Notices. Notice
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/register/2008/02/28/08-877A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 4410-11-M DEPARTMENT OF LABOR Office of the Secretary Submission for OMB Review: Comment Request February 22, 2008. The Department of Labor
(DOL)hereby announces the submission of the following public information collection requests
(ICR)to the Office of Management and Budget
(OMB)for review and approval in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. chapter 35). A copy of each ICR, with applicable supporting documentation; including among other things a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained from the RegInfo.gov Web site at *http://www.reginfo.gov/public/do/PRAMain* or by contacting Darrin King on 202-693-4129 (this is not a toll-free number) / e-mail: *king.darrin@dol.gov.* Interested parties are encouraged to send comments to the Office of Information and Regulatory Affairs, Attn: Katherine Astrich, OMB Desk Officer for the Employment and Training Administration (ETA), Office of Management and Budget, Room 10235, Washington, DC 20503, Telephone: 202-395-7316/Fax: 202-395-6974 (these are not a toll-free numbers), e-mail: *OIRA_submission@omb.eop.gov* within 30 days from the date of this publication in the **Federal Register** . In order to ensure the appropriate consideration, comments should reference the OMB Control Number (see below). The OMB is particularly interested in comments which: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; • Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; • Enhance the quality, utility, and clarity of the information to be collected; and • Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. *Agency:* Employment and Training Administration. *Type of Review:* Extension without change of a currently approved collection. *Title:* Interstate Arrangement for Combining Employment and Wages. *OMB Control Number:* 1205-0029. *Form Number:* ETA-586. *Affected Public:* State Governments. *Estimated Number of Respondents:* 53. *Estimated Total Annual Burden Hours:* 848. *Estimated Total Annual Costs Burden:* $0. *Description:* Section 3304(a)(9)(B), of the Internal Revenue Code of 1986, requires states to participate in an arrangement for combining employment and wages covered under the different state laws for the purpose of determining unemployed workers' entitlement to unemployment compensation. The Interstate Arrangement for Combining Employment and Wages for combined wage claims (CWC), promulgated at 20 CFR 616, requires the prompt transfer of all relevant and available employment and wage data between states upon request. The Benefit Payment Promptness Standard, 20 CFR part 640, requires the prompt payment of unemployment compensation including benefits paid under the CWC arrangement. The ETA-586 report provides the ETA/Office of Workforce Security with information necessary to measure the scope and effect of the CWC program and monitor the performance of each state in responding to wage transfer data requests and the payment of benefits. For additional information, see related notice published at 72 FR 68594 on December 5, 2007. *Agency:* Employment and Training Administration. *Type of Review:* New Collection (Request for a new OMB Control Number). *Title:* High Growth and Community-Based Job Training Grants. *OMB Control Number:* 1205-0NEW. *Form Number:* ETA-9134. *Affected Public:* Private Sector: Not-for-profit institutions. *Estimated Number of Respondents:* 272. *Estimated Total Annual Burden Hours:* 53,464. *Estimated Total Annual Costs Burden:* $0. *Description:* This information collection request is to implement new reporting requirements for ETA's High Growth Job Training Initiative (HGJTI) and the Community-Based Job Training Grants (CBJTG). ETA will require grantees to submit standardized quarterly reports summarizing the number and types of participants served by grantees, the number of exiters, the number of participants engaged in training activities, and some participant outcomes. To calculate the common measures for each grantee and for the program as a whole, ETA will also require grantees to submit quarterly participant records for exiters that contain the minimum number of elements needed to obtain the information to calculate the common measures. ETA plans to use these records to obtain wage record information from the Wage Record Interchange System (WRIS), which in turn ETA will use to compute common measures. These reports and records will help ETA gauge the effects of the HGJTI and CBJTG grants, identify grantees that could serve as useful models, and target technical assistance appropriately. ETA's statutory and regulatory authority to administer these programs includes provisions for the requirement of performance reporting from grantees. The legislative authority for these programs comes from the Workforce Investment Act (29 U.S.C. 2801 et seq.) and the American Competitiveness in the Twenty-first Century Act of 2000 as amended, both of which authorize and/or require that ETA collect information from grantees regarding program performance and participant outcomes. Darrin A. King, Acting Departmental Clearance Officer. [FR Doc. E8-3740 Filed 2-27-08; 8:45 am] BILLING CODE 4510-FM-P DEPARTMENT OF LABOR Employment and Training Administration Request for Certification of Compliance—Rural Industrialization Loan and Grant Program AGENCY: Employment and Training Administration, Labor. ACTION: Notice. SUMMARY: The Employment and Training Administration is issuing this notice to announce the receipt of a “Certification of Non-Relocation and Market and Capacity Information Report” (Form 4279-2) for the following: *Applicant/Location:* Green Meadows Dairy, LLC/Hull, Iowa. *Principal Product/Purpose:* The loan, guarantee, or grant application for the purchase of equipment, land, and an existing structure to construct a new cheese manufacturing plant. The NAICS industry codes for this enterprise are: 311513 Cheese Manufacturing—Cheese (except cottage cheese) manufacturing; and 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing—Whey, condensed, dried, evaporated, and powdered manufacturing. DATES: All interested parties may submit comments in writing no later than March 13, 2008. Copies of adverse comments received will be forwarded to the applicant noted above. ADDRESSES: Address all comments concerning this notice to Anthony D. Dais, U.S. Department of Labor, Employment and Training Administration, 200 Constitution Avenue, NW., Room S-4231, Washington, DC 20210; or e-mail *Dais.Anthony@dol.gov;* or transmit via fax 202-693-3015 (this is not a toll-free number). FOR FURTHER INFORMATION CONTACT: Anthony D. Dais, at telephone number
(202)693-2784 (this is not a toll-free number). SUPPLEMENTARY INFORMATION: Section 188 of the Consolidated Farm and Rural Development Act of 1972, as established under 29 CFR part 75, authorizes the United States Department of Agriculture to make or guarantee loans or grants to finance industrial and business activities in rural areas. The Secretary of Labor must review the application for financial assistance for the purpose of certifying to the Secretary of Agriculture that the assistance is not calculated, or likely, to result in:
(a)A transfer of any employment or business activity from one area to another by the loan applicant's business operation; or,
(b)an increase in the production of goods, materials, services, or facilities in an area where there is not sufficient demand to employ the efficient capacity of existing competitive enterprises unless the financial assistance will not have an adverse impact on existing competitive enterprises in the area. The Employment and Training Administration within the Department of Labor is responsible for the review and certification process. Comments should address the two bases for certification and, if possible, provide data to assist in the analysis of these issues. Signed: At Washington, DC this 15th of February, 2008. Gay M. Gilbert, Administrator, Office of Workforce Investment, Employment and Training Administration. [FR Doc. E8-3737 Filed 2-27-08; 8:45 am] BILLING CODE 4510-FN-P NATIONAL ARCHIVES AND RECORDS ADMINISTRATION Agency Information Collection Activities: Proposed Collection; Comment Request AGENCY: National Archives and Records Administration (NARA). ACTION: Notice. SUMMARY: NARA is giving public notice that the agency proposes to request extension of a currently approved information collection used to obtain information from private foundations or other entities in order to design, construct and equip Presidential libraries. The public is invited to comment on the proposed information collection pursuant to the Paperwork Reduction Act of 1995. DATES: Written comments must be received on or before April 28, 2008 to be assured of consideration. ADDRESSES: Comments should be sent to: Paperwork Reduction Act Comments (NHP), Room 4400, National Archives and Records Administration, 8601 Adelphi Rd, College Park, MD 20740-6001; or faxed to 301-713-7409; or electronically mailed to *tamee.fechhelm@nara.gov.* FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the proposed information collections and supporting statements should be directed to Tamee Fechhelm at telephone number 301-837-1694, or fax number 301-713-7409. SUPPLEMENTARY INFORMATION: Pursuant to the Paperwork Reduction Act of 1995 (Pub. L. 104-13), NARA invites the general public and other Federal agencies to comment on proposed information collections. The comments and suggestions should address one or more of the following points:
(a)Whether the proposed collection information is necessary for the proper performance of the functions of NARA;
(b)the accuracy of NARA's estimate of the burden of the proposed information collection;
(c)ways to enhance the quality, utility, and clarity of the information to be collected;
(d)ways to minimize the burden of the collection of information on respondents, including the use of information technology; and
(e)whether small businesses are affected by this collection. The comments that are submitted will be summarized and included in the NARA request for Office of Management and Budget
(OMB)approval. All comments will become a matter of public record. In this notice, NARA is soliciting comments concerning the following information collection: 1. *Title:* Presidential Library Facilities. *OMB number:* 3095-0036. *Agency form number:* None. *Type of review:* Regular. *Affected public:* Presidential library foundations or other entities proposing to transfer a Presidential library facility to NARA. *Estimated number of respondents:* 1. *Estimated time per response:* 31 hours. *Frequency of response:* On occasion. *Estimated total annual burden hours:* 31 hours. *Abstract:* The information collection is required for NARA to meet its obligations under 44 U.S.C. 2112(a)(3) to submit a report to Congress before accepting a new Presidential library facility. The report contains information that can be furnished only by the foundation or other entity responsible for building the facility and establishing the library endowment. Dated: February 21, 2008. Martha Morphy, Assistant Archivist for Information Services. [FR Doc. E8-3780 Filed 2-27-08; 8:45 am] BILLING CODE 7515-01-P NATIONAL ARCHIVES AND RECORDS ADMINISTRATION Information Security Oversight Office, Public Interest Declassification Board (PIDB); Notice of Meeting Pursuant to Section 1102 of the Intelligence Reform and Terrorism Prevention Act of 2004 which extended and modified the Public Interest Declassification Board
(PIDB)as established by the Public Interest Declassification Act of 2000 (Pub. L. 106-567, title VII, December 27, 2000, 114 Stat. 2856), announcement is made for the following committee meeting: *Name of Committee:* Public Interest Declassification Board (PIDB). *Date of Meeting:* Monday, March 17, 2008. *Time of Meeting:* 9 a.m. to 12 p.m. *Place of Meeting:* National Archives and Records Administration, 700 Pennsylvania Avenue, NW., Jefferson Conference Room, Washington, DC 20408. *Purpose:* To solicit public reaction to the issues and recommendations covered in the PIDB's recent report, “Improving Declassification.” (See: *http://www.archives.gov/* *declassification/pidb/improving-declassification.pdf.* ) This meeting will be open to the public. However, due to space limitations and access procedures, the name and telephone number of individuals planning to attend must be submitted to the PIDB staff at the Information Security Oversight Office
(ISOO)no later than Wednesday, March 12, 2008. The PIDB staff will provide additional instructions for gaining access to the location of the meeting. FOR FURTHER INFORMATION CONTACT: Lee H. Johnson, PIDB Staff, Information Security Oversight Office, National Archives Building, 700 Pennsylvania Avenue, NW., Washington, DC 20408, telephone number
(202)357-5039. Dated: February 21, 2008. William J. Bosanko, Acting Director, Information Security Oversight Office. [FR Doc. E8-3865 Filed 2-27-08; 8:45 am] BILLING CODE 7515-01-P EXECUTIVE OFFICE OF THE PRESIDENT Office of National Drug Control Policy Designation of Twenty-six Counties as High Intensity Drug Trafficking Areas ACTION: Notice. SUMMARY: This notice lists twenty-six counties designated as additions to the High Intensity Drug Trafficking Areas (HIDTA) Program by the Director of the Office of National Drug Control Policy (ONDCP). These new counties are: Letcher County in Kentucky and Hamilton and Washington Counties in Tennessee as additions to the Appalachia HIDTA; Barrow, Bartow, Cherokee, Clayton, Douglas, Fayette, Forsyth and Henry Counties in Georgia and Durham, Johnston, Wake, Wayne and Wilson Counties in North Carolina as additions to the Atlanta HIDTA; Shasta County, California as an addition to the Central Valley California HIDTA; Benton, Jefferson, Pulaski and Washington Counties in Arkansas as additions to the Gulf Coast HIDTA; Rock Island County, Illinois as an addition to the Midwest HIDTA; Chester and Delaware Counties in Pennsylvania as additions to the Philadelphia/Camden HIDTA; and Midland and Ector Counties in Texas as additions to the Southwest Border HIDTA West Texas Region. The new counties are designated pursuant to Office of National Drug Control Policy Reauthorization Act of 2006 codified at 21 USCS 1706 et seq, to promote more effective coordination of drug control efforts. In considering whether to designate an area under this section as a High Intensity Drug Trafficking Area, the Director considered, in addition to such other criteria the Director, ONDCP considers to be appropriate, the extent to which:
(1)The area is a significant center of illegal drug production, manufacturing, importation, or distribution;
(2)state and local law enforcement agencies have committed resources to respond to the drug trafficking problem in the area, thereby indicating a determination to respond aggressively to the problem;
(3)drug-related activities in the area are having a significant harmful impact in the area, and in other areas of the country; and
(4)a significant increase in allocation of Federal resources is necessary to respond adequately to drug-related activities in the area. This action will support local, state and Federal law enforcement officers in assessing regional drug threats, designing strategies to combat the threats, developing initiatives to implement the strategies, and evaluating the effectiveness of their coordinated efforts. FOR FURTHER INFORMATION CONTACT: Comments and questions regarding this notice should be directed to Ms. Cheryl C. Nolan, Acting Deputy Director for State, Local and Tribal Affairs, Office of National Drug Control Policy, Executive Office of the President, Washington, DC 20503;
(202)395-6912. Signed at Washington, DC, this 20th day of February, 2008. John P. Walters, Director. [FR Doc. E8-3779 Filed 2-27-08; 8:45 am] BILLING CODE 3180-02-P OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE Generalized System of Preferences (GSP): Import Statistics Relating to Competitive Need Limitations (CNLs); Invitation for Public Comment on CNL Waivers Subject to Potential Revocation Based on New Statutory Thresholds, Possible De Minimis Waivers, and Product Redesignations AGENCY: Office of the United States Trade Representative (USTR). ACTION: Notice. SUMMARY: This notice is to inform the public of the availability of full 2007 calendar year import statistics relating to competitive need limitations
(CNLs)under the Generalized System of Preferences
(GSP)program. Public comments are invited and must be submitted by 5 p.m., Friday, March 21, 2008, to *FR0441@USTR.EOP.GOV* regarding the potential revocation of CNL waivers that meet the new statutory thresholds set forth by section 503(d)(4)(B)(ii) of the Trade Act of 1974 (19 U.S.C. 2463(d)(4)(B)(ii)), as amended by Public Law 109-432. Additionally, public comments are invited and must be submitted by 5 p.m., Friday, March 28, 2008, to *FR0618@USTR.EOP.GOV* regarding possible *de minimis* CNL waivers with respect to particular articles and possible redesignations under the GSP program of articles currently not eligible for GSP benefits because they previously exceeded the CNLs. FOR FURTHER INFORMATION CONTACT: Contact the GSP Subcommittee of the Trade Policy Staff Committee, Office of the United States Trade Representative, 1724 F Street, NW., Room F-220, Washington, DC 20508. The telephone number is
(202)395-6971. SUPPLEMENTARY INFORMATION: I. Competitive Need Limitations The GSP program provides for the duty-free importation of designated articles when imported from designated beneficiary developing countries (BDCs). The GSP program is authorized by title V of the Trade Act of 1974 (19 U.S.C. 2461, *et seq.* ), as amended (the “1974 Act”), and is implemented in accordance with Executive Order 11888 of November 24, 1975, as modified by subsequent Executive Orders and Presidential Proclamations. Section 503(c)(2)(A) of the 1974 Act sets out the two CNLs. When the President determines that a BDC exported to the United States during a calendar year either
(1)a quantity of a GSP-eligible article having a value in excess of the applicable amount for that year ($130 million for 2007), or
(2)a quantity of a GSP-eligible article having a value equal to or greater than 50 percent of the value of total U.S. imports of the article from all countries (the “50 percent CNL”), the President must terminate GSP duty-free treatment for that article from that BDC by no later than July 1 of the next calendar year. *De minimis waivers.* Under section 503(c)(2)(F) of the 1974 Act, the President may waive the 50 percent CNL with respect to an eligible article imported from a BDC if the value of total imports of that article from all countries during the calendar year did not exceed the applicable *de minimis* amount for that year ($18.5 million for 2007). *Redesignations.* Under section 503(c)(2)(C) of the 1974 Act, if imports of an eligible article from a BDC ceased to receive duty-free treatment due to exceeding a CNL in a prior year, the President may, subject to the considerations in sections 501 and 502 of the 1974 Act, redesignate such an article for duty-free treatment if imports in the most recently completed calendar year did not exceed the CNLs. *CNL waiver revocation.* Under Section 503(d)(5) of the 1974 Act, a CNL waiver remains in effect until the President determines that it is no longer warranted due to changed circumstances. Section 503(d)(4)(B)(ii) of the 1974 Act, as amended by Public Law 109-432, also provides that, “[n]ot later than July 1 of each year, the President should revoke any waiver that has then been in effect with respect to an article for 5 years or more if the beneficiary developing country has exported to the United States (directly or indirectly) during the preceding calendar year a quantity of the article—
(I)having an appraised value in excess of 1.5 times the applicable amount set forth in subsection (c)(2)(A)(ii) for that calendar year [$195 million in 2007]; or
(II)exceeding 75 percent of the appraised value of the total imports of that article into the United States during that calendar year.” II. Implementation of Competitive Need Limitations, Waivers, and Redesignations Exclusions from GSP duty-free treatment where CNLs have been exceeded will be effective July 1, 2008, unless granted a waiver by the President. Any CNL-based exclusions, CNL waiver revocations, and decisions with respect to *de minimis* waivers and redesignations will be based on full 2007 calendar year import data. III. 2007 Import Statistics In order to provide notice of articles that have exceeded the CNLs for 2007, and to afford an opportunity for comment regarding potential *de minimis* waivers, redesignations, and the potential revocation of waivers that are subject to the new CNL waiver thresholds provided by section 503(d)(4)(B)(ii) of the 1974 Act, as amended by Public Law 109-432, import data for 2007 are available at: *http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/GSP_2007_Annual_Review/Section_Index.html* ), titled “2007 GSP Review, Full-Year 2007 Import Statistics Relating to Competitive Need Limitations (CNLs).” Full 2007 calendar year data for individual tariff subheadings may be viewed on the Web site of the U.S. International Trade Commission at *http://dataweb.usitc.gov/* . The lists available on the USTR Web site contain, for each article, the Harmonized Tariff Schedule of the United States (HTSUS) subheading and BDC country of origin, the value of imports of the article for the 2007 calendar year, and the percentage of total imports of that article from all countries. The annotations on the lists indicate, among other things, the status of GSP eligibility. The computer-generated lists published on the USTR Web site are for informational purposes only. They may not include all articles to which the GSP CNLs may apply. All determinations and decisions regarding the CNLs of the GSP program will be based on full 2007 calendar year import data with respect to each GSP-eligible article. Each interested party is advised to conduct its own review of 2007 import data with respect to the possible application of the GSP CNL provisions. List I on the USTR Web site shows:
(a)Articles from BDCs that became ineligible for GSP treatment on or before July 1, 2007; and
(b)GSP-eligible articles from BDCs that exceeded a CNL by having been exported in excess of $130 million, or by an amount greater than 50 percent of the total U.S. import value in 2007. Petitions to grant CNL waivers for those articles that received GSP benefits during 2007 but stand to lose GSP duty-free treatment on July 1, 2008, must have been previously submitted in the 2007 GSP Annual Review. List II identifies GSP-eligible articles from BDCs that are above the 50 percent CNL, but that are eligible for a *de minimis* waiver of the 50 percent CNL. Articles eligible for *de minimis* waivers are automatically considered in the GSP annual review process, without petitions, and public comments are invited. List III shows GSP-eligible articles from certain BDCs that are currently not receiving GSP duty-free treatment, but that may be considered for GSP redesignation based on 2007 trade data and consideration of certain statutory factors, as set forth above. Recommendations to the President on redesignations are normally made as part of the GSP annual review process, and public comments are invited. List IV shows articles subject to the new CNL waiver thresholds of section 503(d)(4)(B)(ii) of the 1974 Act, as amended by Public Law 109-432. Recommendations to the President on revocation of these waivers will be made as part of the 2007 GSP annual review process, and public comments are invited. IV. Public Comments Requirements for Submissions All submissions must conform to the GSP regulations set forth at 15 CFR part 2007, except as modified below. Furthermore, each party providing comments should indicate on the first page of the submission its name, the relevant 8-digit HTSUS subheading(s), the BDC of interest, and the type of action ( *e.g.* , new statutory criteria, *de minimis* waiver or redesignation) in which the party is interested. Comments must be submitted, in English, to the Chairman of the GSP Subcommittee of the Trade Policy Staff Committee
