Notices. Notice of termination of waiver of the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing

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BILLING CODE 3110-01-P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copy Available From: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. Extension: Form N-14, SEC File No. 270-297, OMB Control No. 3235-0336. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) has submitted to the Office of Management and Budget requests for extension of the previously approved collection of information discussed below.

Form N-14—Registration Statement Under the Securities Act of 1933 for Securities Issued in Business Combination Transactions by Investment Companies and Business Development Companies. Form N-14 is used by investment companies registered under the Investment Company Act of 1940 [15 U.S.C. 80a-1 *et seq.* ] (“Investment Company Act”) and business development companies as defined by section 2(a)(48) of the Investment Company Act to register securities under the Securities Act of 1933 [15 U.S.C. 77a *et seq.* ] to be issued in business combination transactions specified in Rule 145(a) (17 CFR 230.145(a)) and exchange offers.

The securities are registered under the Securities Act to ensure that investors receive the material information necessary to evaluate securities issued in business combination transactions. The Commission staff reviews registration statements on Form N-14 for the adequacy and accuracy of the disclosure contained therein. Without Form N-14, the Commission would be unable to verify compliance with securities law requirements. The respondents to the collection of information are investment companies or business development companies issuing securities in business combination transactions.

The estimated number of responses is 457 and the collection occurs only when a merger or other business combination is planned. The estimated total annual reporting burden of the collection of information is approximately 620 hours per response for a new registration statement, and approximately 350 hours per response for an amended Form N-14, for a total of 235,010 annual burden hours. Providing the information on Form N-14 is mandatory. Responses will not be kept confidential.

Estimates of the burden hours are made solely for the purposes of the Paperwork Reduction Act, and are not derived from a comprehensive or even a representative survey or study of the costs of SEC rules and forms. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. General comments regarding the above information should be directed to the following persons:

(i)Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or e-mail to: *David_Rostker@omb.eop.gov* ; and

(ii)R. Corey Booth, Director/Chief Information Officer, Office of Information Technology, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. Comments must be submitted to OMB within 30 days of this notice. Dated: January 21, 2005. Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-321 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. Extension: Rule 7d-1; SEC File No. 270-176; OMB Control No. 3235-0311. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission (“Commission”) has submitted to the Office of Management and Budget requests for extension of the previously approved collections of information discussed below. Section 7(d) of the Investment Company Act of 1940 [15 U.S.C. 80a-7(d)] (the “Act” or “Investment Company Act”) requires an investment company (“fund”) organized outside the United States (“foreign fund”) to obtain an order from the Commission allowing the fund to register under the Act before making a public offering of its securities through the United States mail or any means of interstate commerce. The Commission may issue an order only if it finds that it is both legally and practically feasible effectively to enforce the provisions of the Act against the foreign fund, and that the registration of the fund is consistent with the public interest and protection of investors. Rule 7d-1 [17 CFR 270.7d-1] under the Act, which was adopted in 1954, specifies the conditions under which a Canadian management investment company (“Canadian fund”) may request an order from the Commission permitting it to register under the Act. Although rule 7d-1 by its terms applies only to Canadian funds, other foreign funds generally have agreed to comply with the requirements of rule 7d-1 as a prerequisite to receiving an order permitting the foreign fund's registration under the Act. The rule requires a Canadian fund proposing to register under the Act to file an application with the Commission that contains various undertakings and agreements of the fund. Certain of these undertakings and agreements, in turn, impose the following additional information collection requirements:

(1)The fund must file agreements between the fund and its directors, officers, and service providers requiring them to comply with the fund's charter and bylaws, the Act, and certain other obligations relating to the undertakings and agreements in the application;

(2)The fund and each of its directors, officers, and investment advisers that is not a U.S. resident, must file an irrevocable designation of the fund's custodian in the United States as agent for service of process;

(3)The fund's charter and bylaws must provide that

(a)the fund will comply with certain provisions of the Act applicable to all funds,

(b)the fund will maintain originals or copies of its books and records in the United States, and

(c)the fund's contracts with its custodian, investment adviser, and principal underwriter, will contain certain terms, including a requirement that the adviser maintain originals or copies of pertinent records in the United States;

(4)The fund's contracts with service providers will require that the provider perform the contract in accordance with the Act, the Securities Act of 1933 (15 U.S.C. 77a-77z-3), and the Securities Exchange Act of 1934 (15 U.S.C. 78a-78mm), as applicable; and

(5)The fund must file, and periodically revise, a list of persons affiliated with the fund or its adviser or underwriter. Under section 7(d) of the Act the Commission may issue an order permitting a foreign fund's registration only if the Commission finds that “by reason of special circumstances or arrangements, it is both legally and practically feasible effectively to enforce the provisions of the [Act].“ The information collection requirements are necessary to assure that the substantive provisions of the Act may be enforced as a matter of contract right in the United States or Canada by the fund's shareholders or by the Commission. Certain information collection requirements in rule 7d-1 are associated with complying with the Act's provisions. These information collection requirements are reflected in the information collection requirements applicable to those provisions for all registered funds. The Commission believes that one fund is registered under rule 7d-1 and currently active. Apart from requirements under the Act applicable to all registered funds, rule 7d-1 imposes ongoing burdens to maintain records in the United States, and to update, as necessary, the foreign fund's list of affiliated persons. The Commission staff estimates that the rule requires a total of three responses each year. The staff estimates that a respondent would make two responses each year under the rule, one response to maintain records in the United States and one response to update its list of affiliated persons. The Commission staff further estimates that a respondent's investment adviser would make one response each year under the rule to maintain records in the United States. Commission staff estimates that each recordkeeping response would require 6.25 hours each of secretarial and compliance clerk time at a cost of $21.10 and $21.50 per hour, respectively, and the response to update the list of affiliated persons would require 0.25 hours of secretarial time, for a total annual burden of 25.25 hours at a cost of $537.78. The estimated number of 25.25 burden hours is identical to the current allocation. If a foreign fund were to file an application under the rule, the Commission estimates that the rule would impose initial information collection burdens (for filing an application, preparing the specified charter, bylaw, and contract provisions, designations of agents for service of process, and an initial list of affiliated persons, and establishing a means of keeping records in the United States) of approximately 90 hours for the fund and its associated persons. The Commission is not including these hours in its calculation of the annual burden because no fund has applied under rule 7d-1 to register under the Act in the last three years. After registration, a foreign fund may file a supplemental application seeking special relief designed for the fund's particular circumstances. Because rule 7d-1 does not mandate these applications and the fund determines whether to submit an application, the Commission has not allocated any burden hours for these applications. These estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of Commission rules. The Commission believes that the active registrant and its associated persons may spend (excluding the cost of burden hours) approximately $540 per year in maintaining records in the United States. These estimated costs include fees for a custodian or other agent to retain records, storage costs, and the costs of transmitting records. If a Canadian or other foreign fund in the future applied to register under the Act under rule 7d-1, the fund initially might have capital and start-up costs (not including hourly burdens) of an estimated $17,280 to comply with the rule's initial information collection requirements. These costs include legal and processing-related fees for preparing the required documentation (such as the application, charter, bylaw, and contract provisions), designations for service of process, and the list of affiliated persons. Other related costs would include fees for establishing arrangements with a custodian or other agent for maintaining records in the United States, copying and transportation costs for records, and the costs of purchasing or leasing computer equipment, software, or other record storage equipment for records maintained in electronic or photographic form. The Commission expects that a foreign fund and its sponsors would incur these costs immediately, and that the annualized cost of the expenditures would be $17,280 in the first year. Some expenditures might involve capital improvements, such as computer equipment, having expected useful lives for which annualized figures beyond the first year would be meaningful. These annualized figures are not provided, however, because, in most cases, the expenses would be incurred immediately rather than on an annual basis. The Commission is not including these costs in its calculation of the annualized capital/start-up costs because no investment company has applied under rule 7d-1 to register under the Act pursuant to rule 7d-1 in the last three years. These estimates of average costs are made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. General comments regarding the above information should be directed to the following persons:

