Notices. Notice

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BILLING CODE 6325-38-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51385; File No. SR-FICC-2004-14] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Order Approving a Proposed Rule Change Relating to Membership Requirements March 16, 2005. On July 14, 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 On July 15, July 30, August 20, and November 10, 2004, FICC filed amendments 1, 2, 3, and 4 respectively.

On January 3, 2005, FICC filed amendment 5 and withdrew amendments 1, 2, 3, and 4. Notice of the proposal was published in the **Federal Register** on January 18, 2005. 2 The Commission received three comment letters. 3 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. 51018 (Jan. 11, 2005), 70 FR 2911. 3 Letters from Kevin M. Brandt, Director, III Global Ltd., III Finance Ltd., and III Relative Value/Macro Hub Fund Ltd.

(Oct. 25, 2004) and Lawrence R. Uhlick, Executive Director and General Counsel, Institute of International Bankers (Oct. 26, 2004, and Feb. 9, 2005). See also Memorandum to File re: Meeting with Institute of International Bankers (Mar. 15, 2005). I. Description Under the rule change, FICC will amend the rules of its Government Securities Division (“GSD”) and Mortgage-Backed Securities Division (“MBSD”) regarding membership requirements for non-U.S. applicants and members. A. Annual Audited Financial Statements Prior to the rule change, GSD required non-U.S. members and applicants to submit financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S.

GAAP”) “whenever necessary and feasible.” MBSD required non-U.S. members and applicants to submit financial statements prepared in accordance with U.S. GAAP. Both divisions review such financial statements as part of their credit risk management program. FICC is amending these requirements uniformly across both divisions to enable non-U.S. members and applicants to submit financial statements that are prepared according to any other generally accepted accounting methodology (“non-U.S.

GAAP”). Specifically, FICC will increase the existing minimum financial requirements of each applicant and member based on the type of non-U.S. GAAP that was used to prepare the audited financial statement in the following manner: 1. For applicants and members whose financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), the Companies Act of 1985 (“U.K. GAAP”), or Canadian GAAP, the minimum financial requirements will be one and one-half times the applicable requirements. 2.

For applicants and members whole financial statements are prepared in accordance with a European Union country GAAP (“EU GAAP”) other than U.K. GAAP, the minimum financial requirements will be five times the applicable requirements. 3. For applicants and members whose financial statements are prepared in accordance with any other type of GAAP, the minimum financial requirements will be seven times the applicable requirements. For example, under GSD's rules, the minimum financial requirement for a bank netting member is equity capital of US$100 million.

This will continue to be the requirement for all such members (both U.S. and non-U.S. members) whose financial statements are prepared in accordance with U.S. GAAP. However, if such a member's financial statements were prepared in accordance with IFRS, U.K. GAAP, or Canadian GAAP, the member's minimum financial requirement would be US$150 million. If such a member's financial statements were prepared in accordance with an EU country GAAP other than U.K. GAAP, the member's minimum financial requirement would be US$500 million.

If a member's financial statements were prepared in accordance with any other type of GAAP, the member's minimum financial requirement would be US$700 million. In order to apply this change to non-U.S. applicants and members, FICC will delete the terms “Excess Liquid Capital” and “Excess Net Capital” in GSD Rule 3, Section 6, and instead will use the term “applicable minimum regulatory capital,” which is defined in GSD Rule 3, Section 2 as “regulatory capital as defined by the applicant's home country regulator.

” MBSD Article III, Rule 1, Section 2(d) will state that the references to the terms “net capital” or “liquid capital” in, “shall be deemed to refer to regulatory capital in cases where the U.S. regulatory capital terms are not applicable to a non-domestic entity.” FICC will retain the requirement that annual audited financial statements submitted by members and applicants be certified without qualification. The rule change makes clear that annual audited financial statements must be prepared in accordance with generally accepted accounting principles.

In addition, all information submitted to FICC will have to be in English or will have to be a fair and accurate English translation if the information is translated into English. The proposed rule changes will be applied to current members and applicants. B. Material Regulatory Filings As part of its credit risk management, FICC requires applicants and members to submit interim financial data. In the case of U.S. bank and broker-dealer members, GSD and MBSD are able to obtain this financial information through regulatory reports.