(TPSC)as soon as possible, but no later than 5 p.m., Friday, March 21, 2008, for comments on the potential revocation of CNL waivers that meet the new statutory thresholds and no later than 5 p.m., March 28, 2008, for comments regarding *de minimis* waivers or redesignations. To facilitate prompt consideration of submissions, USTR will only accept electronic e-mail submissions in response to this notice. Hand-delivered submissions either by mail or other delivery options will not be accepted. Submissions should be single-copy transmissions in English with the total submission not to exceed 20 single-spaced standard letter-size pages, including attachments, and three megabytes as a digital file attached to an e-mail transmission. The e-mail transmission must use either one of the two following subject lines, based on the subject of the comment being submitted: “Comments on 2007 GSP Redesignation and *De minimis* Waiver Review,” or “Comments on 2007 CNL Waiver Threshold Review,” followed by the BDC country of origin and HTSUS subheading number as set out in the appropriate list. Documents must be submitted as either MSWord (“.doc”), Word Perfect (“.wpd”), Adobe (“.pdf”) or text (“.txt”) files. Documents submitted as electronic image files or containing imbedded images (for example, “.jpg”, “.tif”, “.bmp”, or “.gif” files) will not be accepted. Spreadsheets submitted as supporting documentation are acceptable as Excel, pre-formatted for printing on 8 1/2 × 11 inch paper. To the extent possible, any data attachments to the submission should be included in the same file as the submission itself, and not as separate files. If the submission contains business confidential information, pursuant to 15 CFR 2003.6, a non-confidential version of the submission must also be submitted that indicates where confidential information was redacted by inserting asterisks where material was deleted. In addition, the confidential version must be clearly marked “BUSINESS CONFIDENTIAL” at the top and bottom of each page of the document. The non-confidential version must be clearly marked “PUBLIC” or “NON-CONFIDENTIAL” at the top and bottom of each page. Documents that are submitted without any marking may not be accepted or will be considered public documents. For any document containing business confidential information submitted as an electronic attached file to an e-mail transmission, the file name of the business confidential version should begin with the characters “BC-”, and the file name of the public version should begin with the character “P-”. The “BC-” or “P-” should be followed by the name of the party (government, company, union, association, etc.) which is submitting the comments. E-mail submissions should not include separate cover letters or messages in the message area of the e-mail; information that might appear in any cover letter should be included directly in the attached file containing the submission itself, including the sender's name, organization name, address, telephone number and e-mail address. The e-mail address for the 2007 CNL Waiver Threshold Review is *FR0441@USTR.EOP.GOV* . The e-mail address for submissions to the 2007 GSP Redesignation and *De minimis* Waiver Review is *FR0618@USTR.EOP.GOV* . (Note: the digit before the numbers 4 and 6 in the above e-mail addresses is the number zero, not a letter.) Documents not submitted in accordance with these instructions may not be considered in this review. If unable to provide submissions by e-mail, please contact the GSP Subcommittee to arrange for an alternative method of transmission. Public versions of all documents relating to this review will be available for public review approximately two weeks after the due date by appointment in the USTR Public Reading Room, 1724 F Street, NW., Washington, DC. Availability of documents may be ascertained, and appointments may be made from 9:30 a.m. to noon and 1 p.m. to 4 p.m., Monday through Friday, by calling 202-395-6186. Marideth J. Sandler, Executive Director, Generalized System of Preferences
(GSP)Program, and Chair, GSP Subcommittee, Office of the U.S. Trade Representative. [FR Doc. E8-3805 Filed 2-27-08; 8:45 am] BILLING CODE 3190-W8-P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94-409, that the Securities and Exchange Commission will hold the following meeting during the week of March 3, 2008: A Closed Meeting will be held on Monday, March 3, 2008, at 2 p.m. Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the Closed Meeting. Certain staff members who have an interest in the matters may also be present. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(5), (7), (9)(B), and
(10)and 17 CFR 200.402(a)(5), (7), 9(ii) and (10), permit consideration of the scheduled matters at the Closed Meeting. Commissioner Casey, as duty officer, voted to consider the items listed for the closed meeting in closed session. The subject matter of the Closed Meeting scheduled for Monday, March 3, 2008, will be: Formal order of investigation; Institution and settlement of injunctive actions; Resolution of a litigation claim; Institution of administrative proceedings of an enforcement nature; and a matter related to an enforcement proceeding. 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: February 25, 2008. Nancy M. Morris, Secretary. [FR Doc. E8-3852 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 28166; 812-13444] NETS Trust, et al.; Notice of Application February 25, 2008. 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 (the “Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d), 22(e), and 24(d) of the Act and rule 22c-1 under the Act, under section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and
(B)of the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act. Summary of Application: Applicants request an order that would permit
(a)certain open-end management investment companies and their series, to issue shares (“NETS”) that can be redeemed only in large aggregations (“Creation Units”);
(b)secondary market transactions in NETS to occur at negotiated prices;
(c)dealers to sell NETS to purchasers in the secondary market unaccompanied by a prospectus when prospectus delivery is not required by the Securities Act of 1933 (“Securities Act”);
(d)certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of NETS for redemption;
(e)certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and
(f)certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire NETS. Applicants: NETS Trust (“Trust”), Northern Trust Investments, N.A. (“Adviser”) and Foreside Fund Services, LLC (“Distributor”). Filing Dates: The application was filed on November 1, 2007 and amended on February 13, 2008. 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 5:30 p.m. on March 14, 2008, and should be accompanied by proof of service on applicants, in the form of an affidavit, or for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicants, c/o Peter K. Ewing, Northern Trust Global Investments, 65 East 55th Street, 24th Floor, New York, New York 10022. FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel at
(202)551-6812, or Julia Kim Gilmer, Branch Chief, at
(202)551-6821 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the Public Reference Desk, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington DC 20549-0102, telephone
(202)551-5850. Applicants' Representations 1. The Trust is registered as an open-end management investment company and is organized as a Delaware statutory trust that will offer multiple series. The Trust will initially offer NETS of twenty-three series (“Initial Funds”), each of which will track an equity securities index (“Underlying Index”). 1 Applicants may offer additional investment companies in the future as well as additional series of the Trust and series of any existing or future open-end investment companies registered under the Act (“Future Funds” and together with the Initial Funds, the “Funds”). 2 1 The Initial Funds are: NETS BEL 20 Index Fund (Belgium), NETS Hang Seng China Enterprises Index Fund, NETS CAC40 Index Fund (France), NETS DAX Index Fund (Germany), NETS Dow Jones Wilshire Global ex-US Index Fund, NETS Dow Jones Wilshire Global Total Market Index Fund, NETS Hang Seng Index Fund (Hong Kong), NETS ISEQ 20 Index Fund (Ireland), NETS TA-25 Index Fund (Israel), NETS TOPIX Index Fund (Japan), NETS Tokyo Stock Exchange REIT Index Fund (Japan), NETS FTSE Bursa Malaysia 100 Index Fund, NETS AEX-index Fund (The Netherlands), NETS PSI 20 Index Fund (Portugal), NETS FTSE Singapore Straits Times Index Fund, NETS FTSE/JSE Top 40 Index Fund (South Africa), NETS TSEC Taiwan 50 Index Fund, NETS FTSE 100 Index Fund (United Kingdom), NETS Dow Jones Wilshire 4500 Index Fund, NETS S&P/ASX 200 Index Fund (Australia), NETS S&P/MIB Index Fund (Italy), NETS RTS Index Fund (Russia) and NETS FTSE SET 30 Index Fund (Thailand). 2 All existing entities that intend to rely on the requested order have been named as applicants. Any other existing or future entity that subsequently relies on the order will comply with the terms and conditions of the application. Any Future Fund will be advised by the Adviser or an entity controlled by or under common control with the Adviser. 2. The Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and will serve as the investment adviser to each of the Initial Funds. In the future, the Adviser may enter into sub-advisory agreements with other investment advisers to act as sub-advisers to particular Funds (“Sub-Advisers”). Each Sub-Adviser will be registered under the Advisers Act. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934 (the “Exchange Act”) and will act as the principal underwriter and distributor for the Creation Units of NETS. The Distributor is not affiliated with the Adviser or any Sub-Adviser. 3. Each Fund will hold certain equity securities (“Portfolio Securities”) selected to correspond, before fees and expenses, generally to the price and yield performance of an Underlying Index. Certain of the Underlying Indices are composed of equity securities of domestic issuers and non-domestic issuers meeting the requirements for trading in U.S. markets (“Domestic Indices”). Other Underlying Indices are composed of foreign equity securities (“Foreign Indices”). Funds which track Domestic Indices are referred to as “Domestic Funds” and Funds which track Foreign Indices are referred to as “Foreign Funds.” No entity that creates, compiles, sponsors or maintains an Underlying Index (“Index Provider”) is or will be an affiliated person, as defined in section 2(a)(3) of the Act, or an affiliated person of an affiliated person, of the Trust or a Fund, the Adviser, any Sub-Adviser to or promoter of a Fund, or the Distributor. 4. The investment objective of each Fund will be to provide investment results that correspond, before fees and expenses, generally to the price and yield performance of its Underlying Index. Intra-day values of the Underlying Index will be disseminated every 15 seconds throughout the trading day. A Fund will utilize either a replication or representative sampling strategy which will be disclosed with regard to each Fund in its prospectus. 3 A Fund using a replication strategy will invest in the Component Securities in its Underlying Index in approximately the same proportions as in the Underlying Index. In certain circumstances, such as when there are practical difficulties or substantial costs involved in holding every security in an Underlying Index or when a Component Security is less liquid, illiquid or unavailable, a Fund may use a representative sampling strategy pursuant to which it will invest in some, but not all of the Component Securities of its Underlying Index. 4 Applicants anticipate that a Fund that utilizes a representative sampling strategy will not track the performance of its Underlying Index with the same degree of accuracy as an investment vehicle that invests in every Component Security of the Underlying Index with the same weighting as the Underlying Index. Applicants expect that each Fund will have a tracking error relative to the performance of its Underlying Index of less than 5 percent. 3 Applicants represent that each Fund will invest at least 90% of its total assets in the component securities that comprise its Underlying Index (“Component Securities”) or, in the case of Foreign Funds, Component Securities and depositary receipts representing such securities. “Depositary Receipts” will typically be American Depositary Receipts, but may include Global Depositary Receipts and Euro Depositary Receipts. Each Fund also may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in stocks not included in its Underlying Index, but which the Adviser or Sub-Adviser believes will help the Fund track its Underlying Index. 4 Under the representative sampling strategy, the Adviser will seek to construct a Fund's portfolio so that its market capitalization, industry weightings, fundamental investment characteristics (such as return variability, earnings valuation and yield) and liquidity measures perform like those of the Underlying Index. 5. Creation Units are expected to range between 25,000 to 100,000 NETS as will be clearly stated in the relevant Fund's prospectus (“Prospectus”). Applicants expect that the initial price of a Creation Unit will fall in the range of $1,000,000 to $10,000,000. All orders to purchase Creation Units must be placed with the Distributor, by or through a party that has entered into an agreement with the Distributor (“Authorized Participant”). The Distributor will be responsible for transmitting the orders to the Funds. An Authorized Participant must be either:
(a)A broker-dealer or other participant in the continuous net settlement system of the National Securities Clearing Corporation (“NSCC”), a clearing agency registered with the Commission, or
(b)a participant in the Depository Trust Company (“DTC”, and such participant, “DTC Participant”). NETS of each Fund generally will be sold in Creation Units in exchange for an in-kind deposit by the purchaser of a portfolio of securities designated by the Adviser or Sub-Adviser to correspond generally to the price and yield performance of the relevant Underlying Index (the “Deposit Securities”), together with the deposit of a specified cash payment (“Balancing Amount”). The Balancing Amount is an amount equal to the difference between
(a)the net asset value (“NAV”) (per Creation Unit) of a Fund and
(b)the total aggregate market value (per Creation Unit) of the Deposit Securities. 5 Each Fund may permit a purchaser of Creation Units to substitute cash in lieu of depositing some or all of the Deposit Securities if the Adviser or Sub-Adviser believes such method would reduce the Fund's transaction costs or enhance the Fund's operating efficiency. 6 5 Each Fund will sell and redeem Creation Units only on a “Business Day” which is defined as any day that the New York Stock Exchange, the Listing Exchange (defined below), and the custodian of a Fund are open for business, and includes any day that a Fund is required to be open under section 22(e) of the Act. Each Business Day, prior to the opening of trading on the Listing Exchange (defined below), the list of names and amount of each security constituting the current Deposit Securities and the Balancing Amount will be made available. Any national securities exchange (as defined in section 2(a)(26) of the Act) (“Exchange”) on which NETS are listed (“Listing Exchange”) will disseminate, every 15 seconds during its regular trading hours, through the facilities of the Consolidated Tape Association, an amount per individual NETS representing the sum of the estimated Balancing Amount and the current value of the Deposit Securities. 6 Applicants state that in some circumstances or in certain countries, it may not be practicable or convenient, or permissible under the laws of certain countries or the regulations of certain foreign stock exchanges, for a Foreign Fund to operate exclusively on an “in-kind” basis. Applicants also note that when a substantial rebalancing of a Fund's portfolio is required, the Adviser or Sub-Adviser might prefer to receive cash rather than stocks so that the Fund may avoid transaction costs involved in liquidating part of its portfolio to achieve the rebalancing. 6. An investor purchasing or redeeming a Creation Unit from a Fund will be charged a fee (“Transaction Fee”) to prevent the dilution of the interests of the remaining shareholders resulting from costs in connection with the purchase or redemption of Creation Units. 7 The maximum Transaction Fees relevant to each Fund and the method of calculating such Transaction Fees will be fully disclosed in the Prospectus of such Fund or statement of additional information (“SAI”). The Distributor also will be responsible for delivering the Fund's Prospectus to those persons purchasing Creation Units, and for maintaining records of both the orders placed with it and the confirmations of acceptance furnished by it. In addition, the Distributor will maintain a record of the instructions given to the applicable Fund to implement the delivery of its NETS. 7 Where a Fund permits a purchaser to substitute cash in lieu of depositing a portion of the requisite Deposit Securities, the purchaser may be assessed a higher Transaction Fee to cover the cost of purchasing such Deposit Securities, including operational processing and brokerage costs, and part or all of the spread between the expected bid and the offer side of the market relating to such Deposit Securities. 7. Purchasers of NETS in Creation Units may hold such NETS or may sell such NETS into the secondary market. NETS will be listed and traded on an Exchange. It is expected that one or more member firms of a Listing Exchange will be designated to act as a specialist (“Specialist”) or a market maker (“Market Maker”) and maintain a market for NETS trading on the Listing Exchange. Prices of NETS trading on an Exchange will be based on the current bid/ask market. NETS sold in the secondary market will be subject to customary brokerage commissions and charges. 8. Applicants expect that purchasers of Creation Units will include institutional investors and arbitrageurs (which could include institutional investors). A Specialist or Market Maker, in providing a fair and orderly secondary market for the NETS, also may purchase Creation Units for use in its market-making activities. Applicants expect that secondary market purchasers of NETS will include both institutional investors and retail investors. 8 Applicants expect that the price at which NETS trade will be disciplined by arbitrage opportunities created by the option to continually purchase or redeem Creation Units at their NAV, which should ensure that NETS will not trade at a material discount or premium in relation to their NAV. 8 NETS will be registered in book-entry form only. DTC or its nominee will be the registered owner of all outstanding NETS. DTC or DTC Participants will maintain records reflecting beneficial owners of NETS. 9. NETS will not be individually redeemable, and owners of NETS may acquire those NETS from the Fund, or tender such NETS for redemption to the Fund, in Creation Units only. To redeem, an investor will have to accumulate enough NETS to constitute a Creation Unit. Redemption orders must be placed by or through an Authorized Participant. An investor redeeming a Creation Unit generally will receive
(a)Portfolio Securities designated to be delivered for Creation Unit redemptions (“Fund Securities”) on the date that the request for redemption is submitted 9 and
(b)a “Cash Redemption Payment,” consisting of an amount calculated in the same manner as the Balancing Amount, although the actual amount of the Cash Redemption Payment may differ if the Fund Securities are not identical to the Deposit Securities on that day. An investor may receive the cash equivalent of a Fund Security in certain circumstances, such as if the investor is constrained from effecting transactions in the security by regulation or policy. 9 As a general matter, the Deposit Securities and Fund Securities will correspond pro rata to the Portfolio Securities held by each Fund, but Fund Securities received on redemption may not always be identical to Deposit Securities deposited in connection with the purchase of Creation Units for the same day. The Funds will comply with the federal securities laws in accepting Deposit Securities and satisfying redemptions with Fund Securities, including that the Deposit Securities and Fund Securities are sold in transactions that would be exempt from registration under the Securities Act. 10. No Fund will be marketed or otherwise held out as a traditional open-end investment company or a mutual fund. Instead, each Fund will be marketed as an “ETF,” an “investment company,” a “fund,” or a “trust.” All marketing materials that describe the features or method of obtaining, buying or selling Creation Units or NETS traded on an Exchange, or refer to redeemability, will prominently disclose that NETS are not individually redeemable and that the owners of NETS may purchase or redeem NETS from the Fund in Creation Units only. The same approach will be followed in the SAI, shareholder reports and investor educational materials issued or circulated in connection with the NETS. The Funds will provide copies of their annual and semi-annual shareholder reports to DTC Participants for distribution to shareholders. Applicants' Legal Analysis 1. Applicants request an order under section 6(c) of the Act for an exemption from sections 2(a)(32), 5(a)(1), 22(d), 22(e), and 24(d) of the Act and rule 22c-1 under the Act, under section 12(d)(1)(J) of the Act for an exemption from sections 12(d)(1)(A) and
