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Code · REGISTER · 2006-12-20 · Privacy Office, Office of the Secretary, Department of Homeland Security · Notices

Notices. Notice of Publication of Privacy Impact Assessments

69,515 words·~316 min read·/register/2006/12/20/06-9784

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

BILLING CODE 4410-10-M DEPARTMENT OF HOMELAND SECURITY Published Privacy Impact Assessments on the Web AGENCY: Privacy Office, Office of the Secretary, Department of Homeland Security. ACTION: Notice of Publication of Privacy Impact Assessments. SUMMARY: The Privacy Office of the Department of Homeland Security is making available five Privacy Impact Assessments on various programs and systems in the Department. These assessments were approved and published on the Privacy Office's Web site between October 1, 2006 and October 31, 2006.
Dates: The Privacy Impact Assessment will be available on the DHS Web site until February 20, 2007, after which it may be obtained by contacting the DHS Privacy Office (contact information below). FOR FURTHER INFORMATION CONTACT: Hugo Teufel III, Chief Privacy Officer, Department of Homeland Security, Washington, DC 20528; by telephone
(571)227-3813, facsimile
(866)466-5370, or e-mail: *pia@dhs.gov.* SUPPLEMENTARY INFORMATION: Between October 1, 2006 and October 31, 2006, the Chief Privacy Officer of the Department of Homeland Security
(DHS)approved and published five Privacy Impact Assessments
(PIAs)on the DHS Privacy Office Web site, *http://www.dhs.gov/privacy* , under the link for “Privacy Impact Assessments.” These PIAs cover five separate DHS programs. Below is a short summary of each of those programs, indicating the DHS component responsible for the system, and the date on which the PIA was approved. Additional information can be found on the Web site or by contacting the Privacy Office. 1. Background Check Service Citizenship and Immigration Services October 31, 2006: The United States Citizenship and Immigration Services (USCIS) is developing the Background Check Service
(BCS)to help streamline the established USCIS background check process. As part of the adjudication process, USCIS conducts three different background checks on applicants/petitioners applying for USCIS benefits. These include
(1)a Federal Bureau of Investigation
(FBI)Fingerprint Check,
(2)a FBI Name Check and
(3)a Customs and Border Protection
(CBP)Treasury Enforcement Communication System/Interagency Border Inspection System (TECS/IBIS) Name Check. Prior to BCS, information relating to the FBI Fingerprint Checks and the FBI Name Checks was stored in two different systems. Information relating to the TECS/IBIS Name Checks was not stored in any system. BCS will be the central repository for all activity related to these background checks. 2. MAXHR Solution Component ePerformance System Update Management October 13, 3006: The update is to acknowledge a new version due to a new DHS-specific System of Records Notice, MaxHR ePerformance Management System DHS/OCHCO-001, that is being published in the **Federal Register** in order to provide additional transparency to DHS employees regarding the program. 3. Electronic Travel Document Immigration and Customs Enforcement October 17, 2006: The Electronic Travel Document System
(eTD)will maintain personal information regarding aliens who have been ordered removed or have been removed from the United States. The eTD will also maintain information on U.S. government employees and foreign consular officials required to access the system. The eTD system will present and share alien information with the foreign consular officials and associated governments for their use in the expedited issuance of travel documents. 4. Personal Identity Verification
(PIV)HSPD 12 Management October 13, 2006: Homeland Security Presidential Directive 12 (HSPD-12), issued on August 27, 2004, required the establishment of a standard for identification of Federal Government employees and contractors. HSPD-12 directs the use of a common identification credential for both logical and physical access to federally controlled facilities and information systems. This initiative is intended to enhance security, increase efficiency, reduce identity fraud, and protect personal privacy. 5. Natural Disaster Medical System Federal Emergency Management Agency October 13, 2006: The National Disaster Medical System Medical Professional Credentials
(NDMS)provides health services, health-related social services, other appropriate human services, and appropriate auxiliary services including mortuary and veterinary medical services in times of national emergency. NDMS also allows providers to respond to the needs of victims of a public health emergency or other public emergency, as defined in 42 U.S.C. 300hh-11(b)(3)(A). The NDMS program collects and maintains personally identifiable information in order to hire and retain qualified medical professionals and other professionals that can be activated and deployed in times of emergency. Dated: December 12, 2006. Hugo Teufel III, Chief Privacy Officer. [FR Doc. E6-21751 Filed 12-19-06; 8:45 am] BILLING CODE 4410-10-P DEPARTMENT OF HOMELAND SECURITY Published Privacy Impact Assessments on the Web AGENCY: Privacy Office, Office of the Secretary, Department of Homeland Security. ACTION: Notice of Publication of Privacy Impact Assessments. SUMMARY: The Privacy Office of the Department of Homeland Security is making available three Privacy Impact Assessments on various programs and systems in the Department. These assessments were approved and published on the Privacy Office's Web site between November 1, 2006 and November 30, 2006. DATES: The Privacy Impact Assessments will be available on the DHS Web site until February 20, 2007, after which they may be obtained by contacting the DHS Privacy Office (contact information below). FOR FURTHER INFORMATION CONTACT: Hugo Teufel III, Chief Privacy Officer, Department of Homeland Security, Washington, DC 20528; by telephone
(571)227-3813, facsimile
(866)466-5370, or e-mail: *pia@dhs.gov.* SUPPLEMENTARY INFORMATION: Between November 1, 2006 and November 30, 2006, the Chief Privacy Officer of the Department of Homeland Security
(DHS)approved and published three Privacy Impact Assessments
(PIAs)on the DHS Privacy Office Web site, *http://www.dhs.gov/privacy* , under the link for “Privacy Impact Assessments.” These PIAs cover three separate DHS programs. Below is a short summary of those programs, indicating the DHS component responsible for the system, and the date on which the PIA was approved. Additional information can be found on the Web site or by contacting the Privacy Office. 1. CBP Automatic Targeting System Customs and Border Protection November 22, 2006: Department of Homeland Security, Customs and Border Protection (CBP), has developed the Automated Targeting System (ATS). ATS is one of the most advanced targeting systems in the world. Using a common approach for data management, analysis, rules-based risk management, and user interfaces, ATS supports all CBP mission areas and the data and rules specific to those areas. This PIA was prepared in conjunction with the System of Records Notice that was published on November 2, 2006 in the **Federal Register** . 2. Global Enrollment System Customs and Border Protection November 1, 2006: This is an update to the previous Global Enrollment System PIA, dated April 20, 2006. It was prepared in order to include a description and analysis of the Global On-Line Enrollment System, which is the new online application process for enrollment in Customs and Border Protection trusted traveler programs. With the new system, CBP will be able to offer an on-line enrollment process to prospective and existing members of GES programs. 3. United States Coast Guard “Biometrics at Sea” Mona Passage Proof of Concept U.S. Coast Guard November 3, 2006: This PIA describes the U.S. Coast Guard
(USCG)and U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) Program partnership. The partnership is in furtherance of the broader objective to develop mobile biometric capabilities for the Department of Homeland Security (DHS). The findings from this proof of concept will be used to develop and refine technologies needed for mobile biometrics collection and analysis capability at sea, along with other remote areas where DHS operates. The technologies developed through this proof of concept will assist in the apprehension and prosecution of illegal migrants and migrant smugglers. They will also deter unsafe and illegal maritime migration, which will help preserve life at sea. The USCG deployed the at-sea biometric capability during the operational Proof of Concept
(POC)in November 2006. Dated: December 12, 2006. Hugo Teufel III, Chief Privacy Officer. [FR Doc. E6-21752 Filed 12-19-06; 8:45 am] BILLING CODE 4410-10-P DEPARTMENT OF HOMELAND SECURITY Coast Guard [USCG-2006-24068] Collection of Information Under Review by Office of Management and Budget: OMB Control Numbers: 1625-0003 AGENCY: Coast Guard, DHS. ACTION: Request for comments. SUMMARY: In compliance with the Paperwork Reduction Act of 1995, this request for comments announces that the Coast Guard is forwarding an Information Collection Request (ICR), abstracted below, to the Office of Information and Regulatory Affairs
(OIRA)of the Office of Management and Budget
(OMB)to request an extension of their approval of the following collection of information. The ICR is 1625-0003, Coast Guard Boating Accident Report Form (CG-3865). Our ICR describes the information we seek to collect from the public. Review and comments by OIRA ensures that we impose only paperwork burdens commensurate with our performance of duties. DATES: Please submit comments on or before January 19, 2007. ADDRESSES: To make sure that your comments and related material do not reach the docket [USCG-2006-24068] or OIRA more than once, please submit them by only one of the following means: (1)(a) By mail to the Docket Management Facility, U.S. Department of Transportation (DOT), room PL-401, 400 Seventh Street, SW., Washington, DC 20590-0001.
(b)By mail to OIRA, 725 17th Street, NW., Washington, DC 20503, to the attention of the Desk Officer for the Coast Guard. (2)(a) By delivery to room PL-401 at the address given in paragraph (1)(a) above, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is
(202)366-9329.
(b)By delivery to OIRA, at the address given in paragraph (1)(b) above, to the attention of the Desk Officer for the Coast Guard.
(3)By fax to
(a)the Facility at
(202)493-2298 or by contacting
(b)OIRA at
(202)395-6566. To ensure your comments are received in time, mark the fax to the attention of Mr. Nathan Lesser, Desk officer for the Coast Guard. (4)(a) Electronically through the Web site for the Docket Management System
(DMS)at *http://dms.dot.gov.*
(b)By e-mail to *nlesser@omb.eop.gov.* The Docket Management Facility maintains the public docket for this notice. Comments and material received from the public, as well as documents mentioned in this notice as being available in the docket, will become part of this docket and will be available for inspection or copying at room PL-401 on the Plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet at *http://dms.dot.gov.* Copies of the complete ICRs are available through this docket on the Internet at *http://dms.dot.gov* , and also from Commandant (CG-611), U.S. Coast Guard Headquarters, room 1236 (Attn: Mr. Arthur Requina), 2100 2nd Street, SW., Washington, DC 20593-0001. The telephone number is
(202)475-3523. FOR FURTHER INFORMATION CONTACT: Mr. Arthur Requina, Office of Information Management, telephone
(202)475-3523 or fax
(202)475-3929, for questions on these documents; or Ms. Renee V. Wright, Program Manager, Docket Operations,
(202)493-0402, for questions on the docket. SUPPLEMENTARY INFORMATION: The Coast Guard invites comments on the proposed collection of information to determine whether the collection is necessary for the proper performance of the functions of the Department. In particular, the Coast Guard would appreciate comments addressing:
(1)The practical utility of the collections;
(2)the accuracy of the estimated burden of the collections;
(3)ways to enhance the quality, utility, and clarity of the information that is the subject of the collections; and
(4)ways to minimize the burden of collections on respondents, including the use of automated collection techniques or other forms of information technology. Comments to DMS or OIRA must contain the OMB Control Number of the ICRs addressed. Comments to DMS must contain the docket number of this request, [USCG 2006-24068]. For your comments to OIRA to be considered, it is best if OIRA receives them on or before the January 19, 2007. *Public participation and request for comments:* We encourage you to respond to this request for comments by submitting comments and related materials. We will post all comments received, without change, to *http://dms.dot.gov* , they will include any personal information you have provided. We have an agreement with DOT to use their Docket Management Facility. Please see the paragraph on DOT's “Privacy Act Policy” below. *Submitting comments:* If you submit a comment, please include your name and address, identify the docket number for this request for comment [USCG-2006-24068], indicate the specific section of this document or the ICR to which each comment applies, and give the reason for each comment. You may submit your comments and material by electronic means, mail, fax, or delivery to the Docket Management Facility at the address under ADDRESSES , but please submit them by only one means. If you submit them by mail or delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. The Coast Guard and OIRA will consider all comments and material received during the comment period. We may change the documents supporting this collection of information or even the underlying requirements in view of them. *Viewing comments and documents:* To view comments, as well as documents mentioned in this notice as being available in the docket, go to *http://dms.dot.gov* at any time and conduct a simple search using the docket number. You may also visit the Docket Management Facility in room PL-401 on the Plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. *Privacy Act:* Anyone can search the electronic form of all comments received in dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review the Privacy Act Statement of DOT in the **Federal Register** published on April 11, 2000 (65 FR 19477), or you may visit *http://dms.dot.gov.* Previous Request for Comments. This request provides a 30-day comment period required by OIRA. The Coast Guard has already published the 60-day notice (71 FR 12378, March 10, 2006) required by 44 U.S.C. 3506(c)(2). That notice elicited comments from a firm that provides services in the analysis and design of automotive and marine products (“industry”), and from a state environmental protection agency (“State agency”). These comments requested a substantive revision to the CG-3865 report form. The comments made recommendations to enhance the quality, utility and clarity of the information that is subject to the collection. Comments concerned the terminology used in the current Coast Guard Boating Accident Report Form (CG-3865) lacks clarity to such an extent, it likely makes it difficult for a vessel operator/owner to complete the form as required by 33 CFR 173.55. As currently designed for use by “the operator/owner of a vessel,” some terminology used in the report form could be unclear or unknown by the reporting individual. Additionally, it was stated that designing the accident report form for an operator/owner while at the same time taking into consideration the use of the form by law enforcement officials means the report form has evolved into an instrument that does not adequately address the distinct needs and knowledge level of law enforcement or the operator/owner. We concur that some revisions are needed to improve the CG-3865 report form for accuracy and thoroughness of the information subject to the collection as prescribed by Federal regulations, but we did not agree with all of the suggested changes. Two issues related to potential rulemaking arose during our review of comments. First, the industry commenter has recommended that we amend the reporting provisions of 33 CFR 173.55(a) and
(c)as soon a possible to include law enforcement officers, instead of just vessel operators or owners, as persons who may complete accident reports. We have treated this portion of industry's comment as a petition for rulemaking and have forwarded it to the Executive Secretary of the Marine Safety and Security Committee in accordance with 33 CFR 1.05-20, Petitions for rulemaking. We only note here that § 173.55 identifies who must submit—not who must complete—the report. Second, while examining the form in response to comments, we noted a requirement in paragraph
(w)of 33 CFR 173.57 (Contents of Report). Specifically, paragraph
(w)requires the collection of vessel beam width at widest point and depth from transom to keel. This information is not solicited by the current form. Because it is required by paragraph (w), we have added this item to the revised form. We plan to re-examine this paragraph, particularly in light of requirements for the display of capacity information and a standard for safe loading in 33 CFR part 183, subparts B and C, respectively, to see if a revision in this regulation is warranted. The omission of this beam and transom solicitation in the current form may reflect that it has become impractical to collect this information from vessel operators/owners. After re-examining the usefulness of this information, we may decide a rulemaking is warranted to change the underlying requirement in § 173.57, but we can not eliminate the place to enter this information on the CG-3865 report form while this information is still required. In response to submitted comments, the CG-3865 report form has been revised to eliminate terms and data elements where:
(1)The practicality of collecting the information from vessel operators/owners is unrealistic and
(2)the information is of limited value in supporting the strategies and objectives of the national Recreational Boating Safety
(RBS)Program. The following is a summary of comments submitted within the scope of the solicitation that pertain specifically to the information collection request published in the **Federal Register** (71 FR 12378) on March 10, 2006. Industry Comments Comments submitted by industry focused on the practical utility of the collection as well as ways to enhance the quality and clarity of the information subjected to collection. The firm noted the current CG-3865 form lacks not only clarity, but a definition of terms which could make it difficult for a vessel operator/owner to complete. The firm also commented that we should consult with their stakeholders to correct the structural and content deficiencies of the report form. We concur with these comments and have recently evaluated information captured by the CG-3865 report form in consultation with the National Association of State Boating Law Administrators (NASBLA). NASBLA is comprised of Boating Law Administrators
(BLAs)representing the fifty States, five U.S. Territories, and the District of Columbia, who by regulation, serve as the reporting authorities for their respective jurisdiction. We do not concur with the comment that the CG-3865 report form is not in compliance with 33 CFR 173.55
(a)and (c). While appropriate State reporting authorities may assist appropriate individuals in the proper filing of the report, the report form and manner of reporting is in compliance with Federal regulations. We concur that the CG-3865 report form includes technical information that lacks clarity and definition of terms that a lay person may not be able to respond to in a manner as prescribed by regulations. In response, we have made substantive revisions to the CG-3865 report form in an attempt to capture accurate information from individuals who are required to file the report. For example, the following terms have been eliminated: “Inherently buoyant,” “Tertiary,” “Whitewater boating,” “Off-throttle steering,” and “Runaway boat.” And explanatory text has been provided for the following abbreviations: *VSC* [vessel safety check], *BUI* [boating under the influence], and *PFD* [personal floatation device]. In response to the comment for providing instructions for the vessel operator/owner to describe information for the overall accident as well as information for the specific vessel they were operating, we have included explanatory text in the headings of each section of the report form. Additionally, the structure of the boating accident report database file has been modified to reflect the manner of reporting for the overall accident as well as for the specific vessel(s) involved in the accident. We appreciate the recommendations submitted by industry for improving the quality of data captured by the accident report form. By revising the report form as recommended, we believe accident data is more accurately reported and subsequently captured in our boating accident report database file at the proper levels of causality and description. We believe the data and associated statistical information generated by the revised form will better show the factors—environmental, operator, and vessel—associated with boating accidents. State Agency Comments Comments submitted by the State agency focused on modifying the CG-3865 report form to clarify certain information. In response to these State agency comments: 1. We have modified the form to make it evident the information is required by the Coast Guard as prescribed by current federal regulations. We include in our explanatory text that State reporting authorities may require reports involving only damage to vessels and other property that is less than $2,000. 2. We concur that the most important information to collect regarding a VSC is when the vessel has been involved in an accident. The form has been modified to capture whether the respective vessels involved in accidents had current VSC decals. 3. We have clarified that information requested for a BUI arrest is specifically for the vessel operator involvement in the accident that is subject to the report, and not in reference to any prior BUI arrests. 4. Due to the limited practicality of collecting accurate engine serial number information from vessel operators/owners, serial number information has been eliminated from the revised CG-3865 report form. 5. The term “cruising” remains in the list of values associated with the operation of the vessel at the time of the accident. 6. The term “sudden medical condition” (heart attack, stroke, etc.) has been added to the list of contributing factors for an accident. 7. “Auxiliary equipment failure” now provides an example of such an occurrence ( *e.g.* , generator failure). 8. The entire “Accident Descriptors” section has been eliminated. However, “collision with a commercial vessel” has been added to the list for “Types of Accidents.” 9. The section requesting the “estimated number of days the vessel was used this year,” the “typical number of hours the vessel was used each day this year,” and the “typical number of persons on board the vessel used each day this year” has been eliminated from the report form. 10. In regard to the section of the report entitled, “Other People on Board this Vessel,” we concur with the removal of the last question asking for information on whether operators of the other vessels involved in the accident completed their reports. Individuals completing the form for their respective vessel typically would not know that same type of information for other vessels involved in the accident. In response, the “Other People on Board this Vessel” section has been eliminated. 11. In the section entitled “Witnesses not on this Vessel,” we have modified the title to include witnesses for the overall accident. We have also corrected the spelling of the word “separate.” 12. In the section entitled “For Agency Use Only,” we have modified the form to capture the primary and secondary causes of the accident in the opinion of the reviewing official. 13. In the section entitled “Person Completing the Report,” we have included a response for “Other” so the respondent is able to indicate who is submitting the report in case the operator and owner are unable to submit the report as required. In many of these cases, state reporting authority personnel (e.g., investigator) complete the CG-3865 report form to the best of their ability and submit the data to the Coast Guard. 14. The term “Bruise” has been placed in parentheses next to the term “ABRASION/CONTUSION.” 15. The term “Heart Attack” has been added to the list of types of injuries and the term “Other” has been added to the list of injury causes in the subsection entitled “Injury Caused By.” 16. “Victim Activity at the Time of the Accident” has been modified to be consistent in both the Non-Fatal Injury and Deceased sections of the report form. Since the term “Cruising” is appropriately designated as a vessel operation, it will remain listed as an “Operation at the Time of the Accident.” We appreciate the comments submitted by the State agency in clarifying the type of information to be submitted by vessel operators/owners using the CG-3865 report form. Information Collection Request *Title:* Coast Guard Boating Accident Report Form (CG-3865). *OMB Control Number:* 1625-0003. *Type of Request:* Extension of a currently approved collection. *Affected Public:* Operators of vessels that are being used for recreational purposes or those vessels that are required to be numbered, when as a result of an occurrence that involves the vessel or its equipment if any one of the following occurs:
(1)A person dies;
(2)A person is injured and requires medical treatment beyond first aid;
(3)Damage to vessels and other property totals $2,000 or more or there is a complete loss of any vessel; or
(4)A person disappears from the vessel under circumstances that indicate death or injury. The owner of the vessel shall be the respondent when the operator is unable to serve as such. *Forms:* CG-3865. *Abstract:* Under the authority of Title 46 U.S.C., including 46 U.S.C. 6102 and 6307, the Coast Guard has been delegated the responsibility to collect, analyze, and publish statistical information obtained from recreational boat numbering and casualty reporting systems. Information collected from Coast Guard Boating Accident Report Form (CG-3865) enables the Coast Guard to fulfill this statutory requirement. *Burden Estimate:* The estimated burden has decreased from 3,250 hours to 2,500 hours a year. Dated: December 13, 2006. R.T. Hewitt, Rear Admiral, Assistant Commandant for Command, Control, Communications, Computers and Information Technology. [FR Doc. E6-21644 Filed 12-19-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard [USCG-2006-26521] Random Drug Testing Rate for Covered Crewmembers AGENCY: Coast Guard, DHS. ACTION: Notice of minimum random drug testing rate. SUMMARY: The Coast Guard has set the calendar year 2007 minimum random drug testing rate at 50 percent of covered crewmembers. DATES: The minimum random drug testing rate is effective January 1, 2007 through December 31, 2007. Marine employers must submit their 2006 Management Information System
(MIS)reports no later than March 15, 2007. ADDRESSES: Annual MIS reports may be submitted in writing to Commandant (CG-3PCA), U.S. Coast Guard Headquarters, 2100 Second Street, SW., Room 2404, Washington, DC 20593-0001 or by electronic submission to the following Internet address: * http://www.uscg.mil/hq/g-m/moa/dapip.htm.* FOR FURTHER INFORMATION CONTACT: For questions about this notice, please contact Mr. Robert C. Schoening, Drug and Alcohol Program Manager, Office of Investigations and Analysis (CG-3PCA), U.S. Coast Guard Headquarters, telephone 202-372-1033. If you have questions on viewing the docket, call Renee V. Wright, Program Manager, Dockets Operations, Department of Transportation, telephone 202-366-0402. SUPPLEMENTARY INFORMATION: Under 46 CFR 16.230, the Coast Guard requires marine employers to establish random drug testing programs for covered crewmembers on inspected and uninspected vessels. Every marine employer is required to collect and maintain a record of drug testing program data for each calendar year, and submit this data by 15 March of the following year to the Coast Guard in an annual MIS report. Marine employers may either submit their own MIS reports or have a consortium or other employer representative submit the data in a consolidated MIS report. The purpose of setting a minimum random drug testing rate is to assist the Coast Guard in analyzing its current approach for deterring and detecting illegal drug abuse in the maritime industry. The testing rate for calendar year 2006 is 50 percent. The Coast Guard may lower this rate if, for two consecutive years, the drug test positive rate is less than 1.0 percent, in accordance with 46 CFR 16.230(f)(2). Since 2005 MIS data indicates that the positive rate is greater than one percent industry-wide (1.45 percent), the Coast Guard announces that the minimum random drug testing rate will continue at 50 percent of covered employees for the period of January 1, 2007 through December 31, 2007 in accordance with 46 CFR 16.230(e). Each year, the Coast Guard will publish a notice reporting the results of random drug testing for the previous calendar year's MIS data and the minimum annual percentage rate for random drug testing for the next calendar year. Dated: December 13, 2006. C.E. Bone, Rear Admiral, U.S. Coast Guard, Assistant Commandant for Prevention. [FR Doc. E6-21649 Filed 12-19-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR-5044-N-23] Notice of Proposed Information Collection for Public Comment for Housing Choice Voucher
(HCV)Family Self-Sufficiency
(FSS)Program AGENCY: Office of the Assistant Secretary for Public and Indian Housing, HUD. ACTION: Notice. SUMMARY: The proposed information collection requirement described below will be submitted to the Office of Management and Budget
(OMB)for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal. DATES: *Comments Due Date:* February 20, 2007. ADDRESSES: Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and or OMB Control number and should be sent to: Aneita Waites, Reports Liaison Officer, Public and Indian Housing, Department of Housing and Urban Development, 451 7th Street, SW. Room 4116, Washington, DC 20410. Interested persons are invited to submit comments regarding this proposal. FOR FURTHER INFORMATION CONTACT: Aneita L. Waites,
(202)708-0614, extension 4114. (This is not a toll-free number). For hearing- and speech-impaired persons, this telephone number may be accessed via TTY (text telephone) by calling the Federal Information Relay Services at 1-800-877-8339 (toll-free). SUPPLEMENTARY INFORMATION: The Department will submit the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended). This notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to:
(1)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;
(2)evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information;
(3)enhance the quality, utility, and clarity of the information to be collected; and
(4)minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses. *This Notice also lists the following information:* *Title of Proposal:* Housing Choice Voucher
(HCV)Family Self-Sufficiency
(FSS)Program. *OMB Control Number:* 2577-0178. *Description of the Need for the Information and Proposed Use:* The FSS program, which was established in the National Affordable Housing Act of 1990, promotes the development of local strategies that coordinate the use of public housing assistance and assistance under the Section 8 rental certificate and voucher programs (now known as the Housing Choice Voucher Program) with public and private resources to enable eligible families to achieve economic independence and self-sufficiency. Housing agencies consult with local officials to develop an Action Plan; enter into a Contract of Participation with each eligible family that opts to participate in the program; computes an escrow credit for the family, report annually to HUD on implementation of the FSS program, and complete a funding application for the salary of an FSS program coordinator. *Agency form numbers:* HUD-52650, HUD-52651, HUD-52652. *Members of the Affected Public:* Public housing agencies, State or Local Government. *Estimation including the Total Number of Hours Needed to Prepare the Information Collection for the Number of Respondents, Frequency of response, and hours of response:* Description of information collection Number of respondents Responses per year Total annual responses Hours per response Total hours SF424 750 1 750 0.75 562.5 SF LLL 10 1 10 0.17 1.7 HUD 2880 (OMB no. 2510-0011) 750 1 750 0 *0 HUD 96010 (OMB no. 2535-0114) 750 1 750 0 *0 HUD-2991 Certification 750 1 750 0 *0 HUD-2994-A (OMB no. 2535-0116) 750 1 750 0 *0 FSS Application, HUD-52651 750 1 750 0.75 563 Affirmatively Furthering Fair Housing Statement 750 1 750 .5 375 Subtotal (Application) 750 1 750 2.17 1502.2 Action Plan 5 1 5 40 200 Contract of Participation HUD-52650 750 10 7,500 .25 1,875 Escrow Account Credit Worksheet HUD-52652 750 50 37,500 .85 31,875 Annual Report (Narrative) 750 1 750 1 750 HUD-50058 (OMB no. 2577-0083) 750 50 37,500 0 *0 Subtotal (Program Reporting/Recordkeeping) 750 Varies 45,755 42.1 34,700 Total 750 Varies 46,505 44.27 36,202.2 *Burden hours for forms showing zero burden hours in this collection are reflected in the OMB approval number cited or do not have a reportable burden. The burden hours for this collection have decrease by 3,003.8 hours since the last submission to OMB. *Status of the Proposed Information Collection:* Revision of currently approved collection. Authority: Section 3506 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, as amended. Dated: December 15, 2006. Bessy Kong, Deputy Assistant Secretary for Policy, Program and Legislative Initiatives. [FR Doc. E6-21755 Filed 12-19-06; 8:45 am] BILLING CODE 4210-67-P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service Receipt of an Application for an Incidental Take Permit for the Tucker Pond Low Effect Habitat Conservation Plan, Santa Cruz County, California AGENCY: Fish and Wildlife Service, Interior. ACTION: Notice of availability. SUMMARY: Doug and Jennifer Ross (Applicants) have applied to the U.S. Fish and Wildlife Service (Service or “we”) for an incidental take permit pursuant to section 10(a)(1)(B) of the Endangered Species Act of 1973, as amended (Act). We are considering issuing a 10-year permit to the Applicants that would authorize take of the federally endangered Santa Cruz long-toed salamander ( *Ambystoma macrodactylum croceum* ) and the threatened California red-legged frog ( *Rana aurora draytonii* ) incidental to otherwise lawful activities associated with the construction of private residential facilities on 16.5 acres of their 99-acre property in Aptos, Santa Cruz County, California. We are requesting comments on the permit application and on our preliminary determination that the proposed Habitat Conservation Plan
(HCP)qualifies as a “low effect” HCP, eligible for a categorical exclusion under the National Environmental Policy Act
(NEPA)of 1969, as amended. We explain the basis for this possible determination in a draft Environmental Action Statement
(EAS)and associated Low Effect Screening Form. The Applicants' low effect HCP describes the mitigation and minimization measures they would implement, as required in Section 10(a)(2)(B) of the Act, to address the effects of the project on the Santa Cruz long-toed salamander and California red-legged frog. These measures are outlined in the SUPPLEMENTARY INFORMATION section below. The draft HCP and EAS are available for public review. DATES: Written comments should be received on or before January 19, 2007. ADDRESSES: Please address written comments to Diane Noda, Field Supervisor, Ventura Fish and Wildlife Office, U.S. Fish and Wildlife Service, 2493 Portola Road, Ventura, California 93003. You may also send comments by facsimile to
(805)644-3958. To obtain copies of draft documents, see “Availability of Documents” under SUPPLEMENTARY INFORMATION . FOR FURTHER INFORMATION CONTACT: Bill McIver, Fish and Wildlife Biologist, (see ADDRESSES ) telephone:
(805)644-1766 extension 234. SUPPLEMENTARY INFORMATION: Availability of Documents You may obtain copies of the application, HCP, and EAS by contacting the Fish and Wildlife Biologist (see FOR FURTHER INFORMATION CONTACT ). Documents will also be available for review by appointment, during normal business hours, at the Ventura Fish and Wildlife Office (see ADDRESSES ) or via the Internet at: *http://www.fws.gov/ventura.* Background Section 9 of the Act and Federal regulation prohibit the “take” of fish or wildlife species listed as endangered or threatened, respectively. Take of listed fish or wildlife is defined under the Act to mean harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct. However, the Service, under limited circumstances, may issue permits to authorize incidental take; *i.e.* , take that is incidental to, and not the purpose of, the carrying out of an otherwise lawful activity. Regulations governing incidental take permits for threatened and endangered species are found at 50 CFR 17.32 and 17.22, respectively. The taking prohibitions of the Act do not apply to federally listed plants on private lands unless such take would violate State law. Among other criteria, issuance of such permits must not jeopardize the existence of federally listed fish, wildlife, or plants. The Applicants own 99 acres of property (Ross Property) that includes grassland and coastal brush scrub habitats, in Aptos, California. The project site is located northeast of Highway 1 and south of Freedom Boulevard, in Aptos, Santa Cruz County, California. Typical land uses in the area surrounding the project site include several rural residences, a high school, and undeveloped oak woodland areas. The Applicants propose to construct on approximately 16.5 acres of land: A 7,500 square foot house with associated landscaping (main residence), a single-family dwelling, a 1,500 square foot caretaker house, a 2,000 square foot winemaking and agricultural equipment storage facility, a 2,000 square foot barn, septic systems, a swimming pool, a tennis court, a vineyard of approximately 5 acres, and an orchard. The Applicants propose to implement the following measures to minimize and mitigate take of the Santa Cruz long-toed salamander and California red-legged frog: Establish (with a conservation easement) and monitor a 38.8-acre preserve for the benefit of the Santa Cruz long-toed salamander and California red-legged frog; hire a Service-approved monitor and biologist; implement a construction worker education program; ensure monitoring of all grading, clearing, and other ground disturbing activities; mark construction area boundaries; construct drift fencing around construction area; control trash accumulation and install covered trash receptacles; install screens on irrigation, electrical, and other equipment to exclude Santa Cruz long-toed salamanders; surround the swimming pool with curbs to exclude Santa Cruz long-toed salamanders; remove nonnative plants; control bullfrogs; construct signs; use best management practices; and implement other minimization measures. The conservation easement would be held by the Center for Natural Lands Management, a non-profit conservation organization located in Fallbrook, California. The impacts from the construction activities and use of the property associated with this residential construction project are considered to be negligible to the two species as a whole because:
(1)The amount of habitat being disturbed is small relative to the amount of habitat available within the Applicant's property, Santa Cruz area, and within the range of the species;
(2)most of the areas that would be disturbed during construction probably support few, if any, Santa Cruz long-toed salamanders and California red-legged frogs;
(3)construction activities are not expected to affect Tucker Pond, where Santa Cruz long-toed salamanders are known to occur;
(4)no sheltering habitat for Santa Cruz long-toed salamanders would be removed; and
(5)California red-legged frogs are not expected to be present in the dry grasslands where the project will be built. The Service's proposed action is to issue an incidental take permit to the Applicants, who would then implement the HCP. Two alternatives to the taking of listed species under the proposed action are considered in the HCP. Under the No-Action Alternative, no permit would be issued, the proposed project would not occur, and the HCP would not be implemented. This would avoid immediate effects of construction and use of the property on the Santa Cruz long-toed salamander and California red-legged frog. However, under this alternative, the Applicants would not be able to develop their property, and conservation measures for the Santa Cruz long-toed salamander and California red-legged frog would not be implemented. A second alternative would result in a redesigned project with the relocation of the development footprint to another portion of the parcel. However, much of the property is too steep to be developed, and relocation of the footprint to the western portion of the property would result in the removal of oak woodland, which is essential sheltering habitat for the Santa Cruz long-toed salamander. The Service considers the proposed development footprint as more desirable than development elsewhere on the property because the modification of habitat for the Santa Cruz long-toed salamander and California red-legged frog would not be significant, and establishment of a conservation easement including the breeding pond and upland habitat would benefit the Santa Cruz long-toed salamander and California red-legged frog. The Service has made a preliminary determination that the HCP qualifies as a “low effect” HCP as defined by its Habitat Conservation Planning Handbook (November 1996). Our determination that a HCP qualifies as a low-effect plan is based on the following three criteria:
(1)Implementation of the plan would result in minor or negligible effects on federally listed, proposed, and candidate species and their habitats;
(2)implementation of the plan would result in minor or negligible effects on other environmental values or resources; and
(3)impacts of the plan, considered together with the impacts of other past, present, and reasonably foreseeable similarly situated projects would not result, over time, in cumulative effects to environmental values or resources which would be considered significant. As more fully explained in our EAS and associated Low Effect Screening Form, the Applicant's proposed HCP qualifies as a “low-effect” plan for the following reasons:
(1)Approval of the HCP would result in minor or negligible effects on the Santa Cruz long-toed salamander and California red-legged frog and their habitats. The Service does not anticipate significant direct or cumulative effects to the Santa Cruz long-toed salamander or California red-legged frog resulting from development and use of the Ross Property.
(2)Approval of the HCP would not have adverse effects on unique geographic, historic, or cultural sites, or involve unique or unknown environmental risks.
(3)Approval of the HCP would not result in any cumulative or growth inducing impacts and, therefore, would not result in significant adverse effects on public health or safety.
(4)The project does not require compliance with Executive Order 11988 (Floodplain Management), Executive Order 11990 (Protection of Wetlands), or the Fish and Wildlife Coordination Act, nor does it threaten to violate a Federal, State, local, or tribal law or requirement imposed for the protection of the environment.
