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Code · REGISTER · 2006-06-02 · SECURITIES AND EXCHANGE COMMISSION · Notices

Notices. Notice of intent

25,136 words·~114 min read·/register/2006/06/02/06-5030

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

BILLING CODE 7590-01-M SECURITIES AND EXCHANGE COMMISSION [Release No. IC-27384] Notice of Applications for Deregistration Under Section 8(f) of the Investment Company Act of 1940 May 26, 2006. The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of May, 2006. A copy of each application may be obtained for a fee at the SEC's Public Reference Branch (tel. 202-551-5850). An order granting each application will be issued unless the SEC orders a hearing.
Interested persons may request a hearing on any application by writing to the SEC's Secretary at the address below and serving the relevant applicant with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on June 20, 2006, and should be accompanied by proof of service on the applicant, 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 Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. *For Further Information Contact:* Diane L. Titus at
(202)551-6810, SEC, Division of Investment Management, Office of Investment Company Regulation, 100 F Street, NE., Washington, DC 20549-4041. Hyperion 2005 Investment Grade Opportunity Term Trust, Inc. [File No. 811-7386] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On December 5, 2005, applicant made a liquidating distribution to its shareholders, based on net asset value. American Stock Transfer & Trust Company is holding funds for shareholders who have not yet been located. Applicant incurred $415,495 in expenses in connection with the reorganization. *Filing Date:* The application was filed on April 25, 2006. *Applicant's Address:* Three World Financial Center, 200 Vesey St., 10th Floor, New York, NY 10281-1010. Oppenheimer Principal Protected Trust IV [File No. 811-21562] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On April 13, 2006, applicant made a liquidating distribution to its shareholders, based on net asset value. Expenses of $2,500 incurred in connection with the liquidation were paid by Oppenheimer Funds, Inc., applicant's investment adviser. *Filing Date:* The application was filed on April 21, 2006. *Applicant's Address:* 6803 Tucson Way, Centennial, CO 80112. Grand Prix Funds, Inc. [File No. 811-8461] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On February 17, 2006, applicant made a liquidating distribution to its shareholders, based on net asset value. Applicant incurred $41,188 in expenses in connection with the liquidation. Target Investors, Inc., applicant's investment adviser, will pay any additional expenses incurred in connection with the liquidation. *Filing Date:* The application was filed on May 1, 2006. *Applicant's Address:* Wilton Executive Campus, 15 River Road, Suite 220, Wilton, CT 06897. UM Investment Trust II [File No. 811-21679] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Dates:* The application was filed on April 7, 2006, and amended on May 18, 2006. *Applicant's Address:* 522 Fifth Ave., New York, NY 10036. Weldon Capital Funds Inc. [File No. 811-21509] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On February 28, 2006, applicant made a liquidating distribution to its shareholders, based on net asset value. Expenses of $20,529 incurred in connection with the liquidation were paid by applicant's investment adviser, Weldon Capital Management, Ltd. *Filing Dates:* The application was filed on April 11, 2006, and amended on May 8, 2006. *Applicant's Address:* 4747 W. 135th St., Suite 100, Leawood, KS 66224. JPMorgan Securities Lending Collateral Investment Trust [File No. 811-21581] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. By August 25, 2005, all of applicant's shareholders had redeemed their shares at net asset value. No expenses were incurred in connection with the liquidation. *Filing Dates:* The application was filed on February 13, 2006, and amended on April 28, 2006. *Applicant's Address:* 522 Fifth Ave., New York, NY 10036. Van Kampen California Municipal Trust [File No. 811-5662] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On December 5, 2005, applicant transferred its assets to Van Kampen California Value Municipal Income Trust, based on net asset value. Applicant's preferred shares had liquidation preference of $50,000 per share and the preferred shares of the acquiring fund have a liquidation preference of $25,000 per share, so the preferred shares of applicant were converted into preferred shares of the acquiring fund on a one-for-two basis. Expenses of $217,083 incurred in connection with the reorganization were paid by applicant and the acquiring fund. *Filing Dates:* The application was filed on March 20, 2006, and amended on May 15, 2006. *Applicant's Address:* 1221 Avenue of the Americas, New York, NY 10020. Van Kampen California Quality Municipal Trust [File No. 811-6361] Van Kampen Trust for Investment Grade California Municipals [File No. 811-6535] *Summary:* Each applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On July 29, 2005, each applicant transferred its assets to Van Kampen California Value Municipal Income Trust, based on net asset value. Each applicant's preferred shares were converted into preferred shares of the acquiring fund on a one-for-one basis. Expenses of $76,413 and $227,503, respectively, incurred in connection with the reorganizations were paid by the applicants and the acquiring fund. *Filing Dates:* The applications were filed on March 20, 2006, and amended on May 15, 2006. *Applicants' Address:* 1221 Avenue of the Americas, New York, NY 10020. Wayne Hummer Investment Trust [File No. 811-3880] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On March 24, 2006, applicant transferred its assets to Federated Kaufmann Fund, a series of Federated Equity Funds, based on net asset value. Expenses of $276,593 incurred in connection with the reorganization were paid by Wayne Hummer Asset Management Company, applicant's investment adviser, and Federated Investors, Inc., an affiliate of the acquiring fund's investment adviser. *Filing Dates:* The application was filed on March 29, 2006, and amended on May 18, 2006. *Applicant's Address:* 300 South Wacker Dr., Suite 1500, Chicago, IL 60606. BAT Subsidiary Inc. [File No. 811-8951] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On November 29, 2005, applicant made a liquidating distribution to its shareholders, based on net asset value. Applicant incurred no expenses in connection with the liquidation. *Filing Date:* The application was filed on May 15, 2006. *Applicant's Address:* 100 Bellevue Parkway, Wilmington, DE 19809. TD Waterhouse Plus Funds, Inc. [File No. 811-7871] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On February 24, 2006, applicant transferred its assets to TDAM Money Market Portfolio Premium Class, a series of TD Asset Management USA Funds Inc., based on net asset value. Expenses of $66,291 incurred in connection with the reorganization were paid by TD Asset Management USA Inc., applicant's investment adviser, or one of its affiliates. *Filing Date:* The application was filed on May 10, 2006. *Applicant's Address:* c/o TD Asset Management USA Inc., 31 West 52nd St., 21st Floor, New York, NY 10019. Partners Balanced Trust [File No. 811-21270] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On November 18, 2005, applicant made a liquidating distribution to its shareholders, based on net asset value. Expenses of $18,500 incurred in connection with the liquidation were paid by BlackRock Advisors, Inc., applicant's investment adviser. *Filing Date:* The application was filed on May 15, 2006. *Applicant's Address:* 100 Bellevue Parkway, Wilmington, DE 19809. True Funds [File No. 811-21588] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Dates:* The application was filed on March 30, 2006, and amended on May 4, 2006. *Applicant's Address:* 5455 Corporate Dr., Suite 204, Troy, MI 48098. Lord Abbett Delta Fund [File No. 811-10177] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Dates:* The application was filed on March 27, 2006, and amended on May 18, 2006. *Applicant's Address:* 90 Hudson St., Jersey City, NJ 07302. North American Separate Account VAI [File No. 811-21426] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant requests deregistration based on abandonment of registration. Applicant is not now engaged, or intending to engage, in any business activities, other than those necessary for winding up its affairs. *Filing Date:* The application was filed on April 20, 2006. *Applicant's Address:* North American Company for Life & Health Insurance of New York, 990 Stewart Avenue, Garden City, New York 11530. For the Commission, by the Division of Investment Management, pursuant to delegated authority. J. Lynn Taylor, Assistant Secretary. [FR Doc. E6-8548 Filed 6-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53873; File No. SR-Amex-2006-52] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Numerical Designations of Paragraphs in Amex Rule 935—ANTE May 25, 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 19, 2006, the American Stock Exchange LLC (“Amex” or “Exchange”) submitted to the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by Amex. 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 which renders it 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)(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 Amex seeks to correct the numerical designations of paragraphs in Amex Rule 935—ANTE. The text of the proposed rule change is available on Amex's Web site ( *http://www.amex.com* ), at Amex's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Amex 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 On March 14, 2006, the Exchange submitted a proposal to amend Amex Rule 935—ANTE to revise the manner in which executed contracts are allocated when more than one market participant is either quoting, or has orders, at the Amex best bid or offer at the time the execution occurs. However, by the time this filing was approved on May 12, 2006, 5 other changes to Rule 935—ANTE were approved 6 and the numerical designations of the new paragraphs to this rule were no longer in order. This filing merely seeks to correct this formatting error to keep published rules organized. 5 *See* Exchange Act Release No. 53798 (May 12, 2006), 71 FR 29193 (May 19, 2006). 6 *See* Exchange Act Release Nos. 53635 (April 12, 2006), 71 FR 20144 (April 12, 2006) and 53652 (April 13, 2006), 71 FR 20422 (April 20, 2006). 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. 7 Specifically, the Exchange believes the proposed rule change is consistent with the section 6(b)(5) of the Act, 8 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. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change will impose no burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were either solicited or received by the Exchange on this proposal. 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 9 and subparagraph (f)(6) of Rule 19b-4 10 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. 9 15 U.S.C. 78s(b)(3)(A)(iii). 10 17 CFR 240.19b-4(f)(6). Under Rule 19b-4(f)(6) of the Act, 11 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 Amex has requested that the Commission waive the five-day pre-filing requirement 12 and the 30-day operative delay to allow for the expeditious and accurate publication of Amex rules. The Commission believes that the Amex's proposal raises no new issues or regulatory concerns as it is simply a proposal to reformat rule text changes that have already been approved by the Commission. Therefore, the Commission, consistent with the protection of investors and the public interest, has determined to waive the five-day pre-filing requirement and the 30-day operative date so that the proposal may take effect upon filing. 13 11 *Id* . 12 Amex provided the Commission with written notice of its intent to file the proposed rule change one day prior to the filing date. 13 For purposes only of waiving the operative delay for 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-Amex-2006-52 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-Amex-2006-52. 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 Amex. 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-2006-52 and should be submitted on or before June 23, 2006. 14 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6-8538 Filed 6-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-34-53872; File No. SR-CBOE-2006-45] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change Regarding Its Board Review Authority May 25, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on May 5, 2006, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by CBOE. 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 proposes to amend its rules to clarify the authority of its Board of Directors (“Board”) with respect to actions or inactions of committees of CBOE and CBOE staff. The text of the proposed rule change is below. Proposed new language is in *italics* ; proposed deletions are in [brackets]. Chicago Board Options Exchange, Incorporated Rules Chapter II Organization and Administration (Rules 2.1-2.40) Part A—Committees (Rule 2.1) Rule 2.1. Committees of the Exchange (a)-(c) No change.
