Notices. Issuance of Environmental Assessment and Finding of No Significant Impact for License Amendment
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BILLING CODE 6820-MA-P NATIONAL TRANSPORTATION SAFETY BOARD Sunshine Act Meeting; Agenda Time and Date: 9:30 a.m., Tuesday, July 8, 2008 Place: NTSB Conference Center, 429 L'Enfant Plaza, SW., Washington, DC 20594. Status: The one item is open to the public. Matter To Be Considered: 8021 *Highway Accident Report* —Motorcoach Override of Elevated Exit Ramp, Interstate 75, Atlanta, Georgia, March 2, 2007 (HWY-07-MH-015). News Media Contact: Telephone:
(202)314-6100. Individuals requesting specific accommodations should contact Rochelle Hall at
(202)314-6305 by Thursday, July 3, 2008. The public may view the meeting via a live or archived Webcast by accessing a link under “News & Events” on the NTSB home page at *http://www.ntsb.gov* . FOR FURTHER INFORMATION CONTACT: Vicky D'Onofrio,
(202)314-6410. Dated: Monday, June 30, 2008. Candi R. Bing, Federal Register Liaison Officer. [FR Doc. E8-15248 Filed 7-2-08; 8:45 am] BILLING CODE 7533-01-P NUCLEAR REGULATORY COMMISSION [Docket No. 030-33820] Notice of Availability of Environmental Assessment and Finding of No Significant Impact for Amendment of Byproduct Materials License No. 13-26640-01, for Unrestricted Release of a Facility in Evansville, IN AGENCY: Nuclear Regulatory Commission. ACTION: Issuance of Environmental Assessment and Finding of No Significant Impact for License Amendment. FOR FURTHER INFORMATION CONTACT: Peter J. Lee, PhD, CHP, Health Physicist, Decommissioning Branch, Division of Nuclear Materials Safety, Region III, U.S. Nuclear Regulatory Commission, 2443 Warrenville Road, Lisle, Illinois 60532; telephone:
(630)829-9870; fax number:
(630)515-1259; or by e-mail at *Peter.Lee@nrc.gov.* SUPPLEMENTARY INFORMATION: I. Introduction The U.S. Nuclear Regulatory Commission
(NRC)is proposing to amend Byproduct Materials License No. 13-26640-01. The license is held by the Covance Clinical Research Unit, Inc. (the Licensee), now located at 617 Oakley Street, Evansville, Indiana. Issuance of the amendment would authorize release of the Licensee's facility, located at 800 St. Mary's Drive, Evansville, Indiana (the Facility) for unrestricted use. The Licensee requested this action in NRC FORM 313 dated February 1, 2008. The NRC has prepared an Environmental Assessment
(EA)in support of this proposed action in accordance with the requirements of Title 10, Code of Federal Regulations (CFR), Part 51 (10 CFR Part 51). Based on the EA, the NRC has concluded that a Finding of No Significant Impact (FONSI) is appropriate with respect to the proposed action. The amendment will be issued to the Licensee following the publication of this FONSI and EA in the **Federal Register** . II. Environmental Assessment Identification of Proposed Action The proposed action would approve the Licensee's February 1, 2008 request, resulting in release of the Facility for unrestricted use. License No. 13-26640-01 was issued on August 16, 1995, pursuant to 10 CFR Part 35, and has been amended periodically since that time. The license authorizes the use of by-product materials (carbon-14 and hydrogen-3) in human research studies. Need for the Proposed Action The Licensee has ceased conducting licensed activities at the Facility and seeks the unrestricted use of its Facility. Environmental Impacts of the Proposed Action The historical review of licensed activities conducted at the Facility shows that such activities involved use of the following radionuclides with half-lives greater than 120 days: hydrogen-3 and carbon-14, and that use of these materials at the Facility ceased in early January 2008. Prior to performing the final status survey, the Licensee conducted decontamination activities, as necessary, in the areas of the Facility affected by these radionuclides. The Licensee completed final status surveys at the Facility on January 22, 2008. The final status survey report was attached to the Licensee's amendment request dated February 1, 2008. The Licensee elected to demonstrate compliance with the radiological criteria for unrestricted release as specified in 10 CFR 20.1402 using release criteria for building surfaces based on NUREG-1556, Volume 7, “Program-Specific Guidance About Academic, Research and Development, and Other Licenses of Limited Scope Including Gas Chromatographs and X-Ray Fluorescence Analyzers—Final Report,” Appendix Q, “Radiation Safety Survey Topics.” These release criteria are the same as the radionuclide-specific dose-based release criteria, described in NUREG-1757, “Consolidated NMSS Decommissioning Guidance,” Volume 2. These values provide acceptable levels of surface contamination to demonstrate compliance with the NRC requirements in Subpart E of 10 CFR Part 20 for unrestricted release. The Licensee's final status survey results were below these values and are in compliance with the As Low As Reasonably Achievable (ALARA) requirement of 10 CFR 20.1402. The NRC thus finds that the Licensee's final status survey results are acceptable. Based on its review, the staff has determined that the affected environment and any environmental impacts associated with the proposed action are bounded by the impacts evaluated by the “Generic Environmental Impact Statement in Support of Rulemaking on Radiological Criteria for License Termination of NRC-Licensed Nuclear Facilities,” (NUREG-1496) Volumes 1-3 (ML042310492, ML042320379, and ML042330385). The staff finds there were no significant environmental impacts from the use of radioactive material at the Facility. The NRC staff reviewed available docket file records and the survey results to identify any non-radiological hazards that may have impacted the environment surrounding the Facility. No such hazards or impacts to the environment were identified. The NRC has identified no other radiological or non-radiological activities in the area that could result in cumulative environmental impacts. The NRC staff finds that issuance of the proposed amendment is in compliance with 10 CFR Part 20. Based on its review, the staff considered the impact of the residual radioactivity at the Facility and concluded that the proposed action will not have a significant effect on the quality of the human environment. Environmental Impacts of the Alternatives to the Proposed Action Due to the largely administrative nature of the proposed action, its environmental impacts are small. Therefore, the only alternative the staff considered is the no-action alternative, under which the staff would leave things as they are by simply denying the amendment request. This no-action alternative is not feasible because it conflicts with 10 CFR 30.36(d), requiring that decommissioning of byproduct material facilities be completed and approved by the NRC after licensed activities cease. The NRC's analysis of the Licensee's final status survey data confirmed that the Facility meets the requirements of 10 CFR 20.1402 for unrestricted release. Additionally, denying the amendment request would result in no change in current environmental impacts. The environmental impacts of the proposed action and the no-action alternative are, therefore, similar; and the no-action alternative is accordingly not further considered. Conclusion The NRC staff has concluded that the proposed action is consistent with the NRC's unrestricted release criteria specified in 10 CFR 20.1402. Because the proposed action will not significantly impact the quality of the human environment, the NRC staff concludes that the proposed action is the preferred alternative. Agencies and Persons Consulted NRC provided a draft of this Environmental Assessment to the Indiana Emergency Response Program for review on March 24, 2008. By response dated May 12, 2008, the State agreed with the conclusions of the EA, and provided no comments. The NRC staff has determined that the proposed action is of a procedural nature, and will not affect listed species or critical habitat. Therefore, no further consultation is required under section 7 of the Endangered Species Act. The NRC staff has also determined that the proposed action is not the type of activity that has the potential to cause effects on historic properties. Therefore, no further consultation is required under section 106 of the National Historic Preservation Act. III. Finding of No Significant Impact The NRC staff has prepared this EA in support of the proposed action. On the basis of this EA, the NRC finds that there are no significant environmental impacts from the proposed action, and that preparation of an environmental impact statement is not warranted. Accordingly, the NRC has determined that a Finding of No Significant Impact is appropriate. IV. Further Information Documents related to this action, including the application for license amendment and supporting documentation, are available electronically at the NRC's Electronic Reading Room at *http://www.nrc.gov/reading-rm/adams.html.* From this site, you can access the NRC's Agencywide Document Access and Management System (ADAMS), which provides text and image files of NRC's public documents. The documents related to this action are listed below, along with their ADAMS accession numbers. 1. Mary L. Westrick, Covance Clinical Research Unit Inc., NRC Form 313 dated February 1, 2008 (ADAMS Accession No. ML080810513); 2. Title 10 Code of Federal Regulations, Part 20, Subpart E, “Radiological Criteria for License Termination”; 3. Title 10 Code of Federal Regulations, Part 51, “Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions”; 4. NUREG-1496, “Generic Environmental Impact Statement in Support of Rulemaking on Radiological Criteria for License Termination of NRC-Licensed Nuclear Facilities”; 5. NUREG-1757, ``Consolidated NMSS Decommissioning Guidance.'' 6. NUREG-1556, Volume 7, “Program-Specific Guidance About Academic, Research and Development, and Other Licenses of Limited Scope Including Gas Chromatographs and X-Ray Fluorescence Analyzers—Final Report,” Appendix Q, “Radiation Safety Survey Topics.” If you do not have access to ADAMS, or if there are problems in accessing the documents located in ADAMS, contact the NRC Public Document Room
(PDR)Reference staff at 1-800-397-4209, 301-415-4737, or by e-mail to *pdr@nrc.gov.* These documents may also be viewed electronically on the public computers located at the NRC's PDR, O 1 F21, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852. The PDR reproduction contractor will copy documents for a fee. Dated at Lisle, Illinois, this 23rd day of June 2008. For the Nuclear Regulatory Commission. Christine A. Lipa, Chief, Decommissioning Branch, Division of Nuclear Materials Safety, Region III. [FR Doc. E8-15118 Filed 7-2-08; 8:45 am] BILLING CODE 7590-01-P OFFICE OF PERSONNEL MANAGEMENT Federal Employees Health Benefits Program: Medically Underserved Areas for 2009 AGENCY: Office of Personnel Management. ACTION: Notice of Medically Underserved Areas for 2009. SUMMARY: The Office of Personnel Management
(OPM)has completed its annual determination of the States that qualify as Medically Underserved Areas under the Federal Employees Health Benefits
(FEHB)Program for calendar year 2009. This is necessary to comply with a provision of the FEHB law that mandates special consideration for enrollees of certain FEHB plans who receive covered health services in States with critical shortages of primary care physicians. Accordingly, for calendar year 2009, the following states are Medically Underserved Areas under the FEHB Program: Alabama, Arizona, Idaho, Illinois, Kentucky, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, South Carolina, South Dakota, and Wyoming. For the 2009 calendar year the State of Illinois is being added. DATES: *Effective Date:* January 1, 2009. FOR FURTHER INFORMATION CONTACT: Ingrid Burford, 202-606-0004. SUPPLEMENTARY INFORMATION: FEHB law (5 U.S.C. 8902(m)(2)) mandates special consideration for enrollees of certain FEHB plans who receive covered health services in States with critical shortages of primary care physicians. The FEHB law also requires that a State be designated as a Medically Underserved Area if 25 percent or more of the population lives in an area designated by the Department of Health and Human Services
(HHS)as a primary medical care manpower shortage area. Such States are designated as Medically Underserved Areas for purposes of the FEHB Program, and the law requires non-HMO FEHB plans to reimburse beneficiaries, subject to their contract terms, for covered services obtained from any licensed provider in these States. FEHB regulations (5 CFR 890.701) require OPM to make an annual determination of the States that qualify as Medically Underserved Areas for the next calendar year by comparing the latest HHS State-by-State population counts on primary medical care manpower shortage areas with U.S. Census figures on State resident populations. U.S. Office Of Personnel Management. Linda M. Springer, Director. [FR Doc. E8-15087 Filed 7-2-08; 8:45 am] BILLING CODE 6325-39-P OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE Generalized System of Preferences (GSP): Notice of the Results of the 2007 Annual Product and Country Practices Reviews AGENCY: Office of the United States Trade Representative. ACTION: Notice. SUMMARY: This notice announces:
(1)The disposition of the product petitions accepted for review in the 2007 GSP Annual Product Review;
(2)the results of the 2007 *de minimis* Waiver and Redesignation Reviews;
(3)the results of the 2007 Competitive Need Limitation
(CNL)Waiver Revocation Review; and
(4)the results of the 2007 Country Practices Review. FOR FURTHER INFORMATION CONTACT: Regina Teeter at the GSP Subcommittee, Office of the United States Trade Representative (USTR), Room F-220, 1724 F Street, NW., Washington, DC 20508. The telephone number is
(202)395-6971 and the facsimile number is
(202)395-9481. The results of the 2007 GSP Annual Review are available for review by appointment in the USTR public reading room, 1724 F Street, NW., Washington, DC. 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. The results of the 2007 GSP Annual Review are also available at: *http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/GSP_2007_Annual_Review/Section_Index.html.* SUPPLEMENTARY INFORMATION: The GSP program provides for the duty-free importation of designated articles when imported from beneficiary developing countries. The GSP program is authorized by Title V of the Trade Act of 1974 (19 U.S.C. 2461, *et seq* .), as amended (the “Trade Act”), and is implemented in accordance with Executive Order 11888 of November 24, 1975, as modified by subsequent Executive Orders and Presidential Proclamations. In the 2007 Annual Product Review, the Trade Policy Staff Committee reviewed petitions to change product coverage of the GSP. The disposition of the petitions considered in the 2007 GSP Annual Review is described in List I (Decisions on Petitions to Add Products to GSP Eligibility in the 2007 GSP Annual Review); List II (Decisions on Petitions to Remove Duty-Free Status from a Beneficiary Developing Country for a Product on the List of Eligible Articles for GSP); and List III (Decisions on CNL Waiver Petitions in the 2007 GSP Annual Review). Certain articles for which a waiver of the application of section 503(c)(2)(A) of the 1974 Act was issued at least five years ago, but which are revoked pursuant to section 503(d)(5) are listed in List IV (Products for which a Waiver of the Application of section 503(c)(2)(A) of the 1974 Act is Revoked). In the 2007 Product Review, the GSP Subcommittee evaluated the appraised import values of each GSP-eligible article in 2007 to determine whether an article from a GSP beneficiary developing country exceeded the GSP CNLs. *De minimis* waivers were granted to certain articles that exceeded the 50 percent import share CNL, but for which the aggregate value of the imports of that article was below the 2007 *de minimis* level of $18.5 million. List V (Products Receiving *De Minimis* Waivers) provides the list of the articles and the associated countries granted *de minimis* waivers. No eligible products were redesignated to GSP eligibility. Articles that exceeded one of the GSP CNLs in 2007, and that are newly excluded from GSP eligibility for a specific country, are listed in List VI (Products Newly Subject to CNL Exclusions). The disposition of petitions considered in the 2007 Country Practices Review is described in List VII (“Decisions on Country Practice Petitions in the 2007 GSP Annual Review”). Marideth J. Sandler Executive Director, Generalized System of Preferences
(GSP)Program Chairman, GSP Subcommittee. [FR Doc. E8-15156 Filed 7-2-08; 8:45 am] BILLING CODE 3190-W8-P SECURITIES AND EXCHANGE COMMISSION [Release No. IC-28322] Notice of Applications for Deregistration Under Section 8(f) of the Investment Company Act of 1940 June 27, 2008. The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of June, 2008. A copy of each application may be obtained for a fee at the SEC's Public Reference Branch (tel. 202-551-5850). An order granting each application will be issued unless the SEC orders a hearing. Interested persons may request a hearing on any application by writing to the SEC's Secretary at the address below and serving the relevant applicant with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on July 22, 2008, and should be accompanied by proof of service on the applicant, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. FOR FURTHER INFORMATION CONTACT: Diane L. Titus at
(202)551-6810, SEC, Division of Investment Management, Office of Investment Company Regulation, 100 F Street, NE., Washington, DC 20549-4041. OFI Tremont Market Neutral Hedge Fund [File No. 811-21109] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On April 29, 2008, applicant transferred its assets to OFI Tremont Core Strategies Hedge Fund, based on net asset value. Expenses of $18,500 incurred in connection with the reorganization were paid by OppenheimerFunds, Inc., applicant's investment adviser. *Filing Dates:* The application was filed on June 5, 2008, and amended on June 23, 2008. *Applicant's Address:* 6803 S. Tucson Way, Centennial, CO 80112. UBS Sequoia Fund, L.L.C. [File No. 811-10075] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. On December 21, 2007, applicant made a liquidating distribution to its shareholders, based on net asset value. Expenses of $5,900 incurred in connection with the liquidation were paid by applicant. *Filing Date:* The application was filed on June 4, 2008. *Applicant's Address:* c/o UBS Financial Services Inc., 51 West 52nd St., New York, NY 10019. Tremont Oppenheimer Absolute Return Fund [File No. 811-21541] *Summary:* Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Date:* The application was filed on June 10, 2008. *Applicant's Address:* 6803 S. Tucson Way, Centennial, CO 80112. Citizens Funds [File No. 811-3626] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. On April 4, 2008, applicant transferred its assets to Sentinel Group Funds, Inc., based on net asset value. Expenses of approximately $958,237 incurred in connection with the reorganization were paid by Citizen Advisers, Inc., applicant's investment adviser, and Sentinel Asset Management, Inc., the acquiring fund's investment adviser. *Filing Dates:* The application was filed on May 9, 2008, and amended on June 9, 2008. *Applicant's Address:* One Harbour Pl., Suite 400, Portsmouth, NH 03801. CCMA Select Investment Trust [File No. 811-10441] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind. *Filing Dates:* The application was filed on May 13, 2008, and amended on May 29, 2008. *Applicant's Address:* c/o CCM Advisors, LLC, 190 South LaSalle St., Suite 2800, Chicago, IL 60603. Cova Variable Annuity Account Four [File No. 811-6543] *Summary:* Applicant seeks an order declaring that it has ceased to be an investment company. Applicant requests deregistration based on abandonment of registration. Applicant is not now engaged, or intending to engage, in any business activities other than those necessary for winding up its affairs. *Filing Date:* The application was filed on May 30, 2008. *Applicant's Address:* MetLife Investors Insurance Company, 5 Park Plaza, Suite 1900, Irvine, CA 92614. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Florence E. Harmon, Acting Secretary. [FR Doc. E8-15065 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. IC-28321; File No. 812-13457] Minnesota Life Insurance Company, et al.; Notice of Application June 26, 2008. AGENCY: The Securities and Exchange Commission (“Commission”). ACTION: Notice of application for an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), granting exemptions from the provisions of Sections 2(a)(32) and 27(i)(2)(A) of the 1940 Act and Rule 22c-1 thereunder. Applicants: Minnesota Life Insurance Company (“Minnesota Life”), Variable Annuity Account (“Separate Account”), and Securian Financial Services, Inc. (“SFS”) (collectively, “Applicants”). Summary of Application: Applicants seek an order pursuant to Section 6(c) of the 1940 Act, exempting them from the provisions of Sections 2(a)(32) and 27(i)(2)(A) of the 1940 Act and Rule 22c-1 thereunder to the extent necessary to permit recapture of certain bonuses (“Credit Enhancements”) applied to cumulative net purchase payments that reach certain aggregate amounts in accordance with the formula described in the application, made under
