Tap any paragraph to write a margin note. Your notes collect in the Desk below the text and file under cases with @. The side-by-side margin rail opens on a larger screen.

§
Marginalia
Code · REGISTER · 2004-09-16 · SECURITIES AND EXCHANGE COMMISSION · Notices

Notices. SECURITIES AND EXCHANGE COMMISSION

19,544 words·~89 min read·/register/2004/09/16/04-20885

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request *Upon Written Request, Copies Available From:* Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. *Extension:* Rule 17a-3, SEC File No. 270-026, OMB Control No. 3235-0033. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) is soliciting comments on the collection of information summarized below.
The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Rule 17a-3 [17 CFR 240.17a-3] under the Securities Exchange Act of 1934 requires records to be made by certain exchange members, brokers, and dealers, to be used in monitoring compliance with the Commission's financial responsibility program and antifraud and antimanipulative rules as well as other rules and regulations of the Commission and the self-regulatory organizations.
It is estimated that approximately 6,900 active broker-dealer respondents registered with the Commission incur an average burden of 2,421,195 hours per year to comply with this rule. The Commission believes that requirements included in Rule 17a-3(a)(17) relating to new account data would be performed by clerical workers. The hourly wage of the average person who would be providing customers with account record information is $24 per hour. 1 The hourly wage of the average person who would be updating account record information is $25 per hour. 2 Thus the aggregate cost of these hours is about $16.86 million ((601,753 hours × $24) 3 + (96,742 hours × $25) 4 ).
The Commission believes that requirements contained in the rest of Rule 17a-3 would be performed by individuals in a broker-dealer's compliance department at $82 per hour. 5 Thus, the dollar cost of the 4,600 yearly hours incurred as a result of these rules is 1,722,700 × 82 = $171.66 million. The total cost of ongoing compliance with Rule 17a-3 is $16.86 + $171.66 = $188.52 million. 1 This figure is based on the SIA Report on Office Salaries In the Securities Industry 2003 (Retail Sales Assistant, Junior) and includes 35% for overhead charges. 2 This figure is based on the SIA Report on Office Salaries In the Securities Industry 2003 (Data Entry Clerk, Senior) and includes 35% for overhead charges. 3 This figure comes to approximately $14,442,072. 4 This figure comes to approximately $2,418,550. 5 This figure is based on statistics collected by the Commission's Office of Economic Analysis.
Written comments are invited on:
(a)Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;
(b)the accuracy of the agency's estimate of the burden of the proposed collection of information;
(c)ways to enhance the quality, utility, and clarity of the information to be collected; and
(d)ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Direct your written comments to R. Corey Booth, Director/Chief Information Officer, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549. Dated: September 8, 2004. Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2199 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 22-28755] Application and Opportunity for Hearing: Petroleos Mexicanos and the Pemex; Project Funding Master Trust September 10, 2004. The Securities and Exchange Commission gives notice that Petroleos Mexicanos (Pemex) and the Pemex Project Funding Master Trust have filed an application under Section 304(d) of the Trust Indenture Act of 1939. Pemex and the Master Trust ask the Commission to exempt from the provisions of Section 316(b) of the 1939 Act:
(1)An indenture between Pemex, certain subsidiary guarantors of Pemex and Deutsche Bank Trust Company Americas, as trustee and
(2)an indenture between the Master Trust, Pemex as guarantor, certain subsidiary guarantors of Pemex and Deutsche Bank Trust Company Americas, as trustee. The indentures relate to debt securities of Pemex and the Master Trust that will be issued in the future and that will be qualified under the 1939 Act. Section 304(d) of the 1939 Act, in part, authorizes the Commission to exempt conditionally or unconditionally any indenture from one or more provisions of the 1939 Act. The Commission may provide an exemption under Section 304(d) if it finds that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the 1939 Act. Section 316(b) provides, with stated exceptions, that, the right of any holder of any indenture security to receive payment of the principal of and interest on such indenture security, on or after the respective due dates expressed in such indenture security, or to institute suit for the enforcement of any such payment on or after such respective due dates, shall not be impaired or affected without the consent of such holder * * * The application requests an exemption from Section 316(b) to allow the inclusion of a “collective action clause” in each of the indentures at issue. These collective action clauses would permit, under specified circumstances described in the application, an amendment of payment terms (including the amount due as principal or interest and the maturity date) with the consent of the holders of a supermajority (75%) of the outstanding principal amount of debt securities. Absent an exemption, the 1939 Act would preclude the inclusion of collective clauses in indentures qualified under the 1939 Act. In their application, Pemex and the Master Trust allege that: 1. Pemex is a decentralized entity of the federal government of Mexico. It is wholly owned and controlled by the Mexican federal government and thus has no private shareholders. Because Mexico does not guarantee Pemex's debt, Pemex is not considered a foreign government or political subdivision of the Mexican government for the purposes of Schedule B of the Securities Act of 1933, and instead follows the rules and regulations applicable to foreign private issuers. Furthermore, in connection with offerings registered under the 1933 Act, Pemex and the Master Trust qualify their indentures under the 1939 Act based on the understanding that a government guaranty would be necessary for Pemex and the Master Trust to fall within the exemption provided by Section 304(a)(6) of the 1939 Act. 2. Under a subsidiary guarantee agreement, Pemex's three principal operating subsidiaries, each of which is also a decentralized public entity of the federal government of Mexico, jointly and severally guarantee payment of principal and interest on Pemex's debt. 3. The Master Trust is a Delaware statutory trust established by Pemex as a financing vehicle to segregate the funding of its long-term productive infrastructure projects and take advantage of preferential budgetary treatment. Pemex is the only beneficiary of the Master Trust and controls the Master Trust in all of its activities. Pemex guarantees all of the Master Trust's debt, and the subsidiary guarantors, in turn, jointly and severally guarantee Pemex's payment obligations as guarantors. The Master Trust has no shareholders, issues no subordinated debt and is consolidated into Pemex's consolidated financial statements prepared in accordance with Mexican generally accepted accounting principles. 4. As noted above, in connection with previous offerings registered under the 1933 Act, including exchange offers, Pemex and the Master Trust have qualified their indentures under the 1939 Act. Pemex and the Master Trust will qualify the indentures at issue under the 1939 Act. 5. Mexican government debt restructurings have proceeded in tandem with Pemex's debt restructuring primarily because Pemex's debt makes up a substantial part of Mexican public sector debt and, accordingly, investors view the debt of Pemex (and the Master Trust) and the debt of Mexico as inextricably connected. Any future debt restructuring of Mexico's public debt would thus be expected to include the debt of Pemex and the Master Trust. 6. Mexico, as a sovereign issuer to which the 1939 Act does not apply pursuant to Section 304(a)(6) of the 1939 Act, recently introduced collective action clauses in its debt securities. The collective action clauses permit amendment of the payment terms and certain key nonfinancial terms with the consent of the holders of 75% of the outstanding principal amount of the debt securities. Because Mexican government debt restructurings have historically been negotiated and implemented in tandem with restructuring of the debt of Pemex, Pemex and the Master Trust request that they be permitted to issue debt securities in the future under indentures that contain collective action clauses similar to those that the Mexican government has recently introduced. 7. The collective action clauses are contained in sections 9.02 of the indentures that have been submitted as Exhibit A and Exhibit B to the application. These provisions are designed to ensure that the collective action clauses are narrowly tailored to be invoked only in situations in which an effective restructuring of Pemex's and the Master Trust's debt is necessary in order to effect a tandem general restructuring of the Mexican government's debt. Specifically, the proposed collective action clauses would permit amendments to payment terms with the consent of the holders of 75% of the principal amount of the series of debt securities affected thereby in the event that such an amendment is being made in connection with a “General Restructuring” by Mexico. “General Restructuring” is defined as a request by Mexico for an amendment or an exchange offer by Mexico, each of which affects a matter that would (if made to Pemex's or the Master Trust's debt securities) constitute a “Reserved Matter,” and that applies to either
(1)at least 75% of the aggregate principal amount of outstanding Mexico External Market Debt that will become due and payable within a period of five years following such request or exchange offer or
