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Code · REGISTER · 2006-11-17 · SECURITIES AND EXCHANGE COMMISSION · Notices

Notices. Notice and request for comments

14,866 words·~68 min read·/register/2006/11/17/06-9247

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BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54739; File No. SR-Amex-2006-78] Self-Regulatory Organizations; American Stock Exchange LLC; Order Granting Accelerated Approval to Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto Relating to Generic Listing Standards for Series of Portfolio Depositary Receipts and Index Fund Shares Based on International or Global Indexes November 9, 2006.
I. Introduction On August 18, 2006, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” or “Act”), 1 and Rule 19b-4 thereunder, 2 a proposed rule change to adopt generic listing standards pursuant to Rule 19b-4(e) 3 for series of portfolio deposit receipts (“PDRs”) and index fund shares (“IFSs”) based on international or global indexes.
On October 12, 2006, Amex submitted Amendment No. 1 to the proposal. 4 The proposed rule change and Amendment No. 1 thereto were published for comment in the **Federal Register** on October 19, 2006 for a 15-day comment period. 5 The Commission received one comment letter. 6 On November 6, 2006, Amex submitted Amendment No. 2 to the proposal. 7 This order approves the proposed rule change, as amended, on an accelerated basis. 1 15 U.S.C. 78s(b)(l). 2 17 CFR 240. 19b-4. 3 17 CFR 240.19b-4(e). 4 In Amendment No. 1, Amex revised the proposed rule text and clarified certain aspects of its proposal. 5 *See* Securities Exchange Act Release No. 54595 (October 12, 2006), 71 FR 61811. 6 *See* letter from Ira P.
Shapiro, Principal and Associate General Counsel, Barclays Global Investors (“BGI”), dated October 29, 2006 (“BGI Comment Letter”). 7 In Amendment No. 2, Amex clarified the nature of its surveillance procedures applicable to ETFs that may be listed and traded pursuant to the proposed rule change. II. Description of Proposal As explained more fully in the notice of the proposed rule change, the Exchange proposes to revise Amex Rules 1000 and 1000A to include generic listing standards for series of PDRs and IFSs that are based on international or global indexes. 8 Additionally, the Exchange proposes to revise Amex Rules 1000 and 1000A to include generic listing standards for PDRs and IFSs (PDRs and IFSs together referred to as “exchange-traded funds” or “ETFs”) that are based on indexes or portfolios previously approved by the Commission as an underlying benchmark for the trading of PDRs, IFSs, options or other specified index-based securities.
Finally, Amex proposes other minor clarifying changes to Amex Rules 1000, 1002, 1000A and 1002A. 9 8 8 Amex Rules 1000 *et seq.* allow for the listing and trading on the Exchange of PDRs, which represent interests in a unit investment trust registered under the Investment Company Act of 1940 (“1940 Act”) that operates on an open-end basis and that holds the securities that comprise an index or portfolio. Amex Rules 1000A *et seq.* provide standards for the listing and trading of IFSs, which are securities issued by an open-end management investment company based on a portfolio of stocks or fixed income securities that seeks to provide investment results that correspond generally to the price and yield performance of a specified foreign or domestic stock index or fixed income securities index. 9 The standards set out in Commentary .03(a)(A) to Rule 1000 and Commentary .02(a)(A) to Rule 1000A are being modified to make the wording of each requirement consistent; in addition, standard
(5)of these Commentaries has been modified to reflect the Commission's adoption of Regulation NMS, 17 CFR 242.600 *et seq.* Proposed Commentary .03(b)(iv) to Rule 1000 and Commentary .02(b)(iv) to Rule 1000A have been added to require that entities that advise index providers or calculators and related entities have in place procedures designed to prevent the use and dissemination of material non-public information regarding the index underlying the ETF. Specifically, the Exchange proposes to revise Commentary .03 to Rule 1000 and Commentary .02 to Rule 1000A to include generic listing standards for series of ETFs that are based on international or global indexes, or on indexes previously approved by the Commission under Section 19(b)(2) of the Exchange Act for the trading of ETFs, options or other index-based securities. This proposal will enable the Exchange to list and trade ETFs pursuant to Rule 19b-4(e) 10 of the Exchange Act if each of the conditions set forth in Commentary .03 to Rule 1000 or Commentary .02 to Rule 1000A is satisfied. Rule 19b-4(e) provides that the listing and trading of a new derivative securities product by a self-regulatory organization (“SRO”) shall not be deemed a proposed rule change, pursuant to paragraph (c)(1) of Rule 19b-4, if the Commission has approved, pursuant to Section 19(b) of the Exchange Act, the SRO's trading rules, procedures and listing standards for the product class that would include the new derivatives securities product, and the SRO has a surveillance program for the product class. 11 10 17 CFR 240.19b-4(e). 11 When relying on Rule 19b-4(e), the SRO must submit Form 19b-4(e) to the Commission within five business days after the SRO begins trading the new derivative securities products. *See* Securities Exchange Act Release No. 40761 (December 8, 1998), 63 FR 70952 (December 22, 1998). To list a PDR or an IFS pursuant to the proposed generic listing standards for international or global indexes, the index underlying the PDR or IFS must satisfy all the conditions in Commentary .03 to Rule 1000 (for PDRs) or proposed Commentary .02 to Rule 1000A (for IFSs). As with the existing generic listing standards for ETFs based on domestic indexes, the Exchange states that these generic listing standards are intended to ensure that stocks with substantial market capitalization and trading volume account for a substantial portion of the weight of an index or portfolio. As proposed, the definition section of each of Rule 1000 and Rule 1000A would be revised to include definitions of U.S. Component Stock and Non-US Component Stock. These new definitions would provide the basis for the standards for indexes with either domestic or international stocks, or a combination of both. A “Non-US Component Stock” would mean an equity security issued by an entity that:
(a)Is not organized, domiciled or incorporated in the United States;
(b)is not registered under Section 12(b) or 12(g) of the Exchange Act; and
(c)is an operating company (including Real Estate Investment Trusts (REITS) and income trusts, but excluding investment trusts, unit trusts, mutual funds, and derivatives). This definition is designed to create a category of component stocks that are issued by companies that are not based in the U.S., but that also are not subject to oversight through Commission registration, and would include sponsored Global Depositary Receipts (“GDRs”) and European Depositary Receipts (“EDRs”). A “US Component Stock” would mean an equity security that is registered under Section 12(b) or 12(g) of the Exchange Act. The Exchange proposes that to list an ETF based on an international or global index or portfolio pursuant to the generic listing standards, such index or portfolio must meet the following criteria: • Component stocks that in the aggregate account for at least 90% of the weight of the index or portfolio shall have a minimum market value 12 of at least $100 million (Rule 1000, Commentary .03(a)(B)(1) and Rule 1000A, Commentary .02(a)(B)(1)); 13 12 The Exchange stated for purposes of this filing that “market value” is calculated by multiplying the total shares outstanding by the price per share of the component stock. 13 The BGI Comment Letter notes that certain no-action relief provided by Commission staff under the Exchange Act (the “ETF No-Action Letters”) uses a public float standard, rather than this market value standard, and suggests consistency. The Exchange notes that the ETF No-Action Letters address separate regulatory objectives but is willing to examine modifications to its listing standards in the future. Telephone conference among Marija Willen, Vice President and Associate General Counsel, Amex, Scott Ebner, Vice President, Amex, Florence Harmon, Senior Special Counsel, Division of Market Regulation (“Division”), Commission, and Brian Trackman, Special Counsel, Division, Commission, on November 6, 2006 (“November 6 Telephone Conference”). • Component stocks representing at least 90% of the weight of the index or portfolio shall have a minimum worldwide monthly trading volume 14 during each of the last six months of at least 250,000 shares 15 (Rule 1000, Commentary .03(a)(B)(2) and Rule 1000A, Commentary .02(a)(B)(2)); 16 14 The BGI Comment Letter requested clarification that “worldwide monthly trading volume” includes any shares underlying American Depositary Receipts (“ADRs”) traded in the U.S. In response, the Exchange states that any trading of shares represented by ADRs, GDRs, or EDRs, which are traded on a market with last sale reporting, would be included in the calculation of worldwide monthly trading volume. *See* November 6 Telephone Conference, *supra* note 13. 15 The BGI Comment Letter asserts that it would be less arbitrary to measure trading volume in terms of dollars rather than shares. The Exchange notes that the share trading volume criteria is consistent with the existing generic listing standards for ETFs based on domestic indexes and other listing standards for derivative products, and the Commission believes the Exchange's choice is consistent with the Act. Nevertheless, the Exchange is willing to examine the dollar volume criteria in the future. *See* November 6 Telephone Conference, *supra* note 13. 