Notices. SECURITIES AND EXCHANGE COMMISSION

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BILLING CODE 8010-01-M SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50898; File No. SR-NSX-2004-07] Self-Regulatory Organizations; National Stock Exchange; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto Relating to Non-Member Give-Ups December 21, 2004. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 31, 2004, the National Stock Exchange SM (“NSX” 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 Exchange filed Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comment 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 The NSX submitted Amendment No. 1 in order to provide additional information in describing the manner in which the proposed rule change will operate. Amendment No. 1 replaces the original rule filing in its entirety. The Exchange notes that Amendment No. 1 does not alter the text of the proposed rule change as it appeared in the original rule filing.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the clearing requirements contained in Article II, Section 5.1 of the NSX By-Laws to permit members to give-up a non-member's clearing number if certain conditions are satisfied. The text of the proposed rule change appears below. New language is in italics. CODE OF REGULATIONS (BY-LAWS) OF NATIONAL STOCK EXCHANGE ARTICLE II Exchange Membership Section 5.

Restrictions on Admittance to or Continuance in Membership and Association 5.1. General Restrictions Interpretations and Policies .03 An Exchange member may only give-up its own or another Exchange member's clearing number when executing a transaction on the Exchange *; provided, however, that a member may give-up a non-member's clearing number when executing a transaction on the Exchange if

(i)the non-member

(a)is a registered broker-dealer and is a self-clearing member of the National Securities Clearing Corporation (“NSCC”) and

(b)consents to the disciplinary jurisdiction of the Exchange and agrees to adhere to all applicable Exchange By-Laws and Rules; and

(ii)the executing member's guaranteeing clearing firm, who must be an Exchange member, agrees to accept financial responsibility for all transactions given-up to the non-member, including but not limited to, responsibility to clear and settle the non-member's trades in the event that the non-member or the NSCC does not accept any such trades.* 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 NSX 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 NSX has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, to enter transactions on the NSX, an Exchange member must either be self-clearing or must have a clearing member agree to accept financial responsibility for all of its transactions. In turn, any Exchange member that wishes to self-clear or clear third party transactions on the Exchange must also be a member of the National Securities Clearing Corporation (“NSCC”). In addition, the Exchange By-Laws currently provide that, when a member executes a transaction on the Exchange, it may only give-up its own clearing number or the number of another Exchange member. 4 The Exchange notes that the provision limiting give-ups to Exchange members' clearing firms was originally put in place to ensure the Exchange's ability to exercise jurisdiction over all parties involved in the execution and settlement of trades that occur on the Exchange. The Exchange proposes to expand the list of clearing firms eligible to be “given-up” to include non-member clearing firms, 5 if certain conditions are satisfied. 5 The Exchange notes that use of the term “non-member” refers to the fact that a “non-member” firm does not have certain voting and ownership rights that other NSX members have. However, as described in the proposed rule text, a “non-member” firm that has entered into a give-up arrangement under Interpretation .03 to Article II, Section 5.1 of the Exchange By-Laws is subject to the Exchange's jurisdiction and the requirement to adhere to all applicable Exchange By-Laws and Rules, just as any other member of the Exchange. The conditions that would enable an NSX member to give-up a non-member's clearing number are that

(i)the non-member

(a)be a registered broker-dealer and a self-clearing member of the NSCC and

(b)consent to the disciplinary jurisdiction of the Exchange and agree to adhere to all applicable Exchange By-Laws and Rules; and

