Notices. SECURITIES AND EXCHANGE COMMISSION

22,452 words·~102 min read·/register/2006/03/17/06-2572

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

BILLING CODE 7710-FW-M SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53470; File No. SR-CBOE-2006-26] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Revise Position Limits for VIX Options March 10, 2006. 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 March 3, 2006, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange.

The Exchange filed this proposal as a “non-controversial” proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change 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)(iii). 4 17 CFR 240.19b-4(f)(6). 5 The Exchange requested the Commission to waive the five-day pre-filing notice requirement and the 30-day operative delay, as specified in 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 Exchange is filing this rule change to clarify the position limits for the regular-size options on the CBOE Volatility Index® (“VIX”); the CBOE Nasdaq 100® Volatility Index (“VXN”); and the CBOE Dow Jones Industrial Average® Volatility Index (“VXD”) to put them on a more equivalent level with the position limits for options on the underlying indexes, the SPX, NDX, and DJX. 6 The proposed position limits would also be proportional to the position limits for the increased-value of VIX, VXN, and VXD.

The text of the proposed rule change is available on the Exchange's Web site ( *http://www.cboe.com* ), at the Exchange's Office of the Secretary, and at the Commission. 6 Telephone Conference between Dave Doherty, Attorney, CBOE, and Florence E. Harmon, Senior Special Counsel, Division, Commission, on March 10, 2006. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change.

The text of those 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 parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange received approval from the Commission to list and trade cash-settled, European-style options on

(1)the regular-size VIX, VXN, and VXD 7 (together, “Regular-Size Volatility Index Options”) and

(2)the increased-value versions of VIX, VXN, and VXD (together “Increased-Value Volatility Index Options”). 8 VIX, VXN, and VXD are calculated using real-time quotes of at-the-money and out-of-the-money nearby and second nearby index puts and calls of the S&P 500® Index (SPX), the Nasdaq 100® Index (NDX), and the Dow Jones Industrial Average® Index (DJX), respectively. Generally, volatility indexes provide investors with up-to-the-minute market estimates of expected volatility of the corresponding securities index that each particular volatility index tracks. 7 *See* Securities Exchange Act Release No. 49563 (April 14, 2004), 69 FR 21589 (April 21, 2004) (“Order Granting Approval to Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Relating to Options on Certain CBOE Volatility Indexes”). As of the date of filing, the Exchange lists for trading VIX options (options on the regular size CBOE Volatility Index). 8 *See* Securities Exchange Act Release No. 49698 (May 13, 2004), 69 FR 29152 (May 20, 2004) (“Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule change by [CBOE] Relating to Options on Certain CBOE Volatility Indexes”). The increased-value version of VIX, VXN, and VXD will be calculated by simply multiplying the corresponding value of the VIX, VXN, and VXD, respectively, by ten. To illustrate, where the index level of the VIX would be 12.10, the increased-value VIX will have an index value of 121.00 (ten times 12.10). Similarly, the index level of the increased-value versions of the VXN and the VXD always will be ten times the index level of the VXN and the VXD, respectively. As of the date of filing, the Exchange has not listed for trading Increased-Value Volatility Index Options. The Exchange originally sought and received approval for position and exercise limits of Regular-Size Volatility Index Options in the amount of 25,000 contracts on either side of the market, with no more than 15,000 of such contracts in series in the nearest expiration month. Given that there are no position limits for broad-based index option contracts on the DJX, NDX, OEX and SPX, the Exchange believes it is appropriate to increase the position limits for the Regular-Size VIX, VXN, and VXD to 250,000 position and exercise limits on either side of the market for each of those contracts, with no more than 150,000 of such contracts in series in the nearest expiration month. This is also consistent with limits applicable to the Increased-Value Volatility Index Options (which are 25,000 contracts on either side of the market, with no more than 15,000 of such contracts in series in the nearest expiration month). The Exchange states that increasing the Regular-Size Volatility Index Options position limit from 25,000 contracts to 250,000 contracts would have no effect on the monetary value of the portfolio that could be controlled by a particular person or firm as compared to the Increased Value Volatility Index Options. The Exchange also stated that this also is consistent with previous filings in which the Exchange introduced reduced-value versions of other broad-based indexes. 9 The Exchange notes that pursuant to current CBOE Rule 24.4(d), positions in Regular-Size Volatility Index Options (up to 250,000 contracts) and each of their respective Increased-Value Volatility Index Options (up to 25,000 contracts) would be aggregated in order to determine compliance with position limits. 9 *See* SR-CBOE-2000-15 (Securities Exchange Act Release No. 43000 (June 30, 2000), 65 FR 42409 (July 10, 2000) (“Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 by [CBOE] Relating to a Reduction in the Value of the Nasdaq 100 Stock Index”)) and SR-CBOE-2004-89 (Securities Exchange Act Release No. 51220 (February 17, 2005), 70 FR 9398 (February 25, 2005) (“Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to Reduced-Value Options on the Russell 2000 Stock Index”). 2. Statutory Basis By placing position and exercise limits for Regular-Size Volatility Index Options on a more equivalent basis to the position limits of the underlying index options that such volatility indexes track and proportional to the position limits on the Increased-Size Volatility Index Options, the Exchange believes that this proposed rule change is consistent with Section 6(b) of the Act, 10 in general, and further the objectives of Section 6(b)(5) in particular, 11 in that it should promote just and equitable principles of trade, serve to remove impediments to and perfect the mechanism of a free and open market and a national market system, and protect investors and the public interest. 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 does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change, as amended, has become effective pursuant to Section 19(b)(3)(A) of the Act 12 and Rule 19b-4(f)(6) thereunder 13 because the 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)does not become operative for 30 days from the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest pursuant to Section 19(b)(3)(A) of the Act 14 and Rule 19b-4(f)(6) 15 thereunder. 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b-4(f)(6). 14 15 U.S.C. 78s(b)(3)(A). 15 17 CFR 240.19b-4(f)(6).] The Exchange has requested that the Commission waive the five-day pre-filing notice requirement and the 30-day operative delay. 16 The Commission is exercising its authority to waive the five-day pre-filing notice requirement and believes that the waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Acceleration of the operative delay would allow CBOE to implement the new position and exercise limits for Regular-Size Volatility Index Options immediately for the benefit of large volume traders of these options. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission. 17 16 17 CFR 240.19b-4(f)(6)(iii). 17 For the purposes only of waiving the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in the furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-CBOE-2006-26 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2006-26. 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 20549-1090. Copies of such filing also will be available for inspection and copying at the principal office of the CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2006-26 and should be submitted on or before April 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 18 18 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-3899 Filed 3-16-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53471; File No. SR-DTC-2005-21] Self-Regulatory Organizations; The Depository Trust Company; Order Approving Proposed Rule Change To Implement and Revise Fees Related to Non-Participant Services March 13, 2006. I. Introduction On December 20, 2005, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) and on December 20, 2005, January 23, 2006, and January 25, 2006, 1 amended the proposed rule change SR-DTC-2005-21 pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). 2 Notice of the proposal as amended was published in the **Federal Register** on February 9, 2006. 3 The Commission received no comment letters in response to the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change. 1 The proposed rule change filing was amended twice on January 25, 2006. 2 15 U.S.C. 78s(b)(1). 3 Securities Exchange Act Release No. 53219 (February 3, 2006), 71 FR 6800. II. Description DTC is

(1)revising fees for special requests for Security Position Reports (“SPRs”) and for weekly, monthly, and quarterly dividend record date SPR subscriptions, 4

(2)revising existing fees for audit confirmations provided to issuers and their agents, and

(3)implementing new fees for

(a)audit confirmations for certificates of deposit (“CDs”) provided to issuers and their agents and

(b)access by transfer agents to DTC's imaging database. 4 Weekly reports, monthly reports, and quarterly dividend record date reports are available by annual subscription only. Fees for Issuance of Security Position Reports Several types of SPRs are available through DTC. These include:

(1)Weekly reports showing daily closing positions during that week;

(2)monthly reports showing closing positions on the last business day of the month;

(3)quarterly dividend record date reports showing closing positions on the dividend record date; and

(4)special requests showing closing positions for the date specified. DTC charges fees for SPRs. Currently, the fee charged to issuers or trustees for weekly, monthly, and quarterly dividend record date SPR subscriptions is $1,950, $450, and $150, respectively. The fee charged to issuers or trustees for special requests is $85 per special request. The purpose of this filing is to formally seeks Commission approval of these fees. Because DTC incurs significantly higher costs for the production of special request SPRs relative to the costs of producing reports by subscription and because DTC has determined that a fee increase is necessary to more fully recover costs associated with such production, DTC is increasing the fee charged to issuers or trustees for special request SPRs from $85 to $120 per special request. The increase will become effective on a date in the first quarter of 2006 to be announced by DTC upon the Commission's approval of this proposed rule change. Fees Charged to Issuers/Agents 1. Audit Confirmations DTC receives frequent requests from issuers and/or their agents for confirmations of audit information relating to securities held by DTC. In connection with the processing of such requests for audit confirmations, DTC currently charges a fee of $10.00 per request containing up to and including five CUSIPs and $2.13 for each CUSIP beyond the fifth CUSIP. DTC also receives requests from issuers and/or their agents for confirmations relating to information concerning CDs deposited at DTC. A fee is not currently charged to process these CD audit confirmation requests. Providing issuers and/or their agents with audit confirmation information requires the allocation of significant resources to process the requests resulting in considerable cost to DTC. To more fully recover the costs associated with such audit confirmation processing, DTC is

(1)increasing fees related to processing of audit confirmations to $22 per request for requests of up to and including five CUSIPs and an additional $5.00 per item for each CUSIP beyond the fifth CUSIP and

(2)implementing fees for CD confirmation requests that are identical to those for audit confirmation requests relating to securities. The proposed audit confirmation fees will be effective upon approval by the Commission. 2. Imaging DTC frequently receives requests from transfer agents for access to DTC's security image database to obtain copies of certificates deposited at DTC. DTC incurs significant costs to maintain the database but currently does not charge transfer agents for access to the database. Therefore, in order to recover costs associated with this function, DTC is implementing a new subscription fee of $350 per month for access to the DTC security image database. This fee will be effective upon approval by the Commission. 5 5 DTC has separately filed a proposed rule change (File No. SR-DTC-2005-22) with the Commission to impose a subscription fee in the same amount on participants who subscribe for access to the DTC security image database. Securities Exchange Act Release No. 53463 (March 10, 2006). III. Discussion Section 19(b) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to such organization. Section 17A(b)(3)(D) of the Act requires that the rules of a clearing agency provide for the equitable allocation of reasonable dues, fees, and other charges. 6 The Commission believes that DTC's rule change is consistent with this section because it will provide for the equitable allocation of reasonable dues, fees, and other charges among the users of DTC's services. 6 15 U.S.C. 78q-1(b)(3)(D). IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular section 17A of the Act and the rules and regulations thereunder. *It is therefore ordered,* pursuant to section 19(b)(2) of the Act, that the proposed rule change (File No. SR-DTC-2005-21) be and hereby is approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-3900 Filed 3-16-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53463; File No. SR-DTC-2005-22] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Revise Fee Schedule March 10, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on December 22, 2005, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) and on February 22, 2006, amended the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by DTC. 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 the proposed rule change is to revise DTC's fee schedule. 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. 2 2 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 The purpose of the proposed rule change is to revise fees for certain services provided by DTC. These changes include: 3 3 The specific changes to DTC's fee schedule are attached as an exhibit to the filing.

(1)Elimination of fees charged for Mainframe Dual Host (“MDH”) messaging and computer-to-computer (“CCF”) file transfer services. The costs previously covered by these charges will be absorbed into the overall cost structure of the business lines affected (principally DTC Settlement and Asset Services) and will be covered by service fees. 4 4 MDH and CCF are communications platforms used by participants to interact with DTC.

(2)Decreases to Settlement Services fees as part of DTC's continuing efforts to realign fees with costs.

(3)Restructuring of fees for Corporate Actions by charging fees per announcement and to compensate for the elimination of CCF charges.

