Notices. Scheduling of public forum; invitation to participate and request for comments
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BILLING CODE 4310-05-M DEPARTMENT OF LABOR Office of the Solicitor; Public Forum on the Department of Labor Freedom of Information Act
(FOIA)Improvement Plan AGENCY: Office of the Solicitor (SOL), Department of Labor. ACTION: Scheduling of public forum; invitation to participate and request for comments. SUMMARY: The Department of Labor is scheduling a public forum to seek input from the public on how it might improve the quality and efficiency of the Department's administration of the Freedom of Information Act (FOIA). This forum is part of the Department's FOIA Improvement Plan finalized earlier in 2006. Interested persons are encouraged to submit written comments in response to the questions contained in this notice and offer additional suggestions for improving the quality and efficiency of the Department's FOIA efforts. Attendees are invited to speak on these questions and other related issues at the public forum; those who only wish to observe the forum are welcome to attend as well. The Department's FOIA Improvement Plan is available at *http://www.dol.gov/dol/foia/* (See link for “Agency Plan and Report”). *Background:* On June 14, 2006, the Department submitted its FOIA Improvement Plan and Report pursuant to Executive Order 13392 (“Improving Agency Disclosure of Information”). As part of its FOIA Improvement Plan, the Department has been examining various components of its FOIA practices and procedures. One key component of the plan is outreach to the requester community and solicitation of input concerning ways the Department could improve the quality and efficiency of its FOIA efforts. At this time, the Department is soliciting input on ways to improve its FOIA efforts and, in particular, its written communication with individual requesters. The Department is convening this forum to begin the public input process. The first part of the program will consist of presentations by Departmental officials involved in the FOIA process. The second part of the program will be set aside to allow members of the requester community and the public to make suggestions or ask questions about the Department's FOIA Improvement Plan or its FOIA processes generally. DATES: *Forum* . The public forum will take place at the DOL Auditorium, Frances Perkins Building, U.S. Department of Labor, 200 Constitution Ave., NW., Washington DC 20210. The forum is scheduled for 10 a.m. to 12 p.m., December 18, 2006. *Written comments* . The Department invites oral and written comments in connection with the forum. Comments may be submitted by mail, facsimile or electronically. *Notice of intention to speak at the forum* . In order to accommodate maximum participation at the forum, the Department asks that individuals wishing to speak submit a written intention to speak at the forum by December 14, 2006. Notices may be submitted by mail, facsimile or electronically. If possible, please include an e-mail address or fax number in your notice, so we may contact you about scheduling. The Department requests that presentations be limited to no more than 10 minutes. The amount of time allotted will depend on the number of speakers who wish to speak. ADDRESSES: Written comments and notices of intention to speak at the forum may be submitted by mail, facsimile, or electronic means: *Written comments:* The Department encourages written comments (including electronic or facsimile form) relating to the subject of the forum on an ongoing basis. They may be submitted to the address below. *Mail:* Submit three copies of written comments to: Mr. Brad Mantel, Office of Legal Counsel, Office of the Solicitor, U.S. Department of Labor, 200 Constitution Ave., NW., Room N-2700, Washington DC 20210, telephone
(202)693-4964. *Facsimile:* If your comments are 10 pages or fewer, you may fax them to Mr. Mantel at
(202)693-5774. *Electronic:* You may submit comments electronically to Mr. Mantel at *mantel.brad@dol.gov* . *Notice of intention to speak at the forum:* *Mail:* You may submit a notice of intention to speak to Mr. Brad Mantel, Office of Legal Counsel, Office of the Solicitor, U.S. Department of Labor, 200 Constitution Ave., NW., Room N-2700, Washington, DC 20210, telephone
(202)693-4964. *Facsimile:* You may fax your notice of intention to speak to Mr. Mantel at
(202)693-5774. *Electronic:* You may also electronically submit your intention to speak to Mr. Mantel at *mantel.brad@dol.gov* . FOR FURTHER INFORMATION CONTACT: Brad Mantel, Office of Legal Counsel, Office of the Solicitor, telephone
(202)693-4964. SUPPLEMENTARY INFORMATION: The forum will include agency presentations from Departmental officials on the FOIA Improvement Plan and agency FOIA processes, including the Department's Chief FOIA Officer and the FOIA Public Liaison. The forum is also designed to obtain input from the requester community through an open-microphone session in which participants can address suggestions or questions to the Departmental FOIA agency staff. The Department is particularly interested in hearing from the requester community and the public on the following issues, but encourages input on a broad range of issues and ideas relating its FOIA process: *Question 1:* What additional information can the Department provide on its Web site to assist members of the public in making FOIA requests? *Question 2:* What additional methods can the Department utilize to improve communication with the requester community? *Question 3:* What is the best way of providing requesters information on the status of their FOIA requests? *Question 4:* What information should be included in all FOIA acknowledgement letters? *Question 5:* Would a continuing dialogue with the requester community about the Department's FOIA process be useful? If so, what is the optimal format? Should DOL establish an “electronic” suggestion box for FOIA matters? Individuals with disabilities wishing to attend the forum who need special accommodation should contact Mr. Mantel at
(202)693-4964, or at *mantel.brad@dol.gov* . Authority: This notice was prepared under the direction of Robert A. Shapiro, Associate Solicitor for Legal Counsel and Chief FOIA Officer. Signed at Washington, DC, this 5th day of December, 2006. Robert A. Shapiro, Associate Solicitor for Legal Counsel and Chief FOIA Officer. [FR Doc. E6-20922 Filed 12-7-06; 8:45 am] BILLING CODE 4510-23-P DEPARTMENT OF LABOR Employee Benefits Security Administration Proposed Information Collection; Request for Public Comment Health Disclosure and Claims Issues Project Survey ACTION: Notice SUMMARY: The Department of Labor (the Department), in accordance with the Paperwork Reduction Act of 1995
(PRA)(44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information. This program helps the Department assess the impact of its information collection requirements and minimize the reporting burden on the public and helps the public understand the Department's information collection requirements and provide the requested data in the desired format. Currently, the Employee Benefits Security Administration is soliciting comments on a proposed new information collection entitled the Health Disclosure and Claims Issues Project Survey. A copy of the information collection request
(ICR)can be obtained without charge by contacting the office listed below in the Addresses section of this notice. DATES: Written comments must be submitted on or before February 6, 2007. ADDRESSES: Direct all written comments to Susan G. Lahne, Office of Policy and Research, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5716, Washington, DC 20210. Telephone:
(202)693-8410; Fax:
(202)219-4745. These are not toll-free numbers. Comments may also be submitted electronically to the following Internet e-mail address: *ebsa.opr@dol.gov.* SUPPLEMENTARY INFORMATION: I. Background In 1999, the Department conducted a pilot project under which approximately 200 group health plans were investigated for compliance with Part 7 of the Employee Retirement Income Security Act of 1974 (ERISA). In 2001, the Department initiated the Health Disclosure and Claims Issues: Fiscal Year 2001 Compliance Project (HDCI), which sought to increase compliance through investigations and improve the Department's ability to provide effective compliance assistance by assessing more comprehensively the extent and nature of compliance with Part 7 of ERISA among group health plans. As a result of that project, the Department broadened its compliance assistance efforts through a combination of publications, outreach, self-audit materials, and other compliance tools. As a follow-up to the Fiscal Year 2001 Compliance Project, the Department proposes to conduct a second project, HDCI 2, which is intended to measure changes in compliance with Part 7 of ERISA and to improve the effectiveness of future compliance assistance efforts. As part of HDCI 2, the Department proposes to conduct a narrow scope telephone survey for the sole purpose of identifying an appropriate sample of ERISA-covered single-employer group health plans in two categories:
(1)Plans sponsored by firms with 3-99 employees, and
(2)plans sponsored by firms with 100 or more employees. The survey is necessary because the Department has no available information from which to identify an appropriate sample of ERISA-covered single-employer group health plans. Group health plans that are identified through the telephone survey will be subject to investigation for compliance with the requirements of the health coverage provisions of Part 7 of ERISA. The investigations will be conducted under the investigative authority of the Department and are not part of the Health Disclosure and Claims Issues Project Survey. The Department has determined that conducting a telephone survey is the simplest, least burdensome method of obtaining the information necessary to identify ERISA-covered single-employer plans for this purpose. The telephone survey will be limited in scope and designed to elicit only enough information to determine whether the firm that has been contacted sponsors or is part of a controlled group of firms that sponsors a group health plan subject to the provisions of Part 7. Respondents will be asked by telephone if they provide health benefits to their employees and, if so, the number of employees they have (to determine whether the plan is subject to Part 7 of ERISA or if a small plan exemption applies), and questions to determine whether the firm is a subsidiary that is part of a controlled group of employers and, therefore, whether the plan is sponsored by a parent that will need to be contacted. A respondent's participation in the call will be voluntary. The Department estimates that it will need to contact up to 5,000 firms in order to derive an adequate sample of ERISA-covered single-employer group health plans in each of the two categories described above. The goals of HDCI 2 are to identify and correct violations of Part 7 of ERISA, calculate compliance rates, provide compliance assistance regarding these provisions, and shape the Department's future compliance assistance and investigative resources strategies more efficiently and effectively. II. Current Actions This notice requests public comment pertaining to Office of Management and Budget
(OMB)approval of the information collection contained in the telephone survey described above, which is necessary for purposes of the Health Disclosure and Claims Issues Project Survey. The Department intends, following the receipt of comments pursuant to this notice, to submit an ICR to OMB requesting its approval of this information collection. An agency may not conduct or sponsor, and a person is not required to respond to, an information collection unless it displays a valid OMB control number. A summary of the ICR and the current burden estimates follows: *Type of Review:* New collection. *Agency:* Employee Benefits Security Administration. *Title:* Health Disclosure and Claims Issues Project Survey. *OMB Number:* 1210-NEW. *Affected Public:* Business or other for-profit; not-for-profit organizations. *Total Respondents:* 5000. *Total Responses:* 5000. *Frequency:* Once. *Average Time per Response:* 5 minutes. *Estimated Total Annual Hour Burden:* 417 hours. *Estimated Total Annual Cost Burden:* $0. III. Desired Focus of Comments The Department is particularly interested in comments that: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; • Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; • Enhance the quality, utility, and clarity of the information to be collected; and • Minimize the burden of the collection of information on those who respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., by permitting electronic submission of responses. Comments submitted in response to this notice will be summarized and/or included in the ICR submitted for OMB approval. They will also become a matter of public record. Joseph A. Piacentini, Director, Office of Policy and Research, Employee Benefits Security Administration. [FR Doc. E6-20912 Filed 12-7-06; 8:45 am] BILLING CODE 4510-29-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-60,456] American Wood Dryers Incorporated, Clackamas, OR; Notice of Termination of Investigation Pursuant to Section 221 of the Trade Act of 1974, as amended, an investigation was initiated on November 17, 2006 in response to a petition filed by a company official on behalf of workers of American Wood Dryers Incorporated, Clackamas, Oregon. The petition regarding the investigation has been deemed invalid. The petitioner was not a company official, but was one dislocated worker. A petition filed by workers requires three
(3)signatures. Consequently, the investigation has been terminated. Signed at Washington, DC, this 30th day of November, 2006. Linda G. Poole, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20839 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-60,413] Bendix Commercial Vehicle Systems (C.V.S.) LLC Air Compressor Products, Frankfort, KY; Notice of Termination of Investigation Pursuant to Section 221 of the Trade Act of 1974, an investigation was initiated on November 14, 2006 in response to a petition filed by the Paper, Allied-Industrial, Chemical, & Energy Workers International Union, Local 5-5-32 on behalf of workers of Bendix C.V.S. LLC, Air Compressor Products, Frankfort, Kentucky. The workers are covered by an active certification (TA-W-56,215), which expires on January 26, 2007. Consequently, further investigation in this case would serve no purpose, and the investigation has been terminated. Dated: November 30, 2006. Linda G. Poole, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20836 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-60,491] Hipwell Manufacturing Co., Pittsburgh, PA; Notice of Termination of Investigation Pursuant to Section 221 of the Trade Act of 1974, as amended, an investigation was initiated on November 28, 2006, in response to a petition filed on behalf of workers at Hipwell Manufacturing Co., Pittsburgh, Pennsylvania. The petition dated November 27, 2006 regarding the investigation has been deemed invalid. In order for employees to establish a valid petition, there must be at least three petitioners that were terminated no more than one year from the petition date. On further review, it became apparent that one petitioner was terminated on August 12, 2005, more than one year from the date on the petition. Consequently, the investigation has been terminated. Dated: December 1, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20840 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-60,372] International Truck and Engine Warrenville, IL; Notice of Termination of Investigation Pursuant to Section 221 of the Trade Act of 1974, as amended, an investigation was initiated on November 7, 2006, in response to a worker petition filed by a company official on behalf of workers at International Truck and Engine, Warrenville, Illinois. The petitioner has requested that the petition be withdrawn. Consequently, the investigation has been terminated. Dated: November 22, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20835 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-59,940] Liberty Throwing Co., Inc., Kingston, PA; Notice of Revised Determination on Reconsideration By application of October 24, 2006 a company official requested administrative reconsideration of the Department's negative determination regarding eligibility for workers and former workers of the subject firm to apply for Trade Adjustment Assistance
(TAA)and Alternative Trade Adjustment Assistance (ATAA). The initial investigation resulted in a negative determination signed on September 26, 2006 was based on the finding that imports of elastic yarn did not contribute importantly to worker separations at the subject plant and no shift of production to a foreign source occurred. The denial notice was published in the **Federal Register** on October 16, 2006 (71 FR 60763). In the request for reconsideration, the petitioner provided additional information regarding the subject firm's customers and requested an investigation relating to secondary impact concerning the subject firm as an upstream supplier in the production of fabric. A review of the new facts determined that the workers of the subject firm may be eligible for TAA on the basis of a secondary upstream supplier impact. The Department conducted an investigation of subject firm workers on the basis of secondary impact. It was revealed that Liberty Throwing Co., Inc., Kingston, Pennsylvania supplied elastic yarn that was used in the production of stretch fabric, and a loss of business with domestic manufacturers (whose workers were certified eligible to apply for adjustment assistance) contributed importantly to the workers separation or threat of separation. In accordance with Section 246 the Trade Act of 1974 (26 U.S.C. 2813), as amended, the Department of Labor herein presents the results of its investigation regarding certification of eligibility to apply for alternative trade adjustment assistance
(ATAA)for older workers. In order for the Department to issue a certification of eligibility to apply for ATAA, the group eligibility requirements of Section 246 of the Trade Act must be met. The Department has determined in this case that the requirements of Section 246 have been met. A significant number of workers at the firm are age 50 or over and possess skills that are not easily transferable. Competitive conditions within the industry are adverse. Conclusion After careful review of the facts obtained in the investigation, I determine that all workers of Liberty Throwing Co., Inc., Kingston, Pennsylvania qualify as adversely affected secondary workers under Section 222 of the Trade Act of 1974, as amended. In accordance with the provisions of the Act, I make the following certification: All workers of Liberty Throwing Co, Inc., Kingston, Pennsylvania, who became totally or partially separated from employment on or after August 22, 2005, through two years from the date of this certification, are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974, and are eligible to apply for alternative trade adjustment assistance under Section 246 of the Trade Act of 1974. Dated: November 30, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20834 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-60,433] Moll Industries, Fort Smith Division, Fort Smith, AR; Notice of Termination of Investigation Pursuant to Section 221 of the Trade Act of 1974, as amended, an investigation was initiated on November 15, 2006 in response to a petition filed by a Company Official and on behalf of workers at Moll Industries, Fort Smith Division, Fort Smith, Arkansas. The petitioner has requested that the petition be withdrawn. Consequently, the investigation has been terminated. Signed at Washington, DC, this 27th day of November, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20838 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration Investigations Regarding Certifications of Eligibility To Apply for Worker Adjustment Assistance and Alternative Trade Adjustment Assistance Petitions have been filed with the Secretary of Labor under Section 221(a) of the Trade Act of 1974 (“the Act”) and are identified in the Appendix to this notice. Upon receipt of these petitions, the Director of the Division of Trade Adjustment Assistance, Employment and Training Administration, has instituted investigations pursuant to Section 221(a) of the Act. The purpose of each of the investigations is to determine whether the workers are eligible to apply for adjustment assistance under Title II, Chapter 2, of the Act. The investigations will further relate, as appropriate, to the determination of the date on which total or partial separations began or threatened to begin and the subdivision of the firm involved. The petitioners or any other persons showing a substantial interest in the subject matter of the investigations may request a public hearing, provided such request is filed in writing with the Director, Division of Trade Adjustment Assistance, at the address shown below, not later than December 18, 2006. Interested persons are invited to submit written comments regarding the subject matter of the investigations to the Director, Division of Trade Adjustment Assistance, at the address shown below, not later than December 18, 2006. The petitions filed in this case are available for inspection at the Office of the Director, Division of Trade Adjustment Assistance, Employment and Training Administration, U.S. Department of Labor, Room C-5311, 200 Constitution Avenue, NW., Washington, DC 20210. Dated: November 28, 2006. Linda G. Poole, Certifying Officer, Division of Trade Adjustment Assistance. Appendix [TAA petitions instituted between 11/20/06 and 11/24/06] TA-W Subject firm (petitioners) Location Date of institution Date of petition 60457 NewPage—Luke Maryland Coated Paper Mill
(Comp)Luke, MD 11/20/06 11/20/06 60458 Wheeling Pittsburgh Steel Corp. (Union) Allenport, PA 11/20/06 11/08/06 60459 Sandusky Limited
(Wkrs)Sandusky, OH 11/20/06 11/20/06 60460 Roseburg Forest Products (Union) Coquille, OR 11/20/06 11/10/06 60461 Davis Industries Inc./dba Astro-Lounger/Davis
(Comp)Houlka, MS 11/21/06 11/17/06 60462 St. Louis Braid (Union) St. Louis, MO 11/21/06 11/21/06 60463 Cott Wyomissing
(IBT)Wyomissing, PA 11/21/06 11/20/06 60464 Key Technology (State) Medford, OR 11/21/06 11/20/06 60465 Emerson Motors
(Wkrs)Paragould, AR 11/21/06 11/20/06 60466 International Textile Group
(Comp)Cordova, NC 11/21/06 11/20/06 60467 Spaulding Lighting
(IUE)Cincinnati, OH 11/22/06 11/20/06 60468 USR Metals, Inc.
(Comp)Bloomsburg, PA 11/22/06 11/20/06 60469 TMT International, Inc.
(Wkrs)Elgin, TX 11/22/06 11/21/06 60470 Lanxess Corporation
(Wkrs)Wellford, SC 11/22/06 11/10/06 60471 Armstrong Wood Products
(Comp)Nashville, TN 11/22/06 11/21/06 60472 Camillus Cutlery Company
(USW)Camillus, NY 11/22/06 11/16/06 60473 R.G. Barry Corporation
(Wkrs)Pickerington, OH 11/22/06 11/13/06 60474 General Chemical Performance Products
(Comp)Newark, NJ 11/24/06 11/22/06 60475 Deco Engineering, Inc.
(Comp)Royal Oak, MI 11/24/06 11/22/06 60476 Ultra Flex
(Comp)High Point, NC 11/24/06 11/22/06 60477 American Uniform Company
(Comp)Cleveland, TN 11/24/06 11/22/06 60478 Ford Motor Company
(UAW)Hazelwood, MO 11/24/06 11/21/06 60479 Omnova Solutions
(Wkrs)Auburn, PA 11/24/06 11/16/06 60480 Emcor Facilities Services, Inc.
(Wkrs)Costa Mesa, CA 11/24/06 11/22/06 [FR Doc. E6-20841 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-58,831] Water Pik, Inc. Personal Healthcare Products Including Former On-Site Leased Workers of AppleOne Currently Employed With Employment Solutions, Loveland, CO; Amended Certification Regarding Eligibility To Apply for Worker Adjustment Assistance and Alternative Trade Adjustment Assistance In accordance with Section 223 of the Trade Act of 1974 (19 U.S.C. 2273), and Section 246 of the Trade Act of 1974 (26 U.S.C. 2813), as amended, the Department of Labor issued a Certification of Eligibility to Apply for Worker Adjustment Assistance and Alternative Trade Adjustment Assistance on March 24, 2006, applicable to workers of Water Pik, Inc., Personal Healthcare Products, including on-site leased workers of AppleOne, Loveland, Colorado. The notice was published in the **Federal Register** on April 12, 2006 (71 FR 18772). At the request of the State agency, the Department reviewed the certification for workers of the subject firm. The workers are engaged in the production of water treatment filtration and shower heads. New information shows that in August 2006, the leased workers of AppleOne, employed on-site at the Loveland, Colorado location of Water Pik, Inc., Personal Healthcare Products, became employees of Employment Solutions due to a change in contracting firms. Accordingly, the Department is amending this certification to properly reflect this matter. The intent of the Department's certification is to include all workers employed at Water Pik, Inc., Personal Healthcare Products, Loveland, Colorado who were adversely affected by a shift in production to China. The amended notice applicable to TA-W-58,831 is hereby issued as follows: All workers of Water Pik, Inc., Personal Healthcare Products, including former on-site leased workers of AppleOne, currently employed with Employment Solutions, Loveland, Colorado, who became totally or partially separated from employment on or after February 10, 2005, through March 24, 2008, are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974, and are also eligible to apply for alternative trade adjustment assistance under Section 246 of the Trade Act of 1974. Dated: November 30, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20833 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration Notice of Determinations Regarding Eligibility To Apply for Worker Adjustment Assistance and Alternative Trade Adjustment Assistance In accordance with Section 223 of the Trade Act of 1974, as amended (19 U.S.C. 2273) the Department of Labor herein presents summaries of determinations regarding eligibility to apply for trade adjustment assistance for workers (TA-W) number and alternative trade adjustment assistance
(ATAA)by (TA-W) number issued during the period of November 20 through November 24, 2006. In order for an affirmative determination to be made for workers of a primary firm and a certification issued regarding eligibility to apply for worker adjustment assistance, each of the group eligibility requirements of Section 222(a) of the Act must be met. I. Section (a)(2)(A) all of the following must be satisfied: A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; B. The sales or production, or both, of such firm or subdivision have decreased absolutely; and C. Increased imports of articles like or directly competitive with articles produced by such firm or subdivision have contributed importantly to such workers' separation or threat of separation and to the decline in sales or production of such firm or subdivision; or II. Section (a)(2)(B) both of the following must be satisfied: A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; B. There has been a shift in production by such workers' firm or subdivision to a foreign country of articles like or directly competitive with articles which are produced by such firm or subdivision; and C. One of the following must be satisfied: 1. The country to which the workers' firm has shifted production of the articles is a party to a free trade agreement with the United States; 2. The country to which the workers' firm has shifted production of the articles to a beneficiary country under the Andean Trade Preference Act, African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act; or 3. There has been or is likely to be an increase in imports of articles that are like or directly competitive with articles which are or were produced by such firm or subdivision. Also, in order for an affirmative determination to be made for secondarily affected workers of a firm and a certification issued regarding eligibility to apply for worker adjustment assistance, each of the group eligibility requirements of Section 222(b) of the Act must be met.
