Notices. Notice

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BILLING CODE 7708-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-11568] Issuer Delisting; Notice of Application of DynTek, Inc. To Withdraw Its Common Stock, $.0001 par value, and Series A Convertible Preferred Stock and Warrants, From Listing and Registration on the Boston Stock Exchange, Inc. March 9, 2005. On February 23, 2005, DynTek, Inc. a Delaware corporation (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its common stock, $.0001 par value, and series A convertible preferred stock and warrants (collectively “Securities”), from listing and registration on the Boston Stock Exchange, Inc.

(“BSE”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d). On February 3, 2005, the Board of Directors (“Board”) of the Issuer approved resolutions to withdraw the Securities from listing and registration on BSE. The Board stated that the following reasons factored into its decision. In connection with the Issuer's voluntary withdrawal of Securities from inclusion for trading on Nasdaq SmallCap Market (“Nasdaq”) on December 15, 2004, the Board determined that such withdrawal was in the best interests of the Issuer and its stockholders, and the Issuer's current principal market maker has acted to continue to make a market in the Securities on the OTC Bulletin Board.

The Issuer believes that its stockholders would be better served by channeling its resources into efforts that will accelerate the profitable growth of the Issuer, and that the ongoing costs, distractions, and uncertainties of the process to maintain a Nasdaq listing for the Issuer at that time was warranted. After the Issuer's voluntary withdrawal from listing on Nasdaq, the Issuer received a letter dated December 20, 2004 from BSE requesting additional information regarding the Issuer's decision to voluntary withdraw from Nasdaq, as well as other information pertaining to the listing of the Securities on BSE.

After corresponding with BSE, the Board determined that it is in the best interest of the Issuer and its stockholders to voluntarily withdraw the listing of its Securities from BSE and requested that the Issuer's current market makers continue to make markets in the Securities on the OTC Bulletin Board. The Issuer stated in its application that it has complied with BSE rules governing the withdrawal of a security from BSE by complying with all applicable laws in effect in the State of Delaware, the state in which the Issuer is incorporated, and by complying with BSE procedures for delisting by filing the required documents governing the withdrawal of a security from listing and registration on BSE.

The Issuer's application relates solely to withdrawal of the Securities from listing on BSE and from registration under Section 12(b) of the Act, 3 and shall not affect its obligation to be registered under Section 12(g) of the Act. 4 3 15 U.S.C. 78 *l* (b). 4 15 U.S.C. 78 *l* (g). Any interested person may, on or before April 4, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of the BSE, and what terms, if any, should be imposed by the Commission for the protection of investors.

All comment letters may be submitted by either of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/delist.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include the File Number 1-11568 or; 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 1-11568.

This file number should be included on the subject line if e-mail is used. To help us 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/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions.

You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(1). Jonathan G. Katz, Secretary. 4 [FR Doc. E5-1115 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-04822] Issuer Delisting;

Notice of Application of Earl Scheib, Inc. To Withdraw Its Capital Stock, $1.00 Par Value, From Listing and Registration on the American Stock Exchange LLC March 9, 2005. On February 24, 2005, Earl Scheib, Inc., a Delaware corporation (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its capital stock, $1.00 par value (“Security”), from listing and registration on the American Stock Exchange LLC (“Amex”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d).

On February 23, 2005, the Board of Directors (“Board”) of the Issuer unanimously approved resolutions to withdraw the Security from listing on Amex. The Board stated that it determined it is in the best interest of the Issuer and its stockholders to withdraw the Security from Amex for the following reasons:

(1)The Issuer has fewer than 300 record holders of the Security;

(2)the Security trades in low volumes and, as a result, listing of the Security on Amex does not provide significant liquidity to stockholders;

(3)the expense of maintaining the listing of the Security on Amex, including the cost of complying with the Act and the provision added by the Sarbanes-Oxley Act of 2002, has had, and is expected in the future to have, a significant negative effect on the Issuer's earnings;

(4)the Issuer's management believes the Issuer is the only publicly-traded chain operator of automotive paint and body shops, and that the costs of maintaining its listing on Amex and complying with the Act place the Issuer at a disadvantage with competitors who do not bear these costs nor make the required disclosures;

(5)compliance with the Act and the listing rules of Amex demands significant attention from the Issuer's management and the Board, which attention would otherwise be devoted to developing the Issuer's business and pursing strategic opportunities; and