(B)of the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act. 2. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provision of the Act, 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 policy and provisions of the Act. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) of the Act if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and the proposed transaction is consistent with the policies of the registered investment company and the general provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities or transactions, from any provisions of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Sections 5(a)(1) and 2(a)(32) of the Act 3. Section 5(a)(1) of the Act defines an “open-end company” as a management investment company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the Act defines a redeemable security as any security, other than short-term paper, under the terms of which the owner, upon its presentation to the issuer, is entitled to receive approximately his proportionate share of the issuer's current net assets, or the cash equivalent. Because NETS will not be individually redeemable, applicants request an order that would permit the Funds to register as open-end management investment companies and issue NETS that are redeemable in Creation Units only. Applicants state that investors may purchase NETS in Creation Units and redeem Creation Units from each Fund. Applicants state that because Creation Units may always be purchased and redeemed at NAV, the market price of the NETS should not vary substantially from their NAV. Section 22(d) of the Act and Rule 22c-1 Under the Act 4. Section 22(d) of the Act, among other things, prohibits a dealer from selling a redeemable security, which is currently being offered to the public by or through a principal underwriter, except at a current public offering price described in the prospectus. Rule 22c-1 under the Act generally requires that a dealer selling, redeeming or repurchasing a redeemable security do so only at a price based on its NAV. Applicants state that secondary market trading in NETS will take place at negotiated prices, not at a current offering price described in a Fund's Prospectus, and not at a price based on NAV. Thus, purchases and sales of NETS in the secondary market will not comply with section 22(d) of the Act and rule 22c-1 under the Act. Applicants request an exemption under section 6(c) from these provisions. 5. Applicants assert that the concerns sought to be addressed by section 22(d) of the Act and rule 22c-1 under the Act with respect to pricing are equally satisfied by the proposed method of pricing NETS. Applicants maintain that while there is little legislative history regarding section 22(d), its provisions, as well as those of rule 22c-1, appear to have been designed to
(a)prevent dilution caused by certain riskless-trading schemes by principal underwriters and contract dealers,
(b)prevent unjust discrimination or preferential treatment among buyers, and
(c)ensure an orderly distribution of investment company shares by eliminating price competition from dealers offering shares at less than the published sales price and repurchasing shares at more than the published redemption price. 6. Applicants believe that none of these purposes will be thwarted by permitting NETS to trade in the secondary market at negotiated prices. Applicants state that
(a)secondary market trading in NETS does not involve a Fund as a party and will not result in dilution of an investment in NETS, and
(b)to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand. Therefore, applicants assert that secondary market transactions in NETS will not lead to discrimination or preferential treatment among purchasers. Finally, applicants contend that the proposed distribution system will be orderly because competitive forces will ensure that the difference between the market price of NETS and their NAV remains narrow. Section 24(d) of the Act 7. Section 24(d) of the Act provides, in relevant part, that the prospectus delivery exemption provided to dealer transactions by section 4(3) of the Securities Act does not apply to any transaction in a redeemable security issued by an open-end investment company. Applicants seek relief from section 24(d) to permit dealers selling NETS in the secondary markets to rely on the prospectus delivery exemption provided by section 4(3) of the Securities Act. 10 10 Applicants state that they are not seeking relief from the prospectus delivery requirement for non-secondary market transactions, such as transactions in which an investor purchases NETS from the Funds or an underwriter. Applicants further state that each Fund's Prospectus will caution broker-dealers and others that some activities on their part, depending on the circumstances, may result in their being deemed statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act. For example, a broker-dealer firm and/or its client may be deemed a statutory underwriter if it purchases Creation Units from a Fund, breaks them down into the constituent individual NETS, and sells those NETS directly to customers, or if it chooses to couple the creation of a supply of new NETS with an active selling effort involving solicitation of secondary market demand for NETS. Each Fund's Prospectus will state that whether a person is an underwriter depends upon all of the facts and circumstances pertaining to that person's activities. Each Fund's Prospectus will caution dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary market trading transactions), and thus dealing with NETS that are part of an “unsold allotment” within the meaning of section 4(3)(C) of the Securities Act, that they would be unable to take advantage of the prospectus delivery exemption provided by section 4(3) of the Securities Act. 8. Applicants state that NETS are bought and sold in the secondary market in the same manner as closed-end fund shares. Applicants note that transactions in closed-end fund shares are not subject to section 24(d), and thus closed-end fund shares are sold in the secondary market without a prospectus. Applicants contend that NETS likewise merit a reduction in the unnecessary compliance costs and regulatory burdens resulting from the imposition of the prospectus delivery obligations in the secondary market. Because NETS will be listed on an Exchange, prospective investors will have access to information about the product over and above what is normally available about an open-end security. Applicants state that information regarding market price and volume will be continually available on a real time basis throughout the day on brokers' computer screens and other electronic services. The previous day's closing price and volume information for NETS will be published daily in the financial section of newspapers. In addition, a Web site will be maintained that will include each Fund's Prospectus and SAI, the Portfolio Securities and relevant Underlying Index for each Fund, and additional quantitative information that is updated on a daily basis, including the mid-point of the bid-ask spread at the time of the calculation of NAV (“Bid/Ask Price”), 11 the NAV for each Fund, and information about the premiums and discounts at which the NETS have traded. 11 The Bid-Ask Price per individual NETS of a Fund is determined using the highest bid and the lowest offer on the Listing Exchange. 9. Applicants will arrange for broker-dealers selling NETS in the secondary market to provide purchasers with a product description (“Product Description”) that describes, in plain English, the relevant Fund and the NETS it issues. Applicants state that a Product Description is not intended to substitute for a full Prospectus. Applicants state that the Product Description will be tailored to meet the information needs of investors purchasing NETS in the secondary market. Section 22(e) 10. Section 22(e) of the Act generally prohibits a registered investment company from suspending the right of redemption or postponing the date of payment of redemption proceeds for more than seven days after the tender of a security for redemption. Applicants state that settlement of redemptions for the Foreign Funds is contingent not only on the settlement cycle of the United States market, but also on currently practicable delivery cycles in local markets for underlying foreign securities held by the Foreign Funds. Applicants state that local market delivery cycles for transferring Fund Securities to redeeming investors, coupled with local market holiday schedules, will, under certain circumstances, require a delivery process longer than seven calendar days for Foreign Funds. Applicants request relief under section 6(c) of the Act from section 22(e) to allow the Foreign Funds to pay redemption proceeds up to 14 calendar days after the tender of any Creation Units for redemption. Except as disclosed in the relevant Foreign Fund's Prospectus and/or SAI, applicants expect that each Foreign Fund will be able to deliver redemption proceeds within seven days. 12 With respect to future Foreign Funds, applicants seek the same relief from section 22(e) only to the extent that circumstances similar to those described in the application exist. 12 Rule 15c6-1 under the Exchange Act requires that most securities transactions be settled within three business days of the trade. Applicants acknowledge that no relief obtained from the requirements of section 22(e) will affect any obligations applicants may have under rule 15c6-1. 11. Applicants state that section 22(e) was designed to prevent unreasonable, undisclosed and unforeseen delays in the payment of redemption proceeds. Applicants assert that the requested relief will not lead to the problems that section 22(e) was designed to prevent. Applicants state that the SAI will disclose those local holidays (over the period of at least one year following the date of the SAI), if any, that are expected to prevent the delivery of redemption proceeds in seven calendar days, and the maximum number of days needed to deliver the proceeds for the relevant Foreign Fund. Applicants are not seeking relief from section 22(e) with respect to Foreign Funds that do not effect creations and redemptions of Creation Units in-kind. Section 12(d)(1) 12. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a registered investment company from acquiring securities of an investment company if such securities represent more than 3% of the total outstanding voting stock of the acquired company, more than 5% of the total assets of the acquiring company, or, together with the securities of any other investment companies, more than 10% of the total assets of the acquiring company. Section 12(d)(1)(B) of the Act prohibits a registered open-end investment company, its principal underwriter and any other broker-dealer from selling the investment company's shares to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale will cause more than 10% of the acquired company's voting stock to be owned by investment companies generally. 13. Applicants request an exemption to permit management investment companies (“Purchasing Management Companies”) and unit investment trusts (“Purchasing Trusts”) registered under the Act that are not sponsored or advised by the Adviser or any entity controlling, controlled by, or under common control with the Adviser and are not part of the same “group of investment companies,” as defined in section 12(d)(1)(G)(ii) of the Act, as the Trust (collectively, “Purchasing Funds”) to acquire shares of a Fund beyond the limits of section 12(d)(1)(A). Purchasing Funds do not include the Funds. In addition, applicants seek relief to permit a Fund or broker-dealer (“Broker”) that is registered under the Exchange Act to sell NETS to a Purchasing Fund in excess of the limits of section 12(d)(1)(B). 14. Each Purchasing Management Company will be advised by an investment adviser within the meaning of section 2(a)(20)(A) of the Act (the “Purchasing Fund Adviser”) and may be sub-advised by one or more investment advisers within the meaning of section 2(a)(20)(B) of the Act (each a “Purchasing Fund Sub-Adviser”). Any investment adviser to a Purchasing Fund will be registered under the Advisers Act or exempt from registration. Each Purchasing Trust will be sponsored by a sponsor (“Sponsor”). 15. Applicants submit that the proposed conditions to the requested relief adequately address the concerns underlying the limits in section 12(d)(1)(A) and (B), which include concerns about undue influence by a fund of funds over underlying funds, excessive layering of fees and overly complex fund structures. Applicants believe that the requested exemption is consistent with the public interest and the protection of investors. 16. Applicants believe that neither the Purchasing Funds nor a Purchasing Fund Affiliate would be able to exert undue influence over the Funds. 13 To limit the control that a Purchasing Fund may have over a Fund, applicants propose a condition prohibiting a Purchasing Fund Adviser or a Sponsor, any person controlling, controlled by, or under common control with a Purchasing Fund Adviser or Sponsor, and any investment company and any issuer that would be an investment company but for sections 3(c)(1) or 3(c)(7) of the Act that is advised or sponsored by a Purchasing Fund Adviser or Sponsor, or any person controlling, controlled by, or under common control with a Purchasing Fund Adviser or Sponsor (“Purchasing Fund Advisory Group”) from controlling (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. The same prohibition would apply to any Purchasing Fund Sub-Adviser, any person controlling, controlled by or under common control with the Purchasing Fund Sub-Adviser, and any investment company or issuer that would be an investment company but for sections 3(c)(1) or 3(c)(7) of the Act (or portion of such investment company or issuer) advised or sponsored by the Purchasing Fund Sub-Adviser or any person controlling, controlled by or under common control with the Purchasing Fund Sub-Adviser (“Purchasing Fund Sub-Advisory Group”). Applicants propose other conditions to limit the potential for undue influence over the Funds, including that no Purchasing Fund or Purchasing Fund Affiliate (except to the extent it is acting in its capacity as an investment adviser to a Fund) will cause a Fund to purchase a security in any offering of securities during the existence of any underwriting or selling syndicate of which a principal underwriter is an Underwriting Affiliate (“Affiliated Underwriting”). An “Underwriting Affiliate” is a principal underwriter in any underwriting or selling syndicate that is an officer, director, member of an advisory board, Purchasing Fund Adviser, Purchasing Fund Sub-Adviser, employee or Sponsor of a Purchasing Fund, or a person of which any such officer, director, member of an advisory board, Purchasing Fund Adviser, Purchasing Fund Sub-Adviser, employee, or Sponsor is an affiliated person (except that any person whose relationship to the Fund is covered by section 10(f) of the Act is not an Underwriting Affiliate). 13 A “Purchasing Fund Affiliate” is a Purchasing Fund Adviser, Purchasing Fund Sub-Adviser, Sponsor, promoter, and principal underwriter of a Purchasing Fund, and any person controlling, controlled by, or under common control with any of those entities. A “Fund Affiliate” is an investment adviser, promoter, or principal underwriter of a Fund and any person controlling, controlled by or under common control with any of these entities. 17. Applicants assert that the proposed conditions address any concerns regarding excessive layering of fees. The board of directors or trustees of any Purchasing Management Company, including a majority of the directors or trustees who are not “interested persons” within the meaning of section 2(a)(19) of the Act (“disinterested directors or trustees”), will find that the advisory fees charged to the Purchasing Management Company are based on services provided that will be in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Fund in which the Purchasing Management Company may invest. In addition, except as provided in condition 12, a Purchasing Fund Adviser or a trustee (“Trustee”) or Sponsor of a Purchasing Trust will, as applicable, waive fees otherwise payable to it by the Purchasing Fund in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by a Fund under rule 12b-1 under the Act) received by the Purchasing Fund Adviser or Trustee or Sponsor or an affiliated person of the Purchasing Fund Adviser, Trustee or Sponsor, from the Funds in connection with the investment by the Purchasing Fund in the Fund. Applicants state that any sales loads or service fees charged with respect to shares of a Purchasing Fund will not exceed the limits applicable to a fund of funds set forth in Conduct Rule 2830 of the National Association of Securities Dealers (“NASD”). 18. Applicants submit that the proposed arrangement will not create an overly complex fund structure. Applicants note that no Fund may acquire securities of any investment company or company relying on sections 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act. To ensure that Purchasing Funds comply with the terms and conditions of the requested relief from section 12(d)(1), any Purchasing Fund that intends to invest in a Fund in reliance on the requested order will enter into a Purchasing Fund Agreement between the Fund and the Purchasing Fund requiring the Purchasing Fund to adhere to the terms and conditions of the requested order. The Purchasing Fund Agreement also will include an acknowledgement from the Purchasing Fund that it may rely on the requested order only to invest in the Funds and not in any other investment company. The Purchasing Fund Agreement will further require any Purchasing Fund that exceeds the 5% or 10% limitations in section 12(d)(1)(A)(ii) and
(iii)to disclose in its prospectus that it may invest in the Funds, and to disclose, in “plain English,” in its prospectus the unique characteristics of the Purchasing Funds investing in the Funds, including but not limited to the expense structure and any additional expenses of investing in the Funds. 19. Applicants also note that a Fund may choose to reject a direct purchase of NETS in Creation Units by a Purchasing Fund. To the extent that a Purchasing Fund purchases NETS in the secondary market, a Fund would still retain its ability to reject initial purchases of NETS made in reliance on the requested order by declining to enter into the Purchasing Fund Agreement prior to any investment by a Purchasing Fund in excess of the limits of section 12(d)(1)(A). Sections 17(a)(1) and
(2)of the Act 20. Section 17(a) of the Act generally prohibits an affiliated person of a registered investment company, or an affiliated person of such a person (“Second-Tier Affiliate”), from selling any security to or purchasing any security from the company. Section 2(a)(3) of the Act defines “affiliated person” to include
(a)any person directly or indirectly owning, controlling or holding with power to vote 5% or more of the outstanding voting securities of the other person,
(b)any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with the power to vote by the other person, and
(c)any person directly or indirectly controlling, controlled by or under common control with the other person. Section 2(a)(9) of the Act provides that a control relationship will be presumed where one person owns more than 25% of another person's voting securities. 21. Applicants request an exemption from section 17(a) of the Act pursuant to sections 17(b) and 6(c) of the Act to permit persons to effectuate in-kind purchases and redemptions with a Fund when they are affiliated persons of the Fund or Second-Tier Affiliates solely by virtue of one or more of the following:
(a)Holding 5% or more, or in excess of 25%, of the outstanding NETS of one or more Funds;
(b)having an affiliation with a person with an ownership interest described in (a); or
(c)holding 5% or more, or more than 25%, of the shares of one or more other registered investment companies (or series thereof) advised by the Adviser. 22. Applicants assert that no useful purpose would be served by prohibiting these types of affiliated persons from purchasing or redeeming Creation Units through “in-kind” transactions. The deposit procedures for both in-kind purchases and in-kind redemptions of Creation Units will be the same for all purchases and redemptions. Deposit Securities and Fund Securities will be valued in the same manner as Portfolio Securities. Therefore, applicants state that in-kind purchases and redemptions will afford no opportunity for the specified affiliated persons, or Second-Tier Affiliates, of a Fund to effect a transaction detrimental to other holders of NETS. Applicants also believe that in-kind purchases and redemptions will not result in self-dealing or overreaching of the Fund. 23. Applicants also seek relief from section 17(a) to permit a Fund that is an affiliated person of a Purchasing Fund because the Purchasing Fund holds 5% or more of the NETS of the Fund to sell its NETS to and redeem its NETS from a Purchasing Fund, and to engage in the accompanying in-kind transactions with the Purchasing Fund. 14 Applicants state that the terms of the transactions are fair and reasonable and do not involve overreaching. Applicants note that any consideration paid by a Purchasing Fund for the purchase of redemption of NETS directly from a Fund will be based on the NAV of the Fund. 15 Applicants believe that any proposed transactions directly between the Funds and Purchasing Funds will be consistent with the policies of each Purchasing Fund. The purchase of Creation Units by a Purchasing Fund directly from a Fund will be accomplished in accordance with the investment restrictions of any such Purchasing Fund and will be consistent with the investment policies set forth in the Purchasing Fund's registration statement. The Purchasing Fund Agreement will require any Purchasing Fund that purchases Creation Units directly from a Fund to represent that the purchase of Creation Units from a Fund by a Purchasing Fund will be accomplished in compliance with the investment restrictions of the Purchasing Fund and will be consistent with the investment policies set forth in the Purchasing Fund's registration statement. 14 Applicants acknowledge that receipt of compensation by
(a)an affiliated person of a Purchasing Fund, or an affiliated person of such person, for the purchase by the Purchasing Fund of NETS of a Fund or
(b)an affiliated person of a Fund, or an affiliated person of such person, for the sale by the Fund of its NETS to a Purchasing Fund may be prohibited by section 17(e)(1) of the Act. The Purchasing Fund Agreement also will include this acknowledgment. 15 Applicants believe that a Purchasing Fund will purchase NETS in the secondary market and will not purchase or redeem Creation Units directly from a Fund. Nonetheless, a Purchasing Fund that owns 5% or more of a Fund could seek to transact in Creation Units directly with a Fund pursuant to the section 17(a) relief requested. Applicants' Conditions Applicants agree that any order of granting the requested relief will be subject to the following conditions: 1. As long as the Funds operate in reliance on the requested order, the NETS will be listed on an Exchange. 2. Neither the Trust nor any Fund will be advertised or marketed as an open-end investment company or a mutual fund. Each Fund's Prospectus will prominently disclose that NETS are not individually redeemable shares and will disclose that the owners of NETS may acquire those NETS from the Fund and tender those NETS for redemption to the Fund in Creation Units only. Any advertising material that describes the purchase or sale of Creation Units or refers to redeemability will prominently disclose that NETS are not individually redeemable, and that owners of NETS may acquire those NETS from the Fund and tender those NETS for redemption to the Fund in Creation Units only. 3. The Web site maintained for each Fund, which will be publicly accessible at no charge, will contain the following information, on a per individual NETS basis, for each Fund:
(a)The prior Business Day's NAV and the Bid/Ask Price, and a calculation of the premium or discount of the Bid/Ask Price at the time of calculation of the NAV against such NAV; and
(b)data in chart format displaying the frequency distribution of discounts and premiums of the daily Bid/Ask Price against the NAV, within appropriate ranges, for each of the four previous calendar quarters. In addition, the Product Description for each Fund will state that the Web site for the Fund has information about the premiums and discounts at which the NETS have traded. 4. The Prospectus and annual report for each Fund also will include:
(a)The information listed in condition 3(b),
(i)in the case of the Fund's Prospectus, for the most recently completed year (and the most recently completed quarter or quarters, as applicable) and
(ii)in the case of the annual report, for the immediately preceding five years, as applicable; and
(b)the following data, calculated on a per individual NETS basis for one, five and ten year periods (or life of the Fund):
(i)The cumulative total return and the average annual total return based on NAV and Bid/Ask Price, and
(ii)the cumulative total return of the relevant Underlying Index. 5. Before a Fund may rely on the order, the Commission will have approved, pursuant to rule 19b-4 under the Exchange Act, an Exchange rule requiring Exchange members and member organizations effecting transactions in NETS to deliver a Product Description to purchasers of NETS. 6. Each Fund's Prospectus and Product Description will clearly disclose that, for purposes of the Act, NETS are issued by the Fund, which is a registered investment company, and that the acquisition of NETS by investment companies is subject to the restrictions of section 12(d)(1) of the Act, except as permitted by an exemptive order that permits registered investment companies to invest in a Fund beyond the limits in section 12(d)(1), subject to certain terms and conditions, including that the registered investment company enter into a Purchasing Fund Agreement with the Fund regarding the terms of the investment. 7. The members of a Purchasing Fund's Advisory Group will not control (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. The members of a Purchasing Fund's Sub-Advisory Group will not control (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. If, as a result of a decrease in the outstanding NETS of a Fund, a Purchasing Fund's Advisory Group or a Purchasing Fund's Sub-Advisory Group, each in the aggregate, becomes a holder of more than 25% of the outstanding NETS of a Fund, it will vote its NETS in the same proportion as the vote of all other holders of the NETS. This condition does not apply to the Purchasing Fund's Sub-Advisory Group with respect to a Fund for which the Purchasing Fund's Sub-Adviser or a person controlling, controlled by, or under common control with the Purchasing Fund Sub-Adviser acts as the investment adviser within the meaning of section 2(a)(20)(A) of the Act. 8. No Purchasing Fund or Purchasing Fund Affiliate will cause any existing or potential investment by the Purchasing Fund in a Fund to influence the terms of any services or transactions between the Purchasing Fund or Purchasing Fund Affiliate and the Fund or a Fund Affiliate. 9. The board of directors or trustees of a Purchasing Management Company, including a majority of the disinterested directors or trustees, will adopt procedures reasonably designed to ensure that the Purchasing Fund Adviser and Purchasing Fund Sub-Adviser are conducting the investment program of the Purchasing Management Company without taking into account any consideration received by the Purchasing Management Company or a Purchasing Fund Affiliate from a Fund or a Fund Affiliate in connection with any services or transactions. 10. No Purchasing Fund or Purchasing Fund Affiliate (except to the extent it is acting in its capacity as an investment adviser to a Fund) will cause a Fund to purchase a security in any Affiliated Underwriting. 11. Before investing in the NETS of a Fund in excess of the limits in section 12(d)(1)(A), each Purchasing Fund and the Fund will execute a Purchasing Fund Agreement stating, without limitation, that their boards of directors or trustees and their investment advisers or Sponsors or Trustees, as applicable, understand the terms and conditions of the order, and agree to fulfill their responsibilities under the order. At the time of its investment in NETS of a Fund in excess of the limit in section 12(d)(1)(A)(i), a Purchasing Fund will notify such Fund of the investment. At such time, the Purchasing Fund will also transmit to the Fund a list of names of each Purchasing Fund Affiliate and Underwriting Affiliate. The Purchasing Fund will notify the Fund of any changes to the list of names as soon as reasonably practicable after a change occurs. The relevant Fund and the Purchasing Fund will maintain and preserve a copy of the order, the Purchasing Fund Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place. 12. The Purchasing Fund Adviser, Trustee or Sponsor, as applicable, will waive fees otherwise payable to it by the Purchasing Fund in an amount at least equal to any compensation (including fees received under any plan adopted by a Fund under rule 12b-1 under the Act) received from a Fund by the Purchasing Fund Adviser, Trustee or Sponsor, or an affiliated person of the Purchasing Fund Adviser, Trustee or Sponsor, other than any advisory fees paid to the Purchasing Fund Adviser, Trustee or Sponsor, or its affiliated person by a Fund, in connection with the investment by the Purchasing Fund in the Fund. Any Purchasing Fund Sub-Adviser will waive fees otherwise payable to the Purchasing Fund Sub-Adviser, directly or indirectly, by the Purchasing Management Company in an amount at least equal to any compensation received from a Fund by the Purchasing Fund Sub-Adviser, or an affiliated person of the Purchasing Fund Sub-Adviser, other than any advisory fees paid to the Purchasing Fund Sub-Adviser or its affiliated person by the Fund, in connection with any investment by the Purchasing Management Company in a Fund made at the direction of the Purchasing Fund Sub-Adviser. In the event that the Purchasing Fund Sub-Adviser waives fees, the benefit of the waiver will be passed through to the Purchasing Management Company. 13. Any sales charges and/or service fees charged with respect to shares of a Purchasing Fund will not exceed the limits applicable to a fund of funds as set forth in NASD Conduct Rule 2830. 14. Once an investment by a Purchasing Fund in the securities of a Fund exceeds the limit in section 12(d)(1)(A)(i) of the Act, the board of directors or trustees of a Fund (“Board”), including a majority of the directors or trustees that are not “interested persons” within the meaning of section 2(a)(19) of the Act (“disinterested Board members”), will determine that any consideration paid by the Fund to a Purchasing Fund or Purchasing Fund Affiliate in connection with any services or transactions:
(a)Is fair and reasonable in relation to the nature and quality of the services and benefits received by the Fund;
(b)is within the range of consideration that the Fund would be required to pay to another unaffiliated entity in connection with the same services or transactions; and
(c)does not involve overreaching on the part of any person concerned. This condition does not apply with respect to any services or transactions between a Fund and its investment adviser(s), or any person controlling, controlled by, or under common control with such investment adviser(s). 15. The Board, including a majority of the disinterested Board members, will adopt procedures reasonably designed to monitor any purchases of securities by a Fund in an Affiliated Underwriting once an investment by the Purchasing Fund in the securities of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Purchasing Fund in a Fund. The Board will consider, among other things:
(a)Whether the purchases were consistent with the investment objectives and policies of the Fund;
(b)how the performance of securities purchased in an Affiliated Underwriting compares to the performances of comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index; and
(c)whether the amount of securities purchased by a Fund in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interests of shareholders of the Fund. 16. Each Fund will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in Affiliated Underwritings, once an investment by a Purchasing Fund in the NETS of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth from whom the securities were acquired, the identity of the underwriting syndicate's members, the terms of the purchase, and the information or materials upon which the Board's determinations were made. 17. Before approving any advisory contract under section 15 of the Act, the board of directors or trustees of each Purchasing Management Company, including a majority of the disinterested directors or trustees, will find that the advisory fees charged under such contract are based on services provided that will be in addition to, rather than duplicative of, the services provided under the advisory contract(s) of any Fund in which the Purchasing Management Company may invest. These findings and their basis will be recorded fully in the minute books of the appropriate Purchasing Management Company. 18. No Fund will acquire securities of any investment company or companies relying on sections 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act. For the Commission, by the Division of Investment Management, under delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E8-3781 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57373; File No. SR-Amex-2008-09] Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing of Proposed Rule Change, and Amendment No. 1 Thereto, Relating to Options Linkage Fees February 22, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on February 8, 2008, 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 Amex. On February 19, 2008, Amex submitted Amendment No. 1 to the proposed rule change. 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 Amex proposes to clarify the application of options transaction fees for trades executed through the intermarket options linkage (the “Options Linkage”) on the Exchange. The text of the proposed rule change is available at Amex, the Commission's Public Reference Room, and *http://www.amex.com.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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. 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 The Amex proposes to clarify the application of options transaction fees for trades executed through the Options Linkage on the Exchange. Currently, the Amex Options Fee Schedule (the “Options Fee Schedule”) provides that, under the Linkage Fee Pilot Program that is effective through July 31, 2008, the fees applicable to specialists, registered options traders, and market maker apply to members of other options exchanges (“Non-Member Market Makers”) executing Linkage transactions except for Satisfaction Orders. As a result, the fees for Principal Orders (“P Orders”) and Principal Acting As Agent Orders (“P/A Orders”) (collectively, “Linkage Orders”) submitted through the Options Linkage are:
(i)$0.10 per contract side options transaction fee for equity options, exchange traded fund share (“ETF”) options, QQQQ options and trust issued receipt options;
(ii)$0.21 per contract side options transaction fee for index options (including MNX and NDX options);
(iii)$0.05 per contract side options comparison fee;
(iv)$0.05 per contract side options floor brokerage fee; and
(v)an options licensing fee for certain ETF and index option products ranging from $0.15 per contract side to $0.05 per contract side depending on the particular ETF or index option. 3 3 *See* Options Fee Schedule section of the Amex Price List available at *http://www.amex.com. See also* Securities Exchange Act Release No. 56102 (July 19, 2007), 72 FR 40908 (July 25, 2007) (SR-Amex-2007-64). However, the Options Fee Schedule also provides that broker-dealer orders that are automatically executed on the Exchange are subject to Broker-Dealer Auto-Ex Fees (“BD Auto-Ex Fee”) that include:
(i)$0.50 per contract side options transaction fee for equity options, ETF options, QQQQ options and trust issued receipt options;
(ii)$0.05 per contract side options comparison fee; and
(iii)$0.05 per contract side options floor brokerage fee. 4 Broker-dealer orders that are subject to the BD Auto-Ex Fee include specialist orders, registered options trader orders, Non-Member Market Maker orders, and orders for the account of registered broker-dealers. The Exchange charges this fee to member firms through customary monthly billing. The BD Auto-Ex Fee was implemented prior to the introduction and roll-out of the Options Linkage which commenced on January 31, 2003 in two phases. The entire roll-out of the Options Linkage was completed by July 2003. 4 *See* Securities Exchange Act Release No. 47216 (January 17, 2003), 68 FR 5059 (January 31, 2003) (SR-Amex-2002-114). The Exchange in this proposal seeks to clarify the Options Fee Schedule to make clear that automatically executed Linkage Orders will be charged the BD Auto-Ex Fee that includes:
(i)$0.50 per contract side options transaction fee;
(ii)$0.05 per contract side options comparison fee; and
(iii)$0.05 per contract side options floor brokerage fee. Accordingly, the total transaction fee would be $0.60 per contract side. In contrast to the initial period of time when the Options Linkage was introduced, most Linkage Orders on the Exchange are automatically executed via the ANTE platform. The Exchange acknowledges that the current Options Fee Schedule does not clearly reflect the fact that for automatically executed Linkage Orders, the BD Auto-Ex Fee would apply. However, a specialist or registered options trader on the Exchange would be subject to the BD Auto-Ex Fee in those circumstances that such specialist or registered options trader submitted an order electronically through order-entry lines, such as CMS and/or FIX, for automatic execution. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act 5 in general and Section 6(b)(4) 6 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. The Exchange submits that the proposal clarifies that automatically executed orders in ANTE, whether Linkage Orders or non-Linkage Orders on the behalf of broker-dealers, are subject to the BD Auto-Ex Fee set forth in the Options Fee Schedule. Accordingly, the Exchange asserts that the proposed clarification relating to Options Linkage Order transaction charges is an equitable allocation of reasonable fees among Exchange members. 5 15 U.S.C. 78f. 6 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will: A. By order approve such proposed rule change, or B. Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-Amex-2008-09 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-2008-09. 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 also will be available for inspection and copying at the principal office of Amex. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Amex-2008-09 and should be submitted on or before March 20, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E8-3735 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57357; File No. SR-CBOE-2008-14] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change To Establish a Solicitation Auction Mechanism and To Amend Its Automated Improvement Mechanism February 20, 2008. 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 February 7, 2008, 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 CBOE proposes to establish a new automated mechanism for auctioning larger-sized orders and to modify its existing automated improvement mechanism (“AIM”) to permit its use for the execution of complex orders. The text of the proposed rule change is available on the Exchange's Web site at ( *http://www.cboe.org/Legal* ), at the Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the 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 Under CBOE Rules 6.45A, *Priority and Allocation of Equity Option Trades on the CBOE Hybrid System,* and 6.45B, *Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System,* order entry firms that electronically enter orders are required to expose an unsolicited agency order (“Agency Order”) for at least 3 seconds before crossing it against an order that it has solicited from other broker-dealers. 3 Currently, an order entry firm can comply with this requirement by entering the Agency Order on the Exchange, waiting 3 seconds, and then entering the solicited order. The Exchange states that, due to the 3-second exposure requirement, order entry firms have no level of assurance that they will be able to electronically pair solicited orders against Agency Orders for executions. As an alternative, CBOE has developed AIM, which permits an Agency Order to be electronically executed against principal or solicited interest. 4 3 *See* CBOE Rule 6.45A.02 and 6.45B.02. 4 *See* CBOE Rule 6.74A, *Automated Improvement Mechanism (“AIM”).* To better compete with various other electronic alternatives available at other options exchanges, CBOE has also developed an enhanced auction mechanism for larger-sized simple and complex Agency Orders that are to be executed against solicited orders (the “Auction”). The proposed rule change would implement this functionality in options classes designated by the Exchange. Such orders would be required to be for at least 500 contracts, must be entered as all-or-none limit (“AON”) orders, 5 and would be executed only if the price is at or better than the CBOE best bid or offer (“BBO”). 5 The Exchange's existing rules provide that an AON order may be crossed with another AON order if all bids or offers at the same price at which the cross is to be effected have been filled. *See, e.g.* , Interpretation and Policy .01 to CBOE Rule 6.44, *Bids and Offers in Relation to Units of Trading.* The proposed Auction system is modeled after this principle, except that it would allow the crossing of large-sized AON orders to take place so long as there are no public customer orders at the proposed price and there is insufficient size at an improved price to accommodate the Agency Order. When a proposed solicited cross is entered into the Auction, the Exchange would send a Request for Responses (“RFR”) message to all members that have elected to receive such messages. Members would then have 3 seconds to respond with a price that would improve the proposed execution price for the Agency Order, except that responses would not be entered for the account of an options market maker from another options exchange. Responses may be entered and executed at prices that are in a multiple of the applicable minimum price increment that has been designated by the Exchange for the series, which increment may not be less than $0.01. The Exchange believes this would allow for greater flexibility in pricing large-sized orders and provide for a greater opportunity for price improvement. The Auction will conclude at the sooner of various conditions. 6 At the conclusion of the Auction, the Agency Order would be executed against the solicited order unless there is sufficient size to execute the entire Agency Order at a price (or prices) that improves the proposed crossing price. In the case where there is one or more public customer orders resting in the book at the proposed execution price on the opposite side of the Agency Order, the solicited order would be cancelled and the Agency Order would be executed against other bids (offers) if there is sufficient size at the bid (offer) to execute the entire size of the Agency Order (size would be measured considering resting orders and quotes and responses). 7 If there is not sufficient size to execute the entire Agency Order, the proposed cross would not be executed and both the Agency Order and solicited order would be cancelled. Additionally, the proposed cross would not be executed and both the Agency Order and solicited order would be cancelled if the execution price would be inferior to the BBO. 6 The Auction shall conclude at the sooner of:
(i)*The* end of the response period,
(ii)upon receipt by the Hybrid Trading System (“Hybrid”) of an unrelated order (in the same series as the Agency Order) that is marketable against either the Exchange's disseminated quote (when such quote is the NBBO) or the responses,
(iii)upon receipt by Hybrid of an unrelated limit order (in the same series as the Agency Order and on the opposite side of the market as the Agency Order) that improves any response,
(iv)any time a response matches the Exchange's disseminated quote on the opposite side of the market from the responses, or
(v)any time there is a quote lock on the Exchange pursuant to CBOE Rule 6.45A(d) or 6.45B(d). *See* paragraph (b)(2) of proposed CBOE Rule 6.74B, *Solicitation Auction Mechanism.* 7 When the Agency Order is executed at an improved price(s) or at the proposed execution price against electronic orders, quotes and responses, priority would be pursuant to the allocation algorithm in effect pursuant to CBOE Rule 6.45A or 6.45B, as applicable. The allocation for simple and complex orders would be the same, except that complex orders would also be subject to the complex order priority rules applicable to bids and offers in the individual series legs of a complex order contained in paragraphs
(d)or .06 of CBOE Rule 6.53C, *Complex Orders on the Hybrid System,* as applicable. The proposed rule would also require members to deliver to customers a written document describing the terms and conditions of the Auction mechanism prior to executing Agency Orders using the Auction mechanism. Such written document would be required to be in a form approved by the Exchange. The proposed rule would also specify that members may not use the Auction mechanism to circumvent the Exchange's rules limiting principal order transactions. 8 Additionally, the Exchange notes that for purposes of paragraph
(e)to CBOE Rule 6.9, *Solicited Transactions* , which paragraph prohibits anticipatory hedging activities prior to the entry of an order on the Exchange, the terms of an order would be considered “disclosed” to the trading crowd on the Exchange when the order is entered into the Auction mechanism. 8 *See* CBOE Rules 6.45A.01, 6.45B.01, 6.74, *Crossing Orders,* and 6.74A. Finally, the Exchange is proposing to expand its existing AIM auction, which currently only applies to simple orders, to cover complex orders. Thus, complex orders would be eligible for execution through AIM at a net debit or net credit price provided the Auction eligibility requirements of the AIM rule are satisfied and the Agency Order is eligible for AIM considering its complex order type, order origin code ( *i.e.* , non-broker-dealer public customer, broker-dealers that are not Market-Makers or specialists on an options exchange, and/or Market-Makers or specialists on an options exchange), class, and marketability as determined by the Exchange. Allocation of complex orders that are subject to AIM will be the same as the existing allocation procedures, provided that the complex order priority rules applicable to bids and offers in the individual series legs of a complex order contained in CBOE Rule 6.53C(d) or 6.53C.06, as applicable, will continue to apply. In addition, the Exchange is proposing to provide in its rules that it may determine on a class-by-class basis that orders of 500 or more contracts may be executed through AIM without considering prices that might be available on other options exchanges. All other aspects of the AIM auction will continue to apply unchanged. 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, promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. 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 does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the Exchange consents, the Commission will:
(A)by order approve such proposed rule change, or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 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-2008-14 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2008-14. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference 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-2008-14 and should be submitted on or before March 20, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E8-3729 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57365; File No. SR-CBOE-2007-109] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Adopting Generic Listing Standards for Exchange-Traded Funds Based on International or Global Indexes or Portfolios, or Indexes or Portfolios Described in Exchange Rules Previously Approved by the Commission as Underlying Benchmarks for Derivative Securities February 21, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on September 10, 2007, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) 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 February 19, 2008, CBOE filed Amendment No. 1 to the proposed rule change. This order provides notice of the proposal, as amended, and approves the proposal 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 Exchange proposes to revise its listing standards, adopted pursuant to Rule 19b-4(e) under the Act, in CBOE Rules 31.5(L) and 31.5(M) to include generic listing standards for Index Portfolio Receipts (“IPRs”) and Index Portfolio Shares (“IPSs,” together with IPRs, referred to herein with as “exchange-traded funds” or “ETFs”) that are based on international or global indexes or portfolios, or on indexes or portfolios described in exchange rules that have been previously approved by the Commission for the trading of ETFs or other specified index-based securities. The text of the proposed rule change is available from the Exchange's Web site ( *http://www.cboe.org/Legal* ), at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item 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 The Exchange proposes to list and trade ETFs pursuant to Rule 19b-4(e) under the Act 3 if each of the conditions set forth in CBOE Rules 31.5(L) or
(M)is satisfied. Rule 19b-4(e) provides that the listing and trading of a new derivative securities product by a self-regulatory organization (“SRO”) shall not be deemed a proposed rule change, pursuant to paragraph (c)(1) of Rule 19b-4, if the Commission has approved, pursuant to Section 19(b) of the Act, the SRO's trading rules, procedures, and listing standards for the product class that would include the new derivatives securities product, and the SRO has a surveillance program for the product class. 4 This proposed rule change is based on SR-Phlx-2007-20, which was approved by the Commission on July 11, 2007. 5 3 17 CFR 240.19b-4(e). 4 When relying on Rule 19b-4(e), the SRO must submit Form 19b-4(e) to the Commission within five business days after the exchange begins trading the new derivative securities products. *See* 17 CFR 240.19b-4(e)(2)(ii). 5 *See* Securities Exchange Act Release No. 56049 (July 11, 2007), 72 FR 39121 (July 17, 2007) (SR-Phlx-2007-20). a. Background CBOE Rules 31.5(L) and
(M)provide standards for listing Index Portfolio Receipts and Index Portfolio Shares, respectively, on CBOE. An Index Portfolio Receipt is a security that represent an interest in a unit investment trust that holds securities that comprise a stock index on which a series of IPR is based. 6 An Index Portfolio Share is a security that is issued by an open-end management investment company and based on a portfolio of stocks or fixed income securities designed to provide investment results that correspond generally to the price and yield performance of a specified foreign or domestic stock index or fixed income securities index. 7 Pursuant to CBOE Rule 1.1.02, IPRs must be issued in a specified aggregate minimum number in return for a deposit of specified numbers of shares of stock plus a cash amount. Pursuant to CBOE Rule 1.1.03, IPSs must be issued in a specified aggregate minimum number in return for a deposit of specified numbers of shares of stock and/or a cash amount, or a specified portfolio of fixed income securities and/or a cash amount, with a value equal to the next determined net asset value (“NAV”). When aggregated in the same specified minimum number, the ETFs must be redeemable by the issuer for stock and/or cash, with a value equal to the next determined NAV. The NAV is calculated once a day after the close of the regular trading day. 6 The complete definition of IPRs is set forth in CBOE Rule 1.1.02. 7 The complete definition of IPSs is set forth in CBOE Rule 1.1.03. To meet the investment objective of providing investment returns that correspond to the price and the dividend and yield performance of the underlying index, an ETF may use a “replication” strategy or a “representative sampling” strategy with respect to the ETF portfolio. 8 An ETF using a replication strategy will invest in each stock of the underlying index in about the same proportion as that stock is represented in the index itself. An ETF using a representative sampling strategy will generally invest in a significant number, but not all of the component securities of the underlying index, and will hold stocks that, in the aggregate, are intended to approximate the full index in terms of key characteristics, such as price/earnings ratio, earnings growth, and dividend yield. 8 In either case, an ETF, by its terms, may be considered invested in the securities of the underlying index to the extent the ETF invests in sponsored American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), or European Depositary Receipts (“EDRs”) that trade on exchanges with last-sale reporting representing securities in the underlying index. In addition, an ETF portfolio may be adjusted in accordance with changes in the composition of the underlying index or to maintain compliance with requirements applicable to a regulated investment company under the Internal Revenue Code (“IRC”). b. Generic Listing Standards For Exchange-Traded Funds The Commission has previously approved generic listing standards for ETFs based on indexes that consist of stocks listed on U.S. exchanges. 9 In general, the proposed criteria for the underlying component securities in the international and global indexes are similar to those for the domestic indexes, but with modifications for the issues and risks associated with non-U.S. securities. 9 *See* , *e.g.* , Securities Exchange Act Release No. 44046 (March 7, 2001), 66 FR 15152 (March 15, 2001) (SR-CBOE-00-51); Securities Exchange Act Release No. 45178 (December 20, 2001), 66 FR 67610 (December 31, 2001) (SR-Phlx-00-68); Securities Exchange Act Release No. 43912 (January 31, 2001), 66 FR 9401 (February 7, 2001) (SR-Phlx-00-91). In addition, the Commission has previously approved generic listing standards of exchanges governing the listing and trading of ETFs based on indexes or portfolios composed of Non-U.S. Component Stocks, as well as indexes or portfolios based on both non-U.S. Component Stocks and U.S. Component Stocks. 10 10 *See* Securities Exchange Act Release No. 55621 (April 12, 2007), 72 FR 19571 (April 18, 2007) (SR-NYSEArca-2006-86); Securities Exchange Act Release No. 55269 (February 9, 2007), 72 FR 7490 (February 15, 2007) (SR-NASDAQ-2006-50); Securities Exchange Act Release No. 55113 (January 17, 2007), 72 FR 3179 (SR-NYSE-2006-101). The Commission has also approved generic listing standards for index-based derivative securities products based on indexes or portfolios described in exchange rules that have been previously approved by the Commission under Section 19(b)(2) of the Act for the trading of other index-based securities on the condition that all of the standards set forth in those orders, including surveillance sharing agreements, continue to be satisfied. 11 11 *See* , *e.g.* , Securities Exchange Act Release No. 51563 (April 15, 2005) 70 FR 21257 (April 25, 2005) (SR-Amex-2005-001); Securities Exchange Act Release No. 52204 (August 3, 2005), 70 FR 46559 (August 10, 2005) (SR-PCX-2005-63). The Exchange believes that adopting generic listing standards and applying Rule 19b-4(e) should fulfill the intended objective of that rule by allowing those ETFs that satisfy the proposed generic listing standards to commence trading, without the need for a public comment period and Commission approval. The proposed rules have the potential to reduce the time frame for bringing ETFs to market, thereby reducing the burdens on issuers and other market participants. The failure of a particular ETF to comply with the proposed generic listing standards under Rule 19b-4(e) would not, however, preclude the Exchange from submitting a separate filing pursuant to Section 19(b)(2) requesting Commission approval to list and trade a particular ETF. c. Proposed Requirements for Listing and Trading ETFs Based on International and Global Indexes or Portfolios ETFs listed pursuant to the proposed generic listing standards or that are traded pursuant to UTP would be traded, in all other respects, under the Exchange's existing trading rules and procedures that apply to ETFs and would be covered under the Exchange's surveillance program for ETFs. 12 12 *See* proposed CBOE Rules 31.5(L).01(g) and (M).01(g). To list an ETF pursuant to the proposed generic listing standards for an international or global index or portfolio, the index or portfolio would have to satisfy all the conditions contained in proposed CBOE Rules 31.5(L).01(a)(2) or 31.5(M).01(a)(2). As with the existing generic standards for ETFs based on domestic indexes or portfolios, these generic listing standards are intended to ensure that stocks with substantial market capitalization and trading volume account for a substantial portion of the weight of the index or portfolio. While the standards in this proposal are based on the standards contained in the current generic listing standards for ETFs based on domestic indexes or portfolios, they have been adapted as appropriate to apply to international and global indexes or portfolios. As proposed, CBOE 31.5(L)(e) and 31.5(M)(c) would provide definitions of the terms U.S. Component Stock and Non-U.S. Component Stock. These new definitions would provide the basis for the standards for indexes or portfolios with either domestic or international stocks, or a combination of both. A “Non-U.S. Component Stock” would mean an equity security that is not registered under Section 12(b) or 12(g) of the Act, 13 and that is issued by an entity that
(1)is not organized, domiciled, or incorporated in the United States; and
(2)is an operating company (including a real estate investment trust or income trust, but excluding an investment trust, unit trust, mutual fund, or derivative). This definition is designed to create a category of component stocks that are issued by companies that are not based in the United States, are not subject to oversight through Commission registration, and would include sponsored GDRs and EDRs. A “U.S. Component Stock” would mean an equity security that is registered under Section 12(b) or 12(g) of the Act or an ADR the underlying equity security of which is registered under Section 12(b) or 12(g) of the Act. An ADR with an underlying equity security that is registered pursuant to the Act is considered a U.S. Component Stock because the issuer of that security is subject to Commission jurisdiction and must comply with Commission rules. 13 15 U.S.C. 78 *l*
(b)or (g). The Exchange proposes that, to list an IPR or IPS based on an international or global index or portfolio pursuant to the generic listing standards, such index or portfolio must meet the following criteria: • Component stocks that in the aggregate account for at least 90% of the weight of the index or portfolio each must have a minimum market value of at least $100 million (proposed CBOE Rules 31.5(L).01(a)(2)(A) and 31.5(M).01(a)(2)(A)); • Component stocks representing at least 90% of the weight of the index or portfolio each must have a minimum worldwide monthly trading volume during each of the last six months of at least 250,000 shares (proposed CBOE Rules 31.5(L).01(a)(2)(B) and 31.5(M).01(a)(2)(B)); • The most heavily weighted component stock may not exceed 25% of the weight of the index or portfolio and the five most heavily weighted component stocks may not exceed 60% of the weight of the index or portfolio (proposed CBOE Rules 31.5(L).01(a)(2)(C) and 31.5(M).01(a)(2)(C)); • The index or portfolio shall include a minimum of 20 component stocks (proposed CBOE Rules 31.5(L).01(a)(2)(D) and 31.5(M).01(a)(2)(D)); and • Each U.S. Component Stock must be listed on a national securities exchange and an NMS stock as defined in Rule 600 of Regulation NMS under the Act, and each Non-U.S. Component Stock must be listed on an exchange that has last-sale reporting (proposed CBOE Rules 31.5(L).01(a)(2)(E) and 31.5(M).01(a)(2)(E)). The Exchange believes that these proposed standards are reasonable for international and global indexes or portfolios, and, when applied in conjunction with the other listing requirements, would result in the listing and trading of ETFs that are sufficiently broad-based in scope and not readily susceptible to manipulation. The Exchange also believes that the proposed standards would result in ETFs that are adequately diversified in weighting for any single security or small group of securities to significantly reduce concerns that trading in an ETF based on an international or global index could become a surrogate for the trading in of securities not registered in the United States. The Exchange further notes that, while these standards are similar to those for indexes or portfolios that include only U.S. Component Stocks, they differ in certain important respects and are generally more restrictive, reflecting greater concerns over portfolio diversification with respect to ETFs investing in components that are not individually registered with the Commission. First, in the proposed standards, component stocks that in the aggregate account for at least 90% of the weight of the index or portfolio each shall have a minimum market value of at least $100 million, compared to a minimum market value of at least $75 million for indexes or portfolios with only U.S. Component Stocks. (Market value is calculated by multiplying the total shares outstanding by the price per share of the component stock.) Second, in the proposed standards, the most heavily weighted component stock cannot exceed 25% of the weight of the index or portfolio, in contrast to a proposed 30% standard for an index or portfolio comprised of only U.S. Component Stocks. 14 Third, in the proposed standards, the five most heavily weighted component stocks shall not exceed 60% of the weight of the index or portfolio, compared to a 65% standard for indexes or portfolios comprised of only U.S. Component Stocks. Fourth, the minimum number of stocks in the proposed standards is 20, in contrast to a minimum of 13 in the standards for an index or portfolio with only U.S. Component Stocks. Finally, the proposed standards require that each Non-U.S. Component Stock included in the index or portfolio be listed and traded on an exchange that has last-sale reporting. 14 *See* proposed CBOE Rules 31.5(L).01(a)(1)(C), 31.5(L).01(a)(2)(C), 31.5(M).01(a)(1)(C), and 31.5(M).01(a)(2)(C). The Exchange also proposes to modify CBOE Rules 31.5(L).01(b)(ii) and 31.5(M).01(b)(ii) to require that the index value for an ETF listed pursuant to this proposal be widely disseminated by one or more major market data vendors at least every 60 seconds during the time when the ETF shares trade on the Exchange. If the index value does not change during some or all of the period when trading is occurring on the Exchange, the last official calculated index value must remain available throughout Exchange trading hours. In contrast, the index value for an ETF listed pursuant to the existing standards for domestic indexes must be disseminated at least every 15 seconds during the trading day. This modification reflects limitations, in some instances, on the frequency of intra-day trading information with respect to Non-U.S. Component Stocks and that, in many cases, trading hours for overseas markets overlap only in part, or not at all, with Exchange trading hours. In addition, CBOE Rules 31.5(L).01(c) and 31.5(M).01(c) would be modified to define the term “Intraday Indicative Value” (“IIV”) as the estimate of the value of a share of each ETF that is updated at least every 15 seconds during Normal Market Hours. 15 CBOE also proposes to clarify in these rules that the IIV would be updated at least every 15 seconds during trading in the ETF on the Exchange to reflect changes in the exchange rate between the U.S. dollar and the currency in which any component stock is denominated. If the IIV does not change during some or all of the period when trading is occurring on the CBOE Stock Exchange (“CBSX”), CBOE's equity trading platform, then the last official calculated IIV must remain available throughout CBSX's trading hours. 15 Normal Market Hours are defined in proposed CBOE Rule 52.3(c)(2) as the time period from 8:30 a.m. until 3:15 p.m. Central Time (“CT”). CBOE is proposing that it may designate an ETF for trading during the trading hours specified in CBOE Rule 51.2(d) 16 for IPRs and IPSs as long as the index value and IIV dissemination requirements of CBOE Rules 31.5(L).01(b)(ii), 31.5(L).01(c), 31.5(M).01(b)(ii), and 31.5(M).01(c) are met. 16 CBOE Rule 51.2(d) provides that the hours during which IPR transactions may be made on CBSX are 8:15 a.m. until 3:15 p.m. CT, and that the hours during which IPS transactions may be made on CBSX are 8:15 a.m. until 3:00 p.m. or 3:15 p.m. CT for each series of IPSs, as specified by CBSX. The Exchange proposes to adopt CBOE Rules 31.5(L).01(g) and 31.5(M).01(g) to specify that CBOE will implement written surveillance procedures for ETFs. The Exchange also proposes to add new CBOE Rules 31.5(L).01(h) and 31.5(M).01(h) regarding the creation and redemption process for ETFs and compliance with federal securities laws for ETFs listed pursuant to the new generic listing standards. These new subsections would apply to ETFs listed pursuant to CBOE Rules 31.5(L) and (M), respectively. They would require that the statutory prospectus or the application for exemption from provisions of the Investment Company Act of 1940 17 for the ETF state that the ETF must comply with the federal securities laws in accepting securities for deposits and satisfying redemptions with redemption securities, including that the securities accepted for deposits and the securities used to satisfy redemption requests are sold in transactions that would be exempt from registration under the Securities Act of 1933. 18 17 15 U.S.C. 80a *et seq.* 18 15 U.S.C. 77a *et seq.* The Commission has approved generic listing standards providing for the listing, pursuant to Rule 19b-4(e), of other derivative securities products based on indexes or portfolios described in rules previously approved by the Commission under Section 19(b)(2) of the Act. 19 The Exchange proposes to include in the generic listing standards for the listing of ETFs based on indexes or portfolios that have been approved by the Commission in connection with the listing of options, Index Portfolio Receipts, Index Portfolio Shares, index-linked securities, or Index-Linked Exchangeable Notes. The Exchange believes that the application of this standard to ETFs is appropriate because the underlying index would have been subject to detailed and specific Commission review in the context of the approval of listing of those other derivatives. 19 *See supra* note 11. This new generic standard would be limited to stock indexes or portfolios, and would require that each component stock be either:
(1)A U.S. Component Stock that is listed on a national securities exchange and is an NMS stock as defined in Rule 600 of Regulation NMS; or
(2)a Non-U.S. Component Stock that is listed and traded on an exchange that has last-sale reporting. The Exchange is also proposing to include additional continued listing standards relating to ETFs. The Exchange would commence delisting proceedings if the value of the index or portfolio of securities on which the ETF is based is no longer calculated or disseminated. The Exchange proposes to adopt CBOE Rules 31.5(L)(f) and 31.5(M)(d) to formalize in the rules existing best practices for providing equal access to material information about the value of ETFs. Prior to approving an ETF for listing, the Exchange would obtain a representation from the ETF issuer that the NAV per share would be calculated daily and made available to all market participants at the same time. Proposed CBOE Rule 52.3(b) provides that the Exchange would halt trading in a Derivative Securities Product 20 if the circuit breaker parameter of CBOE Rule 6.3B has been reached. In exercising its discretion to halt or suspend trading in a Derivative Securities Product, the Exchange could consider factors such as the extent to which trading in the underlying securities is not occurring or whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present, in addition to other relevant factors. 20 Proposed Rule 52.3(c)(5)(i) defines “Derivative Securities Product” as a series of Equity-Linked Term Notes, Index-Linked Exchangeable Notes, Index Portfolio Receipts, Index Portfolio Shares, or Trust Issued Receipts that is based on an underlying security or index. Proposed CBOE Rule 52.3(c) sets forth the trading halt rules that apply to a Derivative Securities Product that is traded on the Exchange on a UTP basis. The rule provides that, during the hours for trading of Derivative Securities Products on the Exchange, if a temporary interruption occurs in the calculation or wide dissemination of the Required Value 21 by a major market data vendor and the listing market halts trading in the Derivative Securities Product, the Exchange, upon notification by the listing market of such halt due to such temporary interruption, also shall immediately halt trading in the series of Derivative Securities Product. If the Required Value continues not to be calculated or widely available as of the commencement of trading on the Exchange on the next business day, the Exchange shall not commence trading of the series of Derivative Securities Product that day. If an interruption in the calculation or wide dissemination of the Required Value continues, the Exchange may resume trading in the series of Derivative Securities Product only if calculation and wide dissemination of the Required Value resumes or trading in such series resumes in the listing market. 21 Proposed Rule 52.3(c)(5)(ii) defines “Required Value” as the value of any security or index underlying a Derivative Securities Product, as well as the IIV, indicative optimized portfolio value, or other comparable estimate of the value of a share of a Derivative Securities Product, updated regularly during the trading day. The Exchange proposes to amend CBOE Rule 31.5 to stipulate that, as provided by the Commission Rule 12f-5, 22 the Exchange may extend UTP to any security, such as an ETF, for which the Exchange has in effect rules providing for transactions in such class or type of security. 23 The provision of CBOE Rule 31.5(L) and
