Notices. Notice of an application under sections 6(c), 17(d) and 23(c) of the Investment Company Act of 1940 (the “Act”) and rule 17d-1 under the Act
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BILLING CODE 7590-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. IC-26759; 812-13103] The Adams Express Company, et al.; Notice of Application February 10, 2005. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of an application under sections 6(c), 17(d) and 23(c) of the Investment Company Act of 1940 (the “Act”) and rule 17d-1 under the Act. Summary of Application: The Adams Express Company (“Adams”) and Petroleum & Resources Corporation (“Petroleum”) request an order to permit applicants to adopt an equity-based employee compensation plan.
Applicants: Adams and Petroleum. Filing Dates: The application was filed on June 25, 2004 and amended February 9, 2005. Hearing or Notification of Hearing: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on March 7, 2005, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, Commission, 450 5th Street, NW., Washington, DC 20549-0609. Applicants, c/o Lawrence L. Hooper, Jr., Vice President, General Counsel and Secretary, The Adams Express Company, 7 Saint Paul Street, Baltimore, MD 21202. FOR FURTHER INFORMATION CONTACT:
Marilyn Mann, Senior Counsel, at
(202)551-6813, or Mary Kay Frech, Branch Chief, at
(202)551-6814 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 450 5th Street, NW., Washington, DC 20549-0102 (tel.
(202)942-8090). Applicants' Representations 1. Adams and Petroleum, which are both Maryland corporations, are registered under the Act as closed-end management investment companies. Each company is internally managed. Each company's stock is listed on the New York Stock Exchange and the Pacific Exchange. 2. Adams has twelve directors and seventeen employees and Petroleum has twelve directors and fourteen employees. The boards of Adams and Petroleum are comprised of the same individuals. There are thirteen employees who serve both Adams and Petroleum. 3. In 1985, the Commission issued an order (the “1985 Order”) to permit internally-managed, closed-end investment company members of the Association of Publicly Traded Investment Funds (“APTIF”) to offer their employees deferred equity compensation in the form of stock options and stock appreciation rights. 1 Both Adams and Petroleum were members of APTIF, which voluntarily dissolved subsequent to the issuance of the 1985 Order, and are currently members of the Closed-End Division of the Investment Company Institute, into which the operations of APTIF were consolidated. At their respective annual meetings held in March 1986, the stockholders of the applicants approved the Adams Stock Option Plan (the “Old Adams Plan”) and the Petroleum Stock Option Plan (the “Old Petroleum Plan,” and together with the Old Adams Plan, the “Old Stock Plans”). The Old Stock Plans were adopted in reliance on the 1985 Order. 1 Association of Publicly Traded Investment Funds, Investment Company Act Release No. 14541 (May 28, 1985) (notice) and 14594 (June 21, 1985) (order). 4. Because the investment management business is highly competitive, the applicants believe that their successful operation will depend on their ability to attract, motivate and retain their professional staffs with competitive compensation packages similar to those offered by their competitors. Applicants are requesting relief to permit the adoption of The Adams Express Company 2005 Equity Incentive Compensation Plan and Petroleum & Resources Corporation 2005 Equity Incentive Compensation Plan (each, a “Plan” and together, the “Plans”). Each Plan will be administered by a compensation committee (the “Committees”) composed of three or more directors who
(a)are not “interested persons” of the relevant applicant as defined in section 2(a)(19) of the Act,
(b)are “non-employee directors” within the meaning of rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), and
(c)are “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986 (the “Code”). [p. 10-11] The Plans would permit the applicants to issue stock options (“Options”), stock appreciation rights, 2 restricted stock, 3 restricted stock units, 4 deferred stock units, 5 dividend equivalents 6 and performance awards 7 (“Performance Awards”) (each referred to individually as an “Award” and, collectively, as “Awards”) to key employees and to directors who are not interested persons as defined in section 2(a)(19) of the Act (“disinterested directors”). The exercise price of Options must be at least 100% of the Fair Market Value 8 of a share of an applicant's stock on the date of the grant. Options issued under the Plans will expire no later than 10 years from the date of grant. The Old Stock Plans will be terminated following approval by stockholders of the Plans. Existing awards made under the Old Stock Plans would remain outstanding and would remain subject to the terms and conditions of the Old Stock Plans. 2 A stock appreciation right is a right to receive, upon exercise, the excess of
(i)the Fair Market Value (as defined below) of one share of an applicant's stock on the date of exercise over
(ii)the stock appreciation right's grant price. Stock appreciation rights issued under the Plans will expire no later than ten years from the date of grant. [p. 20] 3 Restricted stock is stock that is subject to restrictions on transferability, risk of forfeiture, or other restrictions. [p. 21] 4 Restricted stock units are rights to receive stock and are subject to certain restrictions and a risk of forfeiture. [p. 21] 5 A deferred stock unit is a right to receive stock, cash or a combination thereof at the end of a specified deferral period. [p. 22] 6 If and to the extent provided for in the applicable Award agreement, recipients of Options, stock appreciation rights, restricted stock units and deferred stock units will be entitled to receive dividend equivalents equal to the amount or value of any cash or other dividends or distributions payable on an equivalent number of shares of stock. Dividend equivalents will be paid in shares of common stock, cash or a combination thereof. [p. 23] 7 Performance Awards, which are payable in cash or stock of the applicants, are conditioned upon satisfaction of performance criteria established by the relevant Committee. [p. 23] 8 For purposes of the Plans, “Fair Market Value” equals the mean of the high and low sale prices per share of the stock of the applicant as reported on the New York Stock Exchange-Composite Transactions (or such other national securities exchange or automated inter-dealer quotation system on which the stock has been duly listed and approved for quotation and trading) on the date on which the value is to be determined, or if no sale of the stock is reported for such date, the next preceding day for which there is a reported sale. [fn. 4, pp. 15-16] 5. Each Plan has been approved by the applicable applicant's board of directors (“Board”), including a majority of the disinterested directors of each applicant. Subject to receipt of the order, each applicant's Board is expected to approve the submission of the respective Plan to stockholders for approval at each applicant's annual meeting. 6. Grants under each Plan may be made only to the applicable applicant's disinterested directors and employees, or to the employees of such applicant's subsidiaries where such employees provide management, administrative or advisory services to the applicant (the “Participants”). Employees who serve both Adams and Petroleum on a combined full-time basis would be eligible to receive Awards under both Plans. 7. Immediately following each annual meeting of stockholders, each disinterested director who is elected a director at, or who was previously elected and continues as a director after, that annual meeting shall receive an award of 750 restricted stock units of Adams and 400 restricted stock units of Petroleum, as applicable. In addition, at the effective date of any disinterested director's initial election to the Board, the disinterested director will be granted 750 restricted stock units of Adams and 400 restricted stock units of Petroleum, as applicable. Disinterested directors will also receive dividend equivalents in respect of such restricted stock units equal to the amount or value of any cash or other dividends or distributions payable on an equivalent number of shares of common stock. The restricted stock units and related dividend equivalents will vest (and become non-forfeitable) and be paid (in the form of shares of common stock) one year from the date of grant. In addition, disinterested directors may elect each year, not later than December 31 of the year preceding the year as to which the annual grant of restricted stock units is to be applicable, to defer to a fixed date or pursuant to a specified schedule payment of all or any portion of the annual grant of restricted stock units. Under the Plans, disinterested directors may also elect each year, not later than December 31 of the year preceding the year as to which deferral of fees is to be applicable, to defer to a fixed date or pursuant to a specified schedule all or any portion of the cash retainer to be paid for Board service in the following calendar year through the issuance of deferred stock units, valued at the Fair Market Value of the relevant applicant's stock on the date when each payment of such retainer amount would otherwise be made in cash. 8. The total number of shares of each applicant's stock reserved and available for delivery in connection with Awards under the applicable Plan (other than any shares of Adams Stock or Petroleum Stock issued in payment of dividend equivalents) is 4% of the outstanding shares of the applicable applicant as of the effective time of the Plan. As of December 31, 2004, this represents 3,445,411 shares of Adams stock and 879,187 shares of Petroleum stock. 9. In the event that a dividend, capital gain distribution or other distribution, recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction affects the common stock of an applicant, then the relevant Committee will, in such manner as it may deem equitable, adjust any or all of
(i)the aggregate number of shares subject to the relevant Plan;
(ii)the number and kind of shares which may be delivered under the relevant Plan;
(iii)the number and kind of shares by which per-person Award limitations are measured;
(iv)the number and kind of shares subject to or deliverable in respect of outstanding Awards; and
(v)the exercise price or grant price relating to any Award. In addition, after the occurrence of any such corporate transaction, the relevant Committee will also have the authority to make provision for payment of cash or other property in respect of an Award. In the event a capital gains distribution is made to the applicant's stockholders, the exercise price of outstanding Options and the grant price of outstanding stock appreciation rights issued under the Plan may be reduced to reflect any such distribution made after the date of grant (provided that no such reduction will be made that would reduce the exercise price or grant price below zero). Applicants' Legal Analysis Sections 18(d), 23(a) and 23(b) of the Act 1. Section 18(d) of the Act generally prohibits a registered management investment company from issuing rights to purchase the company's shares. 9 The applicants state that section 18(d) would prohibit the issuance of Options and stock appreciation rights under the Plans. 9 Section 18(d) permits a fund to issue only warrants or rights, ratably to a class of stockholders, that have an exercise period of no more than 120 days or in exchange for warrants in connection with a reorganization. 2. Section 23(a) of the Act generally prohibits a registered closed-end investment company from issuing securities for services. The applicants state that this provision would prohibit the issuance of Awards under the Plans as compensation for employees' services. 3. Section 23(b) of the Act prohibits a registered closed-end investment company from selling common stock at below its current net asset value. The applicants state that, since Adams stock and Petroleum stock have often traded at a discount to their net asset value and Awards under the Plans will be valued at the current market price of the stock, section 23(b) would in most cases prohibit the issuance of the Awards. 4. Section 6(c) of the Act provides, in part, that the Commission may, by order upon application, conditionally or unconditionally exempt any person, security or transaction, or any class or classes thereof, from any provision of the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. The applicants request an exemption under section 6(c) from section 18(d) and sections 23(a) and
(b)of the Act to the extent necessary to implement the Plans. 5. The applicants state that the concerns underlying those sections include
(i)the possibility that Options could be granted to persons whose interests might be contrary to the interests of stockholders;
(ii)the potential dilutive impact of Awards on stockholders;
(iii)the possibility that Options might facilitate a change of control;
(iv)the introduction of complexity and uncertainty into the investment company's financial structure, thereby making it more difficult to appraise the value of their stock;
(v)possible obfuscation of the extent of management compensation; and