(6)the Issuer has not sought financing in public capital markets in many years, and the Issuer's management does not expect to do so for the foreseeable future. The Issuer stated in its application that it has met the requirements of Amex Rule 18 by complying with all applicable laws in Delaware, in which it is incorporated, and with Amex's rules governing an issuer's voluntary withdrawal of a security from listing and registration. The Issuer's application relates solely to withdrawal of the Security from listing on Amex and from registration under Section 12(b) of the Act, 3 and shall not affect its obligation to be registered under Section 12(g) of the Act. 4 3 15 U.S.C. 78 *l* (b). 4 15 U.S.C. 78 *l* (g). Any interested person may, on or before April 4, 2005 comment on the facts bearing upon whether the application has been made in accordance with the rules of Amex, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/delist.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include the File Number 1-04822 or; 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 1-04822. This file number should be included on the subject line if e-mail is used. To help us 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/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(1). Jonathan G. Katz, Secretary. [FR Doc. E5-1116 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-14544] Issuer Delisting; Notice of Application of Grupo Imsa, S.A. de C.V. To Withdraw Its American Depositary Shares (Represented by American Depositary Receipts (Each Representing Nine Equity Units, Each of Which Consists of Three Series B Shares, No Par Value, and Two Series C Shares, No Par Value), From Listing and Registration on the New York Stock Exchange, Inc. March 9, 2005. On February 10, 2005, Grupo Imsa, S.A. de C.V., a company organized under the laws of United Mexican States (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its American Depositary Shares (each representing nine equity units, each of which consists of three Series B shares, no par value, and two Series C shares, no par value) (“Security”), from listing and registration on the New York Stock Exchange, Inc. (“NYSE”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d). The Board of Directors (“Board”) of the Issuer adopted resolutions, at a meeting held on January 10, 2005, to withdraw the Security from listing and registration on the NYSE. The Board stated that in reaching its decision to withdraw the Security from the Exchange, the Board considered the following factors. First, the Board believes that the Issuer's shareholders have been disadvantaged by the historically thin liquidity of the trading in the US markets for the Security. The Board believes that the trading price of the Security has been adversely affected by weak liquidity. Second, in the Board's view, the liquidity and pricing issues have arisen because the public float of the Security is not large enough to support trading on two exchanges. Only 15% of the Security is owned by the public, with the rest owned by the Canales Clariond and Clariond Reyes families. Since the Issuer is a Mexican company, headquartered in Monterrey, Mexico, the Board believes that all trading in the Security should take place on the Mexican Stock Exchange. Third, the Board hopes that if all of the trading in the Security takes place on the Mexican Stock Exchange, the market for the Security on that exchange will show improved liquidity and pricing. In that case, withdrawal of the Security from listing on the NYSE will benefit the Issuer's shareholders. Last, the Board stated that as required by the Issuer's by-laws, the Issuer's shareholders have voted on and approved by a majority of more than 98%, the proposal to withdraw the Security from listing on the NYSE. Investors in the Security will continue to have access to information regarding the Issuer contained in reports filed with the Commission. In view of the thin liquidity of the trading markets for the Security and the price at which the Security has historically been trading, the Board believes that the Issuer's shareholders have not realized the benefits of an NYSE listing. The Issuer stated in its application that it has complied with the NYSE's rules governing an issuer's voluntary withdrawal of a security from listing and registration by providing the NYSE with the required documents governing the removal of securities from listing and registration on the NYSE. The Issuer's application relates solely to the withdrawal of the Security from listing on the NYSE and from registration under Section 12(b) of the Act, 3 and shall not affect its obligation to be registered under Section 12(g) of the Act. 4 3 15 U.S.C. 78 *l* (b). 4 15 U.S.C. 78 *l* (g). Any interested person may, on or before April 4, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of the NYSE, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/delist.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include the File Number 1-14544 or; 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 1-14544. This file number should be included on the subject line if e-mail is used. To help us 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/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(1). Jonathan G. Katz, Secretary. [FR Doc. E5-1119 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-15169] Issuer Delisting; Notice of Application of Perficient, Inc. To Withdraw Its Common Stock, $.001 Par Value, From Listing and Registration on the Boston Stock Exchange, Inc. March 9, 2005. On February 15, 2005, Perficient, Inc. a Delaware corporation (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its common stock, $.001 par value (“Security”), from listing and registration on the Boston Stock Exchange, Inc. (“BSE”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d). On February 7, 2005, the Board of Directors (“Board”) of the Issuer approved resolutions to withdraw the Security from listing and registration on BSE. In making the decision to delist the Security from BSE, the Issuer stated that the following reason factored into its decision. Over the course of the past twelve months, the Issuer has periodically reviewed its ability to comply with the listing standards of Nasdaq National Market (“Nasdaq”) in order to move the listing of the Security from Nasdaq SmallCap Market to the Nasdaq. The Issuer was aware that once the Security was listed on Nasdaq, the Security would then be a covered security pursuant to Sections 18(b)(1)(A) of the Securities Act of 1933 (“Securities Act”) 3 and the Issuer would no longer need to maintain the listing of the Security on BSE to qualify for the exemption provided by Section 18 of the Securities Act. In December 2004, the Issuer determined that it met the criteria for listing the Security on Nasdaq. In January 2005, the Issuer applied to Nasdaq to move the listing of the Security to Nasdaq and to begin trading of the Security from Nasdaq SmallCap Market to Nasdaq on February 2, 2005. Concurrent with its decision to apply for listing the Security on Nasdaq, the Issuer received a request from BSE on January 3, 2005 to update the Issuer's number of shares listed on BSE, to confirm compliance with the corporate governance requirements of the Sarbanes-Oxley Act of 2002, and to confirm the current number of beneficial holders of the Security. On February 3, 2005, the Issuer notified BSE that the Security was listed on Nasdaq and that the Issuer desired to voluntary delist from BSE. 3 15 U.S.C. 77r § 18(b)(1)(A). The Issuer stated in its application that it has complied with BSE procedures for delisting by filing the required documents governing the withdrawal of securities from listing and registration on BSE. The Issuer's application relates solely to withdrawal of the Security from listing on BSE and from registration under Section 12(b) of the Act, 4 and shall not affect its obligation to be registered under Section 12(g) of the Act. 5 4 15 U.S.C. 78 *l* (b). 5 15 U.S.C. 78 *l* (g). Any interested person may, on or before April 4, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of BSE, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/delist.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include the File Number 1-15169 or; 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 1-15169. This file number should be included on the subject line if e-mail is used. To help us 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/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 6 6 17 CFR 200.30-3(a)(1). Jonathan G. Katz, Secretary. [FR Doc. E5-1118 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [File No. 1-32449] Issuer Delisting; Notice of Application of Vitran Corporation Inc., To Withdraw Its Common Stock, No Par Value, From Listing and Registration on the American Stock Exchange LLC March 9, 2005. On March 1, 2005, Vitran Corporation Inc., an Ontario corporation (“Issuer”), filed an application with the Securities and Exchange Commission (“Commission”), pursuant to Section 12(d) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 12d2-2(d) thereunder, 2 to withdraw its common stock, no par value (“Security”), from listing and registration on the American Stock Exchange LLC (“Amex”). 1 15 U.S.C. 78 *l* (d). 2 17 CFR 240.12d2-2(d). On October 20, 2004, the Board of Directors (“Board”) of the Issuer unanimously approved a resolution to withdraw the Security from listing and registration on Amex and to list the Security on the Nasdaq National Market Systems (“Nasdaq”). The Issuer stated that it believes withdrawing the Security from Amex and listing on Nasdaq will offer increased visibility and liquidity in the financial markets. The Issuer will also have the advantage of being listed on Nasdaq with a majority of its peer group. The Issuer stated that trading in the Security on Nasdaq began March 7, 2005. The Issuer stated in its application that it has met the requirements of Amex Rule 18 by complying with all applicable laws in effect in the Province of Ontario, Canada, in which it is incorporated, and with the Amex's rules governing an issuer's voluntary withdrawal of a security from listing and registration. The Issuer's application relates solely to withdrawal of the Security from listing on the Amex and from registration under Section 12(b) of the Act, 3 and shall not affect its obligation to be registered under Section 12(g) of the Act. 4 3 15 U.S.C. 78 *l* (b). 4 15 U.S.C. 78 *l* (g). Any interested person may, on or before April 4, 2005, comment on the facts bearing upon whether the application has been made in accordance with the rules of the Amex, and what terms, if any, should be imposed by the Commission for the protection of investors. All comment letters may be submitted by either of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/delist.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include the File Number 1-32449 or; 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 1-32449. This file number should be included on the subject line if e-mail is used. To help us 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/delist.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. The Commission, based on the information submitted to it, will issue an order granting the application after the date mentioned above, unless the Commission determines to order a hearing on the matter. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(1). Jonathan G. Katz, Secretary. [FR Doc. E5-1117 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51340; File No. SR-FICC-2005-02] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving Proposed Rule Change To Amend the Application and Continuing Membership Standards of the Government Securities Division and the Mortgage-Backed Securities Division March 9, 2005. I. Introduction On January 7, 2005, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) and on January 14, 2005, amended proposed rule change SR-FICC-2005-02 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). 1 Notice of the proposal was published in the **Federal Register** on January 28, 2005. 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. 51066 (January 21, 2005), 70 FR 4167. II. Description FICC is amending the application and continuing membership standards of the Government Securities Division (“GSD”) and the Mortgage-Backed Securities Division (“MBSD”) to:

(1)Provide that when an applicant, member, or participant 3 becomes subject to an order of statutory disqualification or order of similar effect, including an order issued by a non-U.S. regulator or examining authority, the FICC Membership and Risk Management Committee (“Committee”) shall determine whether this shall be the basis for denial of the membership applicant or termination of membership rather than such denial or termination being automatic;

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

(3)require applicants and members to notify FICC within two business days if they become aware of an investigation or similar proceeding against them that could lead them to violate a FICC membership standard. 3 GSD members and MBSD participants are collectively referred to as members for purposes of this order. 1. Action in Cases of Statutory Disqualification or Orders of Similar Effect The GSD and MBSD rules currently provide that a membership applicant that is subject to an order of statutory disqualification under Section 3(a)(39) of the Act or an order of similar effect is not eligible for membership. 4 Currently, a waiver of this requirement by the Committee is necessary in order for FICC to admit such applicant into membership. The admission requirements also serve as continuance standards for current members. Therefore, if a member becomes subject to a statutory disqualification, a waiver must be sought in order for it to continue as a member of FICC. 4 For example, GSD Rule 3, “Financial Responsibility and Operational Capability Standards,” Section 1, “Admissions Criteria for Comparison-Only Members,” provides that an applicant may not be subject to an order of statutory disqualification or “an order of similar effect issued by a Federal or State banking authority, or other examining authority or regulator.” Section 3(a)

