Fed. Reg. Rules and Regulations — Notice

BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56480; File No. SR-FINRA-2007-011] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend NASD Rule 2711 and NYSE Rule 472 Regarding a Member's Disclosure and Supervisory Review Obligations When Distributing Third-Party Research September 20, 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 September 12, 2007, Financial Industry Regulatory Authority, Inc.

(“FINRA”) (f/k/a National Association of Securities Dealers, Inc. (“NASD”)) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. 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 FINRA is proposing to amend NASD Rule 2711 and NYSE Rule 472 with respect to a member's disclosure and supervisory review obligations when it distributes or makes available third-party research reports.

The text of the proposed rule change is available at FINRA, on FINRA's Web site at *http://www.finra.org,* and in 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. 3 3 The Commission has modified parts of these statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD Rule 2711(h)(13) and NYSE Rule 472(k)(4) set forth a member's disclosure and supervisory review obligations when the member distributes— *i.e.* , “pushes out”—or makes available a research report produced by a third party.

A member that distributes a third-party research report must accompany the report with certain current applicable disclosures (“third-party disclosures”), as they pertain to the member:

(1)If the member owns 1% or more of any class of equity securities of the subject company;

(2)if the member or any affiliate has managed or co-managed a public offering of securities of the subject company or received compensation for investment banking services from the subject company in the past 12 months, or expects to receive or intends to seek compensation for such services in the next three months;

(3)if the member makes a market in the subject company's securities; and

(4)any other actual, material conflict of interest of the research analyst or member of which the research analyst knows or has reason to know at the time the research report is distributed or made available. The third-party disclosure requirements do not apply if a member makes available to its customers non-affiliate research either upon request or through a member-maintained Web site. NASD Rule 2711(h)(13) further requires that a registered principal (or supervisory analyst approved pursuant to Rule 344 of the New York Stock Exchange) must review and approve by signature or initial any third-party research distributed by a member. Consistent with NASD Rule 2210(d)(1)(B), the member must review such research to ensure that the applicable disclosures discussed above are complete and accurate (“disclosure review”) and the content of the research reports contains no untrue statement of material fact or is otherwise not false or misleading (“content review”). Similarly, NYSE Rule 472(k)(4) requires a supervisory analyst approved pursuant to New York Stock Exchange Rule 344 to approve by signature or initial any third-party research distributed by a member organization. Additionally, NYSE Rule 472(k)(4) requires a supervisory analyst or qualified person, designated pursuant to NYSE Rule 342(b)(1), to conduct the same disclosure and content review as NASD Rule 2711(h)(13). FINRA has interpreted that content review requirement to mean that a member's supervisory obligation for review of third-party research extends to any untrue statement of material fact or any false or misleading information that

(1)should be known from a reading of the report or

(2)is known based on information otherwise possessed by the member. 4 No supervisory review is required under either rule when a member makes available non-affiliate research either upon request or through a member-maintained Web site. 4 *See Notice to Members* 07-04. NYSE *Information Memo* 07-11, which has been incorporated by FINRA, sets out the same standard for NYSE Rule 472(k)(4). The proposed rule change would define a “third-party research report” for the purposes of the rules as a research report that is produced by a person or entity other than a member. The proposal further would create the subcategory of “independent third-party research” and eliminate the content review requirement when a member distributes or makes available such research. The proposal would define “independent third-party research” for the purposes of the rules to mean a third-party research report, in respect of which the person or entity producing the report:

(1)Has no affiliation or business or contractual relationship with the distributing member or that member's affiliates that is reasonably likely to inform the content of its research reports; and

(2)makes coverage and content determinations without any input from the distributing member or that member's affiliates. The proposed rule change would create an exception from the disclosure review requirement for independent third-party research reports made available by a member either

(1)upon request,

(2)through a member-maintained Web site, or

(3)where such report is made available by a member to a customer in connection with a solicited order in which the registered representative has informed the customer, during the course of the solicitation, of the availability of independent research on the solicited equity security and the customer requests such independent research. The proposed rule change would require that current applicable third-party disclosures accompany any third-party research report that does not meet the definition of “independent third-party research report,” irrespective of whether it is distributed or made available upon request, on a member-maintained Web site or in connection with a solicitation, as described above. However, the proposed rule change would amend NASD Rule 2711(h)(13) and NYSE 472(k)(4) to allow a member to direct a customer to a Web address where such applicable third-party disclosures could be found. FINRA believes the proposed rule change will promote the availability of independent third-party research—a valuable source of independent analysis for investors that can be compared with or supplement a member's own research. At the same time, the proposal would maintain member supervisory review in those circumstances where the member's relationship with the research provider is such that the research is not wholly free from the control or influence of the member. Moreover, the proposed rule change preserves the requirement that a member disclose potential conflicts with the subject company whenever it “pushes out” research to customers. The filing includes a statement about when FINRA will announce the effective date of the proposed rule change. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of section 15A(b)(6) of the Act, 5 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 promote the availability of independent third-party research reports, thereby resulting in more fully informed investment decisions by investors. 5 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 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 changes are 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-FINRA-2007-011 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-FINRA-2007-011. 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-FINRA-2007-011 and should be submitted on or before October 17, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 6 6 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-18958 Filed 9-25-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56481; File No. SR-FINRA-2007-010] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change To Amend an Exemption to NASD Rule 1050 and NYSE Rule Interpretation 344/02 for Certain Research Analysts Employed by a Member's Foreign Affiliate Who Contribute to the Preparation of a Member's Research Report September 20, 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 September 12, 2007, Financial Industry Regulatory Authority, Inc. (“FINRA”) (f/k/a National Association of Securities Dealers, Inc. (“NASD”)) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. 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 FINRA is proposing to amend an exemption to NASD Rule 1050 and NYSE Rule Interpretation 344/02 for certain research analysts employed by a member's foreign affiliate who contribute to the preparation of a member's research report. The text of the proposed rule change is available at FINRA, on FINRA's Web site at *http://www.finra.org.* , and in 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. 3 3 The Commission has modified part of these statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Background NASD Rule 1050 and NYSE 344 (“Rules”) require an associated person who functions as a research analyst to register as such with FINRA and pass a qualification examination. In the context of this requirement, the Rules define “research analyst” as “an associated person who is primarily responsible for the preparation of the substance of a research report or whose name appears on a research report.” The term “research report” in the Rules have the meaning as defined in NASD Rule 2711(a)(8) and NYSE Rule 472.10(2): A written or electronic communication that includes an analysis of equity securities of individual companies or industries, and that provides information reasonably sufficient upon which to base an investment decision. Pursuant to the Rules, FINRA has implemented the Research Analyst Qualification Examination (Series 86/87). The examination consists of an analysis part (Series 86) and a regulatory part (Series 87). Prior to taking either the Series 86 or 87, a candidate also must have passed the General Securities Registered Representative Examination (Series 7), the Limited Registered Representative (Series 17), or the Canada Module of Series 7 (Series 37 or 38). Persons who were functioning as research analysts on the effective date of March 30, 2004, and submitted a registration application to NASD by June 1, 2004, had until April 4, 2005, to meet the registration requirements. The Rules currently provide exemptions from the Series 86 examination for certain applicants who have passed Levels I and II of the Chartered Financial Analyst examination or have passed Levels I and II of the Chartered Market Technician Examination and produce only “technical research reports” as that term is defined in the Rules. The Rules further exempt certain research analysts who are employed by a member's foreign affiliate and contribute to the preparation of a member's research report. The proposed rule change would modify this latter exemption. Current Exemption In March 2004, FINRA and the New York Stock Exchange issued joint guidance on the determination of whether a research report is considered the product of a member or that of a third party, including a foreign affiliate. 4 The guidance explained that FINRA considers a “research report” to be attributable to the member if

