Notices. Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 24(d) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act
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/register/2006/05/24/06-4868·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 3110-01-M SECURITIES AND EXCHANGE COMMISSION Release No. IC-27323; 812-12354] ProShares Trust, et al.; Notice of Application May 18, 2006. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 24(d) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act. *Applicants:* ProShares Trust (“Trust”), ProShare Advisors LLC (“ProShare Advisors”), and SEI Investments Distribution Company (“Distributor”). *Summary of Application:* Applicants request an order that would permit:
(a)Series of an open-end management investment company to issue shares of limited redeemability;
(b)secondary market transactions in the shares of the series to occur at negotiated prices on the American Stock Exchange LLC (“Amex”), or another national securities exchange as defined in section 2(a)(26) of the Act, or on The NASDAQ Stock Market LLC (each, an “Exchange”);
(c)dealers to sell shares of the series of the Trust to purchasers in the secondary market unaccompanied by a prospectus, when prospectus delivery is not required by the Securities Act of 1933 (the “Securities Act”); and
(d)affiliated persons of a series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of aggregations of the series' shares. *Filing Dates:* The application was filed on December 5, 2000, and amended on January 7, 2005, June 22, 2005, July 6, 2005, and March 29, 2006. *Hearing or Notification of Hearing:* An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on June 12, 2006, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. Applicants: ProShares Trust and ProShare Advisors, 7501 Wisconsin Avenue, Suite 1000, Bethesda, MD 20814; SEI Investments Distribution Company, One Freedom Valley Drive, Oaks, PA 19456. FOR FURTHER INFORMATION CONTACT: John Yoder, Senior Counsel, at
(202)551-6878, Julia Kim Gilmer, Branch Chief, at
(202)551-6871, or Michael W. Mundt, Senior Special Counsel, at
(202)551-6820 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Desk, 100 F Street, NE., Washington, DC 20549-0102 (tel. 202-551-5850). Applicants' Representations 1. The Trust is an open-end management investment company registered under the Act and organized as a Delaware statutory trust. The Trust intends to offer multiple series (each series, a “Fund”) with different types of investment objectives as further described below. ProShare Advisors is registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”). Each Fund will be advised by ProShare Advisors or an entity controlled by or under common control with ProShare Advisors (each, an “Adviser”). The Adviser may enter into subadvisory agreements with additional investment advisers to act as subadviser to the Trust and any of its series. Any subadviser to the Trust or a Fund will be registered under the Advisers Act. The Distributor is registered as a broker-dealer under the Securities Exchange Act of 1934 (“Exchange Act”) and will act as the distributor and principal underwriter for each Fund's shares (“ETS”). 2. The Funds will seek daily investment results, before fees and expenses, that:
(a)Correspond to the return of various equity securities indices (“Conventional Funds”);
(b)provide 125%, 150% or 200% of the return of equity securities indices (“Leveraged Funds”); or
(c)move in the opposite direction of the performance of equity securities indices in multiples of 100%, 125%, 150% or 200% (“Inverse Funds”). Of the twelve initial Funds, four will be Leveraged Funds and eight will be Inverse Funds. 1 1 The Leveraged Funds will seek to return 200% of the return of the S&P 500 Index, the Nasdaq100 Index, the Dow Jones Industrial Average and the S&P MidCap400 Index. The Inverse Funds will seek to return the inverse, or 200% of the inverse, of the same indices. The Trust may offer additional Funds based on these indices and the following indices (collectively, the “Underlying Indices”): Russell 2000 Index, S&P Small Cap 600 Index, Nasdaq Composite Index, S&P 500 BARRA Value Index, S&P 500 BARRA Growth Index, S&P MidCap400 BARRA Value Index, S&P MidCap 400/BARRA Growth Index, S&P SmallCap 600/Barra Value Index, S&P SmallCap 600/BARRA Growth Index, Dow Jones U.S. Airlines Index, Dow Jones U.S. Banks Index, Dow Jones U.S. Basic Materials Sector Index, Dow Jones U.S. Biotechnology Index, Dow Jones U.S. Composite Internet Index, Dow Jones U.S. Consumer Services Index, Dow Jones U.S. Consumer Goods Index, Dow Jones U.S. Oil & Gas Index, Dow Jones U.S. Financials Index, Dow Jones U.S. Health Care Index, Dow Jones U.S. Industrials Index, Dow Jones U.S. Leisure Goods Index, Dow Jones U.S. Oil Equipment, Services & Distribution Index, Dow Jones U.S. Pharmaceuticals Index, Dow Jones U.S. Precious Metals Index, Dow Jones U.S. Real Estate Index, Dow Jones U.S. Semiconductors Index, Dow Jones U.S. Technology Index, Dow Jones U.S. Telecommunications Index, Dow Jones U.S. Utilities Index, Dow Jones U.S. Mobile Communications Index. No index provider is or will be an affiliated person, as defined in section 2(a)(3) of the Act, or an affiliated person of an affiliated person, of the Trust, a promoter, the Adviser, any sub-adviser to any Fund, or the Distributor. 3. In addition to equity securities, the Funds may invest in short-term debt instruments that meet the definition of “Eligible Security” in rule 2a-7 under the Act (“Money Market Instruments”), and in futures contracts, options, equity caps, collars and floors, swap agreements, forward contracts, and reverse repurchase agreements (collectively, “Financial Instruments”) in order to meet their investment objectives. A Conventional Fund will invest 95% or more of its total assets in the equity securities contained in the relevant Underlying Index and may invest up to 5% of its total assets in Financial Instruments and Money Market Instruments. Leveraged Funds will invest 85% or more of their total assets in equity securities contained in the relevant Underlying Index and up to 15% of their total assets in Financial Instruments and Money Market Instruments. The Inverse Funds will only invest in Financial Instruments and Money Market Instruments; they will not invest in equity securities. 4. The Adviser will seek to achieve the investment objectives of the Funds by using a mathematical model that takes into account a variety of specified criteria, the most important of which are:
(a)The net assets in each Fund's portfolio at the end of each trading day;
(b)the amount of required exposure to the Underlying Index; and
(c)the positions in equity securities, Financial Instruments and Money Market Instruments at the beginning of each trading day. On each day that a Fund is open for business (“Business Day”) the full portfolio holdings of each Fund will be disclosed on the Web site of the Trust and/or the relevant Exchange. The portfolio holdings information disclosed each Business Day will form the basis for that Fund's net asset value (“NAV”) calculation as of 4 p.m. that day and will reflect portfolio trades made on the immediately preceding Business Day. Intra-day values of each Underlying Index will be disseminated every 15 seconds throughout the trading day. 5. Applicants expect that each Conventional Fund will have an annual tracking error of less than 5% (excluding the impact of expenses and interest, if any) to the performance of its Underlying Index. For the Leveraged Fund and Inverse Funds, applicants expect a daily tracking error of less than 5% (excluding the impact of expenses and interest, if any) to the specified multiple or inverse multiple, respectively, of the performance of the relevant Underlying Index. 6. Each Fund will issue ETS in aggregations of 25,000 to 50,000 ETS (each, a “Creation Unit”). Applicants expect the price of a Creation Unit to be a minimum of $1 million. Creation Units may be purchased only by or through the Distributor or a party that has entered into a participant agreement with the Distributor (an “Authorized Participant”). An Authorized Participant must be either
(a)a broker-dealer or other participant in the continuous net settlement system of the National Securities Clearing Corporation, a clearing agency that is registered with the Commission, or
(b)a participant in the Depository Trust Company (“DTC”) system. 7. Creation Units of Conventional and Leveraged Funds generally will be purchased and redeemed in exchange for an “in-kind” transfer of securities and cash (“In-Kind Payment”). Inverse Funds will generally be purchased and redeemed entirely for cash because of the limited transferability of Financial Instruments. 2 An investor making an In-Kind Payment will be required to transfer to the Trust a “Deposit Basket” consisting of:
(a)A basket of equity securities consisting of some or all of the securities in the relevant Underlying Index or equivalent equity securities selected by the Adviser to correspond to the performance of the Underlying Index (the “Deposit List”); and
(b)a cash amount equal to the differential, if any, between the market value of the equity securities in the Deposit Basket and the NAV per Creation Unit (“Balancing Amount”). 3 An investor purchasing a Creation Unit from a Fund will be charged a fee (“Transaction Fee”) to prevent the dilution of the interests of the remaining shareholders resulting from the Fund incurring costs in connection with the purchase of the Creation Units. 4 The maximum Transaction Fee and any variations or waivers of the Transaction Fee will be disclosed in the prospectus for ETS (“Prospectus”) and the method of determining the Transaction Fees will be disclosed in the Prospectus and/or statement of additional information (“SAI”). 8. All orders to purchase Creation Units must be placed on a Business Day with the Distributor. The Distributor also will be responsible for delivering the Prospectus to those persons purchasing Creation Units and for maintaining records of the orders and acknowledgements of acceptance for orders. 2 The Trust may also accept and deliver all-cash payments for the purchase and redemption of Creation Units of any Fund in certain limited circumstances. 3 On each Business Day, prior to the opening of trading on the New York Stock Exchange, the Trust's index receipt agent will make available the list of the names and the required number of shares of each equity security included in the current Deposit Basket and the Balancing Amount for each Fund. Such Deposit Basket will apply to all purchases of Creation Units until a new Deposit Basket for a Fund is announced. The Amex will disseminate every 15 seconds during regular Amex trading hours, through the facilities of the Consolidated Tape Association, an amount representing on a per share basis the sum of the current value of the securities on the Deposit List, and the estimated amount of cash and Money Market Instruments held in the portfolio of a Conventional or Leveraged Fund. If such funds hold Financial Instruments, the amount would also include, on a per share basis, the marked-to-market gains or losses of the Financial Instruments held by the Fund. For Inverse Funds, the Amex will disseminate an amount representing, on a per share basis, the estimated amount of cash and Money Market Instruments, and the marked-to-market gains or losses of the Fund's Financial Instruments. 4 A purchaser permitted to substitute cash for certain securities on the Deposit List may be assessed a higher transaction Fee to cover the cost of purchasing such securities, including operational processing and brokerage costs, and part or all of the spread between the expected bid and offer side of the market relating to such securities. 9. Persons purchasing Creation Units from a Fund may hold the ETS or sell some or all of them in the secondary market. Shares of the Funds will be listed on an Exchange and trade in the secondary market in the same manner as other exchange-traded funds. It is expected that one or more Exchange members will act as a specialist or market maker and maintain a market on the listing Exchange for ETS. 5 The price of ETS traded on an Exchange will be based on a current bid/offer market. The initial trading price for each ETS of each Fund will fall in the range of $50 to $250. Transactions involving the sale of ETS in the secondary market will be subject to customary brokerage commissions and charges. 5 The listing requirements established by The NASDAQ Stock Market LLC require that at least two market makers be registered in ETS in order for the ETS to maintain a listing. Registered market makers must make a continuous two-sided market in a listing or face regulatory sanctions. 10. Applicants expect that purchasers of Creation Units will include institutional and retail investors, arbitrageurs, traders, financial advisors, portfolio managers and other market participants. 6 An Exchange specialist or market maker, in providing for a fair and orderly secondary market for ETS, also may purchase or redeem Creation Units for use in its market-making activities. Applicants expect that the market price of ETS will be disciplined by arbitrage opportunities created by the ability to purchase or redeem Creation Units at their NAV, which should ensure that the market price of ETS at or close to 4 p.m. stays close to the NAV on that Business Day. 6 ETS will be registered in book-entry form only. DTC or its nominee will be the record or registered owner of all outstanding ETS. DTC or its participants will maintain records reflecting the beneficial owners of ETS. 11. ETS will not be individually redeemable. ETS will only be redeemable in Creation Units through the Distributor, which will act as the Trust's agent for redemption. To redeem, an investor must accumulate enough ETS to constitute a Creation Unit. An investor redeeming a Creation Unit of a Conventional or Leveraged Fund generally will receive an “in-kind” payment comprised of equity securities published by the Trust's index receipt agent (the “Redemption List”) plus a Balancing Amount equal to the difference between the market value of the equity securities on the Redemption List and the NAV of the ETS being redeemed. Redemptions of Creation Units for Inverse Funds will occur entirely in cash. A redeeming investor will pay a Transaction Fee to offset the transactional expenses associated with redeeming Creation Units. 12. Applicants state that neither the Trust nor any Fund will be advertised, marketed or otherwise held out as a “mutual fund.” The term “mutual fund” will not be used in the Prospectus except to compare and contrast the Trust or a Fund with conventional mutual funds. In all marketing materials where the features or methods of obtaining, buying, or selling Creation Units are described or where there is reference to redeemability, applicants will include a prominent statement to the effect that individual ETS are not redeemable except in Creation Units. The same approach will be followed in connection with reports and other communications to shareholders, as well as any other investor education materials issued or circulated in connection with ETS. The Trust will provide copies of its annual and semi-annual shareholder reports to DTC participants for distribution to beneficial holders of ETS. Applicants' Legal Analysis 1. Applicants request an order under section 6(c) of the Act granting an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 24(d) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act granting an exemption from sections 17(a)(1) and 17(a)(2) of the Act. 2. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provision of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Sections 5(a)(1) and 2(a)(32) of the Act 3. Section 5(a)(1) of the Act defines an “open-end company” as a management investment company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the Act defines a redeemable security as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately his proportionate share of the issuer's current net assets, or the cash equivalent. Because ETS will not be individually redeemable, applicants request an order that would permit the Trust to register as an open-end management investment company and issue ETS of Funds that are redeemable in Creation Units only. Applicants state that investors may always redeem ETS in Creation Units from the Trust. Applicants further state that because the market price of ETS will be disciplined by arbitrage opportunities, investors should be able to sell ETS in the secondary market at or close to 4 p.m. on a Business Day at prices that do not vary substantially from the NAV on that Business Day. Section 22(d) of the Act and Rule 22c-1 Under the Act 4. Section 22(d) of the Act, among other things, prohibits a dealer from selling a redeemable security, which is currently being offered to the public by or through a principal underwriter, except at a current public offering price described in the prospectus. Rule 22c-1 under the Act generally requires that a dealer selling, redeeming, or repurchasing a redeemable security do so only at a price based on its NAV. Applicants state that secondary market trading in ETS will take place at negotiated prices, not at a current offering price described in the Prospectus as required by section 22(d) of the Act, and not at a price based on NAV as required by rule 22c-1 under the Act. Applicants request an exemption under section 6(c) from these provisions. 5. Applicants assert that the concerns sought to be addressed by section 22(d) of the Act and rule 22c-1 under the Act with respect to pricing are equally satisfied by the proposed method of pricing ETS. Applicants maintain that while there is little legislative history regarding section 22(d), its provisions, as well as those of rule 22c-1, appear to have been intended to
(a)prevent dilution caused by certain riskless-trading schemes by principal underwriters and contract dealers,
(b)prevent unjust discrimination or preferential treatment among buyers, and
(c)ensure an orderly distribution of shares by eliminating price competition from dealers offering shares at less than the published sales price and repurchasing shares at more than the published redemption price. 6. Applicants believe that none of these purposes will be thwarted by permitting ETS to trade in the secondary market at negotiated prices. Applicants state that
(a)secondary market trading in ETS does not involve the Trust's assets and cannot result in dilution of an investment in ETS, and
(b)to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand, not as a result of unjust or discriminatory manipulation. Therefore, applicants assert that secondary market transactions in ETS will not lead to discrimination or preferential treatment among purchasers. Finally, applicants contend that the proposed distribution system will be orderly because competitive forces in the marketplace will ensure that the difference between the market price of ETS and their NAV remains narrow. Section 24(d) of the Act 7. Section 24(d) of the Act provides, in relevant part, that the prospectus delivery exemption provided to dealer transactions by section 4(3) of the Securities Act does not apply to any transaction in a redeemable security issued by an open-end investment company. Applicants request an exemption from section 24(d) to permit dealers selling ETS to rely on the prospectus delivery exemption provided by section 4(3) of the Securities Act. 7 7 Applicants do not seek relief from the prospectus delivery requirement for non-secondary market transactions, such as transactions in which an investor purchases ETS in Creations Units from the Issuer or an underwriter. Applicants state that persons purchasing Creation Units will be cautioned in the Prospectus that some activities on their part may, depending on the circumstances, result in their being deemed statutory underwriters and subject them to the prospectus delivery and liability provisions on the Securities Act. The Prospectus will state that whether a person is an underwriter depends upon all the facts and circumstances pertaining to that person's activities. For example, a broker-dealer firm and/or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into the constituent ETS, and sells ETS directly to its customers, or if it chooses to couple the purchase of a supply of new ETS with an active selling effort involving solicitation of secondary market demand for ETS. The Prospectus also will state that dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary market trading transactions), and thus dealing with ETS that are part of an “unsold allotment” within the meaning of section 4(3)(C) of the Securities Act, would be unable to take advantage of the prospectus delivery exemption provided by section 4(3) of the Securities Act. 8. Applicants state that secondary market investors will regard ETS in a manner similar to other securities, including closed-end fund shares that are listed, bought and sold on an Exchange. Applicants note that shares of closed-end fund investment companies are sold in the secondary market unaccompanied by a prospectus. 9. Applicants contend that ETS, as a listed security, merit a reduction in the compliance costs and regulatory burdens resulting from the imposition of prospectus delivery obligations in the secondary market. Because ETS will be exchange-listed, prospective investors will have access to several types of market information about ETS. Applicants state that information regarding market price and volume will be continually available on a real-time basis throughout the day from the relevant Exchange, automated quotation systems, published or other public sources or on-line information services. Applicants expect that the previous day's closing price and volume information for ETS also will be published daily in the financial section of newspapers. In addition, the Trust expects to maintain a We bsite that includes quantitative information updated on a daily basis, including, for each Fund, daily trading volume, the NAV and the reported closing price. The Web site will also include, for each Fund, a calculation of the premium or discount of the reported closing price against NAV, and data in chart format displaying the frequency distribution of discounts and premiums of the reported closing price against the NAV, within appropriate ranges, for each of the four previous calendar quarters. 10. Investors also will receive a product description (“Product Description”) describing the Trust, the Funds and the ETS. Applicants state that, while not intended as a substitute for a Prospectus, the Product Description will contain information about ETS that is tailored to meet the needs of investors purchasing ETS in the secondary market. Sections 17(a)(1) and
(2)of the Act 11. Section 17(a) of the Act generally prohibits an affiliated person of a registered investment company, or an affiliated person of such a person, from selling any security to or purchasing any security from the company. Section 2(a)(3) of the Act defines “affiliated person” to include any person directly or indirectly owning, controlling, or holding with power to vote 5% or more of the outstanding voting securities of the other person and any person directly or indirectly controlling, controlled by, or under common control with, the other person. Section 2(a)(9) of the Act provides that a control relationship will be presumed where one person owns 25% or more of another person's voting securities. Applicants state that one or more holders of Creation Units could own more than 5% of a Fund, or in excess of 25% of that Fund, and could be deemed affiliated with the Trust or such Fund under section 2(a)(3)(A) or 2(a)(3)(C) of the Act. Also, an Exchange specialist or market maker for ETS of any Fund might accumulate, from time to time, more than 5% or in excess of 25% of that Fund's ETS. Applicants request an exemption from section 17(a) of the Act under sections 6(c) and 17(b) of the Act, to permit persons that are affiliated persons of the Funds solely by virtue of a 5% or 25% ownership interest (or affiliated persons of such affiliated persons that are not otherwise affiliated with the Fund) to purchase and redeem Creation Units through “in-kind” transactions. 12. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) of the Act if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and the proposed transaction is consistent with the policies of the registered investment company and the general provisions of the Act. Applicants contend that no useful purpose would be served by prohibiting the affiliated persons of a Fund described above from purchasing or redeeming Creation Units through “in-kind” transactions. The deposit and redemption procedures for “in-kind” purchases and redemptions of Creations Units will be effected in exactly the same manner for all purchases and redemptions. The securities contained in the “in-kind” transactions will be valued in the same manner and according to the same standards as the securities held by the relevant Fund. Therefore, applicants state that “in-kind” purchases and redemptions will afford no opportunity for the affiliated persons described above to effect a transaction detrimental to the other holders of its ETS. Applicants also believe that “in-kind” purchases and redemptions will not result in abusive self-dealing or overreaching by affiliated persons of the Funds. Applicants' Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. Applicants will not register a series of the Trust not identified herein, by means of filing a post-effective amendment to the Trust's registration statement or by any other means, unless applicants have requested and received with respect to such series, either
