[Federal Register Volume 80, Number 46 (Tuesday, March 10, 2015)]
[Notices]
[Pages 12690-12696]
[FR Doc No: 2015-05480]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74433; File No. SR-NYSEArca-2015-02]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to Amendments to NYSE Arca Equities
Rule 8.600 to Adopt Generic Listing Standards for Managed Fund Shares

March 4, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on February 17, 2015, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Equities Rule 8.600 to
adopt generic listing standards for Managed Fund Shares. The text of
the proposed rule change is available on the Exchange's Web site at
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend NYSE Arca Equities Rule 8.600 to
adopt generic listing standards for Managed Fund Shares. Under the
Exchange's current rules, a proposed rule change must be filed with the
Securities and Exchange Commission (``SEC'' or ``Commission'') for the
listing and trading of each new series of Managed Fund Shares. The
Exchange believes that it is appropriate to codify certain rules within
Rule 8.600 that would generally eliminate the need for such proposed
rule changes, which would create greater efficiency and promote uniform
standards in the listing process.
Background
    Rule 8.600 sets forth certain rules related to the listing and
trading of Managed Fund Shares.\4\ Under Rule 8.600(c)(1), the term
``Managed Fund Share'' means a security that:
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    \4\ See Securities Exchange Act Release No. 57619 (April 4,
2008), 73 FR 19544 (April 10, 2008) (SR-NYSEArca-2008-25) (order
approving NYSE Arca Equities Rule 8.600 and listing and trading of
shares of certain issues of Managed Fund Shares) (the ``Approval
Order''). The Approval Order approved the rules permitting the
listing and trading of Managed Fund Shares, trading hours and halts,
listing fees applicable to Managed Fund Shares, and the listing and
trading of several individual series of Managed Fund Shares.
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    (a) represents an interest in a registered investment company
(``Investment Company'') organized as an open-end management investment
company or similar entity, that invests in a portfolio of securities
selected by the Investment Company's investment adviser (hereafter
``Adviser'') consistent with the Investment Company's investment
objectives and policies;
    (b) is issued in a specified aggregate minimum number in return for
a deposit of a specified portfolio of securities and/or a cash amount
with a value equal to the next determined net asset value; and
    (c) when aggregated in the same specified minimum number, may be
redeemed at a holder's request, which holder will be paid a specified
portfolio of securities and/or cash with a value equal to the next
determined net asset value.
    Effectively, Managed Fund Shares are securities issued by an
actively-managed open-end Investment Company (i.e., an actively-managed
exchange-traded fund (``ETF'')). Because Managed Fund Shares are
actively-managed, they do not seek to replicate the performance of a
specified passive index of securities. Instead, they generally use an
active investment strategy to seek to meet their investment objectives.
In contrast, an open-end Investment Company that issues Investment
Company Units (``Units''), listed and traded on the Exchange pursuant
to NYSE Arca Equities Rule 5.2(j)(3), seeks to provide investment
results that generally correspond to the price and yield performance of
a specific foreign or domestic stock index, fixed income securities
index or combination thereof.
    All Managed Fund Shares listed and/or traded pursuant to Rule 8.600
(including pursuant to unlisted trading privileges) are subject to the
full panoply of Exchange rules and procedures that currently govern the
trading of equity securities on the Exchange.\5\
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    \5\ See Approval Order, supra note 4, at 19547.
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    In addition, Rule 8.600(d) currently provides for the criteria that
Managed Fund Shares must satisfy for initial and continued listing on
the Exchange, including, for example, that a minimum number of Managed
Fund Shares are required to be outstanding at the time of commencement
of trading on the Exchange. However, the current process for listing
and trading new series of Managed Fund Shares on the Exchange requires
that the Exchange submit a proposed rule change with the Commission. In
this regard, Commentary .01 to Rule 8.600 specifies that the Exchange
will file separate proposals under Section 19(b) of the Act (hereafter,
a ``proposed rule change'') before listing and trading of [sic] shares
of an issue of Managed Fund Shares.
Proposed Changes to Rule 8.600
    The Exchange would amend Commentary .01 to Rule 8.600 to specify
that the Exchange may approve Managed Fund Shares for listing and/or
trading (including pursuant to unlisted trading privileges) pursuant to
SEC Rule 19b-4(e) under the Act, which pertains to derivative
securities products (``SEC Rule 19b-4(e)'').\6\ SEC Rule 19b-4(e)(1)

