Notices. Notice
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BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54762; File No. SR-CBOE-2006-93] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change Regarding Quarterly Options Series November 16, 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 November 8, 2006, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice and order to solicit comments on the proposed rule change from interested persons and to grant accelerated approval to the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend its rules regarding the opening of Quarterly Options Series to limit the number of strike prices that the Exchange may open for Quarterly Options Series and make minor clarifications.
The text of the proposed rule change is available on the Exchange's Web site ( *http://www.cboe.com* ), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change.
The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On July 11, 2006, the SEC approved CBOE's proposal to add language to CBOE Rule 24.9 that would permit the listing and trading of Quarterly Options Series based on an underlying index. 3 That language did not include a limit on the number of strike prices that may be opened for a Quarterly Options Series.
In the instant filing, Exchange proposes to add such a limit. 3 *See* Securities Exchange Act Release No. 54123 (July 11, 2006), 71 FR 40558 (July 17, 2006) (approving SR-CBOE-2006-65) (“Pilot Program Approval Order”). The purpose of the proposed rule change is to amend CBOE Rule 24.9 (“Terms of Index Option Contracts”) to
(1)Limit the number of strike prices that the Exchange may open for Quarterly Options Series to five strike prices above or below the value of the underlying index,
(2)clarify that the Exchange may open for trading additional Quarterly Options Series of the same class when the Exchange deems such action necessary to maintain an orderly market or meet customer demand, and
(3)clarify that the opening of any new Quarterly Options Series will not affect the previously opened series of options of the same class. 1. Statutory Basis CBOE believes the proposed rule change is consistent with the Act and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act. 4 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 5 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest. 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(5). B. Statement of Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposal. III. Commission Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 6 In particular, the Commission believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act, 7 which requires, among other things, that the rules of the Exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 6 In approving the proposed rule, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78f(b)(5). Currently, under CBOE Rule 24.9, at the time the Exchange initially lists strike prices for a QOS, the Exchange may list strike prices that are within $5 from the closing price of the underlying index on the preceding trading day. The Exchange may open for trading additional strike prices if the current market price of the underlying index moves substantially from the exercise prices of those QOS that already have been opened for trading on the Exchange. The exercise price of each such additional QOS is required to be reasonably related to the current index value of the underlying index at or about the time such additional series is opened for trading on the Exchange. The CBOE rules define the term “reasonably related to the current index value of the underlying index” to mean that the exercise price is within thirty percent of the current index value. However, despite this “reasonably related” requirement, the current language of CBOE Rule 24.9 also permits the Exchange to open for trading additional strike prices that are more than thirty percent away from the current index value, “provided that demonstrated customer interest exists for such series, as expressed by institutional, corporate, or individual customers or their brokers.” 8 Thus, as currently in effect, CBOE Rule 24.9 effectively does not limit the number of additional strike prices that may be opened for a QOS based on an underlying index. 8 CBOE Rule 24.9(a)(2). In this filing, the Exchange proposes to eliminate the requirement that strike prices at the time of initial listing must be within $5 from the closing price of the underlying security on the preceding trading day. Instead, the proposal would limit the Exchange to listing no more than five strike prices above and five strike prices below the value of the underlying index at about the time the QOS is opened for trading on the Exchange. In addition, the proposal would restrict the additional strike prices that may be opened on a QOS. The proposal would permit the Exchange to open additional strike prices that are above (or below) the value of the underlying index, provided that the total number of strike prices above (or below) the value of the underlying index is no greater than five. For example, assume that when a particular QOS was initially listed, the Exchange opened the maximum number of strike prices permitted by the rule: five above and five below the value of the underlying index at that time. If the index value subsequently increased such that only two strike prices were above the value of the underlying index, the Exchange would be permitted to open up to three additional strike prices above the value of the index. (In this example, the Exchange would not be permitted to open any additional strike prices below the value of the underlying index because it may only add strike prices provided that the total number of open strike prices on that side of the underlying index value remains five or fewer.) The provisions of CBOE Rule 24.9 requiring that the exercise price of additional series must be “reasonably related” to the value of the underlying index, unless “demonstrated customer interest” exists for a series with an exercise price more than 30% away from the current index value, would remain in place, but would be limited by the five above/five below restriction. Although the proposal is more permissive in the range of strike prices that may be opened at the time of initial listing, the proposal to limit additional strike prices renders CBOE Rule 24.9(a)(2) more restrictive overall in the number of strike prices that may be opened on the Exchange. Therefore, the Commission believes the proposal should not raise any capacity or regulatory concerns not already discussed in the order approving the QOS pilot program. 9 For these reasons, the Commission believes that the proposed rule change is consistent with the Act. 9 For the same reason, the Commission does not view the proposed rule change as an expansion of the pilot program, and therefore the proposal does not trigger the requirement under the terms of the Pilot Program Approval Order that the Exchange submit a pilot program report. *See* Pilot Program Approval Order, 71 FR at 40561. The Exchange has requested that the Commission approve the proposed rule change prior to the thirtieth day after publication of notice of the filing in the **Federal Register** . The Commission believes that accelerated approval is appropriate because the proposal adds a restriction on the number of strike prices that may be opened on the Exchange, thus lessening the impact of the QOS on the limited quote traffic capacity of the Exchange and the Options Price Reporting Authority, while still permitting the Exchange to list an appropriate range of strike prices in order to respond to market conditions and customer demand. Accordingly, the Commission finds good cause, consistent with Section 19(b)(2) of the Act, 10 to approve the proposed rule change prior to the thirtieth day after publication of the notice of filing thereof in the **Federal Register.** 10 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 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* ); • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-CBOE-2006-93 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC. 20549-1090. All submissions should refer to File Number SR-CBOE-2006-93. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit identifying personal information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-CBOE-2006-93 and should be submitted on or before December 13, 2006. V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 11 that the proposed rule change (SR-CBOE-2006-93) is hereby approved on an accelerated basis. 11 *Id* . 12 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 Nancy M. Morris, Secretary. [FR Doc. E6-19725 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54761; File No. SR-CBOE-2006-85] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Definition of Quarterly Index Expiration or QIX November 16, 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 20, 2006, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend the definition of “Quarterly Index Expiration or QIX” in CBOE Rule 24.1(s). The text of the proposed rule change is available on the Exchange's Web site ( *http://www.cboe.com* ), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to update the definition of an index option contract in CBOE Rule 24.1(s) to reflect current Options Clearing Corporation (“OCC”) settlement procedures. Specifically, the Exchange proposes to define Quarterly Index Expiration (“QIX”) as an index option contract that expires on the last business day of a calendar quarter, rather than the first business day of the month following the end of a calendar quarter. QIX options rules allow the Exchange to trade quarterly expiration options for certain index option products. QIX options were approved by the Commission in February 1993. 5 The Exchange does not currently trade QIX index options, but expects to do so in the near future. In connection with renewed trading of QIX options, the Exchange seeks to modify the definition of QIX in CBOE Rule 24.1(s) to reflect changes in OCC settlement procedures over the years. When QIX rules were approved, OCC expiration processing for QIX options could not be completed until the business day following the end of the calendar quarter. Today, OCC technology and procedures have improved such that expiration processing can be completed on the last business day of the calendar quarter. 5 *See* Securities Exchange Act Release No. 31800 (February 1, 1993), 58 FR 7274 (February 5, 1993) (approving file no. SR-CBOE-92-13). 2. Statutory Basis CBOE believes the proposed rule change is consistent with the Act and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act. 6 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 7 requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange neither solicited nor received comments on the proposal. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 8 and subparagraph (f)(6) of Rule 19b-4 thereunder. 9 Because the foregoing proposed rule change
(i)does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder. 10 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(6). 10 Rule 19b-4(f)(6)(iii) requires the Exchange to give written notice to the Commission of its intent to file the proposed rule change at least five business days prior to filing. The Exchange provided the required notice on September 26, 2006. A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to waive the operative delay if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the operative delay to permit the proposed rule change to become effective prior to the 30th day after filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that the proposal to change the expiration date of QIX options to the last business day of a calendar quarter is consistent with the definition of other quarterly options series on the Exchange. 11 Therefore, the Commission has determined to waive the 30-day delay and allow the proposed rule change to become operative immediately. 12 11 *See, e.g.* , Securities Exchange Act Release No. 54123 (July 11, 2006), 71 FR 40558 (July 17, 2006) (approving CBOE's Quarterly Options Series pilot program, file no. SR-CBOE-2006-65). 12 For purposes only of waiving the operative delay of this proposal, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-CBOE-2006-85 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2006-85. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2006-85 and should be submitted on or before December 13, 2006. 13 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 Nancy M. Morris, Secretary. [FR Doc. E6-19726 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54682A; File No. SR-FICC-2006-15] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Modify Its Rules To Diversify and Standardize Clearing Fund Collateral Requirements Across the Divisions To Improve Liquidity and Minimize Risk for Its Members; Correction and Extension of Comment Period November 17, 2006. Correction In FR Doc. E6-18948, beginning on page 65855 for Thursday, November 9, 2006, revise the number “500,000” to read “5,000,000” on page 65856, second column, sixth line. Extension On October 4, 2006, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) a proposed rule change pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder 2 that would modify the rules of both of the Government Securities Division (“GSD”) and the Mortgage-Backed Securities Division (“MBSD”) (collectively, the “Divisions”) of FICC to diversify and standardize Clearing Fund collateral requirements across the Divisions. A complete description of the proposed rule change is found in the notice of filing, which was published in the **Federal Register** on November 9, 2006. 3 The comment period expires on November 30, 2006. 4 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Exchange Act Release No. 54682 (November 1, 2006) 71 FR 65855 (November 9, 2006) (SR-FICC-2006-15). 4 *Id.* To give the public additional time to comment on the correction above, the Commission has decided to extend the comment period pursuant to Section 19(b)(2) of the Act. 5 Accordingly, the comment period shall be extended until December 12, 2006. 5 15 U.S.C. 78s(b)(2). 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-FICC-2006-15 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-FICC-2006-15. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filings also will be available for inspection and copying at the principal office of FICC and on FICC's Web site at *http://www.ficc.com/gov/notices/GOV115.06.htm?NS-query* . 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-FICC-2006-15 and should be submitted on or before December 12, 2006. 6 17 CFR 200.30-3(a)(12). For the Commission by the Division of Market Regulation, pursuant to delegated authority. 6 Nancy M. Morris, Secretary. [FR Doc. E6-19727 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54751; File No. SR-ISE-2006-56] Self-Regulatory Organizations; International Securities Exchange, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Relating to Customer Fees for Certain Complex Orders November 14, 2006. I. Introduction On September 20, 2006, the International Securities Exchange, Inc. (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to establish execution and comparison fees for customer Complex Orders that take liquidity from the ISE's complex order book. The ISE filed Amendment No. 1 to the proposal on October 4, 2006. 3 The proposed rule change, as amended, was published for comment in the **Federal Register** on October 13, 2006. 4 The Commission received no comments regarding the proposal, as amended. This order approves the proposed rule change, as amended. 1 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 revises the text of the ISE's Schedule of Fees to:
(1)explain when an order takes liquidity from the ISE's complex order book; and
(2)clarify that the proposed fee applies solely to Complex Orders that trade with other Complex Orders, and not to Complex Orders that trade with customer orders in the regular order book. 4 *See* Securities Exchange Act Release No. 54571 (October 4, 2006), 71 FR 60593. II. Description of the Proposal Under its current rules, the ISE generally charges execution and comparison fees of $.15 and $.03 per contract, respectively, for Firm Proprietary orders. 5 The ISE states that it has noted increased volume in certain customer transactions in Complex Orders. According to the ISE, customers that use highly developed trading systems are able to take liquidity quickly from ISE's complex order book. 6 To place customer orders on a more equal footing with broker-dealer orders, the ISE proposes to amend its Schedule of Fees to adopt execution and comparison fees of $.15 and $.03 per contract, respectively, for customer Complex Orders that take liquidity from the ISE's complex order book. 5 For Firm Proprietary Complex Orders, the execution fee is charged only for the leg of the trade with the most contracts. 6 Under the ISE's proposal, an order takes liquidity when it interacts with a Complex Order resident on the ISE's complex order book. The ISE determines the liquidity provider and the liquidity taker based on time, *i.e.* , the order that arrives first on the ISE's complex order book is the liquidity provider. The fees established in the proposal apply solely to customer Complex Orders that take liquidity from the ISE's complex order book, but not to customer Complex Orders that trade with orders in the regular order book. Similarly, the fees do not apply to customer orders in the regular order book that trade with Complex Orders. III. Discussion 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. 7 Specifically, the Commission finds that the proposal is consistent with Section 6(b)(4) of the Act, 8 which requires that the rules of an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. Under its current rules, the ISE generally charges execution and comparison fees of $.15 and $.03 per contract, respectively, for Firm Proprietary orders. The proposal establishes execution and comparison fees of $.15 and $.03 per contract, respectively, for customer Complex Orders that take liquidity from the ISE's complex order book. 9 Accordingly, the Commission believes that the proposal provides for the equitable allocation of fees among members and other persons using the ISE's facilities, consistent with Section 6(b)(4) of the Act. 7 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). 8 15 U.S.C. 78f(b)(4). 9 As with the current execution fee for Firm Proprietary Complex Orders, the execution fee will be charged only for the leg of the trade with the most contracts. IV. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 10 that the proposed rule change (SR-ISE-2006-56), as amended, is approved. 10 15 U.S.C. 78s(b)(2). 11 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 Nancy M. Morris, Secretary. [FR Doc. E6-19734 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54765; File No. SR-NASDAQ-2006-009] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change and Amendments No. 1 and 2 Thereto To Permit Trading Pursuant to Unlisted Trading Privileges of streetTRACKS Gold Shares and To Establish Trading Rules to Trade, Pursuant to Unlisted Trading Privileges, Certain Securities Whose Value Is Linked to the Value of One or More Commodities November 16, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on May 15, 2006 The NASDAQ Stock Market LLC (“Nasdaq” or “Exchange”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by Nasdaq. On October 10, 2006, the Exchange submitted Amendment No. 1 to the proposal, 3 and on November 14, 2006, the Exchange submitted Amendment No. 2 to the proposal. 4 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons, and is granting accelerated approval to the proposal, as amended. 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 replaced Amendment No. 1 in its entirety. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq is making this filing to enable it to continue trading pursuant to unlisted trading privileges (“UTP”) of streetTRACKS Gold Shares (“Shares”) and to add Nasdaq Rule 4630 to establish trading rules to trade, pursuant to UTP, certain securities whose value is linked to the value of one or more commodities. The text of the proposed rule change is below. Proposed new language is in *italics* . 5 5 Changes are marked to the rule text that appears in the electronic manual of Nasdaq found at *http://www.complinet.com/nasdaq* . 4630. Trading in Commodity-Based Trust Shares *(a) Nasdaq will consider for trading pursuant to unlisted trading privileges, Commodity-Based Trust Shares that meet the criteria of this Rule.* *(b) Applicability. This Rule is applicable only to Commodity-Based Trust Shares. Except to the extent inconsistent with this Rule, or unless the context otherwise requires, the provisions of Rule 4420(l) and all other Nasdaq Rules shall be applicable to the trading on Nasdaq of such securities. Commodity-Based Trust Shares are included within the definition of “security” or “securities” as such terms are used in the Nasdaq Rules.* *(c) Definitions. The following terms shall, unless the context otherwise requires, have the meaning herein specified:* *(1) Commodity-Based Trust Shares. The term “Commodity-Based Trust Shares” means a security
(a)that is issued by a trust (“Trust”) that holds a specified commodity deposited with the Trust;
(b)that is issued by such Trust in a specified aggregate minimum number in return for a deposit of a quantity of the underlying commodity; and
(c)that, when aggregated in the same specified minimum number, may be redeemed at a holder's request by such Trust which will deliver to the redeeming holder the quantity of the underlying commodity.* *(2) Commodity. The term “commodity” is defined in Section 1(a)(4) of the Commodity Exchange Act.* *(d) Information Barriers. A member acting as a registered market maker in Commodity-Based Trust Shares is obligated to establish adequate information barriers when such market maker engages in inter-departmental communications. Members should refer to NASD/NYSE Joint Memo on Chinese Wall Policies and Procedures (NASD Notice to Members 91-45) for guidance on the “'minimum elements” of adequate Chinese Wall policy and procedures.” For purposes of Commodity-Based Trust Shares only, “inter-departmental communications” shall include communications to other departments within the same firm or the firm's affiliates that involve trading in an underlying commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives.* *(e) Market Maker Accounts. A member acting as a registered market maker in Commodity-Based Trust Shares must file with Nasdaq Regulation in a manner prescribed by Nasdaq Regulation and keep current a list identifying all accounts for trading in an underlying commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives, that the market maker may have or over which it may exercise investment discretion. No market maker shall trade in an underlying commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives, in an account in which a market maker, directly or indirectly, controls trading activities, or has a direct interest in the profits or losses thereof, that has not been reported as required by this Rule.* *(f) The member acting as a registered market maker in Commodity-Based Trust Shares shall make available to Nasdaq Regulation such books, records or other information pertaining to transactions by such entity or registered or non-registered employee affiliated with such entity for its or their own accounts for trading the underlying physical commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives, as may be requested by Nasdaq Regulation.* *(g) In connection with trading the underlying physical commodity, related commodity futures or options on commodity futures or any other related commodity derivative (including Commodity-Based Trust Shares), the member acting as a market maker in Commodity-Based Trust Shares shall not use any material nonpublic information received from any person associated with the member or employee of such person regarding trading by such person or employee in the physical commodity, commodity futures or options on commodity futures, or any other related commodity derivatives.* *(h) Nasdaq requires that members provide all purchasers of newly issued Commodity-Based Trust Shares a prospectus for the series of Commodity-Based Trust Shares.* *(i) Transactions in Commodity-Based Trust Shares will occur during the trading hours specified in Rule 4617.* 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 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. 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 a. streetTRACKS Gold Shares
(1)General Description The Nasdaq Stock Market, Inc. (“Nasdaq Market”), the parent of Nasdaq, currently trades the Shares. After Nasdaq begins to operate as an exchange for trading securities not listed on Nasdaq, it proposes to continue trading the Shares pursuant to UTP in much the same manner as they are being traded by the Nasdaq Market currently. Nasdaq's surveillance procedures applicable to the Shares will not change as a result of the transition to exchange status. The Commission previously approved the listing and trading of the Shares on the New York Stock Exchange (“NYSE”). 6 The Shares represent units of fractional undivided beneficial interest in and ownership of the streetTRACKS Gold Trust (“Trust”). 6 *See* Securities Exchange Act Release No. 50603 (October 28, 2004) 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (“NYSE Approval Order”). The Trust is an investment trust and is not managed like a corporation or an active investment vehicle. The Trust has no board of directors or officers or persons acting in a similar capacity. The Trust is not an investment company under the Investment Company Act of 1940. The purpose of the Trust is to hold gold bullion. The investment objective of the Trust is for the Shares to reflect the performance of the price of gold, less the Trust's expenses. World Gold Trust Services, LLC, a wholly owned limited liability company of the World Gold Council, 7 is the sponsor of the Trust (“Sponsor”). The Bank of New York is the trustee; HSBC Bank USA, an indirect wholly owned subsidiary of HSBC Holdings plc, is the custodian (“Custodian”); and State Street Global Markets LLC, a wholly owned subsidiary of State Street Corporation, is the marketing agent (“Marketing Agent”). 7 The World Gold Council is a not-for-profit association registered under Swiss law. Generally, the assets of the Trust ( *e.g.* , gold bullion) will be sold to pay Trust expenses and management fees. These expenses and fees will reduce the value of an investor's Shares as gold bullion is sold to pay such costs. Ordinary operating expenses of the Trust include:
(a)Fees paid to the Sponsor;
(b)fees paid to the Trustee;
(c)fees paid to the Custodian;
(d)fees paid to the Marketing Agent; and
(e)various Trust administration fees, including printing and mailing costs, legal and audit fees, registration fees, and Nasdaq listing fees. The Trust's estimated ordinary operating expenses are accrued daily and reflected in the net asset value (“NAV”) of the Trust. The Trust will create Shares on a continuous basis only in aggregations of 100,000 Shares (such aggregation referred to as a “Basket”). Authorized Participants are the only persons that may place orders to create and redeem Baskets by making an in kind deposit of gold together with, if applicable, a specified cash payment. Similarly, the Trust will redeem Shares only in Baskets, principally in exchange for gold and, if applicable, a cash payment. Because the creation and redemption process facilitates the potential for arbitrage, the NYSE stated that the Sponsor believed that the Shares would not trade at a material discount or premium to the underlying gold held by the Trust.
(2)Availability of Information About the Shares The global trade in gold consists of over-the-counter transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options. The NYSE Listing Order contains descriptions of the key components of the gold market. The last sale price for the Shares is disseminated over the Consolidated Tape. Gold pricing information based on the spot price for a troy ounce of gold from various financial information service providers, such as Reuters and Bloomberg, is available on a 24-hour basis. Complete real-time data for gold futures and options prices traded on the COMEX (a division of the NYMEX) is available by subscription from Reuters and Bloomberg. The NYMEX also provides delayed futures and options information on current and past trading sessions and market news free of charge on its Web site. Nasdaq, via a link from its own public Web site ( *http://www.nasdaq.com* ) to the Trust Web site ( *http://www.streettracksgoldshares.com* ), will provide at no charge continuously updated bids and offers indicative of the spot price of gold. 8 8 The Trust's Web site's gold spot price will be provided by The Bullion Desk ( *http://thebulliondesk.com* ). The Trust's Web site will indicate that there are other sources for obtaining the gold spot price. In the event that the Trust's Web site should cease to provide this indicative spot price from an unaffiliated source (and the intraday indicative value) of the Shares, Nasdaq will cease to trade the Shares. The Trust Web site also will provide a calculation of the estimated NAV (also known as the Intraday Indicative Value or “IIV”) of a Share as calculated by multiplying the indicative spot price of gold by the quantity of gold backing each Share. Comparing the IIV with the last sale price of the Shares helps an investor to determine whether, and to what extent, Shares may be selling at a premium or a discount to the NAV. Although provided free of charge, the indicative spot price and IIV per Share will be provided on an essentially real-time basis. 9 The Trust Web site provides the NAV of the Trust as calculated each business day by the Sponsor. In addition, the Trust Web site contains the following information, on a per-Share basis, for the Trust:
(a)The IIV as of the close of the prior business day and the midpoint of the bid/ask price 10 in relation to such IIV (“Bid/Ask Price”), and a calculation of the premium or discount of such price against such IIV; and
(b)data in chart format displaying the frequency distribution of discounts and premiums of the Bid/Ask Price against the IIV, within appropriate ranges, for each of the four previous calendar quarters. The Trust Web site also provides the Trust's prospectus, as well as the two most recent reports to stockholders. The Trust Web site provides the last sale price of the Shares as traded in the U.S. market, subject to a 20-minute delay. 11 Finally, the Shares will trade during all hours that Nasdaq is open, as specified in Nasdaq Rule 4617. 12 9 The Trust's Web site, to which the Nasdaq Web site will link, will disseminate an indicative spot price of gold and the IIV and indicate that these values are subject to an average delay of five to ten seconds. 10 The bid/ask price is determined using the highest bid and lowest offer on the Consolidated Tape as of the time of calculation of the closing day IIV. 11 The last sale price of the Shares in the secondary market is available on a real-time basis for a fee from regular data vendors. 12 The Nasdaq system operates from 7 a.m. to 8 p.m. (all times herein refer to Eastern Standard Time) on each business day, unless modified by Nasdaq. A Nasdaq market maker shall be open for business as of 9:30 a.m. and shall close no earlier than 4 p.m. A Nasdaq market maker may voluntarily open for business prior to 9:30 a.m. and remain open for business later than 4 p.m. Nasdaq market makers whose quotes are open prior to 9:30 a.m. or after 4 p.m. are obligated to comply, while their quotes are open, with all Nasdaq Rules that are not by their express terms, or by an official interpretation of Nasdaq, inapplicable to any part of the 7 a.m. to 9:30 a.m. or 4 p.m. to 8 p.m. period.