(2)at least 50% of the aggregate principal amount of Mexico External Market Debt outstanding at the time of such request or exchange offer. Mexico External Market Debt is defined as all debt securities issued by the Mexican government and indebtedness of the Mexican government for borrowed money which is payable or at the option of its holder may be paid in a currency other than Mexican pesos, excluding any such indebtedness that is owed to or guaranteed by multilateral creditors, export credit agencies and other international or governmental institutions. The principal amount of Mexico External Debt that is the subject of any request by Mexico for such an amendment will be added to the principal amount of Mexico External Market Debt that is the subject of a substantially contemporaneous exchange offer by Mexico for the purposes of determining the existence of a general restructuring. 8. As decentralized entities of the federal government, like the Mexican government itself, Pemex and its subsidiary guarantors are not subject to commercial bankruptcy protection under Mexican law or Chapter 11 of the U.S. Bankruptcy Code. Although the Master Trust is eligible for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code, in the event of such a filing or reorganization thereunder, the Master Trust's creditors could still continue to enforce their rights against Pemex under its guaranty of the Master Trust's debt securities notwithstanding any such filing or proceeding. Because a bankruptcy filing by the Master Trust would not affect Pemex's and the subsidiary guarantors' obligations as guarantors, Pemex and the Master Trust are thus not able to avail themselves of the benefits of consensual debt restructuring that are afforded other companies under Mexican and U.S. bankruptcy law. 9. Because Pemex, like the Mexican government, has no recourse to formal bankruptcy or reorganization proceedings under Mexican or U.S. law, with respect to its own debt securities or its guaranty of the debt securities issued by the Master Trust, and given the practical impossibility of obtaining consents from the holders of 100% of the debt that will be issued, the collective clauses are necessary for an effective restructuring of the external bonds of Pemex and the Master Trust. 10. The proposed collective action clauses would place an investor in debt securities issued or guaranteed by Pemex in no materially worse position than it would be in were Pemex able to avail itself of Mexican or U.S. bankruptcy proceedings. 11. In addition to the collective action clauses, Pemex and the Master Trust propose to increase the percentage of holders needed to consent to modifications of certain key nonpayment terms, expand the scope of persons who are excluded from voting and quorum purposes and add a restriction on their ability to issue further debt securities that are fungible with the debt securities originally issued at a discount. These measures are intended to provide a further safeguard against the potential abuses that the 1939 Act intended to rectify and protect investors from other coercive measures. Any interested persons should look to the application for a more detailed statement of the asserted matters of fact and law. The application is on file in the Commission's Public Reference Section, File Number 22-28755, 450 Fifth Street, NW., Washington, DC 20549. The Commission also gives notice that any interested persons may request, in writing, that a hearing be held on this matter. Interested persons must submit those requests to the Commission no later than October 12, 2004. Interested persons must include the following in their request for a hearing on this matter: —The nature of that person's interest; —The reasons for the request; and —The issues of law or fact raised by the application that the interested person desires to refute or request a hearing on. The interested person should address this request for a hearing to: Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. At any time after October 12, 2004, the Commission may issue an order granting the application, unless the Commission orders a hearing. For the Commission, by the Division of Corporation Finance, pursuant to delegated authority. Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2205 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 35-27889] Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”) September 9, 2004. Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference. Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by October 4, 2004, to the Secretary, Securities and Exchange Commission, Washington, DC 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After October 4, 2004, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective. Exelon Corporation, et al. (70-9645) Exelon Corporation, a registered holding company under the Act (“Exelon”) at 10 South Dearborn Street, 37th Floor, Chicago, Illinois and three subsidiary companies, Commonwealth Edison Company, an electric public-utility company and a holding company exempt from registration by order under section 3(a)(1) of the Act (“ComEd”), at 10 South Dearborn Street, 37th Floor, Chicago, Illinois, PECO Energy Company, a public-utility company (“PECO”), at 2301 Market Street, Philadelphia, Pennsylvania and Exelon Generation Company, LLC, a public-utility company (“Genco”), at 300 Exelon Way, Kennett Square, Pennsylvania (collectively “Applicants”), have filed a post-effective amendment under sections 9, 10 and 11 of the Act to an application/declaration previously filed. PECO is a public-utility company engaged in the purchase, transmission, distribution and sale of electricity and the purchase, distribution and sale of natural gas in Pennsylvania. ComEd is a public-utility company and exempt holding company engaged in the purchase, transmission, distribution and sale of electricity in Illinois. Genco is a public-utility company engaged in the purchase, generation and sale of electricity in Pennsylvania, Illinois, and elsewhere. In its order approving the merger (“Merger”) that created Exelon (Holding Co. Act Release No. 27256, October 19, 2000) (“Merger Order”), the Commission found that the electric properties of Exelon and its subsidiary companies would be interconnected within the meaning of section 2(a)(29)(A) of the Act. That finding was based in part on the fact that Exelon had obtained a 100 MW firm west-to-east contract path (“Contract Path”) from the interface of the transmission systems of American Electric Power Company, Inc. (“AEP”) and ComEd to PJM Interconnection, LLC (“PJM”). At the time of the Merger, PECO was a member of what was then the PJM independent system operator. Exelon committed to file a post-effective amendment seeking Commission approval of any alternative arrangement to satisfy the interconnection requirement. Exelon asserts that AEP will join PJM effective October 1, 2004. According to Exelon, upon integration of AEP into PJM, the transmission facilities of ComEd will be physically interconnected with those of PECO through the facilities of other members of PJM. Accordingly, Exelon requests that the Commission issue an order finding that, once AEP joins PJM, the Exelon interconnection requirement will be satisfied by the membership of ComEd and PECO in PJM. Exelon asks the Commission to further determine that, with the entry of AEP into PJM, Exelon is not required to renew the Contract Path as a basis for interconnection under the Act. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2206 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50341; File No. SR-BSE-2004-14] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change, and Amendment No. 1 Thereto, by the Boston Stock Exchange, Inc. To Amend Its Intermarket Options Linkage Rules September 9, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on April 6, 2004, the Boston Stock Exchange, Inc. (“BSE” or “Exchange”) submitted to the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the BSE. On June 9, 2004, the BSE submitted Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Letter from John Boese, BSE, to Nancy Sanow, Assistant Director, Division of Market Regulation (“Division”), Commission, dated June 8, 2004 (“Amendment No. 1”). In Amendment No. 1, the BSE amended the proposed rule text to clarify that the general requirement that the Exchange's Firm Customer Quote Size (“FCQS”) and Firm Principal Quote Size (“FPQS”) be at least 10 contracts would not apply if the BSE were disseminating a quotation of fewer than 10 contracts. In that case, the Exchange may establish a FQCS or FPQS equal to its disseminated size. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The BSE proposes to amend its rules relating to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (“Linkage Plan”). The text of the proposed rule change, as amended, is below. Proposed additions are in *italics* . Rules of the Boston Options Exchange Facility Trading of Options Contracts on BOX Chapter XII Intermarket Linkage Rules *Sec. 1 Definitions*
(g)“Firm Customer Quote Size” with respect to a P/A Order means the lesser of
(a)The number of option contracts that the Participant sending a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of an Eligible Option Class for Customer orders entered directly for execution in that market; or
(b)the number of option contracts that the Participant receiving a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of an Eligible Option Class for Customer orders entered directly for execution in that market. This number shall be at least 10 *contracts unless the receiving Participant Exchange is disseminating a quotation of less than 10 contracts, in which case this number may equal such quotation size* .
(h)“Firm Principal Quote Size” means the number of option contracts that a Participant Exchange guarantees it will execute at its disseminated quotation for incoming Principal Orders in an Eligible Option Class. This number shall be 10. *However, if the Participant Exchange is disseminating a quotation size of less than 10 contracts, this number may equal such quotation size.* 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 BSE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it had received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The BSE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to make the rules of the Boston Options Exchange (“BOX”), a facility of the BSE, consistent with the other participants in the Linkage Plan (“Participants”) with regard to the “natural size” of quotations under the Linkage Plan. 4 Specifically, the Linkage Plan currently requires that the Participants be firm for both Principal Acting as Agent (“P/A”) and Principal Orders for at least 10 contracts. Concurrent with proposed Joint Amendment No. 13, the current proposed rule change would eliminate this requirement, permitting BOX to be firm for the actual size of its quotation, even if this amount is less than 10 contracts. This change would enable BOX to conform its quotation requirements for incoming Principal and P/A Orders to be consistent with its quotation requirements for non-Linkage orders. 4 The Participants have filed an amendment to the Linkage Plan to change the definitions of “Firm Customer Quote Size” (“FCQS”) and “Firm Principal Quote Size” (“FPQS”) (Joint Amendment No. 13). *See* Securities Exchange Act Release No. 50211 (August 18, 2004), 69 FR 52050 (August 26, 2004) (File No. 4-429). 2. Statutory Basis The BSE believes that the proposed rule is consistent with Section 6(b) of the Act, 5 in general, and furthers the objectives of Section 6(b)(5) 6 in particular in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and protect investors and the public interest. 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The BSE does not believe that the proposed rule change will impose any burden on competition 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 BSE consents, the Commission will:
(A)By order approve such proposed rule change, as amended; or
(B)Institute proceedings to determine whether the proposed rule change, as amended, 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 *rule-comments@sec.gov* . Please include File Number SR-BSE-2004-14 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-BSE-2004-14. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the BSE. 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-BSE- 2004-14 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E4-2228 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50340; File No. SR-CBOE-2004-41] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Chicago Board Options Exchange, Inc. Relating to Minimum Size Guarantees for Linkage Orders September 9, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on July 7, 2004, the Chicago Board Options Exchange, Inc. (“CBOE” or “Exchange”) submitted to the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the CBOE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The CBOE proposes to amend its rules to conform to Amendment No. 13 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (“Linkage Plan”). The text of the proposed rule change is below. Proposed additions are in *italics* . **Chicago Board Options Exchange, Incorporated Rules** **Section E: Intermarket Linkage** **Rule 6.80 Definitions** (1)-(8) (No change.)
