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Code · REGISTER · 2007-12-06 · SECURITIES AND EXCHANGE COMMISSION · Notices

Notices. Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from section 15(a) of the Act and rule 18f-2 under the Act, as well as from certain disclosure requirements

41,161 words·~187 min read·/register/2007/12/06/07-5967·

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

BILLING CODE 7710-FW-M SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request *Upon Written Request, Copies Available From:* U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549-0213. Extension: NAR Exemptive Request; OMB Control No. 3235-XXXX; SEC File No. 270-573. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) has submitted to the Office of Management and Budget (“OMB”) a request for pre-approval of an exemptive request by the National Association of Realtors® (“NAR”) pursuant to the Securities Exchange Act of 1934 (15 U.S.C. 78a *et seq.* ) (“Exchange Act”).
Background NAR has requested an exemption pursuant to Sections 15(a)(2) and 36(a) of the Exchange Act from the broker-dealer registration requirements of Section 15(a)(1) and the reporting and other requirements of the Exchange Act (other than Sections 15(b)(4) and 15(b)(6)), and the rules and regulations thereunder, that apply to a broker or dealer that is not registered with the Commission. Subject to the conditions specified in NAR's application (“Application”), the requested exemption would allow any licensed real estate agent or broker who is predominantly engaged in and has substantial experience in the sale of commercial real estate (“Commercial Real Estate Professional”) and the real estate brokerage firm with which he or she is licensed (“Real Estate Firm”) (collectively, a “RE Participant”) to receive a real estate advisory fee (“Real Estate Advisory Fee”) from a purchaser of an undivided tenant-in-common interest in real property (“TIC Interest”) that is offered and sold together with other arrangements that cause it to be deemed to be a security under the federal securities laws (“TIC Security”).
Under NAR's exemptive request, a Real Estate Advisory Fee could be paid by the purchaser directly or on behalf of the purchaser by the sponsor or issuer of the TIC Security, which could, thereby, reduce the commission or other compensation received by a registered broker-dealer involved in the TIC Security transaction. The Real Estate Advisory Fee generally would be paid to the Real Estate Firm with which the Commercial Real Estate Professional is licensed. The Firm would distribute all or a previously agreed upon percentage of the Real Estate Advisory Fee to the Commercial Real Estate Professional that signed a buyer's agent agreement with the client and to any other Commercial Real Estate Professional or Real Estate Firm that was added to the agreement with the consent of the client.
Proposed Collections of Information The requested exemption would contain five collections of information. First, the requested exemption would require a RE Participant to deliver a copy of the executed buyer's agent agreement to the registered broker-dealer acting as a placement agent (“Lead Placement Agent”). The purpose of the first collection is to assist in implementing the requested exemption and monitoring for compliance with the exemption's conditions. The proposed delivery requirement is designed to ensure that the Lead Placement Agent has a copy of the buyer's agent agreement in order to comply with its recordkeeping obligations discussed below, which would facilitate monitoring for compliance.
Without this collection of information, the Commission and applicable self-regulatory organization (“SRO”) would be unable to monitor the Lead Placement Agent's compliance. Second, the requested exemption would require any Commercial Real Estate Professional that is to receive, directly or indirectly, a portion of a Real Estate Advisory Fee to not be subject to any “statutory disqualification,” as defined in Section 3(a)(39) of the Exchange Act (other than subparagraph
(E)of that section), and to deliver a representation in writing to that effect to the Lead Placement Agent at closing. The purpose of the second collection is to ensure that the Lead Placement Agent has a copy of the statutory disqualification representation in order to comply with its recordkeeping obligations, which would facilitate monitoring for compliance with the conditions of the requested exemption. Without this collection of information, the Commission and applicable SRO would be unable to monitor the Lead Placement Agent's compliance. Third, the requested exemption would require broker-dealers that sell the TIC Securities as participating brokers (“Selling Broker-Dealers”) to deliver a representation in writing that the Selling Broker-Dealer performed a suitability analysis to the Lead Placement Agent at closing, or, if the Selling Broker-Dealer is the Lead Placement Agent, to make such a representation in writing at closing. The purpose of the third collection is to ensure that the Lead Placement Agent has a copy of the suitability analysis in order to comply with its recordkeeping obligations, which would facilitate monitoring compliance with the conditions of the requested exemption. Without this collection of information, the Commission and applicable SRO would be unable to monitor the Lead Placement Agent's compliance and would be unable to ensure that the Selling Broker-Dealer had conducted an appropriate suitability analysis. Fourth, the requested exemption would require a Selling Broker-Dealer that determines that a TIC Security transaction is not suitable to obtain a written affirmation that the customer wants to proceed with the TIC Security transaction notwithstanding the Selling Broker-Dealer's determination. It also would require the Selling Broker-Dealer to deliver the written affirmation to the Lead Placement Agent at closing or, if the Selling Broker-Dealer is the Lead Placement Agent, to maintain the written affirmation consistent with the record retention provisions of Exchange Act Rule 17a-4. The purpose of the fourth collection is to ensure that the customer is informed if a Selling Broker-Dealer determines a transaction is not suitable, and, if the customer wants to proceed with the transaction, that the customer has made such a decision in light of the broker-dealer's determination. In addition, the proposed delivery requirement is designed to ensure that the Lead Placement Agent has a copy of the customer affirmation in order to comply with its recordkeeping obligations, which would facilitate monitoring for compliance with the conditions of the requested exemption. Without this collection of information, the Commission and applicable SRO would be unable to monitor the Lead Placement Agent's compliance and would be unable to ensure that the Selling Broker-Dealer had conducted a suitability analysis and informed the client of this determination. Fifth, the requested exemption would require the Lead Placement Agent to maintain a copy of each of the documents that is to be made and/or delivered at closing, as discussed above (i.e., the buyer's agent agreement, the statutory disqualification representations, the suitability representation, and, if applicable, the customer's written affirmation), and the relevant part of the real estate closing documents that evidences the amount of the Real Estate Advisory Fee paid to any RE Participant involved in the TIC Security transaction. The purpose of the fifth collection is to facilitate monitoring for compliance with the conditions of the requested exemption by compelling the Lead Placement Agent to maintain records of all documents that are required to be delivered at closing. Without this collection of information, the Commission and applicable SRO would be unable to monitor the Lead Placement Agent's compliance. Estimate of Respondent Reporting Burden a. Delivery of the Buyer's Agent Agreement to the Lead Placement Agent The Commission estimates that approximately 800 RE Participants would rely on the requested exemption and each RE Participant would on average deliver to the Lead Placement Agent a copy of an executed buyer's agent agreement 6.63 times 1 a year. Based on these estimates, the Commission estimates that this requirement would result in approximately 5,304 disclosures 2 per year. The Commission also estimates that a RE Participant would spend approximately five minutes per disclosure to the Lead Placement Agent. Thus, the estimated total annual reporting and recordkeeping burden for this requirement is 442 hours 3 for the RE Participants. 1 The Commission is estimating approximately 5,304 TIC Security transactions would occur under the requested exemption. Accordingly, 5,304 TIC Security transactions/800 RE Participants = 6.63. For purposes of this Statement, the Commission has rounded all of its calculations to two decimal places. 2 6.63 × 800 = 5,304. 3 5,304 TIC Security transactions × five minutes per transaction = 26,520/60 = 442. b. Delivery of Statutory Disqualification The Commission estimates that approximately 800 Commercial Real Estate Professionals would rely on the requested exemption and each Commercial Real Estate Professional would on average deliver the written statutory disqualification representation 6.63 times 4 a year. Based on these estimates, the Commission anticipates that this requirement would result in 5,304 disclosures 5 per year. The Commission estimates that approximately 95 percent of Commercial Real Estate Professionals would spend approximately five minutes for each representation to the Lead Placement Agent. The Commission also estimates that approximately five percent of Commercial Real Estate Professionals would spend approximately 30 minutes for their first representation to the Lead Placement Agent, and five minutes for each of the 5.63 subsequent representations. Thus, the estimated total annual reporting and recordkeeping burden for these requirements is 458.67 hours 6 for Commercial Real Estate Professionals. 4 5,304 TIC Security transactions/800 Commercial Real Estate Professionals = 6.63. 5 6.63 × 800 = 5,304. 6 800 × .95 × 6.63 × 5 = 25,194/60 = 419.90 total burden hours for 95 percent of the Commercial Real Estate Professionals. 800 × .05 × 1 × 30 = 1,200/60 = 20 hours for the first representation by five percent of the Commercial Real Estate Professionals. 800 × .05 × 5.63 × 5 = 1,126/60 = 18.77 hours for the second and third representations by five percent of the Commercial Real Estate Professionals. Thus total burden hours would be 419.90 + 20 + 18.77 = 458.67. c. Suitability Determination by the Selling Broker-Dealer The Commission estimates that approximately 150 Selling Broker-Dealers would either deliver or make a representation at closing and each Selling Broker-Dealer would on average deliver or make such a representation 33.59 times 7 a year. The Commission also estimates that a Selling Broker-Dealer would spend approximately five minutes on each disclosure. Thus, the estimated total annual reporting and recordkeeping burden for this requirement is 419.90 hours 8 for Selling Broker-Dealers. 7 The Commission estimates that there would be approximately 5,304 TIC Security transactions a year. Thus, a Selling Broker-Dealer would make or deliver approximately ((5,304 × .95)/150) = 33.59 determinations. 8 (5,304 × .95) × five minutes per transaction = 25,194/60 = 419.90. d. Customer Affirmation by the Selling Broker-Dealer The Commission estimates that there are approximately 150 Selling Broker-Dealers that are potential respondents, those Selling Broker-Dealers would obtain and then deliver or maintain a written affirmation from 265.20 customers who are clients 9 of Commercial Real Estate Participants a year, and each Selling Broker-Dealer would on average obtain and then deliver or maintain such an affirmation 1.77 10 times a year. The Commission also estimates that a customer would spend approximately 30 minutes on each disclosure and the Selling Broker-Dealer would spend approximately 35 minutes on each disclosure. Thus, the estimated total annual reporting and recordkeeping burden for this proposed requirement is an aggregate of 132.60 hours for customers 11 and 154.70 hours for the Selling Broker-Dealers. 12 9 The Commission estimates that approximately five percent of all proposed TIC Security transactions would be determined to be not suitable. 5,304 × .05 = 265.20. 10 The Commission estimates that there would be approximately 5,304 TIC Security transactions under the requested exemption. The Commission estimates that Selling Broker-Dealers would obtain and then deliver or maintain the customer affirmation in five percent of all transactions under the requested exemption. Thus, a Selling Broker-Dealer would obtain approximately ((5,304 × .05)/150) = 1.77 affirmations a year. 11 265.20 TIC Security transactions (5,304 × .05) × 30 minutes per transaction = 7956/60 = 132.60. 12 265.20 TIC Security transactions (5,304 × .05) × 35 minutes per transaction = 9282/60 = 154.70. e. Recordkeeping by the Lead Placement Agent The Commission estimates that approximately 45 Lead Placement Agents would act pursuant to the requested exemption. On average, a Lead Placement Agent would maintain copies of the relevant documents for approximately 117.87 TIC Security transactions 13 a year. The Commission also estimates that a Lead Placement Agent would spend 10 minutes per closing to maintain a copy of these documents. Thus, the estimated total annual reporting and recordkeeping burden for this requirement is 884 hours. 14 13 5,304 TIC Security transactions/45 Lead Placement Agents = 117.87. 14 5,304 TIC Security transactions × 10 minutes = 53,040/60 = 884. f. Aggregated Burdens for Entering Data into ROCIS. For purposes of entering the above collections into the OMB ROCIS system, the burdens discussed above have been summarized and aggregated as follows. There are approximately 995 total respondents. 15 There are approximately 21 responses for each respondent. 16 There are approximately 20,895 total responses. 17 Thus, there are approximately .11 hours per response for each respondent. 18 There are approximately 2,298 total burden hours for all respondents. 19 15 800 + 150 + 45 = 995. 16 20,895 (total responses)/995 (total respondents) = 21. Although total responses should be 21,216 ((800 × 6.63) + (800 × 6.63) + (150 × 33.59) + (150 × 1.77) + (45 × 117.87)), the number has been reduced to 20,895 to ensure consistency with the other data, specifically the 21 responses per respondent and .11 hours per respondent, being entered into ROCIS. 17 995 (total respondents) × 21 (responses per respondent) = 20,895. 18 2,359 (total burden hours)/20,895 (total respondents) = 0.11. 19 20,895 (total responses) × .11 (hours per respondent) = 2,298.45. For purposes of entering this number into ROCIS, it has been rounded to 2,298. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Comments should be directed to
(i)Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or by sending an e-mail to: *Alexander_T._Hunt@omb.eop.gov* ; and
(ii)R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, c/o Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312 or send an e-mail to: *PRA_Mailbox@sec.gov* . Comments must be submitted within 30 days of this notice. Dated: November 29, 2007. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23607 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549-0213. *Extension:* Rule 425; OMB Control No. 3235-0521; SEC File No. 270-462. Notice is hereby given, that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for approval. Rule 425 (17 CFR 230.425) under the Securities Act of 1933 (15 U.S.C. 77a *et seq.* ) requires the filing of certain prospectuses and communications under Rule 135 (17 CFR 230.135) and Rule 165 (17 CFR 230.165) in connection with business combination transactions. The purpose of the rule is to permit more oral and written communications with shareholders about tender offers, mergers and other business combination transactions on a more timely basis, so long as the written communications are filed on the date of first use. Approximately 3,700 issuers file communications under Rule 425 at an estimated .25 hours per response for a total of 925 annual burden hours. Written comments are invited on:
(a)Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(b)the accuracy of the agency's estimate of the burden imposed by the collection of information;
(c)ways to enhance the quality, utility, and clarity of the information collected; and
(d)ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Please direct your written comments to R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-mail to: *PRA_Mailbox@sec.gov* . Dated: November 29, 2007. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23609 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon written request, copies available from: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549-0213. *Extension:* Regulation C; OMB Control No. 3235-0074; SEC File No. 270-68. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 U.S.C. 3501 *et seq.* ) the Securities and Exchange Commission (“Commission”) has submitted to the Office of Management and Budget the request for extension of the previously approved collection of information discussed below. Regulation C (17 CFR 230.400 through 230.498) provides standard instructions to guide persons when filing registration statements under the Securities Act of 1933 (15 U.S.C. 77a *et seq.* ). The information collected is intended to ensure the adequacy of information available to investors in the registration of securities. The information provided is mandatory. Regulation C is assigned one burden hour for administrative convenience because it does not directly impose information collection requirements. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Written comments regarding the above information should be directed to the following persons:
(i)Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503; or send an e-mail to *Alexander_T._Hunt@omb.eop.gov* ; and
(ii)R. Corey Booth, Director/Chief Information Office, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, VA 22312; or send an e-mail to: *PRA_Mailbox@sec.gov* . Comments must be submitted to OMB within 30 days of this notice. Dated: November 30, 2007. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23641 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. IC-28069] Notice of Applications for Deregistration Under Section 8(f) of the Investment Company Act of 1940 November 30, 2007. The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of November, 2007. A copy of each application may be obtained for a fee at the SEC's Public Reference Branch (tel. 202-551-5850). An order granting each application will be issued unless the SEC orders a hearing. Interested persons may request a hearing on any application by writing to the SEC's Secretary at the address below and serving the relevant applicant with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on December 26, 2007, and should be accompanied by proof of service on the applicant, 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 Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. FOR FURTHER INFORMATION CONTACT: Diane L. Titus at
(202)551-6810, SEC, Division of Investment Management, Office of Investment Company Regulation, 100 F Street, NE., Washington, DC 20549-4041. International Equity Portfolio [File No. 811-8434] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On November 1, 2001, applicant made a liquidating distribution to its interest holders, based on net asset value. Any expenses incurred in connection with the liquidations were paid by applicant's holders of beneficial interest. *Filing Dates:* The application was filed on November 7, 2007, and amended on November 21, 2007. *Applicant's Address:* 125 Broad St., New York, NY 10004. Small Cap Growth Portfolio [File No. 811-7269]; The Premium Portfolios [File No. 811-8436] *Summary:* Each applicant seeks an order declaring that it has ceased to be an investment company. On November 1, 2001, each applicant made a liquidating distribution to its interest holders, based on net asset value. Any expenses incurred in connection with the liquidations were paid by each applicant's holders of beneficial interest. *Filing Date:* The applications were filed on November 7, 2007. *Applicants' Address:* 125 Broad St., New York, NY 10004. Government Income Portfolio [File No. 811-8438] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On January 18, 2002, applicant made a liquidating distribution to its interest holders, based on net asset value. Any expenses incurred in connection with the liquidation were paid by applicant's holders of beneficial interest. *Filing Date:* The application was filed on November 7, 2007. *Applicant's Address:* 125 Broad St., New York, NY 10004. CitiFunds Tax Free Reserves [File No. 811-3893]; CitiFunds Multi-State Tax Free Trust [File No. 811-4596] *Summary:* Each applicant seeks an order declaring that it has ceased to be an investment company. On December 7, 2001, each applicant transferred its assets to CitiFunds Trust III, based on net asset value. Expenses incurred in connection with each reorganization were paid by applicants. *Filing Date:* The applications were filed on November 7, 2007. *Applicants' Address:* 125 Broad St., New York, NY 10004. CitiFunds Fixed Income Trust [File No. 811-5033] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On January 18, 2002, applicant transferred its assets to Salomon Brothers U.S. Government Income Fund, a series of Salomon Brothers Series Funds Inc., based on net asset value. Expenses incurred in connection with the reorganization were paid by Citi Fund Management Inc., applicant's investment adviser, and Salomon Brothers Asset Management Inc., the acquiring fund's investment adviser. *Filing Date:* The application was filed on November 7, 2007. *Applicant's Address:* 125 Broad St., New York, NY 10004. CitiFunds International Trust [File No. 811-6154] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On April 30, 2002, applicant transferred its assets to Smith Barney Trust II, based on net asset value. Expenses incurred in connection with the reorganization were paid by applicant. *Filing Date:* The application was filed on November 7, 2007. *Applicant's Address:* 125 Broad St., New York, NY 10004. Adjustable Rate Securities Portfolios [File No. 811-6242] *Summary:* Applicant, a master fund in a master/feeder structure, seeks an order declaring that it has ceased to be an investment company. On October 26, 2005, applicant made a liquidating distribution to its sole feeder fund, based on net asset value. Expenses of $142,494 incurred in connection with the liquidation were paid by applicant, its feeder fund and Franklin Advisers, Inc., applicant's investment adviser. *Filing Dates:* The application was filed on August 20, 2007, and amended on November 7, 2007. *Applicant's Address:* One Franklin Parkway, San Mateo, CA 94403-1906. Atlas Funds [File No. 811-5485] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On March 30, 2007, two series of applicant, Atlas Money Market Fund and Atlas California Money Market Fund, made a liquidating distribution to their shareholders, based on net asset value. Between May 11, 2007 and May 25, 2007, all of applicant's remaining series transferred their assets to corresponding series of Evergreen Equity Trust, Evergreen Select Equity Trust, Evergreen Select Fixed Income Trust, Evergreen Municipal Trust, Evergreen International Trust, Evergreen Fixed Income Trust and Oppenheimer Strategic Income Fund, based on net asset value. Expenses of $2,157,929 incurred in connection with the liquidation and reorganization were paid by Evergreen Investment Management Company, LLC, investment adviser to the surviving series, and its affiliates. *Filing Dates:* The application was filed on October 18, 2007, and amended on November 13, 2007. *Applicant's Address:* 794 Davis St., San Leandro, CA 94577. Colonial Insured Municipal Fund [File No. 811-9533] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On May 25, 2007, applicant distributed to the holders of its preferred shares an amount equal to the liquidation preference of its preferred shares, plus an amount equal to the accumulated but unpaid dividends on those shares. On May 30, 2007, applicant made a liquidating distribution to its common shareholders, based on net asset value. Expenses of $5,000 incurred in connection with the liquidation were paid by applicant. *Filing Date:* The application was filed on November 6, 2007. *Applicant's Address:* One Financial Center, Boston, MA 02111. BlackRock Basic Value Fund II, Inc. [File No. 811-9957] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On June 18, 2007, applicant transferred its assets to BlackRock Basic Value Fund, Inc., based on net asset value. Expenses of $91,334 incurred in connection with the reorganization were paid by BlackRock, Inc., the parent company of applicant's investment adviser, or its affiliates. *Filing Dates:* The application was filed on September 21, 2007, and amended on November 6, 2007. *Applicant's Address:* 800 Scudders Mill Rd., Plainsboro, NJ 08536. Hallmark Equity Series Trust [File No. 