Notices. Notice
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BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53817; File No. SR-BSE-2006-05] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Order Approving a Proposed Rule Change to Modify the Boston Options Exchange's Fee Schedule to Impose Surcharge Fees for Transactions in Options on ETFs on a Retroactive Basis May 17, 2006. On March 15, 2006, the Boston Stock Exchange, Inc. (“BSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposal to retroactively establish certain Boston Options Exchange (“BOX”) licensing fee surcharges applicable to broker-dealer proprietary accounts and market maker accounts for trades in options on certain exchange traded funds (“ETFs”).
The proposed rule change was published for comment in the **Federal Register** on April 13, 2006. 3 The Commission received no comments regarding the proposal. This order approves the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 53607 (April 6, 2006), 71 FR 19221 (“Notice”). The BOX's Fee Schedule currently has in place a surcharge fee item for transactions in the respective ETF options effected by market makers and broker-dealer proprietary accounts that imposes a $0.10 per contract fee for transactions in certain licensed options, including Standard & Poor's Depository Receipts (SPY), iShares Russell 2000 Index Fund (IWM), iShares Russell 2000 Growth Index Fund (IWO), and iShares Nasdaq Biotechnology Index Fund (IBB). 4 In addition, the BOX's Fee Schedule currently lists a surcharge fee of $0.09 per contract fee for transactions in certain licensed options, including S&P Energy Select Sector SPDR Fund
(XLE)and S&P Financial Select Sector SPDR Fund (XLF). The surcharge fees on the licensed options listed above became effective on January 4, 2006. 5 The Exchange is now proposing to retroactively apply these surcharge fees from the Effective Dates listed in Table 1 of the notice 6 (“Effective Dates”) ( *i.e.* , the date on which each product commenced trading on BOX) through January 3, 2006. 7 4 The BOX Fee Schedule also contains a $0.10 surcharge fee per contract for options on the ETF Nasdaq 1000 (“QQQQ”), which is not at issue in this proposed rule change. 5 *See* Securities Exchange Act Release No. 53454 (March 8, 2006), 71 FR 13439 (March 15, 2006) (SR-BSE-2006-01). 6 *See* Notice, *supra* note 3. The Standard & Poor's Depository Receipts commenced trading on January 10, 2005; the iShares Russell 2000 Index Fund commenced trading on May 2, 2005; the S&P Energy Select Sector SPDR Fund commenced trading on June 6, 2005; and the iShares Russell 2000 Growth Index Fund, the iShares Nasdaq Biotechnology Index Fund, and S&P Financial Select Sector SPDR Fund all commenced trading on June 27, 2005. 7 BSE represents these fees are only charged to BOX Participants. In addition, the Exchange is proposing to amend the BOX Fee Schedule to clarify the meaning of the current text in Section 4(b) (“InterMarket Linkage”) of the BOX Fee Schedule, which includes an explicit reference to the surcharge with respect to Inbound P and PA orders that are billed per contract. 8 The BSE is also proposing to amend the title of Section 4(b) of the BOX Fee Schedule to provide more clarity as to which party is billed. 8 Specifically, the Exchange proposes to replace the sentence “Same as if were BOX Participant” with “This charge is the same as that which is applicable to a BOX Participant under Section 2. These orders are also subject to any additional pass-through surcharge fees specified in Section 2(c), as applicable.” After careful consideration of the proposal, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 9 and, in particular, the requirements of Section 6(b) of the Act and the rules and regulations thereunder. 10 Specifically, the Commission believes that the proposal to retroactively establish a surcharge fee of 9 or 10 cents, as applicable, for certain transactions in options on the above-listed ETFs that occurred on the BOX between each ETF options' Effective Date and January 3, 2006 is consistent with Section 6(b)(4) of the Act, 11 in that the proposed rule change provides for the equitable allocation of reasonable dues, fees, and other charges among the Exchange's members and issuers and other persons using its facilities. 9 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(4). The Commission notes that the BOX Fee Schedule that was in effect when each of these products commenced trading ( *i.e.* , on the Effective Dates) stated in Section 2(c) that applicable surcharges applied for options on ETFs that are passed-through by BOX. 12 While the BSE failed to amend in a timely manner its Fee Schedule to specifically list each individual ETF option product and the associated surcharge fee on the BOX Fee Schedule as it was required to do pursuant to Section 19(b) of the Act 13 and Rule 19b-4 thereunder, 14 the Commission notes that the BSE has represented that its Participants:
(1)were aware that surcharge fees were applicable for options on the ETFs pursuant to the general language in Section 2(c) of the BOX Fee Schedule that states that surcharge fees apply to transactions in certain licensed options; and
(2)were aware of the specific pass-through licensing surcharges for each product via their monthly billing statement. 15 Given this level of transparency with respect to the existence of surcharge fees for licensed products, and in consideration of the fact that options on the applicable ETFs have been listed and traded on BOX since each product's respective Effective Date, 16 the Commission believes that the retroactive extension of the respective surcharge fees to all applicable transactions occurring since, and as of, the commencement of trading of each product on BOX is equitable in order to defray BSE's licensing costs. 12 Section 2(c) of the BOX Fee Schedule then stated, as it currently does: “Plus, where applicable, any surcharge for options on ETFs that are passed through by BOX.” 13 15 U.S.C. 78s(b). 14 17 CFR 240.19b-4. 15 *See* Notice, *supra* note 3. 16 The options on the applicable ETFs began trading on BOX ranging from January 10, 2005 to June 27, 2005. *See supra* note 6. The Commission also believes that the new text in Section 4(b) of the BOX Fee Schedule does not raise any new or novel issues but rather serves as a non-substantive change to the BOX Fee Schedule to clarify the existing text. The Commission notes the Exchange's representation that this change does not impose any new fees on Linkage Orders, that it is consistent with the Linkage Fee pilot program, and that applicable Linkage Orders have always been assessed this surcharge and have been invoiced as such. 17 Further, the Commission believes that the change to the title of Section 4(b) of the BOX Fee Schedule does not raise any new or novel issues and merely is designed to accurately reflect the party which is billed. Accordingly, the Commission believes that the changes to Section 4(b) of the BOX Fee Schedule clarify and expand upon the existing text and do not result in any change in application of the Fee Schedule. 17 *See id.* *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 18 that the proposed rule change (SR-BSE-2006-05) is hereby approved. 18 15 U.S.C. 78s(b)(2). 19 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 19 Nancy M. Morris, Secretary. [FR Doc. E6-7818 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53805; File No. SR-CBOE-2006-31] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend Until June 5, 2007, a Pilot Program for Listing Options on Selected Stocks Trading Below $20 at One-Point Intervals May 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 April 27, 2006, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by CBOE. CBOE filed the proposal pursuant to section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend Commentary .01 to CBOE Rule 5.5, “Series of Option Contracts Open for Trading,” to extend until June 5, 2007, its pilot program for listing options series on selected stocks trading below $20 at one-point intervals (“Pilot Program”). The text of the proposed rule change is available on CBOE's Web site ( *http://www.cboe.com* ), at CBOE'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, CBOE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to extend the Pilot Program for an additional year (“Third Pilot Extension Notice”). 