[Federal Register: June 13, 2008 (Volume 73, Number 115)]
[Proposed Rules]
[Page 33743-33745]
[DOCID:fr13jn08-27]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2008-0649; Directorate Identifier 2008-CE-038-AD]
RIN 2120-AA64

Airworthiness Directives; DG Flugzeugbau GmbH Model DG-500MB
Powered Sailplanes

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

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: We propose to adopt a new airworthiness directive (AD) for the
products listed above. This proposed AD results from mandatory
continuing airworthiness information (MCAI) originated by an aviation
authority of another country to identify and correct an unsafe
condition on an aviation product. The MCAI describes the unsafe
condition as:

    A DG-500MB experienced, after the engine shutdown, an
uncommanded retraction of its powerplant.
    Investigations revealed that some bolts of the extension
retraction mechanism had fractured because of fatigue stress due to
increasing push-pull loads acting on incorrectly tightened screws.
    This condition, if not corrected, could lead to damage of the
propeller and the fuselage, thereby reducing the structural
integrity of the sailplane.

    The proposed AD would require actions that are intended to address
the unsafe condition described in the MCAI.

DATES: We must receive comments on this proposed AD by July 14, 2008.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://
www.regulations.gov; 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 proposed AD, the regulatory
evaluation, any comments received, and other information. The street
address for the Docket Office (telephone<PHONE_NUMBER>) is in the
ADDRESSES section. Comments will be available in the AD docket shortly
after receipt.

FOR FURTHER INFORMATION CONTACT: Gregory Davison, Aerospace Engineer,
FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City,
Missouri 64106; telephone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Comments Invited

    We invite you to send any written relevant data, views, or
arguments about this proposed AD. Send your comments to an address
listed under the ADDRESSES section. Include ``Docket No. FAA-2008-0649;
Directorate Identifier 2008-CE-038-AD'' at the beginning of your
comments. We specifically invite comments on the overall regulatory,
economic, environmental, and energy aspects of this proposed AD. We
will consider all comments received by the closing date and may amend
this proposed AD because of those comments.
    We will post all comments we receive, without change, to http://
www.regulations.gov, including any personal information you provide. We
will also post a report summarizing each substantive verbal contact we
receive about this proposed AD.

Discussion

    The European Aviation Safety Agency (EASA), which is the Technical
Agent for the Member States of the European Community, has issued EASA
AD No. 2008-0095, dated May 16, 2008 (referred to after this as ``the
MCAI''), to correct an unsafe condition for the specified products. The
MCAI states:

    A DG-500MB experienced, after the engine shutdown, an
uncommanded retraction of its powerplant.
    Investigations revealed that some bolts of the extension
retraction mechanism had fractured because of fatigue stress due to
increasing push-pull loads acting on incorrectly tightened screws.
    This condition, if not corrected, could lead to damage of the
propeller and the fuselage, thereby reducing the structural
integrity of the sailplane.
    To address this unsafe condition, this Airworthiness Directive
mandates the replacement of eight bolts, the four connecting the
fork 5M203 to the 5M204 adapter and those connecting the adapter
5M204 to the spindle drive, by new ones of higher strength and a
rework of the coupling of the 5M203 fork to the 5M204 adapter as
well as the coupling of the 5M204 adapter to the spindle drive, by
glueing the parts together, in addition to the pre-existing bolts.

    You may obtain further information by examining the MCAI in the AD
docket.

Relevant Service Information

    DG Flugzeugbau GmbH has issued Technical Note No. 843/27, dated
April 14, 2008. The actions described in this service information are
intended to correct the unsafe condition identified in the MCAI.

FAA's Determination and Requirements of the Proposed AD

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to our bilateral agreement with this State of Design Authority, they
have notified us of the unsafe condition described in the MCAI and
service information referenced above. We are proposing this AD because
we evaluated all information and determined the unsafe condition exists
and is likely to exist or develop on other products of the same type
design.

Differences Between This Proposed AD and the MCAI or Service
Information

    We have reviewed the MCAI and related service information and, in
general, agree with their substance. But we might have found it
necessary to use different words from those in the MCAI to ensure the
AD is clear for U.S. operators and is enforceable. In making these
changes, we do not intend to differ substantively from the information
provided in the MCAI and related service information.
    We might also have proposed different actions in this AD from those
in the MCAI in order to follow FAA policies. Any such differences are
highlighted in a NOTE within the proposed AD.

Costs of Compliance

    We estimate that this proposed AD would affect 4 products of U.S.
registry. We also estimate that it would take about 3 work-hours per
product to comply with the basic requirements of this proposed AD. The
average labor rate is $80 per work-hour. Required parts would cost
about $63 per product.
    Based on these figures, we estimate the cost of the proposed AD on
U.S. operators to be $1,212, or $303 per product.

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 proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would 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 this proposed
regulation:
    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); and
    3. Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    We prepared a regulatory evaluation of the estimated costs to
comply with this proposed AD and placed it in the AD docket.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Safety.

The Proposed Amendment

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

PART 39--AIRWORTHINESS DIRECTIVES

    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]

    2. The FAA amends Sec.  39.13 by adding the following new AD:

DG Flugzeugbau GmbH: Docket No. FAA-2008-0649; Directorate
Identifier 2008-CE-038-AD.

Comments Due Date

    (a) We must receive comments by July 14, 2008.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to DG-500MB powered sailplanes, all serial
numbers, certificated in any category.

Subject

    (d) Air Transport Association of America (ATA) Code 71: Power
Plant.

Reason

    (e) The mandatory continuing airworthiness information (MCAI)
states:
    A DG-500MB experienced, after the engine shutdown, an
uncommanded retraction of its powerplant.
    Investigations revealed that some bolts of the extension
retraction mechanism had fractured because of fatigue stress due to
increasing push-pull loads acting on incorrectly tightened screws.
    This condition, if not corrected, could lead to damage of the
propeller and the fuselage, thereby reducing the structural
integrity of the sailplane.
    To address this unsafe condition, this Airworthiness Directive
mandates the replacement of eight bolts, the four connecting the
fork 5M203 to the 5M204 adapter and those connecting the adapter
5M204 to the spindle drive, by new ones of higher strength and, a
rework of the coupling of the 5M203 fork to the 5M204 adapter as
well as the coupling of the 5M204 adapter to the spindle drive, by
glueing the parts together, in addition to the pre-existing bolts.

Actions and Compliance

    (f) Unless already done, within the next 30 days after the
effective date of this AD, modify the spindle drive assembly in
accordance with DG Flugzeugbau GmbH Technical Note No. 843/27, dated
April 14, 2008.

FAA AD Differences

    Note: This AD differs from the MCAI and/or service information
as follows: No differences.

Other FAA AD Provisions

    (g) The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager,
Standards Office, FAA, has the authority to approve AMOCs for this
AD, if requested using the procedures found in 14 CFR 39.19. Send
information to ATTN: Greg Davison, Aerospace Engineer, FAA, Small
Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri
64106; telephone:<PHONE_NUMBER>; fax:<PHONE_NUMBER>. Before using
any approved AMOC on any powered sailplane to which the AMOC
applies, notify your appropriate principal inspector (PI) in the FAA
Flight Standards District Office (FSDO), or lacking a PI, your local
FSDO.
    (2) Airworthy Product: For any requirement in this AD to obtain
corrective actions from a manufacturer or other source, use these
actions if they are FAA-approved. Corrective actions are considered
FAA-approved if they are approved by the State of Design Authority
(or their delegated agent). You are required to assure the product
is airworthy before it is returned to service.
    (3) Reporting Requirements: For any reporting requirement in
this AD, under the provisions of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.), the Office of Management and Budget (OMB) has
approved the information collection requirements and has assigned
OMB Control Number 2120-0056.

Related Information

    (h) Refer to MCAI European Aviation Safety Agency (EASA) AD No.
2008-0095, dated May 16, 2008; and DG Flugzeugbau GmbH Technical
Note No. 843/27, dated April 14, 2008, for related information.