(39)of the Act, which sets forth the definition of “statutory disqualification,” specifically covers orders issued by foreign financial regulatory authorities that are the equivalent to Commission-issued orders covered by the definition. The statutory definition also includes specific references to entities being barred from the “foreign equivalent of a self-regulatory organization [or a] foreign or international securities exchange” under “any substantially equivalent foreign statute or regulation.” At the time it was organized as a clearing agency, the Government Securities Clearing Corporation, the predecessor to FICC, modeled its rules provisions regarding statutory disqualifications on those of other clearing agencies which are now subsidiaries of The Depository Trust & Clearing Corporation. The understanding at the time was that instances of statutory disqualification were a rare occurrence and called into question the entity's ability to meet membership requirements or to remain a member in good standing. More recently, firms are increasingly becoming subject to statutory disqualification, but the reasons for a firm's statutory disqualification may have little bearing on its ability to become or remain a member in good standing. FICC will retain the ability to deny or terminate membership where a firm's ability to meet applicable membership requirements is called into question. However, to the extent an order of statutory disqualification does not call this into question, FICC does not believe it appropriate for the Committee to have to issue a waiver in order to admit or retain the member. The proposed rule change eliminates the automatic need to obtain a waiver in cases where an entity is subject to an order of statutory disqualification or order of similar effect but will keep such orders as a criterion to be considered for membership. FICC management will continue to present all instances of such orders to the Committee, and the Committee will make all final determinations with respect to these entities. In this manner, FICC management and the Committee will be able to thoroughly evaluate the risks presented by an applicant or member that was or that becomes subject to such an order. The proposed rule change allows FICC to admit and retain members that pose no risk to FICC. 5 In instances where waivers are still required under the rules and are granted by the Committee, FICC will promptly notify the Commission. 5 To the extent the Committee determines to admit or retain a member despite a statutory disqualification, the Committee will still retain all rights it currently has under FICC rules to impose limitations or restrictions on such member or participant. 2. Fines for Failure To Notify FICC for Falling Out of Compliance With Membership Criteria FICC's rules currently require members to promptly notify FICC in the event that they are not meeting membership standards. FICC is now implementing a fine for those members that do not promptly notify FICC of their noncompliance with any membership standard. The membership standards are set forth in GSD Rule 2, “Members,” and Rule 3, “Financial Responsibility and Operational Capability Standards,” which apply to comparison-only and netting members as applicable and in MBSD Clearing Rules Article III, “Participants,” which apply to MBSD clearing participants. For risk management purposes, it is important that FICC learn of a member's failure to meet a membership standard as soon as possible in order that FICC can promptly determine a course of action that will best protect FICC. In addition, in some instances, such as certain cases where a member becomes subject to a statutory disqualification order, FICC is required to promptly notify the Commission. 6 Given the importance of FICC's membership standards and the need for FICC to learn of noncompliance as soon as possible, FICC is proposing to fine members $1,000 per instance of a failure to notify FICC within two business days of the member first having knowledge of its falling out of compliance with the particular membership standard. 7 Members would be afforded the same due process as is currently available under FICC's rules with respect to other types of fines. As with all fines, FICC will notify the Commission of all fines that are imposed pursuant to this rule change. 6 Rule 19h-1 of the Act does not require a notification or notice to the Commission in all cases of statutory disqualification. 7 Once FICC is notified of an applicant or member's statutory disqualification, it will follow the provisions of Rule 19h-1 of the Act. In addition, members that fail to timely notify FICC of falling out of compliance with any membership standard will automatically be placed on the Watch List and will be subject to more frequent and thorough monitoring as provided for in GSD Rule 4, Section 3 and MBSD Article IV, Rule 6. 3. Notification of Pending Investigations The proposed rule change also requires applicants and members to notify FICC within two business days of first having knowledge of a pending investigation or similar proceeding or condition that could lead them to violate a membership standard. The proposed rule change will provide an exception to this requirement in cases where disclosure to FICC would cause the applicant or member to violate an applicable law, rule, or regulation. 4. Definitions Finally, MBSD is proposing to add two definitions to Article I, “Definitions and General Provisions.” The term “Associated Person” will be defined to mean, when applied to any “person,” any partner, officer, or director of such “person” or any “person” directly or indirectly controlling or controlled by such “person,” including an employee of such “person.” The term “Person” will mean a partnership, corporation, or other organization, entity or individual. III. Discussion Section 17A(b)(3)(F) of the Act requires that the rules of a clearing agency be designed to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible. 8 The Commission finds that FICC's proposed rule change is consistent with this requirement because it will help FICC monitor its members' compliance with membership standards. This should better enable FICC to act quickly to protect itself and its members and as a result will better enable FICC to safeguard the securities and funds in its custody or control or for which it is responsible. The Commission also finds that FICC's proposed rule change is consistent with this requirement because while it will make an action of statutory disqualification only a criteria to be considered in membership matters and not an automatic bar, FICC has designed the proposed rule change in a manner that will not compromise its membership review process. 8 15 U.S.C. 78q-1(b)(3)(F). IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR-FICC-2005-02) be and hereby is approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E5-1102 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51339; File No. SR-NASD-2004-164] Self-Regulatory Organizations; Order Approving Proposed Rule Change and Amendment No. 1 Thereto by National Association of Securities Dealers, Inc. Relating to the Random Selection of Arbitrators by the Neutral List Selection System March 9, 2005. On October 28, 2004, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, NASD Dispute Resolution, Inc. (“NASD Dispute Resolution”), submitted to the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to NASD Rule 10308 of the NASD Code of Arbitration Procedure (“Code”). On January 5, 2005, NASD filed Amendment No. 1 to the proposed rule change. 3 The **Federal Register** published the proposed rule change, as amended, for comment on February 2, 2005. 4 The Commission received four comment letters in response to the proposed rule change. 5 This order approves the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* letter from Mignon McLemore, NASD, to Catherine McGuire, SEC, dated January 5, 2005. In this letter, NASD stated that it will hire an outside consultant to audit the random selection system after it has been operational for one year and independently verify that the random selection system is operating as described in the proposed rule change. NASD also stated that it will keep statistics on the arbitrators selected by the random selection system who appear on an arbitrator list in order to monitor the effectiveness of the random selection system. 4 Securities Exchange Act Release No. 51083, 70 FR 5497 (“Notice”). 5 *See* letters to Jonathan Katz, Secretary, Commission, from Les Greenberg, dated February 10, 2005 (“Greenberg letter”); Arnold Levine, dated February 19, 2005 (“Levine letter”); Philip Zimmerman, dated February 21, 2005 (“Zimmerman letter”); and Irwin Sugerman, dated February 21, 2005 (“Sugerman letter”). The proposed amendment to NASD Rule 10308 would change the method used by the Neutral List Selection System (“NLSS”) to select arbitrators from a rotational to a random selection function by incorporating the random selection provision of the proposed Customer and Industry Code revisions. 6 6 NASD Dispute Resolution has filed with the SEC a proposed rule change to the Code to reorganize the current rules, simplify the language, codify current practices, and implement several substantive changes. The rule filing was submitted in three parts: Customer Code, Industry Code, and Mediation Code. The Customer Code was filed on October 15, 2003, and amended on January 3, 2005 and January 19, 2005 (SR-NASD-2003-158); the Industry Code was filed on January 16, 2004, and amended on February 26, 2004 and January 3, 2005 (SR-NASD-2004-011). The Mediation Code was filed on January 23, 2004, and amended on January 3, 2005 (SR-NASD-2004-013). It does not contain any provisions concerning the NLSS. The three new codes will replace the current Code in its entirety. The Code revision is undergoing SEC staff review and has not yet been published for comment. The Greenberg letter supported the change to a random selection system. The Sugerman letter commented that a rotational system is more fair, asserting that under such a system an arbitrator's name is presented for possible selection with the same frequency as every other arbitrator. The Zimmerman letter suggested that NASD also use a random selection function for selecting mediators. The Levine letter, while addressing issues relating to arbitrators, did not specifically address the change from a rotational to a random arbitrator selection system. 7 7 The Levine letter commented that NASD should only use professional arbitrators and suggested qualifications that should be required of such arbitrators. The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association. 8 In particular, the Commission believes that the proposed rule change is consistent with Section 15A(b)(6) of the Act, 9 which requires, among other things, that NASD's rules 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. The Commission believes that a random selection function incorporated into the NASD Dispute Resolution arbitration forum provides a fair and equitable system for parties to select arbitrators. 8 In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78(c)(f). 9 15 U.S.C. 78 *o* -3(b)(6). It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 10 that the proposed rule change (SR-NASD-2004-164), as amended, is approved. 10 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Jill M. Petersen, Assistant Secretary. [FR Doc. E5-1103 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51338; File No. SR-NASD-2003-141] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the National Association of Securities Dealers, Inc. To Adopt an Additional Mark-Up Policy for Transactions in Debt Securities Except Municipal Securities March 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 September 17, 2003, 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. 3 On June 29, 2004, NASD filed Amendment No. 1 to the proposed rule change. 4 On February 17, 2005, NASD filed Amendment No. 2 to the proposed rule change. 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 Commission staff made certain changes to the description of the proposed rule change with the consent of NASD, to enhance clarity and accuracy. Telephone conversation between Sharon K. Zackula, Associate General Counsel, Office of General Counsel, Regulatory Policy and Oversight, NASD, Richard Strasser, Attorney-Fellow, and Andrew Shipe, Special Counsel, Division of Market Regulation, Commission, March 3, 2005. 4 *See* letter from Barbara Z. Sweeney, Senior Vice President and Corporate Secretary, NASD, to Katherine England, Assistant Director, Division of Market Regulation, Commission, dated June 29, 2004. 5 *See* Form 19b-4, filed February 17, 2005. Amendment No. 2 replaced the previous filings in their entirety. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to adopt a second interpretation, proposed IM-2440-2, to Rule 2440 to provide additional mark-up guidance for transactions in debt securities except municipal securities. Below is the text of the proposed rule change. Proposed new language is in *italics* . Text in bold would appear in italics in the Rule as published in the NASD Manual. IM-2440- 1. Mark-Up Policy IM-2440- 2. Additional Mark-Up Policy for Transactions in Debt Securities, Except Municipal Securities 1 * 1 * *The Interpretation does not apply to transactions in municipal securities. Single terms in parentheses within sentences, such as the terms “(sales)” and “(to)” in the phrase, “contemporaneous dealer purchases (sales) in the security in question from

(to)institutional accounts,” refer to scenarios where a member is charging a customer a mark-down.* *IM-2440-1 applies to debt securities transactions, and this IM-2440-2 supplements the guidance provided in IM-2440-1.* *A dealer that is acting in a principal capacity in a transaction with a customer and is charging a mark-up or mark-down must mark-up or mark-down the transaction from the prevailing market price. Presumptively for purposes of this IM-2440-2, the prevailing market price for a debt security is established by referring to the dealer's contemporaneous cost as incurred, or contemporaneous proceeds as obtained, consistent with NASD pricing rules. (See, e.g., Rule 2320).* *When the dealer is* selling *the security to a customer, countervailing evidence of the prevailing market price may be considered only where the dealer made no* contemporaneous purchases *in the security or can show that in the particular circumstances the dealer's* contemporaneous cost *is not indicative of the prevailing market price. When the dealer is* buying *the security from a customer, countervailing evidence of the prevailing market price may be considered only where the dealer made no* contemporaneous sales *in the security or can show that in the particular circumstances the dealer's* contemporaneous proceeds *are not indicative of the prevailing market price.* *A dealer that effects a transaction in debt securities with a customer and identifies the prevailing market price using a measure other than the dealer's own contemporaneous cost or proceeds must be prepared to provide evidence that is sufficient to overcome the presumption that the dealer's contemporaneous cost or proceeds provide the best measure of the prevailing market price. A dealer may be able to show that its contemporaneous cost or proceeds are not indicative of prevailing market price, and thus overcome the presumption, in instances where

