[Federal Register Volume 80, Number 160 (Wednesday, August 19, 2015)]
[Notices]
[Pages 50365-50369]
[FR Doc No: 2015-20416]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75695; File No. SR-NYSE-2015-33]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Amending Rule 79A To Delete Supplementary Material .20 Requiring Prior
Floor Official Approval Before a Designated Market Maker Can Initiate
Certain Trades More Than One or Two Dollars Away From the Last Sale

August 13, 2015.
    Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on July 29, 2015, New York Stock Exchange LLC (``NYSE'' 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 self-regulatory
organization. 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\ 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 Rule 79A to delete Supplementary
Material .20 requiring prior Floor Official approval before a
Designated Market Maker (``DMM'') can initiate certain trades more than
one or two dollars away from the last sale. The text of the proposed
rule change is available on the Exchange's Web site at www.nyse.com, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.

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

    In its filing with the Commission, the 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 79A to delete Supplementary
Material .20, which requires prior Floor Official approval for certain
DMM dealer trades more than one or two dollars away from the last sale,
and to make conforming amendments to Rules 48, 80C and 9217 to delete
references to Rule 79A.20.
Background
    Currently, except with respect to inactively traded securities the
Exchange shall from time to time identify, Rule 79A.20(a) requires DMMs
to obtain prior Floor Official approval for all transactions in stocks
by the DMM as dealer (when the market is slow \4\) or transactions in
which the DMM as dealer is reaching across the market \5\ (when the
market is fast) that are made at (i) $1.00 or more away from the last
sale when such last sale is under $20 per share or (ii) $2.00 or more
away from the last sale when such last sale is at $20 per share or
over. The Rule also provides that in unusual market situations, a Floor
Governor, Senior Floor Official, or Executive Floor