    Issued in Kansas City, Missouri, on June 6, 2008.
David R. Showers,
Acting Manager, Small Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E8-13324 Filed 6-12-08; 8:45 am]

BILLING CODE 4910-13-P


                                  Appendix A

   1. Maine Revised Statutes, Title 26, Chapter 3
   2. Maine Revised Statutes, Title 26, Chapter 6
   3. Proposed Supplemental Legislation
   4. Governor's Letter of Support
   5. Attorney General's Letter


[Federal Register Volume 81, Number 25 (Monday, February 8, 2016)]
[Rules and Regulations]
[Pages 6454-6458]
[FR Doc No: 2016-02268]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 571

[Docket No. NHTSA-2014-0073]
RIN 2127-AL27

Federal Motor Vehicle Safety Standards; Lamps, Reflective
Devices, and Associated Equipment

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: NHTSA is amending the side marker requirements contained in
the

Federal Motor Vehicle Safety Standard (FMVSS) on lamps, reflective
devices and associated equipment for vehicles 80 inches or more in
width and less than 30 feet long. This final rule adopts the amendments
proposed in the Notice of Proposed Rulemaking (NPRM), published on
December 4, 2012. These amendments will restore the side marker
photometry requirements for motor vehicles under thirty feet in length
that were in place prior to the 2007 final rule that reorganized the
standard. Restoration of the side marker requirements will have no
negative impact on safety or function and will allow motor vehicle
manufacturers to avoid unnecessary modifications to their side marker
lamps with no added safety or functional benefit.

DATES: Effective Date: August 8, 2016. Compliance Date: Optional early
compliance as discussed below.
    Petitions for Reconsideration: Petitions for reconsideration of
this final rule must be received not later than March 24, 2016.

ADDRESSES: Any petitions for reconsideration should refer to the docket
number of this document and be submitted to: Administrator, National
Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., West
Building, Ground Floor, Docket Room W12-140, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:
    For technical issues: Mr. Wayne McKenzie, Office of Crash Avoidance
Standards, NHTSA, 1200 New Jersey Avenue SE., West Building,
Washington, DC 20590 (Telephone:<PHONE_NUMBER>) (Fax:<PHONE_NUMBER>).
    For legal issues: Mr. John Piazza, Office of the Chief Counsel,
NHTSA, 1200 New Jersey Avenue SE., West Building, Washington, DC 20590
(Telephone:<PHONE_NUMBER>) (Fax:<PHONE_NUMBER>).

SUPPLEMENTARY INFORMATION:

I. Background

    Side marker lamps have been required by FMVSS No. 108 since it was
promulgated as one of the initial Federal Motor Vehicles Safety
Standards in 1967.\1\ The main purpose of side marker lamps is to
indicate the overall length of the vehicle. The photometric
requirements are meant to ensure that the side marker lamps are
sufficiently visible from a range of viewing angles. This final rule
addresses an unintentional change NHTSA made to the photometric
requirements for side marker lamps when it reorganized FMVSS No. 108 in
2007.\2\ Before considering the changes made by this final rule, it is
useful to briefly examine the evolution of the side marker requirements
before 2007.
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    \1\ See 32 FR 2408 (Feb. 3, 1967).
    \2\ 72 FR 68234 (Dec. 4, 2007). The reorganized standard did not
take effect until December 1, 2012. 76 FR 48009 (Aug. 8, 2011).
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    Relevant to the present rulemaking is a change that was made to the
side marker requirements in 1980 in response to a petition for
rulemaking from Chrysler Corporation.\3\ At the time of the Chrysler
petition, FMVSS No. 108 required that the photometric requirements for
side marker lamps be met at test points 45 degrees outboard and inboard
of the lateral center line passing through the lamps. FMVSS No. 108,
however, permitted an additional compliance option for vehicles less
than 80 inches in width. This additional compliance option had the
effect of relaxing the inboard photometry requirements for the side
marker lamps.\4\ Chrysler--which wanted to use a common side marker
design for its single-wheeled (less than 80 inches wide) and its dual-
wheeled (greater than 80 inches wide) pickup trucks--petitioned to make
this compliance option available to all vehicles regardless of width.
NHTSA agreed with Chrysler that eligibility for the additional
compliance option should not depend on a vehicle's width, but did not
agree that it should be available to all vehicles. The agency explained
that the additional compliance option would not be appropriate for
vehicles that are 30 feet or longer.\5\ Accordingly, the 1980 final
rule revised FMVSS No. 108 by deleting the words ``80 inches in overall
width'' and substituting ``30 feet in overall length.''
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    \3\ 45 FR 45287 (July 3, 1980).
    \4\ Specifically, under this additional compliance option, the
photometric requirements could be met for all inboard test points at
a distance of 15 feet from the vehicle and on a vertical plane that
is perpendicular to the longitudinal axis of the vehicle and located
midway between the front and rear side marker lamps. This results in
an angle of less than 45 degrees instead of the fixed 45 degrees
that was otherwise required, so that the side marker lamp was
effectively permitted to illuminate a smaller area than it otherwise
would have been required to illuminate. See 45 FR 45287 (July 3,
1980) (citing 49 CFR 571.108, S<IP_ADDRESS>).
    \5\ This is because testing of side marker lamps is done at a
distance of 15 feet perpendicular to the vehicle and at a 45 degree
angle. At such a distance and angle, only a vehicle 30 feet long or
under would have both of its side marker lamps visible.
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    The next change to the side marker requirements relevant to this
final rule occurred in 2007, when NHTSA reorganized FMVSS No. 108. The
reorganization was intended to streamline the regulatory text and
clarify the standard's requirements. That final rule made the standard
more user-friendly by significantly reducing the number of third-party
documents, such as SAE \6\ standards, incorporated by reference. Prior
to the reorganization, FMVSS No. 108 would, in many instances, specify
requirements by simply referencing an SAE standard (which contained the
requirements), instead of explicitly specifying those requirements in
the text of FMVSS No. 108. However, when the standard was reorganized
in 2007, requirements contained in the referenced third-party standards
were included directly in the regulatory text, instead of incorporating
the requirements by referencing the standard that contained those
requirements. The agency explained that the reorganization was
administrative in nature and that the FMVSS No. 108 requirements were
not being increased, decreased, or substantively modified.
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    \6\ The Society of Automotive Engineers (now SAE International).
SAE is an organization that develops technical standards based on
best practices.
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    However, the newly revised version of FMVSS No. 108 inadvertently
changed the alternative compliance option for side marker lamps. Prior
to the reorganization, side marker lamps were required to conform to
SAE Standard J592e (July 1972) (i.e., the requirements were specified
using incorporation by reference). In addition, the pre-reorganization
regulatory text also explicitly specified the alternative compliance
option that was the subject of the 1980 final rule.\7\ The side marker
lamp requirements specified in SAE J592e (July 1972) also included (in
a footnote) an alternative compliance option for vehicles less than 80
inches wide. This was the same compliance option for which the agency
had deleted the words ``80 inches in overall width'' and added the
words ``30 feet in overall length'' in the 1980 final rule. When NHTSA
reorganized FMVSS No. 108 in 2007, the requirements contained in SAE
Standard J592e (July 1972) were included directly into the regulatory
text of FMVSS No. 108, thus eliminating the incorporation by reference;
\8\ this included the width-based compliance option that we had deleted
from FMVSS No. 108 in 1980. Accordingly, the 2007 reorganization
specified the alternative compliance option that for each motor vehicle
less than 30 feet in overall length and less than 2032 mm [80 inches]
in overall width, the minimum photometric intensity requirements for a

side marker lamp may be met for all inboard test points at a distance
of 15 feet from the vehicle and on a vertical plane that is
perpendicular to the longitudinal axis of the vehicle and located
midway between the front and rear side marker lamps.\9\
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    \7\ The 1980 final rule placed this requirement in S<IP_ADDRESS>. Due
to subsequent amendments, at the time of the 2007 reorganization,
the requirement was in S<IP_ADDRESS>.
    \8\ The requirements were placed in a new table, Table X.
    \9\ See S<IP_ADDRESS>.
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    Therefore, the agency inadvertently added back into FMVSS No. 108
the same width-based language it had deleted in 1980. This had the
effect of substantively changing the side marker requirements by
limiting the vehicles that were eligible for the additional compliance
option. Before the reorganization, vehicles less than 30 feet long were
eligible; after the rewrite, a vehicle had to be both less than 30 feet
long and less than 80 inches wide. The agency did not cite within its
analysis in the 2007 final rule the 1980 rulemaking that replaced the
width criterion with the length criterion.\10\
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    \10\ The agency did receive comments to the NPRM to reorganize
FMVSS No. 108 that stated that the agency's proposal to add the
width criterion to the side marker requirements was a substantive
change to the side marker requirements. However, these comments did
not cite the 1980 rulemaking that had deleted the width criterion.
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II. 2012 Side Marker NPRM