(i)interest rates or the credit quality of the security changed significantly after the dealer's contemporaneous trades, or

(ii)the dealer's contemporaneous trade was with an institutional account with which the dealer regularly effects transactions in the same or a “similar” security, as defined below, and in the case of a sale to such account, was executed at a price higher than the then prevailing market price, or, in the case of a purchase from such account, was executed at a price lower than the then prevailing market price, and the execution price was away from the prevailing market price because of the size and risk of the transaction (a “Specified Institutional Trade”). In the case of a Specified Institutional Trade, when a dealer seeks to overcome the presumption that the dealer's contemporaneous cost or proceeds provide the best measure of the prevailing market price, the dealer must provide evidence of the then prevailing market price by referring exclusively to inter-dealer trades in the same security executed contemporaneously with the dealer's Specified Institutional Trade.* * In instances other than those pertaining to a Specified Institutional Trade, where the dealer has presented evidence that is sufficient to overcome the presumption that the dealer's contemporaneous cost or proceeds provide the best measure of the prevailing market price, or where interest rates or the credit quality of the security changed significantly after the dealer's contemporaneous trades, the most important or first pricing factor that should be taken into consideration in establishing prevailing market price for a mark-up or a mark-down is prices of any contemporaneous inter-dealer transactions in the security in question. In the absence of inter-dealer transactions, the second factor that should be taken into consideration in establishing the prevailing market prices for mark-ups (mark-downs) to customers is prices of contemporaneous dealer purchases (sales) in the security in question from

(to)institutional accounts with which any dealer regularly effects transactions in the same security. For actively traded securities, contemporaneous bid (offer) quotations for the security in question made through an inter-dealer mechanism, through which transactions generally occur at the displayed quotations, may be used in the absence of inter-dealer or institutional transactions (described in the preceding sentence) in determining prevailing market price for customer mark-ups (mark-downs). * *In the event that, in particular circumstances, the above factors are not available, other factors that may be taken into consideration for the purpose of establishing the price from which a customer mark-up (mark down) may be calculated, include but are not limited to:* • *Prices of contemporaneous inter-dealer transactions in a “similar” security, as defined below, or prices of contemporaneous dealer purchase

(sale)transactions in a “similar” security with institutional accounts with which any dealer regularly effects transactions in the “similar” security with respect to customer mark-ups (mark-downs);* • *Yields calculated from prices of contemporaneous inter-dealer transactions in “similar” securities;* • *Yields calculated from prices of contemporaneous purchase

(sale)transactions with institutional accounts with which any dealer regularly effects transactions in “similar” securities with respect to customer mark-ups (mark-downs); and* • *Yields calculated from validated contemporaneous inter-dealer bid (offer) quotations in “similar” securities for customer mark-ups (mark-downs).* *The relative weight one may attribute to these other factors depends on the facts and circumstances surrounding the comparison transaction, such as its size, whether the dealer in the comparison transaction was on the same side of the market as the dealer is in the subject transaction, the timeliness of the information, and, with respect to the final factor listed above, the relative spread of the quotations in the similar security to the quotations in the subject security.* *Finally, if information concerning the prevailing market price of the subject security cannot be obtained by applying any of the above factors, NASD or its members may consider as a factor in assessing the prevailing market price of a debt security the prices or yields derived from economic models (e.g., discounted cash flow models) that take into account measures such as credit quality, interest rates, industry sector, time to maturity, call provisions and any other embedded options, coupon rate, and face value; and consider all applicable pricing terms and conventions (e.g., coupon frequency and accrual methods). Such models currently may be in use by bond dealers or may be specifically developed by regulators for surveillance purposes.* *Because the ultimate evidentiary issue is the prevailing market price, isolated transactions or isolated quotations generally will have little or no weight or relevance in establishing prevailing market price. For example, in considering yields of “similar” securities, except in extraordinary circumstances, members may not rely exclusively on isolated transactions or a limited number of transactions that are not fairly representative of the yields of transactions in “similar” securities taken as a whole.* *A “similar” security should be sufficiently similar to the subject security that it would serve as a reasonable alternative investment to the investor. At a minimum, the security or securities should be sufficiently similar that a market yield for the subject security can be fairly estimated from the yields of the “similar” security or securities. Where a security has several components, appropriate consideration may also be given to the prices or yields of the various components of the security.* *The degree to which a security is “similar,” as that term is used in this Interpretation, to the subject security may be determined by factors that include but are not limited to the following;* *(a) Credit quality considerations, such as whether the security is issued by the same or similar entity, bears the same or similar credit rating, or is supported by a similarly strong guarantee or collateral as the subject security (to the extent securities of other issuers are designated as “similar” securities, significant recent information of either issuer that is not yet incorporated in credit ratings should be considered (e.g., changes to ratings outlooks));* *(b) The extent to which the spread (i.e., the spread over U.S. Treasury securities of a similar duration) at which the “similar” security trades is comparable to the spread at which the subject security trades;* *(c) General structural characteristics and provisions of the issue, such as coupon, maturity, duration, complexity or uniqueness of the structure, callability, the likelihood that the security will be called, tendered or exchanged, and other embedded options, as compared with the characteristics of the subject security; and* *(d) Technical factors such as the size of the issue, the float and recent turnover of the issue, and legal restrictions on transferability as compared with the subject security.* *When a debt security's value and pricing is based substantially on, and is highly dependent on, the particular circumstances of the issuer, including creditworthiness and the ability and willingness of the issuer to meet the specific obligations of the security, in most cases other securities will not be sufficiently similar, and therefore, other securities may not be used to establish the prevailing market price.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Introduction Under NASD Rule 2440, “Fair Prices and Commissions,” a member is required to sell securities to a customer at a fair price. 6 When a member acts in a principal capacity and sells a security to a customer, a dealer generally “marks up” the security, increasing the total price the customer pays. Conversely, when buying a security from a customer, a dealer that is a principal generally “marks down” the security, reducing the total proceeds the customer receives. IM-2440, “Mark-Up Policy,” provides additional guidance on mark-ups and fair pricing of securities transactions with customers. 7 Both Rule 2440 and IM-2440 apply to transactions in debt securities and IM-2440 provides that mark-ups for transactions in common stock are customarily higher than those for bond transactions of the same size. 8 6 NASD Rule 2440 specifically provides that a member is required to sell a security at a fair price to customers, “taking into consideration all relevant circumstances, including market conditions with respect to such security at the time of the transaction, the expense involved, and the fact that he is entitled to a profit * * *.” Rule 2320, “Best Execution and Interpositioning,” also addresses a member's obligation in pricing customer transactions. In any transaction for or with a customer, NASD Rule 2320 requires a member to “use reasonable diligence to ascertain the best inter-dealer market for the subject security and buy and sell in such market so that the resultant price to the customer is as favorable as possible under prevailing market conditions.” Together, Rule 2440 and Rule 2320 impose broad responsibilities on broker-dealers to price customer transactions fairly. *Cf.* “Review of Dealer Pricing Responsibilities,” Municipal Securities Rulemaking Board (“MSRB”) Notice 2004-3 (January 26, 2004) (discussing MSRB Rules requiring municipal securities dealers to “exercise diligence in establishing the market value of [a] security and the reasonableness of the compensation received on [a] transaction”). 7 The terms “mark-up” and “mark-down” are not found in Rule 2440, but are used in IM-2440. Statements regarding mark-ups also apply generally to mark-downs unless mark-downs are discussed specifically in a separate statement. 8 IM-2440(b)(1). Under Rule 2440 and IM-2440, when a customer buys a security from a dealer, the customer's total purchase price, and the mark-up included in the price, must be fair and reasonable. Similarly, when a customer sells a security to a dealer, the customer's total proceeds from the sale, which were reduced by the mark-down, and the mark-down, must be fair and reasonable. A key step in determining whether a mark-up (mark-down) is fair and reasonable is correctly identifying the *prevailing market price* of the security, which is the basis from which the mark-up (mark-down) is calculated. 9 9 The Commission notes that IM-2440 states: “It shall be deemed a violation of Rule 2110 and Rule 2440 for a member to enter into any transaction with a customer in any security at any price not reasonably related to the current market price of the security or to charge a commission which is not reasonable.” The proposed interpretation, “IM-2440-2, Additional Mark-Up Policy For Transactions in Debt Securities, Except Municipal Securities” (“Proposed Interpretation”), provides additional guidance on mark-ups (mark-downs) in debt securities transactions, except municipal securities transactions. 10 The Proposed Interpretation addresses two fundamental issues in debt securities transactions:

(1)How does a dealer correctly identify the prevailing market price of a debt security; and

(2)what is a “similar” security and when may it be considered in determining the prevailing market price. 10 MSRB Rule G-30, “Prices and Commissions,” applies to transactions in municipal securities, and requires that a municipal securities dealer engaging in a transaction as a principal with a customer must buy or sell securities at an aggregate price that is “fair and reasonable.” Prevailing Market Price The Proposed Interpretation provides that when a dealer calculates a mark-up (or mark-down), the best measure of the prevailing market price of the security is presumptively the dealer's contemporaneous cost (proceeds). 11 Further, the dealer may look to countervailing evidence of the prevailing market price *only* where the dealer, when selling a security, made no contemporaneous purchases in the security or can show that in the particular circumstances the dealer's contemporaneous cost is not indicative of the prevailing market price. When buying a security from a customer, the dealer may look to countervailing evidence of the prevailing market price only where the dealer made no contemporaneous sales in the security or can show that in the particular circumstances the dealer's contemporaneous proceeds are not indicative of the prevailing market price. 11 Of course, if a dealer violates NASD Rule 2320, the dealer's contemporaneous cost (proceeds) in such transactions would not be a reliable indicator of the prevailing market price for the purpose of determining a mark-up or mark-down. If a dealer violates Rule 2320 because the dealer fails to exercise diligence, fails to negotiate at arms length in the market, or engages in fraudulent transactions, including those entered into in collusion with other dealers or brokers, including inter-dealer brokers, the price that the dealer obtains is not a price reflecting market forces, and, therefore, is not a valid indicator of the prevailing market price and should not be used to calculate a mark-up (mark-down). In addition, if a dealer that is not a party to a transaction engages in conduct to improperly influence the pricing of such transaction, the dealer could not properly use the execution price as the basis from which to compute a mark-up (mark-down) because the execution price does not represent the prevailing market price of the security. The presumption that contemporaneous cost is the best evidence of prevailing market price is found in many cases and NASD decisions, and its specific applicability to debt securities transactions was addressed by the SEC as early as 1992 in *F.B. Horner & Associates, Inc.,* 50 S.E.C. 1063 (1992), *aff'd,* 994 F.2d 61 (2d Cir. 1993) (“ *F.B. Horner* ”), a debt mark-up case. In *F.B. Horner,* the SEC stated: “We have consistently held that where, as in the present case, a dealer is not a market maker, the best evidence of the current market, absent countervailing evidence, is the dealer's contemporaneous cost.” *F.B. Horner,* 50 S.E.C. at 1065-66. 12 The basis for the standard was also restated. “That standard, which has received judicial approval, reflects the fact that the prices paid for a security by a dealer in transactions closely related in time to his retail sales are normally a highly reliable indication of the prevailing market.” *F.B. Horner,* 50 S.E.C. at 1066 (citations omitted). 12 The term “market maker” is defined in Section 3(a)(38) of the Act [15 U.S.C. 78c(a)(38)] and a dealer in debt securities must meet the legal requirements of Section 3(a)(38) to be considered a market maker. The Proposed Interpretation recognizes that in some circumstances a dealer may seek to overcome the presumption that the dealer's own contemporaneous cost (proceeds) are the prevailing market price of the subject security for determining a mark-up (mark-down), and sets forth a process for identifying a value other than the dealer's own contemporaneous cost (proceeds). Cases Where the Presumption May Be Overcome A dealer may seek to overcome the presumption that its contemporaneous cost or proceeds are not indicative of the prevailing market price in either of two instances:

(1)Where the dealer's contemporaneous trade was with an institutional account with which the dealer regularly effects transactions in the same or a similar security under certain conditions, or

