Notices. Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from section 15(a) of the Act and rule 18f-2 under the Act
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BILLING CODE 7537-01-P NUCLEAR REGULATORY COMMISSION [Docket No. 50-387] Susquehanna Steam Electric Station, Unit 1; Notice of Consideration of Issuance of Amendment to Facility Operating License, Proposed No Significant Hazards Consideration Determination, and Opportunity for a Hearing The U.S. Nuclear Regulatory Commission (the Commission) is considering issuance of an amendment to Facility Operating License No. NPF-14 and NPF-22, issued to PPL Susquehanna, LLC (PPL, the licensee), for operation of the Susquehanna Steam Electric Station, Unit 1 (SSES 1), located in Berwick, Pennsylvania. The proposed amendment would revise the SSES 1 Technical Specification
(TS)Section 2.1.1.2 with regard to the Unit 1 Cycle 14 (U1C14) minimum critical power ratio
(MCPR)safety limit
(SL)for two-loop operation from 1.08 to 1.09 following implementation of a redesigned core. The change to the MCPR SL is necessary due to control cell friction issues which necessitate a U1C14 mid-cycle core redesign and unit shutdown to implement. The exigent amendment request is being made following PPL's determination, based in part, on testing performed the weekend of September 30, 2005, that a mid-cycle core redesign was the most prudent course of action to ensure safe, reliable operation for the remainder of U1C14. Additionally, PPL requests the proposed change on an exigent basis to avoid unnecesary delays in the Unit 1 restart following its upcoming maintenance outage. Before issuance of the proposed license amendment, the Commission will have made findings required by the Atomic Energy Act of 1954, as amended (the Act) and the Commission's regulations. Pursuant to 10 CFR 50.91(a)(6) for amendments to be granted under exigent circumstances, the NRC staff must determine that the amendment request involves no significant hazards consideration. Under the Commission's regulations in 10 CFR 50.92, this means that operation of the facility in accordance with the proposed amendment would not
(1)Involve a significant increase in the probability or consequences of an accident previously evaluated; or
(2)create the possibility of a new or different kind of accident from any accident previously evaluated; or
(3)involve a significant reduction in a margin of safety. As required by 10 CFR 50.91(a), the licensee has provided its analysis of the issue of no significant hazards consideration, which is presented below: 1. Does the proposed change involve a significant increase in the probability or consequences of an accident previously evaluated? Response: No. The proposed change to the MCPR Safety Limits does not directly or indirectly affect any plant system, equipment, component, or change the processes used to operate the plant. Further, the revised U1C14 MCPR Safety Limits are generated using NRC approved methodology and meet the applicable acceptance criteria. In addition, the effects of channel bow were conservatively addressed by increasing the amount of channel bow assumed in the MCPR SL calculation. Thus, this proposed amendment does not involve a significant increase in the probability or consequences of an accident previously evaluated. Prior to the restart of U1C14, licensing analyses will be performed on the redesigned core (using NRC approved methodology referenced in Technical Specification Section 5.6.5.b) to determine changes in the critical power ratio as a result of anticipated operation occurrences. These results will be added to the MCPR Safety Limit values proposed herein to generate the MCPR operating limits in the U1C14 Core Operating Limits Report (COLR). The COLR operating limits thus assure that the MCPR Safety Limit will not be exceeded during normal operation or anticipated operational occurrences. Postulated accidents are also analyzed to confirm NRC acceptance criteria are met. Therefore, this proposed amendment does not involve a significant increase in the probability or consequences of an accident previously evaluated. 2. Does the proposed change create the possibility of a new or different kind of accident from any accident previously evaluated? Response: No. This proposed change to the MCPR Safety Limits does not directly or indirectly affect any plant system, equipment, or component and therefore they do not affect the failure modes of any of these items. Thus, the proposed change does not create the possibility of a previously unevaluated operator error or a new single failure. Therefore, this proposed amendment does not create the possibility of a new or different kind of accident from any previously evaluated. 3. Does the proposed change involve a significant reduction in a margin of safety? Response: No. Since the proposed change does not alter any plant system, equipment, component, or the processes used to operate the plant, the proposed change will not jeopardize or degrade the function or operation of any plant system or component governed by Technical Specifications. The proposed MCPR Safety Limits do not involve a significant reduction in the margin of safety as currently defined in the Bases of the applicable Technical Specification sections, because the MCPR Safety Limits calculated for the remaining U1C14 operation preserve the required margin of safety. Therefore, the proposed change does not involve a significant reduction in a margin of safety. The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration. The Commission is seeking public comments on this proposed determination. Any comments received within 14 days after the date of publication of this notice will be considered in making any final determination. Normally, the Commission will not issue the amendment until the expiration of the 14-day notice period. However, should circumstances change during the notice period, such that failure to act in a timely way would result, for example, in derating or shutdown of the facility, the Commission may issue the license amendment before the expiration of the 14-day notice period, provided that its final determination is that the amendment involves no significant hazards consideration. The final determination will consider all public and State comments received. Should the Commission take this action, it will publish in the **Federal Register** a notice of issuance. The Commission expects that the need to take this action will occur very infrequently. Written comments may be submitted by mail to the Chief, Rules and Directives Branch, Division of Administrative Services, Office of Administration, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, and should cite the publication date and page number of this **Federal Register** notice. Written comments may also be delivered to Room 6D59, Two White Flint North, 11545 Rockville Pike, Rockville, Maryland, from 7:30 a.m. to 4:15 p.m. Federal workdays. Documents may be examined, and/or copied for a fee, at the NRC's Public Document Room, located at One White Flint North, 11555 Rockville Pike (first floor), Rockville, Maryland. The filing of requests for hearing and petitions for leave to intervene is discussed below. Within 60 days after the date of publication of this notice, the licensee may file a request for a hearing with respect to issuance of the amendment to the subject facility operating license and any person whose interest may be affected by this proceeding and who wishes to participate as a party in the proceeding must file a written request for a hearing and a petition for leave to intervene. Requests for a hearing and a petition for leave to intervene shall be filed in accordance with the Commission's “Rules of Practice for Domestic Licensing Proceedings” in 10 CFR Part 2. Interested persons should consult a current copy of 10 CFR 2.309, which is available at the Commission's PDR, located at One White Flint North, Public File Area 01F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible from the Agencywide Documents Access and Management System's (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, *http://www.nrc.gov/reading-rm/doc-collections/cfr/* . If a request for a hearing or petition for leave to intervene is filed by the above date, the Commission or a presiding officer designated by the Commission or by the Chief Administrative Judge of the Atomic Safety and Licensing Board Panel, will rule on the request and/or petition; and the Secretary or the Chief Administrative Judge of the Atomic Safety and Licensing Board will issue a notice of a hearing or an appropriate order. As required by 10 CFR 2.309, a petition for leave to intervene shall set forth with particularity the interest of the petitioner in the proceeding, and how that interest may be affected by the results of the proceeding. The petition should specifically explain the reasons why intervention should be permitted with particular reference to the following general requirements:
(1)The name, address and telephone number of the requestor or petitioner;
(2)the nature of the requestor's/petitioner's right under the Act to be made a party to the proceeding;
(3)the nature and extent of the requestor's/petitioner's property, financial, or other interest in the proceeding; and
(4)the possible effect of any decision or order which may be entered in the proceeding on the requestor's/petitioner's interest. The petition must also identify the specific contentions which the petitioner/requestor seeks to have litigated at the proceeding. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner/requestor shall provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner/requestor must also provide references to those specific sources and documents of which the petitioner/requestor is aware and on which the petitioner/requestor intends to rely to establish those facts or expert opinion. The petitioner/requestor must provide sufficient information to show that a genuine dispute exists with the applicant on a material issue of law or fact. Contentions shall be limited to matters within the scope of the amendment under consideration. The contention must be one which, if proven, would entitle the petitioner/requestor to relief. A petitioner/requestor who fails to satisfy these requirements with respect to at least one contention will not be permitted to participate as a party. Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene, and have the opportunity to participate fully in the conduct of the hearing. If a hearing is requested, the Commission will make a final determination on the issue of no significant hazards consideration. The final determination will serve to decide when the hearing is held. If the final determination is that the amendment request involves no significant hazards consideration, the Commission may issue the amendment and make it immediately effective, notwithstanding the request for a hearing. Any hearing held would take place after issuance of the amendment. If the final determination is that the amendment request involves a significant hazards consideration, any hearing held would take place before the issuance of any amendment. Nontimely requests and/or petitions and contentions will not be entertained absent a determination by the Commission or the presiding officer of the Atomic Safety and Licensing Board that the petition, request and/or the contentions should be granted based on a balancing of the factors specified in 10 CFR 2.309(c)(1)(i)-(viii). A request for a hearing or a petition for leave to intervene must be filed by:
(1)First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff;
(2)courier, express mail, and expedited delivery services: Office of the Secretary, Sixteenth Floor, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff;
(3)E-mail addressed to the Office of the Secretary, U.S. Nuclear Regulatory Commission, *HEARINGDOCKET@NRC.GOV;* or
(4)facsimile transmission addressed to the Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC, Attention: Rulemakings and Adjudications Staff at
(301)415-1101, verification number is
