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Code · REGISTER · 2005-12-27 · NUCLEAR REGULATORY COMMISSION · Notices

Notices. Notice of request for extension of OMB approval

22,032 words·~100 min read·/register/2005/12/27/05-24454·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 4510-26-M NUCLEAR REGULATORY COMMISSION Tennessee Valley Authority [Docket No. 50-390] Watts Bar Nuclear Plant, Unit 1; Environmental Assessment and Finding of No Significant Impact The U.S. Nuclear Regulatory Commission
(NRC)is considering issuance of an exemption from Title 10 of the Code of Federal Regulations (10 CFR) part 50, Appendix E, Sections IV.F.2.b and c for Facility Operating License No. NPF-90, issued to Tennessee Valley Authority (TVA or the licensee), for operation of the Watts Bar Nuclear Power Plant (WBN), Unit 1, located in Rhea County, Tennessee. Therefore, as required by 10 CFR 51.21, the NRC is issuing this environmental assessment and finding of no significant impact. Environmental Assessment Identification of the Proposed Action The proposed action, as described in the licensee's application for a one-time exemption to the requirements of 10 CFR part 50, Appendix E, dated October 5, 2005, would allow the licensee to postpone the biennial, full-participation emergency exercise from November 2, 2005, to June 7, 2006. The licensee's letter requested an exemption from sections IV.F.2.b and c of Appendix E to 10 CFR part 50 regarding exercises involving the onsite and offsite emergency plans, as well as TVA's Radiological Emergency Plan Sections 14.2.1.1 and 14.2.1.3. The NRC staff has determined that the requirements of Appendix E to 10 CFR part 50, Sections IV.F.2.b and 2.c are applicable to the circumstances of the licensee's request and that an exemption from those requirements is appropriate. The licensee also stated in its October 5, 2005, letter that WBN will resume its normal biennial exercise cycle in 2007. The Need for the Proposed Action The proposed exemption from 10 CFR part 50, appendix E, sections IV.F.2.b and c is needed because the planned full-participation exercise originally scheduled for November 2, 2005, was not performed. The Federal Emergency Management Agency, which normally participates in the evaluated, full-participation exercise, and the Tennessee Emergency Management Agency were unable to provide the necessary resources for the exercise due to the impact of Hurricane Katrina. Environmental Impacts of the Proposed Action The NRC has completed its safety evaluation of the proposed action and concludes that the proposed exemption would not present an undue risk to the public health and safety. The details of the NRC staff's safety evaluation will be provided in the exemption that will be issued as part of the letter to the licensee approving the exemption to the regulation. The proposed action relates to the exercising of the emergency response plan, which has no effect on the operation of the facility. The proposed action will not significantly increase the probability or consequences of accidents. No changes are being made in the types of effluents that may be released offsite. There is no significant increase in the amount of any effluent released offsite. There is no significant increase in occupational or public radiation exposure. Therefore, there are no significant radiological environmental impacts associated with the proposed action. With regard to potential non-radiological impacts, the proposed action does not have a potential to affect any historic sites. It does not affect non-radiological plant effluents and has no other environmental impact. Therefore, there are no significant non-radiological environmental impacts associated with the proposed action. Accordingly, the NRC concludes that there are no significant environmental impacts associated with the proposed action. Environmental Impacts of the Alternative to the Proposed Action As an alternative to the proposed action, the staff considered denial of the proposed action ( *i.e.* , the “no-action” alternative). Denial of the application would result in no change in current environmental impacts. The environmental impacts of the proposed action and the alternative action are similar. Alternative Use of Resources The action does not involve the use of any different resources than those previously considered in the Final Environmental Statement Related to the Operation of Watts Bar Nuclear Plant, Units 1 and 2, NUREG 0498, dated December 1978, and a supplement to the Final Environmental Statement (NUREG 0498 Supplement No. 1), dated April 1995. Agencies and Persons Consulted In accordance with its stated policy, on November 9, 2005, the staff consulted with the Tennessee State official, Elizabeth Flanagan of the Tennessee Bureau of Radiological Health, regarding the environmental impact of the proposed action. The State official had no comments. Finding of No Significant Impact On the basis of the environmental assessment, the NRC concludes that the proposed action will not have a significant effect on the quality of the human environment. Accordingly, the NRC has determined not to prepare an environmental impact statement for the proposed action. For further details with respect to the proposed action, see the licensee's letter dated October 5, 2005. Documents may be examined, and/or copied for a fee, at the NRC's Public Document Room (PDR), located at One White Flint North, Public File Area O-1F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible electronically from the Agencywide Documents Access and Management System (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, *http://www.nrc.gov/reading-rm/adams.html* . Persons who do not have access to ADAMS or who encounter problems in accessing the documents located in ADAMS should contact the NRC PDR Reference staff by telephone at 1-800-397-4209 or 301-415-4737, or by e-mail to *pdr@nrc.gov* . Dated at Rockville, Maryland, this 19th day of December 2005. For the Nuclear Regulatory Commission. Douglas V. Pickett, Senior Project Manager, Plant Licensing Branch II-2, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. [FR Doc. E5-7867 Filed 12-23-05; 8:45 am] BILLING CODE 7590-01-P NUCLEAR REGULATORY COMMISSION Advisory Committee on Nuclear Waste Meeting On Planning and Procedures; Notice of Meeting The Advisory Committee on Nuclear Waste
(ACNW)will hold a Planning and Procedures meeting on January 11, 2006, Room T-2B1, 11545 Rockville Pike, Rockville, Maryland. The entire meeting will be open to public attendance, with the exception of a portion that may be closed pursuant to 5 U.S.C. 552b(c)(2) and
(6)to discuss organizational and personnel matters that relate solely to internal personnel rules and practices of ACNW, and information the release of which would constitute a clearly unwarranted invasion of personal privacy. The agenda for the subject meeting shall be as follows: Wednesday, January 11, 2006—8 a.m.-9 a.m. The Committee will discuss proposed ACNW activities and related matters. The purpose of this meeting is to gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the full Committee. Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official, Mr. Michael P. Lee (Telephone: 301/415-6887) between 8:15 a.m. and 5 p.m.
(ET)five days prior to the meeting, if possible, so that appropriate arrangements can be made. Electronic recordings will be permitted only during those portions of the meeting that are open to the public. Further information regarding this meeting can be obtained by contacting the Designated Federal Official between 8:15 a.m. and 5 p.m. (ET). Persons planning to attend this meeting are urged to contact the above named individual at least two working days prior to the meeting to be advised of any potential changes in the agenda. Dated: December 19, 2005. Michael L. Scott, Branch Chief, ACRS/ACNW. [FR Doc. E5-7838 Filed 12-23-05; 8:45 am] BILLING CODE 7590-01-P PENSION BENEFIT GUARANTY CORPORATION Submission of Information Collection for OMB Review; Comment Request; Notice of Failure To Make Required Contributions AGENCY: Pension Benefit Guaranty Corporation. ACTION: Notice of request for extension of OMB approval. SUMMARY: The Pension Benefit Guaranty Corporation
(PBGC)is requesting that the Office of Management and Budget
(OMB)extend approval, under the Paperwork Reduction Act, of the collection of information under part 4043 of its regulations relating to Notice of Failure to Make Required Contributions (OMB control number 1212-0041; expires January 31, 2006). This notice informs the public of the PBGC's request and solicits public comment on the collection of information. DATES: Comments should be submitted by January 26, 2006. ADDRESSES: Comments may be mailed to the Office of Information and Regulatory Affairs of the Office of Management and Budget, Attn: Desk Officer for Pension Benefit Guaranty Corporation, Washington, DC 20503. Copies of the request for extension may be obtained without charge by writing to the PBGC's Communications and Public Affairs Department at Suite 11102 at the above address or by visiting that office or calling 202-326-4040 during normal business hours. (TTY and TDD users may call the Federal relay service toll-free at 1-800-877-8339 and ask to be connected to 202-326-4040.) The regulations, forms, and instructions relating to the notice of failure to make required contributions may be accessed on the PBGC's Web site at *http://www.pbgc.gov.* FOR FURTHER INFORMATION CONTACT: James L. Beller, Jr., Attorney, Legislative and Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-4026, 202-326-4024. (For TTY/TDD users, call the Federal relay service toll-free at 1-800-877-8339 and ask to be connected to 202-326-4024.) SUPPLEMENTARY INFORMATION: Section 302(f) of the Employee Retirement Income Security Act of 1974 (“ERISA”) and section 412(n) of the Internal Revenue Code of 1986 (“Code”) impose a lien in favor of an underfunded single-employer plan that is covered by the termination insurance program if
(1)any person fails to make a required payment when due, and
(2)the unpaid balance of that payment (including interest), when added to the aggregate unpaid balance of all preceding payments for which payment was not made when due (including interest), exceeds $1 million. (For this purpose, a plan is underfunded if its funded current liability percentage is less than 100 percent.) The lien is upon all property and rights to property belonging to the person or persons who are liable for required contributions ( *i.e.* , a contributing sponsor and each member of the controlled group of which that contributing sponsor is a member). Only the PBGC (or, at its direction, the plan's contributing sponsor or a member of the same controlled group) may perfect and enforce this lien. Therefore, ERISA and the Code require persons committing payment failures to notify the PBGC within 10 days of the due date whenever there is a failure to make a required payment and the total of the unpaid balances (including interest) exceeds $1 million. PBGC Form 200, Notice of Failure to Make Required Contributions, and related filing instructions, implement the statutory notification requirement. Submission of Form 200 is required by 29 CFR 4043.81. The collection of information under the regulation has been approved through January 31, 2006, by OMB under control number 1212-0041. The PBGC is requesting that OMB extend approval for another three years. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The PBGC estimates that it will receive 78 Form 200 filings per year under this collection of information. The PBGC further estimates that the average annual burden of this collection of information is 160.5 hours and $44,132. Issued in Washington, DC, this 19th day of December, 2005. Rick Hartt, Chief Technology Officer, Pension Benefit Guaranty Corporation. [FR Doc. E5-7826 Filed 12-23-05; 8:45 am] BILLING CODE 7708-01-P PENSION BENEFIT GUARANTY CORPORATION Submission of Information Collection for OMB Review; Comment Request; Reportable Events AGENCY: Pension Benefit Guaranty Corporation. ACTION: Notice of request for extension of OMB approval. SUMMARY: The Pension Benefit Guaranty Corporation
(PBGC)is requesting that the Office of Management and Budget
