Notices. Notice and request for comments

31,080 words·~141 min read·/register/2006/11/29/06-9449

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

BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54804; File No. SR-CBOE-2006-98] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Adoption of a Hybrid Electronic Quoting Fee November 21, 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 20, 2006, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the CBOE.

The Exchange has designated this proposal as one establishing or changing a due, fee or other charge imposed by the Exchange under Section 19(b)(3)(A), 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend its Fees Schedule to adopt a Hybrid Electronic Quoting Fee.

The text of the proposed rule change is available on the CBOE's Web site at ( *http://www.cboe.com* ), at the CBOE's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposal.

The text of these statements may be examined at the places specified in Item IV below. CBOE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to establish a new Hybrid Electronic Quoting Fee applicable to all Market-Makers, RMMs, DPMs, e-DPMs, and LMMs (collectively “Market-Makers”) in order to promote and encourage more efficient quoting.

As proposed, CBOE would assess all Market-Makers who are submitting electronic quotations to the Exchange a monthly fee of $450. Each month, each Market-Maker will receive an allocation of 1,000,000 quotes. If a Market-Maker submits to CBOE more than 1,000,000 quotes in a month, the Market-Maker will be assessed an additional fee of $.03 per 1,000 quotes in excess of 1,000,000. The Hybrid Electronic Quoting Fee is assessed by Market-Maker acronym. In the event a Market-Maker owns more than one membership and submits electronic quotations for all of the memberships under the same acronym, the Hybrid Electronic Quoting Fee will be assessed per membership owned by the Market-Maker.

The Hybrid Electronic Quoting Fee is only applicable to Market-Makers submitting electronic quotations in option classes traded on the Hybrid Trading System. If a Market-Maker is assessed the Hybrid Electronic Quoting Fee, the Market-Maker does not pay a member dues fee. The Exchange intends to implement the Hybrid Electronic Quoting Fee effective February 1, 2007. 2. Statutory Basis The CBOE believes that the proposed rule change is consistent with Section 6(b) of the Act, 5 in general, and furthers the objectives of Section 6(b)(4) of the Act, 6 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its members. 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(4).

B. Self-Regulatory Organization's Statement on Burden on Competition The CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 7 and subparagraph (f)(2) of Rule 19b-4 thereunder, 8 since it establishes or changes a due, fee or other charge imposed by the Exchange. 7 15 U.S.C. 78s(b)(3)(A). 8 17 CFR 240.19b-4(f)(2).

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 the furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act.

Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-CBOE-2006-98 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-2006-98.

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 CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-CBOE-2006-98 and should be submitted on or before December 20, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12).

Nancy M. Morris, Secretary. [FR Doc. E6-20214 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54805; File No. SR-CBOE-2006-92] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Penny Pilot Program November 21, 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, II, and III below, which Items have been substantially prepared by the CBOE.

The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its rules to implement a Pilot Program to quote and trade certain option classes in pennies. The text of the proposed rule change is available on the Exchange's Web site at *http://www.cboe.com,* at the Office of the Secretary, CBOE, 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 CBOE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose CBOE proposes to amend its rules in connection with the Penny Pilot Program, which is scheduled to commence on January 26, 2007. Specifically, the following 12 classes 3 will participate in the Penny Pilot Program, which is scheduled initially to last for six months. 3 CBOE understands that another option class will be added to the Penny Pilot Program to bring the total number of classes in the Penny Pilot Program to 13.

IWM—Ishares Russell 2000 QQQQ—QQQQ SMH—SemiConductor Holders GE—General Electric AMD—Advanced Micro Devices MSFT—Microsoft INTC—Intel CAT—Caterpiller WFMI—Whole Foods TXN—Texas Instruments FLEX—Flextronics International SUNW—Sun Micro The minimum increments for all classes in the Penny Pilot Program, except for the QQQQs, will be $0.01 for all option series below $3 (including LEAPS), and $0.05 for all option series $3 and above (including LEAPS). With respect to the QQQQs, the minimum increment will be $0.01 for all option series.

For all other option classes not participating in the Penny Pilot Program, the current quoting and trading minimum increments will remain the same. In connection with the Penny Pilot Program, CBOE proposes to amend CBOE Rule 6.42 relating to the minimum increments for option classes. In particular, CBOE proposes to include a subparagraph stating that the decimal increments for bids and offers for all series of option classes participating in the Penny Pilot Program will be announced to the membership via Regulatory Circular and published by the Exchange on its Web site.

Because the Penny Pilot Program is expected to commence on January 26, 2007, on a rolling basis with one or more Pilot classes beginning on that date and the other Pilot classes quoting and trading in penny increments shortly thereafter, CBOE believes it is more appropriate to notify its members as to the minimum increments for Pilot Classes and their start date in the Pilot Program via Regulatory Circular as opposed to codifying this information in CBOE Rule 6.42. CBOE has filed for Commission approval a copy of the proposed Regulatory Circular that it intends to issue.

CBOE also proposes to amend CBOE Rule 6.54 relating to accommodation liquidations (“cabinet trades”) to state that the rule is not applicable to trading in option classes participating in the Penny Pilot Program. Currently, CBOE Rule 6.54 sets forth the terms and conditions in which cabinet trades can be executed on CBOE. Because cabinet trades involve orders priced at $1 per option contract, the specific terms and conditions for cabinet trading are not applicable to option classes participating in the Penny Pilot Program.

Due to the anticipated demands on CBOE's system capacity and the option industry's capacity for processing quotations and transactions in penny increments, CBOE has implemented or intends to implement several quote mitigation strategies. • *Limitation on Messages.* Pursuant to CBOE Rule 6.23A, CBOE currently limits the number of messages sent by members accessing CBOE electronically in order to protect the integrity of the Hybrid Trading System. Limiting the number of messages sent by members accessing CBOE electronically reduces the number of quotations sent by CBOE to the Options Price Reporting Authority (“OPRA”). • *Imposition of Fees.* CBOE is developing an objective and fair method to encourage electronic quoters at CBOE to reduce the number of quotations that are sent to CBOE by imposing fees that will go into effect on February 1, 2007. 4 4 *See* Securities Exchange Act Release No. 54804 (November 21, 2006) (File No.

SR-CBOE-2006-98). • *Amendment to Market-Maker Obligations.* CBOE proposes to amend CBOE Rule 8.7 to modify the continuous electronic quoting obligation of Market-Makers and Remote Market-Makers (“RMMs”). Currently, as set forth in CBOE Rule 8.7(d)(ii) and (e), Market-Makers and RMMs, respectively, are obligated to provide continuous electronic quotes in 60% of the series of his/her appointed option class. CBOE proposes to amend these obligations to provide that Market-Makers and RMMs shall provide continuous electronic quotes in 60% of the series of his/her appointed class that have a time to expiration of less than nine months.

CBOE believes that excluding series that are nine months or more to expiration, *i.e.* , LEAPS, from Market-Makers' and RMMs' continuous quoting obligations should reduce the number of quotes CBOE disseminates to OPRA, while continuing to impose upon Market-Makers and RMMs significant quoting obligations. CBOE also notes that this proposed change is consistent with CBOE Rule 5.8 which provides that the continuity rules do not apply to option series until the time to expiration is less than nine months. 5 5 The Commission recently approved a similar proposal from the Philadelphia Stock Exchange. *See* Securities Exchange Act Release No. 54648 (October 24, 2006), 71 FR 63375 (October 30, 2006) (SR-Phlx-2006-52). • *Delisting Policy* .

CBOE is adopting the following delisting policy: equity option classes with national average daily volume (“ADV”) of less than 20 contracts will be delisted. • *Oversight of Member Quoting* . CBOE continuously monitors the quotation activity of its members submitting electronic quotations to CBOE, and regularly notifies any member that appears to be disseminating significantly more quotations than other members. CBOE also regularly communicates with independent vendors who provide quotation services to members to encourage the vendors to modify their systems to provide efficient quotation systems and to alert them whenever it appears that users of their system appear to be submitting significantly more quotations than other members.

Finally, CBOE, along with the other options exchanges, intends to submit to the Commission following the fourth month of the Penny Pilot Program ( *i.e.* , by the end of May 2007) a report analyzing the first three months of the Penny Pilot Program. In particular, CBOE anticipates that its report will assess the impact of the changes to the minimum increments during the first three months of the Program, including its effects on

(i)Market participants and customers;

(ii)market performance and quality, such as quoted spreads, effective spreads, and the displayed size in the Pilot classes; and

(iii)OPRA, vendor and exchange capacity. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act, 6 in general, and furthers the objectives of Section 6(b)(5) of the Act, 7 in particular, in that the proposed rule change is designed 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 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period

(i)As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or

(ii)as to which the Exchange consents, the Commission will:

(A)By order approve such proposed rule change, or

(C)below, of the most significant aspects of these statements. 5 5 The Commission has modified the text of the summaries prepared by FICC.

(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change FICC believes that amending certain administrative provisions of the rules of GSD and MBSD to create more uniformity between the rules of FICC and NSCC will provide more clarity to the members of FICC and NSCC.

(i)Proposed GSD Rule Changes Rule 28—Forms Currently, GSD Rule 28 states that the delivery of forms of lists, notices, and other documents may be delivered by the use of any media, including magnetic tape, discs, or cards. FICC proposes to remove language referring to “magnetic tapes, discs, or cards” since these modes of delivery are outdated. Rule 29—Release of Clearing Data FICC proposes to amend GSD Rule 29 so that it is structured in a way that is similar to the analogous NSCC rule. Therefore, FICC proposes to delete numbered section subheadings and identify provisions going forward with the letters

(a)through (g). FICC proposes to delete Section 7 of Rule 29 since FICC no longer follows this procedure. Rule 30—Lists To Be Maintained FICC proposes to amend GSD Rule 30 so that it includes Sponsored Members as a category of members for which FICC will maintain a list. Rule 31—Distribution Facilities Since FICC does not currently maintain distribution facilities, FICC proposes to amend GSD Rule 31 by including language indicating that “if deemed necessary” FICC will “establish” distribution facilities. FICC does not propose to alter the guidelines listed in the rule.

(ii)Proposed MBSD Rule Changes Clearing Rule 8 and EPN Rule 8—Arbitration of Disputes FICC proposes to delete MBSD Clearing Rule 8 of Article V and MBSD EPN Rule 8 of Article X since the provisions are outdated and have never been invoked by MBSD. Clearing Rule 10 and EPN Rule 10—Amendment of Rules FICC proposes to revise MBSD Clearing Rule 10 of Article V and MBSD EPN Rule 10 of Article X with language similar to that of the GSD and NSCC rules. 6 The rule will continue to provide for prompt notification to all participants, limited purpose participants, EPN users, and registered clearing agencies of proposals made to change, revise, add, or repeal any MBSD Rule. Participants may submit comments to FICC upon receipt of the notification. 6 GSD Rule 33 and NSCC Rule 33. Clearing Rule 12 and EPN Rule 12—Waivers, Etc. FICC proposes to modify MBSD Clearing Rule 12 of Article V and MBSD EPN Rule 12 of Article X with language similar to that of the GSD and NSCC rules. 7 Pursuant to the proposed rule, the Board of Directors or any FICC officer having a rank of Vice President or higher may waive or suspend times fixed by the rules or regulations issued by FICC whenever waiver or suspension is deemed necessary or expedient in his or her judgment. The waiver or suspension shall not continue in effect for more than sixty calendar-days unless approved by the Board of Directors within the sixty calendar-day period. 7 GSD Rule 22 and NSCC Rule 42.

(iii)MBSD Administrative Rule Additions FICC proposes to add certain provisions to MBSD Clearing Rules and MBSD EPN Rules that are currently contained in the rules of the GSD. FICC believes the additions will provide guidance to MBSD members on administrative matters. Clearing Rule 19 and EPN Rule 19—Forms FICC proposes to add a rule identical to GSD Rule 28 to MBSD Clearing Rules Article V and MBSD EPN Rules Article X allowing FICC to use forms of lists, notices, or other documents in connection with any transactions. Information required to be delivered to FICC may be delivered by the use of any media, to be prescribed by FICC from time to time. EPN Rule 18—Release of Processing Data FICC proposes to add a rule similar to GSD Rule 29 to MBSD EPN Rules Article X governing the release of EPN processing data upon written request or pursuant to a written agreement between an EPN user and FICC. Clearing Rule 20 and EPN Rule 19—Lists to be Maintained FICC proposes to add a rule similar to GSD Rule 30 to MBSD Clearing Rules Article V and MBSD EPN Rules Article X providing that MBSD will maintain lists of all participants, limited purpose participants, and EPN users to be made available upon request. Clearing Rule 9 and EPN Rule 9—Captions FICC proposes to add a rule regarding captions to MBSD Clearing Rules Article V and MSBD EPN Rules Article X to clarify that captions to rules are for information and guidance only and should not be considered by participants as substantive language. Clearing Rule 21 and EPN Rule 20—Distribution Facilities FICC proposes to add a rule similar to GSD Rule 31 to MBSD Clearing Rules Article V and MBSD EPN Rules Article X regarding distribution facilities. Though MBSD does not currently maintain a distribution facility, the rule will provide guidance if a facility is established in the future. FICC believes the proposed rule change is consistent with Section 17A of the Act, 8 as amended because it is concerned solely with the administration of FICC and as such does not affect the safeguarding of securities or funds in the custody or control of FICC or for which it is responsible. 8 15 U.S.C. 78q-1.

(B)Self-Regulatory Organization's Statement on Burden on Competition FICC does not believe that the proposed rule change will have any impact or impose any burden on competition.

(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. FICC will notify the Commission of any written comments received by FICC. 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 9 and Rule 19b-4(f)(3) 10 thereunder because the rule effects a change in an existing service of FICC that does not adversely affect the safeguarding of securities or funds in the custody or control of FICC or for which it is responsible. At any time within sixty days of the filing of the proposed rule change, 11 the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 9 15 U.S.C. 78s(b)(3)(A)(iii). 10 17 CFR 240.19b-4(f)(3). 11 For purposes of calculating the sixty-day period within which the Commission may summarily abrogate the proposed rule change under Section 19(b)(3)(C) of the Act, the Commission considers the period to commence on the date on which the last amendment to the proposed rule change was filed with the Commission. 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-FICC-2006-18 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FICC-2006-18. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference 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/commondocs/rule.filings/rule.filing.06-18.amendment1.pdf* . 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-2006-18 and should be submitted on or before December 20, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 12 Nancy M. Morris, Secretary. 12 17 CFR 200.30-3(a)(12). [FR Doc. E6-20210 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54809; File No. SR-ISE-2006-63] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes November 21, 2006. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on November 1, 2006, the International Securities Exchange, LLC (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the ISE. The ISE has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the ISE under section 19(b)(3)(A)(ii) of the Act, 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE is proposing to amend its Schedule of Fees to remove the surcharge fee for transactions in options on the NASDAQ-100 Index Tracking Stock® (“QQQQ®”) and the iShares NASDAQ Biotechnology Index Fund (“IBB”). The text of the proposed rule change is available on the ISE's Web site ( *http://www.iseoptions.com/legal/proposed_rule_changes.asp* ), at the principal office of the ISE, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the ISE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The ISE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend its Schedule of Fees to remove the surcharge fee previously adopted for transactions in options on the QQQQ® 5 and options on the IBB. 6 The Exchange is proposing to remove the surcharge fee from its Schedule of Fees because it no longer pays a license fee to The NASDAQ Stock Market, Inc. in connection with transactions in options on QQQQ® and IBB. Accordingly, there is no longer a need for this surcharge fee. The Exchange will, however, continue to charge an execution fee and a comparison fee for transactions in options on QQQQ® and IBB. 5 *See* Securities Exchange Act Release No. 44151 (April 4, 2001), 66 FR 19266 (April 13, 2001) (ISE-2001-09). 6 *See* Securities Exchange Act Release No. 45765 (April 16, 2002), 67 FR 19786 (April 23, 2002) (ISE-2002-10). Additionally, the Exchange proposes to remove IYE from the list of Premium Products on the Schedule of Fees as IYE no longer trades on the Exchange. 2. Statutory Basis The Exchange believes that the basis under the Act for this proposed rule change is the requirement under section 6(b)(4) of the Act 7 that an exchange have an equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. 7 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to section 19(b)(3)(A) of the Act 8 and rule 19b-4(f)(2) 9 thereunder. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-ISE-2006-63 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2006-63. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2006-63 and should be submitted on or before December 20, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-20216 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54798; File No. SR-NASD-2006-104] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto To Reflect Nasdaq's Complete Separation From the NASD Upon the NASDAQ Stock Market LLC's Operation as a National Securities Exchange for Non-Nasdaq Exchange-Listed Securities November 21, 2006. I. Introduction On September 5, 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 various NASD rules to reflect the complete separation of the NASD from The Nasdaq Stock Market, Inc. (“Nasdaq”), which would permit the Nasdaq Stock Market LLC (“Nasdaq Exchange”) to begin operations as a national securities exchange for securities reported to the Consolidated Transaction Association Plan (“CTA Plan Securities”). NASD also proposes to amend its NASD/Nasdaq Trade Reporting Facility (“TRF”) rules to allow members to report over-the-counter (“OTC”) trades in CTA Plan Securities. On September 14, 2006, the NASD submitted Amendment No. 1 to the proposed rule change. 3 The proposed rule change, as amended, was published for comment in the **Federal Register** on September 21, 2006. 4 The Commission received no comments on the proposed rule change. On November 3, 2006, the NASD submitted Amendment No. 2 to the proposed rule change. 5 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 In Amendment No. 1, NASD clarified that