(vi)encouragement of speculative portfolio investments at the insistence of the Option holders (to increase the possibility of a rise in market price from which they might benefit). 6. The applicants state that, because Awards under each Plan are issuable only to the applicable applicant's directors, officers and other key employees, Awards will not be granted to individuals with interests contrary to those of the applicant's stockholders. The applicants also assert that the Plans would not become a means for insiders to obtain control of Adams or Petroleum because the number of shares of stock issuable under the Plans would be limited to 4% of the outstanding shares of Adams or Petroleum. Moreover, as a condition to the requested order, no individual Participant could be issued more than 35% of the shares reserved for issuance under the Plans. In addition, in no event may the total number of shares of Adams stock or Petroleum stock, with respect to which all types of Awards may be granted to a Participant under the applicable Plan, exceed 300,000 shares of stock within any thirty-six month period during which the applicable Plan is in effect. 7. The applicants further state that each Plan will be submitted to stockholders for their approval. The applicants represent that a concise, “plain English” description of the Plans, including their potential dilutive effect, will be provided in the proxy materials that will be submitted to their respective stockholders. The applicants also state that they will comply with the proxy disclosure requirements in Item 10 of Schedule 14A under the Exchange Act. The applicants further note that the Plans will be disclosed to investors in accordance with the requirements of Item 18 of Form N-2, and pursuant to the standards and guidelines adopted by the Financial Accounting Standards Board for operating companies. In addition, as a condition to the requested order, Adams and Petroleum will comply with the disclosure requirements for executive compensation plans applicable to operating companies under the Exchange Act. The applicants conclude that the Plans will be adequately disclosed to investors and appropriately reflected in the market value of their stock. 8. The applicants acknowledge that, while Awards granted under the Plans would have a dilutive effect on the stockholders' equity in Adams and Petroleum, as the case may be, that effect would not be significant and would be outweighed by the anticipated benefits of the Plans to Adams, Petroleum and their stockholders. The applicants assert that they need the flexibility to provide equity-based employee compensation in order to be able to compete effectively with investment management companies for talented professionals. The applicants also assert that equity-based compensation would more closely align the interests of Adams and Petroleum directors, officers and employees with those of the applicants' stockholders. 9. In addition, the applicants state that stockholders will be further protected by the conditions to the requested order that assure continuing oversight of the operation of the Plans by the applicable Board. Under these conditions, each applicant's Board will review the relevant Plan at least annually. In addition, the applicable Committee periodically will review the potential impact that the grant, exercise or vesting of Awards could have on an applicant's earnings and net asset value per share, such review to take place prior to any decisions to grant Awards, but in no event less frequently than annually. Adequate procedures and records will be maintained to permit such review. The relevant Committee will be authorized to take appropriate steps to ensure that neither the grant nor the exercise or vesting of Awards would have an effect contrary to the interests of the stockholders of the applicant. This authority will include the authority to prevent or limit the grant of additional Awards. Section 17(d) of the Act 10. Section 17(d) of the Act and rule 17d-1 under the Act generally prohibit an affiliated person of a registered investment company, or an affiliated person of such a person, from participating in a joint enterprise, joint arrangement or profit-sharing plan in which the company is a participant, unless the Commission by order approves the transaction. Rule 17d-1(c) defines a joint enterprise to include any stock option or stock purchase plan. Rule 17d-1(b) provides that, in considering relief pursuant to the rule, the Commission will consider
(i)whether the participation of the registered investment company in a joint enterprise is consistent with the Act's policies and purposes and
(ii)the extent to which that participation is on a basis different from or less advantageous than that of other participants. 11. The applicants request an order pursuant to section 17(d) and rule 17d-1 to permit the Plans. The applicants state that the Plans, although benefiting the Participants and Adams and Petroleum in different ways, are in the interests of stockholders of Adams and Petroleum because the Plans will help them attract, motivate and retain talented professionals and help align the interests of employees with those of their stockholders. Thus, the applicants assert that the Plans are consistent with the policies and purposes of the Act and that the applicants' participation in the Plans will be on a basis no less advantageous than that of other participants. Section 23(c) of the Act 12. Section 23(c) of the Act generally prohibits a registered closed-end investment company from purchasing any securities of which it is the issuer except in the open market, pursuant to tender offers or under other circumstances as the Commission may permit to insure that the purchase is made on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased. 13. The applicants state that a purchase by Adams or Petroleum of Adams or Petroleum stock from a Participant in connection with an Award, or where shares are withheld by the applicants in payment of the exercise price, might be prohibited by section 23(c) and request an order under section 23(c) to permit these purchases. The applicants state that these purchases will be made on a basis which does not unfairly discriminate against the stockholders of Adams and Petroleum because Adams and Petroleum will purchase their shares from the Participants at their Fair Market Value, as defined in the Plans, on the date of the repurchase, which would not be significantly different from the price at which all other Adams and Petroleum stockholders could sell their shares on the New York Stock Exchange. Applicants' Conditions The applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions: 1. Each Board will maintain a Committee, none of the members of which will be “interested persons” of the applicants as defined in the Act. Each Committee will administer the relevant Plan and will be composed of three or more directors of the relevant applicant who
(i)are not “interested persons” of the relevant applicant,
(ii)are “non-employee directors” within the meaning of rule 16b-3 under the Exchange Act and
(iii)are “outside directors” as defined under section 162(m) of the Code. 2. A Plan will not be implemented unless it is approved by a majority of the votes cast by stockholders at a meeting called to consider the Plan. Any amendment to a Plan will be subject to the approval of the applicable applicant's stockholders to the extent such approval is required by applicable law or regulation or the applicable Board otherwise determines. Unless terminated or amended, during the fifth year of each Plan (and each fifth year thereafter), the Plan shall be submitted for reapproval to the relevant applicant's stockholders and all Awards made during that year shall be contingent upon stockholder reapproval. 3. Awards are not transferable or assignable, except as the Committees will specifically approve to facilitate estate planning or to a beneficiary upon a Participant's death or by will or the laws of descent and distribution. Awards may also be transferred pursuant to a qualified domestic relations order. 4. The existence and nature of the Awards granted will be disclosed in accordance with standards or guidelines adopted by the Financial Accounting Standards Board for operating companies and the requirements of the Commission under Item 402 of Regulation S-K, Item 8 of Schedule 14A under the Exchange Act and Item 18 of Form N-2. 5. The maximum number of shares of stock available for delivery in connection with Awards under a Plan (other than any shares of Adams Stock or Petroleum Stock, as applicable, issued in payment of Dividend Equivalents) will be 4% of the relevant applicant's stock outstanding on the effective date of the relevant Plan, subject to adjustment for corporate transactions. 6. Each applicant's Board will review the relevant Plan at least annually. In addition, the applicable Committee periodically will review the potential impact that the grant, exercise, or vesting of Awards could have on an applicant's earnings and net asset value per share, such review to take place prior to any decisions to grant Awards, but in no event less frequently than annually. Adequate procedures and records will be maintained to permit such review, and the relevant Committee will be authorized to take appropriate steps to ensure that neither the grant nor the exercise or vesting of Awards would have an effect contrary to the interests of investors in the applicant. This will include the authority to prevent or limit the grant of additional Awards. All records maintained pursuant to this condition will be subject to examination by the Commission and its staff. 7. The Old Stock Plans will be terminated pursuant to their terms following approval by stockholders of the Plans. No further grants would be made under the Old Stock Plans beyond those already made as of the date hereof. Existing awards made under the Old Stock Plans would remain outstanding and would remain subject to the terms and conditions of the Old Stock Plans. 8. Awards under the Plans are issuable only to directors, officers, employees of the relevant applicant and employees of certain of its subsidiaries. No person will be granted Awards relating to more than 35% of the shares reserved for issuance under the relevant Plan. Subject to the immediately preceding limitation, in any thirty-six month period during which a Plan is in effect, no person may be granted under that Plan more than 300,000 shares of stock in respect of Options, 300,000 shares of stock in respect of stock appreciation rights, 300,000 shares of stock in respect of restricted stock, 300,000 shares of stock in respect of restricted stock units or 300,000 shares of stock in respect of deferred stock units. In addition, in no event may the total number of shares of stock with respect to which all types of Awards may be granted to an eligible person under the applicable Plan exceed 300,000 shares of stock within any thirty-six month period during which the applicable Plan is in effect, which amount may be adjusted to reflect certain corporate transactions or events that affect the applicant's stock. Grants to disinterested directors are limited to those described in paragraph 2 below. 9. In each fiscal year, a disinterested director will be granted 750 restricted stock units of Adams and 400 restricted stock units of Petroleum, as applicable, which amounts may be adjusted to reflect certain corporate transactions. At the effective date of any disinterested director's initial election to the Board of an applicant, such disinterested director will be granted 750 restricted stock units of Adams and 400 restricted stock units of Petroleum, as applicable, which amounts may be adjusted to reflect certain corporate transactions. Disinterested directors will also receive dividend equivalents in respect of such restricted stock units equal to the amount or value of any cash or other dividends or distributions payable on an equivalent number of shares of common stock. The restricted stock units and related dividend equivalents will vest (and become non-forfeitable) and be paid (in the form of shares of common stock) one year from the date of grant. In addition, disinterested directors may elect each year, not later than December 31 of the year preceding the year as to which the annual grant of restricted stock units is to be applicable, to defer to a fixed date or pursuant to a specified schedule payment of all or any portion of the annual grant of restricted stock units. Any modification of the deferral election may be made only upon satisfaction of any conditions that the relevant Committee may impose. Disinterested directors may also elect each year, not later than December 31 of the year preceding the year as to which deferral of fees is to be applicable, to defer to a fixed date or pursuant to a specified schedule all or any portion of the cash retainer to be paid for Board or other service related to Board activities in the following calendar year through the issuance of deferred stock units, valued at the Fair Market Value of the relevant applicant's stock on the date when each payment of such retainer amount would otherwise be made in cash. For the Commission, by the Division of Investment Management, under delegated authority. Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-637 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51185; File No. SR-Amex-2005-14] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to a Suspension of Transaction Fees in Connection With the iShares® COMEX Gold Trust February 10, 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 February 1, 2005, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Amex. The Exchange filed the proposal as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. 