(5)Approval of the HCP would not establish a precedent for future actions or represent a decision in principle about future actions with potentially significant environmental effects. The Service therefore has made a preliminary determination that approval of the HCP qualifies as a categorical exclusion under the NEPA, as provided by the Department of the Interior Manual (516 DM 2, Appendix 1 and 516 DM 6, Appendix 1). Based upon this preliminary determination, we do not intend to prepare further NEPA documentation. The Service will consider public comments in making its final determination on whether to prepare such additional documentation. We will evaluate the permit application, the HCP, and comments submitted thereon to determine whether the application meets the requirements of section 10(a) of the Act. If the requirements are met, the Service will issue a permit to the Applicants. Public Review and Comment If you wish to comment on the permit application, draft Environmental Action Statement or the proposed HCP, you may submit your comments to the address listed in the ADDRESSES section of this document. Our practice is to make comments, including names, home addresses, etc., of respondents available for public review. Individual respondents may request that we withhold their names and/or home addresses, etc., but if you wish us to consider withholding this information you must state this prominently at the beginning of your comments. In addition, you must provide a rationale demonstrating and documenting that disclosure would constitute a clearly unwarranted invasion of privacy. In the absence of exceptional, documented circumstances, this information will be released. All submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, are available for public inspection in their entirety. The Service provides this notice pursuant to section 10(c) of the Act and pursuant to implementing regulations for NEPA (40 CFR 1506.6). Dated: December 13, 2006. Diane K. Noda, Field Supervisor, Ventura Fish and Wildlife Office, Ventura, California. [FR Doc. E6-21714 Filed 12-19-06; 8:45 am] BILLING CODE 4310-55-P DEPARTMENT OF THE INTERIOR Bureau of Land Management [CO-200-0777-XZ-241A] Notice of Meeting, Front Range Resource Advisory Council (Colorado) AGENCY: Bureau of Land Management, Interior. ACTION: Notice of public meeting. SUMMARY: In accordance with the Federal Land Policy and Management Act (FLPMA) and the Federal Advisory Committee Act of 1972 (FACA), the U.S. Department of the Interior, Bureau of Land Management
(BLM)Front Range Resource Advisory Council (RAC), will meet as indicated below. DATES: The meetings will be held January 25, 2007 and March 21, 2007. Both meetings will be from 9:15 a.m. to 4 p.m. ADDRESSES: Holy Cross Abbey Community Center, 2951 E. Highway 50, Canon City, Colorado 81212. FOR FURTHER INFORMATION CONTACT: Ken Smith,
(719)269-8500. SUPPLEMENTARY INFORMATION: The 15 member Council advises the Secretary of the Interior, through the Bureau of Land Management, on a variety of planning and management issues associated with public land management in the Royal Gorge Field Office and San Luis Valley, Colorado. Planned agenda topics for the January 25, 2007 meeting will include: Manager updates on current land management issues; the draft Colorado Recreation Strategy Communication Plan; the South Park Plan Amendment; travel management planning and the Rio Grande Natural Area. Planned agenda topics for the March 21, 2007 meeting will include: Manager updates on current land management issues; biomass utilization and travel management planning. All meetings are open to the public. The public is encouraged to make oral comments to the Council at 9:30 a.m. or written statements may be submitted for the Council's consideration. Depending on the number of persons wishing to comment and time available, the time for individual oral comments may be limited. Summary minutes for the Council Meeting will be maintained in the Royal Gorge Field Office and will be available for public inspection and reproduction during regular business hours within thirty
(30)days following the meeting. Meeting Minutes and agenda are also available (10 days prior to each meeting) at: *http://www.blm.gov/rac/co/frrac/co_fr.htm.* Dated: December 13, 2006. Roy L. Masinton, Royal Gorge Field Manager. [FR Doc. E6-21713 Filed 12-19-06; 8:45 am] BILLING CODE 4310-JB-P DEPARTMENT OF THE INTERIOR National Park Service National Register of Historic Places; Notification of Pending Nominations and Related Actions Nominations for the following properties being considered for listing or related actions in the National Register were received by the National Park Service before December 2, 2006. Pursuant to section 60.13 of 36 CFR part 60 written comments concerning the significance of these properties under the National Register criteria for evaluation may be forwarded by United States Postal Service, to the National Register of Historic Places, National Park Service, 1849 C St., NW., 2280, Washington, DC 20240; by all other carriers, National Register of Historic Places, National Park Service, 1201 Eye St., NW., 8th floor, Washington, DC 20005; or by fax, 202-371-6447. Written or faxed comments should be submitted by January 4, 2007. John W. Roberts, Acting Chief, National Register/National Historic Landmarks Program. ARKANSAS Pulaski County Argenta Historic District (Boundary Increase), Roughly bounded by N. Poplar, 9th St., N. Broadway, W. 4th, Broadway, North Little Rock, 06001217 CALIFORNIA Alameda County Altenheim, 1720 MacArthur Blvd., Oakland, 06001218 COLORADO Larimer County Shaffer, Henry K. and Mary E., House, 1302 N. Grant Ave., Loveland, 06001219 IOWA Fremont County Hunter School, Jct. of IA 275 and IA J18, Tabor, 06001220 MAINE Aroostook County Sodergren, John J. and Martha, Homestead, 161 S. Shore Rd., Stockholm, 06001222 Knox County Camden Great Fire Historic District, Elm and Main Sts., Camden, 06001221 Somerset County Mercer Union Meetinghouse, Main St., 1/10 mi. W of jct. with ME 2, Mercer, 06001223 York County Sanford Town Hall (Former), 505 Main St., Springvale, 06001225 MONTANA Silver Bow County Parrot Mine Shops Complex, 244 Anaconda Rd., Butte, 06001228 Yellowstone County Black Otter Trail, Black Otter Trail, Billings, 06001224 NEW YORK Richmond County West Bank Light Station, (Light Stations of the United States MPS) In lower New York Bay, 3.3 mi. E of New Dorp Beach, New Dorp Beach, 06001230 Suffolk County Orient Point Light Station, (Light Stations of the United States MPS) NE tip of Long Island, 1.1 mi. NE of Eastern Terminus of NY 25, Orient, 06001229 NORTH DAKOTA Cass County Sprunk Site (32CS04478), Address Restricted, Enderlin, 06001226 RHODE ISLAND Providence County Downtown Pawtucket Historic District, (Pawtucket MRA) Roughly bounded by Broad St., Grant St., High St., East Ave. Ext. and Main St., Pawtucket, 06001227 SOUTH CAROLINA Spartanburg County Marysville School, Sunny Acres Rd., Pacolet, 06001231 TENNESSEE Cannon County Rucker—Mason Farm, (Historic Family Farms in Middle Tennessee MPS) 837 Hare Ln., Porterfield, 06001234 TEXAS Bexar County Gunter Hotel, 205 E. Houston St., San Antonio, 06001233 VERMONT Windham County Estey Organ Company Factory (Boundary Increase), 68 Birge St., Brattleboro, 06001232 Windsor County Ascutney Mill Dam Historic District, 55 and 57 Ascutney St., Windsor, 06001236 Ludlow Village Historic District, Main St., Depot St., Ludlow, 06001235 [FR Doc. E6-21663 Filed 12-19-06; 8:45 am] BILLING CODE 4312-51-P INTERNATIONAL TRADE COMMISSION [Investigation No. 731-TA-1034 (Remand)] Certain Color Television Receivers From China AGENCY: United States International Trade Commission. ACTION: Notice of request for comments in a remand proceeding concerning an antidumping investigation on certain color television receivers from China. SUMMARY: The Commission hereby gives notice that it is inviting parties to the referenced proceeding to file comments in the remand proceeding ordered by the United States Court of International Trade (CIT). For further information concerning the conduct of this proceeding and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A through E (19 CFR part 201), and part 207, subpart A (19 CFR part 207). DATES: *Effective Date:* December 14, 2006. FOR FURTHER INFORMATION CONTACT: Debra A. Baker (202-205-3180), Office of Investigations, or Marc A. Bernstein (202-205-3087), Office of General Counsel, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its Internet server ( *http://www.usitc.gov* ). The public record of Investigation No. 731-TA-1034 may be viewed on the Commission's electronic docket
(EDIS)at *http://edis.usitc.gov.* SUPPLEMENTARY INFORMATION: *Background.* —In May 2004, the Commission determined that an industry in the United States was materially injured by reason of certain color television receivers
(CTVs)from China. Sichuan Changhong Electric Co. (Changhong) subsequently instituted an action at the CIT challenging the Commission's determination. The CIT issued an opinion in the matter on November 15, 2006. *Sichuan Changhong Electric Co.* v. *United States* , Ct. No. 04-00266, Slip Op. 06-168 (Ct. Int'l Trade Nov. 15, 2006). In its opinion, the CIT rejected all arguments asserted by plaintiff Changhong, but remanded the matter to the Commission for explanation and possible modification concerning the “specific causation determination” requirements imposed by the U.S. Court of Appeals for the Federal Circuit in *Bratsk Aluminum Smelter* v. *United States* , 444 F.3d 1369 (Fed. Cir. 2006) and *Caribbean Ispat, Ltd.* v. *United States* , 450 F.3d 1336 (Fed. Cir. 2006). *Participation in the proceeding* .—Only those persons who were interested parties to the original investigation ( *i.e.* , persons listed on the Commission Secretary's service list) and were parties to the appeal may participate in the remand proceeding. Such persons need not make any additional filings with the Commission to participate in the remand proceeding. References to business proprietary information (“BPI”) during the remand proceeding will be governed, as appropriate, by the administrative protective order issued in the original investigation. *Written Submissions.* —The Commission is not reopening the record in this proceeding for submission of new factual information. The Commission will, however, permit the parties to file comments pertaining to the inquiries that are the subject of the CIT's remand instructions. Comments shall be limited to no more than twenty
(20)double-spaced and single-sided pages of textual material. The parties may not submit any new factual information and may not address any issue other than the applicability of the *Bratsk* and *Ispat* decisions to this investigation, whether the Commission's causation analysis in the original investigations complies with the requirements the Federal Circuit articulated in those two decisions, and what, if any, modifications must be made to the Commission's causation analysis to put it into conformance with the requirements articulated in those decisions. Any such comments must be filed with the Commission no later than January 8, 2007. All written submissions must conform with the provisions of section 201.8 of the Commission's rules; any submissions that contain BPI must also conform with the requirements of sections 201.6, 207.3, and 207.7 of the Commission's rules. The Commission's rules do not authorize filing of submissions with the Secretary by facsimile or electronic means, except to the extent permitted by section 201.8 of the Commission's rules, as amended, 67 FR 68036 (November 8, 2002). In accordance with sections 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigation must be served on all other parties to the investigation (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service. Parties are also advised to consult the Commission's Rules of Practice and Procedure, part 201, subparts A through E (19 CFR part 201), and part 207, subpart A (19 CFR part 207) for provisions of general applicability concerning written submissions to the Commission. By order of the Commission. Issued: December 15, 2006. Marilyn R. Abbott, Secretary to the Commission. [FR Doc. E6-21747 Filed 12-19-06; 8:45 am] BILLING CODE 7020-02-P DEPARTMENT OF LABOR Office of the Secretary Submission for OMB Review: Comment Request December 14, 2006. The Department of Labor
(DOL)has submitted the following public information collection request
(ICR)to the Office of Management and Budget
(OMB)for review and approval in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). A copy of this ICR, with applicable supporting documentation, may be obtained at *http://www.reginfo.gov/public/do/PRAMain* , or contact Ira Mills on 202-693-4122 (this is not a toll-free number) or e-mail: *Mills.Ira@dol.gov.* Comments should be sent to Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for U.S. Department of Labor/Employment and Training Administration (ETA), Office of Management and Budget, Room 10235, Washington, DC 20503, 202-395-7316 (this is not a toll free number), within 30 days from the date of this publication in the **Federal Register** . The OMB is particularly interested in comments which: • 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 are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, *e.g.* , permitting electronic submission of responses. *Agency:* Employment and Training Administration. *Type of Review:* Extension without change of a currently approved collection. *Title:* Preliminary Estimate of Average Employer Tax Rates. *OMB Number:* 1205-0228. *Frequency:* Annually. *Affected Public:* State, Local, or Tribal government. *Type of Response:* Reporting. *Number of Respondents:* 53. *Annual Responses:* 53. *Average Response time:* 15 minutes. *Total Annual Burden Hours:* 14. *Total Annualized Capital/Startup Costs:* 0. *Total Annual Costs (operating/maintaining systems or purchasing services):* 0. *Description:* The Secretary has interpreted applicable sections of Federal law to require States to address the prevention, detection, and recovery of benefit overpayments caused by willful misrepresentation or errors by claimants or others. This report provides an accounting of the types and amounts of such overpayments and serves as a useful management tool for monitoring overall integrity in the Unemployment Insurance system. Ira L. Mills, Departmental Clearance Officer/ Team Leader. [FR Doc. E6-21630 Filed 12-19-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Office of the Secretary Submission for OMB Review: Comment Request December 14, 2006. The Department of Labor
(DOL)has submitted the following public information collection requests
(ICR)to the Office of Management and Budget
(OMB)for review and approval in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. chapter 35). A copy of each ICR, with applicable supporting documentation, may be obtained from RegInfo.gov at *http://www.reginfo.gov/public/do/PRAMain* or by contacting Darrin King on 202-693-4129 (this is not a toll-free number)/e-mail: *king.darrin@dol.gov.* Comments should be sent to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for the Occupational Safety and Health Administration (OSHA), Office of Management and Budget, Room 10235, Washington, DC 20503, Telephone: 202-395-7316/Fax: 202-395-6974 (these are not a toll-free numbers), within 30 days from the date of this publication in the **Federal Register** . The OMB is particularly interested in comments which: • 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 are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. *Agency:* Occupational Safety and Health Administration. *Type of Review:* Extension without change of currently approved collection. *Title:* 4,4′-Methylenedianiline Construction 29 CFR 1926.60. *OMB Number:* 1218-0183. *Type of Response:* Recordkeeping and third-party disclosure. *Affected Public:* Business or other for-profits. *Number of Respondents:* 60. *Number of Annual Responses:* 3,960. *Estimated Time per Response:* Varies by task. *Total Burden Hours:* 1,607. *Total Annualized capital/startup costs:* $0. *Total Annual Costs (operating/maintaining systems or purchasing services):* $80,412. *Description:* The purpose of this Standard and its information collection requirements is to provide protection for employees from adverse health effects associated with occupational exposure to 4,4'-Methylenedianiline. Employers must monitor exposure, keep employee exposures within the permissible exposure limits, provide employees with medical examinations and training, and establish and maintain employee exposure-monitoring and medical records. *Agency:* Occupational Safety and Health Administration. *Type of Review:* Extension without change of currently approved collection. *Title:* 4,4′-Methylenedianiline General Industry 29 CFR 1910.1050. *OMB Number:* 1218-0184. *Type of Response:* Recordkeeping and third-party disclosure. *Affected Public:* Business or other for-profits. *Number of Respondents:* 13. *Number of Annual Responses:* 583. *Estimated Time per Response:* Varies by task. *Total Burden Hours:* 293. *Total Annualized capital/startup costs:* $0. *Total Annual Costs (operating/maintaining systems or purchasing services):* $19,312. *Description:* The purpose of this Standard and its information collection requirements is to provide protection for employees from adverse health effects associated with occupational exposure to 4,4-Methylenedianiline. Employers must monitor exposure, keep employee exposures within the permissible exposure limits, provide employees with medical examinations and training, and establish and maintain employee exposure-monitoring and medical records. *Agency:* Occupational Safety and Health Administration. *Type of Review:* Extension without change of currently approved collection. *Title:* Electrical Protective Equipment (29 CFR 1910.137), and Electric Power Generation, Transmission, and Distribution (29 CFR 1910.269). *OMB Number:* 1218-0190. *Type of Response:* Recordkeeping and third-party disclosure. *Affected Public:* Business or other for-profits. *Number of Respondents:* 20,765. *Number of Annual Responses:* 437,884. *Estimated Time per Response:* Varies by task. *Total Burden Hours:* 30,533. *Total Annualized capital/startup costs:* $0. *Total Annual Costs (operating/maintaining systems or purchasing services):* $0. *Description:* The information collection requirements are needed to help provide protection to employees who use electrical protective equipment and who are involved in industries engaged in electric power generation, transmission, and distribution work. *Agency:* Occupational Safety and Health Administration. *Type of Review:* Extension without change of currently approved collection. *Title:* Standard on Walking-Working Surfaces (29 CFR part 1910, subpart D). *OMB Number:* 1218-0199. *Type of Response:* Third-party disclosure. *Affected Public:* Business or other for-profits. *Number of Respondents:* 12,100. *Number of Annual Responses:* 12,100. *Estimated Time per Response:* Varies by task. *Total Burden Hours:* 1,193. *Total Annualized capital/startup costs:* $0. *Total Annual Costs (operating/maintaining systems or purchasing services):* $0. *Description:* The information collection requirements in the Walking-Working Surfaces standard is designed to protect employees by making them aware of load limits of the floors of buildings, defective portable metal ladders, and the specifications of outrigger scaffolds used. *Agency:* Occupational Safety and Health Administration. *Type of Review:* Extension without change of currently approved collection. *Title:* OSHA Data Initiative (ODI). *OMB Number:* 1218-0209. *Type of Response:* Reporting. *Affected Public:* Business or other for-profits. *Number of Respondents:* 100,000. *Number of Annual Responses:* 100,000. *Estimated Time per Response:* 10 minutes. *Total Burden Hours:* 16,666. *Total Annualized capital/startup costs:* $0. *Total Annual Costs (operating/maintaining systems or purchasing services):* $0. *Description:* The agency will collect occupational injury and illness data from selected employers. These employers will also be required to provide the average employment, hours worked, and the name and phone number of the person submitting the data. The data collection will include mail and telephone follow-up to ask clarifying questions concerning data submitted, and to attempt to obtain responses from non-responders. The purpose of the data collection is to compile occupational injury and illness data from employers within specific industries and size categories. OSHA then will be able to calculate occupational injury and illness rates by employer and specific industry. The agency will require this information from up to 100,000 employers required to create and maintain records pursuant to 29 CFR part 1904. In each of the previous OSHA Data Initiative
(ODI)information collections, beginning with the collection of CY 1995 data, the Agency collected data from approximately 80,000 establishments each year. OSHA used the 1996 data from the 1997 collection as a baseline for both its Cooperative Compliance Program initiative and its Interim Plan for Inspection Targeting. The 1997 through 2004 injury and illness data have been used for OSHA's Site Specific Targeting
(SST)plans. Each year the SST plan is updated with the most current data. The SST-06 plan is currently using CY 2004 establishment specific data. Since 1998, OSHA has used the information from each data collection to identify approximately 14,000 establishments in Federal jurisdiction with high lost workday injury and illness case rates. OSHA sends letters to these establishments indicating its concern about the high injury and illness rate at the establishment and informing the employer of available services, such as the OSHA on-site consultation program, that can be used to identify hazards and address occupational safety and health issues. OSHA is also using the information collected for measurement purposes to comply with the Government Performance and Results Act (GPRA). It must be noted that limiting this data collection to establishments with 40 or more employees also limits OSHA's ability to fully utilize this data collection to meet the Agency's requirements under the GPRA. A significant portion of OSHA inspections as well as consultation visits are performed at establishments with less than 40 employees. OSHA cannot conduct follow-up data collection to measure the impact of these interventions without authorization to collect from this group of smaller employers. OSHA is seeking approval to collect data from these employers only for performance measurement purposes. Data collected from this group would not be used for OSHA's enforcement activities. Some states operating state plans pursuant to Section 18 of the OSH Act also use the information collected for the same purposes as does Federal OSHA. Darrin A. King, Acting Departmental Clearance Officer. [FR Doc. E6-21631 Filed 12-19-06; 8:45 am] BILLING CODE 4510-26-P DEPARTMENT OF LABOR Occupational Safety and Health Administration [Docket No. NRTL95-F-1] Nationally Recognized Testing Laboratories; Proposed Revised Fee Schedule AGENCY: Occupational Safety and Health Administration (OSHA), Labor. ACTION: Notice. SUMMARY: This notice provides the proposed revised schedule of fees to be charged by the Occupational Safety and Health Administration
(OSHA)to Nationally Recognized Testing Laboratories (NRTLs). OSHA charges fees for specific types of services it provides to NRTLs. The fees charged to NRTLs first went into effect on October 1, 2000. DATES: The new fees shown in this notice will become effective on February 5, 2007. You must submit information or comments by the following dates: • Hard copy: postmarked or sent by January 4, 2007. • Electronic transmission or facsimile: sent by January 4, 2007. ADDRESSES: You may submit comments by any of the following methods: *Electronically:* You may submit comments and attachments electronically at *http://www.regulations.gov,* which is the Federal eRulemaking Portal. Follow the instructions on-line for making electronic submissions. *Fax:* If your submissions, including attachments, are not longer than 10 pages, you may fax them to the OSHA Docket Office at
(202)693-1648. *Mail, hand delivery, express mail, messenger, or courier service:* You must submit three copies of your comments and attachments to the OSHA Docket Office, Docket No. NRTL95-F-1, U.S. Department of Labor, Room N-2625, 200 Constitution Avenue, NW., Washington, DC 20210. Deliveries (hand, express mail, messenger and courier service) are accepted during the Department of Labor's and Docket Office's normal business hours, 8:15 a.m.-4:45 p.m., e.t. *Instructions:* All submissions must include the Agency name and the OSHA docket number for this notice (OSHA Docket No. NRTL95-F-1). Submissions, including any personal information you provide, are placed in the public docket without change and may be made available online at *http://www.regulations.gov.* *Docket:* To read or download submissions or other material in the docket, go to *http://www.regulations.gov* or the OSHA Docket Office at the address above. All documents in the docket are listed in the *http://www.regulations.gov* index, however, some information (e.g., copyrighted material) is not publicly available to read or download through the Web site. All submissions, including copyrighted material, are available for inspection and copying at the OSHA Docket Office. *Extension of Comment Period:* Submit requests for extensions concerning this notice to the Office of Technical Programs and Coordination Activities, NRTL Program, Occupational Safety and Health Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-3655, Washington, DC 20210. Or fax to
(202)693-1644. FOR FURTHER INFORMATION CONTACT: MaryAnn Garrahan, Director, Office of Technical Programs and Coordination Activities, NRTL Program, Occupational Safety and Health Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., Room N3655, Washington, DC 20210, or phone
(202)693-2110. Our Web page includes information about the NRTL Program (see *http://www.osha.gov* and select “N” in the site index). SUPPLEMENTARY INFORMATION: I. Introduction The Occupational Safety and Health Administration
(OSHA)is proposing to adjust the fees that the Agency charges for the services it provides to Nationally Recognized Testing Laboratories (NRTLs). OSHA is taking this action as a result of its process for annually reviewing the fees, as provided under 29 CFR 1910.7(f). This review has shown that the costs of providing the services covered by the fees have changed sufficiently to warrant adjustments to the current fee schedule, which has been in effect since January 2002. The fee adjustments described in this notice are based on the current approach for calculating fees, which is the same approach OSHA used in developing the first fee schedule (effective October 1, 2000). OSHA is also in the process of developing a new approach to calculating fees that would more accurately recoup the total costs of the services OSHA provides to NRTLs. The Agency will be proposing this new approach, and seeking comments on it, in a **Federal Register** notice to be published at a later date. II. Background Many of OSHA's safety standards require that equipment or products used in the workplace be tested and certified to help ensure they can be used safely. *See, e.g.* , 29 CFR part 1910, subpart S. In general, this testing and certification must be performed by a Nationally Recognized Testing Laboratory (NRTL). Products or equipment that have been tested and certified must have the NRTL's certification mark on them, or, if this is not feasible, then on its packaging. An employer may rely on the certification mark, which shows that the equipment or product has been tested and certified in accordance with OSHA requirements. In order to ensure that the testing and certification is done appropriately, OSHA implemented the NRTL Program. The NRTL Program establishes the criteria that an organization must meet in order to be and remain recognized as an NRTL. The NRTL Program requirements are set forth under 29 CFR 1910.7, “Definition and requirements for a nationally recognized testing laboratory.” To be recognized by OSHA, an organization must:
(1)Have the appropriate capability to test, evaluate, and approve products to assure their safe use in the workplace;
(2)be completely independent of the manufacturers, vendors, and major users of the products for which OSHA requires certification;
(3)have internal programs that ensure proper control of the testing and certification process; and
(4)have effective reporting and complaint handling procedures. OSHA requires NRTL applicants (i.e., organizations seeking initial recognition as an NRTL) to provide detailed and comprehensive information about their programs, processes, and procedures in writing when they apply. OSHA reviews the written information and conducts an on-site assessment to determine whether the organization meets the requirements of 29 CFR 1910.7. OSHA uses a similar process when an NRTL (i.e., an organization already recognized) applies for expansion or renewal of its recognition. In addition, the Agency conducts annual audits to ensure that the recognized laboratories maintain their programs and continue to meet the recognition requirements. Currently, there are 18 NRTLs operating over 50 recognized sites in the U.S., Canada, Europe, and the Far East. III. Program Costs and Fee Calculation To understand the adjustments we are proposing to make to the fee schedule, Section A discusses the derivation of the hourly rate we will use to assess the fees. Section B discusses changes we are making to the estimate of activity times and briefly describes new chargeable activities for the services to NRTLs. Section C details the proposed new activity costs. A. Derivation of Hourly Rate
(ECR)In preparing the proposed fee schedule presented in this notice, OSHA has updated its calculation of the total resources that it has committed to the NRTL Program overall and has then computed the costs that are involved solely with the application approval and the periodic review (i.e., audit) functions. OSHA calculates the fees for these services by multiplying an equivalent average direct staff cost per hour rate
(ECR)by the time it takes to perform the activities involved in application processing or audit functions. Simply put, Fee for activity = ECR x Time for activity. OSHA derives the ECR by taking the total estimated direct and indirect costs of the program, consisting of personnel costs (salary and fringe) and office expenses, but excluding travel, and dividing that total by the total available annual work hours of the direct staff devoted to all the NRTL Program activities, i.e., the number of full-time equivalent
(FTE)personnel. 1 Illustrated as an equation: 1 In discussing total hours in this notice, we often refer to FTEs which stands for full-time equivalents and equals total hours divided by 2,080, the total available annual work hours for one full-time employee. ECR = TPC / TAW, where TPC is the total estimated direct and indirect program costs (excluding travel) and TAW is the total available annual work hours of the direct staff. Figure 1, below, represents OSHA's TPC of providing the services for which we charge fees and shows the calculation of the ECR. As a result of our proposed adjustments, our base hourly rate for calculating our fees, i.e., the ECR, would increase approximately 17% above its present level, from $54.50 to $63.80. The $54.50 was derived using 2002 projected staff salary and fringe, and other program costs. The 17% increase mainly reflects annual salary adjustments provided to Federal employees that have accumulated since the revision in 2002. The Agency believes these costs are fair and reasonable. Figure 1.—NRTL Program Annual Cost Estimates Cost description FTE Avg. cost per FTE (including fringe) Total costs Direct Staff Costs 5.24 $110,743 $580,294 Indirect Staff & Other Costs ( 1 ) ( 1 ) 2 115,130 Subtotal Costs 695,424 Travel Expenses ( 1 ) ( 1 ) 60,000 Total Program Costs 755,424 Avg. direct staff cost/hr. = $580,294/(5.24 FTE x 2,080 hours) = $53.20. ECR = Equivalent avg. direct staff cost/hr. rate = $695,424/(5.24 FTE x 2,080 hours) = $63.80 (includes direct & indirect costs but not travel). 1 Not applicable. 2 This amount consists of $60,150 for management and support staff and $54,980 for equipment and other costs. In Figure 1, Direct Staff Costs are personnel costs for the staff that perform direct activities (i.e., the services, such as the application, on-site and legal reviews, and other activities involved in application processing and audits) as well as activities not directly connected to the fees. Indirect Staff and Other Costs are expenses for support and management staff, equipment, and other costs that are involved in the operation of the program. Support and management staff consists of program management and secretarial staff. Equipment and other costs are intended to cover items such as computers, telephones, building space, utilities, and supplies, which are necessary to perform the services covered by the proposed fees. In general, indirect costs, by their very nature, are not readily identified with a specific output (in the present context, a specific activity) but are used in producing it. They are allocated to the application processing and audit activities based on direct staff costs. Travel Expenses shown in the figures are estimates of the costs we incur for travel related to the services that are covered by the fees. However, this amount is not included in the ECR since we charge for the actual staff travel expenses of the on-site visits performed by our program staff. In Figure 1, the travel expenses figure is presented only to show total program costs. The use of an “equivalent average direct staff cost per hour rate”
(ECR)measure is a convenient method of allocating indirect costs to each of the services for which OSHA will charge fees. The same result is obtained if direct staff costs are first calculated and then indirect costs are allocated based on the value, i.e., dollar amount, of the direct staff costs, which is an approach that is consistent with Federal accounting standards. To illustrate this, assume that a direct staff member spends 10 hours on an activity; the direct staff costs would then be calculated as follows: Direct staff costs = 10 hours × $53.20/hour = $532. The $53.20/hour is the direct staff cost/hour amount shown in Figure 1. The indirect costs would be allocated by first calculating the ratio of indirect costs to direct staff costs, again using the costs shown in Figure 1. This ratio would be as follows: Indirect costs/direct staff costs = $115,130/$580,294 = 0.1984. Next, the indirect costs would be calculated based on the $532 estimate of direct staff costs: Indirect costs = $532 × 0.1984 = $106. Finally, the total costs of the activity are calculated: Total costs = direct staff costs + indirect costs = $532 + $106 = $638. We derive the same amount using the ECR of $63.80, i.e., 10 hours × $63.80/hour = $638. B. Modified Activity Times and Additional Activities In addition to updating the ECR, the Agency has updated estimates of the average staff time that it spends on some specific activities or functions of the services covered by the fees. The staff activity times we updated resulted in a portion of the adjustments in the proposed Fee Schedule. OSHA previously developed these times for each major activity within the main types of services, which are application processing and audits. For application processing, OSHA is increasing the average staff activity time in the areas of the on-site assessment and the final report/federal register notice activities. In the first case, the increase mainly reflects the time necessary for making travel arrangements and, in the second case, mainly reflects the separate time necessary for the preparation of the notice. For audits, OSHA is increasing the average staff activity time in the areas of the pre-site review and report preparation activities, each for similar reasons as the corresponding application activities just described. In addition, in both cases, we propose to charge for actual travel time (i.e., time in travel to and from sites), which replaces the nominal 4 hours that we currently include in the first day fee for assessments and audits. OSHA also is charging for some additional activities it performs during application processing and audits. These activities are for Additional Application Review, Supplemental Program Review, and Invoice Processing. Section IV of this notice further explains these activities and the modifications mentioned above. The proposed estimates reflect the Agency's experience with the NRTL Program fees over the four years since OSHA published the current fee schedule. C. Tables of Activity Costs Figures 2, 3, 4, and 5, below, present the costs of the major activities for which fees are charged. We include average travel costs in the figures below to provide an overall cost for a particular activity. However, as explained above, since we charge for actual travel, only the non-travel costs serve as the basis for the fees later shown in the Proposed Fee Schedule (Table A). In deriving the fee amounts shown in the Table A, OSHA has generally rounded the costs shown in Figures 2, 3, 4, and 5, up or down, to the nearest $5 or $10 amount. Figure 2.—Initial Application Cost Estimates Major activity Type of cost Average hours Average cost* Initial Application Review Office and field staff time 80 $5,100 Additional Review Time Office staff 16 1,020 On-Site Assessment—first day (per site, per assessor) Field staff time (16 hours preparation, 6 hours travel processing, and 8 hours at site) 30 1,914 Field staff travel expense ($700 airfare/other + $100 per diem) ( 1 ) 800 Total 2,714 On-Site Assessment—each addnl. day** (per site, per assessor) Field staff time (at site) 8 510 Field staff travel expense (per diem only) ( 1 ) 100 Total 610 On-Site Assessment travel time—per day (per site, per assessor) Field staff 8 510 Review and Evaluation (10 test standards) Office staff time 2 128 Final Report & Federal Register notice Field and office staff time 132 8,422 Fees Invoice Processing Office staff time 2 128 * Average cost for staff time = average hours x equivalent average direct staff cost/hr. ($63.80). ** Note: 2 additional days estimated if there are 2 assessors and 4 additional days estimated if there is 1 assessor. 1 Not applicable. Figure 3.—Expansion Application (Additional Site) Cost Estimates Major activity Type of cost Average hours Average cost* Application Review (expansion for site) Office and field staff time 16 $1,021 Additional Review Time Office staff 8 510 On-Site Assessment—first day (per site, per assessor) Field staff time (12 hours preparation, 4 hours travel processing, and 8 hours at site) 24 1,531 Field staff travel time expense ($700 airfare/other + $100 per diem) ( 1 ) 800 Total 2,331 On-Site Assessment—addnl. day** (per site, per assessor) Field staff time (at site) 8 510 Field staff travel expense (per diem only) ( 1 ) 100 Total 610 On-Site Assessment travel time—per day (per site, per assessor) Field staff 8 510 Review and Evaluation Fee (10 test standards) Office staff time 2 128 Final Report & Federal Register notice Field and office staff time 50 3,190 Fees Invoice Processing Office staff time 2 128 * Average cost for staff time = average hours x equivalent average direct staff cost/hr. ($63.80). ** Note: 2 additional days estimated for 1 assessor. 1 Not applicable. Figure 4.—Renewal Or Expansion (Other Than Additional Site) Application Cost Estimates Major activity Type of cost Average hours Average cost* Application Review (renewal or expansion other than additional site) Office and field staff time 2 $128 Additional Review Time Office staff 8 510 Renewal Application Information Review Office staff 16 1,021 On-Site Assessment—first day (expansion) (per site, per assessor) Field staff time (8 hours preparation, 4 hours travel processing, and 8 hours at site) 20 1,276 Field staff travel expense ($700 airfare/other + $100 per diem) ( 1 ) 800 Total 2,076 On-Site Assessment—first day (renewal) (per site, per assessor) Field staff time (16 hours preparation, 4 hours travel processing, and 8 hours at site) 28 1,787 Field staff travel expense ($700 airfare/other + $100 per diem) ( 1 ) 800 Total 2,587 On-Site Assessment—addnl. day ** (per site, per assessor) Office staff time (at site) 8 510 Field staff travel expense (covers per diem only) ( 1 ) 100 Total 610 On-Site Assessment travel time—per day (per site, per assessor) Field staff 8 510 Review and Evaluation Fee (10 test standards) (expansion) Office staff time 2 128 Final Report & Federal Register notice Office and field staff time (if there is an on-site assessment) 50 3,190 Final Report & Federal Register notice Office and field staff time (if there is NO on-site assessment) 30 1,914 Supplemental Program Review Office and field staff time (per program requested incl. consultation and assessor's memo) 4 255 Fees Invoice Processing Office staff time 2 128 * Average cost for staff time = average hours × equivalent average direct staff cost/hr. ($63.80). ** Note: 2 additional days estimated for renewal assessment; no additional days for expansion assessment. 1 Not applicable. Figure 5.—On-Site Audit Cost Estimates Major activity Type of cost Average hours Average cost * On-Site Audit—first day (per site, per auditor) Field staff time (12 hours pre-site review preparation, 4 hours travel processing, and 8 hours at site) 24 1,531 Prepare report/contact NRTL plus office review staff time (2 days for field staff and 2 hours for office staff) 18 1,148 Subtotal (first day) 2,679 Field staff travel expense ($700 airfare/other + $100 per diem) ( 1 ) 800 Total 3,479 On-Site Audit—addnl. day** (per site, per auditor) Field staff time (at site) 8 510 Travel expense (covers per diem only) ( 1 ) 100 Total 610 On-Site Audit travel time—per day (per site, per auditor) Field staff 8 510 Fees Invoice Processing Office staff time 2 128 * Average cost for staff time = average hours × equivalent average direct staff cost/hr. ($63.80). ** Note: 1.0 additional day estimated for 1 auditor. 1 Not applicable. IV. Proposed Fee Schedule and Description of Fees OSHA proposes the adjusted fee schedule shown below as Table A. Table A.—Fee Schedule: Nationally Recognized Testing Laboratory Program (NRTL Program) [Fee Schedule (Effective February 5, 2007)] 12 Type of service Activity or category (fee charged per application unless noted otherwise) Fee amount APPLICATION PROCESSING Initial Application Review 1 8 $5,100. Expansion Application Review (per additional site) 1 8 1,020. Renewal or Expansion (other) Application Review 1 130. Renewal Information Review Fee 7 1,020. Additional Review—Initial Application (if the application is substantially revised, submit one-half Initial Application Review fee) 7 1,020. Additional Review—Renewal or Expansion Application 7 510. Assessment—Initial Application (per site—SUBMIT WITH APPLICATION) 2 4 8 8,890. Assessment—Initial Application (per person, per site—first day—BILLED AFTER ASSESSMENT) 2 10 1,910 + actual travel expenses. Assessment—Renewal Application (per person, per site—first day) 3 10 1,790 + actual travel expenses. Assessment—Expansion Application (additional site) (per person, per site—first day) 3 1,530 + actual travel expenses. Assessment—Expansion Application (other) (per person, per site—first day) 3 1,280 + actual travel expenses. Assessment—each addnl. day or each day on travel (per person, per site) 2 3 510 + actual travel expenses. Review & Evaluation 5 ($13 per standard if it is already recognized for NRTLs and requires minimal review; OR else $64 per standard) 13 per standard OR $64 per standard. Final Report/Register Notice—Initial Application 5 9 8,420. Final Report/Register Notice—Renewal or Expansion Application (if OSHA performs on-site assessment) 5 9 3,190. Final Report/Register Notice—Renewal or Expansion Application (if OSHA performs NO on-site assessment) 5 9 1,910. AUDITS On-site Audit (per person, per site, first day) 6 2,680 + actual travel expenses. On-site Audit—each addnl. day or each day on travel (per person, per site) 6 510 + actual travel expenses. Office Audit (per person, per site) 6 510. MISCELLANEOUS Supplemental Travel (per site—for sites located outside the 48 contiguous States or the District of Columbia) 4 1,000. Supplemental Program Review (per program requested) 4 260. Fees Invoice Processing (per application or audit) 4 130. Late Payment 11 64. 1 Who must pay the Application Review fees, and when must they be paid? If you are applying for initial recognition as an NRTL, you must pay the Initial Application Review fee and include this fee with your initial application. If you are an NRTL and applying for an expansion or renewal of recognition, you must pay the Expansion Application Review fee or Renewal Application Review fee, as appropriate, and submit this fee concurrently with your expansion or renewal application. See note 7 if you amend or revise your initial or expansion application. 2 What assessment fees do you submit for an initial application, and when must they be paid? If you are applying for initial recognition as an NRTL, you must pay $8,890 for each site for which you wish to obtain recognition, and you must submit this amount concurrently with your initial application. We base this amount on two assessors performing a three-day assessment at each site. After completing the actual assessment, we calculate our assessment fee based on the actual staff time and travel costs incurred in performing the assessment. We calculate this fee at the rate of $1,910 for the first day at the site, $510 for each additional day at the site, and $510 for each day in travel, plus actual travel expenses, for each assessor. *(Note: days charged for being in travel status are those allowed under government travel rules. This note applies to any assessment or audit.)* Actual travel expenses are determined by government per diem and other travel rules. We bill or refund the difference between the amount you pre-paid and the actual assessment fee. We reflect this difference in the final bill that we send to you at the time we publish the preliminary Federal Register notice announcing the application. 3 What assessment fees do you submit for an expansion or renewal application, and when must they be paid? If you are an NRTL and applying solely for an expansion or renewal of recognition, you do not submit any assessment fee with your application. If we need to perform an assessment for the expansion or renewal request, we bill you for this fee after we perform the assessment. The fee is based on the actual staff time and travel costs we incurred in performing the assessment. We calculate this fee at the rate of $1,790, $1,530, or $1,280 for the first day at the site of a renewal, expansion (site), and expansion (other) assessment, respectively. We also include $510 for each additional day at the site and $510 for each day in travel, plus actual travel expenses, for each assessor. Actual travel expenses are determined by government per diem and other travel rules. When more than one site of the NRTL is visited during one trip, we charge the $510 additional day fee, plus actual travel expenses, for each day at a site. 4 When do I pay the Supplemental Travel, the Supplemental Program Review, or the Fees Invoice Processing fees? You must include the Supplemental Travel fee when you submit an initial application for recognition and the site you wish to be recognized is located outside the 48 contiguous U.S. states or the District of Columbia. The current supplemental travel fee is $1,000. We factor in this prepayment when we bill for the actual costs of the assessment, as described in our note 2, above. See note 8 for possible refund of application or assessment fees. You must include the Supplemental Program Review fee when you apply for approval to use other qualified parties or facilities to perform specific activities. See Chapter 2 of the NRTL Program Directive for more information. We will include the Fees Invoice Processing fee in the total for each of our invoices to you. 5 When do I pay the Review and Evaluation and the Final Report/Register Notice fees? We bill an applicant or an NRTL for the appropriate fees at the time we publish the preliminary Federal Register notice to announce the application. We calculate the Review and Evaluation Fee at the rate of $13 per test standard requested for those standards that OSHA previously recognized for any NRTL and that require minimal review or do not represent a new area of testing for the NRTL. Otherwise, this fee is $64 per standard requested. 6 When do I pay the Audit fee? We bill the NRTL for this fee (on-site or office, as deemed necessary) after completion of the audit and base the fee on actual staff time and travel costs incurred in performing the audit. We calculate our fee at the rate of $2,680 for the first day at the site, $510 for each additional day at the site, and $510 for each day in travel, plus actual travel expenses for each auditor. Actual travel expenses are determined by government per diem and other travel rules. 7 When do I pay the Additional Review fee or Renewal Information Review fee? The Additional Review fees cover the staff time in reviewing new or modified information submitted after we have completed our preliminary review of an application. There is no charge for review of a “minor” revision, which entails modifying or supplementing less than approximately 10% of the documentation in the application. The Additional Review fee applies to revisions modifying or supplementing from 10% to 50% of that documentation. For a new application, the fee represents 16 hours of additional review time and for a renewal or expansion application, the fee represents 8 hours of additional review time. If an applicant exceeds that 50% threshold in revising its application, we will charge one-half the Initial Application Review fee and the full Expansion Application Review fee, as applicable. The Renewal Information Review fee applies when an NRTL submits updated information to OSHA in connection with a request for renewal of recognition. 8 When and how can I obtain a refund for the fees that I paid? If you withdraw before we complete our preliminary review of your initial application or your expansion application to include an additional site, we will refund half of the application fee. If you are applying for initial recognition as an NRTL, we will refund the pre-paid assessment fees if you withdraw your application before we have traveled to your site to perform the on-site assessment. For an initial application, we will also credit your account for any amount of the pre-paid assessment fees collected that is greater than the actual cost of the assessment. Other than these cases, we do not generally refund or grant credit for any other fees that are due or collected. 9 Will I be billed even if my application is rejected? If we reject your application, we will bill you for the fees pertaining to tasks that we have performed that are not covered by the fees you have submitted. For example, if we perform an assessment for an expansion application but deny the expansion, we will bill you for the assessment fee. Similarly, we will bill you for the Final Report and Federal Register fee if we also wrote the report and published the notice. See note 11 for the consequences of non-payment. 10 What rate does OSHA use to charge for staff time? OSHA has estimated an equivalent staff cost per hour that it uses for determining the fees that are shown in the Fee Schedule. This hourly rate takes into account the costs for salary, fringe benefits, equipment, supervision and support for each “direct staff” member, that is, the staff that perform the main activities identified in the Fee Schedule. The rate is an average of these amounts for each of these direct staff members. The current estimated equivalent staff costs per hour = $63.80. 11 What happens if I do not pay the fees that I am billed? As explained above, if you are an applicant, we will send you a final bill (for any assessment and for the Review and Evaluation and Final Report/Register Notice fees) at the time we publish the preliminary Federal Register notice. If you do not pay the bill by the due date, we will assess the Late Payment fee shown in the Fee Schedule. This late payment fee represents one hour of staff time at the equivalent staff cost per hour (see note 10). If we do not receive payment within 60 days of the bill date, we will cancel your application. As also explained above, if you are an NRTL, we will generally send you a bill for the audit fee after completion of the audit. If you do not pay the fee by the due date, we will assess the Late Payment Fee shown in the Fee Schedule. If we do not receive payment within 60 days of the bill date, we will publish a Federal Register notice stating our intent to revoke recognition. However, please note that in either case, you may be subject to collection procedures under U.S. (Federal) law. 12 How do I know whether this is the most Current Fee Schedule? You should contact OSHA's NRTL Program (202-693-2110) or visit the program's Web site to determine the effective date of the most current Fee Schedule. Access the site by selecting “N” in the Subject Index at *http://www.osha.gov.* Any application review fees are those in effect on the date you submit your application. Other application processing fees are those in effect when the activity covered by the fee is performed. Audit fees are those in effect on the date we begin our audit. In evaluating the adjustments to the fee schedule, OSHA has considered the following:
(1)Actual expenditures for the 2005 fiscal year, and
(2)expected costs for the 2006 fiscal year. Both increases and decreases are reflected in these adjustments. The following is a description of the tasks and functions currently covered by each type of fee category, *e.g.* , application fees, and the basis used to charge each fee. *Application Fees:* This fee reflects the technical work performed by office and field staff in reviewing application documents to determine whether an applicant submitted complete and adequate information. The application review does not include a determination on the test standards requested, which is reflected in the Review and Evaluation fee. Application fees are based upon average costs per type of application. OSHA uses an average cost because the amount of time spent on the application review does not vary greatly by type of application. This is based on the premise that the number and type of documents submitted will generally be the same for a given type of application. Experience has shown that, indeed, most applicants do follow the application guide that OSHA provides. Two new fees are being added in this area, which are explained in the Section VI, below. *Assessment Fees:* This fee is different for the initial renewal expansion
(site)and expansion (other) applications. It is based on the number of days for staff preparatory and on-site work and related travel. Six types of fees are shown, and five are charged per site and per person. The four fees for the first day reflect time for office preparation and 8 hours at the applicant's facility. There is one fee covering either additional days at the facility and/or days in travel. Additional days or days in travel are assessed for either a half or a full day. A supplemental travel amount is assessed for travel outside the contiguous 48 states or the District of Columbia. For initial applications, an amount to cover the assessment must be submitted “up-front” with the application. In addition to the first day and additional day amounts, the applicant or NRTL must pay actual travel expenses, based on government per diem and travel rules. For initial applications, any difference between actual travel expenses and the up-front travel amount is reflected in the final bill or refund sent to the applicant. Similar to the application fee, the office preparation time generally involves the same types of activities. Actual time at the facility may vary, but the staff devote at least a full day to performing the on-site work. The fee for the additional day reflects time spent at the facility and the actual travel expenses for that day. *Review and Evaluation Fee:* This fee is charged per test standard (which is part of an applicant's proposed scope of recognition). The fee reflects the fact that staff time spent on the office review of an application varies based on the number of test standards requested by the applicant. In general, the fee is based on the estimated time necessary to review test standards to determine whether each one is “appropriate,” as defined in 29 CFR 1910.7, and covers equipment for which OSHA mandates certification by an NRTL. The fee also covers time to determine the current designation and status ( *i.e.* , active or withdrawn) of a test standard by reviewing current directories of the applicable test standard organization. Furthermore, it includes time spent discussing the results of the application review with the applicant. The actual time spent will vary depending on whether an applicant requests test standards that have previously been approved for other NRTLs. When the review is minimal, these activities take approximately 2 hours for 10 standards. This translates to $13 per standard. When the review is more substantial, the estimated average review time per standard is one hour for each standard, which translates to $64 per standard. Substantial review will occur when the standard has not been previously recognized for any NRTL or when the NRTL is proposing to conduct testing in a “new” area, *i.e.* , for a type of product not similar to any currently included under its scope of recognition. *Final Report/Register Notice Fees:* Each of these fees are charged per application. The fee reflects the staff time required to prepare the report of the on-site review of an applicant's or an NRTL's facility, which includes contacting the applicant or NRTL to discuss issues or items in its response to our findings during our assessment. The fee also reflects the time spent making the final evaluation of an application, preparing the required **Federal Register** notices, and responding to comments received in response to the preliminary finding notice. These fees are based on average costs per type of application, since the type and content of documents prepared are generally the same for each type of applicant. There is a separate fee when OSHA performs no on-site assessment. In these cases, the NRTL Program staff perform an office assessment and prepare a memo to recommend the expansion or renewal. *Audit (Post-Recognition Review) Fees:* These fees reflect the time for office preparation, time at the facility and travel, and time to prepare the audit report of the on-site audit. A separate fee is shown for an office audit conducted in lieu of an actual visit. Each fee is per site and does not generally vary for the same reasons described for the assessment fee and because the audit is generally limited to between one and two days. As previously described, the audit fee includes amounts for travel, and, similar to assessments, OSHA will bill the NRTL for actual travel expenses. *Miscellaneous Fees:* Four different fees are shown under this category. OSHA can charge a Late Payment fee if an invoice is not paid by the due date. This amount represents 1 hour of staff time for contacting the NRTL and preparing a late invoice and cover letter. The Supplemental Travel fee applies per site for an initial application if the site to be recognized is located outside the 48 contiguous U.S. states or the District of Columbia. The fee is $1,000. We are adding two new miscellaneous fees, which are explained in Section VI, below. VI. Major Changes to the Fee Schedule The following table shows the major adjustments ( *i.e.* , increases or decreases of $100 or more) that we propose to make to the fee schedule in Table A as compared to the current fee schedule. 2 Following the table, we explain each of the major adjustments. 2 Our current fee schedule is available on the OSHA Web site. Table of Major Adjustments to Fee Schedule Description of activity or category Current fee amount Proposed fee amount Comment on change in fee amount Initial Application Review $4,400 $5,100 None. Expansion Application Review 850 1,020 None. Additional Review—Initial Application None 1,020 New fee. Renewal Application Information Review None 1,020 New fee. Additional Review—Renewal or Expansion Application None 510 New fee. Assessment—Initial Application (SUBMIT WITH APPLICATION) 6,500 8,890 None. Assessment—Initial Application (per person, per site—first day—BILLED AFTER ASSESSMENT) 1,500 1,910 None. Assessment—Renewal Application (per person, per site—first day) 1,100 1,790 Currently combined with expansion assessment fee. Assessment—Expansion (additional site) (per person, per site—first day) 1,100 1,530 Currently combined with renewal assessment fee. Assessment—Expansion (other) (per person, per site—first day) 1,100 1,280 Currently combined with renewal assessment fee. Assessment—each addnl. day OR travel time—each day (per person, per site) 440 510 Only 4 hours of travel time currently charged through the first day fee for assessments. Review & Evaluation 10 per ten standards 13 per standard Correction of undercharge per ten standards: $130 + $10 = $120. Final Report/Register Notice—Initial Application 6,550 8,420 None. Final Report/Register Notice—Renewal or Expansion Application (if OSHA performs on-site assessment) 2,600 3,190 None. Final Report/Register Notice—Renewal or Expansion Application (if OSHA performs NO on-site assessment) 1,500 1,910 None. On-site Audit (first day) 1,950 2,680 None. Supplemental Program Review None 260 New fee Fees Invoice Processing None 130 New fee. *Application and Assessment.* The increase in the application review fees, the assessment-related fees, and the final report/register notice fees resulted primarily from the increase in the hourly cost charged for the direct staff time. The audit-related fees also increased in part for the same reason but also because we added 4 hours for the pre-site review of each audit and 14 hours for the preparation of the audit report. These extra hours are reflected in Figure 5. In our current fee schedule, we have a fee for Assessment—Expansion or Renewal Application (first day). Under the proposed schedule, we would replace this with a separate assessment fee for renewals and a separate fee for each type of expansion. *Travel.* We changed our treatment of “travel time,” which is time in travel to and from a site, as opposed to audit or assessment time at a site. Travel time is determined following Government travel regulations. Currently, the fee schedule includes only 4 hours of travel time for an entire trip, which is reflected in the first day fee for assessments and audits. As explained in the notes to the fee schedule, we have removed the 4-hour travel time from these first day fees and propose to charge for actual travel time at the rate for an additional day, which under the proposed schedule would be $510. This rate would be charged based on either a half-day or a full day. We are charging for this fee separately, as opposed to including it in the first day flat fee, in order to more accurately recoup our travel costs. For example, if a trip for an audit lasts a total of three days, with two of those days spent at the site, we currently charge the lab for 2.5 workdays (20 hours). Under the proposed schedule, we would charge for 3 workdays (24 hours). This charge is most important in the case of foreign travel where travel time may be 2 or 3 days in total. Of course, the removal of the 4 hours of travel time from the first day of an assessment or of an audit reduces those fees. *Additional Application Review.* The new Additional Review fees cover the staff time in reviewing new or modified information submitted for an application. For example, an applicant may need to revise or amend an initial or expansion application if we find that there are “major” deficiencies with it. There is no charge for review of a “minor” revision, which as Note 7 to the Fee Schedule describes, entails modifying or supplementing less than approximately 10% of the documentation in the application. The Additional Review fee applies to revisions modifying or supplementing from 10% to 50% of that documentation. For a new application, the fee represents 16 hours of additional review time and for a renewal or expansion application, the fee represents 8 hours of additional review time. If an applicant exceeds that 50% threshold in revising its application, we will charge one-half the Initial Application Review fee and the full Expansion Application Review fee, as applicable. The Renewal Information Review fee applies when an NRTL submits updated information to OSHA in connection with a request for renewal of recognition. For example, such information may include revised procedures and manuals for various parts of its testing and certification activities. *Supplemental Program Review and Fees Invoice Processing.* There are two more new fees, which would recoup costs for tasks we now perform in application processing and/or audits, but for which we do not charge. The first fee, Supplemental Program Review, covers the time to review requests by NRTLs to use a supplemental program, under which NRTLs can use other qualified parties to perform tasks necessary for product testing and certification. Currently, there are eight of these programs, and NRTLs may apply to use one or more of them. The use of the term “program” in this context may be a bit misleading. It is not separate from, but just a segment within, the NRTL Program and defines the category or type of activity or service that the NRTL can accept from other parties or facilities. To be approved to use a program, the NRTL must meet certain criteria and the fee covers the time for us to make the office review and determination. If an on-site assessment were needed as part of granting the approval, this would be covered separately in the fee for the on-site assessment or audit during which we review documentation or other operational aspects related to a proposed use of the applicable program(s). The second fee is Fees Invoice Processing, which also involves tasks directly related to the application processing or audit activities and for which we have not been recouping costs. We follow essentially the same process to prepare each invoice for either an application or an audit and would thus charge per invoice prepared. *Review and Evaluation Fee.* The increase in the Review and Evaluation Fee is primarily a correction to the basis we used in the current fee schedule. In both cases, we base the fee on performing two separate reviews of 10 standards in 2 hours. However, the current fee schedule incorrectly reflects a $10 cost for those 2 hours. Since the current hourly rate is $54.50, this means the current fee is understated by about $100 per ten standards (i.e., currently, it should be $109 per 10 standards, but we are only charging $10 per 10 standards). At the proposed hourly rate, those 2 hours would result in a cost of $130 for the 10 standards or $13 per standard. *Notes to the Fee Schedule.* We also propose to change a few of the notes to the fee schedule. In the table below, we show the notes that we plan to modify or add and explain why. Proposed adjustments that merely update a fee amount mentioned in a note are not explained or described in the table below. Table of Modified or New Notes to the Fee Schedule Note to fee schedule Fee or area covered by note Reason(s) for modifying or adding note 2 Initial application assessment This note now also describes the separate charge for staff travel time. 3 Expansion or renewal assessment This note now also describes the separate charge for staff travel time and shows the different first day fees for renewal and expansion assessments. 4 Supplemental travel This note mentions possible refund of application fees. It also describes the new Supplemental Program Review and Fees Invoice Processing fees. 5 Review and evaluation We corrected the basis for charging this fee, as explained in the section above. 6 Audit This note now also describes the separate charge for staff travel time. 7 Additional review Note 7 previously covered refund of fees and now would cover the fee for additional reviews of applications. 8 Refunds This note would permit refunds of half the application fee if an applicant withdraws its initial or expansion (additional site) application before we complete our preliminary review. Note 8 previously covered the hourly rate for staff time, which is now under Note 10. 9 Application rejection Note 9 previously covered non-payment of fees and now would cover the new area of fees due if we were to reject an application. 11 Non-payment Note 11 is new. This area was previously covered under Note 9 and now would include a statement about collection procedures under U.S. (Federal) law. 12 Fees in effect Note 12 is new. This area was previously covered under Note 10 and now would include a note primarily to change the “in-effect” criterion for certain application processing fees. Finally, we are explaining again a matter dealing with the fee for Review and Evaluation, which was addressed when revising our fees in 2002. We revisit it here to clarify one aspect of our work involved in this activity. NRTLs submit requests to expand their scope to include additional test standards, *i.e.* , testing of additional types of products. Generally, this request has consisted of a listing of the test standards. If we determine that the products requested are similar to products already in the particular NRTL's scope, the testing would fall within its current capabilities, and no additional documentation needs to be reviewed. In that case, the NRTL would be charged the proposed fee of $13 per standard requested. However, if the NRTL requests a standard that represents a new area of testing under its scope, then it must submit information on the testing equipment and procedures it will use as well as qualifications of personnel that will perform the testing. In that case, the charge would be $64 per standard, representing an average of 1 hour to review the information that must be submitted. Similarly, if OSHA has not previously recognized a particular standard for any NRTL, even though it may cover types of products under test standards that we have recognized, we would charge $64 per standard, representing an average of 1 hour to review the testing and other provisions of the standard and to determine if the NRTL has the necessary capability. Proposed Decision OSHA has performed its annual review of the fees it currently charges to Nationally Recognized Testing Laboratories, as provided under 29 CFR 1910.7(f). Based on this review, OSHA has determined that the current fee schedule warrants adjustment, as detailed in this notice. As a result, OSHA proposes to revise those current fees by adopting the Nationally Recognized Testing Laboratory Program Fee Schedule shown as Table A, above, which would become effective on February 5, 2007. OSHA welcomes public comments, including supporting information on the proposed fee schedules. Your comment should consist of pertinent written documents and exhibits. Should you need more time to comment, you must request it in writing, including reasons for the request. OSHA must receive your written request for extension at the address provided above no later than the last date for comments. OSHA will limit any extension to 15 days, unless the requester justifies a longer period. You may obtain or review documents related to the establishment of the fees and all submitted comments, as received, by contacting the Docket Office, Room N2625, Occupational Safety and Health Administration, U.S. Department of Labor, at the above address. Docket No. NRTL95-F-1, contains all materials in the record concerning OSHA's NRTL Program fees. The NRTL Program staff will review all timely comments and, after resolution of issues raised by these comments, will recommend the final version of the NRTL Program Fee Schedule to the Assistant Secretary. The Agency will publish a public notice of its final version of the fee schedule in the **Federal Register** , as provided under 29 CFR 1910.7. Edwin G. Foulke, Jr., Assistant Secretary of Labor. For the reasons discussed in the preamble, OSHA proposes to revise the fees it currently charges to Nationally Recognized Testing Laboratories by adopting the following Fee Schedule: Nationally Recognized Testing Laboratory Program (NRTL Program) [FEE SCHEDULE (Effective December 20, 2006)] 12 Type of service Activity or category (fee charged per application unless noted otherwise) Fee Amount APPLICATION PROCESSING Initial Application Review 1 8 $5,100. Expansion Application Review (per additional site) 1 8 1,020. Renewal or Expansion (other) Application Review 1 130. Renewal Information Review Fee 7 1,020. Additional Review—Initial Application (if the application is substantially revised, submit one-half Initial Application Review fee) 7 1,020. Additional Review—Renewal or Expansion Application 7 510. Assessment—Initial Application (per site—SUBMIT WITH APPLICATION) 2 4 8 8,890. Assessment—Initial Application (per person, per site—first day—BILLED AFTER ASSESSMENT) 2 10 1,910 + actual travel expenses. Assessment—Renewal Application (per person, per site—first day) 3 10 1,790 + actual travel expenses. Assessment—Expansion Application (additional site) (per person, per site—first day) 3 1,530 + actual travel expenses. Assessment—Expansion Application (other) (per person, per site—first day) 3 1,280 + actual travel expenses. Assessment—each addnl. day or each day on travel (per person, per site) 2 3 510 + actual travel expenses. Review & Evaluation 5 (13 per standard if it is already recognized for NRTLs and requires minimal review; OR else $64 per standard) 13 per standard OR 64 per standard. Final Report/Register Notice—Initial Application 5 9 8,420. Final Report/Register Notice—Renewal or Expansion Application (if OSHA performs on-site assessment) 5 9 3,190. Final Report/Register Notice—Renewal or Expansion Application (if OSHA performs NO on-site assessment) 5 9 1,910. AUDITS On-site Audit (per person, per site, first day) 6 2,680 + actual travel expenses. On-site Audit—each addnl. day or each day on travel (per person, per site) 6 510 + actual travel expenses. Office Audit (per person, per site) 6 510. MISCELLANEOUS Supplemental Travel (per site—for sites located outside the 48 contiguous States or the District of Columbia) 4 1,000. Supplemental Program Review (per program requested) 7 260. Fees Invoice Processing (per application or audit) 4 130. Late Payment 11 64. 1 Who must pay the Application Review fees, and when must they be paid? If you are applying for initial recognition as an NRTL, you must pay the Initial Application Review fee and include this fee with your initial application. If you are an NRTL and applying for an expansion or renewal of recognition, you must pay the Expansion Application Review fee or Renewal Application Review fee, as appropriate, and submit this fee concurrently with your expansion or renewal application. See note 7 if you amend or revise your initial or expansion application. 2 What assessment fees do you submit for an initial application, and when must they be paid? If you are applying for initial recognition as an NRTL, you must pay $8,890 for each site for which you wish to obtain recognition, and you must submit this amount concurrently with your initial application. We base this amount on two assessors performing a three-day assessment at each site. After completing the actual assessment, we calculate our assessment fee based on the actual staff time and travel costs incurred in performing the assessment. We calculate this fee at the rate of $1,910 for the first day at the site, $510 for each additional day at the site, and $510 for each day in travel, plus actual travel expenses, for each assessor. ( *Note: days charged for being in travel status are those allowed under government travel rules. This note applies to any assessment or audit.* ) Actual travel expenses are determined by government per diem and other travel rules. We bill or refund the difference between the amount you pre-paid and the actual assessment fee. We reflect this difference in the final bill that we send to you at the time we publish the preliminary Federal Register notice announcing the application. 3 What assessment fees do you submit for an expansion or renewal application, and when must they be paid? If you are an NRTL and applying solely for an expansion or renewal of recognition, you do not submit any assessment fee with your application. If we need to perform an assessment for the expansion or renewal request, we bill you for this fee after we perform the assessment. The fee is based on the actual staff time and travel costs we incurred in performing the assessment. We calculate this fee at the rate of $1,790, $1,530, or $1,280 for the first day at the site of a renewal, expansion (site), and expansion (other) assessment, respectively. We also include $510 for each additional day at the site and $510 for each day in travel, plus actual travel expenses, for each assessor. Actual travel expenses are determined by government per diem and other travel rules. When more than one site of the NRTL is visited during one trip, we charge the $510 additional day fee, plus actual travel expenses, for each day at a site. 4 When do I pay the Supplemental Travel, the Supplemental Program Review, or the Fees Invoice Processing fees? You must include the Supplemental Travel fee when you submit an initial application for recognition and the site you wish to be recognized is located outside the 48 contiguous U.S. states or the District of Columbia. The current supplemental travel fee is $1,000. We factor in this prepayment when we bill for the actual costs of the assessment, as described in our note 2, above. See note 8 for possible refund of application or assessment fees. You must include the Supplemental Program Review fee when you apply for approval to use other qualified parties or facilities to perform specific activities. See Chapter 2 of the NRTL Program Directive for more information. We will include the Fees Invoice Processing fee in the total for each of our invoices to you. 5 When do I pay the Review and Evaluation and the Final Report/Register Notice fees? We bill an applicant or an NRTL for the appropriate fees at the time we publish the preliminary Federal Register notice to announce the application. We calculate the Review and Evaluation Fee at the rate of $13 per test standard requested for those standards that OSHA previously recognized for any NRTL and that require minimal review or do not represent a new area of testing for the NRTL. Otherwise, this fee is $64 per standard requested. 6 When do I pay the Audit fee? We bill the NRTL for this fee (on-site or office, as deemed necessary) after completion of the audit and base the fee on actual staff time and travel costs incurred in performing the audit. We calculate our fee at the rate of $2,680 for the first day at the site, $510 for each additional day at the site, and $510 for each day in travel, plus actual travel expenses for each auditor. Actual travel expenses are determined by government per diem and other travel rules. 7 When do I pay the Additional Review fee or Renewal Information Review fee? The Additional Review fees cover the staff time in reviewing new or modified information submitted after we have completed our preliminary review of an application. There is no charge for review of a “minor” revision, which entails modifying or supplementing less than approximately 10% of the documentation in the application. The Additional Review fee applies to revisions modifying or supplementing from 10% to 50% of that documentation. For a new application, the fee represents 16 hours of additional review time and for a renewal or expansion application, the fee represents 8 hours of additional review time. If an applicant exceeds that 50% threshold in revising its application, we will charge one-half the Initial Application Review fee and the full Expansion Application Review fee, as applicable. The Renewal Information Review fee applies when an NRTL submits updated information to OSHA in connection with a request for renewal of recognition. 8 When and how can I obtain a refund for the fees that I paid? If you withdraw before we complete our preliminary review of your initial application or your expansion application to include an additional site, we will refund half of the application fee. If you are applying for initial recognition as an NRTL, we will refund the pre-paid assessment fees if you withdraw your application before we have traveled to your site to perform the on-site assessment. For an initial application, we will also credit your account for any amount of the pre-paid assessment fees collected that is greater than the actual cost of the assessment. Other than these cases, we do not generally refund or grant credit for any other fees that are due or collected. 9 Will I be billed even if my application is rejected? If we reject your application, we will bill you for the fees pertaining to tasks that we have performed that are not covered by the fees you have submitted. For example, if we perform an assessment for an expansion application but deny the expansion, we will bill you for the assessment fee. Similarly, we will bill you for the Final Report and Federal Register fee if we also wrote the report and published the notice. See note 11 for the consequences of non-payment. 10 What rate does OSHA use to charge for staff time? OSHA has estimated an equivalent staff cost per hour that it uses for determining the fees that are shown in the Fee Schedule. This hourly rate takes into account the costs for salary, fringe benefits, equipment, supervision and support for each “direct staff” member, that is, the staff that perform the main activities identified in the Fee Schedule. The rate is an average of these amounts for each of these direct staff members. The current estimated equivalent staff costs per hour = $63.80. 11 What happens if I do not pay the fees that I am billed? As explained above, if you are an applicant, we will send you a final bill (for any assessment and for the Review and Evaluation and Final Report/Register Notice fees) at the time we publish the preliminary Federal Register notice. If you do not pay the bill by the due date, we will assess the Late Payment fee shown in the Fee Schedule. This late payment fee represents one hour of staff time at the equivalent staff cost per hour (see note 10). If we do not receive payment within 60 days of the bill date, we will cancel your application. As also explained above, if you are an NRTL, we will generally send you a bill for the audit fee after completion of the audit. If you do not pay the fee by the due date, we will assess the Late Payment Fee shown in the Fee Schedule. If we do not receive payment within 60 days of the bill date, we will publish a Federal Register notice stating our intent to revoke recognition. However, please note that in either case, you may be subject to collection procedures under U.S. (Federal) law. 12 How do I know whether this is the most Current Fee Schedule? You should contact OSHA's NRTL Program (202-693-2110) or visit the program's Web site to determine the effective date of the most current Fee Schedule. Access the site by selecting “N” in the Subject Index at *http://www.osha.gov* . Any application review fees are those in effect on the date you submit your application. Other application processing fees are those in effect when the activity covered by the fee is performed. Audit fees are those in effect on the date we begin our audit. [FR Doc. E6-21670 Filed 12-19-06; 8:45 am] BILLING CODE 4510-26-P LIBRARY OF CONGRESS Copyright Office [Docket No. 2006-7] Notice of Intent to Audit AGENCY: Copyright Office, Library of Congress. ACTION: Public notice. SUMMARY: The Copyright Office of the Library of Congress is announcing receipt of a notice of intent to audit 2005 statements of account concerning the eligible nonsubscription transmissions of sound recordings made by Beethoven.com (“Beethoven”) under statutory licenses. FOR FURTHER INFORMATION CONTACT: Tanya M. Sandros, Associate General Counsel, Copyright GC/I&R, P.O. Box 70400, Southwest Station, Washington, DC 20024-0977. Telephone:
(202)707-8380. Telefax:
(202)252-3423. SUPPLEMENTARY INFORMATION: Section 106(6) of the Copyright Act, title 17 of the United States Code, gives the copyright owner of a sound recording the right to perform a sound recording publicly by means of a digital audio transmission, subject to certain limitations. Among these limitations are certain exemptions and a statutory license which allows for the public performance of sound recordings as part of “eligible nonsubscription transmissions.” 1 17 U.S.C. 114. A music service that operates under the section 114 statutory license may also make any necessary ephemeral reproductions to facilitate the digital transmission of the sound recording under a second license set forth in section 112(e) of the Copyright Act. Use of these licenses requires that services make payments of royalty fees to and file reports of sound recording performances with SoundExchange. SoundExchange is a collecting rights entity that was designated by the Librarian of Congress to collect statements of account and royalty fee payments from services and distribute the royalty fees to copyright owners and performers entitled to receive such royalties under sections 112(e) and 114(g) following a proceeding before a Copyright Arbitration Royalty Panel (CARP)—the entity responsible for setting rates and terms for use of the section 112 and section 114 licenses prior to the passage of the Copyright Royalty and Distribution Reform Act of 2004 (CRDRA), Pub. L. No. 108-419, 118 Stat. 2341 (2004). *See* 69 FR 5695 (February 6, 2004). 1 An “eligible nonsubscription transmission” is a noninteractive digital audio transmission which, as the name implies, does not require a subscription for receiving the transmission. The transmission must also be made as a part of a service that provides audio programming consisting in whole or in part of performances of sound recordings the primary purpose of which is to provide audio or entertainment programming, but not to sell, advertise, or promote particular goods or services. *See* 17 U.S.C. 114(j)(6). This Act, which the President signed into law on November 30, 2004, and which became effective on May 31, 2005, amends the Copyright Act, title 17 of the United States Code, by phasing out the CARP system and replacing it with three permanent Copyright Royalty Judges (CRJs). Consequently, the CRJs will carry out the functions heretofore performed by the CARPs, including the adjustment of rates and terms for certain statutory licenses such as the section 114 and 112 licenses. However, section 6(b)(3) of the Act states in pertinent part: [t]he rates and terms in effect under section 114(f)(2) or 112(e) . . . on December 30, 2004, for new subscription services [and] eligible nonsubscription services . . . shall remain in effect until the later of the first applicable effective date for successor terms and rates . . . or such later date as the parties may agree or the Copyright Royalty Judges may establish. Successor rates and terms for these licenses have not yet been established. Accordingly, the terms of the section 114 and 112 licenses, as currently constituted, are still in effect. One of the current terms, set forth in § 262.6 of title 37 of the Code of Federal Regulations, states that SoundExchange, as the Designated Agent, may conduct a single audit of a Licensee for the purpose of verifying their royalty payments. As a preliminary matter, the Designated Agent is required to submit a notice of its intent to audit a Licensee with the Copyright Office and serve this notice on the service to be audited. 37 CFR 262.6(c). On December 23, 2005, SoundExchange filed with the Copyright Office a notice of intent to audit Beethoven for the years 2002, 2003, and 2004. *See* 72 FR 624 (January 5, 2006). Subsequently, on November 22, 2006, SoundExchange filed a second notice of intent to audit Beethoven, 2 pursuant to § 262.6(c), notifying the Copyright Office of its intent to expand its current audit to cover 2005. Section 262.6(c) requires the Copyright Office to publish a notice in the **Federal Register** within thirty days of receipt of the filing announcing the Designated Agent’s intent to conduct an audit. 2 A copy of the new Notice of Intent to Audit Beethoven is posted on the Copyright Office Website at http://www.copyright.gov/carp/beethoven-notice.2006.pdf. In accordance with this regulation, the Office is publishing today’s notice to fulfill this requirement with respect to the notice of intent to audit filed by SoundExchange on November 22, 2006. Dated: December 15, 2006 Tanya M. Sandros, Associate General Counsel. [FR Doc. E6-21746 Filed 12-19-06; 8:45 am] BILLING CODE 1410-30-S NATIONAL CREDIT UNION ADMINISTRATION Community Development Revolving Loan Fund for Credit Unions AGENCY: National Credit Union Administration. ACTION: Notice of application period. SUMMARY: The National Credit Union Administration
(NCUA)will accept applications for participation in the Community Development Revolving Loan Fund's Loan Program throughout calendar year 2007, subject to availability of funds. Application procedures for qualified low-income credit unions are in NCUA Rules and Regulations. ADDRESSES: Applications for participation may be obtained from and should be submitted to: NCUA, Office of Small Credit Union Initiatives, 1775 Duke Street, Alexandria, VA 22314-3428. DATES: Applications may be submitted throughout calendar year 2007. FOR FURTHER INFORMATION CONTACT: Tawana James, Director, Office of Small Credit Union Initiatives at the above address or telephone
(703)518-6610. SUPPLEMENTARY INFORMATION: Part 705 of the NCUA Rules and Regulations implements the Community Development Revolving Loan Fund
(Fund)for Credit Unions. The purpose of the Fund is to assist officially designated “low-income” credit unions in providing basic financial services to residents in their communities that result in increased income, home ownership, and employment. The Fund makes available low interest loans in the aggregate amount of $300,000 to qualified participating “low-income” designated credit unions. Interest rates are currently set at one percent. Specific details regarding availability and requirements for technical assistance grants from the Fund will be published in a Letter to Credit Unions and on NCUA's Web site at *http://www.ncua.gov/* . Fund participation is limited to existing credit unions with an official “low-income” designation. This notice is published pursuant to Section 705.9 of the NCUA Rules and Regulations that states NCUA will provide notice in the **Federal Register** when funds in the program are available. By the National Credit Union Administration Board on December 13, 2006. Mary F. Rupp, Secretary, NCUA Board. [FR Doc. E6-21664 Filed 12-19-06; 8:45 am] BILLING CODE 7535-01-P NATIONAL SCIENCE FOUNDATION National Science Board Commission on 21st Century Education in Science, Technology, Engineering, and Mathematics; Notice of Meeting In accordance with the Federal Advisory Committee Act (Pub. L. 92-463, as amended), the National Science Board announces the following meeting: *Date and Time:* Friday, December 22, 2006, 11 a.m.-12:30 p.m. EST (teleconference meeting) *Place:* National Science Foundation, Arlington, Virginia, Room 1235 will be available to the public to listen to this teleconference meeting. *Type of Meeting:* Open. *Contact Person:* Dr. Elizabeth Strickland, Commission Executive Secretary, National Science Board Office, National Science Foundation, 4201 Wilson Blvd, Arlington, VA 22230. Telephone: 703-292-4527. E-mail: *estrickl@nsf.gov.* *Purpose of Meeting:* To discuss preliminary draft recommendations of the Commission. *Agenda:* Discussion of preliminary draft recommendations of the Commission. *Reason for Late Notice:* Time and date of meeting were not established until December 12, 2006. Russell Moy, Attorney-Advisor. [FR Doc. E6-21618 Filed 12-19-06; 8:45 am] BILLING CODE 7555-01-P NUCLEAR REGULATORY COMMISSION [Docket No. 50-285] Omaha Public Power District; Notice of Withdrawal of Application for Amendment to Facility Operating License The U.S. Nuclear Regulatory Commission (NRC/the Commission) has granted the request of Omaha Public Power District (OPPD, the licensee) to withdraw its August 11, 2005, application for proposed amendment to Facility Operating License No. DPR-40 for the Fort Calhoun Station, Unit No. 1, located in Washington County, Nebraska. The proposed amendment would have revised the Technical Specifications
(TSs)pertaining to the volume of trisodium phosphate
(TSP)needed in containment. Specifically, this proposed change would have revised TS Figure 2-3, “TSP Volume Required for RCS [Reactor Coolant System] Critical Boron Concentration (ARO [All Rods Out], HZP [Hot Zero Power], No Xenon),” and related technical information used for calculating minimum volumes of TSP required for maintaining sump pH equal to or greater than 7. The amendment was necessary to account for the increase in the RCS volume as result of the planned replacement of the steam generators and pressurizer. The amendment is no longer needed since the NRC staff has approved the OPPD amendment dated August 21, 2006, to remove the TSP and replace it with sodium tetraborate. The Commission had previously issued a Notice of Consideration of Issuance of Amendment published in the **Federal Register** on September 27, 2005 (70 FR 56502). However, by letter dated November 30, 2006, the licensee withdrew the proposed change. For further details with respect to this action, see the application for amendment dated August 11, 2005, as supplemented by letter dated November 3, 2005, and the licensee's letter dated November 30, 2006, which withdrew the application for license amendment. Documents may be examined, and/or copied for a fee, at the NRC'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 electronically from the Agencywide Documents Access and Management Systems (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, * http://www.nrc.gov/reading- rm.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.* Dated at Rockville, Maryland, this 13th day of December 2006. For the Nuclear Regulatory Commission. Alan B. Wang, Project Manager, Plant Licensing Branch IV, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. [FR Doc. E6-21673 Filed 12-19-06; 8:45 am] BILLING CODE 7590-01-P OFFICE OF PERSONNEL MANAGEMENT Proposed Collection: Comment Request for Review of New Information Collection Form: OPM Optional Form XX AGENCY: U.S. Office of Personnel Management. ACTION: Notice. SUMMARY: In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, May 22, 1995), this notice announces that the U.S. Office of Personnel Management
(OPM)intends to submit to the Office of Management and Budget
(OMB)a request for review of a new information collection document. Optional Form
(OF)XX, Certificate of Medical Examination replaces the existing Civil Service Commission Standard Form
(SF)78, Certificate of Medical Examination, which was last revised in October 1969. Replacement is necessary because the SF-78 is no longer accurate. Revisions include making the form optional for agencies, incorporating changes required by 29 CFR 1630.13, which addresses prohibited medical examinations and inquiries, and deleting references to the Federal Personnel Manual and other outdated references. It will be used to collect medical information about individuals who are incumbents of positions which require physical fitness/agility testing and medical examinations, or who have been selected for such a position contingent upon meeting physical fitness/agility testing and medical examinations as a condition of their employment. This information is needed to ensure fair and consistent treatment of employees and job applicants, to adjudicate requests to pass over preference eligibles, and to adjudicate claims of discrimination under the Americans with Disabilities Act (ADA). Approximately 45,000 forms are submitted annually. It takes approximately 30 total minutes to complete the form. The annual estimated burden is 22,500 hours. Comments are particularly invited on: • Whether this collection of information is necessary for the proper performance of functions of OPM, and whether it will have practical utility; • Whether our estimate of the public burden of this collection is accurate, and based on valid assumptions and methodology; • Ways we can enhance the quality, utility and clarity of the information collected; and • Ways we can minimize the burden of the collection of information on those who are to respond, through use of the appropriate technological collection techniques or other forms of information technology. For copies of this proposal, contact Mary Beth Smith-Toomey on
(202)606-8358, Fax
(202)418-3251, or e-mail to *mbtoomey@opm.gov.* Please include a mailing address with your request. DATES: Comments on this proposal should be received within 60 calendar days from the date of this publication. ADDRESSES: Send or deliver comments to—J. C. Phillip Spottswood, J.D., M.P.H. by telephone at
(202)606-1389, by TTY at
(202)418-3134; by fax at
(202)606-0864; or by e-mail at *phil.spottswood@opm.gov.* Linda M. Springer, Director, U.S. Office of Personnel Management. [FR Doc. E6-21647 Filed 12-19-06; 8:45 am] BILLING CODE 6325-39-P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 27598; 812-13133] Members Mutual Funds, et al.; Notice of Application December 13, 2006. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (“Act”) for an exemption from sections 12(d)(1)(A) and