Non-U.S. MBSD members are required to submit unaudited monthly financial statements to MBSD. Non-U.S. GSD netting members are required to submit certain quarterly financial information to GSD. In addition, the GSD rules currently require non-U.S. members and applicants to also submit all “material regulatory filings” that the entity makes with its primary regulator in its home jurisdiction. However, FICC cannot specifically identify all such material regulatory filings for non-U.S. members and applicants with confidence.

Under the rule change, which will be adopted uniformly across both FICC divisions, FICC will require non-U.S. members (other than those organized or established in the U.K. and regulated by the Financial Services Authority (“FSA”)) to provide specific monthly or quarterly financial data, as applicable, directly to FICC. FICC will provide the non-U.S. members with a form requesting specific financial data related to capital, assets, liabilities, revenue, pertinent ratios, and various capital requirements, as applicable.

Each non-U.S. member will be required to complete the form, have it signed by the entity's chief financial officer, chief executive officer, or similar high-ranking official, and return it to FICC by a prescribed deadline. Broker-dealers and banks that are organized or established in the U.K. and regulated by the FSA will be required to submit certain regulatory monthly or quarterly reports, as applicable, that are filed with the FSA. 4 Because FICC will be able to obtain the necessary financial data from these reports, these U.K. firms will not be required to complete and submit FICC's financial reporting form as are other non-U.S. members.

FICC's rules will provide that failure to submit the financial form or the U.K. regulatory reports, as applicable, to FICC within the timeframes established by FICC will subject a member to the same consequences, including a fine, as is currently provided for in FICC's rules for late submission of required financial documents. 4 Although FICC currently has no U.K. members, FICC is familiar with the regulatory reports filed by banks and broker-dealers that are organized or established in the U.K. and regulated by the FSA.

FICC recognizes that certain regulatory filings provide warnings of possible concerns regarding a member's compliance with regulatory standards and its financial status. For example, under FICC's current rules, GSD's and MBSD's U.S. broker-dealer members are required to submit to FICC SEC Rule 17a-11 reports. GSD's netting members, MBSD's U.S. non-broker-dealer members, and all non-U.S. members must submit to FICC, concurrently with their submission to their relevant regulator, copies of regulatory notifications required to be made when a member's capital levels or other financial requirements fall below prescribed levels. 5 5 Securities Exchange Act Release Nos. 49947 (June 30, 2004), 69 FR 41316 (July 8, 2004) [File No.

SR-FICC-2003-01] and 49156 (Jan. 30, 2004), 69 FR 5881 (Feb. 6, 2004) [File No. SR-MBSCC-2001-06]. The rule change expands this by requiring members to submit to FICC any regulatory notifications required to be made when it does not comply with its financial reporting and responsibility standards set by its home country regulator and when it becomes subject to a disciplinary action by its home country regulator. In addition, the rule change makes the late submission of any such filing subject to a fine and other related consequences that have been recently approved by or are pending with the Commission. 6 This rule change requires that such filings be submitted to FICC in English or be in a fair and accurate English translation if they have been translated into English. 6 Securities Exchange Act.

Release Nos. 50659 (Nov. 15, 2004), 69 FR 67767 (Nov. 19, 2004) [File No. SR-FICC-2004-11] and 51146 (Feb. 7, 2005), 70 FR 7984 (Feb. 16, 2005) [File No. SR-FICC-2004-13]. Finally, the rule change requires MBSD non-U.S. regulated applicants to certify that they are in compliance with the financial reporting and responsibility standards of their home country. This requirement was recently added to GSD's rules. 7 7 Securities Exchange Act Release No. 50617 (Nov. 1, 2004), 69 FR 64796 (Nov. 8, 2004) [File No.

SR-FICC-2004-01]. C. Legal Risk FICC members that are incorporated outside of the U.S. present FICC with increased legal risk in the event they become insolvent. 8 Notwithstanding the protections for clearing agencies contained in the U.S. federal laws 9 and the New York Banking Law (which is applicable to GSD foreign netting members with New York state-licensed branches and agencies), there is a risk that a U.S. court could determine not to apply New York law to the adjudication of FICC's rights against an insolvent non-U.S. member. 10 In such event, the foregoing protections may not be available to FICC. 8 At this time, GSD will continue to only permit non-U.S. banks operating out of U.S. branches or agencies to be Foreign Netting Members. 9 *E.g.,* the Federal Deposit Insurance Corporation Improvement Act of 1991 and the U.S.