(1)Significant number or proportion of the workers in the workers' firm or an appropriate subdivision of the firm have become totally or partially separated, or are threatened to become totally or partially separated;
(2)The workers' firm (or subdivision) is a supplier or downstream producer to a firm (or subdivision) that employed a group of workers who received a certification of eligibility to apply for trade adjustment assistance benefits and such supply or production is related to the article that was the basis for such certification; and
(3)Either—
(A)The workers' firm is a supplier and the component parts it supplied for the firm (or subdivision) described in paragraph
(2)accounted for at least 20 percent of the production or sales of the workers' firm; or
(B)A loss or business by the workers' firm with the firm (or subdivision) described in paragraph
(2)contributed importantly to the workers' separation or threat of separation. In order for the Division of Trade Adjustment Assistance to issued a certification of eligibility to apply for Alternative Trade Adjustment Assistance
(ATAA)for older workers, the group eligibility requirements of Section 246(a)(3)(A)(ii) of the Trade Act must be met. 1. Whether a significant number of workers in the workers' firm are 50 years of age or older. 2. Whether the workers in the workers' firm possess skills that are not easily transferable. 3. The competitive conditions within the workers' industry (i.e., conditions within the industry are adverse). Affirmative Determinations for Worker Adjustment Assistance The following certifications have been issued. The date following the company name and location of each determination references the impact date for all workers of such determination. The following certifications have been issued. The requirements of Section 222(a)(2)(A) (increased imports) of the Trade Act have been met. *None.* The following certifications have been issued. The requirements of Section 222(a)(2)(B) (shift in production) of the Trade Act have been met. *TA-W-60,325; West Tennessee Machining, Camden, TN: October 27, 2005.* The following certifications have been issued. The requirements of Section 222(b) (supplier to a firm whose workers are certified eligible to apply for TAA) of the Trade Act have been met. *None.* The following certifications have been issued. The requirements of Section 222(b) (downstream producer for a firm whose workers are certified eligible to apply for TAA based on increased imports from or a shift in production to Mexico or Canada) of the Trade Act have been met. *None.* Affirmative Determinations for Worker Adjustment Assistance and Alternative Trade Adjustment Assistance The following certifications have been issued. The date following the company name and location of each determination references the impact date for all workers of such determination. The following certifications have been issued. The requirements of Section 222(a)(2)(A) (increased imports) and Section 246(a)(3)(A)(ii) of the Trade Act have been met. *TA-W-60,245; R.L. Stowe Mills, Chronicle Division, Sewing Department, Belmont, NC: October 12, 2005.* *TA-W-60,320; Agilent Technologies, Global Infrastructure Organization, Santa Clara, CA: October 24, 2005.* *TA-W-60,378; Chemtrade Performance Chemical US, LLC, A Wholly Owned Subsidiary of Chemtrade Logistics, Carlisle, SC: November 3, 2005.* *TA-W-60,173; LeRocato Manufacturing, Plainfield, CT: September 29, 2005.* *TA-W-60,286; Himmelberger Harrison Mfg Co., Frame Components Division, Morehouse, MO: October 24, 2005.* The following certifications have been issued. The requirements of Section 222(a)(2)(B) (shift in production) and Section 246(a)(3)(A)(ii) of the Trade Act have been met. *TA-W-60,291; Photometrics, A Division of Roper Scientific, Tucson, AZ: October 20, 2005.* *TA-W-60,330; Paige Electric, McConnellsburg, PA: October 24, 2005.* *TA-W-60,336; Ward Products LLC, New Jersey Division, North Brunswick, NJ: October 30, 2005.* *TA-W-60,345; Pride Manufacturing Co., A Subsidiary of Cintsa Corporation, Cutting Line, Portal, GA: October 25, 2005.* *TA-W-60,350; Clariant Corporation, Pigments and Additives Division, Coventry, RI: October 27, 2005.* *TA-W-60,416; Moore's Machine Co., Of Fayetteville, Inc., Fayetteville, NC: November 9, 2005.* *TA-W-60,423; 3M Company, Electronic Solutions Division, Columbia, MO: November 13, 2005.* *TA-W-60,441; ITW Tomco, Bryan, OH: November 13, 2005.* *TA-W-60,279; Aquaria, Inc., dba Marineland, Consumer Division, Moorpark, CA: October 20, 2005.* *TA-W-60,289; Vesuvius USA, Beaver Falls, PA: October 24, 2005.* *TA-W-60,452; Coleman Cable, Siler City, NC: November 15, 2005.* The following certifications have been issued. The requirements of Section 222(b) (supplier to a firm whose workers are certified eligible to apply for TAA) and Section 246(a)(3)(A)(ii) of the Trade Act have been met. *TA-W-60,185; Southern Steel and Wire Co., A Subsidiary of SSW Holding Co., Fort Smith, AR: October 2, 2005.* *TA-W-60,377; Springfield LLC, Customer Service and Administrative Center, Rockhill, SC: November 3, 2005.* *TA-W-60,379; Springfield LLC, Limestone Plant, Gaffney, SC: November 3, 2005.* The following certifications have been issued. The requirements of Section 222(b) (downstream producer for a firm whose workers are certified eligible to apply for TAA based on increased imports from or a shift in production to Mexico or Canada) and Section 246(a)(3)(A)(ii) of the Trade Act have been met. *None.* Negative Determinations for Alternative Trade Adjustment Assistance In the following cases, it has been determined that the requirements of 246(a)(3)(A)(ii) have not been met for the reasons specified. The Department has determined that criterion
(1)of Section 246 has not been met. Workers at the firm are 50 years of age or older. *TA-W-60,325; West Tennessee Machining, Camden, TN: October 27, 2005.* The Department has determined that criterion
(2)of Section 246 has not been met. Workers at the firm possess skills that are easily transferable. *None.* The Department has determined that criterion
(3)of Section 246 has not been met. Competition conditions within the workers' industry are not adverse. *None.* Negative Determinations for Worker Adjustment Assistance and Alternative Trade Adjustment Assistance In the following cases, the investigation revealed that the eligibility criteria for worker adjustment assistance have not been met for the reasons specified. Because the workers of the firm are not eligible to apply for TAA, the workers cannot be certified eligible for ATAA. The investigation revealed that criteria (a)(2)(A)(I.A.) and (a)(2)(B)(II.A.) (employment decline) have not been met. *TA-W-60,182; Oaklawn Packaging, Inc., Fort Smith, AR.* *TA-W-60,365; KHS USA, Inc., Waukesha Division, Waukesha, WI.* *TA-W-60,422; Ahlstrom Corporation, LLC, Mt. Holly Springs, PA.* The investigation revealed that criteria (a)(2)(A)(I.B.) (Sales or production, or both, did not decline) and (a)(2)(B)(II.B.) (shift in production to a foreign country) have not been met. *None.* The investigation revealed that criteria (a)(2)(A)(I.C.) (increased imports) and (a)(2)(B)(II.B.) (shift in production to a foreign country) have not been met. *TA-W-60,236; Tracewell Electronics, Cuba, NY.* *TA-W-60,295; Hickory Springs Manufacturing Co., Bedding Division, Micaville, NC.* *TA-W-60,300; Wak Industries, Gastonia, NC.* *TA-W-60,366; Jones Apparel Group, NY Better Apparel Production, New York, NY.* *TA-W-60,159; Brown International Corporation, Covina, CA.* The investigation revealed that the predominate cause of worker separations is unrelated to criteria (a)(2)(A)(I.C.) (increased imports) and (a)(2)(B)(II.C) (shift in production to a foreign country under a free trade agreement or a beneficiary country under a preferential trade agreement, or there has been or is likely to be an increase in imports). *None.* The workers' firm does not produce an article as required for certification under Section 222 of the Trade Act of 1974. *TA-W-60,265; Physical Rehab Works, Working Onsite at Maytag Corp., Herrin, IL.* *TA-W-60,265A; Executive Security Specialists, Working Onsite at Maytag Corp., Herrin, IL.* *TA-W-60,272; Elder Manufacturing Co., Dexter Facility, Dexter, MO.* The investigation revealed that criteria of Section 222(b)(2) has not been met. The workers' firm (or subdivision) is not a supplier to or a downstream producer for a firm whose workers were certified eligible to apply for TAA. *None.* I hereby certify that the aforementioned determinations were issued during the period of November 20 through November 24, 2006. Copies of these determinations are available for inspection in Room C-5311, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210 during normal business hours or will be mailed to persons who write to the above address. Dated: November 30, 2006. Linda G. Poole, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20832 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-60,429] Xyron Inc., Garden Grove, CA; Notice of Termination of Investigation Pursuant to Section 221 of the Trade Act of 1974, as amended, an investigation was initiated on November 14, 2006, in response to a petition filed on behalf of workers of Xyron Inc., Garden Grove, California. The workers produced adhesive coated liners. This petitioning group of workers is covered by an earlier petition (TA-W-60,355) filed on November 2, 2006, that is the subject of an ongoing investigation for which a determination has not yet been issued. Accordingly, further investigation in this case would serve no purpose and this investigation has been terminated. Dated: November 29, 2006. Linda G. Poole, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-20837 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration Notice of Approval for Missouri for Avoidance of 2006 Credit Reduction Under the Federal Unemployment Tax Act Sections 3302(c)(2) and 3302(d)(3) of the Federal Unemployment Tax Act
(FUTA)provide that employers in a state that has an outstanding balance of advances under Title XII of the Social Security Act on January 1 of two or more consecutive years are subject to a reduction in credits otherwise available against the FUTA tax for a calendar year, if a balance of advances remains on November 10 of that year. Because the account of Missouri in the Unemployment Trust Fund had a balance of advances on January 1 of 2004, 2005, and 2006, and still had a balance of advances on November 10, 2006, Missouri employers were potentially liable for a reduction in their FUTA offset credit for 2006. Section 3302(g) of FUTA provides that a state may avoid credit reduction for a year by meeting certain criteria. Missouri applied for avoidance of the 2006 credit reduction under this section. Pursuant to delegation of authority to me under Secretary's Order 4-75, I have determined that Missouri meets all of the criteria of section 3302(g) and thus qualifies for credit reduction avoidance. Therefore, Missouri employers will have no reduction in FUTA offset credit for calendar year 2006. Dated: November 24, 2006. Emily Stover DeRocco, Assistant Secretary for Employment and Training. [FR Doc. E6-20910 Filed 12-7-06; 8:45 am] BILLING CODE 4510-30-P NATIONAL NANOTECHNOLOGY COORDINATION OFFICE Nanoscale Science, Engineering and Technology Subcommittee, National Science and Technology Council, Committee on Technology; Research Needs and Priorities Related to the Environmental, Health, and Safety Aspects of Engineered Nanoscale Materials: Public Meeting ACTION: Notice of public meeting. SUMMARY: The National Nanotechnology Coordination Office (NNCO), on behalf of the Nanoscale Science, Engineering, and Technology
(NSET)Subcommittee of the Committee on Technology, National Science and Technology Council (NSTC), will hold a public meeting on January 4, 2007, to receive input on research needs related to the environmental, health, and safety aspects of engineered nanoscale materials (hereafter referred to as nanomaterials). Specifically, the NSET Subcommittee is seeking comment on the research needs and prioritization criteria for the research identified in the NSET Subcommittee document Environmental, Health, and Safety Research Needs for Engineered Nanoscale Materials, which was released on September 15, 2006. *Date and Address:* The public meeting will be held on Thursday, January 4, 2007, beginning at 8:30 a.m. at the FDIC Training Center, 3501 North Fairfax Drive, Arlington, VA 22226. A schedule will be published prior to the meeting. Directions to the facility are available on the registration web page (see below). *Registration:* Persons interested in attending the meeting may register at *http://www.nano.gov/public_ehs.html* prior to the meeting. Due to space limitations, early registration is suggested. On-site registration will be available on a first-come basis, space permitting. Persons interested in presenting comments at the meeting also should register at *http://www.nano.gov/public_ehs.html* and should do so no later than Wednesday, December 20, 2006. Written or electronic comments may be submitted on the same web page until January 31, 2007. Information on this meeting also will be posted on *http://www.nano.gov.* FOR FURTHER INFORMATION, CONTACT: For information regarding this Notice, please contact Cate Alexander Brennan, National Nanotechnology Coordination Office. Telephone:
(703)292-4399. E-mail: *calexand@nnco.nano.gov.* SUPPLEMENTARY INFORMATION: The Nanoscale Science, Engineering, and Technology
(NSET)Subcommittee coordinates planning, budgeting, and program implementation and review to ensure a balanced and comprehensive National Nanotechnology Initiative (NNI). The NSET Subcommittee is composed of representatives from agencies participating in the NNI. The NNCO provides technical and administrative support to the NSET Subcommittee in its work. On September 15, 2006, the NSET Subcommittee released a document identifying environmental, health, and safety research and information needs related to understanding and management of potential risks of nanomaterials. The document was created by the Nanotechnology Environmental and Health Implications
(NEHI)Working Group of the NSET Subcommittee, which is composed of scientists and other agency representatives. The document also reflects expert input from industry liaison groups and other research needs-identification efforts. This foundational document will be used by the NSET Subcommittee and the Federal agencies participating in the NNI as they set research priorities for Government-funded research programs. The meeting is an opportunity for public participation in the prioritization of research related to environmental, health, and safety aspects of nanomaterials. Specific comment on research needs and prioritization criteria in the Environmental, Health, and Safety Research Needs for Engineered Nanoscale Materials document and input regarding the criteria for evaluating research priorities is welcome. (To read the document, see *http://www.nano.gov/NNI_EHS_research_needs.pdf.)* The public meeting will be chaired by leadership of the NEHI Working Group, the NSET Subcommittee, and the NNCO. For more information on the National Nanotechnology Initiative and its various working entities, please *visit www.nano.gov.* How Can You Participate? You can participate through oral presentation at the meeting or through written electronic material submitted to the NNCO at *http://www.nano.gov/public_ehs.html.* The meeting is open to the public, up to the limit set by facility fire codes. Pre-registration is required for participation (see above). How Will the Meeting Day Be Structured? Due to significant interest in and the breadth of this subject, our plan is to organize the public meeting around subject areas, including research prioritization criteria and the five research areas identified in the Environmental, Health, and Safety Research Needs for Engineered Nanoscale Materials document: Instrumentation, Metrology, and Analytical Methods; Nanomaterials and Human Health; Nanomaterials and the Environment; Health and Environmental Surveillance; and Risk Management Methods. Speakers are requested to indicate which research area you wish to speak to; if you will direct your comments to topics outside of those identified above, please indicate that as well, so that you can be scheduled accordingly. In addition to indicating the topical area of your presentation, please also provide a short description of the content you intend to cover. The final organization of the meeting may change depending on the nature of the requests for presentations that are received. The speaker schedule will be distributed before the meeting. How Will Public Input Be Used? All comments and recommendations made at the meeting or in written submissions will be considered by the NEHI Working Group as it proceeds with prioritizing the research needs. Input from multiple stakeholders with various interests will be valuable to the NNI, especially with regard to strategic and interim goals for filling the EHS information needs gaps for nanomaterials. The NSET Subcommittee and NNI member agencies plan to make the priority-setting process a dynamic, open, and transparent process. Mihail Roco, Senior Advisor, Nanoscale Science, Engineering, and Technology Subcommittee of the National Science and Technology Council Committee on Technology. [FR Doc. E6-20864 Filed 12-7-06; 8:45 am] BILLING CODE 3170-WF-P NUCLEAR REGULATORY COMMISSION [Docket No. 50-400]; [License Nos. Npf-63] Carolina Power & Light Company; Receipt of Request for Action Under 10 Cfr 2.206 Notice is hereby given that by petition dated September 20, 2006, and its supplements dated October 23, and October 30, 2006, Mr. John D. Runkle (attorney for the petitioners) has requested that the U.S. Nuclear Regulatory Commission
(NRC)take action with regard to Shearon Harris Nuclear Power Plant (SHNPP). The petitioners request that NRC take enforcement action in the form of an Order that would revoke SHNPP's Operating License or impose maximum fines for each violation for each day the plant has been in violation of fire protection regulations. As the basis for this request, the petitioners discuss several fire safety violations at SHNPP which could affect the safe operation of the plant and safe shutdown of the plant in emergency situations. The petitioners' concerns focus on faulty fire barriers, reliance on indefinite compensatory measures, the risk associated with the noncompliances, and the NRC's enforcement discretion policy. The petitioners have also requested open and public proceedings with the NRC; the licensee, Carolina Power & Light, now doing business as Progress Energy; and external stakeholders in the vicinity of the SHNPP. The request is being treated pursuant to Title 10 of the Code of Federal Regulations Section 2.206 (10 CFR 2.206) of the Commission's regulations. As provided by 10 CFR 2.206, the agency will take appropriate action on this petition within a reasonable time. A copy of the petition is available for inspection at the Commission's Public Document Room (PDR), located at One White Flint North, Public File Area O1 F21, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible from the Agencywide Documents Access and Management System (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, *http://www.nrc.gov/reading-rm/adams.html* . Persons who do not have access to ADAMS or who encounter problems in accessing the documents located in ADAMS should contact the NRC PDR Reference staff by telephone at 1-800-397-4209 or 301-415-4737, or by e-mail to *pdr@nrc.gov* . For Nuclear Regulatory Commission. Dated at Rockville, Maryland, this 4th day of December 2006. J.E. Dyer, Director, Office of Nuclear Reactor Regulation. [FR Doc. E6-20858 Filed 12-7-06; 8:45 am] BILLING CODE 7590-01-P NUCLEAR REGULATORY COMMISSION [Docket No. 70-27] Summary of Environmental Assessment and Finding of No Significant Impact for Exemption to Licensed Physician Requirements for BWX Technologies, Inc., Lynchburg, VA AGENCY: Nuclear Regulatory Commission. ACTION: Notice of proposed action. FOR FURTHER INFORMATION CONTACT: Billy Gleaves, Project Manager, Fuel Facility Licensing Directorate, Division of Fuel Cycle Safety and Safeguards, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission (NRC), Mail Stop T-8F42, Washington, DC 20852. Telephone:
(301)415-5848; fax number:
(310)415-5955; e-mail: *bcg@nrc.gov.* SUPPLEMENTARY INFORMATION: I. Introduction The U.S. Nuclear Regulatory Commission
(NRC)is considering issuing an exemption to BWX Technologies, Inc. (BWXT), the holder of NRC special nuclear materials License SNM-42. The proposed action would exempt BWXT from certain requirements set forth in 10 CFR 73.46(b) and Part 73 Appendix B. The exemptions would authorize the licensee to allow medical examinations to be given by licensed nurse practitioners authorized to practice medicine by the Commonwealth of Virginia. The exemptions would allow such nurses, in addition to licensed physicians, to give medical examinations that are required prior to allowing personnel to participate in physical fitness tests. The exemptions would be to requirements stated in 10 CFR 73.46(b)(10)(iii) and (iv); 73.46(b)(11)(iii) and (v); 73.46(b)(12)(ii); and Part 73 Appendix B paragraphs I.B.1.b, I.B.2.b, and I.C. In accordance with the requirements of 10 CFR Part 51 the NRC has prepared an Environmental Assessment
(EA)in support of this action. Based on the EA, the NRC has concluded that a Finding of No Significant Impact is appropriate. If approved, the exemption would be issued following the publication of this Notice. II. EA Summary As stated above, the staff has prepared an EA in support of the proposed action. The EA contains sensitive information and is not publicly available. The NRC staff has concluded that issuing the proposed exemptions will not result in a significant impact to the environment. The NRC staff concluded that the proposed action will not adversely affect federally listed species or federally designated critical habitat because no federally listed species are known to occur in the project area. The NRC staff found that no historic properties will be affected by the proposed action. The proposed action does not have a potential to affect the probability or consequences of accidents; the types or amounts of effluents; nor occupational or public radiation exposure. Therefore, there are no significant radiological environmental impacts associated with the proposed action. III. Finding of No Significant Impact On the basis of the EA, the NRC has concluded that there are no significant environmental impacts from the proposed action, and has determined that the preparation of an environmental impact statement is not required. IV. Further Information Documents related to this action can be accessed on the NRC's Agencywide Document Access and Management System (ADAMS) that provides electronic copies of NRC's public documents. The ADAMS accession number for the **Federal Register** notice related to this action is: Notice of License Amendment Request of BWX Technologies, Inc., Lynchburg, VA (ML063050294). If you do not have access to ADAMS or if there are problems in accessing the documents located in ADAMS, contact the NRC's Public Document Room
(PDR)Reference staff at 800-397-4209, 301-415-4737, or by e-mail to *pdr@nrc.gov.* Dated at Rockville, Maryland, this 27th day of November 2006. For the U.S. Nuclear Regulatory Commission. Brian Smith, Acting Chief, Fuel Facility Licensing Directorate, Division of Fuel Cycle Safety, and Safeguards, Office of Nuclear Material Safety, and Safeguards. [FR Doc. E6-20857 Filed 12-7-06; 8:45 am] BILLING CODE 7590-01-P RAILROAD RETIREMENT BOARD Proposed Collection; Comment Request *Summary:* In accordance with the requirement of Section 3506 (c)(2)(A) of the Paperwork Reduction Act of 1995 which provides opportunity for public comment on new or revised data collections, the Railroad Retirement Board
(RRB)will publish periodic summaries of proposed data collections. *Comments are invited on:*
(a)Whether the proposed information collection is necessary for the proper performance of the functions of the agency, including whether the information has practical utility;
(b)the accuracy of the RRB's estimate of the burden of the collection of the information;
(c)ways to enhance the quality, utility, and clarity of the information to be collected; and
(d)ways to minimize the burden related to the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. Title and Purpose of Information Collection Application and Claim for Sickness Insurance Benefits; OMB 3220-0039 Under Section 2 of the Railroad Unemployment Insurance Act (RUIA), sickness benefits are payable to qualified railroad employees who are unable to work because of illness or injury. In addition, sickness benefits are payable to qualified female employees if they are unable to work, or if working would be injurious, because of pregnancy, miscarriage or childbirth. Under Section 1(k) of the RUIA, a statement of sickness with respect to days of sickness of an employee is to be filed with the RRB within a 10-day period from the first day claimed as a day of sickness. The RRB's authority for requesting supplemental medical information is Section 12(i) and 12(n) of the RUIA. The procedures for claiming sickness benefits and for the RRB to obtain supplemental medical information needed to determine a claimant's eligibility for such benefits are prescribed in 20 CFR Part 335. The forms currently used by the RRB to obtain information needed to determine eligibility for and the amount of sickness benefits due a claimant follows: Form SI-1a, Application for Sickness Benefits; Form SI-1b, Statement of Sickness; Form SI-3, Claim for Sickness Benefits; Form SI-7, Supplemental Doctor's Statement; Form SI-8, Verification of Medical Information; Form ID-7h, Non-Entitlement to Sickness Benefits and Information on Unemployment Benefits; Form ID-11a, Requesting Reason for Late Filing of Sickness Benefit and ID-11b, Notice of Insufficient Medical and Late Filing. Completion is required to obtain or retain benefits. One response is requested of each respondent. The RRB proposes the addition an equivalent Internet version of Form SI-3, Claim for Sickness Benefits to the information collection. The internet equivalent Form SI-3 will essentially mirror the manual RRB Form SI-3 currently in use, but will also provide the claimant the ability to change their direct deposit information in addition to the ability to complete and file the claim via the Internet. Revisions to Form ID-11a and ID-11b to add an item requesting information regarding why a claimant filed their claim late are also proposed. No changes are proposed to Form(s) SI-1b, SI-7, SI-8, and ID-7h. Minor, non-burden impacting editorial changes are proposed to Form(s) SI-1a and SI-3. Estimate of Annual Respondent Burden The estimated annual respondent burden is as follows: Form #(s) Annual responses Time
(min)Burden
(hrs)SI-1a 22,200 10 3,700 SI-1b(Doctor) 22,200 8 2,960 SI-3 (manual) 135,200 5 11,267 SI-3 (Internet) 33,800 5 2,816 SI-7 33,600 8 4,480 SI-8 50 5 4 ID-7H 50 5 4 ID-11A 800 4 53 ID-11B 1,000 4 67 Total 248,900 25,351 Additional Information or Comments To request more information or to obtain a copy of the information collection justification, forms, and/or supporting material, please call the RRB Clearance Officer at
(312)751-3363 or send an e-mail request to *Charles.Mierzwa@RRB.GOV* . Comments regarding the information collection should be addressed to Ronald J. Hodapp, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611-2092 or send an e-mail to *Ronald.Hodapp@RRB.GOV* . Written comments should be received within 60 days of this notice. Charles Mierzwa, Clearance Officer. [FR Doc. E6-20914 Filed 12-7-06; 8:45 am] BILLING CODE 7905-01-P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. *Extension:* Rule 17f-6; SEC File No. 270-392; OMB Control No. 3235-0447. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission (the “Commission”) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget (“OMB”) for extension and approval. Rule 17f-6 (17 CFR 270.17f-6) under the Investment Company Act of 1940 (15 U.S.C. 80a) permits registered investment companies (“funds”) to maintain assets ( *i.e.* , margin) with futures commission merchants (“FCMs”) in connection with commodity transactions effected on both domestic and foreign exchanges. 1 Prior to the rule's adoption, funds generally were required to maintain these assets in special accounts with a custodian bank. 1 Custody of Investment Company Assets With Futures Commission Merchants and Commodity Clearing Organizations, Investment Company Act Release No. 22389 (Dec. 11, 1996) (61 FR 66207 (Dec. 17, 1996)). The rule requires a written contract that contains certain provisions designed to ensure important safeguards and other benefits relating to the custody of fund assets by FCMs. To protect fund assets, the contract must require that FCMs comply with the segregation or secured amount requirements of the Commodity Exchange Act (“CEA”) and the rules under that statute. The contract also must contain a requirement that FCMs obtain an acknowledgment from any clearing organization that the fund's assets are held on behalf of the FCM's customers according to CEA provisions. Finally, FCMs are required to furnish to the Commission or its staff on request information concerning the fund's assets in order to facilitate Commission inspections. The Commission estimates that approximately 2,275 funds effect commodities transactions and could deposit margin with FCMs under Rule 17f-6 in connection with those transactions. Commission staff estimates that each fund uses and deposits margin with two different FCMs in connection with its commodity transactions. 2 2 This estimate is based on information conversations with representatives of the fund industry. The Commission estimates that each of the 2,275 funds spends an average of 1 hour annually complying with the contract requirements of the rule ( *i.e.* , executing contracts that contain the requisite provisions with additional FCMs), for a total of 2,275 annual burden hours. The estimate does not include the time required by an FCM to comply with the rule's contract requirements because, to the extent that complying with the contract provisions could be considered “collections of information,” the burden hours for compliance are already included in other PRA submissions or are de minimis. 3 The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act, and is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules and forms. 3 The rule requires a contract with the FCM to contain three provisions. Two of the provisions require the FCM to comply with existing requirements under the CEA and rules adopted under that Act. Thus, to the extent these provisions could be considered collections of information, the hours required for compliance would be included in the collection of information burden hours submitted by the Commodity Futures Trading Commission for its rules. The third contract provision requires that the FCM produce records or other information requested by the Commission or its staff. Commission staff has requested this type of information from an FCM so infrequently in the past that the annual burden hours are de minimis. Compliance with the collection of information requirements of the rule is necessary to obtain the benefit of relying on the rule. If an FCM furnishes records pertaining to a fund's assets at the request of the Commission or its staff, the records will be kept confidential to the extent permitted by relevant statutory or regulatory provisions. The rule does not require these records be retained for any specific period of time. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Written comments are invited on:
(a)Whether the collection of information is necessary for the proper performance of the functions of the Commission, including whether the information has practical utility;
(b)the accuracy of the Commission's estimate of the burden of the collection of information;
(c)ways to enhance the quality, utility, and clarity of the information collected; and
(d)ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days after this publication. Please direct your written comments to R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-mail to: *PRA_Mailbox@sec.gov* . Dated: November 30, 2006. Nancy M. Morris, Secretary. [FR Doc. E6-20805 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Securities Act of 1933, Release No. 8757/ December 4, 2006; Securities Exchange Act of 1934, Release No. 54865/ December 4, 2006] Order Approving Public Company Accounting Oversight Board Budget and Annual Accounting Support Fee for Calendar Year 2007 The Sarbanes-Oxley Act of 2002 (the “Act”) established the Public Company Accounting Oversight Board (“PCAOB”) to oversee the audits of public companies and related matters, to protect investors, and to further the public interest in the preparation of informative, accurate and independent audit reports. The PCAOB is to accomplish these goals through registration of public accounting firms and standard setting, inspection, and disciplinary programs. Section 109 of the Act provides that the PCAOB shall establish a reasonable annual accounting support fee, as may be necessary or appropriate to establish and maintain the PCAOB. Section 109(h) amends Section 13(b)(2) of the Securities Exchange Act of 1934 to require issuers to pay the allocable share of a reasonable annual accounting support fee or fees, determined in accordance with Section 109 of the Act. Under Section 109(f), the aggregate annual accounting support fee shall not exceed the PCAOB's aggregate “recoverable budget expenses,” which may include operating, capital and accrued items. Section 109(b) of the Act directs the PCAOB to establish a budget for each fiscal year in accordance with the PCAOB's internal procedures, subject to approval by the Securities and Exchange Commission (the “Commission”). On July 18, 2006, the Commission amended its Rules of Practice related to its Informal and Other Procedures to add a rule that facilitates the Commission's review and approval of PCAOB budgets and accounting support fees. 1 The new budget rule provides, among other things, a timetable for the preparation and submission of the PCAOB budget and for Commission actions related to each budget, a description of the information that should be included in each budget submission, limits on the PCAOB's ability to incur expenses and obligations except as provided in the approved budget, procedures relating to supplemental budget requests, requirements for the PCAOB to furnish on a quarterly basis certain budget-related information, and a list of definitions that apply to the rule and to general discussions of PCAOB budget matters. 1 17 CFR 202.11. *See* Release No. 33-8724 (July 18, 2006) [71 FR 41998 (July 24, 2006)]. Although the new budget rule will not take effect until the budget process for fiscal year 2008, the PCAOB staff and the Commission staff used their best efforts to substantially comply with the timetable and other requirements in the new rule for the PCAOB budget submission for 2007. Accordingly, in March 2006 the PCAOB provided the Commission with a narrative description of its program issues and outlook for the 2007 budget year, and in April the Commission staff provided to the PCAOB staff economic assumptions and budgetary guidance for the 2007 budget year. The PCAOB subsequently delivered a preliminary budget and budget justification to the Commission. The staff from the Commission's Offices of the Chief Accountant, Executive Director and Information Technology dedicated a substantial amount of time to the review and analysis of the PCAOB's programs, projects and budget estimates, reviewed the PCAOB's estimates of 2006 actual spending, and attended several meetings with management and staff of the PCAOB to develop an understanding of the PCAOB's budget and operations. During the course of the Commission's review, the Commission staff relied upon representations and supporting documentation from the PCAOB. Also, substantially as provided in the new rule, there was a “pass back” from the Commission to the PCAOB. The PCAOB approved its 2007 budget on November 30, 2006 and submitted that budget for Commission approval. After considering the above, the Commission did not identify any proposed disbursements in the 2007 budget adopted by the PCAOB that are not properly recoverable through the annual accounting support fee, and the Commission believes that the aggregate proposed 2007 annual accounting support fee does not exceed the PCAOB's aggregate recoverable budget expenses for 2007. As part of its review of the 2007 PCAOB budget, the Commission notes that the PCAOB has reaffirmed its commitments, among other things, to build upon its 2007 goals and objectives to develop a comprehensive multi-year strategic plan that is integrated with the PCAOB budget process; to have the auditors of its 2007 annual financial statements opine on the PCAOB's internal control over financial reporting; to devote staff resources to train both PCAOB staff and the public on revisions to the standard for auditing internal control over financial reporting; and to comply with the new Commission rule related to the PCAOB budget approval process in connection with its budget for 2008. The Commission also recognizes that the PCAOB, upon the arrival of Chairman Olson in mid 2006, appropriately has undertaken reviews in a number areas, including its compensation, recruiting and information technology programs. Because of the potential significance of those reviews, during 2007 the PCAOB should supplement the quarterly reports made available to the Commission under the new budget rule with periodic reports on the progress and results of those reviews and with monthly reports showing variances of actual or estimated expenditures from budgeted amounts, to the extent such progress reports and monthly reports are prepared for internal purposes. Based on the foregoing, the Commission has determined that the PCAOB's 2007 budget and annual accounting support fee are consistent with Section 109 of the Act. Accordingly, It is ordered, pursuant to Section 109 of the Act, that the PCAOB budget and annual accounting support fee for calendar year 2007 are approved. By the Commission. Nancy M. Morris, Secretary. [FR Doc. E6-20878 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54851; File No. SR-Amex-2006-48] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Change and Amendment No. 1 Thereto Modifying the Exchange's Independent Director and Audit Committee Corporate Governance Standards November 30, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on May 17, 2006, the American Stock Exchange LLC (“Amex” 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 substantially prepared by the Exchange. Amex filed Amendment No. 1 with the Commission on September 25, 2006. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons and to approve the proposal on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced and superseded the original filing in its entirety. Amendment No. 1 clarified certain details of the Exchange's initial proposal, and conformed it with recent revisions to the corporate governance standards of The NASDAQ Stock Market LLC (“Nasdaq”). *See* Securities Exchange Act Release No. 54583 (October 6, 2006), 71 FR 60782 (October 16, 2006) (approving SR-NASDAQ-2006-021) (“Nasdaq Corporate Governance Order”). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Section 121 of the Amex Company Guide (“Company Guide”) to clarify and modify certain corporate governance standards applicable to companies listed on the Amex, including the definition of “independent director,” and audit committee requirements. The text of the proposed rule change is below. 4 Proposed new language is in *italics* ; proposed deletions are in [brackets]. 4 With the Exchange's consent, a few technical spacing changes have been made to the text of the proposed rule change. Telephone conversation between Kristie Diemer, Special Counsel, Division of Market Regulation, Commission and Courtney McBride, Assistant General Counsel, Amex. Company Guide Independent Directors and Audit Committee Sec. 121. A. Independent Directors: *(1)* Each [listed company] *issuer* must have a sufficient number of independent directors on its [B] *b* oard of [D] *d* irectors [(1)] *(a)* such that at least a majority of such directors are independent directors (subject to the exceptions set forth in Section 801 and, with respect to small business issuers, Section 121B(2)(c)), and [(2)] *(b)* to satisfy the audit committee requirement set forth below. *(2)* “Independent director” means a person other than an *executive* officer or employee of the company [or any parent or subsidiary]. No director qualifies as independent unless the *issuer's* [B] *b* oard of [D] *d* irectors affirmatively determines that the director does not have a [material] relationship [with the listed company] that would interfere with the exercise of independent judgment *in carrying out the responsibilities of a director* . In addition *to the requirements contained in this Section 121A, directors serving on* [,] audit committees [members] must also comply with the *additional, more stringent* requirements set forth in *Section* [paragraph] *121* B(2) below. The following is a non-exclusive list of persons who shall not be considered independent:
(a)a director who is, or during the past three years was, employed by the company [or by any parent or subsidiary of the company], other than prior employment as an interim *executive officer* [Chairman or CEO*] *(provided the interim employment did not last longer than one year) (See Commentary .08)* ;
(b)a director who accept *ed* [s] or has an immediate family member who accept *ed* [s] any [payments] *compensation* from the company [or any parent or subsidiary of the company] in excess of $60,000 during *any period of twelve consecutive months within the three years preceding the determination of independence* [the current or any of the past three fiscal years], other than the following: [(1)] *(i)* compensation for board *or board committee* service, [(2) payments arising solely from investments in the company's securities, (3)] *(ii)* compensation paid to an immediate family member who is [a non-executive] *an* employee ( *other than an executive officer* ) of the company [or of a parent or subsidiary of the company], [(4)] *(iii)* compensation received for former service as an interim *executive officer* [Chairman or CEO] *(provided the interim employment did not last longer than one year) (See Commentary .08)* , *or* [(5)] *(iv)* benefits under a tax-qualified retirement plan, *or* [(6)] non-discretionary compensation *;* [,] [(7) loans permitted under Section 13(k) of the Exchange Act
(8)loans from a financial institution provided that the loans
(i)Were made in the ordinary course of business,
(ii)were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general public,
(iii)did not involve more than a normal degree of risk or other unfavorable factors, and
(iv)were not otherwise subject to the specific disclosure requirements of SEC Regulation S-K, Item 404, or
(9)payments from a financial institution in connection with the deposit of funds or the financial institution acting in an agency capacity, provided such payments were
(i)Made in the ordinary course of business,
(ii)made on substantially the same terms as those prevailing at the time for comparable transactions with the general public, and
(iii)not otherwise subject to the disclosure requirements of SEC Regulation S-K, Item 404.*]
(c)a director who is an immediate family member of an individual who is, or *at any time during* [has been in any of] the past three years *was* , employed by the company [or any parent or subsidiary of the company] as an executive officer;[*]
(d)a director who is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments (other than those arising solely from investments in the company's securities or payments under non-discretionary charitable contribution matching programs) that exceed 5% of the organization's consolidated gross revenues for that year, or $200,000, whichever is more, in any of the most recent three fiscal years;[*]
(e)a director [of the listed company] who is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the most recent three fiscal years any of the [listed company's] *issuer's* executive officers serve on [that entity's] *the* compensation committee *of such other entity;* [*] *or*
(f)a director who is, or has an immediate family member who is, a current partner of the company's outside auditor, or was a partner or employee of the company's outside auditor who worked on the company's audit at any time during any of the past three years.[*] [(g)] *(3)* [i] *I* n the case of an investment company, in lieu of [paragraphs] *Sections 121A(2)*
(a)through (f), a director who is an “interested person” of the *investment* company as defined in Section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee. B. Audit Committee
(1)Charter Each [I] *i* ssuer must certify that it has adopted a formal written audit committee charter and that the [A] *a* udit [C] *c* ommittee has reviewed and reassessed the adequacy of the formal written charter on an annual basis. The charter must specify the following: [(i)] *(a)* the scope of the audit committee's responsibilities, and how it carries out those responsibilities, including structure, processes, and membership requirements; [(ii)] *(b)* the audit committee's responsibility for ensuring its receipt from the outside auditors of a formal written statement delineating all relationships between the auditor and the [company] *issuer* , consistent with Independence Standards Board Standard 1, and the audit committee's responsibility for actively engaging in a dialogue with the auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditor and for taking, or recommending that the full board take, appropriate action to oversee the independence of the outside auditor; [and] [(iii)] *(c)* the *audit* committee's purpose of overseeing the accounting and financial reporting processes of the issuer and the audits of the financial statements of the issuer; *and* [(iv)] *(d)* the specific audit committee responsibilities and authority set forth in [paragraph
(4)of this subs] *S* ection *121B(4)* .
