Proposed Rules. SECURITIES AND EXCHANGE COMMISSION

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BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53484; File No. SR-ISE-2005-25] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change and Amendment No. 1 Thereto Relating to Trading Options on Full and Reduced Values of the FTSE 100 Index and the FTSE 250 Index, Including Long-Term Options March 14, 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 May 16, 2005, the International Securities Exchange, Inc.

(the “Exchange” or the “ISE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the ISE. On February 22, 2006, the Exchange filed Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. In addition, the Commission is granting accelerated approval of the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Form 19b-4 dated February 22, 2006.

(“Amendment No. 1”). In Amendment No. 1, which replaced the original filing in its entirety, the Exchange:

(1)Expanded the “purpose” section to include additional information about the components, and calculation and maintenance of the FTSE Indexes; and

(2)obtained a representation by the FTSE regarding FTSE's insider trading and non-disclosure policies as they pertain to broker-dealer members of the FTSE committees that determine the composition of the indexes. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE is proposing to amend its rules to trade options on full and reduced values of the FTSE 100 Index and the FTSE 250 Index. The Exchange also proposes to list and trade long-term options on full and reduced values of the FTSE 100 Index and the FTSE 250 Index. Options on these indexes will be a.m. cash-settled and will have European-style exercise provisions. The text of this proposed rule change is available on the Exchange's Web site at *http://www.iseoptions.com/legal/proposed_rule_changes.asp,* the Exchange's principal office, and in 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 ISE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Rules 2001, 2004 and 2009 to provide for the listing and trading on the Exchange of a.m. cash-settled, European-style, index options on the FTSE 100 Index and the FTSE 250 Index (collectively, the “FTSE Indexes”). Specifically, the Exchange proposes to list options based upon

(i)full value of the FTSE Indexes,

(ii)one-tenth of the value of the FTSE Indexes (“Mini FTSE Indexes”), and

(iii)one one-hundredth of the value of the FTSE Indexes (“Micro FTSE Indexes”). In addition to regular options on the FTSE Indexes, the Exchange may list long-term options on the FTSE Indexes, the Mini FTSE Indexes, and the Micro FTSE Indexes (“FTSE LEAPS”). 4 4 Under ISE Rule 2009(b), “Long-Term Index Options Series,” the Exchange may list long-term options that expire from 12 to 60 months from the date of issuance. The Exchange states that the FTSE 100 Index and the FTSE 250 Index are internationally recognized, capitalization-weighted indexes based on the prices of the most highly capitalized British stocks traded on the London Stock Exchange (“LSE”), a Recognized Investment Exchange under the Financial Services and Markets Act 2000 of the U.K and regulated by the Financial Services Authority (“FSA”) of the U.K. The LSE's Stock Exchange Electronic Trading Service (“SETS”) is a fully electronic order book trading service. SETS is the central price formation and trading service for the securities comprising the FTSE 100 Index, the most liquid FTSE 250 securities, and equities that underlie Euronext.LIFFE (“LIFFE”) traded equity options. SETS market maker (“SETSmm”) is the LSE's trading service for, among others, the FTSE 250 securities that are not traded on SETS. Currently, LIFFE lists equity options on the FTSE 100 Index and futures and futures options on the FTSE 250 Index. The Exchange notes that the Commission previously approved for the Chicago Board Options Exchange (“CBOE”) to list reduced-value options on the FTSE 100 Index, and for the American Stock Exchange (“Amex”), the CBOE, the Midwest Stock Exchange (“MSE”) n/k/a the Chicago Stock Exchange, the New York Stock Exchange (“NYSE”), and the Pacific Stock Exchange (“PSE”) to trade warrants on the FTSE 100 Index. 5 5 * See* Securities Exchange Act Release Nos. 29722 (September 23, 1991), 56 FR 49807 (October 1, 1991) (order approving File No. SR-CBOE-91-07); 27769 (March 6, 1990), 55 FR 9380 (March 13, 1990) (order approving File No. SR-Amex-90-03); 28634 (November 20, 1990), 55 FR 49729 (November 30, 1990) (order approving File No. SR-MSE-90-12); 28399 (August 30, 1990), 55 FR 37390 (September 11, 1990) (order approving File No. SR-NYSE-90-37); and 28106 (June 12, 1990), 55 FR 24955 (June 19, 1990) (order approving File No. SR-PSE-90-15). Index Design and Composition The FTSE 100 and 250 Indexes were created in the 1980's by the International Stock Exchange of the United Kingdom and the Republic of Ireland (the predecessor to the LSE) in conjunction with the Financial Times and a committee of U.K. financial institutions, including LIFFE. The Indexes are administered and maintained by FTSE International Limited (“FTSE”). 6 To qualify for inclusion in a FTSE Index, a company must satisfy, among others, the following conditions:

(1)It must have a full listing on the London Stock Exchange;

(2)it must not be a subsidiary of another FTSE Index constituent; and

(3)it must be sufficiently liquid to be traded. 7 The FTSE 100 Index consists of the largest 100 UK companies ranked by unadjusted market value, and the FTSE 250 consists of the next 250 UK companies ranked by unadjusted market value. 8 The FTSE EMEA Committee conducts a quarterly review of the FTSE Indexes to ensure that its component stocks are representative of the state of the equity market for the largest U.K. companies. 6 The FTSE Europe, Middle East and Africa ( “EMEA”) Committee is responsible for, among other things, establishing rules to determine, review, and modify the composition of the FTSE Indexes, as well as how the FTSE Indexes are calculated. The FTSE EMEA Committee is comprised of representatives from various financial institutions including, among others, FTSE, Barclays Global Investors, Goldman Sachs, and LIFFE. 7 *See* “Ground Rules for the Management of the UK Series of the FTSE Actuaries Share Indices,” at *http://www.ftse.com* for complete eligibility criteria. 8 Unadjusted market capitalization (as opposed to a “free-float” index methodology) refers to the total number of shares outstanding multiplied by the share price. A “free-float” index methodology usually excludes shares held by strategic investors by way of cross ownership, government ownership, private ownership, and restricted share ownership. Telephone conversation between Samir Patel, Assistant General Counsel, ISE, and Raymond Lombardo, Special Counsel, Division, Commission, on February 27, 2006. As of February 14, 2005, following are the characteristics of the FTSE 100 Index:

(i)The total capitalization of all of the components in the Index is £1.23 trillion;

(ii)regarding component capitalization,

(a)the highest capitalization of a component is £119.14 billion (BP Plc),

(b)the lowest capitalization of a component is £516.80 million (Schroders NV),

(c)the mean capitalization of the components is £12.07 billion, and

(d)the median capitalization of the components is £5.20 billion;

(iii)regarding component price per share,

(a)the highest price per share of a component is £31.56 (Carnival),

(b)the lowest price per share of a component is 60 pence (Corus Group),

(c)the mean price per share of a component is £6.91, and

(d)the median price per share of a component is £6.06;

(iv)regarding component weightings,

(a)the highest weighting of a component is 9.82% (BP Plc),

(b)the lowest weighting of a component is 0.04% (Schroders NV),

(c)the mean weighting of the components is 0.98%,

(d)the median weighting of the components is 0.43%, and

(e)the total weighting of the top five highest weighted components is 36.52% (BP Plc, HSBC Holdings, Vodafone Group, GlaxoSmithKline, Royal Bank of Scotland);

(v)regarding component available shares,

(a)the most available shares of a component is 65.28 billion (Vodafone Group),

(b)the least available shares of a component is 70.94 million (Schroders NV),

(c)the mean available shares of the components is 2.72 billion, and

(d)the median available shares of the components is 1.11 billion;

(vi)regarding the six month average daily volumes of the components,

(a)the highest six month average daily volume of a component is 224.20 million (Vodafone Group),

(b)the lowest six month average daily volume of a component is 117,669 (Schroders NV),

(c)the mean six month average daily volume of the components is 13.69 million,

(d)the median six month average daily volume of the components is 7.56 million,

(e)the average of six month average daily volumes of the five most heavily traded components is 441.02 million (Vodafone Group, BP Plc, Corus Group, BT Group, Shell Transport and Trading Co.), and

(f)100% of the components had a six month average daily volume of at least 50,000. As of February 14, 2005, following are the characteristics of the FTSE 250 Index:

(i)The total capitalization of all of the components in the Index is £220.24 billion;

(ii)regarding component capitalization,

(a)the highest capitalization of a component is £2.69 billion (BPB),

(b)the lowest capitalization of a component is £212.30 million (PZ Cussons PLC),

(c)the mean capitalization of the components is £877.46 million, and

(d)the median capitalization of the components is £693.41 million;

(iii)regarding component price per share,

(a)the highest price per share of a component is £43.72 (Greggs PLC),

(b)the lowest price per share of a component is 20 pence (Invensys),

(c)the mean price per share of a component is £4.91, and

(d)the median price per share of a component is £3.47;

(iv)regarding component weightings,

(a)the highest weighting of a component is 1.30% (BPB),

(b)the lowest weighting of a component is 0.06% (Euromoney Institutional Investor PLC),

(c)the mean weighting of the components is 0.40%,

(d)the median weighting of the components is 0.31%, and

(e)the total weighting of the top five highest weighted components is 6.04% (BPB, International Power, Hammerson PLC, Kelda Group, Peninsular & Oriental Steam PLC);

(v)regarding component available shares,

(a)the most available shares of a component is 5.69 billion (Invensys),

(b)the least available shares of a component is 12.14 million (Greggs PLC),

(c)the mean available shares of the components is 345.10 million, and

(d)the median available shares of the components is 201.60 million;

(vi)regarding the six month average daily volumes of the components,

(a)the highest six month average daily volume of a component is 40.89 million (Invensys),

(b)the lowest six month average daily volume of a component is 4,139 (PZ Cussons PLC),

(c)the mean six month average daily volume of the components is 1.95 million,

(d)the median six month average daily volume of the components is 702,801,

(e)the average of six month average daily volumes of the five most heavily traded components is 104.75 million (Invensys, ARM Holdings PLC, Cookson Group, Woolworths Group, EMI Group), and

(f)97% of the components had a six month average daily volume of at least 50,000. Index Calculation and Index Maintenance The base index value of the FTSE 100 Index and the FTSE 250 Index, was 1000, as of December 31, 1983, and 1412.60, as of December 31, 1985, respectively. On February 14, 2005, the index value of the FTSE 100 Index and the FTSE 250 Index was 5041.80 and 7370.10, respectively. The Exchange believes that these levels are too high for successful options trading. As a result, the premiums for options on the full values of the FTSE Indexes are high, which may deter retail investors. Accordingly, the Exchange proposes to base trading in options on both full size FTSE Indexes and on fractions of full size FTSE Indexes. In particular, the Exchange proposes to list

(i)Mini FTSE Index options that are based on one-tenth of the value of each of the FTSE Indexes, and

