Rules and Regulations. SECURITIES AND EXCHANGE COMMISSION
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BILLING CODE 8010-01-M SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50811; File No. SR-Amex-2004-98] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Temporarily Suspend the Specialist's and Registered Traders' Transaction Charges for the Trading of Nasdaq-100 Index Tracking Stock December 7, 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 December 1, 2004, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in items I, II, III below, which Items have been prepared by the Exchange.
Amex has designated the proposed rule change as “establishing or changing a due, fee, or other charge” under section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(2) thereunder, 4 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 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Amex proposes to amend the Amex Equity and Exchange Traded Funds and Trust Issued Receipts Fee Schedules to temporarily suspend the specialist's and registered traders' transaction charges for the trading of Nasdaq-100 Index Tracking Stock (Symbol:
QQQQ) pursuant to the Nasdaq Unlisted Trading Privileges Plan. The text of the proposed rule change is available at the Office of the Secretary, Amex, and at the Commission. 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 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 Statutory Basis for, the Proposed Rule Change 1. Purpose Effective December 1, 2004, the Nasdaq-100 Index Tracking Stock® listed on the Nasdaq Stock Market, Inc. It trades on Nasdaq under the symbol QQQQ.
The Amex trades the QQQQ on an unlisted trading privileges basis. Currently, transaction charges for the specialist and registered traders are $0.0037 ($0.37 per 100 shares) and $0.0038 ($0.38 per 100 shares) respectively. These transaction charges are also subject to a $300 per trade maximum. The Amex proposes to amend the Amex Equity and Exchange Traded Funds and Trust Issued Receipts Fee Schedules to suspend the transaction charges for the specialist and registered traders until December 31, 2004.
The Exchange believes that this fee suspension would encourage competition among markets trading QQQQ and enhance the Amex's competitiveness in trading this security. 2. Statutory Basis The Amex believes the proposed rule change is consistent with section 6(b) of the Act, 5 in general, and furthers the objectives of section 6(b)(4) of the Act, 6 in particular, in that it is intended to provide for the equitable allocation of reasonable dues, fees and other charges among its members and issuers and other persons using its facilities. 5 15 U.S.C. 78f(b). 6 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. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, and, therefore, has become effective pursuant to section 19(b)(3)(A)(ii) of the Act 7 and subparagraph (f)(2) of Rule 19b-4 thereunder. 8 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. 7 15 U.S.C. 78s(b)(3)(A)(ii). 8 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-Amex-2004-98 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-2004-98. 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, 450 Fifth Street, NW., Washington, DC 20549.
Copies of such filing will also 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-2004-98 and should be submitted on or before January 4, 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. E4-3610 Filed 12-13-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50814; File No. SR-BSE-2004-52] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to Market Maker Quote Obligations Under the Rules of the Boston Options Exchange Facility December 7, 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 24, 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, II, and III below, which items have been prepared by the Exchange. On December 3, 2004, the BSE filed an 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 In Amendment No. 1, the BSE made technical, non-substantive changes to the rule text.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt a rule under the rules of the Boston Options Exchange Facility (“BOX”) to provide BOX Market Makers protection from the unreasonable risk associated with communication failures and systemic errors. The text of the proposed rule change, as amended, is below. Proposed new language is in *italics.* Chapter VI. Sec. 12 Standard Market Maker Protection Mechanism
(a)Trade Counter *The Trading Host will maintain a “trade counter” for each Market Maker on each class to which the Market Maker is appointed. This trade counter will be incremented by one every time the Market Maker executes a trade of at least 10 contracts on any series in the appointed class. Whenever the Trading Host receives from the Market Maker a message to update or refresh any of his quotes on any of the options series in the same class, the trade counter at the Trading Host for that class will be reset to zero.*
(b)Standard Market Maker Protection Mechanism *The Trading Host will implement the Standard Market Maker Protection Mechanism on an appointed class whenever the following conditions are met:* *i.* *The trade counter has reached “n” executions against the quotes of the Market Maker in the Market Maker's appointed class; and* *ii.* *The Trading Host has not received from the Market Maker a message to update or refresh any of his quotes on any of the options series in the same class before the “n” executions have occurred.* *When the above conditions are met, the Trading Host will automatically cancel all quotes posted by the Market Maker on that class by generating a “bulk cancel” message.* *(c)* *The bulk cancel message will have the same time priority as any other quote or order message received by BOX. Any orders or quotes that matched with the Market Maker's quote and were received by the Trading Host prior to the receipt of the bulk cancel message will be automatically executed. Orders or quotes received by the Trading Host after receipt of the bulk cancel message will not be executed against the Market Maker. At any time the Market Maker may update or refresh any of its quotes for any of the options series in the same class and reset the trade counter to zero.* *(d)* *The Board shall determine the appropriate trade counter threshold of “n” executions required in paragraph
(b)above to implement the Standard Market Maker Protection Mechanism. In no case will the threshold be lower than five.* Sec. 13 Advanced Market Maker Protection Mechanism *(a)* *The Advanced Market Maker Protection Mechanism is enabled (or disabled ) for an options class when a Market Maker sends an Advanced Market Maker Protection enabling (or disabling ) message to the Trading Host. Unless enabled, the Advanced Market Maker Protection Mechanism is disabled for all options classes.* *(b)* *When the Advanced Market Maker Protection Mechanism is enabled for a Market Maker's appointed options class, any “bulk quote” message sent by the Market Maker on that class is automatically rejected as soon as one of the following activating events occurs:* *i.* *The Market Maker's Standard Market Maker Protection Mechanism is triggered for that class, pursuant to Section 12; or* *ii.* *The Market Maker activates the Panic Quote function for that class pursuant to Section 14.* *(c)* *Once the Advanced Market Maker Protection Mechanism has been activated for an options class, any bulk quote messages sent by the Market Maker on that class will continue to be rejected until the Market Maker sends an Advanced Market Maker Protection enabling or disabling message to the Trading Host.* *(d)* *For purposes of this Section 13, a “bulk quote” message is a single message from a Market Maker that simultaneously updates all of the Market Maker's quotes in multiple series in a class at the same time.* Sec. 14. Panic Quote *A Market Maker may simultaneously cancel all its quotes in an assigned class by sending a Panic Quote message to the Trading Host through the Panic Quote channel, or otherwise requesting BOX operations staff to manually generate the Panic Quote message to the Trading Host in order to cancel all of the Market Maker's quotes in that class.