(OMB)extend approval, under the Paperwork Reduction Act, of the collection of information under part 4043 of its regulations relating to Reportable Events (OMB control number 1212-0013; expires January 31, 2006). This notice informs the public of the PBGC's request and solicits public comment on the collection of information. DATES: Comments should be submitted by January 26, 2006. ADDRESSES: Comments may be mailed to the Office of Information and Regulatory Affairs of the Office of Management and Budget, Attn: Desk Officer for Pension Benefit Guaranty Corporation, Washington, DC 20503. Copies of the request for extension may be obtained without charge by writing to the PBGC's Communications and Public Affairs Department at Suite 11102 at the above address or by visiting that office or calling 202-326-4040 during normal business hours. (TTY and TDD users may call the Federal relay service toll-free at 1-800-877-8339 and ask to be connected to 202-326-4040.) The reportable events regulations, forms, and instructions may be accessed on the PBGC's Web site at *http://www.pbgc.gov.* FOR FURTHER INFORMATION CONTACT: James L. Beller, Jr., Attorney, Legislative and Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-4026, 202-326-4024. (For TTY/TDD users, call the Federal relay service toll-free at 1-800-877-8339 and ask to be connected to 202-326-4024.) SUPPLEMENTARY INFORMATION: Section 4043 of the Employee Retirement Income Security Act of 1974 (ERISA) requires plan administrators and plan sponsors to report certain plan and corporate events to the PBGC. The reporting requirements give the PBGC timely notice of events that indicate plan or employer financial problems. The PBGC uses the information provided in determining what, if any, action it needs to take. For example, the PBGC might need to institute proceedings to terminate the plan (placing it in trusteeship) under section 4042 of ERISA to ensure the continued payment of benefits to plan participants and their beneficiaries or to prevent unreasonable increases in its losses. The collection of information under the regulation has been approved through January 31, 2006, by OMB under control number 1212-0013. The PBGC is requesting that OMB extend its approval for another three years. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The PBGC estimates that it will receive 705 reportable events per year under this collection of information. The PBGC further estimates that the average annual burden of this collection of information is 2,974 hours and $817,850. Issued in Washington, DC, this 19th day of December, 2005. Rick Hartt, Chief Technology Officer, Pension Benefit Guaranty Corporation. [FR Doc. E5-7828 Filed 12-23-05; 8:45 am] BILLING CODE 7708-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52984; File No. SR-Amex-2005-123] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Amex Rule 900-ANTE to Provide a Revised Implementation Date for the ANTE System, and To Eliminate Commentary .01 to Amex Rule 935-ANTE December 20, 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 29, 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 and II below, which Items have been prepared by the Amex. The Amex filed the proposal as a “non-controversial” proposed rule change pursuant to section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. 5 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). 5 The Amex has asked the Commission to waive the five-day pre-filing notice requirement and the 30-day operative delay. *See* Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-4(f)(6)(iii). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Amex proposes to amend
(i)Amex Rule 900-ANTE to provide a revised date for the completion of the implementation of the ANTE System for all options classes; and
(ii)Amex Rule 935-ANTE, to eliminate Commentary .01 because the implementation of increased floor broker functionality in the ANTE System has made this provision obsolete. The text of the proposed rule change is available on the Amex's Web site ( *http://www.amex.com* ), at the Amex'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 Amex included statements concerning the purpose of, and basis for, the proposed rule change, and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose—Revised Implementation Date—Amex Rule 900-ANTE On May 20, 2004, the Commission approved the Amex's proposal to implement a new options trading platform known as the Amex New Trading Environment (“ANTE”). 6 On May 25, 2004, the Amex began rolling out the ANTE System on its trading floor on a specialist's post-by-specialist's post basis. At that time, the Amex anticipated that the roll out would be completed by the end of the second quarter of 2005. The Amex subsequently extended the implementation date for the full roll-out of the ANTE System to November 30, 2005. 7 The Amex has rolled out the ANTE System to all its option classes except two: The Nasdaq 100 Index (“NDX”) and the Mini Nasdaq Index (“MNX”). There are specific reasons why these products have not been rolled out on the ANTE System. The specialist in these products is concerned that the theoretical price calculator provided by the ANTE System may not accurately price the options on these indexes. The specialist is waiting for its own theoretical index price calculator, which has been installed and is currently being tested, to successfully calculate prices for these indexes and options. The Amex expects that the MNX/NDX specialist will have the proprietary calculator in place by December 31, 2005. 6 *See* Securities Exchange Act Release No. 49747 (May 20, 2004), 69 FR 30344 (May 27, 2004) (SR-Amex-2003-89). 7 *See* Securities Exchange Act Release No. 52740 (November 4, 2005), 70 FR 69170 (November 14, 2005), (SR-Amex-2005-109). The Amex is now proposing to further revise its implementation schedule to provide that the remaining two option classes will be on the ANTE System by December 31, 2005. Maintaining two systems for the trading of options—the legacy system (XTOPS, AODB and Auto-Ex) and ANTE—is costly. As a result, the Exchange is working diligently to have all option classes on the ANTE System by December 31, 2005, so that it can retire its legacy systems. Increased Floor Broker Functionality—Amex Rule 935-ANTE Amex Rule 935-ANTE
(b)provides for the post trade allocation of contracts executed as the result of the submission of orders to trade with orders in the ANTE Central Book. If more than one ANTE Participant 8 and/or a floor broker representing a customer order submits an order to trade with an order in the ANTE Central book within a period not to exceed five seconds after the initial ANTE Participant has submitted its order, all those ANTE Participants and the floor broker's customer will be entitled to participate in the allocation of any executed contracts. The ANTE System was initially unable to provide the functionality necessary for floor brokers representing customer orders in the trading crowd to directly participate in the post trade allocation of orders taken off the Central Book. Commentary .01 to Amex Rule 935-ANTE provides a temporary methodology for the specialist to disengage the post trading allocation system in a specific series, which allows the floor broker to alert the specialist within the five-second timeframe whenever the specialist's customer wants to participate in post trade allocation, and allows the specialist to provide for the customer's participation in post trade allocation when appropriate. The Commission approved the procedures set forth in Commentary .01 to Amex Rule 935-ANTE as a “reasonable, temporary solution.” 9 Effective November 18, 2005, the ANTE System gave floor brokers greater functionality to access the Central Book, and the Exchange now proposes to eliminate Commentary .01 because the implementation of greater floor broker functionality has made the procedures set forth in Commentary .01 unnecessary. 8 Amex Rule 900-ANTE (b)(45) defines ANTE Participant as the specialist and/or registered options trader(s) assigned to trade a specific options class on the ANTE System. 9 *See* footnote 6, *supra* . 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of section 6(b) of the Act 10 in general, and furthers the objectives of section 6(b)(5) of the Act 11 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 transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and in general, to protect investors and the public interest; and is designed to prohibit unfair discrimination between customers, issuers, brokers and dealers. 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange 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. The Exchange has requested that the Commission waive the five-day pre-filing requirement and the 30-day operative delay period for “non-controversial” proposals. The Commission waives the five-day pre-filing requirement and the 30-day operative delay. 12 The Amex has represented that the theoretical price calculators for the final two options classes are not installed. The Commission believes that extending the deadline for implementing Amex Rule 900-ANTE by one month should afford the Amex the time needed to install and/or fix the theoretical price calculators. The Commission believes that it is in the interest of investors and the public to delay implementation of the ANTE system until all of the components are in place and functioning properly, and to eliminate Commentary .01 to Amex Rule 935, which it is no longer necessary. Therefore, the foregoing rule change has become immediately effective and operative upon filing pursuant to Section 19(b)(3)(A)(iii) of the Act 13 and Rule 19b-4(f)(6) thereunder. 14 12 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). 13 15 U.S.C. 78s(b)(3)(A)(iii). 14 17 CFR 240.19b-4(f)(6). At any time within 60-days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change 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-2005-123 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-2005-123. 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 Amex's Office of the Secretary. 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-2005-123 and should be submitted on or before January 17, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7843 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52977; File No. SR-DTC-2005-20] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Discontinue Its Domestic Tax Reporting Service December 19, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on November 21, 2005, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) a proposed rule change and on November 23, 2005, amended the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by DTC. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 2 and Rule 19b-4(f)(4) thereunder 3 so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(iii). 3 17 CFR 240.19b-4(f)(4). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule allows DTC to discontinue the Domestic Tax Reporting Service (“DTax”). The termination of this service took effect on December 1, 2005. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC 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. DTC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 4 4 The Commission has modified the text of the summaries prepared by DTC. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Although the Commission approved DTC's offering of DTax, DTC has determined that it will not offer the service in the future through DTC. The purpose of the proposed rule change is to terminate DTax as a DTC service offering. DTC participants will be informed of the termination of DTax at DTC by Important Notice. DTax is a tax reporting service that accumulates and provides year-end tax recharacterization information on various securities types, including mutual funds, real estate investment trusts (REITs), Exchange Traded Funds (ETFs), and common stock, to facilitate accurate and timely Internal Revenue Service Form 1099 tax reporting. DTC began offering the service in 1998, and it has grown to have a database of 13,000 securities, both DTC-eligible and (predominantly) non-DTC-eligible securities. The service is available through the Web and other proprietary computer-to-computer communications systems. For purposes of efficiency and enhanced customer service, a wholly-owned subsidiary of The Depository Trust & Clearing Corporation, DTC's parent, will instead offer DTax. DTC participants will be given information regarding how to purchase the service outside of DTC. It is anticipated that DTax will be offered to customers at the same cost as it has been provided through DTC in the past. The proposed change is consistent with Section 17A of the Act 5 and the rules and regulations thereunder applicable to DTC because it will allow for more efficient allocation of DTC's resources. The proposed rule change will be implemented consistently with the safeguarding of securities and funds in DTC's custody or control or for which it is responsible inasmuch as the DTax service merely facilitates tax reporting of non-DTC eligible securities and does not affect the clearance and settlement of securities in DTC's custody or control. 5 15 U.S.C. 78q-1. B. Self-Regulatory Organization's Statement on Burden on Competition DTC does not believe that the proposed rule change will have any impact or impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(iii) of the Act 6 and Rule 19b-4(f)(4) 7 thereunder because the proposed rule effects a change in an existing service of DTC that