(1)the report appears to be the product of the member or

(2)a “research analyst” as defined by FINRA rules associated with a member is involved in producing the research report. Where either of the two factors pertain, the research report and any “research analyst” involved in its production must meet all of the applicable requirements of NASD Rules 1050 and 2711 and NYSE Rules 344 and 472. Thus, for example, a “globally-branded” research report that is not clearly labeled to the reader as being wholly the product of a foreign affiliate would be deemed the member's research. Similarly, FINRA considers a research report prepared by a “mixed-team” that includes at least one research analyst associated with the member to be a member's report for the purpose of application of NASD Rule 2711 and NYSE Rule 472. 4 *See* NASD *Notice to Members* 04-18 and New York Stock Exchange *Information Memo* 04-10. The New York Stock Exchange memo applies to its Rule 472. FINRA has incorporated both Rule 472 and the applicable interpretive guidance. Since the Rules require any “research analyst” who contributes to the preparation of a member's research report or whose name appears on such report to be registered, certain foreign analysts who contribute to the production of a member's “globally-branded” research or “mixed-team” research report could be required to meet the qualification requirements, but only if they are associated persons of the member. FINRA affirmed this interpretation in announcing the Research Analyst Qualification Examination in a March 2004 *Notice to Members* 04-25. Subsequently, some members requested an exemption from the Rules for certain research analysts associated with a member who reside in certain foreign jurisdictions. FINRA was concerned that absent the safe harbor for certain foreign analysts, members might have had a pragmatic incentive, although not a defensible basis, for construing associated person status on an unduly narrow basis. To alleviate these issues, while maintaining—and in some cases, extending—the safeguards in FINRA rules that ensure objective and quality research, FINRA proposed an exemption from the research analyst qualification requirements for certain research analysts employed by foreign entities in certain jurisdictions approved by FINRA and the New York Stock Exchange, and subject to certain conditions. The Commission approved the proposed exemption in May 2005. 5 FINRA recognized as the basis for exemptive relief from the registration and qualification requirements compliance with other standards in foreign jurisdictions that reflect recognition of principles that are consonant with FINRA qualification standards and the research analyst conflict of interest rules. These principles generally include a combination of

(1)rules that govern research analysts and firm conflicts of interest in the preparation and distribution of research reports;

(2)a requirement that research analysts be registered or licensed by a regulatory authority; or

(3)a testing or experience requirement that demonstrates research analysts' skills and/or knowledge of rules and regulations applicable to research analysts and their firms in the preparation and distribution of research reports. Foreign research analysts in jurisdictions that do not have approved standards are still required to pass the Series 86 and 87 examinations if they are “associated persons” and participate in the preparation of a member's research report. FINRA and the New York Stock Exchange approved seven jurisdictions that met the applicable standard: the United Kingdom, Thailand, China, Hong Kong, Singapore, Malaysia and Japan. 6 5 *See* Securities Exchange Act Release No. 51644 (May 2, 2005), 70 FR 24148 (May 6, 2005) (File No. SR-NYSE 2005-25 and SR-NASD-2005-043). 6 *See* NASD *Notice to Members* 05-24 and New York Stock Exchange *Information Memo* 05-23. The proposed rule change would create a superseding exemption from the research analyst qualification requirements that would cover research analysts residing anywhere outside of the United States. More specifically, the requirements of NASD Rule 1050(a) and NYSE Rule 344.10 would not apply to an associated person who

(1)is an employee of a non-member foreign affiliate of a member (“foreign research analyst”),

