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Code · REGISTER · 2007-08-24 · NUCLEAR REGULATORY COMMISSION · Notices

Notices. Notice

33,500 words·~152 min read·/register/2007/08/24/07-4153

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BILLING CODE 7555-01-M NUCLEAR REGULATORY COMMISSION [Docket No. 50-0219-LR, ASLBP No. 06-844-01-LR] Atomic Safety and Licensing Board; In the Matter of: Amergen Energy Company, LLC (License Renewal for Oyster Creek Nuclear Generating Station) August 20, 2007. Before Administrative Judges: E. Roy Hawkens, Chairman; Dr. Paul B. Abramson; Dr. Anthony J. Baratta Notice of Hearing (Application for 20-year License Renewal) This proceeding concerns the July 22, 2005 application by AmerGen Energy Company, LLC (“AmerGen”) to renew its operating license for the Oyster Creek Nuclear Generating Station (“Oyster Creek”) for twenty years beyond the current expiration date of April 9, 2009.
In response to the September 15, 2005 Notice of Opportunity for Hearing (70 Fed. Reg. 54,585 (Sept. 15, 2005)), two Requests for Hearing and Petitions to Intervene were filed on November 14, 2005. One Petition was filed by the New Jersey Department of Environmental Protection [hereinafter referred to as New Jersey], and the other Petition was filed by the Nuclear Information and Resource Service, Jersey Shore Nuclear Watch, Inc., Grandmothers, Mothers and More for Energy Safety, New Jersey Public Interest Research Group, New Jersey Sierra Club, and New Jersey Environmental Federation [hereinafter referred to collectively as Citizens].
On December 9, 2005, this Atomic Safety and Licensing Board was established to preside over the proceeding. On February 27, 2006, this Board issued a Memorandum and Order in which we (LBP-06-07, 63 NRC 188 (2006)):
(1)Denied New Jersey's Request for Hearing and Petition to Intervene; 1 and
(2)granted Citizens' Request for Hearing and Petition to Intervene. We concluded that Citizens' contention was admissible to the extent it challenged AmerGen's aging management program for measuring corrosion in the sand bed region of the drywell liner ( *id.* at 217). 1 Although New Jersey established standing, the Board concluded that it failed to proffer an admissible contention. The Nuclear Regulatory Commission sustained the Board's ruling. CLI-07-08, 65 NRC 124 (2007); CLI-06-24, 64 NRC 111 (2006). Subsequently, on June 6, 2006, this Board issued a Memorandum and Order in which we concluded that Citizens' contention, as admitted by the Board, was a contention of omission that had been cured as a result of newly docketed commitments by AmerGen to perform periodic ultrasonic testing (“UT”) measurements in the sand bed region of the drywell liner throughout the period of extended operation (LBP-06-16, 63 NRC 737 (2006)). Instead of dismissing the proceeding, the Board gave Citizens the opportunity to file a new contention raising one or more specific substantive challenges to AmerGen's new periodic UT program for the sand bed region ( *id.* at 744). On June 23, Citizens submitted a Petition to file new contentions, and on October 10, this Board admitted one of the newly proffered contentions; specifically, Citizens' assertion that AmerGen's scheduled UT monitoring frequency in the sand bed region of the drywell shell during the renewal period is insufficient to maintain an adequate safety margin (LBP-06-22, 64 NRC 229, 240-44 (2006)). This Atomic Safety and Licensing Board hereby gives notice that, pursuant to 10 CFR Part 2, Subpart L, it will convene an evidentiary hearing to receive testimony and exhibits concerning whether the frequency of AmerGen's proposed UT monitoring program for the sand bed region of the drywell shell is sufficient to maintain adequate safety margins during the period of extended operation. A. Date, Time, and Location of Evidentiary Hearing The evidentiary hearing in this proceeding, which will be open to the public, 2 will begin on Monday, September 24, 2007 at 9 a.m., and will continue day-to-day, ending no later than Wednesday, September 26 at 12 p.m., at the location specified below: Ocean County Administration Building, Room 119, 101 Hooper Avenue, Toms River, NJ 08754. 2 Members of the public who plan to attend the evidentiary hearing are advised that security measures may be employed at the entrance to the facility, including searches of hand-carried items such as briefcases, backpacks, packages, etc. In addition, signs, banners, posters and displays will be prohibited because they are disruptive to the conduct of the adjudicatory process. *See* Procedures for Providing Security Support for NRC Public Meetings/Hearings, 66 Fed. Reg. 31,719 (June 12, 2001). In the event that a party deems it necessary to discuss protected information at the hearing, that portion of the hearing will be closed to the public. *See* 10 CFR 2.390(a)(4). B. Submitting Written Limited Appearance Statements Any person not a party to the proceeding, including persons who are affiliated with or represented by a party, may submit to the Board at any time a written limited appearance statement setting forth his or her position on matters of concern relating to this proceeding. *See* 10 CFR 2.315(a). Although these statements do not constitute testimony or evidence in the proceeding, they nonetheless may assist the Board and/or the parties in their consideration of the issues. Such statements should be submitted to: *Mail:* Office of the Secretary, Rulemakings and Adjudications Staff, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, *Fax:*
(301)415-1101 (verification
(301)415-1966). *E-mail: hearingdocket@nrc.gov.* In addition, using the same method of service, a copy of the written statement must be sent to the Chairman of this Licensing Board as follows: *Mail:* Administrative Judge E. Roy Hawkens, c/o: Debra Wolf, Esq., Law Clerk, Atomic Safety and Licensing Board Panel, Mail Stop T-3 F23, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. *Fax:*
(301)415-5599 (verification
(301)415-6094). *E-mail: daw1@nrc.gov.* C. Availability of Documentary Information Regarding the Proceeding Documents relating to this proceeding are available for public inspection at the Commission's Public Document Room (PDR), located at One White Flint North, 11555 Rockville Pike (first floor), Rockville, Maryland, or electronically from the publicly available records component of NRC's document system (ADAMS). ADAMS is accessible from the NRC Web site at *http://www.nrc.gov/reading-rm/adams.html* (Electronic Reading Room). 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
(800)397-4209 or
(301)415-4737, or by e-mail to *pdr@nrc.gov.* D. Scheduling Information Updates To the extent updated/revised scheduling information exists regarding the evidentiary hearing, it can be found on the NRC Web site at *http://www.nrc.gov/public-involve/public-meetings/index.cfm* or by calling
(800)368-5642, extension 5036, or
(301)415-5036. It is so *ordered.* Dated in Rockville, Maryland, on August 20, 2007. For the Atomic Safety and Licensing Board. 3 3 Copies of this Notice of Hearing were sent this date by Internet e-mail to counsel for:
(1)AmerGen;
(2)Citizens;
(3)the NRC Staff; and
(4)New Jersey. E. Roy Hawkens, Chairman, Administrative Judge. [FR Doc. E7-16853 Filed 8-23-07; 8:45 am] BILLING CODE 7590-01-P OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE Fiscal Year 2008 Tariff-Rate Quota Allocations for Raw Cane Sugar, Refined and Specialty Sugar, and Sugar-Containing Products AGENCY: Office of the United States Trade Representative. ACTION: Notice. SUMMARY: The Office of the United States Trade Representative
(USTR)is providing notice of country-by-country allocations of the FY 2008 in-quota quantity of the tariff-rate quota for imported raw cane sugar, refined and specialty sugar, and sugar-containing products. EFFECTIVE DATE: August 24, 2007. ADDRESSES: Inquiries may be mailed or delivered to Leslie O'Connor, Director of Agricultural Affairs, Office of Agricultural Affairs, Office of the United States Trade Representative, 600 17th Street, NW., Washington, DC 20508. FOR FURTHER INFORMATION CONTACT: Leslie O'Connor, Office of Agricultural Affairs, telephone: 202-395-6127 or facsimile: 202-395-4579. SUPPLEMENTARY INFORMATION: Pursuant to Additional U.S. Note 5 to chapter 17 of the Harmonized Tariff Schedule of the United States (HTS), the United States maintains a tariff-rate quota for imports of raw cane sugar and refined sugar. Pursuant to Additional U.S. Note 8 to chapter 17 of the HTS, the United States maintains a tariff-rate quota for imports of sugar-containing products. Section 404(d)(3) of the Uruguay Round Agreements Act (19 U.S.C. 3601(d)(3)) authorizes the President to allocate the in-quota quantity of a tariff-rate quota for any agricultural product among supplying countries or customs areas. The President delegated this authority to the United States Trade Representative under Presidential Proclamation 6763 (60 FR 1007). On August 10, 2007, the Secretary of Agriculture announced the sugar program provisions for fiscal year
(FY)2008 (Oct. 1, 2007, through Sept. 30, 2008). The Secretary of Agriculture announced an in-quota quantity of the tariff-rate quota for raw cane sugar for FY 2008 of 1,117,195 metric tons* raw value, which is the minimum amount to which the United States is committed under the World Trade Organization
(WTO)Uruguay Round Agreements. (USDA did not announce the establishment of any shipping patterns for the FY 2008 raw sugar tariff-rate quota.) USTR is allocating this quantity (1,117,195 metric tons* raw value) to the following countries: Country FY 2008 Raw cane sugar allocations (metric tons raw value) Argentina 45,281 Australia 87,402 Barbados 7,371 Belize 11,583 Bolivia 8,424 Brazil 152,691 Colombia 25,273 Congo 7,258 Costa Rica 15,796 Cote d'Ivoire 7,258 Dominican Republic 185,335 Ecuador 11,583 El Salvador 27,379 Fiji 9,477 Gabon 7,258 Guatemala 50,546 Guyana 12,636 Haiti 7,258 Honduras 10,530 India 8,424 Jamaica 11,583 Madagascar 7,258 Malawi 10,530 Mauritius 12,636 Mexico 7,258 Mozambique 13,690 Nicaragua 22,538 Panama 30,538 Papua New Guinea 7,258 Paraguay 7,258 Peru 43,175 Philippines 142,160 South Africa 24,220 St Kitts & Nevis 7,258 Swaziland 16,849 Taiwan 12,636 Thailand 14,743 Trinidad & Tobago 7,371 Uruguay 7,258 Zimbabwe 12,636 These allocations are based on the countries' historical shipments to the United States. The allocations of the raw cane sugar tariff-rate quota to countries that are net importers of sugar are conditioned on receipt of the appropriate verifications of origin, and certificates for quota eligibility must accompany imports from any country for which an allocation has been provided. On August 10, 2007, the Secretary of Agriculture established the FY 2008 refined sugar tariff-rate quota at 85,503 metric tons raw value for which the sucrose content, by weight in the dry state, must have a polarimeter reading of 99.5 degrees or more. This amount includes the minimum level to which the United States is committed under the WTO Uruguay Round Agreement (22,000 metric tons raw value of which 1,656 metric tons raw value is specialty sugar) and an additional 63,503 metric tons raw value for specialty sugars. USTR is allocating a total of 10,300 metric tons raw value of refined sugar to Canada, 2,954 metric tons raw value of refined sugar to Mexico, and 7,090 metric tons raw value of refined sugar to be administered on a first-come, first-served basis. The 64,159 metric tons raw value specialty sugar TRQ, which includes the additional 63,503 metric tons raw value of specialty sugar and the specialty sugar allocation of 1,656 metric tons raw value included in the 22,000 metric tons raw value WTO minimum, will be administered on a first-come, first-served basis in five tranches. The first tranche of 1,656 metric tons raw value will open October 24, 2007. All types of specialty sugars are eligible for entry under this tranche. The second tranche of 22,544 metric tons raw value will open on November 15, 2007. The third, fourth, and fifth tranches of 13,653 metric tons raw value each will open on January 30, 2008; May 14, 2008 and August 27, 2008 respectively. The second, third, fourth and fifth tranches will be reserved for organic sugar and other specialty sugars not currently produced commercially in the United States or reasonably available from domestic sources. With respect to the tariff-rate quota of 64,709 metric tons for certain sugar-containing products maintained under Additional U.S. Note to Chapter 17 to the Harmonized Tariff Schedule of the United States, USTR is allocating 59,250 metric tons to Canada. The remainder of the sugar-containing products tariff-rate quota is available for other countries on a first-come, first-served basis. *Conversion factor: 1 metric ton = 1.10231125 short tons. Susan C. Schwab, United States Trade Representative. [FR Doc. E7-16736 Filed 8-23-07; 8:45 am] BILLING CODE 3190-W7-P RAILROAD RETIREMENT BOARD Proposed Collection; Comment Request SUMMARY: In accordance with the requirement of Section 3506 (c)(2)(A) of the Paperwork Reduction Act of 1995 which provides opportunity for public comment on new or revised data collections, the Railroad Retirement Board
(RRB)will publish periodic summaries of proposed data collections. *Comments are invited on:*
(a)Whether the proposed information collection is necessary for the proper performance of the functions of the agency, including whether the information has practical utility;
(b)the accuracy of the RRB's estimate of the burden of the collection of the information;
(c)ways to enhance the quality, utility, and clarity of the information to be collected; and
(d)ways to minimize the burden related to the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. *Title and Purpose of Information Collection:* Representative Payee Monitoring; OMB 3220-0151. Under Section 12 of the Railroad Retirement Act (RRA), the RRB may pay annuity benefits to a representative payee when an employee, spouse or survivor annuitant is incompetent or a minor. The RRB is responsible for determining if direct payment to an annuitant or a representative payee would best serve the annuitant's best interest. The accountability requirements authorizing the RRB to conduct periodic monitoring of representative payees, including a written accounting of benefit payments received, are prescribed in 20 CFR 266.7. The RRB utilizes the following forms to conduct its representative payee monitoring program. Form G-99a, *Representative Payee Report* , is used to obtain information needed to determine whether the benefit payments certified to the representative payee have been used for the annuitant's current maintenance and personal needs and whether the representative payee continues to be concerned with the annuitant's welfare. RRB Form G-99c, *Representative Payee Evaluation Report* , is used to obtain more detailed information from a representative payee who fails to complete and return Form G-99a, or in situations when the returned Form G-99a indicates the possible misuse of funds by the representative payee. Form G-99c contains specific questions concerning the representative payee's performance and is used by the RRB to determine whether or not the representative payee should continue in that capacity. Completion of the forms in this collection is required to retain benefits. The RRB proposes no changes to Form G-99a. Non-burden impacting editorial and formatting changes are proposed for Form G-99c. The completion time for Form G-99a is estimated at 18 minutes per response. The completion time for Form G-99c is estimated at between 24 to 31 minutes per response. The RRB estimates that approximately 6,000 Form G-99a's and 535 G-99c's are completed annually. Additional Information or Comments: To request more information or to obtain a copy of the information collection justification, forms, and/or supporting material, please call the RRB Clearance Officer at
(312)751-3363 or send an e-mail request to *Charles.Mierzwa@RRB.GOV* . Comments regarding the information collection should be addressed to Ronald J. Hodapp, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611-2092 or send an e-mail to *Ronald.Hodapp@RRB.GOV.* Written comments should be received within 60 days of this notice. Charles Mierzwa, Clearance Officer. [FR Doc. E7-16797 Filed 8-23-07; 8:45 am] BILLING CODE 7905-01-P RAILROAD RETIREMENT BOARD Agency Forms Submitted for OMB Review, Request for Comments *Summary:* In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Railroad Retirement Board
(RRB)is forwarding an Information Collection Request
(ICR)to the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget
(OMB)to request a revision to a currently approved collection of information: 3220-0057, Placement Service consisting of Form(s) ES-2, ES-21, ES-21c, UI-35, and Job Vacancies Reports. Our ICR describes the information we seek to collect from the public. Review and approval by OIRA ensures that we impose appropriate paperwork burdens. The RRB invites comments on the proposed collection of information to determine
(1)the practical utility of the collection;
(2)the accuracy of the estimated burden of the collection;
(3)ways to enhance the quality, utility and clarity of the information that is the subject of collection; 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 RRB or OIRA must contain the OMB control number of the ICR. For proper consideration of your comments, it is best if RRB and OIRA receive them within 30 days of publication date. Section 12(i) of the Railroad Unemployment Insurance Act (RUIA), authorizes the Railroad Retirement Board
(RRB)to establish, maintain, and operate free employment offices to provide claimants for unemployment benefits with job placement opportunities. Section 704(d) of the Regional Railroad Reorganization Act of 1973, as amended, and as extended by the consolidated Omnibus Budget Reconciliation Act of 1985, required the RRB to maintain and distribute a list of railroad job vacancies, by class and craft, based on information furnished by rail carriers to the RRB. Although the requirement under the law expired effective August 13, 1987, the RRB has continued to obtain this information in keeping with its employment service responsibilities under Section 12(k) of the RUIA. Application procedures for the job placement program are prescribed in 20 CFR 325. The procedures pertaining to the RRB's obtaining and distributing job vacancy reports furnished by rail carriers are described in 20 CFR 346.1. The RRB currently utilizes four forms to obtain information needed to carry out its job placement responsibilities. Form ES-2, Supplemental Information for Central Register, is used by the RRB to obtain information needed to update a computerized central register of separated and furloughed railroad employees available for employment in the railroad industry. Form ES-21, Referral to State Employment Service, and ES-21c, Report of State Employment Service Office, are used by the RRB to provide placement assistance for unemployed railroad employees through arrangements with State Employment Service offices. Form UI-35, Field Office Record of Claimant Interview, is used primarily by RRB field office staff to conduct in-person interviews of claimants for unemployment benefits. Completion of these forms is required to obtain or maintain a benefit. In addition, the RRB also collects Railroad Job Vacancies information received voluntarily from railroad employers. *Previous Requests for Comments:* The RRB has already published the initial 60-day notice (72 FR 18283-18284 on April 11, 2007) required by 44 U.S.C. 3506(c)(2). That request elicited no comments. Information Collection Request
(ICR)*Title:* Placement Service. *OMB Control Number:* 3220-0057. *Form(s) submitted:* ES-2, ES-21, ES-21c, UI-35, and Job Vacancies Reports. *Type of request:* Revision of a currently approved collection. *Affected public:* Individuals or households, Business or-other-for profit, State, Local and Tribal government. *Abstract:* Under the RUIA, the Railroad Retirement Board provides job placement assistance for unemployed railroad workers. The collection obtains information from job applicants, railroad employers and State Employment Service offices for use in placement, for providing referrals for job openings, reports of referral results and for verifying and monitoring claimant eligibility. *Changes Proposed:* The RRB proposes minor, non-burden impacting editorial changes to Form ES-2, and minor non-burden impacting editorial and reformatting changes to Form ES-21. No changes are being proposed to Form ES-21c, UI-35 or to the Railroad Job Vacancies Report. *The burden estimate for the ICR is as follows:* *Estimated Completion Time for Form ES-2:* .25 minutes. *Estimated Completion Time for Form ES-21:* .68 minutes. *Estimated Completion Time for Form ES-21c:* 1.5 minutes. *Estimated Completion Time for Form UI-35 (in person):* 7 minutes. *Estimated Completion Time for Form UI-35 (by mail):* 10.5 minutes. *Estimated Completion Time for Job Vacancies Report:* 10 minutes. *Estimated annual number of respondents:* 10,750. *Total annual responses:* 23,000. *Total annual reporting hours:* 1,452. *Additional Information or Comments:* Copies of the forms and supporting documents can be obtained from Charles Mierzwa, the agency clearance officer (312-751-3363) or *Charles.Mierzwa@rrb.gov.* Comments regarding the information collection should be sent to Ronald J. Hodapp, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611-2092 or *Ronald.Hodapp@RRB.GOV,* and to the Office of Management Budget at ATTN: Desk Officer for RRB, Fax:
(202)395-6974 or via E-mail to *OIRA_Submission@omb.eop.gov.* Charles Mierzwa, Clearance Officer. [FR Doc. E7-16803 Filed 8-23-07; 8:45 am] BILLING CODE 7905-01-P RAILROAD RETIREMENT BOARD Agency Forms Submitted for OMB Review, Request for Comments SUMMARY: In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Railroad Retirement Board
(RRB)is forwarding an Information Collection Request
(ICR)to the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget
(OMB)to request an extension to a currently approved collection of information: 3220-0079, Certification Regarding Rights to Unemployment Benefits consisting of Form UI-45, Claimant's Statement—Voluntary leaving of Work. Our ICR describes the information we seek to collect from the public. Review and approval by OIRA ensures that we impose appropriate paperwork burdens. The RRB invites comments on the proposed collection of information to determine