(i)new deferred variable annuity contracts and certificates, including data pages, riders and endorsements, described in the application (the “New Contracts”) and under
(ii)any deferred variable annuity contracts and certificates, including data pages, riders and endorsements, that Minnesota Life may issue in the future (the “Future Contracts”) through the Separate Account and any other separate accounts of Minnesota Life and its successors in interest (the “Future Accounts”), provided that any such Future Contracts are substantially similar in all material respects to the New Contracts (New Contracts and Future Contracts referred to collectively as the “Contracts”). Applicants also request that the exemptive relief extend to any Financial Industry Regulatory Authority (“FINRA”) member broker-dealers controlling, controlled by, or under common control with any Applicant, whether existing or created in the future, that in the future, may act as principal underwriter for the Contracts (“Future Underwriters”). Applicants would recapture Credit Enhancements previously applied to purchase payments under the New Contracts in the following circumstances:
(1)In the event a contract owner exercises his or her right to cancellation/“free look” under the New Contract;
(2)if the Credit Enhancements were added to the contract within 12 months prior to the date of death of the contract owner (unless the New Contract is continued under the surviving spouse continuation option); and
(3)if the Credit Enhancements were added to the contract within 12 months prior to the date of annuitization or partial annuitization of the contract. The requested relief would also apply to any Future Contract funded by the Separate Account or Future Accounts, provided that such Future Contract is substantially similar in all material respects to the New Contract. Filing Date: The application was filed on November 21, 2007, and amended on June 24, 2008. 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 Secretary of the Commission 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 July 21, 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 may request notification of a hearing by writing to the Secretary of the Commission. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. Applicants, c/o Michael P. Boyle, Senior Counsel, Minnesota Life Insurance Company, 400 Robert Street North, St. Paul, Minnesota 55101. FOR FURTHER INFORMATION CONTACT: Ellen J. Sazzman, Senior Counsel, at
(202)551-6762, or Harry Eisenstein, Branch Chief, at
(202)551-6795, Office of Insurance Products, Division of Investment Management. SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application is available for a fee from the Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 20549 ((202) 551-8090). Applicants' Representations 1. Minnesota Life is a Minnesota stock life insurance company organized under the laws of Minnesota. All of the shares of the voting stock of Minnesota Life are owned by a second tier intermediate stock holding company named “Securian Financial Group, Inc.,” which in turn is a wholly-owned indirect subsidiary of Minnesota Mutual Companies, Inc. 2. Minnesota Life is authorized to sell insurance and annuities in all states (except New York), and the District of Columbia. For purposes of the 1940 Act, Minnesota Life is the depositor and sponsor for the Separate Account. Minnesota Life also serves as depositor for several other separate accounts. Minnesota Life may establish one or more additional Future Accounts for which it will serve as depositor. 3. The Separate Account is a segregated investment account under Minnesota law. Under Minnesota law, the assets of the Separate Account attributable to the Contracts and any other variable annuity contracts through which interests in the Separate Account are issued are owned by Minnesota Life, but are held separately from all other assets of Minnesota Life, for the benefit of the owners of, and the persons entitled to payment under, Contracts issued through the Separate Account. Consequently, such assets are not chargeable with liabilities arising out of any other business that Minnesota Life may conduct. Income, gains and losses, realized or unrealized, from each sub-account of the Separate Account, are credited to or charged against that sub-account without regard to any other income, gains or losses of Minnesota Life. The Separate Account is a “separate account” as defined by Section 2(a)(37) of the 1940 Act, is registered with the Commission as a unit investment trust (File No. 811-4294), and interests in the Separate Account offered through the Contracts are registered under the Securities Act of 1933 on Form N-4, File No. 333-111067. 4. The Separate Account is divided into a number of sub-accounts. Each sub-account invests exclusively in shares representing an interest in a separate corresponding investment portfolio of one of several series-type, open-end management investment companies. The assets of the Separate Account support one or more varieties of variable annuity contracts, including the New Contract. Minnesota Life may issue Future Contracts through the Separate Account. Minnesota Life also may issue Contracts through Future Accounts. 5. SFS is a wholly-owned subsidiary of Securian Financial Group, Inc. SFS serves as the principal underwriter of Minnesota Life separate accounts registered as unit investment trusts under the 1940 Act, including the Separate Account, and is the distributor of variable life insurance policies and variable annuity contracts issued through such separate accounts, including the Contracts. SFS is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a member of FINRA. SFS may act as principal underwriter for Future Accounts of Minnesota Life and as distributor for Future Contracts. 6. The New Contracts are deferred combination variable and fixed annuity contracts that Minnesota Life may issue to individuals on a “non-qualified” basis or in connection with certain types of retirement plans that receive favorable federal income tax treatment under the Internal Revenue Code of 1986, as amended (the “Code”). The New Contracts make available a number of sub-accounts of the Separate Account to which a contract owner may allocate net purchase payments and associated Credit Enhancement(s). 7. The New Contracts also offer fixed-interest allocation options under which Minnesota Life credits guaranteed rates of interest for various periods. These include several guaranteed term account options and the Minnesota Life general account. A market value adjustment may apply to the fixed-interest allocation options under the New Contracts in certain circumstances. 8. A contract owner's initial purchase payment must be at least $10,000 (unless a lower qualified plan limitation applies). Thereafter, a contract owner may choose the amount and frequency of purchase payments, except that the minimum subsequent purchase payment is $500 ($100 for automatic payment plans). A contract owner may make transfers of contract value among and between the sub-accounts and, subject to certain restrictions, among and between the sub-accounts and the fixed-interest allocation options at any time. Contract value is the sum of a contract owner's values in the general account, guarantee periods of the guaranteed term account and sub-accounts of the Separate Account on any valuation date before the annuity commencement date. 9. The New Contracts offer a contract owner a variety of annuity payment options. The contract owner may annuitize any time. A contract owner may choose to annuitize his/her entire contract or only a portion of the contract value. If a deferred sales charge (“DSC”) would otherwise apply to New Contract withdrawals at the time of annuitization, the DSC will be waived for amounts applied to provide annuity payments. In the event of a contract owner's (or the annuitant's, if any contract owner is not an individual) death prior to annuitization, the beneficiary may elect to receive the death benefit in the form of one of several annuity payment options instead of a lump sum. 10. The New Contracts have a DSC which is applicable on surrender and withdrawal of accumulation values as described more fully below. Credit Enhancements are not recaptured upon surrender or withdrawal. 11. If a contract owner withdraws contract value, Minnesota Life may deduct a DSC equal to a percentage of each purchase payment surrendered or withdrawn. The DSC is separately calculated and applied to each purchase payment at any time that the purchase payment (or part of the purchase payment) is surrendered or withdrawn. The amount of the DSC depends on how long a contract owner's purchase payment has been held under the New Contract. The DSC applicable to each purchase payment diminishes to zero over time as the purchase payment remains in the New Contract. The DSC does not apply in any circumstances under which Credit Enhancements will be recaptured. 12. The New Contracts offer a standard DSC schedule as follows: Contract Years Since Payment 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8+ Deferred Sales Charge (percent) 8.0 8.0 7.0 6.0 6.0 5.0 4.0 3.0 0 The DSC does not apply to: • The annual free withdrawal amount (as discussed below). • Amounts withdrawn to pay the annual maintenance fee, any transfer charge or any periodic charges for optional riders. • Any amount attributable to recaptured Credit Enhancements. • Amounts payable as a death benefit upon the death of the contract owner or the annuitant, if applicable. • Amounts applied to provide annuity payments under an annuity option. • Amounts withdrawn because of an excess contribution to a tax-qualified contract (including, for example, IRAs and tax sheltered annuities). • The difference between any required minimum distribution due (according to Internal Revenue Service rules) on the New Contract and any annual free withdrawal amount allowed. • A surrender or withdrawal requested any time after the first contract anniversary and if a contract owner meets the requirements of a qualifying confinement in a hospital or medical care facility. • A surrender or withdrawal requested any time after the first contract anniversary and in the event that a contract owner is diagnosed with a terminal illness as described in the New Contract. • A surrender or single withdrawal amount any time after the first contract anniversary if the unemployment waiver applies. • If a certain optional living benefit is elected, withdrawals in a contract year if less than or equal to the limit specified for the benefit. 13. A contract year is defined as a period of one year beginning with the contract issue date and continuing up to, but not including, the next contract anniversary, or beginning with a contract anniversary and continuing up to, but not including, the next contract anniversary. 14. The amount withdrawn plus any DSC is deducted from the contract value. The amount of the DSC is determined from the percentages shown in the table above. For purposes of determining the amount of DSC, withdrawal amounts will be allocated to contract gain up to the free withdrawal amount, and then to purchase payments on a first-in, first-out, basis. The amount of the DSC is determined by:
(a)Calculating the number of years each purchase payment being withdrawn has been in the New Contract;
(b)multiplying each purchase payment being withdrawn by the appropriate DSC percentage from the table; and
(c)adding the DSC from all purchase payments calculated in (b). Unless otherwise instructed, the DSC will be deducted pro rata from all sub-accounts. The New Contract permits a contract owner to withdraw from his or her contract certain “free amounts” on an annual basis without imposition of the DSC. The annual free withdrawal amount shall be equal to 10% of purchase payments not previously withdrawn and received by Minnesota Life during the current contract year, plus the greater of:
(i)Contract value less purchase payments not previously withdrawn as of the most recent contract anniversary; or
(ii)10% of the sum of purchase payments not previously withdrawn and still subject to the DSC, as of the most recent contract anniversary. The free withdrawal amount does not apply when a New Contract is surrendered. 15. Subject to state availability, a contract owner may elect to purchase optional living benefit riders. A contract owner may only elect a single living benefit on a New Contract. These include a minimum guaranteed income benefit rider, a guaranteed minimum withdrawal benefit rider, and two guaranteed living withdrawal benefit riders. 16. If a contract owner dies before the annuity start date, the New Contract provides for a death benefit payable to a beneficiary computed as of the date Minnesota Life receives written notice and due proof of death. The death benefit payable to the beneficiary depends on the death benefit option selected by the contract owner: The guaranteed minimum death benefit which is included as part of the base New Contract; or one of four optional death benefits. 17. Minnesota Life will credit the contract value allocated to the sub-accounts and the fixed-interest accounts with a Credit Enhancement when total cumulative net purchase payments reach certain aggregate levels. The term “cumulative net purchase payments” is equal to the total of all purchase payments applied to the contract less any amounts previously withdrawn from contract value. The amount of the Credit Enhancement to be added will be calculated as follows:
(a)Cumulative net purchase payments; multiplied by
(b)the applicable Credit Enhancement percentage from the table below; minus
(c)any Credit Enhancements previously applied to contract value. Cumulative net purchase payments Credit enhancement percentage $250,000-$499,999.99 0.25 $500,000-$749,999.99 0.50 $750,000-$999,999.99 0.75 $1,000,000 or more 1.00 18. For example, an original purchase payment equal to $251,000 is made to the Contract; Minnesota Life applies a Credit Enhancement equal to 0.25% of purchase payments ($627.50) to the Contract. Subsequently, the contract owner requests a withdrawal from contract value of $35,000 including applicable deferred sales charge. Cumulative net purchase payments are now equal to $251,000 − $35,000 = $216,000. An additional purchase payment of $300,000 is later added to the Contract, making cumulative net purchase payments equal to $216,000 + $300,000 = $516,000. Applying the formula: $516,000 × 0.5% = $2,580 less $627.50 results in a Credit Enhancement added equal to $1,952.50. 19. The Credit Enhancement amount is treated as earnings for purposes of federal taxes under the Contract. Minnesota Life will allocate the Credit Enhancement for the applicable purchase payment among the sub-accounts and fixed-interest accounts the contract owner selects in accordance with a contract owner's current purchase payment allocation instructions. Minnesota Life applies the Credit Enhancement to a contract owner's contract value either by “purchasing” accumulation units of an appropriate sub-account or adding to the contract owner's fixed-interest allocation option values. Minnesota Life reserves the right to increase or decrease the amount of the Credit Enhancement or discontinue the Credit Enhancement in the future. In such case Minnesota Life would seek any additional exemptive relief to the extent required. 20. Minnesota Life intends to recapture or retain the Credit Enhancements only in the following circumstances. First, Minnesota Life recaptures or retains 100% of the Credit Enhancements in the event that the contract owner exercises his or her cancellation right during the “free look” period. Second, Minnesota Life recaptures all of the Credit Enhancements added to the Contract within 12 months prior to the date of death of the contract owner (unless the Contract is continued under the surviving spouse benefit continuation option); any Credit Enhancement added to the Contract more than 12 months prior to the date of death would not be recaptured. Third, Minnesota Life will recapture all of the Credit Enhancements added to the Contract within 12 months prior to the annuitization date of the Contract. Any Credit Enhancement added to the Contract more than 12 months prior to the date of annuitization would not be recaptured. If only a partial annuitization were elected, a pro rata portion of the Credit Enhancements added to the Contract within 12 months of the annuitization date would be recaptured. So for example, if half the contract value were annuitized, half of the Credit Enhancements added within 12 months of the date of the annuitization would be recaptured. 21. Investment gains attributable to the Credit Enhancement will not be recaptured. Since Minnesota Life does not recapture the investment gain/loss attributable to the Credit Enhancement, only the dollar amount of the Credit Enhancement added to the Contract is recaptured in the circumstances described in the application. 22. With regard to variable contract value, several consequences flow from the foregoing. First, increases in the value of accumulation units representing Credit Enhancements accrue to the contract owner immediately. The initial value of such units belongs to the contract owner except in the limited circumstances of recapture. Second, decreases in the value of accumulation units representing Credit Enhancements do not diminish the dollar amount of contract value subject to recapture. Therefore, additional accumulation units must become subject to recapture as their value decreases. Stated differently, the proportionate share of any contract owner's variable contract value (or the contract owner's interest in the Separate Account) that Minnesota Life needs to “recapture” to avoid anti-selection increases as variable contract value (or the contract owner's interest in the Separate Account) decreases. This has the potential to dilute somewhat the contract owner's interest in his/her Contract as compared to other contract owners who do not trigger the recapture provisions. 23. Finally, because it is not administratively feasible to track the Credit Enhancements in the Separate Account which may still be subject to recapture, Minnesota Life deducts the daily mortality and expense risk charge and the daily administrative charge from the entire net asset value of the Separate Account. As a result, the daily mortality and expense risk charge, and any optional benefit charges paid by any contract owner may be greater than that which he or she would pay without the Credit Enhancement. In other words, any asset based fees taken on a dollar amount that is subsequently recaptured cannot be refunded to contract owners. 24. Applicants request that the Commission, pursuant to Section 6(c) of the 1940 Act, grant the exemptions set forth below from Sections 2(a)(32) and 27(i)(2)(A) of the 1940 Act and Rule 22c-1 thereunder to permit Applicants to recapture Credit Enhancements previously applied to purchase payments under the New Contracts:
(1)In the event a contract owner exercises his or her right to cancellation/“free look” under the New Contract;
(2)if the Credit Enhancements were added to the Contract within 12 months prior to the date of death of the contract owner (unless the New Contract is continued under the surviving spouse continuation option); and
(3)if the Credit Enhancements were added to the Contract within 12 months prior to the date of annuitization or partial annuitization of the Contract. The requested relief would also apply to any Future Contract funded by the Separate Account or Future Accounts provided such Future Contract is substantially similar in all material respects to the New Contract. 25. The relief sought in this Application is intended to permit Minnesota Life with respect to the New Contract to:
(i)Deduct any Credit Enhancements from amounts returned after a contract owner exercises his or her right to cancel the contract during the free-look period;
(ii)deduct from any death benefit the amount of any Credit Enhancements applied during the 12 months prior to the date of the contract owner's death; and
(iii)deduct from any annuitization benefit the amount of any Credit Enhancements applied during the 12 months prior to the date of annuitization or partial annuitization. Applicants' Legal Analysis 1. Section 6(c) of the 1940 Act authorizes the Commission to exempt any person, security or transaction, or any class or classes of persons, securities or transactions from the provisions of the 1940 Act and the rules promulgated thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act. 2. Subsection
(i)of Section 27 provides that Section 27 does not apply to any registered separate account supporting variable annuity contracts, or to the sponsoring insurance company and principal underwriter of such account, except as provided in paragraph
(2)of subsection (i). Paragraph