* 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 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 purpose of the proposed rule change is to provide all BOX Market Makers protection from the unreasonable risk of multiple nearly simultaneous executions caused by communication failures or systemic errors. Like auto-quote systems used on other options exchanges, the primary method for Market Makers to update their quotes on BOX is to post and update quotes on multiple series of options at the same time through the use of “bulk quotes”. 4 Generally, these quotes are based on the Market Maker's proprietary pricing models that rely on various factors, including the price of the underlying security and that security's market volatility. As these variables change, a Market-Maker's pricing model and automated quote system will continuously enter bulk quote updates for most or all series in the class. 4 A “bulk quote” message is a single message from a Market Maker that simultaneously updates all of the Market Maker's quotes in multiple series in a class at the same time. In most instances a Market Maker sends a message to BOX to update or refresh its quote on at least one series in its assigned class after each execution by the Market Maker in that options series or any movement in the underlying security's price. Several executions in the class without any message or quote update from the Market Maker would indicate some type of technical breakdown in either the Market Maker's communication link with BOX or the Market Maker's automated trading and quotation system. If a Market Maker's communication link with BOX is lost or delayed and the Market Maker cannot effectively update its quotes after an execution or when the underlying security's price moves, then the Market Maker's stale quotes are vulnerable to being hit and automatically executed across all the series in the assigned class nearly simultaneously. Similarly, if the Market Maker's pricing model and automated quote update system malfunctions, the Market Maker's bulk quote update could inadvertently automatically execute across all the series in the assigned class. These nearly simultaneous multiple executions can create huge unintended principal positions for the Market Maker and expose the Market Maker to unnecessary market risk. Firm risk management procedures dictate that Market Makers must take into account the possibility of such errors and the corresponding risk to the Market Maker and the firm. As a result, the BSE believes that Market Makers widen their quotes, quote less aggressively and limit their quote size in order to avoid such unintended executions and the attendant risks and costs, all to the detriment of customers and other market participants. The proposed rule addresses these concerns. Standard Market Maker Protection The Standard Market Maker Protection feature on BOX would protect all Market Makers from excessive multiple and unintended automatic executions due to the following: • Communication problems preventing the Market Maker from making intended quote updates. • Technical or systemic errors causing Market Maker quote update errors. • Bulk quotes unintentionally “sweeping the book” or being “swept”. The Standard Market Maker Protection Mechanism would begin with a “trade counter” for each class where the Market Maker has a market making appointment. This trade counter would be incremented by one every time the Market Maker executes a trade of at least 10 contracts on any series of the assigned class. The trade counter would reset every time the Market Maker sends a quote update or refresh message to BOX on any one of the series within the class. The Boston Options Exchange Regulation LLC (“BOXR”) Board would define a threshold number for the trade counter to reach (currently determined to be five) 5 to trigger the implementation of the Standard Market Maker Protection Mechanism. This would limit the number of consecutive executions a given Market Maker could have automatically executed on an assigned class without BOX receiving any message from the Market Maker. 5 In no case will the threshold be less than five. Once the trade counter has reached the defined threshold number of five, the Trading Host would automatically cancel all quotes posted by that Market Maker on that class by generating a bulk cancel message. The bulk cancel message would have the same time priority as any other quote update or order message the Trading Host receives, so that any orders or quotes that matched with the Market Maker's quote and were received by the Trading Host prior to the receipt of the cancel message would be automatically executed pursuant to the BOX rules. Orders or quotes received by the Trading Host after receipt of the cancel message would not be executed against the Market Maker. As soon as the Standard Market Maker Protection Mechanism is triggered, the Market Maker would receive a message to confirm the cancellation of the Market Maker's quotes on the given class. The Market Maker could respond with a quote update or refresh, or no reply, which BOX would assume means a communication or system problem with the Market Maker. At any time the Market Maker may update or refresh any of its quotes for any of the options series in the given class and reset the trade counter to zero. Advanced Market Maker Protection The Advanced Market Maker Protection Mechanism would provide Market Makers with an additional feature that may be enabled/disabled on demand by the Market Makers using a special message sent to the Trading Host. The Market Maker would enable the mechanism by sending BOX an Advanced Market Maker Protection enabling message. When enabled, the Advanced Market Maker Protection feature would cause BOX to automatically reject any bulk quote message sent by the Market Maker on a specific appointed class as soon as one of the following events occurs: • The Market Maker's Standard Market Maker Protection Mechanism is triggered for the given class. • The Panic Quote function is triggered by the Market Maker for the given class. 6 6 *See* discussion of Panic Quote below. Quoting for the Market Maker on an options class would be disabled once the Advanced Market Maker Protection Mechanism is triggered for such class. 7 Any subsequent bulk quote update message would be rejected. Quoting for the Market Maker would only be reactivated by the Market Maker sending to BOX a new Advanced Market Maker Protection enabling message. 7 No other options classes would be affected. Standard and Advanced Market Maker Protection These mechanisms would protect both Market Maker quotes currently posted and in the BOX book and those incoming bulk quotes that a Market Maker may erroneously generate as part of an automatic update. For example, this would mean that a new bulk quote message from a Market Maker that is immediately executable across multiple series would not generate a number of executions greater than the defined threshold number ( *i.e.* would not allow the Market Maker to unintentionally sweep the book). Without these protection mechanisms multiple unintentional trades could automatically occur. These executions would not properly reflect the true nature of the market and would subject Market Makers to unreasonable market risk and multiple execution and clearing fees, with no real economic justification behind the trades. 8 The Exchange believes the proposed rule change would reduce these inefficiencies and risks by preventing a BOX Market Maker from erroneously trading automatically multiple times. Under normal circumstances, BOX Market Maker quotes do match and are automatically executed; however, these are usually only on a few series in a class and involve immediate quote updates after an execution. The trade counter would not reach the threshold level under most circumstances. 