[Federal Register Volume 86, Number 34 (Tuesday, February 23, 2021)]
[Rules and Regulations]
[Pages 10740-10742]
[FR Doc No: 2021-03570]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2020-1020; Project Identifier MCAI-2020-00988-T;
Amendment 39-21401; AD 2021-02-18]
RIN 2120-AA64

Airworthiness Directives; Airbus Defense and Space S.A. (Formerly
Known as Construcciones Aeronauticas, S.A.) Airplanes

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

ACTION: Final rule.

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SUMMARY: The FAA is adopting a new airworthiness directive (AD) for all
Airbus Defense and Space S.A. Model CN-235, CN-235-100, CN-235-200, and
CN-235-300 airplanes and Model C-295 airplanes. This AD was prompted by
cracks found on certain left- and right-hand stringers in a certain
area of the fuselage. This AD requires repetitive inspections for
cracking or broken rivets of certain left- and right-hand stringers and
surrounding structure, and repair if necessary, as specified in a
European Union Aviation Safety Agency (EASA) AD, which is incorporated
by reference. The FAA is issuing this AD to address the unsafe
condition on these products.

DATES: This AD is effective March 30, 2021.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in this AD as of March 30,
2021.

ADDRESSES: For material incorporated by reference (IBR) in this AD,
contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany;
telephone +49 221 8999 000; email<EMAIL_ADDRESS>internet
www.easa.europa.eu. You may find this IBR material on the EASA website
at https://ad.easa.europa.eu You may view this IBR material at the FAA,
Airworthiness Products Section, Operational Safety Branch, 2200 South
216th St., Des Moines, WA. For information on the availability of this
material at the FAA, call<PHONE_NUMBER>. It is also available in the AD
docket on the internet at https://

www.regulations.gov by searching for and locating Docket No. FAA-2020-
1020.

Examining the AD Docket

    You may examine the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2020-
1020; or in person at Docket Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. The AD docket contains
this final rule, any comments received, and other information. The
address for Docket Operations is U.S. Department of Transportation,
Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200
New Jersey Avenue SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Shahram Daneshmandi, Aerospace
Engineer, Large Aircraft Section, International Validation Branch, FAA,
2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-
3220; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Discussion

    The EASA, which is the Technical Agent for the Member States of the
European Union, has issued EASA AD 2020-0159, dated July 16, 2020 (EASA
AD 2020-0159) (also referred to as the Mandatory Continuing
Airworthiness Information, or the MCAI), to correct an unsafe condition
for all Airbus Defense and Space S.A. Model CN-235, CN-235-100, CN-235-
200, and CN-235-300 airplanes and Model C-295 airplanes.
    The FAA issued a notice of proposed rulemaking (NPRM) to amend 14
CFR part 39 by adding an AD that would apply to all Airbus Defense and
Space S.A. Model CN-235, CN-235-100, CN-235-200, and CN-235-300
airplanes and Model C-295 airplanes. The NPRM published in the Federal
Register on November 10, 2020 (85 FR 71583). The NPRM was prompted by
cracks found on certain left- and right-hand stringers in a certain
area of the fuselage. The NPRM proposed to require repetitive
inspections for cracking or broken rivets of certain left- and right-
hand stringers and surrounding structure, and repair if necessary, as
specified in an EASA AD.
    The FAA is issuing this AD to address such cracking in the
stringers, which could result in reduced structural integrity of the
airplane. See the MCAI for additional background information.

Comments

    The FAA gave the public the opportunity to participate in
developing this final rule. The FAA received no comments on the NPRM or
on the determination of the cost to the public.

Conclusion

    The FAA reviewed the relevant data and determined that air safety
and the public interest require adopting this final rule as proposed,
except for minor editorial changes. The FAA has determined that these
minor changes:
     Are consistent with the intent that was proposed in the
NPRM for addressing the unsafe condition; and
     Do not add any additional burden upon the public than was
already proposed in the NPRM.

Related Service Information Under 1 CFR Part 51

    EASA AD 2020-0159 describes procedures for repetitive detailed
visual (DET) or high frequency eddy current inspections of the stringer
P0a and P0a' at the riveted line of the attachment to the gusset and
along the stringer head, in particular at the area of the last
attachment of the gusset to the stringer in the midpoint between frame
(FR) 43 and FR44, repetitive DET inspections for fatigue cracks of the
fuselage skin, along the stringers' footprint and surrounding structure
and the attachment of the gusset to the FR43; repetitive DET
inspections for fatigue cracks of the actuator bracket on FR43, along
the radius of the vertical nerves, inner lug holes, and attachment
holes of the bracket to FR43; repetitive DET inspections for fatigue
cracks or broken rivets in the web and joint clips to skin and stringer
of both sides of the frame between stringer P1d and P1d' (two stringers
for each side from the central stringer P0a); repetitive DET
inspections for fatigue cracks or broken rivets of the gussets, along
the flange which joins FR43; and repair of any cracking or broken
rivets.
    This material is reasonably available because the interested
parties have access to it through their normal course of business or by
the means identified in the ADDRESSES section.