(B)of the Act, and under sections 6(c) and 17(b) of the Act for an exemption from section 17(a) of the Act. Summary of the Application: The order would permit certain registered open-end management investment companies to acquire shares of other registered open-end management investment companies and unit investment trusts (“UITs”) that are within and outside the same group of investment companies. *Applicants:* MEMBERS Mutual Funds (“MMF”), ULTRA Series Fund (“USF”) (each a “Trust”, and together, the “Trusts”), Members Capital Advisors, Inc. (“MCA”), and CUNA Mutual Life Insurance Company (“CUNA Mutual”) (collectively, the “Applicants”). Applicants request that the order also extend to any future series of the Trusts, and any other existing or future registered open-end management investment companies and any series thereof that are part of the same group of investment companies as defined in section 12(d)(1)(G)(ii) of the Act, as the Trusts and are, or may in the future be, advised by MCA or any other investment adviser controlling, controlled by, or under common control with MCA (together with the existing series of the Trusts, the “Funds”). Filing Dates: The application was filed on October 29, 2004 and amended on March 24, 2006 and December 6, 2006. *Hearing or Notification of Hearing:* An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on January 8, 2007, and should be accompanied by proof of service on applicants in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicants: CUNA Mutual Group, 5910 Mineral Point Road, Madison, Wisconsin 53701-0391. FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202)551-6876, or Nadya Roytblat, Assistant Director, at
(202)551-6821 (Office of Investment Company Regulation, Division of Investment Management). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Desk, 100 F Street, NE., Washington, DC 20549-0102 (telephone
(202)551-5850). Applicants' Representations 1. CUNA Mutual is a life insurance company organized under the laws of Iowa. Through separate accounts (“Separate Accounts”) registered under the Act as UITs (the “Registered Separate Accounts”) and a separate account not registered under the Act (the “Unregistered Separate Account”), CUNA Mutual issues group and individual variable annuity contracts and variable life insurance policies (the “Variable Contracts”) which offer the owners of such contracts the opportunity to indirectly invest in USF. 2. MMF is a statutory trust organized under the laws of Delaware and USF is a business trust organized under the laws of Massachusetts. Both Trusts are registered under the Act as open-end management investment companies. MMF and USF currently offer twelve and thirteen separate Funds, respectively. MCA, an Iowa corporation, is registered under the Investment Advisers Act of 1940 and serves as investment adviser to the Funds. 3. Applicants request relief to permit
(a)a Fund (a “Fund of Funds”) to acquire shares of registered open-end management investment companies that are not part of the same group of investment companies (as defined in section 12(d)(1)(G)(ii) of the Act) as the Fund of Funds (the “Unaffiliated Underlying Funds”),
(b)the Fund of Funds to acquire shares of UITs that are not part of the same group of investment companies as the Fund of Funds (the “Unaffiliated Underlying Trusts”),
(c)the Unaffiliated Underlying Funds and Trusts (collectively, the “Unaffiliated Funds”) to sell their shares to the Fund of Funds,
(d)the Fund of Funds to acquire shares of certain other Funds in the same group of investment companies as the Fund of Funds (the “Affiliated Funds,” and together with the Unaffiliated Funds, the “Underlying Funds”) and
(e)the Affiliated Funds to sell their shares to the Fund of Funds. Certain of the Unaffiliated Underlying Trusts or Unaffiliated Underlying Funds may be registered under the Act as either UITs or open-end management investment companies and have received exemptive relief to permit their shares be listed and traded on a national securities exchange at negotiated prices (“ETFs”). Each Fund of Funds also may invest in other securities and financial instruments. Applicants state that a Fund of Funds will provide an efficient and simple method of allowing investors to create a comprehensive asset allocation program. Applicants' Legal Analysis A. Section 12(d)(1) 1. Section 12(d)(1)(A) of the Act prohibits a registered investment company from acquiring shares of an investment company if the securities represent more than 3% of the total outstanding voting stock of the acquired company, more than 5% of the total assets of the acquiring company, or, together with the securities of any other investment companies, more than 10% of the total assets of the acquiring company. Section 12(d)(1)(B) of the Act prohibits a registered open-end investment company, its principal underwriter and any broker or dealer from selling the shares of the investment company to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale will cause more than 10% of the acquired company's voting stock to be owned by investment companies generally. 2. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Applicants seek an exemption under section 12(d)(1)(J) to permit the Funds of Funds to acquire shares of the Underlying Funds and to permit the Underlying Funds, their principal underwriters and any broker or dealer to sell shares to the Funds of Funds beyond the limits set forth in sections 12(d)(1)(A) and
(B)of the Act. 3. Applicants state that the proposed arrangement will not give rise to the policy concerns underlying sections 12(d)(1)(A) and (B), which include concerns about undue influence by a Fund of Funds or its affiliated persons over Underlying Funds, excessive layering of fees, and overly complex fund structures. Accordingly, applicants believe that the requested exemption is consistent with the public interest and the protection of investors. 4. Applicants state that the proposed arrangement will not result in undue influence by a Fund of Funds or its affiliated persons over the Underlying Funds. The concern about undue influence does not arise in connection with a Fund of Funds' investment in the Affiliated Funds, since they are part of the same group of investment companies. To limit the control that a Fund of Funds or its affiliated persons may have over an Unaffiliated Fund, applicants propose a condition prohibiting:
(a)MCA and any person controlling, controlled by or under common control with MCA, any investment company and any issuer that would be an investment company but for section 3(c)(1) or section 3(c)(7) of the Act advised or sponsored by MCA or any person controlling, controlled by or under common control with MCA (collectively, the “Group”), and
(b)any investment adviser within the meaning of section 2(a)(20)(B) of the Act (“Sub-Adviser”) to a Fund of Funds, any person controlling, controlled by or under common control with the Sub-Adviser, and any investment company or issuer that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act (or portion of such investment company or issuer) advised by the Sub-Adviser or any person controlling, controlled by or under common control with the Sub-Adviser (collectively, the “Sub-Adviser Group”) will not control (individually or in the aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) of the Act. 5. Applicants further state that condition 2 precludes a Fund of Funds and MCA, any Sub-Adviser, promoter or principal underwriter of a Fund of Funds, and any person controlling, controlled by or under common control with any of those entities (each, a “Fund of Funds Affiliate”) from taking advantage of an Unaffiliated Fund, with respect to transactions between the Fund of Funds or a Fund of Funds Affiliate and the Unaffiliated Fund or the Unaffiliated Fund's investment adviser(s), sponsor, promoter, principal underwriter or any person controlling, controlled by or under common control with any of these entities (each, an “Unaffiliated Fund Affiliate”). Condition 5 precludes a Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to an Unaffiliated Underlying Fund or sponsor to an Unaffiliated Underlying Trust) from causing an Unaffiliated Fund to purchase a security in an offering of securities during the existence of any underwriting or selling syndicate of which a principal underwriter is an officer, director, trustee, member of an advisory board, investment adviser, Sub-Adviser, or employee of the Fund of Funds, or a person of which any such officer, director, trustee, investment adviser, Sub-Adviser, member of an advisory board, or employee is an affiliated person (each, an “Underwriting Affiliate,” except any person whose relationship to the Unaffiliated Fund is covered by section 10(f) of the Act is not an Underwriting Affiliate). An offering of securities during the existence of any underwriting or selling syndicate of which a principal underwriter is an Underwriting Affiliate is an “Affiliated Underwriting.” 6. As an additional assurance that an Unaffiliated Underlying Fund understands the implications of an investment by a Fund of Funds under the requested order, prior to a Fund of Funds' investment in the Unaffiliated Underlying Fund in excess of the limit in section 12(d)(1)(A)(i), condition 8 requires that the Fund of Funds and Unaffiliated Underlying Fund execute an agreement stating, without limitation, that their boards of directors or trustees (“Boards”) and their investment advisers understand the terms and conditions of the order and agree to fulfill their responsibilities under the order (“Participation Agreement”). Applicants note that an Unaffiliated Fund (other than an ETF whose shares are purchased by a Fund of Funds in the secondary market) will retain the right to reject an investment by a Fund of Funds. 1 1 An Unaffiliated Fund, including an ETF, would retain its right to reject any initial investment by a Fund of Funds in excess of the limit in section 12(d)(1)(A)(i) of the Act by declining to execute the Participation Agreement with the Fund of Funds. 7. Applicants do not believe that the proposed arrangement will involve excessive layering of fees. With respect to investment advisory fees, applicants state that, in connection with the approval of any investment advisory contract under section 15 of the Act, the Board of each Fund of Funds, including a majority of the trustees who are not “interested persons,” as defined in section 2(a)(19) of the Act (“Disinterested Trustees”), will find that the advisory fees charged under the advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided pursuant to any Underlying Fund's advisory contract(s). Applicants further state that MCA will waive fees otherwise payable to it by a Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by an Unaffiliated Underlying Fund pursuant to rule 12b-1 under the Act) received from an Unaffiliated Fund by MCA, or an affiliated person of MCA, other than any advisory fees paid to MCA or an affiliated person of MCA by the Unaffiliated Fund, in connection with the investment by the Fund of Funds in the Unaffiliated Fund. 8. Applicants state that with respect to Registered Separate Accounts that invest in a Fund of Funds, no sales load will be charged at the Fund of Funds level or at the Underlying Fund level. Other sales charges and service fees (as defined in Rule 2830 of the Conduct Rules of the NASD, (“Rule 2830”)), if any, will only be charged at the Fund of Funds level or at the Underlying Fund level, not both. With respect to other investments in a Fund of Funds, any sales charges and/or service fees charged with respect to shares of the Fund of Funds will not exceed the limits applicable to funds of funds as set forth in Rule 2830. 2 2 With respect to an investment by a Registered Separate Account in a Fund of Funds, the aggregate of all fees and charges at all levels will be reasonable in relation to the services rendered, the expenses expected to be incurred and the risks assumed by the applicable parties. This representation includes the fees and charges paid to CUNA Mutual and CUNA Mutual Insurance Society or any other insurance company controlling, controlled by, or under common control with CUNA Mutual. 9. Applicants state that the proposed arrangement will not create an overly complex fund structure. Applicants note that an Underlying Fund will be prohibited from acquiring securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A), except to the extent that such Underlying Fund:
(a)receives securities of another investment company as a dividend or as a result of a plan of reorganization of a company (other than a plan devised for the purpose of evading section 12(d)(1) of the Act); or
(b)acquires (or is deemed to have acquired) securities of another investment company pursuant to exemptive relief from the Commission permitting such Underlying Fund to:
(i)acquire securities of one or more affiliated investment companies for short-term cash management purposes, or
(ii)engage in interfund borrowing and lending transactions. Applicants also represent that a Fund of Funds' prospectus and sales literature will contain concise, “plain English” disclosure designed to inform investors of the unique characteristics of the proposed Fund of Funds structure, including, but not limited to, its expense structure and the additional expenses of investing in Underlying Funds. 3 3 Each Fund of Funds also will comply with the disclosure requirements concerning the aggregate expenses of investing in Underlying Funds set forth in Investment Company Act Release No. 27399. B. Section 17(a) 1. Section 17(a) of the Act generally prohibits sales or purchases of securities between a registered investment company and any affiliated person of the company. Section 2(a)(3) of the Act defines an “affiliated person” of another person to include
(a)any person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of the other person;
(b)any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the other person; and
(c)any person directly or indirectly controlling, controlled by, or under common control with the other person. 2. Applicants state that the Funds of Funds and the Affiliated Funds might be deemed to be under common control of MCA and therefore affiliated persons of one another. Applicants also state that the Funds of Funds and the Underlying Funds might be deemed to be affiliated persons of one another if a Fund of Funds acquires 5% or more of an Underlying Fund's outstanding voting securities. In light of these possible affiliations, section 17(a) could prevent an Underlying Fund from selling shares to and redeeming shares from a Fund of Funds. 4 4 Applicants acknowledge that receipt of any compensation by
(a)an affiliated person of a Funds of Funds, or an affiliated person of such person, for the purchase by the Fund of Funds of shares of an Underlying Fund or
(b)an affiliated person of a Underlying Fund, or an affiliated person of such person, for the sale by the Underlying Fund of its shares to a Fund of Funds is subject to section 17(e) of the Act. The Participation Agreement also will include this acknowledgement. 3. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that
(a)the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned;
(b)the proposed transaction is consistent with the policies of each registered investment company involved; and
(c)the proposed transaction is consistent with the general purposes of the Act. Section 6(c) of the Act permits the Commission to exempt any person or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. 4. Applicants submit that the proposed transactions satisfy the standards for relief under sections 17(b) and 6(c) of the Act. Applicants state that the terms upon which an Underlying Fund will sell its shares to or purchase its shares from a Fund of Funds will be based on the net asset value of each Underlying Fund. 5 Applicants also state that the proposed transactions will be consistent with the policies of each Fund of Funds and Underlying Fund, and with the general purposes of the Act. 5 Applicants note that a Fund of Funds generally would purchase and sell shares of an Underlying Fund that operates as an ETF through secondary market transactions at market prices rather than through principal transactions with the Underlying Fund at net asset value. Applicants would not rely on the requested relief from section 17(a) for such secondary market transactions. A Fund of Funds could seek to transact in “Creation Units” directly with an ETF pursuant to the requested section 17(a) relief. Applicants' Conditions Applicants agree that the order granting the requested relief shall be subject to the following conditions: 1. The members of the Group will not control (individually or in the aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) of the Act. The members of the Sub-Adviser Group will not control (individually or in the aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) of the Act. If, as a result of a decrease in the outstanding voting securities of an Unaffiliated Fund, the Group or the Sub-Adviser Group, each in the aggregate, becomes a holder of more than 25% of the outstanding voting securities of the Unaffiliated Fund, then the Group or the Sub-Adviser Group (except for any member of the Group or the Sub-Adviser Group that is a Separate Account) will vote its shares of the Unaffiliated Fund in the same proportion as the vote of all other holders of the Unaffiliated Fund's shares. This condition will not apply to the Sub-Adviser Group with respect to an Unaffiliated Fund for which the Sub-Adviser or a person controlling, controlled by, or under common control with the Sub-Adviser acts as the investment adviser within the meaning section 2(a)(20)(A) of the Act (in the case of an Unaffiliated Underlying Fund) or as the sponsor (in the case of an Unaffiliated Underlying Trust). A Registered Separate Account will seek voting instructions from its contract holders and will vote its shares of an Unaffiliated Fund in accordance with the instructions received and will vote those shares for which no instructions were received in the same proportion as the shares for which instructions were received. An Unregistered Separate Account will either:
(i)vote its shares of the Unaffiliated Fund in the same proportion as the vote of all other holders of the Unaffiliated Fund's shares; or
(ii)seek voting instructions from its contract holders and vote its shares in accordance with the instructions received and vote those shares for which no instructions were received in the same proportion as the shares for which instructions were received. 2. No Fund of Funds or Fund of Funds Affiliate will cause any existing or potential investment by the Fund of Funds in an Unaffiliated Fund to influence the terms of any services or transactions between the Fund of Funds or a Fund of Funds Affiliate and the Unaffiliated Fund or an Unaffiliated Fund Affiliate. 3. The Board of each Fund of Funds, including a majority of the Disinterested Trustees, will adopt procedures reasonably designed to assure that MCA and any Sub-Adviser are conducting the investment program of the Fund of Funds without taking into account any consideration received by the Fund of Funds or a Fund of Funds Affiliate from an Unaffiliated Fund or an Unaffiliated Fund Affiliate in connection with any services or transactions. 4. Once an investment by a Fund of Funds in the securities of an Unaffiliated Underlying Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Underlying Fund, including a majority of the Disinterested Trustees, will determine that any consideration paid by the Unaffiliated Underlying Fund to a Fund of Funds or a Fund of Funds Affiliate in connection with any services or transactions:
(a)is fair and reasonable in relation to the nature and quality of the services and benefits received by the Unaffiliated Underlying Fund;
(b)is within the range of consideration that the Unaffiliated Underlying Fund would be required to pay to another unaffiliated entity in connection with the same services or transactions; and
(c)does not involve overreaching on the part of any person concerned. This condition does not apply with respect to any services or transactions between an Unaffiliated Underlying Fund and its investment adviser(s), or any person controlling, controlled by, or under common control with such investment adviser(s). 5. No Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to an Unaffiliated Underlying Fund or sponsor to an Unaffiliated Underlying Trust) will cause an Unaffiliated Fund to purchase a security in any Affiliated Underwriting. 6. The Board of an Unaffiliated Underlying Fund, including a majority of the Disinterested Trustees, will adopt procedures reasonably designed to monitor any purchases of securities by the Unaffiliated Underlying Fund in an Affiliated Underwriting, once an investment by a Fund of Funds in the securities of the Unaffiliated Underlying Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board of the Unaffiliated Underlying Fund will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Fund of Funds in the Unaffiliated Underlying Fund. The Board of the Unaffiliated Underlying Fund will consider, among other things:
(a)Whether the purchases were consistent with the investment objectives and policies of the Unaffiliated Underlying Fund;
(b)how the performance of securities purchased in an Affiliated Underwriting compares to the performance of comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index; and
(c)whether the amount of securities purchased by the Unaffiliated Underlying Fund in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board of an Unaffiliated Underlying Fund will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interests of shareholders. 7. Each Unaffiliated Underlying Fund will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase from an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of an Unaffiliated Underlying Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth the:
(a)Party from whom the securities were acquired,
(b)identity of the underwriting syndicate's members,
(c)terms of the purchase, and
(d)information or materials upon which the determinations of the Board of the Unaffiliated Underlying Fund were made. 8. Prior to its investment in shares of an Unaffiliated Underlying Fund in excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated Underlying Fund will execute a Participation Agreement stating, without limitation, that their Boards and their investment advisers understand the terms and conditions of the order and agree to fulfill their responsibilities under the order. At the time of its investment in shares of an Unaffiliated Underlying Fund in excess of the limit in section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated Underlying Fund of the investment. At such time, the Fund of Funds will also transmit to the Unaffiliated Underlying Fund a list of the names of each Fund of Funds Affiliate and Underwriting Affiliate. The Fund of Funds will notify the Unaffiliated Underlying Fund of any changes to the list as soon as reasonably practicable after a change occurs. The Unaffiliated Underlying Fund and the Fund of Funds will maintain and preserve a copy of the order, the Participation Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place. 9. Before approving any advisory contract under section 15 of the Act, the Board of each Fund of Funds, including a majority of the Disinterested Trustees, shall find that the advisory fees charged under the advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Underlying Fund in which the Fund of Funds may invest. Such finding, and the basis upon which the finding was made, will be recorded fully in the minute books of the appropriate Fund of Funds. 10. MCA will waive fees otherwise payable to it by a Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by an Unaffiliated Underlying Fund pursuant to rule 12b-1 under the Act) received from an Unaffiliated Fund by MCA, or an affiliated person of MCA, other than any advisory fees paid to MCA or its affiliated person by the Unaffiliated Fund, in connection with the investment by the Fund of Funds in the Unaffiliated Fund. Any Sub-Adviser will waive fees otherwise payable to the Sub-Adviser, directly or indirectly, by the Fund of Funds in an amount at least equal to any compensation received by the Sub-Adviser, or an affiliated person of the Sub-Adviser, from an Unaffiliated Fund, other than any advisory fees paid to the Sub-Adviser or its affiliated person by the Unaffiliated Underlying Fund, in connection with the investment by the Fund of Funds in the Unaffiliated Underlying Fund made at the direction of the Sub-Adviser. In the event that the Sub-Adviser waives fees, the benefit of the waiver will be passed through to the Fund of Funds. 11. With respect to Registered Separate Accounts that invest in a Fund of Funds, no sales load will be charged at the Fund of Funds level or at the Underlying Fund level. Other sales charges and service fees, as defined in Rule 2830, if any, will only be charged at the Fund of Funds level or at the Underlying Fund level, not both. With respect to other investments in a Fund of Funds, any sales charges and/or service fees charged with respect to shares of a Fund of Funds will not exceed the limits applicable to funds of funds set forth in Rule 2830. 12. No Underlying Fund will acquire securities of any other investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent that such Underlying Fund:
(a)receives securities of another investment company as a dividend or as a result of a plan of reorganization of a company (other than a plan devised for the purpose of evading section 12(d)(1) of the Act); or
(b)acquires (or is deemed to have acquired) securities of another investment company pursuant to exemptive relief from the Commission permitting such Underlying Fund to:
(i)acquire securities of one or more affiliated investment companies for short-term cash management purposes, or
(ii)engage in interfund borrowing and lending transactions. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Nancy M. Morris, Secretary. [FR Doc. E6-21656 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54936; File No. S7-24-89] Joint Industry Plan; Notice of Filing and Effectiveness of Amendment No. 18 to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis, Submitted by the American Stock Exchange LLC, the Boston Stock Exchange, Inc., the Chicago Stock Exchange, Inc., the Chicago Board Options Exchange, Inc., the International Securities Exchange, Inc., the National Association of Securities Dealers, Inc., the National Stock Exchange, Inc., the Nasdaq Stock Market LLC, NYSE Arca, Inc., and the Philadelphia Stock Exchange, Inc. December 14, 2006. I. Introduction and Description Notice is hereby given that on December 13, 2006, the operating committee (“Operating Committee” or “Committee”) 1 of the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation, and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege Basis (“Nasdaq/UTP Plan” or “Plan”) filed with the Securities and Exchange Commission (“Commission”) an amendment to the Plan pursuant to Rule 608 under the Securities Exchange Act of 1934 (the “Act”) 2 . This amendment represents Amendment 18 made to the Plan and reflects the modification of the Access Section to be consistent with Rule 610 of Regulation NMS. 3 Amendment 18 was unanimously approved by the Committee on August 17, 2006. 4 The Commission is publishing this notice of filing and effectiveness to solicit comments from interested persons on Amendment No. 18. 1 The Plan Participants (collectively, “Participants”) are: the American Stock Exchange LLC (“Amex”), the Boston Stock Exchange, Inc. (“BSE”), the Chicago Stock Exchange, Inc. (“CHX”), the Chicago Board Options Exchange, Inc. (“CBOE”), the International Securities Exchange, Inc. (“ISE”), the National Association of Securities Dealers, Inc. (“NASD”), the National Stock Exchange, Inc. (“NSX”), the Nasdaq Stock Market LLC (“Nasdaq”), NYSE Arca, Inc. (“NYSEArca”), and the Philadelphia Stock Exchange, Inc. (“Phlx”). 2 17 CFR 242.608. 3 17 CFR 242.610. 4 *See* letter from Bridget M. Farrell, Chairman, OTC/UTP Operating Committee, to Nancy M. Morris, Secretary, Commission, dated December 12, 2006. II. Background The Plan governs the collection, consolidation, and dissemination of quotation and transaction information for the Nasdaq Global Market and Nasdaq Capital Market securities listed on Nasdaq or traded on an exchange pursuant to unlisted trading privileges (“UTP”). 5 The Plan provides for the collection from Plan Participants and the consolidation and dissemination to vendors, subscribers, and others of quotation and transaction information in Eligible Securities. 6 5 Section 12 of the Act generally requires an exchange to trade only those securities that the exchange lists, except that Section 12(f) of the Act permits an exchange to extend UTP to any security that is listed and registered on a national securities exchange. Nasdaq began operating as a national securities exchange for Nasdaq-listed securities on August 1, 2006, *see* Securities Exchange Act Release No. 54241 (July 31, 2006), 71 FR 45359 (August 8, 2006). 6 The Plan defines “Eligible Securities” as any Nasdaq Global Market or Nasdaq Capital Market security, as defined in NASDAQ Rule 4200. The Commission originally approved the Plan on a pilot basis on June 26, 1990. 7 The parties did not begin trading until July 12, 1993; accordingly, the pilot period commenced on July 12, 1993. The pilot approval of the Plan was most recently extended on December 5, 2005. 8 7 *See* Securities Exchange Act Release No. 28146, 55 FR 27917 (July 6, 1990). 8 *See* Securities Exchange Act Release No. 52886, 70 FR 74059 (December 14, 2005). III. Description and Purpose of the Amendment 9 9 The complete text of the Plan, as amended by Amendment No. 18, is attached as Exhibit A. Section IX of the Plan, entitled “Market Access,” describes the access requirements that are applicable to the Plan Participants. Amendment No. 18 eliminates the existing Market Access language and replaces it with language consistent with Rule 610 of Regulation NMS. 10 10 *See* 17 CFR 242.610. However, as Amendment No. 18 states, for Eligible Securities that are displayed by a Participant that operates an SRO trading facility that is not an NMS Compliant Facility, the telephone access requirement, which was included in the Market Access section before this Amendment No. 18 became effective, will continue to be applicable to the Participant. IV. Date of Effectiveness of the Amendment The changes set forth in Amendment No. 18 have been designated by the Participants as involving solely technical or ministerial matters, and thus are being put into effect upon filing with the Commission pursuant to Rule 608(b)(3)(iii). 11 At any time within 60 days of the filing of any such amendment, the Commission may summarily abrogate the amendment and require that the amendment be refiled in accordance with paragraph (a)(1) of Rule 608 under the Act 12 and reviewed in accordance with paragraph (b)(2) of Rule 608 under the Act, 13 if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or the maintenance of fair and orderly markets, to remove impediments to, and perfect mechanisms of, a national market system or otherwise in furtherance of the purposes of the Act. 14 11 17 CFR 242.608(b)(3)(iii). 12 17 CFR 242.608(a)(1). 13 17 CFR 242.608(b)(2). 14 17 CFR 242.608(b)(3)(iii). V. Solicitation of Comments The Commission seeks general comments on Amendment No. 18. Interested persons are invited to submit written data, views, and arguments concerning the foregoing, 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 Number S7-24-89 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 S7-24-89. 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 written statements with respect to the proposed Plan amendment that are filed with the Commission, and all written communications relating to the proposed Plan amendment 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 Office of the Secretary of the Committee, currently located at NYSE Arca, Inc., 100 South Wacker Drive, Suite 1800, Chicago, IL 60606. 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 S7-24-89 and should be submitted on or before January 10, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 15 Florence E. Harmon, Deputy Secretary. 15 17 CFR 200.30-3(a)(27). Exhibit A Amendment No. 18; Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege Basis The undersigned registered national securities association and national securities exchanges (collectively referred to as the “Participants”), have jointly developed and hereby enter into this Nasdaq Unlisted Trading Privileges Plan (“Nasdaq UTP Plan” or “Plan”). I. Participants The Participants include the following: A. Participants 1. American Stock Exchange LLC, 86 Trinity Place, New York, New York 10006. 2. Boston Stock Exchange, 100 Franklin Street, Boston, Massachusetts 02110. 3. Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605. 4. Chicago Board Options Exchange, Inc., 400 South LaSalle Street, 26th Floor, Chicago, Illinois 60605. 5. International Securities Exchange, Inc., 60 Broad Street, New York, New York 10004. 6. National Association of Securities, Dealers, Inc., 1735 K Street, NW., Washington, DC 20006. 7. National Stock Exchange, Inc., 440 South LaSalle Street, 26th Floor, Chicago, Illinois 60605. 8. NYSE Arca, Inc., 100 South Wacker Drive, Suite 1800, Chicago, IL 60606. 9. Philadelphia Stock Exchange, 1900 Market Street, Philadelphia, Pennsylvania 19103. 10. The Nasdaq Stock Market LLC, 1 Liberty Plaza, 165 Broadway, New York, NY 10006. B. Additional Participants Any other national securities association or national securities exchange, in whose market Eligible Securities become traded, may become a Participant, provided that said organization executes a copy of this Plan and pays its share of development costs as specified in Section XIII. II. Purpose of Plan The purpose of this Plan is to provide for the collection, consolidation and dissemination of Quotation Information and Transaction Reports in Eligible Securities from the Participants in a manner consistent with the Exchange Act. It is expressly understood that each Participant shall be responsible for the collection of Quotation Information and Transaction Reports within its market and that nothing in this Plan shall be deemed to govern or apply to the manner in which each Participant does so. III. Definitions A. *Current* means, with respect to Transaction Reports or Quotation Information, such Transaction Reports or Quotation Information during the fifteen
(15)minute period immediately following the initial transmission thereof by the Processor. B. *Eligible Security* means any Nasdaq Global Market or Nasdaq Capital Market security, as defined in NASDAQ Rule 4200. Eligible Securities under this Nasdaq UTP Plan shall not include any security that is defined as an “Eligible Security” within Section VII of the Consolidated Tape Association Plan. A security shall cease to be an Eligible Security for purposes of this Plan if:
(i)The security does not substantially meet the requirements from time to time in effect for continued listing on Nasdaq, and thus is suspended from trading; or
(ii)the security has been suspended from trading because the issuer thereof is in liquidation, bankruptcy or other similar type proceedings. The determination as to whether a security substantially meets the criteria of the definition of Eligible Security shall be made by the exchange on which such security is listed provided, however, that if such security is listed on more than one exchange, then such determination shall be made by the exchange on which, the greatest number of the transactions in such security were effected during the previous twelve-month period. C. *Commission* and *SEC* shall mean the U.S. Securities and Exchange Commission. D. *Exchange Act* means the Securities Exchange Act of 1934. E. *Market* shall mean
(i)When used with respect to Quotation Information, the NASD in the case of an NASD Participant, or the Participant on whose floor or through whose facilities the quotation was disseminated; and
(ii)when used with respect to Transaction Reports, the Participant through whose facilities the transaction took place or is reported, or the Participant to whose facilities the order was sent for execution. F. *NASD* means the National Association of Securities Dealers Inc. G. *NASD Participant* means an NASD member that is registered as a market maker or an electronic communications network or otherwise utilizes the facilities of the NASD pursuant to applicable NASD rules. H. *Transaction Reporting System* means the System provided for in the Transaction Reporting Plan filed with and approved by the Commission pursuant to SEC Rule11Aa3-1, subsequently re-designated as Rule 601 of Regulation NMS, governing the reporting of transactions in Nasdaq securities. I. *UTP Quote Data Feed* means the service that provides Subscribers with the National Best Bid and Offer quotations, size and market center identifier, as well as the Best Bid and Offer quotations, size and market center identifier from each individual Participant in Eligible Securities and, in the case of NASD, the NASD Participant(s) that constitute NASD's Best Bid and Offer quotations. J. *Nasdaq System* means the automated quotation system operated by Nasdaq. K. *UTP Trade Data Feed* means the service that provides Vendors and Subscribers with Transaction Reports. L. *Nasdaq Security* or *Nasdaq-listed Security* means any security listed on the Nasdaq Global Market or Nasdaq Capital Market. M. *News Service* means a person that receives Transaction Reports or Quotation Information provided by the Systems or provided by a Vendor, on a Current basis, in connection with such person's business of furnishing such information to newspapers, radio and television stations and other news media, for publication at least fifteen
(15)minutes following the time when the information first has been published by the Processor. N. *OTC Montage Data Feed* means the data stream of information that provides Vendors and Subscribers with quotations and sizes from each NASD Participant. O. *Participant* means a registered national securities exchange or national securities association that is a signatory to this Plan. P. *Plan* means this Nasdaq UTP Plan, as from time to time amended according to its provisions, governing the collection, consolidation and dissemination of Quotation Information and Transaction Reports in Eligible Securities. Q. *Processor* means the entity selected by the Participants to perform the processing functions set forth in the Plan. R. *Quotation Information* means all bids, offers, displayed quotation sizes, the market center identifiers and, in the case of NASD, the NASD Participant that entered the quotation, withdrawals and other information pertaining to quotations in Eligible Securities required to be collected and made available to the Processor pursuant to this Plan. S. *Regulatory Halt* means a trade suspension or halt called for the purpose of dissemination of material news, as described at Section X hereof or that is called for where there are regulatory problems relating to an Eligible Security that should be clarified before trading therein is permitted to continue, including a trading halt for extraordinary market activity due to system misuse or malfunction under Section X.E.1. of the Plan (“Extraordinary Market Regulatory Halt”). T. *Subscriber* means a person that receives Current Quotation Information or Transaction Reports provided by the Processor or provided by a Vendor, for its own use or for distribution on a non-Current basis, other than in connection with its activities as a Vendor. U. *Transaction Reports* means reports required to be collected and made available pursuant to this Plan containing the stock symbol, price, and size of the transaction executed, the Market in which the transaction was executed, and related information, including a buy/sell/cross indicator and trade modifiers, reflecting completed transactions in Eligible Securities. V. *Upon Effectiveness of the Plan* means July 12, 1993, the date on which the Participants commenced publication of Quotation Information and Transaction Reports on Eligible Securities as contemplated by this Plan. W. *Vendor* means a person that receives Current Quotation Information or Transaction Reports provided by the Processor or provided by a Vendor, in connection with such person's business of distributing, publishing, or otherwise furnishing such information on a Current basis to Subscribers, News Services or other Vendors. IV. Administration of Plan A. Operating Committee: Composition The Plan shall be administered by the Participants through an operating committee (“Operating Committee”), which shall be composed of one representative designated by each Participant. Each Participant may designate an alternate representative or representatives who shall be authorized to act on behalf of the Participant in the absence of the designated representative. Within the areas of its responsibilities and authority, decisions made or actions taken by the Operating Committee, directly or by duly delegated individuals, committees as may be established from time to time, or others, shall be binding upon each Participant, without prejudice to the rights of any Participant to seek redress from the SEC pursuant to Rule 608 of Regulation NMS under the Exchange Act or in any other appropriate forum. An Electronic Communications Network, Alternative Trading System, Broker-Dealer or other securities organization (“Organization”) which is not a Participant, but has an actively pending Form 1 Application on file with the Commission to become a national securities exchange, will be permitted to appoint one representative and one alternate representative to attend regularly scheduled Operating Committee meetings in the capacity of an observer/advisor. If the Organization's Form 1 petition is withdrawn, returned, or is otherwise not actively pending with the Commission for any reason, then the Organization will no longer be eligible to be represented in the Operating Committee meetings. The Operating Committee shall have the discretion, in limited instances, to deviate from this policy if, as indicated by majority vote, the Operating Committee agrees that circumstances so warrant. Nothing in this section or elsewhere within the Plan shall authorize any person or organization other than Participants and their representatives to participate on the Operating Committee in any manner other than as an advisor or observer, or in any Executive Session of the Operating Committee. B. Operating Committee: Authority The Operating Committee shall be responsible for: 1. Overseeing the consolidation of Quotation Information and Transaction Reports in Eligible Securities from the Participants for dissemination to Vendors, Subscribers, News Services and others in accordance with the provisions of the Plan; 2. Periodically evaluating the Processor; 3. Setting the level of fees to be paid by Vendors, Subscribers, News Services or others for services relating to Quotation Information or Transaction Reports in Eligible Securities, and taking action in respect thereto in accordance with the provisions of the Plan; 4. Determining matters involving the interpretation of the provisions of the Plan; 5. Determining matters relating to the Plan's provisions for cost allocation and revenue-sharing; and 6. Carrying out such other specific responsibilities as provided under the Plan. C. Operating Committee: Voting Each Participant shall have one vote on all matters considered by the Operating Committee. 1. The affirmative and unanimous vote of all Participants entitled to vote shall be necessary to constitute the action of the Operating Committee with respect to: a. Amendments to the Plan; b. Amendments to contracts between the Processor and Vendors, Subscribers, News Services and others receiving Quotation Information and Transaction Reports in Eligible Securities; c. Replacement of the Processor, except for termination for cause, which shall be governed by Section V(B) hereof; d. Reductions in existing fees relating to Quotation Information and Transaction Reports in Eligible Securities; and e. Except as provided under Section IV(C)(3) hereof, requests for system changes; and f. all other matters not specifically addressed by the Plan. 2. With respect to the establishment of new fees or increases in existing fees relating to Quotation Information and Transaction Reports in Eligible Securities, the affirmative vote of two-thirds of the Participants entitled to vote shall be necessary to constitute the action of the Operating Committee. 3. The affirmative vote of a majority of the Participants entitled to vote shall be necessary to constitute the action of the Operating Committee with respect to: a. Requests for system changes reasonably related to the function of the Processor as defined under the Plan. All other requests for system changes shall be governed by Section IV(C)(1)(e) hereof. b. Interpretive matters and decisions of the Operating Committee arising under, or specifically required to be taken by, the provisions of the Plan as written; c. Interpretive matters arising under Rules 601 and 602 of Regulation NMS; and d. Denials of access (other than for breach of contract, which shall be handled by the Processor), 4. It is expressly agreed and understood that neither this Plan nor the Operating Committee shall have authority in any respect over any Participant's proprietary systems. Nor shall the Plan or the Operating Committee have any authority over the collection and dissemination of quotation or transaction information in Eligible Securities in any Participant's marketplace, or, in the case of the NASD, from NASD Participants. D. Operating Committee: Meetings Regular meetings of the Operating Committee may be attended by each Participant's designated representative and/or its alternate representative(s), and may be attended by one or more other representatives of the parties. Meetings shall be held at such times and locations as shall from time to time be determined by the Operating Committee. *Quorum:* Any action requiring a vote only can be taken at a meeting in which a quorum of all Participants is present. For actions requiring a simple majority vote of all Participants, a quorum of greater than 50% of all Participants entitled to vote must be present at the meeting before such a vote may be taken. For actions requiring a 2/3 majority vote of all Participants, a quorum of at least 2/3 of all Participants entitled to vote must be present at the meeting before such a vote may be taken. For actions requiring a unanimous vote of all Participants, a quorum of all Participants entitled to vote must be present at the meeting before such a vote may be taken. A Participant is considered present at a meeting only if a Participant's designated representative or alternate representative(s) is either in physical attendance at the meeting or is participating by conference telephone, or other acceptable electronic means. Any action sought to be resolved at a meeting must be sent to each Participant entitled to vote on such matter at least one week prior to the meeting via electronic mail, regular U.S. or private mail, or facsimile transmission, provided however that this requirement may be waived by the vote of the percentage of the Committee required to vote on any particular matter, under Section C above. Any action may be taken without a meeting if a consent in writing, setting forth the action so taken, is sent to and signed by all Participant representatives entitled to vote with respect to the subject matter thereof. All the approvals evidencing the consent shall be delivered to the Chairman of the Operating Committee to be filed in the Operating Committee records. The action taken shall be effective when the minimum number of Participants entitled to vote have approved the action, unless the consent specifies a different effective date. The Chairman of the Operating Committee shall be elected annually by and from among the Participants by a majority vote of all Participants entitled to vote. The Chairman shall designate a person to act as Secretary to record the minutes of each meeting. The location of meetings shall be rotated among the locations of the principal offices of the Participants, or such other locations as may from time to time be determined by the Operating Committee. Meetings may be held by conference telephone and action may be taken without a meeting if the representatives of all Participants entitled to vote consent thereto in writing or other means the Operating Committee deems acceptable. E. Advisory Committee
(a)*Formation.* Notwithstanding any other provision of this Plan, an Advisory Committee to the Plan shall be formed and shall function in accordance with the provisions set forth in this section.