8 In many instances such trades qualify under the BOX obvious error rule and are busted. However, not all trades created by these circumstances technically qualify. The Market Maker Protection Mechanism would also spare BOXR from expending considerable resources to address obvious errors that arise in this manner. The Exchange believes these protection mechanisms would eliminate trades that are involuntary, the result of technological error or inaccuracy, and that impede certain liquidity providers' ability to competitively quote. Also, the Exchange believes the protection mechanisms would increase the liquidity available in the BOX market and would enhance competition because Market-Makers would be better able to quote larger size aggressively with fewer concerns over technological breakdowns. Panic Quote A Market Maker may simultaneously cancel all its quotes in an assigned class by triggering the Panic Quote function. The Panic Quote function would be triggered by the Market Maker sending a Panic Quote message to the BOX Trading Host through the Panic Quote channel, or otherwise requesting BOX operations staff to manually generate the Panic Quote message to the Trading Host in order to cancel all of the Market Maker's quotes in that class. Triggering the Panic Quote function would also trigger the Advanced Market Maker Protection Mechanism, and all subsequent bulk quote messages would be rejected by the BOX Trading Host until the Market Maker sends a new Advanced Market Maker Protection enabling message. These market maker protections do not relieve a Market Maker's obligations pursuant to Chapter VI, Sections 5 and 6 of the BOX Rules; in particular, Chapter VI, Section 6(d) of the BOX Rules which addresses a Market Maker's obligation to enter continuous quotations for the options classes to which it is appointed. After a market maker protection has been utilized, Market Makers are expected to resume entering continuous quotations for the options classes to which they are appointed as soon as practicable. 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of section 6(b) of the Act, 9 in general, and section 6(b)(5) of the Act, 10 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. 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 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 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 Exchange 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-BSE-2004-52 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-2004-52. 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 publicly available. All submissions should refer to File Number SR-BSE-2004-52 and should be submitted on or before January 4, 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. E4-3612 Filed 12-13-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50813; File No. SR-ISE-2004-31] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to System-Assisted Quotation Services December 7, 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 30, 2004, the International Securities Exchange, Inc. (“ISE” 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 Exchange. On November 16, 2004, the ISE filed 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 Amendment No. 1 replaced and superseded 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 codify in its rules descriptions of certain functionality it provides to market makers to assist them in meeting their quotation obligations. The text of the proposed rule change, as amended, is below. Proposed new language is in *italics.* Rule 804. Market Maker Quotations (a)-(f) No change. *(g) Automated Quotation Adjustments. A market maker may establish parameters by which the Exchange will automatically restate:* *(1) the prices of a market maker's quotations in all series of an options class, at prices specified by the market maker, if the market maker trades, in the aggregate, a specified number of contracts (established by the market maker), within an Exchange-established time frame, in that class;* *(2) the price of a market maker's quotations in an options series if the number of contracts that the market maker is willing to buy or sell at a specified price is exhausted; and* *(3) the size of a market maker's quotation in an options series to 10 contracts if, as a result of an execution in that series, the market maker's quotation is decremented below that size and the Exchange's best bid (offer) would be less than 10 contracts.* 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 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 purpose of this rule change is to codify in the ISE's rules certain services the ISE offers market makers to help them manage their quotations. By way of background, ISE Rules 803 and 804 require market makers to maintain continuous and firm quotations. To comply with this requirement, each ISE market maker employs its own sophisticated proprietary quotation and risk management systems to determine the prices and sizes at which its quotes. The ISE system itself also contains several voluntary tools that market makers can use to assist them in meeting their quotation obligations. ISE market makers are not required to use the ISE-provided functionality and can program their own systems to perform the same functions if they prefer. The three tools the ISE offers are: • “Speed bump” functionality. A market maker's risk in an options class is not limited to the risk in a single series of that class. Rather, a market maker faces exposure in all series of a class, requiring that the market maker off-set or otherwise hedge its overall position in a class. The speed bump functionality helps a market maker limit this overall exposure and risk. Specifically, the functionality permits a market maker to establish parameters in the central system to move its quotations in all series of an option to an inferior price when the market maker trades a specified number of contracts in that class as a whole within a fixed time period. That time period currently is a rolling 30 seconds. 4 Market Makers can specify a number of contracts (“the exposure limit”) by class. For example, if a market maker establishes an exposure limit of 1,000 contracts in XYZ options, the system will move the market maker's quotations in all series of XYZ options to an inferior price following one or more transactions that result in the aggregate execution of 1,000 contracts in XYZ options, regardless of the series in which those trades occur. By limiting its exposure across series, a market maker is better able to quote aggressively in an option, knowing that the speed bump will automatically move all its quotations in a class when its exposure limit is hit. 4 If the ISE were to change this time period it would do so in a notice to market makers. • “Tick-worse” functionality. Among other things, ISE Rules 803 and 804 require:
(1)Primary Market Makers to provide continuous quotations in all their assigned options; and
(2)Competitive Market Makers generally to provide continuous quotations in 60 percent of their assigned options. If the size of a market maker's quotation in a series is exhausted, ISE rules effectively require the market maker to immediately establish a new quotation, either at the same or different price. ISE provides market makers with “tick-worse” functionality that allows market makers to pre-define the prices and sizes at which the system will automatically move their quotation following an execution that exhausts the size of their existing quotation. Having this functionality in the central exchange system—rather than having market makers themselves send refreshed quotations when they receive a report of an execution exhausting their quotations—helps market makers maintain continuous quotations when their displayed quotations are exhausted. • “Step-up” functionality. Until recently, ISE Rule 804(b) required that all of the ISE's disseminated quotations be for at least 10 contracts. To achieve compliance with that requirement, the rule prohibited market makers from initially entering a quotation of less than 10 contracts. Furthermore, if a market maker's quotation fell below 10 contracts due to executions at the quotation price, and the disseminated ISE quotation would be less than 10 contracts, ISE Rule 804(b) also required market makers to reestablish their quotation for at least 10 contracts (at the same price or a different price). In order to help market makers meet these obligations, the ISE developed the “step-up” functionality permitting a market maker to refresh its quotation to 10 contracts when an execution decrements the quotation below that size (if the best disseminated quotation on the Exchange would be less than 10 contracts). The Commission recently approved amendments to ISE Rule 804 eliminating the requirement that the ISE disseminate quotations of at least 10 contracts. 