provides that the listing and trading of a new derivative securities
product by a self-regulatory organization (``SRO'') is not deemed a
proposed rule change, pursuant to paragraph (c)(1) of Rule 19b-4,\7\ if
the Commission has approved, pursuant to section 19(b) of the Act, the
SRO's trading rules, procedures and listing standards for the product
class that would include the new derivative securities product and the
SRO has a surveillance program for the product class. This is the
current method pursuant to which ``passive'' ETFs are listed under NYSE
Arca Equities Rule 5.2(j)(3).
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    \6\ 17 CFR 240.19b-4(e). As provided under SEC Rule 19b-4(e),
the term ``new derivative securities product'' means any type of
option, warrant, hybrid securities product or any other security,
other than a single equity option or a security futures product,
whose value is based, in whole or in part, upon the performance of,
or interest in, an underlying instrument.
    \7\ 17 CFR 240.19b-4(c)(1). As provided under SEC Rule 19b-
4(c)(1), a stated policy, practice, or interpretation of the SRO
shall be deemed to be a proposed rule change unless it is reasonably
and fairly implied by an existing rule of the SRO.
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    The Exchange would also specify within Commentary .01 to Rule 8.600
that components of Managed Fund Shares listed pursuant to SEC Rule 19b-
4(e) must satisfy on an initial and continued basis certain specific
criteria, which the Exchange would include within Commentary .01, as
described in greater detail below. As proposed, the Exchange would
continue to file separate proposed rule changes before the listing and
trading of Managed Fund Shares with components that do not satisfy the
additional criteria described below or components other than those
specified below. For example, if the components of a Managed Fund Share
exceeded one of the applicable thresholds, the Exchange would file a
separate proposed rule change before listing and trading such Managed
Fund Share. Similarly, if the components of a Managed Fund Share
included a security or asset that is not specified below, the Exchange
would file a separate proposed rule change.
    The Exchange would also add to the ``generic'' criteria of Rule
8.600(d) by specifying that all Managed Fund Shares must have a stated
investment objective, which must be adhered to under normal market
conditions.\8\
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    \8\ The Exchange would also add a new defined term under Rule
8.600(c)(5) to specify that the term ``normal market conditions''
includes, but is not limited to, the absence of trading halts in the
applicable 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.
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    Finally, the Exchange would also amend the continued listing
requirement in Rule 8.600(d)(2)(A) by changing the requirement that a
Portfolio Indicative Value for Managed Fund Shares be widely
disseminated by one or more major market data vendors at least every 15
seconds during the time when the Managed Fund Shares trade on the
Exchange to a requirement that a Portfolio Indicative Value be widely
disseminated by one or more major market data vendors at least every 15
seconds during the Core Trading Session (as defined in NYSE Arca
Equities Rule 7.34).
Proposed Managed Fund Share Portfolio Standards
    The Exchange is proposing standards that would pertain to Managed
Fund Shares to qualify for listing and trading pursuant to SEC Rule
19b-4(e). These standards would be grouped according to security or
asset type. The Exchange notes that the standards proposed for a
Managed Fund Share portfolio that holds domestic equity securities,
Derivative Securities Products and Index-Linked Securities are based in
large part on the existing equity security standards applicable to
Units in Commentary .01 to Rule 5.2(j)(3). The standards proposed for a
Managed Fund Share portfolio that holds fixed income securities are
based in large part on the existing fixed income security standards
applicable to Units in Commentary .02 to Rule 5.2(j)(3). Many of the
standards proposed for other types of holdings in a Managed Fund Share
portfolio are based on previous proposed rule changes for specific
series of Managed Fund Shares.\9\
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    \9\ See Securities Exchange Act Release Nos. 66321 (February 3,
2012), 77 FR 6850 (February 9, 2012) (SR-NYSEArca-2011-95) (the
``PIMCO Total Return Approval'') and 72666 (July 3, 2014), 79 FR
44224 (July 30, 2014) (SR-NYSEArca-2013-122) (the ``PIMCO Total
Return Use of Derivatives Approval''); 69244 (March 27, 2013), 78 FR
19766 (April 2, 2013) (SR-NYSEArca-2013-08) (the ``SPDR Blackstone/
GSO Senior Loan Approval''); 68870 (February 8, 2013), 78 FR 11245
(February 15, 2013) (SR-NYSEArca-2012-139) (the ``First Trust
Preferred Securities and Income Approval''); 69591 (May 16, 2013),
78 FR 30372 (May 22, 2013) (SR-NYSEArca-2013-33) (the
``International Bear Approval''); 61697 (March 12, 2010), 75 FR
13616 (March 22, 2010) (SR-NYSEArca-2010-04) (the ``WisdomTree Real
Return Approval''); and 67054 (May 24, 2012), 77 FR 32161 (May 31,
2012) (SR-NYSEArca-2012-25) (the ``WisdomTree Brazil Bond
Approval''). Certain standards proposed herein for Managed Fund
Shares are also based on previous proposed rule changes for specific
series of Units for which Commission approval for listing was
required due to the Units not satisfying certain standards of
Commentary .01 and .02 to Rule 5.2(j)(3). See Securities Exchange
Act Release Nos. 67985 (October 4, 2012), 77 FR 61804 (October 11,
2012) (SR-NYSEArca-2012-92) (the ``iShares 2018 S&P AMT-Free
Municipal Series and iShares 2019 S&P AMT-Free Municipal Series
Approval''); 63881(February 9, 2011), 76 FR 9065 (February 16, 2011)
(SR-NYSEArca-2010-120) (the ``SPDR Nuveen S&P High Yield Municipal
Bond ETF Approval''); 63176 (October 25, 2010), 75 FR 66815 (October
29, 2010) (SR-NYSEArca-2010-94) (the ``iShares Taxable Municipal
Bond Fund Approval''); and 69373 (April 15, 2013), 78 FR 23601
(April 19, 2013) (SR-NYSEArca-2012-108) (the ``NYSE Arca U.S. Equity
Synthetic Reverse Convertible Index Fund Approval'').
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    Proposed Commentary .01(a) would describe the standards for a
Managed Fund Share portfolio that holds equity securities, including
U.S. Component Stocks,\10\ Derivative Securities Products,\11\ and
Index-Linked Securities \12\ listed on a national securities exchange,
as follows:
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    \10\ For the purposes of Commentary .01 and this proposal, the
term ``U.S. Component Stocks'' would have the same meaning as
defined in NYSE Arca Equities Rule 5.2(j)(3).
    \11\ For the purposes of Commentary .01 and this proposal, the
term ``Derivative Securities Products'' would have the same meaning
as defined in NYSE Arca Equities Rule 7.34(a)(4)(A).
    \12\ Index-Linked Securities are securities listed under NYSE
Arca Equities Rule 5.2(j)(6).
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    (1) Component stocks (excluding Derivative Securities Products and
Index-Linked Securities) that in the aggregate account for at least 90%
of the equity weight of the portfolio (excluding such Derivative
Securities Products and Index-Linked Securities) each must have a
minimum market value of at least $75 million; \13\
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    \13\ This proposed text is identical to the corresponding text
of Commentary .01(a)(A)(1) to Rule 5.2(j)(3), except for the
omission of the reference to ``index,'' which is not applicable, and
the addition of the reference to Index-Linked Securities.
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    (2) Component stocks (excluding Derivative Securities Products and
Index-Linked Securities) that in the aggregate account for at least 70%
of the equity weight of the portfolio (excluding such Derivative
Securities Products and Index-Linked Securities) each must have a
minimum monthly trading volume of 250,000 shares, or minimum notional
volume traded per month of $25,000,000, averaged over the last six
months; \14\
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    \14\ This proposed text is identical to the corresponding text
of Commentary .01(a)(A)(2) to Rule 5.2(j)(3), except for the
omission of the reference to ``index,'' which is not applicable, and
the addition of the reference to Index-Linked Securities.
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    (3) The most heavily weighted component stock (excluding Derivative
Securities Products and Index-Linked Securities) must not exceed 30% of
the equity weight of the portfolio, and, to the extent applicable, the
five most heavily weighted component stocks (excluding Derivative
Securities Products and Index-Linked Securities) must not exceed 65% of
the equity weight of the portfolio; \15\
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    \15\ This proposed text is identical to the corresponding text
of Commentary .01(a)(A)(3) to Rule 5.2(j)(3), except for the
omission of the reference to ``index,'' which is not applicable, and
the addition of the reference to Index-Linked Securities.

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    (4) The portfolio must include a minimum of 13 component stocks;
provided, however, that there would be no minimum number of component
stocks if (a) one or more series of Derivative Securities Products or
Index-Linked Securities constitute, at least in part, components
underlying a series of Managed Fund Shares, or (b) one or more series
of Derivative Securities Products or Index-Linked Securities account
for 100% of the equity weight of the portfolio of a series of Managed
Fund Shares; \16\
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    \16\ This proposed text is identical to the corresponding text
of Commentary .01(a)(A)(4) to Rule 5.2(j)(3), except for the
omission of the reference to ``index,'' which is not applicable, the
addition of the reference to Index-Linked Securities, and the
reference to the 100% limit applying to the ``equity portion'' of
the portfolio--this last difference included [sic] because these
proposed standards in Commentary .01(a) to Rule 8.600 permit the
inclusion of non-equity securities, whereas Commentary .01 to Rule
5.2(j)(3) only applies to equity securities.
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    (5) Equity securities (excluding unsponsored American Depository
Receipts (``ADRs'')) in the portfolio must be U.S. Component Stocks
listed on a national securities exchange and must be NMS Stocks as
defined in Rule 600 of Regulation NMS; \17\
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    \17\ 17 CFR 240.600. This proposed text is identical to the
corresponding text of Commentary .01(a)(A)(5) to Rule 5.2(j)(3),
except for the addition of ``equity'' to make clear that the
standard applies to ``equity securities'', the exclusion of
unsponsored ADRs, and the omission of the reference to ``index,''
which is not applicable.
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    (6) For Derivative Securities Products and Index-Linked Securities,
no more than 25% of the equity weight of the portfolio could include
leveraged and/or inverse leveraged Derivative Securities Products or
Index-Linked Securities; and
    (7) ADRs may be sponsored or unsponsored. However no more than 10%
of the equity weight of the portfolio shall consist of unsponsored
ADRs.
    Proposed Commentary .01(b) would describe the standards for a
Managed Fund Share portfolio that holds fixed income securities, which
are debt securities \18\ that are notes, bonds, debentures or evidence
of indebtedness that include, but are not limited to, U.S. Department
of Treasury securities (``Treasury Securities''), government-sponsored
entity securities (``GSE Securities''), municipal securities, trust
preferred securities, supranational debt and debt of a foreign country
or a subdivision thereof, investment grade and high yield corporate
debt, bank loans, mortgage and asset backed securities, and commercial
paper. The applicable portfolio holdings standards would be as follows:
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    \18\ Debt securities include a variety of fixed income
obligations, including, but not limited to, corporate debt
securities, government securities, municipal securities, convertible
securities, and mortgage-backed securities. Debt securities include
investment-grade securities, non-investment-grade securities, and
unrated securities. Debt securities also include variable and
floating rate securities.
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    (1) Components that in the aggregate account for at least 75% of
the fixed income weight of the portfolio shall meet the following:
    (i) each shall have a minimum original principal amount outstanding
of $100 million or more; \19\ or
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    \19\ This text of proposed Commentary .01(b)(1)(i) to Rule 8.600
is based on the corresponding text of Commentary .02(a)(2) to Rule
5.2(j)(3) .
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    (iii) [sic] if a municipal bond component, such component shall be
issued in an offering with an aggregate size, as set forth in the
official statement of the offering, of $100 million or more; \20\
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    \20\ This proposed text is similar to the amendment to
Commentary .02(a)(2) to Rule 5.2(j)(3) as proposed in SR-NYSEArca-
2015-01. See Securities Exchange Act Release No. 74175 (January 29,
2015), 80 FR 6150 (February 4, 2015) (notice of filing of proposed
rule change amending NYSE Arca Equities Rule 5.2(j)(3), Commentary
.02 relating to listing of Investment Company Units based on
municipal bond indexes). Proposed rule changes for series of Units
previously listed and traded on the Exchange pursuant to Rule
5.2(j)(3) similarly included the ability for such Units' holdings to
include municipal bond components with individual principal amount
outstanding of less than $100 million. See, e.g., iShares 2018 S&P
AMT-Free Municipal Series and iShares 2019 S&P AMT-Free Municipal
Series Approval, supra note 9, at 61807; SPDR Nuveen S&P High Yield
Municipal Bond ETF Approval, supra note 9, at 9066; and iShares
Taxable Municipal Bond Fund Approval, supra note 9, at 66815-6. The
proposed rule takes into account features of municipal bonds that
differ from those of most other Fixed Income Securities.
Principally, municipal bonds are issued with either ``serial'' or
``term'' maturities or some combination thereof. The official
statement issued in connection with a municipal bond offering
describes the terms of the bonds and the issuer and/or obligor on
the related bonds, which is comprised of a number of specific
maturity sizes. The entire issue (sometimes referred to as the
``deal size'') receives the same credit rating and the various
maturities are all subject to the provisions set forth in the
official statement. The entire issue is based on a specified project
or group of related projects and funded by the same revenue or other
funding sources identified in the official statement. The Exchange
believes that the proposed rule change is reasonable and appropriate
in that pricing and liquidity of such maturity sizes is
predominately based on the common characteristics of the aggregate
issue of which the municipal bond is part. Thus, consideration of
the aggregate issue rather than the individual bond component does
not raise concerns regarding pricing or liquidity of the index
components or of the Units overlying the applicable municipal bond
index.
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    (2) No component fixed-income security (excluding Treasury
Securities and GSE Securities) could represent more than 30% of the
fixed income weight of the portfolio, and the five most heavily
weighted component fixed income securities in the portfolio must not in
the aggregate account for more than 65% of the fixed income weight of
the portfolio; \21\
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    \21\ This proposed text is identical to the corresponding text
of Commentary .02(a)(4) to Rule 5.2(j)(3), except for the omission
of the reference to ``index,'' which is not applicable.
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    (3) An underlying portfolio (excluding exempted securities) must
include a minimum of 13 non-affiliated issuers; \22\
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    \22\ This proposed text is identical to the corresponding text
of Commentary .02(a)(5) to Rule 5.2(j)(3), except for the omission
of the reference to ``index,'' which is not applicable, and the
exclusion of the text ``consisting entirely of.''
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    (4) Component securities that in [sic] aggregate account for at
least 90% of the fixed income weight of the portfolio must be either
(a) from issuers that are required to file reports pursuant to Sections
13 and 15(d) of the Act; (b) from issuers that have a worldwide market
value of its outstanding common equity held by non-affiliates of $700
million or more; (c) from issuers that have outstanding securities that
are notes, bonds debentures, or evidence of indebtedness having a total
remaining principal amount of at least $1 billion; (d) exempted
securities as defined in Section 3(a)(12) of the Act; or (e) from
issuers that are a government of a foreign country or a political
subdivision of a foreign country; and
    (5) Non-agency mortgage-related and other asset-backed securities
components of a portfolio shall not account for more than 20% of the
weight of the fixed income portion of the portfolio.
    Proposed Commentary .01(c) would describe the standards for a
Managed Fund Share portfolio that holds cash and cash equivalents.\23\
Specifically, the portfolio may hold short-term instruments with
maturities of less than 3 months. There would be no limitation to the
percentage of the portfolio invested in such holdings. Short-term
instruments would include, without limitation, the following: \24\
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    \23\ Proposed rule changes for previously-listed series of
Managed Fund Shares have similarly included the ability for such
Managed Fund Share holdings to include cash and cash equivalents.
See, e.g., SPDR Blackstone/GSO Senior Loan Approval, supra note 9,
at 19768-69 and First Trust Preferred Securities and Income
Approval, supra note 9, at 76150.
    \24\ Proposed rule changes for previously-listed series of
Managed Fund Shares have similarly specified short-term instruments
with respect to their inclusion in Managed Fund Share holdings. See,
e.g., First Trust Preferred Securities and Income Approval, supra
note 9, at 76150-51.
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    (1) U.S. Government securities, including bills, notes and bonds
differing as to maturity and rates of interest, which are either issued
or guaranteed by the U.S. Treasury or by

