[Federal Register Volume 80, Number 189 (Wednesday, September 30, 2015)]
[Rules and Regulations]
[Pages 58593-58597]
[FR Doc No: 2015-24725]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 25

[Docket No. FAA-2015-2392; Special Conditions No. 25-589-SC]

Special Conditions: Boeing Model 747-8 Airplanes; Seats With
Inflatable Lap 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 Boeing Model 747-8
airplanes. These airplanes will have a novel or unusual design feature
associated with seats with inflatable lap 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: The effective date of these special conditions is September 30,
2015. We must receive your comments by November 16, 2015.

ADDRESSES: Send comments identified by docket number FAA-2015-2392
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: Jayson Claar, 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 are
impracticable because these procedures would significantly delay
issuance of the design approval and thus delivery of the affected
airplane.
    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
issuance.

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 February 3, 2014, the Boeing Company applied for an amendment to
Type Certificate no. A20WE to allow installation of inflatable lap
belts for head-injury protection on certain seats in Boeing Model 747-8
airplanes.
    The Model 747-8 airplane, a derivative of the Model 747-400
airplane, is a bi-level, wide-body airplane powered by four wing-
mounted General Electric GEnx-2B engines. The airplane will have a
maximum seating

capacity of 605 passengers and two crew members, and a maximum takeoff
weight of 987,000 pounds.
    The Boeing Company requested special conditions to allow inflatable
lap belts on Boeing Model 747-8 series airplanes, similar to Special
Conditions no. 25-386-SC for Boeing Model 737 series airplanes; 25-
187A-SC for Boeing Model 777 series airplanes; 25-148-SC for Boeing
Model 767 series airplanes; and 25-431-SC for Boeing Model 787 series
airplanes. These special conditions will allow installation of
inflatable lap belts for head-injury protection on certain seats in
Boeing Model 747-8 airplanes. Section 121.311(j) of 14 CFR requires
that no person may operate a transport-category airplane type-
certificated after January 1, 1958, and manufactured on or after
October 27, 2009, in passenger-carrying operations after October 27,
2009, unless all passenger and flight-attendant seats on the airplane,
operated under part 121 rules, meet the requirements of Sec.  25.562 in
effect on or after June 16, 1988.
    The Boeing Model 747-8 airplane, operated under part 121, must meet
all of the requirement of Sec.  25.562 for passenger and flight-
attendant seats. Therefore, it is in the interest of installers to show
full compliance to Sec.  25.562, so that an operator under part 121 may
be able to use the airplane without having to conduct additional
certification work. The FAA also notes that some foreign civil
airworthiness authorities have invoked these same operator requirements
in the form of airworthiness directives.
    Occupants must be protected from head injury, as required by Sec.
25.785, either by eliminating any injurious object within the striking
radius of the head, or by installing padding. Traditionally, this has
required either a setback of 35 inches from any bulkhead or other rigid
interior feature or, where not practical, the installation of specified
types of padding. The relative effectiveness of these established means
of injury protection was not quantified. With the adoption of Amendment
25-64 to part 25, specifically Sec.  25.562, a new standard was created
that quantifies required head-injury protection.
    Each seat-type design approved for crew or passenger occupancy
during takeoff and landing, as required by Sec.  25.562, must
successfully complete dynamic tests or be demonstrated by rational
analysis based on dynamic tests of a similar type seat. In particular,
the regulations require that persons not suffer serious head injury
under the conditions specified in the tests, and that protection must
be provided, or the seat be designed, so that head impact does not
exceed a HIC value of 1,000 units. While the test conditions described
for HIC are detailed and specific, it is the intent of the requirement
that an adequate level of head-injury protection be provided for
passengers in a severe crash.
    Because Sec. Sec.  25.562 and 25.785 and associated guidance do not
adequately address seats with inflatable lap belts, the FAA recognizes
that appropriate pass/fail criteria need to be developed that fully
address the safety concerns specific to occupants of these seats.

Type Certification Basis

    Under the provisions of 14 CFR 21.101, Boeing must show that the
Model 747-8 airplane meets the applicable provisions of the regulations
listed in Type Certificate no. A20WE, or the applicable regulations in
effect on the date of application for the change, except for earlier
amendments as agreed upon by the FAA. The regulations listed in the
type certificate are commonly referred to as the ``original type
certification basis.'' The regulations incorporated by reference in
Type Certificate no. A20WE are as follows:
    14 CFR part 25, Amendments 25-1 through 25-120, with exceptions
permitted by Sec.  21.101. In addition, the certification basis
includes certain special conditions, exemptions, or later amended
sections of the applicable part that are not relevant to these special
conditions.
    If the Administrator finds that the applicable airworthiness
regulations (i.e., 14 CFR part 25) do not contain adequate or
appropriate safety standards for Boeing Model 747-8 airplanes because
of a novel or unusual design feature, special conditions are prescribed
under Sec.  21.16.
    Special conditions are initially applicable to the model for which
they are issued. Should the type certificate for that model be amended
later to include any other model that incorporates the same novel or
unusual design feature, or should any other model already included on
the same type certificate be modified 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 747-8 airplanes 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 Features

    Boeing Model 747-8 airplanes will incorporate the following novel
or unusual design feature: Seats with inflatable lap belts. The
inflatable lap belt is designed to limit occupant forward excursion in
the event of an accident. This will reduce the potential for head
injury, thereby reducing the Head Injury Criterion (HIC) measurement as
required by Title 14, Code of Federal Regulations (14 CFR),
25.562(c)(5). The inflatable lap belt functions similarly to an
automotive inflatable airbag, but in this case, the airbag is
integrated into the lapbelt, and inflates away from the seated
occupant. While inflatable airbags are now standard in the automotive
industry, the use of an inflatable lap belt is novel for commercial
aviation.