5 Under ISE Rule 804(b), while market makers still must initially establish quotations of at least 10 contracts, they do not need to reestablish 10-contract quotes if their quotation is decremented due to executions at the quotation price. Although there is no current regulatory need for the step-up functionality, certain market makers continue to use it to maintain 10 contract quotations, and the ISE continues to offer it as a voluntary tool. 5 *See* Securities Exchange Act Release No. 49602 (April 22, 2004), 69 FR 23841 (April 30, 2004) (SR-ISE-2003-26). 2. Statutory Basis The Exchange believes the basis under the Act for this proposed rule change is the requirement under section 6(b)(5) 6 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in 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 rule change will codify the ability of ISE members to use ISE-provided functionality to maintain competitive and liquid quotations. 6 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change does not 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 Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. 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 Exchange 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-ISE-2004-31 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-2004-31. 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 publicly available. All submissions should refer to File Number SR-ISE-2004-31 and should be submitted on or before January 4, 2005. 7 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 7 Jill M. Peterson, Assistant Secretary. [FR Doc. E4-3611 Filed 12-13-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50820; File No. SR-MSRB-2004-06] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Approving Proposed Rule Change To Create Real-Time Transaction Price Service and Propose Annual Subscription Fee December 8, 2004. On October 26, 2004, the Municipal Securities Rulemaking Board (“MSRB” or “Board”), filed with the Securities and Exchange Commission (“SEC” or “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 create the Real-Time Transaction Price Service (the “Service”) and propose an annual subscription fee for the Service. The proposed rule change was published for comment in the **Federal Register** on November 4, 2004. 3 The Commission received one comment letter regarding the proposal. 4 On November 30, 2004, the MSRB filed a response to the comment letter. 5 This order approves the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 50605 (October 29, 2004), 69 FR 64346 (November 4, 2004) (“Notice”). 4 *See* e-mail letter from Al Adler, CEO, Munibond.com, to *rule-comments@sec.gov,* dated November 4, 2004 (“Mr. Adler's Letter”). 5 *See* letter from Jill C. Finder, Assistant General Counsel, MSRB, to Martha M. Haines, Chief, Office of Municipal Securities, Division of Market Regulation, Commission, dated November 30, 2004 (“MSRB's Response Letter”). The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB 6 and, in particular, the requirements of Section 15B(b)(2)(C) of the Act and the rules and regulations thereunder. 7 Section 15B(b)(2)(C) of the Act requires, among other things, that the MSRB's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities, to remove impediments to and perfect the mechanism of a free and open market in municipal securities, and, in general, to protect investors and the public interest. 8 In particular, the Commission finds that the proposed rule change will increase transparency and facilitate the fair pricing of municipal securities transactions. 6 In approving this rule the Commission notes that it has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78o-4(b)(2)(C). 8 *Id.* Mr. Adler's Letter expressed concerns about the pricing of the Real-Time Transaction Price Service, stating that the Service will increase the abuses and inequalities in the municipal bond market and will be of immediate benefit to large bond dealers at the expense of small investors. Mr. Adler stated that the delivery fee was drastically inflated to discourage small bond investors from using the Service and that the MSRB should cut the fee for the Service as far as possible, perhaps even making it free, if the MSRB wants to help the small municipal bond investor have any degree of information parity with the larger firms. The MSRB's Response Letter states that the MSRB's intent is to achieve the widest possible dissemination of the real-time data, with the ultimate goal of making the data available to investors for free or at a very modest cost. The MSRB stated that it strongly encourages the redistribution of data obtained through the Real-Time Transaction Reporting System, and that, toward this end, subscribers to the Service will be allowed to re-disseminate transaction data to an unlimited number of their own customers or clients at no additional charge. The MSRB further stated that by not charging for or restricting re-dissemination of the transaction data, the MSRB wishes to encourage information vendors—and various other entities that make securities data available to members of the securities industry and the public—to use the transaction data in their products and services. Finally, the MSRB stated that, through this approach, the MSRB anticipates that it will be possible for a typical individual investor to obtain the transaction data that is relevant to his or her investments for free or at a very modest cost. After careful consideration, the Commission believes the proposed annual subscription fee for the Real-Time Transaction Price Service satisfies the statutory standards, and that the proposed rule change will increase transparency and facilitate the fair pricing of municipal securities transactions. For the reasons discussed above, the Commission finds that the proposal is consistent with the Act and the rules and regulations thereunder. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 9 that the proposed rule change (SR-MSRB-2004-06) be, and hereby is, approved. 9 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). J. Lynn Taylor, Assistant Secretary. [FR Doc. E4-3635 Filed 12-13-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50822; File No. SR-NASD-2004-175] Self Regulatory Organizations, Notice of Filing and Immediate Effectiveness of Proposed Rule Change by National Association of Securities Dealers, Inc. Relating to Repeal of Existing NASD Short Sale Rules in Light of SEC Regulation SHO December 8, 2004. Pursuant to Section 19(b)(3) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on November 30, 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 “non-controversial” rule change under paragraph (f)(6) of Rule 19b-4 under the Act, 3 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. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change 1 15 U.S.C. 78s(b)(3). 2 17 CFR 240.19b-4. 3 17 CFR 240.19b-4 NASD is proposing to repeal NASD Rule 3110(b)(1), Rule 3210, Rule 3370(b) and Rule 11830 in light of the requirements of the SEC's new short sale regulation, Regulation SHO under the Act. Below is the text of the proposed rule change. Proposed deletions are in brackets. 3110. Books and Records
(a)No change.
(b)Marking of Customer Order Tickets. [(1) A person associated with a member shall indicate on the memorandum for the sale of any security whether the order is “long” or “short,” except that this requirement shall not apply to transactions in debt securities. An order may be marked “long” if
(A)the customer's account is long the security involved or
(B)the customer owns the security and agrees to deliver the security as soon as possible without undue inconvenience or expense.] [(2)] A person associated with a member shall indicate on the memorandum for each transaction in a non-Nasdaq security, as that term is defined in the Rule 6700 Series, the name of each dealer contacted and the quotations received to determine the best inter-dealer market; however, the requirements of this subparagraph shall not apply if two or more priced quotations for the security are displayed in an inter-dealer quotation system, as defined in Rule 2320(g), that permits quotation updates on a real-time basis for which NASD Regulation has access to historical quotation information.