5 The Pilot Program allows CBOE to select a total of five individual stocks on which option series may be listed at $1 strike price intervals. 6 To be eligible for inclusion in the Pilot Program, the underlying stock must close below $20 on its primary market on the previous trading day. If selected for the Pilot Program, the Exchange may list strike prices at $1 intervals from $3 to $20, but no $1 strike price may be listed that is greater than $5 away from the underlying stock's closing price on its primary market on the previous day. The Exchange also may list $1 strikes on any other options class designated by another options exchange that employs a similar pilot program under its rules. Under the terms of the Pilot Program, the Exchange may not list long-term option series (“LEAPS”®) at $1 strike price intervals for any class selected for the Pilot Program. The Exchange also is restricted from listing any series that would result in strike prices being $0.50 apart. 5 The Commission approved the Pilot Program on June 5, 2003. *See* Securities Exchange Act Release No. 47991 (June 5, 2003), 68 FR 35243 (June 12, 2003) (order approving File No. SR-CBOE-2001-60) (“Pilot Approval Order”). The Pilot Program was extended through June 5, 2005 and again through June 5, 2006. *See* Securities Exchange Act Release Nos. 49799 (June 3, 2004), 69 FR 32642 (June 10, 2004) (notice of filing and immediate effectiveness of File No. SR-CBOE-2004-34) (“First Pilot Extension Notice”) and 51771 (May 31, 2005), 70 FR 33228 (June 7, 2005) (notice of filing and immediate effectiveness of File No. SR-CBOE-2005-37) (“Second Pilot Extension Notice”) (collectively, “Pilot Extension Notices”). Under Interpretation and Policy .01(a) to CBOE Rule 5.5, the Pilot Program is scheduled to expire on June 5, 2006. 6 The Pilot Program generally allows CBOE to select a total of five individual stocks on which option series may be listed at $1 strike price intervals. However, the Pilot Program was recently amended to provide that CBOE can designate no more than four individual stocks for inclusion in the Pilot Program at the same time there are strike prices listed for $1 intervals on Mini-SPX options in accordance with Interpretation and Policy .14 to CBOE Rule 24.9. If CBOE were to determine to discontinue listing Mini-SPX option series at $1 strike price intervals, CBOE would again be free to select up to five option classes for inclusion in the Pilot Program. *See* Securities Exchange Act Release No. 52625 (October 18, 2005), 70 FR 61479 (October 24, 2005) (File No. SR-CBOE-2005-81) (notice of filing and order granting accelerated approval of proposed rule change relating to options on a reduced-value version of the Standard and Poor's 500 Stock Index (“Mini-SPX options”)). As stated in its previous filings establishing and extending the Pilot Program, 7 CBOE believes that $1 strike price intervals provide investors with greater flexibility in the trading of equity options that overlie lower-priced stocks 8 by allowing investors to establish equity options positions that are better tailored to meet their investment objectives. 9 As reflected in the First Pilot Extension Notice, the trading volume in a wide majority of the classes selected for the Pilot Program increased significantly within the first year after being selected for the Pilot Program. 10 In ten of the 22 classes originally selected, average daily trading volume (“ADV”) increased over 100%, and in some classes ADV more than tripled. 11 As reflected in the Second Pilot Extension Notice, after almost two years since the inception of the Pilot Program, ADV in several options classes remained significantly higher than immediately prior to their respective selection in the Pilot Program. 12 Now, almost three years since the inception of the Pilot Program, CBOE notes that ADV in several options classes remains significantly higher than immediately prior to their selection for the Pilot Program. 13 It should be noted that, as reflected in the Pilot Program Report for the Second Pilot Extension Notice and this Third Pilot Extension Notice, ADV also has dropped in several options classes since their selection for the Pilot Program, although it is difficult to identify the specific market factors that may contribute to the increase or decrease in options trading volume from one particular class to another, especially considering the time removed since the inception of the Pilot Program. However, the Exchange still believes that the practice of offering customers strike prices for lower-priced stocks at $1 intervals contributes to the overall volume of the participating options classes. 7 *See* Pilot Approval Order and Pilot Extension Notices, *supra* note 5. 8 To be eligible for inclusion in the Pilot Program, the underlying stock must close below $20 per share on its primary market on the previous trading day. 9 *See* Pilot Approval Order and Pilot Extension Notices, *supra* note 5. 10 *See* First Pilot Extension Notice, *supra* note 5. 11 *See* First Pilot Extension Notice, *supra* note 5. 12 * See* Second Pilot Extension Notice, *supra* note 5. 13 Pursuant to the Pilot Extension Notices, CBOE is submitting a report (the “Pilot Program Report”), as Exhibit 3 to the proposal. Among other things, the Pilot Program Report contains analyses of the ADV and open interest (“OI”) for the options classes that have been selected for the Pilot Program since its inception. With regard to the impact on system capacity, CBOE's analysis of the Pilot Program also suggests that the impact on CBOE's, the Options Price Reporting Authority's (“OPRA”), and market data vendors” respective automated systems has been minimal. Specifically, CBOE notes that in February 2006, 22 of the 23 classes participating in the Pilot Program accounted for 7,002,356 quotes per day or 0.89% of the industry's 790,899,315 average quotes per day. 14 The 23 classes averaged 268,468 contracts per day or 3.56% of the industry's 7,531,756 average contracts per day. The classes involved totaled 1458 series or 1.1% of all series listed. 15 It should be noted that these quoting statistics may overstate the contribution of $1 strike prices because these figures also include quotes for series listed in intervals higher than $1 ( *i.e.,* $2.50 strikes) in the same options classes. Even with the non-$1 strike series quoting being included in these figures, CBOE believes that the overall impact on capacity is still minimal. 14 Quoting information is not included for CPN, which was delisted from the New York Stock Exchange on December 6, 2005 and trading in the existing option series was restricted. 15 *See* Pilot Program Report, *infra* Exhibit 3. 2. Statutory Basis The Exchange believes that an extension of the Pilot Program is warranted because the data indicates that there is strong investor demand for $1 strikes and because the Pilot Program has not adversely impacted systems capacity. For these reasons, the Exchange believes the proposed rule change is consistent with the Act and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of section 6(b) of the Act. 16 Specifically, the Exchange believes the proposed rule change is consistent with the requirements of section 6(b)(5) 17 that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and, in general, to protect investors and the public interest. 16 15 U.S.C. 78f(b). 17 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believes that the proposed rule change will impose any burden on competition that is not necessary or appropriate in the furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others The Exchange neither solicited nor received comments on the proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action CBOE has filed the proposed rule change pursuant to section 19(b)(3)(A) of the Act 18 and subparagraph (f)(6) of Rule 19b-4 thereunder. 19 Because the foregoing proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. As required under Rule 19b-4(f)(6)(iii), CBOE provided the Commission with written notice of its intention to file the proposed rule change at least five business days prior to filing the proposal with the Commission or such shorter period as designated by the Commission. 20 18 15 U.S.C. 78s(b)(3)(A). 19 17 CFR 240.19b-4(f)(6). 20 As set forth in the Commission's initial approval of the Pilot Program, if CBOE proposes to:
(1)Extend the Pilot Program;
(2)expand the number of options eligible for inclusion in the Pilot Program; or
(3)seek permanent approval of the Pilot Program, it must submit a Pilot Program report to the Commission along with the filing of its proposal to extend, expand, or seek permanent approval of the Pilot Program. CBOE must file any such proposal and the Pilot Program report with the Commission at least 60 days prior to the expiration of the Pilot Program. The Pilot Program report must cover the entire time the Pilot Program was in effect and must include:
(1)Data and written analysis on the open interest and trading volume for options (at all strike price intervals) selected for the Pilot Program;
(2)delisted options series (for all strike price intervals) for all options selected for the Pilot Program;
(3)an assessment of the appropriateness of $1 strike price intervals for the options CBOE selected for the Pilot Program;
(4)an assessment of the impact of the Pilot Program on the capacity of CBOE's, OPRA's, and vendors' automated systems;
(5)any capacity problems or other problems that arose during the operation of the Pilot Program and how CBOE addressed them;
(6)any complaints that CBOE received during the operation of the Pilot Program and how CBOE addressed them; and
(7)any additional information that would help to assess the operation of the Pilot Program. *See* Pilot Approval Order, *supra* note 5. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-CBOE-2006-31 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 No. SR-CBOE-2006-31. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of 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 No. SR-CBOE-2006-31 and should be submitted on or before June 13, 2006. 21 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 21 Nancy M. Morris, Secretary. [FR Doc. E6-7800 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53810; File No. SR-DTC-2006-06] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Relating to Changes to Its SMART/Track for Buy-Ins Service May 16, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on March 27, 2006, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by DTC. DTC filed the proposed rule change pursuant to section 19(b)(3)(A)(iii) of the Act 2 and Rule 19b-4(f)(4) thereunder 3 so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(iii). 3 17 CFR 240.19b-4(f)(4). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change consists of changes to the functionality of DTC's SMART/Track for Buy-Ins service. II. Self-Regulatory Organization's Statement of the Purpose of, and CAStatutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. DTC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 4 4 The Commission has modified the text of the summaries prepared by DTC.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The proposed rule change relates to DTC's SMART/Track for Buy-Ins service as it pertains to the retransmittal of buy-ins in the National Securities Clearing Corporation (“NSCC”)'s Continuous Net Settlement (“CNS”) system. Since 2003, DTC has made several rule filings relating to a service that was originally known as Universal Hub and that is now known as SMART/Track. 5 With its rule filing SR-DTC-2005-19, 6 DTC implemented the fourth phase of SMART/Track, “SMART/Track for Buy-Ins,” that provides automated communication, warehousing and tracking of various types of buy-in related notices pertaining to buy-ins governed by the rules of either NSCC or other self-regulatory organizations. 5 Securities Exchange Act Release Nos. 50029 (July 15, 2004), 69 FR 43870 (July 22, 2004) [SR-DTC-2003-10] (Universal Hub, Stock Loan notification service); 50887 (Dec. 20, 2004), 69 FR 77802 (Dec. 28, 2004) [SR-DTC-2004-11] (Corporate Action Liability Notification Service); 52104 (July 21, 2005), 70 FR 43730 (July 28, 2004) [SR-DTC-2005-06] (SMART/Track for Agency Lending Disclosure); and 53032 (December 28, 2005), 71 FR 1457 (January 9, 2006) [SR-DTC-2005-19] (SMART/Track for Buy-Ins). 6 Securities Exchange Act Release No. 53032 (December 28, 2005), 71 FR 1457 (January 9, 2006). *See also* , DTC Important Notice B#8796 (Nov. 23, 2005) available online at *http://www.dtc.org/.* The phase-in of SMART/Track for Buy-In functionality pertaining to NSCC CNS Buy-Ins was commenced on November 14, 2005, for CNS buy-in executions and completed on February 10, 2006, with the addition of CNS notices of intent to buy-in and CNS buy-in orders. The buy-in functionality of DTC's PEX platform relating to NSCC CNS buy-ins was discontinued on March 13, 2006. 7 7 Securities Exchange Act Release No. 53503 (March 16, 2006), 71 FR 15237 (March 27, 2006) [SR-DTC-2006-01]. In 2005, NSCC submitted rule filing SR-NSCC-2005-15 which modified NSCC's Rules with regard to CNS buy-ins, creating a new buy-in retransmittal procedure that may be utilized by NSCC members receiving buy-in notices initiated outside of the CNS system (a “Buy-In Retransmittal Notice”). 8 8 Securities Exchange Act Release No. 53528 (March 21, 2006), 71 FR 15506 (March 28, 2006) [SR-NSCC-2005-15]. Pursuant to that rule change, the NSCC member originating a Buy-In Retransmittal Notice will be provided with five additional fields that will be used for identification of the entity (or entities, as appropriate) that initiated the buy-in against the member. At least one such entity other than the originating member must be identified or the Buy-In Retransmittal Notice will be rejected. NSCC members with short positions will be advised of their potential buy-in liability through DTC's SMART/Track for Buy-Ins. Concurrent with NSCC's implementation of the changes set forth in rule filing SR-NSCC-2005-15, DTC will make corresponding changes to SMART/Track for Buy-Ins to activate the CNS Retransmittal Buy-In functionality. 9 9 This functionality includes notices of intent to buy-in, buy-in orders, buy-in executions, and short member buy-in liability. As the NSCC CNS Retransmittal Buy-In functionality is an added feature to an existing DTC service that will conform the functionality of DTC's service to that which is required by NSCC's rules, DTC believes that the proposed rule change effects a change in an existing service of DTC that
(i)does not adversely affect the safeguarding of securities or funds in the custody or control of DTC and
(ii)does not significantly affect the respective rights or obligations of DTC or those participants using the service. The proposed rule change is therefore consistent with Section 17A of the Act 10 and the rules and regulations thereunder applicable to DTC. Moreover, DTC has represented that the proposed rule change will be implemented consistently with the statutory obligation to safeguard securities and funds in its possession or control or for which it is responsible. 10 15 U.S.C. 78q-1.
(B)Self-Regulatory Organization's Statement on Burden on Competition DTC does not believe that the proposed rule change will have any impact or impose any burden on competition.
