Notices. Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (“Act”) for an exemption from section 12(d)(1)(F)(ii) of the Act
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BILLING CODE 7590-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. IC-27184; 812-13176] The Integrity Funds, et al.; Notice of Application December 8, 2005. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (“Act”) for an exemption from section 12(d)(1)(F)(ii) of the Act. *Summary of Application:* Applicants request an order to permit certain registered open-end management investment companies relying on section 12(d)(1)(F) of the Act to charge a sales load in excess of 1 1/2 percent. *Applicants:* Integrity Money Management, Inc.
(the “Adviser”), Integrity Funds Distributor, Inc. (the “Distributor”), and The Integrity Funds on behalf of itself and certain series thereof, and future registered open-end management investment companies and series thereof advised by the Adviser or an entity controlling, controlled by, or under common control with the Adviser or for which the Distributor or any entity controlling, controlled by, or under common control with the Distributor serves as principal underwriter (the “Funds”). *Filing Dates:* The application was filed on March 17, 2005 and amended on December 2, 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 January 3, 2006 and should be accompanied by proof of service on the 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: Brenda Sem, c/o Integrity Mutual Funds, Inc., 1 Main Street North, Minot, North Dakota 58703. FOR FURTHER INFORMATION CONTACT: Keith A. Gregory, Senior Counsel, at
(202)551-6815 or Mary Kay Frech, 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 at the Commission's Public Reference Desk, 100 F Street, NE., Washington, DC 20549-0102 (tel.
(202)551-8090). Applicants' Representations 1. The Integrity Funds is a Delaware statutory trust registered with the Commission under the Act as an open-end management investment company. The Integrity Funds currently consists of ten Funds. 1 The Adviser is registered as an investment adviser under the Investment Advisers Act of 1940. The Distributor is the principal underwriter to the Funds and is registered as a broker-dealer under the Securities Exchange Act of 1934. 1 The Integrity All Season Fund (the “All Season Fund”) is the only existing Fund that currently intends to rely on the requested relief. Any existing or future registered open-end management investment company or series thereof that relies on the order in the future will do so only in accordance with the terms and conditions of the application. 2. Certain Funds, including the All Season Fund, intend to invest all or a portion of their assets in the shares of various other registered investment companies that are not part of the same “group of investment companies” as defined in section 12(d)(1)(G)(ii) of the Act as the Funds (“Underlying Funds”) in reliance on section 12(d)(1)(F) of the Act. Each of the Underlying Funds will be registered as a closed-end investment company, an open-end investment company or unit investment trust. The Underlying Funds may also be registered as open-end investment companies or unit investment trusts that have received exemptive relief to, among other things, issue shares of limited redeemability that can be traded on an exchange at negotiated prices (“Exchange-Traded Funds”). The Funds also may invest a portion of their assets directly in equity or fixed income securities, and other investments. Applicants request relief to permit the Funds to charge a sales load in excess of the limit in section 12(d)(1)(F)(ii) of the Act. Applicants' Legal Analysis A. Section 12(d)(1) of the Act 1. Section 12(d)(1)(A) of the Act provides that no registered investment company may acquire securities of another investment company if those securities represent more than 3% of the acquired company's total outstanding voting stock, more than 5% of the acquiring company's total assets, or if the securities, together with the securities of any other acquired investment companies, represent more than 10% of the acquiring company's total assets. Section 12(d)(1)(B) of the Act provides that no registered open-end investment company, its principal underwriter and any broker or dealer may sell securities of the company to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale will cause more than 10% of the acquired company's voting stock to be owned by investment companies. 2. Section 12(d)(1)(F) of the Act provides that section 12(d)(1) shall not apply to the acquisition by a registered investment company of the securities of an investment company if, among other things, the acquiring company and its affiliates immediately after the purchase own no more than 3% of an acquired company's total outstanding stock and the acquiring company does not charge a sales load in excess of 1 1/2 %. Applicants state that the Funds will comply with section 12(d)(1)(F) in all respects except for the sales load limit of 1 1/2 %. 3. Section 12(d)(1)(J) of the Act provides that the Commission may exempt persons or transactions from any provision of section 12(d)(1), if and to the extent that such exemption is consistent with the public interest and the protection of investors. 4. Applicants request an order under section 12(d)(1)(J) exempting them from the sales load limitation in section 12(d)(1)(F)(ii). Applicants have agreed, as a condition to the requested relief, that any sales charges and/or service fees with respect to shares of a Fund will not exceed the limits set forth in Rule 2830 of the NASD Conduct Rules (“NASD Conduct Rules”) applicable to a fund of funds. Applicants believe that it is appropriate to apply the NASD's rule to the proposed arrangement instead of the sales load limitation in section 12(d)(1)(F)(ii) because the proposed limit would cap the aggregate sales charges that may be imposed by a fund of funds. Applicants assert that the NASD's rule more accurately reflects today's regulatory environment with respect to the methods by which investment companies finance sales expenses. Applicants also state that the Funds will incur brokerage commissions in connection with their purchase and sale of shares of closed-end funds or Exchange-Traded Funds. The commissions on such transactions will not differ from those customarily incurred in connection with the purchase and sale of comparable securities. Applicants' Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. The Funds will comply with section 12(d)(1)(F) in all respects except for the sales load limitation of section 12(d)(1)(F)(ii). 2. Any sales charges and/or service fees (as those terms are defined in Rule 2830 of the NASD Conduct Rules) charged with respect to shares of a Fund will not exceed the limits applicable to a fund of funds as set forth in Rule 2830 of the NASD Conduct Rules. 3. No Underlying Fund will acquire securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent that such Underlying Fund
(a)receives securities of another investment company as a dividend or as a result of a plan of reorganization of a company (other than a plan devised for the purpose of evading section 12(d)(1)of the Act); or
(b)acquires (or is deemed to have acquired) securities of another investment company pursuant to exemptive relief from the Commission permitting such Underlying Fund to
(i)acquire securities of one or more affiliated investment companies for short-term cash management purposes; or
(ii)engage in interfund borrowing and lending transactions. 4. Prior to reliance on the requested order, the board of directors or trustees (“Board”) of each Fund, including a majority of the Board who are not “interested persons” (as defined in section 2(a)(19) of the Act) (“Disinterested Directors”), shall find that the advisory fees, if any, charged under the Fund's advisory contract(s) are based on services provided that are in addition to, rather than duplicative of, services provided under any Underlying Fund's advisory contract(s). Such finding, and the basis upon which the finding was made, will be recorded fully in the minute books of the appropriate Fund. In addition, in connection with the approval of any investment advisory contract pursuant to section 15 of the Act subsequent to such initial determination, the Board of each Fund, including a majority of the Disinterested Directors, shall find that the advisory fees, if any, charged under the Fund's advisory contract(s) are based on services provided that are in addition to, rather than duplicative of, services provided pursuant to any Underlying Fund's advisory contract(s). Such finding, and the basis upon which the finding was made, will be recorded fully in the minute books of the appropriate Fund. 5. The Board of each Fund will satisfy fund governance standards as defined in rule 0-1(a)(7) under the Act by the compliance date for the rule. For the Commission, by the Division of Investment Management, under delegated authority. Jonathan G. Katz, Secretary. [FR Doc. E5-7302 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 27183; 812-12935] Rydex ETF Trust, et al.; Notice of Application December 8, 2005. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 12(d)(1)(A) and
(B)and under sections 6(c) and 17(b) of the Act for an exemption from section 17(a) of the Act. Summary of the Application: The order would amend a prior order to permit principal underwriters and brokers and dealers to sell shares of certain registered open-end management investment companies, certain of which operate as exchange-traded funds, to other registered open-end management investment companies that are not part of the same group of investment companies. 1 The order would also amend a condition in another prior order. 2 1 *PADCO Advisors, Inc., et al.* , Investment Company Act Rel. Nos. 24678 (Oct. 5, 2000) (notice) and 24722 (Oct. 31, 2000) (order) (“Original Order”). 2 *Rydex ETF Trust, et al.* , Investment Company Act Rel. Nos. 25948 (Feb. 27, 2003) (notice) and 25970 (Mar. 25, 2003) (order) (“ETF Order”). Applicants: Rydex ETF Trust, Rydex Series Funds, Rydex Dynamic Funds, PADCO Advisors, Inc. (“PADCO”) and PADCO Advisors II, Inc. (“PADCO II”). Filing Dates: The application was filed on February 28, 2003, and amended on February 19, 2004, June 4, 2004 and September 29, 2005. Applicants have agreed to file a final amendment during the notice period, the substance of which is reflected here. 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 January 3, 2006, 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, 9601 Blackwell Road, Suite 500, Rockville, MD 20850. FOR FURTHER INFORMATION CONTACT: Stacy L. Fuller, Branch Chief, and Michael W. Mundt, Senior Special Counsel, at
(202)551-6821 (Office of Investment Company Regulation, Division of Investment Management). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 20549-0102 (tel. 202-551-5850). Applicants' Representations: 1. Rydex Series Funds and Rydex Dynamic Funds (the “Original Trusts”) and Rydex ETF Trust are open-end management investment companies registered under the Act, each of which is comprised of separate series (“Rydex Funds” or “Funds”). PADCO and PADCO II, which do business as Rydex Investments, are Maryland corporations registered as investment advisers under the Investment Advisers Act of 1940 (“Advisers Act”). All Rydex Funds are, and will be, advised by PADCO, PADCO II or an entity that is controlling, controlled by or under common control with PADCO and PADCO II and is registered as an investment adviser under the Advisers Act, and are, and will be, in the same group of investment companies, as defined in section 12(d)(1)(G)(ii) of the Act. 2. The Commission issued the Original Order to the Original Trusts and PADCO upon their application (“Original Application”) to permit registered open-end management investment companies (“Funds of Funds”) that are not part of the same group of investment companies as the Original Trusts to acquire shares of the Rydex Funds beyond the limits of section 12(d)(1)(A) of the Act, and to permit the Original Trusts, and each existing and future registered open-end management investment company that is part of the same group of investment companies as the Original Trusts to sell shares beyond the limits in section 12(d)(1)(B) of the Act. The Commission issued the ETF Order to permit the series of Rydex ETF Trust (“Rydex ETF Funds”) to issue shares of limited redeemability (“Rydex ETF Shares” or “Shares”) that trade in the secondary market at negotiated prices. 3. Applicants request an order amending both the Original Order and the ETF Order. The requested order would amend the Original Order to
(a)permit any principal underwriter of a Rydex Fund and broker or dealer (“Broker”) registered under the Securities Exchange Act of 1934 knowingly to sell shares of Rydex Funds, including Rydex ETF Shares, beyond the limits set forth in section 12(d)(1)(B) to Funds of Funds and
(b)modify certain terms and conditions of the Original Order. In addition, the requested order would amend a condition of the ETF Order in order to render it consistent with the relief from section 12(d)(1) granted by the Original Order as modified by the requested order. 3 3 Applicants state that, except for Brokers and Funds of Funds, all parties that currently intend to rely on the requested order are named as applicants. Any other party that relies on the requested order in the future, including principal underwriters, Brokers and Funds of Funds, will comply with the terms and conditions of the Original Application, as amended by this application. Applicants acknowledge that Funds of Funds may rely on the requested order only to invest in Rydex Funds and not in any other registered investment company. Applicants state that Funds of Funds do not include Rydex Funds. Applicants' Legal Analysis A. Original Order 1. Section 12(d)(1)(B) prohibits any registered open-end investment company, principal underwriter or Broker from knowingly selling any security issued by an open-end investment company (“acquired company”) to another investment company (“acquiring company”) if the sale would cause either the acquiring company to own more than 3% of the acquired company's voting stock or investment companies generally to own more than 10% of the acquired company's voting stock. Applicants state that the Rydex Funds, including Rydex ETF Funds, are permitted under the Original Order to sell their shares to Funds of Funds in excess of the limits of section 12(d)(1)(B). However, applicants state that because Rydex ETF Shares have begun to be listed and traded on a national securities exchange, as defined in section 2(a)(26) of the Act, or on The Nasdaq Stock Market since the Original Order, Brokers are now virtually certain to be involved in sales of Rydex ETF Shares to Funds of Funds, which may require the requested relief. Accordingly, applicants seek to amend the Original Order to permit any principal underwriter and Broker knowingly to sell shares of Rydex Funds to Funds of Funds in excess of the limits prescribed by section 12(d)(1)(B). 2. Applicants also seek to clarify the Original Order in certain respects. First, applicants seek to clarify that a Fund of Funds that intends to rely on the amended order will enter into a participation agreement with the relevant Rydex Fund before exceeding any of the investment limits of section 12(d)(1)(A). Second, applicants seek to amend the Original Order to better address situations where a Fund of Funds employs an investment adviser within the meaning of section 2(a)(20)(A) of the Act (“Fund of Funds Adviser”) and one or more investment advisers within the meaning of section 2(a)(20)(B) of the Act (“Subadvisers”). Applicants state that any investment adviser to a Fund of Funds will be registered, or exempt from registration, under the Advisers Act. 3. Applicants state that their legal analysis is unchanged from that provided in the Original Application. Specifically, applicants state that they will continue to be, and that any principal underwriter and Brokers will be, fully subject to all of the terms and conditions of the Original Order, as amended by the requested order. Applicants posit that the proposed amendments raise no additional regulatory or investor protection concerns that are not addressed by the terms and conditions of the requested order. Applicants, therefore, contend that the previously requested relief, as it would be amended, will be
(a)appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act,
(b)consistent with the public interest and the protection of investors, and
(c)conducted on terms that are reasonable and fair and do not involve overreaching on the part of any person concerned, and consistent with the policy of each registered fund involved and with the purposes of the Act. B. ETF Order 4. Existing condition 2 to the ETF Order provides that the prospectus (“Prospectus”) and the product description (“Product Description”) of each Rydex ETF Fund will disclose that Rydex ETF Shares are issued by a Rydex Fund and that the acquisition of Rydex ETF Shares is subject to the restrictions of section 12(d)(1). In light of the relief requested to permit Funds of Funds to purchase, and the principal underwriter, Brokers and Rydex ETF Funds to sell, Rydex ETF Shares in excess of the limits of sections 12(d)(1)(A) and (B), respectively, applicants seek to replace existing condition 2 with condition 14, as stated below. Condition 14 generally provides that the Funds of Funds will be alerted that they may invest in Rydex ETF Funds in excess of the limits of section 12(d)(1) to the extent that they comply with the terms and conditions of the Original Order, as amended by the requested order, including the requirement that they enter into a participation agreement with the Rydex ETF Fund regarding the terms of the investment. Applicants' Conditions A. Original Order Applicants agree the conditions to the Original Order will be superseded by, and the requested order will be subject to, the following conditions: 1.
(a)The Fund of Funds Adviser,
(b)any person controlling, controlled by, or under common control with the Fund of Funds Adviser, and
(c)any investment company or issuer that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act that is advised or sponsored by the Fund of Funds Adviser, or any person controlling, controlled by, or under common control with the Fund of Funds Adviser (collectively, the “Adviser Group”) will not control (individually or in the aggregate) a Rydex Fund within the meaning of section 2(a)(9) of the Act.