(ii)Micro FTSE Index options that are based on one one-hundredth of each of the FTSE Indexes. 9 The Exchange believes that listing options on reduced values will attract a greater source of customer business than if options were based only on the full value of the FTSE Indexes. The Exchange further believes that listing options on reduced values will provide an opportunity for investors to hedge, or speculate on, the market risk associated with the stocks comprising the FTSE Indexes. Additionally, by reducing the values of the FTSE Indexes, investors will be able to use this trading vehicle while extending a smaller outlay of capital. The Exchange believes that this should attract additional investors, and, in turn, create a more active and liquid trading environment. 10 9 As noted above, the Exchange also proposes to list LEAPS on all FTSE Indexes. 10 The concept of listing reduced value options on an index is not a novel one. For example, the Commission has previously approved the listing of reduced value options on the S&P 500 Index, the Nasdaq 100 Index, and the NYSE Composite Index. *See* Securities Exchange Act Release Nos. 32893 (September 14, 1993), 58 FR 49070 (September 21, 1993) (S&P 500 Index); 43000 (June 30, 2000), 65 FR 42409 (July 10, 2000) (Nasdaq 100 Index); 48681 (October 22, 2003), 68 FR 62337 (November 3, 2003) (NYSE Composite Index). Index levels for options on the full size FTSE Indexes, the Mini FTSE Indexes and the Micro FTSE Indexes shall each be calculated by FTSE, and shall be disseminated by ISE every 15 seconds during the Exchange's regular trading hours to market information vendors via the Options Price Reporting Authority (“OPRA”). 11 The methodology used to calculate the value of the FTSE Indexes is similar to the methodology used to calculate the value of other well-known market-capitalization weighted indexes. The level of each FTSE Index reflects the total market value of the component stocks relative to a particular base period and is computed by dividing the total market value of the companies in each index by its respective index divisor. 12 11 The Exchange shall also disseminate these values to its members. The FTSE Indexes will be published daily through major quotation vendors, such as Reuters. 12 A divisor is an arbitrary number chosen at the starting date of an index to fix the index starting value. The divisor is adjusted periodically when capitalization amendments are made to the constituents of the index in order to allow the index value to remain comparable over time. Without a divisor the index value would change when corporate actions took place and would not reflect the true value of an underlying portfolio based upon the index. The FTSE Indexes are updated on a real-time basis from 8 a.m. to 4:30 p.m. (London time), which corresponds to 3 a.m. to 11:30 a.m. (New York time). After 11:30 a.m. (New York time), the Exchange will disseminate a static value of the FTSE Indexes via OPRA until the close of trading each day. The FTSE Indexes are calculated using the last traded price of the component securities. If a component security does not open for trading, the price of that security at the close or the index on the previous day is used in the calculation. 13 13 The FTSE Indexes are published daily in the Financial Times and are available real-time on Reuters, Bloomberg, and other market information systems which disseminate information on a real-time basis. The FTSE Indexes will be monitored and maintained by FTSE. FTSE will be responsible for making all necessary adjustments to the indexes to reflect component deletions, share changes, stock splits, stock dividends (other than an ordinary cash dividend), and stock price adjustments due to restructuring, mergers, or spin-offs involving the underlying components. Some corporate actions, such as stock splits and stock dividends, require simple changes to the available shares outstanding and the stock prices of the underlying components. Other corporate actions, such as share issuances, that change the market value would require changing the index divisor to effect adjustments. The FTSE Indexes are reviewed each quarter in March, June, September, and December based on market capitalization. Based on information submitted by FTSE, the FTSE EMEA Committee approves the new index components and a reserve list of six companies for the FTSE 100 Index. If a company is deleted from the FTSE 100 Index between reviews as a result of a merger, takeover, or other corporate action, the highest ranking company from the reserve list will replace it in the index. Although the Exchange is not involved in the maintenance of any of the FTSE Indexes, the Exchange represents that it will monitor each FTSE Index on a quarterly basis, at which point the Exchange will notify the staff of the Market Regulation Division of the Commission by filing a proposed rule change pursuant to Rule 19b-4, if, with respect to any FTSE Index:

(i)The number of securities in a FTSE Index drops by 1/3 rd or more;

(ii)10% or more of the weight of a FTSE Index is represented by component securities having a market value of less than 50 million;

(iii)10% or more of the weight of a FTSE Index is represented by component securities trading less than 20,000 shares per day; or

(iv)the largest component security accounts for more than 15% of the weight of a FTSE Index or the largest five components in the aggregate account for more than 50% of the weight of a FTSE Index. The Exchange will also notify the staff of the Market Regulation Division of the Commission immediately in the event FTSE ceases to maintain and calculate the FTSE Indexes, or in the event values of the FTSE Indexes are not disseminated every 15 seconds by a widely available source. In the event the FTSE Indexes cease to be maintained or calculated, or its values are not disseminated every 15 seconds by a widely available source, the Exchange will not list any additional series for trading and will limit all transactions in such options to closing transactions only for the purpose of maintaining a fair and orderly market and protecting investors. Exercise and Settlement Value Options on the FTSE Indexes will expire on the Saturday following the third Friday of the expiration month. Trading in the FTSE Indexes will normally cease at 4:15 p.m. (New York time) on the Thursday preceding an expiration Saturday. The index value for exercise of the FTSE Index options will be calculated based on the LSE's Exchange Delivery Settlement Price (“EDSP”) intra-day auction, which was introduced by LSE in November of 2004. The EDSP is a settlement value calculated by Euronext-LIFFE for FTSE index futures and options contracts traded on its exchange. The EDSP value is calculated using an intra-day auction process administered by the LSE for all the component stocks of the FTSE 100 Index and the FTSE 250 Index. The intra-day auction occurs between 10:10 a.m. and 10:29 a.m. (London time) for the FTSE 100 Index, and between 10:10 a.m. and 10:31 a.m. (London time) for the FTSE 250 Index on the third Friday of the expiration month. Therefore, because trading in the expiring contract months will normally cease on a Thursday at 4:15 p.m. (New York time), the EDSP for exercise will be determined the day after trading has ceased, *i.e.* , during the Friday morning LSE trading session, by 5:31 a.m. (New York time). The last automated traded price prior to the EDSP auction or the previous day's closing price will be used to calculate the final EDSP if a security did not participate in the auction. During the auction process, indications of the settlement price for each index are widely disseminated every 15 seconds via special indexes called Expiry Indexes. The purpose of the Expiry Indexes is to disseminate expected settlement values as the auction progresses. When the auction is finished, the final values of the Expiry Indexes are disseminated as the EDSP values. The Expiry Indexes and subsequent EDSP values are widely disseminated through major market data vendors including Reuters, Bloomberg, and Thomson. If the LSE is closed on the Friday before expiration, but the ISE remains open, then the last trading day for expiring FTSE Index options will be moved earlier to Wednesday as if the ISE had had a Friday holiday. The settlement index value used for exercise will be calculated during LSE's EDSP intra-day auction on Thursday morning. Contract Specifications The contract specifications for options on the FTSE 100 Index and the FTSE 250 Index are set forth in Exhibits 3-2 and 3-4, respectively, to the proposed rule change filed by the Exchange. The FTSE Indexes are broad-based indexes, as defined in Exchange Rule 2001(j). Options on the FTSE Indexes are European-style and a.m. cash-settled. The Exchange's standard trading hours for broad-based index options (9:30 a.m. to 4:15 p.m., New York time), as set forth in Rule 2008(a), will apply to the FTSE Indexes. Exchange rules that are applicable to the trading of options on broad-based indexes will apply to both full and reduced values of the FTSE Indexes. 14 Specifically, the trading of full and reduced values of the FTSE Indexes will be subject to, among others, Exchange rules governing margin requirements and trading halt procedures for index options. Options shall be quoted and traded in U.S. dollars. 14 *See* ISE Rules 2000 through 2012. For options on the full value FTSE Indexes, the Exchange proposes to establish aggregate position limits at 25,000 contracts on the same side of the market, provided no more than 15,000 of such contracts are in the nearest expiration month series. Mini FTSE Index option contracts and Micro FTSE Index option contracts shall be aggregated with full value FTSE Index option contracts, where ten