(ii)R. Corey Booth, Director/Chief Information Officer, Office of Information Technology, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549. Comments must be submitted to OMB within 30 days of this notice. Dated: January 21, 2005. Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-322 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51062; File No. SR-Amex-00-27] Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Amendments No. 1, 2, 3, 4, 5, and 6 Thereto, and Notice of Filing and Order Granting Accelerated Approval to Amendments No. 7 and 8 Thereto by the American Stock Exchange LLC To Require the Immediate Display of Customer Options Limit Orders January 21, 2005. I. Introduction On May 10, 2000, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend Amex Rules 958A and 958A-ANTE to require the immediate display of customer options limit orders. Amex filed amendments to the proposed rule change on March 13, 2002, 3 April 3, 2003, 4 July 15, 2003, 5 August 19, 2003, 6 October 22, 2003, 7 and August 12, 2004. 8 The proposed rule change, as amended by Amendments No. 1 through 6, was published for comment in the **Federal Register** on August 19, 2004. 9 No comments were received regarding the amended proposal. Amex filed amendments to the proposed rule change on December 16, 2004, 10 and January 6, 2005. 11 This order approves the proposed rule change and Amendments No. 1 through 6 and grants accelerated approval to and solicits comment on Amendments No. 7 and 8. 1 15 U.S.C. 78s(b)(1). 2 2 17 CFR 240.19b-4 3 On March 13, 2002, Amex filed a Form 19b-4, which replaced the original filing in its entirety (“Amendment No. 1”). 4 On April 3, 2003, Amex filed a Form 19b-4, which replaced the original filing and Amendment No. 1 in their entirety (“Amendment No. 2”). 5 On July 15, 2003, Amex filed a Form 19b-4, which replaced the original filing and all previous amendments in their entirety (“Amendment No. 3”). 6 On August 19, 2003, Amex filed a Form 19b-4, which replaced the original filing and all previous amendments in their entirety (“Amendment No. 4”). 7 *See* letter from Claire P. McGrath, Senior Vice President and Deputy General Counsel, Amex, to Nancy Sanow, Assistant Director, Division of Market Regulation, Commission, dated October 21, 2003 (“Amendment No. 5”). 8 On August 12, 2004, Amex filed a Form 19b-4, which replaced the original filing and all previous amendments in their entirety (“Amendment No. 6”). 9 *See* Securities Exchange Act Release No. 50188 (August 12, 2004), 69 FR 51495 (“Notice of the Proposal”). 10 *See* Amendment No. 7, dated December 16, 2004, submitted by Clare P. McGrath, Senior Vice President and Deputy General Counsel, Amex (“Amendment No. 7”). In Amendment No. 7, Amex proposes a minor modification to the exemptions to the Display Obligation. 11 *See* Amendment No. 8, dated January 6, 2005, submitted by Clare P. McGrath, Senior Vice President and Deputy General Counsel, Amex (“Amendment No. 8”). In Amendment No. 8, Amex proposes a minor modification to the exemptions to the Display Obligation. II. Description of Proposed Rule Amex proposes to amend Amex Rules 958A and 958A-ANTE to require the immediate display of customer options limit orders 12 that better the current market quotation (“Display Obligation”). Under the proposal, Amex specialists would be required to display immediately upon receipt the price and size of each customer options limit order held by the specialist that is at a price or size that would improve the displayed bid or offer in the option that is the subject of the limit order. Amex proposes to define “immediately upon receipt” to mean, under normal market conditions, as soon as practicable but no later than 30 seconds after receipt by the specialist. 13 12 Amex proposes to define the term “customer options limit order” as “an order to buy or sell an option at a specified price and size that is for the account of a customer as defined in paragraph (a)(26) of Rule 11Ac1-1 under the Securities Exchange Act of 1934.” Proposed Amex Rules 958A(e)(3) and 958A-ANTE(e)(3). 13 In its filing, Amex states that “receipt” means the time the order enters the Amex Order File system (“AOF”), which is consistent with its surveillance standard for other rules, such as the firm quote rule, wherein the Exchange measures compliance with the rule using the time the order enters the AOF. This means that the time of receipt is when the order is received in the AOF, even if the specialist does not happen to see it for several seconds. Amex proposes to exempt, or partially exempt, certain orders from the Display Obligation. Specifically, Amex proposes to exempt orders executed upon receipt as well as any order where the customer who placed it requests that the order not be displayed if, upon receipt of the order, the specialist announces to the trading crowd the information about the order that would be displayed absent the customer's request. Amex further proposes that orders the terms of which are delivered by the specialist to another exchange for execution be exempted from the Display Obligation. Exempt order types would also include all or none orders, at the close orders, fill or kill orders, immediate or cancel orders, stop orders, stop limit orders, and complex orders ( *i.e.* , spread, straddle, switch and combination orders), orders received prior to or during the opening trading rotation whether at the beginning of the trading day or after a trading halt (although once the trading rotation ends such orders would then be subject to the Display Obligation), and orders of more than 100 contracts, unless the customer placing such order requests that it be displayed. 14 Amex also proposes to amend Amex Rule 590 to include violations of the Exchange's limit order display rule in the Minor Rule Violation Fine System. 14 For a complete discussion of these exempt order types, see Notice of the Proposal, supra note 3. III. Commission Findings and Order Granting Approval The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 15 and, in particular, the requirements of section 6(b)(5) of the Act, 16 which requires, among other things, that the rules of an exchange 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 facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 15 In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 16 15 U.S.C. 78f(b)(5). Specifically, the Commission believes that the display of customer options limit orders that improve the price or size of the best disseminated Amex quote should promote transparency and enhance the quality of executions of customer options limit orders on Amex. The proposed amendments to Amex Rules 958A and 958A-ANTE introduce requirements for customer limit order display that are comparable to the requirements of the Commission's Display Rule, Rule 11Ac1-4 under the Act, 17 which is applicable to customer limit orders received in the equity market. In addition, the Commission believes that the Exchange's proposal to exempt all or none, fill or kill, immediate or cancel, and large sized orders from the Display Obligation is reasonable since these order types are either identical or substantially similar to order types exempt from the Commission's Display Rule. 17 17 CFR 240.11Ac1-4. The Commission also believes that it is consistent with the Act for Amex to exempt stop orders and stop limit orders from the Display Obligation under its rules. These orders are contingent orders that are subject to a particular triggering event and, thus, are not available for execution until the triggering event occurs. A stop order becomes a market order when triggered and thus is not subject to the Display Obligation because such an order would then be immediately executable. A stop limit order becomes a limit order when the triggering event occurs. This limit order would be subject to the Display Obligation. At the close orders may not be represented, displayed or booked until as near as possible to the close of trading, and, therefore, the Commission believes it is reasonable to exempt such orders from the Display Obligation. Spread, combination, straddle, stock-option, and one-cancels-the-other orders are complex orders with more than one component and, thus, the Commission believes, are not suitable for display. During a trading rotation, Amex systems attempt to set an opening price for the series. Until that opening price is established, there is no disseminated market. Therefore, the Commission believes it is reasonable to exempt orders received during a trading rotation from the Display Obligation. The Commission notes, however, that once the trading rotation ends, any orders not executed would then be subject to the Display Obligation. Finally, customer orders the terms of which are delivered by the specialist to another exchange for execution are exempt from the Exchange's Display Obligation. The Commission believes it is reasonable to exempt such orders since they are subject to execution upon receipt at the other options exchange. Moreover, the Exchange represents that if the order delivered to the other options exchange were canceled, in whole or in part, by the other exchange, then the original customer order would be subject to the Display Obligation immediately upon receipt of the cancellation notice by the Exchange. The Commission finds good cause for approving Amendments No. 7 and 8 to the proposed rule change prior to the thirtieth day after their publication in the **Federal Register** , pursuant to section 19(b)(2) of the Act. 18 Amendments No. 7 and 8 made minor modifications to the exemption for customer orders the terms of which are immediately delivered to another exchange for execution. Acceleration of Amendments No. 7 and 8 will permit the Exchange to implement the proposal in an expeditious manner. The Commission, therefore, believes that good cause exists, consistent with section 6(b)(5) 19 and section 19(b) 20 of the Act, to accelerate approval of Amendments No. 7 and 8. 18 15 U.S.C. 78s(b)(2). 19 15 U.S.C. 78f(b)(5). 20 15 U.S.C. 78s(b). IV. Solicitation of Comments Concerning Amendments No. 7 and 8 Interested persons are invited to submit written data, views, and arguments concerning Amendments No. 7 and 8, including whether they are 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-00-27 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-00-27. 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 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-Amex-00-27 and should be submitted on or before February 18, 2005. V. Conclusion *It is therefore ordered,* pursuant to section 19(b)(2) of the Act, 21 that the proposed rule change (File No. SR-Amex-00-27), as amended, be approved, and that Amendments No. 7 and 8 thereto be approved on an accelerated basis. 21 *Id.* 22 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 22 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-317 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51063; File No. SR-CBOE-2004-35] Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto by the Chicago Board Options Exchange, Inc. To Require the Immediate Display of Customer Limit Orders January 21, 2005. I. Introduction On June 17, 2004, the Chicago Board Options Exchange, Inc. (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend CBOE Rule 8.85 to require the immediate display of customer limit orders. The proposed rule change was published for comment in the **Federal Register** on July 2, 2004. 3 No comments were received regarding the proposal. CBOE filed Amendments No. 1 and 2 with the Commission on August 31, 2004, 4 and January 6, 2005, 5 respectively. This order approves the proposed rule change, grants accelerated approval to Amendment No. 2, and solicits comment on Amendment No 2. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 49916 (June 25, 2004), 69 FR 40422 (“Notice of the Proposal”). 4 *See* letter from Steve Youhn, Assistant Secretary, CBOE, to Nancy Sanow, Assistant Director, Commission, Division of Market Regulation, dated August 30, 2004 (“Amendment No. 1”). In Amendment No. 1, CBOE corrected a typographical error in the proposed rule text. Because Amendment No. 1 is a technical amendment, it is not subject to notice and comment. 5 *See* Amendment No. 2, dated January 6, 2005, submitted by Steve Youhn, Assistant Secretary, CBOE (“Amendment No. 2”). In Amendment No. 2, CBOE proposes a minor modification to the exemptions to the Display Obligation. II. Description of Proposed Rule CBOE proposes to amend CBOE Rule 8.85(b)(i) to codify an immediate display requirement with respect to eligible customer limit orders 6 (“Display Obligation”). Under the proposal, each DPM would be required to display the price and full size of eligible customer limit orders when such orders represent buying or selling interest that is at a better price than the best disseminated CBOE quote. A DPM also must increase the size of its quote to reflect a limit order priced equal to the CBOE disseminated quote. In proposed CBOE Rule 8.85(b)(i), CBOE proposes to define “immediately” to mean, under normal market conditions, as soon as practicable but no later than 30 seconds after receipt by the DPM. 7 6 CBOE proposes to define the term “customer limit order” as “an order to buy or sell a listed option at a specified price that is not for the account of either a broker or dealer; provided, however, that the term customer limit order shall include an order transmitted by a broker or dealer on behalf of a customer.” Proposed CBOE Rule 8.85(b)(i). 7 In its filing, CBOE states that “receipt by the DPM” means receipt on the PAR terminal in the DPM trading crowd, which is consistent with the firm quote definition of “time of receipt.” This means that the time of receipt is when the order is received on PAR, even if the DPM or PAR operator does not happen to see it for several seconds. CBOE proposes to exempt, or partially exempt, certain orders from the Display Obligation. Specifically, CBOE proposes to exempt orders executed upon receipt as well as any order where the customer who placed it requests that the order not be displayed, if upon receipt of the order the DPM announces via public outcry the information about the order that would be displayed if the order were subject to display. CBOE further proposes an exemption from the Display Obligation for orders for which, immediately upon receipt, a related order for the principal account of a DPM reflecting the terms of the customer order is routed to another options exchange that is a participant in the intermarket options linkage plan. 8 Exempt order types would also include contingency orders ( *i.e.* , market-if-touched, market-on-close, stop (stop-loss), and stop-limit orders), one-cancels-the-other orders, all or none orders, fill or kill orders, immediate or cancel orders, complex orders ( *i.e.* , spread, combination, straddle and stock-option orders), orders received during a trading rotation (although once the trading rotation ends such orders would then be subject to the Display Obligation), and orders of more than 100 contracts, unless the customer placing such order requests that it be displayed. 9 8 *See* Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000) (order approving the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage). 9 For a complete discussion of these exempt order types, *see* Notice of the Proposal, *supra* note 3. III. Commission Findings and Order Granting Approval The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 10 and, in particular, the requirements of section 6(b)(5) of the Act, 11 which requires, among other things, that the rules of an exchange 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 facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 10 In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 11 15 U.S.C. 78f(b)(5). Specifically, the Commission believes that the display of customer options limit orders that improve the price or size of the best disseminated CBOE quote should promote transparency and enhance the quality of executions of customer limit orders on CBOE. The proposed amendments to CBOE Rule 8.85 introduce requirements for customer limit order display that are comparable to the requirements of the Commission's Display Rule, Rule 11Ac1-4 under the Act, 12 which is applicable to customer limit orders received in the equity market. In addition, the Commission believes that the Exchange's proposal to exempt all-or-none, fill-or-kill, immediate-or-cancel, and large sized orders from the Display Obligation is reasonable since these order types are either identical or substantially similar to order types exempt from the Commission's Display Rule. 12 17 CFR 240.11Ac1-4. The Commission also believes that it is consistent with the Act for CBOE to exempt from the Display Obligation under its rules market-if-touched, stop-limit, and stop or stop-loss orders. These orders are contingent orders that are subject to a particular triggering event and, thus, are not available for execution until the triggering event occurs. A market-if-touched or stop-loss order becomes a market order when triggered and thus is not subject to the Display Obligation because such an order would then be immediately executable. A stop-limit order becomes a limit order when the triggering event occurs. This limit order would be subject to the Display Obligation. Market-on-close orders may not be represented, displayed or booked until as near as possible to the close of trading, and, therefore, the Commission believes it is reasonable to exempt such orders from the Display Obligation. Spread, combination, straddle, stock-option, and one-cancels-the-other orders are complex orders with more than one component and, thus, the Commission believes, are not suitable for display. During a trading rotation, CBOE systems attempt to set an opening price for the series. Until that opening price is established, there is no disseminated market. Therefore, it is reasonable to exempt orders received during a trading rotation from the Display Obligation. The Commission notes, however, that once the trading rotation ends, any orders not executed would then be subject to the Display Obligation. Finally, the Exchange proposes to exempt from the Display Obligation customer orders for which a related order for the principal account of a DPM reflecting the terms of the customer order is routed to another options exchange. The Commission believes it is reasonable to exempt such orders since they are subject to execution upon receipt at the other options exchange. Moreover, the Exchange represents that if an order routed to another options exchange is cancelled in whole or in part by the other exchange, then the order would be subject to the Display Obligation immediately upon receipt of the cancellation notice by the Exchange. The Commission finds good cause for approving Amendment No. 2 to the proposed rule change prior to the thirtieth day after their publication in the **Federal Register** , pursuant to section 19(b)(2) of the Act. 13 Amendment No. 2 made a minor modification to the exemption for customer orders for which a related order reflecting the terms of the customer order is immediately delivered to another exchange for execution. Acceleration of Amendment No. 2 will permit the Exchange to implement the proposal in an expeditious manner. The Commission, therefore, believes that good cause exists, consistent with section 6(b)(5) 14 and section 19(b) 15 of the Act, to accelerate approval of Amendment No. 2. 13 15 U.S.C. 78s(b)(2). 14 15 U.S.C. 78f(b)(5). 15 15 U.S.C. 78s(b). IV. Solicitation of Comments Concerning Amendment No. 2 Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 2, including whether it is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-CBOE-2004-35 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-CBOE-2004-35. 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 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-CBOE-2004-35 and should be submitted on or before February 18, 2005. V. Conclusion *It is therefore ordered,* pursuant to section 19(b)(2) of the Act, 16 that the proposed rule change (File No. SR-CBOE-2004-35) be approved, and that Amendment No. 2 thereto be approved on an accelerated basis. 16 *Id.* For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 17 17 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-318 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51066; File No. SR-FICC-2005-02] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Amend the Application and Continuing Membership Standards of the Government Securities Division and the Mortgage-Backed Securities Division January 21, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on January 7, 2005, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) and on January 14, 2005, amended the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by FICC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FICC is seeking to amend the rules of the Government Securities Division (“GSD”) and the Mortgage-Backed Securities Division (“MBSD”) to:

(1)Provide that when an applicant, member, or participant becomes subject to an order of statutory disqualification or order of similar effect, including an order issued by a non-U.S. regulator or examining authority, the FICC Membership and Risk Management Committee (“Committee”) shall determine whether such order shall be the basis for denial of the membership applicant or termination of membership rather than such denial or termination being automatic;

(2)impose a fine on members and participants that fail to notify FICC within two business days of falling out of compliance with specified membership standards, including becoming subject to an order of statutory disqualification or order of similar effect; and

(3)require applicants, members, and participants to notify FICC within two business days if they become aware of an investigation or similar proceeding against them that could lead them to violate a FICC membership standard. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC 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. FICC has prepared summaries, set forth in sections (A), (B), and

(C)below, of the most significant aspects of these statements. 2 2 The Commission has modified the text of the summaries prepared by FICC.