    To address this change, NHTSA published a notice of proposed
rulemaking (NPRM) on December 4, 2012.\11\ As we explained in the NPRM,
based on our communications with vehicle manufacturers, a petition for
rulemaking from the Alliance for Automobile Manufacturers, and our
review of the 1980 final rule, NHTSA recognized that the 2007 rewrite
erroneously added the width requirement back into the standard. This
inadvertent change might have required manufacturers to perform costly
redesigns in order to comply with the 2007 final rule. Accordingly, the
NPRM proposed to restore the pre-reorganization side marker
requirements for vehicles that are 80 inches or more in width and less
than 30 feet long. Considering the cost manufacturers would have to
incur as a result of the modifications in the 2007 final rule, NHTSA
announced in the 2012 NPRM that it would not pursue compliance actions
against manufacturers that install side marker lamps on vehicles that
are 80 inches or more in width and less than 30 feet long that fail to
meet the 45 degree inboard photometric requirements of the 2007 final
rule, provided that they meet the photometric requirements at a
distance of 15 feet from the vehicle and on a vertical plane that is
perpendicular to the longitudinal axis of the vehicle and located
midway between the front and rear side marker lamps. NHTSA stated that
this enforcement policy would be effective until the rulemaking was
completed. That enforcement policy will end as of the effective date of
this final rule.
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    \11\ 77 FR 71752, Dec. 4, 2012.
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III. Comments on the NPRM

    NHTSA received only three comments in response to the 2012 NPRM.
The Alliance of Automobile Manufacturers (the ``Alliance'') stated that
it agrees with NHTSA's analysis of the situation surrounding the
changes to FMVSS No. 108 during the administrative reorganization
process as well as the proposed revisions. The Alliance stated that the
proposed changes would bring the side marker photometry requirements
back in line with the original intent of the 1980 final rule and
restore the requirements that were in force prior to the 2007 final
rule. The Alliance also commented that the phrase ``. . . and less than
80 inches (2m) in overall width'' should be deleted from footnote 1 of
Table X to ensure there is no ambiguity concerning the application of
side marker lamp inboard photometry requirements.
    General Motors submitted a comment in support of the change to the
proposal and stated that the proposed changes would restore the
previous requirements and would have no overall effect on safety.
    The European Commission submitted a comment requesting an extension
of the comment period to February 5, 2013.

IV. Agency Comment Analysis and Agency Decision

    NHTSA has carefully considered the comments submitted in this
rulemaking. We have reviewed the comments received from GM and the
Alliance and agree with the rationale presented. Having received no
information to the contrary, we are amending S<IP_ADDRESS> of FMVSS No. 108
to delete the phrase ``and less than 2032 mm in overall width,''
consistent with the proposal. This revision will restore the
photometric requirements in FMVSS No. 108 for side marker lamps on
vehicles less than 30 feet in length so that the requirements may be
met for all inboard test points at a distance of 15 feet from the
vehicle on a vertical plane that is perpendicular to the longitudinal
axis of the vehicle and located midway between the front and rear side
marker lamps, regardless of the width of the vehicle.
    We have also decided to adopt the Alliance's proposed revision to
footnote 1 of Table X. The text in the footnote that the Alliance
proposes to delete--``and less than 80 inches (2m) in overall width''--
is essentially the same as the text we are deleting from S<IP_ADDRESS>.
Similarly revising this footnote will make the requirements stated in
the footnote consistent with the requirements stated in S<IP_ADDRESS>.
    With respect to the comment from the European Commission, NHTSA
chose not to extend the comment period formally because we stated in
the NPRM that the agency would consider late comments to the extent
practicable. Given that this final rule is being published several
years after the NPRM and we did not receive any additional comments or
requests to extend the comment period, we consider this comment
resolved.

V. Effective Date

    In the NPRM we proposed an effective date of 30 days after
publication of the final rule. Under the Safety Act, a FMVSS typically
is not effective before the 180th day after the standard is published.
We did not receive any comments concerning the proposed effective date.
Therefore, in keeping with typical practice, this final rule will be
effective August 8, 2016, with optional early compliance. We believe
that specifying a later effective date for this final rule will not
have any adverse effects or prejudice regulated entities. Moreover,
providing for optional early compliance will allow manufacturers to
immediately benefit from the flexibility afforded by the revised side
marker requirements the same as if the effective date were earlier.
NHTSA's compliance policy stated in the 2012 NPRM is terminated as of
the effective date of this final rule.

VI. Regulatory Notices and Analyses

A. Executive Order 12866, Executive Order 13563, and DOT Regulatory
Policies and Procedures

    NHTSA has considered the impact of this rulemaking action under
Executive Order 12866, Executive Order 13563, and the DOT's regulatory
policies and procedures. This final rule was not reviewed by the Office
of Management and Budget (OMB) under E.O. 12866, ``Regulatory Planning
and Review.'' It is not considered to be significant under E.O. 12866
or the Department's regulatory policies and procedures.
    This final rule restores requirements to the standard that were
unintentionally changed during the administrative revision of the
standard. Because this final rule merely restores previously existing
requirements it is not expected to have any costs. This

final rule allows manufacturers to avoid the cost of redesigning the
side marker lamps for dual-wheeled pickup trucks because these vehicles
can now continue to meet the side marker photometry requirements for
narrower vehicles. Because there are not any costs associated with this
rulemaking and only minor benefits, we have not prepared a separate
economic analysis for this rulemaking.

B. Executive Order 13609: Promoting International Regulatory
Cooperation

    The policy statement in section 1 of Executive Order 13609
provides, in part:

    The regulatory approaches taken by foreign governments may
differ from those taken by U.S. regulatory agencies to address
similar issues. In some cases, the differences between the
regulatory approaches of U.S. agencies and those of their foreign
counterparts might not be necessary and might impair the ability of
American businesses to export and compete internationally. In
meeting shared challenges involving health, safety, labor, security,
environmental, and other issues, international regulatory
cooperation can identify approaches that are at least as protective
as those that are or would be adopted in the absence of such
cooperation. International regulatory cooperation can also reduce,
eliminate, or prevent unnecessary differences in regulatory
requirements.

    NHTSA is not aware of any conflicting regulatory approach taken by
a foreign government concerning the subject matter of this rulemaking.

C. Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act, 5 U.S.C. 60l et
seq., NHTSA has evaluated the effects of this action on small entities.
I hereby certify that this rule would not have a significant impact on
a substantial number of small entities. The final rule would affect
manufacturers of motor vehicle light equipment, but the entities that
qualify as small businesses would not be significantly affected by this
rulemaking because the agency is restoring requirements that previously
existed in an older version of the regulation. This rulemaking is not
expected to affect the cost of manufacturing motor vehicle lighting
equipment.