811-7734] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On August 10, 2007, applicant transferred its assets to Roanoke Small-Cap Growth Fund, a series of Northern Lights Fund Trust, based on net asset value. Expenses of $21,359 incurred in connection with the reorganization were paid by Reserve Management Corporation, an affiliate of applicant. *Filing Dates:* The application was filed on October 5, 2007, and amended on November 6, 2007. *Applicant's Address:* The Reserve, 1250 Broadway, New York, NY 10001. Hallmark Investment Series Trust [File No. 811-879] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. By June 28, 2007, each series of applicant had made a liquidating distribution to its shareholders, based on net asset value. Expenses of $14,105 incurred in connection with the liquidation were paid by Reserve Management Corporation, an affiliate of applicant. *Filing Dates:* The application was filed on October 5, 2007, and amended on November 6, 2007. *Applicant's Address:* The Reserve, 1250 Broadway, New York, NY 10001. Merit Advisors Investment Trust [File No. 811-21495] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On February 28, 2006, applicant made a liquidation distribution to its shareholders, based on net asset value. Applicant incurred no expenses in connection with the liquidation. *Filing Dates:* The application was filed on September 28, 2007, and amended on October 31, 2007. *Applicant's Address:* 13905A Quail Creek Rd., Oklahoma City, OK 73134-1002. Merit Advisors Investment Trust II [File No. 811-21520] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Dates:* The application was filed on September 28, 2007, and amended on October 31, 2007. *Applicant's Address:* 13905A Quail Creek Rd., Oklahoma City, OK 73134-1002. Lazard Global Mid Cap Fund, Inc. [File No. 811-21683] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Dates:* The application was filed on September 6, 2007, and amended on November 6, 2007. *Applicant's Address:* c/o Lazard Asset Management, LLC, 30 Rockefeller Plaza, New York, NY 10112. WhiteRock Portfolio Investors, L.L.C. [File No. 811-9104] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Dates:* The application was filed on April 30, 2007, and amended on October 31, 2007 and November 2, 2007. *Applicant's Address:* 825 NE Multnomah, Suite 1900, Portland, OR 97232. Separate Account AIA of Integrity Life Insurance Company [File No. 811-5431] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant requests deregistration based on abandonment of registration. At the time of filing, Applicant had no shareholders or contract owners. *Filing Date:* The application was filed on August 14, 2007 and amended on October 16, 2007 and November 19, 2007. *Applicant's Address:* 400 Broadway, Cincinnati, OH 45202. Separate Account AII of Integrity Life Insurance Company [File No. 811-5432] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant requests deregistration based on abandonment of registration. At the time of filing, Applicant had no shareholders or contract owners. *Filing Date:* The application was filed on August 14, 2007 and amended on October 16, 2007 and November 19, 2007. *Applicant's Address:* 400 Broadway, Cincinnati, OH 45202. Principal Aggressive Growth Fund, Inc. [File No. 811-8176]; Principal Asset Allocation Fund, Inc. [File No. 811-8178]; Principal Balanced Fund, Inc. [File No. 811-5073]; Principal Bond Fund, Inc. [File No. 811-5173]; Principal Emerging Growth Fund, Inc. [File No. 811-5170]; Principal Government Securities Fund, Inc. [File No. 811-4916]; Principal Growth Fund, Inc. [File No. 811-8180]; Principal High Yield Fund, Inc. [File No. 811-5175]; Principal Money Market Fund, Inc. [File No. 811-3546]; Principal World Fund, Inc. [File No. 811-8182] *Summary:* Each applicant seeks an order declaring that it has ceased to be an investment company. On December 31, 1997, each applicant transferred its assets to a corresponding series of the Principal Variable Contracts Fund, Inc. at net asset value. Expenses were allocated among the applicants in proportion to the ratio of the assets of each applicant to the assets of all the applicant determined as of July 22, 1997. Shareholders of the Applicants paid $12,135, $1,009, $7,059, $4,276, $11,726, $6,672, $8,365, $0, $3,598, $6,409, respectively, and Principal Management Corporation, the investment adviser, paid $8,122, $4,675, $4,725, $2,862, $7,849, $4,466, $5,599, $0, $2,408, $4,290, respectively. *Filing Dates:* The applications were filed on August 9, 2007, and amended on November 14, 2007. *Applicants' Address:* 711 High Street, Des Moines, Iowa 50392-2080. Separate Account VUL of National Integrity Life Insurance Co. [File No. 811-4667] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant requests deregistration based on abandonment of registration. At the time of filing, Applicant had no shareholders or contract owners. *Filing Date:* The application was filed on August 14, 2007 and amended on October 16, 2007. *Applicant's Address:* 400 Broadway, Cincinatti, OH 45202. Select Ten Plus Fund, LLC [File No. 811-9179] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant requests deregistration based on abandonment of registration. At the time of filing, Applicant had no shareholders or contract owners. *Filing Date:* The application was filed on August 14, 2007 and amended on October 16, 2007. *Applicant's Address:* 400 Broadway, Cincinnati, OH 45202. CILCONY Variable Separate Account [File No. 811-21620] *Summary:* Applicant, a separate account of Protective Life Insurance Company of New York (“PLICONY”), seeks an order declaring that it has ceased to be an investment company. On June 11, 2007, at a meeting of the Board of Directors of PLICONY (“Board”), the Board approved a resolution to close the Applicant and to file the application to deregister the Applicant. Applicant states that it has no shareholders as there was never a public offering of the securities and no shares were ever sold. *Filing Date:* The application was filed on August 15, 2007. *Applicant's Address:* Protective Life Insurance Company of New York (formerly Chase Insurance Life Company of New York), 2500 Westfield Drive, Elgin, IL 60123-7836. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23613 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 28071; 812-13450] Unified Series Trust and Envestnet Asset Management, Inc.; Notice of Application November 30, 2007. AGENCY: Securities and Exchange Commission (“Commission”). ACTION: Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from section 15(a) of the Act and rule 18f-2 under the Act, as well as from certain disclosure requirements. Summary of the Application: Applicants request an order permitting them to enter into and materially amend subadvisory agreements without shareholder approval and granting relief from certain disclosure requirements. Applicants: Unified Series Trust (“Trust”) and Envestnet Asset Management, Inc. (“Adviser”). Filing Dates: The application was filed on November 14, 2007. Applicants have agreed to file an amendment during the notice period, the substance of which is reflected in this notice. 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 December 26, 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 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 Dee Anne Sjogren, Thompson Coburn LLP, One U.S. Bank Plaza, St. Louis, MO 63101. FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at
(202)551-6870, or Nadya B. Roytblat, Assistant Director, at
(202)551-6821 (Office of Investment Company Regulation, Division of Investment Management). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 20549-0102 (telephone
(202)551-5850). Applicants' Representations 1. The Trust is organized as Ohio business trust and is registered under the Act as an open-end management investment company. The Adviser, a Delaware corporation, is registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”). 2. The Trust currently offers a number of series, each with its own investment objective(s), policies and restrictions. The Adviser will serve as the investment adviser to two of the series of the Trust (each, a “Fund,” and collectively, the “Funds”). The Adviser will enter into an investment advisory agreement with the Trust for each Fund (each, an “Advisory Agreement,” and collectively, the “Advisory Agreements”) approved by the board of trustees of the Trust (the “Board”), including a majority of the trustees who are not “interested persons,” as defined in section 2(a)(19) of the Act (the “Independent Trustees”), and the shareholders of each Fund. 1 1 Applicants also request relief with respect to any future series of the Trust and any other existing or future registered open-end management investment company or series thereof that:
(a)Is advised by the Adviser or any person controlling, controlled by, or under common control with the Adviser;
(b)uses the management structure described in the application; and
(c)complies with the terms and conditions contained in the application (included in the term “Funds”). The Trust is the only existing investment company that currently intends to rely on the requested order. If the name of any Fund contains the name of a Subadviser (as defined below), the name of the Adviser or the name of the entity controlling, controlled by, or under common control with the Adviser that serves as the primary adviser to such Fund, or a trademark or trade name owned by them, will precede the name of the Subadviser. 3. The Advisory Agreement permits the Adviser to enter into separate advisory agreements (“Subadvisory Agreements”) with subadvisers (“Subadvisers”). Each Subadviser will be registered under the Advisers Act. The specific investment decisions for each Fund using a Subadviser will be made by that Subadviser, who will be granted discretionary authority to invest the assets, or a portion of the assets, of a particular Fund, subject to the general supervision by the Adviser and the Board. The Adviser will select Subadvisers based on an evaluation of their skills and proven abilities in managing assets pursuant to a specific investment style and will recommend their hiring to the Board. Subadvisers must be approved by the Board, including a majority of the Independent Trustees. The Adviser will monitor and evaluate the performance of Subadvisers and recommend to the Board their hiring, termination and replacement. The Adviser will compensate a Subadviser out of the management fee paid to the Adviser by the Fund under the Advisory Agreement. 4. Applicants request an order to permit the Adviser, subject to Board approval, to enter into and materially amend Subadvisory Agreements without obtaining shareholder approval. The requested relief will not extend to any Subadviser that is an “affiliated person,” as defined in section 2(a)(3) of the Act, of a Fund or the Adviser, other than by reason of serving as a Subadviser to one or more of the Funds (“Affiliated Subadviser”). 5. Applicants also request an exemption from the various disclosure provisions described below that may require each Fund to disclose fees paid by the Adviser to the Subadvisers. An exemption is requested to permit each Fund to disclose (both as a dollar amount and as a percentage of the Fund's net assets) the:
(a)aggregate fees paid to the Adviser and any Affiliated Subadvisers; and
(b)aggregate fees paid to Subadvisers other than Affiliated Subadvisers (collectively, “Aggregate Fee Disclosure”). If a Fund employs an Affiliated Subadviser, the Fund will provide separate disclosure of any fees paid to the Affiliated Subadviser. Applicants' Legal Analysis 1. Section 15(a) of the Act provides, in relevant part, that it is unlawful for any person to act as an investment adviser to a registered investment company except under a written contract that has been approved by a vote of a majority of the company's outstanding voting securities. Rule 18f-2 under the Act provides that each series or class of stock in a series company affected by a matter must approve the matter if the Act requires shareholder approval. 2. Form N-1A is the registration statement used by open-end investment companies. Item 14(a)(3) of Form N-1A requires disclosure of the method and amount of the investment adviser's compensation. 3. Rule 20a-1 under the Act requires proxies solicited with respect to an investment company to comply with Schedule 14A under the Securities Exchange Act of 1934 (“Exchange Act”). Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together, require a proxy statement for a shareholder meeting at which the advisory contract will be voted upon to include the “rate of compensation of the investment adviser,” the “aggregate amount of the investment adviser's fees,” a description of the “terms of the contract to be acted upon,” and, if a change in the advisory fee is proposed, the existing and proposed fees and the difference between the two fees. 4. Form N-SAR is the semi-annual report filed with the Commission by registered investment companies. Item 48 of Form N-SAR requires investment companies to disclose the rate schedule for fees paid to their investment advisers, including the Subadvisers. 5. Regulation S-X sets forth the requirements for financial statements required to be included as part of investment company registration statements and shareholders reports filed with the Commission. Sections 6-07(2)(a),
(b)and
(c)of Regulation S-X require that investment companies include in their financial statements information about investment advisory fees. 6. Section 6(c) of the Act provides that the Commission may exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provisions of the Act, or from any rule thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policies and provisions of the Act. Applicants state that the requested relief meets this standard for the reasons discussed below. 7. Applicants assert that the Funds' shareholders rely on the Adviser to select and monitor the Subadvisers best suited to achieve a Fund's investment objectives. Applicants contend that, from the perspective of the investor, the role of the Subadvisers is comparable to that of individual portfolio managers employed by traditional investment advisory firms. Applicants state that requiring shareholder approval of each Subadvisory Agreement would impose unnecessary costs and delays on the Funds and may preclude the Adviser from acting promptly in a manner considered advisable by the Board. Applicants note that the Advisory Agreement will remain subject to section 15(a) of the Act and rule 18f-2 under the Act. 8. Applicants assert that many Subadvisers use a “posted” rate schedule to set their fees. Applicants state that, while Subadvisers are willing to negotiate fees lower than those posted in the schedule, they are reluctant to do so when the fees are disclosed to other prospective and existing customers. Applicants submit that the requested relief will encourage potential Subadvisers to negotiate lower subadvisory fees with the Adviser. Applicants' Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. Before a Fund may rely on the requested order, the operation of the Fund in the manner described in the application will be approved by a majority of the Fund's outstanding voting securities, as defined in the Act, or, in the case of a Fund whose public shareholders purchase shares on the basis of a prospectus containing the disclosure contemplated by condition 2 below, by the initial shareholder(s) before such Fund's shares are offered to the public. 2. The prospectus for each Fund will disclose the existence, substance and effect of any order granted pursuant to the application. Each Fund will hold itself out to the public as employing the management structure described in the application. The prospectus will prominently disclose that the Adviser has ultimate responsibility, subject to oversight by the Board, to oversee the Subadvisers and recommend their hiring, termination, and replacement. 3. Within 90 days of the hiring of any new Subadviser, the affected Fund's shareholders will be furnished all information about the new Subadviser that would be included in a proxy statement, except as modified to permit Aggregate Fee Disclosure. This information will include Aggregate Fee Disclosure and any change in such disclosure caused by the addition of a new Subadviser. To meet this obligation, the Fund will provide shareholders within 90 days of the hiring of a new Subadviser with an information statement meeting the requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 14A under the Exchange Act, except as modified by the order to permit Aggregate Fee Disclosure. 4. The Adviser will not enter into a Subadvisory Agreement with any Affiliated Subadviser, without such agreement, including the compensation to be paid thereunder, being approved by the shareholders of the applicable Fund. 5. At all times, at least a majority of the Board will be Independent Trustees, and the nomination of new or additional Independent Trustees will be placed within the discretion of the then-existing Independent Trustees. 6. When a Subadviser change is proposed for a Fund with an Affiliated Subadviser, the Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the applicable Board minutes, that such change is in the best interests of the Fund and its shareholders and does not involve a conflict of interest from which the Adviser or the Affiliated Subadviser derives an inappropriate advantage. 7. Independent legal counsel, as defined in rule 0-1(a)(6) under the Act, has been and will continue to be engaged to represent the Independent Trustees. The selection of such counsel will be within the discretion of the then-existing Independent Trustees. 8. The Adviser will provide the Board, no less frequently than quarterly, with information about the Adviser's profitability on a per Fund basis. This information will reflect the impact on profitability of the hiring or termination of any Subadviser during the applicable period. 9. Whenever a Subadviser is hired or terminated, the Adviser will provide the Board with information showing the expected impact on the Adviser's profitability. 10. The Adviser will provide general management services to each Fund, including overall supervisory responsibility for the general management and investment of the Fund's assets, and subject to review and approval of the Board, will:
(a)Set each Fund's overall investment strategies;
(b)evaluate, select and recommend Subadvisers to manage all or a part of a Fund's assets;
(c)where appropriate, allocate and reallocate a Fund's assets among multiple Subadvisers;
(d)monitor and evaluate the performance of Subadvisers; and
(e)implement procedures reasonably designed to ensure that the Subadvisers comply with each Fund's investment objective, policies, and restrictions. 11. No trustee or officer of the Trust or a Fund or director or officer of the Adviser will own any interest in a Subadviser, directly or indirectly (other than through a pooled investment vehicle that is not controlled by such person), except for:
(a)Ownership of interests in the Adviser or any entity that controls, is controlled by, or is under common control with the Adviser; or
(b)ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly traded company that is either a Subadviser or an entity that controls, is controlled by, or is under common control with a Subadviser. 12. Each Fund will disclose in its registration statement the Aggregate Fee Disclosure. 13. The requested order will expire on the effective date of rule 15a-5 under the Act, if adopted. For the Commission, by the Division of Investment Management, under delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23722 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION Notice of Sunshine Act Meeting Federal Register Citation of Previous Announcement: Status: Closed Meeting. Place: 100 F Street, NW., Washington, DC. Date and Time of Previously Announced Meeting: Thursday, December 6, 2007 at 2 p.m. Change In the Meeting: Deletion of an Item. The following item will not be considered during the Closed Meeting on Thursday, December 6, 2007: A matter involving enforcement techniques At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at
(202)551-5400. Dated: December 4, 2007. Nancy M. Morris, Secretary. [FR Doc. E7-23789 Filed 12-4-07; 12:58 pm] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56861; File No. SR-Amex-2007-127] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Certain Conforming Changes to Amex Rules Relating to the Amex Book Clerk Program November 29, 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 November 28, 2007, the American Stock Exchange LLC (“Exchange” or “Amex”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to make certain non-substantive housekeeping changes to Amex rules, to conform to the recent approval of the Amex Book Clerks program. The text of the proposed rule change is available at Amex, the Commission's Public Reference Room, and *http://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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Commission recently approved the Exchange's proposal (the “ABC Proposal”) to eliminate the agency obligations of specialists and establish Amex Book Clerks (“ABCs”). 5 In connection with the ABC Proposal, the Exchange submitted a related filing limiting the liability of the Exchange for the actions of ABCs, which was also recently approved. 6 5 *See* Securities Exchange Act Release No. 56804 (November 16, 2007), 72 FR 66002 (November 26, 2007) (SR-Amex-2006-107). 6 *See* Securities Exchange Act Release No. 56805 (November 16, 2007), 72 FR 65773 (November 23, 2007) (SR-Amex-2007-122). The Exchange proposes to make certain non-substantive housekeeping changes to Amex rules, including Rule 995-ANTE, governing ABCs, and Rule 996-ANTE, governing the liability of the Exchange in connection with ABCs. Specifically, the Exchange proposes to delete paragraph
(d)in Rule 995-ANTE, governing the liability of the Exchange for the actions of ABCs, since this text is included in new Rule 996-ANTE. Given the date of the approval order, the Exchange also proposes to extend the date by which the Exchange shall assign an ABC to each applicable trading station from November 30, 2007 to May 1, 2008. 7 The Exchange also proposes to amend Rule 996-ANTE to replace the references to Amex Rule 960 with the correct reference to Amex Rule 970. 7 As noted in the ABC Proposal, the Exchange proposes to implement this rule change to all applicable trading posts over a 180-day period. While the ABC Proposal was pending with the Commission, the Exchange filed an unrelated proposal to establish the Exchange's Directed Order Program, which was separately codified as Rule 996-ANTE. 8 The Exchange proposes to correct this duplicate designation by renumbering the version of Rule 996-ANTE that governs the Exchange's Directed Order Program as Rule 997-ANTE. The Exchange also proposes a conforming change to correct a cross-reference in Rule 935-ANTE. 8 *See* Securities Exchange Act Release No. 56269 (August 15, 2007), 72 FR 47086 (August 22, 2007) (approving SR-Amex-2007-75). Finally, the Exchange proposes to renumber Commentary .03 to Rule 958A-ANTE regarding timing of firm quote obligations for orders received by the ABC as Commentary .04, also to correct an erroneous duplicate designation. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 9 in general, and furthers the objectives of Section 6(b)(5) of the Act 10 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 engage 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 and dealers. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change will 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 by the Exchange with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 11 and subparagraph (f)(6) of Rule 19b-4 thereunder. 12 Because the foregoing proposed rule change:
(i)Does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder. 13 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b-4(f)(6). 13 Rule 19b-4(f)(6) also requires the Exchange to give the Commission 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 business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied the five-day pre-filing requirement. A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to waive the operative delay if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the operative delay to permit the proposed rule change to become effective prior to the 30th day after filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Waiver of the 30-day pre-operative waiting period will allow immediate clarification of Amex rules regarding ABCs, by deleting duplicative text, fixing duplicative numbering, and clarifying the date by which the Exchange shall assign an ABC to each applicable trading station under the ABC proposal. Therefore, the Commission has determined to waive the 30-day delay and allow the proposed rule change to become operative upon filing. 14 14 For purposes only of waiving the operative delay of this proposal, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-Amex-2007-127 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-2007-127. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 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-Amex-2007-127 and should be submitted on or before December 27, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23589 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56868; File No. SR-Amex-2007-125] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish a Riskless Principal and Other Exceptions to Amex Rules Prohibiting Members' Proprietary Trading While in Possession of Like or Better-Priced Customer Orders November 29, 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 November 16, 2007, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared substantially by the Amex. The Amex has submitted the proposed rule change under section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Amex proposes to adopt changes to Rules 24—AEMI, “Limitations on Members' Trading Because of Customers' Orders,” 151—AEMI, “Purchases and Sales While Holding Unexecuted Market Order,” and 152—AEMI, “Taking or Supplying Stock to Fill Customer's Order,” to:
(i)provide for a “riskless principal” and other exceptions to the Amex's general rules against members entering proprietary orders while in possession of a customer order that could trade at the same price; and
(ii)make various “housekeeping” changes to eliminate duplicative or unnecessary portions of the AEMI rules. The text of the proposed rule change is available at *http://www.amex.com* , the principal offices of the Amex, 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, the Amex 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 Amex has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose To provide greater flexibility in trading methods available on the Amex, while still sufficiently protecting customer orders, the Amex proposes to adopt a “riskless principal” and other exceptions detailed below to its general rules against a member entering a proprietary order while in possession of a customer order that could trade at the same price. These new exceptions, which are the same as those adopted by the New York Stock Exchange LLC (“NYSE”) in July 2007, 5 will be added to Rule 24—AEMI (which is the Amex equivalent of NYSE Rule 92, “Limitations on Members' Trading Because of Customers' Orders”) and will promote regulatory consistency. Additionally, the Amex proposes to make certain housekeeping changes occasioned by the changes to Rule 24—AEMI. Among other things, the Amex proposes to:
(i)Eliminate Rule 150—AEMI, which substantially overlaps with and is being folded into Rule 24—AEMI; and
(ii)add a riskless principal exception to the general restrictions in Rule 152—AEMI against a member supplying/taking stock to fill a customer's order. 5 *See* Securities Exchange Act Release Nos. 56017 (July 5, 2007), 72 FR 38110 (July 12, 2007) (order approving File No. SR-NYSE-2007-21); and 56088 (July 18, 2007), 72 FR 40351 (July 24, 2007) (notice of filing and immediate effectiveness of File No. SR-NYSE-2007-63). Riskless Principal Exception and Other Changes to Rule 24—AEMI Rule 24—AEMI is substantially and structurally similar to the version of NYSE Rule 92 that existed until the NYSE amended its rule in July 2007. 6 In relevant part, the Amex intends to adopt the substance of those NYSE amendments to: 6 *See* note 5, *supra.* • Add a “riskless principal” exception that would allow a member to trade a security as principal while holding one or more customer orders in the security to permit the member to pass on to its customer(s) the prices received on the Exchange; 7 7 A member would be permitted to aggregate only those customer orders where the order types and instructions (including tick restrictions) permit such aggregation. Such aggregating meets the standards set forth in the July 18, 2005, no-action letter from the Division of Trading and Markets (“Division”) (f/k/a the Division of Market Regulation) to the Securities Industry Association (“SIA”), in which the Division granted a riskless principal exemption from Rule 10a-1 under the Act to permit a broker-dealer to fill a customer order without complying with the “tick” provisions of Rule 10a-1, in certain situations and subject to certain conditions. *See* letter from James Brigagliano, Assistant Director, Division, Commission, to Ira Hammerman, Senior Vice President and General Counsel, SIA, dated July 18, 2005. • Amend certain customer consent requirements to allow a customer to give affirmative prior blanket—rather than order-by-order—consent to a member trading while in possession of a customer order, as permitted by the rule, provided that the requisite disclosures to the customer regarding potential trading-along, opt-out rights, and allocation methodology are periodically made 8 and such informed customer consent has been documented; 9 8 The required periodic disclosures would include affirmative notice of:
(i)the fact that the member may trade along with the customer's order, subject to the customer's right to affirmatively opt-out of such trading-along on an order-by-order basis or to modify the instructions obtained under the blanket consent; and
(ii)the method by which the member organization will allocate shares to the customer's order (including the allocation methodology for riskless principal transactions that include Rule 24—AEMI(b) proprietary orders and orders from customers that have and/or have not consented to trade along with such proprietary orders). The Exchange would not require a specific allocation methodology ( *e.g.* , strict time priority, precedence based on size, *etc.* ), but would require it to be fair and reasonable, consistently applied, consistent with the rules governing parity of orders, and not unfairly discriminatory against any particular class of accounts or types of orders. 9 Acceptable documentation of customer consent following delivery of the required disclosures would be:
(i)A signed writing from the customer that acknowledges receipt of the required disclosures and provides consent; or
(ii)in the case of oral customer consent, by a written notice from the member sent to the customer documenting the provision of such required disclosures and such oral consent. Once a customer has provided affirmative consent and so long the firm continues to provide written disclosures on a periodic basis, the firm will not need to renew such affirmative consent. • Expand the class of customers eligible to give affirmative consent from institutional investors with 10,000-share orders or more to all institutional investors and individual investors with orders of 10,000 shares (worth at least $100,000) or more; and • Add an exception which would permit specialists to trade proprietarily ahead of held customer orders 2 1/2 hours after the close of regular trading and up to 15 minutes prior to the following trading day's opening, thereby better allowing the specialists to hedge their trading risk and bring their dealer accounts in line with trading in away markets. According to the Amex, these changes will serve to harmonize Rule 24—AEMI with the guidelines of the Financial Industry Regulatory Authority, Inc. (“FINRA,” f/k/a NASD) on members trading while in possession of customer orders, commonly known as the “Manning Rule,” 10 so as to provide a more consistent regulatory environment for broker-dealers. The Amex intends to make the same amendments in substance to its Rule 24—AEMI as the NYSE made to its Rule 92, with slight differences discussed below. 10 *See* FINRA IM 2110-2 and FINRA Rule 2111. New NYSE Rule 92(c)(3) requires, among other things, that in order to avail itself of the riskless principal transaction: A member must submit a report of execution of the facilitated order to a designated Exchange database as required by NYSE Rule 123(f). The member must also submit to the same database, within such time frame and in such format as the Exchange may from time to time require, an electronic report containing data elements sufficient to provide an electronic link of the execution of the facilitated order to all of the underlying orders. The referenced “Exchange database” is the NYSE's Front End Systemic Capture (“FESC”) database. The Amex does not have a database that is able to capture order and execution data with respect to riskless principal transactions in the same manner as FESC. Accordingly, the Amex's regulatory staff will need to surveil for proper use of the new riskless principal exemption simultaneous with general surveillance of transactions where members trade ahead of customers orders under pre-existing exceptions to Rule 24—AEMI. Should a transaction appear to be a riskless principal transaction, Amex Regulation will validate that all elements required by the exception are met by requesting and reviewing supporting documentation from the members involved, rather than automatically surveilling for violations as the NYSE is presumably able to do with its FESC system. Accordingly, because technological differences require the development of a slightly different audit trail, Amex's corresponding paragraph in Rule 24—AEMI will state: A member or member organization must maintain a contemporaneous record of every execution on a riskless principal basis, which record shall be submitted to the Exchange within such time frame, in such format, and containing such information (in addition to any information required by Rule 153—AEMI) as the Exchange may from time to time require to validate the riskless principal nature of the transaction. Other wording, structural, or grammatical differences between comparable sections of NYSE Rule 92 and Rule 24—AEMI are not intended to create substantive differences and are intended only to add clarity where the Amex thought necessary for its members. 11 11 For example, while the NYSE chose to make the riskless principal exception a separate subsection
(c)to its Rule 92 (with the remaining exceptions listed in NYSE Rule 92(d)), Amex preferred to list all exceptions—including the riskless principal transaction exception—in the same subsection of its equivalent Rule 24—AEMI(c). For another example, NYSE Rule 92(b) begins: A member or member organization may enter a proprietary order while representing a customer order that could be executed at the same price, provided that the customer's order is designated not held and is for
(i)an institutional account, or
(ii)over 10,000 shares, unless such orders are less than $100,000 in value, and the member organization periodically provides written disclosures to its customers and obtains and documents affirmative customer consent, under the following conditions. * * * Comparable Rule 24—AEMI(b), as proposed to be amended, provides: A member or member organization may enter a proprietary order while representing a customer order which could be executed at the same price, provided:
(1)The customer's order is designated not held and is
(i)an institutional account, or
(ii)over 10,000 shares (unless such orders are less than $100,000 in value); and the member organization has periodically provided written disclosures to such customer of the possibility and allocation methodology of its potential trading along and obtained and documented such customer's affirmative consent to same; and
(2)one of the following conditions exists. * * * Housekeeping Changes Existing Rule 24—AEMI substantially overlaps with existing Rule 150—AEMI, in that both rules recite the general prohibitions upon, and exceptions to, an Amex member trading a proprietary order while in possession of a customer order that could be executed at the same price. To eliminate future confusion, the Amex proposes to eliminate Rule 150—AEMI (which is a vestige of pre-AEMI Amex Rule 150) in favor of merging the two rules into Rule 24—AEMI (which was originally patterned after NYSE Rule 92). This will result in three exceptions being added to Rule 24—AEMI, but no substantive expansion of the list of exceptions available pre-amendment (except as noted above by expanding the exceptions to include the recent changes made to comparable NYSE Rule 92). 12 12 Note, however, that the former Rule 150—AEMI(c)(5) exception for a purchase or sale of an exchange-traded fund by a specialist where the specialist is on parity with another broker-dealer order pursuant to the Exchange's rules ( *e.g.* , Rule 126—AEMI) has been incorporated in new Rule 24—AEMI(c)(7) as “any purchase or sale of any security * * * by a specialist whose bid (offer) is on parity with a customer's order pursuant to Rule 126—AEMI.” The new phrasing more accurately describes the operation and application of Rule 126—AEMI, under which a specialist has been and is permitted to trade on parity with a customer under a variety of circumstances broader than reflected in former Rule 150—AEMI(c)(5). Additionally, Commentary .06 to Rule 24—AEMI will now clarify that the riskless principal exception of new subsection (c)(10) applies only to orders entered from off the floor of the Exchange, and that specialists, in particular, remain bound by Rule 155—AEMI, “Precedence Accorded to Orders Entrusted to Specialists,” which contains no such exception (replacing existing Commentary .06, which deals with the interplay between the now-defunct Intermarket Trading System Plan and Rule 24—AEMI). Finally, Rule 152—AEMI (originally patterned after NYSE Rule 91), which currently contains the general prohibitions upon, and exceptions to, supplying/taking stock to fill a customer's order, will be amended to incorporate the new riskless principal transaction exception, as such transactions, by definition, include a member supplying/taking stock to fill a customer's order. 13 13 The Amex notes that the NYSE did not so amend its comparable NYSE Rule 91, although it is not clear why. 2. Statutory Basis The proposed rule change is designed to be consistent with Regulation NMS, 14 as well as section 6(b) of the Act, 15 in general, and furthers the objectives of section 6(b)(5) of the Act, 16 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 14 17 CFR 242.600 *et. seq.* 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Amex believes that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No formal written comments were solicited or received with respect to the proposed rule change itself, but Amex staff have had numerous communications with representatives of the Securities Industry and Financial Markets Association, which have requested that the Amex amend its rules to match the recent changes to NYSE Rules 92, as described above. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Amex has designated the proposed rule change as one that:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)does not become operative for 30 days from the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. In addition, as required under Rule 19b-4(f)(6)(iii), 17 the Amex provided the Commission with written notice of its intention to file the proposed rule change, along with a brief description of the text of the proposed rule change, at least five business days prior to filing the proposal with the Commission. Therefore, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act 18 and Rule 19b-4(f)(6) thereunder. 19 17 17 CFR 240.19b-4(f)(6)(iii). 18 15 U.S.C. 78s(b)(3)(A). 19 17 CFR 240.19b-4(f)(6). The Amex has requested the Commission to waive the 30-day operative delay because of the commencement of full industry compliance with Rules 610 and 611 of Regulation NMS 20 and the broker-dealer community's desire to have the riskless principal exception in place at all automated market centers as soon as possible. In addition, the Amex states that the proposed changes are similar to those adopted by the NYSE and do not raise new issues. 20 17 CFR 242.610 and 17 CFR 242.611. The Commission hereby grants the Amex's request 21 and believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because the changes to Rule 24—AEMI are substantially similar to changes adopted previously by the NYSE. 22 The remaining changes to Rules 24—AEMI and 152—AEMI, and the elimination of Rule 150—AEMI, are designed to streamline and clarify the Amex's rules and do not raise new regulatory issues. For these reasons, the Commission designates that the proposed rule change become operative immediately. 21 For purposes of waiving the 30-day operative delay, the Commission has considered the proposal's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 22 *See* note 5, *supra.* 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-Amex-2007-125 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Amex-2007-125. 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 publicly available. All submissions should refer to File Number SR-Amex-2007-125 and should be submitted on or before December 27, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 23 23 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23593 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56853; File No. SR-Amex-2007-94] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to Notes Linked to the Performance of the CBOE S&P 500 PutWrite Index (PUT SM ) November 28, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 2 thereunder, notice is hereby given that on August 20, 2007, the American Stock Exchange LLC (“Amex” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. On November 27, 2007, the Exchange filed Amendment No. 1. 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. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade notes, the performance of which is linked to the CBOE S&P 500 PutWrite Index (PUT SM ) (the “PUT Index” or “Index”). The text of the proposed rule change is available at the Exchange, 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. 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 Under Section 107A of the Amex Company Guide (“Company Guide”), the Exchange may approve for listing and trading securities which cannot be readily categorized under the listing criteria for common and preferred stocks, bonds, debentures, or warrants. 3 The Amex proposes to list for trading under Section 107A of the Company Guide notes linked to the performance of the PUT Index (the “Notes”). The PUT Index is determined, calculated and maintained solely by the Chicago Board Options Exchange, Inc. (“CBOE”). 4 Eksportfinans will issue the Notes under the name “Eksportfinans Index-Linked Notes.” 5 3 *See* Securities Exchange Act Release No. 27753 (March 1, 1990), 55 FR 8626 (March 8, 1990) (SR-Amex-89-29). 4 If the CBOE discontinues publication of the Index and the CBOE or another entity publishes a successor or substitute index that the calculation agent determines, in its sole discretion, to be comparable to the Index (a “Successor Index”), then the calculation agent may substitute the Successor Index as calculated by the CBOE or any other entity for the Index and calculate the Redemption Amount (as defined below) by reference to the Successor Index. In the event that the CBOE discontinues publication of the Index and
(a)the calculation agent does not select or approve a Successor Index or
(b)the Successor Index is no longer published on any of the relevant scheduled trading days, the calculation agent will compute a substitute level for the Index in accordance with the procedures last used to calculate the level of the Index before any discontinuation but using only those securities that comprised the Index prior to such discontinuation. If a Successor Index is selected or the calculation agent calculates a level as a substitute for the Index, the Successor Index or level will be used as a substitute for the Index for all purposes going forward even if CBOE elects to begin republishing the Index, unless the calculation agent decides to use the republished Index. If the CBOE discontinues publication of the Index and the calculation agent determines that no Successor Index is available at that time, then on each scheduled trading day until the earlier to occur of
(a)the determination of the Redemption Amount or
(b)a determination by the calculation agent that a Successor Index is available, the calculation agent will determine the level that would be used in computing the Redemption Amount as if that day were a scheduled trading day. Eksportfinans, has been appointed to act as the calculation agent. Telephone conversation between Jeffrey P. Burns, Vice President and Associate General Counsel, Amex and Ronesha Butler, Special Counsel, Division of Trading and Markets, Commission (“Division”), Commission, on October 31, 2007. 5 Eksportfinans and Standard & Poor's (“S&P”), a division of the McGraw-Hill Companies, Inc. have entered into a non-exclusive license agreement providing for the use of the PUT Index by Eksportfinans in connection with certain securities including the Notes. S&P is not responsible for and will not participate in the issuance and creation of the Notes. The Notes will conform to the initial listing guidelines under Section 107A 6 and continued listing guidelines under Sections 1001-1003 7 of the Company Guide. The Notes are a series of medium-term debt securities of Eksportfinans that provide for a cash payment at maturity or upon earlier exchange at the holder's option, based on the performance of the PUT Index as adjusted by an annual index fee (the “Index Fee”). The principal amount of each Note is expected to be $20. The Notes will not have a minimum principal amount that will be repaid and, accordingly, payment on the Notes prior to or at maturity may be less than the original issue price of the Notes. In particular, the value of the PUT Index must increase for the investor to receive at least the $20 principal amount per security at maturity. 8 The Notes will have a term of thirty
(30)years. The Notes are not callable by the issuer; however, holders will be able to redeem the Notes in minimum aggregate amounts of $1,000 on a weekly basis. 6 Section 107A of the Company Guide provides the initial listing standards for the Notes. Section 107A requires:
(1)A minimum public distribution of one million units;
(2)a minimum of 400 public shareholders; and
(3)a market value of at least $4 million. In addition, Section 107A provides a limited exception to the minimum public distribution and minimum public shareholder requirement if an issue is traded in thousand dollar denominations or if the securities are redeemable at the option of the holders on at least a weekly basis. Because the Notes will be redeemable on a weekly basis at the option of the holders, the exception to the minimum public distribution and public shareholder requirement in Section 107A will apply to the listing of the Notes. In addition, the listing guidelines provide that the issuer has assets in excess of $100 million, stockholder's equity of at least $10 million, and pre-tax income of at least $750,000 in the last fiscal year or in two of the three prior fiscal years. In the case of an issuer which is unable to satisfy the earning criteria stated in Section 101 of the Company Guide, the Exchange will require the issuer to have the following:
(1)Assets in excess of $200 million and stockholders' equity of at least $10 million; or
(2)assets in excess of $100 million and stockholders' equity of at least $20 million. 7 The Exchange's continued listing guidelines are set forth in Sections 1001 through 1003 of Part 10 to the Exchange's Company Guide. Section 1002(b) of the Company Guide states that the Exchange will consider removing from listing any security where, in the opinion of the Exchange, it appears that the extent of public distribution or aggregate market value has become so reduced to make further dealings on the Exchange inadvisable. With respect to continued listing guidelines for distribution of the Notes, the Exchange will rely, in part, on the guidelines for bonds in Section 1003(b)(iv). Section 1003(b)(iv)(A) provides that the Exchange will normally consider suspending dealings in, or removing from the list, a security if the aggregate market value or the principal amount of bonds publicly held is less than $400,000. 8 Telephone conversation between Jeffrey P. Burns, Vice President and Associate General Counsel, Amex and Ronesha Butler, Special Counsel, Division, Commission, on October 31, 2007. The payment that a holder of a Note will receive at maturity or redemption (the “Redemption Amount”) will depend on the relation of the final Index value (the “Final Index Value”) to the closing value of the Index on the pricing date (the “Initial Index Value”) of the PUT Index, as adjusted by the Index Fee (as defined below). For purposes of determining the amount payable at maturity of the Notes, the Redemption Amount will be determined at the close of the markets on the maturity date (the “Final Valuation Date).” In the event that a market disruption event 9 occurs on the Final Valuation Date, such Final Valuation Date will be postponed to the next scheduled trading day on which no market disruption event occurs. 9 A “market disruption event” is defined as the failure of the primary market or related markets to open for trading during regular trading hours or the occurrence or existence of any of the following events:
(i)A trading disruption, if material, at any time during the one hour period that ends at the close of trading for the applicable exchange;
(ii)an exchange disruption, if material, at any time during the one hour period that ends at the close of trading for the applicable exchange; or