(2)resides outside the United States and

(3)contributes, partially or entirely, to the preparation of globally-branded or foreign affiliate research reports but does not contribute to the preparation of a member's research, including a mixed-team report, that is not globally-branded. 7 Eligibility for the exemption would further be conditioned on the member meeting certain supervisory, disclosure and recordkeeping requirements. 7 When used in reference to NYSE Rule 344.10, the term “member” refers to both a natural person and “member organization.” Supervisory Review Members that publish or otherwise distribute globally-branded research reports partially or entirely prepared by a foreign research analyst would be required to subject such research to pre-use review and approval by a registered principal or supervisory analyst in accordance with NASD Rule 1022(a)(5) and NYSE Rule 344.11 and interpretations thereto. 8 In addition, the member would be required to ensure that such research reports comply with NASD Rule 2711 and NYSE Rule 472, as applicable. 8 *See* NASD *Notice to Members* 04-81 and 07-04. Disclosure In publishing or otherwise distributing globally-branded research reports partially or entirely prepared by a foreign research analyst, a member would be required to prominently disclose on the front page of each such research report:

(1)Each affiliate contributing to the research report;

(2)The names of the foreign research analysts employed by each contributing affiliate;

(3)That such research analysts are not registered/qualified as research analysts with FINRA; and

(4)That such research analysts may not be associated persons of the member and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Recordkeeping Members would be required to establish and maintain records that identify those individuals who have availed themselves of the exemption, the basis for such exemption, and evidence of compliance with the conditions of the exemption. Failure to establish and maintain such records would create an inference of a violation of NASD Rule 1050 and NYSE Rule 344. Members also would be required to establish and maintain records that evidence compliance with the applicable content, disclosure, and supervision provisions of NASD Rule 2711 and NYSE Rule 472. Members must maintain these records in accordance with the supervisory requirements of NYSE Rule 342 and NASD Rule 3010, and in addition to such requirement, the failure to establish and maintain such records would create an inference of a violation of the applicable content, disclosure, and supervision provisions of NYSE Rule 472 and NASD Rule 2711. The proposed rule change would have no impact on the obligation of any person or broker-dealer, including a foreign broker-dealer, to comply with the applicable provisions of the federal securities laws, rules and regulations and self-regulatory organization rules. And the fact that a foreign research analyst avails herself or himself of this exemption would not be probative of whether that individual is an “associated person” for other purposes, including whether the foreign research analyst is subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. FINRA views the proposed rule change as an iteration of the existing exemption that will better encourage dissemination to investors of globally-branded and foreign research where determination of FINRA's jurisdiction can be doubtful. At the same time, FINRA believes the proposal balances investor protection concerns by ensuring that all research produced by foreign research analysts who avail themselves of the exemption are subject to supervision, disclosure and other beneficial safeguards, even where the foreign research analyst may not be an associated person of the member and therefore not subject to FINRA regulatory oversight. The proposed rule change would apply prospectively only and is not intended to abate any enforcement actions for failure to comply with the existing exemption. The filing includes a statement about when FINRA will announce the effective date of the proposed rule change. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of section 15A of the Act, including section 15A(b)(6) of the Act, 9 in that it is designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade and, in general, to protect investors and the public interest. The proposed rule change will promote dissemination of globally-branded and foreign research to investors and ensure that such research has investor protection safeguards that might not otherwise be required. 9 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 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 changes are 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-FINRA-2007-010 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-FINRA-2007-010. 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-FINRA-2007-010 and should be submitted on or before October 17, 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. E7-18954 Filed 9-25-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56478; File No. SR-MSRB-2007-03] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Delay the Implementation of Amendments to Rule G-27 on Supervision September 20, 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 September 14, 2007, the Municipal Securities Rulemaking Board (“MSRB” or “Board”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the MSRB. The MSRB has filed the proposal pursuant to section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(1) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The MSRB is proposing to delay, until February 29, 2008, implementation of the amendments to Rule G-27, on supervision, approved in File Number SR-MSRB-2006-10, and which are scheduled to be implemented on November 26, 2007. There are no new changes to the text of Rule G-27 as amended. The text of the proposed rule change is available on the MSRB's Web site ( *http://www.msrb.org* ), at the MSRB, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On May 22, 2007, the Commission approved File Number SR-MSRB-2006-10, which incorporated into Rule G-27 most of the requirements of NASD Rules 3010 (Supervision) and 3012 (Supervisory Control System), to help ensure a coordinated regulatory approach in the area of supervision and to facilitate inspection and enforcement. The Commission also granted the MSRB's request for a delayed effective date of November 26, 2007. Shortly after approval of the amendments, MSRB staff began receiving inquiries from industry members indicating some confusion over which type of principal is required based on the activities conducted at branch offices and offices of supervisory jurisdiction. The MSRB is currently reviewing the amendments to Rule G-27 in light of these inquiries and anticipates publishing a notice in the near future addressing the questions and concerns raised. Pending the completion of such review and anticipated publication of further guidance in this area, the MSRB has filed the proposed rule change for immediate effectiveness to immediately delay, until February 29, 2008, the implementation date of the recently approved amendments to Rule G-27, which otherwise would be implemented on November 26, 2007. 2. Statutory Basis The MSRB believes that the proposed rule change is consistent with section 15B(b)(2)(C) of the Act, 5 which provides that the MSRB's rules shall: 5 15 U.S.C. 78o-4(b)(2)(C). Be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities, to remove impediments to and perfect the mechanism of a free and open market in municipal securities, and, in general, to protect investors and the public interest. The MSRB believes that delaying the implementation date of the recently approved amendments to Rule G-27 will give brokers, dealers and municipal securities dealers the time needed to determine which, if any, of their personnel must be registered as a principal (either a municipal securities principal (Series 53) or a municipal fund securities limited principal (Series 51)) based on the activities undertaken at a branch office and/or office of supervisory jurisdiction. B. Self-Regulatory Organization's Statement on Burden on Competition The MSRB does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The MSRB has received two letters requesting guidance on Rule G-27, as amended, from the College Savings Foundation and from Sutherland Asbill & Brennan, LLP. These commentators raised certain substantive questions regarding the application of the amendments. The MSRB is currently reviewing the amendments to Rule G-27 in light of these inquiries and anticipates publishing a notice in the near future addressing the questions and concerns raised. 