Discussion

    The inflatable lap belt has two potential advantages over other
means of head-impact protection. First, it can provide significantly
greater protection than would be expected with energy-absorbing pads,
and second, it can provide essentially equivalent protection for
occupants of all stature. These are significant advantages from a
safety standpoint, because such devices will likely provide a level of
safety that exceeds the minimum standards of part 25. Conversely,
inflatable lap belts in general are active systems and must be relied
upon to activate properly when needed, as opposed to an energy-
absorbing pad or upper torso restraint that is passive and always
available. Therefore, the potential advantages must be balanced against
this and other potential disadvantages to develop standards for this
design feature.
    The FAA has considered the installation of inflatable lap belts to
have two primary safety concerns: First, that they perform properly
under foreseeable operating conditions; and second, that they do not
perform in a manner or at such times as would constitute a hazard to
the airplane or occupants. This latter point has the potential to be
the more rigorous of the requirements, owing to the active nature of
the system.
    The inflatable lap belt will rely on electronic sensors for
signaling, and will employ an automatic inflation mechanism for
activation, so that it is available when needed. These same devices
could be susceptible to

inadvertent activation, causing deployment in a potentially unsafe
manner. The consequences of such deployment must be considered in
establishing the reliability of the system. Boeing must substantiate
that the effects of an inadvertent deployment in flight are either not
a hazard to the airplane, or that such deployment is an extremely
improbable occurrence (less than 10-9 per flight hour). The
effect of an inadvertent deployment on a passenger or crewmember that
might be positioned close to the inflatable lap belt should also be
considered. The person could be either standing or sitting. A minimum
reliability level will have to be established for this case, depending
upon the consequences, even if the effect on the airplane is
negligible.
    The potential for an inadvertent deployment could be increased as a
result of conditions in service. The installation must take into
account wear and tear so that the likelihood of an inadvertent
deployment is not increased to an unacceptable level. In this context,
an appropriate inspection interval and self-test capability are
considered necessary. Other outside influences are lightning and high-
intensity radiated fields (HIRF). Existing regulations regarding
lightning, Sec.  25.1316, and HIRF, Sec.  25.1317, are applicable. For
compliance with those conditions, if inadvertent deployment could cause
a hazard to the airplane, the inflatable lap belt is considered a
critical system; if inadvertent deployment could cause injuries to
persons, the inflatable lap belt should be considered an essential
system. Finally, the inflatable lap-belt installation should be
protected from the effects of fire, so that an additional hazard is not
created by, for example, a rupture of a pyrotechnic squib.
    To function as an effective safety system, the inflatable lap belt
must function properly and must not introduce any additional hazards to
occupants as a result of its functioning. The inflatable lap belt
differs variously from traditional occupant-protection systems and
requires special conditions to ensure adequate performance.
    Because the inflatable lap belt is essentially a single-use device,
it could potentially deploy under crash conditions that are not
sufficiently severe as to require head-injury protection from the
inflatable lap belt. And because an actual crash is frequently composed
of a series of impacts before the airplane comes to rest, this could
render the inflatable lap belt useless if a larger impact follows the
initial impact. This situation does not exist with energy-absorbing
pads or upper-torso restraints, which tend to provide continuous
protection regardless of severity or number of impacts in a crash
event. Therefore, the inflatable lap-belt installation should be such
that the inflatable lap belt will provide protection when it is
required, by not expending its protection during a less-severe impact.
Also, it is possible to have several large impact events during the
course of a crash, but there will be no requirement for the inflatable
lap belt to provide protection for multiple impacts.
    Given that each occupant's restraint system provides protection for
that occupant only, the installation must address unoccupied seats. It
will be necessary to show that the required protection is provided for
each occupant regardless of the number of occupied seats, and that
unoccupied seats may have lap belts that are active.
    The inflatable lap belt should be effective for a wide range of
occupants. The FAA has historically considered the range from the 5th
percentile female to the 95th percentile male as the range of occupants
that must be taken into account. In this case, the FAA is proposing
consideration of a broader range of occupants due to the nature of the
lap-belt installation and its close proximity to the occupant. In a
similar vein, these persons could have assumed the brace position for
those accidents where an impact is anticipated. Test data indicate that
occupants in the brace position do not require supplemental protection,
so it would not be necessary to show that the inflatable lap belt will
enhance the brace position. However, the inflatable lap belt must not
introduce a hazard when it is deployed into a seated, braced occupant.
    Another area of concern is the use of seats so equipped by
children, whether they are lap-held, sitting in approved child-safety
seats, or occupying the seat directly. Although specifically prohibited
by FAA operating regulations, the use of the supplementary loop belt
(``belly belt'') may be required by other civil aviation authorities,
and should also be considered with the end goal of meeting those
regulations. Similarly, if the seat is occupied by a pregnant woman,
the installation needs to address such usage, either by demonstrating
that it will function properly, or by adding appropriate limitation on
usage.
    The inflatable lap belt will be electrically powered. Likewise, the
system could possibly fail due to a separation in the fuselage. Because
this system is intended as crash/post-crash protection means, failure
due to fuselage separation is not acceptable. As with emergency
lighting, the restraint system should function properly if such a
separation occurs at any point in the fuselage.
    Because the inflatable lap belt is likely to have a large volume
displacement, the inflated bag could potentially impede egress of
passengers. However, the lap-belt bag deflates to absorb energy, so it
is likely that an inflatable lap belt would be deflated by the time
passengers begin to leave their seats. Nonetheless, it is appropriate
to specify a time interval after which the inflatable lap belt may not
impede rapid egress. The maximum time allowed for an exit to open fully
after actuation is 10 seconds, according to Sec.  25.809(b)(2).
Therefore, the FAA has established 10 seconds as the time interval that
the inflatable lap belt must not impede rapid egress from the seat
after it is deployed. In actuality, it is unlikely that a flight
attendant would prepare an exit this quickly in an accident severe
enough to warrant deployment of the inflatable lap belt. The inflatable
lap belt will likely deflate much more quickly than 10 seconds.
    This potential impediment to rapid egress is even more critical at
the seats installed in the emergency-exit rows. Installation of
inflatable restraints at the Type III exit rows presents different
egress concerns as compared with front-row seats. However, the need to
address egress is already part of the special conditions, so there is
no change to the special conditions at this time. As noted below, the
method of compliance with the special conditions may involve specific
considerations when an inflatable restraint is installed at Type III
exits. Section 25.813 clearly requires access to the exit from the main
aisle in the form of an unobstructed passageway, and no interference in
opening the exit. The restraint system must not create an impediment to
the access to, and the opening of, the exit. These lap belts should be
evaluated in the exit row under existing regulations (Sec. Sec.  25.809
and 25.813) and guidance material. The inflatable lap belts must also
be evaluated in post-crash conditions, and should be evaluated using
representative restraint systems in the bag-deployed condition.
    This evaluation would include reviewing the access to, and opening
of, the exit, specifically for obstructions in the egress path; and any
interferences in opening the exit. Each unique interior configuration
must be considered, e.g., passageway width, single or dual passageways
with outboard seat removed, etc. If the restraint creates any
obstruction or interference, it is likely that it could impede rapid
egress from the airplane. In some cases, the