(2)provides that it shall be unlawful for a registered separate account or sponsoring insurance company to sell a variable annuity contract supported by the separate account unless the “* * * contract is a redeemable security; and * * * [t]he insurance company complies with Section 26(e) * * *”. 3. Section 2(a)(32) defines a “redeemable security” as any security, other than short-term paper, under the terms of which the holder, upon presentation to the issuer, is entitled to receive approximately his proportionate share of the issuer's current net assets, or the cash equivalent thereof. 4. Rule 22c-1 imposes requirements with respect to both the amount payable on redemption of a redeemable security and the time as of which such amount is calculated. In pertinent part, Rule 22c-1 prohibits a registered investment company issuing any redeemable security, a person designated in such issuer's prospectus as authorized to consummate transactions in any such security, and a principal underwriter of, or dealer in, such security from selling, redeeming or repurchasing any such security, except at a price based on the current net asset value of such security which is next computed after receipt of a tender of such security for redemption or of an order to purchase or sell such security. 5. Applicants submit that to the extent that the recapture of the Credit Enhancement arguably could be seen as a discount from the net asset value, or arguably could be viewed as resulting in the payment to a contract owner of less than the proportional share of the issuer's net assets, in violation of Section 2(a)(32) or 27(i)(2)(A) of the 1940 Act and Rule 22c-1 thereunder, the Credit Enhancement recapture would then trigger the need for relief absent some exemption from the 1940 Act. Rule 6c-8 provides, in relevant part, that a registered separate account, and any depositor of such account, shall be exempt from Sections 2(a)(32), 27(c)(1), 27(c)(2) and 27(d) of the 1940 Act and Rule 22c-1 thereunder to the extent necessary to permit them to impose a deferred sales load on any variable annuity contract participating in such account. Applicants assert, however, that the Credit Enhancement recapture is not a sales load but a recapture of a Credit Enhancement previously applied to a contract owner's purchase payments. Minnesota Life provides the Credit Enhancement from its general account on a guaranteed basis. The Contracts are designed to be long-term investment vehicles. In undertaking this financial obligation, Minnesota Life contemplates that a contract owner will retain a Contract over an extended period, consistent with the long-term nature of the Contracts. Minnesota Life contends that it designed the Contract so that it would recover its costs (including the Credit Enhancements) over an anticipated duration while a Contract is in force. If a contract owner withdraws his or her money during the free look period, the contract owner dies shortly after Credit Enhancements are applied, or the Contract is annuitized before this anticipated period, Minnesota Life asserts it must recapture the Credit Enhancement subject to recapture in order to avoid a loss. 6. Applicants submit that the proposed recapture of the Credit Enhancement would not violate Section 2(a)(32) or 27(i)(2)(A) of the 1940 Act or Rule 22c-1 thereunder. Minnesota Life would grant Credit Enhancements out of its general account assets. Applicants submit that a contract owner's interest in the Credit Enhancements does not vest until the expiration of the free look period and the expiration of the 12-month period following the application of a Credit Enhancement to the contract owner's Contract; until such time, Minnesota Life generally retains the right to and interest in each contract owner's contract value representing the dollar amount of any unvested Credit Enhancement amounts. Therefore, Applicants submit if Minnesota Life recaptures any Credit Enhancements or part of a Credit Enhancement in the circumstances described above, it would merely be retrieving its own assets. Applicants further submit that to the extent that Minnesota Life may grant and recapture Credit Enhancements in connection with variable contract value, it would not, at either time, deprive any contract owner of his or her then proportionate share of the Separate Account's assets. 7. Applicants further submit that the operation of the proposed Credit Enhancements would not violate Section 2(a)(32) or 27(i)(2)(A) of the 1940 Act because the recapture of Credit Enhancements would not, at any time, deprive a contract owner of his or her proportionate share of the current net assets of the Separate Account. Section 2(a)(32) defines a redeemable security as one “under the terms of which the holder, upon presentation to the issuer, is entitled to receive approximately his proportionate share of the issuer's current net asset value.” Applicants assert that taken together, these two sections of the 1940 Act do not require that the holder receive the exact proportionate share that his or her security represented at a prior time. Therefore, Applicants submit that the fact that the proposed Credit Enhancement provisions have a dynamic element that may cause the relative ownership positions of Minnesota Life and a contract owner to shift due to Separate Account performance would not cause the provisions to conflict with Sections 2(a)(32) or 27(i)(2)(A). Nonetheless, in order to avoid any uncertainty as to full compliance with the 1940 Act, Applicants seek exemptions from these two sections. 8. Minnesota Life's granting of Credit Enhancements would have the result of increasing a contract owner's contract value in a way that arguably could be viewed as the purchase of an interest in the Separate Account at a price below the current net asset value. Similarly, Minnesota Life's recapture of any Credit Enhancements arguably could be viewed as the redemption of such an interest at a price above the current net asset value. If such is the case, then the Credit Enhancements arguably could viewed as conflicting with Rule 22c-1. Applicants contend that these are not correct interpretations or applications of these statutory and regulatory provisions. Applicants also contend that the Credit Enhancements do not violate Rule 22c-1. 9. Rule 22c-1 was intended to eliminate or reduce, as far as was reasonably practicable:
(1)The dilution of the value of outstanding redeemable securities of registered investment companies through their sale at a price below net asset value or their redemption at a price above net asset value; or
(2)other unfair results, including speculative trading practices. Applicants submit that the industry and regulatory concerns prompting the adoption of Rule 22c-1 were primarily the result of backward pricing, the practice of basing the price of a mutual fund share on the net asset value per share determined as of the close of the market on the previous day. Backward pricing permitted certain investors to take advantage of increases or decreases in net asset value that were not yet reflected in the price, thereby diluting the values of outstanding shares. 10. Applicants submit that the Credit Enhancements do not give rise to either of the two concerns that Rule 22c-1 was designed to address. First, Applicants contend that the proposed Credit Enhancements pose no such threat of dilution. A contract owner's interest in his or her contract value or in the Separate Account would always be offered at a price based on the net asset value next calculated after receipt of the order. The granting of a Credit Enhancement does not reflect a reduction of that price. Instead, Minnesota Life would purchase with its general account assets, on behalf of the contract owner, an interest in the Separate Account equal to the Credit Enhancement. Because the Credit Enhancement will be paid out of the general account assets, not the Separate Account assets, Applicants submit that no dilution will occur as a result of the Credit Enhancement. Recaptures of Credit Enhancements result in a redemption of Minnesota Life's interest in a contract owner's contract value or in the Separate Account at a price determined based on the Separate Account's current net asset value and not at an inflated price. Moreover, the amount recaptured will never exceed the amount that Minnesota Life paid from its general account for the Credit Enhancement. Similarly, although a contract owner is entitled to retain any investment gains attributable to the Credit Enhancement, the amount of such gains would always be computed at a price determined based on net asset value. 11. Second, Applicants submit that speculative trading practices calculated to take advantage of backward pricing will not occur as a result of Minnesota Life's recapture of the Credit Enhancement. Variable annuities are designed for long-term investment, and by their nature, do not lend themselves to the kind of speculative short-term trading that Rule 22c-1 was designed to prevent. More importantly, the Credit Enhancement recapture simply does not create the opportunity for speculative trading. 12. Applicants assert that the Credit Enhancement is generally beneficial to a contract owner. The recapture tempers this benefit somewhat, but unless the owner
(1)exercises his or her right to cancel the contract during the “free look” period, or
(2)Minnesota Life applies Credit Enhancements and a death benefit during the same 12-month period, or
(3)Minnesota Life applies Credit Enhancements and a contract owner annuitizes during the same 12-month period, the contract owner retains the ability to avoid the Credit Enhancement recapture in the circumstances described in the application. While there would be a small downside in a declining market where the contract owner bears the downside risk of incurring losses attributable to the Credit Enhancements applied, it is the converse of the benefits a contract owner would receive on the Credit Enhancement amounts in a rising market because earnings on the Credit Enhancement amount vest with him or her immediately. Applicants submit that as any earnings on Credit Enhancements applied would not be subject to recapture and thus would be immediately available to a contract owner, over time this would increase the contract owner's share of contract value in the Separate Account more than it would have increased without the Credit Enhancements. Likewise any losses on Credit Enhancements would also not be subject to recapture and over time would decrease the contract owner's share of contract value in the Separate Account by more than it would have decreased had the Credit Enhancements never been applied. Applicants submit that the Credit Enhancement recapture does not diminish the overall value of the Credit Enhancement. 13. Applicants assert that the Credit Enhancement recapture provision is necessary for Minnesota Life to offer the Credit Enhancement and prevent anti-selection—the risk that a contract owner would make significant purchase payments into the Contract solely to receive a quick profit from the Credit Enhancements and then withdraw his or her money. Applicants submit it would be unfair to Minnesota Life to permit a contract owner to keep his or her Credit Enhancement upon his or her exercise of the Contract's “free look” provision. Because no DSC applies to the exercise of the “free look” provision, individuals could purchase the contract with no intention of keeping it, and the contract owner could obtain a quick profit in the amount of the Credit Enhancement at Minnesota Life's expense by exercising that right in just a short period of time. Applicants submit it would also be unfair to Minnesota Life to permit a contract owner to keep his or her Credit Enhancements paid shortly before death or annuitization. Rather than spreading purchase payments over a number of years, a contract owner could knowingly make very large payments shortly before death or annuitization to obtain a quick profit in the amount of the Credit Enhancement thereby leaving Minnesota Life less time to recover the cost of the Credit Enhancement, to its financial detriment. Applicants further submit because no additional DSC applies upon death of a contract owner (or annuitant), a death shortly after the award of Credit Enhancements would afford a contract owner or a beneficiary a similar profit at Minnesota Life's expense. Finally Applicants submit that because no additional DSC applies upon annuitization, if a contract owner annuitizes his or her contract shortly after the award of the Credit Enhancement, such event would afford a contract owner a similar profit at Minnesota Life's expense. 14. Applicants submit that in the event of such profits to a contract owner or beneficiary, Minnesota Life could not recover the cost of granting the Credit Enhancements. This is because Minnesota Life intends to recoup the costs of providing the Credit Enhancement through the charges under the Contract, particularly the daily mortality and expense risk charge and through efficiencies associated with administering contracts with higher aggregate purchase payments. Applicants assert that if the profits described above are permitted, a contract owner could take advantage of them, reducing the base from which the daily charges are deducted and greatly increasing the amount, and cost, of Credit Enhancements that Minnesota Life must provide. Therefore, the recapture provisions are a price of offering the Credit Enhancements. Applicants submit that Minnesota Life simply cannot offer the proposed Credit Enhancements without the ability to recapture those Credit Enhancements in the limited circumstances described in the application. 15. Applicants state that the Commission's authority under Section 6(c) of the 1940 Act to grant exemptions from various provisions of the 1940 Act and rules thereunder is broad enough to permit orders of exemption that cover classes of unidentified persons. Applicants request an order of the Commission that would exempt them, Minnesota Life's successors in interest, Future Accounts and Future Underwriters from the provisions of Sections 2(a)(32) and 27(i)(2)(A) of the 1940 Act and Rule 22c-1 thereunder with respect to the Contracts. Applicants submit that the exemption of these classes of persons is appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act because all of the potential members of the class could obtain the foregoing exemptions for themselves on the same basis as the Applicants, but only at a cost to each of them that is not justified by any public policy purpose. As discussed in the application, the requested exemptions would only extend to persons that in all material respects are the same as the Applicants. Applicants note that the Commission has previously granted exemptions to classes of similarly situated persons in various contexts and in a wide variety of circumstances, including class exemptions for recapturing bonus-type credits under variable annuity contracts. 16. Applicants represent that any Future Contracts will be substantially similar in all material respects to the New Contracts, but particularly with respect to the Credit Enhancements and recapture of Credit Enhancements and that each factual statement and representation about the Credit Enhancement feature will be equally true of any Future Contracts. Applicants also represent that each material representation made by them about the Separate Account and SFS will be equally true of Future Accounts and Future Underwriters, to the extent that such representations relate to the issues discussed in the Application. In particular, each Future Underwriter will be registered as a broker-dealer under the Securities Exchange Act of 1934 and be a member of FINRA. 17. Based upon the foregoing, Applicants submit that the recapture of the proposed Credit Enhancement involves none of the abuses to which provisions of the 1940 Act and rules thereunder are directed. The contract owner will always retain the investment experience attributable to the Credit Enhancement and will retain the principal amount in all cases except under the circumstances described herein. Further, Applicants assert that Minnesota Life should be able to recapture such Credit Enhancement to limit potential losses associated with such Credit Enhancements. Conclusions Applicants submit that the exemptions requested are necessary or appropriate in the public interest, consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the 1940 Act, and consistent with and supported by Commission precedent. Applicants also submit that the provisions for recapture of Credit Enhancements under the Contracts do not violate Section 2(a)(32) and 27(i)(2)(A) of the 1940 Act and Rule 22c-1 thereunder. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Florence E. Harmon, Acting Secretary. [FR Doc. E8-15071 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58043; File No. SR-ODD-2008-02] Self-Regulatory Organizations; The Options Clearing Corporation; Order Granting Approval of Accelerated Delivery of Supplement to the Options Disclosure Document Reflecting Changes to Disclosure Regarding Certain Binary Stock and Index Options, Range Options and Delayed Start Options June 26, 2008. On June 9, 2008, The Options Clearing Corporation (“OCC”) submitted to the Securities and Exchange Commission (“Commission”), pursuant to Rule 9b-1 under the Securities Exchange Act of 1934 (“Act”), 1 five preliminary copies of a supplement to its options disclosure document (“ODD”) reflecting changes to disclosure regarding certain binary options on stock and broad-based indexes, range options and delayed start options (“DSOs”). 2 On June 26, 2008, the OCC submitted to the Commission five definitive copies of the supplement. 3 1 17 CFR 240.9b-1. 2 *See* letter from Jean M. Cawley, Senior Vice President and Deputy General Counsel, OCC, to Sharon Lawson, Senior Special Counsel, Division of Trading and Markets (“Division”), Commission, dated June 9, 2008. 3 *See* letter from Jean M. Cawley, Senior Vice President and Deputy General Counsel, OCC, to Sharon Lawson, Senior Special Counsel, Division, Commission, dated June 25, 2008. The ODD currently contains general disclosures on the characteristics and risks of trading standardized options. Recently, the Chicago Board Options Exchange, Incorporated (“CBOE”) amended its rules to permit the listing and trading of certain binary index options. 4 The CBOE also recently amended its rules to permit the listing and trading of range options. 5 The proposed supplement amends the ODD to accommodate these changes by providing disclosure regarding certain binary stock and index options, range options and DSOs. 6 4 *See* Securities Exchange Act Release No. 57850 (May 22, 2008), 73 FR 31169 (May 30, 2008) (SR-CBOE-2006-105). CBOE Rule 22.3(a) permits it to trade binary options on any broad-based index that has been selected in accordance with CBOE Rule 24.2. 5 *See* Securities Exchange Act Release No. 57376 (February 25, 2008), 73 FR 11689 (March 4, 2008) (SR-CBOE-2007-104). CBOE Rule 20.3(a) permits it to trade range options on any index that is eligible for options trading on CBOE. 6 The proposed June supplement supersedes and replaces the April 2008 supplement to the ODD to accommodate the approval of trading of certain binary index options and range options. *See* notes 4 and 5, *supra* . The April 2008 supplement contained disclosure on binary options on individual equity securities, including exchange-traded funds, and DSOs, which were previously approved for trading by the Commission. *See* Securities Exchange Act Release No. 56251 (August 14, 2007), 72 FR 46523 (August 20, 2007) (SR-Amex-2004-27) (order approving the listing and trading of binary options on individual stocks and exchange-traded funds, also known as fixed return options) and Securities Exchange Act Release No. 56855 (November 28, 2007), 72 FR 68610 (December 5, 2007) (CBOE-2006-90) (order approving the listing and trading of DSOs). Specifically, the proposed supplement to the ODD adds new disclosure regarding the characteristics of binary index options on broad-based indexes as well as the special risks of these binary index options. The proposed supplement to the ODD also adds new disclosure regarding the characteristics and special risks of range options. Finally, the proposed supplement makes disclosures regarding the characteristics and special risks of binary stock options and DSOs. 7 The proposed supplement is intended to be read in conjunction with the more general ODD, which, as described above, discusses the characteristics and risks of options generally. 8 7 The Commission notes that the disclosure regarding binary stock options and DSOs in the proposed June supplement is substantially similar to that provided in the April 2008 supplement. 8 The Commission notes that the options markets must continue to ensure that the ODD is in compliance with the requirements of Rule 9b-1(b)(2)(i) under the Act, 17 CFR 240.9b-1(b)(2)(i), including when future changes regarding binary index options, range options and/or DSOs are made. Any future changes to the rules of the options markets concerning binary index options, range options and/or DSOs would need to be submitted to the Commission under Section 19(b) of the Act. 15 U.S.C. 78s(b). Rule 9b-1(b)(2)(i) under the Act 9 provides that an options market must file five copies of an amendment or supplement to the ODD with the Commission at least 30 days prior to the date definitive copies are furnished to customers, unless the Commission determines otherwise, having due regard to the adequacy of information disclosed and the public interest and protection of investors. 10 In addition, five copies of the definitive ODD, as amended or supplemented, must be filed with the Commission not later than the date the amendment or supplement, or the amended options disclosure document, is furnished to customers. The Commission has reviewed the proposed supplement and finds, having due regard to the adequacy of information disclosed and the public interest and protection of investors, that the proposed supplement may be furnished to customers as of the date of this order. 9 17 CFR 240.9b-1(b)(2)(i). 