16 16 The BGI Comment Letter notes that the ETF No-Action Letters measure liquidity of components in the index or portfolio differently than Amex's proposed rules measure liquidity. The Exchange notes that the ETF No-Action Letters address separate regulatory objectives but is willing to examine modifications to its listing standards in the future. *See* November 6 Telephone Conference, *supra* note 13. • The most heavily weighted component stock may not exceed 25% of the weight of the index or portfolio and the five most heavily weighted component stocks may not exceed 60% of the weight of the index or portfolio (Rule 1000, Commentary .03(a)(B)(3) and Rule 1000A, Commentary .02(a)(B)(3)); • The index or portfolio shall include a minimum of 20 component stocks (Rule 1000, Commentary .03(a)(B)(4) and Rule 1000A, Commentary .02(a)(B)(4)); and • Each US Component Stock in the index or portfolio shall be listed on a national securities exchange and shall be an NMS Stock as defined in Rule 600 of Regulation NMS under the Exchange Act, and each Non-US Component Stock in the index or portfolio shall be listed on an exchange that has last-sale reporting (Rule 1000, Commentary .03(a)(B)(5) and Rule 1000A, Commentary .02(a)(B)(5)). 17 17 The BGI Comment Letter questioned which non-U.S. exchanges have systems for “last-sale reporting.” In this regard, the Exchange states, when considering whether an ETF meets its listing standards, that it will use several methods to determine whether a non-U.S. exchange has last-sale reporting. For example, the Exchange states that it will evaluate whether execution prices are available for transactions in securities listed and traded on such exchange. The Exchange further states that last-sale reporting is easily verified through major market data vendors and other entities. In addition, the Exchange states that many index providers have policies to include index components only from foreign exchanges where pricing, transaction reporting, and corporate news are sufficiently transparent and widely disseminated. *See* November 6 Telephone Conference, *supra* note 13. The Exchange also proposes to include in the generic listing standards for the listing of ETFs, in new Commentary .03(a)(C) to Rule 1000 and Commentary .02(a)(C) to Rule 1000A, indexes that have been approved by the Commission as underlying benchmarks in connection with the listing of options, PDRs, IFSs, Index-Linked Exchangeable Notes, or Index-Linked Securities. 18 18 BGI questions requiring comprehensive surveillance sharing agreements (“CSSAs”) with the home country market for the underlying index components in proposed Commentary .03(a)(C) to Amex Rule 1000 and Commentary .02(a)(C) to Amex Rule 1000A. The standards set out in paragraph
(B)of both Commentaries do not require a CSSA with the home country market because they provide for minimum levels of liquidity, concentration and pricing transparency for index components. If an ETF is based on an index whose components do not satisfy these composition criteria, it may be listed pursuant to paragraph
(C)of both Commentaries if the Commission has previously approved the index or portfolio in connection with the listing and trading of another derivative product. To the extent that the Commission's approval of that index or portfolio required CSSAs, that requirement must also be satisfied. *See* November 6 Telephone Conference, *supra* note 13. The Exchange also proposes to modify Commentary .03(b)(iii) to Rule 1000 and Commentary .02(b)(iii) to Rule 1000A to require that the index value for all ETFs listed pursuant to the proposed standards for international and global indexes (or otherwise approved by the Commission) be widely disseminated by one or more major market data vendors at least every 60 seconds during the time when the ETF trades on the Exchange. If the index value does not change during some or all of the period when trading is occurring on the Exchange, the last official calculated index value must remain available throughout Exchange trading hours. Index values for ETFs listed pursuant to the standards for domestic indexes (or otherwise approved by the Commission) must be disseminated at least every 15 seconds during the trading day. The proposed modification to this requirement for ETFs based on international or global indexes reflects that, in some instances, the frequency of intra-day trading information is limited with respect to Non-US Component Stocks and that, in many cases, trading hours for overseas markets overlap only in part, or not at all, with Exchange trading hours. In addition, Commentary .03(c) to Rule 1000 and Commentary .02(c) to Rule 1000A are being modified to define the term “Intraday Indicative Value” as the estimate that is updated at least every 15 seconds of the value of a share of each ETF, for ease of reference in these rules. A similar change is also proposed in Rules 1002 and 1002A, which are the continued listing standards for these and other ETFs. The Exchange also proposes to clarify in Commentary .03(c) to Rule 1000 and Commentary .02(c) to Rule 1000A that the Intraday Indicative Value will be updated during the hours the ETF shares trade on the Exchange to reflect changes in the exchange rate between the U.S. dollar and the currency in which any component stock is denominated for all ETFs based on global or international indexes. The Exchange is also proposing to add a subsection
(i)to Commentary .03 to Rule 1000 and a subsection
(j)to Commentary .02 to Rule 1000A regarding the creation and redemption process for ETFs and compliance with Federal securities laws for ETFs listed pursuant to the generic listing standards for international and global indexes. These new subsections will apply to PDRs listed pursuant to Commentary .03(a)(B) or
(C)and for IFSs listed pursuant to Commentary .02(a)(B) or (C). For the listing and trading of all ETFs, whether or not by generic listing standards, the Exchange is also proposing to include additional, continued listing standards relating to ETFs that substitute new indexes, either in the instance where the value of the index or portfolio of securities on which the ETF is based is no longer calculated or available, or in the event that the ETF chooses to substitute a new index or portfolio for the existing index or portfolio. In both instances, the Exchange would commence delisting proceedings if the new index or portfolio does not meet the standards set forth in Rules 1000 *et seq.* or Rules 1000A *et seq.* , as applicable. 19 If, for example, an ETF chose to substitute an index that did not meet any of the generic listing standards for listing of ETFs pursuant to Rule 19b-4(e), 20 then for continued listing, approval by the Commission of a separate filing pursuant to Section 19(b)(2) 21 to list and trade that ETF would be required. 22 19 The BGI Comment Letter requested clarification of when an index is “no longer calculated or available” and in such event, why a “substantially similar” substituted index could not satisfy the dissemination requirements of the listing standards. In response, the Exchange notes that many indexes change components periodically based on a specified methodology. Index turnover, consistent with such an index methodology, may not constitute an index substitution triggering possible delisting of the ETF. However, if the index underlying the ETF is substituted with a new index or the specified index methodology is substantially changed from the announced methodology under which the product was listed, the Exchange acknowledges that it must either file a new Form 19b-4(e) or the listing and trading of the derivative product is a proposed rule change pursuant to Section 19(b)(2) of the Exchange Act, 15 U.S.C. 78s(b)(2). *See* November 6 Telephone Conference, *supra* note 13. 20 17 CFR 240.19b-4(e). 21 15 U.S.C. 78s(b)(2). 22 The Exchange notes that this is not a new requirement under the Exchange Act. The Exchange acknowledges that transparency of the index methodology is necessary for effective pricing of the derivative product and investor protection. *See* November 6 Telephone Conference, *supra* note 13. The Exchange proposes to modify the initial and continued listing standards for all ETFs relating to disseminated information to formalize in the rules existing best practices for providing equal access to material information about the value of ETFs. Pursuant to Rules 1002(a)(ii) and 1002A(a)(ii), prior to approving an ETF for listing, the Exchange will obtain a representation from the ETF issuer that the net asset value (“NAV”) per share will be calculated daily and made available to all market participants at the same time. In addition, proposed Rules 1002(b)(ii) and 1002A(b)(ii) establish that if the Intraday Indicative Value (as defined in Commentary .03 to Rule 1000 and Commentary .02 to Rule 1000A) or the index value applicable to that series of ETFs is not being disseminated as required, the Exchange may halt trading during the day in which the interruption to the dissemination of the Intraday Indicative Value or the index value occurs. If the interruption to the dissemination of the Intraday Indicative Value or the index value persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption. With regard to trading, ETFs listed under the proposed standards will be subject to Amex rules and procedures that govern the trading of ETFs and the trading of equity securities on the Amex, including among others, rules and procedures governing trading halts, disclosures to members, responsibilities of the specialist, account opening and customer suitability requirements, the election of a stop or limit order, and margin. 