(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. 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)(iii) of the Act 11 and Rule 19b-4(f)(4) 12 thereunder because the proposed rule effects a change in an existing service of DTC that
(i)does not adversely affect the safeguarding of securities or funds in the custody or control of DTC or for which it is responsible and
(ii)does not significantly affect the respective rights or obligations of DTC or persons using the service. At any time within sixty days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 11 15 U.S.C. 78s(b)(3)(A)(iii). 12 17 CFR 240.19b-4(f)(4). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change 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-2006-06 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 20549-9303. All submissions should refer to File Number SR-DTC-2006-06. 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 *http://www.dtc.org.* 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-2006-06 and should be submitted on or before June 13, 2006. 13 17 CFR 200.30-3(a)(12). For the Commission by the Division of Market Regulation, pursuant to delegated authority. 13 Nancy M. Morris, Secretary. [FR Doc. E6-7805 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53806; File No. SR-ISE-2006-20] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Extend Until June 5, 2007, a Pilot Program for Listing Options on Selected Stocks Trading Below $20 at One-Point Intervals May 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 April 18, 2006, the International Securities Exchange, Inc. (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the ISE. The ISE filed the proposal pursuant to section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to amend Supplementary Material .01 to ISE Rule 504, “Series of Options Contracts Open for Trading,” to extend until June 5, 2007, its pilot program for listing options series on selected stocks trading below $20 at one-point intervals (“Pilot Program”). The text of the proposed rule change is available on the ISE's Web site ( *http://www.iseoptions.com* ), at the ISE'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 ISE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The ISE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On June 16, 2003, the Commission approved the ISE's Pilot Program, which allows the ISE to list series with $1 strike price intervals on equity option classes that overlie up to five individual stocks, provided that the strike prices are $20 or less, but not less than $3, subject to the terms of the Pilot Program. 5 The Pilot Program, after being extended on three prior occasions, 6 is set to expire on June 5, 2006. 7 The Exchange may currently select up to five individual stocks to be included in the Pilot Program. The Exchange, however, is also permitted to list options on other individual stocks at $1 strike price intervals if other options exchanges listed those series pursuant to their respective rules. The Exchange has selected the following five options classes to participate in the Pilot Program: AMR Corp. [AMR], Clapine Corp. [CPN], EMC Corp. [EMC], El Paso Corp. [EP], and Sun Microsystems Inc. [SUNW]. The ISE believes the Pilot Program has been successful and well received by its members and the investing public. Thus, the ISE proposes to extend the Pilot Program until June 5, 2007. 5 *See* Securities Exchange Act Release No. 48033 (June 13, 2003), 68 FR 37036 (June 20, 2003) (order approving File No. SR-ISE-2003-17) (“Pilot Program Approval Order”). 6 *See* Securities Exchange Act Release Nos. 49827 (June 8, 2004), 69 FR 33966 (June 17, 2004) (notice of filing and immediate effectiveness of File No. SR-ISE-2004-21) (extending the $1 Strike Pilot Program until August 5, 2004); 50060 (July 22, 2004), 69 FR 45864 (July 30, 2004) (notice of filing and immediate effectiveness of File No. SR-ISE-2004-26) (extending the $1 Strike Pilot Program until June 5, 2005); and 51769 (May 31, 2005), 70 FR 33232 (June 07, 2005) (notice of filing and immediate effectiveness of File No. SR-ISE-2005-22) (extending the $1 Strike Pilot Program until June 5, 2006) (collectively, “Pilot Extension Notices”). 7 *See* Securities Exchange Act Release No. 51769, *supra* note 6. In support of this proposed rule change, and as required by the Pilot Program Approval Order and the Pilot Extension Notices, the Exchange is submitting to the Commission a report (“Pilot Program Report”), attached as Exhibit 3 to the proposal, that details the Exchange's experience with the Pilot Program. Specifically, the Pilot Program Repot contains data and written analysis regarding the five options classes included in the Pilot Program for the period between May 2, 2005, and February 28, 2006. The Exchange believes there is sufficient investor interest and demand to extend the Pilot Program for another year. The Exchange continues to believe that the Pilot Program has provided investors with greater trading opportunities and flexibility and the ability to more closely tailor their investment strategies and decisions to the movement of the underlying security. Furthermore, the Exchange has not detected any material proliferation of illiquid options series resulting from the narrower strike price intervals. 2. Statutory Basis The ISE believes the proposed rule change is consistent with the Act and the rules and regulations thereunder and, in particular, the requirements of section 6(b) of the Act. 8 Specifically, the ISE believes the proposed rule change is consistent with the requirements under section 6(b)(5) of the Act 9 that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, 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. The ISE believes that extension of the Pilot Program until June 5, 2007 will result in a continuing benefit to investors by allowing them to more closely tailor their investment decisions, and will allow the ISE to further study investor interest in $1 strike price intervals. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The ISE believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in the furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others The ISE has not solicited, and does not intend to solicit, comments on this proposed rule change. The ISE has not received any unsolicited written comments from members or other interested persons. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The ISE has filed the proposed rule change pursuant to section 19(b)(3)(A) of the Act 10 and subparagraph (f)(6) of Rule 19b-4 thereunder. 11 Because the foregoing proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. As required under Rule 19b-4(f)(6)(iii), the ISE provided the Commission with written notice of its intention to file the proposed rule change at least five business days prior to filing the proposal with the Commission or such shorter period as designated by the Commission. 12 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b-4(f)(6). 12 As set forth in the Commission's initial approval of the Pilot Program, if the ISE proposes to:
(1)Extend the Pilot Program;
(2)expand the number of options eligible for inclusion in the Pilot Program; or
(3)seek permanent approval of the Pilot Program, it must submit a Pilot Program report to the Commission along with the filing of its proposal to extend, expand, or seek permanent approval of the Pilot Program. The ISE must file any such proposal and the Pilot Program report with the Commission at least 60 days prior to the expiration of the Pilot Program. The Pilot Program report must cover the entire time the Pilot Program was in effect and must include:
(1)Data and written analysis on the open interest and trading volume for options (at all strike price intervals) selected for the Pilot Program;
(2)delisted options series (for all strike price intervals) for all options selected for the Pilot Program;
(3)an assessment of the appropriateness of $1 strike price intervals for the options the ISE selected for the Pilot Program;
(4)an assessment of the impact of the Pilot Program on the capacity of the ISE's, the Options Price Reporting Authority's, and vendors' automated systems;
(5)any capacity problems or other problems that arose during the operation of the Pilot Program and how the ISE addressed them;
(6)any complaints that the ISE received during the operation of the Pilot Program and how the ISE addressed them; and
(7)any additional information that would help to assess the operation of the Pilot Program. *See* Pilot Program Approval Order, *supra* note 5. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-2006-20 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 No. SR-ISE-2006-20. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-ISE-2006-20 and should be submitted on or before June 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 13 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-7797 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53818; File No. SR-NASD-2006-062] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Reflect the Revised Effective Date of Certain Amendments to NASD's Order Audit Trail System Rules May 17, 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 May 15, 2006, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. NASD has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule under section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) thereunder, 4 which renders the proposal effective upon receipt of this filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend Rule 6957(c) to reflect July 10, 2006 as the effective date for the Order Audit Trail System (“OATS”) reporting requirements for manual orders on an immediately effective basis. 5 Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in [brackets]. 6 5 The SEC recently approved amendments to the NASD Rule 6950 Series (“OATS Rules”) relating to OATS. *See* Securities Exchange Act Release No. 52521 (September 28, 2005), 70 FR 57909 (October 4, 2005). *See also* Notice to Members 05-78 (November 2005). NASD recently filed a proposed rule change for immediate effectiveness that extends the effective date of these amendments to the OATS Rules until July 10, 2006. *See* SR-NASD-2006-052. *See also* Notice to Members 06-17 (April 2006). 6 In addition, the instant filing is proposing changes to the current text of NASD Rule 6957 to accurately reflect the requirements of the rule that will be in effect beginning July 10, 2006. *See supra* note 5. As part of SR-NASD-2006-052, NASD is amending NASD Rule 6957(c) to make it identical to the proposed changes in this filing. 6950. Order Audit Trail System 6957. Effective Date The requirements of the Order Audit Trail System shall be effective in accordance with the following schedule:
(a)and
(b)No Change.