10 This provision permits the Commission to shorten or lengthen the period of time which must elapse before definitive copies may be furnished to customers. *It is therefore ordered* , pursuant to Rule 9b-1 under the Act, 11 that definitive copies of the proposed supplement to the ODD (SR-ODD-2008-02), reflecting changes to disclosure regarding certain binary stock and index options, range options and DSOs may be furnished to customers as of the date of this order. 11 17 CFR 240.9b-1. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 12 12 17 CFR 200.30-3(a)(39). Florence E. Harmon, Acting Secretary. [FR Doc. E8-15102 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58051; File No. SR-CBOE-2008-54] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Approving Proposed Rule Change Related to Sponsored Users June 27, 2008. On May 12, 2008, Chicago Board Options Exchange, Incorporated (“CBOE”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 a proposed rule change to amend CBOE Rule 6.20A to permit Sponsored User access to all products traded on CBOE. The proposed rule change was published for comment in the **Federal Register** on May 27, 2008. 3 The Commission received no comments regarding the proposal. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 57836 (May 19, 2008), 73 FR 30430. The Commission has carefully reviewed the proposed rule change and finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange 4 and, in particular, Section 6(b)(5) of the Act, 5 which requires that an exchange have rules designed to 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. 4 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 5 15 U.S.C. 78f(b)(5). The proposal will expand the scope of Sponsored User access, which has previously been approved by the Commission, 6 beyond CBOE's FLEX Hybrid Trading System (“FLEX”) and the CBOE Stock Exchange facility (“CBSX”) to all other products that are traded on CBOE. Sponsored Users who access other products trading on CBOE will be subject to the same requirements as Sponsored Users on FLEX and CBSX. 7 In addition, although the number of Sponsored Users who may access products other than FLEX and CBSX will be limited to fifteen, CBOE will admit applicants in a non-discriminatory manner using a first-in, first-out method. In this regard, CBOE's actions will be subject to review under Chapter XIX of its rules. 6 *See* Securities Exchange Act Release No. 56792 (November 15, 2007), 72 FR 65776 (November 23, 2007) (SR-CBOE-2006-99) (approving proposed rule change to permit sponsored user access to FLEX). *See also* Securities Exchange Act Release No. 57646 (April 10, 2008), 73 FR 20726 (April 16, 2008) (SR-CBOE-2008-37) (notice of filing and immediate effectiveness of proposed rule change to permit sponsored user access to CBSX). 7 *See* CBOE Rule 6.20A. *It is therefore ordered,* pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR-CBOE-2008-54) be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Florence E. Harmon, Acting Secretary. [FR Doc. E8-15104 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58038; File No. SR-ISE-2008-50] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Exposure of Public Customer Orders to all ISE Members June 26, 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 June 23, 2008, the International Securities Exchange, LLC (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the ISE. The ISE has designated the proposed rule change as a “non-controversial” rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The ISE proposes to amend ISE Rule 803 relating to the exposure of public customer orders. The text of the proposed rule change is available on ISE's Web site at *http://www.ise.com,* at ISE's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the ISE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The ISE 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 amend ISE Rule 803 relating to the exposure of public customer orders. Pursuant to Commission approval, before a Primary Market Maker (“PMM”) sends a public customer order through the intermarket linkage (“Linkage”) when ISE is not at the national best bid or offer (“NBBO”), the Exchange exposes these customer orders to all its market makers to give them an opportunity to match the NBBO. 5 5 *See* Securities Exchange Act Release No. 57812 (May 12, 2008), 73 FR 28846 (May 19, 2008) (Notice of Filing of Amendment No. 1 to the Proposed Rule Change and Order Granting Accelerated Approval of Proposed Rule Change, As Modified by Amendment No. 1 Thereto, Relating to the Exposure of Public Customer Orders). Specifically, before the PMM sends a Linkage Order on behalf of a public customer, the public customer order is exposed at the NBBO price for a period established by the Exchange not to exceed one second. During this exposure period, Exchange market makers may enter responses up to the size of the order being exposed in the regular trading increment applicable to the option. If at the end of the exposure period, the order is executable at the then-current NBBO and the ISE is not at the then-current NBBO, the order is executed against responses that equal or better the then-current NBBO. 6 The exposure period will be terminated if the exposed order becomes executable on the ISE at the prevailing NBBO or if the Exchange receives an unrelated order that could trade against the exposed order at the prevailing NBBO price. 7 If, after an order is exposed, the order is not executed in full on the Exchange at the then-current NBBO or better, and it is marketable against the then-current NBBO, the PMM sends a Linkage Order on the customer's behalf for the balance of the order as provided in Rule 803(c)(2)(ii) even though there may be other ISE members who would be willing to execute the order at the better price. If the balance of the order is not marketable against the then- current NBBO, it is placed on the ISE book. 6 Executions will be allocated pro-rata based on size ( *i.e.* , the percentage of the total number of contracts available at the same price that is represented by the size of a market maker's response). 7 The order is executed against orders and quotes on the book and responses received during the exposure period in price priority. At the same price, customer orders are executed first in time priority and then all other interest (orders, quotes and responses) are allocated pro-rata based on size. The Exchange notes that when an order is sent to another exchange through Linkage, the other exchange charges an execution fee. The cost of sending the order through Linkage can be substantial, particularly with respect to other options exchanges that have adopted a maker-taker fee schedule. 8 To retain as much order flow as possible on ISE and to help reduce costs associated with the number of orders sent through Linkage, ISE proposes to expose public customer orders to Electronic Access Members in addition to all other market makers, thus permitting all members of the Exchange to respond to these public customer orders before the orders are sent to another exchange through Linkage. This proposal will provide additional opportunities for public customer orders to be executed at the NBBO at ISE, and, as noted above, will reduce PMM costs by reducing the number of Linkage orders they must send to other exchanges. 8 Several options exchanges have adopted a fee structure in which firms receive a rebate for the execution of orders resting in the limit order book, *i.e.* , posting liquidity, and pay a fee for the execution of orders that trade against liquidity resting on the limit order book, *i.e.* , taking liquidity. Taker fees currently range up to $0.45 per contract and are charged without consideration of the order origin category, including public customer orders. The effective price paid by a customer purchasing an option can be considerably higher on an exchange that charges a taker fee. Because orders cannot be executed at prices inferior to the NBBO, ISE members are effectively forced to pay taker fees when an exchange with a taker fee structure is at the NBBO and the members' orders are directly routed to such an exchange or indirectly routed to such an exchange through Linkage (where the fees are passed through). 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act. 9 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(5) of the Act's 10 requirements that the rules of a national securities exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and, in general, to protect investors and the public interest. In particular, the proposed rule change will give additional opportunities for public customer orders to be executed at the NBBO at ISE and reduce costs by reducing the number of Linkage orders sent to other exchanges. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that the proposed rule change 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 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 proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and subparagraph (f)(6) of Rule 19b-4 thereunder. 12 As required under Rule 19b-4(f)(6)(iii), 13 the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change. 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b-4(f)(6). 13 17 CFR 240.19b-4(f)(6)(iii). A proposed rule change filed under Rule 19b-4(f)(6) 14 normally may not become operative prior to 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) 15 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The ISE requests that the Commission waive the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii), 16 which would make the rule change effective and operative upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that a waiver of the 30-day operative delay will allow the Exchange to implement this proposed rule change immediately and, thus, permit all ISE members to respond to public customer orders that have been exposed. 17 Further, the Commission notes that another exchange has similar rules that would expose in-bound orders that are executable against the NBBO on that exchange's book for one second. 18 Accordingly, the Commission designates the proposed rule change operative upon filing with the Commission. 14 17 CFR 240.19b-4(f)(6). 15 17 CFR 240.19b-4(f)(6)(iii). 16 *Id.* 17 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 18 *See* Chapter V, Section 16(b) of the Rules of the Boston Options Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-ISE-2008-50 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2008-50. 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 ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2008-50 and should be submitted on or before July 24, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 19 Florence E. Harmon, Acting Secretary. 19 17 CFR 200.30-3(a)(12). [FR Doc. E8-15069 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58041; File No. SR-ISE-2007-94] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change as Modified by Amendments No. 1 and 3 Thereto Relating to Reduction of the Order Handling and Exposure Periods June 26, 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 5, 2007, the International Securities Exchange, LLC (“ISE” or “Exchange”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by ISE. On December 4, 2007, ISE filed Amendment No. 1 to the proposed rule change. On May 22, 2008, ISE filed Amendment No. 2 to the proposed rule change. 3 On June 23, 2008, ISE filed Amendment No. 3 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. 3 Amendment No. 2 was withdrawn on May 29, 2008. I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange is proposing to reduce the order handling and exposure periods contained in Exchange Rules 716 (Block Trades), 717 (Limitations on Orders), 723 (Price Improvement Mechanism for Crossing Transactions), and 811 (Directed Orders) from three seconds to one second. The text of the proposed rule change is available on the Exchange's Web site ( *http://www.iseoptions.com* ), 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, ISE included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. ISE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to reduce the order handling and exposure periods contained in Exchange Rules 716 (Block Trades), 717 (Limitations on Orders), 723 (Price Improvement Mechanism for Crossing Transactions), and 811 (Directed Orders) from three seconds to one second. Rule 716 contains the requirements applicable to the execution of orders using the Block Order Mechanism, Facilitation Mechanism, and Solicited Order Mechanism. The Block Order Mechanism allows members to obtain liquidity for the execution of a block-size order, whereas the Facilitation and Solicited Order Mechanisms allow members to enter block-size cross transactions. Rule 723 contains the requirements applicable to the execution of orders using the Price Improvement Mechanism (“PIM”). The PIM allows members to enter cross transactions of any size. Orders entered into any of these mechanisms (“Mechanisms”) currently are exposed to all market participants for three seconds, giving participants an opportunity to enter additional trading interest before the orders are automatically executed. Under the proposal, the exposure period for all four Mechanisms would be reduced to one second. Rule 717 requires members to expose agency orders to the marketplace before executing them as principal 4 or executing them against orders solicited from other members. 5 Under Rule 717, an order can be exposed either by entering it onto the Exchange and waiting at least three seconds before entering the contra-side proprietary or solicited order, or by utilizing the various mechanisms that have an exposure period built into the functionality as described above. Under the proposal, the exposure period for orders entered onto the Exchange would be reduced to one second. 6 4 Rule 717(d). 5 Rule 717(e). The Exchange proposes to make a non-substantive clean-up of Rule 717(e) to specify that members can use the Facilitation Mechanism to execute solicited crosses. The Facilitation Mechanism rule was amended earlier this year to allow members to enter solicited crosses, and Rule 717(e) should have been updated at that time. *See* Securities Exchange Act Release No. 55557 (March 29, 2007), 72 FR 16838 (April 5, 2007). 6 Under Rule 717(d), a member may enter an agency order that would execute against a pre-existing proprietary order on the Exchange if such proprietary order was entered at least three seconds prior to receipt of the agency order. Under the proposal, this time period would also be reduced to one second. Rule 811 contains the requirements applicable to the handling and execution of Directed Orders. A Directed Order is an order routed from an Electronic Access Member to an Exchange Market Maker (the “Directed Market Maker”) through the Exchange's system. 7 A Directed Market Maker is required to enter Directed Orders into the PIM or release the order to the Exchange's limit order book within three seconds of receipt. 8 Under the proposal, this time period would be reduced to one second. 7 Rule 811(a)(1). 8 Rule 811(c)(3). If the Directed Market Maker fails to do so within three seconds, the Exchange's system automatically releases the order. Rule 811(c)(3)(ii). Additionally, there are three instances when a Directed Order is exposed to all market participants for three seconds after being released to the Exchange's limit order book:
(i)Before a Directed Order is matched against the Directed Market Maker at the NBBO; 9
(ii)before executing a Directed Order against the Directed Market Maker's Guarantee; 10 and
(iii)before being given to the Primary Market Maker for handling where the Directed Market Maker is also the Primary Market Maker. 11 Under the proposal, these three exposure periods would be reduced to one second. 9 If a Directed Market Maker is quoting at the NBBO at the time it releases a Directed Order, the Directed Market Maker is last in priority, and the order is exposed to all market participants before the Directed Order is executed against the Directed Market Maker's quote. 10 If the Directed Market Maker is quoting at the NBBO on the opposite side of the market from a Directed Order at the time the Directed Order is received by the Directed Market Maker, and the Directed Order is marketable, the Exchange's system will automatically guarantee execution of the Directed Order against the Directed Market Maker at the price and the size of the Directed Market Maker's quote. Rule 811(d). 11 As provided in Rule 714, when the Exchange's best bid or offer is inferior to another exchange, incoming marketable customer orders are handled by the Primary Market Maker pursuant to Rule 803(c), which requires the Primary Market Maker to either execute the order at a price that matches the NBBO or attempt to obtain the better price for the customer according to the Linkage rules contained in Chapter 19. Finally, if a Directed Order is placed on the Exchange's limit order book, the Directed Market Maker is not permitted to enter a proprietary order to execute against the Directed Order during the three seconds following the release of the Directed Order. This limitation would be reduced to one second under the proposal. In adopting the various three-second order handling and exposure periods, ISE recognized that three seconds would not be long enough to allow human interaction with the orders. Rather, market participants had become sufficiently automated that they could react to these orders electronically. In this context, ISE recognizes that it is in all market participants' best interest to minimize the exposure period to a time frame that continues to allow adequate time for market participants to electronically respond, as both the order being exposed and the participants responding to the order are subject to market risk during the exposure period. In this respect, ISE's experience with the three-second time period indicates one second would provide an adequate response time. Indeed, most members wait until the end of the last second of the three-second period before responding to exposed orders. Accordingly, the Exchange does not believe it is necessary or beneficial to the orders being exposed to continue to subject them to market risk for a full three seconds. Recently, the Exchange distributed a survey to members that regularly participate in orders executed through the Mechanisms that would be affected by the proposal. To substantiate that its members could receive, process, and communicate a response back to the Exchange within one second, the survey asked members to identify how many milliseconds it took for
(i)a broadcast from ISE to reach their systems;
(ii)their systems to generate responses; and
(iii)their responses to reach the ISE. The survey results indicate that the time it takes a message to travel between the Exchange and its members typically is not more than fifty milliseconds each way. 12 The survey also indicated that it takes not more than ten milliseconds for member systems to process the information and generate a response. Thus, the survey indicated that it typically takes, at most, 110 milliseconds for members to receive, process, and respond to broadcast messages related to the various Mechanisms. Additionally, members indicated that reducing the exposure period to one second would not impair their ability to participate in orders executed through the Mechanisms. 13 The Exchange believes that this information provides additional support for its assertion that reducing the exposure periods from three seconds to one second will continue to provide members with sufficient time to ensure effective interaction with orders. 12 Eleven firms responded to the survey. Eight of the eleven responded to the specific timing questions. Half of these members communicate to the Exchange from Chicago. The others are located in New York City, or operate from both New York City and Chicago. 13 All of the eight members that responded to the specific timing questions, and two of the three members that did not answer the specific timing questions, indicated that reducing the crossing exposure timer to one second would not impair their ability to participate in ISE crossing orders. One member responded that it could not measure the specific times and indicated that it would prefer to keep the exposure periods at three seconds. When approving the existing three-second order handling and exposure periods, the Commission concluded that three seconds was sufficient to afford electronic crowds sufficient time to compete for orders. 14 In reaching this conclusion, the Commission stated that the critical issue is determining whether the three-second timeframe would give participants in a fully automated marketplace sufficient time to respond, compete and provide price improvement for orders, and whether electronic systems were available to ISE members that would allow them to respond in a meaningful way within the proposed timeframe. 15 The Commission noted that the ISE is a fully electronic exchange where participants interact by electronic means, and that electronic systems were readily available, if not already in place, that would allow ISE members to respond. 16 14 *See* Securities Exchange Act Release No. 50819 (December 8, 2004), 69 FR 75093 (December 15, 2004) (order approving PIM with three-second order handling and exposure periods); Securities Exchange Act Release No. 52711 (November 1, 2005), 70 FR 67508 (November 7, 2005) (reduction of exposure period for Facilitation and Solicited Order Mechanisms from ten seconds to three seconds); Securities Exchange Act Release No. 53850 (May 23, 2006), 71 FR 30703 (May 30, 2006) (reduction of exposure period for orders entered on the Exchange under Rule 717(d) and