(9)“Firm Customer Quote Size” with respect to a P/A Order means the lesser of
(a)The number of option contracts that the Participant Exchange sending a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of an Eligible Option Class for Customer orders entered directly for execution in that market; or
(b)the number of option contracts that the Participant Exchange receiving a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of an Eligible Option Class for Customer orders entered directly for execution in that market. The Firm Customer Quote Size will be at least 10 contracts for each series of an Eligible Option Class *unless the receiving Participant Exchange is disseminating a quotation of less than 10 contracts, in which case this number may equal such quotation size* .
(10)“Firm Principal Quote Size” means the number of options contracts that a Participant Exchange guarantees it will execute at its disseminated quotation for incoming Principal Orders in an Eligible Option Class. This number shall be no fewer than 10, *however if the Participant Exchange is disseminating a quotation size of less than 10 contracts, this number may equal such quotation size* . (11)-(21) (No change.) 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 CBOE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it had received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The CBOE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to conform CBOE's linkage rules to proposed Amendment No. 13 to the Linkage Plan, which would accommodate “natural size” of quotations. 3 Specifically, the Linkage Plan and CBOE rules currently require that the Exchange be firm for both Principal Acting as Agent (“P/A”) and Principal Orders for at least 10 contracts (the “10-up” requirement). The proposed rule change would permit CBOE members to be firm for the actual size of their quotation, even if this amount is less than 10 contracts. 3 The participants in the Linkage Plan (“Participants”) have filed an amendment to the Linkage Plan to change the definitions of “Firm Customer Quote Size” (“FCQS”) and “Firm Principal Quote Size” (“FPQS”) (Joint Amendment No. 13). *See* Securities Exchange Act Release No. 50211 (August 18, 2004), 69 FR 52050 (August 26, 2004) (File No. 4-429). The Participants adopted the 10-up requirement for the Linkage Plan at a time when all the exchanges had rules requiring that their quotations be firm for customer orders for at least 10 contracts. 4 The CBOE no longer applies the 10-up requirement to all its quotes. 5 Thus, the CBOE now seeks to conform its quotation requirements for incoming Principal and P/A Orders to be more consistent with the quotation requirements for non-Linkage orders. 4 *See* Securities Exchange Act Release No. 44383 (June 1, 2001), 66 FR 30959 (June 8, 2001) (SR-Amex-2001-18; SR-CBOE-2001-15; SR-ISE-2001-07; SR-PCX-2001-18; and SR-Phlx-2001-37). . 5 *See* CBOE Rule 8.51(c). The proposed rule change would amend the definitions of both FCQS and FPQS. While CBOE's Linkage rules would maintain a general requirement that the FCQS and FPQS be at least 10 contracts, that minimum would not apply if CBOE were disseminating a quotation of fewer than 10 contracts. In that case, the Exchange may establish a FQCS or FPQS equal to its disseminated size. As with Principal and P/A Orders today, if the order is of a size eligible for automatic execution (“auto-ex”), 6 the receiving exchange must provide for the auto-ex of the order. If this is not the case (for example, the receiving exchange's auto-ex system is not engaged), the receiving exchange still must provide a manual execution for at least the FCQS or FPQS, as appropriate (in this case, the size of its disseminated quotation of less than 10 contracts). 6 At the request of the Exchange, Commission staff removed an extraneous reference provided in the original filing regarding the automatic execution size at exchanges sending and receiving Principal Orders. Telephone conversation between Angelo Evangelou, CBOE and Tim Fox, Attorney, Division of Market Regulation, Commission, on August 23, 2004. 2. Statutory Basis The CBOE believes that the proposed rule is consistent with Section 6(b) of the Act, 7 in general, and furthers the objectives of Section 6(b)(5) 8 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, should promote just and equitable principles of trade, serve to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). 8 B. Self-Regulatory Organization's Statement on Burden on Competition The CBOE does not believe that the proposed rule change will impose any burden on competition 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 CBOE consents, the Commission will:
(A)By order approve such proposed rule change; or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( * http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-CBOE-2004-41 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-CBOE-2004-41. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2004-41 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E4-2226 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50339; File No. SR-ISE-2004-01] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change, and Amendments No. 1 and 2 Thereto, by the International Securities Exchange, Inc. Relating to Minimum Size Guarantees for Linkage Orders September 9, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on January 13, 2004, the International Securities Exchange, Inc. (“ISE” or “Exchange”) submitted to the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the ISE. On May 10, 2004, the ISE submitted Amendment No. 1 to the proposed rule change. 3 On July 30, 2004, the Exchange submitted Amendment No. 2 to the proposed rule change. 4 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Letter from Michael J. Simon, Senior Vice President and General Counsel, ISE, to Nancy Sanow, Assistant Director, Division of Market Regulation (“Division”), Commission, dated May 7, 2004 (“Amendment No. 1”). In Amendment No. 1, the ISE amended the proposed rule text to clarify that the general requirement that the Exchange's Firm Customer Quote Size (“FCQS”) and Firm Principal Quote Size (“FPQS”) be at least 10 contracts would not apply if the ISE were disseminating a quotation of fewer than 10 contracts. In that case, the Exchange may establish a FQCS or FPQS equal to its disseminated size. 4 *See* Letter from Michael J. Simon, Senior Vice President and General Counsel, ISE, to Nancy Sanow, Assistant Director, Division, Commission, dated July 28, 2004 (“Amendment No. 2”). In Amendment No. 2, the Exchange submitted a new Form 19b-4, which replaced and superceded the original filing in its entirety. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to amend its rules regarding the minimum size of firm quotes for Principal Orders and Principal Acting as Agent Orders (“P/A Orders”) received through the intermarket options linkage (“Linkage”). The ISE proposes that this rule change take effect upon approval by the Commission of both the instant proposal and the corresponding Joint Amendment No. 13 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (“Linkage Plan”). The text of the proposed rule change, as amended, is below. Proposed additions are in *italics* . Chapter 19 Intermarket Linkage Rule 1900. Definitions The following terms shall have the meaning specified in this Rule solely for purposes of this Chapter 19:
(7)“Firm Customer Quote Size” with respect to a P/A Order means the lesser of:
(a)The number of option contracts that the Participant Exchange sending a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of an Eligible Option Class for Public Customer orders entered directly for execution in that market; or
(b)the number of option contracts that the Participant Exchange receiving a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of an Eligible Option Class for Public Customer orders entered directly for execution in that market. This number shall be at least 10 *unless the receiving Participant Exchange is disseminating a quotation of less than 10 contracts, in which case this number may equal such quotation size* .
