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Code · REGISTER · 2004-12-01 · SECURITIES AND EXCHANGE COMMISSION · Notices

Notices. SECURITIES AND EXCHANGE COMMISSION

14,413 words·~66 min read·/register/2004/12/01/04-26460·

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

BILLING CODE 4510-43-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50726; File No. SR-Amex-2004-92] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by the American Stock Exchange LLC to Correct a Cross-Reference in Section 220 of the Amex Company Guide November 23, 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 November 19, 2004, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission the proposed rule change as described in items I and III below, which items have been prepared by the Amex.
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 Amex proposes to amend a cross-reference in Section 220 of the *Amex Company Guide* . New text is in italics. Proposed deletions are in brackets. Sec. 220. ORIGINAL LISTING APPLICATIONS OF FOREIGN ISSUERS—GENERAL
(a)No change.
(b)Listing Fee—For companies listed on foreign stock exchanges, the original listing fee, including the one-time charge, is 50% of the rate for domestic companies, with a maximum fee of [$25,000] *$32,500* (see § 140). Additional and annual fees are the same as charged for domestic companies (see §§ 141 and 142). 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 Amex 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 Amex 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose On December 6, 2001, the Exchange submitted a proposal amending multiple sections of the Amex *Company Guide* relating to the initial and annual listing fees, fees for listing additional shares, and the one-time charge for listing shares issued in connection with the acquisition of a listed company by an unlisted company. Specifically, an amendment was made to Section 140 of the Amex *Company Guide* to increase the maximum original listing fees charged to non-U.S. companies that are listed on a foreign stock exchange from $25,000 to $32,500. 3 Unfortunately, at the time of the proposed rule change, a cross-reference to this exact fee in Section 220(b) of the Amex *Company Guide* was overlooked and, therefore, not updated. Section 220(b) currently, and inaccurately, reads that the maximum fee charged in the abovementioned circumstance is $25,000. The Amex is proposing to correct the cross-reference in Section 220(b) to read $32,500 in order to keep its published rules accurate. 3 *See* Securities Exchange Act Release No. 45403 (February 6, 2002), 67 FR 6553 (February 12, 2002) (approving File No. SR-Amex-2001-100). 2. Statutory Basis The proposed rule change is consistent with section 6(b) of the Act, 4 in general and furthers the objectives of section 6(b)(5) of the Act, 5 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engage 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; and is not designed to permit unfair discrimination between customers, issuers, brokers and dealers. 4 15 U.S.C. 78(b). 5 15 U.S.C. 78(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Amex does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)Impose any significant burden on competition; and
(iii)Become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to section 19(b)(3)(A) of the Act 6 and Rule 19b-4(f)(6) thereunder. 7 6 15 U.S.C. 78s(b)(3)(A). 7 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Amex complied with this requirement. At any time within 60 days of the filing of the 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. The Amex has requested that the Commission waive the 30-day operative delay period. The Commission believes that allowing the Exchange to correct this cross-reference in its rules is consistent with the protection of investors and the public interest, and therefore waives the 30-day operative delay. 8 8 For purposes of waiving the operative period date of this proposal only, the Commission has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). 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 *rulecomments@sec.gov* . Please include File Number SR-Amex-2004-92 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-Amex-2004-92. 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 such filing also will be available for inspection and copying at the principal office of the Amex. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2004-92 and should be submitted on or before December 22, 2004. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3408 Filed 11-30-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50733; File No. SR-BSE-2004-50] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate a Restriction Precluding a BSE Specialist From Trading Both Nasdaq-Listed and New York Stock Exchange-Listed Securities Simultaneously November 24, 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 November 22, 2004, the Boston Stock Exchange, Inc., (“BSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Exchange. The BSE filed the proposed rule change pursuant to section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders it 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 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The BSE proposes to eliminate the restrictions precluding a BSE specialist from trading both Nasdaq-listed and New York Stock Exchange (“NYSE”)-listed securities at the same time. The text of the proposed rule change is below. Proposed deletions are in brackets. 5 5 With the instant proposed rule change, the BSE eliminated Section 11 of Chapter XXXV (“Limitations on Specialists”). As a result, all subsequent Sections in Chapter XXXV are renumbered. Chapter XXXV Limitations on Specialists [Sec. 11. Any individual member who is registered as a specialist is not permitted to maintain a book, as defined in Chapter XV, Specialists, Section 6, The Specialist's Book, in both Nasdaq securities and listed securities. Nasdaq securities must comprise a separate book which must be solely traded by a separate specialist. A specialist who is qualified under the provisions of this Chapter XXXV, and the provisions of Chapter XV, Specialists, Section 1, Registration, to trade either listed or Nasdaq securities, or both, cannot accept orders in, nor effect transactions in, both types of securities, at the same time. Nothing in this section shall preclude any duly qualified specialist from occasionally substituting for, or acting as an alternate for, another specialist in either listed or Nasdaq securities, in accordance with Article XVI of the Constitution of the Boston Stock Exchange, Officers and Associates, Section 7, Alternates for Members Absent. A specialist substituting for another specialist in accordance with the provisions of this section will be permitted to trade both Nasdaq and listed securities at the same time, during the period of substitution. In the case of an extended or permanent absence of a specialist qualified to trade Nasdaq securities, the firm from which the specialist is absent must promptly notify the Exchange and make arrangements to permanently replace the absent specialist in a reasonable amount of time, as determined by the Exchange. The Exchange reserves the right to temporarily reassign some or all of the Nasdaq securities comprising an absent specialist's book in the event that a firm does not make suitable or timely arrangements for the replacement of the absent specialist.] II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to eliminate the restrictions, as set forth in Chapter XXXV, Trading in Nasdaq Securities, Section 11, Limitations on Specialists. This Section precludes a BSE specialist from trading both Nasdaq-listed and NYSE-listed securities at the same time. Originally, the primary reason for the restriction was to separate specialists' books so that the BSE would be able to ensure that specialists maintained adequate levels of capital in their respective accounts. When the rule was first proposed, 6 the Exchange anticipated that individual BSE specialists might seek to trade large numbers of Nasdaq-listed securities, and the Exchange was concerned that such a practice would lead to an undue concentration of stocks within a single specialist book. The Exchange was also concerned that differences in the marketplaces for Nasdaq-listed and NYSE-listed securities necessitated a requirement that a specialist concentrate on trading in either the Nasdaq or NYSE-listed marketplace, but not both at the same time. 6 *See* Securities Exchange Act Release No. 44476 (June 26, 2001), 66 FR 35293 (July 3, 2001) (SR-BSE-2001-01). Since the rule was approved, 7 BSE specialist trading practices have gradually evolved to the point that the specialists are limiting their trading to a much more limited number of securities. As a result, the concern regarding undue concentration of stocks within a single specialist book has lessened considerably. Also, regardless of the number of stocks within a specialist's book, the Exchange consistently monitors all of its specialist accounts regarding proper capitalization and risk levels, and is confident in its ability to proactively manage that risk, regardless of the types of securities within an account. 