(3)Trading Rules Trading in the Shares will be subject to Nasdaq's existing rules governing the trading of equity securities and will occur during the hours when other equity securities are traded on Nasdaq. The minimum price variation will be as set forth in the Nasdaq rules specifically with respect to equity securities listed on the NYSE. Nasdaq is trading the Shares pursuant to UTP, but will cease trading in the Shares during all trading sessions if:
(a)The primary market stops trading the Shares because of a regulatory halt and/or a halt because dissemination of the IIV and/or the unaffiliated gold value has ceased or Nasdaq no longer provides a hyperlink to the Trust's Web site; or
(b)the primary market delists the Shares. Additionally, Nasdaq may cease trading the Shares if such other event shall occur or condition exists which in the opinion of Nasdaq makes further dealings on Nasdaq inadvisable. Because Nasdaq is trading pursuant to UTP the Shares during its early and late trading sessions, when the primary market is closed, Nasdaq will monitor the unaffiliated value of gold and IIV per Share and ensure that trading of the Shares will cease during the early and late trading sessions, if the unaffiliated value of gold and IIV per Share (used by the primary listing exchange) is no longer calculated or available during the early and late trading sessions, or Nasdaq stops providing a hyperlink on its Web site to such unaffiliated gold value or IIV per Share.
(4)Surveillance Nasdaq believes its surveillance procedures are adequate to properly monitor the trading of the Shares. Specifically, the NASD relies on its existing surveillance procedures for equity securities. After Nasdaq begins to operate as an exchange for trading securities not listed on Nasdaq, the NASD, on behalf of Nasdaq, will continue to surveil Nasdaq trading, including Nasdaq trading of the Shares. Nasdaq's transition to exchange status will not result in any change in the surveillance process with respect to the Shares. 13 13 Surveillance of all trading on the Nasdaq Market, including the trading of Shares, is currently being conducted by NASD, Inc. Following Nasdaq's transition to exchange status, NASD, Inc. will continue to surveil trading, pursuant to a regulatory services agreement. Nasdaq is responsible for NASD, Inc.'s performance under this regulatory services agreement. In addition, for intermarket surveillance purposes, Nasdaq entered into a reciprocal Memorandum of Understanding with NYMEX, which is a comprehensive surveillance sharing arrangement, 14 for the sharing of information related to any financial instrument based, in whole or in part, upon an interest in or performance of gold. 14 Telephone conversation between Jonathan Cayne, Associate General Counsel, Nasdaq, and Florence Harmon, Senior Special Counsel, Division of Market Regulation, Commission, November 15, 2006.
(5)Information Circular In connection with its commencement of operations as an exchange for trading non-Nasdaq securities, Nasdaq will issue an information circular (“Circular”), which, among other things, will identify certain securities, such as the Shares, that present special characteristics and risks associated with their trading. The Circular will refer to the information publicly available about the identified securities, alert members to possible prospectus delivery requirements, and remind them of the suitability rules. Specifically, the Circular, among other things, will discuss what the Shares are, how a Basket is created and redeemed, the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction, applicable Nasdaq rules, dissemination of information regarding the indicative price of gold and IIV, trading information, and the applicability of suitability rules. The Circular will also explain that the Trust is subject to various fees and expenses described in the Registration Statement, and that the number of ounces of gold required to create a Basket or to be delivered upon a redemption of a Basket will gradually decrease over time because the Shares comprising a Basket will represent a decreasing amount of gold due to the sale of the Trust's gold to pay the Trust's expenses. The Circular will also reference the fact that there is no regulated source of last sale information regarding physical gold, and that the Commission has no jurisdiction over the trading of gold as a physical commodity. The Circular will also set forth the procedures for purchases and redemptions of the Shares in Baskets and that the Shares are not individually redeemable but are redeemable only in Basket-size aggregations or multiples thereof. The Circular will also advise members of their suitability obligations with respect to recommended transactions to customers in the Shares. The Circular will also discuss any relief if granted by the Commission or the staff from any rules under the Act. b. Commodity-Based Trust Shares Nasdaq is also adopting Rule 4630 to govern the trading, pursuant to UTP, of Commodity-Based Trust Shares (including the Shares). Nasdaq currently does not list (and does not have listing rules for) Commodity-Based Trust Shares, but its facilities are currently being used for the over-the-counter trading of such securities if they are listed on the NYSE or the American Stock Exchange (“Amex”). Once Nasdaq's separation from the NASD is complete and Nasdaq begins to operate as a national securities exchange with respect to securities listed on the NYSE and Amex, Nasdaq plans to continue trading NYSE- and Amex-listed Commodity-Based Trust Shares pursuant to UTP, subject to Commission approval of UTP trading of such securities. (Nasdaq expects to make appropriate filings with the Commission under Rule 19b-4. 15 ) 15 17 CFR 240.19b-4. The proposed rule, which is based on the existing rules of NYSE Arca, Inc. as adapted for UTP trading only, would impose certain requirements on any Nasdaq member registered and acting as a market maker in Commodity-Based Trust Shares. As the proposed rule's definition of Commodity-Based Trust Shares reflects, these securities are structurally similar to exchange traded funds, except, of course, that their value is a function of the value of the underlying commodities, rather than of an underlying securities index. The proposed rule will apply to the trading of Commodity-Based Trust Shares at all times. The proposed rule establishes the following requirements for market makers in Commodity-Based Trust Shares:
(1)Information Barriers The proposed rule makes clear that a member acting as a registered market maker in Commodity-Based Trust Shares is obligated to comply with NASD Notice to Members 91-45 pertaining to limitations on dealings when such market maker engages in inter-departmental communications. For purposes of Commodity-Based Trust Shares only, “inter-departmental communications” shall include communications to other departments within the same firm or the firm's affiliates that involve trading in an underlying commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives.
(2)Market Maker Accounts A member acting as a registered market maker in Commodity-Based Trust Shares will be required to file and keep current a list of all accounts for trading in an underlying commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives, that the market maker may have or over which it may exercise investment discretion.
(3)Books and Records A member acting as a registered market maker in Commodity-Based Trust Shares will be required to make available to Nasdaq Regulation such books, records or other information pertaining to transactions in the underlying physical commodity, related commodity futures or options on commodity futures, or any other related commodity derivatives, as may be requested by Nasdaq Regulation.
(4)Material Non-public Information In connection with trading the underlying physical commodity, related commodity futures or options on commodity futures or any other related commodity derivatives (including Commodity-Based Trust Shares), the member acting as a market maker in Commodity-Based Trust Shares would not be permitted to use any material non-public information received from any person associated with the member or employee of such person regarding trading by such person or employee in the physical commodity, commodity futures or options on commodity futures, or any other related commodity derivatives. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act 16 in general, and with Section 6(b)(5) of the Act 17 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, remove impediments to a free and open market and a national market system, and, in general, to protect investors and the public interest. 16 15 U.S.C. 78f. 17 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 will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments 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-NASDAQ-2006-009 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-2006-009. 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 publicly available. All submissions should refer to File Number SR-NASDAQ-2006-009 and should be submitted on or before December 13, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of 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. 18 In particular, the Commission believes that the proposal is consistent with Section 6(b)(5) of the Act, 19 which requires that an exchange have rules designed, among other things, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission believes that the proposal will benefit investors by increasing competition among markets that trade the Shares. 18 In approving the proposal, the Commission has considered its impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 19 15 U.S.C. 78f(b)(5). In addition, the Commission believes that the proposal is consistent with Section 12(f) of the Act, 20 which permits an exchange to trade, pursuant to UTP, a security that is listed and traded on another exchange. 21 The Commission notes that it previously approved the listing and trading of the Shares on NYSE 22 and, via UTP, on NYSE Arca. 23 The Commission also believes that the proposal is consistent with Rule 12f-5 under the Act, 24 which provides that an exchange shall not extend UTP to a security unless the exchange has in effect a rule or rules providing for transactions in the class or type of security to which the exchange extends UTP. The Exchange represented that it meets this requirement because it deems the Shares to be equity securities, thus rendering trading in the Shares subject to the existing rules of the Exchange governing the trading of equity securities, including rules relating to trading hours, trading halts, and the minimum trading increment. 20 15 U.S.C. 78l(f). 21 Section 12(a) of the Act, 15 U.S.C. 78 *l* (a), generally prohibits a broker-dealer from trading a security on a national securities exchange unless the security is registered on that exchange pursuant to Section 12 of the Act. Section 12(f) of the Act excludes from this restriction trading in any security to which an exchange “extend[s] unlisted trading privileges.” When an exchange extends UTP to a security, it allows its members to trade the security as if it were listed and registered on the exchange even though it is not so listed and registered. 22 *See* NYSE Approval Order, *supra* note 6. 23 *See* Securities Exchange Act Release No. 51245 (February 23, 2005) 70 FR 10731 (March 4, 2005) (SR-PCX-2004-117). 24 17 CFR 240.12f-5. The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, 25 which sets forth Congress's finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotations for and last sale information regarding the Shares are disseminated through the Consolidated Quotation System. Furthermore, as noted by the Exchange, various means exist for investors to obtain reliable gold price information and thereby monitor the underlying spot market in gold relative to the NAV of their Shares. Additionally, the Trust's Web site provides an continuously updated IIV (subject to an average delay of five to ten seconds). If the Trust ceases to maintain or to calculate the IIV or if the value of the index ceases to be widely available, the Exchange would cease trading the Shares. 25 15 U.S.C. 78k-1(a)(1)(C)(iii). The Commission notes that, if the Shares were to be delisted by NYSE, the Exchange would no longer have authority to trade the Shares pursuant to this order. In support of the proposal, the Exchange made the following representations: 1. The Exchange's surveillance procedures are adequate to deter manipulation, and its existing surveillance procedures for investment company units will be utilized for the Shares. Among other things, the Exchange entered into a reciprocal Memorandum of Understanding with NYMEX for the sharing of information related to any financial instrument based, in whole or in part, upon an interest in or performance of gold. 2. The Exchange will distribute an information circular to its members prior to the commencement of trading of the Shares on the Exchange that explains, among other things, the terms and characteristics of the Shares and the risks associated with their trading. 3. The Exchange will require a member to provide all purchasers of newly-issued Shares on the Exchange to provide that customer with a product prospectus, and will note this prospectus delivery requirement in the information circular. 4. The Exchange will cease trading the Shares during the regular market session
(a)If the primary market stops trading the Shares because of a halt because the dissemination of the IIV and/or the unaffiliated underlying gold spot price has ceased to be disseminated by the Trust's Web site or because of a regulatory halt; or
(b)if the primary market delists the shares. 5. During its early and late trading sessions, when the primary market is closed, the Exchange will monitor the dissemination of the IIV and the unaffiliated underlying gold spot price by the Trust's Web site, and will cease trading the Shares if this data ceases to be available. 6. The Exchange will cease trading the Shares if the Exchange's Web site for any reason ceases to provide a hyperlink to the Trust's Web site. This approval order is conditioned on the Exchange's adherence to these representations. Finally, the Commission believes that subsections
(d)and
(e)of the Exchange's proposed Rule 4630, which impose information barriers and trading restrictions on a member acting as a registered market maker in the Shares, are reasonable and consistent with the Act. These provisions would require a member acting as a registered market maker in the Shares to provide the Exchange with information relating to its trading in physical gold, gold futures contracts, options on gold futures, or any other gold derivatives. Further, a member acting as a registered market maker in the Shares would be prohibited under these provisions from using any material nonpublic information received from any person associated with a member or employee of such person regarding trading by such person or employee in physical gold, gold futures contracts, options on gold futures, or any other gold derivatives. The Commission finds good cause for approving the proposal, as amended, prior to the 30th day after the date of publication of the notice of filing thereof in the **Federal Register** . As noted previously, the Commission previously found that the listing and trading of the Shares on NYSE and, pursuant to UTP, on NYSE Arca is consistent with the Act. 26 The Commission presently is not aware of any regulatory issue that should cause the Commission to revisit these earlier findings. Therefore, accelerating approval of the proposal should benefit investors by creating, without undue delay, additional competition in the market for the Shares. 26 *See supra* notes 6 and 23. V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 27 that the proposed rule change, as amended (SR-Nasdaq-2006-009), is approved on an accelerated basis. 27 15 U.S.C. 78s(b)(2). 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. E6-19733 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54768; File No. SR-NASD-2006-110] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change and Amendment No. 1 Thereto to Establish a Two-Year Pilot Program Exempting from TRACE Reporting Transactions in Bonds Traded on a Facility of NYSE November 16, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on September 19, 2006, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I and II below, which Items have substantially been prepared by NASD. On September 27, 2006, NASD filed Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments 4 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, which replaces and supersedes the original filing in its entirety, made various technical changes to the proposal and replaced a reference in the proposed rule text to NYSE's Automated Bond System with a reference to “a facility of NYSE.” 4 The Commission received one comment on the proposed rule change prior to issuance of this notice and order. *See* comment from Ron Klein, Chairman, CEO, General Associates, Inc., dated October 16, 2006. The commenter asked various questions regarding the status of the filing, which are resolved by the Commission's action in this notice and order. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to amend:
(1)NASD Rule 6230, to initiate a two-year pilot program exempting certain TRACE-eligible securities from reporting requirements that otherwise would apply; and
(2)NASD Rules 6210 and 6230, to reflect the registration of The NASDAQ Stock Market LLC as a national securities exchange. Below is the text of the proposed rule change, as amended. Proposed new language is *italicized* ; proposed deletions are in [brackets]. 6200. TRADE REPORTING AND COMPLIANCE ENGINE (TRACE) 6210. Definitions The terms used in this Rule 6200 Series shall have the same meaning as those defined in NASD's By-Laws and Rules unless otherwise specified.
(a)No Change.
(b)No Change.
(c)The term “reportable TRACE transaction” shall mean any secondary market transaction in a TRACE-eligible security except transactions in TRACE-eligible securities that are listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, when such transactions are executed on, and reported to the exchange and the transaction information is disseminated publicly[, or transactions in TRACE-eligible securities that are listed and quoted on the Nasdaq Stock Market, Inc. (Nasdaq), when such transactions are reported to Nasdaq and the transaction information is disseminated publicly]. (d)-(j) No Change. 6230. Transaction Reporting
(a)through
(d)No Change.
(e)Transactions Exempt from Reporting The following types of transactions shall not be reported:
(1)Transactions that are part of a primary distribution by an issuer.
(2)Transactions in TRACE-eligible securities that are listed on a national securities exchange, when such transactions are executed on and reported to the exchange and the transaction information is disseminated publicly[, and transactions in TRACE-eligible securities that are listed and quoted on Nasdaq, when such transactions are reported to Nasdaq and the transaction information is disseminated publicly].
(3)Transactions where the buyer and the seller have agreed to trade at a price substantially unrelated to the current market for the TRACE-eligible security (e.g., to allow the seller to make a gift).