(1)the practical utility of the collection;
(2)the accuracy of the estimated burden of the collection;
(3)ways to enhance the quality, utility and clarity of the information that is the subject of collection; 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 RRB or OIRA must contain the OMB control number of the ICR. For proper consideration of your comments, it is best if RRB and OIRA receive them within 30 days of publication date. Under Section 4 of the Railroad Unemployment Insurance Act (RUIA), an employee who leaves work voluntarily is disqualified for unemployment benefits unless the employee left work for good cause and is not qualified for unemployment benefits under any other law. RRB Form UI-45, Claimant's Statement—Voluntary Leaving of Work, is used by the RRB to obtain the claimant's statement when it is indicated by the claimant, the claimant's employer, or another source that the claimant has voluntarily left work. Completion of Form UI-45 is required to obtain or retain benefits. One response is received from each respondent. The RRB proposes a very minor non-burden impacting editorial change to Form UI-45. *Previous Requests for Comments:* The RRB has already published the initial 60-day notice (72 FR 9363 on March 1, 2007) required by 44 U.S.C. 3506(c)(2). That request elicited no comments. Information Collection Request
(ICR)*Title:* Certification Regarding Rights to Unemployment Benefits. *OMB Control Number:* 3220-0079. *Form(s) submitted:* UI-45. *Type of request:* Extension of a currently approved collection. *Affected public:* Individuals or households, Business or-other-for profit. *Abstract:* In administering the disqualification for the voluntary leaving of work provision of Section 4 of the Railroad Unemployment Insurance Act, the Railroad Retirement Board investigates an unemployment claim that indicates that the claimant left voluntarily. The certification obtains information needed to determine if the leaving was for good cause. *Changes Proposed:* The RRB proposes a minor non-burden impacting editorial change to Form UI-45. *The burden estimate for the ICR is as follows:* *Estimated Completion Time for Form UI-45:* 5-15 minutes. *Estimated annual number of respondents:* 1,950. *Total annual responses:* 2,900. *Total annual reporting hours:* 487. *Additional Information or Comments:* Copies of the forms and supporting documents can be obtained from Charles Mierzwa, the agency clearance officer (312-751-3363) or *Charles.Mierzwa@rrb.gov.* Comments regarding the information collection should be sent to Ronald J. Hodapp, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611-2092 or *Ronald.Hodapp@RRB.GOV* , and to the Office of Management Budget at ATTN: Desk Officer for RRB, Fax :
(202)395- 6974 or via E-mail to *OIRA_Submission@omb.eop.gov.* Charles Mierzwa, Clearance Officer. [FR Doc. E7-16843 Filed 8-23-07; 8:45 am] BILLING CODE 7905-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. IC-27931; 812-13259] American International Group, Inc., et al.; Temporary Order and Notice of Application August 20, 2007. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Temporary order and notice of application for a permanent order under section 9(c) of the Investment Company Act of 1940 (“Act”). SUMMARY: Applicants have received a temporary order exempting them from section 9(a) of the Act, with respect to an injunction entered against American International Group, Inc. (“AIG”) on February 17, 2006 by the United States District Court for the Southern District of New York (“Injunction”), from August 20, 2007, until the Commission takes final action on an application for a permanent order. Applicants also have applied for a permanent order. *Applicants:* AIG, AIG Annuity Life Insurance Corporation (“AIG Annuity”), AIG Annuity Insurance Company (“AIG Annuity”), AIG Equity Sales Corp. (“AIG Equity”), AIG Global Investment Corp. (“AIGGIC”), AIG Life Insurance Company (“AIG Life”), AIG SunAmerica Asset Management Corp. (“SunAmerica Asset Management”), AIG SunAmerica Capital Services, Inc. (“SunAmerica Capital”), AIG SunAmerica Life Assurance Company (“ASLAC”), American General Distributors, Inc. (“AM Distributors”), American General Equity Services Corp. (”AM Equity”), American General Life Insurance Company (“AM Life”), American International Life Assurance Company of New York (“AILAC”), Brazos Capital Management, L.P. (“Brazos”), First SunAmerica Life Insurance Company (“First SunAmerica”), The United States Life Insurance Company in the City of New York (“US Life”), and The Variable Annuity Life Insurance Company (“VALIC”) (collectively, “Applicants”). 1 1 Applicants request that any relief granted pursuant to the application also apply to any other company of which AIG is or may become an affiliated person (included in the defined term “Applicants”). FILING DATES: The application was filed on February 10, 2006, and amended on August 16, 2007. *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 September 14, 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, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicants c/o Anastasia Kelly, American International Group, Inc., 70 Pine Street, New York, New York 10270. FOR FURTHER INFORMATION CONTACT: Julia Kim Gilmer, Branch Chief, at 202-551-6871 or Nadya B. Roytblat, Assistant Director, at 202-551-6821 (Division of Investment Management, Office of Investment Company Regulation). 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 Branch, 100 F. Street, NE., Washington, DC 20549 (tel.202-551-5850). Applicants' Representations 1. AIG, through its subsidiaries, offers property and casualty and life insurance products to commercial, institutional and individual customers worldwide. AIG's global businesses also include financial services and asset management. The other Applicants are wholly owned subsidiaries of AIG. AIGGIC, SunAmerica Asset Management, Brazos, and VALIC are investment advisers registered under the Investment Advisers Act of 1940 (“Advisers Act”) and serve as investment adviser or subadviser (“Adviser Applicants”) to certain registered investment companies (“Funds”). AIG Equity, SunAmerica Capital, AM Distributors, and AM Equity are broker-dealers registered under the Securities Exchange Act of 1934 (“Exchange Act”) and serve as a principal underwriter to open-end Funds and Funds that are unit investment trusts (“UITs”). AIG Annuity, AIG Life, ASLAC, AM Life, AILAC, First SunAmerica and U.S. Life serve as depositors to various Funds. 2. On February 17, 2006, the United States District Court for the Southern District of New York entered the Injunction against AIG in a matter brought by the Commission. 2 The Commission alleged in the complaint (“Complaint”) that AIG violated sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Exchange Act and rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 thereunder, and section 17(a) of the Securities Act of 1933, by making intentionally misleading statements in its financial statements (“Conduct”). Without admitting or denying any of the allegations in the Complaint, except as to jurisdiction, AIG consented to the entry of the Injunction and to pay penalties and disgorgement of $800 million. 3 2 *Securities and Exchange Commission* v. *American International Group, Inc.,* 06 Civ. 1000
(LAP)(S.D.N.Y., filed Feb. 17, 2006). 3 AIG also agreed to comply with certain undertakings relating to its internal controls over financial reporting; the organization and reporting structure of AIG's internal audit department and disclosure committee; the policies, procedures and effectiveness of AIG's regulatory, compliance and legal functions; AIG's records management and retention policies and procedures; and AIG's whistleblower procedures. Applicants' Legal Analysis 1. Section 9(a)(2) of the Act, in relevant part, prohibits a person who has been enjoined from engaging in or continuing any conduct or practice in connection with the purchase or sale of a security from acting, among other things, as an investment adviser or depositor of any registered investment company or a principal underwriter for any registered open-end investment company, registered unit investment trust, or registered face-amount certificate company. Section 9(a)(3) of the Act makes the prohibition in section 9(a)(2) applicable to a company, any affiliated person of which has been disqualified under the provisions of section 9(a)(2). Section 2(a)(3) of the Act defines “affiliated person” to include any person directly or indirectly controlling, controlled by, or under common control, with the other person. Applicants state that AIG is an affiliated person of each of the other Applicants within the meaning of section 2(a)(3). Applicants state that, as a result of the Injunction, they would be subject to the prohibitions of section 9(a). 2. Section 9(c) of the Act provides that the Commission shall grant an application for an exemption from the disqualification provisions of section 9(a) of the Act if it is established that these provisions, as applied to Applicants, are unduly or disproportionately severe or that the conduct of the Applicants has been such as not to make it against the public interest or the protection of investors to grant the exemption. Applicants have filed an application pursuant to section 9(c) seeking a temporary and permanent order exempting them from the disqualification provisions of section 9(a). 4 4 Applicants have received orders granting a temporary exemption from section 9(a) of the Act with respect to the Injunction until August 21, 2007. Investment Company Act Release Nos. 27227 (Feb. 21, 2006) (granting a temporary exemption until August 21, 2006); 27446 (Aug. 18, 2006) (extending the temporary exemption to February 16, 2007); 27700 (Feb. 16, 2007) (extending the temporary exemption to August 21, 2007). 3. Applicants believe that they meet the standards for exemption specified in section 9(c). Applicants state that the prohibitions of section 9(a) as applied to them would be unduly and disproportionately severe and that it would not be against the public interest or the protection of investors to grant the requested exemption from section 9(a). The Conduct did not involve any of the Applicants acting in the capacity of investment adviser, subadviser, depositor or principal underwriter for any Fund. Applicants state that with the exception of index Funds, none of the Funds advised by the Adviser Applicants holds any securities issued by AIG. 4. Applicants state that their inability to continue to provide advisory and underwriting services to the Funds and to serve as depositor to Funds would result in potentially severe hardships for the Funds and their shareholders. Applicants also state that they have distributed written materials, including an offer to meet in person to discuss the materials, to the boards of directors of the Funds (the “Boards”), including the directors who are not “interested persons,” as defined in section 2(a)(19) of the Act, of such Funds, and their independent legal counsel as defined in rule 0-1(a)(6) under the Act, if any, regarding the Injunction, any impact on the Funds, and the application. Applicants state that they have provided the Boards with all information concerning the Injunction and the application that is necessary for the Funds to fulfill their disclosure and other obligations under the federal securities laws. 5. Applicants also state that, if they were barred from providing services to the Funds, the effect on their businesses and employees would be severe. Applicants state that they have committed substantial resources to establish an expertise in advising, subadvising, and distributing the Funds, and acting as a depositor to Funds. Applicants further state that prohibiting them from providing advisory and distribution services to the Funds would adversely affect not only the viability of their businesses, but also the livelihoods of their employees. Applicants state that they have previously received one order under section 9(c) of the Act. 5 5 AIG Annuity Life Insurance Company, *et al.* , Investment Company Act Release Nos. 26690 (Dec. 8, 2004) (notice) and 26718 (Jan. 4, 2005) (order). Applicants' Condition Applicants agree that any order granting the requested relief will be subject to the following condition: Any temporary exemption granted pursuant to the application shall be without prejudice to, and shall not limit the Commission's rights in any manner with respect to, any Commission investigation of, or administrative proceedings involving or against, the Applicants, including without limitation, the consideration by the Commission of a permanent exemption from section 9(a) of the Act requested pursuant to the application, or the revocation or removal of any temporary exemptions granted under the Act in connection with the application. Temporary Order The Commission has considered the matter and finds that Applicants have made the necessary showing to justify granting a temporary exemption. Accordingly, *it is hereby ordered,* pursuant to section 9(c) of the Act, that Applicants are granted a temporary exemption from the provisions of section 9(a), solely with respect to the Injunction, subject to the condition in the application, from August 20, 2007, until the Commission takes final action on their application for a permanent order. By the Commission. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16763 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 27930] Investment Company Act of 1940; In the Matter of Healthshares, Inc., Xshares Advisors LLC (Formerly, X-Shares Advisors, LLC), XShares Group LLC (Formerly, Ferghana-Wellspring, LLC) and TDAX Funds, Inc.; 420 Lexington Avenue, Suite 2550, New York, NY 10170 (812-13358) August 20, 2007. Order Under Sections 6(C) and 17(B) of the Investment Company Act of 1940 HealthShares, Inc., XShares Advisors LLC (formerly, X-Shares Advisors, LLC), XShares Group LLC (formerly, Ferghana-Wellspring LLC) and TDAX Funds, Inc., filed an application on January 19, 2007 and amendments to the application on June 4, 2007, July 20, 2007 and August 3, 2007, requesting an order to amend a prior order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 24(d) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act (“Prior Order”). 1 1 HealthShares, Inc., *et al.* , Investment Company Act Release Nos. 27553 (November 16, 2006) (notice) and 27594 (December 7, 2006) (order). The Prior Order permits:
(a)Open-end management investment companies, whose series are based on certain equity securities indices created by an affiliate of the investment adviser, to issue shares redeemable only in large aggregations;
(b)secondary market transactions in the shares of the series to occur at negotiated prices;
(c)dealers to sell shares to purchasers in the secondary market unaccompanied by a prospectus when prospectus delivery is not required by the Securities Act of 1933 (“Securities Act”); and
(d)certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of aggregations of the series' shares. The amended order permits the applicants to offer additional series that would hold equity and fixed income securities and provides that certain representations and undertakings contained in the Prior Order shall not apply to a series where an entity that creates, compiles, sponsors, or maintains an underlying index is not an affiliated person, or an affiliated person of an affiliated person, of the series, its investment adviser, distributor, promoter, or any sub-adviser to the series. In addition, the amended order deletes a condition relating to future relief in the Prior Order. On July 27, 2007, a notice of the filing of the application was issued (Investment Company Act Release No. 27916). The notice gave interested persons an opportunity to request a hearing and stated that an order disposing of the application would be issued unless a hearing was ordered. No request for a hearing has been filed, and the Commission has not ordered a hearing. The matter has been considered and it is found, on the basis of the information set forth in the application, as amended, that granting the requested exemptions is 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. In addition, it is found that the terms of the proposed transactions, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and that the proposed transactions are consistent with the policy of each registered investment company concerned and with the general purposes of the Act. Accordingly, in the matter of HealthShares, Inc., *et al.* (File No. 812-13358), *It is ordered,* under section 6(c) of the Act, that the requested exemption from sections 2(a)(32), 5(a)(1), 22(d) and 24(d) of the Act and rule 22c-1 under the Act are granted, effective immediately, subject to the conditions contained in the application, as amended. *It is further ordered,* under sections 6(c) and 17(b) of the Act, that the requested exemption from sections 17(a)(1) and (a)(2) of the Act is granted, effective immediately, subject to the conditions contained in the application, as amended. The exemption from section 24(d) of the Act does not affect a purchaser's rights under the civil liability and anti-fraud provisions of the Securities Act. Thus, rights under section 11 and section 12(a)(2) of the Securities Act extend to all purchasers who can trace their securities to a registration statement filed with the Commission, whether or not they were delivered a prospectus in connection with their purchase. For the Commission, by the Division of Investment Management, under delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16762 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release Nos. 33-8836; 34-56293; File No. 265-24] Discussion Paper for Consideration by the SEC Advisory Committee on Improvements to Financial Reporting AGENCY: Securities and Exchange Commission. ACTION: Request for comments. SUMMARY: The Advisory Committee is soliciting public comment on a discussion paper prepared by the Committee Chairman, Robert Pozen. The discussion paper provides a working outline, including a discussion of issues, views and potential consideration points that the Committee may evaluate. DATES: Comments should be received on or before September 24, 2007. ADDRESSES: Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/other.shtml* ); or • Send an e-mail message to *rule-comments@sec.gov.* Please include File Number 265-24 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Federal Advisory Committee Management Officer, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File No. 265-24. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on its Web site ( *http://www.sec.gov/rules/other.shtml* ). Comments also will be available for public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. 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. FOR FURTHER INFORMATION CONTACT: Questions about this release should be referred to James L. Kroeker, Deputy Chief Accountant, or Shelly C. Luisi, Senior Associate Chief Accountant, at
(202)551-5300, Office of the Chief Accountant, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-6561. SUPPLEMENTARY INFORMATION: At the request of the SEC Advisory Committee on Improvements to Financial Reporting, the Commission is publishing this release soliciting public comments on the issues that the Committee proposes to consider. The Commission announced the establishment of the Advisory Committee on June 27, 2007. The Committee was officially established on July 17, 2007 with the filing of its Charter with Congress. The Charter provides that the Committee's objective is to examine the U.S. financial reporting system, with a view to providing specific recommendations as to how unnecessary complexity in that system could be reduced and how that system could be made more useful to investors. The Charter directs the Committee to consider the following areas of inquiry: • The current approach to setting financial accounting and reporting standards, including
(a)Principles-based vs. rules-based standards,
(b)the inclusion within standards of exceptions, bright lines, and safe harbors, and