Official \6\ has the discretion to determine that a different price
parameter other than that required in subdivision (a) of the Rule is
appropriate when the last sale is at $100 per share or over.\7\
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    \4\ For purposes of the Rule, the NYSE is considered a ``slow''
market when displaying a bid or offer (or both) that is not entitled
to protection of Rule 611 under Regulation NMS. See Rule 79A.20(a).
DMM dealer transactions in slow markets include the opening,
reopening, and closing transactions.
    \5\ A DMM reaches across the market when the DMM buys from the
NYSE offer or sells to the NYSE bid.
    \6\ Pursuant to Rules 46 and 46A, Floor Governors, Senior Floor
Officials and Executive Floor Officials are one of several ranks of
the broader category of Floor Officials, including, in order of
increasing seniority, Floor Officials, Senior Floor Officials,
Executive Floor Officials, Floor Governors and Executive Floor
Governors. See Securities Exchange Act Release No. 57627 (April 4,
2008), 73 FR 19919 (April 11, 2008) (SR-NYSE-2008-19).
    \7\ See Rule 79A.20(b).
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    The principles embodied in Rule 79A.20 were originally aimed at
preventing undue price dislocation by the specialist at the opening.
Gradually, the rule was extended to all trades significantly away from
the last sale.\8\ The rule also functioned in part as a safeguard
against market manipulation by specialists and Floor brokers as well as
a control on price volatility by requiring a Floor Official who was not
party to the transaction to review and approve all proposed
transactions exceeding the rule's parameters before the trade was
published to the consolidated tape, thereby ensuring that specialists
were maintaining appropriate price continuity and depth, and that Floor
brokers were not transacting in the trading crowd at unduly wide
variations from the last sale.\9\
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    \8\ See Securities Exchange Act Release No. 56209 (August 6,
2007), 72 FR 45290, 45291 (August 13, 2007) (SR-NYSE-2007-65)
(``Release No. 56209'').
    \9\ See id.
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    In 2006, the Commission approved the Exchange's adoption of a
``hybrid market'' under which Exchange systems assumed the function of
matching and executing electronically-entered orders but specialists
remained the responsible broker-dealer for orders on the Exchange's
limit order book.\10\ In 2007, as a result of the increasing automation
of trading and the accompanying decentralization of pricing decisions
away from specialists, the Exchange comprehensively amended Rule
79A.20. In that filing, the Exchange virtually eliminated Rule 79A.20
approvals in all situations except those prescribed in the current
Rule.\11\
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    \10\ See Securities Exchange Act Release No. 53539 (March 22,
2006), 71 FR 16353 (March 31, 2006) (SR-NYSE-2004-05).
    \11\ See Release No. 56209, supra note 8, at 45291. At the time,
the rule was set forth in Supplementary Material .30 of Rule 79A.
The rule was re-numbered as Supplementary Material .20 in 2008. See
Securities Exchange Act Release No. 58184 (July 17, 2008), 73 FR
42853 (July 23, 2008) (SR-NYSE-2008-46).
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    Since that time, additional, significant market structure changes
have continued to obviate the need for Rule 79A.20. In particular, in
2008, the Exchange adopted the New Market Model, which transformed
specialists into DMMs, who are no longer agents for the Exchange's
limit order book and whose trading activity on the Exchange is limited
to proprietary trading.\12\ Also in 2008, the Exchange greatly enhanced
the transparency of its marketplace and improved the quality of the
opening and closing auctions by introducing a real-time order imbalance
information data feed (``Order Imbalance Information'').\13\ Further,
DMMs now also have the ability to electronically open and close trading
on the Exchange, which was not available to specialists in 2007.\14\ In
2015, the Exchange eliminated Liquidity Replenishment Points (``LRP'')
and the Gap Quote Policy and amended Rule 79A.20 to remove references
to these Exchange-specific volatility mechanisms. Rule 79A.20 had
previously required Floor Official review and approval of DMMs dealer
trades one or two points away from the last sale following these intra-
day ``slow'' market scenarios.\15\ Finally, also in 2015, the Exchange
amended Rule 1000 to reject marketable orders of over 1,000,000 shares
upon arrival. Such orders were ineligible for automatic execution and
caused the Exchange to suspend automatic executions and disseminate a
``slow'' quote condition.\16\
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    \12\ See Securities Exchange Act Release No. 58845(October 24,
2008), 73 FR 64379, 64381 (October 29, 2008) (SR-NYSE-2008-46).
    \13\ See Securities Exchange Act Release No. 57861 (May 23,
2008), 73 FR 31905 (June 4, 2008) (SR-NYSE-2008-42). See also
Securities Exchange Act Release No. 59815 (April 23, 2009), 74 FR
19609 (April 29, 2009) (SR-NYSE-2009-41) (modifying the reference
price at which the Exchange reports Order Imbalance Information and
clarifying what information is included in and excluded from the
Order Imbalance Information Reports). In 2009, the Exchange further
enhanced the transparency of its informational data feed for
imbalances by including d-Quotes and all other e-Quotes containing
pegging instructions eligible to participate in the closing
transaction in the Order Imbalance Information data feed. See Rule
70(1) & Supplementary Material .25; Securities Exchange Act Release
No. 60153 (June 19, 2009), 74 FR 30656 (June 26, 2009) (SR-NYSE-
2009-49).
    \14\ See Rule 123D (openings); Rule 123C.10 (closings). See
generally Rule 104(b).
    \15\ See Securities Exchange Act Release No. 74063 (January 15,
2015), 80 FR 3269 (January 22, 2015) (SR-NYSE-2015-01). See also
note 4, supra.
    \16\ See Securities Exchange Act Release No. 74649 (April 6,
2015), 80 FR 19383 (April 10, 2015) (SR-NYSE-2015-14).
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Proposed Rule Change
    The Exchange proposes to delete Rule 79A.20. As discussed below,
the situations where the Rule would be invoked are now limited to the
open, reopenings and the close, where market transparency and existing
safeguards render the Rule unnecessary and duplicative of other rules
requiring Floor Official approval.
    As noted above, the recent elimination of LRPs and the Gap Quote
Policy removed the remaining intra-day events when the Exchange's
market was ``slow'' and DMM pricing decisions that could trigger Rule
79A.20 approvals. As such, trading circumstances warranting Rule 79A.20
review are now limited to manual DMM participation when a security
moves one or two dollars from the last sale (based on whether the
security is under $20 or $20 and over) at either the open, close or,
more rarely, intraday during reopenings.
    In light of the transparency surrounding the open and close and the
involvement of Floor Officials in those processes, the Exchange
believes that there is no longer a need for Floor Officials to
separately approve individual DMM transactions under Rule 79A.20.
First, as described above, the Exchange significantly enhanced the
transparency surrounding the open and close with the introduction of a
real-time Order Imbalance Information data feed in 2008. This
proprietary data feed, disseminated prior to the open pursuant to Rule
15(c)(1) \17\ and prior to close pursuant to Rule 123C(6),\18\ reflects
real-time order imbalances that accumulate prior to the opening and
closing