(4)*For the duration of a two-year pilot program, effective upon the later of either: 1) approval of this rule by the Commission, or 2) execution by NASD and the New York Stock Exchange (“NYSE”) of a data sharing agreement addressing data related to transactions covered by this Rule, transactions in TRACE-eligible securities that are executed on a facility of NYSE in accordance with NYSE Rules 1400 and 1401 and reported to NYSE in accordance with NYSE's applicable trade reporting rules and disseminated publicly by NYSE.*
(f)No Change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD is proposing to amend its Rule 6230 to exempt from Trade Reporting and Compliance Engine (“TRACE”) 5 reporting requirements, for a period of two years, transactions in TRACE-eligible securities 6 executed on a facility of the New York Stock Exchange (“NYSE”) in accordance with NYSE Rules 1400 and 1401, provided that such transactions are reported pursuant to applicable NYSE trade reporting rules and publicly disseminated. 7 NYSE has sought exemptive relief from the Commission that would facilitate NYSE's trading of certain corporate debt securities that are not listed on NYSE. 8 NASD has proposed to amend its Rule 6230 to address concerns regarding duplicative trade reporting that would result from the trading of those NYSE-Traded Bonds which otherwise would be subject to both NASD's and NYSE's trade reporting requirements. 5 *See* NASD Rule 6210(b). 6 *See* NASD Rule 6210(a). 7 *See* Securities Exchange Act Release Nos. 51999 (July 8, 2005), 70 FR 41067 (July 15, 2005) (SR-NYSE-2004-69) (proposing NYSE Rules 1400 and 1401) (“NYSE Corporate Debt Proposal”) and 54767 (November 16, 2006) (SR-NYSE-2004-69) (approving NYSE Corporate Debt Proposal). 8 *See* Securities Exchange Act Release No. 51998 (July 8, 2005), 70 FR 40748 (July 14, 2005) (File No. S7-06-05). Debt securities traded on a facility of NYSE, but not listed on NYSE, are herein referred to as “NYSE-Traded Bonds.” NASD Rule 6230(e)(2) currently exempts transactions in TRACE-eligible securities that are listed on a national securities exchange when such transactions are executed on and reported to the exchange and the transaction information is disseminated publicly. However, NYSE-Traded Bonds will not be listed on NYSE 9 and the proposed rule change would expand the exemption from reporting under NASD Rule 6230 to transactions in NYSE-Traded Bonds that are TRACE-eligible securities that are reported to NYSE and disseminated publicly. 9 *See* NYSE Corporate Debt Proposal, 70 FR at 41067, 41068 (discussing distinction between bonds listed on NYSE and bonds traded on a facility of NYSE). NASD notes that the proposed rule change is predicated on NASD's receiving certain information from NYSE relating to transactions in NYSE-Traded Bonds that are TRACE-eligible and NASD's successful integration of this information into its audit trail. 10 The success of the proposed pilot program will be heavily dependent on NASD's ability to effectively continue to provide surveillance for corporate debt trading in the over-the-counter (“OTC”) market. NASD will evaluate the effectiveness of the consolidated audit trail during the pendency of the proposed pilot program. 10 In this regard, NASD and NYSE are in the process of negotiating a data-sharing agreement wherein, among other things, NYSE will agree to provide NASD, on a T+1 basis, certain information related to transactions in NYSE-Traded Bonds that are TRACE-eligible securities. In turn, NASD intends to consolidate this information into the computer database housing NASD's audit trail. NASD intends to provide NYSE regulatory personnel access, strictly for regulatory purposes only, to that portion of NASD's database reflecting the information submitted by NYSE. Finally, NASD is proposing to delete references to “Nasdaq” and the “Nasdaq Stock Market, Inc.” in NASD Rule 6210 and “Nasdaq” in NASD Rule 6230 to reflect The NASDAQ Stock Market LLC's registration as a national securities exchange. The proposed rule change will become effective upon the later of either:
(1)approval of this proposed rule change by the Commission, or
(2)execution by NASD and NYSE of a data-sharing agreement addressing data related to transactions covered by the proposed rule change. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, 11 which requires, among other things, that NASD's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. The proposed rule change is being made to enhance regulatory efficiency and reduce duplicative trade reporting. 11 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments were neither solicited nor received. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2006-110 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASD-2006-110. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2006-110 and should be submitted on or before December 13, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of the Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the Act and the rules and regulations thereunder applicable to a national securities association. 12 Specifically, the Commission believes that the proposal is consistent with Section 15A(b)(6) of the Act 13 in that it is designed to promote just and equitable principles of trade, to perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission also believes that the proposal is consistent with Section 15A(b)(9) of the Act 14 in that it does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. 12 In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 13 15 U.S.C. 78 *o* -3(b)(6). 14 15 U.S.C. 78 *o* -3(b)(9). Any trade in unregistered corporate debt securities on NYSE will automatically be captured by NYSE's systems. The Commission understands that NYSE will provide data on such trades to NASD for surveillance purposes. Therefore, NASD should be able to obtain necessary surveillance data without subjecting joint NYSE/NASD members to a duplicative reporting requirement. The Commission concludes that it is reasonable and consistent with the Act for NASD to eliminate from its rules the requirement that a trade executed on NYSE also be reported to TRACE. 15 15 The Commission will continue to monitor the growth of intermarket competition in the corporate bond markets and, in the event market fragmentation becomes a concern, will consider appropriate means to address the consolidation of market information for corporate bonds. Pursuant to Section 19(b)(2) of the Act, 16 the Commission finds good cause for approving the proposed rule change, as amended, before the thirtieth day after the date of publication of notice of filing thereof. Accelerating approval of this proposed rule change will immediately eliminate double-reporting of certain bond trades and thereby eliminate an unnecessary burden on NYSE members trading corporate bonds pursuant to the terms of an exemption being granted in a related action today by the Commission. 17 The Commission believes that NASD's rule change raises no issues of regulatory concern, because NASD should have access to sufficient regulatory information relating to the exempted bond trades through the information-sharing agreement it will enter with NYSE. Therefore, the Commission does not believe it is necessary or appropriate to delay approval and implementation of this proposal pending a notice-and-comment period. 16 15 U.S.C. 78s(b)(2). 17 *See* Securities Exchange Act Release No. 54766 (November 16, 2006) (File No. S7-06-05). V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 18 that the proposed rule change (SR-NASD-2006-110), as amended, is hereby approved on an accelerated basis. 18 15 U.S.C. 78s(b)(2). 19 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 19 Nancy M. Morris, Secretary. [FR Doc. E6-19728 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54755; File No. SR-NASD-2006-007] Self-Regulatory Organizations; National Association of Securities Dealers, Inc; Order Approving Proposed Rule Change Relating to Option Position and Exercise Limits and Position Reporting Obligations; and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 1 Thereto November 15, 2006. I. Introduction On January 23, 2006, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend NASD Rule 2860, which relates to position and exercise limits and position reporting obligations for members that hold positions in index and equity options or that represent customers holding such positions. The proposed rule change was published for comment in the **Federal Register** on February 6, 2006. 3 The Commission received one comment on the proposal. 4 In its comment letter, the Securities Industry Association (“SIA”) “endorse[d] the adoption of clear and objective criteria for identifying those index options that would be exempt from NASD option position and exercise limits.” 5 However, the SIA also recommended “streamlining the relevant standards and easing the operational steps necessary for NASD member firms to verify compliance with the Proposed Rule Change.” 6 In response to this comment, NASD filed Amendment No. 1 to the proposed rule change on September 20, 2006. 7 This notice and order solicits comments from interested persons on Amendment No. 1 and approves the proposal, as amended by Amendment No. 1, on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 53189 (January 30, 2006), 71 FR 6117. 4 *See* letter from John R. Vitha, Esq., Chairman, Securities Industry Association Derivative Product Committee, to Nancy M. Morris, Secretary, Commission, dated May 23, 2006 (“SIA Letter”). 5 *Id.* at 1. 6 *Id.* 7 The text of Amendment No. 1 is available on the NASD's Web site ( *http://www.nasd.com* ), at NASD's principal office, and at the Commission's Public Reference Room. II. Description of the Proposal A. Position Limits for OTC Index Options NASD currently prohibits its members, for their proprietary or agency accounts, from holding positions in over-the-counter (“OTC”) equity options 8 that exceed certain position limits. 9 NASD also imposes exercise limits on a member that holds OTC equity options; the member may not exercise, within a period of five consecutive business days, a number of option contracts that exceeds the same number established for the position limit. 10 The position limits that NASD imposes on its members for OTC equity options are based on similar standards established by the option exchanges for “standardized” equity options. 11 In contrast, NASD rules impose no position limits on OTC index options, but do not clarify what constitutes an OTC index option for this purpose. 8 An “OTC option” for the purposes of this approval order means any option contract not issued or subject to issuance by the Options Clearing Corporation (“OCC”). 9 These position limits vary depending on the characteristics of the security underlying the OTC option. *See* NASD Rule 2860(b)(3)(A)(viii). 10 *See* NASD Rule 2860(b)(4). NASD's proposal will impact its exercise limits in the same way as it will change its position limits. 11 The term “standardized equity option” means any equity options contract issued, or subject to issuance by, The Options Clearing Corporation that is not a FLEX Equity Option. *See* NASD Rule 2860(b)(2)(UU). NASD believes that some indexes underlying OTC options might have economic characteristics more closely resembling single securities than broad-based indexes. This could be the case, for example, where the index consisted of only a small number of securities or if one or a few securities represented a significant percentage of the index's weighting. In its initial filing, NASD proposed 11 criteria an index would have to meet to be sufficiently broad-based for an option on that index to be deemed a “conventional index option” under proposed NASD Rule 2860(b)(2)(N). 12 A position in a “conventional index option” would continue to be free from any position limits imposed by NASD rules. In addition, a position in an OTC option overlying the same index as an exchange-traded option would not be subject to position limits. A position in an OTC index option that did not either qualify as a “conventional index option” or overlie the same index as an exchange-traded option would in effect be deconstructed into separate equity option components, and NASD position limits would apply with respect to each component. 13 12 The 11 criteria originally proposed by NASD to define a “conventional index option” were as follows: a) The option must be A.M.-settled; b) The index must be weighted pursuant to one of a number of widely recognized methodologies; c) The index must consist of ten or more component securities; d) Each component security must be characterized by a minimum market capitalization; e) Each component security must be characterized by a minimum trading volume; f) The most highly weighted components of the index must be characterized by heightened trading volume, as compared to the remaining components; g) No single component security or group of five securities may represent more than a maximum concentration of the index; h) All component securities are “NMS securities” as defined in Regulation NMS; i) Certain non-U.S. component securities may not, in the aggregate, represent more than a maximum weight of the index; j) An equal dollar-weighted index will be rebalanced once every quarter; and k) If an underlying index is maintained by a broker-dealer, the index must be calculated by a third party that has implemented appropriate information barriers around its personnel who have access to information about changes to the index. 13 *See* NASD Rule 2860(b)(2)(JJ). In response to the SIA Comment Letter, NASD in Amendment No. 1 replaced the 11 originally proposed criteria for a “conventional index option” with the following criteria: • An index must contain nine or more equity securities. • No equity security may comprise more than 30% of the equity security component of the index's weighting. • Each equity security in the index is either: 1. A component security of the Russell 3000 Index or the FTSE All-World Index Series; or 2. Characterized by a minimum market capitalization and minimum trading volume. 14 14 Specifically, each equity security in the index must:
(A)Have a market capitalization of at least $75 million, or, in the case of the lowest weighted component securities in the basket or index in the aggregate account for no more than 10% of the weight of the index $50 million; and
(B)have a trading volume for each of the preceding six months of at least one million shares or, in the case of each of the lowest weighted component securities in the basket or index that in the aggregate account for no more than 10% of the weight of the index, 500,000 shares. The SIA recommended basing the definition of a “conventional index option,” in part, on the definition under the Exchange Act of what is not a “narrow-based security index.” 15 As provided in that definition, the SIA recommended replacing the requirement that a qualifying index be comprised of ten or more securities with a requirement that an index be comprised of nine or more securities. Similarly, the SIA also recommended that the NASD amend its proposal to conform with the criterion under the Exchange Act definition described above, to provide that no equity security in the index represent more than 30% of the equity security component of the index. NASD adopted both of these recommendations. 15 *See* 15 U.S.C. 78c(a)(55)(C). In its original filing, NASD required that the components of an index underlying a “conventional index option” be characterized by certain minimum market capitalization and liquidity standards. 16 The SIA suggested that NASD treat components of the Russell 3000 Index and the FTSE All-World Index Series as meeting such quantitative standards without measuring the actual market capitalization and trading volume of such components. 17 In Amendment No. 1, NASD retained the quantitative standards for market capitalization and trading volume, but allowed that condition to be met if an equity security is included in the Russell 3000 Index or the FTSE All-World Index Series. NASD believes that these indexes are reasonable surrogates for the quantitative measurements, and that these alternative criteria would reduce the compliance burden for members to monitor capitalization and trading volume of the index components. 16 *See supra* note 14 17 *See* SIA Letter at 3. NASD believes that the criteria it proposed in Amendment No. 1 to replace the original 11 criteria impose sufficient parameters on the components of the index to ensure that a qualifying index would not be so narrowly constructed as to have the economic characteristics of a single security or small group of securities. Accordingly, NASD in Amendment No. 1 eliminated the remaining criteria proposed in the original filing. B. Large Options Position Reporting Under existing NASD Rule 2860(b)(5)(A)(i)(a), an NASD member must report a position of 200 contracts or more in any OTC option covering an “underlying security or index.” 18 On June 30, 2006, the Commission approved an NASD rule change that, among other things, eliminated the term “underlying index,” which was defined to mean “an index upon which a Nasdaq index option contract is based.” 19 Accordingly, NASD rules currently provide no standard for the types of OTC index options for which members must report large positions. NASD's initial proposal would have clarified this situation by requiring a member to report a position of 200 or more contracts in:
(1)An OTC option on an index underlying an exchange-traded option, or
(2)a “conventional index option,” as defined in proposed NASD Rule 2860(b)(2)(N). 18 When a member conducts a business in standardized ( *i.e.* , exchange-traded) options but is not a member of the exchange on which the option is traded ( *i.e.* is an “access firm”), the member also must report to NASD a position of 200 contracts or more in a standardized option. *See* NASD Rule 2860(b)(5)(A)(i)(b). Nothing in this proposal affects an access firm's obligation to report positions in standardized options. 19 The proposed rule change amended various NASD rules in anticipation of the Nasdaq Stock Market's separation from NASD. *See* Securities Exchange Act Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006) (SR-NASD-2005-087). In its comment letter, the SIA suggested that a position in an OTC index option should be exempt from any position reporting requirements unless the OTC option overlies the same index as an exchange-traded option. NASD generally agrees with the SIA's approach and is proposing to revise its Rule 2860(b)(5) to provide that a member must report a position in a “conventional index option” only when such option is based on an index that underlies, or is substantially similar to an index that underlies, an exchange-traded option. This approach would enable NASD Market Regulation staff to analyze the exchange-traded and OTC markets in aggregate for options on the same or substantially similar indexes. 20 NASD believes that position reporting for other conventional index options would be of little regulatory interest and represents that, to the extent it requires information about a position in a conventional index option on a specially negotiated index or group of underlying securities, it can obtain such information from a member pursuant to a request under NASD Rule 8210. 21 Thus, NASD believes that eliminating this position reporting requirement would not prevent it from accessing information relating to a conventional index option position as needed to carry out its market oversight and enforcement responsibilities. 20 Telephone conversation among Gary Goldsholle, Associate General Counsel, NASD, Kathryn Moore, Assistant General Counsel, NASD, and Tim Fox, Special Counsel, Commission, on October 31, 2006. 21 However, a position in an OTC index option that did not qualify as a “conventional index option” would in effect be deconstructed into separate equity option components, and the position reporting obligation would apply with respect to each component. *See* NASD Rule 2860(b)(2)(JJ). Finally, the SIA urged NASD to revisit the threshold at which position reporting applies, for the OTC options where position reporting is required. 22 The SIA suggested raising the threshold from the current 200 contracts to 10,000 contracts. NASD stated in Amendment No. 1 that it does not believe such a change is appropriate or necessary at this time. However, NASD stated that it will consider this issue and subject it to further review and discussion with the other self-regulatory organizations. 22 *See* SIA Letter at 4. C. Position Limits for Options on Foreign Equity Securities Under existing NASD Rule 2860(b)(3)(A)(viii), the position limits for conventional equity options parallel the limits for the standardized options on the same security. Therefore, if a standardized equity option is subject to a higher tier of position limits because of the relatively liquid and deep nature of the market for the underlying security, then a conventional option on the same security would be subject to a higher tier as well. On the other hand, with respect to an OTC option on an equally liquid foreign security, for which no exchange-traded equivalent exists, a member is required to limit its holdings (or its customer's holdings) to the lowest tier of position limits, absent prior approval of NASD staff. To alleviate this disparate treatment of OTC options on foreign equities, NASD proposed in the original filing to allow the higher tiers of position limits for OTC options overlying equity components of the FTSE All-World Index Series 23 meeting the volume and float criteria established by the options exchanges for standardized options on domestic equity securities. 24 23 NASD has represented that, if it designates another index in addition to or instead of the FTSE All-World Index Series, NASD would publish the designation of the new index in a *Notice to Members* and provide members at least 30 days' written notice of the change. 24 *See* Commentary .07 to American Stock Exchange Rule 904, Section 7(c) of Chapter III of the Boston Options Exchange Rules, Interpretation .02 to Chicago Board Options Exchange (“CBOE”) Rule 4.11; International Securities Exchange Rule 412(d); Commentary .06 to NYSE Arca Rule 6.8; Commentary .05 to Philadelphia Stock Exchange Rule 1001. Under the proposed rule change, a member would file a post-trade notice—within one business day—with NASD staff providing the necessary trade volume data and/or current float data to support the member's position limit calculation. NASD staff would review the member's notice, and, if the staff determined that a member incorrectly assigned a position limit, a staff member would instruct the firm to reduce its position below the appropriate limits determined by NASD staff. The Commission received no comments on this aspect of the proposal. D. Miscellaneous Issues The SIA also suggested revising the definition of “conventional index option” to permit the inclusion of financial assets other than equity securities. 25 NASD believes that the originally proposed definition of “conventional index option” permits the inclusion of non-equity assets and is not proposing any change to the rule text to accommodate SIA's suggestion. According to NASD, financial assets other than equity securities could be part of an index and the option thereon could still qualify as a “conventional index option” if the equity security components of the index together met the criteria in the definition. 25 *See* SIA Letter at 4. In addition to changes in response to the SIA Letter, NASD in Amendment No. 1 proposed to clarify the date on which an OTC index option would or would not qualify as a “conventional index option.” The revised rules clarify that the definition's requirements apply as of the date the option position is created. 26 NASD designed this approach to clarify that subsequent events that might impact an index's components would not change how an option on that index is treated for purposes of NASD's position limits and position reporting rules. 26 Telephone conversation between Gary Goldsholle, Associate General Counsel, NASD, and Tim Fox, Division of Market Regulation, Commission on October 19, 2006. III. Discussion The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities association and, in particular, the requirements of Section 15A(b)(6) of the Exchange Act, 27 which requires that the rules of the NASD be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to facilitate transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. 28 The Commission believes the proposed rule change is reasonably designed to enhance the NASD's ability to monitor the options positions of members and their customers and to clarify applicable position limits. In particular, the Commission believes that the NASD rules it is approving today reasonably differentiate between broad-based indexes and indexes whose economic characteristics more closely approximate those of a single security or a small number of securities. The Commission believes that the proposal is designed to balance between allowing the NASD to obtain information for surveilling the market in OTC index options and limiting the burdens on NASD members that hold positions in such options. 27 15 U.S.C. 78 *o* -3(b)(6). 28 In approving the proposal, the Commission has considered the rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). The Commission finds good cause for approving the proposal, as amended by Amendment No. 1, prior to the thirtieth day after the amended proposal is published for comment in the **Federal Register** pursuant to Section 19(b)(2) of the Exchange Act. 29 The Commission believes that Amendment No. 1 does not make any changes to the proposal that would adversely impact investor protection or the public interest. The Commission notes that it received only one comment letter in response to NASD's original proposal. 30 Amendment No. 1 is generally responsive to the commenter's concerns and does not materially alter the proposal. The Commission notes that accelerating approval will enable NASD to implement the proposed rule changes without further delay. 29 15 U.S.C. 78s(b)(2). 30 *See* SIA Letter, *supra* note 4. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 1, including whether Amendment No. 1 is consistent with the Exchange Act. Comments may be submitted by any of the following methods: Electronic comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NASD-2006-007 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 Amendment No. 1 to File Number SR-NASD-2006-007. 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, Station Place, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to Amendment No. 1 to File Number SR-NASD-2006-007 and should be submitted on or before December 13, 2006. V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Exchange Act, 31 that the proposed rule change (SR-NASD-2006-007) be, and hereby is approved, and that Amendment No. 1 is approved on an accelerated basis. 31 *Id* . For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 32 32 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-19732 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54753; File No. SR-NSX-2006-14] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto To Implement a Fee Schedule Under NSX Rule 16.1(a) and 16.1(c) for Transactions Executed Through NSTS and To Modify a Fee Schedule for ITS Transactions November 14, 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 31, 2006, the National Stock Exchange, Inc. (“NSX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. On November 13, 2006, NSX submitted Amendment No. 1 to the proposed rule change. The Exchange has designated this proposal as one establishing or changing a due, fee, or other charge applicable only to a member imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, 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)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to implement a new Fee Schedule to supplement Exchange Rule 11.10 for transactions executed through the Exchange's National Securities Trading System (“NSTS”), and to amend the Fee Schedule applicable to transactions under the Intermarket Trading System Plan and/or the Plan for the Purpose of Creating and Operating an Intermarket Communications Linkage (“ITS Plans”), both to provide for an execution fee and a rebate for executions in Exchange Traded Funds (“ETFs”) classified as Tape B securities. The other fees for executions through NSTS during the phase-in period of Exchange's new trading system, NSX BLADE, will remain the fees contained in NSX Rule 11.10. The text of the proposed rule change, as amended, is available on the Exchange's Web site at *http://www.nsx.com* , at the principal office of NSX, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change, 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. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to
(i)Provide for a rebate of $0.0027 per share executed for adding liquidity in NSTS for ETFs that are classified as Tape B securities and
