[Federal Register Volume 82, Number 66 (Friday, April 7, 2017)]
[Rules and Regulations]
[Pages 16893-16895]
[FR Doc No: 2017-06930]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 25

[Docket No. FAA-2017-0126; Special Conditions No. 25-654-SC]

Special Conditions: VT DRB Aviation Consultants, Boeing Model
777-200 Airplanes; Installation of an Airbag System in Shoulder Belts

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final special conditions; request for comments.

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SUMMARY: These special conditions are issued for the Boeing Model 777-
200 airplane. This airplane, as modified by VT DRB Aviation Consultants
(VT DRB), will have a novel or unusual design feature when compared to
the state of technology envisioned in the airworthiness standards for
transport-category airplanes. This design feature is an airbag system
installed in shoulder belts. 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: This action is effective on VT DRB Aviation Consultants on April
7, 2017. We must receive your comments by May 22, 2017.

ADDRESSES: Send comments identified by docket number FAA-2017-0126
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 or 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://www.regulations.gov/, including any personal
information the commenter provides. Using the search function of the
docket Web site, 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 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: John Shelden, FAA, Airframe and Cabin
Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft
Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057-
3356; telephone<PHONE_NUMBER>; facsimile<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The FAA has determined that notice of, and
opportunity for prior public comment on, these special conditions is
impracticable because these procedures would significantly delay
issuance of the design approval and thus delivery of the affected
airplanes.
    In addition, 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
publication in the Federal Register.

Comments Invited

    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 will consider all comments we receive by the closing date for
comments. We may change these special conditions based on the comments
we receive.

Background

    On July 10, 2015, VT DRB applied for a supplemental type
certificate to install an airbag system in shoulder belts on Boeing
Model 777-200 airplanes. The Boeing Model 777-200 airplane, as modified
by VT DRB, is a very-important-person (VIP) interior-design derivative
of the Boeing Model 777 airplanes currently approved under Type
Certificate No. T00001SE. The modified airplane will have seating for
52 passengers and 7 crewmembers.

Type Certification Basis

    Under the provisions of Title 14, Code of Federal Regulations (14
CFR) 21.101, VT DRB must show that the Boeing Model 777-200 airplane,
as changed, continues to meet the applicable provisions of the
regulations listed in Type Certificate No. T00001SE or the applicable
regulations in effect on the date of application for the change, except
for earlier amendments as agreed upon by the FAA.
    If the Administrator finds that the applicable airworthiness
regulations (i.e., 14 CFR part 25) do not contain adequate or
appropriate safety standards for the Boeing Model 777-200 airplane
because of a novel or unusual design feature, special conditions are
prescribed under the provisions of Sec.  21.16.
    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,
these special conditions would also apply to the other model under
Sec.  21.101.
    In addition to the applicable airworthiness regulations and special
conditions, the Boeing Model 777-200 airplane, as changed, 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 14 CFR 11.19, in
accordance with Sec.  11.38, and they become part of the type
certification basis under Sec.  21.101.

Novel or Unusual Design Feature

    The Boeing Model 777-200 airplane will incorporate the following
novel or unusual design feature: An airbag system in shoulder belts of
multiple-place side-facing seats. Inflatable airbag devices are
designed to limit occupant forward excursion in the event of an
accident. While their use is now standard in the automotive industry,
their use is novel or unusual for commercial aviation.