(a)Any Subadviser,
(b)any person controlling, controlled by, or under common control with the Subadviser, and
(c)any investment company or issuer that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act (or portion of such investment company or issuer) advised or sponsored by the Subadviser or any person controlling, controlled by, or under common control with the Subadviser (collectively, the “Subadviser Group”) will not control (individually or in the aggregate) a Rydex Fund within the meaning of section 2(a)(9) of the Act. If, as a result of a decrease in the outstanding voting securities of a Rydex Fund, the Adviser Group or the Subadviser Group, each in the aggregate, becomes a holder of more than 25 percent of the outstanding voting securities of a Rydex Fund, it will vote its shares of the Rydex Fund in the same proportion as the vote of all other holders of the Rydex Fund's shares. This condition does not apply to the Subadviser Group with respect to a Rydex Fund for which the Subadviser or a person controlling, controlled by, or under common control with the Subadviser acts as the investment adviser within the meaning of section 2(a)(20)(A) of the Act. 2. No Fund of Funds or Fund of Funds Adviser, Subadviser, promoter, principal underwriter, or any person controlling, controlled by, or under common control with any of those entities (each, a “Fund of Funds Affiliate”) will cause any existing or potential investment by the Fund of Funds in shares of a Rydex Fund to influence the terms of any services or transactions between the Fund of Funds or a Fund of Funds Affiliate and the Rydex Fund or its investment adviser(s), promoter, principal underwriter, or any person controlling, controlled by, or under common control with any of those entities (each, a “Rydex Fund Affiliate”). 3. The board of directors of a Fund of Funds, including a majority of the disinterested directors, will adopt procedures reasonably designed to assure that the Fund of Funds Adviser and any Subadviser are conducting the investment program of the Fund of Funds without taking into account any consideration received by the Fund of Funds or a Fund of Funds Affiliate from a Rydex Fund or a Rydex Fund Affiliate in connection with any services or transactions. 4. Once an investment by a Fund of Funds in the securities of a Rydex Fund exceeds the limit in section 12(d)(1)(A)(i) of the Act, the board of trustees of the Rydex Fund (“Board of Trustees”), including a majority of the disinterested trustees, will determine that any consideration paid by the Rydex Fund to the Fund of Funds or a Fund of Funds Affiliate in connection with any services or transactions:
(a)is fair and reasonable in relation to the nature and quality of the services and benefits received by the Rydex Fund;
(b)is within the range of consideration that the Rydex Fund would be required to pay to another unaffiliated entity in connection with the same services or transactions; and
(c)does not involve overreaching on the part of any person concerned. This condition does not apply with respect to any services or transactions between a Rydex Fund and its investment adviser(s), or any person controlling, controlled by, or under common control with such investment adviser(s). 5. No Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to a Rydex Fund) will cause a Rydex Fund to purchase a security in an offering of securities during the existence of any underwriting or selling syndicate of which a principal underwriter is an officer, director, member of an advisory board, Fund of Funds Adviser, Subadviser or employee of the Fund of Funds, or a person of which any such officer, director, member of an advisory board, Fund of Funds Adviser, Subadviser or employee is an affiliated person (each, an “Underwriting Affiliate,” except that any person whose relationship to the Rydex Fund is covered by section 10(f) of the Act is not an Underwriting Affiliate). An offering of securities during the existence of an underwriting or selling syndicate of which a principal underwriter is an Underwriting Affiliate is an “Affiliated Underwriting.” 6. The Board of Trustees, including a majority of the disinterested trustees, will adopt procedures reasonably designed to monitor any purchases of securities by a Rydex Fund in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of the Rydex Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board of Trustees will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Fund of Funds in the Rydex Fund. The Board of Trustees will consider, among other things,
(i)whether the purchases were consistent with the investment objectives and policies of the Rydex Fund,
(ii)how the performance of securities purchased in an Affiliated Underwriting compares to the performance of comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index, and
(iii)whether the amount of securities purchased by the Rydex Fund in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board of Trustees shall take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interest of shareholders. 7. Each Rydex Fund shall maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications, and shall maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in Affiliated Underwritings once an investment by a Fund of Funds in the securities of the Rydex Fund exceeds the limit of section 12(d)(1)(A)(i), setting forth from whom the securities were acquired, the identity of the underwriting syndicate's members, the terms of the purchase, and the information or materials upon which the Board of Trustees' determinations were made. 8. Prior to an investment in a Rydex Fund in excess of the limits in section 12(d)(1)(A), each Fund of Funds and the Rydex Fund will execute an agreement stating, without limitation, that their boards of directors and their investment advisers understand the terms and conditions of the order and agree to fulfill their responsibilities under the order. At the time of its investment in a Rydex Fund in excess of the limit in section 12(d)(1)(A)(i), a Fund of Funds will notify the Rydex Fund of the investment. At such time, the Fund of Funds will also transmit to the Rydex Fund a list of the names of each Fund of Funds Affiliate and Underwriting Affiliate. The Fund of Funds will notify the Rydex Fund of any changes to the list of the names as soon as reasonably practicable after a change occurs. The Rydex Fund and the Fund of Funds will maintain and preserve a copy of the order, the agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place. 9. Prior to approving any advisory contract under section 15 of the Act, the board of directors of each Fund of Funds, including a majority of the disinterested directors, will find that the advisory fees charged under such advisory contract are based on services provided that will be in addition to, rather than duplicative of, the services provided under the advisory contract(s) of any Rydex Fund in which the Fund of Funds may invest. These findings and their basis will be recorded fully in the minute books of the appropriate Fund of Funds. 10. A Fund of Funds Adviser will waive fees otherwise payable to it by the Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by a Rydex Fund under rule 12b-1 under the Act) received from a Rydex Fund by the Fund of Funds Adviser, or an affiliated person of the Fund of Funds Adviser, other than any advisory fees paid to the Fund of Funds Adviser or its affiliated person by the Rydex Fund, in connection with the investment by the Fund of Funds in the Rydex Fund. Any Subadviser will waive fees otherwise payable to the Subadviser, directly or indirectly, by the Fund of Funds in an amount at least equal to any compensation received from a Rydex Fund by the Subadviser, or an affiliated person of the Subadviser, other than any advisory fees paid to the Subadviser or its affiliated person by the Rydex Fund, in connection with the investment by the Fund of Funds in the Rydex Fund made at the direction of the Subadviser. In the event that the Subadviser waives fees, the benefit of the waiver will be passed through to the Fund of Funds. 11. Any sales charges and/or service fees charged with respect to shares of the Funds of Funds will not exceed the limits applicable to a fund of funds as set forth in rule 2830 of the NASD Conduct Rules. 12. No Rydex Fund will acquire securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent permitted by section 12(d)(1)(E) of the Act or an exemptive order that allows the Rydex Fund to purchase shares of an affiliated money market fund for short-term cash management purposes. 13. The board of directors of any Fund of Funds and the Board of Trustees of any Rydex Fund will satisfy the fund governance standards as defined in rule 0-1(a)(7) under the Act by the later of
(i)the compliance date for the rule or
(ii)the date on which the Fund of Funds and the Rydex Fund execute a Participation Agreement. B. ETF Order Applicants agree to replace condition 2 of the ETF Order with the following condition: 14. Each Fund's Prospectus and Product Description will clearly disclose that, for purposes of the Act, Shares are issued by a Fund and the acquisition of Shares by investment companies is subject to the restrictions of section 12(d)(1) of the Act, except as permitted by an exemptive order that permits registered investment companies to invest in a Fund beyond the limits of section 12(d)(1), subject to certain terms and conditions, including that the registered investment company enter into an agreement with the Fund regarding the terms of the investment. For the Commission, by the Division of Investment Management, pursuant to delegated authority. J. Lynn Taylor, Assistant Secretary. [FR Doc. E5-7339 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52886; File No. S7-24-89] Joint Industry Plan; Solicitation of Comments and Order Granting Summary Effectiveness To Request To Extend the Operation of the Reporting Plan for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege Basis, Submitted by The Pacific Exchange, Inc., The National Association of Securities Dealers, Inc., The American Stock Exchange LLC, The Boston Stock Exchange, Inc., The Chicago Stock Exchange, Inc., The National Stock Exchange, Inc., and The Philadelphia Stock Exchange, Inc. and To Extend Certain Exemptive Relief December 5, 2005. I. Introduction and Description On December 2, 2005, the Pacific Exchange, Inc. (“PCX”) on behalf of itself and the National Association of Securities Dealers, Inc. (“NASD”), the American Stock Exchange LLC (“Amex”), the Boston Stock Exchange, Inc. (“BSE”), the Chicago Stock Exchange, Inc. (“CHX”), the National Stock Exchange, Inc. (“NSX”), and the Philadelphia Stock Exchange, Inc. (“Phlx”) (hereinafter referred to collectively as “Participants”), 1 as members of the operating committee (“Operating Committee” or “Committee”) of the Plan submitted to the Securities and Exchange Commission (“Commission”) a request to extend the operation of the Plan and also to extend certain exemptive relief as described below. 2 The Nasdaq UTP Plan governs the collection, processing, and dissemination on a consolidated basis of quotation and last sale information for each of its Participants. This consolidated information informs investors of the current quotation and recent trade prices of The Nasdaq Stock Market, Inc. (“Nasdaq”) securities. It enables investors to ascertain from one data source the current prices in all the markets trading Nasdaq securities. The Plan serves as the required transaction reporting plan for its Participants, which is a prerequisite for their trading Nasdaq securities. Currently, the Plan is scheduled to expire on December 21, 2005. 1 PCX is the chair of the operating committee (“Operating Committee” or “Committee”) for the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege Basis (“Nasdaq UTP Plan” or “Plan”) by the Participants. 2 See letter from Bridget M. Farrell, Chairman, OTC/UTP Operating Committee, to Jonathan G. Katz, Secretary, Commission, dated December 2, 2005. This order grants summary effectiveness, pursuant to Rule 608(b)(4) under the Securities Exchange Act of 1934 (“Act”), 3 to the request to extend operation of the Plan, as modified by all changes previously approved, and to the request to extend certain exemptive relief (“Date Extension”). Pursuant to Rule 608(b)(4) under the Act, 4 the Date Extension will be effective upon publication in the **Federal Register** on temporary basis not to exceed 120 days. 3 17 CFR 242.608(b)(4). 4 17 CFR 242.608(b)(4). II. Exemptive Relief While both Nasdaq and the NASD operate under the umbrella of a single Plan Participant, the submission of two distinct best bids and offers (“BBOs”) could be deemed inconsistent with Section VI.C.1 of the Plan. 5 Pursuant to the 13th Amendment of the Plan and Rule 608(a)(3), 6 Nasdaq cannot be granted Plan Participant status until it is registered as a national securities exchange. While Nasdaq submits a distinct BBO from the NASD and until Nasdaq is registered as a national securities exchange, the NASD will submit quotes to the Plan's Securities Information Processor (“SIP”) in a manner different than specified in Section VI.C.1. of the Plan and, thus, in conflict with Commission Rule 608(c). 7 As discussed at length in the notice of the 13th Amendment, 8 the Commission had determined to relieve the potential conflict among the SuperMontage approval order, 9 Rule 608, 10 and the Plan, by granting the NASD an exemption under Rule 608(e) 11 from compliance with Section VI.C.1. of the Plan as required by Rule 608(c) 12 until such time as Nasdaq is registered as a national securities exchange. 13 The Plan Participants have requested an extension of the exemptive relief. 5 Section VI.C.1. of the Plan, as approved by the Operating Committee in the 13th Amendment, states that “[t]he Processor shall disseminate on the UTP Quote Data Feed the best bid and offer information supplied by each Participant, including the NASD....” 6 17 CFR 242.608(a)(3). 7 17 CFR 242.608(c). Commission Rule 608(c) requires a self-regulatory organization participant of national market system plan to comply with the terms of that plan. 8 See Securities Exchange Act Release No. 46139 (June 28, 2001), 67 FR 44888 (July 5, 2002) (“13th Amendment Notice”). 9 See Securities Exchange Act Release No. 43863 (January 19, 2001), 66 FR 8020 (January 26, 2001). 10 17 CFR 242.608. 11 17 CFR 242.608(e). 12 17 CFR 242.608(c). 13 On March 15, 2001, the Nasdaq Stock Market, Inc. (“Nasdaq”) submitted to the Commission a Form 1 application pursuant to Section 6 of the Act, seeking registration as a national securities exchange. The most recent Form 1 and accompanying amendments were published for comment. See Securities Exchange Act Release No. 52559 (October 4, 2005), 70 FR 59097 (October 11, 2005). III. Discussion The Commission finds that extending the operation of the Plan is consistent with the requirements of the Act and the rules and regulations thereunder, and, in particular, Section 12(f) 14 and Section 11A(a)(1) 15 of the Act and Rules 601 and 608 thereunder. 16 Section 11A of the Act directs the Commission to facilitate the development of a national market system for securities, “having due regard for the public interest, the protection of investors, and the maintenance of fair and orderly markets,” and cites as an objective of that system the “fair competition * * * between exchange markets and markets other than exchange markets.” 17 When the Commission first approved the Plan on a pilot basis, it found that the Plan “should enhance market efficiency and fair competition, avoid investor confusion, and facilitate surveillance of concurrent exchange and OTC trading.” 18 The Plan has been in existence since 1990 and Participants have been trading Nasdaq securities under the Plan since 1993. The Commission finds that extending the operation of the Plan through summary effectiveness furthers the goals described above by preventing the lapse of the sole effective transaction reporting plan for Nasdaq securities traded by exchanges pursuant to unlisted trading privileges. The Commission believes that the Plan is currently a critical component of the national market system and that the Plan's expiration would have a serious, detrimental impact on the further development of the national market system. The Commission also finds that it is appropriate to grant summary effectiveness to the request to extend the exemption under Rule 608(e) 19 from compliance with Section VI.C.1. of the Plan as required by Rule 608(c). 20 The Commission believes that the Plan is a critical component of the national market system and that the requested exemptive relief is necessary to assure the effective operation of the Plan. The Commission believes that the requested exemptive relief extension is consistent with the Act, the Rules thereunder, and, specifically, with the objectives set forth in Sections 12(f) and 11A of the Act 21 and Rules 601 and 608 thereunder. 22 14 15 U.S.C. 78l(f). The Commission finds that extending the Plan is consistent with fair and orderly markets, the protection of investors and the public interest, and otherwise in furtherance of the purposes of the Act. The Commission has taken into account the public trading activity in securities traded pursuant to the Plan, the character of the trading, the impact of the trading of such securities on existing markets, and the desirability of removing impediments to, and the progress that has been made toward the development of a national market system. 15 15 U.S.C. 78k-1(a)(1). 16 17 CFR 242.601 and 17 CFR 242.608. 17 15 U.S.C. 78k-1(a). 18 *See* Securities Exchange Act Release No. 28146 (June 26, 1990), 55 FR 27917 (July 6, 1990). 19 17 CFR 242.608(e). 20 17 CFR 242.608(c). 21 15 U.S.C. 781(f) and 15 U.S.C. 78k-1. 22 17 CFR 242.601 and 17 CFR 242.608. IV. Solicitation of Comments The Commission seeks general comments on the extension of the operation of the Plan and the extension of exemptive relief. Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal 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 S7-24-89 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 S7-24-89. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the Office of the Secretary of the Committee, currently located at the Pacific Exchange, Inc. and Archipelago Exchange L.L.C., 100 South Wacker Drive, Suite 2000, Chicago, IL 60606. 