helicopters. This AD results
from mandatory continuing airworthiness information (MCAI) issued by
the European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community. The MCAI states:
``Recently, a report was received concerning the discovery of fragments
of a plastic blanking plug (fitted to the harness belt buckle 5th
attachment point) inside a seat harness belt buckle. Over time, this
blanking plug hardens and becomes brittle. This condition, if not
corrected, can lead to failure of the plug and fragments being caught
inside the buckle, causing interference and preventing the belt from
being released during an emergency evacuation of the aircraft.'' This
AD requires actions that are intended to address this unsafe condition.

DATES: This AD becomes effective on February 12, 2010.
    The incorporation by reference of certain publications is approved
by the Director of the Federal Register as of February 12, 2010.
    We must receive comments on this AD by March 29, 2010.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov. Follow the instructions for submitting your
comments electronically.
     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 AD from
American Eurocopter Corporation, 2701 Forum Drive, Grand Prairie, TX
75053-4005, telephone<PHONE_NUMBER>, fax<PHONE_NUMBER>, or at http://
www.eurocopter.com.
    Examining the Docket: You may examine the AD docket 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 AD docket contains this AD, the economic evaluation, any
comments received, and other information. The street address for the
Docket Operations office (telephone<PHONE_NUMBER>) is stated in the
ADDRESSES section of this AD. Comments will be available in the AD
docket shortly after receipt.

FOR FURTHER INFORMATION CONTACT: George Schwab, Aviation Safety
Engineer, FAA, Rotorcraft Directorate, Safety Management Group, Fort
Worth, Texas 76137, telephone<PHONE_NUMBER>, fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    EASA, which is the Technical Agent for the Member States of the
European Community, has issued EASA AD No. 2008-0075, dated April 22,
2008, to correct an unsafe condition for the ECF Model AS332L1,
AS332L2, and EC225LP helicopters. EASA received a report concerning the
discovery of fragments of a plastic blanking plug (fitted to the
harness belt buckle 5th attachment point) inside a seat harness belt
buckle. Over time, this blanking plug hardens, becomes brittle, and
starts to deteriorate. This condition, if not corrected, can lead to
fragments of the plug being caught inside the buckle, preventing the
belt from releasing during an emergency evacuation of the aircraft.
    You may obtain further information by examining the MCAI and any
related service information in the AD docket.

Related Service Information

    ECF has issued Emergency Alert Service Bulletin No. 01.00.72 for
the Model AS332L1 and L2 helicopters and No. 04A003 for the Model
EC225LP helicopters, both dated April 15, 2008. The seat buckles
installed on the specified helicopters have five attachment points, and
the seat harness belts have four attachment points only. Therefore, the
5th belt buckle attachment point is blanked using a plastic blanking
plug. These plastic blanking plugs harden and become brittle over time.
Mishandling of the buckle can cause the blanking plug to fail and
fragments may be caught inside the buckle. Any fragments inside the
buckle can lead to interference and may prevent the buckle from
releasing the belts. The service information specifies removing all
seat harness belt buckle blanking plugs, part number (P/N) 332V85134620
or P/N 332V85134621. The actions described in the MCAI are intended to
correct the same unsafe condition as that identified in the service
information.

FAA's Evaluation and Unsafe Condition Determination

    These products have been approved by the aviation authority of
France and are approved for operation in the United States. Pursuant to
our bilateral

agreement with France, they have notified us of the unsafe condition
described in the MCAI. We are issuing this AD because we evaluated all
information provided by EASA and determined the unsafe condition exists
and is likely to exist or develop on other helicopters of these same
type designs.

Differences Between This AD and the MCAI AD

    This AD does not require you to return the parts to the
manufacturer. Also, we refer to the compliance time as 30 days rather
than 1 month.

Costs of Compliance

    We estimate that this AD will affect about 6 helicopters of U.S.
registry. We also estimate that it will take about .4 work-hour per
helicopter to inspect for a failed blanking plug and replace the belt
buckle with an airworthy belt buckle if the plug has failed. The
average labor rate is $80 per work-hour. Required parts will cost about
$250 per belt buckle. Based on these figures, we estimate the cost of
this AD on U.S. operators will be $1,692, assuming 1 belt buckle per
helicopter is replaced.