Interim Action

    The FAA considers this AD interim action. If final action is later
identified, the FAA might consider further rulemaking then.

Costs of Compliance

    The FAA estimates that this AD affects 8 airplanes of U.S.
registry. The FAA estimates the following costs to comply with this AD:

                                      Estimated Costs for Required Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per       Cost on U.S.
                          Labor cost                              Parts cost        product         operators
----------------------------------------------------------------------------------------------------------------
2 work-hours x $85 per hour = $170...........................              $0             $170           $1,360
----------------------------------------------------------------------------------------------------------------

    The FAA has received no definitive data that enables providing cost
estimates for the on-condition action specified in 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.
    The FAA is 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

    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.
    For the reasons discussed above, I certify that this AD:

    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Will not affect intrastate aviation in Alaska, 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.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

    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 airworthiness
directive:

2021-02-18 Airbus Defense and Space S.A. (Formerly Known as
Construcciones Aeronauticas, S.A.): Amendment 39-21401; Docket No.
FAA-2020-1020; Project Identifier MCAI-2020-00988-T.

(a) Effective Date

    This airworthiness directive (AD) is effective March 30, 2021.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to all Airbus Defense and Space S.A. Model CN-
235, CN-235-100, CN-235-200, and CN-235-300 airplanes and Model C-
295 airplanes, certificated in any category.

(d) Subject

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

(e) Reason

    This AD was prompted by cracks found on certain left- and right-
hand stringers in the area of frame (FR) 43 of the fuselage. The FAA
is issuing this AD to address such cracking in the stringers, which
could result in reduced structural integrity of the airplane.

(f) Compliance

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

(g) Requirements

    Except as specified in paragraph (h) of this AD: Comply with all
required actions and compliance times specified in, and in
accordance with, European Union Aviation Safety Agency (EASA) AD
2020-0159, dated July 16, 2020 (EASA AD 2020-0159).

(h) Exceptions to EASA AD 2020-0159

    (1) Where EASA AD 2020-0159 refers to its effective date, this
AD requires using the effective date of this AD.
    (2) The ``Remarks'' section of EASA AD 2020-0159 does not apply
to this AD.
    (3) Where EASA AD 2020-0159 lists a compliance time of ``during
the next A-check, or within 300 FH [flight hours] after the
effective date of this AD, whichever occurs later,'' this AD
requires using a compliance time of within 300 FH after the
effective date of this AD.

(i) No Reporting Requirement

    Although the service information referenced in EASA AD 2020-0159
specifies to submit certain information to the manufacturer, this AD
does not include that requirement.

(j) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
Large Aircraft Section, International Validation Branch, FAA, has
the authority to approve AMOCs for this AD, if requested using the
procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19,
send your request to your principal inspector or local Flight
Standards District Office, as appropriate. If sending information
directly to the Large Aircraft Section, International Validation
Branch, send it to the attention of the person identified in
paragraph (k) of this AD. Information may be emailed to<EMAIL_ADDRESS>Before using any approved AMOC, notify your
appropriate principal inspector, or lacking a principal inspector,
the manager of the responsible Flight Standards Office.
    (2) Contacting the Manufacturer: For any requirement in this AD
to obtain instructions from a manufacturer, the instructions must be
accomplished using a method approved by the Manager, Large Aircraft
Section, International Validation Branch, FAA; or EASA; or Airbus
Defense and Space S.A.'s EASA Design Organization Approval (DOA). If
approved by the DOA, the approval must include the DOA-authorized
signature.

(k) Related Information

    For more information about this AD, contact Shahram Daneshmandi,
Aerospace Engineer, Large Aircraft Section, International Validation
Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone
and fax<PHONE_NUMBER>; email<EMAIL_ADDRESS>
(l) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless this AD specifies otherwise.
    (i) European Union Aviation Safety Agency (EASA) AD 2020-0159,
dated July 16, 2020.
    (ii) [Reserved]
    (3) For EASA AD 2020-0159, contact the EASA, Konrad-Adenauer-
Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
<EMAIL_ADDRESS>internet www.easa.europa.eu. You may find this
EASA AD on the EASA website at https://ad.easa.europa.eu.
    (4) You may view this material at the FAA, Airworthiness
Products Section, Operational Safety Branch, 2200 South 216th St.,
Des Moines, WA. For information on the availability of this material
at the FAA, call<PHONE_NUMBER>. This material may be found in the AD
docket on the internet at https://www.regulations.gov by searching
for and locating Docket No. FAA-2020-1020.
    (5) You may view this material that is incorporated by reference
at the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, email
<EMAIL_ADDRESS>or go to: https://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued on January 14, 2021.
Ross Landes,
Deputy Director for Regulatory Operations, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2021-03570 Filed 2-22-21; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 74, Number 122 (Friday, June 26, 2009)]
[Rules and Regulations]
[Pages 30476-30477]
[FR Doc No: E9-15045]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 192 and 195

[Docket No. PHMSA-2008-0334]
RIN 2137-AE42

Pipeline Safety: Incorporation by Reference Update: American
Petroleum Institute (API) Standards 5L and 1104

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA),
Department of Transportation (DOT).