5 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). 5 Rule 19b-4(f)(6) under the Act requires the Amex to provide the Commission with five business days notice of its intention to file a non-controversial proposed rule change. The Amex did not provide such notice but requested that the Commission waive the notice requirement. The Amex also requested that the Commission to waive the 30-day operative delay. *See* Rule 19b-4(f)(6)(iii) under the Act. 17 CFR 240.19b-4(f)(6)(iii). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to suspend through February 28, 2005, Exchange transaction charges for specialist, registered trader, broker-dealer and customer orders for the iShares COMEX Gold Trust (the “Gold Trust”). The text of the proposed rule change is available on Amex's Web site *http://www.amex.com,* at the Amex's Office of the Secretary, and 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, Amex included statements concerning the purpose of and basis for the proposal and discussed any comments it received regarding the proposal. The text of these statements may be examined at the places specified in Item IV below. The Amex has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose Specialist, registered traders, broker-dealers and customer orders in the Gold Trust are subject to the following transaction charges. Off-Floor orders ( *i.e.* , customer and broker-dealer) currently are charged $.0060 per share ($0.60 per 100 shares), capped at $100 per trade (16,667 shares). Orders entered electronically into the Amex Order File (“System Orders”) from off the Floor for up to 5,099 shares are currently not assessed a transaction charge. This provision, however, does not apply to System Orders of a member or member organization trading as an agent for the account of a non-member competing market maker. System Orders over 5,099 shares currently are subject to a $.0060 per share transaction charge, capped at $100 per trade. Specialists currently are charged $0.0033 ($0.33 per 100 shares), capped at $300 per trade (90,909 shares). Registered traders currently are charged $0.0036 ($0.36 per 100 shares), capped at $300 per trade (83,333 shares). The Exchange is suspending all transaction charges in the Gold Trust for specialist, registered trader, broker-dealer and customer orders until February 28, 2005. The Exchange believes a suspension of fees for the Gold Trust is appropriate to enhance the competitiveness of executions for the Gold Trust on the Amex. The Exchange will reassess the fee suspension as appropriate and will file a proposed rule change for any modification to the fee suspension with the Commission pursuant to Section 19(b)(3)(A) of the Act. 6 6 15 U.S.C. 78s(b)(3)(A). The Exchange is amending the Equities Fee Schedule and Exchange Traded Funds and Trust Issued Receipts Fee Schedule to indicate that transaction charges have been suspended until February 28, 2005 for the Gold Trust. In addition, the Exchange Traded Funds and Trust Issued Receipts Fee Schedule is being amended to refer to the suspension of transaction charges for certain Exchange Traded Funds and the application of customer transaction charges in connection with the iShares S&P 100 Index Fund (Symbol: OEF) previously filed with the Commission. 7 7 *See* Securities Exchange Act Release Nos. 46384 (August 20, 2002), 67 FR 55048 (August 27, 2002) (suspension of transaction charges for SHY, IEF, TLT and LQD); and 47668 (April 11, 2003), 68 FR 19241 (April 18, 2003) (OEF transaction charges). 2. Statutory Basis The Exchange believes that the proposed fee change is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(4) 9 in particular in that it is intended to assure the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received by the Exchange with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)become operative for 30 days from the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest; the proposed rule change has become effective pursuant to Section 19(b)(3)(A) 10 of the Act and Rule 19b-4(f)(6) 11 thereunder. 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b-4(f)(6). Although Rule 19b-4(f)(6) under the Act 12 requires that an Exchange submit notice of its intent to file at least five business days prior to the filing date, the Commission is waiving this requirement at the Exchange's request in view of the fact that the proposed rule change waives fees for all market participants and similar suspension of transaction fees have been approved for similar products. 13 12 17 CFR.240-19b-4(f)(6). 13 *See supra* note 7. The Exchange has also requested that the Commission waive the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate the proposed rule change immediately operative by finding that such action is consistent with the protection of investors and the public interest. The Commission notes that by waiving the operative period, the Exchange has stated that the suspension of transaction fees will enhance the competitiveness of the product and will permit the Exchange to implement the fee waiver immediately. 14 14 The Exchange will reassess the fee waivers prior to February 28, 2005 and will make any required filing pursuant to Rule 19b-4 of the Act prior to that date. Furthermore, the Commission notes that Amex's suspension of transaction fees have been approved for similar products and that trading in the Gold Trust on the Exchange commenced on January 28, 2005. The Exchange also has stated that the fee suspension is for all market participants and is intended to provide cost savings to investors, members, and other market participants. For these reasons, the Commission, consistent with the protection of investors and the public interest, has waived the 30-day operative date requirement for this proposed rule change and has determined to designate the proposed rule change as operative on February 1, 2005, the date it was submitted to the Commission. At any time within 60 days of the filing of this proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *http://www.sec.gov/rules/sro.shtml;* or • Send an e-mail to *rule-comments@sec.gov.* Please include SR-Amex-2005-14 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to SR-Amex-2005-14. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site *http://www.sec.gov/rules/sro.shtml.* Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available on the Exchange's Web site at *http://www.amex.com* and 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 SR-Amex-2005-14 and should be submitted on or before March 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-650 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51172; File No. SR-CBOE-2004-63] Self-Regulatory Organizations; Chicago Board Options Exchange, Inc.; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto Relating to Short Term Option Series February 9, 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 October 12, 2004, the Chicago Board Options Exchange, Inc. (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III, below, which Items have been substantially prepared by the Exchange. CBOE filed Amendment No. 1 to the proposed rule change on January 21, 2005. 3 The Commission is publishing this notice to solicit comment on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced the original filing in its entirety. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend its rules to permit the listing of option series that expire one week after being opened for trading (“Short Term Option Series”). This rule change is being proposed as a one-year pilot program. The text of the proposed rule change, as amended, is available on CBOE's Web site ( *http://www.cboe.org/legal/* ), at CBOE'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, CBOE included statements concerning the purpose of and basis for the proposal and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in Item IV below. CBOE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its rules to accommodate the listing of Short Term Option Series that would expire one week after the date on which the series is opened. Short Term Option Series could be opened on any approved option class 4 on any Friday that is a business day (“Short Term Option Opening Date”) and would expire at the close of business on the next Friday that is a business day (“Short Term Option Expiration Date”). If a Friday were not a business day, the series could be opened (or would expire) on the first business day immediately prior to that Friday. Short Term Option Series would be P.M.-settled. 4 Short Term Options Series could be opened in any option class that satisfied the applicable listing criteria under CBOE rules ( *i.e.* , stock options, options on exchange-traded funds as defined under Interpretation and Policy .06 to CBOE Rule 5.3, or options on indexes). The proposal would allow the Exchange to open up to five Short Term Option Series for each Short Term Option Expiration Date. The strike price for each series would be fixed at a price per share, with at least two strike prices above and two strike prices below the approximate value of the underlying security, or the calculated index value in the case of an index class, at about the time that Short Term Option Series was opened for trading on the Exchange. No Short Term Option Series on an option class could expire in the same week in which monthly option series on the same class expire, except that with regard to index option classes, no Short Term Option Series in an index option class could expire in the same week during which any P.M.-settled monthly option series in the same index class expires or, in the case of QIXs, in the same week during which QIXs expire. This provision means that a Short Term Option Series in an index class (which is P.M.-settled) could expire in the same week in which an A.M.-settled option series in the same underlying index class expires. Finally, the interval between strike prices on Short Term Option Series would be the same as the strike price for series in the same option class that expires in accordance with the normal monthly expiration cycle. The Exchange believes that Short Term Option Series would provide investors with a flexible and valuable tool to manage risk exposure, minimize capital outlays, and be more responsive to the timing of events affecting the securities that underlie option contracts. At the same time, the Exchange is cognizant of the need to be cautious in introducing a product that can increase the number of outstanding strike prices. For that reason, the Exchange intends to employ a limited pilot program (“Pilot Program”) for Short Term Options Series. Under the terms of the Pilot Program, the Exchange could select up to five option classes on which Short Term Option Series may be opened on any Short Term Option Opening Date. 5 The Exchange also would be allowed to list those Short Term Option Series on any option class that is selected by other securities exchanges that employ a similar Pilot Program under their respective rules. This would ensure that the addition of the new series through this Pilot Program would have only a negligible impact on the Exchange's and OPRA's quoting capacity. Also, limiting the term of the Pilot Program to a period of one year would allow the Exchange and the Commission to determine whether the Short Term Option Series program should be extended, expanded, and/or made permanent. 5 *See* note 4 *supra.* If the Exchange were to propose an extension or an expansion of the program, or should the Exchange propose to make the program permanent, the Exchange would submit, along with any filing proposing such amendments to the program, a Pilot Program report (“Report”) that would provide an analysis of the Pilot Program covering the entire period during which the Pilot Program was in effect. The Report would include, at a minimum:
(1)Data and written analysis on the open interest and trading volume in the classes for which Short Term Option Series were opened;
(2)an assessment of the appropriateness of the option classes selected for the Pilot Program;
(3)an assessment of the impact of the Pilot Program on the capacity of CBOE, OPRA, and market data vendors (to the extent data from market data vendors is available);
(4)any capacity problems or other problems that arose during the operation of the Pilot Program and how CBOE addressed such problems;
(5)any complaints that CBOE received during the operation of the Pilot Program and how CBOE addressed them; and
(6)any additional information that would assist in assessing the operation of the Pilot Program. The Report must be submitted to the Commission at least sixty
