[Federal Register: October 8, 2010 (Volume 75, Number 195)]
[Notices]
[Page 62378-62381]
[DOCID:fr08oc10-30]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings 1

September 30, 2010.
    Take notice that the Commission received the following electric
corporate filings:

    Docket Numbers: EC10-104-000.
    Applicants: Dynegy Services Plum Point, LLC, Dynegy Falcon
Holdings, Inc., Plum Point Energy Associates, LLC, EIF Plum Point, LLC,
John Hancock Life Insurance Company (U.S.A).
    Description: Dynegy Falcon Holdings, Inc., Dynegy Services Plum
Point, LLC, Plum Point Energy Associates, LLC, EIF Plum Point, LLC, and
John Hancock Life Insurance Company (U.S.A.), Joint Application For
Approval Under Section 203 of the FPA.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5490.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER10-1977-003.
    Applicants: New York Independent System Operator, Inc.
    Description: New York Independent System Operator, Inc. submits
tariff filing per 35.17(b): Errata to 7/26/10 IBRT Filing to be
effective 9/30/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5420.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-2019-001.
    Applicants: PPL New Jersey Solar, LLC.
    Description: PPL New Jersey Solar, LLC submits tariff filing per
35: PPL New Jersey Solar, LLC Compliance Filing of Baseline Market-
Based Rate Tariff to be effective 7/28/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5277.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-2256-001.
    Applicants: The Trustees of the University of Pennsylvania.
    Description: Trustees of the University of Pennsylvania submits a

Petition for Acceptance of initial tariff, Waivers and Blanket
Authority.
    Filed Date: 09/29/2010.
    Accession Number: 20100930-0205.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3202-000.
    Applicants: CenterPoint Energy Houston Electric, LLC.
    Description: CenterPoint Energy Houston Electric, LLC submits
tariff filing per 35.12: Baseline Filing, TFO Tariff, Sixth Revised
Volume No. 1 to be effective 9/29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5405.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3203-000.
    Applicants: J. Aron & Company.
    Description: J. Aron & Company submits tariff filing per 35.12: J.
Aron & Company MBR Tariff to be effective 9/29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5408.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3204-000.
    Applicants: Sempra Energy Solutions LLC.
    Description: Sempra Energy Solutions LLC submits tariff filing per
35.12: Sempra Energy Solutions LLC MBR Tariff to be effective 9/29/
2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5409.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3205-000.
    Applicants: Atlantic Path 15, LLC.
    Description: Atlantic Path 15, LLC submits tariff filing per 35.12:
Atlantic Path 15 FERC Electric Tariff to be effective 9/29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5410.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3206-000.
    Applicants: Intercom Energy, Inc.
    Description: Intercom Energy, Inc. submits tariff filing per 35.12:
Intercom Energy, Inc. Market-Based Rate Tariff to be effective 9/29/
2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5415.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3207-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Southwest Power Pool, Inc. submits tariff filing per
35.13(a)(2)(iii: 1670R1 Associated Electric Cooperative, Inc. IA to be
effective 11/29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5427.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3208-000.
    Applicants: Power Receivable Finance, LLC.
    Description: Power Receivable Finance, LLC submits tariff filing
per 35.12: Power Receivable Finance, LLC MBR Tariff to be effective 9/
29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5428.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3209-000.
    Applicants: Royal Bank of Canada.
    Description: Royal Bank of Canada submits tariff filing per 35.12:
Baseline Filing of Market-Based Rate Tariff to be effective 9/29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5436.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3210-000.
    Applicants: RBC Energy Services LP.
    Description: RBC Energy Services LP submits tariff filing per
35.12: Market-Based Rate Tariff to be effective 9/29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5444.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3211-000.
    Applicants: Sempra Energy Trading LLC.
    Description: Sempra Energy Trading LLC submits tariff filing per
35.12: Sempra Energy Trading LLC MBR and Reactive Power Tariffs to be
effective 9/29/2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5448.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3212-000.
    Applicants: BNP Paribas Energy Trading GP.
    Description: BNP Paribas Energy Trading GP submits tariff filing
per 35.12: BNP Paribas Energy trading Baseline to be effective 9/29/
2010.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5478.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3216-000; ER10-3217-000.
    Applicants: Kentucky Utilities Company, Louisville Gas and Electric
Company.
    Description: Notice of Cancellation of LG&E OATT Vol 7, KU OATT Vol
4.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5492.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3218-000.
    Applicants: Nevada Power Company.
    Description: Application of Nevada Power Company to cancel FERC
Electric Tariff, Volume No. 1 as part of the Order No. 714 baseline
tariff.
    Filed Date: 09/29/2010.
    Accession Number: 20100929-5493.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3220-000.
    Applicants: Electricity Maine, LLC.
    Description: Electricity Maine, LLC submits application for
authorization to make wholesale sales of energy and capacity at
negotiated, market-based rates.
    Filed Date: 09/29/2010.
    Accession Number: 20100930-0204.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3221-000.
    Applicants: Freedom Logistics, LLC.
    Description: Freedom Logistics, LLC submits an application for
authorization to make wholesale sales of energy and capacity at
negotiated, market-based rates.
    Filed Date: 09/29/2010.
    Accession Number: 20100930-0203.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3224-000.
    Applicants: MidAmerican Energy Company.
    Description: MidAmerican Energy Company submits notice of
cancellation of FERC Electric Tariff, Original Volume No 5 and the
Service Agreements etc.
    Filed Date: 09/29/2010.
    Accession Number: 20100930-0202.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3225-000.
    Applicants: MEICO, Inc.
    Description: Meico, Inc submits notice canceling their market-based
rate tariff, FERC Electric Tariff, Original Volume 1 and a rate
schedule designation sheet reflecting the cancellation of the tariff.
    Filed Date: 09/29/2010.
    Accession Number: 20100930-0201.
    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3234-000.
    Applicants: Energy Cooperative Association of Pennsylvania.
    Description: Energy Cooperative Association of Pennsylvania submits
tariff filing per 35.12: Energy Cooperative Association of Pennsylvania
Baseline MBR eTariff Filing to be effective 9/29/2010.

    Filed Date: 09/29/2010.
    Accession Number: 20100929-5542.

    Comment Date: 5 p.m. Eastern Time on Wednesday, October 20, 2010.