(301)415-1966. A copy of the request for hearing and petition for leave to intervene should also be sent to the Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, and it is requested that copies be transmitted either by means of facsimile transmission to 301-415-3725 or by e-mail to *OGCMailCenter@nrc.gov.* A copy of the request for hearing and petition for leave to intervene should also be sent to Bryan A. Snapp, Esquire, Assoc. General Counsel, PPL Services Corporation, 2 North Ninth St., GENTW3, Allentown, PA 18101-1179, attorney for the licensee. For further details with respect to this action, see the application for amendment dated October 14, 2005, which is available for public inspection at the Commission's Public Document Room (PDR), located at One White Flint North, Public File Area O1 F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible electronically from the Agencywide Documents Access and Management System's (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site *http://www.nrc.gov/reading-rm.html* . Persons who do not have access to ADAMS or who encounter problems in accessing the documents located in ADAMS, should contact the NRC PDR Reference staff by telephone at 1-800-397-4209, 301-415-4737, or by e-mail to *pdr@nrc.gov* . Dated at Rockville, Maryland, this 17th day of October 2005. For the Nuclear Regulatory Commission. Richard J. Laufer, Section Chief, Section 1, Project Directorate I, Division of Licensing Project Management, Office of Nuclear Reactor Regulation. [FR Doc. E5-5854 Filed 10-21-05; 8:45 am] BILLING CODE 7590-01-P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 27117; 812-13097] BBH Fund, Inc. and Brown Brothers Harriman & Co.; Notice of Application October 18, 2005. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from section 15(a) of the Act and rule 18f-2 under the Act. *Summary of the Application:* The requested order would permit certain registered open-end management investment companies to enter into and materially amend subadvisory agreements (“Subadvisory Agreements”) without shareholder approval. *Applicants:* BBH Fund, Inc. (“BBH”) and Brown Brothers Harriman & Co. (the “Adviser,” together with BBH, the “Applicants”). *Filing Date:* The application was filed on June 14, 2004 and amended on June 17, 2005, August 8, 2005 and October 12, 2005. *Hearing or Notification of Hearing:* An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on November 14, 2005, and should be accompanied by proof of service on applicants in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. Applicants, Gail C. Jones, Esq., Reed Smith LLP, Federated Investors Tower, 12th Floor, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779. FOR FURTHER INFORMATION CONTACT: Todd F. Kuehl, Branch Chief, at
(202)551-6821 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee from the Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 20549-0102 (telephone
(202)551-5850). Applicants' Representations 1. BBH, a Maryland corporation, is registered under the Act as an open-end management investment company. BBH currently offers multiple series (each a “Fund,” and collectively, the “Funds”), each of which has its own investment objectives, policies and restrictions. 1 BBH International Equity Fund (“International Equity Fund”) is the only Fund that currently intends to rely on the requested order. 1 Applicants also request relief with respect to any other existing or future registered open-end management investment company or series therof that:
(a)Is advised by the Adviser or any entity controlling, controlled by or under common control with the Adviser;
(b)uses the management structure described in this application; and
(c)complies with the terms and conditions of this application (included in the term “Funds”). The only existing registered open-end management investment company that currently intends to rely on the requested order is named as an Applicant. If the name of any Fund contains the name of Subadviser (as defined below), the name of the Adviser that serves as the primary adviser to the Fund will preced the name of the Subadviser. 2. The Adviser, registered under the Investment Advisers Act of 1940 (“Advisers Act”), serves as investment adviser to each Fund pursuant to an investment advisory agreement with BBH (“Advisory Agreement”), that was approved by the board of directors of BBH (the “Board”), including a majority of the directors who are not “interested persons,” as defined in section 2(a)(19) of the Act (“Independent Directors”), and the shareholders of each Fund. Under the terms of the Advisory Agreement, the Adviser provides the International Equity Fund with investment research, advice and supervision, and furnishes an investment program for the Fund consistent with the investment objectives and policies of the Fund. The Adviser has entered into, or will enter into, Subadvisory Agreements with subadvisers (“Subadvisers”), to whom the Adviser may delegate responsibility for providing investment advice and making investment decisions for the International Equity Fund. Pursuant to the Advisory Agreement, the Adviser receives a fee from the International Equity Fund based on the average daily net assets. Each Subadviser is or will be an investment adviser registered under the Advisers Act. The Adviser has delegated daily management of the International Equity Fund's assets to Subadvisers, who are paid by the Adviser out of the fee it receives from the International Equity Fund. In the future, a Fund may contract directly with and pay a Subadviser directly (“Direct Contract Fund”). 3. Applicants request relief to permit the Adviser, subject to Board approval, to enter into and materially amend Subadvisory Agreements without shareholder approval. The requested relief will not extend to a Subadviser that is an affiliated person, as defined in section 2(a)(3) of the Act, of a Fund or the Adviser, other than by reason of serving as a Subadviser to one or more of the Funds (an “Affiliated Subadviser”). Applicants' Legal Analysis 1. Section 15(a) of the Act provides, in relevant part, that it is unlawful for any person to act as an investment adviser to a registered investment company except pursuant to a written contract that has been approved by the vote of a majority of the company's outstanding voting securities. Rule 18f-2 under the Act provides that each series or class of stock in a series company affected by a matter must approve such matter if the Act requires shareholder approval. 2. Section 6(c) of the Act provides that the Commission may exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provision of the Act, or from any rule thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policies and provisions of the Act. Applicants believe that their requested relief meets this standard for the reasons discussed below. 3. Applicants state that the Funds' shareholders will rely on the Adviser, subject to oversight by the Board, to select Subadvisers for the Funds. Applicants assert that, from the perspective of the investor, the role of the Subadvisers is substantially equivalent to that of individual portfolio managers employed by traditional investment advisory firms. Applicants contend that requiring shareholder approval of Subadvisory Agreements would impose costs and unnecessary delays on the Funds and may preclude the Adviser from acting promptly in a manner considered advisable by the Board. Applicants also note that the Advisory Agreement will remain subject to the shareholder approval requirements in section 15(a) of the Act and rule 18f-2 under the Act. 4. Applicants note that the Commission has proposed rule 15a-5 under the Act and agree that the requested order will expire on the effective date of rule 15a-5 under the Act, if adopted. 2 2 Investment Company Act Release No. 26230 (Oct. 23, 2003). Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. Before a Fund may rely on the order requested in the application, the operation of the Fund in the manner described in the application will be approved by a majority of the Fund's outstanding voting securities, as defined in the Act, or, in the case of a Fund whose public shareholders purchase shares on the basis of a prospectus containing the disclosure contemplated by condition 2 below, by the initial shareholder(s) before shares of such Fund are offered to the public. 2. Each Fund relying on the requested order will disclose in its prospectus the existence, substance, and effect of any order granted pursuant to the application. In addition, each Fund relying on the requested order will hold itself out to the public as employing the “manager of managers” structure described in the application. Such Fund's prospectus will prominently disclose that the Adviser has ultimate responsibility, subject to oversight by the Board, to oversee the Subadvisers and recommend their hiring, termination, and replacement. 3. The Adviser will provide general management and administrative services to each Fund, including overall supervisory responsibility for the general management and investment of the Fund's assets, and, subject to review and approval by the Board, will
(i)Set each Fund's overall investment strategies;
(ii)evaluate, select and recommend Subadvisers to manage all or a part of a Fund's assets;
(iii)when appropriate allocate and reallocate a Fund's assets among multiple Subadvisers;
(iv)monitor and evaluate the performance of the Subadvisers; and
(v)implement procedures reasonably designed to ensure that the Subadvisers comply with the relevant Fund's investment objective, policies, and restrictions. 4. Each Fund will comply with the fund governance standards that the Commission adopted in Investment Company Act Release No. 26520, by the compliance date set forth therein (“Compliance Date”). Prior to the Compliance Date, a majority of the Board will be Independent Directors, and the nomination of new or additional Independent Directors will be at the discretion of the then-existing Independent Directors. Any person who acts as legal counsel for the Independent Directors will be an independent legal counsel, as defined in rule 0-1(a)(6) under the Act. 5. The Adviser will not enter into a Subadvisory Agreement with any Affiliated Subadviser without such agreement, including the compensation to be paid thereunder, being approved by the shareholders of the applicable Fund. 6. When a Subadviser change is proposed for a Fund with an Affiliated Subadviser, the Board, including a majority of the Independent Directors, will make a separate finding, reflected in the Board minutes, that such change is in the best interests of the Fund and its shareholders and does not involve a conflict of interest from which the Adviser or the Affiliated Subadviser derives an inappropriate advantage. 7. Shareholders of any Direct Contract Fund will approve any change to a Subadvisory Agreement if such change would result in an increase in the overall management and advisory fees payable by the Fund that have been approved by the shareholders of the Fund. 8. No director or officer of a Fund, or director or officer of the Adviser will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by such person) any interest in a Subadviser, except for
(i)ownership of interests in the Adviser or any entity that controls, is controlled by, or is under common control with the Adviser; or
(ii)ownership of less than 1% of the outstanding securities of any class of equity or debt of any publicly-traded company that is either a Subadviser or an entity that controls, is controlled by or is under common control with a Subadviser. 9. Within 90 days of the hiring of a new Subadviser, the Adviser will furnish shareholders of the applicable Fund all information about the new Subadviser that would be included in a proxy statement. To meet this obligation, the Adviser will provide shareholders of the applicable Fund with an information statement meeting the requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 14A under the Securities Exchange Act of 1934. 10. The requested order will expire on the effective date of rule 15a-5 under the Act, if adopted. For the Commission, by the Division of Investment Management, under delegated authority. Jonathan G. Katz, Secretary. [FR Doc. E5-5862 Filed 10-21-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release Nos. 33-8628; 34-52629, File No. 265-23] Advisory Committee on Smaller Public Companies AGENCY: Securities and Exchange Commission. ACTION: Time change for meeting of SEC Advisory Committee on Smaller Public Companies. The Securities and Exchange Commission Advisory Committee on Smaller Public Companies is providing notice that it is changing the start time of its public meeting on Monday, October 24, 2005, from 9 a.m. to 9:30 a.m. This meeting will be held in Multi-Purpose Room L006 of the Commission's headquarters, 100 F Street, NE., Washington, DC 20549. The start time for the second day of this meeting Tuesday, October 25, 2005, will remain 9 a.m. FOR FURTHER INFORMATION CONTACT: Kevin M. O'Neill, Special Counsel, at