(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change FICC is seeking to amend the application and continuing membership standards of the GSD and the MBSD to:

(1)Provide that when an applicant, member, or participant becomes subject to an order of statutory disqualification or order of similar effect, including an order issued by a non-U.S. regulator or examining authority, the Committee shall determine whether this shall be the basis for denial of the membership applicant or termination of membership, rather than such denial or termination being automatic;

(2)impose a fine on members and participants that fail to notify FICC within 2 business days of falling out of compliance with specified membership standards, including becoming subject to an order of statutory disqualification or order of similar effect; and

(3)require applicants, members, and participants to notify FICC within two business days if they become aware of an investigation or similar proceeding against them that could lead them to violate a FICC membership standard. 1. Action in Cases of Statutory Disqualification or Orders of Similar Effect The GSD and MBSD rules currently provide that a membership applicant that is subject to an order of statutory disqualification under Section 3(a)(39) of the Act or an order of similar effect is not eligible for membership. 3 Currently, a waiver of this requirement by the Committee is necessary in order for FICC to admit such applicant into membership. The admission requirements also serve as continuance standards for current members and participants. Therefore, if a member or participant becomes subject to a statutory disqualification, a waiver must be sought in order for membership in FICC to continue. 3 For example, GSD Rule 3, “Financial Responsibility and Operational Capability Standards,” Section 1, “Admissions Criteria for Comparison-Only Members,” provides that an applicant may not be subject to an order of statutory disqualification or “an order of similar effect issued by a Federal or State banking authority, or other examining authority or regulator.” Section 3(a)(39) of the Act, which sets forth the definition of “statutory disqualification,” specifically covers orders issued by foreign financial regulatory authorities that are the equivalent to Commission-issued orders covered by the definition. The statutory definition also includes specific references to entities being barred from the “foreign equivalent of a self-regulatory organization [or a] foreign or international securities exchange” under “any substantially equivalent foreign statute or regulation.” At the time it was organized as a clearing corporation, the Government Securities Clearing Corporation, the predecessor to FICC, modeled its rules provisions regarding statutory disqualifications on those of other clearing agencies which are now subsidiaries of The Depository Trust & Clearing Corporation. The understanding at the time was that instances of statutory disqualification were a rare occurrence and called into question the entity's ability to meet membership requirements or to remain a member in good standing. More recently, firms are increasingly becoming subject to statutory disqualification, but the reasons for a firm's statutory disqualification may have little or no bearing on its ability to become or remain a member in good standing. 4 FICC would retain the ability to deny membership to or terminate as a member or participant a firm whose ability to meet applicable membership requirements is called into question. However, to the extent an order of statutory disqualification does not call this into question, FICC does not believe it appropriate for the Committee to issue a waiver in order to admit or retain the member. 4 Of note is that in those situations brought by management before the Committee recently, the Commission has permitted the entity to continue operating as a registered broker-dealer, and the relevant designated examining authority has retained the entity as a member. In addition, Rule 19h-1 promulgated pursuant to the Act, does not require that self-regulatory organizations automatically terminate the membership of entities subject to statutory disqualification. The proposed rule change would eliminate the automatic need to obtain a waiver in cases where an entity is subject to an order of statutory disqualification or order of similar effect but would keep such orders as a criterion to be considered for membership or continued membership. FICC management would continue to present all instances of such orders to the Committee, and the Committee would make all final determinations with respect to these entities. In this manner, FICC management and the Committee would be able to thoroughly evaluate the risks presented by an applicant, member, or participant that becomes subject to an order. The proposed rule change would allow the Committee to permit FICC to admit or retain members or participants that pose no risk to FICC. 5 In instances where waivers are still required under the rules and are granted by the Committee, FICC would promptly notify the Commission. 5 To the extent the Committee determines to admit or retain a member despite a statutory disqualification, the Committee will still retain all rights it currently has under FICC rules to impose limitations or restrictions on such member or participant. 2. Fines for Failure To Notify FICC for Falling Out of Compliance With Membership Criteria In addition to the changes above, FICC is proposing to implement a fine for those members and participants that do not promptly notify FICC of their noncompliance with any membership standard. 6 The membership standards are set forth in GSD Rules 2, “Members,” and 3, “Financial Responsibility and Operational Capability Standards,” which apply to comparison-only and netting members as applicable, and in MBSD clearing rules Article III, “Participants,” which apply to MBSD clearing participants. For risk management purposes, it is important that FICC learn of a member or participant's failure to meet a membership standard as soon as possible in order to determine a course of action that will best protect FICC. In addition, in some instances, such as certain cases where a member or participant becomes subject to a statutory disqualification order, 7 FICC is required to promptly notify the Commission. Given the importance of FICC's membership standards and the need for FICC to learn of noncompliance as soon as possible, FICC is proposing to fine members $1,000 per instance of a failure to notify FICC within two business days of the member or participant first having knowledge of its falling out of compliance with the particular membership standard. 8 Members and participants would be afforded the same due process as is currently available under FICC's rules with respect to other types of fines. As with all fines, FICC will notify the Commission of all fines that are imposed pursuant to this rule change. 6 The rules of FICC currently require members and participants to promptly notify FICC in the event that they are not meeting their membership standards. 7 Rule 19h-1 of the Act does not require a notification or notice to the Commission in all cases of statutory disqualification. 8 Once FICC is notified of an applicant or member's statutory disqualification, it will follow the provisions of Rule 19h-1 of the Act. In addition, members and participants that fail to timely notify FICC of falling out of compliance with any membership standard would automatically be placed on the Watch List and be subject to more frequent and thorough monitoring as provided for in GSD Rule 4, “Clearing Fund, Watch List, and Loss Allocation,” Section 3, “Watch List,” and MBSD Article IV, “Participants Fund,” Rule 6, “Watch List.” 3. Notification of Pending Investigations The proposed rule change also requires applicants, members, and participants to notify FICC within two business days of first having knowledge of a pending investigation or similar proceeding or condition that could lead them to violate a membership standard. The proposed rule change would provide an exception to this requirement in cases where disclosure to FICC would cause the applicant, member, or participant to violate an applicable law, rule, or regulation. 4. Definitions Finally, MBSD is proposing to add two definitions to Article I, “Definitions and General Provisions.” The term “Associated Person” would be defined to mean, when applied to any “person,” any partner, officer, or director of such “person” or any “person” directly or indirectly controlling or controlled by such “person,” including an employee of such “person.” The term “Person” would mean a partnership, Corporation or other organization, entity or individual. FICC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 9 and the rules and regulations thereunder applicable to FICC because it amends FICC's membership criteria in a prudent manner. It imposes fines that will encourage members and participants to notify FICC promptly of falling out of compliance with membership standards, which will enable FICC to act quickly to protect itself and its members and participants and which will better enable FICC to safeguard the securities and funds in its custody or control or for which it is responsible. 9 15 U.S.C. 78q-1.

(B)Self-Regulatory Organization's Statement on Burden on Competition FICC does not believe that the proposed rule change will have any impact or impose any burden on competition.

(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed rule change have not yet been solicited or received. FICC will notify the Commission of any written comments received by FICC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five 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 ninety 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 proposed rule change or

(1)For printed material reviewed, [$75.00] *$100.00* , plus $10.00 for each page reviewed in excess of 10 pages; and

(2)for video or audio media, [$75.00] *$100.00* , plus $10.00 per minute for each minute of tape reviewed in excess of 10 minutes. Where a member requests expedited review of material submitted to the Advertising Regulation Department there shall be a review charge of $500.00 per item plus $25 for each page reviewed in excess of 10 pages. Expedited review shall be completed within three business days, not including the date the item is received by the Advertising Regulation Department, unless a shorter or longer period is agreed to by the Advertising Regulation Department. The Advertising Regulation Department may, in its sole discretion, refuse requests for expedited review. 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 The Department is responsible for ensuring that all NASD member firms' communications with the public are fair, balanced, and not misleading. The mission of the Department, as provided in Rule 2210 and the Interpretations issued thereunder, is to ensure that all member communications with the public, including advertisements, sales literature, and correspondence, are based on principles of fair dealing and good faith, are fair and balanced, and provide a sound basis for evaluating the facts in regard to any particular security or type of security, industry, or service. Among other things, the Department reviews member communications with the public for false, exaggerated, unwarranted, misleading statements or claims, and exaggerated or unwarranted claims, opinions or forecasts. The purpose of the proposed rule change is to amend Section 13 to raise the fee that may be charged by the Department for reviewing each and every item of advertisement, sales literature, and other such material, whether in printed, video or other form, filed with or submitted to NASD (except for items that are filed or submitted in response to a written request from the Department issued pursuant to the spot check procedures set forth in NASD's Rules). Despite annual cost increases, NASD has not adjusted the charge to members for submitting advertisements, sales literature, and other such material to the Department since 1999. A recent analysis of the Department's operating and technology costs showed that NASD's costs have increased significantly due to increased responsibilities, economic conditions and the need for enhanced technology. Based on this review, NASD proposes to raise the fee charged for the review of printed material and video or audio media from $75.00 to $100.00 to offset these cost increases. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of section 15A of the Act 5 in general and with section 15A(b)(5) of the Act 6 in particular, which requires, among other things, that NASD's rules provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system that NASD operates or controls. NASD believes that the rule change is consistent with section 15A(b)(5) of the Act in that the proposed review charge is reasonable based on NASD's costs and equitably allocated among all members that file or submit advertisements, sales literature, and other such material, whether in printed, video or other form. 5 15 U.S.C. 78o-3. 6 15 U.S.C. 78o-3(b)(5). 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 The foregoing rule change has become effective upon filing with the Commission, pursuant to section 19(b)(3)(A)(ii) of the Act 7 and paragraph (f)(2) of Rule 19b-4 thereunder, 8 because it establishes or changes a due, fee, or other charge imposed by NASD. 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-NASD-2004-179 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-2004-179. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing will also 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-2004-179 and should be submitted on or before February 18, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-320 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51048; File No. SR-NYSE-2004-70] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto by the New York Stock Exchange, Inc. To Amend Exchange Rule 104 to Require Specialists To Yield Orally-Consummated Proprietary Trades to Later-Arriving System Orders January 18, 2005. 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 13, 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 January 7, 2005, the Exchange 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 January 7, 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 amend NYSE Rule 104, Dealings by Specialists, to require that in transactions between a specialist and a contra order that have been orally agreed to but not yet reported, the specialist must yield to any system orders that enter the specialist's book and can take the specialist's position in the orally-consummated transaction. The text of the proposed amendments is set forth below. Italics indicate additions. Rule 104 Dealings by Specialists Supplementary Material Functions of Specialists .10 *(11)(i) Notwithstanding the ability of a specialist to trade for his or her dealer account, dealer transactions by a specialist that have not yet been reported by the specialist must yield to any order or orders received through an Exchange order delivery system after the oral commitment to transact, provided that such order or orders are capable of trading in place of the specialist in the consummated transaction.* *(ii) The provisions of subparagraph

(i)above shall not apply if the specialist's trade for his or her dealer account:*

(a)*Is to correct an error on a previously reported transaction;*

(b)*Is executed in satisfaction of the specialist's obligation to give up a trade to an agency order;*

(c)*Is a non-regular way trade between the specialist and a Crowd broker;*

(d)*Is the result of the election of “stop” orders as required in Rule 123A.40;*

(e)*Is in connection with the execution of “stop” orders or CAP orders executed as part of the opening of trading;*

(f)*Participates on the closing transaction in a security to offset a market-at-the-close and/or limit-at-the-close order imbalance; or*

(g)*Is a report of principal participation on a commitment sent to another market center through the ITS system.* *(iii) Transactions by a specialist pursuant to subparagraph

(ii)above must be documented and reported to the Exchange in such manner and within such time as the Exchange shall designate.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend NYSE Rule 104 to provide that where a specialist has completed, but not yet reported, a transaction as principal with an order in the book or in the crowd, the specialist must yield to any order received through SuperDOT® that could take the specialist's place in the unreported principal transaction. Exchange rules provide that specialists must always yield to customer orders on the book when trading in the specialist's specialty securities for the dealer account. When no other interest is present on the book, specialists may trade for their own account with interests represented on the book or by a broker in the crowd; in such situations, the specialist may trade either fully or in parity with other contra interests represented in the crowd, as the case may be. The Exchange proposes to amend NYSE Rule 104.10 to include new section

(11)to require that, notwithstanding the ability of a specialist to trade as principal with either a system order or a broker in the crowd, if a marketable order arrives on the book before the report of the specialist's trade as principal is completed, the specialist must yield to such order. Where the specialist is required to yield, the customer whose order entered the book would be reported as the contra party for the trade instead of the specialist. The proposed rule would provide seven limited exceptions, representing situations in which it would continue to be appropriate for the specialist to act as principal, notwithstanding the presence of a new customer order on the book. These exceptions are:

(1)Corrections of bona fide specialist errors;

(2)Trading in satisfaction of the specialist's obligation to give up a trade to an agency order;

(3)Reports of non-regular-way principal-to-crowd transactions;

(4)Principal participation on stop order electing transactions;

(5)Principal participation in connection with opening transactions;

(6)Closing transactions involving market-on-close (“MOC”) imbalances; and

(7)Report of principal participation on a commitment sent to another market through the Intermarket Trading System (“ITS”). These exceptions are discussed in more detail below: 1. Corrections of Bona Fide Specialist Errors: These are cases where a specialist has to issue corrected reports that include dealer participation via the Display Book® to correct a previously executed and reported transaction. Such corrections could involve the price, volume, or names involved in a transaction. If an executable system order is on the same side as the dealer participation necessary to correct the error, this would trigger the Display Book's® “P” indicator (preventing the specialist from participating as dealer ahead of executable system orders). In this situation, the specialist would be permitted to use the “Prin Ahead” override feature, provided that the specialist placed the notation “Error” in the Display Book's® free-form comment field. The specialist would be required to adequately document the error on the firm's books and records. 2. Trading in satisfaction of the specialist's obligation to give up a trade to an agency order: These are cases where Exchange rules require the specialist to give up a trade to an agency order after the initial trade has been reported and the specialist cannot substitute the agency customer's name, such as where a customer requests to participate on a trade previously executed by the specialist as principal on a non-regular way basis. When reporting such substituted trades, the specialist would have to participate as dealer in order to unwind his own participation in the initial transaction. If an executable system order is on the same side as the dealer participation necessary to effect the substitution, this would trigger the Display Book's® “P” indicator. In this situation, the specialist would be permitted to use the “Prin Ahead” override feature to complete the substitute transaction. The specialist would be required to document the substitution trade in the Display Book's® free-form comment field. 3. Reports of non-regular-way principal-to-crowd transactions: These are cases where a crowd broker represents a non-regular-way settlement order ( *e.g.* , cash basis, next day, and sellers option) and the specialist is willing to trade with that order at a price at which there are regular way settlement customer orders on the same side on the Display Book®. The “Prin Ahead” override feature may be used by the specialist to effect the non-regular way transaction, provided, however, that the specialist may be required to give up the trade to an agency order if the customer indicates its willingness to participate on the same terms as the specialist. 4. Principal participation on stop order electing transactions: These are cases where the specialist participation in an electing transaction requires the guarantee of the same price to the elected stop order(s), the specialist bases the price on the total volume of both transactions, and the specialist effects both transactions contemporaneously and at the same price. Exchange rules require the specialist to report the transaction that elects the stop orders independently from the transaction that fills the stop orders. Orders may arrive on the Display Book® between the time the specialist reports the electing trade and the fill for the stop transaction, which would trigger the “P” indicator. In connection with the transaction filling the stop order, the specialist would be permitted to use the “Prin Ahead” override feature. The specialist would be required to document the dealer participation by placing a stop order comment in the Display Book's® free-form comment field. 5. Principal participation in connection with opening transactions: These are cases where the specialist participates as dealer in connection with stop orders and convert-and-parity (“CAP”) orders 4 that are included in the specialist's calculation of the opening price, elected by the opening crossing trade, and executed substantially contemporaneously with the opening transaction at the opening cross price, but that are reported separately from the report of the opening transaction. Orders may arrive on the Display Book® between the time the specialist reports the opening trade and the fill for the elected stop transaction, which would trigger the “P” indicator. In connection with the transaction filling the stop order at the opening, the specialist would be permitted to use the “Prin Ahead” override feature. The specialist would be required to document the dealer participation by placing a stop order comment in the Display Book's® free-form comment field. 4 CAP orders are orders in which the specialist may convert all or part of an unelected portion of a percentage order, and may trade on parity with the elected or converted portions of the order, as long as the specialist is not holding orders at the same price that do not grant parity. 6. Closing transactions involving MOC imbalances: These are cases where the specialist participates on the closing transaction to offset a market-on-close/limit-on-close order imbalance. The situation may arise if unexecuted market orders entered just prior to the close are assigned to the paired-off portion of the closing trades. When the specialist reports dealer participation to offset an imbalance on the first print of the closing (as required by Exchange rules) and there are market orders on the same side assigned to the paired off portion, which is the second print of the close, the “P” indicator would be triggered. In this instance, the specialist would be permitted to use the “Prin Ahead” override feature. The specialist would be required to document the dealer participation by indicating “MOC” in the Display Book's® free-form comment field. 7. Report of principal participation on a commitment sent to another market through the ITS System: These are cases where the specialist has indicated dealer interest to trade on a regional exchange and has sent a commitment to trade. It may take a regional exchange up to 30 seconds to execute and report the transaction. However, before the specialist can report the trade to the position minder system via the Display Book®, customer orders on the same side at the same or a better price may have been received, which would trigger the “P” indicator when the specialist attempts to report the ITS trade. In such cases, the specialist would be permitted to use the “Prin Ahead” override feature. The specialist would be required to document the situation. The Exchange believes that the amendment is designed to further ensure that public orders receive executions in the Exchange market against other public orders to the greatest extent possible. 2. Statutory Basis The Exchange believes that the proposal, as amended, is consistent with section 6(b)(5) of the Act, 5 which requires that an exchange have rules that are designed 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 securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 5 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposal would not 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 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 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 e-mail to *rule-comments@sec.gov* . Please include File Number SR-NYSE-2004-70 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-2004-70. 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 will also 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-2004-70 and should be submitted on or before February 18, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 6 6 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-319 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51051; File No. SR-PCX-2004-58] Self-Regulatory Organizations; the Pacific Exchange, Inc.; Order Approving Proposed Rule Change and Amendment No. 2 Thereto by the Pacific Exchange, Inc., Relating to the Exchange's Rules Under Its Minor Rule Plan and Recommended Fine Schedule January 18, 2005. On December 2, 2004, the Pacific Exchange, Inc., (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend PCX Rule 10.12 to add new provisions (h)(45) and (k)(i)45. These provisions amend the PCX Minor Rule Plan (“MRP”) and Recommended Fine Schedule (“RFS”) to add the failure to maintain adequate procedures and controls to monitor and supervise the entry of electronic orders by Users 3 to prevent the prohibited practices set forth in PCX Rules 6.87(d) and 6.90(e). 4 The proposed rule change was published for comment in the **Federal Register** on December 17, 2004. 5 On January 3, 2005, PCX filed Amendment No. 1 to the proposal. On January 4, 2005, PCX withdrew Amendment No. 1 and filed Amendment No. 2 to the proposal. 6 The Commission received no comments on the proposal. This order approves the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Pursuant to PCX Rule 6.87(a)(2), “User” means any person or firm that obtains electronic access to Auto-Ex (defined in PCX Rule 6.87(a)(1)) through an Order Entry Firm (defined in PCX Rule 6.87(a)(3)). Pursuant to PCX Rule 6.90(c)(1), “User” means any person or broker-dealer that obtains electronic access to PCX Plus (defined in PCX Rule 6.90(a)) through an Order Entry Firm (defined in PCX Rule 6.90(c)(2)). 4 PCX Rules 6.87(c)(4) and 6.90(d)(3) require Order Entry Firms to maintain such controls and procedures. 5 *See* Securities Exchange Act Release No. 50830 (December 9, 2004), 69 FR 75581 (December 17, 2004) (“Notice”). 6 In Amendment No. 2, PCX proposes to correct a typographical error in the proposed rule text by changing footnote 1 to tie to PCX Rule 10.12(k)(i) instead of to PCX Rule 10.12(k). Amendment No. 2 is a technical amendment, and, therefore, not subject to notice and comment. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange, 7 and, in particular, the requirements of section 6(b)(5) of the Act, 8 in that it is designed to promote just and equitable principles of trade, facilitate transactions in securities, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission also finds that the proposal is consistent with section 6(b)(6) of the Act, 9 which requires that members and persons associated with members be appropriately disciplined for violations of Exchange rules, and section 6(b)(7) of the Act, 10 which requires that members and persons associated with members are provided a fair procedures for disciplinary procedure. 7 In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 8 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78f(b)(6). 10 15 U.S.C. 78f(b)(7). In approving this proposal, the Commission in no way minimizes the importance of compliance with these rules, and all other rules subject to the imposition of fines under the MRP. The Commission believes that the violation of any self-regulatory organization's rules, as well as Commission rules, is a serious matter. However, in an effort to provide the Exchange with greater flexibility in addressing certain violations, the MRP provides a reasonable means to address rule violations that do not rise to the level of requiring formal disciplinary proceedings. The Commission notes, however, that after the first failure by an Order Entry Firm to maintain adequate controls and procedures to monitor and supervise the entry of electronic orders pursuant to PCX Rules 6.87(c)(4) and 6.90(d)(3), the Exchange will treat subsequent violations as a formal disciplinary matter. 11 The Commission expects that the Exchange will continue to conduct surveillance with due diligence, and make a determination based on its findings as to whether fines of more or less than the recommended amount are appropriate for violations of rules under the MRP on a case-by-case basis, or if a violation requires formal disciplinary action. 11 *See* proposed PCX Rule 10.12(k)(i)45. *See also* Notice, *supra* note 5. *It is therefore ordered,* pursuant to section 19(b)(2) of the Act 12 , that the proposed rule change, including Amendment No.2 thereto (File No. SR-PCX-2004-58) be, and it hereby is, approved. 12 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-325 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51053; File No. SR-PCX-2005-03] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc., Relating to Exchange Fees and Charges January 18, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on January 11, 2005, 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 PCX. The PCX has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the PCX under section 19(b)(3)(A)(ii) 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)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The PCX is proposing to amend its Schedule of Fees and Charges For Exchange Services (“Schedule”) in order to add provisions for the handling of options on the Standard and Poor's Depositary Receipts (ticker symbol “SPY”) under the Exchange's marketing fee program. The text of the proposed rule change is available on the PCX's Web site ( *http://www.pacificex.com* ), at the PCX's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the PCX included statements concerning the purpose of and basis for its proposal and discussed any comments it had received regarding the proposal. The text of these statements may be examined at the places specified in Item IV below. The 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 PCX states that the purpose of the proposed filing is to amend the Schedule in order to add provisions for the handling of SPY options under the Exchange's marketing fee program. The Exchange proposes to collect a $1.00 per contract marketing fee for SPY options and assess this fee on all transactions except for Market Maker to Market Maker transactions. In addition, the Exchange is proposing to exclude trades of SPY options from the existing cap on marketing fees. The PCX states that this charge is necessary as a result of the costs associated with trading SPY options. The Exchange believes that capping marketing fees at $200 per trade would put it at a competitive disadvantage to other exchanges that trade SPY options. The Exchange has also proposed to revise the Schedule to show the change in the symbol of the Nasdaq-100 Tracking Stock Options from QQQ to QQQQ. 2. Statutory Basis The Exchange 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)(4) of the Act 6 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities for trading option contracts. 7 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(4). 7 Telephone conversation between Steven Matlin, Senior Counsel, PCX, and Davis Liu, Attorney, Division of Market Regulation, Commission, on January 14, 2005. 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 PCX neither solicited nor received written comments with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to section 19(b)(3)(A)(ii) of the Act 8 and subparagraph (f)(2) of Rule 19b-4 thereunder. 9 Accordingly, the proposal will take effect upon filing with the Commission. 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. 8 15 U.S.C. 78s(b)(3)(A)(ii). 9 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-PCX-2005-03 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-2005-03. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the 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-2005-03 and should be submitted on or before February 18, 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. E5-326 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51061; File No. SR-PCX-00-15] Self-Regulatory Organizations; Order Approving a Proposed Rule Change and Amendments No. 1 and 2 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendments No. 3, 4, 5, 6, and 7 Thereto by the Pacific Exchange, Inc. To Require the Immediate Display of Customer Limit Orders January 21, 2005. I. Introduction On June 14, 2000, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend PCX Rule 6.55 to require the immediate display of customer limit orders. PCX filed Amendments No. 1 and 2 to the proposed rule change on August 1, 2000, 3 and October 17, 2000, 4 respectively. The proposed rule change, as amended by Amendments No. 1 and 2, was published for comment in the **Federal Register** on November 21, 2000. 5 No comments were received regarding the amended proposal. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* letter from Hassan Abedi, Attorney, Regulatory Policy, PCX, to Nancy Sanow, Assistant Director, Division of Market Regulation (“Division”), Commission, dated July 31, 2000 (“Amendment No. 1”). 4 *See* letter from Hassan Abedi, Attorney, Regulatory Policy, PCX, to Nancy Sanow, Assistant Director, Division, Commission, dated September 29, 2000 (“Amendment No. 2”). 5 *See* Securities Exchange Act Release No. 43550 (November 13, 2000), 65 FR 69979 (“Notice”). PCX filed Amendments No. 3, 4, 5, 6, and 7 with the Commission on October 28, 2004, 6 November 18, 2004, 7 December 10, 2004, 8 December 31, 2004, 9 and January 7, 2005, 10 respectively. This order approves the proposed rule change and Amendments No. 1 and 2 and grants accelerated approval to and solicits comment on Amendments No. 3, 4, 5, 6 and 7. 6 On October 28, 2004, PCX filed a Form 19b-4, which replaced the original filing and Amendments No. 1 and 2 in their entirety (“Amendment No. 3”). In Amendment No. 3, PCX proposes to revise the proposal to reflect changes to PCX's systems ( *i.e.* , the approval and roll-out of PCX Plus) since the Notice was published for comment. Amendment No. 3 also added a number of exemptions to the Display Obligation, discussed in more detail below, which mirror exemptions proposed by the Chicago Board Options Exchange (“CBOE”) and American Stock Exchange (“Amex”) in recently-published proposals. *See* Securities Exchange Act Release Nos. 49916 (June 25, 2004), 69 FR 40422 (July 2, 2004) (SR-CBOE-2004-35) (“CBOE Notice”) and 50188 (August 12, 2004), 69 FR 51495 (August 19, 2004) (SR-Amex-00-27) (“Amex Notice”), which we also approve today, *see* Securities Exchange Act Release Nos. 51063 (January 21, 2005) (“CBOE Approval”) and 51062 (January 21, 2005) (“Amex Approval”). 7 *See* letter from Tania Blanford, Staff Attorney, Regulatory Policy, PCX, to Nancy Sanow, Assistant Director, Division, Commission, dated November 18, 2004 (“Amendment No. 4”). In Amendment No. 4, PCX proposes a minor modification to the exemptions to the Display Obligation. 8 *See* Partial Amendment, dated December 10, 2004, submitted by Tania Blanford, Staff Attorney, PCX (“Amendment No. 5”). In Amendment No. 5, PCX proposes a minor modification to the exemptions to the Display Obligation. 9 *See* Partial Amendment, dated December 31, 2004, submitted by Tania Blanford, Staff Attorney, PCX (“Amendment No. 6”). In Amendment No. 6, PCX proposes a minor modification to the exemptions to the Display Obligation. 10 *See* Partial Amendment, dated January 7, 2005, submitted by Tania Blanford, Staff Attorney, PCX (“Amendment No. 7”). In Amendment No. 7, PCX proposes a minor modification to the exemptions to the Display Obligation. II. Description of Proposed Rule PCX proposes to amend PCX Rule 6.55 to codify an immediate display requirement with respect to eligible customer limit orders (“Display Obligation”). The text of the proposed rule change, as amended, follows. Additions are in *italics* . Deletions are in [brackets]. Displaying Bids and Offers in the Book Rule 6.55. The limit orders in the custody of an Order Book Official [shall] constitute *the* [his] book. *Each Order Book Official shall display immediately the full price and size of any customer limit order that improves the price or increases the size of the best disseminated PCX quote.* [So far as practicable, an Order Book Official shall continuously display, in a visible manner, the highest bid and lowest offer along with an indication of the number of option contracts bid for at the highest bid and offered at the lowest offer in his book in each option contract for which he is acting as Order Book Official.] *For the purpose of this rule “immediately” means as soon as practicable after receipt, which under normal market conditions means no later than 30 seconds after receipt. The term “customer limit order” means an order to buy or sell a listed option at a specified price that is not for the account of either a broker or dealer; provided, however, that the term customer limit order shall include an order transmitted by a broker or dealer on behalf of a customer.* [provided, however, that where the highest bid or lowest offer is for more than twenty-five option contracts, or such other number of option contracts as may be prescribed from time to time by the Options Floor Trading Committee, the Order Book Official may display an indication that the bid or offer is for at least that number of option contracts. When required by market conditions, he may make such quotations available orally rather than by displaying them.] *The following order types are exempt from the display obligation:* *(a) An order executed upon receipt;* *(b) An order where the customer who placed it requests that it not be displayed, and upon receipt of the order, the Floor Broker announces in public outcry the information concerning the order that would be displayed if the order were subject to being displayed;* *(c) An order the terms of which are delivered immediately upon receipt to another options exchange that is a participant in the Intermarket Options Linkage Plan;* *(d) Order types defined in PCX Rule 6.62(c)-(d), (f)-(h) and (j)-(k);* *(e) Large-sized orders (orders for more than 100 contracts), unless the customer placing such order requests that the order be displayed;* *(f) Orders received before or during a trading rotation (once the trading rotation ends and regular trading begins, orders received before or during the trading rotation will be subject to the display requirement).* Commentary: [.01 In displaying the highest bid or the lowest offer in his book for a particular option contract, an Order Book Official shall indicate the full size of such bid or offer if it is for 25 or fewer option contracts. If the highest bid or the lowest offer is for more than 25 option contracts, the Order Book Official shall display a size indication of at least 25 units, and may indicate at his discretion, a larger number.] [.02] *.01* Renumbered. [.03] *.02* Renumbered. Currently, PCX Rule 6.55 provides that an Order Book Official (“OBO”) “shall continuously display, in a visible manner, the highest bid and lowest offer along with an indication of the number of option contracts bid for at the highest bid and offered at the lowest offer in his book in each option contract for which he is acting as Order Book Official.” The OBO may take custody of limit orders both manually and electronically. An order is entered manually into an OBO's custody when a Floor Broker places a written, time-stamped order ticket into the proper receptacle at the trading post. 11 Alternatively, an order is entered electronically into the OBO's custody when an OTP Holder or OTP Firm sends it to the Pacific Options Exchange Trading System (“POETS”) or PCX Plus 12 via the Exchange's Member Firm Interface and the order, not being marketable, is electronically entered into the Consolidated Book 13 via the Auto-Ex Book 14 function of POETS or via PCX Plus. Orders entered electronically into the Consolidated Book are immediately displayed on the overhead screens on the trading floor and disseminated to the public via the Options Price Reporting Authority (“OPRA”). Orders entered manually must be entered into POETS or PCX Plus before being displayed on the floor or disseminated via OPRA. 11 *See* PCX Rule 6.52, Commentary .04. A Floor Broker must use due diligence in handling an order that it represents as agent. *See generally* PCX Rule 6.46. 12 *See* Securities Exchange Act Release No. 49718 (May 17, 2004), 69 FR 29611 (May 24, 2004) (order approving PCX Plus). 13 *See* PCX Rule 6.1(b)(37). 14 *See* PCX Rule 6.87(1). Under the proposal, OBOs would be required to display immediately the price and full size of any eligible customer limit order that improves the price or increases the size of the best disseminated PCX quote. PCX proposes to define “immediately” to mean, under normal market conditions, as soon as practicable but no later than 30 seconds after receipt by the OBO. 15 PCX proposes to define the term “customer limit order” as “an order to buy or sell a listed option at a specified price that is not for the account of either a broker or dealer; provided, however, that the term customer limit order shall include an order transmitted by a broker or dealer on behalf of a customer.” 15 In its filing, PCX states that “receipt by the OBO” means receipt on POETS or the PCX Plus system, which is consistent with the firm quote definition of “time of receipt.” This means that the time of receipt is when the order is received on POETS or PCX Plus, even if the OBO does not happen to see it for several seconds. PCX proposes to exempt, or partially exempt, certain order types from the Display Obligation. Specifically, PCX proposes to exempt orders executed upon receipt as well as any order where the customer who placed it requests that the order not be displayed, if upon receipt of the order, the Floor Broker announces via public outcry the information about the order that would be displayed if the order were subject to display. 16 PCX further proposes to exempt from the Display Obligation a customer order the terms of which are delivered, immediately upon receipt, to another options exchange that participates in the options intermarket linkage plan. 17 16 While the Exchange's proposed Display Obligation would be imposed on the OBO, the OBO, who does not hold customer orders, cannot take custody of a limit order that a customer has instructed not to be displayed. Under PCX Rule 6.46(a) and