(c)the processes for providing timely guidance on implementation issues and emerging issues; • The current process of regulating compliance by registrants and financial professionals with accounting and reporting standards; • The current systems for delivering financial information to investors and accessing that information; • Other environmental factors that may drive unnecessary complexity, including the possibility of being second-guessed, the structuring of transactions to achieve an accounting result, and whether there is a hesitance of professionals to exercise judgment in the absence of detailed rules; • Whether there are current accounting and reporting standards that do not result in useful information to investors, or impose costs that outweigh the resulting benefits (the Committee could use one or two existing accounting standards as a “test case,” both to assist in formulating recommendations and to test the application of proposed recommendations by commenting on the manner in which such standards could be improved); and • Whether the growing use of international accounting standards has an impact on the relevant issues relating to the complexity of U.S. accounting standards and the usefulness of the U.S. financial reporting system. The charter also directs the Committee to conduct its work with a view to enhancing financial reporting for the benefit of investors, with an understanding that unnecessary complexity in financial reporting can be harmful to investors by reducing transparency and increasing the cost of preparing and analyzing financial reports. Committee Chair Robert Pozen has drafted the discussion paper for consideration by the Committee. The Committee considered the discussion paper at its first public meeting held on August 2, 2007 and agreed to publish the discussion paper for public comment at that meeting. The full text of the discussion paper is attached as an Appendix and also may be found on the Committee's Web page at *http://www.sec.gov/about/offices/oca/acifr.shtml.* The discussion paper identifies in general terms the issues, views and consideration points that the Committee may evaluate. All interested parties are invited to submit their views, in writing, on any or all of the subjects identified, whether some subjects identified should not be considered for any reason (such as to conserve resources, to focus resources on other, more critical subjects, or because of the limited length of the Committee's term) or on any other matter relating to the current U.S. financial reporting system that the Committee should consider addressing. *General Request for Comment:* Any interested person wishing to submit written comments on any aspect of the discussion paper, as well as on other matters relating to the Committee's work, is requested to do so. Authority: In accordance with Section 10(a) of the Federal Advisory Committee Act, 5 U.S.C. App. 1, 10(a), James L. Kroeker, Designated Federal Officer of the Committee, has approved publication of this release at the request of the Committee. The solicitation of comments is being made solely by the Committee and not by the Commission. The Commission is merely providing its facilities to assist the Committee in soliciting public comment from the widest possible audience. Dated: August 21, 2007. Nancy M. Morris, Committee Management Officer. Appendix—Discussion Paper for Consideration by the SEC Advisory Committee on Improvements to Financial Reporting By Committee Chair Robert Pozen 1 1 This draft discussion paper was prepared by Committee Chair Robert Pozen. It does not necessarily reflect any position or regulatory agenda of the Commission or its staff. Draft dated July 31, 2007 Introduction This white paper is provided as an outline for consideration and discussion by the Securities and Exchange Commission's Advisory Committee on Improvements to Financial Reporting (CIFiR). The purpose of the document is to provide a working outline, including a discussion of issues, views and potential consideration points that the Committee could evaluate. Additionally, the outline is structured in 5 key areas that could serve as a model for organizing the work of the Committee into subcommittees. Background The U.S. capital markets are the deepest and most liquid in the world. The acknowledged success of the U.S. capital markets, and their contribution to the nation's economic vitality, has been due in no small measure to the availability of relevant, reliable, readily understandable, and timely financial information. However, while the U.S. financial reporting system has become the most complete and well developed in the world, some parts of the system may not be fully aligned with changes in the economy, business operations, technology and investor needs, leaving room for improvement. The strength of the U.S. financial reporting system lies in no small part in its inherent checks and balances, including the different perspectives of participants in the markets—direct participants (e.g., companies and investors), regulators, independent standard setters, and other third parties (e.g., attorneys, accountants and auditors). But these different and sometimes conflicting perspectives have contributed to some of the problems in the system, including its extreme complexity and the resulting need to consider how the usefulness of reported financial information can be improved. The SEC has charged the Committee with examining the U.S. financial reporting system to identify ways to improve the system of financial reporting. In considering this mandate, the Committee will consider ways to both reduce unnecessary complexity and make information more useful and understandable for investors. More specifically, the Committee's charter identifies the following as areas of inquiry for the Committee: • The current approach to setting financial accounting and reporting standards, including
(a)The principles-based vs. rules-based standards,
(b)the inclusion within standards of exceptions, bright lines, and safe harbors, and
(c)the process for providing timely guidance on implementation issues and emerging issues; • The current process of regulating compliance with accounting and reporting standards; • The current system for delivering financial information to investors and accessing that information; • Other environmental factors that drive unnecessary complexity, including the possibility of being second-guessed, the structuring of transactions to achieve an accounting result, and whether there is a hesitance by professionals to exercise professional judgment in the absence of detailed rules; • Whether there are current accounting and reporting standards that do not result in useful information to investors, or impose costs that outweigh the resulting benefits; and • Whether the growing use of international accounting standards has an impact on the relevant issues relating to complexity of U.S. accounting and reporting standards and the usefulness of the U.S. financial reporting system. As the Committee proceeds with its evaluation, it may wish to consider the financial reporting system in light of the needs of two primary groups—those who prepare the financial information and those who use the information—while taking into account the overall environmental impact of two secondary groups—those who opine on the information being presented and those who regulate our financial reporting system. Those who prepare financial information generally want: • Clear instructions on what subjects to cover in financial reports; • Not to be later second-guessed by regulators, litigants, etc. in situations where reasonable/good faith judgments were made; • Financial reports to reflect the economic realities of the business, with enough flexibility to reflect the special situation of both the company and the industry; • To reduce period-to-period volatility of earnings to the extent feasible (for example, in situations where the volatility is driven by changes in estimates but where such volatility has not resulted in a “realized” gain or loss); and • To prepare required financial information at a reasonable cost, in terms of dollars and management time. Those who are users of financial information generally want: • To understand the financial reports, at the level of detail that is desired by each type of user; • To be able to rely on the integrity of the financial reports (and not be told later they were incomplete, misleading or actually wrong); • The financial reports to reflect the economic substance of the business, regardless of technical rules; • Financial reports to reflect, to the extent feasible, actual changes in market values from period to period; and • The reports to be delivered in a format that makes it easy to compare one company to another. Those who opine on the specific financial information presented generally want: • Clear instructions on what subjects to cover in financial reports; • Not to be later second-guessed by regulators, litigants, etc. in situations where reasonable/good faith judgments were made; • The financial reports to reflect the economic substance of the business; and • To make a reasonable profit opining on financial information at a reasonable cost. Those who regulate the system generally want: • A financial reporting system that provides protection to investors, promotes market efficiency and facilitates capital formation; • Clear instructions on what subjects to cover in financial reports; • To be able to rely on the integrity of the financial reports; • The financial reports to reflect the economic substance of the business; and • All of the above to be accomplished at a reasonable cost to society in relation to the benefits to be achieved. While the list of objectives above is only illustrative and certainly not all inclusive, one can observe that the objectives of those involved in our financial reporting system are consistent in many respects. All participants want clear guidelines that allow financial reports to be prepared and presented in a straightforward fashion, do not want financial reports to be subsequently deemed to be incorrect, want the financial reports to reflect the economic substance of the business, and do not want companies to spend too much money and management time on preparing financial reports. However, the Committee should recognize that some of the goals of participants within our financial reporting system may conflict. For example, preparers often want less volatility in earnings implying less fair value measures, while users generally prefer that more assets and liability reflect their current values. This places tension on the desire to have financial reports that reflect the economic substance of the entity. Further, users may prefer a uniform format that makes comparisons easy, while preparers may want special rules that allow them to present what they believe are the unique aspects of their industry or company. Upon conclusion of the Committee's work, the Committee will provide written recommendations to the Chairman of the SEC on how to improve the financial reporting system in the U.S. These recommendations may cover many aspects of the financial reporting system for the Commission to consider, including recommendations that involve the Financial Accounting Standards Board (FASB), the Public Company Accounting Oversight Board (PCAOB), and other appropriate organizations. In order to facilitate the Committee in forming these recommendations, the Committee will create subcommittees. The subcommittees will report their recommendations and advice to the Committee for full discussion and deliberation. The proposed subcommittees are listed below. Following that listing of proposed subcommittees is a proposal regarding their objectives and some preliminary topics the subcommittees may wish to consider. I. Substantive Complexity II. Standard Setting Process III. Audit Process and Compliance IV. Delivering Financial Information V. International Coordination I. Substantive Complexity This subcommittee will study the causes and impact of complexity on financial accounting and reporting standards, including:
(1)Principles-based vs. rules-based standards;
(2)inclusion within standards of exceptions, bright lines and safe harbors; and
(3)the concerns of fair value measurement attributes and related earnings volatility. This subcommittee may wish to consider the following: Principles-Based Standards Some commentators have suggested that the U.S. should adopt more principles than detailed rules as a way to reduce complexity. However, other commentators have argued that both preparers and users may prefer bright line rules to avoid second guessing in the U.S. regulatory and litigation environment. In considering the need for principles and rules, the subcommittee may wish to evaluate the recent efforts of the FASB to move to a more principles-based approach while retaining implementation guidance. As a reference point, the subcommittee may wish to begin with the SEC staff's 2003 report to Congress mandated by the Sarbanes-Oxley Act of 2002 on a principles-based approach to standard setting in the U.S., and the FASB's related response. Competing Principles Complexity may be created not by the adoption of principles versus rules, but rather as a result of competing principles. For example, U.S. GAAP is not consistent on the appropriate measurement attribute to use for valuing financial assets and liabilities. In areas like financial assets and liabilities, there are two basic principles: Lower of cost or market, and fair value. The appropriate method to use in U.S. GAAP may be based on a specific industry, a specific transaction, a registrant expectation, or a registrant choice. To many it would be less complex to choose one approach, but many disagree which approach is most appropriate considering both relevance and reliability. More and more compromises are made, and these compromises lead to greater complexity as lines are drawn or judgments are made to delineate when one approach applies and the other does not. This subcommittee may wish to consider to what extent mixed measurement attributes (fair value versus historical cost) have increased complexity and reduced transparency, and what changes should be made within our capital markets to allow for more consistent measurement attributes. Preparers vs. Users Complexity also may result from conflicts between the objectives of preparers and users. From the perspective of sophisticated users, financial reports would be more useful if they contained more segment information in multi-line businesses. However, most companies are reluctant to have more reporting segments because this may involve the disclosure of competitively sensitive information. This subcommittee may wish to consider whether enhanced information would improve the usefulness of financial reporting in our capital markets. Industry Specific Exceptions Many industries have successfully obtained special treatment or exemptions from general accounting standards from the FASB or the SEC. While such exemptions or special treatment increase complexity, they, in many cases, may help preparers within these industries present their financial reports in ways that, in their view, better reflect the economic substance of their businesses than the general standards. This subcommittee may wish to consider whether industry specific accounting or disclosure is useful to our capital markets. Alternative Accounting Policies Currently, GAAP allows for entities to elect alternative accounting treatment for various transactions that may be economically similar. Most recently, the FASB issued SFAS 159, Fair Value Option, that allows companies to irrevocably elect to record certain types of assets and liabilities at fair value. This election is an instrument by instrument election. Other explicit options are currently present in U.S. GAAP. Providing companies with options may be a useful compromise when there are acceptable alternatives, but it makes it more difficult for users to compare companies. The subcommittee may wish to consider whether alternative accounting policies are useful to our capital markets. Sensitivity Analysis Financial reports are currently presented in a way that may over-simplify an issue with a complex range of results. In certain areas of accounting, the assumptions drive the results—for example, accounting for unfunded liabilities of defined benefit funds. Yet the range of permissible assumptions—for example, discount rates and mortality experience—is quite large. While sensitivity analyses are utilized to some degree, the subcommittee may wish to consider whether further sensitivity analyses would reduce complexity. II. Standard Setting Process This subcommittee will study the standard setting process and may wish to consider the following: U.S. GAAP Hierarchy Presently, all U.S. public companies must follow U.S. GAAP to be in compliance with applicable securities laws and regulations. Over the years, U.S. GAAP has been developed by many different recognized and unrecognized organizations. In the most recent past, these recognized organizations have included the SEC, the FASB, the Emerging Issues Task Force (EITF), and the American Institute of Certified Public Accountants (AICPA) Accounting Standards Executive Committee (AcSEC). For public companies, the authority to set GAAP resides with the SEC. The SEC has historically looked to private sector bodies to provide standards for financial reporting by public companies, and since 1973 the FASB has been recognized by the Commission for this role, absent any contrary determination by the Commission. In addition, the SEC at times will develop interpretive application and disclosure guidance for public companies. The FASB also allows for the EITF, which is subject to its own oversight by the FASB and the SEC, to develop interpretive application guidance to existing U.S. GAAP. The FASB has undertaken a significant project to develop a comprehensive and integrated codification of all existing accounting literature organized by subject matter that would become an easily retrievable single source for all of U.S. GAAP. This project may provide a useful roadmap for identifying those areas in U.S. GAAP that could be simplified. Characteristics of the FASB Currently in the U.S., accounting standards for public companies are established by the FASB, absent any contrary determination by the Commission, and the FASB is subject to oversight by the SEC. The Board consists of three members from public accounting, two from preparers, one from academia, and one user. While each member of the Board brings different experiences and perspectives, they are selected based on their expertise in financial reporting and are expected to make decisions based on what they believe will improve financial reporting rather than representing any one constituent group. All members of the Board must sever all ties and remain independent. The subcommittee may wish to consider the characteristics of Board members and the Board selection process. FASB Standard Setting Process The FASB has an open due process through which the Board obtains input from many constituents, issues proposals and receives extensive further input in the format of comment letters and holds public meetings with constituents. The Board makes all decisions on its accounting standards in public through open debate prior to reaching conclusion. This process can take many years, but was designed to provide constituents maximum input into the decisions of the Board. Currently, a simple majority vote is needed to complete projects. The Board publishes all decisions via board minutes on its Web site and as a basis for conclusions within all significant standards. The FASB develops major standards based on a conceptual framework. This conceptual framework was designed by previous Boards to act as fundamentals on which future financial accounting and reporting would be based. The conceptual framework, however, is not complete and is not consistent with all of existing U.S. GAAP. To address these issues, the FASB currently has a major project on its agenda jointly with the International Accounting Standards Board
(IASB)to improve the conceptual framework and to readdress some major accounting standards where the application is not consistent with the conceptual framework or does not provide sufficiently transparent financial reporting. Areas being considered in this joint project include pensions, leasing, liabilities and equity, revenue recognition, and financial statement presentation. Accounting standards resulting from the FASB process often leave open many questions of interpretation. The underlying reason for the need for interpretation generally results from either a misunderstanding of the stated principle or rule, or a concern that others will express a different view of the application of the principle or rule within the standard. The FASB staff offers a service to respond to inquiries, but exercises caution in answering some inquiries due to the establishment of precedent. Sometimes the FASB or FASB staff is asked to formally amplify or clarify a set of interpretive issues within an accounting standard. These interpretations were previously published as FASB staff question and answer documents with little Board oversight and no public comment period. Currently, these interpretations are primarily done through FSPs (FASB staff positions), which are discussed and debated with Board members at a public meeting and exposed for comment. The subcommittee may wish to consider the process for setting standards and developing interpretations, including the FASB's voting procedures and the methods used by the FASB or the FASB staff to:
(1)Set their agenda,
(2)set their priorities,
(3)deliberate,
(4)communicate, and
(5)respond to technical inquiries. Interpretive Guidance—EITF In the mid 1980s, the FASB formed the EITF. The original charter of the EITF was to act as an advisory group to the Board to educate the Board on emerging issues so that the Board could decide whether interpretive guidance was necessary. Shortly after its creation, the EITF's charter was revised to allow for members of the EITF to develop authoritative interpretive guidance. The types of issues addressed by the EITF range from very specific to very broad, but are expected to be completed by the Task Force within one year. The EITF may only interpret existing standards and does not have the authority to amend or replace existing standards. Members of the EITF represent all significant constituents and include large and small preparers, large and small audit firms, and users. These members are volunteers and do not sever ties with their current employers or firms. The Chairman of the EITF is a member of the FASB staff and all documents produced for the EITF are developed by the FASB staff. A conclusion by the EITF is reached if not more than 3 members object. Currently, all conclusions by the EITF are exposed for public comment and are ratified by the FASB. This subcommittee may wish to consider the role of the EITF and whether that role should be changed to one of an advisory group. Interpretive Guidance—SEC The Commission itself sometimes addresses accounting issues directly. In addition, SEC staff primarily through the Office of the Chief Accountant