transactions on the Exchange and the price at which interest eligible
to participate in the opening or closing transactions may be executed
in full.
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    \17\ Pursuant to Rule 15(c)(1), Order Imbalance Information
disseminated prior to the open includes all interest eligible for
execution in the opening transaction of the security in Exchange
systems, i.e., electronic interest, including Floor broker
electronic interest, entered into Exchange systems prior to the
opening. Pre-opening Order Imbalance Information is disseminated
approximately every five minutes between 8:30 a.m. Eastern Time
(``ET'') and 9:00 a.m. ET; approximately every minute between 9:00
a.m. ET and 9:20 a.m. ET; and approximately every 15 seconds between
9:20 a.m. ET and the opening of trading in that security. See Rule
15(c)(3).
    \18\ Pursuant to Rule 123C(6), Order Imbalance Information
disseminated prior to the close includes, among other things: (1)
The Mandatory Market on Close (``MOC'')/Limit on Close (``LOC'')
Imbalance Publication; (2) a data field indicating the price at
which closing-only interest (i.e., MOC orders, marketable LOC
orders, and CO orders opposite the imbalance) may be executed in
full; and, (3) a data field indicating the price at which interest
in the Display Book (e.g., Minimum Display Reserve Orders, Floor
broker reserve e-Quotes not designated to be excluded from the
aggregated agency interest information available to the DMM, d-
Quotes and pegged e-Quotes at the price indicated on the order as
the base price to be used to calculate the range of discretion and
Stop orders) as well as all closing-only orders (MOC, marketable
LOC, and CO orders opposite the imbalance) may be executed in full.
Pre-closing Order Imbalance Information is disseminated every
fifteen seconds between 3:40 p.m. and 3:50 p.m.; thereafter, it is
disseminated every five seconds between 3:50 p.m. and 4:00 p.m.
Commencing at 3:55 p.m., the Order Imbalance Information
disseminated by the Exchange also includes d-Quotes and all other e-
Quotes containing pegging instructions eligible to participate in
the closing transaction and Stop orders.
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    Second, in addition to disseminating Order Imbalance Information,
the Exchange's Rules require the timely communication of price
dislocations and unusual market situations, including delayed openings,
to the marketplace. Rule 15(a) provides that if the opening transaction
in a security will be at a price that represents a change of more than
the ``applicable price change'' specified in the Rule (representing a
numerical or percentage change from the security's closing price per
share or, in the case of an IPO, the security's offering price), the
DMM arranging the opening transaction or the Exchange must issue a pre-
opening indication (a ``Rule 15 Indication''), which represents a range
of where a security may open. The Rule 15 Indication is a price range
that is published on the Exchange's proprietary data feeds prior to the
scheduled opening time. A Rule 15 Indication includes the security and
the price range within which the DMM anticipates the opening
transaction will occur, and would include any orally-represented Floor
broker interest for the open.
    Similarly, Rule 123D Mandatory Indications are required for an
opening that will result in a ``significant'' price change from the
previous close. For securities priced under $10, indications are
required under Rule 123D(1) if the price change is one dollar or more;
for securities between $10 and $99.99, indications are required for
price movements of the lesser of 10% or three dollars; and for
securities over $100, indications are required for price movements of
five dollars or more. Rule 123D(1) requires DMMs to disseminate one or
more indications in connection with any delayed opening where a
security has not opened or been quoted by 10 a.m. (``Rule 123D
Mandatory Indication''). The DMM is responsible for publishing the Rule
123D Mandatory Indication and, when determining the price range for the
indication, take into consideration Floor broker interest that has been
orally entered and what, at a given time, the DMM anticipates the
dealer participation in the opening transaction would be. Rule 123D
Mandatory Indications are published to the Consolidated Tape.
    Importantly, all Rule 123D Mandatory Indications require the
supervision and approval of a Floor Official. Rule 123D approvals are
therefore similar to Rule 79A.20 approvals. In fact, almost half of
Floor Official approvals under Rule 79A.20 also occur in situations
where a mandatory indication was published pursuant to Rule 123D. In
these circumstances, requiring the Floor Official to separately approve
a price movement under Rule 79A.20 would be duplicative.
    The Exchange further notes that the Floor Official approval
requirements of Rule 79A.20 impede the ability of a DMM to open or
close a security electronically at the Exchange if the security were to
open one or two points away from the last sale. As a practical matter,
the only way for Floor Officials to approve trades more than one or two
dollars away from the last sale in the case of an electronic open or
close would be to turn a fast market into a ``slow'' one and
potentially open the security after 9:30 a.m., which was one of the
rationales for eliminating virtually all Rule 79A.20 approvals in
2007.\19\
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    \19\ See Release No. 56209, supra note 8 at 45291.
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    With respect to the separate Rule 79A.20 requirement that the DMM
obtain Floor Official approvals when the market is fast and the DMM as
dealer is reaching across the market, i.e., selling at the bid and
buying at the offer, the Exchange similarly believes that such
approvals are unnecessary and duplicative of other safeguards. As noted
above, the application of Rule 79A.20 is limited to the opening,
reopenings and the close, where this scenario would not arise.
Moreover, the Exchange believes that obtaining Floor Official approval
when a DMM is reaching across a fast market is impractical in today's
market place because, especially in the most actively traded Exchange
securities, the automated marketplace simply moves too fast.
    Even if obtaining Floor Official approvals were practical, the
Exchange believes that the combination of volatility and system
controls in place that were unavailable in 2007 render such approvals
unnecessary. DMM dealer trades one or two points away from the last
sale that reach across the market would continue to be subject to the
Limit Up/Limit Down (``LULD'') price controls, as provided for in Rule
80C(a)(4), the Trading Collars, as provided for in Rule 1000(c), and
the numerical guidelines for determining whether a clearly erroneous
execution has occurred under Rule 128. In addition, as the Exchange
noted in a different context,\20\ as the marketplace has become more
electronic, DMM units have increased their utilization of technology to
reduce risk exposure by using algorithms to adjust prices quickly in
response to market dynamics, which in turn has contributed to reducing
the potential for significant and/or rapid movements in the market and
help DMMs satisfy their obligation to maintain a fair and orderly
market in assigned securities pursuant to Rule 104, particularly in
times of market stress. The Exchange believes that these risk controls
provide a further significant limitation on the ability of DMMs to
initiate a move of more than one or two dollars away from the last sale
trade in fast markets, especially in light of the tight spreads on the
Exchange.\21\
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    \20\ See Securities Exchange Act Release No. 71360 (January 21,
2014), 79 FR 4366, 4367 (January 27, 2014) (SR-NYSE-2014-02).
    \21\ For instance, in May 2015, the quoted spread on the NYSE
for stocks below $20 a share was $0.048; the quoted spread for
stocks above $20 was $0.466. For all NYSE-listed securities, the
quoted spread in May 2015 was $0.314.
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    Finally, DMM pricing decisions at the open and close and during
fast markets are subject to specific DMM obligations with respect to
the quality of the markets in securities to which they are assigned. In
general, transactions on the Exchange by a DMM for the DMM's account
must be effected in a reasonable and orderly manner in relation to the
condition of the general market and the market in the particular stock.
    As noted, DMMs have affirmative obligations under Rule 104(a) to
engage in a course of dealings for their own account to assist in the
maintenance of a fair and orderly market insofar as reasonably
practicable. Specifically, Rule 104(f)(ii) sets forth the DMM's
obligation to act as reasonably necessary to ensure appropriate depth
and maintain reasonable price variations between transactions (also
known as price continuity) and prevent unexpected variations in
trading. Further, under Rule 123D(1), openings and reopenings must be
fair and orderly, reflecting the DMM's professional assessment of
market conditions at the time, and appropriate consideration of the
balance of supply and demand as reflected by orders represented in the
market. The Exchange also supplies DMMs with suggested Depth Guidelines
for each security in which a DMM is registered, and DMMs are expected
to quote and trade with reference to the Depth Guidelines. Further, the
DMM's affirmative obligation includes obligations to re-enter the
market when reaching across to execute against available interest. For
instance, under Rule 104(h), DMMs can engage in conditional
transactions that establish or increase a position and that reach
across the market without restriction