7 See Securities Exchange Act Release No. 44952 (October 18, 2001), 66 FR 54039 (October 25, 2001) (SR-BSE-2001-01). Moreover, with the proposal set forth in Regulation NMS 8 that all securities, regardless of listing market, be considered NMS securities, and the proposals to apply uniform rules (such as the trade-through rule proposal 9 ) to all securities, the Exchange no longer believes that it is necessary, or prudent, to distinguish between Nasdaq-listed and NYSE-listed securities for the purposes of restricting a specialist's trading activities. Recently enacted Regulation SHO 10 also does not distinguish between NYSE-listed and Nasdaq-listed securities in its application. The BSE is seeking to proactively respond to the trend of treating all securities as one type, and as part of a single national market system. 8 *See* Securities Exchange Act Release No. 49325 (February 26, 2004), 69 FR 11126 (March 9, 2004). 9 *Id.* at 69 FR 11129-11153. 10 *See* Securities Exchange Act Release No. 50103 (July 28, 2004), 69 FR 48008 (August 6, 2004). Most importantly, however, is that, on November 9, 2004, Nasdaq officially announced that it would be assuming the listing of the Nasdaq-100 Index Tracking Stock (the “QQQs”), effective December 1, 2004. Several BSE specialists currently trade the QQQs as an NYSE-listed security. As a result of the prohibition currently set forth in the BSE's rules, those specialists would no longer be able to transact business in the QQQs on the BSE. Since the BSE is the only UTP Exchange that currently has this restriction in place, BSE specialists, and the BSE, would be placed at a severe competitive disadvantage, as a result of actions beyond the Exchange's control, if the BSE does not remove this restriction. Accordingly, the Exchange has asked the Commission to waive the 30-day operative delay of the proposed rule change, to allow it to be both effective and operative upon filing with the Commission. 2. Statutory Basis The BSE believes that the proposed rule change is consistent with the requirements of Section 6(b) of the Act, 11 in general, and Section 6(b)(5) 12 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 is not designed to permit unfair discrimination between customers, brokers, or dealers, or to regulate by virtue of any authority matters not related to the administration of the Exchange. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition. 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 proposed rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)Impose any significant burden on competition; and
(iii)Become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b-4(f)(6) thereunder. 14 At any time within 60 days of the filing of the 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. 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires that a self-regulatory organization provide the Commission written notice of its intent to file a proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change with the Commission. The BSE complied with this requirement. The BSE has asked that the Commission waive the 30-day operative delay contained in Rule 19b-4(f)(6)(iii) under the Act. 15 The Commission believes such waiver is consistent with the protection of investors and the public interest, for it will allow BSE specialists that currently trade the QQQs as a NYSE-listed security to continue to do so as of December 1, 2004, when Nasdaq will assume the listing of the QQQs. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission. 16 15 17 CFR 240.19b-4(f)(6)(iii). 16 For purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 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-2004-50 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-2004-50. 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-2004-50 and should be submitted on or before December 22, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 17 17 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3405 Filed 11-30-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50735; File No. SR-CBOE-2004-69] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Board Options Exchange, Incorporated to Eliminate the Exchange's Marketing Fee Voting Procedures November 24, 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 October 29, 2004, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) 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 the Exchange. The Exchange filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. 5 The Commission is publishing this notice to solicit comments on the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). 5 The Exchange has asked the Commission to waive the 30-day operative delay. See Rule 19b-4(f)(6)(iii). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The CBOE proposes to eliminate its Marketing Fee Voting Procedures, previously set forth in Interpretation and Policy .12 to CBOE Rule 8.7. Proposed new language is *italicized* ; proposed deletions are in [brackets]. Rule 8.7 Obligations of Market-Makers Interpretations and Policies .01-.11 No change. .12 *Reserved* . [Marketing Fee Voting Procedures: The following procedures specify how a trading crowd determines whether to participate or not to participate in the Exchange's marketing fee program. These procedures expire six months from the date of SEC approval, or such earlier time as the Commission has approved them on a permanent basis.
(a)Eligible Voters.
(i)The term “trading crowd” is synonymous with the term “station,” which is defined in Interpretation and Policy .01 to Rule 8.8.
(ii)Eligible Trading Crowd Members: Members of a trading crowd that will be eligible to participate in the vote (“eligible trading crowd members”) shall include
(1)those Market-Makers who have transacted at least 80% of their Market-Maker contracts and transactions in each of the three immediately preceding calendar months in option classes traded in the trading crowd, and who continue to be present in the trading crowd in the capacity of a Market-Maker at the time of the vote;
(2)the DPM for a trading crowd; and
(3)any e-DPM, and shall each have one vote. Any e-DPM appointed to one or more option classes shall be eligible to vote on marketing fees for those option classes.
(b)Requesting a Trading Crowd Vote. Any eligible trading crowd member (including the DPM and any e-DPM) can request that a vote be held to determine whether or not the trading crowd should continue to participate in the marketing fee program for one or more of the option classes located at that station by submitting a written request to that effect to the Secretary of the Exchange. The Exchange shall post a notice at the station and provide written notice to the e-DPM of the time and date of any vote to be taken at least 10 calendar days prior to the time of the vote. The marketing fee oversight committee shall determine all other administrative procedures pertaining to the vote.
(c)Participation in the Marketing Fee Program. A trading crowd shall be deemed to have indicated that it desires to participate in the Exchange's marketing fee program for one or more of the option classes located at that station if a majority of those eligible trading crowd members participate in the vote and if a majority of the total votes cast are in favor of participating in the marketing fee program for those option classes. Conversely, a trading crowd shall be deemed to have indicated that it does not desire to participate in the Exchange's marketing fee program for one or more of the option classes located at that station if a majority of those eligible trading crowd members participate in the vote and if a majority of the total votes cast are against participating in the marketing fee program for those option classes.
(i)Frequency of Vote: Once a crowd votes to participate in the marketing fee program, subsequent votes to determine whether to continue its participation may be held only once every three calendar months. Once a crowd votes not to participate in the marketing fee program, subsequent votes to determine whether to participate in the marketing fee program may be held only once every thirty days.