(2)Composition
(a)Each issuer must have, and certify that it has and will continue to have, an [A] *a* udit [C] *c* ommittee of at least three members, each of whom:
(i)satisfies the independence standards specified in Section 121A and Rule 10A-3 under the Securities Exchange Act of 1934; [and]
(ii)*must not have participated in the preparation of the financial statements of the issuer or any current subsidiary of the issuer at any time during the past three years; and* *(iii)* is able to read and understand fundamental financial statements, including a company's balance sheet, income statement, and cash flow statement. Additionally, each issuer must certify that it has, and will continue to have, at least one member of the audit committee who is financially sophisticated, in that he or she has past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual's financial sophistication, including but not limited to being or having been a chief executive officer, chief financial officer, other senior officer with financial oversight responsibilities. A director who qualifies as an audit committee financial expert under Item 401(h) of Regulation S-K, Item 401(e) of Regulation S-B or Item 3 of Form N-CSR (in the case of a registered management investment company) is presumed to qualify as financially sophisticated.
(b)Notwithstanding [paragraph] *Section 121B(2)* (a), one director who is not independent as defined in Section 121A, but who satisfies the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 (see [sub-paragraph] *Section 121B(2)* (a)(i)), and is not a current officer or employee or an immediate family member of such officer or employee, may be appointed to the [A] *a* udit [C] *c* ommittee, if the board, under exceptional and limited circumstances, determines that membership on the committee by the individual is required by the best interests of the [company] *issuer* and its shareholders, and the board discloses, in the next annual meeting proxy statement (or in its next annual report on SEC Form 10-K or equivalent if the issuer does not file an annual proxy statement) subsequent to such determination, the nature of the relationship and the reasons for that determination. A director appointed to the [A] *a* udit [C] *c* ommittee pursuant to this exception may not serve for in excess of two consecutive years and may not chair the [A] *a* udit [C] *c* ommittee.
(c)Small Business Issuers—Small Business Issuers (as defined in SEC Regulation S-B) are subject to all requirements specified in this Section 121B(2), except that such issuers are only required to maintain a [B] *b* oard of [D] *d* irectors comprised of at least 50% independent directors, and an [A] *a* udit [C] *c* ommittee of at least two members, comprised solely of independent directors who also meet the requirements of Rule 10A-3 under the Securities Exchange Act of 1934.
(3)Meeting Requirements The [A] *a* udit [C] *c* ommittee of each [listed company] *issuer* must meet on at least a quarterly basis, except that with respect to [listed] registered closed-end management investment companies, the [A] *a* udit [C] *c* ommittee must meet on a regular basis as often as necessary to fulfill its responsibilities, including at least annually in connection with issuance of the *investment* company's audited financial statements.
(4)Audit Committee Responsibilities and Authority The [A] *a* udit [C] *c* ommittee of each [listed company] *issuer* must have the specific audit committee responsibilities, authority and procedures necessary to comply with Rule 10A-3(b)(2), (3),
(4)and
(5)under the Securities Exchange Act of 1934 (subject to the exemptions provided in Rule 10A-3(c) under the Securities Exchange Act of 1934), concerning responsibilities relating to: ([i] *a* ) registered public accounting firms, ([ii] *b* ) complaints relating to accounting, internal accounting controls or auditing matters, ([iii] *c* ) authority to engage advisors, and ([iv] *d* ) funding as determined by the audit committee. Audit committees for investment companies must also establish procedures for the confidential, anonymous submission of concerns regarding questionable accounting or auditing matters by employees of the investment adviser, administrator, principal underwriter, or any other provider of accounting related services for the investment company, as well as employees of the investment company.
(5)Exception *At any time when an issuer has a class of common equity securities (or similar securities) that is listed on another national securities exchange or national securities association subject to the requirements of SEC Rule 10A-3 under the Securities Exchange Act of 1934, the listing of classes of securities of a direct or indirect consolidated subsidiary or an at least 50% beneficially owned subsidiary of the issuer (except classes of equity securities, other than non-convertible, non-participating preferred securities, of such subsidiary) shall not be subject to the requirements of this Section 121B.* See Also Section 803. [* With respect to independent directors who are not members of the Audit Committee, the applicable “look-back” period will be only one year for the first year after the amendment or adoption (as applicable) of Sections 121A(1), 121B(2)(c) and 802(a) with respect to board of director composition. With respect to independent directors who are members of the Audit Committee, the applicable “look-back” period will be only one year for the first year after the amendment or adoption (as applicable) of paragraphs (b),
(e)and
(f)of Section 121A. The applicable three-year “look-back” periods specified in Section 121A will begin to apply only from and after December 1, 2004.] * * * Commentary .01 No change. .02 *“Company” includes any parent or subsidiary of the issuer listed on the Exchange.* “Parent” or “subsidiary” includes entities that are consolidated with the issuer's financial statements *as filed with the SEC (but not if the issuer reflects such entity solely as an investment in its financial statements).* .03-.05 No change. .06 In order to affirmatively determine that an independent director does not have a material relationship with the [listed company] *issuer* that would interfere with the exercise of independent judgment, as specified in [paragraph] *Section 121* A, the board of directors of each [listed company] *issuer* must obtain from each such director full disclosure of all relationships which could be material in this regard[, including but not limited to any payments specified in paragraphs (b)(8) and (9)]. *.07 The three year look-back periods referenced in Sections 121A(2)(a), (c),
(e)and
(f)commence on the date the relationship ceases. For example, a director employed by the company is not independent until three years after such employment terminates.* *.08 For purposes of Section 121A(2)(a), employment by a director as an executive officer on an interim basis shall not disqualify that director from being considered independent following such employment, provided the interim employment did not last longer than one year. A director would not be considered independent while serving as an interim officer. Similarly, for purposes of Section 121A(2)(b), compensation received by a director for former service as an interim executive officer need not be considered as compensation in determining independence after such service, provided such interim employment did not last longer than one year. Nonetheless, the issuer's board of directors still must consider whether such former employment and any compensation received would interfere with the director's exercise of independent judgment in carrying out the responsibilities of a director. In addition, if the director participated in the preparation of the company's financial statements while serving as an interim executive officer, Section 121B(2)(a)(ii) would preclude service on the issuer's audit committee for three years.* *.09 Section 121A(2)(b) is generally intended to capture situations where compensation is made directly to (or for the benefit of) the director or an immediate family member of the director. For example, consulting or personal service contracts with a director or an immediate family member of the director would be analyzed under Section 121A(2)(b). In addition, political contributions to the campaign of a director or an immediate family member of the director would be considered indirect compensation under Section 121A(2)(b). Non-preferential payments made in the ordinary course of providing business services (such as payments of interest or proceeds related to banking services or loans by an issuer that is a financial institution or payment of claims on a policy by an issuer that is an insurance company), payments arising solely from investments in the company's securities and loans permitted under Section 13(k) of the Securities Exchange Act of 1934 will not preclude a finding of director independence as long as the payments are non-compensatory in nature. Depending on the circumstances, a loan or payment could be compensatory if, for example, it is not on terms generally available to the public.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Amex included statements concerning the purpose of and basis for the proposal 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. Amex 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 In 2003, the Commission approved broad enhancements to the corporate governance standards applicable to issuers listed on the Amex. 5 The enhancements related to, among other things, board of director composition and independence standards, as well as audit committee composition, authority, and disclosure obligations. These revisions also included new tests to determine the independence of directors. Comparable standards were adopted by Nasdaq and by the New York Stock Exchange (“NYSE”). 6 5 *See* Securities Exchange Act Release No. 48863 (December 1, 2003), 68 FR 68432 (December 8, 2003) (approving SR-Amex-2003-65). 6 *See* Securities Exchange Act Release No. 48745 (November 4, 2003), 68 FR 64154 (November 12, 2003) (approving SR-NYSE-2002-33, SR-NASD-2002-77, SR-NASD-2002-80, SR-NASD-2002-138, SR-NASD-2002-139, and SR-NASD-2002-141). Since implementing the enhanced corporate governance standards, the Exchange has proposed various changes to these standards based upon its experience administering the corporate governance program. The Exchange now proposes several changes to the independent director and audit committee requirements applicable to listed issuers that, according to the Exchange, are designed to:
(i)Eliminate unnecessary restrictions;
(ii)clarify certain aspects of the Exchange's corporate governance requirements; and
(iii)make these requirements consistent with those of Nasdaq and NYSE. Section 121A of the Company Guide ( *Independent Directors* ) requires most listed issuers to have a board of directors comprised of a majority of independent directors. It also specifies the criteria the board of directors must utilize in determining whether a director can be considered independent and sets forth certain “bright line” tests that preclude a finding of independence. Section 121B of the Company Guide ( *Audit Committee* ) sets forth the requirements for the composition of an issuer's audit committee, which must consist of, among other things, at least three directors who satisfy the independence standards in Section 121A. Such independence standards are substantially the same as Nasdaq standards 7 and are conceptually similar to NYSE standards. 8 7 Nasdaq Rule 4200(a)(15) and IM-4200. *See also* Nasdaq Corporate Governance Order, *supra* note 3. 8 Section 303A.02 of the NYSE Listed Company Manual.
(i)*Definition of Independent Director* 9 9 The change described in this subsection relates to a provision in the preamble to current Section 121A of the Company Guide that would become the preamble to Section 121A(2) as part of Amex's proposed numbering scheme. Section 121A of the Company Guide currently provides that an independent director of a listed company may not be an officer or employee of the company or any parent or subsidiary thereof, or have a material relationship with the listed company that would interfere with the exercise of independent judgment. The Exchange proposes to clarify that any relationship, not just a material relationship, that would interfere with the exercise of judgment in specifically carrying out the responsibilities of a director may preclude a determination of independence. According to the Exchange, this clarifying change will make the Amex's definition of independent director consistent with the Nasdaq's definition of independent director. 10 10 Nasdaq Rule 4200(a)(15).
(ii)*Service as a Compensated Interim Officer* 11 11 The change described in this subsection relate to current Sections 121A(a) and 121A(b)(4) of the Company Guide, which would become Sections 121A(2)(a) and 121A(2)(b)(iii), respectively, in Amex's proposed numbering scheme. Pursuant to current Section 121A(a) of the Company Guide, a director who is, or during the past three years was, employed by a company or by a parent or subsidiary of such company as an interim Chairman or CEO is not automatically precluded from being considered independent. Further, compensation received in excess of $60,000 during the current or past three fiscal years for former service as an interim Chairman or CEO does not automatically preclude a director from being considered independent. The Exchange proposes to expand both exceptions to cover the former service and compensation of all interim executive officers, not just the Chairman and CEO. Amex believes that the proposed rule change will enable issuers to more easily fill director seats by broadening the pool of prospective independent directors to include interim executive officers and others with particular expertise. However, the Exchange proposes to limit the ability to exclude such past service and compensation as an interim executive officer to one year, in order to prevent potential abuse of the exceptions. The Exchange also proposes to clarify in new Commentary .08 that current service as an interim officer would preclude a director from being considered independent. In addition, if, while acting as an interim officer, a director participated in the preparation of the financial statements of an issuer or current subsidiary of the issuer, the director would be precluded from serving on such issuer's audit committee for three years. Of course, depending upon the magnitude of the compensation and the length of service as a former interim executive officer, a board could still determine on its own—without regard to a “bright line” test—that an individual should not be considered independent. In this respect, the proposed new Commentary .08 to Section 121 specifies the board's obligation to consider such former service and related compensation in making an independence determination. In its proposal, Amex notes that the Commission recently published notice of a filing by Nasdaq in which Nasdaq proposed similar changes to its corporate governance standards. 12 According to the Exchange, NYSE standards also provide that compensated service as an interim officer does not disqualify a director from being considered independent following such service. 13 In Amex's view, the proposed rule change would result in more uniformity across market centers with respect to how interim service by directors is treated for independence purposes. 12 The Commission notes that the Nasdaq proposal has since been approved. See Nasdaq Corporate Governance Order, supra note 3. 13 Commentary to Sections 303A.02(b)(i) and
(ii)of the NYSE Listed Company Manual.
(iii)*Compensation over $60,000* 14 14 The change described in this subsection relate to current Section 121A(b) of the Company Guide, which would become Section 121A(2)(b) in the new numbering scheme Amex proposes in this filing. Section 121A(b) of the Company Guide currently precludes a finding of independence if a director, or an immediate family member of the director, accepts any payments from the company or any parent or subsidiary of the company in excess of $60,000 during the current or any of the past three fiscal years preceding the determination of independence. Certain types of payments that are unlikely to taint a director's independence are excluded from the $60,000 test. 15 15 Exceptions in the current rule, for example, include payments from a financial institution ( *e.g.* , interest on a savings account), payments arising solely from investments in the company's securities, and loans permitted under Section 13(k) of the Act. The Exchange notes that over the course of administering Section 121A(b), additional types of payments have been identified that should be excepted from the test because they are unlikely to taint a director's independence. Rather than continuing to codify examples of “payments” that should be excluded from the test as they arise, the Exchange believes that the more effective approach is to amend Section 121A(b) to focus on “compensation.” As a result, the Exchange proposes to modify Section 121A(b) to provide that a finding of independence is precluded if a director accepts, or has an immediate family member who accepts, any compensation, with certain exceptions, from a company or its affiliates in excess of $60,000 during any consecutive twelve-month period within the three years prior to the independence determination. To provide further guidance, the Exchange proposes adding new Commentary .09, which would specify that Section 121A(b) is intended to capture situations where compensation is made directly to (or for the benefit of) the director or the director's immediate family member. In order to illustrate such intention, proposed Commentary .09 provides specific examples of direct and indirect compensation that would preclude a finding of director independence, such as contributions made to the political campaign of a director or an immediate family member of the director. 16 The Exchange also proposes modifying Section 121A(b) to clarify that compensation for service on a board committee will not preclude a finding of independence. The Amex indicates that, while the current provision carves out compensation for board service and was meant to cover compensation for service on board committees, there appears to be some confusion in this regard among companies. 16 Proposed Commentary .09 further clarifies that, in general, under the proposed rule, non-preferential payments made in the ordinary course of providing business services (such as payments of interest or proceeds related to banking services or loans by an issuer that is a financial institution or payment of claims on a policy by an issuer that is an insurance company) will not preclude a finding of director independence as long as the payments are non-compensatory in nature. *See* Company Guide, Section 121, proposed Commentary .09. The Exchange believes that a revised rule based on compensation rather than payments will better capture the types of compensation that bear on a director's independence. Amex notes that a similar proposed rule change recently filed by Nasdaq 17 and published by the Commission, and a comparable NYSE provision, 18 preclude independence if a director or family member has received direct compensation above a minimum threshold. Accordingly, the Exchange believes that the proposed rule change will make Section 121A(b) consistent with the corresponding provisions of Nasdaq and NYSE, thereby creating greater uniformity across market centers with respect to the standards for evaluating a director's independence. 17 The Nasdaq proposal has since been approved. *See* Nasdaq Corporate Governance Order, *supra* note 3. 18 Section 303A.02(b)(2) of the NYSE Listed Company Manual.
(iv)*Timeframes for Determining Independence* 19 19 The changes described in this subsection relate to current Section 121A(b) of the Company Guide, which would become Section 121A(2)(b), and to current Sections 121A(a), (c), (e), and (f), which would become Sections 121A(2)(a), (c), (e), and
(f)in Amex's proposed numbering scheme. The Exchange proposes that the applicable one-year period or three-year period preceding the determination of independence set forth in current Section 121A(b) of the Company Guide be measured chronologically rather than by fiscal year. Under the proposed rule, the look-back period would be any period of twelve consecutive months within the three years preceding the date independence is to be determined. The Exchange believes that such proposed modification is appropriate because it introduces a simpler calculation that is not dependent on a company's particular fiscal year end. Additionally, the Exchange proposes to clarify in new Commentary .07 that the three-year look-back periods referenced in current paragraphs (a), (c), (e), and
(f)of Section 121A commence on the date the relationship ceases. These proposed rule changes would conform the Exchange's look-back periods to the Nasdaq look-back periods. 20 20 Nasdaq Rule 4200(a)(15) and IM-4200.
(v)*Other Changes* The Exchange also proposes to make other clarifying changes to Section 121. First, the Exchange proposes to clarify that the term “non-executive employee” in current Section 121A(b)(3) (proposed Section 121A(2)(b)(ii)) means an employee other than an executive officer, a term defined by reference to Commission Rule 16a-1(f) under the Act. 21 Second, the Exchange proposes to clarify that references to “the company” in Section 121 include any parent or subsidiary of the listed issuer. Third, the Exchange proposes to clarify in proposed new Section 121B(5) that an exception to the audit committee requirements contained in Commission Rule 10A-3(c)(2) under the Act 22 for certain subsidiaries of listed issuers also is applicable to the Amex's audit committee requirements. The Amex states that such clarifying revisions will make Section 121 consistent with Nasdaq's recent proposed rule change. 23 21 17 CFR 240.16a-1(f). 22 17 CFR 240.10A-3(c)(2). 23 *See* Nasdaq Corporate Governance Order, *supra* note 3. Finally, the Exchange proposes several organizational and grammatical changes to Section 121 which, though non-substantive, are intended to simplify reading of its corporate governance standards.