(OCA)communicates to the public in various forms about accounting issues, including staff accounting bulletins, letters to industry, speeches, and other educational material. These sources of information often are viewed by the SEC staff as confirmations of existing accounting standards, but have led to restatements by public registrants. The OCA also receives requests from specific registrants for pre-review of accounting issues. These requests are often considered by others in determining their own accounting policies. The SEC's Division of Corporation Finance reviews and comments on financial reports filed by public issuers that are not investment companies. The Division has a process for making its comment letters public upon completion of the review process. Through the Division's filing review process and its now more transparent process making comment letters publicly available on the SEC's Web site, the staff of Corporation Finance can have a significant influence on how accounting standards are interpreted. The SEC's Division of Enforcement, in the course of its investigatory and settlement negotiation processes, often explains the staff's views of a registrant's accounting conclusion. The Division's communications in this regard have been viewed by some as representing views applicable to all companies and not just with respect to the individual facts and circumstances involving the party involved in the particular enforcement investigation. This subcommittee may wish to consider the extent to which the SEC should publish interpretive guidance, as well as the communication methods used to describe the activities of the SEC or the SEC staff. Interpretive Guidance—Other Many organizations, including large accounting firms and the AICPA, publish detailed educational material regarding accounting. These publications are widely used and presumed to be correct by their readers, but may turn out to be not always consistent or accurate. When an inconsistency or inaccuracy is discovered, the authors of the education material often seek clarity from the FASB or SEC staffs. This subcommittee may wish to consider whether the FASB or SEC should be involved reviewing or providing this type of guidance. The Use of Cost-Benefit Analysis in Standard Setting Determining the costs and benefits of a new accounting standard or rule involves difficult predictions. Often, the true costs and benefits may not be able to be fully known or understood until after the new standard or rule is fully implemented. The processes and practices both pre- and post-issuance may differ among organizations that set accounting standards and rules. The subcommittee may wish to review the existing cost-benefit analysis practices of appropriate organizations to determine if changes should be recommended. Existing Standards This subcommittee also may wish to consider whether to review two or three previously issued standards or rules to understand both the cost-benefit analysis that was utilized prior to the standard or rule's exposure to public comment and the cost-benefit analysis that was utilized prior to adoption of the standard or rule. This subcommittee may wish to review whether any changes by the standard setter as a result of a given cost-benefit analysis or for ease of implementation actually reduced the costs of application or increased the benefits. Finally, the subcommittee may wish to consider two or three existing standards and determine whether any changes might be made to the standards to reduce the actual costs of application or improve the benefit to users. III. Audit Process and Compliance This subcommittee will study the current process of regulating compliance with the accounting and reporting standards and other environmental factors that drive unnecessary complexity, including the possibility of being second-guessed, the structuring of transactions to achieve an accounting result, and whether there is a hesitance on the part of professionals to exercise professional judgment in the absence of detailed rules. This subcommittee may wish to consider the following: Financial Restatements A significant number of restatements have occurred in the U.S. financial markets over the past few years. Some have attributed these restatements to more rigorous interpretations of accounting and reporting standards by preparers, outside auditors, the SEC, and the PCAOB, while others believe the concept of materiality (and discussions regarding materiality in SEC Staff Accounting Bulletins 99 and 108) is applied too broadly. Many believe that this increased volume of restatements makes it more difficult for securities analysts and other users of financial information to determine the significance of a restatement. Further, some have expressed concern that the high volume of restatements could lead to an environment where users of financial reports begin discounting the importance of restatements (for example, if restatements are viewed to be routine). The U.S. Treasury has announced it is commissioning a study to determine why the volume of financial restatements has risen so sharply, and this subcommittee should monitor the U.S. Treasury's work in this regard. This subcommittee also may wish to consider the reasons for an increase in restatements. For example, the subcommittee might consider whether the increase is a result of:
(1)A broad application of the definition of materiality (including the application of materiality guidance in situations where errors do not impact the “bottom line”);
(2)more rigorous auditing or enforcement;
(3)second guessing by the SEC, the PCAOB, or outside auditors;
(4)increasingly detailed accounting standards; or
(5)inappropriate application of standards by preparers/auditors. Further, the subcommittee may wish to consider whether there are alternative methods to communicate with the capital markets for certain types of accounting errors (including consideration of the potential for prospective methods to deal with making changes to historical accounting practices). Use of Judgment Any move toward reducing complexity and increasing transparency should consider the role of preparer and auditor judgment as it relates to the reduction of prescriptive application guidance. For example, one approach to consider could be whether to expand the use of accounting and auditing standards that allow for more judgment in application. The subcommittee should also consider the role of disclosure in such an environment. For example, some have suggested that more latitude should be provided in standards, with the caveat that more disclosure is provided about the alternative(s) that were considered and why the selected alternative was applied. This subcommittee may wish to consider whether an increase in the use of judgment (elimination of bright lines and detailed application guidance) would result in increased usefulness of financial reports, including the potential impact on comparability. Furthermore, the subcommittee may wish to consider whether an increase in judgment on the part of preparers and auditors is impacted by not knowing or understanding how these groups will be judged by the SEC, the PCAOB or others. PCAOB The PCAOB is required to inspect annually all registered public accounting firms that provide audit reports for more than 100 public companies, and at least triennially registered public accounting firms that provide audit reports for fewer than 100 issuers. Reports on these inspections have been produced in many cases more than one year after the completion of the inspections. Pursuant to the Sarbanes-Oxley Act, a portion of the results of the inspections are made available publicly, and certain nonpublic portions of the reports may remain nonpublic if the firm responds to the criticisms to the Board's satisfaction within a given time period. Similar to the FASB, the PCAOB receives requests for guidance on how audits should be carried out. In the case of internal control reviews, the PCAOB issued a series of questions and answers, which were generally well received. Nevertheless, these questions and answers were issued without advance notice or public comment, despite the fact they were intended to have general applicability. This subcommittee may wish to consider the PCAOB's inspection process and how the process impacts registrant and auditor behavior. The subcommittee may also want to consider whether this creates the need for additional auditing and accounting interpretive guidance, as well as the process on how such guidance is issued. SEC—Corporation Finance The SEC is required to review filings by listed public issuers on a regular and systemic basis, as well as review all public companies required to file reports at least once every three years. These reviews may be time consuming and are conducted by the SEC Division of Corporation Finance. A perception may exist that consultation with the OCA does not generally occur unless the registrant requests such consultation. This subcommittee may wish to understand the process the SEC uses to review registrants' public filings, including the process for providing comments and the level of review and coordination with the various departments of the SEC. Furthermore, the subcommittee may wish to consider whether and how the process impacts registrant and auditor behavior and creates the need for additional auditing and accounting interpretive guidance. SEC—Division of Enforcement The Division of Enforcement has broad authority to open an informal inquiry into a registrant's financial reporting or an auditor's application of professional standards with respect to registrant reporting. Formal investigations that provide subpoena authority are made only after approval by the Commission. The OCA is generally consulted before consideration by the Commission of a recommendation by the Division of Enforcement involving financial reporting or auditor misconduct. This subcommittee may wish to understand the process the SEC uses to open an enforcement investigation, including the level and timing of coordination with the various departments of the SEC. Furthermore, the subcommittee may wish to consider how the process impacts registrant and auditor behavior and affects the need for additional auditing and accounting interpretive guidance. Audit Firms This subcommittee may wish to consider whether the behavior of audit firms creates or results in unnecessary complexity. For example, to promote efficient and effective audits, audit firms have created various tools and controls so that a uniform policy is applied throughout their organizations. These include checklists, audit programs, training, and networks of subject matter experts. These subject matter experts tend to view their particular issue as very important and may insist on a uniform national policy, even if the recommended approach is not applied uniformly in practice by others outside the firm. This subcommittee may wish to consider the impact that these practices have on promoting judgment and transparent reporting in the capital markets. Sustainability of the Audit Profession Legal risks faced by audit firms and registrants clearly influence their behavior in preparing and auditing financial reports, including their willingness to exercise judgment and to show flexibility in applying accounting rules. With respect to audit firms, the U.S. Treasury has announced its intention to establish an advisory committee to study the sustainability of a strong and vibrant public company auditing profession. Treasury has announced that the committee is to study, among other things, the ability to attract and retain the human capital necessary to meet developments in the business and financial reporting environment; audit market competition and concentration; and the financial resources of the auditing profession, including the effect of existing limitations on auditing firms' structure. This subcommittee should be aware of how litigation and potential litigation influence behavior and may wish to consider the work of the Treasury's committee, but should not attempt to develop proposals that duplicate the work of that committee. IV. Delivering Financial Information This subcommittee will study the current system for delivering financial information to investors and accessing that information. This subcommittee may wish to consider the following: Tiering of Information Different groups of investors exist in our capital markets and may have different needs for information from financial reports. The individual investor may be interested mainly in a journalistic outline of the key points about the progress of the business. By contrast, a sophisticated investor may be interested in a full discussion of management's choice of assumptions underlying the financial reports as well as a comparative analysis of particular financial indicators versus a peer universe. Many have suggested tiering the information with a journalistic summary at the beginning and more detailed analyses as the reader continues to read. Within the context of the Internet, this could mean a summary page, together with hyperlinks to more detailed information on particular topics. Tagging of Information The SEC is engaged in a major project to introduce interactive data tagging technology for the informational content of financial reports, such as through the use of XBRL, so that users have the ability to quickly and easily focus on the important information they desire in these reports. Moreover, tagging of information may allow investors to customize their needs based on their desired level of detail. The tagging of information can be focused on performance metrics for carrying out the strategy of a specific company and could be designed along the lines of a balanced scorecard. The tagging of information can be organized into a variety of standard formats for key performance indicators
(KPIs)organized by industry. An existing project for the development of these KPIs is being undertaken by a non-profit consortium on enhanced business reporting (originally started under the AICPA). The subcommittee may wish to study these developments and consider whether additional recommendations can be made to improve the usefulness of financial reporting in these areas. Press Releases and Web Site Disclosure Press releases and corporate Web sites have become important forms of communication for many public companies. For example, some companies post or issue press releases to report interim and annual results and in doing so often release non-GAAP financial measures. These operating results are often issued well before the formal operating results and disclosure are required to be filed with the SEC, and they may contain additional information that is not required to be filed. Recently as a result of implementing the Sarbanes-Oxley Act, the SEC revised its rules and regulations concerning the public disclosure of non-GAAP financial measures, including in press releases and earnings webcasts, and whether press releases also must be filed versus furnished with the SEC. This subcommittee may wish to consider the underlying reasons why press releases and web disclosures—and the information contained in them—are used by our capital markets in order to determine if additional performance indicators would be useful for our capital markets. In addition, the subcommittee may wish to consider the experience of issuers with disclosure of non-GAAP information and the use of press releases and corporate Web sites in connection with their financial reports. The continued demand for these disclosures by issuers may suggest that the required formats for reporting financial information are not serving all the needs of preparers and users. Legal Issues To provide various forms of communications that meet the needs of different investor groups, there may be a need to consider the legal liabilities for different types of information—e.g., MD&A versus audited income statements—and for the different communication methods used to provide them. For example, this subcommittee may wish to look at the experience with “free writing” in public offerings whereby issuers can communicate new developments or pieces of information that may not be included in the formal prospectus. Further, this subcommittee may wish to look at the various attempts to provide a summary prospectus in the mutual fund industry. V. International Coordination This subcommittee should consider whether the growing use of international accounting standards has an impact on the relevant issues relating to complexity of U.S. accounting standards and the usefulness of the U.S. financial reporting system (for example, by identifying best practice employed internationally). As it relates to the acceptance of International Financial Reporting Standards, or IFRS, in the U.S. capital markets, the SEC has issued a proposing release to permit the use of IFRS by foreign private issuers without a U.S. GAAP reconciliation. In addition, the SEC has voted to issue a concept release on whether U.S. issuers should be allowed the choice to use IFRS to satisfy their SEC reporting requirements. The SEC expects to receive important feedback on these initiatives that could be considered by this subcommittee. Each of the four other subcommittees should consider whether there are areas or international best practice that should be evaluated by the international subcommittee for implementation in the U.S. financial reporting system. Given the timing of the expected comment letter process on the Commission's initiatives, and in order for the other subcommittees to identify areas of focus, the substantive research and analysis of this subcommittee will not begin until early 2008. While the nature of the items considered by this committee has not been fully developed, the subcommittee may wish to consider the following: Standard Setting Approach This committee should consider whether there are “best practices” employed by the IASB in the standard setting process. For example, many believe the IASB takes an approach based more on principles rather than detailed rules, but the IASB, like the FASB, nevertheless does have conflicting principles and controversies based on volatility and the increased use of fair value. Many have observed that the accounting standards promulgated by the FASB are too lengthy. This is partly because the FASB includes in its standards not only the text, but also its history and the responses to significant comments on the initial proposal and implementation guidance. By contrast, IFRS generally include only the text in its accounting standards. The FASB has already started to work together with the IASB in formulating new accounting standards or revising existing standards in the hopes that future standards will be converged. The subcommittee may wish to consider a few examples where the FASB and the IASB are working together to determine if the process is effective and efficient to meet the needs of our capital markets. Regulation The enforcement of accounting standards outside the U.S. may be quite different depending on the particular jurisdiction from the enforcement policies and practices within the U.S. The subcommittee may wish to consider these differences and determine whether the U.S. system could benefit from any lessons from the foreign experience. [FR Doc. E7-16772 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56278; File No. SR-Amex-2007-72] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Elimination of the Short Sale “tick” and Price Tests August 17, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, as amended (the “Act”), 1 notice is hereby given that on July 6, 2007, the American Stock Exchange LLC (the “Amex” or the “Exchange”) filed with the Securities and Exchange Commission (“SEC” or the “Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated the proposed rule change as constituting a “non-controversial” rule change under paragraph (f)(6) of Rule 19b-4 under the Act, 2 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. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend various Amex rules to conform to recent Commission amendments to Rule 10a-1 under the Act and Regulation SHO, that will eliminate Commission and self-regulatory organization (“SRO”) short sale “tick” and price tests. The text of the proposed rule change is available at Amex, the Commission's Public Reference Room, and *http://www.amex.com.* 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose On June 13, 2007, the Commission voted to adopt amendments to Rule 10a-1 under the Act and Regulation SHO to remove the “tick” test of Rule 10a-1 and any short sale price test of any SRO. As a result of the Commission's action, the Exchange is seeking to conform its rules accordingly by rescinding Amex Rule 7, which contains a “tick” test applicable to short sales effected on the Exchange, as well as to make conforming and “housekeeping” changes to certain other rules. Amex Rule 30A requires members and member organizations to submit periodic reports with respect to short positions in Amex listed securities. However, the rule excludes certain short positions pursuant to exemptions that are specified in Rule 200 of Regulation SHO and Rule 10a-1(e) (1), (6), (7),
(8)and
(10)under the Act, which are incorporated by reference. Because the Commission's recent rule-making will change the rule references incorporating these exemptions, the Exchange is proposing to amend Rule 30A to conform to these changes. In addition, the Exchange proposes to make certain other conforming and “housekeeping” changes necessary to conform to the Commission's rulemaking. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act 3 in general and furthers the objectives of Section 6(b)(5) of the Act 4 in particular 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; and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers, or to regulate by virtue of any authority conferred by the Act matters not related to the purpose of the Act or the administration of the Exchange. 3 15 U.S.C. 78f(b). 4 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition 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 No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become immediately effective pursuant to Section 19(b)(3)(A) 5 of the Act and Rule 19b-4(f)(6) 6 thereunder because it does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)become operative for thirty
(30)days after the date of the filing, or such shorter time as the Commission may designate. 5 15 U.S.C. Section 78s(b)(3)(A). 6 17 CFR 240.19b-4(f)(6). The Exchange has asked the Commission to waive the 30-day operative delay. The Commission believes such waiver is consistent with the protection of investors and the public interest because it would allow the proposed rule change to be effective on July 6, 2007, the compliance date for the amendments to Rule 10a-1 and Regulation SHO. 7 For this reason, the Commission designates the proposal to be operative upon filing with the Commission. 7 For purposes only of waiving the 30-day pre-operative period, the Commission has considered the proposed rule change's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). At any time within sixty