(8)“Firm Principal Quote Size” means the number of option contracts that a Participant Exchange guarantees it will execute at its disseminated quotation for incoming Principal Orders in an Eligible Option Class. This number shall be 10 *, however if the Participant Exchange is disseminating a quotation size of less than 10 contracts, this number may equal such quotation size* . 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 ISE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it had received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The ISE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to limit the requirement that ISE Primary Market Makers provide minimum size guarantees for Principal and P/A Orders received through Linkage. This proposal would implement pending Amendment No. 13 to the Linkage Plan into the ISE rules, while providing uniformity between the minimum size guarantees that market makers provide for orders received through Linkage and orders received through other means. 5 5 Telephone conversation between Michael J. Simon, Senior Vice President and General Counsel, ISE, and Tim Fox, Attorney, Division, Commission on August 3, 2004. Until recently, the ISE required its Primary Market Makers to disseminate quotations assuring that the Exchange's best bid and offer (“BBO”) be for a size of at least 10 contracts. However, the Commission recently approved an amendment to the Exchange rules that significantly changed those restrictions and obligations, permitting the dissemination of a BBO of less than 10 contracts. 6 Notwithstanding that rule change, the Linkage Plan continues to require that the ISE provide an automatic execution for at least 10 contracts for Principal and P/A Orders, regardless of the size of the Exchange's disseminated quotation (the “10-up requirement”). This is not a requirement that the ISE can unilaterally change; rather, any change to a Linkage Plan rule requires that the six options exchanges that are participants in the Linkage Plan (“Participants”) unanimously agree to a Linkage Plan amendment, followed by corresponding changes to the rules of all the Participants. 6 *See* Securities Exchange Act Release No. 49602 (April 22, 2004), 69 FR 23841 (April 30, 2004) (SR-ISE-2003-26) (the “Real Size Filing”). While the Real Size Filing was pending at the Commission, the Participants agreed to submit Joint Amendment No. 13 to amend the Linkage Plan to eliminate the 10-up requirement. This proposed rule filing would implement that Linkage Plan Amendment by amending the ISE Rule definitions of FCQS and FPQS to recognize that an exchange's disseminated quotation size may be less than 10 contracts. However, as with Principal and P/A Orders today, if an order is of a size eligible for automatic execution at both the sending and receiving exchanges, the ISE will provide an automated execution of the Linkage order. If this is not the case, while the Exchange may allow the order to drop to manual handling, the ISE still must provide a manual execution for at least the FCQS or FPQS, as appropriate. 2. Statutory Basis The ISE believes that the proposed rule is consistent with Section 6(b) of the Act, 7 in general, and furthers the objectives of Section 6(b)(5) 8 in particular in that it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transaction in securities, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, the proposed rule change would provide uniformity between the minimum size guarantees that market makers provide for orders received through Linkage and orders received through other means. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The ISE does not believe that the proposed rule change will impose any burden on competition 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 ISE consents, the Commission will:
(A)By order approve such proposed rule change, as amended; or
(B)Institute proceedings to determine whether the proposed rule change, as amended, 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 *rule-comments@sec.gov* . Please include File Number SR-ISE-2004-01 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-ISE-2004-01. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the ISE. 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-ISE-2004-01 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E4-2223 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50335; File No. SR-NASD-2004-136] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to the Implementation Date of Notice to Members 04-50 (Treatment of Commodity Pool Trail Commissions Under Rule 2810) September 9, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on September 8, 2004, the National Association of Securities Dealers, Inc. (“NASD”), filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. NASD has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of NASD under Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) thereunder, 4 which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is filing with the Commission a proposed rule change to delay the implementation date of *Notice to Members* 04-50 (“ *NtM* 04-50”) until October 12, 2004. No changes to the text of NASD rules are required by this proposed rule change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in Sections (A), (B), and
(C)below, of the most significant aspects of such statements.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On July 13, 2004, NASD filed *NtM* 04-50 with the SEC. In *NtM* 04-50, NASD announced that it was no longer going to exclude the payment of any trail commissions for commodity pool direct participation programs (“DPPs”) from the underwriting compensation limits of Rule 2810 (“Direct Participation Programs” or “DPP Rule”). *NtM* 04-50 announced that, “effective immediately, in determining whether to issue a ‘no objections’ opinion in connection with a commodity pool DPP filed with the [NASD Corporate Financing] Department under Rule 2810, NASD staff will consider, among other things, whether the level of underwriting compensation, including the types of trail commission previously excluded, exceeds the 10% limitation in the DPP Rule.” On July 22, 2004, the SEC published the Notice of Filing and Immediate Effectiveness of the *NtM* 04-50. 5 5 Release No. 34-50065 (July 22, 2004), 69 FR 45870 (July 30, 2004) [File No. SR-NASD-2004-108] (“SR-NASD-2004-108”). In view of certain comments submitted to the SEC in response to SR-NASD-2004-108, 6 NASD is delaying the implementation date of *NtM* 04-50 until October 12, 2004. Thus, the policy announced in *NtM* 04-50 will not apply to commodity pool DPPs filed with the NASD Corporate Financing Department before October 12, 2004. 6 Eight comment letters were submitted to the Commission during the comment period. The NASD responded to these comment letters on August 31, 2004. These comment letters, the NASD response to these comment letters, and comment letters received after the end of the comment period may be examined at the places specified in Item IV below. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, 7 which requires, among other things, that NASD's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change is in the public interest and will benefit investors in commodity pool DPPs by limiting the compensation that can be paid to members for selling commodity pool DPPs, and servicing the accounts that hold such investments, to the same amounts that apply to all other DPP investments. At the same time, the proposed rule change also provides additional time for commodity pool DPPs to adjust to the policy of *NtM* 04-50. 7 15 U.S.C. 78o-3(b)(6).
(B)Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.
(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action NASD has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of NASD under Section 19(b)(3)(A)(i) of the Act 8 and Rule 19b-4(f)(1) thereunder, 9 which renders the proposal effective upon receipt of this filing by the Commission. 8 15 U.S.C. 78s(b)(3)(A)(i). 9 17 CFR 240.19b-4(f)(1). At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2004-136 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-NASD-2004-136. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml)* . Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the NASD. 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-NASD-2004-136 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2203 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50337; File No. SR-NYSE-2004-06] Self-Regulatory Organizations; Order Granting Approval To Proposed Rule Change and Amendment Nos. 1 and 2 Thereto by the New York Stock Exchange, Inc. Relating to Amendments to Exchange Rule 104 and Rule 123 September 9, 2004. On February 6, 2004, the New York Stock Exchange, Inc. (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (“Act”) and Rule 19b-4 thereunder, 2 a proposed rule change to amend NYSE Rule 104.10 (Dealings by Specialists) to provide that customers may limit the ability of specialists to trade along with their orders or to invoke precedence based on size when the specialist is liquidating a position in its specialty security for its dealer account, and to make a corresponding change to NYSE Rule 123 (Records of Orders) concerning record keeping. On April 5, 2004, the Exchange amended the proposed rule change. 3 On July 14, 2004, the Exchange again amended the proposed rule change. 4 The proposed rule change, as amended, was published for comment in the **Federal Register** on August 2, 2004. 5 The Commission received no comments on the proposal. This order approves the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* letter from Darla C. Stuckey, Corporate Secretary, NYSE, to Nancy J. Sanow, Assistant Director, Division of Market Regulation (“Division”), Commission, dated April 2, 2004 and accompanying Form 19b-4 (“Amendment No. 1”). In Amendment No. 1, the NYSE clarified that, under the proposed rule change, customers may limit specialists from trading along with their orders and from invoking precedence based on size. 4 *See* letter from Darla C. Stuckey, Corporate Secretary, NYSE, to Nancy J. Sanow, Assistant Director, Division, Commission, dated July 13, 2004 and accompanying Form 19b-4 (“Amendment No. 2”). In Amendment No. 2, NYSE amended the proposed rule text and added additional explanatory material to clarify the proposal. Amendment No. 2 replaced the Exchange's original filing and Amendment No. 1 thereto in their entirety. 5 *See* Securities Exchange Act Release No. 50090 (July 27, 2004), 69 FR 46197. The Commission finds that the proposed rule change is consistent with the requirements of Section 6 of the Act, 6 applicable to a national securities exchange. 7 In particular, the Commission believes that the proposal is consistent with Section 6(b)(5) of the Act, 8 which requires, among other things that an exchange have rules that are designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 6 *See* 15 U.S.C. 78f. 7 In approving this proposed rule change, the Commission has considered its impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). 8 15 U.S.C. 78f(b)(5). Currently, when a specialist liquidates a position in his or her specialty security, the specialist is permitted to trade on parity with the crowd or may invoke precedence based on size. 9 The Exchange believes that there may be circumstances in which a customer will wish to preclude a specialist from trading on parity or invoking precedence based on size. Accordingly, the Exchange has proposed to amend NYSE Rule 104.10(6)(i) to include new paragraph
(C)to provide that transactions by a specialist for his or her dealer account in liquidating or decreasing a position in a specialty security must yield to a customer's order in the crowd upon the request of the member representing such order, where such request has been documented as a term of the order, to the extent of the volume of such order included in the quote prior to the transaction. The customer's order will then participate in the transaction to the extent that priority, parity and precedence rules permit. In addition, the Exchange has proposed to amend NYSE Rule 123 to add new paragraph
(g)to provide that a request to a specialist to yield to a customer order is a condition of that order and must be documented in accordance with applicable books and records requirements. 10 9 Specialist dealer transactions when liquidating a position are subject to specific affirmative market-making standards and review. NYSE Rule 104 requires that specialists' proprietary dealings be reasonably necessary to permit the specialist to maintain a fair and orderly market. In addition, specialists are required to obtain Floor Official approval for any liquidating sale transactions on a direct minus tick or purchase transactions on a direct plus tick. 10 Relevant rules include NYSE Rules 123 and 410 and Rules 17a-3 and a—4 under the Act, 17 CFR 240.17a—3 and 240.17a-4. By giving the crowd broker the ability to require that the specialist yield to his or her customer's order, the Commission believes that the proposed amendment will create more similarity in the way orders on the book and in the crowd are handled. The Commission further believes that the proposal may enhance the execution of customer orders on the Exchange. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 11 that the proposed rule change, as amended, (SR-NYSE-2004-06) be, and hereby is, approved. 11 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2204 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50346; File No. SR-PCX-2004-84] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Pacific Exchange, Inc. Relating to the Definition of Firm Customer Quote Size and Firm Principal Quote Size Pursuant to the Intermarket Options Linkage Plan September 10, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on September 1, 2004, the Pacific Exchange, Inc. (“PCX” or “Exchange”) submitted to the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the PCX. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Pacific Exchange, Inc. (“PCX” or “Exchange”) is proposing to amend the definitions of Firm Customer Quote Size (“FCQS”) and Firm Principal Quote Size (“FPQS”) pursuant to the intermarket options linkage (“Linkage”). The text of the proposed fee schedule is below. Proposed additions are *italicized* . Rules of the Pacific Exchange, Inc. Definitions Rule 6.92(a)(1)-(8)—(No Change).