(d)General Duties and Powers of Committees. Each committee shall administer the provisions of the Constitution and the rules of the Exchange pertaining to matters within its jurisdiction. *In addition to any powers and duties specifically granted in the Constitution or Rules,* e[E]ach committee shall have *only* such other powers and duties as may be delegated to it by the Board of Directors. Each committee is subject to the control and supervision of the Board of Directors. Part B—Board Review (Rule 2.2) Rule 2.2. Power of the Board to Review Exchange Decisions *In connection with any delegation to a committee or committees pursuant to Article EIGHTH of the Certificate of Incorporation, the Board retains the power and authority to review, affirm, modify, suspend or overrule any and all actions or inactions of committees and of all officers, representatives or designees of the Exchange; provided, however, that such power and authority shall not apply to
(a)actions taken (or inactions) pursuant to Chapters XVII, XVIII and XIX of the Rules, unless specifically provided for in those Rules, or
(b)actions taken by (or inactions of) the Nominating Committee or Executive Committee pursuant to Article IV of the Constitution.* Part [B] *C* —Departments (Rule 2.15) No change. Part [C] *D* —Dues, Fees and Other Charges (Rules 2.20-2.40) II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose CBOE's Certificate of Incorporation provides that the Board shall manage the business and affairs of the Exchange except to the extent that the authority, powers, and duties of such management shall be delegated to a committee or committees of the Exchange that are established pursuant to the Exchange's Constitution. The Certificate of Incorporation and Constitution of CBOE also provide that the Board may establish one or more committees, each of which shall have the authority, power, and duties as may be prescribed in the Exchange's Constitution or Rules, or by resolution of the Board. 3 3 *See* Article EIGHTH of the CBOE Certificate of Incorporation and Section 7.6 of the CBOE Constitution. Over time the Board has established various committees, several of which have specific authorities described in the Exchange's Constitution or Rules. Though CBOE Rule 2.1, *Committees of the Exchange* , currently provides that each committee “is subject to the control and supervision of the Board,” this supervisory power alone does not make explicit the power of the Board to directly modify or overrule the action (or inaction) of a committee when the decisionmaking authority with respect to the action has been delegated to the committee in the Exchange's Rules. The proposed rule change will address this by explicitly reserving the Board's review authority over all actions taken by (or inactions of) committees of CBOE, as well as CBOE staff. Specifically, this proposed rule change seeks to adopt CBOE Rule 2.2, *Power of the Board to Review Exchange Decisions* , which clarifies that the Board retains the power and authority to review, affirm, modify, suspend, or overrule any and all actions or inactions of committees of CBOE and of CBOE officers, representatives, or designees. Proposed CBOE Rule 2.2 would not apply to actions taken (or inactions) pursuant to Chapters XVII ( *Discipline* ), XVIII ( *Arbitration* ), and XIX ( *Hearings and Review* ) of the Exchange's Rules, unless specifically provided for in those Rules, or to actions taken by (or inactions of) the Nominating Committee or Executive Committee relating to the nominating process pursuant to Article IV of the Exchange's Constitution. The proposed rule change also seeks to amend CBOE Rule 2.1 to make clear that committees will only have such powers and duties as are specifically granted in the Exchange's Constitution or Rules and only such other powers and duties as may be delegated to them by the Board. 2. Statutory Basis The Exchange believes that, because it clarifies the Board's authority, the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act 4 which requires, among other things, that the rules of the Exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, and in general, to protect investors and the public interest. The Exchange also believes that the proposed rule change is consistent with the requirements of Section 6(b)(1) of the Act, 5 which requires that an exchange be so organized so as to have the capacity to be able to carry out the purposes of the Act and to comply, and (subject to any rule or order of the Commission pursuant to Section 17(d) 6 or 19(g)(2) 7 of the Act) to enforce compliance by its members and persons associated with its members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange. 4 15 U.S.C. 78f(b)(5). 5 15 U.S.C. 78f(b)(1). 6 15 U.S.C. 78q(d). 7 15 U.S.C. 78s(g)(2). 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 Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the Exchange consents, the Commission shall:
(A)By order approve such proposed rule change, or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-CBOE-2006-45 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-CBOE-2006-45. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of 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-2006-45 and should be submitted on or before June 23, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 J. Lynn Taylor, Assistant Secretary. 8 17 CFR 200.30-3(a)(12). [FR Doc. E6-8552 Filed 6-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53876; File No. SR-NYSE-2006-16] Self-Regulatory Organizations; New York Stock Exchange, Inc. (n/k/a New York Stock Exchange LLC); Order Granting Approval of a Proposed Rule Change and Amendment No. 1 Relating to the Listing and Trading of Index-Linked Securities of Barclays Bank PLC Linked to the Performance of the Dow Jones—AIG Commodity Index Total Return May 25, 2006. I. Introduction On March 6, 2006, the New York Stock Exchange, Inc. (n/k/a New York Stock Exchange LLC) (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 2 thereunder, a proposed rule change to list and trade Index-Linked Securities of Barclays Bank PLC (“Barclays”) linked to the performance of the Dow Jones—AIG Commodity Index Total Return (the “Index”). On March 27, 2006, NYSE filed Amendment No. 1 to the proposed rule change. The proposed rule change, as amended by Amendment No. 1, was published for comment in the **Federal Register** on April 21, 2006 for a 15-day comment period. 3 The Commission received no comments on the proposal. This order approves the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 53639 (April 12, 2006), 71 FR 20741 (the “Notice”). II. Description of the Proposal The NYSE proposes to list and trade the Index-Linked Securities (“Notes”) that will track the performance of the Index pursuant to Section 703.19 (“Other Securities”) of the NYSE Listed Company Manual (the “Manual”). Barclays intends to issue the Notes under the name “iPath SM Exchange-Traded Notes.” The Exchange believes that the Notes will conform to the initial listing standards for equity securities under Section 703.19 of the Manual because Barclays is an affiliate of Barclays PLC, 4 an Exchange-listed company in good standing. Under Section 703.19 of the Manual, the Exchange may approve for listing and trading securities not otherwise covered by the criteria of Sections 1 and 7 of the Manual, provided the issue is suited for auction market trading. 5 The Notes will have a minimum life of one year, the minimum public market value of the Notes at the time of issuance will exceed $4 million, there will be at least one million Notes outstanding, and there will be at least 400 holders at the time of issuance. 4 The issuer of the Notes, Barclays, is an affiliate of an Exchange-listed company (Barclays PLC) and not an Exchange-listed company itself. However, Barclays, though an affiliate of Barclays PLC, would exceed the Exchange's earnings and minimum tangible net worth requirements in Section 102 of the Manual. Additionally, the Exchange states that the Notes, when combined with the original issue price of all other Note offerings of the issuer that are listed on a national securities exchange (or association), does not exceed 25% of the issuer's net worth. Telephone conference between Florence E. Harmon, Senior Special Counsel, Division of Market Regulation (“Division”), Commission, and John Carey, Assistant General Counsel, Exchange, on April 11, 2006 (“April 11 Telephone Conference”). 5 *See* Securities Exchange Act Release No. 28217 (July 18, 1990), 55 FR 30056 (July 24, 1990). The Notes are a series of medium-term debt securities of Barclays that provide for a cash payment at maturity or upon earlier exchange at the holder's option, based on the performance of the Index. The principal amount of each Note is $50. The Notes will trade on the Exchange's equity trading floor, and the Exchange's existing equity trading rules will apply to trading the Notes. The Notes will not have a minimum principal amount that will be repaid and, accordingly, payment on the Notes prior to or at maturity may be less than the original issue price of the Notes. In fact, the value of the Index must increase for the investor to receive at least the $50 principal amount per Note at maturity or upon exchange or redemption. If the value of the Index decreases or does not increase sufficiently to offset the investor fee (described below), the investor will receive less, and possibly significantly less, than the $50 principal amount per Note. In addition, holders of the Notes will not receive any interest payments from the Notes. The Notes will have a term of 30 years. The Notes are not callable. 6 6 April 11 Telephone Conference. Holders who have not previously redeemed their Notes will receive a cash payment at maturity equal to the principal amount of their Notes times the index factor on the Final Valuation Date (as defined below) minus the investor fee on the Final Valuation Date. The “index factor” on any given day will be equal to the closing value of the Index on that day divided by the initial index level. The “initial index level” is the closing value of the Index on the date of issuance of the Notes (the “Trade Date”), and the “final index level” is the closing value of the Index on the Final Valuation Date. The investor fee is equal to 0.75% per year times the principal amount of a holder's Notes times the index factor, calculated on a daily basis in the following manner: The investor fee on the Trade Date will equal zero. On each subsequent calendar day until maturity or early redemption, the investor fee will increase by an amount equal to 0.75% times the principal amount of a holder's Notes times the index factor on that day (or, if such day is not a trading day, the index factor on the immediately preceding trading day) divided by 365. The investor fee is the only fee holders will be charged in connection with their ownership of the Notes. Prior to maturity, holders may redeem their Notes on any Redemption Date (defined below) during the term of the Notes, provided that they present at least 50,000 Notes for redemption, or they act through a broker or other financial intermediaries (such as a bank or other financial institution not required to register as a broker-dealer to engage in securities transactions) that are willing to bundle their Notes for redemption with other investors' Notes. If a holder chooses to redeem his Notes, the holder will receive a cash payment on the applicable Redemption Date equal to the principal amount of his Notes times the index factor on the applicable Valuation Date (defined below) minus the investor fee on the applicable Valuation Date. A “Redemption Date” is the third business day following a Valuation Date (other than the Final Valuation Date (defined below)). A “Valuation Date” is each Thursday from the first Thursday after issuance of the Notes until the last Thursday before maturity of the Notes (the “Final Valuation Date”) inclusive (or, if such date is not a trading day, the next succeeding trading day), unless the calculation agent determines that a market disruption event, as described below, occurs or is continuing on that day. 7 In that event, the Valuation Date for the maturity date or corresponding Redemption Date, as the case may be, will be the first following trading day on which the calculation agent determines that a market disruption event does not occur and is not continuing. In no event, however, will a Valuation Date be postponed by more than five trading days. 8 To redeem their Notes, holders must instruct their broker or other person through whom they hold their Notes to take the following steps: 7 Barclays will serve as the initial calculation agent for the Notes. 8 If a “market disruption event” is of more than a temporary nature, the Exchange will file a proposed rule change pursuant to Rule 19b-4 seeking Commission approval to continue to trade the Notes. (17 CFR 240.19b-4.) Unless approved for continued trading, the Exchange would commence delisting proceedings. *See* “Continued Listing Criteria,” *infra.* Telephone conference between Florence E. Harmon, Senior Special Counsel, Division, Commission; John Carey, Assistant General Counsel, Exchange; and Mike Cavalier, Assistant General Counsel, Exchange, on April 10, 2006 (“April 10 Telephone Conference”). • Deliver a notice of redemption to Barclays via e-mail by no later than 11 a.m. Eastern time (“ET”) on the business day prior to the applicable Valuation Date. If Barclays receives such notice by the time specified in the preceding sentence, it will respond by sending the holder a confirmation of redemption; • Deliver the signed confirmation of redemption to Barclays via facsimile in the specified form by 4 p.m. ET on the same day; Barclays must acknowledge receipt in order for the confirmation to be effective; and • Transfer such holder's book-entry interest in its Notes to the trustee, The Bank of New York, on Barclays' behalf at or prior to 10 a.m. ET 9 on the applicable Redemption Date (the third business day following the Valuation Date). 9 The Exchange authorized the Commission staff to clarify time zone references here and elsewhere in the proposal. Telephone conference between Florence E. Harmon, Senior Special Counsel, Division, Commission; John Carey, Assistant General Counsel, Exchange; and Mike Cavalier, Assistant General Counsel, Exchange, on March 29, 2006 (“March 29 Telephone Conference”). If holders elect to redeem their Notes, Barclays may request that Barclays Capital Inc. (a broker-dealer) purchase the Notes for the cash amount that would otherwise have been payable by Barclays upon redemption. In this case, Barclays will remain obligated to redeem the Notes if Barclays Capital Inc. fails to purchase the Notes. Any Notes purchased by Barclays Capital Inc. may remain outstanding for trading on the Exchange. If an event of default occurs and the maturity of the Notes is accelerated, Barclays will pay the default amount in respect of the principal of the Notes at maturity. III. Indicative Value An intraday “Indicative Value” meant to approximate the intrinsic economic value of the Notes will be calculated and published via the facilities of the Consolidated Tape Association (“CTA”) every 15 seconds throughout the NYSE trading day on each day on which the Notes are traded on the Exchange. Additionally, Barclays or an affiliate will calculate and publish the closing Indicative Value of the Notes on each trading day at *http://www.ipathetn.com.* In connection with the Notes, the term “Indicative Value” refers to the value at a given time based on the following equation: Indicative Value = Principal Amount per Unit × (Current Index Level/Initial Index Level) − Current Investor Fee Where: • Principal Amount per Unit = $50 • Current Index Level = The most recent published level of the Index as reported by Dow Jones and AIG-Financial Products Corp. (“AIG-FP”). 10 10 AIG-FP is a wholly-owned and guaranteed subsidiary of American International Group, Inc. • Initial Index Level = The Index level on the trade date for the Notes. • Current Investor Fee = The most recent daily calculation of the investor fee with respect to the Notes, determined as described above (which, during any trading day, will be the investor fee determined on the preceding calendar day). The Indicative Value will not reflect price changes to the price of an underlying commodity between the close of trading of the futures contract at the relevant futures exchange and the close of trading of the Notes on the NYSE at 4 p.m. ET. 11 The value of the Notes may accordingly be influenced by non-concurrent trading hours between the NYSE and the various futures exchanges on which the futures contracts based on the Index commodities are traded. 11 April 11 Telephone Conference (confirming Notes will trade until 4:00 p.m. ET). The Notice includes a chart of the trading hours for each of the futures contract components in the Index. *See* Notice, *supra,* note 3. While the market for futures trading for each of the Index commodities is open, the Indicative Value can be expected to closely approximate the redemption value of the Notes. However, during the NYSE trading hours when the futures contracts have ceased trading, spreads and resulting premiums or discounts may widen, and therefore, increase the difference between the price of the Notes and their redemption value. The Exchange states that the Indicative Value disseminated during the NYSE trading hours should not be viewed as a real time update of the redemption value. IV. Description of the Index The investment objective of the Notes is to track the Index, which is described below and in more detail in the Notice. 12 The Index is designed to be a diversified benchmark for commodities as an asset class and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the Index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. 13 The Index currently is composed of the prices of 19 exchange-traded futures contracts on physical commodities. 14 Futures contracts on the Index are currently listed for trading on the Chicago Board of Trade (“CBOT”). The Index is a proprietary index that AIGI International Inc. (“AIGI”) developed, that each year is determined by AIG-FP, subject to the oversight and approval of the Oversight Committee (defined below), and that Dow Jones calculates. 15 The methodology for determining the composition and weighting of the Index and for calculating its value is subject to modification by Dow Jones and AIG-FP (“Index Sponsors”) at any time. 16 Dow Jones disseminates the Index value at least every 15 seconds 17 (assuming the Index value has changed within such 15 second interval) from 8 a.m. to 3 p.m. ET and publishes a daily Index value at approximately 4 p.m. ET on each DJ-AIG Business Day (as defined below) on Reuters page AIGCII. 18 The Index value can still be retrieved after 3 p.m. ET until the end of the Exchange trading day, but its value is generally static after 3 p.m. ET, although it may change if settlement values for Index components become available after that time. A DJ-AIG Business Day (“DJ-AIG Business Day”) is a day on which the sum of the Commodity Index Percentages (as defined below) for the Index commodities that are available to trade is greater than 50%. For example, based on the weighting of the Index commodities for 2006, if the CBOT and the NYMEX are closed for trading on the same day, a DJ-AIG Business Day will not exist. 19 Dow Jones and AIGI have established the Dow Jones—AIG Commodity Index Oversight Committee (the “Oversight Committee”) to assist them in connection with the operation of the Index. The Oversight Committee may also meet at such other times as may be necessary. 12 The methodology for determining the composition and weighting of the Index and calculating its value is described in more detail in the Notice. *See supra,* note 3. 13 These returns are calculated by using the 91-day U.S. Treasury Bill auction rate, designated as “High Rate” as published in the “Treasury Security Auction Results” report, published by the Bureau of the Public Debt currently available on its Web site ( *http://wwws.publicdebt.treas.gov/AI/AIGateway* ), which is generally published once per week on Monday. 14 On March 3, 2006, the Oversight Committee of the Dow Jones—AIG Commodity Index announced that the Reformulated Gasoline Blendstock for Oxygen Blending (“RB”) futures contract traded on the New York Mercantile Exchange (“NYMEX”) will replace the New York Harbor Unleaded Gasoline (“HU”) futures contract also traded on NYMEX. Telephone conference between Brian Trackman, Special Counsel, Division, Commission, and John Carey, Assistant General Counsel, Exchange, on March 30, 2006. 15 AIG-FP is not a broker-dealer or futures commission merchant; however, AIG-FP may have such affiliates. Therefore, AIG-FP