Discussion

    The applicant is installing, as a voluntary safety measure in the
VT DRB interior, airbags (inflatable restraints) in the shoulder belts
of multiple-place side-facing seats. The applicable airworthiness
regulations have no regulations for this particular feature. Therefore,
special conditions are necessary.
    The certification basis of this modification includes Special
Federal Aviation Regulation (SFAR) 109, section 4(b), which specifies
the injury criteria for this seating orientation. These special
conditions, like special conditions previously issued on airplanes with
side-facing seats incorporating airbag systems, address the safety
issues inherent in this seating orientation when using airbag systems
to meet the injury criteria.
    SFAR 109, section 4(b) incorporates by reference the requirements
of Sec.  25.562(c)(1) through (c)(6). Section 25.562(c) requires that
the restraints remain on the shoulders and pelvises of the occupants
during impact. Advisory Circular (AC) 25.562-1B, ``Dynamic Evaluation
of Seat Restraint Systems and Occupant Protection on Transport
Airplanes,'' dated January 10, 2006, clarifies this requirement by
stating that restraints must remain on the shoulders and pelvises when
loaded by the occupants. This criterion is necessary to protect the
occupants from serious injuries that could be caused by lap-belt
contact forces applied to soft tissue, or by ineffectively restraining
the upper torsos in the event the upper-torso restraints slide off the
shoulders. In forward-facing seats (the type specifically addressed in
that AC), occupant motion during rebound, and any subsequent re-loading
of the belts, is limited by interaction with the seat backs. However,
in side-facing seats subjected to a forward impact, the restraint
systems may be the only means of limiting the occupants' rearward
(rebound) motion.
    Also as discussed by the FAA in previous special conditions, the
installation of airbag systems in shoulder belts have two additional
safety concerns: That the systems perform properly under foreseeable
operating conditions, and that the systems do not perform in a manner
or at such times as would constitute a hazard to the occupants. These
special conditions address those concerns.
    These special conditions are derived not only from similar
previously-issued special conditions, but also from special conditions
the FAA has issued for airbag systems on lap belts, with some changes
to address the issues specific to side-facing seats.
    The special conditions are not an installation approval. Therefore,
while the special conditions relate to each such system installed, the
overall installation approval is a separate finding and must consider
the combined effects of all such systems installed.
    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.

Applicability

    As discussed above, these special conditions are applicable to the
Boeing Model 777-200 airplane as modified by VT DRB. Should VT DRB
apply at a later date for a supplemental type certificate to modify any
other model included on Type Certificate No. T00001SE to incorporate
the same novel or unusual design feature, these special conditions
would apply to that model as well.

Conclusion

    This action affects only one novel or unusual design feature on one
model of airplane. It is not a rule of general applicability and
affects only the applicant who applied to the FAA for approval of this
feature on the airplane.
    The substance of these special conditions has been subject to the
notice and comment period in several prior instances, 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, because a delay would
significantly affect the certification of the airplane, which is
imminent, the FAA has determined that prior public notice and comment
are unnecessary and impracticable, and good cause exists for adopting
these special conditions upon publication in the Federal Register. 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 25

    Aircraft, Aviation safety, Reporting and recordkeeping
requirements.

0
The authority citation for these special conditions is as follows:

    Authority:  49 U.S.C. 106(g), 40113, 44701, 44702, 44704.