(ii)charge a liquidity taker fee of $0.0030 per share for transactions in ETFs that are classified as Tape B securities via NSTS, including transactions executed through the auspices of the ITS Plans. Background The Exchange has created a new state of the art trading platform, known as NSX BLADE, that utilizes a strict price/time priority system as the ultimate replacement for NSTS. In connection with the new trading platform, the Exchange filed a proposed rule change to accommodate the new trading platform, which was approved on August 31, 2006. 5 5 *See* Securities Exchange Act Release No. 54391 (August 31, 2006), 71 FR 52836 (September 7, 2006) (order approving SR-NSX-2006-08). As part of that rule filing, the Exchange stated that NSX BLADE will be phased in gradually—first with a small group of Tape C securities over several weeks until all Tape C securities have been transitioned to the new system. Once all Tape C securities have been transitioned to NSX BLADE, the Exchange will then transition all Tape A and Tape B securities. 6 6 The Exchange commenced the gradual phase-in of NSX BLADE on October 23, 2006 with the trading of one Tape C security. NSX plans to monitor this implementation and adjust the schedule as needed to maintain an orderly transition. During this transitional period of phasing in various securities to the NSX BLADE System, the Exchange will be operating both NSTS and the NSX BLADE Systems. Until such securities are phased into the NSX BLADE System, Tape B securities, including ETFs that are classified as Tape B securities, will continue to be traded via NSTS. Rule Set During this transitional period of phasing in various securities to the NSX BLADE System, the Exchange will be operating under two sets of rules. All transactions in NSTS will still operate under the rules pertaining to NSTS (old NSX Rule 11.9 (National Securities Trading System) and old NSX Rule 11.10 (National Securities Trading System Fees)) while all transactions in NSX BLADE will operate under the new trading rules approved in SR-NSX-2006-08 and the new fee rules in Chapter XVI. 7 When the phase-in period has expired and NSTS is no longer operational, old NSX Rules 11.9 and 11.10 will be extinguished. 8 The Exchange has issued a Notice to ETP Holders to advise them of the different trading systems and the rules and fees applicable to each, 9 and will issue a Notice advising them of these new Fee Schedules and this rule change. During this interim period, the Exchange has decided to create a Fee Schedule applicable to NSTS Rules under the authority of NSX Rule 16.1. Further, while the Fee Schedule for ITS Transactions is identical to the Fee Schedule for identical transactions entered in NSTS, the Exchange has decided to create a Fee Schedule for ITS Transactions to make it easier for parties to identify the specific fees associated with the ETP Holders' transactions. 7 The Exchange filed SR-NSX-2006-10 in anticipation of the new trading rules and it was effective upon filing on July 13, 2006. *See* Securities Exchange Act Release No. 54194 (July 24, 2006), 71 FR 43258 (July 31, 2006) (notice of filing and immediate effectiveness of SR-NSX-2006-10). SR-NSX-2006-10 added Chapter XVI to the Exchange's Rules to create a central place where the ETP Holders can look to in order to determine the Exchange's fees and its Fee Schedules. Originally contemplated as the Fee Schedule for NSX BLADE, the chapter was flexible enough to allow the Exchange to establish other fees in that Chapter. For example, NSX Rule 16.1 is not limited by its terms to the NSX BLADE system. Thus, the Exchange has implemented the ITS Plan Fee Schedule to provide for a pass-through of costs provision which is applicable to any transactions through NSTS or NSX BLADE if done through an ITS Plan. *See* Securities Exchange Act Release No. 54692 (November 2, 2006), 71 FR 65867 (November 9, 2006) (notice of filing and immediate effectiveness of SR-NSX-2006-12). Moreover, any changes to the NSTS Fees, if necessary through the phase-in period, will be done through a Fee Schedule under NSX Rule 16.1. In contrast, NSX Rule 16.2 is limited to transactions through NSX BLADE in that rules relating to fees for crosses and tape credits for transactions through NSTS are already contained in the NSTS NSX Rule 11.10. 8 Similarly, the NSTS Fee Schedule will also be extinguished. 9 Regulatory Circular 06-011 issued on October 19, 2006. 2006. Fee Proposal The instant rule change proposes a new Fee Schedule under NSX Rule 16.1(a) and 16.1(c) for executions through NSTS, and proposes to amend a Fee Schedule previously filed for transactions executed through the ITS Plans. 10 The proposed NSTS and ITS Plan Fee Schedules provide for an execution fee of $0.0030 per share for removing liquidity in ETFs classified as Tape B securities executed through NSTS (in other words, a charge for taking liquidity against an order in NSTS). ETP Holders taking liquidity will be charged under the NSTS Fee Schedule, and executions in Tape B ETFs through an ITS Plan will be charged under the ITS Plan Fee Schedule (although the rate of the two execution fees are identical). 11 The Fee Schedules also provide for a rebate of $0.0027 per share executed for adding liquidity in NSTS for ETFs that are classified as Tape B securities (in other words, a rebate for the addition of liquidity to NSTS, provided that it results in an execution through the NSTS System). 10 As set forth in SR-NSX-2006-10, the Exchange proposed to maintain a separate fee schedule that contains its current fees, dues and other charges, instead of including all of its specific fees, dues and charges in the text of its rules. 11 The Exchange would bill non-ETP Holders using the facilities of the Exchange for transactions through an ITS Plan under the ITS Plan Fee Schedule. *See* Securities Exchange Act Release No. 54548 (September 29, 2006), 71 FR 59159 (October 6, 2006) (notice of filing and order granting accelerated approval of SR-NSX-2006-11), which permits Exchange to Exchange billing for transactions through the Linkage Plan. The Exchange represented that, for purposes of Exchange to Exchange billing, it would charge in accordance with its fee schedule. The fees and rebates applicable to these Tape B ETF securities are contained in the NSTS Fee Schedule under NSX Rule 16.1. Moreover, as stated in SR-NSX-2006-13 (filed October 23, 2006), until transitioned to NSX BLADE, any transaction in the Tape A and Tape B (non-Nasdaq listed) securities through the NSTS System will be charged the fees in old NSX Rule 11.10. This NSTS Fee Schedule will supplement the fees and rebates contained in old NSX Rule 11.10 and will supercede any contrary fees that are contained in old NSX Rule 11.10. If the NSTS Fee Schedule does not contravene any fees stated in old NSX Rule 11.10, the ETP Holder affecting a transaction via NSTS will be charged the fees noted in old NSX Rule 11.10. Pursuant to NSX Rule 16.1(c), the Exchange will “provide ETP Holders with notice of all relevant dues, fees, assessments and charges of the Exchange.” ETP Holders and others, including self-regulatory organizations that are the subject of the Exchange to Exchange billing, 12 using the Exchange will be advised of these fees through the Exchange's Web site. In addition, the ETP Holders will, simultaneous with the filing, be notified through the issuance of a Regulatory Circular of these new Fee Schedules applicable to transactions through the NSTS System and the ITS Plans. 12 *See id.* NSX states the fees have been designed in this manner in order to ensure that the Exchange can continue to fulfill its obligations under Section 6(b) of the Act. 13 13 15 U.S.C. 78f(b). 2. Statutory Basis The Exchange believes that the proposed rule change, as amended, is consistent with Section 6(b) of the Act, 14 in general, and furthers the objectives of Section 6(b)(4) of the Act, 15 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges. The Exchange also believes that the proposed rule change, as amended, furthers the objectives of Section 6(b)(1) of the Act 16 in that it helps to assure that the Exchange is so organized and has the capacity to be able to carry out the purposes of the Act and to comply, and to enforce compliance by its ETP Holders with the Act. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(4). 16 15 U.S.C. 78f(b)(1). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change, as amended, will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change, as amended. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change, as amended, has been designated as a fee change pursuant to Section 19(b)(3)(A)(ii) of the Act 17 and Rule 19b-4(f)(2) 18 thereunder, because it establishes or changes a due, fee, or other charge applicable only to a member imposed by the Exchange. Accordingly, the proposal will take effect upon filing with the Commission. At any time within 60 days of the filing of such proposed rule change the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 19 17 15 U.S.C. 78s(b)(3)(A)(ii). 18 17 CFR 240.19b-4(f)(2). 19 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposal, the Commission considers the period to commence on November 13, 2006, the date on which the Exchange submitted Amendment No. 1. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NSX-2006-14 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-NSX-2006-14. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NSX-2006-14 and should be submitted on or before December 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 20 Nancy M. Morris, Secretary. 20 17 CFR 200.30-3(a)(12). [FR Doc. E6-19731 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54767; File No. SR-NYSE-2004-69] Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving Proposed Rule Change and Amendment No. 1 Thereto To Establish Rules for the Trading of Unregistered Corporate Debt Securities November 16, 2006. I. Introduction On December 3, 2004, the New York Stock Exchange LLC (f/k/a New York Stock Exchange, Inc.) (“NYSE” 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”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to establish rules for the trading of unlisted debt securities on the Exchange's Automated Bond System (“ABS”). In connection with this proposed rule change, NYSE submitted an application for a Commission exemption pursuant to Section 36 of the Exchange Act 3 that would permit its members, brokers, and dealers to trade certain unregistered corporate debt securities on ABS. 4 On March 15, 2005, NYSE filed Amendment No. 1 to the proposed rule change. 5 The proposal, as amended, was published for comment in the **Federal Register** on July 15, 2005. 6 The Commission received 19 comments from 16 different commenters on the NYSE Exemption Request and/or the proposed rule change. On October 18, 2005, the Exchange filed an initial response to the comment letters. 7 On September 22, 2006, the Exchange filed a second response to the comment letters. 8 This order approves the proposed rule change, as amended. 9 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78mm. 4 *See* Securities Exchange Act Release No. 51998 (July 8,2005), 70 FR 40748 (July 14, 2005) (File No. S7-06-05) (“NYSE Exemption Request”). 5 Amendment No. 1 replaced and superseded the original filing in its entirety. 6 *See* Securities Exchange Act Release No. 51999 (July 8,2005), 70 FR 41067. 7 *See* letter from Mary Yeager, Assistant Secretary, NYSE,to Jonathan G. Katz, Secretary, Commission, dated October 18, 2005 (“NYSE Response Letter 1”). 8 *See* letter from Mary Yeager, Assistant Secretary, NYSE,to Nancy Morris, Secretary, Commission, dated September 22, 2006 (“NYSE Response Letter 2”). 9 In a separate action, the Commission today also is approving the NYSE Exemption Request. *See* Securities Exchange Act Release No. 54766 (November 16, 2006) (File No. S7-06-05) (“Section 36 Exemption Order”). II. Description of the Proposal Currently, bond trading is conducted on the Exchange through ABS, an electronic trading system that provides subscribers with access to screens that display the order “book” in each bond being traded. Subscribers can enter orders which, if not immediately executed, would be displayed in the book according to price-time priority. NYSE disseminates quotation and last-sale information to market data vendors via the Exchange's dedicated bond quote line. A corporate debt security may be listed and traded on the Exchange if it meets the standards set forth in NYSE Listed Company Manual Section 102.03 (for debt securities of domestic issuers 10 ) or Section 103.05 (for debt securities of non-U.S. issuers), both of which require that the debt issue has an aggregate market value or principal amount of no less than $5 million, and that
(a)the issuer of the debt security (or an entity that directly or indirectly owns a majority interest in, or is under common control with, such issuer) has equity securities listed on the Exchange;
(b)an issuer of equity securities listed on the Exchange has guaranteed the debt security; or
(c)at least one of three criteria is met relating to the rating of the debt security or certain related debt securities. 11 In addition, a convertible debt security may be listed under NYSE Listed Company Manual Sections 102.03 or 103.05 only if the underlying equity security is subject to real-time last sale reporting in the United States. Alternatively, a debt security can trade on NYSE without a listing relationship if it is an “exempted security” (as defined in Section 3(a)(12) of the Exchange Act 12 ). 10 An issuer incorporated or otherwise organized outside the United States would be treated as a domestic issuer under NYSE's bond listing standards only if it is excepted from the definition of “foreign private issuer” as set forth in Rule 3b-4 under the Exchange Act, 17 CFR 240.3b-4. 11 Debt securities meeting the requirements of NYSE Listed Company Manual Sections 703.19 (“Other Securities”) or 703.21 (“Equity-Linked Debt Securities”) currently also may be listed and traded on the Exchange. 12 15 U.S.C. 78c(a)(12). Section 12(a) of the Exchange Act 13 provides that it shall be unlawful for any member, broker, or dealer to effect any transaction in any security (other than an exempted security) on a national securities exchange unless a registration is effective as to such security for such exchange. Section 12(b) of the Exchange Act 14 sets forth the information an issuer is required to submit for a security to be registered on a national securities exchange. 13 15 U.S.C. 78 *l* (a). 14 15 U.S.C. 78 *l* (b). In this filing, the Exchange has proposed to establish NYSE Rules 1400 and 1401 in connection with the NYSE Exemption Request. Rule 1400 would incorporate the terms of the Commission's Section 36 Exemption Order into the Exchange's rules. Under Rule 1400, the debt securities eligible to be traded on the Exchange without being listed on the Exchange would include any unlisted note, bond, debenture, or evidence of indebtedness that is statutorily exempt from the registration requirements of Section 12(b) of the Exchange Act or is eligible to be traded absent Section 12(b) registration pursuant to the Section 36 Exemption Order. Securities eligible to be traded pursuant to the Section 36 Exemption Order would include debt securities that meet the NYSE Listing Standards of NYSE Listed Company Manual Sections 102.03 or 103.05, but would exclude convertible debt securities, which are equity securities under Section 3(a)(11) of the Exchange Act. 15 15 *See* 15 U.S.C. 78c(a)(11). Debt securities meeting the listing requirements of NYSE Listed Company Manual Sections 703.19 or 703.21, while not eligible to be traded pursuant to the Section 36 Exemption Order, would continue to be eligible to be listed and traded on the Exchange. NYSE Rule 1401 would set forth additional criteria for an unregistered debt security to be traded on the Exchange. Rule 1401 would require of each “traded” debt security an outstanding aggregate market value or principal amount of no less than $10 million on the date trading commences 16 and $1 million for continued inclusion for trading on the Exchange. 17 Rule 1401 also would allow the Exchange to suspend trading of a debt security if, among other things, the issuer declares bankruptcy, the Exchange receives advice that the debt securities are without value, or the issuer of the debt securities or its management engages in operations which, in the opinion of the Exchange, are contrary to the public interest. Rule 1401 also provides that the Exchange would promptly suspend trading in a debt security if the security no longer qualified as an exempted security or no longer met the criteria set forth in the Commission's Section 36 Exemption Order. 16 NYSE would employ two existing corporate bond issue databases that provide issue market size information to review for compliance with this criterion. 17 To monitor the $1 million threshold, NYSE would utilize Xcitek, LLC (“Xcitek”), a third-party vendor, to monitor corporate actions such as partial redemptions, defaults, and tender offers. NYSE has represented that it would monitor the prices of bonds in the event that an issuer defaults or is facing potential bankruptcy and would monitor the media for warnings of possible difficulties in addition to ratings downgrades. NYSE intends to identify outstanding debt securities that it currently does not list as well as newly issued debt securities that would satisfy the requirements of Rules 1400 and 1401, and to notify its members and member organizations, through ticker notices and postings on the Exchange's Web site, that such unlisted debt securities are eligible to be traded on the Exchange. In addition, NYSE intends to identify debt securities currently listed on the Exchange that meet the criteria set forth in Rules 1400 and 1401 and thus would be eligible for trading on an unlisted basis. In such cases, NYSE would inform the issuer that its debt securities could be delisted but traded on the Exchange on an unlisted basis. 18 An issuer could elect not to have its debt securities delisted; such securities would have to continue to meet the applicable listing standards. 19 Any security not satisfying the requirements of Rules 1400 and 1401 could trade on the Exchange provided it meets the applicable listing standards. 20 18 *See* NYSE Response Letter 2 at 1. 19 *See id.* 20 Debt securities would remain eligible for listing by and trading on the Exchange under NYSE Listed Company Manual Sections 102.03, 103.05, 703.19, and 703.21. III. Summary of Comments and NYSE's Response As noted above, the Commission received 19 comments from 16 different commenters related to the proposed NYSE Exemption Request and/or the proposed rule change. 21 Thirteen of the commenters strongly urged the Commission to grant the Section 36 exemption and approve the proposed rule change. 22 The commenters generally asserted that allowing unregistered corporate bonds to trade on NYSE would lead to increased efficiency, transparency, liquidity, and competition in the debt markets. Three other commenters—NASD, Nasdaq, and the BMA—expressed some support for NYSE's proposal but also raised certain concerns. 23 21 *See* comments from Dennis J. Lehr, dated July 18, 2005 (“Lehr Letter”); Howard M. Friedman, Compliance and Operations Officer, Easton & Co., dated July 19, 2005 (“Easton Letter”); Michele C. David, Vice President & Assistant General Counsel, The Bond Market Association (“BMA”), dated July 26, 2005; Robyn Greene, Esq., dated August 4, 2005 (“Greene Letter”); William T. Dolan, dated August 5, 2005 (“Dolan Letter”); Donald G. Dueweke, dated August 9, 2005 (“Dueweke Letter”); Denis P. Kelleher, CEO, Wall Street Access, dated August 9, 2005 (“Wall Street Access Letter”); Joseph P. Riveiro, Manager, Corporate Bond Department, InvestecUS, Inc., dated August 9, 2005 (“InvestecUS Letter”); Lynnette Kelly Hotchkiss, Senior Vice President and Associate General Counsel, BMA, dated August 15, 2005 (“BMA Letter 2”); David Russell, Jr., Managing Director, Cove Hill Advisory Services, Inc., dated August 15, 2005 (“Cove Hill Letter”); Thomas Peterffy, Chairman, and David M. Battan, Vice President and General Counsel, Interactive Brokers LLC, dated August 19, 2005 (“Interactive Brokers Letter”); Barbara Z. Sweeney, Senior Vice President and Corporate Secretary, National Association of Securities Dealers, Inc. (“NASD”), dated September 7, 2005 (“NASD Letter”); Fred Siesel, dated June 2, 2006 (“Siesel Letter 1”); Ron Klein, Chairman and CEO, General Associates, Inc., dated July 2, 2006 (“General Associates Letter 1”); Michael N. Castle, Member of the U.S. House of Representatives, dated August 22, 2006 (“Castle Letter”); Joan Conley, Senior Vice President, The Nasdaq Stock Market, Inc., dated September 6, 2006 (“Nasdaq Letter”); Fred Siesel, dated September 14, 2006 (“Siesel Letter 2”); Cate Long, Multiple-Markets, dated October 12, 2006 (“Multiple-Markets Letter”); and Ron Klein, Chairman and CEO, General Associates, Inc., dated October 16, 2006 (“General Associates Letter 2”). 22 *See* Lehr Letter, Easton Letter, Greene Letter, Dolan Letter, Dueweke Letter, Wall Street Access Letter, InvestecUS Letter, Cove Hill Letter, Interactive Brokers Letter, Siesel Letter 1, General Associates Letter 1, Castle Letter, Siesel Letter 2, Multiple-Markets Letter, and General Associates Letter 2. 23 *See* NASD Letter, Nasdaq Letter, and BMA Letter 2. A. Bond Market Supervision and Fragmentation Issues NASD argued generally that Commission approval of NYSE's proposal “could undermine the Commission's original goal of increasing transparency in the corporate bond market.” 24 NASD asserted that, by being permitted to trade unregistered debt securities, the Exchange would be establishing an “execution facility in the [over-the-counter (“OTC”)] market.” 25 Based on that assertion, NASD argued that “transactions in unlisted bonds that are effected through ABS must be subject to NASD's statutorily mandated oversight as the OTC market regulator under Section 15A of the Exchange Act.” 26 NASD further argued that “a robust consolidated inter-market audit trail * * * [is necessary] * * * to ensure that the broader corporate bond market is effectively regulated without fragmentation” 27 and that, “[i]f significant corporate bond transaction data is disseminated by the NYSE, investors will be confronted with two unconsolidated corporate bond ‘tapes.' ” 28 Nasdaq also expressed the view that having one regulator in the corporate bond market ensures appropriate and non-duplicative regulation of that market. 29 24 NASD Letter at 7. 25 *Id.* at 3. 26 *Id.* at 3-4. 27 *Id.* at 5. 28 *Id.* at 7. 29 *See* Nasdaq Letter at 2. With respect to transaction reporting, the BMA noted that, read literally, NASD's rules governing the Trade Reporting and Compliance Engine (“TRACE”), to which NASD members must report transactions in TRACE-eligible securities, would apply to trades in unregistered debt securities on ABS. 30 The BMA stated that dual reporting of the same trades would be unnecessary and unduly burdensome. 31 Another commenter, Multiple-Markets, argued that a combined trade reporting system would be beneficial to investors. 32 30 *See* BMA Letter 2 at 3. 31 *See id.* 32 *See* Multiple-Markets Letter at 3. In its response letter, NYSE rejected NASD's assertion that trading of unregistered debt securities would render ABS an OTC facility subject to NASD oversight. 33 NYSE argued that, if trading of unregistered securities on ABS were OTC activity, its members would not need a Section 36 exemption to trade such securities on the Exchange in the first place. 34 With respect to concerns relating to investor confusion that may arise as a result of unconsolidated market data, NYSE responded that it believed vendors would consolidate the data in response to customer demand. 35 In response to the concerns regarding uncoordinated regulation, NYSE stated that it would be amenable to coordinating regulation with NASD. 36 NYSE agreed with the BMA's view that the Exchange's members should not be required to report ABS trades to TRACE. 37 33 *See* NYSE Response Letter 1 at 5-6. 34 *See id.* at 5. 35 *See id.* at 6. 36 *See id.* In this regard, NASD and NYSE are in the process of negotiating a data-sharing agreement wherein, among other things, NYSE will agree to provide NASD certain information related to transactions in unlisted TRACE-eligible bonds traded on NYSE. In turn, NASD intends to consolidate this information into the computer database housing NASD's audit trail. 37 *See id.* at 2. B. Competition Issues The BMA raised various interrelated competition issues. For example, the BMA asserted that, by trading unregistered debt securities, the Exchange would be “acting as a broker” and “competing with other brokers that also offer trading in the [same] debt securities.” 38 While not objecting to NYSE's “acting as broker,” the BMA claimed that this arrangement could give NYSE “a variety of competitive advantages over the brokers with which it will be competing” due to the Exchange's status as a self-regulatory organization (“SRO”) that regulates many of those brokers. 39 The BMA also expressed concern that broker-dealers could be forced to become NYSE members or to acquire NYSE trading rights to have access to liquidity in unregistered debt securities that would trade on ABS. 40 The BMA also questioned the Exchange's ownership of ABS quotation and trading data and argued that, at a minimum, “any fees imposed by the NYSE on the provision of such data must be reasonable and that the NYSE should not benefit from data ownership rights that are superior to its competitors.” 41 38 BMA Letter 2 at 2. 39 *Id.* 40 *See id.* at 4-5. 41 *Id.* at 4. NYSE refuted the BMA's assertion that the Exchange would be acting as a broker, noting that it “neither makes recommendations regarding the purchase or sale of securities nor acts as agent for any person or entity in connection with purchases or sales through ABS.” 42 NYSE added that all activity on the Exchange occurs pursuant to rules that must be established pursuant to the procedural requirements of Section 19(b) of the Exchange Act and meet the substantive requirements of Section 6(b) of the Exchange Act. 43 NYSE noted in particular that any fees for accessing ABS trade data must comply with Section 6(b)(4) of the Exchange Act, 44 which requires the Exchange to allocate charges equitably among members, issuers, and other persons using the Exchange's facilities. 45 The Exchange concluded that its status as an SRO conveyed no inappropriate competitive advantage in trading unregistered debt securities on ABS. 46 42 NYSE Response Letter 1 at 2. 43 *See id.* 44 15 U.S.C. 78f(b)(4). 45 *See id.* at 4. 46 *See id.* Nasdaq and the BMA also raised issues relating to inter-exchange competition. Nasdaq argued that “[t]he NYSE-proposed requirement that ABS securities be limited to issuers with at least one class of equity listed on the NYSE may place a substantial barrier to the trading of ABS issues by other competing exchanges that lack an equity listing relationship with the debt issuer.” 47 Similarly, the BMA expressed concern that any Commission action not result in a “grant of monopoly trading privileges to the NYSE.” 48 The BMA also asked whether the Commission intends to grant other exchanges the ability to trade, on an unlisted basis, debt securities of issuers whose equity securities were listed on other exchanges. 49 47 Nasdaq Letter at 2. 48 BMA Letter 2 at 6. 49 *See id.* at 5. One commenter, Multiple-Markets, expressed concern that the Exchange's proposed use of a single third-party vendor, Xcitek, to supply NYSE with information about corporate bonds and their issuers, would give Xcitek an unfair advantage over competing vendors. 50 Multiple-Markets also argued that debt securities trading pursuant to the Exchange's proposal should be rated by at least two nationally recognized statistical rating organizations (“NRSROs”) before being admitted to trading on the Exchange on an unlisted basis, and the withdrawal of such ratings should result in a suspension of trading. 51 50 *See* Multiple-Markets Letter at 5-6. 51 *See id.* at 5. C. Blue Sky Issues Finally, the BMA expressed concern that debt securities delisted pursuant to the Exchange's proposal and shifted to “traded” status could lose their “blue sky exemption.” 52 To address this concern, NYSE represented that it would contact in writing all issuers of currently listed debt to highlight the issue and provide such issuers the option of maintaining their listed status. 53 52 *See* BMA Letter 2 at 6. Under Section 18 of the Securities Act of 1933, 15 U.S.C. 77r, certain securities are exempt from state registration requirements or “blue sky laws,” including those that are listed, or authorized for listing, on certain national securities exchanges and securities of the same issuer that are equal in seniority or senior to such securities. 53 *See* NYSE Response Letter 2 at 1. IV. Discussion After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange. 54 In particular, the Commission believes that the proposal is consistent with the provisions of Section 6(b)(5) of the Exchange Act, 55 which requires, among other things, that a national securities exchange's rules 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. 54 In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 55 15 U.S.C. 78f(b)(5). The Commission believes that NYSE Rule 1400 is reasonably designed to implement the terms and conditions of the Commission's Section 36 Exemption Order into the Exchange's rules. The Commission also believes that Rule 1401's qualitative and quantitative criteria for initial and continued inclusion for trading on the Exchange are reasonable and consistent with the Exchange Act. These criteria are similar to those in existing NYSE rules that govern the listing of debt securities on the Exchange and have previously been approved by the Commission. 56 56 *See e.g.* , Securities Exchange Act Release No. 34019 (May 5, 1994), 59 FR 24765 (May 12, 1994) (SR-NYSE-93-49) (approving changes to NYSE bond listing standards). NYSE currently permits only debt securities with an outstanding market value or principal amount of at least $5 million to be listed on the Exchange and suspends the trading of listed debt securities when the outstanding market value or principal amount falls below $1 million. *See* Sections 102.03 and 703.06 of the NYSE Listed Company Manual, respectively. The Commission has carefully considered the comments received and believes that none of the commenters raised any issue that should preclude approval of this proposal. The Commission agrees with the Exchange's view that trading unregistered debt securities on the Exchange would not result in an OTC facility that must, as such, be subject to NASD oversight. Such trading will be effected by NYSE members, pursuant to NYSE rules, and using systems owned and operated by NYSE. NASD expressed concerns that market fragmentation might be exacerbated as a result of approval of this filing and the NYSE Exemption Request. Nasdaq also expressed the view that the corporate bond market would be better served by a single regulator. In addition, Multiple-Markets argued that a combined trade reporting system would be beneficial to investors. The Commission does not believe that these commenters' broad anticipatory concerns should preclude approval of NYSE's proposal. The Commission, however, will continue to monitor the growth of intermarket competition in the corporate bond markets and, in the event market fragmentation becomes a concern, will consider appropriate means to address the consolidation of market information for corporate bonds. The BMA noted that current NASD rules would require transactions in unregistered bonds effected on the Exchange to be reported to TRACE. 