(i)implemented and agrees to maintain procedures reasonably designed to prevent the use and dissemination by relevant employees of AIG-FP, in violation of applicable laws, rules and regulations, of material non-public information relating to changes in the composition or method of computation or calculation of the Index and
(ii)agrees to periodically check the application of such procedures as they relate to personnel of AIG-FP responsible for such changes. Barclays has informed the Exchange that Dow Jones does not have any affiliates engaged in the securities or commodities trading businesses and, as such, does not believe that such firewall procedures are necessary in its case. In addition, the Oversight Committee is subject to written policies that acknowledge their obligations with respect to material non-public information. Telephone conference between Florence E. Harmon, Senior Special Counsel, Division, Commission and John Carey, Assistant General Counsel, Exchange, on May 11, 2006. 16 In such case, the Commission would expect the Exchange to file a proposed rule change pursuant to Rule 19b-4 (17 CFR 240.19b-4), seeking Commission approval to continue trading the Notes. Unless approved for continued trading, the Exchange would commence delisting proceedings. *See* “Continued Listing Critera,” *infra.* April 10 Telephone Conference. 17 April 11 Telephone Conference. 18 The Oversight Committee (defined below) may exclude any otherwise eligible contract from the Index if it determines that it has an inadequate trading window. The Index currently includes contracts traded on the London Metal Exchange (“LME”), which is located in London. During the hours where the LME is closed, Dow Jones uses the last price and uses the settlement price once it is available in order to publish the Index value through the end of the trading day. The Index value does not reflect any after-hours or overnight trading in contracts traded on the LME. 19 The Index value will be disseminated at least every 15 seconds and the daily Index value to be calculated and disseminated during the time the Notes trade on the Exchange; otherwise, the Exchange will halt trading in the Notes. April 11 Telephone Conference. As described in more detail in the Notice, the Index is re-weighted and rebalanced each year in January on a price-percentage basis. The annual weightings for the Index are determined each year in June or July by AIG-FP under the supervision of the Oversight Committee, announced after approval by the Oversight Committee, and implemented the following January. The composition of the Index for 2006 was approved following a meeting in July 2005. The Index reweighting and rebalancing took place in January 2006. 20 20 *See* Notice, *supra* note 3, for a chart of the composition percentages for the Index for 2006. The Exchange states that a number of commodities have been selected that are believed to be sufficiently significant to the world economy to merit consideration for inclusion in the Index and which are the subject of a qualifying related futures contract. With the exception of several metals contracts (aluminum, lead, tin, nickel and zinc) that trade on the LME, each of the potential commodities is the subject of a futures contract that trades on a U.S. exchange. The 23 potential commodities currently considered for inclusion in the Index and the 19 Index commodities selected for 2006 are set out in the Notice. 21 21 *See* Notice, *supra* note 3. A futures contract known as a Designated Contract is selected for each commodity. With the exception of several LME contracts, where the Oversight Committee believes that there exists more than one futures contract with sufficient liquidity to be chosen as a Designated Contract for a commodity, the Oversight Committee selects the futures contract that is traded in North America and denominated in dollars. If more than one such contract exists, the Oversight Committee selects the most actively traded contract. 22 For the purposes of applying the diversification rules, the commodities considered for inclusion in the Index are assigned to “Commodity Groups.” 23 22 The Designated Contracts for the commodities included in the Index for 2005 are set out in the Notice. *See supra* note 3. 23 The Commodity Groups and their effective target rounded weightings for 2006 are set out in the Notice. *See supra* note 3. The relative weightings of the component commodities included in the Index are determined annually according to both liquidity and dollar adjusted production data in 2/3 and 1/3 shares, respectively. Each June, for each commodity designated for potential inclusion in the Index, liquidity is measured by the Commodity Liquidity Percentage (“CLP”) and production by the Commodity Production Percentage (“CPP”). The CLP for each commodity is determined by taking a five-year average of the product of trading volume and the historical dollar value of the Designated Contract for that commodity, and dividing the result by the sum of such products for all commodities which were designated for potential inclusion in the Index. The CPP is determined for each commodity by taking a five-year average of annual world production figures, adjusted by the historical dollar value of the Designated Contract, and dividing the result by the sum of such production figures for all the commodities, which were designated for potential inclusion in the Index. The CLP and the CPP are then combined (using a ratio of 2:1) to establish the Commodity Index Percentage (“CIP”) for each commodity. This CIP is then adjusted in accordance with certain diversification rules in order to determine the commodities, which will be included in the Index and their respective percentage weights. The Index is designed to provide diversified exposure to commodities as an asset class. To ensure that no single commodity or commodity sector dominates the Index, the following diversification rules are applied to the annual re-weighting and rebalancing of the Index as of January of the applicable year: • No related group of commodities designated as a “Commodity Group” ( *e.g.* , energy, precious metals, livestock, or grains) may constitute more than 33% of the Index. • No single commodity may constitute more than 15% of the Index. • No single commodity, together with its derivatives ( *e.g.* , crude oil, together with heating oil and unleaded gasoline), may constitute more than 25% of the Index. • No single commodity that is in the Index may constitute less than 2% of the Index. Following the annual re-weighting and rebalancing of the Index in January, the percentage of any single commodity or group of commodities at any time prior to the next re-weighting or rebalancing will fluctuate and may exceed or be less than the percentages set forth above. Following application of the diversification rules discussed above, CIPs are incorporated into the Index by calculating the new unit weights for each Index commodity. Near the beginning of each new calendar year (the “CIM Determination Date”), the CIPs, along with the settlement prices on that date for Designated Contracts included in the Index, are used to determine a Commodity Index Multiplier (“CIM”) for each Index commodity. This CIM is used to achieve the percentage weightings of the Index commodities, in dollar terms, indicated by their respective CIPs. After the CIMs are calculated, they remain fixed throughout the year. As a result, the observed price percentage of each Index commodity will float throughout the year, until the CIMs are reset the following year based on new CIPs. In order to avoid delivering the underlying physical commodities and to maintain exposure to the underlying physical commodities, periodically futures contracts on physical commodities specifying delivery on a nearby date must be sold and futures contracts on physical commodities that have not yet reached the delivery period must be purchased. The rollover for each contract occurs over a period of five DJ-AIG Business Days each month according to a pre-determined schedule. This process is known as “rolling” a futures position. The Index is a “rolling index.” The Index is calculated by Dow Jones by applying the impact of the changes to the futures prices of commodities included in the Index (based on the commodities' relative weightings). Once the CIMs are determined as discussed above, the calculation of the Index is a mathematical process whereby the CIMs for the Index commodities are multiplied by the daily settlement prices in U.S. dollars for the applicable Designated Contracts. These products are then summed. During the rollover period, the sum includes both nearby and deferred contracts weighted according to the specified roll percentage. The percentage change in this sum from the prior day is then applied to the prior Index value. Finally, the value of one day's interest is added, calculated using the most recent (lagged by one day) 91-Day U.S. Treasury Bill Auction High Rate to arrive at the current Index value. Dow Jones disseminates the Index value at least every 15 seconds (assuming the Index value has changed within such fifteen-second interval) from 8 a.m. to 3 p.m. ET and publishes a daily Index value at approximately 4 p.m. ET on each DJ-AIG Business Day on its Web site at *http://www.djindexes.com.* 24 This information is also transmitted via one or more major market data vendors. Real time information about the trading of the component futures contracts and their daily settlement prices is available from one or more major market data vendors, and in some cases, the underlying futures exchanges. 25 Additionally, in the event of a disruption, adjustment, discontinuance, or substitution of the Index, the calculation agent has discretion as to the computation methodology and adjustments. However, in such case, the Exchange will file a proposed rule change pursuant to Rule 19b-4 under the Act. Unless approved for continued trading, the Exchange would commence delisting proceedings. 26 24 The Index value is static from 3 p.m. to 4 p.m. ET other than modifications to reflect settlement prices becoming available. April 11 Telephone Conference. 25 Telephone conference between Florence E. Harmon, Senior Special Counsel, Division, Commission, and John Carey, Assistant General Counsel, Exchange, on May 23, 2006. 26 *See* “Continued Listing Criteria,” *infra.* April 10 Telephone Conference. V. Continued Listing Criteria The Exchange has represented that it prohibits the initial and/or continued listing of any security that is not in compliance with Rule 10A-3 under the Act. 27 27 17 CFR 240.10A-3. The Exchange will delist the Notes: • If, following the initial twelve month period from the date of commencement of trading of the Notes:
(i)The Notes have more than 60 days remaining until maturity and there are fewer than 50 beneficial holders of the Notes for 30 or more consecutive trading days;
(ii)if fewer than 50,000 Notes remain issued and outstanding; or
(iii)if the market value of all outstanding Notes is less than $1,000,000; • If the Index value ceases to be calculated or available during the time the Notes trade on the Exchange on at least a 15 second basis through one or more major market data vendors; 28 28 The Exchange confirmed that the Index value will be disseminated at least every 15 seconds by one or more major market data vendors during the time the Notes trade on the Exchange. The Exchange also confirmed that the index and its components have daily settlement values that are widely disclosed. Telephone conference between Florence E. Harmon, Senior Special Counsel, Division, Commission, and John Carey, Assistant General Counsel, Exchange, on May 23, 2006. • If, during the time the Notes trade on the Exchange, the Indicative Value ceases to be available on a 15 second delayed basis; or • If such other event shall occur or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. Additionally, the Exchange has represented it will file a proposed rule change pursuant to Rule 19b-4 under the Act, 29 seeking approval to continue trading the Notes and unless approved, the Exchange will commence delisting the Notes if: 29 17 CFR 240.19b-4. • Dow Jones and AIG-FP substantially change either the Index component selection methodology or the weighting methodology; • If a new component is added to the Index (or pricing information is used for a new or existing component) that constitutes more than 10% of the weight of the Index with whose principal trading market the Exchange does not have a comprehensive surveillance sharing agreement; 30 or 30 Therefore, only 10% of the weight of all of the Index (and thus the Index components) could not be subject to comprehensive surveillance sharing arrangements with the Exchange. April 10 Telephone Conference. • If a successor or substitute index is used in connection with the Notes. The filing will address, among other things the listing and trading characteristics of the successor or substitute index and the Exchange's surveillance procedures applicable thereto. VI. Trading Rules The Exchange's existing equity trading rules will apply to trading of the Notes. The Notes will trade between the hours of 9:30 a.m. and 4 p.m. ET 31 and will be subject to the equity margin rules of the Exchange. 32 31 March 29 Telephone Conference. 32 *See* NYSE Rule 431. A. Trading Halts The Exchange has agreed it will cease trading the Notes if there is a halt or disruption in the dissemination of the Index value or the Indicative Value. 33 The Exchange has also represented it will cease trading the Notes if a “market disruption event” occurs that is of more than a temporary nature. 34 In the event that the Exchange is open for business on a day that is not a DJ-AIG Business Day, the Exchange will not permit trading of the Notes on that day. 33 In the event the Index value or Indicative Value is no longer calculated or disseminated, the Exchange would immediately contact the Commission to discuss measures that may be appropriate under the circumstances. 34 In the event a “market disruption event” occurs that is of more than a temporary nature, the Exchange would immediately contact the Commission to discuss measures that may be appropriate under the circumstances. B. Specialist Trading Obligations The Exchange has proposed Supplementary Material .10 to proposed NYSE Rule 1301B 35 in order to apply the provisions of NYSE Rule 1300B(b) and NYSE Rule 1301B to certain Notes listed on the Exchange pursuant to Section 703.19 (“Other Notes”) of the Manual. Specifically, NYSE Rules 1300B(b) and 1301B will apply to Notes listed under Section 703.19 where the price of such Notes is based in whole or part on the price of
(a)a commodity or commodities,
(b)any futures contracts or other derivatives based on a commodity or commodities; or
(c)any index based on either
(a)or
(b)above. 35 *See* Amendment No. 1 to SR-NYSE-2006-17, filed with the Commission on March 24, 2006. As a result of application of NYSE Rule 1300B(b), the specialist in the Notes, the specialist's member organization and other specified persons will be prohibited under paragraph
(m)of NYSE Rule 105 Guidelines from acting as market maker or functioning in any capacity involving market-making responsibilities in the Index components, the commodities underlying the Index components, or options, futures or options on futures on the Index, or any other derivatives (collectively, “derivative instruments”) based on the Index or based on any Index component or any physical commodity underlying an Index component. If the member organization acting as specialist in the Notes is entitled to an exemption under NYSE Rule 98 from paragraph