(60)days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml)* ; or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Amex-2007-72 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Amex-2007-72. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Amex. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2007-72 and should be submitted on or before September 14, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16757 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56227A; File No. SR-CBOE-2007-83] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Amend CBOE Rules relating to the Appointment Cost for Options on the Nasdaq-100 Index Tracking Stock August 20, 2007. Correction FR Document No. E7-15901, beginning on page 45846 for Wednesday, August 15, 2007, 1 incorrectly stated the date of the release as August 8, 2008. The date should be revised to read “August 8, 2007.” 1 *See* Securities Exchange Act Release No. 56227 (August 8, 2007), 72 FR 45846. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 2 2 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16753 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56281; File No. SR-CHX-2007-16] Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change as Modified by Amendment No. 1 Thereto To Amend Its Bylaws To Prevent Exchange Director From Participating in the Determination of Any Matter Involving an Issuer of a Security Listed or To Be Listed on the Exchange if the Director Is a Director, Officer, or Employee of the Issuer August 17, 2007. 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 27, 2007, 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 substantially prepared by CHX. On August 10, 2007, CHX filed an amendment 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 Partial Amendment No. 1 modified the last sentence of footnote 6 below, to state that when a director recuses himself or herself from a decision, the Exchange reflects that recusal in the minutes of the meeting at which the recusal occurred, in accordance with its internal written policies. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CHX proposes to amend its bylaws to bar a director from participating in a matter relating to an issuer of a security, if the director is a director, officer or employee of the issuer of that security. The text of this proposed rule change is available on the Exchange's Web site at *http://www.chx.com/content/Participant_Information/Rules_Filings.html,* at the Office of the Secretary of the Exchange, 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, 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. 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 Under the Exchange's rules, if the Exchange proposes to delist a security, the issuer of the security has the right to avail itself of a hearing before a hearing officer and to appeal the decision of the hearing officer to the Exchange's Executive Committee. 4 The Exchange's Executive Committee is composed entirely of Exchange directors. 5 4 *See* Article 25, Rule 4 of CHX's bylaws. 5 *See* Article 2, Rule 2 of CHX's bylaws. The committee must consist of not less than five members, plus the chairman of the Board. A majority of the committee members must be public directors. *Id.* Although the Exchange's bylaws generally prevent a director from participating in the determination of any matter in which the director is personally interested, no provision of the bylaws specifically confirms that a director should not participate in a decision involving the issuer of a security if he or she is a director, officer or employee of the issuer. This proposed change would add a clarification to the Exchange's bylaws to confirm that, in a matter involving the issuer of a security listed or to be listed on the Exchange, a director shall be deemed to be personally interested in the matter if he or she is a director, officer or employee of the issuer of the security. 6 The Exchange believes that this new provision appropriately limits a director's ability to participate in proceedings involving a company for which he or she serves as a director, officer or employee. 7 6 This proposal is a slightly-amended version of the proposal originally made in SR-CHX-2006-25, which has been withdrawn. In this new version of the proposal, the Exchange, at the recommendation of Commission staff, has expanded its original filing to cover all proceedings involving an issuer of a security, instead of limiting the proposal only to delisting proceedings. Importantly, however, this proposal is not designed to affect other provisions of this section of the bylaws; specifically, this proposal is not designed to prevent a participant director who is an employee of an issuer that is also a participant firm from participating in the determination of matters that may affect participants as a whole or certain groups of participants, as already expressly permitted by the bylaws. *See* Article II, Section 7 of the CHX's bylaws. In this revised version of the original proposal, the Exchange also has confirmed that, although it will typically deem a director to be “personally interested” in a matter relating to an issuer if the director is a director, officer or employee of that issuer (subject to the exception described above), the Exchange will review other relationships between a director and an issuer on a case-by-case basis to determine whether inappropriate personal interest exists. When a director recuses himself or herself from a decision, the Exchange reflects that recusal in the minutes of the meeting at which the recusal occurred, in accordance with its internal written policies. 7 This bylaws change is also consistent with a recommendation made by the Commission's Office of Compliance Inspections and Examinations. 2. Statutory Basis CHX believes the proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act. 8 The proposed rule change is consistent with Section 6(b)(5) of the Act 9 because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, protect investors and the public interest by confirming that an Exchange director should not participate in proceedings involving a company for which he or she serves as a director, officer or employee. 8 15 U.S.C. 78(f)(b). 9 15 U.S.C. 78(f)(b)(5). B. Self-Regulatory Organization's Statement of Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition. 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 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 Number SR-CHX-2007-16 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-CHX-2007-16. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CHX-2007-16 and should be submitted on or before September 14, 2007. 10 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16756 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56277; File No. SR-DTC-2007-04] Self-Regulatory Organizations; The Depository Trust Company; Order Granting Approval of a Proposed Rule Change Relating to a Policy Statement on the Eligibility of Foreign Securities August 17, 2007. I. Introduction On April 19, 2007, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) proposed rule change SR-DTC-2007-04 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). 1 Notice of the proposal was published in the **Federal Register** on June 28, 2007. 2 One comment letter was received. 3 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. 55940 (June 21, 2007), 72 FR 35532. 3 Letter from Noland Cheng, Chairman, Operations Committee, Securities Industry and Financial Markets Association (July 17, 2007). II. Description The proposed rule change adds a new Policy Statement on the Eligibility of Foreign Securities to DTC's rules. 4 The purpose of the Policy Statement is to set forth in a single place and in an accessible manner the criteria and procedures for making the securities of foreign issuers (“Foreign Securities”) eligible for deposit and book-entry transfer through the facilities of DTC in accordance with the Securities Act of 1933 (“Securities Act”) 5 and the rules and regulations of the Commission thereunder. For purposes of the Policy Statement,
(1)The term “security” has the meaning provided in section 2(a)(1) of the Securities Act, 6
(2)the term “foreign issuer” has the meaning provided in Rule 405 under the Securities Act, which and includes both a “foreign government” and a “foreign private issuer” as defined in Rule 405, 7 and
(3)capitalized terms that are used but not otherwise defined in the Policy Statement have the meanings given to such terms in the Rules of DTC. 4 Policy Statements are used by DTC to clarify and consolidate the Rules of DTC with respect to the subject of a Policy Statement. A Policy Statement is a part of the Rules of DTC. As such, pursuant to Rule 2, Section 1 of the DTC Rules and the Participants Agreement that participants enter into with DTC, a Policy Statement is binding on DTC participants. 5 15 U.S.C. 77 *et seq.* 6 15 U.S.C. 77b(a)(1). 7 17 CFR 230.405. The term foreign issuer means any issuer which is a foreign government, a national of any foreign country or a corporation or other organization incorporated or organized under the laws of any foreign country. The Policy Statement covers both Foreign Securities deposited with DTC at the time that such Foreign Securities are first distributed (referred to as “new issues” in the DTC system) and Foreign Securities deposited with DTC subsequent to the time that such Foreign Securities are first distributed (referred to as “older issues” in the DTC system). The criteria and procedures for making new issues of Foreign Securities eligible for deposit and book-entry transfer through the facilities of DTC have previously been codified by DTC. The criteria and procedures for making older issues of Foreign Securities eligible for deposit and book-entry transfer through the facilities of DTC have not previously been codified by DTC. Accordingly, what would be new in the Policy Statement are the criteria and procedures for making older issues of unregistered Foreign Securities DTC-eligible. 8 These older issues are generally securities that are freely tradable outside the U.S. over the counter or on foreign exchanges or are traded in the U.S. over the counter subject to the resale restrictions of the Securities Act. 8 Registered securities, whether new issues or older issues, whether foreign or domestic, can always be made DTC-eligible. The proposed rule change, as it relates to older issues of unregistered Foreign Securities, represents an extension with no material change in arrangements that now apply to new issues of unregistered Foreign Securities, including securities that may be resold without registration under the Securities Act pursuant to Regulation S or Rule 144A. By establishing the criteria and procedures for a wider but not fundamentally different range of unregistered Foreign Securities to be DTC-eligible, the proposed rule change, should increase the transparency and reduce the risk and cost of transactions in these securities. At the present time, purchases and sales of older issues of unregistered Foreign Securities by U.S. investors typically settle through foreign intermediaries and central securities depositories in multiple jurisdictions. By having these transactions settle at DTC, U.S. investors and intermediaries would be able to benefit from
(1)DTC risk management controls approved by the Commission,
(2)a more visible and less complicated settlement process, and
(3)greater control over settlement costs with fees determined by the user-representative board of directors of DTC. In all cases and circumstances, participants of DTC would be responsible for determining that their deposit of older issues of unregistered Foreign Securities with DTC and that their transactions in such securities through the facilities of DTC, are in compliance with the Rules of DTC and the federal securities laws. Categories of Foreign Securities Eligible for DTC Services Under the Policy Statement, the following categories of Foreign Securities will be eligible for DTC book-entry delivery services as and to the extent set forth below. 9 9 The categories of Foreign Regulation S Securities, Foreign Rule 144A Securities, Foreign Restricted Securities, and Foreign Other Eligible Securities are not all mutually exclusive. For example,
(i)Foreign Regulation S Securities may be resold to qualified institutional buyers (as defined in Rule 144A) pursuant to Rule 144A,
(ii)Foreign Rule 144A Securities may be resold in offshore transactions (as defined in Regulation S) pursuant to Regulation S, and
(iii)Foreign Regulation S Securities and Foreign Rule 144A Securities that are restricted securities (as defined in Rule 144) may be resold pursuant to Rule 144.
(1)Foreign Securities that are registered under the Securities Act (“Registered Foreign Securities”) will be eligible for all DTC services.
(2)Foreign Securities that are exempt from registration under the Securities Act pursuant to an exemption that does not involve any resale restrictions (“Exempt Foreign Securities”) will be eligible for all DTC services.
(3)Foreign Securities that may be offered and sold without registration under the Securities Act pursuant to Regulation S (“Foreign Regulation S Securities”) 10 will be eligible for all DTC services. This includes Category 1 securities, Category 2 securities, and Category 3 securities under Regulation S. 11 10 17 CFR 230.901 through 905. 11 Category 1 of the primary offering safe harbor of Regulation S includes the securities of foreign issuers for which there is no substantial U.S. market in the subject securities, securities being offered by foreign (or domestic) issuers in overseas directed offerings, securities of foreign governments and securities being offered by foreign issuers pursuant to employee benefit plans. Category 2 of the primary offering safe harbor of Regulation S includes the equity securities of reporting foreign issuers, the debt securities of foreign (or domestic) reporting issuers, and the debt securities of nonreporting foreign issuers even if there is substantial U.S. market interest in the subject securities. Category 3 of the primary offering safe harbor of Regulation S includes the equity securities of non-reporting foreign issuers with substantial U.S. market interest in the subject securities. 17 CFR 230.903.
(4)Foreign Securities that may be resold without registration under the Securities Act pursuant to Rule 144A (“Foreign Rule 144A Securities”) 12 will be eligible for all DTC services. If such Foreign Rule 144A Securities are not investment grade securities ( *i.e.* , nonconvertible debt securities or nonconvertible preferred stock rated in one of the top four categories by a nationally recognized statistical rating agency), then to be eligible for DTC services such Foreign Rule 144A Securities will have to be securities designated for inclusion in a system of a self-regulatory organization approved by the Commission for the reporting of quotation and trade information on Rule 144A transactions (“SRO Rule 144A System”). 13 12 17 CFR 230.144A. 13 For the requirement that securities other than investment grade securities be designated for inclusion in a Self Regulatory Organization (“SRO”) Rule 144A System approved by the Commission, see Securities Exchange Act Release No. 33327 (December 13, 1993), 58 FR 67878 (December 22, 1993) (File No. SR-DTC-90-06) (Order Approving a Proposed Rule Change by DTC Relating to the Eligibility of Rule 144A Securities at DTC). The original SRO Rule 144A System approved by the Commission was the Private Offerings, Resales, and Trading through Automated Linkages (“PORTAL”) Market System operated by the National Association of Securities Dealers, Inc. (“NASD”). For a description of the PORTAL Market System and the relationship between the PORTAL Market System and DTC, see Securities Exchange Act Release Nos. 27956 (April 27, 1990), 55 FR 18781 (May 4, 1990) (File No. SR-NASD-88-23) (Order Approving Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval to Amendments to Proposed Rule of NASD Relating to the Operation of the PORTAL Market) and 33326 (December 13, 1993), 58 FR 66388 (December 22, 1993) (File No. SR-NASD-91-5) (Order Approving a Proposed Rule Change Relating to the Operation of the PORTAL Market). In 2001, the Commission approved an NASD proposed rule change to require PORTAL participants to submit trade reports of secondary market transactions in PORTAL equity securities through the NASD Automated Confirmation and Transaction Service (“ACT”) and PORTAL high-yield debt securities through the NASD Trade Reporting and Comparison Entry Service (“TRACE”) and to redefine the PORTAL Market System to include ACT and TRACE. Securities Exchange Act Release No. 44042 (March 6, 2001), 66 FR 14969 (March 13, 2001) (File No. SR-NASD-99-66) (Order Approving Proposed Rule Change Relating to the Implementation of Mandatory Trade Reporting for PORTAL Securities). As a result, ACT and TRACE are each an SRO Rule 144A System for purposes of the DTC Rule 144A eligibility requirement. On July 31, 2007, the Commission approved a proposed rule change by The NASDAQ Stock Market LLC (“Nasdaq”) to reestablish a quotation and trading system, The PORTAL Market, for securities that are designated by Nasdaq as PORTAL securities. The system would allow PORTAL Participants to trade with one another in a closed system. Securities Exchange Act Release No. 56172, 72 FR 44196 (August 7, 2007) (File No. SR-NASDAQ-2006-065).
(5)Foreign Securities that may be resold without registration under the Securities Act pursuant to Rule 144 (“Foreign Restricted Securities”) 14 will be eligible for all DTC services. 14 17 CFR 230.144.
(6)Foreign Securities that may be resold without registration under the Securities Act pursuant to any other exemption (“Foreign Other Eligible Securities”) will be eligible for all DTC services. This shall include without limitation an exemption pursuant to Commission Rule 801 15 in connection with a rights offering or an exemption pursuant to Commission Rule 802 16 in connection with an exchange offer. 15 17 CFR 230.801. 16 17 CFR 230.802. Although all the foregoing categories of Foreign Securities will be eligible for deposit and book-entry transfer through the facilities of DTC, DTC will have the right adopt associated procedures to determine in accordance with Rule 5, Section 1 of the DTC Rules and in accordance with its obligations as a registered clearing agency subject to regulation by the Commission whether any particular issue will be accepted for deposit and made eligible for some or all DTC services. Responsibilities of Issuers and Participants Issuers and participants will be responsible for determining that their deposit of Foreign Securities with DTC and that their transactions in Foreign Securities through the facilities of DTC are in compliance with the Rules of DTC and the federal securities laws. In particular and without limitation, issuers and participants will be responsible not to engage in any transactions in Foreign Securities, including any distribution of unregistered Foreign Securities through the facilities of DTC, in violation of the Securities Act and the rules and regulations of the Commission thereunder. These responsibilities of issuers and participants are based on the following.
(1)Issuers and participants depositing Foreign Securities with DTC and participants engaging in transactions in Foreign Securities through the facilities of DTC are subject to the Rules of DTC and the federal securities laws.
(2)Rule 2, Section 7 of DTC's Rules provides, “In connection with their use of the Corporation's [DTC's] services, Participants and Pledgees must comply with all applicable laws, including all applicable laws relating to securities, taxation and money laundering.”
(3)Section 7(b) of DTC's “Operational Arrangements (Necessary for an Issue to Become and Remain Eligible for DTC Services)” (“DTC Operational Arrangements”) which relate to book-entry only (“BEO”) issues being made eligible for DTC services provides: Issuer recognizes that DTC does not in any way undertake to, and shall not have any responsibility to, monitor or ascertain the compliance of any transactions in the Securities with the following, as amended from time to time:
(1)any exemptions from registration under the Securities Act of 1933;
(2)the Investment Company Act of 1940;
(3)the Employee Retirement Income Security Act of 1974;
(4)the Internal Revenue Code of 1986;
(5)any rules of any self-regulatory organizations (as defined under the Securities Exchange Act of 1934); or
(6)any other local, state, federal, or foreign laws or regulations thereunder. This and other representations made by issuers to DTC pursuant to the DTC Operational Arrangements are mirrored in the Letter of Representations that DTC receives from issuers in connection with their deposits of BEO issues with DTC.
(4)In 1994, in an order clarifying certain language in the Rule 144A approval order, the Commission concurred in the position taken by DTC with respect to Rule 5 of DTC's Rules that “Rule 5 does not require DTC to determine whether securities, when deposited at DTC, may be transferred lawfully by book-entry in light of the Federal securities law.” 17 The original Rule 144A order included the statement that Rule 5, Section 1 of DTC's Rules required DTC to determine whether in light of the Federal securities laws, particularly the provisions of Rules 144, 144A, and 145, securities when deposited with DTC could be lawfully transferred by book-entry. DTC filed the rule change in order to clarify that DTC Rule 5 does not require DTC to determine whether securities deposited at DTC may be transferred lawfully pursuant to Federal securities laws. DTC subsequently amended Rule 5 to delete any implication that DTC was under any statutory or contractual obligation to determine whether securities deposited with DTC could be legally transferred by book-entry. 17 Securities Exchange Act Release No. 33672 (February 23, 1994), 59 FR 10186 (March 3, 1994) (File No. SR-DTC-93-14) (Order Approving Proposed Rule Change Relating to a Clarification of Rule 5). DTC Procedures DTC implements a variety of measures designed to facilitate compliance by issuers and participants with their obligations to DTC and pursuant to the federal securities laws. With respect to new issues of Foreign Securities, these measures include the following.
