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Code · REGISTER · 2006-07-17 · U. S. Nuclear Regulatory Commission (NRC) · Rules and Regulations

Rules and Regulations. Notice of the OMB review of information collection and solicitation of public comment

26,349 words·~120 min read·/register/2006/07/17/06-6243

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BILLING CODE 7535-01-M NUCLEAR REGULATORY COMMISSION Agency Information Collection Activities: Submission for the Office of Management and Budget
(OMB)Review; Comment Request AGENCY: U. S. Nuclear Regulatory Commission (NRC). ACTION: Notice of the OMB review of information collection and solicitation of public comment. SUMMARY: The NRC has recently submitted to OMB for review the following proposal for the collection of information under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). The NRC hereby informs potential respondents that an agency may not conduct or sponsor, and that a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. 1. *Type of submission, new, revision, or extension:* Revision. 2. *The title of the information collection:* “Reports Concerning Possible Non-Routine Emergency Generic Problems”. 3. *The form number if applicable:* N/A. 4. *How often the collection is required:* On occasion. 5. *Who will be required or asked to report:* Nuclear power reactor licensees, research and test reactors, and materials applicants and licensees. 6. *An estimate of the number of annual responses:* 1,032 responses (832 nuclear power reactor licensees; 200 materials applicants and licensees). 7. *The estimated number of annual respondents:* 204 (104 nuclear power reactor licensees; 100 materials applicants and licensees). 8. *An estimate of the total number of hours needed annually to complete the requirement or request:* 369,440 (349,440 for nuclear power reactor licensees [8 responses × 420 hrs/response × 104 licensees] and 20,000 for materials applicants and licensees [2 responses × 100 hrs/response × 100 licensees]). 9. *An indication of whether Section 3507(d), Pub. L. 104-13 applies:* N/A 10. *Abstract:* NRC is requesting approval authority to collect information concerning possible non-routine generic problems which would require prompt action from NRC to preclude potential threats to public health and safety. A copy of the final supporting statement may be viewed free of charge at the NRC Public Document Room, One White Flint North, 11555 Rockville Pike, Room O-1 F21, Rockville, MD 20852. OMB clearance requests are available at the NRC worldwide Web site: *http://www.nrc.gov/public-involve/doc-comment/omb/index.html.* The document will be available on the NRC home page site for 60 days after the signature date of this notice. Comments and questions should be directed to the OMB reviewer listed below by August 16, 2006. Comments received after this date will be considered if it is practical to do so, but assurance of consideration cannot be given to comments received after this date. John A. Asalone, Office of Information and Regulatory Affairs (3150-0012), NEOB-10202, Office of Management and Budget, Washington, DC 20503. Comments can also be e-mailed to *John_A._Asalone@omb.eop.gov* or submitted by telephone at
(202)395-4650. The NRC Clearance Officer is Brenda Jo. Shelton, 301-415-7233. Dated at Rockville, Maryland, this 29th day of June, 2006. For the Nuclear Regulatory Commission. Brenda Jo. Shelton, NRC Clearance Officer, Office of Information Services. [FR Doc. E6-11212 Filed 7-14-06; 8:45 am] BILLING CODE 7590-01-P OFFICE OF PERSONNEL MANAGEMENT Excepted Service AGENCY: Office of Personnel Management (OPM). ACTION: Notice. SUMMARY: This gives notice of OPM decisions granting authority to make appointments under Schedules A, B, and C in the excepted service as required by 5 CFR 6.6 and 213.103. FOR FURTHER INFORMATION CONTACT: David Guilford, Center for Leadership and Executive Resources Policy, Division for Strategic Human Resources Policy, 202-606-1391. SUPPLEMENTARY INFORMATION: Appearing in the listing below are the individual authorities established under Schedules A, B, and C between May 1, 2006 and May 31, 2006. Future notices will be published on the fourth Tuesday of each month, or as soon as possible thereafter. A consolidated listing of all authorities as of June 30 is published each year. Schedule A No Schedule A appointments were approved for May 2006. Schedule B No Schedule B appointments were approved for May 2006. Schedule C The following Schedule C appointments were approved during May 2006: Section 213.3303 Executive Office of the President Office of Management and Budget BOGS00153 Director of Operations to the Director Office of Management and Budget. Effective May 25, 2006. BOGS60155 Special Assistant to the Director Office of Management and Budget. Effective May 25, 2006. Office of National Drug Control Policy QQGS60090 Public Affairs Specialist to the Counselor to the Deputy Director. Effective May 17, 2006. Section 213.3304 Department of State DSGS60947 Staff Assistant (Visits) to the Supervisory Protocol Officer (Visits). Effective May 4, 2006. DSGS61085 Senior Advisor to the Assistant Secretary, Bureau of Educational and Cultural Affairs. Effective May 4, 2006. DSGS61086 Public Affairs Specialist to the Director, Bureau of International Narcotics and Law Enforcement. Effective May 4, 2006. DSGS61087 Legislative Management Officer to the Assistant Secretary for Legislative and Intergovernmental Affairs. Effective May 4, 2006. DSGS61079 Staff Assistant to the Coordinator for International Information Programs. Effective May 9, 2006. DSGS61080 Staff Assistant to the Under Secretary for Public Diplomacy and Public Affairs. Effective May 9, 2006. DSGS60747 Staff Assistant to the Under Secretary for Public Diplomacy and Public Affairs. Effective May 17, 2006. DSGS61083 Public Affairs Specialist to the Assistant Secretary for Public Affairs. Effective May 18, 2006. DSGS61091 Special Assistant to the Under Secretary for Public Diplomacy and Public Affairs. Effective May 25, 2006. Section 213.3305 Department of the Treasury DYGS00470 Senior Advisor to the Deputy Assistant Secretary (Public Liaison, Strategic Planning and Business Development). Effective May 12, 2006. DYGS00471 Public and Legislative Affairs Manager to the Director Community Development Financial Institutions. Effective May 18, 2006. DYGS60418 Special Assistant to the Executive Secretary. Effective May 18, 2006. Section 213.3306 Department of Defense DDGS16933 Special Assistant to the Deputy Under Secretary of Defense (Acquisition and Technology). Effective May 4, 2006. DDGS16943 Administrative Assistant to the Director, Department of Defense Office of Legislative Counsel. Effective May 12, 2006. DDGS16941 Special Assistant to the Principal Deputy Assistant Secretary of Defense (Legal Affairs). Effective May 15, 2006. DDGS16944 Public Affairs Specialist to the Assistant Secretary of Defense (Public Affairs). Effective May 15, 2006. DDGS16940 Research Assistant to the Speechwriter, Office of the Assistant Secretary of Defense (Public Affairs). Effective May 19, 2005. DDGS16948 Special Assistant to the Principal Deputy Under Secretary of Defense (Comptroller). Effective May 30, 2006. DDGS16951 Defense Fellow to the Special Assistant to the Secretary of Defense for White House Liaison. Effective May 30, 2006. Section 213.3308 Department of the Navy DNGS60075 Confidential Assistant to the Assistant Secretary of the Navy (Financial Management and Comptroller). Effective May 16, 2006. Section 213.3309 Department of the Air Force DFGS60046 Budget Analyst to the Assistant Secretary (Financial Management and Comptroller). Effective May 25, 2006. Section 213.3310 Department of Justice DJGS00291 Deputy Chief Privacy and Civil Liberties Officer and Counsel to the Deputy Attorney General. Effective May 15, 2006. DJGS00328 Associate Director to the Director, Office of Intergovernmental and Public Liaison. Effective May 18, 2006. DJGS00054 Counsel to the Assistant Attorney General (Legal Policy). Effective May 25, 2006. DJGS00183 Counsel to the Deputy Attorney General. Effective May 25, 2006. Section 213.3311 Department of Homeland Security DMGS00512 Advance Representative to the Advance Representative, Office of the Chief of Staff. Effective May 1, 2006. DMGS00513 Advisor to the Assistant Secretary for Grants and Training to the Executive Director, Office of Grants and Training. Effective May 1, 2006. DMGS00504 Special Assistant to the Assistant Secretary for Infrastructure Protection. Effective May 4, 2006. DMGS00516 Confidential Assistant to the Executive Secretary. Effective May 4, 2006. DMGS00514 Confidential Assistant to the Assistant Secretary, Immigration and Customs Enforcement. Effective May 5, 2006. DMGS00520 Confidential Assistant to the White House Liaison and Advisor. Effective May 10, 2006. DMGS00524 Press Assistant to the Assistant Secretary for Public Affairs. Effective May 10, 2006. DMGS00526 Deputy White House Liaison to the White House Liaison and Advisor. Effective May 12, 2006. DMGS00521 Press Assistant to the Assistant Secretary for Public Affairs. Effective May 16, 2006. DMGS00523 Special Assistant to the Assistant Secretary, Immigration and Customs Enforcement. Effective May 16, 2006. DMGS00525 Policy Assistant to the Deputy Director, Federal Emergency Management Agency. Effective May 16, 2006. DMGS00527 Assistant Director for Legislative Affairs to the Assistant Secretary for Legislative Affairs. Effective May 16, 2006. DMGS00530 Deputy Press Secretary to the Assistant Secretary for Public Affairs. Effective May 16, 2006. DMGS00522 Assistant Press Secretary to the Assistant Secretary for Public Affairs. Effective May 18, 2006. DMGS00528 Special Assistant to the Chief of Staff to the General Counsel and Associate General Counsel for Science and Technology. Effective May 25, 2006. DMGS00529 Director of Legislative Affairs for Border, Transportation, and Immigration Security to the Assistant Secretary for Legislative Affairs. Effective May 25, 2006. DMOT00519 Special Assistant to the Assistant Secretary, Transportation Security Administration. Effective May 31, 2006. Section 213.3312 Department of the Interior DIGS01068 Special Assistant to the Secretary for Alaska to the Senior Advisor to the Secretary for Alaskan Affairs. Effective May 18, 2006. DIGS01067 Special Assistant—Scheduling and Advance to the Director—Scheduling and Advance. Effective May 25, 2006. DIGS01069 Special Assistant to the Chief of Staff. Effective May 25, 2006. DIGS01064 Hispanic Media Outreach Coordinator to the Director, Office of Communications. Effective May 30, 2006. Section 213.3313 Department of Agriculture DAGS00842 Special Assistant to the Deputy Assistant Secretary for Administration. Effective May 12, 2006. Section 213.3314 Department of Commerce DCGS00275 Confidential Assistant to the Director, Office of Business Liaison. Effective May 11, 2006. DCGS00593 Senior Advisor to the Coordinator for International Intellectual Property Enforcement. Effective May 12, 2006. DCGS00346 Confidential Assistant to the Director Office of White House Liaison. Effective May 25, 2006. DCGS00452 Confidential Assistant to the Deputy Assistant Secretary for Legislative and Intergovernmental Affairs. Effective May 25, 2006. DCGS00540 Confidential Assistant to the Chief of Staff. Effective May 31, 2006. Section 213.3315 Department of Labor DLGS60179 Senior Advisor to the Assistant Secretary for Employment Standards. Effective May 11, 2006. DLGS60135 Special Assistant to the Director, 21st Century Office and Deputy Assistant Secretary for Intergovernmental Affairs. Effective May 12, 2006. DLGS60121 Special Assistant to the Director of Operations. Effective May 25, 2006. Section 213.3316 Department of Health and Human Services DHGS60485 Director of Communications to the Assistant Secretary, Health. Effective May 4, 2006. DHGS60240 Regional Director, Dallas, Texas, Region VI to the Director of Intergovernmental Affairs. Effective May 8, 2006. DHGS60034 Senior Advisor to the Administrator, Substance Abuse and Mental Health Service. Effective May 16, 2006. Section 213.3317 Department of Education DBGS00522 Confidential Assistant to the Chief of Staff. Effective May 4, 2006. DBGS00523 Director, White House Liaison to the Chief of Staff. Effective May 4, 2006. DBGS00517 Confidential Assistant to the Assistant Secretary for Elementary and Secondary Education. Effective May 5, 2006. DBGS00524 Special Assistant to the Chief of Staff to the Deputy Secretary. Effective May 5, 2006. DBGS00518 Special Assistant to the Director, Regional Services. Effective May 8, 2006. DBGS00521 Deputy Chief of Staff for Strategy to the Chief of Staff. Effective May 9, 2006. DBGS00525 Confidential Assistant to the Executive Assistant. Effective May 10, 2006. DBGS00531 Press Secretary to the Assistant Secretary, Office of Communications and Outreach. Effective May 10, 2006. DBGS00527 Confidential Assistant to the Director, Scheduling and Advance Staff. Effective May 12, 2006. DBGS00532 Special Assistant to the Director, Office of Educational Technology. Effective May 12, 2006. DBGS00533 Special Assistant to the Director, White House Liaison. Effective May 12, 2006. DBGS00534 Special Assistant to the Under Secretary. Effective May 12, 2006. DBGS00528 Chief of Staff to the Assistant Deputy Secretary for Innovation and Improvement. Effective May 18, 2006. DBGS00526 Confidential Assistant to the Executive Director. Effective May 19, 2006. DBGS00536 Confidential Assistant to the Deputy Assistant Secretary. Effective May 19, 2006. Section 213.3318 Environmental Protection Agency EPGS06011 Program Specialist to the Assistant Administrator for Environmental Information. Effective May 17, 2006. Section 213.3325 United States Tax Court JCGS60044 Secretary (Confidential Assistant) to the Chief Judge. Effective May 1, 2006. JCGS60063 Secretary (Confidential Assistant) to the Chief Judge. Effective May 1, 2006. JCGS60079 Trial Clerk to the Chief Judge. Effective May 1, 2006. Section 213.3331 Department of Energy DEGS00520 Policy Advisor to the Deputy Assistant Secretary for Natural Gas and Petroleum Technology. Effective May 11, 2006. DEGS00514 Special Assistant to the Assistant Secretary for Environment, Safety and Health. Effective May 16, 2006. Section 213.3346 Selective Service System SSGS03373 Administrative Assistant to the Director, Selective Service System. Effective May 5, 2006. Section 213.3348 National Aeronautics and Space Administration NNGS00171 Senior Legislative Affairs Program Specialist to the Assistant Administrator for Legislative Affairs. Effective May 17, 2006. NNGS00172 Congressional Relations Specialist to the Assistant Administrator for Legislative Affairs. Effective May 30, 2006. Section 213.3356 Commission on Civil Rights CCGS60031 General Counsel to the Staff Director. Effective May 25, 2006. Section 213.3384 Department of Housing and Urban Development DUGS60151 Staff Assistant to the Assistant Secretary for Public Affairs. Effective May 4, 2006. DUGS60385 Staff Assistant to the Assistant Secretary for Public Affairs. Effective May 8, 2006. DUGS60411 Special Assistant to the General Counsel. Effective May 10, 2006. DUGS60373 Media Outreach Specialist to the Assistant Secretary for Public Affairs. Effective May 31, 2006. Section 213.3394 Department of Transportation DTGS60376 Director, Office of Small and Disadvantaged Business Utilization to the Secretary. Effective May 10, 2006. Authority: 5 U.S.C. 3301 and 3302; E.O. 10577, 3 CFR 1954-1958 Comp., p. 218. Office of Personnel Management. Dan G. Blair, Deputy Director. [FR Doc. E6-11233 Filed 7-14-06; 8:45 am] BILLING CODE 6325-39-P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. *Extension:* Rule 12d1-1; SEC File No. 270-526; OMB Control No. 3235-0584. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ) the Securities and Exchange Commission (the “Commission”) is soliciting comments on the collections of information summarized below. The Commission plans to submit these existing collections of information to the Office of Management and Budget (“OMB”) for extension and approval. Under current law, an investment company (“fund”) is limited in the amount of securities the fund (“acquiring fund”) can acquire from another fund (“acquired fund”). In general under the Investment Company Act of 1940 (15 U.S.C. 80a) (the “Investment Company Act” or “Act”), a registered fund (and companies it controls) cannot:
(i)Acquire more than three percent of another fund's securities;
(ii)invest more than five percent of its own assets in another fund; or
(iii)invest more than ten percent of its own assets in other funds in the aggregate. 1 In addition, a registered open-end fund, its principal underwriter, and any registered broker or dealer cannot sell that fund's shares to another fund if, as a result:
(i)The acquiring fund (and any companies it controls) owns more than three percent of the acquired fund's stock; or