(1)The effective date of the proposed rule change would be the date upon which the Nasdaq Exchange commences operation as an exchange for CTA Plan Securities;

(2)the NASD's Market Regulation Committee would perform substantially the same functions as performed by the Nasdaq's Quality of Markets Committee; and

(3)the proposed rule change would reflect NASD's continued participation in the Intermarket Trading System (“ITS”) Plan. 4 *See* Securities Exchange Act Release No. 54451 (September 15, 2006), 71 FR 55243. 5 In Amendment No. 2, the NASD

(i)Amended the definition of Consolidated Quotation Service in NASD Rule 6320 to clarify that CQS Market Makers will send their quotations to the ITS/CAES System;

(ii)conformed NASD Rule 6420(d)(3)(B), which relates to riskless principal transactions in the proposed ITS/CAES System to NASD Rule 4632(d)(3)(B), which relates to the same transactions in the NASD/Nasdaq TRF; and

(iii)amended NASD Rule 11890(b)(2) to provide that an officers designated by an Executive Vice President of NASD's Market Regulation Committee or NASD's Transparency Services Department could also take action under that rule. II. Background Prior to 2000, Nasdaq was wholly-owned by the NASD. The NASD and Nasdaq began restructuring their relationship in 2000 with the goal of completely separating Nasdaq from the NASD. As part of this restructuring, Nasdaq filed with the Commission an application to register one of its subsidiaries, the Nasdaq Exchange, as a national securities exchange. 6 The Commission approved the Nasdaq Exchange's registration as a national securities exchange on January 13, 2006. 7 6 In connection with the Nasdaq Exchange registration, Nasdaq became a holding company with the Nasdaq Exchange as its wholly-owned subsidiary. 7 *See* Securities Exchange Act Release No. 53128, 71 FR 3350 (January 23, 2006) (“Nasdaq Exchange Order”). In the Nasdaq Exchange Order, the Commission conditioned the Nasdaq Exchange's operation as a national securities exchange on the satisfaction of certain enumerated requirements. The Nasdaq Exchange Order and the conditions therein reflected the Nasdaq Exchange's original intent to begin trading at the same time CTA Plan Securities and Nasdaq securities reported to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis (“Nasdaq UTP Plan Securities”). In March 2006, however, the Nasdaq Exchange requested that the Commission modify the conditions in the Nasdaq Exchange Order so that it could begin operations as a national securities exchange for Nasdaq UTP Plan Securities before all the conditions were satisfied. In response to the request, this Commission modified the conditions in the Nasdaq Exchange Order. 8 All conditions for the Nasdaq Exchange to begin trading Nasdaq UTP Plan Securities were fulfilled, 9 and the Nasdaq Exchange commenced operations with respect to these securities on August 1, 2006. 10 8 *See* Securities Exchange Act Release No. 54085 (June 30, 2006), 71 FR 38910 (July 10, 2006) (“Order Modifying Nasdaq Exchange Conditions”). 9 *See e.g.* , Securities Exchange Act Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006) (File No. SR-NASD-2005-087) (amending the Delegation Plan to eliminate Nasdaq's authority over NASD members' over-the-counter (“OTC”) activities in Nasdaq UTP Plan Securities). The NASD also established the NASD/Nasdaq Trade Reporting Facility. 10 *Id.* The condition remaining to be satisfied before the Nasdaq Exchange may commence trading CTA Plan Securities is that “the NASD must represent to the Commission that control of Nasdaq through the Preferred D share is no longer necessary because the NASD can fulfill through other means its obligations with respect to securities reported to the CTA Plan under Section 15A(b)(11) of the Exchange Act, Rules 602 and 603 of Regulation NMS, and the national market system plans in which the NASD participates.” NASD currently has delegated to Nasdaq authority to perform obligations under the Plan of Allocation and Delegation of Functions by NASD to Subsidiaries (the “Delegation Plan”) with respect to NASD members’ OTC activities, including quoting, trading, and trade reporting of CTA Plan Securities. Because Nasdaq continues to operate pursuant to the Delegation Plan, the NASD retains control of Nasdaq through the outstanding share of Nasdaq Series D preferred stock. 11 In this proposed rule change, the NASD proposes to complete its separation from Nasdaq by, among other things, amending its Delegation Plan to completely eliminate its delegation of authority to Nasdaq. 11 The share of Series D preferred stock gives the NASD the right to cast one vote more than one-half of all votes entitled to be cast at an election by all holders of capital stock of Nasdaq. The voting right of the NASD immediately terminates upon the date on which Nasdaq no longer operates pursuant to authority delegated by NASD under the NASD's Delegation Plan. *See* Nasdaq Certificate of Incorporation, Certificate of Designation of Series D Preferred Stock of Nasdaq, Section 4. In addition to amending the Delegation Plan, the NASD proposes to:

(1)Delete the By-laws of Nasdaq and amend the By-laws of the NASD, NASD Regulation, Inc. (“NASDR”), and NASD Dispute Resolution, Inc. to reflect that Nasdaq will no longer be a subsidiary of the NASD;

(2)delete NASD rules that are specific to Nasdaq and its operating systems and amend NASD rules to reflect Nasdaq's complete separation from the NASD;

(3)modify certain NASD rules to clarify the NASD's continued regulation of the OTC market in CTA Plan Securities and to reflect the NASD's continued participation in the ITS Plan; and

(4)expand the scope of the NASD/Nasdaq TRF rules to allow NASD members to report OTC transactions in CTA Plan Securities. 12 12 The proposed rule change also includes corrections of minor grammatical or typographical errors as well as the renaming and renumbering of certain rules, including redesignation of Commission rules adopted under Section 11A of the Exchange Act with the appropriate Regulation NMS references. III. Discussion A. Condition With Regard to CTA Plan Securities As noted above, before the Nasdaq Exchange can commence operations as a national securities exchange for CTA Plan Securities, “the NASD must represent to the Commission that control of Nasdaq through the Preferred D share is no longer necessary because the NASD can fulfill through other means its obligations with respect to securities reported to the CTA Plan under Section 15A(b)(11) of the Exchange Act, Rules 602 and 603 of Regulation NMS, and the national market system plans in which the NASD participates.” 1. OTC Quotations and Transaction Reports Section 15A(b)(11) of the Exchange Act requires the NASD to have rules that govern the “form and content of quotations relating to securities sold otherwise than on a national securities exchange * * *.” 13 These rules also must be designed to produce fair and informative quotations and to promote orderly procedures for collecting, distributing, and publishing quotations. 14 13 15 U.S.C. 78 *o* -3(b)(11). 14 *Id.* Rule 602 of Regulation NMS also requires the NASD to collect bids, offers, quotation sizes, and aggregate quotation sizes from those members who are responsible broker or dealers. 15 The NASD must then make available to vendors, at all times when last sale information is reported, information about the best bids, best offers, and quotation sizes communicated otherwise than on an exchange by its members that act as OTC market makers, and their identity. 15 17 CFR 242.602. The NASD has retained its rules that allow its members to register as CQS Market Makers 16 and ITS/CAES Market Makers. 17 These rules are essential to the NASD's ability to fulfill its statutory and regulatory obligations, and to NASD members' ability to fulfill their regulatory obligations to submit their OTC quotes to the NASD. 18 These rules provide that members communicating quotations in CTA Plan Securities off an exchange must register as CQS Market Makers and ITS/CAES Market Makers. 16 *See* NASD Rule 6300 Series. NASD members that submit quotes in CQS securities must be registered as CQS market makers. *See* NASD Rule 6320(a). CQS market makers must also register as ITS/CAES market makers. *See* NASD Rule 6320(e). 17 *See* NASD Rule 5200 Series. NASD members that participate in ITS must register as ITS/CAES market makers. *See* NASD Rule 5220. ITS/CAES market makers must also register as CQS market makers. *See* NASD Rule 5220(a). *See* also NASD Rule 6320(e). 18 *See* Rule 602(b) of Regulation NMS under the Exchange Act, 17 CFR 242.602. Rule 601 of Regulation NMS 19 requires the NASD to file a transaction reporting plan regarding transactions in listed equity and Nasdaq securities that are executed by its members otherwise than on a national securities exchange. 20 Under Rule 603 of Regulation NMS, 21 national securities exchanges and national securities associations act jointly pursuant to an effective national market system plan to disseminate consolidated information, including a national best bid and offer, and quotations for and transactions in NMS stocks. 19 17 CFR 242.601. 20 Under Rule 601(b) of Regulation NMS, broker-dealers are prohibited from executing a transaction otherwise than on a national securities exchange unless there is an effective transaction reporting plan. NASD Rule 5000 requires NASD members to report transactions in exchange-listed securities effected otherwise than on an exchange to the NASD. 21 17 CFR 242.603. Currently, the NASD satisfies these requirements with regard to CTA Plan Securities by participating in the Consolidated Quotation System Plan (“CQ Plan”) and CTA Plan and by operating the SuperIntermarket 22 pursuant to authority delegated to Nasdaq under the Delegation Plan. 23 22 The SuperIntermarket is referred to as the ITS/CAES System under NASD rules. *See* NASD Rule 4700 Series. 23 Through its delegation to Nasdaq, the NASD currently uses technology owned by Nasdaq, as its facility to collect quotes and transaction reports in CTA Plan Securities. The NASD intends to continue to participate in the CQ Plan and CTA Plan. To satisfy its obligations under these plans, the NASD proposes to continue to use the ITS/CAES System for quote collection and trade reporting. 24 Quotes that are submitted to the ITS/CAES System will continue to be reported to the CQ Plan for dissemination. Transactions that are effected in the ITS/CAES System would be locked in by the system and reported to the CTA Plan for dissemination. 25 For transactions that are not effected in the ITS/CAES System, the NASD will allow members to report their trades to the ITS/CAES System for dissemination to the CTA Plan. 26 The NASD proposes to amend its Rule 4720 and Rule 6400 to provide that NASD members may report trades in CTA Plan Securities that are not effected in the ITS/CAES System to ITS/CAES System. 24 The NASD will contract with Nasdaq for the use of the ITS/CAES System for these purposes. The ITS/CAES System will remain a facility of the NASD. 25 The ITS/CAES System would also provide the necessary clearing information regarding the transaction to the National Securities Clearing Corporation. 26 Non-ITS/CAES market makers that wish to use this trade reporting functionality must register as “Trade Reporting Only Participants” pursuant to proposed NASD Rule 4705(a). 2. ITS Plan Rule 608 of Regulation NMS requires the NASD to comply with and enforce compliance with the terms of each national market system plan of which it is a sponsor or participant. 27 In addition to the CQ Plan and CTA Plan, the NASD is a participant in the ITS Plan. The ITS Plan establishes the rules under which ITS Participants interact with regard to CTA Plan Securities and contains a trade-through rule. The NASD currently satisfies its obligations under the ITS Plan through the ITS/CAES System, which, as noted above, is currently operated by Nasdaq pursuant to the Delegation Plan. The NASD also enforces compliance by its members with the terms of the ITS Plan. The NASD intends to remain a participant in the ITS Plan until the termination of the ITS Plan, which is expected to take place on the Trading Phase Date. 28 Accordingly, it must comply with, and enforce compliance by its members with, the provisions of the ITS Plan. 29 27 17 CFR 242.608(c). 28 The Trade Phase Date is the required date for full operation of Regulation NMS-compliant trading systems of all automated trading centers that intend to qualify their quotations for trade-through protection under Rule 611 of Regulation NMS. The Commission previously extended compliance dates for Rule 610 (Access Rule) and Rule 611 (The Order Protection Rule) of Regulation NMS. The Commission established the Trading Phase Date as February 5, 2007. *See* Securities Exchange Act Release No. 34-53829 (May 18, 2006), 71 FR 30038 (May 24, 2006). The termination of the ITS Plan will be subject to a separate filing. 29 On September 29, 2006, the Commission issued an exemption to the ITS Plan participants from certain provisions of the ITS Plan. Because the NASD is not participating in The Plan for the Purpose of Creating and Operating an Intermarket Communications Linkage Pursuant to Section 11A(a)(3)(B) of the Securities Exchange Act of 1934 (“Linkage Plan”), *see* Securities Exchange Act Release No. 54551 (September 29, 2006), 71 FR 59148 (October 6, 2006), it was not granted the same exemptions as were granted to the Linkage Plan participants. *See* letter to Robert Hill, Chairman, ITS Operating Committee, from David Shillman, Associate Director, Division of Market Regulation, Commission, dated September 29, 2006 (“ITS Exemption Letter”). The NASD proposes to continue to use the ITS/CAES System to support its participation in the ITS Plan. 30 Members, including electronic communication networks (“ECNs”) that wish to become ITS/CAES Market Makers, must register with the NASD. 31 Registration and compliance requirements for NASD members continue to be provided in amended NASD Rules 4705, 5220, 6320, and 6330. All ITS/CAES Market Makers must continue to display and maintain continuous two-sided quotes. 32 30 *See supra* note 24. 31 *See* NASD Rule 5210(e). 32 *See* NASD Rule 5220(e). The rules that govern the ITS/CAES System are found in NASD Rule 4700 and 5200 Series. The NASD proposes to amend its Rule 4700 Series to eliminate certain functionalities that are not necessary for compliance with the ITS Plan. For example, the NASD proposes to eliminate the automatic execution functionality of the ITS/CAES System. 33 Therefore, all references to automatic executions and execution algorithms have been deleted. In addition, the NASD proposes to eliminate reserve size and certain order types such as “discretionary,” “non-directed,” “sweep,” “fill or return,” “good-till-cancelled,” and “total good-till-canceled” orders. 34 The Commission finds that the deletion of these rules is consistent with the Exchange Act because they are not required for compliance with the ITS Plan. 33 The ITS/CAES System will be an order delivery system, which will require a market maker's response to execute an order delivered in response to its quote. *See* NASD Rule 4710(b)(1). 34 NASD Rule 4701 (nn), (p), (rr), (ll),