(9)“Firm Customer Quote Size” with respect to a P/A Order means the lesser of
(a)the number of option contracts that the Participant Exchange sending a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of an Eligible Option Class for Customer orders entered directly for execution in that market; or
(b)the number of option contracts that the Participant Exchange receiving a P/A Order guarantees it will automatically execute at its disseminated quotation in a series of Eligible Option Class for Customer orders entered directly for execution in that market. This number will be at least 10 *unless the receiving Participant Exchange is disseminating a quotation of less than 10 contracts, in which case this number may equal such quotation size* .
(10)“Firm Principal Quote Size” means the number of option contracts that a Participant Exchange guarantees it will execute at its disseminated quotation for incoming Principal Orders in an Eligible Option Class. This number will be at least 10 *however if the Participant Exchange is disseminating a quotation size of less than 10 contracts, this number may equal such quotation size* . (11)-(21)—(No Change). 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 PCX included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it had received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The PCX has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this rule change is to implement proposed Joint Amendment No. 13 to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (“Linkage Plan”) into the PCX Rules. 3 Joint Amendment No. 13, together with this proposed rule change, would change the definitions of both FCQS and FPQS. While Joint Amendment No. 13 and this proposed rule change would maintain a general requirement that the FCQS and FPQS be at least 10 contracts, such a minimum would not apply if the Exchange were disseminating a quotation of fewer than 10 contracts. In that case, the Exchange may establish a FQCS or FPQS equal to its disseminated size. 4 3 The participants in the Linkage Plan (“Participants”) have filed an amendment to the Linkage Plan to change the definitions of FCQS and FPQS (“Joint Amendment No. 13”). *See* Securities Exchange Act Release No. 50211 (August 18, 2004), 69 FR 52050 (August 26, 2004) (File No. 4-429). 4 The PCX would only disseminate a quotation of fewer than 10 contracts when the Exchange's rule, as approved by the Commission, permitted such dissemination. As with Principal and Principal Acting as Agent (“P/A”) Orders today, if a Principal or P/A Order is of a size eligible for automatic execution (“auto-ex”), 5 the receiving Participant must provide for the auto-ex of the order. If this is not the case (for example, the receiving Participant's auto-ex system is not engaged), the receiving Participant may allow the order to drop to manual handling. However, the receiving Participant must nonetheless provide manual execution of the order for at least the FCQS or FPQS, as appropriate (in this case, the size of its disseminated quotation of less than 10 contracts). The proposed rule change would allow the Exchange to accommodate natural size of quotations for Linkage Orders. 5 At the request of the Exchange, Commission staff removed an extraneous reference provided in the original filing regarding the automatic execution size at exchanges sending and receiving Principal Orders. Telephone conversation between Steven B. Matlin, Senior Counsel, Regulatory Policy, PCX and Tim Fox, Attorney, Division of Market Regulation, Commission, on September 10, 2004. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Section 6(b)(5) of the Act 7 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 8 to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). 8 At the request of the Exchange, Commission staff made a technical correction to this section of the filing. Telephone conversation between Steven B. Matlin, Senior Counsel, Regulatory Policy, PCX and Tim Fox, Attorney, Division of Market Regulation, Commission, on September 10, 2004. 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 Written comments on the proposed rule change were neither solicited nor received. 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 PCX consents, the Commission will:
(A)By order approve such proposed rule change; or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-PCX-2004-84 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-PCX-2004-84. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-PCX-2004-84 and should be submitted on or before October 7, 2004. 9 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 Jill M. Peterson, Assistant Secretary. [FR Doc. E4-2224 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50332; File No. SR-Phlx-2004-49] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto by the Philadelphia Stock Exchange, Inc. Relating to Fees Applicable to the Exchange's Electronic Trading Platform, Phlx XL September 9, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 2 thereunder, notice is hereby given that on July 29, 2004, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Phlx. On August 13, 2004, Phlx submitted an amendment to the proposed rule change. 3 The proposed rule change has been filed by the Phlx as establishing or changing a due, fee, or other change, pursuant to Section 19(b)(3)(A)(ii) of the Act, 4 and Rule 19b-4(f)(2) 5 thereunder, which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* letter from Richard S. Rudolph, Director and Counsel, Phlx, to Deborah Lassman Flynn, Assistant Director, Division of Market Regulation, Commission, dated August 12, 2004 (“Amendment No. 1”). In Amendment No. 1, the Phlx added a footnote to the text of its proposed fee schedule indicating that the 50% pass-through charge applicable to those Streaming Quote Traders to whom the Exchange supplies Hyperfeed data is subject to a pilot scheduled to expire on January 28, 2005. The Phlx also made technical, non-substantive changes to the proposed rule text. 4 15 U.S.C. 78s(b)(3)(A)(ii). 5 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to amend its fee schedule in anticipation of the deployment of its electronic trading platform for options, Phlx XL. 6 Specifically, the Exchange proposes:
(1)To establish charges applicable to Exchange Registered Options Traders (“ROTs”) that submit proprietary electronic quotations (“streaming quotes”), 7 and
(2)to no longer charge the option specialist for listed options currently subject to the Exchange's Specialist Deficit (Shortfall) fee (“shortfall fee”), 8 when that option is offered on Phlx XL. 6 *See* Securities Exchange Act Release No. 50100 (July 27, 2004), 69 FR 46612 (August 3, 2004) (SR-Phlx-2003-59). 7 Such ROTs are known as Streaming Quote Traders (“SQTs”). *See* Phlx Rule 1014(b). 8 *See* Securities Exchange Act Release Nos. 48206 (July 22, 2003), 68 FR 44555 (July 29, 2004) (SR-Phlx-2003-45); and 48207 (July 22, 2003), 68 FR 44558 (July 29, 2003) (SR-Phlx-2003-47). The Exchange charges a fee of $0.35 per contract for specialists trading any Top 120 Option if 12% of the total national monthly contract volume for such Top 120 Option is not effected on the Exchange. The fee is limited to $10,000 per month per option provided that the total monthly market share effected on the Phlx in the Top 120 Option is equal to or greater than 50% of the volume threshold in effect. SQT Fees The Phlx has determined to assess SQTs a 50% pass-through charge relating to costs borne by the Phlx for data it will provide to SQTs who desire to obtain from the Exchange real-time underlying data to enable them to price the overlying options (“Hyperfeed” costs) 9 in addition to any other applicable fees. 10 The 50% pass-through charge will be implemented beginning on the first day of deployment of the first option to trade on Phlx XL, and will apply on a pilot basis to those SQTs that the Exchange supplies Hyperfeed data for the first 180 days of deployment of Phlx XL. 11 9 SQTs trading options on Phlx XL will use handheld devices for the purpose of streaming quotations in options in which they are assigned. The Exchange will not supply the handheld devices; SQTs will obtain the handheld devices from one of several Exchange-approved vendors. Some vendors provide underlying data to the SQT who uses their handheld as a service to enable such SQT to price overlying options, while other vendors do not. The Exchange will provide such underlying data, obtained from a third-party service provider, to those SQTs whose vendors do not provide such data as part of the service they provide to the SQT. The Hyperfeed fee represents a pass-through of 50% of the costs borne by the Exchange in obtaining and providing such data to such SQTs. 10 Members who stream proprietary quotations in “Streaming Quote Options” traded on Phlx XL will also pay any Exchange transaction-related fees as well as non transactional-related fees and membership-related fees in effect during this time period, when applicable, such as trading post/booth, floor facility, shelf space and permit fees. 11 The Commission notes that any changes or pilot extensions of the Hyperfeed data pass-through charge would require the Phlx to file a proposed rule change pursuant to Section 19(b) of the Act. Shortfall Fee The shortfall fee is a component of the Exchange's Specialist Fixed Fee calculation. 12 Therefore, for any options specialist that has elected the Specialist Fixed Fee and lists an option that was subject to the shortfall fee (which was used in calculating the Specialist Fixed Fee), the Specialist's Fixed Fee will be reduced by the amount of the shortfall fee. The Specialist Fixed Fee calculation and the shortfall fee will be pro-rated in the month in which the option is deployed on Phlx XL. 13 12 *See* Securities Exchange Act Release Nos. 48459 (September 8, 2003), 68 FR 54034 (September 15, 2003) (SR-Phlx-2003-61); 49467 (March 24, 2004), 69 FR 17017 (March 31, 2004) (SR-Phlx-2004-17); and 49770 (May 25, 2004), 69 FR 31150 (June 2, 2004) (SR-Phlx-2004-31). 13 The Exchange intends to roll out equity options on the Phlx XL in stages. Unlike the Hyperfeed fee, the shortfall fee calculation will not be limited to the first 180 calendar days of deployment of Phlx XL. The text of the proposed rule change is available at the Phlx, at the Commission, and on the Commission's Web site, *http://www.sec.gov/rules/sro/phlx.shtml* . 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 Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change, as amended, is to adopt fees relating to Phlx XL. With respect to the Hyperfeed fee, the purpose is to recoup part of the costs borne by the Exchange for data supplied by the Exchange to SQTs in connection with the anticipated deployment of Phlx XL. The Exchange believes that the 50% pass-through cost should enable ROTs that wish to become SQTs to make the transition on a cost-effective basis, with the Exchange effectively absorbing 50% of the Hyperfeed costs during the 180 day deployment of Phlx XL. With respect to the shortfall fee, the purpose of the proposed rule change, as amended, is to address the effect of the shortfall fee calculation as it relates to options traded on Phlx XL. The Exchange believes that it would be unreasonable to impose a shortfall fee on specialists (once there are streaming quotes) when SQTs will be competing for market share on a relatively equal basis, as the shortfall fee was designed, in part, to create an incentive for specialists to promote the options they have been allocated. 