(M)that governs surveillance procedures, the provisions of CBOE Rule 54.1 and 54.2 that relate to information circulars and prospectus delivery, and CBOE Rule 51.2(d) that governs trading hours for transactions in IPRs and IPSs, would apply to securities traded on a UTP basis (as does the applicable proposed trading halt provision of CBOE Rule 52.3(b)). The Exchange would not, however, apply quantitative listing standards to securities traded on a UTP basis. 22 17 CFR 240.12f-5. 23 *See* proposed CBOE Rule 31.5. The Exchange is proposing other minor and clarifying changes to CBOE Rules 31.5(L) and (M). Current CBOE Rules 31.5L.01(b)(i) and 31.5M.01(b)(i) would be deleted, so that an index underlying a series of IPRs or IPSs need not be calculated according to the methodologies specified in those rules. 24 CBOE Rules 31.5(L).01(b)(ii) and 31.5(M).01(b)(ii) would be amended to ensure that an entity that advises an index provider or calculator and related entities has in place procedures designed to prevent the use and dissemination of material non-public information regarding the index underlying the ETF. CBOE Rules 31.5(L).01(e) and 31.5(M).01(e) would be adopted to clarify that the minimum increment for bids and offers is set in Rule 51.2(d). CBOE Rules 31.5(L).01(f) and 31.5(M).01(f) are being adopted to clarify that the trading hours for IPRs and IPSs, respectively, are set in CBOE Rule 51.2. CBOE Rules 31.5(L).01(a)(1)(C) and 31.5(M).01(a)(1)(C) would be amended to change the maximum weighting requirement for the most heavily weighted component stock from 25% to 30% of the weight of the index or portfolio for IPRs and IPSs. 25 24 This is consistent with the rules of other national securities exchanges. *See, e.g.* , NYSE Arca Equities Rules 5.2(j)(3) and 8.200. 25 This is consistent with the rules of other SROs. *See, e.g.* , Securities Exchange Act Release Nos. 44532 (July 10, 2001), 66 FR 37078 (July 16, 2001) (SR-Amex-2001-25). The Exchange will closely monitor activity in ETFs to identify and deter any potential improper trading activity in ETFs. The Exchange represents that its surveillance procedures are adequate to properly monitor the trading of ETFs that would be listed or traded pursuant to UTP. Specifically, CBOE will rely on its existing surveillance procedures governing equities, options, and ETFs. Additionally, the Exchange states that it will develop procedures to closely monitor activity in ETFs and related securities to identify and deter any potential improper trading activity. In addition, the Exchange has a general policy prohibiting the dissemination of material, non-public information by its employees. Finally, the Exchange deems IPRs and IPSs to be equity securities. Therefore, IPRs and IPSs are subject to the Exchange's trading rules that apply to equity securities. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 26 in general, and furthers the objectives of Section 6(b)(5) of the Act 27 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 because the proposal would permit the Exchange to more efficiently introduce products for trading on CBSX. In addition, the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to foster cooperation and coordination with persons engaged in facilitating transactions in securities. 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 CBOE does not believe that the proposed rule change would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange neither solicited nor received comments on the proposal. 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-CBOE-2007-109 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-CBOE-2007-109. 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 20549-1520 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 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-2007-109 and should be submitted on or before March 20, 2008. 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, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 28 In particular, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act 29 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, 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. 28 In approving this rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 29 15 U.S.C. 78f(b)(5). Currently, the Exchange must file a proposed rule change with the Commission pursuant to Section 19(b)(1) of the Act 30 and Rule 19b-4 thereunder 31 to list and trade any ETF based on an index comprised of foreign securities. The Exchange also must file a proposed rule change to list and trade any ETF based on an index or portfolio described in a rule change that has previously been approved by the Commission as an underlying benchmark for derivative securities. However, Rule 19b-4(e) provides that the listing and trading of a new derivative securities product by an SRO will not be deemed a proposed rule change pursuant to Rule 19b-4(c)(1) if the Commission has approved, pursuant to Section 19(b) of the Act, the SRO's trading rules, procedures, and listing standards for the product class that would include the new derivative securities product, and the SRO has a surveillance program for the product class. CBOE's proposed rules, which allow the listing and trading of ETFs pursuant to Rule 19b-4(e) based on certain indexes or portfolios with components that include foreign securities or indexes or portfolios described in exchange rules that have been previously approved by the Commission as underlying benchmarks for derivative securities, fulfill these requirements. Use of Rule 19b-4(e) by the Exchange to list and trade such ETFs should promote competition, reduce burdens on issuers and other market participants, and make such ETFs available to investors more quickly. 32 30 15 U.S.C. 78s(b)(1). 31 17 CFR 240.19b-4. 32 The Commission notes, however, that the failure of a particular ETF to meet these generic listing standards would not preclude the Exchange from submitting a separate proposed rule change to list and trade the ETF. The Commission previously has approved generic listing standards for other exchanges that are substantially similar to those proposed here by the Exchange. 33 This proposal does not appear to raise any novel regulatory issues. Therefore, the Commission finds that CBOE's proposal is consistent with the Act on the same basis that it approved the other exchanges' generic listing standards for ETFs based on international or global indexes or portfolios, or on indexes or portfolios described in exchange rules that have been previously approved by the Commission as underlying benchmarks for derivative securities. 33 *See, e.g.* , Securities Exchange Act Release No. 56049 (July 11, 2007), 72 FR 39121 (July 17, 2007) (SR-Phlx-2007-20); Securities Exchange Act Release No. 55269 (February 9, 2007), 72 FR 19571 (February 15, 2007) (SR-NASDAQ-2006-50); Securities Exchange Act Release No. 55621 (April 12, 2007), 72 FR 19571 (April 18, 2007) (SR-NYSEArca-2006-86); Securities Exchange Act Release No. 55113 (January 17, 2007), 72 FR 3179 (January 24, 2007) (SR-NYSE-2006-101); Securities Exchange Act Release No. 54739 (November 9, 2006), 71 FR 66993 (November 17, 2007) (SR-Amex-2006-78). Proposed CBOE Rules 31.5(L).01(a)(2) and 31.5(M).01(a)(2) establish standards for the composition of indexes and portfolios underlying international ETFs. These requirements are designed, among other things, to require that components of an index or portfolio underlying an ETF are adequately capitalized and sufficiently liquid, and that no one security dominates the index. The Commission believes that, taken together, these standards are reasonably designed to ensure that securities with substantial market capitalization and trading volume account for a substantial portion of any underlying index or portfolio, and that when applied in conjunction with the other applicable listing requirements will permit the listing and trading of only ETFs that are sufficiently broad-based in scope to minimize potential manipulation. The Commission further believes that the proposed listing standards are reasonably designed to preclude CBOE from listing and trading ETFs that might be used as surrogate for trading in unregistered securities. The requirement that each component security underlying an ETF be an NMS Stock (in the case of a U.S. Component Stock) or listed on an exchange and subject to last-sale reporting (in the case of a Non-U.S. Component Stock) also should contribute to the transparency of the market for these ETFs. The proposed generic listing standards also will permit the Exchange to list and trade an ETF if the Commission has previously approved an SRO rule change that contemplates listing and trading a derivative product based on the same underlying index. CBOE would be able to rely on that earlier approval order, provided that:
(1)The securities comprising the underlying index consist of U.S. Component Stocks or Non-U.S. Component Stocks; and
(2)CBOE complies with the commitments undertaken by the other SRO set forth in the prior order, including any surveillance-sharing arrangements with a foreign market. The Commission believes that CBOE's proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act, 34 which sets forth Congress' 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. CBOE's proposal requires the value of the index or portfolio underlying an ETF based on a global or international index to be disseminated at least once every 60 seconds during the time when the ETF shares trade on the Exchange. 35 CBOE has represented that, if an underlying index or portfolio value is no longer calculated or available, it would commence delisting proceedings for the associated ETF. In addition, an IIV, which represents an estimate of the value of a share of each ETF, must be updated and disseminated at least once every 15 seconds during CBOE Normal Market Hours trading session. The IIV must reflect changes in the exchange rate between the U.S. dollar and the currency in which any index or portfolio component stock is denominated. If the IIV does not change during some or all of the period when trading is occurring on CBOE, then the last official calculated IIV must remain available throughout CBOE's trading hours. 36 34 15 U.S.C. 78k-1(a)(1)(C)(iii). 35 *See* proposed CBOE Rule 31.5(L).01(b)(ii) and 31.5(M).01(b)(ii). 36 *See* proposed CBOE Rules 31.5(L).01(c) and 31.5(M).01(c). The Commission believes the proposal is reasonably designed to preclude trading of ETFs when transparency is impaired. Proposed CBOE Rule 52.3(b) provides that, when the Exchange is the listing market, CBOE may halt trading during the day in which the interruption occurs if the IIV or its equivalent or index value applicable to a Derivative Securities Product is not disseminated as required. If the interruption continues, CBOE will halt trading no later than the beginning of the next trading day. In addition, proposed CBOE Rule 52.3(c) sets forth trading halt procedures when the Exchange trades the Derivative Securities Product pursuant to UTP. This proposed rule is substantially similar to that recently adopted by other exchanges. 37 37 *See supra* note 33; *see also* Securities Exchange Act Release No. 54997 (December 21, 2006), 71 FR 78501 (December 29, 2006) (SR-NYSEArca-2006-77). The Commission believes that the proposed rules are reasonably designed to promote fair disclosure of information that may be necessary to price an ETF appropriately. These generic listing standards provide that the issuer of an ETF must represent that it will calculate the NAV and make it available daily to all market participants at the same time. 38 CBOE proposed to amend current CBOE Rules 31.5(L).01(b)(ii) and 31.5(M).01(b)(ii) to make sure that an entity that advises an index provider or calculator and related entities has in place procedures designed to prevent the use and dissemination of material non-public information regarding the index underlying the ETF. 38 *See* proposed CBOE Rules 31.5(L)(f) and 31.5(M)(d). CBOE has represented that its surveillance procedures are adequate to properly monitor the trading of the IPRs and IPSs listed pursuant to the proposed new listing standards or traded on a UTP basis. This approval is based on that representation. Acceleration The Commission finds good cause for approving the proposed rule change, as amended, prior to the 30th day after the date of publication of the notice of filing thereof in the **Federal Register** . The Commission notes that CBOE's proposal is substantially similar to other proposals that have been approved by the Commission. 39 The Commission does not believe that CBOE's proposal raises any novel regulatory issues and, therefore, that good cause exists for approving the filing before the conclusion of a notice-and-comment period. Accelerated approval of the proposal will expedite the listing and trading of additional ETFs by CBOE, subject to consistent and reasonable standards. Therefore, the Commission finds good cause, consistent with Section 19(b)(2) of the Act, 40 to approve the proposed rule change, as amended, on an accelerated basis. 39 *See supra* note 33. 40 15 U.S.C. 78s(b)(2). V. Conclusion *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, 41 that the proposed rule change (SR-CBOE-2007-109), as amended, be, and it hereby is, approved on an accelerated basis. 41 *Id.* For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 42 42 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E8-3732 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57374; File No. SR-CBOE-2008-13] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Fee Changes February 22, 2008. 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 February 1, 2008, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) 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 CBOE has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the CBOE under Section 19(b)(3)(A)(ii) of the Act, 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The CBOE proposes to extend its Hybrid 3.0 book execution fee to orders that are executed by the Hybrid Agency Liaison (“HAL”) system. The text of the proposed rule change is available on the Exchange's Web site ( *http://www.cboe.org/legal* ), at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the 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 CBOE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to add another class of orders to which the Hybrid 3.0 book execution fee of $.18 per contract applies. On November 1, 2007, the Exchange implemented a fee of $.18 per contract applicable to orders in Hybrid 3.0 classes resting in the electronic book that are executed. The classes that trade on the Hybrid 3.0 platform are options on the S&P 100 Index (“OEX”), options on the S&P 500 Index (“SPX”), and options on the Morgan Stanley Retail Index (“MVR”). The fee does not apply to orders in SPX options resting in the SPX electronic book that are executed during opening rotation on the final settlement date of CBOE Volatility Index (“VIX”) options and futures. In January 2008, CBOE introduced the HAL system in Hybrid 3.0 classes. HAL is a system for automated handling of electronically received orders that are not automatically executed upon receipt by the Hybrid Trading System. CBOE Rule 6.14 governs the operation of the HAL system. Orders received by the HAL system are electronically exposed (flashed) to all CBOE market-makers appointed to the relevant option class as well as to all members acting as agent for orders at the top of the Exchange's book in the relevant option series. In Hybrid 3.0 classes, this exposure and a subsequent allocation period afford crowd members an opportunity to trade against limit orders that improve the Exchange's disseminated quotation. If any portion of an exposed order remains unexecuted at the end of a HAL process, the remaining order is displayed. The Exchange is proposing to extend the Hybrid 3.0 book execution fee to orders in Hybrid 3.0 classes that are executed by the HAL system. Specifically, an order that is exposed (flashed) by HAL and subsequently executed by the HAL system would be charged $.18 per contract. This is the same as if the order had been booked and then traded. The Hybrid 3.0 HAL system and book execution system have helped to improve execution time as well as service and efficiency. The fee is designed to help the Exchange recover its costs of developing these systems and offset the cost of maintaining and enhancing these systems in the future. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act, 5 in general, and furthers the objectives of Section 6(b)(4), 6 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 CBOE facilities. 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(4). 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. 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 7 and Rule 19b-4(f)(2) 8 thereunder. 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. 7 15 U.S.C. 78s(b)(3)(A). 8 17 CFR 19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-CBOE-2008-13 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-CBOE-2008-13. 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 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-2008-13 and should be submitted on or before March 20, 2008. 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. E8-3734 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57363; File No.-CHX-2007-21] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To Amend Rules Relating to Registration Requirements February 20, 2008. 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 9, 2007, the Chicago Stock Exchange, Inc. (“CHX” or “Exchange”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by CHX. On February 14, 2008, CHX filed Amendment No. 1 to the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced and superseded the original filing in its entirety. I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change CHX proposes to amend its registration requirements to require CHX participants to use the Financial Industry Regulatory Authority, Inc.'s (“FINRA”) Web Central Registration Depository (“Web CRD”) to register associated persons who are required to register with the Exchange under CHX rules. The Exchange would also amend its Fees Schedule (the “Fee Schedule”) to include fees that would be charged in connection with the use of Web CRD. The text of this proposed rule change is available at CHX, on the Exchange's Web site at *http://www.chx.com,* 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, CHX 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. CHX has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose FINRA's Web CRD system is a centralized, web-based system used by securities exchanges and broker-dealers across the country to track registration and qualification information about firms and the individuals who work for those firms. The Exchange has entered into an agreement with FINRA to allow the Exchange's participants to use Web CRD to register certain of their associated persons. Through this proposal, the Exchange seeks to amend its registration rules and Fee Schedule:
(a)To require Exchange participants to use Web CRD to register associated persons who are required to register with the Exchange under CHX rules;
(b)to allow CHX to determine whether participants should submit fingerprints to CHX or to FINRA for processing during the registration process; and