(i)does not adversely affect the safeguarding of securities or funds in the custody or control of DTC or for which it is responsible and
(ii)does not significantly affect the respective rights or obligations of DTC or persons using the service. At any time within sixty days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 8 6 15 U.S.C. 78s(b)(3)(A)(iii). 7 17 CFR 240.19b-4(f)(4). 8 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 the date on which the last amendment to the proposed rule change was filed with the Commission. 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-DTC-2005-20 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-DTC-2005-20. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of DTC and on DTC's Web site at *https://login.dtcc.com/dtcorg/* . 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-DTC-2005-20 and should be submitted on or before January 17, 2006. 9 17 CFR 200.30-3(a)(12). For the Commission by the Division of Market Regulation, pursuant to delegated authority. 9 Jonathan G. Katz, Secretary. [FR Doc. E5-7856 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52983; File No. SR-ISE-2005-047] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Adopt a Flat Execution Fee For Public Customer Orders in “Premium Products” and Firm Proprietary Orders, and To Incorporate the Current Facilitation Mechanism Fee Into the Flat Execution Fee For Firm Proprietary Orders December 20, 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 1, 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, II and III below, which Items have been prepared by the ISE. On December 7, 2005, the Exchange filed Amendment No. 1 to the proposed rule change. 3 The ISE filed the proposal as a “non-controversial” proposed rule change pursuant to section 19(b)(3)(A)(iii) of the Act 4 and Rule 19b-4(f)(2) 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 Amendment No. 1, ISE explained further its basis for the proposed flat execution fee and its reason for eliminating the Facilitation Mechanism fee. Amendment No. 1 also corrected several minor errors. For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change the Commission considers the period to commence on December 7, 2005, the date on which the ISE filed Amendment No. 1. *See* 15 U.S.C. 78s(b)(3)(C). 4 15 U.S.C. 78s(b)(3)(A)(iii). 5 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to amend its Schedule of Fees to
(i)adopt a flat execution fee for Public Customer Orders 6 in “Premium Products” (as defined in the Schedule of Fees) and firm proprietary orders; and
(ii)incorporate the current Facilitation Mechanism fee into the flat execution fee for firm proprietary orders. The text of the proposed rule change is available at the Exchange and at the Commission's Public Reference Room, and at the Exchange's Web site ( *http://www.iseoptions.com/legal/proposed_rule_changes.asp* ). 6 A Public Customer Order is defined in ISE Rule 100(a)(33) as an order for the account of a Public Customer. A Public Customer is defined in ISE Rule 100(a)(32) as a person that is not a broker or dealer in securities. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the ISE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange's Schedule of Fees currently contains a formula that determines the amount of the execution fee to be charged to all order types, *i.e.* , Public Customer (for certain index-based products), firm proprietary and market maker, based on the Exchange's average daily volume during the previous month. Under the current formula, the execution fee can range anywhere between $0.12 per contract to $0.21 per contract, depending on the Exchange's average daily volume during the previous month. The Exchange proposes to change this structure so that Public Customer Orders in “Premium Products” 7 and firm proprietary orders pay a flat execution fee of $0.15 per contract. 8 Public Customer Orders in products other than Premium Products will continue to be subject to a flat execution fee of $0.05, although that fee is currently waived until June 30, 2006. ISE market makers will continue to be charged the variable fee under the current formula. A $0.03 per contract comparison fee shall continue to apply to all these order types, unless specifically waived in the Schedule of Fees. 7 The ISE proposes to define the term “Premium Products” in the Schedule of Fees as options on DIA, IBB, IEF, IJH, IJR, IWM, IWN, IWO, NYC, NY, OEF, OIH, SHY, SMH, SPY, TLT, XLB, XLE, XLF, XLI, XLU, BYT, HSX, HVY, IXK, IXX, IXZ, JLO, MID, MNX, MSH, NDX, OOG, RMN, RND, RUF, RUI, RUT, SIN, and SML. 8 These fees will be charged only to Exchange members. Additionally, the Exchange proposes to delete the separate Facilitation Mechanism fee line item. Previously, there was a separate line item in the Schedule of Fees for orders executed in that mechanism: Orders executed in the Facilitation Mechanism were charged the lower of the standard execution fee or $0.15 per contract. Historically, fees charged for trades executed in the Facilitation Mechanism were carved out on the Schedule of Fees as a separate line item because, as a matter of inducement for members to transact in the Facilitation Mechanism, these fees were lower than the standard execution fees. Over time, as the standard execution fees decreased, as a result of increased volume, the two fees became identical. Accordingly, the Exchange now proposes to eliminate the separate line item for orders executed in the Facilitation Mechanism because it is no longer necessary when there is a flat $0.15 fee for firm proprietary order and public customer orders in Premium Products. As a matter of “housekeeping,” in addition to using “Premium Products” as a defined word throughout the Schedule of Fees, the Exchange proposes to identify each product that appears on the Schedule of Fees by its ticker symbol alone rather than by its name and ticker symbol. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of section 6(b)(4) of the Act, 9 which requires that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. The Exchange believes the proposed fees are reasonable because they closely correlate to the variable execution fees charged to market maker and firm proprietary orders over the course of the last 12 months. For example, for nine months during 2005, the variable execution fees charged to market maker and firm proprietary orders were $0.15 per contract, and for 3 months during 2005, these same fees were $0.14 per contract. The Exchange further believes that the proposed fee changes will enable the ISE to continue offering competitively priced products and services. 9 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. The ISE has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act, 10 and paragraph (f)(2) of Rule 19b-4 thereunder 11 because it establishes or changes a due, fee, or other charge. 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 10 15 U.S.C. 78s(b)(3)(A)(ii). 11 17 CFR 240.19b-4(f)(2). 12 *See* footnote 3, *supra.* 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-ISE-2005-047 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-ISE-2005-047. 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 ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2005-047 and should be submitted on or before January 17, 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. E5-7844 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52980; File No. SR-NASD-2005-134] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Status of Registered Persons and Sole Proprietors Serving in the Armed Forces of the United States December 19, 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 National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. NASD 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 the Substance of the Proposed Rule Change NASD is proposing to amend NASD IM-1000-2 to
(1)clarify that the scope of the relief provided in the IM extends to any registered person of a firm who volunteers for or is called into active military duty, not just registered representatives;
(2)codify the staff's existing interpretation with respect to the receipt of transaction-related compensation by registered persons who volunteer for or are called into active military duty;
(3)clarify that the relief provided to a registered person of a firm who volunteers for or is called into active military duty is available to the person during the period that such person remains registered with the firm, regardless of whether the person returns to employment at a different firm upon completion of his or her active military duty; and
(4)clarify that the “inactive” status designation is available to registered persons and sole proprietors who volunteer for or are called into active duty in the Armed Forces of the United States and is available to them only while they remain on active military duty. Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in [brackets]. B. SCHEDULE A TO NASD BY-LAWS IM-1000-2. Status of [Sole Proprietors and Registered Representatives] *Persons* Serving in the Armed Forces *of the United States* *(a) Inactive Status of Currently Registered Persons* *(1)* A[ny] [R] *r* egistered [Representative] *person* of a member who volunteers *for* or is called into active duty in the Armed Forces of the United States shall be placed, after proper notification to [the Executive Office] *NASD,* upon inactive status and need not be re-registered by such member upon his or her return to active employment with the member. *Such a person will remain eligible to receive transaction-related compensation, including continuing commissions, because he or she remains registered with a member of NASD. The employing member also may allow such a person to enter into an arrangement with another registered person of the member to take over and service the person's accounts and to share transaction-related compensation based upon the business generated by such accounts. However, since such persons are inactive, they may not perform any of the duties performed by a registered person.* [Any member (Sole Proprietor) who temporarily closes his or her business by reason of volunteering or being called into the Armed Forces of the United States, shall be placed, after proper notification to the Executive Office, on inactive status until his or her return to active participation in the investment banking and securities business.] ( *2* ) A [R] *r* egistered [Representative] *person* who is placed on inactive status [as set forth above] *pursuant to this paragraph (a)* shall not be included within the definition of “Personnel” for purposes of the dues or assessments as provided in Article VI of the *NASD* By-Laws. [Any member placed on inactive status as set forth above shall not be required to pay dues or assessments during the pendency of such inactive status and shall not be required to pay an admission fee upon return to active participation in the investment banking and securities business.] *(3)* A [R] *r* egistered [Representative] *person* who is placed on inactive status [as set forth above] *pursuant to this paragraph (a)* shall not be required to complete either of the Regulatory or Firm Elements of the continuing education requirements set forth in Rule 1120 during the pendency of such inactive status. *
(4)The relief provided in subparagraphs (a)(1), (a)(2), and (a)(3) shall be available to a registered person who is placed on inactive status pursuant to this paragraph
(a)during the period that such a person remains registered with the member with which he or she was registered at the beginning of active duty in the Armed Forces of the United States, regardless of whether the person returns to active employment with another member upon completion of his or her active duty in the Armed Forces of the United States. * *(5) The relief described in this paragraph
(a)will be provided only to a person registered with a member and only while the person remains on active military duty.*
(b)Inactive Status of Sole Proprietorships *(1) A member that is a sole proprietor who temporarily closes his or her business by reason of volunteering for or being called into active duty in the Armed Forces of the United States, shall be placed, after proper notification to NASD, on inactive status while the member remains on active military duty.* *(2) A sole proprietor member placed on inactive status as set forth in this paragraph