(a)exemptive relief from the Commission, or
(b)a no-action letter from the Division of Investment Management of the Commission. 2. The Prospectus and the Product Description will clearly disclose that, for purposes of the Act, ETS are issued by the Funds and that the acquisition of ETS by investment companies is subject to the restrictions of section 12(d)(1) of the Act, except as permitted by an exemptive order that permits registered investment companies to invest in a Fund beyond the limits in section 12(d)(1), subject to certain terms and conditions, including that the registered investment company enter into an agreement with the Fund regarding the terms of the investment. 3. As long as the Trust operates in reliance on the requested order, the ETS will be listed on an Exchange. 4. Neither the Trust nor any Fund will be advertised or marketed as an open-end fund or a mutual fund. The Prospectus will prominently disclose that ETS are not individually redeemable shares and will disclose that the owners of the ETS may acquire those ETS from the Trust and tender those ETS for redemption to the Trust in Creation Units only. Any advertising material that describes the purchase or sale of Creation Units or refers to redeemability will prominently disclose that ETS are not individually redeemable and that owners of ETS may acquire those ETS from the Trust and tender those ETS for redemption to the Trust in Creation Units only. 5. Before a Fund may rely on the order, the Commission will have approved, pursuant to rule 19b-4 under the Exchange Act, an Exchange rule or an amendment thereto, requiring Exchange members and member organizations effecting transactions in ETS to deliver a Product Description to purchasers of ETS. 6. The Web site for the Trust, which will be publicly accessible at no charge, will contain the following information, on a per ETS basis, for each Fund:
(a)The prior Business Day's NAV and the reported closing price, and a calculation of the premium or discount of such price against such NAV; and
(b)data in chart format displaying the frequency distribution of discounts and premiums of the daily closing price against the NAV, within appropriate ranges, for each of the four previous calendar quarters (or the life of the Fund, if shorter). In addition, the Product Description for each Fund will state that the Trust's Web site has information about the premiums and discounts at which the ETS have traded. 7. The Prospectus and annual report for each Fund will also include:
(a)The information listed in condition 6(b),
(i)in the case of the Prospectus, for the most recently completed year (and the most recently completed quarter or quarters, as applicable), and
(ii)in the case of the annual report, for the immediately preceding five years (or the life of the Fund, if shorter); and
(b)the following data, calculated on a per ETS basis for one, five and ten year periods (or life of the Fund, if shorter),
(i)the cumulative total return and the average annual total return based on NAV and closing price, and
(ii)the cumulative total return of the relevant Underlying Index. By the Commission. J. Lynn Taylor, Assistant Secretary. [FR Doc. E6-7913 Filed 5-23-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 27324; 812-13280] WisdomTree Investments, Inc. et al.; Notice of Application May 18, 2006. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d), 22(e), and 24(d) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act. Summary of Application: Applicants request an order granting relief (“ETF Relief”) to permit
(a)open-end management investment companies, the series of which consist of the component securities of certain domestic and international equity securities indexes, to issue shares (“Shares”) that can be redeemed only in large aggregations (“Creation Units”),
(b)secondary market transactions in Shares to occur at negotiated prices on a national securities exchange, as defined in section 2(a)(26) of the Act (“Exchange”),
(c)dealers to sell Shares to purchasers in the secondary market unaccompanied by a prospectus when prospectus delivery is not required by the Securities Act of 1933 (“Securities Act”),
(d)certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of a Creation Unit for redemption, and
(e)certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units. Applicants request that the order also grant relief (“12(d)(1) Relief”) to permit certain registered management investment companies and unit investment trusts (“UITs”) outside of the same group of investment companies as the series to acquire Shares. Applicants: WisdomTree Investments, Inc. (“WTI”), WisdomTree Asset Management, Inc. (“WTA” or “Advisor”), and WisdomTree Trust (“Trust”). Filing Dates: The application was filed on April 19, 2006, and amended on May 8, 2006. Applicants have agreed to file an additional amendment during the notice period, the substance of which is reflected herein. Hearing or Notification of Hearing: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on June 9, 2006, and should be accompanied by proof of service on applicants, in the form of an affidavit, or for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicants, 48 Wall Street, Suite 1100, New York, NY 10005. FOR FURTHER INFORMATION CONTACT: Keith A. Gregory, Senior Counsel, at
(202)551-6815, or Stacy L. Fuller, Branch Chief, at
(202)551-6821 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Public Reference Desk, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-0102 (telephone
(202)551-5850). Applicants' Representations 1. The Trust, a Delaware business trust, is registered under the Act as an open-end series management investment company. Applicants currently intend to introduce 20 series (“Initial Funds”) of the Trust and may establish additional series in the future (“Future Funds,” and together with the Initial Funds, “Funds”). 1 The Advisor, a subsidiary of WTI, is registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”) and will serve as the investment adviser to each Fund. 2 Each Fund may also be subadvised by a separate investment adviser within the meaning of section 2(a)(20)(B) of the Act that is not otherwise an affiliated person of the Advisor or the Funds and is registered as an investment adviser under the Advisers Act (“Subadvisor”). 3 ALPS Distributors, Inc., a broker-dealer registered under the Securities Exchange Act of 1934 (“Exchange Act”), will serve as principal underwriter for the Funds (“Distributor”). 1 All parties that currently intend to rely on the requested order are named as applicants. Any other party that relies on the order in the future will comply with the terms and conditions of the application. 2 Neither WTI or WTA nor any affiliated person of WTI or WTA is or will be a broker or dealer. 3 BNY Investment Advisors will serve as Subadvisor to the Initial Funds. 2. Certain Funds (“Domestic Funds”) will invest in a portfolio of equity securities (“Portfolio Securities”) selected to correspond generally to the price and yield performance of a specified domestic equity securities index (“Domestic Index”), while other Funds (“International Funds”) will invest in Portfolio Securities selected to correspond generally to the price and yield performance of an international equity securities index (“International Index,” and together with Domestic Indexes, “Indexes”). 4 The Indexes are based on a proprietary, rules-based methodology developed by WTI to define the dividend-paying segments of the domestic and international markets (“Methodology”). The Methodology, including the rules which govern the inclusion and weighting of securities in the Indexes, will be publicly available, including on the Funds' Web site (“Web site”), along with the identities and weightings of the component securities of each Index (“Component Securities”) and the Portfolio Securities of each Fund. 5 While WTI may change the rules of the Methodology in the future, WTI does not intend to do so. Any change to the Methodology would not take effect until WTI had given the public at least 60 days advance notice of the change and had given reasonable notice of the change to the Calculation Agent. The “Calculation Agent” is the entity that, pursuant to an agreement with WTI, is solely responsible for all Index calculation, maintenance, dissemination and reconstitution activities. 6 The Calculation Agent is not, and will not be, an affiliated person, or an affiliated person of an affiliated person, of the Funds, Advisor, Subadvisor, Distributor or promoter of the Funds. 7 4 Sixteen of the Initial Funds are Domestic Funds. The other Initial Funds are International Funds. 5 WTI will license the Indexes to the Advisor for use in connection with the Funds. The license will specifically state that the Advisor must provide the use of the Indexes to the Funds at no cost. 6 The Calculation Agent will determine the number, type and weight of securities that comprise each Index and perform, or cause to be performed, all other calculations that are necessary to determine the proper constitution of each Index. The Calculation Agent will not disclose any information about any Index's constitution to WTI, WTA, the Subadvisor or Funds prior to the publication of such information on the Web site. However, an employee of WTI and/or WTA will monitor the Methodology and the Indexes (“Index Administrator”), and other employees of WTI and/or WTA may be appointed to assist the Index Administrator (“Index Staff,” and together with the Index Administrator, “Index Provider”). 7 Bloomberg L.P. will serve as Calculation Agent for the Initial Funds. 3. Applicants state that the Index Provider will not have any responsibility for the management of the Funds. In addition, applicants have adopted policies and procedures that, among other things, are designed to limit or prohibit communications between the Index Provider and other employees of WTI and WTA (“Firewalls”). Among other things, the Firewalls prohibit the Index Provider from disseminating non-public information about the Indexes, including potential changes to the Methodology, to, among others, the employees of WTA and the Subadvisor responsible for managing the Funds (“advisory personnel”). The Firewalls also prohibit WTA advisory personnel from sharing any non-public information about the Funds with the Index Provider. Further, WTA and the Subadvisor have, pursuant to rule 206(4)-7 under the Advisers Act, written policies and procedures designed to prevent violations of the Advisers Act and the rules under the Advisers Act. WTI, WTA, the Subadvisor and Distributor also have adopted or will adopt a Code of Ethics as required under rule 17j-1 under the Act, which contains provisions reasonably necessary to prevent Access Persons (as defined in rule 17j-1) from engaging in any conduct prohibited in rule 17j-1. In addition, WTI, WTA and the Subadvisor have adopted or will adopt policies and procedures to detect and prevent insider trading as required under section 204A of the Advisers Act, which are reasonably designed taking into account the nature of their business, to prevent the misuse in violation of the Advisers Act, Exchange Act, or rules and regulations under the Advisers Act and Exchange Act, of material non-public information. 4. Any Future Fund will be advised by the Advisor or an entity controlling, controlled by or under common control with the Advisor and be in the same “group of investment companies,” as defined in section 12(d)(1)(G)(ii) of the Act, as the Initial Funds. Applicants will not offer a Future Fund unless either they have requested and received with respect to such Future Fund exemptive relief from the Commission or a no-action position from the staff of the Commission, or the Future Funds will be listed on an Exchange without the need for a filing under rule 19b-4 under the Exchange Act. In addition, any Future Fund that relies on any order granted pursuant to this application will comply with the terms and conditions of the application, including the following:
(a)The Methodology will be publicly available, including on the Web site;
(b)once the rules of the Methodology are established, applicants may change them only after giving the public at least 60 days advance notice of any change on the Web site;
(c)applicants have Firewalls;
(d)the Calculation Agent will not be an affiliated person, or an affiliated person of an affiliated person, of the Funds, Advisor, Subadvisor, Distributor or promoter of the Funds; and
(e)the Indexes will be reconstituted on a fixed periodic basis no more frequently than quarterly. 5. The investment objective of each Fund will be to provide investment results that generally correspond, before fees and expenses, to the price and yield performance of the relevant Index. The intra-day value of each Index will be disseminated every 15 seconds throughout the trading day over the Consolidated Tape on each day that the Funds are open, which includes any day that the Funds are required by to be open under section 22(e) of the Act (“Business Day”). In seeking to achieve its investment objective, each Fund will utilize either a replication or a representative sampling strategy. A Fund using a replication strategy generally will invest in the Component Securities of the relevant Index in the same approximate proportions as in the relevant Index. In certain circumstances, such as when a Component Security is illiquid or there are practical difficulties or substantial costs involved in holding every security in an Index, a Fund may use a representative sampling strategy pursuant to which it will invest in some but not all of the Component Securities. 8 Applicants anticipate that a Fund that utilizes a representative sampling strategy will not track the performance of its Index with the same degree of accuracy as an investment vehicle that invests in every Component Security in the same weighting as the Index. Applicants expect that each Fund will have a tracking error relative to the performance of its Index of no more than 5%. 8 Each Fund will invest at least 95% of its assets in Component Securities. Each Fund may invest up to 5% of its assets in securities, which are not Component Securities but which the Advisor or Subadvisor believes will help the Fund track its Underlying Index, including futures, options and swap contracts, cash and cash equivalents, and other investment companies, including other exchange-traded funds within the limits of section 12(d)(1) of the Act. International Funds will have no less than 90% of their assets in Component Securities and may invest up to 10% of their assets in securities that are not Component Securities. In order to reduce any potential for tracking error, the Advisor or Subadvisor will invest such assets in securities that have aggregate investment characteristics (such as market capitalization) and fundamental characteristics (such as return variability, earnings valuation and yield) similar to those of the relevant Index. None of the Indexes will include depository receipts ( *e.g.* , American Depository Receipts) as Component Securities. However, the Advisor or Subadvisor may include depository receipts on the list of Deposit Securities (as defined below) when holding the depository receipt will improve liquidity, tradability or settlement for an International Fund and may treat the depository receipt of a Component Security as a Component Security for purposes of applicants' representations related to the percentage of assets of an International Fund that will be invested in Component Securities. 6. Shares of the Funds will be sold at a price of between $25 and $250 per Share in Creation Units of between 25,000 and 200,000 Shares. All orders to purchase Creation Units must be placed with the Distributor by or through an “Authorized Participant,” an entity that has entered into an agreement with the Distributor and that is either
(a)a participant in the continuous net settlement system of the National Securities Clearing Corporation, a clearing agency registered with the Commission or
(b)a participant in the Depository Trust Company (“DTC,” and such participant, “DTC Participant”). Creation Units generally will be issued in exchange for an in-kind deposit of securities and cash, though a Fund may sell Creation Units on a cash-only basis in limited circumstances. An investor wishing to purchase a Creation Unit from a Fund will have to transfer to the Fund a “Creation Deposit” consisting of:
(a)A portfolio of securities that has been selected by the Advisor or Subadvisor to correspond generally to the performance of the relevant Index (“Deposit Securities”), and
(b)a cash payment to equalize any differences between the market value of the Deposit Securities per Creation Unit and the net asset value (“NAV”) per Creation Unit (“Cash Requirement”). 9 An investor purchasing a Creation Unit from a Fund will be charged a fee (“Transaction Fee”) to prevent the dilution of the interests of the remaining shareholders resulting from the Fund incurring costs in connection with the purchase of the Creation Units. 10 Each Fund will disclose the maximum Transaction Fee in its prospectus (“Prospectus”) and the method of calculating the Transaction Fee in its statement of additional information (“SAI”). None of the Funds will impose a sales load, sales charge or fee under rule 12b-1 under the Act. 9 On each Business Day, prior to the opening of trading on the Exchange where the Fund's Shares are listed (“Listing Exchange”), the Advisor or Subadvisor will make available the list of the names and the required number of shares of each Deposit Security required for the Creation Deposit for the Fund. That Creation Deposit will apply to all purchases of Creation Units until a new Creation Deposit for the Fund is announced. Each Fund reserves the right to permit or require the substitution of an amount of cash in lieu of depositing some or all of the Deposit Securities. The Listing Exchange will disseminate every 15 seconds throughout the trading day over the Consolidated Tape an amount representing, on a per Share basis, the sum of the current value of the Deposit Securities and the estimated Cash Requirement. 10 When a Fund permits a purchaser to substitute cash for Deposit Securities, the purchaser may be assessed a higher Transaction Fee to offset the brokerage and other transaction costs incurred by the Fund to purchase the requisite Deposit Securities. 7. Orders to purchase Creation Units of a Fund will be placed with the Distributor who will be responsible for transmitting orders to the Funds. The Distributor will maintain a record of Creation Unit purchases. The Distributor will be responsible for issuing confirmations of acceptance and furnishing Prospectuses to purchasers of Creation Units. 8. Persons purchasing Creation Units from a Fund may hold the Shares or sell some or all of them in the secondary market. Shares of the Funds will be listed on a Listing Exchange, such as the American Stock Exchange LLC, New York Stock Exchange and Nasdaq Stock Market, Inc. (“Nasdaq”), and traded in the secondary market in the same manner as other equity securities. It is expected that one or more members of the Listing Exchange will act, with respect to Nasdaq, 11 as a market maker (“Market Maker”) or, with respect to any other Exchange, as a specialist (“Specialist”), and maintain a market on the Exchange for the Shares. The price of Shares traded on an Exchange will be based on a current bid/offer market. Purchases and sales of Shares in the secondary market will be subject to customary brokerage commissions and charges. 11 The listing requirements established by Nasdaq require that at least two Market Makers be registered in Shares in order for the Shares to maintain a listing on Nasdaq. Registered Market Makers must make a continuous two-sided market in a listing or face regulatory sanctions. 9. Applicants expect that purchasers of Creation Units will include institutional investors and arbitrageurs. The Market Maker or Specialist, in providing for a fair and orderly secondary market for Shares, also may purchase Creation Units for use in its market-making activities. Applicants expect that secondary market purchasers of Shares will include both institutional and retail investors. 12 Applicants expect that the price at which the Shares trade will be disciplined by arbitrage opportunities created by the ability to continually purchase or redeem Creation Units at their NAV, which should ensure that the Shares will not trade at a material discount or premium in relation to their NAV. 12 Shares will be registered in book-entry form only. DTC or its nominee will be the registered owner of all outstanding Shares. DTC or DTC Participants will maintain records reflecting the beneficial owners of Shares. 10. Shares will not be individually redeemable. Shares will only be redeemable in Creation Units from a Fund. To redeem, an investor will have to accumulate enough Shares to constitute a Creation Unit. Redemption orders must be placed by or through an Authorized Participant. An investor redeeming a Creation Unit generally will receive
(a)a portfolio of securities designated to be delivered for Creation Unit redemptions on the date that the request for redemption is submitted (“Redemption Securities”), which may not be identical to the Deposit Securities required to purchase Creation Units on that date, and
(b)a “Cash Redemption Payment,” consisting of an amount calculated in the same manner as the Cash Requirement. An investor may receive the cash equivalent of a Redemption Security in certain circumstances, such as if the investor is constrained from effecting transactions in the security by regulation or policy. A redeeming investor will pay a Transaction Fee, which is calculated in the same manner as a Transaction Fee payable in connection with purchases of Creation Units. 11. Applicants state that neither the Trust nor any Fund will be marketed or otherwise held out as a traditional open-end investment company or mutual fund. Rather, applicants state that each Fund will be marketed as an “exchange-traded fund,” “investment company,” “fund” and “trust.” All marketing materials that refer to redeemability or describe the method of obtaining, buying or selling Shares will prominently disclose that Shares are not individually redeemable and that Shares may be acquired or redeemed from the Fund in Creation Units only. The same type of disclosure will be provided in the Prospectus, SAI, shareholder reports and investor educational materials issued or circulated in connection with Shares. The Funds will provide copies of their annual and semi-annual shareholder reports to DTC Participants for distribution to beneficial owners of Shares. Applicants' Legal Analysis 1. Applicants request an order under section 6(c) of the Act granting an exemption from sections 2(a)(32), 5(a)(1), 22(d), 22(e), and 24(d) of the Act and rule 22c-1 under the Act, under section 12(d)(1)(J) granting an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act, and under sections 6(c) and 17(b) of the Act granting an exemption from sections 17(a)(1) and 17(a)(2) of the Act. 2. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provision of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security or transaction, or any class or classes thereof, from any of the provisions of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and the proposed transaction is consistent with the policies of the registered investment company and the general provisions of the Act. Sections 5(a)(1) and 2(a)(32) of the Act 3. Section 5(a)(1) of the Act defines an “open-end company” as a management investment company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the Act defines a redeemable security as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately his proportionate share of the issuer's current net assets, or the cash equivalent. Because Shares will not be individually redeemable, applicants request an order that would permit the Trust to register as an open-end management investment company and issue Shares that are redeemable in Creation Units only. Applicants state that investors may purchase Shares in Creation Units and redeem Creation Units from each Fund. Applicants further state that because the market price of Shares will be disciplined by arbitrage opportunities, investors should be able to sell Shares in the secondary market at prices that do not vary substantially from their NAV. Section 22(d) of the Act and Rule 22c-1 Under the Act 4. Section 22(d) of the Act, among other things, prohibits a dealer from selling a redeemable security, which is currently being offered to the public by or through a principal underwriter, except at a current public offering price described in the prospectus. Rule 22c-1 under the Act generally requires that a dealer selling, redeeming or repurchasing a redeemable security do so only at a price based on its NAV. Applicants state that secondary market trading in Shares will take place at negotiated prices, not at a current offering price described in the Prospectus, and not at a price based on NAV. Thus, purchases and sales of Shares in the secondary market will not comply with section 22(d) of the Act and rule 22c-1 under the Act. Applicants request an exemption under section 6(c) from these provisions. 5. Applicants assert that the concerns sought to be addressed by section 22(d) of the Act and rule 22c-1 under the Act with respect to pricing are equally satisfied by the proposed method of pricing Shares. Applicants maintain that the provisions of section 22(d), as well as those of rule 22c-1, appear to have been designed to