(e)from thirty seconds to three seconds); Securities Exchange Act Release No. 54531 (September 28, 2006), 71 FR 58649 (October 4, 2006) (reduction of exposure period for Block Order Mechanism from thirty seconds to three seconds). 15 *See* Securities Exchange Act Release No. 50819 (December 8, 2004), 69 FR 75093 at 75096 (December 15, 2004) (order approving PIM with three-second order handling and exposure periods). 16 *Id.* The Exchange believes reducing order handling and exposure periods as discussed above from three seconds to one second would benefit all market participants. Since members react to these orders electronically, and generally only at the tail end of the three-second period, reducing the time periods would continue to provide sufficient time to ensure effective interaction with orders. At the same time, reducing the time periods to one second would allow the Exchange to provide investors and other market participants with more timely executions, thereby reducing market risk. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) of the Act 17 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, ISE believes that the proposal will benefit market participants by providing more timely executions. 17 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties, except as described below. In Amendment No. 3, ISE noted that the Commission received a comment letter on another ISE rule proposal related to the price at which a transaction may be effected through the PIM (the “Price Proposal”), which asserted that the combined effect of the Price Proposal and this proposal to reduce the exposure period to one second would be increased internalization rates. 18 ISE further noted that the Commission subsequently approved the Price Proposal, stating that it did not agree with the concerns raised by the commenter and that the PIM would continue to provide an opportunity for customer orders to receive an execution at a price better than the NBBO. 19 The Commission stated in its approval order that the Price Proposal could increase the likelihood of members entering agency orders into the PIM because the members would only be required to guarantee an execution at the NBBO, which would provide additional customer orders an opportunity for price improvement. ISE also noted that the Commission mentioned in its approval order the potential for the Price Proposal to encourage increased participation in a PIM and that increased participation would decrease the proportion of an agency order that would be internalized by the submitting member. 18 Letter from Lisa J. Fall, General Counsel, Boston Options Exchange, to Nancy M. Morris, Secretary, Commission, dated May 14, 2008 (commenting on File Number SR-ISE-2008-29). 19 See Securities Exchange Act Release No. 57847 (May 21, 2008), 73 FR 30987 (May 29, 2008) (order approving File No. SR-ISE-2008-29). As the Exchange discusses in the Purpose section of this filing, and as further supported by the results of the survey discussed above, ISE members are able to respond to PIM orders in less than one second, and therefore the Exchange does not believe this proposal will discourage competition for PIM orders. Rather, ISE believes that this rule change, like the Price Proposal, could provide additional customer orders an opportunity for price improvement because it would reduce the market risk for members that are required to guarantee an execution at the NBBO or better. 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-ISE-2007-94 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2007-94. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *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 ISE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2007-94 and should be submitted on or before July 24, 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, Acting Secretary. [FR Doc. E8-15101 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58033; File No. SR-NYSE-2008-49] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend for Three Months the Moratorium Related to the Qualification and Registration of Registered Competitive Market Makers, Pursuant to NYSE Rule 107A, and Competitive Traders, Pursuant to NYSE Rule 110 June 26, 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 June 23, 2008, the New York Stock Exchange LLC (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend for three months the moratorium related to the qualification and registration of Registered Competitive Market Makers (“RCMMs”), pursuant to Exchange Rule 107A, and Competitive Traders (“CTs”), pursuant to Exchange Rule 110 (“Moratorium”). The text of the proposed rule change is available at *http://www.nyse.com* , the NYSE, and the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to extend for three months the current Moratorium related to the qualification and registration of RCMMs, pursuant to Exchange Rule 107A, and CTs, pursuant to Exchange Rule 110. On September 22, 2005, the Exchange filed SR-NYSE-2005-63 3 with the Commission proposing to implement a Moratorium on the qualification and registration of new RCMMs and CTs. The purpose of the Moratorium was to allow the Exchange an opportunity to review the viability of RCMMs and CTs in the NYSE HYBRID MARKET SM (“Hybrid Market”). 4 3 *See* Securities Exchange Act Release No. 52648 (October 21, 2005), 70 FR 62155 (October 28, 2005) (SR-NYSE-2005-63). 4 *See* Securities Exchange Act Release No. 53539 (March 22, 2006), 71 FR 16353 (March 31, 2006) (SR-NYSE-2004-05) (establishing the Hybrid Market). During each phase of the Hybrid Market, new system functionality was included in the operation of Exchange systems, and new data was generated. As a result, the Exchange was unable to make an informed decision as to the viability of RCMMs and CTs in the Hybrid Market. The phased-in implementation of the Hybrid Market required the Exchange to extend the Moratorium an additional six times over the next twenty-four months. 5 5 *See* Securities Exchange Act Release Nos. 54140 (July 13, 2006), 71 FR 41491 (July 21, 2006) (SR-NYSE-2006-48); 54985 (December 21, 2006), 72 FR 171 (January 3, 2007) (SR-NYSE-2006-113); 55992 (June 29, 2007), 72 FR 37289 (July 9, 2007) (SR-NYSE-2007-57); 56556 (September 27, 2007), 72 FR 56421 (October 3, 2007) (SR-NYSE-2007-86); 57072 (December 31, 2007), 73 FR 1252 (January 7, 2008) (SR-NYSE-2007-125); and 57601 (April 2, 2008), 73 FR 19123 (April 8, 2008) (SR-NYSE-2008-22). The Exchange is now proposing to extend the Moratorium, as amended, 6 for an additional three months to September 30, 2008 in order to finalize its determination as to the roles of RCMMs and CTs and to formally submit a proposal to the Commission outlining the role, if any, these classes of traders have in the Exchange's evolving market. 6 *See* Securities Exchange Act Release No. 53549 (March 24, 2006), 71 FR 16388 (March 31, 2006) (SR-NYSE-2006-11) (making certain amendments to the Moratorium). On June 12, 2008, the Exchange filed its proposal to create its new market model (“New Model”). 7 Pursuant to its proposal, the Exchange intends to:
(i)Provide market participants with additional abilities to post hidden liquidity on Exchange systems;
(ii)create a Designated Market Maker (“DMM”) and phase out the NYSE specialist; and
(iii)enhance the speed of execution through technological enhancements and a reduction in message traffic between Exchange systems and its DMMs. 7 *See* SR-NYSE-2008-46. In light of these proposed changes, the Exchange seeks to continue its review of the data related to RCMMs' and CTs' current trading on the NYSE. Accordingly, the Exchange requests additional time to decide what roles, if any, RCMMs and CTs should perform in the proposed New Model. The Exchange will issue an Information Memo announcing the extension of the Moratorium. 2. Statutory Basis The basis under the Act 8 for this proposed rule change is the requirement under section 6(b)(5) 9 that an exchange have rules that are designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange is currently reviewing the data related to RCMMs and CTs to evaluate its trading volume in the current, more electronic market. Since it is undergoing significant developments in its technology and its market model, the Exchange believes that an extension of time to finalize its determination of what, if any, roles the RCMMs and CTs will play in this evolving marketplace could potentially remove impediments to, and better improve, the mechanism of a free and open market. 8 15 U.S.C. 78a. 9 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change:
(i)Does not significantly affect the protection of investors or the public interest;
(ii)does not impose any significant burden on competition; and
(iii)does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act 10 and Rule 19b-4(f)(6) thereunder. 11 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) under the Act, the Exchange is required to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied the five-day pre-filing requirement. A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act 12 normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) 13 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The NYSE has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because it would allow the Moratorium to continue without interruption so that the Exchange may have additional time to make a final determination as to the future roles of RCMMs and CTs in the proposed New Model and to file with the Commission a proposed rule change outlining such roles. For these reasons, the Commission designates that the proposed rule change become operative immediately. 14 12 17 CFR 240.19b-4(f)(6). 13 17 CFR 240.19b-4(f)(6)(iii). 14 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NYSE-2008-49 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2008-49. 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2008-49 and should be submitted on or before July 24, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 15 15 17 CFR 200.30-3(a)(12). Florence E. Harmon, Acting Secretary. [FR Doc. E8-15066 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58036; File No. SR-NYSE-2008-51] Self-Regulatory Organizations; New York Stock Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Exchange Rule 103A (Specialist Stock Reallocation and Member Education and Performance) and Exchange Rule 103B (Specialist Stock Allocation) June 26, 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 June 24, 2008, the New York Stock Exchange, LLC (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated the proposed rule change as “non-controversial” under Section 19(b)(3)(A)(iii) 3 of the Act and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to extend to September 30, 2008, the moratorium on the administration of the Specialist Performance Evaluation Questionnaire (“SPEQ”) pursuant to Exchange Rule 103A and the use of the SPEQ pursuant to Exchange Rule 103B (“Moratorium”), which was implemented on June 8, 2007. In addition, the Exchange proposes to continue to suspend the use of SuperDot turnaround for orders received and the use of responses to administrative messages as objective measures in the assessment of specialist performance during the Moratorium. The Exchange further proposes that the SPEQ and Order Reports/Administrative Responses continue to be removed from the criteria used to commence a specialist performance improvement action during the Moratorium. The text of the proposed rule changes is available on the Exchange's Web site ( *http://www.nyse.com* ), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NYSE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to extend to September 30, 2008, the Moratorium on the administration of the SPEQ pursuant to Exchange Rule 103A and the use of the SPEQ pursuant to Exchange Rule 103B, which was implemented on June 8, 2007 and extended through June 31, 2008. 5 5 *See* Securities Exchange Act Release Nos. 55852 (June 4, 2007), 72 FR 31868 (June 8, 2007) (NYSE-2007-47) (“Original Request”); 57184 (January 22, 2008), 73 FR 5254 (January 29, 2008) (NYSE-2008-02); and 57591 (April 1, 2008), 73 FR 18838 (April 7, 2008) (NYSE-2008-21). In addition, the Exchange proposes that the use of SuperDot turnaround for orders received and responses to administrative messages continue to be removed from the objective measures used in the assessment of specialist performance pursuant to Exchange Rule 103B or as criteria used to commence specialist performance improvement action pursuant to Exchange Rule 103A during the Moratorium. SPEQ Prior to June 2007, pursuant to Exchange Rule 103A, on a quarterly basis, the Exchange distributed a twenty-question survey known as the SPEQ to eligible Floor brokers 6 to evaluate specialist performance during the quarter immediately prior to the distribution of the SPEQ. Initially, this subjective feedback provided critical information to assist the Exchange in maintaining the quality of the NYSE market. 6 The Exchange believed that conscientious participation in the SPEQ process was a critical element in the Exchange's program for evaluating the overall performance of its specialists. All eligible Floor brokers were required to participate in the process and evaluate from one to three specialist units each quarter. Floor brokers were selected to participate in the SPEQ process based on broker badge data submitted in accordance with audit trail requirements. Brokers who intentionally failed or refused to participate in the SPEQ process were potentially subject to disciplinary action, including the imposition of a summary fine pursuant to Exchange Rule 476A. However, the Exchange believed that the SPEQ no longer adequately allowed a Floor broker to assess the electronic interaction between the specialist and the Floor broker. The Hybrid Market provided Floor brokers and specialists with electronic trading tools that have resulted in less personal and verbal contact between Floor brokers and specialists. Currently, the majority of transactions executed on the Exchange are done through electronic executions. In addition, the dramatic increase in transparency with respect to the Display Book through, among other things, Exchange initiatives like NYSE OPENBOOK TM 7 (“OPENBOOK”) has decreased the need for the Floor broker to obtain market information verbally from the specialist. This increased transparency gives all market participants, both on and off the Floor, a greater ability to see and react to market changes. 7 OPENBOOK Online Database is an Exchange online service that allows subscribers to view the contents of the specialist book for any stock at any given point in the day, or over a period of time. Results are returned in an Excel spreadsheet. OPENBOOK Online Database is a historical database with data stored online for a 12-month period. The questions on the SPEQ did not take into account the operation of the electronic tools available in the Hybrid Market. The SPEQ did not provide Floor brokers with a means to evaluate specialist performance under the current market model. As a result of the more electronic interaction between Floor brokers and specialists, Floor brokers were unable to assess specialist performance using the SPEQ. The questions posed to the Floor brokers on the SPEQ required Floor brokers to opine on the specialists' ability to offer single price executions and specialists' ability to provide notification to Floor brokers of market changes in particular stocks. In the current more electronic market, specialists are unable to offer single price executions and the relative speed of executions makes it virtually impossible for specialists to notify brokers of changes in a particular security. Given the above, the SPEQ no longer served as a meaningful measure of specialist performance. Objective Measures The Exchange further requests that during the extension of the Moratorium, allocations of newly listed securities on the Exchange continue to be based on the objective measures identified in Exchange Rule 103B, 8 with the exception of SuperDot turnaround for orders received and response to administrative messages. 8 Pursuant to Exchange Rule 103B, specialist dealer performance is measured in terms of participation (TTV); stabilization; capital utilization, which is the degree to which the specialist unit uses its own capital in relation to the total dollar value of trading in the unit's stocks; and near neighbor analysis, which is a measure of specialist performance and market quality comparing performance in a stock to performance of stocks that have similar market characteristics. Additional objective measures pursuant to Exchange Rule 103B are those measures included in Exchange Rule 103A which are:
(a)Timeliness of regular openings;
(b)promptness in seeking Floor official approval of a non-regulatory delayed opening;
(c)timeliness of DOT turnaround; and
(d)response to administrative messages. As explained in the Original Request and previously requested extensions, SuperDot turnaround for orders received and response to administrative messages no longer provides meaningful objective standards to evaluate specialist performance in the Hybrid Market. Specifically, in the more electronic Hybrid Market, orders received by Exchange systems that are marketable upon entry are eligible to be immediately and automatically executed by Exchange systems. As such, SuperDot turnaround no longer provided a meaningful objective measure of a specialist's performance. Furthermore, in the current more electronic market, the Exchange systems automatically respond to the majority of the administrative messages. Today, there are two administrative messages that require a manual response from specialists. These are messages that require the specialist to provide status information on market orders and stop orders. With regard to requests for the status of stop orders, the specialists are no longer capable of providing this information. In December 2006, following Commission approval, 9 the Exchange changed its stop order handling process. Stop orders are no longer visible to the part of the NYSE Display Book® that the specialist “sees.” When a transaction on the Exchange results in the election of a stop order that had been received prior to such transaction, the elected stop order is sent as a market order 10 to the Display Book and the specialist's system employing algorithms, where it is handled in the same way as any other market order. The specialist, therefore, is unable to provide any information regarding the status of stop orders. 9 *See* Securities Exchange Act Release No. 54820 (November 27, 2006), 71 FR 70824 (December 6, 2006) (SR-NYSE-2006-65). 10 As used herein, the term “market order” refers to market orders that are not designated as “auction market orders.” Market orders are eligible to receive immediate and automatic execution on the Exchange. The immediate and automatic execution of market orders eliminates the need for the specialists to respond to the administrative request for the status of market orders. In practice, a customer that submits a market order will likely receive a report of execution before the administrative message requesting the status of the market order has been printed and read by the specialist. This change has had a minimal impact on Exchange customers. In the past few years, the average number of administrative messages received on a daily basis has steadily declined. The Exchange believes that immediate and automatic execution of orders will virtually eliminate administrative messages that require a manual response from a specialist. As a result, a specialist's ability to respond to administrative messages no longer provides a meaningful measure of specialists' performance during the Moratorium. Given the above, the Exchange seeks to continue suspension of the use of both measures as criteria used to assess specialists' performance during the extension of the Moratorium. Performance Improvement Actions Similarly, during the extension of the Moratorium, the Exchange seeks to continue suspending the use of the SPEQ and Order Reports/Administrative Reports as criteria for the implementation of a performance improvement action pursuant to Exchange Rule 103A. Exchange Rule 103A(b) provides that: The Market Performance Committee shall initiate a Performance Improvement Action (except in highly unusual or extenuating circumstances, involving factors beyond the control of a particular specialist unit, as determined by formal vote of the Committee) in any case where a specialist unit's performance falls below such standards as are specified in the Supplementary Material to this rule. The objective of a Performance Improvement Action shall be to improve a specialist unit's performance where the unit has exhibited one or more significant weaknesses, or has exhibited an overall pattern of weak performance that indicates the need for general improvement. Prior to June 2007, the SPEQ and Order Reports/Administrative Reports were two criteria included in the standards specified in Exchange Rule 103A Supplementary Material. Given that SPEQ and Order Reports/Administrative Reports no longer provided significant objective measures of specialists' performance in the Hybrid Market, the Exchange sought to suspend the use of both measures as criteria for the implementation of a performance improvement action during the Moratorium. Through this filing, the Exchange seeks to continue this suspension for the duration of the Moratorium. Creation of a New Process The Exchange intends to establish a quantifiable measure in order to determine a specialist unit's eligibility to participate in the new Allocation Process. The Exchange intends to formally submit a proposal to the Commission to amend Exchange rules that govern the allocation of securities to specialist units and other related rules by the end of June 2008. The Exchange believes that the use of a single objective measure to determine specialist unit eligibility for allocation will create a more efficient process that is consistent with the Exchange's current more electronic trading environment. Conclusion The Exchange therefore requests to extend the Moratorium on the administration of the SPEQ pursuant to Exchange Rule 103A and the use of the SPEQ pursuant to Exchange Rule 103B until September 30, 2008. In addition, the Exchange proposes to continue to suspend the use of SuperDot turnaround for orders received and the use of responses to administrative messages as objective measures in the assessment of specialist performance during the Moratorium. The Exchange further proposes that the SPEQ and Order Reports/Administrative Responses continue to be removed from the criteria used to commence a specialist performance improvement action during the Moratorium. 2. Statutory Basis The Exchange believes that the basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 11 that an Exchange have rules that are designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposed rule change also is designed to support the principles of Section 11A(a)(1) 12 in that it seeks to assure economically efficient execution of securities transactions, make it practicable for brokers to execute investors' orders in the best market and provide an opportunity for investors' orders to be executed without the participation of a dealer. Due to the Exchange's transition to a more electronic market, the current SPEQ, SuperDot turnaround for orders received and response to administrative messages no longer provide meaningful objective standards to evaluate specialist performance in the Hybrid Market. The Exchange requests this continued extension of the Moratorium to determine whether elimination of the SPEQ as well as SuperDot turnaround for orders received and response to administrative messages as objective measures would remove an impediment to a free and open electronic market which would result in the more economically efficient execution of securities transactions. Given the current trend to a more electronically based market, the Exchange believes that the use of more objective and detailed measures will promote healthy competition between specialist units and ultimately result in better market-making for Exchange customers. 11 15 U.S.C. 78f(b)(5). 12 15 U.S.C. 78k-1(a)(1). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action *Because the proposed rule change does not:*