passenger is the one who will open the exit, such as a Type III over-
wing hatch. Project-specific means-of-compliance guidance is likely
necessary if these restraint systems are installed at the Type III exit
rows.
    Note that the special conditions are applicable to the inflatable
lap-belt system as installed. The special conditions are not an
installation approval. Therefore, while the special conditions relate
to each such system installed, the overall installation approval is
separate, and must consider the combined effects of all such systems
installed.
    Boeing will install inflatable lap belts, a novel design feature,
on certain seats of Model 747-8 airplanes, to reduce the potential for
head injury if an accident occurs. The inflatable lap belt works
similar to an automotive inflatable air bag, except that the air bag in
the Boeing design is integrated into the lap belt of the restraint
system.
    The performance criteria for head-injury protection in objective
terms is stated in Sec.  25.562. However, none of these criteria are
adequate to address the specific issues raised concerning seats with
inflatable lap belts. The FAA has therefore determined that, in
addition to the requirements of part 25, special conditions are needed
to address requirements particular to the installation of seats with
inflatable lap belts.
    Accordingly, in addition to the passenger-injury criteria specified
in Sec.  25.785, these special conditions are proposed for the Boeing
Model 747-8 airplanes equipped with inflatable lap belts. Other
conditions may be developed, as needed, based on further FAA review and
discussions with the manufacturer and civil-aviation authorities.
    For a passenger-safety system, the inflatable lap belt is unique in
that it is both an active and entirely autonomous device. While the
automotive industry has good experience with inflatable air bags, the
conditions of use and reliance on the inflatable lap belt as the sole
means of injury protection are quite different. In automobile
installations, the air bag is a supplemental system and works in
conjunction with an upper-torso restraint. In addition, the crash event
is more definable and typically of shorter duration, which can simplify
the activation logic. The airplane-operating environment is also quite
different from automobiles and includes the potential for greater wear
and tear, and unanticipated abuse conditions (due to galley loading,
passenger baggage, etc.). Airplanes also operate where exposure to HIRF
could affect the lap-belt activation system.
    The current special conditions for the Boeing Model 777 airplane
were amended to address flammability of the airbag material. During the
development of the inflatable lap belt, the manufacturer was unable to
develop a fabric that would meet the inflation requirements for the bag
and the flammability requirements of part 25, Appendix F, Part
I(a)(1)(ii). The fabrics that were developed that meet the flammability
requirement did not produce acceptable deployment characteristics.
However, the manufacturer was able to develop a fabric that not only
meets the flammability requirements of part 25, Appendix F, Part
I(a)(1)(ii), but also has acceptable deployment characteristics.
    Part I of Appendix F to part 25 specifies the flammability
requirements for interior materials and components. There is no
reference to inflatable restraint systems in Appendix F, because such
devices did not exist at the time the flammability requirements were
written. The existing requirements are based on material types as well
as use, and have been specified in light of state-of-the-art materials
available to perform a given function. Without a specific reference,
the default requirement would apply to the type of material used in
making the inflatable restraint, which is a fabric in this case.
However, in writing special conditions, the FAA must also consider the
use of the material, and whether the default requirement is
appropriate. In this case, the specialized function of the inflatable
restraint means that highly specialized materials are needed. The
standard normally applied to fabrics is a 12-second vertical ignition
test. However, materials that meet this standard do not perform
adequately as inflatable restraints. Because the safety benefit of the
inflatable restraint is significant, the flammability standard
appropriate for these devices should not screen out suitable materials
and thereby effectively eliminate the use of inflatable restraints. The
FAA must establish a balance between the safety benefit of the
inflatable restraint and its flammability performance. Presently, the
2.5-inch-per-minute horizontal test is considered to provide that
balance. As the state-of-the-art in materials progresses (which is
expected), the FAA may change this standard in subsequent special
conditions to account for improved materials.
    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