(ii)Tie Votes: If a vote conducted in accordance with this rule results in a tie, the status quo for that trading crowd shall remain in effect. Accordingly, if the trading crowd currently participates in the marketing fee program and a tie vote occurs, the marketing fee program will remain in effect in that trading crowd. If the trading crowd does not participate in the marketing fee at the time the tie vote occurs, the marketing fee will not be implemented in the trading crowd at that time.] .13 No Change. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On July 30, 2004, 6 the CBOE amended Interpretation and Policy .12 to CBOE Rule 8.7, setting forth voting procedures specifying how a trading crowd, including the DPM and e-DPM, determines whether or not to participate in the Exchange's marketing fee program. 7 The marketing fee voting procedures were adopted as a six-month pilot. The CBOE has determined to replace its current marketing fee program that is assessed on DPM, e-DPM, and Market-Maker transactions in all equity option classes in which a DPM has been appointed. The marketing fee is assessed only on those Market-Maker, DPM, and e-DPM transactions resulting from orders from customers of payment accepting firms with which the DPM has agreed to pay for that firm's order flow, and only with respect to orders from customers that are for 200 contracts or less. According to the Exchange, on October 28, 2004, it held a special meeting of its membership for the purpose of holding a membership vote on its proposed new marketing fee program. The Exchange states that CBOE membership voted in favor of approving the new marketing fee program, which does not include a marketing fee voting procedure. In conjunction with this filing, the CBOE has filed a rule change incorporating the new marketing fee program pursuant to Section 19(b)(3)(A)(ii) of the Act 8 and subparagraph (f)(2) of Rule 19b-4 thereunder. 9 6 Telephone conversation between Andrew Spiwak, Director Legal Division and Chief Enforcement Attorney, CBOE, and David Liu, Attorney, Division of Market Regulation, Commission, on November 2, 2004. 7 The marketing fee voting procedures were described in SR-CBOE-2004-47 ( *see* Securities Exchange Act Release 50130 (July 30, 2004) 69 FR 47965 (August 6, 2004).) 8 15 U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 240.19b-4(f)(2). The CBOE filed a rule change to adopt a new marketing fee to be imposed on transactions of Market-Makers (including Designated Primary Market-Makers, or DPMs, and electronic Designated Primary Market-Makers, or e-DPMs) pursuant to Section 19(b)(3)(A)(ii) of the Act and subparagraph (f)(2) of Rule 19b-4 thereunder ( *see* SR-CBOE-2004-68). 2. Statutory Basis The CBOE believes that the elimination of Interpretation and Policy .12 to Rule 8.7 is consistent with and in furtherance of the objectives of Section 6(b)(5) of the Act 10 in that it is designed to enhance competition to promote just and equitable principles of trade and to remove impediments to and perfect the mechanisms of a free and open market. 10 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition. 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 The foregoing proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b-4(f)(6) thereunder 12 because the proposal:
(i)Does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative prior to 30 days after the date of filing (or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest). 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b-4(f)(6). A proposed rule change filed under Rule 19b-4(f)(6) 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 requests that the Commission waive the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii), 13 and designate the proposed rule change to become operative immediately. 13 17 CFR 240.19b-4(f)(6)(iii). The CBOE has requested that the Commission waive the 30-day operative delay and to designate the proposed rule change as operative on November 1, 2004, to facilitate the implementation of the new marketing fee program that became effective on November 1, 2004. The Commission believes that waiving the 30-day operative period is consistent with the protection of investors and the public interest. 14 The Commission believes that waiving the 30-day operative delay would permit the Exchange to eliminate the Marketing Fee Voting Procedures at the same time that it implements its revised marketing fee program. Under the Exchange's revised marketing fee program, which applies to all classes of equity options, voting procedures would not be a part of the program. 15 Accordingly, 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 November 1, 2004, to facilitate the implementation of the new marketing fee program that became effective on November 1, 2004. 16 14 For purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 15 *See supra* note 9. 16 *Id* . 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-CBOE-2004-69 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-2004-69. 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-2004-69 and should be submitted on or before December 22, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 17 17 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3401 Filed 11-30-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50736; File No. SR-CBOE-2004-68] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Chicago Board Options Exchange, Inc. To Adopt a New Marketing Fee November 24, 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 October 29, 2004, the Chicago Board Options Exchange, Inc. (“CBOE” 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 CBOE. On November 2, 2004, CBOE submitted Amendment No. 1 to the proposed rule change. 3 The CBOE has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the CBOE under Section 19(b)(3)(A)(ii) of the Act, 4 and Rule 19b-4(f)(2) thereunder, 5 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 Andrew D. Spiwak, Director Legal Division and Chief Enforcement Attorney, CBOE, to Nancy Sanow, Assistant Director, Division of Market Regulation, Commission, dated November 2, 2004 (“Amendment No. 1”). Amendment No. 1 replaced the originally filed proposed rule text in full. 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 CBOE proposes to adopt a new marketing fee to be imposed on transactions of Market-Makers (including Designated Primary Market-Makers, or DPMs, and electronic Designated Primary Market-Makers, or e-DPMs) other than Market-Maker-to-Market-Maker transactions. The fee will be imposed at the rate of $.22 per contract on all classes of equity options. Below is the text of the proposed rule change. Proposed new language is *italicized* ; proposed deletions are in [brackets]. Chicago Board Options Exchange, Inc. Fee Schedule 1. Unchanged. 2. MARKET MAKER, e-DPM & DPM MARKETING FEE (in option classes in which a DPM has been appointed)
(6)$.[40] *22* 3.-4. Unchanged. Notes: (1)-(5) No Change.
(6)The Marketing Fee will be assessed only on transactions of Market-Makers, e-DPMs and DPMs [resulting from customer orders from payment accepting firms with which the DPM has agreed to pay for that firm's order flow, and with respect to orders from customers that are for 200 contracts or less.] *at the rate of $.22 per contract on all classes of equity options other than Market-Maker-to-Market-Maker transactions. This fee shall not apply to index options and options on ETFs. The fee shall apply to options on HOLDRs. Should any surplus of the marketing fees at the end of each month occur, those funds would be carried forward to the following month. The Exchange would then refund such surplus at the end of the quarter, if any, on a pro rata basis based upon contributions made by the Market-Makers, e-DPMs and DPMs.* (7)-(14) 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 its proposal and discussed any comments it had received regarding the proposal. 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 Currently, the CBOE imposes a marketing fee of $.40 per option contract on Market-Maker transactions, including transactions of DPMs and e-DPMs, in all classes of options in which a DPM has been appointed. The marketing fee is assessed only on those Market-Maker, DPM and e-DPM transactions resulting from orders from customers of payment accepting firms (“payment accepting firms”) with which the DPM has agreed to pay for that firm's order flow, and only with respect to orders from customers that are for 200 contracts or less. The CBOE proposes to replace its current marketing fee that is assessed on DPM, e-DPM and Market Maker transactions in all equity option classes. 