(60)days prior to the expiration date of the Pilot Program. The Exchange represents that it has the system capacity to adequately handle the series that would be permitted by this proposal. The Exchange provided to the Commission information in a confidential submission that supports its system capacity representations. 2. Statutory Basis The Exchange believes that the introduction of Short Term Option Series would attract order flow to the Exchange, increase the variety of listed options to investors, and provide a valuable hedging tool to investors. For these reasons, the Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 6 in general, and with Section 6(b)(5) of the Act 7 in particular, in that it is designed to promote just and equitable principles of trade as well as to protect investors and the public interest. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the 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, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-CBOE-2004-63 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-2004-63. 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-2004-63 and should be submitted on or before March 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-635 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51173; File No. SR-CBOE-2004-85] Self-Regulatory Organizations; Chicago Board Options Exchange, Inc.; Order Approving a Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto Regarding Designated Primary Market-Makers' Handling of Non-Public Customer Orders February 9, 2005. I. Introduction On December 15, 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 its rules regarding Designated Primary Market-Makers' handling of non-public customer orders. On December 21, 2004, the CBOE submitted Amendment No. 1 to the proposed rule change. 3 The proposed rule change was published for comment in the **Federal Register** on December 29, 2004. 4 The Commission received no comments on the proposal. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 made technical corrections to the propose rule text of the proposed rule change. 4 *See* Securities Exchange Act Release No. 50909 (December 22, 2004), 69 FR 78072. On February 4, 2005, the CBOE submitted Amendment No. 2 to the proposed rule change. 5 This order approves the proposed rule change, as amended by Amendment Nos. 1 and 2. Simultaneously, the Commission is providing notice of filing of Amendment No. 2 and granting accelerated approval of Amendment No. 2. 5 Amendment No. 2 deleted the language of Interpretation and Policy .03 of CBOE Rule 8.85, which defined “public customer” order for purposes of CBOE Rule 8.85(b)(iii). Since the term “public customer” order will no longer be in CBOE Rule 8.85(b)(iii), the interpretation is no longer necessary. II. Description The Exchange proposes to amend CBOE Rule 8.85(b)(iii) to require each Designated Primary Market-Maker (“DPM”) to accord priority to both public and non-public customer orders which a DPM represents as agent over its own principal transactions, unless the customer who placed the order has consented to not being accorded such priority. 6 6 On January 25, 2002, the Commission approved a CBOE proposed rule change eliminating from CBOE rules the obligation of DPMs to accord priority to non-public customer orders. *See* Securities Exchange Act Release No. 45341 (January 25, 2002), 67 FR 5016 (February 1, 2002). In this filing, the Exchange proposes to revert back to the original language. III. Discussion After careful review, 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) of the Act 8 and the rules and regulations thereunder. The Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act, 9 which requires 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 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. 7 In approving this proposed rule change, the Commission 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). 9 15 U.S.C. 78f(b)(5). Specifically, the Commission finds that requiring DPMs to accord priority to all orders, non-public as well as public customer orders, that they hold as agent in CBOE's rules should ensure that these orders are handled in compliance with federal securities laws and agency law principles. In Amendment No. 2, the CBOE proposed to delete the language of Interpretation and Policy .03 of CBOE Rule 8.85, which defined the term “public customer” order for purposes of CBOE Rule 8.85(b)(iii). Because the term “public customer” order will no longer be in CBOE Rule 8.85(b)(iii), the interpretation is no longer necessary. The Commission notes that the proposed text of CBOE Rule 8.85(b)(iii) has been subject to notice and comment, and that no comments have been received. The Commission believes that the deletion of the language of proposed language of Interpretation and Policy .03 of CBOE Rule 8.85 will clarify CBOE Rule 8.85 by removing a definition that is no longer necessary and, therefore, merits approval. Accordingly, the Commission finds that there is good cause, consistent with Section 6(b)(5) 10 and Section 19(b)(2) of the Act, 11 to approve Amendment No. 2 on an accelerated basis prior to the 30th day of the date of publication of notice of filing thereof in the **Federal Register** . 10 15 U.S.C. 78f(b)(5). 11 15 U.S.C. 78s(b)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 2 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-2004-85 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-2004-85. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2004-85 and should be submitted on or before March 9, 2005. V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 12 that the proposed rule change (File No. SR-CBOE-2004-85), as amended by Amendment No. 1, be, and hereby is, approved, and that Amendment No. 2 to the proposed rule change be, and hereby is, approved on an accelerated basis. 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. E5-642 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51178; File No. SR-FICC-2005-03] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Appendix A to Its Cross-Margining Agreement With the Chicago Mercantile Exchange To Update the List of Other Cross-Margining Agreement To Which Each Is a Party February 9, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on January 21, 2005, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) 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 The proposed rule change consists of amendments to Appendix A to the cross-margining agreement (“Agreement”) between the Chicago Mercantile Exchange (“CME”) and the Government Securities Division (“GSD”) of FICC which lists other cross-margining and loss sharing arrangements to which the GSD and CME are parties. 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 currently participating in a cross-margining arrangement with the Chicago Mercantile Exchange (“CME”). The Agreement governing the arrangement contains Appendix A on which the parties are required to list other cross-margining or loss sharing arrangements to which they are parties. The Agreement provides that the parties may amend Appendix A without prior approval of the other party by giving notice to the other party. The CME recently notified FICC that it has amended Appendix A to remove two agreements it had with the Board of Trade Clearing Corporation and to add an agreement that it now has with the New York Mercantile Exchange. This rule change incorporates these changes into the Agreement, which is a part of the GSD's rules. The proposed rule change is consistent with the requirements of Section 17A of the Act 3 and the rules and regulations thereunder applicable to FICC because it facilitates the establishment of linked or coordinated facilities for clearance and settlement of transactions in securities and in futures. 3 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 an 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 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 The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(iii) of the Act 4 and Rule 19b-4(f)(4) 5 thereunder because the proposed rule does not significantly affect the respective rights or obligations of the clearing agency or persons using the service and does not adversely affect the safeguarding of securities or funds in the custody or control of FICC or for which it is responsible. At any time within sixty days of the filing of such 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. 4 15 U.S.C. 78s(b)(3)(A)(iii). 5 17 CFR 240.19b-4(f)(4). 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-FICC-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-FICC-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 Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of FICC and on FICC's Web site at *www.ficc.com* . 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-FICC-2005-03 and should be submitted on or before March 9, 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. E5-638 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51175; File No. SR-FICC-2004-19] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving a Proposed Rule Change Relating to Changes To Eliminate or Amend Rules That Are Inconsistent With Current Practice, Have Expired, Are Outdated, Are Unnecessary, or Require Technical Correction February 9, 2005. SUMMARY: On October 7, 2004, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) a proposed rule change pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 (File No. SR-FICC-2004-19). Notice of the proposal was published in the **Federal Register** on December 29, 2004. 2 No comment letters were received. For the reasons discussed below, the Commission is approving the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 50888 (Dec. 20, 2004), 69 FR 78073. I. Description The proposed rule change will eliminate or amend FICC's Government Securities Division (“GSD”) and Mortgage-Backed Securities Division (“MBSD”) rules in the following manner: 1. Delete Provisions in GSD's Rules Regarding the Automated Customer Account Transfer Service (“ACATS”) The ACATS provisions were added to GSD's rules in 1998, when the National Securities Clearing Corporation requested that the Government Securities Clearing Corpoartion (“GSCC”), the GSD's predecessor, establish with it an interface that would enable account transfers involving netting-eligible government securities to be processed using GSCC's existing netting and settlement processes. This service was never implemented, and its continued reference in the rules is inconsistent with current practice. 2. Delete Provisions From GSD's Rules That Designate Participation in the Repo Comparison and Netting Processes GSD's rules used to refer to FICC as designating a member to be eligible to participate in the repo comparison and repo netting processes. When these repo services commenced in 1995, GSCC required testing prior to participation and subsequently designated members as eligible to participate in the services. Participation in these services has now become commonplace and special testing and designation for participation in the repo services is no longer necessary. As such, the provisions in question are outdated and are being deleted. 3. Make Technical Corrections to GSD Rules By i. Changing the definitions of “Interest Adjustment Payment” and “Interest Rate Mark Adjustment Payment” in GSD Rule 1 (Definitions) to correct an erroneous reference in both definitions to the “Federal Funds Rate” and replacing them with references to a newly defined term, “Overnight Investment Rate;” ii. changing the term in Rule 1 “Multilateral Clearing Organization” to “Multilateral Clearing Agency;” iii. changing the language of the definition in Rule 1 of “Member” to reflect the fact that certain members ( *i.e.* , comparison-only members) are approved for membership by senior management and not by the Membership and Risk Management Committee; iv. correcting Section 1(d) of Rule 2, where GSD is erroneously referred to as its predecessors name, GSCC; v. deleting subsection
(b)of Rule 11B, which has expired; vi. changing an incorrect reference to “Rule 7” to “Rule 6C” in Rule 17, Section 4; and vii. changing a reference to the “Membership and Standards Committee” to the “Membership and Risk Management Committee” in Rule 48, Section 2. 4. Technical Corrections in the MBSD Rules FICC will renumber MBSD Rule 15 (Notices) of Article X to Rule 16 as it is in fact the 16th rule in that article. II. Discussion Section 17A(b)(3)(A) of the Act requires, among other things, that a clearing agency be organized to facilitate the prompt and accurate clearance and settlement of securities transactions. 3 FICC's proposed rule change will eliminate unnecessary or outdated provisions, and make technical changes. This should promote greater transparency and understanding of FICC's actual practices and policies, which should enhance FICC's organizational capacity to facilitate the prompt and accurate clearance and settlement of securities transactions. 3 15 U.S.C. 78q-1(b)(3)(A). III. Conclusion On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act 4 and the rules and regulations thereunder. 4 15 U.S.C. 78q-1. *It is therefore ordered* , pursuant to section 19(b)(2) of the Act, that the proposed rule change (File No. SR-FICC-2004-19) be, and hereby is, approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-639 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51146; File No. SR-FICC-2004-13] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change To Amend the Rules of the Mortgage-Backed Securities Division To Impose Fines on Members for Violations of Minimum Financial Standards and To Modify the Penalty Assessment Process for Failures of Members To Submit Requisite Financial Reports on a Timely Basis February 7, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on June 24, 2004, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) and on February 2, 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 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 its Mortgage-Backed Securities Division (“MBSD”) to impose fines on members for violations of minimum financial standards and to modify the penalty assessment process for failures of members to submit requisite financial reports on a timely basis. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 The proposed rule change would amend the rules of the MBSD by imposing fines on members for violations of minimum financial standards and by modifying the penalty assessment process for failures of members to submit requisite financial reports on a timely basis. 1. Violations of Minimum Financial Standards The rules of the MBSD require clearing members to meet and maintain certain minimum financial standards at all times. While the majority of MBSD members consistently satisfy their minimum financial requirements, occasionally members do breach these requirements and create undue risk for FICC and its members. Currently, the MBSD rules do not impose specific margin consequences for falling out of compliance with minimum financial requirements but allow the Membership and Risk Management Committee in its discretion to impose conditions which can include an increase to the participant's minimum required deposits to the Participants Fund. Under the proposed rule change, a violation of a minimum financial requirement by an MBSD clearing participant would result in the imposition on such member of a margin premium equal to the greater of