provided such transactions are followed by appropriate re-entry on the
opposite side of the market commensurate with the size of the DMM's
transaction.\22\ The Exchange issues guidelines, called price
participation points (``PPP''), that identify the price at or before
which a DMM is expected to re-enter the market after effecting a
conditional transaction.\23\ DMM trading activity on the Exchange is
actively monitored for compliance with each of these obligations.
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    \22\ See Rule 104(h)(iii). Immediate re-entry is required after
certain Conditional Transactions.
    \23\ See NYSE Rule 104(h)(iii)(A).
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    The Exchange believes that the availability and dissemination of
Order Imbalance Information, Rule 15 Indications and 123D Mandatory
Indications, together with the DMM's existing affirmative and other
obligations pursuant to Rule 104, provide an appropriate framework in
today's market structure for ensuring that opening or closing
transactions that occur at a price significantly away from the last
sale price are communicated to all market participants. In particular,
because of this transparency, the open and close are subject to greater
scrutiny by all market participants, which in of itself serves as a
check on where a DMM opens or closes a security. The Exchange therefore
believes that the need for a Floor Official to review a DMM's actions
at the open or close, which was adopted in a time when there was no
market-wide transparency regarding pricing of the open or close, is
redundant of existing oversight of the open and close.
    For all of these reasons, the Exchange believes that requiring
separate Floor Official approvals for one and two dollar price
movements is no longer necessary.
    The Exchange also proposes to delete references to Rule 79A.20 from
Rules 48, 80C and 9217. In the case of Rule 48, the reference to be
removed would be to Rule 79A.30. Rule 48 was not updated when the text
of the Rule was moved from Supplementary Material .30 to .20.\24\ The
Exchange believes these proposed changes will add transparency and
clarity to the Exchange's rules.
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    \24\ See note 11 supra.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\25\ in general, and furthers the
objectives of section 6(b)(5) of the Act,\26\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
promote just and equitable principles of trade, remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and protect investors and the public interest. In
particular, the Exchange believes that eliminating Rule 79A.20 would
remove impediments to and perfect the mechanism of a free and open
market and a national market system by eliminating redundant approvals
from the remaining manual processes at the open and close of trading.
The Exchange believes that eliminating Rule 79A.20 approvals would not
be inconsistent with the public interest and the protection of
investors because the transparency surrounding the open and close and
the information available to the marketplace enables investors and the
public to assess whether a security would open or close outside the one
or two point parameter, thereby obviating the need for a single Floor
Official to oversight the open and close. Further, the Exchange
believes that eliminating Rule 79A.20 approvals would not be
inconsistent with the public interest and the protection of investors
because other safeguards will remain in place to ensure that DMMs
maintain appropriate price continuity and depth and do not transact at
unduly wide price variations, thereby establishing substantially the
same result. As noted above, pursuant to Rule 123D, Floor Officials
would remain involved in supervising when the open would occur at a
price significantly away from the last sale, which is when the majority
of Rule 79A.20 approvals currently occur, and DMM trading will also
remain subject to Exchange rules, including the obligation to maintain
a fair and orderly market under Rule 104.
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    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(5).
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    The Exchange further believes that deleting corresponding
references to Rule 79A.20 in other rules would remove impediments to
and perfects the mechanism of a free and open market by reducing
potential confusion and adding transparency and clarity to the
Exchange's rules, thereby ensuring that members, regulators and the
public can more easily navigate and understand the Exchange's rulebook.