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 S7-24-89 and should be submitted on or before January 4, 2006. V. Conclusion *It is therefore ordered* , pursuant to Sections 12(f) and 11A of the Act 23 and paragraph (b)(4) of Rule 608 thereunder, 24 that the operation of the Plan, as modified by all changes previously approved, be, and hereby is, extended, and that certain exemptive relief also be extended, both for a period not to exceed 120 days from the date of publication of this Date Extension in the **Federal Register** . 23 15 U.S.C. 78(f) and 15 U.S.C. 78k-1. 24 17 CFR 242.608(b)(4). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 25 25 17 CFR 200.30-3(a)(27). Jonathan G. Katz, Secretary. [FR Doc. E5-7329 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52901; File No. SR-OPRA-2005-03] Options Price Reporting Authority; Order Approving an Amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information To Provide That Classes of Foreign Currency Options Newly Introduced for Trading on the Philadelphia Stock Exchange Be Treated as Equity/Index Options During a Temporary Period Ending on December 31, 2007 December 6, 2005. On October 21, 2005, the Options Price Reporting Authority (“OPRA”) submitted to the Securities and Exchange Commission (“Commission”), pursuant to Section 11A of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 608 thereunder, 2 an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information (“OPRA Plan”). 3 The proposed OPRA Plan amendment would provide that classes of Foreign Currency Options (“FCO Securities” or “FCO”), newly introduced for trading on the Phlx during a temporary period ending no later than December 31, 2007, will be treated by OPRA as Equity/Index Options (“EIO Securities” or “EIO”) to the extent described in the proposed amendment. Notice of the proposal was published in the **Federal Register** on November 7, 2005. 4 The Commission received no comment letters on the proposed OPRA Plan amendment. This order approves the proposal. 1 15 U.S.C. 78k-1. 2 17 CFR 242.608. 3 The OPRA Plan is a national market system plan approved by the Commission pursuant to Section 11A of the Act and Rule 608 thereunder (formerly Rule 11Aa3-2). *See* Securities Exchange Act Release No. 17638 (March 18, 1981), 22 S.E.C. Docket 484 (March 31, 1981). The full text of the OPRA Plan is available at *http://www.opradata.com* . The OPRA Plan provides for the collection and dissemination of last sale and quotation information on options that are traded on the participant exchanges. The six participants to the OPRA Plan are the American Stock Exchange LLC, the Boston Stock Exchange, Inc., the Chicago Board Options Exchange, Incorporated, the International Securities Exchange, Inc., the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, Inc (“Phlx”). 4 *See* Securities Exchange Act Release No. 52710 (November 1, 2005), 70 FR 67503. FCO Securities under the OPRA Plan are currently traded only on the Phlx, which processes these options on a separate computer platform from its EIO Securities. The FCO platform is a legacy system, which is in the process of being converted to a newer technology. The Phlx has advised OPRA that it expects to have this effort completed no later than December 31, 2007, and that, in the meanwhile, the Phlx does not intend to devote resources to expanding the soon to be replaced legacy platform. Because the legacy FCO platform does not have the capacity to handle additional classes of FCO Securities that may be introduced for trading by the Phlx while the new platform is being developed, the Phlx has proposed to temporarily process any such new classes of FCO Securities on its EIO platform, which does have the capacity to handle them, until the new FCO platform is available. According to OPRA, this would mean that, while these new FCO Securities are on the EIO platform, their quotes and trade reports would be disseminated to OPRA over EIO data lines and not over the FCO data line. In turn, this would require OPRA to treat these quotes and trade reports as if they were EIO Securities. Thus, quotes and trade reports covering these new FCO Securities would be included in OPRA's basic service and not in its FCO service, and revenues and expenses pertaining to market data regarding these new FCO Securities would be allocated to OPRA's basic accounting center and further allocated among the parties to the OPRA Plan as if these products were EIO Securities and not FCO Securities. OPRA represents that all currently traded FCO products would continue to be disseminated on the current FCO data line, and would continue to be treated by OPRA as FCO Securities. Only newly traded FCO Securities would be treated as EIO Securities and only for a temporary period while the Phlx's upgraded FCO platform is being developed. The purpose of the proposed OPRA Plan amendment is to codify in the language of the OPRA Plan the above-described temporary treatment of the Phlx's newly traded FCO Securities. After careful review, the Commission finds that the proposed OPRA Plan amendment is consistent with the requirements of the Act and the rules and regulations thereunder. 5 The Commission finds that the proposed OPRA Plan amendment is consistent with Section 11A of the Act 6 and Rule 608 thereunder 7 in that it is appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system. Specifically, the Commission finds that it is appropriate to clarify in the language of the OPRA Plan the temporary treatment of the Phlx's newly traded FCO Securities as EIO Securities and believes that the proposed language is a reasonable accommodation by OPRA during the time the Phlx is upgrading its FCO platform. 5 In approving this proposed OPRA Plan Amendment, the Commission has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 6 15 U.S.C. 78k-1. 7 17 CFR 242.608. *It is therefore ordered* , pursuant to Section 11A of the Act, 8 and Rule 608 thereunder, 9 that the proposed OPRA Plan amendment (SR-OPRA-2005-03) be, and it hereby is, approved on a temporary basis, until December 31, 2007. 8 15 U.S.C. 78k-1. 9 17 CFR 242.608. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(29). Jonathan G. Katz, Secretary. [FR Doc. E5-7301 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52900; File No. SR-OPRA-2005-04] Options Price Reporting Authority; Order Approving an Amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information (“OPRA Plan”) to Amend Guideline No. 1 of the Best Bid and Offer Guidelines Adopted Pursuant to the OPRA Plan December 6, 2005. On October 31, 2005, the Options Price Reporting Authority (“OPRA”) submitted to the Securities and Exchange Commission (“Commission”), pursuant to section 11A of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 608 thereunder, 2 an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information (“OPRA Plan”). 3 The proposed amendment would amend Guideline No. 1 of the Best Bid and Offer Guidelines (“BBO Guidelines”) previously adopted by OPRA under section II
(o)of the OPRA Plan and make a minor editorial correction to the introductory paragraph of the BBO Guidelines. Notice of the proposal was published in the **Federal Register** on November 7, 2005. 4 The Commission received no comment letters on the proposed OPRA Plan amendment. This order approves the proposal. 1 15 U.S.C. 78k-1. 2 17 CFR 242.608. 3 The OPRA Plan is a national market system plan approved by the Commission pursuant to Section 11A of the Act and Rule 608 thereunder (formerly Rule 11Aa3-2). *See* Securities Exchange Act Release No. 17638 (March 18, 1981), 22 S.E.C. Docket 484 (March 31, 1981). The full text of the OPRA Plan is available at *http://www.opradata.com.* The OPRA Plan provides for the collection and dissemination of last sale and quotation information on options that are traded on the participant exchanges. The six participants to the OPRA Plan are the American Stock Exchange LLC, the Boston Stock Exchange, Inc., the Chicago Board Options Exchange, Incorporated, the International Securities Exchange, Inc., the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, Inc. 4 *See* Securities Exchange Act Release No. 52714 (November 1, 2005), 70 FR 67501. The purpose of the proposed amendment is to amend Guideline No. 1 of OPRA's BBO Guidelines to reduce from five cents to one cent the minimum price differential by which a bid or offer must improve a current quote in order to displace the current quote in the consolidated BBO. In addition, the proposed amendment will revise the introductory paragraph of the BBO Guidelines to correctly refer to the section of the OPRA Plan where the definition of “BBO” is set forth. Under the current rules of the exchanges that are parties to the OPRA Plan, the minimum quoting increment for options is five cents (ten cents for options quoted at $3 or higher), and no exchange currently quotes options in penny increments. In the absence of this amendment, if penny quoting were to be introduced on one or more exchange and if an exchange were to improve the current best quote on another exchange by less than five cents, the original quote and not the improved quote would continue to be disseminated over OPRA's BBO service as the “best” even though a better quote would in fact be available. This amendment would assure that, in the event penny quoting is introduced in the options markets, OPRA's BBO service would disseminate the actual best-priced bids and offers at any given point in time. After careful review, the Commission finds that the proposed OPRA Plan amendment is consistent with the requirements of the Act and the rules and regulations thereunder. 5 The Commission finds that the proposed OPRA Plan amendment is consistent with section 11A of the Act 6 and Rule 608 thereunder 7 in that it is appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of, a national market system. Specifically, the Commission finds that it is reasonable and appropriate to amend the BBO Guidelines at this time to ensure that, should the options exchanges receive Commission approval to quote options in penny increments, OPRA would be able to disseminate the actual best-priced bids and offers through its BBO service. 5 In approving this proposed OPRA Plan Amendment, the Commission has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 6 15 U.S.C. 78k-1. 7 17 CFR 242.608. *It Is therefore ordered* , pursuant to section 11A of the Act, 8 and Rule 608 thereunder, 9 that the proposed OPRA Plan amendment (SR-OPRA-2005-04) be, and it hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 Jonathan G. Katz, Secretary. 8 15 U.S.C. 78k-1. 9 17 CFR 242.608. 10 17 CFR 200.30-3(a)(29). [FR Doc. E5-7304 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52904; File No. SR-Amex-2005-092] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 1 Thereto Relating to the Trading Pursuant to Unlisted Trading Privileges of the iShares S&P Global 100 Fund December 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 September 13, 2005, the American Stock Exchange LLC (“Amex” or the “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. On November 22, 2005, Amex filed Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons and approving the proposal on an accelerated basis. 1 15 U.S.C 78s(b)(1). 2 17 CFR 240.19b-4. 3 In Amendment No. 1, the Exchange clarified and supplemented certain aspects of its proposal. Amendment No. 1 supplements the information provided in various sections, as indicated, of the Exchange's Form 19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Amex proposes to trade shares (the “Fund Shares” or “Shares”) of the iShares S&P Global 100 Fund (ticker symbol: IOO) (the “Global 100 Fund” or “Fund”) pursuant to unlisted trading privileges (“UTP”). The text of the proposed rule change is available on the Exchange's Web site at ( *http://www.amex.com* ) at the principal office of the Exchange, 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 Amex 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 Amex has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade Fund Shares which are Index Fund Shares under Amex Rules 1000A *et seq.* , pursuant to UTP. The Commission previously approved the original listing and trading of the Fund Shares on the New York Stock Exchange, Inc. (“NYSE”). 4 The Fund is a separate series of the iShares Trust (the “Trust”). Standard & Poor's Corporation, a division of The McGraw-Hill Companies, Inc. (“S&P”), calculates and maintains the S&P Global 100 Index (the “Index” or “Underlying Index”) in cooperation with the NYSE. The Underlying Index is governed and maintained by S&P through an Index Committee drawn from professionals at S&P. Additional information about the Funds is also available at *http://www.ishares.com.* 4 *See* Securities Exchange Act Release No. 43658 (December 1, 2000), 65 FR 77408 (December 11, 2000) (SR-NYSE-00-53) (“NYSE Order”). The Fund commenced trading on the NYSE on December 8, 2000. The investment objective of the Fund is to provide investment results that correspond generally to the performance of the Underlying Index. The Underlying Index seeks results that correspond generally to the price and yield performance, before fees and expenses, of 100 multinational, blue chip companies of major importance in the global equity markets as defined by the Index. The Index includes 100 large-cap companies drawn from the S&P 1200 Index, whose businesses are global in nature and derive a substantial portion of their operating income, assets and employees from multiple countries. 5 The Index description, including any changes thereto, may be found on the S&P Global Web site at *http://www.spglobal.com.* 5 A global company is defined as a corporation that has production facilities and/or other fixed assets in at least one nation other than its home country and makes its major management decisions in a global context. The degree to which sales are executed outside the home country is a factor in determining a company's global reach.
(a)Dissemination of Information About the Fund Shares Quotations for and last sale information regarding the Fund is disseminated through the Consolidated Tape Association (“CTA”). The net asset value (“NAV”) of the Fund is calculated each business day, normally at the close of regular trading of the NYSE, and is published in a number of places, including *http://www.iShares.com* and through the facilities of CTA. According to the Funds' prospectus, Investors Bank & Trust Company, the administrator, custodian and transfer agent for the Fund, determines the NAV for the Funds as of the close of regular trading on the NYSE (ordinarily 4 p.m., Eastern time) on each day that the NYSE is open for trading. 6 The Funds and the index calculation methodology for the Index is both described in more detail in the NYSE Order. 6 The Web site for the Trust, *http://www.iShares.com,* makes available a variety of other relevant information about the Shares. In order to provide updated information relating to the Funds for use by investors, professionals, and persons wishing to create or redeem Fund Shares in creation unit aggregation (“Creation Units”), the NYSE disseminates, through the facilities of CTA, the indicative optimized portfolio value (“IOPV”), calculated by Bloomberg, L.P., every fifteen
(15)seconds during the trading hours for the Shares of 9:30 a.m. to 4:15 p.m. ET. As described in the Funds' prospectus, dividends are accrued daily from net investment income and will be declared and paid to beneficial owners of record at least annually by the Funds. The process for payment of dividends and other distributions is described in more detail in the Funds' Prospectus and in the NYSE Order.
(b)Trading Rules The Exchange deems the Fund Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. The trading hours for the Funds on the Exchange will be 9:30 a.m. to 4:15 p.m. Eastern Time (“ET”). Shares trade with a minimum price variation of $0.01. Amex Rule 190 generally precludes certain business relationships between an issuer and the specialist in the issuer's securities. Exceptions in the rule permit specialists in Fund Shares to enter into Creation Unit transactions to facilitate the maintenance of a fair and orderly market. Commentary .04 to Amex Rule 190 specifically applies to Index Fund Shares listed on the Exchange, including the Shares. Commentary .04 states that nothing in Amex Rule 190(a) should be construed to restrict a specialist registered in a security issued by an investment company from purchasing and redeeming the listed security, or securities that can be subdivided or converted into the listed security, from the issuer as appropriate to facilitate the maintenance of a fair and orderly market. Amex Rule 154, Commentary .04(c) provides that stop and stop limit orders to buy or sell a security (other than an option, which is covered by Rule 950(f) and Commentary thereto) the price of which is derivatively priced based upon another security or index of securities, may with the prior approval of a Floor Official, be elected by a quotation, as set forth in Commentary .04(c)(i-v). The Exchange has designated Index Fund Shares, including the Funds Shares, as eligible for this treatment. The rules of the Exchange require its members to deliver a prospectus or product description to investors purchasing Shares of the Fund prior to or concurrently with the confirmation of a transaction in such Shares. The Exchange notes, however, that although Exchange Rule 1000A provides for delivery of written descriptions to customers of Funds that have received an exemption from section 24(d) of the Investment Company Act of 1940 and the Trust has received such an exemption, there is at this time no written description available for these Funds. The Exchange will advise its members and member organizations that delivery of a prospectus in lieu of a written description would satisfy the requirements of Rule 1000A. The Amex will cease trading in the Fund Shares if
(a)the primary market stops trading the Fund Shares because of a regulatory halt akin to a halt based on Amex Rule 117 and/or a halt because dissemination of the indicative optimized portfolio value (“IOPV”) and/or underlying index value has ceased or
(b)the primary market delists the Fund Shares.
(c)Surveillance The Exchange notes that the Underlying Index is broad-based and has components with significant market capitalizations and liquidity. 7 Nevertheless, the Exchange represents that its surveillance procedures are adequate to properly monitor the trading of the Shares. Specifically, the Amex will rely on its existing surveillance procedures governing Index Fund Shares, which have been deemed adequate under the Act. 7 Telephone conversation between Florence Harmon, Senior Special Counsel, Division of Market Regulation, Commission, and Jeffrey Burns, Associate General Counsel, Amex, on December 6, 2005.