(ii)and (tt), respectively, have been deleted. Under the proposed ITS/CAES System, an order must be either a market or limit orders, must indicate whether it is a buy, short sale, short-sale exempt or long sale and may be designated “immediate or cancel,” “day,” “total day,” “total immediate or cancel” or “summary.” *See* NASD Rule 4706(a)(1). In the proposed rule change, the NASD also proposes to delete NASD Rules 5240 and 5250 relating to the ITS Pre-Opening Application functionality. The Commission believes that eliminating these rules is consistent with the Exchange Act because the other ITS participants are exempt from Section 7 Pre-Opening Application and Exhibit A Pre-Opening Application Rule under the ITS Plan. 35 35 *See* ITS Exemption Letter, *supra* note 29. ITS/CAES Market Markers will continue to access other ITS/CAES Market Makers' bids and offers by entering “Preferenced Orders,” 36 but the proposed rule change requires that the Preferenced Order be entered using the immediate or cancel designation ( *i.e.* , IOC or IOX). 37 Under the proposed rules, Preferenced Orders may only be sent to another ITS/CAES Market Maker when that ITS/CAES Market Maker is at the best bid/offer in the proposed ITS/CAES System and only in an amount equal to or less than the ITS/CAES Market Maker's displayed quote. 38 The proposed system would reject a Preferenced Order sent to an ITS/CAES Market Maker that is not at the best bid/offer in the system, or where the execution of the Preferenced Order would result in the violation of the trade through rule set forth in NASD Rule 5262. 39 36 Preferenced Orders may be designated to be delivered to a particular ITS/CAES Market Maker or a particular ITS exchange. *See* NASD Rule 4701(aa). 37 *See* NASD Rule 4701(aa). 38 *See* NASD Rule 4710(b)(1)(B). 39 *Id.* ITS/CAES Market Makers may interact with other ITS exchanges' bids and offers via inbound and outbound ITS Commitments. 40 Inbound ITS Commitments would have a uniform time-in-force (“TIF”) of 5 seconds. 41 Since the proposed ITS/CAES System would not provide automatic executions, ITS Commitments received by ITS/CAES Market Makers must be responded to or executed by an affirmative response within 5 seconds. If the ITS Commitment is not responded to within that time period, it would be returned to the sending exchange. Similarly, ITS/CAES Market Makers would be able to send outbound ITS Commitments to access quotes displayed by other ITS exchanges. All outbound ITS Commitments entered by ITS/CAES Market Makers would be treated as “immediate or cancel” and would have a TIF of 5 seconds. 42 Once an ITS Commitment is entered, it cannot be cancelled by the ITS/CAES Market Maker. 43 40 *See* NASD Rule 5230 for requirements regarding ITS Commitments. 41 *See* NASD Rule 4708(b)(3). 42 The TIF would be 30 seconds in the limited circumstance where the ITS Commitment is sent to an ITS exchange that is unable to accept a TIF of 5 seconds. *See* NASD Rule 4708(c). *See also* NASD Rule 5230 (NASD Rule 4708 states that outbound ITS Commitments must be consistent with the applicable provisions of NASD Rule 5200 Series and the ITS Plan). 43 *Id.* The proposed ITS/CAES System will reject all quotes that lock or cross the NASD best bid or offer (“BBO”) or the National BBO. 44 Since the system will no longer permit ITS/CAES Market Makers to initiate a locking or crossing quote, the NASD is proposing to replace the current NASD Rule 5263, which provides procedures relating to locking and crossing markets, with a new NASD Rule 5263 that prohibits such quoting activities altogether. 44 *See* NASD Rule 4708(a)(2) and NASD Rule 4710(b)(1)(C)(2). In addition, market and limit orders designated as IOC and limit orders designated as “total IOC,” whose displayed price would lock or cross another quote/order if they were displayed shall be rejected. *See* NASD Rule 4706(a)(1)(E). The Commission finds that the NASD's proposed changes to its ITS/CAES System is consistent with Section 15A(b)(6) of the Exchange Act. 45 In addition, the Commission believes that it will allow the NASD to continue to fulfill its statutory and regulatory obligations and will enable NASD members to fulfill their regulatory obligation to submit their OTC quotations to the NASD and to continue to comply with the requirements of the ITS Plan. Further, the NASD's rules are designed to produce fair and informative quotations and promote orderly procedures for collecting, distributing and publishing quotations as required by Section 15A(b)(11) of the Exchange Act. 46 The Commission finds that the modifications to the proposed ITS/CAES System are consistent with Section 15A(b)(6) of the Exchange Act and that under the proposed ITS/CAES System rules the NASD will be able to continue to satisfy its obligations under Rules 601, 602, and 603 of Regulation NMS. 45 15 U.S.C. 78 *o* -3(b)(6). 46 15 U.S.C. 78 *o* -3(b)(11). 3. Changes to Governing Documents The NASD proposes to amend the Delegation Plan to eliminate its delegation of authority to Nasdaq. The removal of Nasdaq from the Delegation Plan terminates the NASD's control of Nasdaq pursuant to the share of Series D preferred stock. Specifically, the NASD will lose its voting right and Nasdaq will be able to redeem the share for $1.00. 47 Because the NASD has represented that it is able to fulfill its obligations with regard to CTA Plan Securities, the Commission believes that it is consistent with Section 15A(b)(6) of the Exchange Act to approve the NASD's proposal to eliminate its delegation of functions to Nasdaq from the NASD's Delegation Plan. 47 *See supra* note 11. Because the NASD proposes to eliminate the delegation to Nasdaq, the NASD also proposes to eliminate the Quality of Markets Committee, which was a committee appointed by the Nasdaq Board. The NASD represents that its existing Market Regulation Committee will perform substantially the same functions as those performed by the Quality of Markets Committee. 48 48 *See In the Matter of National Association of Securities Dealers, Inc.* , Order Instituting Public Proceedings Pursuant to Section 19(h)(1) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions, Securities Exchange Act Release No. 37538 (August 8, 1996), Administrative Proceeding File No. 3-9056. Furthermore, the NASD proposes to delete references to the Market Operations Review Committee (“MORC”), which was appointed by the Nasdaq Board and which reviewed transactions under the clearly erroneous procedures of NASD Rule 11890 and related NASD Rule 5626. 49 The NASD proposes to amend the Delegation Plan to reflect that the authority of the Uniform Practice Code (“UPC”) Committee has been expanded to enable it to the review appeals under NASD Rule 11890 of determinations relating to all transactions (including those in CTA Plan Securities), not only those involving Nasdaq UTP Plan Securities and OTC Equity Securities. 50 49 *See* Delegation Plan, Section III.C.2. 50 *Id. See* NASD Rule 6610(d) (defining OTC Equity Security). In addition, the NASD proposes to remove all references in the Delegation Plan to Nasdaq as a subsidiary of the NASD. For example, the Delegation Plan has been amended to reflect that the NASDR will no longer, in conjunction with Nasdaq, develop and adopt rules to establish trading practices with respect to OTC Equity Securities, including OTC Bulletin Board securities. 51 In the proposal, the NASD also revises the By-laws of the NASD, NASDR and NASD Dispute Resolution, Inc. to remove references to Nasdaq as a subsidiary of the NASD. In addition, the NASD proposes to delete the Nasdaq By-Laws. 51 *See* Delegation Plan, Section II.A.1(t). The NASD also proposes to eliminate its delegation of authority to Stockwatch, which handles the trading halt functions for CTA Plan Securities traded in the OTC market because this function will now be performed by the NASD. 52 52 *See* Delegation Plan, Sections II and IV. The Commission finds that these changes to the NASD's governing documents are consistent with the Exchange Act because they will accurately reflect the complete separation of Nasdaq from the NASD once the Nasdaq Exchange begins to operate as a national securities exchange for CTA Plan Securities. 4. Other Deleted Rules To Reflect Nasdaq's Separation The NASD also proposes to delete several rules in their entirety because the NASD will no longer require these rules after the Nasdaq Exchange commences operations as a national securities exchange for CTA Plan Securities. For example, the NASD proposes to delete the rules that govern member activities in BRUT and the Inet. These trading systems are Nasdaq trading systems and when the Nasdaq Exchange begins operations as an exchange for CTA Plan Securities, they will be facilities of the Nasdaq Exchange. 53 Because these systems will cease to be NASD facilities, the Commission finds that deletion of these rules is consistent with Section 15A(b)(6) of the Exchange Act. 54 53 BRUT and Inet are already facilities of the Nasdaq Exchange for the purposes of trading Nasdaq UTP Plan Securities. *See also* Securities Exchange Act Release No. 54155 (July 14, 2006), 71 FR 41291 (July 20, 2006). 54 15 U.S.C. 78 *o* -3(b)(6). The NASD also proposes to delete NASD Rule 4400, which describes the treatment of securities that are dually-listed on the New York Stock Exchange, Inc. and the Nasdaq Exchange. 55 These dually-listed securities are considered CTA Plan Securities, and thus are not currently trading on the Nasdaq Exchange. Upon approval of this proposed rule change, these dually-listed securities will be eligible to trade on the Nasdaq Exchange along with the other CTA Plan Securities, and thus NASD Rule 4400 will no longer be necessary. The Nasdaq Exchange currently has the same rule in its rules, which continues to describe these securities as CTA Plan Securities for purposes of quoting and trade reporting. 56 Accordingly, the Commission finds the deletion of this rule to be consistent with Section 15A(b)(6) of the Exchange Act. 55 Under current NASD Rule 4400, these securities are subject to the CTA and CQ Plans and are treated as CTA Plan Securities under the NASD rules. 56 *See* Nasdaq Exchange Rule IM-4390. Like the NASD Rule 4400, Nasdaq Exchange Rule IM-4390 provides that the Nasdaq Exchange will send all quotes and trade reports in dually-listed securities to the processor of the CTA Plan. In addition, the Nasdaq Exchange Rule IM-4390 states that market makers in the dually-listed securities will be subject to the obligations set forth in Nasdaq Exchange Rule 5200 regarding quoting, trading, and transaction reporting of CTA Plan Securities and that the Nasdaq Exchange will honor the trade halt authority of the primary market under the CQ and CTA Plans. In addition, the NASD proposes to delete NASD Rule 0140, which provides procedures for fingerprint-based background checks of Nasdaq employees and independent contractors for purposes of enhancing the physical security of Nasdaq facilities, systems and data. Once Nasdaq separates from the NASD, these procedures will no longer be governed by NASD rules. 57 The Commission finds that the deletion of this rule is consistent with Section 15A(b)(6) of the Exchange Act because it relates solely to the operation of the Nasdaq Exchange. 57 The Nasdaq Exchange has a similar rule. *See* Nasdaq Exchange Rule 0140. B. Proposed Changes to NASD/Nasdaq Trade Reporting Facility Rules Currently, the NASD/Nasdaq Trade Reporting Facility only accepts trade reports in Nasdaq UTP Plan Securities. 58 The NASD proposes to redefine “designated securities” in NASD Rule 4100 to include any NMS stock as defined in Rule 600(b)(47) of Regulation NMS. 59 This change will permit NASD members to report OTC transactions in CTA Plan Securities to the NASD/Nasdaq Trade Reporting Facility. 60 In addition, to accommodate transaction reports in CTA Plan Securities, the NASD proposes to incorporate the trade reporting requirements for CTA Plan Securities currently set forth in the NASD Rule 6400 Series into NASD Rules 4100, 4200, 4600, and 6100 Series, which are rules relating to the NASD/Nasdaq TRF. Specifically, the NASD proposes to incorporate the exclusions set forth in current NASD Rules 6420(e)(6) and

(7)into proposed NASD Rule 4632(e). Current NASD Rules 6420(e)(6) and

(7)provide that the following transactions are not to be reported to the NASD:

(i)Acquisitions of securities by members as a principal in anticipation of making an immediate distribution or offering on an exchange; and

(ii)purchase of securities off the floor of an exchange pursuant to a tender offer. These exclusions are specific to exchange trading and, therefore, did not apply to reporting of transactions in Nasdaq UTP Plan Securities. However, now that the NASD/Nasdaq Trade Reporting Facility will accept transaction reports in all exchange-listed securities, the NASD proposes that these exclusions be applied to trade reporting to the NASD/Nasdaq Trade Reporting Facility. The Commission finds that including these exclusions in NASD Rule 4632(e) is consistent with Section 15A(b)(6) of the Exchange Act. 58 *See supra* note 9. 59 17 CFR 242.600(b)(47). 60 *See also* proposed NASD Rule 4200(a)(2). Members that report to the NASD/Nasdaq Trade Reporting Facility currently can enter into “give-up” arrangements 61 whereby one member reports transactions to the NASD/Nasdaq Trade Reporting Facility on behalf of another member. Proposed NASD Rule 4632(h) codifies this process and provides that the member with the reporting obligation will remain responsible for the transaction report submitted on its behalf. Further, under the proposed rule, both the member with the reporting obligation and the member submitting the trade to the NASD/Nasdaq Trade Reporting Facility will be responsible for ensuring that the information submitted is in compliance with all applicable rules and regulations. The Commission finds that codifying this existing practice, which is currently being applied in the ITS/CAES System, is consistent with Section 15A(b)(6) of the Exchange Act since it should clarify the reporting obligations of market participants and promote coordination in trade reporting. 61 These arrangements are similar to those currently in place in the ITS/CAES System. *See* NASD Rule 4720. The NASD also proposes to amend NASD Rule 4632(d)(3)(B) relating to requirements for reporting “riskless principal” transactions to the NASD/Nasdaq Trade Reporting Facility. 62 The proposed rule change will clarify that where the initial leg of a riskless principal transaction (media leg) has been reported to the NASD/Nasdaq Trade Reporting Facility, the second leg (non-media leg) must also be reported to the NASD/Nasdaq Trade Reporting Facility. However, where the initial leg of the riskless principal transaction has been executed on an exchange and thus reported by the exchange, the NASD member will be permitted, but not required, to report the second leg to the NASD/Nasdaq Trade Reporting Facility. NASD members that choose to report such second leg transactions to the NASD/Nasdaq Trade Reporting Facility must include all data required under NASD Rule 4632. NASD members should not submit the principal transaction (media leg) to the NASD/Nasdaq Trade Reporting Facility for a transaction that was executed on and reported by an exchange, because that would result in double reporting of the same transaction. 63 The Commission finds that this proposed rule change is consistent with Section 15A(b)(6) of the Exchange Act since it codifies an existing practice and clarifies the rules relating to riskless principal transaction reporting. 62 A riskless principal transaction is a transaction in which a member, after having received a customer order, executes an offsetting transaction, as principal, with another customer or broker-dealer to fill that customer order and both transactions are executed at the same price. Such transactions are reported to the NASD/Nasdaq Trade Reporting Facility as one transaction in the same manner as an agency transaction (excluding the mark-up or mark-down, commission equivalent or other fee) or otherwise, as specified in NASD Rule 4632. *See* NASD 4632(d)(3)(B). 63 *See also* NASD Rule 4632(e)(6). In the proposed rule change, the NASD proposes a similar amendment to NASD Rule 6420(d)(3)(B) with regard to riskless principal transactions in CTA Plan Securities reported to the NASD via the ITS/CAES System. Finally, the NASD proposes to amend the definition of “Reporting ECN” in NASD Rule 6110(i) to clarify that the term includes alternative trading systems, as well as ECNs, as those terms are defined in Rule 600 of Regulation NMS, for purposes of reporting transactions to the NASD/Nasdaq Trade Reporting Facility. 64 The Commission believes that this proposed change to NASD Rule 6110(i) is consistent with Section 15A(b)(6) of the Exchange Act because it will ensure that ECNs and ATSs are subject to the same clearing and comparison rules of the NASD and should promote consistency in the NASD's treatment of market participants. 64 The amended definition of “Reporting ECN” shall also apply to the trade reporting service of the ITS/CAES System. *See* NASD Rule 6110(m). In its filing, the NASD represented that it will have an integrated audit trail of CTA Plan Securities transactions that are reported to the ITS/CAES System and the NASD/Nasdaq Trade Reporting Facility. The NASD also represented that it will have integrated surveillance capabilities. Until the implementation of a comprehensive automated audit trail and surveillance is complete, the NASD has represented that its staff will create an integrated audit trail on a manual basis as needed for regulatory purposes. 65 65 In its filing, the NASD stated that it expects that an automated comprehensive audit trail and integrated surveillance will be completed by the end of fourth quarter 2006. C. Other Changes The NASD proposes to move certain trading practice requirements relating to exchange-listed securities currently found in NASD Rule 6440 to NASD Rule 5120, thus making them applicable to OTC trading of all exchange-listed securities. Currently, NASD Rule 6440 only applies to CTA Plan Securities. The NASD proposes to extend these rules prohibiting certain manipulative practices with respect to Nasdaq UTP Plan Securities. The Commission believes that proposed NASD Rule 5120 is consistent with the Section 15A(b)(6) of the Exchange Act because it extends the NASD's rules that prohibit manipulative trading practices to Nasdaq UTP Plan Securities. The Commission believes that this change will promote uniformity in NASD's rules. In addition, the NASD proposes to add a new NASD Rule 5130 to explicitly require that NASD members participating in any NASD system or facility must provide information to the staff of the NASD when the NASD staff requests information relating to a specific NASD rule, Commission rule, or provision of a joint industry plan ( *e.g.* , UTP, CTA, CQ and ITS). A failure to comply in a timely, truthful and/or complete manner with such request may be deemed conduct inconsistent with just and equitable principles of trade. This rule is substantially similar to former NASD Rule 4625, which imposed obligations on NASD members to respond to requests from the staff of Nasdaq MarketWatch and Nasdaq Market Operations and which was inadvertently deleted from NASD rules. 66 The Commission finds that proposed NASD Rule 5130 is consistent with Section 15A(b)(6) of the Exchange Act, and with Section 15A(b)(2) of the Exchange Act because it is designed to allow the NASD to conduct more efficient surveillance and investigation of its members' activities for potential violations of NASD rules and the federal securities laws. 66 NASD Rule 4625 was inadvertently deleted as part of File No. SR-NASD-2005-087, *supra* note 9. Finally, the NASD proposes to amend NASD Rule 11890 Series (Clearly Erroneous Transactions). Specifically, the NASD proposes to delete those provisions that provide Nasdaq with the authority to break trades as a result of a complaint. The proposed rule change also reallocates to the NASD authority previously allocated to Nasdaq to break trades in CTA Plan Securities on its own motion, which is consistent with the NASD's current authority with respect to Nasdaq UTP Plan Securities and OTC Equity Securities. The Commission finds that these changes are consistent with Section 15A of the Exchange Act because it updates the NASD's rules to reflect the separation of Nasdaq. The NASD also proposes to amend NASD Rule 11890(c) to delete references to the MORC, which currently reviews appeals of erroneous transactions in CTA Plan Securities. Instead, proposed NASD Rule 11890(b) and