2. Statutory Basis The Phlx believes that its proposal to amend its schedule of dues, fees, and charges is consistent with Section 6(b) of the Act 14 in general, and furthers the objectives of Section 6(b)(4) of the Act 15 in particular, in that it is an equitable allocation of reasonable dues, fees, and other charges among Exchange members who become SQTs. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change, as amended, will impose any inappropriate burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change, as amended, has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act, 16 and Rule 19b-4(f)(2) 17 thereunder, because it establishes or changes a due, fee, or other charge. At any time within 60 days of the filing of the proposed rule change, as amended, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 18 16 15 U.S.C. 78s(b)(3)(A)(ii). 17 17 CFR 240.19b-4(f)(2). 18 For purposes of calculating the 60-day abrogation period, the Commission considers the period to commence on August 13, 2004, the date Phlx filed Amendment No. 1. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, 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 E-mail to *rule-comments@sec.gov* . Please include File Number SR-Phlx-2004-49 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-Phlx-2004-49. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. 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-Phlx-2004-49 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 19 19 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2200 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50333; File No. SR-Phlx-2004-48] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto Relating to SIG Indices, LLLP Disclaimer September 9, 2004. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on July 28, 2004, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in items I and II below, which Items have been prepared by the Phlx. The Exchange has filed the proposal as a “non-controversial” rule change pursuant to section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. On August 19, 2004, the Exchange filed Amendment No. 1 to the proposed rule change. 5 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). 5 *See* Letter from Carla Behnfeldt, Director, Phlx to Mia Zur, Attorney, Division of Market Regulation (“Division”), Commission, dated August 18, 2004 (“Amendment No. 1”). In Amendment No. 1, the Phlx replace the original proposed rule change in its entirety. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposed to amend Rule 1104A, Susquehanna Indices, LLP Indexes, to provide the name change and expand the coverage of the rule. Below is the proposed rule change. Proposed new language is *italicized* . Proposed deletions are in [brackets]. 6 6 The Exchange requested that the staff of the Division correct a minor error in the proposed rule text. Telephone discussion between Carla Behnfeldt, Director, Phlx and Mia Zur, Attorney, Division, Commission (August 25, 2004). Rule 1104A. [Susquehanna] *SIG* Indices, LLLP Indexes [Susquehanna] *SIG* Indices, LLLP makes no warranty, express or implied, as to results to be obtained by any person or any entity from the use of the SIG Investment Managers Index TM , [or] the SIG Cable, Media & Entertainment Index TM , *the SIG Casino Gaming Index* TM , *the SIG Semiconductor Equipment Index* TM , *and the SIG Semiconductor Device Index* TM , or any data included therein in connection with the trading of option contracts thereon, or for any other use. [Susquehanna] *SIG* Indices, LLLP makes no express or implied warranties of merchantability or fitness for a particular purpose for use with respect to the SIG Investment Managers Index TM , [or] the SIG Cable, Media & Entertainment Index TM , *the SIG Casino Gaming Index* TM , *the SIG Semiconductor Equipment Index* TM , * and the SIG Semiconductor Device Index* TM , or any data included therein. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose 7 7 The Phlx requested that the staff of the Division make minor non-substantive modifications to language in the purpose section. Telephone discussion between Carla Behnfeldt, Director, Phlx and Mia Zur, Attorney, Division, Commission (August 25, 2004). The purpose of the proposed rule change is to amend Phlx Rule 1104A which applies to indexes maintained by SIG Indices, LLLP (formerly known as “Susquehanna Indices, LLLP”). 8 The rule currently provides generally that Susquehanna Indices, LLP (“SI”) makes no warranty, express or implied, as to results to be obtained by any person or entity from the use of SIG Investment Managers Index and that SI makes no express or implied warranties of merchantability or fitness for a particular purpose for use with respect to that index or any data included therein. 9 The Exchange is now proposing to amend Phlx Rule 1104A to update the rule to reflect the name change and to expand the coverage of the rule to include the SIG Casino Gaming Index TM , the SIG Semiconductor Equipment Index TM , and the SIG Semiconductor Device Index TM which are new indexes upon which options have recently been listed on the Exchange. 8 The Exchange currently lists options on the SIG Investment Managers Index TM and the SIG Cable, Media & Entertainment Index TM pursuant to a license agreement with SIG Indices, LLLP and Exchange Rule 1009A(b). The Exchange recently amended Exchange Rule 1104A to cover the SIG Cable, Media & Entertainment Index TM pursuant to a requirement in the license agreement. *See* Securities Exchange Act Release No. 49605 (April 22, 2004), 69 FR 24209 (May 3, 2004). The Exchange is filing the current proposed rule change pursuant to a requirement in the license agreement. SIG Investment Managers Index TM , SIG Cable, Media & Entertainment Index TM , SIG Casino Gaming Index TM , SIG Semiconductor Equipment Index TM , and SIG Semiconductor Device IndexTM are trademarks of SIG Indices, LLLP. 9 The Exchange noted in its filing to adopt Exchange Rule 1104A that it believed that the disclaimer proposed in Exchange Rule 1104A is appropriate given that it is similar to disclaimer provisions of American Stock Exchange Rule 902C relating to indexes underlying options listed on that exchange. *See* Securities Exchange Release No. 48135 (July 7, 2003), 68 FR 42154 (July 16, 2003) (approving SR-Phlx-2003-21). 2. Statutory Basis The Exchange believes that its proposal is consistent with the requirement under section 6(b) of the Act 10 in general, and furthers the objectives of section 6(b)(5) of the Act 11 in particular, in that it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule should encourage SI to continue to maintain the SIG Casino Gaming Index TM , the SIG Semiconductor Equipment Index TM , and the SIG Semiconductor Device Index TM so that options on them may be traded on the Exchange, thereby providing investors with enhanced investment opportunities. 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 inappropriate burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Phlx has filed the proposed rule change pursuant to section 19(b)(3)(A) of the Act 12 and subparagraph (f)(6) of Rule 19b-4 thereunder. 13 Because the foregoing rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. As required under Rule 19b-4(f)(6)(iii), the Phlx provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to filing the proposal with the Commission or such shorter period as designated by the Commission. 14 12 15 U.S.C. 78s(b)(3)(a). 13 17 CFR 240.19b-4(f)(6). 14 *See supra* , note 5. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 15 15 For purposes of calculating the 60-day abrogation period, the Commission considers the proposal to have been filed on August 19, 2004, the date the Phlx filed Amendment No. 1. 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 *rule-comments@sec.gov* . Please include File Number SR-Phlx-2004-48 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-Phlx-2004-48. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site *http://www.sec.gov/rules/sro.shtml* . Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. 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-Phlx-2004-48 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 16 16 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2201 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50336; File No. SR-Phlx-2004-54] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendments No. 1 and 2 Thereto Relating to Continuing Education Requirements for Registered Persons September 9, 2004. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 18, 2004, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in items I and II below, which items have been prepared by the Phlx. The Exchange has filed the proposal as a “non-controversial” rule change pursuant to section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. 5 On August 26, 2004, the Exchange filed Amendment No. 1 to the proposed rule change. 6 On September 3, 2004, the Exchange filed Amendment No. 2 to the proposed rule change. 7 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). 5 The Phlx asked the Commission to waive the 30-day operative delay. *See* Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii). 6 *See* letter from Mark I. Salvacion, Director and Counsel, Phlx to Katherine A. England, Assistant Director, Division of Market Regulation (“Division”), Commission, dated August 24, 2004 (“Amendment No. 1”). In Amendment No. 1, the Phlx replaced the original proposed rule change in its entirety. 7 *See* letter from Mark I. Salvacion, Director and Counsel, Phlx to Katherine A. England, Assistant Director, Division, Commission, dated September 2, 2004 (“Amendment No. 2”). In Amendment No. 2, the Phlx made minor changes to the proposed rule text. For purposes of calculating the 60-day abrogation period, the Commission considers the proposal to have been filed on September 3, 2004, the date the Phlx filed Amendment No. 2. *See* Rule 19b-4(f)(2), 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx, pursuant to section 19(b)(1) of the Act and Rule 19b-4 thereunder, 8 proposes to amend Exchange Rule 640(a) to allow members and member organizations (“Member Firms”) to administer the Continuing Education Regulatory Element Program to its registered persons 9 by instituting an in-firm program acceptable to the Exchange. The text of the proposed rule change is below. Proposed new language is in *italics* . 8 17 CFR 240.19b-4. 9 For purposes of Exchange Rule 640 the term “registered person” means any member, registered representative or other person registered or required to be registered under Exchange rules, but does not include a person whose activities are limited solely to the transaction of business on the floor with members or registered broker-dealers. *See* Exchange Rule 640, Commentary .01. Continuing Education For Registered Persons Rule 640(a)(1)-(3) No change. *(4) In-Firm Delivery of the Regulatory Element—Members and member organizations will be permitted to administer the continuing education Regulatory Element program to their registered persons by instituting an in-firm program acceptable to the Exchange.* *The following procedures are required:* *(A) Principal/Officer In-Charge. The firm has designated a principal/officer-in-charge to be responsible for the in-firm delivery of the Regulatory Element.* *(B) Site Requirements:* *(i) The location of all delivery sites will be under the control of the firm.* *(ii) The delivery of Regulatory Element continuing education will take place in an environment conducive to training. (Examples: a training facility, conference room or other area dedicated to this purpose would be appropriate. Inappropriate locations would include a personal office or any location that is not or cannot be secured from traffic and interruptions.)* *(iii) Where multiple delivery terminals are placed in one room, adequate separation between terminals will be maintained.* *(C) Technology Requirements. The communication links and firm delivery computer hardware must comply with standards defined by the Exchange or its designated vendor.* *(D) Supervision* *(i) The firm's written supervisory procedures must contain the procedures implemented to comply with requirements of in-firm delivery of the Regulatory Element continuing education.* *(ii) The firm's supervisory procedures must identify the principal/officer-in-charge designated pursuant to paragraph