D. Executive Order 13132

    NHTSA has examined this rule pursuant to Executive Order 13132 (64
FR 43255, August 10, 1999) and concluded that no additional
consultation with States, local governments or their representatives is
mandated beyond the rulemaking process. The agency has concluded that
the rulemaking would not have sufficient federalism implications to
warrant consultation with State and local officials or the preparation
of a federalism summary impact statement. The final rule would not have
``substantial direct effects 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.''
    NHTSA rules can preempt in two ways. First, the National Traffic
and Motor Vehicle Safety Act contains an express preemption provision:
``When a motor vehicle safety standard is in effect under this chapter,
a State or a political subdivision of a State may prescribe or continue
in effect a standard applicable to the same aspect of performance of a
motor vehicle or motor vehicle equipment only if the standard is
identical to the standard prescribed under this chapter.'' 49 U.S.C.
30103(b)(1). It is this statutory command by Congress that preempts any
non-identical State legislative and administrative law addressing the
same aspect of performance.
    The express preemption provision set forth above is subject to a
savings clause under which ``[c]ompliance with a motor vehicle safety
standard prescribed under this chapter does not exempt a person from
liability at common law.'' 49 U.S.C. 30103(e). Pursuant to this
provision, State common law tort causes of action against motor vehicle
manufacturers that might otherwise be preempted by the express
preemption provision are generally preserved.
    However, the Supreme Court has recognized the possibility, in some
instances, of implied preemption of such State common law tort causes
of action by virtue of NHTSA's rules, even if not expressly preempted.
This second way that NHTSA rules can preempt is dependent upon there
being an actual conflict between an FMVSS and the higher standard that
would effectively be imposed on motor vehicle manufacturers if someone
obtained a State common law tort judgment against the manufacturer,
notwithstanding the manufacturer's compliance with the NHTSA standard.
Because most NHTSA standards established by an FMVSS are minimum
standards, a State common law tort cause of action that seeks to impose
a higher standard on motor vehicle manufacturers will generally not be
preempted. However, if and when such a conflict does exist--for
example, when the standard at issue is both a minimum and a maximum
standard--the State common law tort cause of action is impliedly
preempted. See Geier v. American Honda Motor Co., 529 U.S. 861 (2000).
    Pursuant to Executive Order 13132 and 12988, NHTSA has considered
whether this rule could or should preempt State common law causes of
action. The agency's ability to announce its conclusion regarding the
preemptive effect of one of its rules reduces the likelihood that
preemption will be an issue in any subsequent tort litigation.
    To this end, the agency has examined the nature (e.g., the language
and structure of the regulatory text) and objectives of this rule and
finds that this rule, like many NHTSA rules, prescribes only a minimum
safety standard. As such, NHTSA does not intend that this rule preempt
state tort law that would effectively impose a higher standard on motor
vehicle manufacturers than that established by this rule. Establishment
of a higher standard by means of State tort law would not conflict with
the minimum standard announced here. Without any conflict, there could
not be any implied preemption of a State common law tort cause of
action.

E. National Environmental Policy Act

    NHTSA has analyzed this final rule for the purposes of the National
Environmental Policy Act. The agency has determined that implementation
of this action would not have any significant impact on the quality of
the human environment.

F. Paperwork Reduction Act

    Under the procedures established by the Paperwork Reduction Act of
1995, a person is not required to respond to a collection of
information by a Federal agency unless the collection displays a valid
OMB control number. This final rule would not establish any new
information collection requirements.

G. National Technology Transfer and Advancement Act

    Under the National Technology Transfer and Advancement Act of 1995
(NTTAA) (Pub. L. 104-113), ``all Federal agencies and departments shall
use technical standards that are developed or adopted by voluntary
consensus standards bodies, using such technical standards as a means
to carry out policy objectives or activities determined by the agencies
and departments.'' This final rule would not adopt or reference any new
industry or consensus standards that were not already present in FMVSS
No. 108.

H. Civil Justice Reform

    With respect to the review of the promulgation of a new regulation,
section 3(b) of Executive Order 12988,

``Civil Justice Reform'' (61 FR 4729, February 7, 1996) requires that
Executive agencies make every reasonable effort to ensure that the
regulation: (1) Clearly specifies the preemptive effect; (2) clearly
specifies the effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct, while promoting
simplification and burden reduction; (4) clearly specifies the
retroactive effect, if any; (5) specifies whether administrative
proceedings are to be required before parties file suit in court; (6)
adequately defines key terms; and (7) addresses other important issues
affecting clarity and general draftsmanship under any guidelines issued
by the Attorney General. This document is consistent with these
requirements.
    Pursuant to this Order, NHTSA notes as follows. The preemptive
effect of this final rule is discussed above. NHTSA notes further that
there is no requirement that individuals submit a petition for
reconsideration or pursue other administrative proceeding before they
may file suit in court.

I. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 requires agencies to
prepare a written assessment of the costs, benefits and other effects
of proposed or final rules that include a Federal mandate likely to
result in the expenditure by State, local or tribal governments, in the
aggregate, or by the private sector, of more than $100 million annually
(adjusted for inflation with base year of 1995). This final rule would
not result in expenditures by State, local or tribal governments, in
the aggregate, or by the private sector in excess of $100 million
annually.

J. Executive Order 13211

    Executive Order 13211 (66 FR 28355, May 18, 2001) applies to any
rulemaking that: (1) Is determined to be economically significant as
defined under E.O. 12866, and is likely to have a significantly adverse
effect on the supply of, distribution of, or use of energy; or (2) that
is designated by the Administrator of the Office of Information and
Regulatory Affairs as a significant energy action. This rulemaking is
not subject to E.O. 13211.

K. Regulation Identifier Number (RIN)

    The Department of Transportation assigns a regulation identifier
number (RIN) to each regulatory action listed in the Unified Agenda of
Federal Regulations. The Regulatory Information Service Center
publishes the Unified Agenda in April and October of each year. You may
use the RIN contained in the heading at the beginning of this document
to find this action in the Unified Agenda.

L. Privacy Act

    Anyone is able to search the electronic form of all comments
received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review DOT's
complete Privacy Act Statement in the Federal Register published on
April 11, 2000 (Volume 65, Number 70; Pages 19477-78).

Regulatory Text

List of Subjects in 49 CFR Part 571

    Imports, Motor vehicle safety, Motor vehicles, Tires.

    In consideration of the foregoing, NHTSA is amending 49 CFR part
571 as set forth below.

PART 571--FEDERAL MOTOR VEHICLE SAFETY STANDARDS

0
1. The authority citation for part 571 continues to read as follows:

    Authority:  49 U.S.C. 322, 30111, 30115, 30117, 30166:
delegation of authority at 49 CFR 1.95.

0
2. Section 571.108 is amended by revising paragraph S<IP_ADDRESS> and
footnote 1 of Table X to read as follows:

Sec.  571.108  Standard No. 108; Lamps, reflective devices, and
associated equipment.

* * * * *
    S<IP_ADDRESS> Inboard photometry. For each motor vehicle less than 30
feet in overall length, the minimum photometric intensity requirements
for a side marker lamp may be met for all inboard test points at a
distance of 15 feet from the vehicle and on a vertical plane that is
perpendicular to the longitudinal axis of the vehicle and located
midway between the front and rear side marker lamps.
* * * * *

Table X--Side Marker Lamp Photometry Requirements

* * * * *
    (1) Where a side marker lamp installed on a motor vehicle less than
30 feet in overall length has the lateral angle nearest the other
required side marker lamp on the same side of the vehicle reduced from
45[deg] by design as specified by S<IP_ADDRESS>, the photometric intensity
measurement may be met at the lesser angle.
* * * * *

    Issued in Washington, DC, on February 1, 2016 under authority
delegated in 49 CFR 1.95.
Mark R. Rosekind,
Administrator.
[FR Doc. 2016-02268 Filed 2-5-16; 8:45 am]
 BILLING CODE 4910-59-P


[Federal Register Volume 77, Number 210 (Tuesday, October 30, 2012)]
[Notices]
[Pages 65740-65747]
[FR Doc No: 2012-26639]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68094; File No. SR-BATS-2012-042]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing of Proposed Rule Change To List and Trade Shares of the iShares
Sovereign Screened Global Bond Fund

October 24, 2012.
    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 October 12, 2012, BATS Exchange, Inc. (``Exchange'' or ``BATS'')
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 substantially by the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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