ACTION: Direct final rule; confirmation of effective date.

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SUMMARY: The Pipeline and Hazardous Materials Safety Administration
(PHMSA) is confirming the effective date of April 14, 2009, for the
direct final rule that appeared in the Federal Register on April 14,
2009. The direct final rule incorporated by reference the most recent
editions of API Specification 5L, ``Specification for Line Pipe'' and
API 1104, ``Welding of Pipelines and Related Facilities.''

DATES: The effective date for the direct final rule that appeared in
the Federal Register on April 14, 2009 (74 FR 17099) is confirmed as
April 14, 2009.

FOR FURTHER INFORMATION CONTACT: For information about the technical
standards, contact Mike Israni,<PHONE_NUMBER>, or by e-mail at
<EMAIL_ADDRESS>For all other

information contact John Gale by phone at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    In the Federal Register of April 14, 2009, PHMSA published a direct
final rule adopting the most recent editions of two consensus technical
standards, the American Petroleum Institute (API) 5L (44th edition) and
API 1104 (20th edition). Through use of these consensus standards,
pipeline operators will be able to use current technology, materials,
and practices. The incorporation of the most recent editions of these
standards improves clarity, consistency, and accuracy, reduces
unnecessary burdens on the regulated community and will provide, at
minimum, an equivalent level of safety. PHMSA did not eliminate the use
of the current referenced standards but simply allowed the additional
use of these new standards. PHMSA may in the future propose to
eliminate the incorporation of the existing referenced standards.

Standards Incorporated by Reference

    The National Technology Transfer and Advancement Act of 1995 (Pub.
L. 104-113) directs Federal agencies to use voluntary consensus
standards in lieu of government-written standards whenever possible.
Voluntary consensus standards are standards developed or adopted by
voluntary bodies that develop, establish, or coordinate technical
standards using agreed upon procedures.
    PHMSA's Office of Pipeline Safety participates in more than 25
national voluntary consensus standards committees. PHMSA's policy is to
adopt voluntary consensus standards when they are applicable to
pipeline design, construction, maintenance, inspection, and repair.
PHMSA has the ultimate responsibility to ensure the best interests of
public safety are being served. PHMSA reviews and approves for
incorporation by reference updated versions based on this directive.
When PHMSA believes some aspect of the standard does not meet this
directive, it will not incorporate the new edition, or that part of the
standard that it believes is contradictory with the directive. In
recent years, PHMSA has adopted dozens of new and revised voluntary
consensus standards into its gas pipeline (49 CFR Part 192)
regulations, its liquefied natural gas (LNG) (49 CFR Part 193)
regulations, and its hazardous liquid pipeline (49 CFR Part 195)
regulations.
    Parts 192, 193, and 195 incorporate by reference all or parts of
more than 60 standards and specifications developed and published by
technical organizations, including the American Petroleum Institute,
American Gas Association, American Society of Civil Engineers, American
Society of Mechanical Engineers, American Society for Testing and
Materials, Manufacturers Standardization Society of the Valve and
Fittings Industry, National Fire Protection Association, Plastics Pipe
Institute, and Pipeline Research Council International. These
organizations update and revise their published standards every 3 to 5
years to reflect modern technology and best technical practices. PHMSA
has reviewed the revised voluntary consensus standards being
incorporated in this final rule.