(4)Increases in Custody and Asset Servicing, Underwriting, and Tax Services to realign fees with costs. In addition, DTC is implementing certain disincentive fees to discourage activities which increase industry inefficiencies. These disincentive fees include fees for Withdrawals by Transfer, fees related to requirements for physical presentation on corporate action transactions, and fees for late submissions of deposits on restricted securities. Also, DTC is introducing fees associated with new services. In particular, such fees relate to Canadian Settlement services, SMART/Track for Buy-Ins, and Agency Lender Disclosure. 5 In addition, a new fee is being added for a processing enhancement, known as the Certificate Verification process, to the existing Deposits service which allows participants to submit files through DTC to appropriate transfer agents in order to verify that certificates destined for transfer are valid certificates prior to physical processing of certificates. Such verification provides for a decrease in deposit rejects and for improved transaction turnaround. 6 5 For further information regarding Canadian Settlement services, see Securities Exchange Act Release No. 52784 (November 16, 2005), 70 FR 70902 (November 23, 2005) [File No. SR-DTC-2005-08]. For further information regarding SMART/Track for Buy-Ins, see Securities Exchange Act Release No. 53032 (December 28, 2005), 71 FR 1457 (January 9, 2006) [File No. SR-DTC-2005-19]. For further information regarding SMART/Track for Agency Lending Disclosure, see Securities Exchange Act Release No. 52104 (July 21, 2005), 70 FR 43730 [File No. SR-DTC-2005-06]. 6 For further information regarding DTC's Deposits service, see Securities Exchange Act Release No. 46391 (August 21, 2002), 67 FR 55050 (August 27, 2002) [File No. SR-DTC-2002-07]. These proposed fee revisions are consistent with DTC's overall pricing philosophy to align service fees with underlying costs, to discourage manual and exception processing, and to encourage immobilization and dematerialization of securities. The effective date for these fee adjustments was January 1, 2006. DTC believes that the proposed rule change is consistent with the requirements of Section 17A(b)(3)(D) of the Act 7 and the rules and regulations thereunder applicable to DTC because it provides for the equitable allocation of reasonable dues, fees, and other charges among DTC's participants. 7 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 on 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 No written comments relating to the proposed rule change have been solicited or received. DTC will notify the Commission of any written comments received by DTC. 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)(ii) of the Act 8 and Rule 19b-4(f)(2) 9 thereunder because the proposed rule change establishes or changes a due, fee, or other charge applicable only to a participant. 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. 10 8 15 U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 240.19b-4(f)(2). 10 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 February 22, 2006, 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 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-2005-22 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-DTC-2005-22. 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-2005-22 and should be submitted on or before April 7, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-3901 Filed 3-16-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53450; File No. SR-ISE-2006-04] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to Its Proposal To Reorganize From Its Current Structure Into a Holding Company Structure March 8, 2006. 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 January 12, 2006, the International Securities Exchange, Inc. (“ISE, Inc.”) 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 ISE, Inc. The Exchange filed Amendment No. 1 to the proposed rule change on March 3, 2006, and withdrew Amendment No. 1 on March 3, 2006. On March 3, 2006, the Exchange filed Amendment No. 2. 3 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 *See* Partial Amendment No. 2 dated March 3, 2006 (“Amendment No. 2”). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change ISE, Inc. is proposing to reorganize from its current structure into a holding company structure as more fully described below. The text of the proposed rule change is available on ISE, Inc.'s Web site ( *http://www.iseoptions.com* ), at the principal office of ISE, Inc., and at the Commission's Public Reference Room. The text of Exhibit 5 of the proposed rule change, as well as Amendment No. 2, is also available on the Commission's Web site ( *http://www.sec.gov/rules/sro.shtml* ). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, ISE, Inc. 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. ISE, Inc. 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 ISE, Inc. proposes to reorganize from the current structure of ISE, Inc., a Delaware corporation, into a holding company structure (the “Reorganization”). 4 A holding company, International Securities Exchange Holdings, Inc., a Delaware corporation (“ISE Holdings”), and its wholly owned subsidiary, International Securities Exchange, LLC, a Delaware limited liability company (“ISE, LLC”), have been formed in contemplation of the Reorganization. Consummation of the Reorganization is conditioned upon satisfaction of certain conditions, including approval of the Reorganization by the Commission. 5 After satisfaction of these conditions, ISE, Inc. will merge into ISE, LLC, with ISE, LLC as the surviving entity of the merger (the “Merger”). In the Merger: 4 For a discussion of ISE, Inc.'s current capital stock and governance structure, *see* Securities Exchange Act Release No. 51029 (January 12, 2005), 70 FR 3233 (January 21, 2005) (SR-ISE-2004-29) (relating to the approval of certain amendments to ISE, Inc.'s Certificate of Incorporation, Constitution, and ISE Rules in connection with ISE, Inc.'s initial public offering) (“IPO Order”). In connection with the initial public offering. ISE, Inc. filed a registration statement on Form S-1 with the Commission (File No. 333-117145). This proposed rule change includes:

(a)The deletion of the Amended and Restated Certificate of Incorporation of ISE, Inc. (“ISE, Inc. Amended Certificate”) and Amended and Restated Constitution of ISE, Inc. (“ISE, Inc. Amended Constitution”);

(b)the proposed Certificate of Incorporation of International Securities Exchange Holdings, Inc. (“Holdings Certificate“);

(c)the proposed Bylaws of International Securities Exchange Holdings, Inc. (“Holdings Bylaws“);

(d)the proposed Limited Liability Company Agreement of International Securities Exchange, LLC (“LLC Agreement“);

(e)the proposed Constitution of International Securities Exchange, LLC (“LLC Constitution”); and

(f)certain proposed amendments to the Rules of ISE, Inc. (the “ISE Rules“) to reflect the Reorganization. 5 ISE, Inc. has received a private letter ruling from the Internal Revenue Service Relating to the treatment of the proposed Reorganization under U.S. Federal tax law with respect to ISE, Inc., its stockholders, and ISE Holdings. The ruleing provides assurances that the Reorganization and related transactions will not result in any material taxes to the holders of shares of ISE, Inc. Class A Common Stock, par value $.01 per share (“Class A Common Stock”), ISE, Inc. Class B Common Stock, Series B-1, par value $.01 per share (“Series B-1 Common Stock”), ISE, Inc. Class B Common Stock, Series B-2, par value $.01 per share (“Aeries B-2 Common Stock”), or ISE, Inc. Class B Common Stock, Series B-3, par value $.01 per share (“Series B-3 Common Stock” and together with the Series B-1 Common Stock and Series B-2 Common Stock, the “Class B Common Stock”). *See* Internal Revenue Service PLR-135357-04 (November 17, 2004.

(1)Each outstanding share of Class A Common Stock will be converted into one share of ISE Holdings common stock, par value $.01 per share (“ISE Holdings Common Stock”);

(2)Each outstanding share of Series B-1 Common Stock will be converted into one PMM Right (“PMM Right”). Each PMM Right provides the holder with

(a)the right to vote on the election of the PMM Directors of ISE, LLC, 6

(b)the right to vote on any change in, amendment or modification of, the Core Rights 7 or the definition of Core Rights, and

(c)the predicate to obtaining the trading rights and privileges associated with each PMM Right as set forth in the LLC Constitution and ISE Rules for a PMM; 6 “PMM Directors” as defined in Section 3.2(b) of proposed LLC Constitution means two directors, who must be officers, directors, or partners of Primary Market Makers (“PMM's”), elected by a plurality vote of the holders of the PMM Rights voting together as a class. 7 “Core Rights” as defined in Section 2.2 of proposed LLC Agreement means any increase in the number of authorized PMM Rights or CMM Rights.

(3)Each outstanding share of Series B-2 Common Stock will be converted into one CMM Right (“CMM Right”). Each CMM Right provides the holder with

(a)the right to vote on the election of the CMM Directors, 8

(b)the right to vote on any change in, amendment or modification of, the Core Rights or the definition of Core Rights, and

(c)the predicate to obtaining the trading rights and privileges of each CMM Right as set forth in the LLC Constitution and ISE Rules for a CMM; and 8 “CMM Directors” as defined in Section 3.2(b) of proposed LLC Constitution means two directors, who must be officers, directors, or partners of Competitive Market Makers (“CMMs”), elected by a plurality vote of the holders of the CMM Rights voting together as a class.

(4)Each share of Series B-3 Common Stock will be converted into one EAM Right (“EAM Right” and together with the PMM Rights and CMM Rights, the “Exchange Rights”). Each EAM Right provides the holder thereof with

(a)the right to vote on the election of the EAM Directors 9 and

(b)the predicate to obtaining the trading rights and privileges of such EAM Right as set forth in the LLC Constitution and ISE Rules for an EAM. 9 “EAM Directors” as defined in Section 3.2(b) of proposed LLC Constitution means two directors, who must be officers, directors, or partners of Electronic Access Members (“EAMs”) elected by a plurality vote of the holders of the EAM Rights voting together as a class. The PMM Directors, CMM Directors, and EAM Directors are collectively referred to as the “Exchange Directors.” As a result of the Merger, the holders of shares of Class A Common Stock will become stockholders of ISE Holdings and holders of Series B-1 Common Stock, Series B-2 Common Stock, and Series B-3 Common Stock will become holders of PMM Rights, CMM Rights, and EAM Rights, respectively, in ISE, LLC, as further described below. Effectively, ISE Holdings will become the sole equity owner of ISE, LLC, and the shares of ISE Holdings Common Stock will in turn be publicly held. Furthermore, upon consummation of the Merger, the percentage of the outstanding shares of ISE Holdings Common Stock held after the Merger by each holder of Class A Common Stock will be identical to the percentage of Class A Common Stock that such holder held prior to the Merger. The percentage of Exchange Rights held after the Merger by each holder of Class B Common Stock will also be identical to the percentage of Class B Common Stock that such holder held prior to the Merger, giving effect to the particular series of Class B Common Stock and class of Exchange Rights held and to be held by such holder. ISE, Inc. represents that, currently, no Person, either alone or together with its Related Persons, owns more than 40 percent of the outstanding shares of any class or series of stock of ISE, Inc., and no member, either alone or together with its Related Persons, owns more than 20 percent of the outstanding shares of any class or series of stock of ISE, Inc. 10 Accordingly, ISE, Inc. has no reason to believe that the Reorganization, as detailed above, will result in any large concentrations of ownership or voting power by ISE, Inc.'s current stockholders or members. In addition, ISE, Inc. represents that it will continue to have a trading concentration limit and a 20% member ownership limit. 11 10 “Person” means an individual, partnership (general or limited), joint stock company, corporation, limited liability company, trust or unincorporated organization, or any governmental entity or agency or political subdivision thereof. *See* ISE, Inc. Amended Certificate, Article Fourth, Subdivision III. Currently, “Related Person” means

(1)With respect to any Person, all “affiliates” and “associates” of such Person (as such terms are defined in Rule 12b-2 under the Act);

(2)with respect to any Person constituting an exchange member (as defined in the ISE, Inc. Amended Constitution), any broker or dealer with which such Exchange Member is associated; and