(iii)an early closure. A “trading disruption” generally means any suspension of, or limitation, imposed on trading by the primary exchange or related exchange or otherwise, whether by reason of movements in price exceeding limits permitted by the relevant exchange or related exchange or otherwise:
(i)Relating to securities that comprise 20% or more of the level of the S&P 500® Index (the “S&P 500”); or
(ii)in options contracts or futures contracts relating to the Index or the S&P 500 on any relevant related exchange. An “exchange disruption” means any event (other than a scheduled early closure) that disrupts or impairs the ability of market participants in general to:
(i)Effect transactions in, or obtain market values on, any primary exchange or related exchange in securities that comprise 20 percent or more of the level of the S&P 500; or
(ii)effect transactions in options contracts or futures contracts relating to the Index or the S&P 500 on any relevant related exchange. A “related exchange” is an exchange or quotation system on which futures or options contracts relating to the Index or the S&P 500 are traded. The Index Fee will be 1.0%. A holder or investor on the maturity date will receive a Redemption Amount equal to: EN06DE07.000 The Notes are cash-settled in U.S. dollars and do not give the holder any right to receive any of the component securities, dividend payments, or any other ownership right or interest in the securities comprising the PUT Index. The Notes are designed for investors who desire exposure to a covered put selling options strategy on a broad market index and who are willing to forego principal protection and market interest payments on the Notes during their term. 10 10 Telephone conversation between Jeffrey P. Burns, Vice President and Associate General Counsel, Amex and Ronesha Butler, Special Counsel, Division, Commission, on October 31, 2007. The Commission has previously approved the listing on the Amex of securities with structures similar to that of the proposed Notes. 11 11 *See* Securities Exchange Act Release Nos. 51426 (March 23, 2005), 70 FR 16315 (March 30, 2005) (approving the listing and trading of Morgan Stanley notes linked to the BXM Index); 50719 (November 22, 2004), 69 FR 69644 (November 30, 2004) (approving the listing and trading of Morgan Stanley notes linked to the BXM Index); 51634 (April 29, 2005), 70 FR 24138 (May 6, 2006) (approving the listing and trading of Wachovia notes linked to the BXM Index); and 51840 (June 14, 2005), 70 FR 35468 (June 20, 2005) (approving the listing and trading of JPMorgan notes linked to the BXD Index). The BXM index is the CBOE S&P 500 BuyWrite Index SM while the BXD is the equivalent index using the DJIA as the underlying index rather than the S&P 500. Description of the Index The PUT Index is a benchmark index designed to measure the performance of a hypothetical investment strategy that overlays short S&P 500 puts over a money market account. Developed by the CBOE in cooperation with S&P, the Index was initially announced in April 2002. The PUT Index was set to an initial value of 100.00 as of June 1, 1988. 12 The Exchange states that the CBOE developed the PUT Index in response to several factors, including the repeated requests by options portfolio managers that the CBOE provide an objective benchmark for evaluating the performance of put selling strategies. Further, the CBOE developed the PUT Index to provide investors with a relatively straightforward indicator of covered put selling which otherwise may seem complicated and inordinately risky. 12 Telephone conversation between Jeffrey P. Burns, Vice President and Associate General Counsel, Amex and Ronesha Butler, Special Counsel, Division, Commission, on October 31, 2007. The number of puts in the Index is set to collateralize the exposure to S&P 500 downturns. This design provides higher leverage than the BXM strategy 13 but will also capture the potentially “rich” options premium of S&P 500 put options. Short option strategies, and especially short put strategies, typically generate high risk-adjusted returns. 13 The BXM Index is a benchmark index designed to measure the performance of a hypothetical “buy-write” strategy on the S&P 500. A “buy-write” is a conservative options strategy in which an investor buys a stock or portfolio and writes call options on the stock or portfolio. This strategy is also known as a “covered call” strategy. A buy-write strategy provides option premium income to cushion decreases in the value of an equity portfolio, but will underperform stocks in a rising market. A buy-write strategy tends to lessen overall volatility in a portfolio. The PUT Index strategy invests cash at one- and three-month Treasury Bill rates and sells a sequence of one-month at-the-money S&P 500 puts (SPX). The short put position is collateralized by the Treasury bills. The PUT Index portfolio is rebalanced on the third Friday of the month when the puts expire and new puts are sold. This procedure is referred to as the “roll.” On every third roll, the total cash in the PUT portfolio is reinvested at the three-month Treasury bill rate. The rebalanced portfolio is long three-month Treasury bills and short one-month SPX puts. On other roll dates, the cash obtained from selling new SPX puts is invested at the one-month Treasury bill rate, and the cash required to settle expiring in-the-money puts is financed first by one-month Treasury bills and second by three-month Treasury bills, if necessary. On such roll dates, the rebalanced portfolio is typically long one and three-month Treasury bills and short one-month SPX puts. The theory of the PUT strategy is to trade a premium over Treasury bill rates for a leveraged exposure to S&P 500 downturns. It is expected that asset managers will find the PUT strategy a convenient method to utilize disposable cash to enhance returns. From June 1988 to March 2007, the PUT Index had an annualized monthly return of 12.79% compared to 12.08% for the S&P 500 Total Return Index (SPTR), 11.91% for the BXM and 4.66% for three-month Treasury bills. The PUT Index had a smaller standard deviation than the BXM and SPTR. As expected, PUT Index monthly returns tend to
(a)increase with the return on the S&P 500,
(b)be greater than the returns of the BXM and SPTR when SPTR returns are negative or small, and
(c)be smaller when SPTR returns are larger. More specifically, the PUT Index tends to perform better when the monthly return of SPTR is at or below 2.5%. The solid relative performance of the PUT Index is explained by the fact that this occurred 67% of the time between June 1988 and March 2007. Construction of PUT Index Portfolio The PUT Index tracks the value of an initial investment of $100 in a portfolio that passively follows the CBOE S&P 500 PUT strategy. The portfolio is managed and calculated as follows: • On June 1, 1988, the inception date, SPX at-the-money put options are sold and $100 plus the cash from this sale is invested at the three-month Treasury bill rate. 14 If the puts expire in the money at the next roll date, the final settlement loss is financed by the Treasury bills, and a new batch of puts is sold. The revenue from the sale of the puts is invested at the one-month Treasury bill rate. 14 The intra-day cash from selling puts at the open is deemed to be invested at the close of the roll date. Similarly settlement losses are deemed to be financed at the close. • Similarly, on the second roll date, any settlement loss from expiring puts is financed first by one-month Treasury bills and if this is not sufficient, by three-month Treasury bills. Again, the cash from the sale of new puts is invested at the one-month Treasury bill rate. • On the third roll date, both the one- and three-month Treasury investments are liquidated and the cash is used to finance possible losses from the expiring puts. New puts are sold and the total net cash balance is now reinvested at the three-month Treasury bill rate. Final Settlement Price of Expiring Put Options At expiration, the put options are settled to a Special Opening Quotation (SOQ, ticker “SET”) of the S&P 500. 15 The SOQ is a special calculation of the S&P 500 Index compiled from the opening prices of S&P 500 stocks. The SOQ is calculated when all S&P 500 stocks have opened for trading; this typically happens before 11 a.m. Eastern Time (“ET”). 16 The aggregate settlement value of the expiring puts is equal to the number of puts times the maximum of 0 and the difference between the strike price of the puts and the SOQ. 15 If the third Friday is an exchange holiday, the put option will be settled against the SOQ on the previous business day and the new put option will be selected on that day as well. 16 If one or more stocks in the S&P 500 Index do not open on the day the SOQ is calculated, the final settlement price for SPX options is determined in accordance with the Rules and By-Laws of the Options Clearing Corporation. Selection of the “At-the-Money” Strike Price The strike price of the new options is the strike price of the listed CBOE SPX put option that is closest to but not greater than the last value of the S&P 500 Index reported before 11 a.m. ET. For example, if the last S&P 500 Index value reported before 11 a.m. ET is 1433.10 and the closest listed SPX put option strike price below 1433.10 is 1430 then 1430 strike SPX put options are sold. Sale Price of Put Options 17 17 A slightly different roll procedure is used to calculate the historical series of the CBOE S&P 500 Collateralized Put Index. This is to take into account the changes in the timing of the expiration of S&P 500 options, and to mimic the changes made in the calculation of the BXM series over time. Up to November 20, 1992, the roll is deemed to take place at the close of the 3rd Friday, the strike price of the new put is determined at 4 p.m. ET and the new puts are deemed sold at the last bid price before 4 p.m. ET. After this date, the index is rolled at 11 a.m. ET instead. And starting on March 17, 2006, the new puts were sold at the VWAP. The new put options are deemed sold at a price equal to the volume-weighted average of the traded prices (“VWAP”) of put options with that strike during the half-hour period beginning at 11:30 a.m. ET. The CBOE calculates the VWAP in a two-step process. First, the CBOE excludes trades between 11:30 a.m. and 12 p.m. ET that are identified as having been executed as part of a “spread.” Second, the CBOE then calculates the weighted average of all remaining transaction prices at that strike between 11:30 a.m. and 12 p.m. ET, with weights equal to the fraction of total non-spread volume transacted at each price during this period. The source of the transaction prices used in the calculation of the VWAP is CBOE's Market Data Retrieval (“MDR”) System. 18 If no transactions occur at the new put strike between 11:30 a.m. and 12 p.m. ET, the new put options are deemed sold at the last bid price reported before 12 p.m. ET. 18 Time & Sales information from CBOE's MDR System is disseminated through the Options Price Reporting Authority
(OPRA)and is publicly available through most price quote vendors. Number of Puts Sold The PUT investor sells a different number of puts at every roll. The number of puts is chosen to ensure that the maximum final settlement loss can be financed by Treasury bills. Therefore, if the S&P 500 falls to zero, the value of the PUT portfolio is zero. The number of puts sold increases with Treasury bill rates and the price of the put and will decrease with the strike price. Index Calculation CBOE calculates the PUT once per day at the close of trading. On any given date, the index represents the value of the initial $100 invested in the CBOE S&P 500 PUT strategy. At the close of every business date, the value of the PUT is equal to the value of the Treasury bill account less the mark-to-market value of the puts: EN06DE07.001 where M <sup>t</sup> is the Treasury bill balance at the close of date t, N <sup>last</sup> is the number of put options sold at the last roll date, and P <sup>t</sup> is the arithmetic average of the last bid and ask prices of the put option reported before 4 p.m. ET on date t. On all but roll dates, the Treasury bill balance is obtained by compounding the one and three-month Treasury balances at the previous business close at their respective daily rates. EN06DE07.002 where i = 1 and 3 for one and three-month Treasury bills, and r i <sup>t−1</sup> is the corresponding Treasury bill rate from the previous to the current close. The Treasury bill rates between two roll dates are obtained by compounding the daily rates. On every third roll date, the Treasury bills are deemed to mature, the cash is used to pay for final settlement of the puts if they expire in-the-money, and new puts are sold. The net cash balance available for reinvestment is: EN06DE07.003 where K <sup>old</sup> is the strike price of the put options sold at the previous roll date, SOQ <sup>t</sup> is the final settlement price on roll date t, N <sup>new</sup> is the number of new puts sold and P <sup>vwap</sup> is the volume-weighted average price at which the new options are sold. This balance is reinvested at the three-month Treasury bill rate. Therefore, in the month following a third roll date, the one-month Treasury balance is zero. The number of new puts sold on any roll date t is set such that the Treasury balance at the next roll date covers the maximum put settlement loss: EN06DE07.004 where K <sup>new</sup> is the strike price at which the new puts are sold, and R <sup>t</sup> is the three-month Treasury bill rate to the next roll date. Treasury balance 1 Month 3 Months Number of puts Strike price SOQ Settlement loss Put bid 11/20/03 22.0826 647.6421 0.6440 1040 11/21/03 Pre-settlement 22.0832 647.6589 1038 1.1978 Post-Settlement 20.8854 647.6589 0.6612 1030 18.2 1.00071 November 21, 2003 was a third roll date. Daily compounding of the one-month and three-months Treasury balances outstanding at the close of November 20, 2003 (daily compounding rates 1.000024 and 1.00003, respectively) yielded one- and three-month settlement balances of $22.08 and $647.66. Since the SOQ was 1038, the 1040 put expired in the money with a settlement loss of $1.1978 = .644* (1040-1038). The number of new puts sold was N = M / [K/(1+R)−P] = 668.5442/(1030/1.000717-18.2) = .6612. Equivalently, N*K = (M+N*P)*(1+R) = .6612*1030. Assuming that the S&P 500 had decreased to 0 at the next roll date (December 19, 2003), the settlement loss on the puts would have been N*K= .6612 * 1030. By construction, this would have been exactly covered by the Treasury investment. The calculation on other roll dates is similar to that on third roll dates but the cash from sale of the puts is invested at the one-month Treasury bill rate. The daily closing price of the PUT Index is calculated and disseminated by the CBOE on its Web site at *http://www.cboe.com* and via the Options Pricing and Reporting Authority (“OPRA”) at the end of each trading day. 19 The value of the S&P 500 Index is disseminated at least once every fifteen
(15)seconds throughout the scheduled trading day. The Exchange believes that the dissemination of the S&P 500 along with the ability of investors to obtain S&P 500 put option pricing provides sufficient transparency regarding the PUT Index. In addition, as indicated above, the value of the PUT Index is calculated once every scheduled trading day, thereby, providing investors with a daily value of such “hypothetical” put selling options strategy on the S&P 500. 19 The Commission, in connection with BXM and BXD Index Notes, approved the listing and trading of these products where the dissemination of the value of the underlying index occurred once per trading day. *See supra* note 11. The CBOE has represented that the PUT Index value will be calculated and disseminated by the CBOE once every scheduled trading day after the close. The daily change in the PUT Index reflects the daily changes in the Treasury bill account and related put options positions. Eksportfinans represents that it will seek to arrange to have the PUT Index calculated and disseminated on a daily basis through a third party if the CBOE ceases to calculate and disseminate the Index. 20 If, however, Eksportfinans is unable to arrange the calculation and dissemination of the PUT Index as indicated above, the Exchange will undertake to delist the Notes. 21 20 The Exchange represents, that it will file a proposed rule change pursuant to Rule 19b-4, seeking approval to continue trading the Notes based on a successor or substitute index, and unless approved, the Exchange will commence delisting of the Notes. Telephone conversation between Jeffrey P. Burns, Vice President and Associate General Counsel, Amex and Ronesha Butler, Special Counsel, Division, Commission, on October 31, 2007. 21 *See supra* note 4. In order to provide an updated value of the daily Redemption Amount for use by investors, the Exchange will disseminate over the Consolidated Tape Association's Network B, a daily indicative Redemption Amount (the “Indicative Value”). The Indicative Value will be calculated by the Exchange after the close of trading and after the CBOE calculates the PUT Index for use by investors the next scheduled trading day. Indicative Value is not adjusted on an intra-day basis. 22 It is designed to provide investors with a daily reference value of the Index. The Indicative Value may not reflect the precise value of the current Redemption Amount or amount payable upon exchange or maturity. Therefore, the Indicative Value disseminated by the Exchange during trading hours should not be viewed as a real time update of the PUT Index, which is calculated only once a day. While the Indicative Value that will be disseminated by the Amex is expected to be close to the current PUT Index value, the values of the Indicative Value and the PUT Index will diverge due to the application of the Index Fee. 22 The Telephone conversation between Jeffrey P. Burns, Vice President and Associate General Counsel, Amex and Ronesha Butler, Special Counsel, Division, Commission, on October 31, 2007. Because the PUT Index is not calculated and disseminated every 15 seconds, the Exchange seeks a limited exception from the generic continued listing requirement set forth in Section 107D(h) of the Company Guide. In current Commentary .01 to Section 107, the Exchange provides that although the BXM and BXD Indexes do not satisfy the requirements of Section 107D(h), these Indexes nevertheless may be listed and traded pursuant to the generic standards set forth in Section 107D. The Exchange believes that the dissemination requirement found in Section 107D(h) of the Company Guide is not necessary for the PUT Index because the dissemination of the S&P 500 along with the ability of investors to obtain put option pricing information provides sufficient transparency regarding the Index. Accordingly, the Exchange requests that the Commission approve the proposed revision to Commentary .01 to Section 107D. The Exchange represents that it prohibits the initial and/or continued listing of any security that is not in compliance with Rule 10A-3 under the Act. 23 23 17 CFR 240.10A-3. Because the Notes are issued in $20 denominations, the Amex's existing equity floor trading rules will apply to the trading of the Notes. First, pursuant to Amex Rule 411, the Exchange will impose a duty of due diligence on its members and member firms to learn the essential facts relating to every customer prior to trading the Notes. 24 Second, the Notes will be subject to the equity margin rules of the Exchange. 25 Third, the Exchange will, prior to trading the Notes, distribute a circular to the membership providing guidance with regard to member firm compliance responsibilities (including suitability recommendations) when handling transactions in the Notes and highlighting the special risks and characteristics of the Notes. With respect to suitability recommendations and risks, the Exchange will require members, member organizations and employees thereof recommending a transaction in the Notes:
(1)To determine that such transaction is suitable for the customer; and
(2)to have a reasonable basis for believing that the customer can evaluate the special characteristics of, and is able to bear the financial risks of such transaction. In addition, Eksportfinans will deliver a prospectus in connection with the initial sales of the Notes. 24 Amex Rule 411 requires that every member, member firm or member corporation use due diligence to learn the essential facts, relative to every customer and to every order or account accepted. 25 *See* Amex Rule 462 and Section 107D(k) of the Company Guide. The Exchange represents that its surveillance procedures are adequate to properly monitor the trading of the Notes. Specifically, the Amex will rely on its existing surveillance procedures governing equities and options. In addition, the Exchange also has a general policy which prohibits the distribution of material, non-public information by its employees. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act, 26 in general, and furthers the objective of Section 6(b)(5) of the Act, 27 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 facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. 26 15 U.S.C.78f(b). 27 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 Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. The Amex has requested accelerated approval of this proposed rule change prior to the 30th day after the date of publication of the notice of the filing thereof. The Commission has determined that a 15-day comment period is appropriate in this case. 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-2007-94 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-2007-94. 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 at ( *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-Amex-2007-94 and should be submitted on or before December 21, 2007. 28 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 28 Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23640 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56862; File No. SR-CBOE-2007-135] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to a Transaction Fee Waiver for Options on the Mini-SPX November 29, 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 November 16, 2007, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the CBOE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to waive all transaction fees in options on the Mini-SPX (“XSP”). The text of the proposed rule change is available at the CBOE, on the Exchange's Web site at *http://www.cboe.org/legal* , 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, CBOE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to waive transaction fees for all market participants in XSP options beginning on November 19, 2007. CBOE intends to undertake a marketing “re-launch” of the XSP product due in part to the fact that XSP options are now traded in penny increments in conjunction with the expanded penny pilot program recently approved by the Commission. 3 In conjunction with the re-launch, CBOE has decided to waive all XSP transaction fees for an indefinite period of time. The Exchange may determine to reevaluate the fee waiver at a future time. 3 *See* Securities and Exchange Act Release No. 56565 (September 27, 2007), 72 FR 56403 (October 3, 2007). 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act, 4 in general, and furthers the objectives of Section 6(b)(4) 5 of the Act in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among CBOE members and other persons using its facilities. 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of 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 Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A) of the Act 6 and subparagraph (f)(2) of Rule 19b-4 7 thereunder. 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 6 15 U.S.C. 78s(b)(3)(A). 7 17 CFR 240.19b-4(f)(2). 8 *Id.* IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-CBOE-2007-135 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2007-135. 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 CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2007-135 and should be submitted on or before December 27, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23590 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56860; File No. SR-CBOE-2007-59] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving a Proposed Rule Change To Amend the Minimum Quote Size Requirements for Hybrid Opening System Rotations November 29, 2007. On September 17, 2007, the Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend its minimum quote size requirements that are applicable to trading rotations conducted via the Hybrid Opening System (“HOSS”). The proposed rule change was published for comment in the **Federal Register** on October 25, 2007. 3 The Commission received no comments on the proposal. This order approves the proposed rule change. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 56680 (October 19, 2007), 72 FR 60697 (“Notice”). Currently, CBOE Rule 8.7 generally requires that the initial size a market maker electronically quotes must be at least ten contracts (undecremented size) (the “10-up” requirement). 