    The Exchange is proposing to list and trade shares of the iShares
Sovereign Screened Global Bond Fund (``Fund'') of the iShares Sovereign
Screened Global Bond Fund, Inc. (``Company'') under BATS Rule 14.11(i)
(``Managed Fund Shares''). The shares of the Fund are collectively
referred to herein as the ``Shares.'' The text of the proposed rule
change is available at the Exchange's Web site at http://www.batstrading.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 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 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 proposes to list and trade the Shares under BATS Rule
14.11(i), which governs the listing and trading of Managed Fund Shares
on the Exchange.\3\ The Fund will be an actively managed ETF. The
Shares will be offered by the Company, which was established as a
Maryland corporation on December 2, 2011. The Company is registered
with the Commission as an open-end investment company and has filed a
registration statement on behalf of the Fund on Form N-1A
(``Registration Statement'') with the Commission.\4\
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    \3\ The Commission approved BATS Rule 14.11(i) in Securities
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148
(September 6, 2011) (SR-BATS-2011-018). Although the Fund would be
the first actively-managed exchange traded fund (``ETF'') listed on
the Exchange, the Commission has previously approved the listing and
trading of a number of actively managed ETFs on NYSE Arca, Inc.
pursuant to Rule 8.600 of that exchange. See, e.g., Securities
Exchange Act Release Nos. 66343 (February 7, 2012), 77 FR 7647
(February 13, 2012) (SR-NYSEArca-2011-85) (order approving listing
and trading of five actively managed ETFs); and 66345 (February 7,
2012), 77 FR 7643 (February 13, 2012) (SR-NYSEArca-2011-84) (order
approving listing and trading of three actively managed ETFs,
including Russell Bond ETF). The Exchange believes the proposed rule
change raises no significant issues not previously addressed in
those prior Commission orders.
    \4\ See Registration Statement on Form N-1A for the Company,
dated March 5, 2012 (File Nos. 333-179905 and 811-22674). The
descriptions of the Fund and the Shares contained herein are based,
in part, on information in the Registration Statement. The
Commission has issued an order granting certain exemptive relief to
the Company under the Investment Company Act of 1940 (15 U.S.C. 80a-
1) (``1940 Act'') (``Exemptive Order''). See Investment Company Act
Release No. 29571 (January 24, 2011) (File No. 812-13601).
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Description of the Shares and the Fund
    BlackRock Fund Advisors is the investment adviser (``BFA'' or
``Adviser'') to the Fund.\5\ BlackRock International Limited serves as
sub-adviser for the Fund (``Sub-Adviser'').\6\ State Street Bank and
Trust Company is the administrator, custodian, and transfer agent for
the Company. BlackRock Investments, LLC (``Distributor'') serves as the
distributor for the Company.
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    \5\ BlackRock Fund Advisors is an indirect wholly owned
subsidiary of BlackRock, Inc.
    \6\ The Adviser manages the Fund's investments and its business
operations subject to the oversight of the Board of Directors of the
Company (``Board''). While BFA is ultimately responsible for the
management of the Fund, it is able to draw upon the trading,
research, and expertise of its asset management affiliates for
portfolio decisions and management with respect to portfolio
securities. Portfolio managers employed by the Adviser are generally
responsible for day-to-day management of the Fund and, as such,
typically make all decisions with respect to portfolio holdings. The
Adviser also has ongoing oversight responsibility. The Sub-Adviser,
subject to the supervision and oversight of the Board and BFA, will
be primarily responsible for execution of securities transactions
outside the United States and Canada and may, from time to time,
participate in the management of specified assets in the Fund's
portfolio. The Sub-Adviser may be responsible for the day-to-day
management of the Fund.
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    BATS Rule 14.11(i)(7) provides that, if the investment adviser to
the investment company issuing Managed Fund Shares is affiliated with a
broker-dealer, such investment adviser shall erect a ``fire wall''
between the investment adviser and the broker-dealer with respect to
access to information concerning the composition and/or changes to such
investment company portfolio.\7\ In addition, Rule 14.11(i)(7) further
requires that personnel who make decisions on the investment company's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material, non-public information regarding
the applicable investment company portfolio. Rule 14.11(i)(7) is
similar to BATS Rule 14.11(b)(5)(A)(i); however, Rule 14.11(i)(7) in
connection with the establishment of a ``fire wall'' between the
investment adviser and the broker-dealer reflects the applicable open-
end fund's portfolio, not an underlying benchmark index, as is the case
with index-based funds. The Adviser and Sub-Adviser are both affiliated
with multiple broker-dealers and have both implemented ``fire walls''
with respect to such broker-dealers regarding access to information
concerning the composition and/or changes to the Fund's portfolio. In
addition, Adviser and Sub-Adviser personnel who make decisions
regarding the Fund's portfolio are subject to procedures designed to
prevent the use and dissemination of material, non-public information
regarding the Fund's portfolio. In the event that (a) the Adviser or
the Sub-Adviser becomes newly affiliated with a broker-dealer, or (b)
any new adviser or sub-adviser becomes affiliated with a broker-dealer,
they will implement a fire wall with respect to such broker-dealer
regarding access to information concerning the composition and/or
changes to the portfolio, and will be subject to procedures designed to
prevent the use and dissemination of material, non-public information
regarding such portfolio.
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    \7\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (``Advisers
Act''). As a result, the Adviser and Sub-Adviser and their related
personnel are subject to the provisions of Rule 204A-1 under the
Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
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iShares Sovereign Screened Global Bond Fund
    According to the Registration Statement, the Fund will seek to
generate current income while striving to mitigate downside risk by
investing principally in global sovereign debt obligations. To achieve
its objective, the Fund will invest, under normal

circumstances,\8\ at least 80% of its net assets in sovereign
government bonds from both developed and emerging market countries. In
the absence of normal circumstances, the Fund may temporarily depart
from its normal investment process, provided that such departure is, in
the opinion of the portfolio management team of the Fund, consistent
with the Fund's investment objective and in the best interest of the
Fund. For example, the Fund may hold a higher than normal proportion of
its assets in cash in response to adverse market, economic, or
political conditions.
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    \8\ The term ``under normal circumstances'' includes, but is not
limited to, the absence of adverse market, economic, political, or
other conditions, including extreme volatility or trading halts in
the fixed income markets or the financial markets generally;
operational issues causing dissemination of inaccurate market
information; or force majeure type events such as systems failure,
natural or man-made disaster, act of God, armed conflict, act of
terrorism, riot, or labor disruption, or any similar intervening
circumstance.
---------------------------------------------------------------------------

    The Fund will hold sovereign debt obligations of at least 13 non-
affiliated issuers. The Fund will not purchase the securities of
issuers conducting their principal business activity in the same
industry if, immediately after the purchase and as a result thereof,
the value of the Fund's investments in that industry would equal or
exceed 25% of the current value of the Fund's total assets, provided
that this restriction does not limit the Fund's: (i) Investments in
securities of other investment companies; (ii) investments in
securities issued or guaranteed by the U.S. government, its agencies,
or instrumentalities; or (iii) investments in repurchase agreements
collateralized by U.S. government securities.\9\ The Fund will not
invest in equity securities.
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    \9\ See Form N-1A, Item 9. The Commission has taken the position
that a fund is concentrated if it invests more than 25% of the value
of its total assets in any one industry. See, e.g., Investment
Company Act Release No. 9011 (October 30, 1975), 40 FR 54241
(November 21, 1975).
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    The Fund intends to qualify each year as a regulated investment
company (``RIC'') under Subchapter M of the Internal Revenue Code of
1986, as amended.\10\ The Fund will invest its assets, and otherwise
conduct its operations, in a manner that is intended to satisfy the
qualifying income, diversification, and distribution requirements
necessary to establish and maintain RIC qualification under Subchapter
M. The Subchapter M diversification tests generally require that (1)
the Fund invest no more than 25% of its total assets in securities
(other than securities of the U.S. government or other RICs) of any one
issuer or two or more issuers that are controlled by the Fund and that
are engaged in the same, similar, or related trades or businesses, and
(2) at least 50% of the Fund's total assets consist of cash and cash
items, U.S. government securities, securities of other RICs, and other
securities, with investments in such other securities limited in
respect of any one issuer to an amount not greater than 5% of the value
of the Fund's total assets and not greater than 10% of the outstanding
voting securities of such issuer.
---------------------------------------------------------------------------