    These special conditions are applicable to the Boeing Model 747-8
airplanes. Should Boeing apply at a later date for a change to the type
certificates to include another model that incorporates the same novel
or unusual design feature, or should any other model already included
on the same type certificate be modified to incorporate the same novel
or unusual design feature, these special conditions would apply to the
other model as well.

Conclusion

    This action affects only certain novel or unusual design features
on the Boeing Model 747-8 airplanes. It is not a rule of general
applicability, and it affects only Boeing Model 747-8 airplanes listed
on amended Type Certificate no. A20WE.

List of Subjects in 14 CFR Part 25

    Aircraft, Aviation safety, reporting and recordkeeping
requirements.

    The authority citation for these special conditions is as follows:

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

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 Boeing Model 747-8 airplanes with
inflatable lap belts installed.
    1. The inflatable lap belt must be shown to deploy and provide
protection under crash conditions where it is necessary to prevent
serious head injury. The means of protection must take into
consideration a range of stature from a two-year-old child to a 95th
percentile male. The inflatable lap belt must provide a consistent
approach to energy absorption throughout that range of occupants. In
addition, the following situations must be considered.
    The seat occupant is:
     Holding an infant
     a child in a child-restraint device
     a child not using a child-restraint device
     a pregnant woman
    2. The inflatable lap 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 lap belt.
    3. The design must prevent the inflatable lap belt from being
either incorrectly buckled or incorrectly

installed such that the inflatable lap belt would not properly deploy.
Alternatively, it must be shown that such deployment is not hazardous
to the occupant, and will provide the required head-injury protection.
    4. The inflatable lap-belt system must be shown not to be
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), likely to be experienced in service.
    5. Deployment of the inflatable lap belt must not introduce injury
mechanisms to the seated occupant, nor result in injuries that could
impede rapid egress. This assessment should include an occupant who is
in the brace position when it deploys, and an occupant whose inflatable
lap belt is loosely fastened.
    6. An inadvertent deployment that could cause injury to a standing
or sitting person must be shown to be improbable.
    7. It must be shown that inadvertent deployment of the airbag
system in the lap belt, during the most critical part of the flight,
either will not cause a hazard to the airplane or its occupants, or
meets the requirement of Sec.  25.1309(b).
    8. The inflatable lap belt must be shown to not impede rapid egress
of occupants 10 seconds after its deployment.
    9. The inflatable lap-belt system must be protected from lightning
and HIRF. The threats specified in existing regulations regarding
lightning, Sec.  25.1316, and HIRF, Sec.  25.1317, are incorporated by
reference for the purpose of measuring lightning and HIRF protection.
For the purposes of complying with HIRF requirements, the inflatable
lap-belt system is considered a ``critical system'' if its deployment
could have a hazardous effect on the airplane; otherwise it is
considered an ``essential'' system.
    10. The inflatable lap belt must function properly after loss of
normal airplane electrical power, and after a transverse separation of
the fuselage at the most critical location. A separation at the
location of the lap belt does not have to be considered.
    11. The inflatable lap belt must be shown to not release hazardous
quantities of gas or particulate matter into the cabin.
    12. The inflatable lap-belt installation must be protected from the
effects of fire such that no hazard to occupants will result.
    13. A means must be available for a crewmember to verify the
integrity of the inflatable-lap-belt-activation system prior to each
flight, or it must be demonstrated to reliably operate between
inspection intervals.
    14. The inflatable material may not have an average burn rate of
greater than 2.5 inches per minute when tested using the horizontal-
flammability test as defined in 14 CFR part 25, Appendix F, Part
I(b)(5).
    15. The airbag system in the lap 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 September 1, 2015.
Jeffrey E. Duven,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2015-24725 Filed 9-29-15; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register: December 31, 2008 (Volume 73, Number 251)]
[Notices]
[Page 80504-80505]
[DOCID:fr31de08-117]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59146; File No. SR-NYSEArca-2008-136]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by NYSE Arca, Inc. Amending NYSE Arca Equities Rule 5.2(j)(6),
the Exchange's Initial Listing Standards for Equity Index-Linked
Securities, Commodity-Linked Securities, Currency-Linked Securities,
Fixed Income Index-Linked Securities, Futures-Linked Securities and
Multifactor Index-Linked Securities