(a)25 percent of the member's unadjusted 3 Participants Fund requirement or
(b)$1,000,000, to continue for ninety calendar days after the later to occur of
(i)the member's return to compliance with applicable minimum financial standards or
(ii)FICC's discovery of the applicable violation. 4 In addition, such violation would result in
(1)a report of the violation to the FICC Membership and Risk Management Committee at its next regularly scheduled meeting or sooner if deemed appropriate by FICC and
(2)the placement of such member on FICC's “watch list” subjecting it to frequent and thorough monitoring. None of these consequences would preclude FICC from imposing any other margin consequences permitted by the MBSD rules. 3 “Unadjusted” means the standard calculation before any additional assessments. 4 The required clearing fund deposit premium that will be assessed for violation of applicable minimum financial standards will be effective beginning on the day of the violation but will begin to be assessed on the date FICC becomes aware of the violation. 2. Failure To Submit Requisite Financial Reports on a Timely Basis Certain members that are required to provide monthly or quarterly financial data to FICC at times have violated MBSD's membership requirements by not timely providing such financial data. In such instances, management contacts each offending member and follows up with a letter. Failure to timely receive required information creates risk to FICC and as a result hinders FICC's ability to appropriately assess the financial condition of such members. To encourage timely submission of required financial data, FICC has established a mechanism to fine delinquent participants. 5 FICC is now proposing two additional measures to enforce timely filing of financial information. 5 Securities Exchange Act Release No. 49947 (June 30, 2004), 69 FR 41316 [File No. SR-FICC-2003-01]. First, FICC proposes to subject delinquent participants to a more stringent Participants Fund requirement. Specifically, the proposed rule filing would automatically impose a margin premium equal to the greater of
(1)25 percent of the member's unadjusted Participants Fund requirement or
(2)$1,000,000. The margin premium would be applied until appropriate financial data is submitted to FICC and reviewed for compliance purposes. In addition, delinquent members would be precluded from taking back any excess Participants Fund collateral to which they might ordinarily be entitled. Second, participants that fail to submit requisite financial reports on a timely basis would also automatically be placed on FICC's “watch list” and subject to frequent and thorough monitoring. FICC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 6 and the rules and regulations thereunder applicable to FICC because it assures the safeguarding of securities and funds which are in the custody or control of FICC by encouraging participants to maintain their minimum financial standards and to submit their required financial reports on a timely basis. As a result, FICC's ability to maintain a financially sound participant base should be enhanced. 6 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
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-FICC-2004-13 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-FICC-2004-13. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of FICC and on FICC's Web site at *http://www.ficc.com/gov/gov.docs.jsp?NS-query.* 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-FICC-2004-13 and should be submitted on or before March 9, 2005. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-647 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51176; File No. SR-ISE-2005-03] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Relating to the Calculation of Securities Indexes Underlying Options February 9, 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 5, 2005, the International Securities Exchange, Inc. (“Exchange” or “ISE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II, which Items have been prepared by the Exchange. The Exchange filed the proposal as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. On February 4, 2005, the Exchange filed Amendment No. 1 to the proposal. 5 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). 5 In Amendment No. 1, the Exchange modified the purpose section of the proposed rule change to reflect that the proposal is intended to clarify ISE rules pertaining to the source of pricing information for securities that comprise any particular securities index on which options are traded on the Exchange. Additionally, the Exchange withdrew its request for the waiver of the 30-day operative period, as the Exchange does not currently trade options on any indexes that may be subject to this rule. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to amend its rules to clarify the determination of the source of securities price information used to calculate values of certain securities indexes underlying options traded on the Exchange. The text of the rule change is below. Proposed new language is *italicized* . 6 6 The proposed rule language is based on a Chicago Board Options Exchange, Inc. (“CBOE”) rule change recently approved by the Commission. *See* Securities Exchange Act Release No. 50269 (August 26, 2004), 69 FR 53755 (September 2, 2004). Rule 2009. Terms of Index Options Contracts (a)-(e) no change. *(f) Index Level at Expiration. With respect to any securities index on which options are traded on the Exchange, the source of the prices of component securities used to calculate the current index level at expiration is determined by the reporting authority for that index* . 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 ISE has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to clarify ISE rules related to index options as they pertain to the source of pricing information for securities that comprise any particular securities index on which options are traded on the Exchange. The purpose of the rule change is to clarify that the “reporting authority” (or index calculator) for any securities index on which options are traded on the ISE may determine to use the reported sale prices for one or more underlying securities from a market that may not necessarily be the primary market for that security in calculating the appropriate index value. 7 This clarification is necessary because ISE's rules may be read to mean that the primary market for each security that comprises an index will always be the source of reported sale prices to calculate the index. While the Exchange does not currently trade options on any indexes that are calculated by using prices from sources other than the primary market, the Exchange seeks to adopt this rule in the event it does list such options in the future. 7 On May 12, 2004, Dow Jones & Company (“Dow Jones”) published a plan to implement a pilot program in which Dow Jones proposed to use the opening and closing prices of Nasdaq-listed stocks reported from the American Stock Exchange to calculate certain Dow Jones Averages. Dow Jones has since terminated the pilot program. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder and, in particular, the requirements of Section 6(b) of the Act. 8 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(5) 9 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective 10 pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b-4(f)(6) thereunder. 12 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). 10 The Exchange provided the Commission with notice of its intent to file the proposed rule change at least five days prior to the filing date. 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b-4(f)(6). 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. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-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-ISE-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 Commissions 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 ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2005-03 and should be submitted on or before March 9, 2005. 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. E5-641 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51171; File No. SR-NASD-2005-016] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Fees for the Nasdaq Information Exchange Protocol February 9, 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 31, 2005, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), 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 Nasdaq. Pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 Nasdaq has designated this proposal as one establishing or changing a due, fee, or other charge of a self-regulatory organization, which renders the proposed rule change effective immediately upon filing. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change Nasdaq proposes to modify its fees for the Nasdaq Information Exchange protocol. Nasdaq will implement the proposed rule change on February 1, 2005. The text of the proposed rule change is available on the NASD's Web site ( *http://www.nasd.com* ), at the NASD'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, Nasdaq 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. Nasdaq 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 Nasdaq recently submitted a proposed rule change to establish fees for the Nasdaq Information Exchange, or “QIX,” a new proprietary messaging protocol that, unlike the current application programming interface (“API”) protocol, does not require use of an service delivery platform (“SDP”) at the premises of the subscriber. 5 Nasdaq has concluded that it underestimated its costs of providing the new protocol when it initially established these fees, and is now revising the fees accordingly. The fee for a QIX port pair (including an ECN direct connection port pair) is being increased from $1,000 to $1,200 per month, and the fee for an unsolicited message port is being increased from $750 to $1,000 per month. Despite these fee increases, Nasdaq believes that the implementation of QIX will still result in significant cost savings to subscribers in comparison to the current SDP/API protocol. 5 *See* Securities Exchange Act Release No. 51170 (February 9, 2005) (File No. NASD-2005-002). 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 15A of the Act, 6 in general, and section 15A(b)(5) 7 of the Act, in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the NASD operates or controls. Even with the fee increases reflected in the proposed rule change, the new QIX protocol will offer substantial cost savings in comparison with the current SDP/API protocol. Fees for access services are equitably allocated based on the level of message traffic between Nasdaq and each firm. 6 15 U.S.C. 78 *o* -3. 7 15 U.S.C. 78 *o* -3(5). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq 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. 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 pursuant to section 19(b)(3)(A) of the Act 8 and subparagraph (f)(2) of Rule 19b-4 thereunder, because it establishes or changes a due, fee, or other charge. 9 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). 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-NASD-2005-016 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-2005-016. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2005-016 and should be submitted on or before March 9, 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. E5-634 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51170; File No. SR-NASD-2005-002] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Establish Fees for Connectivity to the Nasdaq Market Center February 9, 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 7, 2005, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), 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 Nasdaq. On January 28, 2005, Nasdaq filed Amendment No. 1 to the proposed rule change. 3 Pursuant to Section 19(b)(3)(A) of the Act 4 and Rule 19b-4(f)(1), (2), and