(c)will provide that the NASD's UPC Committee will have its authority expanded so that it may review appeals relating to all transactions (including transactions in CTA Plan Securities), and not just transactions relating to Nasdaq UTP Plan Securities and OTC Equity Securities as provided in the current rule. 67 The Commission finds that these proposed changes are consistent with Section 15A(b)(6) of the Exchange Act as they adequately reflect the structure and obligations of the NASD's committee with respect to NASD Rule 11890 upon Nasdaq's complete separation from the NASD. 67 *See supra* notes 50-51 and accompanying text. In contrast to the MORC's decisions, decisions by UPC Committee may be submitted by the parties to arbitration. *See* NASD Rule 11890(c) In Amendment No. 2, the NASD clarified that the Consolidated Quotation Service referred to in NASD Rule 6320 is the ITS/CAES System. The Commission finds that this proposed change is consistent with Section 15A(b)(6) of the Exchange Act 68 because it clarifies NASD's rule and reflects the fact that CQS Market Makers, who are required to be registered as ITS/CAES Market Makers, will send their quotations to the ITS/CAES System. In Amendment No. 2, the NASD also amended NASD Rule 6420(d)(3)(B), which relates to riskless principal transactions in the proposed ITS/CAES System so that it would conform to NASD Rule 4632(d)(3)(B), which relates to the same transactions in the NASD/Nasdaq TRF. The NASD also amended NASD Rule 11890(b)(2), which relates to clearly erroneous transactions to provide that officers designated by an Executive Vice President of NASD's Market Regulation Committee or NASD's Transparency Services Department could also take action under that rule. The Commission finds that these proposed changes are consistent with the Section 15A(b)(6) of the Exchange Act since they clarify the NASD's rules and accurately reflect NASD's proposed ITS/CAES System and its review of clearly erroneous transactions. For these reasons, the Commission finds good cause for approving Amendment No. 2 to the proposal prior to the 30th day after the date of publication of filing thereof in the **Federal Register** . Accordingly, the Commission finds that it is consistent with Section 15A(b)(6) and Rule 19(b)(2) of the Exchange Act 69 to approve Amendment No. 2 on an accelerated basis. 68 15 U.S.C. 78 *o* -3(b)(6). 69 15 U.S.C. 78 *o* -3(b)(6) and 15 U.S.C. 78s(b)(2). D. Effective Date of Proposed Rule Change The NASD proposes that the changes to its governing documents, including the Delegation Plan, and its rules become effective on the date on which the Nasdaq Exchange commences operation as a national securities exchange for CTA Plan Securities. The Commission finds that this effective date is consistent with Section 15A of the Exchange Act because until the Nasdaq Exchange begins operations, the NASD must maintain its current rules to fulfill its statutory and regulatory obligations. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 2, including whether Amendment No. 2 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 No. SR-NASD-2006-104 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-NASD-2006-104. 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 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 publicly available. All submissions should refer to File No. SR-NASD-2006-104 and should be submitted on or before December 20, 2006. V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Exchange Act, that the proposed rule change (SR-NASD-2006-104), as amended by Amendment No. 1, is approved and that Amendment No. 2 is approved on an accelerated basis. 70 70 In approving the proposed rule change, the Commission considered the proposal's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 71 71 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-20215 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54811; File No. SR-NASD-2006-066] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 Thereto To Allow Certain Institutional Customers To Elect Not To Receive Account Statements November 22, 2006. On May 23, 2006, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“SEC” or “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 amendment to NASD rule 2340 (Customer Account Statements). On August 17, 2006, NASD filed Amendment No. 1 to the proposed rule change. 3 The proposed rule change, as amended by Amendment No. 1, was published for comment in the **Federal Register** on October 16, 2006. 4 The Commission received one comment on the proposal. 5 This order approves the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 In Amendment No. 1, NASD proposed to partially amend the text of proposed amended Rule 2340. 4 *See* Exchange Act Release No. 54566 (Oct. 3, 2006), 71 FR 60784 (Oct. 16, 2006). 5 *See* letter from Noland Cheng, Chairman, Operations Committee, Securities Industry and Financial Markets Association (“SIFMA”), to Nancy M. Morris, Secretary, Commission, dated November 3, 2006 (“SIFMA letter”) (available for review on the Commission's Web site at *http://www.sec.gov/comments/sr-nasd-2006-066/nasd2006066-1.pdf* ). I. Description The proposed amendment to NASD Rule 2340 would allow institutional customers with Delivery versus Payment/Receive versus Payment (“DVP/RVP”) accounts to elect not to receive quarterly account statements. 6 A DVP/RVP account is an arrangement whereby payment for securities purchased is made to the selling customer's agent/and or delivery of securities sold is made to the buying customer's agent in exchange for payment at the time of settlement, usually in the form of cash. 6 The proposed rule change is similar to a rule change proposed by the New York Stock Exchange, Inc. (now known as New York Stock Exchange LLC). *See* Securities Exchange Act Release No. 53826 (May 18, 2006), 71 FR 30211 (May 25, 2006). Rule 2340, in pertinent part, requires any member that conducts a general securities business and also carries customer accounts or holds customer funds or securities to send account statements to customers at least once each calendar quarter. The statement of account must contain a description of any securities positions, money balances, or account activity, and must be sent to each customer whose account had a security position, money balance, or account activity during the time since the last statement was sent. The proposed amendment would provide relief from this requirement with regard to customer accounts that are carried solely for the purpose of DVP/RVP transactions. NASD states that account statements for DVP/RVP accounts (chiefly institutional accounts) generally do not reflect any cash balance or security position at the end of a quarter, and that DVP/RVP customers generally rely on trade runs or customer confirmations issued pursuant to Rule 10b-10 under the Exchange Act for transaction-related information. The proposed amendment would relieve members from the obligation to send quarterly statements to customers with DVP/RVP accounts if:

(1)The customer's account is carried solely for the purpose of execution on a DVP/RVP basis;

(2)all transactions in the account are handled on a DVP/RVP basis in conformity with Rule 11860; 7

(3)there are no securities or cash positions in the account at the end of the quarter (other than positions of a temporary nature, such as those arising from fails to receive or deliver, errors, questioned trades, dividend or bond interest entries and other similar transactions);

(4)the customer consents to the suspension in writing and the member maintains such consents in a manner consistent with NASD Rule 3110 and Rule 17a-4 under the Exchange Act; 8

(5)the member undertakes to provide any particular statement or statements to the customer promptly upon request; and

(6)the member undertakes to promptly reinstate the delivery of such statements to the customer upon request. The proposed rule change specifies that Rule 2340 does not qualify or condition the obligations of a member under Rule 15c3-2 under the Exchange Act concerning quarterly notices of free credit balances on statements. 9 The proposed rule change would also define “DVP/RVP account” for purposes of Rule 2340. 10 Finally, the proposed rule change includes a technical amendment that would replace the reference to “the Association” in paragraph

(e)of Rule 2340 with “NASD.” 7 Prior to accepting an order in a DVP/RVP account, a member must comply with Rule 11860, which requires, among other things, that the member obtain certain information from the customer, including the name and address of the agent and the account number of the customer on file with the agent. 8 Under NASD Rule 3110(a), NASD members are, among other things, required to make and preserve books and records as prescribed by Rule 17a-3 under the Exchange Act. Rule 3110(a) also states that the recordkeeping format, medium, and retention period must comply with Rule 17a-4 under the Exchange Act. Rule 17a-4 specifies the manner in which broker-dealers must maintain the records created in accordance with Rule 17a-3, and certain other records produced by broker-dealers, and the required retention periods for these records. 9 Rule 15c3-2 under the Exchange Act requires broker-dealers to provide each of their customers for whom a free credit balance is carried, not less frequently than once every three months, a written statement informing the customer of the amount due to the customer, and written notice that the funds are not segregated and may be used in the broker-dealer's business operations, and that the funds are payable on the customer's demand. 10 Proposed Rule 2340(d)(6) would define a “ DVP/RVP account” as “an arrangement whereby payment for securities purchased is made to the selling customer's agent and/or delivery of securities sold is made to the buying customer's agent in exchange for payment at time of settlement, usually in the form of cash.” II. Summary of Comments The Commission received one comment on the proposal, which was supportive, did not suggest any changes to the proposal, and did not require a response from NASD. 11 11 *See* SIFMA letter, footnote 5, *supra.* III. Discussion and Findings The Commission finds that the proposed rule change is consistent with the Act, and in particular, with section 15A(b)(6) of the Act, 12 which requires, among other things, that NASD rules be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and national market system, and in general, to protect investors and the public interest. The Commission believes that the proposed rule change, as amended, should remove impediments to and perfect the mechanisms of a free and open market and national market system by removing an unnecessary and potentially costly obligation on firms to deliver quarterly account statements to DVP/RVP customers. At the same time, the proposal maintains certain investor protections ( *i.e.* , requiring NASD members to obtain affirmative consent to the suspension of quarterly account statements, preserving the ability of customers to obtain particular statements upon request and to resume receipt of statements promptly upon request, and precluding member organizations from unilaterally terminating delivery of such statements). The Commission therefore believes the proposal is consistent with the Exchange Act. 12 15 U.S.C. 78o-3(b)(6). IV. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act 13 that the proposed rule change (SR-NASD-2006-066) be, and hereby is, approved, 14 effective immediately. 15 13 15 U.S.C. 78s(b)(2). 14 In approving this proposed rule change, the Commission notes that it has considered the proposed rule change's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 15 NASD initially requested that the effective date of the proposed rule change be 30 days following NASD's publication, within 60 days of the Commission's approval of the rule change, of a *Notice to Members* announcing the rule change. NASD withdrew its request to delay effectiveness of the proposal in a telephone conversation between Shirley Weiss, Associate General Counsel, NASD, and Brice Prince, Special Counsel, Division of Market Regulation, Commission, on November 21, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 16 16 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-20217 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54808; File No. SR-NSX-2006-15] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Add a Rule Regarding Third-Party Routing Services in Respect of Orders Entered Into NSX BLADE November 21, 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 21, 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 and II below, which Items have been prepared by the Exchange. NSX has filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to add a new NSX Rule 2.12 describing the terms under which the Exchange would provide routing services procured from a third party with respect to orders entered into its new state of the art trading system, NSX BLADE. The text of the proposed rule change is below. Proposed new language is in *italics* . RULES OF NATIONAL STOCK EXCHANGE, INC. CHAPTER II—ETP Holders of the Exchange Rule 2.11 NSX Securities, LLC (a)-(b) No change. *(c) This Rule 2.11 shall become effective on March 1, 2007.* *Rule 2.12 Order Routing Services* *The Exchange will route orders to other trading centers under certain circumstances (“Routing Services”) as described in Chapter XI of these Rules. The Exchange will provide its Routing Services pursuant to the terms of three separate agreements:

(1)an agreement between the Exchange and each ETP Holder on whose behalf orders will be routed;

(2)an agreement between the Exchange and each third-party broker-dealer that will serve as a “give-up” on an away trading center when the ETP Holder on whose behalf an order is routed is not also a member or subscriber of the away trading center; and

(3)an agreement between the Exchange and a third-party service provider (“Technology Provider”) pursuant to which the Exchange licenses the routing technology used by the Exchange for its Routing Services (“Exchange-Technology Provider Agreement”). This Rule 2.12 shall be effective through February 28, 2007.* *Interpretations and Policies* *.01

(a)The Exchange will provide its Routing Services in compliance with these Rules, as well as other provisions of the Exchange's By-Laws and Rules where applicable, and with the provisions of the Act and the rules thereunder, including, but not limited to, the requirements in Section 6(b)(4) and

(5)of the Act that the rules of a national securities exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers.* *(b) As provider of the Routing Services, the Exchange will license the necessary routing technology for use within its own systems and accordingly will control the logic that determines when, how, and where orders are routed away to other trading centers.* *(c) The Exchange will establish and maintain procedures and internal controls reasonably designed to adequately restrict the flow of confidential and proprietary information between the Exchange (including its facilities) and the Technology Provider, and, to the extent the Technology Provider reasonably receives confidential and proprietary information, that adequately restrict the use of such information by the Technology Provider to legitimate business purposes necessary for the licensing of routing technology.* *(d) The Exchange-Technology Provider Agreement will include terms and conditions that enable the Exchange to comply with this Interpretation and Policy .01.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSX 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. NSX 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 add a new NSX Rule 2.12 relating to the routing of orders to other trading centers by the Exchange. The proposed Rule would apply to orders entered into the Exchange's new state of the art trading system, NSX BLADE, and would be effective through February 28, 2007. NSX states that this Rule is proposed to be effective for a finite period so that the Exchange can offer routing services through NSX BLADE while the Exchange's wholly-owned subsidiary, NSX Securities, LLC (“NSX Securities”) completes its registration process as a broker-dealer with the National Association of Securities Dealers, Inc. (“NASD”) (and thus becomes available to provide routing services), and while the Exchange evaluates its options for providing routing services to ETP Holders. The Exchange states that the ability to route orders entered into NSX BLADE to away markets for execution at the best available prices is a key feature of NSX's new system. Proposed NSX Rule 2.12 provides that the Exchange's routing services would be provided under the terms of

(i)an agreement between the Exchange and each ETP Holder on whose behalf the orders would be routed,

(ii)an agreement between the Exchange and each third party broker-dealer that would serve as a “give-up” on any away trading center when the ETP Holder on whose behalf an order is routed is not also a member or subscriber at the away trading center, and

(iii)an agreement between the Exchange and a third-party service provider pursuant to which the Exchange licenses the routing technology used by the Exchange for its routing services, as well as in compliance with the provisions of the Act and the rules thereunder, and other applicable provisions of the Exchange's By-Laws and Rules. Proposed NSX Rule 2.12 also provides for

(i)the equitable allocation of dues, fees and other charges,

(ii)Exchange control of the routing logic, and

(iii)the establishment and maintenance of procedures and internal controls designed to protect confidential and proprietary information. Proposed NSX Rule 2.12 provides that the Rule would be effective through February 28, 2007. 5 The Exchange intends to provide routing services in accordance with proposed NSX Rule 2.12 until February 28, 2007, unless the Exchange, with the Commission's approval, amends proposed NSX Rule 2.12 before such date. During such time period, the Exchange intends to evaluate its options for providing routing services. At the conclusion of such time period, the Exchange may decide to

(i)continue the approach provided for in proposed NSX Rule 2.12 on a permanent basis and not use NSX Securities as the outbound router (by filing a proposed rule change to delete NSX Rule 2.11 and renumber proposed NSX Rule 2.12),

(ii)use the Exchange's original approach of NSX Securities as an outbound router and discontinue the approach provided for in proposed NSX Rule 2.12 (by filing a proposed rule change to delete proposed NSX Rule 2.12), or

(iii)file a proposed rule change to allow ETP Holders to use either NSX Securities or the approach provided for in proposed NSX Rule 2.12 for outbound routing. The Exchange's use of NSX Securities as an outbound router would be contingent on NSX Securities' successful completion of its registration process as a broker-dealer with NASD. 5 With this rule filing the Exchange also proposes to amend NSX Rule 2.11, relating to NSX Securities' Outbound Router function, to provide that such Rule would become effective on March 1, 2007, immediately after proposed NSX Rule 2.12 ceases to be effective. 2. Statutory Basis NSX believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, 6 in general, and with Section 6(b)(5) of the Act, 7 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to a free and open market and a national market system, and, in general, to protect investors and the public interest. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change is subject to Section 19(b)(3)(A)(iii) of the Act 8 and Rule 19b-4(f)(6) thereunder 9 because the proposal:

(i)Does not significantly affect the protection of investors or the public interest;