    \10\ 26 U.S.C. 851.
---------------------------------------------------------------------------

Sovereign Debt
    The Fund intends to achieve its investment objective by investing,
under normal circumstances, at least 80% of its net assets in bonds
denominated in local currencies and the U.S. dollar, issued by
governments in both developed and emerging market countries.
    The Fund intends to maintain specific exposure to global government
bonds with targeted investment characteristics. The Adviser will
utilize a model-based proprietary investment process to assemble the
investment portfolio from a defined group of developed and emerging
market countries across all credit rating categories, including below
investment grade. The investment process primarily will utilize the
universe of sovereign debt issuers included in the BlackRock Sovereign
Risk Index, a proprietary model that scores countries using a
comprehensive list of relevant fiscal, financial, and institutional
metrics to assess sovereign credit risk. These country scores, along
with other model-driven factors, will be used to construct the Fund's
investment portfolio by screening out lower scoring countries and
weighting the remaining sovereigns based on their scores. As of July
31, 2012, there were 48 countries in the universe of eligible
countries, any of which may or may not be held by the Fund.\11\ This
proprietary investment process is intended to provide an increased
exposure to sovereign debt securities issued by countries with higher
credit quality, as defined by the model, than would a fund that seeks
to replicate the performance of a broad global government bond index
that is weighted more heavily towards countries based on their amount
of debt outstanding. As of July 31, 2012, the following countries were
included in the universe of eligible countries: Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Croatia, the
Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece,
Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Malaysia,
Mexico, the Netherlands, New Zealand, Norway, Peru, the Philippines,
Poland, Portugal, Russia, South Africa, South Korea, Singapore,
Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan, Thailand,
Turkey, the United Kingdom, the United States, and Venezuela.\12\
Countries may be added to, eliminated from, or replaced in the universe
of eligible countries at any time, and the model may score countries
differently over time, which means that countries may be added to,
deleted from, or re-weighted within the model.
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    \11\ Countries must have at least $5 billion of outstanding debt
principal amounts at the beginning of the calendar year in order to
be included in the eligible universe.
    \12\ Each country's approximate value of outstanding debt
principal amounts as of July 31, 2012, is as follows (in billions):
Argentina $160; Australia $246; Austria $248; Belgium $421; Brazil
$498; Canada $865; Chile $58; China $1,216; Colombia $76; Croatia
$22; the Czech Republic $79; Denmark $133; Egypt $116; Finland $106;
France $1,696; Germany $1,347; Greece $169; Hungary $86; India $593;
Indonesia $112; Ireland $109; Israel $151; Italy $2,007; Japan
$11,554; Malaysia $142; Mexico $379; the Netherlands $384; New
Zealand $58; Norway $64; Peru $27; the Philippines $98; Poland $221;
Portugal $143; Russia $140; Singapore $136; Slovakia $40; Slovenia
$18; South Africa $138; South Korea $380; Spain $844; Sweden $143;
Switzerland $98; Taiwan $162; Thailand $104; Turkey $265; the United
Kingdom $1,878; the United States $10,743; and Venezuela $72.
---------------------------------------------------------------------------

    The universe of sovereign debt currently includes securities that
are rated ``investment grade'' as well as ``below investment grade.''
\13\ The Fund intends to provide an increased exposure to sovereign
debt securities issued by countries with higher credit quality, as
defined by the model, than would a fund that seeks to replicate the
performance of a broad global government bond index that is weighted
more heavily toward countries based on their amount of debt
outstanding.\14\ The Fund expects that, under normal circumstances, the
securities included in the Fund will be primarily investment grade. As
of July 31, 2012, 97% of the securities in the BlackRock Sovereign Risk
Index were rated investment grade.
---------------------------------------------------------------------------

    \13\ When constructing the model, the distribution of ratings
across issues in each country will be considered in order to ensure
that no single issue is over weighted and that the model is
diversified. The ratings-based caps will be imposed on a per country
basis, and will be generally as follows: AAA/AA=5%; A=4%; BBB=3%;
Junk=2% (ratings are averaged across Moody's and S&P).
    \14\ The Fund will not invest in distressed debt.
---------------------------------------------------------------------------

    The Fund's investments will be consistent with the Fund's
investment objective and will not be used to enhance leverage. Under
normal circumstances, the effective duration of

the Fund's portfolio is expected to be 5-7 years, as calculated by the
Adviser.\15\
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    \15\ Effective duration is a measure of the potential
responsiveness of a bond or portfolio price to small parallel shifts
in interest rates. When measured across a portfolio, the effective
duration of a portfolio is equivalent to the average portfolio
duration.
---------------------------------------------------------------------------

Other Portfolio Holdings
    While the Fund will invest at least 80% of its net assets in bonds
denominated in local currencies and the U.S. dollar, issued by
governments in both developed and emerging market countries, the
Adviser expects that, under normal market circumstances, the Fund also
intends to invest its remaining assets in money market securities (as
described below) in a manner consistent with its investment objective
in order to help manage cash flows in and out of the Fund, such as in
connection with payment of dividends or expenses, and to satisfy margin
requirements, to provide collateral, or to otherwise back investments
in derivative instruments. For these purposes, money market securities
include: short-term, high-quality obligations issued or guaranteed by
the U.S. Treasury or the agencies or instrumentalities of the U.S.
government; short-term, high-quality securities issued or guaranteed by
non-U.S. governments, agencies, and instrumentalities; repurchase
agreements backed by U.S. government securities; money market mutual
funds; and deposits and other obligations of U.S. and non-U.S. banks
and financial institutions. All money market securities acquired by the
Fund will be rated investment grade. The Fund does not intend to invest
in any unrated money market securities. However, it may do so, to a
limited extent, such as where a rated money market security becomes
unrated, if such money market security is determined by the Adviser or
the Sub-Adviser to be of comparable quality.
    Additionally, the Fund may hold up to an aggregate amount of 15% of
its net assets in illiquid securities (calculated at the time of
investment), including Rule 144A securities.\16\ The Fund will monitor
its portfolio liquidity on an ongoing basis to determine whether, in
light of current circumstances, an adequate level of liquidity is being
maintained, and will consider taking appropriate steps in order to
maintain adequate liquidity if, through a change in values, net assets,
or other circumstances, more than 15% of the Fund's net assets are held
in illiquid securities. Illiquid securities include securities subject
to contractual or other restrictions on resale and other instruments
that lack readily available markets as determined in accordance with
Commission staff guidance.
---------------------------------------------------------------------------

    \16\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14618 (March 18, 2008), footnote 34. See also Investment Company Act
Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 1970)
(Statement Regarding ``Restricted Securities''); Investment Company
Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 20, 1992)
(Revisions of Guidelines to Form N-1A). A fund's portfolio security
is illiquid if it cannot be disposed of in the ordinary course of
business within seven days at approximately the value ascribed to it
by the fund. See Investment Company Act Release No. 14983 (March 12,
1986), 51 FR 9773 (March 21, 1986) (adopting amendments to Rule 2a-7
under the 1940 Act); Investment Company Act Release No. 17452 (April
23, 1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A under
the Securities Act of 1933).
---------------------------------------------------------------------------

    Pursuant to the Exemptive Order, the Fund will not invest in swap
agreements, futures contracts, or option contracts. The Fund may invest
in currency forwards for hedging against foreign currency exchange rate
risk and/or trade settlement purposes.
The Shares
    The Fund will issue and redeem Shares on a continuous basis at the
net asset value per share (``NAV'') \17\ only in large blocks of a
specified number of Shares or multiples thereof (``Creation Units'') in
transactions with authorized participants who have entered into
agreements with the Distributor. The Fund currently anticipates that a
Creation Unit will consist of 100,000 Shares, though this number may
change from time to time, including prior to the listing of the Fund.
The exact number of Shares that will comprise a Creation Unit will be
disclosed in the Registration Statement of the Fund. Once created,
Shares of the Fund trade on the secondary market in amounts less than a
Creation Unit.
---------------------------------------------------------------------------

    \17\ The NAV of the Fund's Shares generally will be calculated
once daily Monday through Friday as of the close of regular trading
on the New York Stock Exchange, generally 4:00 p.m., Eastern Time
(``NAV Calculation Time''). NAV per Share is calculated by dividing
the Fund's net assets by the number of Fund Shares outstanding. For
more information regarding the valuation of Fund investments in
calculating the Fund's NAV, see the Registration Statement.
---------------------------------------------------------------------------