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. The proposed rule change is
not intended to address competitive issues but rather to eliminate
redundant approvals of manual trades on its trading Floor.

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

    The Exchange has filed the proposed rule change pursuant to section
19(b)(3)(A)(iii) of the Act \27\ and Rule 19b-4(f)(6) thereunder.\28\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \27\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \28\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \29\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\30\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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    \29\ 17 CFR 240.19b-4(f)(6).
    \30\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such 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 shall institute proceedings under
section 19(b)(2)(B) \31\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \31\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2015-33 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-NYSE-2015-33. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; 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-NYSE-2015-33 and should be
submitted on or before September 9, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-20416 Filed 8-18-15; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 59 (Friday, March 27, 2015)]
[Rules and Regulations]
[Pages 16255-16259]
[FR Doc No: 2015-06583]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2014-0229; Directorate Identifier 2013-NM-186-AD;
Amendment 39-18123; AD 2015-06-05]
RIN 2120-AA64

Airworthiness Directives; Airbus Airplanes

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

ACTION: Final rule.

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SUMMARY: We are adopting a new airworthiness directive (AD) for all
Airbus Model A300 and A310 series airplanes, and certain Model A300 B4-
600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R
Variant F airplanes (collectively called Model A300-600 series
airplanes). This AD was prompted by a review of certain repairs, which
revealed that the structural integrity of the airplane could be
negatively affected if those repairs are not re-worked. This AD
requires an inspection to identify certain repairs, and corrective
action if necessary. We are issuing this AD to detect and correct
certain repairs on the floor cross beams flange. If those repairs are
not reworked, the structural integrity of the airplane could be
negatively affected.

DATES: This AD becomes effective May 1, 2015.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of May 1, 2015.

ADDRESSES: You may examine the AD docket on the Internet at http://www.regulations.gov/#!docketDetail;D=FAA-2014-0229; or in person at the
Docket Management

Facility, U.S. Department of Transportation, Docket Operations, M-30,
West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE.,
Washington, DC.
    For service information identified in this AD, contact Airbus SAS,
Airworthiness Office--EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac
Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51;
email<EMAIL_ADDRESS>Internet http://www.airbus.com.
You may view this referenced service information at the FAA, Transport
Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information
on the availability of this material at the FAA, call<PHONE_NUMBER>. It
is also available on the Internet at http://www.regulations.gov by
searching for and locating Docket No. FAA-2014-0229.

FOR FURTHER INFORMATION CONTACT: Dan Rodina, Aerospace Engineer, ANM-
116, International Branch, Transport Airplane Directorate, FAA, 1601
Lind Avenue SW., Renton, WA 98507-3356; telephone<PHONE_NUMBER>; fax
425-227-1149.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 by adding an AD that would apply to all Airbus Model A300 and
A310 series airplanes, and certain Model A300 B4-600, B4-600R, and F4-
600R series airplanes, and Model A300 C4-605R Variant F airplanes
(collectively called Model A300-600 series airplanes). The NPRM
published in the Federal Register on April 16, 2014 (79 FR 21413).
    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Union, has issued EASA
Airworthiness Directive 2013-0220, dated September 18, 2013 (referred
to after this as the Mandatory Continuing Airworthiness Information, or
``the MCAI''), to correct an unsafe condition for all Airbus Model A300
and A310 series airplanes, and certain Model A300 B4-600, B4-600R, and
F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes
(collectively called Model A300-600 series airplanes). The MCAI states:

    In the frame of the Extended Service Goal (ESG) activity, all
existing Structural Repair Manual (SRM) repairs were reviewed.
    This analysis, which consisted in new static and fatigue
calculations, revealed that some repairs were no longer applicable
to some specific areas.
    These repairs, if not reworked, could affect the structural
integrity of the aeroplane. To address the repairs on the floor
cross beams flange, Airbus issued Alert Operator Transmission (AOT)
A300-53A0392, AOT A300-53A6171 and AOT A310-53A2135.
    To address this unsafe condition, and further to the
implementation of the Aging Aircraft Safety Rule (AASR), this [EASA]
Airworthiness Directive requires a [general visual] inspection of
the floor cross beams flange at frame (FR)11 and FR12A to identify
SRM repairs and, depending on findings, accomplishment of corrective
action [reworking the SRM repairs].

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov/#!documentDetail;D=FAA-2014-0229-0002.

Comments

    We gave the public the opportunity to participate in developing
this AD. The following presents the comments received on the NPRM (79
FR 21413, April 16, 2014) and the FAA's response to each comment.