(202)551-3260, Office of Small Business Policy, Division of Corporation Finance, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-3628. SUPPLEMENTARY INFORMATION: In accordance with Section 10(a) of the Federal Advisory Committee Act, 5 U.S.C. App. 1, 10(a), and the regulations thereunder, Gerald J. Laporte, Designated Federal Officer of the Committee, has ordered publication of this notice. Dated: October 18, 2005. Jonathan G. Katz, Committee Management Officer. [FR Doc. E5-5861 Filed 10-21-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52625; File No. SR-CBOE-2005-81 Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Options on a Reduced-Value Version of the Standard and Poor's 500 Stock Index October 18, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, as amended, (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on October 5, 2005, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and is approving the proposal on an accelerated basis. 1 15 U.S.C. 78s(b)(l). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The CBOE proposes to amend its rules to allow the Exchange to list options on a reduced-value version of the Standard and Poor's 500 Stock Index at $1 strike price intervals. The text of the proposed rule change is available on the CBOE's Web site ( *http://www.cboe.com* ), at the CBOE's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the CBOE 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 III below. The CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend CBOE Rule 24.9 (“Terms of Index Option Contracts”) by adding a new interpretation that would allow the Exchange to list series on the reduced-value version of the Standard & Poor's 500 Stock Index (“S&P 500 Index”) option (“Mini-SPX option”), which is based on 1/10 th of the value of the S&P 500 Index, at strike price intervals no less than $1. 3 3 Currently, under Interpretation and Policy .01 to CBOE Rule 24.9, the Exchange has authority to list options on the Mini-SPX at $2.50 strike price intervals. Similarly, the Exchange currently lists and trades options at $1 strike price interval on an exchange traded fund (“ETF”) based on the S&P 500 index; specifically, the Standard & Poor's Depositary Receipts (commonly known as the “SPDRs”) ETF. 4 The SPDR, like the Mini-SPX option, is designed to track the performance of the S&P 500 Index and the price of one SPDR roughly approximates 1/10 th the value of the S&P 500 Index. The Exchange believes it would be logical to set the strike price interval for the Mini-SPX option at the same interval as options on the SPDR, because setting the price interval higher for Mini-SPX options than for SPDR options could cause confusion to investors and would put Mini-SPX options at a competitive disadvantage to SPDR options. As such, the Exchange proposes to list series on Mini-SPX options at $1 strike price intervals. 4 The Exchange has authority to list option series on any qualifying ETF at $1 strike price intervals. *See* Interpretation and Policy .08 to CBOE Rule 5.5. *See also* Interpretation and Policy .07 to CBOE Rule 5.5, which allows the Exchange to list $1 strike price series on options based on an ETF that represents an interest in the securities that make up the Nasdaq-100 Index (“QQQQ”), regardless of the whether the value of the QQQQ exceeds $200. The Exchange also proposes to impose certain conditions upon the listing of $1 strike price series on Mini-SPX options, as described below. First, to limit the number of series listed, the Exchange would not be allowed to list new series at less than $1 strike price intervals on Mini-SPX options at strike prices that are more than twenty percentage points (20%) away from one-tenth ( 1/10 th) the current index value of the S&P 500 Index. For example, if the current index value of the S&P 500 Index were 1,200.00, the Exchange would be permitted to list $1 strike price series on Mini-SPX options at strike prices ranging from $96 to $144. The Exchange would be permitted to list series on Mini-SPX options at $3 or greater strike price intervals with strike prices that are no more than twenty-five percentage points (25%) away from 1/10 th the current value of the S&P 500 Index and the Exchange would be permitted to list series at $5 or greater strike price intervals on Mini-SPX options that are more than 25% away from one-tenth of the current value of the S&P 500 Index. Also, the Exchange would not be permitted to list LEAPS or reduced-value LEAPS on Mini-SPX options at intervals less than $5. Finally, as long as there are open Mini-SPX option series listed at $1 strike price intervals, the Exchange would be required to surrender one of its five selections under the CBOE $1 Strike Price Pilot Program (“Pilot”). 5 Under the terms of the Pilot, the Exchange may select up to five different equity option classes on which series may be listed at $1 strike price intervals. 6 This proposal would limit the listing of option series at $1 strike price intervals on the Exchange in the Pilot to four classes when Mini-SPX options are listed at $1 strike price intervals. If the Exchange were to determine to discontinue listing Mini-SPX option series at $1 strike price intervals, the Exchange would again be free to select up to five option classes for inclusion in the Pilot. Accordingly, CBOE's Rule provisions relating to the Pilot will be amended to reference these measures. 5 *See* Interpretation and Policy .01(a) to CBOE Rule 5.5. 6 Under the terms of the Pilot, the Exchange also may list series at $1 strike price intervals on any other option classes if those classes are specifically designated by other securities exchanges that employ a similar Pilot under their respective rules. The CBOE Pilot also provides for other restrictions that will not necessarily apply to Mini-SPX options. *See supra* note 5. As a technical matter, the Exchange also proposes to amend Interpretation and Policy .09 to Rule 24.9, which describes the current index value of a “reduced-value option on the Standard & Poor's 500 Stock Index”, 7 to indicate that the new term “Mini-SPX” will be used to describe the option product. 7 This description was added at the time the Exchange was granted approval to list and trade Mini-SPX options. *See* Securities Exchange Act Release No. 32893 (September 14, 1993); 58 FR 49070 (September 21, 1993) (allowing CBOE to list options on the Mini-SPX). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act, 8 in general, and furthers the objectives of Section 6(b)(5) of the Act, 9 in particular, in that it is 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. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change will impose no burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received by the Exchange on this proposal. III. 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-CBOE-2005-81 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-CBOE-2005-81. 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 CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2005-81 and should be submitted on or before November 14, 2005. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder, applicable to a national securities exchange, 10 and, in particular, with the requirements of Section 6(b)(5) of the Act, 11 which requires, among other things, that the Exchange's rules promote just and equitable principles of trade and facilitate transactions in securities, and, in general, protect investors and the public interest. 10 In approving this proposal, the Commission has considered its impact on efficiecy, competition, and capital formation. 15 U.S.C. 78c(f). 11 15 U.S.C. 78f(b)(5). The Commission believes that the CBOE's proposal should provide investors with increased flexibility in satisfying their investment objectives by allowing them to purchase and sell (under certain conditions) Mini-SPX options at strike price intervals of no less than $1. In addition, the proposed restrictions that would permit the listing of options at $1 and $3 strike price intervals only for strike prices that are within 20% and 25%, respectively, of 1/10 of the current value of the S&P 500 Index should help to mitigate the effect of this proposal on the use of options system capacity. The Exchange has requested that the Commission approve the proposed rule change on an accelerated basis. The Commission finds good cause, pursuant to Section 19(b)(2) of the Act, 12 for approving the proposed rule change prior to the thirtieth day after the date of publication of notice in the **Federal Register** . The Commission notes that the CBOE received approval to list and trade options on the Mini-SPX more than 10 years ago. At that time, the proposal was noticed for the full comment period and no comments were received. The Commission believes that the proposal, which would permit the exchange to begin listing options on the Mini-SPX at $1 strike price intervals on an expedited basis, raises no new issues of regulatory concern. Accordingly, the Commission finds that good cause exists, consistent with Sections 6(b)(5) and 19(b)(2) of the Act, 13 to approve the proposed rule change on an accelerated basis. 12 15 U.S.C. 78s(b)(2). 13 15 U.S.C. 78f(b)(5) and 78s(b)(2). V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 14 that the proposed rule change (SR-CBOE-2005-81) is hereby approved on an accelerated basis. 14 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-5859 Filed 10-21-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52624; File No. SR-CBOE-2005-79 Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend CBOE Rule 8.4 Relating to Remote Market-Maker Appointments October 18, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on September 30, 2005, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) 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 Exchange filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. 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 CBOE proposes to amend CBOE Rule 8.4 relating to Remote Market-Maker appointments. The text of the proposed rule change is available on the CBOE's Web site ( *http://www.cboe.com* ), at the CBOE's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this rule change is to amend CBOE Rule 8.4 relating to Remote Market-Maker (“RMM”) appointments. CBOE Rule 8.4 provides that RMMs will have a Virtual Trading Crowd (“VTC”) Appointment, which confers the right to quote electronically in a certain number of products selected from various “tiers.” There are five tiers that are structured according to trading volume statistics and an “A+” Tier which consists of three option classes—options on Standard & Poor's Depositary Receipts, options on the Nasdaq-100 Index Tracking Stock, and options on Diamonds. CBOE proposes to amend CBOE Rule 8.4(d) relating to the “A+” Tier to include an additional option class in the “A+” Tier, namely reduced-value options on the Standard & Poor's 500 Stock Index. CBOE believes it is appropriate to include this option class in this tier based on its anticipated trading volume. CBOE also proposes to delete Interpretation .01 to CBOE Rule 8.4 as it is no longer necessary. Interpretation .01 initially was approved in April 2005 in connection with CBOE's implementation of its RMM program. 