New Editions of Standards

    The following new editions of currently referenced standards are
being incorporated by reference (IBR) in parts 192 and 195. These new
editions refine, and clarify existing material in the standard and
generally do not introduce new topics.
American Petroleum Institute (API)
    ANSI/API Spec 5L/ISO 3183 ``Specification for Line Pipe''
(44th edition, 2007) Referenced by 49 CFR 192.55(e); 192.112; 192.113;
Item I, Appendix B to part 192; 195.106(b)(1)(i); 195.106(e).
    Amendments to API 5L in the 44th edition include:
    1. High default toughness criteria for PSL 2 pipe previously not
specified, ensuring a higher toughness baseline for most critical
products in the field.
    2. Restrictive dimensional limits (including wall thickness,
diameter, out-of-round, pipe end geometric irregularities) ensuring
better field fit up and welding.
    3. More comprehensive description of ultrasonic and radiographic
methods and documentation testing providing a more consistent weld and
body inspection and pipe traceability is improved through key
inspection step.
    4. New sour service and offshore requirements including restrictive
documentation, processing, chemical composition, inspection and
mechanical property controls ensuring well suited product applied to
these critical applications.
     API 1104 ``Welding of Pipelines and Related Facilities,''
(20th edition, errata, 2008) Referenced in 49 CFR 192.227(a);
192.229(c)(1); and 192.241(c); Item II, Appendix B; 195.222; 195.228(b)
and 195.214(a).
    The 20th edition of API 1104 includes a new Appendix A. Appendix A
describes the method to determine the maximum height and length of a
weld imperfection that can remain in a girth weld and not be a threat
to the integrity of a pipeline. Appendix A in the 19th edition is an
old standard that was developed in the 1970's and at that time X 60
material was the strongest pipe available. Now X 80 is commonplace.
    By letters dated September 26, 2008 and December 4, 2008, EVRAZ,
Inc. and California Steel Industries, Inc., petitioned PHMSA to allow
the immediate use of the 44th edition of API 5L. The petitioners
explained that the failure to allow the use of the newer standard would
adversely impact the metallurgy and tolerances of the pipe manufactured
in their plants and that the impact was industry-wide. Due to the lead
time of ordering steel pipe for major infrastructure projects, the
petitioners urgently requested that PHMSA allow the use of the newer
standard in order to avoid adverse impacts on their customers' projects
involving thousands of tons of pipe and hundreds of workers.
    The direct final rule was issued under the procedures set forth in
49 CFR 190.339. That provision allows for incorporation by reference of
industry standards by direct final rule. If an adverse comment or
notice of intent to file an adverse comment is received, a timely
document would be published in the Federal Register withdrawing this
direct final rule in whole or in part. PHMSA did not receive any
adverse comments.

    Issued in Washington, DC, on June 22, 2009 under the authority
delegated in part 1.
Jeffrey D. Wiese,
Acting Deputy Administrator.
[FR Doc. E9-15045 Filed 6-25-09; 8:45 am]
BILLING CODE 4910-60-P


[Federal Register: March 5, 2009 (Volume 74, Number 42)]
[Notices]
[Page 9609-9610]
[DOCID:fr05mr09-37]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER09-734-000]

Pittsfield Generating Company, LP; Notice of Filing

February 26, 2009.
    Take notice that on February 20, 2009, Pittsfield Generating
Company, LP filed a request that the Commission waive application of
the unreserved transmission use penalty provisions in Section 14.5 of
the Northeast Utilities Companies Local Service Schedule under Section
II of the ISO New England Inc.'s Transmission, Markets and Services
Tariff, FERC Electric Tariff No. 3.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211, 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the comment date. On or
before the comment date, it is not necessary to serve motions to
intervene or protests on persons other than the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://
www.ferc.gov. Persons unable to file electronically should submit an
original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail

<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. Eastern Time on March 13, 2009.

Kimberly D. Bose,
Secretary.
[FR Doc. E9-4713 Filed 3-4-09; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 86, Number 32 (Friday, February 19, 2021)]
[Notices]
[Pages 10364-10367]
[FR Doc No: 2021-03339]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91122; File No. SR-CBOE-2020-052]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To
Amend Rules 5.37, 5.38, and 5.73 Related to Auction Notification
Messages and Index Combo Orders in SPX in the Automated Improvement
Mechanism, Complex Automated Improvement Mechanism, and FLEX Automated
Improvement Mechanism

February 12, 2021.

I. Introduction

    On June 3, 2020, Cboe Exchange, Inc. (``Exchange'' or ``Cboe'')
filed with the Securities and Exchange Commission