(d)Information Circular In connection with the trading of the Shares, the Amex will inform its members in an Information Circular of the special characteristics and risks associated with trading of the Shares, such as, a description of the Fund and associated Shares, how the Fund Shares are created and redeemed in Creation Units ( *e.g.* , that Fund Shares are not individually redeemable), foreign currency risks, foreign securities characteristics, applicable foreign country laws and restrictions, applicable Exchange rules, dissemination information, trading information, the applicability of suitability rules and a discussion of any relief provided by the Commission or the staff from any rules under the Act. Additionally, in the Information Circular, the Exchange will advise its members to deliver a prospectus to investors purchasing Shares of the Fund prior to or concurrently with the confirmation of a transaction in such Shares. The Information Circular will also discuss the information that will be publicly available about the Shares. The Information Circular will also remind members of their suitability obligations, including Amex Rule 411, which impose a duty of the due diligence on its members and member firms to learn the essential facts relating to every customer prior to trading the Shares. 8 8 Telephone conversation between Florence Harmon, Senior Special Counsel, Division of Market Regulation, Commission, and Jeffrey Burns, Associate General Counsel, Amex, on December 6, 2005. 2. Statutory Basis The proposed rule change, as amended, is consistent with section 6(b) of the Act 9 in general and furthers the objectives of section 6(b)(5) 10 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transaction in securities, and, in general to protect investors and the public interest. In addition, the Exchange believes that the proposal is consistent with Rule 12f-5 under the Act 11 because it deems the Fund Shares to be equity securities, thus rendering the Shares subject to the Exchange's existing rules governing the trading of equity securities. 9 15 U.S.C. 78s(b). 10 15 U.S.C. 78s(b)(5). 11 17 CFR 240.12f-5. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change, as amended, 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 with respect to the proposed rule change. III. 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-Amex-2005-092 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-Amex-2005-092. 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 Amex. 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 publicly available. All submissions should refer to File Number SR-Amex-2005-092 and should be submitted on or before January 4, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 12 In particular, the Commission finds that the proposed rule change is consistent with section 6(b)(5) of the Act, 13 which requires that an exchange have rules designed, among other things, 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. 12 In approving this rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 13 15 U.S.C. 78f(b)(5). In addition, the Commission finds that the proposal is consistent with section 12(f) of the Act, 14 which permits an exchange to trade, pursuant to UTP, a security that is listed and registered on another exchange. 15 The Commission notes that it previously approved the listing and trading of the Shares on the NYSE. 16 The Commission also finds that the proposal is consistent with Rule 12f-5 under the Act, 17 which provides that an exchange shall not extend UTP to a security unless the exchange has in effect a rule or rules providing for transactions in the class or type of security to which the exchange extends UTP. Amex rules deem the Shares to be equity securities, thus trading in the Shares will be subject to the Exchange's existing rules governing the trading of equity securities. 18 14 15 U.S.C. 78 *l* (f). 15 Section 12(a) of the Act, 15 U.S.C. 78l(a), generally prohibits a broker-dealer from trading a security on a national securities exchange unless the security is registered on that exchange pursuant to section 12 of the Act. Section 12(f) of the Act excludes from this restriction trading in any security to which an exchange “extends UTP.” When an exchange extends UTP to a security, it allows its members to trade the security as if it were listed and registered on the exchange even though it is not so listed and registered. 16 *See* NYSE Order, *supra* note 4. 17 17 CFR 240.12f-5. 18 The Commission notes that Commentary .04 to existing Amex Rule 190 will permit a specialist in the Shares to create or redeem creation units of these funds to facilitate the maintenance of a fair and orderly market. The Commission previously has found Commentary .04 to Amex Rule 190 to be consistent with the Act. *See* Securities Exchange Act Release No. 36947 (March 8, 1996), 61 FR 10606, 10612 (March 14, 1996) (SR-Amex-95-43). The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, 19 which sets forth Congress's finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotations for and last sale information regarding the Shares are disseminated through the Consolidated Quotation System. Furthermore, the NYSE disseminates through the facilities of CTA an updated IOPV for the Shares at least every 15 seconds from 9:30 a.m. to 4:15 p.m. E.T. 19 15 U.S.C. 78k-1(a)(1)(C)(iii). The Exchange will cease trading in the Shares if
(a)the primary market stops trading the Shares because of a regulatory halt similar to a halt based on Amex Rule 117 and/or a halt because dissemination of the IOPV and/or underlying index value has ceased or
(b)the primary market delists the Shares. In support of this proposed rule change, the Exchange has made the following representations: 1. Amex has appropriate rules to facilitate transactions in this type of security. 2. Amex surveillance procedures are adequate to properly monitor the trading of the Shares on the Exchange. 3. Amex will distribute an Information Circular to its members prior to the commencement of trading of the Shares on the Exchange that explains the terms, characteristics, and risks of trading such shares. 4. Amex will require a member with a customer that purchases the Shares on the Exchange to provide that customer with a product prospectus and will note this prospectus delivery requirement in the Information Circular. 5. Amex will cease trading in the Shares if
(a)the primary market stops trading the Shares because of a regulatory halt similar to a halt based on Amex Rule 117 and/or a halt because dissemination of the IOPV and/or underlying index value has ceased or
(b)the primary market delists the Shares. This approval order is conditioned on Amex's adherence to these representations. The Commission finds good cause for approving this proposed rule change, as amended, before the thirtieth day after the publication of notice thereof in the **Federal Register** . As noted previously, the Commission previously found that the listing and trading of these Shares on the NYSE is consistent with the Act. 20 The Commission presently is not aware of any issue that would cause it to revisit that earlier finding or preclude the trading of these funds on the Exchange pursuant to UTP. Therefore, accelerating approval of this proposed rule change should benefit investors by creating, without undue delay, additional competition in the market for these Shares. 20 *See* NYSE Order, *supra* note 4. V. Conclusion *It Is therefore ordered,* pursuant to section 19(b)(2) of the Act, that the proposed rule change (SR-Amex-2005-092), is hereby approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 21 21 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7296 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52925; File No. SR-Amex-2005-126] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Adopt an Options Licensing Fee for Options on Certain PowerShares Exchange-Traded Funds December 8, 2005. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on December 5, 2005, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. Amex has designated this proposal as one establishing or changing a due, fee, or other charge imposed by a self-regulatory organization pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Amex proposes to modify its Options Fee Schedule by adopting a per-contract license fee for the orders of specialists, registered options traders, firms, non-member market makers, and broker-dealers (collectively, “Market Participants”) in connection with options transactions in two
(2)new PowerShares exchange-traded funds (“ETFs”). The text of the proposed rule change is available on the Exchange's Internet Web site ( *http://www.amex.com* ), at the Exchange's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange has entered into numerous agreements with various index providers for the purpose of trading options on certain ETFs. As a result, the Exchange is required to pay index license fees to third parties as a condition to the listing and trading of these ETF options. In many cases, the Exchange is required to pay a significant licensing fee to the index provider that may not be reimbursed. In an effort to recoup the costs associated with certain index licenses, the Exchange has recently established per-contract licensing fees for orders of Market Participants that are collected on each option transaction in certain designated products in which such Market Participant is a party. 5 5 *See, e.g.* , Securities Exchange Act Release No. 52493 (September 22, 2005), 70 FR 56941 (September 29, 2005). The purpose of the proposal is to charge an options licensing fee in connection with options on the PowerShares Value Line Timeliness Select Portfolio (symbol: PIV) and the PowerShares Water Resources Portfolio (symbol: PHO) (collectively, “PowerShares ETF options”). Specifically, Amex seeks to charge an options licensing fee of $0.10 per contract side for each PowerShares ETF option for the orders of Market Participants executed on the Exchange. In all cases, the fee would be charged only to the Exchange member through whom such order is placed. Amex represents that the proposed options licensing fee would allow the Exchange to recoup its costs in connection with the index license fees for the trading of the PowerShares ETF options. The fee would be collected on every Market Participant order executed on the Exchange. The Exchange believes that requiring the payment of a per-contract licensing fee in connection with the PowerShares ETF options by those Market Participants that benefit from the index license agreements is justified and consistent with the rules of the Exchange. The Exchange notes that, in recent years, it has revised a number of its fees to better align Amex fees with the actual cost of delivering services and reduce Amex's subsidization of such services. 6 The Exchange represents that the implementation of this proposal is consistent with the reduction and/or elimination of these subsidies. Amex believes that this fee will help to allocate to those Market Participants engaging in transactions in PowerShares ETF options a fair share of the related costs of offering such options for trading. 6 *See, e.g.* , Securities Exchange Act Release No. 45360 (January 29, 2002), 67 FR 5626 (February 6, 2002); Securities Exchange Act Release No. 44286 (May 9, 2001), 66 FR 27187 (May 16, 2001). The Exchange asserts that the proposal provides for an equitable allocation of fees as required by section 6(b)(4) of the Act. 7 In connection with the adoption of an options licensing fee for the PowerShares ETF options, the Exchange notes that charging the options licensing fee, where applicable, to all Market Participant orders, except for customer orders, is reasonable given the competitive pressures in the industry. Accordingly, the Exchange seeks, through this proposal, to better align its transaction charges with the cost of providing trading products. 7 Section 6(b)(4) of the Act states that the rules of a national securities exchange must “provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities.” 15 U.S.C. 78f(b)(4). 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)(4) of the Act 9 in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange 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 The foregoing proposed rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act 10 and Rule 19b-4(f)(2) 11 thereunder because it establishes or changes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 10 15 U.S.C. 78s(b)(3)(A)(ii). 11 17 CFR 19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-Amex-2005-126 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-Amex-2005-126. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of Amex. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2005-126 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7307 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52914; File No. SR-CBOE-2005-98] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Revisions to the Series 9/10 Examination Program December 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 November 16, 2005, the Pacific Exchange, Inc. (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the CBOE. CBOE has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) 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)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE is filing revisions to the study outline and selection specifications for the Limited Principal—General Securities Sales Supervisor (Series 9/10) examination program. The proposed revisions update the material to reflect changes to the laws, rules, and regulations covered by the examination, as well as modify the content of the examination program to track more closely the functional workflow of a Series 9/10 limited principal. CBOE is not proposing any textual changes to the Constitution or Rules of CBOE. The revised study outline is attached as Exhibit 3a. However, CBOE has omitted the Series 9/10 selection specifications from this filing and has submitted the specifications under separate cover to the Commission with a request for confidential treatment pursuant to the Commission's confidential treatment procedures under the Freedom of Information Act. 5 The text of the proposed rule change is available on the Exchange's Web site ( *http://www.cboe.com* ), at the Exchange's Office of the Secretary, and at the Commission. 5 17 C.F.R. 200.83. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE included statements concerning the purpose of and basis for the 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. 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 CBOE Rule 9.2 states that no member organization shall be approved to transact options business with the public until those persons associated with it who are designated as Options Principals have been approved by and registered with the Exchange. CBOE Rule 9.2 further requires successful completion of an examination prescribed by the Exchange in order to qualify for registration as an Options Principal. The Series 9/10 examination, an industry-wide examination, has been designed for this purpose. The Series 9/10 examination tests a candidate's knowledge of securities industry rules and regulations and certain statutory provisions pertinent to the supervision of sales activities. The Series 9/10 examination program is shared by CBOE and the following SROs: The American Stock Exchange LLC, the National Association of Securities Dealers, Inc. (“NASD”), the Municipal Securities Rule Making Board (“MSRB”), the New York Stock Exchange, Inc. (“NYSE”), the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, Inc. A committee of industry representatives, together with the staff of CBOE and the other SROs, recently undertook a periodic review of the Series 9/10 examination program. As a result of this review, CBOE is proposing to update the content of the examination to cover Regulation S-P, 6 MSRB Rules G-37/G-38, SRO research analyst and anti-money laundering rules, municipal fund securities ( *e.g.* , 529 college savings plans), and exchange traded funds. CBOE is further proposing revisions to the study outline to reflect the SEC short sale requirements. In addition, as part of an ongoing effort to align the examination more closely to the supervisory duties of a Series 9/10 limited principal, CBOE is proposing to modify the content of the examination to track the functional workflow of a Series 9/10 limited principal. Also, CBOE is proposing to include questions related to parallel rules of NASD, the options exchanges, the MSRB and the NYSE in the same section of the exam. 6 17 CFR 248.1-18; 17 CFR 248.30; and 17 CFR 248, Appendix A. As a result of the revisions, CBOE is proposing to modify the main section headings and the number of questions on each section of the Series 9/10 study outline as follows: Section 1—Hiring, Qualifications, and Continuing Education, 9 questions; Section 2—Supervision of Accounts and Sales Activities, 94 questions; Section 3—Conduct of Associated Persons, 14 questions; Section 4—Recordkeeping Requirements, 8 questions; Section 5—Municipal Securities Regulation, 20 questions; Section 6—Options Regulation, 55 questions. Sections 1 through 5 constitute the Series 10 portion of the examination. Section 6 constitutes the Series 9 portion of the examination. Series 10 covers general securities and municipal securities, and Series 9 covers options. The revised examination continues to cover the areas of knowledge required for the supervision of sales activities. CBOE is proposing these changes to the entire content of the Series 9/10 examination, including the selection specifications and question bank. The number of questions on the Series 9/10 examination will remain at 200, and candidates will continue to have 4 hours to complete the Series 10 portion and 1 1/2 hours to complete the Series 9 portion. Also, each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions on each series, 9 and 10, to receive a passing grade. CBOE understands that the other SROs also will file with the Commission similar revisions to the Series 9/10 examination program. 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)(1) 8 of the Act in particular, in that it is designed to enforce compliance by Exchange members and persons associated with its members with the rules of the Exchange. The Exchange also believes the proposed rule change furthers the objectives of Section 6(c)(3) 9 of the Act, which authorizes CBOE to prescribe standards of training, experience and competence for persons associated with CBOE members. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(1). 9 15 U.S.C. 78f(c)(3). B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of 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 The proposed rule change has become effective pursuant to Section 19(b)(3)(A)(i) of the Act 10 and Rule 19b-4(f)(1) thereunder, 11 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization. CBOE will announce the implementation date in a Regulatory Circular to be published no later than 60 days after SEC Notice of this filing. 10 15 U.S.C. 78s(b)(3)(A)(i). 11 17 CFR 240.19b-4(f)(1). 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-2005-98 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-CBOE-2005-98. 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-2005-98 submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 Jonathan G. Katz, Secretary. 