(ii)all acquiring funds (and companies they control) in the aggregate own more than ten percent of the acquired fund's stock. 2 Rule 12d1-1 under the Act (17 CFR 270.12d1-1) provides an exemption from these limitations for “cash sweep” arrangements, in which a fund invests all or a portion of its available cash in a money market fund rather than directly in short-term instruments. An acquiring fund relying on the exemption may not pay a sales load, distribution fee, or service fee on acquired fund shares, or if it does, the acquiring fund's investment adviser must waive a sufficient amount of its advisory fee to offset the cost of the loads or distribution fees. 3 The acquired fund may be a fund in the same fund complex or in a different fund complex. In addition to providing an exemption from section 12(d)(1) of the Act, the rule provides exemptions from section 17(a) and Rule 17d-1, which restrict a fund's ability to enter into transactions and joint arrangements with affiliated persons. 4 These provisions could otherwise prohibit an acquiring fund from investing in a money market fund in the same fund complex, 5 or prohibit a fund that acquires five percent or more of the securities of a money market fund in another fund complex from making any additional investments in the money market fund. 6 1 *See* 15 U.S.C. 80a-12(d)(1)(A). If an acquiring fund is not registered, these limitations apply only with respect to the acquiring fund's acquisition of registered funds. 2 *See* 15 U.S.C. 80a-12(d)(1)(B). 3 *See* Rule 12d1-1(b)(1). 4 *See* 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d); 17 CFR 270.17d-1. 5 An affiliated person of a fund includes any person directly or indirectly controlling, controlled by, or under common control with such other person. *See* 15 U.S.C. 80a-2(a)(3)(C) (definition of “affiliated person”). Most funds today are organized by an investment adviser that advises or provides administrative services to other funds in the same complex. Funds in a fund complex are generally under common control of an investment adviser or other person exercising a controlling influence over the management or policies of the funds. *See* 15 U.S.C. 80a-2(a)(9). Not all advisers control funds they advise. The determination of whether a fund is under the control of its adviser, officers, or directors depends on all the relevant facts and circumstances. *See* Investment Company Mergers, Investment Company Act Release No. 25259 (Nov. 8, 2001) [66 FR 57602 (Nov. 15, 2001)], at n.11. To the extent that an acquiring fund in a fund complex is under common control with a money market fund in the same complex, the funds would rely on the Rule's exemptions from section 17(a) and Rule 17d-1. 6 *See* 15 U.S.C. 80a-2(a)(3)(A), (B). The rule also permits a registered fund to rely on the exemption to invest in an unregistered money market fund that limits its investments to those in which a registered money market fund may invest under Rule 2a 7 under the Act (17 CFR 270.2a 7), and undertakes to comply with all the other provisions of Rule 2a 7. In addition the acquiring fund must reasonably believe that the unregistered money market fund
(i)Operates in compliance with Rule 2a 7,
(ii)complies with sections 17(a), (d), (e), 18, and 22(e) of the Act 7 as if it were a registered open-end fund,
(iii)has adopted procedures designed to ensure that it complies with these statutory provisions,
(iv)maintains the records required by Rules 31a 1(b)(2)(ii), 31a 1(b)(2)(iv), and 31a-1(b)(9); 8 and
(v)preserves permanently, the first two years in an easily accessible place, all books and records required to be made under these rules. 7 *See* 15 U.S.C. 80a-17(a), 15 U.S.C. 80a-17(d), 15 U.S.C. 80a-17(e), 15 U.S.C. 80a-18, 15 U.S.C. 80a-22(e). 8 *See* 17 CFR 270.31a-1(b)(2)(ii), 17 CFR 270.31a-1(b)(2)(iv), 17 CFR 270.31a-1(b)(9). Rule 2a-7 contains certain collection of information requirements. An unregistered money market fund that complies with Rule 2a 7 would be subject to these collection of information requirements. In addition, the recordkeeping requirements under Rule 31 with which the acquiring fund reasonably believes the unregistered money market fund complies are collections of information for the unregistered money market fund. By allowing funds to invest in registered and unregistered money market funds, Rule 12d1-1 is intended to provide funds greater options for cash management. In order for a registered fund to rely on the exemption to invest in an unregistered money market fund, the unregistered money market fund must comply with certain collection of information requirements for registered money market funds. These requirements are intended to ensure that the unregistered money market fund has established procedures for collecting the information necessary to make adequate credit reviews of securities in its portfolio, as well as other recordkeeping requirements that will assist the acquiring fund in overseeing the unregistered money market fund (and Commission staff in its examination of the unregistered money market fund's adviser). Commission staff estimates that registered funds currently invest in 40 unregistered money market funds in excess of the statutory limits under an exemptive order issued by the Commission, and will invest in approximately 6 new unregistered money market funds each year. 9 Staff estimates that each of these unregistered money market funds spends 1220 hours to perform the record of credit risk analysis and other determinations annually, and in the first year after the rule's adoption, each will spend 21 hours to implement the board procedures. 10 Finally, Commission staff estimates that 10 unregistered money market funds spends 4.5 hours to review and amend procedures annually. The estimated total of annual responses under Rule 12d1-1 is 57,131. 11 9 This estimate is based on the number of applications filed with the Commission in 2005. This estimate may be understated because applicants generally do not identify the name or number of unregistered money market funds in which registered funds intend to invest, and each application also applies to unregistered money market funds to be organized in the future. 10 The Commission adopted Rule 12d1-1 on June 20, 2006. See Fund of Funds Investments, Investment Company Act Release No. 27399 (June 20, 2006). 11 This estimate is based on the following calculation: (40 × 1220) + (6 × 1220) + (40 × 21) + (6 × 21) + (10 × 4.5) = 57,131. Commission staff estimates that in addition to the costs described in section 12, unregistered money market funds will incur costs to preserve records, as required under Rule 2a-7. These costs will vary significantly for individual funds, depending on the amount of assets under fund management and whether the fund preserves its records in a storage facility in hard copy or has developed and maintains a computer system to create and preserve compliance records. In its Rule 2a-7 submission, Commission staff estimated that the amount an individual money market fund may spend ranged from $100 per year to $300,000. We have no reason to believe the range would be different for unregistered money market funds. As noted before, we have no information on the amount of assets managed by unregistered money market funds. Accordingly, Commission staff has estimated that an unregistered money market fund in which registered funds would invest in reliance on Rule 12d1-1 would have, on average, $376.4 million in assets under management. 12 Based on a cost of $0.0000005 per dollar of assets under management for medium-sized funds, the staff estimates compliance with Rule 2a-7 would cost these types of unregistered money market funds $8,000 annually. 13 Commission staff estimates that unregistered money market funds will not incur any capital costs to create computer programs for maintaining and preserving compliance records for Rule 2a-7. 14 12 This estimate is based on the average of assets under management of medium-sized registered money market funds ($50 million to $999 million). 13 This estimate was based on the following calculation: 46 unregistered money market funds × $357.7 million in assets under management × $0.0000005 = $8,227. The estimate of cost per dollar of assets is the same as that used for medium-sized funds in the Rule 2a-7 submission. 14 This estimate is based on information Commission staff obtained in its survey for the Rule 2a-7 submission. Of the funds surveyed, no medium-sized funds incurred this type of capital cost. The funds either maintained record systems using a program the fund would be likely to have in the ordinary course of business (such as Excel) or the records were maintained by the fund's custodian. The collections of information required for unregistered money market funds by Rule 12d1-1 are necessary in order for acquiring funds to be able to obtain the benefits described above. Notices to the Commission will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Written comments are invited on:
(a)Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(b)the accuracy of the agency's estimate of the burden of the collection of information;
(c)ways to enhance the quality, utility, and clarity of the information collected; and
(d)ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 22312 or send an e-mail to: *PRA_Mailbox@sec.gov* . Dated: June 23, 2006. Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11229 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. Extension: Rule 17a-6, SEC File No. 270-433, OMB Control No. 3235-0489. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below. Rule 17a-6 (17 CFR 240.17a-6) under the Securities Exchange Act of 1934 (15 U.S.C. 78a *et seq.* ) permits national securities exchanges, national securities associations, registered clearing agencies, and the Municipal Securities Rulemaking Board (collectively, “SROs”) to destroy or convert to microfilm or other recording media records maintained under Rule 17a-1, if they have filed a record destruction plan with the Commission and the Commission has declared such plan effective. There are currently 22 SROs: 10 national securities exchanges, 1 national securities association, 10 registered clearing agencies, and the Municipal Securities Rulemaking Board. These respondents file no more than one record destruction plan per year, which requires approximately 160 hours for each new plan. However, the Commission is discounting that figure given its experience to date with the number of plans that have been filed. Further, any existing SRO record destructions plan may require revision, over time, in response to, for example, changes in document retention technology, which the Commission estimates will take much less than the 160 hours estimated for a new plan. Thus, the total annual compliance burden is estimated to be 60 hours, based on an estimated two respondents per year. The approximate cost per hour is $250, resulting in a total cost of compliance for these respondents of $15,000 per year (60 hours @ $250 per hour). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. General comments regarding the estimated burden hours should be directed to the following persons:
(i)The Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or by sending an e-mail to *David_Rostker@omb.eop.gov* and
(ii)R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, c/o Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312 or by sending an e-mail to *PRA_Mailbox@sec.gov.* Comments must be submitted within 30 days of this notice. Dated: July 10, 2006. Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11230 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. *Extension:* Rule 489 and Form F-N; SEC File No. 270-361; OMB Control No. 3235-0411. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) has submitted to the Office of Management and Budget requests for extension of the previously approved collections of information discussed below: • Rule 489 (17 CFR 230.489) under the Securities Act of 1933 (15 U.S.C. 77a *et seq.* ), Filing of Form by Foreign Banks and Insurance Companies and Certain of Their Holding Companies and Finance Subsidiaries; and Form F-N, Appointment of Agent for Service of Process by Foreign Banks and Foreign Insurance Companies and Certain of Their Holding Companies and Finance Subsidiaries Making Public Offerings of Securities in the United States Rule 489 (17 CFR 230.489) under the Securities Act of 1933 (15 U.S.C. 77a *et seq.* ) requires foreign banks and foreign insurance companies and holding companies and finance subsidiaries of foreign banks and foreign insurance companies that are exempted from the definition of “investment company” by virtue of Rules 3a-1, 3a-5, and 3a-6 under the Investment Company Act of 1940 (15 U.S.C. 80a-1 *et seq.* ) to file Form F-N under the Securities Act of 1933 to appoint an agent for service of process when making a public offering of securities in the United States. Approximately seven entities are required by Rule 489 to file Form F-N, which is estimated to require an average of one hour to complete. The estimated annual burden of complying with the rule's filing requirement is approximately eleven hours, as some of the entities submitted multiple filings. The estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ) and are not derived from a comprehensive or even representative survey or study of the cost of Commission rules and forms. The collection of information under Form F-N is mandatory. The information provided by the Form is not kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. General comments regarding the above information should be directed to the following persons:
(i)Desk officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or e-mail to: *David_Rostker@omb.eop.gov;* and
(ii)R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson 6432 General Green Way, Alexandria, Virginia 22312, or send an e-mail to: *PRA_Mailbox@sec.gov.* Comments must be submitted to OMB within 30 days of this notice. Dated: July 10, 2006. Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11231 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. *Extension:* Rule 17a-25; SEC File No. 270-482; OMB Control No. 3235-0540. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. Rule 17a-25 (17 CFR 240.17a-25) requires registered broker-dealers to electronically submit securities transaction information, including identifiers for prime brokerage arrangements, average price accounts, and depository institutions, in a standardized format when requested by the Commission staff. In addition, the rule also requires broker-dealers to submit, and keep current, contact person information for electronic blue sheets (“EBS”) requests. The Commission uses the information for enforcement inquiries or investigations and trading reconstructions, as well as for inspections and examinations. The Commission estimates that it sends approximately 27,000 electronic blue sheet requests per year. Accordingly, the annual aggregate hour burden for electronic and manual response firms is estimated to be 3,564 hours and 405 hours, respectively. In addition, the Commission estimates that it will request 1,400 broker-dealers to supply the contact information identified in Rule 17a-25(c) and estimates the total aggregate burden hours to be 350. Thus, the annual aggregate burden for all respondents to the collection of information requirements of Rule 17a-25 is estimated at 4,319 hours. Written comments are invited on:
(a)Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;
(b)the accuracy of the agency's estimate of the burden of the proposed collection of information;
(c)ways to enhance the quality, utility, and clarity of the information to be collected; and
(d)ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Comments should be directed to
(i)the Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC, 20503 or by sending an e-mail to: *David_Rostker@omb.eop.gov* ; and
(ii)R. Corey Booth, Director/Chief Information Office, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 22312 or send an e-mail to: *PRA_Mailbox@sec.gov.* Comments must be submitted to OMB within 60 days of this notice. Dated: July 10, 2006. Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11232 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54123; File No. SR-CBOE-2006-65] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Permit the Listing and Trading of Quarterly Options Series July 11, 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 July 10, 2006, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. CBOE has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. 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 The Exchange proposes to amend its rules to permit the listing and trading of quarterly options series. 5 The text of the proposed rule change is set forth below. Proposed new language is in *italics* . 5 This proposal is substantially identical to a recently approved proposal by the International Securities Exchange (“ISE”) to list Quarterly Options Series on a pilot basis. *See* Securities Exchange Act Releases No. 53857 (May 24, 2006), 71 FR 31246 (June 1, 2006) (notice of filing); and 54113 (July 7, 2006) (approval order). **Rule 1.1. Definitions.** When used in these Rules, unless the context otherwise requires: (a)-(bbb) No Change. Quarterly Options Series. *(ccc) Quarterly Option Series. A Quarterly Option Series is a series in an options class that is approved for listing and trading on the Exchange in which the series is opened for trading on any business day and that expires at the close of business on the last business day of a calendar quarter.* **. . . Interpretations and Policies:** .01-.05 No Change. Rule 5.5. Option Contracts Open for Trading