    Docket Numbers: ER10-3213-000.
    Applicants: Southwest Power Pool, Inc.
    Description: Southwest Power Pool, Inc. submits an executed service
agreement for Firm Point-to-Point Transmission Service with Oklahoma
Municipal Power Authority, to be effective 9/1/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5005.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3214-000.
    Applicants: PH Glatfelter Company.
    Description: PH Glatfelter Company submits Petition for Acceptance
of Initial Rate Schedule, Waivers, and Blanket Authority, FERC Tariff
No 1, to be effective 9/29/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5009.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3219-000.
    Applicants: The Dayton Power and Light Company.
    Description: The Dayton Power and Light Company submits tariff
filing per 35.13(a)(2)(iii: FERC Rate Schedule No. 52, Village of
Versailles to be effective 9/29/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5053.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3222-000.
    Applicants: The Dayton Power and Light Company.
    Description: The Dayton Power and Light Company submits tariff
filing per 35.13(a)(2)(iii: FERC Rate Schedule No. 47, Village of
Waynesfield to be effective 9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5067.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3223-000.
    Applicants: Indian River Power LLC.
    Description: Indian River Power LLC submits tariff filing per
35.12: Indian River Power FERC Electric Tariff 09302010 to be effective
9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5068.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3226-000.
    Applicants: Great Bay Hydro Corporation.
    Description: Great Bay Hydro Corporation submits tariff filing per
35.12: Baseline eTariff Filing Pursuant to Order No. 714 to be
effective 9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5070.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3227-000.
    Applicants: Great Bay Power Marketing, Inc.
    Description: Great Bay Power Marketing, Inc. submits tariff filing
per 35.12: Baseline eTariff Filing Pursuant to Order No. 714 to be
effective 9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5072.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3228-000.
    Applicants: MidAmerican Energy Company.
    Description: MidAmerican Energy Company submits tariff filing per
35: Market-Based Rate Tariff Refiled to be effective 9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5074.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3229-000.
    Applicants: Midwest Independent Transmission System Operator, Inc..
    Description: Midwest Independent Transmission System Operator, Inc.
submits tariff filing per 35: 09-30-10 ARR Load Shifts Filing to be
effective 9[sol]1[sol]2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5075.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3230-000.
    Applicants: Wheelabrator Portsmouth Inc.
    Description: Wheelabrator Portsmouth Inc. submits tariff filing per
35.12: Wheelabrator Portsmouth Inc. MBR Tariff to be effective 9/30/
2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5076.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3231-000.
    Applicants: Wheelabrator Ridge Energy Inc.
    Description: Wheelabrator Ridge Energy Inc. submits tariff filing
per 35.12: Wheelabrator Ridge Energy Inc. MBR Tariff to be effective 9/
30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5077.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3232-000.
    Applicants: Wheelabrator Shasta Energy Company Inc.
    Description: Wheelabrator Shasta Energy Company Inc. submits tariff
filing per 35.12: Wheelabrator Shasta Energy Company, Inc. MBR Tariff
to be effective 9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5081.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3233-000.
    Applicants: Wheelabrator South Broward Inc.
    Description: Wheelabrator South Broward Inc. submits tariff filing
per 35.12: Wheelabrator South Broward Inc. MBR Tariff to be effective
9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5091.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3235-000.
    Applicants: MidAmerican Energy Company.
    Description: MidAmerican Energy Company submits tariff filing per
35: Capacity and Energy Sales Tariff--Baseline filing to be effective
9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5094.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3236-000.
    Applicants: Wyoming Colorado Intertie, LLC.
    Description: Wyoming Colorado Intertie, LLC submits tariff filing
per 35.12: Open Access Transmission Tariff in Compliance with Order No.
714 to be effective 9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5103.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3237-000.
    Applicants: Wheelabrator Frackville Energy Company Inc.
    Description: Wheelabrator Frackville Energy Company Inc. submits
tariff filing per 35.12: Wheelabrator Frackville Energy Company Inc.
MBR Tariff to be effective 9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5106.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3238-000.
    Applicants: MATL LLP.
    Description: MATL LLP submits tariff filing per 35.12: Open Access
Transmission Tariff in Compliance with Order No. 714 to be effective 9/
30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5108.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3239-000.
    Applicants: Wheelabrator Westchester L.P.
    Description: Wheelabrator Westchester L.P. submits tariff filing
per

35.12: Wheelabrator Westchester L.P. MBR Tariff to be effective 9/30/
2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5110.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Docket Numbers: ER10-3240-000.
    Applicants: Wheelabrator North Andover Inc.
    Description: Wheelabrator North Andover Inc. submits tariff filing
per 35.12: Wheelabrator North Andover Inc. MBR Tariff to be effective
9/30/2010.
    Filed Date: 09/30/2010.
    Accession Number: 20100930-5113.
    Comment Date: 5 p.m. Eastern Time on Thursday, October 21, 2010.

    Any person desiring to intervene or to protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Rules of Practice and Procedure (18 CFR 385.211 and
385.214) on or before 5 p.m. Eastern time on the specified comment
date. It is not necessary to separately intervene again in a subdocket
related to a compliance filing if you have previously intervened in the
same docket. 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. Anyone filing a motion to
intervene or protest must serve a copy of that document on the
Applicant. In reference to filings initiating a new proceeding,
interventions or protests submitted on or before the comment deadline
need not be served on persons other than the Applicant.
    As it relates to any qualifying facility filings, the notices of
self-certification [or self-recertification] listed above, do not
institute a proceeding regarding qualifying facility status. A notice
of self-certification [or self-recertification] simply provides
notification that the entity making the filing has determined the
facility named in the notice meets the applicable criteria to be a
qualifying facility. Intervention and/or protest do not lie in dockets
that are qualifying facility self-certifications or self-
recertifications. Any person seeking to challenge such qualifying
facility status may do so by filing a motion pursuant to 18 CFR
292.207(d)(iii). Intervention and protests may be filed in response to
notices of qualifying facility dockets other than self-certifications
and self-recertifications.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://
www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
14 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First St. NE., Washington, DC 20426.
    The filings in the above proceedings are accessible in the
Commission's eLibrary system by clicking on the appropriate link in the
above list. They are also 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 dockets(s). For assistance
with any FERC Online service, please e-mail<EMAIL_ADDRESS>
or call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2010-25373 Filed 10-7-10; 8:45 am]
BILLING CODE 6717-01-P


In addition, the Exchange would continue to handle events processed
by the matching engine in sequence, and a Continuous Book Order that is
included in the Exchange's published bid or offer would trade with
incoming Continuous Book Orders unless the Periodic Auction is
processed prior to the matching engine's receipt of the incoming
Continuous Book Order. Such executions would not run afoul of the firm
quote requirements of the Quote Rule as Rule 602(b)(3) of Regulation
NMS contains an explicit exemption from these requirements for broker-
dealers that are in the process of effecting a transaction in that
security at the time the incoming order is ``presented'' to the broker-
dealer for potential execution.
    Finally, the Exchange's published quotations would continue to be
considered ``automated quotations'' as defined in Rule 600(b)(4) of
Regulation NMS. As discussed with respect to compliance with the Quote
Rule, the

Exchange has designed its system for trading Periodic Auctions to
minimize unnecessary latency, and therefore does not believe that the
introduction of Periodic Auctions would impair the ability of the
Exchange to execute incoming orders entered on the Continuous Book
against its published bids or offers. In this regard, the Exchange
represents that any additional latency on the Continuous Book that may
result from the proposed introduction of Periodic Auctions would not be
material from the perspective of compliance with the Order Protection
Rule. Under Regulation NMS, an ``automated'' quotation is one that,
among other things, can be executed ``immediately and automatically''
against an incoming immediate-or-cancel order. Although the
Commission's recent guidance related to automated quotations has
focused on the introduction of intentional delay mechanisms or ``speed
bumps,'' \76\ which present different and more complex issues under
Regulation NMS, the Exchange believes that its proposed implementation
of Periodic Auctions would not frustrate the purposes of the Order
Protection Rule by ``impairing fair and efficient access'' to the
Exchange's quotations. In this regard, the Exchange notes that it has
engaged in substantial testing of its Periodic Auction product and,
based on that testing, believes that any additional latency that may be
experienced on the Continuous Book as a result of the introduction of
its Periodic Auction product would be minimal and de minis [sic] from
the perspective of the Order Protection Rule.\77\
---------------------------------------------------------------------------

    \76\ See Securities Exchange Act Release No. 78102 (June 17,
2016), 81 FR 40785 (June 23, 2017) (File No. S7-03-16) (``Commission
Interpretation'').
    \77\ Although the Commission refused to enumerate a numeric
latency threshold for an intentional delay that is sufficiently de
minimis for the purposes of the Order Protection Rule, the Staff of
the Division of Trading and Markets has issued guidance stating the
Staff's belief that delays of less than one millisecond would
qualify as de minimis. See Staff Guidance on Automated Quotations
under Regulation NMS (June 17, 2016), available at https://www.sec.gov/divisions/marketreg/automated-quotations-under-regulation-nms.htm. While the Exchange's proposal would not
introduce an intentional delay, the Exchange's testing indicates
that any additional latency that may result from the proposed
introduction of Periodic Auctions would be well within this
threshold.
---------------------------------------------------------------------------

e. Compliance With Section 11(a) of the Exchange Act
    The proposed rule change is also consistent with Section 11(a)(1)
of the Act \78\ and the rules promulgated thereunder. Generally,
Section 11(a)(1) of the Act restricts any member of a national
securities exchange from effecting any transaction on such exchange for
(i) the member's own account, (ii) the account of a person associated
with the member, or (iii) an account with respect to which the member
or a person associated with the member exercises investment discretion
(collectively referred to as ``covered accounts''), unless a specific
exemption is available. Rule 11a2-2(T) under the Act,\79\ known as the
``effect versus execute'' rule, provides exchange members with an
exemption from the Section 11(a)(1) prohibition.
---------------------------------------------------------------------------