12 17 CFR 200.30-3(a)(12). [FR Doc. E5-7337 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52913; File No. SR-CBOE-2005-97] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Revisions to the Series 4 Examination Program December 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 November 15, 2005, the Pacific Exchange, Inc. (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by CBOE. CBOE has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) 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)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE is filing revisions to the study outline and selection specifications for the Limited Principal—Registered Options (Series 4) examination program. The proposed revisions update the material to reflect changes to the laws, rules, and regulations covered by the examination, as well as modify the content of the examination program to track more closely the functional workflow of a Series 4 limited principal. CBOE is not proposing any textual changes to the Constitution or Rules of CBOE. The revised study outline is attached as Exhibit 3a. However, CBOE has omitted the Series 4 selection specifications from this filing and has submitted the specifications under separate cover to the Commission with a request for confidential treatment pursuant to the Commission's confidential treatment procedures under the Freedom of Information Act. 5 The text of the proposed rule change is available on the Exchange's Web site ( *http://www.cboe.com* ), at the Exchange's Office of the Secretary, and at the Commission. 5 17 C.F.R. 200.83. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE included statements concerning the purpose of and basis for the 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. 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 CBOE Rule 9.2 states that no member organization shall be approved to transact options business with the public until those persons associated with it who are designated as Options Principals have been approved by and registered with the Exchange. CBOE Rule 9.2 further requires successful completion of an examination prescribed by the Exchange in order to qualify for registration as an Options Principal. The Series 4 examination, an industry-wide examination, has been designed for this purpose, and tests a candidate's knowledge of options trading generally, the industry rules applicable to trading of option contracts, and the rules of registered clearing agencies for options. The Series 4 examination covers, among other things, equity options, foreign currency options, index options, and options on government and mortgage-backed securities. The Series 4 examination program is shared by CBOE and the following SROs: the American Stock Exchange LLC, the National Association of Securities Dealers, Inc., the New York Stock Exchange, Inc., the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, Inc. A committee of industry representatives, together with the staff of CBOE and the other SROs, recently undertook a periodic review of the Series 4 examination program. As a result of this review and as part of an ongoing effort to align the examination more closely to the supervisory duties of a Series 4 limited principal, CBOE is proposing to modify the content of the examination to track the functional workflow of a Series 4 limited principal. More specifically, CBOE is proposing to revise the main section headings and the number of questions on each section of the Series 4 study outline as follows: Options Investment Strategies, decreased from 35 to 34 questions; Supervision of Sales Activities and Trading Practices, increased from 71 to 75 questions; and Supervision of Employees, Business Conduct, and Recordkeeping and Reporting Requirements, decreased from 19 to 16 questions. CBOE is further proposing revisions to the study outline to reflect the SEC short sale requirements. The revised examination continues to cover the areas of knowledge required to supervise options activities. CBOE is proposing these changes to the entire content of the Series 4 examination, including the selection specifications and question bank. The number of questions on the Series 4 examination will remain at 125, and candidates will continue to have three hours to complete the exam. Also, each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions to receive a passing grade. CBOE understands that the other SROs also will file with the Commission similar revisions to the Series 4 examination program. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act, 6 in general, and furthers the objectives of Section 6(b)(1) 7 of the Act in particular, in that it is designed to enforce compliance by Exchange members and persons associated with its members with the rules of the Exchange. The Exchange also believes the proposed rule change furthers the objectives of Section 6(c)(3) 8 of the Act, which authorizes CBOE to prescribe standards of training, experience and competence for persons associated with CBOE members. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78(b)(1). 8 15 U.S.C. 78(c)(3). B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of 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 The proposed rule change has become effective pursuant to Section 19(b)(3)(A)(i) of the Act 9 and Rule 19b-4(f)(1) thereunder, 10 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization. CBOE will announce the implementation date in a Regulatory Circular to be published no later than 60 days after SEC Notice of this filing. 9 15 U.S.C. 78f(b)(3)(A)(i). 10 17 CFR 240.19b-(f)(l). 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-2005-97 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-CBOE-2005-97. 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-2005-97 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 Jonathan G. Katz, Secretary. 11 17 CFR 200.30-3(a)(12). [FR Doc. E5-7338 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52922; File Nos. SR-DTC-2005-16, SR-FICC-2005-19, and SR-NSCC-2005-14] Self-Regulatory Organizations; The Depository Trust Company, Fixed Income Clearing Corporation, and National Securities Clearing Corporation; Order Approving Proposed Rule Changes to Require Members to Purchase Shares of the Common Stock of The Depository Trust & Clearing Corporation December 7, 2005. I. Introduction On October 4, 2005, The Depository Trust Company (“DTC”), the Fixed Income Clearing Corporation (“FICC”), and the National Securities Clearing Corporation filed with the Securities and Exchange Commission (“Commission”) proposed rule changes SR-DTC-2005-16, SR-FICC-2005-19, and SR-NSCC-2005-14 pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). 1 Notices of the proposals were published in the **Federal Register** on October 31, 2005. 2 The Commission received one comment letter in response to the proposed rule change filed by DTC 3 and one comment letter in response to the proposed rule change filed by FICC. 4 For the reasons discussed below, the Commission is approving the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 Securities Exchange Act Release Nos. 52665 (October 25, 2005), 70 FR 62357 [SR-DTC-2005-16]; 52663 (October 25, 2005), 70 FR 62359 [SR-FICC-2005-19]; and 52664 (October 25, 2005), 70 FR 62364 [SR-NSCC-2005-14]. 3 Letter from Stewart A. Levin, Ph.D., Geophysics Research Fellow, Landmark Graphics Corp. (Oct. 29, 2005). 4 Letter from Kelly S. McEntire, Retired State of Utah Administrator, (Dec. 6, 2005). II. Description The Depository Trust & Clearing Corporation (“DTCC”) is a holding company parent of DTC, FICC, and NSCC. Pursuant to DTCC's current Shareholders Agreement (“Shareholders Agreement”), substantially all members and participants of DTC, FICC, and NSCC (collectively “Participants”) are entitled but are not required to purchase DTCC common shares. Participants are allocated an entitlement to purchase DTCC common shares on the basis of their relative use of the services of DTC, FICC, and NSCC. As of the last periodic allocation of share entitlements in 2003, approximately 1,100 Participants had a right to purchase DTCC common shares; however, only 190 Participants currently own any DTCC common shares and of these only 86 own DTCC common shares up to the full amounts of their share entitlements. DTCC has obtained the consent of its common shareholders to amend the Shareholders Agreement pursuant to which Participants of DTC, FICC, and NSCC that make full use of the services of one or more of these clearing agency subsidiaries of DTCC would be required to purchase DTCC common shares (“Mandatory Purchaser Participants”) 5 in accordance with the terms of the amended Shareholders Agreement while preserving the right but not the obligation of other Participants that make only limited use of the services of one or more of the clearing agencies to purchase DTCC common shares (“Voluntary Purchaser Participants”). 6 5 Pursuant to the amendments to the Shareholders Agreement, a Mandatory Purchaser Participant that is a Participant in more than one clearing agency will be required to purchase DTCC common shares based upon its relative use of the services of all clearing agencies of which it is a Participant. For DTC, a Mandatory Purchaser Participant includes all participants of DTC other than Limited Participants. For FICC, this term includes Netting Members of FICC's Government Securities Division. For NSCC, this term includes all Members other than Mutual Fund/Insurance Services Members. 6 The DTCC Shareholders Agreement marked to show the proposed amendments is attached to the proposed rule change as Exhibit 3 and is available on DTC's Web site at *http://www.dtc.org/impNtc/mor/index.html* , FICC's Web site at *http://www.ficc.com/gov/gov.docs.jsp?NS-query=* , and NSCC's Web site at *www.nscc.com/legal* . Holders of DTCC common shares are entitled to elect all of the directors of DTCC other than two directors that DTCC preferred shareholders are entitled to elect. 7 DTCC common shareholders are entitled to vote on all other matters submitted to a vote of DTCC shareholders, and each DTCC common shareholder is entitled to one vote per DTCC common share. DTCC common shareholders are entitled to cumulative voting in the election of directors. In addition, DTCC common shareholders are entitled to receive out of the assets of DTCC, when and if declared by the Board of Directors of DTCC, dividends payable in cash or stock or otherwise. However, since DTC, FICC, and NSCC provide their services to their Participants on a cost-basis with revenues in excess of expenses and necessary reserves rebated or provide their services on a discounted basis, as a matter of policy and practice DTCC does not pay any dividends on DTCC common shares. The amendments to the Shareholders Agreement will have no effect on these rights of DTCC common shareholders and preferred shareholders. 7 In connection with the 1999 integration of DTC and NSCC and formation of DTCC, the New York Stock Exchange (“NYSE”) and the National Association of Securities Dealers (“NASD”), the then coowners of NSCC, each received 10,000 DTCC preferred shares in exchange for their NSCC common stock. DTCC preferred shareholders have no right to vote on any matters submitted to a vote of DTCC shareholders except that each of the two DTCC preferred shareholders are entitled to elect one director. DTCC preferred shareholders have no right to receive any dividends. In the event of any liquidation, dissolution or winding up of the affairs of DTCC, DTCC preferred shareholders are entitled to a liquidation preference of $300 per share of DTCC preferred stock. Pursuant to certain covenants in the Shareholders Agreement, a person elected as a director of DTCC also serves as a director of DTC, FICC, and NSCC. The amendments to the Shareholders Agreement will have no effect on these covenants. The system for allocating entitlements to purchase shares in the Shareholders Agreement was first implemented by DTC with respect to DTC common shares in 1973. At that time, the bank users of DTC's services purchased their DTC common shares, but for logistical and other reasons the NYSE, the NASD, and the American Stock Exchange (“AMEX”) (collectively “Self-Regulatory Organizations”) purchased the DTC common shares allocated to the broker-dealer users of DTC services that were their members. It was anticipated that over time as broker-dealers exercised their right to purchase DTC common shares, the number of DTC common shares held by broker-dealers directly would increase, and the number of DTC common shares held by the Self-Regulatory Organizations would correspondingly decrease, potentially to zero, since the share entitlements of the Self-Regulatory Organizations were a function of the unexercised share entitlements of their members. Notwithstanding the passage of time and the opportunity afforded broker-dealer Participants to purchase DTCC common shares, the Self-Regulatory Organizations continue to hold a significant block of DTCC common shares. NYSE holds approximately 29% of the outstanding DTCC common shares, and the NASD and the AMEX each holds approximately 3.7%. It is also the case that a significant number of Participants other than broker-dealers have not purchased any DTCC common shares or have not purchased DTCC common shares commensurate with their share entitlements. Accordingly, a total of approximately 36.4% of the outstanding DTCC common shares are not held by Participants but rather are held by the Self-Regulatory Organizations. Ownership of DTCC common shares (and previously ownership of DTC common shares) is not a financial investment but instead is a vehicle for supporting each registered clearing agency and influencing its policies and operations through the election of directors. By providing that all DTCC common shares are owned by Participants, DTC, FICC, and NSCC believe that the proposed rule changes 8 and the proposed amendments to the Shareholders Agreement will guarantee that Participants continue to govern and to control the activities of DTC, FICC, and NSCC, including the services provided and the service fees charged. In particular, Participants will be in a position to assure that DTC, FICC, and NSCC continue the practices of establishing fees that are cost-based and use-based and of returning to Participants in the form of cash rebates or discounts revenues in excess of expenses and necessary reserves. Finally, because they introduce the greatest risks to the clearing agencies and obtain the greatest benefits from clearing agency services, it is appropriate to require those Participants making full use of the services of DTC, FICC, and NSCC to contribute to DTCC's capital through the purchase of its common shares. 8 The proposals add a new provision to each of DTC, FICC, and NSCC's rules that requires Mandatory Purchaser Participants to purchase and own DTCC common shares in accordance with the terms of the Shareholders Agreement. The new provisions are DTC Rule 31, NSCC Rule 64, FICC's Government Securities Division Rule 49, and FICC's Mortgage-Backed Securities Division Article V, Rule 18. III. Comment Letters The Commission received two comment letters. 9 Both commenters opposed the proposed rule change. One commenter stated that if DTC needed to raise capital it should offer the shares to the general public or participants in DTC's Direct Registration System. The commenter also suggested that share ownership by DTC participants provides a financial disincentive for such participants to share information with the Commission and other regulators regarding criminal or unethical practices. The other commentator suggested that requiring participants to purchase common shares in DTCC could be used as a means to separate small investors from large investors based on their net assets and subject smaller investors to potential abuse. 9 *Supra* notes 3 and 4. IV. Discussion Section 17A(b)(3)(C) of the Act requires that the rules of a clearing agency be designed to assure fair representation in the selection of its directors and the administration of its affairs. 10 The Commission finds that DTC, FICC, and NSCC's proposed rule changes are consistent with this requirement because the proposed changes serve to increase the number of Participants that have input in the selection of DTCC's board of directors and thus the boards of directors of DTC, FICC, and NSCC. This increased participation of Participants should help DTC, FICC, and NSCC assure that their Participants have fair representation in the selection of its directors and the administration of their affairs. 10 15 U.S.C. 78q-1(b)(3)(C). The purpose of the proposed rule changes are not to raise capital for DTC, FICC, and NSCC as suggested by one of the commenters, but rather to redistribute common share ownership from having a significant portion held by the Self-Regulatory Organizations to having all shares held by the Participants in order to increase Participants' role in the selection of directors and the administration of DTC, FICC, and NSCC's affairs. With respect to the other commenter's fear that some “investors” would not be able to purchase DTCC common shares, neither DTC, FICC, nor NSCC have been informed by any of their Participants that they would have difficulty or be unable to pay for the allocation of shares. V. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule changes are consistent with the requirements of the Act and in particular section 17A of the Act and the rules and regulations thereunder. *It is therefore ordered* , pursuant to section 19(b)(2) of the Act, 11 that the proposed rule changes (File Nos. SR-DTC-2005-16, SR-FICC-2005-19, and SR-NSCC-2005-14) be and hereby is approved. 11 15 U.S.C. 78s(b)(2). For the Commission by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7305 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52910; File No. SR-ISE-2005-052] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Requirements for Continued Approval of Securities that Underlie Options Traded on the Exchange December 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 November 21, 2005, the International Securities Exchange, Inc. (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the ISE. 3 The ISE filed the proposal pursuant to Section 19(b)(3)(A) of the Act, 4 and Rule 19b-4(f)(6) thereunder, 5 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 persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 In one part of the proposal, ISE Rule 504(d)(6) is erroneously referenced, instead of current ISE Rule 503(b)(6). The staff corrected this reference, as per telephone conversation between Samir Patel, Assistant General Counsel, ISE, and Christopher Chow, Attorney, Division of Market Regulation, Commission, December 5, 2005. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to amend certain of its rules governing the requirements for and the withdrawal of approval of securities underlying options traded on the Exchange. The text of the proposed rule change is below. Proposed new language is in *italics;* proposed deletions are in [brackets]. Rule 502. Criteria for Underlying Securities
(a)Underlying securities with respect to which put or call options contracts are approved for listing and trading on the Exchange must meet the following criteria:
(1)The security must be registered and *be an “NMS stock” as defined in Rule 600 of Regulation NMS under the Exchange Act* [(i) listed on a national securities exchange; or
(ii)traded through the facilities of a national securities association and reported as a “national market system” (“NMS”) security as set forth in Rule 11Aa3-1 under the Exchange Act]; and
(2)No change. (b)-(j) No change. Rule 503. Withdrawal of Approval of Underlying Securities
(a)No change.