5 The purpose of the inactivity fee was to prevent RMMs from applying for appointments in products in which they had no intention of quoting, thereby preventing other members from securing appointments in products. CBOE subsequently determined to eliminate the inactivity fee, 6 but did not at that time delete reference to the inactivity fee in Interpretation .01. This rule filing makes that change. 5 *See* Securities Exchange Act Release No. 51542 (April 14, 2005), 70 FR 20952 (April 22, 2005), approving SR-CBOE-2005-22. 6 *See* Securities Exchange Act Release No. 51705 (May 18, 2005), 70 FR 30158 (May 25, 2005) (SR-CBOE-2005-35). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 7 in general and furthers the objectives of Section 6(b)(5) 8 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and in general, to protect investors and the public interest. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing 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 As required under Rule 19b-4(f)(6)(iii) under the Act, 11 the Exchange provided the Commission with 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 the filing of the proposed rule change. 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). 11 17 CFR 240.19b-4(f)(6)(iii). A proposed rule change filed under Rule 19b-4(f)(6) normally may not become operative prior to 30 days after the date of filing. 12 However, Rule 19b-4(f)(6)(iii) 13 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay and render the proposed rule change to become operative immediately. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The proposed change to the “A+” Tier that is described in this proposed rule change and the deletion of Interpretation .01 to CBOE Rule 8.4 do not raise any new, unique, or substantive issues from those raised in the filing that initially established the “A+” Tier, 14 or the filing that eliminated the inactivity fee. 15 Accordingly, the Commission designates the proposal to become operative immediately. 16 12 *Id.* 13 *Id.* 14 *See supra* note 5. 15 *See supra* note 6. 16 For purposes only of waiving the operative date of this proposal, the Commission has considered the impact of the proposed rule 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-CBOE-2005-79 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-CBOE-2005-79. 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 CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2005-79 and should be submitted on or before November 14, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 17 17 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-5860 Filed 10-21-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52612; File No. SR-CHX-2005-25] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Participant Fees and Credits October 14, 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 16, 2005, the Chicago Stock Exchange, Inc. (“CHX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the CHX. On October 3, 2005, CHX filed Amendment No. 1 to the proposed rule change. 3 On October 12, 2005, CHX filed Amendment No. 2 to the proposed rule change. 4 The CHX has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the CHX under Section 19(b)(3)(A)(ii) of the Act, 5 and Rule 19b-4(f)(2) thereunder, 6 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested parties. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 In Amendment No. 1, the Exchange:
(1)made clarifying changes to the proposed rule text and the purpose section of the filing; and
(2)noted that the proposed rule change is submitted in conjunction with the filing (SR-CHX-2005-23), which established a special allocation process available to the Committee on Specialist Assignment and Evaluation (“CSAE”) in special circumstances involving the allocation of more than 100 stocks at a time. 4 In Amendment No. 2, which superseded Amendment No. 1 in its entirety, the Exchange made a minor change to the proposed rule text and made a corresponding change to the purpose section of the proposed rule change. The effective date of the original proposed rule change is September 16, 2005, the effective date of Amendment No. 1 is October 3, 2005 and the effective date of Amendment No. 2 is October 12, 2005. For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change under Section 19(b)(3)(C) of the Act, the Commission considers the period to commence on October 12, 2005, the date on which the CHX filed Amendment No. 2. *See* 15 U.S.C. 78s(b)(3)(C). 5 15 U.S.C. 78s(b)(3)(A)(ii). 6 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The CHX proposes to amend its Participant Fee Schedule (the “Fee Schedule”) to confirm the assignment fees that apply when the Exchange's CSAE assigns a group of securities to a specialist firm in competition with other specialist firms. Below is the text of the proposed rule change, as amended. Proposed new language is *italicized* ; proposed deletions are in [brackets]. Participant Fees and Credits D. Specialist Assignment Fees Specialist Application Fee No change to text Assignment of Dual Trading System Securities Once the Committee on Specialist Assignment and Evaluation approves a Participant to act as specialist in a security ( *or a group of securities* ), that Participant must pay the following fee: * * * * * * * $1,000 If the security ( *or group of securities* ) was assigned in competition with at least one other Participant and up to one-third of all Participants that trade Dual Trading System Securities $4,000 If the security ( *or group of securities* ) was assigned in competition with more than one-third of all Participants that trade Dual Trading System Securities Assignment of Nasdaq/NM Securities Beginning on September 1, 2004, once the Committee on Specialist Assignment and Evaluation approves a Participant to act as specialist in a security ( *or a group of securities* ), that Participant must pay the following fee: * * * * * * * $1,000 If the security ( *or group of securities* ) was assigned in competition with one other Participant that trades Nasdaq/NM Securities $4,000 If the security ( *or group of securities* ) was assigned in competition with two or more [member firms] *Participants* that trade Nasdaq/NM Securities * * * * * * * 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 CHX included statements concerning the purpose of, and basis for, the proposed rule change, as amended, and discussed any comments it received regarding the proposal, as amended. The text of these statements may be examined at the places specified in Item IV below. The CHX 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's CSAE is responsible for assigning securities to be traded by specialist firms. 7 Although the CSAE ordinarily assigns securities on a one-by-one basis, the CSAE could choose to assign securities in groups consisting of more than one security. 7 *See* Article XXX, Rule 1. Through this submission, the Exchange proposes to modify its Fee Schedule to confirm the assignment fees that apply when the CSAE assigns a group of securities to a specialist firm in competition with other specialist firms. Specifically, the Exchange proposes to charge, for the assignment of a group of listed securities:
(a)a fee of $1,000 per group, if the group was assigned in competition with at least one other participant and up to one-third of all participants trading Dual Trading System Securities; and
(b)a fee of $4,000 per group, if the group was assigned in competition with more than one-third of the participants trading Dual Trading System Securities. 8 Similarly, the Exchange proposes to charge, for the assignment of a group of Nasdaq/NM securities:
(x)a fee of $1,000 per group if the group of securities was assigned in competition with at least one other participant that trades Nasdaq/NM securities; and
(y)a fee of $4,000 per group, if the group of securities was assigned in competition with two or more participants that trades Nasdaq/NM securities. 8 “Dual Trading System Securities” are securities listed on the New York Stock Exchange, the American Stock Exchange or any other stock exchange that are also listed or traded on the Chicago Stock Exchange. These changes to the Fee Schedule are submitted in connection with SR-CHX-2005-23, which proposed a change to Rule 1 of CHX Article XXX that established an allocation process available to the CSAE, in special circumstances involving the allocation of more than 100 stocks at a time. 9 If the CSAE determines that it will allocate a large number of stocks by posting groups of stocks at the beginning of the application and assignment process, then these changes to the Fee Schedule would govern the applicable assignment fees. 10 9 The Commission notes that the Exchange uses the terms “security(ies), stock(s) and issue(s)” interchangeably. *See* Securities Exchange Act Release No. 52379 (September 2, 2005), 70 FR 53825 (September 12, 2005). 10 According to the Exchange, assignment fees are assessed upon permanent assignment of the subject issues. The Exchange represents that the fees associated with the assignment of securities in competition would be the same for a single security and for a group of securities. The Exchange believes that these charges are appropriate because, among other things, the Exchange's work associated with the assignment of securities in competition is not measurably different based on the number of securities that are being assigned at a particular time. In each instance, Exchange staff gathers data relating to each applicant's demonstrated ability, experience and financial responsibility and the CSAE meets to review the data, to hear presentations from applicants and to determine the appropriate assignment decision. 2. Statutory Basis The Exchange believes that the proposed rule change, as amended, is consistent with Section 6(b)(4) of the Act 11 in that it provides for the equitable allocation of reasonable dues, fees and other charges among CHX's members. 11 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, as amended, will impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change, as amended, has been designated as a fee change pursuant to Section 19(b)(3)(A) of the Act 12 and Rule 19b-4 thereunder 13 because it establishes or changes a due, fee or other charge imposed by the Exchange. Accordingly, the proposal will take effect upon filing with the Commission. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 14 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b-4(f)(2). 14 *See supra* note 4. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, 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-CHX-2005-25 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-CHX-2005-25. 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 CHX. 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-CHX-2005-25 and should be submitted on or before November 14, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-5858 Filed 10-21-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52574; File No. SR-NASD-2005-099] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to Amendments to the Restated Certificate of Incorporation of the Nasdaq Stock Market, Inc. October 7, 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 August 19, 2005, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, the Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Nasdaq. On September 30, 2005, Nasdaq submitted Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice, as amended, 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 Amendment No. 1 made minor edits to the originally filed proposed rule change and clarified the proposed definition of “Broker Affiliate” set forth in Paragraph C.6. of Nasdaq's Restated Certificate of Incorporation to include a broker or dealer or an affiliate thereof. In Amendment No. 1, Nasdaq also reflected approval of the proposal by the Board of Directors of Nasdaq and by its stockholders. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to amend its Restated Certificate of Incorporation (“Certificate”). Below is the text of the proposed rule change, as amended. Proposed new language is *italicized* ; proposed deletions are in [brackets]. RESTATED CERTIFICATE OF INCORPORATION OF THE NASDAQ STOCK MARKET, INC. ARTICLE FOURTH A. No change. B. No change. C. 1.