(3)any two or more Persons that have any agreement, arrangement, or understanding (whether or not in writing) to act together for the purpose of acquiring, voting, holding, or disposing of shares of the capital stock of ISE, Inc. *See* ISE, Inc. Amended Certificate, Article Fourth, Subdivision III. ISE, Inc. proposes to modify the definition of “Related Persons” in connection with the Reorganization to also include, with respect to any Person, any executive officer (as defined under Rule 3b-7 under the Act), director, general partner, manager, or managing member, as applicable, and, with respect to any Person that is an executive officer (as defined under Rule 3b-7 under the Act), director, general partner, manager, or managing member of a company, corporation, or similar entity, such company, corporation, or entity, as applicable. *See* proposed Holdings Certificate, Article Fourth, Subdivision III. 11 For the member trading oncentration limit, *see* ISE Rule 303(b), which will continue to exist after the Reorganization, and proposed LLC Agreement, Section 6.5. ISE, Inc. proposes to modify Section 6.5(a) of proposed LLC Agreement to include lessees of Exchange Rights and to clarify that holders and lessees of Exchange Rights also may not exercise any of the non-trading rights associated with more than 20% of such Exchange Rights. ISE, Inc. also notes that the Commission is in the process of reviewing issues relating to new ownership structures of self-regulatory organizations (“SROs”) and has proposed rules relating to the ownership of SROs, including imposing limitations on member ownership of an SRO or facility of an SRO. *See* Securities Exchange Act Release No. 50699 (November 18, 2004), 69 FR 71126 (December 8, 2004). ISE, Inc. also notes that the Commission recently approved a separate proposal to amend ISE Rule 303 to increase the 20% member trading concentration limit to 30% for PMMs only, provided that in approving any PMM to exercise the trading privileges associated with more than 20% of the PMMs, the board of directors of ISE, Inc. (the “ISE, Inc. Board”) will not approve any arrangement in which the PMM would gain ownership or voting rights in excess of those permitted under the ISE, Inc. Amended Certificate or ISE, Inc. Amended Constitution. *See* Securities Exchange Act Release No. 53271 (February 10, 2006), 71 FR 8625 (February 17, 2006). * See also* Amendment No. 2, *supra* note 3. a. Description of ISE, LLC i. General ISE, LLC will be a wholly owned subsidiary of ISE Holdings. As the sole LLC member of ISE, LLC, ISE Holdings will have sole voting control over ISE, LLC, except for certain matters relating to Exchange Rights. 12 Specifically, as noted below, the composition of and qualifications for the Board of Directors of ISE, LLC (the “LLC Board”) will be the same as they are for the ISE, Inc. Board, and ISE Holdings will have the sole right to vote on the election of a majority of the members of the LLC Board. In general, however, the management and administration of ISE, LLC will be carried out by the LLC Board and by the executive officers of ISE, LLC, who will be appointed by the LLC Board. 13 In addition, to further preserve the autonomy of ISE, LLC, all meetings of the LLC Board pertaining to the self-regulatory function of ISE, LLC (including disciplinary matters) or to the structure of the market in which ISE, LLC regulates will be closed to all persons other than the LLC Board and officers, staff, counsel, or other advisors of ISE, LLC whose participation is necessary or appropriate to the proper discharge of ISE, LLC's regulatory functions and any representative of the Commission. No members of the Board of Directors of ISE Holdings (the “Holdings Board”) who are not also LLC Board members and no officers, staff, counsel, or advisors of ISE Holdings who are not also officers, staff, counsel, or advisors of ISE, LLC will be allowed to participate in such meetings. 14 12 The proposed LLC Agreement only permits ISE, LLC to have one LLC member at any given time, and assignment of the sole LLC member interest is subject to Commission approval. Proposed LLC Agreement, Sections 2.1, 3.1, and 7.1. ISE Holdings will not have any voting rights with respect to the Core Rights, the election of Exchange Directors, or any other matters relating to the Exchange Rights, such as the eligibility and approval of persons to own, transfer or lease Exchange Rights, rulemaking, supervision of entities holding Exchange Rights, and the like. Proposed LLC Agreement, Section 2.2. 13 Proposed LLC Constitution, Section 5.1(a). *See also* proposed LLC Agreement, Section 5.1. 14 Proposed LLC Constitution, Section 3.2(d). ii. Exchange Operations ISE, LLC will operate as a registered “national securities exchange” under Section 6 of the Act 15 and will maintain ISE, Inc.'s current regulatory authority over its members. 16 All persons using ISE, LLC as an exchange will continue to be subject to the current ISE Rules, as proposed to be modified herein in order to reflect the Reorganization. 17 ISE, LLC will continue to carry out the statutory responsibilities to enforce compliance of its members with the provisions of the Federal securities laws and ISE Rules. 18 ISE, LLC will continue to be required to approve any changes to ISE Rules and governing documents of ISE, LLC and to file any such changes with the Commission pursuant to Section 19(b) of the Act and Rule 19b-4 thereunder. 19 15 15 U.S.C. 78f. 16 For purposes of the Act, the holders or lessees of Exchange Rights will be deemed “members” of ISE, LLC. 17 ISE, Inc. is proposing to amend the ISE Rules to, among other things, change references to “Class B common stock,” “Class B stockholders,” “shares,” and similar or derivative words to “Exchange Rights,” “Exchange Rights holders,” and “Rights” and the like. 18 In addition, in discharging his or her responsibilities as a member of the LLC Board, each director shall take into consideration the effect that his or her actions would have on the ability of ISE, LLC to carry out its responsibilities under the Act and on the ability of ISE, LLC to engage in conduct that fosters and does not interfere with ISE, LLC's ability 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 mechanisms of a free and open market and a national market system, and in general, to protect investors and the public interest. In discharging his or her responsibilities as a member of the LLC Board, each director also shall comply with the Federal securities laws and rules and regulations thereunder and cooperate with the Commission. Proposed LLC Agreement, Section 5.1(b). 19 15 U.S.C. 78s(b) and 17 CFR 240.19b-4. In addition, ISE, LLC is proposing to adopt a new ISE Rule 312, which will provide that, without prior Commission approval, ISE, LLC or any entity with which it is affiliated shall not, directly or indirectly through one or more intermediaries, acquire or maintain an ownership interest in a Member or non-member owner, and a Member or non-member owner shall not be or become an affiliate of ISE, LLC or an affiliate of any affiliate of ISE, LLC. Nothing in the new ISE Rule 312 will prohibit a Member or non-member owner from acquiring or holding any equity interest in ISE Holdings, Inc. that is permitted by the Holdings Certificate or prohibit any Member from being or becoming an affiliate of ISE, LLC or an affiliate of any affiliate of ISE, LLC solely by reason of any officer, director, or partner of such Member being or becoming an Exchange Director pursuant to the LLC Constitution. 20 20 The term “Member,” as proposed to be defined in ISE Rule 100, means an organization that has been approved to exercise trading rights associated with Exchange Rights. All confidential information pertaining to the self-regulatory function of ISE, LLC (including but not limited to disciplinary matters, trading data, trading practices, and audit information) contained in books and records of ISE, LLC shall:

(1)Not be made available to any persons (other than as provided below) other than to those officers, directors, employees, and agents of ISE, LLC that have a reasonable need to know the contents thereof;

(2)be retained in confidence by ISE, LLC and the officers, directors, employees, and agents of ISE, LLC; and

(3)not be used for any commercial purposes. Nothing in the LLC Agreement shall be interpreted to limit or impede the rights of the Commission to access and examine such confidential information pursuant to the Federal securities laws and rules and regulations thereunder or to limit or impede the ability of any officers, directors, employees, or agents of ISE, LLC to disclose such confidential information to the Commission. 21 21 Proposed LLC Agreement, Section 4.1(b). As the registered SRO, ISE, LLC will continue to have ultimate responsibility for the administration and enforcement of the rules governing its options business operations. The regulatory relationship that ISE, Inc. currently maintains with the National Association of Securities Dealers (“NASD”) will not be affected by the Reorganization, and ISE, LLC, as the successor-in-interest to ISE, Inc., will continue to have the same regulatory relationship with the NASD. 22 The Reorganization will not affect the current disciplinary process. ISE, LLC's disciplinary process will be the same as the process for ISE, Inc. and will continue to be governed by the Business Conduct Committee, which is comprised of members. 23 All decisions with respect to the listing and delisting of options and related products will continue to be made in accordance with ISE Rules. 22 *See* Securities Exchange Act Release No. 4781 (May 14, 2003), 68 FR 27869 (May 21, 2003) (approving an agreement pursuant to Rule 17d-2 of the Act between the NASD and ISE, Inc.). 23 Currently, the Chief Regulatory Officer of ISE, Inc. authorizes the institution of disciplinary actions, and ISE, Inc., with the assistance of the NASD staff, if appropriate, conducts disciplinary proceedings before the Business Conduct Committee. Decisions of the Business Conduct Committee may be appealed to the Committee for Review of ISE, Inc., which is composed of directors of ISE, Inc. ISE, Inc. currently is a participant in various national market system plans, including the Options Price Reporting Authority, which provides options price reporting, and the Options Intermarket Linkage Plan, which addresses intermarket options trading. After the Reorganization, ISE, LLC proposes to continue to participate in these plans and have a representative serve on the committees overseeing these plans. iii. Organization, Management and Governance of ISE, LLC Since ISE, LLC will be the surviving entity in the Merger, the LLC Agreement and the LLC Constitution will function as the charter and bylaws of the surviving entity. ISE, Inc. represents that the provisions of the LLC Agreement and LLC Constitution are substantively the same as the current ISE, Inc. Amended Certificate and ISE, Inc. Amended Constitution, respectively, insofar as exchange operations and structure and corporate governance are concerned. 24 ISE, LLC will continue to have a similar interpretation regarding the payment of “dividends” to “stockholders,” except that the interpretation will relate to distributions to the sole LLC member and holders of Exchange Rights. Specifically, ISE, LLC will interpret ISE Rules to require that any revenue it receives from regulatory fees or penalties will be segregated and applied to fund the legal, regulatory, and surveillance operations of ISE, LLC and will not be used to pay distributions to the sole LLC member or holders of Exchange Rights, except in the event of liquidation of ISE, LLC, in which case the sole LLC member will be entitled to the distribution of ISE, LLC's remaining assets. 25 24 *See* IPO Order, *supra* note 4. In addition, while the ISE, Inc. Amended Constitution currently only requires that no officers may be holders of shares of Class B Common Stock or affiliated with an exchange member, ISE, LLC will require that no officers or employees of ISE, LLC may be holders of Exchange Rights or affiliated with an Exchange Member. Proposed LLC Constitution, Section 4.5. ISE, Inc. also is codifying its current practice of prohibiting the transfer or lease of fractional portions of any Exchange Rights. Proposed LLC Constitution, Sections 12.1, 12.2, and 12.4. 25 *See* Securities Exchange Act Release No. 45803 (April 23, 2002), 67 FR 21306 (April 30, 2002) (adopting this interpretation in connection with ISE, Inc.'s demutualization). As is the case currently with respect to the ISE, Inc. Board, the LLC Board will be comprised of 15 members, 26 eight of whom will be Non-Industry Directors 27 elected by ISE Holdings as the sole LLC member, six of whom will be Exchange Directors elected by a plurality of the holders of the Exchange Rights, and the Chief Executive Officer of ISE, LLC. 28 Each year, the Nominating Committee, which is not a committee of the LLC Board, will nominate the Exchange Directors, and the Corporate Governance Committee, which is a committee of the LLC Board, will nominate the Non-Industry Directors. 29 Holders of Exchange Rights also may nominate Exchange Directors by petition. 30 The initial members of the LLC Board were the individuals serving as directors of ISE, Inc. on the date of formation of ISE, LLC. 31 Similar to the manner of election of the current ISE, Inc. Board, at the first annual meeting of the sole LLC member and holders of Exchange Rights and at each subsequent annual meeting, ISE Holdings will elect the Non-Industry Directors, and holders of Exchange Rights will elect the Exchange Directors, to serve until the next annual meeting or until their successors are elected and qualified. 32 The Chairman of the LLC Board is a Non-Industry Director who is elected by the LLC Board. Each director of ISE, LLC holds office for a term of two years, except the Chief Executive Officer of ISE, LLC who holds office for a term of one year or such earlier time as such person no longer serves as Chief Executive Officer. The directors, other than the Chief Executive Officer, are divided into two classes, designated as Class I and Class II directors. At each annual meeting, the successors of the class of directors whose term expires at that meeting will be elected to hold office for a term expiring at the annual meeting held in the second year following the year of their election and until their successors are elected and qualified. If there is a vacancy on the LLC Board, the vacancy will be filled by the LLC Board, and the person chosen to fill the vacancy will serve until the expiration of the term of office of the class to which such person was elected. No Exchange Director may serve more than three consecutive terms, and, after a two-year hiatus, may be eligible to serve as an Exchange Director again. 33 26 ISE, Inc. proposes that the number of members of the LLC Board may only be changed by the LLC Board with the approval of the affirmative vote of the holders of two-thirds of the then outstanding Exchange Rights. Proposed LLC Constitution, Section 3.2. Currently, the number of ISE, Inc. Board members can only be changed by the ISE, Inc. Board with the approval of the affirmative vote of the holders of two-thirds of the voting power of the then outstanding shares of Class A Common Stock. ISE, Inc. Amended Certificate, Article Seventh. 27 “Non-Industry Director” means a director that meets the requirements of “non-industry representative.” Proposed LLC Constitution, Section 3.2(b). The term “non-industry representative” means any person who would not be considered an “industry representative,” as well as

(i)a person affiliated with a broker or dealer that operates solely to assist the securities-related activities of the business of non-member affiliates or