(a)After a particular class of options (call option contracts or put option contracts relating to a specific underlying security or calculated index) has been approved for listing and trading on the Exchange, the Exchange from time to time may open for trading series of options on that class. Only options contracts of series currently open for trading may be purchased or written on the Exchange. Prior to the opening of trading in a given series, the Exchange will fix the expiration month, year and exercise price of that series. For Short Term Option Series, the Exchange will fix a specific expiration date and exercise price, as provided in paragraph (d). *For Quarterly Options Series the Exchange will fix a specific expiration date and exercise price, as provided in paragraph (e).*
(b)Except for Short Term Option series *and Quarterly Options Series* , at the commencement of trading on the Exchange of a particular class of options, the Exchange usually will open three series of options for each expiration month in that class. The exercise price of each series will be fixed at a price per share, with at least one strike price above and one strike price below the price at which the underlying stock is traded in the primary market at about the time that class of options is first opened for trading on the Exchange. Paragraph
(d)will govern the procedures for opening Short Term Option Series. *Paragraph
(e)will govern the procedures for opening Quarterly Options Series.* (c)-(d) No Change. *(e) Quarterly Option Series Pilot Program. For a one-year pilot period, the Exchange may list and trade options series that expire at the close of business on the last business day of a calendar quarter (“Quarterly Options Series”). The Exchange may list Quarterly Options Series for up to five
(5)currently listed options classes that are either index options or options on exchange traded funds. In addition, the Exchange may also list Quarterly Options Series on any options classes that are selected by other securities exchanges that employ a similar pilot program under their respective rules. The one-year pilot will commence either the day the Exchange first initiates trading in a Quarterly Options Series or July 24, 2006, whichever is earlier.* *The Exchange may list series that expire at the end of the next consecutive four
(4)calendar quarters, as well as the fourth quarter of the next calendar year. For example, if the Exchange is trading Quarterly Options Series in the month of May 2006, it may list series that expire at the end of the second, third, and fourth quarters of 2006, as well as the first and fourth quarters of 2007. Following the second quarter 2006 expiration, the Exchange could add series that expire at the end of the second quarter of 2007.* *(1) Quarterly Options Series will be P.M. settled.* *(2) The strike price for each Quarterly Options Series will be fixed at a price per share, with at least two strike prices above and two strike prices below the approximate value of the underlying security at about the time that a Quarterly Options Series is opened for trading on the Exchange. The Exchange shall list strike prices for a Quarterly Options Series that are within $5 from the closing price of the underlying on the preceding day. Additional Quarterly Options Series of the same class may be open for trading on the Exchange when the Exchange deems it necessary to maintain an orderly market, to meet customer demand or when the market price of the underlying security moves substantially from the initial exercise price or prices. To the extent that any additional strike prices are listed by the Exchange, such additional strike prices shall be within $5 from the closing price of the underlying on the preceding day. The opening of the new Quarterly Options Series shall not affect the series of options of the same class previously opened.* *(3) The interval between strike prices on Quarterly Options Series shall be the same as the interval for strike prices for series in that same options class that expire in accordance with the normal monthly expiration cycle.* . . . Interpretations and Policies: .01-.02 No Change. .03 Except for Short Term Option Series *and Quarterly Options Series,* the Exchange usually will open four expiration months for each class of options open for trading on the Exchange: the first two being the two nearest months, regardless of the quarterly cycle on which that class trades; the third and fourth being the next the two nearest term months (May and June) and the next two expiration months of the cycle (July and October). When the May series expires, the Exchange would add January series. When the June series expires, the Exchange would add August series as the next nearest month, and would not add April). Regarding Short Term Option Series, the Exchange may select up to five currently listed option classes on which Short Term Option Series may be opened on any Short Term Option Opening Date. In addition to the five-option class restriction, the Exchange also may list Short Term Option Series on any option classes that are selected by other securities exchanges that employ a similar Pilot Program under their respective rules. For each option class eligible for participation in the Short Term Option Series Pilot Program, the Exchange may open up to five Short Term Option Series for each expiration date in that class. The strike price of each Short Term Option Series will be fixed at a price per share, with at least two strike prices above and two strike prices below the value of the underlying security or calculated index value at about the time that Short Term Option Series is opened for trading on the Exchange. .04-.10 No Change. Rule 24.1. Definitions (a)-(y) No Change. *Quarterly Options Series* *(z) The term “Quarterly Options Series” means, for the purposes of Chapter XXIV, a series in an options class that is approved for listing and trading on the Exchange in which the series is opened for trading on any business day and that expires at the close of business on the last business day of a calendar quarter.* . . . Interpretations and Policies: .01 No Change. Rule 24.4. Position Limits for Broad-Based Index Options (a)-(d) No Change.
(e)Positions in Short Term Option series *and Quarterly Options Series* shall be aggregated with positions in options contracts on the same index. . . . Interpretations and Policies: .01-.04 No Change. Rule 24.4A Position Limits for Industry Index Options (a)-(c) No Change.
(d)Positions in Short Term Option series *and Quarterly Options Series* shall be aggregated with positions in options contracts on the same index. . . . Interpretations and Policies: .01-.02 No Change. Rule 24.9. Terms of Index Option Contracts
(a)General.
(1)No Change.
(2)Expiration Months. Index option contracts may expire at three-month intervals or in consecutive months. The Exchange may list up to six expiration months at any one time, but will not list index options that expire more than twelve months out. Notwithstanding the preceding restriction, until the expiration in November 2004, the Exchange may list up to seven expiration months at any one time for the SPX, MNX and DJX index option contracts, provided one of those expiration months is November 2004. Short Term Option Series Pilot Program. Notwithstanding the preceding restriction, after an index option class has been approved for listing and trading on the Exchange, the Exchange may open for trading on any Friday that is a business day (“Short Term Option Opening Date”) series of options on that class that expire on the next Friday that is a business day (“Short Term Option Expiration Date”). If the Exchange is not open for business on a Friday, the Short Term Option Opening Date will be the first business day immediately prior to that Friday. Similarly, if the Exchange is not open for business on a Friday, the Short Term Option Expiration Date will be the first business day immediately prior to that Friday. The Exchange may continue to list Short Term Option Series until the Short Term Option Series Pilot Program expires on July 12, 2007. Regarding Short Term Option Series, the Exchange may select up to five currently listed option classes on which Short Term Option Series may be opened on any Short Term Option Opening Date. In addition to the five-option class restriction, the Exchange also may list Short Term Option Series on any option classes that are selected by other securities exchanges that employ a similar Pilot Program under their respective rules. For each index option class eligible for participation in the Short Term Option Series Pilot Program, the Exchange may open up to five Short Term Option Series on index options for each expiration date in that class. The strike price of each Short Term Option Series will be fixed at a price per share, with at least two strike prices above and two strike prices below the calculated value of the underlying index at about the time that Short Term Option Series is opened for trading on the Exchange. No Short Term Option Series on an index option class may expire in the same week during which any monthly option series on the same index class expire or, in the case of QIXs, in the same week during which the QIXs expire. *Quarterly Options Series Pilot Program. Notwithstanding the preceding restriction, for a one-year pilot period, the Exchange may list and trade options series that expire at the close of business on the last business day of a calendar quarter (“Quarterly Options Series”). The Exchange may list Quarterly Options Series for up to five
(5)currently listed options classes that are either index options or options on ETFs. In addition, the Exchange may also list Quarterly Options Series on any options classes that are selected by other securities exchanges that employ a similar pilot program under their respective rules. The one-year pilot will commence either the day the Exchange first initiates trading in a Quarterly Options Series or July 24, 2006, whichever is earlier.* *The Exchange may list series that expire at the end of the next consecutive four
(4)calendar quarters, as well as the fourth quarter of the next calendar year. For example, if the Exchange is trading Quarterly Options Series in the month of May 2006, it may list series that expire at the end of the second, third, and fourth quarters of 2006, as well as the first and fourth quarters of 2007. Following the second quarter 2006 expiration, the Exchange could add series that expire at the end of the second quarter of 2007.* *Quarterly Options Series shall be P.M. settled.* *The strike price of each Quarterly Options Series will be fixed at a price per share, with at least two strike prices above and two strike prices below the value of the underlying security at about the time that a Quarterly Options Series is opened for trading on the Exchange. The Exchange shall list strike prices for a Quarterly Options Series that are within $5 from the closing price of the underlying on the preceding day. The Exchange may open for trading additional Quarterly Options Series of the same class if the current index value of the underling index moves substantially from the exercise price of those Quarterly Options Series that already have been opened for trading on the Exchange. The exercise price of each Quarterly Options Series open for trading on the Exchange shall be reasonably related to the current index value of the underlying index to which such series relates at or about the time such series of options is first opened for trading on the Exchange. The term “reasonably related to the current index value of the underlying index” means that the exercise price is within thirty percent (30%) away from the current index value. The Exchange may also open for trading additional Quarterly Options Series that are more than thirty percent (30%) away from the current index value, provided that demonstrated customer interest exists for such series, as expressed by institutional, corporate, or individual customers or their brokers. Market-Makers trading for their own account shall not be considered when determining customer interest under this provision.* (3)-(5) No Change. (b)-(c) No Change. . . . Interpretations and Policies: .01-.12 No Change. .13 The interval between strike prices on Short Term Option Series *and Quarterly Options Series* shall be the same as the interval for strike prices for series in that same options class that expire in accordance with the normal monthly expatriation cycle. .14 No Change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its rules to accommodate the listing of options series that would expire at the close of business on the last business day of a calendar quarter (“Quarterly Options Series”). Quarterly Options Series could be opened on any approved options class 6 on a business day (“Quarterly Options Opening Date”) and would expire at the close of business on the last business day of a calendar quarter (“Quarterly Options Expiration Date”). The Exchange would list series that expire at the end of the next consecutive four
(4)calendar quarters, as well as the fourth quarter of the next calendar year. For example, if the Exchange were trading Quarterly Options Series in the month of April 2006, it would list series that expire at the end of the second, third, and fourth quarters of 2006, as well as the first and fourth quarters of 2007. Following the second quarter 2006 expiration, the Exchange would add series that expire at the end of the second quarter of 2007. 6 Quarterly Options Series may be opened in options on indexes or options on Exchange Traded Fund (“ETFs”) that satisfy the applicable listing criteria under CBOE rules. Quarterly Options Series listed on currently approved options classes would be P.M.-settled and, in all other respects, would settle in the same manner as do the monthly expiration series in the same options class. The proposed rule change would allow the Exchange to open up to five currently listed options classes that are either index options or options on ETFs. The strike price for each series would be fixed at a price per share, with at least two strike prices above and two strike prices below the approximate value of the underlying security at about the time that a Quarterly Options Series is opened for trading on the Exchange. The Exchange may list strike prices for a Quarterly Options Series that are within $5 from the closing price of the underlying security on the preceding trading day. The proposal would permit the Exchange to open for trading additional Quarterly Options Series of the same class when the Exchange deems it necessary to maintain an orderly market, to meet customer demand, or when the current market price of the underlying security moves substantially from the exercise prices of those Quarterly Options Series that already have been opened for trading on the Exchange. In addition, the exercise price of each Quarterly Options Series on an underlying index would be required to be reasonably related to the current index value of the index at or about the time such series of options were first opened for trading on the Exchange. The term “reasonably related to the current index value of the underlying index” means that the exercise price is within thirty percent of the current index value. The Exchange would also be permitted to open for trading additional Quarterly Options Series on an underlying index that are more than thirty percent away from the current index value, provided that demonstrated customer interest exists for such series, as expressed by institutional, corporate, or individual customers or their brokers. Market-Makers trading for their own account shall not be considered when determining customer interest under this provision. Because monthly options series expire on the third Friday of their expiration month, a Quarterly Options Series, which would expire on the last business day of the quarter, could never expire in the same week in which a monthly options series in the same class expires. The same, however, is not the case for Short Term Option Series. Quarterly Options Series and Short Term Option Series on the same options class could potentially expire concurrently under the proposal. Therefore, to avoid any confusion in the marketplace, the proposal stipulates that the Exchange may not list a Short Term Option Series that expires at the end of the day on the same day as a Quarterly Options Series in the same class expires. In other words, the proposed rules would not permit the Exchange to list a P.M.-settled Short Term Option Series on an ETF or an index that would expire on a Friday that is the last business day of a calendar quarter if a Quarterly Options Series on that ETF or index were scheduled to expire on that day. However, the proposed rules would permit the Exchange to list as A.M.-settled Short Term Option Series and a P.M.-settled Quarterly Options Series in the same options class that both expire on the same day ( *i.e.* , on a Friday that is the last business day of the calendar quarter). The Exchange believes that the concurrent listing of an A.M.-settled Short Term Option Series and a P.M.-settled Quarterly Options Series on the same underlying ETF or index that expire on the same day would not tend to cause the same confusion as would P.M.-settled short term and quarterly series in the same options class, and would provide investors with an additional hedging mechanism. Finally, the interval between strike prices on Quarterly Options Series would be the same as the interval for strike prices for series in the same options class that expires in accordance with the normal monthly expiration cycles. The Exchange believes that Quarterly Options Series would provide investors with a flexible and valuable tool to manage risk exposure, minimize capital outlays, and be more responsive to the timing of events affecting the securities that underlie option contracts. At the same time, CBOE is cognizant of the need to be cautious in introducing a product that can increase the number of outstanding strike prices. For that reason, CBOE intends to employ a limited pilot program (“Pilot Program”) for Quarterly Options Series. Under the terms of the Pilot Program, the Exchange could select up to five option classes on which Quarterly Options Series may be opened on any Quarterly Options Opening Date. The Exchange would also be allowed to list those Quarterly Options Series on any options class that is selected by another securities exchange with a similar Pilot Program under its rules. The Exchange believes that limiting the number of options classes in which Quarterly Options Series may be opened would help to ensure that the addition of the new series through this Pilot Program will have only a negligible impact on the Exchange's and the Option Price Reporting Authority's (“OPRA”) quoting capacity. Also, limiting the term of the Pilot Program to a period of one year will allow the Exchange and the Commission to determine whether the program should be extended, expanded, and/or made permanent. If the Exchange were to propose an extension or an expansion of the program, or were the Exchange to propose to make the Pilot Program permanent, the Exchange would submit, along with any filing proposing such amendments to the Pilot Program, a Pilot Program report (“Report”) that will provide an analysis of the Pilot Program covering the entire period during which the Pilot Program was in effect. The Report would include, at a minimum:
(1)Data and written analysis on the open interest and trading volume in the classes for which Quarterly Option Series were opened;
(2)an assessment of the appropriateness of the options classes selected for the Pilot Program;
(3)an assessment of the impact of the Pilot Program on the capacity of CBOE, OPRA, and on market data vendors (to the extent data from market data vendors is available);
(4)any capacity problems or other problems that arose during the operation of the Pilot Program and how CBOE addressed such problems; and
(5)any complaints that CBOE received during the operation of the Pilot Program and how CBOE addressed them; and
(6)any additional information that would assist in assessing the operation of the Pilot Program. The Report must be submitted to the Commission at least sixty days prior to the expiration date of the Pilot Program. Alternatively, at the end of the Pilot Program, if the Exchange determines not to propose an extension or an expansion of the Pilot Program, or if the Commission determines not to extend or expand the Pilot Program, the Exchange would not longer list any additional Quarterly Options Series and would limit all existing open interest in Quarterly Options Series to closing transactions only. Finally, the Exchange represents that it has the necessary systems capacity to support new options series that will result from the introduction of Quarterly Options Series. 2. Statutory Basis The Exchange believes that the introduction of Quarterly Options Series will attract order-flow to the Exchange, increase the variety of listed options to investors, and provide a valuable hedging tool to investors. For these reasons, the Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 7 in general and furthers the objectives of Section 6(b)(5) of the Act 8 in particular in that it is designed to promote just and equitable principles of trade 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 does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 9 and subparagraph (f)(6) of Rule 19b-4 thereunder. 10 Because the foregoing proposed rule change
(i)does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder. 11 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). 11 The Exchange provided the Commission with pre-filing notice of the proposal, as required by Rule 19b-4(f)(6)(iii). A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to waive the operative delay if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the operative delay to permit the Pilot Program extension to become effective prior to the 30th day after filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that the proposal is substantially identical to the ISE's Quarterly Option Series Pilot Program, previously published for comment and approved by the Commission, 12 and thus CBOE's proposal raises no new issues of regulatory concern. Moreover, waiving the operative delay will allow CBOE to immediately compete with other exchanges that list and trade quarterly options under similar programs, and consequently will benefit the public. Therefore, the Commission has determined to waive the 30-day delay and allow the proposed rule change to become operative upon filing. 13 12 *See supra* note 5. 13 For purposes only of waiving the operative delay of this proposal, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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-2006-65 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2006-65. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2006-65 and should be submitted on or before August 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11227 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54120; File No. SR-DTC-2005-14] Self-Regulatory Organizations; The Depository Trust Company; Order Approving a Proposed Rule Change Relating to Compliance With Regulations Administered by the Office of Foreign Assets Control July 10, 2006. On September 9, 2005, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) a proposed rule change pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and on October 25, 2005, amended the proposed rule change. On November 30, 2005, DTC again amended the proposed rule change. 2 Notice of the proposal was published in the **Federal Register** on November 14, 2005. 3 The Commission received one comment letter. 4 For the reasons discussed below, the Commission is approving the proposed rule change. 1 15 U.S.C. 17s(b)(1). 2 Republication of notice of proposed rule change is not required because the second amendment to the proposed rule change merely clarified an existing DTC practice and did not alter the rights or responsibilities of DTC's participants. 3 Securities Exchange Act Release No. 52721 (Nov. 2, 2005), 70 FR 69179. 4 Letter from Alan E. Sorcher, Vice President and Associate General Counsel, Securities Industry Association (Dec. 8, 2005), available online at *http://www.sec.gov/rules/sro/dtc/dtc200514.shtml* . I. Description DTC will revise its Deposit Service, Custody Service, and Withdrawals-By-Transfer Service procedures. These changes are based upon guidance from the U.S. Department of the Treasury's Office of Foreign Assets Control (“OFAC”) to DTC. 1. Deposit Service In order for a participant to receive immediate credit in its securities account at DTC for a deposit of registered securities, the participant will be required to certify to DTC that it has compared certain parties identified on the deposited certificate (this could include parties such as the issuer and all assignees) against OFAC's list of Specially Designated Nationals and against OFAC's regulations (collectively referred to as the “OFAC list”) and that there were no matches identified by such comparison. In the case of a deposit of registered securities by a participant located outside the United States, including a deposit by or for the benefit of a participant accepted at a depository facility located outside the United States, a participant will not receive immediate credit in its securities account. DTC will give credit for the deposit only after DTC has screened the parties on the deposit against the OFAC list and has identified no valid matches. 2. Custody Service With respect to securities and other financial instruments that are deposited pursuant to DTC's Custody Service procedures, DTC will act on the instructions of the depositing participant only after DTC has screened the parties on the deposit against the OFAC list and has identified no valid matches. 5 5 This is the clarification that was the subject of DTC's November 30, 2005, amendment to the proposed rule change. *Supra* note 2. 3. Withdrawal-By-Transfer Service For securities on deposit that are sought to be withdrawn pursuant to DTC's Withdrawal-By-Transfer Service, including Withdrawal-By-Transfer requests for securities in the Direct Registration System, DTC will act on the instructions of a withdrawing participant only after DTC has screened the investor in whose name the securities are to be registered against the OFAC list and has identified no valid match. For each service, in the event that DTC identifies a match against the OFAC list, DTC will first attempt to resolve false-positive matches. For valid matches, DTC will present the matches to participants that issued the instructions through a new Participant Terminal System function called “OFAP.” The participant will be required to review the registration of each certificate identified as a potential match and to respond to DTC for each such registration by providing information sufficient for DTC to conclude, in its sole discretion, that the registrant is or is not the person or entity listed on the OFAC list. Notwithstanding a participant's efforts to resolve matches against the OFAC list, if DTC, in its sole discretion, continues to believe that the registrant is the person or entity on the OFAC list, it will refuse to process the requested transaction. II. Comment Letters The Commission received one comment letter on the proposed rule change from the Securities Industry Association (“SIA”). The SIA recommended that the Commission:
(1)Allow for a reasonable implementation period that recognizes the significant changes broker-dealers will likely have to make to their systems and procedures;
(2)clarify a participant's obligations to screen names that appear as prior owners on securities certificates;
(3)clarify how introducing and clearing brokers are to implement certain provisions of the rule; and
(4)provide guidance on the application of Regulation S-P, 6 which governs the privacy of consumer financial information, to the process by which participants provide information to DTC. Furthermore, the SIA expressed concern that the rule change might negatively affect investors because of potential delays in processing their transactions due to duplicative OFAC checks. 6 17 CFR 248. In response to these comments, the Commission first observes that DTC provided its participants with the planned technical specifications of the processing systems for its deposit services in March 2006. 7 On June 30, 2006, DTC further notified participants that the OFAC certification process would be implemented in two phases: Phase 1, which will be effective August 7, 2006, for deposits affecting a small category of deposits received by DTC and which should require no systems changes by participants; and Phase 2, which will be effective sometime in the fourth quarter of 2006, for the remaining deposits and that will require systems enhancements. 8 The Commission believes that these time implementation time frames should be sufficient for participants to make any needed systems changes and to make any needed operational changes required to implement DTC's revisions. 7 “Preparation for the Implementation of OFAC Certification of Deposits from Domestic Participants,” DTC Important Notice B9382-06 (Mar. 31, 2006), available online at *http://www.dtc.org/impNtc/exe/exe_9382-06.pdf* . 8 “Implementation of OFAC Certification of Deposits from Domestic Participants,” DTC Important Notice B9899-06 (June 30, 2006), available online at *http://www.dtc.org/impNtc/exe/exe_9899-06.pdf* . Second, the “property” and “property interests” subject to OFAC regulations 9 relate to items where the property owner has a “present, future, or contingent” ownership interest. 10 Since prior security owners whose names might appear on a securities certificate have no present, future, or contingent interest in that property, transacting in such certificates would not appear to be prohibited by OFAC regulations. 9 *See, e.g.* , 31 CFR 215.203. 10 31 CFR 515.311(a). Third, in approving the proposed rule change, the Commission does not take a position on whether a DTC participant can evade OFAC liability if it relies on a certification of an introducing broker-dealer for which it acts that the introducing broker-dealer has screened the parties involved in the transaction against the OFAC list and that there were no matches identified by such screening. 11 11 The Commission notes that further inquiries relating to this subject should be directed to OFAC. Fourth, broker-dealers disclosing their customers' nonpublic personal information to comply with OFAC or DTC rules could rely on an exception from Regulation S-P's notice and opt out requirements for disclosures made to comply with Federal, state, or local laws, rules and other applicable legal requirements. 12 Recipients of information disclosed under this exception would be subject to Regulation S-P's limitations on the redisclosure and reuse of such information. 13 12 *See* 17 CFR 248.15(a)(7)(i). 13 *See, e.g.* , 17 CFR 248.11(a). With respect to the SIA's concern that some investors might be negatively affected by potentials delays in processing duplicative OFAC checks, the Commission notes that any such potential delays in processing should be minimal and well justified in light of the importance of the goals and purposes of doing such checks. III. Discussion Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of a clearing agency be designed to assure the safeguarding of securities and funds that are in its custody or control. 14 DTC, like all U.S. persons and entities, is subject to OFAC regulations. 15 Pursuant to recommendations made by OFAC, DTC is establishing formal procedures that will define and allocate responsibility for screening the names of persons and entities involved in furtherance of its obligation to refuse to transact directly or indirectly with restricted persons and entities. In so doing, DTC mitigates its regulatory risk of conducting business with such restricted individuals and entities, which could substantially imperil its or its participants assets, and therefore should help DTC assure the safeguarding of securities and funds that are in its custody or control or for which it is responsible. 14 15 U.S.C. 78q-1(b)(3)(F). 15 The fines for violations can be substantial. Depending on the violation, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations. Civil penalties range from $11,000 to $1,000,000 for each violation. The OFAC-related procedures of, among others, DTC and broker-dealers, are the subject of ongoing OFAC and Commission reviews to determine the effectiveness of these procedures in identifying and blocking transactions with restricted persons and entities. Accordingly, DTC has acknowledged that subject to the finding of these reviews it may need to revise its procedures in the future and has represented that it will continue to work with the Commission and OFAC to improve the effectiveness of its OFAC-related procedures. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act 16 and the rules and regulations thereunder. 16 15 U.S.C. 78q-1. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR-DTC-2005-14) be, and hereby is, approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 17 17 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11209 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54117; File No. SR-ISE-2006-37] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Short Term Option Series Pilot Program July 10, 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 July 3, 2006, the International Securities Exchange, Inc. (“Exchange” or “ISE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. ISE has designated this proposal as non-controversial under section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. 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 47 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Supplementary Material .02 to ISE Rule 504 and Supplementary Material .01 to ISE Rule 2009 to extend until July 12, 2007, its pilot program for listing and trading Short Term Option Series (“Pilot Program”). The text of the proposed rule change is available on the Exchange's Web site ( *http://www.iseoptions.com* ), at the Exchange's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to extend the Pilot Program for an additional year, through July 12, 2007. 