(a)prevent dilution caused by certain riskless trading schemes by principal underwriters and contract dealers,
(b)prevent unjust discrimination or preferential treatment among buyers, and
(c)ensure an orderly distribution of investment company shares by eliminating price competition from dealers offering shares at less than the published sales price and repurchasing shares at more than the published redemption price. 6. Applicants believe that none of these purposes will be thwarted by permitting Shares to trade in the secondary market at negotiated prices. Applicants state that
(a)secondary market trading in Shares does not involve the Funds as parties and cannot result in dilution of an investment in Shares, and
(b)to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand. Therefore, applicants assert that secondary market transactions in Shares will not lead to discrimination or preferential treatment among purchasers. Finally, applicants contend that the proposed distribution system will be orderly because arbitrage activity will ensure that the difference between the market price of Shares and their NAV remains narrow. Section 22(e) of the Act 7. Section 22(e) generally prohibits a registered investment company from suspending the right of redemption or postponing the date of payment of redemption proceeds for more than seven days after the tender of a security for redemption. The principal reason for the requested exemption is that settlement of redemptions for the International Funds is contingent not only on the settlement cycle of the United States market, but also on currently practicable delivery cycles in local markets for underlying foreign securities held by the International Funds. Applicants state that local market delivery cycles for transferring certain foreign securities to investors redeeming Creation Units, together with local market holiday schedules, will under certain circumstances require a delivery process in excess of seven calendar days for the International Funds. Applicants request relief under section 6(c) of the Act from section 22(e) to allow the International Funds to pay redemption proceeds up to 12 calendar days after the tender of a Creation Unit for redemption. At all other times and except as disclosed in the relevant Prospectus and/or SAI, applicants expect that each International Fund will be able to deliver redemption proceeds within seven days. 13 With respect to Future Funds based on an International Index, applicants seek the same relief from section 22(e) only to the extent that circumstances similar to those described in the application exist. 13 Rule 15c6-1 under the Exchange Act requires that most securities transactions be settled within three business days of the trade. Applicants acknowledge that no relief obtained from the requirements of section 22(e) will affect any obligations applicants may have under rule 15c6-1. 8. Applicants state that section 22(e) was designed to prevent unreasonable, undisclosed and unforeseen delays in the payment of redemption proceeds. Applicants assert that the requested relief will not lead to the problems that section 22(e) was designed to prevent. Applicants state that the SAI will disclose those local holidays (over the period of at least one year following the date of the SAI), if any, that are expected to prevent the delivery of redemption proceeds in seven calendar days, and the maximum number of days needed to deliver the proceeds for the relevant International Fund. Section 24(d) of the Act 9. Section 24(d) of the Act provides, in relevant part, that the prospectus delivery exemption provided to dealer transactions by section 4(3) of the Securities Act does not apply to any transaction in a redeemable security issued by an open-end investment company. Applicants request an exemption from section 24(d) to permit dealers selling Shares to rely on the prospectus delivery exemption provided by section 4(3) of the Securities Act. 14 14 Applicants state that they do not seek relief from the prospectus delivery requirement for non-secondary market transactions, such as purchases of Shares from the Funds or an underwriter. Applicants state that the Prospectus will caution persons purchasing Creation Units that some activities on their part, depending on the circumstances, may result in their being deemed statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act. For example, a broker-dealer firm and/or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into the constituent Shares and sells them directly to its customers, or if it chooses to couple the creation of new Shares with an active selling effort involving solicitation of secondary market demand for Shares. The Prospectus will state that whether a person is an underwriter depends upon all the facts and circumstances pertaining to that person's activities. The Prospectus also will state that dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary market trading transactions), and thus dealing with Shares that are part of an “unsold allotment” within the meaning of section 4(3)(C) of the Securities Act, would be unable to take advantage of the prospectus delivery exemption provided by section 4(3) of the Securities Act. 10. Applicants state that Shares will be listed on a Listing Exchange and will be traded in a manner similar to other equity securities, including the shares of closed-end investment companies. Applicants note that dealers selling shares of closed-end investment companies in the secondary market generally are not required to deliver a prospectus to the purchaser. Applicants contend that Shares, as a listed security, merit a reduction in the compliance costs and regulatory burdens resulting from the imposition of prospectus delivery obligations in the secondary market. Because Shares will be exchange-listed, prospective investors will have access to several types of market information about Shares. Applicants state that information regarding market price and volume will be continually available on a real-time basis throughout the day on computer screens of brokers and other electronic services. The previous day's closing price and volume information for Shares also will be published daily in the financial section of newspapers. In addition, the Web site will include, for each Fund, the prior Business Day's NAV, the reported closing price of a Share, and a calculation of the premium or discount of the closing price against such NAV, as well as data in chart format displaying the frequency distribution of discounts and premiums of the closing price against the NAV, within appropriate ranges, for each of the four previous calendar quarters. 11. Investors also will receive a short product description (“Product Description”), describing a Fund and its Shares. Applicants state that, while not intended as a substitute for a Prospectus, the Product Description will contain information about Shares that is tailored to meet the needs of investors purchasing Shares in the secondary market. The Product Description will prominently disclose that the Indexes are created and sponsored by an affiliated person of the Advisor. Section 12(d)(1) of the Act 12. Section 12(d)(1)(A) of the Act prohibits a registered investment company from acquiring securities of an investment company if such securities represent more than 3% of the total outstanding voting stock of the acquired company, more than 5% of the total assets of the acquiring company, or, together with the securities of any other investment companies, more than 10% of the total assets of the acquiring company. Section 12(d)(1)(B) of the Act prohibits a registered open-end investment company, its principal underwriter or any broker or dealer (“Broker”) that is registered under the Exchange Act from knowingly selling the investment company's shares to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale will cause more than 10% of the acquired company's voting stock to be owned by investment companies generally. 13. Applicants request an exemption to permit registered management investment companies (“Acquiring Management Companies”) and unit investment trusts (“Acquiring Trusts,” and together with the Acquiring Management Companies, “Acquiring Funds”) that are not advised or sponsored by the Advisor or an entity controlling, controlled by or under common control with the Advisor, and not part of the same “group of investment companies,” as defined in section 12(d)(1)(G)(ii), as the Funds, to acquire Shares beyond the limits of section 12(d)(1)(A). Acquiring Funds exclude registered investment companies that are, or in the future may be, part of the same group of investment companies within the meaning of section 12(d)(1)(G)(ii) of the Act as the Funds. The requested exemption would also permit the Funds, their principal underwriters and any Broker knowingly to sell shares of the Funds to an Acquiring Fund in excess of the limits of section 12(d)(1)(B). Applicants request that the relief sought apply to
(a)each Fund,
(b)each Acquiring Fund that enters into a written agreement with a Fund (“Acquiring Fund Agreement”), and
(c)any Broker. 15 15 An Acquiring Fund may rely on the requested order only to invest in the Funds and not in any other investment company. 14. Each Acquiring Management Company will be advised by an investment adviser within the meaning of section 2(a)(20)(A) of the Act (the “Acquiring Fund Advisor”) and may be advised by one or more investment advisers within the meaning of section 2(a)(20)(B) of the Act (each, an “Acquiring Fund Subadvisor”). Any investment adviser to an Acquiring Fund will be registered or exempt from registration under the Advisers Act. Each Acquiring Trust will be sponsored by a sponsor (“Sponsor”). 15. Applicants submit that the proposed conditions to the requested relief adequately address the concerns underlying the limits in section 12(d)(1), which include concerns about undue influence, excessive layering of fees and overly complex structures. Applicants believe that the requested exemption is consistent with the public interest and the protection of investors. 16. Applicants believe that neither the Acquiring Funds nor an Acquiring Fund Affiliate would be able to exert undue influence over the Funds. 16 To limit the control that an Acquiring Fund may have over a Fund, applicants propose a condition prohibiting the Acquiring Fund Advisor, Sponsor, any person controlling, controlled by or under common control with the Acquiring Fund Advisor or Sponsor, and any investment company or issuer that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act that is advised or sponsored by the Acquiring Fund Advisor, Sponsor, or any person controlling, controlled by or under common control with an Acquiring Fund Advisor or Sponsor (“Acquiring Fund's Advisory Group”) from controlling (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. The same prohibition would apply to any Acquiring Fund Subadvisor, any person controlling, controlled by or under common control with the Acquiring Fund Subadvisor, and any investment company or issuer that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act (or portion of such investment company or issuer) advised or sponsored by the Acquiring Fund Subadvisor or any person controlling, controlled by or under common control with the Acquiring Fund Subadvisor (“Acquiring Fund's Subadvisory Group”). 16 The “Acquiring Fund Affiliates” are the Acquiring Fund Advisor, Acquiring Fund Subadvisor(s), Sponsor, promoter or principal underwriter of an Acquiring Fund, and any person controlling, controlled by or under common control with any of these entities. 17. Applicants also propose conditions 9-14, stated below, to limit the potential for undue influence by an Acquiring Fund over a Fund. Condition 9 precludes an Acquiring Fund and Acquiring Fund Affiliates from causing any potential investment by the Acquiring Fund in a Fund to influence the terms of any services or transactions between the Acquiring Fund or an Acquiring Fund Affiliate and the Fund or a Fund Affiliate. 17 Condition 12 precludes an Acquiring Fund or Acquiring Fund Affiliate (except to the extent it is acting in its capacity as an investment adviser to a Fund) from causing a Fund to purchase a security in any offering of securities during the existence of any underwriting or selling syndicate of which a principal underwriter is an Underwriting Affiliate (“Affiliated Underwriting”). 18 17 The “Fund Affiliates” are the Advisor, Subadvisor(s), promoter and principal underwriter of a Fund, and any person controlling, controlled by or under common control with any of these entities. 18 An “Underwriting Affiliate” is a principal underwriter in any underwriting or selling syndicate that is an officer, director, member of an advisory board, Acquiring Fund Advisor, Acquiring Fund Subadvisor, Sponsor, or employee of the Acquiring Fund, or a person which any such officer, director, member of an advisory board, Acquiring Fund Advisor, Acquiring Fund Subadvisor, Sponsor, or employee is an affiliated person, except any person whose relationship to the Fund is covered by section 10(f) of the Act is not an Underwriting Affiliate. 18. Applicants represent that as an additional assurance that Acquiring Funds understand the implications of an investment in a Fund under the requested order, any Acquiring Fund that intends to invest in a Fund in reliance on the requested order will be required to enter into an Acquiring Fund Agreement with the Fund. The Acquiring Fund Agreement will ensure that the Acquiring Fund understands and agrees to comply with the terms and conditions of the requested order. The Acquiring Fund Agreement also will include an acknowledgement from the Acquiring Fund that it may rely on the order only to invest in the Funds and not in any other investment company. Applicants note that a Fund may choose to reject any direct purchase of Creation Units by an Acquiring Fund. 19 19 A Fund would retain its right to reject any initial investment by an Acquiring Fund in excess of the limit in section 12(d)(1)(A)(i) by declining to execute the Acquiring Fund Agreement with the Acquiring Fund. 19. Applicants do not believe the proposed arrangement will involve excessive layering of fees. The board of directors or trustees of any Acquiring Management Company, including a majority of the disinterested directors or trustees, will find that the advisory fees charged to the Acquiring Management Company are based on services provided that will be in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Fund in which the Acquiring Management Company may invest. In addition, an Acquiring Fund Advisor or a Sponsor or trustee of an Acquiring Trust (“Trustee”) will waive fees otherwise payable to it by the Acquiring Fund in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by a Fund under rule 12b-1 under the Act) received from the Fund by the Acquiring Fund Advisor, Sponsor or Trustee or an affiliated person of the Acquiring Fund Advisor, Sponsor or Trustee, in connection with the investment by the Acquiring Fund in the Fund (other than advisory fees). Applicants state that any sales charges or service fees charged with respect to shares of an Acquiring Fund will not exceed the limits applicable to a fund of funds set forth in Conduct Rule 2830 of the NASD (“Rule 2830”). 20. Applicants submit that the proposed arrangement will not create an overly complex structure. Applicants note that no Fund may acquire securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A). Applicants also represent that the Acquiring Fund Agreement will require any Acquiring Fund that exceeds the 5% or 10% limitations in section 12(d)(1)(A)(ii) and
(iii)to disclose in its prospectus that it may invest in Funds, and to disclose in “plain English” in its prospectus the unique characteristics of the Acquiring Funds investing in Funds, including but not limited to the expense structure and any additional expenses of investing in the Funds. Sections 17(a)(1) and
(2)of the Act 21. Section 17(a) of the Act generally prohibits an affiliated person of a registered investment company, or an affiliated person of such a person, from selling any security to or purchasing any security from the company. Section 2(a)(3) of the Act defines “affiliated person” to include any person directly or indirectly owning, controlling or holding with power to vote 5% or more of the outstanding voting securities of the other person, any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with the power to vote by the other person, and any person directly or indirectly controlling, controlled by or under common control with the other person. Section 2(a)(9) of the Act provides that a control relationship will be presumed where one person owns more than 25% of another person's voting securities. Applicants request two exemptions under sections 6(c) and 17(b) from section 17(a). 22. First, applicants request an exemption from 17(a) to permit
(a)persons who are affiliated persons of a Fund solely by virtue of holding with the power to vote 5% or more, or more than 25%, of a Fund's, or two or more Funds', Shares (“First-Tier Affiliates”) and
(b)affiliated persons of First-Tier Affiliates who are not otherwise affiliated with the Fund, and persons who are affiliated persons of a Fund solely by virtue of holding with the power to vote 5% or more, or more than 25%, of the outstanding voting securities of other registered investment companies (or series thereof), which are not Funds, advised by the Advisor (“Second-Tier Affiliates”) to purchase and redeem Creation Units through in-kind transactions. Applicants contend that no useful purpose would be served by prohibiting the First- and Second-Tier Affiliates from purchasing or redeeming Creation Units through in-kind transactions. The deposit procedure for in-kind purchases and the redemption procedure for in-kind redemptions will be the same for all purchases and redemptions. Deposit Securities and Redemption Securities will be valued in the same manner as the Portfolio Securities. Therefore, applicants state, the in-kind purchases and redemptions for which relief is requested will afford no opportunity for the affiliated persons of a Fund, or the affiliated persons of such affiliated persons, described above, to effect a transaction detrimental to other holders of Shares. Applicants also believe that these in-kind purchases and redemptions will not result in self-dealing or overreaching of the Fund. 23. Second, applicants request an exemption from section 17(a) to permit a Fund, which is an affiliated person of an Acquiring Fund because the Acquiring Fund holds 5% or more of the Fund's Shares, to sell its Shares to, and redeem its Shares from, the Acquiring Fund. 20 Applicants state that any consideration paid for Shares in transactions with a Fund will be based on the Fund's NAV. Applicants also state that any transactions directly between the Funds and the Acquiring Funds will be consistent with the policies of each Acquiring Fund. Applicants further state that the purchase of Creation Units by an Acquiring Fund will be accomplished in accordance with the investment restrictions of the Acquiring Fund and will be consistent with the investment policies set forth in the Acquiring Fund's registration statement. Applicants note that the Acquiring Fund Agreement will require each Acquiring Fund to represent that any purchase of Creation Units will be accomplished in compliance with the investment restrictions of the Acquiring Fund and will be consistent with the investment policies set forth in the Acquiring Fund's registration statement. 20 Applicants expect that most Acquiring Funds will purchase Shares in the secondary market and will not transact in Creation Units with a Fund. Applicants' Conditions Applicants agree that any order granting the ETF Relief will be subject to the following conditions: 1. Applicants will not register a Future Fund by means of filing a post-effective amendment to the Trust's registration statement or by any other means, unless either
(a)applicants have requested and received with respect to such Future Fund, either exemptive relief from the Commission or a no-action letter from the Division of Investment Management of the Commission; or
(b)the Future Fund will be listed on an Exchange without the need for a filing pursuant to rule 19b-4 under the Exchange Act. 2. As long as the Trust operates in reliance on the requested order, the Shares will be listed on a Listing Exchange. 3. Neither the Trust (with respect to any Fund) nor any Fund will be advertised or marketed as an open-end investment company or a mutual fund. Each Fund's Prospectus will prominently disclose that Shares are not individually redeemable shares and will disclose that the owners of Shares may acquire those Shares from a Fund and tender those Shares for redemption to a Fund in Creation Units only. Any advertising material that describes the purchase or sale of Creation Units or refers to redeemability will prominently disclose that Shares are not individually redeemable and that owners of Shares may acquire those Shares from a Fund and tender those Shares for redemption to a Fund in Creation Units only. 4. The Web site for each Fund, which will be publicly accessible at no charge, will contain the following information, on a per Share basis, for each Fund:
(a)The prior Business Day's NAV and the reported closing price, and a calculation of the premium or discount of such price against such NAV; and
(b)data in chart format displaying the frequency distribution of discounts and premiums of the daily closing price against the NAV, within appropriate ranges, for each of the four previous calendar quarters. In addition, the Product Description for each Fund will state that the Web site for the Fund has information about the premiums and discounts at which the Fund's Shares have traded. 5. The Prospectus and annual report for each Fund will also include:
(a)The information listed in condition 4(b),
(i)in the case of the Prospectus, for the most recently completed year (and the most recently completed quarter or quarters, as applicable) and
(ii)in the case of the annual report, for the immediately preceding five years, as applicable; and
(b)the following data, calculated on a per Share basis for one, five and ten year periods (or life of the Fund),
(i)the cumulative total return and the average annual total return based on NAV and closing price, and
(ii)the cumulative total return of the relevant Index. 6. Before a Fund may rely on the order, the Commission will have approved, pursuant to rule 19b-4 under the Exchange Act, a Listing Exchange rule requiring Listing Exchange members and member organizations effecting transactions in Shares to deliver a Product Description to purchasers of Shares. 7. Each Fund's Prospectus and Product Description will clearly disclose that, for purposes of the Act, Shares are issued by the Funds and that the acquisition of Shares by investment companies is subject to the restrictions of section 12(d)(1) of the Act, except as permitted by an exemptive order that permits registered investment companies to invest in a Fund beyond the limits of section 12(d)(1), subject to certain terms and conditions, including that the registered investment company enter into an agreement with the Fund regarding the terms of the investment. Applicants agree that any order of the Commission granting the 12(d)(1) Relief will be subject to the following conditions: 8. The members of an Acquiring Fund's Advisory Group will not control (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. The members of an Acquiring Fund's Subadvisory Group will not control (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. If, as a result of a decrease in the outstanding Shares of a Fund, an Acquiring Fund's Advisory Group or an Acquiring Fund's Subadvisory Group, each in the aggregate, becomes a holder of more than 25% of the outstanding Shares of the Fund, it will vote its Shares in the same proportion as the vote of all other Shareholders of the Fund's Shares. This condition will not apply to the Acquiring Fund's Subadvisory Group with respect to a Fund for which the Acquiring Fund Subadvisor or a person controlling, controlled by or under common control with the Acquiring Fund Subadvisor acts as the investment adviser within the meaning of section 2(a)(20)(A) of the Act. 9. No Acquiring Fund or Acquiring Fund Affiliate will cause any existing or potential investment by the Acquiring Fund in a Fund to influence the terms of any services or transactions between the Acquiring Fund or an Acquiring Fund Affiliate and the Fund or a Fund Affiliate. 10. The board of directors or trustees of an Acquiring Management Company, including a majority of the independent directors or trustees, will adopt procedures reasonably designed to assure that the Acquiring Fund Advisor and any Acquiring Fund Subadvisor are conducting the investment program of the Acquiring Management Company without taking into account any consideration received by the Acquiring Management Company or an Acquiring Fund Affiliate from a Fund or a Fund Affiliate in connection with any services or transactions. 11. Once an investment by an Acquiring Fund in the securities of a Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, the board of trustees of the Funds (“Board”), including a majority of the independent trustees, will determine that any consideration paid by the Fund to the Acquiring Fund or an Acquiring Fund Affiliate in connection with any services or transactions:
(a)Is fair and reasonable in relation to the nature and quality of the services and benefits received by the Fund;
(b)is within the range of consideration that the Fund would be required to pay to another unaffiliated entity in connection with the same services or transactions; and
(c)does not involve overreaching on the part of any person concerned. This condition does not apply with respect to any services or transactions between a Fund and its investment adviser(s), or any person controlling, controlled by or under common control with such investment adviser(s). 12. No Acquiring Fund or Acquiring Fund Affiliate (except to the extent it is acting in its capacity as an investment adviser to a Fund) will cause a Fund to purchase a security in any Affiliated Underwriting. 13. The Board, including a majority of the independent trustees, will adopt procedures reasonably designed to monitor any purchases of securities by the Fund in an Affiliated Underwriting once an investment by an Acquiring Fund in the securities of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Acquiring Fund in the Fund. The Board will consider, among other things:
(a)Whether the purchases were consistent with the investment objectives and policies of the Fund;
(b)how the performance of securities purchased in an Affiliated Underwriting compares to the performance of comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index; and
(c)whether the amount of securities purchased by the Fund in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interests of the Fund's shareholders. 14. The Fund will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in Affiliated Underwritings once an investment by an Acquiring Fund in the securities of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth from whom the securities were acquired, the identity of the underwriting syndicate's members, the terms of the purchase, and the information or materials upon which the determinations of the Board were made. 15. Before investing in a Fund in excess of the limits in section 12(d)(1)(A), each Acquiring Fund and the Fund will execute an Acquiring Fund Agreement stating, without limitation, that their boards of directors or trustees and their investment advisers, or Sponsor and Trustee, as applicable, understand the terms and conditions of the order, and agree to fulfill their responsibilities under the order. At the time of its investment in Shares of a Fund in excess of the limit in section 12(d)(1)(A)(i), an Acquiring Fund will notify the Fund of the investment. At such time, the Acquiring Fund will also transmit to the Fund a list of the names of each Acquiring Fund Affiliate and Underwriting Affiliate. The Acquiring Fund will notify the Fund of any changes to the list of the names as soon as reasonably practicable after a change occurs. The Fund and the Acquiring Fund will maintain and preserve a copy of the order, the agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place. 16. The Acquiring Fund Advisor, Sponsor or Trustee, as applicable, will waive fees otherwise payable to it by the Acquiring Fund in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by a Fund under rule 12b-1 under the Act) received from a Fund by the Acquiring Fund Advisor, Sponsor or Trustee, or an affiliated person of the Acquiring Fund Advisor, Sponsor or Trustee, other than any advisory fees paid to the Acquiring Fund Advisor, Sponsor or Trustee, or its affiliated person by the Fund, in connection with the investment by the Acquiring Fund in the Fund. Any Acquiring Fund Subadvisor will waive fees otherwise payable to the Acquiring Fund Subadvisor, directly or indirectly, by the Acquiring Management Company in an amount at least equal to any compensation received from a Fund by the Acquiring Fund Subadvisor, or an affiliated person of the Acquiring Fund Subadvisor, other than any advisory fees paid to the Acquiring Fund Subadvisor or its affiliated person by the Fund, in connection with the investment by the Acquiring Management Company in the Fund made at the direction of the Acquiring Fund Subadvisor. In the event that the Acquiring Fund Subadvisor waives fees, the benefit of the waiver will be passed through to the Acquiring Management Company. 17. Any sales charges and/or service fees charged with respect to shares of an Acquiring Fund will not exceed the limits applicable to a fund of funds as set forth in Rule 2830. 18. No Fund will acquire securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act. 19. Before approving any investment advisory contract under section 15 of the Act, the board of directors or trustees of each Acquiring Management Company, including a majority of the independent directors or trustees, will find that the advisory fees charged under the advisory contract are based on services provided that will be in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Fund in which the Acquiring Management Company may invest. These findings and the basis upon which they are made will be recorded fully in the minute books of the appropriate Acquiring Management Company. For the Commission, by the Division of Investment Management, under delegated authority. Nancy M. Morris, Secretary. [FR Doc. E6-7912 Filed 5-23-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53824; File No. SR-Amex-2006-43] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List for Trading Options on the iShares MSCI Emerging Markets Index Fund 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 2, 2006, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Amex has filed the proposed rule change, pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. 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 Exchange proposes to list and trade options on the iShares MSCI Emerging Markets Index Fund (“Fund Options”). The Exchange has designated this proposal as non-controversial and has requested that the Commission waive both the five-day pre-filing requirement and the 30-day pre-operative waiting period contained in Rule 19b-4(f)(6)(iii) under the Act. 5 The text of the proposed rule change is available on the Amex's Web site at *http://www.amex.com,* the Office of the Secretary, Amex and at the Commission's Public Reference Room. 5 17 CFR 240.19-4(f)(6)(iii). 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange seeks approval to list for trading on the Exchange options on the iShares MSCI Emerging Markets Index Fund (“Fund”). Commentary .06 to Amex Rule 915 and Commentary .07 to Amex Rule 916, respectively (the “Listing Standards”) establish the Exchange's initial listing and maintenance standards. The Listing Standards permit the Exchange to list funds structured as open-end investment companies, such as the Fund, without having to file for approval with the Commission to list for trading options on such funds. 6 The Exchange submits that the Fund meets substantially all of the Listing Standard requirements, and for the requirements that are not met, sufficient mechanisms exist that would provide the Exchange with adequate surveillance and regulatory information with respect to the Fund. 6 Commentary .06 to Amex Rule 915 sets forth the initial listing and maintenance standards for shares or other securities (“Exchange-Traded Fund Shares”) that are principally traded on a national securities exchange or through the facilities of a national securities exchange and reported as a national market security, and that represent an interest in a registered investment company organized as an open-end management investment company, a unit investment trust, or other similar entity. The Fund is an open-end investment company designed to hold a portfolio of securities that tracks the MSCI Emerging Markets Index (“Index”) 7 . The Fund employs a “representative sampling” methodology to track the Index, which means that the Fund invests in a representative sample of securities in the Index that have a similar investment profile as the Index. 8 Securities selected by the Fund have aggregate investment characteristics (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures similar to those of the Index. The Fund generally invests at least 90% of its assets in the securities of the Index or in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) representing such securities. In order to improve portfolio liquidity and give the Fund additional flexibility to comply with the requirements of the U.S. Internal Revenue Code and other regulatory requirements and to manage future corporate actions and index changes in smaller markets, the Fund also has the authority to invest the remainder of its assets in securities that are not included in the Index or in ADRs and GDRs representing such securities. The Fund may invest up to 10% of its assets in other MSCI index funds that seek to track the performance of equity securities of constituent countries of the Index. The Fund is not permitted to concentrate its investments ( *i.e.* , hold 25% or more of its total assets in the stocks of a particular industry or group of industries), except that, to the extent practicable, the Fund will concentrate to approximately the same extent that the Index concentrates in the stocks of such particular industry or group of industries. The Exchange believes that these requirements and policies prevent the Fund from being excessively weighted in any single security or small group of securities and significantly reduce concerns that trading in the Fund could become a surrogate for trading in unregistered securities. 7 As provided on the Web site of Morgan Stanley Capital International Inc. (“MSCI”) ( *http://www.msci.com* ), which is the entity that created and currently maintains the Index, the Index is a capitalization-weighted index whose component securities are adjusted for available float and must meet objective criteria for inclusion in the Index. The Index aims to capture 85% of the publicly available total market capitalization in each emerging market included in the Index. As of March 31, 2006, the Index was comprised of 828 constituents with the top five constituents representing the following weights: 4.08%, 2.14%, 2.14%, 1.76%, and 1.72%. The Index is rebalanced quarterly, calculated in U.S. Dollars on a real time basis, and disseminated every 60 seconds during market trading hours. 8 The Fund is comprised of 267 securities as of March 31, 2006. Samsung Electronics Co LTD GDR, a South Korean security, has the greatest individual weight at 5.78%. The aggregate percentage weighting of the top 5, 10, and 20 securities in the Fund are 18.36%, 28.24%, and 43.46%, respectively. Shares of the Fund (“Fund Shares”) are issued in exchange for an “in kind” deposit of a specified portfolio of securities, together with a cash payment, in minimum size aggregation size of 150,000 shares (each, a “Creation Unit”), as set forth in the Fund's prospectus. The Fund issues and sells Fund Shares in Creation Unit sizes through a principal underwriter on a continuous basis at the net asset value per share next determined after an order to purchase Fund Shares and the appropriate securities are received. Following issuance, Fund Shares are traded on an exchange like other equity securities, and equity trading rules apply. Likewise, redemption of Fund Shares is made in Creation Unit size and “in kind,” with a portfolio of securities and cash exchanged for Fund Shares that have been tendered for redemption. The Exchange notes that the maintenance listing standards set forth in Commentary .07 to Amex Rule 916 for open-end investment companies do not include criteria based on either the number of shares or other units outstanding or on their trading volume. The absence of such criteria is justified on the ground that since it should always be possible to create additional shares or other interests in open-end investment companies at their net asset value by making an in-kind deposit of the securities that comprise the underlying index or portfolio, there is no limit on the available supply of such shares or interests. This, in turn, should make it highly unlikely that the market for listed, open-end investment company shares could be capable of manipulation, since whenever the market price for such shares departs from net asset value, arbitrage will occur. Similarly, since the Fund meets all of the requirements of the Listing Standards except as described below, the Exchange believes that the same analysis applies to the Fund. The Exchange has reviewed the Fund and determined that it satisfies the Listing Standards except for the requirement set forth in Commentary .06(b)(i) to Amex Rule 915, which requires the Fund to meet the following condition: “any non-U.S. component stocks in the index or portfolio on which the Fund Shares are based that are not subject to comprehensive surveillance agreements do not in the aggregate represent more than 50% of the weight of the index or portfolio.” The Exchange currently has in place surveillance agreements with foreign exchanges that cover 46.72% of the securities in the Fund. One of the foreign exchanges on which component securities of the Fund are traded and with which the Exchange does not have a surveillance agreement is the Bolsa Mexicana de Valores (“Bolsa”). The percentage of the weight of the Fund represented by these securities is 7.42%. The Exchange understands that the Commission has been willing to allow an exchange to rely on a memorandum of understanding entered into between regulators in the event that the exchanges themselves cannot enter into a surveillance agreement. The Exchange previously attempted to enter into a surveillance agreement with Bolsa as part of seeking approval to list and trade options on the Mexico Index 9 . Additionally, the Chicago Board Options Exchange, Incorporated (the “CBOE”) also previously attempted to enter into a surveillance agreement with Bolsa at or about the time when the CBOE sought approval to list for trading options on the CBOE Mexico 30 Index in 1995, which was comprised of stocks trading on Bolsa. 10 Since, in both instances, Bolsa was unable to provide a surveillance agreement, the Commission previously allowed the Exchange and the CBOE to rely on the memorandum of understanding executed by the Commission and the CNBV, dated as of October 18, 1990 (“MOU”). The Commission noted in the respective Approval Orders that in cases where it would be impossible to secure an agreement, the Commission relied in the past on surveillance sharing agreements between the relevant regulators. The Commission further noted in the respective Approval Orders that pursuant to the terms of the MOU, it was the Commission's understanding that both the Commission and the CNBV could acquire information from and provide information to the other, similar to that which would be required in a surveillance sharing agreement between exchanges, and therefore, should the Exchange or the CBOE need information on Mexican trading in the component securities of the Mexico Index or the CBOE Mexico 30 Index, the Commission could request such information from the CNBV under the MOU. 11 The Exchange has attempted to contact Bolsa with a request to enter into a surveillance agreement. The Exchange is uncertain whether the same barriers that prevented Bolsa from previously entering into an information sharing agreement still exist today. In this regard, the Exchange requests permission to rely on the MOU entered into between the Commission and the CNBV for purposes of satisfying its surveillance and regulatory responsibilities for the component securities in the Fund that trade on Bolsa until the Exchange is able to secure a surveillance agreement with Bolsa. The Exchange believes this request is reasonable in that the Commission has already acknowledged that the MOU permits both the Commission and the CNBV to acquire information from and provide information to the other, similar to that which would be required in a surveillance sharing agreement between exchanges. The Commission's approval of this request would otherwise render the Fund compliant with all of the Listing Standards. 12 9 *See* Securities Exchange Act Release No. 34500 (August 8, 1994), 59 FR 41534 (August 12, 1994). 10 *See* Securities Exchange Act Release No. 36415 (October 25, 1995), 60 FR 55620 (November 1, 1995). 11 The Exchange also states that the Commission noted if securing an information sharing agreement is not possible, an exchange should contact the Commission prior to listing a new derivative securities product. In such case, the Commission may determine instead that it is appropriate to rely on a memorandum of understanding between the Commission and the foreign regulator. *See* Securities Exchange Act Release No. 40761 (December 8, 1998), 63 FR 70952 (December 22, 1998). 12 The Exchange notes that the component securities of the Fund change periodically. Therefore, the Exchange may in fact have in place surveillance agreements that would otherwise cover the percent weighting requirements set forth in the Listing Standards for securities not trading on Bolsa. In this event, the Fund would satisfy all of the Listing Standards and reliance on an approval order for the Fund would be unnecessary. The Exchange will list the Fund Options subject to a sixty-day pilot program and rely on the MOU entered into between the Commission and the CNBV for purposes of satisfying its surveillance and regulatory responsibilities until the Exchange is able to secure a surveillance agreement with Bolsa. During this period, the Exchange agrees to use its best efforts to obtain a comprehensive surveillance agreement with Bolsa, which shall reflect the following:
(i)Express language addressing market trading activity, clearing activity, and customer identity;
(ii)Bolsa's reasonable ability to obtain access to and produce requested information; and
(iii)based on the comprehensive surveillance agreement and other information provided by Bolsa, the absence of existing rules, laws, or practices that would impede the Exchange from foreign information relating to market activity, clearing activity, or customer identity, or, in the event such rules, laws, or practices exist, they would not materially impede the production of customer or other information. The Exchange also represents that it will regularly update the Commission on the status of its negotiations with Bolsa. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act 13 in general, and furthers the objectives of Section 6(b)(5) of the Act, 14 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers, or to regulate by virtue of any authority conferred by the Act matters not related to the purpose of the Act or the administration of the Exchange. 13 15 U.S.C. 78f(b). 14 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 No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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)does not become operative prior to 30 days after the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interests, the proposed rule change has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 15 and Rule 19b-4(f)(6) thereunder. 16 15 15 U.S.C. 78s(b)(3)(A)(iii). 16 17 CFR 240.19b-4(f)(6). Amex requests that the Commission waive both the five-day pre-filing requirement and the 30-day pre-operative period specified in Rule 19b-4(f)(6)(iii). 17 The Commission is exercising its authority to waive the five-day pre-filing notice requirement and believes that waiving the 30-day pre-operative period is consistent with the protection of investors and public interest. The Exchange has agreed to use its best efforts to obtain a comprehensive surveillance agreement with the Bolsa during a sixty-day pilot period in which the Exchange will rely on the MOU with respect to surveillance of Fund components trading on Bolsa. The Exchange also represents that it will regularly update the Commission on the status of its negotiations with Bolsa. The Commission notes that Amex currently has in place surveillance agreements with foreign exchanges that cover 46.72% of the securities in the Fund and that the Index upon which the Fund is based appears to be a broad-based index. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission. 18 17 CFR 240.19b-4(f)(6)(iii). 18 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 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. 19 19 *See* Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Amex-2006-43 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-Amex-2006-43. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2006-43 and should be submitted on or before June 14, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 20 20 17 CFR 200.30-3(a)(12). J. Lynn Taylor, Assistant Secretary. [FR Doc. E6-7872 Filed 5-23-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53816; File No. SR-CBOE-2006-50 Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend CBOE Rule 8.4 Relating to Remote Market-Maker Appointments 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 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 and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a “non-controversial” proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder. 4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend CBOE Rule 8.4 relating to Remote Market-Maker appointments. The text of the proposed rule change is available on CBOE's Web site ( *http://www.cboe.com* ), at the CBOE's Office of the Secretary, and at the Commission's Public Reference Room.. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend CBOE Rule 8.4 relating to Remote Market-Maker (“RMM”) appointments. CBOE Rule 8.4 provides that RMMs will have a Virtual Trading Crowd (“VTC”) Appointment, which confers the right to quote electronically in a certain number of products selected from various Tiers. Currently, there are five Tiers (Tiers A, B, C, D, and E) that are structured according to trading volume statistics, and an “A+” Tier which consists of four option classes—options on Standard & Poor's Depositary Receipts (SPY), options on the Nasdaq-100 Index Tracking Stock (QQQQ), options on Diamonds (DIA), and options based on The Dow Jones Industrial Average (DJX). CBOE Rule 8.4(d) assigns appointment costs to Hybrid 2.0 Classes based on the Tier in which they are located, and an RMM may select for each Exchange membership it owns or leases any combination of products trading on the Hybrid 2.0 Platform 5 whose aggregate appointment cost does not exceed 1.0. 5 CBOE Rule 1.1(aaa) defines Hybrid Trading System and Hybrid 2.0 Platform. CBOE proposes to make the following changes to the Tiers. First, CBOE proposes to remove from the A+ Tier DIA options and DJX options. Going forward, DIA options and DJX options would fall within one of the remaining Tiers A through E depending on their trading volume. As a result of this change, the appointment costs for DIA options and DJX options would be reduced from .25 to the appointment cost for whichever Tier (A through E) they are assigned. This change would lower an RMM's cost to receive an appointment in these two Hybrid 2.0 Classes. Second, CBOE proposes to create a new Tier—the “AA” Tier, and place within it options on the CBOE Volatility Index (VIX). CBOE proposes to assign an appointment cost of .50 to VIX options. Currently, VIX options are traded on the Hybrid Trading System, but not on the Hybrid 2.0 Platform. 2. Statutory Basis 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. 6 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) of the Act, 7 which requires that the rules of an 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. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 8 and subparagraph (f)(6) of Rule 19b-4 9 thereunder because it does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition;