Bankruptcy Code. 10 This particular matter is currently being adjudicated in a case that will be argued before the Second Circuit. The case involves a Serbian governmental agency that has brought a U.S. Bankruptcy Code Section 304 proceeding seeking to have the disposition of the assets of certain Yugoslavian banks with New York state-licensed agencies be considered under home country law. *See Agency for Deposit Ins., Rehab., Bankr. & Liquidation of Banks* v. *Superintendent of Banks* , Case No. 03-CV-9320 (JSR), Case No. 03-CV-9321 (JSR), 2004 U.S.

Dist. LEXIS 10848 (S.D.N.Y. June 2004). In order to mitigate this risk, FICC has required and will continue to require non-U.S. GSD netting and MBSD clearing applicants to submit non-U.S. legal opinions drafted by outside counsel from the jurisdiction in which the member is incorporated and/or primarily conducts its business. As is its current practice, FICC will continue to make a case-by-case determination, based on its analysis of the legal opinion, of the legal risks presented by the home country laws of such applicants.

In doing so, FICC will now retain U.S. outside counsel to review the legal opinions and to advise FICC of any risks presented. The rule change makes clear that, based on its review of the legal opinion, FICC will determine what, if any, protective measures it will impose to mitigate any legal risks. Protective action may, for example, take the form of requiring the member to post additional collateral and/or requiring a member to post a certain percentage of its collateral requirement in a certain form (such as letters of credit).

In order to protect FICC against any adverse changes in home country law that may have arisen since the members submitted their legal opinions as a part of the membership/application process and in order to determine whether any positive developments in home country law would support eliminating or relaxing any collateral premiums that may have been imposed on any members, 11 FICC will require all of its current non-U.S. members (except those members whose opinions have been issued within the past 18 months) to submit a current legal opinion from outside non-U.S. counsel addressing the non-U.S. legal issues or to provide a letter on their outside counsel's letterhead stating that no material changes have occurred in home country law since the date of the original legal opinions.

FICC will require its current members to submit these updated legal opinions (or letters) within three months of the approval of this filing by the Commission. FICC will then review with the assistance of its outside counsel all such revised legal opinions and those original legal opinions that counsel indicates remain current and will determine whether protective measures need to be taken or whether the current increased collateral requirements should continue, be relaxed, or be eliminated. 11 GSD currently has three non-U.S. netting members that are subject to increased clearing fund requirements due to past determinations of heightened legal risk presented by the insolvency laws of their home jurisdictions.

These members are currently posting 100 percent of their clearing fund requirement in the form of one or more letters of credit and an additional 30 percent in the form of cash or securities. The rule change will also require all non-U.S. members to provide an annual update of their non-U.S. legal opinion or to provide a letter from their outside counsel stating that no material issues have arisen since the issuance of the opinion or the last update. FICC may impose such additional requirements on non-U.S. members as described above based on review of such updated legal opinions.

D. Additional Changes The rule change will delete all references to certifications by the chief executive officer, chief financial officer, or other that accompany financial statements, financial data, or regulatory reports. These certifications do not appear to be standard documentation, and FICC historically has not received such certifications. If a need to request a certification with respect to a particular member or applicant arises, FICC will have the authority to request it pursuant to the general authority that it has in both division's rules to seek additional information.

In addition, in a previous rule change, FICC amended its rules with the intention of giving FICC the option to request that financial figures be submitted in U.S. dollar equivalents. 12 This rule change deletes this option from FICC's rules as FICC performs these calculations itself, intends to continue doing so, and believes that the pending language has the potential for confusion. 12 *Supra* note 8, SR-FICC-2004-01. Finally, the rule change will amend the number of recent routine regulatory reports that a U.S.

GSD netting applicant or MBSD clearing applicant is required to submit to FICC to the number of such reports that the entity has filed during the preceding 12 months or a lesser period if the applicant has been in business or has been registered or licensed for a lesser period. For example, a GSD U.S. broker-dealer applicant that is a monthly FOCUS filer would need to submit copies of all of its FOCUS reports filed during the preceding 12 months. With respect to 17a-11 reports, where the current rules do not specify the necessary time period, the proposed rule change requires U.S. broker-dealer applicants to submit all 17a-11 reports filed during the preceding 24 months.