FAA's Determination of the Effective Date

    An unsafe condition exists that requires the immediate adoption of
this AD. We find that the risk to the flying public justifies waiving
notice and comment prior to adoption of this rule because this unsafe
condition requires immediate adoption of this AD due to possible
inability to release the seat belts from the seat harness belt buckle
during an emergency evacuation of the helicopter. Therefore, we have
determined that notice and opportunity for public comment before
issuing this AD are impracticable and that good cause exists for making
this amendment effective in fewer than 30 days.

Comments Invited

    This AD is a final rule that involves requirements affecting flight
safety, and we did not precede it by notice and opportunity for public
comment. However, we invite you to send us any written data, views, or
arguments concerning this AD. Send your comments to an address listed
under the ADDRESSES section of this AD. Include ``Docket No. FAA-2009-
1146; Directorate Identifier 2008-SW-38-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this AD. We will
consider all comments received by the closing date and may amend this
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 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 product(s) identified in this
rulemaking action.

Regulatory Findings

    We determined that this AD will not have federalism implications
under Executive Order 13132. This AD will not have a substantial direct
effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
    Therefore, I certify this AD:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979); 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 an economic evaluation of the estimated costs to comply
with this 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.

Adoption of the Amendment

0
Accordingly, under the authority delegated to me by the Administrator,
the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new AD:

2010-03-01 Eurocopter France: Amendment 39-16184. Docket No. FAA-
2009-1146; Directorate Identifier 2008-SW-38-AD.

Effective Date

    (a) This airworthiness directive (AD) becomes effective on
February 12, 2010.

Other Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Model AS332L1, AS332L2, and EC225LP
helicopters with the following seat harnesses, fitted with blanking
plugs, part number (P/N) 332V85134620 or P/N 332V85134621, except
seat harnesses modified by Eurocopter MOD 332V080169, installed,
certificated in any category:

------------------------------------------------------------------------
     Harness manufacturer                   Seat harness P/N
------------------------------------------------------------------------
Schroth......................  P/N 1-10-725203.
                               P/N 1-10-P65203.
                               On Fisher Harmony single seats, P/N
<PHONE_NUMBER>1X205 (Eurocopter P/N
                                704A41210112).
                               On Fisher Harmony two-seat benches, P/N
<PHONE_NUMBER>1XX205 (Eurocopter P/N
                                704A41210113).
AM-SAFE......................  P/N 503583-407-2251.
                               P/N 503583-408-2251.
                               On Sicma single seats with the following
                                P/Ns:
                                  P/N 17911-02-00 (Eurocopter P/N
                                   704A41210102).
                                  P/N 17911-03-00 (Eurocopter P/N
                                   704A41210105).
                                  P/N 17912-02-00 (Eurocopter P/N
                                   704A41210103).

                                  P/N 17912-03-00 (Eurocopter P/N
                                   704A41210106).
                               On Sicma two-seat benches with the
                                following P/Ns:
                                  P/N 17920-02-00 (Eurocopter P/N
                                   704A41210104).
                                  P/N 17920-03-00 (Eurocopter P/N
                                   704A41210107).
                                  P/N 504729-401-2251 on rear bench
                                   seats (all P/Ns).
------------------------------------------------------------------------

    Note: Embodiment of MOD 332V080169 can be checked visually by
verifying that no blanking plug is fitted on the 5th attachment
point of the buckle plus verifying that aircraft records indicate
the blanking plug has been removed by following MOD 332V080169.

Reason

    (d) The mandatory continuing airworthiness information (MCAI)
states: ``Recently, a report was received concerning the discovery
of fragments of a plastic blanking plug (fitted to the harness belt
buckle 5th attachment point) inside a seat harness belt buckle. Over
time, this blanking plug hardens and becomes brittle. This
condition, if not corrected, can lead to failure of the plug and
fragments being caught inside the buckle, causing interference and
preventing the belt from being released during an emergency
evacuation of the aircraft.''