(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend Rules 5.37, 5.38, and 5.73 to (1) allow
the Exchange to determine to disseminate the stop price in auction
notification messages for Automated Improvement Mechanism (``AIM''),
Complex Automated Improvement Mechanism (``C-AIM''), and FLEX AIM
auctions in S&P 500[supreg] Index options (``SPX''); and (2) modify the
minimum increment for C-AIM and FLEX AIM auction responses for Index
Combo Orders in SPX. The proposed rule change was published for comment
in the Federal Register on June 18, 2020.\3\ On July 22, 2020, the
Exchange submitted Amendment No. 1 to the proposed rule change, which
replaced and superseded the proposed rule change in its entirety.\4\ On
July 27, 2020, pursuant to Section 19(b)(2) of the Act,\5\ 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 disapprove the proposed rule
change.\6\ On August 21, 2020, the Commission published notice of
Amendment No. 1 and instituted proceedings under Section 19(b)(2)(B) of
the Act \7\ to determine whether to approve or disapprove the proposed
rule change, as modified by Amendment No. 1.\8\ On December 8, 2020,
pursuant to Section 19(b)(2) of the Act,\9\ the Commission designated a
longer period within which to approve or disapprove the proposed rule
change, as modified by Amendment No. 1.\10\ This order approves the
proposed rule change, as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 89063 (June 12,
2020), 85 FR 36923 (``Notice''). Comments received on the proposed
rule change are available on the Commission's website at: https://www.sec.gov/comments/sr-cboe-2020-052/srcboe2020052.htm.
    \4\ In Amendment No. 1, the Exchange amended the proposal to:
(1) To add that, when the proposed stop price dissemination in
auction notification messages is enabled for AIM, C-AIM, or FLEX AIM
auctions in SPX, it would apply to all such AIM, C-AIM, or FLEX AIM
auctions; (2) specify that the proposed minimum increment
modification would apply to Index Combo Orders in SPX, and to
correct an internal cross-reference in the proposed rules; (3)
provide additional detail to the description and examples of the
proposed modification to the minimum increment for Index Combo
Orders in SPX; and (4) provide additional justification and support
for the proposed rule change. The full text of Amendment No. 1 is
available on the Commission's website at: https://www.sec.gov/comments/sr-cboe-2020-052/srcboe2020052-7464403-221166.pdf.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 89400, 85 FR 46202
(July 31, 2020). The Commission designated September 16, 2020 as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 89638, 85 FR 53045
(August 27, 2020).
    \9\ 15 U.S.C. 78s(b)(2).
    \10\ See Securities Exchange Act Release No. 90592, 85 FR 80863
(December 14, 2020). The Commission designated February 13, 2021 as
the date by which the Commission shall approve or disapprove the
proposed rule change, as modified by Amendment No. 1.
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II. Description of the Proposal, as Modified by Amendment No. 1

A. Background

    The AIM, C-AIM, and FLEX AIM are electronic auctions intended to
provide an agency order with the opportunity to receive price
improvement (over the National Best Bid or Offer in AIM, or the
synthetic best bid or offer on the Exchange in C-AIM).\11\ Upon
submitting an agency order into one of these auctions, the initiating
Trading Permit Holder must also submit a contra-side second order for
the same size as the agency order. The contra-side order guarantees
that the agency order will receive an execution. Upon commencement of
an auction, market participants submit responses to trade against the
agency order. At the conclusion of the auction, depending on the
contra-side interest available, the contra-side order may be allocated
a certain percentage of the agency order.\12\
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    \11\ See Rules 5.38 (AIM), 5.38 (C-AIM), and 5.73 (FLEX AIM).
    \12\ See Rules 5.37(e), 5.38(e), and 5.73(e).
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    On March 16, Cboe activated the AIM and C-AIM in SPX options, so
that trading in SPX could continue while the trading floor was
closed.\13\ Once the trading floor re-opened on June 15, 2020, the
Exchange disengaged AIM and C-AIM for SPX. Prior to the trading floor
closure, the Exchange had not activated C-AIM (or AIM) in SPX and thus
all non-FLEX crossing transactions in SPX were previously only able to
occur on the trading floor.
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    \13\ The Exchange had activated C-AIM and AIM in SPX for the
first time as a result of the March 16, 2020 trading floor
suspension to help prevent the spread of COVID-19. According to the
Exchange, FLEX AIM in SPX had been activated prior to March 16,
2020.
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B. Minimum Increment for Index Combo Orders in SPX

    The Exchange proposes to amend Rules 5.38 and 5.73 to modify the
minimum increment for C-AIM and FLEX AIM auction responses,
respectively, in which the agency order complex strategy is comprised
of an Index Combo Order (as defined in Rule 5.33(b)) in SPX.\14\ When
submitting an agency order into a C-AIM auction, the initiating member
must also submit principal or solicited contra-side complex order(s)
for the same size as the agency order, which guarantees that the agency
order will receive an execution.\15\ Upon commencement of a C-AIM
auction, market participants submit responses to trade against the
agency order and at the conclusion of an auction, depending on the
contra-side interest available, the contra order may be allocated a
certain percentage of the agency order.\16\
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    \14\ An Index Combo Order is an order to purchase or sell one or
more index option series and the offsetting number of Index
Combinations defined by the delta. For purposes of an Index Combo
order, the following terms have the following meanings: (1) An
``Index Combination'' is a purchase (sale) of an index option call
and sale (purchase) of an index option put with the same underlying
index, expiration date, and strike price; (2) A ``delta'' is the
positive (negative) number of Index Combinations that must be sold
(purchased) to establish a market neutral hedge with one or more
series of the same index option; and (3) An Index Combo order may
not have a ratio greater than eight options to one Index Combination
(8.00), and will be subject to all provisions applicable to complex
orders (excluding the one-to-three/three-to-one ratio) in the Rules.
See Rule 5.33(b).
    \15\ See Rule 5.38.
    \16\ See generally Rule 5.38(e). The same process applies to the
FLEX AIM auction pursuant to the FLEX Rules. See generally Rule
5.73(e).
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    Rules 5.38(c)(5)(A) and 5.38(a)(4) currently provide that the
minimum price increment for C-AIM responses and agency and initiating
orders, respectively, must be in an increment the Exchange determines
on a class basis, which is $0.05 in SPX options.\17\ The corresponding
FLEX AIM Rules 5.73(c)(5)(A) and 5.73(a)(4) provide the same treatment
for FLEX AIM auctions. Thus, under current rules market participant
responses in the C-AIM and FLEX AIM auctions must improve the net
package price (i.e., each strategy unit) based on then-current leg
markets by at least the minimum increment of $0.05.\18\ Because of the
differences between the quoting practices on floor and the quoting
practices in the C-AIM and FLEX AIM auctions with respect to Index
Combo Orders in SPX,\19\ however,