(A)above and contain a list of individuals authorized by the firm to serve as proctors.* *(iii) Firm locations for delivery of the Regulatory Element continuing education will be specifically listed in the firm's written supervisory procedures.* *(E) Proctors.* *(i) All sessions will be proctored by an authorized person during the entire Regulatory Element continuing education session. Proctors must be present in the session room or must be able to view the person(s) sitting for Regulatory Element continuing education through a window or by video monitor.* *(ii) The individual responsible for proctoring at each administration will sign a certification that required procedures have been followed, that no material from Regulatory Element continuing education had been reproduced, and that no candidate received any assistance to complete the session. Such certification may be part of the sign-in log required under paragraph
(F)below.* *(iii) Individuals serving as proctors must be persons registered with an SRO and supervised by the designated principal/officer-in-charge for purposes of in-firm delivery of the Regulatory Element continuing education.* *(iv) Proctors will check and verify the identification of all individuals taking Regulatory Element continuing education.* *(F) Administration* *(i) All appointments will be scheduled in advance using the procedures and software specified by the Exchange to communicate with the Exchange's system and designated vendor.* *(ii) The firm/proctor will conduct each session in accordance with administrative appointment scheduling procedures established by the Exchange or its vendor.* *(iii) A sign-in log will be maintained at the delivery facility. Logs will contain the date of each session, the name and social security number of the individual taking the session, that required identification was checked, the sign-in time, the sign-out time, and the name of the individual proctoring the session. Such logs are required to be maintained pursuant to SEC Rules 17a-3 and 17a-4.* *(iv) No material will be permitted to be utilized for the session nor may any session-related material be removed.* *(v) Delivery sites will be made available for inspection by the SROs.* *
(vi)Before commencing in-firm delivery of the Regulatory Element continuing education, members are required to file with their Designated Examining Authority (“DEA”), a letter of attestation (*as specified below) signed by a principal/officer-in-charge executive officer or executive representative, attesting to the establishment of required procedures addressing principal/officer-in-charge, supervision, site technology proctors and administrative requirements. Letters filed with Exchange should be sent to Examinations Department, Philadelphia Stock Exchange, 1900 Market Street, Philadelphia, Pennsylvania, 19103. * **Letter of Attestation for In-Firm Delivery of Regulatory Element Continuing Education [Name of member or member organization] has established procedures for delivering Regulatory Element continuing education on its premises. I have determined that these procedures are reasonably designed to comply with SRO requirements pertaining to in-firm delivery of Regulatory Element continuing education, including that such procedures have been implemented to comply with principal/officer in-charge, supervision, site, technology, proctors, and administrative requirements.* *Signature:* *Printed Name:* *Title: [Must be signed by a Principal Executive Officer (or Executive Representative) of the Member Organization.]* 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 Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Exchange Rule 640(a) to allow Member Firms to administer the Continuing Education Regulatory Element Program (“Regulatory Element”) to their registered persons by instituting an in-firm program acceptable to the Exchange. The Regulatory Element currently requires registered persons to complete a computer-based training program on the second anniversary of their registration, and every three years thereafter. The program includes topics related to sales practices, customer communications, compliance, ethics, and other subjects pertinent to conducting a securities business. 10 Currently, Member Firms generally use third-party testing centers to administer the Regulatory Element. 10 *See* Securities Exchange Act Release No. 35341 (February 8, 1995), 60 FR 8426 (February 14, 1995). *See also* Securities Exchange Act Release No. 39802 (March 25, 1998), 63 FR 15474 (March 31, 1998). At the recommendation of the Securities Industry/Regulatory Council on Continuing Education (“Council”), 11 the Exchange proposes to adopt amendments to Exchange Rule 640(a) to permit member organizations to administer the Regulatory Element of the Continuing Education Program to their registered persons by instituting firm programs acceptable to the Exchange. The proposed rule requires that member organizations meet certain conditions for in-house delivery relating to the security of the training delivery environment. The proposed rule change sets forth the delivery requirements as specified by the Council. The Exchange believes that the proposed rule change is consistent with recent changes made to similar rules by other self-regulatory organizations. 12 11 The Council is comprised of representatives from broker-dealers and self-regulatory organizations whose duties include recommending and helping develop specific content and questions for the Regulatory Element, as well as minimum core curricula for the Firm Element. The Council has developed a model under which member organizations may deliver the computer-based training in-house. 12 The proposed change is identical in substance, and substantially similar in wording, to American Stock Exchange Rule 341A, New York Stock Exchange Rule 345a, Interpretation /03, National Association of Securities Dealers Rule 1120, and Chicago Board Options Exchange Rule 9.3A. 2. Statutory Basis The Exchange believes that its proposal is consistent with section 6(b) of the Act 13 in general, and furthers the objectives of section 6(b)(5) of the Act 14 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and, in general, to protect investors and the public interest by ensuring that Member Firms have adequate opportunities to provide training in the Regulatory Element to their registered persons. The Exchange also believes that the proposed rule change is consistent with section 6(c)(3) of the Act. 15 Under that section, it is the Exchange's responsibility to prescribe standards of training, experience and competence for persons associated with Exchange members and member organizations. The Exchange has proposed this rule change to establish an additional mechanism for the administration of the Regulatory Element of the Program, which will help to enable registered persons to satisfy their continuing education obligations. 13 15 U.S.C. 78f(b). 14 15 U.S.C. 78f(b)(5). 15 15 U.S.C. 78f(c)(3). 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 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 The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act 16 and Rule 19b-4(f)(6) thereunder. 17 16 15 U.S.C. 78s(b)(3)(A). 17 17 CFR 240.19b-4(f)(6). A proposed rule change filed under Rule 19b-4(f)(6) 18 normally does not become operative prior to 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange satisfied the five-day pre-filing requirement. The Exchange further requested that the Commission waive the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate the proposed rule change immediately operative. The Commission notes that the proposed rule change, as amended, is similar to proposed rule changes that previously have been approved by the Commission that were subject to the full notice and comment period, 19 and thus does not raise new issues of regulatory concern. For these reasons, the Commission, consistent with the protection of investors and the public interest, has waived the 30-day operative date requirement for this proposed rule change, and has determined to designate the proposed rule change as operative on August 18, 2004, the date it was submitted to the Commission. 18 17 CFR 240.19b-4(f)(6). 19 *See supra* , note 12. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 20 20 For purposes of calculating the 60-day abrogation period, the Commission considers the proposal to have been filed on September 3, 2004, the date the Phlx filed Amendment No. 2. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, 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 *rule-comments@sec.gov* . Please include File Number SR-Phlx-2004-54 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-Phlx-2004-54. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal offices of the Phlx. 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-Phlx-2004-54 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 21 21 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2202 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50342; File No. SR-Phlx-2004-16] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change, and Amendment No. 1 Thereto, by the Philadelphia Stock Exchange, Inc. Relating to Exchange Rules 1083(g) and (h), To Modify the Definitions of “Firm Customer Quote Size” and “Firm Principal Quote Size” September 9, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on February 13, 2004, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) submitted to the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Phlx. On August 11, 2004, the Phlx submitted Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Letter from Richard S. Rudolph, Phlx, Director and Counsel to Deborah Lassman Flynn, Assistant Director, Division of Market Regulation, Commission, dated August 10, 2004 (“Amendment No. 1”). In Amendment No. 1, the Phlx amended the proposed rule text to clarify that the general requirement that the Exchange's Firm Customer Quote Size (“FCQS”) and Firm Principal Quote Size (“FPQS”) be at least 10 contracts would not apply if the Phlx were disseminating a quotation of fewer than 10 contracts. In that case, the Exchange may establish a FQCS or FPQS equal to its disseminated size. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to amend its rules relating to the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage (“Linkage Plan”). The text of the proposed rule change, as amended, is below. Proposed additions are in italics. Proposed deletions are in [brackets]. Intermarket Linkage Rule 1083. Definitions The following terms shall have the meaning specified in this Rule solely for the purpose of Rules 1083 through 1087: (a)-(f) (No change).