(a)Except as may otherwise be provided in this Restated Certificate of Incorporation (including any Preferred Stock Designation) or by applicable law, each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote, and no holder of any series of Preferred Stock, as such, shall be entitled to any voting powers in respect thereof.
(b)Except as may otherwise be provided in this Restated Certificate of Incorporation or by applicable law, the holders of the *3.75% Series A Convertible Notes due 2012 (as may be amended, supplemented or otherwise modified from time to time, the “Series A Notes”) and the 3.75% Series B Convertible Notes due 2012 (as may be amended, supplemented or otherwise modified from time to time, the “Series B Notes” and, together with the Series A Notes, the “Notes”)* [4.0% Convertible Subordinated Notes due 2006 (the “Notes”)] which may be issued from time to time by Nasdaq shall be entitled to vote on all matters submitted to a vote of the stockholders of Nasdaq, voting together with the holders of the Common Stock (and of any other shares of capital stock of Nasdaq entitled to vote at a meeting of stockholders) as one class. Each principal amount of Notes shall be entitled to a number of votes equal to the number of votes represented by the Common Stock of Nasdaq that could then be acquired upon conversion of such principal amount of Notes into Common Stock, subject to adjustments as provided in the Notes *and the Indenture dated as of April 22, 2005 between Nasdaq and Law Debenture Trust Company of New York, as trustee, as such Indenture may be amended, supplemented or otherwise modified from time to time.* Holders of the Notes shall be deemed to be stockholders of Nasdaq, and the Notes shall be deemed to be shares of stock, solely for the purpose of any provision of the General Corporation Law of the State of Delaware or this Restated Certificate of Incorporation that requires the vote of stockholders as a prerequisite to any corporate action. 2. Notwithstanding any other provision of this Restated Certificate of Incorporation, but subject to subparagraph 6 of this paragraph C. of this Article Fourth, in no event shall
(i)any record owner of any outstanding Common Stock or Preferred Stock which is beneficially owned, directly or indirectly, as of any record date for the determination of stockholders and/or holders of Notes entitled to vote on any matter, or
(ii)any holder of any Notes which are beneficially owned, directly or indirectly, as of any record date for the determination of stockholders and/or holders of Notes entitled to vote on any matter, by a person (other than an Exempt Person) who beneficially owns shares of Common Stock, Preferred Stock and/or Notes [(”Excess Shares and/or Notes”)] in excess of five percent (5%) of the then-outstanding shares of stock generally entitled to vote as of the record date in respect of such matter (“ *Excess Shares and/or Notes* ”), be entitled or permitted to vote any Excess Shares and/or Notes on such matter. For all purposes hereof, any calculation of the number of shares of stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of stock of which any person is the beneficial owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as in effect on the date of filing this Restated Certificate of Incorporation. 3. The following definitions shall apply to this paragraph C. of this Article Fourth:
(a)“Affiliate” shall have the meaning ascribed to that term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of filing this Restated Certificate of Incorporation.
(b)A person shall be deemed the “beneficial owner” of, shall be deemed to have “beneficial ownership” of and shall be deemed to “beneficially own” any securities:
(i)Which such person or any of such person's Affiliates is deemed to beneficially own, directly or indirectly, within the meaning of Rule l3d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of the filing of this Restated Certificate of Incorporation;
(ii)Which such person or any of such person's Affiliates has
(A)the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the beneficial owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person's Affiliates until such tendered securities are accepted for purchase; or
(B)the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the beneficial owner of, or to beneficially own, any security by reason of such agreement, arrangement or understanding if the agreement, arrangement or understanding to vote such security
(1)arises solely from a revocable proxy or consent given to such person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and
(2)is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii)Which are beneficially owned, directly or indirectly, by any other person and with respect to which such person or any of such person's Affiliates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to (b)(ii)(B) above) or disposing of such securities; provided, however, that
(A)no person who is an officer, director or employee of an Exempt Person shall be deemed, solely by reason of such person's status or authority as such, to be the “beneficial owner” of, to have “beneficial ownership” of or to “beneficially own” any securities that are “beneficially owned” (as defined herein), including, without limitation, in a fiduciary capacity, by an Exempt Person or by any other such officer, director or employee of an Exempt Person, and
(B)the Voting Trustee, as defined in the Voting Trust Agreement by and among Nasdaq, the National Association of Securities Dealers, Inc., a Delaware corporation (the “NASD”), and The Bank of New York, a New York banking corporation, as such may be amended from time to time (the “Voting Trust Agreement”), shall not be deemed, solely by reason of such person's status or authority as such, to be the “beneficial owner” of, to have “beneficial ownership” of or to “beneficially own” any securities that are governed by and held in accordance with the Voting Trust Agreement.
(c)A “person” shall mean any individual, firm, corporation, partnership, limited liability company or other entity.
(d)“Exempt Person” shall mean Nasdaq or any Subsidiary of Nasdaq, in each case including, without limitation, in its fiduciary capacity, or any employee benefit plan of Nasdaq or of any Subsidiary of Nasdaq, or any entity or trustee holding stock for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee benefits for employees of Nasdaq or of any Subsidiary of Nasdaq.
(e)“Subsidiary” of any person shall mean any corporation or other entity of which securities or other ownership interests having ordinary voting power sufficient to elect a majority of the board of directors or other persons performing similar functions are beneficially owned, directly or indirectly, by such person, and any corporation or other entity that is otherwise controlled by such person.
(f)The Board shall have the power to construe and apply the provisions of this paragraph C. of this Article Fourth and to make all determinations necessary or desirable to implement such provisions, including, but not limited to, matters with respect to
(1)the number of shares of stock beneficially owned by any person,
(2)the number of Notes beneficially owned by any person,
(3)whether a person is an Affiliate of another,
(4)whether a person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of beneficial ownership,
(5)the application of any other definition or operative provision hereof to the given facts, or
(6)any other matter relating to the applicability or effect of this paragraph C. of this Article Fourth. 4. The Board shall have the right to demand that any person who is reasonably believed to hold of record or beneficially own Excess Shares and/or Notes supply Nasdaq with complete information as to
(a)the record owner(s) of all shares and/or Notes beneficially owned by such person who is reasonably believed to own Excess Shares and/or Notes, and
(b)any other factual matter relating to the applicability or effect of this paragraph C. of this Article Fourth as may reasonably be requested of such person. 5. Any constructions, applications, or determinations made by the Board, pursuant to this paragraph C. of this Article Fourth, in good faith and on the basis of such information and assistance as was then reasonably available for such purpose, shall be conclusive and binding upon Nasdaq, its stockholders and the holders of the Notes. 6. Notwithstanding anything herein to the contrary, subparagraph 2 of this paragraph C. of this Article Fourth shall not be applicable to any Excess Shares and/or Notes beneficially owned by
(a)the NASD or its Affiliates until such time as the NASD beneficially owns five percent (5%) or less of the outstanding shares of stock and/or Notes entitled to vote on the election of a majority of directors at such time,
(b)any other person as may be approved for such exemption by the Board prior to the time such person beneficially owns more than five percent (5%) of the outstanding shares of stock and/or Notes entitled to vote on the election of a majority of directors at such time or
(c)Hellman & Friedman Capital Partners IV, L.P., H&F International Partners IV-A, L.P., H & F International Partners IV-B, L.P., [and] H&F Executive Fund, IV L.P.; * Silver Lake Partners II TSA, L.P., Silver Lake Technology Investors II, L.L.C., Silver Lake Partners TSA, L.P., and Silver Lake Investors, L.P. or their respective affiliated investment funds that are:
(i)Under common management and control,
(ii)comprised of members or partners with the same ultimate ownership, and
(iii)subject to terms and conditions that are substantially identical in all material respects, * if the Board has approved an exemption for any other person pursuant to section 6(b) of this paragraph C. of this Article Fourth (other than an exemption granted in connection with the establishment of a strategic alliance with another exchange or similar market) *provided that in no event shall the exemption contained in Section 6(c) cause a registered broker or dealer or an Affiliate thereof (a “Broker Affiliate,” provided that, a Broker Affiliate shall not include an entity that either owns ten percent or less of the equity of a broker or dealer, or for which the broker or dealer accounts for one percent or less of the gross revenues received by the consolidated entity) to receive an exemption for a greater percentage of voting securities than has been granted to another Broker Affiliate by the Board.* The Board, however, may not approve an exemption under section 6(b):
(i)For a *Broker Affiliate* [registered broker or dealer or an Affiliate thereof (provided that, for these purposes, an Affiliate shall not be deemed to include an entity that either owns ten percent or less of the equity of a broker or dealer, or the broker or dealer accounts for one percent or less of the gross revenues received by the consolidated entity);] or