23 23 *See* Amex Rules 1000 through 1006 and 1000A through 1005A. The Exchange represents that its surveillance procedures are adequate to properly monitor the trading of the PDRs and IFSs listed pursuant to the proposed new listing standards. Specifically, the Amex will rely on its existing surveillance procedures governing PDRs and IFSs. In addition, the Exchange has a general policy prohibiting the distribution of material, non-public information by its employees. III. Discussion and Commission Findings After careful review, including consideration of the BGI Comment Letter, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Exchange Act, in general, and the rules and regulations thereunder applicable to a national securities exchange. 24 In particular, the Commission finds that the proposed rule change, as amended, is consistent with Section 6(b)(5) of the Exchange Act, 25 in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and 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. 24 In approving this rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 25 15 U.S.C. 78f(b)(5). Generic Listing Standards for Exchange-Traded Funds To list ETFs based on international or global indexes, or on indexes or portfolios previously approved by the Commission as an underlying benchmark for a derivative security, the Amex currently must file a proposed rule change with the Commission pursuant to Section 19(b)(1) of the Exchange Act and Rule 19b-4 thereunder. However, Rule 19b-4(e) provides that the listing and trading of a new derivative securities product by a SRO will not be deemed a proposed rule change pursuant to Rule 19b-4(c)(1) if the Commission has approved, pursuant to Section 19(b) of the Act, the SRO's trading rules, procedures, and listing standards for the product class that would include the new derivative securities product, and the SRO has a surveillance program for the product class. The Exchange's proposed rules for the listing and trading of ETFs based on international or global indexes pursuant to Rule 19b-4(e) fulfills these requirements. The Amex's ability to rely on Rule 19b-4(e) to list ETFs that meet the requirements of Commentary .03 to Amex Rule 1000 or Commentary .02 to Amex Rule 1000A potentially reduces the time frame for bringing these securities to the market, thereby reducing the burdens on issuers and other market participants and promoting competition and making ETFs based on global or international indexes available to investors more quickly. The Commission has previously approved generic listing standards pursuant to Rule 19b-4(e) 26 of the Exchange Act for ETFs based on indexes that consist of stocks listed and traded on U.S. exchanges. 27 The Commission has also previously approved the listing and trading by the Exchange of several ETFs based on a variety of international and global market indexes. 28 In approving these securities for Exchange trading, the Commission considered applicable Amex rules that govern their trading. The Commission believes that generic listing standards for these securities should fulfill the intended objective of Rule 19b-4(e) under the Act 29 and allow those ETFs that satisfy the generic listing standards to commence trading without the need for public comment and Commission approval. 30 26 17 CFR 240.19b-4(e). 27 *See* Commentary .03 to Amex Rule 1000 and Commentary .02 to Amex Rule 1000A. *See also* Securities Exchange Act Release No. 42787 (May 15, 2000), 65 FR 33598 (May 24, 2000). 28 *See,* *e.g.* , Securities Exchange Act Release Nos. 50189 (August 12, 2004), 69 FR 51723 (August 20, 2004) (approving the listing and trading of certain Vanguard International Equity Index Funds); 44700 (August 14, 2001), 66 FR 43927 (August 21, 2001) (approving the listing and trading of series of the iShares Trust based on certain S&P global indexes). Likewise, the Commission has approved listing standards that permit the listing and trading of index-based derivative securities where the same index had been considered in connection with the Commission's approval of another derivative security. *See,* *e.g.* , Amex *Company Guide* Section 107D (Index-Linked Securities), Securities Exchange Act Release No. 51563 (April 15, 2005), 70 FR 21257 (April 25, 2005). 29 17 CFR 240.19b-4(e). 30 The Commission notes that the failure of a particular index to comply with the proposed generic listing standards under Rule 19b-4(e), however, would not preclude the Exchange from submitting a separate filing pursuant to Section 19(b)(2), requesting Commission approval to list and trade a particular index-linked product. ETF Listing and Trading The Commission finds that the Amex proposal contains adequate rules and procedures to govern the listing of ETFs based on international or global indexes listed pursuant to Rule 19b-4(e) on the Exchange or trading pursuant to unlisted trading privileges (“UTP”). 31 31 An exchange trading ETFs pursuant to UTP must comply with applicable trading rules and surveillance requirements for the derivative product. *See* Securities Exchange Act Release No. 35637 (April 21, 1995), 60 FR 20891 (April 28, 1995). As proposed, Commentary .03 to Amex Rule 1000 and Commentary .02 to Amex Rule 1000A establish standards for the composition of an index or portfolio underlying an ETF. These requirements are designed, among other things, to require that components of an index or portfolio underlying an ETF are adequately capitalized and sufficiently liquid, and that no one stock dominates the index. Taken together, the Commission finds that these standards are reasonably designed to ensure that stocks with substantial market capitalization and trading volume account for a substantial portion of any underlying index or portfolio, and that when applied in conjunction with the other applicable listing requirements, will permit the listing only of ETFs that are sufficiently broad-based in scope to minimize potential manipulation. Similarly, the Commission finds that the proposed listing standards are designed to preclude ETFs from becoming surrogates for trading in unregistered securities. The Commission further believes that the requirement that each component security underlying an ETF be listed on an exchange and subject to last-sale reporting should contribute to the transparency of the market for ETFs. The proposed generic listing standards will, alternatively, permit listing of an ETF if the Commission has previously approved the underlying index for trading in connection with another derivative product and the underlying index or portfolio constituents are all either U.S. Component Stocks, which must be listed on a national securities exchange and be an NMS stock as defined in Rule 600(b)(47) of Regulation NMS under the Act, 32 or Non-US Component Stocks listed on an exchange that has last-sale reporting. 33 The Commission believes that if it has previously determined that such index and its components were sufficiently transparent, then the Exchange may rely on this finding, provided that the Exchange complies with the rules and conditions set forth by the Commission in its prior approval order, including surveillance sharing arrangements with the foreign market, if any. 34 32 17 CFR 242.600(b)(47). 33 *See* proposed Commentary .03(a)(C) to Amex Rule 1000 and Commentary .02(a)(C) to Amex Rule 1000A. 34 The Commission notes that it has taken this position connection with listing standards for ILSs. *See supra* note 28. Regardless of whether the ETF is listed and/or traded pursuant to these generic listing standards, the Exchange's proposal also requires the value of an index or portfolio underlying an ETF based on a global or international index to be disseminated at least once every 60 seconds. 35 In addition, an Intraday Indicative Value, which represents an estimate of the value of a share of each ETF, must be updated and disseminated at least once every 15 seconds during the time an ETF trades on the Exchange. 36 The Commission believes that by requiring pricing information for both the relevant underlying index 37 and the ETF to be readily available and disseminated, the proposal is designed to ensure a fair and orderly market for ETFs listed and traded pursuant to Amex Rules 1000 and 1000A. 35 *See* proposed Commentary .03(b)(iii) to Amex Rule 1000 and Commentary .02(b)(iii) to Amex Rule 1000A. To the extent an index or portfolio value does not change during some of the time that a foreign ETF trades on the Exchange, the last official calculated value must remain available throughout Exchange trading hours. 36 *See* Commentary .03(c) to Amex Rule 1000 and Commentary .02(c) to Amex Rule 1000A. The Intraday Indicative Value will be updated to reflect changes in the exchange rate between the U.S. dollar and the currency in which any index or portfolio component stock is denominated. 