(f)and Commentaries .01 and .05 thereto, the Floor Broker, as the person holding the order, will have the obligation to vocalize the information concerning the order that would be displayed if the order were subject to being displayed. Telephone conversation between Tania Blanford, Staff Attorney, Regulatory Policy, PCX, and Nathan Saunders, Attorney, Division, Commission, November 9, 2004. 17 *See* Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 48023 (August 4, 2000) (order approving the Plan for the Purpose of Creating and Operating an Intermarket Option Linkage). The Exchange represents that if such a related order that is delivered immediately upon receipt to another options exchange that is a particiipant in the intermarket options linkage plan were canceled, in whole or in part, by the other options exchange, then the OBO would be obligated to display immediately upon receipt of the cancellation notice the price and size of the customer order as set forth in proposed PCX Rule 6.55. The Exchange also proposes to exempt, or partially exempt, from the Display Obligation the following types of orders set forth in PCX Rule 6.62(c)-(d), (f)-(h) and (j)-(k): Contingency orders: Stop-limit orders (PCX Rule 6.62(c)(1)) and stop (stop-loss) orders (PCX Rule 6.62(c)(2))—These orders are not executable until the market reaches a specified “trigger” price, at which point a stop-limit order converts to a limit order and a stop order converts to a market order. As such, these orders are not available to trade and have no standing in the quoted markets until the specified price trigger is reached. However, the limit order resulting from a triggered stop-limit order is subject to the Display Obligation. Complex orders: Spread orders (PCX Rule 6.62(d)); straddle orders (PCX Rule 6.62(g)); combination orders (PCX Rule 6.62(h)); stock/option orders (PCX Rule 6.62(j)(1)); and ratio orders (PCX Rule 6.62(k))—These orders specify instructions to trade more than one options series or product as a package, typically at a specified net debit or credit as opposed to at a specific limit price for each leg involved. Therefore, there is no specified limit price for each leg of the order to display in the Exchange's disseminated quotes. Moreover, OPRA does not accept complex order quotes at net prices. One-cancels-the-other orders (PCX Rule 6.62(f))—A one-cancels-the-other order consists of two or more orders treated as a unit. The execution of any one of the orders causes the others to be cancelled. If the Floor Broker cannot execute any of the orders upon receipt, then none can be displayed or booked as doing so could result in the approximately simultaneous execution of more than one component order, in direct contravention of the primary order condition. Large sized orders—The Commission's Display Rule, Rule 11Ac1-4 under the Act, 18 applicable to customer limit orders received in the equity market, provides a general exclusion for block size orders of at least 10,000 shares. 19 PCX proposes to adopt a similar exemption for large sized orders. Accordingly, there would be no obligation to display orders for more than 100 contracts, unless the customer placing such order requests otherwise. 18 17 CFR 240.11Ac1-4. 19 *See* 17 CFR 240.11Ac1-4(c)(4). Orders received during a trading rotation—Orders received before or during a trading rotation (as defined in PCX Rule 6.64) would be exempt from the 30-second standard. During a rotation, the PCX systems attempt to find the opening price and until the opening price is established, there is no disseminated market. Once the trading rotation ends and regular trading begins, orders received before or during the trading rotation would be subject to the Display Obligation. Finally, PCX proposes to delete language in PCX Rule 6.55, Commentary .01, referring to display obligations where the highest bid or lowest offer is for more than twenty-five option contracts as such language is no longer applicable. III. Commission Findings and Order Granting Approval The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 20 and, in particular, the requirements of section 6(b)(5) of the Act, 21 which requires, among other things, that the rules of an exchange 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 facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Specifically, the Commission believes that the immediate display of customer limit orders that improve the price or size of the best disseminated PCX quote should promote transparency and enhance the quality of executions of customer limit orders on PCX. 20 In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 21 15 U.S.C. 78f(b)(5). The proposed amendments to PCX Rule 6.55 introduce requirements for customer limit order display that are comparable to the requirements of the Commission's Display Rule, which is applicable to customer limit orders received in the equity market. In addition, the Commission believes that the Exchange's proposal to exempt large sized orders from the Display Obligation is reasonable since a substantially similar exemption is set forth in the Commission's Display Rule. The Commission also believes that it is consistent with the Act for PCX to exempt from the Display Obligation under its rules stop-limit and stop or stop-loss orders. These orders are contingent orders that are subject to a particular triggering event and, thus, are not available for execution until the triggering event occurs. A stop-loss order becomes a market order when triggered and thus is not subject to the Display Obligation because such an order would then be immediately executable. A stop-limit order becomes a limit order when the triggering event occurs. This limit order would be subject to the Display Obligation. Spread, straddle, combination, stock/option, ratio and one-cancels-the-other orders are complex orders with more than one component and, thus, the Commission believes, are not suitable for display. During a trading rotation, PCX systems attempt to set an opening price for the series. Until that opening price is established, there is no disseminated market. Therefore, it is reasonable to exempt orders received before or during a trading rotation from the Display Obligation. The Commission notes, however, that once the trading rotation ends, any orders not executed would then be subject to the Display Obligation. Finally, the Exchange proposes to exempt from the Display Obligation customer orders the terms of which are delivered, immediately upon receipt, to another options exchange. The Commission believes it is reasonable to exempt such orders since they are subject to execution upon receipt at the other options exchange. Moreover, the Exchange represents that if the order delivered to the other options exchange were canceled, in whole or in part, by the other exchange, then the original customer order would be subject to the Display Obligation immediately upon receipt of the cancellation notice by the Exchange. The Commission finds good cause for approving Amendments No. 3, 4, 5, 6, and 7 to the proposed rule change prior to the thirtieth day after their publication in the **Federal Register,** pursuant to section 19(b)(2) of the Act. 22 Amendment No. 3 would revise the proposal to reflect changes to PCX's systems since the Notice was published for comment. These revisions are necessary given recent changes to PCX's systems, such as the approval and implementation of the PCX Plus electronic trading platform, but do not alter the primary purpose of the proposal: to require immediate display of customer limit orders on the Exchange. 22 15 U.S.C. 78s(b)(2). In Amendment No. 3, PCX also proposes several exemptions to the Display Obligation. The Commission notes that these exemptions, discussed in detail in Part II above, are substantially identical to exemptions proposed by CBOE and Amex in their customer limit order display proposals, which were recently noticed for full 21-day comment periods. 23 No comments were received on either the CBOE or Amex proposal. Amendments No. 4, 5, 6, and 7 proposed minor modifications to the proposed rule text, and thus are appropriate for accelerated approval. 23 *See* CBOE Notice and Amex Notice, *supra* note 6. Accelerated approval of Amendments No. 3, 4, 5, 6, and 7 will permit the Exchange to implement the proposal in an expeditious manner, *i.e.,* simultaneously with the implementation of similar proposals by CBOE, Amex and the Philadelphia Stock Exchange (“Phlx”), which we also approve today. 24 The Commission, therefore, believes that good cause exists, consistent with section 6(b)(5) 25 and section 19(b) 26 of the Act, to accelerate approval of Amendments No. 3, 4, 5, 6, and 7. 24 *See* CBOE Approval, *supra* note 6; Amex Approval, *supra* note 6; and Securities Exchange Act Release No. 51064 (January 21, 2005) (notice of filing and order granting accelerated approval to SR-Phlx-2004-73). 25 15 U.S.C. 78f(b)(5). 26 15 U.S.C. 78s(b). IV. Solicitation of Comments Concerning Amendments No. 3, 4, 5, 6, and 7 Interested persons are invited to submit written data, views, and arguments concerning Amendments No. 3, 4, 5, 6, and 7, including whether they are 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-00-15 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-00-15. 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 Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-PCX-00-15 and should be submitted on or before February 18, 2005. V. Conclusion *It is therefore ordered,* pursuant to section 19(b)(2) of the Act, 27 that the proposed rule change (File No. SR-PCX-00-15), as amended, be approved, and that Amendments No. 3, 4, 5, 6, and 7 thereto be approved on an accelerated basis. 27 *Id.* For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 28 28 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-327 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51060; File No. SR-Phlx-2005-01] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Philadelphia Stock Exchange, Inc., Relating To Imposing a New Licensing Fee in Connection With the Firm-Related Equity Option and Index Option Fee Cap January 19, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on January 10, 2005, the Philadelphia Stock Exchange, Inc. (“Exchange” or “Phlx”) 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. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx, pursuant to section 19(b)(1) of the Act and Rule 19b-4 thereunder, proposes to amend its schedule of fees to adopt a license fee of $.10 for options traded on the Standard & Poor's Depositary Receipts®, Trust Series 1 (“SPDRs”), traded under the symbol SPY (“SPY”), 3 to be assessed per contract side for equity option “firm” transactions (comprised of equity option firm/proprietary comparison transactions, equity option firm/proprietary transactions and firm/proprietary facilitation transactions). This license fee will be imposed only after the Exchange's $60,000 “firm-related” equity option and index option comparison and transaction charge cap, described more fully below, is reached. 3 “Standard & Poor's,” “S&P®,” “S&P 500®,” “Standard & Poor's 500®,” “Standard & Poor's Depositary Receipts®,” and “500” are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by the Philadelphia Stock Exchange, Inc., in connection with the listing and trading of SPDRs, on the Phlx. These products are not sponsored, sold or endorsed by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and Standard & Poor's makes no representation regarding the advisability of investing SPDRs. Currently, the Exchange imposes a cap of $60,000 per member organization 4 on all “firm-related” equity option and index option comparison and transaction charges combined. 5 Specifically, “firm-related” charges include equity option firm/proprietary comparison charges, equity option firm/proprietary transaction charges, equity option firm/proprietary facilitation transaction charges, index option firm (proprietary and customer executions) comparison charges, index option firm/proprietary transaction charges, and index option firm/proprietary facilitation transaction charges (collectively, “firm-related charges”). Thus, such firm-related charges for equity options and index options, in the aggregate for one billing month, may not exceed $60,000 per month per member organization. 4 The firm/proprietary comparison or transaction charge applies to member organizations for orders for the proprietary account of any member or non-member broker-dealer that derives more than 35% of its annual, gross revenues from commissions and principal transactions with customers. Member organizations are required to verify this amount to the Exchange by certifying that they have reached this threshold and by submitting a copy of their annual report, which was prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). In the event that a member organization has not been in business for one year, the most recent quarterly reports, prepared in accordance with GAAP, will be accepted. *See* Securities Exchange Act Release No. 43558 (November 14, 2000), 65 FR 69984 (November 21, 2000) (SR-Phlx-00-85). 5 *See* Securities Exchange Act Release No. 51024 (January 11, 2005), 70 FR 3088 (January 19, 2005) (File No. SR-Phlx-2004-94). The Exchange also imposes a license fee of $0.10 per contract side for equity option “firm” transactions on options on Nasdaq-100 Index Tracking Stocksm, 6 traded under the symbol QQQQ (“QQQ”), and certain other licensed products 7 (collectively, “licensed product”) after the $60,000 cap, as described above, is reached. Therefore, when a member organization exceeds the $60,000 cap (comprised of combined firm-related charges), the member organization is charged $60,000, plus license fees of $0.10 per contract side for any applicable licensed product trades (if any) over those that were included in reaching the $60,000 cap. In other words, once the cap is reached, the $0.10 license fee is imposed on all subsequent firm-related transactions; these license fees are charged in addition to the $60,000 cap. 6 The Nasdaq-100®, Nasdaq-100 Index®, Nasdaq®, The Nasdaq Stock Market®, Nasdaq-100 Shares SM , Nasdaq-100 Trust SM , Nasdaq-100 Index Tracking Stock SM , and QQQ SM are trademarks or service marks of The Nasdaq Stock Market, Inc. (“Nasdaq”) and have been licensed for use for certain purposes by the Phlx pursuant to a License Agreement with Nasdaq. The Nasdaq-100 Index® (“Index”) is determined, composed, and calculated by Nasdaq without regard to the Licensee, the Nasdaq-100 Trust SM , or the beneficial owners of Nasdaq-100 Shares SM . Nasdaq has complete control and sole discretion in determining, comprising, or calculating the Index or in modifying in any way its method for determining, comprising, or calculating the Index in the future. 7 In addition to the QQQs, the following products are assessed a $.10 license fee per contract side after the $60,000 cap is reached: Russell 1000 Growth iShares (“IWF”); Russell 2000 iShares (“IWM”); Russell 2000 Value iShares (“IWN”): Russell 2000 Growth iShares (“IWO”); Russell Midcap Growth iShares (“IWP”); Russell Midcap Value iShares (“IWS”); NYSE Composite Index (“NYC”); and NYSE U.S. 100 Index (“NY”). The Exchange proposes to adopt a $.10 license fee per contract side for the SPY for equity option firm transactions, which will be imposed after the $60,000 cap is reached in the same way the current licensed product fees are assessed. Thus, when a member organization exceeds the $60,000 cap, the member organization will be charged $60,000 plus any applicable license fees for trades of licensed products, including the SPY, over those trades that were counted in reaching the $60,000 cap. 8 8 Consistent with current practice, when calculating the $60,000 cap, the Exchange first calculates all equity option and index option transaction and comparison charges for products without license fees, and then equity option transaction and comparison charges for products with license fees ( *i.e.* , QQQ license fees) that are assessed by the Exchange after the $60,000 cap is reached. *See* Securities Exchange Act Release No. 50836 (December 10, 2004), 69 FR 75584 (December 17, 2004) (SR-Phlx-2004-70). The fees set forth in this proposal are scheduled to become effective for transactions settling on or after January 10, 2005. The Exchange also proposes to make a minor change to its $60,000 Firm Related Equity Option and Index Option Cap Schedule by changing the reference to “$50,000” to read “$60,000.” Although other references to $50,000 were changed to $60,000 in SR-Phlx-2004-94, this reference was inadvertently omitted. A copy of the applicable portions of the Exchange's Summary of Equity Options Charges and the Exchange's $60,000 “Firm Related” Equity Option and Index Option Cap Schedule is available on Phlx's Web site ( *http://www.phlx.com/exchange/phlx_rule_fil.html* ), at Phlx's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in item IV below. The Exchange has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of assessing the SPY license fee of $.10 per contract side after reaching the $60,000 cap as described in this proposal is to help defray licensing costs associated with the trading of this product, while still capping member organizations' fees enough to attract volume from other exchanges. The cap operates this way in order to offer an incentive for additional volume without leaving the Exchange with out-of-pocket costs. 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b)(4) of the Act, 9 in that it provides for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. 9 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee or other charge imposed by the Exchange, it has become effective pursuant to section 19(b)(3)(A)(ii) of the Act 10 and Rule 19b-4(f)(2) 11 thereunder. 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. 10 15 U.S.C. 78s(b)(3)(A)(ii). 11 17 CFR 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 No. SR-Phlx-2005-01 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-Phlx-2005-01. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2005-01 and should be submitted on or before February 18, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-323 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51064; File No. SR-Phlx-2004-73 Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change and Amendments No. 1 and 2 Thereto To Require the Immediate Display of Customer Options Limit Orders January 21, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 , and Rule 19b-4 2 thereunder, notice is hereby given that on November 3, 2004, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in items I, II, and III, below, which items have been substantially prepared by the Exchange. Phlx filed Amendment No. 1 to the proposed rule change on January 13, 2005, 3 and filed Amendment No. 2 to the proposed rule change on January 19, 2005. 4 The Commission is publishing this notice to solicit comment on the proposed rule change, as amended, from interested persons, and at the same time is granting accelerated approval to the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Amendment No. 1, dated January 13, 2005, submitted by Richard S. Rudolph, Director and Counsel, Phlx (“Amendment No. 1”). In Amendment No. 1, Phlx proposes clarifying language to be included in the previously submitted proposed rules. 4 *See* Amendment No. 2, dated January 19, 2005, submitted by Richard S. Rudolph, Director and Counsel, Phlx (“Amendment No. 2”). In Amendment No. 2, Phlx proposes a minor modification to the previously submitted proposed rules. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Phlx proposes to amend Phlx Rules 1014, 1063 and 1080, and to delete Option Floor Procedure Advice A-1, to:

(1)Reflect that the Exchange's Automated Options Market (“AUTOM”) System, 5 and not the specialist, will immediately display the full price and size of any limit order that establishes the Exchange's disseminated price or increases the size of the Exchange's disseminated bid or offer, subject to certain exemptions; and

(2)establish new rules that require Exchange Registered Options Traders (“ROTs”) and Floor Brokers to place limit orders on the limit order book electronically. 5 AUTOM is the Exchange's electronic order delivery, routing, execution and reporting system, which provides for the automatic entry and routing of equity option and index option orders to the Exchange trading floor. Orders delivered through AUTOM may be executed manually, or certain orders are eligible for AUTOM's automatic execution features: AUTO-X, Book Sweep, and Book Match. Equity option and index option specialists are required by the Exchange to participate in AUTOM and its features and enhancements. Option orders entered by Exchange members into AUTOM are routed to the appropriate specialist unit on the Exchange trading floor. *See* Phlx Rule 1080. The text of the proposed rule change, as amended, follows. Additions are in *italics* . Deletions are in [brackets]. Rule 1014. Obligations and Restrictions Applicable to Specialists and Registered Options Traders (a)-(h) No Change. Commentary: .01-.17 No change. *.18. An ROT who wishes to place a limit order on the limit order book must submit such a limit order electronically.* Rule 1063. Responsibilities of Floor Brokers (a)-(e) No change. *Commentary:* *.01. A Floor Broker who wishes to place a limit order on the limit order book must submit such a limit order electronically through the Options Floor Broker Management System.* Rule 1080. Philadelphia Stock Exchange Automated Options Market (AUTOM) and Automatic Execution System (AUTO-X) (a)-(b) No change

(c)AUTO-X. * * * (i)-(iii) No change.