(b)shall not be required to pay dues or assessments during the pendency of such inactive status and shall not be required to pay an admission fee upon return to active participation in the investment banking and securities business.* *(3) The relief described in this paragraph
(b)will be provided only to a sole proprietor member and only while the person remains on active military duty.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Since the September 11, 2001 attacks, NASD has provided tailored regulatory relief to securities industry professionals who volunteer for or are called into active military duty. Most notably, in January 2002, NASD filed with the SEC for immediate effectiveness a rule change that amended NASD IM-1000-2 to codify the staff's position regarding the relief from NASD Rule 1120 (Continuing Education Requirements) for securities industry professionals who volunteer for or are called into active military duty. 5 5 *See* Securities Exchange Act Release No. 45259 (January 9, 2002), 67 FR 2256 (January 16, 2002) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Relieve Registered Representatives Serving in the Armed Forces From Continuing Education Requirements) (SR-NASD-2002-03). NASD IM-1000-2 currently permits a firm to place a registered representative on “inactive” status while serving in the Armed Forces of the United States. Such “inactive” status excuses a registered representative from continuing education obligations, waives dues and assessments, and ensures that he or she is not subject to the two-year expiration period for securities licenses of persons who cease to be registered with a member (“two-year licensing expiration provisions”). 6 6 NASD Rules 1021(c), 1031(c), and 1041(c) provide that if a person does not register with a member within two years of his or her last registration, his or her qualification as a principal, representative, or assistant representative will lapse and the person must then retest to function as a principal, representative, or assistant representative. In the case of a person on “inactive” status due to active military duty, because he or she is considered registered for purposes of NASD Rules, the “two-year licensing expiration provisions” do not apply. Additionally, following discussions with the SEC staff, NASD published on its Web site guidance that provides that “inactive” registered persons serving in the Armed Forces of the United States may receive transaction-related compensation, provided that they do not perform any functions of a registered person while on “inactive” status. 7 7 *See Registered Persons on Active Military Duty* (available at: *http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_014635&ssSourceNodeId=1091* ). The NASD staff's interpretation with respect to the receipt of transaction-related compensation by registered persons serving in the Armed Forces of the United States is consistent with the New York Stock Exchange, Inc.'s (“NYSE”) interpretation to NYSE Rule 345(a), which the NYSE codified in June 2002. *See* NYSE Interpretation Handbook, NYSE Rule 345(a)/03. Telephone conversation between Mia Zur, Attorney, Jan Woo, Attorney, Division, Commission, and Afshin Atabaki, Counsel, NASD, dated December 8, 2005. NASD has recently received requests for further clarification on the scope of NASD IM-1000-2 and the accompanying guidance. In particular, members have questioned whether the IM applies to registered persons other than registered representatives and whether registered persons can receive commissions on accounts that have been temporarily re-assigned in their absence. Members also have questioned the manner in which the relief applies if a registered person seeks employment with a different member upon completing active military duty. 8 8 Some members have questioned whether the return of a registered person who volunteers for or is called into active military duty to employment at a different member would negate or invalidate the relief the person has received while being deemed “inactive” at his original employing member. In response, NASD is proposing the following amendments to NASD IM-1000-2 to clarify its scope and codify NASD's existing guidance with respect to the receipt of transaction-related compensation by registered persons actively serving in the Armed Forces of the United States. First, NASD is proposing to amend NASD IM-1000-2 to clarify that the scope of the relief provided in the IM extends to any registered person of a member who volunteers for or is called into active military duty, not just registered representatives. Second, NASD is proposing to amend NASD IM-1000-2 to expressly state that a registered person of a member who volunteers for or is called into active duty in the Armed Forces of the United States and who is placed on “inactive” status will remain eligible to receive transaction-related compensation, including continuing commissions, because he or she remains registered with a member of NASD. In addition, NASD is proposing to amend NASD IM-1000-2 to provide that an employing member may allow such a person to enter into an arrangement with another registered person of the member to take over and service the person's accounts and to share transaction-related compensation based upon the business generated by such accounts. NASD also is proposing to amend NASD IM-1000-2 to state that such “inactive” persons may not perform any of the duties performed by a registered person. As noted above, the proposed amendments are consistent with NASD's existing interpretation with respect to the receipt of transaction-related compensation by registered persons actively serving in the Armed Forces of the United States, as well as the NYSE's interpretation to NYSE Rule 345(a). 9 9 The relief regarding the ongoing receipt of transaction-based compensation does not extend to a sole proprietor member placed on “inactive” status pursuant to NASD IM-1000-2. Rather, consistent with current practice, NASD staff, in consultation with SEC staff, will address such issues in the context of a sole proprietor member placed on “inactive” status on a case-by-case basis. *See* NYSE Interpretation Handbook, NYSE Rule 345(a)/03. Telephone conversation between Mia Zur, Attorney, Jan Woo, Attorney, Division, Commission, and Afshin Atabaki, Counsel, NASD, dated December 8, 2005. Third, NASD is proposing to amend NASD IM-1000-2 to clarify that the relief provided to a registered person of a member who volunteers for or is called into active military duty is available to the person during the period that such person remains registered with the member, regardless of whether the person returns to employment at a different member upon completion of his or her active military duty. Accordingly, under the proposal, NASD will not rescind the relief provided to such a person simply because he or she decides to register with another member upon completion of his or her active military duty. For instance, if a registered person of Firm Y who volunteers for or is called into active military duty and who is placed on “inactive” status with Firm Y decides to register with Firm Z upon completion of her active military duty, NASD will not invalidate the relief that was provided to the person while on “inactive” status with Firm Y. Fourth, NASD is proposing to amend NASD IM-1000-2 to clarify that the “inactive” status designation is available to registered persons and sole proprietors who volunteer for or are called into active duty in the Armed Forces of the United States and is available to them only while they remain on active military duty. Therefore, under the proposal, a registered person who is placed on “inactive” status pursuant to NASD IM-1000-2 will be removed from “inactive” status if the person ceases to be registered with a member while serving in the Armed Forces of the United States. 10 If he or she re-registers with a member while still serving in the Armed Forces of the United States, he or she will again be eligible for “inactive” status pursuant to the IM. Further, under the proposal, a registered person or sole proprietor who is placed on “inactive” status pursuant to NASD IM-1000-2 will be removed from “inactive” status if the registered person or sole proprietor is no longer on active military duty. 10 In conjunction with this filing, NASD is filing a proposed rule change with the Commission to address the status of persons who terminate their registration with a member while on active military duty and persons who commence their active military duty within two years after they have ceased to be registered with a member, including the application of the “two-year licensing expiration provisions” to such persons. *See* SR-NASD-2005-135. NASD is proposing to implement the proposed rule change immediately upon filing with the Commission. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, 11 which requires, among other things, that NASD's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change provides appropriate tailored relief to persons actively serving in the Armed Forces of the United States in a manner consistent with NASD's goals of investor protection and market integrity. 11 15 U.S.C. 78o-3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 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 has become effective pursuant to Section 19(b)(3)(A)(i) of the Act 12 and Rule 19b-4(f)(1) thereunder, 13 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. NASD has proposed to implement the rule change immediately upon filing with the Commission. NASD will announce the proposed rule change in a *Notice to Members* to be published no later than 60 days after SEC Notice of this filing. 12 15 U.S.C. 78s(b)(3)(A)(i). 13 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-NASD-2005-134 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-NASD-2005-134. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2005-134 and should be submitted on or before January 17, 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. E5-7839 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52981; File No. SR-NASD-2005-133] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to an Increase in Fees for Certain Qualification Examinations December 19, 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 National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. NASD has designated the proposed rule change as one establishing or changing a due, fee, or other charge under Section 19(b)(3)(A)(ii) 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)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change NASD is proposing to amend Section 4 of Schedule A to the NASD By-Laws (“Schedule A”) to increase examination fees that shall be assessed persons taking certain qualifications examinations as of January 1, 2006. Below is the text of the proposed rule change. Proposed new language is in *italics;* proposed deletions are in [brackets]. B. SCHEDULE A TO NASD BY-LAWS C. Section 4—Fees
(a)and
(b)No change.
(c)The following fees shall be assessed to each individual who registers to take an examination as described below as of January 1, 200[5] *6* . These fees are in addition to the registration fee described in paragraph (b). Series 4 Registered Options Principal $80 Series 6 Investment Company Products/Variable Contracts Representative [$70] *$75* Series 7 General Securities Representative [$225] *$250* Series 9 General Securities Sales Supervisor—Options Module $60 Series 10 General Securities Sales Supervisor—General Module [$95] *$100* Series 11 Assistant Representative—Order Processing $60 Series 17 Limited Registered Representative $65 Series 22 Direct Participation Programs Representative [$70] *$75* Series 23 General Securities Principal Sales Supervisor Module $75 Series 24 General Securities Principal [$85] *$95* Series 26 Investment Company Products/Variable Contracts Principal $75 Series 27 Financial and Operations Principal [$85] *$95* Series 28 Introducing Broker/Dealer Financial and Operations Principal $75 Series 37 Canada Module of S7 (Options Required) $150 Series 38 Canada Module of S7 (No Options Required) $150 Series 39 Direct Participation Programs Principal $75 Series 42 Registered Options Representative $60 Series 55 Limited Representative—Equity Trader [$80] *$85* Series 62 Corporate Securities Limited Representative [$70] *$75* Series 72 Government Securities Representative [$80] *$85* Series 82 Limited Representative—Private Securities Offering $75 Series 86 Research Analyst—Analysis $150 Series 87 Research Analyst—Regulatory $105
(1)through
(3)No change.