(b)*Composition.* Members of the Advisory Committee shall be selected for two-year terms as follows:
(1)*Operating Committee Selections.* By affirmative vote of a majority of the Participants entitled to vote, the Operating Committee shall select at least one representative from each of the following categories to be members of the Advisory Committee:
(i)A broker-dealer with a substantial retail investor customer base,
(ii)a broker-dealer with a substantial institutional investor customer base,
(iii)an alternative trade system,
(iv)a data vendor, and
(v)an investor.
(2)*Participant Selections.* Each Participant shall have the right to select one member of the Advisory Committee. A Participant shall not select any person employed by or affiliated with any participant or its affiliates or facilities.
(c)*Function.* Members of the Advisory Committee shall have the right to submit their views to the Operating Committee on Plan matters, prior to a decision by the Operating Committee on such matters. Such matters shall include, but not be limited to, any new or modified product, fee, contract, or pilot program that is offered or used pursuant to the Plan.
(d)*Meetings and Information.* Members of the Advisory Committee shall have the right to attend all meetings of the Operating Committee and to receive any information concerning Plan matters that is distributed to the Operating Committee; provided, however, that the Operating Committee may meet in executive session if, by affirmative vote of a majority of the Participants entitled to vote, the Operating Committee determines that an item of Plan business requires confidential treatment. V. Selection and Evaluation of the Processor A. Generally The Processor's performance of its functions under the Plan shall be subject to review by the Operating Committee at least every two years, or from time to time upon the request of any two Participants but not more frequently than once each year. Based on this review, the Operating Committee may choose to make a recommendation to the Participants with respect to the continuing operation of the Processor. The Operating Committee shall notify the SEC of any recommendations the Operating Committee shall make pursuant to the Operating Committee's review of the Processor and shall supply the Commission with a copy of any reports that may be prepared in connection therewith. B. Termination of the Processor for Cause If the Operating Committee determines that the Processor has failed to perform its functions in a reasonably acceptable manner in accordance with the provisions of the Plan or that its reimbursable expenses have become excessive and are not justified on a cost basis, the Processor may be terminated at such time as may be determined by a majority vote of the Operating Committee. C. Factors To Be Considered in Termination for Cause Among the factors to be considered in evaluating whether the Processor has performed its functions in a reasonably acceptable manner in accordance with the provisions of the Plan shall be the reasonableness of its response to requests from Participants for technological changes or enhancements pursuant to Section IV(C)(3) hereof. The reasonableness of the Processor's response to such requests shall be evaluated by the Operating Committee in terms of the cost to the Processor of purchasing the same service from a third party and integrating such service into the Processor's existing systems and operations as well as the extent to which the requested change would adversely impact the then current technical (as opposed to business or competitive) operations of the Processor. D. Processor's Right to Appeal Termination for Cause The Processor shall have the right to appeal to the SEC a determination of the Operating Committee terminating the Processor for cause and no action shall become final until the SEC has ruled on the matter and all legal appeals of right therefrom have been exhausted. E. Process for Selecting New Processor At any time following effectiveness of the Plan, but no later than upon the termination of the Processor, whether for cause pursuant to Section IV(C)(1)(c) or V(B) of the Plan or upon the Processor's resignation, the Operating Committee shall establish procedures for selecting a new Processor (the “Selection Procedures”). The Operating Committee, as part of the process of establishing Selection Procedures, may solicit and consider the timely comment of any entity affected by the operation of this Plan. The Selection Procedures shall be established by a two-thirds majority vote of the Plan Participants, and shall set forth, at a minimum: 1. The entity that will:
(a)Draft the Operating Committee's request for proposal for bids on a new processor;
(b)Assist the Operating Committee in evaluating bids for the new processor; and
(c)Otherwise provide assistance and guidance to the Operating Committee in the selection process. 2. The minimum technical and operational requirements to be fulfilled by the Processor; 3. The criteria to be considered in selecting the Processor; and 4. The entities (other than Plan Participants) that are eligible to comment on the selection of the Processor. Nothing in this provision shall be interpreted as limiting Participants' rights under Section IV or Section V of the Plan or other Commission order. VI. Functions of the Processor A. Generally The Processor shall collect from the Participants, and consolidate and disseminate to Vendors, Subscribers and News Services, Quotation Information and Transaction Reports in Eligible Securities in a manner designed to assure the prompt, accurate and reliable collection, processing and dissemination of information with respect to all Eligible Securities in a fair and non-discriminatory manner. The Processor shall commence operations upon the Processor's notification to the Participants that it is ready and able to commence such operations. B. Collection and Consolidation of Information For as long as Nasdaq is the Processor, the Processor shall be capable of receiving Quotation Information and Transaction Reports in Eligible Securities from Participants by the Plan-approved, Processor sponsored interface, and shall consolidate and disseminate such information via the UTP Quote Data Feed, the UTP Trade Data Feed, and the OTC Montage Data Feed to Vendors, Subscribers and News Services. For so long as Nasdaq is not registered as a national securities exchange and for so long as Nasdaq is the Processor, the Processor shall also collect, consolidate, and disseminate the quotation information contained in NQDS. For so long as Nasdaq is not registered as a national securities exchange and after Nasdaq is no longer the Processor for other SIP datafeeds, either Nasdaq or a third party will act as the Processor to collect, consolidate, and disseminate the quotation information contained in NQDS. C. Dissemination of Information The Processor shall disseminate consolidated Quotation Information and Transaction Reports in Eligible Securities via the UTP Quote Data Feed, the UTP Trade Data Feed, and the OTC Montage Data Feed to authorized Vendors, Subscribers and News Services in a fair and non-discriminatory manner. The Processor shall specifically be permitted to enter into agreements with Vendors, Subscribers and News Services for the dissemination of quotation or transaction information on Eligible Securities to foreign (non-U.S.) marketplaces or in foreign countries. The Processor shall, in such instance, disseminate consolidated quotation or transaction information on Eligible Securities from all Participants. Nothing herein shall be construed so as to prohibit or restrict in any way the right of any Participant to distribute quotation, transaction or other information with respect to Eligible Securities quoted on or traded in its marketplace to a marketplace outside the United States solely for the purpose of supporting an intermarket linkage, or to distribute information within its own marketplace concerning Eligible Securities in accordance with its own format. If a Participant requests, the Processor shall make information about Eligible Securities in the Participant's marketplace available to a foreign marketplace on behalf of the requesting Participant, in which event the cost shall be borne by that Participant. 1. Best Bid and Offer The Processor shall disseminate on the UTP Quote Data Feed the best bid and offer information supplied by each Participant, including the NASD Participant(s) that constitute NASD's single Best Bid and Offer quotations, and shall also calculate and disseminate on the UTP Quote Data Feed a national best bid and asked quotation with size based upon Quotation Information for Eligible Securities received from Participants. The Processor shall not calculate the best bid and offer for any individual Participant, including the NASD. The Participant responsible for each side of the best bid and asked quotation making up the national best bid and offer shall be identified by an appropriate symbol. If the quotations of more than one Participant shall be the same best price, the largest displayed size among those shall be deemed to be the best. If the quotations of more than one Participant are the same best price and best displayed size, the earliest among those measured by the time reported shall be deemed to be the best. A reduction of only bid size and/or ask size will not change the time priority of a Participant's quote for the purposes of determining time reported, whereas an increase of the bid size and/or ask size will result in a new time reported. The consolidated size shall be the size of the Participant that is at the best. If the best bid/best offer results in a locked or crossed quotation, the Processor shall forward that locked or crossed quote on the appropriate output lines ( *i.e.* , a crossed quote of bid 12, ask 11.87 shall be disseminated). The Processor shall normally cease the calculation of the best bid/best offer after 6:30 p.m., Eastern Time. 2. Quotation Data Streams The Processor shall disseminate on the UTP Quote Data Feed a data stream of all Quotation Information regarding Eligible Securities received from Participants. Each quotation shall be designated with a symbol identifying the Participant from which the quotation emanates and, in the case of NASD, the NASD Participant(s) that constitute NASD's Best Bid and Offer quotations. In addition, the Processor shall separately distribute on the OTC Montage Data Feed the Quotation Information regarding Eligible Securities from all NASD Participants from which quotations emanate. The Processor shall separately distribute NQDS for so long as Nasdaq is not registered as a national securities exchange and for so long as Nasdaq is the Processor. For so long as Nasdaq is not registered as a national securities exchange and after Nasdaq is no longer the Processor for other SIP datafeeds, either Nasdaq or a third party will act as the Processor to collect, consolidate, and disseminate the quotation information contained in NQDS. 3. Transaction Reports The Processor shall disseminate on the UTP Trade Data Feed a data stream of all Transaction Reports in Eligible Securities received from Participants. Each transaction report shall be designated with a symbol identifying the Participant in whose Market the transaction took place. D. Closing Reports At the conclusion of each trading day, the Processor shall disseminate a “closing price” for each Eligible Security. Such “closing price” shall be the price of the last Transaction Report in such security received prior to dissemination. The Processor shall also tabulate and disseminate at the conclusion of each trading day the aggregate volume reflected by all Transaction Reports in Eligible Securities reported by the Participants. E. Statistics The Processor shall maintain quarterly, semi-annual and annual transaction and volume statistical counts. The Processor shall, at cost to the user Participant(s), make such statistics available in a form agreed upon by the Operating Committee, such as a secure Web site. VII. Administrative Functions of the Processor Subject to the general direction of the Operating Committee, the Processor shall be responsible for carrying out all administrative functions necessary to the operation and maintenance of the consolidated information collection and dissemination system provided for in this Plan, including, but not limited to, record keeping, billing, contract administration, and the preparation of financial reports. VIII. Transmission of Information to Processor by Participants A. Quotation Information Each Participant shall, during the time it is open for trading be responsible promptly to collect and transmit to the Processor accurate Quotation Information in Eligible Securities through any means prescribed herein. Quotation Information shall include: 1. Identification of the Eligible Security, using the Nasdaq Symbol; 2. the price bid and offered, together with size; 3. the NASD Participant along with the NASD Participant's market participant identification or Participant from which the quotation emanates; 4. identification of quotations that are not firm; and 5. through appropriate codes and messages, withdrawals and similar matters. B. Transaction Reports Each Participant shall, during the time it is open for trading, be responsible promptly to collect and transmit to the Processor Transaction Reports in Eligible Securities executed in its Market by means prescribed herein. With respect to orders sent by one Participant Market to another Participant Market for execution, each Participant shall adopt procedures governing the reporting of transactions in Eligible Securities specifying that the transaction will be reported by the Participant whose member sold the security. This provision shall apply only to transactions between Plan Participants. Transaction Reports shall include: 1. Identification of the Eligible Security, using the Nasdaq Symbol; 2. the number of shares in the transaction; 3. the price at which the shares were purchased or sold; 4. the buy/sell/cross indicator; 5. the Market of execution; and, 6. through appropriate codes and messages, late or out-of-sequence trades, corrections and similar matters. All such Transaction Reports shall be transmitted to the Processor within 90 seconds after the time of execution of the transaction. Transaction Reports transmitted beyond the 90-second period shall be designated as “late” by the appropriate code or message. The following types of transactions are not required to be reported to the Processor pursuant to the Plan: 1. Transactions that are part of a primary distribution by an issuer or of a registered secondary distribution or of an unregistered secondary distribution; 2. transactions made in reliance on Section 4(2) of the Securities Act of 1933; 3. transactions in which the buyer and the seller have agreed to trade at a price unrelated to the Current Market for the security, *e.g.* , to enable the seller to make a gift; 4. odd-lot transactions; 5. the acquisition of securities by a broker-dealer as principal in anticipation of making an immediate exchange distribution or exchange offering on an exchange; 6. purchases of securities pursuant to a tender offer; and 7. purchases or sales of securities effected upon the exercise of an option pursuant to the terms thereof or the exercise of any other right to acquire securities at a pre-established consideration unrelated to the Current Market. C. Symbols for Market Identification for Quotation Information and Transaction Reports The following symbols shall be used to denote the marketplaces: Code Participant A American Stock Exchange LLC B Boston Stock Exchange, Inc. W Chicago Board Options Exchange, Inc. M Chicago Stock Exchange, Inc. I International Securities Exchange, Inc. D NASD Q Nasdaq Stock Market LLC C National Stock Exchange, Inc. P NYSE Arca, Inc. X Philadelphia Stock Exchange, Inc. D. Whenever a Participant determines that a level of trading activity or other unusual market conditions prevent it from collecting and transmitting Quotation Information or Transaction Reports to the Processor, or where a trading halt or suspension in an Eligible Security is in effect in its Market, the Participant shall promptly notify the Processor of such condition or event and shall resume collecting and transmitting Quotation Information and Transaction Reports to it as soon as the condition or event is terminated. In the event of a system malfunction resulting in the inability of a Participant or its members to transmit Quotation Information or Transaction Reports to the Processor, the Participant shall promptly notify the Processor of such event or condition. Upon receiving such notification, the Processor shall take appropriate action, including either closing the quotation or purging the system of the affected quotations. IX. Market Access Consistent with the state of electronic technology and pursuant to the requirements of Rule 610 of Regulation NMS, a Participant that operates an SRO trading facility shall provide for fair and efficient order execution access to quotations in each Eligible Security displayed through its trading facility. In the case of a Participant that operates an SRO display-only quotation facility, trading centers posting quotations through such SRO display-only quotation facility must provide for fair and efficient order execution access to quotations in each Eligible Security displayed through the SRO display-only quotation facility. A Participant that operates an SRO trading facility may elect to allow such access to its quotations through the utilization of private electronic linkages between the Participant and other trading centers. In the case of a Participant that operates an SRO display-only quotation facility, trading centers posting quotations through such SRO display-only quotation facility may elect to allow such access to their quotations through the utilization of private electronic linkages between the trading center and SRO trading facilities of Plan Participants and/or other trading centers. In accordance with Regulation NMS, a Participant shall not impose, or permit to be imposed, any fee or fees for the execution of an order against a protected quotation of the Participant or of a trading center posting quotes through a Participant's SRO display-only quotation facility in an Eligible Security or against any other quotation displayed by the Participant in an Eligible Security that is the Participant's displayed best bid or offer for that Eligible Security, where such fee or fees exceed the limits provided for in Rule 610(c) of Regulation NMS. As required under Regulation NMS, the terms of access to a Participant's quotations or of a trading center posting quotes through a Participant's SRO display-only quotation facility in an Eligible Security may not be unfairly discriminatory so as to prevent or inhibit any person from obtaining efficient access to such displayed quotations through a member of the Participant or a subscriber of a trading center. If quotations in an Eligible Security are displayed by a Participant that operates an SRO trading facility (or are displayed by a trading center that posts quotations through an SRO display-only quotation facility) that complies with the fair and efficient access requirements of Regulation NMS (an “NMS Compliant Facility”), including prior to the compliance date of such access requirements, that Participant (or trading center posting quotes through an SRO display-only quotation facility) shall no longer be required to permit each NASD market participant to have direct telephone access to the specialist, trading post, market maker and supervisory center in such Eligible Security that trades on that NMS Compliant Facility. For quotations in Eligible Securities that are displayed by a Participant that operates an SRO trading facility that is not an NMS Compliant Facility, such telephone access requirement will continue to be applicable to the Participant. X. Regulatory Halts A. Whenever, in the exercise of its regulatory functions, the Listing Market for an Eligible Security determines that a Regulatory Halt is appropriate pursuant to Section III.S, the Listing Market will notify all other Participants pursuant to Section X.E and all other Participants shall also halt or suspend trading in that security until notification that the halt or suspension is no longer in effect. The Listing Market shall immediately notify the Processor of such Regulatory Halt as well as notice of the lifting of a Regulatory Halt. The Processor, in turn, shall disseminate to Participants notice of the Regulatory Halt (as well as notice of the lifting of a regulatory halt) through the UTP Quote Data Feed. This notice shall serve as official notice of a regulatory halt for purposes of the Plan only, and shall not substitute or otherwise supplant notice that a Participant may recognize or require under its own rules. Nothing in this provision shall be read so as to supplant or be inconsistent with a Participant's own rules on trade halts, which rules apply to the Participant's own members. The Processor will reject any quotation information or transaction reports received from any Participant on an Eligible Security that has a Regulatory Halt in effect. B. Whenever the Listing Market determines that an adequate publication or dissemination of information has occurred so as to permit the termination of the Regulatory Halt then in effect, the Listing Market shall promptly notify the Processor and each of the other Participants that conducts trading in such security pursuant to Section X.F. Except in extraordinary circumstances, adequate publication or dissemination shall be presumed by the Listing Market to have occurred upon the expiration of one hour after initial publication in a national news dissemination service of the information that gave rise to the Regulatory Halt. C. Except in the case of a Regulatory Halt, the Processor shall not cease the dissemination of quotation or transaction information regarding any Eligible Security. In particular, it shall not cease dissemination of such information because of a delayed opening, imbalance of orders or other market-related problems involving such security. During a regulatory halt, the Processor shall collect and disseminate Transaction Information but shall cease collection and dissemination of all Quotation Information. D. For purposes of this Section X, “Listing Market” for an Eligible Security means the Participant's Market on which the Eligible Security is listed. If an Eligible Security is dually listed, Listing Market shall mean the Participant's Market on which the Eligible Security is listed that also has the highest number of the average of the reported transactions and reported share volume for the preceding 12-month period. The Listing Market for dually-listed Eligible Securities shall be determined at the beginning of each calendar quarter. E. For purposes of coordinating trading halts in Eligible Securities, all Participants are required to utilize the national market system communication media (“Hoot-n-Holler”) to verbally provide real-time information to all Participants. Each Participant shall be required to continuously monitor the Hoot-n-Holler system during market hours, and the failure of a Participant to do so at any time shall not prevent the Listing Market from initiating a Regulatory Halt in accordance with the procedures specified herein. 1. The following procedures shall be followed when one or more Participants experiences extraordinary market activity in an Eligible Security that is believed to be caused by the misuse or malfunction of systems operated by or linked to one or more Participants. a. The Participant(s) experiencing the extraordinary market activity or any Participant that becomes aware of extraordinary market activity will immediately use best efforts to notify all Participants of the extraordinary market activity utilizing the Hoot-n-Holler system. b. The Listing Market will use best efforts to determine whether there is material news regarding the Eligible Security. If the Listing Market determines that there is non-disclosed material news, it will immediately call a Regulatory Halt pursuant to Section X.E.2. c. Each Participant(s) will use best efforts to determine whether one of its systems, or the system of a direct or indirect participant in its market, is responsible for the extraordinary market activity. d. If a Participant determines the potential source of extraordinary market activity pursuant to Section X.1.c., the Participant will use best efforts to determine whether removing the quotations of one or more direct or indirect market participants or barring one or more direct or indirect market participants from entering orders will resolve the extraordinary market activity. Accordingly, the Participant will prevent the quotations from one or more direct or indirect market participants in the affected Eligible Securities from being transmitted to the Processor. e. If the procedures described in Section X.E.1.a.-d. do not rectify the situation, the Participant(s) experiencing extraordinary market activity will cease transmitting all quotations in the affected Eligible Securities to the Processor. f. If the procedures described in Section X.E.1.a-e do not rectify the situation within five minutes of the first notification through the Hoot-n-Holler system, or if Participants agree to call a halt sooner through unanimous approval among those Participants actively trading impacted Eligible Securities, the Listing Market may determine based on the facts and circumstances, including available input from Participants, to declare an Extraordinary Market Regulatory Halt in the affected Eligible Securities. Simultaneously with the notification of the Processor to suspend the dissemination of quotations across all Participants, the Listing Market must verbally notify all Participants of the trading halt utilizing the Hoot-n-Holler system. g. Absent any evidence of system misuse or malfunction, best efforts will be used to ensure that trading is not halted across all Participants. 2. If the Listing Market declares a Regulatory Halt in circumstances other than pursuant to Section X.E.1.f., the Listing Market must, simultaneously with the notification of the Processor to suspend the dissemination of quotations across all Participants, verbally notify all Participants of the trading halt utilizing the Hoot-n-Holler system. F. If the Listing Market declares a Regulatory Halt, trading will resume according to the following procedures: 1. Within 15 minutes of the declaration of the halt, all Participants will make best efforts to indicate via the Hoot-n-Holler their intentions with respect to canceling or modifying transactions. 2. All Participants will disseminate to their members information regarding the canceled or modified transactions as promptly as possible, and in any event prior to the resumption of trading. 3. After all Participants have met the requirements of Section X.F.1-2, the Listing Market will notify the Participants utilizing the Hoot-n-Holler and the Processor when trading may resume. Upon receiving this information, Participants may commence trading pursuant to Section X.A. XI. Hours of Operation A. Quotation Information may be entered by Participants as to all Eligible Securities in which they make a market between 9:30 a.m. and 4 p.m. Eastern Time (“ET”) on all days the Processor is in operation. Transaction Reports shall be entered between 9:30 a.m. and 4:01:30 p.m. ET by Participants as to all Eligible Securities in which they execute transactions between 9:30 a.m. and 4 p.m. ET on all days the Processor is in operation. B. Participants that execute transactions in Eligible Securities outside the hours of 9:30 a.m. ET and 4 p.m., ET, shall be required to report such transactions as follows:
(i)Transactions in Eligible Securities executed between 4 a.m. and 9:29:59 a.m. ET and between 4:00:01 and 8 p.m. ET, shall be designated as “.T” trades to denote their execution outside normal market hours;
(ii)transactions in Eligible Securities executed after 8 p.m. and before 12 a.m. (midnight) shall be reported to the Processor between the hours of 4 a.m. and 8 p.m. ET on the next business day (T+1), and shall be designated “as/of” trades to denote their execution on a prior day, and be accompanied by the time of execution;
(iii)transactions in Eligible Securities executed between 12 a.m. (midnight) and 4 a.m. ET shall be transmitted to the Processor between 4 a.m. and 9:30 a.m. ET, on trade date, shall be designated as “.T” trades to denote their execution outside normal market hours, and shall be accompanied by the time of execution;
(iv)transactions reported pursuant to this provision of the Plan shall be included in the calculation of total trade volume for purposes of determining net distributable operating revenue, but shall not be included in the calculation of the daily high, low, or last sale. C. Late trades shall be reported in accordance with the rules of the Participant in whose Market the transaction occurred and can be reported between the hours of 4 a.m. and 8 p.m. D. The Processor shall collect, process and disseminate Quotation Information in Eligible Securities at other times between 4 a.m. and 9:30 a.m. ET, and after 4 p.m. ET, when any Participant or Nasdaq market participant is open for trading, until 8 p.m. ET (the “Additional Period”); provided, however, that the best bid and offer quotation will not be disseminated before 4 a.m. or after 8 p.m. ET. Participants that enter Quotation Information or submit Transaction Reports to the Processor during the Additional Period shall do so for all Eligible Securities in which they enter quotations. XII. Undertaking by All Participants The filing with and approval by the Commission of this Plan shall obligate each Participant to enforce compliance by its members with the provisions thereof. In all other respects not inconsistent herewith, the rules of each Participant shall apply to the actions of its members in effecting, reporting, honoring and settling transactions executed through its facilities, and the entry, maintenance and firmness of quotations to ensure that such occurs in a manner consistent with just and equitable principles of trade. XIII. Financial Matters A. Development Costs Any Participant becoming a signatory to this Plan after June 26, 1990, shall, as a condition to becoming a Participant, pay to the other Plan Participants a proportionate share of the aggregate development costs previously paid by Plan Participants to the Processor, which aggregate development costs totaled $439,530, with the result that each Participant's share of all development costs is the same. Each Participant shall bear the cost of implementation of any technical enhancements to the Nasdaq system made at its request and solely for its use, subject to reapportionment should any other Participant subsequently make use of the enhancement, or the development thereof. B. Cost Allocation and Revenue Sharing The provisions governing cost allocation and revenue sharing among the Participants are set forth in Exhibit 1 to the Plan. C. Maintenance of Financial Records The Processor shall maintain records of revenues generated and development and operating expenditures incurred in connection with the Plan. In addition, the Processor shall provide the Participants with:
(a)A statement of financial and operational condition on a quarterly basis; and
(b)an audited statement of financial and operational condition on an annual basis. XIV. Indemnification Each Participant agrees, severally and not jointly, to indemnify and hold harmless each other Participant, Nasdaq, and each of its directors, officers, employees and agents (including the Operating Committee and its employees and agents) from and against any and all loss, liability, claim, damage and expense whatsoever incurred or threatened against such persons as a result of any Transaction Reports, Quotation Information or other information reported to the Processor by such Participant and disseminated by the Processor to Vendors. This indemnity agreement shall be in addition to any liability that the indemnifying Participant may otherwise have. Promptly after receipt by an indemnified Participant of notice of the commencement of any action, such indemnified Participant will, if a claim in respect thereof is to be made against an indemnifying Participant, notify the indemnifying Participant in writing of the commencement thereof; but the omission to so notify the indemnifying Participant will not relieve the indemnifying Participant from any liability which it may have to any indemnified Participant. In case any such action is brought against any indemnified Participant and it promptly notifies an indemnifying Participant of the commencement thereof, the indemnifying Participant will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying Participant similarly notified, to assume and control the defense thereof with counsel chosen by it. After notice from the indemnifying Participant of its election to assume the defense thereof, the indemnifying Participant will not be liable to such indemnified Participant for any legal or other expenses subsequently incurred by such indemnified Participant in connection with the defense thereof but the indemnified Participant may, at its own expense, participate in such defense by counsel chosen by it without, however, impairing the indemnifying Participant's control of the defense. The indemnifying Participant may negotiate a compromise or settlement of any such action, provided that such compromise or settlement does not require a contribution by the indemnified Participant. XV. Withdrawal Any Participant may withdraw from the Plan at any time on not less than 30 days prior written notice to each of the other Participants. Any Participant withdrawing from the Plan shall remain liable for, and shall pay upon demand, any fees for equipment or services being provided to such Participant pursuant to the contract executed by it or an agreement or schedule of fees covering such then in effect. A withdrawing Participant shall also remain liable for its proportionate share, without any right of recovery, of administrative and operating expenses, including start-up costs and other sums for which it may be responsible pursuant to Section XIV hereof. Except as aforesaid, a withdrawing Participant shall have no further obligation under the Plan or to any of the other Participants with respect to the period following the effectiveness of its withdrawal. XVI. Modifications to Plan The Plan may be modified from time to time when authorized by the agreement of all of the Participants, subject to the approval of the SEC or which otherwise becomes effective pursuant to Section 11A of the Act and Rule 608 of Regulation NMS. XVII. Applicability of Securities Exchange Act of 1934 The rights and obligations of the Participants and of Vendors, News Services, Subscribers and other persons contracting with Participant in respect of the matters covered by the Plan shall at all times be subject to any applicable provisions of the Act, as amended, and any rules and regulations promulgated thereunder. XVIII. Operational Issues A. Each Participant shall be responsible for collecting and validating quotes and last sale reports within their own system prior to transmitting this data to the Processor. B. Each Participant may utilize a dedicated Participant line into the Processor to transmit trade and quote information in Eligible Securities to the Processor. The Processor shall accept from Exchange Participants input for only those issues that are deemed Eligible Securities. C. The Processor shall consolidate trade and quote information from each Participant and disseminate this information on the Processor's existing vendor lines. D. The Processor shall perform gross validation processing for quotes and last sale messages in addition to the collection and dissemination functions, as follows: 1. Basic Message Validation
(a)The Processor may validate format for each type of message, and reject non-conforming messages.
(b)Input must be for an Eligible Security. 2. Logging Function—The Processor shall return all Participant input messages that do not pass the validation checks (described above) to the inputting Participant, on the entering Participant line, with an appropriate reject notation. For all accepted Participant input messages ( *i.e.* , those that pass the validation check), the information shall be retained in the Processor system. XIX. Headings The section and other headings contained in this Plan are for reference purposes only and shall not be deemed to be a part of this Plan or to affect the meaning or interpretation of any provisions of this Plan. XX. Counterparts This Plan may be executed by the Participants in any number of counterparts, no one of which need contain the signature of all Participants. As many such counterparts as shall together contain all such signatures shall constitute one and the same instrument. XXI. Depth of Book Display The Operating Committee has determined that the entity that succeeds Nasdaq as the Processor should have the ability to collect, consolidate, and disseminate quotations at multiple price levels beyond the best bid and best offer from any Participant that voluntarily chooses to submit such quotations while determining that no Participant shall be required to submit such information. The Operating Committee has further determined that the costs of developing, collecting, processing, and disseminating such depth of book data shall be borne exclusively by those Participants that choose to submit this information to the Processor, by whatever allocation those Participants may choose among themselves. The Operating Committee has determined further that the primary purpose of the Processor is the collection, processing and dissemination of best bid, best offer and last sale information (“core data”), and as such, the Participants will adopt procedures to ensure that such functionality in no way hinders the collecting, processing and dissemination of this core data. Therefore, implementing the depth of book display functionality will require a plan amendment that addresses all pertinent issues, including:
(1)Procedures for ensuring that the fully-loaded cost of the collection, processing, and dissemination of depth-of-book information will be tracked and invoiced directly to those Plan Participants that voluntarily choose to send that data, voluntarily, to the Processor, allocating in whatever manner those Participants might agree; and
(2)Necessary safeguards the Processor will take to ensure that its processing of depth-of-book data will not impede or hamper, in any way, its core Processor functionality of collecting, consolidating, and disseminating National Best Bid and Offer data, exchange best bid and offer data, and consolidated last sale data. Upon approval of a Plan amendment implementing depth of book display, this article of the Plan shall be automatically deleted. *In witness whereof* , this Plan has been executed as of the____day of ____, 200_, by each of the Signatories hereto. American Stock Exchange LLC By: Boston Stock Exchange, Inc. By: Chicago Stock Exchange, Inc. By: Chicago Board Options Exchange, Inc. By: International Securities Exchange, Inc. By: NASD By: National Stock Exchange, Inc. By: NYSE Arca, Inc. By: Philadelphia Stock Exchange, Inc. By: The Nasdaq Stock Market LLC By: Exhibit 1 1. Each Participant eligible to receive revenue under the Plan will receive an annual payment for each calendar year to be determined by multiplying
(i)That Participant's percentage of total volume in Nasdaq securities reported to the Processor for that calendar year by
(ii)the total distributable net operating income (as defined below) for that calendar year. In the event that total distributable net operating income is negative, each Participant eligible to receive revenue under the Plan will receive an annual bill for each calendar year to be determined according to the same formula (described in this paragraph) for determining annual payments to eligible Participants. 2. A Participant's percentage of total volume in Nasdaq securities will be calculated by taking the average of
(i)The Participant's percentage of total trades in Nasdaq securities reported to the Processor for the year and
(ii)the Participant's percentage of total share volume in Nasdaq securities reported to the Processor for the year (trade/volume average). For any given year, a Participant's percentage of total trades shall be calculated by dividing the total number of trades that that Participant reports to the Processor for that year by the total number of trades in Nasdaq securities reported to the Processor for the year. A Participant's total share volume shall be calculated by multiplying the total number of trades in Nasdaq securities in that year that that Participant reports to the Processor by the number of shares for each such trade. Unless otherwise stated in this agreement, a year shall run from January 1 to December 31 and quarters shall end on March 31, June 30, September 30, and December 31. Processor shall endeavor to provide Participants with written estimates of each Participant's percentage of total volume within five business days of month end. 3. For purposes of this Exhibit 1, net distributable operating income for any particular calendar year shall be calculated by adding all revenues from the UTP Quote Data Feed, the UTP Trade Data Feed, and the OTC Montage Data Feed including revenues from the dissemination of information respecting Eligible Securities to foreign marketplaces (collectively, “the Data Feeds”), and subtracting from such revenues the costs incurred by the Processor, set forth below, in collecting, consolidating, validating, generating, and disseminating the Data Feeds. These costs include, but are not limited to, the following: a. The Processor costs directly attributable to creating OTC Montage Data Feed, including: 1. Cost of collecting Participant quotes into the Processor's quote engine; 2. Cost of processing quotes and creating OTC Montage Data Feed messages within the Processor's quote engine; 3. Cost of the Processor's communication management subsystem that distributes OTC Montage Data Feed to the market data vendor network for further distribution. b. The costs directly attributable to creating the UTP Quote Data Feed, including: 1. The costs of collecting each Participant's best bid, best offer, and aggregate volume into the Processor's quote engine and, in the case of NASD, the costs of identifying the NASD Participant(s) that constitute NASD's Best Bid and Offer quotations; 2. Cost of calculating the national best bid and offer price within the Processor's quote engine; 3. Cost of creating the UTP Quote Data Feed message within the Processor's quote engine; 4. Cost of the Processor's communication management subsystem that distributes the UTP Quote Data Feed to the market data vendors' networks for further distribution. c. The costs directly attributable to creating the UTP Trade Data Feed, including: 1. The costs of collecting each Participant's last sale and volume amount into the Processor's quote engine 2. Cost of determining the appropriate last sale price and volume amount within the Processor's trade engine; 3. Cost of utilizing the Processor's trade engine to distribute the UTP Trade Data Feed for distribution to the market data vendors. 4. Cost of the Processor's communication management subsystem that distributes the UTP Trade Data Feed to the marker data vendors' networks for further distribution. d. The additional costs that are shared across all Data Feeds, including: 1. Telecommunication Operations costs of supporting the Participant lines into the Processor's facilities; 2. Telecommunications Operations costs of supporting the external market data vendor network; 3. Data Products account management and auditing function with the market data vendors; 4. Market Operations costs to support symbol maintenance, and other data integrity issues; 5. Overhead costs, including management support of the Processor, Human Resources, Finance, Legal, and Administrative Services. e. Processor costs excluded from the calculation of net distributable operating income include trade execution costs for transactions executed using a Nasdaq service and trade report collection costs reported through a Nasdaq service, as such services are market functions for which Participants electing to use such services pay market rate. f. For the purposes of this provision, the following definitions shall apply: 1. “Quote engine” shall mean the Nasdaq's NT or Tandem system that is operated by Nasdaq to collect quotation information for Eligible Securities; 2. “Trade engine” shall mean the Nasdaq Tandem system that is operated by Nasdaq for the purpose of collecting last sale information in Eligible Securities. 4. At the time a Participant implements a Processor-approved electronic interface with the Processor, the Participant will become eligible to receive revenue. 5. Processor shall endeavor to provide Participants with written estimates of each Participant's quarterly net distributable operating income within 45 calendar days of the end of the quarter, and estimated quarterly payments or billings shall be made on the basis of such estimates. All quarterly payments or billings shall be made to each eligible Participant within 45 days following the end of each calendar quarter in which the Participant is eligible to receive revenue, provided that each quarterly payment or billing shall be reconciled against a Participant's cumulative year-to-date payment or billing received to date and adjusted accordingly, and further provided that the total of such estimated payments or billings shall be reconciled at the end of each calendar year and, if necessary, adjusted by March 31st of the following year. Interest shall be included in quarterly payments and in adjusted payments made on March 31st of the following year. Such interest shall accrue monthly during the period in which revenue was earned and not yet paid and will be based on the 90-day Treasury bill rate in effect at the end of the quarter in which the payment is made. Monthly interest shall start accruing 45 days following the month in which it is earned and accrue until the date on which the payment is made. In conjunction with calculating estimated quarterly and reconciled annual payments under this Exhibit 1, the Processor shall submit to the Participants a quarterly itemized statement setting forth the basis upon which net operating income was calculated, including a quarterly itemized statement of the Processor costs set forth in Paragraph 3 of this Exhibit. Such Processor costs and Plan revenues shall be adjusted annually based solely on the Processor's quarterly itemized statement audited pursuant to Processor's annual audit. Processor shall pay or bill Participants for the audit adjustments within thirty days of completion of the annual audit. By majority vote of the Operating Committee, the Processor shall engage an independent auditor to audit the Processor's costs or other calculation(s), the cost of which audit shall be shared equally by all Participants. The Processor agrees to cooperate fully in providing the information necessary to complete such audit. [FR Doc. E6-21708 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54938; File No. PCAOB-2006-02] Public Company Accounting Oversight Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adjusting Implementation Schedule of Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles December 14, 2006. Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (the “Act”), notice is hereby given that on October 31, 2006, the Public Company Accounting Oversight Board (the “Board” or the “PCAOB”) filed with the Securities and Exchange Commission (the “SEC” or “Commission”) the proposed rule change described in Items I and II below, which items have been prepared by the Board. The PCAOB has designated the proposed rule change as “constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule” under Section 19(b)(3)(A)(i) of the Securities Exchange Act of 1934 (“Exchange Act”) (as incorporated, by reference, into Section 107(b)(4) of the Act), which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Board's Statement of the Terms of Substance of the Proposed Rule Change The PCAOB is filing with the SEC an adjustment of the implementation schedule for Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles. Specifically the Board will not apply Rule 3523 to tax services provided on or before April 30, 2007, when those services are provided during the audit period and are completed before the professional engagement period begins. The PCAOB is not proposing any textual changes to the Rules of the PCAOB. II. Board's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Board included statements concerning the purpose of, and basis for, the proposed rule and discussed any comments it received on the proposed rule. The text of these statements may be examined at the places specified in Item IV below. The Board has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Board's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
(a)Purpose On July 26, 2005, the Board adopted certain rules related to registered public accounting firms' provision of tax services to public company audit clients. The rules were designed to address certain concerns related to auditor independence when auditors become involved in marketing or otherwise opining in favor of aggressive tax shelter schemes or in selling personal tax services to individuals who play a direct role in preparing the financial statements of public company audit clients. As part of this rulemaking, the Board adopted Rule 3523 to prohibit registered public accounting firms from providing any tax services to persons in a financial reporting oversight role at an audit client. Rule 3523 was approved by the Securities and Exchange Commission on April 19, 2006. Under the current implementation schedule set by the Board, Rule 3523 will not apply to tax services being provided pursuant to an engagement in process on April 19, 2006, provided that such services are completed on or before October 31, 2006. 1 1 PCAOB Release No. 2006-001 (March 28, 2006), at 2-3. Rule 3523 applies to all tax services performed for persons in a financial reporting oversight role during the “audit and professional engagement period.” The Board intends to revisit the application of Rule 3523 to tax services provided during the period before a registered public accounting firm becomes auditor of record for an audit client—that is, during only the “audit period.” 2 Accordingly, the Board has decided to adjust the implementation schedule for Rule 3523, as it applies to tax services provided during the “audit period,” while it revisits this aspect of the rule. Specifically the Board will not apply Rule 3523 to tax services provided on or before April 30, 2007, when those services are provided during the audit period and are completed before the professional engagement period begins. 3 2 Consistent with the SEC's independence rules, 17 CFR 210.2-01(f)(5), the phrase “audit and professional engagement period” is defined to include two discrete periods of time. The “audit period” is the period covered by any financial statements being audited or reviewed. Rule 3501(a)(iii)(1). The “professional engagement period” is the period beginning when the accounting firm either signs the initial engagement letter or begins audit procedures and ends when the audit client or the accounting firm notifies the SEC that the client is no longer that firm's audit client. Rule 3501(a)(iii)(2). 3 This will apply whether there is an engagement in process on April 19, 2006 or not. The implementation schedule for Rule 3523 as it applies to tax services provided during the professional engagement period remains unchanged. 4 Accordingly, as of November 1, 2006, registered public accounting firms must comply with Rule 3523 as it relates to tax services provided during the professional engagement period. 4 PCAOB Release No. 2006-001 (March 28, 2006), at 3.