(1)For all Foreign Securities, DTC will require
(a)from the Participant seeking DTC eligibility ( *e.g.* , the underwriter) an Eligibility Questionnaire that sets forth *inter alia* the basis on which the securities are eligible for deposit and book-entry transfer though the facilities of DTC and
(b)from the issuer a Letter of Representations with representations that incorporate by reference substantially all of the standard representations set forth in the DTC Operational Arrangements.
(2)For Foreign Regulation S Securities, DTC will require from the issuer a rider to the Letter of Representations with *inter alia* additional representations relating to the securities being eligible for resale pursuant to Regulation S and having a CUSIP or CINS identification number different from the CUSIP or CINS identification number of any registered securities of the issuer of the same class.
(3)For Foreign Rule 144A Securities, DTC will require from the issuer a rider to the Letter of Representations with *inter alia* additional representations relating to the securities being eligible for resale pursuant to Rule 144A, having a CUSIP or CINS identification number different from the CUSIP or CINS identification number of any registered securities of the issuer of the same class and whether the securities are investment grade securities or securities designated for inclusion in an SRO Rule 144A System. With respect to older issues of Foreign Securities, these measures include the following. 18 18 Foreign Securities that have historically been traded only on foreign securities exchanges and in foreign over-the-counter markets can be deposited as older issues and transferred by book-entry through the facilities of DTC, provided that they may legally be resold in the United States ( *i.e.* , they are registered under the Securities Act or they are eligible for resale in the United States without registration under the Securities Act).
(1)DTC
(a)will determine that any unregistered Foreign Securities deposited with DTC have a CUSIP or CINS identification number that is different from the CUSIP or CINS identification of any registered securities of the issuer of the same class and
(b)would confirm that any Foreign Rule 144A Securities deposited with DTC are investment grade securities or securities designated for inclusion in an SRO Rule 144A System.
(2)DTC will require from any participant that wishes to deposit any unregistered Foreign Securities with DTC or engage in any transactions in unregistered Foreign Securities through the facilities of DTC a one-time blanket Letter of Representations (“Participant Foreign Securities BLOR”) with *inter alia* representations that such Participant
(a)will not deposit any unregistered Foreign Securities with DTC unless such securities are eligible for resale without registration under the Securities Act and
(b)will not engage in any transactions in Foreign Securities, including any distribution of unregistered Foreign Securities through the facilities of DTC, in violation of the Securities Act and the rules and regulations of the Commission thereunder. 19 19 A form of the proposed Participant Foreign Securities BLOR is attached as Exhibit 2 to the proposed rule change filed by DTC with the Commission. DTC will systemically block any Participant that has not executed a Participant Foreign Securities BLOR from
(a)depositing any unregistered Foreign Securities with DTC or
(b)engaging in any transactions in unregistered Foreign Securities through the facilities of DTC. Additional Documentation Although the foregoing documentation for new issues and older issues would be provided by issuers or participants in connection with the deposit of Foreign Securities with DTC and as a condition to engaging in transactions in Foreign Securities through the facilities of DTC, DTC will have the right to adopt associated procedures to determine in accordance with Rule 5 Section 1 of the DTC Rules and its obligations as a registered clearing agency subject to regulation by the Commission whether any other or additional documentation will be required. III. Comments The Commission received one comment to the proposed rule change. 20 The comment letter was written on behalf of the Operations Committee of the Securities Industry and Financial Markets Association (“SIFMA”) and requests that the Commission approve the proposed rule change. SIFMA notes in its letter that the proposed rule change includes procedures, such as the Eligibility Questionnaire and the Blanket Letter of Representation, that are designed
(1)to prevent DTC Participants from depositing unregistered Foreign Securities at DTC that are not eligible for resale under the Securities Act and
(2)to prevent DTC Participants from using the facilities of DTC to engage in transactions in unregistered Foreign Securities that would violate the Securities Act and the rules and regulations thereunder. SIFMA states that given these procedural controls, it believes that older issues of unregistered Foreign Securities pose no additional risk to DTC or to the national clearance and settlement system and that participants and the markets will benefit from making a wider range of unregistered Foreign Securities eligible for deposit and book-entry transfer at DTC. 20 Letter from Noland Cheng, Chairman, Operations Committee, Securities Industry and Financial Markets Association (July 17, 2007). IV. Discussion Section 17A(b)(3)(F) of the Act requires that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions. The proposed rule change expands the kinds of Foreign Securities eligible for deposit and book-entry transfer at DTC to include not only new issues of Foreign Securities but also older issues of Foreign Securities such as securities that currently may be freely traded outside the U.S. over the counter or on foreign exchanges or traded in the U.S. in the over-the-counter market subject to the resale restrictions of the Securities Act. The proposed rule change also consolidates DTC's procedures for making Foreign Securities DTC-eligible. By allowing DTC participants to consolidate their positions in Foreign Securities at DTC instead of using the services of several custodians, DTC participants should benefit from the use of DTC's efficient, safe, and cost-efficient operations. This should be particularly true in situations where one DTC participant is transferring Foreign Securities to another DTC participant. Accordingly, we find that the proposed rule change is designed to promote the prompt and accurate clearance and settlement of securities transactions. While DTC states in the filing that issuers and participants will be responsible not to engage in any transactions in Foreign Securities, including any distribution of unregistered Foreign Securities through the facilities of DTC, in violation of the Securities Act and the rules and regulations of the Commission, DTC is adopting, as set forth in the Policy Statement, certain measures designed to facilitate compliance by issuers and participants with the securities laws. These measures, as outlined in section III of this approval order, and appear to be well designed to reduce the potential for the misuse of DTC's systems and facilities, particularly given DTC's experience with newer issuers of Foreign Securities. However, we expect DTC to monitor the effectiveness of these measures and to modify or adopt additional procedures where necessary. V. 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. 21 21 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-DTC-2007-04) be and hereby is approved. 22 17 CFR 200.30-3(a)(12). For the Commission by the Division of Market Regulation, pursuant to delegated authority. 22 Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16752 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56279; File No. SR-NASD-2007-047] Self-Regulatory Organizations: National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Amendments to Certain Rules in Light of Amendments to SEC Rule 10a-1 and Regulation SHO August 17, 2007. 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 5, 2007, the National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc. (“FINRA”)) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by FINRA. FINRA has designated the proposed rule change as constituting a “non-controversial” rule change under paragraph (f)(6) of Rule 19b-4 under the Act, 3 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. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend certain rules and repeal Rule 5100 and IM-5100 in light of the elimination of SEC Rule 10a-1 of the Act and the amendments to Regulation SHO under the Act. The text of the proposed rule change is available at FINRA, the Commission's Public Reference Room, and *http://www.finra.org.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA 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. FINRA 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 Background and Discussion On June 13, 2007, the Commission voted to adopt certain amendments to SEC Rule 10a-1 and Regulation SHO under the Act. The amendments, among other things:
(1)Eliminate the short sale price test contained in SEC Rule 10a-1;
(2)add Rule 201(a) of Regulation SHO to provide that no price test, including any price test of any self-regulatory organization (“SRO”), shall apply to short sales in any security;
(3)add Rule 201(b) of Regulation SHO to prohibit any SRO from having a price test; and
(4)amend Rule 200(g) of Regulation SHO to remove the requirement that a broker-dealer mark a sell order of an equity security as “short exempt” if the seller is relying on an exception from the price test of Rule 10a-1, or any price test of any exchange or national securities association. The amendments to SEC Rule 10a-1 and Regulation SHO became effective on July 3, 2007. 4 However, the compliance date of the amendments was July 6, 2007. 4 *See* Securities Exchange Act Release No. 55970 (June 28, 2007), 72 FR 36348 (July 3, 2007). The purpose of this proposed rule change is to make conforming changes to FINRA rules to reflect the elimination of SEC Rule 10a-1 and other amendments to Regulation SHO by:
(1)Eliminating references to SEC Rule 10a-1 in FINRA rules;
(2)repealing FINRA's short sale rule contained in Rule 5100 and IM-5100, as well as amending FINRA rules that reference Rule 5100 or IM-5100; and
(3)removing any “short exempt” marking requirements in FINRA rules. Elimination of References to SEC Rule 10a-1 in FINRA Rules Currently, Rule 3360 (Short-Interest Reporting) requires members to record and report short interest information to FINRA. Reportable short positions are those resulting from “short sales” as the term is defined in SEC Rule 200 of Regulation SHO, with the exception of positions that meet the requirements of subsections (e)(1), (6), (7), (8), and
(10)of Rule 10a-1 of the Act. 5 As a result of the repeal of SEC Rule 10a-1, these subsections will no longer exist. Therefore, FINRA is proposing a technical change to Rule 3360 to replace the references to these exceptions to SEC Rule 10a-1 with the underlying rule text of each provision. 6 FINRA also is proposing to make conforming amendments to IM-6130, IM-6130C, IM-6130D, IM-6130E to remove references to SEC Rule 10a-1. 5 *See* Rule 3360(b)(1). 6 As part of the Commission's approval of amendments to expand Rule 3360 to OTC equity securities, the Commission urged FINRA to review the exceptions to short interest reporting to determine whether further rulemaking is appropriate. *See* Securities Exchange Act Release No. 53224 (February 3, 2006), 71 FR 7101 (February 10, 2006) (order approving SR-NASD-2005-112). Additionally, as part of the Commission's approval of rule changes by FINRA, Amex, and the NYSE to increase the frequency of short interest reporting to twice per month, the Commission instructed FINRA, among other SROs, to review the exceptions to short interest reporting to determine whether further rulemaking is appropriate. FINRA, together with the other SROs, is currently conducting such a review. If, based on this review, a determination is made that further rulemaking is warranted, FINRA will file a separate rule change with the Commission. *See* Securities Exchange Act Release No. 55406 (March 6, 2007), 72 FR 11071 (March 12, 2007) (order approving SR-NASD-2006-131; SR-NYSE-2006-111; SR-Amex-2007-05). Repeal of FINRA's Short Sale Rule As noted above, the Commission has removed the restrictions on the execution prices of short sales and prohibited SROs from having price tests. Rule 5100 governs short sales of over-the-counter (“OTC”) transactions reported to the Alternative Display Facility or a Trade Reporting Facility. More specifically, Rule 5100 generally prohibits a member from effecting short sales in NASDAQ Global Market securities otherwise than on an exchange for a customer account, or the member's own account, at or below the current national best (inside) bid, when the current national best (inside) bid is below the preceding national best (inside) bid. As an SRO, FINRA now is prohibited from having such a short sale price test under newly adopted SEC Rule 201. Accordingly, FINRA is proposing to repeal its short sale rule contained in Rule 5100 and the related interpretive material in IM-5100 and is proposing conforming changes to IM-6130, IM-6130C, IM-6130D, IM-6130E and Rule 9610 to delete references to Rule 5100 in such rules. Removal of Short Exempt Marking Requirements Currently, Rule 200(g)(2) of Regulation SHO provides that a short sale order must be marked short exempt if relying on an exception from the short sale price test in SEC Rule 10a-1 or any short sale price test of an exchange or national securities association. Likewise, certain FINRA rules require members to indicate on their transaction reports whether a transaction is a short exempt transaction, in conformance with SEC Rule 200(g)(2). In light of the Commission's recent amendments to delete the short exempt marking requirement from its rule, FINRA is proposing conforming changes to delete any references to that requirement in its rules. As such, FINRA proposes to amend Rules 4632, 4632A, 4632C, 4632D, 4632E, 6130, 6130C, 6130D, 6130E, and IM-6130, IM-6130C, IM-6130D, IM-6130E to remove the short exempt marking requirements. Technical Changes FINRA also is proposing to make certain technical changes to the text of Rule 3360. Specifically, Rule 3360(b) provides that, subject to certain limited exceptions, short positions required to be reported under the rule are those resulting from short sales as the term is defined in Rule 200 of Regulation SHO. The term “short sale” is actually defined in Rule 200(a) of Regulation SHO. Therefore, FINRA is proposing to amend the text of Rule 3360 to reference Rule 200(a) of Regulation SHO, not Rule 200 of Regulation SHO to eliminate any confusion. Additionally, FINRA is proposing to amend the definition of “OTC equity security” in Rule 3360 to delete the specific reference to The Nasdaq Stock Market, Inc. as it is now covered under the term “national securities exchange.” Implementation As noted above, FINRA has filed the proposed rule change for immediate effectiveness. FINRA proposes July 6, 2007 as the compliance date of the proposed rule change, to coincide with the compliance date of the amendments to SEC Rule 10a-1 and Regulation SHO. However, with respect to the repeal of the short sale exempt marking requirements, firms are permitted to continue to mark transactions as “short exempt” for a ninety-day transitional period after the July 6, 2007 compliance date in accordance with the SEC No-Action relief relating to the “short exempt” marking requirement of Rule 200(g) of Regulation SHO. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of section 15A(b)(6) of the Act, 7 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change is necessary and appropriate to comply with the amendments to SEC Rule 10a-1 and Regulation SHO. 7 15 U.S.C. 78o-3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition FINRA 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 Because the foregoing proposed rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) 8 of the Act and Rule 19b-4(f)(6) thereunder. 9 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(6). FINRA has asked the Commission to waive the 30-day operative delay. The Commission believes such waiver is consistent with the protection of investors and the public interest because it would allow the proposed rule change to be effective on July 6, 2007, the compliance date for the amendments to Rule 10a-1 and Regulation SHO. 10 For this reason, the Commission designates the proposal to be operative upon filing with the Commission. 10 For purposes only of waiving the 30-day pre-operative period, the Commission has considered the proposed rule change's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2007-047 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-2007-047. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. 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-2007-047 and should be submitted on or before September 14, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 Florence E. Harmon, Deputy Secretary. 11 17 CFR 200.30-3(a)(12). [FR Doc. E7-16758 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56285; File No. SR-NASD-2007-049] Self-Regulatory Organizations; National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NASD Rule 3013 and Accompanying Interpretive Material 3013 August 17, 2007. 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 16, 2007, the National Association of Securities Dealers, Inc. (“NASD”), n/k/a Financial Industry Regulatory Authority, Inc. (“FINRA”), 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 substantially prepared by FINRA. 3 FINRA has designated the proposed rule change as constituting a “non-controversial” rule change under paragraph (f)(6) of Rule 19b-4 under the Act, 4 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. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 On July 26, 2007, the Commission approved a proposed rule change filed by NASD to amend NASD's Certificate of Incorporation to reflect its name change to Financial Industry Regulatory Authority, Inc., or FINRA, in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation, Inc. *See* Securities Exchange Act Release No. 56146 (July 26, 2007). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend NASD Rule 3013 and accompanying Interpretive Material 3013 to permit members to designate co-chief executive officers and multiple chief compliance officers to discharge the requirements of those rules. The text of the proposed rule change is available on FINRA's Web site ( *http://www.finra.org* ), at FINRA, 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, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD Rule 3013 (Annual Certification of Compliance and Supervisory Processes) is intended to bolster attention to members' compliance programs by requiring substantial and purposeful interaction between business and compliance officers throughout the member firm. To that end, Rule 3013(a) requires each member to designate and specifically identify on Schedule A of the Uniform Application for Broker-Dealer Registration (“Form BD”) a principal to serve as chief compliance officer (“CCO”). Rule 3013(b) requires that the chief executive officer (“CEO”) certify annually that the member has in place processes to establish, maintain, review, test and modify written policies and procedures reasonably designed to achieve compliance with applicable NASD rules, MSRB rules and federal securities laws and regulations. The certification language and additional guidance are set forth in Interpretive Material (“IM”) 3013. The certification includes not only a statement that the member has in place certain compliance processes, but also that the CEO has conducted one or more meetings with the CCO in the preceding 12 months to discuss those processes. The interpretive material explains that the mandated meetings between the CEO and CCO must include a discussion of the member's compliance efforts to date and identify and address significant compliance problems and plans for emerging business areas. The IM further sets forth the expertise that is expected of a CCO, including the process of gaining an understanding of a member's products, services and line functions that need to be the subject of compliance policies and written supervisory procedures. FINRA recognizes that such expertise may reside in more than one individual in firms with distinct business segments. In those circumstances, FINRA believes the purposes of the rule can be achieved with equal effect by dividing the responsibility of advising the member on its compliance scheme among those compliance experts within each distinct business unit. Accordingly, the proposed rule change would permit a member to designate multiple chief compliance officers on Schedule A of Form BD, provided that