    \78\ 15 U.S.C. 78k(a). Section 11(a)(1) prohibits a member of a
national securities exchange from effecting transactions on that
exchange for its own account, the account of an associated person,
or an account over which it or its associated person exercises
discretion unless an exception applies.
    \79\ 17 CFR 240.11a2-2(T).
---------------------------------------------------------------------------

    The ``Effect vs. Execute'' exemption permits an exchange member,
subject to certain conditions, to effect transactions for covered
accounts by arranging for an unaffiliated member to execute
transactions on the exchange. To comply with Rule 11a2-2(T)'s
conditions, a member: (i) Must transmit the order from off the exchange
floor; (ii) may not participate in the execution of the transaction
once it has been transmitted to the member performing the execution;
\80\ (iii) may not be affiliated with the executing member; and (iv)
with respect to an account over which the member has investment
discretion, neither the member nor its associated person may retain any
compensation in connection with effecting the transaction except as
provided in the rule. For the reasons set forth below, the Exchange
believes that members entering orders into Periodic Auctions would
satisfy the requirements of Rule 11a2-2(T), and that the proposal is
therefore consistent with Section 11(a) of the Act and the rules
thereunder.
---------------------------------------------------------------------------

    \80\ The member may, however, participate in clearing and
settling the transaction.
---------------------------------------------------------------------------

    The first condition of Rule 11a2-2(T) is that orders for covered
accounts be transmitted from off the exchange floor. The Exchange's
system, including the proposed system for processing Periodic Auctions
pursuant Proposed Rule 11.25, would continue to receive orders
electronically through remote terminals or computer-to-computer
interfaces. In the context of other automated trading systems, the
Commission has found that the off-floor transmission requirement is met
if an order for a covered account is transmitted from a remote location
directly to an exchange by electronic means.\81\ Because the Exchange's
system for handling Periodic Auctions would receive orders from members
electronically through remote terminals or computer-to-computer
interfaces, the Exchange believes that orders submitted to a Periodic
Auction electronically would satisfy the off-floor transmission
requirement.
---------------------------------------------------------------------------

    \81\ See Securities Exchange Act Release No. 15533 (January 29,
1979), 44 FR 6084 (January 31, 1979) (``1979 Release''); 14563
(March 14, 1978), 43 FR 11542 (March 17, 1978) (``1978 Release'');
see also Securities Exchange Act Release No. 88806 (May 4, 2020), 85
FR 27451 (May 8, 2020) (order approving MEMX LLC's exchange
registration); 85828 (May 10, 2019), 84 FR 21841 (May 15, 2019)
(order approving the Long-Term Stock Exchange, Inc.'s exchange
registration).
---------------------------------------------------------------------------

    The second condition of Rule 11a2-2(T) requires that neither a
member nor an associated person of such member participate in the
execution of its order. This requirement was originally intended to
prevent members from using their own brokers on an exchange floor to
influence or guide the execution of their orders.\82\ The Exchange
represents that Periodic Auctions would be executed automatically
pursuant to the rules set forth in Proposed Rule 11.25, which would
govern the operation of Periodic Auctions. Although the Exchange would
disseminate Periodic Auction Messages during the Periodic Auction
Period and members would generally be permitted to modify and/or cancel
their orders during the auction process, the execution of a member's
orders in a Periodic Auction would depend not on the member entering
the order, but rather on what other orders are present, the priority of
those orders, and the remaining duration of any Periodic Auction in the
security. Specifically, the Periodic Auction Price at which orders
would be executed in a Periodic Auction would be established at the end
of the 100 millisecond Periodic Auction Period based on objective rules
that balance supply and demand in the auction pursuant to Proposed Rule
11.25(d), and the priority of any orders executed at the Periodic
Auction Price would be determined based on the criteria established in
Proposed Rule 11.25(e), which defines the priority of orders executed
in such auctions. Thus, at no time following the submission of an order
is a member or associated person of such member able to acquire control
or influence over the result or timing of order execution, which would
instead be conducted pursuant to Proposed Rules 11.25(d)-(e), as
described, based on the Periodic Auction Orders and Continuous Book
Orders available to participate in the execution of the auction.\83\
Once an

order has been transmitted, the member that transmitted the order will
not participate in its eventual execution.
---------------------------------------------------------------------------

    \82\ Id. (``1978 Release'').
    \83\ Users may modify and/or cancel their Periodic Auction
Orders at any time unless the User has elected to use the proposed
``lock-in'' feature. See Proposed Rule 11.25(b). The Commission has
stated that the non-participation requirement does not preclude
members from cancelling or modifying orders, or from modifying
instructions for executing orders, after they have been transmitted
so long as such modifications or cancellations are also transmitted
from off the floor. See Securities Exchange Act Release No. 14563
(March 14, 1978), 43 FR 11542, 11547 (the ``1978 Release'').
---------------------------------------------------------------------------

    The third condition of Rule 11a2-2(T) requires that the order be
executed by an exchange member who is unaffiliated with the member
initiating the order. The Commission has recognized that the
requirement is satisfied when automated exchange facilities are used,
as long as the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange.\84\ The Exchange
represents that the Periodic Auctions are designed such that no member
has any special or unique trading advantage in the handling of any
orders that are processed in Periodic Auctions after transmitting such
orders to the Exchange.
---------------------------------------------------------------------------

    \84\ In considering the operation of automated execution systems
operated by an exchange, the Commission noted that, while there is
not an independent executing exchange member, the execution of an
order is automatic once it has been transmitted into the system.
Because the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange, the Commission has
stated that executions obtained through these systems satisfy the
independent execution requirement of Rule 11a2-2(T). See 1979
Release.
---------------------------------------------------------------------------

    Finally, the fourth condition of Rule 11a2-2(T) requires that, in
the case of a transaction effected for an account with respect to which
the initiating member or an associated person thereof exercises
investment discretion, neither the initiating member nor any associated
person thereof may retain any compensation in connection with effecting
the transaction, unless the person authorized to transact business for
the account has expressly provided otherwise by written contract
referring to Section 11(a) of the Act and Rule 11a2-2(T)
thereunder.\85\ The Exchange recognizes that members relying on Rule
11a2-2(T) for transactions effected through a Periodic Auction must
comply with this condition of the Rule, and the Exchange will enforce
this requirement pursuant to its obligations under Section 6(b)(1) of
the Act to enforce compliance with federal securities laws.
---------------------------------------------------------------------------

    \85\ See 17 CFR 240.11a2-2(T)(a)(2)(iv). In addition, Rule 11a2-
2(T)(d) requires a member or associated person authorized by written
contract to retain compensation, in connection with effecting
transactions for covered accounts over which such member or
associated persons thereof exercises investment discretion, to
furnish at least annually to the person authorized to transact
business for the account a statement setting forth the total amount
of compensation retained by the member in connection with effecting
transactions for the account during the period covered by the
statement which amount must be exclusive of all amounts paid to
others during that period for services rendered to effect such
transactions. See also 1978 Release, at 11548 (stating ``[t]he
contractual and disclosure requirements are designed to assure that
accounts electing to permit transaction-related compensation do so
only after deciding that such arrangements are suitable to their
interests'').
---------------------------------------------------------------------------

f. Conclusion
    In conclusion, the Exchange believes that the proposed rule change
would enhance the experience of investors looking to access liquidity
in the public market and fill an important role in the U.S. equities
market where liquidity may be more limited outside of the open and
close of trading. By introducing a price forming auction for the
aggregation and execution of buy and sell orders intraday, Periodic
Auctions would increase execution opportunities available to investors.
In turn, Periodic Auctions may improve trading outcomes for market
participants that have trouble sourcing liquidity in the public markets
today, including in thinly-traded securities where liquidity is often
limited and trading often occurs on a number of off-exchange venues
that can offer reduced market impact. As such, the Exchange believes
that the proposed rule change would remove impediments to and perfect
the mechanism of a free and open market.