December 22, 2008.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on December 10, 2008, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Equities Rule 5.2(j)(6),
the Exchange's initial listing standards for Equity Index-Linked
Securities, Commodity-Linked Securities, Currency-Linked Securities,
Fixed Income Index-Linked Securities, Futures-Linked Securities and
Multifactor Index-Linked Securities. The text of the proposed rule
change is available on the Exchange's Web site at http://www.nyse.com,
at the Exchange's principal office and at the Commission's Public
Reference Room.

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

    In its filing with the Commission, the self-regulatory organization
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 those 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 parts of such statements.

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

1. Purpose
    The Exchange is proposing to amend NYSE Arca Equities Rule
5.2(j)(6), the Exchange's initial listing standards for Equity Index-
Linked Securities, Commodity-Linked Securities, Currency-Linked
Securities, Fixed Income Index-Linked Securities, Futures-Linked
Securities and Multifactor Index-Linked Securities (``Index-Linked
Securities''), to provide for greater flexibility in the listing
criteria for such securities, as set forth below.
    Currently, Rule 5.2(j)(6)(A)(d) provides that the payment at
maturity of a cash amount for Index-Linked Securities may or may not
provide for a multiple of the direct or inverse performance of an
underlying Reference Asset,\4\ and in no event will a loss or negative
payment at maturity be accelerated by a multiple that exceeds twice the
performance of an underlying Reference Asset.
---------------------------------------------------------------------------

    \4\ As defined in Rule 5.2(j)(6), ``Reference Assets'' include
``Equity Reference Assets,'' which consist of an underlying index or
indexes of equity securities; ``Commodity Reference Assets,'' which
consist of a basket or index of one or more physical commodities or
commodity futures, options or other commodity derivatives or
Commodity-Based Trust Shares (as defined in Rule 8.201); ``Currency
Reference Assets,'' which include a basket or index of one or more
currencies, or options or currency futures or other currency
derivatives or Currency Trust Shares (as defined in Rule 8.202);
``Fixed Income Reference Asset'' which consist of one or more
indexes or portfolios of notes, bonds, debentures or evidence of
indebtedness that include, but are not limited to, U.S. Department
of Treasury securities, government-sponsored entity securities,
municipal securities, trust preferred securities, supranational debt
and debt of a foreign country or a subdivision thereof; ``Futures
Reference Asset'' which consists of an index of (a) futures on
Treasury Securities, GSE Securities, supranational debt and debt of
a foreign country or a subdivision thereof, or options or other
derivatives on any of the foregoing; or (b) interest rate futures or
options or derivatives; and ``Multifactor Reference Asset'' which
consists of any combination of two or more Equity Reference Assets,
Commodity Reference Assets, Currency Reference Assets, Fixed Income
Reference Assets or Futures Reference Assets.
---------------------------------------------------------------------------

    The Exchange proposes to amend Rule 5.2(j)(6)(A)(d) to allow the
Exchange to consider for listing and trading Index-Linked Securities
that provide that in no event will a loss or negative payment at
maturity be accelerated by a multiple that exceeds three times the
performance of an underlying Reference Asset.
    The Exchange proposes these changes in order to allow the Exchange
to initially consider for listing and trading Index-Linked Securities
that employ investment strategies similar or analogous to certain
Exchange-Traded Funds which list and trade on the Exchange pursuant to
NYSE Arca Equities Rule 5.2(j)(3).\5\ Currently, Exchange-Traded Funds
are able to seek daily investment results, before fees and expenses,
that correspond to three times the inverse or opposite of the daily
performance (-300%) of the underlying indexes.
Limitation on Leverage
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 58825 (October 21,
2008), 73 FR 63756 (October 27, 2008) (SR-NYSEArca-2008-89). Order
approving inverse fund shares that cannot exceed -300% of the
inverse or opposite of the daily performance of an underlying index.
---------------------------------------------------------------------------

    In connection with Index-Linked Securities that seek to provide
investment results, before fees and expenses, in an amount that exceeds
-300% of the percentage performance of the underlying benchmark index,
the Exchange's proposal would continue to require specific Commission
approval pursuant to section 19(b)(2) of the Act.\6\ In particular,
NYSE Arca Equities Rule 5.2(j)(6) would expressly prohibit Index-Linked
Securities that seek to provide investment results, before fees and
expenses, in an amount that exceeds -300% of the percentage performance
of the underlying benchmark index, from being approved by the Exchange
for listing and trading pursuant to Rule 19b-4(e) under the Act.\7\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(2).
    \7\ 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------

    The Exchange believes that a -300% limitation will permit Index-
Linked Securities to provide investors with an incremental additional
degree of leverage similar to instruments available to professional
investors to manage risk. In addition, recommendations to investors of
transactions in Index-Linked Securities are subject to the customer
suitability requirements of NYSE Arca Equities Rule 9.2, as discussed
below.