6 The commentators also requested that the MSRB delay the effective date of the amendments. The MSRB believes that it would be appropriate to delay the implementation of the amendments until February 29, 2008, in light of its pending review of questions on the amendments, anticipated publication of further guidance in this area, and desire to prevent firms from expending unnecessary time and expense in registering as principals certain people who may not need to be so registered. 6 The MSRB believes that a notice should fully address such questions and concerns. If, however, the MSRB concludes that a notice is insufficient and that further rulemaking is necessary, the MSRB will file a separate rule change with the Commission. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The MSRB has designated this proposed rule change as constituting a stated policy, practice or interpretation with respect to the meaning, administration or enforcement of an existing MSRB rule under Section 19(b)(3)(A)(i) of the Act, 7 and Rule 19b-4(f)(1) thereunder, 8 which renders the proposed rule change effective upon filing with the Commission. 7 15 U.S.C. 78s(b)(3)(A)(i). 8 17 CFR 240.19b-4(f)(1). At any time within 60 days of this filing, the Commission may summarily abrogate this proposal if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 9 9 *See* 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-MSRB-2007-03 on the subject line. Paper Comments: • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-MSRB-2007-03. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 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 MSRB. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-MSRB-2007-03 and should be submitted on or before October 17, 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. E7-18957 Filed 9-25-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56461; File No. SR-NASDAQ-2007-077] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Fees for Members Using the Nasdaq Market Center September 18, 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 September 4, 2007, The NASDAQ Stock Market LLC (“Nasdaq”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II, and III 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)(2) thereunder, 4 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to modify pricing for Nasdaq members using the Nasdaq Market Center. Nasdaq will implement this proposed rule change on September 4, 2007. The text of the proposed rule change is available at the Exchange's Web site, *http://www.nasdaq.complinet.com* , the Exchange and the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq is adding a new fee tier for orders routed to the New York Stock Exchange (“NYSE”) through the Nasdaq Market Center. The new tier recognizes that some market participants use Nasdaq as a preferred means to route orders to NYSE, but less frequently access liquidity on the Nasdaq book. Nevertheless, Nasdaq believes that offering a modest price reduction for firms that make significant use of Nasdaq as a router is appropriate in light of the overall level of fees paid by such firms. Specifically, the reduced fee would apply to members with an average daily volume in all securities during the month of more than 60 million shares of liquidity routed to the NYSE without attempting to execute in the Nasdaq Market Center in any respect. Directed Intermarket Sweep Orders would not count toward the 60 million share requirement, nor would orders that access only displayed quotes in Nasdaq prior to routing. The fee for routing to NYSE in such cases would be $0.0003 per share executed, which compares favorably to fees of $0.000325 and $0.00035 for firms that provide up to 35 million shares of liquidity through Nasdaq (but which are higher than the fee of $0.000275 for firms providing more liquidity). Firms in the new tier would continue to pay a fee of $0.00035 for Directed Intermarket Sweep Orders and orders that access only displayed size in Nasdaq, and 0.3% of the total transaction cost for routed orders in securities priced at less than $1 per share. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, 5 in general, and with Section 6(b)(4) of the Act, 6 in particular, in that the change provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which Nasdaq operates or controls. Nasdaq believes that the fee change reflects an allocation of fees that recognizes the preference of some market participants to use Nasdaq as their primary means of routing orders to NYSE for execution. 5 15 U.S.C. 78f. 6 15 U.S.C. 78f(b)(4). B. Self Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change is filed pursuant to Section 19(b)(3)(A)(ii) of the Act 7 and subparagraph (f)(2) of Rule 19b-4 thereunder 8 because it establishes or changes a due, fee, or other charge applicable only to a member imposed by a self-regulatory organization. Accordingly, the proposal is effective upon Commission receipt of the filing. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 7 15 U.S.C. 78s(b)(3)(A)(ii). 8 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-NASDAQ-2007-077 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASDAQ-2007-077. 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 Nasdaq. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASDAQ-2007-077 and should be submitted on or before October 17, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-18955 Filed 9-25-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56477; File No. SR-NASDAQ-2007-056] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change and Amendment No. 2 Thereto, To Retroactively Modify Pricing for Nasdaq Members Using the Nasdaq Market Center September 20, 2007. On June 1, 2007, The NASDAQ Stock Market LLC (“Nasdaq”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to make retroactive to February 12, 2007, certain modifications to Nasdaq's fee schedule to address transition issues arising from its commencing operations as a national securities exchange. On July 27, 2007, Nasdaq filed Amendment No. 1. On August 6, 2007, Nasdaq withdrew Amendment No. 1 and filed Amendment No. 2, which replaced the text of the original filing in its entirety. The proposed rule change was published for notice and comment in the **Federal Register** on August 15, 2007. 3 The Commission received no comments on the proposal. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 56228 (August 8, 2007), 72 FR 45848. The Commission has carefully reviewed the proposed rule change and finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 4 and, in particular, the requirements of Section 6(b)(4) of the Act, 5 which requires that Nasdaq's rules provide for the equitable allocation of reasonable dues, fees and other charges among its members and issuers and other persons using its facilities. With respect to Rule 7013, the Commission believes it is appropriate to eliminate Tape A revenue sharing for Nasdaq members trading non-Nasdaq securities because this change restores the status quo with respect to Tape A revenue sharing that existed prior to Nasdaq's transition to exchange operation on February 12, 2007. With respect to Rule 7014, the Commission believes that it is appropriate to delete the rule in its entirety because Nasdaq began trading all securities, including non-Nasdaq securities, on a single trading platform on February 12, 2007; thus, a pricing distinction for trading non-Nasdaq securities is not appropriate. The Commission also believes that the remainder of Rule 7014 can be eliminated because the rule references obsolete practices or is duplicative of other Nasdaq rules. 4 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(4). *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 6 that the proposed rule change (SR-NASDAQ-2007-056) be, and it hereby is, approved. 6 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-18956 Filed 9-25-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56471; File No. SR-OCC-2007-08] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Binary Options September 19, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on June 28, 2007, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by OCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change would amend OCC's By-Laws and Rules to permit OCC to clear and settle various types of binary options, including “fixed return options” to be listed by the American Stock Exchange (“Amex”) and binary options on broad-based securities indexes proposed to be listed by the Chicago Board Options Exchange (“CBOE”). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and

(C)below, of the most significant aspects of such statements. 2 2 The Commission has modified parts of these statements.