U.S. Government agencies or instrumentalities;
    (2) certificates of deposit issued against funds deposited in a
bank or savings and loan association;
    (3) bankers' acceptances, which are short-term credit instruments
used to finance commercial transactions;
    (4) repurchase agreements and reverse repurchase agreements;
    (5) bank time deposits, which are monies kept on deposit with banks
or savings and loan associations for a stated period of time at a fixed
rate of interest; and
    (6) commercial paper, which are short-term unsecured promissory
notes.
    Proposed Commentary .01(d) would describe the standards for a
Managed Fund Share portfolio that holds listed and centrally cleared
derivatives, including futures, options and cleared swaps on
commodities, currencies and financial instruments (e.g., stocks, fixed
income, interest rates, and volatility) or a basket or index of any of
the foregoing.\25\ There would be no limitation to the percentage of
the portfolio invested in such holdings; provided, however, that, in
the aggregate, at least 90% of the weight of such holdings invested in
futures and exchange-traded options shall consist of futures and
options whose principal market is a member of the Intermarket
Surveillance Group (``ISG'') or is a market with which the Exchange has
a comprehensive surveillance sharing agreement (``CSSA'').\26\
Additionally, proposed Commentary .01(d)(2) requires certain
information to be included on the Web site of each series of Managed
Fund Shares holding any listed and centrally cleared derivative.\27\
The required information includes the following, to the extent
relevant: ticker symbol, CUSIP or other identifier, a description of
the holding, identity of the asset upon which the derivative is based,
the strike price for any options, the quantity of each such derivative
held as measured by select metrics, maturity date, coupon rate,
effective date, market value and percentage weight of the holding in
the portfolio.
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    \25\ Proposed rule changes for previously-listed series of
Managed Fund Shares have similarly included the ability for such
Managed Fund Share holdings to include listed derivatives. See,
e.g., WisdomTree Real Return Approval, supra note 9, at 13617 and
WisdomTree Brazil Bond Approval, supra note 9, at 32163.
    \26\ ISG is comprised of an international group of exchanges,
market centers, and market regulators that perform front-line market
surveillance in their respective jurisdictions. See https://www.isgportal.org/home.html.
    \27\ Proposed rule changes for previously-listed series of
Managed Fund Shares have similarly included disclosure requirements
with respect to each portfolio holding, as applicable to the type of
holding. See, e.g.. PIMCO Total Return Use of Derivatives Approval,
supra note 9, at 44227.
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    Proposed Commentary .01(e) would describe the standards for a
Managed Fund Share portfolio that holds over the counter (``OTC'')
derivatives, including forwards, options and swaps on commodities,
currencies and financial instruments (e.g., stocks, fixed income,
interest rates, and volatility) or a basket or index of any of the
foregoing.\28\ There would be no limitation to the percentage of the
portfolio invested in such holdings. Additionally, proposed Commentary
.01(e)(2) requires certain information to be included on the Web site
of each series of Managed Fund Shares holding any OTC derivative.\29\
The required information includes the following, to the extent
relevant: ticker symbol, CUSIP or other identifier, a description of
the holding, identity of the asset upon which the derivative is based,
the strike price for any options, the quantity of each such derivative
held as measured by select metrics, maturity date, coupon rate,
effective date, market value and percentage weight of the holding in
the portfolio.
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    \28\ A proposed rule change for series of Units previously
listed and traded on the Exchange pursuant to Rule 5.2(j)(3)
similarly included the ability for such Units' holdings to include
OTC derivatives, specifically OTC down-and-in put options, which are
not NMS Stocks as defined in Rule 600 of Regulation NMS and
therefore do not satisfy the requirements of Commentary .01(a)(A) to
Rule 5.2(j)(3). See, e.g., NYSE Arca U.S. Equity Synthetic Reverse
Convertible Index Fund Approval, supra note 9, at 23602.
    \29\ Proposed rule changes for previously-listed series of
Managed Fund Shares have similarly included disclosure requirements
with respect to each portfolio holding, as applicable to the type of
holding. See, e.g.. PIMCO Total Return Use of Derivatives Approval,
supra note 9, at 44227.
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    Proposed Commentary .01(f) would describe the standards for a
Managed Fund Share portfolio that holds illiquid assets.\30\ The
portfolio could hold up to an aggregate amount of 15% of the weight of
its portfolio (calculated at the time of investment) in assets deemed
illiquid by the Adviser.\31\
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    \30\ Proposed rule changes for previously-listed series of
Managed Fund Shares have similarly included the ability for such
Managed Fund Shares to include illiquid assets. See, e.g.,
International Bear Approval, supra note 9, at 30375-76. Illiquid
assets 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. 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); and Investment Company Act Release No. 17452
(April 23, 1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A
under the Securities Act of 1933). See also First Trust Preferred
Securities and Income Approval, supra note 9, at 76151, n. 16. The
Exchange understands that a number of factors are currently
considered by investment companies in reaching liquidity decisions.
Examples of factors that would be reasonable for a board of
directors to take into account with respect to a Rule 144A security
(but which would not necessarily be determinative) would include,
among others: (1) The frequency of trades and quotes for the
security; (2) the number of dealers willing to purchase or sell the
security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of
the security and the nature of the marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting
offers, and the mechanics of transfer).
    \31\ If a Managed Fund Share portfolio holds Rule 144A
securities, such securities would be subject to this 15% threshold
if deemed to be illiquid by the Adviser. However, if deemed to be
liquid by the Adviser, such Rule 144A securities would be subject to
the other applicable standards.
---------------------------------------------------------------------------