    The Exchange notes that NYSE Arca Equities Rule 9.2(a) provides
that an ETP Holder, before recommending a transaction in Index-Linked
Securities, must have reasonable grounds to believe that the
recommendation is suitable for their customer based on any facts
disclosed by the customer as to its other security holdings and as to
its financial situation and needs. Further, the rule provides, with a
limited exception, that prior to the execution of a transaction
recommended to a non-institutional customer, the ETP Holder shall make
reasonable efforts to obtain information concerning the customer's
financial status, tax status, investment objectives, and any other
information that such ETP Holder believes would be useful to make a
recommendation. Prior to the commencement of trading, the Exchange will
inform its ETP Holders in an Information Bulletin of this suitability
requirement. Specifically, ETP Holders will be reminded in the
Information Bulletin that, in recommending transactions in these
securities, they must have a reasonable basis to believe that the
customer can evaluate the special characteristics, and is able to bear
the financial risks, of such investment.
    The Exchange believes that these changes will allow the Exchange
greater flexibility in the listing of Index-Linked Securities, which
will allow the Exchange to offer investors more investment options and
to remain competitive in the marketplace. The Exchange believes that
investors will continue to be protected because the payment at maturity
cannot be based on a multiple that exceeds three times the inverse
performance of an underlying Reference Asset.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with section 6(b) \8\ of the Act, in general, and furthers the
objectives of section 6(b)(5),\9\ in particular, in that it is 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 facilitating transactions in
securities, and to remove impediments to and perfect the mechanisms of
a free and open market and a national market system, and, in general,
to protect investors and the public interest. Specifically, the
Exchange believes that the proposed change to the standards for listing
and trading Index-Linked Securities enhances the investment
opportunities for our users by providing them with an additional degree
of leverage, while also limiting potential losses or negative payments
to -300%.\10\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ See e-mail from Andrew Stevens, Chief Counsel--U.S.
Equities & Derivatives, NYSE Arca, Inc., to Mitra Mehr, Special
Counsel, Division of Trading and Markets, Commission, dated December
22, 2008.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca 2008-136 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-NYSEArca-2008-136. This
file number should be included on the subject line if e-mail 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 inspection
and copying in the Commission's Public Reference Room, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 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-NYSEArca-2008-136 and should
be submitted on or before January 21, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Florence E. Harmon,
Acting Secretary.
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

 [FR Doc. E8-31098 Filed 12-30-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 11 (Wednesday, January 17, 2018)]
[Notices]
[Pages 2471-2474]
[FR Doc No: 2018-00634]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82479; File No. SR-NASDAQ-2018-002]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Add a New Rule 6200 To Codify Participant Risk Settings in the
Exchange's Trading System (as Set Forth in a Proposed IM-6200-1) and To
Authorize the Exchange To Share Those Settings With the Clearing Member
That Clears Transactions on Behalf of the Participant

January 10, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 3, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to add a new Rule 6200 to codify Participant
risk settings in the Exchange's trading system (as set forth in a
proposed IM-6200-1) and to authorize the Exchange to share such risk
settings with the clearing member that clears transactions on behalf of
the Participant.
    The text of the proposed rule change is set forth below. Proposed
new language is italicized; deleted text is in brackets.
* * * * *
The Nasdaq Stock Market Rules
* * * * *
Equity Rules
* * * * *
[6200. Reserved.]

6200. Exchange Sharing of Participant Risk Settings

    The Exchange may share any Participant risk settings in the trading
system specified in IM-6200-1 with the clearing member that clears
transactions on behalf of the Participant. For purposes of this Rule,
the term ``Participant'' has the meaning set forth in Rule 4701(c).