57 However, NASD recently filed a proposed rule change with the Commission to amend its rules to provide that transactions in TRACE-eligible securities 58 executed on NYSE pursuant to the Section 36 Exemption Order would be exempt from TRACE reporting for a two-year pilot period. In a separate action, the Commission today is approving that NASD proposal. 59 Therefore, transactions in unregistered corporate debt securities on NYSE will not have to be double-reported to TRACE. 57 *See* NASD Rule 6220. 58 *See* NASD Rule 6210(a). 59 *See* Securities Exchange Act Release No. 54768 (November 16, 2006) (notice of filing and accelerated approval of SR-NASD-2006-110). Commenters also raised various competitive issues with NYSE's proposal. The BMA claimed that NYSE's ability to sell trade data would give it “a significant competitive advantage,” and broker-dealers “will be required to pay significant additional charges to obtain information for which they are currently already paying TRACE.” 60 The BMA observed that many broker-dealers that trade corporate debt securities OTC are not currently members of NYSE, and argued that Commission approval of this proposal “could effectively force those firms to become members of the NYSE or to acquire NYSE trading rights.” 61 Finally, the BMA opined that “there has historically been a conflict between an exchange's role as a financial intermediary and its role as a regulator of financial intermediaries.” 62 Nasdaq argued that limiting NYSE's proposal only to corporate debt securities issued by an entity having an equity security listed on the Exchange “may place a substantial barrier to the trading of ABS issues by other competing exchanges that lack an equity listing relationship with the debt issuer.” 63 Similarly, the BMA questioned whether, and under what conditions, the Commission would permit other exchanges to trade unregistered corporate debt securities. 64 60 BMA Letter 2 at 3. 61 *Id.* at 5. 62 *Id.* at 4. 63 Nasdaq Letter at 2. 64 *See* BMA Letter 2 at 5-6. The Commission finds that NYSE's proposal is consistent with Section 6(b)(8) of the Exchange Act, 65 which requires that the rules of an exchange not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. The Exchange Act sets out a comprehensive regulatory scheme for exchanges. Among other things, any fees charged by an exchange for market data on trades executed on its facilities must be fair and reasonable, not unreasonably discriminatory, and equitably allocated among its members and other persons using its facilities. 66 While an exchange is entitled to limit participation to those persons who have qualified for membership, the Exchange Act permits denials of membership only for specific legitimate reasons. 67 The Commission, among other things, oversees exchanges to ensure that they are enforcing their rules in a manner consistent with the Exchange Act and that any changes to an exchange's rules are consistent with the Exchange Act. The Commission concludes that the commenters have raised no competitive issue that would preclude approval of this proposal. The Commission believes that NYSE's entry into this segment of the corporate bond market is broadly pro-competitive and in the public interest. 65 15 U.S.C. 78f(b)(8). 66 *See* 15 U.S.C. 78f(b)(4). 67 *See* 15 U.S.C. 78f(c). The Commission does not believe that the Section 36 Exemption Order gives NYSE an unfair competitive advantage over other exchanges. Other exchanges may petition the Commission for similar relief that would permit their members to trade unregistered debt securities on exchange facilities subject to the conditions imposed by the Commission in NYSE's case. The Commission further believes that requiring a debt security that trades pursuant to the proposed rule change to be rated by NRSROs, as Multiple-Markets suggests, is not necessary or appropriate in the public interest, as the decision whether to impose such a requirement is a matter typically left to the business discretion of the individual markets. 68 Similarly, with respect to the commenter's concern about NYSE's proposed use of a third-party data vendor to supply information regarding the actions of corporate bond issuers, selection of a particular vendor is generally within the business judgment of the Exchange. 69 68 *See* Multiple-Markets Letter at 5. 69 *See id.* The Commission notes that it is not sanctioning a particular vendor by approving the proposed rule change. Finally, the Commission does not believe that there are any blue sky issues that would preclude approval of this proposal. Currently, any security listed on the Exchange is exempt from state blue sky laws. A debt security that is delisted by the Exchange and, instead, traded on an unlisted basis could lose its blue sky exemption. However, NYSE has represented that it would not involuntarily delist the debt security of any issuer (provided that the security otherwise met all applicable listing requirements). 70 Therefore, this proposal will not cause undue hardship for any issuer that relies on the Exchange's listing of its debt security to obtain a blue sky exemption. 70 *See* NYSE Response Letter 2 at 1. V. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Exchange Act, 71 that the proposed rule change (SR-NYSE-2004-69), as amended, is approved. 71 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 72 Nancy M. Morris, Secretary. 72 17 CFR 200.30-3(a)(12). [FR Doc. E6-19723 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54759; File No. SR-NYSEArca-2006-80] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Procedures for Executing Complex Options Orders in Open Outcry November 15, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on November 3, 2006, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange has filed the proposal as one effecting a change in an existing order-entry or trading system pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(5) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(5). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Arca Rule 6.75 concerning the procedures for executing complex options orders in open outcry. The text of the proposed rule change is available on the Exchange's Web site at *http://www.nysearca.com* , at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NYSE Arca Rule 6.75 sets forth the priority and order allocation procedures with respect to orders executed by open outcry. Commentary .01 to NYSE Arca Rule 6.75 sets forth the procedures for executing combination, spread, ratio, and straddle orders (otherwise known as “complex orders”) in open outcry. When the Exchange introduced its new electronic trading platform for options, the OX Trading System (“OX”), the Exchange did not amend the open outcry procedures for complex orders. 5 The Exchange is providing clarifying rule amendments to NYSE Arca Rule 6.75 and Commentary .01 to NYSE Arca Rule 6.75 so that the procedures reflect references to the current systems on the floor now that OX is fully implemented. 5 *See* Securities Exchange Act Release No. 54238 (July 28, 2006), 71 FR 44758 (August 7, 2006) (SR-NYSEArca-2006-13) (approving establishment of OX platform). Specifically, the Exchange wishes to clarify that the “Book” referenced in NYSE Arca Rule 6.75(h)(4) and Commentary .01(b)-(d) to NYSE Arca Rule 6.75 has been phased out and has been replaced by the Consolidated Book of OX. 6 In the past, the “Book” had contained only customer limit orders and was maintained by the floor's Order Book Official. Today, the floor utilizes the Consolidated Book of OX, and, importantly, the Consolidated Book contains not only customer limit orders but also broker-dealer and firm limit orders. Given this more comprehensive representation of orders in the Consolidated Book, the Exchange wishes to clarify how OTP Holders 7 and OTP Firms 8 are to interact with the Consolidated Book when representing a complex order. 6 *See* NYSE Arca Rule 6.1(b)(37). The term “Consolidated Book” means the Exchange's electronic book of limit orders for the accounts of Public Customers and broker-dealers, and Quotes with Size. The term “Quote with Size” means a quotation to buy or sell a specific number of option contracts at a specific price that a Market Maker has entered into PCX Plus through an electronic interface. NYSE Arca Rule 6.1(b)(33). 7 *See* NYSE Arca Rule 1.1(q). 8 *See* NYSE Arca Rule 1.1(r). When executing a complex order at a net debit or credit, which can be satisfied at the electronically disseminated bids and offers of the series involved in the order, the Floor Broker must determine if there are customer orders in the Consolidated Book at the best price in each series. 9 The Floor Broker will consult the Trading Official at the post to make the determination. 10 The Trading Official will check the system to see if there are customer orders on any or all sides of the transaction and inform the broker but will disclose neither the size of the customer order(s) nor the ranking of the customer order(s). In the event that there is any customer order priced at the best price in the corresponding series in the Consolidated Book, all orders at that price, customer and non-customer, will be deemed to have priority and will have to be satisfied prior to executing the complex orders. For each execution of a complex order that takes priority over non-customer bids and offers displayed in the Consolidated Book, the Trading Official at the post shall record the transaction by completing an Unusual Activity Report. A log of such reports will be maintained by the Floor Surveillance Unit. 9 *See* NYSE Arca Rule 6.43(a). A “Floor Broker” is an individual (either an OTP Holder or OTP Firm or a nominee of an OTP Holder or OTP Firm) who is registered with the Exchange for the purpose, while on the Exchange Floor, of accepting and executing option orders received from OTP Holders and OTP Firms. 10 *See* NYSE Arca Rule 6.1(b)(34). A “Trading Official” is an Exchange employee or officer, who is designated by the Chief Executive Officer (or its designee) or by the Chief Regulatory Officer (or its designee) of the Exchange. Trading Officials have the ability to recommend and enforce rules and regulations relating to trading access, order, decorum, health, safety, and welfare on the Exchange. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with section 6(b) of the Act 11 in general and furthers the objectives of section 6(b)(5) 12 in particular in that it is designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change 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 change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective upon filing pursuant to section 19(b)(3)(A)(iii) of the Act 13 and Rule 19b-4(f)(5) 14 thereunder because it effects a change in an existing order-entry or trading system of a self-regulatory organization that
(i)does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not have the effect of limiting the access to or availability of the system. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 13 15 U.S.C. 78s(b)(3)(A)(iii). 14 17 CFR 19b-4(f)(5). 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-NYSEArca-2006-80 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEArca-2006-80. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2006-80 and should be submitted on or before December 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-19735 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54758; File No. SR-NYSEArca-2006-81] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rules Related to Complex Order Trading November 15, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on November 3, 2006, the NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NYSE Arca proposes to amend its rules governing Complex Order Trading in order to allow the pricing and trading of complex orders in one cent increments. The Exchange also proposes to eliminate certain obsolete rules related to the PCX Plus System (“PCX Plus”) Complex Trading Engine (“CTE”). The text of the proposed rule change is available on the Exchange's Web site at *http://www.nysearca.com* , at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this filing is to amend NYSE Arca Rule 6.91 which governs CTE. NYSE Arca proposes to adopt certain rules regarding the pricing of complex orders that are in effect at the International Securities Exchange (“ISE”). 5 The Exchange also proposes to eliminate certain obsolete rules related to PCX Plus CTE. 5 *See* ISE Rule 722(b)(1)-(2). *Administrative Changes* . NYSE Arca recently completed the introduction of the OX Trading System (“OX”) for options. Prior to OX the Exchange used PCX Plus. The Exchange developed rules for trading complex orders, some of which were specific to PCX Plus, in particular those that dealt with PCX Plus CTE. PCX Plus CTE is no longer used to execute orders. Therefore, the Exchange proposes to eliminate obsolete rules that applied only to CTE. NYSE Arca will file new rules with the Commission prior to trading complex orders on OX *.* The Exchange anticipates the introduction of complex order trading on OX sometime in the first quarter of 2007. The Exchange also proposes amending NYSE Arca Rule 6.91(a) which deals with the definition of certain order types. NYSE Arca Rule 6.62(j) defines “Combination orders.” Proposed NYSE Arca Rule 6.91(a)(10) now will reference NYSE Arca Rule 6.62(j) so that this may be included with the definition of other complex order types for ease of reference. *Pricing of Complex Orders* . Presently, individual orders comprising complex orders on NYSE Arca must be executed in minimum price variations (“MPV”) equivalent to those in NYSE Arca Rule 6.72(a). Those increments are $.05 for options that are priced less than $3.00 and $.10 for options priced above $3.00. 6 Complex orders are, by definition, complex trades involving intricate trading strategies. These orders, which are made up of two or more option orders (the “legs” of the order) or an option order tied to a corresponding equity order, are typically priced on a net debit/credit basis. The net debit/credit price is derived from either the difference in, or combined total of, the individual legs of the order. Pricing on a net debit/credit basis allows for the pricing of the entire order, as opposed to having to price the individual legs. Pricing the order as a single trade allows the order to trade at a price that can be more reflective of the actual value of the order, which can often be difficult when using separate prices. 7 Since all legs of a complex order are typically done by the same trader or customer, the trade is often better priced than would be if done as separate trades. 8 Often, however, when attempting to execute a trade on a net debit/credit basis, market participants are prevented from actually trading at the true value, because they must price the individual legs in standard MPVs as set forth in NYSE Arca Rule 6.72(a). The requirement that the legs of a complex order must trade in standard MPVs, even when the order itself is priced at a net debit/credit, defeats the purpose behind net debit/credit pricing of complex orders; that being, orders traded on a debit/credit basis can provide the opportunity for more efficient pricing of option trades. Therefore, NYSE Arca proposes to add a new Commentary .01 to NYSE Arca Rule 6.91 to allow the option leg(s) of complex orders, as defined in NYSE Arca Rule 6.91(a), to be executed in one cent increments, regardless of the minimum increment otherwise applicable to the individual option leg(s) of the order. Providing additional price points at which the individual legs of an order can be priced may facilitate complex order execution on NYSE Arca and provide better prices for all participants. 6 The Exchange has proposed changes to NYSE Arca Rule 6.72 as part of SR-NYSEArca-2006-73, which was filed on October 9, 2006, and is pending approval. The proposed rule change will create a Penny Pilot Program which will allow penny pricing in certain classes of options on NYSE Arca. 7 Telephone conversation between Glen Gsell, NYSE Arca, and Molly Kim, Division of Market Regulation, Commission, on November 13, 2006. 8 *Id* . In conjunction with the change above, the Exchange proposes to add a new Commentary .02 to NYSE Arca Rule 6.91 that requires any leg of a complex order that takes priority over established customer orders in the Consolidated Book to be better priced by at least one MPV as provided in NYSE Arca Rule 6.72. The Exchange believes that these proposed rule changes related to the pricing of complex orders are consistent with rules for complex order trading on the ISE. 9 9 *See* note 5 *supra* . 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) 10 of the Act, in general, and furthers the objectives of Section 6(b)(5), 11 in particular, in that it is designed to facilitate transactions in securities, to promote just and equitable principles of trade, to enhance competition, and to protect investors and the public interest. In particular, trading complex orders in one cent increments will provide market participants and public customers with more pricing options, which could lead to tighter spreads and increased liquidity at NYSE Arca. 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 12 and Rule 19b-4(f)(6) thereunder, 13 because it:
(i)Does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)by its terms, does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. 14 12 15 U.S.C. 78s(b)(3)(A)(iii). 13 17 CFR 240.19b-4(f)(6). 14 As required by Rule 19b-4(f)(6)(iii) of the Act, NYSE Arca 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. NYSE Arca requests that the Commission waive the 30-day operative period under Rule 19b-4(f)(6)(iii). 15 The Commission believes that it is consistent with the protection of investors and the public interest to waive the 30-day operative delay, because waiving the operative delay will allow NYSE Arca investors to immediately trade and price complex orders in one cent increments on NYSE Arca. 16 15 17 CFR 240.19b-4(f)(6)(iii). 16 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). At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 17 17 *See* Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-NYSEArca-2006-81 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 No. SR-NYSEArca-2006-81. 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 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-2006-81 and should be submitted on or before December 13, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 18 18 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-19737 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54760; File No. SR-Phlx-2006-76] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Rule 185A, Intermarket Sweep Orders—Temporary November 15, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on November 13, 2006, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II, below, which Items have been prepared by the Phlx. The Exchange filed the proposal as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which rendered the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to adopt Phlx Rule 185A, Intermarket Sweep Orders—Temporary, which describes:
(1)The obligations of the Exchange sending orders to other market centers, and
(2)the obligations of XLE Participants sending Intermarket Sweep Orders (“ISOs”) 5 or IOC Cross Orders that are marked as meeting the requirement to route to other market centers 6 (both types of orders hereinafter are referred to as “Incoming Sweep Orders”). Specifically, before Rule 611 of Regulation NMS 7 is operative on the Exchange (the “Trading Phase Date”), 8 Phlx would use away market obligations instead of immediate-or-cancel intermarket sweep orders. An away market obligation is an immediate or cancel limit order for an NMS stock generated by Phlx in connection with the execution of an order by Phlx and routed to one or more away market centers to execute against all better-priced protected quotations displayed by the other market centers up to their displayed size. If the away market center is capable of receiving an intermarket sweep order, the Exchange may generate and utilize an intermarket sweep order as the away market obligation. In addition, before the Trading Phase Date, the proposed new rule would expressly require XLE Participants sending Incoming Sweep Orders to simultaneously send an intermarket sweep order (or comparable order) for the full displayed size of the top of book of every other market center displaying a better-priced protected quotation. The text of the proposed rule change is available on Phlx's Web site, *http://www.phlx.com* , at Phlx's principal office, and at the Commission's Public Reference Room. 5 *See* Phlx Rule 185(b)(2)(C). 6 *See* Phlx Rule 185(c)(2)(D). 7 17 CFR 242.611. 8 The Trading Phase Date is February 5, 2007. *See* Securities Exchange Act Release No. 53829 (May 18, 2006), 71 FR 30038 (May 24, 2006) (File No. S7-10-04). 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 Phlx included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to clarify the operation of XLE's outbound routing and Incoming Sweep Orders before the Trading Phase Date. Currently, Phlx Rules 185(b)(1)(C)(i)-(ii) and (b)(2)(B) state that when routing out to away market centers, Phlx will use “immediate-or-cancel intermarket sweep orders” to execute against any away market centers with better-priced quotations. However, prior to the Trading Phase Date, not all away market centers will accept intermarket sweep orders. Therefore, in order to implement away routing before the Trading Phase Date, Phlx will use “away market obligations” instead of “immediate-or-cancel intermarket sweep orders.” In addition, before the Trading Phase Date, Phlx will require XLE Participants who send Incoming Sweep Orders to the Exchange to simultaneously send an intermarket sweep order (or comparable order) for the full displayed size of the top of book of every other market center displaying a better-priced protected quotation. This requirement is intended to mirror the requirement, which will be operative after the Trading Phase Date, that all such Incoming Sweep Orders meet the requirement of intermarket sweep orders in Rule 600(b)(30) of Regulation NMS. 9 The Exchange notes that it has requested an exemption from the provisions of the Intermarket Trading System Plan to allow, among other things, the Exchange and its XLE Participants to implement outbound routing and Incoming Sweep Orders in this manner prior the Trading Phase Date. 10 9 17 CFR 242.600(b)(30). 10 *See* Letter from John Dayton, Director and Counsel,Phlx, to Nancy M. Morris, Secretary, Commission, dated November 9, 2006. *See also* Letter from David Shillman, Associate Director, Division of Market Regulation, Commission, to John Dayton, Director and Counsel, Phlx, dated November 14, 2006. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 11 in general, and furthers the objectives of Section 6(b)(5) of the Act 12 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others No written comments were either solicited or received by the Exchange. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule
(i)Does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, provided that the Exchange has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change or such shorter time as designated by the Commission, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b-4(f)(6) thereunder. 14 As required under Rule 19b-4(f)(6)(iii) under the Act, 15 Phlx provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, prior to the date of the filing of the proposed rule change. 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b-4(f)(6). 15 17 CFR 240.19b-4(f)(6)(iii). A proposed rule change filed under Rule 19b-4(f)(6) under the Act 16 normally may not become operative prior to 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) under the Act 17 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay, which would make the rule change effective and operative upon filing. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest, because it allows the Exchange to implement this proposal without delay in order to accommodate the Exchange's plans to commence operation of XLE. The Commission notes that the Exchange has represented that the proposed rule change is based upon a proposed rule change of the American Stock Exchange LLC (“Amex”). 18 For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission. 19 16 17 CFR 240.19b-4(f)(6). 17 17 CFR 240.19b-4(f)(6)(iii). 18 *See* Securities Exchange Act Release No. 54709 (November 3, 2006), 71 FR 65847 (November 9, 2006) (SR-Amex-2006-72) (approval order for Amex's new electronic trading system on a pilot basis, specifically Amex Rules 126A-AEMI-One and 131-AEMI-One). 19 For the purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 20 20 *See* 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2006-76 on the subject line. Paper comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2006-76. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2006-76 and should be submitted on or before December 13, 2006. 21 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 21 Nancy M. Morris, Secretary. [FR Doc. E6-19730 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54756; File No. SR-SCCP-2006-03] Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Trade Recording and Value Fees and NMS Linkage November 15, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on September 26, 2006, Stock Clearing Corporation of Philadelphia (“SCCP”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by SCCP. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change SCCP, pursuant to Section 19(b)(1) of the Act 3 and Rule 19b-4 thereunder, 4 is amending its Trade Recording Fee and its Value Fee (together “Fees”) that are set forth in its Fee Schedule. The amendment extends the application of the Fees to an order that is executed by way of an outbound NMS Linkage order when such outbound NMS Linkage order reflects the PACE order's clearing information after being delivered to the Philadelphia Stock Exchange, Inc. (“Phlx”) by the PACE system. 5 The Fees will not apply where a PACE order was executed against an inbound NMS Linkage order. 3 15 U.S.C. 78s(b)(1). 4 17 CFR 240.19b-4. 5 PACE is Phlx's automated order routing, delivery, execution and reporting system for equities. Phlx Rule 229. I. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, SCCP 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. SCCP 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 The purpose of the proposed rule change is treat PACE trades that interact with NMS Linkage 6 orders the same as Intermarket Trading System (“ITS”) commitments with respect to the Fees. 7 The NMS Linkage Plan is the successor plan to the ITS Plan. While there are some operational differences between the two plans, both facilitate intermarket linkage among market centers trading certain listed securities, and SCCP believes the NMS Linkage Plan will be used in a similar manner as the ITS Plan by Phlx members and member organizations. Therefore, SCCP proposes to apply the Fees to PACE trades that interact with NMS Linkage orders in the identical manner as PACE trades that interact with ITS commitments. This is accomplished by adding the words “or NMS Linkage order” to footnote 1 in the SCCP Fee Schedule. 6 The Commission published notice of the NMS Linkage Plan in Securities Exchange Act Release No. 54239 (July 28, 2006), 71 FR 44328 (August 4, 2006) [File No. 4-524]. A NMS Linkage Plan, dated August 1, 2006, and reflecting Phlx's inclusion as a Participant, was sent to the Commission on August 8, 2006. 7 Securities Exchange Act Release No. 47922 (May 23, 2003), 68 FR 33560 (June 4, 2003) [File No. SR-SCCP-2002-08] (order adopting the current fee treatment of PACE trades that interact with ITS commitments). SCCP believes that the proposed rule change is consistent with Section 17A of the Act and with Section 17A(b)(3)(D) in particular because it provides for the equitable allocation of reasonable fees and other charges among its participants. B. Self-Regulatory Organization's Statement on Burden on Competition SCCP does not believe that the proposed rule change will impose any inappropriate burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. I. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 8 and Rule 19b-4(f)(2) 9 thereunder because it establishes or changes a due, fee, or other charge. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 8 15 U.S.C. 78(s)(b)(3)(A)(ii). 9 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-SCCP-2006-03 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-SCCP-2006-03. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available for inspection and copying at the principal office of SCCP. 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-SCCP-2006-03 and should be submitted on or before December 13, 2006. 10 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 Nancy M. Morris, Secretary. [FR Doc. E6-19736 Filed 11-21-06; 8:45 am] BILLING CODE 8011-01-P SMALL BUSINESS ADMINISTRATION Disaster Declaration #10715, Alaska Disaster #AK-00010 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of ALASKA ( FEMA-1666-DR), dated 10/27/2006. *Incident:* Hooper Bay Fire. *Incident Period:* 08/03/2006 Through 08/04/2006. *Effective Date:* 10/27/2006. *Physical Loan Application Deadline Date:* 12/26/2006. *Addresses:* Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416 SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 10/27/2006, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: *Primary Counties:* The City Of Hooper Bay Within The Lower Yukon Area. The Interest Rates are: Percent Other (Including Non-Profit Organizations) With Credit Available Elsewhere 5.000 Businesses And Non-Profit Organizations Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 10715. (Catalog of Federal Domestic Assistance Number 59008) Jane M. Pease, Acting Associate Administrator for Disaster Assistance. [FR Doc. E6-19711 Filed 11-21-06; 8:45 am] BILLING CODE 8025-01-P DEPARTMENT OF STATE [Public Notice 5618] Bureau of Educational and Cultural Affairs