(2)where interest rates or the credit quality of the security changed significantly after the dealer's contemporaneous trades. Specified Institutional Trades In instances when the dealer establishes that the dealer's contemporaneous trade was a “Specified Institutional Trade,” to overcome the presumption that the dealer's contemporaneous cost (or proceeds) is the best measure of the prevailing market price, the dealer must provide evidence of the then prevailing market price in the subject security by referring *exclusively* to inter-dealer trades in the same security executed contemporaneously with the dealer's Specified Institutional Trade. 13 13 A “Specified Institutional Trade” is defined as a dealer's contemporaneous trade with an institutional account with which the dealer regularly effects transactions in the same or a “similar” security, as defined below, and in the case of a sale to such an account, the trade was executed at a price *higher* than the then prevailing market price, and in the case of a purchase from such an account, the trade was executed at a price *lower* than the then prevailing market price, *and* the execution price was away from the prevailing market price because of the size and risk of the transaction. Transactions Other Than Specified Institutional Trades. In instances other than those pertaining to a Specified Institutional Trade, where the dealer has presented evidence that is sufficient to overcome the presumption that the dealer's contemporaneous cost (proceeds) provide the best measure of the prevailing market price, or where interest rates or credit quality of the security changed significantly, the dealer must follow a process for determining prevailing market price, considering certain factors in the appropriate order, as set forth in the Proposed Interpretation. Initially, a dealer must look to three factors or measures in the order they are presented (the “Hierarchy”) to determine prevailing market price. The most important and first factor in the Hierarchy is the pricing of any contemporaneous inter-dealer transactions in the same security. The second most important factor in the Hierarchy recognizes the role of certain large institutions in the fixed income securities markets. In the absence of inter-dealer transactions, the second factor a dealer must consider is the prices of contemporaneous dealer purchases in the security in question from institutional accounts with which any dealer regularly effects transactions in the same security. 14 If contemporaneous inter-dealer trades or dealer-institutional trades in the same security are not available, a dealer must look to the third factor in the Hierarchy, which may be applied only to actively traded securities. For actively traded securities, a dealer is required to look to contemporaneous bid (offer) quotations for the security in question for proof of the prevailing market price if such quotations are made through an inter-dealer mechanism through which transactions generally occur at the displayed quotations. 15 14 Contemporaneous dealer sales with such institutional accounts would be used to calculate a mark-down. If a dealer has overcome the presumption by establishing that interest rates or the credit quality of the security changed significantly after the dealer's trade, any inter-dealer or dealer-institutional trades in the same security *that occurred prior to the event* would not be valid measures of the prevailing market price as such transactions would be subject to the same imperfection. 15 A dealer also is subject to the process of establishing prevailing market price, including the analysis under the Hierarchy and the other factors discussed below, where the dealer has not engaged in trading in the subject security for an extended period and therefore can evidence that it has no contemporaneous cost (proceeds) to refer to as a basis for computing a mark-up (mark-down). Additional Factors That May Be Considered in Cases Other Than Specified Institutional Trades If none of the three factors in the Hierarchy is available, the dealer then may take into consideration the non-exclusive list of four factors in the Proposed Interpretation in trying to establish prevailing market price using a measure other than the dealer's contemporaneous cost (proceeds). In contrast to the Hierarchy of three factors discussed above, a dealer is not required to consider the four factors below in a particular order. The four factors reflect the particular nature of the debt markets and the trading and valuation of debt securities. They are: • Prices of contemporaneous inter-dealer transactions in a “similar” security, as defined below, or prices of contemporaneous dealer purchase

(sale)transactions in a “similar” security with institutional accounts with which any dealer regularly effects transactions in the “similar” security with respect to customer mark-ups (mark-downs); • Yields calculated from prices of contemporaneous inter-dealer transactions in “similar” securities; • Yields calculated from prices of contemporaneous purchase

(a)Credit quality considerations, such as whether the security is issued by the same or similar entity, bears the same or similar credit rating, or is supported by a similarly strong guarantee or collateral as the subject security (to the extent that securities of other issuers are designated as “similar” securities, significant recent information of either issuer that is not yet incorporated in credit ratings should be considered ( *e.g.* , changes in ratings outlooks));

(b)The extent to which the spread ( *i.e.* , the spread over U.S. Treasury securities of a similar duration) at which the “similar” security trades is comparable to the spread at which the subject security trades;

(c)General structural characteristics of the issue, such as coupon, maturity, duration, complexity or uniqueness of the structure, callability, the likelihood that the security will be called, tendered or exchanged, and other embedded options, as compared with the characteristics of the subject security; and

(d)Technical factors, such as the size of the issue, the float and recent turnover of the issue, and legal restrictions on transferability as compared with the subject security. The provisions regarding “similar” securities, if adopted, would affirm explicitly, for the first time, that it may be appropriate under specified circumstances to refer to “similar” securities to determine prevailing market price. 17 17 The Proposed Interpretation also states that, for certain securities, there are no “similar” securities. Specifically, when a debt security's value and pricing is based substantially, and is highly dependent, on the particular circumstances of the issuer, including creditworthiness and the ability and willingness of the issuer to make interest payments and otherwise meet the specific obligations of the security, in most cases other securities will not be sufficiently “similar,” and therefore, may not be used to establish prevailing market price of the subject security. As noted above, NASD may consider a dealer's pricing information obtained from an economic model to establish prevailing market price, when “similar” securities do not exist and facts and circumstances have combined to create a price information void in the subject security. In addition, as provided in the Proposed Interpretation, NASD also may look to economic models other than the dealer's to make determinations as to the prevailing market price of a security. If the proposal were approved, NASD would announce the effective date of the proposed rule change in a *Notice to Members* to be published no later than 60 days following Commission approval. The effective date will be 30 days following publication of the *Notice to Members* announcing Commission approval. 2. Statutory Basis NASD believes that the proposed rule change is consistent with Section 15A(b)(6) of the Act, 18 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 clarifying the standard for correctly identifying the prevailing market price of a debt security for purposes of calculating a mark-up (mark-down), clarifying the additional obligations of a member when it seeks to use a measure other than the member's own contemporaneous cost (proceeds) as the prevailing market price, and confirming that similar securities may be used in certain instances to determine the prevailing market price are measures designed to prevent fraudulent practices, promote just and equitable principles of trade, and protect investors and the public interest. 18 15 U.S.C. 78o-3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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

(a)No specialist shall effect on the Exchange purchases or sales of any security in which such specialist is registered, for any account in which he, his member organization or any other member, allied member, or approved person, (unless an exemption with respect to such approved person is in effect pursuant to Rule 98) in such organization or officer or employee thereof is directly or indirectly interested, unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market, or to act as an odd-lot dealer in such security.

(b)No change. Supplementary Material Functions of Specialists .10 Regular specialists.—Any member who expects to act regularly as specialist in any listed stock and to solicit orders therein must be registered as a regular specialist. The function of a member acting as regular specialist on the Floor of the Exchange includes, in addition to the effective execution of commission orders entrusted to him, the maintenance, in so far as reasonably practicable, of a fair and orderly market on the Exchange in the stocks in which he is so acting. This is more specifically set forth in the following: (1)-(6) No change.