(10)Mini FTSE Index option contracts and one-hundred

(100)Micro FTSE Index option contracts equal one

(1)full value FTSE Index option contracts. These limits are identical to the limits that were approved for options on the FTSE Indexes previously listed for trading at the CBOE. 15 Additionally, under ISE Rule 2006, an index option hedge exemption for public customers may be available which may expand the position limit up to an additional 75,000 contracts. 16 Furthermore, proprietary accounts of members may receive an exemption of up to 50,000 contracts for the purpose of facilitating public customer orders. 17 15 *See supra* note 5. 16 The same limits that apply to position limits shall apply to exercise limits for these products. 17 *See* ISE Rule 413(c). The Exchange proposes to apply broad-based index margin requirements for the purchase and sale of options on the FTSE Indexes. Accordingly, purchases of put or call options with 9 months or less until expiration must be paid for in full. Writers of uncovered put or call options must deposit/maintain 100% of the option proceeds, plus 15% of the aggregate contract value (current index level x $100), less any out-of-the-money amount, subject to a minimum of the option proceeds plus 10% of the aggregate contract value for call options and a minimum of the option proceeds plus 10% of the aggregate exercise price amount for put options. The Exchange proposes to set strike price intervals at least 2 1/2 points for certain near-the-money series in near-term expiration months when the index level of the FTSE Indexes is below 200, and 5 point strike price intervals for other options series with expirations up to one year, and at least 10 point strike price intervals for longer-term options. The minimum tick size for series trading below $3 shall be $0.05, and for series trading at or above $3 shall be $0.10. The Exchange proposes to list options on full and reduced values of the FTSE Indexes in the three consecutive near-term expiration months plus up to three successive expiration months in the March cycle. For example, consecutive expirations of January, February, March, plus June, September, and December expirations would be listed. 18 In addition, long-term option series having up to sixty months to expiration may be traded. 19 The trading of long-term FTSE Indexes shall be subject to the same rules that govern the trading of all the Exchange's index options, including sales practice rules, margin requirements, and trading rules. 18 *See* Rule 2009(a)(3). 19 *See* Rule 2009(b)(1). The Exchange is not listing reduced value LEAPS on the FTSE Indexes pursuan to Rule 2009(b)(2). Except for the further reduced value given to the FTSE Indexes, all of the specifications and calculations for the reduced value FTSE Indexes shall be the same as those used for the full value FTSE Indexes. The reduced value FTSE Indexes will trade independently of and in addition to the full value FTSE Indexes, and all the FTSE Indexes shall be subject to the same rules that presently govern the trading of Exchange index options, including sales practice rules, margin requirements, trading rules, and position and exercise limits. Surveillance and Capacity The Exchange represents that it has an adequate surveillance program in place for options traded on the FTSE Indexes and intends to apply those same program procedures that it applies to the Exchange's other index options. Additionally, the Exchange has provided the Commission, on a confidential basis, a representation made by FTSE to the Exchange regarding FTSE's insider trading policies, as they pertain to the broker-dealer members of FTSE's EMEA Committee who are charged with the selection of component securities that comprise the FTSE Indexes. The FTSE EMEA Committee members are also required to maintain in confidence, including non-disclosure to another party, any information that they may be given by virtue of their membership of the FTSE EMEA Committee, unless such information is already in the public domain or where disclosure is required by law. The Exchange is also a member of the Intermarket Surveillance Group

(ISG)under the Intermarket Surveillance Group Agreement, dated June 20, 1994. The members of the ISG include all of the U.S. registered stock and options markets: the American Stock Exchange, the Boston Stock Exchange, the Chicago Board Options Exchange, the Chicago Stock Exchange, the National Stock Exchange, the National Association of Securities Dealers, the New York Stock Exchange, the Pacific Stock Exchange and the Philadelphia Stock Exchange. In addition, the LSE and LIFFE are affiliate members of ISG. 20 The ISG members work together to coordinate surveillance and investigative information sharing in the stock and options markets. In addition, the major futures exchanges are affiliated members of the ISG, which allows for the sharing of surveillance information for potential intermarket trading abuses. \ 20 Telephone conversation between Samir Patel, Assistant General counsel, ISE, and Raymond Lombardo, Special Counsel, Division, Commission, on February 28, 2006. The Exchange has the necessary systems capacity to support new options series that will result from the introduction of both full and reduced values of the FTSE Indexes, including LEAPS. The Exchange has provided the Commission system capacity information that supports its system capacity representations. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act, 21 in general, and furthers the objectives of Section 6(b)(5), 22 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 21 15 U.S.C. 78f(b). 22 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 imposes any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were either solicited or received. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-2005-25 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-ISE-2005-25. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the 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-2005-25 and should be submitted by April 11, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 23 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b) of the Act, 24 in general, and furthers the objectives of Section 6(b)(5), 25 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 23 In approving this proposal, the Commission has considered its impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). 24 15 U.S.C. 78f(b). 25 15 U.S.C. 78f(b)(5). Because the FTSE 100 and FTSE 250 Indexes are broad-based indexes of actively traded, well-capitalized stocks, the trading of the proposed Index options on the Exchange does not raise unique regulatory concerns. The options on the FTSE Indexes will be traded under ISE's existing regulatory regime for index options, which include, among other things, position and exercise limits and margin requirements. Additionally, the Exchange has represented that it has adequate systems capacity and surveillance for these Index options and that the index value will be disseminated at least every 15 seconds. Under Section 19(b)(2) of the Act, 26 the Commission may not approve any proposed rule change prior to the thirtieth day after publication of the notice of the filing thereof, unless the Commission finds good cause for so doing and publishes its reasons for so finding. The Commission believes that the proposed rule filing does not raise any new, unique or substantive issues from those raised in a filing previously approved by the Commission 27 allowing the CBOE to list and trade reduced value index options on the FTSE 100 Index. Accordingly, The Commission hereby finds good cause for approving the proposed rule change and Amendment No. 1 thereto prior to the thirtieth day after the date of publication of notice of filing thereof in the **Federal Register** . 26 15 U.S.C. 78s(b)(2). 27 See Securities Exchange Act Release No. 29722 (September 23, 1991), 56 FR 49807 (October 1, 1991) (order approving SR-CBOE-91-07). V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 28 that the proposed rule change (SR-ISE-2005-25), as amended, be, and hereby is, approved on an accelerated basis. 28 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 29 29 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-4056 Filed 3-20-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53488; File No. SR-NASD-2006-015] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto To Establish the Nasdaq Halt Cross March 15, 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 31, 2006, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Nasdaq. On February 16, 2006, Nasdaq filed Amendment No. 1 to the proposed rule change. On March 6, 2006, Nasdaq filed Amendment No. 2 to the proposed rule change. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to improve the opening process for Nasdaq securities that are the subject of a trading halt initiated pursuant to NASD Rule 4120(a). The text of the proposed rule change is available on Nasdaq's Web site, *http://www.nasdaq.com* , at Nasdaq'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, Nasdaq included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposal. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 3. Purpose Nasdaq is proposing to establish an opening cross for the trading of Nasdaq-listed securities that have been the subject of a trading halt initiated pursuant to NASD Rule 4120(a)(1), (4), (5), (6), or