(vi)*Transition* The Exchange will implement the proposed rule change immediately upon approval by the Commission. In order to facilitate transition to the modified standards, any director that would be considered independent under the current standards, but that would no longer be deemed independent under the modified standards, would be permitted to continue serving on the board of directors as an independent director until no later than 90 days after the approval of this filing. 24 24 The Commission notes that this transition period does not affect an issuer's obligation to comply with the requirements relating to audit committee composition. The Exchange believes that the proposed rule change is responsive to concerns of its listed issuers and would benefit investors and issuers by providing additional transparency and clarity to Amex's corporate governance standards. The Exchange notes that such additional transparency and clarity also would facilitate uniform application and ease administration of corporate governance standards. Furthermore, the Exchange believes that by making the Amex standards more consistent with those of Nasdaq and NYSE, the proposed rule change would promote greater uniformity across listing markets. 2. Statutory Basis The Amex believes that the proposed rule change is consistent with Section 6(b) of the Act, 25 in general, and furthers the objectives of Section 6(b)(5) of the Act, 26 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. 25 15 U.S.C. 78f(b). 26 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, the Exchange believes that the proposed rule change will promote greater uniformity with the corporate governance standards of other markets. 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. 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-Amex-2006-48 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Amex-2006-48. 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 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-Amex-2006-48 and should be submitted on or before December 29, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 27 In particular, the Commission believes that the proposal is consistent with Section 6(b)(5) of the Act, 28 which requires that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and in general to protect investors and the public interest. 27 In approving this proposal, the Commission has considered its impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 28 15 U.S.C. 78f(b)(5). 28 15 U.S.C. 78f(b)(5). The Commission believes that the proposed rule change would provide clarity and guidance to Amex listed companies, particularly with respect to the determination of whether a director is independent. In particular, the proposed rule change would preclude a finding of independence if a director accepts any compensation from the company or its affiliates in excess of $60,000 during the prescribed time period. 29 This proposed change would align the Amex rule with corresponding rules of Nasdaq and NYSE relating to corporate governance standards of listed issuers. 30 The proposal also would revise various other provisions of Amex's corporate governance standards, including by amending several provisions to conform more closely with Nasdaq's and NYSE's corporate governance standards for its listed issuers. 31 29 Under current Section 121A of the Company Guide, a director of a listed company would not be considered independent if the director or a family member of the director has accepted more than $60,000 in payments from the company or its parent or subsidiary during the time period set forth in the rule. The proposed rule change would amend the rule to refer to compensation in excess of $60,000 from the company, rather than payments. 30 *See* Nasdaq's IM-4200 to Nasdaq Rule 4200 and Section 303A.02(b)(ii) of the NYSE Listed Company Manual. Proposed changes to Section 121A of the Company Guide would provide examples of non-compensatory payments, such as interest related to banking services, insurance proceeds, and non-preferential loans from financial institutions. At the same time, the proposed changes to Section 121A of the Company Guide would make clear that payments made by the company for the benefit of the director—such as political contributions to the campaign of a director or a family member and loans to a director or family member that are on terms not generally available to the public—could be considered indirect compensation so as to preclude a finding that the director was independent. 31 These other changes relate to: status of independent directors who served as interim officers for a maximum one-year period; the definition of “non-executive employee;” inclusion of parent and subsidiary within the meaning of “company;” and an exception in Amex's standards relating to audit committees for certain issuers that have a listed parent, consistent with a similar exception contained in Rule 10A-3 under the Act, 17 CFR 240.10A-3. The Commission finds good cause, consistent with Section 19(b)(2) of the Act, 32 for approving this proposal, as amended, before the thirtieth day after the publication of notice thereof in the **Federal Register** . The Commission notes that the proposal raises no new issues and believes that accelerating its approval would harmonize corporate governance listing standards among exchanges. 32 15 U.S.C. 78s(b)(2). V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 33 that the proposed rule change, as amended (SR-Amex-2006-48), is hereby approved on an accelerated basis. 33 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 34 34 34 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20804 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54855; File No. SR-DTC-2006-15] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of a Proposed Rule Change Relating to the Canadian Link Service December 1, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on October 10, 2006, The Depository Trust Company (“DTC”) 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 DTC. 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 proposed rule change would amend DTC's Rule 30, Canadian-Link Service, to allow certain Canadian-Link transactions to settle in U.S. dollars. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC 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. DTC 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 DTC's Canadian-Link Service currently allows participants of DTC (“DTC Participants”) to clear and settle two categories of securities transactions in Canadian dollars:
(1)Transactions with participants of The Canadian Depository for Securities Limited (“CDS Participants”) and
(2)transactions with other DTC Participants. The Canadian-Link Service also allows DTC Participants to transfer Canadian dollar funds to CDS Participants through the facilities of CDS and to other DTC Participants through Canadian settlement banks acting for DTC and such DTC Participants. The proposed rule change would add an additional functionality to the Canadian-Link Service to allow DTC Participants to settle certain securities transactions with CDS Participants in U.S. dollars (“cross-border U.S. dollar securities transactions”). Set forth below is a description of the current Canadian-Link Service and a description of the proposed change. Current Functionality of the Canadian-Link Service The Canadian-Link Service allows DTC Participants to clear and settle valued securities transactions in Canadian dollars with CDS Participants through the link between DTC and CDS. The securities that may be the subject of these transactions are securities that are eligible for book-entry transfer through the facilities of CDS and DTC (“Full-Service Canadian-Link Securities”) and securities that are eligible for book-entry transfer through the facilities of CDS but not through DTC (“Limited Service Canadian-Link Securities”). The securities are delivered to and from CDS Participants through the facilities of CDS. Money settlement between DTC and CDS is included in Canadian dollar money settlement at CDS. Money settlement between DTC and DTC Participants takes place between Canadian settlement banks acting for DTC and such DTC Participants. The Canadian-Link Service allows DTC Participants to clear and settle valued transactions in Canadian dollars with other DTC Participants through the facilities of DTC. The securities that may be the subject of these transactions are Full-Service Canadian-Link Securities. The securities are delivered to and from DTC Participants through the facilities of DTC. Money settlement between DTC and DTC Participants takes place through Canadian settlement banks acting for DTC and such DTC Participants. The Canadian-Link Service allows DTC Participants to transfer Canadian dollar funds without any corresponding delivery or receipt of securities to CDS Participants or other DTC Participants. Transactions between DTC Participants and CDS Participants are processed through the facilities of CDS. Transactions between DTC Participants and other DTC Participants are processed through Canadian settlement banks acting for such DTC Participants. The proposed rule change would not change any of the existing components of the Canadian-Link Service and except for cross-border U.S. dollar securities transactions, as set forth below, would not change how securities transactions are currently processed through the Canadian-Link Service. Proposed Enhancement of the Canadian-Link Service The proposed rule change would enhance the Canadian-Link Service to allow DTC Participants to clear and settle certain valued securities transactions in U.S. dollars with CDS Participants through the link between DTC and CDS. 3 The securities that would be the subject of the enhancement are Limited-Service Canadian-Link Securities, *i.e.* , securities that are eligible for book-entry transfer through the facilities of CDS but not DTC. The securities would be delivered to and from CDS Participants through the facilities of CDS. Money settlement between DTC and CDS would be included in U.S. dollar money settlement at DTC. Money settlement between DTC and DTC Participants would also be included in U.S. dollar money settlement at DTC together with the settlement of DTC Participants' other transactions at DTC. As the foregoing indicates, these cross-border U.S. dollar securities transactions would be processed in substantially the same way that transactions are now processed except that these transactions would settle in U.S. dollars rather than in Canadian dollars and the place of money settlement will be at DTC rather than at CDS or through Canadian settlement banks. 3 DTC has represented to the Commission that some transactions executed in Canadian markets, either on a stock exchange or over-the-counter, are settled in U.S. dollars. Transactions that settle in U.S. dollars would be reported to DTC in U.S. dollar amounts. DTC would not convert settlement amounts from Canadian to U.S. dollars. The proposed rule change would also add new definitions to DTC Rule 30 to distinguish between transactions between DTC Participants and CDS Participants (“Cross-Border Securities Transactions”) and transactions between only DTC Participants (“Intra-DTC Securities Transactions”). The proposed rule change would also add new definitions to distinguish between transactions that settle in U.S. dollars and transactions that settle in Canadian dollars (for example, “Cross-Border CAD Securities Transactions” and “Intra-DTC USD Securities Transactions”). Risk Management Controls Set forth below is a description of DTC's risk management controls with respect to the Canadian-Link Service and how these risk management controls would be affected as a result of the proposed rule change. 1. Canadian-Link Required Participants Fund Deposit. A DTC Participant that uses the Canadian-Link Service is currently required to make an additional required deposit to the DTC participants fund that is determined in accordance with a formula that takes into account the volume of cross-border Canadian dollar securities transactions processed by DTC for such DTC Participant. Under the proposed rule change, such formula would also take into account the volume of cross-border U.S. dollar securities transactions processed by DTC for such DTC Participant. 2. Security for Canadian-Link Transactions. A DTC Participant that uses the Canadian-Link Service is currently required to pledge to DTC its interest in the securities subject to cross-border Canadian dollar securities transactions that are held by DTC for such DTC Participant at CDS. Under the proposed rule change, such DTC Participant will also be required to pledge to DTC its interest in the securities subject to cross-border U.S. dollar securities transactions that are held by DTC for such DTC Participant at CDS. 3. Canadian-Link Service Net Debit Caps. A DTC Participant that uses the Canadian-Link Service is currently subject to a net debit cap on the negative Canadian dollar balance that may, from time to time, be incurred by such DTC Participant with respect to its use of the Canadian-Link Service. Under the proposed rule change, a DTC Participant would also be subject to a net debit cap on the negative U.S. dollar balance that may from time to time be incurred by such DTC Participant with respect to its cross-border U.S. dollar securities transactions. The proposed rule change would add new definitions to DTC Rule 30 to take into account that there would be separate Net Debit Caps for U.S. and for Canadian dollar transactions. 4. Collateral Monitor of Canadian-Link Participants. A DTC Participant that uses the Canadian-Link Service is currently subject to the DTC collateral monitor with respect to its use of the Canadian-Link Service. Under the proposed rule change, a DTC Participant would also be subject to the DTC collateral monitor with respect to its cross-border U.S. dollar securities transactions. As the foregoing indicates, cross-border U.S. dollar securities transactions will be subject to essentially the same robust risk management controls that are already applicable to the other securities transactions currently processed through the Canadian-Link Service. Statutory Basis for the Proposed Rule Change Section 17A(a)(3)(F) of the Act requires that the rules of a registered clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions and to assure the safeguarding of securities and funds which are in its possession or control or for which it is responsible. The proposed enhancement to the Canadian-Link Service should promote the prompt and accurate clearance and settlement of cross-border securities transactions between DTC Participants and CDS Participants and between DTC Participants and other DTC Participants in a secure, efficient, and regulated environment. B. Self-Regulatory Organization's Statement on Burden on Competition DTC does not believe that the proposed rule change will impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments relating to the proposed rule change have been solicited or received by DTC from members, participants, or other persons. DTC will notify the Commission of any written comments it receives. 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 the proposed rule change or,
(b)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-DTC-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-DTC-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 DTC. 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-DTC-2006-15 and should be submitted on or before December 29, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 4 4 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20868 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54854; File No. SR-NASDAQ-2006-046] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Guidance for Adjudicating Clearly Erroneous Transactions Under Rule 11890 December 1, 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 7, 2006, The NASDAQ Stock Market LLC (“Nasdaq”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by Nasdaq. Nasdaq filed the proposal as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(6) thereunder, 4 which 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 Nasdaq is providing guidance regarding factors it generally considers in adjudicating clearly erroneous transactions under Nasdaq Rule 11890. The text of the proposed rule change is below. Proposed new language is in *italics.* IM-11890-4. Clearly Erroneous Transaction Guidance for Filings under Rule 11890(a) and Single Stock Events under Rule 11890(b) *Nasdaq is providing the following guidance on how it generally considers:* • *All complaints filed by market participants under Rule 11890(a); and* • *Many events involving a single security considered on Nasdaq's own motion pursuant to Rule 11890(b).* * Nasdaq generally considers a transaction to be clearly erroneous when the print is substantially inconsistent with the market price at the time of execution. In making such a determination, Nasdaq takes into account the circumstances at the time of the transaction, the maintenance of a fair and orderly market, and the protection of investors and the public interest. Participants in Nasdaq are responsible for ensuring that the appropriate price and type of order are entered into Nasdaq's systems. Simple assertion by a firm that it made a mistake in entering an order or a quote, or that it failed to pay attention or to update a quote, may not be sufficient to establish that a transaction was clearly erroneous. * *Numerical factors for review* *Nasdaq primarily considers the execution price of a trade in determining whether it is clearly erroneous.* *Execution price* *Range away from reference price* *$1.75 and under* *Equal to or greater than the minimum threshold required for adjudication under Rule 11890(a)(2)(C)(ii).* *Over $1.75 and up to $25* *10%* *Over $25 and up to $50* *5%* *Over $50* *3%* *Nasdaq uses different Reference Prices based on the time of the trade and the listing venue of the security in order to establish an appropriate comparison point. These Reference Prices are detailed below. In unusual circumstances, however, Nasdaq may use a different Reference Price.* *Time of trade and listing venue* *Reference price* *Nasdaq-listed securities for trades executed between 9:30 am and 4 pm Eastern Time (“Regular Session”)* *The best bid (best offer) (“BBO”) in Nasdaq at the time of execution of first share of the disputed order.* *Non-Nasdaq-listed securities for trades executed during Regular Session and after primary market has posted first two-sided quote* *The national BBO at the time of execution of first share of the disputed order.* *Non-Nasdaq-listed securities for trades executed during Regular Session and before primary market has posted first two-sided quote* *The national BBO at the time of execution of first share of the disputed order. If national BBO does not appear substantially related to market, Nasdaq may consider other Reference Prices including the opening trade, indication of interest and first two-sided quote in the primary market (which may occur after the execution) and the closing price for the prior Regular Session for the security's primary market.* *Nasdaq-listed and non-Nasdaq-listed securities for trades executed after 4 pm and before 9:30 am Eastern Time* *Closing price of security for the last Regular Session on the security's primary market.* Additional Factors *In occasional circumstances, Nasdaq may consider additional factors in determining whether a transaction is clearly erroneous. These include:* • *Material news released for the security* • *Suspicious trading activity* • *System malfunctions or disruptions* • *Locked or crossed markets* • *Trading in the security was recently halted/resumed* • *The security is an initial public offering* • *Volume and volatility for the security* • *Stock-split, reorganization or other corporate action.* • *Validity of consolidated tape trades and quotes and Nasdaq BBO comparison to national BBO.* • *General volatility of market conditions.* • *Reason for the error.* Additional Information Concerning Rule 11890(b) *Nasdaq may on its own motion review transactions in any security in the event of:* • *A disruption or malfunction in the use or operation of any quotation, execution, communication, or trade reporting system owned or operated by Nasdaq and approved by the SEC;* • *Extraordinary market conditions or other circumstances in which the nullification or modification of transactions may be necessary for the maintenance of a fair and orderly market or the protection of investors and the public interest.* *Consequently, Rule 11890(b) is focused on systemic problems that involve large numbers of parties or trades, or market conditions where it would not be in the best interests of the market to proceed under the processes set forth in Rule 11890(a). Sometimes events involving a single security will meet the standards of Rule 11890(b). However, market participants should not assume that Rule 11890(b) will be available where, for example, they failed to file a complaint within the time periods specified in Rule 11890(a). The rule could be available, however, in cases where a trade not eligible for adjudication under Rule 11890(a) nevertheless could present systemic risks if permitted to stand.* *The guidance set forth in IM-11890-4 applies to many events involving a single security adjudicated pursuant to Rule 11890(b). However, Nasdaq may apply the guidance set forth in IM 11890-5 to some events involving a single security, such as some situations where trading activity occurs in multiple market centers and Nasdaq is acting in consultation with other markets.* IM-11890-5. Clearly Erroneous Transaction Guidance for Multi-Stock Events Under Rule 11890(b) *Nasdaq is providing the following guidance on how it generally considers multi-stock events adjudicated on Nasdaq's own motion pursuant to Rule 11890(b).* * Nasdaq generally considers a transaction to be clearly erroneous when the print is substantially inconsistent with the market price at the time of execution. In making such a determination, Nasdaq takes into account the circumstances at the time of the transaction, the maintenance of a fair and orderly market, and the protection of investors and the public interest. Participants in Nasdaq are responsible for ensuring that the appropriate price and type of order are entered into Nasdaq's systems. Simple assertion by a firm that it made a mistake in entering an order or a quote, or that it failed to pay attention or to update a quote, may not be sufficient to establish that a transaction was clearly erroneous. * *Nasdaq may on its own motion review transactions in any security in the event of:* • *A disruption or malfunction in the use or operation of any quotation, execution, communication, or trade reporting system owned or operated by Nasdaq and approved by the SEC; or* • *Extraordinary market conditions or other circumstances in which the nullification or modification of transactions may be necessary for the maintenance of a fair and orderly market or the protection of investors and the public interest.* *Consequently, Rule 11890(b) is focused on systemic problems that involve large numbers of parties or trades, or market conditions where it would not be in the best interests of the market to proceed under the processes set forth in Rule 11890(a). Even in cases involving multiple securities, however, market participants should not assume that Rule 11890(b) will be available where, for example, they failed to file a complaint within the time periods specified in Rule 11890(a). The rule could be available, however, in cases where a trade not eligible for adjudication under Rule 11890(a) nevertheless could present systemic risks if permitted to stand. The determination of whether to adjudicate an event under Rule 11890(b) is made by Nasdaq in its sole discretion pursuant to the terms of the rule.* Numerical Factors for Review *Nasdaq primarily considers the execution prices of the trades in question in determining whether trades should be nullified in a multi-stock event pursuant to Rule 11890(b). Generally all trades more than 10% away from the Reference Price would be clearly erroneous.* *NASDAQ uses different Reference Prices based on time of the trade in order to establish an appropriate comparison point. These Reference Prices are detailed below. In unusual circumstances, however, Nasdaq may use a different Reference Price.* *Time of trade* *Reference price* *All trades executed after the opening of trading during regular market hours and until the end of regular market hours* *For Nasdaq-listed securities, the best bid (best offer) (“BBO”) in Nasdaq at the time of execution of first share of the disputed order.* *For Non-Nasdaq-listed securities, the national BBO at the time of execution of first share of the disputed order.* *All securities for trades executed:* • *after 4 p.m., Eastern Time (ET)* • *before 9:30 a.m., ET* • *during the market opening process for regular market hours* *The closing price of the security for regular market hours on the security's primary market.* *In occasional circumstances, Nasdaq may consider additional factors in determining whether the transactions are clearly erroneous. These include:* • *Material news released for individual securities* • *Suspicious trading activity* *Nasdaq may also apply the guidance set forth in IM 11890-5 to some events involving a single security, such as some situations where trading activity occurs in multiple market centers and Nasdaq is acting in consultation with other markets.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq is adopting Interpretive Material under Nasdaq Rule 11890 to provide guidance with regard to its consideration of transactions that may be clearly erroneous. Paragraph
(a)of Nasdaq Rule 11890 allows market participants to petition Nasdaq to nullify or modify trades that they allege to be clearly erroneous. Paragraph
(b)allows Nasdaq to nullify or modify trades on its own motion in the event of a disruption or malfunction in the use or operation of Nasdaq systems or extraordinary market conditions or other circumstances in which the nullification or modification of transactions may be necessary for the maintenance of a fair and orderly market or the protection of investors and the public interest. Nasdaq is providing one set of Interpretive Material relating to Nasdaq Rule 11890(a) and many events involving a single stock under Rule 11890(b), and a second set of Interpretive Material relating to events involving multiple stocks under Nasdaq Rule 11890(b). In each case, the Interpretive Material is intended to provide market participants with insights into the factors generally considered by Nasdaq in determining whether to nullify or modify trades under the rule. 5 5 The Interpretive Material includes language relating to trades in non-Nasdaq securities. Although Nasdaq is not yet operative as an exchange in these securities, Nasdaq is filing this language in anticipation of an operational date for these securities in the near future. Because Nasdaq's parent company, The Nasdaq Stock Market, Inc. (“Nasdaq Inc.”), currently trades non-Nasdaq securities pursuant to authority delegated by the National Association of Securities Dealers, Inc. (“NASD”) and administers NASD Rule 11890 with respect to these securities pursuant to that delegation, Nasdaq Inc. is also filing a version of the Interpretive Material as an NASD Rule. *See* SR-NASD-2006-123 (November 7, 2006). At its basic level, Nasdaq Rule 11890 is intended to allow Nasdaq to adjudicate disputes between firms as to the status of a trade, with a goal of preventing unjust enrichment of one market participant at the expense of another in circumstances where the terms of a trade are clearly out of line with objective market conditions for a security. Thus, Nasdaq Rule 11890(a) allows the party that believes it made a significant error to petition for an adjudication, and in appropriate circumstances, to be relieved of the obligation to settle the trade. The rule may not be used as an insurance policy against trades that merely lose money, however. Accordingly, the NASD's predecessor rule was amended in 2005 6 to establish a conclusive presumption that a trade is not eligible for review under Nasdaq Rule 11890(a) unless its price deviates from the inside market for the security by an amount in excess of certain bright-line numerical thresholds. This aspect of the rule reflects the view that it is preferable to promote market certainty and accountability by market participants by allowing all trades close to the inside market to stand, even if a particular trade may arguably have been caused by a market participant error. 6 *See* Securities Exchange Act Release No. 52141 (July 27, 2005), 70 FR 44709 (August 3, 2005) (SR-NASD-2004-009). Nevertheless, in an environment of continual increases in the scope and speed of electronic trading, Nasdaq Rule 11890(b) provides an important safeguard against market disruptions caused by trader errors or system malfunctions that result in executions affecting multiple market participants and/or securities. Thus, Nasdaq Rule 11890(b) mitigates systemic risk by providing a mechanism to break erroneous trades that may have a serious detrimental effect on one or more market participants. Nasdaq Rule 11890(b) has been used both with respect to events affecting a single stock, as where an erroneous order causes a large number of trades involving multiple market participants to execute, and events affecting multiple stocks, as where a system malfunction results in a more widespread problem. Because of its focus on system malfunctions and overall market integrity, market participants should not assume that Nasdaq Rule 11890(b) will be used where, for example, they failed to file a complaint within the time periods specified in Nasdaq Rule 11890(a). However, the rule could be available in cases where a trade not eligible for adjudication under Nasdaq Rule 11890(a) nevertheless could present systemic risks if permitted to stand. Thus, for example, if a firm's erroneous trades had the potential to cause a firm's insolvency but its petition was untimely, Nasdaq might consider using Nasdaq Rule 11890(b)(ii) to prevent the insolvency. 7 7 As is the case in all instances where a firm's erroneous trades raise questions as to the adequacy of its internal controls, Nasdaq would also refer the firm for investigation by the NASD in its capacity as Nasdaq's regulatory services provider. Thus, under both parts of the rule, Nasdaq strives to strike a balance between certainty and flexibility, to ensure that
(i)similar situations are addressed in a similar manner,
(ii)market participants do not attempt to use the rule to attain unfair advantage, and
(iii)the rule is not written or construed in a way that may prevent action necessary to protect market quality or prevent systemic problems and thereby maintain a fair and orderly market and protect investors and the public interest. With these considerations in mind, Nasdaq believes that the Interpretive Material allows market participants to achieve a better understanding of Nasdaq's application of the rule without limiting its adaptability. In effect, the Interpretive Material describes Nasdaq's understanding of the precedents that have emerged through years of adjudications under the rule; as with judicial precedents, they serve as a guide to future cases without constricting adaptability to new or unique fact patterns. Both sets of Interpretive Material reflect that Nasdaq generally considers a transaction to be clearly erroneous when the print is substantially inconsistent with the market price at the time of execution. In making such a determination, Nasdaq takes into account the circumstances at the time of the transaction, the maintenance of a fair and orderly market, and the protection of investors and the public interest. The Interpretive Material also stresses that participants in Nasdaq are responsible for ensuring that the appropriate price and type of order are entered into Nasdaq's systems. Simple assertion by a firm that it made a mistake in entering an order or a quote, or that it failed to pay attention or to update a quote, may not be sufficient to establish that a transaction was clearly erroneous. IM-11890-4 concerns all complaints filed by market participants under Nasdaq Rule 11890(a), as well as many events involving a single security considered on Nasdaq's own motion pursuant to Nasdaq Rule 11890(b). Nasdaq primarily considers the execution price of a trade in determining whether it is clearly erroneous. Specifically, Nasdaq generally uses the following guidelines: 8 8 Nasdaq stated that at all execution prices, the guidelines are equal to or greater than the minimum threshold required for adjudication under Rule 11890(a)(2)(C)(ii). Telephone conversation by and between John Yetter, Senior Associate General Counsel, Nasdaq, and Terri Evans, Special Counsel and David Hsu, Special Counsel, Division of Market Regulation, Commission, on November 17, 2006. Execution price Range away from reference price $1.75 and under Equal to or greater than the minimum threshold required for adjudication under Rule 11890(a)(2)(C)(ii). Over $1.75 and up to $25 10 percent. Over $25 and up to $50 5 percent. Over $50 3 percent. Thus, the degree of deviation from a specified reference price needed for a trade to be declared clearly erroneous depends on the execution price: securities trading at lower prices require a higher percentage deviation before they will be considered clearly erroneous, since the normal daily trading ranges for these securities generally involve larger percentage movements. In the case of securities priced at $1.75 or below, a trade will generally be considered clearly erroneous if it is eligible for adjudication at all under the minimum thresholds under Nasdaq Rule 11890(a)(2)(C)(ii), since these thresholds require significant percentage deviation before a low-priced trade is eligible. Nasdaq uses different Reference Prices based on time of the trade and the listing venue of the security in order to establish an appropriate comparison point. These Reference Prices are detailed below. In unusual circumstances, however, Nasdaq may use a Reference Price not specifically described in the Interpretive Material. For example, in a case where material news about a security was released after market close for the security and a trade occurring after 4 p.m. and before 9:30 a.m. is at issue, it may be more appropriate to use a Reference Price derived from after-hours trading activity than to use the closing price of the security. Similarly, in the case of several large orders that execute at multiple prices, a Reference Price based on a weighted average of the BBO at relevant times may be more appropriate than a Reference Price based solely on the BBO immediately prior to the execution of the first share of the order. Time of trade and listing venue Reference price Nasdaq-listed securities for trades executed between 9:30 a.m. and 4 p.m. Eastern Time (“Regular Session”) The best bid (best offer) (“BBO”) in Nasdaq at the time of execution of first share of the disputed order. Non-Nasdaq-listed securities for trades executed during Regular Session and after primary market has posted first two-sided quote The national BBO at the time of execution of first share of the disputed order. Non-Nasdaq-listed securities for trades executed during Regular Session and before primary market has posted first two-sided quote The national BBO at the time of execution of first share of the disputed order. If national BBO does not appear substantially related to market, Nasdaq may consider other Reference Prices including the opening trade, indication of interest and first two-sided quote in the primary market (which may occur after the execution) and the closing price for the prior Regular Session for the security's primary market. Nasdaq-listed and non-Nasdaq-listed securities for trades executed after 4 p.m. and before 9:30 a.m. Eastern Time Closing price of security for the last Regular Session on the security's primary market. In occasional circumstances, Nasdaq may consider additional factors in determining whether a transaction is clearly erroneous. These include: • Material news released for the security. • Suspicious trading activity. • System malfunctions or disruptions. • Locked or crossed markets. • Trading in the security was recently halted/resumed. • The security is an initial public offering. • Volume and volatility for the security. • Stock-split, reorganization or other corporate action. • Validity of consolidated tape trades and quotes and Nasdaq BBO comparison to national BBO. • General volatility of market conditions. • Reason for the error. IM-11890-5 concerns multi-stock events adjudicated on Nasdaq's own motion pursuant to Nasdaq Rule 11890(b). In such cases, Nasdaq primarily considers the numerical factors of the execution prices in determining whether trades should be nullified. Generally all trades more than 10% away from the Reference Price would be clearly erroneous. 9 9 Nasdaq generally uses 10% threshold in these cases, in contrast to the sliding scale of percentages described in IM-11890-4, because multi-stock events adjudicated under Rule 11890(b) generally require coordination with other venues trading the stock in order to ensure consistent treatment of trades across all venues affected by the event. Nasdaq has found that the 10% threshold is generally used by other venues and therefore facilitates a coordinated and timely response. Nasdaq uses different Reference Prices based on time of the trade in order to establish an appropriate comparison point. These Reference Prices are detailed below. In unusual circumstances, however, Nasdaq may use a different Reference Price. Time of trade Reference price All trades executed after the opening of trading during regular market hours and until the end of regular market hours For Nasdaq-listed securities, the best bid (best offer) (“BBO”) in Nasdaq at the time of execution of first share of the disputed order. For Non-Nasdaq-listed securities, the national BBO at the time of execution of first share of the disputed order. All securities for trades executed: • after 4 p.m., Eastern Time
(ET)• before 9:30 a.m., ET • during the market opening process for regular market hours The closing price of the security for regular market hours on the security's primary market. In occasional circumstances, Nasdaq may consider additional factors in determining whether the transactions in a multi-stock event are clearly erroneous, including material news released for individual securities or suspicious trading activity. The guidance set forth in IM-11890-4 will apply to many events involving a single security adjudicated pursuant to Nasdaq Rule 11890(b). However, Nasdaq may apply the guidance set forth in IM-11890-5 to some events involving a single security, such as some situations where trading activity occurs in multiple market centers and Nasdaq is acting in consultation with other markets. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, 10 in general, and with Section 6(b)(5) of the Act, 11 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to a free and open market and a national market system, and, in general, to protect investors and the public interest. The Interpretive Materials will promote market participants' understanding of Nasdaq's application of Nasdaq Rule 11890, thereby promoting greater certainty and accountability. 10 15 U.S.C. 78f. 11 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change is subject to Section 19(b)(3)(A)(iii) of the Act 12 and Rule 19b-4(f)(6) thereunder 13 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 the self-regulatory organization 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. 12 15 U.S.C. 78s(b)(3)(A)(iii). 13 17 CFR 240.19b-4(f)(6). Nasdaq provided the Commission with written notice of its intent to file this proposed rule change at least five business days prior to the date of filing the proposed rule change. Nasdaq has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because the filing promotes market participants' understanding of Nasdaq's application of Nasdaq Rule 11890, thereby promoting greater certainty with regard to the administration of the rule. For these reasons, the Commission designates the proposal to be effective upon filing with the Commission. 14 14 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 15 15 *See* Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASDAQ-2006-046 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASDAQ-2006-046. 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 Nasdaq. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASDAQ-2006-046 and should be submitted on or before December 29, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 16 16 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20806 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54857; File No. SR-NASD-2006-101] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Provide for the Payment of a $200 Honorarium Per Case for Each Arbitrator Who Considers Contested Motions for the Issuance of Subpoenas December 1, 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 23, 2006, the National Association of Securities Dealers, Inc. (“NASD”) 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 NASD. On November 13, 2006, NASD filed Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 In Amendment No. 1, NASD clarified provisions to the proposed rule change. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NASD is proposing to provide for the payment of a $200 honorarium per case for each arbitrator who considers contested motions for the issuance of subpoenas. Below is the text of the proposed rule change. 4 Proposed new language is in italics. 4 If the Commission approves the pending revisions to the NASD Code of Arbitration Procedure for Customer Disputes, the rules proposed in this filing will be renumbered as appropriate; *see* Securities Exchange Act Release No. 51856 (June 15, 2005) (SR-NASD-2003-158), 70 FR 36442 (June 23, 2005); and the NASD Code of Arbitration Procedure for Industry Disputes; *see* Securities Exchange Act Release No. 51857 (June 15, 2005) (SR-NASD-2004-011), 70 FR 36430 (June 23, 2005). IM-10104. Arbitrators' Honorarium (a)-(e) No change