(1)each designated CCO is a principal of the firm;
(2)the member precisely defines and documents the areas of primary compliance responsibility assigned to each designated CCO and makes specific provisions for which of the designated CCOs has primary compliance responsibility in areas that can reasonably be expected to overlap;
(3)each designated CCO satisfies all of the requirements of Rule 3013 and IM-3013 with respect to his or her defined area of primary compliance responsibility as if that individual was the member's only CCO; and
(4)collectively, the designated CCOs have the responsibilities and expertise that enable them to consult with the CEO on the totality of the subject matters required to be addressed in the certification by the CEO under Rule 3013. Thus, for example, IM-3013 explains that member must conduct one or more meetings annually between the CEO and CCO to
(1)discuss and review the matters that are the subject of the certification;
(2)discuss and review the member's compliance efforts as of the date of such meetings; and
(3)identify and address significant compliance problems and plans for emerging business areas. A member that chooses to have multiple CCOs under the proposed rule change would be required to conduct one or more meetings annually between the CEO and each designated CCO, individually or collectively. And at each such meeting, the CEO would be required to discuss with each CCO the required topics, but only as it relates to the particular CCO's defined area of primary compliance responsibility. Similarly, the IM currently requires review by the CCO of the report evidencing a member's processes and consultation by the CEO with the CCO prior to execution of the certification. The proposed rule change would require review by and consultation with each CCO. The proposed rule change also would permit the designation of a single co-CEO for the purposes of compliance with Rule 3013 and IM-3013 only. 5 However, in contrast to the proposal to allow co-CCOs, co-CEOs could not divide up the requirements of the Rule and interpretive material; rather, each of the two CEOs would be required to individually discharge all of the obligations set forth in Rule 3013 and IM-3013, each would be held responsible for the representations in the certification as if they were the member's only CEO, and the signature of each co-CEO would be expected to appear on the same single annual certification. 5 Designation of a co-CEO pursuant to this proposed rule change would have no effect on any other regulatory obligation imposed on a member or its CEO. As noted in Item 2 of this filing, FINRA has filed the proposed rule change for immediate effectiveness. The effective date and the implementation date will be the date of filing, July 16, 2007. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, 6 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change is consistent with the provisions of the Act noted above in that it will enhance focus on members' compliance and supervision systems, thereby decreasing the likelihood of fraud and manipulative acts and increasing investor protection. 6 15 U.S.C. 78o-3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition FINRA 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. 7 7 15 U.S.C. 78a. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. 8 8 17 CFR 240.19b-4(f)(6). A proposed rule change filed under Rule 19b-(f)(6) normally may not become operative prior to 30 days after the date of filing. 9 However, Rule 19b-4(f)(6)(iii) 10 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and in the public interest because it will:
(1)Improve the compliance certification and supervisory processes of members by assigning responsibility in multiple CCOs based on expertise; and
(2)still make the designated CCO responsible for compliance in his or her area of expertise as if the individual was the member's only CCO. For this reason, the Commission designates that the proposed rule change become operative immediately. 11 9 Rule 19b-4(f)(6)(iii) requires that a self-regulatory organization submit to the Commission written notice of its intent to file the proposed rule change, along with a brief description of the text of the proposed rule change, at least five days prior to the date of filing of the proposed rule change, or shorter time as designated by the Commission. FINRA has satisfied the five-day pre-filing notice requirement. 10 *Id.* 11 For the purposes only of waiving the operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2007-049 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-2007-049. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. 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-2007-049 and should be submitted on or before September 14, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16761 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56280; File No. SR-NYSEArca-2007-88] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to NYSE Arca Rule 6.72 and the Penny Pilot for Options Trading August 17, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 16, 2007, the NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which items have been substantially prepared by NYSE Arca. 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 NYSE Arca proposes to amend its options trading rules in order to extend the Penny Pilot in options classes in certain issues (“Pilot Program”) previously approved by the Commission through March 27, 2009. 3 The Exchange also proposes to expand the Pilot Program in two phases:
(1)The first phase will start on September 28, 2007 and continue through March 27, 2008 and will add 22 options classes, and
(2)the second phase will start on March 28, 2008 and continue through March 27, 2009 and will add approximately 28 additional option classes. The text of the proposed rule change is available at *http://www.nysearca.com,* at the Exchange, and at the Commission's Public Reference Room. 3 *See* Securities Exchange Act Release Nos. 55156 (January 23, 2007), 72 FR 4759 (February 1, 2007) (SR-NYSEArca-2006-73) and 56150 (July 26, 2007), 72 FR 42460 (August 2, 2007) (SR-NYSEArca-2007-56). 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 Exchange hereby proposes to extend the time period of the Pilot Program 4 through March 27, 2009. The Exchange believes the benefits to public customers and other market participants who will be able to express their true prices to buy and sell options have been demonstrated to outweigh the increase in quote traffic. 4 *See supra,* note 3. The Exchange also proposes to expand the Pilot Program in two phases. According to the proposal, the first phase will start on September 28, 2007 and continue through March 27, 2008 and will add 22 options classes. These 22 options classes are among the most actively traded, multiply listed options classes based on national average daily volume and, together with the existing 13 pilot classes, represent approximately 35% of the total industry volume. The 22 additional classes are: SPDR S&P 500 (SPY), Apple Inc. (AAPL), Altria Group (MO), Dendreon Corp. (DNDN), Amgen Inc. (AMGN), Yahoo! Inc. (YHOO), Qualcomm Inc. (QCOM), General Motors (GM), Energy Select Sector SPDR (XLE), Diamonds Trust (DIA), Oil Services HLDRS (OIH), NYSE Euronext (NYX), Cisco Systems (CSCO), Financial Select Sector SPDR (XLF), AT&T, Inc. (T), Citigroup, Inc. (C), Amazon.com Inc. (AMZN), Motorola Inc. (MOT), Research in Motion Ltd. (RIMM), Freeport-McMoRan Copper & Gold, Inc. (FCX), ConocoPhillips (COP), and Bristol-Myers Squibb Co. (BMY). Pursuant to the proposal, the second phase will start on March 28, 2008 and continue through March 27, 2009 and will add approximately 28 additional options classes. These 28 options classes will be among the most actively traded, multiply listed options classes based on national average daily volume, up to the top 50 by volume. This will bring the total number of options classes traded pursuant to the Pilot Program to 63 (12 from the original Pilot Program, 22 from phase one of the proposed expansion, and 28 from phase two of the proposed expansion). 5 5 The Exchange intends to submit a filing pursuant to Section 19(b)(3)(A) of the Act prior to the beginning of phase two, announcing the classes to be added to the Pilot Program. Pursuant to NYSE Arca Rule 6.72, the pilot issues will also be announced to the Exchange's membership via Regulatory Bulletin and published by the Exchange on its Web site. Aside from this expansion, all other aspects of the Pilot Program will remain the same. Specifically, for option contracts traded pursuant to the Pilot Program, the following minimum increments apply:
(1)One cent ($0.01) for all options contracts in QQQQ (Nasdaq-100 Index Tracking Stock),
(2)one cent ($0.01) for all options contracts that are trading at less than $3, and
(3)five cents ($0.05) for all option contracts that are trading at or above $3. NYSE Arca represents that the Exchange has the necessary system capacity to support any additional series listed as part of the Pilot Program. The Exchange agrees to submit written reports to the Commission that include data and written analysis of information collected during the course of the Pilot Program. The Exchange intends to submit four reports within 30 days of the end of each of the following report periods:
(i)May 1, 2007 through September 27, 2007,
(ii)September 28, 2007 through January 31, 2008,
(iii)February 1, 2008 through July 31, 2008, and
(iv)August 1, 2008 through January 31, 2009. These reports will include, but will not be limited to, data and analysis concerning the economic and capacity impact of the Pilot Program. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act, 6 in general, and furthers the objectives of Section 6(b)(5) of the Act, 7 in particular, in that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will 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 on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the Exchange consents, the Commission will:
(A)By order approve such proposed rule change, or
(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. The Commission also requests and encourages interested persons to submit comments on the following specific questions: • Whether there are circumstances under which options classes included in the Penny Pilot should be removed from the Pilot? • If so, what factors should be considered in making the determination to remove an option class from the Penny Pilot? ○ Should an objective standard be used? For instance, should an option class come out of the Penny Pilot if its trading volume drops below a threshold amount? If so, what should that threshold be? Or, should an option class come out of the Penny Pilot if it is no longer among the most actively-traded options? If so, what should be considered the most-actively traded options? What statistics or analysis should be used to support a determination to remove an options class? ○ Should a more subjective analysis be allowed? If so, what factors should be taken into account? • What concerns might arise by removing an option from the Penny Pilot? How could such concerns be ameliorated? • How frequently should the analysis be undertaken ( *e.g.* , annually, bi-annually, quarterly), or should the evaluation be an automated process? • If a determination is made that an option should be removed from the Penny Pilot, how much notice should be given to market participants that the quoting increment will change? Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSEArca-2007-88 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEArca-2007-88. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2007-88 and should be submitted on or before September 14, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16759 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56272; File No. SR-Phlx-2007-57] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Trading Sessions on XLE August 16, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 3, 2007, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Phlx Rule 101, Supplementary Material .02 to provide for securities that trade in one or two, but not all three, trading sessions on XLE. 5 In addition, the Exchange would amend the rule to require the Exchange to maintain on its Internet Web site information regarding securities that do not trade in all three sessions on XLE and securities which have a Core Session that lasts until 4:15 p.m. (ET). 5 Phlx Rule 101 Supplementary Material .02(1)-(3) describes XLE's three trading sessions. The Pre Market Session begins at 8 a.m. Eastern Time (“ET”) and concludes at the commencement of the Core Session. The Core Session begins at 9:30 a.m.
(ET)and concludes at 4 p.m. (ET), provided that for specified exchange-traded funds, the Core Session concludes at 4:15 p.m. (ET). The Post Market Session begins following the conclusion of the Core Session and concludes at 6 p.m. (ET). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Phlx included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. The text of the proposed rule change is available on the Phlx Web site ( *http://www.phlx.com* ), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to clarify the trading hours of certain securities that will not trade on Phlx during the entire XLE trading day. Phlx Rule 101 currently provides, in part, that XLE shall have three trading sessions each day: A Pre Market Session (8 a.m. until 9:30 a.m. (ET)), a Core Session (9:30 a.m. until 4 p.m. (ET), except for certain exchange-traded funds (“ETFs”), for which the trading session lasts until 4:15 p.m. (ET)) and a Post Market Session (which begins at the conclusion of the Core Session and lasts until 6 p.m. (ET)). Proposed Phlx Rule 101 would include a list of those securities which are eligible to trade in one or more, but not all three of these trading sessions. Phlx would maintain on its Internet Web site ( *http://www.phlx.com* ) a list that identifies all securities traded on XLE that do not trade for the duration of each of the three sessions specified in Phlx Rule 101. For example, certain ETFs that are based on indexes composed of commodities or securities not registered in the United States may not be eligible to trade during the entire XLE trading day because the instruments underlying the indexes underlying the ETF are not active during certain times and therefore last sale or other data used to determine the index value is not available. In addition, Phlx will maintain on its Internet Web site a list that identifies all securities traded on XLE for which the Core Session is extended until 4:15 p.m. (ET). Pursuant to the proposed rule, Phlx would also be required to update its Web site promptly and indicate on its Web site a “current as of” date. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Section 6(b)(5) of the Act 7 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. 6 15 U.S.C. 78f(b). 7 5 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not:
(i)Significantly affect the protection of investors or the public interest;
(ii)Impose any significant burden on competition; and
(iii)Become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and Rule 19b-4(f)(6) thereunder. 9 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b-4(f)(6). A proposed rule change filed under Rule 19b-4(f)(6) 10 normally does not become operative prior to 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay. 11 The Commission believes that such waiver is consistent with the protection of investors and the public interest because the proposed rule change should provide transparency and more clarity with respect to the trading hours eligibility of certain derivative securities products. For this reason, the Commission designates the proposed rule change as operative upon filing with the Commission. 12 The Commission notes that the filing does not change the trading hours of the derivative securities products listed in Phlx Rule 101, but codifies trading hour sessions that have been established through other rule changes or through the use of the Exchange's generic listing standards 13 pursuant to Rule 19b-4(e) under the Act. 14 The Commission also notes that the proposed rule change is substantially similar to the rules of another national securities exchange. 15 10 *Id.* 11 17 CFR 240.19b-4(f)(6)(iii). As required by Rule 19b-4(f)(6), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change at least five days prior to the date of filing of the proposed rule change. 12 For purposes only of waiving the operative date of this proposal, the Commission has considered the rule's impact on efficiency, competition and capital formation. *See* 15 U.S.C. 78c(f). 13 *See e.g.,* Phlx Rule 803(i)(11)( *1* ). 14 17 CFR 240.19b-4(e). 15 *See* Securities Exchange Act Release No. 55707 (May 4, 2007), 72 FR 26666 (May 10, 2007) (SR-NYSEArca-2007-41). At any time within 60 days of the filing of the proposed rule change the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2007-57 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2007-57. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2007-57 and should be submitted on or before September 14, 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. E7-16754 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56274; File No. SR-Phlx-2007-54] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendments No. 1 and 2 Thereto Relating to Market Access Providers August 16, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 6, 2007, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III, below, which Items have been substantially prepared by the Phlx. The Phlx filed Amendments No. 1 and 2 to the proposed rule change on August 14, 2007 and August 16, 2007, respectively. The Phlx filed the proposed rule change 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 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 Phlx proposes to amend its schedule of fees to institute a new subsidy program (the “Subsidy”), which would be available to qualifying Phlx member organizations that offer to customers automated order routing systems and electronic market access to U.S. options markets (“Market Access Providers” or “MAPs”) and which would provide such qualified Market Access Providers incentives to route additional option orders to the Phlx and to offer to their customers certain services that are intended to promote the business of the Phlx. The Subsidy would be applicable to any Exchange member organization that qualifies as a MAP who elects to participate by submitting any application(s) and/or form(s) required by the Exchange and complying with other conditions enumerated below. The Subsidy would apply to any MAP that has elected to participate for the calendar month that commences following the satisfaction by such MAP of all conditions of participation, and for each calendar month thereafter, provided that such conditions continue to be satisfied. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Phlx included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Phlx has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to provide incentives to Exchange member organizations and their customers. For a MAP to be eligible for the Subsidy, a MAP (an “Eligible MAP”) would be required to:
(1)Submit any required Exchange applications and/or forms for Exchange approval to participate as an Eligible MAP;
(2)Provide to its customers systems that enable the electronic routing of equity option orders to all of the U.S. options exchanges, including the Phlx;
(3)Provide to its customers current consolidated market data from the U.S. options exchanges;
(4)Interface with the Phlx's API to access the Exchange's electronic options trading platform, Phlx XL; 5 5 *See* Securities Exchange Act Release No. 50100 (July 27, 2004), 69 FR 46612 (August 3, 2004) (SR-Phlx-2003-59).