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

    The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the proposed rule
change is designed to increase competition by introducing an additional
mechanism for equities market participants to seek liquidity during the
course of the trading day. Indeed, the proposed introduction of
Periodic Auctions is a pro-competitive means of addressing the concerns
that the Commission expressed in its Statement on thinly-traded
securities. The proposal, which seeks to introduce innovative
functionality on a non-primary listing exchange, would allow
competition, rather than regulatory intervention designed to limit
competition (e.g., through the suspension or termination of unlisted
trading privileges), to improve market quality in thinly-traded and
other securities.
    The introduction of Periodic Auctions is designed to improve
execution quality for investors sourcing liquidity during the trading
day, and, in particular, those that are looking to trade in size, or
are looking to access liquidity in thinly-traded or other securities
where liquidity may be more scarce. Providing an additional mechanism
for price forming orders to be executed would promote competition
between venues that seek to execute this order flow, and provide market
participants and investors with greater choice with respect to how they
choose to source liquidity. The equities industry is fiercely
competitive as the Exchange must compete with other equities exchanges
and off-exchange venues for order flow. The proposal is both evidence
of this competition, and would further enable the Exchange to compete
effectively in this market.

III. Discussion and Commission Findings

    After careful review of the proposal and the comments, the
Commission finds that the Exchange's proposal is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to a national securities exchange.\86\ In
particular, the Commission finds that the proposed rule change is
consistent

with Section 6(b)(5) of the Exchange Act,\87\ 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. As outlined below, the Commission has carefully reviewed the
proposed rule change, comments received, and BYX's response to comments
to arrive at these findings.
---------------------------------------------------------------------------

    \86\ 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). One commenter asserts
that exchange operators creating new matching protocols and order
types on exchanges with little trading volume forces market
participants ``to do their own subjective analysis to understand how
these methods will affect the overall market'' and that it involves
a ``painstaking assessment of every order type across each exchange
that only the most sophisticated participants can master.'' Letter
from Joanna Mallers, Secretary, FIA Principal Traders Group, to
Vanessa Countryman, Secretary, Commission, dated August 25, 2020
(``FIA PTG Letter'') at 2. The Commission does not believe that
exchanges should be held to different standards for introducing new
functionality based on their trading volume. The Commission has
consistently encouraged trading centers to innovate and compete for
order flow, consistent with the objectives of Section 11A of the
Exchange Act, to assure fair competition among brokers and dealers,
among exchange markets and between exchange markets and markets
other than exchange markets. For example, in amending Rule 606(b)(3)
of Regulation NMS, the Commission stated that the modified rule
could affect competition among trading centers. The Commission
stated: ``If broker-dealers change their order routing decisions to
focus more on execution quality and route fewer orders to a given
trading center, that trading center will have an incentive to take
measures to attract and gain back order flow by innovating on
execution quality.'' Securities Exchange Act Release No. 84528
(November 2, 2018), 83 FR 58338, 58400 (November 19, 2018) (S7-14-
16).
    \87\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In the current market structure for trading NMS stocks, there are
multiple competing trading centers for the display and execution of
orders. Congress has found that it is in the public interest and
appropriate for the protection of investors and the maintenance of fair
and orderly markets to assure, among other things, the economically
efficient execution of securities transactions, the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities, and the practicability
of brokers executing investors' orders in the best market.\88\
---------------------------------------------------------------------------

    \88\ See Section 11A(a)(1)(C) of the Exchange Act, 15 U.S.C.
78k(a)(1)(C).
---------------------------------------------------------------------------

    In the U.S. equity market structure, auctions are a fundamental
form of price discovery mechanism, in which orders to buy and sell are
matched at a single executing price. Traditionally, the U.S. markets
open and close with an auction, and trading throughout the day is
conducted via continuous trading. Consistent with Section 11A of the
Exchange Act, the Commission has encouraged and welcomed beneficial
innovations in the marketplace by market participants.\89\ In
considering market structure innovations that may provide benefits to
thinly traded securities, the Commission noted that some suggested that
an exchange implement periodic intraday auctions as a means of
concentrating liquidity at times other than solely at the market open
and market close.\90\ The Exchange is proposing to add Periodic
Auctions to continuous trading in an attempt to attract intra-day
trading liquidity.
---------------------------------------------------------------------------

    \89\ See Securities Exchange Act Release Nos. 61358 (January 14,
2010) (Concept Release on Equity Market Structure) (``Moreover, to
the extent that a competitive advantage flows from these [highly
sophisticated trading tools], does that competitive advantage help
to promote and enable competition, beneficial innovation, and
ultimately, enhanced market quality?'') and 83663 (July 18, 2018)
(Regulation of NMS Stock Alternative Trading Systems) (``Regulation
ATS was designed to encourage innovation and provide enough
flexibility to accommodate the business objectives of, and benefits
provided by, alternative trading systems''). See also Securities
Exchange Act Release No. 87327, supra note 13.
    \90\ See Securities Exchange Act Release No. 87327, supra note
13, 84 FR at 56957, n.15 and accompanying text.
---------------------------------------------------------------------------

    Two commenters support the innovation of the proposal and its
potential benefits to the national market system.\91\ Commenters also
raise some concerns and offer suggestions regarding the proposal. One
commenter characterizes Periodic Auctions as a new mechanism for non-
displayed transactions and raises a concern that Periodic Auctions
would encourage non-displayed trading.\92\ The commenter also states
that market structure considerations, including the mechanics of
matching trades, are complex and that a seemingly small change in
market structure can result in significant negative and often
unintended consequences and costs. From this general proposition, the
commenter concludes that Periodic Auctions could cause wider bid-ask
spreads \93\ and decreased posted size.\94\ The Commission notes that
while auction orders are not displayed, information about auctions is
disseminated to the marketplace, including transaction information. In
addition, the Periodic Auction Book Price and the total number of
shares of Periodic Auction Orders that are matched at the Periodic
Auction Book Price would be disseminated and trades would be reported.
Although the commenter states that trading system changes can result in
increased costs to market participants,\95\ the Commission notes that
participation in the Periodic Auctions is not required by the Exchange
and that costs related to participation in or assessment of the
Periodic Auctions would be determined by market participants. The
Exchange asserts, in response to the commenter, that its proposal will
enhance market quality by encouraging market participants to post
orders on its Continuous Book because Periodic Auctions will: (1)
Increase execution opportunities for such orders; and (2) provide an
opportunity for such orders to receive price improvement beyond their
posted prices when executed in a Periodic Auction.\96\ In addition, the
Exchange states that it has already conducted rigorous testing
(discussed below) \97\ and that, prior to implementing Periodic
Auctions, it will conduct more testing of the proposed functionality.
This additional testing will include: (1) Unit testing by the
development team and system-wide integration testing by an independent
quality assurance team, both of which will be incorporated into the
Exchange's automated test framework; (2) at least two weeks of internal
testing in the Exchange's certification environment using an automated
system to generate and send orders as well as manual testing by the
Exchange's trade desk; and (3) at least four weeks of customer testing
in the certification environment.\98\ The Exchange states that its
certification environment will remain available alongside the
production release of Periodic Auctions for members that want to test
Periodic Auction functionality in that environment following its
initial rollout.\99\ The Commission believes that this testing may
allow the Exchange and members to identify negative unintended
consequences resulting from Periodic Auctions. More generally, the
Commission believes that market innovations may create new
opportunities for investors and have the potential to benefit the
market overall. Given the anticipated enhancements to price discovery
and opportunities for price improvement that Periodic Auctions may
provide, the Commission finds the Exchange's proposal is consistent
with the Exchange Act.
---------------------------------------------------------------------------

    \91\ See letter from Ellen Greene, Managing Director, Equities &
Options Market Structure, Securities Industry and Financial Markets
Association, to Vanessa Countryman, Secretary, Commission, dated
December 17, 2020 (``SIFMA Letter'') at 1; letter from Joe Wald and
Ray Ross, Managing Directors and Co-Heads of Electronic Trading, BMO
Capital Markets Group, to Vanessa Countryman, Secretary, Commission,
dated December 22, 2020 (``BMO Letter'') at 1.
    \92\ See FIA PTG Letter, supra note 86, at 1.
    \93\ Another commenter states that it is difficult to predict
whether Periodic Auctions would increase liquidity. See SIFMA
Letter, supra note 91, at 2. This commenter had previously submitted
a letter stating that it might comment on the substance of the
proposal after reviewing the Exchange's FAQs about the operation of
the Periodic Auction. See letter from Ellen Greene, Managing
Director, Equities & Options Market Structure, Securities Industry
and Financial Markets Association, to Vanessa Countryman, Secretary,
Commission, dated August 28, 2020. The Exchange did post FAQs on its
website and the commenter submitted its second comment letter.
    \94\ See FIA PTG Letter, supra note 86, at 2. Therefore, the
commenter suggests that it is necessary to conduct a comprehensive
and quantitative analysis to understand the consequences. See id.
    \95\ See id.
    \96\ See letter from Adrian Griffiths, Assistant General
Counsel, Exchange, to Vanessa Countryman, Secretary, Commission,
dated February 4, 2021 (``BYX Response'') at 6.
    \97\ See infra note 102, and accompanying text.
    \98\ See Amendment No. 4 at 7-8.
    \99\ See id. at 8.
---------------------------------------------------------------------------