II. Comments The Institute of International Bankers (“IIB”) submitted two comment letters. While the first letter objected to the increased financial requirements for entities submitting financial statements prepared using non-U.S. GAAP, its primarily focus was on its objections to standard clearing fund premiums for all non-U.S. members. After FICC amended the proposal to remove the standard clearing fund premiums for non-U.S. members, the IIB wrote in support of the proposed rule change, particularly with respect to the provisions that address how FICC will manage the legal risk arising from the participation in FICC by branches of international banks that operate in the United States.

The III Global Ltd., III Finance Ltd., and III Relative Value/Macro Hub Fund Ltd. investment companies submitted a comment letter also objecting to standard clearing fund premiums for non-U.S. members. However, as with the IIB's first letter, this letter also addressed a version of the proposed rule change that the Commission had not yet published for comment and that FICC substantively modified. III. Discussion Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of a clearing be designed to assure the safeguarding of securities and funds which are in its custody or control. 13 The proposed rule change should enhance FICC's surveillance and assessment of applicants' and members' financial and legal condition.

In addition, the proposed rule change will harmonize both of FICC's division's application and membership requirements and will make clear to all applicants and members of the breadth of financial and legal information that FICC will require and review in order to develop an accurate risk profile to evaluate an applicant's or member's financial condition. Accordingly, the proposed rule should appropriately enhance FICC's ability to mitigate financial risk to itself and to its members and therefore should help FICC to assure the safeguarding of securities and funds that are in its custody or control or for which it is responsible. 13 15 U.S.C. 78q-1(b)(3)(F).

IV. 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 14 and the rules and regulations thereunder. 14 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-2004-14) be, and hereby is, approved. 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. E5-1257 Filed 3-22-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51382; File No. SR-NASD-2005-029] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Modifications to the Nasdaq Opening Process for Nasdaq-Listed Stocks March 16, 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 March 4, 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 and II below, which items have been prepared by Nasdaq. Nasdaq has designated the proposed rule change as “non-controversial” under section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6).

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq is filing a proposed rule change to modify NASD Rule 4704(d)(1) which governs the dissemination of the Order Imbalance Indicator prior to the Nasdaq Opening Cross. The text of the proposed rule change is set forth below. Proposed new language is in italics; proposed deletions are in [brackets]. 5 5 The proposed rule change is marked to show changes from the rule text appearing in the NASD Manual available at *https://www.nasd.com.* Rule 4704 Opening Process for Nasdaq-listed Securities (a)-(c) No Change.

(d)Processing of Nasdaq Opening Cross. For certain Nasdaq-listed securities designated by Nasdaq, the Nasdaq Opening Cross shall occur at 9:30, and regular hours trading shall commence when the Nasdaq Opening Cross concludes.

(1)Beginning at *9:25* [9:28] a.m., Nasdaq shall disseminate by electronic means an Order Imbalance Indicator every 15 seconds until 9:29, and then every 5 seconds until market open. The Order Imbalance Indicator shall contain the following real time information: (A)-(E) No Change. (2)-(4) 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, 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 is proposing to modify NASD Rule 4704(d)(1) which governs the dissemination of the Order Imbalance Indicator prior to the Nasdaq Opening Cross. NASA Rule 4704(d)(1) currently provides that Nasdaq will disseminate the Order Imbalance Indicator every 15 seconds beginning at 9:28 a.m. and every 5 seconds beginning at 9:29 a.m. until market open. The Order Imbalance Indicator informs market participants about the expected outcome of the Nasdaq Opening Cross and enables them to determine how to participate in it. Nasdaq has determined that disseminating the Order Imbalance Indicator beginning at 9:25 a.m. would enhance market transparency and encourage increased order interaction during the Nasdaq Opening Cross. Currently, Nasdaq's system opens all quotes and orders at 9:25 a.m. but there is no dissemination of information regarding the status of the market until 9:28 a.m. Nasdaq believes that disseminating the Order Imbalance Indicator at 9:25 a.m. would permit market participants to make earlier and better informed decisions about how they will participate in the Nasdaq Opening Cross which would, in turn, improve the fair and orderly opening of the market. There would be no changes in the entry, display, processing, or execution of individual orders. 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 with section 15A(b)(6) of the Act, 7 in particular, in that section 15A(b)(6) requires that the NASD's rules be designed to protect investors and the public interest. Nasdaq believes that its current proposal is consistent with the NASD's obligations under these provisions of the Act because it would result in a more orderly opening for all Nasdaq stocks. The proposed rule change would create a fair, orderly, and unified opening for Nasdaq stocks, prevent the occurrence of locked and crossed markets in halted securities, and preserve price discovery and transparency that is vital to an effective opening of trading. 6 15 U.S.C. 78 *o* -3. 7 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change would 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 Nasdaq neither solicited nor received written comments with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not:

(i)Significantly affect the protection of investors or the public interest;

(ii)Impose any significant burden on competition; and

(iii)Become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, it has become effective pursuant to section 19(b)(3)(A) of the Act 8 and Rule 19b-4(f)(6) thereunder. 9 Nasdaq has requested that the Commission waive the 30-day operative delay for “non-controversial” proposals, based upon a representation that the proposal is of the utmost importance to the fair and orderly operation of The Nasdaq Stock Market during the pre-opening trading period. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because it will allow Nasdaq to begin disseminating the Order Imbalance Indicator at the earlier 9:25 a.m. time immediately, thereby providing increased information and greater transparency to the market. For this reason, the Commission designates the proposal to be effective and operative upon filing with the Commission. 10 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(6). The Commission notes that Nasdaq provided written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change at least five business days prior to the date of filing of the proposed rule change. 10 For purposes only of waiving the 30-day operative delay of the proposed rule change, the Commission considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 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 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-2005-029 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-2005-029. 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 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-2005-029 and should be submitted on or before April 13, 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. E5-1255 Filed 3-22-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51386; File No. SR-NASD-2005-031] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Modifications to the Nasdaq Opening Process for Nasdaq-Listed Stocks March 16, 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 March 14, 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 and II below, which Items have been prepared by Nasdaq. Nasdaq has designated the proposed rule change as “non-controversial” under section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq is filing a proposed rule change to modify NASD Rule 4704(d)(1) which governs the dissemination of the Order Imbalance Indicator prior to the Nasdaq Opening Cross. The text of the proposed rule change is set forth below. Proposed new language is in *italics* ; proposed deletions are in [brackets]. 5 5 The proposed rule change is marked to show changes from the rule text appearing in the NASD Manual available at *http://www.nasd.com* as amended by SR-NASD-2005-029 (March 4, 2005). Rule 4704 Opening Process for Nasdaq-Listed Securities (a)-(c) No Change.

(1)Beginning at 9:2 *5:30* a.m., Nasdaq shall disseminate by electronic means an Order Imbalance Indicator every 15 seconds until 9:2 *8:20* [9], and then every 5 seconds until market open. The Order Imbalance Indicator shall contain the following real time information: (A)-(E) No Change. (2)-(4) 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, 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 is proposing to modify NASD Rule 4704(d)(1) which governs the dissemination of the Order Imbalance Indicator prior to the Nasdaq Opening Cross. NASD Rule 4704(d)(1) currently provides that Nasdaq will disseminate the Order Imbalance Indicator every 15 seconds beginning at 9:25 a.m. and every 5 seconds beginning at 9:29 a.m. until market open. The Order Imbalance Indicator informs market participants about the expected outcome of the Nasdaq Opening Cross and enables them to determine how to participate in it. Nasdaq recently determined that disseminating the Order Imbalance Indicator beginning at 9:25 a.m. will enhance market transparency and encourage increased order interaction during the Nasdaq Opening Cross. Currently, Nasdaq's system opens all quotes and orders at 9:25 a.m via an unlocking/uncrossing process described in Rule 4704(b). The processing of the unlocking/uncrossing algorithm takes several seconds to complete. Under the recently published rule change, 6 the first dissemination of the Order Imbalance Indicator at 9:25 a.m. could occur prior to the completion of the unlocking/uncrossing algorithm. This would defeat the transparency that Nasdaq continually strives to create. Accordingly, Nasdaq is proposing to disseminate the Order Imbalance Indicator at 9:25:30 a.m. rather than 9:25 a.m. as recently proposed. In addition, Nasdaq is proposing to increase transparency by disseminating the Order Imbalance Indicator every five seconds beginning at 9:28:20 a.m. rather than at 9:29 a.m. 6 *See* SR-NASD-2005-029 (March 4, 2005). There would be no changes in the entry, display, processing, or execution of individual orders. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act, 7 in general, and with section 15A(b)(6) of the Act, 8 in particular, in that section 15A(b)(6) requires, among other things, that a national securities association's rules be designed to protect investors and the public interest. Nasdaq believes that its current proposal is consistent with the NASD's obligations under these provisions of the Act because it would result in a more orderly opening for all Nasdaq stocks. The proposed rule change would create a fair, orderly, and unified opening for Nasdaq stocks, prevent the occurrence of locked and crossed markets in halted securities, and preserve price discovery and transparency that is vital to an effective opening of trading. 7 15 U.S.C. 78 *o* -3. 8 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change would 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 Nasdaq neither solicited nor received written comments with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not:

(i)Significantly affect the protection of investors or the public interest;

(ii)Impose any significant burden on competition; and

(iii)Become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, it has become effective pursuant to section 19(b)(3)(A) of the Act 9 and Rule 19b-4(f)(6) thereunder. 10 Nasdaq has requested that the Commission waive the five-day pre-filing notice requirement and the 30-day operative delay for “non-controversial” proposals, based upon a representation that the proposal is of the utmost importance to the fair and orderly operation of The Nasdaq Stock Market during the pre-opening trading period. The Commission believes that waiver of the five-day pre-filing requirement and the 30-day operative delay is consistent with the protection of investors and the public interest because it would allow Nasdaq immediately to implement the proposed rule change which should improve transparency in the pre-opening trading period. For this reason, the Commission designates the proposal to be effective and operative upon filing with the Commission. 11 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). 11 For purposes only of waiving the 30-day operative delay of the proposed rule change, the Commission considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 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 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-2005-031 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-2005-031. 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 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-2005-031 and should be submitted on or before April 13, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E5-1256 Filed 3-22-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-51372; File No. SR-NYSE-2004-62] Self-Regulatory Organizations; New York Stock Exchange Inc.; Notice of Filing of Proposed Rule Change To Eliminate Rule 496 and To Amend the Listed Company Manual Relating to Transfer Agents March 15, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on October 29, 2004, the New York Stock Exchange Inc. (“NYSE”) filed with the Securities and Exchange Commission (“Commission”) and on December 3, 2004, and February 9, 2005, amended the proposed rule change as described in items I, II, and III below, which items have been prepared primarily by the NYSE. 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 NYSE proposes to:

(i)Eliminate Rule 496;

(ii)amend the Listed Company Manual (“LCM”) to remove references to the current requirement of Rule 496 that transfer agents for listed companies maintain an office or an agent in Manhattan below Chambers Street;

(iii)incorporate in the LCM certain other requirements currently in Rule 496; and

(iv)codify exceptions to the transfer agent provisions that the NYSE has historically applied. 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 NYSE 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 NYSE 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 the NYSE.

(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The NYSE proposes to eliminate Rule 496 and proposes to amend its LCM to retain and to continue to impose certain current significant requirements of Rule 496 with respect to entities acting as transfer agents for listed companies. The NYSE believes it is appropriate that the transfer agent requirements be set forth solely in the LCM due to the fact that its rules are generally applicable to members rather than listed companies. In addition, the current requirements of Rule 496 are referred to, and to some extent, repeated in various sections of the LCM. Accordingly, the NYSE believes that the transfer agent requirements are more properly contained in the LCM. Rule 496 requires, among other things, that transfer agents for listed companies maintain an office or obtain an agent located south of Chambers Street in the Borough of Manhattan, City of New York, where securities can be delivered in person for registration of transfer and can be picked up after completion of such registration (often referred to in the industry as a “drop”). The current requirement was implemented when most securities traded on the NYSE were held in certificated form and were settled with physical delivery. The transfer agents' presence in lower Manhattan, where the brokers were also concentrated, facilitated the speedy settlement of transactions and processing of securities transfers. However, most securities are now held in “street name” at The Depository Trust Company (“DTC”), a securities depository registered as clearing agency under section 17A of the Exchange Act, 3 and transfers of such securities occur through automated book-entry systems at DTC without the need for transfer of physical certificates. As a result, very few transfers are facilitated any longer by the drop in lower Manhattan. The NYSE believes that marketplace participants, including securityholders, would not be harmed by elimination of the drop requirement in Rule 496. 3 15 U.S.C. 78q-1(b). Rule 496 also requires transfer agents to record the transfer of securities received at the transfer agent's drop before the close of business on a record date as being transferred on the record date in order to establish the transferee's rights on the record date. As revised, the LCM will provide the same protection for securities mailed by the close of business on a record date by a registered clearing agency ( *i.e.* , DTC). Because the vast majority of securities are now held in “street name,” the NYSE believes that securityholders will not be disadvantaged by providing this record date protection only to registered clearing agencies. Rule 496 also requires transfer agents to meet certain capital and insurance standards. Currently under the rule, transfer agents are required to