(i)Significantly affect the protection of investors or the public interest;
(ii)impose any significant burden on competition; and
(iii)become operative for 30 days after the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and subparagraph (f)(6) of Rule 19b-4 thereunder. 14 13 15 U.S.C. 78s(b)(3)(A). 14 17 CFR 240.19b-4(f)(6). A proposed rule change filed under 19b-4(f)(6) normally may not become operative prior to 30 days after the date of filing. 15 However, Rule 19b-4(f)(6)(iii) 16 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the Commission waive the five-day prefiling requirement and the 30-day pre-operative delay and designate the proposed rule change to become operative upon filing. 15 17 CFR 240.19b-4(f)(6)(iii). 16 *Id* . The Commission believes that waiving the five-day prefiling requirement and the 30-day operative delay is consistent with the protection of investors and the public interest because it would allow the Exchange to extend the Moratorium without interruption. The Commission designates the proposal to become effective and operative upon filing. 17 17 For purposes only of waiving the 30-day operative delay, the Commission has considered the impact of the proposed rule on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in the furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NYSE-2008-51 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2008-51. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2008-51 and should be submitted on or before July 24, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 18 18 17 CFR 200.30-3(a)(12). Florence E. Harmon, Acting Secretary. [FR Doc. E8-15067 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58050; File No. SR-NYSE-2008-53] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Amending NYSE Rule 123D (Openings and Halts in Trading) To Provide for a Limited Exemption for Securities Trading on the Exchange That Are Part of the Russell Index Reconstitution June 27, 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 June 27, 2008, the New York Stock Exchange LLC (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. NYSE filed the proposed rule change as a “non-controversial” proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change NYSE proposes to amend NYSE Rule 123D to exempt orders for any security that is trading on the Exchange on June 27, 2008, and is part of the Russell Index Reconstitution 5 (a “Russell Stock”), from the provisions of the non-regulatory trading halt condition designated as “Sub-penny trading” as set forth in subsection
(3)of the rule. The text of the proposed rule change is available at the Exchange, the Commission's Public Reference Room, and *http://www.nyse.com* . 5 On June 27, 2008, the Russell Investment Group will reconstitute certain of its indices, including the Russell 3000® Index and the Russell Microcap® Index. 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 Through this filing, the Exchange proposes to amend NYSE Rule 123D to provide a limited exemption for orders in a Russell Stock that is trading on the Exchange on June 27, 2008, and is part of the Russell Index Reconstitution, from the provisions of the non-regulatory trading halt condition designated as “Sub-penny trading” pursuant to NYSE Rule 123D(3). Background Pursuant to NYSE Rule 123D(3), whenever a security trading on the Exchange is reported on the consolidated tape during normal trading hours as having traded at a price of $1.05 or less, or if a security would open on the Exchange at a price of $1.05 or less, trading in the security on the Exchange shall be immediately halted due to a “Sub-penny trading” condition. Once halted for such reason, trading shall not resume on the Exchange until the security has traded on another automated trading center, as defined in Rule 600(b)(4) of Regulation NMS (“Reg NMS”), 6 for at least one entire trading day at a price or prices that are at all times at or above $1.10. Any such resumption of trading shall occur at the beginning of a trading day, so that normal opening procedures can apply. In contrast to other trading halts described in NYSE Rule 123D, a “Sub-penny trading” halt is automatic and does not require the approval of any Floor Officials. However, if a determination is made by a Floor Official that a trade that triggered a halt because of a “Sub-penny trading” condition was made in error or otherwise was an anomaly, trading of the security on the Exchange will resume immediately. Orders entered with the Exchange in a security subject to a “Sub-penny trading” condition halt will be routed to NYSE Arca, where they will be handled in accordance with the rules governing that market. The Exchange will cancel any open limit orders in the Display Book system with respect to securities that become subject to a “Sub-penny trading” condition halt. 6 *See* 17 CFR 242.600(b)(4). Exemption From NYSE Rule 123D(3) The Exchange seeks, through this filing, a limited exemption from the provisions of NYSE Rule 123D(3) on June 27, 2008. The Exchange believes that this exemption is necessary to address the possibility that a particular Russell Stock might open or trade on the Exchange at a price of $1.05 or less, thereby invoking the “Sub-penny trading” condition halt. In that instance, trading in the Russell Stock would be halted on the Exchange for the rest of the trading day and unexecuted limit orders remaining on the Display Book would be cancelled. More importantly, there would be no closing transaction on the Exchange for the Russell Stock on the day a “Sub-penny trading” condition halt was in effect and thus, no ability to price such stock during the Russell Index Reconstitution. Pursuant to this proposed limited exemption, the Exchange would not invoke the “Sub-penny trading” halt if the Russell Stock opened or traded on the Exchange at a price of $1.05 or less. Rather, the Exchange would permit the Russell Stock to continue to trade. If such stock were to trade at a price of $0.99 or less, a non-regulatory trading condition designated as “Equipment Changeover” would be implemented. When an “Equipment Changeover” condition trading halt is invoked, Exchange Systems will continue to accept all orders in the Russell Stock. Open orders in the Russell Stock on the NYSE Display Book system will not be cancelled nor will such orders be routed to NYSE Arca. Instead, all orders that have been entered will be aggregated for purposes of a closing transaction pursuant to all relevant NYSE rules governing the close. The Exchange believes that only one Russell Stock trading on the Exchange could potentially be eligible for a “Sub-penny trading” condition halt on June 27, 2008. Accordingly, the Exchange states that this limited exemption is applicable to only one such Russell Stock. If such security does not trade at a price of $1.05 or less, this limited exemption would prove unnecessary and would expire at the close of trading on June 27, 2008. The Exchange believes further that this limited exception would ensure that on June 27, 2008, each Russell Stock would be subject to pricing on the NYSE close, removing the possibility that such stock might be adversely affected on the close, causing potential harm to the market and to investors. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act, 7 in general, and furthers the objectives of Section 6(b)(5) of the Act, 8 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes the proposed rule change would ensure that trading in Russell Stocks and the Russell Index Reconstitution on June 27, 2008, would proceed without any impediment. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange states that 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 Because the foregoing proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b-4(f)(6) thereunder. 10 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to provide the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Commission is waiving the five business-day requirement. A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the five business-day pre-filing requirement and the 30-day operative delay so that it may immediately implement the limited exemption to the provisions of NYSE Rule 123D to ensure that Russell Stocks would be subject to pricing on the NYSE close on June 27, 2008. The Exchange states that the proposed rule change does not significantly affect the protection of investors or the public interest and does not impose any significant burden on competition. The Commission believes that waiving the 30-day operative delay and five business-day pre-filing requirement is consistent with the protection of investors and the public interest. 11 The Commission believes that this narrowly tailored exception to NYSE Rule 123D(3), lasting only for the duration of one trading day, should help to ensure fair and orderly markets on June 27, 2008, the day of the Russell Index Reconstitution. The Commission notes that the requirements of Rule 611 of Reg NMS 12 would still apply. For these reasons, the Commission designates the proposed rule change as operative upon filing. 11 For purposes only of waiving the 30-day operative delay and five business-day pre-filing requirement, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 12 *See* 17 CFR 242.611. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NYSE-2008-53 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2008-53. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2008-53 and should be submitted on or before July 24, 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, Acting Secretary. [FR Doc. E8-15070 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58040; File No. SR-NYSE-2008-50] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend NYSE Rule 104.10 To Extend the Duration of the Pilot Program Applicable to Conditional Transactions in All Securities to September 30, 2008 June 26, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule19b-4 thereunder, 2 notice is hereby given that on June 23, 2008, the New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated the proposed rule change as a “non-controversial” proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Rule 104.10 to extend the duration of the pilot program applicable to Conditional Transactions as defined in Rule 104.10(6)(i) in all securities to September 30, 2008. The text of the proposed rule change is available at NYSE, *http://www.nyse.com* , and the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend NYSE Rule 104.10 to extend the duration of the pilot program applicable to Conditional Transactions as defined in Rule 104.10(6)(i) in all securities for an additional three months until September 30, 2008. On October 26, 2007, the Commission approved the ability of NYSE specialists to effect Conditional Transactions pursuant to NYSE Rule 104.10(6) in all securities traded on the NYSE to operate as a pilot through March 31, 2008 (the “Conditional Transaction Pilot”). 5 5 *See* Securities Exchange Act Release No. 56711 (October 26, 2007), 72 FR 62504 (November 5, 2007) (SR-NYSE-2007-83). The Pilot was extended for an additional three months until June 30, 2008. *See* Securities Exchange Act Release No. 57592 (April 1, 2008), 73 FR 18836 (April 7, 2008) (SR-NYSE-2008-23).
(a)Current Conditional Transaction Pilot Conditional Transactions are specialists' transactions that establish or increase a position and reach across the market to trade as the contra-side to the Exchange published bid or offer. Under the current Conditional Transaction Pilot, NYSE specialists are allowed to effect Conditional Transactions in all securities traded on the NYSE until June 30, 2008. When a specialist effects a Conditional Transaction, he or she has obligations to re-enter the market on the opposite side from which the specialist effected his or her Conditional Transaction pursuant to the rule. Specifically, pursuant to NYSE Rule 104.10(6)(ii), “appropriate” re-entry means “re-entry on the opposite side of the market at or before the price participation point or the ‘PPP.’ ” 6 Depending on the type of Conditional Transaction, a specialist's obligation to re-enter may be immediate or subject to the same re-entry conditions of Non-Conditional Transactions. 7 Conditional Transactions are subject to a specialist's overall negative obligation. 8 As a condition of operating the Conditional Transaction Pilot, the Exchange committed to providing the Commission with data related to specialist executions of Conditional Transactions. The Exchange has provided the Commission's Division of Trading and Markets and Office of Economic Analysis with statistics related to market quality, specialist trading activity and sample statistics for the months of November 2007 through May 2008. The data includes the daily Consolidated Tape volume in shares, daily number of trades, daily high-low volatility in basis points, and daily close price in dollars. 6 NYSE Rule 104.10(6)(iii)(a) provides that the PPP identifies the price at or before which a specialist is expected to re-enter the market after effecting a Conditional Transaction. PPPs are only minimum guidelines and compliance with them does not guarantee that a specialist is meeting its obligations. The Exchange issued guidance regarding PPPs in January 2007. *See* NYSE Member Education Bulletin 2007-1 (January 18, 2007). 7 NYSE Rule 104.10(6)(iii)(c) provides that immediate re-entry is required after the following Conditional Transactions:
(I)A purchase that
(1)Reaches across the market to trade with an Exchange published offer that is above the last differently priced trade on the Exchange and above the last differently priced published offer on the Exchange,
(2)is 10,000 shares or more or has a market value of $200,000 or more, and
(3)exceeds 50% of the published offer size.
(II)A sale that
(1)Reaches across the market to trade with an Exchange published bid that is below the last differently priced trade on the Exchange and below the last differently priced published bid on the Exchange,
(2)is 10,000 shares or more or has a market value of $200,000 or more, and
(3)exceeds 50% of the published bid size. Pursuant to current NYSE Rule 104.10(6)(iv), Conditional Transactions that involve:
(a)A specialist's purchase from the Exchange published offer that is priced above the last differently-priced trade on the Exchange or above the last differently-priced published offer on the Exchange; and
(b)A specialist's sale to the Exchange published bid that is priced below the last differently-priced trade on the Exchange or below the last differently-priced published bid on the Exchange are subject to the re-entry requirements for Non-Conditional Transactions pursuant to Rule 104.10(5)(i)(a)(II)(c). NYSE Rule 104.10(5)(i)(a)(II)(c) provides: Re-entry Obligation Following Non-Conditional Transactions—The specialist's obligation to maintain a fair and orderly market may require re-entry on the opposite side of the market trend after effecting one or more Non-Conditional Transactions. Such re-entry transactions should be commensurate with the size of the Non-Conditional Transactions and the immediate and anticipated needs of the market. 8 The negative obligation, which is part of NYSE Rule 104, requires that specialists restrict their dealings so far as practicable to those reasonably necessary to permit the specialists to maintain a fair and orderly market. Specifically, NYSE Rule 104(a) provides: No specialist shall effect on the Exchange purchases or sales of any security in which such specialist is registered, for any account in which he, his member organization or any other member, allied member, or approved person, (unless an exemption with respect to such approved person is in effect pursuant to Rule 98) in such organization or officer or employee thereof is directly or indirectly interested, unless such dealings are reasonably necessary to permit such specialist to maintain a fair and orderly market, or to act as an odd-lot dealer in such security. The Exchange continues to calculate the specialist's profit on round-trip Hit Bid and Take Offer (“HB/TO”) executions. This is accomplished by measuring the specialist's profit on HB/TO activity by taking the round-trip trading profits for all HB/TO trades where the specialist executes an offsetting trade within 30 seconds. In cases where the volume of the offsetting execution is less than the size of the HB/TO execution, the calculation will only include profits realized within the 30-second window. The Exchange continues to calculate the quote-based specialist re-entry ratio. Each re-entry price level is categorized and reported separately. In addition, the Exchange continues to provide the Commission with data related to the average realized spread on specialist HB/TO executions. These calculations are done using the same formula as SEC Rule 605. Specifically, the average realized spread is a share-weighted average of realized spreads. For specialist buys, it is double the amount of difference between the execution price and the midpoint of the consolidated best bid and offer five minutes after the time of HB/TO execution. For specialist sells, it is double the amount of difference between the midpoint of the consolidated best bid and offer five minutes after the time of HB/TO execution and the execution price. The Exchange will continue to provide all the aforementioned information to the Commission on or before the 15th of the calendar month directly following the data month. The Exchange will maintain average measures for each stock-day during a particular month in order to provide such information to the Commission upon request. Furthermore, NYSE Regulation, Inc. (“NYSER”) believes that it has appropriate surveillance procedures in place to surveil for compliance with the negative obligations of specialists. NYSER monitors, using a pattern-and-practice and/or outlier approach, specialist activity that appears to cause or exacerbate excessive price movement in the market (since such transactions would appear to be in violation of a specialist's negative obligation). In this connection, NYSER continues to surveil for specialist compliance with the PPP re-entry requirements, and, based on its reviews of surveillance data to date, has not identified significant compliance issues. The Division of Market Surveillance of NYSER also monitors specialist trading to cushion such price movements.