5 The Pilot Program allows ISE to list and trade Short Term Option Series, which expire one week after the date on which a series is opened. Under the Pilot Program, ISE may select up to five approved options classes on which Short Term Option Series could be opened. 6 A series could be opened on any Friday that is a business day and would expire on the next Friday that is a business day. 7 If a Friday were not a business day, the series could be opened (or would expire) on the first business day immediately prior to that Friday. 5 The Commission approved the Pilot Program on July 12, 2005. *See* Securities Exchange Act Release No. 52012 (July 12, 2005), 70 FR 41246 (July 18, 2005) (SR-ISE-2005-17). Under ISE Rules 504 and 2009, the Pilot Program is scheduled to expire on July 12, 2006. 6 A Short Term Option Series could be opened in any options class that satisfied the applicable listing criteria under ISE rules ( *i.e.* , stock options, options on exchange traded funds as defined under ISE Rule 502(h), or options on indexes). The Exchange could also list and trade Short Term Option Series on any options class that is selected by another exchange that employs a similar pilot program. 7 Short Term Option Series would be settled in the same manner as the monthly expiration series in the same class. Thus, if the monthly option contract for a particular class were A.M.-settled, as most index options are, the Short Term Option Series for that class also would be A.M.-settled; if the monthly option contract for a particular class were P.M.-settled, as most non-index options are, the Short Term Option Series for that class also would be P.M.-settled. Similarly, Short Term Option Series for a particular class are physically settled or cash-settled in the same manner as the monthly option contract in that class. For each class selected for the Pilot Program, the Exchange usually would open five Short Term Option Series in that class for each expiration date. The strike price of each Short Term Option Series would be fixed at a price per share, with at least two strike prices above and two strike prices below the value of the underlying security or calculated index value at about the time that the Short Term Option Series is opened. ISE would not open a Short Term Option Series in the same week that the corresponding monthly options series is expiring, because the monthly options series in its last week before expiration is functionally equivalent to the Short Term Option Series. The intervals between strike prices on a Short Term Option Series would be the same as the intervals between strike prices on the corresponding monthly options series. The Exchange believes that Short Term Option Series can provide investors with a flexible and valuable tool to manage risk exposure, minimize capital outlays, and be more responsive to the timing of events affecting the securities that underlie option contracts. While ISE has not listed any Short Term Option Series during the first year of the Pilot Program, there has been significant investor interest in trading short-term options at the Chicago Board Options Exchange (“CBOE”). 8 To have the ability to respond to customer interest in the future, the Exchange proposes the continuation of the Pilot Program. 8 CBOE filed a report with the Commission on June 13, 2006, stating that CBOE has listed Short Term Options Series in four different options classes. *See* Securities Exchange Act Release No. 53984 (June 14, 2006), 71 FR 35718 (June 21, 2006) (extending CBOE's Short Term Option Series Pilot Program). In the original proposal to establish the Pilot Program, the Exchange stated that if it were to propose an extension, expansion, or permanent approval of the program, the Exchange would submit, along with any filing proposing such amendments to the program, a report providing an analysis of the Pilot Program covering the entire period during which the Pilot Program was in effect. 9 Since the Exchange did not list any One Week Options Series during the first year of the Pilot Program, there is no data available to compile such a report at this time. Therefore the Exchange did not submit a report with its proposal to extend the Pilot Program. 9 *See* Form 19b-4 for File No. SR-ISE-2005-17, filed March 7, 2005. 2. Statutory Basis The Exchange believes that Short Term Option Series could stimulate customer interest in options and provide a flexible and valuable tool to manage risk exposure, minimize capital outlays, and be more responsive to the timing of events affecting the securities that underlie option contracts. For these reasons, the Exchange believes that the proposed rule change is consistent with section 6(b) of the Act 10 in general and furthers the objectives of section 6(b)(5) of the Act 11 in particular in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to section 19(b)(3)(A) of the Act 12 and subparagraph (f)(6) of Rule 19b-4 thereunder. 13 Because the foregoing proposed rule change
(i)does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder. 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b-4(f)(6). A proposed rule change filed under Rule 19b-4(f)(6) normally requires notice to the Commission of the Exchange's intent to file the proposed rule change five business days prior to filing, and normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to waive the five day pre-filing requirement and to accelerate the operative date if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the pre-filing notice requirement and the operative delay to permit the Pilot Program extension to become effective prior to the 30th day after filing. The Commission believes that waiving the pre-filing notice requirement and the 30-day operative delay is consistent with the protection of investors and the public interest because waiving these requirements will allow the benefits of the Pilot Program to continue without interruption. 14 Therefore, the Commission designates that the proposal will become operative on July 12, 2006. 15 14 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 15 As set forth in the Exchange's original filing proposing the Pilot Program, if the Exchange were to propose an extension, expansion, or permanent approval of the Pilot Program, the Exchange would submit, along with any filing proposing such amendments to the program, a report that would provide an analysis of the Pilot Program covering the entire period during which the Pilot Program was in effect. The report would include, at a minimum:
(1)Data and written analysis on the open interest and trading volume in the classes for which Short Term Option Series were opened;
(2)an assessment of the appropriateness of the options classes selected for the Pilot Program;
(3)an assessment of the impact of the Pilot Program on the capacity of ISE, OPRA, and market data vendors (to the extent data from market data vendors is available);
(4)any capacity problems or other problems that arose during the operation of the Pilot Program and how ISE addressed such problems;
(5)any complaints that ISE received during the operation of the Pilot Program and how ISE addressed them; and
(6)any additional information that would assist in assessing the operation of the Pilot Program. The report must be submitted to the Commission at least 60 days prior to the expiration date of the Pilot Program. *See* Form 19b-4 for File No. SR-ISE-2005-17, filed March 7, 2005. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-2006-37 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2006-37. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the 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-ISE-2006-37 and should be submitted on or before August 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 16 16 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11204 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54121; File No. SR-ISE-2006-31] Self-Regulatory Organizations; International Securities Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to PrecISE Fees July 10, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on June 30, 2006, the International Securities Exchange, Inc. (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the ISE. The ISE has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the ISE under Section 19(b)(3)(A)(ii) of the Act, 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE is proposing to amend its Schedule of Fees to:
(i)Adopt PrecISE through VPN fees;
(ii)clarify the application of a fee waiver for PrecISE Trade® terminals; and
(iii)exempt PrecISE through VPN from Session/API fees. The text of the proposed rule change is available on the ISE's Web site ( *http://www.iseoptions.com/legal/proposed _rule_changes.asp* ), at the principal office of the ISE, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the ISE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The ISE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to amend the Exchange's Schedule of Fees to:
(i)Adopt PrecISE through VPN fees;
(ii)clarify the application of a fee waiver for PrecISE Trade terminals; and
(iii)exempt PrecISE through VPN from Session/API fees. PrecISE through VPN is a new method for connecting a PrecISE Trade terminal to the Exchange. 5 A PrecISE through VPN connection is available to Electronic Access Members (“EAMs”) of the Exchange. PrecISE through VPN consists of PrecISE, a front-end, order entry application that was recently rolled out by the Exchange that will eventually replace the current CLICK trade terminals. 6 PrecISE, in addition to a dedicated network connection, also runs over a secure “virtual private network” ( *i.e.* , “VPN”) over the Internet. PrecISE through VPN was designed for EAMs that want a lower cost, lower bandwidth connection to the Exchange than the traditional, dedicated network PrecISE connection. The Exchange also envisions that EAMs will use PrecISE through VPN as a back-up or disaster recovery connection to the Exchange. As a result, the Exchange is proposing to establish a monthly fee of $250 per terminal for PrecISE through VPN to offset the Exchange's costs for maintaining these connections. 5 PrecISE through VPN is similar to CLICK through VPN, for which the Exchange has previously adopted fees. *See* Securities Exchange Act Release No. 48157 (July 10, 2003), 68 FR 42443 (July 17, 2003) (notice and immediate effectiveness of SR-ISE-2003-14). 6 The Exchange represents that PrecISE through VPN is merely a different means of connecting to the trading system operated by the Exchange known as PrecISE ( *i.e.* , it is a new means of connecting to the Exchange's trading system), and does not require any changes to the Exchange's surveillance or communications rules. Secondly, the Exchange recently adopted a waiver of fees related to the new PrecISE Trade terminals, such that fees for the first two months of a member's use of PrecISE Trade terminals are waived. 7 The Exchange proposes to clarify that the waiver shall only apply to those members that are *concurrently* using both the old CLICK Trade terminals and the new PrecISE Trade terminals. The purpose of the waiver is to allow an existing member to transition from a CLICK Trade terminal to a PrecISE Trade terminal, without being charged both fees. For example, new members who only have PrecISE Trade terminals would not be eligible for this fee waiver. 7 *See* Securities Exchange Act Release No. 53788 (May 11, 2006), 71 FR 28728 (May 17, 2006) (notice and immediate effectiveness of SR-ISE-2006-19). Finally, the Exchange is proposing that PrecISE through VPN connections be exempt from Session/API fees. As with CLICK through VPN, Session/API fees will not apply for connecting to the Exchange's trading system through a VPN connection. 2. Statutory Basis The Exchanges believes that the basis under the Act for this proposed rule change is the requirement under Section 6(b)(4) of the Act 8 that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. 8 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b-4(f)(2) 10 thereunder. 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). 10 17 CFR 19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-2006-31 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2006-31. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2006-31 and should be submitted on or before August 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11210 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54124; File No. SR-ISE-2005-49] Self-Regulatory Organizations; International Securities Exchange, Inc.; Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 Relating to Complex Order Execution July 11, 2006. I. Introduction On October 4, 2005, the International Securities Exchange, Inc. (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend ISE Rule 722, “Complex Orders,” to allow the legs of an options-only complex order to be executed in penny increments. The ISE filed Amendment Nos. 1 and 2 to the proposal on February 1, 2006, and April 20, 2006, respectively. 3 The proposed rule change, as amended by Amendment Nos. 1 and 2, was published for comment in the **Federal Register** on June 6, 2006. 4 The Commission received no comments regarding the proposal, as amended. This order approves the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 2 replaced the initial filing and Amendment No. 1 in their entirety. 4 *See* Securities Exchange Act Release No. 53909 (May 31, 2006), 71 FR 32617. II. Description of the Proposal ISE Rule 722(b)(1) currently allows the options leg(s) of a stock-option order to be executed in one-cent increments, regardless of the minimum increment otherwise applicable to the individual options leg(s) of the order. 5 The ISE proposes to amend ISE Rule 722(b)(1) to allow options-only complex orders, as well as stock-option orders, to be executed in one-cent increments. The proposal retains the existing requirement under the ISE's rules that allows a complex order to take priority over established Public Customer interest in the marketplace only if at least one leg of the complex order trades at a price that is better than the corresponding bid or offer in the marketplace by at least one minimum trading increment, as provided in ISE Rule 710. 6 5 Under ISE Rule 710, “Minimum Trading Increments,” the minimum trading increment is $.05 for an options contract trading at less than $3.00 per option and $.10 for an options contract trading at $3.00 per option or higher. 6 *See* ISE Rule 722(b)(2). III. Discussion After careful review, 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 and, in particular, with Section 6(b)(5) of the Act, 7 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest. 8 Specifically, the Commission believes that by allowing options-only complex orders to be executed in one-cent increments, the proposal may facilitate the execution of options-only complex orders by providing a greater number of price points at which such orders may be executed. As noted above, the ISE's rules will continue to require that at least one leg of a complex order trade at a price that is better than the corresponding bid or offer in the marketplace by at least one minimum trading increment, as provided in ISE Rule 710, when any of the established bids or offers in the marketplace consists of a Public Customer limit order. 9 7 15 U.S.C. 78f(b)(5). 8 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 9 *See* ISE Rule 722(b)(2). IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 10 that the proposed rule change (SR-ISE-2005-49), as amended, is approved. 10 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11228 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54119; File No. SR-Nasdaq-2006-014] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Modify the Description of the ACES Communications Service July 10, 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 July 7, 2006, The NASDAQ Stock Market LLC (“Exchange” or “Nasdaq”) 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. 3 Nasdaq has designated this proposal as non-controversial under section 19(b)(3)(A)(iii) of the Act 4 and Rule 19b-4(f)(6) thereunder, 5 which renders the proposed rule change 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 Subsequent to filing the proposal, the Exchange clarified that Item 8 of the Form 19b-4 should state that the proposed rule change is not based on rules of another self-regulatory organization or of the Commission. Telephone conversation between Alex Kogan, Associate General Counsel, Nasdaq, and Nathan Saunders, Special Counsel, Division of Market Regulation, Commission, on July 10, 2006. 4 15 U.S.C. 78s(b)(3)(A)(iii). 5 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Nasdaq Rule 6210 to allow non-members to use the ACES communications service. The text of the proposed rule change is set forth below. Additions are in *italics* and deletions are in [brackets]. 6210. Definitions
(a)and
(b)No change
(c)The term “Receiving Subscriber” means any [Nasdaq member that is registered as a Nasdaq market maker or ITS/CAES Market Maker and] *person* that has executed an agreement with Nasdaq authorizing its use of ACES to receive ACES Orders from Routing Subscribers.