37 The requirement contemplates that one composite index value would be disseminated in accordance with this rule for any ETF based on several indexes. The Exchange proposes continued listing standards for all ETFs, whether listed pursuant to generic listing standards or by Commission approval of the specific product. In the event that an underlying index or portfolio value is no longer calculated on at least a 15 second basis or is substituted with an index that does not meet the applicable requirements, the Exchange will commence delisting proceedings. The Commission believes that this is an important safeguard to help assure that ETFs listed and traded on the Exchange meet applicable listing standards on an ongoing basis and do not, for example, trade without key pricing information available. The Commission notes that each ETF will be required to represent that it will calculate and make available daily the NAV to all market participants at the same time. Furthermore, proposed Amex Rules 1002(b)(ii) and 1000A(b)(ii) require that, if the Intraday Indicative Value or index value applicable to an ETF is not disseminated as required, the Exchange may halt trading during the day in which the interruption occurs. If the interruption continues, then the Exchange will halt trading no later than the beginning of the next trading day. Similarly, if the Exchange deems further dealings in the product inadvisable, trading will be halted. The Commission believes that the delisting criteria, NAV dissemination requirements, and trading halt rules will help ensure an appropriate level of transparency exists with respect to each foreign ETF to allow for the maintenance of fair and orderly markets. Surveillance The Commission notes that any foreign ETFs approved for listing and trading would be subject to Amex's existing surveillance program for ETFs, which the Exchange has represented are adequate to properly monitor the trading of ETFs listed pursuant to these proposed generic listing standards. Acceleration The Commission finds good cause for approving the proposed rule change, as amended, prior to the 30th day after the date of publication of the notice of filing in the **Federal Register** . The Exchange has requested accelerated approval of the proposal to facilitate the prompt listing and trading of ETFs based on global or international indexes or portfolios meeting the specified criteria and ETFs based on indexes or portfolios underlying derivative securities that were previously approved by the Commission. The Commission notes that the Exchange's listing standards are based, in part, on previously approved ETF listing standards relating to indexes or portfolios made up of U.S. Component Stocks or on Commission orders approving the listing and trading of ETFs based on global or international indexes. The Commission believes that accelerated approval of the proposal should expedite the listing and trading of additional ETFs, subject to consistent and reasonable standards, to the benefit of the investing public. Therefore, the Commission finds good cause, consistent with Section 19(b)(2) of the Act, 38 to approve the proposed rule change on an accelerated basis. 38 15 U.S.C. 78s(b)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 2 is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Amex-2006-78 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Amex-2006-78. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Amex. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2006-78 and should be submitted on or before December 8, 2006. V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 39 that the proposed rule change (SR-Amex-2006-78), as modified by Amendments No. 1 and 2, is hereby approved on an accelerated basis. 39 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 40 40 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-19415 Filed 11-16-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54732; File No. SR-NASDAQ-2006-044] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Modify the Rules of the Nasdaq Global Select Market November 9, 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 October 10, 2006, The NASDAQ Stock Market LLC (“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 Nasdaq. Nasdaq has filed this proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder 4 which renders the proposal effective upon filing with the Commission. On November 2, 2006, Nasdaq filed Amendment No. 1 to the proposed rule change. 5 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). 5 In Amendment No. 1, Nasdaq, among other things, added the requirement of $80 million market value of listed securities for business development companies exempt from registration pursuant to the Investment Company Act of 1940. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to modify the rules related to closed-end funds listed on the Nasdaq Global Select Market to clarify the treatment of business development companies. The text of the proposed rule change, as amended, is below. Proposed new language is *italicized* . 6 6 Changes are marked to the rule text that appears in the electronic manual of Nasdaq found at *http://www.complinet.com/nasdaq.* 4426. Nasdaq Global Select Market Listing Requirements
(a)No change.
(b)Liquidity Requirements (1)-(2) No change.
(3)The publicly held shares must have either: (A)-(B) No change.
(C)a market value of at least $70 million in the case of:
(i)An issuer listing in connection with its initial public offering;
(ii)an issuer that is affiliated with, or a spin-off from, another company listed on the Global Select Market; and
(iii)a closed end management investment company registered under the Investment Company Act of 1940 *or exempt from registration as a business development company as defined in Section 2 of the Investment Company Act of 1940* . (c)-(d) No change.
(e)Closed End Management Investment Companies. (1)-(2) No change. *(3) A closed end management investment company that is exempt from registration as a business development company as defined in Section 2 of the Investment Company Act of 1940 shall not be required to meet paragraph
(c)of this Rule 4426 but must have a market value of listed securities of at least $80 million.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change, as amended, and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq recently amended the listing standards for the Nasdaq Global Select Market, in part, to clarify the treatment of closed-end management investment companies. 7 In that filing, Nasdaq inadvertently failed to describe the rules applicable to closed end management investment companies that elect to be treated as business development companies. This filing clarifies that, like other closed-end funds, business development companies do not have to meet the financial requirements of Nasdaq Rule 4426(c). However, such companies must have a market value of listed securities of at least $80 million to be eligible for initial listing. 7 *See* Securities Exchange Act Release No. 54274 (August 3, 2006), 71 FR 45878 (August 10, 2006) (SR-NASDAQ-2006-020). 2. Statutory Basis Nasdaq believes that the proposed rule change, as amended, is consistent with the provisions of Section 6 of the Act, 8 in general, and with Section 6(b)(5) of the Act, 9 in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Nasdaq believes that the proposed rule change, as amended, clarifies Nasdaq's rules. 8 15 U.S.C. 78f. 9 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change, as amended, would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposal does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change, as amended, has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b-4(f)(6) thereunder. 11 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b-4(f)(6). As required by Rule 19b-4(f)(6)(iii) of the Act, Nasdaq provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description of the text of the proposed rule change, at least five business days prior to the date of the filing of the proposed rule change. Nasdaq requests that the Commission waive the 30-day operative period under Rule 19b-4(f)(6)(iii). 12 The Commission believes that it is consistent with the protection of investors and the public interest to waive the 30-day operative delay, 13 because the proposal is consistent with the treatment afforded business development companies by other markets. 14 12 17 CFR 240.19b-4(f)(6)(iii). 13 For purposes only of waiving the 30-day operative delay of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 14 *See* Section 102.04 of the New York Stock Exchange Listed Company Manual. At any time within 60 days of the filing of such proposed rule change, as amended, 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. 15 15 For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposed rule change under Section 19(b)(3)(C) of the Act, the Commission considers the period to commence on November 2, 2006, the date Nasdaq filed Amendment No. 1 to the proposed rule change. *See* Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASDAQ-2006-044 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-NASDAQ-2006-044. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of Nasdaq. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASDAQ-2006-044 and should be submitted on or before December 8, 2006. 16 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 16 Nancy M. Morris, Secretary. [FR Doc. E6-19424 Filed 11-16-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54730; File No. SR-NYSEArca-2006-04] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Change and Amendments No. 1, 2 and 3 Thereto Relating to the Criteria for Securities that Underlie Options Traded on the Exchange November 9, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on April 11, 2006, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. NYSE Arca filed Amendment No. 1 to the proposed rule change on August 18, 2006. 3 NYSE Arca filed Amendment No. 2 to the proposed rule change on October 17, 2006. 4 NYSE Arca filed Amendment No. 3 to the proposed rule change on November 6, 2006. 5 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons and is approving the proposal on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced the original filing in its entirety. 4 Amendment No. 2 corrected certain minor, inadvertent omissions to the changes proposed in Amendment No. 1. In Amendment No. 2, NYSE Arca also clarified that Fund Shares must be traded on a national securities exchange pursuant to NYSE Arca Rule 5.3(g). 5 Amendment No. 3 clarified the proposal, as earlier amended, and corrected certain minor, inadvertent omissions to the changes proposed in Amendments No. 1 and 2. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Rules 5.3(g), 5.6(k) and 6.39(a), as well as the Commentary to NYSE Arca Rules 11.3 and 11.16, to enable the initial and continued listing and trading on the Exchange of options on shares or other securities (“Exchange-Traded Fund Shares” or “Fund Shares”) that represent an interest in a specified non-U.S. currency. The text of the proposed rule change is below. Additions are *italicized,* deletions are [bracketed]. Rules of the NYSE Arca, Inc. RULE 5 OPTION CONTRACTS TRADED ON THE EXCHANGE Section 2. Underlying Securities Rule 5.3—Criteria for Underlying Securities (a)-(f)—No change.