(b)Statutory Basis The statutory basis for the proposed rule change is Title I of the Act. B. Board's Statement on Burden on Competition The Board 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. Board's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Board did not solicit or receive written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Exchange Act (as incorporated, by reference, into Section 107(b)(4) of the Act), in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the PCAOB. 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 Exchange Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule is consistent with the requirements of Title I of 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/pcaob.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number PCAOB-2006-02 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washingtion, DC 20549-1090. All submissions should refer to File Number PCAOB-2006-02. 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/pcaob.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 PCAOB. All comments received will be posted without change; we do 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 PCAOB-2006-02 and should be submitted on or before January 10, 2007. By the Commission. Nancy M. Morris, Secretary. [FR Doc. E6-21659 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54926; File No. SR-CBOE-2006-62] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto Amending its Index Obvious Error Rule December 13, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on July 7, 2006, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. On October 30, 2006, the CBOE submitted 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 Amendment No. 1 (“Amendment No. 1”) supersedes and replaces the original filing in its entirety. The substance of Amendment No. 1 is incorporated into this notice. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend CBOE Rule 24.16 (“Rule”), which is the Exchange's rule applicable to the nullification and adjustment of transactions in index options, options on exchange-traded funds (“ETFs”), and options on HOLDing Company Depository ReceiptS (“HOLDRS”). The Exchange is proposing to amend the Rule in order to:
(i)re-define what constitutes an “obvious price error;”
(ii)provide for a Market-Maker to Market-Maker adjustment of obvious price errors (currently such erroneous transactions are subject to nullification);
(iii)eliminate the nullification and adjustments provisions for erroneous quantity errors; and
(iv)make various non-substantive changes to the text of the Rule. Below is the text of the proposed rule change. Proposed new language is in *italics* and proposed deletions are in [brackets]. Chicago Board Options Exchange, Incorporated Rules Rule 24.16. Nullification and Adjustment of [Index Option] Transactions *in Index Options, Options on ETFs and Options on HOLDRS* RULE 24.16. This Rule only governs the nullification and adjustment of transactions involving index options and options on ETFs or H *O* LDR *S* [s]. Rule 6.25 governs the nullification and adjustment of transactions involving equity options. Paragraphs (a)(1), [(2),] ([6] *5* ) and ([7] *6* ) of this Rule have no applicability to trades executed in open outcry.
(a)Trades Subject to Review A member or person associated with a member may have a trade adjusted or nullified *,* *as provided herein* , if, in addition to satisfying the procedural requirements of paragraph
(b)below, one of the following conditions is satisfied:
(1)Obvious Price Error: An obvious pric *e* [ing] error will be deemed to have occurred when the execution price of a transaction is above or below the fair market value of the option by at least a prescribed *minimum error* amount. For series trading with normal bid-ask differentials as established in Rule 8.7(b)(iv), the prescribed *minimum error* amount shall be: [(a) the greater of $0.10 or 10% for options trading under $2.50;
(b)10% for options trading at or above $2.50 and under $5; or
(c)$0.50 for options trading at $5 or higher.] Fair market value Minimum error amount Below $2 $0.125 $2 to $5 $0.20 Above $5 to $10 $0.25 Above $10 to $20 $0.40 Above $20 $0.50 For series trading with bid-ask differentials that are [greater than] *a multiple of* the widths established in Rule 8.7(b)(iv), the prescribed *minimum* error amount shall *have the same multiple applied to the minimum error amount prescribed above* [be:
(a)the greater of $0.20 or 20% for options trading under $2.50;
(b)20% for options trading at or above $2.50 and under $5; or
(c)$1.00 for options trading at $5 or higher].
(i)Definition of Fair Market Value: For purposes of this Rule only, the fair market value of an option is the midpoint of the national best bid and national best offer for the series (across all exchanges trading the option). In multiply listed issues, if there are no quotes for comparison purposes, fair market value shall be determined by Trading Officials. For singly-listed issues, fair market value shall be the *midpoint of the* first quote after the transaction(s) in question that does not reflect the erroneous transaction(s). For transactions occurring as part of the Rapid Opening System (“ROS trades”) or Hybrid Opening System (“HOSS”), fair market value shall be the *midpoint of the* first quote after the transaction(s) in question that does not reflect the erroneous transaction(s). *The determination of fair market value shall be made by Trading Officials in accordance with the provisions of this paragraph.* *(ii) Price Adjustment or Nullification: Obvious price errors will be adjusted or nullified in accordance with the following:* *(A) Transactions between CBOE Market-Makers: Where both parties to the transaction are CBOE Market-Makers, the execution price of the transaction will be adjusted by Trading Officials upon notification pursuant to paragraph
(b)and in accordance with the adjustment and nullification provisions of paragraph (c)(1) below.* *(B) Transactions involving at least one non-CBOE Market-Maker: Where one of the parties to the transaction is not a CBOE Market-Maker, the transaction will be adjusted or nullified by Trading Officials upon notification pursuant to paragraph
(b)and in accordance with the adjustment and nullification provisions of paragraph (c)(3) below.* [(2) Obvious Quantity Error: An obvious error in the quantity term will be deemed to occur when the transaction size exceeds the responsible broker or dealer's average disseminated size over the previous four hours by a factor of five
(5)times. The quantity to which a transaction shall be adjusted from an obvious quantity error shall be the responsible broker or dealer's average disseminated size over the previous four trading hours (which may include the previous trading day).] (3)-(7) Renumbered to (2)-(6)
(b)No change.
(c)Adjustments *and Nullifications* *(1) Transactions between CBOE Market-Makers pursuant to paragraph (a)(1) shall be adjusted to the fair market value minus
(plus)the prescribed minimum error amount with respect to an erroneous sell
(buy)transaction. If the adjusted price is not in a multiple of the applicable minimum trading increment, the adjusted price will be rounded down
(up)to the next price that is a multiple of the applicable minimum trading increment with respect to an erroneous sell
(buy)transaction.* *(2) Transactions between CBOE Market-Makers pursuant to paragraphs (a)(2)-(a)(5) shall be nullified.* *(3) [* Unless otherwise specified in Rule 24.16(a)(1)-(6), t] *T* ransactions *involving at least one non-CBOE Market-Maker pursuant to paragraphs (a)(1) through (a)(5)* will be adjusted provided the adjusted price does not violate the [customer's] *non-CBOE Market-Maker's* limit price. Otherwise, the transaction will be nullified. With respect to Rule 24.16(a)(1) *(ii)(B)* - *(a)(4)* [(5)], the price to which a transaction shall be adjusted shall be the National Best Bid (Offer) immediately following the erroneous transaction with respect to a sell
(buy)order entered on the Exchange. For ROS or HOSS transactions, the price to which a transaction shall be adjusted shall be based on the first non-erroneous quote after the erroneous transaction on CBOE. With respect to Rule 24.16(a)([6] *5* ), the transaction shall be adjusted to a price that is $0.10 under parity. (d)-(e) No change. * * * Interpretations and Policies: .01-.02 No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change, as amended, and discussed any comments it received on the proposed rule change, as amended. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to make various amendments to CBOE Rule 24.16, which is its obvious error rule pertaining to index options, options on ETFs, and options on HOLDRS. First, the Exchange states that the proposal would revise the scale used to identify the minimum error amount necessary to constitute an obvious price error. Specifically, an “obvious price error” would be deemed to have occurred for series trading with normal bid-ask differentials as established in CBOE rule 8.7(b)(iv) when the execution price of a transaction is above or below the fair market value of the option by at least: $0.125 for options trading under $2; $0.20 for options trading at or above $2 and up to $5; $0.25 for options trading above $5 and up to $10; $0.40 for options trading above $10 and up to $20; and $0.50 for options trading above $20. For series trading with bid-ask differentials that are a multiple of the widths established in CBOE rule 8.7(b)(iv), the prescribed error amount would have the same multiple applied to the amounts prescribed above. For example, if double-wide bid-ask relief has been granted in an option that currently trades at a price of $6, the minimum error amount would be $0.50 above or below the fair market value. 4 Second, the Exchange states that the proposal would revise the obvious price error provision as it relates to the handling of transactions involving only CBOE Market-Makers. Under the current rule, such erroneous price transactions are nullified. Under the proposal, these CBOE-Market-Maker-to-CBOE-Market-Maker transactions would be subject to adjustment. 5 The Exchange states that this change is intended to address feedback from Exchange members that an adjustment is preferential to having a transaction nullified because in many instances the CBOE Market-Makers that are parties to the transaction may have already hedged the option position before being alerted to the erroneous price error. The CBOE notes that the change is also consistent with the Exchange's current procedures for adjusting erroneous price errors in equity options involving CBOE Market-Makers. 6 4 The Exchange states that under the current rule, an “obvious pricing error” is deemed to have occurred when the execution price of a transaction is above or below the fair market value of the option by at least a prescribed amount. For series trading with normal bid-ask differentials as established in CBOE rule 8.7(b)(iv), the prescribed amount is:
(a)the greater of $0.10 or 10% for options trading under $2.50;
(b)10% for options trading at or above $2.50 and under $5; or
(c)$0.50 for options trading at $5 or higher. For series trading with bid-ask differentials that are greater than the widths established in CBOE rule 8.7(b)(iv), the prescribed error amount is:
(a)The greater of $0.20 or 20% for options trading under $2.50;
(b)20% for options trading at or above $2.50 and under $5; or
(c)$1.00 for options trading at $5 or higher. *See* CBOE rule 24.16(a)(1). The Exchange states that the definition of fair market value will continue to apply as it currently does today. However, the Exchange is proposing to clarify in the text of the rule that, with respect to singly-listed issues and transactions occurring as part of ROS or HOSS, the fair market value is the midpoint of the first quote after the transaction(s) in question that does not reflect the erroneous transaction(s). Additionally, the Exchange is proposing to clarify that the determination of fair market value is made by Trading Officials in accordance with the provisions of CBOE rule 24.16(a)(1)(i). Telephone conference between Michou H.M. Nguyen, Special Counsel, Division of Market Regulation, Commission, and Jennifer Lamie, Managing Senior Attorney, Exchange, on October 31, 2006. 5 The Exchange states that the proposed revisions to the text of the rule make clear that the manner in which obvious price errors involving at least one non-CBOE Market-Maker are handled will continue to apply unchanged. In addition, the proposed revisions to the text of the rule make clear that the manner in which other obvious errors ( *i.e.* , obvious errors related to verifiable disruptions or malfunctions of Exchange systems, erroneous prints or quotes in the underlying, trades below intrinsic value, and no bid series) will also continue to apply unchanged. *See* proposed revisions to CBOE rule 24.16(c). 6 *See* CBOE rule 6.25(a)(1). The Exchange states that in applying the proposed CBOE Market-Maker adjustment provision to index options/ETF/HOLDRS, the adjustment price would be equal to the fair market value of the option minus the minimum error amount in the case of an erroneous sell transaction or the fair market value plus the minimum error amount in the case of an erroneous buy transaction. If the adjusted price is not in a multiple of the applicable minimum trading increment, the adjusted price would be rounded down
(up)to the next price that is a multiple of the applicable minimum trading increment with respect to an erroneous sell
(buy)transaction. For example, if an erroneous sale transaction involving two CBOE Market-Makers occurred in an option with a fair market value of $6.075 and a minimum trading increment of $0.10, the adjusted price would be $5.80 ($6.075 − $0.25 = $5.825, which is rounded down to the nearest $0.10 increment of $5.80). Third, the Exchange states that the proposal would eliminate obvious quantity errors as a type of transaction that is subject to obvious error review. The Exchange represents that elimination of this provision is consistent with the Exchange's current rule for equity options, which does not have an obvious error review for quantity errors. 7 7 *See* CBOE rule 6.25(a). Fourth, the Exchange states that the proposal would make various non-substantive changes to CBOE rule 24.16, such as making cross-reference updates to correspond to the above-described revisions, changing the title of the rule to reflect its application to options on ETFs and HOLDRS (currently the title only references index options), clarifying that fair market value is as determined by Exchange Trading Officials who administer the obvious error rule, and making other non-substantive changes for ease of understanding the existing text. 2. Statutory Basis The Exchange believes the proposed rule change, as amended, is consistent with section 6(b) of the Act, 8 in general, and furthers the objectives of section 6(b)(5) of the Act, 9 in particular, in that it is designed to promote just and equitable principles of trade, prevent fraudulent and manipulative acts, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 8 15 U.S.C. 78f(b). 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, as amended, will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received by the Exchange with respect to the proposed rule change, as amended. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or
(ii)as to which the Exchange consents, the Commission will: A. By order approve the proposed rule change, as amended, 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-CBOE-2006-62 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2006-62. 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-CBOE-2006-62 and should be submitted on or before January 10, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21654 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54922; File No. SR-CHX-2006-36] Self Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Participant Fees and Credits December 12, 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 16, 2006, the Chicago Stock Exchange, Inc. (“CHX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the CHX. The Exchange has filed this proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 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 CHX proposes to amend its Schedule of Participant Fees and Credits (the “Fee Schedule”) to include a fee for receiving orders routed through the CHX communications or routing functionality. The text of this proposed rule change is available on the Exchange's Web site ( *http://www.chx.com/rules/proposed_rules.htm* ) at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the CHX included statements concerning the purpose of and basis for the proposed rule changes and discussed any comments it received regarding the proposal. The text of these statements may be examined at the places specified in Item IV below. The CHX 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 Changes 1. Purpose As part of the Exchange's new trading model, the Exchange proposes to operate a neutral communications service that allows its participants to route orders to any destination connected to the CHX's network. This service would allow participants to route orders to market makers or other broker-dealers connected to the CHX's network, which provide order handling and execution services in the over-the-counter market; and to other destinations (including order-routing vendors) that are connected to the CHX's network. 5 (To the extent that this service routes orders to destinations other than the Exchange and its institutional brokers, it is called the Exchange's “wide area network” or “WAN”). The WAN would not effect trade executions and would not report trades to “the tape.” The WAN would be a facility of the Exchange. 5 Participants would also use this communications service to route orders to the Exchange's matching System and to its institutional brokers. This proposal would establish a $5,000 monthly fee for any participant that receives orders through the WAN. The monthly fee would be prorated in the month that a participant first begins using the service, based on the participant's first date of use. The fee would not be assessed until January 1, 2007, to allow the full implementation of the Exchange's new trading model to be completed before the fee is put into effect. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act 6 in that it provides for the equitable allocation of reasonable dues, fees and other charges among its members who might seek to receive orders using the WAN service. 6 15 U.S.C. 78(f)(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule changes 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 Changes Received From Members, Participants or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Changes and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee or other charge applicable only to a member, 7 it therefore has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and Rule 19b-4(f)(2) thereunder. 9 At any time within 60 days of the filing of such 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 purpose of the Act. 7 Under Article I, Rule 1(t) of the Exchange's rules, an Exchange “ participant” is considered a “member” for all purposes under the Act. 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the 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 e-mail to *rule-comments@sec.gov.* Please include File Number SR-CHX-2006-36 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 No. SR-CHX-2006-36. 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 changes 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 will also be available for inspection and copying at the principal office of the CHX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-CHX-2006-36 and should be submitted on or before January 10, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21655 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54927; File No. SR-DTC-2006-07] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of a Proposed Rule Change Relating to the Wind-Down of a Participant December 13, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on March 28, 2006, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) and on September 29, 2006, amended the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily 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). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would add a new Rule 32, Wind Down of a Participant, 2 to DTC's Rules to address a situation where a participant notifies DTC that it intends to wind down its activities and DTC determines in its discretion that it must take special action in order to protect itself and its participants. 3 2 The text of DTC's proposed Rule 32 can be found DTC's Web site at *http://www.dtc.org.* 3 Similar proposed rule changes have been filed by the Fixed Income Clearing Corporation [File No. SR-FICC-2006-05] and the National Securities Clearing Corporation [File No. SR-NSCC-2006-05]. 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. 4 4 The Commission has modified parts of these statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The proposed rule change would allow DTC to make a determination that a participant is a wind-down participant and would set forth the conditions DTC using its discretion could place on a wind-down participant and the actions DTC using its discretion could take with respect to a wind-down participant to protect itself and its participants. Such actions would include restricting or modifying the wind-down participant's use of any or all of DTC's services and requiring the wind-down participant to post increased participants fund deposits. DTC would retain all of its other rights set forth in its rules and participant agreements, including the right to cease to act for the wind-down participant. DTC believes that the proposed rule will ensure that it has the needed flexibility to appropriately manage the risks presented by an entity in crisis that remains a participant of DTC. This is particularly important to preserve orderly settlement in the marketplace and to minimize the risk of loss to DTC and its participants. The proposed rule summarizes in a single rule DTC's rights and the actions it may take in such a situation. These rights and actions are either permitted elsewhere in DTC's rules or are permitted pursuant to DTC's emergency authority. By summarizing them in a single rule, however, the proposed rule change should provide clarity and a clear legal basis for DTC's rights or actions taken with respect to a wind-down participant. DTC also believes that the proposed rule is designed to minimize the need for rule waivers. DTC believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder because it is designed to enhance DTC's rules regarding DTC's rights and the actions it may take with respect to a wind-down of a participant that presents risk to DTC. B. Self-Regulatory Organization's Statement on Burden on Competition DTC does not believe that the proposed rule change would have any impact or impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. DTC will notify the Commission of any written comments received by DTC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve the proposed rule change or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-DTC-2006-07 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-2006-07. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of DTC and on DTC's Web site at *http://www.dtc.org.* 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-2006-07 and should be submitted on or before January 10, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21683 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54929; File No. SR-FICC-2006-05] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to the Wind-Down of a Participant December 13, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on March 28, 2006, Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) and on September 28, 2006, amended the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by FICC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would add a new Rule 21A, Wind-Down of a Netting Member, to the Rules of FICC's Government Securities Division (“GSD”) and a new Rule 2A, Wind-Down of a Participant, to the Rules of FICC's Mortgage-Backed Securities Division (“MBSD”) 2 to address a situation where a participant notifies FICC that it intends to wind down its activities and FICC determines, in its discretion, that it must take special action in order to protect itself and its participants. 3 2 The text of FICC's GSD's proposed Rule 21A and MBSD's Rule 2A can be found on FICC's Web site at *http://www.ficc.com.* 3 Similar proposed rule changes have been filed by The Depository Trust Company [File No. SR-DTC-2006-07] and the National Securities Clearing Corporation [File No. SR-NSCC-2006-05]. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC 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. FICC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of such statements. 4 4 The Commission has modified parts of these statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The proposed rule would allow FICC to determine that a participant is a wind-down member or wind-down participant and would set forth the conditions FICC using its discretion could place on a wind-down participant and the actions FICC using its discretion could take with respect to a wind-down participant to protect itself and its members or participants. Such actions would include restricting or modifying the wind-down member or participant's use of any or all of FICC's services and requiring the wind-down member or participant to post increased clearing fund deposits. FICC would retain all of its other rights set forth in its rules and participant agreements, including the right to declare the wind-down participant insolvent, if applicable, and to cease to act for the participant. FICC believes that the proposed rule would ensure that it has the needed flexibility to appropriately manage the risks presented by an entity in crisis that remains a participant of FICC. This is particularly important to preserve orderly settlement in the marketplace and to minimize the risk of loss to FICC and its members and participants. The proposed rule summarizes in a single rule FICC's rights and the actions it may take in such a situation. These rights and actions are either permitted elsewhere in FICC's rules or are permitted pursuant to FICC's emergency authority. By summarizing them in a single rule, however, the proposed rule change is designed to provide clarity and a clear legal basis for FICC's rights or actions taken with respect to a wind-down member or participant. FICC also believes that the proposed rule is designed to minimize the need for rule waivers. FICC believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder because it will enhance the rules of both divisions of FICC regarding actions that FICC may take with respect to a wind-down of a participant that presents risk to FICC. B. Self-Regulatory Organization's Statement on Burden on Competition FICC does not believe that the proposed rule change would have any impact or impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. FICC will notify the Commission of any written comments received by FICC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve the proposed rule change or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-FICC-2006-05 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FICC-2006-05. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site *(http://www.sec.gov/rules/sro.shtml).* Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of FICC and on FICC's Web site at *http://www.ficc.com.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FICC-2006-05 and should be submitted on or before January 10, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21707 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54923; File No. SR-ISE-2006-73] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of a Proposed Rule Change Relating to the Definition of Complex Trade as Applied to Trades Through the Intermarket Linkage December 12, 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 December 4, 2006, the International Securities Exchange, LLC (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change, as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 ISE proposes to amend ISE Rule 1900 to revise the definition of “Complex Trade” as such definition applies to trades through the Intermarket Linkage (“Linkage”). The text of the proposed rule change appears below, with additions *italicized* and deletions in [brackets]: Rule 1900. Definitions
(3)“Complex Trade” means the execution of an order in an option series in conjunction with the execution of one or more related order(s) in different options series in the same underlying security occurring at or near the same time *for the purpose of executing a particular investment strategy and for an equivalent number of contracts, provided that the number of contracts of the legs of a spread, straddle, or combination order may differ by a permissible ratio* [for the equivalent number of contracts and for the purpose of executing a particular investment strategy]. *The permissible ratio for this purpose is any ratio that is equal to or greater than one-to-three (.333) and less than or equal to three-to-one (3.00).* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The proposed rule change will amend the definition of “Complex Trade” in the ISE's Linkage rules. For Linkage purposes, the ISE defines a “Complex Trade” as a trade reflecting the execution of an order in an options series in conjunction with one or more other orders in different series in the same underlying security “for the equivalent number of contracts.” A Complex Trade is exempt from the trade-through rule. 3 3 *See* ISE Rule 1902(b)(7). In contrast to the Linkage definition of “Complex Trade,” ISE Rule 722(a)(6) defines “complex orders” for other purposes on the ISE. This definition includes “ratio orders,” which do not require that there be an equivalent number of contracts in the orders. Specifically, ISE Rule 722(a)(6) permits ratios that are equal to or greater than one-to-three, and less than or equal to three-to-one. The ISE applies modified priority rules to complex orders. The proposal will conform the Linkage definition of Complex Trade to the ISE's general definition of the concept. According to the ISE, the other five options exchanges are adopting a similar definition, which will result in uniform application of the term across all options exchanges. The ISE believes that such uniformity will facilitate the speedy execution of complex trades on all markets. 2. Statutory Basis According to the ISE, the basis under the Act for the proposed rule change is the requirement under Section 6(b)(5) of the Act 4 that the rules of a national securities exchange be designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transaction in securities, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. 4 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The ISE believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The ISE has not solicited, and does not intend to solicit, comments on this proposed rule change. The ISE has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will: A. By order approve such proposed rule change; or B. institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-2006-73 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2006-73. 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 ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2006-73 and should be submitted on or before January 10, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21653 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54930; File No. SR-MSRB-2006-10] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Proposed Rule Change Relating to Amendments to Rule G-27, on Supervision, Rule G-8, on Recordkeeping, and Rule G-9, on Record Retention December 13, 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 24, 2006, the Municipal Securities Rulemaking Board (“MSRB” or “Board”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the MSRB. 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 MSRB is filing with the Commission a proposed rule change consisting of amendments to Rule G-27, on supervision, and the related recordkeeping and record retention requirements of Rules G-8 and G-9. The text of the proposed rule change is available on the MSRB's Web site ( *http://www.msrb.org* ), at the MSRB's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the MSRB 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 MSRB 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 Over the past two years, NASD and the New York Stock Exchange (“NYSE”) have adopted a series of rule changes designed to strengthen the supervisory control procedures of their member firms. Specifically, NASD amended its Rule 3010 (Supervision) to include more stringent office inspection rules, and adopted new Rule 3012 (Supervisory Control System) to require the testing and verification of a firm's supervisory procedures. 3 3 The NASD and NYSE amendments are substantially similar. MSRB Rule G-27, on supervision, requires brokers, dealers and municipal securities dealers (collectively referred to as “dealers”) to supervise their municipal securities activities by designating individuals with supervisory responsibilities for municipal securities activities, adopting written supervisory procedures, and reviewing transactions and correspondence. Similarly, NASD Rule 3010 requires dealers to establish a supervisory system, adopt written supervisory procedures, review transactions and correspondence, and, most recently, to conduct internal inspections with minimum inspection cycles. NASD also recently adopted new Rule 3012 to require that dealers:
(1)Test and verify that its supervisory procedures are sufficient, and amend or create additional supervisory procedures where the testing and verification identify a need; and
(2)establish procedures that are reasonably designed to review and supervise, on a day-to-day basis, the customer account activity conducted by the dealer's producing managers. In April 2006, the MSRB published for comment draft amendments to Rule G-27, which incorporated most of the NASD requirements contained in Rules 3010 and 3012 in order to promote regulatory consistency and make these requirements specifically applicable to the municipal securities activities of securities firms and bank dealers. 4 The Board received two comment letters in response to the notice, both of which expressed support for the draft amendments, as more fully described below. 5 Based on the comment letters received, as well as discussions with various industry participants and the relevant regulatory agencies, the Board determined to adopt the draft amendments with one substantive revision relating to the designation of appropriate principal. Although the new supervisory activities required under the proposed rule change are derived from NASD requirements, these activities relate specifically to a dealer's municipal securities activities and require in-depth knowledge of MSRB rules. Therefore, the Board believes it is appropriate that these supervisory activities be undertaken by a municipal securities principal (or a municipal fund securities limited principal in the case of activities related to municipal fund securities). The proposed rule change clarifies these requirements by amending the “Appropriate Principal” provision in Rule G-27(b)(ii)(C). 6 4 MSRB Notice 2006-11 (April 21, 2006). 5 Although the notice specifically requested comment from bank dealers, particularly on their ability to comply with the new requirements relating to tape recording of conversations, office inspection, and the new supervisory control provisions, the Board did not receive comment letters from bank dealers. Based on the absence of comment letters from this segment of the industry, as well as informal discussions with the bank regulatory agencies, the Board has no reason to believe that bank dealers will be unable to comply with the new requirements for supervision. 6 This provision is also amended to make clear that supervision with respect to correspondence under Rule G-27(e) is to be undertaken by a municipal securities principal (or a municipal fund securities limited principal in the case of correspondence relating to municipal fund securities) or a municipal securities sales principal. The MSRB believes that adopting most of the requirements of NASD Rules 3010 and 3012 will help ensure a coordinated regulatory approach in the area of supervision, and will facilitate inspection and enforcement. 7 The proposed amendments to Rule G-27 are described below. 7 The MSRB notes that NASD Rule 3013 (Annual Certification of Compliance and Supervisory Processes) requires NASD member firms to designate a principal to serve as chief compliance officer and to certify, on an annual basis, that the member has in place processes to establish, maintain, review, test and modify written compliance policies and written supervisory procedures designed to achieve compliance with applicable NASD rules, MSRB rules and federal securities laws and regulations. This requirement became fully operative on April 1, 2006. Since all NASD member firms are subject to this rule (which requires that firms have supervisory procedures for compliance with MSRB rules), the Board has not incorporated this requirement into amended Rule G-27. Bank dealers, however, are not currently subject to this requirement since they are not NASD members. Therefore, after the Rule G-27 amendments have been in effect for approximately a year, the Board will seek feedback from the bank regulators concerning bank dealers' ability to comply with the new supervisory requirements over that time period. Assuming there are no compliance problems or concerns in this area, the Board will then consider the propriety of adopting an annual certification requirement for bank dealers. Description of Proposed Amendments The proposed amendments modify section
(b)of Rule G-27, on supervisory system; add new subsection (c)(ii), on tape recording of conversations; add new subsection (c)(iii) on updating written supervisory procedures; add new section (d), on internal inspections; add new section (f), on supervisory control system; and add new definitions section (g). As a general principle, the requirements of Rule G-27 apply only with respect to those registered persons who engage in municipal securities activities and those offices in which such municipal securities activities are undertaken (regardless of the level or amount of such municipal securities activities). Supervisory System The proposed amendments modify section
(b)of Rule G-27, on supervisory system, to include the following five provisions: 8 8 These provisions are based on NASD Rule 3010(a)(3)-(7). • Designation of certain locations as offices of supervisory jurisdiction (“OSJ”) (G-27(b)(iii)); • Designation of one or more appropriately registered principals in each OSJ, including the main office, and one or more appropriately registered representatives or principals in each non-OSJ branch office with authority to carry out the supervisory responsibilities assigned to that office by the dealer (G-27(b)(iv)); • Assignment of each registered person to an appropriately registered representative or principal who shall be responsible for supervising that person's activities (G-27(b)(v)); • Reasonable efforts to determine that all supervisory personnel are qualified by virtue of experience or training to carry out their assigned responsibilities (G-27(b)(vi)); and • Participation of each registered representative and principal in an annual meeting to discuss compliance matters (G-27(b)(vii)). The amendments also include a reference in Rule G-27(b)(ii)(C) to “municipal fund securities limited principal” that is added to explicitly affirm the supervisory functions that such a principal may undertake pursuant to Rule G-3, on professional qualifications. Specifically, paragraph (b)(iv)(C) of Rule G-3 allows a municipal fund securities limited principal to “undertake all actions required or permitted under any Board rule to be taken by a municipal securities principal, but solely with respect to activities related to municipal fund securities.” Tape Recording of Conversations The amendments incorporate NASD Rule 3010(b)(2), on tape recording of conversations, in Rule G-27(c)(ii). Subsection (c)(ii) requires dealers to establish special supervisory procedures, including the tape recording of conversations, when they have hired more than a specified percentage of registered persons from certain firms that have been expelled or have had their broker/dealer registrations revoked for violations of sales practice rules. The requisite percentage varies depending on the size of the dealer, from 40 percent for a small dealer to 20 percent for a larger dealer. The dealer must establish the required supervisory procedures within 30 days of receiving notice from their registered securities association or bank regulator, or obtaining actual knowledge that it is subject to this provision of the rule. Under this provision, if the requisite percentage of a dealer's sales force previously was employed by a disciplined firm, the dealer will be required to adopt special written procedures to supervise the telemarketing activities of all its registered persons. The procedures require, at a minimum, that the dealer tape record all telephone conversations between all of its registered persons and both existing and potential customers for a period of two years. The measures required by this provision are designed to prevent a recurrence of sales practice abuse or other customer harm that caused the disciplined firm to have its registration revoked. This provision also requires dealers subject to the taping requirement to establish reasonable procedures for reviewing tape recordings to ensure compliance with securities laws and applicable rules and regulations, to retain and catalog the tapes, and to submit reports to the appropriate registered securities association or bank regulator on their supervision of telemarketing. Updating Written Supervisory Procedures Subsection (c)(iii) is added to replace existing section (e), which currently requires a dealer to revise and update its written supervisory procedures as necessary to respond to changes in Board or other applicable rules. Proposed subsection (c)(iii) has language that mirrors the language in NASD Rule 3010(b)(4), and requires each dealer to keep a copy of procedures at each location where supervisory activities are conducted and to amend its written supervisory procedures within a reasonable time after changes occur. Internal Inspections The amendments incorporate NASD Rule 3010(c), on internal inspections, in new section
(d)under Rule G-27. This new section imposes office inspection requirements that establish minimum inspection cycles and delineate the topics that must be covered during such inspections as well as the manner in which inspections are documented. 9 In addition, the amendments include new section
(g)which defines the designations “office of supervisory jurisdiction” and “branch office” used in section (d), among other terms. 9 The stringency of the office inspection requirements is graduated and based on designations of offices under specifically defined categories, such as office of supervisory jurisdiction, supervisory and non-supervisory branch offices, and non-branch offices. Mandatory Inspection Cycles. Section
(d)obligates dealers to inspect OSJs and supervisory branch offices on at least an annual basis. 10 It also requires dealers to inspect all non-supervisory branch offices at least once every three years. It directs dealers, however, to consider when it might be appropriate to conduct more frequent inspection of non-supervisory branch offices. Further, Rule G-27(d) requires dealers to inspect non-branch locations “on a regular periodic schedule.” Each dealer must document, as part of its written supervisory procedures, an explanation of how the dealer determined the frequency of its examination schedule. In establishing the schedule, dealers should consider the nature and complexity of the securities activities for which each non-branch location is responsible, and the frequency of customer contact at the non-branch location. 10 A “branch office” is defined in Rule G-27(g) as “any location where one or more associated persons of a dealer regularly conducts the business of effecting any transactions in, or inducing or attempting to induce the purchase or sale of any security, or is held out as such, excluding [certain enumerated locations].” A “supervisory branch office” is any non-OSJ branch office that is responsible for supervising one or more non-branch offices. Independent Office Inspections. Section
(d)places limits on who is eligible to perform the required inspection function. This provision prohibits office inspections from being performed by: • The branch office manager; • Any person within the office who has supervisory responsibilities; or • Any individual who is directly or indirectly supervised by such person(s). However, an exception to this limitation is provided if the dealer is so limited in size and resources that it cannot comply with it. *Content of Inspections and Requirements for Inspection Reports.* Dealers must document each office inspection by preparing a written report that documents when it conducted the inspection and the results of its testing and verification in the following areas: • Safeguarding customer funds and securities; • Maintaining books and records; • Supervising customer accounts services by branch office managers; • Transmitting funds between customer and registered representative and between customers and third parties; • Validating customer address changes; *and* • Validating changes in customer account information. *Heightened Inspection Requirements.* Section
(d)also requires dealers to adopt, under certain circumstances, procedures that require heightened inspections designed to avoid conflicts of interest arising from economic, commercial or financial interests that the branch manager's supervisor holds in the person or activities being inspected. Such heightened inspection procedures are required if
(1)the person conducting the inspection reports to the branch office manager's supervisor or works in an office supervised by the branch manager's supervisor; *and*
(2)the branch office manager generates 20% or more of the revenue of the business units supervised by the branch office manager's supervisor. 11 Dealers must calculate the 20% threshold in the same manner as when determining whether a producing manager must be subject to heightened supervision, as described below. 11 The 2004 NTM provides examples of such heightened inspection procedures under NASD Rule 3010, including, without limitation, unannounced office inspections; increasing the frequency of inspections; broadening the scope of activities inspected; and/or having one or more principals review or approve the inspection. The MSRB would view these examples as equally applicable to the heightened inspection procedures required under Rule G-27(d)(iii). Supervisory Control System The amendments also include new section (f), derived from NASD Rule 3012, which incorporates the following new requirements: *Testing and Verification of Supervisory Control Procedures.* Section
(f)requires dealers to designate and identify one or more principals charged with establishing, maintaining and enforcing a system of “supervisory control policies and procedures” that: • Test and verify that a dealer's supervisory procedures are reasonably designed to achieve compliance with the federal securities laws and MSRB rules; and • Create additional or amended supervisory procedures where a need for such procedures is identified by such testing. *Annual Submission of Report to Senior Management.* At least once annually, the principal(s) designated under section
(f)must submit a report to senior management that details the dealer's supervisory control policies and procedures, summarizes the results of testing and identifies significant weaknesses, and discusses additional or amended procedures implemented in response to such testing. The Board recognizes that situations may arise where a dealer is required under the rules of another self-regulatory organization to produce a similar report. The Board does not intend for a dealer to produce duplicative reports in such situations. Instead, for purposes of this section (f), a dealer may prepare a single report so long as there is coordination in the preparation and submission of such report between any principal(s) designated by the dealer pursuant to the rules of another self-regulatory organization and the principal designated under Rule G-27(b)(ii)(C) or (f)(i). The dealer should adequately document such coordination between or among the various principals. *Supervision of Producing Manager's Customer Account Activity.* Section
(f)requires dealers to adopt procedures to review and supervise daily customer account activities of each branch office manager, sales manager, regional or district sales manager, or any person performing similar supervisory functions (“producing managers”). These policies and procedures must include “a means of customer confirmation, notification, or follow-up that can be documented.” Specifically, the provision requires that policies and procedures must be reasonably designed to review and monitor the following activities: • All transmittals of funds and securities to and from customer accounts; • Changes of customer's address, including procedures to validate change of address; and • Changes in customer investment objectives, including validation of such changes. 12 12 If a dealer does not engage in any of these activities, then the dealer's supervisory control policies and procedures must note that the dealer is not engaged in these activities and that the supervisory control policies and procedures must be amended before the dealer may engage in such activities. *Independent Review of Producing Manager.* Section
(f)requires an independent review of the producing manager. This review must be conducted by a person or persons who are senior to, or “otherwise independent” of, the producing manager. To be considered “otherwise independent” of the producing manager, the person performing the review: • Must not report, either directly or indirectly, to the producing manager he or she is reviewing; • Must be located at a different office than the producing manager; • Must not have supervisory authority over any of the activity under review, including not being *directly* compensated in whole or in part as a result of such activity; *and* • Must alternate such review responsibility with another person at least once every two years. Section
(f)also requires dealers to adopt, under certain circumstances, heightened supervisory procedures designed to avoid conflicts of interest arising from economic, commercial or financial interests that the supervisor holds in the person or activities being supervised. Such heightened supervisory procedures are required with respect to producing managers who are responsible for generating at least 20% of the revenue of the business which is supervised by the producing manager's supervisor. 13 As noted above, the relevant provisions of Rule G-27 would apply if any portion of the 20% threshold is attributable to revenue generated through municipal securities transactions. However, the heightened supervision requirement does not apply where an otherwise independent person conducts the producing manager's reviews. 13 The 2004 NTM provides examples of such heightened supervisory procedures under NASD Rule 3012, including, without limitation, unannounced supervisory reviews; increasing the frequency of supervisory reviews by different reviewers within a certain time period; broadening the scope of activities reviewed; and/or having one or more principals approve the supervisory review of such producing manager. The MSRB would view these examples as equally applicable to the heightened supervisory procedures required under Rule G-27(f)(ii)(C). Finally, section
(f)provides an exception from the independent review requirement if a dealer is so limited in size and resources that it is unable to identify anyone who is senior to or otherwise independent of the producing manager to conduct the review (the “limited size and resource” exception). The MSRB intends generally that the provisions of Rule G-27 be read consistently with the analogous NASD provisions, unless the MSRB specifically indicates otherwise. Thus, relevant NASD interpretations would be presumed to apply to the comparable MSRB provision, subject to the MSRB's right to make distinctions when necessary and appropriate. The MSRB recommends that dealers, including bank dealers, regularly visit or link to the relevant portions of the NASD Web site on supervision for current NASD interpretations of such analogous provisions. 14 Furthermore, the MSRB intends to continue coordinating its requirements relating to supervision with those of the other relevant self-regulatory organizations in the securities markets whenever appropriate for dealers engaging in municipal securities transactions. 14 NASD's Web site on supervision is located at *http://www.nasd.com/RulesRegulation/IssueCenter/SupervisoryControl/index.htm.* Finally, NASD Rule 3012 (Supervisory Control System) provides that “Any member in compliance with substantially similar requirements of the New York Stock Exchange, Inc. shall be deemed to be in compliance with the provisions of this Rule.” We note that the amendments to Rule G-27 incorporate substantially all of NASD Rule 3012. Therefore, the MSRB believes that any dealer in compliance with similar NASD or NYSE requirements would be deemed in compliance with the comparable requirements of Rule G-27(f), on supervisory control system, so long as there is coordination between or among any principal(s) designated by the dealer pursuant to the rules of NASD or the NYSE and the appropriate principal designated pursuant to Rule G-27(b)(ii)(C). 2. Statutory Basis The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act, 15 which provides that the MSRB's rules shall: 15 15 U.S.C. 78o-4(b)(2)(C). Be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities, to remove impediments to and perfect the mechanism of a free and open market in municipal securities, and, in general, to protect investors and the public interest. The MSRB believes that by conforming Rule G-27 to the relevant NASD rules on supervision and thereby making such requirements specifically applicable to the municipal securities activities of securities firms and bank dealers, the proposed rule change will promote regulatory consistency by facilitating dealer compliance with such requirements, as well as by facilitating the inspection and enforcement thereof. B. Self-Regulatory Organization's Statement on Burden on Competition The MSRB 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 In April 2006 the MSRB published for comment draft amendments to Rule G-27 which incorporated most of the NASD requirements contained in Rules 3010 and 3012 in order to promote regulatory consistency and make these requirements specifically applicable to the municipal securities activities of securities firms and bank dealers. In response to its notice, the Board received two comment letters, both of which expressed support for the draft amendments. The Investment Company Institute (“ICI”) noted that conforming MSRB requirements to those of the NASD “will strengthen the current supervisory systems of municipal securities dealers because NASD rules require a more structured and formalized supervisory system than Rule G-27 in its current form.” ICI further stated that the proposal will “facilitate compliance by those dealers that are dually registered with the MSRB and the NASD * * * [and that this] conformity should also enable the NASD to more efficiently inspect those dealers that are subject to rules of both self-regulatory organizations.” The other commentator—BSC Securities—was supportive of the draft amendments but was concerned about “unintended consequences of rulemaking.” BSC noted that, as a small firm, it is particularly concerned with costs of compliance and therefore urged the Board to adopt provisions that are “identical (not ‘substantially similar') to other SRO's rules to ensure the coordination of regulatory approaches.” While the Board is sensitive to the costs of compliance, particularly in the case of smaller dealers, we believe that the amendments are appropriate and will result, as ICI stated, in “no substantive difference in the supervisory systems imposed by the rules of the MSRB and the NASD.” 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. The MSRB has proposed that the amendments become effective six months after Commission approval of the proposed rule change. 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-MSRB-2006-10 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-MSRB-2006-10. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the MSRB's offices. 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-MSRB-2006-10 and should be submitted on or before January 10, 2007. 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. E6-21779 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54933; File No. SR-NASDAQ-2006-051] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Temporarily Adjust Tier Volume Limits December 13, 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 December 1, 2006, The NASDAQ Stock Market LLC (“Nasdaq”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by Nasdaq. On December 7, 2006, the Exchange submitted Amendment No. 1 to the proposed rule change. Nasdaq has filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 5 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to reduce, for the month of December 2006, the average daily volume tiers in Nasdaq-listed securities contained in Nasdaq Rule 7018(a) to qualify for certain fee and rebate levels. Nasdaq would implement the proposed rule change immediately. The text of the proposed rule change is available on Nasdaq's Web site at *http://www.nasdaq.com* , at the principal office of Nasdaq, 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, 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 proposing to reduce, for the month of December 2006, the average daily volume tiers for trading and routing in Nasdaq-listed securities contained in Nasdaq Rule 7018(a) to qualify for certain fee and rebate levels. Currently, in order to qualify for a per-share execution fee of $0.0028, members must have an average daily volume through Nasdaq facilities in all securities during a particular month of
(i)more than 30 million shares of liquidity provided and
(ii)more than 50 million shares of liquidity accessed and/or routed. For routed orders, to qualify for a fee of the greater of
(i)$0.0028 per share executed or
(ii)a pass-through of all applicable access fees charged by electronic communications networks that charge more than $0.003 per share executed, a firm must have an average daily volume through Nasdaq facilities in all securities during the month of
(i)more than 30 million shares of liquidity provided, and
(ii)more than 50 million shares of liquidity access and/or routed. For the month of December 2006, Nasdaq is proposing to reduce those qualification volume tiers to 27 million shares and 47 million shares, respectively. In addition, Nasdaq is also reducing for the month of December 2006 the monthly average daily volume tier required to obtain the $0.0025 credit rebate from its current 30 million share level to 27 million shares. 5 5 In addition, Nasdaq is also making certain non-substantive and corrective changes to Nasdaq Rule 7018(a) to reflect, among other things, the recent termination of the operation of Nasdaq's Brut Facility. Nasdaq states that the reduction is designed to respond to certain processing issues associated with Nasdaq's implementation of its new single-book execution facility that can result in inhibiting the ability of users to submit orders to the system and thus not reach their usual levels of participation that would historically entitle them to the most competitive fee and rebate levels. Nasdaq believes that a temporary reduction of the qualification tiers is appropriate while both Nasdaq and its users gain more familiarity with the new single-book trading environment. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, 6 in general, and with Sections 6(b)(4) of the Act, 7 in particular, in that the proposal provides for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. 6 15 U.S.C. 78f. 7 15 U.S.C. 78f(b)(4). 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)(ii) of the Act 8 and subparagraph (f)(2) of Rule 19b-4 thereunder 9 because it establishes or changes a due, fee, or other charge applicable only to a member imposed by the self-regulatory organization. Accordingly, the proposal is effective upon Commission receipt of the filing. 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. 10 8 15 U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 240.19b-4(f)(2). 10 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposal, the Commission considers the period to commence on December 7, 2006, the date on which the Exchange submitted Amendment No. 1. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change 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-2006-051 on the subject line. Paper Comments: • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-NASDAQ-2006-051. 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 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-2006-051 and should be submitted on or before January 10, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21652 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54932; File No. SR-NASD-2006-132] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Pricing for NASD Members Using ITS/CAES and Inet December 13, 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 December 1, 2006, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by Nasdaq. Nasdaq filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act, 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to modify the pricing for NASD members using the ITS/CAES System and Nasdaq's Inet facility (collectively, the “Nasdaq Facilities”). Nasdaq states that it will implement this rule change on December 1, 2006. The text of the proposed rule change is set forth below. Proposed new language is in *italics* ; proposed deletions are in [brackets]. 5 5 Nasdaq states that changes are marked to the rule text that appears in the electronic NASD Manual found at *http://www.nasd.com,* as further amended on an immediately effective basis by File No. SR-NASD-2006-130 (filed on November 30, 2006). 7010. System Services (a)-(h) No change.