4 The Exchange proposes to amend CBOE Rule 6.2B to modify the minimum quote size requirements applicable to Market- Makers, Remote Market-Makers, Designated Primary Market-Makers, Electronic Designated Primary Market-Makers and Lead Market-Makers (collectively referred to as “Market-Makers”) 5 with respect to opening rotations in CBOE Hybrid Trading System (“Hybrid”) classes. Specifically, the 10-up requirement would continue to apply, except that a Market-Maker would be permitted to enter an opening quote for as low as one contract if the underlying primary market 6 disseminates less than a 1000-share best bid or offer quote (which is the equivalent of ten contracts) immediately prior to an option series opening. In contrast to the intra-day quoting requirements under CBOE Rule 8.7, this exception would not require that the opening quote process be automated or that the Market-Maker's quote size automatically return to at least 10-up when the underlying primary market no longer disseminates a minimum 1000-share quote. 4 If, however, the underlying primary market disseminates a 100-share best bid or offer quote (which is the equivalent of one option contract), a Market-Maker's undecremented quote may be for as low as one contract (“1-up”) if the process is automated and the quote automatically returns to at least 10-up when the underlying market no longer disseminates a 100-share quote. *See, e.g.* , CBOE Rule 8.7(d)(ii)(B). 5 Currently, Designated Primary Market-Makers, Electronic Designated Primary Market-Makers and Lead Market-Makers are required to enter opening quotes in accordance with CBOE Rule 6.2B in 100% of the series of each appointed class; other Market-Makers and Remote Market-Makers are permitted, but not required, to enter opening quotes in accordance with CBOE Rule 6.2B. *See* CBOE Rules 6.2B, 8.15A (subparagraph (b)(iv) of this rule has been interpreted by the Exchange to require an LMM to enter opening quotes in 100% of the series of each appointed class), 8.85, and 8.93. 6 CBOE Rule 1.1(v) defines the term “primary market” of an underlying security as “the principal market in which the underlying security is traded.” The Commission notes that, while the Exchange believes that the existing opening quote size requirement imposes a reasonable obligation on Market-Makers who receive certain benefits for satisfying this and other obligations, the Exchange also believes that there are instances where requiring Market-Makers to quote 10-up during an opening rotation imposes a heightened level of risk on them. 7 Accordingly, CBOE's proposal would provide limited relief from this quoting requirement during the opening rotation only. 7 *See* Notice, *supra* note 3, at 60698. The Commission finds that the proposed rule change is consistent with the requirements of Section 6 of the Act 8 and the rules and regulations thereunder applicable to a national securities exchange. 9 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act, 10 which requires that a national securities exchange's rules be designed to facilitate transactions in securities, to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and, in general, to protect investors and the public interest. The Commission notes that Market-Makers hedge their options transactions by buying and/or selling the underlying securities. When the underlying primary market for the particular equity security on which a CBOE option is based disseminates less than a 1000-share quote during CBOE's opening rotation in the respective option series, the amount of readily-accessible liquidity available to a CBOE Market-Maker in the underlying security on that particular side of the market to hedge a 10-up quote in the respective option may potentially be limited. Correspondingly, Market-Makers' ability to hedge their positions at the open might be restricted, increasing their financial exposure and risk, particularly when the Market-Maker is required to quote over multiple series during the typically active open rotation period. 11 8 15 U.S.C. 78(f)(b). 9 In approving this rule change, the Commission notes that it has considered the proposal's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 10 15 U.S.C. 78f(b)(5). 11 According to the Exchange, an options exchange may list 20 or more options series for an underlying stock. For example, if a Market-Maker posts 10-up markets in twenty series, that Market-Maker would provide liquidity equivalent to 20,000 shares. While the Commission continues to believe that CBOE's existing quote size requirements are appropriate, given the benefits that are provided to Market-Makers such as favorable margin treatment, the Commission also believes that it is reasonable to allow a limited exception for Market-Makers to lower their quote sizes to as low as one contract during opening rotations on HOSS when there is a diminished amount of liquidity in the underlying primary market. By permitting Market-Makers to limit their exposure at the opening, the Commission believes that this proposal may encourage Market-Makers to quote more competitively during HOSS opening rotations. 12 The Commission notes that CBOE's proposal would permit Market-Makers to submit an opening quote for as low as one contract only in connection with opening rotations on HOSS, though a Market-Maker would be free to quote more if it so choose. Further, the proposal would permit a Market-Maker to maintain its 1-up quote during the opening rotation until it is decremented or the Market-Maker updates its quote, at which point CBOE's continuous quoting obligation rules would apply. Finally, the Commission believes that the proposal should not detract from CBOE's ability to maintain fair and orderly openings on HOSS because, to the extent that there may be a market order imbalance on the opening, such imbalances would continue to be addressed in the same manner as they are currently handled under existing CBOE rules. 12 Nothing in this proposal would affect a Market-Maker's obligation to honor its firm quote obligations imposed by CBOE Rule 8.51. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 13 that the proposed rule change (SR-CBOE-2007-59) be, and hereby is, approved. 13 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23608 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56863; File No. SR-DTC-2007-06] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Proposed Rule Change To Amend the Hearing Procedures Afforded to an Interested Person and Harmonize Them With Similar Rules of Its Affiliates November 29, 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 April 30, 2007, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by DTC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change seeks
(1)to modify DTC's rules regarding hearing procedures afforded to Interested Persons 3 and
(2)where practicable or beneficial, to harmonize them with similar rules of DTC's affiliates, the National Securities Clearing Corporation (“NSCC”) and the Fixed Income Clearing Corporation (“FICC”). 3 “A Participant or Pledgee, [or] applicant to become a Participant or Pledgee or issuer of a Security.” Rule 22, Section 1. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. DTC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 4 4 The Commission has modified the text of the summaries prepared by DTC. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Minor Rule Violation Plan In 1984, the Commission adopted amendments to Rule 19d-1(c) under the Act 5 that allow self-regulatory organizations to adopt with Commission approval plans for the disposition of minor violations of rules. 6 5 17 CFR 240.19d-1(c). 6 Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 23828 (June 8, 1984) [File No. S7-983A]. Currently under DTC's rules, an Interested Person subject to disciplinary action has a right to a hearing before a member or members of a panel selected by the Chairman of the Board from a pool of persons employed by or partners of participants. Because some rule violations are not sufficiently serious to merit Board review, DTC is proposing to adopt a Minor Rule Violation Plan within the meaning of Rule 19d-1(c)(2) of the Act for those rule violations DTC deems minor. Consistent with Rule 19d-1(c)(2) of the Act, DTC would designate those rule violations for which a fine may be assessed in an amount not to exceed $5,000 as minor rule violations. If a member were to dispute a fine imposed by DTC by filing a written request for hearing and a written statement, DTC management would have the authority to waive the fine. DTC management would notify the Board of Directors (or a Committee authorized by the Board of Directors) of its determination to waive the fine and would provide the reasons for the waiver. The Board or Committee could in its discretion decide to reinstate any fine waived by DTC management. If DTC management were not to waive the fine, the member could appeal the decision to a panel comprised of DTC officers (“Minor Rule Violation Panel”). 2. Hearings for All Other Violations and Minor Rule Violation Appeals For matters involving
(i)an alleged violation of a DTC rule or procedure for which a fine in an amount of over $5,000 is assessed,
(ii)applicants for participation, or
(iii)other disciplinary actions to which the Minor Rule Violation Plan would not apply or for appeals from a Minor Rule Violation Panel decision adverse to an Interested Person, the Interested Person would be entitled to a hearing before a panel comprised of three individuals selected by the Chairman of the Board from a pool of persons employed by or partners of participants. Persons shall be appointed members of the pool by the Board. Decisions of the panel would be final; however, the full Board of Directors would retain the right to modify any sanction or reverse any decision of the Board panel that is adverse to the Interested Person. Currently with respect to hearings, an Interested Person is afforded the opportunity to be heard and may be represented by counsel if desired. A record is kept of the hearing, and at the discretion of the Board panel, the associated cost may be charged in whole or part to the Interested Person in the event that the decision is adverse to the Interested Person. The Interested Person is advised of the Board panel's decision within ten business days after the conclusion of the hearing. These procedures would also apply with respect to the Minor Rule Violation Plan. 3. Administrative Changes: Uniformity of Time Frames The proposed rule changes seek to implement uniform time periods among DTC, NSCC, and FICC governing actions an Interested Person would be required to take in order to request a hearing. The deadlines an Interested Person must adhere to in order to request a hearing currently vary between DTC, NSCC, and FICC. Under the proposed rule change, an Interested Person would have five business days from the date on which DTC first informed it of a sanction or a denial of membership by which to request a hearing. Within seven business days, or three days in the case of a summary action taken against the Interested Person, after filing a request for a hearing with DTC, the Interested Person would be required to submit to DTC a clear and concise written statement setting forth the action or proposed action of DTC with respect to which the hearing is requested, the basis for objection to such action, whether the Interested Person intends to attend the hearing, and whether the Interested Person chooses to be represented by counsel at the hearing. The proposed time frames would be consistent with time frames being proposed by FICC and NSCC. DTC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 7 and the rules and regulations thereunder because the adoption of a Minor Rule Violation Plan furthers the statutory objective of providing a fair procedure for disciplining Participants and will provide DTC with the ability to impose a meaningful sanction for those rule violations that do not necessarily rise to a level of meriting a full disciplinary proceeding. Accordingly, the proposed rule change promotes the prompt and accurate clearance and settlement of securities transactions. 7 15 U.S.C. 78q-1. B. Self-Regulatory Organization's Statement on Burden on Competition DTC does not believe that the proposed rule change will have any impact or impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not been solicited or received. DTC will notify the Commission of any written comments received by DTC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the **Federal Register** or within such longer period:
(i)As the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-DTC-2007-06 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-DTC-2007-06. 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 filings also will be available for inspection and copying at the principal office of DTC and on DTC's Web site at *http://www.dtcc.com/downloads/legal/rule_filings/2007/dtc/2007-06.pdf* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-DTC-2007-06 and should be submitted on or before December 21, 2007. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23591 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56864; File No. SR-FICC-2007-06] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Modify the Hearing Procedures Afforded to Members and Applicants for Membership and Harmonize Them With Similar Rules of Its Affiliates November 29, 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 April 30, 2007, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) and on July 24, 2007, amended 3 the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by FICC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 The amendment corrected a typographical error in the proposed rule text. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change seeks
(1)to modify the rules of FICC's Government Securities Division (“GSD”) and Mortgage-Backed Securities Division (“MBSD”) (GSD and MBSD are collectively referred to as the “Divisions”), including the EPN rules of MBSD, regarding hearing procedures afforded to members and applicants for membership and
(2)where practicable or beneficial, to harmonize them with similar rules of FICC's affiliates, The Depository Trust Company (“DTC”) and the National Securities Clearing Corporation (“NSCC”). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FICC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 4 4 The Commission has modified the text of the summaries prepared by FICC. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Minor Rule Violation Plan In 1984, the Commission adopted amendments to Rule 19d-1(c) under the Act 5 that allow self-regulatory organizations to adopt with Commission approval plans for the disposition of minor violations of rules. 6 5 17 CFR 240.19d-1(c). 6 Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 23828 (June 8, 1984) File No. S7-983A]. Currently under each Division's rules, a member or applicant subject to disciplinary action has a right to a hearing before a panel comprised of members of FICC's Board of Directors regardless of the severity of the action for which the member or applicant is being disciplined. 7 Because some rule violations are not sufficiently serious to merit Board review, FICC is proposing to adopt a Minor Rule Violation Plan within the meaning of Rule 19d-1(c)(2) of the Act for those rule violations FICC deems minor. Consistent with Rule 19d-1(c)(2) of the Act, FICC would designate those rule violations for which a fine may be assessed in an amount not to exceed $5,000 as minor rule violations. If a member were to dispute a fine imposed by FICC by filing a written request for hearing and a written statement, FICC management would have the authority to waive the fine. FICC management would notify the Board of Directors (or a Committee authorized by the Board of Directors) of its determination to waive the fine and would provide the reasons for the waiver. The Board or Committee could in its discretion decide to reinstate any fine waived by FICC management. If FICC management were not to waive the fine, the member could appeal the decision to a panel comprised of FICC officers (“Minor Rule Violation Panel”). 7 MBSD Article V, Rule 7 (“Appeals”); EPN Article X, Rule 7 (“Appeals”); and GSD Rule 37 (“Hearing Procedures”). 2. Hearings for All Other Violations and Minor Rule Violation Appeals For matters involving
(i)an alleged violation of a GSD or MBSD rule for which a fine in an amount of over $5,000 is assessed,
(ii)applicants for membership, or
(iii)other disciplinary actions to which the Minor Rule Violation Plan would not apply or for appeals from a Minor Rule Violation Panel decision adverse to a member or applicant, the member or applicant would be entitled to a hearing before a panel comprised of three individuals of the FICC Board of Directors (or their designees) appointed by the Chairman of the FICC Board. Decisions of the panel would be final; however, the full Board of Directors would retain the right to modify any sanction or reverse any decision of the Board panel that was adverse to the member or applicant. Currently with respect to hearings, a member or applicant is afforded the opportunity to be heard and may be represented by counsel if desired. A record is kept of the hearing, and at the discretion of the Board panel, the associated cost may be charged in whole or part to the member or applicant in the event that the decision is adverse to the member or applicant. The member or applicant is advised of the Board panel's decision within ten business days after the conclusion of the hearing. These procedures would also apply with respect to the Minor Rule Violation Plan. 3. Administrative Changes: Uniformity of Time Frames The proposed rule changes seek to implement uniform time periods for the Divisions governing actions a member or applicant would be required to take in order to request a hearing. The deadlines a member or applicant must adhere to in order to request a hearing currently vary between the Divisions. Under the proposed rule change, a member or applicant would have five business days, or two business days in the case of a summary action taken against the member or applicant pursuant to Rule 21 or 22, 8 from the date on which FICC first informs it of a sanction or a denial of membership in which to request a hearing. 8 Examples of a summary action are a suspension of a member or restriction of a member's access to services as described in Rule 21, Section 1 (“Restrictions on Access to Services”). Within seven business days, or three business days in the case of a summary action taken against the member or applicant, after filing a request for a hearing with FICC, the member or applicant would be required to submit to FICC a clear and concise written statement setting forth the action or proposed action of FICC with respect to which the hearing is requested, the basis for objection to such action, whether the member or applicant intends to attend the hearing, and whether the member or applicant chooses to be represented by counsel at the hearing. These proposed time frames would be consistent with time frames being proposed by DTC and NSCC. 4. Technical Changes MBSD Article V, Rule 3 (“Fines and Other Sanctions”) would be amended in accordance with the proposed changes to the hearing procedures of MBSD. In addition, minor technical changes would be made to the rules of both Divisions where necessary to implement the proposed changes set forth above. 5. Implementation of the Proposed Changes The proposed changes will be implemented upon approval of this proposed filing by the Commission. Members will be advised of the implementation through an FICC Important Notice. FICC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 9 and the rules and regulations thereunder because the adoption of a Minor Rule Violation Plan furthers the statutory objective of providing a fair procedure for disciplining members and will provide FICC with the ability to impose meaningful sanctions for those rule violations that do not necessarily rise to a level meriting a full disciplinary proceeding. Accordingly, the proposed rule change promotes the prompt and accurate clearance and settlement of securities transactions. 9 15 U.S.C. 78q-1. B. Self-Regulatory Organization's Statement on Burden on Competition FICC does not believe that the proposed rule change will have any impact or impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not been solicited or received. FICC will notify the Commission of any written comments received by FICC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the **Federal Register** or within such longer period:
(i)As the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-FICC-2007-06 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FICC-2007-06. 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 filings also will be available for inspection and copying at the principal office of FICC and on FICC's Web site at *http://www.dtcc.com/downloads/legal/rule_filings/2007/ficc/2007-06.pdf* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FICC- 2007-06 and should be submitted on or before December 21, 2007. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23592 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56871; File No. SR-ISE-2007-87] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to the Criteria for Securities That Underlie Options Traded on the Exchange November 30, 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 November 29, 2007, the International Securities Exchange, LLC (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. This order provides notice of the proposed rule change and approves the proposed rule change on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to permit the initial and continued listing and trading on the Exchange of options on Index Multiple Exchange Traded Fund Shares (“Index Multiple ETFs”) and Index Inverse Exchange Traded Fund Shares (“Index Inverse ETFs”). The text of the proposed rule change is available at ( *http://www.ise.com* ), at 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 III 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 The purpose of the proposed rule change is to amend ISE Rules 502 and 503 to enable the listing and trading on the Exchange of options on Index Multiple ETFs and Index Inverse ETFs. Index Multiple ETFs seek to provide investment results, before fees and expenses, that correspond to a specified multiple of the percentage performance on a given day of a particular foreign or domestic stock index. Index Inverse ETFs seek to provide investment results, before fees and expenses, that correspond to the inverse (opposite) of the percentage performance on a given day of a particular foreign or domestic stock index by a specified multiple. Index Multiple ETFs and Index Inverse ETFs differ from traditional exchange-traded funds (“ETFs”) in that they do not merely correspond to the performance of a given index, but rather attempt to match a multiple or inverse of such underlying index performance. The ProShares Ultra Funds, which currently trades on the American Stock Exchange (“Amex”), is an example of an Index Multiple ETF. Amex also currently lists for trading Index Inverse ETFs, namely the Short Funds and the UltraShort Funds. 3 3 *See* Securities Exchange Act Release Nos. 52553 (October 3, 2005), 70 FR 59100 (October 11, 2005) (SR-Amex-2004-62) (approving the listing and trading of the Ultra Funds and Short Funds) and 54040 (June 23, 2006), 71 FR 37629 (June 30, 2006) (SR-Amex-2006-41) (approving the listing and trading of the UltraShort Funds). The Ultra Funds are expected to gain, on a percentage basis, approximately twice (200%) as much as the underlying benchmark index and should lose approximately twice (200%) as much as the underlying benchmark index when such prices decline. The Short Funds are expected to achieve investment results, before fees and expenses, that correspond to the inverse or opposite of the daily performance (−100%) of an underlying benchmark index. Lastly, the UltraShort Funds are expected to achieve investment results, before fees and expenses, that correspond to twice the inverse or opposite of the daily performance (−200%) of the underlying benchmark index. In order to achieve investment results that provide either a positive multiple or inverse of the benchmark index, Index Multiple ETFs or Index Inverse ETFs may hold a combination of financial instruments, including, among other things, stock index futures contracts; options on futures; options on securities and indices; equity caps, collars and floors; swap agreements; forward contracts; repurchase agreements; and reverse repurchase agreements (the “Financial Instruments”). The underlying portfolios of Index Multiple ETFs generally will hold at least 85% of their assets in the component securities of the underlying relevant benchmark index. The remainder of any assets is devoted to Financial Instruments that are intended to create the additional needed exposure to such underlying index necessary to pursue its investment objective. Normally, 100% of the value of the underlying portfolios of Index Inverse ETFs will be devoted to Financial Instruments and money market instruments, including U.S. government securities and repurchase agreements (the “Money Market Instruments”). Currently, ISE Rule 502(h) provides securities deemed appropriate for options trading shall include shares or other securities (“Fund Shares”) 4 that