(g)Exchange-Traded Fund Shares. Securities deemed appropriate for options trading shall include shares or other securities (“Exchange-Traded Fund Shares” *or “Fund Shares”* ) that are [principally] traded on a national securities exchange [or through the facilities of a national securities association] and *are defined as an “NMS stock” in Rule 600(b)(47) of Regulation NMS* [reported as a national market security], and that *(i)* represent an interest in a registered investment company organized as an open-end management investment company, a unit investment trust or a similar entity which holds securities constituting or otherwise based on or representing an investment in an index or portfolio of securities, *or
(ii)represent interests in a trust that holds a specified non-U.S. currency deposited with the trust when aggregated in some specified minimum number may be surrendered to the trust by the beneficial owner to receive the specified non-U.S. currency and pays the beneficial owner interest and other distributions on the deposited non-U.S. currency, if any, declared and paid by the trust (“Funds”);* provided:
(A)the Exchange-Traded Fund Shares meet the criteria and guidelines for underlying securities set forth in Rule 5.3(a) *and (b);* or
(B)the Exchange-Traded Fund Shares must be available for creation or redemption each business day in cash or in kind from *or through the issuing trust, investment company or other entity* [the investment company] at a price related to the net asset value. In addition, the *issuer* [investment company] *is obligated* [shall provide that] *to issue Fund Shares in a specified aggregate number* [fund shares may be created] even though some or all of the *investment assets* [securities] needed to be deposited have not been received by the *issuer* [unit investment trust or the management investment company], provided the authorized creation participant has undertaken to deliver the *investment assets* [shares] as soon as possible and such undertaking has been secured by the delivery and maintenance of collateral consisting of cash or cash equivalents satisfactory to the *issuer of Fund Shares* [fund] which underlie[s] the option as described in the *Fund Shares'* [fund or unit trust] prospectus; and
(A)any non-U.S. component securities (including fixed-income) in *an* [the] index or portfolio *of securities* on which the Fund Shares are based that are not subject to comprehensive surveillance agreements do not in the aggregate represent more than 50% of the weight of the index or portfolio;
(B)*component* securities (including fixed-income) *of an index or portfolio of securities on which Fund Shares are based* for which the primary market is in any one country that is not subject to a comprehensive surveillance agreement do not represent 20% or more of the weight of the index; [and]
(C)*component* securities (including fixed-income) *of an index or portfolio of securities on which Fund Shares are based* for which the primary market is in any two countries that are not subject to comprehensive surveillance agreements do not represent 33% or more of the weight of the index *; and* [.] *(D) for Funds that hold a specified non-U.S. currency deposited with the trust, the Exchange has entered into an appropriate comprehensive surveillance sharing agreement with the marketplace or marketplaces with last sale reporting that represent(s) the highest volume in derivatives (options or futures) on the specified non-U.S. currency, which are utilized by the national securities exchange where the underlying Funds are listed and traded.* (h)—No change. Rule 5.6—Withdrawal of Approval of Underlying Securities (a)-(j)—No change.
(k)Absent exceptional circumstances, securities initially approved for options trading pursuant to Rule 5.3(g) (such securities are defined and referred to in that [Commentary] *rule* as “Exchange-Traded Fund *S* [s]hares” *or “Fund Shares”* ) shall not be deemed to meet the Exchange's requirements for continued approval, and the exchange shall not open for trading any additional series of option contracts of the class covering such Exchange-Traded Fund Shares, whenever the Exchange-Traded Fund Shares are delisted *as provided in subparagraph (b)(5) or* [and] trading in the *Fund* Shares is [suspended] *halted* on *their primary market* [a national securities exchange, or the Exchange-Traded Fund Shares are no longer traded as national market securities through the facilities of a national securities association]. In addition, the Exchange shall consider the suspension of opening transactions in any series of options of the class covering Exchange-Traded Fund Shares in any of the following circumstances:
(1)In accordance with the terms of paragraphs 1 through [7] *4* of Rule 5.6(b) in the case of options covering Exchange-Traded Fund Shares when such options were approved pursuant to Rule 5.3(g) *(1)(A)* .
(2)*In the case of options covering Exchange-Traded Fund Shares approved pursuant to Rule 5.3(g)(1)(B),* [F] *f* ollowing the initial twelve-month period beginning upon the commencement of trading of the Exchange-Traded Fund Shares on a national securities exchange [or as national market securities through the facilities of a national market association] *and are defined as an “NMS stock” in Rule 600(b)(47) of Regulation NMS,* there are fewer than 50 record and/or beneficial holders of *such* Exchange-Traded Fund Shares for 30 *or* more consecutive trading days;
(3)The value of the index or portfolio of securities *or non-U.S. currency* on which the Exchange-Traded Fund Shares are based is no longer calculated or available; or
(4)Such other event shall occur or condition exist that in the opinion of the Exchange makes further dealing in such options on the Exchange inadvisable. (l)—No change. Commentary: .01—No change. RULE 6 OPTIONS TRADING Rule 6.39—Securities Accounts and Orders of Market Makers
(a)Identification of Accounts [Upon Request]. *A Lead Market Maker in the Fund Shares, as defined in Rule 5.3(g), is obligated to conduct all trading in the Fund Shares in account(s) that have been reported to the Exchange. In addition,* [I] *i* n a manner prescribed by the Exchange, each Market Maker shall [upon request] file with the Exchange a list identifying all accounts for stock, option *s* , *non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency* and related securities trading in which the Market Maker may directly or indirectly engage in trading activities or over which the Market Maker exercises investment discretion. *No Market Maker shall engage in stock, options, non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency or related securities trading in an account that has not been reported pursuant to this Rule.* (b)—No change. Commentary: .01—No change. RULE 11 BUSINESS CONDUCT Rule 11.3—Prevention of the Misuse of Material, Nonpublic Information (a)-(b)—No change. Commentary: .01 For purposes of Rule 11.3, conduct constituting the misuse of material, non-public information includes, but is not limited to, the following: A. Trading in any securities issued by a corporation *or Funds, as defined in Rule 5.3(g), or a trust or similar entities,* or in any related securities or related options or other derivative securities, *or in any related non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency* while in possession of material, non-public information concerning that issuer; or B. Trading in a security or related options or other derivative securities, *or in any related non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency* while in possession of material non-public information concerning imminent transactions in the *above* [security or related securities]; or C. Disclosing to another person or entity any material, non-public information involving a corporation *or Funds or a trust or similar entities* whose shares are publicly traded or an imminent transaction in an underlying security or related securities *or in the underlying non-U.S. currency, or any related non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency* for the purpose of facilitating the possible misuse of such material, non-public information. .02-.03—No change. Rule 11.16—Books and Records (a)—No change. Commentary: .01—No change. *.02 In addition to the existing obligations under Exchange rules regarding the production of books and records, a Lead Market Maker in non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency, shall make available to the Exchange such books, records or other information pertaining to transactions in the applicable non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives on such currency, as may be requested by the Exchange.* (b)—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 NYSE Arca included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The NYSE Arca 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 NYSE Arca Rules 5.3(g), 5.6(k) and 6.39(a), as well as the Commentary to NYSE Arca Rules 11.3 and 11.16, to enable the initial and continued listing and trading on the Exchange of options on shares of exchange-traded funds (“ETFs”) that hold a specified non-U.S. currency. The proposed rule change is based on the rule proposal of the International Securities Exchange (“ISE”), which was approved by the Commission. 