(m)of NYSE Rule 105 Guidelines, then that member organization could act in a market making capacity in the Index components, the commodities underlying the Index components, or derivative instruments based on the Index or based on any Index component or commodity underlying an Index component, other than as a specialist in the Notes themselves, in another market center. Under NYSE Rule 1301B(a), the member organization acting as specialist in the Notes
(1)will be obligated to conduct all trading in the Notes in its specialist account, (subject only to the ability to have one or more investment accounts, all of which must be reported to the Exchange),
(2)will be required to file with the Exchange and keep current a list identifying all accounts for trading in the Index components or the physical commodities underlying the Index components, or derivative instruments based on the Index or based on the Index components or the physical commodities underlying the Index components, which the member organization acting as specialist may have or over which it may exercise investment discretion, and
(3)will be prohibited from trading in the Index components or the physical commodities underlying the Index components, or derivative instruments based on the Index or based on the Index components or the physical commodities underlying the Index components, in an account in which a member organization acting as specialist, controls trading activities which have not been reported to the Exchange as required by NYSE Rule 1301B. Under NYSE Rule 1301B(b), the member organization acting as specialist in the Notes will be required to make available to the Exchange such books, records or other information pertaining to transactions by the member organization and other specified persons for its or their own accounts in the Index components or the physical commodities underlying the Index components, or derivative instruments based on the Index or based on the Index components or the physical commodities underlying the Index components, as may be requested by the Exchange. This requirement is in addition to existing obligations under Exchange rules regarding the production of books and records. Under NYSE Rule 1301B(c), in connection with trading the Index components or the physical commodities underlying the Index components, or derivative instruments based on the Index or based on the Index components or the physical commodities underlying the Index components, the specialist could not use any material nonpublic information received from any person associated with a member or employee of such person regarding trading by such person or employee in the Index components or the physical commodities underlying the Index components, or derivative instruments based on the Index or based on the Index components or the physical commodities underlying the Index components. C. Surveillance The Exchange represents that its surveillance procedures are adequate to properly monitor the trading of the Notes and the Index components. The Exchange will rely upon existing NYSE surveillance procedures governing equities with respect to surveillance of the Notes. The Exchange believes that these procedures are adequate to monitor Exchange trading of the Notes and to detect violations of Exchange rules, consequently deterring manipulation. In this regard, the Exchange has the authority under NYSE Rules 476 and 1301B to request the Exchange specialist in the Notes to provide NYSE Regulation with information that the specialist uses in connection with pricing the Notes on the Exchange, including specialist, proprietary or other information regarding Notes, commodities, futures, options on futures or other derivative instruments. The Exchange believes it also has authority to request any other information from its members—including floor brokers, specialists and “upstairs” firms—to fulfill its regulatory obligations. With regard to the Index components, the Exchange can obtain market surveillance information with respect to transactions occurring on the LME and NYMEX (and COMEX), including customer identity information, pursuant to comprehensive surveillance sharing arrangements with each of these exchanges. All of the other trading venues on which current Index components are traded, namely CBOT, the Coffee, Sugar and Cocoa Exchange of the New York Board of Trade, and the Chicago Mercantile Exchange Inc., are members of the Intermarket Surveillance Group (“ISG”), and the Exchange therefore has access to all relevant trading information with respect to those contracts without any further action being required on the part of the Exchange. All these surveillance arrangements constitute comprehensive surveillance sharing arrangements. VII. Suitability Pursuant to NYSE Rule 405, the Exchange will impose a duty of due diligence on its members and member firms to learn the essential facts relating to every customer prior to trading the Notes. 36 With respect to suitability recommendations and risks, the Exchange will require members, member organizations and employees thereof recommending a transaction in the Notes:
(1)To determine that such transaction is suitable for the customer; and
(2)to have a reasonable basis for believing that the customer can evaluate the special characteristics of, and is able to bear the financial risks of, such transaction. 36 NYSE Rule 405 requires that every member, member firm or member corporation use due diligence to learn the essential facts relative to every customer and to every order or account accepted. VIII. Information Memorandum 37 37 The Exchange initially referred to the distributed document in its filing as an “Information Circular.” The Exchange requested that the Commission change the reference to an “Information Memorandum” in the Commission's Notice. *See supra,* note 3. Telephone conference between Kristie Diemer, Attorney, Division, Commission, and John Carey, Assistant General Counsel, Exchange, on April 10, 2006. The Exchange will, prior to trading the Notes, distribute a memorandum to the membership providing guidance with regard to member firm compliance responsibilities (including suitability recommendations) when handling transactions in the Notes. The memorandum will note to members language in the prospectus used by Barclays in connection with the sale of the Notes regarding prospectus delivery requirements for the Notes. Specifically, in the initial distribution of the Notes, 38 and during any subsequent distribution of the Notes, NYSE members will deliver a prospectus to investors purchasing from such distributors. 39 38 The Registration Statement reserves the right to do subsequent distributions of these Notes. 39 April 10 Telephone Conference. The memorandum will discuss the special characteristics and risks of trading this type of security. Specifically, the memorandum, among other things, will discuss what the Notes are, how the Notes are redeemed, applicable Exchange rules, dissemination of information regarding the Index value and the Indicative Value, trading information, and applicable suitability rules. The memorandum will also notify members and member organizations about the procedures for redemptions of Notes and that Notes are not individually redeemable but are redeemable only in aggregations of at least 50,000 Notes. The memorandum will also reference the fact that there is no regulated source of last sale information regarding physical commodities and that the SEC has no jurisdiction over the trading of physical commodities or the futures contracts on which the value of the Notes is based, and that the Commodity Futures Trading Commission has no regulatory jurisdiction over the trading of certain foreign based futures contracts. The memorandum will also discuss other exemptive or no-action relief under the Act provided by the Commission staff. 40 40 March 29 Telephone Conference. IX. Discussion and Commission's Findings After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 41 In particular, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of Section 6(b)(5) of the Act, 42 which requires, among other things, that the Exchange's rules be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 41 In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 42 15 U.S.C. 78f(b)(5). A. Surveillance Information sharing agreements with primary markets trading index components underlying a derivative product are an important part of a self-regulatory organization's ability to monitor for trading abuses in derivative products. The Commission believes that the Exchange's comprehensive surveillance sharing arrangements with LME, NYMEX (and COMEX), pursuant to which the Exchange can obtain market surveillance information, including customer identity information, along with the Exchange's participation in the ISG, create the basis for the Exchange to monitor for fraudulent and manipulative practices in the trading of the Notes. In addition, the Exchange represents that it will delist the Notes if a new component is added to the Index (or pricing information is used for a new or existing component) that constitutes more than 10% of the weight of the Index with whose principal trading market the Exchange does not have a comprehensive surveillance sharing agreement. Moreover, NYSE Rules 476 and 1301B give NYSE the authority to request the Exchange specialist in the Notes to provide NYSE Regulation with pricing information, among other things. Furthermore, the Exchange believes that it also has the authority to request any other information from its members—including floor brokers, specialists and “upstairs” firms—to fulfill its regulatory obligations. The Commission believes that these rules provide the NYSE with the tools necessary to adequately surveil trading in the Notes. B. Dissemination of Information The Commission believes that sufficient venues for obtaining reliable price information exist so that investors in the Notes can monitor the underlying Index relative to the Indicative Value of the Notes. There is a considerable amount of information about the Index and its components available through public Web sites and professional subscription services, including Reuters and Bloomberg. During the time that the Notes will trade on the Exchange, Dow Jones disseminates via one or more major market data vendors the Index value at least every 15 seconds 43 from 8 a.m. to 3 p.m. ET and publishes a daily Index value at approximately 4 p.m. ET on Reuters. Real time information about the trading of the component futures contracts and their daily settlement prices is available from one or more major market data vendors, and in some cases, the underlying futures exchanges. 43 April 11 Telephone Conference. While the Indicative Value will not reflect price changes of an underlying commodity between the close of trading of the futures contract at the relevant futures exchange and the close of trading on the NYSE at 4 p.m. New York time, the Exchange will disseminate the Indicative Value of the Notes via the facilities of the CTA every 15 seconds throughout the NYSE trading day on each day on which the Notes are traded on the Exchange. Additionally, Barclays or an affiliate will calculate and publish the closing Indicative Value of the Notes on each trading day at *http://www.ipathetn.com.* C. Listing and Trading The Commission finds that the Exchange's proposed rules and procedures for the listing and trading of the proposed Notes are consistent with the Act. Notes will trade as equity securities under Section 703.19 and will be subject to NYSE rules applicable to equity trading including, among others, rules governing priority, parity and precedence of orders, specialist responsibilities, account opening and customer suitability requirements. The Commission believes that the listing and delisting criteria for the Notes should help to maintain a minimum level of liquidity and therefore minimize the potential for manipulation of the Notes. The Exchange represents that it would file a proposed rule change, pursuant to Rule 19b-4, 44 if the Index Sponsors materially change the composition of the Index, the methodology of calculating the value of the Index, or any other policies relevant to the Index. Finally, the Commission notes that the Information Memorandum the Exchange will distribute will inform members and member organizations about the terms, characteristics and risks in trading the Notes, including their prospectus delivery obligations. 44 17 CFR 240.19b-4. X. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act that the proposed rule change (SR-NYSE-2006-16), as amended by Amendment No. 1, is approved. 45 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 45 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6-8549 Filed 6-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53875; File No. SR-NYSEArca-2006-11] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to the Trading of the United States Oil Fund, LP Pursuant to Unlisted Trading Privileges May 25, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on April 26, 2006, NYSE Arca, Inc. (the “Exchange”), through its wholly owned subsidiary NYSE Arca Equities, Inc. (“NYSE Arca Equities” or the “Corporation”), 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 Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and is approving the proposal on an accelerated basis. 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, through its wholly owned subsidiary NYSE Arca Equities, proposes to amend its rules governing NYSE Arca, L.L.C. (also referred to as the “NYSE Arca Marketplace”), the equities trading facility of NYSE Arca Equities. The Exchange proposes new NYSE Arca Equities Rule 8.300 in order to permit trading, either by listing or pursuant to unlisted trading privileges (“UTP”), units in a partnership that is a commodity pool under the Commodity Exchange Act (“CEA”) that is designed to track a specified commodity or index of commodities by holding any combination of investments
(i)comprised of or based on futures contracts, options on futures contracts, forward contracts, swaps, and over-the-counter (“OTC”) contracts for commodities or based on price changes in commodities, and
(ii)in securities that may be required to satisfy margin or collateral requirements associated with investments in the financial instruments listed in item
(i)above (such units are referred to generally herein as “Partnership Units”). Pursuant to these proposed rules, the Exchange initially proposes to trade, pursuant to UTP, units (“Units”) of the United States Oil Fund, LP (“USOF” or the “Partnership”). The text of the proposed rule change appears below. Additions are *underlined.* Rules of NYSE Arca Equities, Inc. *Rule 8.300* *Partnership Units* *(a) The Corporation will consider for trading, whether by listing or pursuant to unlisted trading privileges, Partnership Units that meet the criteria of this Rule.* *(b) Definitions. The following terms as used in the Rule shall, unless the context otherwise requires, have the meanings herein specified:* *(1) Commodity. The term “commodity” is defined in Section 1(a)(4) of the Commodity Exchange Act.* *(2) Partnership Units. The term “Partnership Units” for purposes of this Rule means a security
(a)that is issued by a partnership that invests in any combination of futures contracts, options on futures contracts, forward contracts, commodities and/or securities; and
(b)that is issued and redeemed daily in specified aggregate amounts at net asset value.* *(c) Designation. The Corporation may list and trade Partnership Units based on an underlying asset, commodity or security. Each issue of a Partnership Unit shall be designated as a separate series and shall be identified by a unique symbol.* *(d) Initial and Continued Listing. Partnership Units will be listed and/or traded on the Corporation subject to application of the following criteria:* *(1) Initial Listing—The Corporation will establish a minimum number of Partnership Units required to be outstanding at the time of commencement of trading on the Corporation.* *(2) Continued Listing—The Corporation will consider removing from listing Partnership Units under any of the following circumstances:* *(i) if following the initial twelve month period following the commencement of trading of Partnership Units,
(A)the partnership has more than 60 days remaining until termination and there are fewer than 50 record and/or beneficial holders of Partnership Units for 30 or more consecutive trading days;
(B)if the partnership has fewer than 50,000 Partnership Units issued and outstanding; or