IM-6200-1. Risk Settings

    The Exchange offers certain risk settings applicable to a
Participant's activities on the Exchange. The risk settings currently
offered by the Exchange are:
    (a) Share Size Control--When enabled by a Participant, this
optional control will allow a Participant to limit the number of shares
that the Participant may associate with an order placed on the
Exchange;
    (b) ISO Control--When enabled by a Participant, this optional
control will prevent a Participant from entering an ISO order onto the
Exchange;
    (c) Cancel-on-Disconnect Control--When enabled by a Participant,
this optional control will allow a Participant, when it experiences a
disruption in its connection to the Exchange, to immediately cancel all
pending Exchange orders except for those designated for the Opening or
Closing Crosses and Good-Till-Canceled orders (RASH & FIX only);
    (d) The Nasdaq Kill Switch--This control is described in Rule 6130;
    (e) Limit Order Protection--This control is described in Rule
4757(c);
    (f) Price Collar Check--This control will automatically restrict a
routed order from executing at a price that differs from the NBBO (at
the time of order entry) by more than five percent or $0.25, whichever
difference is greater. The system will proceed to route an order unless
and until it crosses the greater of these two price collars, and if it
does so, then the system will block further routings of the order that
fall outside of the collars. For example, if the NBBO is $99 x $100 at
the time of entry of a buy order, then the system will route the order
at prices at or below $105, but will stop doing so if the offer price
rises above $105 (five percent of the NBO).
    (g) Maximum Order Volume Check--This control will automatically
reject an order for routing away that exceeds a maximum volume of
shares. As applied to equity orders, the default maximum order volume
is set at 25,000 shares, but the Participant may request that the
Exchange set a higher default based on historic volume.
    (h) Cumulative Order Volume Check--This control will automatically
block an attempt by a Participant using a particular MPID to route
orders away to buy or sell equity securities that, cumulatively, exceed
9.5 million shares during a five second time period; and
    (i) Duplication Control--This control will automatically reject an
order that a Participant submits to the Exchange to the extent that it
is duplicative of another order that the Participant submitted to the
Exchange during the prior five seconds.
* * * * *

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

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

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

1. Purpose
    The Exchange proposes to adopt proposed IM-6200-1, which codifies a
comprehensive list of Participant risk settings in the Exchange's
trading system. The Exchange also proposes to adopt new Rule 6200 to
authorize the Exchange to share these risk settings with the clearing
member that clears transactions on behalf of the Participant. For
purposes of Rule 6200, the term ``Participant'' has the meaning set
forth in Rule 4701(c).\3\
---------------------------------------------------------------------------

    \3\ A ``Participant'' is an entity that fulfills the obligations
contained in Rule 4611 regarding participation in the System, and
includes Nasdaq ECNs, Nasdaq Market Makers, and Order Entry Firms.
---------------------------------------------------------------------------

    Participants are required to be members of the Exchange. Rule 4618
states that ``all transactions through the facilities of the Nasdaq
Market Center shall be cleared and settled through a registered
clearing agency using a continuous net settlement system.'' It further
provides that this requirement may be satisfied by ``direct
participation, use of direct clearing services, by entry into a
correspondent clearing arrangement with another member that clears
trades through such a clearing agency. . . .'' Further, pursuant to
Rule 4627, every clearing member acting on a Participant's behalf that
constitutes a side of a system trade is responsible for honoring such
trades of that Participant.
    All Participants that are not clearing members require a clearing
member's consent to clear transactions on their behalf in order to
conduct business on the Exchange. Each Participant that transacts
through a clearing member on the Exchange must have an arrangement
between the Participant and the clearing member. The Exchange is
provided notice of which clearing members have relationships with which
Participants. The clearing member that guarantees the Participant's
transactions on the Exchange has a financial interest in understanding
the risk tolerance of the Participant. The proposal would provide the
Exchange with authority to directly provide clearing members with
information that may otherwise be available to such clearing members by
virtue of their relationship with the respective Participants.\4\
---------------------------------------------------------------------------

    \4\ The Exchange notes that its proposal would cover Sponsored
Participants, as set forth in Rule 4615, meaning that the proposal
would authorize the Exchange to share the risk settings of Sponsored
Participants with clearing members that clear trades on their
behalf.

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

    Proposed IM-6200-1 would codify a list of risk settings that are
currently offered by the Exchange and would be covered by proposed Rule
6200. This list is comprehensive with respect to the risk settings that
the Exchange presently offers. Certain of these risk settings are
mandatory for Participants, meaning that the Exchange either imposes
specific risk tolerances that are uniform for all Participants or it
sets default risk tolerances, but it affords flexibility to
Participants to select their own risk tolerance levels. In certain
instances, the Exchange does not require Participants to utilize risk
settings, but instead makes them available for use at the option of
Participants. The risk settings set forth in proposed IM-6200-1
comprise the following:
     Share Size Control--When enabled by a Participant, this
optional control will allow a Participant to limit the number of shares
that the Participant may associate with an order placed on the
Exchange;
     ISO Control--When enabled by a Participant, this optional
control will prevent a Participant from entering an ISO order onto the
Exchange;
     Cancel-on-Disconnect Control--When enabled by a
Participant, this optional control will allow a Participant, when it
experiences a disruption in its connection to the Exchange, to
immediately cancel all pending Exchange orders except for those
designated for the Opening or Closing Crosses, and Good-Till-Canceled
orders (RASH & FIX only);
     The Nasdaq Kill Switch--This control is described in Rule
6130;
     Limit Order Protection--This control is described in Rule
4757(c);
     Price Collar Check--This control will automatically
restrict a routed order from executing at a price that differs from the
NBBO (at the time of order entry) by more than five percent or $0.25,
whichever difference is greater. The system will proceed to route an
order unless and until it crosses the greater of these two price
collars, and if it does so, then the system will block further routings
of the order that fall outside of the collars. For example, if the NBBO
is $99 x $100 at the time of entry of a buy order, then the system will
route the order at prices at or below $105, but will stop doing so if
the offer price rises above $105 (five percent of the NBO).
     Maximum Order Volume Check--This control will
automatically reject an order for routing away that exceeds a maximum
volume of shares. As applied to equity orders, the default maximum
order volume is set at 25,000 shares, but the Participant may request
that the Exchange set a higher default based on historic volume.
     Cumulative Order Volume Check--This control will
automatically block an attempt by a Participant using a particular MPID
to route orders away to buy or sell equity securities that,
cumulatively, exceed 9.5 million shares during a five second time
period; and
     Duplication Control--This control will automatically
reject an order that a Participant submits to the Exchange to the
extent that it is duplicative of another order that the Participant
submitted to the Exchange during the prior five seconds.
    As set forth above, the proposal to authorize the Exchange to share
any of the Participant's risk settings with the clearing member that
clears transactions on behalf of the Participant would be limited to
the risk settings specified in proposed IM-6200-1. The Exchange notes
that use by a Participant of the risk settings offered by the Exchange
is optional for share size, ISO, kill switch, and cancel-on disconnect
controls, and is required in other instances.\5\ By using the optional
risk settings, following this proposed Rule change a Participant
therefore also opts-in to the Exchange sharing its risk settings with
its clearing member. The Exchange notes that any Participant that does
not wish to share its mandatory risk settings with its clearing member
could avoid sharing such settings by becoming a clearing member.
---------------------------------------------------------------------------