(i)ITS/CAES System and Inet Order Execution and Routing (1)-(6) No change.
(7)The following charges shall apply to the use of the Nasdaq Facilities by members for routing to the NYSE for all securities[, including Exchange-Traded Funds]: [Order charged a fee by the NYSE specialist] [$0.01 per share executed] Order that attempts to execute in the Nasdaq Facilities prior to routing *:* [and that is not charged a fee by the NYSE specialist or that is routed to NYSE via ITS] [$0.0002 per share executed (but no more than $25,000 per month)] *Order for Exchange-Traded Fund* *$0.0028 per share executed* *All other orders* *$0.000225 per share executed* Order that does not attempt to execute in the Nasdaq Facilities prior to routing *:* [and that is not charged a fee by the NYSE specialist] [$0.0003 per share executed (but no more than $75,000 per month)] *Order for Exchange-Traded Fund* *$0.003 per share executed* *All other orders* *$0.000275 per share executed*
(8)No change. (j)—(y) No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 modifying its price schedule for routing orders to the New York Stock Exchange LLC (“NYSE”) in response to significant pricing changes that were filed and announced by NYSE on November 30, 2006 and implemented by it on December 1, 2006. 6 Specifically, the NYSE filings establish an increased execution fee of $0.000275 per share executed for securities other than exchange-traded funds and a fee of $0.003 per share executed for most orders for exchange-traded funds, eliminate a $750,000 monthly fee cap, and eliminate specialist commissions on transactions. 6 *See* Securities Exchange Act Release Nos. 54856 (December 1, 2006) (notice of filing and immediate effectiveness of File No. SR-NYSE-2006-106 to increase transaction execution fees and eliminate fee cap) and 54850 (November 30, 2006) (notice of filing and immediate effectiveness of File No. SR-NYSE-2006-105 to eliminate specialist fees). To ensure that its fees for routing orders to the NYSE accurately reflect the costs that Nasdaq will incur and provide appropriate incentives for Nasdaq market participants to seek liquidity on Nasdaq rather than routing directly to NYSE, Nasdaq is instituting the following fees: • $0.003 per share executed for exchange-traded fund orders that route to NYSE without attempting to execute in the Nasdaq Facilities; • $0.0028 per share executed for exchange-traded fund orders that route to NYSE after attempting to execute in the Nasdaq Facilities; • $0.000275 per share executed for orders in securities other than exchange-traded funds that route to NYSE without attempting to execute in the Nasdaq Facilities; and • $0.000225 per share executed for orders in securities other than exchange-traded funds that route to NYSE after attempting to execute in the Nasdaq Facilities. As a further corollary to the changes made by NYSE, Nasdaq is eliminating the monthly fee caps that it had in place for orders routed to NYSE and eliminating the fee for orders charged a fee by the NYSE specialist. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 15A of the Act, 7 in general, and with Section 15A(b)(5) of the Act, 8 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the NASD operates or controls. Nasdaq states that the proposed rule change is a direct response to changes in the fees that Nasdaq pays when routing orders to the NYSE for execution. 7 15 U.S.C. 78 *o* -3. 8 15 U.S.C. 78 *o* -3(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 rule change is subject to Section 19(b)(3)(A)(ii) of the Act 9 and subparagraph (f)(2) of Rule 19b-4 thereunder 10 because it establishes or changes a due, fee, or other charge applicable only to a member imposed by the self-regulatory organization. Accordingly, the proposal is effective upon Commission receipt of the filing. 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. 9 15 U.S.C. 78s(b)(3)(A)(ii). 10 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-NASD-2006-132 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File No. SR-NASD-2006-132. 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 will also be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-NASD-2006-132 and should be submitted on or before January 10, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21648 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54934; File No. SR-NASD-2006-130] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Extend a Pricing Pilot for NASD Members Using ITS/CAES and Inet December 13, 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 National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by Nasdaq. On December 6, 2006, Nasdaq submitted Amendment No. 1 to the proposed rule change. Nasdaq filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act, 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to extend a pricing pilot for NASD members using the ITS/CAES System and Nasdaq's Inet facility (collectively, the “Nasdaq Facilities”). Nasdaq states that it will implement this rule change on December 1, 2006. The text of the proposed rule change is set forth below. Proposed new language is in *italics* ; proposed deletions are in [brackets]. 5 5 Nasdaq states that changes are marked to the rule text that appears in the electronic NASD Manual found at *http://www.nasd.com* , as amended by SR-NASD-2006-126 (November 13, 2006) on an immediately effective basis. 7010. System Services (a)-(h) No change.
(i)ITS/CAES System and Inet Order Execution and Routing (1)-(5) No change.
(6)Except as provided in paragraph (7), the following charges shall apply to the use of the order execution and routing services of the Nasdaq Facilities by members for securities subject to the Consolidated Quotations Service and Consolidated Tape Association plans other than Exchange-Traded Funds (“Covered Securities”): Order Execution Order that accesses the Quote/Order of a Nasdaq Facility market participant: Charge to member entering order: On or after [December 1, 2006] *January 2, 2007* $0.0007 per share executed. For a pilot period during the month *s* of November *and December* 2006: Members with an average daily volume through the Nasdaq Facilities in Covered Securities during the month of
(i)more than 100,000 shares of liquidity provided, and
(ii)more than 100,000 shares of liquidity accessed and/or routed $0.0007 per share executed. Members with an average daily volume through the Nasdaq Facilities in Covered Securities during the month of
(i)between 50,000 and 100,000 shares of liquidity provided, and
(ii)between 50,000 and 100,000 shares of liquidity accessed and/or routed $0.001 per share executed. Other members $0.0015 per share executed. Credit to member providing liquidity for a Covered Security listed on NYSE and The NASDAQ Stock Market LLC $0.0007 per share executed. Credit to a member providing liquidity for other Covered Securities: Members with an average daily volume through the Nasdaq Facilities in Covered Securities during the month of more than 5 million shares of liquidity accessed, provided, or routed $0.0005 per share executed. Members with an average daily volume through the Nasdaq Facilities in Covered Securities during the month of 10 million or more shares of liquidity provided $0.0006 per share executed. Other members No credit. Order Routing Order routed to Amex $0.0028 per share executed (plus, in the case of orders charged a fee by the Amex specialist, $0.01 per share executed). Order routed to NYSE See NYSE fee schedule in Rule 7010(i)(7). All other orders $0.0028 per share executed. (7)—(8) No change. (j)—(y) No change. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 proposes to extend for one month a pricing pilot for non-Nasdaq listed securities traded through the Nasdaq Facilities. Effective November 1, 2006, 6 Nasdaq introduced a higher pricing tier of $0.0015 per share executed for members to access liquidity when those members provide an average of less than 50,000 shares of liquidity per day and access and/or route an average of less than 50,000 shares of liquidity per day in non-Nasdaq securities through the Nasdaq Facilities during the month. In addition, Nasdaq introduced an intermediate pricing tier of $0.001 per share executed for members to access liquidity when those members provide an average of between 50,000 shares and 100,000 shares of liquidity per day and access and/or route an average of between 50,000 shares and 100,000 shares of liquidity per day. 7 Nasdaq states that it is continuing to evaluate the effect of the pricing change on market participants' liquidity provision, and therefore is extending the pilot pricing for one month. Nasdaq states that it will determine whether to submit an additional filing regarding these fees by January 2, 2006. 6 *See* Securities Exchange Act Release No. 54742 (November 13, 2006), 71 FR 67179 (November 20, 2006) (SR-NASD-2006-122). 7 Nasdaq continues to charge $0.0007 per share executed for all other members to access liquidity ( *i.e.* , when those members provide an average of more than 100,000 shares of liquidity per day and access and/or route an average of more than 100,000 shares of liquidity per day). 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 15A of the Act, 8 in general, and with Section 15A(b)(5) of the Act, 9 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the NASD operates or controls. Nasdaq states that the proposed rule change extends for an additional month a pilot that introduced a higher fee for accessing Nasdaq Facility liquidity in cases where a market participant's use of the Nasdaq Facilities does not meet certain minimal thresholds. Nasdaq believes that this change is consistent with an equitable allocation of fees because lower overall fees are charged to market participants that enhance market quality by providing liquidity. 8 15 U.S.C. 78 *o* -3. 9 15 U.S.C. 78 *o* -3(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. In particular, for the reasons discussed in SR-NASD-2006-122, Nasdaq does not believe that the proposed change to fees to access liquidity in non-Nasdaq securities through the Nasdaq Facilities will impose a burden on competition by other markets that route orders to the Nasdaq Facilities for execution. 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 rule change is subject to Section 19(b)(3)(A)(ii) of the Act 10 and subparagraph (f)(2) of Rule 19b-4 thereunder 11 because it establishes or changes a due, fee, or other charge applicable only to a member imposed by the self-regulatory organization. Accordingly, the proposal is effective upon Commission receipt of the filing. 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. 12 10 15 U.S.C. 78s(b)(3)(A)(ii). 11 17 CFR 240.19b-4(f)(2). 12 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-day period within which the Commission may summarily abrogate the proposal, the Commission considers the period to commence on December 6, 2006, the date on which the Exchange submitted Amendment No. 1. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change 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-NASD-2006-130 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File No. SR-NASD-2006-130. 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 will also be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-NASD-2006-130 and should be submitted on or before January 10, 2007. 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. E6-21650 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54931; File No. SR-NASD-2006-115] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval to a Proposed Rule Change, as Amended, Relating to an NASD Trade Reporting Facility Established in Conjunction With the Boston Stock Exchange December 13, 2006. I. Introduction On September 29, 2006, the National Association of Securities Dealers, Inc. (“NASD”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposal to establish an NASD trade reporting facility (the “NASD/BSE TRF”) in conjunction with the Boston Stock Exchange, Inc. (“BSE”). The proposed rule change was published for comment in the **Federal Register** on October 18, 2006. 3 The Commission received one comment letter regarding the proposal. 4 The NASD filed Amendment No. 1 to the proposed rule change on December 5, 2006. 5 This order approves the proposal, as amended, on an accelerated basis. In addition, the Commission is publishing notice to solicit comments on the proposed rule change as amended by Amendment No. 1. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 54591 (October 12, 2006), 71 FR 61519. 4 *See* letter from Alden Adkins, Executive Vice President, BSE, to Robert Colby, Deputy Director, Division of Market Regulation, Commission, dated October 24, 2006 (“BSE Letter”). 5 In Amendment No. 1, the NASD revises the proposal to:
(1)Provide notice of final action taken by the NASD with respect to the proposal;
(2)amend NASD Rule 4632D(a) to indicate that the NASD/BSE TRF will support the .W and .PRP trade report modifiers;
(3)add NASD Rule 4632D(g)(2)(G) to define the term “cancelled” for purposes of determining the deadline for reporting a trade cancellation;
(4)add NASD Rule 4632D(i) and 6130D(g) to expressly prohibit the aggregating of trades for purposes of trade reporting to the NASD/BSE TRF;
(5)add NASD Rule 6130D(f) to provide trade report modifiers for certain transactions reported to the NASD/BSE TRF in accordance with Section 3 of Schedule A to the NASD By-Laws; and
(6)make various technical changes. In addition, in Amendment No. 1 the NASD makes conforming changes to the rules of the trade reporting facility operated by the NASD and the National Stock Exchange, Inc. (the “NASD/NSX TRF”) by adding NASD Rules 4632C(h) and 6130C(g) to expressly prohibit the aggregating of trades for purposes of trade reporting to the NASD/NSX TRF. II. Description of the Proposal A. NASD/BSE TRF The NASD proposes to establish a new trade reporting facility, the NASD/BSE TRF, that will provide NASD members with an additional facility for reporting transactions in NMS stocks, as defined in Rule 600(b)(47) of Regulation NMS under the Act, 6 that are effected otherwise than on an exchange. The NASD/BSE TRF will be operated by the NASD/BSE Trade Reporting Facility LLC (“NASD/BSE TRF LLC”). The NASD/BSE TRF structure and rules are substantially similar to the trade reporting facilities established by the NASD and the Nasdaq Stock Market, Inc. (the “NASD/Nasdaq TRF”) and by the NASD and the National Stock Exchange, Inc. (the “NASD/NSX TRF”), which the Commission approved in June 2006 7 and November 2006, 8 respectively. 6 17 CFR 242.600(b)(47). 7 *See* Securities Exchange Act Release No. 54084 (June 30, 2006), 71 FR 38935 (July 10, 2006) (order approving File No. SR-NASD-2005-087) (“NASD/Nasdaq TRF Approval Order”). Although the NASD/Nasdaq TRF originally accepted transaction reports only for Nasdaq Global Market and Nasdaq Capital Market securities and convertible bonds listed on the Nasdaq Stock Market LLC (“Nasdaq Exchange”), the Commission recently approved an NASD proposal that, among other things, amended the rules of the NASD/Nasdaq TRF to allow NASD members to report transactions in NMS stocks to the NASD/Nasdaq TRF. *See* Securities Exchange Act Release No. 54798 (November 21, 2006), 71 FR 69156 (November 29, 2006) (order approving File No. SR-NASD-2006-104) (“NASD/Nasdaq TRF November Order”). 8 *See* Securities Exchange Act Release No. 54715 (November 6, 2006), 71 FR 66354 (November 14, 2006) (order approving File No. SR-NASD-2006-115) (“NASD/NSX TRF Approval Order”). The NASD/BSE TRF will be a facility, as defined under the Act, 9 of the NASD, subject to regulation by the NASD and to the NASD's registration as a national securities association. NASD members 10 that match and/or execute orders internally or through proprietary systems may submit reports of these trades, with appropriate information and modifiers, to the NASD/BSE TRF, which will then report them to the appropriate exclusive securities information processor (“SIP”). 11 NASD/BSE TRF transaction reports disseminated to the media will include a modifier indicating the source of the transactions that will distinguish them from transactions executed on or through the BSE. The NASD/BSE TRF will provide the NASD with a real-time copy of each trade report for regulatory review purposes. At the option of the participant, the NASD/BSE TRF may provide the necessary clearing information regarding transactions to the National Securities Clearing Corporation. 9 15 U.S.C. 78c(a)(2). 10 Only NASD members in good standing may participate in the NASD/BSE TRF. *See* NASD Rule 6120D(a)(1). NASD/BSE TRF participants also must meet the minimum requirements set forth in NASD Rule 6120D, including the execution of, and continuing compliance with, a Participant Application Agreement; membership in, or maintenance of, an effective clearing arrangement with a participant of a registered clearing agency registered pursuant to the Act; and the acceptance and settlement of each trade that the NASD/BSE TRF identifies as having been effected by the participant. NASD Rule 6190D, “Termination of Access,” allows the NASD to terminate access to the NASD/BSE TRF if a participant fails to:
(1)abide by the rules or operating procedures of the trade reporting service of the NASD/BSE TRF or the NASD;
(2)honor contractual agreements entered into with the NASD or its subsidiaries or the Participant Application Agreement; or
(3)pay promptly for services rendered to the trade reporting service of the NASD/BSE TRF. 11 The NASD/BSE TRF will have controls in place to ensure that transactions reported to the NASD/BSE TRF that are significantly away from the current market will not be submitted to the SIP. The NASD represents that this is consistent with current practice and notes that the Alternative Display Facility (“ADF”) and the NASD/Nasdaq TRF currently do not submit such trades to the SIP. B. Limited Liability Company Agreement of the NASD/BSE TRF LLC The NASD and the BSE will jointly own the NASD/BSE TRF LLC, which will operate the NASD/BSE TRF. The NASD has filed the Limited Liability Company Agreement of the NASD/BSE TRF LLC (the “LLC Agreement”) as part of the current proposal. The LLC Agreement recognizes the NASD as having sole regulatory responsibility for the NASD/BSE TRF. The NASD, as the “SRO Member” under the LLC Agreement, will perform the “SRO Responsibilities” 12 for the NASD/BSE TRF. The BSE, as the “Business Member” under the LLC Agreement, will be primarily responsible for the management of the facility's business affairs to the extent those activities are not inconsistent with the regulatory and oversight functions of the NASD. The BSE will pay the cost of regulation and provide systems to enable NASD members to report trades to the NASD/BSE TRF. The BSE will be entitled to the profits and losses, if any, derived from the operation of the NASD/BSE TRF. 13 Under section 9(d) of the LLC Agreement, each Member agrees to comply with the federal securities laws and the rules and regulations thereunder and to cooperate with the Commission pursuant to its regulatory authority and the provisions of the LLC Agreement. 12 The LLC Agreement defines “SRO Responsibilities” as those duties or responsibilities of a self-regulatory organization (“SRO”) pursuant to the Act and the rules promulgated thereunder, including but not limited to those set out in section 9(a) of the LLC Agreement. *See* Schedule A of the LLC Agreement. 13 *See* section 15 of the LLC Agreement. The NASD/BSE TRF LLC will be managed by, or under the direction of, a Board of Directors to be established by the NASD and the BSE. The NASD will have the right to designate at least one Director, the SRO Member Director, to the NASD/BSE TRF LLC Board of Directors. The SRO Director must approve, by consent, all “Major Actions,” as defined in section 10(e) of the LLC Agreement. In addition, each Director agrees to comply with the federal securities laws and the rules and regulations thereunder and to cooperate with the Commission and the SRO Member pursuant to their regulatory authority. 14 Further, when discharging her or her duties as a member of the Board of Directors, each Director must take into consideration whether his or her actions as a Director would cause the NASD/BSE TRF or either Member to engage in conduct that would be inconsistent with the purposes of the Act. 15 14 *See* section 10(b) of the LLC Agreement. 15 *Id.* The initial term of the LLC Agreement is three years. During that time, until the NASD/BSE TRF reaches “Substantial Trade Volume” (defined as 250,000 trades or more per day for three consecutive months), the BSE may terminate the arrangement for convenience. After the NASD/BSE TRF reaches Substantial Trade Volume, either Member may terminate the LLC Agreement by providing to the other Member prior written notice of at least one year. In addition, the NASD may terminate in the event its status or reputation as an SRO is called into jeopardy by the actions of the BSE or the NASD/BSE TRF LLC. If the NASD/BSE TRF LLC arrangement is terminated, the NASD represents that it would be able to fulfill all of its regulatory obligations with respect to over-the-counter (“OTC”) trade reporting through its other facilities, including the NASD/Nasdaq TRF, the ADF, and the ITS/CAES System. C. NASD/BSE TRF Rules 1. NASD Rule 4000D and 6000D Series The NASD proposes to adopt the NASD Rule 4000D Series, “The NASD/BSE Trade Reporting Facility,” and 6000D Series, “NASD/BSE Trade Reporting Facility Systems and Programs,” to establish, respectively, trade reporting and clearing and comparison rules for the NASD/BSE TRF. 16 The NASD Rule 4000D and 6000D Series are substantially similar to the NASD Rule 4000 and 6000 Series governing the NASD/Nasdaq TRF and the NASD Rule 4000C and 6000C Series governing the NASD/NSX TRF. 17 16 The NASD notes that all other NASD rules that apply to OTC trading generally will apply to trades reported to the NASD/BSE TRF. 17 Some differences among the rules governing the governing the trade reporting facilities result from differences among the trade reporting systems of the facilities. For example, because neither the NASD/BSE TRF or the NASD/NSX TRF has a trade comparison functionality, the rules governing the NASD/BSE TRF and the NASD/NSX TRF contain no provisions relating to trade matching, trade acceptance, or aggregate volume matching. The rules governing the NASD/Nasdaq TRF contain such provisions. D. Amendment No. 1 Amendment No. 1 makes several changes to the proposal. In the original proposal, proposed NASD Rule 4632D(a)(7) indicated that stop stock transactions, transactions at prices based on average-weighting or other special formulae, and certain transactions that reflected a price different from the current market could not be reported to the NASD/BSE TRF and had to be reported to the NASD via an alternative electronic mechanism. Amendment No. 1 revises NASD Rule 4362D(a) to indicate that the NASD/BSE TRF will support these trades and thus will support the .W and .PRP trade report modifiers. Specifically, new NASD Rules 4632D(a)(4) and (a)(9) require NASD members to append the .W trade report modifier to, respectively, transaction reports occurring at prices based on average-weighting or other special pricing formulae and to reports of stop stock transactions. New NASD Rule 4362D(a)(7) will require members to append the .PRP trade report modifier to transaction reports that reflect a price different from the current market when the execution price is based on a prior reference point in time. New NASD Rules 43632D(a)(4), (7), and
(9)are substantially the same as current NASD Rules 4632(a)(4), (7), and (9), which apply to the NASD/Nasdaq TRF. In addition, Amendment No. 1 adds NASD Rule 6130D(f), which requires the use of specified trade report modifiers for the reporting of certain types of transactions that are assessed a regulatory transaction fee in accordance with section 3 of Schedule A to the NASD By-Laws. Specifically, NASD Rule 6130D(f) provides trade report modifiers for the reporting of odd-lot transactions, away from the market sales, and purchases or sales of securities effected upon the exercise of an over-the-counter option. These transactions are not to be reported to the NASD/BSE TRF for purposes of publication. 18 NASD Rule 6130D(f) is substantially similar to NASD Rule 6130(g), which became effective on December 1, 2006. 19 18 *See* NASD Rule 4632D(f). 19 *See* Securities Exchange Act Release No. 53977 (June 12, 2006), 71 FR 43976 (June 16, 2006) (order approving File No. SR-NASD-2006-055). *See also* Securities Exchange Act Release No. 54909 (December 11, 2006) (notice of filing and immediate effectiveness of File No. SR-NASD-2006-129) (proposing a substantially similar rule for the NASD/NSX TRF) (“December Notice”). Amendment No. 1 also adds NASD Rules 4632D(i) and 6130D(g) to the rules of the NASD/BSE TRF, and makes conforming changes to the rules of the NASD/NSX TRF. 20 These rules add express provisions prohibiting the aggregation of trades for purposes of trade reporting to the NASD/BSE TRF and the NASD/NSX TRF. The NASD notes that the original proposal indicated that members would not be permitted to aggregate individual executions of orders in a security at the same price into a single transaction report submitted to the NASD/BSE TRF. Similarly, the NASD notes that aggregation is not permitted for purposes of trade reporting to the NASD/NSX TRF. 21 For the sake of clarity, and to maintain consistency among the rules governing its trade reporting facilities, the NASD has determined to add an express prohibition on aggregating trades to the rules of both the NASD/BSE TRF and the NASD/NSX TRF. 20 *See* NASD Rules 4632C(h) and 6130C(g). 21 *See* NASD/NSX TRF Approval Order, *supra* note 8. Finally, Amendment No. 1 contains several technical changes. In this regard, Amendment No. 1 adds NASD Rule 4632D(g)(2)(G) for purposes of determining the deadline for reporting a trade cancellation to the NASD/BSE TRF. This paragraph is identical to NASD Rule 4632(g)(2)(G) of the NASD/Nasdaq TRF rules and was omitted inadvertently from NASD Rule 4632D. Amendment No. 1 also replaces an incorrect reference in NASD Rule 6190D to the “Applicant Participation Agreement” with a reference to the “Participant Application Agreement;” replaces a reference in NASD Rule 4632D(d)(1) to “Registered ECNs” with a reference to “Reporting ECNs,” which is the defined term in NASD Rule 6110D; revises NASD Rule 6130D(d)(2) to require trade reports to include the number of shares or bonds; and revises NASD Rule 4632D to clarify a reference to a Non-Reporting Member or other contra party, and to refer to a “Security Identification Symbol” rather than a “stock symbol.” E. Implementation In light of the systems changes necessary for the NASD to implement the NASD/BSE TRF for non-Nasdaq exchange-listed securities, the NASD proposes to implement the proposal in two phases. Specifically, the NASD proposes to implement the proposed rule change with respect to Nasdaq-listed equity securities and convertible debt on the first day of operation of the NASD/BSE TRF, and to implement the proposed rule change with respect to non-Nasdaq exchange-listed securities at a later date. The NASD will announce the implementation of the first phase of the proposed rule change no later than 30 days following Commission approval of the proposal, and the second phase no later than 90 days following Commission approval. III. Summary of Comments The Commission received one comment letter regarding the proposal. 22 The commenter argued that the NASD/NSX TRF would have an unfair competitive advantage over the NASD/BSE TRF if the NASD/NSX TRF were approved prior to the NASD/BSE TRF. Specifically, the commenter believes that “the first regional exchange operated TRF [will] capture the lion's share of members seeking an alternative to the Nasdaq operated TRF.” 23 Citing the Congressional finding in section 11A(a)(1)(C)(ii) of the Act 24 that “[i]t is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure * * * fair competition among brokers and broker-dealers, among exchange markets, and between exchange markets and markets other than exchange markets * * *,” the commenter asked the Commission to approve the current proposal and the NASD/NSX TRF proposal simultaneously. In support of this argument, the commenter also noted the similarities between the NASD/NSX TRF proposal and the current proposal. 22 *See* BSE Letter, *supra* note 4. 23 *See* BSE Letter, *supra* note 4. 24 15 U.S.C. 78k-1(a)(1)(C)(ii). IV. Discussion The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association. 25 In particular, the Commission finds that the proposed rule change, as amended, is consistent with section 15A(b)(6) of the Act 26 in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. 25 In approving this proposed rule change, the Commission has considered the proposal's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 26 15 U.S.C. 78o-3(b)(6). The NASD/BSE TRF will provide NASD members with an additional mechanism for reporting transactions in exchange-listed securities effected otherwise than on an exchange. Rule 601 of Regulation NMS requires the NASD to file a transaction reporting plan regarding transactions in listed equity and Nasdaq securities that are executed by its members otherwise than on a national securities exchange. 27 Under rule 603 of Regulation NMS, 28 national securities exchanges and national securities associations act jointly pursuant to an effective national market system plan to disseminate consolidated information, including a national best bid and offer, and quotations for and transactions in NMS stocks. Today, the NASD operates the ADF, 29 NASD/Nasdaq TRF 30 and the NASD/NSX TRF, 31 and the ITS/CAES System 32 for collecting transaction reports. In addition, the NASD is a participant in the Nasdaq UTP Plan 33 with regard to transaction reports in Nasdaq-listed securities, and the CTA Plan 34 with regard to securities listed on exchanges other than Nasdaq. 27 Under Rule 601(b) of Regulation NMS, broker-dealers are prohibited from executing a transaction otherwise than on a national securities exchange unless there is an effective transaction reporting plan. NASD Rule 5000 requires NASD members to report transactions in exchange-listed securities effected otherwise than on an exchange to NASD. 28 17 CFR 242.603. 29 Currently, the ADF only accepts quotes and trades in Nasdaq-listed securities. The Commission recently approved a proposal to extend the ADF to non-Nasdaq exchange-listed securities. *See* Securities Exchange Act Release No. 54537 (September 28, 2006), 71 FR 59173 (October 6, 2006) (order approving File No. SR-NASD-2006-091). 30 *See* NASD/Nasdaq TRF Approval Order and NASD/Nasdaq TRF November Order, *supra* note 7. 31 *See* NASD/NSX TRF Approval Order, *supra* note 8. 32 The ITS/CAES System provides a means by which NASD and its members can comply with the terms of the Intermarket Trading System Plan (“ITS Plan”). The ITS/CAES System reports trades in non-Nasdaq exchange-listed securities that are effected in the ITS/CAES System or in NASD members' proprietary systems. The Commission recently approved an NASD proposal to amend the ITS/CAES System to reflect the operation of the Nasdaq Exchange as a national securities exchange. *See* NASD/Nasdaq TRF November Order, *supra* note 7. 33 Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis (“Nasdaq UTP Plan”). 34 Consolidated Tape Association Plan (“CTA Plan”). Upon approval of the NASD/BSE TRF, the NASD will operate another facility for the purposes of accepting transaction reports from its members. The Commission has previously recognized that the Act does not prohibit the NASD from establishing multiple facilities for fulfilling its regulatory purposes. 35 Indeed, as noted above, the NASD currently operates multiple facilities for fulfilling its regulatory obligations. Therefore, the Commission believes that it is consistent with the Act for the NASD to establish the NASD/BSE TRF for purposes of fulfilling its regulatory obligations. The NASD represented that if the NASD/BSE TRF LLC arrangement is terminated, the NASD will be able to fulfill all of its regulatory obligations with respect to OTC trade reporting through its other facilities, including the NASD/Nasdaq TRF and the ADF. 35 *See* NASD/Nasdaq TRF Approval Order, *supra* note 7. The NASD represented that it will have an integrated audit trail of all trade reporting facilities, ADF, and ITS/CAES System transactions, and will have integrated surveillance capabilities. NASD has represented that it expects to automate its integrated audit trail and surveillance by the end of the fourth quarter of 2006 for Nasdaq-listed securities and by the end of the first quarter of 2007 for non-Nasdaq exchange-listed securities. The Commission believes that an integrated audit trail and integrated surveillance capabilities are important to the NASD's ability to conduct effective surveillance of OTC trading in exchange-listed securities when transactions in those securities can be reported to one of the NASD's trade reporting facilities, the ADF, or the ITS/CAES System. A commenter suggested that the Commission approve the current proposal simultaneously with the NASD/NSX TRF. 36 As noted above, the Commission has approved the NASD's proposal to establish the NASD/NSX TRF. 37 The Commission stated in the NASD/NSX TRF Approval Order that it did not believe that it should delay the operation of the NASD/NSX TRF until other trade reporting facilities are ready to operate. 38 The Commission stated, further, that it believed that approving the NASD/NSX TRF and allowing it to begin operations immediately could enhance competition by providing a new facility, in addition to those that are operating currently, for reporting OTC trades in exchange-listed securities. 39 36 *See* BSE Letter, *supra* note 4. 37 *See* NASD/NSX TRF Approval Order, *supra* note 8. 38 *See* NASD/NSX TRF Approval Order, *supra* note 8. 39 *See* NASD/NSX TRF Approval Order, *supra* note 8. A. NASD/BSE TRF Rules Most of the provisions in the new NASD Rule 4000D and 6000D Series, which establish the trade reporting and clearing and comparison rules for the NASD/BSE TRF, are substantially similar to the NASD Rule 4000 and 6000 Series and the NASD Rule 4000C and 6000C Series that the Commission approved for the NASD/Nasdaq TRF 40 and the NASD/NSX TRF, 41 respectively. Other provisions in the rules of the NASD/BSE TRF are substantially similar to existing NASD rules. 42 The Commission finds that the provisions of the NASD Rule 4000D and 6000D Series that are substantially similar to existing NASD rules are consistent with Act. 40 *See* NASD/Nasdaq TRF Approval Order, *supra* note 7. 41 *See* NASD/NSX TRF Approval Order, *supra* note 8. 42 For example, the two- and three-party trade reporting rules in NASD Rules 4632D(c) and
(d)are substantially similar to the two- and three-party trade reporting rules of the ADF. *See* NASD Rules 4632A(c) and (d). Similarly, the provisions of NASD Rule 6130D(f), which provide trade report modifiers for certain transactions that are assessed a regulatory transaction fee in accordance with Section 3 of Schedule A to the NASD By-Laws, are substantially similar to NASD Rule 6130(g), which governs the NASD/Nasdaq TRF. The NASD also adopted substantially similar provisions for the NASD/NSX TRF in NASD Rule 6130C(f). *See* December Notice, *supra* note 19. In Amendment No. 1, the NASD proposes to adopt rules for the NASD/NSX TRF and the NASD/BSE TRF that expressly prohibit members from aggregating trades for purposes of trade reporting to the NASD/NSX TRF and the NASD/BSE TRF. 43 The NASD notes that both its initial NASD/BSE TRF proposal and the NASD/NSX TRF proposal 44 stated this prohibition, which the NASD now proposes to include in the rules of the NASD/NSX TRF and the NASD/BSE TRF. The Commission finds that these provisions are consistent with the Act because they will help to clarify the rules governing the NASD/NSX TRF and the NASD/BSE TRF. 43 *See* NASD Rules 4632C(h) and 6130C(g) (governing the NASD/NSX TRF); and 4632D(i) and 6130D(g) (governing the NASD/BSE TRF). 44 *See* NASD/NSX TRF Approval Order, *supra* note 8. In addition, Amendment No. 1 revises NASD Rules 4632D(a)(4), (7), and
(9)to reflect that the NASD/BSE TRF will support the .W and .PRP modifiers, and adds NASD Rule NASD Rule 4632D(g)(2)(G), which is identical to NASD Rule 4632(g)(2)(G), and was inadvertently omitted. Amendment No. 1 also proposes to adopt NASD Rule 6130D(f), which provides trade report modifiers for certain transactions and is substantially similar to NASD Rules 6130(g) and 6130C(f). 45 Because proposed NASD Rule 6130D(f), and the proposed changes to NASD Rule 4632D(a) and NASD Rule 4632D(g), adopt rule provisions for the NASD/BSE TRF that are identical or substantially similar to existing NASD rules, the Commission finds that these changes are consistent with the Act. Similarly, Commission finds that the technical changes described in Section II.D. above, which correct errors in the text of the NASD/BSE TRF's rules, are consistent with the Act because they will help to ensure the accuracy of the NASD's rules. 45 *See* note 42, *supra* . B. NASD/BSE TRF LLC The NASD and the BSE will jointly own the NASD/BSE TRF LLC, which will operate the NASD/BSE TRF. The NASD has filed the LLC Agreement as part of the current proposal. 46 The LLC Agreement is substantially similar to the limited liability company agreement of the NASD/Nasdaq TRF LLC (“NASD/Nasdaq TRF LLC Agreement”) that the Commission approved in the NASD/Nasdaq TRF Approval Order 47 and to the limited liability company agreement of the NASD/NSX TRF that the Commission approved in the NASD/NSX TRF Approval Order. 48 Accordingly, for the reasons discussed in the NASD/Nasdaq TRF Approval Order with respect to the NASD/Nasdaq TRF LLC Agreement, the Commission finds that the LLC Agreement is consistent with the Act. 49 46 The Commission notes that any changes to the LLC Agreement that are stated policies, practices, or interpretations of the NASD, as defined in Rule 19b-4 under the Act, must be filed with the Commission pursuant to Section 19(b) of the Act and Rule 19b-4 thereunder. 47 *See* note 7, *supra* . 48 *See* note 8, *supra* . 49 The Commission incorporates by reference the discussion and analysis of the NASD/Nasdaq TRF LLC and NASD/Nasdaq TRF LLC Agreement set forth in the NASD/Nasdaq TRF Approval Order, *supra* note 7. The Commission notes that the NASD/BSE TRF LLC, as the operator of an NASD facility, is an integral part of a SRO registered pursuant to the Act and, as such, is subject to obligations imposed by the Act. The Commission underscores that these obligations endure so long as the NASD/BSE TRF LLC operates an NASD facility. The Commission believes that the LLC Agreement makes clear that the NASD will have sole regulatory responsibility for the activities of NASD members related to the facility operated by the NASD/BSE TRF LLC and provides the NASD with certain rights that are intended to preserve its regulatory authority and control. 50 The Commission believes that the provisions of the LLC Agreement will allow the NASD to carry out its self-regulatory responsibilities with respect to its facility and that both the Commission and the NASD will have sufficient regulatory jurisdiction over the controlling parties of the NASD/BSE TRF LLC to carry out their responsibilities under the Act. 50 For example, pursuant to the LLC Agreement, the NASD must consent before certain “Major Actions,” as defined in the LLC Agreement, with respect to the NASD/BSE TRF LLC are effective. For example, under the LLC Agreement, each Member and each director of the NASD/BSE TRF LLC agrees to comply with the federal securities laws and rules and regulations thereunder and to cooperate with the Commission pursuant to its regulatory authority and the provisions of the LLC Agreement. In addition, the NASD and the BSE acknowledge in the LLC Agreement that—to the extent directly related to the NASD/BSE TRF LLC's activities—their books, records, premises, officers, directors, governors, agents, and employees will be deemed to be the books, records, premises, officers, directors, governors, agents, and employees of the NASD itself and its affiliates for the purposes of, and subject to oversight pursuant to, the Act. This provision will reinforce the Commission's ability to exercise its authority under Section 19(h)(4) of the Act 51 with respect to the officers and directors of the NASD/BSE TRF LLC because all such officers and directors-to the extent that they are acting in matters related to the NASD/BSE TRF LLC's activities-would be deemed to be the officers and directors of the NASD itself. Furthermore, under the LLC Agreement, the records of the NASD and BSE, to the extent that they are related to the NASD/BSE TRF LLC's activities, are deemed to be records of the NASD itself and are subject to the Commission's examination authority under Section 17(b)(1) of the Act. 52 51 15 U.S.C. 78s(h)(4). Section 19(h)(4) of the Act authorizes the Commission, by order, to remove from office or censure any officer or director of an SRO if it finds after notice and an opportunity for hearing that such officer or director has:
(1)Willfully violated any provision of the Act or the rules and regulations thereunder, or the rules of such SRO;
(2)willfully abused his or her authority; or
(3)without reasonable justification or excuse, has failed to enforce compliance with any such provision by a member or person associated with a member of the SRO. 52 *See* Section 17(c) of the LLC Agreement. The LLC Agreement also provides that the NASD and the BSE, and each officer, director, agent, and employee thereof, irrevocably submits to the jurisdiction of the U.S. federal courts, the Commission, and the NASD for the purpose of any suit, action, or proceeding pursuant to the U.S. federal securities laws and the rules and regulations thereunder arising from, or relating to, the NASD/BSE TRF LLC's activities. The Commission also believes that the requirements of Section 19(b) of the Act and Rule 19b-4 thereunder provide the Commission with sufficient authority over changes in control of the NASD/BSE TRF LLC to enable the Commission to carry out its regulatory oversight responsibilities with respect to the NASD and its facilities. The Commission notes that the NASD is required to enforce compliance with the provisions of the LLC Agreement because they are “rules of the association” within the meaning of Section 3(a)(27) of the Act. 53 A failure on the part of the NASD to enforce its rules could result in a suspension or revocation of its registration pursuant to Section 19(h)(1) of the Act. 54 53 15 U.S.C. 78c(a)(27). 54 15 U.S.C. 78s(h)(1). C. Accelerated Approval of the Proposed Rule Change as Amended by Amendment No. 1 The Commission finds good cause for approving the proposed rule change as amended by Amendment No. 1 prior to the thirtieth day after the date of publication of notice of filing thereof in the **Federal Register** . As described more fully above, the changes to NASD Rules 4362D(a), 4632D(g), and 6130D(f) adopt provisions for the NASD/BSE TRF that are identical to or substantially the same as existing NASD rules. The Commission believes that these changes do not raise new regulatory issues and will help to provide consistency in the NASD's trade reporting rules. Amendment No. 1 also revises the rules of the NASD/NSX TRF and the NASD/BSE TRF to include an express prohibition on the aggregating of trades for purposes of trade reporting to these facilities. The Commission believes that this change strengthens and clarifies the rules governing the NASD/NSX TRF and the NASD/BSE TRF by providing an express prohibition on the aggregating of trades for purposes of trade reporting to the facilities. Finally, Amendment No. 1 includes technical changes that correct errors in the text of the NASD/BSE TRF's rules, thereby helping to ensure the accuracy of the NASD's rules. For these reasons, the Commission finds that it is consistent with Sections 15A(b)(6) and 19(b) of the Act to approve the proposed rule change as amended by Amendment No. 1 on an accelerated basis. V. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the proposed rule change as amended by Amendment No. 1, including whether it 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-2006-115 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-2006-115. 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-NASD-2006-115 and should be submitted on or before January 10, 2007. VI. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 55 that the proposed rule change (SR-NASD-2006-115), as amended, is approved. 55 15 U.S.C. 78s(b)(2). 56 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 56 Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21660 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54928; File No. SR-NSCC-2006-05] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to the Wind-Down of a Member December 13, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on March 28, 2006, National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) and on September 28, 2006, amended the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by NSCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would add a new Rule 42, Wind-Down of a Member, Fund Member, or Insurance Carrier Member, 2 to NSCC's Rules to address a situation where a member notifies NSCC that it intends to wind down its activities and NSCC determines in its discretion that it must take special action in order to protect itself and its participants. 3 2 The text of NSCC's proposed Rule 42 can be found on NSCC's Web site at *http://www.nscc.com.* 3 Similar proposed rule changes have been filed by The Depository Trust Company [File No. SR-DTC-2006-07] and the Fixed Income Clearing Corporation [File No. SR-FICC-2006-05]. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of such statements. 4 4 The Commission has modified parts of these statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The proposed rule would allow NSCC to determine that a member is a wind-down member and would set forth the conditions NSCC using its discretion could place on a wind-down member and the actions NSCC using its discretion could take with respect to a wind-down member to protect itself and its members. Such actions would include restricting or modifying the wind-down member's use of any or all of NSCC's services and requiring the wind-down member to post increased clearing fund deposits. NSCC would retain all of its other rights set forth in its rules and membership agreements, including the right to declare the wind-down member insolvent, if applicable, and to cease to act for the member. NSCC believes that the proposed rule would ensure that it has the needed flexibility to appropriately manage the risks presented by an entity in crisis that remains a member of NSCC. This is particularly important to preserve orderly settlement in the marketplace and to minimize the risk of loss to NSCC and its members. The proposed rule summarizes in a single rule NSCC's rights and the actions it may take in such a situation. These rights and actions are either permitted elsewhere in NSCC's rules or are permitted pursuant to NSCC's emergency authority. By summarizing them in a single rule, however, the proposed rule change should provide clarity and a clear legal basis for NSCC's rights or actions taken with respect to a wind-down member. NSCC also believes that the proposed rule is designed to minimize the need for rule waivers. NSCC believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder because it will enhance NSCC's rules regarding actions that NSCC may take with respect to a wind-down of a member that presents risk to NSCC. B. Self-Regulatory Organization's Statement on Burden on Competition NSCC does not believe that the proposed rule change would have any impact or impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. NSCC will notify the Commission of any written comments received by NSCC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve the proposed rule change or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NSCC-2006-05 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-NSCC-2006-05. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of NSCC and on NSCC's Web site at *http://www.nscc.com.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NSCC-2006-05 and should be submitted on or before January 10, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 5 5 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21706 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54921; File No. SR-NSCC-2006-14] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Clarifying and Technical Changes to its Insurance Processing Service December 12, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on November 2, 2006, the National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by NSCC. NSCC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 2 and Rule 19b-4(f)(4) thereunder 3 so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(iii). 3 17 CFR 240.19b-4(f)(4). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The purpose of the proposed rule change is to make clarifying and technical changes to NSCC's Rule 57 regarding NSCC's Insurance Processing Service (“IPS”). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSCC 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. NSCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 4 4 The Commission has modified the text of the summaries prepared by NSCC. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to make clarifying and technical changes to Rule 57 of NSCC's Rules regarding IPS. NSCC proposes to reformat Rule 57 for clarity. References to services or functionalities that are not currently offered would be deleted and to those that have changed since the rule was initially written would be revised accordingly. These changes are explained below. *Reformatting of Rule 57* Rule 57 is being reorganized such that
(i)Section 1 of the rule now consolidates all of the general provisions that will generally apply to all IPS services and
(ii)each subsequent section (Sections 2 through 10) applies to a separate service offering within IPS. This differs from the format of the current rule in which some of the services are referenced in a list contained in Section 1 of the rule and certain other of the services are described in separate, individual sections of the rule. *Section 1* Section 1 will contain all of the general provisions that apply to all services within IPS. Most of these general provisions are contained in Sections 1 and 2 of the current Rule 57 and with some exceptions are repeated in subsequent sections of the current rule with respect to specific services. The statement currently contained in Addendum D of NSCC's Rules, which states that that NSCC does not guarantee money settlement of IPS transactions, is being restated in Subsection
(l)of Section 1 of the rule. Repositioning the statement in the rule which governs the insurance services will help clarify to applicants and members that IPS is not a “guaranteed service.” The last two sentences of current Subsection
(d)of Section 2 of Rule 57, which state that NSCC would adjust IPS data on the instruction of a participant, are being deleted. Because NSCC acts as a pass-through of IPS data, it would not generally be expected to make adjustments on such data. Provisions contained in Sections 1 and 2, which are specific to a particular service offering within IPS, of the current Rule 57 are being deleted and moved to subsequent sections that are dedicated to that particular service offering. For example, the material regarding application information is being moved to Section 3, “Applications and Premiums.” *Section 2, “Commissions and Compensation”* Section 2 will set forth the provisions specific to the commission service offered in IPS, which provisions are currently in Section 3. The service, currently named “Commissions and Charge Backs,” is being renamed “Commissions and Compensation” to reflect that the service currently accommodates other types of compensation payable between insurance carriers and distributors such as bonus amounts. General provisions that are not specific to the Commissions and Charge Backs service and that apply generally to all IPS services are being deleted from this section and placed in Section 1 as discussed above. Sections 3(d) and
(e)of the current rule, which state that NSCC may offer members the ability to cancel commission transactions, are being deleted. At the time the commission service was originally proposed, NSCC anticipated that it would develop such an enhancement. 5 The enhancement has not been developed and there are no plans to develop it at this time. 5 Securities Exchange Act Release No. 39096 (September 19, 1997), 62 FR 50416 (September 25, 1997) [File No. SR-NSCC-96-21]. The provisions in the current rule regarding the date on which commission transactions may settle are being rewritten to use terminology consistent with analogous provisions elsewhere in the rules. *Section 3, “Applications and Premiums”* Section 3 will set forth the provisions that are specific to the applications and premiums services in IPS, which provisions are currently in Sections 2 and 4. The provisions of the current Sections 2 and 4 that are of general applicability to all IPS services are deleted from these sections and placed in Section 1 as discussed above. Section 2
(e)of the current rule, which states that NSCC will reject application data if it has four or more errors, is being deleted. The precise data requirements of the various services change from time to time as new fields are added or deleted or made mandatory or optional, and the data requirements therefore are more typically contained in the NSCC user guides and other documentation rather than being set forth in the text of the NSCC Rules. *Section 4, “Licensing and Appointments”* Section 4 will set forth the provisions specific to the licensing and appointments services within IPS. In the current rule, the reference to the licensing and appointments service is contained in Sections 1 and 4 in the list of types of data that may be transmitted through IPS. *Section 5, “Positions and Valuations”* Section 5 will set forth the provisions specific to the positions and valuations services within IPS. Section 5 of the current rule, which regards a product repository service which may be offered by NSCC, is being deleted. NSCC determined not to offer this service after the proposed rule change for the service had been filed and approved. 6 NSCC has no plans to offer such a service at this time and would file a proposed rule change should it determine to do so after this provision is deleted from the rules. 6 Securities Exchange Act Release No. 47644 (April 7, 2003), 68 FR 17850 (April 11, 2003) [File No. SR-NSCC-2003-04]. *Section 6, “ACATS/Transfers”* Section 6 will set forth the provisions specific to the ACATS transfer service within IPS and is reworded slightly differently from the current Section 6 in order to use terminology that is consistent with analogous terminology elsewhere in NSCC's rules. *Section 7, “Asset Pricing”* Section 6 sets forth the provisions specific to the asset pricing service within IPS. *Section 8, “Financial Activity Reporting”* Section 7 will set forth the provisions specific to the financial activity reporting service within IPS, which service is referenced in Section 1 of the current rule in the list of types of data that may be transmitted through IPS. *Section 9,“In Force Transactions”* Section 9 will set forth the provisions specific to the In Force Transactions services within IPS. *Section 10, “InsurExpress”* Section 10 will set forth the provisions specific to the InsurExpress service within IPS. This service was the subject of a proposed rule change regarding the insurance service that was proposed to be offered under the name “Portal.” 7 7 Securities Exchange Act Release No. 48896 (December 9, 2003), 68 FR 70553 (December 18, 2003) [File No. SR-NSCC-2003-18]. The proposed rule change is consistent with the requirements of Section 17A of the Act and the rules and regulations thereunder because in clarifying NSCC's Rules to more accurately and clearly set forth the nature of the insurance processing services already offered by NSCC, the proposed rule change effects a change in an existing service of NSCC that
(i)does not adversely affect the safeguarding of securities or funds in the custody or control of NSCC and
(ii)does not significantly affect the respective rights or obligations of NSCC or those members using the service. B. Self-Regulatory Organization's Statement on Burden on Competition NSCC does not believe that the proposed rule change will have any impact or impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. NSCC will notify the Commission of any written comments received by NSCC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(iii) of the Act 8 and Rule 19b-4(f)(4) thereunder 9 because the proposed rule effects a change in an existing service of NSCC that
(i)Does not adversely affect the safeguarding of securities or funds in the custody or control of NSCC and
(ii)does not significantly affect the respective rights or obligations of NSCC or those members using the service. At any time within sixty days of the filing of such rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 8 15 U.S.C. 78s(b)(3)(A)(iii). 9 17 CFR 240.19b-4(f)(4). 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-NSCC-2006-14 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NSCC-2006-14. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of NSCC and on NSCC's Web site at *http://www.nscc.com.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NSCC-2006-14 and should be submitted on or before January 10, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21717 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54935; File No. SR-OCC-2006-10] Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Accelerated Approval of a Proposed Rule Change Relating to Cash-Settled Foreign Currency Options December 13, 2006. I. Introduction On June 8, 2006, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) proposed rule change SR-OCC-2006-10 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). 1 On October 26, 2006, OCC amended the proposed rule change. Notice of the proposal was published in the **Federal Register** on November 17, 2006. 2 No comment letters were received. For the reasons discussed below, the Commission is granting approval of the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 54721, (November 8, 2006), 71 FR 67004. II. Description The proposed rule change will enable OCC to accommodate a request from the Philadelphia Stock Exchange, Inc. (“Phlx”) that OCC clear and settle cash-settled foreign currency options (“Cash-Settled FCOs”). While OCC's By-Laws and Rules currently provide for the clearance and settlement of Cash-Settled FCOs, changes to OCC's By-Laws are needed in connection with the Cash-Settled FCOs that are to be traded by Phlx. 3 3 For a description of the Phlx proposed rule change, see Securities Exchange Act Release No. 54652 (October 26, 2006) 71 FR 64597 (November 2, 2006) [File No. SR-Phlx-2006-34]. Currently, there are no cash-settled FCOs traded at any options exhange. The first change is to reflect the different expiration date of the Cash-Settled FCOs as compared with the expiration date provided for in OCC's By-Laws. The definition of “expiration date” in Article XXII, Section 1 of OCC's By-Laws provides that Cash-Settled FCOs generally expire on the Monday specified by the relevant exchange at or before trading begins. To accommodate the Cash-Settled FCOs proposed to be traded by Phlx, the definition will be amended to provide for an expiration date on the Saturday following the third Friday of the expiration month, which is the same as the expiration date for equity and index options. OCC is also providing for expirations on such other dates as an exchange may determine, which is consistent with the definition of “expiration date” applicable to index options. OCC is also amending Article VI, Section 22 of its By-Laws to make clear that Cash-Settled FCOs will not clear through OCC's International Clearing System. 4 4 Interpretation .02 of Article VI, Section 22 of OCC's By-Laws currently provides, “All classes of foreign currency options and cross-rate foreign currency options are cleared through ICS.” OCC amended the proposed rule change on October 26, 2006, to amend Article XXII, Section 4 of OCC's By-Laws to conform the provisions relating to unavailability or inaccuracy of the spot price for Cash-Settled FCOs to the comparable provisions of Article XVII of OCC's By-Laws relating to the unavailability or inaccuracy of the current index value or other value or price used to determine the exercise settlement amount for index options. The primary conforming changes are the addition of procedures under which the exercise settlement amount will be established by an adjustment panel in the event of the unavailability or inaccuracy of the spot price and a modification of normal expiration date exercise procedures in situations in which the adjustment panel delays the fixing of the exercise settlement amount beyond the last trading day for the affected series. The amendment also modified Rule 2302 of OCC's Rules in connection with a change in the expiration date exercise procedures for Cash-Settled FCOs. As originally filed, the rules for Cash-Settled FCOs provided for true automatic exercise without the opportunity for clearing members to give non-exercise instructions. Phlx subsequently informed OCC that Cash-Settled FCOs should be subject to the same “exercise-by-exception” procedures that apply to many other OCC-issued options. Under the “exercise-by-exception” procedures, a Cash-Settled FCO will be deemed to be exercised at expiration if the exercise settlement value is at least $1.00 per contract unless the clearing member instructs OCC not to exercise it. OCC is also adding an interpretation to Rule 2302 to note that the normal expiration date exercise procedures do not apply in circumstances in which the fixing of the exercise settlement amount is delayed beyond the last trading day before expiration of cash-settled foreign currency options. III. Discussion Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions. 5 The purpose of the proposed rule change is to amend OCC's By-Laws and Rules so that OCC may clear and settle the new Cash-Settled FCO product proposed to be listed and traded on Phlx. Accordingly, the proposed rule change should promote the prompt and accurate clearance and settlement of securities transactions. 5 15 U.S.C. 78q-1(b)(3)(F). OCC has requested that the Commission approve the proposed rule prior to the thirtieth day after publication of the notice of the amended filing. The Commission finds good cause for approving the proposed rule change prior to the thirtieth day after the publication of notice because such approval will allow OCC to give its members sufficient notice of its clearance and settlement of Cash-Settled FCOs before trading begins. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder. 6 6 In approving the proposed rule change, the Commission considered the proposal's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR-OCC-2006-10) be and hereby is approved. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E6-21684 Filed 12-19-06; 8:45 am] BILLING CODE 8011-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10757 and #10758] Washington Disaster # WA-00007 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of Washington (FEMA-1671-DR), dated 12/12/2006. *Incident:* Severe Storms, Flooding, Landslides, and Mudslides. *Incident Period:* 11/02/2006 through 11/11/2006. DATES: *Effective Date:* 12/12/2006. *Physical Loan Application Deadline Date:* 2/12/2007. *Economic Injury
(Eidl)Loan Application Deadline Date:* 9/12/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 12/12/2006, applications for disaster loans may be filed at the address listed above or other locally announced locations. *The following areas have been determined to be adversely affected by the disaster:* *Primary Counties (Physical Damage and Economic Injury Loans):* Clark, Cowlitz, Grays Harbor, King, Lewis, Pierce, Skagit, Skamania, Snohomish, Thurston, and Wahkiakum. *Contiguous Counties (Economic Injury Loans Only):* Washington: Chelan, Island, Jefferson, Kitsap, Kittitas, Klickitat, Mason, Okanogan, Pacific, Whatcom, and Yakima. Oregon: Clatsop, Columbia, Hood River, and Multnomah. The Interest Rates are: Percent *For Physical Damage:* Homeowners With Credit Available Elsewhere 6.000 Homeowners Without Credit Available Elsewhere 3.000 Businesses With Credit Available Elsewhere 8.000 Other (Including Non-Profit Organizations) With Credit Available Elsewhere 5.250 Businesses and Non-Profit Organizations Without Credit Available Elsewhere 4.000 *For Economic Injury:* Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 107576 and for economic injury is 107580. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Roger B. Garland, Acting Associate Administrator for Disaster Assistance. [FR Doc. E6-21679 Filed 12-19-06; 8:45 am] BILLING CODE 8025-01-P DEPARTMENT OF STATE [Public Notice 5647] 60-Day Notice of Proposed Information Collection: DS-4048, Projected Sales of Major Weapons in Support of Section 25(a)(1) of the Arms Export Control Act; OMB Control Number 1405-0156 ACTION: Notice of request for public comment. SUMMARY: The Department of State is seeking Office of Management and Budget
(OMB)approval for information collection described below. The purpose of this notice is to allow 60 days for public comments in the **Federal Register** preceding submission to OMB of the Form DS-4048 as the means of collecting the information. We are conducting this process in accordance with the Paperwork Reduction Act of 1995. • *Title of Information Collection:* Projected Sales of Major Weapons in Support of Section 25(a)(1) of the Arms Export Control Act. • *OMB Control Number:* 1405-0156. • *Type of Request:* Extension of Currently Approved Collection. • *Originating Office:* Bureau of Political-Military Affairs, Directorate of Defense Trade Controls, PM/DDTC. • *Form Number:* DS-4048. • *Respondents:* Business organizations. • *Estimated Number of Respondents:* 20 (total). • *Estimated Number of Responses:* 20 (per year). • *Average Hours Per Response:* 60 hours. • *Total Estimated Burden:* 1,200 hours (per year). • *Frequency:* Once a Year. • *Obligation to Respond:* Voluntary. DATES: The Department will accept comments from the public up to 60 days from December 20, 2006. ADDRESSES: Comments and questions should be directed to Patricia C. Slygh, the Acting Director of the Office of Defense Trade Controls Management, Department of State, who may be reached via the following methods: • *E-mail: slyghpc@state.gov.* • *Mail:* Patricia C. Slygh, SA-1, 12th Floor, Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, U.S. Department of State, Washington, DC 20522-0112. • *Fax:* 202-261-8199. You must include the DS form number, information collection title, and OMB control number in the subject lines of your message/letter. FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the information collection and supporting documents, to Patricia C. Slygh, PM/DDTC, SA-1, 12th Floor, Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, U.S. Department of State, Washington, DC 20522-0112, who may be reached via e-mail at *slyghpc@state.gov.* SUPPLEMENTARY INFORMATION: We are soliciting public comments to permit the Department to: • Evaluate whether the proposed collection of information is necessary for the proper performance of our functions. • Evaluate the accuracy of our 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 the use of automated collection techniques or other forms of technology. *Abstract of proposed collection:* Section 25 of the Arms Export Control Act requires an annual report to Congress on projected sales of major weapons (if $7M or more) and non-major weapons (if $25M or more). In order to prepare this report, the Directorate of Defense Trade Controls
(DDTC)requests information from selected defense companies, registered with DDTC, on relevant projected sales, including information on the foreign country to which the item is to be sold, a description of the item, the item's quantity, and its value. *Methodology:* These forms/information collections may be sent to the Directorate of Defense Trade Controls via the following methods: mail, personal delivery, fax, and/or electronically. Dated: December 8, 2006. Gregory M. Suchan, Deputy Assistant Secretary for Defense Trade Controls, Bureau of Political-Military Affairs, Department of State. [FR Doc. E6-21730 Filed 12-19-06; 8:45 am] BILLING CODE 4710-27-P DEPARTMENT OF STATE [Public Notice 5648] Culturally Significant Objects Imported for Exhibition; Determinations: “Comic Abstraction: Image-Breaking, Image-Making” SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition “Comic Abstraction: Image-Breaking, Image-Making”, imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at The Museum of Modern Art, New York, New York, beginning on or about March 4, 2007 until on or about June 11, 2007, and at possible additional venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Wolodymyr Sulzynsky, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone:
(202)453-8050). The address is U.S. Department of State, SA-44, 301 4th Street, SW. Room 700, Washington, DC 20547-0001. Dated: December 12, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E6-21729 Filed 12-19-06; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [PUBLIC NOTICE 5649] Culturally Significant Objects Imported for Exhibition; Determinations: “Pissarro: Creating the Impressionist Landscape” *Summary:* Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition “Pissarro: Creating the Impressionist Landscape”, imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Baltimore Museum of Art, Baltimore, Maryland, beginning on or about February 11, 2007 until on or about May 13, 2007, the Milwaukee Museum of Art, Milwaukee, Wisconsin, beginning on or about June 10, 2007 until on or about September 9, 2007, and the Memphis Brooks Museum of Art, Memphis, Tennessee, beginning on or about October 7, 2007 until on or about January 6, 2008, and at possible additional venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . *For Further Information Contact:* For further information, including a list of the exhibit objects, contact Wolodymyr Sulzynsky, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone:
(202)453-8050). The address is U.S. Department of State, SA-44, 301 4th Street, SW. Room 700, Washington, DC 20547-0001. Dated: December 12, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E6-21728 Filed 12-19-06; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Noise-Exposure Map Notice: Receipt of Noise-Compatibility Program and Request for Review for Portland International Airport, Portland, OR AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice. SUMMARY: The Federal Aviation Administration
(FAA)announces its determination that the noise-exposure maps
(NEM)submitted by the Director of Aviation for Portland International Airport under the provisions of 49 U.S.C. 47501 *et seq.* (Aviation Safety and Noise Abatement Act) and 14 CFR part 150 are in compliance with applicable requirements. The FAA also announces that it is reviewing a proposed noise-compatibility program that was submitted for Portland International Airport under Part 150, in conjunction with the noise-exposure map, and that this program will be approved or disapproved on or before June 15, 2007. DATES: *Effective Date:* The effective date of the FAA's determination on the noise-exposure maps and of the start of its review of the associated noise-compatibility program is December 13, 2006. The public comment period ends February 15, 2006. FOR FURTHER INFORMATION CONTACT: Cayla Morgan, Federal Aviation Administration, Seattle Airports Division, 1601 Lind Ave. SW., Renton, WA, 98057-3356, telephone 425-227-2653. Comments on the proposed noise-compatibility program should also be submitted to the above office. SUPPLEMENTARY INFORMATION: This notice announces that the FAA finds that the noise-exposure maps submitted for Portland International Airport are in compliance with applicable requirements of Part 150, effective December 13, 2006. Further, the FAA is reviewing a proposed noise-compatibility program for that airport which will be approved or disapproved on or before June 15, 2007. This notice also announces the availability of this program for public review and comment. Under 49 U.S.C., 47503 (the Aviation Safety and Noise Abatement Act, hereinafter referred to as “the Act”), an airport operator may submit to the FAA noise-exposure maps which meet applicable regulations and which depict non-compatible land uses as of the date of submission of such maps, a description of projected aircraft operations, and the ways in which such operations will affect such maps. The Act requires such maps to be developed in consultation with interested and affected parties in the local community, government agencies, and persons using the airport. An airport operator who has submitted noise-exposure maps that are found by the FAA to be in compliance with the requirements of Federal Aviation Regulations (FAR), Part 150, promulgated pursuant to the Act, may submit to the FAA for approval a noise-compatibility program that sets forth the measures the operator has taken or proposes to take to reduce existing non-compatible uses and prevent the introduction of additional non-compatible uses. The Director of Aviation for the Portland International Airport submitted to the FAA on October 5, 2006, noise-exposure maps, descriptions and other documentation that were produced during the Portland International Airport FAR Part 150 Study dated October 2006. It was requested that the FAA review this material as the noise-exposure maps, as described in section 47503 of the Act, and that the noise mitigation measures, to be implemented jointly by the airport and surrounding communities, be approved as a noise-compatibility program under section 47504 of the Act. The FAA has completed its review of the noise-exposure maps and related descriptions submitted by the director of the Portland International Airport. The specific documentation determined to constitute the noise-exposure maps includes the following from the *Portland International Airport Part 150 Noise-Compatibility Study Update:* • Section B. Forecasts of Aviation Activity; • Pages D28 through D49, and D68 through D72 describe the input data used to develop the existing and future contours; • Section E—Land Use Analysis; • Table D7 at Page D32, Detailed Breakdown of Aircraft Operations; • Table D14 at Page D69, Operations by Aircraft Category for 2008 Forecast; • Table D15 at Page D71, Aircraft Fleet Mix Assumptions for Future
(2008)Conditions; • Page H1—Noise-exposure Map Supplemental Information; • Figure H1 at page H14, Future
(2011)Existing Noise-exposure Map; • Figure H2 at page H15 Existing
(2005)Noise-exposure Map; • Section I—Public and Airport User Consultation Summary; • Appendix A—Public Hearing Comments and Responses • Appendix B—Comments Outside the Public Hearing Comment Period; The FAA has determined that these maps for Portland International Airport are in compliance with applicable requirements. This determination is effective on December 13, 2006. The FAA's determination on an airport operator's noise-exposure maps is limited to a finding that the maps were developed in accordance with the procedures contained in appendix A of FAR Part 150. Such determination does not constitute approval of the applicant's data, information or plans, or a commitment to approve a noise-compatibility program or to fund the implementation of that program. If questions arise concerning the precise relationship of specific properties to noise-exposure contours depicted on a noise-exposure map submitted under section 47503 of the Act, it should be noted that the FAA is not involved in any way in determining the relative locations of specific properties with regard to the depicted noise contours, or in interpreting the noise-exposure maps to resolve questions concerning, for example, which properties should be covered by the provisions of section 47506 of the Act. These functions are inseparable from the ultimate land use control and planning responsibilities of local government. These local responsibilities are not changed in any way under Part 150 or through the FAA's review of noise-exposure maps. Therefore, the responsibility for the detailed overlaying of noise-exposure contours onto the map depicting properties on the surface rests exclusively with the airport operator that submitted those maps, or with those public agencies and planning agencies with which consultation is required under section 47503 of the Act. The FAA has relied on the certification by the airport operator, under section 150.21 of FAR Part 150, that the statutorily required consultation has been accomplished. The FAA has formally received the noise-compatibility program for Portland International Airport, also effective on December 13, 2006. Preliminary review of the submitted material indicates that it conforms to the requirements for the submittal of noise-compatibility programs, but that further review will be necessary prior to approval or disapproval of the program. The formal review period, limited by law to a maximum of 180 days, will be completed on or before June 15, 2007. The FAA's detailed evaluation will be conducted under the provisions of 14 CFR Part 150, section 150.33. The primary considerations in the evaluation process are whether the proposed measures may reduce the level of aviation safety, create an undue burden on interstate or foreign commerce, or be reasonably consistent with obtaining the goal of reducing existing non-compatible land uses and preventing the introduction of additional non-compatible land uses. Interested persons are invited to comment on the proposed program with specific reference to these factors. The FAA will consider, to the extent practicable, all comments, other than those properly addressed to local land-use authorities. Copies of the noise-exposure maps, the FAA's evaluation of the maps, and the proposed noise-compatibility program are available for examination at the following locations: Federal Aviation Administration, Airports Division, 1601 Lind Avenue, SW., Suite 315, Renton, WA 98057-3356. Federal Aviation Administration, Seattle airports District Office, 1601 Lind Avenue, SW., Suite 250, Seattle, WA 98057-3356. Portland International Airport, 7000 NE Airport Way, Portland, OR 97208. Issued in Renton, Washington, on December 13, 2006. J. Wade Bryant, Acting Manager, Airports Division, Northwest Mountain Region. [FR Doc. 06-9784 Filed 12-19-06; 8:45 am]
Connectionstraces to 34
Traces to 34 documents
U.S. Code
CFR
24 references not yet in our index
  • 33 CFR 183
  • 46 CFR 16.230
  • 46 CFR 16.230(f)(2)
  • 46 CFR 16.230(e)
  • 50 CFR 17.32
  • 40 CFR 1506.6
  • 36 CFR 60
  • 19 CFR 201
  • 19 CFR 207
  • 444 F.3d 1369
  • 450 F.3d 1336
  • Pub. L. 104-13
  • 29 CFR 1910
  • 29 CFR 1904
  • Pub. L. 108-419
  • 118 Stat. 2341
  • 37 CFR 262.6(c)
  • Pub. L. 92-463
  • 17 CFR 240.19
  • 15 USC 78(f)(b)(4)
  • 5 USC 78s(b)(1)
  • 15 USC 78
  • 79 Stat. 985
  • 14 CFR 150
Citation graph
cites case law
Notices
Notice of Publication of Privacy Impact Assessments
U.S.C.§ 300hh–11
U.S.C.§ 3506
C.F.R.§ 173.55
C.F.R.§ 1.05-20
C.F.R.§ 173.57
U.S.C.§ 6102
Fed. Reg.Notices
Fed. Reg.Notices
C.F.R.§ 1926.60
F. App'x444 F.3d 1369
F. App'x450 F.3d 1336
Cite33 CFR 183
Cites 58 · showing 12Cited by 0 across 0 sources
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