(C)if the market value of all Partnership Units issued and outstanding is less than $1,000,000;* *(ii) if the value of the underlying benchmark investment, commodity or asset is no longer calculated or available on at least a 15-second delayed basis or the Corporation stops providing a hyperlink on its Web site to any such investment, commodity, or asset value;* *(iii) if the Indicative Partnership Value is no longer made available on at least a 15-second delayed basis; or* *(iv) if such other event shall occur or condition exists which in the opinion of the Corporation makes further dealings on the Corporation inadvisable.* *Upon termination of a partnership, the Corporation requires that Partnership Units issued in connection with such partnership be removed from Corporation listing. A partnership will terminate in accordance with the provisions of the partnership prospectus.* *(3) Term—The stated term of the partnership shall be as stated in the prospectus. However, such entity may be terminated under such earlier circumstances as may be specified in the Partnership prospectus.* *(4) General Partner—The following requirements apply:* *(i) The general partner of a partnership must be an entity having substantial capital and surplus and the experience and facilities for handling partnership business. In cases where, for any reason, an individual has been appointed as general partner, a qualified entity must also be appointed as general partner.* *(ii) No change is to be made in the general partner of a listed issue without prior notice to and approval of the Corporation.* *(5) Voting—Voting rights shall be as set forth in the applicable partnership prospectus.* *(e) Market Maker Accounts.* *(1) An ETP Holder acting as a registered Market Maker in Partnership Units is obligated to comply with Rule 7.26 pertaining to limitations on dealings when such Market Maker, or affiliate of such Market Maker, engages in Other Business Activities. For purposes of Partnership Units, Other Business Activities shall include acting as a Market Maker or functioning in any capacity involving market-making responsibilities in the underlying asset or commodity, related futures or options on futures, or any other related derivatives. However, an approved person of an ETP Holder acting as a registered Market Maker in Partnership Units that has established and obtained Corporation approval of procedures restricting the flow of material, non-public market information between itself and the ETP Holder pursuant to Rule 7.26, and any member, officer or employee associated therewith, may act in a market making capacity, other than as a Market Maker in the Partnership Units on another market center, in the underlying asset or commodity, related futures or options on futures, or any other related derivatives.* *(2) The ETP Holder acting as a registered Market Maker in Partnership Units must file, with the Corporation, in a manner prescribed by the Corporation, and keep current a list identifying all accounts for trading the underlying asset or commodity, related futures or options on futures, or any other related derivatives, which the ETP Holder acting as registered Market Maker may have or over which it may exercise investment discretion. No ETP Holder acting as registered Market Maker in the Partnership Units shall trade in the underlying asset or commodity, related futures or options on futures, or any other related derivatives, in an account in which an ETP Holder acting as a registered Market Maker, directly or indirectly, controls trading activities, or has a direct interest in the profits or losses thereof, which has not been reported to the Corporation as required by this Rule.* *(3) In addition to the existing obligations under Corporation rules regarding the production of books and records (See, e.g. Rule 4.4), the ETP Holder acting as a registered Market Maker in Partnership Units shall make available to the Corporation such books, records or other information pertaining to transactions by such entity or any limited partner, officer or approved person thereof, registered or non-registered employee affiliated with such entity for its or their own accounts in the underlying asset or commodity, related futures or options on futures, or any other related derivatives, as may be requested by the Corporation.* *(4) In connection with trading the underlying asset or commodity, related futures or options on futures or any other related derivative (including Partnership Units), the ETP Holder acting as a registered Market Maker in Partnership Units shall not use any material nonpublic information received from any person associated with an ETP Holder or employee of such person regarding trading by such person or employee in the physical asset or commodity, futures or options on futures, or any other related derivatives.* *(f) Limitation of Corporation Liability. Neither the Corporation nor any agent of the Corporation shall have any liability for damages, claims, losses or expenses caused by any errors, omissions, or delays in calculating or disseminating any underlying asset or commodity value, the current value of the underlying asset or commodity if required to be deposited to the partnership in connection with issuance of Partnership Units; net asset value; or other information relating to the purchase, redemption or trading of Partnership Units, resulting from any negligent act or omission by the Corporation or any agent of the Corporation, or any act, condition or cause beyond the reasonable control of the Corporation or its agent, including, but not limited to, an act of God; fire; flood; extraordinary weather conditions; war; insurrection; riot; strike; accident; action of government; communications or power failure; equipment or software malfunction; or any error, omission or delay in the reports of transactions in an underlying asset or commodity.* *The Corporation will file separate proposals under Section 19(b) of the Securities Exchange Act of 1934 before listing and trading separate and distinct Partnership Units designated on different underlying investments, commodities and/or assets.* *Commentary* *.01 The Exchange requires that Equity Trading Permit holders provide to all purchasers of newly issued Partnership Units a prospectus for the series of Partnership Units.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item III below, and is set forth in Sections A, B, and C below. A. *Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change* 1. Purpose The Exchange proposes to add new NYSE Arca Equities Rule 8.300 in order to permit trading, either by listing or pursuant to UTP, units in a partnership that holds commodity-based or linked investments. Pursuant to this proposed rule, the Exchange initially proposes to trade pursuant to UTP the Units, which represent ownership of a fractional undivided interest in the net assets of USOF. 3 The Commission previously approved the original listing and trading of the Units by the American Stock Exchange LLC (“Amex”). 4 3 USOF, a Delaware limited partnership, is a commodity pool. The Exchange states that USOF is not an investment company as defined in Section 3(a) of the Investment Company Act of 1940. The offering of the Units of the Partnership is registered with the Commission under the Securities Act of 1933. 4 *See* Securities Exchange Act Release Nos. 53582 (March 31, 2006), 71 FR 17510 (April 6, 2006) (order granting approval to SR-Amex-2005-127) (“Amex Order”); 53324 (February 16, 2006), 71 FR 9614 (February 24, 2006) (“USOF Notice”). The investment objective of the USOF is for its net asset value (“NAV”) 5 to reflect the performance of the spot price of West Texas Intermediate light, sweet crude oil delivered to Cushing, Oklahoma (the “WTI light, sweet crude oil”), 6 as represented by the performance of the price of the “Benchmark Oil Futures Contract,” less the expense of operation of USOF. The “Benchmark Oil Futures Contract” is the near-month ( *i.e.* , spot month) future contract for delivery of WTI light, sweet crude oil traded on the New York Mercantile Exchange (“NYMEX”). 7 5 NAV is the total assets, less total liabilities of USOF, determined on the basis of generally accepted accounting principles. NAV per Unit is the NAV of USOF divided by the number of outstanding Units. 6 The types of crude oil are typically described by a combination of their physical attributes and their place of origin. A few of these types of crude oil are widely traded and their prices serve as benchmarks in determining the spot and forward prices of the other types of crude oil. The three most important types of crude oil that are used as benchmarks are the light, sweet crude oil from the United States known as “West Texas Intermediate,” a light, sweet crude oil from Europe's North Sea known as “Brent Crude,” and a medium crude oil from the Middle East known as “Dubai Crude.” These three types of crude oil are the ones used most frequently in the trading of listed futures contracts, listed options, and non-exchange listed derivative contracts based on crude oil. 7 The Exchange will file a Form 19b-4 to obtain Commission approval for the continued trading of the Units should the General Partner change the Benchmark Oil Futures Contract from this NYMEX WTI light, sweet crude oil futures contract. The assets of USOF will consist of futures contracts for light, sweet crude oil and other petroleum based fuels that are traded on the NYMEX or other U.S. and foreign exchanges 8 (collectively, “Oil Futures Contracts”). USOF will also purchase other oil interests, such as cash-settled options on Oil Futures Contracts, forward contracts for oil, and OTC transactions that are based on the price of oil, other petroleum-based fuels, and indices based on the foregoing (collectively, “Other Oil Interests”). (Oil Futures Contracts and Other Oil Interests are collectively referred to as “Oil Interests.”) The Oil Interests for light, sweet crude oil and other petroleum based fuels in which USOF will invest are based on domestic oil, (WTI light, sweet crude oil), international oil (Brent Crude Oil), heating oil, natural gas, and gasoline. A description of these commodities and the primary trading market for futures contracts based on such commodities is set forth in the USOF Notice. 9 8 USOF will primarily purchase WTI light, sweet crude Oil Futures Contracts traded on the NYMEX, but may also purchase Oil Futures Contracts on other exchanges, including the Intercontinental Exchange, formerly known as the International Petroleum Exchange, which operates its futures business through ICE Futures (“ICE Futures”) and the Singapore Oil Exchange. 9 *See* USOF Notice, *supra* note 4. USOF will also invest in short term obligations of the United States Government (“Treasuries”) to be used to satisfy its current or future margin and collateral requirements and to otherwise satisfy its obligations with respect to its investments in Oil Interests.
(a)*The Units.* In January 2005, the Commission approved an Exchange rule (NYSE Arca Equities Rule 8.201) for the listing and trading of Commodity-Based Trust Shares. 10 Commodity-Based Trust Shares are trust issued receipts (“TIRs”) based on the value of an underlying commodity or index of commodities held by a trust. Because of USOF's structure as a partnership and the nature of its investments, the current Commodity-Based Trust Shares rule (NYSE Arca Equities Rule 8.201) does not specifically permit the Exchange to trade this product. This proposal seeks to expand the ability of the Exchange to list and/or trade securities based on a portfolio of underlying investments that may not be “securities” in circumstances where the issuer is a partnership, organized as a commodities pool under the CEA. 10 *See* Securities Exchange Act Release Nos. 51067 (January 21, 2005), 70 FR 3952 (January 27, 2005) (approving general standards for the listing and trading of Commodity-Based Trust Shares and trading pursuant to UTP of shares of the iShares(r) COMEX Gold Trust); 51245 (February 23, 2005), 70 FR 10731-01 (March 4, 2005) (approving the trading pursuant to UTP of shares of the streetTRACKS® Gold Trust); 53520 (March 20, 2006), 71 FR 14977 (March 24, 2006) (approving the trading pursuant to UTP of shares of the iShares Silver Trust). *See also* Securities Exchange Act Release No. 53736 (April 27, 2006), 71 FR 26582 (May 5, 2006) (proposal to trade pursuant to UTP shares of the DB Commodity Index Tracking Fund). Under proposed NYSE Arca Equities Rule 8.300, the Exchange would be able to trade pursuant to UTP the Units issued by USOF. For units issued by other commodity-based partnerships or other types of units issued by USOF, if any, the Exchange would submit a filing pursuant to Section 19(b) of the Act, subject to the review and approval of the Commission. A description of the liquidity, depth, and pricing mechanisms of the international oil market, the regulation of futures, operation of the USOF, and a description of the Units is set forth in the Amex Order and the USOF Notice. 11 To summarize, issuances of Units will be made only in baskets of 100,000 Units or multiples thereof (a “Basket”). The Partnership will issue and redeem Baskets of the Units on a continuous basis by or through participants who have entered into authorized purchaser agreements (each, an “Authorized Purchaser”) 12 with the General Partner, 13 at the net asset value (“NAV”) per Unit next determined after an order to purchase the Units in a Basket is received in proper form. Baskets may be issued and redeemed on any Business day (defined as any day other than a day on which the Amex, the NYMEX, or the New York Stock Exchange is closed for regular trading) through ALPS Distributors, Inc. (the “Marketing Agent”) in exchange for cash and/or Treasuries, which Brown Brothers Harriman & Co. (the “Custodian” and the “Administrator”) receives from Authorized Purchasers or transfers to Authorized Purchasers, in each case on behalf of USOF. Baskets are then separable upon issuance into identical Units that will be traded on the NYSE Arca Marketplace as equity securities. 14 11 *See supra* note 4. 12 An “Authorized Purchaser” is a person, who at the time of submitting to the General Partner an order to create or redeem one or more Baskets,
(i)is a registered broker-dealer or other market participant, such as a bank or other financial institution that is exempt from broker-dealer registration,
(ii)is a Depository Trust Company Participant, and
(iii)has in effect a valid Authorized Purchaser Agreement. 13 The General Partner is Victoria Bay Asset Management, LLC, a single member Delaware limited liability company wholly owned by Wainwright Holdings, Inc. The General Partner, which was formed for the specific purpose of managing and controlling USOF, has registered as a Commodity Pool Operator (“CPO”) with the Commodity Futures Trading Commission (“CFTC”) and has become a member of the National Futures Association (“NFA”). 14 The Exchange expects that the number of outstanding Units will increase and decrease as a result of creations and redemptions of Baskets. Baskets will be issued in exchange for Treasuries and/or cash in an amount equal to the NAV per Unit times 100,000 Units (the “Basket Amount”). Authorized Purchasers that wish to purchase a Basket must transfer the Basket Amount to the Administrator (the “Deposit Amount”). Authorized Purchasers that wish to redeem a Basket will receive an amount of Treasuries and cash in exchange for each Basket surrendered in an amount equal to the NAV per Basket (the “Redemption Amount”). On each business day, the Administrator will make available, prior to 9:30 a.m. Eastern Time (“ET”), the estimated Basket Amount for the creation of a Basket based on the prior day's NAV. 15 According to the Amex Order, the Amex will disseminate at least every 15 seconds throughout the trading day, via the facilities of the Consolidated Tape Association (“CTA”), an amount representing, on a per Unit basis, the current indicative value of the Basket Amount ( *See* “Indicative Partnership Value” below). Shortly after 4 p.m. ET, the Administrator will determine the NAV for USOF as described below. At or about 4 p.m. ET on each business day, the Administrator will determine the Actual Basket Amount (“Actual Basket Amount”) for orders placed by Authorized Purchasers received before 12 p.m. ET that day. Thus, although Authorized Purchasers place orders to purchase Units during the trading day until 12 p.m. ET, the Actual Basket Amount is determined as of 4 p.m. ET. 15 The Administrator will make available an “estimated” Basket Amount prior to the opening of trading on the Exchange, rather than the Actual Basket Amount, which will not be available until shortly after 4 p.m. ET each business day, as described below. All such information (NAV, Actual Basket Amount, Estimated Basket Amount, and daily disclosure of portfolio holdings) will be available to all market participants at the same time to avoid any informational disadvantage. Shortly after 4 p.m. ET on each business day, the Administrator, Amex, and the General Partner will disseminate the NAV for the Units and the Actual Basket Amount (for orders placed during the day). The Basket Amount and the NAV are communicated by the Administrator to all Authorized Purchasers via facsimile or electronic mail message. According to the Amex Order, the Amex will also disclose the NAV and the Actual Basket Amount on its Web site at * http:// www.amex.com. * 16 On each day that the Amex is open for regular trading, the Administrator will adjust the Deposit Amount as appropriate to reflect the prior day's Partnership NAV and accrued expenses. The Administrator will then determine the Deposit Amount for a given business day. 16 *See supra* note 15. The Administrator will calculate NAV as follows:
(1)Determine the current value of USOF assets and
(2)subtract the liabilities of USOF. The NAV will be calculated at 4 p.m. ET using the settlement value 17 of Oil Futures Contracts traded on the NYMEX as of the close of open-outcry trading on the NYMEX at 2:30 p.m. ET, and for the value of other Oil Futures Interests and Treasuries, the value of such investments as of the earlier of 4 p.m. ET or the close of trading on the New York Stock Exchange. The NAV is calculated by including any unrealized profit or loss on Oil Futures Contracts and other Oil Interests and any other credit or debit accruing to USOF but unpaid or not received by USOF. The NAV is then used to compute all fees (including the management and administrative fees) that are calculated from the value of Partnership assets. The Administrator will calculate the NAV per unit by dividing the NAV by the number of Units outstanding. The calculation methodology for the NAV is described in more detail in the Amex Order. 17 *See* NYMEX Rule 6.52. The Units will not be individually redeemable but will only be redeemable in Baskets. To redeem, an Authorized Participant will be required to accumulate enough Units to constitute a Basket ( *i.e.* , 100,000 Units). Authorized Participants that wish to redeem a Basket will receive the Redemption Amount in exchange for each Basket surrendered. 18 The operation of the Partnership and creation and redemption process is described in more detail in the Amex Order. 18 Authorized Purchasers are required to pay a transaction fee of $1,000 for each order to create or redeem one or more Baskets.
(b)Dissemination and Availability of Information.