(i)represent interests in registered investment companies (or series thereof) organized as open-end management investment companies, unit investment trusts or similar entities that are traded on a national securities exchange or through the facilities of a national securities association and are defined as an “NMS stock” under Rule 600 of Regulation NMS, and that hold portfolios of securities comprising or otherwise based on or representing investments in broad-based indexes or portfolios of securities (or that hold securities in one or more other registered investment companies that themselves hold such portfolios of securities); or
(ii)represent interests in a trust that holds a specified non-U.S. currency deposited with the trust when aggregated in some specified minimum number may be surrendered to the trust by the beneficial owner to receive the specified non-U.S. currency and pays the beneficial owner interest and other distributions on the deposited non-U.S. currency, if any, declared and paid by the trust (“Funds”); or
(iii)represent commodity pool interests principally engaged, directly or indirectly, in holding and/or managing portfolios or baskets of securities, commodity futures contracts, options on commodity futures contracts, swaps, forward contracts and/ or options on physical commodities and/or non-U.S. currency (“Commodity Pool ETFs”). 4 ISE also proposes to make technical conforming changes to its current ISE Rules 502(h) and 503(h) to those of the Amex. As a result, and in the context of this filing, the Exchange refers to Fund Shares as Exchange-Traded Fund Shares hereafter. The Exchange proposes to amend ISE Rule 502(h) to expand the type of options to include the listing and trading of options based on Index Multiple ETFs and Index Inverse ETFs that may hold or invest in any combination of securities, Financial Instruments and/or Money Market Instruments. Index Multiple ETFs and Index Inverse ETFs will continue to otherwise satisfy the listing standards in ISE Rule 502(h). The Exchange also proposes to make non-substantive, clarifying changes to its Rule 502(h) by conforming the construction of this rule to that of the Amex. The Exchange notes that this change is purely aesthetic and does not make any substantive changes to the listing standards found in ISE Rule 502(h). Accordingly, in addition to certain repositioning of existing rule text, the Exchange also proposes to
(1)remove the reference to a “national securities association” in ISE Rule 502(h)(i), and
(2)add the words “or currencies” to ISE Rule 502(h)(ii). As set forth in proposed amended ISE Rule 502(h), Index Multiple ETFs and Index Inverse ETFs must be traded on a national securities exchange and must be an “NMS stock” as defined under Rule 600 of Regulation NMS. In addition, Index Multiple ETFs and Index Inverse ETFs must meet either:
(i)The criteria and guidelines under ISE Rules 502(a) and 502(b); or
(ii)be available for creation or redemption each business day from or through the issuing trust, investment company, commodity pool or other entity in cash or in kind at a price related to net asset value, and the issuer is obligated to issue Exchange-Traded Fund Shares in a specified aggregate number even if some or all of the investment assets and/or cash required to be deposited have not been received by the issuer, subject to the condition that the person obligated to deposit the investment assets has undertaken to deliver them as soon as possible and such undertaking is secured by the delivery and maintenance of collateral consisting of cash or cash equivalents satisfactory to the issuer of the Exchange-Traded Fund Shares fund, all as described in the prospectus. The Exchange's current continued listing standards for options on Fund Shares will continue to apply. The Exchange proposes to amend ISE Rule 503(h) to indicate that the index or portfolio may consist of, among other things, securities, Financial Instruments and/or Money Market Instruments. In proposing to make conforming changes to the Exchange's rules to those of the Amex, ISE seeks to amend ISE Rule 503(h) by
(1)deleting a reference to “national securities association” and
(2)adding the words “or suspended”. Under the applicable continued listing criteria in ISE Rule 503(h), options on Exchange-Traded Fund Shares may be subject to the suspension of opening transactions as follows:
(1)Following the initial twelve-month period beginning upon the commencement of trading of the Exchange-Traded Fund Shares, there are fewer than 50 record and/or beneficial holders of the Exchange-Traded Fund Shares for 30 or more consecutive trading days;
(2)the value of the index or portfolio of securities or non-U.S. currency, portfolio of commodities including commodity futures contracts, options on commodity futures contracts, swaps, forward contracts, options on physical commodities, and/or Financial Instruments and Money Market Instruments, on which the Exchange-Traded Fund Shares are based is no longer calculated or available; or
(3)such other event occurs or condition exists that in the opinion of the Exchange makes further dealing on the Exchange inadvisable. Additionally, the Exchange-Traded Fund Shares shall not be deemed to meet the requirements for continued approval, and the Exchange shall not open for trading any additional series of option contracts of the class covering such Index Multiple ETFs or Index Inverse ETFs, if the underlying ETFs are halted or suspended from trading on their primary market or if the underlying ETFs are delisted in accordance with the terms of ISE Rule 503(h) or the value of the index or portfolio on which the underlying ETFs are based is no longer calculated or available. The expansion of the types of investments that may be held by Index Multiple ETFs or Index Inverse ETFs under ISE Rule 502(h) will not have any effect on the rules pertaining to position and exercise limits 5 or margin. 6 5 *See* ISE Rules 412 and 414. 6 *See* ISE Rule 1202. This proposal is necessary to enable the Exchange to list and trade options on the shares of the Ultra Fund, Short Fund and UltraShort Fund of the ProShares Trust. 7 ISE believes the ability to trade options on Index Multiple ETFs and Index Inverse ETFs will provide investors with greater risk management tools. The proposed amendment to the Exchange's listing criteria for options on Fund Shares is necessary to ensure that the Exchange will be able to list options on the Funds of the ProShares Trust as well as other Index Multiple ETFs or Index Inverse ETFs that may be introduced in the future. 7 *See supra,* note 3. The Exchange represents that its existing surveillance procedures applicable to trading in options are adequate to properly monitor the trading in Index Multiple ETF options and Index Inverse ETF options. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Act 8 in general and furthers the objectives of Section 6(b)(5) 9 in particular in that it is designed to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 8 15 U.S.C. 78f(b). 9 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The proposed rule change does not impose any burden on competition. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form at *http://www.sec.gov/rules/sro.shtml* ; or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-ISE-2007-87 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File No. SR-ISE-2007-87. 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 at *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 No. SR-ISE-2007-87 and should be submitted on or before December 27, 2007. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange, 10 and in particular, the requirements of Section 6(b) of the Act. 11 Specifically, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act, 12 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 10 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). Surveillance The Commission notes that the Exchange has represented that its existing surveillance procedures applicable to trading options are adequate to properly monitor trading in options on Index Multiple ETFs and Index Inverse ETFs. In addition, the Exchange has represented that the expansion of the types of investments that may be held by Index Multiple ETFs or Index Inverse ETFs under ISE Rule 502(h) will not have any effect on the rules pertaining to position and exercise limits 13 or margin. 14 13 *See* ISE Rules 412 and 414. 14 *See* ISE Rule 1202. Listing and Trading Options on Fund Shares The Commission notes that, pursuant to the proposed rule change, the Exchange represented that the current continuing listing standards for options on Exchange-Traded Fund Shares will continue to apply. These provisions include requirements regarding initial and continued listing standards, suspension of opening transactions, and trading halts. Proposed amended ISE Rule 502(h), would require that Index Multiple ETFs and Index Inverse ETFs be traded on a national securities exchange and must be an “NMS stock” as defined under Rule 600 of Regulation NMS. 15 15 17 CFR 242.600(b)(47). The Commission believes that this proposal is necessary to enable the Exchange to list and trade options on the shares of the Ultra Fund, Short Fund and UltraShort Fund of the ProShares Trust. The Commission believes that the ability to trade options on the Index Multiple ETFs and Index Inverse ETFs will provide investors with additional risk management tools. The Commission further believes that the proposed amendment to the Exchange's listing criteria for options on Fund Shares will ensure that the Exchange will be able to list options on the Funds of the ProShares Trust as well as other Index Multiple ETFs and Index Inverse ETFs that may be introduced in the future, thereby affording investors greater investment choices. The Commission finds good cause for approving this proposal before the thirtieth day after the publication of notice thereof in the **Federal Register** . The Commission notes that it has recently approved substantially similar proposals by other national securities exchanges. 16 This proposed rule change does not raise any new, unique, or substantive issues that differ substantially from those raised in the prior filings that would preclude the trading of the options on Index Multiple ETFs or Index Inverse ETFs on the Exchange. Therefore, accelerating approval of this proposal should benefit investors by creating, without delay, additional competition in the market for these types of options. 16 *See* Securities Exchange Act Release Nos. 56650 (October 12, 2007), 72 FR 59123 (October 18, 2007) (approving SR-Amex-2007-35) and 56715 (October 29, 2007), 72 FR 62287 (November 2, 2007) (approving SR-CBOE-2007-119 on an accelerated basis). V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 17 that the proposed rule change, (SR-ISE-2007-87), is hereby approved on an accelerated basis. 17 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 18 18 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23586 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56866; File No. SR-ISE-2007-102] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Permit Trading of Shares of 93 Funds of the ProShares Trust Pursuant to Unlisted Trading Privileges November 29, 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 October 25, 2007, the International Securities Exchange, LLC (“Exchange” or “ISE”) 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. On November 29, 2007, ISE filed Amendment No. 1 to the proposed rule change. 3 This order provides notice of the proposed rule change and approves the proposal, as modified by Amendment No. 1, on an accelerated basis. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 supersedes and replaces the original filing in its entirety. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to trade shares (“Shares”) of the 93 funds identified below (collectively, “Funds”) of the ProShares Trust pursuant to unlisted trading privileges (“UTP”). The text of the proposed rule change is available on the Exchange's Web site ( *http://www.ise.com* ), at the Exchange's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, ISE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III 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 ISE proposes to trade pursuant to UTP the Shares of the 93 Funds, which are exchange-traded funds (“ETFs”). The Commission has previously approved the listing and trading of those ETFs on the American Stock Exchange LLC (“Amex”). The Exchange is submitting this filing because its current generic listing standards for ETFs do not extend to ETFs where the investment objective corresponds to a specified multiple of the performance, or the inverse performance, of an index that underlies a Fund (each such index is referred to below as an “Underlying Index”), rather than merely mirroring the performance of the index. These Shares are currently trading on Amex, NYSE Arca, and Nasdaq. The Funds are referred to as Ultra Funds, Short Funds, and UltraShort Funds, as described more fully below. Ultra Funds Certain Funds seek daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Underlying Indexes (“Ultra Funds”). If such a Fund meets its objective, the net asset value (“NAV”) 4 of the Shares of the Fund should increase (on a percentage basis) approximately twice as much as the Fund's Underlying Index when the prices of the securities in such Index increase on a given day, and should lose approximately twice as much when such prices decline on a given day. This filing applies to the following Ultra Funds: 4 NAV per Share of each Fund is computed by dividing the value of the net assets of such Fund ( *i.e.* , the value of its total assets less total liabilities) by its total number of Shares outstanding. Expenses and fees are accrued daily and taken into account for purposes of determining NAV. • Four Ultra Funds, the listing and trading of which on Amex were approved by the Commission on May 10, 2006: 5
(1)Ultra S&P 500,
(2)Ultra Nasdaq-100,
(3)Ultra Dow 30, and
(4)Ultra S&P Mid-Cap 400; and 5 *See* Securities Exchange Act Release No. 54040 (June 23, 2006), 71 FR 37629 (June 30, 2006) (SR-Amex-2006-41). The Commission approved the UTP trading of these Funds on NYSE Arca and Nasdaq. *See* Securities Exchange Act Release No. 54045 (June 26, 2006), 71 FR 37971 (July 3, 2006) (SR-PCX-2005-115); Securities Exchange Act Release No. 55353 (February 26, 2007), 72 FR 9802 (March 5, 2007) (SR-Nasdaq-2007-011). • 27 Ultra Funds, the listing and trading of which on Amex were approved by the Commission on January 17, 2007: 6
(1)Ultra Russell 2000,
(2)Ultra S&P SmallCap 600,
(3)Ultra S&P500/Citigroup Value,
(4)Ultra S&P500/Citigroup Growth,
(5)Ultra S&P MidCap 400/Citigroup Value,
(6)Ultra S&P MidCap 400/Citigroup Growth,
(7)Ultra S&P SmallCap 600/Citigroup Value,
(8)Ultra S&P SmallCap 600/Citigroup Growth,
(9)Ultra Basic Materials,
(10)Ultra Consumer Goods,
(11)Ultra Consumer Services,
(12)Ultra Financials,
(13)Ultra Health Care,
(14)Ultra Industrials,
(15)Ultra Oil & Gas,
(16)Ultra Real Estate,
(17)Ultra Semiconductors,
(18)Ultra Technology,
(19)Ultra Utilities,
(20)Ultra Russell Midcap Index,
(21)Ultra Russell Midcap Growth Index,
(22)Ultra Russell Midcap Value Index,
(23)Ultra Russell 1000 Index,
(24)Ultra Russell 1000 Growth Index,
(25)Ultra Russell 1000 Value Index,
(26)Ultra Russell 2000 Growth Index, and
(27)Ultra Russell 2000 Value Index. 6 *See* Securities Exchange Act Release No. 55117 (January 17, 2007), 72 FR 3442 (January 25, 2007) (SR-Amex-2006-101). Subsequently, the Commission approved the UTP trading of these Funds on NYSE Arca. *See* Securities Exchange Act Release No. 55125 (January 18, 2007), 72 FR 3462 (January 25, 2007) (SR-NYSEArca-2007-87) (SR-NYSEArca-2006-87). Short Funds ISE also proposes to trade Shares of certain Funds that seek daily investment results, before fees and expenses, that correspond to the inverse or opposite of the daily performance (−100%) of the Underlying Indexes (“Short Funds”). If such a Fund is successful in meeting its objective, the NAV of the corresponding Shares should increase approximately as much (on a percentage basis) as the respective Underlying Index loses when the prices of the securities in the Index decline on a given day, or should decrease approximately as much as the respective Index gains when prices in the Index rise on a given day. This filing applies to the following Short Funds: • Four Short Funds, the listing and trading of which on Amex were approved by the Commission on May 10, 2006: 7
(1)Short S&P 500,
(2)Short Nasdaq-100,
(3)Short Dow 30, and
(4)Short S&P Mid-Cap 400; and 7 *See supra* note 4. • 27 Short Funds, the listing and trading of which on Amex were approved by the Commission on January 17, 2007: 8
(1)Short Russell 2000,
(2)Short S&P SmallCap 600,
(3)Short S&P500/Citigroup Value,
(4)Short S&P500/Citigroup Growth,
(5)Short S&P MidCap 400/Citigroup Value,
(6)Short S&P MidCap 400/Citigroup Growth,
(7)Short S&P SmallCap 600/Citigroup Value,
(8)Short S&P SmallCap 600/Citigroup Growth,
(9)Short Basic Materials,
(10)Short Consumer Goods,
(11)Short Consumer Services,
(12)Short Financials,
(13)Short Health Care,
(14)Short Industrials,
(15)Short Oil & Gas,
(16)Short Real Estate,
(17)Short Semiconductors,
(18)Short Technology,
(19)Short Utilities,
(20)Short Russell Midcap Index,
(21)Short Russell Midcap Growth Index,
(22)Short Russell Midcap Value Index,
(23)Short Russell 1000 Index,
(24)Short Russell 1000 Growth Index,
(25)Short Russell 1000 Value Index,
(26)Short Russell 2000 Growth Index, and
(27)Short Russell 2000 Value Index. 8 *See supra* note 5. UltraShort Funds ISE also proposes to trade Shares of certain Funds that seek daily investment results, before fees and expenses, that correspond to twice the inverse (−200%) of the daily performance of the Underlying Indexes (“UltraShort Funds”). If such a Fund is successful in meeting its objective, the NAV of the corresponding Shares should increase approximately twice as much (on a percentage basis) as the respective Underlying Index loses when the prices of the securities in the Index decline on a given day, or should decrease approximately twice as much as the respective Underlying Index gains when such prices rise on a given day. This filing applies to the following UltraShort Funds: • Four UltraShort Funds, the listing and trading of which on Amex were approved by the Commission on June 23, 2006: 9
(1)UltraShort S&P 500,
(2)UltraShort Nasdaq-100,
(3)UltraShort Dow 30, and
(4)UltraShort S&P Mid-Cap 400; and 9 *See supra* note 5. • 27 UltraShort Funds, the listing and trading of which on Amex were approved by the Commission on January 17, 2007: 10
(1)UltraShort Russell 2000,
(2)UltraShort S&P SmallCap 600,
(3)UltraShort S&P500/Citigroup Value,
(4)UltraShort S&P500/Citigroup Growth,
(5)UltraShort S&P MidCap 400/Citigroup Value,
(6)UltraShort S&P MidCap 400/Citigroup Growth,
(7)UltraShort S&P SmallCap 600/Citigroup Value,
(8)UltraShort S&P SmallCap 600/Citigroup Growth,
(9)UltraShort Basic Materials,
(10)UltraShort Consumer Goods,
(11)UltraShort Consumer Services,
(12)UltraShort Financials,
(13)UltraShort Health Care,
(14)UltraShort Industrials,
(15)UltraShort Oil & Gas,
(16)UltraShort Real Estate,
(17)UltraShort Semiconductors,
(18)UltraShort Technology,
(19)UltraShort Utilities,
(20)UltraShort Russell Midcap Index,
(21)UltraShort Russell Midcap Growth Index,
(22)UltraShort Russell Midcap Value Index,
(23)UltraShort Russell 1000 Index,
(24)UltraShort Russell 1000 Growth Index,
(25)UltraShort Russell 1000 Value Index,
(26)UltraShort Russell 2000 Growth Index, and
(27)UltraShort Russell 2000 Value Index. 10 *See id.* Access to the current portfolio composition of each Fund is currently available through the Trust's Web site ( *http://www.proshares.com* ). 11 The Underlying Indexes are identified in the filings in which Amex proposed to list and trade the Funds (the “Original Filings”). 12 The Original Filings state that Amex would disseminate for each Fund on a daily basis by means of Consolidated Tape Association (“CTA”) and CQ High Speed Lines information with respect to an Indicative Intra-Day Value (“IIV”), quotations for and last-sale information concerning the Shares, the recent NAV, the number of shares outstanding, and the estimated cash amount and total cash amount per Creation Unit. Amex will make available on its Web site the daily trading volume, closing price, NAV, and final dividend amounts, if any, to be paid for each Fund. The NAV of each Fund is calculated and determined each business day at the close of regular trading, typically 4 p.m. Eastern Time (“ET”). The NAV would be calculated and disseminated at the same time to all market participants. 13 11 The Trust's Web site is publicly accessible at no charge and contains the following information for each Fund's Shares:
(1)The prior business day's closing NAV, the reported closing price, and a calculation of the premium or discount of such price in relation to the closing NAV;
(2)data for a period covering at least the current and three immediately preceding calendar quarters (or the life of a Fund, if shorter) indicating how frequently each Fund's Shares traded at a premium or discount to NAV based on the daily closing price and the closing NAV, and the magnitude of such premiums and discounts;
(3)its prospectus and product description; and
(4)other quantitative information such as daily trading volume. The prospectus and/or product description for each Fund would inform investors that the Trust's Web site has information about the premiums and discounts at which the Fund's Shares have traded. 12 *See supra* notes 4 and 5. 13 The Original Filings explain that, if the IIV is not disseminated as required, Amex would halt trading in the shares of the Funds. If Amex halts trading for this reason, then ISE would halt trading in the Shares immediately, as set forth in ISE Rule 2123(e). The Original Filings state that the daily closing index value and the percentage change in the daily closing index value for each Underlying Index would be publicly available on various Web sites such as *http://www.bloomberg.com.* The Original Filings further state that data regarding each Underlying Index is also available from the respective index provider to subscribers. According to the Original Filings, several independent data vendors package and disseminate index data in various value-added formats (including vendors displaying both securities and index levels and vendors displaying index levels only). The Original Filings state that the value of each Underlying Index is updated intra-day on a real-time basis as its individual component securities change in price, and the intra-day values of each Underlying Index are disseminated at least every 15 seconds throughout Amex's trading day by Amex or another organization authorized by the relevant Underlying Index provider. To provide updated information relating to each Fund for use by investors, professionals, and persons wishing to create or redeem Shares, Amex disseminates through the facilities of the CTA:
(1)Continuously throughout Amex's trading day, the market value of a Share; and
(2)at least every 15 seconds throughout Amex's trading day, the IIV as calculated by Amex. Shares would trade on ISE from 9:30 a.m. ET until 4:15 p.m. ET. ISE would halt trading in the Shares of a Fund under the conditions specified in ISE Rules 702, 703, and 2123. The conditions for a halt include a regulatory halt by the listing market. UTP trading in the Shares will also be governed by provisions of ISE Rule 2123 relating to temporary interruptions in the calculation or wide dissemination of the IIV or the value of the Underlying Index. Additionally, ISE may cease trading the Shares if other unusual conditions or circumstances exist which, in the opinion of ISE, makes further dealings on ISE detrimental to the maintenance of a fair and orderly market. ISE will also follow any procedures with respect to trading halts as set forth in ISE rules. The Exchange proposes to amend ISE Rule 2123 to add a subparagraph addressing the suitability responsibilities of Equity Electronic Access Members (“EAMs”) in recommending these Funds to customers. Specifically, proposed Rule 2123( *l* ) would require an Equity EAM to have reasonable grounds for believing that the recommendation of any transaction for the purchase, sale, or exchange of any of these Funds is suitable for its customer. An Equity EAM shall base its determination of suitability upon the basis of the information furnished by such customer after reasonable inquiry concerning the customer's investment objectives, tax status, financial situation, and needs, and any other information known by such Equity EAM. Prior to the commencement of trading, the Exchange will inform Equity EAMs in a Regulatory Information Circular (“RIC”) of the special characteristics and risks associated with trading the Shares. Specifically, the RIC will discuss the following:
(1)The procedures for purchases and redemptions of Shares in Creation Unit Aggregations (and that Shares are not individually redeemable);
(2)proposed ISE Rule 2132( *l* ), which imposes a duty of due diligence on Equity EAMs to learn the essential facts relating to every customer prior to trading the Shares;
(3)how information regarding the IIV is disseminated;
(4)the requirement that Equity EAMs deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with a transaction; and