    One commenter asks whether there would be any impact on price
discovery

in the continuous order book.\100\ The Exchange states that offering
Periodic Auctions alongside its continuous trading would not cause any
undue latency that would negatively impact trading on the Continuous
Book.\101\ The Exchange represents that it has conducted rigorous
testing, including both an analysis of system performance related to
Periodic Auctions in expected market conditions and additional stress
testing, including scenarios beyond what the Exchange expects to happen
in a production environment.\102\ As a result, the Exchange does not
believe that the proposed Periodic Auctions would have any meaningful
impact on its ability to offer continuous trading alongside its
proposed Periodic Auction and would not inappropriately interfere with
trading on the Continuous Book.\103\ The Exchange states that, based on
its analysis, any additional latency that may be experienced on the
Continuous Book would be minimal, and both (1) within the range of
latencies experienced when the Exchange conducts other resource
consumptive tasks today, such as re-pricing of pegged orders; and (2)
so small as to not present any regulatory concerns under either the
Quote Rule or the Order Protection Rule.\104\ These statements
supplement the Exchange's representation in Amendment No. 3 that, based
on substantial testing, any additional latency resulting from running a
Periodic Auction would be minimal and de minimis from the perspective
of the Order Protection Rule and would be well within a threshold of
one millisecond.\105\ Further, to prevent potential capacity and/or
performance issues, the Exchange will cancel a Periodic Auction at the
end of the Periodic Auction Period if it is unable to successfully
process such Periodic Auction according to Rule 11.25 after a specified
number of attempts determined by the Exchange and published in a
circular distributed to members.\106\ Based on the Exchange's
representations and the Commission's understanding of the proposed
operation of the Periodic Auctions, the Commission finds that the
potential for delay resulting from the Periodic Auctions as proposed
would not impair fair and efficient access to the Exchange's protected
quotations under the Exchange Act.\107\
---------------------------------------------------------------------------

    \100\ See BMO Letter, supra note 91, at 2. The commenter also
asks what the parameters are surrounding the circumstances in which
the Exchange would ``throttle'' the initiation of periodic auctions.
See id. In response, in Amendment No. 3, the Exchange provides
additional information, stating that ``the throttle would limit the
rate at which new auctions are initiated by the System by imposing
configurable limits for both: (1) A sustained rate that controls the
number of Periodic Auctions that can be initiated on a continuous
basis, calculated by looking at System load during high utilization
periods and the time it takes to initiate an auction to determine a
safe maximum for the number of auctions that can be initiated each
second; and (2) a burst rate that would allow the System to initiate
a larger number of Periodic Auctions when either no or few auctions
have been initiated for a specified time period.'' Amendment No. 3
at 19, n.30.
    \101\ See BYX Response, supra note 96, at 10.
    \102\ See id. at 11.
    \103\ See id.
    \104\ See id.
    \105\ See Amendment No. 3, at 64, n.69.
    \106\ See proposed BYX Rule 11.25(f). See also Amendment No. 3
at 27.
    \107\ See Securities Exchange Act Release No. 78102 (June 17,
2016), 81 FR 40785 (File No. S7-03-16) (Commission Interpretation
Regarding Automated Quotations Under Regulation NMS) (``Commission
Interpretation'').
---------------------------------------------------------------------------

    Two commenters raise concerns about the potential for market
participants to manipulate or otherwise misuse Periodic Auctions or the
continuous book. One commenter states that market participants may
route orders to other trading venues before and during the auction
(based on information disseminated by the Exchange) and thereby impact
the price of the auction, which could affect investors who submitted
orders on BYX's continuous book because orders on the continuous book
may not opt out of the auction.\108\ Another commenter states that
because orders may be cancelled at any time, and given the
interconnectivity of the periodic auction with the continuous order
book, market participants may be able to utilize the ability to cancel
and the transparency surrounding orders in the periodic auction to gain
and improperly use information about trading interest on the Exchange
in general.\109\ Supplementary Material to .04 to Proposed Rule 11.25
provides that (1) Periodic Auction Orders must be entered with the
intent to participate in Periodic Auctions; and (2) a pattern or
practice of submitting orders for the purpose of disrupting or
manipulating Periodic Auctions, including entering and immediately
cancelling Periodic Auction Orders, will be deemed conduct inconsistent
with just and equitable principles of trade. The Exchange represents
that it will conduct surveillance to ensure that users do not
inappropriately enter Periodic Auction Orders for impermissible
purposes, including to gain information about Periodic Auction Orders
that are resting on the Periodic Auction Book or to otherwise disrupt
or manipulate Periodic Auctions.\110\ Based on the proposed standard
established by Supplementary Material to .04 to Proposed Rule 11.25 as
well as the Exchange's representation and the Commission's assessment
of the Exchange's proposed surveillances, the Commission finds that the
proposal is designed to prevent fraudulent and manipulative acts and
practices.
---------------------------------------------------------------------------

    \108\ See SIFMA Letter, supra note 91, at 2.
    \109\ See BMO Letter, supra note 91, at 2, n.4.
    \110\ See BYX Response, supra note 96, at 6. See also Amendment
No. 3 at 31 and 58.
---------------------------------------------------------------------------

    On a related point, one commenter raises concerns about information
leakage from the operation of the Periodic Auctions. The commenter
suggests that having a specific liquidity code attached to a continuous
book order that interacts with an auction order indicating it was
executed in a Periodic Auction could provide a ``free look'' regarding
an imbalance in the market and the direction of the imbalance.\111\ The
Exchange disagrees, asserting that disclosing when an execution occurs
as part of an auction is required and important post-trade
transparency, not a form of improper information leakage.\112\
Responding to the commenter's specific concern about potentially
signaling a potential buy or sell imbalance by including Continuous
Book Orders in Periodic Auctions, the Exchange states that: (1) The
Commission has approved the dissemination of actual imbalance
information in other auctions for U.S. equity securities due to the
value of that information in informing public price discovery; (2) the
Periodic Auction Price at which orders are executed in a Periodic
Auction would also be reported on each executed transaction, rendering
any additional information that could be inferred about a potential
imbalance in a completed auction meaningless; and (3) Periodic Auctions
are actually designed to perform an important price discovery function,
which is facilitated by post-trade transparency about the execution of
orders in the auction.\113\ While one may be able to detect that an
order imbalance existed prior to a Periodic Auction based on the
reported price of executions from that auction, the Commission agrees
with the Exchange that one may not necessarily infer from that reported
price that an imbalance persists after the auction and believes that
timely dissemination of transaction information is an important element
of the national market system.
---------------------------------------------------------------------------

    \111\ See BMO Letter, supra note 91, at 3.
    \112\ See BYX Response, supra note 96, at 9.
    \113\ See id. at 10.
---------------------------------------------------------------------------

    The same commenter seeks confirmation that the FIX message
associated with a periodic auction

execution would not have anything indicating that it occurred in an
auction, i.e., the auction trade print will be a bulk print that
includes all fills, but that the trade will be identified as an auction
print on the Exchange's proprietary data feed.\114\ The Exchange
responds that it would disseminate information about executions in
Periodic Auctions through both the securities information processors
and its proprietary market data feeds as a single ``bulk print''
indicating the number of shares executed in the auction and the price
at which those shares are executed. It also responds that its
proprietary market data feeds would indicate that the execution is an
auction execution.\115\ The Exchange states that currently there is no
similar indicator disseminated by the SIPs for intraday auction
executions.\116\ To facilitate additional transparency about the nature
of Periodic Auction executions to subscribers of the SIP feeds, the
Exchange represents that it will submit a request to the operating
committee(s) of the NMS plan(s) governing the dissemination of such
information and make best efforts to have similar information included
on those feeds as soon as practicable.\117\ The Commission notes that
SIP indicators currently include those for opening and closing auctions
and believes that adding an indicator to identify Periodic Auction
transactions via the SIP feeds should enhance transparency.
---------------------------------------------------------------------------