(ii)an individual or entity that is subject to a statutory disqualification under section 3(a)(39) of the Exchange Act. The Board may approve an exemption for any other stockholder or holder of Notes if the Board determines that granting such exemption would
(A)not reasonably be expected to diminish the quality of, or public confidence in, The Nasdaq Stock Market or the other operations of Nasdaq, on the ability to prevent fraudulent and manipulative acts and practices and on investors and the public, and
(B)promote just and equitable principles of trade, foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to and facilitating transactions in securities or assist in the removal of impediments to or perfection of the mechanisms for a free and open market and a national market system. 7. In the event any provision (or portion thereof) of this paragraph C. of this Article Fourth shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this paragraph C. of this Article Fourth shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision (or portion hereof) had been stricken herefrom or otherwise rendered inapplicable, it being the intent of Nasdaq, its stockholders and the holders of the Notes that each such remaining provision (or portion thereof) of this paragraph C. of this Article Fourth remains, to the fullest extent permitted by law, applicable and enforceable as to all stockholders and all holders of Notes, including stockholders and holders of Notes that beneficially own Excess Shares and/or Notes, notwithstanding any such finding. 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, as amended, 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 states that the purpose of the proposed rule change is to amend the Certificate to afford the holders of 3.75% Series A Convertible Notes due October 2012 (“Series A Notes”) and the 3.75% Series B Convertible Notes due 2012 (“Series B Notes” and, collectively with the Series A Notes, the “Notes”) the right to vote with Nasdaq stockholders. The Series A Notes and the Series B Notes were issued in connection with Nasdaq's entry into a definitive agreement and plan of merger (“Merger Agreement”) with Instinet Group Incorporated (“Instinet”), under which Nasdaq will acquire all outstanding shares of Instinet for an aggregate purchase price of approximately $1.878 billion in cash and Instinet will merge into a wholly owned subsidiary of Nasdaq (“Merger”). The purchase price is comprised of approximately $934.5 million from Nasdaq, approximately $207.5 million from Iceland Acquisition Corp., an affiliate of Silver Lake Partners II, L.P. (“SLP”), a private equity fund, pursuant to the sale of Instinet's institutional brokerage business, and the balance from Instinet's available cash, including approximately $174 million from the sale of Instinet's Lynch, Jones & Ryan, Inc. subsidiary (“LJR”). As a result of the Merger, Instinet would become a wholly owned subsidiary of Nasdaq. Nasdaq states that completion of the Merger is subject to Instinet's sale of LJR and customary closing conditions, including regulatory approvals, including approval of the Merger by the Commission and approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). Nasdaq expects the Merger to be completed during the fourth quarter of 2005 or the first quarter of 2006. Nasdaq concurrently entered into a definitive agreement (“Transaction Agreement”) to sell Instinet's institutional brokerage business to Iceland Acquisition Corp., an affiliate of SLP, immediately upon the closing of the Merger for a purchase price of $207.5 million, subject to certain adjustments. The proposed sale is subject to terms and conditions set forth in the Transaction Agreement. According to Nasdaq, these include, among other things, the closing of the Merger and closing conditions that are similar to the closing conditions contained in the Merger Agreement, including approval under the HSR Act and the obtaining of other required regulatory approvals with respect to the sale of the institutional brokerage business to Iceland Acquisition Corp. According to Nasdaq, on April 22, 2005, it entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with Norway Acquisition SPV, LLC (“Norway SPV”) providing for the sale by Nasdaq to Norway SPV of $205 million aggregate principal amount of the Series A Notes and warrants (“Series A Warrants”) to purchase 2,209,052 shares of Nasdaq's common stock (“Common Stock”) at $14.50 per share. In addition, the Series A Notes will be convertible into Common Stock, subject to certain adjustments and conditions, at a purchase price of $14.50 per share, which would equal 14,137,931 shares. The Series A Notes and the Series A Warrants purchased by Norway SPV are indirectly owned by Hellman & Friedman Capital Partners IV, L.P., H&F International Partners IV-A, L.P., H&F International Partners IV-B, L.P., and H&F Executive Fund IV, L.P. (collectively, the “H&F Entities”) and Silver Lake Partners II TSA, L.P., Silver Lake Technology Investors II, L.L.C., Silver Lake Partners TSA, L.P., and Silver Lake Investors, L.P. (collectively, the “SLP Entities”) and Integral Capital Partners VI, L.P. and VAB Investors, LLC, (collectively with the SLP Entities, the “SLP Investors”). Nasdaq will receive proceeds of $205.0 million from the sale of the Series A Notes and Series A Warrants, less fees and other expenses. On April 22, 2005, Nasdaq also entered into a Note Amendment Agreement (“Note Amendment Agreement”) with the H&F Entities providing for the exchange by Nasdaq of its $240 million aggregate principal amount of 4.0% Convertible Subordinated Notes due 2006 (“Old Notes”) for $240 million aggregate principal amount of the Series B Notes and warrants (“Series B Warrants”) to purchase 2,753,448 shares of Common Stock at $14.50 per share. The Series B Notes will be convertible into Common Stock, subject to certain adjustments and closing conditions, at a purchase price of $14.50 per share, which would equal 16,551,724 shares. The Old Notes had been convertible at any time during a five-year period into 12,000,000 shares of Nasdaq common stock at a conversion price of $20 per share. On April 22, 2005, Nasdaq also entered into an Indenture (“Indenture”) with Law Debenture Trust Company of New York, as trustee, governing the terms of the Notes. Nasdaq states that the Notes are senior unsecured obligations of Nasdaq, rank pari passu in right of payment with all existing and any future senior unsecured indebtedness of Nasdaq, and are senior in right of payment to any future subordinated indebtedness of Nasdaq. Under the terms of the Indenture, subject to certain exceptions, Nasdaq will be required to redeem the Series A Notes and Series A Warrants if
(i)the Merger Agreement is terminated or
(ii)the Merger has not closed by April 22, 2006, but in no event earlier than October 24, 2005. The aggregate redemption price for the Series A Notes and Series A Warrants will be $205.0 million plus any accrued interest on the Series A Notes. Upon the mandatory redemption of the Series A Notes,
(i)the Indenture and the Series B Notes will automatically be deemed to be amended to restate, with limited exceptions, the terms of the Old Notes and
(ii)the Series B Warrants will be terminated. Article Fourth *Paragraph C.1.* Nasdaq proposes to amend this paragraph of the Certificate to provide that holders of the Notes would enjoy the same rights that are currently granted to holders of the Old Notes, which are being retired. Specifically, Nasdaq states that holders of the Notes would be entitled to vote on all matters submitted to a vote of the stockholders of Nasdaq, voting together with the holders of the Common Stock (and of any other shares of capital stock of Nasdaq entitled to vote at a meeting of stockholders) as one class. Each holder of the Notes would be entitled to a number of votes equal to the number of shares of common stock such holder would obtain upon conversion of the principal amount of the Notes held by such person, subject to adjustments as provided in the Notes and the Indenture, dated as of April 22, 2005, between Nasdaq and Law Debenture Trust Company of New York, as trustee, as such Indenture may be amended, supplemented, or otherwise modified from time to time. 4 The amendment would also provide that holders of the Notes shall be deemed to be stockholders and the Notes shall be deemed to be shares of stock solely for the purposes of provisions of the Delaware General Corporation Law and the Certificate that require the vote of stockholders as a prerequisite to corporate action. 4 The conversion rate of the Notes may be adjusted, for example, in the event of a distribution of Nasdaq common stock as a dividend, and in the event of a stock split, reverse split or share combination. *See* Indenture Agreement, Paragraph 15.05, attached as Exhibit 4.3 to Nasdaq's Form 8-K dated April 28, 2005. *Paragraph C.2.* By virtue of the amendments to Paragraph C.1. set forth above, the current provision of the Certificate that imposes restrictions on stockholders voting shares and/or Old Notes in excess of 5% of outstanding stock and Old Notes would impose the same restrictions on holders of shares and the Series A Notes and Series B Notes. Any person who beneficially owns shares of common stock and/or Notes in excess of 5% of the then-outstanding shares of common stock (“Excess Shares and/or Notes”) would not be permitted to vote such Excess Shares and/or Notes. As is true under the current Certificate, the calculation of the number of shares of common stock outstanding at any particular time would be made in accordance with the last sentence of SEC Rule 13d-3(d)(1)(i). 5 As a result, shares of common stock that may be acquired by a holder of the Notes through conversion would be deemed to be outstanding for purposes of calculating the voting power owned by such holder. 5 17 CFR 240.13d-3(d)(1)(i). *Paragraph C.6.* Currently, this paragraph provides that the 5% voting limitation does not apply to
(1)the NASD or its affiliates until such time as the NASD beneficially owns 5% or less of Nasdaq's outstanding common stock, or