(c)Manual Orders The requirements of the Order Audit Trail System shall be effective *on July 10, 2006* [120 days after SEC approval of SR-NASD-00-23,] for all manual orders, provided that firms shall be required to report information item
(18)specified in Rule 6954(b) only to the extent such item is available to them [and shall not be required to record and report information items
(4)and
(5)specified in Rule 6954(b) and information item
(1)specified in Rule 6954(c)].
(d)No Change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD is proposing to amend NASD Rule 6957(c) to reflect July 10, 2006 as the effective date for the OATS reporting requirements for manual orders. On September 28, 2005, the SEC approved amendments to the OATS Rules which, among other things, 7 implement the OATS reporting requirements for manual orders. 8 On April 20, 2006, NASD filed a proposed rule change for immediate effectiveness that extends the effective date of these recent amendments to the OATS Rules until July 10, 2006. 9 In doing so, NASD, among other things, amended NASD Rule 6957(c) relating to the effective date for manual orders to reflect the revised effective date. 7 These amendments to the OATS Rules also:
(1)Provide that members are required to capture and report the time the order is received by the member from the customer for all orders;
(2)expand the order transmittal requirements to include orders routed to a member's trading desk or trading department;
(3)exclude certain members from the definition of “Reporting Member” for those orders that meet specified conditions and are recorded and reported to OATS by another member; and
(4)permit NASD to grant exemptive relief from the OATS requirements in certain circumstances to members that meet specified criteria. In SR-NASD-2006-052, NASD revised the effective date of these amendments to the OATS Rules to July 10, 2006. *See* SR-NASD-2006-052. *See also* Notice to Members 06-17 (April 2006). 8 *See supra* note 5. 9 *Id.* Because these changes to NASD Rule 6957(c) will not be incorporated into the NASD manual until July 10, 2006, NASD is proposing to amend NASD Rule 6957(c) to reflect the new implementation date on an immediately effective basis and make the effective date of the OATS requirements for manual orders transparent in the current version of the NASD Rules. 10 10 NASD also is proposing to amend the rule text to reflect certain technical amendments to NASD Rule 6957(c) to clarify that the OATS order information required under NASD Rules 6954(b)(4) and
(5)and the OATS transmittal requirements under NASD Rule 6951(c)(1) apply to manual orders. These technical amendments were approved by Commission in SR-NASD-00-23. *See* Securities Exchange Act Release No. 52521 (September 28, 2005), 70 FR 57909 (October 4, 2005). 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of section 15A(b)(6) of the Act, 11 which requires, among other things, that NASD rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change will provide transparency regarding the effective date of the OATS reporting requirements for manual orders. 11 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act 12 and paragraph (f)(1) of Rule 19b-4 thereunder, 13 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of NASD. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b-4(f)(1). IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2006-062 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-2006-062. 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 NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-NASD-2006-062 and should be submitted on or before June 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-7816 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53819; File No. SR-NASD-2006-052] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto to Reflect the Revised Effective Date of Certain Amendments to NASD's Order Audit Trail System Rules May 17, 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 April 20, 2006, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. NASD has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule under Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b-4(f)(1) thereunder, 4 which renders the proposal effective upon receipt of this filing with the Commission. The Exchange filed Amendment No. 1 to the proposed rule change on May 15, 2006. 5 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b-4(f)(1). 5 In Amendment No. 1, NASD made certain technical and clarifying changes to the rule text and throughout the proposed rule change. 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 May 15, 2006, the date on which the Exchange filed Amendment No. 1. *See* 15 U.S.C. 78s(b)(3)(C). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to establish July 10, 2006 as the effective date of the amendments to NASD's Order Audit Trail System (“OATS”) rules approved by the Commission on September 28, 2005 6 and March 30, 2006. 7 6 *See* Securities Exchange Act Release No. 52521 (September 28, 2005), 70 FR 57909 (October 4, 2005) (SR-NASD-00-23). *See also* Notice to Members 05-78 (November 2005). 7 *See* Securities Exchange Act Release No. 53580 (March 30, 2006), 71 FR 17529 (April 6, 2006) (SR-NASD-2006-040). *See also* Notice to Members 06-15 (April 2006). Below is the text of the proposed rule change. Proposed new language is in *italics* ; proposed deletions are in [brackets]. 8 8 The proposed changes indicated below are based on rule text approved by the SEC on September 28, 2005 and March 30, 2006, which, but for this subsequent filing, would have become effective May 8, 2006. See *supra* notes 5 and 6. 6950. Order Audit Trail System 6957. Effective Date The requirements of the Order Audit Trail System shall be effective in accordance with the following schedule:
(a)and
(b)No Change.
(c)Manual Orders The requirements of the Order Audit Trail System shall be effective on *July 10, 2006* [six months after publication of the revised OATS Reporting Technical Specifications relating to SR-NASD-00-23,] for all manual orders, provided that firms shall be required to report information item
(18)specified in Rule 6954(b) only to the extent such item is available to them.
(d)No Change. 6958. Exemption to the Order Recording and Data Transmission Requirements
(a)through
(b)No Change.