6 The CBOE states that the purpose of the new marketing fee plan is to provide the members of the Exchange with the ability to compete for the opportunity to trade with those orders that might otherwise be routed to other exchanges. The proposed marketing fee would be assessed whereby DPMs, e-DPMs and Market-Makers would be debited $.22 for every contract they enter into on the Exchange other than Market-Maker-to-Market-Maker transactions, including all transaction between any combination of DPMs, e-DPMs, and Market-Makers. This fee would not apply to index options and options on ETFs, but would apply to options on HOLDRs. 7 6 On August 3, 2004, the Exchange amended its marketing fee to incorporate e-DPMs as part of the existing marketing fee. *See* Securities Exchange Act Release No. 50212 (August 18, 2004), 69 FR 52051 (August 24, 2004) (SR-CBOE-2004-55). 7 HOLDRs are trust-issued receipts that represent an investor's beneficial ownership of a specified group of stocks. *See* Interpretation and Policy .07 to CBOE Rule 5.3. The CBOE states that all funds generated by the marketing fee would be collected by the Exchange and recorded according to the DPM, station, and class where the options subject to the fee are traded (“Trading Crowds”). The money collected would be disbursed by the Exchange according to the instructions of the DPM. According to the Exchange, those funds would be available to the DPM solely for those Trading Crowds where the fee was assessed and could only be used by that DPM to attract orders in the classes of options for which the fee was assessed. The CBOE states that funds collected from e-DPMs would only be used to attract order flow for the classes in which the e-DPM is appointed. According to the CBOE, the Marketing Fee Oversight Committee, which the Exchange's Board of Directors has previously established, would conduct a quarterly review to determine the effectiveness of the proposed marketing fee and may recommend to the Exchange that it modify the fee in the future based upon its effectiveness. Similar to the current marketing fee program, the Exchange states that it would not be involved in the determination of the terms governing the orders that qualify for payment or the amount of any payment. The Exchange would provide administrative support for the program in such matters as maintaining the funds, keeping track of the number of qualified orders each firm directs to the Exchange, and making the necessary debits and credits to the accounts of the traders and the payment accepting firms to reflect the payments that are made. According to the CBOE, fees collected during a calendar month would only be available to the DPM for payment for that calendar month's order flow. The Exchange believes that the rate of $.22 would generally result in all funds being paid out at the end of the calendar month. The CBOE states that the Marketing Fee Oversight Committee would review, on a quarterly basis, any surplus. Should any surplus of the marketing fees at the end of each month occur, those funds would be carried forward to the following month. The Exchange would then refund such surplus at the end of the quarter, if any, on a pro rata basis based upon contributions made by the Market-Makers. The Exchange believes that refunds, if any, would be *de minimis* . Thus, the Exchange states that refunding any surplus at the end of a quarter, rather than on a monthly basis, would be more efficient for Exchange administration. The Exchange believes that the $.22 per contract is an equitable allocation of a reasonable fee among CBOE members and is designed to enable the CBOE to compete with other markets in attracting options order flow in multiply traded options. According to the CBOE, it is important to note that Exchange Market-Makers, DPMs, and e-DPMs would have no way of identifying prior to execution whether a particular order is from a payment-accepting firm, or from a firm that does not accept payment for their order flow. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(4) of the Act 9 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among the CBOE's members. 8 15 U.S.C. 78f(b). 9 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 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 The CBOE neither solicited nor received written comments with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 10 and subparagraph (f)(2) of Rule 19b-4 thereunder. 11 Accordingly, the proposal will take effect upon filing with the Commission. At any time within 60 days after the filing of the proposed rule change, the Commission may summarily abrogate the 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. 10 15 U.S.C. 78s(b)(3)(A)(ii). 11 17 CFR 240.19b-4(f)(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 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-2004-68 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-2004-68. 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 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-2004-68 and should be submitted on or before December 22, 2004. 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. E4-3403 Filed 11-30-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50732; File No. SR-CBOE-2004-71] Self-Regulatory Organizations; Chicago Board Options Exchange, Inc.; Notice of Filing of Proposed Rule Change To Modify the Distribution of the DPM Participation Entitlement for Orders Specifying a Preferred DPM Under CBOE Rule 8.87 November 23, 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 November 10, 2004, the Chicago Board Options Exchange, Inc. (“CBOE” 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 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 modify the distribution of the Designated Primary Market-Maker (“DPM”) participation entitlement for orders specifying a Preferred DPM under CBOE Rule 8.87. Below is the text of the proposed rule change. Proposed new language is in *italics;* proposed deletions are in brackets. Rule 8.87 Participation Entitlements of DPMs and e-DPMs
(a)No change.
(b)The participation entitlement for DPMs and e-DPMs (as defined in Rule 8.92) shall operate as follows:
(1)Generally.
(i)To be entitled to a participation entitlement, the DPM/e-DPM must be quoting at the best bid/offer on the Exchange.
(ii)A DPM/e-DPM may not be allocated a total quantity greater than the quantity that the DPM/e-DPM is quoting at the best bid/offer on the Exchange.
(iii)The participation entitlement is based on the number of contracts remaining after all public customer orders in the book at the best bid/offer on the Exchange have been satisfied.
(2)Participation Rates applicable to DPM Complex. The collective DPM/e-DPM participation entitlement shall be: 50% when there is one Market-Maker also quoting at the best bid/offer on the Exchange; 40% when there are two Market-Makers also quoting at the best bid/offer on the Exchange; and, 30% when there are three or more Market-Makers also quoting at the best bid/offer on the Exchange.
(3)Allocation of Participation Entitlement Between DPMs and e-DPMs. The participation entitlement shall be as follows: If the DPM and one or more e-DPMs are quoting at the best bid/offer on the Exchange, the e-DPM participation entitlement shall be one-half (50%) of the total DPM/e-DPM entitlement and shall be divided equally by the number of e-DPMs quoting at the best bid/offer on the Exchange. The remaining half shall be allocated to the DPM. If the DPM is not quoting at the best bid/offer on the Exchange and one or more e-DPMs are quoting at the best bid/offer on the Exchange, then the e-DPMs shall be allocated the entire participation entitlement (divided equally between them). If no e-DPMs are quoting at the best bid/offer on the Exchange and the DPM is quoting at the best bid/offer on the Exchange, then the DPM shall be allocated the entire participation entitlement. If only the DPM and/or e-DPMs are quoting at the best bid/offer on the Exchange (with no Market-Makers at that price), the participation entitlement shall not be applicable and the allocation procedures under Rule 6.45A shall apply. *(4)* *Allocation of Participation Entitlement Between DPMs and e-DPMs for Orders Specifying a Preferred DPM. Notwithstanding the provisions of subparagraph (b)(3) above, the Exchange may allow, on a class-by-class basis, for the receipt of marketable orders, through the Exchange's Order Routing System when the Exchange's disseminated quote is the NBBO, that carry a designation from the member transmitting the order that specifies a DPM or e-DPM in that class as the “Preferred DPM” for that order.* *In such cases and after the provisions of subparagraph (b)(1)(i) and