(iii)become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate; and the Exchange has given the Commission written notice of its intention to file the proposed rule change at least five business days prior to filing. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 8 15 U.S.C. 78s(b)(3)(A)(iii). 9 17 CFR 240.19b-4(f)(6). Under Rule 19b-4(f)(6) of the Act, 10 the proposal does not become operative for 30 days after the date of its filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative date, so that the proposal may take effect upon filing. The Exchange believes that the proposal to lower the appointment costs for the DIA and DJX option classes does not raise any new regulatory issues and promotes competition by reducing the access costs of trading in multiple options classes as an RMM. The Exchange believes that the proposal to add VIX options to a new AA Tier also does not raise any new, unique, or substantive issues from those raised in previous CBOE rule changes relating to these Tiers. The Commission agrees and, consistent with the protection of investors and the public interest, has determined to waive the 30-day operative date so that the proposal may take effect upon filing. 11 10 *Id* . 11 For purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-CBOE-2006-50 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2006-50. 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 the CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2006-50 and should be submitted on or before June 14, 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. E6-7916 Filed 5-23-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53832; File No. SR-CBOE-2006-46] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Rule 15.9, Regulatory Cooperation May 18, 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 8, 2006, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) 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 rendered 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 Exchange proposes to amend CBOE Rule 15.9, Regulatory Cooperation, to clarify that the Exchange may contract with another self-regulatory organization (“SRO”) for the performance of certain of CBOE's regulatory functions. The text of the proposed rule change is available on the Exchange's Web site, *http://www.cboe.com* , at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose CBOE Rule 15.9(a) allows the Exchange to enter into agreements with domestic and foreign SROs, associations and contract markets and the regulators of such markets for the exchange of information and other regulatory purposes. 4 4 The Exchange has entered into a Regulatory Services Agreement (“RSA”) with other options markets participating in the proposed Options Regulatory Surveillance Authority (“ORSA”) national market system plan. Under the ORSA RSA, CBOE will provide certain regulatory services to the other options markets. The Exchange proposes to amend CBOE Rule 15.9 to expressly allow the Exchange to contract with another SRO for the performance of certain of CBOE's regulatory functions. The proposed rule change would enhance CBOE's ability to carry out its regulatory obligations under the Act by providing CBOE the ability to contract with another SRO for regulatory services. Under any agreement for regulatory services with another SRO, CBOE would remain an SRO registered under section 6 of Act 5 and, therefore, would continue to have statutory authority and responsibility for enforcing compliance by its members, and persons associated with its members, with the Act, the rules thereunder, and the rules of the Exchange. 5 15 U.S.C. 78f. The proposed rule change specifically states that any action taken by another SRO, or its employees or authorized agents, operating on behalf of CBOE pursuant to a regulatory services agreement with CBOE, would be deemed an action taken by CBOE. Under any agreement for regulatory services with another SRO, CBOE would retain ultimate responsibility for performance of its SRO duties, and the proposed rule change states that CBOE shall retain ultimate legal responsibility for, and control of, its SRO responsibilities. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act 6 in general, and furthers the objectives of sections 6(b)(1), 6(b)(6) and 6(b)(7) of the Act 7 in particular, in that it will enhance the ability of the Exchange to enforce compliance by its members and persons associated with its members with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange; it will help ensure that members and persons associated with members are appropriately disciplined for violations of the Act, the rules and regulations thereunder, and the rules of the Exchange; and it will provide a fair procedure for the disciplining of members and persons associated with members. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(1); 15 U.S.C. 78f(b)(6); and 15 U.S.C. 78f(b)(7). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the 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, 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 8 and subparagraph (f)(6) of Rule 19b-4 thereunder. 9 The Exchange has requested that the Commission waive the 30-day operative delay period for “non-controversial” proposals and make the proposed rule change effective and operative upon filing. The Commission hereby grants the request. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. In this regard, the Commission believes that the proposal should be implemented without delay because of its immediate applicability with respect to the proposed ORSA plan. 10 For this reason, the Commission designates the proposal to be effective and operative upon filing with the Commission. 11 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(6 ). 10 The Commission notes that the proposed rule change is based on a similar rule of the Boston Stock Exchange, Inc. *See* Securities Exchange Act Release No. 53436 (March 7, 2006), 71 FR 13194 (March 14, 2006) (SR-BSE-2006-08). 11 For the purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in the furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-CBOE-2006-46 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2006-46. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the 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-CBOE-2006-46 and should be submitted on or before June 14, 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. E6-7918 Filed 5-23-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53825; File No. SR-NYSE-2006-38] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Exchange's Financial Listing Criteria 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 New York Stock Exchange LLC (“NYSE” 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. NYSE has filed this 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 NYSE proposes to amend its domestic financial listing standards for companies proposing to list on the Exchange contained in Section 102.01C of the Exchange's Listed Company Manual (the “Manual”) to allow domestic companies to qualify for listing, under certain limited circumstances, on the basis of their earnings, cash flows or revenues, as applicable, in the most recent completed nine-month period. However the Exchange must conclude that the company can reasonably be expected to qualify under the regular standard upon completion of its then current fiscal year. The text of the proposed rule change is available on the Exchange's Web site ( *http://www.nyse.com),* at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the 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. NYSE has prepared summaries, set forth in Sections A, B and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NYSE proposes to amend its domestic financial listing standards for companies proposing to list on the Exchange contained in Section 102.01C of the Exchange's Listed Company Manual (the “Manual”) to allow companies seeking to list under the Exchange's domestic standards to qualify for listing, under certain limited circumstances, on the basis of their earnings, cash flows or revenues, as applicable, in the most recent completed nine-month period. Section 102.01C of the Manual allows companies to list under the Exchange's domestic listing criteria by meeting one of the following three standards: • *Earnings Test*
(1)Pre-tax earnings from continuing operations and after minority interest, amortization and equity in the earnings or losses of investees, adjusted for certain specified items, must total at least $10,000,000 in the aggregate for the last three fiscal years together with a minimum of $2,000,000 in each of the two most recent fiscal years, and positive amounts in all three years. • *Valuation/Revenue with Cash Flow Test* —
(1)At least $500,000,000 in global market capitalization,
(2)At least $100,000,000 in revenues during the most recent 12 month period, and
(3)At least $25,000,000 aggregate cash flows for the last three fiscal years with positive amounts in all three years, subject to certain adjustments. • *Pure Valuation/Revenue Test* —
(1)At least $750,000,000 in global market capitalization, and
(2)At least $75,000,000 in revenues during the most recent fiscal year. Over the years, the Exchange states that it has been unable to list a number of financially healthy companies because those companies had insufficient earnings, cash flows, or revenues in the earliest fiscal year required by the applicable standard. In many cases, such a company is very different at the time of its listing application from the company that had existed in such earlier period. Such company may have undergone a recapitalization transaction in which it substantially reduced its debt burden. Alternatively, the company may have undergone a significant change in its operations, including, but not limited to: • A divestiture or discontinuation of a loss-making business line, • A change in management, • An acquisition or series of acquisitions, • Economies of scale and increased revenues as the company emerges from its start-up phase, • The effect of foreign currency valuation, • Entering a new geographic region or market or exiting a geographic region or market, or • The launch of a new product or service. Therefore, the Exchange proposes to amend Section 102.01C(I) and
(II)(the “Earnings” and “Valuation/Revenue with Cash Flow” Tests) to enable it to qualify a company based on the most recent completed nine months in lieu of the earliest fiscal year otherwise required by the applicable standard, in circumstances where a recapitalization transaction or significant change in operations has rendered irrelevant the financial position of the company in that third year back and the company would meet the requirements of Section 102.01C(I) or
(II)based on the most recent nine months and the two immediately preceding fiscal years. For the same reasons, the Exchange proposes to amend Section 102.01C(III) (the “Pure Valuation/Revenue” Test) on the basis of the most recent nine months, instead of a full fiscal year. In such cases, the Exchange must conclude that the Company can reasonably be expected to qualify under the regular standard upon completion of its then current fiscal year. The Exchange believes that investors are not protected less by the qualification for listing of companies that can meet the Earnings or Valuation/Revenue with Cash Flow Tests on the basis of 33 months of financial history, including their last two completed fiscal quarters, than by the qualification of companies based on an older three-year period, particularly if a recapitalization or significant change in operations has materially changed the nature of the company. Similarly, the Exchange believes that investors are not protected less by the qualification for listing of companies that can meet the Pure Valuation/Revenue Test on the basis of the most recently completed nine months period, rather than an older twelve month period. The Exchange believes that any company it would qualify for listing on the basis of the proposed amendment would meet the existing standards of Section 102.01C with the passage of time upon completion of its next fiscal year. 5 5 For purposes of Rule 3a51-1(a)(1) under the Act, the Exchange states that, as proposed to be amended herein, its initial listing standards will be substantially similar to the initial listing standards in place on January 8, 2004. 17 CFR 240.3a51-1(a)(1). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b) 6 of the Act, in general, and Section 6(b)(5) 7 of the Act, in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. 6 15 U.S.C. 78(f)(b). 7 15 U.S.C. 78(f)(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 were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)does not become operative for 30 days after the date of the 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 8 and Rule 19b-4(f)(6) thereunder. 9 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(6). As required by Rule 19b-4(f)(6)(iii) under the Act, the Exchange also provided with the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of the proposed rule change. The Exchange has asked the Commission to waive the 30-day operative delay specified in Rule 19b-4(f)(6)(iii). 10 The Commission hereby grants that request because the Commission believes that waiving the 30-day operative period is consistent with the protection of investors and public interest. 11 In its proposal to qualify a company, in the case of the Earnings Test and Valuation/Revenue with Cash Flow Test, on the basis of 33 months of financial history and, in the case of the Pure Valuation/Revenue Test, on the basis of nine months of financial history, the Exchange has stated its belief that any company that it would qualify for listing on the basis of the proposed rule change would meet the existing standards of Section 102.01C upon completion of its next fiscal year. Therefore, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. 10 17 CFR 240.19b-4(f)(6)(iii). 11 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). The Exchange also requested that the Commission waive the five-day pre-filing requirement; however, the Exchange provided the Commission with such notice; therefore, this request is moot. 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 e-mail to *rule-comments@sec.gov* . Please include File Number SR-NYSE-2006-38 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2006-38. 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 NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2006-38 and should be submitted by June 14, 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. E6-7914 Filed 5-23-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53834; File No. SR-NYSE-2006-32] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Relating to the NYSE Retail Trading Product and the NYSE Program Trading Product May 18, 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 9, 2006, the New York Stock Exchange LLC (“NYSE” 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 NYSE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to establish fees for two new market data products: The NYSE Retail Trading Product and the NYSE Program Trading Product. The text of the proposed rule change is available on the Exchange's Web site ( *http://www.nyse.com* ), at the NYSE's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Pursuant to a separate proposed rule change that NYSE has filed contemporaneously with the proposed rule change ( *see* SR-NYSE-2006-31; the “Pilot Program Filing”), NYSE proposes to make available to vendors and investors the following:
(1)The NYSE Retail Trading Product will consist of
(A)a real-time datafeed of certain execution report information that has been recorded as trades for accounts of “individual investors” 3 and
(B)an end-of-day summary of the retail trading activity on the Exchange for that day, including total buy-and-sell retail share volume for each stock traded (the “End-of-Day Retail Trading Summary”). 3 For this purpose, the “account of an individual investor” means an account covered by Section 11(a)(1)(E) of the Act. That section refers to the “account of a natural person, or a trust created by a natural person for himself or another natural person.”
(2)The NYSE Program Trading Product will consist of
(A)a real-time datafeed of certain execution report information that has been recorded as program trades 4 and
(B)an end-of-day summary of program trading activity on the Exchange for that day, including total index arbitrage (as opposed to non-index arbitrage) program trading volume (the “End-of-Day Program Trading Summary”). 4 For this purpose, “program trading” has the definition that Supplementary Material .40(b) to NYSE Rule 80A (“Index Arbitrage Trading Restrictions”) gives to that term. Each published report of a trade execution that is included in the datafeed for either product shall indicate such information as the security's symbol, the size of the trade, the time of the trade's execution and other related information. 5 (More information regarding the NYSE Retail Trading Product and the NYSE Program Trading Product can be found on the NYSE Web site at *http://www.nysedata.com/InfoTools.* ) 5 NYSE will only include in the NYSE Retail Trading Product and the NYSE Program Trading Product information that is attached to execution reports. While the NYSE believes the information contained in the NYSE Retail Trading Product and the NYSE Program Trading Product is accurate, the NYSE does not guarantee the completeness or accuracy of account information submitted by order entry firms on which the InfoTools product is based. The Exchange believes the NYSE Retail Trading Product should provide investors with increased information regarding individual investors' trading activity on the Exchange. Similarly, the NYSE Program Trading Product should provide investors with increased information regarding program trading activity. Pursuant to the proposed rule change, NYSE proposes to establish:
(1)A monthly access fee of $1,500 for receipt of the NYSE Retail Trading Product datafeed (for receipt of the real-time datafeed, the end-of-day summaries, or both);
(2)A monthly access fee of $1,500 for receipt of the NYSE Program Trading Product datafeed (for receipt of the real-time datafeed, the end-of-day summaries, or both);
(3)A monthly display fee of $2.00 that the vendor or its subscribers are to pay for each display device receiving NYSE Retail Product information and/or NYSE Program Trading Product information (collectively, “NYSE Trading Information”) that the vendor makes available from the real-time datafeed; and
(4)A monthly fee of $250 if the vendor makes NYSE Trade Information available from the end-of-day summaries, rather than from the real-time datafeeds. In addition, each vendor of NYSE Trading Information will receive a monthly credit of $2 for each device that the vendor has entitled to receive displays of NYSE Trading Information, up to a maximum of:
(1)$3,000 per month if the vendor pays the monthly access fees for both the NYSE Retail Trading Product datafeed and the NYSE Program Trading Product datafeed (which two monthly access fees total $3,000); and
(2)$1,500 per month if the vendor pays the monthly access fees for either the NYSE Retail Trading Product datafeed or the NYSE Program Trading Product, but not both (either of which monthly access fees equals $1,500). The Exchange would commence to impose those fees 30 days after the Commission approves them. NYSE believes that the access and device fees for the NYSE Retail Trading Product and the NYSE Program Trading Product would reflect an equitable allocation of NYSE's overall costs to users of its facilities. The access fees, the device fees and the device fee credit apply equally to every vendor. The Exchange notes that it proposes to set the device fee offset of access fees ( *i.e.* the device fee credit) at such low levels ( *i.e.,* a $1500 access fee is offset in full if only 750 of a vendor's customers subscribe to the service) that the vast majority of vendors that wish to provide displays of this information are likely, in effect, not to pay access fees. In arriving at the monthly $1500 access fee, the $2 device fee and the $250 redistribution fee, the Exchange took into account the cost of collecting, processing and making available NYSE Trading Information, and assessed the value of the two products relative to other data products that the Exchange makes available, such as NYSE OpenBook and NYSE Alerts. The Exchange believes that the fees would enable the users of NYSE Trading Information to make an appropriate contribution to the recovery of the overall costs of NYSE's operations and that the fees are reasonably related to the value that the two products provide to those who use them. The Exchange is not proposing to impose any attribution requirements on vendors displaying NYSE Trading Information. However, the Exchange believes that it is incumbent on vendors to identify and display information in a manner that avoids investor confusion. This is especially true at a time when markets are offering investors, who have grown accustomed to viewing consolidated information over the past three decades, many new exchange-specific information services. Thus, while the Exchange is not proposing to impose any attribution requirement, it does propose to have vendors provide, by link or otherwise, a description of the NYSE Retail Trading Product and NYSE Program Trading Product in a manner that is reasonably transparent and accessible to subscribers of the two products. The Exchange will require the Exhibit A to each vendor's contract with the Exchange for the receipt and redistribution of the NYSE Retail Trading Product and NYSE Program Trading Product to describe how the vendor will make the description available. The description should read substantially as follows: NYSE Rule 132B requires each NYSE member firm to record for each order that it submits to the Exchange such information as whether the firm is placing the order for the account of a retail customer or whether the order results from program trade trading activity. NYSE uses this information to produce the NYSE Retail Trading Product and NYSE Program Trading Product, each of which includes real-time information relating to retail trading and program trading activity, respectively, as well as daily summaries and historical databases of that information. While the NYSE believes the information contained in the NYSE Retail Trading Product and NYSE Program Trading Product is accurate, Customer understands that its agreement with NYSE provides that NYSE
(1)Reserves all rights to that information,
(2)does not guarantee the completeness or accuracy of account information submitted by order entry firms on which the InfoTools product is based, and
(3)shall not be liable for any loss due either to their negligence or to any cause beyond their reasonable control. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Section 6(b)(4) of the Act 7 in particular, in that it provides for the equitable allocation of reasonable fees, dues, and other charges among Exchange participants, issuers and other persons using its facilities. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments regarding the proposed rule change. The Exchange has not received any unsolicited written comments from Exchange participants or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or
(ii)as to which the NYSE consents, the Commission will: A. By order approve such proposed rule change; or B. Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2006-32 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-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 Room. 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 publicly available. All submissions should refer to File Number SR-NYSE-2006-32 and should be submitted on or before June 14, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-7915 Filed 5-23-06; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION National Women's Business Council; Notice of Cancellation for Public Meeting In accordance with the Women's Business Ownership Act (Pub. L. 106-554 as amended) the National Women's Business Council
(NWBC)public meeting on Capitol Hill, originally scheduled for Tuesday, May 23, 2006, is being postponed until September 2006. The NWBC Web site will be updated shortly with information on the new date, time and location. We hope you will be able to join the NWBC in September 2006. If you have any questions, please contact the National Women's Business Council at 202-205-3850 or *info@nwbc.gov.* Matthew K. Becker, Committee Management Officer. [FR Doc. E6-7974 Filed 5-23-06; 8:45 am] BILLING CODE 8025-01-P SOCIAL SECURITY ADMINISTRATION Privacy Act of 1974 as Amended; Computer Matching Program (SSA/Department of the Treasury, Bureau of the Public Debt (BPD)—Match Number 1038 AGENCY: Social Security Administration (SSA). ACTION: Notice of the renewal of an existing computer matching program which is scheduled to expire on June 25, 2006. SUMMARY: In accordance with the provisions of the Privacy Act, as amended, this notice announces the renewal of an existing computer matching program that SSA is currently conducting with BPD. DATES: SSA will file a report of the subject matching program with the Committee on Homeland Security and Governmental Affairs of the Senate; the Committee on Government Reform of the House of Representatives and the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB). The matching program will be effective as indicated below. ADDRESSES: Interested parties may comment on this notice by either telefax to