(7)(“Halt Cross”). 3 The Halt Cross will integrate quotes and orders that are entered prior to the resumption of trading in a halted stock, create an unlocked inside bid and offer in the Nasdaq Market Center, and facilitate an orderly process for opening trading at the time specified by Nasdaq pursuant to NASD Rule 4120. 3 The Halt Cross will not be used to open the market following a trading halt initiated under NASD Rule 4120(a)(2) or (3), which apply only to securities governed by the Consolidated Quotation System national market system plan. The Current Process Currently, Nasdaq opens the trading of Nasdaq stocks that have been the subject of a trading halt using the process described in NASD Rule 4704(c), which also governs stocks that are not designated to participate in the Opening Cross. For halted securities, that process has three components:

(1)The Halt Period;

(2)the Quotation Only Period; and

(3)Trade Resumption. During the Halt Period, the entry of quotations and orders into Nasdaq systems is prohibited. When Nasdaq MarketWatch determines pursuant to NASD Rule 4120 that trading should resume, a message is sent to market participants establishing a 15-minute Quotation Only Period where quotes and orders can be entered into Nasdaq systems but no executions occur. When the Quotation Only Period ends, another message is sent to market participants signaling the resumption of trading, and the opening process described in NASD Rule 4704(c) occurs. The current process executes quotes and orders that would lock or cross the market in a fair and orderly manner and creates an unlocked and uncrossed bid and offer for the opening of trading. Nasdaq has determined, however, that the process can be improved. The New Process Of the three components described above, only the Halt Period will remain as it is today. The Quotation Only Period will remain at 15 minutes for Initial Public Offerings (“IPOs”) but will be shortened from 15 minutes to 5 minutes for all other halts. The Quotation Only Period will also be modified to provide for:

(1)The dissemination of the net Order Imbalance Indicator (“NOII”) containing the same data elements currently disseminated prior to the Opening and Closing Crosses;

(2)an “Imbalance Detection Process;” and

(3)an Imbalance Delay. Nasdaq will modify Trade Resumption to provide for a processing of the Halt Cross and for the addition of a delay of between zero and 15 seconds (randomly selected) to minimize potential gaming behavior by market participants during Trade Resumption. The new process will be codified in proposed NASD Rule 4703, and language in NASD Rule 4704(c) describing the current process will be removed. Each of these modifications will be described in more detail below. *The Net Order Imbalance Indicator.* Nasdaq proposes to disseminate the NOII prior to the Halt Cross, just as it does prior to the Opening and Closing Crosses. The NOII for the Halt Cross will contain the same data elements, reflecting the current state of the market leading into the Cross:

(1)The Inside Match Price, which is the price at which the maximum number of shares of eligible quotes and orders would be paired;

(2)the number of shares represented by eligible quotes and orders that are paired at the Inside Match Price;