(d)The term “Routing Subscriber” means any [Nasdaq member] *person* that has executed an agreement with Nasdaq authorizing its use of ACES to route orders to Receiving Subscribers' order management systems. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose ACES is a neutral communications service that allows market participants to route orders to one another. ACES does not effect trade executions, and it does not report executed trades to “the tape.” Moreover, market participants receiving orders through ACES may execute them in any manner that they deem consistent with duties of best execution and other applicable industry obligations. As the ACES service can be of value to all market participants, both members and non-members of the NASD have historically been permitted to use it. Thus, today, there are a number of non-members who actually send their orders using the ACES system. The rule set under which Nasdaq will shortly begin to operate as an exchange has for the first time included a description of ACES. 6 However, as this description is currently worded, it would require that all ACES users be Nasdaq members, which would be a departure from the existing practice. Nasdaq proposes to adjust the applicable language in order to eliminate this restriction entirely before Nasdaq begins operating as an exchange and to avoid denying access to ACES to non-members that wish to use it for either routing or receiving orders. 6 *See* Nasdaq Rules 6200-6250. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act 7 in general and furthers the objectives of section 6(b)(5) of the Act 8 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 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 does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act 9 and Rule 19b-4(f)(6) 10 thereunder because it
(i)does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, provided that the self-regulatory organization has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the filing date of the proposed rule change. 11 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). 11 As required under Rule 19b-4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change at least five days prior to the filing date. The Exchange has requested that the Commission waive the 30-day operative delay of Rule 19b-4(f)(6)(iii) so that the proposed rule change may become effective on the date that Nasdaq commences operations as a national securities exchange (currently scheduled to be August 1, 2006). The Commission believes that waiving the operative delay is consistent with the protection of investors and the public interest because doing so will permit non-members to continue to use ACES without interruption. Therefore, the Commission has determined to waive the 30-day operative delay and allow the proposed rule change to become operative on the date that Nasdaq commences operations as a national securities exchange. 12 12 For purposes only of waiving the operative delay of this proposal, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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-Nasdaq-2006-014 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-Nasdaq-2006-014. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the 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-Nasdaq-2006-014 and should be submitted on or before August 7, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11207 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54118; File No. SR-NASD-2005-114] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change Relating to the Regulation of Compensation, Fees, and Expenses in Public Offerings of Real Estate Investments Trusts and Direct Participation Programs July 10, 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 September 28, 2005, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by NASD. On June 12, 2006, NASD filed amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 In Amendment No. 1, which replaced the original filing, NASD clarified its discussion of certain of the proposed amendments, and made other technical changes. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend NASD Rule 2810, to address the regulation of compensation, fees, and expenses in public offerings of real estate investments trusts and direct participation programs. Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets. 2810. Direct Participation Programs
(a)No Change.
(b)Requirements
(1)Application No member or person associated with a member shall participate in a public offering of a direct participation program or a limited partnership rollup transaction *or, where expressly provided below, a real estate investment trust as defined in Rule 2340(c)(4) (“REIT”)* , except in accordance with this paragraph
(b)*, provided however, this paragraph
(b)shall not apply to an initial or secondary public offering of or a secondary market transaction in a unit, depositary receipt or other interest in a direct participation program that complies with subparagraph (2)(D).*
(2)No Change.
(3)Disclosure
(A)Through
(C)No Change.
(D)Prior to executing a purchase transaction in a direct participation program *or a REIT* , a member or person associated with a member shall inform the prospective participant of all pertinent facts relating to the liquidity and marketability of the program *or REIT* during the term of the investment[;] *. Included in the pertinent facts shall be information regarding whether the sponsor has offered prior programs or REITs in which disclosed in the offering materials was a date or time period at which the program or REIT might be liquidated, and whether the prior program(s) or REIT(s) in fact liquidated on or around that date or during the time period.* [provided, however, that paragraph
(b)shall not apply to an initial or secondary public offering of a secondary market transaction in a unit, depositary receipt or other interest in a direct participation program which complies with subparagraph (2)(D).]
(4)Organization and Offering Expenses
(A)No member or person associated with a member shall underwrite or participate in a public offering of a direct participation program *or REIT* if the organization and offering expenses are not fair and reasonable, taking into consideration all relevant factors.
(B)In determining the fairness and reasonableness of organization and offering expenses for purposes of subparagraph
(A)hereof, the arrangements shall be presumed to be unfair and unreasonable if:
(i)The total amount of all items of compensation from whatever source *, including offering proceeds and “trail commissions”* payable to underwriters, broker/dealers, or affiliates thereof, which are deemed to be in connection with or related to the distribution of the public offering, exceeds *an amount that equals ten percent of the gross proceeds of the offering* [currently effective compensation guidelines for direct participation programs published by the Association];[*] [*A guideline for underwriting compensation of ten percent of proceeds received, plus a maximum of 0.5% for reimbursement of bona fide diligence expenses, was published in Notice to Members 82-51 (October 19, 1982).]
(ii)Organization and offering expenses *, which include all items of compensation* , paid by a program *or REIT* in which a member or an affiliate of a member is a sponsor exceed *an amount that equals fifteen percent of the gross proceeds of the offering* [currently effective guidelines for such expenses published by the Association];[**] [**A guideline for organization and offering expenses of 15 percent proceeds received was published in Notice to Members 82-51 (October 19, 1982).]
(iii)No Change.
(iv)Commissions or other compensation are to be paid or awarded either directly or indirectly, to any person engaged by a potential investor for investment advice as an inducement to such advisor to advise the purchaser of interests in a particular program *or REIT* , unless such person is a registered broker/dealer or a person associated with such a broker/dealer; [or]
(v)The program *or REIT* provides for compensation of an indeterminate nature to be paid to members or persons associated with members for sales of program units *or REIT* , or for services of any kind rendered in connection with or related to the distribution thereof, including, but not necessarily limited to, the following: A percentage of the management fee, a profit sharing arrangement, brokerage commissions, and over-riding royalty interest, a net profits interest, a percentage of revenues, a reversionary interest, a working interest, a security or right to acquire a security having an indeterminate value, or other similar incentive items; [provided however, that an arrangement which provides for continuing compensation to a member or person associated with a member in connection with a public offering shall not be presumed to be unfair and unreasonable if all of the following conditions are satisfied:] [a. the continuing compensation is to be received only after each investor in the program has received cash distributions from the program aggregating an amount equal to his cash investment plus a six percent cumulative annual return on his adjusted investment;] [b. the continuing compensation is to be calculated as a percentage of program cash distributions;] [c. the amount of continuing compensation does not exceed three percent for each one percentage point that the total of all compensation pursuant to subparagraph (B)(i) received at the time of the offering and at the time any installment payment is made fall below nine percent; provided, however, that in no event shall the amount of continuing compensation exceed 12 percent of program cash distributions; and] [d. if any portion of the continuing compensation is to be derived from the limited partners' interest in the program cash distributions, the percentage of the continuing compensation shall be no greater than the percentage of program cash distributions to which limited partners are entitled at the time of the payment.] *(vi) the program or REIT charges a sales load or commission on securities that are purchased through the reinvestment of dividends, unless the registration statement registering the securities under the Securities Act of 1933 became effective prior to (the effective date of this rule amendment); or* *(vii) the member has received reimbursement for due diligence expenses that are not included in a detailed and itemized invoice.* *(C) The organization and offering expenses subject to the limitations in paragraph (b)(4)(B)(ii) above include the following:* *(i) issuer organization and offering expenses, which include, but are not limited to: expenses, including overhead expenses, for:* *a. assembling and mailing offering materials, processing subscription agreements, generating advertising and sales materials;* *b. legal services provided to the sponsor or issuer;* *c. salaries and non-transaction-based compensation paid to employees or agents of the sponsor or issuer for performing services for the sponsor or issuer;* *d. transfer agents, escrow holders depositories, engineers and other experts, and* *e. registration and qualification of securities under federal and state law, including taxes and fees and NASD fees;* *(ii) underwriting compensation, which includes but is not limited to items of compensation listed in Rule 2710(c)(3) including payments:* *a. to any wholesaler that is engaged in the solicitation, marketing, distribution or sales of the program or REIT securities and any employee of the wholesaler involved in the solicitation, development, maintenance and monitoring of selling agreements and relationships with broker/dealers and accounts and account holders at broker/dealers;* *b. to any employee of a member and any dual employee of a member and the sponsor, issuer or other affiliate who receives transaction-based compensation unless information has been provided to NASD, with regard to a program or REIT with fewer than ten people engaged in wholesaling, from which the Corporate Financing Department can readily conclude that the payments are made as consideration for non-broker/dealer services provided to the sponsor, issuer or other affiliate; and* *c. for training and education meetings, legal services provided to a member in connection with the offering and advertising and sales material generated by a member;* *(iii) due diligence expenses incurred when a member affirmatively discharges its responsibilities to ensure that all material facts pertaining to a program or REIT are adequately and accurately disclosed in the offering document.*
(C)through
(E)Renumbered as
(D)through
(5)through
(6)No Change.
(c)Non-Cash Compensation
(1)No Change.
(2)Restriction on Non-Cash Compensation In connection with the sale and distribution of direct participation *program or REIT* securities, no member or person associated with a member shall directly or indirectly accept or make payments or offers of payments of any non-cash compensation, except as provided in this provision. Non-cash compensation arrangements are limited to the following:
(A)through
(B)No Change.
(C)Payment or reimbursement by offerors in connection with meetings held by an offeror or by a member for the purpose of training or education of associated persons of a member, provided that:
(i)No Change.
(ii)the location is appropriate to the purpose of the meeting, which shall mean *a United States* [an] office of the offeror or the member *holding the meeting* , or a facility located in the vicinity of such office, or a *United States* regional location with respect to *meetings of associated persons who work within that region or, with respect to* [regional] meetings *with direct participation programs or REITs, a United States location at which a significant or representative asset of the program or REIT is located;*
(iii)through
(iv)No Change.
(D)through
(E)No Change.
(d)No Change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD is proposing to amend Rule 2810 (the “Rule”) to address the regulation of compensation, fees, and expenses in public offerings of direct participation programs (“DPPs”) and real estate investment trusts as defined in Rule 2340(c)(4) (“REITs”) (collectively “Investment Programs”). Specifically, NASD's proposed rule change would address the following issues:
(1)Compensation limitations and the use and allocation of offering proceeds;
(2)disclosure regarding the liquidity of prior programs offered by the same sponsor;
(3)sales loads on reinvested dividends; and
(4)non-cash compensation provisions regarding the appropriate location for training and education meetings. Rule 2810 governs the underwriting terms and arrangements of DPP securities. Rule 2710 governs the underwriting terms and arrangements of REITs. However, because REITs and real estate limited partnerships are competing alternative forms of investing in real estate securities with equivalent costs of distribution, NASD's Corporate Financing Department (“Department”) has applied the same underwriting and due diligence guidelines to both DPPs and REITs since the early 1980s. As discussed in more detail below, NASD proposes to amend Rule 2810 so that the Rule's compensation, disclosure and non-cash compensation provisions expressly govern REITs. In February 2004, NASD published Notice to Members 04-07 (the “Notice”) requesting comment on a proposed rule change and interpretive policies regarding the allocation of fees and expenses between issuers, sponsors and broker-dealers for Investment Programs in which the sponsors and broker-dealers offering such securities are affiliated. The Notice also addressed due diligence practices and disclosure in connection with Investment Programs as well as the allocation of underwriter compensation and issuer organization and offering expenses. The Notice also proposed prohibiting sales loads on reinvested dividends in Investment Programs and closed-end funds. Finally, the Notice requested comment on two non-cash compensation provisions in Rules 2710(i) and 2810(c):
(1)a proposal to amend what would constitute an “appropriate location” for training and education meetings; and