(410)965-8582 or writing to the Associate Commissioner for Income Security Programs, 245 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-6401. All comments received will be available for public inspection at this address. FOR FURTHER INFORMATION CONTACT: The Associate Commissioner for Income Security Programs as shown above. SUPPLEMENTARY INFORMATION: A. General The Computer Matching and Privacy Protection Act of 1988 (Public Law (Pub. L.) 100-503), amended the Privacy Act (5 U.S.C. 552a) by describing the manner in which computer matching involving Federal agencies could be performed and adding certain protections for individuals applying for, and receiving, Federal benefits. Section 7201 of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508) further amended the Privacy Act regarding protections for such individuals. The Privacy Act, as amended, regulates the use of computer matching by Federal agencies when records in a system of records are matched with other Federal, State, or local government records. It requires Federal agencies involved in computer matching programs to:
(1)Negotiate written agreements with the other agency or agencies participating in the matching programs;
(2)Obtain the approval of the matching agreement by the Data Integrity Boards
(DIB)of the participating Federal agencies;
(3)Publish notice of the computer matching program in the **Federal Register** ;
(4)Furnish detailed reports about matching programs to Congress and OMB;
(5)Notify applicants and beneficiaries that their records are subject to matching; and
(6)Verify match findings before reducing, suspending, terminating or denying an individual's benefits or payments. B. SSA Computer Matches Subject to the Privacy Act We have taken action to ensure that all of SSA's computer matching programs comply with the requirements of the Privacy Act, as amended. Dated: March 6, 2006. Martin H. Gerry, Deputy Commissioner for Disability and Income Security Programs. Notice of Computer Matching Program, Social Security Administration
(SSA)with the Department of the Treasury, Bureau of the Public Debt
(BPD)A. Participating Agencies SSA and BPD. B. Purpose of the Matching Program The purpose of this matching program is to establish the conditions, safeguards and procedures for BPD's disclosure of certain savings security information to SSA. (The term “savings security” means Series E, EE or I United States Savings Securities.) SSA will use the match results to verify eligibility and payment amounts of individuals under the Supplemental Security Income
(SSI)program. The SSI program was created under title XVI of the Social Security Act (the Act) to provide benefits under the rules of that title to individuals with income and resources below levels established by law and regulations. C. Authority for Conducting the Matching Program Sections 1631(e)(1)(B) and
(f)of the Act (42 U.S.C. 1383(e)(1)(B) and (f)). D. Categories of Records and Individuals Covered by the Matching Program SSA will provide BPD with a finder file extracted from SSA's Supplemental Security Income Record and Special Veterans Benefits system of records containing Social Security numbers of individuals who have applied for, or receive, SSI payments. This information will be matched with BPD files in BPD's savings-type securities registration systems of records (United States Savings Type Securities and Retail Treasury Securities Access Application) and a reply file of matched records will be furnished to SSA. Upon receipt of BPD's reply file, SSA will match identifying information from the BPD file with SSA's records to determine preliminarily whether the data pertain to the relevant SSI applicant or recipient before beginning the process of verifying savings security ownership and taking any necessary benefit actions. E. Inclusive Dates of the Matching Program The matching program will become effective upon signing of the agreement by both parties to the agreement and approval of the agreement by the Data Integrity Boards of the respective agencies, but no sooner than 40 days after notice of this matching program is sent to Congress and OMB, or 30 days after publication of this notice in the **Federal Register** , whichever date is later. The matching program will continue for 18 months from the effective date and may be extended for an additional 12 months thereafter, if certain conditions are met. [FR Doc. E6-7869 Filed 5-23-06; 8:45 am] BILLING CODE 4191-02-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration [Summary Notice No. PE-2006-14] Petitions for Exemption; Summary of Petitions Received AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of petitions for exemption received. SUMMARY: Pursuant to FAA's rulemaking provisions governing the application, processing, and disposition of petitions for exemption part 11 of Title 14, Code of Federal Regulations (14 CFR), this notice contains a summary of certain petitions seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of any petition or its final disposition. DATES: Comments on petitions received must identify the petition docket number involved and must be received on or before June 13, 2006. ADDRESSES: You may submit comments [identified by DOT DMS Docket Number FAA-2001-10967] by any of the following methods: • Web site: *http://dms.dot.gov.* Follow the instructions for submitting comments on the DOT electronic docket site. • Fax: 1-202-493-2251. • Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-001. • Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 am and 5 pm, Monday through Friday, except Federal Holidays. *Docket:* For access to the docket to read background documents or comments received, go to *http://dms.dot.gov* at any time or to Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 am and 5 pm, Monday through Friday, except Federal Holidays. FOR FURTHER INFORMATION CONTACT: Tim Adams
(202)267-8033, Sandy Buchanan-Sumter
(202)267-7271, Shanna Harvey
(202)493-4657,or John Linsenmeyer
(202)267-5174, Office of Rulemaking (ARM-1), Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591. This notice is published pursuant to 14 CFR 11.85 and 11.91. Issued in Washington, DC, on May 17, 2006. Ida M. Klepper, Acting Director, Office of Rulemaking. Petitions for Exemption *Docket No.:* FAA-2001-10967. *Petitioner:* Experimental Aircraft Association. *Section of 14 CFR Affected:* 14 CFR 135.251, 135.255, and appendices I and J to part 121. *Description of Relief Sought:* To permit Experimental Aircraft Association (EAA), to authorize a pilot or an event sponsor (EAA Chapter) to participate in up to six charitable sightseeing events per calendar year based upon special or unique community needs. [FR Doc. E6-7858 Filed 5-23-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Transit Administration Preparation of a Supplemental Draft Environmental Impact Statement on East-West Corridor Transit Improvements in Miami-Dade County, FL AGENCIES: Federal Transit Administration (FTA), U.S. Department of Transportation (DOT). ACTION: Notice of intent to prepare a supplemental draft environmental impact statement. SUMMARY: The Federal Transit Administration
(FTA)and Miami-Dade Transit
(MDT)intend to prepare a Supplemental Draft Environmental Impact Statement (SDEIS) in accordance with the National Environmental Policy Act of 1969 (NEPA), for the proposed East-West Transit Corridor Study in Miami-Dade County, Florida, between Florida International University
(FIU)and the Miami Intermodal Center
(MIC)at Miami International Airport (MIA). The SDEIS will evaluate at least three alternatives: a No-Build Alternative; a Transportation System Management
(TSM)Alternative; a Build Alternative; and any reasonable alternatives uncovered during the public scoping process. Scoping will be accomplished through meetings and correspondence with interested persons, organizations, the general public, Federal, State and local agencies. MDT will create a Coordination Plan to actively include public and participating agency involvement and comment during the entire NEPA process. The Coordination Plan will be found on the East-West Corridor Web site at *http://www.miamidade.gov/transit* . The purpose of this Notice of Intent is to re-notify interested parties of the intent to prepare the SDEIS and invite participation in the Study. An Advance Notification for the original East-West Corridor Multimodal Project was issued in 1993. The study area being evaluated in this SDEIS traverses the western portion ( *i.e.* , FIU to MIC) of the entire East-West Corridor between FIU and the Port of Miami that was studied in the East-West Multimodal Corridor Major Investment Study/Draft Environmental Impact Statement (MIS/DEIS) in 1995 and the East-West Multimodal Corridor Final Environmental Impact Statement
(FEIS)in 1998. A Locally Preferred Alternative (LPA)/Minimum Operable Segment
(MOS)emerged from this process and was the subject of a Record of Decision jointly issued by the Federal Highway Administration
(FHWA)and FTA in 1998. With approval of the People's Transportation Plan
(PTP)by Miami-Dade County voters in 2002, along with changes in growth and development along the western portion of the corridor, a redefinition of planned transit investments resulted in the locally proposed alternative. It is the intention of this action to improve mobility in the East-West Corridor. DATES: *Comment Due Date:* Written comments on the scope of the alternatives and impacts to be considered should be sent to Ms. Maria C. Batista, Project Manager by June 30, 2006. See ADDRESSES below. *Scoping Meetings:* A Miami-Dade Transit agency coordination meeting will be held on Wednesday, June 7, 2006 from 2 p.m. to 5 p.m. at Florida International University, Miami, Florida. Public scoping meetings will be held on Wednesday, June 7, 2006 from 7 p.m. to 9 p.m. at Florida International University, Miami, Florida, and on Tuesday, June 13, 2006 from 7 p.m. to 9 p.m. at St. Dominic Catholic Church, Miami, Florida. See ADDRESSES below. ADDRESSES: *Written comments* on the project scope should be sent to Ms. Maria C. Batista, Project Manager, Miami-Dade Transit, 111 NW., First Street, Suite 910, Miami, Florida 33128-1970. The fax number is 305.372.6017. *Scoping meetings* will be held at the following locations: Agency Coordination Meeting Wednesday, June 7, 2006 from 2 p.m. to 5 p.m. Florida International University, Graham Building, University Park, 11200 SW 8th Street, Miami, Florida. Public Meetings Wednesday, June 7, 2006 from 7 p.m. to 9 p.m. Florida International University, Graham Building, University Park, 11200 SW 8th Street, Miami, Florida. Tuesday, June 13, 2006 from 7 p.m. to 9 p.m. St. Dominic Catholic Church, Senior Center Hall, 5849 NW 7th Street, Miami, Florida. FOR FURTHER INFORMATION CONTACT: Mr. Tony Dittmeier, Transportation Program Specialist, Federal Transit Administration, Atlanta Regional Office,
(404)562-3512. SUPPLEMENTARY INFORMATION: I. Scoping The current East-West Transit Corridor SDEIS is re-examining improved transit service in the portion of the East-West Corridor between FIU and the MIC at MIA. The MDT and FTA invite interested individuals, organizations, and Federal, State, and local agencies to participate in defining the purpose and need for, and refining the scope of the East-West Transit Corridor SDEIS. Comments should focus on identifying any significant social, economic, or environmental issues related to the proposed alternatives. Specific suggestions related to alignment variations to be examined and issues to be addressed are welcome and will be considered in the final scope for the study. Scoping comments should focus on the issues for analysis. Comments may be made at the scoping meetings or in writing no later than June 30, 2006. See DATES and ADDRESSES above for meeting times and locations and the address for written comments. A scoping information packet is available from Ms. Maria C. Batista at the address given above or on the MDT internet Web page at *http://www.miamidade.gov/transit* . See ADDRESSES above. II. Description of Study Area and Project Need The study area is located in central Miami-Dade County, Florida, beginning at the University Park Campus of FIU and ending just past MIA at the proposed MIC. The study area covers approximately a three-mile by nine-mile rectangle, generally bounded by NW 25th Street on the north; SW 8th Street on the south; the Homestead Extension of Florida's Turnpike (SR 821) on the west; and NW 37th Avenue to the east. It encompasses the area 1.5 miles north and south of the Dolphin Expressway (SR 836). The study area includes portions of the Cities of Miami, Sweetwater, and Doral, as well as areas within unincorporated Miami-Dade County. This area is highly urbanized with the older and denser development to the east ( *i.e.* , downtown Miami and Miami Beach), and the more recent and less dense development in the suburbs to the west and south. The proposed transit alternative would serve the airport, portions of the City of Miami along the Dolphin Expressway, the City of Sweetwater, the City of Doral and FIU. It would provide an additional means of transportation within and through the heavily-congested East-West Corridor, thereby improving accessibility to major activity centers in the corridor and in the region generally. This would include improved mobility between residential suburbs to the south and west and the employment, cultural, and tourism centers to the east such as MIA, downtown Miami, the Port of Miami, and Miami Beach. The purpose of and need for pursuing additional transit options to address mobility and accessibility issues in the East-West Corridor is based on the following key elements: • The Miami-Dade Metropolitan Planning Organization (MPO), MDT, elected officials, and the people of Miami-Dade County have shown their commitment to major transportation capital investment in the corridor through officially adopted plans and approval of a referendum to commit sales tax revenues to fund expansion of the Metrorail system in this corridor. • The roadway network in the corridor is heavily congested with many segments that have significantly high crash rates and unreliable travel conditions and times. • The corridor contains several major employment/activity centers, including Miami International Airport, the single most important economic force and trip generator in the region. • The efficiency of current transit service in the corridor, provided exclusively by bus, is hampered by the same factors that have impaired mobility along the congested roadway network in the corridor. • With only one current and two planned east-west express bus routes in the corridor, current and potential transit users in the study area would benefit greatly from a higher level of transit service. • Once the planned expansion of the Dolphin Expressway is completed, there will be essentially no capacity to further expand the roadway network in any substantial way, either for general purpose traffic or exclusive transit lanes, due to the high cost of acquiring property for right-of-way and associated adverse environmental impacts and community disruption. • In order to meet projected growth and sustain continued economic viability within the corridor and the region, a major investment in transit is needed to meet mobility and accessibility needs. In a region where high capacity transportation facilities are primarily oriented north-south, the East-West Corridor is Miami-Dade County's most important and heavily traveled east-west route. Much of the growth in recent years has occurred in the western and southwestern portions of the region, including the western portion of the East-West Corridor, which has seen rapid growth in population, households, and employment. The study area currently has more than 195,000 residents in 68,000 households and some 180,500 jobs. Official growth forecasts indicate that this trend will continue with population increasing by 44,000 (23 percent) by the year 2030 and jobs increasing by 60,000 (33 percent). Several studies have clearly demonstrated the need for public transportation improvements to accommodate the East-West Corridor's substantial population growth, increasing employment and development, and the need for a wider range of mobility options to meet rising east-west travel demand within and through the corridor. Both the Miami-Dade MPO's 2030 Long-Range Transportation Plan
(LRTP)and the People's Transportation Plan have designated the East-West Corridor as a priority corridor for extension of Metrorail service. In November 2002, the voters of Miami-Dade County approved the People's Transportation Plan and a one-half percent sales tax increase to fund the plan. The PTP includes an extension of Metrorail service from the MIC to FIU. The extension of Metrorail service from the MIC to FIU also is designated as a Priority I project in the MPO's financially constrained 2030 LRTP, approved by the MPO Governing Board in December 2004. III. Alternatives The transportation alternatives proposed for consideration in this study area include: *No-Build Alternative* —The No-Build Alternative includes the existing street, highway, and transit facilities and services and those transit and highway improvements planned and programmed to be implemented by 2030. The No-Build Alternative provides the baseline for establishing the environmental impacts of the proposed alternatives, and assumes the following projects will be completed: • Extension of the Stage 1 Metrorail Line from the existing Earlington Heights station to a new station at the MIC. • MIC-MIA Connector fixed guideway people mover system linking MIA and the MIC. • Increase in Tri-Rail service frequencies to 20-minute headways during peak periods between MIA and Mangonia Park Station in Palm Beach County. Transportation System Management
(TSM)Alternative—The TSM Alternative is defined as lower cost, operationally-oriented improvements to address the transportation problems identified in the corridor. It also provides a baseline against which the effectiveness of the Build Alternative is evaluated and rated for federal New Starts funding, and would include the following: • Express, limited-stop bus service along the Dolphin Expressway. • Enhanced bus service on major east-west arterials. • Park-and-ride facilities at the same locations as the Build Alternative and sized to meet the forecasted demand. • Enhanced bus stations at the same locations as the Build Alternative. • The TSM Alternative also includes all improvements identified under the No-Build Alternative. *Build Alternative* —The Build Alternative consists of an approximately 10.1 mile, two-track, elevated, heavy rail extension of Metrorail from the MIC at MIA west to FIU, with proposed stations at the NW 57th Avenue/Blue Lagoon, NW 72nd Ave./Palmetto Expressway, NW 87th Avenue, NW 97th Avenue, NW 107th Avenue, and FIU. The LPA that was developed as a result of the initial environmental studies prepared in the 1990's continues to form the basis of the current SDEIS effort. The Build Alternative connects FIU with the MIC at MIA by following the Florida Turnpike northward from FIU and then the Dolphin Expressway eastward to the MIC. It would be developed as a direct extension of the existing Metrorail system. Several land use and development changes have occurred since the previous studies that require some minor refinement of the alignment and station location options. These refinements are being developed in consultation with state and local agencies and the surrounding community. The intent of these refinements to the alternative is to stay generally within the original corridor while looking to improvements that would enhance the ridership potential of the line, reduce costs where feasible, and further mitigate environmental impacts. IV. Probable Effects/Potential Impacts for Analysis The FTA and MDT will evaluate all significant environmental, social, and economic impacts of the alternatives analyzed in the SDEIS. Environmental and social impacts proposed for analysis include land use, zoning, and economic development; secondary development; land acquisition, displacements, and relocation of existing uses; historic resources; visual and aesthetic qualities; neighborhoods and communities; environmental justice; air quality; noise and vibration; hazardous materials; ecosystems; water resources; energy; safety and security; utilities; traffic and transportation; natural areas; threatened and endangered species; ground water and potentially contaminated sites; wetlands; and floodplain areas. The SDEIS will also evaluate secondary and cumulative impacts. Potential impacts will be assessed for the long-term operation of each alternative and the short-term construction period. Measures to avoid, minimize, or mitigate any significant adverse impacts will be identified. V. Public Involvement A comprehensive public involvement program has been developed and a public and agency involvement Coordination Plan will be created. The program includes a project Web site ( *http://www.miamidade.gov/transit* ); outreach to local and county officials and community and civic groups; a public scoping process to define the issues of concern among all parties interested in the study; a public hearing on release of the supplemental draft environmental impact statement (SDEIS); establishment of walk-in project offices in the corridor; and development and distribution of project newsletters. VI. FTA Procedures In accordance with FTA policy, all Federal laws, regulations, and executive orders affecting project development, including but not limited to the regulations of the Council on Environmental Quality and FTA implementing NEPA (40 CFR parts 1500-1508, and 23 CFR Part 771), the 1990 Clean Air Act Amendments, section 404 of the Clean Water Act, Executive Order 12898 regarding environmental justice, the National Historic Preservation Act, the Endangered Species Act, and section 4(f) of the DOT Act, will be addressed to the maximum extent practicable during the NEPA process. In addition, MDT may seek § 5309 New Starts funding for the project and will therefore be subject to the FTA New Starts regulation (49 CFR part 611). This New Starts regulation requires the submission of certain specified information to FTA to support a MDT request to initiate preliminary engineering, which is normally done in conjunction with the NEPA process. Pertinent New Starts evaluation criteria will be included in the Final Supplemental Environmental Impact Statement. Issued On: May 17, 2006. Yvette G. Taylor, FTA Regional Administrator. [FR Doc. E6-7865 Filed 5-23-06; 8:45 am] BILLING CODE 4910-57-P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration [Docket No. NHTSA-2005-22176; Notice 2] Nissan Motor Company and Nissan North America, Denial of Petition for Decision of Inconsequential Noncompliance Nissan Motor Company, Ltd. and Nissan North America, Inc. (Nissan) have determined that certain vehicles that they produced in 2004 through 2005 do not comply with S9.2.2 of 49 CFR 571.225, Federal Motor Vehicle Safety Standard (FMVSS) No. 225, “Child restraint anchorage systems.” Pursuant to 49 U.S.C. 30118(d) and 30120(h), Nissan has petitioned for a determination that this noncompliance is inconsequential to motor vehicle safety and has filed an appropriate report pursuant to 49 CFR part 573, “Defect and Noncompliance Reports.” Notice of receipt of the petition was published, with a 30 day comment period, on August 25, 2005 in the **Federal Register** (70 FR 49972). NHTSA received a comment from Advocates for Highway and Auto Safety (Advocates) as well as a comment by Nissan responding to Advocates' comment. Affected are a total of approximately 24,655 model year
(MY)2005 Infiniti FX vehicles manufactured from September 1, 2004 to July 13, 2005, and 65,361 MY 2005 Nissan Maxima vehicles manufactured from September 1, 2004 to July 11, 2005. There was also mention in the **Federal Register** notice of 167 MY 2005 Infiniti Q45 vehicles with rear power seats manufactured from September 1, 2004 to June 30, 2005; however, this reference was in error and the Infiniti Q45 vehicles are not the subject of this petition. A child restraint anchorage system consists of two lower anchorages and a tether anchorage that can be used to attach a child restraint system to a vehicle. These systems are sometimes referred to as LATCH (Lower Anchorages and Tethers for Children) systems and are intended to help ensure proper installation of child restraint systems. S9.2.2 of FMVSS No. 225 requires: With adjustable seats adjusted as described in S9.2.3, each lower anchorage bar shall be located so that a vertical transverse plane tangent to the front surface of the bar is