(c)This Rule shall be in effect until *July 10, 2011* [May 8, 2011]. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD is proposing to establish July 10, 2006 as the effective date of the amendments to NASD's rules relating to OATS requirements approved by the Commission on September 28, 2005 and March 30, 2006. Specifically, on September 28, 2005, the SEC approved amendments to NASD Rules 6950 through 6957 (“OATS Rules”). 9 The amendments to the OATS Rules:
(1)Implement the OATS reporting requirements for manual orders (“OATS Phase III”);
(2)provide that members are required to capture and report the time the order is received by the member from the customer for all orders;
(3)expand the order transmittal requirements to include orders routed to a member's trading desk or trading department;
(4)exclude certain members from the definition of “Reporting Member” for those orders that meet specified conditions and are recorded and reported to OATS by another member; and
(5)permit NASD to grant exemptive relief from the OATS reporting requirements in certain circumstances to members that meet specified criteria. 9 *See supra* note 5. On March 30, 2006, the SEC approved further amendments to the OATS Rules that expand NASD's OATS exemptive authority to include electronic recording requirements. 10 As amended, NASD has the authority to grant exemptive relief from the OATS electronic recording and reporting requirements for manual orders to members that meet specified criteria. 10 *See supra* note 6. The current effective date of these amendments is May 8, 2006. Since approval of these amendments, several firms and service bureaus have requested that the effective date of the amended OATS requirements be extended, noting the significant technological changes required to implement the OATS requirements for manual orders in particular. NASD understands the concerns raised and believes that extending the effective date of the recent amendments to the OATS Rules until July 10, 2006 will greatly assist firms and service bureaus by providing additional time to ensure that all the necessary system changes can be tested and implemented, thereby helping to ensure the integrity and accuracy of OATS data. Accordingly, NASD is proposing to establish July 10, 2006 as the effective date of the amendments to NASD's OATS Rules approved by the Commission on September 28, 2005 and March 30, 2006. In doing so, NASD also is proposing amendments to NASD Rules 6957(c) and 6958(c) to reflect the amended effective date. NASD has filed the proposed rule change for immediate effectiveness. NASD announced the revised effective date in its Notice to Members 06-17 (April 2006). 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, 11 which requires, among other things, that NASD rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that extending the effective date of the recent amendments to the OATS Rules will provide firms and service bureaus more time to make necessary system changes to ensure compliance with the amended OATS requirements. 11 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others While NASD did not specifically solicit comment on the proposed rule change, NASD received one written comment letter regarding certain implementation issues and concerns. 12 Specifically, the commenter contends that release of the OATS Reporting Technical Specifications and subsequent clarification from NASD staff regarding the OATS reporting requirements highlighted new development requirements that were not accounted for in their original implementation planning. As such, the commenter requests that NASD extend the time for testing and extend the compliance date for the amended OATS reporting requirements. As described herein, NASD is proposing to extend the effective date of the recent amendments to the OATS Rules to provide additional time for firms and service bureaus to make necessary system changes to ensure compliance with the amended OATS requirements. 12 *See* Letter from Financial Information Forum, on behalf of FIF Service Bureau Committee, to Paul McKenney, NASD, dated March 29, 2006. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and paragraph (f)(1) of Rule 19b-4 thereunder, 14 in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of NASD. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b-4(f)(1). IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2006-052 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-2006-052. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-NASD-2006-052 and should be submitted on or before June 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-7817 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53811; File No. SR-NSCC-2005-17] Self-Regulatory Organizations; National Securities Clearing Corporation; Order Approving Proposed Rule Change to Modify Its Rules and Procedures Related to the Collection of Commission Payments May 16, 2006. I. Introduction On December 29, 2005, the National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) and on February 3, 2006, amended proposed rule change SR-NSCC-2005-17 pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). 1 Notice of the proposal was published in the **Federal Register** on March 13, 2006. 2 No comment letters were received. For the reasons discussed below, the Commission is approving the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 53424 (March 6, 2006), 71 FR 12759. II. Description As part of ongoing efforts to increase processing efficiencies, NSCC is modifying its Rule 16, “Settlement of Commissions,” to further standardize and automate the processing of commission bill payments. In 2001, NSCC modified Rule 16 to implement the use of Automated Clearing House (“ACH”) wire transfers when making payments to non-clearing members utilizing NSCC's Commission Bill Service. As a part of NSCC's move to payment of credits by ACH wire transfer, all non-clearing members were required to execute appropriate ACH documentation in order to receive their credit payments. 3 While NSCC automated the payment of funds from NSCC to non-clearing members, the collection of monies owed to NSCC by non-clearing members was not automated. Non-clearing members continued to pay commission bill settlement funds to NSCC by checks. 3 Securities Exchange Act Release No. 44550 (July 12, 2001), 66 FR 37509 (July 18, 2001) [File No. SR-NSCC-2001-08]. NSCC is now further modifying Rule 16 to require the use of ACH preauthorized payments in the collection of funds from those non-clearing members that are indebted to NSCC as a result of their utilization of the Commission Bill Service. Accordingly, at the time as determined and announced to users of the Commission Bill Service by NSCC, NSCC will debit the bank account designated by each non-clearing member an amount equal to the amount owed by the non-clearing member to NSCC. 4 All non-clearing members will be required to execute appropriate ACH documentation. 4 Currently, commission bill settlement takes place on the 15th day of each month or on the next preceding business day if the 15th is not a business day. In addition to the above change, NSCC is also making a technical correction to Rule 16(3) to conform the Rule to practice. NSCC will eliminate text that provides that non-clearing members must deliver information to NSCC on the 10th day of each month. NSCC is eliminating this text because this practice has been discontinued. Implementation NSCC will work with New York Stock Exchange (“NYSE”) and American Stock Exchange (“AMEX”) staff to obtain new ACH documentation from all non-clearing members that currently utilize the Commission Bill Service. Within two weeks of approval by the SEC of this rule filing, NSCC will begin implementing the ACH debit process on a rolling-basis. NSCC anticipates that collection of funds by check from non-clearing members to NSCC will be discontinued in its entirety by the end of the second quarter of 2006. III. Discussion Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of a clearing agency be designed to remove impediments to and perfect the mechanism of a national system for prompt and accurate clearance and settlement of securities transactions. 5 By requiring electronic payment of funds from non-clearing members utilizing its Commission Bill Service, NSCC should reduce processing errors and delays that are typically associated with the manual processing of checks. As such, the proposed rule change is consistent with NSCC's statutory obligation to remove impediments to and perfect the mechanism of a national system for prompt and accurate clearance and settlement of securities transactions. 5 15 U.S.C. 78q-1(b)(3)(F). 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, 6 that the proposed rule change (File No. SR-NSCC-2005-17) be and hereby is approved. 6 15 U.S.C. 78s(b)(2). 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. E6-7798 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53812; No. SR-OCC-2006-03] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Effect Certain Fee Changes to Ancillary Services Program May 16, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on April 13, 2006, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by OCC. OCC filed the proposed rule change pursuant to section 19(b)(3)(A)(ii) of the Act 2 and Rule 19b-4(f)(2) 3 thereunder so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(ii). 