(ii)an employee of an entity that is affiliated with a broker or dealer that does not account for a material portion of the revenues of the consolidated entity and who is primarily engaged in the business of the non-member entity. Proposed LLC Constitution, Section 13.1(w). These definitions are the same as the current definitions. *See* ISE, Inc. Amended Constitution, Sections 3.2(b) and 14.1(q). 28 Proposed LLC Agreement, Section 5.2 and proposed LLC Constitution, Section 3.2(b). Pursuant to Section 4.6 of proposed LLC Constitution, the Chief Executive Officer of ISE, LLC is elected by the LLC Board and will be nominated by the LLC Board for a directorship by virtue of his or her office. 29 *See* proposed LLC Constitution, Section 3.10. *See also* ISE, Inc. Amended Constitution, Section 3.10. 30 ISE, Inc. represents that the petition process following the Reorganization will be substantially similar to the petition process in place currently for ISE, Inc., except that petitions submitted for nominees for Exchange Directors of ISE, LLC will not be required to contain all the information that is required to be disclosed pursuant to Regulation 14A under the Act since ISE, LLC will not be subject to the proxy requirements under the Act. In addition, for purposes of determining whether a person has been nominated for election by petition by the requisite percentage set forth in the proposed LLC Constitution, no Exchange Member, alone or together with its affiliates, may account for more than fifty percent (50%) of the signatures of the holders of outstanding Exchange Rights of the series entitled to elect such person, and any such signatures by such Exchange Member, alone or together with its affiliates, in excess of such fifty percent (50%) limitation shall be disregarded. *Id.* 31 The current directors of ISE, LLC are the same directors of ISE, Inc. immediately following the 2005 Annual Meeting of Stockholders of ISE, Inc. 32 *See* proposed LLC Constitution, Section 3.2(c). *See also* Amendment No. 2, *supra* note 3. 33 Proposed LLC Constitution, Section 3.2(e). ISE, Inc. did not impose term limits on Non-Industry Directors, and ISE, LLC does not propose to do so, though the ISE, LLC Corporate Governance Committee may determine whether and how to provide for such term limits at a later time. ISE, LLC will have a Finance & Audit Committee, a Corporate Governance Committee, and a Compensation Committee, all of which will be governed by charters. 34 As is currently the case with respect to ISE, Inc. and its shares of Class B Common Stock, ISE, LLC will require ownership of an Exchange Right as a predicate to obtaining the trading rights and privileges associated with such Exchange Right. 35 Holders of PMM and CMM Rights will be entitled to the same Core Rights to which the holders of Series B-1 Common Stock and Series B-2 Common Stock are entitled with respect to ISE, Inc. 36 34 Proposed LLC Constitution, Sections 5.4, 5.5 and 5.6. ISE, Inc. proposes that the LLC Board may designate additional committees by resolution passed by a majority of the whole LLC Board. Proposed LLC Constitution, Section 5.1. Currently, the ISE, Inc. Board may designate additional committees by a resolution of a majority of a quorum. ISE, Inc. Amended Constitution, Section 5.1 35 ISE, Inc. Amended Certificate, Article Fourth, Subdivision II(b)(ii) and proposed LLC Agreement, Section 6.2. 36 ISE, Inc. Amended Certificate, Article Fourth, Subdivision II(b)(v)(B) and proposed LLC Agreement, Section 6.3(b). ISE, LLC will have officers, including a President and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Information Officer, Chief Regulatory Officer, and Chief Marketing Officer, who will manage the business and affairs of ISE, LLC, subject to the oversight of the LLC Board and, in some cases, the approval of ISE Holdings as the sole LLC member. 37 The initial officers of ISE, LLC will be the individuals currently serving as the officers of ISE, Inc. 37 Under Delaware law, certain events such as a sale of all or substantially all of the assets, merger, or liquidation of ISE, LLC may require the approval of ISE Holdings. The organizational documents of ISE, LLC will differ from the ISE, Inc.'s organizational documents in several notable respects. Because ISE, LLC is not a corporation and has limited liability members instead of stockholders, ISE Holdings and Exchange Right holders will not have voting, dividend, and liquidation rights typically associated with common stock under state corporate law. 38 For example, the LLC Act does not statutorily confer the same or similar voting rights on limited liability members as are conferred to stockholders, pursuant to the Delaware General Corporation Law. Accordingly, following the Reorganization, the sole LLC member and the Exchange Right holders will not statutorily be entitled to vote on certain items with respect to which the holders of Class A and Class B Common Stock would have had a voting right ( *i.e.* , an increase or decrease in the aggregate number of authorized shares of Class A or Class B Common Stock, a change in par value, and any alteration or change in the powers, preferences, or special rights of the shares so as to affect them adversely). 38 Because Exchange Rights will not have “par value” following the Reorganization, holders of EAMs also will not be entitled to a return of the $0.01 par value per share upon withdrawal from ISE, LLC. Additionally, the holders of Exchange Rights will not be “members” of ISE, LLC for purposes of the Delaware Limited Liability Company Act (the “LLC Act”). Proposed LLC Agreement, Section 6.1. ISE, Inc. notes that some of these items are irrelevant in the context of a wholly-owned limited liability company ( *e.g.* , the notion of par value and certain Class A holder voting rights that instead will be relevant at the ISE Holdings level), but where still relevant and practical, ISE, Inc. has attempted to preserve in proposed LLC Agreement and proposed LLC Constitution certain rights of the holders of Class B Common Stock following the Reorganization. As a result, holders of Exchange Rights will continue to be entitled to vote with respect to the Core Rights (that is, any increase in the number of PMM Rights or CMM Rights to be approved by holders of a majority of PMM Rights, voting as a separate class, and CMM Rights, voting as a separate class) and with respect to any amendments that would alter or change the powers, preferences, or special rights of one or more series of Exchange Rights so as to affect them adversely (to be approved by holders of a majority of Exchange Rights entitled to vote thereon). 39 39 The sole LLC member will have a similar right to approve amendments to the proposed LLC Constitution if such amendments would alter or change the powers, preferences, or special rights of the sole LLC member so as to affect it adversely. Proposed LLC Agreement, Section 8.1 and proposed LLC Constitution, Section 10.1. Also, since ISE, LLC will have ISE Holdings as its sole LLC member, ISE, Inc. deems certain of the antitakeover provisions in the ISE, Inc. organizational documents less necessary for ISE, LLC. Specifically, ISE, LLC's organizational documents will not:

(1)Deny the right of ISE Holdings to call a special meeting;

(2)require “advance notice” of ISE Holdings” or Exchange Right holders' proposals;

(3)except as described herein, impose an ownership or voting limitation on ISE Holdings (or any corrective mechanism with respect to any ownership limitation); 40 or

(4)require any super-majority votes with respect to certain significant matters, such as mergers. 41 40 ISE, Inc. notes that ownership and voting limitations will not be relevant to a wholly owned subsidiary of a holding company, although ISE Holdings itself will have substantially the same ownership and voting limitations that ISE, Inc. currently has, as described below. Additionally, as stated earlier, ISE, LLC will continue to have a trading concentration limit and 20% member ownership limit pursuant to ISE Rule 303(b), except as described herein, and proposed LLC Agreement, Section 6.5. *See supra* note 11 for a discussion of certain modifications to ISE Rule 303(b) approved in a separate rule filing by the Commission. *See also* Amendment No. 2, *supra* note 3. 41 For the text of the current antitakeover provisions, *see* ISE, Inc. Amended Certificate, Article Eighth and ISE, Inc. Amended Constitution, Section 2.2 (pertaining to calling a special meeting); ISE, Inc. Amended Constitution, Section 2.7 (pertaining to “advance notice” provisions); ISE, Inc. Amended Certificate, Article Fourth, Subdivision III (pertaining to ownership and voting limitations); and ISE, Inc. Amended Certificate, Article Seventh (pertaining to super-majority votes). In addition, because ISE, LLC will be a wholly-owned subsidiary of ISE Holdings, and ISE Holdings will be entitled to elect a majority of the LLC Board, it is deemed less necessary to allow the sole LLC member to amend the proposed LLC Constitution (currently, ISE, Inc. stockholders representing at least a majority of the voting power may amend the ISE, Inc. Amended Constitution). However, the sole LLC member has the right to approve amendments to proposed LLC Constitution if such amendments would alter or change the powers, preferences, or special rights of the sole LLC member so as to affect it adversely. For the text of the current power to amend the ISE, Inc. Amended Constitution, *see* ISE, Inc. Amended Constitution, Section 11.1. For the text of the proposed power to amend the LLC Constitution, *see* proposed LLC Constitution, Section 10.1. b. Description of ISE Holdings i. General ISE Holdings will be governed by the Holdings Certificate and the Holdings Bylaws. ISE Holdings will not cause ISE, LLC to be operated in a manner inconsistent with ISE, LLC's regulatory and oversight functions. 42 The Holdings Certificate and Holdings Bylaws, as well as the LLC Agreement and LLC Constitution, are intended to ensure that the Reorganization will not unduly interfere with or restrict the ability of ISE, LLC or the Commission to effectively carry out their respective regulatory oversight responsibilities under the Act and generally to enable ISE, LLC to operate in a manner that complies with the Federal securities laws, including furthering the objectives of Section 6(b)(5) of the Act. 43 In addition, ISE Holdings and its officers, directors, employees, and agents will be required to submit to the jurisdiction of the U.S. Federal courts, the Commission, and ISE, LLC for the purposes of any suit, action, or proceeding, pursuant to the U.S. Federal securities laws and the rules or regulations thereunder arising out of, or relating to, the activities of ISE, LLC and will waive any claims of inconvenient forum or improper venue. 44 42 In particular, ISE Holdings, its officers, directors, and employees will give due regard to the preservation of the independence of the self-regulatory function of ISE, LLC and will not interfere with the effectuation of any decision by the LLC Board relating to such function. Proposed Holdings Bylaws, Section 1.5. 43 15 U.S.C. 78f(b)(5). 44 Proposed Holdings Bylaws, Section 1.4. ISE Holdings and its officers, directors, employees, and agents will also maintain an agent for service of process in the U.S. *Id.* The ISE Holdings Common Stock will have the traditional features of common stock, including voting, dividend, and liquidation rights. 45 Except as described below, the holders of ISE Holdings Common Stock will be entitled to vote on all matters submitted to the stockholders for a vote, and, except as discussed below, each holder will have one vote per share of ISE Holdings Common Stock owned. 46 As discussed further below, holders of ISE Holdings Common Stock will be subject to substantially the same ownership and voting limitations with respect to ISE Holdings Common Stock to which the holders of Class A Common Stock currently are subject. 45 ISE Holdings will be authorized to pay dividends to the stockholders of ISE Holdings as and when declared by the Holdings Board. 46 ISE Holdings may issue preferred stock in the future, the terms of which will be determined by the Holdings Board. ii. Organization, Management and Governance of ISE Holdings ISE Holdings will be governed under the direction of the Holdings Board. The number of directors shall be fixed by resolution of the Holdings Board and is expected to be nine immediately following the Reorganization. 47 Each year, the Corporate Governance Committee of ISE Holdings will nominate candidates for election as directors for the class of directors standing for election at the ISE Holdings annual meeting of stockholders. 48 As required by the New York Stock Exchange, Inc. (the “NYSE”), where the Class A Common Stock currently trades and where ISE, Inc. intends that the ISE Holdings Common Stock will be listed and traded, a majority of the directors of ISE Holdings must be deemed “independent” within the meaning of the NYSE's listing standards. 49 The directors of ISE Holdings, other than the Chief Executive Officer of ISE Holdings, will be divided into two classes and will be elected by a plurality of the votes cast by stockholders at each annual meeting of stockholders at which a quorum is present. 50 The directors will serve staggered two-year terms, with the term of office of one class expiring each year. 51 The Chief Executive Officer will hold office for a term of one year or such earlier time as such person no longer serves as Chief Executive Officer. 52 The Chairman of the Holdings Board will be elected by the Holdings Board. If there is a vacancy on the Holdings Board, the vacancy will be filled by the Holdings Board, and the person elected to fill the vacancy will serve until the expiration of the term of office of the class to which such person was elected. 53 47 The Holdings Board is currently comprised of two directors; one is the Chief Executive Officer of ISE, Inc., and the other is the Secretary of ISE, Inc. 48 Proposed Holdings Bylaws, Section 3.10(c). 49 Section 303A of the NYSE Listed Company Manual. 50 Proposed Holdings Certificate, Article Fifth. 51 *Id.* ISE, Inc. represents that it will address term limits, if any, in ISE Holdings' Corporate Governance Principles to be adopted in connection with the Reorganization. 52 *Id.* 53 Proposed Holdings Bylaws, Section 3.3. ISE Holdings will have officers, including a President and Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Information Officer, General Counsel, and Chief Marketing Officer, who will manage the business and affairs of ISE Holdings, subject to the oversight of the Holdings Board. The initial officers of ISE Holdings will be the individuals currently serving as officers of ISE, Inc. ISE Holdings will have a Board Executive Committee, Finance & Audit Committee, Compensation Committee, and a Corporate Governance Committee. The Finance & Audit, Compensation, and Corporate Governance committees will be governed by charters that comply with the NYSE's listing standards. The Holdings Certificate and Holdings Bylaws will contain substantially the same ownership limitations (including the same corrective mechanisms), voting limitations, and antitakeover provisions 54 that are contained in the ISE, Inc. Amended Certificate and ISE, Inc. Amended Constitution. 55 If a Person, either alone or with its Related Persons, 56 beneficially owns shares of stock of ISE Holdings in violation of the relevant ownership limitation, ISE Holdings will apply substantially the same corrective procedures that were approved by the Commission in connection with ISE, Inc.'s initial public offering. 57 ISE, Inc. believes that the ownership and voting limitations will prevent any stockholder or group of stockholders acting together from exercising undue control over the operation of ISE, LLC. 58 Specifically, ISE, Inc. believes that these ownership and voting limitations are designed to prohibit any Person, either alone or with its Related Persons, from having the power to control a substantial number of outstanding votes entitled to be cast on any matter without Commission review and, more importantly, that may be adverse to ISE, LLC's or the Commission's regulatory oversight responsibilities. ISE, Inc. also believes that these provisions serve to protect the integrity of ISE, LLC's and the Commission's regulatory oversight responsibilities and allow the Commission to review, and subject to public notice and comment, the acquisition of substantial ownership or voting power by any stockholder or group of stockholders. 54 The antitakeover provisions relate to such things as special meetings of stockholders, required stockholder vote with respect to certain actions, and advance notice of stockholder proposals (including the nomination of directors). Proposed Holdings Bylaws, Article II. 55 *See* IPO Order, *supra* note 4. For the sake of clarity, ISE, Inc. notes that the Special Trustee (as defined in the ISE, Inc. Amended Certificate and proposed Holdings Certificate) who holds the Excess Shares (as defined in the ISE, Inc. Amended Certificate and proposed Holdings Certificate) is currently ISE, Inc. and, after the Reorganization, will be ISE Holdings and that in each instance, ISE, Inc. and ISE Holdings can also appoint a special trustee who is unaffiliated with it or any Person or Related Person owning Excess Shares. ISE, Inc. Amended Certificate, Article Fourth, Subdivision III(c)(ii) and proposed Holdings Certificate, Article Fourth, Subdivision III(c)(ii). 56 *See supra* note 10. 57 *See supra* note 4 (implementing corrective procedures relating to the ownership limitations) and ISE, Inc. Amended Certificate, Article Fourth, Subdivision III(c) (setting forth the corrective procedures relating to the ownership limitations). 58 ISE, Inc. also believes that, much like the 20% member ownership limitation, the 20% voting limitation cannot be waived by the Holdings Board with respect to members. iii. Exchange-Related Matters Pursuant to the Holdings Certificate, in discharging his or her responsibilities as a member of the Holdings Board, each director shall take into consideration the effect that ISE Holdings's actions would have on the ability of ISE, LLC to carry out its responsibilities under the Act and on the ability of ISE, LLC and ISE Holdings to engage in conduct that fosters and does not interfere with ISE, LLC's and ISE Holdings' ability 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 mechanisms of a free and open market and a national market system, and, in general, to protect investors and the public interest. 59 In addition, in discharging his or her responsibilities as a member of the Holdings Board, each director shall comply with the Federal securities laws and rules and regulations thereunder and cooperate with ISE, LLC and the Commission. 60 Furthermore, in discharging his or her responsibilities as an officer or employee of ISE Holdings, each officer or employee shall comply with the Federal securities laws and rules and regulations thereunder and shall cooperate with ISE, LLC and the Commission. 61 59 Proposed Holdings Certificate, Article Twelfth. 60 *Id.* 61 *Id.* Moreover, for so long as ISE Holdings controls, directly or indirectly, ISE, LLC, each officer, director, and employee of ISE Holdings shall give due regard to the preservation of the independence of the self-regulatory function of ISE, LLC and to ISE, LLC's obligations under the Act and the rules thereunder, including, without limitation, Section 6(b) of the Act 62 and shall not take any actions which he or she knows or reasonably should have known would interfere with the effectuation of any decisions by the LLC Board relating to ISE, LLC's regulatory functions (including disciplinary matters) or which would adversely affect the ability of ISE, LLC to carry out ISE, LLC's responsibilities under the Act. 63 62 15 U.S.C. 78f(b). 63 Proposed Holdings Bylaws, Section 1.5. ISE Holdings also will take reasonable steps necessary to cause its officers, directors, and employees prior to accepting a position as such to consent in writing to the applicability to them of Article Twelfth, Article Thirteenth and Article Fourteenth of proposed Holdings Certificate and Sections 1.4 and 1.5 of proposed Holdings Bylaws, as applicable, with respect to their activities related to ISE, LLC. Proposed Holdings Bylaws, Section 1.6. ISE, Inc. believes that these provisions would help ensure that directors, officers, and employees of ISE Holdings are cognizant of, and take into account, when carrying out their duties and responsibilities as directors, officers, and employees of ISE Holdings, the fact that ISE Holdings would operate an exchange that is subject to regulatory oversight by the Commission and that the ISE, LLC is required to be operated in compliance with Federal securities laws. ISE, Inc. believes that these provisions also would help ensure that the Commission is able to effectively fulfill its regulatory obligations with respect to ISE, LLC. Pursuant to the Holdings Certificate and Holdings Bylaws, for so long as ISE Holdings controls, directly or indirectly, ISE, LLC, any amendment to the Holdings Certificate and Holdings Bylaws must be submitted by the Holdings Board to the LLC Board and, if the LLC Board determines that such amendment is required, under Section 19 of the Act 64 and the rules promulgated thereunder, to be filed with, or filed with and approved by, the Commission before such amendment may be effective under Section 19 of the Act and the rules promulgated thereunder, then such amendment shall not be filed with the Secretary of State of the State of Delaware until filed with, or filed and approved by, the Commission, as the case may be. 65 In short, if the LLC Board determines that an amendment to the Holdings Certificate and Holdings Bylaws must be filed with, or filed with and approved by, the Commission as a proposed rule change pursuant to Section 19 of the Act and Rule 19b-4 thereunder, 66 such amendment will not become effective until it becomes effective pursuant to the Rule 19b-4 filing process. 64 15 U.S.C. 78s. 65 Proposed Holdings Certificate, Article Sixteenth and proposed Holdings Bylaws, Section 10.1. 66 15 U.S.C. 78s and 17 CFR 19b-4. ISE, Inc. believes that these provisions would help to preserve the ability of ISE, LLC to carry out its regulatory responsibilities under the Act and would help to provide the Commission with the ability to review and subject to public notice and comment any changes in proposed Holdings Certificate and proposed Holdings Bylaws that could have the potential to affect ISE, LLC's and the Commission's regulatory responsibilities regarding ISE, LLC. Pursuant to proposed Holdings Certificate, all confidential information pertaining to the self-regulatory function of ISE, LLC (including but not limited to disciplinary matters, trading data, trading practices, and audit information) contained in books and records of ISE, LLC that shall come into the possession of ISE Holdings shall:

(1)Not be made available to any Persons (other than as provided below) other than to those officers, directors, employees, and agents of ISE Holdings that have a reasonable need to know the contents thereof;

(2)be retained in confidence by ISE Holdings and the officers, directors, employees, and agents of ISE Holdings; and

(3)not be used for any commercial purposes. Nothing in the Holdings Certificate shall be interpreted to limit or impede the rights of the Commission to access and examine such confidential information pursuant to the Federal securities laws and rules and regulations thereunder or to limit or impede the ability of any officers, directors, employees, or agents of ISE Holdings to disclose such confidential information to the Commission. 67 67 Proposed Holdings Certificate, Article Thirteenth. For so long as ISE Holdings controls, directly or indirectly, ISE, LLC, the books, records, premises, officers, directors, and employees of ISE Holdings shall be deemed to be the books, records, premises, officers, directors, and employees of ISE, LLC for purposes of and subject to oversight pursuant to the Act but only to the extent they relate to the exchange business of ISE, LLC. 68 In addition, the books and records of ISE, LLC and ISE Holdings will be kept within the U.S. 69 ISE, Inc. believes that these provisions would help to ensure access to ISE Holdings' books and records by the Commission and, to the extent ISE Holdings' books and records relate to the operation or administration of ISE, LLC, would help enable the Commission to carry out its regulatory responsibilities regarding ISE, LLC. 68 Proposed Holdings Certificate, Article Fourteenth. 69 Proposed Holdings Bylaws, Section 1.3. Pursuant to proposed Holdings Certificate, ISE Holdings shall comply with the Federal securities laws and rules and regulations thereunder and shall cooperate with ISE, LLC and the Commission, pursuant to their respective regulatory authority. 70 In addition, ISE Holdings shall take reasonable steps necessary to cause its agents to cooperate with ISE, LLC and the Commission, pursuant to their respective regulatory authority with respect to such agents' activities related to ISE, LLC. 71 ISE, Inc. believes that these provisions would help to ensure that ISE Holdings will not interfere with the Commission's regulatory responsibilities by ensuring that ISE Holdings will comply with Federal securities laws, cooperates with ISE, LLC and the Commission pursuant to their respective regulatory authority, and takes reasonable steps to ensure that its agents do not interfere with the Commission's ability to carry out its regulatory responsibilities. 70 Proposed Holdings Certificate, Article Fifteenth. 71 *Id.* ISE, Inc. believes that the Reorganization will permit ISE, LLC to continue ISE, Inc.'s current function as a national securities exchange while its corporate parent, ISE Holdings, may, through greater organizational flexibility, facilitate access to capital markets, promote new business opportunities, facilitate future acquisitions and the formation of strategic alliances, and create a framework for future growth. 2. Statutory Basis ISE, Inc. believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange and, in particular, with the requirements of Section 6(b) of the Act. 72 The Exchange believes that the proposal is consistent with the requirement under Section 6(b)(1) of the Act 73 that an exchange be so organized and has the capacity to be able to carry out the purposes of the Act and to comply, and (subject to any rule or order of the Commission pursuant to Section 17(d) 74 or 19(g)(2) 75 of the Act) to enforce compliance by its members and persons associated with its members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the exchange. ISE, Inc. also believes this proposed rule change furthers the objective of Section 6(b)(5) of the Act 76 that an exchange have rules that, among other things, are designed to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. 72 15 U.S.C. 78f(b). *See also* Amendment No. 2, *supra* note 3. 73 15 U.S.C. 78f(b)(1). 74 15 U.S.C. 78q(d). 75 15 U.S.C. 78s(g)(2). 76 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition ISE, Inc. believes that the proposed rule change does not impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others ISE, Inc. has not solicited, and does not intend to solicit, comments on this proposed rule change. ISE, Inc. has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such other 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 the proposed rule change, or B. Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-2006-04 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2006-04. 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 Commissions 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 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-2006-04 and should be submitted by April 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 77 77 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-3855 Filed 3-16-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53472; File No. SR-NYSE-2006-18] Self-Regulatory Organizations; New York Stock Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Rule 104, Dealings by Specialists March 13, 2006. 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 March 8, 2006, the New York Stock Exchange, LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 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 NYSE has asked the Commission to waive the 5-day pre-filing notice requirement and the 30-day operative delay. *See* Section 19(b)(3)(A) of the Act, and Rule 19b-4(f)(6)(iii) thereunder. 15 U.S.C. 78s(b)(1), 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 Exchange proposes to amend NYSE Rules 104.12 and .13 concerning investment accounts and investment positions in specialty securities for securities issued by the Exchange. The text of the proposed rule change is available on NYSE's Web site, *http://www.nyse.com* , at NYSE's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change. 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 NYSE Rule 104 (Dealings by Specialists) governs specialists' dealings in their specialty securities. Trades conducted by a specialist in specialty securities are effected in the specialist's dealer account. Under NYSE Rule 104.12, a specialist may assign part of his or her dealer account position to an investment account, provided that such assignment does not create a short position in the specialist's dealer account. Additionally, NYSE Rule 104.12 prohibits the assignment to the investment account of any position or part thereof that was purchased on nonstabilizing ticks, *i.e.* , a “plus” tick (at a price higher than the last trade) or “zero plus tick” (higher than the last different trade). In order to assign a position to an investment account, a specialist's purchases in that security must be at least 75% stabilizing for that day and the calendar week encompassing the purchase of that security. Similarly, positions in the dealer account are netted with positions in an investment account. Thus, if the specialist is short in the dealer account, but has a long position in the investment account that exceeds the short dealer position, the specialist is considered to be net long. In that situation, a specialist may not liquidate the short dealer account position by purchasing on a plus tick; nor may the specialist purchase on a zero plus tick more than 50% of the stock that is being offered in the market at that time, and, in no event may the specialist purchase the final 100 shares offered. NYSE Rule 104.13 requires that transactions effected in specialty stocks for the accounts of specified persons affiliated with or related to a specialist must be for investment purposes and executed in accordance with certain restrictions relating to the price at which transactions may take place, known as “tick” restrictions. The accounts specified in the rule include accounts of employees or parties active in the business of the specialist, the spouse or children residing in the same household as a specialist or person active in the specialist business, and any approved person (individual or entity in a control relationship) of the specialist, other than an approved person entitled to an exemption pursuant to NYSE Rule 98 (Restrictions on an Approved Person Associated with a Specialist's Member Organization). *NYSE-Archipelago Merger.* The merger of NYSE and Archipelago Holdings, Inc. has received Commission approval and was completed on March 7, 2006. 6 Trading in the common stock of the newly-formed, publicly-traded holding company NYSE Group, Inc. on the Exchange will commence on March 8, 2006, under the symbol “NYX.” 6 *See* Securities Exchange Act Release No. 53382 (February 27, 2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77). Under the terms of the merger, members of the Exchange, *i.e.* , seatholders on the NYSE, will receive shares of NYX stock in exchange for their membership interests. In certain circumstances, where the purchase of an Exchange membership was the subject of a financing arrangement with the member organization a seat holder was associated with, the member organization will be eligible to receive the NYX shares being exchanged for a membership. These NYX shares will be held in a special account separate from the specialist's dealer and investment accounts. The NYX shares received as a result of this exchange will be subject to transfer restrictions set forth in the amended and restated Certificate of Incorporation of NYSE Group, Inc. These transfer restrictions prohibit any direct or indirect assignment, sale, exchange, transfer, tender or any other disposition of NYX shares. Except as otherwise provided in Article IV, Section 4 of the amended and restated Certificate of Incorporation, these restrictions are scheduled to expire after 12, 24, and 36 months subsequent to the issuance date of the shares, for one-third of the total shares after each such 12-month interval. The specialist organization will be informed by the transfer agent as to the specific date the restrictions will be lifted for each tranche. It is only when the restrictions are removed that these shares will be transferred to the specialist's dealer or investment account and will be fully subject to NYSE Rule 104. Among those who will receive restricted NYX shares will be seatholders who are associated with the member organization which is registered as the specialist in NYX stock, and that specialist member organization itself. *Proposed Rule Change.* The Exchange proposes to amend NYSE Rules 104.12 and .13 to exempt from these provisions any positions held by a specialist or his or her organization in a specialty security issued by NYSE Group, Inc. and listed on the NYSE which is restricted as to sale or transfer. This exemption will last during the pendency of such restriction as to sale or transfer. The Exchange believes that given that these shares cannot be used in the specialist's normal market making activities, the application of NYSE Rules 104.12 and .13 to these positions does not serve any useful purpose. The provisions of NYSE Rule 104.12 are designed to permit specialists to establish investment positions in specialty securities while recognizing that all trading activity and positions in such specialty securities must be available for use in the specialist's dealer activities. The restrictions contained in NYSE Rule 104.13 help ensure that associated persons of specialists do not trade in a destabilizing manner any NYSE security in which the related specialist organization is registered. Since the shares of NYX that are to be received by the specialists, the specialist member organization and any associated parties in exchange for their membership interests will be, for all practical purposes, unable to be used in any manner until the restrictions described above are removed, the Exchange believes that it would be inappropriate to include them within the purview of NYSE Rules 104.12 and .13. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 7 that an Exchange have rules that are designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule does not