(5)thereunder, 5 Nasdaq has designated this proposal in part as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule, in part as establishing or changing a due, fee, or other charge, and in part as a proposal effecting a change in an existing order-entry or trading system of a self-regulatory organization, which renders the proposed rule change effective immediately upon filing. 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 In Amendment No. 1, Nasdaq added representations with respect to monitoring usage traffic on dedicated and non-dedicated FIX servers and steps it would take to provide a high level of support across all other FIX servers, and replaced the text of the original filing in its entirety. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b-4(f)(1), (2), and (5). I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change Nasdaq proposes to amend NASD Rule 7010 to establish fees for new options for connecting to the Nasdaq Market Center and is filing a related Member Alert and Head Trader Alert. Nasdaq will implement the proposed rule change immediately. The text of the proposed rule change, and the texts of the related Member Alert and Head Trader Alert, that were attached as exhibits to the proposal, are available on the NASD's Web site ( *http://www.nasd.com* ), at the NASD'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, Nasdaq 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. Nasdaq 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 Nasdaq Information Exchange Nasdaq offers market participants and other Nasdaq subscribers a choice of messaging protocols for communicating with Nasdaq systems, with the goal of allowing firms to select the connectivity options that best suit their needs. The protocol options currently available to firms include the Financial Information Exchange (“FIX”) protocol, the computer-to-computer interface (“CTCI”) protocol, and an application programming interface (“API”) protocol that requires the use of a Service Delivery Platform (“SDP”), a hardware unit located at the subscriber's premises. Although the SDP/API protocol has offered distinct advantages in terms of functional support for quoting market participants and other firms with high volumes of message traffic, the need for firms to install and maintain one or more SDPs has resulted in comparatively higher communications and infrastructure costs for firms using SDP/API. As a result, Nasdaq has developed the Nasdaq Information Exchange or “QIX,” a new proprietary protocol that does not require use of an SDP. Nasdaq believes that QIX will offer the benefits of the current API protocol but at a significantly reduced cost to its users. The QIX protocol is being made available for use in production immediately. During a period of approximately ten months thereafter, Nasdaq will work with users of the SDP/API protocol to transition them to QIX, FIX, and/or CTCI. Nasdaq intends to sunset the SDP/API protocol and connectivity by the end of October 2005 (or such later date as Nasdaq may announce to market participants); all users of that protocol will be required to transition by that time. The sunset of SDP/API will not affect the operation of any of the rules governing trading through the Nasdaq Market Center ( *e.g.* , the 4700 Series of the NASD Rules). In contrast to the SDP/API protocol, which requires market participants to use, and pay Nasdaq for the use of, a telecommunications network supplied by MCI pursuant to an agreement with Nasdaq, QIX will offer market participants choice in the establishment of connections to Nasdaq. As is currently the case for FIX, market participants may use a range of third-party communications providers, may establish connections to service bureaus that in turn connect to Nasdaq, or may take advantage of additional modes of telecommunications that may become available to the financial sector in the future. As a result, member firms will benefit from the forces of competition, choice, and innovation when selecting telecommunications services for the purpose of connecting to Nasdaq's facilities through QIX and FIX, rather than receiving connectivity as a vertically integrated component of Nasdaq's facilities. Nasdaq will assess a basic charge of $1,000 for each pair of “ports” that uses QIX. 6 A port is a discrete right of access to Nasdaq's trading facility using the QIX protocol. Ports, which are analogous to a “logon” in the SDP/API environment, are provided in pairs to increase throughput performance by separating unsolicited message streams from quote/order entry and response streams. The number of port pairs that a particular firm will require will depend on the volume of its message traffic. The direct connection for electronic communications networks (“ECNs”) that Nasdaq recently established 7 will continue to be available, at the same charge of $1,000 per port pair per month. Upon the sunset of the SDP/API protocol, ECNs will no longer be able to connect to Nasdaq using an SDP, so the use of a direct connection will become mandatory for ECNs quoting in Nasdaq. Subscribers will also be able to receive a single port that is used solely to receive unsolicited messages (such as drop copy execution reports) at a cost of $750 per month. 8 6 A subscriber that seeks to track its proprietary quotes separately from customer orders that are reflected in its quotes will have the option of receiving a third proprietary quote information port for that purpose at no additional charge. The Commission notes that in a subsequent filing (NASD-2005-016), Nasdaq proposed to revise the QIX fees. The fee for a QIX port pair (including an ECN direct connection port pair) would be increased from $1,000 to $1,200 per month, and the fee for an unsolicited message port would be increased from $750 to $1,000 per month. *See* Securities Exchange Act Release No. 51171 (February 9, 2005). 7 *See* Securities Exchange Act Release No. 50647 (November 8, 2004), 69 FR 65667 (November 15, 2004) (SR-NASD-2004-158). 8 Because Nasdaq's charges are assessed against the Nasdaq market participant rather than telecommunications providers or service bureaus that act as intermediaries, the fees established by this proposed rule change apply only to NASD members. QIX, unlike the SDP/API, will not support the risk management function of Nasdaq's trade reporting service, but this function will continue to be available through the Nasdaq Workstation. In addition, QIX will not provide a market data feed, so firms that currently use the SDP/API for market data will need to subscribe separately to the appropriate market data feeds. Nevertheless, Nasdaq expects that the overall cost of QIX to support a given level of usage will be significantly lower than the cost of SDP/API to support an equivalent level. Nasdaq also expects that the effort required by firms to transition from SDP/API to QIX will be quite manageable by firms, given the similarities between the two protocols. To assist in the transition, SDP/API and CTCI users will be provided with the ability to segregate unused bandwidth on T1 circuits supporting these existing connections to establish temporary QIX and/or FIX connections while firms await installation of such new circuits as may be required to support their planned QIX and/or FIX usage. In addition, pursuant to NASD Rule 7050(d)(3), subscribers that are transitioning from SDP/API to QIX or FIX will be permitted to use the Nasdaq Testing Facility to test QIX or FIX functionality free of charge for a 90-calendar day period. Nasdaq has been providing notice to all market participants that will be affected by the sunset of SDP/API through direct contacts and through widely disseminated written notices, including Nasdaq Head Trader Alert (2004-105), which was disseminated in July 2004, 9 and Nasdaq Head Trader Alert (2005-009) and an NASD Member Alert, which are being disseminated in conjunction with this filing. 10 To further ensure the availability of this information, Nasdaq is filing the NASD Member Alert and the new Head Trader Alert as Exhibits to this proposed rule change. 9 *See http://www.nasdaqtrader.com/dynamic/newsindex/headtraderalerts_2004.stm.* 10 *See http://www.nasdaqtrader.com/dynamic/newsindex/headtraderalerts_2005.stm* and *http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&nodeId=1193&ssSourceNodeId=546.* The Head Trader Alerts and Member Alert also describe Nasdaq's plans to replace the current Nasdaq Workstation II with a new Nasdaq Workstation by October 2005. Nasdaq will submit a separate proposed rule change to establish fees for the new Nasdaq Workstation. FIX Servers In response to requests from market participants, Nasdaq is also offering users of the FIX protocol the option of using FIX through a dedicated server (also known as a “FIX engine”). Currently, Nasdaq's FIX servers are not dedicated to a specific firm, but rather a single FIX server may carry message traffic from multiple firms. Nasdaq carefully monitors usage to ensure that capacity is adequate to handle message traffic. Nevertheless, in response to the request of several firms, Nasdaq is proposing to provide the option of a dedicated server at a cost of $1,000 per server per month to reflect Nasdaq's additional costs of providing this service. Nasdaq represents that it will carefully monitor message traffic on all dedicated and non-dedicated servers to ensure that dedicated servers will not provide firms that receive them with any advantage over other market participants in terms of the speed with which messages are transmitted to and from the Nasdaq Market Center. Specifically, Nasdaq represents that it will install additional non-dedicated servers whenever necessary to provide a high level of support across all FIX servers. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 15A of the Act, 11 in general, and Section 15A(b)(5) 12 of the Act, in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the NASD operates or controls. Nasdaq believes the proposed rule change would provide market participants with a choice of several cost-effective methods to connect to Nasdaq's facilities, including QIX, a new API protocol that will offer substantial cost savings in comparison with the current SDP/API protocol. Nasdaq represents that fees for access services are equitably allocated based on the level of message traffic between Nasdaq and each firm. 11 15 U.S.C. 78 *o* -3. 12 15 U.S.C. 78 *o* -3(5). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq 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 pursuant to Section 19(b)(3)(A) of the Act 13 and subparagraphs (f)(1), (2), and
(5)of Rule 19b-4 thereunder, because it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule, establishes or changes a due, fee, or other charge, and effects a change in an existing order-entry or trading system. 14 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 15 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b-4(f)(1), (2), and (5). 15 *See* 15 U.S.C. 78s(b)(3)(C). For purposes of calculation the 60-day abrogation period, the Commission considers the period to commence on January 28, 2005, the date Nasdaq filed Amendment No. 1. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2005-002 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-2005-002. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2005-002 and should be submitted on or before March 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 16 16 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-636 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51181; File No. SR-NASD-2004-171] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to Amendments to Rule 2340 (Customer Account Statements) February 10, 2005. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (“Act”) 2 and Rule 19b-4 thereunder, 3 notice is hereby given that on November 2, 2004, the National Association of Securities Dealers, Inc. (“NASD”), filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. On February 2, 2005 NASD filed Amendment No. 1 to the proposed rule change. 4 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 15 U.S.C. 78a *et seq.* 3 17 CFR 240.19b-4. 4 In Amendment No. 1, NASD filed a partial amendment to change the proposed effective date from 30 days following Commission approval to 180 days following Commission approval. NASD also changed the reference to “each customer” to “the customer” in the sentence proposed to be added as the second sentence to paragraph
(a)of Rule 2340. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend Rule 2340 to require that account statements include a statement that advises each customer to promptly report any inaccuracy or discrepancy in that person's account to his or her introducing firm and clearing firm (where these are different firms) and to re-confirm any oral communications in writing to further protect the customer's rights, including rights under the Securities Investor Protection Act (“SIPA”). Below is the text of the proposed rule change. Proposed new language is in italics. 2340. Customer Account Statements
(a)General Each general securities member shall, with a frequency of not less than once every calendar quarter, send a statement of account (“account statement”) containing a description of any securities positions, money balances, or account activity to each customer whose account had a security position, money balance, or account activity during the period since the last such statement was sent to the customer. *In addition, each general securities member shall include in the account statement a statement that advises the customer to report promptly any inaccuracy or discrepancy in that person's account to his or her brokerage firm. (In cases where the customer's account is serviced by both an introducing and clearing firm, each general securities member must include in the advisory a reference that such reports be made to both firms.) Such statement also shall advise the customer that any oral communications should be re-confirmed in writing to further protect the customer's rights, including rights under the Securities Investor Protection Act (SIPA)* .