(iii)above have been met, then the participation entitlement applicable to the DPM Complex (as set forth in subparagraph (b)(2) above) shall be allocated to the Preferred DPM subject to the following:* *(i)* * If the Preferred DPM is an e-DPM and the DPM is also quoting at the best bid/offer on the Exchange, then 1/3 of the participation entitlement shall be allocated to the DPM and the balance of the participation entitlement shall be allocated to the Preferred DPM; * *(ii)* * If the Preferred DPM is the DPM and one or more e-DPMs are also quoting at the best bid/offer on the Exchange, then 1/3 of the participation entitlement shall be allocated to the e-DPMs and the balance of the participation entitlement shall be allocated to the Preferred DPM; * *(iii)* *If the Preferred DPM is not quoting at the best bid/offer on the Exchange then the participation entitlement set forth in subparagraph (b)(3) above shall apply;* *(iv)* *If only members of the DPM Complex are quoting at the best bid/offer on the Exchange then the participation entitlement applicable to the Preferred DPM shall be: 50% when there is one other member of the DPM Complex also quoting at the best bid/offer on the Exchange; 40% when there are two other members of the DPM Complex quoting at the best bid/offer on the Exchange; and, 30% when there are three or more members of the DPM Complex also quoting at the best bid/offer on the Exchange. The other members of the DPM Complex shall not receive a participation entitlement and the allocation procedures under Rule 6.45A shall apply; and* *(v)* *In no case shall a DPM/e-DPM be allocated, pursuant to this participation right, a total quantity greater than the quantity that the DPM/e-DPM is quoting at the best bid/offer on the Exchange.* *The Preferred DPM participation entitlement set forth in subparagraph (b)(4) of this Rule shall be in effect until [insert 1 year from SEC approval date] on a pilot basis.* 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 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 On July 12, 2004 the Commission approved a proposed rule change allowing competing remote electronic DPMs (“e-DPMs”). 3 Under these new rules, the Exchange may approve one or more e-DPMs for any option class trading on the CBOE's Hybrid System. Among other things, e-DPMs are required to meet certain quoting obligations in at least 90% of the series of each allocated class, 4 and to promote the Exchange in a manner that is likely to enhance the ability of the Exchange to compete for order flow. The Exchange has approved seven e-DPMs to date. Option classes have been allocated to these e-DPMs in a manner that has resulted in no option class having more than four e-DPMs (in addition to a floor-based DPM). 3 *See* Securities Exchange Act Release No. 50003 (July 12, 2004), 69 FR 43028 (July 19, 2004) (SR-CBOE-2004-24). 4 Alternatively, if a Request for Quote (“RFQ”) functionality is enabled for CBOE's Hybrid System, e-DPMs could be required to respond to 98% of RFQs. As part of SR-CBOE-2004-24, the CBOE also amended CBOE Rule 8.87 relating to the participation entitlement of DPMs to account for e-DPMs. 5 More specifically, CBOE Rule 8.87 now provides that the DPM Complex (the DPM and e-DPM(s) combined) participation entitlement rate is 30% when there are three or more Market-Makers also quoting at the best price, 40% when there are two Market-Makers also quoting at the best price, and 50% when there is one Market-Maker also quoting at the best price. The rule further details the manner in which the participation entitlement is divided between members of the DPM Complex. If the DPM and one or more e-DPMs are quoting at the best price, the collective e-DPM participation entitlement shall be one-half of the total entitlement and shall be divided equally by the number of e-DPMs quoting at the best price with the remaining half allocated to the DPM. If the DPM is not quoting at the best price and one or more e-DPMs are quoting at the best price, then the e-DPMs shall be allocated the entire participation entitlement (divided equally between them). If no e-DPMs are quoting at the best price and the DPM is quoting at the best price, then the DPM shall be allocated the entire participation entitlement. Lastly, if only the DPM and/or e-DPMs are quoting at the best price (with no Market-Makers at that price), the participation entitlement shall not be applicable and the allocation procedures under CBOE Rule 6.45A shall apply. The following example illustrates the application of the current participation entitlement for e-DPMs: 5 DPMs and e-DPMs are only entitled to a guaranteed participation percentage if they are quoting at the best price on the Exchange. Further, the participation entitlement is based on the number of contracts remaining after public customer orders on the book have been filled. Example 1. Assume the CBOE market is 1-1.15 and both sides equal the NBBO. Also assume that the DPM and three e-DPMs are part of the $1 bid along with ten Market-Makers and one customer order in the book for 10 contracts. A market order to sell 110 contracts will execute against the customer order in the book first for 10 contracts. After that, the participation right (which may or may not be used in the allocation of the order under CBOE Rule 6.45A) would be as follows: 15 contracts to the DPM and five contracts to each of the three e-DPMs. The Exchange now seeks to modify the participation entitlement for orders designated with a Preferred DPM (the modified participation entitlement is being proposed as a one-year pilot program). Only a DPM or e-DPMs allocated a particular option class would be eligible for the “preferred” designation in such class, and the Preferred DPM participation entitlement (described below) would only be granted if the Preferred DPM were quoting at the best price at the time the order is received and executed electronically by the Hybrid System. Thus, the preferred entitlement will only apply to orders executed at the NBBO. The proposed participation entitlement for the Preferred DPM is as follows: • If the Preferred DPM is an e-DPM and the DPM is also quoting at the best bid/offer on the Exchange, then 1/3 of the participation entitlement shall be allocated to the DPM and the balance of the participation entitlement shall be allocated to the Preferred DPM; • If the Preferred DPM is the DPM and one or more e-DPMs are also quoting at the best bid/offer on the Exchange, then 1/3 of the participation entitlement shall be allocated to the e-DPMs and the balance of the participation entitlement shall be allocated to the Preferred DPM; • If the Preferred DPM is not quoting at the best bid/offer on the Exchange then the Preferred DPM participation entitlement shall not apply and the “regular” participation entitlement set forth in subparagraph (b)(3) of CBOE Rule 8.87 shall apply; and, • If only members of the DPM Complex are quoting at the best bid/offer on the Exchange then the participation entitlement applicable to the Preferred DPM shall be: 50% when there is one other member of the DPM Complex also quoting at the best bid/offer on the Exchange; 40% when there are two other members of the DPM Complex quoting at the best bid/offer on the Exchange; and, 30% when there are three or more members of the DPM Complex also quoting at the best bid/offer on the Exchange. All members of the DPM Complex other than the Preferred DPM will not receive a participation entitlement (but may participate on a trade pursuant to CBOE Rule 6.45A). In no case shall a DPM/e-DPM be allocated a total quantity greater than the quantity that the DPM/e-DPM is quoting at the best bid/offer on the Exchange. Below are examples detailing how the proposed participation entitlement would operate: Example 2. (With DPM as the Preferred DPM)—Assume the CBOE market is 1-1.15 and both sides equal the NBBO. Also assume that the DPM and two e-DPMs are part of the $1 bid along with ten Market-Makers and one customer order in the book for 10 contracts. A market order designating the DPM as the Preferred DPM to sell 110 contracts will execute against the customer order in the book first for 10 contracts. After that, the participation entitlement (which may or may not be used in the allocation of the order under CBOE Rule 6.45A) would be as follows: 20 contracts to the DPM and five contracts to each of the two e-DPMs. Example 3. (With e-DPM as the Preferred DPM)—Same market as Example 2 above. A market order designating e-DPM #1 as the Preferred DPM to sell 110 contracts will execute against the customer order in the book first for 10 contracts. After that, the participation entitlement (which may or may not be used in the allocation of the order under CBOE Rule 6.45A) would be as follows: 20 contracts to e-DPM #1, 10 contracts to the DPM, and no entitlement for e-DPM #2. Example 4. (Only members of the DPM Complex quoting at