(b)Absent exceptional circumstances, an underlying security will not be deemed to meet the Exchange's requirements for continued approval whenever any of the following occur: (1)-(4) No change. [(5) The issuer has failed to make timely reports as required by applicable requirements of the Exchange Act, and such failure has not been corrected within thirty
(30)days after the date the report was due to be filed.] [(6)] *(5) The underlying security ceases to be an “NMS stock” as defined in Rule 600 of Regulation NMS under the Exchange Act.* [The issuer, in the case of an underlying security that is principally traded on a national securities exchange, is delisted from trading on that exchange and neither meets NMS criteria nor is traded through the facilities of a national securities association, or the issue, in the case of an underlying security that is principally traded through the facilities of a national securities association, is no longer designated as an NMS security.] [(7)] *(6)* If an underlying security is approved for options listing and trading under the provisions of Rule 502(c), the trading volume and price history of the Original Security (as therein defined) prior to but not after the commencement of trading in the Restructure Security (as therein defined), including “when-issued” trading, may be taken into account in determining whether the trading volume and market price requirements of
(3)and
(4)of this paragraph
(b)are satisfied. (c)-(j) No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the ISE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The ISE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to eliminate ISE Rule 503(b)(5) pertaining to the continued approval of securities that underlie options traded on the Exchange. ISE Rule 503(b) sets forth various situations under which an underlying security previously approved for options trading will in usual circumstances be deemed to no longer meet Exchange requirements for the continuance of such approval. In such circumstances, ISE Rule 503(a) provides that the Exchange will not open for trading any additional series of options in that class and may also limit any new opening transactions in those options series that have already been opened. Currently, ISE Rule 503(b)(5) provides that an underlying security will no longer be approved for options trading on the Exchange when: “(5) The issuer has failed to make timely reports as required by applicable requirements of the Exchange Act, and such failure has not been corrected within thirty
(30)days after the date the report was due to be filed.” The Exchange proposes to eliminate this provision because
(i)it limits investors' ability to use options to hedge existing equity positions in such securities, and
(ii)it is not necessary in the context of the rest of ISE Rule 503(b). First, ISE Rule 503(b)(5) can and does impact investors' interests by preventing investors from using new options series to hedge positions that they may hold in the underlying security of companies that fail to make timely reports required by the Act. ISE believes such a restriction is inconsistent with the rules and regulations in the markets for the underlying securities because no similar trading restriction is placed upon the trading of the underlying security itself. Thus, ISE Rule 503(b)(5) only serves to limit the abilities of shareholders in such companies who may wish to hedge their positions with new options series, at a time when the ability to hedge may be particularly important. ISE believes that ISE Rule 503(b)(5) has outlived any usefulness and now serves to unnecessarily burden and confuse the investing public. ISE believes this provision was appropriate when it was first implemented in or around 1976 when the listing and trading of standardized options was still in its infancy and information pertaining to public companies was not readily available to the general investing public. The Exchange believes that today's listed options market, however, is a mature one with investors who have access to a significant amount of real-time market information to assist them in making informed investment decisions, including information as to whether companies have timely filed reports as required by the Exchange Act, and if not, why not. Therefore, ISE believes that there is no reason to continue limiting investors' ability to trade in options classes, including new series within those classes, simply because a company is not timely in filing its reports. The Exchange further states that this restriction is further misplaced, considering that investors are not similarly restricted from buying or selling shares of the underlying security in the equity markets. Moreover, the Exchange believes that ISE Rule 503(b)(5) limits an investor's ability to hedge his underlying stock positions at a time when he may be in most need to protect his investment. The failure of a public company to comply with its reporting requirements under the Act could cause a significant movement in the price of that company's stock. Restricting the Exchange from opening new options series may leave investors without means to hedge their positions with options contracts at strike prices that more accurately reflect the contemporaneous price trends of the underlying stock. The ISE states that new options series on a security should not be permitted to be opened if the underlying security ceases to be an “NMS stock” within the meaning of Rule 600(b)(47) of Regulation NMS. 6 Typically, the Exchange becomes aware of issues that may impact the continued listing of a security well before that security is delisted from its primary market. Exchange staff routinely monitors daily press releases and informational releases disseminated by various entities, such as, the primary listing market of a security and private news services, in an effort to monitor the activities and news items pertaining to the issuers of securities that underlie options traded on the Exchange. In many cases, when an issuer fails to comply with its reporting requirements under the Act, the issuer is given a substantial amount of time to cure this deficiency before the primary listing market actually delists the issuer's security. Many times, the issuer is able to comply without its security ever being delisted. During this period, ISE staff continually monitors the status of the issuer's compliance with its reporting requirements to determine whether the security may be delisted. Finally, the primary listing market typically issues a press release well in advance of delisting an issuer's security to give investors and other market participants adequate notice. 6 17 CFR 242.600(b)(47). Given the availability of data and information relating to public issuers of securities in today's markets, and in light of the extensive amount of additional continued listing standards under ISE Rule 503(b), waiting until a security is actually delisted by its primary listing market is the appropriate point at which to restrict the issuance of new options series in an options class. Accordingly, the Exchange hereby proposes to eliminate ISE Rule 503(b)(5). Additionally, as a matter of “housekeeping,” the Exchange also proposes to clarify the texts of ISE Rules 502(a)(1) and 503(b)(6), 7 which govern the criteria for the initial and continued listing of options on a particular security, respectively. Both of these provisions include as part of the criteria, a requirement that the underlying security must be a national market system security (“NMS security”). As part of the recently adopted Regulation NMS, 8 among other things, the Commission revised the definition of an NMS security. Specifically, Rule 600(b)(46) under Regulation NMS defines an NMS security as “any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options.” As such, each of these ISE Rules will be amended to reflect these new terms. 7 ISE Rule 503(b)(6) would become ISE Rule 503(b)(5) to correspond with the elimination of current ISE Rule 503(b)(5), as discussed above. 8 *See* Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005). 2. Statutory Basis The ISE believes that the basis under the Act for this proposed rule change is found in Section 6(b)(5), in that the elimination of ISE Rule 503(b)(5), which is both burdensome to investors and unnecessary for their protection, will serve to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. B. Self-Regulatory Organization's Statement on Burden on Competition The ISE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in the furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The ISE has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to provide 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 5 business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The ISE has asked the Commission to waive the 5-day pre-filing notice requirement and the 30-day operative delay. The Commission waives the 5-day pre-filing notice requirement. Additionally, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because the proposed rule change is based upon a recently approved rule change by the Chicago Board Options Exchange, Incorporated (“CBOE”), 9 which was published for notice and comment. 10 For this reason, the Commission designates that the proposal has become effective and operative immediately upon filing with the Commission. 9 *See* Securities Exchange Act Release Nos. 52562 (October 4, 2005), 70 FR 59382 (October 12, 2005) (notice for SR-CBOE-2004-037) and 52779 (November 16, 2005), 70 FR 70902 (November 23, 2005) (approval order for SR-CBOE-2004-037). 10 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 11 11 *See* Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-4(f)(6)(iii). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-ISE-2005-052 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 20549-0903. All submissions should refer to File No. SR-ISE-2005-052. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-ISE-2005-052 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7303 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52896; File No. SR-NASD-2005-116] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change To Modify Nasdaq's Auditor Peer Review Requirement December 6, 2005. On September 29, 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”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 a proposed rule change to modify NASD Rule 4350(k), regarding the oversight of accountants that audit listed issuers. 3 The proposed rule change was published for comment in the **Federal Register** on October 26, 2005. 4 The Commission received no comments on the proposal. This order approves the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 The proposed rule change would also make a conforming amendment to the language of NASD Rule 4200(a). 4 Securities Exchange Act Release No. 52645 (Oct. 20, 2005), 70 FR 61864. Current NASD Rule 4350(k) requires each issuer listed on Nasdaq to be audited by an independent accountant that has received an external quality control review by another independent public accountant (a “peer review”) or is enrolled in an acceptable peer review program. The proposed rule change would replace this requirement with a provision that requires each listed issuer to be audited by an independent accountant that is registered as a public accounting firm with the Public Company Accounting Oversight Board (“PCAOB”), as provided for in the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). 5 The PCAOB is charged, among other things, with conducting a continuing program of inspections of registered public accounting firms. 6 5 *See* Section 102 of the Sarbanes-Oxley Act, 15 U.S.C. 7212. 6 *See* Section 104 of the Sarbanes-Oxley Act, 15 U.S.C. 7214. The Commission finds that the proposed rule change is consistent with the requirements of Section 15A(b) of the Act 7 and the rules and regulations thereunder applicable to a national securities association, 8 and in particular, with Section 15A(b)(6) of the Act. 9 The Commission believes that the proposed rule change will align Nasdaq's requirements with the auditor oversight requirements of the Sarbanes-Oxley Act and eliminate the redundancy of Nasdaq's current rule. 7 15 U.S.C. 78o-3(b). 8 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition and capital formation. *See* 15 U.S.C. 78c(f). 9 15 U.S.C. 78o-3(b)(6). *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 10 that the proposed rule change (SR-NASD-2005-116) be, and it hereby is, approved. 10 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7333 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52915; File No. SR-NYSE-2005-85] Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Revisions to the Study Outline and Selection Specifications for the Limited Principal—General Securities Sales Supervisor (Series 9/10) Examination Program December 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 November 30, 2005, the New York Stock Exchange, Inc. (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) 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)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing with the Commission revisions to the study outline and selection specifications for the Limited Principal—General Securities Sales Supervisor (Series 9/10) examination program. The proposed revisions update the material to reflect changes to the laws, rules, and regulations covered by the examination, as well as modify the content of the examination program to track more closely the functional workflow of a Series 9/10 Limited Principal. The revised study outline is available on the Exchange's Web site ( *http://www.nyse.com* ), at the NYSE, and at the Commission. However, the Exchange has omitted the Series 9/10 selection specifications from this filing and has submitted the specifications under separate cover to the Commission with a request for confidential treatment pursuant to Rule 24b-2 5 under the Act. The Exchange will announce the proposed rule change and the implementation date to its members and member organizations in an Information Memo to be published no later than 30 days after SEC Notice of this filing. 5 17 CFR 240.24b-2. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Pursuant to Section 6(c)(3)(B) 6 of the Act, which requires the Exchange to prescribe standards of training, experience, and competence for persons associated with Exchange members and member organizations, the Exchange has developed examinations, and administers examinations developed by other self-regulatory organizations (“SROs”), that are designed to establish that persons associated with Exchange members and member organizations have attained specified levels of competence and knowledge. The Exchange periodically reviews the content of the examinations to determine whether revisions are necessary or appropriate in view of changes pertaining to the subject matter covered by the examinations. 6 15 U.S.C. 78f(c)(3)(B). NYSE Rule 345 (“Employees-Registration, Approval, Records”) requires member firms to register with the NYSE any individuals who regularly perform duties customarily performed by a direct supervisor of a registered representative. Under NYSE Rule 342 (“Offices-Approval, Supervision, and Control”) member firms are required to supervise themselves. Specifically, NYSE Rule 342.13 requires individuals who supervise general trading activities to have a creditable three-year record as a registered representative or equivalent experience and to pass the General Securities Sales Supervisor Qualification Examination (Series 9/10) or another examination acceptable to the Exchange that demonstrates competency relevant to assigned responsibilities. 7 7 NYSE Rule 342.13 provides that the General Securities Principal Examination (Series 24), if taken and passed after July 1, 2001, is an acceptable alternative for persons whose duties do not include the supervision of options or municipal securities sales activity. The examination requirement may be waived at the discretion of the Exchange. The Series 9/10 examination, an industry-wide examination, qualifies an individual to function as a General Securities Sales Supervisor. It tests a candidate's knowledge of securities industry rules and regulations and certain statutory provisions pertinent to the supervision of sales activities. The Series 9/10 examination is primarily geared towards individuals who will act as the Branch Managers/Sales Supervisor of the firm's branch office locations. The Branch Manager is generally responsible for reviewing the activities of registered persons at the branch location and is also responsible for the review and approval of customer accounts that are opened through a registered representative at a branch. The Series 9/10 examination program is shared by NYSE and the following SROs: the American Stock Exchange LLC, the Chicago Board Options Exchange, Inc., the Municipal Securities Rule Making Board (“MSRB”), the National Association of Securities Dealers, Inc. (“NASD”), the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, Inc. NYSE understands that the other SROs also will file with the Commission similar revisions to the Series 9/10 examination program. A committee of industry representatives, together with the staff of NYSE and the other SROs, recently undertook a periodic review of the Series 9/10 examination program. As a result of this review, NYSE is proposing to update the content of the examination to cover Regulation S-P, 8 MSRB Rules G-37/G-38, SRO research analyst and anti-money laundering rules, municipal fund securities ( *e.g.* , 529 college savings plans), and exchange traded funds. The study outline also reflects the new SEC short sale rule requirements. In addition, as part of an ongoing effort to align the examination more closely to the supervisory duties of a Series 9/10 Limited Principal, NYSE is proposing to modify the content of the examination to track the functional workflow of a Series 9/10 Limited Principal. Also, NYSE is proposing to include questions related to the rules of the options exchanges and the MSRB and parallel NYSE and NASD rules in the same section of the exam. 8 17 CFR. 248.1-18; 17 CFR.249.30; and 17 CFR.248, Appendix A. As a result of the revisions, the main section headings and the number of questions on each section of the Series 9/10 study outline were modified as follows: Section 1—Hiring, Qualifications, and Continuing Education, 9 questions; Section 2—Supervision of Accounts and Sales Activities, 94 questions; Section 3—Conduct of Associated Persons, 14 questions; Section 4—Record keeping Requirements, 8 questions; Section 5—Municipal Securities Regulation, 20 questions; Section 6—Options Regulation, 55 questions. Sections 1 through 5 constitute the Series 10 portion of the examination. Section 6 constitutes the Series 9 portion of the examination. Series 10 covers general securities and municipal securities and Series 9 covers options. The revised examination continues to cover the areas of knowledge required for the supervision of sales activities. NYSE is proposing similar changes to the corresponding sections of the Series 9/10 selection specifications and question bank. The number of questions on the Series 9/10 examination will remain at 200 and candidates will have four hours to complete the Series 10 portion and one and half hour to complete the Series 9 portion. Also, each candidate must correctly answer 70 percent of the questions on each series, 9 and 10, to receive a passing grade. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(c)(3)(B) 9 of the Act, in that it provides for the prescription by NYSE of standards of training, experience, and competence for persons associated with NYSE members and member organizations. 9 15 U.S.C. 78f(c)(3)(B). B. Self-Regulatory Organization's Statement on Burden on Competition NYSE does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change has become effective pursuant to Section 19(b)(3)(A)(i) 10 of the Act and Rule 19b-4(f)(1) thereunder, 11 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization. The Exchange will announce the implementation date to its members and member organizations in an Information Memo to be published no later than 30 days after SEC Notice of this filing. 10 15 U.S.C. 78s(b)(3)(A)(i). 11 17 CFR 240.19b-4(f)(1). 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-NYSE-2005-85 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-NYSE-2005-85. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2005-85 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7327 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52918; File No. SR-PCX-2005-113] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Revisions to the Series 9/10 Examination Program December 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 November 17, 2005, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by PCX. On November 22, 2005, PCX filed Amendment No. 1 to the proposed rule change. PCX has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) 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, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change PCX is filing revisions to the study outline and selection specifications for the Limited Principal—General Securities Sales Supervisor (Series 9/10) examination program. The proposed revisions update the material to reflect changes to the laws, rules, and regulations covered by the examination, as well as modify the content of the examination program to track more closely the functional workflow of a Series 9/10 limited principal. PCX is not proposing any textual changes to the existing PCX rules. The revised study outline is available on PCX's Web site *(http://www.pacificex.com),* at PCX, and at the Commission. However, PCX has omitted the Series 9/10 selection specifications from this filing and has submitted the specifications under separate cover to the Commission with a request for confidential treatment pursuant to Rule 24b-2 under the Act. 5 5 17 CFR 240.24b-2. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, PCX 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. PCX has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Pursuant to Section 6(c)(3) of the Act, 6 which allows PCX to examine and verify the standards of training, experience, and competence for persons associated with Equities Trading Permit (“ETP”) Holders, PCX has developed examinations, and requires satisfaction of examinations developed by other SROs, that are designed to establish that persons associated with ETP Holders have attained specified levels of competence and knowledge. PCX periodically reviews the content of examinations to determine whether revisions are necessary or appropriate in view of changes pertaining to the subject matter covered by the examinations. 