(b)through
(d)No change II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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
(a)Purpose On May 25, 2001, the U.S. General Accounting Office (“GAO”) issued *Securities Investor Protection: Steps Needed to Better Disclose SIPC Policies to Investors* (GAO-01-653). In that report, the GAO made recommendations to SEC and the Securities Investor Protection Corporation (“SIPC”) about ways to improve the information available to the public about SIPC and the Securities Investor Protection Act. 5 Among other things, the GAO recommended that self-regulatory organizations (“SROs”) explore actions to include information on periodic statements or trade confirmations to inform investors that they should document any unauthorized trading in writing. This is important because, in the event a firm goes into SIPC liquidation, SIPC and the trustee generally will assume that the firm's records are accurate unless the customer is able to prove otherwise. 6 Currently, clearing firms may include language in customer account statements advising customers to immediately report to the firm any discrepancies in balances or positions, but these advisories may not necessarily direct customers to do so in writing, nor are they *required* to be included on the statements. 5 In July 2003, the GAO issued *Securities Investor Protection: Update on Matters Related to the Securities Investor Protection Corporation* , in which the GAO noted that the Commission was working with self-regulatory organizations to explore ways in which the GAO's recommendations could be implemented. 6 The SIPC Brochure advises customers that if they ever discover an error in a confirmation or statement, they should immediately bring the error to the attention of the brokerage firm in writing and keep a copy of this writing. SIPC advises that if there is something wrong with the brokerage firm's records, the customer will have to prove that the records are inaccurate, or SIPC and the trustee will assume that the firm's records are correct. Therefore, NASD is proposing to amend Rule 2340, which specifies disclosures required to be made on customer account statements. The proposed amendment to Rule 2340 would require general securities firms to include in monthly account statements a statement advising customers to report promptly any inaccuracy or discrepancy in their account to their clearing firm and the introducing firm (where these are different firms). Such statement also would need to advise customers that any oral communications should be re-confirmed in writing to further protect customers' rights, including rights under SIPA. The proposed disclosure requirement would not impose any limitation whatsoever on a customer's right to raise concerns regarding inaccuracies or discrepancies in his or her account at any time, either in writing or orally. Further, a customer's failure to promptly raise such concerns, either in writing or orally, does not act to estop a customer from reporting an inaccuracy or discrepancy in his or her account during any SIPC liquidation of his or her brokerage or clearing firm. NASD will announce the effective date of the proposed rule change in a Notice to Members to be published no later than 30 days following Commission approval. NASD is proposing an effective date of 180 days following Commission approval. This will give members time to make necessary changes to their customer documentation and systems.
(b)Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, which requires, among other things, that NASD rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change is consistent with the provisions of the Act noted above because each customer will be advised to promptly report any discrepancies or inaccuracies in his or her account to his or her brokerage firm (both the clearing firm and introducing firm, where the customer's account is serviced by both) and to re-confirm any oral communications in writing, thereby further protecting the customer's rights, including rights under SIPA.
(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 Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will: A. By order approve such 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, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NASD-2004-171 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 No. SR-NASD-2004-171. 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. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing 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 file number SR-NASD-2004-171 and should be submitted on or before March 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-649 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51177; File No. SR-NSCC-2004-11] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Amending the Fee Schedule of the Insurance Processing Service February 9, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on December 20, 2004, the National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) a proposed rule change as described in Items I, II, and III below, which Items have been prepared primarily by NSCC. 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). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change will revise the transaction fees for NSCC's Insurance Processing Service (“IPS”). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 2 2 The Commission has modified the text of the summaries prepared by NSCC. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Pursuant to this rule change, fees for the Positions and Valuations (“POV”) product of IPS, which enables carriers to send annuity and life insurance contract details to their distributors, will be adjusted as follows (each fee is for 1,000 items): • For zero to 500,000 items per month (the previous range was zero to 49,999 items per month), there will be a price increase from $6.00 to $8.00; • For 500,001 to 2,000,000 items per month (the previous range was 50,000 to 249,999 items per month), there will be a price decrease from $5.00 to $4.50; • For 2,000,001 to 4,000,000 items per month (the previous range was 250,000 to 999,999 items per month), there will be a price decrease from $4.00 to $3.75; and • For 4,000,001 or more items per month (the previous range was 1,000,000 or more items per month), there will be a price increase from $2.00 to $3.50. The effective date for these fee adjustments was January 1, 2005. NSCC represents that these proposed fee revisions are consistent with NSCC's overall pricing philosophy to align service fees and underlying cost. NSCC believes that the proposed rule change is consistent with the requirements of the Section 17A of the Act 3 and the rules and regulations thereunder because it provides for a reasonable fee to cover the clearing agency's costs and as such it promotes the prompt and accurate clearance and settlement of securities transactions. 3 15 U.S.C. 78q-1. B. Self-Regulatory Organization's Statement on Burden on Competition NSCC believes that the proposed rule change will not 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 NSCC has not solicited or received written comments relating to the proposed rule change. NSCC will notify the Commission of any written comments it receives. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change took effect upon filing with the Commission pursuant to Section 19(b)(3)(A)(ii) of the Act 4 and Rule 19b-4(f)(2) 5 thereunder because the proposed rule change changes a due, fee, or other charge imposed by NSCC. At any time within sixty days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 4 15 U.S.C. 78s(b)(3)(A)(ii). 5 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-NSCC-2004-11 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-NSCC-2004-11. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 450 Fifth Street, NW., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at NSCC's principal office and on NSCC's Web site at *http://www.nscc.com/legal/index2004.html* . 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-NSCC-2004-11 and should be submitted on or before March 9, 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. E5-640 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51179; File No. SR-Phlx-2004-95] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Relating to Limitation of the Net Inbound ITS Credit to Certain Phlx and SCCP Fees and Transaction-Related Charges February 9, 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 30, 2004, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Phlx. On January 24, 2005, the Exchange filed Amendment No. 1. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 clarified certain terminology used in the proposed rule change and slightly changed the text of the rule. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to revise its schedule of fees to limit the Net Inbound Intermarket Trading System (“ITS”) 4 Credit (“ITS Credit”) 5 to certain Phlx and Stock Clearing Corporation of Philadelphia (“SCCP”) 6 fees and transaction-related charges. Specifically, the proposal limits the ITS Credit to the amount of Phlx Permit Fees, Phlx Outbound ITS Fees, SCCP Trade Recording Fees, SCCP Value Fees, SCCP Transaction Charges (Remote Specialist Only), SCCP ETF Fees (related to NASDAQ-100 Trust, Series 1 (“QQQ”), 7 Standard & Poor's Depository Receipts® (“SPDRs”), 8 and DIAMONDS® Exchange Traded Funds (“DIAMONDS®”)) 9 incurred in the same month that the credit is earned. 10 On a monthly basis, ITS Credit in excess of the amount charged for the fees may not be used for any other purpose and may not be carried forward. 11 The proposed amendment is scheduled to become effective for transactions occurring in February, 2005. 4 ITS is an order routing network designed to facilitate intermarket trading in exchange-listed equity securities among participating self-regulatory organizations based on current quotation information emanating from their markets. 5 Currently, the ITS Credit (which is calculated on a monthly basis) is: $0.30 per 100 shares on the excess, if any, of the number of inbound ITS shares executed compared to the number of outbound ITS shares sent and executed on a monthly basis. The outbound ITS fee (“Outbound ITS Fee”) for PACE orders (PACE is the Exchange's electronic order routing, delivery, execution, and reporting system for equities) sent over ITS and containing customer clearing information is: $0.60 per 100 shares for up to 501 shares and $0.30 per 100 shares for 501 to 4,999 shares. *See* Securities Exchange Act Release No. 45388 (February 4, 2002), 67 FR 6310 (February 11, 2002) SR-Phlx-2001-121). 6 SCCP, a subsidiary of Phlx, is a registered clearing agency. 7 The Nasdaq-100®, The 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-200 Index® (“Index”) is determined, composed, and calculated by Nasdaq without regard to the licensee of the product, 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. 8 “Standard & Poor's®,” “S&P®,” “S&P 500®,” “Standard & Poor's 500®”, and “500” are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by the Phlx, in connection with the listing and trading of SPDRs, on the Phlx. These products are not sponsored, sold or endorsed by Standard & Poor's (“S&P”), a division of The McGraw-Hill Companies, Inc., and S&P makes no representation regarding the advisability of investing SPDRs. 9 “Dow Jones ®,” “The Dow SM ,” “Dow 30 SM ,” “Dow Jones Industrial Average SM ”, “Dow Jones Industrials SM ,” “DJIA SM, ” “DIAMONDS ®,” and “The Market's Measure®” are trademarks of Dow Jones & Company, Inc. (“Dow Jones”) and have been licensed for use for certain purposes by the Phlx, pursuant to a License Agreement with Dow Jones. The DIAMONDS Trust, based on the DJIA, is not sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in the DIAMONDS Trust. 10 SCCP is simultaneously submitting a proposed rule change that adds reference to the ITS Credit in the SCCP Fee Schedule and also renames fees related to certain products as “ETF Fees.” *See* SR-SCCP-2004-05. 11 Thus, for example, if an equity specialist had a monthly ITS Credit of $30,000 and monthly Phlx and SCCP charges that were eligible to be reduced by the ITS Credit of $5,000 and $20,000, respectively, the equity specialist would receive a credit of $25,000, and the unused credit amount of $5,000 could not be used for any purpose. The text of the proposed rule change is available on the Phlx's Web site *http://www.phlx.com* , at the 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 Phlx included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to continue encouraging ITS trades by allowing equity specialists to get an ITS Credit, but to limit the credit in a reasonable fashion so as not to financially burden the Exchange, particularly in light of the change in equity business on the Exchange. Specifically, while the current ITS Fee and ITS Credit methodology was practical when instituted in 2002, 12 the equity business mix on the Exchange has changed, such that the ITS Credit is now substantially greater than the ITS Fee, with the Exchange generally having to credit substantial amounts to equity specialists. The Exchange is therefore constricting the amount of the ITS Credit, which will continue to be calculated on a monthly basis, such that the credit is limited as described above. The fees to which the ITS Credit is now limited reflect the most fundamental fees applicable to equity specialists. 12 *See* Securities Exchange Act Release No. 45388 (February 4, 2002), 67 FR 6310 (February 11, 2002) (SR-Phlx-2001-121). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 13 in general, and furthers the objectives of Section 6(b)(4) of the Act 14 in particular, in that it is an equitable allocation of reasonable fees among Exchange members. 13 15 U.S.C. 78f(b). 14 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 inappropriate burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 15 and paragraph