the best price)—Assume the CBOE market is 1-1.15 and both sides equal the NBBO. Also assume that the DPM and two e-DPMs are the only quoters on the $1 bid. A market order designating e-DPM #1 as the Preferred DPM to sell 100 contracts is received. The participation entitlement (which may or may not be used in the allocation of the order under CBOE Rule 6.45A) would be as follows: 40 contracts to e-DPM #1. The balance of the order would be allocated to the DPM and e-DPM #2 pursuant to CBOE Rule 6.45A. Example 5. (Preferred DPM not quoting at best price)—Assume the CBOE market is 1-1.15 and both sides equal the NBBO. Also assume that the DPM and three e-DPMs are part of the $1 bid along with ten Market-Makers and one customer order in the book for 10 contracts. A market order designating e-DPM #4 (not part of $1 bid) as the Preferred DPM to sell 110 contracts will execute against the customer order in the book first for 10 contracts. After that, the participation entitlement (which may or may not be used in the allocation of the order under CBOE Rule 6.45A) would be as follows: 15 contracts to the DPM and 5 contracts to each of the three e-DPMs. e-DPM #4 would not participate. There would be no requirement that orders submitted to the Exchange carry a Preferred DPM designation. Further, by requiring DPMs to quote on the NBBO in order to receive a Preferred DPM participation entitlement, the Exchange believes that the proposed rule will significantly enhance quote competition and will result in greater liquidity for customers. Lastly, by providing e-DPMs with a greater participation right in cases where orders designate them as a Preferred DPM, the CBOE believes the proposal creates incentives for e-DPMs to competitively quote and to attempt to attract order-flow to the CBOE. This benefits the Exchange and its customers by adding liquidity to the CBOE's markets. 2. Statutory Basis The Exchange believes 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. By Rewarding DPMs and e-DPMs for making deep and tight markets and by enhancing their ability to compete for order flow, the Exchange believes the proposed rule change would:
(i)Promote just and equitable principles of trade;
(ii)serve to remove impediments to and perfect the mechanism of a free and open market and a national market system; and
(iii)help ensure that the Exchange can attract well capitalized firms as specialists which in turn serves to protect investors and the public interest. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). 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-2004-71 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-2004-71. 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 publicly available. All submissions should refer to File Number SR-CBOE-2004-71 and should be submitted on or before December 22, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3406 Filed 11-30-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50725; File No. SR-CBOE-2004-25] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval to Proposed Rule Change and Amendment No. 1 Relating to Designated Primary Market-Makers Obligations November 23, 2004. On April 23, 2004, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend its rules to clarify that CBOE Designated Primary Market Makers (“DPMs”) are required to make competitive markets on the Exchange and to otherwise promote the Exchange in a manner that is likely to enhance the ability of the Exchange to compete successfully for order flow in the classes they trade. On September 30, 2004, the CBOE filed Amendment No. 1 to the proposed rule change. 3 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced and superseded the CBOE's original 19b-4 filing in its entirety. The proposed rule change, as amended, was published for comment in the **Federal Register** on October 21, 2004. 4 The Commission received no comments on the amended proposal. 4 *See* Securities Exchange Act Release No. 50548 (October 15, 2004), 69 FR 61881. The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 5 and, in particular, the requirements of Section 6 of the Act 6 and the rules and regulations thereunder. The Commission finds specifically that the proposed rule change, as amended, is consistent with Section 6(b)(5) of the Act 7 in that it is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 5 In approving this proposed rule change, as amended, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 6 15 U.S.C. 78f. 7 15 U.S.C. 78f(b)(5). The Commission notes that the CBOE is amending the language used to describe its DPMs' current obligation under CBOE Rule 8.85(c)(ii) by using specific language that was more recently approved by the Commission to describe a similar obligation applicable to electronic DPMs (“e-DPMs”) under CBOE Rule 8.93(vi). The Commission further notes that proposed rule change, as amended, is simply making a clarifying change and will not in any way change the substance of the DPMs' current obligation. The Commission believes that the proposed rule change, as amended, will conform the language used to describe the same current DPM and e-DPM obligations, and therefore finds the proposal to be consistent with the Act. It is therefore ordered, pursuant to section 19(b)(2) of the Act, 8 that the proposed rule change (File No. SR-CBOE-2004-25), as amended, be, and it hereby is, approved. 8 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3407 Filed 11-30-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50714; File No. SR-NASD-2003-101] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval to Proposed Rule Change, and Notice of Filing and Order Granting Accelerated Approval to Amendments No. 1 and 2 Thereto Relating to Time Limits for Submission of Claims in Arbitration November 22, 2004. I. Introduction On June 19, 2003, the National Association of Securities Dealers, Inc. (“NASD” or “Association”), through its wholly-owned subsidiary, NASD Dispute Resolution, Inc. (“NASD Dispute Resolution”), filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend Rule 10304 of the NASD Code of Arbitration Procedure (“Code”) to clarify, among other effects of the rule, that arbitration eligibility determinations are made by arbitrators. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. The proposed rule change was published for comment in the **Federal Register** on August 1, 2003. 3 The Commission received eight comment letters on the proposal. 4 On September 23, 2003, NASD filed a response to the comment letters received as of that date and Amendment No. 1 to the proposed rule change. 5 On February 3, 2004, NASD filed Amendment No. 2 to the proposed rule change. 6 This order approves the proposed rule change, and issues notice of and grants accelerated approval to Amendments No. 1 and No. 2. 3 *See* Release No. 34-48225 (July 7, 2002), 68 FR 45299 (August 1, 2003). 4 *See* letters to Jonathan G. Katz, Secretary, Commission, from J. Pat Sadler, President, Public Investors Arbitration Bar Association, dated August 18, 2003 (“PIABA Letter”); Stephen G. Sneeringer, Senior Vice President and Counsel, A.G. Edwards & Sons, Inc., dated August 22, 2003 (“A.G. Edwards Letter”); Gregory M. Scanlon, Vice President & Senior Corporate Counsel, Charles Schwab & Co., Inc., dated August 26, 2003 (“Schwab Letter”); Herbert E. Pounds, Jr., Law Offices of Herbert E. Pounds, Jr., P.C., dated November 1, 2004 (“Pounds Letter”); James D. Keeney, P.A., dated November 8, 2004 (“Second Keeney Letter”); William S. Sheperd, Sheperd Smith & Edwards, L.L.P., dated November 10, 2004 (“Sheperd Letter”) Rosemary J. Shockman, President, Public Investors Arbitration Bar Association, dated November 1, 2004 (“Second PIABA Letter”); and letter from James D. Keeney, P.A., to Mr. Robert Love, Division of Market Regulation (“Division”), Commission, dated July 17, 2003 (“Keeney Letter”). 5 *See* Letter from Laura Gansler, Counsel, NASD Dispute Resolution, Inc., to Florence Harmon, Senior Special Counsel, Division, Commission, dated September 23, 2003, available at *http://www.nasdadr.com/rule_filings_index03.asp#03-101* (“Amendment No. 1”). 6 *See* Letter from Laura Gansler, Counsel, NASD Dispute Resolution, Inc., to Catherine McGuire, Chief Counsel, Division, Commission, dated February 3, 2004, available at *http://www.nasdadr.com/rule_filings_index03.asp#03-101* (“Amendment No. 2”). II. Description of the Proposal A. Text of the Proposed Rule Change NASD proposes to amend its rules governing arbitration to clarify and limit the effect of its six-year time limitation for the submission of claims. Below is the text of the proposed rule change. Proposed new language is *italicized* and proposed deletions are in [brackets]. Rule 10304. Time Limitation Upon Submission.