applying the $0.05 minimum increment to auction responses in both floor
trading and the electronic C-AIM and FLEX AIM auctions could result in
a significant difference in the price improvement that an order
receives depending on whether the Index Combo Order in SPX is traded in
the electronic auctions or on the trading floor.\20\ A floor broker
seeking to cross SPX complex orders on the trading floor generally
identifies the legs of the complex order and their relative sizes to
each other with a net package price.\21\ The trading crowd then
generally provides a market based on the strategy's theoretical value,
rather than on the value of the net package (which equals the strategy
times the ratio), particularly when the complex order represented is a
delta neutral order that includes a combo.\22\ In open outcry trading,
the trading crowd generally prices the combo hedge portion separately
from the non-combo portion of the order.\23\ If the crowd improves the
price of the non-combo leg of the order by a minimum increment, or
greater, that price is given on each contract.\24\ The proposed changes
are intended to provide for substantially the same price improvement
opportunities at meaningful increments for Index Combo Orders in SPX,
whether they are submitted to the C-AIM or FLEX AIM electronic auctions
or executed on the trading floor.\25\
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    \17\ The System rejects a C-AIM response or agency or initiating
order that is not in the applicable minimum increment.
    \18\ Although members of the trading crowd on the trading floor
are permitted to improve the net package price (based on then-
current leg markets) by the minimum increment of $0.05, the Exchange
states that this is not the common practice. See Amendment No. 1,
supra note 4, at 9.
    \19\ An Index Combo Order in SPX is a complex order that
includes one or more SPX legs, hedged by an SPX combo, or synthetic
future, defined by the delta. The Exchange states that Index Combo
Orders in SPX comprise a significant portion of crosses in SPX and
that a significant amount of SPX volume was executed through C-AIM
when the Exchange activated C-AIM for SPX options. See id. at 7 and
n.10 (stating that in April 2020, Index Combo Orders in SPX
comprised 60.5% of crossed volume executed in SPX via AIM while the
trading floor was inoperable).
    \20\ See id. at 9-11, for examples of these pricing distinctions
in practice.
    \21\ See id. at 7.
    \22\ See id.
    \23\ The price of the combo and the rest of the order are
ultimately packaged and appear as a net package price for the entire
order on the customer fill report. See id. at 8.
    \24\ See id.
    \25\ See id. at 13.
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    Accordingly, to better align the C-AIM and FLEX AIM electronic
auction crossing processes and the open outcry crossing process for
Index Combo Orders in SPX, the Exchange proposes to amend Rule
5.38(c)(5)(A) to provide that the minimum price increment for a C-AIM
response in which the agency order complex strategy is comprised of an
Index Combo Order in SPX will be the ratio of the non-combo portion of
the strategy to the number of combos, multiplied by the minimum price
increment the Exchange determines for options on SPX agency orders
pursuant to Rule 5.38(a)(4).\26\ The Exchange also proposes to amend
Rule 5.73(c)(5)(A) to revise the FLEX AIM process for Index Combo
Orders in SPX in the same manner.\27\
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    \26\ For example, if a market participant buys 800 November 3650
SPX Calls tied to 100 September 3210 Combos, using a delta of 12.5,
the System would calculate the minimum increment by multiplying the
ratio of the non-combo leg of the order (800) to the number of
combos (100) by the minimum increment of $0.05. Therefore, (800/100)
x 0.05 = $0.40 as the starting point for price improvement during
the C-AIM or FLEX C-AIM auction. See id.
    \27\ See id. at 12-13.
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C. Auction Stop Price Dissemination in SPX