    The changes proposed herein would not have an impact on the
existing rules applicable to the listing and trading of Managed Fund
Shares, which address, for example, net asset value, creation and
redemption of shares, availability of information, trading halts,
surveillance and information bulletins.
    The Exchange believes that the proposed standards would continue to
ensure transparency surrounding the listing process for Managed Fund
Shares. Additionally, the Exchange believes that the proposed portfolio
standards for listing and trading Managed Fund Shares, many of which
track existing Exchange rules relating to Units, are reasonably
designed to promote a fair and orderly market for such Managed Fund
Shares.\32\ These proposed standards would also work in conjunction
with the existing initial and continued listing criteria related to
surveillance procedures and trading guidelines.
---------------------------------------------------------------------------

    \32\ See Approval Order, supra note 4 at 19548.
---------------------------------------------------------------------------

    In support of this proposal, the Exchange represents that: \33\
---------------------------------------------------------------------------

    \33\ The Exchange made similar representations in the Approval
Order. See id. at 19549.
---------------------------------------------------------------------------

    (1) The Managed Fund Shares will continue to conform to the initial
and continued listing criteria under Rule 8.600;
    (2) the Exchange's surveillance procedures are adequate to continue
to properly monitor the trading of the Managed Fund Shares in all
trading sessions and to deter and detect violations of Exchange rules.
Specifically, the Exchange intends to

utilize its existing surveillance procedures applicable to derivative
products, which will include Managed Fund Shares, to monitor trading in
the Managed Fund Shares;
    (3) prior to the commencement of trading of a particular series of
Managed Fund Shares, the Exchange will inform its Equity Trading Permit
(``ETP'') Holders in a Bulletin of the special characteristics and
risks associated with trading the Managed Fund Shares, including
procedures for purchases and redemptions of Managed Fund Shares,
suitability requirements under NYSE Arca Equities Rule 9.2(a), the
risks involved in trading the Managed Fund Shares during the Opening
and Late Trading Sessions when an updated Portfolio Indicative Value
will not be calculated or publicly disseminated, information regarding
the Portfolio Indicative Value, prospectus delivery requirements, and
other trading information. In addition, the Bulletin will disclose that
the Managed Fund Shares are subject to various fees and expenses, as
described in the Registration Statement, and will discuss any
exemptive, no-action, and interpretive relief granted by the Commission
from any rules under the Act. Finally, the Bulletin will disclose that
the net asset value for the Managed Fund Shares will be calculated
after 4 p.m. ET each trading day; and
    (4) the issuer of a series of Managed Fund Shares will be required
to comply with Rule 10A-3 under the Act for the initial and continued
listing of Managed Fund Shares, as provided under NYSE Arca Equities
Rule 5.3.
    The Exchange notes that the proposed change is not otherwise
intended to address any other issues and that the Exchange is not aware
of any problems that ETP Holders or issuers would have in complying
with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\34\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\35\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78f(b).
    \35\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 because it would facilitate the listing and trading of
additional Managed Fund Shares, which would enhance competition among
market participants, to the benefit of investors and the marketplace.
Specifically, after more than six years under the current process,
whereby the Exchange is required to file a proposed rule change with
the Commission for the listing and trading of each new series of
Managed Fund Shares, the Exchange believes that it is appropriate to
codify certain rules within Rule 8.600 that would generally eliminate
the need for separate proposed rule changes. The Exchange believes that
this would facilitate the listing and trading of additional types of
Managed Fund Shares that have investment portfolios that are similar to
investment portfolios for Units, which have been approved for listing
and trading, thereby creating greater efficiencies in the listing
process for the Exchange and the Commission. In this regard, the
Exchange notes that the standards proposed for Managed Fund Share
portfolios that include domestic equity securities, Derivative
Securities Products, and Index-Linked Securities are based in large
part on the existing equity security standards applicable to Units in
Commentary .01 to Rule 5.2(j)(3) and that the standards proposed for
Managed Fund Share portfolios that include fixed income securities are
based in large part on the existing fixed income standards applicable
to Units in Commentary .02 to Rule 5.2(j)(3). Additionally, many of the
standards proposed for other types of holdings of series of Managed
Fund Shares are based on previous proposed rule changes for specific
series of Managed Fund Shares.\36\ With respect to the proposed
exclusion of Derivatives Securities Products and Index-Linked
Securities from the requirements of proposed Commentary .01(a) of Rule
8.600, the Exchange believes it is appropriate to exclude Index-Linked
Securities as well as Derivative Securities Products from certain
component stock eligibility criteria for Managed Fund Shares in so far
as Derivative Securities Products and Index-Linked Securities are
themselves subject to specific quantitative listing and continued
listing requirements of a national securities exchange on which such
securities are listed. Derivative Securities Products and Index-Linked
Securities that are components of a fund's portfolio would have been
listed and traded on a national securities exchange pursuant to a
proposed rule change approved by the Commission pursuant to Section
19(b)(2) of the Act \37\ or submitted by a national securities exchange
pursuant to Section 19(b)(3)(A) of the Act \38\ or would have been
listed by a national securities exchange pursuant to the requirements
of Rule 19b-4(e) under the Act.\39\ The Exchange also notes that
Derivative Securities Products and Index-Linked Securities are
derivatively priced, and, therefore, the Exchange believes that it
would not be necessary to apply the proposed generic quantitative
criteria (e.g., market capitalization, trading volume, or portfolio
component weighting) applicable to equity securities other than
Derivative Securities Products or Index-Linked Securities (e.g., common
stocks) to such products.\40\
---------------------------------------------------------------------------

    \36\ See supra, note 9.
    \37\ 15 U.S.C. 78s(b)(2).
    \38\ 15 U.S.C. 78s(b)(3)(A).
    \39\ 17 CFR 240.19b-4(e).
    \40\ See Securities Exchange Act Release Nos. 57561 (March 26,
2008), 73 FR 17390 (April 1, 2008) (SR-NYSEArca-2008-29) (notice of
filing of proposed rule change to amend eligibility criteria for
components of an index underlying Investment Company Units); 57751
(May 1, 2008), 73 FR 25818 (May 7, 2008) (SR-NYSEArca-2008-29)
(order approving proposed rule change to amend eligibility criteria
for components of an index underlying Investment Company Units).
---------------------------------------------------------------------------

    With respect to the proposed amendment to the continued listing
requirement in Rule 8.600(d)(2)(A) to require dissemination of a
Portfolio Indicative Value at least every 15 seconds during the Core
Trading Session (as defined in NYSE Arca Equities Rule 7.34), such
requirement conforms to the requirement applicable to the dissemination
of the Intraday Indicative Value for Investment Company Units in
Commentary .01(c) and Commentary .02(c) to NYSE Arca Equities Rule
5.2(j)(3). In addition, such dissemination is consistent with
representations made in proposed rule changes for issues of Managed
Fund Shares previously approved by the Commission.\41\
---------------------------------------------------------------------------

    \41\ See, e.g., Approval Order, supra note 4; International Bear
Approval, supra note 9.
---------------------------------------------------------------------------

    The proposed rule change is also designed to protect investors and
the public interest because Managed Fund Shares listed and traded
pursuant to Rule 8.600, including pursuant to the proposed new
portfolio standards, would continue to be subject to the full panoply
of Exchange rules and procedures that currently govern the trading of
equity securities on the Exchange.\42\
---------------------------------------------------------------------------

    \42\ See Approval Order, supra note 4, at 19547.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices because the
Managed