    \114\ See BMO Letter, supra note 91, at 3.
    \115\ See BYX Response, supra note 96, at 9.
    \116\ See Amendment No. 4 at 5.
    \117\ See id. at 5-6.
---------------------------------------------------------------------------

    National securities exchanges compete to attract orders through a
variety of means, including by offering innovative order execution
functionality. In turn, market participants have flexibility to choose
how to route their orders so long as they meet their regulatory
obligations, including their obligations to meet the requirements under
Regulation NMS and meet best execution obligations for their
customers.\118\ To the extent that market participants are concerned
about possible information leakage through the reporting of the
execution price or the operation of the Periodic Auctions, they may
seek to protect their information in a number of ways, including
choosing not to post orders on the Continuous Book, or not to submit
orders to Periodic Auctions.\119\
---------------------------------------------------------------------------

    \118\ See Securities Exchange Act Release No. 90610 (December 9,
2020) (S7-03-20) at 37-38.
    \119\ See text accompanying note 123, infra.
---------------------------------------------------------------------------

    Commenters also suggest modifications to BYX's proposal that they
think could be beneficial, although commenters do not raise concerns
that the proposal is inconsistent with the Exchange Act if the Exchange
does not incorporate these suggested modifications. One commenter
suggests that initially Periodic Auctions be held only for thinly
traded securities and, if there are clear improvements to liquidity,
Periodic Auctions should be gradually permitted for more liquid
securities.\120\ The Exchange states that, while Periodic Auctions may
be particularly beneficial in thinly traded securities, Periodic
Auctions would be broadly beneficial to trading in other securities,
including those that suffer from diminished market quality for reasons
other than being thinly traded.\121\ The Exchange also states that its
understanding, based on the experience of national securities exchanges
that have implemented trading mechanisms limited to a subset of NMS
stocks, is that a number of market participants that transact in NMS
stocks do not employ differentiated routing logic for different
symbols.\122\ Therefore, BYX believes those market participants may not
incorporate Periodic Auctions into their routing logic if Periodic
Auctions were limited to thinly traded securities, and this, in turn,
may impact the Exchange's ability to achieve the critical mass
necessary to make Periodic Auctions successful.\123\
---------------------------------------------------------------------------

    \120\ See SIFMA Letter, supra note 91, at 3.
    \121\ See BYX Response, supra note 96, at 7.
    \122\ See id. at 7, text accompanying n.8.
    \123\ See id. at 7-8.
---------------------------------------------------------------------------

    The same commenter suggests that Continuous Book Orders be excluded
from the Periodic Auctions.\124\ That commenter and another commenter
also suggest making Continuous Book Order participation in the Periodic
Auctions optional.\125\ In response, the Exchange asserts that if a
user is concerned that its Continuous Book Orders could be executed in
Periodic Auctions at an unfair price the user would be no worse off
than if the user were to trade with an immediate-or-cancel order in the
Continuous Book.\126\ The Exchange states that a Continuous Book Order
that is executed in a Periodic Auction would always trade at a price
that is at least as good, and in many cases better than, the price it
would obtain in an execution on the Continuous Book.\127\ Additionally,
the Exchange asserts that, because each Periodic Auction is a price
forming auction, a market participant that attempted to misuse the
Periodic Auctions by entering orders into the Periodic Auction to trade
with Continuous Book Orders at unfair prices would incur additional
risks if trading in a Periodic Auction, where it may have to trade with
such orders at an improved price rather than trading immediately with
such orders on the Continuous Book.\128\
---------------------------------------------------------------------------

    \124\ See SIFMA Letter, supra note 91, at 3.
    \125\ See BMO Letter, supra note 91, at 2.
    \126\ See BYX Response, supra note 96, at 5.
    \127\ See id. at 4.
    \128\ See id. at 5.
---------------------------------------------------------------------------

    One commenter suggests that the Exchange execute orders in Periodic
Auctions only at the midpoint of the NBBO to both reduce a potential
latency impact on the continuous order book and address the complexity
that Periodic Auctions would add to the market.\129\ The commenter also
asserts that its suggested NBBO midpoint execution would create less
potential for information leakage.\130\ The Exchange responds that the
Periodic Auction is not designed to execute trades at the midpoint, but
that it is designed as a price forming auction to execute orders at a
price that balances supply and demand in the Periodic Auctions, whether
or not that price is the NBBO midpoint.\131\ In addition, the Exchange
states that market participants that wish to receive midpoint
executions already can do so by using midpoint pegged orders and
similar order types.\132\
---------------------------------------------------------------------------

    \129\ See BMO Letter, supra note 91, at 3.
    \130\ See id.
    \131\ See BYX Response, supra note 96, at 8.
    \132\ See id.
---------------------------------------------------------------------------

    The same commenter suggests that the Exchange provide further
clarity regarding how and whether orders that trade in Periodic
Auctions will receive a unique fee code indicating that they indeed
were executed in a Periodic Auction.\133\ The Exchange notes that the
pending proposal does not address fees, states that it intends to
submit a fee proposal separately, and asserts that consideration of
such fee codes is inappropriate in connection with this proposal.\134\
---------------------------------------------------------------------------

    \133\ See BMO Letter, supra note 91, at 3, n.5.
    \134\ See BYX Response, supra note 96, at 9, n.10. The Exchange
also notes that the commenter will have an opportunity comment on
its fee proposal if it has concerns. See id.
---------------------------------------------------------------------------

    The commenter also asks that BYX add its ``True Minimum Quantity''
instruction for orders participating in the proposed auction mechanism.
The commenter states that this would better facilitate the interaction
of large-size orders.\135\ The Exchange's ``true minimum'' instruction
allows Users trading on the Continuous Book to enter orders with a
minimum size condition that must be met by a single contra-side order,
instead of one or more contra-side

orders.\136\ The Exchange states that introducing the true minimum
instruction into a Periodic Auction would unnecessarily complicate
executions; instead, the Exchange is proposing to offer a minimum
quantity instruction in the Periodic Auctions, which it believes will
be valuable.\137\ The Commission believes that the Exchange's decision
not to incorporate the various suggestions offered by commenters into
its proposal does not render the proposed rule change without a
rational basis or inconsistent with the Exchange Act.
---------------------------------------------------------------------------

    \135\ See BMO Letter, supra note 91, at 4.
    \136\ See BYX Response, supra note 96, at 11. See also BYX Rule
11.9(c)(5).
    \137\ See BYX Response, supra note 96, at 11-12. BYX also states
that no provision of the Exchange Act requires that the Exchange
make any particular order instruction available to customers, or to
allow the use of all order instructions that it has determined to
offer in each and every trading mechanism that is offers to its
members. See id. at 12.
---------------------------------------------------------------------------

    The Commission finds that the proposed rule change is designed to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. Periodic Auctions would supplement
existing opening and closing auctions by consolidating buy and sell
interest in price forming auctions during the course of the trading
day. Periodic Auctions may be particularly helpful in fulfilling and
improving execution quality of orders by or on behalf of market
participants seeking to trade in size or in thinly traded securities.
One potential issue with a periodic auction running concurrently with a
continuous book is that the act of operating the periodic auction could
cause latency in the operation of the continuous book that would impact
market participants' ability to receive timely executions on the
continuous book. As discussed above, the Exchange has conducted
testing, including stress testing, of the potential latency the
Periodic Auctions may introduce into the continuous book and has made
representations that the impact would be minimal and de minimis from
the perspective of the Order Protection Rule and would be well within a
threshold of one millisecond.\138\ As a result, the Commission
concludes that the potential latency caused by the Periodic Auctions as
proposed does not impair fair and efficient access to the Exchange's
protected quotations under the Exchange Act. In addition, the
Commission believes that the Exchange has addressed the potential for
manipulation or misuse of the Periodic Auctions and that the Exchange
has appropriate surveillances in place to detect and deter such
manipulation or misuse.
---------------------------------------------------------------------------