(a)Not more than 70 mm behind the corresponding point Z of the CRF [child restraint fixture], measured parallel to the bottom surface of the CRF and in a vertical longitudinal plane, while the CRF is pressed against the seat back by the rearward application of a horizontal force of 100 N at point A on the CRF. The lower anchorage bars in the subject vehicles do not comply with this requirement. Nissan states that tests performed for NHTSA by MGA Research revealed a noncompliance in a 2005 Infiniti FX, and Nissan subsequently investigated its other vehicle models on this issue. Nissan believes that the noncompliance is inconsequential to motor vehicle safety and that no corrective action is warranted. However, NHTSA has reviewed the petition and has determined that the noncompliance is not inconsequential to motor vehicle safety. The Agency stated in the March 5, 1999 final rule (64 FR 10786) that, This final rule is being issued because the full effectiveness of child restraint systems is not being realized. The reasons for this include design features affecting the compatibility of child restraints and both vehicle seats and vehicle seat belt systems. By requiring an easy-to-use anchorage system that is independent of the vehicle seat belts, this final rule makes possible more effective child restraint installation and will thereby increase child restraint effectiveness and child safety. 64 FR 10786. The language of the March 5, 1999 final rule clearly indicates that ease of use is consequential to the proper installation of child restraints and ultimately the safety of the child passenger. The ease of use for the child restraint anchorage system is directly impacted by the rearward location or depth of the anchorage bars. In its petition, Nissan first states that the vehicles comply with the alternative requirements S15 of FMVSS No. 225, which were available as a compliance option until September 1, 2004. Advocates makes the comment that this is irrelevant because it was not a legal method of compliance at the time the vehicles were built, which is correct. When the agency established the safety standard on March 5, 1999 (64 FR 10786), the final rule did not permit the International Organization for Standardization
(ISO)compliance option. The agency received petitions for reconsideration of the final rule from the Alliance of Automobile Manufacturers (Alliance), as well as others. On August 31, 1999 (64 FR 47568), the agency allowed manufacturers to comply, as an option, with the requirements set forth in a draft standard issued by the ISO group until September 1, 2002. This provision was later extended to September 1, 2004. The ISO requirements permitted lower anchorage strength that was less than that required by the March 5, 1999 final rule and did not specify a horizontal force to be applied to the CRF when measuring the distance between Point Z and the anchorage bar. The reasons for permitting this interim compliance option are discussed in the August 31, 1999 notice: These amendments are made to provide manufacturers lead time to develop lower anchorages that meet the strength requirements of our standard. Lower anchorages meeting the draft ISO requirements will provide an improved means of attaching child restraints. While the 11,000 N strength requirement is preferable to the ISO 8,000 N requirement, we are balancing the benefits associated with lower anchorages meeting the draft ISO requirements in the short run against the possibility of there being no improved means of attaching child restraints. Lower anchorages meeting the draft ISO requirements will still provide an improvement to parents who have difficulty attaching a child restraint correctly in a vehicle or whose vehicle seats are incompatible with child restraints. In the short term, we are adopting an alternative allowing compliance with a lesser requirement as a practicable temporary approach that would reap benefits not otherwise obtainable during the interim. The agency is thus amending the standard to enable manufacturers to provide child restraint anchorage systems in vehicles as quickly as possible. 64 FR 47570. Thus, the ISO provisions and specifically S15 were permitted as an interim step to provide some improvements to the public as quickly as possible while balancing the testing and lead time necessary for manufacturers to provide a system that complies with the regulation. Prior to September 1, 2004, Nissan was able to comply with the S15 requirement for anchorage bar depth by applying a horizontal force that exceeded the 100 N requirement of S9.2.2, since S15 did not specify a limit on horizontal force. NHTSA's compliance test data for the 2005 Infiniti FX35 show that it took a horizontal force of 213 N to achieve the 70 mm distance, more than twice the 100 N horizontal application force limit in the current standard. The March 5, 1999 final rule specified a horizontal force application of 5 N at point A on the CRF for determining the distance between point Z and the anchorage bars. A force application was specified to obtain an objective measurement. The June 27, 2003 response to petitions for reconsideration (68 FR 38208) revised the horizontal application force specified in S9.2.2 to 100 N. General Motors had requested that the 5 N requirement be deleted or increased; the Alliance requested deletion or an increase to 150 N. In the June 27, 2003 notice the agency discussed the decision to increase the force limit to 100 N. On reconsideration, while a force specification is needed for objectivity, increasing the force level will result in a larger area provided to vehicle manufacturers for installing the LATCH lower anchorages, which facilitates the installation of the anchorages. We estimate that a 5th percentile adult female would be able to exert a 100 N force pushing back on a child restraint without problem. 68 FR 38214. The 213 N force necessary to achieve a measurement of 70 mm in the Infiniti FX35 far exceeds what was determined to be reasonable (100 N) in the June 27, 2003 notice. This means that more than twice the permitted force would be needed to achieve a distance of 70 mm or less between point Z and the anchorage bars. Second, Nissan states that the extent of the noncompliance is not significant. Specifically, it says: The left and right lower anchorages in the MY 2005 FX vehicle were located 76 mm and 83 mm behind Point Z, respectively, when tested by MGA under the procedures of S9.2.2. During its subsequent investigation using the MGA CRF, Nissan measured the lower anchorage location in the left and right rear seats in five other FX vehicles. The average distance from Point Z was 78 mm, and the greatest distance was 81 mm. The average distance for the four 5-seat Nissan Maxima vehicles tested was 76 mm, and the greatest distance was 81 mm. The average distance for the three 4-seat Maxima vehicles tested was 92 mm, and the greatest distance was 94 mm. At most, this reflects a distance of less than an inch beyond the distance specified in the standard, and the difference is less than one-half of an inch for the FX and the 5-seat Maxima models. Advocates commented that the safety issue is not the actual distance of the noncompliance but rather the effect of this noncompliance on safety. It states that even a “noncompliance that involves a minimal deviation from the standard can be critical if it prevents the proper installation of child restraints in vehicles.” NHTSA agrees. The 70 mm maximum distance between point Z on the fixture and the front of the anchorage bar was established to ensure easy installation of a child restraint system
(CRS)and to reduce the likelihood of an improperly installed CRS. Locating the anchorage bars at this distance or less ensures that the anchorage bars are accessible and easy to use. In the March 5, 1999 final rule (64 FR 10786), the agency increased the anchorage bar location to the current 70 mm maximum distance after the ISO working group increased its limit from 50 mm to 70 mm. In requiring the 70 mm limit, NHTSA stated, * * * NHTSA believes that most vehicles, except those with highly contoured seats, will have the bars 50 to 60 mm from the CRF. At this distance the agency believes that the bars would generally be visible at the seat bight without compressing the seat cushion or seat back. Permitting lower anchorages at distances beyond 70 mm affects the ease of installation and proper installation of LATCH equipped child restraint systems, and compromises the benefits realized by a compliant child restraint anchorage system. The measurements of the subject lower anchorages exceed the requirements of S9.2.2 by up to 24 mm. Therefore, NHTSA finds that the extent of the noncompliance is significant. Third, Nissan conducted a survey program to assess the ease of installing CRSs in these vehicles, and set out the results as an attachment to its petition. Nissan points out that there were few unsuccessful attempts and says that the results “clearly demonstrate that the noncompliance * * * does not adversely affect the ease of installation of the CRSs * * *.” Nissan also indicates that the latchings were accomplished in an average time of between 22 seconds and 39 seconds. Advocates calls into question the validity of Nissan's survey conclusions, based on Nissan's use of its employees as testers and its dismissal of several failures because they were by one installer. NHTSA also finds Nissan's conclusions to be questionable. Survey participants were women employees of Nissan. No description is given of the women involved in the study except that they “* * * included some relatively small women and some mothers * * *.” Nissan indicates that “These results show that, despite the noncompliance, parents and other consumers in the real world have very little difficulty installing CRSs in the vehicles covered by this petition.” Nissan made no attempt to obtain a sample that is representative of the general population but indicates that its results are generalizable. In the real world, parents include men, who were not included in this study. It seems by selection of a sample consisting of all women, Nissan assumes women would have more difficulty than men in installing CRSs to the lower anchor in the vehicle seat or that women would be more likely to install a CRS. But these may be incorrect assumptions. Men also install CRSs and there may be male physical attributes that may affect the ability of males to connect CRSs to the anchor. For example, in the tight space in the bight of the vehicle seat where the anchors are located, men—generally having larger hands than women—may have a more difficult time locating the anchor and connecting to it. Further, each of the twelve installers had the benefit of a short demonstration on how each of the CRS hardware types was to be installed for the vehicles in question. The installers were also shown a diagram from the owner's manual that illustrated the location of the anchorages in the seat. They were then shown a sample of a lower anchorage removed from a seat so that they would know what to look for in the seat. NHTSA is not convinced that this survey is predictive of likely real-world problems that would be encountered by members of the general public who were not given similar, detailed instructions immediately prior to attempting to install a CRS. Also, even with this detailed briefing, 20 of the 336 installation attempts by this group were unsuccessful. It should be noted that Nissan did not include a control vehicle (with lower anchors that comply with the standard) in their study for comparison purposes. Also, the sample size is very small (12 participants, and one participant's results were discounted). The ability to generalize the results of this study to the population at large is very doubtful. In addition, NHTSA finds no basis for dismissing several failures as anomalous because they were by a single installer. Nissan reports that 20 (1.9 %) attempts failed during the trials but adds that one participant accounted for 12 of the 20 failed attempts to latch the child restraint to the anchor and indicates its belief that her performance was “* * * anomalous and not predictive of the general public in installing CRSs * * *.” Nissan suggests that if the results from installer number 9 are discarded, then overall there would only be 8 unsuccessful attempts (0.3% for the FX, 0.0 % for the 5-seat Maxima, and 2.3% for the 4-seat Maxima) to latch a child restraint to the anchor. However, installer number 9 did not fail across the board. She accomplished 72 successful child restraint installations out of 84 attempts. Installer number 9 may represent a segment of the distribution of child restraint installing capabilities of the general public. In other words, there may be a significant number of number 9s in the general population. The sample, as stated earlier, is very small (and biased), and it could be the case that a sample of this size might have one or more data points that appear to be outliers but may prove not to be if a larger sample were taken. One other installer in Nissan's survey (installer number 8) had 4 unsuccessful installations and was retained in the study's assessment. Also, it should be noted that Nissan apparently did not obtain feedback from the participants concerning the unsuccessful installation attempts so it is impossible to know if the location of the anchor had any bearing on the installers' ability to attach the CRS to the anchor. For these reasons, NHTSA is not convinced that the results of this survey program make the case that this noncompliance does not have an effect on safety. Fourth, Nissan dismissed two complaints that were filed with NHTSA's Office of Defects Investigation in January of 2004. Nissan contacted the complainants eighteen months after the complaints were filed and determined one no longer had their notes and the second may have been installed using an improper procedure. NHTSA does not agree with Nissan that these complaints should be deemed irrelevant. Both complaints were filed by certified child safety technicians. Both complainants, as part of their jobs, installed child restraints in numerous other vehicles. NHTSA also contacted both complainants and determined it was their professional opinion at the time the complaint was registered that installation of child restraints into these vehicles was very difficult and worthy of sending a complaint to the agency. These complaints did not account for NHTSA's decision to test the Infiniti FX. NHTSA reviews vehicles continuously and identified the Infiniti FX as a test vehicle based on preliminary inspections that indicated a possible problem with the anchorage bar depth. After the noncompliance was determined to exist with the Infiniti FX, a check of the complaint database uncovered these complaints. The complaints are consistent with the test results that indicate the anchorage bars are too deep in the seat bight for easy installation. Fifth, Nissan states that “other vehicle characteristics in these models compensate for the lower anchorage location to allow for ease of installation,” including seat foam that compresses easily and suppleness of leather seats. Nissan has presented no objective data to support this assertion, and it is contradicted by NHTSA test data for the Infiniti FX35, which indicate that over twice the allowable horizontal load must be placed on the CRF to compress the foam before the 70 mm distance can be achieved. In conclusion, the fact that LATCH anchorages in some Nissan vehicles are at between 6 and 24 mm deeper in the seat bight than allowed by FMVSS No. 225 is consequential to safety. These LATCH anchorages may not be readily accessible and may not enable proper anchoring of the CRS to the vehicle, particularly since force considerably in excess of that specified in the standard would have to be exerted in order for the installer to make proper use of the anchorages in some circumstances. Moreover, since the anchorages are located deeper in the seat bight, improper anchoring of the CRS to other vehicle seat components such as wires and frame elements is more probable. The consequentiality may be significantly increased if a CRS has rigid attachments that are designed to attach to a vehicle anchorage located within the 70 mm distance. The agency believes that this noncompliance could well result in children riding in child restraint systems that are improperly installed and, therefore, do not provide the protection these systems are designed to provide. This is the danger the rule was intended to prevent. In consideration of the foregoing, NHTSA has decided that the petitioner has not met its burden of persuasion that the noncompliance described is inconsequential to motor vehicle safety. Accordingly, Nissan's petition is hereby denied. Authority: 49 U.S.C. 30118, 30120; delegations of authority at CFR 1.50 and 501.8. Issued on: May 18, 2006. Daniel C. Smith, Associate Administrator for Enforcement. [FR Doc. E6-7866 Filed 5-23-06; 8:45 am] BILLING CODE 4910-59-P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration Hazardous Materials: Improving the Safety of Railroad Tank Car Transportation of Hazardous Materials AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT. ACTION: Notice of public meeting. SUMMARY: PHMSA and the Federal Railroad Administration
(FRA)invite interested persons to participate in a public meeting to address the safe transportation of hazardous materials in railroad tank cars. PHMSA and FRA are initiating a comprehensive review of design and operational factors that affect rail tank car safety. DATES: *Public meeting:* May 31-June 1, 2006, starting at 9 a.m. and ending at 5 p.m. both days. ADDRESS: *Public meeting:* The Hotel George, 15 E Street, NW., Washington, DC 20001. *Oral presentations:* Any person wishing to present an oral statement should notify Lucinda Henriksen, by telephone, e-mail, or in writing, at least four business days before the date of the public meeting. Oral statements will be limited to 15 minutes. For information on facilities or services for persons with disabilities or to request special assistance at the meetings, contact Ms. Henriksen by telephone or e-mail as soon as possible. FOR FURTHER INFORMATION CONTACT: Lucinda Henriksen ( *Lucinda.Henriksen@dot.gov* ), Trial Attorney, Office of Chief Counsel, Federal Railroad Administration, 1120 Vermont Ave., NW., Washington, DC 20590 (202-493-1345) or William S. Schoonover ( *William.Schoonover@dot.gov* ), Staff Director, Hazardous Materials Division, Federal Railroad Administration, 1120 Vermont Avenue, NW., Washington, DC 20590, (202-493-6050). SUPPLEMENTARY INFORMATION: The Federal hazardous materials transportation law (Federal hazmat law, 49 U.S.C. 5101 *et seq.,* as amended by section 1711 of the Homeland Security Act of 2002, Public Law 107-296 and Title VII of the 2005 Safe, Accountable, Flexible and Efficient Transportation Equity Act—A Legacy for Users (SAFETEA-LU)) authorizes the Secretary of the Department of Transportation to “prescribe regulations for the safe transportation, including security, of hazardous material in intrastate, interstate, and foreign commerce.” The Secretary has delegated this authority to the Pipeline and Hazardous Materials Safety Administration (PHMSA). The Hazardous Materials Regulations (HMR: 49 CFR parts 171-180) promulgated by PHMSA under the mandate in section 5103(b) govern safety aspects, including security, of the transportation of hazardous material the Secretary considers appropriate. The Hazardous Materials Regulations—or HMR—are designed to achieve three goals:
(1)To ensure that hazardous materials are packaged and handled safely during transportation;
(2)To provide effective communication to transportation workers and emergency responders of the hazards of the materials being transported; and
(3)To minimize the consequences of an incident should one occur. The hazardous material regulatory system is a risk management system that is prevention-oriented and focused on identifying a safety or security hazard and reducing the probability and quantity of a hazardous material release. We collect and analyze data on hazardous materials—incidents, regulatory actions, and enforcement activity—to determine the safety and security risks associated with the transportation of hazardous materials and the best ways to mitigate those risks. Under the HMR, hazardous materials are categorized by analysis and experience into hazard classes and packing groups based upon the risks they present during transportation. The HMR specify appropriate packaging and handling requirements for hazardous materials, and require a shipper to communicate the material's hazards through use of shipping papers, package marking and labeling, and vehicle placarding. The HMR also require shippers to provide emergency response information applicable to the specific hazard or hazards of the material being transported. Finally, the HMR mandate training requirements for persons who prepare hazardous materials for shipment or who transport hazardous materials in commerce. The HMR also include operational requirements applicable to each mode of transportation. The Secretary of Transportation also has authority over all areas of railroad safety (49 U.S.C. 20101 *et seq.* ), and has delegated this authority to FRA. FRA has issued a comprehensive set of Federal regulations governing the safety of all facets of freight and passenger railroad operations (49 CFR parts 200-244). FRA inspects railroads and shippers for compliance with both FRA and PHMSA regulations. FRA also conducts research and development to enhance railroad safety. Railroads carry over 1.7 million shipments of hazardous materials annually, including millions of tons of explosive, poisonous, corrosive, flammable and radioactive materials. The need for hazardous materials to support essential services means transportation of highly hazardous materials is unavoidable. However, these shipments frequently move through densely populated or environmentally sensitive areas where the consequences of an incident could be loss of life, serious injury, or significant environmental damage. In the last several years, there have been a number of rail tank car accidents in which the car was breached and product lost on the ground or into the atmosphere. Of particular concern have been accidents involving materials that are poisonous, or toxic, by inhalation (TIH materials). For example, on January 18, 2002, in Minot, ND, one person was killed and 11 more were seriously injured when a Canadian Pacific Railway train derailed. Five tank cars carrying anhydrous ammonia catastrophically ruptured, and a vapor plume covered the derailment site and surrounding area. On June 28, 2004, in Macdona, TX, three people were killed and 41 were seriously injured when a Union Pacific freight train struck a BNSF freight train. The collision resulted in the breach of a tank car and a release of chlorine, a poisonous gas. Property damage and environmental clean-up costs exceeded $7 million. On January 6, 2005, in Graniteville, SC, nine people were killed and about 75 were seriously injured when Norfolk Southern Railway train collided with a standing train, and a tank car carrying chlorine was breached. Total damages exceed $6.9 million. In each of these incidents, the primary causative factor was railroad operations, a failed tank structure, or a combination of the two. Only with a full understanding of what happened can the necessary steps for prevention and mitigation be identified and implemented. PHMSA and the Federal Railroad Administration
(FRA)are initiating a comprehensive review of design and operational factors that affect rail tank car safety. The two agencies will utilize a risk management approach to identify ways to enhance the safe transportation of hazardous materials in tank cars, including tank car design, manufacture, and requalification; operational issues such as human factors, track conditions and maintenance, wayside hazard detectors, and signals and train control systems; and emergency response. The review will not consider security issues. PHMSA and FRA have been working closely with the Transportation Security Administration on developing proposed regulations to enhance the security of rail shipments of hazardous materials; these regulatory proposals should be issued for public comment in the near future. The public safety meeting now scheduled for May 31-June 1 is intended to kick-off the public involvement in this on-going effort within the Department. PHMSA and FRA are primarily looking to this meeting to surface issues and prioritize them. In addition, PHMSA and FRA will discuss the need for additional public forums and their time and place. Persons wishing to make statements will be afforded an opportunity to do so and a transcript—to be made available to the public—will be taken. Issued in Washington, DC on May 18, 2006, under authority delegated in 49 CFR part 106. Robert A. McGuire, Associate Administrator for Hazardous Materials Safety. FR Doc. E6-7863 Filed 5-23-06; 8:45 am] BILLING CODE 4910-60-P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration [Docket No. PHMSA-06-24044; Notice 2] Pipeline Safety: Grant of Waiver; Dominion Transmission, Inc. AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT. ACTION: Grant of Waiver; Dominion Transmission, Inc. SUMMARY: Dominion Transmission, Inc.