(ECA)Request for Grant Proposals: Iraqi Young Leaders Exchange Program for Undergraduate Students *Announcement Type:* New Cooperative Agreement. *Funding Opportunity Number:* ECA/A/E/USS-07-IYL. *Catalog of Federal Domestic Assistance Number:* 00.000. *Dates: Key Dates:* Application Deadline: January 12, 2007. *Executive Summary:* The Branch for the Study of the United States, Office of Academic Exchange Programs, Bureau of Educational and Cultural Affairs, announces an open competition for the “Iraqi Young Leaders Exchange Program for Undergraduate Students,” a series of six-week thematic institutes to take place at four different host institutions during the summers of 2007 and 2008. Accredited post-secondary education institutions in the United States and public and private non-profit organizations or consortia of organizations may submit proposals to cooperate with the Bureau in the administration and implementation of this program. Each institute should provide a group of 15-20 highly motivated Iraqi undergraduate students with an integrated and imaginatively designed academic program that includes structured classroom instruction in one of the following four themes: science and technology; media and journalism; entrepreneurship; and public policy. Each institute should incorporate a leadership component and integrate practical learning opportunities related to the institute's theme. In addition, each institute will include an educational travel program that will give participants a deeper understanding of U.S. culture and society. All participants will be expected to return to Iraq immediately following the conclusion of the program. The awarding of the grant for this program is contingent upon the availability of funds (prior year Economic Support Funds, which, at the time of this publication, are pending transfer to ECA for obligation). I. Funding Opportunity Description Authority Overall grant making authority for this program is contained in the Mutual Educational and Cultural Exchange Act of 1961, Public Law 87-256, as amended, also known as the Fulbright-Hays Act. The purpose of the Act is “to enable the Government of the United States to increase mutual understanding between the people of the United States and the people of other countries * * *; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, developments, and achievements of the people of the United States and other nations * * * and thus to assist in the development of friendly, sympathetic and peaceful relations between the United States and the other countries of the world.” The funding authority for the program above is provided through legislation. Purpose In July 2006, President Bush announced the creation of the “Iraqi Young Leaders Exchange Program.” The Bureau of Educational and Cultural Affairs, Branch for the Study of the U.S., will administer this program. Recently graduated high school seniors and undergraduates completing the first and second years of university will participate in intensive, thematic institutes, which will enhance their understanding of the United States, while developing their leadership skills. The Branch will sponsor a total of 150 Iraqi undergraduate student leaders over a two-year period during the summers of 2007 and 2008. In each of these years, the institutes for the “Iraqi Young Leaders Exchange Program for Undergraduate Students” should provide 75 undergraduate student leaders, aged 18-20, with an integrated and imaginatively designed program through four institutes running concurrently at different U.S. host institutions. The program will consist of an academic component that includes leadership training and community service, as well as an educational travel component in the United States. The principal objective of the institutes is to heighten the participants' awareness of the history and evolution of U.S. society, culture, values and institutions. All campus programs should include cultural enrichment activities and should actively engage American undergraduate or graduate student peers as mentors or escorts for the Iraqi students. In addition to promoting a better understanding of the United States, an important objective of the institutes is to develop the participants' leadership and collective problem-solving skills. In this context, the academic program should include group discussions, training and exercises that focus on such topics as the essential attributes of leadership; teambuilding; effective communication; and management skills for diverse organizational settings. There should also be a community service component, whereby the students experience firsthand how not-for-profit organizations and volunteerism play a key role in American civil society. Local site visits and educational travel to cities and other destinations outside the immediate area of the host institutions should provide opportunities to observe varied aspects of American life and discuss issues raised in the academic program. The program should also include opportunities for participants to meet American citizens from a variety of backgrounds, to interact with their American peers, and to speak to appropriate student and civic groups about their experiences and life in Iraq. ECA plans to award a single grant for the recruitment and administration of all institutes for the “Iraqi Young Leaders Exchange Program for Undergraduate Students.” The Bureau is seeking detailed proposals for the institutes from U.S. not-for-profit organizations that will administer the institutes in collaboration with four different U.S. colleges, universities or other not-for-profit academic organizations, who will act as program host institutions. Applicant organizations may submit grant proposals requesting funds not exceeding $2,312,500 to implement a total of eight institutes between June and August 2007, and June and August 2008, or one institute per host institution each summer. Applicant organizations will be evaluated on the functionality of their partnerships with their four selected host institutions. Selected host institutions must have an established reputation in the field or discipline related to their specific program theme (i.e., science and technology; media and journalism; entrepreneurship; and public policy). Applicant organizations are also encouraged to partner with host institutions that together reflect the geographic diversity of the United States. The grantee organization will be ECA's primary point of contact in communicating with the four selected host institutions. The grant recipient organization will recruit, screen, and nominate the exchange participants, in consultation with, but without reliance on the U.S. Embassy in Baghdad. The grantee organization should make every effort to recruit a balanced pool of male and female participants from across Iraq, who represent the ethnic, religious, and cultural diversity of the Iraqi population. The grantee organization will conduct a nation-wide recruitment campaign in Iraq that includes special provisions for the recruitment of female participants and participants from Southern Iraq. The grantee organization will prepare the students for both the content and the logistics of the exchange, and will be responsible for the entire cycle of each program to include: management of travel documents; international and domestic airline reservations for students; preparation and oversight of all programmatic components in the U.S.; and the provision of follow on activities and support for grantee alumni. The Bureau of Educational and Cultural Affairs recognizes that the grantee organization will be conducting all Iraq-based activity in an inherently challenging working environment. As such, applicant organizations must provide a detailed plan for arranging all activities in the U.S. and Iraq directly or in collaboration with partner organizations, which must be identified in the proposal. This plan must also demonstrate the capacity to ensure the participants' security during all phases of Iraq-based activity. The applicant should take into account that Iraqi student participants may have little or no prior knowledge of the United States and varying degrees of experience in expressing their opinions in a classroom setting, therefore, component activities will be tailored accordingly. Every effort should be made to encourage active student participation in all aspects of a program. Program Design The “Iraqi Young Leaders Exchange Program for Undergraduate Students” should consist of four intensive thematic academic programs, to be implemented each summer during 2007 and 2008 for a total of eight institutes, with approximately 75 participants per summer (i.e., 19 per institute). The program should be organized through a carefully integrated series of panel presentations, seminar discussions, debates, individual and group activities, lectures and reading assignments, as well as local site visits, regional educational travel, and participation in community service activities. In addition to host-college or university faculty and professionals from the region where the institutes take place (e.g., in government, media, religious and civic organizations), course presenters should include outstanding scholars and other professional experts from throughout the United States, as appropriate. The institutes must not simply replicate existing or previous lectures, workshops, or group activities designed for American students. Rather, they should be a specially designed and well-integrated seminar that creatively combines lectures, discussions, readings, debates, local site visits and regional travel into a coherent whole. The grantee organization will be required to select four host institutions to develop a program that provides ample time and opportunity for discussion and interaction among students, lecturers and guest speakers, not simply standard lectures or broad survey reading assignments. Reading and writing assignments should be adjusted to the participants' knowledge of English. Capacity of Administering Organization U.S. applicant organizations or consortia must have the necessary capacity in the United States and Iraq to implement the program through either their own offices or partner institutions. Organizations may demonstrate their direct expertise, or they may partner with other organizations to best respond to the requirements outlined in the RFGP. Organizations that opt to work in sub-grant arrangements should clearly outline all duties and responsibilities of the partner organization, ideally in the form of sub-grant agreements and accompanying budgets. Organizations or consortia applying for this grant must demonstrate their (or their partners') capacity for conducting projects of this nature. Program Administration The grantee organization should designate a project director who will oversee all Iraq and U.S. based activity, and serve as the primary liaison with ECA on program and administrative matters. There should also be an academic director at each host institution who will be present throughout the program to ensure the continuity, coherence and integration of all aspects of the academic program, including the educational travel program. In addition to the academic director(s), an administrative director or coordinator should be assigned at each host institution to oversee all student support services, including supervision of the program participants, budgetary, logistical, and other administrative arrangements. For the purposes of this program, it is important that the grantee organization also retain qualified U.S. undergraduate or graduate students as peer mentors or escorts who exhibit cultural sensitivity, an understanding of the program's objectives, and a willingness to accompany the students throughout the program sessions. Iraq-based Activity The grantee organization will demonstrate a capacity to work effectively in Iraq and manage the following activities in consultation with, but without reliance on the U.S. Embassy in Baghdad.
(1)Recruit, screen, and nominate 75 Iraqi undergraduate student leaders and an appropriate number of alternates for six-week programs in the United States during summer 2007, with a second cycle of recruitment for programs in the summer of 2008. Recruitment and nomination will be coordinated in consultation with, but without reliance upon the Public Affairs Section
(PAS)at the U.S. Embassy in Baghdad.
(2)Assist selected participants in submitting J-1 visa applications via the electronic version of the application form (EVAF). Process DS-2019 forms and U.S. visa applications with sufficient lead-time to allow for visa interviews at the U.S. Embassy in Baghdad no later than 100 days before the beginning of travel to the United States.
(3)Provide orientations in a third country en route to the U.S., or in Washington, DC for all Iraqi undergraduate students chosen to participate.
(4)Provide international roundtrip travel arrangements to Washington, DC for participants.
(5)Create and manage an online communication portal for alumni to continue dialogue and carry out action plans that promote program objectives. The portal can also be used to track alumni addresses, and should take every precaution to safeguard student security. Participants Participants in the “Iraqi Young Leaders Exchange Program for Undergraduate Students” should be highly motivated and exemplary recently graduated high school seniors and those completing the first and second years at colleges, universities and teacher training institutions from across Iraq, who display leadership through academic achievement, community involvement, and extracurricular activities, and who demonstrate the willingness and preparedness to participate in this program. Their major fields of study will be varied, and will include the sciences, social sciences, humanities, education and business. All participants will have a good knowledge of English. The grantee organization will recruit and recommend participants for selection to the appropriate institute in accordance with the applicant's qualifications and primary fields of interest. Confirmation of final selection will be made by ECA's Branch for the Study of the United States. Participants will be students aged 18-20 from across Iraq, who represent the ethnic, religious, and cultural diversity of the Iraqi population. Every effort should be made to select a balanced mix of male and female participants. The grantee organization should make a particular effort to recruit participants who are from non-elite or underprivileged backgrounds, from both rural and urban areas, and have had little or no prior experience in the United States or elsewhere outside of their home country. Applicant organizations must submit a detailed plan for conducting a nation-wide recruitment campaign that includes special provisions for the recruitment of female participants and participants from Southern Iraq. *Program Dates:* The institutes, which should be a maximum of 44 days in length (including participant arrival and departure days), should begin in June 2007, with a similar cycle of programs in the summer of 2008. *Program Guidelines:* It is essential that proposals provide a detailed and comprehensive narrative describing how the partner organizations and/or host institutions will achieve the objectives of the program. For host institutions, this includes listing the title, scope and content of each session, planned site visits, and how each session relates to each institute's theme. A syllabus must be included that indicates the subject matter for each lecture, panel discussion, group presentation or other activity. The syllabus should also confirm or provisionally identify proposed speakers, trainers, and session leaders, and clearly show how assigned readings will advance the goals of each session. A calendar of all program activities must be included in the proposal, as well as a description of plans for public and media outreach in connection with each institute. Overall, proposals will be reviewed on the basis of their coherence, clarity, and attention to detail. Please note: In a cooperative agreement, the Branch for the Study of the United States is substantially involved in program activities above and beyond routine grant monitoring. The Branch will assume the following responsibilities for the institutes: confirm the final selection of participants in consultation with the U.S. Embassy in Baghdad; oversee the institutes through one or more site visits; debrief participants in Washington, D.C. and consult on the implementation of a four-day conclusion program in Washington, DC at the end of the institutes; and engage in follow-on communication with the participants after they return to their home countries. The Branch may require changes in the content or scope of activities of the institutes, either before or after the grant is awarded. The recipient will be required to obtain approval of any significant agenda/syllabus changes in advance of their implementation. II. Award Information *Type of Award:* Cooperative Grant. ECA's level of involvement in this program is listed under number I above. *Fiscal Year Funds:* Prior year Economic Support Funds
(ESF)which, at the time of this publication, are pending transfer to ECA for obligation. *Approximate Total Funding:* $2,312,500. *Approximate Number of Awards:* 1. *Anticipated Award Date:* Pending availability of funds, March 1, 2007. *Anticipated Project Completion Date:* August 2008. *Additional Information:* Pending successful implementation of this program and the availability of funds in subsequent fiscal years, it is ECA's intent to renew this grant for one additional fiscal year in accordance with the original announcement. III. Eligibility Information *III.1. Eligible applicants:* Applications may be submitted by public and private non-profit organizations meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3). *III.2. Cost Sharing or Matching Funds:* There is no minimum or maximum percentage required for this competition. However, the Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs. When cost sharing is offered, it is understood and agreed that the applicant must provide the amount of cost sharing as stipulated in its proposal and later included in an approved grant agreement. Cost sharing may be in the form of allowable direct or indirect costs. For accountability, you must maintain written records to support all costs that are claimed as your contribution, as well as costs to be paid by the Federal Government. Such records are subject to audit. The basis for determining the value of cash and in-kind contributions must be in accordance with OMB Circular A-110, (Revised), Subpart C.23—Cost Sharing and Matching. In the event you do not provide the minimum amount of cost sharing as stipulated in the approved budget, ECA's contribution will be reduced in like proportion. *III.3. Other Eligibility Requirements:*
(a)Bureau grant guidelines require that organizations with less than four years experience in conducting international exchanges be limited to $60,000 in Bureau funding. ECA anticipates awarding one grant, in the amount not to exceed $2,312,500 to support program and administrative costs required to implement this exchange program. Therefore, applicant organizations with less than four years experience in conducting international exchanges are ineligible under this competition. The Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs. IV. Application and Submission Information Note: Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. *IV.1 Contact Information To Request an Application Package:* Please contact the Branch for the Study of the United States, ECA/A/E/USS, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC 20547; tel.
(202)453-8532; fax
(202)453-8533; e-mail: *WalshBM@state.gov* to request a Solicitation Package. Please refer to the Funding Opportunity Number ECA/A/E/USS-07-IYL located at the top of this announcement when making your request. Alternatively, an electronic application package may be obtained from grants.gov. Please see section IV.3f for further information. The Solicitation Package contains the Proposal Submission Instruction
(PSI)document, which consists of required application forms, and standard guidelines for proposal preparation. It also contains the Project Objectives, Goals and Implementation
(POGI)document, which provides specific information, award criteria and budget instructions tailored to this competition. Please specify Brendan M. Walsh and refer to the Funding Opportunity Number ECA/A/E/USS-07-IYL located at the top of this announcement on all other inquiries and correspondence. *IV.2. To Download a Solicitation Package Via Internet:* The entire Solicitation Package may be downloaded from the Bureau's Web site at *http://exchanges.state.gov/education/rfgps/menu.htm* , or from the Grants.gov Web site at *http://www.grants.gov* . Please read all information before downloading. *IV.3. Content and Form of Submission:* Applicants must follow all instructions in the Solicitation Package. The application should be submitted per the instructions under IV.3f. “Application Deadline and Methods of Submission” section below. *IV.3a. You are required to have a Dun and Bradstreet Data Universal Numbering System
(DUNS)number to apply for a grant or cooperative agreement from the U.S. Government.* This number is a nine-digit identification number, which uniquely identifies business entities. Obtaining a DUNS number is easy and there is no charge. To obtain a DUNS number, access *http://www.dunandbradstreet.com* or call 1-866-705-5711. Please ensure that your DUNS number is included in the appropriate box of the SF-424 which is part of the formal application package. *IV.3b. All proposals must contain an executive summary, proposal narrative and budget.* Please refer to the Solicitation Package. It contains the mandatory Proposal Submission Instructions
(PSI)document “and the Project Objectives, Goals and Implementation
(POGI)document” for additional formatting and technical requirements. *IV.3c. You must have nonprofit status with the IRS at the time of application.* If your organization is a private nonprofit which has not received a grant or cooperative agreement from ECA in the past three years, or if your organization received nonprofit status from the IRS within the past four years, you must submit the necessary documentation to verify nonprofit status as directed in the PSI document. Failure to do so will cause your proposal to be declared technically ineligible. *IV.3d. Please take into consideration the following information when preparing your proposal narrative:* *IV.3.d.1. Adherence to all regulations governing the J visa:* The Bureau of Educational and Cultural Affairs is placing renewed emphasis on the secure and proper administration of Exchange Visitor (J visa) Programs and adherence by grantees and sponsors to all regulations governing the J visa. Therefore, proposals should demonstrate the applicant's capacity to meet all requirements governing the administration of the Exchange Visitor Programs as set forth in 22 CFR 62, including the oversight of Responsible Officers and Alternate Responsible Officers, screening and selection of program participants, provision of pre-arrival information and orientation to participants, monitoring of participants, proper maintenance and security of forms, recordkeeping, reporting and other requirements. The grantee will be responsible for issuing DS-2019 forms to participants in this program. A copy of the complete regulations governing the administration of Exchange Visitor
(J)programs is available at *http://exchanges.state.gov* or from: United States Department of State, Office of Exchange Coordination and Designation, ECA/EC/ECD—SA-44, Room 734, 301 4th Street, SW., Washington, DC 20547; Telephone:
(202)203-5029; FAX:
(202)453-8640. Please refer to Solicitation Package for further information. *IV.3d.2. Diversity, Freedom and Democracy Guidelines* Pursuant to the Bureau's authorizing legislation, programs must maintain a non-political character and should be balanced and representative of the diversity of American political, social, and cultural life. “Diversity” should be interpreted in the broadest sense and encompass differences including, but not limited to, ethnicity, race, gender, religion, geographic location, socioeconomic status, and physical challenges. Applicants are strongly encouraged to adhere to the advancement of this principle both in program administration and in program content. Please refer to the review criteria under the ‘Support for Diversity’ section for specific suggestions on incorporating diversity into your proposal. Public Law 104-319 provides that “in carrying out programs of educational and cultural exchange in countries whose people do not fully enjoy freedom and democracy,” the Bureau “shall take appropriate steps to provide opportunities for participation in such programs to human rights and democracy leaders of such countries.” Public Law 106-113 requires that the governments of the countries described above do not have inappropriate influence in the selection process. Proposals should reflect advancement of these goals in their program contents, to the full extent deemed feasible. *IV.3d.3. Program Monitoring and Evaluation* Proposals must include a plan to monitor and evaluate the project's success, both as the activities unfold and at the end of the program. The Bureau recommends that your proposal include a draft survey questionnaire or other technique plus a description of a methodology to use to link outcomes to original project objectives. The Bureau expects that the grantee will track participants or partners and be able to respond to key evaluation questions, including satisfaction with the program, learning as a result of the program, changes in behavior as a result of the program, and effects of the program on institutions (institutions in which participants work or partner institutions). The evaluation plan should include indicators that measure gains in mutual understanding as well as substantive knowledge. Successful monitoring and evaluation depend heavily on setting clear goals and outcomes at the outset of a program. Your evaluation plan should include a description of your project's objectives, your anticipated project outcomes, and how and when you intend to measure these outcomes (performance indicators). The more that outcomes are “smart” (specific, measurable, attainable, results-oriented, and placed in a reasonable time frame), the easier it will be to conduct the evaluation. You should also show how your project objectives link to the goals of the program described in this RFGP. Your monitoring and evaluation plan should clearly distinguish between program *outputs* and *outcomes* . *Outputs* are products and services delivered, often stated as an amount. Output information is important to show the scope or size of project activities, but it cannot substitute for information about progress towards outcomes or the results achieved. Examples of outputs include the number of people trained or the number of seminars conducted. *Outcomes* , in contrast, represent specific results a project is intended to achieve and are usually measured as an extent of change. Findings on outputs and outcomes should both be reported, but the focus should be on outcomes. We encourage you to assess the following four levels of outcomes, as they relate to the program goals set out in the RFGP (listed here in increasing order of importance): 1. *Participant satisfaction* with the program and exchange experience. 2. *Participant learning* , such as increased knowledge, aptitude, skills, and changed understanding and attitude. Learning includes both substantive (subject-specific) learning and mutual understanding. 3. *Participant behavior* , concrete actions to apply knowledge in work or community; greater participation and responsibility in civic organizations; interpretation and explanation of experiences and new knowledge gained; continued contacts between participants, community members, and others. 4. *Institutional changes* , such as increased collaboration and partnerships, policy reforms, new programming, and organizational improvements. Please note: Consideration should be given to the appropriate timing of data collection for each level of outcome. For example, satisfaction is usually captured as a short-term outcome, whereas behavior and institutional changes are normally considered longer-term outcomes. Overall, the quality of your monitoring and evaluation plan will be judged on how well it
(1)Specifies intended outcomes;
(2)gives clear descriptions of how each outcome will be measured;
(3)identifies when particular outcomes will be measured; and
(4)provides a clear description of the data collection strategies for each outcome (i.e., surveys, interviews, or focus groups). (Please note that evaluation plans that deal only with the first level of outcomes [satisfaction] will be deemed less competitive under the present evaluation criteria.) Grantees will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. *IV.3d.4. Describe your plans for overall program management, staffing, and coordination with each host institution and the Branch for the Study of the United States.* The Branch considers these to be essential elements of your program; please be sure to give sufficient attention to them in your proposal. Please refer to the Technical Eligibility Requirements and the POGI in the Solicitation Package for specific guidelines. *IV.3e. Please take the following information into consideration when preparing your budget:* *IV.3e.1. Applicants must submit a comprehensive budget for the entire program.* There must be a summary budget as well as breakdowns reflecting both administrative and program budgets. Applicants may provide separate sub-budgets for each program component, phase, location, or activity to provide clarification. *IV.3e.2. Allowable costs for the program include the following:*
(1)Institute staff salary and benefits.
(2)Advertisement of program, recruitment, and selection of participants.
(3)Participant housing and meals.
(4)Participant travel and per diem.
(5)Textbooks, educational materials and admissions fees.