(d)through
(h)No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose This proposed rule change amends Schedule A to increase examination fees that shall be assessed persons taking certain qualification examinations as of January 1, 2006. Any person associated with a member firm who is engaged in the securities business of the firm must register with the NASD. As part of the registration process, securities professionals must pass a qualification examination to demonstrate competence in each area in which they intend to work. Some of these examinations are sponsored ( *i.e.* , developed) by NASD, and others are sponsored by the New York Stock Exchange, Inc. (“NYSE”), the Municipal Securities Rulemaking Board (“MSRB”), or other self-regulatory organizations (“SROs”). 5 NASD administers qualification examinations via computer through the PROCTOR® system 6 at test centers operated by vendors under contract with NASD. NASD charges an examination fee to candidates for NASD-sponsored examinations. For those examinations sponsored by a NASD client and administered/delivered by NASD, NASD charges a delivery fee that comprises either a part or all of the examination fee for these examinations. 7 5 For example, NASD administers and delivers the Series 6, 24, and 27 examinations, which are sponsored by NASD. NASD also administers and delivers client examinations, such as the Series 7, which is sponsored by the NYSE, and the Series 10, which is sponsored jointly by several SROs (the American Stock Exchange LLC (“Amex”), the Chicago Board Options Exchange, Inc. (“CBOE”), MSRB, NASD, NYSE, the Pacific Exchange, Inc. (“PCX”), and the Philadelphia Stock Exchange, Inc. (“Phlx”)). 6 PROCTOR® is a technology system that supports computer-based testing and training. 7 For additional discussion of the examination and delivery fee structure, *see* Securities Exchange Act Release No. 50575 (October 20, 2004), 69 FR 62732 (October 27, 2004) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to Amendments to Section 4 of Schedule A to the NASD By-Laws (Fees for Qualification Examinations)) (SR-NASD-2004-145). Each year, NASD conducts a comprehensive review of the licensing examination fee structure, which includes an analysis of the costs of developing, administering, and delivering examinations. NASD's review in 2005 showed that certain operational costs are rising. In particular, these costs consist of
(1)the cost of providing the extensive network of test delivery centers; and
(2)technology costs required to maintain the current PROCTOR® system and to redesign the PROCTOR® system. The proposed rule change will increase examination fees for certain NASD-sponsored examinations. In addition, NASD has advised its client examination sponsors of the impact of the higher costs on delivery fees for client-sponsored examinations. Accordingly, NASD is proposing to amend Schedule A to reflect the following increases in examination fees (which includes NASD-sponsored and client-sponsored examinations, as well as joint SRO examinations): Series 6 Investment Company Products/Variable Contracts Representative (NASD-sponsored) From $70 to $75. Series 7 General Securities Representative (NYSE-sponsored) From $225 to $250. Series 10 General Securities Sales Supervisor—General Module (Sponsored jointly by AMEX, CBOE, NASD, NYSE, PCX, and PHLX) From $95 to $100. Series 22 Direct Participation Programs Representative (NASD-sponsored) From $70 to $75. Series 24 General Securities Principal (NASD-sponsored) From $85 to $95. Series 27 Financial and Operations Principal (NASD-sponsored) From $85 to $95. Series 55 Limited Representative—Equity Trader (NASD-sponsored) From $80 to $85. Series 62 Corporate Securities Limited Representative (NASD-sponsored) From $70 to $75. Series 72 Government Securities Representative (NASD-sponsored) From $80 to $85. The proposed rule change is effective upon filing pursuant to Section 19(b)(3)(A) of the Act 8 and paragraph (f)(2) of Rule 19b-4 thereunder, 9 in that the proposed rule change establishes or changes a due, fee, or other charge imposed by NASD. The new fees will be become effective for “120-day examination windows” opened in the Central Registration Depository (CRD®) on or after January 1, 2006. 10 NASD will continue to conduct an annual review of its costs and adjust examination and delivery fees, if necessary, as of January 1 each year after making the appropriate rule filings. 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(2). 10 The published fee represents the fee that will be charged at the time the individual registers for the examination. The individual then has 120 days to take the examination. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(5) of the Act, 11 which requires, among other things, that NASD rules provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system that NASD operates or controls. NASD believes that the rule change is consistent with Section 15A(b)(5) of the Act in that the fee changes reflect NASD's increased costs in delivering the examinations and in maintaining and upgrading the examination delivery system. 12 11 15 U.S.C. 78o-3(b)(5). 12 *Id.* B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 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 Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by NASD, it has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b-4(f)(2) thereunder. 14 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *(http://www.sec.gov/rules/sro.shtml)* ; or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2005-133 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-NASD-2005-133. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site *(http://www.sec.gov/rules/sro.shtml)* . Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2005-133 and should be submitted on or before January 17, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7840 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52978; File No. SR-NASD-2005-141] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Modify the Execution Fees for Quotes and Orders Executed in the Nasdaq Opening Cross December 19, 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 National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II and III below, which Items have been prepared by Nasdaq. On December 9, 2005, Nasdaq filed Amendment No. 1 to the proposed rule change. 3 Nasdaq has designated this proposal as 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, 4 and Rule 19b-4(f)(2) 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 Amendment No. 1, Nasdaq made non-substantive changes to the text of the proposed rule change. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to modify the execution fees for quotes and orders in the Nasdaq Opening Cross. Nasdaq will implement the proposed rule change on January 3, 2006. Additions are *italicized,* and deletions are in brackets. 7010. System Services (a)-(h) No change
(i)Nasdaq Market Center and Brut Facility Order Execution (1)-(3) No change.
(4)Opening Cross [For a period of three months commencing on the date Nasdaq implements its Opening Cross (as described in Rule 4704(d)), members shall not be charged Nasdaq Market Center execution fees, or receive Nasdaq Market Center liquidity provider credits, for those quotes and orders executed in the Nasdaq Opening Cross.] *Commencing on January 1, 2006, members shall be assessed the following Nasdaq Market Center execution fees for quotes and orders executed in the Nasdaq Opening Cross:* *Market-on-Open, Limit-on-Open and Day orders executed in the Nasdaq Opening Cross—$0.0005 per share executed for the net number of buy and sell shares up to a maximum of $10,000 per firm per month* *All other quotes and orders executed in the Nasdaq Opening Cross—No charge for execution*
(5)and
(6)No change. (j)-(w) No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq has determined to establish the following pricing for the Nasdaq Opening Cross beginning January 3, 2006. Nasdaq will assess a fee of $0.0005 per share executed during the Nasdaq Opening Cross for all Market-on-Open, Limit-on-Open, and Day orders that are executed in the Opening Cross. That fee will be assessed on the difference between the total number of shares of buy
(sell)interest minus the total number of shares of sell
(buy)interest executed by that firm for all stocks. The fee will be capped at $10,000 per firm per month for all stocks combined. At this time, Nasdaq will assess no fees and offer no rebates for quotations and other orders executed during the Nasdaq Opening Cross. Nasdaq will monitor the effectiveness of the proposed pricing schedule in preserving and enhancing the success of the Nasdaq Opening Cross to date. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with Section 15A of the Act, 6 in general, and Section 15A(b)(5) 7 of the Act, in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility or system which the NASD operates or controls. The proposed fees for Market-on-Open, Limit-on-Open, and Day orders are consistent with the statute in that they are designed to result in an execution charge approximating the execution charge for quotes and orders entered and executed in the Nasdaq Market Center throughout the trading day. Assessing no fee and offering no rebate for quotations and other orders executed during the Nasdaq Opening Cross is consistent with the statute because it is designed to encourage the entry of Imbalance Only orders to minimize imbalances resulting from the Opening Cross algorithm, and to preserve the Opening Cross liquidity provided by quotations and orders from the continuous market. B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq 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 Nasdaq 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and subparagraph (f)(2) of Rule 19b-4 thereunder. 9 At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 10 Nasdaq will implement the proposed rule change on January 3, 2006. 6 15 U.S.C. 78 *o* -3. 7 15 U.S.C. 78 *o* -3(b)(5). 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(2). 10 The effective date of the original proposed rule change is December 5, 2005, and the effective date of Amendment No. 1 is December 9, 2005. For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change, as amended, under Section 19(b)(3)(C) of the Act, the Commission considers the period to commence on December 9, 2005, the date on which Nasdaq 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 is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2005-141 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number SR-NASD-2005-141. 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 offices of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2005-141 and should be submitted on or before January 17, 2006. 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. E5-7860 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52979; File No. SR-NASD-2005-135] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change Relating to the Status of Former Registered Persons Serving in the Armed Forces of the United States December 19, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on November 15, 2005, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the NASD. 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. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend NASD IM-1000-2 to toll the two-year expiration provisions for qualification examination requirements set forth in NASD Rules 1021(c), 1031(c), and 1041(c) for certain former registered persons serving in the Armed Forces of the United States, including persons who commence their active military duty within two years after they have ceased to be registered with a member and persons who terminate their registration with a member while on active military duty. Below is the text of the proposed rule change. Proposed new language is in *italics.* IM-1000-2. Status of Persons Serving in the Armed Forces of the United States (a)-(b) No Change. *(c) Status of Formerly Registered Persons* *