(c)to adopt new fees to cover charges assessed by FINRA for its work in processing fingerprints or the materials submitted through the Web CRD system. CHX would also delete a provision that requires firms to notify CHX of the termination of any non-registered, associated person's employment. 4 4 *See* Article 6, Rule 2, Interpretations and Policies .03. CHX believes that this requirement has become somewhat obsolete with CHX's move to its new trading model (and the elimination of its physical trading floor), because the requirement had, in effect, been largely focused on the employment status of clerks working on the Exchange's trading floor. Because the Exchange no longer has a physical trading floor, it is no longer as important to learn of the termination of a clerk's employment with a participant firm. Moreover, CHX regularly receives an updated list of a firm's associated persons when it conducts its annual examinations. The first part of this proposal would require CHX participants to use the Web CRD system to register certain of their associated persons. 5 Today, CHX participants that are not members of FINRA do not have access to the Web CRD system for registering their associated persons. Instead of using this on-line tool, those participants must handle their registration and continuing education processes manually, by filing paperwork with CHX. CHX staff must process and store this paperwork in hard copy form. To alleviate the need for manual processing and to ensure that other regulatory benefits are achieved, the Exchange believes that it is appropriate to require CHX participants to use Web CRD to register associated persons who are required to register with the Exchange under CHX rules. 6 Among other things, use of the Web CRD system would allow all information relating to the registration of associated persons to be compiled in one central repository for access by regulators and broker-dealers and would permit the automated tracking of a registered person's continuing education requirements, if any. 5 *See* Proposed Article 6, Rule 2, Interpretations and Policies .01. 6 Under CHX rules, a variety of persons, including, but not limited to, officers, partners, principal stockholders, and directors of a participant firm, must register with the Exchange, as well as any person acting as an institutional broker representative or as a market maker trader or any person listed on Schedules A, B or C of a participant firm's Form BD. *See* Article 6, Rule 2(b). These registration rules only apply to participant firms for which the Exchange is the designated examining authority and to registered persons of other participant firms where the registered persons act as institutional broker representatives or market maker traders on the Exchange. *See* Article 6, Rule 2, Interpretations and Policies .04. In addition, under this proposal, CHX participants would be required to submit any required fingerprints to either the Exchange or to FINRA for processing. 7 Under the Exchange's current rules, CHX participants submit fingerprints to the Exchange for processing. 8 Under the proposal, the Exchange would have the discretion to continue this process or to require its participants to submit fingerprint cards to FINRA for processing. The Exchange seeks this flexibility so that it can determine, from time to time, which fingerprint processing method is most efficient for the Exchange and for its participants. 7 *See* Proposed Article 6, Rule 10, Interpretations and Policies .01. 8 When the Exchange receives fingerprints, the Exchange processes them through the Federal Bureau of Investigation (“FBI”). The FBI retrieves criminal history information associated with those fingerprints and returns reports to the Exchange for review. Finally, because FINRA would assess charges to CHX participants for using the Web CRD system and for processing any fingerprints that are submitted, the Exchange also seeks to amend its Fee Schedule to include applicable registration, processing and termination fees, as well as various fingerprint charges. 9 9 These charges include an $85 registration fee; a $95 disclosure processing fee; a $30 annual processing fee; and termination fees of $40 and $80. Fingerprint processing fees would be $30.25 per card for an initial submission; $13 per card for a second submission; and $30.25 per card for a third submission. These fees reflect the charges assessed by FINRA for these services; CHX is not charging any additional fees of its own. The Exchange anticipates that its participants would be able to begin using Web CRD for registering associated persons in mid-March 2008 and plans to allow its participants to transition to the use of the Web CRD system over the course of a six to nine-month period. 10 At the end of this period, CHX participants would be required to use Web CRD for submitting any registration materials required by CHX rules. 10 The Exchange believes that this transition period is appropriate because each CHX participant firm that is not already a FINRA member will be required to enter a new Form U-4 into the Web CRD for each person associated with the firm that is required, by CHX rules, to register with the Exchange. The entry of this information could be time-consuming for some firms, and the Exchange believes it is appropriate to give firms an adequate period of time to complete this task before mandating the use of the Web CRD system. 2. Statutory Basis CHX believes the proposal is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act. 11 The proposed rule change is consistent with Section 6(b)(5) of the Act 12 because it would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, protect investors and the public interest by permitting the Exchange to require CHX participant firms to register certain associated persons using FINRA's Web CRD system, a centralized database used by the securities exchanges and broker-dealers across the country to track registration and qualification information about firms and individuals who work for those firms. By requiring use of the Web CRD system, the Exchange's regulatory group, as well as the firms themselves, would be better able to determine whether a registrant has met applicable continuing education requirements. The Exchange also notes that it would be ensuring that other regulators can readily find information about disciplinary actions taken against CHX-only participants. 11 15 U.S.C. 78(f)(b). 12 15 U.S.C. 78(f)(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. 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or
(ii)as to which the Exchange consents, the Commission will:
(A)By order approve such proposed rule change, or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-CHX-2007-21 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CHX-2007-21. 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 also will be available for inspection and copying at the principal office of CHX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CHX-2007-21 and should be submitted on or before March 20, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E8-3731 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57366; File No. SR-DTC-2008-01] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Deliver Order Input Cutoff Window February 21, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 notice is hereby given that on January 10, 2008, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared primarily by DTC. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 2 and Rule 19b-4(f)(4) thereunder 3 so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)((3)(A)(iii). 3 17 CFR 240.19b-4(f)(4). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change DTC will modify its system to provide its participants with the option of submitting deliver orders (“DOs”) from 8 p.m. to 11 p.m. during the night cycle. 4 4 All times referenced in this notice are eastern standard time. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, DTC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. DTC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change. Currently, DTC's system does not allow participants to submit DOs after the night cycle input cutoff at 8 p.m. After the 8 p.m. cutoff, the next input time for participants to submit DOs is the day cycle, which begins at 3 a.m., the next business day. DTC is extending the DO input time frame to 11 p.m. to provide its participants with additional flexibility to respond on a more timely basis to delivery receive orders that they may have received earlier in the night cycle and to do so at a reduced cost. DOs processed during the extended night cycle will be billed at DTC's current night DO fee of $0.12. To take advantage of the expanded input window, participants will be required to use a new format. 5 5 The new format options are outlined in Exhibit 5 of DTC's rule filing. DTC states that the proposed rule change is consistent with the requirements of Section 17A of the Act 6 and the rules and regulations thereunder applicable to DTC as it allows for more efficient processing of certain transactions. Therefore, it will not adversely affect the safeguarding of funds or securities in DTC's custody and control or for which it is responsible. 6 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 DTC has not solicited or received written comments relating to the proposed rule change. DTC will notify the Commission of any written comments it receives. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(iii) of the Act 7 and Rule 19b-4(f)(4) 8 thereunder because the proposed rule effects a change in an existing service of DTC that
(i)does not adversely affect the safeguarding of securities or funds in the custody or control of DTC or for which it is responsible and
(ii)does not significantly affect the respective rights or obligations of DTC or persons using the DO service. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogated such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 7 15 U.S.C. 78s(b)(3)(A)(iii). 8 17 CFR 240.19b-4(f)(4). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ) or • Send an e-mail to *rule-comment@sec.gov.* Please include File No. SR-DTC-2008-01 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-DTC-2008-01. 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. to 3 p.m. Copies of such filing also will be available for inspection and copying at DTC's principal office and on DTC's Web site at ( *http://www.dtcc.com/legal/rule_filings/dtc/2008.php* ). 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. DTC-2008-01 and should be submitted on or before March 20, 2008. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Florance E. Harmon, Deputy Secretary. [FR Doc. E8-3708 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57362; File No. SR-DTC-2006-16] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of Amended Proposed Rule Change Amending FAST and DRS Limited Participant Requirements for Transfer Agents February 20, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on October 12, 2006, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”) and on March 29, 2007, and May 3, 2007, amended proposed rule change No. SR-DTC-2006-16. On May 25, 2007, the Commission published notice of the proposed rule change as amended by Amendment 1 and Amendment 2. 2 The Commission received 29 comment letters to the proposed rule change as amended by Amendments 1 and 2. 3 On December 31, 2007, DTC filed Amendment 3. The Commission is publishing this notice to solicit comments from interested parties on the proposed rule change as amended by Amendments 1, 2, and 3 and as described in Items I, II, and III below, which items have been prepared primarily by the DTC. 4 1 15 U.S.C. 78s(b)(1). 2 Securities Exchange Act Release No. 34-55816 (May 25, 2007), 71 FR 30648 (June 1, 2007)[File No. SR-DTC-16]. 3 The comment letters can be found at *http://www.sec.gov/comments/sr-dtc-2006-16/dtc200616.shtml.* 4 The exact text of the DTC's proposed rule change can be found at *http://www.dtc.org/impNtc/mor/index.html#2006.* I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change DTC proposes to amend its rules to update, standardize, and restate the requirements for the Fast Automated Securities Transfer Program (“FAST”), to delineate the responsibilities of DTC and the transfer agents with respect to the securities held by transfer agents as part of the FAST program, and to restate the requirements for transfer agents participating in the Direct Registration System (“DRS”). 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 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. 5 5 The Commission has modified portions of the text of the summaries prepared by the DTC.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Prior to the establishment of the FAST program, transfers of securities to or from DTC occurred by sending securities back and forth between DTC and transfer agents. In the case of securities being deposited with DTC, DTC sent the certificates to the transfer agent for registration into the name of DTC's nominee, Cede & Co., and the transfer agent returned the reregistered certificates to DTC. In the case of securities being withdrawn from DTC, DTC sent the certificates registered in the name of Cede & Co. to the transfer agent for reregistration into the name designated by the withdrawing DTC participant, and the transfer agent returned the reregistered security to DTC for delivery to the withdrawing participant. This process exposed securities to risk of loss during transit between DTC and transfer agents and resulted in the expense of making physical deliveries of securities. Under the FAST program, transfer agents hold FAST-eligible securities registered in the name of Cede & Co. in the form of balance certificates. As additional securities are deposited or withdrawn from DTC, transfer agents adjust the denomination of the balance certificates as appropriate and electronically confirm theses changes with DTC. Such “FAST agents” are holding in custody those securities that would otherwise be held at DTC for the benefit of DTC's participants. As such, the FAST program reduces the movement of certificates between DTC and the transfer agents and therefore reduces the costs and risks associated with the creation, movement, and storing of certificates to DTC, DTC participants, issuers, and transfer agents. 6 6 For a description of DTC's current rules relating to FAST, see Securities Exchange Act Release Nos. 34-13342 (March 8, 1977) [File No. SR-DTC-76-3]; 34-14997 (July 26, 1978) [File No. SR-DTC-78-11]; 34-21401 (October 16, 1984) [File No. SR-DTC-84-8]; 34-31941 (March 3, 1993) [SR-DTC-92-15]; and 34-46956 (December 6, 2002) [File No. SR-DTC-2002-15]. The FAST program has grown substantially since first being introduced in 1975. 7 Recent changes in the rules of the major securities exchanges are expected to further accelerate this growth. 8 Those exchange rules require as a listing prerequisite that issues be eligible for processing through DRS. Since becoming a FAST agent is a criterion for a transfer agent's eligibility for participation in DRS, DTC anticipates significant growth in the FAST program. 7 DTC introduced the FAST program in 1975 with 400 issues and 10 agents. Currently, there are over 930,000 issues and approximately 90 agents in FAST. 8 Securities Exchange Act Release Nos. 54289 (August 8, 2006), 71 FR 47278 (August 16, 2006) [File No. SR-NYSE-2006-29]; 54290 (August 8, 2006), 71 FR 47262 (August 16, 2006) [File No. SR-Amex-2006-40]; 54288 (August 8, 2006), 71 FR 47276 (August 16, 2006) [File No. SR-NASDAQ-2006-08]; 54410 (September 7, 2006), 71 FR 54316 (September 14, 2006) [File No. SR-NYSE Arca-2006-31]; 55482 (March 15, 2007), 72 FR 13544 (March 22, 2007) [File No. SR-Phlx-2006-69]; 55481 (March 15, 2007), 72 FR 13544 (March 22, 2007) [File No. SR-CHX-2006-33]; and 55480 (March 15, 2007), 72 FR 13544 (March 22, 2007) [File No. SR-BSE-2006-46]. DRS allows an investors to hold a security as the registered owner in electronic form on the books of the transfer agent rather than holding through the use of a certificate or holding indirectly through a financial intermediary ( *e.g.,* a broker-dealer) that holds the security in “street name”. DRS also allows for the transfer of a DRS position from the books of the transfer agent to a DTC broker-dealer participant through the facilities of DTC using FAST. 9 9 For a description of DTC's rules relating to DRS, see Securities Exchange Act Release Nos. 34-37931 (November 7, 1996) [File No. SR-DTC-96-15]; 34-41862 (September 10, 1999) [File No. SR-DTC-99-16]; 34-42366 (January 28, 2000) [File No. SR-DTC-00-01]; 34-42704 (April 19, 2000) [File No. SR-DTC-00-04]; 34-43586 (November 17, 2000) [File No. SR-DTC-00-09]; 34-44969 (August 14, 2001) [File No. SR-DTC-2001-07]; 34-45232 (January 3, 2002) [SR-DTC-2001-18]; 34-45430 (February 11, 2002) [File No. SR-DTC-2002-01]; and 34-48885 (December 5, 2003) [File No. SR-DTC-2002-17]; 34-52422 (September 14, 2005) [File No. SR-DTC-2005-11].
(1)Proposed Amendments to DTC's FAST Requirements Despite the FAST program's robust past growth and expected future growth, the transfer agent eligibility requirements for FAST have not substantially changed since the implementation of FAST and do not:
(i)Take into account the increased volume and value of securities processed by the transfer agents,
(ii)reflect improved technology and currently available safeguards which would enhance the safekeeping of securities held by the transfer agents on behalf of DTC , and
(iii)require the use of standardized audit reports to certify transfer agents' processes and controls. In light of the FAST program's growth, DTC reexamined the requirements of the FAST program with a view toward ensuring that DTC's assets in the custody of transfer agents, which ultimately belong to DTC's participants and their customers, are adequately protected. As more fully described below, DTC has identified aspects of the FAST program that need revising or additional requirements. The proposed revisions and additional requirements include:
(i)Insurance requirements that take into account transaction volumes of securities processed by transfer agents,
(ii)safekeeping requirements to clarify and to enhance security and fire protection standards and to take into consideration technological advances that allow for economical security improvements, and
(iii)bookkeeping requirements to ensure compliance with applicable laws and regulations and use standardized audit reports addressing transfer agents' processes and controls. DTC is therefore proposing to amend and to restate the minimum requirements for transfer agents participating in the FAST program in order to improve the safekeeping of securities transfer agents hold for DTC and to provide better defined requirements as more transfer agents participate in the immobilization and dematerialization of securities. DTC's proposed minimum requirements are as follows: 1. Transfer agent must be registered with the Commission or their appropriate regulatory authority, except where the transfer agent's participation in the FAST program is limited to acting solely for municipal issues (transfer agents must provide DTC with evidence of such) and follow all applicable rules under the Exchange Act, as well as all other applicable federal and state laws, rules, and regulations, applicable to transfer agents, including OFAC regulations. 2. The transfer agent must execute and fulfill the requirements of the appropriate form of “Balance Certificate Agreement” 10 with DTC. 11 10 DTC currently maintains three forms of the Balance Certificate Agreement: one for transfer agents, one for issuers acting as their own agent, and one for parties using a processing agent. DTC is consolidating these forms into a single form, as attached as Exhibit 2 to its initial filing. 11 DTC notes that these minimum requirements incorporate by reference the Balance Certificate Agreement between the transfer agent and DTC. 3. The transfer agent must sign and fulfill requirements of the “Operational Criteria for the FAST Transfer Agent Processing” 12 and must comply with all applicable provisions of DTC's “Operational Arrangements” (“OA”), 13 as amended from time to time. 14 12 The Operational Criteria for the FAST Transfer Agent Processing is attached as Exhibit 2(b) to DTC's initial filing. 13 For more information relating to DTC's OA, see Securities Exchange Act Release Nos. 34-45994 (May 29, 2002), 67 FR 39452 [File No. SR-DTC-2002-02]; 34-24818 (August 19, 1987), 52 FR 31833 [File No. DTC-87-10]; 34-25948 (July 27, 1988), 53 FR 29294 [File No. DTC-88-13]; 34-30625 (April 23, 1992), 57 FR 18534 [File No. DTC-92-06]; 34-35649 (April 26, 1995), 60 FR 21576 [File No. DTC-94-19]; and 34-39894 (April 21, 1998), 63 FR 23310 [File No. DTC-97-23]. 14 DTC notes that these minimum requirements incorporate by reference the Operational Criteria for FAST Transfer Agent Processing and all applicable terms in DTC's Operational Arrangements. 4. In order to provide for the operational proficiency and efficiency of the program, the transfer agent must complete DTC's training on FAST functionality on being accepted as a FAST transfer agent. 5. In order to protect against a risk of loss, the transfer agent must carry and provide evidence of a minimum of the following standard form Financial Institution Bond or a commercial crime policy providing similar coverage in proportion to transaction volume the agent processes, as follows: a. $10 million for a transfer agent with 25,000 or fewer transfer transactions per year as reported to the Commission; b. $25 million for a transfer agent with over 25,000 transfer transactions per year as reported to the Commission; and c. In addition, the transfer agent must carry and provide evidence of a minimum of $1 million in Errors and Omissions insurance. In the event that a transfer agent can demonstrate that its existing coverage and/or capitalization would provide similar protections to DTC as the requirements set forth herein, it may apply to DTC for a waiver. DTC shall have sole discretion as to whether or not to grant any such waiver. 6. In order to facilitate consistent protection against losses relating to securities in a transfer agent's control, the transfer agent must notify DTC as soon as practicable of notice of any actual lapse in insurance coverage or change in business practices, such as increasing volumes or other business changes that would result in the transfer agent requiring additional insurance coverage as outlined above. Such notice shall be delivered to: DTC Inventory Management—1SL 55 Water Street New York, New York 10041 And with a copy to: DTC General Counsel's Office 55 Water Street—22nd Floor New York, New York 10041. 7. The transfer agent must provide proof to DTC of any new or substitute policy with respect to any required insurance within five
(5)days after the entry into force of such new or substitute policy. 8. The transfer agent must establish and maintain electronic communications with DTC to balance FAST positions on a daily schedule. 9. The transfer agent must provide on an annual basis to DTC within ten
(10)business days of filing with the Commission, a copy of the Annual Study of Evaluation of Internal Accounting Control filed with the Commission pursuant to Exchange Act Rule 17Ad-13, attesting to the soundness of controls to safeguard securities assets and to the reliability and integrity of computer systems, including confidentiality of customer accounts or other non-public information. If a transfer agent obtains a SAS-70 audit report, the transfer agent shall provide DTC with a copy of the report within ten
(10)business days of the transfer agent's receipt of the report. If a SAS-70 audit report is not available, then the transfer agent must provide to DTC, on an annual basis within ten
(10)business days of filing with the Commission an accountant's report (pursuant to Exchange Act Rule 17Ad-13, Annual Study of Evaluation of Internal Accounting Controls), a SSAE-10 report from an external certified public accountant (or an equivalent report) attesting to the soundness of the transfer agent's controls relating to FAST. 10. FAST agents must safeguard all the securities assets as stated under Exchange Act Rule 17Ad-12, with at a minimum the following additional DTC requirements: a. maintain a theft and fire central monitoring alarm system protecting the entire premises and b. maintain all certificates in a vault, safe, or other secure location, accessible only by authorized personnel. 11. Personnel with access to the safe and the codes for the centralized monitoring system must comply with Exchange Act Rule 17f-2, which includes but is not limited to rules for fingerprinting staff that physically handle certificates. 12. Unless prohibited by applicable law, the transfer agent when applying to be a FAST agent must provide DTC with a copy of the two most recent deficiency or compliance correspondences from the Commission as well as any follow-up correspondences. In addition, unless prohibited by applicable law, the transfer agent on an ongoing basis must provide DTC with notice of any alleged material deficiencies documented by the Commission that may affect the activities of the transfer agent as a FAST Agent within five
(5)business days of the transfer agent being notified of such material deficiencies. 13. Unless prohibited by applicable law, during regular business hours and upon advance notice, DTC reserves the right to visit and inspect, to the extent such visits and inspections pertain to DTC's position, the transfer agent's facilities, books, and records. DTC, however, is not obligated to conduct such visits or inspections. 14. Existing FAST agents shall have a period of six
(6)months from the date of the Commission's approval of this rule filing to comply with these requirements, including the submission to DTC of a signed Balance Certificate Agreement, signed Operational Criteria, and all supporting documentation referenced herein. If an agent is not compliant with these requirements upon the expiration of such period, DTC shall have the right, using its sole discretion, to terminate or to continue the agent's FAST status. 15. An agent acting on behalf of a transfer agent or an issuer acting on its own behalf shall have the same rights and responsibilities under these requirements as if it were the transfer agent.