6 15 U.S.C. 78f(c)(3). PCXE Rule 6.18(d) states that if an ETP Holder does business with the public, the person (or persons) designated to direct day-to-day compliance activity and each other person directly supervising ten or more persons engaged in compliance activity must pass the General Securities Sales Supervisor Qualification Examination (Series 9/10). A General Securities Sales Supervisor is precluded from performing any of the following activities: supervision of the origination and structuring of underwritings; supervision of market making commitments; final approval of advertisements as these are defined in NASD Rule 2210; supervision of the custody of firm or customer funds and/or securities for purposes of Rule 15c3-3 7 under the Act; or supervision of overall compliance with financial responsibility rules for broker-dealers promulgated pursuant to the provisions of the Act. The Series 9/10 examination, an industry-wide examination, qualifies an individual to function as a General Securities Sales Supervisor. The Series 9/10 examination tests a candidate's knowledge of securities industry rules and regulations and certain statutory provisions pertinent to the supervision of sales activities. 7 17 CFR 240.15c3-3. The Series 9/10 examination program is shared by PCX and the following SROs: the American Stock Exchange LLC, the Chicago Board Options Exchange, Inc., the Municipal Securities Rule Making Board (“MSRB”), the New York Stock Exchange, Inc. (“NYSE”), the National Association of Securities Dealers, Inc. (“NASD”), and the Philadelphia Stock Exchange, Inc. A committee of industry representatives, together with the staff of PCX and the other SROs, recently undertook a periodic review of the Series 9/10 examination program. As a result of this review, PCX is proposing to update the content of the examination to cover Regulation S-P, 8 MSRB Rules G-37/G-38, SRO research analyst and anti-money laundering rules, municipal fund securities ( *e.g.* , 529 college savings plans), and exchange traded funds. PCX is further proposing revisions to the study outline to reflect the SEC short sale requirements. In addition, as part of an ongoing effort to align the examination more closely to the supervisory duties of a Series 9/10 limited principal, PCX is proposing to modify the content of the examination to track the functional workflow of a Series 9/10 limited principal. Also, PCX is proposing to include questions related to parallel rules of NASD, the options exchanges, the MSRB, and the NYSE in the same section of the exam. 8 17 CFR 248.1-18; 17 CFR 248.30; and 17 CFR 248, Appendix A. As a result of the revisions, PCX is proposing to modify the main section headings and the number of questions on each section of the Series 9/10 study outline as follows: Section 1—Hiring, Qualifications, and Continuing Education, 9 questions; Section 2—Supervision of Accounts and Sales Activities, 94 questions; Section 3—Conduct of Associated Persons, 14 questions; Section 4—Recordkeeping Requirements, 8 questions; Section 5—Municipal Securities Regulation, 20 questions; Section 6—Options Regulation, 55 questions. Sections 1 through 5 constitute the Series 10 portion of the examination. Section 6 constitutes the Series 9 portion of the examination. Series 10 covers general securities and municipal securities, and Series 9 covers options. The revised examination continues to cover the areas of knowledge required for the supervision of sales activities. PCX is proposing these changes to the entire content of the Series 9/10 examination, including the selection specifications and question bank. The number of questions on the Series 9/10 examination will remain at 200, and candidates will continue to have four hours to complete the Series 10 portion and one and one-half hours to complete the Series 9 portion. Also, each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions on each series, 9 and 10, to receive a passing grade. As noted below, PCX understands that the other SROs also will file with the Commission similar proposed rule changes reflecting the revisions to the Series 9/10 examination program. 2. Statutory Basis PCX believes that the proposed revisions to the Series 9/10 examination program are consistent with Section 6(b) of the Act, 9 in general, and further the objectives of Section 6(b)(1) 10 in particular, in that it is designed to enforce compliance by ETP Holders and persons associated with the rules of the Exchange. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(1). B. Self-Regulatory Organization's Statement on Burden on Competition PCX does not believe that the proposed rule change, as amended, will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change, as amended, has become effective pursuant to Section 19(b)(3)(A)(i) of the Act 11 and Rule 19b-4(f)(1) thereunder, 12 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization. PCX will announce the implementation date in a Rule Adoption Notice to be published no later than 7 days after Notice of this filing. 11 15 U.S.C. 78s(b)(3)(A)(i). 12 17 CFR 240.19b-4(f)(1). 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. 13 13 The effective date of the original proposed rule is November 17, 2005. The effective date of Amendment No. 1 is November 22, 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 November 22, 2005, the date on which PCX submitted Amendment No. 1. *See* 15 U.S.C. 78s(b)(3)(C). 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-PCX-2005-113 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-PCX-2005-113. 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 PCX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-PCX-2005-113 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7325 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52911; File No. SR-PCX-2005-129] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. and Amendment No. 1 Thereto Relating to the Approval of Securities That Underlie Options Traded on the Exchange December 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 November 23, 2005, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. On December 7, 2005, PCX filed Amendment No. 1 to the proposed rule change. 3 PCX filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act, 4 and Rule 19b-4(f)(6) thereunder, 5 which renders the proposal, as amended, effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Form 19b-4 dated December 7, 2005 which replaced the original filing in its entirety (“Amendment No. 1”). Amendment No. 1 made clarifying changes and corrected typographical errors in the original filing. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes changes to PCX rules pertaining to the approval of securities that underlie options traded on the Exchange. Specifically, the Exchange proposes to eliminate Rule 5.6(b)(5) and amend Rule 5.6(b)(6) and Rule 5.3(b). A copy of the proposed rule change is available on the PCX Web site, ( *www.pacificex.com* ), at the PCX's Office of the Secretary and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization 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 self-regulatory organization 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 Amendment No. 1 is to make clarifying changes and correct typographical errors in the original filing. This Amendment No. 1 replaces the original rule filing in its entirety. The Exchange proposes changes to PCX rules pertaining to the approval of securities that underlie options traded on the Exchange. Specifically, the Exchange proposes to eliminate Rule 5.6(b)(5) and amend Rule 5.6(b)(6) and Rule 5.3(b). PCX Rule 5.6(b) sets forth various situations under which an underlying security previously approved for options trading will in usual circumstances be deemed to no longer meet Exchange requirements for the continuance of such approval. In such circumstances, Rule 5.6(b)(5) provides that the Exchange will not open for trading any additional series of options in that class and may also limit any new opening transactions in those options series that have already been opened. The Exchange proposes to eliminate this provision because
(1)it limits investors' ability to use options to hedge existing equity positions in such securities, and
(2)it is not necessary in the context of the rest of Rule 5.6(b). First, Rule PCX 5.6(b)(5) can and does impact investors' interests by preventing them from using new options series to hedge positions that may hold in the underlying security of companies that fail to make timely reports required by the Act. The Exchange states that such a restriction is inconsistent with the rules and regulations in the markets for the underlying securities because no similar trading restriction is placed upon the trading of the underlying security itself. Thus, Rule 5.6(b)(5) only serves to limit the abilities of shareholders in such companies who may wish to hedge their positions with new options series, at a time when the ability to hedge may be particularly important. The PCX believes that Rule 5.6(b)(5) has outlived any usefulness and now serves to unnecessarily burden and confuse the investing public. This provision was appropriate when it was first implemented when the listing and trading of standardized options was still in its infancy and information pertaining to public companies was not readily available to the general investing public. The Exchange believes that today's listed options market, however, is a mature one with investors who have access to a significant amount of real-time market information to assist them in making informed investment decisions, including information as to whether companies have timely filed reports as required by the Act, and if not, why not. Therefore, the Exchange states that there is no reason to continue limiting investors' ability to trade in options classes, including new series within those classes, simply because a company is not timely in filing its reports. The Exchange further believes that this restriction is further misplaced, considering that investors are not similarly restricted from buying or selling shares of the underlying security in the equity markets. Moreover, the Exchange believes that Rule 5.6(b)(5) limits an investor's ability to hedge his underlying stock positions at a time when he may be in most need to protect his investment. The failure of a public company to comply with its reporting requirements under the Act could cause a significant movement in the price of that company's stock. Restricting the Exchange from opening new options series may leave investors without means to hedge their positions with options contracts at strike prices that more accurately reflect the contemporaneous price trends of the underlying stock. Clearly, new options series on a security should not be permitted to be opened if the underlying security ceases to be an NMS stock. Typically, the Exchange becomes aware of issues that may impact the continued listing of a security well before that security is delisted from its primary market. Exchange staff routinely monitors daily press releases and informational releases disseminated by various entities, such as, the primary listing market of a security and private news services, in an effort to monitor the activities and news items pertaining to the issuers of securities that underlie options traded on the Exchange. In many cases, when an issuer fails to comply with its reporting requirements under the Act, the issuer is given a substantial amount of time to cure this deficiency before the primary listing market actually delists the issuer's security. Many times, the issuer is able to comply without its security ever being delisted. During this period, PCX staff continually monitors the status of the issuer's compliance with its reporting requirements to determine whether the security may be delisted. Finally, the primary listing market typically issues a press release well in advance of delisting an issuer's security to give investors and other market participants adequate notice. Given the availability of data and information relating to public issuers of securities in today's markets, and in light of the extensive amount of additional continued listing standards under Rule 5.6(b), waiting until a security is actually delisted by its primary listing market is the appropriate point at which to restrict the issuance of new options series in an options class. Accordingly, the Exchange hereby proposes to eliminate PCX Rule 5.6(b)(5). Additionally, as a matter of “housekeeping,” the Exchange also proposes to clarify Exchange Rule 5.3(b) and Rule 5.6(b)(6), which govern the criteria for the initial and continued listing of options on a particular security, respectively. Both of these provisions include as part of the criteria, a requirement that the underlying security must be a national market system security (“NMS security”). As part of the recently adopted Regulation NMS, among other things, the Commission revised the definition of an NMS security. 6 Specifically, Rule 600(b)(46) under Regulation NMS defines an NMS security as “any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options.” Rule 600(b)(47) also defines an “NMS stock” as any NMS security other than an option. As such, PCX Rule 5.3(b) and Rule 5.6(b)(5) will be amended to reflect these new terms. 6 *See* Securities Exchange Act Release No. 51808 (June 9, 2005); 70 FR 37496 (June 29, 2005). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) 7 of the Act, in general, and furthers the objectives of Section 6(b)(5), 8 in particular, in that it is designed to facilitate transactions in securities, to promote just and equitable principles of trade, to enhance competition, and 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 Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has designated the proposed rule change as one that:
(i)Does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate. Therefore, the foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b-4(f)(6) thereunder. 10 At any time within 60 days after the filing of the proposed rule change, the Commission may summarily abrogate the rule change if it appears to the Commission such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) under the Act, 11 the proposal does not become operative for 30 days after the date of its filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. The PCX has asked the Commission to waive the 30-day operative delay and the five day pre-filing notice requirement. Because the proposed rule change is based upon a recently approved rule change by the Chicago Board Options Exchange, Incorporated (“CBOE”), 12 and the CBOE's proposed rule change was published for public notice and comment, the Commission believes that waiving the 30-day operative delay, as well as the five day pre-filing notice requirement, is consistent with the protection of investors and the public interest. Accordingly, the Commission designates the proposal to be effective and operative upon filing with the Commission. 13 11 17 CFR 240.19b-4(f)(6)(iii). 12 *See* Securities Exchange Act Release Nos. 52562 (October 4, 2005), 70 FR 59382 (October 12, 2005) (notice for SR-CBOE-2004-37) and 52779 (November 16, 2005), 70 FR 70902 (November 23, 2005) (approval order for SR-CBOE-2004-37). 13 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-PCX-2005-129 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-PCX-2005-129. 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 offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-PCX-2005-129 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7328 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52920; File No. SR-PCX-2005-112] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Revisions to the Series 4 Examination Program December 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 November 3, 2005, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by PCX. On November 22, 2005, PCX filed Amendment No. 1 to the proposed rule change. PCX has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) 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, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change PCX is filing revisions to the study outline and selection specifications for the Limited Principal—Registered Options (Series 4) examination program. The proposed revisions update the material to reflect changes to the laws, rules, and regulations covered by the examination, as well as modify the content of the examination program to track more closely the functional workflow of a Series 4 limited principal. PCX is not proposing any textual changes to the PCX Rules. The revisions that PCX is submitting with this filing supersede all prior revisions to the Series 4 examination program submitted by PCX. The revised study outline is available on PCX's Web site ( *http://www.pacificex.com* ), at PCX, and at the Commission. However, PCX has omitted the Series 4 selection specifications from this filing and has submitted the specifications under separate cover to the Commission with a request for confidential treatment pursuant to Rule 24b-2 under the Act. 5 5 17 CFR 240.24b-2. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, PCX 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. PCX has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Pursuant to Section 6(c)(3) of the Act, 6 which allows PCX to examine and verify the standards of training, experience, and competence for persons associated with PCX Options Trading Permit (“OTP”) Holders or OTP Firms, PCX has developed examinations, and requires satisfaction of examinations developed by other SROs, that are designed to establish that persons associated with PCX OTP Holders or OTP Firms have attained specified levels of competence and knowledge. PCX periodically reviews the content of examinations to determine whether revisions are necessary or appropriate in view of changes pertaining to the subject matter covered by the examinations. 6 15 U.S.C. 78f(c)(3). PCX Rule 9.18 states that no OTP Firm or OTP Holder shall be approved to transact business with the public in options contracts, unless those persons associated with the OTP Firm or OTP Holder who are designated as Options Principals or who are designated as Registered Representatives have been approved by and registered with the Exchange. The Series 4 examination, an industry-wide examination, qualifies an individual to function as a Registered Options and Security Futures Principal, but only for purposes of supervising an OTP Holder's or OTP Firm's options activities. 7 The Series 4 examination tests a candidate's knowledge of options trading generally, the industry rules applicable to trading of option contracts, and the rules of registered clearing agencies for options. The Series 4 examination covers, among other things, equity options, foreign currency options, index options, and options on government and mortgage-backed securities. 7 A Registered Options and Security Futures Principal also must complete a firm-element continuing education program that addresses security futures and a principal's responsibilities for security futures before such person can supervise security futures activities. The Series 4 examination program is shared by PCX and the following SROs: the American Stock Exchange LLC, the Chicago Board Options Exchange, Inc., the New York Stock Exchange, Inc., the National Association of Securities Dealers, Inc., and the Philadelphia Stock Exchange, Inc. A committee of industry representatives, together with the staff of the PCX and the other SROs, recently undertook a periodic review of the Series 4 examination program. As a result of this review and as part of an ongoing effort to align the examination more closely to the supervisory duties of a Series 4 limited principal, PCX is proposing to modify the content of the examination to track the functional workflow of a Series 4 limited principal. More specifically, PCX is proposing to revise the main section headings and the number of questions on each section of the Series 4 study outline as follows: Options Investment Strategies, decreased from 35 to 34 questions; Supervision of Sales Activities and Trading Practices, increased from 71 to 75 questions; and Supervision of Employees, Business Conduct, and Recordkeeping and Reporting Requirements, decreased from 19 to 16 questions. PCX is further proposing revisions to the study outline to reflect the SEC short sale requirements. The revised examination continues to cover the areas of knowledge required to supervise options activities. PCX is proposing these changes to the entire content of the Series 4 examination, including the selection specifications and question bank. The number of questions on the Series 4 examination will remain at 125, and candidates will continue to have three hours to complete the exam. Also, each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions to receive a passing grade. 2. Statutory Basis PCX believes that the proposed revisions to the Series 4 examination program are consistent with Section 6(b) of the Act, 8 in general, and further the objectives of Section 6(b)(1) 9 in particular, in that it is designed to enforce compliance by OTP Holders and OTP Firms and persons associated with the rules of the Exchange. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(1). B. Self-Regulatory Organization's Statement on Burden on Competition PCX does not believe that the proposed rule change, as amended, will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change, as amended, has become effective pursuant to Section 19(b)(3)(A)(i) of the Act 10 and Rule 19b-4(f)(1) thereunder, 11 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization. PCX will announce the implementation date in a Rule Adoption Notice to be published no later than 7 days after Notice of this filing. 10 15 U.S.C. 78s(b)(3)(A)(i). 11 17 CFR 240.19b-4(f)(1). 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. 12 12 The effective date of the original proposed rule is November 3, 2005. The effective date of Amendment No. 1 is November 22, 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 November 22, 2005, the date on which PCX submitted Amendment No. 1. *See* 15 U.S.C. 78s(b)(3)(C). 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-PCX-2005-112 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-PCX-2005-112. 