(2)any other person that the Nasdaq Board of Directors may exempt prior to the time that such person beneficially owns more than 5% of the outstanding shares of common stock. The paragraph also provides that the H&F Entities will be exempted from the 5% voting limitation if the Nasdaq Board of Directors approves an exemption from the 5% voting limitation for any other person (other than an exemption granted in connection with the establishment of a strategic alliance with another exchange or similar market). This exemption would not apply to any other person to whom the H&F Entities might transfer Notes and/or common stock with the exception of affiliated investment funds under common management and control. 6 The paragraph also provides that the Board may not approve an exemption from the 5% limit for a registered broker or dealer or an affiliate thereof 7 or a person that is subject to a statutory disqualification under section 3(a)(39) of the Act. 8 In addition, before granting an exemption, the Nasdaq Board must make certain findings with respect to the effect of an exemption on enumerated aspects of Nasdaq's regulatory obligations. 6 Nasdaq states that the Amended and Restated Limited Partnership or Limited Liability Company Agreement (each, an “Agreement”) of each H&F Entity and each SLP Entity provides for the establishment of “Alternative Investment Structures” or “Alternative Investment Vehicles” for legal, tax, regulatory or other reasons deemed by the General Partner or Manager, as applicable, to be in the best interests of the partnership or company, as applicable. According to Nasdaq, under the Agreements, such alternative structures are required to be substantially identical in all material respects to the funds themselves ( *i.e.* , common management and control, common ultimate membership, and substantially identical terms and conditions). Nasdaq states that, in other words, the alternative investment structures or vehicles would have limited partners or members of the same ultimate ownership, including those that are registered broker/dealers, and the partners/members would have the same ultimate interest in portfolio investments in registered broker/dealers. Nasdaq states that, as such, a transfer of Notes or Common Stock between an H&F Entity or an SLP Entity and an alternative investment structure or vehicle would have no meaningful effect in the event the Nasdaq Board grants a waiver under Article Fourth, paragraph C.6. 7 Nasdaq states that a small number of the limited partners of the H&F Entities are registered broker/dealers or affiliates of registered broker/dealers (“H&F Broker/Dealer investors”). The Certificate provides that Nasdaq may not exempt a registered broker/dealer or an affiliate thereof from the 5% voting limitation. The Certificate defines “affiliate” with reference to SEC Rule 12b-2, 17 CFR 240.12b-2, which in turn defines an “affiliate” of a specified person as “a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.” Nasdaq states that the interests of the H&F Broker/Dealer Investors in the H&F Entities are minimal. Moreover, according to Nasdaq, the limited partnership agreements that govern the H&F Entities provide that the limited partners shall take no part in the control or management of the business or affairs of the limited partnership, nor shall they have any authority to act for or on behalf of the limited partnership, nor shall they have any authority to act for or on behalf of the limited partnership. 8 15 U.S.C. 78c(a)(39). The proposed rule amendment would add conforming references to the SLP Entities and would provide that the SLP Entities, along with the H&F Entities, would be exempted from the 5% voting limitation if the Nasdaq Board approves an exemption from the 5% voting limitation for any other person (other than an exemption granted in connection with the establishment of a strategic alliance with another exchange or similar market). 9 Nasdaq states that this exemption would not apply to any other person to whom the SLP Entities might transfer Notes and/or common stock, with the exception of affiliated investment funds under common management and control. 10 Nasdaq states that, in the event that the Board determines to grant an exemption from the 5% voting restriction under subparagraph
(b)of paragraph 6, such exemption shall not trigger an exemption under subparagraph
(c)for the benefit of a broker/dealer. Finally, Nasdaq states that the proposed amendment is designed to ensure that, if in the future the Board raises the voting restriction above 5% for any Broker Affiliate, the H&F Entities and the SLP Entities would automatically receive the same percentage voting rights or the highest percentage voting rights to which their Notes and shares held entitled them at the time. 11 9 Nasdaq states that, under the terms of the Transaction Agreement, SLP will acquire the institutional brokerage business (“VAB”) of Instinet, a registered broker/dealer. According to Nasdaq, during the time that SLP continue to own the VAB, the SLP Entities would be deemed to be affiliates of the VAB. Nasdaq states that, in the unlikely event that the Nasdaq Board were considering granting a waiver under Article Fourth, C.6.b, of the Certificate, the Board would be required to consider that such action would trigger an exemption under Article Fourth, C.6.c to the benefit of SLP that would be deemed inconsistent with the provision of the Certificate barring an affiliate of a registered broker or dealer from voting Excess Shares and/or Notes. Nasdaq notes that, in connection with its application for registration as a national securities exchange, Nasdaq filed
(i)an amendment to the By-Laws stating that a resolution of the Nasdaq Board to approve an exemption for any person from the five percent voting limitation shall not be permitted to become effective until such resolution has been filed with and approved by the Commission under section 19 of the Act, and
(ii)a rule to provide that no member of the Nasdaq exchange or person associated with such a member may beneficially own more than 20% of the outstanding shares of Nasdaq's common stock or Notes. *See* Securities Exchange Act Release No. 52559 (October 4, 2005). In addition, Nasdaq states that a small number of the limited partners of the SLP Entities are registered broker/dealers or affiliates of registered broker/dealers (“SLP Broker/Dealer Investors”). According to Nasdaq, the interests of the SLP Broker/Dealer Investors in the SLP Entities are minimal. Moreover, Nasdaq states that the limited partnership agreements that govern the SLP Entities provide that the limited partners shall take no part in the control or management of the business or affairs of the limited partnership, nor shall they have any authority to act for or on behalf of the limited partnership 10 *See supra* note 6. 11 Nasdaq states that the definition of “Broker Affiliate” set forth in paragraph C.6. includes a broker or a dealer or an affiliate thereof. 2. Statutory Basis Nasdaq believes that the proposed rule change, as amended, is consistent with the provisions of sections 15A(b)(2) and
(6)of the Act, 12 which require, among other things, that the it be so organized and have the capacity to be able to carry out the purposes of the Act and to comply and enforce compliance with the provisions of the Act, and that its rules are 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. Nasdaq believes that the changes proposed to the Certificate are consistent with maintaining the 5% voting limitation that is currently contained in the Certificate, which Nasdaq believes serves the public interest by ensuring that certain individuals and entities cannot gain undue influence over the operations of Nasdaq. Nasdaq states that, in its order previously approving the Certificate, the Commission found that this 5% voting limitation and other limitations affecting the control of Nasdaq fulfill the obligations arising under Sections 15A(b)(2) and (6). 13 12 15 U.S.C. 78 *o* -3(b)(2) and (6). 13 *See* Securities Exchange Act Release No. 34-42983 (June 26, 2000), 65 FR 41116 (July 3, 2000) (SR-NASD-00-27). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq 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 No written comments were either solicited or 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 Nasdaq consents, the Commission will:
(A)By order approve such proposed rule change, as amended; or
(B)Institute proceedings to determine whether the proposed rule change, as amended, should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2005-099 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-NASD-2005-099. 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 Nasdaq. 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-2005-099 and should be submitted on or before November 14, 2005. 14 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 J. Lynn Taylor, Assistant Secretary. [FR Doc. E5-5843 Filed 10-21-05; 8:45 am] BILLING CODE 8010-01-P UNITED STATES SENTENCING COMMISSION Sentencing Guidelines for United States Courts AGENCY: United States Sentencing Commission. ACTION: Notice of temporary, emergency amendments to sentencing guidelines, policy statements, and commentary. SUMMARY: Pursuant to
(A)section 105 of the Family Entertainment and Copyright Act of 2005, Pub. L. 109-9 (the “FECA”); and
(B)the United States Parole Commission Extension and Sentencing Commission Authority Act of 2005, Pub. L. 109-76 (pertaining to the directive in section 6703 of the Intelligence Reform and Terrorism Prevention Act of 2004, Pub. L. 108-458), the Commission hereby gives notice of temporary, emergency amendments to the sentencing guidelines, policy statements, and commentary. This notice sets forth the temporary, emergency amendments and the reason for each amendment. DATES: The Commission has specified an effective date of October 24, 2005, for the emergency amendments. FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs Officer, Telephone:
(202)502-4590. SUPPLEMENTARY INFORMATION: The Commission must promulgate temporary, emergency amendments to implement the FECA directives by October 24, 2005, and to implement the directive in United States Parole Commission Extension and Sentencing Commission Authority Act of 2005 by November 27, 2005. The statutory deadlines for the promulgation of the temporary, emergency amendments, in conjunction with the Commission's public meeting schedule (the promulgation of such amendments must occur in a public meeting) and pressing needs of other Commission business, made it impracticable to publish proposed temporary, emergency amendments in the **Federal Register** in order to provide an opportunity for public comment. The Commission therefore had good cause not to publish proposed amendments before their effective date. *See* 5 U.S.C. 553(b), (d)(3). The temporary, emergency amendments set forth in this notice also may be accessed through the Commission's Web site at *http://www.ussc.gov.* Authority: 28 U.S.C. 994(a), (o), (p), (x); section 105 of Pub. L. 109-9; and Pub. L. 109-76. Ricardo H. Hinojosa, Chair. 1. *Amendment:* Section 2B5.3(b) is amended by redesignating subsections (b)(2) through (b)(4) as subsections (b)(3) through (b)(5), respectively; and by inserting after subsection (b)(1) the following: “(2) If the offense involved the display, performance, publication, reproduction, or distribution of a work being prepared for commercial distribution, increase by 2 levels.”. The Commentary to § 2B5.3 captioned “Application Notes” is amended in Note 1 by striking “ ‘Uploading’ ” and all that follows through “the infringing item.” and inserting the following: “ ‘Uploading’ means making an infringing item available on the Internet or a similar electronic bulletin board with the intent to enable other persons to