(2)Proposed Amended and Restated Eligibility Requirements for DRS Limited Participants DTC is proposing the following restatement of the eligibility requirements for DRS Limited Participants 15 and the DRS eligibility requirements for DRS issues to promote consistency with the FAST program requirements as well as to further ensure the soundness of the DRS system. 15 DRS Limited Participants are transfer agents that participate in DRS through DTC. They are bound to certain provisions of the DTC rules. Securities Exchange Act Release No. 34-37931 (November 7, 1996) [File No. SR-DTC-96-15]. In order to be eligible to be a DRS Limited Participant, a transfer agent must: 1. Participate in the FAST program and abide by DTC's requirements governing participation in the FAST program, which requirements are proposed to be amended by this filing; 2. Execute a DTC Limited Participant Account agreement; 3. Deliver transaction advices directly to investors relating to DRS Withdrawal-by-Transfer requests and provide DTC with a file containing the information required by DTC (which must include, among other things, the transaction advice delivery date) in a format and using functionality as specified by DTC from time to time; 4. Complete DTC's training program on DRS and Profile Modification System (“Profile”) functionality; 5. Participate in the Profile surety or insurance program to initiate Profile transactions; 16 16 In DRS, instructions to transfer shares are sent by a broker-dealer that is a DTC Participant or a by a transfer agent that is a DRS Limited Participant through Profile. Profile provides screen based indemnification against false instructions from the party submitting the instructions through DRS. The indemnity is supported by either a surety bond or an insurance policy. 6. Implement program changes related to DTC internal systems modifications within a reasonable time upon receiving notification from DTC of such modifications; 7. Implement program changes to support and expand DRS processing capabilities as agreed to by the DRS Ad Hoc Committee; and 8. Existing DRS Limited Participants shall have a period of six
(6)months from the date of the Commission's approval of this rule filing within which they must comply with these requirements. If an agent is not compliant with these requirements upon the expiration of such period, DTC shall have the right using its sole discretion to terminate or to continue the agent's status as a DRS Limited Participant.
(3)Eligibility Requirements for DRS Issues In order for an issue to be eligible as a DRS issue, the issue must: 1. Have a transfer agent accepted as a DTC DRS Limited Participant; 2. Be included in the FAST program (An issue may not be added to DRS if an “out of balance” position exists.)
(4)DTC's Proposed Standard of Care Obligations With Respect to FAST DTC is proposing to establish a clearer demarcation of responsibility and liability with respect to the FAST program. Historically, DTC believes the Commission has left to user-governed clearing agencies the question of how to allocate losses associated with, among other things, clearing agency functions. 17 In conjunction with its approval of these standards, the Commission noted that while it had “called on registered clearing agencies to undertake, by rule, to deliver all fully-paid securities in their control to, or as directed by, the participant for whom the securities are held,” given that registered clearing agencies had demonstrated a high level of responsibility in safeguarding securities and funds, a standard of care based on a strict standard of liability was not required either with respect to failures of the clearing agency or a sub-custodian. DTC notes that securities in the FAST program are held by a transfer agent and are not within the immediate custody and control of DTC. As such, after a transfer agent is accepted to the FAST program, DTC is proposing the addition of a clarifying provision to Rule 6 to state that DTC will not be liable for the acts or omissions of FAST Agents or other third parties, unless caused directly by DTC's gross negligence, willful misconduct, or violation of federal securities laws for which there is a private right of action. In addition, DTC proposes that under no circumstance shall DTC be liable for selecting or accepting any third party as an agent of DTC, including a transfer agent participating in the FAST Program. 17 Securities Exchange Act Release Nos. 34-20221 (September 23, 1983) and 34-22940 (February 24, 1986). In this regard, DTC adopted a uniform standard with respect to certain of its procedures, or Service Guides, such that DTC is not liable for any loss incurred by a participant other than one caused directly by gross negligence or willful misconduct on the part of DTC. See Securities Exchange Act Release No. 34-44719 (August 17, 2001) [File No. SR-DTC-2001-01]. DTC believes the proposed rule change is consistent with the requirements of Section 17A of the Act, as amended, 18 and the rules and regulations thereunder because it improves standards relating to the eligibility of transfer agents and issues for its FAST and DRS programs. As such, it assures the safeguarding of securities and funds which are in the custody or control of DTC or for which it is responsible. 18 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 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 DTC has neither solicited nor received written comments on the proposed rule change. 19 19 The Commission received 29 comment letters to DTC's proposed rule change as amended by Amendments 1 and 2. The comment letters can be found at *http://www.sec.gov/comments/sr-dtc-2006-16/dtc200616.shtml* . 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-2006-16 in the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-DTC-2006-16. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F Street, NE., Washington, DC 20549 on official business days between the hours of 10 a.m. and 3:30 p.m. Copies of such filings also will be available for inspection and copying at the principal office of the DTC and on the DTC's Web site, *http://www.dtcc.com.* All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-DTC-2006-16 and should be submitted on or before March 20, 2008. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 20 20 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E8-3730 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-57368; File No. SR-NASDAQ-2008-011] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Equity Securities Using Alternative Settlement Processes in Nasdaq's PORTAL System February 21, 2008. 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 February 7, 2008, The NASDAQ Stock Market LLC (“Nasdaq”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared primarily by Nasdaq. Nasdaq has filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder 4 so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested 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 Nasdaq proposes to allow issuers of PORTAL equity securities to select settlement procedures that do not involve submission to The Depository Trust Company (“DTC”). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change Currently, in order to qualify for inclusion in Nasdaq's PORTAL Market (“PORTAL”), an equity security must be depository eligible. 5 Recently, however, issuers and market participants have implemented alternative regular way non-DTC settlement arrangements for a small subset of Commission Rule 144A equity offerings in order to ensure compliance with various regulatory obligations or trading conditions for the security imposed by its issuer including monitoring the number of record holders for purposes of determining the issuer's reporting obligations under Section 12(g) of the Act. These alternative settlement arrangements are generally implemented through the execution of written agreements among the market participants that obligate them to settle transactions in accordance with the alternative settlement process. Having agreed to follow and be subject to the alternative settlement process, approved participants are then given authorizing credentials that allow them to engage in transactions in the alternative settlement security with other preapproved counter-parties. This process enhances the likelihood that trades in such securities settle appropriately. 5 Rule 6502(b)(1)(C). Nasdaq defines “depository eligible” in Rule 11310. Although not specifically required, the primary securities depository for Nasdaq transactions is DTC. In order to provide the enhanced functionality and transparency of the PORTAL system to such issuers, Nasdaq proposes to allow restricted securities using such alternative settlement processes access to PORTAL. Under the proposal, issuers of Rule 144A equity securities, as defined in Rule 6501(c) of the PORTAL Market rules (“PORTAL Equity Securities”), that intend to use an alternative settlement process would have their issues designated as PORTAL Equity Securities, which would permit such PORTAL Equity Securities to be quoted, traded, and reported for dissemination and regulatory purposes through the PORTAL System like other PORTAL Equity Securities. In order to qualify for PORTAL designation, the alternative settlement security must use an alternative settlement process that:
(1)Is mandated by the issuer;
(2)provides adequate disclosure to investors of the existence of the alternative settlement process, and
(3)includes information, technology, and procedures sufficient for Nasdaq to send and receive transaction and other information necessary to the effectuate the process. For qualified alternative settlement securities, the PORTAL system will establish communication linkages and processes with the operators of alternative settlement processes that will be used to seek to ensure that only PORTAL market participants that have met the prerequisites for participation in the process enter indicative quotes, orders, or execute a trade through the PORTAL System in the alternative settlement security. For example, the PORTAL system will regularly communicate with operators of alternative settlement processes and will prevent entities that have not been approved by those operators from entering quotes or orders in the particular alternative settlement security into PORTAL. Once a trade in a PORTAL Equity Security that relies upon an alternative settlement process is consummated, details of the trade will be provided to the alternative settlement process by the PORTAL system. Nasdaq believes that the above proposal enhances the flexibility for issuers of Commission Rule 144 equity securities to choose a non-DTC settlement process that meets their needs and also increases the efficiency and transparency of the trading in such issues through access to the PORTAL system. Nasdaq states that the proposed rule change is consistent with the provisions of Section 6 of the Act, 6 in general, and with Sections 6(b)(5) of the Act, 7 in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Nasdaq believes that offering access to its PORTAL system to equity securities that rely on an alternative settlement processes will enhance the efficiency and transparency of the trading of such securities and will facilitate the reporting of trades in such securities. 6 15 U.S.C. 78f. 7 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Nasdaq did not solicit or receive written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant Section 19(b)(3)(A)(iii) of the Act 8 and Rule 19b-4(f)(6) thereunder 9 because it does not:
(1)Significantly affect the protection of investors or the public interest;
(2)impose any significant burden on competition; and
(3)become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 8 15 U.S.C. 78s(b)(3)(A)(iii). 9 17 CFR 240.19b-4(f)(6). 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-NASDAQ-2008-011 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File No. SR-NASDAQ-2008-011. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at Nasdaq's principal office. 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-NASDAQ-2008-011 and should be submitted on or before March 20, 2008. For the Commission by the Division of Trading and Markets, pursuant to delegated authority. 10 Florence E. Harmon, Deputy Secretary. 10 17 CFR 200.30-3(a)(12). [FR Doc. E8-3733 Filed 2-27-08; 8:45 am] BILLING CODE 8011-01-P DEPARTMENT OF STATE [Public Notice 6099] Announcement of Meetings of the International Telecommunication Advisory Committee SUMMARY: This notice announces meetings of the International Telecommunication Advisory Committee
(ITAC)to prepare for meetings of International Telecommunication Union Telecommunication Standardization Sector (ITU-T) technical Study Groups Sixteen (Multimedia terminals, systems and applications), and Seventeen (Security, languages and telecommunication software); an ITAC meeting to begin preparation of advice on the World Telecommunication Standardization Assembly 2008 (WTSA 08) and other related meetings of the ITU; and meetings in preparation for a meeting of the Organization of American States Inter-American Telecommunication Commission (CITEL) Permanent Consultative Committee II (PCC.II) (Radiocommunication including Broadcasting). The ITAC will meet to begin preparation of advice for the government on the ITU World Telecommunication Standardization Assembly 2008 (WTSA 08) and related meetings such as the Telecommunication Sector Advisory Group (TSAG), various groups meeting on the International Telecommunication Regulations, cybersecurity, and other subjects relevant to the ITU-T for the coming 12 months. The meeting will be held on Monday afternoon March 17, 2008 2-4 p.m. EST hosted by AT&T, 1120 20th Street, 10th floor, Washington, DC. The ITAC will hold further meetings with similar agendas on April 24, May 12, and June 17. **Federal Register** notices will be published for each of these meetings with the specific agenda and meeting details, at the appropriate time. The ITAC will meet to prepare advice on submission of contributions to CITEL PCC.II on March 25, April 1 and April 8, 2008, 2-4 p.m. at the Federal Communications Commission, 445 12th Street, SW., Washington, DC. The ITAC will meet to prepare advice on submission of contributions to ITU-T SG17 on March 20, 2008, 10 a.m. to noon EST, by conference call. Call in information is either +1 210 839-8500 or 1 888 455-9640, passcode 52902. The ITAC will meet to prepare advice on submission of contributions to ITU-T SG16 on April 24, 2008 beginning at 10 a.m. EST, by conference call. People desiring to participate in this meeting should call either +1 210 839-8500 or 1 888 455-9640, passcode 52902. All these meetings are open to the public as seating capacity allows. The public will have an opportunity to provide comments at these meetings. People desiring further information on these meetings may apply to the secretariat at *minardje@state.gov.* Dated: February 19, 2008. Richard C. Beaird, International Communications & Information Policy, Department of State. [FR Doc. E8-3815 Filed 2-27-08; 8:45 am] BILLING CODE 4710-07-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Notice of Intent To Rule on Change in Use of Aeronautical Property at Louisville International Airport, Louisville, KY AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Request for public comment. SUMMARY: The FAA is requesting public comment on the request by the Louisville Regional Airport Authority to change a portion of airport property from aeronautical to non-aeronautical use at the Louisville International Airport, Louisville, Kentucky. The request consists approximately of 8.65 acres of formal release. This action is taken under the provisions of Section 125 of the Wendell H. Ford Aviation Investment Reform Act for the 21st Century (AIR 21). DATES: Comments must be received on or before March 31, 2008. ADDRESSES: Comments on this notice may be mailed or delivered in triplicate to the FAA at the following address: Memphis Airports District Office, 2862 Business Park Drive, Building G, Memphis, TN 38118. In addition, one copy of any comments submitted to the FAA must be mailed or delivered to Mr. Charles T. Miller, Executive Director, Louisville Regional Airport Authority, P.O. Box 9129, Louisville, KY 40209-0129. FOR FURTHER INFORMATION CONTACT: Mr. Tommy L. Dupree, Team Lead/Civil Engineer, Federal Aviation Administration, Memphis Airports District Office, 2862 Business Park Drive, Building G, Memphis, TN 38118,
(901)322-8185. The application may be reviewed in person at this same location, by appointment. SUPPLEMENTARY INFORMATION: The FAA proposes to rule and invites public comment on the request to release approximately 8.65 acres at the Louisville International Airport, Louisville, KY. Under the provisions of AIR 21 (49 U.S.C. 47107(h)(2)). On February 20, 2008, the FAA determined that the request to release property at the Louisville International Airport submitted by the airport owner meets the procedural requirements of the Federal Aviation Administration. The FAA may approve the request, in whole or in part, no later than March 31, 2008. *The following is a brief overview of the request:* The Louisville Regional Airport Authority, owner of the Louisville International Airport, is proposing to formally release approximately 8.65 acres of airport property so the property can be converted to use for industrial development. Any person may inspect, by appointment, the request in person at the FAA office listed above under FOR FURTHER INFORMATION CONTACT. In addition, any person may, upon appointment and request, inspect the request, notice and other documents germane to the request in person at the Louisville Regional Airport Authority, P.O. Box 9129, Louisville, KY 40209-0129. Issued in Memphis, TN, on February 20, 2008. Phillip J. Braden, Manager, Memphis Airports District Office, Southern Region. [FR Doc. 08-877 Filed 2-27-08; 8:45 am]
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U.S. Code
- Repealed. Pub. L. 113–128, title V, § 511(a), July 22, 2014, 128 Stat. 1705§ 2801
- Presidential archival depository§ 2112
- Designation of eligible articles§ 2463
- Authority to extend preferences§ 2461
- Open meetings§ 552b
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- National securities exchanges§ 78f
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Short title§ 77a
- Definitions and application§ 78c
- National market system for securities; securities information processors§ 78k–1
- National system for clearance and settlement of securities transactions§ 78q–1
- Project grant application approval conditioned on assurances about airport operations§ 47107
16 references not yet in our index
- Pub. L. 104-13
- 20 CFR 616
- 20 CFR 640
- 29 CFR 75
- Pub. L. 106-567
- 114 Stat. 2856
- Pub. L. 109-432
- 15 CFR 2007
- Pub. L. 94-409
- 17 CFR 240.19
- 15 USC 78
- 15 USC 80a
- 17 CFR 240.12
- 17 CFR 19
- 15 USC 78(f)(b)
- 15 USC 78(f)(b)(5)
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Pub. L.Pub. L. 104-13
Cite20 CFR 616
Cite20 CFR 640
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