(g)“Firm Customer Quote Size” with respect to a P/A Order means the lesser of
(a)the number of option contracts that the Participant Exchange sending a P/A Order guarantees it will automatically execute at its disseminated price in a series of an Eligible Option Class for Public Customer orders entered directly for execution in that market; or
(b)the number of option contracts that the Participant Exchange receiving a P/A Order guarantees it will automatically execute at its disseminated price in a series of an Eligible Option Class for Public Customer orders entered directly for execution in that market. This number shall be at least 10, *unless the receiving Participant is disseminating a quotation of less than 10 contracts, in which case this number may equal such quotation size* .
(h)“Firm Principal Quote Size” means the number of options contracts that a Participant Exchange guarantees it will execute at its disseminated price for incoming Principal Orders in an Eligible Option Class. This number shall be at least 10[.] *, however if the Participant is disseminating a quotation size of less than 10 contracts, this number may equal such quotation size* . (i)-(u) (No change). 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 Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it had received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to eliminate the requirement that the Phlx members that participate in the Linkage Plan be firm for incoming Principal and Principal Acting as Agent (“P/A”) Orders for a size of at least 10 contracts where the Exchange's disseminated size is less than 10 contracts. The proposed rule change would allow Phlx members that participate in the Linkage Plan to execute inbound Principal and P/A Orders at their actual disseminated size as opposed to a minimum quote size. 4 4 At the request of the Exchange, this paragraph has been modified to make clear that the proposed rule change applies exclusively to Phlx members. Telephone conversation between Richard S. Rudolph, Director and Counsel, Phlx, and Tim Fox, Attorney, Division of Market Regulation (“Division”), Commission, on September 7, 2004. The proposed rule change represents another step towards the execution of all order types at the Exchange's disseminated price up to its actual disseminated size, rather than the execution of orders at the Exchange's disseminated price up to an artificially designated size. The Commission has approved several Exchange rule amendments that require Phlx responsible brokers or dealers to be firm for their actual disseminated size, 5 as well as amendments providing automatic executions at the Exchange's disseminated size, rather than a pre-set “AUTO-X guarantee.” 6 5 *See* Securities Exchange Act Release No. 47646 (April 8, 2003), 68 FR 27610 (May 20, 2003) (SR-Phlx-2003-18). 6 *See* Securities Exchange Act Release No. 46886 (November 22, 2002), 67 FR 72015 (December 3, 2002) (SR-Phlx-2002-39). The purpose of the instant proposed rule change is to eliminate the artificial 10 contract minimum contained in the definition of “FCQS” and “FPQS” in the Exchange's rules. Specifically, the proposed rule change would allow Phlx members that participate in the Linkage Plan to execute inbound P/A and Principal Orders at the actual size of the disseminated quote. 7 Currently, Exchange Rules 1083(g) and
(h)impose the obligation on the Phlx specialist to execute an order at a minimum guaranteed size of 10 contracts despite the fact that the actual disseminated size may be less than 10 contracts. 8 The proposed rule change would permit the Phlx to execute inbound Linkage orders at the Exchange's actual disseminated size. The proposed rule change would eliminate the artificial minimum guaranteed size of 10 contracts, and would therefore require Phlx specialists to be firm at the Exchange's disseminated price for their actual disseminated size. 7 At the Exchange's request, this sentence was modified to make clear that the proposed rule change would permit the execution of Principal and P/A Orders at the actual disseminated size as opposed to the size of the order. Telephone conversation between Richard S. Rudolph, Director and Counsel, Phlx, and Tim Fox, Attorney, Division, Commission, on September 7, 2004. 8 Currently, for example, if the Exchange's disseminated size is for 3 contracts and the Phlx receives an inbound eligible P/A or Principal Order with a size of 10 contracts, then Rule 1083 requires that the specialist must execute 10 contracts despite the fact that the Exchange's disseminated size is only 3 contracts. The Exchange believes that executions of Principal and P/A Orders at the Exchange's actual disseminated size should enhance the ability of participants of the Linkage Plan that send Principal and P/A Orders to the Exchange to ascertain the actual number of contracts available at the Exchange's disseminated price, thus resulting in more transparency in the marketplace. 2. Statutory Basis The Phlx believes that the proposed rule is consistent with Section 6(b) of the Act, 9 in general, and furthers the objectives of Section 6(b)(5) 10 in particular in that it is designed to perfect the mechanisms of a free and open market and the national market system, protect investors and the public interest and promote just and equitable principles of trade, by permitting Exchange specialists to provide executions for Linkage Orders at the Exchange's actual disseminated size. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Phlx does not believe that the proposed rule change will impose any inappropriate burden on competition. 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 Phlx consents, the Commission will:
(A)By order approve such proposed rule change, as amended; or
(B)Institute proceedings to determine whether the proposed rule change, as amended, 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 *rule-comments@sec.gov* . Please include File Number SR-Phlx-2004-16 on the subject line. Paper Ccomments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-Phlx-2004-16. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. 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-Phlx-2004-16 and should be submitted on or before October 7, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E4-2225 Filed 9-15-04; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION [Declaration of Disaster #3620] State of Florida; Amendment #2 In accordance with a notice received from the Department of Homeland Security—Federal Emergency Management Agency—effective September 9, 2004, the above numbered declaration is hereby amended to include Charlotte, Columbia, DeSoto, Dixie, Gilchrist, Hardee, Hillsborough, Levy, and Marion counties as disaster areas due to damages caused by Hurricane Frances occurring on September 3, 2004, and continuing. In addition, applications for economic injury loans from small businesses located in the contiguous counties of Hamilton, Lafayette, Sarasota, Suwannee, and Taylor in the State of Florida; and Clinch and Echols in the State of Georgia may be filed until the specified date at the previously designated location. All other counties contiguous to the above named primary counties have previously been declared. The economic injury number assigned to Georgia is 9ZU400. All other information remains the same, *i.e.* , the deadline for filing applications for physical damage is November 3, 2004 and for economic injury the deadline is June 6, 2005. (Catalog of Federal Domestic Assistance Program Nos. 59002 and 59008). Dated: September 10, 2004. S. George Camp, Acting Associate Administrator for Disaster Assistance. [FR Doc. 04-20885 Filed 9-15-04; 8:45 am]
Connectionstraces to 7
2 references not yet in our index
  • 17 CFR 240.17
  • 17 CFR 240.19
Citation graph
cites case law
Notices
SECURITIES AND EXCHANGE COMMISSION
U.S.C.§ 3501
U.S.C.§ 78s
U.S.C.§ 78f
U.S.C.§ 552
C.F.R.§ 200.30-3
U.S.C.§ 78o–3
U.S.C.§ 78c
Cite17 CFR 240.17
Cite17 CFR 240.19
Cites 9Cited by 0 across 0 sources
★   the supreme law of the land   ★
Don't Tread on Me
E Pluribus Unum — out of many, one

"If you don't know your rights, you don't have any."

Marginalia · a citizen's law index
A research desk, not legal advice. Always read the cited source before relying on a summary.
Questions or an issue? support@self-law.org
disclaimerMarginalia is a research index, not a law firm. Nothing on this site is legal, tax, or financial advice and no attorney–client relationship is formed by using it. Statutes, regulations, and case law change; summaries, search results, AI output, and member posts may be incomplete, out of date, or wrong. Any interpretation drawn from material on this site should be validated by a licensed attorney in your jurisdiction before you act on it.