(1)If a person who is currently not registered with a member volunteers for or is called into active duty in the Armed Forces of the United States at any time within two years after the date the person ceases to be registered with a member, NASD will defer the lapse of registration requirements set forth in Rules 1021(c), 1031(c), and 1041(c) (i.e., toll the two-year expiration provisions for qualification examination requirements). NASD will defer the lapse of registration requirements commencing on the date the person begins actively serving in the Armed Forces of the United States, provided that NASD is properly notified of the person's period of active military service within 90 days following his or her completion of active service or upon his or her re-registration with a member, whichever occurs first. The deferral will terminate 90 days following the person's completion of active service in the Armed Forces of the United States. Accordingly, if such person does not re-register with a member within 90 days following his or her completion of active service in the Armed Forces of the United States, the amount of time in which the person must become re-registered with a member without being subject to the qualification examination requirements shall consist of the standard two-year period provided in Rules 1021(c), 1031(c), and 1041(c) reduced by the period of time between the person's termination of registration and beginning of active service in the Armed Forces of the United States. * *(2) If a person placed upon inactive status while serving in the Armed Forces of the United States ceases to be registered with a member, NASD will defer the lapse of registration requirements set forth in Rules 1021(c), 1031(c), and 1041(c) (i.e., toll the two-year expiration provisions for qualification examination requirements) during the pendency of his or her active service in the Armed Forces of the United States. NASD will defer the lapse of registration requirements based on existing information in the Central Registration Depository, provided that NASD is properly notified of the person's period of active military service within two years following his or her completion of active service or upon his or her re-registration with a member, whichever occurs first. The deferral will terminate 90 days following the person's completion of active service in the Armed Forces of the United States. Accordingly, if such person does not re-register with a member within 90 days following his or her completion of active service in the Armed Forces of the United States, the amount of time in which the person must become re-registered with a member without being subject to the qualification examination requirements shall consist of the standard two-year period provided in Rules 1021(c), 1031(c), and 1041(c).* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Since the September 11, 2001 attacks, NASD has provided tailored regulatory relief to securities industry professionals who volunteer for or are called into active military duty. In January 2002, NASD filed with the SEC for immediate effectiveness a rule change that amended NASD IM-1000-2 to codify the staff's position regarding the relief from NASD Rule 1120 (Continuing Education Requirements) for securities industry professionals who volunteer for or are called into active military duty. 3 In addition, in conjunction with the current filing, NASD has filed with the SEC for immediate effectiveness a rule change 4 that amends NASD IM-1000-2 to clarify its scope with respect to registered persons and sole proprietors and to codify NASD's existing guidance relating to the receipt of transaction-related compensation by registered persons actively serving in the Armed Forces of the United States. 3 *See* Securities Exchange Act Release No. 45259 (January 9, 2002), 67 FR 2256 (January 16, 2002) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Relieve Registered Representatives Serving in the Armed Forces From Continuing Education Requirements) (SR-NASD-2002-03). 4 *See* SR-NASD-2005-134. Recently, members have requested that NASD toll the two-year expiration period for securities licenses (“two-year licensing expiration provisions”) 5 in certain cases, such as where a person commences active military duty within two years of his or her having been registered with a member or where a person on active military duty ceases to be registered with a member, but seeks employment in the industry following completion of active service. 5 NASD Rules 1021(c), 1031(c), and 1041(c) provide that if a person does not register with a member within two years of his or her last registration, his or her qualification as a principal, representative, or assistant representative will lapse and the person must then retest to function as a principal, representative, or assistant representative. In response, NASD is proposing to amend NASD IM-1000-2 to toll the “two-year licensing expiration provisions” for a person previously registered with a member who commences his or her active military duty within two years after he or she has ceased to be registered with the member. Under the proposal, the tolling would start on the date such person enters active military service and would terminate 90 days following the person's completion of active service in the Armed Forces of the United States. The proposal requires that NASD be properly notified of the person's period of active military service within 90 days following his or her completion of active service or upon his or her re-registration with a member, whichever occurs first. The proposal also provides that if such person does not re-register with a member within 90 days following his or her completion of active service in the Armed Forces of the United States, the amount of time in which the person must become re-registered with a member without being subject to the “two-year licensing expiration provisions” will consist of the standard two-year period reduced by the period of time between the person's termination of registration and beginning of active service in the Armed Forces of the United States. 6 6 For instance, under the proposal, if a person terminates his registration with a firm on August 1, 2005, is called into active military duty on November 1, 2005, and returns from active military duty on May 1, 2006, NASD would toll the “two-year licensing expiration provisions” beginning on November 1, 2005, until July 30, 2006 (which is 90 days following completion of his active military duty). In this example, NASD would have to be notified of his period of active military service by no later than July 30, 2006. Further, if he does not re-register with a member by July 30, 2006, he would then have 21 months remaining (24 months less the three months that ran prior to his entering active service) to re-register with a firm without having to re-take a qualification exam or seek a waiver. In addition, NASD is proposing to amend NASD IM-1000-2 to toll the “two-year licensing expiration provisions” for a person placed upon “inactive” status pursuant to NASD IM-1000-2 who while serving in the Armed Forces of the United States ceases to be registered with a member. 7 Under the proposal, the tolling would start on the date such person ceases to be registered with the member and would terminate 90 days following the person's completion of active service in the Armed Forces of the United States. The proposal requires that NASD be properly notified of the person's period of active military service within two years following his or her completion of active service or upon his or her re-registration with a member, whichever occurs first. NASD is proposing to toll the “two-year licensing expiration provisions” for such persons based on available information in the Central Registration Depository
(CRD)regarding their active military status. The proposal further provides that if such person does not re-register with a member within 90 days following his or her completion of active service in the Armed Forces of the United States, the person would have 90 days plus two years following the end of the person's active service in the Armed Forces of the United States to become re-registered with a member. 8 7 Persons on “inactive” status due to active military duty who do not cease their registration with a member while serving in the Armed Forces of the United States are not subject to the “two-year licensing expiration provisions” because they are considered registered for purposes of NASD Rules. *See* NASD IM-1000-2. 8 For example, under the proposal, assume a person registered with Firm A, enters active military duty on January 1, 2006, and is placed on “inactive” status for purposes of NASD registration. He then terminates his registration with Firm A on July 1, 2006 while still on active military duty. He returns from active military duty on December 1, 2006. In this example, NASD would remove his “inactive” status designation on July 1, 2006 because he has ceased to be registered with a member. However, NASD would toll the “two-year licensing expiration provisions” beginning on July 1, 2006, until March 1, 2007 (which is 90 days following completion of his active military duty). NASD would have to be notified of his period of active military service by no later than December 1, 2008 (which is two years following completion of his active military duty). NASD will announce the effective date of the proposed rule change in a *Notice to Members* (“ *NTM* ”) to be published no later than 60 days following Commission approval. The effective date will be 30 days following publication of the *NTM* announcing Commission approval. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, 9 which requires, among other things, that NASD's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change provides appropriate tailored relief to persons actively serving in the Armed Forces of the United States in a manner consistent with NASD's goals of investor protection and market integrity. 9 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change, or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change 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-NASD-2005-135 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-NASD-2005-135. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2005-135 and should be submitted on or before January 17, 2006. 10 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 Jonathan G. Katz, Secretary. [FR Doc. E5-7864 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52976; File No. SR-NSCC-2005-15] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to Buy-Ins in Its Continuous Net Settlement System December 19, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on December 1, 2005, the National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by NSCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The purpose of this proposed rule change is to modify NSCC's Rules with regard to CNS Buy-Ins in an effort to harmonize the buy-in rules of the industry and to assist NSCC members in reducing their exposure related to buy-ins. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NSCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 2 2 The Commission has modified the text of the summaries prepared by NSCC.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of this filing is to modify NSCC's Rules with regard to CNS Buy-Ins in an effort to harmonize the buy-in rules of the industry and to assist NSCC members in reducing their exposure related to buy-ins. At the request of participants and after consultation with the Buy-In Subcommittee of the Securities Industry Association, NSCC proposes to modify its Rules to create a new buy-in retransmittal procedure that may be utilized by NSCC Members receiving buy-in notices initiated outside of the CNS System (“Buy-In Retransmittal Notice”). 3 Existing NSCC fees related to CNS Buy-Ins will remain unchanged. 3 The specific rules being amended are Rule 11, “CNS System,” and Procedures VII, “CNS Accounting Operation,” and X, “Execution of CNS Buy-Ins.” Current Process for CNS Buy-Ins Currently under NSCC's Rules (except with respect to securities subject to a voluntary corporate reorganization), a member having a long position at the end of any day (“Originator”) may submit to NSCC a Notice of Intention to Buy-In (“Buy-In Notice”) specifying the quantity of securities which it intends to buy-in (“Buy-In Position”). The Buy-In Position is given high priority for allocation from the night cycle on N+1 through completion of the CNS day cycle at approximately 3 p.m. eastern standard time on N+2. 4 4 The day the Buy-In Notice is submitted to NSCC is referred to as N, with N+1 and N+2 referring to the succeeding days. Each CNS day begins in the evening and includes an evening allocation of securities and a daytime allocation of securities. If the Buy-In Position (or a portion thereof) remains unfilled after the evening allocation on N+1, NSCC issues CNS Retransmittal Notices on the following morning (N+1) to a sufficient number of members with short positions. NSCC issues CNS Retransmittal Notices in an aggregate quantity at least equal to the Buy-In Position. In no case will the Buy-In liability of a member exceed the Buy-In Position or the total short position of the member. If several members have short positions with the same age, all such members are issued CNS Retransmittal Notices even if the total of their short position exceeds the Buy-In Position. If the Buy-In Position is not satisfied by 3 p.m. on N+2, the buy-in may be executed. This current process will remain in effect. Buy-In Notices transmitted by a member which is the original submitter will be referred to as “Original Buy-In Notices.” Proposed Procedure for CNS Buy-In Retransmittals At times, an NSCC member will be in receipt of a buy-in notice initiated outside of the CNS system while at the same time be failing to receive shares from CNS in the same security. Recognizing that such externally initiated buy-ins may expire before the time the expiration period that NSCC's Rules currently provide as the expiration for CNS buy-ins ( *i.e.* , the current N+2 expiration), NSCC is proposing a new procedure to permit retransmittals of such buy-ins with an appropriately shortened execution time frame. Accordingly, the new procedure would provide that an NSCC member which has a long position in CNS at the end of any day ( *i.e.