(f)*Payment for Deciding Contested Subpoena Requests Without a Hearing Session* *
(1)The honorarium for deciding one or more contested motions requesting the issuance of a subpoena without a hearing session shall be $200. The honorarium shall be paid on a per case basis to each arbitrator who decides the contested motion(s). The parties shall not be assessed more than $600 in fees under this paragraph in any arbitration proceeding. The honorarium shall not be paid for cases administered under Rules 10203 or 10302. * *(2) For purposes of paragraph (f)(1), a contested motion requesting the issuance of a subpoena shall include a motion requesting the issuance of a subpoena, the draft subpoena, a written objection from the party opposing the issuance of the subpoena, and any other documents supporting a party's position.* *(3) The panel will allocate the cost of the honorarium under paragraph (f)(1) to the parties pursuant to Rules 10205(c) and 10332(c).* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to provide for the payment of a $200 honorarium per case for each arbitrator who considers contested motions for the issuance of subpoenas. Last year, NASD amended IM-10104 of the NASD Code of Arbitration Procedure (“Code”), to provide arbitrators with an honorarium of $200 to decide discovery-related motions without a hearing session. 5 The revised rule, however, does not address whether a contested motion concerning a subpoena constitutes a discovery-related motion. As a result, NASD has received questions regarding the appropriate payment, if any, for arbitrators who decide subpoena issues. These questions have focused on whether, under the rule, arbitrators should be paid to decide contested motions requesting the issuance of a subpoena. 5 *See* Securities Exchange Act Release No. 51931 (June 28, 2005) (File No. SR-NASD-2005-052), 70 FR 38989 (July 6, 2005). The issue of whether arbitrators should receive an honorarium for deciding contested subpoena motions will become even more significant if the Commission approves amendments to Rule 10322 as proposed by NASD. 6 The proposed changes to Rule 10322 would permit only arbitrators to issue subpoenas in arbitration disputes. 7 If the proposed changes to Rule 10322 are approved by the Commission, attorneys would no longer have the authority to issue subpoenas. NASD anticipates that this would result in a significant increase in the number of subpoena requests considered by arbitrators. 6 *See* Securities Exchange Act Release No. 54134 (July 12, 2006) (File No. SR-NASD-2005-079), 71 FR 40762 (July 18, 2006). 7 Currently, Rule 10322 allows arbitrators and any counsel of record to the proceedings to issue subpoenas as provided by law. NASD recognizes that arbitrators may spend a considerable amount of time and effort deciding contested subpoena motions and believes that arbitrators should be compensated for this work. Therefore, NASD proposes to provide a $200 honorarium to each arbitrator who decides contested motions for subpoenas. 8 NASD anticipates that if its proposed changes to Rule 10322 are approved, under most circumstances, the chairperson will be the only arbitrator considering subpoena requests based on the documents supplied by the parties. If the entire panel decides a contested motion, each arbitrator who participates in the subpoena ruling will receive an honorarium of $200. The $200 honorarium paid to an arbitrator would provide payment for all contested subpoena motions in a case ( *i.e.* , the honorarium would be paid on a per case basis, regardless of the number of contested subpoena motions considered by an arbitrator or panel during the case). 9 Furthermore, the maximum amount that would be paid by the parties, collectively, for any one case would be $600, irrespective of any changes to the composition of the panel. 10 NASD believes that structuring the honorarium in this manner will limit the arbitration costs for parties while at the same time compensating arbitrators for the time that they spend considering contested subpoena requests. 8 For purposes of this rule, a contested motion is defined as a motion to issue a subpoena, the draft subpoena, a written objection from the party opposing the issuance of the subpoena, and any other documents supporting a party's position. Arbitrators will not be entitled to receive the honorarium if a motion for a subpoena is uncontested. 9 This differs from other discovery-related motions, for which an arbitrator receives an honorarium for each motion considered. *See* IM-10104(e). If the panel has received the honorarium for considering a contested subpoena request and subsequently receives a number of new contested subpoena requests, however, the chairperson may call a prehearing conference to hear and decide these maters, for which the participating arbitrator(s) would receive the normal prehearing honorarium. *See* IM-10104(a) and (b). 10 In situations where more than three different arbitrators consider contested subpoena requests, NASD will pay the additional honorarium. For example, if all three members of a panel have decided a contested subpoena request and the chairperson is thereafter replaced by another arbitrator, NASD would pay the $200 honorarium to the replacement chairperson for deciding any later contested subpoena requests, because the parties already would have incurred $600 in costs relating to the requests. Likewise, if there have been three different chairpersons in the same proceeding, each of whom has considered a contested subpoena request, NASD would pay the $200 honorarium should a fourth chairperson consider a contested subpoena request. NASD does not anticipate that either of these situations will occur frequently. 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Sections 15A(b)(5) 11 and 15A(b)(6) 12 of the Act, which require, among other things, that NASD's rules provide for the equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility or system that the NASD operates or controls, and that NASD's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change is consistent with the provisions of the Act noted above because the panel will allocate the honorarium for deciding a discovery-related motion equitably among the parties. Moreover, NASD believes the proposed rule change will encourage arbitrators to decide contested subpoena requests without scheduling a prehearing conference, thereby expediting the arbitration process for parties. 11 15 U.S.C. 78o-3(b)(5). 12 15 U.S.C. 78o-3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change, or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2006-101 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASD-2006-101. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2006-101 and should be submitted on or before December 29, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20873 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54856; File No. SR-NYSE-2006-106] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees Charged to Member Organizations for Transactions in Equity Securities December 1, 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 30, 2006, the New York Stock Exchange LLC (“Exchange” or “NYSE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. NYSE has designated this proposal as one establishing or changing a due, fee, or other charge imposed by NYSE under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to revise the fees it charges to its member organizations for transactions in equity securities by eliminating the $750,000 monthly fee cap and establishing a flat fee of $0.000275 per share. The Exchange will also begin charging the standard Exchange Traded Fund (“ETF”) fee of $0.0030 per share on transactions in ETFs traded on an unlisted trading privilege basis. The Exchange also is eliminating the specialist trading privilege fee and the specialist allocation fee. In addition, simultaneously with the implementation of the revised trading fees, the Exchange intends, by means of a separate filing (the “Commission Elimination Filing”), to eliminate specialist commissions. 5 The proposed rule changes will take effect as of December 1, 2006. 5 *See* Securities Exchange Act Release No. 54850 (November 30, 2006) (notice of filing and immediate effectiveness of SR-NYSE-2006-105). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. The text of the proposed rule change is available on the Exchange's Web site ( *http://www.nyse.com* ), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to revise the fees it charges to its member organizations for transactions in equity securities by eliminating the $750,000 monthly fee cap and establishing a flat fee of $0.000275 per share. The Exchange will also begin charging the standard ETF fee of $0.0030 per share on transactions in ETFs traded on an unlisted trading privileges basis. In addition, simultaneously with the implementation of the revised trading fees, the Exchange proposes in the Commission Elimination Filing to eliminate specialist commissions. The proposed fee changes will take effect as of December 1, 2006. The Exchange has requested that the Commission make the effectiveness of the Commission Elimination Filing operative on December 1, 2006, the same day the changes contained in this filing take effect. The Exchange currently charges a fee of $0.00025 per share on equity transactions, subject to a monthly fee cap of $750,000 per member organization. The Exchange proposes to eliminate the monthly fee cap and raise the equity transaction fee to $0.000275 per share. Under the current fee structure, the member organizations with the highest trading volume on the Exchange benefit from a lower effective fee level than member organizations sending smaller volumes to the Exchange, because they benefit from the monthly cap. After the elimination of the monthly cap, the effective fee rate will be the same for all member organizations regardless of how much volume they send to the Exchange. 6 Moreover, while the transaction fee is increasing from $0.00025 to $0.000275, the prohibition of specialist commissions referenced above will lead to a lower effective trading cost when compared to the combined costs of transaction fees and specialist commissions under the current structure. As such, the Exchange believes that the combined effect of the fee change and the prohibition of specialist commissions will be to make its pricing structure more competitive, more equitable, more transparent and easier to understand. 6 The Exchange's $80 per transaction cap on fees will continue to be applied. Unlike transactions in listed ETFs, on which the Exchange charges a $0.0030 per share fee, the Exchange does not currently charge fees on transactions in ETFs traded on an unlisted trading privileges basis. As of December 1, 2006, the Exchange proposes to charge the same fee on transactions in ETF securities traded on a UTP basis as it charges on listed ETFs. In order to partially offset the specialists' loss of commissions, the Exchange is eliminating the specialist trading privilege fee and the specialist allocation fee. The specialist allocation fee is charged to the specialist allocated a new equity listing and for any specific allocation the fee payable is an amount equal to the difference between the initial listing fee the company is required to pay subject to the Exchange's $250,000 cap on initial listing fees and the amount the company would have to pay if the listing fee cap was $500,000. 7 Initial listing fees payable by companies will continue to be capped at $250,000, notwithstanding the elimination of the specialist allocation fee. 7 *See* Exchange Act Release No. 34-43700 (December 11, 2000); 65 FR 79147 (December 18, 2000) (SR-NYSE-00-48). The Exchange is also instituting a program of revenue sharing with Exchange specialists. Revenue sharing payments to specialists will be made from the Exchange's general revenues and will not be limited to a particular revenue source. Given the uncertainties faced by specialists in light of the complete implementation of the Exchange's hybrid market initiative over the next several months coupled with the loss of commission income, in order to provide to the specialist firms a source of payments in lieu of commissions for a transitional period, the Exchange will distribute a fixed amount of $53 million among the specialists with respect to the six-month period commencing on December 1, 2006. This fixed amount will be allocated among the specialist firms based on their performance in October 2006, and will be allocated in proportion to the rebates each of the specialist firms would be entitled to under the formulas set forth in items
(2)and
(3)(but not item (1)) of the next paragraph. The transitional rebate will be paid in six equal monthly installments. Commencing June 1, 2007, the Exchange intends to institute a revenue sharing program that will provide variable payments to the specialist firms depending on performance. The Exchange will file a rule filing with the Commission pursuant to the Act and the rules thereunder in relation to such revenue sharing program prior to its implementation. While the nature of the revenue sharing program that the Exchange will ultimately propose may change depending on market conditions in the intervening period, it is currently anticipated that the revenue sharing program will have the following three components:
(1)Specialists would receive a rebate (calculated on a monthly basis) of $0.000275 per share for each share of their specialty securities they either buy or sell on the Exchange.
(2)Specialists would receive a rebate each month relating to their absolute market share in each of their specialty stocks if that market share exceeds 35%. A market share in a stock that is equal to or exceeds 35% would entitle a specialist to a rebate of
(i)$15 for each percentage point above or equal to 35% up to and including 50%,
(ii)$25 for each percentage point above 50% up to and including 65%,
(iii)$35 for each percentage point above 65% up to and including 80%, and
(iv)$45 for each percentage point above 80%. The following are examples of how this rebate would be paid: • If Specialist X trades XYZ stock in which the Exchange has a 50% market share, it would receive $225 per month, which is 15% multiplied by $15. • If Specialist X trades XYZ stock in which the Exchange has a 65% market share, it would receive $600 per month, which is 15% multiplied by $15, plus 15% multiplied by $25.
(3)Specialists would receive a volume-weighted rebate each month for every share traded in a stock in which the Exchange has a greater than 35% market share. If the Exchange has a market share: • Equal to or greater than 35% up to and including 50%, the rebate would be $0.00013 per share. • Greater than 50% up to and including 65%, the rebate would be $0.00014 per share. • Greater than 65% up to and including 80%, the rebate would be $0.00015 per share. • Greater than 80% the rebate would be $0.00016 per share. The following are examples of how the volume-weighted rebate would be paid: • If Specialist X trades XYZ stock in which the Exchange has a 50% market share, it would receive a rebate of $0.00013 for every share traded above the 35% market share threshold. • If Specialist X trades XYZ stock in which the Exchange has a 65% market share, it would receive a rebate of $0.00013 per share for every share traded above the 35% market share threshold up to and including a 50% market share, and then would receive $0.00014 for every share above the 50% level. The Exchange may alter the provisions of the revenue sharing program in the future in response to its experience with its application over time, in particular in light of the Exchange's full implementation of its hybrid market initiative. 8 8 The Exchange will file a rule filing with the Commission pursuant to the Act and the rules thereunder in relation to any such changes prior to their implementation. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act 9 in general and furthers the objectives of Section 6(b)(4) 10 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. 9 15 U.S.C. 78f. 10 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective upon filing pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b-4(f)(2) 12 thereunder because it establishes or changes a due, fee, or other charge imposed by the Exchange. 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 19b-4(f)(2). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-NYSE-2006-106 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-NYSE-2006-106. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NYSE. 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-NYSE-2006-106 and should be submitted on or before December 29, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20872 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54850; File No. SR-NYSE-2006-105] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Prohibit Specialists From Charging Commissions on Transactions in Their Specialty Securities November 30, 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 30, 2006, the New York Stock Exchange LLC (“Exchange” or “NYSE”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt new Rule 104B prohibiting specialist firms from charging commissions on transactions in their specialty securities, including exchange traded fund (“ETF”) securities, and to make changes to Rules 104 and 123B to reflect the fact that specialists will no longer be able to charge commissions. In connection with the elimination of specialist commissions, the Exchange proposes in a separate filing (the “Fee Filing”) 5 to institute a program of revenue sharing for the specialists. The proposed rule changes will take effect as of December 1, 2006. The amendments to the Exchange's Rules are included in Exhibit 5 to the Exchange's filing. 5 *See* SR-NYSE-2006-106 (filed on November 30, 2006). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the NYSE 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 NYSE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. The text of the proposed rule change is available on the Exchange's Web site ( *http://www.nyse.com* ), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to adopt new Rule 104B prohibiting specialist firms from charging commissions on transactions in their specialty securities, including ETF securities, and to make changes to Rules 104 and 123B to reflect the fact that specialists will no longer be able to charge commissions. In connection with the elimination of specialist commissions, the Exchange proposes, in the separate Fee Filing, to:
(i)Eliminate the specialist trading privilege fee and the specialist allocation fee, and
(ii)institute a program of revenue sharing for the specialists. In the Fee Filing, the Exchange is also:
(i)Eliminating its $750,000 monthly fee cap on equity transactions,
(ii)adopting a flat equity transaction fee of $0.000275 per share, and
(iii)applying the $0.0030 per share ETF fee to ETFs traded on an unlisted trading privilege basis. We are requesting that the Commission make the effectiveness of this filing operative on December 1, 2006, the same day the changes contained in the Fee Filing take effect. The Exchange proposes to implement new Rule 104B prohibiting specialist firms from charging commissions on transactions in their specialty securities, including ETFs, and to make technical conforming changes to Rules 104 and 123B to reflect the fact that specialists will no longer be able to charge commissions on equity or ETF transactions. 6 The elimination of specialist commissions will take effect on December 1, 2006, and will not have retroactive effect. Therefore, specialist firms will not be prohibited from collecting commissions owed on transactions completed before that date. 6 The ETF transactions with respect to which specialists will be prohibited from charging commissions will include transactions in Investment Company Units pursuant to Exchange Rule 1100, Trust Issued Receipts pursuant to Exchange Rule 1200, and streetTRACKS® Gold Shares pursuant to Exchange Rule 1300, Currency Trust Shares pursuant to Exchange Rule 1300A, Commodity Trust Shares pursuant to Exchange Rule 1300B or any security governed by Exchange Rule series 1100, 1200, 1300, 1300A or 1300B. Subsection
(4)of Supplementary Material .20 of Rule 104 (“Dealings by Specialists”) provides that, for those members registered as a regular specialist subject to the Commission's Net Capital Rule, 7 the term “net liquid assets” refers to excess net capital computed in accordance with the provisions of Rule 325 (“Capital Requirements”) with certain adjustments, including deductions for floor brokerage and/or commissions receivable. Similarly, Rule 123B(b)(1) and Supplementary Material .10 to Rule 123B provide that a specialist may not charge floor brokerage ( *i.e.* , a commission) for the execution of an order which he or she receives by means of the Exchange's automated order routing system, known as SuperDot, if such order is executed within five minutes of receipt by the specialist. As, under new Rule 104B, specialists will be prohibited from charging any commissions in relation to trades in their specialty securities, the foregoing provisions will cease to be relevant and the Exchange proposes to delete them upon adoption of new Rule 104B. 7 *See* 17 CFR 240.15c3-1. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 8 of the Securities Exchange Act of 1934 in general and furthers the objectives of Section 6(b)(5) 9 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments, and to perfect the mechanism of, a free and open market and a national market system, and, in general, to protect investors and the public interest. 8 15 U.S.C. 78f. 9 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 were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 10 and subparagraph (f)(6) of Rule 19b-4 thereunder. 11 Because the Exchange has designated the foregoing proposed rule change as one that:
(i)Does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder. 12 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b-4(f)(6). 12 The Exchange provided written notice to the Commission 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 filing, as required by Rule 19b-4(f)(6)(iii). The Exchange requests that the Commission waive the 30-day operative delay specified in Rule 19b-4(f)(6)(iii) with respect to the proposed rule change. 13 The Exchange represents that the specialist firms affected by the proposal have all agreed to the elimination of commissions contingent upon the Exchange's implementation of the revenue sharing program proposed in the Fee Filing. As the proposal and the revision to the Exchange's trading fees are both parts of an integrated plan in which
(i)the revenues generated from the revised fees will partially offset the cost to the Exchange of the payments the Exchange will make to the specialists under the revenue sharing program, and
(ii)the cost to customers of the increased transaction fees will be offset at least partially by the elimination of commissions, it is essential that the proposals in this filing takes effect at the same time as the fee change. Therefore, the Exchange believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. 13 17 CFR 240.19b-4(f)(6)(iii). The Commission has determined to waive the 30-day delay and allow the proposed rule change to become operative on December 1, 2006. 14 The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because the Exchange has represented that the elimination of specialist commissions will benefit investors by helping to offset their increased transaction fees under the Fee Filing. 14 For purposes only of waiving the operative delay of this proposal, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-NYSE-2006-105 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-NYSE-2006-105. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2006-105 and should be submitted on or before December 29, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20874 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54849; File No. SR-NYSE-2006-104] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Waive Initial Listing Fee and One-Time Special Charge in Connection With Listing New Class of Common Shares Payable by Any Company Listed on Another National Securities Exchange That Transfers the Listing of Its Primary Class of Common Shares to the NYSE November 30, 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 29, 2006, The New York Stock Exchange LLC (“Exchange” or “NYSE”) 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 substantially by NYSE. The Exchange filed the proposal as a “non-controversial” proposed rule change 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. 5 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). 5 NYSE gave the Commission written notice of its intention to file the proposed rule change on November 29, 2006. The Commission reviewed the proposed rule change and gave NYSE permission to file the proposed rule change on the same day. NYSE has asked the Commission to waive the 30-day operative delay. *See* Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NYSE proposes to amend Section 902.03 of its Listed Company Manual to provide that there shall be no initial listing fee payable by any company listed on another national securities exchange that transfers the listing of its primary class of common shares to the Exchange. The Exchange will eliminate initial listing fees for issuers listed on other national securities exchanges that transfer their listing to the Exchange on or after November 29, 2006. In addition, the Exchange will waive with respect to such issuers the special one-time charge of $37,500 payable in connection with the initial listing of any class of common shares. The text of the proposed rule change is available at *www.nyse.com* , at the NYSE, 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, NYSE 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. NYSE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NYSE proposes to amend Section 902.03 of its Listed Company Manual to provide that there shall be no initial listing fee payable by any company listed on another national securities exchange that transfers the listing of its primary class of common shares to the Exchange. NYSE will eliminate entry and application fees for exchange issuers that transfer their listing to the Exchange on or after November 29, 2006. In addition, the Exchange will waive with respect to such issuers the special one-time charge of $37,500 payable in connection with the initial listing of any class of common shares. For issuers that have paid these fees, the Exchange will refund the money. Companies transferring from other national securities exchanges will still be required to pay the annual listing fee payable by all companies, prorated for the first portion of a calendar year after the listing date. Companies transferring from other national securities exchanges will be subject to the same level of annual fees and listing of additional shares fees as other NYSE issuers. The proposed rule change will not affect the Exchange's commitment of resources to its regulatory oversight of the listing process or its regulatory programs. Specifically, companies that switch their listing will be reviewed for compliance with Exchange listing standards in the same manner as any other company that applies to be listed on the Exchange. The Exchange will conduct a full and independent review of each issuer's compliance with the Exchange's listing standards. The Exchange believes that the elimination of such fees is justified on several grounds. An issuer that already paid initial listing fees to an exchange when it became a publicly traded company is reluctant to pay a second initial listing fee to another listing venue, even if it concludes that the Exchange offers the issuer and its investors superior services and market quality. Even if an issuer concludes that the Exchange would provide a superior market for its stock, the benefits of the switch must currently be weighed against the cost of initial inclusion, which can be as much as $250,000. Since the expected benefits of the switch would be diffused among the issuers' investors and realized over time, but the initial listing fees must be paid by the issuer immediately, the Exchange is concerned that issuers that stand to benefit may nevertheless opt to forgo a switch. As such, the Exchange believes that assessing the initial fees against issuers that have already paid fees to list on another market imposes a burden on the competition between exchange markets and markets other than exchange markets, a competition that the Exchange believes is one of the central goals of the national market system. This concern is particularly great in light of the fact that the Commission has approved the waiver of initial listing fees by Nasdaq with respect to companies transferring from other national securities exchanges. 6 6 *See* Securities Exchange Act Release Nos. 50740 (November 29, 2004), 69 FR 70299 (December 3, 2004) (SR-NASD-2004-140) (notice) and 51004 (January 10, 2005), 70 FR 2917 (January 18, 2005) (approval order). The Exchange understands that the effect of this proposed rule change will be to impose a lower level of listing fees on switching issuers than on some other issuers. In light of the fact that the Exchange will collect the same level of annual fees and listing of additional shares fees from such issuers, however, the Exchange believes that the difference does not constitute an inequitable allocation of fees. In light of a switching issuer's prior payment to another market, the Exchange believes that eliminating initial fees for switching issuers is entirely consistent with an equitable allocation of listing fees. The Exchange does not expect the financial impact of this proposed rule change to be material, either in terms of increased levels of annual fees from switching issuers or in terms of diminished entry fees. Quite simply, even with the proposed rule change in place, the Exchange understands that a change in listing venue is a major step for an issuer, and therefore the Exchange does not expect that the number of switching issuers in a given time frame will be sufficient to have a material effect on financial resources. Accordingly, the proposed rule change will not impact the Exchange's resource commitment to its regulatory oversight of the listing process or its regulatory programs. 2. Statutory Basis NYSE believes the proposed rule change is consistent with the requirement under Section 6(b)(4) 7 of the Act that an exchange have rules that provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities, and the requirement under Section 6(b)(5) 8 of the Act that an exchange have rules that are designed 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 issuers. In light of a switching issuer's prior payment to another market, the Exchange believes that the proposed fee waiver does not render the allocation of its listing fees inequitable or unfairly discriminatory because the Exchange expects that, on average, the review of companies transferring from other national securities exchanges to the Exchange will be less costly than the review of a previously unlisted company, as the issuer will have previously been subject to corporate governance requirements very similar to those of the Exchange. The Exchange believes that the fee waiver will make it easier for companies to transfer among national securities exchanges and will remove a competitive disadvantage the Exchange currently has vis a vis Nasdaq and is therefore designed to perfect the mechanism of a free and open market. 7 15 U.S.C. 78f(b)(4). 8 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b-4(f)(6) thereunder. 10 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). 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. NYSE has asked that the Commission waive the 30-day operative delay contained in Rule 19b-4(f)(6)(iii) under the Act. 11 Because waiver of these fees will enable NYSE to compete for listings with Nasdaq, the Commission believes waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission designates the proposal to be effective and operative upon filing with the Commission. 12 11 17 CFR 240.19b-4(f)(6)(iii). 12 For purposes only of waiving the 30-day operative delay of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 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-NYSE-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 Number SR-NYSE-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 NYSE. 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-NYSE-2006-104 and should be submitted on or before December 29, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20885 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54860; File No. SR NYSE-2006-76] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval to Proposed Rule Change, as Amended, Relating to Exchange Rule 104.10 (“Dealings by Specialists”) December 1, 2006. I. Introduction On September 22, 2006, the New York Stock Exchange LLC (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend specialist stabilization requirements set forth in NYSE Rule 104.10 (“Dealings by Specialists”). The proposed rule change was published for comment in the **Federal Register** on September 28, 2006. 3 The Commission received five comment letters 4 from one commenter and two comment response letters from NYSE. 5 On October 25, 2006, NYSE filed Amendment No. 1 to the proposed rule change. 6 This notice and order approves the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. 7 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 54504 (September 26, 2006), 71 FR 57011 (“Stabilization Proposal”). 4 *See* letters from George Rutherfurd to the Commission, dated October 11, 2006 (“Rutherfurd Letter I”); October 20, 2006 (“Rutherfurd Letter II”); October 26, 2006 (“Rutherfurd Letter III”); November 2, 2006 (“Rutherfurd Letter IV”); and November 14, 2006 (“Rutherfurd Letter V”). 5 *See* letters from Mary Yeager, Assistant Secretary, NYSE, to Nancy M. Morris, Secretary, Commission, dated November 6, 2006 (“NYSE Letter I”) and November 29, 2006 (“NYSE Letter II”). 6 For a description of Amendment No. 1, *see* Section II.D., *infra* . 7 The proposed rule change, as amended by Amendment No. 1, was approved on a temporary, pilot basis in File No. SR-NYSE-2006-82. *See* Securities Exchange Release No. 54578 (October 5, 2006), 71 FR 60216 (October 12, 2006) (“Phase 3 Pilot”). II. Description of the Proposal NYSE Rule 104 governs specialist dealings and includes, among other things, restrictions upon specialists' ability to trade as a dealer in the stocks in which he or she is registered. Under NYSE Rule 104(a), specialists are not permitted to effect transactions on the Exchange for their proprietary accounts in any security in which the specialist is registered, “unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market * * *” This restriction is known as the “negative obligation.” In particular, NYSE Rules 104.10(5) and
(6)expand upon the negative obligation with regard to specific types of proprietary transactions. These sections further define the instances when a specialist is restricted in his or her ability to trade in relation to the direction of the market. A. Current Specialist Stabilization Rules Specifically, current NYSE Rule 104.10(5)(i) provides that specialist proprietary transactions are to be effected in a reasonable and orderly manner in relation to the general market, the market in a particular stock, and the adequacy of the specialist's position to the immediate and reasonably anticipated needs of the market. The rule further provides that, unless it is to render the specialist's position in a stock adequate for current or reasonably anticipated needs of the market, a specialist should not effect a non-stabilizing transaction ( *i.e.* , a transaction with the trend of price movement) for the specialist's account when acquiring or increasing a position. In this regard, the rule restricts specialists from purchasing stock at a price above the last sale (in the same trading session) and purchasing more than 50% of the stock offered on a “zero plus tick,” *i.e.* , at the same price as the last sale, when such last sale price was higher than the previous, differently priced sale in the stock on the Exchange. Specialists are, however, permitted to effect these types of transactions with Floor Official approval or in less active markets where such transactions are an essential part of a proper course of dealings and where the amount of stock involved and the price change, if any, are normal in relation to the market. NYSE Rule 104.10(6) sets forth the specialist's stabilization requirements when liquidating or reducing a position. This rule provides that such trades should be effected in a reasonable and orderly manner in relation to the condition of the general market, the market in the particular security, and the adequacy of the specialist's position to meet the immediate and anticipated needs of the market in the security. Specialists are permitted to liquidate or reduce a position by selling stock on a “direct minus tick,” *i.e.* , selling stock at a price lower than the price of the last sale on the Exchange, or by purchasing stock on a “direct plus tick,” *i.e.* , at a price higher than the price of the last sale on the Exchange, if such transaction is reasonably necessary and the specialist has obtained Floor Official approval. After such direct tick liquidating transactions and after proprietary liquidating sales on “zero minus ticks” and proprietary liquidating purchases on “zero plus ticks,” specialists are required to re-enter the market on the opposite side in an appropriate amount, where the imbalance of supply and demand indicates that immediately succeeding transactions may result in lower (following specialist's sale) or higher (following specialist's purchase) prices. 8 8 This rule provides that, during any period of volatile or unusual market conditions resulting in a significant price movement in the subject security, the specialist's transaction in reentering the market should reflect, at a minimum, the specialist's usual level of dealer participation. Further, any series of specialist destabilizing transactions during periods of volatile or unusual market conditions should be accompanied by the specialist's re-entry in the market and effecting transactions which reflect a significant degree of dealer participation. *See* NYSE Rule 104.10(6)(i)(B). Pursuant to NYSE Rule 104.10(b)(7), specialists are permitted to effect proprietary transactions in investment company units and Trust issued receipts (securities commonly referred to as exchange-traded funds or ETFs) without Floor Official approval for the purpose of bringing the ETF price into parity with the underlying index value. These transactions, however, must be effected in a manner that is consistent with the maintenance of a fair and orderly market. B. Proposed Specialist Stabilization Rules NYSE proposes to retain the negative obligation in that specialist dealings must be reasonably necessary for the maintenance of a fair and orderly market and that transactions with the trend of the market be accompanied by appropriate re-entry on the opposite side of the market. NYSE proposes to amend its stabilization rules to reflect four types of specialist dealer transactions—“Neutral,” “Non-Conditional,” “Conditional,” and “Prohibited.” 1. Neutral Transactions 9 9 Proposed NYSE Rule 104.10(5)(i)(a)(I). NYSE proposes to define Neutral Transactions as purchases or sales by which a specialist liquidates or decreases a position. NYSE proposes that Neutral Transactions must be effected in a reasonable and orderly manner in relation to the condition of the general market, the market in the particular stock, and the adequacy of the specialist's position to the immediate and reasonably anticipated needs of the round-lot and odd-lot market. Neutral Transactions may be made without restriction as to price but must be reasonably necessary to render the specialist's position adequate to the market's needs. This is similar to what the current rule permits today, 10 but eliminates the requirement for Floor Official approval in situations where the transaction is a sale on a direct minus tick or a purchase on a direct plus tick. The specialist's obligation to maintain a fair and orderly market may require re-entry on the opposite side of the market after effecting one or more Neutral Transactions and should be in accordance with the immediate and anticipated needs of the market. Re-entry on the opposite side of the market is not required merely as a result of the specialist engaging in one or more Neutral Transactions, but may be necessary in order for the specialist to meet his or her affirmative obligation to maintain a fair and orderly market. 10 NYSE Rule 104.10(6)(i)(A). 2. Non-Conditional Transactions 11 11 Proposed NYSE Rule 104.10(5)(i)(a)(II). Non-Conditional Transactions are defined as certain specialist bids or purchases and offers or sales that establish or increase the specialist's position other than reaching across the market to trade with the Exchange quote. Like Neutral Transactions, Non-Conditional Transactions must be effected in a reasonable and orderly manner in relation to the condition of the general market, the market in the particular stock, and the adequacy of the specialist's position to the immediate and reasonably anticipated needs of the round-lot and odd-lot market. Proposed NYSE Rule 104.10(5)(i)(a)(II)(b) sets forth seven types of Non-Conditional Transactions (items
(i)through (vii)), which may be effected without restriction as to price or the need for Floor Official approval. The first two types of Non-Conditional Transactions (items
(i)and (ii)) are allowed without restriction under the current rule and have not been changed. 12 The following is a list of Non-Conditional Transactions: 12 NYSE Rules 104.10(5)(iv) and 104.10(7).