Request To Change the Compliance Time Expression From Months to Flight
Cycles

    United Parcel Service (UPS) requested that the compliance time
proposed in the NPRM (79 FR 21413, April 16, 2014) for doing the
general visual inspection be changed from a compliance time based on
months to a compliance time based on the accumulation of flight cycles
since certain structural repair manual (SRM) repairs were incorporated
on an airplane. UPS stated that all documentation related to the NPRM
indicated that the reported damage is fatigue-related; therefore the
inspection compliance time should reflect a typical fatigue-related
issue, which is expressed in flight cycles. UPS explained that it did
not provide a proposed compliance time because it did not have data and
suggested that the original equipment manufacturer (OEM) could
establish compliance times for the instructions for continued
airworthiness based on the data used in the SRM repair evaluation to
determine extended service goals.
    We do not agree to change the compliance time expression from
months to accumulated flight cycles since certain SRM repairs were
done. The OEM does not have documentation for all the SRM repairs
accomplished on each airplane, thus it is unable to establish
compliance times because of the incomplete data. The FAA and EASA have
determined that a 30-month compliance time is sufficient to accomplish
the inspection and all applicable corrective actions. No change has
been made to this AD regarding this issue. However, under the
provisions of paragraph (i) of this AD, we may approve requests for
adjustments to the compliance time if data are submitted to
substantiate that such an adjustment would provide an acceptable level
of safety.

Request To Omit References to the AD in Repair Approvals

    UPS requested that paragraphs (h) and (i)(2) of the NPRM (79 FR
21413, April 16, 2014) be revised to omit the statement ``[F]or a
repair method to be approved, the repair approval must specifically
refer to this AD.'' UPS stated that the FAA included this sentence in
the NPRM because there is a ``potential'' for operators to do repairs
that do not adequately address the unsafe condition. UPS commented that
adding a reference to the applicable AD on repair documentation does
not address the root cause of repair documentation availability.
Previously approved repairs for an AD should have been vetted as part
of the corrective action and AD development process. However, if a
repair is not identified during that process, the operator is still
responsible for adhering to the Airworthy Product provision in an AD.
The Airworthy Product provision, in conjunction with FAA Advisory
Circular 120-77, ``Maintenance and Alteration Data,'' dated October 7,
2002 (http://rgl.faa.gov/Regulatory_and_Guidance_Library/
rgAdvisoryCircular.nsf/0/199e798c7ee4347786256c4d004ae5dc/$FILE/
AC%20120-77.pdf), provides sufficient guidance and clarification for
repairs accomplished during compliance with the requirements of an AD.
    We concur with the commenter's request to remove from this AD the
requirement that repair approvals specifically refer to this AD. Since
late 2006, we have included a standard paragraph titled ``Airworthy
Product'' in all MCAI ADs in which the FAA develops an AD based on a
foreign authority's AD. The MCAI or referenced service information in
an FAA AD often directs the owner/operator to contact the manufacturer
for corrective actions, such as a repair. Briefly, the Airworthy
Product paragraph allowed owners/operators to use corrective actions
provided by the manufacturer if those actions were FAA approved. In
addition, the paragraph stated that any actions approved by the State
of Design Authority (or its delegated agent) are considered to be FAA
approved.
    In the NPRM (79 FR 21413, April 16, 2014), we proposed to prevent
the use

of repairs that were not specifically developed to correct the unsafe
condition by requiring that the repair approval provided by the State
of Design Authority or its delegated agent specifically refer to this
FAA AD. This change was intended to clarify the method of compliance
and to provide operators with better visibility of repairs that are
specifically developed and approved to correct the unsafe condition. In
addition, we proposed to change the phrase ``its delegated agent'' to
include ``the Design Approval Holder (DAH) with a State of Design
Authority's design organization approval (DOA)'' to refer to a DAH
authorized to approve required repairs for the AD.
    Comments were provided to another NPRM (Directorate Identifier
2012-NM-101-AD (79 FR 21413, April 16, 2014)) about these proposed
changes. UPS commented on that NPRM as follows: ``The proposed wording,
being specific to repairs, eliminates the interpretation that Airbus
messages are acceptable for approving minor deviations (corrective
actions) needed during accomplishment of an AD mandated Airbus service
bulletin.''
    That comment has made the FAA aware that some operators have
misunderstood or misinterpreted the Airworthy Product paragraph to
allow the owner/operator to use messages provided by the manufacturer
as approval of deviations during the accomplishment of an AD-mandated
action. The Airworthy Product paragraph does not approve messages or
other information provided by the manufacturer for deviations to the
requirements of the AD-mandated actions. The Airworthy Product
paragraph only addresses the requirement to contact the manufacturer
for corrective actions for the identified unsafe condition and does not
cover deviations from other AD requirements. However, deviations to AD-
required actions are addressed in 14 CFR 39.17, and anyone may request
approval of an alternative method of compliance to the AD-required
actions using the procedures found in 14 CFR 39.19.
    To address this misunderstanding and misinterpretation of the
Airworthy Product paragraph, we have changed that paragraph and
retitled it ``Contacting the Manufacturer.'' This paragraph now
clarifies that for any requirement in this AD to obtain corrective
actions from a manufacturer, the actions must be accomplished using a
method approved by the FAA, or the European Aviation Safety Agency
(EASA), or Airbus's EASA Design Organization Approval (DOA).
    The Contacting the Manufacturer paragraph also clarifies that, if
approved by the DOA, the approval must include the DOA-authorized
signature. The DOA signature indicates that the data and information
contained in the document are EASA approved, which is also FAA
approved. Messages and other information provided by the manufacturer
that do not contain the DOA-authorized signature approval are not EASA
approved, unless EASA directly approves the manufacturer's message or
other information.
    This clarification does not remove flexibility afforded previously
by the Airworthy Product paragraph. Consistent with long-standing FAA
policy, such flexibility was never intended for required actions. This
is also consistent with the recommendation of the AD Implementation
Aviation Rulemaking Committee to increase flexibility in complying with
ADs by identifying those actions in manufacturers' service instructions
that are ``Required for Compliance'' with ADs. We continue to work with
manufacturers to implement this recommendation. But once we determine
that an action is required, any deviation from the requirement must be
approved as an alternative method of compliance.
    Other commenters pointed out that in many cases the foreign
manufacturer's service bulletin and the foreign authority's MCAI may
have been issued some time before the FAA AD. Therefore, the DOA may
have provided U.S. operators with an approved repair, developed with
full awareness of the unsafe condition, before the FAA AD is issued.
Under these circumstances, to comply with the FAA AD, the operator
would be required to go back to the manufacturer's DOA and obtain a new
approval document, adding time and expense to the compliance process
with no safety benefit.
    Based on these comments, we removed the requirement from this AD
that the DAH-provided repair specifically refer to this AD. Before
adopting such a requirement in the future, the FAA will coordinate with
affected DAHs and verify they are prepared to implement means to ensure
that their repair approvals consider the unsafe condition addressed in
an AD. Any such requirements will be adopted through the normal AD
rulemaking process, including notice-and-comment procedures, when
appropriate.
    We have also decided not to include a generic reference to either
the ``delegated agent'' or the ``DAH with State of Design Authority
design organization approval,'' but instead we will provide the
specific delegation approval granted by the State of Design Authority
for the DAH.