Fund Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in Rule 8.600. The Exchange has
in place surveillance procedures that are adequate to properly monitor
trading in the Managed Fund Shares in all trading sessions and to deter
and detect violations of Exchange rules and applicable federal
securities laws. The Financial Industry Regulatory Authority, Inc.
(``FINRA''), on behalf of the Exchange, will communicate as needed
regarding trading in Managed Fund Shares with other markets that are
members of the ISG, including all U.S. securities exchanges and futures
exchanges on which the components are traded. In addition, the Exchange
may obtain information regarding trading in Managed Fund Shares from
other markets that are members of the ISG, including all U.S.
securities exchanges and futures exchanges on which the components are
traded, or with which the Exchange has in place a CSSA.
    The Exchange also believes that the proposed rule change would
fulfill the intended objective of Rule 19b-4(e) under the Act by
allowing Managed Fund Shares that satisfy the proposed listing
standards to be listed and traded without separate Commission approval.
However, as proposed, the Exchange would continue to file separate
proposed rule changes before the listing and trading of Managed Fund
Shares that do not satisfy the additional criteria described above.
    For these reasons, the Exchange believes that the proposal is
consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\43\ the Exchange
does not believe that the proposed rule change will impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act. Instead, the Exchange believes that the
proposed rule change would facilitate the listing and trading of
additional types of Managed Fund Shares and result in a significantly
more efficient process surrounding the listing and trading of Managed
Fund Shares, which will enhance competition among market participants,
to the benefit of investors and the marketplace. The Exchange believes
that this would reduce the time frame for bringing Managed Fund Shares
to market, thereby reducing the burdens on issuers and other market
participants and promoting competition. In turn, the Exchange believes
that the proposed change would make the process for listing Managed
Fund Shares more competitive by applying uniform listing standards with
respect to Managed Fund Shares portfolio holdings.
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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

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

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate 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 the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. In particular, the Commission seeks
comments on the following questions:
    1. According to the Exchange, many of the requirements of the
proposed rule applicable to equity and fixed income securities holdings
are identical to the requirements for equity and fixed income index-
based ETFs, respectively.\44\
---------------------------------------------------------------------------

    \44\ See proposed Commentaries .01(a) and (b) to NYSE Arca
Equities Rule 8.600.
---------------------------------------------------------------------------

    a. Do commenters believe that these requirements for index-based
ETFs should equally apply to the listing and trading of Managed Fund
Shares? If so, why? If not, why not?
    b. Do commenters believe that the requirements for index-based ETFs
that the Exchange proposes to apply to Managed Fund Shares are adequate
to deter manipulation irrespective of similarities between the two
types of products? If so, why? If not, why not?
    2. In addition, as noted by the Exchange, some of the requirements
of the proposed rule are identical to certain, specifically tailored
requirements referenced in other previously approved proposed rule
changes pertaining to the listing and trading of specific series of
Managed Fund Shares. What are commenters' views on whether these
specifically tailored requirements for certain series of Managed Fund
Shares ought to equally apply to all Managed Fund Shares by virtue of
being incorporated into these proposed generic listing standards?
    3. Do commenters believe that the proposed listing requirements are
adequate to deter manipulation and other trading abuses of the price of
generically listed Managed Fund Shares? If so, why? If not, why not?
    4. Under the proposed rule, there would be no limitation to the
percentage of the portfolio invested in short-term cash equivalents or
derivative instruments. In addition, under the proposed rule, there
would be no limitation as to the types of short-term cash equivalents
or derivative instruments that could be held in the portfolio. To what
extent, if at all, should the proposed generic listing standards
restrict the holding of these portfolio components? If so, how and why?
If not, why not?
    5. Do commenters have views on whether the proposed generic listing
requirements for Managed Fund Shares have adequately accounted for all
types of assets that a portfolio can hold? Should the proposed rules
include additional or fewer restrictions? Are there other measures that
the Commission and the Exchange should consider with respect to a
portfolio of Managed Fund Shares that are generically listed?
    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-NYSEArca-2015-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2015-02. 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-NYSEArca-2015-02 and should be submitted on or before
March 31, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
---------------------------------------------------------------------------

    \45\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-05480 Filed 3-9-15; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: May 5, 2010 (Volume 75, Number 86)]
[Notices]
[Page 24769-24771]
[DOCID:fr05my10-147]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61989; File No. SR-NYSEAmex-2010-37]

Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of
Proposed Rule Change Amending Commentary to Rule 915 and Rule 916

April 27, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on April 8, 2010, NYSE Amex LLC (``NYSE Amex'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend Commentary .10 to Rule 915 and
Commentary .11 to Rule 916 for the purpose of listing and trading
options on the shares of the ETFS Palladium Trust and the ETFS Platinum
Trust. The text of the proposed rule change is available on the
Commission's Web Site at http://www.sec.gov. A copy of this filing is
available on the Exchange's Web site at http://www.nyse.com, at the
Exchange's principal office and at the Commission's Public Reference
Room.

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

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

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

1. Purpose
    Recently, the U.S. Securities and Exchange Commission (``SEC'' or
``Commission'') authorized the Exchange to list and trade options on
the SPDR Gold Trust \4\ (``GLD'') the iShares COMEX Gold Trust
(``IAU'') the iShares Silver Trust (``SLV''),\5\ the ETFS Silver Trust
(``SIVR'') and the ETFS Gold Trust (``SGOL'').\6\ Now, the Exchange
proposes to list and trade options on the ETFS Palladium Trust
(``PALL'') and the ETFS Platinum Trust (``PPLT'').
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 57894 (May 30,
2008), 73 FR 32061 (June 5, 2008) (order approving SR-Amex-2008-15).
    \5\ See Securities Exchange Act Release No. 59055 (December 4,
2008), 73 FR 238 [sic] (December 10, 2008) (order approving SR-Amex-
2008-68).
    \6\ See Securities Exchange Act Release No. 61483 (February 3,
2010), 75 FR 6753 (February 10, 2010).
---------------------------------------------------------------------------

    Currently, Amex Rule 915 deems appropriate for options trading
Exchange-Traded Fund Shares (``ETFs'' or ``Fund Shares'') that are
traded on a national securities exchange and are defined as an ``NMS
stock'' in Rule 600 of Regulation NMS and that represent (i) Interests
in registered investment companies (or series thereof) organized as
open-end management investment companies, unit investment trusts or
similar entities that hold portfolios of securities and/or financial
instruments including, but not limited to, stock index futures
contracts, options on futures, options on securities and indexes,
equity caps, collars and floors, swap agreements, forward contracts,
repurchase agreements and reverse purchase agreements (the ``Financial
Instruments''), and money market instruments, including, but not
limited to, U.S. government securities and repurchase agreements (the
``Money Market Instruments'') comprising or otherwise based on or
representing investments in indexes or portfolios of securities and/or
Financial Instruments and Money Market Instruments (or that hold
securities in one or more other registered investment companies that
themselves hold such portfolios of securities and/or Financial
Instruments and Money Market Instruments); or (ii) interests in a trust
or similar entity that holds a specified non-U.S. currency deposited
with the trust or similar entity when aggregated in some specified
minimum number may be surrendered to the trust by the beneficial owner
to receive the specified non-U.S. currency and pays the beneficial
owner interest and other distributions on deposited non-U.S. currency,
if any, declared and paid by the trust; or (iii) commodity pool
interests principally engaged, directly or indirectly, in holding and/
or managing portfolios or baskets of securities, commodity futures
contracts, options on commodity futures contracts, swaps, forward
contracts and/or options on physical commodities and/or non-U.S.
currency (``Commodity Pool Units''), or (iv) represents an interest in
a registered investment company (``Investment Company'') organized as
an open-end management investment company or similar entity, that
invests in a portfolio of securities selected by the Investment
Company's investment adviser consistent with the Investment Company's
investment objectives and policies, which is issued in a specified
aggregate minimum number in return for a deposit of a specified
portfolio of securities and/or a cash amount with a value equal to the
next determined net asset value (``NAV''), and when aggregated in the
same specified minimum number, may be redeemed at a holder's request,
which holder will be paid a specified portfolio of securities and/or
cash with a value equal to the next determined NAV (``Managed Fund
Share'').\7\ In addition, pursuant to Commentary .10 to Rule 915 the
Exchange may also list options based on shares of GLD, IAU, SLV, SIVR,
and SGOL. This proposed rule change seeks to expand the current
exception set forth in Commentary .10 to Rule 915 for Exchange-Traded
Fund Shares that may be approved for options trading on the Exchange to
include PALL and PPLT.
---------------------------------------------------------------------------