(i)Oil Futures Contracts The daily settlement prices for the NYMEX traded Oil Futures Contracts held by USOF are publicly available on the NYMEX Web site at *http://www.nymex.com.* The Exchange's Web site at *http://www.nysearca.com* will also include a hyperlink to the NYMEX Web site for the purpose of disclosing futures contract pricing. In addition, various market data vendors and news publications publish futures prices and related data. The Exchange represents that quote and last sale information for the Oil Futures Contracts are widely disseminated through a variety of market data vendors worldwide, including Bloomberg and Reuters. According to the Amex Order, last sale information for the Benchmark Oil Futures Contract will be updated and disseminated at least every 15 seconds by one or more major market data vendors during the time the Units trade. However, from 2:30 p.m. ET to the opening of NYMEX ACCESS at 3:15 p.m. ET, the pricing for the Benchmark Oil Futures Contract will not be updated. The Exchange further represents that real-time futures data is available by subscription from Reuters and Bloomberg. The NYMEX also provides delayed futures information on current and past trading sessions and market news free of charge on its Web site. The specific contract specifications for the Oil Futures Contracts are also available on the NYMEX Web site and the ICE Futures Web site at *https://www.theice.com.*
(ii)USOF Units The Web site for USOF, which will be publicly accessible at no charge and to which the Exchange will provide a hyperlink on its Web site ( *http://www.nysearca.com* ), will include the following information:
(1)The prior business day's NAV and the reported closing price;
(2)the mid-point of the bid-ask price 19 in relation to the NAV as of the time the NAV is calculated (the “Bid-Ask Price”);
(3)calculation of the premium or discount of such price against such NAV;
(4)data in chart form displaying the frequency distribution of discounts and premiums of the Bid-Ask Price against the NAV, within appropriate ranges for each of the four previous calendar quarters;
(5)the prospectus and the most recent periodic reports filed with the Commission or required by the CFTC; and
(6)other applicable quantitative information. In addition, information on USOF's daily portfolio holdings will be available on its Web site at *http://www.unitedstatesoilfund.com* and will be equally accessible to investors and Authorized Purchasers. 19 The Bid-Ask Price of Units is determined using the highest bid and lowest offer as of the time of calculation of the NAV. As described above, the NAV for USOF will be calculated and disseminated daily. According to the Amex Order, the Amex also intends to disseminate for USOF on a daily basis by means of CTA/CQ High Speed Lines information with respect to the Indicative Partnership Value (as discussed below), recent NAV, Units outstanding, the estimated Basket Amount and the Deposit Amount ( *e.g.* , the Actual Basket Amount). The Exchange will make available on its Web site daily trading volume, closing prices and the NAV. The closing price and settlement prices of the Oil Futures Contracts held by USOF are also readily available from the NYMEX, automated quotation systems, published or other public sources, or on-line information services such as Bloomberg or Reuters. In addition, the Exchange will provide a hyperlink on its Web site at *http://www.nysearca.com* to USOF's Web site.
(iii)Indicative Partnership Value According to the Amex Order, the Amex will disseminate through the facilities of the CTA an updated Indicative Partnership Value (the “Indicative Partnership Value”) per Unit basis at least every 15 seconds from 9:30 a.m. to 4:15 p.m. ET. The Indicative Partnership Value will be calculated based on the Treasuries and cash required for creations and redemptions ( *i.e.* , NAV per limit x 100,000) adjusted to reflect the price changes of the current Benchmark Oil Futures Contract. The Indicative Partnership Value will not reflect price changes to the price of the current Benchmark Oil Futures Contract between the close of open-outcry trading of these oil futures contract on the NYMEX at 2:30 p.m. ET and the open of trading on the NYMEX ACCESS market at 3:15 p.m. ET. 20 The Indicative Partnership Value after 3:15 p.m. ET will reflect changes to the current Benchmark Oil Futures Contract as provided for through NYMEX ACCESS. The value of a Unit may accordingly be influenced by the non-concurrent trading hours of the Amex and NYMEX. While the Units will trade on the Amex from 9:30 a.m. to 4:15 p.m. ET, the current Benchmark Oil Futures Contract will trade, in open-outcry, on the NYMEX from 10 a.m. ET to 2:30 p.m. ET and NYMEX ACCESS from 3:15 p.m. ET through the following morning 9:50 a.m. ET. 20 NYMEX ACCESS®, an electronic trading system, is open for price discovery on the NYMEX light, sweet crude oil futures contract each Monday through Thursday at 3:15 p.m. ET through the following morning at 9:50 a.m. ET, from 3:15-5 p.m. Friday, and from 7 p.m. Sunday night until Monday morning 9:50 a.m. ET. Telephone Conference between David Strandberg, Director, NYSE Arca Equities Inc., and Angela Muehr, Attorney, Division of Market Regulation (“Division”), Commission, on May 25, 2006. While the NYMEX (open outcry) is open for trading, the Indicative Partnership Value can be expected to closely approximate the value per unit of the Basket Amount. 21 However, during Exchange trading hours when the Oil Futures Contracts have ceased trading, spreads and resulting premiums or discounts may widen, and therefore, increase the difference between the price of the Units and the NAV of the Units. The Exchange believes that dissemination of the Indicative Partnership Value based on the cash amount required for a Basket provides additional information that is not otherwise available to the public and is useful to professionals and investors in connection with the Units trading on NYSE Arca Marketplace or the creation or redemption of the Units. 21 Telephone Conference between David Strandberg, Director, NYSE Arca Equities Inc., and Angela Muehr, Attorney, Division, Commission, on May 25, 2006.
(c)*Continued Listing and UTP Trading Criteria.* While the Exchange immediately seeks to trade the Units pursuant to UTP, the Exchange is also adopting general initial and continued listing standards applicable to all Partnership Units in the event the Exchange were to list such Partnership Units. In such an event, the Exchange would still file a Form 19b-4 to list such Partnership Units. Nevertheless, such continued listing standards are included below. When the Exchange is the listing market for Partnership Units, the Partnership will be subject to the continued listing and trading criteria under proposed new NYSE Arca Equities Rule 8.300. In particular, the proposed continued listing criteria provides that the Exchange will consider removal from listing of such Partnership Units under any of the following circumstances: • If, following the initial twelve month period from the date of commencement of trading of the Partnership Units,
(i)the Partnership has more than 60 days remaining until termination and there are fewer than 50 record and/or beneficial holders of the Partnership Units for 30 or more consecutive trading days;
(ii)the Partnership has fewer than 50,000 Partnership Units issued and outstanding; or
(iii)the market value of all Partnership Units issued and outstanding is less than $1,000,000; • If the value of the underlying benchmark investment, commodity or asset is no longer calculated or available on at least a 15-second delayed basis or the Exchange stops providing a hyperlink on its Web site to any such investment, commodity or asset value; • If the Indicative Partnership Value is no longer made available on at least a 15-second delayed basis; or • If such other event shall occur or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. In addition, the Exchange will remove Partnership Units from listing and trading upon termination of the Partnership. If the Exchange is trading Partnership Units pursuant to UTP, such as the Units, then the Exchange will cease trading in the Units if
(i)the listing market stops trading the Units because of a regulatory halt similar to a halt based on NYSE Arca Equities Rule 7.12 or a halt because the Indicative Partnership Value or the value of the underlying spot commodity or Oil Futures Contract is no longer available; or
(ii)the listing market delists the Units. Additionally, the Exchange may cease trading the Units if such other event shall occur or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. The Exchange represents that it prohibits the initial and/or continued listing of any security that is not in compliance with Rule 10A-3 under the Exchange Act. 22 22 *See* Rule 10A-3(c)(7), 17 CFR 240.10A-3(c)(7) (stating that a listed issuer is not subject to the requirements of Rule 10A-3 if the issuer is organized as an unincorporated association that does not have a board of directors and the activities of the issuer are limited to passively owning or holding securities or other assets on behalf of or for the benefit of the holders of the listed securities).
(d)*Trading Rules.* The Exchange deems the Units to be equity securities, thus rendering trading in the Partnership subject to the Exchange's existing rules governing the trading of equity securities. Trading in the Units on the Exchange will occur in accordance with NYSE Arca Equities Rule 7.34(a), except that the Units will not be eligible to trade during the Opening Session (4 a.m. to 9:30 a.m. ET) or the Late Trading Session (4:15 p.m. to 8 p.m. ET) unless the Indicative Partnership Value is disseminated during that time. 23 The Exchange has appropriate rules to facilitate transactions in the Units during all trading sessions. The minimum trading increment for Units on the Exchange will be $0.01. 23 If the Indicative Partnership Value is disseminated during the Opening and/or Late Trading Sessions, NYSE Arca will file a proposal under Section 19(b) of the Act before permitting trading during those Sessions. Further, the Exchange has proposed new NYSE Arca Equities Rule 8.300(e), which sets forth certain restrictions on ETP Holders acting as registered Market Makers in Units to facilitate surveillance. NYSE Arca Equities Rule 8.300(e)(2)-(3) will require that the ETP Holder acting as a registered Market Maker in the Units provide the Exchange with necessary information relating to its trading in the underlying asset or commodity, related futures or options on futures, or any other related derivatives. NYSE Arca Equities Rule 8.300(e)(4) will prohibit the ETP Holder acting as a registered Market Maker in the Units from using any material nonpublic information received from any person associated with an ETP Holder or employee of such person regarding trading by such person or employee in the underlying asset or commodity, related futures or options on futures or any other related derivative (including the Units). In addition, NYSE Arca Equities Rule 8.300(e)(1) will prohibit the ETP Holder acting as a registered Market Maker in the Units from being affiliated with a market maker in the underlying asset or commodity, related futures or options on futures or any other related derivative unless adequate information barriers are in place, as provided in NYSE Arca Equities Rule 7.26. As a general matter, the Exchange has regulatory jurisdiction over its ETP Holders and their associated persons, which includes any person or entity controlling an ETP Holder, as well as a subsidiary or affiliate of an ETP Holder that is in the securities business. A subsidiary or affiliate of an ETP Holder that does business only in commodities or futures contracts would not be subject to Exchange jurisdiction, but the Exchange could obtain information regarding the activities of such subsidiary or affiliate through surveillance sharing agreements with regulatory organizations of which such subsidiary or affiliate is a member. With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Units. Trading in the Units may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Units inadvisable. These may include
(i)the extent to which trading is not occurring in the current Benchmark Oil Futures Contract, or
(ii)whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. In addition, trading in Units will be subject to trading halts caused by extraordinary market volatility pursuant to the Exchange's “circuit breaker” rule 24 or by the halt or suspension of the trading of the current Benchmark Oil Futures Contract. 24 *See* NYSE Arca Equities Rule 7.12. If the Exchange is the listing market for Partnership Units, the Exchange will halt trading in the Partnership Units if:
(i)The value of the underlying benchmark investment, commodity or asset updated at least every 15 seconds from a source not affiliated with the sponsor, partnership, or the Exchange is no longer available;
(ii)the Indicative Partnership Value per Unit updated at least every 15 seconds is no longer available, or
(iii)the Exchange stops providing on the Exchange's Web site, via a hyperlink to the partnership's Web site, such value of the underlying investment, commodity or asset and Indicative Partnership Value per Unit. 25 25 In the event the value of the underlying benchmark investment, commodity or asset or the Indicative Partnership Value is no longer calculated or disseminated, the Exchange would immediately contact the Commission to discuss measures that may be appropriate under the circumstances. If the Exchange is trading Partnership Units pursuant to UTP, such as the Units, the Exchange will cease trading the Units if
(i)the listing market stops trading the Units because of a regulatory halt similar to NYSE Arca Equities Rule 7.12 or a halt because the Indicative Partnership Value or the value of the underlying spot commodity or Oil Futures Contract is no longer available, or
(ii)the listing market delists the Units. Additionally, the Exchange may cease trading the Units if such other event shall occur or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. Units will be deemed “Eligible Listed Securities,” as defined in NYSE Arca Equities Rule 7.55, for purposes of the Intermarket Trading System (“ITS”) Plan and therefore will be subject to the trade through provisions of NYSE Arca Equities Rule 7.56, which require that ETP Holders avoid initiating trade-throughs for ITS securities. USOF sought and received certain exemptive relief for the Units, including relief from the short sale rule, Rule 10a-1, and Regulation SHO under the Act. 26 26 *See* letter from James A. Brigagliano, Acting Associate Director, Division, Commission, to Mr. James M. Cain, Esq., Sutherland, Asbill & Brennan LLP, dated April 7, 2006.
(e)*Surveillance.* The Exchange intends to utilize its existing surveillance procedures applicable to derivative products and shares of the streetTRACKS Gold Trust 27 to monitor trading in the Units. The Exchange represents that these procedures are adequate to monitor Exchange trading of the Units. 27 *See supra* note 10. The Exchange's current trading surveillance focuses on detecting securities trading outside their normal patterns. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations. The Exchange is able to obtain information regarding trading in the Units and the underlying Oil Futures Contracts through ETP Holders in connection with such ETP Holders' proprietary or customer trades which they effect on any relevant market. In addition, the Exchange may obtain trading information via the Intermarket Surveillance Group (“ISG”) from other exchanges who are members or affiliates of the ISG, including the CBOT. In addition, the Exchange has an Information Sharing Agreement in place with NYMEX for the purpose of providing information in connection with trading in or related to futures contracts traded on the NYMEX. To the extent that USOF invests in Oil Interests traded on other exchanges, the Exchange will enter into information sharing agreements, acceptable to the Commission staff, with those particular exchanges. 28 28 In such event, the Exchange will file a proposed rule change pursuant to Rule 19b-4 of the Act, indicating such surveillance arrangements.