(c)No change. 3210. *Reserved.* [Securities “Failed to Receive” and “Failed to Deliver”] [(a) No member, or person associated with a member, shall sell a security for his own account, or buy a security as a broker for a customer (except exempt securities), if,] [(1) in respect to domestic securities, he has a fail to deliver in that security 60 days old or older; or] [(2) in respect to foreign securities, he has a fail to deliver in that security 90 days old or older (except American Depositary Receipt and Canadian securities, which shall be subject to the provisions of subparagraph (1)).] [(b) Pursuant to the Rule 9600 Series, for good cause shown and in exceptional circumstances, the Association may exempt a member or a person associated with a member from the provisions of this Rule.] 3370. [Prompt Receipt and Delivery of Securities] *Purchases* [(a) Purchases]. No member or person associated with a member may accept a customer's purchase order for any security unless it has first ascertained that the customer placing the order or its agent agrees to receive securities against payment in an amount equal to any execution, even though such an execution may represent the purchase of only a part of a larger order. [(b) Sales]. [(1) Long Sales]. [No member or persons associated with a member shall accept a long sale order from any customer in any security (except exempt securities other than municipals) unless:] [(A) The member has possession of the security;] [(B) The customer is long in his account with the member;] [(C) The member or person associated with a member makes an affirmative determination that the customer owns the security and will deliver it in good deliverable form within three
(3)business days of the execution of the order; or] [(D) The security is on deposit in good deliverable form with a member of the Association, a member of a national securities exchange, a broker/dealer registered with the Commission, or any organization subject to state or federal banking regulations and that instructions have been forwarded to that depository to deliver the securities against payment.] [(2) “Short Sales”]. [(A) Customer and non-member broker/dealer short sales]. [No member or person associated with a member shall accept a “short” sale order for any customer or non-member broker/dealer in any security unless the member or person associated with a member makes an affirmative determination that the member will receive delivery of the security from the customer or non-member broker/dealer or that the member can borrow the security on behalf of the customer or non-member broker/dealer for delivery by settlement date. This requirement shall not apply, however, to transactions in corporate debt securities or transactions in security futures, as defined in Section 3(a)(55) of the Act, or proprietary orders of a non-member broker/dealer that meet one of the exceptions in subparagraph
(B)below, provided, however, that
(i)the non-member broker/dealer is registered with the Securities and Exchange Commission, and
(ii)if using the market maker exception, the non-member broker/dealer is registered or qualified as a market maker in the securities and is selling such securities in connection with bona fide market making.] [(B) Proprietary short sales]. [No member shall effect a “short” sale for its own account in any security unless the member or person associated with a member makes an affirmative determination that the member can borrow the securities or otherwise provide for delivery of the securities by the settlement date. This requirement will not apply to transactions in corporate debt securities, to transactions in security futures, as defined in Section 3(a)(55) of the Act, to bona fide market making transactions by a member in securities in which it is registered as a Nasdaq or ADF market maker, to bona fide market maker transactions in non-Nasdaq securities in which the market maker publishes a two-sided quotation in an independent quotation medium, or to transactions that result in fully hedged or arbitraged positions.] [(3) Public Offering]. [In the case of a public offering of securities, paragraph (b)(1) hereof shall not apply during the period from the commencement of the public offering until seven
(7)business days following the date of settlement between the underwriter and issuer of the securities; provided, however, that the member believes in good faith that the customer has purchased the securities.] [(4) “Affirmative Determination”]. [(A) To satisfy the requirements for an “affirmative determination” contained in paragraph (b)(1)(C) above for long sales, the member or person associated with a member must make a notation on the order ticket at the time the order is taken which reflects the conversation with the customer as to the present location of the securities in question, whether they are in good deliverable form and the customer's ability to deliver them to the member within three
(3)business days.] [(B) To satisfy the requirement for an “affirmative determination” contained in paragraph (b)(2) above for customer, non-member broker/dealer, and proprietary short sales, the member or person associated with a member must keep a written record that includes:] [(i) if a customer or non-member broker/dealer assures delivery, the present location of the securities in question, whether they are in good deliverable form and the customer's or non-member broker/dealer's ability to deliver them to the member within three
(3)business days; or] [(ii) if the member or person associated with a member locates the stock, the identity of the individual and firm contacted who offered assurance that the shares would be delivered or that were available for borrowing by settlement date and the number of shares needed to cover the short sale.] [(C) The manner by which a member or person associated with a member annotates compliance with the “affirmative determination” requirement contained in subsection (b)(2) above ( *e.g.* , marking the order ticket, recording inquiries in a log, etc.) is not specified by this Rule and, therefore, shall be decided by each member. Members may rely on “blanket” or standing assurances ( *i.e.* , “Easy to Borrow” lists) that securities will be available for borrowing on settlement date to satisfy their affirmative determination requirements under this Rule. For any short sales executed in Nasdaq National Market
(NNM)or national securities exchange-listed (listed) securities, members also may rely on “Hard to Borrow” lists indicating NNM or listed securities that are difficult to borrow or unavailable for borrowing on settlement date to satisfy their affirmative determination requirements under this Rule, provided that:
(i)Any securities restricted pursuant to UPC 11830 must be included on such a list; and
(ii)the creator of the list attests in writing on the document or otherwise that any NNM or listed securities not included on the list are easy to borrow or are available for borrowing. Members are permitted to use Easy to Borrow or Hard to Borrow lists provided:
(i)The information used to generate the list is less than 24-hours old; and
(ii)the member delivers the security on settlement date. Should a member relying on an Easy to Borrow or Hard to Borrow list fail to deliver the security on settlement date, the Association shall deem such conduct inconsistent with the terms of this Rule, absent mitigating circumstances adequately documented by the member.] [(5) “Bona Fide Fully Hedged” and “Bona Fide Fully Arbitraged”]. [In determining the availability of the exemption provided in paragraph (b)(2)(B) above and in Rule 11830 from short sale requirements for “bona fide fully hedged” and “bona fide fully arbitraged” transactions, the following guidelines shall apply. These guidelines are for illustrative purposes and are not intended to limit the Association's ability to determine the proper scope of the terms “bona fide fully hedged” or “bona fide fully arbitraged” pursuant to this provision, on a case-by-case basis.] [(A) Bona Fide Fully Hedged]. [The following transactions shall be considered bona fide fully hedged:] [(i) Short a security and long a convertible debenture, preferred or other security which has a conversion price at or in the money and is convertible within ninety days into the short security.] [Example: Long ABCD Company 9% convertible subordinated debentures due 2003. Each debenture is convertible into common at $27.90 per share of common equal to 35.842 shares of common per 1M debenture. • With the price of the ABCD at 8 3/4 -9 or 8.75-9 and a short position of 100 shares of ABCD the short position would not