(5)trading information. In addition, the RIC will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The RIC will also discuss any exemptive, no-action, and/or interpretive relief granted by the Commission from the Act and rules under the Act. The RIC will also disclose that the NAV for the Shares will be calculated after 4 p.m. ET each trading day. The Exchange intends to utilize its existing surveillance procedures applicable to equities to monitor trading in the Shares. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares and to deter and detect violations of Exchange rules. The Exchange's current trading surveillance focuses on detecting securities trading outside their normal patterns. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations. Additionally, the Exchange may obtain information via the Intermarket Surveillance Group (“ISG”) from other exchanges who are members or affiliates of the ISG. 14 The Exchange also has a general policy prohibiting the distribution of material, non-public information by employees. 14 For a list of the current members and affiliate members of ISG, *see http://www.isgportal.com* . 2. Statutory Basis The statutory basis under the Act for this proposed rule change is found in Section 6(b)(5), 15 in that the proposed rule change is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanisms of a free and open market and a national market system, and in general to protect investors and the public interest. 15 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 The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from members or other interested parties. III. 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-ISE-2007-102 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2007-102. 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 ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2007-102 and should be submitted on or before December 27, 2007. IV. Commission's Findings and Order Granting Accelerated Approval of the Proposed Rule Change After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 16 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act, which requires that an exchange have rules designed, among other things, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and in general to protect investors and the public interest. The Commission believes that this proposal should benefit investors by increasing competition among markets that trade the Shares. 16 In approving this rule change, the Commission notes that it has considered the proposal's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). In addition, the Commission finds that the proposal is consistent with Section 12(f) of the Act, 17 which permits an exchange to trade, pursuant to UTP, a security that is listed and registered on another exchange. 18 The Commission notes that it previously approved the listing and trading of the Shares on Amex. 19 The Commission also finds that the proposal is consistent with Rule 12f-5 under the Act, 20 which provides that an exchange shall not extend UTP to a security unless the exchange has in effect a rule or rules providing for transactions in the class or type of security to which the exchange extends UTP. The Exchange has represented that it meets this requirement because it deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. 17 15 U.S.C. 78 *l* (f). 18 Section 12(a) of the Act, 15 U.S.C. 78 *l* (a), generally prohibits a broker-dealer from trading a security on a national securities exchange unless the security is registered on that exchange pursuant to Section 12 of the Act. Section 12(f) of the Act excludes from this restriction trading in any security to which an exchange “extends UTP.” When an exchange extends UTP to a security, it allows its members to trade the security as if it were listed and registered on the exchange even though it is not so listed and registered. 19 *See supra* notes 5 and 6. 20 17 CFR 240.12f-5. The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, 21 which sets forth Congress's finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotations for and last-sale information regarding the Shares are disseminated through the facilities of the CTA and the Consolidated Quotation System. Furthermore, the IIV, updated to reflect changes in currency exchange rates, is calculated by Amex and published via the facilities of the CTA on a 15-second delayed basis throughout ISE's trading hours. As mentioned above, the Trust's Web site provides information relating to the value of the Shares such as the prior business day's closing NAV, the reported closing price, and daily trading volume. 21 15 U.S.C. 78k-1(a)(1)(C)(iii). The Commission also believes that the Exchange's trading halt rules are reasonably designed to prevent trading in the Shares when transparency is impaired. If the listing market halts trading when the IIV is not being calculated or disseminated, the Exchange would halt trading in the Shares pursuant to ISE Rule 2123(e). The Commission notes that, if the Shares should be delisted by the listing exchange, the Exchange would no longer have authority to trade the Shares pursuant to this order. In support of this proposal, the Exchange has made the following representations: 1. The Exchange believes that its surveillance procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules. 2. Prior to the commencement of trading, the Exchange would inform EAMs in a Regulatory Information Circular of the special characteristics and risks associated with trading the Shares. 3. ISE would require its members to deliver a prospectus or product description to investors purchasing the Shares prior to or concurrently with a transaction in the Shares. This approval order is based on the Exchange's representations. The Commission finds good cause for approving this proposal before the thirtieth day after the publication of notice thereof in the **Federal Register** . As noted previously, the Commission previously found that the listing and trading of the Shares on Amex is consistent with the Act and that the trading of the Shares pursuant to UTP by NYSE Arca and Nasdaq is consistent with the Act. 22 The Commission presently is not aware of any regulatory issue that should cause it to revisit these findings or would preclude the trading of the Shares on the Exchange pursuant to UTP. Therefore, accelerating approval of this proposal should benefit investors by creating, without undue delay, additional competition in the market for the Shares. 22 *See supra* at notes 5 and 6. V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 23 that the proposed rule change (SR-ISE-2007-102) as modified by Amendment No. 1, be, and hereby is, approved on an accelerated basis. 23 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 24 24 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23611 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56865; File No. SR-NSCC-2007-06] Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change To Modify the Hearing Procedures Afforded to Members and Applicants for Membership and Harmonize Them With Similar Rules of Its Affiliates November 29, 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 April 30, 2007, the National Securities Clearing Corporation (“NSCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by NSCC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change seeks
(1)to modify NSCC's rules regarding hearing procedures afforded to members and applicants for membership and
(2)where practicable or beneficial, to harmonize them with similar rules of NSCC's affiliates, The Depository Trust Company (“DTC”) and the Fixed Income Clearing Corporation (“FICC”). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NSCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NSCC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 3 3 The Commission has modified the text of the summaries prepared by NSCC.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
(1)Minor Rule Violation Plan In 1984, the Commission adopted amendments to Rule 19d-1(c) under the Act 4 that allow self-regulatory organizations to adopt with Commission approval plans for the disposition of minor violations of rules. 5 4 17 CFR 240.19d-1(c). 5 Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 23828 (June 8, 1984) [File No. S7-983A]. Currently under NSCC's rules, a member or applicant subject to disciplinary action has a right to a hearing before a panel comprised of members of NSCC's Credit and Market Risk Management Committee regardless of the severity of the action for which the member or applicant is being disciplined. 6 Because some rule violations are not sufficiently serious to merit Board review, NSCC is proposing to adopt a Minor Rule Violation Plan within the meaning of Rule 19d-1(c)(2) of the Act for those rule violations NSCC deems minor. Consistent with Rule 19d-1(c)(2) of the Act, NSCC would designate those rule violations for which a fine may be assessed in an amount not to exceed $5,000 as minor rule violations. If a member were to dispute a fine imposed by NSCC by filing a written request for hearing and a written statement, NSCC management would have the authority to waive the fine. NSCC management would notify the Board of Directors (or a Committee authorized by the Board of Directors) of its determination to waive the fine and would provide the reasons for the waiver. The Board or Committee could in its discretion decide to reinstate any fine waived by NSCC management. If NSCC management were not to waive the fine, the member could appeal the decision to a panel comprised of NSCC officers (“Minor Rule Violation Panel”). 6 If the action or proposed action of NSCC as to which the hearing relates has been taken or has been proposed to be taken by the Credit and Market Risk Management Committee, the members of the panel shall be drawn from members of the Executive Committee of NSCC's Board of Directors. *See* Rule 37 (Hearing Procedures), Section 2.
(2)Hearings for All Other Violations and Minor Rule Violation Appeals For matters involving
(i)an alleged violation of an NSCC rule for which a fine in an amount of over $5,000 is assessed,
(ii)applicants for membership, or
(iii)other disciplinary actions to which the Minor Rule Violation Plan would not apply or for appeals from a Minor Rule Violation Panel decision adverse to a member or applicant, the member or applicant would be entitled to a hearing before a panel comprised of three individuals of the NSCC Board of Directors (or their designees) appointed by the Chairman of the NSCC Board. Decisions of the panel would be final; however, the full Board of Directors would retain the right to modify any sanction or reverse any decision of the Board panel that was adverse to the member or applicant. Currently with respect to hearings, a member or applicant is afforded the opportunity to be heard and may be represented by counsel if desired. A record is kept of the hearing, and at the discretion of the Board panel, the associated cost may be charged in whole or part to the member or application in the event that the decision is adverse to the member or applicant. The member or applicant is advised of the Board panel's decision within ten business days after the conclusion of the hearing. These procedures would also apply with respect to the Minor Rule Violation Plan.
(3)Administrative Changes: Uniformity of Time Frames The proposed rule changes seek to implement uniform time periods among NSCC, DTC, and FICC governing actions a member or applicant would be required to take in order to request a hearing. The deadlines a member or applicant must adhere to in order to request a hearing currently vary between NSCC, DTC, and FICC. Under the proposed rule change, a member or applicant would have five business days, or two business days in the case of summary action taken against the member or applicant pursuant to Rule 46, 7 from the date on which NSCC first informs it of a sanction or a denial of membership in which to request a hearing. 7 Examples of a summary action are a suspension of a member or restriction of a member's access to services as described in Rule 46 (“Restrictions on Access to Services”). Within seven business days, or three business days in the case of a summary action being taken against the member or applicant, after filing a request for a hearing with NSCC, the member or applicant would be required to submit to NSCC a clear and concise written statement setting forth the action or proposed action of NSCC with respect to which the hearing is requested, the basis for objection to such action, whether the member or applicant intends to attend the hearing, and whether the member or applicant chooses to be represented by counsel at the hearing. These proposed time frames would be consistent with time frames being proposed by DTC and FICC.
(4)Pending Changes From NSCC Rule Filing SR-NSCC-2006-17 The current time frame for an applicant or member to request a hearing appears in the following rules: Rule 2 (“Members”), Rule 3 (“Lists to Be Maintained”), Rule 51 (“Fund Member”), Rule 54 (“Settling Bank Only Members”), Rule 56 (“Insurance Carrier/Retirement Services Member”), and Rule 60 (“TPA Member”). 8 Each of those rules is pending deletion as part of rule filing SR-NSCC-2006-17. Accordingly, in the event that this filing is approved prior to SR-NSCC-2006-17, the time frame for an applicant or member to request a hearing that appears in those rules will be deleted. 8 The current time frame for an applicant or member to request a hearing also appears in Rule 45 (“Notices”). This proposed rule filing would delete that reference also.
(5)Implementation of the Proposed Changes The proposed changes would be implemented upon approval of this proposed filing by the Commission. Members would be advised of the implementation through an NSCC Important Notice. NSCC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 9 and the rules and regulations thereunder because the adoption of a Minor Rule Violation Plan furthers the statutory objective of providing a fair procedure for disciplining members and will provide NSCC with the ability to impose meaningful sanctions for those rule violations that do not necessarily rise to a level meriting a full disciplinary proceeding. Accordingly, the proposed rule change promotes the prompt and accurate clearance and settlement of securities transactions. 9 15 U.S.C. 78q-1.
(B)Self-Regulatory Organization's Statement on Burden on Competition NSCC does not believe that the proposed rule change will have any impact or impose any burden on competition.
(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not been solicited or received. NSCC will notify the Commission of any written comments received by NSCC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the **Federal Register** or within such longer period:
(i)as the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NSCC-2007-06 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NSCC-2007-06. 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 filings also will be available for inspection and copying at the principal office of NSCC and on NSCC's Web site at *http://www.dtcc.com/downloads/legal/rule_filings/2007/nscc/2007-06.pdf* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NSCC-2007-06 and should be submitted on or before December 21, 2007. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23594 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56851; File No. SR-NYSE-2007-106] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 2, Relating to Exchange Rule 103A(a)(3) To Address Changes in the Way the Exchange Delivers Education Programs to its Members and To Clarify That the Mandatory Education Requirement Applies to All Individuals Qualified To Use a Trading License November 28, 2007. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (“Act”) and Rule 19b-4 thereunder, 2 notice is hereby given that on November 16, 2007, the New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. The NYSE has designated the proposed rule change as one concerned solely with the administration of the Exchange pursuant to section 19(b)(3)(A)(iii) of the Act, 3 and Rule 19b-4(f)(3) thereunder, 4 which renders the proposal effective upon filing with the Commission. On November 26, 2007, the Exchange submitted Amendment No. 1 to the proposed rule change. The Exchange withdrew Amendment No. 1 on November 27, 2007. The Exchange submitted Amendment No. 2 to the proposed rule change on November 27, 2007. 5 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(3). 5 In Amendment No. 2, the Exchange made a technical change to the rule text. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NYSE is proposing to amend Rule 103A(a)(3) to address changes in the way the Exchange delivers education programs to its members and to clarify that the mandatory education requirement applies to all individuals qualified to use a trading license, and not just to members who are active on the trading Floor. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NYSE included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NYSE has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend NYSE Rule 103A to reflect certain changes to how the Exchange delivers its continuing education program, and to reflect changes to the Exchange's membership structure, which affects who must complete the program. Since its inception, the Exchange's Floor Member Continuing Education Program (“FMCE Program”), which NYSE Regulation manages, has evolved from providing semi-annual stand-up presentations to delivering computer-based educational modules in a learning laboratory. Because of limitations associated with these delivery methods, NYSE Regulation is currently upgrading the FMCE Program to permit more efficient and cost-effective delivery to participants via the Internet. In connection with these changes, the Exchange is proposing to amend Rule 103A(a)(3) to remove the reference to “semi-annual” education programs, and is proposing to shorten the time in which program participants must complete the program elements. In addition, due to changes in the NYSE's membership structure, in which one trading license may be used by multiple qualified individuals over the course of a year, the Exchange is proposing to amend Rule 103A(a)(3) to clarify that the education requirement applies to all individuals qualified to use a trading license, not just those who are actively working as “members” on the Floor. Background NYSE Rule 103A requires the Exchange to provide, and Exchange Floor members to take, continuing education. Over the years, the method by which the Exchange delivered the required education components has evolved from in-person lectures to large groups of members to individualized computer-assisted training in a learning laboratory setting. That evolution reflected an ongoing assessment by the Exchange of the most efficient way to deliver timely continuing education and training to a large group of Floor members. When the Exchange delivered the FMCE Program in person or in a learning laboratory, participants were required to participate in these meetings during extended business hours. The current language of Rule 103A(a)(3) reflects meeting room and laboratory space limitations by requiring the Exchange to deliver the FMCE Program twice a year and allowing participants 120 days from the time that they were originally scheduled to take continuing education to complete the requirement. To address the space and time limitations associated with the FMCE Program, NYSE Regulation is in the process of modernizing its method for delivering the FMCE Program. As redesigned, NYSE Regulation will offer the FMCE Program via a web-based interactive program that participants can access from an Internet-capable computer. Participants will no longer need to come to a learning laboratory at the Exchange facility or schedule specific times with the Exchange to complete the program. Instead, participants will be able to access the FMCE Program from their member organization offices, under the supervision of their member firm at a time that is mutually convenient for the participant and the member organization. Changes to Rule 103A are necessary in order to keep the rule consistent with the new delivery method. In addition to the changes necessitated by changes to the program delivery method, the Exchange is also proposing to amend Rule 103A to clarify who is required to complete the FMCE Program. Rule 103A currently applies to all Exchange “members,” which, until 2006, referred to individuals who owned or leased seats on the Exchange. In 2006, the Exchange changed its membership structure from seats that were held by particular individuals within a member organization, to trading licenses that are not specific to particular individuals within a member organization. Under the new membership structure, in order to become a member organization, an incorporated entity must, among other things, purchase a trading license. Holders of a trading license may then designate one or more individuals to use the license, each of whom must complete the qualifications necessary to be “members” of the Exchange. Although one license holder may have more than one qualified member associated with it, only one such qualified individual may use the trading license on a given trading day. The individual using the license on a given day is the “active member” for that day. Substituting another qualified individual to use a license can happen on as little as one day's notice to the Exchange. Accordingly, all qualified individuals who could use the license, including those who are not regularly active on the Floor, must remain current with the FMCE Program requirements. As currently drafted, however, Rule 103A, which refers to “members” only, does not clearly articulate this requirement. Proposed Amendments The Exchange proposes to amend Rule 103A(a)(3) by:
(i)Updating the rule to reflect the Exchange's new delivery method; and