(7)The requirement to obtain Floor Official approval for transactions for a specialist's own account contained in subparagraphs (5)(i)(A),

(B)and (6)(i)(A) above shall not apply to transactions effected [for the purpose of bringing the price of] *in* an investment company unit (the “unit”), as that term is defined in Section 703.16 of the Listed Company Manual, or a Trust Issued Receipt (the “receipt”) as that term is defined in Rule 1200 [into parity with the value of the index on which the unit is based, with the net asset value of the securities comprising the unit or the receipt, or with a futures contract on the value of the index on which the unit is based]. Nevertheless such transactions must be effected in a manner that is consistent with the maintenance of a fair and orderly market and with the other requirements of this rule and the supplementary material herein. No changes to remainder of rule. 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 proposal. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to eliminate the current restriction on the ability of specialists to buy ETFs on plus ticks or sell ETFs on minus ticks without Floor Official approval for the transactions. NYSE Rule 104 governs specialists' dealings in their specialty stocks. In particular, NYSE Rules 104.10(5) and

(6)describe certain types of transactions that are not to be effected unless they are reasonably necessary to render the specialist's position adequate to the needs of the market. The Exchange states that, in effect, these restrictions generally require specialists' transactions for their own accounts to be “stabilizing” ( *i.e.,* against the trend of the market) and prohibit specialists from making transactions that are “destabilizing” ( *i.e.,* with the market trend by buying on plus ticks and selling on minus ticks), except with the approval of a Floor Official. The Exchange is proposing to remove these restrictions in connection with destabilizing transactions in ETFs by specialists for their own account. These products are based on a portfolio of underlying securities and are derivatively priced based upon the value of those securities. Therefore, according to the Exchange, specialists would be unable to effect ETF transactions for their own accounts in a manner that would likely lead the market price in those securities, even if the transactions were effected on destabilizing ticks. The Exchange notes that the Commission has previously recognized this aspect of ETFs. 4 4 *See* Securities Exchange Act Release No. 49087 (January 15, 2004), 69 FR 3622 (January 26, 2004) (“[T]he Commission believes that because ETFs are priced derivatively, an Exchange specialist would not be able to manipulate the pricing of an ETF.”). Specialists are not currently required to obtain Floor Official approval for proprietary destabilizing transactions that bring an ETF into parity with the value of the index on which the ETF is based. The Exchange believes that, in light of the derivative nature of ETFs and the Commission's recognition that specialists are generally unable to lead the market through proprietary transactions in ETFs, NYSE Rule 104.10(7) should be amended to delete the need for Floor Official approval for any specialist destabilizing dealer account transactions in ETFs. The Exchange notes that in addition to the diminished benefit of Floor Official approval of specialists' proprietary destabilizing tick transactions in ETFs, the time required to obtain Floor Official approval for such transactions can have the effect of delaying trading in these products and could result in inferior execution prices for customer orders. Finally, the Exchange believes that removing these restrictions should enhance the specialist's ability to make competitive markets in ETFs, since other markets where they are traded do not have such restrictions. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 5 that an Exchange have rules that are designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 5 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change, as amended, 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, and does not intend to solicit, comments regarding the proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** 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-NYSE-2004-71 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-NYSE-2004-71. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2004-71 and should be submitted on or before April 5, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 6 6 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E5-1101 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51333; File No. SR-Phlx-2005-15] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Eliminating Its Floor Brokerage Transaction Fee March 8, 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 28, 2005, 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 Exchange. The proposed rule change has been filed by the Phlx as establishing or changing a due, fee, or other charge, pursuant to Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b-4(f)(2) 4 thereunder, which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to amend its schedule of fees to eliminate the $.05 per contract Floor Brokerage Transaction Fee from the Exchange's Summary of Equity Option Charges and the Summary of Index Option and FXI Options Charges, effective for transactions settling on or after March 1, 2005. The Exchange is also proposing to make minor technical changes to correct two footnote numbers that appear on the Exchange's fee schedule. 5 5 Because the Phlx recently has filed several rule change proposals that affect the numbering of footnotes in the fee schedule, the Phlx intends to amend File No. SR-Phlx-2005-16 to further adjust this numbering. Telephone conversation between Cynthia Hoekstra, Counsel, Phlx, and Ira L. Brandriss, Assistant Director, Division of Market Regulation, Commission, March 8, 2005. 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. 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 remain competitive in connection with the transaction charges assessed by the Exchange. Eliminating the $.05 per contract floor brokerage transaction fee will, of course, decrease costs for those floor brokers to whom the fee has applied. The purpose of changing the numbers of the footnotes that appear on page 2 of the Exchange's Summary of Equity Option Charges and page 1 of the Exchange's Summary of Index Option and FXI Options Charges is to correct a typographical error in connection with the numbering of these footnotes. 2. Statutory Basis The Exchange believes that its proposal to amend its schedule of fees is consistent with Section 6(b) of the Act, 6 in general, and furthers the objectives of Section 6(b)(4) of the Act, 7 in particular, in that it is an equitable allocation of reasonable fees among Exchange members. 6 15 U.S.C. 78f(b). 7 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)(ii) of the Act 8 and Rule 19b-4(f)(2) 9 thereunder, because it changes a fee imposed by the Exchange. At any time within 60 days of the filing of the proposed rule change, as amended, 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. 78(s)(b)(3)(A)(ii). 9 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an E-mail to *rule-comments@sec.gov* . Please include File Number SR-Phlx-2005-15 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-Phlx-2005-15. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of 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-2005-15 and should be submitted on or before April 5, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 Jill M. Peterson, Assistant Secretary. 10 17 CFR 200.30-3(a)(12). [FR Doc. E5-1100 Filed 3-14-05; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION Disaster Declaration # 10057 and # 10058; Arizona Disaster # AZ-00001 AGENCY: Small Business Administration. ACTION: Notice. SUMMARY: This is a notice of an Administrative declaration of a disaster for the State of Arizona, dated 03/02/2005. *Incident:* Strong Winter Storms. *Incident Period:* 12/28/2004 through 01/12/2005. *Effective Date:* 03/02/2005. *Physical Loan Application Deadline Date:* 05/02/2005. *EIDL Loan Application Deadline Date:* 12/02/2005. 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 Administrator's disaster declaration on 03/02/2005, 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:* Mohave. *Contiguous Counties:* Arizona: Coconino, La Paz, Yavapai. California: San Bernardino. Nevada: Clark, Lincoln. Utah: Kane, Washington. 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(s) assigned to this disaster for physical damage is 10057 B and for economic injury is 10058 0. The States which received EIDL Decl # are Arizona, Nevada, California, and Utah. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Dated: March 2, 2005. Hector V. Barreto, Administrator. [FR Doc. 05-4998 Filed 3-14-05; 8:45 am]

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