(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to permit OCC to clear and settle binary options, including fixed return options (“FROs”) to be listed and traded by Amex 3 and binary options on broad-based indexes proposed to be listed and traded by CBOE. 4 Binary options (sometimes referred to as “digital” options) are all-or-nothing options that pay a fixed amount if exercised in the money and otherwise pay nothing. Until recently, OCC did not clear any binary options other than credit default options (“CDOs”) traded on CBOE. CBOE and OCC recently were granted approval for CBOE to trade and for OCC to clear related products called credit default basket options (“CDBOs”). 5 General characteristics of binary options, excluding features unique to CDOs and/or CDBOs that were already described in OCC's prior rule changes, are described below, followed by an explanation of the specific rule changes being proposed by OCC. 3 Securities Exchange Act Release No. 56251 (August 14, 2007), 72 FR 46523 (August 20, 2007) (File No. SR-Amex-2004-27). 4 File No. SR-CBOE-2006-105. 5 Securities Exchange Act Release Nos. 56275 (August 17, 2007), 72 FR 47097 (August 22, 2007) (File No. SR-CBOE-2007-026) and 56288 (August 20, 2007), 72 FR 49034 (August 27, 2007) (File No. SR-OCC-2007-06). *Description of Binary Options.* Binary options are cash-settled options that have only two possible payoff outcomes, either a fixed exercise settlement amount or nothing at all. They are subject to automatic exercise. The underlying interest of a binary option may be one or more securities, an index of securities, or some other measure; however, OCC presently intends to clear only binary options that are within the definition of a “security” as determined by the Commission. In its capacity as a “derivatives clearing organization” regulated by the Commodity Futures Trading Commission (“CFTC”), OCC may in the future propose to clear binary options that are commodity options subject to the jurisdiction of the CFTC. A binary option, other than a CDO or CDBO, is in the money and will be automatically exercised if its underlying interest value, when measured against its exercise price, is determined to meet the criteria for automatic exercise as specified in the Exchange Rules of the listing Exchange. 6 For example, in the case of a “finish high fixed return option,” such option will be automatically exercised and settled for a fixed amount of cash if its underlying interest value is above its exercise price at expiration. In the case of a “finish low fixed return option,” such option will be automatically exercised and settled for a fixed amount of cash if its underlying interest value is below its exercise price at expiration. The rules proposed in this current filing for binary options are intended to be sufficiently generic to be the basis for clearing binary options proposed to be listed by Amex and CBOE as well as other binary options in the future. 6 CDOs and CDBOs, on the other hand, do not have exercise prices. A CDO or CDBO will be deemed to be in the money and will be automatically exercised if a credit event occurs at any time prior to the last day of trading. *By-Law and Rule Amendments Applicable to Binary Options.* In order to provide a framework of rules that can accommodate clearance and settlement of various kinds of binary option products, OCC proposes to broaden the By-Law Article and Rule Chapter covering CDOs and CDBOs.

(1)Terminology—Article I, Section 1 and Article XIV, Section 1 “Binary option” would be defined in Article XIV, Section 1 of the By-Laws, and the definition would be cross-referenced in Article I of the By-Laws. The definitions of “option contract” and “type of option” in Article I of the By-Laws would be amended to include a binary option. OCC proposes to redefine the term “class” in Article XIV, Section 1 so that it will apply to binary options generally. To be within the same class, binary options other than CDOs or CDBOs must cover the same underlying interest and have otherwise identical terms except for exercise price (if any) and expiration date. The definition of “exercise price” in Article I would be replaced with respect to binary options with a revised definition in Article XIV, Section 1 which would recognize that binary options will be settled by a fixed cash payment. The exercise price of a binary option is neither an amount that is paid in exchange for an underlying interest nor is it used to determine the exercise settlement amount as in the case of other cash-settled options. In the case of a binary option other than a CDO or CDBO, the exercise price of a binary option is simply a defined value or range of values for the underlying interest. If the underlying interest value falls within the defined range at expiration of such binary option, the option will be automatically exercised; otherwise, the option will expire unexercised. A CDO or CDBO is said to have no exercise price. OCC proposes to redefine the term “underlying interest” in Article XIV, Section 1 so that it will apply to binary options generally. In the case of a binary option other than a CDO or CDBO, the underlying interest is the underlying security, securities, index, basket, or measure whose value is compared to such option's exercise price to determine whether the option is in the money and will be automatically exercised. In conjunction with the revised definitions of “exercise price” and “underlying interest,” OCC also proposes to add a new defined term, “underlying interest value,” to Article XIV, Section 1. When used with respect to a binary option other than a CDO or CDBO, underlying interest value means the value or level of the unit of trading of the underlying interest at any point in time as reported by the reporting authority. A new definition for the term “unit of trading” would state “unit of trading” when used with respect to a binary option means the quantity of the underlying interest on which the underlying interest value is based and is ordinarily a single share in the case of binary options on individual equity securities or one

(1)In the case of binary index options. The terms “unit of trading” and “underlying interest value” would not be applicable to CDOs and CDBOs. Other terms that were created or amended for CDOs and CDBOs will be modified to apply to binary options generally.