be exempt. • If the price of ABCD was $28 with a short position of 100 shares, 35 shares would be exempt and the remaining 65 shares would not be exempt.] [(ii) Short a security and long a call which has a strike price at or in the money and which is exercisable within 90 calendar days into the underlying short security.] [Example: Long 1 call of EFGH at a price of either 44 1/8 or $44.10 with a strike price of 40 expiring within 90 calendar days. • With the circumstances as above 100 shares would be exempt. • If the strike price was 50 a short position of 100 shares would not be exempt. • With any strike price and the call expiring in more than 90 days any short of the common would not be exempt.] [(iii) Short a security and long a position in warrants or rights which are exercisable within 90 days into the short security. To the extent that the long warrants or rights are “out of the money,” then the short position shall be exempt up to the market value of the long warrants or rights.] [Example: Long 100 warrants of IJKL (IJKLW: 2 1/4 -2 3/4 or 2.25-2.75). Each warrant is exercisable into 1 share of common at $2. (IJKL: 4-4 1/2 or $4-4.50). • With the circumstances as above a short position of 100 shares would be exempt. • If the price of IJKL is $1.50 and the market value of long warrants is 1/4 of a point, or $.25, a short position of 16 shares would be exempt.] [(iv) Short a security and long a single stock future of the underlying security.] [Example: Long 1 single stock future of MNOP. • With the circumstances as above (and assuming a contract size of 100) 100 shares would be exempt. • Even if the expiration date for the single stock future was more than 90 calendar days, 100 shares would be exempt.] [(B) Bona Fide Fully Arbitraged]. [The following transactions shall be considered bona fide fully arbitraged:] [(i) Long a security purchased in one market together with a short position from an offsetting sale of the same security in a different market at as nearly the same time as practicable for the purpose of taking advantage of a difference in price in the two markets.] [Example: Purchase 100 shares of EFGH on the London Stock Exchange and simultaneously effecting a short sale of 100 shares of EFGH on Nasdaq. • Under the above circumstances, the 100 shares short would be exempt.] [(ii) Long a security which is without restriction other than the payment of money exchangeable or convertible within 90 calendar days of the purchase into a second security together with a short position from an off-setting sale of the second security at or about the same time for the purpose of taking advantage of a concurrent disparity in the prices of the securities.] [Example: Long 100 shares of MNOP (MNOP: 51-51 1/4 or 51.00-51.25) which is being acquired by QRST Corp. (QRST: 52 1/8 -52 3/8 or 52.10-52.30) at the rate of 1.15 shares per MNOP share. • If the exchange is to take place within 90 days then a short of 115 shares of QRST would be exempt from the mandatory buy-in. Also, if the exchange was to take place at a date later than 90, all short positions in the above example would be subject to the mandatory buy-in.] [(C) The transaction date of the short sale shall govern when a fully hedged or fully arbitraged position exists.] 11830. *Reserved.* [Mandatory Close-Out for Short Sales] [(a) A contract involving a short sale in Nasdaq securities described in paragraph
(b)hereof, for the account of a customer or for a member's own account, which has not resulted in delivery by the broker/dealer representing the seller within 10 business days after the normal settlement date, must be closed by the broker/dealer representing the seller by purchasing for cash or guaranteed delivery securities of like kind and quantity.] [(b) This requirement shall apply to Nasdaq securities, as published by the Association, which have clearing short position of 10,000 shares or more and that are equal to at least one-half ( 1/2 ) of one percent of the issue's total shares outstanding.] [(c) This mandatory close-out requirement shall not apply to bona fide market making transactions and transactions that result in fully hedged or arbitraged positions.] 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 June 23, 2004, the SEC adopted certain provisions of a new short sale regulation, designated Regulation SHO (Reg SHO). Reg SHO includes several new provisions that are duplicative of or overlap with existing NASD rules. These include:
(1)SEC Rule 200(g) of Reg SHO, which requires that sell orders in all equity securities be marked “long,” “short,” or “short exempt”;
(2)SEC Rule 203(a) of Reg SHO, which provides that, with limited exception, if a broker-dealer knows or should know that a sale of an equity security is marked long, the broker-dealer must make delivery when due and cannot use borrowed securities to do so;
(3)SEC Rule 203(b)(1) of Reg SHO, which applies a uniform rule, with certain limited exceptions, requiring all broker-dealers, prior to effecting short sales in equity securities, to “locate” securities available for borrowing; and
(4)SEC Rule 203(b)(3) of Reg SHO, which requires registered clearing agency participants to close out all failures to deliver 10 days after the normal settlement date for securities in which a substantial amount of failures to deliver have occurred, referred to as “threshold securities.” 4 4 Reg SHO defines a “threshold security” as any equity security of an issuer that is registered under Section 12 of the Exchange Act or that is required to file reports under Section 15(d) of the Exchange Act (a reporting company) where for five consecutive settlement days there are aggregate fails to deliver at a registered clearing agency of 10,000 shares or more per security; that the level of fails is equal to a least one-half of one percent of the issue's total shares outstanding (TSO); and the security is included on a listed published by a self-regulatory organization. As noted in the adopting release for Reg SHO, as well as in discussions between SEC and NASD staff, the SEC has indicated that it expects that Reg SHO provisions will supplant existing overlapping self-regulatory organization
(SRO)rules. Accordingly, NASD believes that certain of its rules are duplicative of or overlap with Reg SHO requirements and therefore should be repealed. As a result, NASD is proposing to repeal NASD Rule 3110(b)(1), Rule 3210, Rule 3370(b) and Rule 11830. Specifically, Rule 3110(b)(1), 5 overlaps or is duplicative with Rule 200(g) of Reg SHO, which governs order marking in all equity securities. In addition, Rule 3210, 6 Rule 3370(b) 7 and Rule 11830 8 overlap with or are duplicative of Rule 203 of Reg SHO. 5 Rule 3110(b)(1) requires that an associated person indicate on the order ticket whether an order is “long” or “short.” 6 Rule 3210 prohibits a member from selling a security for its own account or buying a security as a broker for a customer, if the member has a fail to deliver in that security that is 60 days old or older, or 90 days old or older for foreign securities. 7 Rule 3370(b) requires, among other things, that
(1)no member accept a long sale order from a customer unless the member has possession of the security, the customer is long in his account, the member makes an affirmative determination that the customer owns the security and will deliver it on settlement date or that it is in good deliverable form on deposit with a member or other permissible entity; and