Actions and Compliance

    (e) Required as indicated, unless accomplished previously, do
the following:
    (1) Within 30 days, pry out the blanking plug from each seat
harness belt buckle.
    (2) If the removed blanking plug has deteriorated (fragmented),
before further flight, replace the belt buckle with an airworthy
belt buckle without a plastic blanking plug. Do this replacement as
depicted in Figures 7 and 8 for the ``AM-SAFE'' belt buckle and
Figure 9 for the ``SCHROTH'' belt buckle of Eurocopter Emergency
Alert Service Bulletin (ASB) No. 01.00.72 for the Model AS332L1 and
L2 and ASB No. 04A003 for the Model EC225LP helicopters, both dated
April 15, 2008. To replace a belt buckle, follow the Accomplishment
Instructions, paragraph 2.B.2.b. of ASB 01.00.72 or ASB 04A003, both
dated April 15, 2008, as applicable to your model helicopter, except
this AD does not require you to return the harness belt buckle to
the manufacturer.
    (i) Conduct a buckle fastening release test to ensure the buckle
works correctly.
    (ii) Inspect the positioning of the seat harness belt on the
buckle to assure that it is as depicted in Figure 6 of the ASB, as
applicable to your model helicopter.
    (3) If the blanking plug has not deteriorated, return the buckle
to service without the blanking plug.

    Note: This modifies the buckle to be airworthy without the
blanking plug.

Differences Between This AD and the MCAI AD

    (f) This AD does not require you to return the harness belt
buckle to the manufacturer. Also, we use a compliance time of 30
days rather than 1 month.

Other Information

    (g) The Manager, Safety Management Group, FAA, ATTN: George
Schwab, Aviation Safety Engineer, Rotorcraft Directorate, Fort
Worth, Texas 76137, telephone<PHONE_NUMBER>, fax<PHONE_NUMBER> has
the authority to approve AMOCs for this AD, if requested, using the
procedures found in 14 CFR 39.19.

Related Information

    (h) European Aviation Safety Agency (EASA) AD No. 2008-0075,
dated April 22, 2008, contains related information.

Joint Aircraft System/Component (JASC) Code

    (i) JASC Code 2500: Cabin Equipment & Furnishings.

Material Incorporated by Reference

    (j) You must use the specified portions of Eurocopter Emergency
Alert Service Bulletin No. 01.00.72 for the Model AS332L1 and L2
helicopters and No. 04A003 for the Model EC225LP helicopters, both
dated April 15, 2008, to do the actions required.
    (1) The Director of the Federal Register approved the
incorporation by reference of this service information under 5
U.S.C. 552(a) and 1 CFR part 51.
    (2) For service information identified in this AD, contact
American Eurocopter Corporation, 2701 Forum Drive, Grand Prairie, TX
75053-4005, telephone<PHONE_NUMBER>, fax<PHONE_NUMBER>, or at
http://www.eurocopter.com.
    (3) You may review copies at the FAA, Rotorcraft Directorate,
Fort Worth, Texas 76137; or at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call<PHONE_NUMBER>, or go to: http://
www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Fort Worth, Texas, on November 24, 2009.
Lance T. Gant,
Acting Manager, Rotorcraft Directorate, Aircraft Certification Service.
[FR Doc. 2010-1515 Filed 1-27-10; 8:45 am]
BILLING CODE 4910-13-P


<!DOCTYPE HTML PUBLIC "-//-//W3C//DTD HTML 3.2//EN">

<META name="generator" content="PDFCreactiveX HTML Export">
<META name="creation-date" content="10/03/2010 11:40:33 ">
<TITLE></TITLE>


[Federal Register Volume 82, Number 219 (Wednesday, November 15, 2017)]
[Notices]
[Pages 52959-52962]
[FR Doc No: 2017-24656]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82035; File No. SR-Phlx-2017-89]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Its Index
Options Rules To Be More Clear and Conformed More Closely to Those of
the Options Clearing Corporation (``OCC'') and Other Exchanges