    Current Rules 5.37(c)(2), 5.38(c)(2), and 5.73(c)(2) provide that
the system initiates the AIM, C-AIM, and FLEX AIM auction processes,
respectively, by sending an auction notification message detailing the
side, size, auction ID, and options series (and, for C-AIM auctions,
complex strategy, or, for FLEX AIM auctions, length of the auction
period and options series or complex strategy, as applicable) of the
agency order to all users that elect to receive AIM, C-AIM, or FLEX AIM
auction notification messages. Because AIM, C-AIM, and FLEX AIM auction
notification messages are not included in the disseminated BBO (in
connection with AIM auctions) or OPRA, the Exchange does not currently
include the stop price of an agency order in auction notification
messages.\28\ To better align the AIM and C-AIM pricing process in SPX
with the open outcry process, the Exchange proposes to amend Rules
5.37(c)(2) and 5.38(c)(2) to provide that the Exchange may also
determine to include the stop price in SPX AIM and C-AIM auction
notification messages.\29\ As with all other information disseminated
in an AIM and C-AIM auction notification message, the disseminated stop
price for SPX auctions will be available to all users that elect to
receive auction notification messages.\30\ Because the FLEX AIM rules
are similar to the AIM and C-AIM rules, the Exchange also proposes to
maintain this consistency by amending Rule 5.73(c)(2) to similarly
provide that the Exchange may determine to include the stop price in
FLEX AIM auction notification messages for all FLEX AIM auctions in
SPX.\31\
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    \28\ See id. at 11.
    \29\ The Exchange represents that it will notify its trading
permit holders of a determination to include the stop price in
auction notification messages, pursuant to Rule 1.5, via a
specification, notice, or regulatory circular with appropriate
advanced notice, which will be posted on the Exchange's website,
electronic message, or other communication method as provided in the
Rules. See id. at 12 n.18.
    \30\ See proposed Rules 5.37(c)(2) and 5.38(c)(2).
    \31\ See Amendment No. 1, supra note 4, at 12-13.
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III. Discussion and Commission Findings

    The Commission finds that the proposed rule change, as modified by
Amendment No. 1, is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\32\ In particular, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act,\33\ 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. The
Commission also finds that the proposed rule change, as modified by
Amendment No. 1, is consistent with Section 6(b)(8) of the Act,\34\
which requires that the rules of a national securities exchange do not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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    \32\ 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).
    \33\ 15 U.S.C. 78f(b)(5).
    \34\ 15 U.S.C. 78f(b)(8).
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    As discussed above, the Exchange proposes to publish the stop price
of SPX AIM auctions. As previously noted, according to the Exchange,
orders in SPX generally take on greater risk, have a higher notional
value, trade in much larger size, and effect increasingly more complex
strategies than options in other classes.\35\ Therefore, the Exchange
believes that this proposed change may address any uncertainties market
participants may have when pricing SPX responses.\36\ The Exchange
further states that, for SPX orders crossed on the trading floor in
open outcry, market makers generally have more confidence in the
pricing of their responses as the crosses start with a request for
market and the trading crowd then provides a ``ballpark'' of the prices
at which they are willing to trade, which the market maker may then use
to more confidently price its responses.\37\ The Exchange believes that
its proposal, therefore, has been designed to incentivize continued,
competitive responses to SPX electronic auctions in substantially the
same manner in which responses may be