    \138\ See Commission Interpretation, supra note 107.
---------------------------------------------------------------------------

    The Commission must approve the proposed rule change, as modified
by Amendments No. 3 and No. 4, which does not incorporate any of the
commenters' suggestions, if it finds that it is consistent with the
Exchange Act; \139\ alternatively the Commission must disapprove it if
it cannot make that finding.\140\ For the reasons discussed above, the
Commission finds that the proposed rule change, as modified by
Amendments No. 3 and No. 4, is consistent with the Exchange Act \141\
and the rules and regulations thereunder applicable to a national
securities exchange.
---------------------------------------------------------------------------

    \139\ See Section 19(b)(2)(C)(i) of the Exchange Act.
    \140\ See Section 19(b)(2)(C)(ii) of the Exchange Act.
    \141\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Solicitation of Comments on Amendments No. 3 and No. 4 to the
Proposed Rule Change

    Interested persons are invited to submit written views, data, and
arguments concerning whether Amendments No. 3 and No. 4 are consistent
with the Exchange 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-CboeBYX-2020-021 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-CboeBYX-2020-021. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of 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-CboeBYX-2020-021 and should be submitted
on or before April 22, 2021.

V. Accelerated Approval of the Proposed Rule Change, as Modified by
Amendments No. 3 and No. 4

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendments No. 3 and No. 4, prior to the
thirtieth day after the date of publication of notice of the filing of
Amendments No. 3 and No. 4 in the Federal Register. In Amendment No. 3,
the Exchange (among other things) discussed how its proposal is
consistent with Rule 201 of Regulation SHO. This supplemental
information in Amendment No. 3 assisted the Commission in evaluating
the Exchange's proposal and in determining that it is consistent with
the Exchange Act. In Amendment No. 4, the Exchange corrected Example 6.
Additionally, in Amendment No. 4, in response to comments, the Exchange
discussed its efforts to submit trade reports to the SIP indicating
which transactions were effected during Periodic Auctions, offered
additional rationale for its proposal to allow cancellations of
Periodic Auction Orders during ongoing Periodic Auctions, and set forth
its implementation plans for the Periodic Auction. Neither Amendment
No. 3 nor No. 4 raise any novel legal issue. Accordingly, the
Commission finds good cause, pursuant to Section 19(b)(2) of the
Exchange Act,\142\ to approve the proposed rule change, as modified by
Amendments No. 3 and No. 4, on an accelerated basis.
---------------------------------------------------------------------------

    \142\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\143\ that the proposed rule change (SR-CboeBYX-2020-021),
as modified by Amendments No. 3 and No. 4, be, and

it hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \143\ Id.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\144\
---------------------------------------------------------------------------

    \144\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-06676 Filed 3-31-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 43 (Monday, March 5, 2018)]
[Rules and Regulations]
[Pages 9176-9178]
[FR Doc No: 2018-04417]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 23

[Docket No. FAA-2018-0090; Special Conditions No. 23-286-SC]

Special Conditions: Textron Aviation, Inc., Model C90A King Air;
Installation of Electronic Engine Control System

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final special conditions; request for comments.

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

SUMMARY: These special conditions are issued for the Textron Aviation,
Inc., model C90A King Air airplane. This airplane as modified by
Nextant Aerospace will have a novel or unusual design feature
associated with installation of an engine that includes an electronic
engine control system. The applicable airworthiness regulations do not
contain adequate or appropriate safety standards for this design
feature. These special conditions contain the additional safety
standards that the Administrator considers necessary to establish a
level of safety equivalent to that established by the existing
airworthiness standards.

DATES: The effective date of these special conditions is March 5, 2018.
    We must receive your comments by April 4, 2018.

ADDRESSES: Send comments identified by docket number FAA-2018-0090
using any of the following methods:
     Federal eRegulations Portal: Go to http://www.regulations.gov and follow the online instructions for sending your
comments electronically.
     Mail: Send comments to Docket Operations, M-30, U.S.
Department of Transportation (DOT), 1200 New Jersey Avenue SE, Room
W12-140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery of Courier: Take comments to Docket
Operations in Room W12-140 of the West Building Ground Floor at 1200
New Jersey Avenue SE, Washington, DC, between 9 a.m., and 5 p.m.,
Monday through Friday, except Federal holidays.
     Fax: Fax comments to Docket Operations at<PHONE_NUMBER>.
    Privacy: The FAA will post all comments it receives, without
change, to http://regulations.gov, including any personal information
the commenter provides. Using the search function of the docket
website, anyone can find and read the electronic form of all comments
received into any FAA docket, including the name of the individual
sending the comment (or signing the comment for an association,
business, labor union, etc.). DOT's complete Privacy Act Statement can
be found in the Federal Register published on April 11, 2000 (65 FR
19477-19478), as well as at http://DocketsInfo.dot.gov.
    Docket: Background documents or comments received may be read at
http://www.regulations.gov at any time. Follow the online instructions
for accessing the docket or go to the Docket Operations in Room W12-140
of the West Building Ground Floor at 1200 New Jersey Avenue SE,
Washington, DC, between 9 a.m., and 5 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Jeff Pretz, Federal Aviation
Administration, Aircraft Certification Service, Policy & Innovation
Division, Small Airplane Standards Branch, AIR-691, 901 Locust, Room
301, Kansas City, MO 64106; telephone<PHONE_NUMBER>; facsimile (816)
329-4090.

SUPPLEMENTARY INFORMATION: The FAA has determined that notice and
opportunity for prior public comment hereon are impracticable because
these procedures would significantly delay issuance of the approval
design and thus delivery of the affected aircraft. In addition, the FAA
has determined, in accordance with 5 U.S.C. 553(b)(3)(B) and 553(d)(3),
that notice and opportunity for prior public comment hereon are
unnecessary because the substance of these special conditions has been
subject to the public comment process in several prior instances with

no substantive comments received. The FAA therefore finds that good
cause exists for making these special conditions effective upon
issuance.

------------------------------------------------------------------------
        Special conditions No.               Company/airplane model
------------------------------------------------------------------------
23-01-05-SC \1\.......................  Eclipse Aviation Corporation/
                                         Model 500.
23-10-03-SC \2\.......................  Diamond Aircraft Industries/
                                         Model DA-40NG.
23-98-03-SC \3\.......................  Raytheon Aircraft Company/Model
                                         3000.
------------------------------------------------------------------------

Comments Invited
---------------------------------------------------------------------------

    \1\ http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgSC.nsf/0/3B5A8ECF0327533486256B80006AEF68?OpenDocument&Highlight=23-01-05-sc.
    \2\ http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgSC.nsf/0/4D1C0F368222693386257904004BC13F?OpenDocument&Highlight=electronic%20engine%20control.
    \3\ http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgSC.nsf/0/FF5633DA88FBF46586256B96005F8AAF?OpenDocument&Highlight=electronic%20engine%20control.
---------------------------------------------------------------------------

    We invite interested people to take part in this rulemaking by
sending written comments, data, or views. The most helpful comments
reference a specific portion of the special conditions, explain the
reason for any recommended change, and include supporting data. We ask
that you send us two copies of written comments.
    We will consider all comments we receive on or before the closing
date for comments. We will consider comments filed late if it is
possible to do so without incurring expense or delay. We may change
these special conditions based on the comments we receive.