The Special Conditions

0
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 Boeing Model 777-200 airplanes
modified by VT DRB Aviation Consultants.
    1. For seats with an airbag system in the shoulder belts, show that
the airbag system in the shoulder belt will deploy and provide
protection under crash conditions where it is necessary to prevent
serious injury. The means of protection must take into consideration a
range of stature from a 2-year-old child to a 95th percentile male. The
airbag system in the shoulder belt must provide a consistent approach
to energy absorption throughout that range of occupants. When the seat
system includes an airbag system, that system must be included in each
of the certification tests as it would be installed in the airplane. In
addition, the following situations must be considered:
    a. The seat occupant is holding an infant.
    b. The seat occupant is a pregnant woman.
    2. The airbag system in the shoulder belt must provide adequate
protection for each occupant regardless of the number of occupants of
the seat assembly, considering that unoccupied seats may have an active
airbag system in the shoulder belt.
    3. The design must prevent the airbag system in the shoulder belt
from being either incorrectly buckled or incorrectly installed, such
that the airbag system in the shoulder belt would not properly deploy.
Alternatively, it must be shown that such deployment is not hazardous
to the occupant, and will provide the required injury protection.
    4. It must be shown that the airbag system in the shoulder belt is
not susceptible to inadvertent deployment as a result of wear and tear,
or inertial loads resulting from in-flight or ground maneuvers
(including gusts and hard landings), and other operating and
environmental conditions (vibrations, moisture, etc.) likely to occur
in service.
    5. Deployment of the airbag system in the shoulder belt must not
injure the seated occupant, including injuries that could impede rapid
egress. This assessment should include an occupant whose belt is
loosely fastened.
    6. It must be shown that inadvertent deployment of the airbag
system in the shoulder belt, during the most critical part of the
flight, will either meet the requirement of Sec.  25.1309(b) or not
cause a hazard to the airplane or its occupants.
    7. It must be shown that the airbag system in the shoulder belt
will not impede rapid egress of occupants 10 seconds after airbag
deployment.
    8. The airbag system must be protected from lightning and high-
intensity radiated fields (HIRF). The threats to the airplane specified
in existing regulations regarding lighting, Sec.  25.1316, and HIRF,
Sec.  25.1317, are incorporated by reference for the purpose of
measuring lightning and HIRF protection.
    9. The airbag system in the shoulder belt must function properly
after loss of normal aircraft electrical power, and after a transverse
separation of the fuselage at the most critical location. A separation
at the location of the airbag system in the shoulder belt does not have
to be considered.
    10. It must be shown that the airbag system in the shoulder belt
will not release hazardous quantities of gas or particulate matter into
the cabin.
    11. The airbag system in the shoulder-belt installation must be
protected from the effects of in-flight fire such that no hazard to
occupants will result.
    12. A means must be available for a crewmember to verify the
integrity of the airbag system in the shoulder-belt activation system
prior to each flight, or it must be demonstrated to reliably operate
between inspection intervals. The FAA considers that the loss of the
airbag-system deployment function alone (i.e., independent of the
conditional event that requires the airbag-system deployment) is a
major-failure condition.
    13. The inflatable material may not have an average burn rate of
greater than 2.5 inches/minute when tested using the horizontal
flammability test defined in part 25, appendix F, part I, paragraph
(b)(5).
    14. The airbag system in the shoulder belt, once deployed, must not
adversely affect the emergency-lighting system (i.e., block floor
proximity lights to the extent that the lights no longer meet their
intended function).

    Issued in Renton, Washington, on March 31, 2017.

Michael Kaszycki,
Assistant Manager, Transport Airplane Directorate, Aircraft
Certification Service.
[FR Doc. 2017-06930 Filed 4-6-17; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register Volume 82, Number 202 (Friday, October 20, 2017)]
[Notices]
[Pages 48858-48861]
[FR Doc No: 2017-22754]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81879; File No. SR-CBOE-2017-065]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To List and Trade S&P Select Sector Index Options

October 16, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on October 4, 2017, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is proposing to amend certain rules in connection with
listing S&P Select Sector Indexes under generic narrow-based listing
standards.
    The text of the proposed rule change is also available on the
Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this proposed rule change is to amend certain rules
in connection with the Exchange's plans to list and trade ten S&P
Select Sector Index options.
    Each S&P Select Sector Index represents the performance of
companies that are components of the Standard & Poor's 500 Index (``S&P
500'') within one of the following sectors (each of which is referred
to as a ``S&P Select Sector Index''):
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    \5\ These symbols represent the index. The corresponding option
symbols are SIXM, SIXE, SIXT, SIXV, SIXU, SIXR, SIXI, SIXY, SIXB,
and SIXRE, respectively.