6 6 *See* Securities Exchange Act Release No. 54087 (June 30, 2006), 71 FR 38918 (July 10, 2006) (SR-ISE-2005-60). Currently, the term “Exchange-Traded Fund Shares,” as defined under NYSE Arca Rule 5.3(g), requires that the investment assets held by a registered investment company organized as an open-end management investment company, a unit investment trust or a similar entity consist of securities constituting or otherwise based on or representing an investment in an index or portfolio of securities. As proposed, amended NYSE Arca Rule 5.3(g) would also permit the investment assets to consist of a trust that holds a specified non-U.S. currency deposited with the trust. In particular, the proposed amendment to NYSE Arca Rule 5.3(g) would permit the Exchange to list options on the euro shares (“Shares” or “Euro Shares”) 7 issued by the Euro Currency Trust (“Trust”) 8 and other similarly structured currency-based products, which function as an ETF, whose Shares reflect the price of a particular foreign currency and whose assets are limited to a particular foreign currency. The Shares may be purchased from the Trust only in one or more blocks of 50,000 Shares, as described in the prospectus under “Creation and Redemption of Shares.” A block of 50,000 shares is called a Basket. The Trust issues Shares in Baskets on a continuous basis to certain authorized participants (“Authorized Participants”) as described in the prospectus under “Plan of Distribution.” Each Basket, when created, is offered and sold to an Authorized Participant at a price in euro equal to the net asset value (“NAV”) for 50,000 Shares on the day that the order to create the Basket is accepted by the Trustee. 7 The Shares trade on the New York Stock Exchange (“NYSE”) under the symbol “FXE.” The Shares may also trade in other markets. 8 The Exchange notes that the Trust is not a registered investment company under the Investment Company Act of 1940 (the “1940 Act”) and is not required to register under the 1940 Act. The Exchange believes that permitting options on foreign currency-based Fund Shares to be traded on the Exchange is consistent with the Commission's recent approval order of a rule change filed by the NYSE to list and trade the Shares. 9 This rule change to NYSE Arca's listing criteria for Fund Shares is intended to provide appropriate listing standards for options on the Shares and similar types of foreign currency-based Fund Shares that may be listed in the future. 9 *See* Securities Exchange Act Release No. 52843 (November 28, 2005), 70 FR 72486 (December 5, 2005) (SR-NYSE-2005-65). For options trading, the underlying Fund Shares will continue to need to satisfy the listing standards in NYSE Arca Rule 5.3(g). Specifically, the Fund Shares must be traded on a national securities exchange and must be an “NMS stock” as defined in Rule 600(b)(47) of Regulation NMS. 10 The Fund Shares must also either:
(1)Meet the criteria and guidelines for underlying securities set forth in NYSE Arca Rule 5.3(a) and (b); or
(2)be available for creation or redemption each business day in cash or in kind from or through the issuer at a price related to NAV, and the issuer is obligated to issue Fund Shares in a specified aggregate number even though some or all of the investment assets needed to be deposited have not been received by the issuer, subject to the condition that the authorized creation participant has undertaken to deliver the investment assets as soon as possible, and such undertaking is secured by the delivery and maintenance of collateral consisting of cash or cash equivalents satisfactory to the issuer, as described in the prospectus. Proposed NYSE Arca Rule 5.3(g)(2)(D) provides that “for Funds that hold a specified non-U.S. currency deposited with the trust, the Exchange has entered into an appropriate comprehensive surveillance sharing agreement with the marketplace or marketplaces with last sale reporting that represent(s) the highest volume in derivatives (options or futures) on the specified non-U.S. currency, which are utilized by the national securities exchange where the underlying Funds are listed and traded.” The Exchange is also proposing to make other conforming changes to the text of NYSE Arca Rule 5.3(g) to reflect the proposed broadened definition of Fund Shares. 10 In light of the implementation of certain aspects of Regulation NMS, the Exchange hereby seeks to amend NYSE Arca Rule 5.3(g) to reflect that Exchange-Traded Fund Shares must be NMS stocks as defined in Rule 600(b)(47) of Regulation NMS instead of “national market” securities. The Exchange also seeks to amend NYSE Arca Rule 5.6(k), the maintenance rule for Exchange-Traded Fund Shares, to delete obsolete references contained therein. Under NYSE Arca Rule 5.6(k), the Exchange will not open for trading any additional series of option contracts of a class covering Fund Shares whenever the Fund Shares are delisted or trading in the Fund Shares is halted on the primary market. In addition, the Exchange will consider the suspension of opening transactions in any series of options of the class covering Fund Shares as follows:
(1)Following the initial twelve-month period beginning upon the commencement of trading of the Fund Shares, there are fewer than 50 record and/or beneficial holders of the Fund Shares for 30 or more consecutive trading days;
(2)the value of the non-U.S. currency is no longer calculated or available; or
(3)such other event occurs or condition exists that in the opinion of the Exchange makes further dealing on the Exchange inadvisable. The Exchange represents that the expansion of the types of investments that may be held by a Fund Share under NYSE Arca Rule 5.3(g) will not have any effect on the rules pertaining to position and exercise limits 11 or margin. 12 11 *See* NYSE Arca Rules 6.8 and 6.9. 12 *See* NYSE Arca Rule 4.16. The Exchange is also proposing to amend Commentary .01 to NYSE Arca Rule 11.3 to require an OTP Holder or OTP Firm to establish, maintain, and enforce written policies and procedures designed to prevent the misuse of any material nonpublic information it might have or receive in a related security, option, or derivative security or in the applicable non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency. Finally, the Exchange is proposing to amend NYSE Arca Rule 6.39(a) and to add Commentary .02 to NYSE Arca Rule 11.16 to require that market makers handling options on Fund Shares provide the Exchange with all necessary information relating to their trading in the applicable non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency. In addition, proposed NYSE Arca Rule 6.39(a) would prohibit market makers from engaging in stock, options, non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency or related securities trading in an account which has not been reported in a manner prescribed by the Exchange. The Exchange represents that it has an adequate surveillance program in place for options on the Fund Shares, and intends to apply those same program procedures that it applies to options on Fund Shares currently traded on the Exchange. To comply with proposed NYSE Arca Rule 5.3(g)(2)(D), the Exchange may obtain trading information via the Intermarket Surveillance Group (“ISG”) from other exchanges who are members or affiliates of the ISG. Specifically, NYSE Arca can obtain such information from the Philadelphia Stock Exchange (“Phlx”) in connection with euro options trading on the Phlx and from the Chicago Mercantile Exchange (“CME”) and the London International Financial Futures Exchange (“LIFFE”) in connection with euro futures trading on those exchanges. 13 13 Phlx is a member of ISG. CME and LIFFE are affiliate members of ISG. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) 14 of the Act in general and furthers the objectives of Section 6(b)(5) 15 in particular in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market, and, in general, to protect investors and the public interest. In addition, the Exchange believes that, with the commencement of trading of a currency-based ETF of the NYSE, amending its rule to accommodate the listing and trading of options on publicly traded shares or other securities that hold investment assets consisting of foreign currency will benefit investors by providing them with the same valuable risk management tool that is currently available with respect to other publicly traded ETFs whose investment assets consist of securities. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSEArca-2006-04 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-NYSEArca-2006-04. 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 NYSE Arca. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2006-04 and should be submitted on or before December 8, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of the Proposed Rule Change After careful review, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 16 In particular, the Commission finds that the proposed rule change, as amended, is consistent with Section 6(b)(5) of the Act, 17 which requires, among other things, that the rules of an 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. 16 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 17 15 U.S.C. 78f(b)(5). Currently, the Exchange can list options on Fund Shares that represent an interest in a registered investment company organized as an open-end management investment company, a unit investment trust or a similar entity that holds securities constituting or otherwise based on or representing an investment in an index or portfolio of securities. 18 The Exchange's proposal would allow it to list and trade options on Fund Shares whose investment assets consist of a specified non-U.S. currency deposited with a trust. 19 18 *See* NYSE Arca Rule 5.3(g). 19 For example, the Exchange's proposed rule change will permit the Exchange to list options on Euro Shares that are listed and traded on the NYSE under the symbol “FXE.” *See supra* note 9. The underlying Fund Shares would continue to need to satisfy the listing standards in NYSE Arca Rule 5.3(g). Specifically, the Fund Shares must be traded on a national securities exchange 20 and must be an “NMS stock” as defined in Rule 600(b)(47) of Regulation NMS. 21 The Fund Shares must also either:
(1)meet the criteria and guidelines for underlying securities set forth in NYSE Arca Rule 5.3(a) and (b); or