    \7\ See Commentary .06 to Rule 915.
---------------------------------------------------------------------------

    Apart from allowing PALL and PPLT to be underlyings for options
traded on the Exchange as described above, the listing standards for
Exchange-Traded Fund Shares will remain unchanged from those that apply
under current Exchange rules. Exchange-Traded Fund Shares on which
options may be listed and traded must still be listed and traded on a
national securities exchange and must satisfy the other listing
standards set forth in Commentary .06 to Rule 915. Specifically, in
addition to satisfying the listing requirements set forth above,
Exchange-Traded Fund Shares must meet either (1) the criteria and
guidelines under Commentary .01 to Rule 915; or (2) be available for
creation or redemption each business day from or through the issuer in
cash or in kind at a price related to net asset value, and the issuer
must be obligated to issue Exchange-Traded Fund Shares in a specified
aggregate number even if some or all of the investment assets required
to be deposited have not been

received by the issuer, subject to the condition that the person
obligated to deposit the investments has undertaken to deliver the
investment assets as soon as possible and such undertaking is secured
by the delivery and maintenance of collateral consisting of cash or
cash equivalents satisfactory to the issuer, as provided in the
respective prospectus.
    This proposal is intended to provide appropriate standards for the
listing and trading of options on PALL and PPLT. The proposed revision
to Commentary .11 to Rule 916 specifically provides that shares of PALL
and PPLT be deemed ``Exchange-Traded Fund Shares'' for purposes of
Commentary .07 to Rule 916. Under the applicable continued listing
criteria in Commentary .07 to Amex Rule 916, the Exchange will consider
the suspension of opening transactions in PALL or PPLT in any of the
following circumstances: (1) Following the initial twelve-month period
beginning upon the commencement of trading of PALL or PPLT, there are
fewer than 50 record and/or beneficial holders of PALL or PPLT for 30
or more consecutive trading days; (2) the value of the underlying
silver or underlying gold [sic] is no longer calculated or available;
or (3) such other event occurs or condition exists that in the opinion
of the Exchange makes further dealing on the Exchange inadvisable. In
addition, PALL or PPLT shall not be deemed to meet the requirements for
continued approval, and the Exchange shall not open for trading any
additional series of option contracts of the class covering PALL or
PPLT, respectively, if PALL or PPLT ceases to be an ``NMS Stock'' as
provided for in Commentary .07(2) to Rule 916 or PALL or PPLT is halted
from trading on the primary listing market, or if PALL or PPLT is
delisted.
    The Exchange represents that the listing and trading of PALL
options or PPLT options under NYSE Amex rules will not have any effect
on the rules pertaining to position and exercise limits \8\ or
margin.\9\
---------------------------------------------------------------------------

    \8\ See NYSE Amex Rules 904 and 905.
    \9\ See NYSE Amex Rule 462.
---------------------------------------------------------------------------

    The Exchange represents that it has an adequate surveillance
program in place for options on PALL and PPLT. The Exchange may obtain
trading information via the Intermarket Surveillance Group (``ISG'')
from other exchanges who are members or affiliates of the ISG. The
Exchange may also obtain trading information from various commodity
futures exchanges worldwide that have entered into comprehensive
surveillance sharing agreements with the Exchange. In connection with
PALL and PPLT, the Exchange represents that it may obtain information
from the New York Mercantile Exchange, Inc. (``NYMEX''), pursuant to a
comprehensive surveillance sharing agreement, related to any financial
instrument that is based, in whole or in part, upon an interest in or
performance of silver or gold [sic]. Prior to listing and trading
options on PALL or PPLT, the Exchange represents that it will either
have the ability to obtain specific trading information via ISG or
through a comprehensive surveillance sharing agreement with the
marketplace or marketplaces with last sale reporting that represent(s)
the highest volume in derivatives (options or futures) on the
underlying palladium or platinum.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \10\ of
the Securities Exchange Act of 1934 (the ``Act''), in general, and
furthers the objectives of Section 6(b)(5) \11\ in particular in that
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanisms of a free and open market and a national market system.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

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

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

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

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File No. SR-NYSEAmex-2010-37 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 No. SR-NYSEAmex-2010-37. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for 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
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of NYSE Amex. 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 No.

SR-NYSEAmex-2010-37 and should be submitted on or before May 26, 2010.
---------------------------------------------------------------------------

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

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10458 Filed 5-4-10; 8:45 am]
BILLING CODE 8010-01-P


[Federal Register Volume 76, Number 125 (Wednesday, June 29, 2011)]
[Proposed Rules]
[Pages 38065-38069]
[FR Doc No: 2011-16365]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2011-0648; Directorate Identifier 2010-NM-276-AD]
RIN 2120-AA64

Airworthiness Directives; Bombardier, Inc. Model CL-600-2B19
(Regional Jet Series 100 & 440) Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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

SUMMARY: We propose to adopt a new airworthiness directive (AD) for the
products listed above that would supersede an existing AD. 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:

    Seven cases of on-ground hydraulic accumulator screw cap/end cap
failure have been experienced on CL-600-2B19 aeroplanes, resulting
in the loss of the associated hydraulic system and high-energy
impact damage to adjacent systems and structure. * * *
* * * * *
    A detailed analysis of the calculated line of trajectory of a
failed screw cap/end cap for each of the accumulators has been
conducted, resulting in the identification of several areas where
systems and/or structural components could potentially be damaged.
Although all of the failures to date have occurred on the ground, an
in-flight failure affecting such components could potentially have
an adverse effect on the controllability of the aeroplane.
* * * * *
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 August 15, 2011.

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 W12-40, 1200 New
Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
    For service information identified in this proposed AD, contact
Bombardier, Inc., 400 Cote-Vertu Road West, Dorval, Quebec H4S 1Y9,
Canada; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>; e-mail
<EMAIL_ADDRESS>Internet http://www.bombardier.com. You
may review copies of the referenced service information at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington. For information on the availability of this material at the
FAA, call<PHONE_NUMBER>.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office
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 Operations office (telephone<PHONE_NUMBER>) is
in the ADDRESSES section. Comments will be available in the AD docket
shortly after receipt.

FOR FURTHER INFORMATION CONTACT: Christopher Alfano, Aerospace
Engineer, Airframe and Mechanical Systems Branch, ANE-171, FAA, New
York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite
410, Westbury, New York 11590; telephone<PHONE_NUMBER>; fax (516) 794-
5531.

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-2011-0648;
Directorate Identifier 2010-NM-276-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 based on 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

    On October 7, 2010, we issued AD 2010-22-02, Amendment 39-16481 (75
FR 64636, October 20, 2010). That AD required actions intended to
address an unsafe condition on Bombardier, Inc. Model CL-600-2B19
(Regional Jet Series 100 & 440) airplanes.
    Since we issued AD 2010-22-02, we have determined that further
rulemaking is necessary. While AD 2010-22-02 did not require the
removal of the hydraulic system No. 3 accumulator, or replacement of
the hydraulic system No. 1, inboard brake, and outboard brake
accumulators, as specified in Part IV and Part VII of the Canadian
Airworthiness Directive CF-2010-24, dated August 3, 2010, this NPRM
proposes to require those actions. Also, for airplanes on which
Bombardier Service Bulletin 601R-29-035, dated May 11, 2010, is done
and reducer having part number MS21916D8-6 installed, this NPRM
proposes to require replacing the reducer with a new reducer. We have
coordinated with Transport Canada Civil Aviation (TCCA) on this issue.

Relevant Service Information

    Bombardier has issued Service Bulletin 601R-29-035, Revision A; and
Service Bulletin 601R-32-107, Revision B; both dated December 8, 2010.
The actions described in this service information as outlined in the
``Discussion'' section above, are intended to correct the unsafe
condition identified in the MCAI.

Change to Existing AD

    This proposed AD would retain all requirements of AD 2010-22-02.
Since AD 2010-22-02 was issued, the AD format has been revised, and
certain paragraphs have been rearranged. As a result, the corresponding
paragraph identifiers have changed in this proposed AD, as listed in
the following table:

                      Revised Paragraph Identifiers
------------------------------------------------------------------------
                                     Corresponding  requirement in this
   Requirement in AD 2010-22-02                  proposed AD
------------------------------------------------------------------------
 paragraph (j)                       paragraph (o)
 paragraph (k)                       paragraph (j)
 paragraph (l)                       paragraph (k)
 paragraph (m)                       paragraph (p)
 paragraph (n)                       paragraph (l)
 paragraph (o)                       paragraph (m)
 paragraph (p)                       paragraph (r)
 paragraph (q)                       paragraph (n)
 paragraph (r)                       paragraph (s)
------------------------------------------------------------------------

FAA's Determination and Requirements of This 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 the State of Design Authority, we have
been notified of the unsafe condition described in the MCAI and service
information referenced above. We are proposing this AD because we
evaluated all pertinent information and determined an unsafe condition
exists and is likely to exist or develop on other products of the same
type design.