(f)*Information Bulletin* . Prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin of the special characteristics and risks associated with trading the Units. Specifically, the Information Bulletin will discuss the following:
(i)The procedures for purchases and redemptions of Units in Baskets (and that Units are not individually redeemable);
(ii)NYSE Arca Equities Rule 9.2(a), 29 which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Units;
(iii)how information regarding the Indicative Partnership Value is disseminated;
(iv)the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Units prior to or concurrently with the confirmation of a transaction; and
(v)trading information. For example, the Information Bulletin will advise ETP Holders, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Partnership. The Exchange notes that investors purchasing Units directly from the Partnership (by delivery of the Deposit Amount) will receive a prospectus. ETP Holders purchasing Units from the Partnership for resale to investors will deliver a prospectus to such investors. 29 The Exchange has proposed to amend NYSE Arca Equities Rule 9.2(a) (“Diligence as to Accounts”) to provide that ETP Holders, before recommending a transaction, must have reasonable grounds to believe that the recommendation is suitable for the customer based on any facts disclosed by the customer as to his other security holdings and as to his financial situation and needs. Further, the proposed rule amendment provides that prior to the execution of a transaction recommended to a non-institutional customer, the ETP Holders should make reasonable efforts to obtain information concerning the customer's financial status, tax status, investment objectives and any other information that they believe would be useful to make a recommendation. *See* Amendment No. 1 to SR-PCX-2005-115 (November 21, 2005). In addition, the Information Bulletin will reference that the Partnership is subject to various fees and expenses described in the Registration Statement. The Information Bulletin will also reference the fact that there is no regulated source of last sale information regarding physical commodities, and that the Commission has no jurisdiction over the trading of WTI light, sweet crude oil, Brent crude oil, heating oil, gasoline, natural gas or other petroleum-based fuels, that the CFTC has regulatory jurisdiction over the trading of oil-based futures contracts and related options, and that trading in certain OTC commodity based derivatives is not within the jurisdiction of the CFTC and may therefore be effectively unregulated. Further, the Information Bulletin will disclose that the NAV for the Units will be calculated shortly after 4 p.m. ET each trading day. The Information Bulletin will also discuss any relief, if granted, by the Commission or the staff from any rules under the Act. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 30 in general and furthers the objectives of Section 6(b)(5), 31 in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transaction in securities, to remove impediments and perfect the mechanisms of a free and open market, and, in general, to protect investors and the public interest. 30 15 U.S.C. 78s(b). 31 15 U.S.C. 78s(b)(5). In addition, the Exchange believes that the proposal is consistent with Rule 12f-5 under the Act 32 because it deems the Units to be equity securities, thus rendering the Units subject to the Exchange's existing rules governing the trading of equity securities. 32 17 CFR 240.12f-5. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. III. 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-NYSEArca-2006-11 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-NYSEArca-2006-11. 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-NYSEArca-2006-11 and should be submitted on or before June 23, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 33 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act, 34 which requires that an exchange have rules designed, among other things, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and in general to protect investors and the public interest. 33 In approving this rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 34 15 U.S.C. 78f(b)(5). In addition, the Commission finds that the proposal is consistent with Section 12(f) of the Act, 35 which permits an exchange to trade, pursuant to UTP, a security that is listed and registered on another exchange. 36 The Commission notes that it previously approved the listing and trading of the Units on the Amex. 37 The Commission also finds that the proposal is consistent with Rule 12f-5 under the Act, 38 which provides that an exchange shall not extend UTP to a security unless the exchange has in effect a rule or rules providing for transactions in the class or type of security to which the exchange extends UTP. NYSEArca rules deem the Units to be equity securities, thus trading in the Units will be subject to the Exchange's existing rules governing the trading of equity securities. 35 15 U.S.C. 78 *l* (f). 36 Section 12(a) of the Act, 15 U.S.C. 78l(a), generally prohibits a broker-dealer from trading a security on a national securities exchange unless the security is registered on that exchange pursuant to Section 12 of the Act. Section 12(f) of the Act excludes from this restriction trading in any security to which an exchange “extends UTP.” When an exchange extends UTP to a security, it allows its members to trade the security as if it were listed and registered on the exchange even though it is not so listed and registered. 37 *See* Amex Order, *supra* note 4. 38 17 CFR 240.12f-5. The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, 39 which sets forth Congress's finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. 39 15 U.S.C. 78k-1(a)(1)(C)(iii). In support of the portion of the proposed rule change regarding UTP of the Units, the Exchange has made the following representations: 1. The Exchange has appropriate rules to facilitate transactions in this type of security in all trading sessions. 2. The Exchange's surveillance procedures are adequate to properly monitor the trading of the Units on the Exchange. 3. The Exchange will distribute an Information Bulletin to its members prior to the commencement of trading of the Units on the Exchange that explains the special characteristics and risks of trading the Units. 4. The Exchange will require a member with a customer who purchases newly issued Units on the Exchange to provide that customer with a product prospectus and will note this prospectus delivery requirement in the Information Bulletin. 5. The Exchange will cease trading in the Units if
(i)the listing market stops trading the Units because of a regulatory halt similar to a halt based on NYSE Arca Equities Rule 7.12 and/or a halt because the Indicative Partnership Value or the value of the underlying Oil Futures Contract for WTI light, sweet crude oil is no longer available, or
(ii)the listing market delists the Units. Additionally, the Exchange may cease trading the Units if such other event shall occur or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. This approval order is conditioned on the Exchange's adherence to these representations. The Commission finds good cause for approving this proposed rule change before the thirtieth day after the publication of notice thereof in the **Federal Register** . As noted previously, the Commission previously found that the listing and trading of these Units on the Amex is consistent with the Act. 40 The Commission presently is not aware of any issue that would cause it to revisit that earlier finding or preclude the trading of these funds on the Exchange pursuant to UTP. Therefore, accelerating approval of this proposed rule change should benefit investors by creating, without undue delay, additional competition in the market for these Units. 40 *See* Amex Order, *supra* note 4. V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR-NYSEArca-2006-11), is hereby approved on an accelerated basis. 41 41 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 42 42 17 CFR 200.30-3(a)(12). J. Lynn Taylor, Assistant Secretary. [FR Doc. E6-8547 Filed 6-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53874; File No. SR-Phlx-2006-18] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 1 Thereto Relating to Split Price Priority in Options May 25, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 , and Rule 19b-4 2 thereunder, notice is hereby given that on March 2, 2006, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. On May 9, 2006, Phlx filed an amendment to the proposed rule change (“Amendment No. 1”). 3 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and is approving the proposal on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 In Amendment No. 1, the Exchange revised the rule text of the proposed rule change to clarify its meaning and revised the purpose section to clarify the operation of the Exchange's current split price priority rule and the proposed modification to that rule. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rule 1014(g)(i)(C) 4 to adopt a new split price priority provision that establishes priority for in-crowd participants in split price transactions over the quotations of participants that are not located in the crowd ( *i.e.* , out-of-crowd Streaming Quote Traders (“SQTs”) 5 and Remote Streaming Quote Traders (“RSQTs”) 6 ) even where the market has a bid/ask differential of one minimum trading increment. 7 The text of the proposed rule change, as amended, is set forth below. Proposed new language is in *italics* ; deleted language is in brackets. 8 4 Phlx Rule 1014(g)(i)(C) is subject to a pilot program scheduled to expire on June 30, 2006. *See infra* Section II. A.1. 5 An SQT is an ROT who has received permission from the Exchange to generate and submit option quotations electronically through AUTOM in eligible options to which such SQT is assigned. An SQT may only submit such quotations while such SQT is physically present on the floor of the Exchange. *See* Phlx Rule 1014(b)(ii)(A). 6 An RSQT is an ROT that is a member or member organization with no physical trading floor presence who has received permission from the Exchange to generate and submit option quotations electronically through AUTOM in eligible options to which such RSQT has been assigned. An RSQT may only submit such quotations electronically from off the floor of the Exchange. *See* Phlx Rule 1014(b)(ii)(B). 7 Generally, all options on stocks, indexes, and Exchange Traded Funds quoting in decimals at $3.00 or higher have a minimum increment of $.10, and those quoting in decimals under $3.00 have a minimum increment of $.05. *See* Phlx Rule 1034(a). 8 The bracketed word “and” in the final sentence of the rule text set forth below is indicated in Exhibit 4 of the proposed rule change. Obligations and Restrictions Applicable to Specialists and Registered Options Traders Rule 1014. (a)-(f) No change.
(g)Equity Option and Index Option Priority and Parity
(i)(A)-(B)
(C)Purchase or sale priority for orders of 100 contracts or more. If a member purchases (sells) 50 or more option contracts of a particular series at a particular price or prices, he shall, at the next lower (higher) price have priority in purchasing (selling) up to the equivalent number of option contracts of the same series that he purchased
(sold)at the higher (lower) price or prices, but only if his bid (offer) is made promptly and the purchase
(sale)so effected represents the opposite side of a transaction with the same order or offer
(bid)as the earlier purchase or purchases (sale or sales). *When the market has a bid/ask differential of one minimum trading increment and the bid and/or offer represent the quotation of an out-of-crowd SQT or an RSQT, such member shall have priority over such SQT and/or RSQT with respect to both the bid and the offer.* The Options Committee may increase the “minimum qualifying order size” above 100 contracts for all products under its jurisdiction. Announcements regarding changes to the minimum qualifying order size shall be made via an Exchange circular. This paragraph is subject to a pilot scheduled to expire June 30, 2006, and shall only apply to transactions in equity options *(including* [and] options overlying Exchange Traded Fund Shares (“ETFs”) *)* and only to such transactions that are effected in open outcry.
(h)No change. Commentary: No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change, as amended, and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to modify an existing pilot program concerning split-price transactions (“pilot”), 9 which by virtue of their size and the need to execute them at multiple prices may be difficult to execute without a limited exception to current Exchange priority rules, as described below. The pilot is scheduled to expire on June 30, 2006. 9 *See* Securities Exchange Act Release No. 53021 (December 23, 2005), 70 FR 77435 (December 30, 2005) (SR-Phlx-2005-86). The Exchange proposes to modify the pilot such that when the market has a bid/ask differential of one minimum trading increment and the bid and/or offer represent the quotation of an out-of-crowd SQT or an RSQT, the rule would apply to grant priority over such SQT and/or RSQT with respect to the bid and/or the offer. Thus, the Exchange is expanding the pilot to include priority in both trades of the split price transaction where there is a minimum trading increment market, but only over an out-of-crowd SQT or an RSQT. Such priority would apply only when the bid and/or ask, as applicable, represent the quotation of an out-of-crowd SQT or an RSQT. Current Pilot The current pilot, applicable to equity options (including options overlying Exchange Traded Fund Shares, permits a member with an order for at least 100 contracts 10 who buys (sells) at least 50 contracts at a particular price to have priority over all others in purchasing (selling) up to an equivalent number of contracts of the same order at the next lower (higher) price without being required to yield priority, including to existing customer interest in the limit order book. Absent this rule, such orders would be required to yield priority. 11 10 Orders for a size of less than 100 contracts are not eligible for the current pilot and would not be affected by this proposed rule change. 11 *See* Phlx Rule 119(a). For example, where the market is $.25-$.35, a Floor Broker who is representing an order to purchase 100 contracts and executes a purchase of 50 of those contracts at a price of $.30 has priority over all market participants to purchase the remaining 50 contracts in the order at $.25. Two trades would be reported to the tape, one a purchase of 50 contracts at $.30 and the other a purchase of 50 contracts at $.25. The Floor Broker's customer thus would receive a net purchase price of $.275 for 100 contracts. In this example, the Floor Broker would not be able to use this provision in a minimum increment market ( *e.g.* , $.25-$.30), because he or she could not execute the first trade at $.30 at all, regardless of the current split price priority provision, because that provision does not give priority over whoever is offering at $.30 until the second trade. Accordingly, the Exchange is proposing to amend the split price priority provision, as described below. Proposed Modification to the Current Pilot As stated above, the current pilot contemplates that a member who purchases (sells) 50 or more option contracts of a particular series at a particular price or prices has priority at the next lower (higher) price in purchasing (selling) up to the equivalent number of option contracts of the same series that he or she purchased