(5)Offer to its customers a customized interface and routing functionality (including sweep function described below) such that:
(A)The Phlx will be the default destination for all equity option orders (whether marketable or not), provided that in the case of marketable orders, the Phlx is at the national best bid or offer (“NBBO”) on the appropriate side of the market ( *i.e.* , the contra-side of the order that is routed to the Phlx), regardless of size or time, up to the Phlx's disseminated size; and
(B)The MAP's option order routing functionality incorporates a feature that causes equity option orders at a specified price to be routed simultaneously to multiple exchanges with a single click (a “sweep function”), which is configured to route all such orders (or, if such orders are for a size larger than the size disseminated by the Phlx on the opposite side of the market, at least the portion of the order that corresponds to the Phlx's disseminated size) to the Phlx as the default destination for execution for a size up to the full size quoted on the Phlx, provided that, in the case of marketable orders, the Phlx disseminated price on the appropriate side of the market is at the NBBO;
(6)Configure its own option order routing functionality such that it is configured as described in sub- paragraphs 5(A) and
(B)above, with respect to all equity option orders as to which the MAP has discretion as to routing (“MAP Routing Orders”);
(7)Ensure that the customized functionality described in sub-paragraphs
(5)and
(6)above permits users submitting equity option orders through such system(s) to manually override the Phlx as the default destination on an order-by-order basis; and
(8)Enter into and maintain an agreement with the Exchange to function as an Eligible MAP and be in compliance with all terms thereof. The Agreement In the agreement referred to in sub-paragraph
(8)above, Eligible MAPs will undertake to offer to their customers the customized interface described in sub-paragraph
(5)above. In addition, Eligible MAPs will also undertake to provide support for such customized interface for those customers that receive the service described in sub-paragraph
(5)above. Nothing in the agreement would obligate a MAP's customer to exclusively use an Eligible MAP's order routing system. Furthermore, nothing in the agreement would relieve Eligible MAPs from complying with their best execution obligations. Specifically, the Eligible MAP would need to, on a regular and at least a quarterly basis, conduct best execution evaluations. If, based upon its regular best execution analysis, the Eligible MAP determines that the routing of MAP Routing Orders to the Phlx using the feature described in sub-paragraph
(6)above would, with respect to particular options, be inconsistent with the highest quality of execution standards, then the Eligible MAP may disable and suspend the features described in sub-paragraphs
(5)and
(6)above with respect to such options and for such period the Eligible MAP determines such inconsistency exists. Eligible MAPs will covenant to refrain from entering into arrangements with other exchanges or execution venues where such exchange or execution venue will have the same routing position as, or priority over, the Phlx as the default destination for option orders described in sub-paragraphs
(5)and
(6)above, unless the Phlx otherwise consents. Such covenant will terminate on the date which is the last calendar day of the year that is one year from the date of the agreement; provided that the Phlx may, by giving written notice to the Eligible MAP, elect to extend such covenant for additional one-year terms, in which case the per contract fee (as described in the first paragraph under “Calculation of the Subsidy” below) during any extension period for that Eligible MAP shall be $0.01 per contract greater than the Subsidy Rate (as defined below) then in effect at the date of renewal, so long as such covenant remains in effect. Notwithstanding the termination of the covenant as described above, the agreement shall otherwise remain in effect. Calculation of the Subsidy The Subsidy, payable to Eligible MAPs monthly, would be an amount per contract (the “Subsidy Rate”) of $0.10 for each Eligible Contract (as defined below) in the immediately preceding calendar month above the particular Eligible MAP's Baseline Order Flow (as defined below). • “Eligible Contracts” means contracts that result from the execution on the Phlx of:
(1)Equity option orders (other than crosses) sent electronically to an Eligible MAP (and routed to the Phlx electronically by the Eligible MAP) by its customers; and
(2)MAP Routing Orders (other than crosses) sent electronically by the Eligible MAP. • “Baseline Order Flow” for an Eligible MAP means the higher of:
(1)500,000 contracts; or
(2)the average contracts per month, calculated for the 3-month period immediately preceding the Eligible MAP entering into the agreement with the Phlx as described in sub-paragraph
(8)above, that resulted from the execution on the Phlx of equity option orders (other than crosses) routed to the Phlx electronically by such Eligible MAP. The Volume Bonus The Exchange will pay each Eligible MAP $50,000 per month (the “Volume Bonus”) for each month in which the Eligible Contracts of such Eligible MAP in the immediately preceding calendar month exceed the higher of:
(1)1,500,000; or
(2)three times the Baseline Order Flow of such Eligible MAP. The Volume Bonus shall be in addition to the amount for any Subsidy that is payable. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 6 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act 7 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities, as well as to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open national market system, and, in general, to protect investors and the public interest, by establishing a Subsidy that encourages the routing of equity options business to the Exchange. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(4) and (5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 8 and Rule 19b-4(f)(2) 9 thereunder, because it involves a member due, fee, or other charge. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 8 15 U.S.C. 78(s)(b)(3)(A)(ii). 9 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2007-54 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2007-54. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2007-54 and should be submitted on or before September 14, 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. E7-16755 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56284; File No. SR-Phlx-2007-62] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change Relating to the Extension and Expansion of a Pilot Program To Quote and Trade Certain Option Series in Increments of $0.01 August 17, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 17, 2007 the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which items have been substantially prepared by the Phlx. 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 Phlx proposes to extend and expand a pilot program (the “Pilot”) that permits certain options series to be quoted and traded in increments of $0.01, through March 27, 2009. The extended Pilot would include additional options that are not part of the current Pilot. The text of the proposed rule change is available on the Exchange's Web site at ( *http://www.phlx.com* ), at the offices of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to continue to permit specified options series to be quoted and traded in increments of $0.01 by extending the Pilot through March 27, 2009, and to expand the Pilot to include additional options, as described more fully below. The Exchange believes that including additional options in the Pilot should provide greater breadth and depth of experience in quoting and trading options series in increments of $0.01, and should therefore enable the Exchange to better analyze the impact of the Pilot on the options marketplace. Current Pilot The current Pilot began on January 26, 2007, 3 and was thereafter extended through September 27, 2007. 4 All series in options included in the Pilot (“Pilot Options,” listed below) trading at a price of less than $3.00 are currently quoted and traded in minimum increments of $0.01, and Pilot Options with a price of $3.00 or higher are currently quoted and traded in minimum increments of $0.05, except that options overlying the Nasdaq-100 Index Tracking Stock (“QQQQ”) 5 are quoted and traded in minimum increments of $0.01 for all series regardless of the price. A list of all Pilot Options was communicated to membership via Exchange circular. 3 *See* Securities Exchange Act Release No. 55153 (January 23, 2007), 72 FR 4553 (January 31, 2007) (SR-Phlx-2006-74). In that filing, the Exchange also made conforming amendments to various Exchange rules in order to be consistent with the Pilot. These conforming changes were also approved on a six-month pilot basis. Therefore, the Exchange is proposing to extend the effective date for these rules through March 27, 2009. 4 *See* Securities Exchange Act Release No. 56141 (July 24, 2007), 72 FR 42216 (August 1, 2007) (SR-Phlx-2007-53). 5 The Nasdaq-100®, Nasdaq-100 Index®, Nasdaq®, The Nasdaq Stock Market®, Nasdaq-100 Shares SM , Nasdaq-100 Trust SM , Nasdaq-100 Index Tracking Stock SM , and QQQ SM are trademarks or service marks of The Nasdaq Stock Market, Inc. (Nasdaq) and have been licensed for use for certain purposes by the Philadelphia Stock Exchange pursuant to a License Agreement with Nasdaq. The Nasdaq-100 Index® (the Index) is determined, composed, and calculated by Nasdaq without regard to the Licensee, the Nasdaq-100 Trust SM , or the beneficial owners of Nasdaq-100 Shares SM . Nasdaq has complete control and sole discretion in determining, comprising, or calculating the Index or in modifying in any way its methods for determining, comprising, or calculating the Index in the future. The options included in the current Pilot are: Symbol Underlying security IWM Ishares Russell 2000 QQQQ QQQQ SMH SemiConductor Holders GE General Electric AMD Advanced Micro Devices MSFT Microsoft INTC Intel CAT Caterpillar WFMI Whole Foods TXN Texas Instruments A Agilent Tech Inc. FLEX Flextronics International SUNW Sun Micro Expanded Pilot The Exchange proposes to expand the current Pilot to include additional options in two phases, beginning on September 28, 2007. Phase I Phase I would begin September 28, 2007, and would continue through March 27, 2008. Phase I would include the original 13 Pilot Options, together with 22 additional options. The 22 new options (listed below), combined with the original 13, would represent approximately 35% of national trading volume based on year-to-date trading volume data (through July 16, 2007) from the Options Clearing Corporation (“OCC”). Excluded from this phase are Google, NDX and RUT due to their relatively high premiums. All Pilot Options in Phase I would trade in $0.01 increments in series trading below $3.00, and in $0.05 increments in series trading at $3.00 and above, except that options on QQQQ would continue to trade in increments of $0.01 for all series. Options to be added to the Pilot in Phase I: Symbol Underlying security SPY SPDR Trust Series 1 AAPL Apple Inc. MO Altria Group Inc. DNDN Dendreon Corporation AMGN Amgen, Inc. YHOO Yahoo!, Inc. QCOM Qualcomm, Inc. GM General Motors Corporation XLE S&P Energy Select Sector SPDR DIA DIAMONDS Trust Series I OIH Oil Services HOLDRS NYX NYSE Euronext CSCO Cisco Systems, Inc. XLF S&P Financial Select Sector SPDR T AT&T Corporation C Citigroup, Inc. AMZN Amazon.com, Inc. MOT Motorola, Inc. RIMM Research in Motion, Ltd. FCX Freeport-McMoRan Cooper & Gold, Inc. COP ConocoPhillips BMY Bristol-Meyers Squibb Company The Exchange would issue a circular to membership identifying the options to be added to the Pilot in Phase I. Phase II Phase II would begin March 28, 2008, and would extend for one year, through March 27, 2009. Options would be added to the Pilot in Phase II such that the Top 50 multiply listed options by national volume would be included, bringing the total number of options in the Pilot to 63. Thus, any multiply listed options in the Top 50 that are not included in Phase I would be added to the Pilot in Phase II. The Exchange would file a proposed rule change under Section (b)(3)(A) of the Act, and would issue a circular to membership, identifying the options to be added to the Pilot in Phase II. Again, all penny options in Phase II would trade in $0.01 increments in series trading below $3.00, and in $0.05 increments in series trading at $3.00 and above. Options on QQQQ would continue to trade in increments of $0.01 for all series. Reporting The Exchange would submit four
(4)reports on the Pilot analyzing its impact on the quality of the Exchange's markets and on capacity, which would be due on the last day of the calendar month following a specified period, as follows: Report #1 would cover the period from May 1, 2007-September 27, 2007 Report #2 would cover the period from September 28, 2007-January 31, 2008 Report #3 would cover the period from February 1, 2008-July 31, 2008 Report #4 would cover the period from August 1, 2008-January 31, 2009 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act, 6 in general, and furthers the objectives of Section 6(b)(5) of the Act, 7 in particular, in that the proposed rule change is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest by expanding the Pilot to include more options series. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will 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 on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the Exchange consents, the Commission will:
(A)By order approve such proposed rule change, or
(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. The Commission also requests and encourages interested persons to submit comments on the following specific questions: • Whether there are circumstances under which options classes included in the Penny Pilot should be removed from the Pilot? • If so, what factors should be considered in making the determination to remove an option class from the Penny Pilot? ○ Should an objective standard be used? For instance, should an option class come out of the Penny Pilot if its trading volume drops below a threshold amount? If so, what should that threshold be? Or, should an option class come out of the Penny Pilot if it is no longer among the most actively-traded options? If so, what should be considered the most-actively traded options? What statistics or analysis should be used to support a determination to remove an options class? ○ Should a more subjective analysis be allowed? If so, what factors should be taken into account? • What concerns might arise by removing an option from the Penny Pilot? How could such concerns be ameliorated? • How frequently should the analysis be undertaken ( *e.g.* , annually, bi-annually, quarterly), or should the evaluation be an automated process? • If a determination is made that an option should be removed from the Penny Pilot, how much notice should be given to market participants that the quoting increment will change? Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2007-62 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-Phlx-2007-62. 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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Phlx. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2007-62 and should be submitted on or before September 14, 2007. 8 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16760 Filed 8-23-07; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 5886] Industry Advisory Panel: Notice of Open Meeting The Industry Advisory Panel of Overseas Buildings Operations will meet on Thursday, September 20, 2007 from 9:30 until 3:30 p.m. Eastern Standard Time. The meeting will be held in room 1107 of the U.S. Department of State, located at 2201 C Street, NW., (entrance on 23rd Street), Washington, DC. For logistical and security reasons, it is imperative that everyone enter and exit using only the 23rd Street entrance. The majority of the meeting is devoted to an exchange of ideas between the Department's Bureau of Overseas Building Operations' senior management and the panel members, on design, operations, and building maintenance. Members of the public are asked to kindly refrain from joining the discussion until Director Williams opens the discussion to them. Entry to the building is controlled; to obtain pre-clearance for entry, members of the public planning to attend should provide, by September 12, 2007, their name, professional affiliation, date of birth, citizenship, and a valid government-issued ID number (i.e., U.S. government ID, U.S. military ID, passport, or drivers license (and state)) by e-mailing: *iapr@state.gov.* Due to limited space, please remember that only one person per company may register. If you have any questions, please contact Andrea Specht at *spechtam@state.gov* or on
(703)516-1544. Dated: August 16, 2007. Charles E. Williams, Director and Chief Operating Officer, Overseas Buildings Operations, Department of State. [FR Doc. E7-16834 Filed 8-23-07; 8:45 am] BILLING CODE 4710-24-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Notice of FAA Approval of the Noise Compatibility Program at Great Falls International Airport, Great Falls, MT AGENCY: Federal Aviation Administration, DOT. ACTION: Notice of FAA Approval of Noise Compatibility Program 14 CFR Part 150, Great Falls International Airport, Great Falls, Montanta. SUMMARY: The Federal Aviation Administration
(FAA)announces its findings on the noise compatibility program submitted by the Great Falls International Airport under the provisions of 49 U.S.C. (the Aviation Safety and Noise Abatement Act, hereinafter referred to as “the Act”) and 14 CFT Part 150. These findings are made in recognition of the description of Federal and nonfederal responsibilities in Senate Report No. 96-52 (1980). On February 13, 2007, the FAA determined that the noise exposure maps submitted by the Great Falls International Airport under Part 150 were in compliance with applicable requirements. On August 8, 2007, the FAA approved the Great Falls International Airport noise compatibility program. All of the recommendations of the program, approved by the Airport, were approved in whole or in part by FAA. EFFECTIVE DATE: The effective date of the FAA's approval of the Great Falls International Airport noise compatibility program is August 8, 2007. FOR FURTHER INFORMATION CONTACT: Gary Gates, Federal Aviation Administration, Helena Airports District Office, 2725 Skyway Drive, Suite 2, Helena, MT, telephone 406-449-5271, e-mail *gary.gates@faa.gov.* Documents reflecting this FAA action may be reviewed at this same location. SUPPLEMENTARY INFORMATION: This notice announces that the FAA has given its overall approval to the noise compatibility program for Great Falls International Airport, effective August 8, 2007. Under section 47504 of the Act, an airport operator who has previously submitted a noise exposure map may submit to the FAA a noise compatibility program which sets forth the measures taken or proposed by the airport operator for the reduction of existing non-compatible land uses and prevention of additional non-compatible land uses within the area covered by the noise exposure maps. The Act requires such programs to be developed in consultation with interested and affected parties including local communities, government agencies, airport users, and FAA personnel. Each airport noise compatibility program developed in accordance with Federal Aviation Regulations
(FAR)Part 150 is a local program, not a Federal program. The FAA does not substitute its judgement for that of the airport proprietor with respect to which measures should be recommended for action. The FAA's approval or disapproval of FAR Part 150 program recommendations is measured according to the standards expressed in Part 150 and the Act and is limited to the following determinations: a. The noise compatibility program was developed in accordance with the provisions and procedures of FAR Part 150; b. Program measures are reasonably consistent with achieving the goals of reducing existing non-compatible land uses around the airport and preventing the introduction of additional non-compatible land uses; c. Program measures would not create an undue burden on interstate or foreign commerce, unjustly discriminate against types or classes of aeronautical uses, violate the terms of airport grant agreements, or intrude into areas preempted by the Federal Government; and d. Program measures relating to the use of flight procedures can be implemented within the period covered by the program without derogating safety, adversely affecting the efficient use and management of the navigable airspace and air traffic control systems, or adversely affecting other powers and responsibilities of the Administrator prescribed by law. Specific limitations with respect to FAA's approval of an airport noise compatibility program are delineated in FAR Part 150, section 150.5. Approval is not a determination concerning the acceptability of land uses under Federal, state, or local law. Approval does not by itself constitute an FAA implementing action. A request for Federal action or approval to implement specific noise compatibility measures may be required, and an FAA decision on the request may require an environmental assessment of the proposed action. Approval does not constitute a commitment by the FAA to financially assist in the implementation of the program nor a determination that all measures covered by the program are eligible for grant-in-aid funding from the FAA. Where federal funding is sought, requests for project grants must be submitted to the FAA Helena Airports District Office in Helena, Montana. Great Falls International Airport submitted to the FAA on February 2, 2007, the noise exposure maps, descriptions, and other documentation produced during the noise compatibility planning study. The Great Falls International Airport noise exposure maps were determined to FAA to be in compliance with applicable requirements on February 13, 2007. Notice of this determination was published in the **Federal Register** on February 26, 2007 (FR Volume 72, Number 37, pages 8412 and 8413). The Great Falls International Airport study contains a proposed noise compatibility program comprised of actions designed for phased implementation by airport management and adjacent jurisdictions from 2005 through 2016. It was requested that the FAA evaluate and approve this material as a noise compatibility program as described in section 47504 of the Act. The FAA began its review of the program on February 13, 2007, and was required by a provision of the Act to approve or disapprove the program within 180 days (other than the use of new or modified flight procedures for noise control). Failure to approve or disapprove such program within the 180-day period shall be deemed to be an approval of such program. The submitted program contained ten proposed actions for noise mitigation on and off the airport. Eight of these were approved by the Airport requiring an FAA determination. The FAA completed its review and determined that the procedural and substantive requirements of the Act and FAR Part 150 have been satisfied. The overall program, therefore, was approved by the FAA effective August 8, 2007. The program elements were approved as follows and as further described in the Record of Approval. Recommendation one—Amend Local Zoning Ordinances to Minimize New Non-compatible Land Uses was approved except for clarified FAA involvement regarding height restrictions. This element will be addressed on a case-by-case basis under project specific 14 CFR Part 77 evaluations. Recommendation two: Create Fair Disclosure Agreements within the Airport Influence Area; Recommendation three: Amend Existing Building Codes; Recommendation four: Prohibit Noise Sensitive Land Use with the 65 DNL; Recommendation five: Prohibit Residential Densities Greater than 2-4 units/acre; Recommendation seven: Sound Attenuation and Undeveloped Land Purchase; Recommendation nine: Periodic Review of Aeronautical Operations and Part 150 Updates; Recommendation ten: Establish Local Committee to Monitor 150 Program; Recommendation six and eight were not approved by the Airport Authority and required no action by FAA. These determinations are set forth in detail in a Record of Approval signed by the Airports Division Manager, Northwest Mountain Region on August 8, 2007. The Record of Approval, as well as other evaluation materials and the documents comprising the submittal, are available for review at the FAA office listed above and at the administrative offices of the Great Falls International Airport. The Record of Approval also will be available on-line at *http://www.faa.gov/arp/environmental/14cfr150/index14.cfm.* Issued in Renton, Washington August 8, 2007. Donna P. Taylor, Manager, Airports Division, Northwest Mountain Region. [FR Doc. 07-4153 Filed 8-23-07; 8:45 am]
Connections1 cite this · traces to 22
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CFR
10 references not yet in our index
  • 10 CFR 2
  • 66 FR 31
  • 20 CFR 325
  • 17 CFR 240.19
  • 15 USC 78(f)(b)
  • 15 USC 78(f)(b)(5)
  • 5 USC 78f(b)(5)
  • 15 USC 78(s)(b)(3)(A)(ii)
  • 14 CFR 150
  • 14 CFR 77
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C.F.R.§ 266.7
C.F.R.§ 346.1
U.S.C.§ 3506
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U.S.C.§ 78f
Cite10 CFR 2
Fed. Reg.66 FR 31
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Cites 32 · showing 12Cited by 1 across 1 source
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