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

(ii)does not impose any significant burden on competition; and

(iii)by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, provided that the Exchange has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change or such shorter time as designated by the Commission, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and Rule 19b-4(f)(6) thereunder. 9 Accordingly, a proposed rule change filed under Rule 19b-4(f)(6) under the Act 10 normally may not become operative prior to 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) 11 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(6). 10 17 CFR 240.19b-4(f)(6). 11 17 CFR 240.19b-4(f)(6)(iii). The NYSE has requested that the Commission waive the 5-day pre-filing notice requirement and the 30-day operative delay, which would make the rule change effective and operative upon filing. The Commission believes that waiver of the 5-day pre-filing notice and the 30-day operative delay is consistent with the protection of investors and the public interest, because it allows the NYSE to implement this proposal as soon as possible upon the commencement of trading of NYX stock on March 8, 2006, and thereby accommodates the receipt and retention of restricted NYX shares by the specialist in a special account separate and apart from the specialist's dealer or investment accounts and addresses the treatment of such shares under NYSE Rule 104. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission. 12 12 For the purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 13 13 *See* 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2006-18 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2006-18. 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 will also be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File number SR-NYSE-2006-18 and should be submitted by April 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 Nancy M. Morris, Secretary. 14 17 CFR 200.30-3(a)(12). [FR Doc. E6-3898 Filed 3-16-06; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 5342] Bureau of Educational and Cultural Affairs

(ECA)Request for Grant Proposals: International Sports Programming Initiative *Announcement Type:* New Grant. *Funding Opportunity Number:* ECA/PE/C/WHA-EAP-06-34. *Catalog of Federal Domestic Assistance Number:* 00.000. *Key Dates: Application Deadline:* May 11, 2006. *Executive Summary:* The Office of Citizen Exchanges of the Bureau of Educational and Cultural Affairs announces an open competition for International Sports Programming Initiative. Public and private non-profit organizations meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3) may submit proposals to discuss approaches designed to enhance and improve the infrastructure of youth sports programs in the countries of Africa, East Asia, Near East and North Africa, and South Asia. The focus of all programs must be reaching out to youth ages 8-18. Programs designed to train elite athletes will not be considered. In Africa, the following countries are eligible: Democratic Republic of Congo, Ethiopia, Guinea, Liberia, Rwanda, Tanzania and Uganda. In East Asia eligible countries are: Cambodia, China, Indonesia, Malaysia, Philippines and Thailand. In the Near East and North Africa eligible countries are: Algeria, Bahrain, Egypt, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, United Arab Emirates, and Yemen. Eligible countries in South Asia are: Afghanistan, Bangladesh, India, Nepal, Pakistan and Sri Lanka. Only single country projects are eligible. Applicants may not submit proposals that address more than one country or for countries that are not designated in the RFGP. For the purposes of this competition, eligible regions are Africa, East Asia, the Near East, North Africa, and South Asia. No guarantee is made or implied that grants will be awarded in all themes and for all countries listed. I. Funding Opportunity Description *Authority:* Overall grant making authority for this program is contained in the Mutual Educational and Cultural Exchange Act of 1961, Public Law 87-256, as amended, also known as the Fulbright-Hays Act. The purpose of the Act is “to enable the Government of the United States to increase mutual understanding between the people of the United States and the people of other countries; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, developments, and achievements of the people of the United States and other nations and thus to assist in the development of friendly, sympathetic and peaceful relations between the United States and the other countries of the world.” The funding authority for the program above is provided through legislation. Purpose *Overview:* The Office of Citizen Exchanges welcomes proposals that directly respond to the following thematic areas. Given budgetary limitations, projects for other themes and other countries not listed below will not be eligible for consideration under the FY-2006 International Sports Program Initiative. In Africa, the following countries are eligible: Democratic Republic of Congo, Ethiopia, Guinea, Liberia, Rwanda, Tanzania and Uganda. In East Asia eligible countries are: Cambodia, China, Indonesia, Malaysia, Philippines and Thailand. In the Near East and North Africa eligible countries are: Algeria, Bahrain, Egypt, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, United Arab Emirates, and Yemen. Eligible countries in South Asia are: Afghanistan, Bangladesh, India, Nepal, Pakistan and Sri Lanka. Only single country projects are eligible. Themes

(1)Training Sports Coaches The World Summit on Physical Education (Berlin, 1999) stated that a “quality physical education helps children to develop the patterns of interest in physical activity, which are essential for healthy development and which lay the foundation for healthy, adult lifestyles.” Coaches are critical to the accomplishment of this goal. A coach not only needs to be qualified to provide the technical assistance required by young athletes to improve, but must also understand how to aid a young person to discover how success in athletics can be translated into achievement in the development of life skills and in the classroom. Projects submitted in response to this theme would be aimed at aiding youth, secondary school and university coaches in the target countries in the development and implementation of appropriate training methodologies, through seminars and outreach. The goal is to ensure the optimal technical proficiency among the coaches participating in the program while also emphasizing the role sports can play in the long-term economic well being of youth.

(2)Youth Sports Management Exchange Exchanges funded under this theme would help American and foreign youth sport coaches, adult sponsors, and sports associations officials share their experience in managing and organizing youth sports activities, particularly in financially challenging circumstances, and would contribute to a better understanding of the role of sports as a significant factor in educational success. Americans are in a good position to convey to foreign counterparts the importance of linking success in sports to educational achievement and how these two factors can contribute to short-term and long-term economic prospects.

(3)Youth With Disability Exchanges supported by this theme are designed to promote and sponsor sports, recreation, fitness and leisure events for children and adults with physical disabilities. Project goals include improving the quality of life for people with disabilities by providing affordable inclusive sports and recreational experiences that build self-esteem and confidence, enhancing active participation in community life and making a significant contribution to the physical and psychological health of people with disabilities. Physically and developmentally challenged individuals will be fully included in the sports and recreation opportunities in their communities.

(4)Sports and Health Projects funded under this category will focus on effective and practical ways to use sport personalities and sports health professionals to increase awareness among young people of the importance of following a healthy life style to reduce illness, prevent injuries and speed rehabilitation and recovery. Emphasis will be on the responsibility of the broader community to support healthy behavior. The project goals are to promote and integrate scientific research, education, and practical applications of sports medicine and exercise science to maintain and enhance physical performance, fitness, health, and quality of life. (Actual medical training and dispensing of medications are outside the purview of this theme.) *Audience:* Representatives from government and non-governmental organizations, coaches, community leaders, and youth audiences. Ideal Program Model • U.S. grantee identifies U.S. citizens to conduct multi location in-country program, including clinics and training sessions for government officials (Ministry of Sports and Ministry of Education), coaches (adult and youth), GO representatives including representatives from relevant sports federation, community officials including local authorities associated with recreational facilities, youth audiences (equal numbers of boys and girls), elected local government officials, and sports management professionals to support one of the themes listed. In-country partner (a local university, government agency or other appropriate organization such as relevant sports federation) would co-host the event with the U.S. grantee institution; and participate in the selection of participants for U.S. program. • U.S. program that would include a site visits designed to provide participants with background information on U.S. approaches to the themes listed in the announcement; internships with appropriate sports related organizations and at community-based recreational facilities; and a one-day debriefing and evaluation. • In-country program conducted by U.S. experts that served as internship hosts or coordinated site visits. Participants in U.S. program design the program and serve as co-presenters. Project would also support materials translated into target language, small grants for projects designed to expand the exchange experience and support for the development of alumni association. Suggested Program Designs Bureau-supported exchanges may include internships; study tours; short-term, non-technical experiential learning; extended and intensive workshops; and seminars taking place in the United States or overseas as long as these seminars promote intensive exchange of ideas among participants in the project. Examples of program activities include: 1. A U.S.-based program that includes an orientation to program purposes and to U.S. society; study tour/site visits; professional internships/placements; interaction and dialogue; hands-on training; professional development; and action plan development. 2. Capacity-building/training-of-trainer

(TOT)workshops to help participants to identify priorities, create work plans, strengthen professional and volunteer skills, share their experience with committed people within each country, and become active in a practical and valuable way. 3. Site visits by U.S. facilitators/experts to monitor projects in the region and to encourage further development, as appropriate. Participant Selection Proposals should clearly describe the types of persons that will participate in the program as well as the participant recruitment and selection processes. For programs that include U.S. internships, applicants should submit letters of support from host institutions. In the selection of foreign participants, the Bureau and U.S. embassies retain the right to review all participant nominations and to accept or refuse participants recommended by grantee institutions. When U.S. participants are selected, grantee institutions must provide their names and brief biographical data to the Office of Citizen Exchanges. Priority in two-way exchange proposals will be given to foreign participants who have not previously traveled to the United States. II. Award Information *Type of Award:* Grant Agreement. *Fiscal Year Funds:* 2006. *Approximate Total Funding:* $600,000. *Approximate Number of Awards:* 4-5. *Approximate Average Award:* $135,000. *Floor of Award Range:* $60,000. *Ceiling of Award Range:* Approximately $135,000. *Anticipated Award Date:* Pending availability of funds, August 31, 2006. *Anticipated Project Completion Date:* September 30, 2007-June 30, 2008. Projects under this competition may range in length from one to three years depending on the number of project components, the country/region targeted and the extent of the evaluation plan proposed by the applicant. The Office of Citizen Exchanges strongly encourages applicant organizations to plan enough time after project activities to measure project outcomes. Please refer to the Program Monitoring and Evaluation section, item IV.3d.3 below, for further guidance on evaluation. III. Eligibility Information *III.1. Eligible applicants:* Applications may be submitted by public and private non-profit organizations meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3). *III.2. Cost Sharing or Matching Funds:* There is no minimum or maximum percentage required for this competition. However, the Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs. Cost sharing is an important element of the ECA-grantee institution relationship, and it demonstrates the implementing organization's commitment to the program. Cost sharing is included as one criterion for grant proposal evaluation. Applicants are strongly encouraged to cost share a portion of overhead and administrative expenses. Cost-sharing, including contributions from the applicant, proposed in-country partner(s), and other sources should be included in the budget request. Proposal budgets that do not reflect cost sharing will be deemed not competitive under the Cost Effectiveness and Cost Sharing criterion (item V.1 below). When cost sharing is offered, it is understood and agreed that the applicant must provide the amount of cost sharing as stipulated in its proposal and later included in an approved grant agreement. Cost sharing may be in the form of allowable direct or indirect costs. For accountability, you must maintain written records to support all costs that are claimed as your contribution, as well as costs to be paid by the Federal government. Such records are subject to audit. The basis for determining the value of cash and in-kind contributions must be in accordance with OMB Circular A-110, (Revised), Subpart C.23—Cost Sharing and Matching. In the event you do not provide the minimum amount of cost sharing as stipulated in the approved budget, ECA's contribution will be reduced in like proportion. *III.3. Other Eligibility Requirements:*

(a)Grants awarded to eligible organizations with less than four years of experience in conducting international exchange programs will be limited to $60,000.