(a)No dispute, claim, or controversy shall be eligible for submission to arbitration under this Code where six
(6)years have elapsed from the occurrence or event giving rise to the act of dispute, claim, or controversy. *The panel will resolve any questions regarding the eligibility of a claim under this Rule.*
(b)*Dismissal of a claim under this Rule does not prohibit a party from pursuing the claim in court. By requesting dismissal of a claim under this Rule, the requesting party agrees that if the panel dismisses a claim under the Rule, the party that filed the dismissed claim may withdraw any remaining related claims without prejudice and may pursue all of the claims in court.* ( *c* ) This Rule shall not extend applicable statutes of limitations[, nor shall it apply to any case which is directed to arbitration by a court of competent jurisdiction.] *; nor shall the six-year time limit on the submission of claims apply to any claim that is directed to arbitration by a court of competent jurisdiction upon request of a member or associated person.* B. Description of the Proposed Rule Change NASD has proposed to amend Rule 10304 of the Code to clarify certain of its effects, particularly in light of the ruling of the United States Supreme Court in *Howsam* vs. *Dean Witter Reynolds, Inc.* 7 In *Howsam* , the Court held that the issue of whether a claim is ineligible for arbitration under Rule 10304 of the Code is presumptively a matter for arbitrators to decide. Rule 10304 of the Code provides that a claim is ineligible for arbitration in the NASD forum if six or more years have elapsed from the occurrence or event giving rise to the claim. Rule 10304 of the Code, however, currently does not state expressly whether the eligibility of a claim is determined by arbitrators or by the courts. In its proposal, NASD explained that under current NASD practice, arbitrators resolve questions concerning whether a particular claim falls with the six-year time limit, but noted that the issue has generated a significant amount of collateral litigation with differing results, leading to uncertainty and confusion among forum users until the Supreme Court's decision in *Howsam* . 7 537 U.S. 79 (Dec. 10, 2002). NASD therefore has proposed several amendments to Rule 10304 of the Code. First, NASD proposes to amend Rule 10304 of the Code to state explicitly that eligibility determinations are made by the arbitrators. Second, NASD proposes to amend the provision in the current eligibility rule to provide that the rule does not apply to claims ordered to arbitration by a court at a member's or associated person's request. Finally, NASD proposes to amend Rule 10304 of the Code to provide that by requesting dismissal of a claim on eligibility grounds in the NASD forum, the requesting party is agreeing that the party that filed the dismissed claim may withdraw all related claims without prejudice and may pursue all of the claims in court. Moreover, by a companion rule filing being approved today, Rule 10304 of the Code and all other NASD arbitration rules would be incorporated into predispute arbitration agreements governing arbitrations proceedings that take place in NASD forums. 8 8 *See* Release No. 34-50713. III. Summary of Comments and NASD's Response The Commission received eight comments on the proposal. 9 PIABA generally supported the proposed rule change as “far superior to the rule in its present form,” although PIABA would prefer elimination of Rule 10304 of the Code. 10 PIABA suggested amending the rule, however, to provide that motions to dismiss a claim under the rule be filed within 30 days of appointment of an arbitration panels. 11 NASD responded that arbitrators, rather than the Code, should set deadlines for raising and responding to eligibility challenges on a case-by-case basis, generally in Initial Prehearing Conferences, given the varying complexity of cases. 12 9 *See* note 4, *supra* . 10 *See* PIABA Letter. 11 *Id.* 12 *See* Amendment No. 1. Due to a misplaced bracket in the original filing, NASD deleted the entire last sentence of Rule 10304(a) of the Code. Rather, NASD had intended to delete only the following text: “nor shall it apply to any case which is directed to arbitration by a court of competent jurisdiction.” NASD corrected this typographical error in Amendment No. 1. In Amendment No. 2, this text was moved to Rule 10304(c) and further amended in response to certain comments. Mr. Keeney objected to the proposed rule change, arguing that the current six-year eligibility rule should be eliminated entirely, on the basis that it is “hostile to investors.” 13 Mr. Keeney also took issue with the proposed amendment to allow parties whose claims are dismissed under Rule 10304 of the Code to withdraw any remaining related claims and pursue them in court, claiming that this provision forces claimants to choose between bifurcating or abandoning older claims, or pursuing the entire case in court. 14 NASD responded to these concerns, disagreeing that the rule is “hostile to investors” and, in contrast, stated that the purpose of the rule is to provide claimants with more choices with respect to where they can pursue related claims, a result that is in the best interest of investors. 15 Finally, Mr. Keeney objected to the elimination of the provision in Rule 10304 of the Code that the rule would not apply to claims ordered to arbitration by a court, on the basis that this would allow industry parties to “whipsaw” claimants between court and arbitration. 16 In response, NASD is proposing to amend the exemption, rather than delete it, to provide that the six-year time limit would not apply to claims ordered to arbitration by a court at a member's or associated person's request. 17 13 *See* Keeney Letter. 14 *Id.* 15 *See* Amendment No. 1 16 *See* Keeney Letter. 17 Mr. Keeney's concern also would be addressed in part by SR-NASD-98-74, approved today in Release No. 34-50713, which would amend NASD Rule 3110 so that a predispute arbitration agreement would prohibit members from seeking to compel arbitration of some but not all of a customer's court-filed claims, thus preventing members from forcing customers to litigate in two forums. NASD Rule 3110 also explicitly incorporates the rules of the arbitration forum in which the claim is filed into the predispute arbitration agreement. *See supra* n. 8. Schwab also opposed the proposed rule change. Schwab contended that the anti-bifurcation provision would encourage claimants intentionally to include ineligible claims in their Statement of Claim, resulting in respondents having to choose between arbitrating stale claims, or seeking dismissal of an older claim based on eligibility while having to litigate remaining claims in court. 18 NASD acknowledged that there was a theoretical potential for abuse of this provision, but responded that the benefits of eliminating the issue of claimants being forced to bifurcate claims (as under the current rule) outweighs this concern. 19 NASD also noted that the anti-bifurcation provision applies to related claims, and rejected Schwab's assertion that the term “related claims” should be defined in the rule, maintaining that this determination is most properly made by arbitrators on a case-by-case basis. 20 In addition, Schwab noted that Rule 10304 of the Code does not expressly state that only a respondent may request dismissal of a claim based on eligibility, leading to the possibility that a claimant could request such a dismissal to pursue related claims in court. 21 NASD responded that this is not a practical concern because the rule change is not intended to apply to parties who move to dismiss their own claims. 