(3)the number of shares in any imbalance at the Inside Match Price; and

(4)the buy/sell direction of that imbalance at the Inside Match Price. In order to increase efficiency, Nasdaq will maintain the same programming format for the NOII distributed during the Halt Cross as distributed during the Opening and Closing Cross. To maintain that uniformity, Nasdaq will disseminate an indicative clearing price range at which the Halt Cross would occur if the Halt Cross were to occur at that time. The two indicative prices in that range and the inside match price will, however, each be identical values because, in the absence of order types unique to the IPO and Halt Cross, the inside match price and indicative price range will each be calculated based upon the same order set, resulting in the same price output. The NOII for the Halt Cross will be disseminated every five seconds throughout the Quotation Only Period. The NOII disseminated prior to the Halt Cross will differ in several ways from those disseminated prior to the Opening and Closing Crosses. First, the Halt Cross NOII will be based on different order types. The NOII for the Opening and Closing Crosses includes information about On Open and On Close order types, in addition to quotations and regular and extended hours orders for each time in force (Total Day, Day, Good-till-Canceled, and Immediate or Cancel). The NOII for the Halt Cross will include quotations, regular hours orders, and extended hours orders but not On Open or On Close orders. This difference is necessary because Nasdaq has determined not to support On Open and On Close order types in the middle of the trading day when the Halt Cross will occur. In Nasdaq's view, On Open and On Close Orders are impractical for an IPO or other halt where quoting and trading can resume at variable times and, thereby, could increase the potential of confusion or gaming behavior. Second, the NOII for the Halt Cross will disseminate the same value for the Inside Match Price, Near Indicative Clearing Price and Far Indicative Clearing Price. This is based, in part, on the fact that, unlike during the opening and closing, during a halt, there is no firm inside quotation and the inside can be locked or crossed. For both the open and close, the Nasdaq inside is subject to automatic execution which provides a reliable price upon which to base an inside match calculation. In addition, the Halt Cross does not include On Open and On Close orders. On Open and On Close orders are available to absorb liquidity during the Opening and Closing Crosses and do affect the Near and Far Indicative Clearing Price data elements prior to the Opening and Closing Crosses. Due to these differences, Nasdaq concluded that calculating the Near and Far Indicative Clearing Prices could create ambiguous data. Nasdaq proposes to disseminate the Near and Far Indicative Clearing Price fields with identical values to the inside match price in order to avoid requiring market participants to re-program their systems to accept a different NOII. Third, the Inside Match Price (and thus the Near and Far Indicative Clearing Prices) will be calculated using the following algorithm. First, the system will determine the price(s) that maximizes the number of shares paired. If more than one such price exists, the system will select the price that minimizes the imbalance of shares unpaired, and does not leave unexecuted shares at a superior price. If more than one price satisfies both conditions, the next tie breaker will depend on whether the Halt Cross is for an IPO or another halt. For an IPO halt, if more than one such price satisfies the above conditions, the system will select the price that minimizes the distance from the Issuer's IPO price, which is found in the previous day's close field. For any other halt, if the stock has already been opened for that day and more than one price satisfies the above conditions, the system will select the price that minimizes the distance from the last Nasdaq Market Center execution prior to the halt. If the security has not been opened for that day yet and more than one such price exists, the system will select the price that minimizes the distance from the previous Nasdaq Official Closing Price. *Imbalance Detection and Delay Periods.* In order to facilitate the orderly opening of a security in which trading is halted, Nasdaq proposes to establish an Imbalance Detection Process that would measure an imbalance against a specified threshold, and to establish an Imbalance Delay if a liquidity imbalance exceeds that threshold. The Imbalance Detection Process and Imbalance Delay Period will be based upon the data contained in the NOII, which, as stated earlier, will be disseminated every five seconds throughout the Quotation Only Period of 15 minutes for IPOs and 5 minutes for all other halts. Specifically, Nasdaq will compare the Inside Match Price from the third to last NOII (T−15 seconds to the Halt Cross) with that of the NOII immediately prior to the cross (T−1 second) and determine whether the change in price exceeds a predetermined price or percentage variance threshold. The threshold will be set initially at 10 percent or fifty cents, whichever is higher. Nasdaq will monitor the threshold and adjust it from time to time upon reasonable notice to market participants. If the price or percent variance yielded by the Imbalance Detection Process is within the threshold, trading will resume on schedule. If, however, the price or percent variance exceeds the threshold, Nasdaq will delay the Trade Resumption by 5 minutes in the case of IPOs and by 1 minute in the case of all other halts. For IPOs, the Imbalance Detection Process will be repeated at the end of the Imbalance Delay Period and a second delay ordered if the price change still exceeds the threshold. A third delay will be called if the price change exceeds the threshold at the end of the second Imbalance Delay Period. At the end of the third Imbalance Delay Period the Imbalance Detection Process will not be repeated and trading will resume. For all halts other than IPOs, there can be only a single one-minute Imbalance Delay. At the end of the one-minute Imbalance Delay, Trade Resumption will occur. Each time Nasdaq systems impose an Imbalance Delay, Nasdaq will issue a Delay Notification to Nasdaq market participants. *Trade Resumption and Halt Cross.* When the Quotation Only Period ends, whether or not followed by one or more Imbalance Delays, Nasdaq will send market participants the Trade Resumption message. In order to discourage gaming by market participants, Nasdaq will program the system to add a random delay of between zero and 15 seconds prior to issuing the Trade Resumption notification. When the Trade Resumption notification has been set, the system will conduct the Halt Cross. The algorithm for the Halt Cross is similar to the Opening and Closing Crosses. First, the system will determine the price that maximizes the number of shares executed. If more than one such price satisfies that condition, the system will select the price that minimizes the imbalance of shares unexecuted and does not leave unexecuted shares at a superior price. If more than one price satisfies that condition also, the second tie breaker will depend on whether the cross is for an IPO or another halt. For an IPO, if more than one price satisfies the above conditions, the system will select the price that minimizes the distance from the Issuer's IPO price, which is found in the previous day's close field. For any other halt, if the security has already been opened for that day and more than one price satisfies the above conditions, the system will select the price that minimizes the distance from the last Nasdaq Market Center execution prior to the halt. If the security has not been opened for that day and more than one such price satisfies the above conditions, the system will select the price that minimizes the distance from the previous Nasdaq Official Closing Price. The system will execute all orders in strict price/time priority starting with the displayed quotation size and then the reserve quotation size at the most aggressive price level, and then moving to successive price levels. All orders that are executable will be executed at the Halt Cross price. As with the Opening and Closing Crosses, only orders and quotations that are subject to automatic execution will participate in the Halt Cross. For IPOs and for other halts where a security has not previously opened during the trading day, the Halt Cross execution will be reported to Nasdaq's trade reporting system with SIZE as the contra party on both sides of the trade, and then transmitted to the consolidated tape. The Halt Cross price and the associated paired volume will then be disseminated via the UTP Trade Data Feed (“UTDF”) as a bulk print and on the Nasdaq Index Dissemination Service (“NIDS”) and the Nasdaq Application Program Interface as the Nasdaq Official Opening Price (“NOOP”). For halts where a security has already opened during the trading day, the Halt Cross will be reported to Nasdaq's trade reporting system as a single trade, but it will not be identified as a bulk print and will not be disseminated as the NOOP. When the Halt Cross is complete, the execution functionality of the Nasdaq Market Center will open for regular trading. If there is insufficient trading interest to perform the Halt Cross as described above, trading will resume via the modified opening process (“MOP”) that is currently used to open Nasdaq stocks where no Opening Cross occurs as set forth in NASD Rule 4704(c). The MOP has several steps, each of which occurs in strict time priority. First, limit orders in the system that have a time-in-force of Day or GTC will wake-up. Of those, orders whose limit price does not lock or cross the book will be added to the book. Orders whose limit price does lock or cross the book will be placed in an “In Queue” state in strict time priority. Second, reverse Pegged orders will wake up. If the price created by the reverse Pegged order does not lock or cross the book, the order will be placed on the book. If the price created by the reverse Pegged order would lock or cross the book, the order will be placed in “In Queue” status. Third, regular Pegged orders will wake up in strict time priority. Since these orders can only join the current highest bid or lowest offer price level, they will simply add depth to the book at that price. The In Queue orders also include market and IOC and IOX orders in strict time priority. At this point, all eligible orders that would not lock or cross the market will be on the Nasdaq Market Center book, and all other eligible orders will be In Queue. The system will then process the “In Queue” orders, including market orders, in strict time priority order regardless of order type. IOC and IOX orders that are not executable will be canceled as is currently done. Orders with a time in force of DAY and GTC that are not executable will be added to the book in strict time priority. Once this process is complete, the system will begin processing the input queue as normal. Where no Halt Cross occurs, the NOOP value will be the first Nasdaq Market Center execution following trade resumption unless the security has already traded during normal market hours on that trading day. That price will be disseminated via the NIDS and UTDF, and Nasdaq feeds. When resuming trading after a halt where the issue has already traded during normal market hours on that trading day, NOOP computation will be suppressed. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act, 4 in general, and with section 15A(b)(6) of the Act, 5 in particular, in that section 15A(b)(6) requires the NASD's rules to be designed, among other things, to protect investors and the public interest. Nasdaq's current proposal is consistent with the NASD's obligations under these provisions of the Act because it will result in a more orderly opening for stocks that are the subject of a trading halt initiated under NASD Rule 4120. The proposed rule change will prevent the occurrence of locked and crossed markets in halted securities and will preserve price discovery and transparency that is vital to an effective opening of trading. 4 15 U.S.C. 78o-3. 5 15 U.S.C. 78o-3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq believes that the proposed rule change would impose no burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Nasdaq did not solicit or receive any written comments with respect to the proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period