Additional Changes to This AD

    In this AD, we have corrected a formatting error in the
subparagraphs of paragraph (g)(1) of the NPRM (79 FR 21413, April 16,
2014). The subparagraphs were incorrectly identified as (g)(1)(a),
(g)(1)(b), and (g)(1)(c), and should have been identified as paragraphs
(g)(1)(i), (g)(1)(ii), and (g)(1)(iii) of this AD.

Conclusion

    We reviewed the relevant data, considered the comments received,
and determined that air safety and the public interest require adopting
this AD with the changes described previously and minor editorial
changes. We have determined that these minor changes:
     Are consistent with the intent that was proposed in the
NPRM (79 FR 21413, April 16, 2014) for correcting the unsafe condition;
and
     Do not add any additional burden upon the public than was
already proposed in the NPRM (79 FR 21413, April 16, 2014).
    We also determined that these changes will not increase the
economic burden on any operator or increase the scope of this AD.

Related Service Information Under 1 CFR Part 51

    Airbus has issued the following service information, which
describes procedures for doing general visual inspections of the floor
cross beams flange at certain frames and contacting the manufacturer
for corrective actions:
     Airbus All Operator Telex A300-53A0392, dated March 14,
2012 (for Model A300 series airplanes);
     Airbus All Operator Telex A300-53A617, dated March 14,
2012 (for Model A300 B4-601, B4-603, B4-620, and B4-622 airplanes;
Model A300 B4-605R and B4-622R airplanes; Model A300 F4-605R and F4-
622R airplanes; and Model A300 C4-605R Variant F airplanes); and
     Airbus All Operator Telex A310-53A2135, dated March 14,
2012 (for Model A310 series airplanes).
    This service information is reasonably available; see ADDRESSES for
ways to access this service information.

Costs of Compliance

    We estimate that this AD affects 177 airplanes of U.S. registry.
    We also estimate that it would take about 1 work-hour per product
to comply with the basic requirements of this AD. The average labor
rate is $85

per work-hour. Based on these figures, we estimate the cost of this AD
on U.S. operators to be $15,045, or $85 per product.
    We have received no definitive data that would enable us to provide
cost estimates for the on-condition actions specified in this AD.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. ``Subtitle VII: Aviation
Programs,'' describes in more detail the scope of the Agency's
authority.
    We are issuing this rulemaking under the authority described in
``Subtitle VII, Part A, Subpart III, Section 44701: General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.

Regulatory Findings

    We determined that this AD will not have federalism implications
under Executive Order 13132. This AD will not have a substantial direct
effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
    For the reasons discussed above, I certify that this AD:
    1. Is not a ``significant regulatory action'' under Executive Order
12866;
    2. Is not a ``significant rule'' under the DOT Regulatory Policies
and Procedures (44 FR 11034, February 26, 1979);
    3. Will not affect intrastate aviation in Alaska; and
    4. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov/#!docketDetail;D=FAA-2014-0229; or in person at the
Docket Management Facility between 9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays. The AD docket contains this AD, the
regulatory evaluation, any comments received, and other information.
The street address for the Docket Operations office (telephone 800-647-
5527) is in the ADDRESSES section.

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

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

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

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive (AD):

2015-06-05 Airbus: Amendment 39-18123. Docket No. FAA-2014-0229;
Directorate Identifier 2013-NM-186-AD.