(ii)does not impose any significant burden on competition; and

(iii)does not become operative prior to 30 days after the date of filing or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest; provided that NSX has given the Commission notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 8 15 U.S.C. 78s(b)(3)(A)(iii). 9 17 CFR 240.19b-4(f)(6). NSX has fulfilled the five-day pre-filing requirement. NSX has requested that the Commission waive the 30-day operative delay requirement. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because such waiver would immediately provide NSX and its market participants with the ability to route orders to away markets for execution at the best available prices, a key feature of NSX BLADE, which is now operational. The Commission notes that this proposed rule change is substantially similar to the rules of another self-regulatory organization. 10 For these reasons, the Commission hereby waives the 30-day operative delay requirement. 11 The Commission notes that NSX intends to offer outbound routing to its ETP Holders beginning on November 27, 2006. 10 Rule 126B-AEMI of the American Stock Exchange LLC. See Securities Exchange Act Release No. 54552 (September 29, 2006), 71 FR 59546 (October 10, 2006) (approving File No. SR-Amex-2005-104). 11 For the purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). At any time within 60 days of the filing of 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. 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-NSX-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-NSX-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 Room. Copies of the filing also will be available for inspection and copying at the principal office of the NSX. 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-2006-15 and should be submitted on or before December 20, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 Nancy M. Morris, Secretary. 12 17 CFR 200.30-3(a)(12). [FR Doc. E6-20218 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54810; File No. SR-NYSE-2005-90] Self-Regulatory Organizations; New York Stock Exchange LLC; Order Granting Approval of Proposed Rule Change and Amendment No. 1 Thereto and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 2 Thereto To Allow Certain Institutional Customers To Elect Not To Receive Account Statements November 22, 2006. On December 21, 2005, the New York Stock Exchange, Inc. (now known as New York Stock Exchange LLC) (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“SEC” or “Commission”), pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (“Exchange Act” or “Act”), 2 and Rule 19b-4 thereunder, 3 a proposed amendment to NYSE Rule 409 (Statements of Accounts to Customers). On March 28, 2006, the NYSE filed Amendment No. 1 to the proposed rule change. 4 The proposed rule change, as amended by Amendment No. 1, was published for comment in the **Federal Register** on May 25, 2006. 5 The Commission received two comments on the proposal. 6 On August 14, 2006, the NYSE filed Amendment No. 2 to the proposed rule change. 7 This order approves the proposed rule change, as amended by Amendment No. 1. Simultaneously, the Commission is providing notice of filing of Amendment No. 2 and granting accelerated approval of Amendment No. 2. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a *et seq.* 3 17 CFR 240.19b-4. 4 In Amendment No. 1, the NYSE proposed to partially amend the text of proposed amended Rule 409. 5 *See* Exchange Act Release No. 53826 (May 18, 2006), 71 FR 30211 (May 25, 2006). 6 *See* letter from Tom DiSpaldo, Compliance Officer, BNP Paribas Securities Corporation, to Nancy M. Morris, Secretary, Commission, dated June 12, 2006 (“BNP letter”) (available for review on the Commission's Web site at *http://www.sec.gov/comments/sr-nyse-2005-90/tdispaldo7238.htm* ); and letter from Noland Cheng, Chairman, Operations Committee, Securities Industry Association, to Nancy M. Morris, Secretary, Commission, dated June 16, 2006 (“SIA letter”) (available for review on the Commission's Web site at *http://www.sec.gov/comments/sr-nyse-2005-90/sia061606.pdf* ). 7 In Amendment No. 2, the NYSE proposed to partially amend the text of proposed amended Rule 409 as discussed in Section III below. I. Description The proposed amendment to NYSE Rule 409 would allow institutional customers conducting a Delivery versus Payment and Receive versus Payment (“DVP/RVP”) business to elect not to receive quarterly account statements. Rule 409, in pertinent part, specifies the obligations of member organizations with respect to customer statements, including frequency of delivery and elements of content. NYSE Rule 409(a) requires that, except with the permission of the Exchange, members and member organizations shall send statements at least quarterly to customers for accounts showing security and money positions and entries during the preceding quarter. The proposed amendment would provide relief from this requirement for customer accounts that are carried solely for the purpose of DVP/RVP transactions. A DVP/RVP account is an arrangement whereby delivery of securities sold is made to the buying customer's bank in exchange for payment, usually in cash, at settlement. Such accounts must comply with the requirements outlined in NYSE Rule 387 (COD Orders). 8 8 NYSE Rule 387 sets out specific prerequisites for the acceptance of such orders:

(1)The member or member organization must have previously received the name and address of the agent, together with its customer number;

(2)The order must note the payment on delivery or collect on delivery nature of the trade;

(3)The member or member organization must deliver to the customer a confirmation in the specified form; and

(4)The member organization must have obtained an agreement from the customer regarding the furnishing of appropriate instructions for the settlement of the trade. Due to the nature of DVP/RVP accounts, their statements do not generally reflect any cash balance or security position at the end of a quarter. Consequently, according to NYSE, DVP/RVP customers (chiefly institutional customers) generally rely on confirmations (issued pursuant to Rule 10b-10 under the Exchange Act) or trade runs for transaction-related information. Such records provide critical transactional information (such as security name and price, commission or markup, if applicable, trade date, settlement date, etc.) in a timely fashion. According to NYSE, institutional investors prefer transaction confirms or trade run information to quarterly account statements. The proposed amendment to NYSE Rule 409 would relieve member organizations of the obligation to send quarterly statements to customers if:

(1)The customer's account is carried solely for the purpose of execution on a DVP/RVP basis;

(2)all transactions effected for the account are done on a DVP/RVP basis in conformity with Rule 387;

(3)the account does not show security or money positions at the end of the quarter;

(4)the customer consents to the suspension of such statements in writing and such consents are maintained by the member organization in a manner consistent with Exchange Rule 440 and Rule 17a-4 under the Exchange Act; 9

(5)the member organization undertakes to provide any particular statement or statements to the customer promptly upon request; and

(6)the member organization undertakes to promptly reinstate the delivery of such statements to the customer upon request. The proposed rule change specifies that Rule 409 does not qualify or condition the obligations of a member organization under Rule 15c3-2 under the Exchange Act concerning quarterly notices of free credit balances on statements. 10 9 Under NYSE Rule 440, NYSE member organizations are, among other things, required to make and preserve books and records as prescribed by Rule 17a-3 under the Exchange Act. Rule 440 also states that the recordkeeping format, medium, and retention period must comply with Rule 17a-4 under the Exchange Act. Rule 17a-4 specifies the manner in which broker-dealers must maintain the records created in accordance with Rule 17a-3, and certain other records produced by broker-dealers, and the required retention periods for these records. 10 Rule 15c3-2 under the Exchange Act requires broker-dealers to provide each of their customers for whom a free credit balance is carried, not less frequently than once every three months, a written statement informing the customer of the amount due to the customer, and written notice that the funds are not segregated and may be used in the broker-dealer's business operations, and that the funds are payable on the customer's demand. II. Summary of Comments The Commission received two comments on the proposal, both of which generally were supportive. 11 BNP opposed condition number

(3)of the proposal ( *i.e.* , that the account not show security or money positions at the end of the quarter). BNP believed that proposed condition

(3)could, among other things, require members to monitor qualifying accounts to ensure that they had no money or positions at the end of the quarter. BNP also contended that the condition could be triggered as a result of a failed receipt or delivery at the end of the quarter. In such case, the customer would receive a quarterly statement even though it had consented not to receive one. BNP contended that the customer would be confused by such statement and the statement would not benefit the customer. 12 11 *See* footnote 6, *supra* . 12 In its comment, discussed below, SIA does not believe that condition

(3)should apply to those accounts that show a money or position balance at the end of the quarter because of unsettled items or a “DK.” The SIA letter supported the proposed amendment to NYSE Rule 409 but commented that the proposal would unnecessarily and impractically require individual firms to retain a record that reflects each institution's consent to the suspension of statements. SIA proposed that the NYSE interpret proposed amended Rule 409 to make an institution's notification to Omgeo 13 and Omgeo's population of their database sufficient for recordkeeping purposes. 13 According to SIA, Omgeo, LLC is the leading industry provider of institutional processing services. SIA believes that other vendors would also provide such indicators. III. NYSE's Response to Comments In filing Amendment No. 2, NYSE addressed comments on the proposal by revising proposed amended Rule 409(a)(3) to confirm that transactional positions, such as those arising from a fail to receive or deliver money or securities, will not be deemed money or security positions for purposes of this rule. This proposed change is intended to avoid the possibility raised by BNP that firms could be in violation of the rule due to a failed receipt or delivery at the end of a quarter. IV. 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 exchange. 14 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Exchange Act. 15 Section 6(b)(5) of the Act requires, among other things, 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 national market system, and in general, to protect investors and the public interest. The Commission believes that the proposed rule change, as amended, should remove impediments to and perfect the mechanisms of a free and open market and national market system by removing an unnecessary and potentially costly obligation on firms to deliver quarterly account statements to DVP/RVP customers. At the same time, the proposal maintains certain investor protections ( *i.e.* , requiring NYSE member organizations to obtain affirmative consent to the suspension of quarterly account statements, preserving the ability of customers to obtain particular statements upon request and to resume receipt of statements promptly upon request, and precluding member organizations from unilaterally terminating delivery of such statements). Therefore, the Commission believes the proposal is consistent with the Exchange Act. 14 In approving this proposed rule change, the Commission has considered whether the proposed rule change will promote efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 15 15 U.S.C. 78f(b)(5). Accelerated Approval of Amendment No. 2 The Commission finds good cause to approve Amendment No. 2 to the proposed rule change, as amended, prior to the thirtieth day after Amendment No. 2 is published for comment in the **Federal Register** pursuant to Section 19(b)(2) of the Act. 16 Amendment No. 2 clarifies that transactional positions, such as those arising from a fail to receive or deliver money or securities, will not be deemed money or security positions for purposes of the proposed amended rule. The Commission finds that Amendment No. 2 appropriately addresses a concern raised by a commenter. 17 For these reasons, the Commission believes that good cause exists to accelerate approval of Amendment No. 2. 16 15 U.S.C. 78s(b)(2). 17 *See* BNP letter, footnote 6, *supra* . V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Exchange Act, 18 that the proposed rule change (SR-NYSE-2005-90), as amended by Amendment No. 1 thereto, be, and hereby is, approved, and that Amendment No. 2 thereto, be, and hereby is, approved on an accelerated basis. 18 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 19 19 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-20227 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54796; File No. SR-NYSEArca-2006-85] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to a Six-Month Pilot Program To Adopt New Initial and Continued Listing Standards November 20, 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 17, 2006, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comment on the proposed rule change from interested persons. For the reasons discussed below, the Commission is granting accelerated approval of the proposed rule change, as a six-month pilot, until May 29, 2007. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes, on a six-month pilot program basis (the “Pilot Program”), to make significant revisions to its initial and continued financial listing standards for operating companies. 3 The text of the proposed rule change is available on the Exchange's Web site at *www.nysearca.com* , at the Exchange's Office of the Secretary and at the Commission's Public Reference Room. 3 The Commission notes that the proposed changes are primarily to the initial and continued listing standards of common stock and common stock equivalent securities, preferred stock and similar issues and secondary classes of common stock. Some changes are also being made to the listing standards for bonds and debentures, warrants, contingent value rights, other securities, and index-linked exchangeable notes. 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 self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On March 7, 2006, Archipelago Holdings, Inc. and the New York Stock Exchange, Inc. completed their merger (the “Merger”), creating NYSE Group, Inc. (“NYSE Group”). NYSE Group is a holding company that operates, among other subsidiaries, two securities exchanges: New York Stock Exchange LLC (“NYSE”) and NYSE Arca Equities, Inc. (“NYSE Arca Equities” or the “Corporation”). 4 NYSE Arca Equities conducts its equities trading operations through its equities trading facility, NYSE Arca, L.L.C. (also referred to as the “NYSE Arca Marketplace”). 4 The Commission notes that NYSE Arca is actually the registered national securities exchange and NYSE Arca Equities is a wholly-owned subsidiary of NYSE Arca. In connection with the Merger, NYSE Arca Marketplace examined all aspects of its listings program, and as a result, determined to make substantial modifications and enhancements to its listing standards. Accordingly, with this filing, NYSE Arca is proposing significant revisions to the initial and continued listing criteria applicable to operating companies set forth in NYSE Arca Equities Rule 5, completely replacing the current tiered structure with a single set of numerical and financial requirements. 5 The principal objectives of these proposed revisions are to upgrade the financial condition, shareholder interest, and stature of issuers listing on NYSE Arca Marketplace; more closely align NYSE Arca Marketplace's listing standards and structure with the NYSE; and enhance NYSE Arca Marketplace's competitive position. 6 5 This filing relates only to quantitative (financial) original and continued listing standards applicable to operating companies. It does not relate to listing standards for corporate governance, exchange traded funds, open and closed-end funds, commodity-based trusts, trust issued receipts, portfolio depositary receipts, investment company units or other types of structured products. *See supra* note 3. 6 The Commission recently approved substantial revisions to NYSE Arca's listing fees. *See* Securities Exchange Act Release No. 54007 (June 16, 2006), 71 FR 36155 (June 23, 2006) (SR-PCX-2006-16). NYSE Arca Equities Rule 5.1(a) provides that the Board of the Directors of the Exchange will make determinations as to whether to list securities or admit securities to unlisted trading privileges on the Exchange. Similarly, current NYSE Arca Equities Rule 5.2(a) provides that the prescribed forms of applications to list securities on the Exchange will be determined by the Board of Directors. This filing proposes to amend both of the aforementioned requirements to state that the Exchange will make such determinations. Such decisions will be made by the chief executive officer of the Exchange or by staff of the Exchange pursuant to authority delegated by the chief executive officer. In addition, NYSE Arca Equities Rule 5.2(a) would be amended to state that the Exchange may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination could be made even if the company meets the standards set forth below. Summary of Current and Proposed Initial Listing Standards Summary of Current Initial Listing Standards for Operating Companies Currently, the NYSE Arca Marketplace has a two-tier listing structure, classifying listed securities as either Tier I or Tier II. For their common stock to qualify for initial listing as a Tier I security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.2(c). 7 To qualify for initial listing as a Tier II security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.2(k). Both Rule 5.2(c) and Rule 5.2(k) also provide that an issuer may qualify under either a Basic or an Alternate set of listing criteria. To be eligible to list, an issuer need only satisfy all of the criteria under one of these four separate sets of standards. 8 7 In addition to the numerical criteria set forth in Rules 5.2(c) and 5.2(k), issuers must also satisfy certain qualitative requirements, including corporate governance-related standards set forth in NYSE Arca Equities Rule 5.3. These corporate governance rules are not the subject of this proposal. 8 NYSE Arca Equities Rule 5.2(a) provides that approval of listing applications is a matter solely within the discretion of NYSE Arca Equities, and the fact that an issuer may meet the applicable listing requirements does not necessarily mean that its application will be approved. These requirements are: Tier I (Rule 5.2(c)) Basic Alternate Tier II (Rule 5.2(k)) Basic Alternate Net tangible assets 9 $2,000,000 Net worth 10 $4,000,000 $12,000,000 $8,000,000 Pre-tax income 11 $750,000 Net income 12 $100,000 Public float (shares) 500,000 1,000,000 500,000 1,000,000 Public beneficial holders 13 800 or 400 400 500 500 Market value $3,000,000 $15,000,000 $1,500,000 $2,000,000 Operating history 3 years 3 years Price 14 $5 $3 $3 $1 Proposed Initial Listing Standards for Common Stock and Common Stock Equivalent Securities With this filing, NYSE Arca is proposing to eliminate the Tier I and II classifications and replace, in their entirety, the current Tier I and Tier II numerical standards for initial listing for common stock set forth in NYSE Arca Rules 5.2(c) and (k), respectively. Companies whose common stock is listed with a Tier II designation will be able to remain listed under the existing Tier II rules as long as they are in compliance with the maintenance requirements of Arca Equities Rule 5.5(h). However, the Exchange will no longer list any new issuers or additional classes of securities with a Tier II designation. 9 NYSE Arca Equities Rule 5.1(b)(10) defines “net tangible assets” as the amount of funds remaining after deducting intangible assets from stockholders' equity. This rule further provides that intangible assets include, but are not limited to, goodwill, patents, copyrights, trademarks, leaseholds, franchises, licenses, permits, research and development costs, organization costs, and similar types of property rights. 10 NYSE Arca Equities Rule 5.1(b)(9) defines “net worth” as total assets (excluding the value of goodwill) less total liabilities. 11 NYSE Arca Equities Rule 5.2(c)(4) provides that an issuer must have pre-tax income from continuing operations of at least $750,000 in the last fiscal year or two of the last three fiscal years. 12 NYSE Arca Equities Rule 5.2(k)(4) provides that an issuer must have net income from continuing operations of at least $100,000 in the last fiscal year or in two of the last three fiscal years, or total net tangible assets of $2,500,000. 13 NYSE Arca Equities Rule 5.2(c)(2) provides that issuers must have at least 800 public beneficial holders if the issuer has at least 500,000 and less than 1,000,000 shares publicly held, or a minimum of 400 public beneficial holders if the issuer has either:

(i)At least 1,000,000 shares publicly held; or

(ii)at least 500,000 shares publicly held and average daily trading volume in excess of 2,000 shares for the six months preceding the date of application. 14 NYSE Arca Equities Rules 5.2(c)(5) and 5.2(k)(5) provide that the issuer must maintain the minimum price for the majority of business days for the most recent six-month period prior to the date of application, and the price must be at or above the minimum per share at the time of application. In place of the existing Tier I and Tier II standards, this filing proposes to require for initial listing that, at the time of initial listing, the listed class of common stock or common stock equivalent securities 15 shall have: 15 Proposed NYSE Arca Equities Rule 5.1(b)(26) defines common stock equivalent as “ordinary shares, ADRs, American Depository Shares, global depository shares, depository shares, shares or certificates of beneficial interest of trusts, and other similar issues that have the same characteristics of common stock.” • At least 1.1 million publicly held shares. • A closing price per share of $5 or more. • A minimum of 400 round lot shareholders. In addition, the requirements of one of Standards One, Two or Three below must be met: Standard One • The issuer of the security had annual income from continuing operations before income taxes of at least $1 million in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. • The market value of publicly held shares is at least $8 million. • The issuer of the security has stockholders' equity of at least $15 million. Standard Two • The issuer of the security has stockholders' equity of at least $30 million. • The market value of publicly held shares is at least $18 million. • The issuer has a two-year operating history. Standard Three • The market value of publicly held shares is at least $20 million. • The issuer has: ○ A market value of listed securities of $75 million (currently traded issuers must meet this requirement and the $5 closing price requirement for 90 consecutive trading days prior to applying for listing); or ○ Total assets and total revenue of $75 million each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. In evaluating compliance with these standards, the Exchange will consider amounts contained in a company's pro forma financial statements provided in a filing with the Commission pursuant to Commission rules and regulations governing Article 11 “Pro forma information of Regulation S-X Part 210—Form and Content of and Requirements for Financial Statements.” This shall include, without limitation, adjustments relating to the proceeds of an offering. In the case of foreign private issuers (as such term is defined in Rule 3b-4 under the Act), the Exchange will take into account global market capitalization in evaluating compliance with the market capitalization requirements of this rule. This revised rule shall apply to common stock and common stock equivalents, including, but not limited to: Ordinary shares, American Depository Receipts (“ADRs”), American Depository Shares, global depository shares, depository shares, shares or certificates of beneficial interest of trusts, and other similar issues that have the same characteristics of common stock. Summary of Current Initial Listing Standards for Preferred Stock and Similar Issues Currently, as set forth in NYSE Arca Equities Rule 5.2(d), in the case of preferred stock and similar issues, the following listing requirements among others must be met: • The issuer must meet the net worth and earnings requirements as set forth in the Tier I Basic Listing Requirements under Rule 5.2(c), and must meet and appear to be able to service the dividend requirements for the preferred stock. • If the company's common stock is traded on NYSE Arca or on either the American Stock Exchange LLC (“Amex”) or NYSE, the following public distribution requirements must be met: At least 100,000 preferred shares publicly held and an aggregate market value of at least $2,000,000, and a minimum closing bid price of $10. • If the related common stock is not traded on any of the above referenced exchanges then the requirements are: At least 400,000 preferred shares publicly held and an aggregate market value of at least $4,000,000, and a minimum closing bid price of $10. At least 800 public beneficial holders of 100 shares or more shall also be required. Proposed Initial Listing Standards for Preferred Stock and Similar Issues and Secondary Classes of Common Stock For initial listing, if the common stock or common stock equity equivalent security of the issuer is listed on the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the issue shall have: • At least 200,000 publicly held shares; • A market value of publicly held shares of at least $4,000,000; • A minimum closing price per share of $5; • A minimum of 100 round lot shareholders. Alternatively, in the event the issuer's common stock or common stock equivalent security is not listed on either the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the preferred stock and/or secondary class of common stock may be traded on the Exchange so long as the security satisfies the initial listing criteria for common stock. Summary of Current and Proposed Continued Listing Standards Current Continued Listing Standards for Common Stock To qualify for continued listing as a Tier I security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.5(b). To qualify for continued listing as a Tier II security, issuers must satisfy, among other things, the numerical criteria set forth in NYSE Arca Equities Rule 5.5(h). These requirements are: 16 If the issuer has sustained losses from continuing operations and/or net losses in two of the last three fiscal years, then it must have a minimum of $2 million in net worth. If the issuer has sustained losses from continuing operations and/or net losses in three of the last four fiscal years, then it must have a minimum of $4 million in net worth. 17 Alternatively, an issuer must have at least 300 beneficial holders of 100 shares or more. 18 NYSE Arca Equities Rules 5.5(b) and

(h)provide that NYSE Arca Equities may waive the minimum bid price requirements upon consideration of market conditions, the issuer's capitalization, the number of outstanding and publicly held shares, and any other factors NYSE Arca Equities deems appropriate. This proposal eliminates this provision and replaces it with the “cure period” set forth in revised Rule 5.5(b). Tier I (Rule 5.5(b)) Tier II (Rule 5.5(h)) Net tangible assets or Net worth $2,000,000 or 4,000,000 16 $500,000 or 2,000,000. Public float (shares) 200,000 300,000. Public beneficial holders 400 17 250. Market value $1,000,000 $500,000. Bid price 18 $3 $1. Proposed Continued Listing Standards for Common Stock and Common Stock Equivalent Securities With this filing, NYSE Arca is proposing to eliminate the two tiered structure and replace, in their entirety, the current Tier I and Tier II numerical standards for continued listing for common stock set forth in NYSE Arca Rules 5.5(b) and (h), respectively, except that Rule 5.5(h) will continue to be applied to common stocks listed with a Tier II designation prior to the effectiveness of this filing. In their place, this filing proposes in new Rule 5.5(b) to require for continued listing that a listed common stock must meet the criteria set forth in either Continued Listing Standard One or Continued Listing Standard Two below to continue to remain listed on the Exchange. All of the existing Tier I issuers and securities currently meet the requirements of the proposed continued listing standards. As such, the Exchange does not need to provide a phase in period for compliance with the new rules and will be able to apply them as soon as the Commission approves the Pilot Program. Under the proposed new standards, a listed common stock must meet each of the criteria set forth in Continued Listing Standards One or Two below to continue to remain listed on the Exchange. Continued Listing Standard One • 750,000 publicly held shares; • Market value of publicly held shares of $5 million; • The issuer has stockholders' equity of at least $10 million; and • 400 shareholders of round lots. Continued Listing Standard Two • The issuer has: ○ A market value of listed securities of $50 million or, in the case of non-U.S. companies, a global market capitalization of $50 million; or ○ total assets and total revenue of $50 million each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. • 1,100,000 shares publicly held; • Market value of publicly held shares of $15 million; and • 400 shareholders of round lots. In the case of a non-U.S. company with ADRs listed on the Exchange, the term “global market capitalization” means

(x)the closing sale price per share of the common stock or common stock equivalent security underlying the ADRs multiplied by

(y)the number of shares of such common stock or common stock equivalent security outstanding worldwide (including any shares underlying outstanding ADRs). In addition, an issuer will also be considered to be below compliance standards if the average closing price of a security is less than $1.00 over a consecutive 30 trading-day period. Once notified, the issuer must bring its share price and average share price back above $1.00 by six months following receipt of the notification. The issuer must, however, notify the Exchange, within 10 business days of receipt of the notification, of its intent to cure this deficiency or be subject to suspension and delisting procedures. Once a U.S. issuer is notified that it is below compliance, it is required to issue a press release disclosing the fact that it has fallen below the continued listing standards of the Exchange concurrent with filing notice of such non-compliance with the SEC as required by Form 8-K. Once a foreign private issuer is notified that it is below compliance, the issuer has 30 days to issue a press release disclosing the fact that it has fallen below the continued listing standards of the Exchange. If the foreign private issuer fails to issue this press release during the allotted 30 days, the Exchange will issue the requisite press release. In the event that at the expiration of the six-month cure period, both a $1.00 share price and a $1.00 average share price over the preceding 30 trading days are not attained, the Exchange will commence suspension and delisting procedures. Notwithstanding the foregoing, if an issuer determines that, if necessary, it will cure the price condition by taking an action that will require approval of its shareholders, it must so inform the Exchange in the above referenced notification, must obtain the shareholder approval by no later than its next annual meeting, and must implement the action promptly thereafter. The price condition will be deemed cured if the price promptly exceeds $1.00 per share, and the price remains above the level for at least the following 30 trading days. Notwithstanding the foregoing, if the subject security is not the primary trading common equity security of the issuer ( *e.g.* , a tracking stock or a preferred class), as discussed in more detail below, the Exchange may determine whether to apply this test to such security after evaluating the financial status of the issuer. Continued Listing Standards for Preferred Stock and Similar Issues and Secondary Classes of Common Stock NYSE Arca proposes to replace its existing continued listing standards for preferred stock and similar issues with the requirements described below and to also apply those requirements to secondary classes of common stock. For continued listing, if the common stock or common stock equity equivalent security of the issuer is listed on the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the issue shall have: • At least 100,000 publicly held shares; • A market value of publicly held shares of at least $1,000,000; • A minimum closing price per share of $1; • A minimum of 100 round lot shareholders. If the preferred stock or similar issue is the issuer's only security listed on the Exchange, after evaluating the financial status of the issuer, the Exchange may choose to apply the six-month cure period provided under the proposed common stock continued listing standards to any failure to maintain a $1 closing price. Alternatively, in the event the issuer's common stock or common stock equivalent security is not listed on either the Exchange or on the NYSE, The Nasdaq Global Market or the Amex, the preferred stock and/or secondary class of common stock may be listed on the Exchange so long as the security satisfies the continued listing criteria for common stock. Other Securities Pre-Tax Income Requirement To conform to the parallel provision in Standard One of the proposed common stock initial listing standards, the Exchange proposes to increase the pre-tax income from continuing operations standard of NYSE Arca Equities Rule 5.2(e) (“Bonds and Debentures”), NYSE Arca Equities Rule 5.2(g) (“Contingent Value Rights”), NYSE Arca Equities Rule 5.2(j)(1) (“Other Securities”) and NYSE Arca Equities Rule 5.2(j)(4) (“Index-Linked Exchangeable Notes”) from $750,000 to $1 million. 19 19 The Commission notes that, among other things, the Exchange proposes other clarifying changes, additional definitions, and different net worth standards for bonds and debentures, contingent value rights, other securities, and index-linked exchangeable notes. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act, 20 in general, and furthers the objectives of Section 6(b)(5) of the Act 21 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. 20 15 U.S.C. 78f(b). 21 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments on the proposed rule change were neither solicited nor received. III. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change 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-2006-85 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-NYSEArca-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 Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2006-85 and should be submitted on or before December 20, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 22 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act, 23 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 are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. 22 In approving this proposed rule change, the Commission notes that it has considered the proposed rules' impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 23 15 U.S.C. 78f(b)(5). The Exchange proposes to make significant changes to its initial and continued listing standards. Among other things, the Exchange would no longer have a two-tiered listing structure. The Exchange represents that all existing Tier I issuers would meet one of the proposed continued listing standards set forth in proposed NYSE Arca Equities Rule 5.5(h). Further, the proposal would include a grandfather clause to ensure that the existing Tier II issuers would have the option to remain listed on the Exchange for as long as they meet the continued listing standards. The Commission believes that the proposal is designed not to permit unfair discrimination among issuers, since the proposal would treat all prospective issuers and existing Exchange-listed issuers equally. Although the proposal significantly restructures and changes NYSE Arca listing standards, as discussed below, the changes are substantially similar to The Nasdaq Global Market initial and continued listing standards. Based on this, the Commission believes it is reasonable for the Exchange to determine that companies that meet these new listing standards are appropriate for inclusion and continued listing on NYSE Arca. For these reasons, as discussed in more details below, the Commission finds that the proposal is consistent with the requirements of the Act. A. Initial Listing Standards As proposed, the Exchange's common stock or common stock equivalent securities 24 initial listing standards would be significantly modified and the Exchange would no longer have Tier I or Tier II securities. Common stock or common stock equivalent securities would need:

(1)At least 1.1 million publicly held shares;

(2)a closing price per share of $5 or more; and

(3)a minimum of 400 round lot shareholders, in addition to meeting the additional standards set forth in one of three alternatives. 25 Among other things, Standard 1 and Standard 2 would replace the current net worth requirement with an increased stockholders' equity requirement of $15,000,000 and $30,000,000, respectively. In addition, under Standard 3, the current net worth requirement would be eliminated and the issuer would be required to have a market value of listed securities of $75,000,000 or total assets and total revenue of $75,000,000 each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. The Commission notes that the proposed initial listing standards for common stock or common stock equivalent securities are substantially similar to The Nasdaq Global Market initial listing standards. 26 24 *See* proposed NYSE Arca Equities Rule 5.1(b)(26). 25 *See* proposed NYSE Arca Equities Rule 5.2(c). 26 *See* Nasdaq Rule 4420(a)-(c). The Exchange's proposed preferred stock (and similar issues) and secondary classes of common stock initial listing standards would also be significantly modified. The Exchange would eliminate the current net worth and earnings requirements, and increase the current publicly held shares requirement and market value requirement. The Exchange would also lower the current bid price requirement. As proposed, if the common stock or common stock equivalent security of the issuer is listed on the Exchange, NYSE, The Nasdaq Global Market, or Amex, these securities must have:

(1)At least 200,000 publicly held shares;

(2)a market value of publicly held shares of at least $4 million;

(3)a closing price per share of $5 or more; and

(4)a minimum of 100 round lot shareholders. 27 If the common stock or common stock equivalent security of the issuer is not listed on the Exchange, NYSE, The Nasdaq Global Market, or Amex, these securities must satisfy the initial listing standards for common stock. 28 The Commission notes that these requirements are substantially similar to The Nasdaq Global Market initial listing standards. 29 27 *See* proposed NYSE Arca Equities Rule 5.2(d). 28 *See* proposed NYSE Arca Equities Rule 5.2(d). 29 *See* Nasdaq Rule 4420(k). The Exchange also proposes to amend the initial listing standards for bonds and debentures and contingent value rights by increasing the net worth requirement and pre-tax income requirement consistent with the proposed common stock initial listing standards. In addition, the Exchange proposes to amend the initial listing standards for other securities and index-linked exchangeable notes to add a pre-tax income requirement, consistent with the pre-tax income requirements of the common stock initial listing standards. The pre-tax income requirement for these securities is being raised from $750,000 to $1,000,000. Based on the foregoing, the Commission believes that the proposed amendments to the NYSE Arca Equities initial listing standards are consistent with the requirements of the Act. B. Continued Listing Standards The Commission believes that the proposed amendments to the NYSE Arca Equities continued listing standards are consistent with the requirements of the Act. The Exchange proposes to amend the common stock or common stock equivalent securities continued listing standard, by requiring that common stock must meet the standards set forth in one of two alternatives. 30 Both common stock continued listing standards would increase the current publicly held shares requirement. In addition, the current $1,000,000 market value requirement would be increased to a $5,000,000 market value of publicly held shares requirement under Continued Listing Standard 1 and $15,000,000 under Continued Listing Standard 2. Continued Listing Standard 1 would replace the current net worth requirement of $2,000,000 or $4,000,000 with a higher stockholders' equity requirement of $10,000,000. Continued Listing Standard 2 would eliminate the current net worth requirement, but require companies to maintain a market value of listed securities of $50,000,000 (in the case of non-U.S. companies, a global market capitalization of $50,000,000), or total assets and total revenue of $50,000,000 each for the most recently completed fiscal year or two of the last three most recently completed fiscal years. In addition, the Exchange would require under both common stock continued listing standards that all common stock have an average closing price of at least $1.00 over a consecutive 30-day trading period, instead of the current $3 bid price requirement. 31 The Commission notes that the proposed continued listing standards for common stock, common stock equivalent securities and similar issues are substantially similar to The Nasdaq Global Market continued listing standards. 32 30 See proposed NYSE Arca Equities Rule 5.5(b). 31 As noted above, issuers would have six months to cure this deficiency. *See* proposed NYSE Arca Equities Rule 5.5(b). 32 *See* Nasdaq Rule 4450(a)-(b). The Exchange also proposes to amend the preferred stock (and similar issues) and secondary classes of common stock continued listing standards. 33 The Exchange would eliminate the current net worth requirement and continuing operations requirements. In addition, the proposed new preferred continued listing standards would contain a new $1 bid price requirement. The Commission notes that the proposed continued listing standards for preferred stock and similar issues and secondary classes of common stock are substantially similar to The Nasdaq Global Market continued listing standards. 34 33 *See* proposed NYSE Arca Equities Rule 5.5(c). 34 *See* Nasdaq Rule 4450(h). C. Other Changes The proposed rule change would permit the Exchange, rather than its board of directors, to approve securities for listing and to prescribe the form of listing applications. 35 In particular, the Exchange may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination could be made even if the company meets the standards set forth below. The Commission believes that it is reasonable for the Exchange, based upon its experience, to determine whether the security of a company would be appropriate for inclusion on NYSE Arca. The Commission notes that this amendment is similar to NYSE's listing standards. 36 Further, with respect to the continued listing standards of all securities, the Exchange proposes to require all issuers to comply with the Exchange's corporate governance qualitative standards, rather than only the independent directors/board committees requirement in current NYSE Arca Equities Rule 5.3(k). 37 The Commission believes that these amendments are consistent with the requirements of the Act. 35 *See* proposed NYSE Arca Equities Rule 5.1(a) and 5.2(a). 36 *See* NYSE Listed Company Manual Section 101.00. 37 *See also* NYSE Arca Equities Rule 5.5(k), which sets forth other reasons for suspending or delisting securities on the Exchange. D. Accelerated Approval Pursuant to Section 19(b)(2) of the Act, 38 the Commission may not approve any proposed rule change prior to the 30th day after the date of publication of notice of the filing thereof, unless the Commission finds good cause for so doing and publishes its reasons for so finding. The Exchange has requested the Commission find good cause for approving the proposed rule change prior to the 30th day after the date of publication of notice in the **Federal Register** . 38 15 U.S.C. 78s(b)(2). The Commission believes that it is reasonable to grant accelerated approval to allow for the efficient administration of the Exchange's initial and continued listing programs as promptly as possible. The Commission notes that the proposed listing standards, while significantly different than the Exchange's current listing standards, are substantially similar to The Nasdaq Global Market, which the Commission previously approved. In addition, the Commission notes that the proposed listing standards would be in effect only as a pilot program for a six-month period. 39 Accordingly, the Commission believes that there is good cause, pursuant to Sections 6(b)(5) of the Act 40 and 19(b)(2) of the Act, 41 to grant accelerated approval to the proposed rule change prior to the 30th day after the date of publication of notice in the **Federal Register** . 39 In any request under Section 19(b) of the Act for permanent approval or an extension of the pilot period, the Exchange may wish to report on the operations of the new standards during the pilot period. 40 15 U.S.C. 78f(b)(5). 41 15 U.S.C. 78s(b)(2). V. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange, and, in particular, with Section 6(b)(5) of the Act. 42 42 15 U.S.C. 78f(b)(5). The staff of the Division of Market Regulation (“Staff”) would not recommend enforcement action to the Commission under Rules 15g-2 through 15g-9 under the Act if broker-dealers treat equity securities listed pursuant to the initial and continued listing requirements set forth in amended NYSE Arca Equities Rule 5 as meeting the exclusion from the definition of penny stock contained in Rule 3a51-1 udner the Act pursuant to paragraph (a)(2) thereof. In taking this position, the Staff notes in particular that these amended listing requirements are equivalent, in all material respects, to the listing requirments of the The Nasdaq Global Market. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 43 that the proposed rule change (SR-NYSEArca-2006-85), is hereby approved on an accelerated basis, as a six-month pilot, until May 29, 2007. 43 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 44 44 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-20211 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54793; File No. SR-OCC-2006-20] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of Proposed Rule Change To Accelerate the Expiration Date of American-Style Equity Options That Have Been Adjusted To Call for Cash-Only Delivery November 20, 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 26, 2006, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by OCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The purpose of the proposed rule change is to accelerate the expiration date of American-style equity options that have been adjusted to call for cash-only delivery to the earliest practicable regular expiration date. OCC currently has such authority with respect to European-style options that have been so adjusted. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and