Differences Between This 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

    Based on the service information, we estimate that this proposed AD
would affect about 605 products of U.S. registry.
    The actions that are required by AD 2010-22-02 and retained in this
proposed AD take about 19 work-hours per product, at an average labor
rate of $85 per work hour. Based on these figures, the estimated cost
of the currently required actions is $1,615 per product.
    We estimate that it would take about 14 work-hours per product to
comply with the new basic requirements of this proposed AD. The average
labor rate is $85 per work-hour. Required parts would cost about $3,054
per product. Where the service information lists required parts costs
that are covered under warranty, we have assumed that there will be no
charge for these costs. As we do not control warranty coverage for
affected parties, some parties may incur costs higher than estimated
here. Based on these figures, we estimate the cost of the proposed AD
on U.S. operators to be $2,567,620, or $4,244 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, Incorporation by
reference, 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 removing Amendment 39-16481 (75 FR
64636, October 20, 2010) and adding the following new AD:

Bombardier, Inc.: Docket No. FAA-2011-0648; Directorate Identifier
2010-NM-276-AD.

Comments Due Date

    (a) We must receive comments by August 15, 2011.

Affected ADs

    (b) This AD supersedes AD 2010-22-02, Amendment 39-16481.

Applicability

    (c) This AD applies to Bombardier, Inc. Model CL-600-2B19
(Regional Jet Series 100 & 440) airplanes, certificated in any
category, serial numbers 7003 and subsequent.

Subject

    (d) Air Transport Association (ATA) of America Code 29 and 32:
Hydraulic Power and Landing Gear, respectively.

Reason

    (e) The mandatory continuing airworthiness information (MCAI)
states:

    Seven cases of on-ground hydraulic accumulator screw cap/end cap
failure have been experienced on CL-600-2B19 aeroplanes, resulting
in the loss of the associated hydraulic system and high-energy
impact damage to adjacent systems and structure. * * *
* * * * *
    A detailed analysis of the calculated line of trajectory of a
failed screw cap/end cap for each of the accumulators has been
conducted, resulting in the identification of several areas where
systems and/or structural components could potentially be damaged.
Although all of the failures to date have occurred on the ground, an
in-flight failure affecting such components could potentially have
an adverse effect on the controllability of the aeroplane.
* * * * *

Compliance

    (f) You are responsible for having the actions required by this
AD performed within

the compliance times specified, unless the actions have already been
done.

Restatement of Requirements of AD 2010-22-02, With Revised Service
Information

Airplane Flight Manual (AFM) Revision

    (g) Within 30 days after November 4, 2010 (the effective date of
AD 2010-22-02), revise the Limitations section, Normal Procedures
section, and Abnormal Procedures section of the AFM by incorporating
Canadair Regional Jet Temporary Revision (TR) RJ/186-1, dated August
24, 2010, into the applicable section of Canadair Regional Jet AFM,
CSP A-012. Thereafter, except as provided by paragraph (t) of this
AD, no alternative actions specified in Canadair Regional Jet TR RJ/
186-1, dated August 24, 2010, may be approved.

    Note 1:  The actions required by paragraph (g) of this AD may be
done by inserting a copy of Canadair Regional Jet TR RJ/186-1, dated
August 24, 2010, into the applicable section of the Canadair
Regional Jet AFM, CSP A-012. When this TR has been included in the
general revisions of the AFM, the general revisions may be inserted
into the AFM, and this TR removed, provided that the relevant
information in the general revision is identical to that in Canadair
Regional Jet TR RJ/186-1, dated August 24, 2010.

Deactivation of the Hydraulic System No. 3 Accumulator

    (h) Within 250 flight cycles after November 4, 2010, deactivate
the hydraulic system No. 3 accumulator, in accordance with Part A of
the Accomplishment Instructions of Bombardier Alert Service Bulletin
A601R-29-031, Revision A, dated March 26, 2009. Doing the removal of
the hydraulic system No. 3 accumulator in paragraph (o) of this AD
is an alternate method of compliance with the requirements of this
paragraph. The actions in this paragraph apply to all accumulators
in hydraulic system No. 3.

Removal of the Hydraulic System No. 2 Accumulator

    (i) Within 500 flight cycles after November 4, 2010, remove the
hydraulic system No. 2 accumulator, in accordance with the
Accomplishment Instructions of Bombardier Service Bulletin 601R-29-
032, Revision A, dated January 26, 2010. The actions in this
paragraph apply to all accumulators in hydraulic system No. 2.

Initial and Repetitive Ultrasonic Inspection of Hydraulic System No. 1,
Inboard Brake, and Outboard Brake Accumulators

    (j) For hydraulic system No. 1, inboard brake, and outboard
brake accumulators having P/N 601R75138-1 (08-60163-001 or 08-60163-
002): At the applicable compliance times specified in paragraph (l)
of this AD, do the inspections required by paragraphs (j)(1) and
(j)(2) of this AD. Repeat the inspections for each accumulator
having P/N 601R75138-1 (08-60163-001 or 08-60163-002) thereafter at
intervals not to exceed 500 flight cycles until the replacement
specified in this paragraph is done or the replacement specified in
paragraph (p) of this AD is done. If any crack is found, before
further flight, replace the accumulator with a new accumulator
having P/N 601R75138-1 (08-60163-001 or 08-60163-002) and having the
letter ``T'' after the serial number on the identification plate, in
accordance with the Accomplishment Instructions of the applicable
service bulletin identified in table 1 or table 2 of this AD.
    (1) Do an ultrasonic inspection for cracks on each accumulator,
in accordance with Part B of the Accomplishment Instructions of the
applicable service bulletin identified in table 1 of this AD.

                       Table 1--Bombardier Service Information for Accumulator Inspection
----------------------------------------------------------------------------------------------------------------
           Accumulator                      Document               Revision                    Date
----------------------------------------------------------------------------------------------------------------
Hydraulic System No. 1...........  Bombardier Alert Service   B................  May 11, 2010.
                                    Bulletin A601R-29-029,
                                    including Appendix A,
                                    dated October 18, 2007.
Inboard and Outboard Brake.......  Bombardier Alert Service   D................  May 11, 2010.
                                    Bulletin A601R-32-103,
                                    including Appendix A,
                                    Revision A, dated
                                    October 18, 2007.
----------------------------------------------------------------------------------------------------------------

     (2) Do an ultrasonic inspection for cracks on the screw cap, in
accordance with the Accomplishment Instructions of the applicable
service bulletin identified in table 2 of this AD.

                        Table 2--Bombardier Service Information for Screw Cap Inspection
----------------------------------------------------------------------------------------------------------------
           Accumulator                      Document               Revision                    Date
----------------------------------------------------------------------------------------------------------------
Hydraulic System No. 1...........  Bombardier Service         A................  May 11, 2010.
                                    Bulletin 601R-29-033,
                                    including Appendix A,
                                    dated May 5, 2009.
Inboard and Outboard Brake.......  Bombardier Service         A................  May 11, 2010.
                                    Bulletin 601R-32-106,
                                    including Appendix A.
----------------------------------------------------------------------------------------------------------------

     (k) For hydraulic system No. 1, inboard brake, and outboard
brake accumulators having P/N 601R75138-1 (08-60163-001 or 08-60163-
002): Do the inspections specified in paragraph (j) of this AD at
the applicable time in paragraph (k)(1), (k)(2), and (k)(3) of this
AD.
    (1) For any accumulator not having the letter ``T'' after the
serial number on the identification plate and with more than 4,500
flight cycles on the accumulator as of November 4, 2010: Inspect
within 500 flight cycles after November 4, 2010.
    (2) For any accumulator not having the letter ``T'' after the
serial number on the identification plate and with 4,500 flight
cycles or less on the accumulator as of November 4, 2010: Inspect
prior to the accumulation of 5,000 flight cycles on the accumulator.
    (3) If it is not possible to determine the flight cycles
accumulated for any accumulator not having the letter ``T'' after
the serial number on the identification plate: Inspect within 500
flight cycles after November 4, 2010.