(b)Conclusion The Exchange believes that an extension of the current Conditional Transaction Pilot program will continue to provide NYSE specialists with the flexibility to compete and to efficiently and systematically trade and quote in their securities as well as equip them to fluidly manage their risk. In view of the above, the NYSE believes it is appropriate to extend the operation of the Conditional Transaction Pilot program for an additional three months until September 30, 2008. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirement under Section 6(b)(5) 9 of the Act that an Exchange have rules that are designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposed rule change also is designed to support the principles of Section 11A(a)(1) 10 in that it seeks to assure economically efficient execution of securities transactions. The Exchange believes that extending the operation of the Conditional Transaction Pilot will provide specialists with the required flexibility to compete, thus adding value to the Exchange market by encouraging specialists to continue to commit capital. Ultimately, the Exchange believes that the Conditional Transaction Pilot benefits the marketplace by allowing specialists to manage their risk and, therefore, provides them with the ability to increase the liquidity they provide at prices outside the best bid and offer, as well as meet their obligation to bridge temporary gaps in supply and demand and dampen volatility. 9 15 U.S.C. 78f(b)(5). 10 15 U.S.C. 78k-1(a)(1). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b-4(f)(6) thereunder 12 because the foregoing proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)by its terms, does not become operative for 30 days after the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b-4(f)(6). A proposed rule change filed under Rule 19b-4(f)(6) normally may not become operative prior to 30 days after the date of filing. 13 However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii), 14 which would make the rule change effective and operative upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because such waiver would allow the Conditional Transaction Pilot to continue without interruption through September 30, 2008 and provide the Exchange and the Commission additional time to evaluate the pilot. 15 Accordingly, the Commission designates the proposed rule change effective and operative upon filing with the Commission. 13 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)(iii) requires the self-regulatory organization to give the Commission notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. NYSE has satisfied this requirement. 14 17 CFR 240.19b-4(f)(6)(iii). 15 For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2008-50 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2008-50. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR-NYSE-2008-50 and should be submitted on or before July 24, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 16 16 17 CFR 200.30-3(a)(12). Florence E. Harmon, Acting Secretary. [FR Doc. E8-15100 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58052; File No. SR-NYSE-2008-45] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending NYSE Rule 98 and Related Rules To Redefine Specialist Operations at the NYSE June 27, 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 June 11, 2008, New York Stock Exchange LLC (“NYSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 98 and related rules to redefine specialist operations at the NYSE. The text of the proposed rule change is available at NYSE's principal office, the Commission's Public Reference Room, and *http://www.nyse.com.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The NYSE is proposing to amend Rule 98 to reduce the regulatory burdens imposed by the rule and to provide flexibility to member organizations as to how they can structure their specialist operations and manage their risks. In particular, because of changes to the marketplace, including changes to the specialist's role as a result of the increased use of electronic trading, the Hybrid Market®, and Regulation NMS, as well as technological advances in surveillance and internal controls, the NYSE believes that current Rule 98 imposes unnecessary restrictions on member organizations seeking to engage in specialist operations at the Exchange. Accordingly, the NYSE proposes revising Rule 98 in its entirety to provide a framework for specialist operations that meet both the regulatory concerns of the current rule and the reality of today's marketplace. In addition to changes to Rule 98, the NYSE proposes making conforming changes to other NYSE rules that rely on Rule 98 exemptions for approved persons. As discussed in further detail below, the revisions to Rule 98 would include:
(1)Redefining the persons to whom Rule 98 would apply;
(2)allowing specialist operations to be integrated into better capitalized member organizations;
(3)permitting a specialist unit to share non-trading related services with its parent member organization or approved persons; and
(4)providing flexibility to member organizations and their approved persons in how to conduct risk management of specialist operations. To achieve these changes, the NYSE proposes shifting the paradigm of Rule 98 from one that assumes that the approved persons of a specialist member organization are subject to certain NYSE rules unless an exemption is provided to one where NYSE Regulation, Inc. (“NYSE Regulation”) reviews whether a trading unit that proposes to engage in specialist operations is sufficiently walled off from either its approved persons or parent member organization. Under the new paradigm, rules governing specialist operations, such as Rule 104, will apply only to the unit approved to engage in specialist operations at the NYSE. As the NYSE market model continues to evolve, the NYSE believes that the proposed amendments to Rule 98 will provide a platform from which to further modernize specialist operations. A. Background The NYSE adopted Rule 98 in 1987 in response to consolidation in the securities industry, when NYSE specialist firms that had been independent member-owned entities increasingly became subsidiaries of larger, better capitalized broker-dealers. Because of the specialists' unique position within the markets, and the restrictions on dealers under section 11(a) of the Act, 3 the Exchange crafted a rule that governed how larger member organizations could be connected to specialist firms. 3 *See* 15 U.S.C. 78k(a). The rule establishes a functional separation between the specialist organization and the rest of the broker-dealer. The purpose of that separation was to eliminate or control conflicts of interest between the specialist's actions as market maker in an issuer's securities and other interactions among the specialist's parent or sibling entities and the issuer. In its current form, Rule 98 applies to specialist units and so-called “approved persons” of a specialist organization—that is, entities that are in a control relationship with a specialist organization, or share a common corporate parent with the specialist organization and are engaged in a kindred business. 4 Such entities are, by virtue of their association with the specialist organization, subject to the rules and restrictions applicable to specialists. These include, among other things, restrictions on the approved persons' ability to trade in specialty stock options, restrictions on certain of their business transactions with issuers for whom the specialist organization is the registered specialist, and limits on the amount of securities of such issuers that the specialist and approved persons may own in the aggregate. 4 *See* NYSE Rules 2(d) and 304(e). So as not to unreasonably hamstring a broker-dealer organization overall, Rule 98(b) provides that an approved person may seek Exchange approval to be exempted from most of those restrictions. To obtain a Rule 98(b) exemption, the approved person must establish policies and procedures that are consistent with the Guidelines for Approved Persons Associated with a Specialist's Member Organization (“Rule 98 Guidelines”). These guidelines set out in detail how approved persons and associated specialist organizations should structure and conduct their respective businesses in order to ensure complete separation between the specialist organization and the rest of the member organization. Among other things, the Rule 98 Guidelines provide that the specialist member organization be housed in a separate corporate entity and broker-dealer from its approved persons. Further, to ensure that information does not flow improperly from the specialist organization to approved persons and that approved persons do not have undue influence over particular trading decisions by the specialist, the guidelines establish “functional regulations” that enforce the required separateness. These include requirements that the organizations maintain separate books and records, separate financial accounting, and separate required capital, and that each organization have in place procedures to safeguard confidential information derived from business interactions with the issuer or contained in draft research reports prepared by the approved person. The assumption that all entities affiliated with a specialist are subject to specialist rules unless they have obtained a Rule 98(b) exemption creates a substantial administrative burden on specialist organizations and their approved persons: Each approved person of a specialist organization must establish and continually update a separate exemption under Rule 98 if it wishes to engage in activity that would otherwise be restricted under applicable specialist rules. This burden creates a real and substantial barrier to entry for new broker-dealers who may want to establish specialist units. In the face of significant structural changes to the NYSE and the equity markets, and in recognition of the vastly different competitive landscape compared to 1987, the Exchange believes that Rule 98 must be updated in order to provide both existing and prospective specialist firms with the necessary tools to remain competitive while at the same time meeting their obligations as specialists at the NYSE. The proposed changes to Rule 98 also address the Exchange's desire to ease the burdens of a new member organization seeking entry to supplement the six specialist firms currently trading on the Exchange, or the very real possibility of such a firm replacing one or more of the existing specialist firms if they withdraw from the market. Concerning the latter possibility, the NYSE notes that this is not just a theoretical concern: Within the past six months, two specialist firms have already withdrawn. To address these very real concerns, the Exchange proposes to fundamentally amend Rule 98. The proposed rule is described in detail below, but at root, the amendment reverses the assumption that all affiliated entities of a specialist firm are automatically governed by the rules applicable to specialists, and shifts the focus of the rule onto the specialist unit rather than the approved person. As part of this restructuring, the NYSE proposes to eliminate the prescriptive approach of the current rule and move towards a more principle-based approach. The NYSE believes that a principle-based rule closely overseen by NYSE Regulation can achieve the same goals as a rule that attempts to enumerate every possible situation that must be avoided. For that, the proposed rule still requires NYSE Regulation to review whether a specialist unit's policies and procedures are reasonably designed to protect confidential information. However, the rule provides sufficient flexibility so that as the type of information that needs to be protected and the manner in which such information can be protected evolves with changes to the trading environment, so too can the manner in which NYSE Regulation conducts its review. The NYSE believes that the proposed changes to Rule 98 will minimize regulatory burdens and barriers to entry while at the same time provide the necessary level of regulatory scrutiny to ensure that confidential information continues to be protected. In addition, the proposed changes will reduce the regulatory burdens on existing specialist member organizations to enable them to continue such operations at lower cost. B. Proposed Amendments to Rule 98 1. Applicability of Rule 98 Under the proposed rule, a member organization seeking to operate a specialist unit, either as its entire business or as one of its trading units, would need to apply for and be approved by NYSE Regulation before it can begin, or if applicable, continue operations as a specialist unit. As described in more detail below, NYSE Regulation will review whether a proposed specialist unit has:
(1)Adopted written policies and procedures governing the conduct and supervision of the business handled by the specialist unit;
(2)established a process for regular review of such written policies and procedures; and
(3)implemented controls and surveillances reasonably designed to prevent and detect violations of those policies and procedures. Among other things, these policies and procedures must be reasonably designed to protect specialist confidential information and non-public order information, as defined below. Once approved, the NYSE specialist rules, as defined below, including Rule 104, would generally only be applicable to the approved specialist unit and not to its approved persons or, if applicable, parent member organization. As discussed in more detail below, on a case-by-case basis, NYSE Regulation will assess whether an integrated proprietary aggregation unit that manages the risk for a specialist unit could be subject to the specialist rules if the integrated proprietary aggregation unit causes the specialist unit to violate its obligations. The NYSE recognizes that despite the proposed rule changes, an existing specialist member organization may determine to either keep its current operational structure or wait before it implements changes to its operational structure, as permitted by the proposed amended rule. Because current Rule 98 would still be applicable to those specialist units that would not have yet sought the relief available under proposed Rule 98, the Exchange proposes keeping current Rule 98 in its rulebook as “Rule 98 (Former)” until such time as all specialist units are approved pursuant to proposed Rule 98(c). Any new entrant to become a specialist unit would be required to comply with proposed Rule 98; current Rule 98 procedures would not be available to new entrants to the specialist business. As proposed, current Rule 98(b) exemptive relief would be available only so long as the member organization and its approved persons have not materially changed their operational structure, internal controls, or compliance and audit procedures. In such case, the current Rule 98, *i.e.* , Rule 98 (Former), would govern the specialist member organization and its approved persons. 5 Any significant changes to the status quo after the effective date of the proposed new rule would require the member organization to apply for approval pursuant to the procedures described below. 5 As discussed in more detail below, in addition to amending Rule 98, the Exchange proposes to amend related rules that reference the current Rule 98 exemptions for approved persons. To ensure that member organizations operating pursuant to Rule 98 (Former) are subject to the appropriate rules, the Exchange proposes to maintain two forms of the related rules: the amended version and an otherwise unchanged version, except for the title “(Former)” added to the unamended version of the rule or, if applicable, the section affected by the proposed rule change. Once all member organizations are subject to the proposed Rule 98, the Exchange will file to delete any “Former” versions of Rule 98 and the related rules or sections. The Exchange recognizes that an existing specialist member organization that does not implement structural changes to its operations that would require it to apply for approval under the proposed rule may still need certain relief available under the proposed version of the Rule. Accordingly, the Exchange proposes that a member organization operating pursuant to Rule 98 (Former) may apply for relief pursuant to proposed Rule 98(e), which concerns sharing non-trading related services, without first obtaining approval under other provisions of proposed Rule 98. In such situation, the specialist member organization would need to apply for approval from NYSE Regulation to share non-trading related services, as specified in proposed Rule 98(e). If approved, except for the sharing of non-trading related services, such member organization and its approved persons would continue to be subject to Rule 98 (Former) as well as the “(Former)” versions of NYSE rules that reference exemptions from Rule 98 for approved persons, as discussed in more detail below. Once approved pursuant to proposed Rule 98 to operate a specialist unit, share non-trading related services, or engage in risk management, any material changes in how a specialist unit operates its business would require the specialist unit to resubmit its revised written policies and procedures to NYSE Regulation for review. For example, if a specialist unit is approved to operate as a stand-alone aggregation unit and would like to change its business operations to include the specialist unit as part of a larger integrated proprietary aggregation unit, as permitted by proposed Rule 98(d), such change would require pre-approval. 2. Proposed Definitions To ensure clarity, the proposed amendments include a number of defined terms that are applicable throughout the rule. These definitions are designed to provide a level of scalability to the rule so that as the NYSE market model evolves, the definitions used throughout the rule will have common meaning. Among the proposed definitions are: • “Specialist unit”—this definition is intended to apply to any trading unit that is seeking approval to operate as a specialist at the Exchange. As proposed, a specialist unit could be a stand-alone member organization, an aggregation unit within a member organization, or a trading unit (or “desk”) within a larger aggregation unit. Regardless of which corporate structure a member organization chooses, the term “specialist unit” would refer to the unit that is responsible for specialist activities at the Exchange. If approved pursuant to proposed Rule 98(c), a specialist unit would be eligible for allocations under NYSE Rule 103B and be subject to specialist rules. For purposes of Exchange rules, the term “specialist unit” is synonymous with the term “specialist organization” or “specialist member organization.” • “Specialist's account”—this definition refers to any account through which a specialist unit trades at the Exchange. Sometimes referred to as a dealer account, this revised definition would encompass any of the variously-defined accounts that a specialist unit may use to trade at the Exchange. • “Specialist rules”—this definition refers to those rules that govern specialist conduct or trading at the Exchange. Currently, the specialist rules include, among others, Rules 104, 105, and 113, but as the rules at the Exchange change, these rule designations may change. Accordingly, so that proposed Rule 98 evolves along with changes to other rules, this proposed definition does not identify specific rules. • “Specialist confidential information”—this definition concerns the principal or proprietary trading activity of a specialist unit at the Exchange in the securities allocated to it pursuant to Rule 103B, including the unit's positions in those securities, decisions relating to trading or quoting in those securities, and any algorithm or computer system that is responsible for such trading activity and that interface with Exchange systems, such as the specialist application protocol interface (“specialist API”). 6 The definition does not include information about non-public order information, as described below. 6 The specialist API is the electronic link between specialist trading algorithms and the NYSE Display Book®. Via this interface, specialist organization trading algorithms send quoting and trading messages to the Exchange for implementation in the NYSE Display Book®, and the Exchange transmits information necessary to acting as a specialist to specialist organizations. • “Non-public order”—this definition refers to any information relating to order flow at the Exchange, including verbal indications of interest made with an expectation of privacy, electronic order interest, e-quotes, reserve interest, or information about imbalances at the Exchange, that is not publicly-available on a real-time basis via an Exchange-provided datafeed, such as NYSE OpenBook®, or otherwise publicly-available. The definition also encompasses information regarding a reasonably imminent non-public transaction or series of transactions. For example, if in requesting information about the state of the Book, a Floor broker informs the specialist about an order that he or she has, such information would fall under the definition of “non-public order.” As defined, non-public orders include order information at the open, any re-openings, the close, when the security is trading in a slow mode ( *e.g.,* in a Gap quote or LRP situation), and any other information in the NYSE Display Book® 7 that is not available via NYSE OpenBook®. 8 As proposed, the linchpin to the definition of “non-public order” is that it is information not publicly available on a real-time basis. Currently, specialists have unique access to certain non-public order information. However, in its proposed new market model, the Exchange will be proposing to change the specialist's access to such non-public order information. The proposed definition is intended to take into consideration such future changes so that as the specialist's or specialist API's access to non-public order information changes, so will the specialist unit's responsibilities to protect that information change, but without having to revise Rule 98. 7 The Display Book system is an order management and execution facility. The Display Book system receives and displays orders to the specialists, contains the Book, and provides a mechanism to execute and report transactions and publish results to the Consolidated Tape. The Display Book system is connected to a number of other Exchange systems for the purposes of comparison, surveillance, and reporting information to customers and other market data and national market systems. 8 NYSE OpenBook® provides aggregate limit-order volume that has been entered on the Exchange at price points for all NYSE-traded securities. • “Investment banking department” and “Research department”—these definitions refer to the same departments that are defined as such in NYSE Rule 472 and NASD Rule 2711. • “Customer-facing department”—this definition is intended to encompass any department, division, market-making desk, aggregation unit, or trading desk that receives, routes, or executes orders for customer execution or clearing accounts, regardless of whether such unit also engages in principal or proprietary trading. A hallmark of this definition is that a customer has an expectation of confidentiality and best execution on its behalf, which could include a customer that is another broker-dealer. Examples of trading desks that would meet this definition include a Nasdaq market-making desk and most block-trading desks. However, this definition is not intended to include an aggregation unit that solely conducts proprietary trading or proprietary market making (sometimes referred to as electronic market making). • “Aggregation unit”—this definition adopts the standard of Rule 200(f) of Regulation SHO. 9 The proposed rule uses this term throughout to refer to any department, division, unit, or trading desk that has been segregated pursuant to the requirements of Regulation SHO. The NYSE believes that the Regulation SHO requirements for establishing an aggregation unit, including any requirements for information barriers, would be sufficient for segregating a specialist unit's operations from the remainder of a member organization or its approved persons. 9 *See* 17 CFR 242.200(f). • “Non-trading related services”—this definition refers to the type of support services that a specialist unit may share with its parent member organization or approved person. The core of the proposed definition is that the type of services are not related to making decisions about the day-to-day trading of the specialist unit or provide trading support to such activity, such as by a trading assistant or specialist clerk. Examples of non-trading related services include stock loan (so long as consistent with Regulation SHO), clearing and settlement, controllers (for financial accounting purposes), technology support, and personnel who develop applications and algorithmic models. • “Integrated proprietary aggregation unit”—this definition is intended to encompass any aggregation unit that has a trading objective to engage in proprietary trading, including proprietary market-making activities. As defined, an integrated proprietary aggregation unit must not include any activities that would be performed by an investment banking, research, or customer-facing department. Subject to proposed Rule 98(d), a specialist unit could be part of a member organization's integrated proprietary aggregation unit. Alternatively, an approved person or member organization could maintain an integrated proprietary aggregation unit separate from the specialist unit. In such case, the definition of an integrated proprietary aggregation unit becomes relevant in connection with proposed Rule 98(f)(3) and the ability of an approved person to engage in risk management activities on behalf of the specialist unit of an associated member organization. • “Related products”—this definition refers to any derivative instrument that is related to a security allocated to a specialist unit. It can include options, warrants, hybrid securities, single-stock futures, security-based swap agreements, a forward contract, or any other contract that is exercisable into or whose price is based upon or derived from a security listed at the Exchange. The list referenced in the definition is not intended to be exhaustive and the definition is intended to cover any existing or future products that could be related to a security listed at the Exchange. 3. Proposed Rule 98(c): Approval to Operate a Specialist Unit Pursuant to proposed Rule 98(c), a member organization must obtain prior written approval from NYSE Regulation before it can operate a specialist unit. For approval, a specialist unit must demonstrate that it has:
(i)Adopted and implemented comprehensive written procedures and guidelines governing the conduct and supervision of business handled by the specialist unit;
(ii)established a process for regular review of such written policies and procedures; and