November 8, 2017.
    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 November 1, 2017, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend its index options rules to be more
clear and conformed more closely to those of the Options Clearing
Corporation (``OCC'') and other exchanges.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange is proposing to amend its index options rules in a
number of respects to be more clear and reflective of current market
practice, and to be conformed more closely to OCC rules and those of
other exchanges in order to minimize the potential for confusion, in
addition to other index option rule changes as discussed below.
Definition and Use of the Term ``Closing Index Value''
    The Exchange currently assigns the term ``closing index value'' a
meaning which differs from that term's meaning on other exchanges,
which presents the potential for needless confusion. Rule 1000A(b)(8)
currently provides that the closing index value in respect of a
particular index means (a) with respect to P.M.-settled options, the
current index value calculated at the close of business on the day of
exercise, or, if the day of exercise is not a trading day, on the last
trading day before exercise, or (b) with respect to A.M.-settled
options, the opening price of each component issue on the primary
market on the day of exercise, or, if the day of exercise is not a
trading day, on the last trading day before exercise. This definition
is proposed to be deleted. The Exchange now proposes to define the term
``closing index value'' to mean simply the last index value reported on
a business day. The new definition tracks the definition of ``closing
index value'' on CBOE, ISE and NOM.\3\
---------------------------------------------------------------------------

    \3\ CBOE Rule 24.1, ISE Rule 2001(e) and NOM Chapter XIV,
Section 2(e), for example, all define ``closing index value'' as the
last index value reported on a business day.
---------------------------------------------------------------------------

    The substantive provisions of the index rules that currently refer
to ``closing index value'' are proposed to be amended as well as
discussed below, in light of this amendment to the definition of that
term. The use of more consistent terminology across exchanges, both in
the definition itself and in substantive provisions using the defined
term, should minimize potential for confusion, especially in the
context of multiply listed index options. It is in the public interest
to avoid use of different terminology across different exchanges to
describe the same concept.
Substitute the Term ``Current Index Value'' for the term ``Closing
Index Value''
    The term ``current index value'' is defined in Rule 1000A(b)(7) in
respect of a particular index as ``the level of the index that is
derived from the reported prices of the underlying securities that are
the basis of the index, as reported by the reporting authority for the
index.'' Other options exchanges define ``current index value'' in a
similar fashion.\4\
---------------------------------------------------------------------------

    \4\ CBOE Rule 24.1(g), ISE Rule 2001(e) and NOM Chapter XIV,
Section 2(e), for example, all define the term ``current index
value'' with respect to a particular index options contract in
relevant part as the level of the underlying index reported by the
reporting authority for the index, or any multiple or fraction of
such reported level specified by the exchange.
---------------------------------------------------------------------------

    However, the Exchange currently uses the term ``closing index
value'' in provisions where other exchanges use the term ``current
index value.'' In order to use more consistent terminology across
exchanges, the Exchange proposes to replace the term ``closing index
value'' with the term ``current

index value'' in Rules 1000A(b)(1), (2) and (6). Thus the term ``put''
will be defined in Rule 1000A(b)(1) as an option contract under which
the holder of the option has the right, in accordance with the terms
and provisions of the option, to sell to the Options Clearing
Corporation the current index value times the index multiplier. Rule
1000A(b)(2) would be revised to define the term ``call'' as an option
contract under which the holder of the option has the right, in
accordance with the terms of the option, to purchase from OCC the
current index value times the index multiplier. Similarly, the term
``index multiplier'' would be defined to mean the amount specified in
the contract by which the current index value is to be multiplied to
arrive at the value required to be delivered to the holder of a call or
by the holder of a put upon valid exercise of the contract. In all
three of the revised definitions, the only change proposed is the
substitution of the term ``current index value'' for the existing term
``closing index value'' which itself is proposed to be revised as
discussed below to be consistent with the definition of that term on
other exchanges.\5\
---------------------------------------------------------------------------

    \5\ Upon implementation of the proposed amendments, the Exchange
will be using terminology that is consistent with definitions of
``put'', ``call'' and ``index multiplier'' on CBOE, ISE and NOM. See
CBOE Rules 24.1(a), 24.1(b), and 24.1(f); ISE Rules 2001(c), 2001(i)
and 2001(l); and NOM Chapter XIV, Sections 2(d), 2(i) and 2(m). The
amendments will also give the terms ``put'', ``call'' and ``index
multiplier'' definitions that are consistent with the existing Phlx
definition of ``exercise price'' which is the specific price per
unit at which the current index value may be purchased in the case
of a call or sold in the case of a put upon the exercise of an
option. Unlike the current Phlx definitions of ``put'', ``call'' and
``index multiplier'', the current Phlx definition of ``exercise
price'' is consistent with the definition of ``exercise price'' on
other exchanges. See, e.g., CBOE Rule 24.1(d), ISE Rule 2001(f) and
NOM Chapter XIV, Section 2(f), all of which define ``exercise
price'' using the defined term ``current index value''.
---------------------------------------------------------------------------