* , a fail to receive) and which is in receipt of a buy-in notice for securities of the same CUSIP that was initiated outside of the CNS System may submit a “Buy-In Retransmittal Notice” to NSCC. If the Buy-In Position (or a portion thereof) that was the subject of the Buy-In Retransmittal Notice was not satisfied by 3 p.m. on N+1, the buy-in could be executed. The Buy-In Retransmittal Notice would identify the entity that initiated the buy-in against the member. The differences between a Buy-In Retransmittal Notice and an Original Buy-In Notice would be as follows: • An Original Buy-In Notice will refer to a Buy-In Notice transmitted by a member for which the member is the original submitter. A Buy-In Retransmittal Notice will refer to a Buy-In Notice submitted by a member where the member has received a buy-in notice outside of the CNS system with respect to securities of the same CUSIP. • The member submitting a Buy-In Retransmittal Notice will receive an elevated priority for CNS allocations upon NSCC's receipt of the notice. The member submitting an Original Buy-In Notice will continue to receive elevated priority on the morning of N+1. • The member submitting a Buy-In Retransmittal Notice will be provided with five additional fields to be used to identify the entity or entities that initiated the buy-in against the member. At least one such entity other than the member must be identified or NSCC will reject the Buy-In Retransmittal Notice. • For Buy-In Retransmittal Notices, NSCC will transmit CNS Retransmittal Notices to CNS short members upon receipt of the Buy-In Retransmittal Notice on N. The CNS Retransmittal Notice will identify both the submitting member and the entity or entities that initiated the buy-in against the member. For Original Buy-In Notices, NSCC will continue to transmit CNS Retransmittal Notices to short members on the morning of N+1. • A buy-in based on a Buy-In Retransmittal Notice may be executed on N+1 if the Buy-In Position (or a portion thereof) is not satisfied by 3:00 p.m. on N+1. The execution of a buy-in based on an Original Buy-In Notice will continue to be at 3 p.m. on N+2. Technical Correction In addition to modifying NSCC's Rules and Procedures to reflect the above changes, NSCC will also make a technical correction to Procedure X, “Execution of Buy-Ins—CNS System.” The procedure states that members who receive CNS Retransmittal Notices and do not satisfy them assume liability for the loss, if any, which occurs as a result of the buy-in and that those members with the oldest short positions after the evening cycle on N+2 will first be held liable for an executed buy-in. Procedure X should reflect that it is the oldest short positions after the day cycle on N+2 that will first be held liable for an executed buy-in. Implementation If approved by the Commission, NSCC plans to implement these changes on a pilot basis open to all members on the later to occur of January 13, 2006, or within one week of the Commission's approval of the proposed rule filing. The pilot will be limited to buy-ins of CNS eligible NYSE listed securities. NSCC anticipates that the pilot phase will be completed within thirty calendar days of implementation at which time buy-ins of all other CNS eligible securities will be permitted under these proposed changes. At that time the pilot will cease. NSCC will notify its members by an Important Notice of the specific date on which the pilot will expire and the proposed buy-in procedures are available for use with all CNS eligible securities. NSCC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 5 and the rules and regulations thereunder applicable to NSCC because it will assist NSCC members in reducing their buy-in related exposure, thereby promoting the prompt and accurate clearance and settlement of securities transactions. 5 15 U.S.C. 78q-1.
(B)Self-Regulatory Organization's Statement on Burden on Competition NSCC does not believe that the proposed rule change will have any impact or impose any burden on competition.
(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others The proposed rule change was prepared after consultation with the Buy-In Committee of the Securities Industry Association. Written comments relating to the proposed rule change have not yet been solicited or received. NSCC will notify the Commission of any written comments received by NSCC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the **Federal Register** or within such longer period:
(i)as the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding; or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)by order approve such proposed rule change or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NSCC-2005-15 in 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-NSCC-2005-15. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filings also will be available for inspection and copying at the principal office of NSCC and on NSCC's Web site, *http://www.nscc.com\legal.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NSCC-2005-15 and should be submitted on or before January 17, 2005. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 6 6 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7855 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52975; File No. SR-OCC-2004-20] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to a New Risk Management Methodology December 19, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on November 15, 2004, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”), and on May 10, 2005, and December 13, 2005, amended the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by OCC. 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). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The purpose of the proposed rule change is to reflect the implementation of a new risk management methodology that OCC would use to determine the amount of margin assets required to be deposited by a clearing member with respect to each account. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of such statements. 2 2 The Commission has modified parts of these statements.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The proposed new risk management methodology, the System for Theoretical Analysis and Numerical Simulations, will enhance OCC's ability to measure the risk of the portfolios in a clearing member's accounts more accurately and therefore, will enable OCC to calculate margin requirements more precisely. 1. The Existing Risk Management Methodology: The Theoretical Intermarket Margining System Currently, OCC applies the Theoretical Intermarket Margining System (“TIMS”) for the calculation of clearing members’ daily minimum margin requirements, for the determination of the size of OCC's clearing fund, for the computation of additional margin requirements, and for assessing risk in the Hedge Program. TIMS is a univariate risk management methodology that evaluates historical data of approximately 3,000 underlying assets to identify the expected gain or loss on positions that would occur at ten price points for equity instruments and at twenty price points for non-equity instruments within a range of likely price movements of each underlying interest. TIMS requires that options, futures, and stock loan and borrow positions that have the same underlying interest be categorized into classes and that classes be categorized into unique product groups consisting of one or more related classes. TIMS calculates the total risk of each clearing member account as the sum of the worst scenario outcomes of each product group in the account. TIMS recognizes offsetting positions within each clearing member account but only to the extent that the offsetting positions are in the same product group. Although TIMS has consistently produced sufficient base margin requirements, this methodology has a number of shortcomings that have risk-relevant consequences. Among these are the following: a. Because TIMS requires that each class group belong to only one product group, any offsetting effects among instruments in different product groups are ignored when margin requirements are calculated. This inherent lack of methodological flexibility tends to overestimate portfolio risk thereby imposing unnecessarily high margin requirements on clearing members. b. TIMS assumes perfect correlation of price movements for underlying interests belonging to the same product group. As a result, margin requirements for unhedged product group portfolios are often overstated, and margin requirements for hedged product group portfolios are often understated. c. TIMS calculates the total account risk as the sum of the worst scenario outcomes of all product groups. In that sense, TIMS does not measure the price risk of the total portfolio; rather it measures the price risk of the various subportfolios as represented by product groups. Since portfolio risk can never be larger than the sum of the portfolio components' risks, but could be smaller to the extent of any offsetting relationships, TIMS's aggregation of product group risks results in an upwardly biased estimation of a clearing member's portfolio risk. d. TIMS's aggregation methodology often implies an economically impossible correlation (positive or negative) between product groups in an account. Suppose, for example, that an account has a (delta) long position in the broad-based index group and a (delta) short position in the individual equities group. By aggregating the risks in these two groups, TIMS implies that a decline in all broad-based indices could exist simultaneously with a rise in all individual equities—an impossible economic scenario. e. In analyzing historical data, TIMS focuses on a range of potential price movements. However, covering 99% of all potential price movements does not result in coverage of 99% of all profit/loss outcomes, which is the desired goal. Using the TIMS method, some accounts may have margin requirements covering 98% of profit/loss outcomes while others are covered at 99.9%. These small statistical differences can have large dollar implications. 2. The New Risk Management Methodology: The System for Theoretical Analysis and Numerical Simulations The System for Theoretical Analysis and Numerical Simulations (“STANS”) preserves TIMS's analysis of the historical price movements of underlying assets and of the correlation of such price movements among underlying assets. However, STANS evaluates price risk on a portfolio level and more accurately evaluates the correspondence of price movements among underlying assets and therefore, is able to calculate margin requirements more accurately than TIMS. STANS is a multivariate risk management methodology that considers the range of likely price movements for each of the approximately 8,000 assets underlying OCC options. STANS measures the historical correlations among the price movements of the different assets. STANS generates simulated returns for all underlying assets based on this historical data, measures the historical price volatility of each of these underlying assets, and evaluates the relationship structure of the entire portfolio. STANS reduces the imprecision produced by TIMS in the following ways: a. Because STANS does not use TIMS's product group concept, STANS recognizes the relationship of each asset class to all other asset classes rather than recognizing only the relationships among asset classes in the same product group. Therefore, STANS will more accurately identify offsetting positions, and margin requirements will be adjusted downward accordingly. b. STANS identifies a more realistic correlative relationship among underlying assets than TIMS. STANS does not exclude opposite moves for positively correlated assets. In contrast, price scenarios within the TIMS methodology are all concordant. c. Because STANS eliminates product groups, it is able to evaluate the interrelationships among all instruments in a clearing member's portfolio rather than only within a product group. STANS's estimates of portfolio risk are neither upwardly nor downwardly biased. d. STANS generates a distribution of 10,000 potential profit/loss outcomes for the entire portfolio rather than simply a range of potential price movements. As a result, margin requirements are more precise for every account, and therefore, STANS ensures that all accounts will have coverage for predicted liquidation outcomes at the selected confidence levels. These characteristics will improve the accuracy of margin calculations and as a result, will improve the financial stability of OCC and the derivatives markets. In addition, STANS allows for easy integration of various types of non-equity products, such as fixed-income related products and commodities. The implementation of STANS thus facilitates joint risk assessment initiatives that can produce clearing and settlement efficiencies beneficial to investors. To reflect the implementation of STANS in OCC's By-Laws and Rules, OCC proposes to replace most of Rule 601 and to eliminate Rule 602. Proposed new Rule 601 is conceptual rather than attempting a mechanical, step-wise description of margin requirement calculations. It is therefore more concise than the existing Rule 601. OCC presently calculates margin requirements for equity and non-equity products separately with Rule 601 being applicable to equities and Rule 602 being applicable to non-equitities. STANS will calculate margin on equity and non-equity products in one integrated set of calculations. Thus, the calculation of margin requirements for all products will be as set forth in new Rule 601. OCC proposes to delete cross-references to Rule 602 as appropriate throughout the Rules. Proposed Rule 601(c) contains a basic conceptual description of how, pursuant to STANS, OCC would determine the amount of margin assets a clearing member is required to deposit with OCC. Proposed Rule 601(c) uses the concepts of “margin requirement,” “margin assets,” “marking prices” and “minimum expected liquidating value” to aid in the description of STANS and margin requirement calculations. Definitions of each of these terms have been included in the proposed amendments to Article I of the By-Laws or Rule 601 as appropriate. OCC proposes to delete terms that are defined in the existing Rule 601(b) that are relevant to TIMS and not relevant to STANS. For example, the terms “premium margin” and “risk margin” are no longer used. The “margin requirement” as determined using STANS is at least equal to the “minimum expected liquidating value” of the account (if such expected value is less than zero). The “minimum expected liquidating value” may be conceptualized as