    The consideration for purchase of Creation Units of the Fund
generally will consist of the in-kind deposit of a designated portfolio
of securities (including any portion of such securities for which cash
may be substituted) (``Deposit Securities''), and the ``Cash
Component'' computed as described below. Together, the Deposit
Securities and the Cash Component constitute the ``Fund Deposit,''
which represents the minimum initial and subsequent investment amount
for a Creation Unit of the Fund.
    The portfolio of securities required for purchase of a Creation
Unit may not be identical to the portfolio of securities the Fund will
deliver upon redemption of Fund Shares. The Deposit Securities and Fund
Securities (as defined below), as the case may be, in connection with a
purchase or redemption of a Creation Unit, generally will correspond
pro rata, to the extent practicable, to the securities held by the
Fund.
    The Cash Component will be an amount equal to the difference
between the NAV of the Shares (per Creation Unit) and the ``Deposit
Amount,'' which will be an amount equal to the market value of the
Deposit Securities, and serve to compensate for any differences between
the NAV per Creation Unit and the Deposit Amount. The Fund currently
will offer Creation Units for in-kind deposits, but reserves the right
to utilize a ``cash'' option in lieu of some or all of the applicable
Deposit Securities for creation of Shares.
    BFA will make available through the National Securities Clearing
Corporation (``NSCC'') on each business day, prior to the opening of
business on the Exchange, the list of names and the required number or
par value of each Deposit Security and the amount of the Cash Component
to be included in the current Fund Deposit (based on information as of
the end of the previous business day) for the Fund.
    The identity and number or par value of the Deposit Securities may
change pursuant to changes in the composition of the Fund's portfolio
as rebalancing adjustments and corporate action events occur from time
to time. The composition of the Deposit Securities may also change in
response to adjustments to the weighting or composition of the holdings
of the Fund.
    The Fund reserves the right to permit or require the substitution
of a ``cash in lieu'' amount to be added to the Cash Component to
replace any Deposit Security that may not be available in sufficient
quantity for delivery or that may not be eligible for transfer through
the Depository Trust Company (``DTC'') or the clearing process through
the NSCC.
    Except as noted below, all creation orders must be placed for one
or more Creation Units and must be received by the Distributor in
proper form no later than 4:00 p.m., Eastern Time, in each case on the
date such order is placed in order for creation of Creation Units to be
effected based on the NAV of Shares of

the Fund as next determined on such date after receipt of the order in
proper form. Orders requesting substitution of a ``cash in lieu''
amount generally must be received by the Distributor no later than 2:00
p.m., Eastern Time on the Settlement Date. The ``Settlement Date'' is
generally the third business day after the transmittal date. On days
when the Exchange or the bond markets close earlier than normal, the
Fund may require orders to create or to redeem Creation Units to be
placed earlier in the day.
    Fund Deposits must be delivered through the Federal Reserve System
(for cash and government securities), through DTC (for corporate and
municipal securities), or through a central depository account, such as
with Euroclear or DTC, maintained by State Street or a sub-custodian
(``Central Depository Account'') by an authorized participant. Any
portion of a Fund Deposit that may not be delivered through the Federal
Reserve System or DTC must be delivered through a Central Depository
Account. The Fund Deposit transfer must be ordered by the authorized
participant in a timely fashion so as to ensure the delivery of the
requisite number of Deposit Securities to the account of the Fund by no
later than 3:00 p.m., Eastern Time on the Settlement Date.
    A standard creation transaction fee will be imposed to offset the
transfer and other transaction costs associated with the issuance of
Creation Units.
    Shares of the Fund may be redeemed only in Creation Units at their
NAV next determined after receipt of a redemption request in proper
form by the Distributor and only on a business day. BFA will make
available through the NSCC, prior to the opening of business on the
Exchange on each business day, the designated portfolio of securities
(including any portion of such securities for which cash may be
substituted) that will be applicable (subject to possible amendment or
correction) to redemption requests received in proper form on that day
(``Fund Securities''). Fund Securities received on redemption may not
be identical to Deposit Securities that are applicable to creations of
Creation Units.
    Unless cash redemptions are available or specified for the Fund,
the redemption proceeds for a Creation Unit generally will consist of a
specified amount of cash, Fund Securities, plus additional cash in an
amount equal to the difference between the NAV of the Shares being
redeemed, as next determined after the receipt of a request in proper
form, and the value of the specified amount of cash and Fund
Securities, less a redemption transaction fee. The Fund currently will
redeem Shares for Fund Securities, but the Fund reserves the right to
utilize a ``cash'' option for redemption of Shares.
    A standard redemption transaction fee will be imposed to offset
transfer and other transaction costs that may be incurred by the Fund.
    Redemption requests for Creation Units of the Fund must be
submitted to the Distributor by or through an authorized participant no
later than 4:00 p.m., Eastern Time on any business day in order to
receive that day's NAV. The authorized participant must transmit the
request for redemption in the form required by the Fund to the
Distributor in accordance with procedures set forth in the authorized
participant agreement.
    Additional information regarding the Shares and the Fund, including
investment strategies, risks, creation and redemption procedures, fees
and expenses, portfolio holdings disclosure policies, distributions,
taxes, and reports to be distributed to beneficial owners of the Shares
can be found in the Registration Statement or on the Web site for the
Fund (www.iShares.com), as applicable.
Availability of Information
    The Fund's Web site, which will be publicly available prior to the
public offering of Shares, will include a form of the prospectus for
the Fund that may be downloaded. The Web site will include additional
quantitative information updated on a daily basis, including, for the
Fund: (1) the prior business day's reported NAV, mid-point of the bid/
ask spread at the time of calculation of such NAV (``Bid/Ask
Price''),\18\ daily trading volume, and a calculation of the premium
and discount of the Bid/Ask Price against the NAV; and (2) data in
chart format displaying the frequency distribution of discounts and
premiums of the daily Bid/Ask Price against the NAV, within appropriate
ranges, for each of the four previous calendar quarters. Daily trading
volume information will be available in the financial section of
newspapers, through subscription services such as Bloomberg, Thomson
Reuters, and International Data Corporation, which can be accessed by
authorized participants and other investors, as well as through other
electronic services, including major public Web sites. On each business
day, before commencement of trading in Shares during Regular Trading
Hours \19\on the Exchange, the Fund will disclose on its Web site the
identities and quantities of the portfolio of securities and other
assets (``Disclosed Portfolio'') held by the Fund that will form the
basis for the Fund's calculation of NAV at the end of the business
day.\20\ The Disclosed Portfolio will include, as applicable, the
names, quantity, percentage weighting, and market value of fixed income
securities and other assets held by the Fund and the characteristics of
such assets. The Web site and information will be publicly available at
no charge.
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    \18\ The Bid/Ask Price of the Fund will be determined using the
mid-point of the highest bid and the lowest offer on the Exchange as
of the time of calculation of the Fund's NAV. The records relating
to Bid/Ask Prices will be retained by the Fund and its service
providers.
    \19\ Regular Trading Hours are 9:30 a.m. to 4:00 p.m., Eastern
Time.
    \20\ Under accounting procedures to be followed by the Fund,
trades made on the prior business day (``T'') will be booked and
reflected in NAV on the current business day (``T+1'').
Notwithstanding the foregoing, portfolio trades that are executed
prior to the opening of the Exchange on any business day may be
booked and reflected in NAV on such business day. Accordingly, the
Fund will be able to disclose at the beginning of the business day
the portfolio that will form the basis for the NAV calculation at
the end of the business day.
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    In addition, for the Fund, an estimated value, defined in BATS Rule
14.11(i)(3)(C) as the ``Intraday Indicative Value,'' that reflects an
estimated intraday value of the Fund's portfolio, will be disseminated.
Moreover, the Intraday Indicative Value will be based upon the current
value for the components of the Disclosed Portfolio and will be updated
and widely disseminated by one or more major market data vendors at
least every 15 seconds during the Exchange's Regular Trading Hours.\21\
In addition, the quotations of certain of the Fund's holdings may not
be updated during U.S. trading hours if such holdings do not trade in
the United States or if updated prices cannot be ascertained. Further,
there may be periods of time during Regular Trading Hours during which
the Intraday Indicative Value would be static to the extent securities
that comprise the Fund's holdings are not actively trading.
---------------------------------------------------------------------------

    \21\ Currently, it is the Exchange's understanding that several
major market data vendors display and/or make widely available
Intraday Indicative Values published via the Consolidated Tape
Association (``CTA'') or other data feeds.
---------------------------------------------------------------------------

    The dissemination of the Intraday Indicative Value, together with
the Disclosed Portfolio, will allow investors to determine the value of
the underlying portfolio of the Fund on a daily basis and provide a
close estimate of that value throughout the trading day.
    Intraday, executable price quotations on sovereign bonds and other
assets are available from major broker-dealer firms. Such intraday
price information

is available through subscription services, such as Bloomberg, Thomson
Reuters, and International Data Corporation, which can be accessed by
authorized participants and other investors.
    Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. The
previous day's closing price and trading volume information for the
Shares will be published daily in the financial section of newspapers.
Quotation and last-sale information for the Shares will be available on
the facilities of the CTA.
Initial and Continued Listing
    The Shares will be subject to BATS Rule 14.11(i), which sets forth
the initial and continued listing criteria applicable to Managed Fund
Shares. The Exchange represents that, for initial and/or continued
listing, the Fund must be in compliance with Rule 10A-3 under the
Act.\22\ A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange. The Exchange will obtain a
representation from the issuer of the Shares that the NAV per Share
will be calculated daily and that the NAV and the Disclosed Portfolio
will be made available to all market participants at the same time.
---------------------------------------------------------------------------