    Current Rule 1000A(b)(8) defining ``closing index value'' already
points to the current index value. Specifically, it defines ``closing
index value'' to mean, with respect to P.M.-settled options, the
current index value calculated at the close of business on the day of
exercise, or, if the day of exercise is not a trading day, on the last
trading day before exercise. In view of the amendment to Rule 1101A(d)
discussed below providing generally that the current index value used
to settle the exercise of an index options contract is the closing
index value (proposed to be defined as the last index value reported on
a business day) for the day, the net effect of these amendments with
respect to P.M.-settled options is for the most part a change in
terminology only, to be consistent with terminology used by other
options exchanges. Currently, with respect to P.M.- settled options the
relevant value for Rules 1000A(b)(1), (2) and (6) is the ``index value
calculated at the close of business on the day of exercise''. As
amended, the relevant value would be ``the last index value reported on
a business day''. Both formulations express the same concept. These
definitional changes are not intended to change current practice with
respect to P.M.-settled options.
New Definition of ``A.M. Settled Index Option''
    The Exchange proposes to add a new definition of A.M. settled index
option. Consistent with the CBOE, ISE and NOM definitions of this term,
new Rule 1000A(18) would define ``A.M. settled index option'' as an
index option for which the current index value at expiration shall be
determined as provided in Rule 1101A(e).\6\
---------------------------------------------------------------------------

    \6\ See the consistent definitions of ``A.M.-settled index
option'' in CBOE Rule 24.1(r), ISE Rule 2001(c), and NOM Chapter
XIV, Section 2(c). Like proposed Phlx Rule 1000A(b)(18), each of
these definitions incorporates by reference a separate rule
governing the determination of the current settlement value at
expiration.
---------------------------------------------------------------------------

    The Exchange proposes to adopt new Rule 1101A(d), Index Values for
Settlement, which recites that OCC rules specify that, unless the rules
of the Exchange provide otherwise, the current index value used to
settle the exercise of an index options contract is the closing index
value for the day on which the index options contract is exercised in
accordance with OCC rules, or if such day is not a business day, for
the most recent business day. Other options exchanges have similar
rules. \7\
---------------------------------------------------------------------------

    \7\ See, e.g., CBOE Rule 24.9.05 and ISE Rule 2009(e).
---------------------------------------------------------------------------

    As an exception to the baseline rule set forth in Rule 1101A(d)
regarding settlement based on closing index values, the Exchange
proposes to add new Rule 1101A(e) to provide that the last day of
trading for A.M.-settled index options shall be the business day
preceding the business day of expiration, or, in the case of an option
contract expiring on a day that is not a business day, the business day
preceding the last day of trading in the underlying securities prior to
the expiration date. Under the new rule the current index value at the
expiration of an A.M.-settled index option will be determined on the
last day of trading in the underlying securities prior to expiration,
by reference to the reported level of such index as derived from first
reported sale (opening) prices of the underlying securities on the
primary market on such day.\8\ The current language of Rule
1000A(b)(8)(b) suggests that exercise settlement values for A.M.
settled options are always based upon opening prices. In fact, however,
closing prices are used in the case of an early exercise. This new
language makes clear that for A.M.-settled index options opening prices
of the underlying securities determine the current index value used to
settle an exercise only on the last day of trading prior to expiration,
consistent with market practice and OCC processes regarding A.M.
settlement. Exercise of an American style A.M.-settled option prior to
the day of expiration will result in settlement based upon closing
prices in the underlying market, consistent with proposed new Rule
1101A(d) and OCC rules. The new language in 1101A(d) and (e) corrects
existing Exchange Rule 1000A(b)(8) which does not make this distinction
and is at variance with existing market practice and OCC settlement
processes.
---------------------------------------------------------------------------

    \8\ See ISE Rule 2009(a)(5) and NOM Chapter XIV, Section
11(a)(5), which are similar.
---------------------------------------------------------------------------