(2)Terms of Cleared Contracts—Article VI, Section 10(e) Paragraph

(e)of Article VI, Section 10 would be further amended to apply to binary options generally.

(3)General Rights and Obligations—Article XIV, Section 2B Article XIV, Section 2B would define the general rights and obligations of holders and writers of binary options other than CDOs or CDBOs. As noted above, the holder of a binary option that is automatically exercised would have the right to receive the fixed exercise settlement amount from OCC, and the assigned writer would have the obligation to pay that amount to OCC.

(4)Adjustments of Binary Options Other than CDOs or CDBOs—Article XIV, Section 3A; Unavailability or Inaccuracy of Final Underlying Interest Value—Article XIV, Section 5; Determination of Final Underlying Interest Value—Article XIV, Section 6 Article XIV, Section 3A would describe the methods by which binary options other than CDOs or CDBOs generally will be adjusted if adjustments are deemed to be necessary. Special adjustment rules are needed because of the fixed, cash-settlement feature of binary options. For instance, under Article VI, Section 11A(d), which governs adjustment of other equity options, if there is a stock dividend, distribution, or split whereby a whole number of shares of the underlying security is issued for each outstanding share, the exercise price is proportionately reduced, and the number of option contracts is increased by the number of shares issued with respect to each share of the underlying security. This adjustment would be inappropriate for binary options for which the underlying interest is an equity security. For example, an XYZ option with an exercise price of $50 would be adjusted to become two XYZ options, each with an exercise price of $25. Because the fixed exercise settlement amount of a binary option is intended to remain at $100, this adjustment would increase the total payout upon exercise to $200. To avoid this result, Article XIV, Section 3A(a)(4) would provide that the number of option contracts would not proportionally increase and only the exercise price would be adjusted. The other provisions of Article XIV, Section 3A are similar to Article VI, Section 11A, with appropriate modifications for binary options. In order to maintain consistency with adjustment policies for physically settled stock options where such consistency is appropriate, certain changes in the treatment of dividends that were proposed in SR-OCC-2006-01 to become effective at a future date, will become effective on the same date for binary options on single stocks. Article XIV, Section 3A(b) would govern adjustments of binary options for which the underlying interest is an index of equity securities and would be similar to Article XVII, Section 3, which governs index options, with appropriate modifications to reflect unique features of binary options. For instance, because binary options do not have an index multiplier, the Securities Committee would generally adjust the exercise price of a binary option of which the underlying interest is an index of equity securities to get the appropriate result. Article XIV, Section 5, would give OCC the authority to fix the underlying interest value for a binary option other than a CDO or CDBO and to rely on that value for determining whether such binary option would be exercised under circumstances similar to those in which OCC may currently fix the exercise settlement amount for index options. Article XIV, Section 6 would provide, in essence, that the underlying interest value of a series of binary options at expiration, other than CDOs or CDBOs, would be determined by the Exchange or Exchanges on which such series is traded subject to any overriding provision of OCC's By-Laws and Rules. If a series of options is traded on more than one Exchange, OCC could use the underlying interest value received from the Exchange deemed by OCC to be the principal Exchange, or OCC could employ a procedure to derive a single value based on some or all of the values received.

(5)Exercise and Settlement—Chapter XV of the Rules and Rule 801 Binary options would not be subject to the exercise-by-exception procedures applicable to most other options under OCC's Rules but would instead be automatically exercised prior to or at expiration if the specified criterion for exercise is met. The procedures for the automatic exercise of binary options, as well as assignment and settlement of exercises (including provisions applicable to a suspended Clearing Member), would be set forth in Rules 1501 through 1505 of new Chapter XV and in revised Rule 801(b).

(6)Margin Requirements—Rule 601; Deposits in Lieu of Margin—Rule 1506 OCC would margin binary options through its usual “STANS” system. STANS has been modified to accommodate the particular binary options to be traded by Amex and the binary index product currently proposed by CBOE. CDOs and CDBOs will be margined as described in the applicable rule filings cited above. OCC is not proposing to accept escrow deposits in lieu of clearing margin for binary options. Therefore, Rule 1506 would state that Rule 610, which otherwise would permit such deposits, does not apply to binary options.

(7)Acceleration of Expiration Date—Rule 1507(d) This new provision would accelerate the expiration date of a binary option other than a CDO or CDBO when OCC determines in its discretion that the underlying interest value of such option has become fixed prior to the expiration of the option ( *e.g.* , where the equity security underlying a binary option has been converted by a merger into the right to receive a fixed amount of cash). If the option is out of the money, it would expire unexercised. Otherwise, it would be automatically exercised. The proposed changes to OCC's By-Laws and Rules are consistent with the purposes and requirements of Section 17A of the Act because they are designed to promote the prompt and accurate clearance and settlement of transactions in, including exercises of, binary options, and to foster cooperation and coordination with persons engaged in the clearance and settlement of such transactions, to remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of such transactions, and in general to protect investors and the public interest. The proposed rule change accomplishes this purpose by applying substantially the same rules and procedures to these transactions as OCC applies to similar transactions in other cash-settled options except to the extent that special rules and procedures are required in order to accommodate unique features of binary options.