(ii)the executing member's clearing firm, who must be an Exchange member, agrees to accept financial responsibility for all transactions given-up to the non-member, including but not limited to, responsibility to clear and settle the non-member's trades in the event that the non-member or the NSCC does not accept any such trades. The Exchange believes that this additional give-up alternative offers members more flexibility 6 and is consistent with the above-described intent of Interpretation .03 to Article II, Section 5.1 of the Exchange By-Laws in that it permits the Exchange to retain jurisdiction over the parties involved in executions and those responsible for guaranteeing transaction clearance and settlement. 6 For example, undeer the NSX's current requirements, an NSX member can execute a transaction on behalf of a non-member. However, for purposes of reporting by NSX to the NSCC for clearing and settlement, the NSX member cannot give-up the non-member's clearing ccount to NSX. Instead, the clearing and settlement information must be processed directly with the NSCC. Under the proposed rule change, an NSX member would have the option of giving up the non-member's clearing number to the NSX for reporting by NSX to the NSCC. This gives the NSX member the flexibility to process a non-member's order in the same manner in which it is permitted to process other NSX members' orders. In order to evidence the satisfaction of the above-referenced requirements, and thus for a member to be eligible to give-up a non-member's clearing number, an access authorization agreement in a form prescribed by the Exchange must be completed and signed by the member, its NSX member clearing firm, and the non-member clearing firm.7 The agreement will specify that the conditions of Interpretation .03 have been satisfied, including that the non-member consents to the disciplinary jurisdiction of the Exchange and agrees to adhere to all applicable Exchange By-Laws and Rules. The agreement will also specify that the executing member's clearing firm agrees to accept financial responsibility for all transactions given-up to the non-member. 7 The access authorization agreement is attached to Form 19b-4 as Exhibit 3. The Exchange believes the proposal provides adequate controls regarding non-member give-ups. For operational purposes, the Exchange requires the non-member be a self-clearing member of NSCC, thus requiring NSCC clearing membership for Exchange transactions given-up to non-members, as is currently required for Exchange transactions given-up to NSX members. 8 For disciplinary jurisdiction and compliance purposes, the requirements that the non-member consent to the disciplinary jurisdiction of the Exchange and agree to adhere to all applicable Exchange By-Laws and Rules, provide an adequate level of Exchange control over the non-member give-up transaction. The Exchange believes that these controls provide a jurisdictional basis for disciplinary action against the non-member, allowing the Exchange to enforce its rules with respect to the non-member to the same degree as if the non-member were itself a member. Additionally, the NSX requires that the member clearing firm accept financial responsibility for all transactions given-up to the non-member. The Exchange believes that this guarantees the financial obligations incurred with respect to non-member give-up transactions. As is currently the case for give-ups to member clearing firms, the Exchange will assess the executing member with the relevant fees on all transactions given-up to non-members. 8 Telephone conversation between Jennifer M. Lamie, Assistant General Counsel and Secretary, NSX and Marisol Rubecindo, Attorney, Division of Market Regulation, Commission. 2. Statutory Basis The Exchange believes that the proposed rule change, as amended, is consistent with the provisions of Section 6(b) of the Act, 9 in general, and Section 6(b)(5) of the Act, 10 in particular, which requires, among other things, that the rules of the Exchange be 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, to foster cooperation and coordination with persons engaged in clearing and settling transactions, and, in general, to 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, as amended, will impose any inappropriate burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others No written comments were solicited or received in connection with the proposed rule change, as amended. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the 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 organizations consents, the Commission will: A. By order approve the proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: *Electronic Comments* • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NSX-2004-07 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, D.C. 20549-0609. All submissions should refer to File No. SR-NSX-2004-07. This file number should be included in the subject line if e-mail is used. To help the Commission process and review 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 filings will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to file number SR-NSX-2004-07 and should be submitted on before January 19, 2005. For the Commission by the Division of Market Regulation, pursuant to the delegated authority. 11 11 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3865 Filed 12-28-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50912; File No. SR-NYSE-2004-61] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto by the New York Stock Exchange, Inc. to Rescind a Type of Order Known as an Institutional XPress® Order Through Amendments to Exchange Rules 13, 60 and 72 December 22, 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 New York Stock Exchange, Inc. (“NYSE” 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 NYSE 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 *See* Form 19b-4 dated December 3, 2004 (“Amendment No. 1”). In Amendment No. 1, the NYSE changed the basis under which the proposed rule change was filed from Section 19(b)(3) of the Act to Section 19(b)(2) of the Act. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to rescind a type of order known as an Institutional XPress® Order (“XPress Order”) by amending NYSE Rules 13 (Definitions of Orders), 60 (Dissemination of Quotation) and 72 (Priority and Precedence of Bids and Offers). 4 The text of the proposed rule change is available at the Office of the Secretary, the NYSE, and at the Commission. 4 *See* Securities Exchange Act Release Nos. 43763 (December 21, 2000), 65 FR 83120 (December 29, 2000) (SR-NYSE-99-24) and 47614 (April 2, 2003), 68 FR 17140 (April 8, 2003) (SR-NYSE-2002-55). *See also* Information Memo Nos. 01-16 (July 9, 2001) and 03-21 (May 15, 2003). 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 include statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In SR-NYSE-99-24, the Commission approved the Exchange's amendments to NYSE Rules 13 and 72 to create a new type of order, the XPress® Order. In light of the Exchange's recent hybrid market filing, 5 the Exchange now seeks to rescind the XPress Order type, including the amendments made to NYSE Rules 13 and 72 in SR-NYSE-99-24. The Exchange believes that the goal of the XPress Order, clean executions by market participants when entering large-size orders in response to bids and offers which have been displayed for a minimum time period, would be satisfied by the Exchange's hybrid market initiative. In the pending hybrid market filing, the Exchange proposes enhancements to NYSE Direct+® that would esstentially accomplish the same thing as an XPress Order. 6 5 *See* Securities Exchange Act Release Nos. 50173 (August 10, 2004), 69 FR 50407 (August 16, 2004) and 50667 (November 15, 2004), 69 FR 67980 (November 22, 2004) (SR-NYSE-2004-05). 6 Pursuant to the proposed amendments in the hybrid market filing ( *see supra* note 5), auto ex market orders, marketable limit orders and incoming ITS commitments to trade routed to the Display Book, regardless of size, would be eligible for automatic execution against the trading interest reflected in the Exchange's published quotation, with any unfilled balance “sweeping” the book, broker agency interest file and specialist interest file until executed, its limit price, if any, is reached, or a liquidity replenishment point is reached. The Exchange also proposes to rescind the amendments made in connection with the execution of XPress Orders in the NYSE LIQUIDITYQUOTE® filing. 7 Specifically, the Exchange proposes to rescind Supplementary Material .40 of NYSE Rule 13, which provides that a liquidity bid or offer, regardless of size, will be XPress eligible if it has been published for at least 15 seconds. In addition, the Exchange proposes to rescind NYSE Rule 60(d)(iii) which discusses the execution of XPress Orders when liquidity bids or offers are disseminated. 7 *See* Securities Exchange Act Release No. 47614 and Information Memo 03-21, *supra* note 4. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(5) of the Act 9 in particular, because 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, in general, to protect investors and the public interest. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 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 the proposed rule change, or

(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments: • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send and e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2004-61 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-NYSE|2004-61. 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 the filing also will be available for inspection and copying at the principal office of the NYSE. 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-NYSE-2004-61 and should be submitted on or before January 19, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. 04-28481 Filed12-28-04; 8:45 am]

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