------------------------------------------------------------------------
                                                              Number of
                Sector                      Symbol \5\        components
------------------------------------------------------------------------
Financial............................  IXM                            66
Energy...............................  IXE                            32
Technology...........................  IXT                            72
Health Care..........................  IXV                            61
Utilities............................  IXU                            28
Consumer Staples.....................  IXR                            35
Industrials..........................  IXI                            68
Consumer Discretionary...............  IXY                            85
Materials............................  IXB                            26
Real Estate..........................  IXRE                           32
------------------------------------------------------------------------

    Each constituent of a Select Sector Index is a constituent of the
S&P 500, and each Select Sector index is a subindex of the S&P 500. S&P
Dow Jones Indices \6\ assigns constituents to a S&P Select Sector Index
based on the constituent's classification under a global industry
classification standard. S&P Dow Jones Indices monitors and maintains
each Select Sector Index and rebalances each S&P Select Sector Index
quarterly.
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    \6\ S&P Dow Jones Indices is the reporting authority for the S&P
Select Sector Indexes. See proposed Rule 24.1, Interpretation and
Policy .01.
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Initial and Maintenance Listing Criteria
    Each S&P Select Sector Index meets the definition of a narrow-based
index as set forth in Rule 24.1(i)(2) (an index designed to be
representative of a particular industry or a group of related
industries and include indices having component securities that are all
headquartered within a single country). Additionally, each S&P Select
Sector Index option satisfies the initial listing criteria of a narrow-
based index, as set forth in Rule 24.2(b):
    (1) Options will be A.M.-settled;
    (2) the index is capitalization-weighted, price-weighted, equal
dollar-weighted, or modified capitalization-weighted, and consists of
ten or more component securities (the S&P Select Sector Indexes are
modified capitalization-weighted);
    (3) each component security has a market capitalization of at least
$75 million, except that for each of the lowest weighted component
securities in the index that in the aggregate account for no more than
10% of the weight of the index, the market capitalization is at least
$50 million;
    (4) trading volume of each component security has been at least one
million shares for each of the last six months, except that for each of
the lowest weighted component securities in the index that in the
aggregate account for no more than 10% of the weight of the index,
trading volume has been at least 500,000 shares for each of the last
six months;
    (5) in a capitalization-weighted index or a modified
capitalization-weighted index, the lesser of the five highest weighted
component securities in the index or the highest weighted component
securities in the index that in the aggregate represent at least 30% of
the total number of component securities in the index each have had an
average monthly trading volume of at least 2,000,000 shares over the
past six months;
    (6) no single component security represents more than 25% of the
weight of the index, and the five highest weighted component securities
in the index do not in the aggregate account for more than 50% (60% for
an index consisting of fewer than 25 component securities) of the
weight of the index;
    (7) component securities that account for at least 90% of the
weight of the index and at least 80% of the total number of component
securities in the index satisfy the requirements of Rule 5.3 applicable
to individual underlying securities;
    (8) all component securities are ``reported securities'' as defined
in Rule 11A a3-1 under the Exchange Act;
    (9) non-U.S. component securities (stocks or ADRs) that are not
subject to comprehensive surveillance agreements do not in the
aggregate represent more than 20% of the weight of the index;
    (10) the current underlying index value will be reported at least
once every fifteen seconds during the time the index options are traded
on the Exchange;
    (11) an equal dollar-weighted index will be rebalanced at least
once every calendar quarter; and
    (12) if an underlying index is maintained by a broker-dealer, the
index is calculated by a third party who is not a broker-dealer, and
the broker-dealer has erected a ``Chinese Wall'' around its personnel
who have access to information concerning changes in and adjustments to
the index.
    The S&P Select Sector Index options will be subject to the
maintenance listing standards set forth in Rule 24.2(c):
    (1) The conditions stated in (1), (3), (6), (7), (8), (9), (10),
(11) and (12) above must continue to be satisfied, provided that the
conditions stated in (6) above must be satisfied only as of the first
day of January and July in each year;
    (2) the total number of component securities in the index may not
increase or decrease by more than 33\1/3\% from the number of component
securities in the index at the time of its initial listing, and in no
event may be less than nine component securities;
    (3) trading volume of each component security in the index must be
at least 500,000 shares for each of the last six months, except that
for each of the lowest weighted component securities in the index that
in the aggregate account for no more than 10% of the weight of the
index, trading volume must be at least 400,000 shares for each of the
last six months; and
    (4) in a capitalization-weighted index or a modified
capitalization-weighted index, the lesser of the five highest weighted
component securities in the index or the highest weighted component
securities in the index that in the aggregate represent at least 30% of
the total number of stocks in the index each have had an average
monthly trading volume of at least 1,000,000 shares over the past six
months.\7\
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    \7\ As is the case with other index options authorized for
listing and trading on CBOE, in the event a S&P Select Sector Index
fails to satisfy the maintenance listing standards, the Exchange
will not open for trading any additional series of options of that
class unless such failure is determined by the Exchange not to be
significant and the Commission concurs in that determination, or
unless the continued listing of that class of index options has been
approved by the Securities and Exchange Commission (the
``Commission'') under Section 19(b)(2) of the Securities and
Exchange Act (the ``Act'').
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Expiration Months, Settlement, and Exercise Style
    Consistent with existing rules for certain index options, the
Exchange will allow up to twelve near-term expiration months.\8\ The
Exchange elects to have the ability to list up to twelve near-term
expiration months, as that is the same amount the Rules permit for
options on the S&P 500 (``SPX options''). The S&P Select Sector
Indexes, in the aggregate, consist of the same components as the S&P
500, as discussed above. Because of the relation [sic] between the S&P
Select Sector Indexes and the S&P 500, which will likely result in
market participants' investment and hedging strategies consisting of
options over both, the Exchange believes it is appropriate to permit
the same number of monthly expirations for S&P Select Sector Index
options as SPX options.
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    \8\ See proposed Rule 24.9(a)(2).
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    The S&P Select Sector Index options will be A.M., cash-settled
contracts with European-style exercise.\9\ A.M.-settlement is
consistent with the generic listing criteria for industry-based indexes
\10\ (as well as broad-based indexes \11\), and thus it is common for