(2)no member effect a “short” sale order for a customer, non-member broker-dealer or proprietary account in any security unless the member makes an affirmative determination that the member will receive delivery of the security or that the member can borrow the security for delivery by settlement date, subject to certain exemptions. 8 Rule 11830 generally mandates delivery of a security within 10 days of the settlement date for short sales executed in Nasdaq securities that, on the trade date of the transaction, had a clearing short position equal to at least one-half of one percent of the issue's total shares outstanding. As noted below, NASD is filing the proposed rule change for immediate effectiveness, with an operative date of January 3, 2005. 9 NASD will announce the implementation date in a *Notice to Members* to be published prior to January 3, 2005. 9 The Commission understands that the operative date of this proposed rule change is the same date as the compliance date of Rules 200 and 203 of Regulation SHO. *See* Securities Exchange Act Release No. 50103 (July 28, 2004), 69 FR 48008 (August 6, 2004). 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, 10 which requires, among other things, that NASD 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 SEC's Reg SHO will address potentially abusive short selling activities in the marketplace that NASD Rule 3110(b)(1), Rule 3210, Rule 3370(b) and Rule 11830 were intended to address, and therefore repeal of these rules is consistent with the Act. 10 15 U.S.C. 78o-3(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 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 and Rule 19b-4(f)(6) thereunder. In accordance with Rule 19b-4, NASD submitted 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. NASD proposes to make the proposed rule change operative on January 3, 2005. 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-2004-175 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-2004-175. 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 at the principal office of 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 the File Number SR-NASD-2004-175 and should be submitted on or before January 4, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 J. Lynn Taylor, Assistant Secretary. 11 17 CFR 200.30-3(a)(12). [FR Doc. E4-3636 Filed 12-13-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50818; File No. SR-PCX-2004-96] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Amend PCX Equities, Inc. Rule 4.5 To Require All Financial/Operations Principals of PCXE ETP Firms To Successfully Complete the Series 27 Examination and All Compliance Supervisors of PCXE ETP Firms To Successfully Complete the Series 24 Examination December 7, 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 20, 2004, the Pacific Exchange, Inc. (“PCX” or “Exchange”), through its wholly owned subsidiary PCX Equities, Inc. (“PCXE”), 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 PCXE. On December 6, 2004, PCXE filed 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 Amendment No. 1 replaced and superseded the original filing in its entirety. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change PCXE is proposing to amend PCXE Rule 4.5 to require all financial/operations principals of PCXE ETP Firms to successfully complete the National Association of Securities Dealers, Inc.'s (“NASD”) Financial and Operations Principal Examination (“Series 27 Examination”) and to add PCXE Rule 6.18(d) to require all compliance supervisors of PCXE ETP Firms to successfully complete the NASD's General Securities Principal Examination (“Series 24 Examination”). The text of the proposed rule change is below. Proposed new language is in italics. Rule 4.5. Unless the Corporation determines otherwise, every ETP Holder, except as otherwise provided in Rule 4.7, shall file with the Corporation the reports prescribed by this Section. *Each ETP Holder subject to Exchange Act Rule 15c3-1 shall designate a Financial/Operations Principal. The duties of a Financial/Operations Principal shall include taking appropriate actions to assure that the ETP Holder complies with applicable financial and operational requirements under the Rules and the Exchange Act, including but not limited to those requirements relating to the submission of financial reports and the maintenance of books and records. Each Financial/Operations Principal is required to successfully complete the Financial and Operations Principal Examination (Series 27 Exam). Each Financial/Operations Principal designated by an ETP Holder shall be registered in that capacity with the Corporation in a form and manner prescribed by the Corporation. A Financial/Operations Principal of an ETP Holder may be a full-time employee of the ETP Holder or, with the prior written approval of the Corporation, may be a part-time employee or independent contractor of the ETP Holder. All ETP Holders shall be in compliance with this Rule by March 31, 2005.* Rule 4.5(a)-(e)—No Change. Rule 6.18(a)-(c)—No Change.
(d)*Each individual not associated with an ETP Holder and in the case of an ETP Holder, the person (or persons) designated to direct day-to-day compliance activity (such as the Compliance Officer, Partner or Director) and each other person at the ETP Holder directly supervising ten or more persons engaged in compliance activity should have overall knowledge of the securities laws and Exchange rules and must pass the General Securities Principal Examination (Series 24) and, if the ETP Holder does business with the public, the General Securities Sales Supervisor Qualification Examination (Series 9/10). Where good cause is shown, the Corporation, at its discretion, may waive all or a portion of the examination requirements. The Corporation may give consideration to the scope of the ETP Holder's activity, to previous related employment, and to examination requirements of other self-regulatory organizations. In such cases, the Corporation must be satisfied that the person is qualified for the position. All ETP Holders shall be in compliance with this Rule by March 31, 2005.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, PCXE included statements concerning the purpose of and basis for its proposed rule change and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in Item IV below. PCXE 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 PCXE is proposing to amend PCXE Rule 4.5 to require all financial/operations principals of PCXE ETP Firms to successfully complete the Series 27 Examination. PCXE believes that requiring these individuals to successfully complete the Series 27 Examination will ensure that those individuals who prepare the financial statements for PCXE ETP Firms will be sufficiently qualified to prepare such statements. In addition, PCXE is proposing to add PCXE Rule 6.18(d) to require all compliance supervisors of PCXE ETP Firms to successfully complete the Series 24 Examination. PCX believes that requiring these individuals to successfully complete the Series 24 Examination will ensure that those who are supervising equities trading are sufficiently qualified. As part of proposed Rule 6.18(d), PCXE may waive all or a portion of the Series 24 Examination requirements. In evaluating whether to grant a full or partial waiver from the examination requirements, PCXE will review a number of factors including but not limited to the individual's industry experience, education, previous registration history with the Exchange and other examinations taken by the individual that may be acceptable substitutes in conjunction with securities industry experience. These changes will bring the PCXE qualifications to perform such functions up to date with the requirements of other self-regulatory organizations. 4 4 The proposed rule change is based on the Chicago Board Options Exchange's Rule 3.6A(a) and the New York Stock Exchange's Rule 342. 2. Statutory Basis PCXE believes that the proposed rule change is consistent with Section 6(b) of the Act 5 in general, and furthers the objectives of Section 6(b)(5) of the Act 6 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. 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 PCXE 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 self-regulatory organization consents, the Commission will: A. By order approve such 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-2004-96 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-2004-96. 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 PCX. 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-2004-96 and should be submitted on or before January 4, 2005. 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. E4-3633 Filed 12-13-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50817; File No. SR-PCX-2004-105] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Make Clarifying Changes to the PCX Schedule of Fees and Charges With Respect to the Options Orientation Fee To Include the Cost of the Series 44 or 45 Examination and To Adopt a New Fee Associated With the Series 46 Examination December 7, 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 28, 2004, the Pacific Exchange, Inc. (“PCX” 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 Exchange. On December 3, 2004, PCX filed Amendment No. 1 to the proposed rule change. 3 PCX filed this proposal pursuant to Section 19(b)(3)(A) 4 of the Act and Rule 19b-4(f)(6) 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, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced and superseded the original filing in its entirety. For purpose of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change under Section 19(b)(3)(C) of the Act, the Commission considers that period to commence on December 3, 2004, the date that the PCX filed Amendment No. 1. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change PCX is proposing to make a clarifying change to the PCX Schedule of Fees and Charges (“Schedule”) with respect to the Options Orientation Fee. The text of the proposed rule change is available at PCX and at the Commission. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, PCX included statements concerning the purpose of and basis for its proposal and discussed any comments it received regarding the proposal. The text of these statements may be examined at the places specified in Item IV below. 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 Exchange proposes to amend the Schedule to make a clarifying change to the Options Orientation Fee. In October of 2003, the Exchange amended the Options Orientation Fee in connection with the launch of PCX Plus. 6 At the time, the Exchange reconfigured a development and delivery process for the Exchange's Orientation and Examination program. Pursuant to the revised structure, the Exchange developed an orientation and examination content to be administered by the National Association of Securities Dealers, Inc (“NASD”). The revised Options Orientation Fee of $1,000 was intended to include the cost of the Series 44 or Series 45 examination, the investigation fee and the fingerprinting fee, 7 but not the Series 46 examination. 8 Thus, since October 2003, the Exchange has charged $1,000 for the Options Orientation Fee (including the cost of the Series 44 or 45 examination) and no charge has applied for the Series 46 examination. The Exchange proposes to amend the Options Orientation Fee by adding a parenthetical in the Schedule to clarify that the Options Orientation Fee only includes the cost of the Series 44 or Series 45 examination. 6 *See* Securities Exchange Act Release No. 48597 (October 7, 2003), 69 FR 59439 (October 15, 2003) (SR-PCX-2003-57). 7 If the applicant is not required to take the examination ( *i.e.* , qualifies for a waiver), such applicant is only required to pay a separate investigation and fingerprinting fee. 8 Series 46 is an optional examination taken subsequent to the Series 44 examination. The Exchange also proposes to adopt a new fee of $200 to help recover the costs associated with the Series 46 examination. Pursuant to a contractual agreement between PCX and NASD, PCX incurs fixed expenses in connection with the administration of each Series 46 examination. Further, the Exchange expends staff resources for ongoing development and maintenance of examination content. As such, the proposed fee will recover expenses relating to administration, development and ongoing support of the Series 46 examination. The Exchange believes that these proposed changes are necessary to alleviate confusion among the OTP Holders and OTP Firms with respect to the Options Orientation Fee. 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act 9 in general, and Section 6(b)(4) of the Act 10 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among its OTP Holders, OTP Firms, issuers and persons using the facilities. 9 15 U.S.C. 78f(b). 10 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 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 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 11 and Rule 19b-4(f)(6) thereunder. 12 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. 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b-4(f)(6). 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-2004-105 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-2004-105. 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 PCX. 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-2004-105 and should be submitted on or before January 4, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E4-3634 Filed 12-13-04; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 4922] Bureau of Political-Military Affairs; Arms Export Embargo on Côte d'Ivoire (Ivory Coast) SUMMARY: Notice is hereby given that all licenses and other approvals to export or otherwise transfer defense articles and defense services to Côte d'Ivoire (Ivory Coast) are suspended until further notice pursuant to Sections 38 and 42 of the Arms Export Control Act (AECA). EFFECTIVE DATE: December 14, 2004. FOR FURTHER INFORMATION CONTACT: Stephen J. Tomchik, Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, Department of State
(202)663-2799. SUPPLEMENTARY INFORMATION: Effective immediately, it is the policy of the U.S. Government to deny all applications for licenses and other approvals to export or otherwise transfer defense articles and defense services to Côte d'Ivoire (formerly known as Ivory Coast). In addition, U.S. manufacturers and exporters and any other affected parties are hereby notified that the Department of State has suspended all previously issued licenses and approvals to export or otherwise transfer defense articles and defense services to Côte d'Ivoire. These actions have been taken in accordance with U.N. Security Council Resolution 1572, unanimously passed on November 15, 2004, which imposes an embargo on the export of arms and related material, as well as defense services, to the West African nation of Côte d'Ivoire. The embargo will remain in effect for a period of 13 months unless otherwise amended. The resolution establishing the embargo enjoins all states to “take the necessary measures to prevent the direct or indirect supply, sale or transfer to Côte d'Ivoire, from their territories or by their nationals, or using their flag vessels or aircraft, of arms or any related materiel, in particular military aircraft and equipment, whether or not originating in their territories, as well as the provision of any assistance, advice or training related to military activities''. The resolution establishes several exceptions under which the embargo will not apply, namely:
(a)Supplies and technical assistance intended solely for the support of or use by UNOCI (United Nations Operations in Côte d'Ivoire) and the French forces who support them;
(b)Supplies of non-lethal military equipment intended solely for humanitarian or protective use, and related technical assistance and training, as approved in advance by a representative committee consisting of all the members of the Security Council;
(c)Supplies of protective clothing, including flak jackets and military helmets, temporarily exported to Côte d'Ivoire by United Nations personnel, representatives of the media and humanitarian and development workers and associated personnel, for their personal use only;
(d)Supplies temporarily exported to Côte d'Ivoire to the forces of a State which is taking action, in accordance with international law, solely and directly to facilitate the evacuation of its nationals and those for whom it has consular responsibility in Côte d'Ivoire, as notified in advance to the representative committee consisting of all the members of the Security Council; and
(e)Supplies of arms and related materiel and technical training and assistance intended solely for support of or use in the process of restructuring defense and security forces as approved in advance by the representative committee consisting of all the members of the Security Council. U.S. exporters are advised that, effective November 16, 2004, no application for the export to Ivory Coast of defense articles or services covered by the International Traffic in Arms Regulations
(ITAR)will be approved. Exceptions to this policy will be made, in accordance with the ITAR, on a case-by-case basis for proposed exports that conform to the conditions specified in
(a)through
(e)above. Any existing license or authorization for the export to Ivory Coast of ITAR-controlled defense articles or services is hereby suspended. Holders of existing licenses and authorizations for exports to Ivory Coast must submit documentation for review by the Directorate of Defense Trade Controls
(DDTC)supporting the meeting of one of the exceptions cited above prior to DDTC lifting the suspension. This action has been taken pursuant to Sections 38 and 42 of the AECA (22 U.S.C. 2778, 2791) and Section 126.7 of the ITAR in furtherance of the foreign policy of the United States. Dated: December 6, 2004. Rose M. Likins, Acting Assistant Secretary, Political-Military Affairs, Department of State. [FR Doc. 04-27353 Filed 12-13-04; 8:45 am]
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U.S. Code
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Definitions and application§ 78c
- Municipal securities§ 78o–4
- Registered securities associations§ 78o–3
- Control of arms exports and imports§ 2778
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- 17 CFR 240.19
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