    \22\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund. The Exchange will halt trading in
the Shares under the conditions specified in BATS Rule 11.18. Trading
may be halted because of market conditions or for reasons that, in the
view of the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which trading is not occurring in the
securities and/or the financial instruments comprising the Disclosed
Portfolio of the Fund; or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present. Trading in the Shares also will be subject to Rule
14.11(i)(4)(B)(iv), which sets forth circumstances under which Shares
of the Fund may be halted.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. BATS will allow
trading in the Shares from 8:00 a.m. until 5:00 p.m., Eastern Time. The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. As provided in BATS Rule 11.11(a), the
minimum price variation for quoting and entry of orders in Managed Fund
Shares traded on the Exchange is $0.01, with the exception of
securities that are priced less than $1.00, for which the minimum price
variation for order entry is $0.0001.
Surveillance
    The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. Trading of the Shares
through the Exchange will be subject to the Exchange's surveillance
procedures for derivative products, including Managed Fund Shares. The
Exchange may obtain information via the Intermarket Surveillance Group
(``ISG'') from other exchanges who are members or affiliates of the ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement.\23\ The Exchange prohibits the
distribution of material, non-public information by its employees.
---------------------------------------------------------------------------

    \23\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com.
---------------------------------------------------------------------------

Information Circular
    Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) The procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (2) BATS Rule 3.7, which imposes suitability
obligations on Exchange members with respect to recommending
transactions in the Shares to customers; (3) how information regarding
the Intraday Indicative Value is disseminated; (4) the risks involved
in trading the Shares during the Pre-Opening \24\ and After Hours
Trading Sessions \25\ when an updated Intraday Indicative Value will
not be calculated or publicly disseminated; (5) a reminder that there
may be periods of time during Regular Trading Hours during which the
Intraday Indicative Value would be static to the extent securities that
comprise the Fund's holdings are not actively trading; (6) the
requirement that members deliver a prospectus to investors purchasing
newly issued Shares prior to or concurrently with the confirmation of a
transaction; and (7) trading information.
---------------------------------------------------------------------------

    \24\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m.,
Eastern Time.
    \25\ The After Hours Trading Session is from 4:00 p.m. to 5:00
p.m., Eastern Time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to
the commencement of trading, of the prospectus delivery requirements
applicable to the Fund. Members purchasing Shares from the Fund for
resale to investors will deliver a prospectus to such investors. The
Information Circular will also discuss any exemptive, no-action, and
interpretive relief granted by the Commission from any rules under the
Act.
    In addition, the Information Circular will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Circular will also disclose the trading
hours of the Shares of the Fund and the applicable NAV Calculation Time
for the Shares. The Information Circular will disclose that information
about the Shares of the Fund will be publicly available on the Fund's
Web site. In addition, the Information Circular will reference that the
Company is subject to various fees and expenses described in the Fund's
Registration Statement.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act \26\ in general and Section 6(b)(5) of the Act \27\ 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, 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f.
    \27\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in BATS Rule 14.11(i). The
Exchange believes that its surveillance procedures are adequate to

properly monitor the trading of the Shares on the Exchange during all
trading sessions and to deter and detect violations of Exchange rules
and the applicable federal securities laws. If the investment adviser
to the investment company issuing Managed Fund Shares is affiliated
with a broker-dealer, such investment adviser to the investment adviser
[sic] shall erect a ``fire wall'' between the investment adviser and
the broker-dealer with respect to access to information concerning the
composition and/or changes to such investment company portfolio. The
Adviser and Sub-Adviser are both affiliated with multiple broker-
dealers and have implemented ``fire walls'' with respect to such
broker-dealers regarding access to information concerning the
composition and/or changes to the Fund's portfolio. The Exchange may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement.
    According to the Registration Statement, the Fund expects that it
will have at least 80% of its assets invested in sovereign bonds. The
Fund's exposure to any single industry will generally be limited to 25%
of the Fund's assets. Countries must have at least $5 billion of
outstanding debt principal amounts at the beginning of the calendar
year in order to be included in the eligible universe. The Fund expects
that, under normal circumstances, the securities included in the Fund
will be primarily investment grade. As of July 31, 2012, 97% of the
securities in the BlackRock Sovereign Risk Index were rated investment
grade. The Fund's investments will be consistent with the Fund's
investment objective and will not be used to enhance leverage. The Fund
also may invest its net assets in money market instruments at the
discretion of the Adviser or Sub-Adviser.
    Additionally, the Fund may hold up to an aggregate amount of 15% of
its net assets in illiquid securities (calculated at the time of
investment), including Rule 144A securities. The Fund will monitor its
portfolio liquidity on an ongoing basis to determine whether, in light
of current circumstances, an adequate level of liquidity is being
maintained, and will consider taking appropriate steps in order to
maintain adequate liquidity if, through a change in values, net assets,
or other circumstances, more than 15% of the Fund's net assets are held
in illiquid securities. Illiquid securities include securities subject
to contractual or other restrictions on resale and other instruments
that lack readily available markets as determined in accordance with
Commission staff guidance.
    Pursuant to the Exemptive Order, the Fund will not invest in swap
agreements, futures contracts, or option contracts. The Fund may invest
in currency forwards for hedging against foreign currency exchange rate
risk and/or trade settlement purposes.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information is publicly available regarding the Fund and the Shares,
thereby promoting market transparency. Moreover, the Intraday
Indicative Value will be disseminated by one or more major market data
vendors at least every 15 seconds during Regular Trading Hours. On each
business day, before commencement of trading in Shares during Regular
Trading Hours, the Fund will disclose on its Web site the Disclosed
Portfolio that will form the basis for the Fund's calculation of NAV at
the end of the business day. Pricing information will be available on
the Fund's Web site including: (1) The prior business day's reported
NAV, the Bid/Ask Price of the Fund, daily trading volume, and a
calculation of the premium and discount of the Bid/Ask Price against
the NAV; and (2) data in chart format displaying the frequency
distribution of discounts and premiums of the daily Bid/Ask Price
against the NAV, within appropriate ranges, for each of the four
previous calendar quarters. Additionally, information regarding market
price and trading volume of the Shares will be continually available on
a real-time basis throughout the day on brokers' computer screens and
other electronic services, and quotation and last-sale information for
the Shares will be available on the facilities of the CTA, which
contain information for widely followed indexes and securities traded
on the Exchange. The Web site for the Fund will include a form of the
prospectus for the Fund and additional data relating to NAV and other
applicable quantitative information. Trading in Shares of the Fund will
be halted under the conditions specified in BATS Rule 11.18. Trading
may also be halted because of market conditions or for reasons that, in
the view of the Exchange, make trading in the Shares inadvisable.
Finally, trading in the Shares will be subject to BATS Rule
14.11(i)(4)(B)(iv), which sets forth circumstances under which Shares
of the Fund may be halted. In addition, as noted above, investors will
have ready access to information regarding the Fund's holding, the
Intraday Indicative Value, the Disclosed Portfolio, and quotation and
last-sale information for the Shares.
    Intraday, executable price quotations on global sovereign debt
obligations and other assets are available from major broker-dealer
firms. Such intraday price information is available through
subscription services, such as Bloomberg, Thomson Reuters, and
International Data Corporation, which can be accessed by authorized
participants and other investors.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. As noted above, the Exchange has in
place surveillance procedures relating to trading in the Shares and may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement. In addition, as noted above, investors
will have ready access to information regarding the Fund's holdings,
the Intraday Indicative Value, the Disclosed Portfolio, and quotation
and last-sale information for the Shares.
    For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.

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

    The Exchange does not believe that the proposed rule change imposes
any burden on competition.

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

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

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

    Within 45 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 self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such 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 email to<EMAIL_ADDRESS>Please include
File Number SR-BATS-2012-042 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2012-042. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BATS-2012-042 and should be
submitted on or before November 20, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-26639 Filed 10-29-12; 8:45 am]
BILLING CODE 8011-01-P