(2)the new “equal weighting” and “total production” limitations for internal sales contests. NASD received 10 comment letters on Notice to Members 04-07 addressing the proposed rule change, which are discussed below. 4 4 Comments were received from Bob Cornish (Feb. 25, 2004); Mewbourne Securities, Inc. (Roe Buckley) (March 8, 2004); Wells Investment Securities, Inc. (Philip M. Taylor) (March 11, 2004); Hines Real Estate Securities, Inc. (Leslie B. Jallans) (March 11, 2004); Pacific West Financial Group (Philip A. Pizelo) (March 11, 2004); NASAA (Ralph A. Lambiase) (March 12, 2004); CNL Securities Corp. (Robert A. Bourne) (March 12, 2004); Investment Program Association (Christopher L. Davis) (March 12, 2004); Massachusetts Securities Division (Matthew J. Nestor) (March 18, 2004); and Duane Morris (Laurence S. Lese) (April 2004). An additional 26 comment letters received in response to Notice to Members 04-07 pertain solely to NASD's proposal to rescind an NASD interpretive policy regarding trail commissions charged by commodity DPPs. This issue was resolved separately in Notice to Members 04-50, which announced rescission of this policy effective October 12, 2004. See Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealer, Inc. Relating to the Treatment of Commodity Pool Trail Commissions, 69 FR 45870 (July 30, 2004); Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to the Implementation Date of Notice of Members 04-50 (Treatment of Commodity Pool Trail Commissions Under Rule 2810), 69 FR 55855 (September 16, 2004). a. Organization and Offering Expenses Rule 2810 currently provides three limitations on organization and offering expenses (“O & O expenses”) in Investment Programs. In the current rule, as interpreted by NASD compensation guidelines, these expenses are broken down into three categories: “Compensation,” “due diligence,” and “issuer organization and offering expenses.” First, compensation payable to underwriters, broker-dealers, or affiliates may not exceed 10 percent of the gross proceeds of the offering, regardless of the source from which it is derived. Second, members or independent due diligence firms currently may be reimbursed for an additional .5 percent for bona fide due diligence expenses. And third, total issuer O & O expenses for programs in which the member is affiliated with the program sponsor may not exceed 15 percent of the offering proceeds, including any compensation and due diligence expenses. 5 For offerings of programs in which the member is affiliated with the sponsor, this allows an additional 4.5 percent for issuer O & O expenses above the 10 percent underwriting compensation and .5 percent due diligence expenses. 5 See current Rule 2810(b)(4)(B)(i) and Notice to members 82-51. This 15 percent limitation on O & O expenses applies only to sponsors that are affiliated with NASD members, while the ten percent limitation applies to all DPPs and REITS. As discussed below, the proposed rule change would make the Rule more explicit and objective in its treatment of the allocation of certain fees and expenses between issuer O & O and compensation (eliminating the current 0.5 percent limit on due diligence expenses) and modify the limitations pertaining to due diligence expenses. i. Issuer Offering and Organization Expenses Notice to Members 04-07 described the current methodology for allocating O & O expenses between compensation, due diligence and issuer O & O expenses and provided guidance on how the Department allocates certain expenses in the review process. Commenters generally supported the review procedures set out in the Notice, and the proposed rule change would codify the allocation methodologies described therein. Thus, issuer O & O expenses would include:
(i)Expenses, including overhead expenses, for assembling and mailing offering materials; processing subscription agreements and generating advertising and sales materials;
(ii)legal services provided to the sponsor or issuer; and
(iii)salaries and non-transaction-based compensation paid to employees or agents of the sponsor or issuer for performing such services. Also included would be expenses for transfer agents, escrow holders depositories, engineers and other experts, and registration and qualification of securities under Federal and state law, including taxes and fees and NASD fees. 6 6 See proposed amendment to Rule 2810(b)(4)(c)(i). ii. Limits on Compensation As noted above, O & O expenses include fees for underwriting compensation. The proposed rule change would clarify that amounts deducted from the offering proceeds or amounts paid to members, underwriters or affiliates as trail commissions over time are to be treated as underwriting compensation. 7 In addition, paragraph (b)(4)(B)(i) of Rule 2810 would be amended to expressly state that all items of compensation deemed to be in connection with or related to the public offering shall not exceed “ten percent of the gross proceeds of the offering.” 8 Accordingly, all items of compensation paid from any source, including offering proceeds, partnership assets or management fees, would be subject to a “hard cap” of an amount that equals ten percent of gross offering proceeds. 9 7 See proposed amendment to Rule 2810(b)(4)(B)(i). 8 The ten percent figure currently is NASD policy and not in the text of the Rule. 9 An alternative fifteen percent limitation on all items of compensation in which a member or an affiliate of a member is a sponsor is discussed in the text accompanying footnote 16. The proposed rule change also would delete paragraphs (b)(4)(B)(v)(a) through
(d)of Rule 2810 relating to continuing compensation arrangements. Members have not relied on these provisions since their adoption, and the limitations on continuing compensation are included in paragraph (b)(4)(B)(i) of Rule 2810 as proposed to be amended. iii. Dual Employees Prior to the publication of Notice to Members 04-07, members had urged the Department not to allocate automatically all payments (e.g., salaries, bonuses, and expense reimbursements) to registered persons as underwriting compensation because their primary or secondary job responsibilities may involve providing non-distribution related services to the sponsor. Notice to Members 04-07 proposed that any salary, bonus, or other form of compensation paid to a dual employee would be allocated to the ten percent underwriting limitation if any of the employee's compensation was contingent on or varied depending on how much money is raised or the number of securities that are sold in the public offering. Commenters generally were in favor of this standard, although several commenters suggested that with respect to smaller programs, prorating a dual employee's compensation would be preferable to the objective standard described in the Notice. Thus Rule 2810(b)(4)(C)(ii)(b) in general would provide that if the employee of a member and any dual employee of a member and the sponsor, issuer or other affiliate who receives transaction-based compensation, then payments to the employee would be treated as underwriting compensation. With regard to smaller programs with fewer than 10 people engaged in wholesaling, the proposed Rule provides that filers can provide detailed per-employee information to the Department for review. Based on its review, the Department may conclude that certain salary or other non-transaction-based payments made to a dual employee may be allocated to issuer O & O expenses notwithstanding that fact that the dual employee also received transaction-based compensation for other services. 10 For example, after reviewing the relevant documents and information, the Department may conclude that not all of the payments to an employee who is engaged only part time in wholesaling shall be deemed compensation in connection with or related to the distribution of a public offering. 10 See proposed amendment to Rule 2810(b)(4)(C)(ii)(b). These review provisions related to smaller programs apply only to dual employees of a broker-dealer and the sponsor, issuer or other affiliate. Conversation between Joseph Price, Vice President, NASD Corporate Financing Department, and Michael Hershaft, Special Counsel, SEC, June 30, 2006. iv. Wholesaling As described in Notice to Members 04-07, the proposed rule change would require that underwriting compensation include payments to any wholesaler that is engaged in the solicitation, marketing, distribution or sales of the Investment Program securities and any employee of the wholesaler involved in the solicitation, development, maintenance and monitoring of selling agreements and relationships with broker-dealers and accounts and account holders at broker-dealers. 11 NASD staff views wholesaling as a quintessential sales activity in connection with the distribution of Investment Programs and thus should be part of underwriting compensation. 11 Proposed amendment to Rule 2810(b)(C)(ii)(a). Based on comments received, however, and as discussed above, the Rule would provide NASD with the flexibility to determine on a case-by-case basis whether payments to *dual employees* of a broker-dealer, and a sponsor, issuer or other affiliate with fewer than ten people engaged in wholesaling pertain to wholesaling activities or other, non-related activities. 12 12 Proposed amendment to Rule 2810(b)(C)(ii)(b). v. Training and Education Meetings, Legal Services, and Advertising and Sales Materials Notice to Members 04-07 described the Department's policy to allocate to underwriting compensation fees and payments for training and education meetings, legal services provided to a broker-dealer participating in the offering, and advertising and sales material generated by a broker-dealer participating in the offering. The commenters generally supported this policy, and the proposed rule change would codify this policy. 13 13 Proposed amendment to Rule 2810(b)(C)(ii)(c). vi. Due Diligence In Notice to Members 04-07, NASD addressed due diligence practices and disclosure in connection with Investment Programs. Specifically NASD reminded members that for purposes of the current .5 percent allowance for bona fide due diligence expenses, “due diligence expenses” relate only to those expenses incurred when the member affirmatively discharges its responsibilities to ensure that all material facts pertaining to a program are adequately and accurately disclosed in the offering document. 14 The following principles were outlined in the Notice: 14 NASD proposes to codify this requirement at 2810(b)(4)(c)(iii). • Any due diligence payment or reimbursement that is mischaracterized in a filing with NASD or in an offering document would be deemed to be undisclosed underwriting compensation, and the mischaracterization would violate NASD rules and the federal securities laws. Accordingly, members may include only their actual costs incurred for bona fide due diligence expenses. • Any reimbursement that includes a profit margin to the member will be deemed to be underwriting compensation subject to the ten percent limitation, whether or not the member claims that the reimbursement was for “due diligence expenses.” • A sponsor may not reimburse a member for activities that are inconsistent with the due diligence objective, such as golf outings, cruises, tours, and other forms of entertainment. • Members should expect the Department to request a copy of any due diligence meeting agenda to verify that the meeting served a bona fide due diligence purpose. Commenters strongly supported clarification of the treatment of due diligence expenses under Rule 2810. NASD recognizes that conducting appropriate due diligence in connection with Investment Program offerings is an important part of protecting investors and satisfying members' obligations to their customers. However, NASD also is concerned that some members may have merely “piggybacked” on the due diligence of others and accepted reimbursements that amounted to little more than an additional fifty basis points of underwriting compensation. Accordingly, the proposed rule change would require that a member not accept any payments or reimbursements for due diligence expenses unless they are included in a detailed and itemized invoice that is presented by the member to the program sponsor or other entity that pays or reimburses due diligence expenses. 15 In addition, the proposal would eliminate the current .5 percent limit on due diligence expenses currently applicable to Rule 2810. NASD believes that the current cap may unnecessarily limit members' bona fide due diligence activities. Instead, the maximum amount of O & O expenses would remain fifteen percent of the gross offering proceeds (which amount would include:
(1)Issuer O & O expenses;
(2)compensation up to the maximum of ten percent of gross proceeds; and
(3)due diligence expenses that are supported by a detailed and itemized invoice). 16 15 See proposed amendment to Rule 2810(b)(4)(B)(vii). 16 See proposed amendment to Rule 2810(b)(4)(B)(ii). b. Liquidity Disclosure The prospectuses of Investment Programs typically establish a date or time period when an investment will become liquid: either the assets of the Investment Program will be liquidated and the proceeds distributed to shareholders, or the Program may become listed on a national securities exchange or quoted on NASDAQ. Most prospectuses also provide that the liquidity event may be delayed due to market conditions or other factors. Rule 2810(b)(3)(D) currently provides that prior to executing a purchase transaction in a direct participation program, a member or person associated with a member shall inform the prospective participant of all pertinent facts relating to the liquidity and marketability of the program during the term of the investment. NASD is concerned that some investors do not fully appreciate that the liquidation of some sponsors' programs are frequently delayed. The proposal would amend Rule 2810(b)(3)(D) to include REITs as defined in Rule 2340(c)(4), and to require members and their associated persons to inform prospective investors whether the sponsor has offered prior programs for which the prospectus disclosed a date or time period when the program might be liquidated, and whether the prior programs in fact liquidated on or around that date or time period. Members selling Investment Programs would have to disclose whether prior programs offered by the program sponsor liquidated on or during the date or time period disclosed in the prospectuses for those programs. For example, if a sponsor has offered ten prior programs and only two of them liquidated by the date or time period set forth in the prospectus, the member would be required to disclose these facts. NASD recognizes that delays in liquidity may be due to market conditions and other factors beyond the sponsor's control, and that in some cases, investors may benefit from delays in liquidity. Importantly, the proposed rule change would not require liquidations in the time periods specified. However, NASD believes that investors should be provided with the sponsor's track record as an additional piece of data upon which to base an investment decision. c. Sales Loads on Reinvested Dividends Notice to Members 04-07 requested comment on amending Rule 2810 to prohibit commissions (sales loads) on reinvested dividends in Investment Programs. 17 NASD made similar amendments in April 2000 to the Investment Company Rule (Rule 2830), which prohibits members from offering or selling shares of an investment company if it has a front-end or deferred sales charge imposed on shares purchased through the reinvestment of dividends. Three commenters supported NASD's proposal to prohibit loads on reinvested dividends in Investment Programs. One commenter suggested that the industry currently is moving in the direction of eliminating sales loads on shares purchased through dividend reinvestment programs, which reflects a desire among certain issuers and broker-dealers to allow stockholders to reinvest in companies at reduced prices. Another commenter suggested that, for most customers, the reinvestment of dividends typically does not involve a separate investment decision. This commenter also suggested that distributions in DPP investments often involve substantial returns of capital and that charging a commission for reinvesting those funds can result in double selling compensation. The third commenter suggested that a sales load on reinvested dividends is another means to increase overall sales commissions and that investors generally perceive dividend reinvestment plans as transactions without expenses. 17 Notice to Members 04-07 also requested comment on prohibiting sales loads on reinvested dividends for closed-end funds. No commenters addressed this proposal. NASD does not propose amending rule 2710 to address closed-end funds in this filing, which is limited to regulatory proposals involving DPPs and REITs. NASD will further consider whether it is appropriate to adopt amendments prohibiting sales loads on reinvested dividends for closed-end funds. Three commenters opposed prohibiting sales loads on reinvested dividends because members provide more ongoing services in connection with DPP and REIT dividend reinvestment programs than with mutual fund dividend reinvestment programs. One commenter noted that registered representatives involved in dividend reinvestment plans of DPP and REIT programs usually continue to monitor their client's financial portfolios and perform valuable services for their clients on an ongoing basis. The commenter suggested that when a registered representative determines that a specific investor has reached an adequate level of real estate diversification in his/her portfolio, the financial planner would advise the investor to discontinue further investments in the applicable dividend reinvestment plan. One commenter also stated that due to limited liquidity opportunities, registered representatives who place their clients in DPP and REIT programs must also monitor the program portfolio (in addition to their clients' portfolios) more closely than their counterparts who place their clients in liquid investments such as mutual funds. This commenter noted that in order to properly advise a client on whether to make an additional investment in REITs and DPPs, whether through a dividend reinvestment program or otherwise, or whether to apply for participation in a redemption program, the registered representative must continually review and analyze the properties in the investment portfolio, prevailing market conditions, and the management of the portfolio by the sponsor. The commenter stated that registered representatives should be compensated for this ongoing review and analysis because they are providing a valuable service to their clients. The commenter also noted that, without such compensation, the registered representatives might not be as motivated to do this work, which is in the interests of their clients. NASD has determined to move forward with its proposal to prohibit loads on reinvested dividends for Investment Programs after the effective date of this rule amendment. 18 In response to commenters who believe loads on reinvested dividends are necessary in order to compensate registered representatives for providing ongoing services for Investment Programs, NASD notes that Rule 2810 allows for the receipt of trail commissions (up to the limits on underwriting compensation) to compensate them for such ongoing services. 19 18 See proposed amendments to Rule 2810(b)(4)(B)(vi). 