(i)Matching another market's better bid or offer; 13 13 *See* Securities Exchange Release No. 54362 (August 25, 2006), 71 FR 52201 (September 1, 2006) (SR-NYSE-2006-07).
(ii)Bringing the price of a security into parity with an underlying or related security or asset; 14 14 *See* Securities Exchange Release No. 37016 (March 22, 1996), 61 FR 14185 (March 29, 1996) (SR-NYSE-96-04).
(iii)Adding size to an independently established bid or offer on the Exchange;
(iv)Purchasing at the published bid on the Exchange;
(v)Selling at the published offer on the Exchange;
(vi)Purchasing or selling at a price between the Exchange published bid and published offer; or
(vii)Purchasing below the published bid or selling above the published offer on the Exchange ( *e.g.* , during a “sweep”). Re-entry on the opposite side of the market is not required as a result of the specialist engaging in one or more Non-Conditional Transactions, but may be required in order for the specialist to meet its affirmative obligation to maintain a fair and orderly market. Where such re-entry is necessary, it should be commensurate with the size of the specialist's Non-Conditional Transactions and the immediate and anticipated needs of the market. 3. Specialist Trades To Increase Its Position by Trading With the Exchange Quote 15 15 Proposed NYSE Rule 104.10(6). Transactions in which the specialist is increasing or establishing a position in his or her registered securities by reaching across the market to trade with the Exchange bid or offer are governed by proposed NYSE Rule 104.10(5)(i)(b) for inactive securities and proposed NYSE Rule 104.10(6) for active securities. NYSE proposes to define Active Securities as: 16 16 Proposed NYSE Rule 104.10(6)(i).
(a)Securities comprising the S&P 500® Stock Index;
(b)Securities trading on the Exchange during the first five trading days following their initial public offering; and
(c)Securities that have been designated as “active” by a Floor Official. 17 17 A governing Floor Official may designate a security as “active” by determining, among other things, that the security in question has exhibited substantially greater than normal trading volume and is likely to continue to sustain such higher volume during the remainder of the trading session. The Floor Official's determination that a security should be considered “active” lasts only for the trading session on the particular day it is determined. While the security may be designated “active” on subsequent days, such determinations must be made based on its trading characteristics that day. Floor Officials would also be required to notify the Market Surveillance Division of New York Stock Exchange Regulation (“NYSER”) whenever he or she designates a security as “active.” Both the specialist and Floor Official would be required to create and maintain such documentation regarding the security as the Exchange may require. “Inactive securities” are securities that do not fall within the definition of “Active” securities. a. Conditional Transactions in Active Securities NYSE proposes a pilot program until June 30, 2007 (“Pilot”) that would allow Conditional Transactions, which are specialist trades in Active Securities that establish or increase a position by reaching across the market to trade with the Exchange's published bid (in the case of a specialist's sale) or offer (in the case of a specialist's purchase) when such bid (offer) is priced below (above) the last differently-priced trade and the last differently-priced published bid (offer) on the Exchange. NYSE proposes to allow a specialist to execute Conditional Transactions without restriction as to price or Floor Official approval, provided that the specialist appropriately re-enters on the opposite side of the market in a size commensurate with the specialist's Conditional Transaction. NYSE proposes to issue guidelines that specialists should follow, called “Price Participation Points” (“PPPs”), that would identify the price at or before which a specialist is expected to re-enter the market after effecting one or more Conditional Transactions. The Exchange noted that PPPs are minimum guidelines only and compliance with them does not guarantee that a specialist is meeting its obligations. 18 18 *See* proposed NYSE Rule 104.10(6)(iv)(a). NYSE proposes that certain Conditional Transactions would require the specialist to immediately re-enter, or re-enter as the specialist's next available quoting or trading action, regardless of the PPP. For example, immediate re-entry may be required based on the price and/or volume of the specialist's Conditional Transaction(s) in reference to the market in the security at the time of such trading. The fact that there may have been one or more independent trades following the specialist's Conditional Transaction does not, by itself, eliminate the need for immediate re-entry, when otherwise appropriate. In addition, immediate re-entry is required after a Conditional Transaction:
(a)Of 10,000 shares or more or a quantity of stock with a market value of $200,000 or more; and
(b)which exceeds 50% of the published bid or offer size (as relevant). 19 19 *See* proposed NYSE Rule 104.10(6)(iv)(c)(I) and (II). b. Inactive Securities Specialist transactions in Inactive Securities that reach across the market to trade with the existing bid or offer when the specialist is establishing or increasing a position would continue to be governed by the requirements of current NYSE rules. 20 A specialist would not be permitted to establish or increase its position by reaching across the market to purchase the offer at a price that is above the last sale price on the Exchange or sell to the bid at a price below the last sale price on the Exchange, unless such specialist trade is reasonably necessary to render the specialist's position adequate to the immediate and reasonably anticipated needs of the market and approved by a Floor Official. Further, specialists would not be permitted to purchase more than 50% of the stock offered at a price that is equal to the last sale price when the last sale price was higher than the last differently priced regular way sale, unless such trade is approved by a Floor Official. Specialists must reenter the market when reasonably necessary after effecting such trades. 20 The current requirements under NYSE Rule 104.10(5)(i) and NYSE Rule 104.10(6)(i) are reflected in proposed NYSE Rule 104.10(5)(i)(b)(I). *See also* Amendment No. 1. 4. Prohibited Transactions 21 21 Proposed NYSE Rule 104.10(5)(i)(c). NYSE proposes that, during the last ten minutes of trading,
(1)A specialist with a long position in a security would be prohibited from making a purchase in such security that results in a new Exchange high for the day at the time of the specialist's transaction, and
(2)a specialist with a short position in a security would be prohibited from making a sale in such security, including securities subject to the Regulation SHO Pilot, 22 that results in a new Exchange low for the day at the time of the specialist's transaction. However, the specialist would be permitted to effect such a transaction in order to match another market's better bid or offer or to bring the price of the security into parity with an underlying or related security or asset. 22 17 CFR 240.202T. C. Other Changes The Exchange proposes to delete current NYSE Rule 104.10(9). This rule states that if a specialist has sell orders on the limit order book (“Book”) at two or more different prices, the specialist should not, as a dealer, purchase all of the stock from the Book at the lowest limit price and then immediately purchase stock from the Book at a higher limit price. This rule currently requires the specialist to cross the entire amount of stock he or she is purchasing at one price. The same principle applies when a specialist sells to orders on the Book. The Exchange also proposes to make conforming changes such as re-numbering certain provisions and other non-substantive language changes. For example, current NYSE Rule 104.10(6)(i)(D) which governs the ability of the crowd to prevent the specialist, when liquidating or decreasing a position, from trading on parity with the crowd during a manual transaction has been re-numbered NYSE Rule 104.10(5)(i)(a)(I)(d). NYSE Rules 70 and 123 have been amended to reflect this provision's new rule number. D. Description of Amendment No. 1 In Amendment No. 1, the Exchange proposes to clarify that the transactions discussed in proposed NYSE Rule 104.10(5)(i)(b)(I) regarding transactions by a specialist for the specialist's account to establish or increase a position apply to transactions that reach across the market to trade with the Exchange bid or offer. In addition, in the original filing, the Exchange proposed to rescind NYSE Rule 104.10(7), which provides that the requirement to obtain Floor Official approval for transactions for a specialist's own account contained in NYSE Rule 104.10 does not apply to transactions effected in ETFs when the specialist transactions are for the purpose of bringing the ETF into parity with the underlying index value. Amendment No. 1 proposes to retain NYSE Rule 104.10(7) and include that the provisions therein should not apply to streetTRACKS® Gold Shares, as the term is defined in NYSE Rule 1300 or Currency Trust Shares, as the term is defined in NYSE Rule 1301A. In Amendment No. 1, the Exchange further requests that the Commission re-interpret the specialist's negative obligation to eliminate the requirement that each trade by the specialist for the dealer account meet a test of reasonable necessity. The Exchange believes that such an interpretation is appropriate in view of the development of the national market system over the past seventy years since the interpretation was initially issued. According to the Exchange, the Commission has been granted specific authority by Congress to reinterpret the negative obligation. Specifically, in 1975, in connection with the 1975 amendments 23 to the Act, Congress eliminated the negative obligation clause from Section 11(b) of the Act and gave the Commission the flexibility to define dealer obligations for both exchange members and over-the-counter market makers. In making the changes, Congress noted that changes in the marketplace might warrant changes in the scope of the dealer obligation. 24 23 Securities Acts Amendments of 1975 (“1975 Amendments”), Pub. L. No. 94-29, 89 Stat. 97 (June 4, 1975). 24 S. Rep. No. 94-75, at 100
(1975)(“It might well be that with active competition among market makers and the elimination of trading advantages specialists now enjoy, such a restriction on specialists' dealings would become unnecessary. Because trading patterns and market making behavior in the context of a national market system cannot now be predicted, it appears appropriate to expand the Commission's rulemaking authority in this area so that the Commission may define responsibilities and restrict activities of specialists in response to changing market conditions.”). In Amendment No. 1, the Exchange stated that it believes that the conditions for change that were identified by Congress have largely come to pass and that, as a result, it is appropriate to redefine the scope of the specialist's negative obligation. For example, the Exchange argued that the institutionalization of the market, increased competition, and increased application of computer and communication technology has significantly diminished the time-and-place advantages of specialists. As a result, markets have seen increases in the average daily trading volume and the movement off the Floor of the decision making that affects the direction and extent of movements in the specialty stocks. The Exchange stated that there has also been a dramatic increase in transparency with respect to the specialist's Book through, among other things, Exchange initiatives like Exchange OPENBOOK. TM The Exchange stated that it believes that this increased transparency gives all market participants, both on and off the Floor, a greater ability to see and react to market changes. The Exchange stated that there has also been a significant increase in competition in Exchange-listed securities. For example, unlike in previous years, Exchange specialists must now compete with upstairs liquidity providers and with multiple over-the-counter dealers, crossing networks and Alternative Trading Systems. As a result of unlisted trading privileges (“UTP”) and dual listings, the Exchange stated that specialists also face competition from other national and regional exchanges. For all of these reasons, the Exchange stated that it believes that it is appropriate for the Commission to reinterpret the negative obligation away from an emphasis on trade-by-trade necessity, and toward a more general evaluation of the reasonable necessity of trading activity in specialty securities for the dealer account. The Exchange stated that NYSER has appropriate surveillance procedures in place to surveil for compliance with the negative obligation by specialists. For example, NYSER would monitor, on a patterns and practices basis, specialist activity that appears to cause or exacerbate an excessive price movement in the market, as such transactions would appear to be in violation of a specialist's negative obligation. Additionally, the Division of Market Surveillance of NYSER would monitor for all subsequent action taken by the specialist, or lack thereof, to cushion such price movement. As today, the Exchange would, in the context of price volatility alerts, monitor for excessive price movements that may involve a failure to comply with either the affirmative or negative obligation. The Exchange represented that, as it gains experience with its new market structure, it would enhance existing surveillances and/or create new surveillances where necessary and appropriate to monitor for compliance with the specialist negative obligation. III. Comments Commission received five comment letters from one commenter 25 and two letters from the Exchange responding to the commenter. 26 The commenter opposed NYSE's proposal. The commenter argued that the negative obligation and current stabilization rules support public order interaction and that the Exchange's proposal would result in the displacement of public orders by specialists. The commenter argued that, as a result, NYSE's proposal is inconsistent with Section 11A of the Act, which promotes the opportunity for investors' orders to be executed without the participation of a dealer. 25 *See supra* note 4. 26 *See supra* note 5. A. Stabilization Rules The commenter argued that NYSE's proposal to amend its Rule 104.10 to allow specialists to trade in a destabilizing manner was a “de facto abandonment of the specialist's historic mandate to stabilize the market by trading counter to the price trend.” 27 27 *See* Rutherfurd Letter II. The commenter described NYSE's proposal as permitting “direct and unnecessary specialist intervention in determining market price direction,” which the commenter argued cannot serve the public interest, and would have an adverse impact on many public investor trading strategies. The commenter stated that the specialist's role is, in essence, to act as the “trader of last resort” and expressed concern that the proposed changes to the Exchange's stabilization rules allowing specialists to trade for their own account in instances in which they are currently not permitted would displace public orders that would otherwise be capable of execution. 28 The commenter argued that specialists would be unconstrained by whether a particular trade is “necessary” or not and whether the trade had an impact on the market's price direction. 29 The commenter argued that NYSE's proposal provides specialists with proprietary trading privileges that are unrelated to the specialist's market making function. 30 28 *Id.* 29 *Id.* 30 *See* Rutherfurd Letter IV. The commenter stated that active stocks, in particular, trade well in terms of depth and liquidity without unnecessary dealer intervention. He also noted that the stocks in which specialists are least needed are the stocks in which they would be allowed to most freely effect non-stabilizing transactions. The commenter further argued that the maintenance of the stabilization requirements for inactive stocks is meaningless because they rarely, if ever, trade. In addition, the commenter believed that the proposed PPPs would be ineffective in regulating specialists and, in fact, would allow a specialist to increase profits by trading on the opposite side of the market from its previous trade. 31 In the commenter's opinion, specialists would act as risk adverse intra-day “flip traders” who do not seek to hold positions. The Exchange disagreed with the commenter, and stated that it believed that its specialists would continue to assume risk by committing capital to cushion market volatility when other market participants are trading with the trend and destabilizing the price of the security. 32 The Exchange believed that, in order for specialists to continue in this role, they must have the appropriate tools to compete. 31 *See* Rutherfurd Letter II. 32 *See* NYSE Letter I, *supra* note 5, at 9. The Exchange argued that specialists are increasingly unable to compete in a tick-based rules environment given the significant changes in competitive forces, customer expectations, technology, and automation that have impacted the NYSE market in recent years and reduced the specialist's ability to direct or influence trading or control the quote. Notwithstanding the changes in the market place, NYSE's specialists will continue in the Hybrid Market to be required to commit capital and add liquidity in order to bridge gaps in supply and demand, reduce volatility, and encourage stable prices. 33 The Exchange believed that the current tick-based rules were “appropriate for and worked well in a market where substantially all trading was conducted manually, at a pace that enabled individuals to discern ‘tick’ changes easily and which tolerated the time it took to call a Floor Official into the Crowd to approve a specialist's proposed destabilizing transaction.” 34 The Exchange argued, however, that the current rules hinder the specialists from operating in the Hybrid Market, where trading is substantially electronic and the speed and frequency of executions and quote changes preclude individuals from being able to accurately track “ticks” or stop trading to allow for Floor Official involvement. 35 The Exchange, therefore, believes that keeping the current tick-based rule would be inconsistent with Section 11A(a)(i)(C)(ii) of the Act, which promotes fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets. 33 *Id.* 34 *Id. at 3-4.* 35 *Id.* at 4. The Exchange also disagreed with the commenter's suggestion that specialists have a monopoly on algorithmic trading or have access to electronic trading that creates an “unlevel competitive playing field.” 36 The Exchange argued that its rules do not prevent market participants from employing algorithmic-based trading strategies in connection with round-lot trading and stated that, in fact, customers benefit from the use of e-Quotes and d-Quotes via their floor brokers and can create or purchase their own algorithmic systems to generate orders that can be entered via NYSE SuperDot®. 37 The Exchange stated that the Hybrid Market provides all market participants with the ability to trade electronically and that all orders entered on the Exchange would be executed, consistent with their instructions, in accordance with Exchange rules. The Exchange represented that no class of customers would be advantaged or disadvantaged by these rules because all market participants are afforded an opportunity to interact with published trading interest. 38 36 *Id* . at 11 (referencing Rutherfurd Letter II); *see also* Rutherfurd Letter III. 37 *See* NYSE Letter I, *supra* note 5, at 11. 38 *Id* . While the Exchange acknowledged that specialists occupy a unique position in relation to other market participants, the Exchange disagreed with the commenter that specialists continue to enjoy a time and place advantage. 39 It noted that, for example, last sale prices and quotations are immediately available to all market participants and that the growth of internalization has allowed “upstairs” trading firms to have comparable informational advantages as the specialists but the firms are able to trade on their information instantaneously without restrictions. 40 Also, NYSE argued that, while the specialists' algorithms have a slight informational advantage by having knowledge of orders as they enter NYSE systems, such knowledge does not deny other market participants an opportunity to interact with incoming orders. NYSE further notes that specialists' algorithmic ability to trade with incoming marketable orders is limited to providing price improvement or matching a better price posted by another market center. These trading opportunities are subject to competition by floor brokers who have a similar opportunity to interact with incoming orders via d-Quotes. 41 NYSE also noted that marketable CAP-DI orders automatically convert and trade along with specialist principal transactions. 42 Accordingly, the Exchange argued that specialists' algorithms do not act as an impediment to competition among market participants. The Exchange, therefore, believes that the Stabilization Proposal and the amended interpretation of the negative obligations of specialists present an appropriately flexible approach that will allow specialists to continue to add value to the marketplace. 39 *Id* . at 8. 40 *Id* . 41 *Id* . 42 *Id* . Moreover, the Exchange argued that the current marketplace is dominated by professional traders—program traders, hedge funds, day traders, and institutions—employing algorithmic trading and smart order routers. 43 Unlike in the past, NYSE specialists must now compete with upstairs liquidity providers, with multiple over-the-counter dealers, crossing networks, and ECNs, as well as with NYSE floor brokers empowered with new, more effective, electronic order types. 44 These market participants have the ability to trade on alternative systems while actively participating in trading on the Exchange. The Exchange stated that, unlike the Exchange specialists, none of these market participants have similar restrictions on their trading. 43 *Id* . 44 *Id* . B. Negative Obligation The commenter argued that the transaction-by-transaction approach to determining the reasonable necessity of a specialist's proprietary trade is the only consistent interpretation of the negative obligation. According to the commenter, the negative obligation limits a specialist's ability to trade to those situations when there is a disparity in supply and demand and the specialist is needed to ensure appropriate trade-to-trade price continuity. In these situations, the commenter argued that the specialist is not restricted by the negative obligation and, in fact, is required to trade pursuant to the affirmative obligation. The commenter argued that supply and demand assessments arise in each particular trade, and thus the trade-by-trade approach should be maintained in its current form. 45 The commenter believed that NYSE's proposal to reinterpret the negative obligation so that specialist trading is surveilled on a “patterns and practices,” rather than on a trade-by-trade basis, effectively results in a *de facto* rescission of the negative obligation. 46 The commenter disagreed with the Exchange's assertions that specialists' trading privileges have been reduced, and that increased competition and automation support a new interpretation of the negative obligation. The commenter believed that specialists will enjoy a time and place advantage in the Hybrid Market “far in excess of any that the specialist may have enjoyed in the physical auction.” 47 For example, the commenter stated that the specialist alone has knowledge of floor broker hidden public orders and can trade algorithmically to take advantage of material, non-public market information. For this reason, the commenter believed that the negative obligation in its current form will still be relevant and should be maintained. The NYSE responded that the specialists do not have the time and place advantage they once possessed. The Exchange argued that the dissemination of the consolidated quote and trade information and NYSE limit orders via OpenBook provide all investors with market information. 48 In addition, NYSE argued that the expansion of Direct+® and technology available to floor brokers have diminished the size and significance of the Crowd, and allows orders to be entered and executed at the best bid (offer) without human intervention. 49 Further, the Exchange noted that quoting in pennies had reduced concentration of volume and average trade size. 50 Finally, NYSE stated that the national market system order routing requirements have resulted in orders being executed on markets other than the market on which they were entered. 51 45 The commenter also argued that NYSE should propose to amend its Rule 104 and petition the Commission to amend Rule 11b-1 under the Act so that the rule text would clearly express NYSE's proposal. 46 *See* Rutherfurd Letters I, II, III, IV, and V. 47 *See* Rutherfurd Letters II and V. 48 *See* NYSE Letter II, at 2. 49 *Id.* at 3. 50 *Id.* 51 *Id.* The commenter also challenged the Exchange's arguments based on the legislative history of Section 11(b) of the Act. 52 The commenter stated that NYSE “continues to be the dominant, primary market in its stocks by a huge measure” and believed that the Exchange's competitive position is much stronger today than it was in 1975, when Congress and the Commission declined to act on specialists' negative obligations. 53 The NYSE disagreed with the commenter's argument. NYSE stated that competition has increased and that competition has, consequently, effected its market share. 54 NYSE argued that increased internalization, the existence of alternative trading venues, and the ability of floor brokers to compete directly with specialists has resulted in increased competition to the specialist. 55 52 *See* Rutherfurd Letter II (referring to NYSE's excerpt of a Senate Report in SR-NYSE-2006-82: “It might well be that with active competition among market makers and the elimination of trading advantages specialists now enjoy, such a restriction on specialists' dealings would become unnecessary.” S. Rep. No. 94-75, at 100 (1975)). 53 *Id. See also* Rutherfurd Letters III and V. 54 *See* NYSE Letter II, at 2 55 *Id.* at 3. The commenter also expressed concern about how the negative obligations would be measured and enforced. Further, the commenter believed that, even in a fast-moving Hybrid Market, a specialist's algorithm could easily be programmed to conform to the current trade-by-trade negative obligation requirements. The commenter stated that NYSE's proposal to surveil compliance with the negative obligation on a patterns or practices basis is vague and questioned the effectiveness of looking at whether specialist trading causes or exacerbates excessive price movements. The commenter argued that a “specialist cannot know whether subsequent trades that may be part of a ‘pattern’ are necessary because subsequent order flow will dictate pricing, market direction, and, on a case-by-case basis, whether specialist intervention is appropriate as to any particular trade.” 56 According to the commenter, the “problem with commingling ‘necessity’ and ‘pattern’ is that the broad pattern may arguably be okay if there is no unusual price movement, but many individual trades within the pattern may not be ‘necessary’ at all. * * * ” 57 In addition, the commenter believed that the “patterns and practices” surveillance standard was flawed in that each specialist would establish his or her own such standard, which the commenter believed could lead a specialist to trade more aggressively. The commenter also questioned NYSE's plan to monitor price movements as part of its surveillance of the negative obligation, because such examinations had historically been performed to measure the specialist's compliance with the affirmative obligation by looking at whether a specialist had failed to trade to counter the market trend. 56 *See* Rutherfurd Letter II. 57 *Id.* The Exchange believes that the trade-by-trade interpretation established seventy years ago no longer addresses the realities of the modern market. The Exchange emphasized that it is not proposing to eliminate the negative obligation or its reasonable necessity test. The Exchange noted that it is, instead, proposing to reinterpret the negative obligation's reasonable necessity test to eliminate the requirement that each trade must meet the test of reasonable necessity. The Exchange disagreed with the commenter's suggestion that a non-trade-by-trade approach is unworkable, and will ultimately lead to customer disadvantage because specialists would engage in “in and out profit taking that interferes with direct public interaction.” 58 The Exchange argued that such a pattern of trading would continue to violate the specialist's negative obligation, and that its revised approach will provide an appropriate regulatory check on specialists. 59 58 *See* NYSE Letter I, *supra* note 5, at 10 (citing Rutherfurd Letter II). 59 *Id.* C. Public Notice The commenter argued that the proposed rule change, as amended by Amendment No. 1 regarding the reinterpretation of the negative obligation of specialists, should be republished and the public comment period should be reset. 60 In addition, the commenter urged the Commission to consider the proposal at a public hearing. 61 60 *See* Rutherfurd Letters I, II, III, IV, and V. 61 *See* Rutherfurd Letters I, II, and III. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the proposed rule change as modified by Amendment No. 1, including whether the proposal 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-NYSE-2006-76 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-NYSE-2006-76. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of NYSE. 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-NYSE-2006-76 and should be submitted on or before December 29, 2006. V. Discussion and Commission Findings After careful consideration, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 62 and, in particular, the requirements of Section 6 of the Act. 63 Specifically, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act, 64 which requires, among other things, that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, and processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Finally, the Commission believes that the proposal is consistent with the principles set forth in Section 11A of the Act and the requirements of Rule 11b-1 under the Act. 65 62 In approving this proposed rule change, as amended, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 63 15 U.S.C. 78f. 64 15 U.S.C. 78f(b)(5). 65 17 CFR 240.11b-1. Specialists' dealer activities are governed, in part, by the negative and affirmative trading obligations. Rule 11b-1 under the Act requires exchanges that permit members to register as specialists to have rules governing specialists' dealer transactions so that their proprietary trades conform to the negative and affirmative obligations. The negative obligation as set forth in Rule 11b-1 under the Act requires that a specialist's dealings be restricted, so far as practicable, to those reasonably necessary to permit the specialist to maintain a fair and orderly market. 66 The affirmative obligation as set forth in Rule 11b-1 under the Act requires a specialist to engage in a course of dealings for its own account to assist in the maintenance, so far as practicable, of a fair and orderly market. 67 NYSE has adopted these obligations in its Rule 104. 68 66 17 CFR 240.11b-1(a)(2)(iii). 67 17 CFR 240.11b-1(a)(2)(ii). 68 NYSE Rule 104(a) reflects NYSE's adoption of the negative obligation and states that “no specialist shall effect on the Exchange purchases or sales of any security in which such specialist is registered, for any account in which he or his member organization * * * is directly or indirectly interested, unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market * * *” When debating the adoption of the Act, Congress considered barring the ability of exchange members to trade for their own accounts. 69 Instead, pursuant to Section 11(e) of the Act, Congress directed the Commission to make a study of the feasibility and advisability of the completely segregating the functions of brokers and dealers. 70 In 1935, soon after the adoption of the Act, the Commission recommended that the national securities exchanges adopt sixteen rules to regulate trading on exchanges in order to eliminate some of the undesirable consequences of dealer activities. 71 These rules were adopted by all the exchanges. The tenth rule (“Tenth Rule”) prohibited specialists from effecting purchases or sales for their registered securities unless such dealings were reasonably necessary to permit specialists to maintain a fair and orderly market. 72 69 Report of the Committee on Banking and Currency, Stock Exchange Practices, S. Rep. No. 1455 (1934), reprinted in 5 J.S. Ellenberger and Ellen P. Mahar, Legislative History of the Securities Act of 1933 and Securities Exchange Act of 1934 (2001), at 19-30. 70 Commission, Report on the Feasibility and Advisability of the Complete Segregation of the Functions of Dealer and Broker (June 20, 1936) (“Segregation Study”). 71 The text of the recommended rules can be found at Appendix O-1 of the Segregation Study. *See also* Segregation Study at 60-64 for a summary of the rules. 72 The Tenth Rule stated: “No specialist shall effect on the exchange purchases or sales of any security in which such specialist is registered, for any account in which he, or the firm of which he is a partner, or any partner of such firm, is directly or indirectly interested, unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market, or to act as an odd-lot dealer in such security.” *See* Segregation Study Appendix O-1 at 169. *See also* NYSE Rule 104(a). “This rule * * * represents an attempt to eliminate the dealer activities of specialists except insofar as such activities allegedly perform a useful service to the market. In view of the specialist's fiduciary obligation to buyers and sellers whose orders he has accepted for execution; in view of his special knowledge and superior bargaining power in trading for his own account; in view of his peculiar opportunities and motives for attracting public interest to the stock in which he specializes; and in view of the undesirable effect which his trading may exert upon the market; it was deemed essential by the Commission that the dealer functions of the specialist be subjected to stringent control. The rule was intended to allow him only sufficient latitude in his personal trading to enable him to maintain a fair and orderly market in the securities in which he is registered.” 73 73 *Id.* at 63. In 1937, the Commission issued an interpretation (“Saperstein Interpretation”) to clarify various aspects of the Tenth Rule, which the exchanges believed to be unnecessary because of other, more general rules regarding specialists that the exchanges had already adopted. 74 In the interpretation, the Commission emphasized that “a mere showing that a transaction by a specialist for his own account had no undesirable effect, or even no discernible effect, upon the market” was not enough to evidence compliance with the rule. 75 The Saperstein Interpretation stated that the “rule leaves no doubt that it prohibits all transactions for the account of a specialist, excepting only such transactions as are properly a part of a course of dealings reasonably necessary to permit the specialist to maintain a fair and orderly market * * *” 76 The Saperstein Interpretation thereafter stated that *each transaction* by a specialist for his own account must meet the test of reasonable necessity. 77 The interpretation made clear that a specialist would be required to comply with the rule on a transaction-by-transaction basis. 74 Securities Exchange Act Release No. 1117, 1937 SEC LEXIS 357 (March 30, 1937). The Saperstein Interpretation took the form of an interpretation by David Saperstein, then-Director of the Commission's Trading and Exchange Division, and was contained in a letter sent to the Presidents of the various exchanges having a specialist system, including NYSE and a predecessor to the American Stock Exchange. 75 Saperstein Interpretation at 3-4. 76 *Id.* at 4. 77 *Id.* The Saperstein Interpretation also provided the basis for some of the current stabilization rules. Specifically, in the Interpretation, the Commission noted that certain transactions effected by a specialist when increasing or establishing a position tend to have a detrimental effect on the market and therefore would be commonly unjustifiable. These transactions included:
(1)A purchase above the last sale price;
(2)the purchase of all or substantially all the stock offered on the book at the last sale price;
(3)the supplying of all or substantially all the stock bid for on the book at the last sale price; and
(4)transactions that clean up the market in a manner that is similar to cleaning up the book. The Saperstein Interpretation noted that these transactions may be justifiable “but only when they are an essential part of a course of dealings designed to promote the continuity and stability of the market and effected in an orderly manner.” 78 78 *Id.* at 5. NYSE has proposed to amend its rules that restrict the ability of specialists to trade with the trend of the market. NYSE has also asked the Commission to reinterpret the negative obligation to eliminate the requirement that *each* trade be measured against the reasonable necessity test. NYSE believes that specialists are an integral part of its market structure and that they perform important functions in the marketplace. NYSE believes that specialists will continue to contribute vitally to the Hybrid Market by committing capital and adding liquidity in order to bridge gaps in supply and demand, which can help to keep the market fair and orderly and reduce volatility. However, NYSE argues that with the anticipated increase in the volume of orders and speed of market activity as a result of the Hybrid Market and the implementation of Regulation NMS, its current rules restricting the ability of specialists to trade for their own account based upon the tick in relation to the last sale on the Exchange, as set forth in NYSE Rules 104.10(5) and (6), are both unworkable and less relevant in determining whether a specialist's trading is consistent with the negative obligation. Instead, NYSE believes these rules may in fact hinder specialists' ability to maintain fair and orderly markets in the Hybrid environment. In addition, NYSE argues that the time and place and informational advantages traditionally enjoyed by specialists have been diminished. Prior to the Hybrid Market, the majority of orders that were executed on the Exchange were handled by the specialist. Specialists would have unique knowledge at the point of sale as to the extent of interest available in the market for execution. Under the Hybrid Market, all investors have access to the depth of the NYSE Book and will be able to access NYSE liquidity without the involvement of a specialist. Floor brokers and their customers also will be able to interact with incoming orders directly without the involvement of the specialist. This increased transparency and access gives all market participants, both on and off the floor, a greater ability to see and react to market changes. The Commission believes that these combined factors significantly change the market in which the NYSE specialist operates and justifies a new approach to regulating specialists' dealer trades so that they will be able to effectively perform their obligation to maintain a fair and orderly market. The Commission notes that specialists remain constrained by the negative obligation and that their proprietary trading must be limited to that reasonably necessary to maintain a fair and orderly market. Therefore, for the reasons discussed below, the Commission believes that NYSE's proposal to amend its stabilization rules is consistent with the Act. In addition, the Commission has decided to reinterpret the negative obligation to remove the obligation to measure each individual specialist trade against the test of reasonable necessity. A. Negative Obligation In Amendment No. 1, the Exchange requested that the Commission reinterpret the reasonable necessity test found in the negative obligation to eliminate the trade-by-trade analysis that measures whether a specialist's proprietary trade is consistent with the negative obligation. As noted above, the negative obligation as set forth in Rule 11b-1 under the Act requires that a specialist's dealings be restricted, so far as practicable, to those reasonably necessary to permit the specialist to maintain a fair and orderly market. 79 79 17 CFR 240.11b-1(a)(2)(iii). The commenter argued that the trade-by-trade requirement of the Saperstein Interpretation was the only consistent reading of reasonable necessity test. In addition, the commenter believed that, in the Hybrid Market, specialists will not experience a reduction in their advantages, but rather would enjoy advantages far in excess of those available to them in the floor-based auction environment. 80 NYSE disagrees with the commenter's assertion and argues that specialists do not have the informational advantages they once possessed. Specifically, NYSE argues that market information is “ubiquitous, readily available to all market participants as a result of consolidated quote and trade streams” and OpenBook. 81 NYSE also argued that “the expansion of NYSE Direct+® and technology available to floor brokers has diminished the size and significance of the Crowd and enables orders entered into the Exchange system to execute at the best bid and offer without the need for human intervention.” 82 80 The Commission notes that the commenter's assertion that specialists have the exclusive ability to trade with incoming marketable orders is incorrect. Floor brokers are permitted to execute against incoming marketable orders via d-Quotes. *See* NYSE Rule 70.25(b)(i). In addition, the commenter asserted that specialists have access to floor broker agency interest data. This statement is likewise inaccurate. Specialists' algorithms will not have access to such data. *See* NYSE Rule 104(c)(ii). Further, a floor broker may exclude its interest from aggregate floor broker interest that is disclosed to the specialist on the floor. *See* Rule 70.20(g). 81 *See* NYSE Letter II, *supra* note 5. 82 *Id.* The Commission agrees with NYSE that the national market system has changed greatly in the nearly seventy years since the Saperstein Interpretation was issued. The Commission believes that the trade-by-trade standard that was established seventy years ago is unworkable in the current market environment. The high speed and volume of trading in today's market make impracticable a trade-by-trade determination by the specialist of whether a particular trade is reasonably necessary. Further, the Commission believes that the informational advantages that specialists once enjoyed have been diminished. The Commission believes that eliminating the trade-by-trade standard with respect to the negative obligation should enhance the specialist's ability to fulfill its obligation to maintain a fair and orderly market. The Commission believes that increased automation and competition—both within the Hybrid Market and in the markets generally—are significant factors, among others, that affect the ability of specialists to make a trade-by-trade analysis regarding their negative obligations. The Commission finds that permitting specialists to consider the reasonable necessity of their transactions under the negative obligation without a transaction-by-transaction test, is appropriate and consistent with the Act. 83 The Commission emphasizes that it is not eliminating the negative obligation. Therefore, specialists must continue to assess their need to trade and limit their proprietary trades to those reasonably necessary to allow the specialist to maintain a fair and orderly market. 83 The commenter believed that this “reinterpretation” of the Saperstein Interpretation should be done through a change to the text of NYSE Rules. The Commission believes this to be unnecessary, as the original Saperstein Interpretation, was communicated through a letter from then-Director Saperstein to the presidents of the various exchanges. The commenter expressed concern that eliminating the trade-by-trade test could lead to more aggressive trading by specialists. The Commission notes that the new interpretation does not relieve specialists of their obligations under federal securities laws or NYSE Rules. A specialist's ability to effect proprietary transactions remains limited under the Act and NYSE Rules and a specialist must still determine whether their transactions are reasonably necessary. The Commission notes that the Exchange is obligated to surveil its specialists to ensure their compliance with the Act and the Exchange's Rules, and the Exchange has represented that it will conduct surveillance of specialist trading for compliance with the negative obligation. B. Stabilization Rules NYSE proposes to amend its rules that specifically restrict certain specialist transactions that are effected with the trend of the market. As noted above, these rules supplement the negative obligation. 1. Neutral Transactions NYSE proposes to allow a specialist to liquidate or reduce a position regardless of the tick and without the need to receive Floor Official approval. Currently, NYSE rules are less restrictive regarding liquidating trades because these transactions do not create as great a potential conflict of interest for specialists. For example, if a specialist wanted to inappropriately influence the trend of the market in a security in which the specialist held a position, that specialist would have an incentive to increase the value of his or her position in the security by inflating the price. When liquidating a position, the specialist would not have a comparable incentive to cause the price to move downward. Importantly, however, specialists' liquidating trades remain subject to the negative obligation and, therefore, specialists remain constrained by reasonable necessity when engaging in liquidating transactions. Therefore, the Commission finds that it is consistent with the Act for NYSE to eliminate the need for specialists to obtain Floor Official approval when liquidating or reducing a position. 2. Non-Conditional Transactions NYSE proposed to allow a specialist to increase or establish a position in transactions other than transactions that reach across the market to trade with the Exchange bid or offer, without the need for Floor Official approval and regardless of the tick. The Commission believes that these Non-Conditional Transactions do not create a significant potential conflict of interest for specialists. Non-Conditional Transactions reflect instances where an independent source establishes the price of the transaction, thereby addressing concerns that a specialist may be “leading the market.” In addition, the proposed rule would allow specialists to buy at the published bid or sell at the published offer without Floor Official approval. While in this circumstance the specialist may establish the bid/offer, the trade itself is initiated by other market participants and not the specialist. NYSE argues that requiring Floor Official approval is impractical in the Hybrid Market, where trading is substantially electronic and the speed and frequency of executions and quote changes preclude specialists from being able to accurately track ticks or stop trading to allow for Floor Official involvement. The Commission also believes that the proposal to remove specific restrictions on Non-Conditional Transactions could enhance the specialist's ability to maintain fair and orderly markets. Finally, the Commission notes that Non-Conditional Transactions remain subject to the negative obligation. Accordingly, the Commission believes the proposed rule change regarding Non-Conditional Transactions is consistent with the Act. 3. Prohibited Transactions NYSE has proposed to prohibit certain transactions during the last ten minutes of the trading day. The Commission finds that the proposed rules for Prohibited Transactions are consistent with the Act because they restrict trades that may inappropriately influence the price of a security to advantage a specialist's proprietary position. The Commission also believes exempting specialist transactions that match another market's better bid or offer or that bring the price of the security into parity with an underlying or related security asset is appropriate because in these situations, an independent party, not the specialist, has set the price. 4. Conditional Transactions in Active Securities NYSE proposes to allow specialists to trade with the NYSE quote without the need for Floor Official approval and regardless of the tick when increasing or establishing a position in certain Active Securities. 84 As proposed, NYSE specialists will remain subject to the negative obligation and will be required to appropriately reenter the market after a Conditional Trade is executed. NYSE will issue guidelines known as PPPs to provide specialists with a price at which they should reenter. For certain Conditional Trades, specialist reentry must immediately follow the Conditional Trade. 84 Transactions that increase or establish a specialist's position in securities that do not satisfy the definition of Active Security would remain subject to the current NYSE rule, which requires that a specialist receive Floor Official approval before executing a transaction on a destabilizing tick. *See* proposed NYSE Rule 104.10(5)(i)(b). NYSE has proposed some clarifying changes to the rule text of this provision and the Commission finds that these changes better reflect the operation of this rule and therefore are consistent with the Act. The Commission believes that the provisions governing Conditional Transactions in Active Securities may reflect an appropriate balance between the needs of specialists and other market participants in today's fast moving markets. The Commission recognizes the potential conflicts of interest presented when a specialist engages in aggressive trading activity such as reaching across the market to trade with the NYSE Quote while increasing its position. The concern is lessened with Active Securities, however, because the specialist likely will be less able to unilaterally cause a price movement. Accordingly, the Commission is approving this proposed provision on a pilot basis until June 30, 2007. Before the Commission decides whether to extend the operation of this rule or to approve this rule on a permanent basis, NYSE must provide data and analysis on the impact of this rule change. Specifically, during the Pilot, NYSE must provide to the Commission on a regular, ongoing basis, statistics relating to market quality and specialist trading activity under the Pilot. These statistics should include general market quality measures, in addition to specific measures aggregated up from a trade-by-trade analysis of market activity and specialist activity during periods immediately following a specialist's Conditional Trade. After the initiation of the Pilot, NYSE must continue to work with Commission staff to ensure that these statistics are sufficiently informative to allow NYSE and the Commission to evaluate
(i)the degree to which the trading activity of specialists under the Pilot affects execution quality for orders arriving on the same side of the market immediately after Conditional Trades,
(ii)whether specialist Conditional Trades tend to be immediately followed by market price movements in the same direction as the specialist Conditional Trades, and
(iii)the extent to which specialists provide liquidity on the opposite side of the market immediately after a Conditional Trade. These statistics should reflect all relevant aspects of the specialist trading and quoting activity immediately following Conditional Trades, including the frequency and speed of re-entry, the re-entry price relative to the take-out price, and the size of the re-entry quote relative to the size taken. The Commission recognizes that the national market system is changing in considerable ways. Technological advancements and market forces, as well as regulatory changes such as the Commission's Regulation NMS, have spurred trading centers to become even more automated, with trading volume and intermarket competition expected to continue to increase. Although it is difficult to forecast at this time the precise effect of such changes on the Exchange generally and specialists in particular, the Commission believes that the Exchange has made a case for modifying the rules relating to Conditional Transactions in Active Securities in anticipation of such changes. At the same time, the Commission recognizes that the proposed rule change represents a significant shift in the roles and obligations of specialists at the Exchange. Therefore, the Commission has required that, for Conditional Transactions, the Exchange implement this proposed rule change only for Active Securities and only as a Pilot. 5. Other Changes The Commission finds that the proposal to delete current NYSE Rule 104.10(9) is appropriate because it is no longer applicable given the proposed changes to the stabilization rules as described above. In addition, the Commission also believes that the deletion of section
(9)is consistent with the proposed re-definition of a Sweep Transaction 85 and notes that NYSE Rule 104.10(6)(c)(III) makes clear that each specialist trade at a separate price in a Sweep is viewed as a transaction with the published bid or offer for the purposes of the transactions that require immediate re-entry pursuant to proposed NYSE Rule 104.10(6)(iv)(c). 85 *See* Securities Exchange Act Release No. 54820 (November 27, 2006). Further, the Commission believes that retaining NYSE Rule 104.10(7) and including streetTRACKS® Gold Shares (as defined in NYSE Rule 1300) and Currency Trust Shares (as defined in NYSE Rule 1301A) are appropriate because these are derivative products in which there is limited risk for the specialist to assert price control. C. Accelerated Approval of Amendment No. 1 The Commission finds good cause to approve Amendment No. 1 to the proposed rule change prior to the thirtieth day after Amendment No. 1 is published for comment in the **Federal Register** pursuant to Section 19(b)(2) of the Act. 86 The commenter requested that the Commission publish the Exchange's proposal as amended in Amendment No. 1 for public comment. The Commission has authority under Section 19(b)(2) of the Act to approve the proposed rule change prior to the thirtieth day after it is published for comment. 87 The Commission notes that the Exchange's request that the Commission issue a new interpretation of the negative obligation described in Amendment No. 1 was published for a 21-day comment period in an earlier proposed rule change. 88 In that order, the Commission specifically requested comment on NYSE's request to reinterpret the negative obligation. The Commission received comment letters from the commenter himself in response to that request, which were fully considered by the Commission. Therefore, the Commission believes that the public has had appropriate notice of the Exchange's request to re-interpret the negative obligation of specialists. 86 15 U.S.C 78s(b)(2). 87 *Id.* 88 *See* Securities Exchange Act Release No. 54578 (October 5, 2006), 71 FR 60216 (October 12, 2006). *See also* Securities Exchange Act Release No. 54685 (November 1, 2006), 71 FR 65559 (November 8, 2006). The remaining modifications in Amendment No. 1 were clarifications and/or technical corrections to the originally proposed rule change. For these reasons, the Commission believes that good cause exists to accelerate approval of the proposed rule change as amended by Amendment No. 1. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 89 that the proposed rule change (File No. SR-NYSE-2006-76), as modified by Amendment No. 1, be, and hereby is, approved, on an accelerated basis and the Pilot is approved on a temporary basis until June 30, 2007. 89 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 90 90 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-20886 Filed 12-7-06; 8:45 am] BILLING CODE 8011-01-P DEPARTMENT OF STATE [Public Notice 5635] Bureau of Near Eastern Affairs; Notice of New Information Collection Under Emergency Review: Iran Democracy Program Grants Vetting; Form DS-4100, OMB Control Number 1405-xxxx AGENCY: Department of State, Bureau of Near Eastern Affairs. ACTION: Notice of request for Emergency OMB approval. SUMMARY: The Department of State has submitted the following new information collection request to the Office of Management and Budget
(OMB)for review and approval in accordance with the emergency review procedures of the Paperwork Reduction Act of 1995. *Type of Request:* Emergency Review. *Originating Office:* Bureau of Near Eastern Affairs, Middle East Partnership Initiative. *Title of Information Collection:* Iran Democracy Program Grants Vetting. *Frequency:* On occasion. *Form Number:* DS-4100. *Respondents:* Potential Grantees for Iran Democracy Program. *Estimated Number of Respondents:* 200. *Average Hours per Response:* 1 hour per response. *Total Estimated Burden:* 200 hours. The proposed information collection is published to obtain comments from the public and affected agencies. Emergency review and approval of this collection has been requested from OMB by December 8, 2006. If granted, the emergency approval is only valid for 180 days. Comments should be directed to Katherine Astrich, State Department Desk Officer, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Washington, DC 20530, who may be reached on 202-395-4718. During the first 60 days of this same period a regular review of this information collection is also being undertaken. Comments are encouraged and will be accepted until 60 days from the date that this notice is published in the **Federal Register** . The agency requests written comments and suggestions from the public and affected agencies concerning the proposed collection of information. Your comments are being solicited to permit the agency to: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility. • Evaluate the accuracy of the agency's estimate of the burden of the proposed collection, including the validity of the methodology and assumptions used. • Enhance the quality, utility, and clarity of the information to be collected. • Minimize the reporting burden on those who are to respond, including through the use of automated collection techniques or other forms of technology. *For Additional Information:* Requests for additional information, regarding the collection listed in this notice should be directed to David Denehy, Bureau of Near Eastern Affairs, U.S. Department of State, Washington, DC 20520, who may be reached on 202-647-2519, or via e-mail at *DenehyDM@state.gov.* Abstract of Proposed Collection: A critical component of the Administration's Iran policy is the support for indigenous Iranian voices calling for freedom. President Bush himself has pledged this support and the State Department has made the awarding of grants for this purpose a key component of its Iran policy. As a condition of licensing these activities, the Office of Foreign Assets Control
(OFAC)has requested the Department of State to follow certain procedures to effectuate the goals of Sections 481(b), 531(a), 571, 582, and 635(b) of the Foreign Assistance Act of 1961 (as amended); 18 U.S.C. §§ 2339A and 2339B; Executive Order 13224; and Homeland Security Presidential Directive 6. These licensing conditions mandate that the Department conduct a vetting of potential Iran democracy grantees and sub-grantees for counter-terrorism purposes. To conduct this vetting the Department envisions collecting information from grantees and sub-grantees regarding the identity and background of their key employees and Boards of Directors. *Methodology:* The State Department (Bureau of Near Eastern Affairs, Bureau of Democracy Human Rights and Labor, and Bureau of Educational and Cultural Affairs) will collect this information via electronic submission. Dated: December 4, 2006. David M. Denehy, Senior Advisor, Bureau of Near Eastern Affairs, Department of State. [FR Doc. E6-20917 Filed 12-7-06; 8:45 am] BILLING CODE 4710-31-P DEPARTMENT OF TRANSPORTATION Office of the Secretary of Transportation [Docket Nos. OST-2006-26266, FHWA-2006-26270, FTA-2006-26269, RITA-2006-26271] Applications for Urban Partnership Agreements as Part of Congestion Initiative AGENCIES: Office of the Secretary of Transportation (“OST”), Federal Highway Administration (“FHWA”), Federal Transit Administration (“FTA”), Research and Innovative Technology Administration (“RITA”) ACTION: Notice of solicitation for applications to enter into urban partnership agreements with the U.S. Department of Transportation. SUMMARY: In May 2006, the U.S. Department of Transportation (the “Department”) announced its *National Strategy to Reduce Congestion on America's Transportation Network* (the “Congestion Initiative”), a bold and comprehensive national program to reduce congestion on the Nation's roads, rails, runways, and waterways. One major component of the Congestion Initiative is the Urban Partnership Agreement (“UPA”). The purpose of this Notice is to solicit proposals by metropolitan areas to enter into UPAs with the Department in order to demonstrate strategies with a combined track record of effectiveness in reducing traffic congestion. To support congestion-reducing strategies adopted by the Department's urban partners (“Urban Partners”), the Department expects to utilize discretionary funding available under the Department's Intelligent Transportation System Operational Testing to Mitigate Congestion Program (the “ITS-OTMC Program”), its Value Pricing Pilot Program (the “VPP Program”), and other discretionary grant, lending and credit support programs administered by the Department. In addition, to the maximum extent possible, the Department will support its Urban Partners with regulatory flexibility and dedicated expertise and personnel. This Notice is the first of three solicitations to be issued by the Department in connection with the Congestion Initiative. *See below* SUPPLEMENTARY INFORMATION : Coordination with Other Congestion Initiative Solicitations.” The Department reserves the right to solicit, and is actively soliciting, by means other than this Notice, certain metropolitan areas that the Department has determined, on a preliminary basis, to be candidates for UPAs. Neither the procedures nor the criteria set forth in this Notice shall be binding on the Department. DATES: Applicants wishing to become Urban Partners must submit their application on or before April 30, 2007. Applicants wishing to become Urban Partners who intend to apply for funding under the VPP and ITS-OTMC Programs must submit separate applications to the VPP and ITS-OTMC Programs on or before April 30, 2007, in accordance with the requests for proposals for those programs to be published by the Department in the **Federal Register** this month. *See* SUPPLEMENTARY INFORMATION : Coordination with Other Congestion Initiative Solicitations.” Late-filed applications for designation as an Urban Partner and for funding under the VPP and ITS-OTMC Programs will be considered to the extent practical. ADDRESSES: Applicants wishing to become Urban Partners may send three copies of their application by U.S. Post or express mail to: Thomas M. McNamara, Office of the Assistant Secretary for Transportation Policy, U.S. Department of Transportation, Room 10305 (P-20), 400 7th Street, SW., Washington, DC 20590. Alternatively, applicants may file applications via e-mail to Thomas M. McNamara at *thomas.mcnamara@dot.gov.* Only applications received via U.S. Post, express mail or e-mail, in each case as provided above, shall be deemed properly filed. FOR FURTHER INFORMATION CONTACT: Please address questions concerning this Notice to David B. Horner, Esq., Chief Counsel, Federal Transit Administration, U.S. Department of Transportation, via e-mail at *david.horner@dot.gov.* Please address technical questions concerning project development to either Thomas M. McNamara at 202-366-4462 (or by e-mail at *thomas.mcnamara@dot.gov* ) or Patrick DeCorla-Souza at 202-366-4076 (or by e-mail at *patrick.decorla-souza@dot.gov* ). SUPPLEMENTARY INFORMATION: A. Background *Crisis of Congestion.* Traffic congestion affects virtually every aspect of peoples' lives—where people live, where they work, where they shop, and how much they pay for goods and services. According to 2003 figures, in certain metropolitan areas the average rush hour driver loses as many as 93 hours per year to travel delay—equivalent to more than two weeks of work, amounting annually to a virtual “congestion tax” as high as $1,598 per traveler in wasted time and fuel. 1 Nationwide, congestion imposes costs on the economy of over $65 billion per year, 2 a figure that has more than doubled since 1993, and that would be even higher if it accounted for the significant cost of unreliability to drivers and businesses, the environmental impacts of idle-related auto emissions, or increased gasoline prices. 1 Texas Transportation Institute (“TTI”), 2005 Urban Mobility Report, May 2005 ( *http://tti.tamu.edu/documents/mobility_report_2005.pdf* ), Tables 1 and 2. 2 TTI, 2005 Urban Mobility Report, p. 1. Traffic congestion also has a substantial negative impact upon the quality of life of many American families. In a 2005 survey, for example, 52% of Northern Virginia commuters reported that their travel times to work had increased in the past year, 3 leading 70% of working parents to report having insufficient time to spend with their children and 63% of respondents to report having insufficient time to spend with their spouses. 4 Nationally, in a 2005 survey conducted by the National League of Cities, 35% of U.S. citizens reported traffic congestion as the most deteriorated living condition in their city over the past five years; 85% responded that traffic congestion was as bad or worse than the previous year. 5 Similarly, in a 2001 survey conducted by the U.S. Conference of Mayors, 79% of Americans from 10 metropolitan areas reported that congestion has worsened over the past five years; 50% believe it has become “much worse.” 