(A)download or otherwise copy the infringing item; or
(B)have access to the infringing item, including by storing the infringing item in an openly shared file. ‘Uploading’ does not include merely downloading or installing an infringing item on a hard drive on a defendant's personal computer unless the infringing item is placed in an openly shared file. ‘Work being prepared for commercial distribution’ has the meaning given that term in 17 U.S.C. 506(a)(3).”. The Commentary to § 2B5.3 captioned “Application Notes” is amended in Note 2 in subdivision
(A)by inserting after subdivision
(v)the following: “(vi) The offense involves the display, performance, publication, reproduction, or distribution of a work being prepared for commercial distribution. In a case involving such an offense, the ‘retail value of the infringed item’ is the value of that item upon its initial commercial distribution.”; and by inserting after subdivision
(D)the following: “(E) Indeterminate Number of Infringing Items.—In a case in which the court cannot determine the number of infringing items, the court need only make a reasonable estimate of the infringement amount using any relevant information, including financial records.”. The Commentary to § 2B5.3 captioned “Application Notes” is amended by striking Note 3; and by redesignating Notes 4 and 5 as Notes 3 and 4, respectively. Appendix A (Statutory Index) is amended by inserting after the line reference to “18 U.S.C. 2319(A)” the following: “18 U.S.C. 2319B 2B5.3”. *Reason for Amendment:* This proposed amendment implements the directive in section 105 of the Family Entertainment and Copyright Act of 2005, Pub. L. 109-9. The directive, which requires the Commission to promulgate an amendment under emergency amendment authority by October 24, 2005, instructs the Commission to “review and, if appropriate, amend the Federal sentencing guidelines and policy statements applicable to persons convicted of intellectual property rights crimes * * *” “In carrying out [the directive], the Commission shall—
(1)Take all appropriate measures to ensure that the Federal sentencing guidelines and policy statements * * * are sufficiently stringent to deter, and adequately reflect the nature of, intellectual property rights crimes;
(2)Determine whether to provide a sentencing enhancement for those convicted of the offenses [involving intellectual property rights], if the conduct involves the display, performance, publication, reproduction, or distribution of a copyrighted work before it has been authorized by the copyright owner, whether in the media format used by the infringing party or in any other media format;
(3)Determine whether the scope of ‘uploading’ set forth in application note 3 of section 2B5.3 of the Federal sentencing guidelines is adequate to address the loss attributable to people who, without authorization, broadly distribute copyrighted works over the Internet; and
(4)Determine whether the sentencing guideline and policy statements applicable to the offenses [involving intellectual property rights] adequately reflect any harm to victims from copyright infringement if law enforcement authorities cannot determine how many times copyrighted material has been reproduced or distributed.” Pre-Release Works The proposed amendment provides a separate two-level enhancement if the offense involved a pre-release work. The enhancement and the corresponding definition use language directly from 17 U.S.C. 506(a) (criminal infringement). The amendment adds language to Application Note 2 that explains that in cases involving pre-release works, the infringement amount should be determined by using the retail value of the infringed item, rather than any premium price attributed to the infringing item because of its pre-release status. The proposed amendment addresses concerns that distribution of an item before it is legally available to the consumer is more serious conduct than distribution of other infringing items and involves a harm not addressed by the current guideline. Uploading The concern underlying the uploading directive pertains to offenses in which the copyrighted work is transferred through file sharing. The proposed amendment builds on the current definition of “uploading” to include making an infringing item available on the Internet by storing an infringing item in an openly shared file. The proposed amendment also clarifies that uploading does not include merely downloading or installing infringing items on a hard drive of the defendant's computer unless the infringing item is in an openly shared file. By clarifying the definition of uploading in this manner, Application Note 3, which is a restatement of the uploading definition, is no longer necessary and the proposed amendment deletes the application note from the guideline. Indeterminate Number The proposed amendment addresses the final directive by amending Application Note 2, which sets forth the rules for determining the infringement amount. The proposed note provides that the court may make a reasonable estimate of the infringement amount using any relevant information including financial records in cases in which the court cannot determine the number of infringing items. New Offense Finally, the proposed amendment provides a reference in Appendix A (Statutory Index) for the new offense at 18 U.S.C. 2319B. This offense is proposed to be referenced to § 2B5.3. 2. *Amendment:* Section 2J1.2(b) is amended by striking subdivision
(1)and inserting the following: “(1) (Apply the greater):
(A)If the offense involved causing or threatening to cause physical injury to a person, or property damage, in order to obstruct the administration of justice, increase by 8 levels.
(B)If
(i)defendant was convicted under 18 U.S.C. 1001 or 1505; and
(ii)the statutory maximum term of imprisonment relating to international terrorism or domestic terrorism is applicable, increase by 12 levels.”. The Commentary to § 2J1.2 captioned “Statutory Provisions” is amended by striking “18 U.S.C. 1503” and inserting the following: “18 U.S.C. 1001 when the statutory maximum term of imprisonment relating to international terrorism or domestic terrorism is applicable, 1503”. The Commentary to § 2J1.2 captioned “Application Notes” is amended in Note 1 by inserting after “Definitions.—For purposes of this guideline:” the following: “ ‘Domestic terrorism’ has the meaning given that term in 18 U.S.C. 2331(5). ‘International terrorism’ has the meaning given that term in 18 U.S.C. 2331(1).”. The Commentary to § 2J1.2 captioned “Application Notes” is amended by striking Note 2 and inserting the following: “2. Chapter Three Adjustments.—
(A)Inapplicability of Chapter Three, Part C.—For offenses covered under this section, Chapter Three, Part C (Obstruction) does not apply, unless the defendant obstructed the investigation, prosecution, or sentencing of the obstruction of justice count.
(B)Interaction with Terrorism Adjustment.—If § 3A1.4 (Terrorism) applies, do not apply subsection (b)(1)(B).”. Appendix A (Statutory Index) is amended in the line referenced to “18 U.S.C. 1001” by inserting “, 2J1.2 when the statutory maximum term of imprisonment relating to international terrorism or domestic terrorism is applicable” after 2B1.1”. *Reason for Amendment:* This amendment implements section 6703 of the Intelligence Reform and Prevention Act of 2004 (the “Act”), Pub. L. 108-458. Section 6703(a) provides an enhanced penalty of not more than 8 years of imprisonment for offenses under sections 1001(a) and 1505 of title 18, United States Code, “if the offense involves international or domestic terrorism (as defined in section 2331).” Section 6703(b) requires the Sentencing Commission to amend the sentencing guidelines to provide for “an increased offense level for an offense under sections 1001(a) and 1505 of title 18, United States Code, if the offense involves international or domestic terrorism, as defined in section 2331 of such title.” The Commission is directed under section 3 of the United States Parole Commission Extension and Sentencing Commission Authority Act of 2005, Pub. L. 109-76, to promulgate this amendment as an emergency amendment. First, the amendment references convictions under 18 U.S.C. 1001 to 2J1.2 (Obstruction of Justice) “when the statutory maximum term of imprisonment relating to international or domestic terrorism is applicable.” It also adds a new specific offense characteristic at § 2J1.2(b)(1)(B) providing for a 12 level increase for a defendant convicted under 18 U.S.C. 1001 and 1505 “when the statutory maximum term of imprisonment relating to international or domestic terrorism is applicable.” This 12 level increase is applied in lieu of the current 8 level increase for injury or threats to persons or property. The increase of 12 levels is intended to provide parity with the treatment of federal crimes of terrorism within the limits of the 8 year statutory maximum penalty. It is also provided to ensure a 5 year sentence of imprisonment for offenses that involve international or domestic terrorism. Second, the amendment adds to Application Note 1 definitions for “domestic terrorism” and “international terrorism,” using the meanings given the terms at 18 U.S.C. 2331(5) and (1), respectively. Third, the amendment adds to Application Note 2 an instruction that if § 3A1.4 (Terrorism) applies, do not apply § 2J1.2(b)(1)(B). [FR Doc. 05-21211 Filed 10-21-05; 8:45 am]
Connectionstraces to 15
Traces to 15 documents
CFR
U.S. Code
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Definitions and application§ 78c
- Rule making§ 553
- Duties of the Commission§ 994
- Criminal offenses§ 506
- Criminal infringement of a copyright§ 2319
- Statements or entries generally§ 1001
- Influencing or injuring officer or juror generally§ 1503
- Definitions§ 2331
9 references not yet in our index
- 10 CFR 2
- 17 CFR 240.19
- 17 CFR 240.13
- 17 CFR 240.12
- 15 USC 78
- Pub. L. 109-9
- Pub. L. 109-76
- Pub. L. 108-458
- 18 USC 2319B
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Notices
Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from section 15(a) of the Act and rule 18f-2 under the Act
Cite10 CFR 2
Cite17 CFR 240.19
Cite17 CFR 240.13
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