(2)be available for creation or redemption each business day in cash or in kind from or through the issuer at a price related to NAV, and the issuer is obligated to issue Fund Shares in a specified aggregate number. The Commission notes that the Exchange has represented that the expansion of the types of investments that may be held by a Fund Share under NYSE Arca Rule 5.3(g) will not have any effect on the rules pertaining to position and exercise limits or margin. 22 20 The Commission notes that NYSE Arca is proposing to revise NYSE Arca Rule 5.3(g) to eliminate the current reference to trading through the facilities of a national securities association. 21 17 CFR 242.600(b)(47). 22 *See supra* notes 11 and 12. To accommodate the listing and trading of options on Fund Shares investing in non-U.S. currency, the Exchange proposes to amend Commentary .01 to NYSE Arca Rule 11.3 to require an OTP Holder or OTP Firm to establish, maintain, and enforce written policies and procedures designed to prevent the misuse of any material nonpublic information it might have or receive in a related security, option, or derivative security or in the applicable non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency. Further, the Exchange proposes to amend NYSE Arca Rule 6.39(a) and to add Commentary .02 to NYSE Arca Rule 11.16 to require that market makers handling options on Fund Shares provide the Exchange with all necessary information relating to their trading in the applicable non-U.S. currency, non-U.S. currency options, futures or options on futures on such currency, or any other derivatives based on such currency. The Commission believes that these requirements should minimize potential manipulation concerns. Finally, under the proposed change to NYSE Arca Rule 5.6(k), absent exceptional circumstances, Fund Shares would not be deemed to meet the requirements for continued approval, and the Exchange would not open for trading any additional series of option contracts of the class covering such Fund Shares, if the Fund Shares are delisted or, pursuant to the proposed rule change, trading in the Fund Shares is halted on their primary market. The Commission believes that the Exchange's proposal to amend NYSE Arca Rule 5.6(k) addressing trading halts in the Fund Shares on their primary market is consistent with the protection of investors and the public interest. NYSE Arca Rule 5.6(k) also provides that the Exchange will consider the suspension of opening transactions in any series of options of the class covering Fund Shares if the value of the non-U.S. currency on which the Fund Shares are based is no longer calculated or available. The Commission believes that this change appropriately addresses the Exchange's proposed broadened definition of Fund Shares to include Fund Shares that represent interests in a trust that holds a specified non-U.S. currency. The Exchange has represented that it has an adequate surveillance program in place for options on the Fund Shares, as defined by the Exchange's proposal, and it intends to apply those same program procedures that it applies to options on Fund Shares currently traded on the Exchange. In addition, under proposed NYSE Arca Rule 5.3(g)(2)(D), before listing and trading options on Fund Shares based on a non-U.S. currency, the Exchange must have entered into an appropriate comprehensive surveillance sharing agreement with the applicable marketplace or marketplaces with last sale reporting that represent(s) the highest volume in derivatives (options or futures) on the specified non-U.S. currency. This provision means that the options exchange listing options on the Fund Shares must utilize the same comprehensive surveillance sharing arrangements utilized by the equity markets that list and trade the Fund Shares. Through its membership in the ISG, the Exchange is able to obtain trading information regarding trading of listed foreign currency derivative products from other marketplaces that are members or affiliates of the ISG. With respect to the Euro Shares, the Commission notes that the Exchange can obtain such information from the Phlx in connection with euro options trading on the Phlx and from the CME and the LIFFE in connection with euro futures trading on those exchanges. 23 23 *See supra* note 13. Accelerated Approval The Commission finds good cause for approving the proposed rule change, as amended, prior to the thirtieth day after the date of publication of the notice of the filing thereof in the **Federal Register** pursuant to Section 19(b)(2) of the Act. 24 The Exchange has requested accelerated approval of the proposed rule change. The proposal implements rules for the listing and trading of options on Fund Shares representing an interest in a specified non-U.S. currency that are substantially similar to listing standards recently adopted by the ISE. 25 Inasmuch as options on Fund Shares are already listed and traded on other exchanges, the Commission does not believe that the Exchange's proposal raises any novel regulatory issues. Granting accelerated approval to the proposal will enable the Exchange to immediately list and trade options on ETFs holding non-U.S. currency. Therefore, the Commission finds good cause, consistent with Section 19(b)(2) of the Act, 26 to approve the proposed rule change, as amended, on an accelerated basis. 24 15 U.S.C. 78s(b)(2). 25 *See supra* note 6. 26 15 U.S.C. 78s(b)(2). V. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with the Act and rules and regulations thereunder applicable to the national securities exchange. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 27 that the proposed rule change (SR-NYSEArca-2006-04), as amended, is hereby approved on an accelerated basis. 27 *See id.* For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 28 28 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-19418 Filed 11-16-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54721; File No. SR-OCC-2006-10] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Cash-Settled Foreign Currency Options November 8, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on June 8, 2006, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) and on October 26, 2006, amended the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by OCC. 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). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would enable OCC to accommodate a request from the Philadelphia Stock Exchange, Inc. (“Phlx”) that OCC clear and settle cash-settled foreign currency options (“Cash-Settled FCOs”). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of such statements. 2 2 The Commission has modified parts of these statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to enable OCC to accommodate a request from the Philadelphia Stock Exchange, Inc. (“Phlx”) that OCC clear and settle Cash-Settled FCOs. OCC's By-Laws and Rules currently provide for the clearance and settlement of Cash-Settled FCOs although no such options are currently traded, but changes to OCC's By-Laws are needed in connection with the Cash-Settled FCOs proposed to be traded by Phlx. 3 The first change is to reflect the different expiration date of the Cash-Settled FCOs as compared with the date provided for in OCC's By-Laws. The definition of “expiration date” in Article XXII, Section 1 of OCC's By-Laws provides that Cash-Settled FCOs generally expire on the Monday specified by the relevant exchange at or before trading begins. To accommodate the Cash-Settled FCOs proposed to be traded by Phlx, the definition will need to be amended to provide for an expiration date of the Saturday following the third Friday of the expiration month, which is the same as the expiration date for equity and index options. OCC is also proposing to provide for expirations on such other dates as an exchange may determine, which is consistent with the definition of “expiration date” applicable to index options. The next proposed change, to Article VI, Section 22 of OCC's By-Laws, is intended to make it clear that Cash-Settled FCOs will not clear through OCC's International Clearing System. 4 3 For a description of the Phlx proposed rule change, see Securities Exchange Act Release No. 54652 (October 26, 2006) 71 FR 64597 (November 2, 2006) [File No. SR-Phlx-2006-34]. 4 Interpretation .02 under Article VI, Section 22 of OCC's By-Laws currently provides, “All classes of foreign currency options and cross-rate foreign currency options are cleared through ICS.” OCC amended the proposed rule change on October 26, 2006, to propose amending Article XXII, Section 4 of OCC's By-Laws to conform the provisions relating to unavailability or inaccuracy of the spot price for Cash-Settled FCOs to the comparable provisions of Article XVII of OCC's By-Laws relating to the unavailability or inaccuracy of the current index value or other value or price used to determine the exercise settlement amount for index options. The primary conforming changes are the proposed addition of procedures under which the exercise settlement amount would be established by an adjustment panel in the event of the unavailability or inaccuracy of the spot price and a modification of normal expiration date exercise procedures in situations in which the adjustment panel delays the fixing of the exercise settlement amount beyond the last trading day for the affected series. This amendment also proposes to amend Rule 2302 of OCC's Rules in connection with a change in the expiration date exercise procedures for Cash-Settled FCOs. As originally filed, the rules for Cash-Settled FCOs would have provided for true automatic exercise without the opportunity for clearing members to give non-exercise instructions. Phlx has subsequently informed OCC that Cash-Settled FCOs should be subject to the same “exercise-by-exception” procedures that apply to many other OCC-issued options. Under “exercise-by-exception” procedures, a Cash-Settled FCO would be deemed to be exercised at expiration if the exercise settlement value is at least $1.00 per contract unless the clearing member instructs OCC not to exercise it. OCC is also proposing to add an interpretation to Rule 2302 to note that the normal expiration date exercise procedures do not apply in circumstances in which the fixing of the exercise settlement amount is delayed beyond the last trading day before expiration of cash-settled foreign currency options. OCC believes that the proposed rule change is consistent with Section 17A of the Act because it is designed to promote the prompt and accurate clearance and settlement of derivative transactions in Cash-Settled FCOs, to foster cooperation and coordination with persons engaged in the clearance and settlement of such transactions, to remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of such transactions, and, in general, protect investors and the public interest. B. Self-Regulatory Organization's Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments were not and are not intended to be solicited with respect to the proposed rule change, and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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 the 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-OCC-2006-10 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-OCC-2006-10. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of OCC and on OCC's Web site at *http://www.optionsclearing.com.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2006-10 and should be submitted on or before December 8, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-19419 Filed 11-16-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54734; File No. SR-SCCP-2006-02] Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Order Granting Approval of a Proposed Rule Change Relating to the Definition of a Margin Member November 9, 2006. I. Introduction On August 14, 2006, Stock Clearing Corporation of Philadelphia (“SCCP”) filed with the Securities and Exchange Commission (“Commission”) proposed rule change SR-SCCP-2006-02 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). 1 Notice of the proposal was published in the **Federal Register** on September 29, 2006. 2 No comment letters were received. For the reasons discussed below, the Commission is granting approval of the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 54488, (September 22, 2006), 71 FR 57598. II. Description The rule change amends the definition of “margin member” in SCCP Rule 1, Definitions, to accommodate the introduction of equity market makers on the Philadelphia Stock Exchange (“Phlx”) and to reflect the introduction of Phlx's new equity trading system, XLE, which will replace Phlx's equity trading floor. 3 XLE is an electronic trading system which will provide for the entry, display, ranking, routing, and execution of orders in NMS stocks 4 for its members and member organizations (“XLE Participants”). The current equity specialists will be replaced by market makers, a type of XLE Participant, which will be liquidity providers on XLE. 5 3 Securities Exchange Act Release No. 54538 (September 28, 2006), 71 FR 59184 (October 6, 2006) [File No. SR-Phlx-2006-43] (Order granting approval of a proposed rule change relating to Phlx's new equity trading system, XLE). 4 17 CFR 242.600(b)(47). 5 Not every security on XLE will require a market maker. However, if a market maker or multiple market makers choose to register in a security, they must provide a two-sided market in that security on XLE during regular trading hours (usually 9:30 AM to 4:00 PM) of the security. Therefore, some securities on XLE may have no market makers or may have one or more market makers. SCCP Rule 1, Definitions, currently defines “margin members” as SCCP participants that are Phlx specialists, alternate specialists, or other Phlx floor members specifically approved by the National Securities Clearing Corporation to effect trading in a margin account. Margin members that clear and settle their transactions through SCCP's “omnibus clearance and settlement account” at NSCC receive margin accounts from SCCP. 6 SCCP expects that many of its current margin members that are Phlx specialists, alternate specialists, or other Phlx floor members will become XLE Participants, including market makers, upon approval of XLE. This rule change amends the definition of margin member in SCCP's rules to add the term market maker 7 and to remove the word floor from the term Phlx floor member. This will allow SCCP members that are currently margin members under Rule 1 of SCCP's rules to maintain their status as margin members following Phlx's transition to XLE. 6 SCCP Rule 9, Margin Accounts. 7 The rule change in File No. SR-Phlx-2006-43 defines the term “market maker” in Phlx Rule 1, Definitions, paragraph (m). It also adds new rules 170 through 174 to set forth the registration requirements, rights, and obligations of Phlx market makers. SCCP believes that the proposed rule change is consistent with Section 17A of the Act 8 because the proposed rule change is designed to allow current SCCP margin members to maintain their status as they transition from the current floor based trading environment at Phlx to the XLE electronic trading system and would thereby promote the prompt and accurate clearance and settlement of securities transactions and remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance of securities transactions. 8 15 U.S.C. 78q-1. III. Discussion Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions. 9 SCCP is a member of NSCC and has an omnibus clearance and settlement account at NSCC through which its margin members' transactions are cleared and settled. The proposed rule change amends the definition of margin member in SCCP's rules to accommodate the Phlx rule change regarding XLE that was recently approved by the Commission. The proposed rule change neither affects the services SCCP may provide to its member nor affects SCCP's agreement with NSCC to clear and settle transactions submitted through SCCP's omnibus account. Accordingly, because the proposed rule change is designed to be consistent with the new Phlx rules for the XLE trading platform and to avoid any confusion with respect to the services SCCP's members may receive either directly from SCCP or through SCCP's omnibus clearance and settlement account at NSCC, we find that it is designed to promote the prompt and accurate clearance and settlement of securities transactions. 9 15 U.S.C. 78q-1(b)(3)(F). IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR-SCCP-2006-02) be and hereby is approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 10 Nancy M. Morris, Secretary. 10 17 CFR 200.30-3(a)(12). [FR Doc. E6-19422 Filed 11-16-06; 8:45 am] BILLING CODE 8011-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Notice of Intent to Request Revision From the Office of Management and Budget of a Currently Approved Information Collection Activity, Request for Comments; FAA Antidrug And Alcohol Misuse Prevention Programs AGENCY: Federal Aviation Administration, (FAA), DOT. ACTION: Notice and request for comments. SUMMARY: The FAA invites public comments about our intention to request the Office of Management and Budget
(OMB)to approve a current information collection. The FAA uses this information for determining program compliance or non-compliance of regulated aviation employers, oversight planning, determining who must provide annual MIS testing information, and communicating with entities subject to the program regulations. DATES: Please submit comments by January 16, 2007. FOR FURTHER INFORMATION CONTACT: Carla Mauney on
(202)267-9895, or by e-mail at: *Carla.Mauney@faa.gov* . SUPPLEMENTARY INFORMATION: Federal Aviation Administration
(FAA)*Total:* FAA Antidrug And Alcohol Misuse Prevention Programs. *Type of Request:* Revision of an approved collection. *OMB Control Number:* 2120-0535. *Forms(s):* There are no FAA forms associated with this collection. *Affected Public:* A total of 7,000 Respondents. *Frequency:* The information is collected on occasion. *Estimated Average Burden Per Response:* Approximately 5 minutes per response. *Estimated Annual Burden Hours:* An estimated 22,892 hours annually. *Abstract:* The FAA uses this information for determining program compliance or non-compliance of regulated aviation employers, oversight planning, determining who must provide annual MIS testing information, and communicating with entities subject to the program regulations. In addition, the information is used to ensure that appropriate action is taken in regard to crew members and other safety-sensitive employees who have tested positive for drugs or alcohol, or have refused to submit to testing. ADDRESSES: Send comments to the FAA at the following address: Ms. Carla Mauney, Room 712, Federal Aviation Administration, Strategy and Investment Analysis Division, AIO-20, 800 Independence Ave., SW., Washington, DC 20591. *Comments are invited on:* Whether the proposed collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; the accuracy of the Department's estimates of the burden of the proposed information collection; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. Issued in Washington, DC, on November 13, 2006. Carla Mauney, FAA Information Collection Clearance Officer, Strategy and Investment Analysis Division, AIO-20. [FR Doc. 06-9247 Filed 11-16-06; 8:45 am]
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  • 17 CFR 240
  • 17 CFR 240.19
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Notices
Notice and request for comments
U.S.C.§ 78s
C.F.R.§ 242.600
U.S.C.§ 78c
U.S.C.§ 78f
U.S.C.§ 552
C.F.R.§ 200.30-3
U.S.C.§ 78q–1
Cite17 CFR 240
Cite17 CFR 240.19
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