3 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The principal purpose of the rule change is to effect certain fee changes to OCC's ancillary services program. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 4 4 The Commission has modified the text of the summaries prepared by OCC.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The principal purpose of the rule change is to effect certain fee changes with respect to OCC's ancillary services program. In addition to clearance and settlement services, OCC provides its clearing members with a number of ancillary services ranging from on-line access to OCC systems to report and data distribution offerings. Hardware and communication lines support these ancillary service offerings. In August, 2002, OCC implemented a four-tiered fee structure for its ancillary services with a different bundle of services offered at a fixed cost for each tier. 5 5 Securities Exchange Act Release No. 34-46339 (August 12, 2002), 67 FR 53828-01 (August 19, 2002) [File No. SR-OCC-2002-17]. The ancillary services associated with each membership tier are described later in this filing. In September, 2005, OCC's board of directors authorized a plan to eliminate the requirement that clearing members use OCC-supplied equipment and dial-up interface system (“EMCI platform”) as the primary approved means to access ENCORE, OCC's clearing system, which is available on the Internet. 6 In connection with completing plan details, OCC reviewed its ancillary services program and decided to make certain fee adjustments. A detailed listing of these changes to OCC's ancillary fees can be found at *http://www.theocc.com/publications/rules/proposed_changes/sr_occ_06_03.pdf.* 6 Clearing members will be required to use an OCC approved alternative to access ENCORE through the Internet. Accordingly, effective April, 2006, OCC will reduce the fixed monthly ancillary fees charged to Tier I, II, and III clearing members by $300.00/month and the cost of maintaining an additional clearing member number by $100.00/month. These fee reductions reflect the elimination of the ECMI platform and are further intended to offset additional costs that will be incurred by clearing members in deploying the required Internet access. OCC intends to increase the ancillary service fee charged to Tier IV members by $150.00/month to reflect the cost of supporting secure Web-based access to the Stock Loan system by Tier IV clearing members. Finally, OCC intends to reduce the fee charged to subscribing clearing members for OCC-provided leased lines (which provide for secure point-to-point communications) by $1,000/month in order to pass on the lower line charges OCC has negotiated with its telephone providers. 7 7 In addition, OCC intends to make conforming changes to the Supplement to the Agreement for OCC Services: Ancillary Services and the Supplement to the Agreement for OCC Services: Communication Options. C/MACS references are eliminated because that system is no longer used. 56.0 kb line references are eliminated because that line speed is no longer supported. OCC believes the proposed rule change is consistent with section 17A of the Act, 8 as amended, because it clarifies and updates OCC's fee schedule. As such, it provides for the equitable allocation of fees among its participants and aligns fees for services with the associated cost to deliver the service. 8 15 U.S.C. 78q-1.
(B)Self-Regulatory Organization's Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition.
(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were not and are not intended to be solicited with respect to the proposed rule change, and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective upon filing pursuant to section 19(b)(3)(A)(ii) of the Act 9 and Rule 19b-4(f)(2) 10 thereunder because the rule establishes a due, fee, or other charge. 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. 9 15 U.S.C. 78s(b)(3)(A)(ii). 10 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-OCC-2006-03 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 20549-9303. All submissions should refer to File Number SR-OCC-2006-03. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filings also will be available for inspection and copying at the principal office of OCC and on OCC's Web site at *http://www.optionsclearing.com.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2006-03 and should be submitted on or before June 13, 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. E6-7804 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53822; File No. SR-Phlx-2006-32] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Zero Bid Options May 17, 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 May 16, 2006, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposed rule change as a “non-controversial” rule change under Rule 19b-4(f)(6) under the Act, 3 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to amend Exchange Rule 1080(i) to provide that the Exchange's Automated Options Market (AUTOM) System 4 will only convert a market order to sell in a “zero-bid option” 5 into a limit order to sell such option at $0.05 if the Exchange's best bid/offer (the “PBBO”) has a bid/ask differential of less than or equal to $0.25 and
(i)the National Best Bid or Offer (“NBBO”) reflects a zero bid in an option listed on multiple exchanges or
(ii)the Exchange's disseminated bid is zero for an option listed only on the Exchange. 4 AUTOM is the Exchange's electronic order delivery, routing, execution and reporting system, which provides for the automatic entry and routing of equity option and index option orders to the Exchange trading floor. Orders delivered through AUTOM may be executed manually, or certain orders are eligible for AUTOM's automatic execution features, AUTO-X, Book Sweep and Book Match. Equity option and index option specialists are required by the Exchange to participate in AUTOM and its features and enhancements. Option orders entered by Exchange members into AUTOM are routed to the appropriate specialist unit on the Exchange trading floor. AUTOM is today more commonly referred to as Phlx XL. *See* Exchange Rule 1080. 5 A “zero-bid option” is an option with a bid price of zero, meaning the option is virtually worthless. According to the Exchange, a bid price of zero typically occurs in situations where there is no intrinsic value in the series quoted ( *i.e.,* where an option series is out-of-the-money by a relatively large amount and such series is close to expiration). The text of the proposed rule change is set forth below. Italics indicates new text; deletions are bracketed. Philadelphia Stock Exchange Automated Options Market (AUTOM) and Automatic Execution System (AUTO-X) Rule 1080. (a)—(h) No change.
(i)Zero-bid option series. The AUTOM System will convert market orders to sell a particular option series *to limit orders to sell with a limit price of $.05* that are received when: *(A) For options listed only on the Exchange:* *(1)* the *Exchange's disseminated* bid price in such option series is zero;[,] *and* *(2) the Exchange's disseminated quotation in the series has a bid/ask differential less than or equal to $0.25; or* *(B) For options that are listed on multiple exchanges:* *(1) the disseminated NBBO includes a bid price of zero in the series; and* *(2) the Exchange's disseminated quotation in the series has a bid/ask differential less than or equal to $0.25.* [to limit orders to sell with a limit price of $.05] Such orders will be automatically placed on the limit order book in price-time priority. (j)-(l) No change. Commentary: No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, Proposed Rule Change 1. Purpose According to the Exchange, the purpose of the proposed rule change is to modify Exchange Rule 1080(i) so as to limit the circumstances in which AUTOM will convert a market order to sell into a limit order to sell a zero-bid option at $0.05. The Exchange adopted Rule 1080(i) as a means of automating the handling of these orders. 6 Currently, Exchange Rule 1080(i) provides for the conversion of all market orders to sell that are received when the Exchange is disseminating a bid of zero in that option. 6 *See* Securities Exchange Act Release No. 51544 (April 14, 2005), 70 FR 20613 (April 20, 2005) (SR-Phlx-2005-03). Since the adoption of Exchange Rule 1080(i), the Exchange has concluded that not all options with a zero bid are the same. The Exchange currently treats options that have an offer price of a few dollars on the Exchange, as well as options that are not “zero-bid” on other exchanges, as zero-bid options. Accordingly, this proposal outlines additional factors that the Exchange would consider when determining whether an option is a zero-bid option for purposes of Rule 1080(i), including the Exchange's spread and the NBBO. The Exchange believes that the new criteria would clarify when an option is truly a zero-bid option for which orders in that option should be subject to automated handling versus orders for non-zero-bid options that would require manual handling. The Exchange believes that taking the spread into consideration would help limit the conversion of market orders to sell to only those for true zero-bid options, because options with an offer much higher than above $0.25 are likely not to be worthless options. Similarly, for options traded on more than one exchange, the NBBO is relevant for validating whether an option truly is a zero-bid option. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 7 in general, and furthers the objectives of Section 6(b)(5) of the Act 8 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, by limiting the instances in which the Exchange's AUTOM system converts a market order to sell an option that is not a zero-bid option series under Rule 1080(i). 7 15 U.S.C. 78(b). 8 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change:
(i)Does not 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 after the date of filing, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and subparagraph (f)(6) of Rule 19b-4 thereunder. 10 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. 9 15 U.S.C. 78s(b)(3)(A). 10 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. The Commission believes waiving the five-day pre-filing notice and the 30-day operative delay is consistent with the protection of investors and the public interest. Such waivers would allow the Exchange to implement, without undue delay, the proposed amendment to Exchange Rule 1080(i), which would clarify when an option is truly a zero-bid option for which orders in that option should be subject to automated handling versus orders for non-zero-bid options that would require manual handling. For this reason, the Commission designates the proposal to be effective and operative upon filing with the Commission. 11 11 For 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). 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-Phlx-2006-32 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-Phlx-2006-32. 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. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2006-32 and should be submitted on or before June 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-7819 Filed 5-22-06; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10466 and # 10467] Massachusetts Disaster # MA-00005 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a notice of an Administrative declaration of a disaster for the State of Massachusetts dated 5/16/2006. *Incident:* Condominium Complex Fire. *Incident Period:* 4/15/2006. *Effective Date:* 5/16/2006. *Physical Loan Application Deadline Date:* 7/17/2006. *Economic Injury
(EIDL)Loan Application Deadline Date:* 2/16/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as aresult of the Administrator's disaster declaration applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: *Primary Counties:* Essex *Contiguous Counties:* Massachusetts: Middlesex, Suffolk New Hampshire: Hillsborough, Rockingham *The Interest Rates are* : Percent Homeowners with Credit Available Elsewhere 5.750 Homeowners without Credit Available Elsewhere 2.875 Businesses with Credit Available Elsewhere 7.408 Businesses & Small Agricultural Cooperatives without Credit Available Elsewhere 4.000 Other (Including Non-Profit Organizations) with Credit Available Elsewhere 5.000 Businesses and Non-Profit Organizations without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 10466 5 and for economic injury is 10467 0. The States which received an EIDL Declaration # are Massachusetts, New Hampshire. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Dated: May 16, 2006. Hector V. Barreto, Administrator. [FR Doc. E6-7810 Filed 5-22-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10322 and #10323] Texas Disaster Number TX-00097 AGENCY: U.S. Small Business Administration. ACTION: Amendment 9. SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-1624-DR), dated January 11, 2006. *Incident:* Extreme Wildfire Threat. *Incident Period:* 11/27/2005 and continuing through 5/14/2006. DATES: *Effective Date:* 5/14/2006. *Physical Loan Application Deadline Date:* 5/30/2006. *EIDL Loan Application Deadline Date:* 10/11/2006. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the President's major disaster declaration for the State of Texas, dated 1/11/2006, is hereby amended to establish the incident period for this disaster as beginning 11/27/2005 and continuing through 5/14/2006. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Cheri L. Cannon, Acting Associate Administrator for Disaster Assistance. [FR Doc. E6-7811 Filed 5-22-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION CommunityExpress Pilot Program AGENCY: U.S. Small Business Administration (SBA). ACTION: Notice of Pilot Program extension. SUMMARY: This notice announces the extension of SBA's CommunityExpress Pilot Program until December 31, 2006. This extension will allow time for SBA to complete its decision making regarding potential modifications and enhancements to the Program. DATES: The CommunityExpress Pilot Program is extended under this notice until December 31, 2006. FOR FURTHER INFORMATION CONTACT: Charles Thomas, Office of Financial Assistance, U.S. Small Business Administration, 409 Third Street, SW., Washington, DC 20416; Telephone
(202)205-6490; *charles.thomas@sba.gov.* SUPPLEMENTARY INFORMATION: The CommunityExpress Pilot Program was established in 1999 as a subprogram of the Agency's SBA *Express* Pilot Program. Lenders approved for participation in CommunityExpress are authorized to use the expedited loan processing procedures in place for the SBA *Express* Pilot Program, but the loans approved under this Program must be to distressed or underserved markets. To encourage lenders to make these loans, SBA provides its standard 75-85 percent guaranty, which contrasts to the 50 percent guaranty the Agency provides under SBA *Express* . However, under CommunityExpress, participating lenders must arrange and, when necessary, pay for appropriate technical assistance for any borrowers under the program. Maximum loan amounts under this Program are limited to $250,000. SBA previously extended CommunityExpress until November 30, 2005 to consider possible changes and enhancements to the Program (70 FR 56962). The further extension of this Program until December 31, 2006, will allow SBA to more fully evaluate the results and impact of the Program and to consider possible changes and enhancements to the Program. It will also allow SBA to further consult with its lending partners and the small business community about the Program. (Authority: 13 CFR 120.3) James E. Rivera, Associate Administrator for Financial Assistance. [FR Doc. E6-7809 Filed 5-22-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION Export Express Pilot Program AGENCY: U.S. Small Business Administration (SBA). ACTION: Notice of Pilot Program extension. SUMMARY: This notice announces the extension of SBA's Export Express Pilot Program until December 31, 2006. This extension will allow time for SBA to complete its decision making regarding potential modifications and enhancements to the Program. DATES: The Export Express Pilot Program is extended under this notice until December 31, 2006. FOR FURTHER INFORMATION CONTACT: Charles Thomas, Office of Financial Assistance, U.S. Small Business Administration, 409 Third Street, Washington, DC 20416; Telephone
(202)205-6490; *charles.thomas@sba.gov.* SUPPLEMENTARY INFORMATION: The Export Express Pilot Program was established as a subprogram of the agency's SBA *Express* Pilot Program. It was established in 1998 to assist current and prospective small exporters, particularly those needing revolving lines of credit. Export Express generally conforms to the streamlined procedures of SBA *Express* , although it carries SBA's full 75-85 percent guaranty. The maximum loan amount under this Program is limited to $250,000. SBA previously extended Export Express until November 30, 2005 (70 FR 56962), and then again to May 31, 2006 (70 FR 71363), to consider possible changes and enhancements to the Program. The further extension of this Program until December 31, 2006, will allow SBA to more fully evaluate the results and impact of the Program and to consider possible changes and enhancements to the Program. it will also allow SBA to further consult with its lending partners and the small business community about the Program. (Authority: 13 CFR 120.3) James E. Rivera, Associate Administrator for Financial Assistance. [FR Doc. 06-4756 Filed 5-22-06; 8:45 am]
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U.S. Code
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- Definitions and application§ 78c
- National securities exchanges§ 78f
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- National system for clearance and settlement of securities transactions§ 78q–1
3 references not yet in our index
- 17 CFR 240.19
- 15 USC 78
- 15 USC 78(b)
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