    Note 2:  For any accumulator having P/N 601R75138-1 (08-60163-
001 or 08-60163-002) and the letter ``T'' after the serial number on
the identification plate, or if the accumulator P/N is not listed in
paragraph (j) of this AD, the inspection specified in paragraph (j)
of this AD is not required.

Credit for Actions Accomplished in Accordance With Previous Service
Information

    (l) Deactivating the hydraulic system No. 3 accumulator before
November 4, 2010, in accordance with Part A of the Accomplishment
Instructions of Bombardier Alert Service Bulletin A601R-29-031,
dated December 23, 2008, is acceptable for compliance with the
requirements of paragraph (h) of this AD.
    (m) Removing the hydraulic system No. 2 accumulator in
accordance with the Accomplishment Instructions of Bombardier
Service Bulletin 601R-29-032, dated November 12, 2009, before
November 4, 2010, is acceptable for compliance with the requirements
of paragraph (i) of this AD.
    (n) An ultrasonic inspection for cracks done before November 4,
2010, in accordance with Part B of the Accomplishment Instructions
of the applicable service bulletin identified in table 3 of this AD,
or the Accomplishment Instructions of the applicable service
bulletin identified in table 4 of this AD, is acceptable for
compliance

with the corresponding ultrasonic inspection required by paragraph
(j) of this AD.

                    Table 3--Bombardier Credit Service Information for Accumulator Inspection
----------------------------------------------------------------------------------------------------------------
                 Document                            Revision                              Date
----------------------------------------------------------------------------------------------------------------
Bombardier Alert Service Bulletin A601R-   Original....................  October 18, 2007.
 29-029.
Bombardier Alert Service Bulletin A601R-   A...........................  November 12, 2009.
 29-029.
Bombardier Alert Service Bulletin A601R-   Original....................  November 21, 2006.
 32-103.
Bombardier Alert Service Bulletin A601R-   A...........................  March 7, 2007.
 32-103.
Bombardier Alert Service Bulletin A601R-   B...........................  October 18, 2007.
 32-103.
Bombardier Alert Service Bulletin A601R-   C...........................  February 26, 2009.
 32-103.
----------------------------------------------------------------------------------------------------------------

                     Table 4--Bombardier Credit Service Information for Screw Cap Inspection
----------------------------------------------------------------------------------------------------------------
                 Document                            Revision                              Date
----------------------------------------------------------------------------------------------------------------
Bombardier Service Bulletin 601R-29-033..  Original....................  May 5, 2009.
Bombardier Service Bulletin 601R-32-106..  Original....................  May 5, 2009.
----------------------------------------------------------------------------------------------------------------

New Requirements of This AD

Removal of the Hydraulic System No. 3 Accumulator

    (o) Within 1,000 flight cycles after the effective date of this
AD, remove the hydraulic system No. 3 accumulator, in accordance
with Part B of the Accomplishment Instructions of Bombardier Alert
Service Bulletin A601R-29-031, Revision A, dated March 26, 2009.
Doing the action in this paragraph terminates the requirements of
paragraph (h) of this AD.

Replacement of the Hydraulic System No. 1, Inboard Brake, and Outboard
Brake Accumulators

    (p) Within 4,000 flight cycles or 24 months after the effective
date of this AD, whichever occurs first, replace any hydraulic
system No. 1, inboard brake, or outboard brake accumulator having P/
N 601R75138-1 (08-60163-001 or 08-60163-002), with a new accumulator
having P/N 601R75139-1 (11093-4), in accordance with the
Accomplishment Instructions of the applicable service bulletin
identified in table 5 of this AD. Doing the action in this paragraph
terminates the requirement for the inspections in paragraph (j) of
this AD for that accumulator. As of the effective date of this AD,
use only Bombardier Service Bulletin 601R-29-035, Revision A; or
601R-32-107, Revision B; both dated December 8, 2010; as applicable.

                       Table 5--Bombardier Service Information for Accumulator Replacement
----------------------------------------------------------------------------------------------------------------
           Accumulator                     Document                Revision                    Date
----------------------------------------------------------------------------------------------------------------
Hydraulic System No. 1...........  Bombardier Service        Original...........  May 11, 2010.
                                    Bulletin 601R-29-035.
Hydraulic System No. 1...........  Bombardier Service        A..................  December 8, 2010.
                                    Bulletin 601R-29-035.
Inboard and Outboard Brake.......  Bombardier Service        A..................  June 17, 2010.
                                    Bulletin 601R-32-107.
Inboard and Outboard Brake.......  Bombardier Service        B..................  December 8, 2010.
                                    Bulletin 601R-32-107.
----------------------------------------------------------------------------------------------------------------

Action for Airplanes on Which Bombardier Service Bulletin 601R-29-035,
Dated May 11, 2010 Is Done and Reducer Having P/N MS21916D8-6 Is
Installed

    (q) For airplanes on which Bombardier Service Bulletin 601R-29-
035, dated May 11, 2010, is done, and reducer having P/N MS21916D8-6
is installed: Within 1,200 flight cycles or 8 months after the
effective date of this AD, replace the reducer of the hydraulic
system No. 1 with a new reducer in accordance with Part B of
Bombardier Service Bulletin 601R-29-035, Revision A, dated December
8, 2010.

Credit for Actions Accomplished in Accordance With Previous Service
Information

    (r) Removing the hydraulic system No. 3 accumulator in
accordance with Part B of the Accomplishment Instructions of
Bombardier Service Bulletin A601R-29-031, dated December 23, 2008,
before November 4, 2010, is acceptable for compliance with the
requirements of paragraph (o) of this AD.
    (s) Replacing any hydraulic system No. 1, inboard brake, or
outboard brake accumulator before November 4, 2010, in accordance
with the Accomplishment Instructions of Bombardier Service Bulletin
601R-32-107, dated May 11, 2010, is acceptable for compliance with
the corresponding requirements of paragraph (p) of this AD.

FAA AD Differences

    Note 3:  This AD differs from the MCAI and/or service
information as follows: The actions specified in Canadian
Airworthiness Directive CF-2010-24, dated August 3, 2010, apply only
to Tactair accumulators. The actions required by paragraphs (h),
(i), and (o) of this AD apply to all accumulators in the positions
specified in paragraphs (h), (i), and (o) of this AD.

    Note 4:  While Canadian Airworthiness Directive CF-2010-24,
dated August 3, 2010, does not require replacement of the reducer of
the hydraulic system No. 1 with a new reducer, paragraph (q) of this
AD does.

Other FAA AD Provisions

    (t) The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager, New
York Aircraft Certification Office (ACO), ANE-170, 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: Program
Manager, Continuing Operational Safety, FAA, New York ACO, 1600
Stewart Avenue, Suite 410, Westbury, New York 11590; telephone 516-
228-7300; fax<PHONE_NUMBER>. Before using any approved AMOC, notify
your appropriate principal inspector, or lacking a principal
inspector, the manager of the local flight standards district
office/certificate holding district office. The AMOC approval letter
must specifically reference this AD.
    (2) 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.

Related Information

    (u) Refer to MCAI Canadian Airworthiness Directive CF-2010-24,
dated August 3, 2010; Canadair Regional Jet Temporary Revision RJ/
186-1, dated August 24, 2010 to the Canadair Regional Jet Airplane
Flight

Manual, CSP A-012; and the service bulletins listed in table 6 of
this AD; for related information.

                                      Table 6--Related Service Information
----------------------------------------------------------------------------------------------------------------
                 Document                            Revision                              Date
----------------------------------------------------------------------------------------------------------------
Bombardier Alert Service Bulletin A601R-   B...........................  May 11, 2010.
 29-029.
Bombardier Alert Service Bulletin A601R-   A...........................  March 26, 2009.
 29-031.
Bombardier Alert Service Bulletin A601R-   D...........................  May 11, 2010.
 32-103.
Bombardier Service Bulletin 601R-29-032..  A...........................  January 26, 2010.
Bombardier Service Bulletin 601R-29-033..  A...........................  May 11, 2010.
Bombardier Service Bulletin 601R-29-035..  A...........................  December 8, 2010.
Bombardier Service Bulletin 601R-32-106..  A...........................  May 11, 2010.
Bombardier Service Bulletin 601R-32-107..  B...........................  December 8, 2010.
----------------------------------------------------------------------------------------------------------------

    Issued in Renton, Washington, on June 16, 2011.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 2011-16365 Filed 6-28-11; 8:45 am]
BILLING CODE 4910-13-P