(b)Technical Eligibility: In addition to the requirements outlined in the Proposal Submission Instructions

(PSI)technical format and instructions document, all proposals must comply with the following or they will result in your proposal being declared technically ineligible and given no further consideration in the review process. 1. The Office does not support proposals limited to conferences or seminars (i.e., one-to fourteen-day programs with plenary sessions, main speakers, panels, and a passive audience). It will support conferences only when they are a small part of a larger project in duration that is receiving Bureau funding from this competition. 2. No funding is available exclusively to send U.S. citizens to conferences or conference-type seminars overseas; nor is funding available for bringing foreign nationals to conferences or to routine professional association meetings in the United States. 3. The Office of Citizen Exchanges does not support academic research or faculty or student fellowships. 4. Applicants may not submit more than one

(1)proposal for this competition. Organizations that submit proposals that exceed these limits will result in having all of their proposals declared technically ineligible, and none of the submissions will be reviewed by a State Department panel. 5. Proposals that target countries/regions or themes not listed in the RFGP will be deemed technically ineligible. 6. Proposals involving the production or interpretation of artistic work WILL NOT be accepted under this competition, and if received, will be declared technically ineligible. IV. Application and Submission Information Note: Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. *IV.1 Contact Information to Request an Application Package:* Please contact the Office of Citizen Exchanges, ECA/PE/C, Room 220, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC, 20547, tel.: 202-453-8163; fax: 202-453-8168; or e-mail *harveyrh@state.gov* to request a Solicitation Package. Please refer to the Funding Opportunity Number (ECA/PE/C/WHA-EAP-06-34) located at the top of this announcement when making your request. Alternatively, an electronic application package may be obtained from grants.gov. Please see section IV.3F for further information. The Solicitation Package contains the Proposal Submission Instruction

(PSI)document that consists of required application forms, and standard guidelines for proposal preparation. Please specify the Bureau Program Officer listed for each region and theme above and refer to the Funding Opportunity Number (ECA/PE/C/WHA-EAP-06-34) located at the top of this announcement on all other inquiries and correspondence. *IV.2. To Download a Solicitation Package Via Internet:* The entire Solicitation Package may be downloaded from the Bureau's Web site at *http://exchanges.state.gov/education/rfgps/menu.htm* , from the grants.gov Web site at *http://www.grants.gov* . Please read all information before downloading. *V.3. Content and Form of Submission:* Applicants must follow all instructions in the Solicitation Package. The application should be sent per the instructions under IV.3f. “Application Deadline and Methods of Submission” below IV.3a. You are required to have a Dun and Bradstreet Data Universal Numbering System

(DUNS)number to apply for a grant or cooperative agreement from the U.S. Government. This number is a nine-digit identification number, which uniquely identifies business entities. Obtaining a DUNS number is easy and there is no charge. To obtain a DUNS number, access *http://www.dunandbradstreet.com* or call 1-866-705-5711. Please ensure that your DUNS number is included in the appropriate box of the SF-424 which is part of the formal application package. *IV.3b.* All proposals must contain an executive summary, proposal narrative and budget. Please Refer to the Solicitation Package. It contains the mandatory Proposal Submission Instructions

(PSI)document for additional formatting and technical requirements. *IV.3c.* You must have nonprofit status with the IRS at the time of application. If your organization is a private nonprofit which has not received a grant or cooperative agreement from ECA in the past three years, or if your organization received nonprofit status from the IRS within the past four years, you must submit the necessary documentation to verify nonprofit status as directed in the PSI document. Failure to do so will cause your proposal to be declared technically ineligible. *IV.3d.* Please take into consideration the following information when preparing your proposal narrative: *IV.3d.1. Adherence To All Regulations Governing The J Visa:* The Office of Citizen Exchanges of the Bureau of Educational and Cultural Affairs is the official program sponsor of the exchange program covered by this RFGP, and an employee of the Bureau will be the “Responsible Officer” for the program under the terms of 22 CFR part 62, which covers the administration of the Exchange Visitor Program (J visa program). Under the terms of 22 CFR part 62, organizations receiving grants under this RFGP will be third parties “cooperating with or assisting the sponsor in the conduct of the sponsor's program.” The actions of grantee program organizations shall be “imputed to the sponsor in evaluating the sponsor's compliance with” 22 CFR part 62. Therefore, the Bureau expects that any organization receiving a grant under this competition will render all assistance necessary to enable the Bureau to fully comply with 22 CFR part 62 *et seq.* The Bureau of Educational and Cultural Affairs places great emphasis on the secure and proper administration of Exchange Visitor (J visa) Programs and adherence by grantee program organizations and program participants to all regulations governing the J visa program status. Therefore, proposals should *explicitly state in writing* that the applicant is prepared to assist the Bureau in meeting all requirements governing the administration of Exchange Visitor Programs as set forth in 22 CFR part 62. If your organization has experience as a designated Exchange Visitor Program Sponsor, the applicant should discuss its record of compliance with 22 CFR part 62 *et seq.* , including the oversight of its Responsible Officers and Alternate Responsible Officers, screening and selection of program participants, provision of pre-arrival information and orientation to participants, monitoring of participants, proper maintenance and security of forms, record-keeping, reporting and other requirements. The Office of Citizen Exchanges of ECA will be responsible for issuing DS-2019 forms to participants in this program. A copy of the complete regulations governing the administration of Exchange Visitor

(J)programs is available at *http://exchanges.state.gov* or from: United States Department of State, Office of Exchange Coordination and Designation, ECA/EC/ECD-SA-44, Room 734, 301 4th Street, SW., Washington, DC 20547. Telephone:

(202)203-5029. FAX:

(202)453-8640. *IV.3d.2. Diversity, Freedom and Democracy Guidelines:* Pursuant to the Bureau's authorizing legislation, programs must maintain a non-political character and should be balanced and representative of the diversity of American political, social, and cultural life. “Diversity” should be interpreted in the broadest sense and encompass differences including, but not limited to ethnicity, race, gender, religion, geographic location, socio-economic status, and physical challenges. Applicants are strongly encouraged to adhere to the advancement of this principle both in program administration and in program content. Please refer to the review criteria under the ‘Support for Diversity' section for specific suggestions on incorporating diversity into your proposal. Public Law 104-319 provides that “in carrying out programs of educational and cultural exchange in countries whose people do not fully enjoy freedom and democracy,” the Bureau “shall take appropriate steps to provide opportunities for participation in such programs to human rights and democracy leaders of such countries.” Public Law 106-113 requires that the governments of the countries described above do not have inappropriate influence in the selection process. Proposals should reflect advancement of these goals in their program contents, to the full extent deemed feasible. *IV.3d.3. Program Monitoring and Evaluation:* Proposals must include a plan to monitor and evaluate the project's success, both as the activities unfold and at the end of the program. The Bureau recommends that your proposal include a draft survey questionnaire or other technique plus a description of a methodology to use to link outcomes to original project objectives. The Bureau expects that the grantee will track participants or partners and be able to respond to key evaluation questions, including satisfaction with the program, learning as a result of the program, changes in behavior as a result of the program, and effects of the program on institutions (institutions in which participants work or partner institutions). The evaluation plan should include indicators that measure gains in mutual understanding as well as substantive knowledge. Successful monitoring and evaluation depend heavily on setting clear goals and outcomes at the outset of a program. Your evaluation plan should include a description of your project's objectives, your anticipated project outcomes, and how and when you intend to measure these outcomes (performance indicators). The more that outcomes are “smart” (specific, measurable, attainable, results-oriented, and placed in a reasonable time frame), the easier it will be to conduct the evaluation. You should also show how your project objectives link to the goals of the program described in this RFGP. Your monitoring and evaluation plan should clearly distinguish between program *outputs* and *outcomes* . *Outputs* are products and services delivered, often stated as an amount. Output information is important to show the scope or size of project activities, but it cannot substitute for information about progress towards outcomes or the results achieved. Examples of outputs include the number of people trained or the number of seminars conducted. *Outcomes* , in contrast, represent specific results a project is intended to achieve and is usually measured as an extent of change. Findings on outputs and outcomes should both be reported, but the focus should be on outcomes. We encourage you to assess the following four levels of outcomes, as they relate to the program goals set out in the RFGP (listed here in increasing order of importance): 1. *Participant satisfaction* with the program and exchange experience. 2. *Participant learning* , such as increased knowledge, aptitude, skills, and changed understanding and attitude. Learning includes both substantive (subject-specific) learning and mutual understanding. 3. *Participant behavior* , concrete actions to apply knowledge in work or community; greater participation and responsibility in civic organizations; interpretation and explanation of experiences and new knowledge gained; continued contacts between participants, community members, and others. 4. *Institutional changes* , such as increased collaboration and partnerships, policy reforms, new programming, and organizational improvements. Please note: Consideration should be given to the appropriate timing of data collection for each level of outcome. For example, satisfaction is usually captured as a short-term outcome, whereas behavior and institutional changes are normally considered longer-term outcomes. Overall, the quality of your monitoring and evaluation plan will be judged on how well it

(1)specifies intended outcomes;

(2)gives clear descriptions of how each outcome will be measured;

(3)identifies when particular outcomes will be measured; and

(4)provides a clear description of the data collection strategies for each outcome (i.e., surveys, interviews, or focus groups). (Please note that evaluation plans that deal only with the first level of outcomes [satisfaction] will be deemed less competitive under the present evaluation criteria.) Grantees will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. *IV.3e. Please take the following information into consideration when preparing your budget:* *IV.3e.1.* Applicants must submit a comprehensive budget for the entire program. For this competition, requests should not exceed approximately $135,000. There must be a summary budget as well as breakdowns reflecting both administrative and program budgets. Applicants may provide separate sub-budgets for each program component, phase, location, or activity to provide clarification. *IV.3e.2.* Allowable costs for the program include the following: *1. Travel.* International and domestic airfare; visas; transit costs; ground transportation costs. Please note that all air travel must be in compliance with the Fly America Act. There is no charge for J-1 visas for participants in Bureau sponsored programs. *2. Per Diem.* For U.S.-based programming, organizations should use the published Federal per diem rates for individual U.S. cities. Domestic per diem rates may be accessed at: *http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/perd03d.html.* ECA requests applicants to budget realistic costs that reflect the local economy and do not exceed Federal per diem rates. Foreign per diem rates can be accessed at: *http://www.state.gov/m/a/als/prdm/html* . *3. Interpreters.* For U.S.-based activities, ECA strongly encourages applicants to hire their own locally based interpreters. However, applicants may ask ECA to assign State Department interpreters. One interpreter is typically needed for every four participants who require interpretation. When an applicant proposes to use State Department interpreters, the following expenses should be included in the budget: Published Federal per diem rates (both “lodging” and “M&IE”) and “home-program-home” transportation in the amount of $400 per interpreter. Salary expenses for State Department interpreters will be covered by the Bureau and should not be part of an applicant's proposed budget. Bureau funds cannot support interpreters who accompany delegations from their home country or travel internationally. *4. Book and Cultural Allowances.* Foreign participants are entitled to a one-time cultural allowance of $150 per person, plus a book allowance of $50. Interpreters should be reimbursed up to $150 for expenses when they escort participants to cultural events. U.S. program staff, trainers or participants are not eligible to receive these benefits. *5. Consultants.* Consultants may be used to provide specialized expertise or to make presentations. Honoraria rates should not exceed $250 per day. Organizations are encouraged to cost-share rates that would exceed that figure. Subcontracting organizations may also be employed, in which case the written agreement between the prospective grantee and sub-grantee should be included in the proposal. Such sub-grants should detail the division of responsibilities and proposed costs, and subcontracts should be itemized in the budget. *6. Room rental.* The rental of meeting space should not exceed $250 per day. Any rates that exceed this amount should be cost shared. *7. Materials.* Proposals may contain costs to purchase, develop and translate materials for participants. Costs for high quality translation of materials should be anticipated and included in the budget. Grantee organizations should expect to submit a copy of all program materials to ECA, and ECA support should be acknowledged on all materials developed with its funding. *8. Equipment.* Applicants may propose to use grant funds to purchase equipment, such as computers and printers; these costs should be justified in the budget narrative. Costs for furniture are not allowed. *9. Working meal.* Normally, no more than one working meal may be provided during the program. Per capita costs may not exceed $15-$25 for lunch and $20-$35 for dinner, excluding room rental. The number of invited guests may not exceed participants by more than a factor of two-to-one. When setting up a budget, interpreters should be considered “participants.” *10. Return travel allowance.* A return travel allowance of $70 for each foreign participant may be included in the budget. This allowance would cover incidental expenses incurred during international travel. *11. Health Insurance.* Foreign participants will be covered during their participation in the program by the ECA-sponsored Accident and Sickness Program for Exchanges (ASPE), for which the grantee must enroll them. Details of that policy can be provided by the contact officers identified in this solicitation. The premium is paid by ECA and should not be included in the grant proposal budget. However, applicants are permitted to include costs for travel insurance for U.S. participants in the budget. *12. Wire transfer fees.* When necessary, applicants may include costs to transfer funds to partner organizations overseas. Grantees are urged to research applicable taxes that may be imposed on these transfers by host governments. *13. In-country travel costs* for visa processing purposes. Given the requirements associated with obtaining J-1 visas for ECA-supported participants, applicants should include costs for any travel associated with visa interviews or DS-2019 pick-up. *14. Administrative Costs.* Costs necessary for the effective administration of the program may include salaries for grantee organization employees, benefits, and other direct and indirect costs per detailed instructions in the Application Package. While there is no rigid ratio of administrative to program costs, proposals in which the administrative costs do not exceed 25% of the total requested ECA grant funds will be more competitive under the cost effectiveness and cost sharing criterion, per item V.1 below. Proposals should show strong administrative cost sharing contributions from the applicant, the in-country partner and other sources. Please refer to the Solicitation Package for complete budget guidelines and formatting instructions. *IV.3f. Application Deadline and Methods of Submission:* *Application Deadline Date:* Thursday, May 11, 2006. *Reference Number:* ECA/PE/C/WHA-EAP-06-34. *Methods of Submission:* Applications may be submitted in one of two ways:

(1)In hard-copy, via a nationally recognized overnight delivery service (i.e., DHL, Federal Express, UPS, Airborne Express, or U.S. Postal Service Express Overnight Mail, etc.), or

(2)Electronically through *http://www.grants.gov* . Along with the Project Title, all applicants must enter the above Reference Number in Box 11 on the SF-424 contained in the mandatory Proposal Submission Instructions

(PSI)of the solicitation document. *IV.3f.1. Submitting Printed Applications:* Due to heightened security measures, proposal submissions must be sent via a nationally recognized overnight delivery service (i.e., DHL, Federal Express, UPS, Airborne Express, or U.S. Postal Service Express Overnight Mail, etc.) and be shipped no later than the above deadline. The delivery services used by applicants must have in-place, centralized shipping identification and tracking systems that may be accessed via the Internet and delivery people who are identifiable by commonly recognized uniforms and delivery vehicles. Proposals shipped on or before the above deadline but received at ECA more than seven days after the deadline will be ineligible for further consideration under this competition. Proposals shipped after the established deadlines are ineligible for consideration under this competition. It is each applicant's responsibility to ensure that each package is marked with a legible tracking number and to monitor/confirm delivery to ECA via the Internet. ECA will *not* notify you upon receipt of application. Delivery of proposal packages *may not* be made via local courier service or in person for this competition. Faxed documents will not be accepted at any time. Only proposals submitted as stated above will be considered. Applications may not be submitted electronically at this time. Applicants must follow all instructions in the Solicitation Package. Important note: When preparing your submission please make sure to include one extra copy of the completed SF-424 form and place it in an envelope addressed to “ECA/EX/PM”. The original and ten copies of the application should be sent to: U.S. Department of State, SA-44, Bureau of Educational and Cultural Affairs, Ref.: ECA/PE/C/WHA-EAP-06-34, Program Management, ECA/EX/PM, Room 534, 301 4th Street, SW., Washington, DC 20547. Along with the Project Title, all applicants must enter the above Reference Number in Box 11 on the SF-424 contained in the mandatory Proposal Submission Instructions

(PSI)of the solicitation document. *IV.3f.2.—Submitting Electronic Applications:* Applicants have the option of submitting proposals electronically through Grants.gov ( *http://www.grants.gov* ). Complete solicitation packages are available at Grants.gov in the “Find” portion of the system. Please follow the instructions available in the ‘Get Started’ portion of the site ( *http://www.grants.gov/GetStarted* ). Applicants have until midnight (12 a.m.) of the closing date to ensure that their entire applications have been uploaded to the grants.gov site. Applications uploaded to the site after midnight of the application deadline date will be automatically rejected by the grants.gov system, and will be technically ineligible. Applicants will receive a confirmation e-mail from grants.gov upon the successful submission of an application. ECA will not notify you upon receipt of electronic applications. *IV.3g. Intergovernmental Review of Applications:* Executive Order 12372 does not apply to this program. *IV.3h.* Applicants must also submit the “Executive Summary” and “Proposal Narrative” sections of the proposal in text (.txt) format on a PC-formatted disk. The Bureau will provide these files electronically to the appropriate Public Affairs Section(s) at the U.S. Embassy for its review. V. Application Review Information *V.1. Review Process:* The Bureau will review all proposals for technical eligibility. Proposals will be deemed ineligible if they do not fully adhere to the guidelines stated herein and in the Solicitation Package. All eligible proposals will be reviewed by the program office, as well as the Public Diplomacy section overseas, where appropriate. Eligible proposals will be subject to compliance with Federal and Bureau regulations and guidelines and forwarded to Bureau grant panels for advisory review. Proposals may also be reviewed by the Office of the Legal Adviser or by other Department elements. Final funding decisions are at the discretion of the Department of State's Assistant Secretary for Educational and Cultural Affairs. Final technical authority for grants resides with the Bureau's Grants Officer. Review Criteria Technically eligible applications will be competitively reviewed according to the criteria stated below. These criteria are not rank ordered and all carry equal weight in the proposal evaluation: *1. Program Planning and Ability to Achieve Objectives:* Program objectives should be stated clearly and should reflect the applicant's expertise in the subject area and region. Objectives should respond to the topics in this announcement and should relate to the current conditions in the target country/countries. A detailed agenda and relevant work plan should explain how objectives will be achieved and should include a timetable for completion of major tasks. The substance of workshops, internships, seminars and/or consulting should be described in detail. Sample training schedules should be outlined. Responsibilities of proposed in-country partners should be clearly described. A discussion of how the applicant intends to address language issues should be included, if needed. *2. Institutional Capacity:* Proposals should include

(1)the institution's mission and date of establishment;

(2)detailed information about proposed in-country partner(s) and the history of the partnership;

(3)an outline of prior awards—U.S. government and/or private support received for the target theme/country/region; and

(4)descriptions of experienced staff members who will implement the program. The proposal should reflect the institution's expertise in the subject area and knowledge of the conditions in the target country/countries. Proposals should demonstrate an institutional record of successful exchange programs, including responsible fiscal management and full compliance with all reporting requirements for past Bureau grants as determined by Bureau Grants Staff. The Bureau will consider the past performance of prior recipients and the demonstrated potential of new applicants. Proposed personnel and institutional resources should be adequate and appropriate to achieve the program's goals. The Bureau strongly encourages applicants to submit letters of support from proposed in-country partners. *3. Cost Effectiveness and Cost Sharing:* Overhead and administrative costs in the proposal budget, including salaries, honoraria and subcontracts for services, should be kept to a minimum. *Proposals whose administrative costs are less than twenty-five

(25)per cent of the total funds requested from the Bureau will be deemed more competitive under this criterion.* Applicants are strongly encouraged to cost share a portion of overhead and administrative expenses. Cost-sharing, including contributions from the applicant, proposed in-country partner(s), and other sources should be included in the budget request. Proposal budgets that do not reflect cost sharing will be deemed not competitive in this category. *4. Support of Diversity:* Proposals should demonstrate substantive support of the Bureau's policy on diversity. Achievable and relevant features should be cited in both program administration (selection of participants, program venue and program evaluation) and program content (orientation and wrap-up sessions, program meetings, resource materials and follow-up activities). Applicants should refer to the Bureau's Diversity, Freedom and Democracy Guidelines in the Proposal Submission Instructions

(PSI)and the Diversity, Freedom and Democracy Guidelines section, Item IV.3d.2, above for additional guidance. *5. Post-Grant Activities:* Applicants should provide a plan to conduct activities after the Bureau-funded project has concluded in order to ensure that Bureau-supported programs are not isolated events. Funds for all post-grant activities must be in the form of contributions from the applicant or sources outside of the Bureau. Costs for these activities must not appear in the proposal budget, but should be outlined in the narrative. *6. Program Monitoring and Evaluation:* Proposals should include a detailed plan to monitor and evaluate the program. Program objectives should target clearly defined results in quantitative terms. Competitive evaluation plans will describe how applicant organizations would measure these results, and proposals should include draft data collection instruments (surveys, questionnaires, etc.) in Tab E. See the “Program Management/Evaluation” section, item IV.3d.3 above for more information on the components of a competitive evaluation plan. Successful applicants (grantee institutions) will be expected to submit a report after each program component concludes or on a quarterly basis, whichever is less frequent. The Bureau also requires that grantee institutions submit a final narrative and financial report no more than 90 days after the expiration of a grant. Please refer to the “Program Management/Evaluation” section, item IV.3d.3 above for more guidance. VI. Award Administration Information *VI.1a. Award Notices:* Final awards cannot be made until funds have been appropriated by Congress, allocated and committed through internal Bureau procedures. Successful applicants will receive an Assistance Award Document

(AAD)from the Bureau's Grants Office. The AAD and the original grant proposal with subsequent modifications (if applicable) shall be the only binding authorizing document between the recipient and the U.S. Government. The AAD will be signed by an authorized Grants Officer, and mailed to the recipient's responsible officer identified in the application. Unsuccessful applicants will receive notification of the results of the application review from the ECA program office coordinating this competition. *VI.2. Administrative and National Policy Requirements:* Terms and Conditions for the Administration of ECA agreements include the following: Office of Management and Budget Circular A-122, “Cost Principles for Nonprofit Organizations.” Office of Management and Budget Circular A-21, “Cost Principles for Educational Institutions.” OMB Circular A-87, “Cost Principles for State, Local and Indian Governments”. OMB Circular No. A-110 (Revised), Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations. OMB Circular No. A-102, Uniform Administrative Requirements for Grants-in-Aid to State and Local Governments. OMB Circular No. A-133, Audits of States, Local Government, and Non-profit Organizations. Please reference the following Web sites for additional information: *http://www.whitehouse.gov/omb/grants* , *http://exchanges.state.gov/education/grantsdiv/terms.htm#articleI.* *VI.3. Reporting Requirements:* You must provide ECA with a hard copy original plus two copies of the following reports:

(1)A final program and financial report no more than 90 days after the expiration of the award;

(2)Any interim report(s) required in the Bureau grant agreement document. Grantees will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. (Please refer to Application and Submission Instructions [IV.3d.3] above for Program Monitoring and Evaluation information.) All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. All reports must be sent to the ECA Grants Officer and ECA Program Officer listed in the final assistance award document. *VI.4. Program Data Requirements:* Organizations awarded grants will be required to maintain specific data on program participants and activities in an electronically accessible database format that can be shared with the Bureau as required. As a minimum, the data must include the following:

(1)Name, address, contact information and biographic sketch of all persons who travel internationally on funds provided by the grant or who benefit from the grant funding but do not travel.

(2)Itineraries of international and domestic travel, providing dates of travel and cities in which any exchange experiences take place. Final schedules for in-country and U.S. activities must be received by the ECA Program Officer at least three workdays prior to the official opening of the activity. VII. Agency Contacts For questions about this announcement, contact: The Office of Citizen Exchanges, ECA/PE/C, Room 220, ECA/PE/C-WHA-EAP-06-34, Bureau of Educational and Cultural Affairs, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC, 20547; tel.: 202-453-8163; fax: 202-453-8168; *harveyrh@state.gov.* For correspondence with the Bureau concerning this RFGP should reference the above title and number ECA/PE/C-06-xx. Please read the complete **Federal Register** announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. VIII. Other Information Notice The terms and conditions published in this RFGP are binding and may not be modified by any Bureau representative. Explanatory information provided by the Bureau that contradicts published language will not be binding. Issuance of the RFGP does not constitute an award commitment on the part of the Government. The Bureau reserves the right to reduce, revise, or increase proposal budgets in accordance with the needs of the program and the availability of funds. Awards made will be subject to periodic reporting and evaluation requirements per section VI.3 above. Dated: March 8, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. 06-2572 Filed 3-16-06; 8:45 am]

Connectionstraces to 9

Traces to 9 documents

U.S. Code