(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or

(ii)as to which the Nasdaq consents, the Commission will: A. By order approve such proposed rule change, or B. Institute proceedings to determine whether the proposed rule change should be disapproved. 6 6 Nasdaq requested that the Commission grant accelerated approval of the proposed rule change. The Commission will consider granting accelerated approval after the end of the comment period. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or • Send an e-mail to * rule-comments@sec.gov.* Please include File Number SR-NASD-2006-015 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-NASD-2006-015. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of Nasdaq. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2006-015 and should be submitted on or before April 11, 2006. 7 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 7 Nancy M. Morris, Secretary. [FR Doc. E6-4058 Filed 3-20-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53494; File No. SR-NYSE-2005-72] Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating To Amending Exchange Delisting Rules To Conform to Recent Amendments to Commission Rules Regarding Removal From Listing and Withdrawal From Registration March 16, 2006. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the “Act”) 2 and Rule 19b-4 thereunder, 3 notice is hereby given that on October 20, 2005, the New York Stock Exchange, Inc. (“Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which items have been prepared by the Exchange. On December 22, 2005, the Exchange filed Amendment No. 1 to the proposed rule change. 4 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b-4. 4 In Amendment No. 1, the Exchange made clarifying changes to Item 3 of the Exchange's Form 19b-4 and to Exhibit 1. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to modify the Listed Company Manual requirements relating to delisting procedures. The proposed rule change, as amended, reflects modifications of the Exchange's delisting rules to conform to the requirements of recently adopted Commission Rule 12d2-2. 5 The text of the proposed rule change is below. Proposed new language is in *italics* ; proposed deletions are in [brackets]. 5 17 CFR 240.12d2-2. Listed Company Manual 804.00 Procedure for Delisting *The following will be the operative text of Section 804.00 effective as of April 24, 2006:* • If the Exchange staff should determine that a security be removed from the list, it will so notify the issuer in writing, describing the basis for such decision and the specific policy or criterion under which such action is to be taken. The Exchange will simultaneously

(1)issue a press release disclosing the company's status and *the* basis for the Exchange's determination and

(2)begin daily dissemination of ticker and information notices identifying the security's status, and include similar information on the Exchange's Web site. • The notice to the issuer [shall] *will* also inform the issuer of its right to a review of the determination by a Committee of the Board of Directors of the Exchange [(a majority of the members of such Committee voting on each determination must be public Directors)], provided a written request for such a review is filed with the Secretary of the Exchange within ten business days after receiving the aforementioned notice. Such written request must state with specificity the grounds on which the issuer intends to challenge the determination of the Exchange staff, must indicate whether the issuer desires to make an oral presentation to the Committee, and must be accompanied or preceded by payment of a non-refundable appeal fee in the amount of $20,000. • If the issuer does not request a review within the specified period, the Exchange [shall] *will* suspend trading in the security and [an application by the Exchange staff to] *will file a Form 25 with* the Securities and Exchange Commission to strike the security from listing and *furnish* a copy of such [application shall be furnished] *Form 25* to the issuer in accordance with Section 12 of the Securities Exchange Act of 1934 and the rules promulgated thereunder. *Prior to filing a Form 25 with the Securities and Exchange Commission, the Exchange will give public notice of its final determination to remove the security from listing by issuing a press release and posting a notice on its Web site. Such notice will remain posted on the Exchange's Web site until the delisting is effective pursuant to Section 12 of the Securities Exchange Act of 1934 and the rules promulgated thereunder.* • If a review is requested, the review will be scheduled for the first Review Day which is at least 25 business days from the date the request for review is filed with the Secretary of the Exchange, unless the next subsequent Review Day must be selected to accommodate the Committee's schedule. [The chairman of the Committee will disclose to the company and the staff at the commencement of the review which of the industry Directors present will be voting on the matter, although all directors will be entitled to participate in the discussion.] The Committee's review and final decision [shall] *will* be based on oral argument (if any) and the written briefs and accompanying materials submitted by the parties. The company [shall] *will* not be permitted to argue grounds for reversing the staff's decision that are not identified in its request for review, however, the company may ask the Committee for leave to adduce additional evidence or raise arguments not identified in its request for review, if it can demonstrate that the proposed additional evidence or new arguments are material to its request for review and that there was reasonable ground for not adducing such evidence or identifying such issues earlier. This section [shall] *will* not, however,

(i)authorize a company to seek to file a reply brief in support of its request for review or

(ii)be deemed to limit the staff's response to a request for review to the issues raised in the request for review. Upon review of a properly supported request, the Committee may in its sole discretion permit new arguments or additional evidence to be raised before the Committee. Following such event, the Committee may, as it deems appropriate,

(i)itself decide the matter, or

(ii)remand the matter to the staff for further review. Should the Committee remand the matter to the staff, the Committee will instruct the staff to

(i)give prompt consideration to the matter, and,

(ii)complete its review and inform the Committee of its conclusions no later than seven