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

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

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

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

(A)By order approve the proposed rule change or

(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-OCC-2007-08 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-OCC-2007-08. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549, 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 OCC and on OCC's Web site at *http://www.optionsclearing.com* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2007-08 and should be submitted on or before October 17, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-18963 Filed 9-25-07; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 5942] Bureau of International Security and Nonproliferation; Determination Under the Arms Export Control Act AGENCY: Department of State. ACTION: Notice. Pursuant to Section 654(c) of the Foreign Assistance Act of 1961, as amended, notice is hereby given that the Assistant Secretary of State for International Security and Nonproliferation has made a determination pursuant to Section 73 of the Arms Export Control Act and has concluded that publication of the determination would be harmful to the national security of the United States. Dated: September 20, 2007. John C. Rood, Assistant Secretary of State for International Security and Nonproliferation, Department of State. [FR Doc. E7-19000 Filed 9-25-07; 8:45 am] BILLING CODE 4710-27-P DEPARTMENT OF STATE [Public Notice 5943] Bureau of International Security and Nonproliferation; Imposition of Nonproliferation Measures on Two Iranian Entities and a North Korean Entity, Including a Ban on U.S. Government Procurement AGENCY: Bureau of International Security and Nonproliferation, Department of State. ACTION: Notice. SUMMARY: The U.S. Government has determined that three foreign entities have engaged in proliferation activities that warrant the imposition of measures pursuant to Executive Order 12938 of November 14, 1994, as amended by Executive Order 13094 of July 28, 1998 and Executive Order 13382 of June 28, 2005. DATES: *Effective Date:* September 26, 2007. FOR FURTHER INFORMATION CONTACT: On general issues: Pam Durham, Office of Missile Threat Reduction, Bureau of International Security and Nonproliferation, Department of State (202-647-4931). On import ban issues, Rochelle Stern, Director Policy Planning and Program Management, Office of Foreign Assets Control, Department of the Treasury (202-622-2500). On U.S. Government procurement ban issues: Gladys Gines, Office of the Procurement Executive, Department of State (703-516-1691). SUPPLEMENTARY INFORMATION: Pursuant to the authorities vested in the President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 170, *et seq.* ) (IEEPA), the National Emergencies Act (50 U.S.C. 1601, *et seq.* ), the Arms Export Control Act (22 U.S.C. 2751, *et seq.* ), and Section 301 of title 3, United States Code, and Executive Order 12938 of November 14, 1994, as amended, the U.S. Government determined that the following Iranian entities and North Korean entity have engaged in proliferation activities that warrant the imposition of measures pursuant to sections 4(b), 4(c), and 4(d) of Executive Order 12938: Aerospace Industries Organization (AIO), (Iran). Shahid Hemmat Industrial Group (SHIG), (Iran). Korea Mining and Development Corporation (KOMID), (North Korea). Accordingly, pursuant to the provisions of Executive Order 12938, the following measures are imposed on these entities, their subunits, and successors for two years: 1. All departments and agencies of the United States Government shall not procure or enter into any contract for the procurement of any goods, technology, or services from these entities including the termination of existing contracts; 2. All departments and agencies of the United States government shall not provide any assistance to these entities, and shall not obligate further funds for such purposes; 3. The Secretary of the Treasury shall prohibit the importation into the United States of any goods, technology, or services produced or provided by these entities, other than information or informational materials within the meaning of section 203(b)(3) of the International Emergency Economic Powers Act (50 U.S.C. 1702(b)(3)). These measures shall be implemented by the responsible departments and agencies as provided in Executive Order 12938. In addition, pursuant to section 126.7(a)(1) of the International Traffic in Arms Regulations, it is deemed that suspending the above-named entities from participating in any activities subject to Section 38 of the Arms Export Control Act would be in furtherance of the national security and foreign policy of the United States. Therefore, for two years, the Department of State is hereby suspending all licenses and other approvals for:

(a)Exports and other transfers of defense articles and defense services from the United States;

(b)transfers of U.S.-origin defense articles and defense services from foreign destinations; and

(c)temporary import of defense articles to or from the above-named entities. Moreover, it is the policy of the United States to deny licenses and other approvals for exports and temporary imports of defense articles and defense services destined for these entities. Dated: September 20, 2007. John C. Rood, Assistant Secretary of State for International Security and Nonproliferation, Department of State. [FR Doc. E7-18997 Filed 9-25-07; 8:45 am] BILLING CODE 4710-27-P DEPARTMENT OF STATE [Public Notice 5944] Bureau of International Security and Nonproliferation; Imposition of Missile Proliferation Sanctions Against a North Korean Entity AGENCY: Bureau of International Security and Nonproliferation, Department of State. ACTION: Notice. SUMMARY: A determination has been made that a North Korean entity has engaged in activities that require the imposition of measures pursuant to the Arms Export Control Act, as amended, and the Export Administration Act of 1979, as amended (as carried out under Executive Order 13222 of August 17, 2001). DATES: *Effective Date:* September 26, 2007. FOR FURTHER INFORMATION CONTACT: Pam Durham, Office of Missile Threat Reduction, Bureau of International Security and Nonproliferation, Department of State (202-647-4931). On import ban issues, Rochelle Stern, Director Policy Planning and Program Management, Office of Foreign Assets Control, Department of the Treasury (202-622-2500). On U.S. Government procurement ban issues, Gladys Gines, Office of the Procurement Executive, Department of State (703-516-1621). SUPPLEMENTARY INFORMATION: Pursuant to Section 73(a)(1) of the Arms Export Control Act (22 U.S.C. 2797b(a)(1)); Section 11B(b)(1) of the Export Administration Act of 1979 (50 U.S.C. app. 2410b(b)(1)), as carried out under Executive Order 13222 of August 17, 2001 (hereinafter cited as the “Export Administration Act of 1979”); and Executive Order 12851 of June 11, 1993; the U.S. Government determined on September 18, 2007 that the following foreign person had engaged in missile technology proliferation activities that require the imposition of the sanctions described in Sections 73(a)(2)(B) and

(C)of the Arms Export Control Act (22 U.S.C. 2797b(a)(2)(B) and (C)) and Sections 11B(b)(1)(B)(ii) and

(iii)of the Export Administration Act of 1979 (50 U.S.C. app. 2410b(b)(1)(B)(ii) and (iii)) on this person: Korea Mining and Development Corporation (KOMID) (North Korea) and its sub-units and successors. Accordingly, the following sanctions are being imposed on this person for two years:

(A)Denial of all new individual licenses for the transfer to the sanctioned entity of all items on the U.S. Munitions List and all items the export of which is controlled under the Export Administration Act; and,

(B)Denial of all U.S. Government contracts with the sanctioned entity; and

(C)Prohibition on the importation into the U.S. of all products produced by the sanctioned entity. With respect to items controlled pursuant to the Export Administration Act of 1979, the above export sanction only applies to exports made pursuant to individual export licenses. Additionally, because North Korea is a country with a non-market economy that is not a former member of the Warsaw Pact (as referenced in the definition of “person” in section 74(8)(B) of the Arms Export Control Act), the following sanctions shall be applied for two years to all activities of the North Korean government relating to the development or production of missile equipment or technology and all activities of the North Korean government affecting the development or production of electronics, space systems or equipment, and military aircraft:

(A)Denial of all new individual licenses for the transfer to the government activities described above of all items on the U.S. Munitions List; and,

(B)Denial of all U.S. Government contracts with the government activities described above; and

(C)Prohibition on the importation into the U.S. of all products produced by the government activities described above. These measures shall be implemented by the responsible departments and agencies of the United States Government as provided in Executive Order 12851 of June 11, 1993. Dated: September 20, 2007. John C. Rood, Assistant Secretary of State for International Security and Nonproliferation, Department of State. [FR Doc. E7-18994 Filed 9-25-07; 8:45 am] BILLING CODE 4710-27-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Commercial Space Transportation Advisory Committee Working Group—Meeting Notice AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of Commercial Space Transportation Advisory Committee Reusable Launch Vehicle Working Group Telephone Conference. SUMMARY: Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C. App. 2), and 5 U.S.C. 552b(c), notice is hereby given of a telephone conference for the Reusable Launch Vehicle Working Group (RLVWG) of the Commercial Space Transportation Advisory Committee (COMSTAC). The main issue for discussion will be the formation of a group within the RLVWG to examine training standards for crew and space flight participants. The telephone conference will take place on Friday, October 5, 2007 starting at 9:30 Eastern Daylight Time. For the call-in telephone number and the passcode, contact the Contact Person listed below. FOR FURTHER INFORMATION CONTACT: Brenda Parker (AST-100), FAA Office of Commercial Space Transportation (AST), 800 Independence Avenue, SW., Room 331, Washington, DC 20591, telephone

(202)267-3674; e-mail: *brenda.parker@faa.dot.gov.* Issued in Washington, DC, September 19, 2007. Patricia G. Smith, Associate Administrator for Commercial Space Transportation. [FR Doc. E7-18932 Filed 9-25-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Forty-Second Meeting, RTCA Special Committee 186 Automatic Dependent Surveillance-Broadcast (ADS-B) AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of RTCA Special Committee 186 Automatic Dependent Surveillance-Broadcast (ADS-B) meeting. SUMMARY: The FAA is issuing this notice to advise the public of a meeting of RTCA Special Committee 186 Automatic Dependent Surveillance-Broadcast (ADS-B). DATES: The meeting will be held October 2-5, 2007, at 9 a.m. (Unless Otherwise noted). ADDRESSES: The meeting will be held at RTCA, Inc., 1828 L Street, NW., Suite 805, Washington, DC 20036. FOR FURTHER INFORMATION CONTACT:

(1)RTCA Secretariat (Hal Moses), 1828 L Street, NW., Suite 805, Washington, DC 20036,

(202)833-9339; fax

(202)833-9434; Web site *http://www.rtca.org.* SUPPLEMENTARY INFORMATION: Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., Appendix 2), notice is hereby given for a Special Committee 186 meeting. The agenda will include: • *October 2:* • All Day, ASSAP Subgroup, MacIntosh-NBAA Room. • All Day, CDTI Subgroup, Hilton-ATA Room. • *October 3:* • All Day—Working Group 1—Operations and Implementation, Surface Alerting. Activity, Colson Board Room. • All Day, ASSAP Subgroup, MacIntosh-NBAA Room. • All Day, CDTI Subgroup, Hilton-ATA Room. • *October 4:* • All Day—Working Group 1—Operations and Implementation, Surface Alerting Discussion, Colson Board Room. • All Day, ASSAP Subgroup, MacIntosh-NBAA Room. • All Day, CDTI Subgroup, Hilton-ATA Room. • *October 5:* • Working Groups May Meet After the Plenary Adjourns. • Opening Plenary Session (Welcome and Introductory Remarks, review of meeting agenda). • Review/Approval of the Forty-First Meeting Summary, RTCA Paper No. 219-07/SC186-252. • Date, Place, and Time of Next Meeting. • FAA Surveillance and Broadcast Services

(SBS)Program—Status. • Review proposed TORs for Working Groups. • Working Group Reports. • WG-1—Operations and Implementation. • WG-2—TIS-B MASPS. • WG-3—1090 MHz MOPS. • WG-4—Applications Technical Requirements. • WG-5—UAT MOPS. • RFG—Requirements Focus Group. Closing Plenary Session (New/Other Business, Review Actions Items/Work Program, Adjourn). • Note: • AD—Application Development. • ASAS—Aircraft Surveillance Applications System. • ASSAP—Airborne Surveillance & Separation Assurance Processing. • CDTI—Cockpit Display of Traffic Information. • MASPS—Minimum Aviation System Performance Standards. • MOPS—Minimum Operational Performance Standards. • NRA—Non-Radar Airspace. • RFG—Requirements Focus Group. • STP—Surveillance Transmit Processing. Attendance is open to the interested public but limited to space availability. With the approval of the chairmen, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the `FOR FURTHER INFORMATION CONTACT' section. Members of the public may present a written statement to the committee at any time. Issued in Washington, DC, on September 12, 2007. Francisco Estrada C., RTCA Advisory Committee. [FR Doc. 07-4725 Filed 9-25-07; 8:45 am]

Rules and Regulations. Notice