priced on the trading floor, thereby providing for potentially improved
liquidity and price improvement opportunities for orders being executed
through those auctions, as the dissemination of the stop price may
facilitate market participants' confidence in pricing meaningful,
competitive responses during electronic auctions in SPX in a manner
substantially similar to that which occurs on the trading floor.\38\
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    \35\ See Amendment No. 1, supra note 4, at 16.
    \36\ See id.
    \37\ See id. at 6.
    \38\ See id. at 16. The Exchange also states that its affiliated
options exchange, Cboe EDGX Exchange, Inc. (``EDGX Options'')
currently includes the price, along with the other fields the
Exchange currently disseminates, in the auction notification
messages disseminated at the initiation of its AIM and C-AIM
auctions. See EDGX Options Rules 21.19(c)(2) and 21.22(c)(2).
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    The Exchange also proposes to revise the minimum increment for
auction responses for Index Combo Orders in SPX that trade in
electronic auctions. For these orders, the Exchange proposes to base
the minimum auction response increment on the ratio of the non-combo
portion of the strategy to the number of combos, multiplied by the
minimum price increment the Exchange determines for options on SPX
agency orders pursuant to Rule 5.38(a)(4). The Exchange believes that
without the proposed change, responders to C-AIM and FLEX AIM auctions
of Index Combo Orders in SPX could ``step ahead'' of market
participants who are willing to trade with customer orders at the
auction price by providing only a trivial amount of price
improvement.\39\ The Exchange believes that this could discourage
market participants from providing contra-side interest at the best
prices and liquidity providers from joining or improving at meaningful
increments, resulting in fewer price improvement opportunities for
customers.\40\ By tying the minimum auction response increment to the
legs of the order, as opposed to the package price inclusive of the
combos, the Exchange believes the proposed rule will require market
participants to respond to the C-AIM or FLEX AIM auctions for Index
Combo Orders in SPX at prices more aligned with the prices at which
responses for these orders generally occur in open outcry.\41\ One
commenter agreed with Cboe stating that the proposed rule change should
provide investors in SPX with enhanced execution and price improvement
opportunities for agency orders submitted into the AIM auctions.\42\
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    \39\ See Amendment No. 1, supra note 4, at 15.
    \40\ See id. at 13-14 (providing an additional example to
illustrate the Exchange's arguments).
    \41\ See id. The Exchange states that the proposal will not
alter the manner in which the system caps responses pursuant to Rule
5.38(c)(5)(B). Under Rule 5.38(c)(5)(B), C-AIM buy (sell) responses
are capped at the following prices that exist at the conclusion of
the C-AIM Auction: (i) The better of the synthetic best offer
(``SBO'') (synthetic best bid (``SBB'')) or the offer (bid) of a
resting complex order at the top of the complex order book
(``COB''); or (ii) one minimum increment lower (higher) than the
better of the SBO (SBB) or the offer (bid) of a resting complex
order at the top of the COB if the BBO of any component of the
complex strategy or the resting complex order, respectively, is a
Priority Customer order. See id. at 14-15.
    \42\ See letter to Vanessa Countryman, Secretary, Commission,
from Ellen Greene, Managing Director, Equities & Options Market
Structure, The Securities Industry and Financial Markets
Association, dated July 9, 2020.
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    According to the Exchange, orders in SPX generally take on greater
risk than in other option classes, as SPX options tend to have a higher
notional value than options in other classes, trade much larger size
than in other options classes, and effect increasingly more complex
strategies than executed in other classes.\43\ The proposed change to
the minimum auction response increment for Index Combo Orders in SPX
could help to ensure that market participants seeking to trade with an
agency order at a price better than the auction price will be required
to provide meaningful price improvement. Because liquidity providers
responding to a C-AIM or FLEX AIM auction for an Index Combo Order in
SPX will not be able to gain allocation priority over solicited contra
side interest by providing only minimal price improvement over the
auction price, the proposal could help to ensure that market
participants solicited to participate as the contra side to an Index
Combo Order in SPX will continue to provide liquidity for these orders.
The proposed auction response increment also could help to ensure that
an Index Combo Order in SPX that is executed in a C-AIM or FLEX AIM
auction receives an amount of price improvement comparable to the
amount of price improvement that the order might receive if it traded
in open outcry. The proposed change to the minimum auction response
increment for Index Combo Orders in SPX is also consistent with Section
6(b)(8) of the Act because it may promote competition on the Exchange
by more closely aligning the electronic crossing process with the open
outcry crossing process, and thus provide similar execution and price
improvement opportunities to customers whether their orders are
submitted for electronic or open outcry execution.
---------------------------------------------------------------------------

    \43\ See Notice, supra note 3, at 36923.
---------------------------------------------------------------------------

    The Commission further believes that the Exchange's proposal to
allow for the dissemination of the stop price in auction notification
messages for AIM, C-AIM, and FLEX AIM auctions in SPX is consistent
with the Act.\44\ As described above, providing potential auction
responders with more information about an upcoming SPX AIM auction may
encourage market participants to submit more competitive responses,
particularly given the large and complex nature of orders in SPX.
Accordingly, the Commission believes the Exchange's proposal may result
in increased liquidity in AIM auctions and therefore increased price
improvement opportunities for SPX agency orders in the AIM auctions.
---------------------------------------------------------------------------

    \44\ One commenter supported the proposal, highlighting
specifically the stop price dissemination aspect of the proposal and
stating that it would better align the AIM and C-AIM pricing
processes for responses with the open outcry process. See letter to
Vanessa Countryman, Secretary, Commission, from Ellen Greene,
Managing Director, Equities & Options Market Structure, The
Securities Industry and Financial Markets Association, dated July 9,
2020, at 3.
---------------------------------------------------------------------------

    The Commission is also aware that other options exchanges currently
disseminate the stop price of an agency order in similar auction
mechanisms and does not believe this aspect of the proposed rule change
raises any novel regulatory issues.\45\ The Commission believes that
providing similar additional information in its electronic price
improvement auction notification messages should make the Cboe
electronic price improvement auctions competitive with other options
exchanges and encourage the submission of more responses to these
auctions. For this reason, the Commission believes that the proposed
rule change is also consistent with Section 6(b)(8) of the Act.
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    \45\ See, e.g., BOX Exchange LLC Rule 7150(f); EDGX Options
Rules 21.19(c)(2) and 21.22(c)(2); MIAX International Securities
Exchange, LLC Rule 515A(a)(2)(i)(B); and Nasdaq ISE, LLC Options 3,
Section 13(c).
---------------------------------------------------------------------------

    Accordingly, the Commission finds that the proposed rule change, as
modified by Amendment No. 1, is consistent with the requirements of the
Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\46\ that the proposed rule change, as modified by Amendment No. 1
(SR-CBOE-2020-052), be, and hereby is, approved.
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    \46\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\47\
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    \47\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-03339 Filed 2-18-21; 8:45 am]
BILLING CODE 8011-01-P