(7)days before the first Review Day which is at least 25 business days from the date the matter is remanded to the staff. • A request for review will ordinarily stay the suspension of the subject security pending the review, but the Exchange staff may immediately suspend from trading any security pending review should it determine that such immediate suspension is necessary or appropriate in the public interest, for the protection of investors, or to promote just and equitable principles of trade. • Promptly following receipt of a request for review and the appeal fee, the Exchange's Office of the General Counsel will notify the issuer and the Exchange staff of the scheduled Review Day and the briefing schedule. The schedule will be set by the Office of the General Counsel so as to provide the Committee adequate time to review materials submitted to it, with the remaining time split so as to afford the issuer and the Exchange staff substantially equal periods for the submission of a brief by the issuer and a responsive brief by the Exchange staff. Each party must submit its brief and any accompanying materials to both its counterparty and to the Office of the General Counsel of the Exchange, and must do so by means calculated to ensure the party's submission reaches both the Office of the General Counsel and the counterparty at or prior to the deadline specified in the briefing schedule. • The Committee, in its sole discretion upon written motion of either party or upon its own motion, may extend any of the time periods specified above. The Committee in its sole discretion may permit the parties to make oral presentations on their Review Day in accordance with such procedures as the Committee may specify at the time. If the Committee denies a request by either party to make an oral presentation, its reason for doing so must be included in its written decision on the review, which decision is provided to all parties. Document discovery and depositions will not be permitted. • If the Committee decides that the security of the issuer should be removed from listing, the Exchange [shall] *will (i)* suspend trading in the security as soon as practicable [and an application shall be submitted by the Exchange to] *,

(ii)file a Form 25 with* the Securities and Exchange Commission to strike the security from listing and registration and *(iii) furnish* a copy of such [application shall be furnished] *Form 25* to the issuer in accordance with Section 12 of the Securities Exchange Act of 1934 and the rules promulgated thereunder. *Prior to filing the Form 25 with the Securities and Exchange Commission, the Exchange will give public notice of its final determination to remove the security from listing by issuing a press release and posting a notice on its web site. Such notice will remain posted on the Exchange's web site until the delisting is effective pursuant to Section 12 of the Securities Exchange Act of 1934 and the rules promulgated thereunder.* If the Committee decides that the security should not be removed from listing, the issuer will receive from the Exchange a notice to that effect. 806.02 Removal from List Upon Request of Company *The following will be the operative text of Section 806.02 effective as of April 24, 2006:* An issuer may delist a security from the Exchange after its board approves the action and the issuer *(i)* furnishes the Exchange with a copy of the Board resolution authorizing such delisting certified by the secretary of the issuer *and

(ii)complies with all of the requirements of Rule 12d2-2(c) under the Securities Exchange Act of 1934.* The issuer [may] *must* thereafter file [an application] *a Form 25* with the Securities and Exchange Commission to withdraw the security from listing on the Exchange and from registration under the Securities Exchange Act of 1934. *The company must provide a copy of such Form 25 to the Exchange simultaneously with its filing with the Securities and Exchange Commission.* If an issuer delists a class of stock from the Exchange pursuant to this [Rule] *Section 806.02* , but does not delist other classes of listed securities, the Exchange will give consideration to delisting one or more of such other classes. 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 The Exchange proposes to amend Section 804.00 (“Procedure for Delisting”) and Section 806.02 (“Removal from List Upon Request of Company”) of the Exchange's Listed Company Manual. The proposed amendments are intended to comply with the Commission's instruction in the adopting release for Commission Rule 12d2-2 6 requiring each national securities exchange to have rules designed to meet the requirements of Commission Rule 12d2-2 and to make initial filings of such proposed rule changes with the Commission no later than October 20, 2005. The text of the proposed amendments provides that the revised procedures required by such amendments would be operative as of April 24, 2006. 6 *See* Securities Exchange Act Release No. 52029 (July 14, 2005), 70 FR 42456 (July 22, 2005). Commission Rule 12d2-2(b) 7 allows a national securities exchange to file a Form 25 to strike a class of securities from listing in accordance with its rules, if the rules of such exchange, at a minimum, provide for: 7 17 CFR 240.12d2-2(b). • Notice to the issuer of the exchange's decision to delist its securities; • An opportunity for appeal to the exchange's board of directors, or to a committee designated by the board; and • Public notice of the exchange's final determination to remove the security from listing by issuing a press release and posting notice on its web site. Such notice must be disseminated no fewer than 10 days before the delisting becomes effective pursuant to Commission Rule 12d2-2(d)(1) 8 and must remain posted until the delisting is effective. 8 17 CFR 240.12d2-2(d)(1). The proposed amendment to Section 804.00 provides that, before filing a Form 25 with the Commission in connection with the delisting of a security, the Exchange would give public notice of its final determination to delist the security by issuing a press release and posting a notice on its Web site. The notice would remain posted on the Exchange's Web site until the delisting is effective pursuant to Commission Rule 12d2-2(d)(1), *i.e.* , 10 days after filing of the Form 25 unless the Commission acts to delay its effectiveness. Because Section 804.00 currently requires the Exchange to notify the issuer of the delisting decision and provides the issuer with a right to appeal that determination to a committee of the Exchange's board of directors, the Exchange believes that it does not need to make any other amendments to Section 804.00 to comply with Commission Rule 12d2-2(b). The proposed amendment to Section 806.02 provides that any issuer wishing to voluntarily delist a security from the Exchange must comply with all of the requirements of Commission Rule 12d2-2(c) 9 and must furnish the Exchange with a copy of the Form 25 filed in connection with the delisting simultaneously with its filing with the Commission. 9 17 CFR 240.12d2-2(c). In addition to the proposed changes to comply with Commission Rule 12d2-2, the Exchange proposes to amend Section 804.00 to delete references therein to “public Directors” and “industry Directors,” as these terms relate to a historical governance structure of the Exchange that no longer exists. 2. Statutory Basis The Exchange believes that the basis under the Act for the proposed rule change, as amended, is the requirement under Section 6(b)(5) 10 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 10 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, as amended, will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others 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 Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period

(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or

(ii)as to which the Exchange consents, the Commission will:

(A)By order approve such rule change, or

(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2005-72 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-2005-72. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2005-72 and should be submitted on or before April 11, 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. 06-2753 Filed 3-16-06; 4:15 pm]

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