(iv)Except as otherwise provided in this Rule, in the following circumstances, an order otherwise eligible for automatic execution will instead be manually handled by the specialist: (A)-(C) No change.

(D)When the [specialist posts] *Exchange's best* [a] bid or offer *is represented by a limit order on the book* [that is better than the specialist's own bid or offer] (except with respect to orders eligible for “Book Sweep” as described in Rule 1080(c)(iii) above, and “Book Match” as described in Rule 1080(g)(ii) below); (E)-(H) No change. (d)-(k) No change. Commentary: .01 No change. .02 The Electronic Order Book is the Exchange's automated [specialist] limit order book, which automatically routes all unexecuted AUTOM orders to the book and displays orders real-time in order of price/time priority. [Orders not delivered through AUTOM may also be entered onto the Electronic Order Book.] *(a)(i) Except as provided in sub-paragraph (a)(ii) below, the AUTOM System will immediately display the full price and size of any limit order that establishes the Exchange's disseminated price or increases the size of the Exchange's disseminated bid or offer.* *(ii) The AUTOM System will not display:* *(A) An order executed upon receipt;* *(B) An order where the customer who placed it requests that it not be displayed, and upon representation of such order in the trading crowd the Floor Broker announces in public outcry the information concerning the order that would be displayed if the order were subject to being displayed;* *(C) A customer limit order for which, immediately upon receipt, a related order for the principal account of the specialist, reflecting the terms of the customer order, is routed to another options exchange;* *(D) Orders received before or during a trading rotation, however, such limit orders will be displayed immediately upon conclusion of the applicable rotation if they represent the Exchange's best bid or offer;* *(E) The following order types as defined in Rule 1066: Contingency Orders; One-Cancels-the-Other Orders; Hedge Orders (e.g., spreads, straddles, combination orders); Synthetic Options;* *(F) Immediate or Cancel (“IOC”) orders.* *(b) Limit orders may only be placed on the limit order book by:

(i)An ROT via electronic interface with AUTOM pursuant to Rule 1014, Commentary .18;

(ii)a Floor Broker using the Options Floor Broker Management System (as described in Commentary .06 below); or

(iii)the AUTOM System for eligible customer and off-floor broker-dealer limit orders.* *(c) A limit order to be executed manually by the specialist pursuant to Rule 1080(c)(iv) will be displayed automatically by the AUTOM System until such limit order is executed or cancelled. If such limit order is partially executed, the AUTOM System will automatically display the actual number of contracts remaining in such limit order.* .03 No change. .04 ROT Limit Orders. * * * Not later than ten days following approval by the Securities and Exchange Commission of the rules applicable to the Exchange's electronic trading platform, Phlx XL, the Exchange will commence the initial deployment of Phlx XL by allowing specialists and ROTs who are Streaming Quote Traders (“SQTs,” as defined in the Phlx XL rules) to submit electronic quotations in Streaming Quote Options (as defined in the Phlx XL rules), and ROTs who are not SQTs to submit limit orders onto the limit order book via electronic interface with AUTOM [or manually through a Floor Broker or the Specialist]. Eligible incoming orders and quotations will automatically execute against quotations of specialists and SQTs and orders of ROTs in accordance with the functionality of the Phlx XL system, as set forth in the Phlx XL rules. * * * .05-.07 No change. Option Floor Procedure Advices—A-1: Reserved [Responsibility of Displaying Best Bids and Offers

(a)A Specialist shall use due diligence to ensure that the best available bid and offer is displayed for those option series in which he is assigned. Bids and offers for the Specialist's own account, bids and offers on the book, and bids and offers established in the crowd are deemed available for display purposes.

(b)After voicing a bid/offer, the Floor Broker or ROT shall use due diligence to inform the Specialist when s/he is no longer bidding/offering at that price. Specifically, the Floor Broker or ROT must immediately inform the Specialist when s/he is “out” of that bid/offer, including due to an execution or departure from the crowd. FINE SCHEDULE (Implemented on a two-year running calendar basis) A-1 1st Occurrence—$250.00 2nd Occurrence—$500.00 3rd Occurrence—$1,000.00 4th Occurrence and Thereafter Sanction is discretionary with Business Conduct Committee] II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Phlx included statements concerning the purpose of and basis for the proposed rule change, as amended, and discussed any comments it received on the proposed rule change, as amended. The text of these statements may be examined at the places specified in item III below. The Phlx has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change, as amended, is to establish Phlx rules that reflect the immediate, automatic display of limit orders (with certain exemptions as described below), and to require that Phlx ROTs and Floor Brokers who wish to place limit orders on the limit order book do so electronically. Currently, Exchange Options Floor Procedure Advice (“OFPA”) A-1 6 requires the specialist to use due diligence to ensure that the best available bid and offer is displayed for those option series in which he is assigned, including limit orders that represent the Exchange's best bid or offer. However, due to the recently enhanced display functionality of the AUTOM System, the Exchange is proposing to remove this responsibility from the specialist and to fully automate that process. Accordingly, the proposal would delete OFPA A-1 in its entirety. 6 *See* Securities Exchange Act Release Nos. 21760 (February 14, 1985), 50 FR 7248 (February 21, 1985) (SR-Phlx-84-13); 39754 (March 13, 1998), 63 FR 13901 (March 23, 1998) (SR-Phlx-97-53); and 44537 (July 11, 2001), 66 FR 37511 (July 18, 2001) (SR-Phlx-2001-36). The Exchange also proposes to adopt Commentary .02(a) to Phlx Rule 1080 to provide generally that the AUTOM System will immediately 7 display the full price and size of any limit order that establishes the Exchange's disseminated price or increases the size of the Exchange's disseminated bid or offer. The proposal would delete the current provision in Commentary .02 that states that orders not delivered through AUTOM may also be entered onto the Electronic Order Book, because this can no longer be done manually. 7 The Exchange represents that, for the purposes of this rule, “immediately” display means that the AUTOM System will display eligible orders not subject to an exemption automatically and instantaneously upon receipt. Telephone call between Rick Rudolph, Director and Counsel, Phlx, and Nathan Saunders, Attorney, Division of Market Regulation (“Division”), Commission, November 8, 2004. Consistent with the full automation of the display of limit orders on the limit order book, the Exchange proposes to adopt Commentary .02(b) to clarify that limit orders may be placed on the limit order book only by:

(i)An ROT via electronic interface with AUTOM pursuant to Phlx Rule 1080, Commentary .18; 8

(ii)a Floor Broker using the Options Floor Broker Management System pursuant to Phlx Rule 1063, Commentary .01; 9 or

(iii)the AUTOM System for eligible customer and off-floor broker-dealer limit orders. 10 In conjunction with this rule, the Exchange proposes to adopt Commentary .18 to Phlx Rule 1014, to require an ROT who wishes to place a limit order on the limit order book to submit such a limit order electronically, and Commentary .01 to Phlx Rule 1063, to establish that a Floor Broker who wishes to place a limit order on the limit order book must submit such a limit order electronically through the Options Floor Broker Management System. The proposed rule change would delete the provision currently contained in Commentary .04 to Phlx Rule 1014 that an ROT may place a limit order onto the limit order book manually through a Floor Broker or the specialist. 8 In November, 2002, the Commission approved the Exchange's proposal to allow on-floor, in-crowd ROTs to place electronic price improving limit orders on the limit order book via electronic interface with AUTOM (“ROT Access”). *See* Securities Exchange Act Release No. 46763 (November 1, 2002), 67 FR 68898 (November 13, 2003) (SR-Phlx-2002-04). The rules governing ROT Access were amended in July 2004 in the Phlx XL proposal by eliminating the requirement that ROT limit orders placed on the limit order book under ROT Access be price-improving limit orders. *See* Securities Exchange Act Release No. 50100 (July 27, 2004), 69 FR 46612 (August 3, 2004) (SR-Phlx-2003-59). 9 The Options Floor Broker Management System is a component of AUTOM designed to enable Floor Brokers and/or their employees to enter, route and report transactions stemming from options orders received on the Exchange. The Options Floor Broker Management System also is designed to establish an electronic audit trail for options orders represented and executed by Floor Brokers on the Exchange, such that the audit trial provides an accurate, time-sequenced record of electronic and other orders, quotations and transactions on the Exchange, beginning with the receipt of an order by the Exchange, and further documenting the life of the order through the process of execution, partial execution, or cancellation of that order. *See* Phlx Rule 1080, Commentary .06. 10 Off-floor broker-dealers may deliver limit orders for entry onto the limit order book via AUTOM. *See* Phlx Rule 1080(b)(i)(C). The Exchange represents that orders that are not eligible for routing through the AUTOM System would be rejected and sent back either

(a)to the firm that submitted the order, for reentry, or

(b)to the Floor Broker who submitted the order, to be represented using the Options Floor Broker Management System. Telephone call between Rick Rudolph, Director and Counsel, Phlx, and Nathan Saunders, Attorney, Division, Commission, November 8, 2004. Additionally, because the specialist would no longer have the ability to post a limit order, the Exchange proposes to amend Phlx Rule 1080(c)(iv)(D), which currently provides that an order otherwise eligible for automatic execution is instead handled manually by the specialist “when the specialist posts a bid or offer that is better than the specialist's own bid or offer.” Currently, Phlx Rule 1080(c)(iv)(D) states that the specialist will handle an order otherwise eligible for automatic execution manually in this situation, except with respect to orders eligible for Book Sweep, where an automatic execution occurs when a contra-side quotation that matches a limit order on the book results in an execution at the NBBO, 11 and Book Match, where an automatic execution occurs when an inbound contra-side order that matches a limit order on the book results in an execution at the NBBO. 12 To accurately reflect that the specialist can no longer “post” a bid or offer (as described above), the Exchange proposes to amend Phlx Rule 1080(c)(iv)(D) to provide that an order otherwise eligible for automatic execution would instead be handled manually by the specialist when the Exchange's best bid or offer is represented by a limit order on the book. While generally a limit order on the book would be eligible for automatic execution by way of Book Match or Book Sweep, Phlx Rule 1080(c)(iv)(D) is still necessary, because the specialist still would handle an order manually when a ROT or a Floor Broker in the trading crowd verbally announces to the specialist that he/she intends to trade against the limit order on the book representing the Exchange's best bid or offer. While the specialist no longer has the ability to “post” a limit order on the limit order book, the specialist would continue to have the ability to execute such an order, once it is placed on the limit order book electronically, against the ROT or Floor Broker's order, by pointing and clicking on the limit order on the book and entering the contra-side account number against which the limit order on the book will trade. 11 *See* Phlx Rule 1080(c)(iii). 12 *See* Phlx Rule 1080(g)(ii). The proposed rule change also includes in Commentary .02(c) a provision that limit orders to be executed manually by the specialist pursuant to Phlx Rule 1080(c)(iv) 13 would be displayed automatically by the AUTOM system until the limit order is executed or cancelled. If a limit order is partially executed, the AUTOM System would automatically display the actual number of contracts remaining in the limit order. 13 Phlx Rule 1080(c)(iv) enumerates a variety of circumstances under which orders otherwise eligible for automatic execution are instead handled manually by the specialist. Finally, the proposed rule change would establish certain exemptions, or partial exemptions, to the limit order display rule. The proposed exemptions provide that AUTOM will not display:

(a)Limit orders executed upon receipt;

(b)a limit order where the customer who placed it requests that it not be displayed, and upon representation of such order in the trading crowd the Floor Broker announces in public outcry the information concerning the order that would be displayed if the order were subject to being displayed;

(c)a customer limit order for which, immediately upon receipt, a related order for the principal account of the specialist, reflecting the terms of the customer order, is routed to another options exchange;

(d)a limit order received before or during a trading rotation 14 (however, such limit orders will be displayed immediately upon conclusion of the applicable rotation if they represent the Exchange's best bid or offer);

(e)certain contingent and complex order types defined in Phlx Rule 1066, as discussed more fully below; and