19 See proposed amendments to Rule 2810(b)(4)(B)(i). NASD does not believe that sales loads on reinvested dividends are necessary or should be used to finance monitoring of client positions and client communication. Since many dividends in Investment Programs include a return of principal invested, allowing a sales load on reinvested dividends would amount to a double charge to the investor in the NASD's view. In addition, NASD believes that many investors may be confused about what sales loads on reinvested dividends are and why they are paying them, since they may not view the reinvestment of dividends as a separate investment decision for which a sales charge would be levied. d. Non-Cash Compensation Provisions i. Location of Training and Education Meetings The non-cash compensation provisions of Rule 2810 currently permit payments and reimbursements by an offeror in connection with training and education meetings, if the meetings meet the conditions of the Rule. One of the current conditions is the requirement that: “The location is appropriate to the purpose of the meeting, which shall mean an office of the issuer or affiliate thereof, the office of the member, or a facility located in the vicinity of such office, or a regional location with respect to regional meetings.” 20 20 See proposed amendments to Rule 2810(b)(2)(c)(ii). NASD interprets the clause “regional location with respect to regional meetings” in the Rules to permit regional meetings held for the convenience of regional broker-dealers and their associated persons, not national meetings held in regional locations. The proposed rule change would amend the Rule to provide that an “appropriate location” for a training and education meeting may include a location at which a significant or representative Investment Program asset is located. The proposed rule change would address the fact that an important part of bona fide training and education meetings for Investment Programs may be inspecting real estate, oil and gas production facilities, and other types of assets that will be held and managed by the program. 21 21 As discussed above, NASD proposes to amend Rule 2810 so that the Rule's compensation, disclosure and non-cash compensation provisions expressly govern illiquid REITs ( *i.e.* , REITs as defined in Rule 2340(c)(4)). The proposed rule change would not amend the non-cash compensation provisions in Rule 2710, which currently are identical to those in Rule 2810. Accordingly, the non-cash compensation provisions regarding the location of training and education meetings will be different for exchange-traded REITs under Rule 2710 and illiquid REITs under Rule 2810. This amendment was proposed in Notice to Members 04-07, and the commenters generally supported this proposed rule change. Commenters agreed that an important part of bona fide training and education meetings is inspecting real estate, oil and gas production facilities, and other types of assets held and managed by the program. Two commenters noted that it is especially important for associated persons to visit an issuer's assets to better understand the business of the issuer when selling non-liquid investments to customers whose money may be locked up for significant time periods. The commenters did not believe that it would be difficult to determine whether an asset is “significant” to a program and did not think that this determination would complicate the ability of a member's legal or compliance staff to decide whether associated persons should attend a particular meeting. Two commenters to Notice to Members 04-07 suggested that NASD issue a comment indicating that significance might vary from program to program and may be determined based on various criteria in addition to the size of the asset. The commenters noted that an asset may be significant because it reflects a new segment or asset class in which an issuer has determined to invest or because it is representative of a geographic focus of the issuer. The commenters also suggested that the proposed rule language should be broadened to include “a location at which a significant or representative asset of the program is located.” This addition would allow associated persons to visit program assets in conjunction with training and education meetings even if a program's assets are of approximately the same size or type or are located in one geographic area. The commenters noted that associated persons still have a great interest in visiting assets of a program that consists of similar assets. Three commenters to Notice to Members 04-07 stated that they do not believe that the proposed amendments relating to the location of training and education meetings would create a significant risk that locations would be chosen to provide incentives and awards for selling products. Two commenters noted that the non-cash compensation provisions of Rule 2810 provide that training and education meetings may not be conditioned on meeting sales thresholds and may not include payments for expenses of guests. The commenters stated that the industry is aware that agendas must address training and education activities and should not include extracurricular activities such as golf outings. Based on the foregoing, NASD is proposing to amend Rule 2810 to provide that a training and education meeting may include a location at which a “significant or representative” asset is located. 22 22 See proposed amendment to Rule 2810(c)(2)(C)(ii). ii. Total Production and Equal Weighting Requirements In Notice to Members 04-07, NASD proposed to amend Rule 2810 to incorporate the total production and equal weighting conditions for internal sales contests in the Investment Company Rule (Rule 2820) and the Variable Contracts Rule (Rule 2830) into Rule 2810. Subsequently, in June 2005, NASD published Notice to Members 05-40 proposing to expand the prohibitions on non-cash compensation to the sale and distribution of any security, not just the securities of DPPs, REITs, investment companies and variable insurance contracts. NASD staff will consider whether any additional amendments are necessary to the non-cash compensation provisions of Rule 2810 in the context of that rulemaking initiative. e. Effective Date of the Proposed Rule Change NASD will announce the effective date of the proposed rule change in a Notice to Members to be published no later than 60 days following Commission approval. The effective date will be 30 days following publication of the Notice to Members announcing Commission approval. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, which requires, among other things, that NASD's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. Specifically, NASD believes that the proposed rule change amends Rule 2810 to provide greater clarity regarding limitations on compensation, fees, and expenses in public offerings of REITs and DPPs. B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The proposed rule change was published for comment in NASD Notice to Members 04-07 (February 2004). Ten comments were received in response to the Notice. 23 All of the comment letters received were generally in favor of the proposed rule change, and are further discussed in Item II of this notice. 23 See note 1, supra. 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 self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change, or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NASD-2005-114 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASD-2005-114. 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, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to the File Number SR-NASD-2005-114 and should be submitted on or before August 7, 2006. 24 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 24 Jill M. Peterson, Assistant Secretary. [FR Doc. E6-11208 Filed 7-14-06; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10519 and # 10520] New York Disaster # NY-00022 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of New York (FEMA-1650-DR), dated 7/03/2006. *Incident:* Severe Storms and Flooding. *Incident Period:* 6/26/2006 and continuing. *Effective Date:* 7/3/2006. *Physical Loan Application Deadline Date:* 9/1/2006. *Economic Injury
(EIDL)Loan Application Deadline Date:* 4/3/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 7/3/2006, applications for disaster loans may be filed at the address listed above or other locally announced locations. *The following areas have been determined to be adversely affected by the disaster:* Primary Counties (Physical Damage and Economic Injury Loans): Broome, Chenango, Delaware, Herkimer, Montgomery, Oneida, Orange, Otsego, Schoharie, Sullivan, Tioga, Ulster. Contiguous Counties (Economic Injury Loans Only): New York: Albany, Chemung, Columbia, Cortland, Dutchess, Fulton, Greene, Hamilton, Lewis, Madison, Oswego, Putnam, Rockland, Saratoga, Schenectady, St. Lawrence, Tompkins. New Jersey: Passaic, Sussex. Pennsylvania: Bradford, Pike, Susquehanna, Wayne. The Interest Rates are: Percent For Physical Damage: Homeowners With Credit Available Elsewhere: 5.875 Homeowners Without Credit Available Elsewhere: 2.937 Businesses With Credit Available Elsewhere: 7.763 Businesses and Non-Profit Organizations Without Credit Available Elsewhere: 4.000 Other (Including Non-Profit Organizations) With Credit Available Elsewhere: 5.000 For Economic Injury: Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere: 4.000 The number assigned to this disaster for physical damage is 10519 C and for economic injury is 10520 0. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. E6-11148 Filed 7-14-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10515 and # 10516] Pennsylvania Disaster # PA-00004 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of Pennsylvania (FEMA-1649-DR ), dated 07/04/2006 *Incident:* Severe Storms, Flooding, and Mudslides. *Incident Period:* 06/23/2006 and continuing. *Effective Date:* 07/04/2006. *Physical Loan Application Deadline Date:* 09/05/2006. *Economic Injury
(EIDL)LOAN Application Deadline Date:* 04/04/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 07/04/2006, applications for disaster loans may be filed at the address listed above or other locally announced locations. *The following areas have been determined to be adversely affected by the disaster:* Primary Counties (Physical Damage and Economic Injury Loans): Monroe, Schuylkill, Susquehanna, Wayne, Wyoming. Contiguous Counties (Economic Injury Loans Only): Pennsylvania: Berks, Bradford, Carbon, Columbia, Dauphin, Lackawanna, Lebanon, Lehigh, Luzerne, Northampton, Northumberland, Pike, Sullivan. New Jersey: Sussex, Warren. New York: Broome, Delaware, Sullivan, Tioga. The Interest Rates are: Percent For Physical Damage: Homeowners With Credit Available Elsewhere 5.875. Homeowners Without Credit Available Elsewhere 2.937. Businesses With Credit Available Elsewhere 7.763. Businesses and Non-Profit Organizations Without Credit Available Elsewhere 4.000. Other (Including Non-Profit Organizations) With Credit Available Elsewhere 5.000. For Economic Injury: Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere 4.000. The number assigned to this disaster for physical damage is 10515 C and for economic injury is 10516 0. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. E6-11147 Filed 7-14-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10515 and #10516] Pennsylvania Disaster Number PA-00004 AGENCY: U.S. Small Business Administration. ACTION: Amendment 1. SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the Commonwealth of Pennsylvania (FEMA-1649-DR), dated 7/4/2006. *Incident:* Severe Storms, Flooding, and Mudslides. *Incident Period:* 6/23/2006 and continuing. *Effective Date:* 7/5/2006. *Physical Loan Application Deadline Date:* 9/5/2006. *EIDL Loan Application Deadline Date:* 4/4/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing And Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the Presidential disaster declaration for the Commonwealth of Pennsylvania, dated 7/4/2006 is hereby amended to include the following areas as adversely affected by the disaster: Primary Counties: Berks, Chester, Pike. Contiguous Counties: Delaware: New Castle. Maryland: Cecil. New York: Orange. Pennsylvania: Delaware, Lancaster, Montgomery. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. E6-11149 Filed 7-14-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10525 and #10526] New Jersey Disaster #NJ-00004 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of New Jersey (FEMA-1653-DR), dated 07/07/2006. *Incident:* Severe Storms and Flooding. *Incident Period:* 06/23/2006 and continuing. *Effective Date:* 07/07/2006. *Physical Loan Application Deadline Date:* 09/05/2006. *Economic Injury
(EIDL)Loan Application Deadline Date:* 04/09/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 07/07/2006, applications for disaster loans may be filed at the address listed above or other locally announced locations. *The following areas have been determined to be adversely affected by the disaster:* Primary Counties (Physical Damage and Economic Injury Loans): Hunterdon, Mercer, Warren. Contiguous Counties (Economic Injury Loans Only): New Jersey: Burlington, Middlesex, Monmouth, Morris, Somerset, Sussex. Pennsylvania: Bucks, Monroe, Northampton. *The Interest Rates are:* Percent For Physical Damage: Homeowners With Credit Available Elsewhere 5.875 Homeowners Without Credit Available Elsewhere 2.937 Businesses With Credit Available Elsewhere 7.763 Businesses and Non-Profit Organizations Without Credit Available Elsewhere 4.000 Other (Including Non-Profit Organizations) With Credit Available Elsewhere 5.000 For Economic Injury: Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 10525 B and for economic injury is 10526 0. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Roger B. Garland, Acting Associate Administrator for Disaster Assistance. [FR Doc. E6-11144 Filed 7-14-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10521 and #10522] Ohio Disaster #OH-00006 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of Ohio (FEMA-1651-DR), dated 7/2/2006. *Incident:* Severe Storms and Flooding. *Incident Period:* 6/21/2006 through 6/23/2006. *Effective Date:* 7/2/2006. *Physical Loan Application Deadline Date:* 8/31/2006. *Economic Injury
(EIDL)Loan Application Deadline Date:* 4/2/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing and Disbursement Center, 14925 Kingsport Road Fort, Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 7/2/2006, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties (Physical Damage and Economic Injury Loans): Cuyahoga, Erie, Huron, Lucas, Sandusky, Stark. Contiguous Counties (Economic Injury Loans Only): Ohio: Ashland, Carroll, Columbiana, Crawford, Fulton, Geauga, Henry, Holmes, Lake, Lorain, Mahoning, Medina, Ottawa, Portage, Richland, Seneca, Summit, Tuscarawas, Wayne, and Wood. Michigan: Lenawee, Monroe. The Interest Rates are: Percent For Physical Damage: Homeowners With Credit Available Elsewhere 5.875 Homeowners Without Credit Available Elsewhere 2.937 Businesses With Credit Available Elsewhere 7.763 Businesses And Non-Profit Organizations Without Credit Available Elsewhere 4.000 Other (Including Non-Profit Organizations) With Credit Available Elsewhere 5.000 For Economic Injury: Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 10521 C and for economic injury is 10522 0. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. E6-11143 Filed 7-14-06; 8:45 am] BILLING CODE 8025-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Third Meeting: Special Committee 209, Air Traffic Control Radar Beacon Systems (ATCRBS)/Mode S Transponder AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of RTCA Special Committee 209, ATCRBS/Mode S Transponder. SUMMARY: The FAA is issuing this notice to advise the public of a meeting of RTCA Special Committee 209, Air Traffic Control Radar Beacon Systems (ATCRBS)/Mode S Transponder. DATES: The meeting will be held August 8, 2006, from 9 a.m.-5 p.m., and August 9, from 9 a.m.-4 p.m. ADDRESSES: The meeting will be held at RTCA, Inc., 1828 L Street NW., Suite 805, Washington, DC 20036. FOR FURTHER INFORMATION CONTACT: RTCA Secretariat, 1828 L Street, NW., Suite 805, Washington, DC 20036; telephone
(202)833-9339; fax
(202)833-9434; Web site *http://www.rtca.org* . SUPPLEMENTARY INFORMATION: Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., Appendix 2), notice is hereby given for a Special Committee 209 meeting. The agenda will include: August 8-9: • Opening Plenary Session (Welcome, Introductions, and Administrative Remarks, Review/Approval of Agenda, Review/Approval of Minutes from Meeting #2). • Report from Team reviewing the ADLP MOPS, DO-218B. • Report from Team reworking DO-181C. • Report from Team reviewing the update of Test Procedures. • Proposed Changes to the Test Procedures. • Status of the ED-73B/DO-181C Requirements Comparison data base. • Status of the coordination with WG-49. • Review Status of Action Items. • Closing Plenary Session (Other Business, Discussion of Agenda for Next Meeting, Date, Place and Time of Future Meeting, Adjourn). Attendance is open to the interested public but limited to space availability. With the approval of the chairmen, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the FOR FURTHER INFORMATION CONTACT section. Members of the public may present a written statement to the committee at any time. Issued in Washington, DC, on July 7, 2006. Francisco Estrada C., RTCA Advisory Committee. [FR Doc. 06-6243 Filed 7-14-06; 8:45 am]
Connectionstraces to 20
Traces to 20 documents
16 references not yet in our index
  • Pub. L. 104-13
  • 5 CFR 6.6
  • 3 CFR 1954
  • 15 USC 80a
  • 17 CFR 270.12
  • 17 CFR 270.17
  • 17 CFR 270.2
  • 17 CFR 270.31
  • 17 CFR 240.17
  • 17 CFR 240.19
  • 15 USC 17s(b)(1)
  • 17 CFR 248
  • 31 CFR 215.203
  • 47 CFR 240.19
  • 17 CFR 19
  • Pub. L. 92-463
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cites case law
Rules and Regulations
Notice of the OMB review of information collection and solicitation of public comment
U.S.C.§ 3301
U.S.C.§ 3501
U.S.C.§ 80a–12
U.S.C.§ 80a–17
U.S.C.§ 80a–2
U.S.C.§ 80a–18
U.S.C.§ 80a–22
U.S.C.§ 78a
C.F.R.§ 230.489
Pub. L.Pub. L. 104-13
Cite5 CFR 6.6
Cite3 CFR 1954
Cites 36 · showing 12Cited by 0 across 0 sources
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