(i)the current net asset value of positions in the account ( *i.e.* , what used to be called “premium margin”) plus
(ii)an additional amount sufficient to cover the impact of the largest expected adverse market movement ( *i.e.* , what used to be called “risk margin”). Because STANS does not actually derive the minimum expected liquidating value in this additive way and because STANS is designed to project expected values for margin assets whose prices are not referred to as “premiums,” the old terminology was deemed inappropriate. The proposed definition of “marking price” is quite flexible and allows OCC to use its discretion in determining marking prices and to use different marking prices for the same asset or liability depending upon the purpose for which a marking price is needed. An example of where the latter situation may occur is in the case of stock loan and borrow positions. Marking prices in the stock lending market are determined by the conventions of that market, and OCC would generally observe the prices used in that market for purposes of determining the daily marks passed through OCC between the lender and the borrower. OCC might, however, have a different view of the correct marking price to use for purposes of calculating the risk of those positions in STANS. The purpose of proposed Rule 601(e), “Exclusions from Margin Requirement Calculation,” is to identify in one place those positions that are excluded from margin requirement calculations altogether. Existing Rule 601(e) indicates that exercised or expired positions in cleared contracts or stock loan and borrow positions are excluded from margin requirement calculations. Rule 601(a) indicates that short positions in option contracts or BOUNDs for which a deposit in lieu of margin has been made are excluded from margin requirement calculations. Rule 614 indicates that long positions in cleared securities that have been pledged to a pledgee are excluded from margin requirement calculations. By definition, margin-ineligible stock loan positions and stock borrow positions are excluded from margin requirement calculations. Consolidating these provisions in one place facilitates understanding. The release of margin assets to clearing members as described in existing Rule 601(e) has been revised to be clearer and more concise and is now covered in Rule 601(f). The existing rule contains a somewhat artificial description of margin assets being released under a position-specific determination. Consistent with the more integrated approach of the STANS methodology, proposed Rule 601(f) simply states that OCC will permit the release of margin with respect to a clearing member's account if the amount of margin assets in a clearing member's account exceeds the amount of margin assets required to be in the account pursuant to Rule 601 and if any other obligations of the clearing member to OCC have been satisfied. Existing Rule 2111(b) and Rule 2409(b) envision that a provisional margin requirement will be calculated with respect to cross-rate foreign currency options and FX Index Options. The provisional margin requirement was intended to ensure that OCC would not release premiums due to an account of a clearing member in a non-U.S. time zone at a time when it was holding insufficient margin to cover a premium debit in a later time zone and/or increased margin requirements resulting from activity in cross-rate and foreign currency index options since the last U.S. Dollar settlement. OCC proposes to eliminate this provisional margin requirement and will instead simply hold any amounts otherwise payable to a clearing member in a different time zone until after the next regular settlement time in the U.S. Experience has shown that clearing members often instruct OCC to credit any cash from these early settlements to their OCC accounts instead of releasing it, and the amounts involved do not justify the costs of administering the more cumbersome procedure of calculating provisional margin requirements. Since June 2003, OCC has been providing information to representatives of the Office of Prudential Supervision and Risk Analysis of the Division of Market Regulation (“Division”) on the statistical and operational features of the STANS methodology. To become comfortable with the STANS methodology, the Division requested that OCC produce various graphs, simulations, and spreadsheets evidencing STANS's ability to calculate margin requirements more accurately than TIMS. OCC believes that it has responded to all of the Division's inquiries to date and has provided sufficient information for the Division to reach a high degree of comfort with the STANS methodology. The staff of OCC remains available to address any further questions that the Division staff may have. OCC expects that the amount of margin it will collect under STANS will be significantly less than the amount of margin it currently collects under TIMS. This is largely due to the fact that STANS more accurately identifies offsetting positions than TIMS. There would also be a corresponding reduction in the amount of clearing fund collected by OCC under STANS because under Chapter X, “Clearing Fund Contributions,” clearing fund is calculated as a percentage of margin. The Division requested that OCC amend its rules to increase the percentage used to calculate the clearing fund because the Division believes that for the time being the clearing fund contribution should not be significantly reduced. As a result, OCC filed an amendment to the proposed rule change to amend Chapter X, Rule 1001, “Amount of Contribution,” to increase the minimum percentage in the clearing fund calculation from 5 percent to 6 percent of average aggregate margin. OCC believes that the proposed rule change is consistent with the purposes and requirements of Section 17A of the Act because it is designed to assure the safeguarding of securities and funds which are in the custody or control of OCC, to reduce unnecessary costs to investors by facilitating more accurate margin calculations, and in general, to protect investors and the public interest. In addition, the proposed rule change is not inconsistent with OCC's existing rules, including any other rules currently proposed to be amended.
(B)Self-Regulatory Organization's Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition.
(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were not and are not intended to be solicited with respect to the proposed rule change, and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty five days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(a)By order approve the proposed rule change or
(b)Institute proceedings to determine whether the proposed rule change should be disapproved. VI. 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-OCC-2004-20 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-OCC-2004-20. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site *(http://www.sec.gov/rules/sro.shtml)* . Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of OCC and on OCC's Web site at *http://www.optionsclearing.com.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2004-20 and should be submitted on or before January 17, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 3 3 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7841 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-52982; No. SR-OCC-2005-20] Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Reflect the Renaming of the NASDAQ SmallCap Market to the NASDAQ Capital Market December 19, 2005. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on December 8, 2005, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by OCC. The OCC filed the proposed rule change pursuant to Section 19(b)(3)(A)(i) of the Act, 2 and Rule 19b-4(f)(1) 3 thereunder so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(i). 3 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would make a technical change to Rule 604(b)(4). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 4 4 The Commission has modified the text of the summaries prepared by OCC. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The Nasdaq Stock Market, Inc. renamed the NASDAQ SmallCap Market as the NASDAQ Capital Market effective September 27, 2005. This rule change updates a reference to the NASDAQ SmallCap Market in Rule 604(b)(4) by making a conforming change. OCC believes the proposed rule change is consistent with Section 17A of the Act, 5 as amended, because it ensures that OCC's rules are accurate by reflecting the current name associated with a NASDAQ market tier. The proposed rule change is not inconsistent with the existing rules of OCC. 5 15 U.S.C. 78q-1. B. Self-Regulatory Organization's Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were not and are not intended to be solicited with respect to the proposed rule change, and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective upon filing pursuant to Section 19(b)(3)(A) of the Act 6 and Rule 19b-4(f)(1) 7 thereunder because it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. At any time within sixty 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. 6 15 U.S.C. 78s(b)(3)(A). 7 17 CFR 240.19b-4(f)(1). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change 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-OCC-2005-20 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-OCC-2005-20. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filings also will be available for inspection and copying at the principal office of OCC and on OCC's Web site at *http://www.optionsclearing.com* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2005-20 and should be submitted on or before January 17, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Jonathan G. Katz, Secretary. [FR Doc. E5-7842 Filed 12-23-05; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION Committee Management; Notice of Renewal The Administrator of the U.S. Small Business Administration
(SBA)has determined that the renewal of the Audit and Financial Management Advisory Committee is necessary and in the public interest in connection with the performance of duties imposed upon the Administrator, U.S. Small Business Administration by 15 U.S.C. 633. This determination follows consultation with the Management Secretariat, General Services Administration. *Name of Committee:* Audit and Financial Management Advisory Committee. *Purpose and Objective:* The committee provides recommendations and advice regarding the Agency's financial management, including the financial reporting process, systems of internal controls, audit process and process for monitoring compliance with relevant laws and regulations. *Balanced Membership Plans:* The committee consists of at least three
(3)members including one Chairperson. Committee membership must be fairly balanced and diverse in terms of occupational background and type of financial expertise. *Duration:* Continuing. *Responsible SBA Officials:* Jennifer Main, Chief Financial Officer, Office of Chief Financial Officer, U.S. Small Business Administration, 409 3rd Street, SW., Washington, DC 20416. Dated: December 19, 2005. Matthew K. Becker, Committee Management Officer. [FR Doc. 05-24454 Filed 12-23-05; 8:45 am]
Connectionstraces to 11
3 references not yet in our index
  • 10 CFR 50
  • 17 CFR 240.19
  • 15 USC 78
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Notices
Notice of request for extension of OMB approval
C.F.R.§ 51.21
U.S.C.§ 552b
C.F.R.§ 4043.81
U.S.C.§ 78s
U.S.C.§ 78f
U.S.C.§ 78c
U.S.C.§ 552
C.F.R.§ 200.30-3
U.S.C.§ 78q–1
Cite10 CFR 50
Cite17 CFR 240.19
Cite15 USC 78
Cites 14 · showing 12Cited by 0 across 0 sources
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