6 3 Northern Virginia Transportation Alliance 2005 Survey ( *http://www.nvta.org/content.asp?contentid=1774* ). 4 Virginia Department of Transportation. 5 National League of Cities survey of cities (2005). 6 U.S. Conference of Mayors survey on traffic congestion (2001). *The Urban Partnership Agreement.* In May 2006, the Department announced its National Strategy to Reduce Congestion on America's Transportation Network (the “Congestion Initiative”), a bold and comprehensive national program to reduce congestion on the nation's roads, rails, runways, and waterways. One major component of the Congestion Initiative is the Urban Partnership Agreement (“UPA”), through which the Department plans to partner with certain metropolitan areas or “Urban Partners” in order to demonstrate strategies with proven effectiveness in reducing traffic congestion. Under UPAs, the Department and its Urban Partners would agree to pursue four strategies with a combined track record of effectiveness in reducing traffic congestion, known as the “Four Ts:” 1. *Tolling:* Implementing a broad congestion pricing or variable toll demonstration; 2. *Transit:* Creating or expanding express bus services, bus rapid transit (“BRT”) or other innovative commuter transit services, which would benefit from the free-flow traffic conditions generated by pricing; 3. *Telecommuting:* Securing agreements from major area employers to establish or expand telecommuting and flex scheduling programs; and 4. *Technology & operations:* Utilizing cutting edge technological and operational approaches to improve transportation system performance. In return for their commitment to adopt innovative, system-wide solutions to traffic congestion, the Department, to the maximum extent possible, would support its Urban Partners with the Department's financial resources (including a combination of grants, loans, and borrowing authority), regulatory flexibility and dedicated expertise and personnel. *Congestion Pricing.* The most innovative—and often misunderstood—component of the UPA is congestion pricing. Congestion pricing leverages the principles of supply and demand to manage traffic. It does this by charging drivers a user fee that varies by traffic volumes or time of day, thus managing highway resources in a manner that promotes free-flow traffic conditions on highways at all times. Congestion pricing achieves free-flow conditions by shifting purely discretionary rush hour highway travel to other transportation modes or to off-peak periods, taking advantage of the fact that many rush hour drivers on a typical urban highway are not commuters. By removing a fraction of the vehicles from a congested rush hour roadway, pricing enables the system to flow much more efficiently, allowing more cars to move through the same physical space. Similar variable charges have been successfully utilized in other industries (airline tickets, cell phone rates, and electricity, for example), and there is a consensus among economists that congestion pricing represents the single most viable approach to reducing traffic congestion. Congestion pricing benefits drivers and businesses by reducing delays and stress, increasing the predictability of trip times, and allowing for more deliveries per hour. It benefits mass transit by improving transit speeds and the reliability of transit service, increasing transit ridership, and lowering costs for transit providers. It benefits State and local government by improving the quality of transportation services without tax increases or large capital expenditures, providing additional revenues for funding transportation, retaining businesses and expanding the tax base. It saves lives by shortening incident response times for emergency responders. And it benefits society as a whole by reducing fuel consumption and vehicle emissions, allowing for more efficient land use decisions, reducing housing market distortions, and expanding opportunities for civic participation. Congestion pricing is no longer simply a theory; it has demonstrated positive results both here in the U.S. and around the world. Successful American applications of congestion pricing include California's SR-91 between Anaheim and Riverside, portions of I-15 outside of San Diego, and Express Lanes on I-394 between downtown Minneapolis and the western suburbs, all of which have enabled congestion-free rush hour commuting and proven popular with drivers of all income levels. Internationally, congestion pricing has yielded dramatic reductions in traffic congestion and increases in travel speeds in Singapore, London, and Stockholm. Notably, a small reduction in vehicles can yield dramatic improvements in traffic, as demonstrated by a British study, which projected that a 9% drop in traffic could yield a 52% drop in congestion delay. 7 This same dynamic plays out in metropolitan areas every August, as family vacations lead to a minor decrease in rush hour drivers, which substantially reduces area traffic congestion. 7 Department of Transport, U.K., Feasibility Study of Road Pricing in the U.K.: A Report to the Secretary of State for Transport, Road Price Steering Group, Chapter 4, Figure 3. *Transit.* Another critical congestion-reducing strategy to be incorporated into UPAs is increasing the quality and capacity of peak-period transit service in order to offer a more attractive alternative to automobile travel and to accommodate peak-period commuters who elect to switch to transit in response to the imposition of congestion pricing. Congestion pricing and public transportation convey mutual benefits-road pricing benefits public transportation by improving transit speeds and the reliability of transit service, increasing transit ridership, lowering costs per rider for transit providers, and expanding the source of revenue that may be used for transit, while public transportation benefits road pricing by absorbing commuters who shift their travel from automobile to bus or rail. By replacing congested traffic with free-flowing conditions on major routes, congestion pricing will improve the speed and productivity of current express bus services, making them more attractive to commuters while reducing their operating costs. Reducing congestion will also facilitate rapid deployment of innovative, high-performance BRT operations in major corridors, which require only modest investments in new vehicles and passenger facilities that may be eligible for financial support through the Department's various funding mechanisms. Improving the performance and variety of peak-period transit commuting options through a combination of congestion pricing and limited capital investment will provide significant benefits to current transit riders, while improving transit's effectiveness in reducing peak-period auto travel and providing the expanded passenger-carrying capacity necessary to accommodate shifts to transit commuting induced by the imposition of congestion pricing. *Telecommuting.* The third critical congestion-reducing strategy for Urban Partners to adopt is promoting increased use of telecommuting and flexible work scheduling, in order to reduce peak-period commuting and shift some commuting travel to “shoulder” or off-peak hours. Telecommuting can eliminate some peak-period commuting travel by using computer and electronic communications technology to enable certain employees to work from their homes or nearby telecommuting centers on predetermined (often regularly scheduled) workdays, or in some cases on a full-time basis. Flexible work schedules allow employees to shift their commute trips from the peak period to less congested hours. The most promising means to achieve these objectives is for public officials representing Urban Partners to secure agreements from major employers in their metropolitan areas to establish or expand telecommuting programs, and to offer flexible work schedules to the maximum number of their employees. The Department and local transportation planning agencies can offer technical and logistical support to employers for designing, implementing, and monitoring the effectiveness of telecommuting programs and flexible work scheduling. *Technology.* Technology makes possible congestion pricing, which differs from traditional tolling in two material respects:
(1)Instead of charging a fixed fee, congestion pricing manages traffic by charging drivers a user fee that varies by traffic volumes or time of day, thus balancing supply and demand; and
(2)unlike traditional tolling, congestion fees are collected electronically at highway speeds. With variable pricing, technology affords highway managers the flexibility of setting user fees by time of day or “dynamically”—by increasing or decreasing fees depending on traffic volumes to maximize throughput and the free flow of traffic. Technology facilitates this variability by enabling the collection of user fees at highway speeds through the use of transponders, Global Positioning Systems (“GPS”), or cameras. With transponders, or “tags,” tolls may be collected as vehicles pass under overhead antennae. With GPS technology, like that used on Germany's autobahns, an in-vehicle device records charges based on the vehicle's location, and periodically uploads a summary of charges to a processing center along with payments. And with cameras, highway managers can record the identity of vehicles that are not equipped with a transponder or GPS unit. In addition, technological advancements may enhance the quality of transit service deployed to reduce urban congestion. These technology-based improvements may include lane-keeping devices or longitudinal control designed to enhance spatial efficiency on existing highways, precision docking, signal priority systems for buses, contactless fare collection, real-time travel information (bus arrival times, schedules, etc.), advanced traveler information systems, parking alerts and automatic vehicle locator systems. Other technological innovations that may help reduce congestion include: • *Telecommuting* technology, including high-speed wireless internet service to allow download of large files, called “WiMax.” • *Traffic management* technology, including adaptive traffic signal control systems and the use of cameras to provide real-time information to first responders that will help them determine what equipment they will need before they arrive at the site of an accident or incident. • *Advanced traveler information systems* that include web or wireless access to route-specific travel time and toll information; route planning assistance using historical records of congestion by time of day; and communications technologies that gather traffic- and incident-related data from a few vehicles traveling on a roadway and then publish that information to drivers via mobile phones, in-car units or dynamic message signs. B. Funding Urban Partnership Agreements The Department proposes to support UPAs with some or all of the resources listed below. Please note, however, that the Department does not intend for UPAs to replace the VPP or ITS-OTMC Programs; instead, applicants wishing to become Urban Partners who intend to pursue grants, loans or credit support under the programs below should apply separately to such programs on or before April 30, 2007. With respect to the ITS-OTMC and VPP Programs, the Department will publish separate requests for proposals in the **Federal Register** this month. *See below* SUPPLEMENTARY INFORMATION Coordination with Other Congestion Initiative Solicitations.” 1. *Intelligent Transportation Systems Funding:* Since enactment of the Intermodal Surface Transportation Efficiency Act of 1991 (“ISTEA”), the Department has been administering the Intelligent Transportation Systems (“ITS”) Program. In its discretion, the Department may provide Urban Partnerships up to $100 million of ITS research and development funds over three years through the ITS-OTMC Program to be established by the Department as part of the ITS Program. The Department may also continue or modify existing or currently proposed programs or initiatives under the ITS Program to support the Department's Urban Partners. A primary objective of the ITS Program has been the development and operational testing of systems and strategies to reduce congestion in urban areas. As a result, the program has focused considerable attention on the development of various products oriented towards congestion mitigation, such as electronic toll collection, advanced real-time adaptive traffic signals, transit signal priority systems, innovative surveillance systems, improved incident detection and response systems, advanced transit management systems, and multi-modal traveler information systems. These and other congestion-mitigation strategies have been shown to be very effective in improving overall traffic operations and reducing congestion. In reauthorizing the ITS Program, section 5306 of the recently-enacted Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (“SAFETEA-LU”) requires the Department to continue to invest in technologies and systems that can aid in reducing congestion by five percent by 2010. Given the increasing demand on the Nation's surface transportation system, this ambitious goal will require bold, innovative approaches. Projects the Department will consider for funding through the ITS-OTMC Program would incorporate strategies comprised of the “Four Ts.” Such projects could also include: Advanced traffic signal control, innovative incident detection and management strategies, integrated corridor management, real-time traveler information, parking management tied to transit service, innovative traveler information services, managed lanes, ramp control, technology enhanced bus rapid transit systems, freight management, or other innovative and aggressive technology-based congestion mitigation strategies. 2. *Value Pricing Pilot Program Grants:* Since the enactment of ISTEA, the Department has also been administering the VPP Program, a specific congestion-related deployment and evaluation program, formerly known as the Congestion Pricing Pilot Program. The VPP Program provides grants and tolling authority to up to 15 States or other jurisdictions. It provides crucial support for pre-implementation and implementation activities aimed at demonstrating how pricing improves transportation services, specifically for highway and transit related travel. The Department may award a significant portion of the discretionary funding available under the VPP Program to support its Urban Partners. 3. *Small Starts Funding:* The Small Starts program administered by the Federal Transit Administration (“FTA”) provides up to $75 million per project for qualifying transit projects, with a focus on less-capital intensive projects such as bus rapid transit. In its recently issued guidance on Small Starts, the Department noted that because congestion is one of the Nation's most daunting transportation challenges, FTA will facilitate worthy projects that are a significant element of a comprehensive congestion reduction strategy, especially when such projects incorporate pricing strategies. Final funding decisions are made by Congress in response to recommendations by FTA. Projects sponsored by the Department's Urban Partners would be candidates for Small Starts funding. 4. *Private Activity Bonds:* The Department has the authority to issue Private Activity Bonds to qualifying projects, lowering the cost of capital required to construct transportation facilities. The overall program allows for the issuance of up to $15 billion in bonds, some of which could be applied toward projects sponsored by the Department's Urban Partners. 5. *TIFIA Loans and Credit Assistance:* The Department's program administered under the Transportation Infrastructure Finance and Innovation Act (“TIFIA”) can issue direct loans, loan guarantees, and standby lines of credit to qualifying projects. The overall program allows for the support of approximately $10 billion in credit assistance, some of which could be applied toward projects sponsored by the Department's Urban Partners. 6. *Other Assistance.* The Department may also provide its Urban Partners with the authority to institute tolls on portions of their respective Interstate systems 8 and expedite project delivery by waiving certain FHWA regulations (in accordance with FHWA's Special Experimental Project (or “SEP-15”) program or as otherwise permitted by law), and placing key projects on the Environmental Stewardship Executive Order, allowing for the streamlining of some aspects of the environmental review process. Finally, the Department may offer extensive technical expertise and advice from world class engineers and economists. 8 As enacted by SAFETEA-LU, the High Occupancy Vehicle (“HOV”) Facilities Program (23 U.S.C. 166) allows States and localities to convert HOV lanes to high occupancy toll (“HOT”) lanes which allow low-occupant vehicle users to pay for the chance to travel on underutilized HOV lanes, shifting traffic from congested regular lanes to HOV lanes, while maintaining free-flowing travel speeds and vehicle throughput performance for all vehicles on the HOV lanes. When operated in parallel with general purpose lanes, HOT lanes offer drivers an option to pay for congestion-free predictable trips when they need it the most, while improving the performance of general purpose lanes. In coordination with 23 U.S.C. 166, FTA has recently published proposed guidance that, once adopted as final, would eliminate certain existing disincentives to jurisdictions to convert their HOV lanes to HOT lanes. In particular the proposed guidance describes the terms and conditions on which FTA would classify HOV lanes that are converted to HOT lanes as “fixed guideway miles” for purposes of the transit funding formulas administered by FTA. See “Policy Statement on When High-Occupancy Vehicle Lanes Converted to High-Occupancy/Toll Lanes Shall Be Classified as Fixed Guideway Miles for FTA's Funding Formulas and When HOT Lanes Shall Not Be Classified as Fixed Guideway Miles for FTA's Funding Formulas” ( *http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/E6-14796.pdf* ). Please note that designation as an Urban Partner does not, by itself, qualify a party for any grant or funding amount. However, Urban Partners will receive preferential treatment under the ITS-OTMC and VPP Programs in accordance with their terms and certain other discretionary programs administered by the Department. An Urban Partner will also receive the commitment of the Department's leadership to work directly with the Urban Partner in solving its congestion problems. C. Coordination With Other Congestion Initiative Solicitations This solicitation is one of three related solicitations being issued by the Department in connection with the Congestion Initiative. To be published separately in the **Federal Register** this month, the other two solicitations are: 1. *Solicitation for the VPP Program.* The VPP Program, as reauthorized in SAFETEA-LU, supports implementation of a variety of pricing-based approaches for managing congestion on highways. The forthcoming solicitation for the VPP Program will align the program with the Congestion Initiative to support metropolitan areas in implementing broad congestion pricing strategies in the near term. 2. *Solicitation for the Intelligent Transportation System Operational Testing to Mitigate Congestion Program.* The ITS Research and Development program, as reauthorized in SAFETEA-LU, supports the research, development and testing of ITS for a variety of purposes. The forthcoming solicitation for the ITS-OTMC Program will support the operational testing and evaluation of advanced technologies to reduce metropolitan congestion. Please note: If an applicant wishing to become an Urban Partner intends to apply for funding under both the VPP and ITS-OTMC Programs, the applicant must apply to each program by submitting to each program identical copies of a single application that is responsive to both programs' requests for proposals. The Department will publish both programs' requests for proposals in the **Federal Register** this month. D. Preliminary Urban Partner Designation; Urban Partner Designation *Step One.* Applications to become Urban Partners must be submitted on or before April 30, 2007 (with late-filed applications being considered to the extent practical). *See below* SUPPLEMENTARY INFORMATION : “Contents of UPA Application” for instructions concerning the content of applications to become an Urban Partner. *Step Two.* The Department will designate certain applicants as Preliminary Urban Partners on or before June 8, 2007. The Department expects to select up to 10 Preliminary Urban Partners. Please note that designation as a Preliminary Urban Partner does not, by itself, qualify a party for any grant or funding amount. However, it will qualify the designee to continue discussions with the Department to become an Urban Partner. *Step Three.* The Department will work towards selecting Urban Partners by continuing discussions with its Preliminary Urban Partners to determine whether an Urban Partnership is feasible. *Step Four.* Following negotiations, the Department will announce its Urban Partners by August 8, 2007, along with funding decisions under the VPP and ITS-OTMC Programs. Please note that designation as an Urban Partner does not, by itself, qualify a party for any grant or funding amount. However, the designation will afford Urban Partners preferential treatment under certain of the Department's discretionary grant funding programs, such as the ITS-OTMC and VPP Programs, in accordance with their terms. Designation as an Urban Partner will also provide the designee with the commitment of the Department's leadership to work directly with the Urban Partner in solving its congestion problems. *Step Five.* The Department will sign UPAs as soon as possible after selecting its Urban Partners. The Department expects implementation or pre-implementation efforts for the proposed congestion reduction activities to commence shortly after the UPA is signed. Signatories to UPAs may include city and county governments, metropolitan planning organizations, State transportation departments, chambers of commerce, academic institutions, citizen advisory groups, or other responsible organizations that seek to resolve major congestion problems (any of whom may apply to become an Urban Partner). E. Contents of UPA Application An application to become an Urban Partner should briefly describe, with respect to the metropolitan area proposed,
(i)Why its traffic congestion is severe,
(ii)the local public's acknowledgement of the problem,
(iii)the readiness of area's political leadership to solve the problem and
(iv)a solution to congestion that incorporates the Four Ts. In addition, an application should be responsive to the specifications and criteria set forth below. The Department recognizes that information provided in an application to become an Urban Partner may be preliminary and incomplete. If the Department selects an applicant to be a Preliminary Urban Partner, the Department may ask the Preliminary Urban Partner to supplement the data in its application to the extent practical. 1. *Length of Applications:* An application should not exceed 25 pages in length, including both the proposal details and appendix materials. Appendix materials may include maps of roadways and other affected facilities (such as bridges and parallel routes), maps of BRT routes and other transit services or facilities that are directly involved and a list of possible local employers that might endorse new or expanded telecommuting and flextime policies for its employees. 2. *Participating Parties:* An application should provide a preliminary, non-binding list of the parties likely to participate in the Urban Partnership. 3. *Comprehensive Congestion Reduction Strategy:* An application should generally describe the metropolitan area's proposed comprehensive congestion reduction strategy, and explain how different parts of that strategy, if any, would interact to reduce congestion. 4. *Congestion Pricing Measures and Affected Areas:* An application should describe the role pricing would play in the congestion reduction strategy. To the extent practical, an application should indicate, in specific terms, how traffic would be affected, what areas or routes would be priced, how congestion prices would be determined, and which vehicle categories would be affected ( *e.g.* , single occupant vehicles or all vehicles). If the proposed congestion pricing configuration contemplates a cordon pricing system, then the application should specify the approximate area ( *e.g.* , 10 square miles surrounded by certain highways or natural boundaries). 5. *Transit Services:* An application should describe transit services, including BRT and other commuter transit services that are to be provided or supplemented, and the expected impacts of the expanded transit services on congestion. The application should also describe transit fare pricing policies to be adopted with the objective of increasing traveler throughput during peak traffic periods, while avoiding excessive congestion in the transit system. 6. *Telecommuting:* An application should indicate telecommuting, flex-time, and various related employer-employee policies to be adopted, including likely employer participants and the number and location of employees affected. These proposed non-pricing demand management activities need not be limited to telecommuting or flex-time schedules, and they may include activities like parking cash-outs or other suitable incentives that seek to reduce peak-hour, drive-alone travel. 7. *Expedited Project Completion:* An application should indicate any major transportation projects or project components that are sought to be expedited through an UPA. The application should also indicate the expected effects on congestion from early completion of these projects. 8. *Travelers Affected Daily:* An application should indicate the estimated number of daily travelers that will be directly affected by priced facilities and by other measures expected to be adopted by the Urban Partner. This should include the estimated number of persons (vehicles) that will pay congestion charges, as well as the likely number diverted to other travel times, routes, or other transportation services, such as transit. Similarly, if telecommuting is to be adopted, the application should indicate the estimated number of daily employee participants. 9. *Use of Technology:* An application should clearly indicate the extent to which a locality plans to operationally test innovative technology in achieving its congestion reduction targets. 10. *Research, Planning, and Experience To Date:* An application should indicate the prior work that participating parties ( *e.g.* , the candidate city or other jurisdictions) have already done to reduce congestion, including research, planning, and actual implementation of congestion related activities in the metropolitan area. 11. *Other Time-Frame Considerations:* An application should indicate the dates during which applicants expect to conduct congestion reduction activities ( *e.g.* , a seven-month trial from June 1, 2008 until December 31, 2008). If the applicant expects the activities to continue indefinitely, the application should indicate this fact. Similarly, if the pricing activity is adopted on a temporary, experimental basis and the applicant expects it to be voted on by citizens of the jurisdictions participating in an Urban Partnership or otherwise considered for continuation, the application should provide this information. 12. *Funding Support:* An application should indicate the estimated cost to implement the overall congestion reduction strategy. An application should also indicate the anticipated sources of those funds, including the amount requested to be covered by Federal sources. 13. *Contact Information:* An application should clearly indicate contact information, including name, organization, address, phone number, and e-mail address. The Department will use this information to inform parties of the Department's decision regarding selection of interested parties, as well as to contact parties in the event that the Department needs additional information about an application. F. Consideration of Applications The Department will review and consider applications upon receipt. The Department will consider a variety of factors in reviewing applications seeking designations an Urban Partner, including whether proposals: • Are likely to be successfully implemented; • Affect the most daily surface transportation travelers; • Produce the greatest potential reduction in overall traffic congestion; • Provide the greatest congestion-reduction benefits per dollar of Federal support; • Provide the most cost-effective means of reducing traffic congestion; and • Demonstrate innovative and potentially far-reaching technology applications. This Notice is not the sole means by which the Department is soliciting candidates for UPAs. The Department reserves the right to solicit, and is actively soliciting, by means other than this Notice, certain metropolitan areas that the Department has determined, on a preliminary basis, to be candidates for UPAs. Neither the procedures nor the criteria set forth in this Notice shall be binding on the Department. Issued On: November 7, 2006. Maria Cino, Deputy Secretary. [FR Doc. E6-20924 Filed 12-7-06; 8:45 am] BILLING CODE 4910-9X-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Notice of Availability of Draft Advisory Circulars, Other Policy Documents and Proposed Technical Standard Orders AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: This is a recurring Notice of Availability, and request for comments, on draft advisory circulars (ACs), other policy documents, and proposed technical standard orders
(TSOs)currently offered by Aviation Safety. SUMMARY: The FAA's Aviation Safety, an organization responsible for the certification, production approval, and continued airworthiness of aircraft, and certification of pilots, mechanics, and others in safety related positions, publishes proposed non-regulatory documents that are available for public comment on the Internet at *http://www.faa.gov/aircraft/draft_docs/* . DATES: We must receive comments on or before the due date for each document as specified on the Web site. ADDRESSES: Sent comments on proposed documents to the Federal Aviation Administration at the address specified on the Web site for the document being commented on, to the attention of the individual and office identified as point of contact for the document. FOR FURTHER INFORMATION CONTACT: See the individual or FAA office identified on the Web site for the specified document. SUPPLEMENTARY INFORMATION: Final advisory circulars, other policy documents, and technical standard orders
(TSOs)are available on FAA's Web site, including final documents published by the Aircraft Certification Service on FAA's Regulatory and Guidance Library
(RGL)at *http://rgl.faa.gov/* . Comments Invited When commenting on draft ACs, other policy documents or proposed TSOs, you should identify the document by its number. The Aviation Safety organization, will consider all comments received on or before the closing date before issuing a final document. You can obtain a paper copy of the draft document or proposed TSO by contacting the individual or FAA office responsible for the document as identified on the Web site. You will find the draft ACs, other policy documents and proposed TSOs on the “Aviation Safety Draft Documents Open for Comment” Web site at *http://www.faa.gov/aircraft/draft_docs/* . For Internet retrieval assistance, contact the AIR Internet Content Program Manager at 202-267-8361. Background We do not publish an individual **Federal Register** Notice for each document we make available for public comment. On the Web site, you may subscribe to our service for e-mail notification when new draft documents are made available. Persons wishing to comment on our draft ACs, other policy documents and proposed TSOs can find them by using the FAA's Internet address listed above. This notice of availability and request for comments on documents produced by Aviation Safety will appear again in 30 days. Issued in Washington, DC on December 4, 2006. Terry Allen, Acting Manager, Production and Airworthiness Division, Aircraft Certification Service. [FR Doc. 06-9605 Filed 12-7-06; 8:45 am]
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Traces to 13 documents
U.S. Code
- Federal agency responsibilities§ 3506
- Determinations by Secretary of Labor§ 2273
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Definitions and application§ 78c
- Registered securities associations§ 78o–3
- HOV facilities§ 166
17 references not yet in our index
- 26 USC 2813
- 10 CFR 51
- 20 CFR 335
- 44 USC 3501-3520
- 17 CFR 270.17
- 15 USC 80a
- 17 CFR 202.11
- 17 CFR 240.19
- 17 CFR 240.16
- 17 CFR 240.10
- 17 CFR 19
- 17 CFR 240.15
- 17 CFR 240.202
- Pub. L. 94-29
- 89 Stat. 97
- 17 CFR 240.11
- 18 USC 2339A
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