(f)immediate or cancel limit orders. 14 During a trading rotation, the specialist attempts to find the opening price and until the opening price is established, there is no disseminated market. Once the trading rotation ends and regular trading begins, limit orders received before or during the trading rotation that are not executed at the opening price and remain on the limit order book will be displayed if they represent the Exchange's best bid or offer. Generally, Phlx has proposed exemptions or partial exemptions for certain types of contingent and complex orders because these order types, by definition, are priced in a way that is dependent on a condition or another variable, such that displaying the price of such an order without the other information would not accurately reflect that trading interest. Contingency Orders (Phlx Rule 1066(c)): These orders are contingent upon a condition being satisfied, and are not executable until the prerequisite condition is satisfied. Phlx Rule 1066(c) contains the following types of contingency orders eligible for delivery via AUTOM that would not be immediately displayed under the proposal: stop (stop-loss), stop-limit, all-or-none, market-on-close, and cancel-replacement orders. Stop (Stop-Loss) and Stop Limit Orders (Phlx Rule 1066(c)(1)): These orders are not executable until the market reaches a specified price that “elects” the order, at which point they convert to a market order. As such, they are not available to trade and have no standing in the quoted markets until the specified price is reached. A trade or a quote can be the “triggering” event for the election of a stop order. Because they convert to market orders upon the triggering event, stop orders cannot then be subject to the display requirement. A stop-limit order is not “triggered” until the option contract trades or is bid (offered) at or above (below) the stop price, at which point it converts to a limit order. As such, a stop-limit order has no standing in the quoted markets until the specified price trigger is reached. Once triggered, the stop-limit order converts to a limit order, and thus would be subject to display. All-or-None Orders (Phlx Rule 1066(c)(4)): While an all-or-none order can be a limit order, instructions require the order be executed in its entirety or not at all. The Commission's Display Rule, applicable to customer limit orders received in the equity market, also provides an exemption for all-or-none orders. 15 15 *See* 17 CFR 240.11Ac1-4(c)(7). Market-on-Close Orders (Phlx Rule 1066(c)(6)): These orders may have a limit price attached, but are not eligible for representation until the close of trading is imminent. Regardless of the time at which a market-on-close order is entered, the floor broker is required to hold such an order, and is precluded from representing it, until as near as possible to the close of trading. Furthermore, because representation and execution of these orders must occur on or as near to the close of trading as possible, it would be difficult if not impossible to determine whether members met an appropriate display standard for such orders. Cancel-Replacement Order (Phlx Rule 1066(c)(7)): A cancel-replacement order is a contingency order consisting of two or more parts which require the immediate cancellation of a previously received order prior to the replacement of a new order with new terms and conditions. If the previously placed order is already filled partially or in its entirety, the replacement order is automatically canceled or reduced by the number of contracts partially filled. AUTOM would not immediately display all parts of the cancel-replacement order, but rather would display only the order that remains after the previously received order is cancelled. In addition to contingency orders, the Exchange also proposes to establish an exemption for one-cancels-the-other orders, hedge orders and synthetic options. One-Cancels-the-Other Orders (Phlx Rule 1066(e)): A one-cancels-the-other order is comprised of two or more orders treated as a collective unit. The execution of any one of the component orders cancels the other(s). If the specialist cannot execute any of the orders upon receipt, then none can be displayed or booked as doing so could result in the approximate simultaneous execution of more than one component order, in direct contravention of the primary order condition. Hedge Orders (Phlx Rule 1066(f)) and Synthetic Options (Phlx Rule 1066(g)): Hedge orders ( *e.g.* , spreads, straddles, and combination orders) and synthetic options are orders that specify instructions to trade more than one options series or product as a package, typically (with respect to hedge orders) at a specified net debit or credit, as opposed to a specific limit price for each leg involved. Therefore, there is no specified limit price for each series involved to display in the quotes. Moreover, the Options Price Reporting Authority (“OPRA”) does not accept complex order quotes at net prices. Therefore, these orders would not be displayed. Each component of these complex orders is, in essence, itself contingent on the ability to execute the other components of the order. Since there is no guarantee that all components will become executable at the same time, if at all, the immediate display of all components could result in the execution of less than all components of the order. Immediate or Cancel Orders: An immediate or cancel order is a market or limit order which is to be executed in whole or in part as soon as such order is represented in the trading crowd. Any portion not executed is to be cancelled, which means it cannot be displayed. An immediate or cancel order shares most of the same characteristics of an all-or-none order, which is exempt from the Commission's Display Rule. 16 Given the similarity between these order types, the Exchange believes that immediate or cancel orders should also be exempt from the requirements of the Exchange's limit order display rule. 16 *See supra* note 15 and accompanying text. 2. Statutory Basis The Exchange believes that its proposal is consistent with section 6(b) of the Act 17 in general, and furthers the objectives of section 6(b)(5) of the Act 18 in particular, in that it is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanisms of a free and open market and a national market system, and to protect investors and the public interest, by establishing rules requiring the immediate automated display of limit orders on the Exchange, and by requiring ROTs and Floor Brokers to place limit orders on the book electronically, which should enhance transparency on the Exchange and should enhance the Exchange's ability to provide an electronic audit trail respecting the immediate display of limit orders. 17 15 U.S.C. 78f(b). 18 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any inappropriate burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether they are consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-Phlx-2004-73 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-Phlx-2004-73. 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 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-Phlx-2004-73 and should be submitted on or before February 18, 2005. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 19 and, in particular, the requirements of section 6(b)(5) of the Act, 20 which requires, among other things, that the rules of an exchange 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 facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Specifically, the Commission believes that the immediate display of customer options limit orders that improve the price or size of the best disseminated Phlx quote should promote transparency and enhance the quality of executions of customer limit orders on the Phlx. 19 In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 20 15 U.S.C. 78f(b)(5). The proposed amendments to Phlx rules introduce requirements for limit order display that are comparable to the requirements of the Commission's Display Rule, Rule 11Ac1-4 under the Act, 21 which is applicable to customer limit orders received in the equity market. The Exchange has represented that immediate display of limit orders by the AUTOM system means that eligible limit orders will be displayed automatically and instantaneously, as soon as the order is received on the Exchange. Proposed commentaries .02(b) to Phlx Rule 1080, .18 to Phlx Rule 1014, and .01 to Phlx Rule 1063 provide that the only way limit orders may be sent to the Exchange will be electronically via AUTOM, either by an ROT via electronic interface with AUTOM, by a Floor Broker via the Options Floor Broker Management System component of AUTOM, or by off-floor broker-dealers who transmit orders via AUTOM. Thus, under Phlx's system, all limit orders subject to display must be delivered electronically to the Exchange, and would then be displayed automatically and instantaneously. 21 17 CFR 249,11Ac1-4. The Commission believes that the Exchange's proposal to exempt all-or-none and immediate or cancel orders from the Phlx's limit order display rule is reasonable since these order types are either identical or substantially similar to order types exempt from the Commission's Display Rule. The Commission also believes that it is consistent with the Act for the Phlx to exempt from the limit order display requirements under its rules stop-limit and stop or stop-loss orders. These orders are contingent orders that are subject to a particular triggering event and, thus, are not available for execution until the triggering event occurs. A stop-loss order becomes a market order when triggered and thus is not subject to the Phlx's limit order display rule because such an order would then be immediately executable. A stop-limit order becomes a limit order when the triggering event occurs. This limit order would be subject to display under the Phlx's rules. Cancel-replacement orders may be reduced in size if the order intended to be cancelled and replaced has already been filled partially or in its entirety. Thus, a cancel-replacement order would not be immediately displayed, but would be subject to display only after any necessary adjustments were made as a result of the contingency. Market-on-close orders may not be represented, displayed or booked until as near as possible to the close of trading, and, therefore, the Commission believes it is reasonable to exempt such orders from the Phlx's limit order display rule. Hedge orders ( *e.g.* , spread, straddle, and combination orders), synthetic options and one-cancels-the-other orders are complex orders with more than one component and, thus are not suitable for display. In addition, during a trading rotation, Phlx systems attempt to set an opening price for the series. Until that opening price is established, there is no disseminated market. Therefore, it is reasonable to exempt orders received during a trading rotation from the Exchange's limit order display rule. The Commission notes, however, that once the trading rotation ends, any orders not executed would then be subject to display. Finally, the Exchange proposes to exempt from its limit order display rule customer limit orders for which, immediately upon receipt, a related order for the principal account of the specialist, reflecting the terms of the customer order, is routed to another options exchange. The Commission believes it is reasonable to exempt such orders since they are subject to execution upon receipt at the other options exchange. Moreover, the Exchange represents that if the order delivered to the other options exchange were canceled, in whole or in part, by the other exchange, then, immediately upon receipt of the cancellation notice, the original customer order would be subject to the Exchange's limit order display rule and automatically displayed. 22 22 Telephone conversation between Richard S. Rudolph, Director and Counsel, Phlx, and Nathan Saunders, Attorney, Division, Commission, January 14, 2005. The Commission finds good cause for approving the proposed rule change prior to the thirtieth day after the proposal is published in the **Federal Register** , pursuant to Section 19(b)(2) of the Act. 23 The Commission notes that the proposed rule change, which provides for immediate display of limit orders that better the Exchange's disseminated quote, is substantially identical to the proposals filed by the Chicago Board Options Exchange (“CBOE”) 24 and the American Stock Exchange (“Amex”), 25 although the form of Phlx's proposed rule differs slightly. 26 Phlx also proposes several exemptions to its limit order display rule. The Commission notes that these exemptions, discussed above, are substantially identical to exemptions proposed by CBOE and Amex in their options limit order display proposals. The Amex and CBOE proposals were recently noticed for full 21-day comment periods. 27 No comments were received on the CBOE or Amex proposal. 23 15 U.S.C. 78s(b)(2). 24 *See* Securities Exchange Act Release No. 49916 (June 25, 2004), 69 FR 40422 (July 2, 2004) (SR-CBOE-2004-35). 25 *See* Securities Exchange Act Release No. 50188 (August 12, 2004), 69 FR 51495 (August 19, 2004) (SR-Amex-00-27). 26 CBOE and Amex seek to place an affirmative display obligation on their Designated Primary Market-makers and Specialists respectively, whereas Phlx's proposed rule provides for automatic display via the AUTOM system. 27 *See supra* notes 24 and 25. Accelerated approval of the proposed rule change will permit the Exchange to implement the proposal in an expeditious manner, *i.e.* , simultaneously with the implementation of the similar proposals by CBOE, Amex and the Pacific Exchange, Inc. (“PCX”), which we also approve today. 28 The Commission, therefore, believes that good cause exists, consistent with section 6(b)(5) 29 and section 19(b) 30 of the Act, to accelerate approval of the proposed rule change. 28 *See* Securities Exchange Act Release Nos. 51063 (January 21, 2005) (order approving SR-CBOE-2004-35); 51062 (January 21, 2005) (order approving SR-Amex-00-27); and 51061 (January 21, 2005) (order approving SR-PCX-00-15). 29 15 U.S.C. 78f(b)(5). 30 15 U.S.C. 78s(b). V. Conclusion *It is therefore ordered* , pursuant to section 19(b)(2) of the Act, 31 that the proposed rule change, as amended (File No. SR-Phlx-2004-73), be approved on an accelerated basis. 31 *Id.* For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 32 32 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-324 Filed 1-27-05; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION Small Business Size Standards: Waiver of the Nonmanufacturer Rule AGENCY: U.S. Small Business Administration. ACTION: Notice of termination of waiver of the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing. SUMMARY: The U.S. Small Business Administration

(SBA)is terminating the waiver of the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing based on our recent discovery of small business manufacturers for this class of products. Terminating this waiver will require recipients of contracts set aside for small businesses, service-disabled veteran-owned small businesses, SBA's Very Small Business Program or 8(a) businesses to provide the products of small business manufacturers or process on such contracts. DATES: This termination of waiver is effective on February 14, 2005. FOR FURTHER INFORMATION CONTACT: Edith Butler, Program Analyst, by telephone at

(202)619-0422; by fax at

(202)481-1788; or by e-mail at *edith.butler@sba.gov* . SUPPLEMENTARY INFORMATION: Section 8(a)(17) of the Small Business Act,

(Act)15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, SBA's Very Small Business Program or SBA's 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR 121.406(b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market. As implemented in SBA's regulations at 13 CFR 121.1204, in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines “class of products” based on six digit coding systems. The first coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The second is the Product and Service Code established by the Federal Procurement Data System. The SBA received a request on November 2, 2004 to waive the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing. In response, on December 6, 2004, SBA published in the **Federal Register** a notice of intent to the waiver of the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing. In response to these notices, SBA discovered the existence of small business manufacturers of that class of products. Accordingly, based on the available information, SBA has determined that there are small business manufacturers of this class of products, and is therefore terminating the class waiver of the Nonmanufacturer Rule for Petroleum and Coal Products Manufacturing, NAICS 324210. Authority: 15 U.S.C. 637(a)(17). Dated: January 19, 2005. Emily Murphy, Acting Associate Administrator for Government Contracting. [FR Doc. 05-1585 Filed 1-27-05; 8:45 am]

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