index options to be A.M.-settled. The Exchange proposes to amend Rule
24.9(a)(4) to add the S&P Select Sector Index options to the list of
other A.M.-settled options. Standard third-Friday SPX options are A.M.-
settled. European-style exercise is consistent with many index options,
as set forth in Rule 24.9(a)(3). Standard third-Friday SPX options are
A.M.-settled with European-style exercise. The Exchange proposes to
amend Rule 24.9(a)(3) to add S&P Select Sector Index options to the
list of other European-style index options. Because of the relation
between the S&P Select Sector Indexes and the S&P 500, which will
likely result in market participants' investment and hedging strategies
consisting of options over both, the Exchange believes it is
appropriate to list S&P Select Sector Index options with the same
settlement and exercise style as SPX options.
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    \9\ See proposed Rule 24.9(a)(3)(cxiv) through (cxxiii).
    \10\ See Rule 24.2(b)(1).
    \11\ See Rule 24.2(f)(2).
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Appointment Costs
    The Exchange proposes a Market-Maker appointment cost of .001 for
each S&P Select Sector Index option, and each will have a Market-Maker
appointment cost of .001.\12\ The Exchange determines appointment costs
of Tier AA classes based on several factors, including, but not limited
to, competitive forces and trading volume. The Exchange believes the
proposed initial appointment cost for each S&P Select Sector Index
option will foster competition by incentivizing Market-Makers to obtain
an appointment in these newly listed options, which may increase
liquidity in the new classes.
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    \12\ See proposed Rule 8.3(c)(i). S&P Select Sector Index
Options will be in Tier AA (as are other S&P index options). While
the appointment costs of Tier AA classes are not subject to
quarterly rebalancing under Rule 8.3(c)(iv), the Exchange regularly
reviews the appointment costs of Tier AA classes to ensure that they
continue to be appropriate. The Exchange determines appointment
costs of Tier AA classes based on several factors, including, but
not limited to, competitive forces and trading volume.
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Capacity
    CBOE has analyzed its capacity and represents that it believes the
Exchange and OPRA have the necessary systems capacity to handle the
additional traffic associated with the listing of new series that would
result from the introduction of S&P Select Sector Index options up to
the proposed number of possible expirations. Because the proposal is
limited to ten classes, the Exchange believes any additional traffic
that would be generated from the introduction of S&P Select Sector
Index options would be manageable.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\13\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \14\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \15\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ Id.
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    In particular, the Exchange believes that the proposed rule change
will further the Exchange's goal of introducing new and innovative
products to the marketplace. Currently, the Exchange believes that
there is unmet market demand for exchange-listed security options
listed on these ten popular cash indexes. Sector SPDRs and E-mini S&P
Select Sector future products are listed and traded on other exchanges.
As a result, CBOE believes that S&P Select Sector Index options are
designed to provide different and additional opportunities for
investors to hedge or speculate on the market risk associated with the
S&P Select Sector Indexes by listing an option directly on these
indexes.
    The S&P Select Sector Index options satisfy the initial listing
standards for narrow-based indexes in the Exchange's current rules. The
proposed rule change merely adds the S&P Select Sector Indexes to the
table regarding reporting authorities for indexes, to the rule
regarding number of permissible expirations, to the list of European-
style exercise index options, and to the list of A.M.-settled index
options. These changes are consistent [sic] existing rules and index
options currently authorized and listed for trading on the Exchange.
The Exchange notes, with respect to these changes, standard third-
Friday SPX options (which overly the S&P 500, which consist of the same
components as the S&P Select Sector Indexes in the aggregate) currently
have the same reporting authority, the same number of permissible
expirations, the same settlement, and the same exercise style. The
Exchange has observed no trading or capacity issues in SPX trading
given the number of permissible expirations, a.m. settlement, and
European-style exercise. Because of the relation between the S&P Select
Sector Indexes and the S&P 500, which will likely result in market
participants' investment and hedging strategies consisting of options
over both, the Exchange believes it is appropriate to have the same
number of expiration, settlement, and exercise style for both. The
Exchange also represents that it has the necessary systems capacity to
support the new option series given these proposed specifications.
    The Exchange believes the proposed initial low appointment cost for
each S&P Select Sector Index option promotes competition and efficiency
by incentivizing more Market-Makers to obtain an appointment in the
newly listed classes. The Exchange believes this may result in
liquidity and competitive pricing in these classes, which ultimately
benefits investors. The proposed rule change does not result in unfair
discrimination, as the appointment cost will apply to all Market-Makers
in these classes.