(f)of Rule 19b-4 thereunder, 16 because it establishes or changes a due, fee, or other charge imposed by the Phlx. 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. 17 15 15 U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b-4(f)(2). 17 For purposes of claculating the 60-day abrogation period, the Commission considers the proposed rule change to have been filed on January 24, 2005 when Amendment No. 1 was filed. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2004-95 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-2004-95. 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 Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2004-95 and should be submitted on or before March 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 18 18 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-646 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51182; File No. SR-SCCP-2004-04] Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Adoption of a New Per Side Transaction Charge for Remote Specialist Units February 10, 2005. Pursuant to Section 19(b)(1) of 1934 (“Act”), 1 notice is hereby given that on December 29, 2004, the Stock Clearing Corporation of Philadelphia (“SCCP”) 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 primarily by SCCP. 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). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change SCCP will amend its schedule of fees by adding a new transaction fee applicable to remote specialists that deliver certain types of orders to the Philadelphia Stock Exchange (“Phlx”) over PACE. 2 2 PACE is Phlx's automated order routing, delivery, execution, and reporting system for equities. Phlx Rule 229. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, SCCP 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. SCCP has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 3 3 The Commission has modified the text of the summaries prepared by SCCP. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Under the proposed rule change, SCCP will add a $0.15 per Program Trading Side transaction fee. Program Trading Sides are defined as market orders that are sent by an order flow provider to a remote specialist through PACE pursuant to the order flow provider's computerized trading methodology that is based on a predetermined algorithm. 4 In order for the Program Trading Sides to qualify for the $0.15 fee, the order flow provider sending the Program Trading Sides must be affiliated with the remote specialist to whom the Program Trading Sides are directed. 4 Phlx Rules 229 and 229A govern the handling of orders received through PACE. The purpose of this new fee is to provide an incentive for remote specialists to generate additional volume by attracting additional Program Trading Sides. Pursuant to the rule change, remote specialists will be charged a fee of $0.15 per trade side for Program Trading Sides (both odd-lots and round-lots) instead of the current fee of $0.30 per round-lot trade side and $0.10 per odd-lot trade side. For a given month, the fee for each remote specialist will be capped at $10 per day per security provided the total number of Program Trading Sides settled by the remote specialist in all specialty securities exceeds 50,000 sides for that calendar month. SCCP proposed that the fee become effective beginning with trades settling on January 3, 2005. SCCP believes that the proposed rule change is consistent with Section 17A(b)(3)(D) of the Act 5 which requires that the rules of a registered clearing agency provide for the equitable allocation of reasonable dues, fees, and other charges among its participants. 5 15 U.S.C. 78q-1(b)(3)(D). B. Self-Regulatory Organization's Statement on Burden on Competition SCCP 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 SCCP did not solicit or receive written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change took effect upon filing with the Commission pursuant to Section 19(b)(3)(A)(ii) of the Act 6 and Rule 19b-4(f)(2) 7 thereunder because the proposed rule change changes a due, fee, or other charge imposed by SCCP. At any time within sixty days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 6 15 U.S.C. 78s(b)(3)(A)(ii). 7 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-SCCP-2004-04 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-SCCP-2004-04. 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 SCCP's principal office and on SCCP's Web site at *http://www.phlx.com/SCCP/memindex_sccpproposals.html* . 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-SCCP-2004-04 and should be submitted on or before March 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-643 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51186; File No. SR-SCCP-2004-05] Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Limitation of the Net Inbound ITS Credit to Certain SCCP and Phlx Fees and Transaction-Related Charges February 10, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on December 30, 2004, the Stock Clearing Corporation of Philadelphia (“SCCP”) 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 primarily by SCCP. 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). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change SCCP will amend SCCP's fee schedule to indicate that the Net Inbound ITS Credit (“ITS Credit”) 2 established in the Philadelphia Stock Exchange's (“Phlx”) Summary of Equity Charges is limited to certain SCCP and Phlx transaction-related charges. 2 The ITS Credit is a credit that is calculated on a monthly basis consisting of: $0.30 per 100 shares on the excess, if any, of the number of inbound ITS shares executed compared to the number of outbound ITS shares sent and executed. Securities Exchange Act Release No. 45388 (Feb. 2, 2002), 67 FR 6310 (Feb. 11, 2002) [SR-Phlx-2001-121]. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, SCCP 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. SCCP has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. 3 3 The Commission has modified the text of the summaries prepared by SCCP. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Under the rule change, the ITS Credit will be limited to the amount of SCCP's Trade Recording Fees, Value Fees, ETF Fees, and Transaction Charges (Remote Specialist Only) plus Phlx Permit Fees and Phlx Outbound ITS Fees 4 that are incurred in the same month that the credit is earned. On a monthly basis, ITS Credits in excess of the amount charged for all of these fees may not be used for any other purpose and may not be carried forward. 5 The proposed amendment was effective for transactions settling on or after January 3, 2005. 4 Phlx has submitted a companion proposed rule change to the Commission that adds reference to the ITS Credit in the Summary of Equity Charges in Phlx's schedule of fees. [SR-Phlx-2004-95.] 5 For example, if an equity specialist had a monthly ITS Credit of $30,000 and monthly Phlx and SCCP charges that were eligible to be reduced by the ITS Credit of $5,000 and $20,000, respectively, the equity specialist would receive a credit of $25,000, and the unused credit amount of $5,000 would not be used for any other purpose. Also under the rule change, SCCP will rename the fees related to certain products 6 as “ETF Fees” for ease of reference. 6 *I.e.* Nasdaq 100 Trust, Series 1 (also known as QQQ), Standard & Poor's Depositary Receipts (also known as SPDRs), and Diamonds Exchange Traded Funds (also known as Diamonds). The purpose of the proposed rule change is to encourage ITS trades by allowing equity specialists to get an ITS Credit but to limit the credit in a reasonable fashion so as not to financially burden Phlx, particularly in light of the change in Phlx's equity business. While the ITS Fee and ITS Credit methodology was practical when instituted in 2002, 7 Phlx's equity business has changed so that the ITS Credit is now substantially greater than the ITS Fee. As a result, Phlx oftentimes has to credit substantial amounts to equity specialists. Phlx is therefore limiting the amount of the ITS Credit as described above. The fees to which the ITS Credit is now limited reflect the most fundamental fees applicable to equity specialists. 7 Securities Exchange Act No. 45388 (Feb. 2, 2002), 67 FR 6310 (Feb. 11, 2002) [SR-Phlx-2001-121]. SCCP believes that the proposed rule change is consistent with Section 17A(b)(3)(D) of the Act 8 which requires that the rules of a registered clearing agency provide for the equitable allocation of reasonable dues, fees, and other charges among its participants. 8 15 U.S.C. 78q-1(b)(3)(D). B. Self-Regulatory Organization's Statement on Burden on Competition SCCP 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 SCCP did not solicit or receive any comments regarding the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change took effect upon filing with the Commission pursuant to Section 19(b)(3)(A)(ii) of the Act 9 and Rule 19b-4(f)(2) 10 thereunder because the proposed rule change changes a due, fee, or other charge imposed by SCCP. At any time within sixty days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 9 15 U.S.C. 78s(b)(3)(A)(ii). 10 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-SCCP-2004-05 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-SCCP-2004-05. 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 SCCP's principal office and on SCCP's Web site at *http://www.phlx.com/SCCP/memindex_sccpproposals.html.* 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-SCCP-2004-05 and should be submitted on or before March 9, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-648 Filed 2-15-05; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10020 and # 10021] California Disaster # CA-00001 Disaster Declaration AGENCY: Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of California (FEMA-1577-DR), dated 02/04/2005. *Incident:* Severe Storms, Flooding, Debris Flows, and Mudslides. *Incident Period:* 12/27/2004 through 01/11/2005. Effective Date: 02/04/2005. *Physical Loan Application Deadline Date:* 04/05/2005. *EIDL Loan Application Deadline Date:* 11/04/2005. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Disaster Area Office 1, 360 Rainbow Blvd. South 3rd Floor, Niagara Falls, NY 14303. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 02/04/2005, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Los Angeles, Ventura. Contiguous Counties: California, Kern, Santa Barbara, Orange, San Bernardino. The Interest Rates are: Percent Homeowners With Credit Available Elsewhere 5.875 Homeowners Without Credit Available Elsewhere 2.937 Businesses With Credit Available Elsewhere 5.800 Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere 4.000 Other (Including Non-Profit Organizations) With Credit Available Elsewhere 4.750 Businesses and Non-Profit Organizations Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 10020B and for economic injury is 100210. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. 05-2943 Filed 2-15-05; 8:45 am]
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U.S. Code
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Definitions and application§ 78c
- National system for clearance and settlement of securities transactions§ 78q–1
- Short title§ 78a
3 references not yet in our index
- 17 CFR 240.19
- 17 CFR 240
- 15 USC 78
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cites case law
Notices
Notice of an application under sections 6(c), 17(d) and 23(c) of the Investment Company Act of 1940 (the “Act”) and rule 17d-1 under the Act
Cite17 CFR 240.19
Cite17 CFR 240
Cite15 USC 78
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