(6)Honoraria for guest speakers . Please refer to the Solicitation Package for complete budget guidelines and formatting instructions. *IV.3F. Application Deadline and Methods of Submission:* *Application Deadline Date:* January 12, 2007. *Reference Number:* EAC/A/E/USS-07-IYL. *Methods of Submission:* Applications may be submitted in one of two ways:
(1)In hard-copy, via a nationally recognized overnight delivery service (i.e., DHL, Federal Express, UPS, Airborne Express, or U.S. Postal Service Express Overnight Mail, etc.), or
(2)electronically through *http://www.grants.gov* . Along with the Project Title, all applicants must enter the above Reference Number in Box 11 on the SF-424 contained in the mandatory Proposal Submission Instructions
(PSI)of the solicitation document. *IV.3f.1. Submitting Printed Applications.* Applications must be shipped no later than the above deadline. Delivery services used by applicants must have in-place, centralized shipping identification and tracking systems that may be accessed via the Internet and delivery people who are identifiable by commonly recognized uniforms and delivery vehicles. Proposals shipped on or before the above deadline but received at ECA more than seven days after the deadline will be ineligible for further consideration under this competition. Proposals shipped after the established deadlines are ineligible for consideration under this competition. ECA will *not* notify you upon receipt of application. It is each applicant's responsibility to ensure that each package is marked with a legible tracking number and to monitor/confirm delivery to ECA via the Internet. Delivery of proposal packages *may not* be made via local courier service or in person for this competition. Faxed documents will not be accepted at any time. Only proposals submitted as stated above will be considered. Important note: When preparing your submission please make sure to include one extra copy of the completed SF-424 form and place it in an envelope addressed to “ECA/EX/PM”. The original and
(8)copies of the application should be sent to: U.S. Department of State, SA-44, Bureau of Educational and Cultural Affairs, Ref.: ECA/A/E/USS-07-IYL, Program Management, ECA/EX/PM, Room 534, 301 4th Street, SW., Washington, DC 20547. *IV.3f.2—Submitting Electronic Applications.* Applicants have the option of submitting proposals electronically through Grants.gov ( *http://www.grants.gov* ). Complete solicitation packages are available at Grants.gov in the “Find” portion of the system. Please follow the instructions available in the ‘Get Started’ portion of the site ( *http://www.grants.gov/GetStarted* ). Several of the steps in the Grants.gov registration process could take several weeks. Therefore, applicants should check with appropriate staff within their organizations immediately after reviewing this RFGP to confirm or determine their registration status with Grants.gov. Once registered, the amount of time it can take to upload an application will vary depending on a variety of factors including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you not wait until the application deadline to begin the submission process through Grants.gov. Direct all questions regarding Grants.gov registration and submission to: Grants.gov Customer Support, Contact Center. Phone: 800-518-4726. Business Hours: Monday-Friday, 7AM-9PM Eastern Time. E-mail: *support@grants.gov* . Applicants have until midnight (12 a.m.), Washington, DC time of the closing date to ensure that their entire application has been uploaded to the Grants.gov site. There are no exceptions to the above deadline. Applications uploaded to the site after midnight of the application deadline date will be automatically rejected by the grants.gov system, and will be technically ineligible. Applicants will receive a confirmation e-mail from grants.gov upon the successful submission of an application. ECA will *not* notify you upon receipt of electronic applications. It is the responsibility of all applicants submitting proposals via the Grants.gov web portal to ensure that proposals have been received by Grants.gov in their entirety, and ECA bears no responsibility for data errors resulting from transmission or conversion processes. *IV.3f.3 Grant applicants may submit only one proposal for this competition.* However, partner institutions and sub-grantee organizations are eligible for inclusion in multiple proposals provided they meet the criteria for eligible applicants as outlined under “Other Eligibility Requirements” in section III.3.a. of this announcement. *IV.3g. Intergovernmental Review of Applications:* Executive Order 12372 does not apply to this program. V. Application Review Information *V.1. Review Process* . The Bureau will review all proposals for technical eligibility. Proposals will be deemed ineligible if they do not fully adhere to the guidelines stated herein and in the Solicitation Package. All eligible proposals will be reviewed by the program office, as well as the Public Diplomacy section overseas, where appropriate. Eligible proposals will be subject to compliance with Federal and Bureau regulations and guidelines and forwarded to Bureau grant panels for advisory review. Proposals may also be reviewed by the Office of the Legal Adviser or by other Department elements. Final funding decisions are at the discretion of the Department of State's Assistant Secretary for Educational and Cultural Affairs. Final technical authority for cooperative agreements resides with the Bureau's Grants Officer. Review Criteria Technically eligible applications will be competitively reviewed according to the criteria stated below. These criteria are not rank ordered and all carry equal weight in the proposal evaluation: 1. *Quality of Program Idea/Plan* : Proposals should exhibit originality, substance, precision, and relevance to the Bureau's mission. Detailed agenda and relevant work plan should demonstrate substantive undertakings and logistical capacity. 2. *Ability to Achieve Overall Program Objectives* : Objectives should be reasonable, feasible, and flexible. Proposals should clearly demonstrate how the institution will meet the program's objectives and plan. 3. *Support for Diversity* : Proposals should demonstrate substantive support of the Bureau's policy on diversity. Achievable and relevant features should be cited in both program administration (program venue, study tour venue, and program evaluation) and program content (orientation and wrap-up sessions, site visits, program meetings and resource materials). 4. *Evaluation and Follow-Up* : Proposals should include a plan to evaluate the institute's success, both as the activities unfold and at the end of the program. A draft survey questionnaire or other technique plus description of a methodology to use to link outcomes to each institute's objectives is strongly recommended. Proposals should also discuss provisions made for follow-up with returned grantees as a means of establishing longer-term individual and institutional linkages. 5. *Cost-effectiveness/Cost-sharing* : The overhead and administrative components of the proposal, including salaries and honoraria, should be kept as low as possible. All other items should be necessary and appropriate. Proposals should maximize cost-sharing through other private sector support as well as institutional direct funding contributions. 6. *Institutional Track Record/Ability* : Proposals should demonstrate an institutional record of successful exchange programs, including responsible fiscal management and full compliance with all reporting requirements for past Bureau grants as determined by Bureau Grants Staff. The Bureau will consider the past performance of prior recipients and the demonstrated potential of new applicants. Proposed personnel and institutional resources should be fully qualified to achieve the institute's goals. VI. Award Administration Information *VI.1a. Award Notices:* Final awards cannot be made until funds have been appropriated by Congress, allocated and committed through internal Bureau procedures. Successful applicants will receive an Assistance Award Document
(AAD)from the Bureau's Grants Office. The AAD and the original grant proposal with subsequent modifications (if applicable) shall be the only binding authorizing document between the recipient and the U.S. Government. The AAD will be signed by an authorized Grants Officer, and mailed to the recipient's responsible officer identified in the application. Unsuccessful applicants will receive notification of the results of the application review from the ECA program office coordinating this competition. *VI.2 Administrative and National Policy Requirements:* Terms and Conditions for the Administration of ECA agreements include the following: Office of Management and Budget Circular A-122, “Cost Principles for Nonprofit Organizations.” Office of Management and Budget Circular A-21, “Cost Principles for Educational Institutions.” OMB Circular A-87, “Cost Principles for State, Local and Indian Governments”. OMB Circular No. A-110 (Revised), Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations. OMB Circular No. A-102, Uniform Administrative Requirements for Grants-in-Aid to State and Local Governments. OMB Circular No. A-133, Audits of States, Local Government, and Non-profit Organizations. Please reference the following Web sites for additional information: *http://www.whitehouse.gov/omb/grants. http://exchanges.state.gov/education/grantsdiv/terms.htm#articleI.* *VI.3. Reporting Requirements:* You must provide ECA with a hard copy original plus one
(1)copy of the final program and financial report no more than 90 days after the expiration of the award. Grantees will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. Please refer to Application and Submission Instructions (IV.3d.3) above for Program Monitoring and Evaluation information. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. All reports must be sent to the ECA Grants Officer and ECA Program Officer listed in the final assistance award document. *VI.4. The organization awarded the grant will be required to maintain specific data on program participants and activities in an electronically accessible database format that can be shared with the Bureau as required.* As a minimum, the data must include the following:
(1)Name, address, contact information and biographic sketch of all persons who travel internationally on funds provided by the grant or who benefit from the grant funding but do not travel.
(2)Itineraries of international and domestic travel, providing dates of travel and cities in which any exchange experiences take place. Final schedules for in-country and U.S. activities must be received by the ECA Program Officer at least three work days prior to the official opening of the activity. VII. Agency Contacts For questions about this announcement, contact: Brendan M. Walsh, Bureau of Educational and Cultural Affairs, ECA/A/E/USS, Room 314, ECA/A/E/USS-07-IYL, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC 20547, tel.
(202)453-8536; fax
(202)453-8533, e-mail: *WalshBM@state.gov.* All correspondence with the Bureau concerning this RFGP should reference the above title and number “Iraqi Young Leaders Exchange Program for Undergraduate Students” and number (ECA/A/E/USS-07-IYL). Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. VIII. Other Information *Notice:* The terms and conditions published in this RFGP are binding and may not be modified by any Bureau representative. Explanatory information provided by the Bureau that contradicts published language will not be binding. Issuance of the RFGP does not constitute an award commitment on the part of the Government. The Bureau reserves the right to reduce, revise, or increase proposal budgets in accordance with the needs of the program and the availability of funds. Awards made will be subject to periodic reporting and evaluation requirements per section VI.3 above. Dated: November 16, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. E6-19803 Filed 11-21-06; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [Public Notice 5619] Bureau of Educational and Cultural Affairs
(ECA)Request for Grant Proposals: 2007 Summer Institute for English Language Educators from South Africa *Announcement Type:* New Grant. *Funding Opportunity Number:* ECA/A/E/AF-07-01. *Catalog of Federal Domestic Assistance Number:* 00.000 *DATES:* *Key Dates:* Application Deadline: Friday, February 2, 2007. *Executive Summary:* The African Programs Branch, Office of Academic Exchange Programs of the Bureau of Educational and Cultural Affairs announces an open competition for the 2007 Summer Institute for English Language Educators from South Africa. Accredited, post-secondary educational institutions meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3) may submit proposals to provide a six-week training program for approximately 28 English language educators from South Africa. Subject to availability of funds, one grant will be awarded to conduct the 2007 Institute. I. Funding Opportunity Description *Authority:* Overall grant making authority for this program is contained in the Mutual Educational and Cultural Exchange Act of 1961, as amended, Public Law 87-256, also known as the Fulbright-Hays Act. The purpose of the Act is “to enable the Government of the United States to increase mutual understanding between the people of the United States and the people of other countries * * *; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, developments, and achievements of the people of the United States and other nations * * * and thus to assist in the development of friendly, sympathetic, and peaceful relations between the United States and the other countries of the world.” The funding authority for the program above is provided through legislation. *Purpose:* American institutions of higher education having an acknowledged reputation in the field of English as a Second Language
(ESL)and in curriculum design may apply to develop and deliver a six-week summer program for approximately twenty-eight English language educators from South Africa. The Summer Institute should be programmed to encompass about 45 days and should begin on or about June 11, 2007. A variation in start date, up to one week beyond June 11, 2007, will be considered if it is necessitated by the host institution's academic calendar. The first five weeks of the program will consist of academic coursework specializing in project-based ESL materials development and teaching methodology focusing on three theme-based areas: HIV-AIDS, Civic Education and Civil Society, and Economics/Entrepreneurship. The Institute will include instruction in classroom management and curriculum design to support these ESL theme-based projects at the secondary and tertiary levels. The host institution, with the help of participants, will develop a website featuring program information and resource materials. The sixth week will consist of an escorted cultural and educational visit to Washington DC. From primary grade four, English is the medium of instruction and assessment in all subjects for most South African students. For the majority of students and teachers, however, English is a second or third language. Academic literacy in English is a major obstacle to quality education in South Africa. Given the need to teach theme-based English across the South African curriculum, English language educators are key personnel for quality learning. Presently, there exists a severe shortage of skilled classroom educators. South African teachers need to produce and deliver culturally appropriate and pedagogically sound content-based materials in a multi-cultural setting. The 2007 Summer Institute for English Language Educators from South Africa will provide participants with intensive training in the fundamentals of theme-based ESL materials development and classroom methodology, continuous assessment, multicultural, multilingual classroom management, and lesson and course design. These four areas are critical in South Africa where teachers are attempting to implement a new curriculum in a context of educational transformation and Outcomes Based Education (OBE). The Summer Institute will also provide structured exposure to the culture and diversity of the U.S. The program should maintain a relative balance among discussion sessions, lectures and collaborative workshops. Lengthy lectures should be kept to a minimum. Participants should be given ample opportunity to work together and learn from each other as well as from their American instructors. Given the project-based orientation exploring the themes of HIV-AIDS, Civic Education and Civil Society, and Economics/Entrepreneurship, participants will be able to share not only content but relevant ESL materials with their colleagues and home institutions. Participants will receive a book allowance. Few participants will have visited the United States previously. In view of this, an initial orientation to the host institution community and a brief introduction to U.S. society and education should be an integral part of the Institute and should be held on the first two to three days of the program. *Program Design:* Applicants should design a two-part program:
(1)A five-week academic program supporting South Africa's goal of education transformation through the delivery of intensive training in theme-based materials development, teaching methodology, continuous assessment and curriculum design for Outcomes Based Education
(OBE)and ESL learning at the secondary and tertiary levels. Division of the group into 3-4 manageable project teams, each with a selected thematic focus and each targeting the particular needs of the secondary and tertiary levels is essential. Training should be sensitive to any special needs of the South African participants.
(2)A one-week escorted visit to Washington, DC, planned, arranged, and conducted by the Institute Program Director and principal Institute staff. The Washington program should be seen as an integral part of the Summer Institute, complementing and reinforcing both the academic and thematic content. This escorted visit should take place at the end of the Institute. Programming in Washington will include a half-day briefing session at the Bureau of Educational and Cultural Affairs, United States Department of State. Additionally, visits to such organizations as TESOL headquarters, major academic institutions in the area with TESOL and adult education ESL programs, as well as organizations and groups working in the thematic areas of the program (HIV/AIDS, Civic Education and Civil Society, and Economics/Entrepreneurship) should be included. A visit to the Embassy of South Africa should also be planned. Proposals may include cultural and educational visits en route to Washington, if such stops contribute to program quality and are cost-effective. The participants will return to South Africa at the conclusion of the Washington program. Specific areas to address in the Institute are:
(1)Preparation of pre-and/or in-service teacher training modules and workshops designed by participants for delivery to specific audiences of teachers and colleagues upon their return to South Africa.
(2)ESL materials development and teaching methodology with an emphasis on theme-based ESL instruction. Thematic issues should include HIV-AIDS and Health, Civic Education and Civil Society (with special attention to human rights and gender issues), and Economics/Entrepreneurship. Materials should include literary texts as well as other authentic materials. Techniques for continuous assessment should also be addressed.
(3)Classroom management with special reference to teaching in large, multi-lingual, multi-ethnic classrooms.
(4)Introduction to Action Research as an aid to professional development and more reflective and responsive teaching practices.
(5)Education Technology:
(a)Introduction and/or enrichment of knowledge of computer-based word processing and appropriate software for participants who lack these skills. Introduction to computer networks for ESL professionals.
(b)Introduction and/or enrichment of knowledge of e-mail, usenet and the World Wide Web as pedagogic and research tools.
(c)Introduction to Power Point and other applications that participants can use with learners and with colleagues in teacher training sessions when they return to South Africa.
(6)Visits to:
(a)Local institutions and organizations related to thematic areas, including Junior Achievement programs.
(b)On-going ESL classes at the host institution, other universities, and in local educational or community centers, providing participants with opportunities to observe ESL methodology, materials, and multi-cultural classrooms featuring content-based language learning across the curriculum.
(7)Involvement of participants in American culture through community/cultural activities. This should include interaction with Americans from a variety of backgrounds. In this regard, the Institute should incorporate cultural features such as field trips to places of local interest; homestays with families in the area (with teachers and other educators if possible), and events that will bring the participants into contact with Americans from a variety of backgrounds.
(8)Formative evaluation and adjustment of program components accordingly, as well as summative evaluation of the entire Institute upon its completion.
(9)Selection and purchase of books and materials that support the goals and content of the program. Shipment of the same materials at the end of the Institute to the participants' South African addresses. In accordance with the objectives of the Summer Institute, participants will concentrate on their thematic projects. However, the academic program should provide time for interaction with American students, faculty, and school administrators, and the local community to promote mutual understanding between the people of the United States and South Africa. *Participants:* Participants, to be selected by the Public Affairs Section of the U.S. Embassy in Pretoria, will be South African educators involved with English as a second language
(ESL)teaching and teacher training. The selected participants will be drawn from public and private sectors including the national and provincial departments of education, teacher resource centers, non-governmental organizations, university departments of education and teacher training colleges. Minimum qualification for all participants will be a university degree in English or Education. Recruitment will concentrate on English language classroom teachers at intermediate phase levels (grades 4-6), and university and Department of Education officials actively involved with intermediate phase teacher training, and curriculum and materials development. Depending upon availability of funds, approximately 28 participants from South Africa will participate in the Institute. *Program Elements:* The proposal should be designed to support the following specific activities: 1. Pre-program communication among participants and the U.S. institution to facilitate an exchange of ideas developed for the Institute. Communication should be e-mail based. 2. Creation of a Web site identifying the program goals/syllabus and on-going participant thematic projects. The site should be a dynamic resource, with weekly updates during the duration of the program, and regular updates in South Africa following program completion. The Web site should display each of the three completed theme-based projects. The participants should develop site content, while site construction and Internet hosting should be provided by the grantee institution. All Institute participants should receive a CD-ROM of their Web site creation. 3. A five-week academic program comprising coursework on —Topic-specific ESL theme-based materials development and teaching methodology with a focus on academic literacy (writing and reading, including ESL remedial reading and reading recovery instruction); —Effective in-service and pre-service teacher training sessions featuring the skills and knowledge gained on the program to enable participants to conduct workshops upon return to South Africa; —Theory and practice of continuous assessment; —Action Research design and practice for professional development and better teaching and learning; —Use of software applications such as Power Point, and Internet and Web resources for materials development and teacher training. 4. Cultural activities facilitating interaction among the South African participants, American students, faculty, and administrators and the local community to promote mutual understanding between the people of the United States and the people of South Africa, planned within the five-week academic program. 5. A one-week, escorted, cultural and educational visit to Washington, DC, complementing and reinforcing the academic material. The visit will be planned, arranged and conducted by the Institute Program Director and staff. 6. Follow-on communication among participants and the U.S. institution to continue exchanges of ideas developed during the Institute. 7. Selection, purchase and shipment of books and materials for participants' use in follow-on activities and training projects in South Africa. *Orientation:* The host institution should plan to conduct either a pre-program needs assessment if time allows, or a needs assessment upon the arrival of the participants. The Institute Director should be prepared to adjust program emphasis as necessary to respond to participants' professional concerns. The Public Affairs Section of the U.S. Embassy, Pretoria, will hold a pre-departure orientation for all participants in South Africa. The grantee institution will be expected to provide general orientation materials for this meeting. This material might include a tentative program outline with suggested goals and objectives, relevant background information about the U.S. institutions and individuals involved in the project, and information about the local housing, climate, and available services. *Program Administration:* All Summer Institute programming and administrative logistics, management of the academic program and the educational tour, and on-site arrangements will be the responsibility of the grantee institution. The grantee institution is responsible for arrangements for lodging, food, maintenance and local travel for participants while at the host institution and in Washington, DC. The grantee institution should strive to balance cost-effectiveness in accommodations and meal plans with flexibility for differing diets and personal habits among the participants. Single rooms or housing in residential suites, which offer privacy, are preferable. The Bureau will provide the grantee institution with participants' curricula vitae and travel itineraries and will be available to offer guidance throughout the Institute. The Bureau will arrange participants' international travel. The participants will arrive directly at the Institute site from their home countries. It is expected that the Institute program staff will make arrangements to have participants met upon arrival at the airport nearest the host institution. Departures will be from Washington, DC. Participants will be given international roundtrip tickets, which will include the leg from the host institution to Washington, DC, if necessary. The Institute staff will plan for ground transportation to and from Washington area airports. Proposals should describe the available health care system and the plan to provide health care access to Institute participants. The Department of State will provide limited health insurance coverage to all participants. The host institution will be responsible for enrolling the participants in the insurance program with materials supplied by the Department. II. Award Information *Type of Award:* Grant Agreement. *Fiscal Year Funds:* FY 2007. *Approximate Total Funding:* $200,000. *Approximate Number of Awards:* 1. *Approximate Average Award:* $200,000. *Anticipated Award Date:* Pending availability of funds, April 1, 2007. *Anticipated Project Completion Date:* July 21, 2007. *Additional Information:* Pending successful implementation of this program and the availability of funds in subsequent fiscal years, it is ECA's intent to renew this grant for two additional fiscal years, before openly competing it again. III. Eligibility Information *III.1. Eligible applicants:* Applications may be submitted by accredited, post-secondary educational institutions meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3). *III.2. Cost Sharing or Matching Funds:* There is no minimum or maximum percentage required for this competition. However, the Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs. When cost sharing is offered, it is understood and agreed that the applicant must provide the amount of cost sharing as stipulated in its proposal and later included in an approved grant agreement. Cost sharing may be in the form of allowable direct or indirect costs. For accountability, you must maintain written records to support all costs which are claimed as your contribution, as well as costs to be paid by the Federal Government. Such records are subject to audit. The basis for determining the value of cash and in-kind contributions must be in accordance with OMB Circular A-110, (Revised), Subpart C.23—Cost Sharing and Matching. In the event you do not provide the minimum amount of cost sharing as stipulated in the approved budget, ECA's contribution will be reduced in like proportion. *III.3. Other Eligibility Requirements:*
(a)Bureau grant guidelines require that organizations with less than four years experience in conducting international exchanges be limited to $60,000 in Bureau funding. ECA anticipates awarding one grant, in an amount up to $200,000 to support program and administrative costs required to implement this exchange program. Therefore, organizations with less than four years experience in conducting international exchanges are ineligible to apply under this competition. The Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs. IV. Application and Submission Information Note: Please read the complete **Federal Register** announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. *IV.1 Contact Information to Request an Application Package:* Please contact the African Programs Branch, ECA/A/E/AF, Room 232, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC 20547, tel:
(202)453-8119 and fax
(202)453-8121, e-mail: *gilpinvr@state.gov* to request a Solicitation Package. Please refer to the Funding Opportunity Number ECA/A/E/AF-07-01 located at the top of this announcement when making your request. The Solicitation Package contains the Proposal Submission Instruction
(PSI)document which consists of required application forms, and standard guidelines for proposal preparation. Please specify Bureau Program Officer, Valerie Gilpin and refer to the Funding Opportunity Number ECA/A/E/AF-07-01 located at the top of this announcement on all other inquiries and correspondence. *IV.2.* To Download a Solicitation Package Via the Internet: The entire Solicitation Package may be downloaded from the Bureau's Web site at *http://exchanges.state.gov/education/rfgps/menu.htm,* or from the Grants.gov Web site at *http://www.grants.gov.* Please read all information before downloading. *IV.3.* Content and Form of Submission: Applicants must follow all instructions in the Solicitation Package. The application should be submitted per the instructions under IV.3f. “Application Deadline and Methods of Submission” section below. *IV.3a.* You are required to have a Dun and Bradstreet Data Universal Numbering System
(DUNS)number to apply for a grant or cooperative agreement from the U.S. Government. This number is a nine-digit identification number, which uniquely identifies business entities. Obtaining a DUNS number is easy and there is no charge. To obtain a DUNS number, access *http://www.dunandbradstreet.com* or call 1-866-705-5711. Please ensure that your DUNS number is included in the appropriate box of the SF-424 which is part of the formal application package. *IV.3b.* All proposals must contain an executive summary, proposal narrative and budget. Please Refer to the Solicitation Package. It contains the mandatory Proposal Submission Instructions
(PSI)document for additional formatting and technical requirements. *IV.3c.* You must have nonprofit status with the IRS at the time of application. If your organization is a private nonprofit which has not received a grant or cooperative agreement from ECA in the past three years, or if your organization received nonprofit status from the IRS within the past four years, you must submit the necessary documentation to verify nonprofit status as directed in the PSI document. Failure to do so will cause your proposal to be declared technically ineligible. *IV.3d.* Please take into consideration the following information when preparing your proposal narrative: *IV.3d.1 Adherence To All Regulations Governing The J Visa.* The Bureau of Educational and Cultural Affairs is placing renewed emphasis on the secure and proper administration of Exchange Visitor (J visa) Programs and adherence by grantees and sponsors to all regulations governing the J visa. Therefore, proposals should demonstrate the applicant's capacity to meet all requirements governing the administration of the Exchange Visitor Programs as set forth in 22 CFR 62, including the oversight of Responsible Officers and Alternate Responsible Officers, screening and selection of program participants, provision of pre-arrival information and orientation to participants, monitoring of participants, proper maintenance and security of forms, recordkeeping, reporting and other requirements. ECA will be responsible for issuing DS-2019 forms to participants in this program. A copy of the complete regulations governing the administration of Exchange Visitor
(J)programs is available at *http://exchanges.state.gov* or from: United States Department of State, Office of Exchange Coordination and Designation, ECA/EC/ECD-SA-44, Room 734, 301 4th Street, SW., Washington, DC 20547; Telephone:
(202)203-5029; FAX:
(202)453-8640. Please refer to Solicitation Package for further information. *IV.3d.2 Diversity, Freedom and Democracy Guidelines.* Pursuant to the Bureau's authorizing legislation, programs must maintain a non-political character and should be balanced and representative of the diversity of American political, social, and cultural life. “Diversity” should be interpreted in the broadest sense and encompass differences including, but not limited to ethnicity, race, gender, religion, geographic location, socio-economic status, and disabilities. Applicants are strongly encouraged to adhere to the advancement of this principle both in program administration and in program content. Please refer to the review criteria under the ‘Support for Diversity' section for specific suggestions on incorporating diversity into your proposal. Public Law 104-319 provides that “in carrying out programs of educational and cultural exchange in countries whose people do not fully enjoy freedom and democracy,” the Bureau “shall take appropriate steps to provide opportunities for participation in such programs to human rights and democracy leaders of such countries.” Public Law 106-113 requires that the governments of the countries described above do not have inappropriate influence in the selection process. Proposals should reflect advancement of these goals in their program contents, to the full extent deemed feasible. *IV.3d.3. Program Monitoring and Evaluation.* Proposals must include a plan to monitor and evaluate the project's success, both as the activities unfold and at the end of the program. The Bureau recommends that your proposal include a draft survey questionnaire or other technique plus a description of a methodology to use to link outcomes to original project objectives. The Bureau expects that the grantee will track participants or partners and be able to respond to key evaluation questions, including satisfaction with the program, learning as a result of the program, changes in behavior as a result of the program, and effects of the program on institutions (institutions in which participants work or partner institutions). The evaluation plan should include indicators that measure gains in mutual understanding as well as substantive knowledge. Successful monitoring and evaluation depend heavily on setting clear goals and outcomes at the outset of a program. Your evaluation plan should include a description of your project's objectives, your anticipated project outcomes, and how and when you intend to measure these outcomes (performance indicators). The more that outcomes are “smart” (specific, measurable, attainable, results-oriented, and placed in a reasonable time frame), the easier it will be to conduct the evaluation. You should also show how your project objectives link to the goals of the program described in this RFGP. Your monitoring and evaluation plan should clearly distinguish between program *outputs* and *outcomes.* *Outputs* are products and services delivered, often stated as an amount. Output information is important to show the scope or size of project activities, but it cannot substitute for information about progress towards outcomes or the results achieved. Examples of outputs include the number of people trained or the number of seminars conducted. *Outcomes,* in contrast, represent specific results a project is intended to achieve and are usually measured as an extent of change. Findings on outputs and outcomes should both be reported, but the focus should be on outcomes. We encourage you to assess the following four levels of outcomes, as they relate to the program goals set out in the RFGP (listed here in increasing order of importance): 1. *Participant satisfaction* with the program and exchange experience. 2. *Participant learning,* such as increased knowledge, aptitude, skills, and changed understanding and attitude. Learning includes both substantive (subject-specific) learning and mutual understanding. 3. *Participant behavior,* concrete actions to apply knowledge in work or community; greater participation and responsibility in civic organizations; interpretation and explanation of experiences and new knowledge gained; continued contacts between participants, community members, and others. 4. *Institutional changes,* such as increased collaboration and partnerships, policy reforms, new programming, and organizational improvements. Please note: Consideration should be given to the appropriate timing of data collection for each level of outcome. For example, satisfaction is usually captured as a short-term outcome, whereas behavior and institutional changes are normally considered longer-term outcomes. Overall, the quality of your monitoring and evaluation plan will be judged on how well it
(1)Specifies intended outcomes;
(2)gives clear descriptions of how each outcome will be measured;
(3)identifies when particular outcomes will be measured; and
(4)provides a clear description of the data collection strategies for each outcome (i.e., surveys, interviews, or focus groups). (Please note that evaluation plans that deal only with the first level of outcomes [satisfaction] will be deemed less competitive under the present evaluation criteria.) Grantees will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. *IV.3e.* Please take the following information into consideration when preparing your budget: *IV.3e.1.* Applicants must submit a comprehensive budget for the entire program. There must be a summary budget as well as breakdowns reflecting both administrative and program budgets. Applicants may provide separate sub-budgets for each program component, phase, location, or activity to provide clarification. *IV.3e.2. Allowable costs for the program include the following:*
(1)Instructional costs (for example: instructors' salaries, honoraria for outside speakers, educational course materials);
(2)Lodging, meals, and incidentals for participants;
(3)Expenses associated with cultural activities planned for the group of participants (for example: tickets, transportation);
(4)Administrative costs as necessary.