    Proposed Rule 1101A(e) incorporates one exception. In the event
that the primary market for an underlying security is open for trading
on that day, but that particular security does not open for trading on
that day, the price of that security, for the purposes of calculating
the current index value at expiration, will be the last reported sale
price of the security.\9\
---------------------------------------------------------------------------

    \9\ NOM and ISE rules contain similar exceptions. See NOM
Chapter XIV Section 11(a)(5) and ISE Rule 2009(a)(5).
---------------------------------------------------------------------------

    Finally, new language is added to Rule 1101A(e) which specifically
identifies the six A.M.-settled index options that are currently
approved for trading on the Exchange.\10\ The listing of these A.M.-
settled index options is consistent with proposed new Rule 1101A(d),
which recites that the Rules of the Options Clearing Corporation
specify that, unless the Rules of the Exchange provide otherwise (which
Rule 1101A(e) is doing by identifying AM-settled index options), the
current index value used to settle the exercise of an index options
contract shall be the closing index value for the day on which the
index options contract is exercised in accordance with the Rules of the
Options Clearing Corporation or,

if such day is not a business day, for the most recent business day. It
is also consistent with the existing Commentary to Rule 1000A(b)(8)
which provides that for any series of index options the Exchange may,
in its discretion, provide that the calculation of the final index
settlement value of any index on which options are traded at the
Exchange will be determined by reference to the prices of the
constituent stocks at a time other than the close of trading on the
last trading day before expiration.
---------------------------------------------------------------------------

    \10\ The change is being made in conformance with Article XVII,
Section 5 of the OCC By-Laws. Article XVII, Section 5 of the OCC By-
Laws provides that an Exchange may provide by rule that the current
index value shall be determined by reference to the reported level
of such index at a time or times other than the close of trading.
Other options exchanges identify individual AM-settled options in
their rules. See, e.g., CBOE Rule 24.9(a)(4).
---------------------------------------------------------------------------

Deletion of Rule 1044A, Delivery and Payment
    Rule 1044A, Delivery and Payment, currently provides that in
accordance with the applicable Rules of the Options Clearing
Corporation, the settlement of index option contracts will be by the
delivery of the difference between the closing index value on the day
of exercise and the exercise price times the index multiplier. The
Exchange proposes to delete this provision, given the proposed
amendment to the defined term ``closing index value'' as discussed
above. The Exchange has not found a similar rule on other options
exchanges and believes it to be unnecessary given the definitions of
put, call and index multiplier, which imply that settlement will be by
the delivery of the difference between the closing index value on the
day of exercise and the exercise price, times the index multiplier. OCC
Bylaws provide for the calculation of the exercise settlement amount by
reference the [sic] difference between the aggregate exercise price and
the aggregate current index value on the day of the exercise.\11\
---------------------------------------------------------------------------

    \11\ See also Article XVII of the OCC Bylaws.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\12\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\13\ in particular, in that it is designed 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, by adding clarity to the rules, correcting the description of
the manner of calculation of the exercise settlement amount in the case
of early exercise of A.M.-settled options to conform with OCC rules and
processes, and conforming index option terminology more closely to that
used by OCC and other exchanges that list index options. In addition to
correcting the inaccuracy regarding early exercise of A.M.-settled
index options, the proposed rule change would result in Exchange index
option rules that are substantially similar to rules that are currently
in place on other options exchanges as discussed in detail above,
thereby reducing potential investor confusion. The Exchange believes
that the proposed changes will provide greater clarity to members and
the public regarding the Exchange's index option rules.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe the proposed rule change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act, as the added clarity and the increased
conformity to index rules of other options exchanges and
acknowledgement of OCC rules will benefit all market participants
trading Exchange listed index options. The proposed rule change does
not affect competition in that it conforms the Phlx index rulebook to
OCC rules and to existing market practice, and will apply equally to
all market participants transacting in index options on the Exchange.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \14\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-Phlx-2017-89 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2017-89. 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All

submissions should refer to File Number SR-Phlx-2017-89, and should be
submitted on or before December 6, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-24656 Filed 11-14-17; 8:45 am]
 BILLING CODE 8011-01-P