22 A.G. Edwards objected to the elimination of the portion of Rule 10304(a) of the Code that states that “This Rule shall not extend applicable statutes of limitations. * * *” 23 NASD responded by explaining that this comment resulted from a typographical error in the originally filed proposed rule change. NASD had intended to leave this phrase in Rule 10304(a) of the Code, while deleting only the text that followed: “nor shall it apply to any case which is directed to arbitration by a court of competent jurisdiction.” A misplaced bracket made it appear as though NASD intended to delete the entire sentence. 24 NASD has corrected this error in Amendment No. 1 and, in Amendment No. 2, further amended this provision in response to Mr. Keeney's comments, as discussed above. 25 18 *See* Schwab Letter. 19 *See* Amendment No. 1. 20 *See* Amendment No. 1. 21 *See* Schwab Letter. 22 *See* Amendment No. 1. 23 *See* A.G. Edwards Letter. 24 *See* Amendment No. 1; Amendment No. 2. 25 *ID.* Mr. Pounds, while not supportive of every aspect of the rule change, urged approval of the rule as soon as possible to prevent claimants from ending up without a forum in which to bring their claims. 26 In second comment letters, Mr. Keeney and PIABA urged a prompt resolution of this rule filing. 27 Mr. Sheperd similarly urged a prompt resolution of this rule filing. 28 26 *See* Pounds Letter. 27 *See* Second Keeney Letter and Second PIABA Letter. 28 *See* Sheperd Letter. IV. Discussion and Commission Findings After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association 29 and, in particular, the requirements of section 15A of the Act 30 and the rules and regulations thereunder. The Commission finds specifically, that the proposed rule change, as amended, is consistent with section 15A(b)(6) of the Act, 31 which requires, among other things, that the rules of an association 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. 32 29 In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formations. 15 U.S.C. 78c(f). 30 15 U.S.C. 78 *o* -3. 31 15 U.SC. 78 *o* -3(b)(6). 32 *Id.* The Commission believes that the proposed rule is an appropriate response to the U.S. Supreme Court's holding in *Howsam* and clarifies Rule 10304 of the Code in a manner consistent with the Act. The specific amendments to Rule 10304 of the Code proposed by NASD—that questions of eligibility are to be resolved by the arbitration panel, that dismissal under the rule will not preclude later claims in court, and that respondents may not force claimants to bifurcate their claims under the rule—provide needed guidance to parties arbitrating disputes in the NASD's forum. The Commission believes that these amendments will provide certainty, reduce the cost and delay caused by collateral litigation, and streamline the NASD arbitration process. Further, the Commission has carefully considered the suggestions and concerns submitted by commenters and has concluded that NASD has responded appropriately to them. In response to PIABA's suggestion for a 30-day deadline to file a motion to dismiss under Rule 10304 of the Code, the Commission finds consistent with the Act the NASD's position that arbitrators, rather than the Code, should set deadlines for raising and responding to eligibility challenges on a case-by-case basis. The Commission also finds consistent with the Act the NASD's position allowing parties whose claims are dismissed under Rule 10304 of the Code to withdraw any remaining related claims and to pursue all of the claims in court. Both Mr. Keeney and Schwab have objected to this provision of Rule 10304 of the Code for different reasons. Mr. Keeney has asserted that this provision would force claimants to choose between bifurcating or abandoning older claims, or pursuing the entire case in court. Schwab has asserted that this provision may result in respondents having to choose between arbitrating stale claims, or seeking dismissal of an older claim based on eligibility while having to litigate remaining claims in court. While claimants would have to address statute of limitations issues if their claims are ineligible for arbitration, and respondents would have to address possible bifurcation if they request dismissal under Rule 10304 of the Code, the Commission finds that Rule 10304 of the Code, as proposed, is consistent with the Act. The Commission observes that the term “related claims” is intended to be interpreted broadly, given the purposes of the rule and the parallel language in a companion rule filing approved today. 33 33 *See supra* n. 8. The Commission also finds that the proposed amendment of the Rule's provision that the six year time limit does not pertain to claims ordered to arbitration by a court at a member's or associated person's request is consistent with the Act. The provision limits the potential litigation strategies that could impede the resolution of disputes and would address the concern that industry parties could force claimants to litigate in two forums. Moreover, the Commission also notes that pursuant to the companion filing approved today, the specific requirements of this and other provisions of the Code explicitly would be incorporated into the parties' predispute arbitration agreement. 34 and would be given effect under applicable law. 34 *Id* . The Commission finds good cause for accelerating approval of Amendment Nos. 1 and 2 prior to the thirtieth day after the date of publication of notice thereof in the **Federal Register** . Amendment No. 1 merely corrects a typographical error. Amendment No. 2, as noted above, amends Rule 10304(c), so that concerns of claimants or industry parties abusing Rule 10304, as amended, are addressed appropriately. Furthermore, concurrent approval of Amendment Nos. 1 and 2 will enable NASD to announce promptly the final rules, in conjunction with those being approved today in the companion filing, which changes would incorporate Rule 10304, as amended, into any predispute arbitration agreement governing proceedings held in a NASD forum. Concurrent approval of Amendment Nos. 1 and 2 and SR-NASD-2003-101 with the companion rule filing will lessen member confusion as to the final requirements of both rule filings, allow their effective dates to be the same, and thereby permit members to make the necessary changes to comply with them in a timely fashion. 35 35 The Commission further notes that both rule filings and amendments thereto have been available since their respective filing dates on *www.nasdadr.com.* V. 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-2003-101 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 submission should refer to file Number SR-NASD-2003-101. 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/rule/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 Pubic 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-2003-101 and should be submitted on or before December 22, 2004. VI. Conclusion *It is therefore ordered,* pursuant to section 19(b)(2) of the Act, 36 that the proposed rule change (File No. SR-NASD-2003-101) be, and it hereby is, approved and Amendment Nos. 1 and 2 are approved on an accelerated basis. 36 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 37 37 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. 04-26460 Filed 11-30-04; 8:45 am]
Connectionstraces to 5
6 references not yet in our index
  • 17 CFR 240.19
  • 15 USC 78(b)
  • 15 USC 78(b)(5)
  • 537 U.S. 79
  • 15 USC 78
  • 37 CFR 200.30-3(a)(12)
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Notices
SECURITIES AND EXCHANGE COMMISSION
U.S.C.§ 78s
U.S.C.§ 78c
U.S.C.§ 552
C.F.R.§ 200.30-3
U.S.C.§ 78f
SCOTUS537 U.S. 79
Cite17 CFR 240.19
Cite15 USC 78(b)
Cite15 USC 78(b)(5)
Cite15 USC 78
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