(5)U.S. ground transportation costs to U.S. appointments, meetings and to/from airports. Please refer to the Solicitation Package for complete budget guidelines and formatting instructions. *IV.3f. Application Deadline And Methods Of Submission:* *Application Deadline Date:* Friday, February 2, 2007. *Reference Number:* ECA/A/E/AF-07-01. Methods of Submission: Applications may be submitted in one of two ways:
(1)In hard-copy, via a nationally recognized overnight delivery service (i.e., DHL, Federal Express, UPS, Airborne Express, or U.S. Postal Service Express Overnight Mail, etc.), or
(2)electronically through *http://www.grants.gov.* Along with the Project Title, all applicants must enter the above Reference Number in Box 11 on the SF-424 contained in the mandatory Proposal Submission Instructions
(PSI)of the solicitation document. *IV.3f.1 Submitting Printed Applications.* Applications must be shipped no later than the above deadline. Delivery services used by applicants must have in-place, centralized shipping identification and tracking systems that may be accessed via the Internet and delivery people who are identifiable by commonly recognized uniforms and delivery vehicles. Proposals shipped on or before the above deadline but received at ECA more than seven days after the deadline will be ineligible for further consideration under this competition. Proposals shipped after the established deadlines are ineligible for consideration under this competition. ECA will *not* notify you upon receipt of application. It is each applicant's responsibility to ensure that each package is marked with a legible tracking number and to monitor/confirm delivery to ECA via the Internet. Delivery of proposal packages *may not* be made via local courier service or in person for this competition. Faxed documents will not be accepted at any time. Only proposals submitted as stated above will be considered. Important note: When preparing your submission please make sure to include one extra copy of the completed SF-424 form and place it in an envelope addressed to “ECA/EX/PM”. The original and 8 copies of the application should be sent to: U.S. Department of State, SA-44, Bureau of Educational and Cultural Affairs, Ref.: ECA/A/E/AF-07-01, Program Management, ECA/EX/PM, Room 534, 301 4th Street, SW., Washington, DC 20547. Applicants submitting hard-copy applications must also submit the “Executive Summary” and “Proposal Narrative” sections of the proposal in text (.txt) format on a PC-formatted disk. The Bureau will provide these files electronically to the appropriate Public Affairs Section at the U.S. embassy for its review. *IV.3f.2—Submitting Electronic Applications.* Applicants have the option of submitting proposals electronically through Grants.gov ( *http://www.grants.gov* ). Complete solicitation packages are available at Grants.gov in the “Find” portion of the system. Please follow the instructions available in the ‘Get Started’ portion of the site ( *http://www.grants.gov/GetStarted* ). Several of the steps in the Grants.gov registration process could take several weeks. Therefore, applicants should check with appropriate staff within their organizations immediately after reviewing this RFGP to confirm or determine their registration status with Grants.gov. Once registered, the amount of time it can take to upload an application will vary depending on a variety of factors including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you not wait until the application deadline to begin the submission process through Grants.gov. Direct all questions regarding Grants.gov registration and submission to:Grants.gov Customer Support, Contact Center Phone: 800-518-4726, Business Hours: Monday-Friday, 7 a.m.-9 p.m. Eastern Time. E-mail: *support@grants.gov.* Applicants have until midnight (12 a.m.), Washington, DC time of the closing date to ensure that their entire application has been uploaded to the Grants.gov site. There are no exceptions to the above deadline. Applications uploaded to the site after midnight of the application deadline date will be automatically rejected by the grants.gov system, and will be technically ineligible. Applicants will receive a confirmation e-mail from grants.gov upon the successful submission of an application. ECA will *not* notify you upon receipt of electronic applications. It is the responsibility of all applicants submitting proposals via the Grants.gov web portal to ensure that proposals have been received by Grants.gov in their entirety, and ECA bears no responsibility for data errors resulting from transmission or conversion processes. IV.3g. Intergovernmental Review of Applications: Executive Order 12372 does not apply to this program. V. Application Review Information V.1. Review Process The Bureau will review all proposals for technical eligibility. Proposals will be deemed ineligible if they do not fully adhere to the guidelines stated herein and in the Solicitation Package. All eligible proposals will be reviewed by the program office, as well as the Public Diplomacy section overseas, where appropriate. Eligible proposals will be subject to compliance with Federal and Bureau regulations and guidelines and forwarded to Bureau grant panels for advisory review. Proposals may also be reviewed by the Office of the Legal Adviser or by other Department elements. Final funding decisions are at the discretion of the Department of State's Assistant Secretary for Educational and Cultural Affairs. Final technical authority for grants resides with the Bureau's Grants Officer. Review Criteria Technically eligible applications will be competitively reviewed according to the criteria stated below. These criteria are not rank ordered and all carry equal weight in the proposal evaluation: *1. Quality of the program idea/plan:* Proposals should exhibit originality, substance, precision, and relevance to the Bureau's mission. Proposals should demonstrate effective use of community and regional resources to enhance the cultural and educational experiences of participants. A detailed agenda and relevant work plan should demonstrate how the institution will meet the program's objectives. Proposals should show substantive program activities and must adhere to the program guidelines described above. *2. Institutional Capacity:* Proposals should demonstrate an institutional record of successful exchange programs, including responsible fiscal management and full compliance with all reporting requirements for past Bureau grants as determined by Bureau Grants Staff. The Bureau will consider the past performance of prior recipients and the demonstrated potential of new applicants. Proposed personnel and institutional resources should be adequate and appropriate to achieve the program's goals. *3. Multiplier effect/impact:* Proposed programs should strengthen long-term mutual understanding, including maximum sharing of information and establishment of long-term institutional and individual linkages. *4. Support of Diversity:* Proposals should demonstrate the applicant's commitment to promoting the awareness and understanding of diversity. Program administrators should strive for diversity among Institute staff, university students, and the host communities which interact with participants. *5. Evaluation and Follow-on Activities:* Proposals should include a plan to evaluate the program's success, both as the activities unfold and at the end of the program. A draft survey questionnaire or other technique plus description of a methodology to link outcomes to original project objectives is recommended. Proposals should provide a plan for continued follow-on activity (without Bureau support) ensuring that Bureau supported programs are not isolated events. *6. Cost-effectiveness and Cost Sharing:* The overhead and administrative components of the proposal, including salaries and honoraria, should be kept as low as possible. All other items should be necessary and appropriate. Proposals should maximize cost sharing through other private sector support as well as institutional direct funding contributions. Homestays are not allowed as a grant-funded or cost-sharing item. VI. Award Administration Information *VI.1a. Award Notices.* Final awards cannot be made until funds have been appropriated by Congress, allocated and committed through internal Bureau procedures. Successful applicants will receive an Assistance Award Document
(AAD)from the Bureau's Grants Office. The AAD and the original grant proposal with subsequent modifications (if applicable) shall be the only binding authorizing document between the recipient and the U.S. Government. The AAD will be signed by an authorized Grants Officer, and mailed to the recipient's responsible officer identified in the application. Unsuccessful applicants will receive notification of the results of the application review from the ECA program office coordinating this competition. VI.2 Administrative and National Policy Requirements Terms and Conditions for the Administration of ECA agreements include the following: Office of Management and Budget Circular A-122, “Cost Principles for Nonprofit Organizations.” Office of Management and Budget Circular A-21, “Cost Principles for Educational Institutions.” OMB Circular A-87, “Cost Principles for State, Local and Indian Governments”. OMB Circular No. A-110 (Revised), Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations. OMB Circular No. A-102, Uniform Administrative Requirements for Grants-in-Aid to State and Local Governments. OMB Circular No. A-133, Audits of States, Local Government, and Non-profit Organizations Please reference the following Web sites for additional information: *http://www.whitehouse.gov/omb/grants* ; *http://exchanges.state.gov/education/grantsdiv/terms.htm#articleI* . *VI.3. Reporting Requirements:* You must provide ECA with a hard copy original plus two copies of the following reports: A final program and financial report no more than 90 days after the expiration of the award. Grantees will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. (Please refer to IV. Application and Submission Instructions (IV.3.d.3) above for Program Monitoring and Evaluation information.) All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. All reports must be sent to the ECA Grants Officer and ECA Program Officer listed in the final assistance award document. VII. Agency Contacts For questions about this announcement, contact: Valerie Gilpin, African Programs Branch, ECA/A/E/AF, Room 232, Reference Number ECA/A/E/AF-07-01, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC 20547, tel:
(202)453-8119 and fax
(202)453-8121, e-mail: *gilpinvr@state.gov* . All correspondence with the Bureau concerning this RFGP should reference the above title and number ECA/A/E/AF-07-01. Please read the complete **Federal Register** announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. VIII. Other Information Notice The terms and conditions published in this RFGP are binding and may not be modified by any Bureau representative. Explanatory information provided by the Bureau that contradicts published language will not be binding. Issuance of the RFGP does not constitute an award commitment on the part of the Government. The Bureau reserves the right to reduce, revise, or increase proposal budgets in accordance with the needs of the program and the availability of funds. Awards made will be subject to periodic reporting and evaluation requirements per section VI.3 above. Dated: November 16, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. E6-19810 Filed 11-21-06; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [Delegation of Authority No. 295] Delegation by the Secretary of State to the Under Secretary for Arms Control and International Security of Authorities in Executive Order 13382 By virtue of the authority vested in me as Secretary of State, including Section 1 of the State Department Basic Authorities Act, as amended (22 U.S.C. 2651a), I hereby delegate to the Under Secretary for Arms Control and International Security the functions conferred on the Secretary of State in Executive Order 13382 of June 28, 2005. Any act, executive order, regulation or procedure subject to, or affected by, this delegation shall be deemed to be such act, executive order, regulation or procedure as amended from time to time. Notwithstanding this delegation of authority, the Secretary or the Deputy Secretary may at any time exercise any authority or function delegated by this delegation of authority. This delegation of authority shall be published in the **Federal Register** . Dated: November 14, 2006. Condoleezza A. Rice, Secretary of State, Department of State. [FR Doc. E6-19764 Filed 11-21-06; 8:45 am] BILLING CODE 4710-27-P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration [Docket No. PHMSA-04-19856] Pipeline Safety: Notice to Operators of Natural Gas and Hazardous Liquid Pipelines To Accurately Locate and Mark Underground Pipelines Before Construction-Related Excavation Activities Commence Near the Pipelines AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT. ACTION: Notice; Issuance of Advisory Bulletin. SUMMARY: This advisory reminds and reinforces the importance of safe locating excavation practices near underground pipelines. PHMSA's pipeline safety regulations require pipeline operators to implement damage prevention programs to protect underground pipelines during construction related excavation. In addition, PHMSA recommends pipeline operators excavating in areas populated with other pipelines and utilities follow all consensus best practices and guidelines developed by the Common Ground Alliance. Recent serious incidents especially reinforce the importance of accurately locating and marking pipelines and highlight an urgent need for pipeline operators to review how they implement their damage prevention programs to prevent further accidents caused by construction related damage. This Advisory Bulletin provides guidance on how to do this. ADDRESSES: This document can be viewed on the PHMSA home page at: *http://www.phmsa.dot.gov* . FOR FURTHER INFORMATION CONTACT: Joy Kadnar,
(202)366-0568, or by e-mail at *Joy.Kadnar@dot.gov.* SUPPLEMENTARY INFORMATION: 1. Background Recently several construction related incidents have caused damage to underground natural gas and hazardous liquid pipelines in several States, including California, Texas, Virginia, and Wyoming. Some of these incidents have resulted in deaths, injuries, property damage, and disruption to communities. Following an appropriate damage prevention program is the best way to prevent such incidents in the future. This is the second bulletin PHMSA has issued on locating damage prevention this year. In Advisory Bulletin 06-01, published in the **Federal Register** on January 17, 2006 (71 FR 2613), we described other preventable accidents caused by construction-related damage. Advisory Bulletin 06-01 specifically called on operators to ensure that individuals critical to damage prevention at construction sites are qualified to perform the necessary safety tasks. These tasks include one-call notifications, line locating and marking, and inspection of construction activities. In Advisory Bulletin 02-01, published in the **Federal Register** on May 24, 2002 (67 FR 36667), we pointed to the best practices on damage prevention found in the Common Ground Study and urged operators to follow them (see *http://ops.dot.gov/init/prevent/damage.htm* ). The Common Ground Alliance is continuing the work on developing best practices begun with the Common Ground Study. These best practices are widely accepted as providing the basis for conducting safe locating excavation near pipelines. Investigations by PHMSA and its State partners continue to show that the pipeline operators involved in construction related incidents may not always comply with Federal pipeline safety regulations or their own construction and maintenance practices. Among the problems discovered are the following: • Pipeline operators do not always follow their procedures for constructing, repairing, ditching, and backfilling in areas where there are existing pipelines. Typically, procedures prohibit machine excavation within two feet of existing pipelines. • Inspectors working for pipeline operators at construction sites sometimes fail to assist the operator's employees, the operator's contractors, and third-party construction contractors in verifying the marked locations of the existing pipeline facilities. • Operators do not always verify pipeline “as-built” drawings and make them available to locators and excavators at construction sites before activities began. • Operators do not always mark pipelines at cross-overs. • In locations with parallel pipelines, operators sometimes mark the wrong pipeline. • Pipeline operators do not always correctly mark all pipelines in the vicinity of the construction and maintenance activities, and sometimes fail to assign personnel skilled enough to observe excavation and backfilling tasks. Good procedures can prevent accidents only if they are followed. II. Advisory Bulletin (ADB-06-03) *To:* Owners and Operators of Natural Gas and Hazardous Liquid Pipeline Systems. *Subject:* Accurately Locating and Marking Underground Pipelines Before Construction-Related Excavation Activities Commence Near the Pipelines. *Advisory:* Construction-related excavation damage continues to be one of the three leading causes of pipeline damage. PHMSA continues to find pipeline operators damaging regulated pipelines, production and gathering pipelines, and other utilities adjacent to where construction and maintenance is being performed. This damage jeopardizes the safety of excavators, pipeline employees, construction personnel, and others in the vicinity of the excavation. To guard the integrity of buried pipelines and prevent injury, death, and property and environmental damage, PHMSA advises pipeline operators to take the following damage prevention measures: • Use safe locating excavation practices. Follow your procedures and processes for excavation and backfill. When constructing a new pipeline, honor the marking of existing pipelines. • Locate and mark pipelines accurately before locating excavation begins. Do not rely solely on maps, drawings, or other written materials to locate pipelines. • Make sure that individuals locating and marking the pipelines have the knowledge, skills, and abilities to read and understand pipeline alignment and as-built drawings, and that they know what other buried utilities exist in the construction area. • Make sure that individuals locating and marking the pipelines have up-to-date pipeline alignment and as-built drawings. • Make sure that individuals locating and marking the pipelines are familiar with state and local requirements on marking. • Mark all pipelines, including laterals. This is especially important in areas where there is a considerable amount of new pipeline and utility construction. • Consider environmental conditions such as rain and snow when selecting marking methods. • In areas where the pipelines are curved or make sharp bends to avoid other utilities or obstructions, consider the visibility and frequency of markers. • Confirm the accuracy of pipe locating before excavation begins. This applies when the pipeline operator conducts the excavation using its own employees, a contractor, or a third party. • Use qualified personnel for locating and marking pipelines. At a minimum, they should have received appropriate training such as that outline in the National Utility Locating Contractors Association locator training standards and practices. • Make sure excavators have sufficient information about underground pipelines at the construction site to avoid damage to the pipeline. Facilitate communication during the construction activity. • Calibrate tools and equipment used for line locating and make sure they are in proper working order. • Individually mark pipelines located within the same trench where possible. • Follow the best practices on locating and marking pipelines developed by the Common Ground Alliance. • When pipelines are hit or almost his during excavation, evaluate the practices and procedures in use before continuing the construction activity. Operators should use the full range of safe locating excavation practices. In particular, pipeline operators should ensure the use of qualified personnel to accurately locate and mark the location of its underground pipelines. Authority: 49 U.S.C. chapter 601; 49 CFR 1.53. Issued in Washington, DC, on November 17, 2006. Jeffrey D. Wiese, Acting Deputy Associate Administrator for Pipeline Safety [FR Doc. 06-9354 Filed 11-17-06; 3:36 pm]
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U.S. Code
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- Definitions and application§ 78c
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Registration requirements for securities§ 78l
- National market system for securities; securities information processors§ 78k–1
- General exemptive authority§ 78mm
- Exemption from State regulation of securities offerings§ 77r
- Exemption from tax on corporations, certain trusts, etc.§ 501
- Organization of Department of State§ 2651a
CFR
11 references not yet in our index
- 17 CFR 240.19
- 15 USC 78
- 17 CFR 240.12
- 17 CFR 240.3
- 17 CFR 19
- 15 USC 78(s)(b)(3)(A)(ii)
- Pub. L. 87-256
- 22 CFR 62
- Pub. L. 104-319
- Pub. L. 106-113
- 49 CFR 1.53
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Cite17 CFR 240.19
Cite15 USC 78
Cite17 CFR 240.12
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