(i)have capital, surplus (both capital and earned), undivided profits, and capital reserves aggregating at least $10,000,000 and

(ii)maintain blanket bond insurance coverage of at least $25,000,000 to protect securities while in transit or being processed. The proposed revisions to the LCM will retain the capital and insurance requirements of current Rule 496 and will codify several long-standing policies and practices of the NYSE by providing for the qualification of certain transfer agents that do not otherwise meet the capital and insurance requirements of Rule 496. Accordingly, the LCM will specify that a bank, trust company, or other qualified organization acting as transfer agent may: 1. Act in a dual capacity as transfer agent/co-transfer agent and registrar if

(i)a majority of its equity is owned by an entity that meets the standard capital requirements,

(ii)its parent guarantees the subsidiary's performance, and

(iii)the subsidiary maintains the $25,000,000 blanket bond insurance coverage or the parent maintains the coverage for the benefit of the subsidiary; 2. Act in dual capacity as transfer agent/co-transfer agent and registrar if it

(i)has capital of at least $2,000,000 and errors and omissions insurance which, taken together with its capital, equals at least $10,000,000 and

(ii)maintains the standard $25,000,000 blanket bond insurance coverage; or 3. Act as co-transfer agent or co-registrar (but not in a dual capacity) for securities listed on the NYSE if it has capital equal to at least $2,000,000 without maintaining the $25,000,000 blanket bond insurance coverage. Additionally a listed company may act as its own transfer agent provided that it complies with all the requirements applicable to transfer agents not affiliated with the listed company apart from the capital and insurance requirements. However, a listed company may not act as sole registrar for its listed securities unless it also acts as transfer agent. The NYSE believes the foregoing exceptions to the capital and insurance requirements are policies that have been applied by the NYSE for many years. The NYSE believes that these policies are consistent with the protections provided to securityholders by the general standards applicable to transfer agent, as in each case the listed company must have at least one transfer agent which directly or indirectly has the equivalent of at least $10,000,000 in capital and $25,000,000 blanket bond insurance coverage. Section 6(b)(5) of the Act that requires rules of an exchange are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and to perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 4 The NYSE believes that the proposed rule is consistent with its obligations under section 6(b)(5) of the Act because it allows transfer agents acting for listed companies to provide for transfers of securities in a more efficient and cost effective manner by eliminating the drop office requirement, which is now obsolete. Furthermore the proposed rule is consistent because the remainder of the changes are technical in nature. Although the capital and insurance requirements will be removed from Rule 496 and added to the LCM, the amount of capital and insurance required will remain the same. 1 15 U.S.C. 78f(b)(5).

(B)Self-Regulatory Organization's Statement on Burden on Competition NYSE does not believe that the proposed rule change will have an impact on or impose a burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act.

(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments relating to the proposed rule change have been solicited or received. NYSE will notify the Commission of any written comments it receives. 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-NYSE 2004-62 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 2004-62. 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 NYSE or on the NYSE's Web site at *http://www.nyse.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-NYSE 2004-62 and should be submitted on or before April 13, 2005. 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. E5-1254 Filed 3-22-05; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10078 and # 10079] Nevada Disaster # NV-00001 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a notice of an Administrative declaration of a disaster for the State of Nevada, dated 03/15/2005. *Incident:* Heavy Rains and Flooding. *Incident Period:* 01/06/2005 through 01/13/2005. *Effective Date:* 03/15/2005. *Physical Loan Application Deadline Date:* 05/16/2005. *EIDL Loan Application Deadline Date:* 12/15/2005. 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 03/15/2005, 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:* Clark *Contiguous Counties:* Nevada: Lincoln, Nye Arizona: Mohave. California: Inyo, 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 10078 6 and for economic injury is 10079 0. The States which received an EIDL Declaration # are Nevada, Arizona, and California. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Dated: March 15, 2005. Hector V. Barreto, Administrator. [FR Doc. 05-5684 Filed 3-22-05; 8:45 am]

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