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 PCX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-PCX-2005-112 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7330 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52903; File No. SR-Phlx-2005-67] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to the Maintenance, Retention and Furnishing of Books, Records and Other Information Regarding Payment For Order Flow December 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 November 3, 2005, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. On November 22, 2005, the Phlx submitted Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 provided clarifying language to Phlx Rule 760 and the purpose section of the filing. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to amend Phlx Rule 760, Maintenance, Retention and Furnishing of Books, Records and Other Information, to incorporate recent changes to the Exchange's payment for order flow program. The Exchange recently amended its payment for order flow program for trades settling on or after October 1, 2005 (“October program”). 4 Registered Options Traders who receive electronically-delivered orders directed to them (“Directed ROTs”) may, pursuant to the October program, direct the Exchange to make payments to order flow providers on their behalf. 5 Thus, the Exchange proposes to amend Phlx Rule 760 to clarify that these Directed ROTs would now be required to retain records relating to payment for order flow arrangements. 6 4 The October program is in effect as a pilot program that is scheduled to expire on May 27, 2006. *See* Securities Exchange Act Release No. 52568 (October 6, 2005), 70 FR 60120 (October 14, 2005) (SR-Phlx-2005-58). 5 The Exchange represents that under previous payment for order flow programs, specialist units requested reimbursement from the Exchange for monies they paid to order flow providers. Pursuant to the October program, the available payment for order flow funds would be disbursed by the Exchange according to the instructions of the specialist units and Directed ROTs. 6 The Exchange represents that specialists/specialist units are already specifically required to maintain these books and records. The text of Rule Phlx 760, as proposed to be amended, is set forth below with new language in *italics* and deletions in [brackets]. Rule 760 Maintenance, Retention and Furnishing of Books, Records and Other Information Every member and member organization shall make, keep current and preserve such books and records as the Exchange may prescribe and as may be prescribed by the Securities Exchange Act of 1934 and the rules and regulations thereunder. No member or member organization shall refuse to make available to the Exchange such books, records or other information as may be called for under the rules or as may be requested in connection with an investigation by the Exchange. Supplementary Material: * * * .01 Without limiting the general provisions of Rule 760, such Rule requires *Registered Options Traders who receive electronically-delivered orders directed to them* , Specialists [or] *and* Specialist Units who request *that payments be made* [funds, or who make payments] to order flow providers as part of the Exchange's payment for order flow program, to make, keep current and preserve all books and records relating to payment for order flow arrangements, including but not limited to all records pertaining to the identity of the order flow providers, [and] the [origin, use, transfer, distribution and] *rates, and the basis for the* amounts *they have directed the Exchange to pay to order flow providers* [of all payments] (whether on a per contract or flat fee basis). [Such records should be maintained in such a fashion as to permit the Exchange to track payments to order flow providers on an option by option basis.] Such books and records shall be made available as may be requested by the Exchange. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange states that the purpose of this proposal is to update Phlx Rule 760 to reflect recent changes to the Exchange's payment for order flow program, specifically including that Directed ROTs must now retain records relating to payment for order flow arrangements. The Exchange proposes to amend the Supplementary Material to Phlx Rule 760 because the Exchange's current payment for order flow program no longer tracks payments to order flow providers on an option by option basis. In addition, the Exchange notes that specialists and specialist units no longer need to maintain records relating to the use, transfer, and distribution of payment for order flow funds because they will now direct the Exchange to make on their behalf those payment for order flow payments to the order flow providers. The Exchange also proposes to specifically request that books and records regarding the rate (for example, $0.25 per contract or a flat monthly rate) that is paid to order flow providers and the basis for the amount that Directed ROTs, specialists, and specialist units direct the Exchange to pay to order flow providers be maintained. 2. Statutory Basis The Exchange believes the proposal is consistent with section 6(b) of the Act 7 , in general, and furthers the objectives of section 6(b)(1) of the Act, 8 in particular, in that it assist the Exchange in determining and enforcing compliance with its rules assist the Exchange in determining an enforcing compliance with its rules (i.e., the specific terms of the Exchange's payment for order flow program). By enabling the Exchange to verify that the payment for order flow program is being administered in accordance with the terms thereof as approved by the Exchange and set forth in its filing with the Commission, this proposal also promotes just and equitable principles of trade consistent with section 6(b)(1) of the Act. 9 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(1). 9 15 U.S.C. 78f(b)(1). 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 by the Exchange on this proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or
(ii)as to which the Exchange consents, the Commission will: A. By order approve the proposed rule change, or B. Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2005-67 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-Phlx-2005-67. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2005-67 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7299 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52916; File No. SR-Phlx-2005-71] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Revisions to the Series 9/10 Examination Program December 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 November 16, 2005, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Phlx. On November 29, 2005, Phlx filed Amendment No. 1 to the proposed rule change. Phlx has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) 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, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to file revisions to the study outline and selection specifications for the Limited Principal—General Securities Supervisor (Series 9/10) examination (“Series 9/10 Examination”), which is administered by the National Association of Securities Dealers, Inc. (“NASD”). The proposed revisions update the material to reflect changes to the laws, rules, and regulations covered by the Series 9/10 Examination, as well as modify the content of the examination program to track more closely the functional workflow of a Series 9/10 limited principal. Phlx is not proposing any textual changes to its rules. The revised Series 9/10 Examination study outline is available on Phlx's Web site ( *http://www.phlx.com* ), at the Phlx, and at the Commission. 5 5 The Series 9/10 Examination study outline is also available on NASD's Web site ( *http://www.nasd.com* ). However, The Exchange has omitted the Series 9/10 Examination selection specifications from this filing and has submitted the specifications under separate cover to the Commission with a request for confidential treatment pursuant to Rule 24b-2 under the Act. 6 6 17 CFR 240.24b-2. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Series 9/10 Examination tests a candidate's knowledge of securities industry rules and regulations and certain statutory provisions pertinent to the supervision of sales activities. The Series 9/10 Examination is shared by Phlx and the following SROs: The NASD, the American Stock Exchange LLC , the Chicago Board Options Exchange, Inc., the Municipal Securities Rule Making Board (“MSRB”) , the New York Stock Exchange, Inc. (“NYSE”), and the Pacific Exchange, Inc. A committee of industry representatives, together with the staff of NASD and the other SROs, recently undertook a periodic review of the Series 9/10 examination program. As a result of this review, the NASD has filed a rule change proposal with the Commission 7 and Phlx is proposing a similar rule change to update the content of the examination to cover Regulation S-P, 8 MSRB Rules G-37/G-38, SRO research analyst and anti-money laundering rules, municipal fund securities ( *e.g.* , 529 college savings plans), and exchange traded funds. Phlx is further proposing revisions to the study outline to reflect the Commission's short sale requirements. In addition, as part of an ongoing effort to align the examination more closely to the supervisory duties of a Series 9/10 limited principal, the proposal would modify the content of the examination to track the functional workflow of a Series 9/10 limited principal, and would include questions related to parallel rules of NASD, the options exchanges, the MSRB, and the NYSE in the same section of the exam. 7 *See* Securities Exchange Act Release No. 52548 (September 30, 2005), 70 FR 59111 (October 11, 2005) (SR-NASD-2005-111). In the filing, the NASD proposes an implementation date of no later than November 30, 2005. 8 17 CFR 248.1-18; 17 CFR 248.30; and 17 CFR 248, Appendix A. As a result of the revisions, Phlx is proposing to modify the main section headings and the number of questions on each section of the Series 9/10 study outline as follows: Section 1—Hiring, Qualifications, and Continuing Education, 9 questions; section 2—Supervision of Accounts and Sales Activities, 94 questions; section 3—Conduct of Associated Persons, 14 questions; section 4—Recordkeeping Requirements, 8 questions; section 5—Municipal Securities Regulation, 20 questions; section 6—Options Regulation, 55 questions. Sections 1 through 5 constitute the Series 10 portion of the examination. Section 6 constitutes the Series 9 portion of the examination. Series 10 covers general securities and municipal securities, and Series 9 covers options. The revised examination continues to cover the areas of knowledge required for the supervision of sales activities. Phlx is proposing these changes to the entire content of the Series 9/10 examination, including the selection specifications and question bank. The number of questions on the Series 9/10 examination will remain at 200, and candidates will continue to have four hours to complete the Series 10 portion and one and one-half hours to complete the Series 9 portion. Also, each question will continue to count one point, and each candidate must correctly answer 70 percent of the questions on each series, 9 and 10, to receive a passing grade. Phlx believes that the other SROs are filing similar proposals. As further discussed below, the Exchange is filing the proposed rule change for immediate effectiveness. The Exchange will announce the proposed revisions in a *Notice to Members* to be published prior to the implementation date. 2. Statutory Basis The Exchange believes that its proposal is consistent with section 6(b) of the Act_ 9 in general and furthers the objectives of section 6(c)(3), 10 which authorize Phlx to prescribe standards of training, experience and competence for members of the Exchange or persons associated with them. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(c)(3). B. Self-Regulatory Organization's Statement on Burden on Competition The Phlx does not believe that the proposed rule change, as amended, will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change, as amended, has become effective pursuant to section 19(b)(3)(A)(i) 11 of the Act and Rule 19b-4(f)(1) thereunder, 12 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. 11 15 U.S.C. 78s(b)(3)(A)(i). 12 17 CFR 240.19b-4(f)(1). 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. 13 13 The effective date of the original proposed rule is November 16, 2005. The effective date of Amendment No. 1 is November 29, 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 November 29, 2005, the date on which Phlx submitted Amendment No. 1. *See* 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *(http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2005-71 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-Phlx-2005-71. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site *(http://www.sec.gov/rules/sro.shtml).* Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2005-71 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7306 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52919; File No. SR-Phlx-2005-66] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Revisions to the Series 4 Examination Program December 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 November 9, 2005, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Phlx. On November 28, 2005, Phlx filed Amendment No. 1 to the proposed rule change. Phlx has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) 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, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Phlx is filing revisions to the study outline and selection specifications for the Limited Principal—Registered Options (Series 4) examination program (“Series 4 Examination”), which is administered by the National Association of Securities Dealers, Inc. (“NASD”). The proposed revisions update the material to reflect changes to the laws, rules, and regulations covered by the Series 4 Examination, as well as to modify the content of the examination program to track more closely the functional workflow of a Series 4 limited principal. Phlx is not proposing any textual changes to its rules. The revised Series 4 Examination study outline is available on Phlx's Web site *(http://www.phlx.com),* at the Phlx, and at the Commission. However, the Exchange has omitted the Series 4 Examination selection specifications from this filing and has submitted the specifications under separate cover to the Commission with a request for confidential treatment pursuant to Rule 24b-2 under the Act. 5 5 17 CFR 240.24b-2. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Phlx has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Phlx Rule 1024 states that a member organization shall not transact any business with the public in option contracts unless those persons engaged in the management of the member organization's business pertaining to option contracts are registered with and approved by the Exchange as Options Principals. Additionally, the rule states that no individual member shall transact any business directly with the public in option contracts unless he is registered with and approved by the Exchange as an Options Principal. The Series 4 examination, an industry-wide examination, qualifies an individual to function as a Registered Options and Security Futures Principal, but only for purposes of supervising a member firm's options activities. 6 6 A Registered Options and Security Futures Principal must complete an additional continuing education program before such person can supervise security futures activities. The Series 4 Examination tests a candidate's knowledge of options trading generally, the Phlx rules applicable to the trading of option contracts, and the rules of registered clearing agencies for options. The Series 4 Examination covers, among other things, equity options, foreign currency options, index options, and options on government and mortgage-backed securities. The Series 4 Examination is shared by Phlx and the following SROs: the NASD, the American Stock Exchange LLC, the Chicago Board Options Exchange, Inc., the New York Stock Exchange, Inc., and the Pacific Exchange, Inc. NASD has filed with the Commission similar revisions to the study outline and selection specifications for the Series 4 Examination. 7 Phlx believes that the other SROs are filing similar proposals. 7 *See* Securities Exchange Act Release Nos. 51216 (February 16, 2005), 70 FR 8866 (February 23, 2005) (SR-NASD-2005-25) and 52546 (September 30, 2005), 70 FR 59109 (October 11, 2005) (SR-NASD-2005-109) (extending the implementation date of the revisions to no later than November 30, 2005). A committee of industry representatives, together with the staff of Phlx and the other SROs, recently undertook a periodic review of the Series 4 Examination and study outline and selection specifications. As a result of this review and as part of an ongoing effort to align the Series 4 Examination more closely to the supervisory duties of a Series 4 principal, Phlx is proposing to modify the content of the Series 4 Examination to track the functional workflow of a Series 4 principal. More specifically, Phlx is proposing to revise the main section headings and the number of questions on each section of the Series 4 study outline as follows: Options Investment Strategies, decreased from 35 to 34 questions; Supervision of Sales Activities and Trading Practices, increased from 71 to 75 questions; and Supervision of Employees, Business Conduct, and Recordkeeping and Reporting Requirements, decreased from 19 to 16 questions. Phlx is further proposing revisions to the study outline to reflect the SEC short sale requirements. The revised examination continues to cover the areas of knowledge required to supervise options activities. Phlx is proposing similar changes to the corresponding sections of the Series 4 Examination selection specifications and question bank. The number of questions on the Series 4 Examination will remain at 125, and candidates will have three hours to complete the exam. Also, each question will continue to count as one point and candidates must correctly answer 70 percent of the questions to receive a passing grade. As further discussed below, the Exchange is filing the proposed rule change for immediate effectiveness. The Exchange will announce the proposed revisions in a *Notice to Members* to be published prior to the implementation date. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 8 in general and furthers the objectives of Section 6(c)(3), 9 which authorize Phlx to prescribe standards of training, experience and competence for members of the Exchange or persons associated with them. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(c)(3). B. Self-Regulatory Organization's Statement on Burden on Competition The Phlx does not believe that the proposed rule change, as amended, will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change, as amended, has become effective pursuant to Section 19(b)(3)(A)(i) 10 of the Act and Rule 19b-4(f)(1) thereunder, 11 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the Exchange. 10 15 U.S.C. 78s(b)(3)(A)(i). 11 17 CFR 240.19b-4(f)(1). 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. 12 12 The effective date of the original proposed rule is November 9, 2005. The effective date of Amendment No. 1 is November 28, 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 November 28, 2005, the date on which Phlx submitted Amendment No. 1. *See* 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *(http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2005-66 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-Phlx-2005-66. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site *(http://www.sec.gov/rules/sro.shtml)* . Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2005-66 and should be submitted on or before January 4, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7326 Filed 12-13-05; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 5246] Culturally Significant Objects Imported for Exhibition Determinations: “Rubens and His Age: Masterpieces From the Hermitage” AGENCY: Department of State ACTION: Notice. SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition “Rubens and His Age: Masterpieces from the Hermitage”, imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners. I also determine that the exhibition or display of the exhibit objects at the Guggenheim-Hermitage Museum, Las Vegas, Nevada, from on or about January 30, 2006, until on or about August 30, 2006, and at possible additional venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Richard Lahne, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202/453-8058). The address is U.S. Department of State, SA-44, 301 4th Street, SW. Room 700, Washington, DC 20547-0001. Dated: December 9, 2005. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. 05-24065 Filed 12-12-05; 1:01 pm]
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Traces to 21 documents
CFR
- Filing and amendment of national market system plans.§ 242.608
- Dissemination of transaction reports and last sale data with respect to transactions in NMS stocks.§ 242.601
- Delegation of authority to Director of Division of Trading and Markets.§ 200.30-3
- Confidential treatment procedures under the Freedom of Information Act.§ 200.83
- Procedures to safeguard customer information, including response programs for unauthorized access to customer information and customer notice; disposal of customer information and consumer information.§ 248.30
- NMS security designation and definitions.§ 242.600
U.S. Code
- Registration requirements for securities§ 78l
- National market system for securities; securities information processors§ 78k–1
- Comprehensive energy plan§ 781
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Definitions and application§ 78c
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- National system for clearance and settlement of securities transactions§ 78q–1
- Registration with the Board§ 7212
- Inspections of registered public accounting firms§ 7214
- Registered securities associations§ 78o–3
- Immunity from seizure under judicial process of cultural objects imported for temporary exhibition or display§ 2459
- Purposes§ 6501
register
public-private-law
13 references not yet in our index
- 15 USC 78(f)
- 17 CFR 240.19
- 17 CFR 240.12
- 15 USC 78
- 17 CFR 19
- 17 CFR 248.1-18
- 17 CFR 248
- 15 USC 78(b)(1)
- 15 USC 78(c)(3)
- 17 CFR 240.24
- 17 CFR 249.30
- 17 CFR 240.15
- 79 Stat. 985
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cites case law
Notices
Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (“Act”) for an exemption from section 12(d)(1)(F)(ii) of the Act
Cite15 USC 78(f)
Cite17 CFR 240.19
Cite17 CFR 240.12
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