(ii)clarifying that all individuals qualified to use a trading license must meet the mandatory education requirements under the rule. First, since the new delivery method will not require Floor members to physically attend Floor member continuing education sessions, the Exchange is proposing to amend Rule 103A(a)(3) by eliminating references to meetings in general. Second, the Exchange proposes to eliminate the requirement that the Exchange provide continuing member education on a semi-annual basis and instead amend the rule to reflect the versatility of the new delivery method. Going forward, the Exchange intends to annually provide an equivalent amount of education in terms of topics and participation time as it did when the FMCE Program was delivered semi-annually. In the semi-annual mode, the NYSE usually delivered six educational modules, in two sessions of three modules each. This would no longer be the case under the new program; instead, the Exchange plans to deliver education modules on a rolling basis over the course of the year. The Exchange believes that spacing the educational experience gradually over a year's time (an approach that is newly possible with the new delivery method) will be more effective as a learning experience, and enable the Exchange to provide training that is more timely in view of changes to the regulatory landscape. Third, the Exchange proposes to change the timeframe within which Floor members must complete continuing education. Currently, Rule 103A allows FMCE participants to complete their requirement within 120 days of being scheduled to attend an educational meeting. The 120-day window was predicated on certain physical constraints the Exchange faced in delivering previous versions of the program. Under the old delivery methods, the Exchange had to schedule sufficient original education meetings to accommodate over 1,300 participants. Given the size of available meeting rooms (maximum seating capacity 70 persons) for the in-person delivery method and later the seating capacity of the learning laboratory (maximum of 14 persons) and the additional need to provide make-up sessions for participants who could not attend their originally scheduled meeting, the Exchange needed a relatively large timeframe within which to provide educational opportunities. Because no such constraints will exist using the new delivery method, the Exchange proposes to change the time allowed for completion of an educational module from 120 to 60 days from the time that the module is assigned to the program participants. 6 6 In order to ensure the integrity of the program, once the program is in place, firms will be required to certify pursuant to NYSE Rule 342.30(e) that the firm's Floor members (and qualified substitutes) have completed the educational requirements contained in Rule 103A. As a result, the Exchange expects firms will implement procedures for ensuring that their Floor members and qualified substitutes have completed the program, which procedures could include supervising individuals on firm premises while they complete the program. Given the generally small size of member firms' Floor staffs, the Exchange believes that 60 days should be ample time for a firm to ensure that its members and qualified substitutes have completed the program requirements. To assist compliance staff in this regard, the system being implemented by the Exchange contains tools for compliance officers to monitor the completion status of their firms' employees. While anticipating the use of the 60-day deadline in most cases, the Exchange proposes to build flexibility into the rule by providing the option of designating a different timeframe where warranted. For example, training for Floor members in a certain regulatory topic may be deemed urgent and the Exchange could shorten the deadline accordingly. Finally, the Exchange proposes amending the rule to clarify that all qualified members, i.e., all members qualified to work on the Floor of the Exchange, regardless of whether they are active members, are required to complete the mandatory FMCE Program requirements. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 7 that an Exchange have rules that are designed to promote the 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. 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change is effective upon filing pursuant to section 19(b)(3)(A)(iii) 8 of the Act and Rule 19b-4(f)(3) 9 thereunder. The proposed rule change goes solely to the administration of the self-regulatory organization in that it is not a substantive change to NYSE Rule 103A (that is, it neither increases nor decreases the scope of the education requirement under NYSE Rule 103A), but merely updates the rule to reflect the introduction of a new method for delivering the educational material. 8 15 U.S.C. 78s(b)(3)(A)(iii). 9 17 CFR 240.19b-4(f)(3). 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, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2007-106 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2007-106. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the 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 on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File number SR-NYSE-2007-106 and should be submitted on or before December 27, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23587 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56870; File No. SR-NYSE-2007-105] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fees Charged to Member Organizations for the Use of the On-Line Comparison System November 30, 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 November 14, 2007, the New York Stock Exchange LLC (“NYSE” 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 NYSE. 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 NYSE proposes to reduce from $0.15 to $0.10 per trade the fee charged with respect to trades submitted to the On-Line Comparison System (“OCS”) for trade date comparison. 3 At the same time, the Exchange will eliminate all OCS access fees. The text of the proposed rule change is available at the Exchange, on the Exchange's Web site at *http://www.nyse.com,* and at the Commission's Public Reference Room. 3 The OCS is an interactive system, which is used to perform comparison processing, such as matching of initial trade submission, correction processing and questioned trade resolution. 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 Effective January 1, 2008, the Exchange proposes to reduce from $0.15 to $0.10 per trade the fee charged with respect to trades submitted to the OCS for trade date comparison. At the same time, the Exchange will eliminate all OCS access fees. OCS access fees are annual charges paid by members to access OCS. It has recently been the Exchange's experience that the revenues derived from OCS access fees and usage fees have exceeded the Exchange's costs in maintaining the system. As such, the fee revisions are intended to more closely align the revenues derived from OCS fees with the actual cost of running OCS. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 4 in general, and with Section 6(b)(4) of the Act 5 in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective upon filing pursuant to Section 19(b)(3)(A) of the Act 6 and Rule 19b-4(f)(2) 7 thereunder, because it establishes or changes a due, fee, or other charge imposed by the Exchange. 6 15 U.S.C. 78s(b)(3)(A). 7 17 CFR 240.19b-4(f)(2). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2007-105 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2007-105. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the 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 NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2007-105 and should be submitted on or before December 27, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23599 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56858; File No. SR-NYSE-2007-103] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to NYSE Rule 124 (Odd-Lot Orders) November 28, 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 November 14, 2007, the New York Stock Exchange LLC (“NYSE” 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 NYSE. The Exchange has filed the proposal pursuant to section 19(b)(3)(A) of the Act, 3 and Rule 19b-4(f)(5) 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)(5). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Exchange Rule 124 (Odd-Lot Orders) to clarify the manner in which Exchange systems price and execute odd-lot orders 5 at the opening and at the re-opening after a halt in trading on the Exchange. The text of the proposed rule change is available on the Exchange's Web site ( *http://www.nyse.com* ), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. 5 Odd-lot orders are orders for a size less than the standard unit (roundlot) of trading, which is 100 shares for most stocks, although some stocks trade in 10 share units. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NYSE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. 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 This filing is submitted to amend Exchange Rule 124 in order to clarify that for the opening transaction in a subject security, odd-lot market orders and all odd-lot limit orders that are eligible to receive an execution based on the price of the opening transaction 6 shall be executed at the price of the opening transaction. Similarly, in the event of a halt in trading on the Exchange in the subject security, odd-lot market orders and all odd-lot limit orders eligible to receive an execution based on the re-opening price that are accepted by Exchange systems prior to the halt in trading or are received during the halt in trading shall be executed at the price of the re-opening transaction. 6 Pursuant to Exchange Rule 124(b), an odd-lot limit order is considered marketable when its limit price is at or higher than the current National best offer (in the case of an odd-lot limit to buy) and when its limit price is at or lower than the current National best bid (in the case of an odd-lot limit to sell). On September 6, 2007, the Exchange amended Exchange Rule 124 to modify the way in which Exchange systems priced and executed odd-lot orders (the “Odd-lot Filing”). 7 As it pertains to openings and halts in trading, the Odd-lot Filing was intended to provide that odd-lot orders entered into the Exchange systems before the opening transaction of the subject security that would be eligible for execution based on the price of the opening transaction would be executed at the price of the opening transaction. 8 With respect to halts in trading on the Exchange, the Odd-lot Filing was also to provide that odd-lot orders accepted by Exchange systems prior to, or during, a halt in trading that are subsequently eligible to receive an execution based on the re-opening price would be executed at the price of the re-opening transaction. 9 7 *See* Securities Exchange Act Release No. 56551 (September 27, 2007), 72 FR 56415 (October 3, 2007) (SR-NYSE-2007-82). 8 *See* Exchange Rule 124 subsections (c)(vi) (relating to openings) and (c)(vii) (relating to trading halts). 9 The Commission made minor clarifications to this paragraph pursuant to a telephone call with the Exchange. *See* telephone call among Jennifer Dodd, Special Counsel, Division of Trading and Markets, Commission, Rahman Harrison, Special Counsel, Division of Trading and Markets, Commission, and Gillian Rowe, Principal Rule Counsel, NYSE, on November 19, 2007. Currently, Exchange systems handle odd-lot orders at the opening and re-opening after a halt in trading as intended and as described above. However, the Exchange states that the use of the word “marketable” 10 in the rule text of subsections (c)(vi) and (c)(vii) is not accurate. Specifically as it pertains to the open, an order is neither marketable or non-marketable until the specialist determines the opening price. As such, the rule text of subsection (c)(vi) and (c)(vii) should not include the word marketable. Moreover, the use of the term marketable in (c)(vii) technically excludes non-marketable odd-lot limit orders accepted by Exchange systems prior to a halt in trading that are subsequently eligible to receive an execution based on the re-opening price from receiving an execution. 11 This would occur because the definition of marketable in the rule requires the odd-lot limit order to have been marketable “upon receipt by the system.” 10 *See* Exchange Rule 124(c) which defines “marketable odd-lot orders” as odd-lot market orders and odd-lot limit orders that are marketable upon receipt. 11 Exchange Rule 124(d) governs the execution and pricing of odd-lot limit orders that are non-marketable upon receipt that become marketable. Accordingly, the Exchange proposes in this filing to amend subsection (c)(vi) of Exchange Rule 124 to clarify that odd-lot orders entered into the Exchange systems before the opening transaction of the subject security that would be eligible for execution based on the price of the opening transaction shall be executed at the price of the opening transaction. The Exchange further proposes to amend subsection (c)(vii) to clarify that, in the event of a halt in trading on the Exchange, odd-lot orders accepted by Exchange systems prior to, or during, a halt in trading that are subsequently eligible to receive an execution based on the re-opening price shall be executed at the price of the re-opening transaction. The Exchange believes these amendments will accurately align the rule text with the operation of Exchange systems in the handling of odd-lot orders under these specific circumstances. However, the Exchange will continue to monitor the recent changes to the processing of odd-lots and confer with our constituents in order to evaluate whether further change is necessary. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of section 6(b) of the Act, 12 in general, and with section 6(b)(5) of the Act, 13 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. The Exchange also states that the proposed rule change also is designed to support the principles of section 11A(a)(1) 14 in that it seeks to assure economically efficient execution of securities transactions, make it practicable for brokers to execute investors' orders in the best market and provide an opportunity for investors' orders to be executed without the participation of a dealer. 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78k-1(a)(1). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change effects a change in an existing order-entry or trading system of a self-regulatory organization that does not
(1)Significantly affect the protection of investors of the public interest,
(2)impose any significant burden on competition, and
(3)have the effect of limiting the access to or availability of the system, it has become effective pursuant to section 19(b)(3)(A)(iii) of the Act 15 and Rule 19b-4(f)(5) thereunder. 16 15 15 U.S.C. 78s(b)(3)(A)(iii). 16 17 CFR 240.19b-4(f)(5). At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2007-103 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2007-103. 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 NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2007-103 and should be submitted on or before December 27, 2007. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 17 17 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23651 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56856; File No. SR-OCC-2007-13] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to Delayed Start Options November 28, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on October 9, 2007, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by OCC. The Commission is publishing this notice and order to solicit comments from interested persons and to grant approval of the proposal. 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 permit OCC to clear and settle delayed start options (“DSOs”) 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 these statements. 2 2 The Commission has modified the text of the summaries prepared by OCC. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change—Purpose of Rule Change The purpose of the proposed rule change is to accommodate the introduction of DSOs by the CBOE. Initially CBOE proposes to list DSOs only on indexes. 3 3 File No. SR-CBOE-2007-26. The Commission recently issued an order granting approval of SR-CBOE-2007-26 that allows CBOE to list and trade DSOs. Securities Exchange Act Release No. 56855 (November 28, 2007). Description of Product As described by CBOE, a DSO is identical to existing standardized options with one exception: at the commencement of trading in a series, DSOs of that series will not have a set exercise price. Instead, a DSO will commence trading with a preestablished formula that the listing exchange will use to fix the exercise price for the DSO on a specified date prior to the DSO's expiration date (“exercise price setting date”). The CBOE is currently proposing that an “at-the-money” DSO on an index will be assigned an exercise price equal to the closing value of the underlying index on the exercise price setting date, rounded to the increment established by CBOE at the time the DSO commences trading. CBOE has also indicated that it may introduce in- or out-of-the-money DSOs. Those DSOs would, according to CBOE, have the same terms as at-the-money DSOs except that the exercise price would be set at a specified percentage either in- or out-of-the-money on the exercise price setting date ( *e.g.* , 5% in-the-money or 5% out-of-the-money). The listing exchange will specify the exercise price setting date prior to the opening of each series of DSOs. According to CBOE, the exercise price setting date for each series of DSOs traded on CBOE will initially be three months prior to the DSO's expiration date. In other words, each series of DSOs will trade without an exercise price until three months prior to expiration. From the exercise price setting date forward, all options terms will be fixed, and DSOs will be fungible with any other option on the same underlying interest having the same terms such as exercise price, expiration date, etc. An exchange may determine to issue series of DSOs with more or less than three months between the exercise price setting date and the expiration date. A DSO will not have an exercise price until the exercise price setting date, and it will not be exerciseable until after that date. Thus, an “American-style” DSO would be exerciseable only between the exercise price setting date and the expiration date. A “European-style” DSO, like any other European-style option, would be exercised only on or near the expiration date. Proposed Changes to OCC's By-Laws and Rules In order to issue and clear DSOs, OCC needs to make several definitional changes in its By-Laws. A definition of DSO would be added to Article I of the By-Laws. OCC is also proposing to amend the existing definition of “American-style” in Article I of its By-Laws to make clear that unlike other American-style options, DSOs could not be exercised beginning at the commencement time for the options. Instead, American-style DSOs could only be exercised after their exercise price is set. Additionally, OCC proposes to amend the existing definition of “series” to provide that DSOs with the same expiration date, unit of trading, exercise price setting date, and exercise price setting formula will comprise the same series until their exercise price is set. At that point DSOs with the same expiration date, unit of trading and exercise price will, like other options, comprise the same series. Similarly, OCC is proposing to amend the existing definition of “variable terms” in Article I because DSOs will not have an exercise price as one of their variable terms until their exercise price setting date. Instead, DSOs will have both an exercise price setting date and an exercise price setting formula as variable terms until that time. OCC is proposing to add two definitions to Article I as well. Both “exercise price setting date” and “exercise price setting formula” are needed to reflect the fact that DSOs will not have an exercise price when they begin trading and to describe when and how an exercise price will be fixed by the listing exchange. OCC proposes amending Article VI of its By-Laws to clarify that an exchange listing DSOs need not set the exercise price for such options at the time each series is opened for trading but instead must set the exercise price setting date and the exercise price setting formula, and that an American-style DSO may not be exercised until after its exercise price has been set. The proposed amendment to the definition of “series of options” in Article XVII is similar to the amendment to the definition of “series” in Article I and like that amendment is to clarify that DSOs with the same expiration date, unit of trading, exercise price setting date, and exercise price setting formula will comprise the same series until their exercise price is set. The amendments to Article XVII, Section 2(a) and to Rule 1802(a), like the changes to the definition of “American-style” in Article I and in Article VI, would prohibit holders of American-style DSOs from exercising until the exercise price is set. Proposed amendments to Rule 401(a)(1) are to permit matched trade reports for DSOs to contain the exercise price setting date and exercise price setting formula rather than an exercise price until the exercise price is set. The proposed changes to OCC's By-Laws and Rules are consistent with the purposes and requirements of Section 17A of the Act, as amended, because they are designed to promote the prompt and accurate clearance and settlement of transactions in DSOs, which are a new product designed to allow customers to manage risk associated with the volitility of an underlying interest. DSOs are very similar to existing options currently cleared by OCC and would be governed by substantially the same rules and procedures to which existing options are subject. The proposed rule change is not inconsistent with the existing rules of OCC, including rules proposed to be amended. 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 Section 17A(b)(3)(F) of the Act requires, among other things, that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions. 4 The purpose of the proposed rule change is to amend OCC's By-Laws and Rules so that OCC may clear and settle DSOs. Accordingly, after careful review the Commission finds that the proposed rule change meets the requirements of Section 17A(b)(3)(F) of the Act because the proposed rule change should result in the prompt and accurate clearance and settlement of securities transactions, specifically transactions in DSOs. 4 15 U.S.C. 78q-1(b)(3)(F). OCC has requested that the Commission approve the proposed rule prior to the thirtieth day after publication of the notice of filing. The Commission finds good cause for approving the proposed rule change prior to the thirtieth day after publication of notice because such approval will allow CBOE to commence trading of DSOs without any unnecessary delay. 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-2007-13 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-2007-13. 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 OCC and on OCC's Web site at *http://www.theocc.com/publications/rules/proposed_changes/sr_occ_07_13.pdf* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2007-13 and should be submitted on or before December 27, 2007. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder. 5 5 In approving the proposed rule change, the Commission considered the proposal's impact on efficiency, competition and capital formation. 15 U.S.C. 78c(f). *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, that the proposed rule change (File No. SR-OCC-2007-13) be and hereby is approved on an accelerated basis. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 6 6 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-23610 Filed 12-5-07; 8:45 am] BILLING CODE 8011-01-P DEPARTMENT OF STATE [Public Notice 6002] 60-Day Notice of Proposed Information Collection: Public Diplomacy Evaluation Office: Performance Measurement, Evaluation and Public Diplomacy Program Surveys, OMB Control No. 1405-0158 ACTION: Notice of request for public comments. SUMMARY: The Department of State is seeking Office of Management and Budget
(OMB)approval for the information collection described below. The purpose of this notice is to allow 60 days for public comment in the **Federal Register** preceding submission to OMB. We are conducting this process in accordance with the Paperwork Reduction Act of 1995. • *Title of Information Collection:* Public Diplomacy Evaluation Office: Performance Measurement, Evaluation and Public Diplomacy Program Surveys. • *OMB Control Number:* 1405-0158. • *Type of Request:* Revision of a Currently Approved Collection. • *Originating Office:* Public Diplomacy Evaluation Office (PDEO). • *Form Number:* None. • *Respondents:* Respondents of program assessments and/or program monitoring of public diplomacy activities under the collection may include program applicants, participants, alumni, administrators, and hosts or grantee organizations involved in the programs that PDEO is assessing or evaluating. • *Estimated Number of Respondents:* 25,131. • *Estimated Number of Responses:* 25,131. • *Average Hours per Response:* 30 minutes. • *Total Estimated Burden:* 12,565 hours. • *Frequency:* On occasion. • *Obligation to Respond:* Voluntary. DATES: The Department will accept comments from the public up to 60 days from December 6, 2007. ADDRESSES: You may submit comments by any of the following methods: • E-mail: *CrowleyML@state.gov.* • Mail (paper, disk, or CD-ROM submissions): Melinda L. Crowley, U.S. Department of State, Public Diplomacy Evaluation Office (PDEO), 301 4th Street, SW., Room 848 (SA-44), Washington, DC 20547 • Fax: 202-203-7143. You must include the DS form number (if applicable), information collection title, and OMB control number in any correspondence. FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed information collection and supporting documents, to Melinda L. Crowley, U.S. Department of State, Public Diplomacy Evaluation Office (PDEO), 301 4th Street, SW., Room 848 (SA-44), Washington, DC 20547, who may be reached on 202-203-7136 or at *CrowleyML@state.gov.* SUPPLEMENTARY INFORMATION: We are soliciting public comments to permit the Department to: • Evaluate whether the proposed information collection is necessary for the proper performance of our functions. • Evaluate the accuracy of our estimate of the burden of the proposed collection, including the validity of the methodology and assumptions used. • Enhance the quality, utility, and clarity of the information to be collected. • Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of technology. Abstract of Proposed Collection The information collection allows PDEO the ability to regularly collect necessary data from program participants. The performance measurement and evaluation data obtained from program participants allows PDEO to better assess and improve the DOS exchange and public diplomacy programs, while complying with the reporting requirements mandated by Congress and the Office of Management and Budget. These programs assist the Department of State's mission to promote a balanced and accurate view of the United States and build world partnerships. Methodology Data captured through this information collection will be derived from respondents' electronic surveys, personal interviews and/or focus groups. Respondents include program applicants, participants, alumni, administrators, hosts and grantee organizations involved in the programs that PDEO is assessing or evaluating. Dated: November 15, 2007. Rick Ruth, Executive Director, Public Diplomacy Evaluation Office, Department of State. [FR Doc. 07-5967 Filed 12-5-07; 8:45 am]
Connectionstraces to 17
Traces to 17 documents
6 references not yet in our index
  • 1995 USC 3501
  • 17 CFR 240.19
  • 17 CFR 240.10
  • 15 USC 78(f)(b)
  • 15 USC 78
  • 17 CFR 240.12
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cites case law
Notices
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from section 15(a) of the Act and rule 18f-2 under the Act, as well as from certain disclosure requirements
U.S.C.§ 3501
U.S.C.§ 78a
C.F.R.§ 230.425
U.S.C.§ 77a
C.F.R.§ 230.135
C.F.R.§ 230.165
C.F.R.§ 230.400
U.S.C.§ 78s
U.S.C.§ 78f
Cite1995 USC 3501
Cite17 CFR 240.19
Cite17 CFR 240.10
Cites 23 · showing 12Cited by 0 across 0 sources
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