(a) Effective Date

    This AD becomes effective May 1, 2015.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to the Airbus airplanes identified in paragraphs
(c)(1), (c)(2), and (c)(3) of this AD, certificated in any category.
    (1) Model A300 B2-1A, B2-1C, B2K-3C, B2-203, B4-2C, B4-103, and
B4-203 airplanes, all manufacturer serial numbers.
    (2) Model A300 B4-601, B4-603, B4-620, and B4-622 airplanes;
Model A300 B4-605R and B4-622R airplanes; Model A300 F4-605R and F4-
622R airplanes; and Model A300 C4-605R Variant F airplanes; all
manufacturer serial numbers, except those on which Airbus
Modification 12699 has been embodied in production.
    (3) Model A310-203, -204, -221, -222, -304, -322, -324, and -325
airplanes, all manufacturer serial numbers.

(d) Subject

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

(e) Reason

    This AD was prompted by a review of certain repairs, which
revealed that the structural integrity of the airplane could be
negatively affected if those repairs are not re-worked. We are
issuing this AD to detect and correct certain repairs on the floor
cross beams flange. If those repairs are not reworked, the
structural integrity of the airplane could be negatively affected.

(f) Compliance

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

(g) Inspection

    (1) Within 30 months after the effective date of this AD: Do a
general visual inspection of the floor cross beams flange at FR11
and FR12A to determine which structural repair manual (SRM) repairs
have been done, in accordance with the instructions of the service
information specified in paragraph (g)(1)(i), (g)(1)(ii), or
(g)(1)(iii) of this AD, as applicable.
    (i) For Model A300 series airplanes: Airbus All Operator Telex
(AOT) A300-53A0392, dated March 14, 2012.
    (ii) For Model A300 B4-601, B4-603, B4-620, and B4-622
airplanes; Model A300 B4-605R and B4-622R airplanes; Model A300 F4-
605R and F4-622R airplanes; and Model A300 C4-605R Variant F
airplanes: Airbus AOT A300-53A6171, dated March 14, 2012.
    (iii) For Model A310 series airplanes: Airbus AOT A310-53A2135,
dated March 14, 2012.
    (2) A review of airplane maintenance records is acceptable in
lieu of the general visual inspection required by paragraph (g)(1)
of this AD if the SRM repairs can be positively identified from that
review.

(h) Repair

    If, during the inspection required by paragraph (g)(1) of this
AD, it is determined that any SRM repair specified in paragraph 2 of
the service information identified in paragraph (g)(1)(i),
(g)(1)(ii), or (g)(1)(iii) of this AD, as applicable, has been done:
Within 30 months after the effective date of this AD, rework the
repair using a method approved by the Manager, International Branch,
ANM-116, Transport Airplane Directorate, FAA; or the European
Aviation Safety Agency (EASA); or Airbus's EASA Design Organization
Approval (DOA).

(i) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
International Branch, ANM-116, Transport Airplane Directorate, FAA,
has the authority to approve AMOCs for this AD, if requested using
the procedures found in 14 CFR 39.19. In accordance with 14 CFR
39.19, send your request to your principal inspector or local Flight
Standards District Office, as appropriate. If sending information
directly to the International Branch, send it to ATTN: Dan Rodina,
Aerospace Engineer, International Branch, ANM-116, Transport
Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98507-
3356; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>. Information may be
emailed to<EMAIL_ADDRESS>Before using any
approved AMOC, notify your appropriate principal inspector, or
lacking a principal inspector, the manager of the local flight
standards district office/certificate holding district office. The
AMOC approval letter must specifically reference this AD.
    (2) Contacting the Manufacturer: For any requirement in this AD
to obtain corrective

actions from a manufacturer, the action must be accomplished using a
method approved by the Manager, International Branch, ANM-116,
Transport Airplane Directorate, FAA; or the EASA; or Airbus's EASA
DOA. If approved by the DOA, the approval must include the DOA-
authorized signature.

(j) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI)
Airworthiness Directive 2013-0220, dated September 18, 2013, for
related information. This MCAI may be found in the AD docket on the
Internet at http://www.regulations.gov/#!documentDetail;D=FAA-2014-
0229-0002.

(k) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless this AD specifies otherwise.
    (i) Airbus All Operator Telex A300-53A0392, dated March 14,
2012. The document number and date appear on only the first page of
this document.
    (ii) Airbus All Operator Telex A300-53A6171, dated March 14,
2012. The document number and date appear on only the first page of
this document.
    (iii) Airbus All Operator Telex A310-53A2135, dated March 14,
2012. The document number and date appear on only the first page of
this document.
    (3) For service information identified in this AD, contact
Airbus SAS, Airworthiness Office--EAW, 1 Rond Point Maurice
Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96;
fax +33 5 61 93 44 51; email<EMAIL_ADDRESS>
Internet http://www.airbus.com.
    (4) You may view this service information at the FAA, Transport
Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For
information on the availability of this material at the FAA, call
425-227-1221.
    (5) You may view this service information that is incorporated
by reference at the National Archives and Records Administration
(NARA). For information on the availability of this material at
NARA, call<PHONE_NUMBER>, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on March 14, 2015.
Jeffrey E. Duven,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2015-06583 Filed 3-26-15; 8:45 am]
 BILLING CODE 4910-13-P