(DTI)requested a waiver of compliance from requirements for pipelines constructed after March 31, 2000. This waiver will allow DTI to use the most recent, 2006 National Fire Protection Association's
(NFPA)59A, “Standard for Production, Storage, and Handling of Liquefied Natural Gas” and comply with PHMSA's liquefied natural gas
(LNG)facility safety regulations. SUPPLEMENTARY INFORMATION: Background DTI requested a waiver from compliance of the regulatory requirements at 49 CFR 193.2301. This regulation requires each LNG facility constructed after March 31, 2000, to comply with 49 CFR part 193 and standard 59A (NFPA 59A). NFPA 59A requires that welded containers designed for not more than 15 pounds per square inch gauge comply with the 1990 Eighth Edition, of the American Petroleum Institute standard 620 (API 620), “Design and Construction of Large, Welded, Low-Pressure Storage Tanks (Appendix Q).” API 620 requires that examinations be performed using radiography to detect the type of flaws most susceptible in the design and construction of large welded low-pressure storage tanks. DTI is proposing to use the 2006 Tenth Edition, Addendum 1, of API 620, instead of the currently used, 1990 Eighth Edition. This will allow ultrasonic examination as well as radiography as an acceptable alternative non-destructive testing method. The ultrasonic examination consists of full semi-automated and manual examination using shear wave probes, and volumetric examination using a combination of creep wave probes and focused angled longitudinal wave probes. Findings PHMSA considered DTI's waiver request and published a notice inviting interested persons to comment on whether a waiver should be granted (71 FR 13895; March 17, 2006). PHMSA received one comment in support of the waiver from the American Gas Association (AGA). AGA supports DTI's request for a waiver from 49 CFR 193.2301 and is confident that the 2006 Tenth Edition of API 620 will not reduce the integrity of the installation of large welded low-pressure storage tanks at LNG facilities. Grant of Waiver In its May 2005, Report on Comments, the NFPA 59A Committee “accepted in principle” the latest edition of API 620, Tenth Edition, Addendum 1. The Tenth Edition, Addendum 1, of API 620 adds ultrasonic examination as an acceptable method of examination. The proposed wording of the Tenth Edition, Addendum 1, of API 620 deletes “radiographic” inspection and replaces it with “complete” examination. In the Tenth Edition of API 620, “complete” examination is defined as radiographic or ultrasonic examination. For the reasons explained above and in the Notice of March 17, 2006, PHMSA finds that the requested waiver is not inconsistent with pipeline safety and that an equivalent level of safety can be achieved. Therefore, DTI's request for waiver of compliance with § 193.2301 is granted for its LNG facility in Lusby, MD. Authority: 49 U.S.C. 60118
(c)and 49 CFR 1.53. Issued in Washington, DC on May 18, 2006. Theodore L. Willke, Deputy Associate Administrator for Pipeline Safety. [FR Doc. E6-7955 Filed 5-23-06; 8:45 am] BILLING CODE 4910-60-P DEPARTMENT OF THE TREASURY Submission for OMB Review; Comment Request May 18, 2006. The Department of the Treasury has submitted the following public information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Copies of the submission(s) may be obtained by calling the Treasury Bureau Clearance Officer listed. Comments regarding this information collection should be addressed to the OMB reviewer listed and to the Treasury Department Clearance Officer, Department of the Treasury, Room 11000, 1750 Pennsylvania Avenue, NW., Washington, DC 20220. DATES: Written comments should be received on or before June 23, 2006 to be assured of consideration. Community Development Financial Institutions Program Fund
(CDFI)*OMB Number:* 1559-0014. *Type of Review:* Extension. *Title:* New Markets Tax Credit
(NMTC)Program—Community Development, Entity
(CDE)Certification Application. *Form:* CDFI Form 0019. *Description:* The purpose of the NMTC Program is to provide an incentive to investors in the form of a tax credit, which is expected to stimulate investment in new private capital in low income communities. Applicants must be a CDE to apply for allocation. *Respondents:* Businesses and other for-profit and non-profit institutions, and State, local or tribal governments. *Estimated Total Burden Hours:* 2,500 hours. *Clearance Officer:* Ashanti McCallum, Community Development Financial Institutions Program Fund, 601 13th Street, NW., Suite 200 South, Washington, DC 20005.
(202)622-9018. *OMB Reviewer:* Alexander T. Hunt, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503.
(202)395-7316. Robert Dahl, Treasury PRA Clearance Officer. [FR Doc. E6-7921 Filed 5-23-06; 8:45 am] BILLING CODE 4810-70-P DEPARTMENT OF THE TREASURY Comptroller of the Currency Agency Information Collection Activities: Proposed Extension of Information Collection; Comment Request AGENCY: Office of the Comptroller of the Currency (OCC), Treasury. ACTION: Notice and request for comment. SUMMARY: The OCC, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on a continuing information collection, as required by the Paperwork Reduction Act of 1995. An agency may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid OMB control number. The OCC is soliciting comment concerning its information collection titled, “Investment Securities (12 CFR part 1).” DATES: You should submit written comments by July 24, 2006. ADDRESSES: You should direct your comments to: Communications Division, Office of the Comptroller of the Currency, Public Information Room, Mailstop 1-5, Attention: 1557-0205, 250 E Street, SW., Washington, DC 20219. In addition, comments may be sent by fax to
(202)874-4448, or by electronic mail to *regs.comments@occ.treas.gov.* You can inspect and photocopy the comments at the OCC's Public Information Room, 250 E Street, SW., Washington, DC 20219. You can make an appointment to inspect the comments by calling
(202)874-5043. Additionally, you should send a copy of your comments to OCC Desk Officer, 1557-0205, by mail to U.S. Office of Management and Budget, 725, 17th Street, NW., #10235, Washington, DC 20503, or by fax to
(202)395-6974. FOR FURTHER INFORMATION CONTACT: You can request additional information or a copy of the collection from Mary Gottlieb, OCC Clearance Officer, or Camille Dickerson,
(202)874-5090, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 20219. SUPPLEMENTARY INFORMATION: The OCC is proposing to extend OMB approval, without change, of the following information collection: *Title:* Investment Securities (12 CFR part 1). *OMB Number:* 1557-0205. *Description:* This submission covers an existing regulation and involves no change to the regulation or to the information collection requirements. The OCC requests only that OMB extend its approval of the information collection. The information collection requirements in 12 CFR part 1 are as follows: Under 12 CFR 1.4(h)(2), a national bank may request an OCC determination that it may invest in an entity that is exempt from registration under section 3(c)(1) of the Investment Company Act of 1940 if the portfolio of the entity consists exclusively of assets that a national bank may purchase and sell for its own account. The OCC uses the information contained in the request as a basis for determining that the bank's investment is consistent with its investment authority under applicable law and does not pose unacceptable risk. Under 12 CFR 1.7(b), a national bank may request OCC approval to extend the five-year holding period of securities held in satisfaction of debts previously contracted
(DPC)for up to an additional five years. The bank must provide a clearly convincing demonstration of why any additional holding period is needed. The OCC uses the information in the request to ensure, on a case-by-case basis, that the bank's purpose in retaining the securities is not speculative and that the bank's reasons for requesting the extension are adequate, and to evaluate the risks to the bank of extending the holding period, including potential effects on bank safety and soundness. *Type of Review:* Extension of a currently approved collection. *Affected Public:* Businesses or other for-profit. *Estimated Number of Respondents:* 25. *Estimated Total Annual Responses:* 25. *Estimated Total Annual Burden:* 460 hours. *Frequency of Response:* On occasion. Comments submitted in response to this notice will be summarized and included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on:
(a)Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility;
(b)The accuracy of the agency's estimate of the burden of the collection of information;
(c)Ways to enhance the quality, utility, and clarity of the information to be collected;
(d)Ways to minimize the burden of the collection on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e)Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information. Dated: May 18, 2006. Stuart Feldstein, Assistant Director, Legislative and Regulatory Activities Division. [FR Doc. E6-7902 Filed 5-23-06; 8:45 am] BILLING CODE 4810-33-P DEPARTMENT OF THE TREASURY Internal Revenue Service Open Meeting of the Area 2 Taxpayer Advocacy Panel (Including the States of Delaware, North Carolina, South Carolina, New Jersey, Maryland, Pennsylvania, Virginia, West Virginia and the District of Columbia) AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice. SUMMARY: An open meeting of the Area 2 Taxpayer Advocacy Panel will be conducted in Philadelphia, PA. The Taxpayer Advocacy Panel is soliciting public comments, ideas, and suggestions on improving customer service at the Internal Revenue Service. DATES: The meeting will be held Thursday, June 22, Friday, June 23, and Saturday, June 24, 2006. FOR FURTHER INFORMATION CONTACT: Inez E. De Jesus at 1-888-912-1227 (toll-free), or 954-423-7977 (non toll-free). SUPPLEMENTARY INFORMATION: Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App.
(1988)that an open meeting of the Area 2 Taxpayer Advocacy Panel will be held Thursday, June 22, 2006 from 1:30 p.m. to 4:30 p.m. ET, Friday, June 23, 2006 from 8 a.m. to 12 p.m. and from 1 p.m. to 4:30 p.m. ET at the Internal Revenue Service office, 600 Arch Street, and Saturday, June 24, 2006 from 8 a.m. to 11:30 a.m. ET at the Holiday Inn-Historic District, 400 Arch Street, Philadelphia, PA 19106. For information or to confirm attendance, notification of intent to attend the meeting must be made with Inez De Jesus. Ms. De Jesus may be reached at 1-888-912-1227 or 954-423-7977, or write Inez E. De Jesus, TAP Office, 1000 South Pine Island Rd., Suite 340, Plantation, FL 33324, or post comments to the Web site: *http://www.improveirs.org.* The agenda will include the following: Various IRS issues. Dated: May 18, 2006. John Fay, Acting Director, Taxpayer Advocacy Panel. [FR Doc. E6-7971 Filed 5-23-06; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service Open Meeting of the Area 3 Taxpayer Advocacy Panel (Including the States of Florida, Georgia, Alabama, Mississippi, Louisiana, Arkansas, and Puerto Rico) AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice. SUMMARY: An open meeting of the Area 3 Taxpayer Advocacy Panel will be conducted (via teleconference). The Taxpayer Advocacy Panel is soliciting public comments, ideas, and suggestions on improving customer service at the Internal Revenue Service. DATES: The meeting will be held Tuesday, June 20, 2006 from 11:30 a.m. ET. FOR FURTHER INFORMATION CONTACT: Sallie Chavez at 1-888-912-1227, or 954-423-7979. SUPPLEMENTARY INFORMATION: Notice is hereby given pursuant to section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App.
(1988)that an open meeting of the Area 3 Taxpayer Advocacy Panel will be held Tuesday, June 20, 2006, from 11:30 a.m. ET via a telephone conference call. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 954-423-7979, or write Sallie Chavez, TAP Office, 1000 South Pine Island Rd., Suite 340, Plantation, FL 33324. Due to limited conference lines, notification of intent to participate in the telephone conference call meeting must be made with Sallie Chavez. Ms. Chavez can be reached at 1-888-912-1227 or 954-423-7979, or post comments to the Web site: *http://www.improveirs.org.* The agenda will include: Various IRS issues. Dated: May 18, 2006. John Fay, Acting Director, Taxpayer Advocacy Panel. [FR Doc. E6-7972 Filed 5-23-06; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service Open Meeting of the Area 1 Taxpayer Advocacy Panel (Including the States of New York, Connecticut, Massachusetts, Rhode Island, New Hampshire, Vermont and Maine) AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice. SUMMARY: An open meeting of the Area 1 Taxpayer Advocacy Panel will be conducted (via teleconference). The Taxpayer Advocacy Panel is soliciting public comments, ideas and suggestions on improving customer service at the Internal Revenue Service. DATES: The meeting will be held Tuesday, June 20, 2006. FOR FURTHER INFORMATION CONTACT: Audrey Y. Jenkins at 1-888-912-1227 (toll-free), or 718-488-2085 (non toll-free). SUPPLEMENTARY INFORMATION: An open meeting of the Area 1 Taxpayer Advocacy Panel will be held Tuesday, June 20, 2006 from 9 a.m. ET to 10 a.m. ET via a telephone conference call. Individual comments will be limited to 5 minutes. If you would like to have the TAP consider a written statement, please call 1-888-912-1227 or 718-488-2085, or write Audrey Y. Jenkins, TAP Office, 10 MetroTech Center, 625 Fulton Street, Brooklyn, NY 11201. Due to limited conference lines, notification of intent to participate in the telephone conference call meeting must be made with Audrey Y. Jenkins. Ms. Jenkins can be reached at 1-888-912-1227 or 718-488-2085, or post comments to the Web site: *http://www.improveirs.org.* The agenda will include various IRS issues. Dated: May 19, 2006. John Fay, Acting Director, Taxpayer Advocacy Panel. [FR Doc. E6-7973 Filed 5-23-06; 8:45 am] BILLING CODE 4830-01-P 71 100 Wednesday, May 24, 2006 Presidential Documents Title 3— The President Proclamation 8020 of May 19, 2006 National Hurricane Preparedness Week, 2006 By the President of the United States of America A Proclamation During National Hurricane Preparedness Week, private organizations, public officials, and government agencies will highlight the preparations necessary for the new hurricane season that begins on June 1. Last year, a record number of hurricanes caused unprecedented devastation across an entire region of our country. Our citizens along the Gulf Coast demonstrated their strength and resilience, and individuals across America revealed their compassion and resolve by opening their hearts, homes, and communities to those in need. After these storms, Federal, State, and local governments have worked to enhance our Nation's ability to respond to large-scale natural disasters. The Federal Government has conducted an extensive review of preparedness and response efforts, and actions are being taken at all levels of government to improve communications and strengthen emergency response capabilities. To help individuals, families, and businesses prepare for the future, the Department of Homeland Security provides checklists and information on natural disasters and other threats at ready.gov. By working together, government, private entities, and civic and charitable organizations can help increase preparedness for this year's hurricane season. NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, by virtue of the authority vested in me by the Constitution and laws of the United States, do hereby proclaim May 21 through May 27, 2006, as National Hurricane Preparedness Week. I call upon government agencies, private organizations, schools, media, and residents in the coastal areas of our Nation to share information about hurricane preparedness and response to help save lives and protect communities. IN WITNESS WHEREOF, I have hereunto set my hand this nineteenth day of May, in the year of our Lord two thousand six, and of the Independence of the United States of America the two hundred and thirtieth. B [FR Doc. 06-4868 Filed 5-23-06; 8:45 am]
Connectionstraces to 15
Traces to 15 documents
U.S. Code
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- Definitions and application§ 78c
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Records maintained on individuals§ 552a
- Procedure for payment of benefits§ 1383
- Notification of defects and noncompliance§ 30118
- Purpose§ 5101
- Purpose§ 20101
- Compliance and waivers§ 60118
CFR
- Delegation of authority to Director of Division of Trading and Markets.§ 200.30-3
- Does FAA invite public comment on petitions for exemption?§ 11.85
- Calculation of limits.§ 1.4
- Securities held in satisfaction of debts previously contracted; holding period; disposal; accounting treatment; non-speculative purpose.§ 1.7
register
19 references not yet in our index
- 17 CFR 240.19
- 17 CFR 240.19-4(f)(6)(iii)
- 17 CFR 240.3
- 15 USC 78(f)(b)
- 15 USC 78(f)(b)(5)
- Pub. L. 106-554
- Pub. L. 101-508
- 14 CFR 135.251
- 23 CFR 771
- 49 CFR 611
- 49 CFR 571.225
- 49 CFR 573
- Pub. L. 107-296
- 49 CFR 106
- 49 CFR 193.2301
- 49 CFR 193
- 49 CFR 1.53
- Pub. L. 104-13
- 12 CFR 1
Citation graph
cites case law
Notices
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 24(d) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act
Cite17 CFR 240.19
Cite17 CFR 240.19-4(f)(6)(iii)
Cite17 CFR 240.3
Cites 34 · showing 12Cited by 0 across 0 sources