(C)below, of the most significant aspects of these statements. 3 3 The Commission has modified the text of the summaries prepared by OCC.

(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In a cash-out merger, the common equity of the acquired company (“Security”) is converted into a right to receive a fixed amount of cash. On the day after the announced consummation date for the merger, the stock exchanges on which the Security is traded suspend all trading in the Security. Concurrently, the option exchanges discontinue trading in options overlying the Security. If a customer does not liquidate an out-of-the-money option position before the exchange halts trading, its broker must carry the position until it expires. With increasing volume and the proliferation of options with long expiration dates, clearing members' cost and operational overhead of carrying these positions is significant. In an effort to reduce these costs, OCC adopted Rule 807 in 1998 to provide for acceleration of the expiration date of European-style equity options that have been converted to a cash deliverable. OCC now proposes to extend Rule 807 to cover American-style equity options. Under the proposed rule change, OCC typically would accelerate the expiration date of American-style and European-style equity options that are adjusted to call for a cash deliverable to the earliest practicable regular expiration date. OCC proposes to set the exercise by exception price threshold for the adjusted contracts at $.01 per share of the amount of the cash deliverable. 4 4 OCC also proposes to make a conforming change to Rule 1106. Every option contract that has an exercise price below (in the case of a call) or above (in the case of a put) the amount of the cash deliverable by $.01 or more will be deemed to have been exercised immediately prior to the accelerated expiration time unless the clearing member directs otherwise. OCC proposes to implement the rule change on January 1, 2008, to allow clearing members and customers sufficient time to prepare for the change of methodology. OCC will not implement the proposed rule change until definitive copies of an appropriate revision of or supplement to the options disclosure document, *Characteristics and Risks of Standardized Options* , are available for distribution. OCC believes the proposed rule change is consistent with the requirements of Section 17A of the Act 5 and the rules and regulations thereunder because it would eliminate inefficient procedures for clearance and settlement that impose unnecessary costs on investors and persons facilitating transactions by and acting on behalf of investors. As such, OCC believes it is designed to promote the prompt and accurate clearance and settlement of securities transactions. 5 15 U.S.C. 78q-1.

(B)Self-Regulatory Organization's Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition.

(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were not and are not intended to be solicited with respect to the proposed rule change, and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the **Federal Register** or within such longer period:

(i)As the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or

(ii)as to which the self-regulatory organization consents, the Commission will:

(A)By order approve such proposed rule change or

(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-OCC-2006-20 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-OCC-2006-20. 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 OCC and on OCC's Web site at *http://www.optionsclearing.com/publications/rules/proposed_changes/sr_occ_06_20.pdf* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2006-20 and should be submitted on or before December 20, 2006. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 6 6 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-20209 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54807; File No. SR-Phlx-2006-53] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to Assignments in Options Based on Root Symbol November 21, 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 August 18, 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, II, and III, below, which Items have been prepared by the Phlx. 3 On November 21, 2006, the Exchange filed Amendment No. 1 to the proposed rule change. 4 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 At the Exchange's request, the Commission has made certain clarifying additions and deletions to the description of the proposed rule change. *See* Telephone Conversations between Richard S. Rudolph, Vice President and Counsel, Phlx, Cyndi Rodriguez, Special Counsel, Division of Market Regulation (“Division”), Commission and Johnna B. Dumler, Special Counsel, Division, Commission, on September 14, 2006 and September 20, 2006. 4 In Partial Amendment No. 1, the Exchange clarified in the proposed rule text that root symbols are assigned to series by the Options Clearing Corporation. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rule 507, Application for Assignment in Streaming Quote Options, by adopting new Commentary .01 to the rule, which would authorize the Exchange's Options Allocation, Evaluation and Securities Committee (“OAESC”), 5 to assign trading privileges in options to Streaming Quote Traders (“SQTs”) 6 and Remote Streaming Quote Traders (“RSQTs”) 7 by “root symbol” (as defined more fully below), such that an SQT or RSQT may be assigned in only certain series of an option. The text of the proposed rule change, as amended, is set forth below. Italic indicates new text. 5 The OAESC is a standing committee of the Exchange that has jurisdiction over the allocation, retention and transfer of the privileges to deal in all options to, by and among members on the options and foreign currency options trading floors. It is responsible for appointing specialists, alternate or assistant specialists or odd-lot dealers on the options and foreign currency options trading floors. It also establishes standards for the periodic review and evaluation of their performance and is empowered to suspend or revoke their appointments upon showing of reasonable cause therefore. *See* Phlx By-Law Article X, Section 10-7(a). *See also* Phlx Rule 500. 6 An SQT is an Exchange Registered Options Trader (“ROT”) who has received permission from the Exchange to generate and submit option quotations electronically through AUTOM in eligible options to which such SQT is assigned. An SQT may only submit such quotations while such SQT is physically present on the floor of the Exchange. *See* Phlx Rule 1014(b)(ii)(A). 7 An RSQT is an ROT that is a member or member organization with no physical trading floor presence who has received permission from the Exchange to generate and submit option quotations electronically through AUTOM in eligible options to which such RSQT has been assigned. An RSQT may only submit such quotations electronically from off the floor of the Exchange. *See* Phlx Rule 1014(b)(ii)(B). Application for Assignment in Streaming Quote Options Rule 507. (a)—(g) No change. *Commentary:* *.01. An applicant may request assignment by “root symbol,” such that an SQT or RSQT may be assigned in only certain series of an option. A root symbol is the options trading mnemonic used for each option. The Exchange may list different root symbols, as applied by the Options Clearing Corporation (“OCC”), in series overlying the same underlying security depending, without limitation, on the strike price of the series, the expiration of the series, the price of the underlying security, and/or mergers and acquisitions relating to the underlying security.* 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, as amended, and discussed any comments it received on the proposed rule change, as amended. 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, as amended, is to mitigate quote traffic and address quote capacity issues by reducing the number of quotations required to be submitted on the Exchange. The proposal would permit the OAESC to assign trading privileges to SQTs and RSQTs, upon their request, only in specific series of a particular option based on the “root symbol” of the series, instead of assigning trading privileges in all series of such option. Thus, as described below, SQTs and RSQTs would be required to submit quotations in fewer series. Current Assignment Rule Phlx Rule 507 currently provides the solicitation, application and review process to be followed by the OAESC when an SQT or RSQT submits an application for assignment in an option. Under Phlx Rule 507, an application for assignment must be submitted in writing to the Exchange's designated staff and would be required to include, at a minimum, the name of the SQT or RSQT applicant and written verification from the Exchange's Membership Services Department that such SQT or RSQT applicant is qualified as a ROT. To ensure an SQT or RSQT applicant's technological readiness to submit electronic quotes, Phlx Rule 507(b)(ii) mandates that no application for assignment in Streaming Quote Options would be approved by the OAESC without written certification signed by an officer (Vice President or above) of the Exchange's Financial Automation Department 8 indicating that the SQT or RSQT applicant has sufficient technological ability to support his/her continuous quoting requirements as set forth in Phlx Rule 1014(b)(ii), and the SQT or RSQT applicant has successfully completed, or is scheduled to complete, testing of its quoting system with the Exchange. 8 The Exchange's Financial Automation Department is responsible for the design, development, implementation, testing and maintenance of the Exchange's automated trading systems, surveillance systems, and back office systems, and for monitoring the quality of performance and operational readiness of such systems, in addition to user training and validation of user technology as it pertains to such users' interface with the Exchange's systems. SQT and RSQT Quoting Requirements Currently, SQTs and RSQTs that do not receive Directed Orders 9 in a Streaming Quote Option 10 are responsible to quote continuous, two-sided markets in not less than 60% of the series in each Streaming Quote Option in which such SQT or RSQT is assigned. 11 9 The term “Directed Order” means any customer order (other than a stop or stop-limit order as defined in Phlx Rule 1066) to buy or sell which has been directed to a particular specialist, RSQT, or SQT by an Order Flow Provider. *See* Phlx Rule 1080(l)(i)(A). 10 A Streaming Quote Option is an option in which SQTs may generate and submit option quotations if such SQT is physically present on the Exchange floor, and RSQTs may generate and submit option quotations from off the floor of the Exchange, electronically. *See* Phlx Rule 1080(k). Currently, all options trading on the Exchange are Streaming Quote options. 11 *See* Phlx Rule 1014(b)(ii)(D)(1). An SQT or RSQT that receives Directed Orders (“DSQT” or “DRSQT”, respectively) is responsible to quote continuous, two-sided markets in not less than 99% of the series listed on the Exchange in at least 60% of the options in which such DSQT or DRSQT is assigned. 12 Whenever a DSQT or DRSQT enters a quotation in an option in which such DSQT or DRSQT is assigned, such DSQT or DRSQT must maintain continuous quotations for not less than 99% of the series of the option listed on the Exchange until the close of that trading day. 13 12 *See* Phlx Rule 1014(b)(ii)(D)(1). 13 *See* Phlx Rule 1014(b)(ii)(D)(1). The Proposal The Exchange proposes to permit SQT and RSQT applicants to request assignment in an option by “root symbol.” Today, all assignments are by overlying option, meaning the SQT and RSQT applicants that are assigned in a particular option are assigned in all series of such option. Therefore, the calculation of the percentage of series required to be quoted is based on every series listed in such option, thus requiring SQTs and RSQTs to quote most series. Root symbols are the basic symbols used to identify an option, such as, for example, “ABQ” for options on fictitious “ABC Corporation.” The various series of options on ABC Corporation are identified with two additional symbols reflecting the expiration month and the strike price, which also indicate whether it is a put or call option. ABC Corporation may have different root symbols other than ABQ because of the number of strike prices (there are not enough letters in the alphabet to capture all potential strike prices), the expiration months available, and whether any mergers or acquisitions have occurred. Thus, an option on the Exchange overlying a single underlying security could have several different root symbols. The Exchange anticipates that, if options can be assigned by root symbol, SQTs and RSQTs may more carefully tailor their requests to the specific roots in which they are interested, which should encourage quality quoting. According to the Exchange, SQTs and RSQTs often submit quotes with bid/ask differentials as wide as the Exchange's rules permit in series that they have no interest in quoting. 14 The effect of this is that, in order to meet their quoting continuity requirements, SQTs and RSQTs submit continuous quotations that are not at or even near the best bid or offer on the Exchange, nor the National Best Bid or Offer. Such quotations result in unnecessary quote traffic on the Exchange, often causing issues of concern respecting quote capacity. This proposal should reduce the number of series assigned to SQTs and RSQTs by the OAESC, and consequently reduce the number of quotes submitted by SQTs and RSQTs. 14 Streaming Quote Options trading on the Exchange's fully electronic trading platform for options, Phlx XL, may be quoted electronically with a difference not to exceed $5 between the bid and offer regardless of the price of the bid. The $5 bid/ask differentials only apply to Streaming Quote Options trading on Phlx XL and only following the opening rotation in each security. *See* Phlx Rule 1014(c)(i)(A)(2). 2. Statutory Basis The Exchange believes that the proposed rule change, as amended, is consistent with Section 6(b) of the Act 15 in general, and furthers the objectives of Section 6(b)(5) of the Act 16 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, by reducing the number of options quotations required to be submitted, which should enable the Exchange to mitigate quote traffic and capacity. 15 15 U.S.C. 78f(b). 16 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, 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 Written comments on the proposed rule change, as amended, were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period

(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or

(ii)as to which the Phlx consents, the Commission will:

(A)By order approve such proposed rule change, as amended, or,

(B)Institute proceedings to determine whether the proposed rule change, as amended, should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2006-53 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-2006-53. 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, as amended, that are filed with the Commission, and all written communications relating to the proposed rule change, as amended, 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-2006-53 and should be submitted on or before December 20, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 17 17 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-20212 Filed 11-28-06; 8:45 am] BILLING CODE 8011-01-P DEPARTMENT OF TRANSPORTATION Office of the Secretary Aviation Proceedings, Agreements Filed the Week Ending November 3, 2006 The following Agreements were filed with the Department of Transportation under the Sections 412 and 414 of the Federal Aviation Act, as amended (49 U.S.C. 1382 and 1384) and procedures governing proceedings to enforce these provisions. Answers may be filed within 21 days after the filing of the application. *Docket Number:* OST-2006-26276. *Date Filed:* November 3, 2006. *Parties:* Members of the International Air Transport Association. *Subject:* CBPP/17 teleconference on 06 September 2006. CBPP/17/Meet/003/06 dated 17 October 2006. *Finally Adopted Resolutions:* 600a. *Intended effective date:* 3 February 2007. *Docket Number:* OST-2006-26263. *Date Filed:* November 1, 2006. *Parties:* Members of the International Air Transport Association. *Subject:* Mail vote 519—Resolution 002ii, TC2 Europe between points in the ECAA, (Memo 0642), Mail vote 520—Resolution 002jj, TC2 Europe except between points in the ECAA, (Memo 0643), *Intended effective date:* 1 December 2006. *Docket Number:* OST-2006-26245. *Date Filed:* Ocotober 31, 2006. *Parties:* Members of the International Air Transport Association. *Subject:* Mail Vote 516—Resolution 010e, TC3 Japan, Korea-South East Asia, Special Passenger Amending Resolution between Korea (Rep. of) and China excluding Hong Kong SAR and Macao SAR, Philippines (Memo 1003). *Intended effective date:* 6 November 2006. *Docket Number:* OST-2006-26243. *Date Filed:* October 30, 2006. *Parties:* Members of the International Air Transport Association. *Subject:* MAIL VOTE NUMBER A 132, PAC2 (Mail A132), Reporting & Remittance Cycle for Russia. *Intended effective date:* 1 January 2007. Renee V. Wright, Program Manager, Docket Operations, Federal Register Liaison. [FR Doc. E6-20179 Filed 11-28-06; 8:45 am] BILLING CODE 4910-9X-P DEPARTMENT OF TRANSPORTATION Office of the Secretary Aviation Proceedings, Agreements Filed the Week Ending November 10, 2006 The following Agreements were filed with the Department of Transportation under the Sections 412 and 414 of the Federal Aviation Act, as amended (49 U.S.C. 1382 and 1384) and procedures governing proceedings to enforce these provisions. Answers may be filed within 21 days after the filing of the application. *Docket Number:* OST-2006-26297. *Date Filed:* 11-7-2006. *Parties:* Members of the International Air Transport Association. *Subject:* TC23 Africa—South East Asia Expedited Resolution 002c (Memo 0312) Intended effective date: 1 November 2006. *Docket Number:* OST-2006-26289. *Date Filed:* 11-6-2006. *Parties:* Members of the International Air Transport Association. *Subject:* Mail Vote 517—Resolution 010f PTC3/23/31/123 Special Amending Resolution—Sri Lanka (Memo 1364) Intended effective date: 17 November 2006. Renee V. Wright, Program Manager, Docket Operations, Federal Register Liaison. [FR Doc. E6-20232 Filed 11-28-06; 8:45 am] BILLING CODE 4910- 9X-P DEPARTMENT OF TRANSPORTATION Office of the Secretary Aviation Proceedings, Agreements Filed the Week Ending October 27, 2006 The following Agreements were filed with the Department of Transportation under the Sections 412 and 414 of the Federal Aviation Act, as amended (49 U.S.C. 1382 and 1384) and procedures governing proceedings to enforce these provisions. Answers may be filed within 21 days after the filing of the application. *Docket Number:* OST-2006-26167. *Date Filed:* 10-23-2006. *Parties:* Members of the International Air Transport Association. *Subject:* Mail Vote 514—Resolution 010c, TC3 Japan, Korea-South East Asia, Special Passenger Amending Resolution between Japan and China excluding Hong Kong SAR and Macao SAR (Memo 1002). *Intended effective date:* 01 November 2006. *Docket Number:* OST-2006-26186. *Date Filed:* 10-25-2006. *Parties:* Members of the International Air Transport Association. *Subject:* TC23/TC123 Mail Vote 511, Between Africa and South West Pacific, Except between South Africa and Australia (Memo 0315). *Technical Correction:* TC23/TC123 Mail Vote 511 Between Africa and South West Pacific Except between South Africa and Australia (Memo 0317). *Intended effective date:* 01 April 2007. Docket Number: OST-2006-26188. *Date Filed:* 10-25-2006. *Parties:* Members of the International Air Transport Association. *Subject:* TC23/TC123 Mail Vote 512. Between South Africa and Australia (Memo 0316). *Technical Correction:* TC23/TC123 Mail Vote 512. Between South Africa and Australia (Memo 0318). *Intended effective date:* 01 April 2007. *Docket Number:* OST-2006-26189. *Date Filed:* 10-25-2006. *Parties:* Members of the International Air Transport Association. *Subject:* PTC23/TC123 Middle East Japan/Korea. Expedited Resolution 002ff. (Memo 0311). *Intended effective date:* 01 December 2007. *Docket Number:* OST-2006-26194. *Date Filed:* 10-25-2006. *Parties:* Members of the International Air Transport Association. *Subject:* TC23/TC123 Europe-South West Pacific Resolutions and Specified Fares Tables (Memo 0109). *Minutes:* TC23 Europe-South West Pacific, South Asian Subcontinent (Memo 0111). *Intended effective date:* 01 April 2007. *Docket Number:* OST-2006-26196. *Date Filed:* 10-25-2006. *Parties:* Members of the International Air Transport Association. *Subject:* TC23 Mail Vote 509. Between Europe and South Asian Subcontinent. (Memo 0151). TC23 Europe-South West Pacific, South Asian Subcontinent (Memo 0153). *Intended effective date:* 01 April 2007. Renee V. Wright, Program Manager Docket Operations, Federal Register Liaison. [FR Doc. E6-20236 Filed 11-28-06; 8:45 am] BILLING CODE 4910-9X-P DEPARTMENT OF TRANSPORTATION Notice of Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits Filed Under Subpart B (Formerly Subpart Q) During the Week Ending October 27, 2006 The following Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits were filed under Subpart B (formerly Subpart Q) of the Department of Transportation's Procedural Regulations (see 14 CFR 301.201 *et seq.* ). The due date for Answers, Conforming Applications, or Motions to Modify Scope are set forth below for each application. Following the Answer period DOT may process the application by expedited procedures. Such procedures may consist of the adoption of a show-cause order, a tentative order, or in appropriate cases a final order without further proceedings. *Docket Number:* OST-2006-26200. *Date Filed:* October 25, 2006. *Due Date for Answers, Conforming Applications, or Motion to Modify Scope:* November 15, 2006. *Description:* Application of Global Jet Luxembourg, S.A., requesting a foreign air carrier permit to engage in charter foreign air transportation of persons and property between any point or points in Luxembourg and any point or points in the United States, either directly or via intermediate points in other countries, with or without stopovers, and beyond, coextensive with the rights provided under the U.S.-Luxembourg Air Transport Agreement and Fifth Freedom charter service pursuant to the prior approval requirements set forth in Part 212 of the Department's Regulations. *Docket Number:* OST-2006-26199. *Date Filed:* October 25, 2006. *Due Date for Answers, Conforming Applications, or Motion to Modify Scope:* November 15, 2006. *Description:* Application of Global Jet Austria GmbH, requesting a foreign air carrier permit to engage in charter foreign air transportation of persons and property between any point or points in Austria and any point or points in the United States, either directly or via intermediate points in other countries, with or without stopovers, and beyond, coextensive with the rights provided under the U.S.-Austria Air Services Agreement and Fifth Freedom charter service pursuant to the prior approval requirements set forth in Part 212 of the Department's Economic Regulations. Renee V. Wright, Program Manager, Docket Operations. Federal Register Liaison. [FR Doc. E6-20235 Filed 11-28-06; 8:45 am] BILLING CODE 4910-9X-P DEPARTMENT OF TRANSPORTATION Office of the Secretary Notice of Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits Filed Under Subpart B (Formerly Subpart Q) During the Week Ending November 10, 2006 The following Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits were filed under Subpart B (formerly Subpart Q) of the Department of Transportation's Procedural Regulations (See 14 CFR 301.201 *et. seq.* ). The due date for Answers, Conforming Applications, or Motions to Modify Scope are set forth below for each application. Following the Answer period DOT may process the application by expedited procedures. Such procedures may consist of the adoption of a show-cause order, a tentative order, or in appropriate cases a final order without further proceedings. *Docket Number:* OST-1996-1657. *Date Filed:* November 7, 2006. *Due Date for Answers, Conforming Applications, or Motion to Modify Scope:* November 28, 2006. *Description:* Application of Alaska Central Express, Inc. requesting a fitness determination and reissuance of its certificate of public convenience and necessity to the extent necessary to permit Alaska Central to engage in interstate charter air transportation of passengers. *Docket Number:* OST-2006-26328. *Date Filed:* November 8, 2006. *Due Date for Answers, Conforming Applications, or Motion to Modify Scope:* November 29, 2006. *Description:* Application of VistaJet Luftfahrtunternehmen GmbH, requesting an exemption and a foreign air carrier permit authorizing it to provide charter foreign air transportation of persons, property, and mail using small aircraft between any point or points in Austria and any point or points in the United States; and between any point or points in United States and any point or points in a third country or countries, provided that such service constitutes part of a continuous operation, with or without a change of aircraft, that includes air service to Austria for the purpose of carrying local traffic between Austria and the United States, and other charters between third countries and the United States. Renee V. Wright, Program Manager, Docket Operations, Federal Register Liaison. [FR Doc. E6-20237 Filed 11-28-06; 8:45 am] BILLING CODE 4910-9X-P DEPARTMENT OF TRANSPORTATION Federal Highway Administration [Docket No. FHWA-2006-26431] Agency Information Collection Activities: Request for Comments for New Information Collection AGENCY: Federal Highway Administration (FHWA), DOT. ACTION: Notice and request for comments. SUMMARY: The FHWA has forwarded the information collection request described in this notice to the Office of Management and Budget

(OMB)for approval of a new information collection. We published a **Federal Register** Notice with a 60-day public comment period on this information collection on September 21, 2006. We are required to publish this notice in the **Federal Register** by the Paperwork Reduction Act of 1995. DATES: Please submit comments by December 29, 2006. ADDRESSES: You may send comments within 30 days to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW., Washington, DC 20503, Attention DOT Desk Officer. You are asked to comment on any aspect of this information collection, including:

(1)Whether the proposed collection is necessary for the FHWA's performance;

(2)the accuracy of the estimated burden;

(3)ways for the FHWA to enhance the quality, usefulness, and clarity of the collected information; and

(4)ways that the burden could be minimized, including the use of electronic technology, without reducing the quality of the collected information. All comments should include the Docket number FHWA-2006-26431. FOR FURTHER INFORMATION CONTACT: Mr. Eric Weaver,

(202)493-3153, Long-Term Planning Program (HRDI-13), Office of Research Development and Technology, Federal Highway Administration, Turner-Fairbank Highway Research Center, 6300 Georgetown Pike, McLean, VA 22101. Office hours are from 7:30 a.m. to 4 p.m., Monday through Friday, except Federal holidays. SUPPLEMENTARY INFORMATION: *Title:* Mechanistic Empirical Pavement Design National Status Survey. *Background:* In June 2004, the National Cooperative Highway Research Program (NCHRP) released the Mechanistic Empirical Pavement Design Guide (MEPDG) for New and Rehabilitated Pavement Structures. FHWA organized a Design Guide Implementation Team

(DGIT)to immediately begin the process of informing, educating, and assisting FHWA field offices, State Highway Agencies, Industry, and others about the new design guide. FHWA considers implementation of mechanistic-empirical pavement design a critical element in improving the National Highway System. It ties directly into objectives listed in the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users, (SAFETEA-LU), Section 1503, which supports longer life pavements. Consequently, the impacts of long-life pavements include congestion mitigation and improved work zone safety. The MEPDG represents a significant advancement in pavement design and includes the best available engineering theory and mechanistic principles to determine both the structural response and to predict performance over the lifetime of a pavement structure. The mechanistic theory is balanced with over 525 empirical observations from the Long Term Pavement Performance database that represents a wide range of both material and climatic conditions. The use of both the mechanistic theory and a wide range of empirical observations make the MEPDG a robust design procedure. The MEPDG can be considered a 40-year step forward in pavement design. The MEPDG is a more theoretical and mathematical based procedure, strongly bolstered by fundamental engineering principles and is readily useful to academia, researchers, and practitioners of pavement analysis and design. The MEPDG provides significant potential benefits over the current AASHTO Guide in achieving cost-effective pavement designs and rehabilitation strategies. Most importantly, its user-oriented computational software implements an integrated analysis approach for predicting pavement condition over time. This analysis considers the complex interaction between traffic loadings, climatic conditions, materials and pavement structure. Implementation of the MEPDG will require a significant amount of time, resources, and funding. However, the adoption of the guide has the potential for providing a substantial long-term savings based on the shear magnitude of annual expenditures for highway pavements. In 2003, over 79 billion dollars was used for highway purposes; based on data published in Highway Statistics 2003 from the Office of Highway Policy Information. Any improvement in the designs will have a significant implication in reducing costs to maintain these pavements and more than offset the resources required to implement the new pavement design guide. The DGIT has put forth a strategic plan of action to aid the transportation community in deploying this new technology. The DGIT is an integral part of an extensive outreach campaign including Enhancement, Education, and Implementation strategies to promote the MEPDG. These activities include onsite and web based workshops that have already educated more than 1,200 engineers across the USA in 21 States and around the globe in Canada, Europe, China, India, Mexico, and Central and South America. FHWA encourages States to evaluate the utility that the MEPDG offers and to carefully implement the guidelines and recommendations. The long-term goal of the AASHTO Joint Technical Committee on Pavements is to adopt the guide as an AASHTOWare product to replace the AASHTO 1993 design guide. Moving towards a mechanistic-empirical design process represents a huge paradigm shift for the majority of states and will require a significant amount of education, training, new equipment, new testing requirements and data collection. Most importantly it will require better communication and coordination between the designers, materials engineers, traffic engineers, and consultants to collect and maintain the data needed to optimize the pavement designs and continue to validate and calibrate the models in the Guide. The DGIT is focused on being a leader in this effort by providing Education, Enhancement, and Implementation activities to the Transportation Community. Burden Hours for Information Collection *Frequency:* Bi-Annual. *Respondents:* The Pavement Design Engineer in each State DOT, Puerto Rico, and the District of Columbia; for a total of 52. *Estimated Average Burden per response:* Assuming 1 respondent per State plus Puerto Rico and the District of Columbia and 1 hr to respond to the survey the total will be approximately 52 burden hours. FHWA is seeking a 3-year approval and plans on conducting the survey in the first and third year of the approval time period. The estimated average annual burden is 35 hours. *Electronic Access:* Internet users may access all comments received by the U.S. DOT Dockets, Room PL-401, by using the universal resource locator (URL): *http://dms.dot.gov,* 24 hours each day, 365 days each year. Please follow the instructions online for more information and help. Authority: The Paperwork Reduction Act of 1995; 44 U.S.C. Chapter 35, as amended; and 49 CFR 1.48. Issued on: November 22, 2006. James R. Kabel, Chief, Management Programs and Analysis Division. [FR Doc. E6-20208 Filed 11-28-06; 8:45 am] BILLING CODE 4910-22-P DEPARTMENT OF TRANSPORTATION Federal Highway Administration Environmental Impact Statement; Osage, Maries, and Phelps Counties, MO AGENCY: Federal Highway Administration (FHWA), DOT. ACTION: Notice of Intent. SUMMARY: The FHWA is issuing this notice to advise the public that an environmental impact statement

(EIS)will be prepared for proposed improvements along U.S. 63 between the U.S. 63 and U.S. 50 interchange in Osage County to a point in Phelps County, south of the Maries County Line. FOR FURTHER INFORMATION CONTACT: Ms. Mary Ridgeway, Environmental Review Engineer, FHWA Division Office, 3220 West Edgewood, Suite H, Jefferson City, MO 65109, Telephone:

(573)638-2620 or Mr. Dave Nichols, Director of Project Development, Missouri Department of Transportation, P.O. Box 270, Jefferson City, MO 65102, Telephone:

(573)751-4586. SUPPLEMENTARY INFORMATION: The FHWA, in cooperation with the Missouri Department of Transportation (MoDOT), will prepare an EIS for a proposal for improvements along U.S. 63 between the U.S. 63 and U.S. 50 interchange in Osage County to a point in Phelps County, south of the Maries County line. A location study will run concurrently with the preparation of the EIS and will provide definitive reasonable alternatives for evaluation in the EIS. The proposed action will accomplish several goals:

(1)Improve safety,

(2)decrease congestion, and

(3)support community regional development. The proposed project will include improvements to be located within a study area defined by existing improvements just south of the U.S. 63 and U.S. 50 interchange on the north in Osage County and existing improved roadway facility in Phelps County, south of the Maries County line. The east and west boundaries will extend approximately 1 to 2 miles on either side of existing U.S. 63. The study area is approximately 1 to 2 miles on either side of existing U.S. 63. The study area is approximately 50 miles in length and 2 miles in width. Known potential impacts include residential and/or commercial relocations and access changes. A U.S. Army Corps of Engineers Section 404 permit and a floodplain development permit from the State Emergency Management Agency may be required. Alternatives under consideration included

(1)No build,

(2)build alternatives,

(3)transportation system management options. To date, substantial preliminary coordination has occurred with local officials. As part of the scoping process, an interagency coordination meeting will be held with all appropriate federal, state, and local agencies. In addition, public information meetings and further meetings with public officials will be held to solicit public and agency input on the reasonable range of alternatives. A location public hearing will be held to present the findings of the Draft EIS. Public notice will be given announcing the time and place of all public meetings and the public hearing. The Draft EIS will be available for public and agency review and comment prior to the public hearing. To ensure that the full range of issues related to this proposed action are addressed and all significant issues are identified, comments and suggestions are invited from all interested parties. Comments or questions concerning this proposed action and the EIS should be directed to the FHWA or MoDOT at the addresses previously provided. (Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.) Issued on: November 20, 2006. Mary Ridgeway, Environmental Review Engineer, Jefferson City. [FR Doc. 06-9449 Filed 11-28-06; 8:45 am]

Connectionstraces to 14

Traces to 14 documents

U.S. Code