(sold)at the higher (lower) price or prices. The proposed rule change would afford priority to members physically located in the crowd with respect to split price transactions in those instances when the market has a bid/ask differential of one minimum trading increment and the bid and/or ask represent quotations of members physically located outside of the crowd. The Exchange believes that this provision should enable it to compete for order flow in situations where Floor Brokers seek split price executions in open outcry when the bid and/or ask consists of RSQT quotations and/or the quotations of an out-of-crowd SQT and there is a bid/ask differential of one minimum trading increment. The Exchange provides the following example: assume a Floor Broker represents an order to purchase 100 contracts in a series where the market is $0.25 bid, $0.30 offer, and both the bid and offer represent quotations submitted by out of-crowd SQTs 12 or RSQTs. Under the proposal, the Floor Broker and contra-side participant in the trading crowd would be afforded priority over the out-of-crowd SQT or RSQT at both $0.25 and $0.30, because the bid/ask differential is one minimum trading increment ($.05). This would enable the Floor Broker to execute a split-price order at a net price ($0.275) that improves the market. According to the Phlx, the effect (and ultimate benefit) to that Floor Broker's customer would be a net purchase price of $.275 for 100 contracts. The proposed rule change would apply only with respect to quotations submitted by out-of-crowd SQTs and RSQTs, and thus would not operate to afford priority over, for example, customer or broker-dealer orders or in-crowd SQT quotes. 12 The specialist and/or SQTs participating in a trading crowd may, in response to a verbal request for a market by a Floor Broker, state a bid or offer that is different than their electronically submitted bid or offer, provided that such stated bid or offer is not inferior to such electronically submitted bid or offer. *See* Phlx Rule 1014, Commentary .05(c). The Exchange believes that, in situations where the market has a bid/ask differential of one minimum trading increment, it is potentially difficult for the Floor Broker to achieve price improvement for the Floor Broker's customer on the Phlx. Instead, the order might trade at another exchange that has no impediments, *i.e.* , rules that afford priority to in-crowd participants over out-of-crowd participants generally, regardless of split price priority. 13 Accordingly, the Exchange has proposed a limited exception to its priority rule in the context of split price transactions. 13 The Phlx cites to Chicago Board Options Exchange, Incorporated (“CBOE”) Rule 6.45A, which provides that only in-crowd market participants are eligible to participate in open outcry trade allocations. *See* Securities Exchange Act Release No. 51366 (March 14, 2005), 70 FR 13217 (March 18, 2005) (SR-CBOE-2004-75). The Phlx notes that CBOE Rule 6.45A affords priority over out-of-crowd participants even where there is no split price priority situation. CBOE Rule 6.47 contains CBOE's split price provision, which is similar to current Phlx Rule 1014(g)(i)(C). 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 14 in general, and furthers the objectives of Section 6(b)(5) of the Act 15 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. According to the Exchange, the rule would enable Floor Brokers representing split price orders in open outcry to provide split-price executions at improved prices on behalf of customers by establishing a limited priority rule regarding split-price transactions when the bid/ask differential is one minimum trading increment and the bid and/or ask represent the quotation of an out-of-crowd participant. 14 15 U.S.C. 78f(b). 15 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 either solicited or received. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-Phlx-2006-18 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2006-18. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2006-18 and should be submitted on or before June 23, 2006. IV. Commission's Findings and Order Granting Approval of the Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder, applicable to a national securities exchange, and, in particular with the requirements of Section 6(b)(5) of the Act. 16 The proposed rule change would provide a limited exception to the Exchange's split price priority rule by allowing a Floor Broker and a contra-side participant in the trading crowd to have priority over an out-of-crowd SQT or an RSQT when there is a bid/ask differential of one minimum trading increment that is established by the quotes of such SQT or RSQT. The Commission believes that the proposed rule change should help facilitate better priced executions for larger-sized orders on the floor of the Exchange. The Commission notes that it has previously approved rule proposals that permit an exchange to grant priority to in-crowd participants in open outcry auctions on its floor over market participants who are not physically present in the crowd. 17 16 In approving this proposed rule change, as amended, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 17 *See supra* note 13. The Exchange has requested accelerated approval of the proposed rule change. The Commission finds good cause, consistent with Section 19(b)(2) of the Act, to approve the proposed rule change, as amended, prior to the 30th day after the date of publication of the notice of filing thereof in the **Federal Register** . As noted above, the Exchange's proposal yields a result similar to that of CBOE rules previously approved by the Commission that permit a Floor Broker and a contra-side participant in the trading crowd to have priority in split price transactions over out-of-crowd participants when there is a bid/ask differential of one trading increment. 18 Accordingly, the Commission believes that it is appropriate to approve the proposed rule change on an accelerated basis to allow the Phlx to compete more effectively for larger-sized orders in open outcry transactions on the floor of the Exchange. 18 *Id.* V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 19 that the proposed rule change, as amended (Phlx-2006-18), is hereby approved on an accelerated basis until the expiration of the current split price priority pilot program on June 30, 2006. 19 15 U.S.C. 78s(b)(2). 20 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 20 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6-8550 Filed 6-1-06; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 5433] Notice of Public Meeting on FY 2007 Refugee Admissions Program There will be a meeting on the President's FY 2007 Refugee Admissions Program on Wednesday, June 28, 2006 from 2 p.m. to 4 p.m. The meeting will be held at the Refugee Processing Center, 1401 Wilson Boulevard, Suite 700, Arlington, Virginia. The meeting's purpose is to hear the views of attendees on the appropriate size and scope of the FY 2007 Refugee Admissions Program. Seating is limited. Persons wishing to attend this meeting must notify the Bureau of Population, Refugees, and Migration at telephone
(202)663-1045 by 5 p.m. Wednesday, June 21, 2006, to arrange for admission. Persons wishing to present oral comments, or to submit written comments for consideration, must provide them in writing by 5 p.m. Wednesday, June 21, 2006. All comments should be faxed to PRM at
(202)663-1364. Any questions about the public meeting should be directed to Kelly Gauger, PRM/Admissions Program Officer at
(202)663-1055. Information about the Refugee Admissions Program may be found at *http://www.state.gov/g/prm/.* Dated: May 24, 2006. Kelly Ryan, Deputy Assistant Secretary, Department of State. [FR Doc. E6-8624 Filed 6-1-06; 8:45 am] BILLING CODE 4710-33-P TENNESSEE VALLEY AUTHORITY Environmental Impact Statement for Bear Creek Dam Leakage Resolution AGENCY: Tennessee Valley Authority. ACTION: Notice of intent. SUMMARY: The Tennessee Valley Authority
(TVA)will prepare an environmental impact statement
(EIS)addressing the proposed resolution of leakage problems at Bear Creek Dam, Franklin County, Alabama. Since the dam was completed in 1969, there has been excessive leakage of water through its foundation and TVA seeks a long-term resolution of this leakage. TVA will use the EIS process to obtain public involvement on this proposal. Public comment is invited concerning both the scope of the EIS and environmental issues that should be addressed as a part of this EIS. DATES: Comments on the scope and environmental issues for the EIS must be postmarked or e-mailed no later than July 3, 2006 to ensure consideration. ADDRESSES: Written comments should be sent to Charles P. Nicholson, Environmental Stewardship and Policy, Tennessee Valley Authority, Mail Stop WT 9B, 400 West Summit Hill Drive, Knoxville, Tennessee 37902-1499. Comments may be e-mailed to *cpnichol@tva.gov* or submitted by fax at
(865)632-6855. FOR FURTHER INFORMATION CONTACT: Warren P. Behlau, Tennessee Valley Authority, Mail Stop LP 3D-C, 1101 Market Street, Chattanooga, Tennessee 37402-2801. Telephone
(423)751-8760. E-mail may be sent to *wpbehlau@tva.gov.* SUPPLEMENTARY INFORMATION: Background Bear Creek Reservoir is one of four reservoirs located in northwest Alabama that comprise the Bear Creek Project. The Bear Creek Project was authorized by Congress in 1964 for the primary purposes of flood control, recreation, and economic development, including water supply. The project dams do not generate electricity. Construction of Bear Creek Dam began in 1967 and was completed in 1969. The earth-fill dam has a maximum height of 68 feet and length of 1385 feet. It impounds a reservoir with a maximum length of 12 miles, summer pool of 690 acres, and approximately 39 miles of shoreline. Most of the reservoir shoreline is owned by TVA and much of the adjacent back-lying land is owned by Bear Creek Development Authority (BCDA), a state agency. Shoreline development consists of an environmental education center and two public recreation areas with campgrounds and other facilities operated by BCDA, and a municipal raw water intake and treatment plant operated by the Franklin County Water Service Authority approximately 2.3 miles upstream of Bear Creek Dam. Bear Creek Dam has a concrete chute spillway with an elevation of 602 feet. The reservoir has historically been operated with a winter pool elevation of 565 feet and a summer pool elevation of 576 feet. The target spring fill date is mid-April and the target date to begin the winter drawdown in November 15. Under normal conditions, discharges are through a tower-type intake structure, sluiceway tunnel, and stilling basin. The reservoir is operated to maintain a minimum continuous flow of 21 cubic feet per second at Red Bay, Alabama, about 23 miles downstream of Bear Creek Dam. Bear Creek Dam is constructed of earth fill. A portion of the dam was constructed on residual soil and there are numerous sinkholes in its vicinity. Since the completion of the dam in 1969, there has been continuous leakage of water through the foundation of the dam. Although some leakage is typical of earthen dams, the amount at Bear Creek has been excessive. In 1972, TVA completed a major foundation drilling and grouting project which reduced the leakage. Since 1972 the leakage has slowly increased and TVA has attempted several subsequent repairs. The most recent repairs were in 2004-2005, when TVA completed another major drilling and grouting project. This repair project did not adequately reduce leakage when the reservoir was returned to its normal summer pool level. The excessive leakage through the dam foundation increases the risk of dam failure, especially when the pool level is at an elevation above 570 feet. TVA has taken steps to minimize this risk by maintaining the summer reservoir pool at an elevation of 568 feet, eight feet lower than the normal summer operating level of 576 feet. The normal winter pool level continues to be 565 feet. Due to the limited size of the intake structure and sluiceway, however, TVA cannot pass enough water through them during many rainfall events to prevent the pool from rising above 570 feet. When heavy rains cause the reservoir to rise above elevation 576, TVA notifies the local emergency management agencies of the increased risk and monitors the situation closely. TVA also has equipment and materials on hand for emergency repairs, should a sinkhole or other problem develop. TVA recognizes that these measures are not viable long-term solutions to the leakage problem. TVA's Hydro Board of Consultants has jointly agreed with TVA that it must take action to resolve the leakage problem. Potential Alternatives TVA is considering a range of alternatives. Although the No Action alternative, which consists of operating the dam as designed, would not remedy the leakage problem, it would provide a baseline for comparison with other alternatives and its consideration is required by the implementing regulations for the National Environmental Policy Act (NEPA). Other alternatives under consideration include:
(1)Continue to operate the dam as done since 2005 with a lower summer pool elevation of 568 feet;
(2)modify the dam by rebuilding the spillway at a lower elevation to maintain a winter pool elevation of 565 feet and with a maximum rise of 5 feet;
(3)repair the dam by installing a grout curtain in the soil foundation or by building a barrier to prevent flow through the dam;
(4)remove the dam and rebuild it in approximately the same location and with similar operating characteristics;
(5)build a new weir dam, capable of maintaining a reservoir pool elevation of 565 feet, a short distance downstream of the Franklin County Water Service Authority water intake, remove Bear Creek Dam, and restore the former creek channel; and
(6)remove the dam and restore the original creek channel. TVA will use the results of the public scoping process and additional technical studies to refine the range of alternatives that will be evaluated in detail in the EIS. Proposed Issues To Be Addressed The EIS will contain descriptions of the existing environmental and socioeconomic resources within the area that would be affected by the proposed action. TVA's evaluation of potential environmental impacts to these resources will include, but not necessarily be limited to, the potential impacts on water quality, water supply, aquatic and terrestrial ecology, endangered and threatened species, wetlands, flooding and floodplains, recreation, aesthetics and visual resources, land use including agricultural operations, historic and archaeological resources, and socioeconomic resources. Scoping Process Scoping, which is integral to the process for implementing NEPA, is a procedure that solicits public input to the EIS process to ensure that:
(1)Issues are identified early and properly studied;
(2)issues of little significance do not consume substantial time and effort;
(3)the draft EIS is thorough and balanced; and
(4)delays caused by an inadequate EIS are avoided. TVA's NEPA procedures require that the scoping process commence soon after a decision has been reached to prepare an EIS in order to provide an early and open process for determining the scope and for identifying the significant issues related to a proposed action. The range of alternatives and the issues to be addressed in the draft EIS will be determined, in part, from written comments submitted by mail or e-mail, and comments presented orally or in writing at any public meetings. The preliminary identification of reasonable alternatives and environmental issues in this notice is not meant to be exhaustive or final. The scoping process will include both interagency and public scoping. The public is invited to submit written comments or e-mail comments on the scope of this EIS no later than the date given under the DATES section of this notice. TVA will conduct a public scoping meeting on June 20, 2006, at the Arts and Entertainment Center in Red Bay, Alabama. The meeting, which will be conducted in an open-house format, will be from 4 p.m. to 8 p.m. At the meeting, TVA staff will describe the project and the EIS process, answer questions, and solicit comments on the issues that the public would like addressed in the EIS. The meeting will be publicized through notices in local newspapers, by TVA press releases, on the TVA Web site at *http://www.tva.gov/environment/calendar.htm,* and in letters to local elected officials. The agencies to be included in the interagency scoping are U.S. Army Corps of Engineers, U.S. Fish and Wildlife Service, Bear Creek Development Agency, Alabama Department of Environmental Management, the Alabama Historical Commission, and other Federal, State, and local agencies, as appropriate. After consideration of the scoping comments, TVA will further identify alternatives and environmental issues to be addressed in the EIS. Following analysis of the environmental consequences of each alternative, TVA will prepare a draft EIS for public review and comment. Notice of availability of the draft EIS will be published by the Environmental Protection Agency in the **Federal Register** . TVA will solicit written comments on the draft EIS, and information about public meetings to comment on the draft EIS will be announced. TVA expects to release a draft EIS in the spring of 2007 and a final EIS in the fall of 2007. In the event the situation unexpectedly worsens or is determined to be worse, it may be necessary to take action expeditiously to address this consistent with applicable procedures for emergency actions. Dated: May 26, 2006. Kathryn J. Jackson, Executive Vice President, River System Operations & Environment. [FR Doc. E6-8564 Filed 6-1-06; 8:45 am] BILLING CODE 8120-08-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Public Notice for a Change in Use of Aeronautical Property at Lawrence Municipal Airport, Lawrence, MA AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Request for public comments. SUMMARY: The FAA is requesting public comment on the City of Lawrence, Massachusetts' request to change a portion (40.37 acres) of Airport property from aeronautical use to non-aeronautical use. The property is located in North Andover, MA, off Clark Street in the area known of the Northwest quadrant of the Airport and is currently used for vacant land. The City plans to sell 17.44 acres and lease 22.9 acres for revenue production. Upon disposition is the property will be used as for development of an industrial park. Portions of the property were acquired under FAAP Project No. 9-19-007-0503 and ADAP Project No. 5-25-0026-06. The disposition of proceeds from the disposal of airport property will be in accordance with FAA's Policy and Procedures Concerning the Use of Airport Revenue, published in the **Federal Register** on February 16, 1999. DATES: Comments must be received on or before July 3, 2006. ADDRESSES: Documents are available for review by appointment by contacting Mr. Michael Miller, Airport Manager at Lawrence Municipal Airport, 492 Sutton Street, North Andover, MA, Telephone 978-794-5880 or by contacting Donna R. Witte, Federal Aviation Administration, 16 New England Executive Park, Burlington, Massachusetts, Telephone 781-238-7624. FOR FURTHER INFORMATION CONTACT: Donna R. Witte at the Federal Aviation Administration, 12 New England Executive Park, Burlington, Massachusetts 01803, Telephone 781-238-7624. SUPPLEMENTARY INFORMATION: Section 125 of The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21) requires the FAA to provide an opportunity for public notice and comment to the “waiver” or “modification” of a sponsor's Federal obligation to use certain airport property for aeronautical purposes. Issued in Burlington, Massachusetts, on May 17, 2006. LaVerne F. Reid, Manager, Airports Division, New England Region. [FR Doc. 06-5030 Filed 6-1-06; 8:45 am]
Connectionstraces to 8
4 references not yet in our index
  • 17 CFR 240.19
  • 17 CFR 240.10
  • 17 CFR 240.12
  • 15 USC 78
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Notices
Notice of intent
U.S.C.§ 78s
U.S.C.§ 78f
U.S.C.§ 78c
U.S.C.§ 552
C.F.R.§ 200.30-3
U.S.C.§ 78q
U.S.C.§ 78l
U.S.C.§ 78k–1
Cite17 CFR 240.19
Cite17 CFR 240.10
Cite17 CFR 240.12
Cite15 USC 78
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