    \5\ As noted above, for the Maximum Order Volume Check, the
Exchange sets a default order volume but Participants have
flexibility to adjust this level.
---------------------------------------------------------------------------

    To the extent that a clearing member might reasonably require a
Participant to provide access to its risk settings as a prerequisite to
continuing to clear trades on the Participant's behalf, the Exchange's
proposal to share those risk settings directly reduces the
administrative burden on Participants and ensures that clearing members
are receiving information that is up-to-date and conforms to the
settings active in the Exchange's trading system. Further, the Exchange
believes that the proposal will help such clearing members to better
monitor and manage the potential risks that they assume when clearing
for Participants of the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ in particular, in that it is designed 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change will allow the Exchange to directly
provide a Participant's risk settings to the clearing member that
clears trades on behalf of the Participant. A clearing member
guarantees transactions executed on Nasdaq for members with whom it has
entered into a clearing arrangement, and therefore bears the risk
associated with those transactions. The Exchange therefore believes
that it is appropriate for the clearing member to have knowledge of
what risk settings the Participant may utilize within the Exchange's
trading system. The proposal will permit clearing members who have a
financial interest in the risk settings of Participants with whom the
Participants have entered into clearing arrangements to better monitor
and manage the potential risks assumed by clearing members, thereby
providing clearing members with greater control and flexibility over
setting their own risk tolerance and exposure and aiding clearing
members in complying with the Act. To the extent a clearing member
might reasonably require a Participant to provide access to its risk
settings as a prerequisite to continuing to clear trades on the
Participant's behalf, the Exchange's proposal to share those risk
settings directly reduces the administrative burden on Participants and
ensures that clearing members are receiving information that is up-to-
date and conforms to the settings active in the Exchange's trading
system. Moreover, the proposal will foster cooperation and coordination
with persons engaged in facilitating transactions in securities and
more generally, will protect investors and the public interest, by
reducing administrative burdens on both clearing members and other
Participants and by allowing clearing members to better monitor their
risk exposure.
    The Exchange further believes that codifying the risk settings
described above in proposed IM-6200-1 is consistent with the Act. These
settings

assist Participants in managing and controlling the risks associated
with their access to and activity on the Exchange, both for the benefit
of Participants and investors. The Exchange's risk settings, moreover,
are consistent with risk settings employed by other exchanges, such as
Cboe BYX. Although the Exchange presently offers these risk settings,
codifying them will provide additional transparency to Participants
regarding the risk settings offered by the Exchange. It will also
foster cooperation and coordination with persons engaged in
facilitating transactions in securities and more generally, will
protect investors and the public interest, by providing additional
transparency regarding risk settings offered by the Exchange.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act, as amended. The proposed
rule change is not designed to address any competitive issues and does
not pose an undue burden on non-clearing members because, unlike
clearing members, non-clearing members do not guarantee the execution
of a Participant's transactions on the Exchange. Moreover, the proposal
to share risk settings with clearing members will not burden
competition among clearing members because it will apply to all
clearing members equally and regardless of size. The Exchange notes
that this proposal will not affect competition among Participants
because the proposal provides for sharing of all of Participants' risk
settings set forth in IM-6200-1. Any Participant that does not wish to
share its risk settings with its clearing member could avoid sharing
such settings by becoming a clearing member. Lastly, the proposal to
codify the Exchange's risk settings will not burden competition among
Participants because the risk settings are already available to or
required of Participants and will continue to be available or required
of all Participants going forward.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and the text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-NASDAQ-2018-002 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-NASDAQ-2018-002. 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-NASDAQ-2018-002 and should be submitted
on or before February 7, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00634 Filed 1-16-18; 8:45 am]
 BILLING CODE 8011-01-P