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

    CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. S&P Select Sector Indexes
satisfy initial listing standards set forth in the Rules, and the
proposed number of expirations, settlement, and exercise style are
consistent with current rules applicable to index options, including
standard third-Friday SPX options. Because of the relation [sic]
between the S&P Select Sector Indexes and the S&P 500, which will
likely result in market participants' investment and hedging strategies
consisting of options over both, the Exchange believes it is
appropriate to have the same number of expirations, settlement, and
exercise style for both options. S&P Select Sector Index options will
provide investors with different and additional opportunities to hedge
or speculate on the market associated with the S&P Select Sector
indexes.
    The Exchange believes the proposed initial low appointment cost for
each

S&P Select Sector Index option promotes competition and efficiency by
incentivizing more Market-Makers to obtain an appointment in the newly
listed classes. The Exchange believes this may result in liquidity and
competitive pricing in these classes, which ultimately benefits
investors. The proposed rule change does not result in unfair
discrimination, as the appointment cost will apply to all Market-Makers
in these classes.

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

    The Exchange neither solicited nor received comments on the
proposed rule change.

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

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public
interest;
    B. impose any significant burden on competition; and
    C. become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \16\ and
Rule 19b-4(f)(6) \17\ thereunder.\18\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2017-065 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-CBOE-2017-065. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2017-065 and should be
submitted on or before November 13, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22754 Filed 10-19-17; 8:45 am]
 BILLING CODE 8011-01-P