Background

    On January 12, 2016, Nextant Aerospace applied for a supplemental
type certificate (STC) for installation of two General Electric (GE)
H75-100E engines that include electronic engine and propeller controls
in the model C90A King Air. The model C90A, currently approved under
Type Certificate No. 3A20, is a normal category twin turbo-propeller
airplane with a maximum capacity of up to 13 passengers and a maximum
takeoff weight of up to 9650 lbs. or 10,100 lbs., depending on the
serial number modified. The airplane includes two Pratt & Whitney
Corporation (PWC) PT6A-21 engines and either Hartzell or McCauley
reversing propellers.
    Nextant Aerospace originally received an STC for the model C90A for
installation of two GE H75-100 engines. Nextant Aerospace has made
application to amend the STC to install GE H75-100E engines, which
include single channel analog supervisory electronic engine controls
(EECs) in addition to the existing mechanical engine controls. The EEC
does not include any software, but does provide single lever control
for both the fuel metering and propeller control. The EEC also ensures
the engine and propeller remain within their operating limits
throughout the approved operating range, including propeller reverse
operation and starting. Loss of the EEC results in the pilot control of
the hydro-mechanical metering/shut-off lever.
    The Nextant Aerospace installation of GE H75-100E engines in the
model C90A King Air use an electronic engine control system (a single
channel supervisory control with a mechanical backup as opposed to a
two-channel full authority control with no mechanical backup) instead
of a traditional mechanical only control system. Although the engine
control system is certificated as part of the engine, the installation
of an engine with an electronic control system requires evaluation due
to critical environmental effects and possible effects on or by other
airplane systems. This includes indirect effects of lightning, radio
interference with other airplane electronic systems, shared engine and
airplane data, and power sources.
    The regulatory requirements in 14 CFR part 23 for evaluating the
installation of complex systems, including electronic systems and
critical environmental effects, are contained in Sec. Sec.  23.1306,
23.1308, and 23.1309. However, when Sec.  23.1309 was developed, the
use of electronic control systems for engines was not envisioned. The
integral nature of these systems makes it necessary to ensure the
airplane functions, which may be included in the EEC, are properly
evaluated and that the installation does not degrade the EEC
reliability, which is approved under part 33. Sections 23.1306(a) and
23.1308(a) are applied to the EEC to ensure it remains equivalent to a
mechanical only system, which is not generally susceptible to the High
Intensity Radiated Fields (HIRF) and lightning environments.
    In some cases, the airplane in which the engine is installed
determines a higher classification than the engine controls are
certificated for, requiring the EEC systems be analyzed at a higher
classification. As of November 2005, EEC special conditions mandated
the Sec.  23.1309 classification for loss of EEC control as
catastrophic for any airplane. This is not to imply an engine failure
is classified as catastrophic, but that the EEC must provide an
equivalent reliability to mechanical engine controls. In addition,
Sec. Sec.  23.1141(e) and 25.901(b)(2) are applied to provide the fault
tolerant design requirements of turbine engine mechanical controls to
the EEC and ensure adequate inspection and maintenance interval for the
EEC. As this is a supervisory EEC with a mechanical control backup, the
intent of this special condition is to ensure the installation of both
the EEC and mechanical backup provide an equivalent reliability to that
expected of a mechanical only control.
    Part 23 did not envision the use of electronic engine controls with
either full authority controls or supervisory only controls, and lacks
the specific regulatory requirements necessary to provide an adequate
level of safety. Therefore, special conditions are necessary.

Type Certification Basis

    Under the provisions of Title 14, Code of Federal Regulations (CFR)
21.101, Nextant Aerospace must show that the model C90A, as changed,
continues to meet the applicable provisions of the regulations
incorporated by reference in Type Certificate No. 3A20 or the
applicable regulations in effect on the date of application for the
change. The regulations incorporated by reference in the type
certificate are commonly referred to as the ``original type
certification basis.'' The regulations incorporated by reference in
3A20 are as follows: CAR 3, effective May 15, 1956, amendments 3-1, 3-
2, and 3-8; CAR 3, amendment 3-6; and CAR 3 Sec.  3.705, amendment 3-7.
In addition, the certification basis includes special conditions and
some requirements from 14 CFR parts 23, 25, 36 and SFAR 27, as noted on
the Type Certificate Data Sheet. If the Administrator finds that the
applicable airworthiness regulations in part 23 do not contain adequate
or appropriate safety standards for the model C90A because of a novel
or unusual design feature, special conditions are prescribed under the
provisions of Sec.  21.16.
    In addition to the applicable airworthiness regulations and special
conditions, the model C90A must comply with the fuel vent and exhaust
emission requirements of 14 CFR part 34 and the noise certification
requirements of 14 CFR part 36.
    The FAA issues special conditions, as defined in Sec.  11.19, under
Sec.  11.38 and they become part of the type certification basis under
Sec.  21.101.
    Special conditions are initially applicable to the model for which
they are issued. Should the applicant apply for a supplemental type
certificate to modify any other model included on the

same type certificate to incorporate the same novel or unusual design
feature, the FAA would apply these special conditions to the other
model.

Novel or Unusual Design Features

    The model C90A King Air will incorporate the following novel or
unusual design features: The installation of an Electronic Engine
Control (EEC) system.

Discussion

    As defined in the summary section, this airplane makes use of an
electronic engine control system in addition to a traditional
mechanical control system, which is a novel design for this type of
airplane. The applicable airworthiness regulations do not contain
adequate or appropriate safety standards for this design feature.
Mandating a structured assessment to determine potential installation
issues mitigate the concerns that the addition of an electronic engine
control does not produce a failure condition not previously considered.

Applicability

    These special conditions are applicable to the model C90A King Air
when modified by Nextant Aerospace. Should Nextant Aerospace apply
later for a supplemental type certificate to modify any other model
included on Type Certificate No. 3A20 to incorporate the same novel or
unusual design feature, the FAA would apply these special conditions to
that model as well.

Conclusion

    This action affects only certain novel or unusual design features
on the model C90A airplane. It is not a rule of general applicability
and affects only the applicant who applied to the FAA for approval of
these features on the airplane.
    The substance of these special conditions has been subjected to the
notice and comment period in several prior instances, identified above,
and has been derived without substantive change from those previously
issued. It is unlikely that prior public comment would result in a
significant change from the substance contained herein. Therefore,
notice and opportunity for prior public comment hereon are unnecessary
and the FAA finds good cause, in accordance with 5 U.S. Code Sec. Sec.
553(b)(3)(B) and 553(d)(3), making these special conditions effective
upon issuance. The FAA is requesting comments to allow interested
persons to submit views that may not have been submitted in response to
the prior opportunities for comment described above.

List of Subjects in 14 CFR Part 23

    Aircraft, Aviation safety, Signs and symbols.

Citation

    The authority citation for these special conditions is as follows:

    Authority:  49 U.S.C. 106(f), 106(g), 40113 and 44701; 14 CFR
21.16 and 21.101; and 14 CFR 11.38 and 11.19.

The Special Conditions

    Accordingly, pursuant to the authority delegated to me by the
Administrator, the following special conditions are issued as part of
the type certification basis for Textron Aviation (formerly
Beechcraft); model C90A King Air airplanes modified by Nextant
Aerospace.

1. Installation of Electronic Engine Control System

    a. For electronic engine control (EEC) system installations, it
must be established that no single failure or malfunction or probable
combinations of failures of EEC system components will have an effect
on the system, as installed in the airplane, that causes the Loss of
Thrust Control (LOTC) probability of the system to exceed those allowed
in part 33 certification.
    b. Supervisory electronic engine control system installations must
be evaluated for environmental and atmospheric conditions, including
lightning. The EEC system lightning and High Intensity Radiated Fields
(HIRF) effects that would result in LOTC or an unacceptable change in
power or thrust must be evaluated in accordance with Sec. Sec.  23.1306
and 23.1308.
    c. The components of the installation must be constructed,
arranged, and installed to ensure their continued safe operation
between normal inspections or overhauls.
    d. Functions incorporated into any electronic engine control that
make it part of any equipment, systems or installation whose functions
are beyond that of basic engine control and which may also introduce
system failures and malfunctions, are not exempt from Sec.  23.1309 and
must be shown to meet part 23 levels of safety as derived from Sec.
23.1309. Part 33 certification data, if applicable, may be used to show
compliance with any part 23 requirements. If part 33 data is used to
substantiate compliance with part 23 requirements, then the part 23
applicant must be able to provide this data for their showing of
compliance.

    Note: The term ``probable'' in the context of ``probable
combination of failures'' does not have the same meaning as used for
a safety assessment process. The term ``probable'' in ``probable
combination of failures'' means ``foreseeable,'' or those, failure
conditions anticipated to occur one or more times during the
operational life of each airplane.

    Issued in Kansas City, Missouri, on February 16, 2018.
Pat Mullen,
Manager, Small Airplane Standards Branch, Aircraft Certification
Service.
[FR Doc. 2018-04417 Filed 3-2-18; 8:45 am]
 BILLING CODE 4910-13-P