(iii)implemented controls and surveillances reasonably designed to prevent and detect violations of these procedures and guidelines. As proposed, these policies and procedures must be reasonably designed to provide that the specialist unit will maintain the confidentiality of both specialist confidential information and non-public orders. The proposed rule enumerates certain bright-line divisions that the specialist unit must maintain, including information barriers between the specialist unit and investment banking, research, and customer-facing departments and approved persons. Such information barriers should guarantee confidentiality two ways: the specialist unit cannot access material non-public information about securities allocated to that unit from either its approved persons or non-specialist operations of a parent member organization and vice versa. With respect to a specialist unit's internal controls and surveillances, NYSE Regulation will be reviewing such surveillance plans to determine whether they are reasonably designed to protect information as required under the proposed rule. Where feasible, NYSE Regulation will expect specialist units to use automated surveillances to check for breaches of the information barriers required by the proposed rule. As with the current rule, NYSE Regulation will also review whether a member organization has implemented internal audit procedures relating to compliance with the proposed Rule 98 policies and procedures. In addition to the specific information barriers enumerated in the proposed rule, if a member organization proposes to operate a specialist unit as a stand-alone unit, the Exchange proposes importing the requirements of a Regulation SHO independent trading unit for specialist units. Accordingly, as required by Rule 200(f) of Regulation SHO, 10 NYSE proposes requiring a specialist unit to have a written plan of organization that specifies its trading objectives and meet all of the other requirements of an independent trading unit under Regulation SHO. If a specialist unit seeks to avail itself of the exemption from NYSE Rule 105 under proposed Rule 98(f)(1), that written plan of organization would need to include its trading objectives for trading in related products. 10 *See* 17 CFR part 242.200(f). As with the current rule, proposed Rule 98 would require the specialist unit to maintain net capital sufficient to meet the requirements of NYSE Rule 104.21. The NYSE believes that if a specialist unit is integrated within a larger member organization, the net capital requirement can be met by having the requisite capital amount allocated to the specialist unit by the member organization. Despite the segregations required by the rule, the NYSE believes that senior managers who are not dedicated to the specialist unit and are associated with either an approved person or a member organization that runs a specialist unit should still be able to provide management oversight to the specialist unit. As proposed, the revised rule is not intended to be more restrictive than the current rule, which permits an approved person to provide general oversight over its associated specialist member organization. The proposed rule instead shifts from a detailed list of specific types of oversight that is permissible to a principle-based approach that focuses on protecting specialist confidential information and non-public order information. As with the current rule, as proposed, senior management oversight of a specialist unit should not conflict with or compromise in any way with the specialist unit's market-making obligations. Proposed Rule 98(c)(2)(E) provides guidance on how a member organization or approved person should handle situations where a senior manager is called upon for risk management purposes and in connection with that role, gains access to specialist confidential information or non-public order information. The Exchange notes that non-public order information could become stale if the order is executed or cancelled without the specialist's knowledge. To ensure that there is no misuse of such information, whether material or not, the senior manager must not make (directly or indirectly) specialist confidential information or non-public order information available to the persons or systems responsible for making trading decisions in aggregation units, departments, divisions, or trading desks that are not part of the specialist unit, including the customer-facing departments. The senior manager also must not use such information to directly or indirectly influence the day-to-day trading decisions of the other aggregation units of the member organization or approved person with respect to the securities allocated to the specialist unit. The NYSE believes that these restrictions on the use of specialist confidential information and non-public order information are similar to how broker-dealers currently handle situations where a senior manager has oversight over multiple aggregation units and in such capacity, becomes privy to confidential information of one aggregation unit. For such situations, broker-dealers have already developed procedures for protecting confidential information and the NYSE believes that such procedures should be reasonable for the oversight of a specialist unit as well. The Exchange notes that although the proposed amendments to Rule 98 eliminate the exemption process under current Rule 98(b), the review that NYSE Regulation would conduct when approving a specialist unit would be as rigorous as the current review for obtaining an exemption, just simply a different focus of what is reviewed. As with the current Rule 98 exemption process, staff from both the Market Surveillance Division of NYSE Regulation as well as relevant staff from the Financial Industry Regulatory Authority, Inc. (“FINRA”), who are responsible for the routine examinations of specialist units, would be involved in reviewing a specialist unit's written policies and procedures and proposed automated surveillances and controls. 11 11 In connection with the July 2007 transfer of certain member firm regulation functions from NYSE Regulation to FINRA, NYSE Regulation and FINRA entered into a regulatory services agreement (“RSA”) whereby FINRA agreed to provide NYSE Regulation with certain services relating to NYSE's retained responsibilities to examine for compliance with NYSE rules that govern trading on or through the systems and facilities of the Exchange. In particular, pursuant to the RSA, FINRA participates in the current Rule 98(b) exemption process and examines specialist firms for compliances with that rule. As proposed, FINRA would continue to participate in the approval process under the proposed Rule 98 and examine specialist units for compliance with the rule. For existing specialist firms, the initial approval process associated with any changes to how they operate may require upfront work to ensure that the specialist unit's policies and procedures are reasonably designed to meet the requirements of the proposed rule. However, unlike the current rule, as proposed, specialist units would be relieved of the requirement to update any written statements to the Exchange for changes in approved persons or dually-affiliated employees. Once approved, NYSE Regulation and FINRA would examine whether a specialist unit's policies and procedures continue to meet the rule requirements and whether the implemented controls and automated surveillances are functioning as designed. As part of such examination review, NYSE Regulation and FINRA will conduct on-site reviews of a specialist unit to review for breaches of the controls or surveillances. And, as noted above, if the specialist unit proposes making any material changes to its operations, it would need to seek additional approval before it can change its operations. 4. Proposed Rule 98(d): Operating a Specialist Unit Within an Integrated Proprietary Unit One of the goals of proposed Rule 98 is to provide a member organization with greater flexibility in how it manages the risk of a specialist unit. As discussed below, in proposed Rule 98(f), the NYSE proposes providing member organizations with an array of options of how to conduct risk management. The NYSE believes that the flexibility afforded by these options will meet the varying business models of the member organizations currently operating or seeking to operate a specialist unit at the Exchange. As discussed in more detail below, one proposed risk management model would be to permit a member organization to integrate a specialist unit within a larger aggregation unit that meets the requirements of an integrated proprietary aggregation unit. Proposed Rule 98(d) sets forth the minimum requirements for how to structure such an integrated unit. While such a unit would be considered a single aggregation unit for Regulation SHO purposes, as proposed, the member organization would need to establish information barriers within the integrated proprietary aggregation unit to restrict access to non-public order information to the specialist unit only. And depending on the risk management model proposed by a specialist unit, a member organization or approved person may need to further segregate the flow of information within a specialist unit. As proposed, the specialist unit that would operate within the integrated proprietary aggregation unit would need to meet the requirements of proposed Rule 98(c)(2)(A), (C), (D), and
(E)of the rule, which concern the information barriers associated with the specialist unit and non-specialist unit operations, net capital requirements, and senior management oversight. Because an integrated proprietary aggregation unit that includes a specialist unit would likely already be subject to Rule 200(f) of Regulation SHO that it qualify as an independent trading unit, the specialist unit operating within the integrated proprietary aggregation unit would not need to separately meet the Rule 200(f) requirement for an independent trading unit. Accordingly, as proposed, a specialist unit that operates within an integrated proprietary aggregation unit would not need to meet the requirements of proposed Rule 98(c)(2)(B), which requires a specialist unit to separately comply with all of the Regulation SHO independent trading unit requirements. 12 12 The Exchange recognizes that there may be some Regulation SHO issues in connection with how a member organization may choose to structure its specialist unit within an integrated proprietary aggregation unit or provide risk management to the specialist unit pursuant to proposed Rule 98(f). In such case, approval to operate under proposed Rule 98 would not be provided until all Regulation SHO issues that may arise have been resolved. In addition to meeting certain requirements of proposed Rule 98(c), under proposed Rule 98(d)(2)(B), the specialist unit must restrict access to non-public order information or specialist confidential information from the rest of the integrated proprietary aggregation unit. Such information barriers must ensure that both individuals and systems that are not assigned to the specialist unit do not have access to non-public order information, or, unless otherwise provided for in proposed Rule 98(f), specialist confidential information. The NYSE believes that as proposed, Rule 98(d)(2)(B) provides sufficient flexibility for how a member organization structures its operations to evolve as the NYSE market model changes. For example, the specialist API currently has access to limited non-public order information, but does not have access to information available in the NYSE Display Book. So long as the specialist API has access to that non-public order information, the Exchange believes that systems not dedicated to the specialist unit should not be integrated with the specialist API. Accordingly, the trading algorithms of the integrated proprietary aggregation unit that are not dedicated to the specialist unit would not have access to any non-public order information via the specialist API, or any other system. Proposed Rule 98(d)(2)(B)(iii) addresses the situation of communications from the Floor of the Exchange to the rest of the integrated proprietary aggregation unit. Currently, specialist unit employees on the Floor of the Exchange have access to non-public order information, whether via access to information in the Display Book® or because of verbal representations of imminent orders. The NYSE believes that the best way to ensure that such information is not provided to individuals or systems not dedicated to the specialist unit is to restrict communications while the employee is still on the Floor of the Exchange. Proposed Rule 98(d)(2)(B)(iv) considers the possibility that an individual who works on the Floor of the Exchange 13 may also, on an intra-day basis, move to an off-Floor location and engage in a non-specialist related role within the integrated proprietary aggregation unit pursuant to proposed Rule 98(d) or for an “upstairs” desk trading in related products within the specialist unit pursuant to proposed Rule 98(f)(1). In such case, the individual must not make any non-public order information or, unless specifically provided for, specialist confidential information, available to individuals or systems that are not dedicated to the specialist unit. Nor may that individual use such non-public information, or, except as provided for in the Rule, specialist confidential information, in any way in connection with responsibilities that are not related to Floor-based activities of the specialist unit. For purposes of proposed Rule 98(f)(1), once off the Floor, a specialist may not use non-public information to directly or indirectly trade in related products. However, nothing in the rule bars a specialist unit from moving personnel among different positions intraday, so long as the restrictions on information flow and use are followed. The NYSE believes that this would provide member organizations with sufficient flexibility to transfer its employees among various roles, including on the Floor of the Exchange and in a specialist unit upstairs location during a given trading day. For intra-day transfers, the Exchange will expect specialist units to have written policies and procedures reasonably designed to ensure that non-public order information and specialist confidential information (unless otherwise permitted) would not be used from an off-Floor location. The Exchange notes that in addition to the information barriers required by proposed Rule 98, specialists must continue to abide by Exchange rules that govern their access to and use of non-public order information. 14 13 Note that NYSE rules define being on the Floor to include the trading Floor of the Exchange, and the premises immediately adjacent thereto, such as the various entrances and lobbies of 11 Wall Street, 18 New Street, 12 Broad Street, and 18 Broad Street, as well as the telephone lobby in the first basement of 11 Wall Street. *See* Rule 112(b). 14 *See, e.g.* , NYSE Rules 70.20(h)(ii), 104(b), 115, and 115A. As noted above, an integrated proprietary aggregation unit would need to qualify as an aggregation unit, which for Regulation SHO purposes, requires the unit to net its positions. While the proposed rule would no longer require separate books and records for a specialist unit, to ensure that NYSE Regulation can review the trading activity by the specialist unit at the Exchange without having to parse through commingled records, under proposed Rule 98(d)(2)(C), in addition to meeting Regulation SHO requirements, an integrated proprietary aggregation unit must maintain records of its specialist's accounts in a manner that is separate from the accounts of the integrated proprietary aggregation unit. 15 15 The Exchange is engaging in a separate discussion with Commission staff of the Regulation SHO implications of requiring a specialist unit to separately aggregate its trading positions for purposes of Exchange rules. In addition to the above, the integrated proprietary aggregation unit must have written policies and procedures that address how it will ensure that the unit will not engage in any activities that could violate other Exchange rules or federal securities laws and regulations, including Regulation SHO. The policies and procedures must address, at a minimum, how the unit will ensure against front running, wash sales, and market manipulation. In connection with wash sales, a potential concern for an integrated proprietary aggregation unit is the possibility that the specialist unit could be selling (buying) one of the securities registered to it and an individual or trading system of the integrated proprietary aggregation unit could at the same time be buying (selling) that same security at the Exchange. With the proper use of mnemonics associated with those orders, Exchange systems are capable of rejecting one side of those orders. Because the presumption would be in favor of the specialist unit trading, i.e., to meet its affirmative obligations at the Exchange, the NYSE proposes rejecting the order from the integrated proprietary aggregation unit. The NYSE also proposes that to the extent an integrated proprietary aggregation unit directs its trading at the Exchange in any security that has been allocated to the specialist unit through the specialist unit, such trading would be subject to the specialist rules. In other words, while the specialist unit would be subject to certain market-making obligations while trading at the Exchange, the integrated proprietary aggregation unit's independent “upstairs” operations would be able to trade freely. Finally, to ensure that NYSE Regulation can review the trading activities of the integrated proprietary aggregation unit, proposed Rule 98(d)(4) requires member organizations to maintain audit trail information for any trading by such unit, including trading at the Exchange and at other market centers. The NYSE proposes to amend NYSE Rule 132B to have the Order Tracking System (“OTS”) requirements apply to trading by a specialist unit, and if applicable, an integrated proprietary aggregation unit. Member organizations must maintain sufficient records to reconstruct in a time-sequenced manner its trading in securities allocated to the specialist unit and any trading by the integrated proprietary aggregation unit in those securities in other market centers or trading in related products. As with the approval process under proposed Rule 98(c), to obtain approval to operate a specialist unit within an integrated proprietary aggregation unit, a member organization would need to submit its written policies and procedures to NYSE Regulation for review of whether such policies and procedures are reasonably designed to meet the rule requirements. Once approved under proposed Rule 98(d), NYSE Regulation and FINRA would continue to examine whether a specialist unit's policies and procedures continue to meet the rule requirements and whether the implemented controls and surveillances plans are functioning as designed. 5. Proposed Rule 98(e): Sharing Non-Trading Related Services One of the restrictions of current Rule 98 is the limit on a specialist member organization and its approved persons to share operational support personnel. In its current form, Rule 98(c) permits dual affiliation only if the specialist member organization and approved person provide the Exchange with a written statement of the duties of such person and why it is necessary for the individual to have a dual affiliation. Any changes to dual affiliations must be submitted to the Exchange for approval in advance of making such change. The NYSE believes that current Rule 98(c) unnecessarily restricts the ability of a specialist member organization and its approved person to share non-trading related services, *i.e.* , operational support services. Accordingly, the NYSE proposes amending Rule 98 to permit the sharing of non-trading related services, subject to the approval of NYSE Regulation. As with the approval process to become a specialist unit, the approval process for a specialist unit to share non-trading related services with its parent member organization or approved person would require the specialist unit to:
(1)Adopt written policies and procedures governing the sharing or non-trading related services;
(2)establish a process for regular review of such written policies and procedures; and
(3)implement controls and surveillances reasonably designed to prevent and detect violations of those policies and procedures. In accordance with the purpose of Rule 98, such policies and procedures must be reasonably designed to protect specialist confidential information and non-public order information. The NYSE understands that personnel or systems that provide non-trading related services may have access to specialist confidential information or non-public order information. For example, clearance and settlement services would have knowledge of specialist positions in securities, and technological support personnel may have knowledge of how a specialist algorithm conducts its trading. However, access to such information should not be the basis for restricting the sharing of such personnel or systems. Rather, such personnel or systems can be shared so long as the specialist unit has controls reasonably designed to ensure that the individuals or systems who have access to specialist confidential information or non-public information neither provide nor make available that information to any individuals or systems not part of the specialist unit. In particular, under no circumstances should non-public order information or specialist confidential information be made available to the investment banking, research, or customer-facing departments. Before a specialist unit can share non-trading related services, NYSE Regulation will review whether the specialist unit has adopted policies and procedures and controls and surveillances reasonably designed to protect specialist confidential information and non-public order information. Once approved, a specialist unit would no longer need to provide NYSE Regulation with a written statement of why a certain individual has a dual affiliation and update such written statements if the individual involved changes. On an ongoing basis, NYSE Regulation and FINRA will examine whether the specialist unit's policies and procedures and controls comply with the requirements of the rule. 6. Proposed Rule 98(f): Risk Management Specialist member organizations and their approved persons are currently limited in their ability to manage the specialist member organization's trading risks: Rule 98 currently restricts an approved person from being involved in any trading decisions of an associated specialist member organization; Rule 105 currently restricts the specialist member organization's ability to trade in options and single-stock futures related to the securities allocated to the specialist member organization. Together, these restrictions place specialist member organizations at a competitive disadvantage vis-à-vis other market-making or trading firms. The NYSE believes that the changes to the marketplace that have occurred since 1987, when Rule 98 was adopted, call for an overhaul of how specialist units are permitted to manage their risk. For example, when Rule 98 was adopted, the NYSE enjoyed an approximately 85% market share in trading of NYSE-listed securities and specialists participated in approximately 12% of the transactions at the Exchange. Now, the NYSE's market share for listed securities hovers under 40%, and of that, specialist participation is in the range of two percent. These numbers are telling: Because of automatic executions at the Exchange, specialists no longer have a unique advantage over other market participants. To the contrary, specialists are now at a disadvantage to other market participants because they must meet their affirmative and negative obligations to the Exchange, yet cannot participate in the type of hedging activities that other market participants may and can do. Accordingly, the Exchange proposes providing specialist units with the ability to manage their risks by broadening the ability to trade in related products and expanding the universe of who may be involved in managing the risk of the specialist unit. Because there is no single correct model for risk management, the NYSE proposes providing specialist units with options of how to manage their risk, which they can choose to use in combination or alone. Regardless of which model a specialist unit proposes to adopt for risk management, at all times, the specialist unit will be ultimately responsible for its quoting or trading decisions at the Exchange. a. Specialist Unit Risk Management In order to provide a specialist unit with greater risk management tools, the NYSE proposes permitting specialist units to apply for an exemption from the Rule 105(b)-(d) restrictions on trading options and single-stock futures. In connection with this change, the NYSE proposes amending Rule 105 so that it applies only to a specialist unit, and not to any other departments or units of a member organization or approved person. If approved for an exemption from Rule 105, a specialist unit would be permitted to trade in related products, subject to proposed Rule 98(f)(1). 16 16 The Exchange also proposes amending section
(m)of the Rule 105 Guidelines to provide that a specialist unit is not permitted to engage in market-making activities in single-stock futures or options. However, if eligible for an exemption under Rule 105(b)-(d), nothing restricts a specialist unit from having a trading desk that trades in options or single-stock futures. Because an integrated proprietary aggregation unit that includes a specialist unit may engage in options market making, the Exchange proposes eliminating sections (m)(ii) and
(iii)of the Rule 105 Guidelines. As proposed, to obtain an exemption from Rule 105, the specialist unit must:
(i)Adopt and implement comprehensive written procedures and guidelines governing the conduct of trading in related products;
(ii)establish a process for regular review of such written procedures and guidelines; and
(iii)implement controls and surveillances reasonably designed to prevent and detect violations of these procedures and guidelines. These policies and procedures must be reasonably designed to ensure that the individuals or systems responsible for trading related products do not have access to non-public order information, or, unless otherwise specifically provided for, specialist confidential information. In addition, individuals who work on the Floor of the Exchange would not be permitted to trade or direct trading in related products, nor would the specialist API be permitted to make any trading decisions in related products. Accordingly, any trading in related products by the specialist unit must be conducted by an off-Floor, *i.e.,* “upstairs” office. All trading in related products must be conducted by individuals who are qualified and registered to trade in the marketplaces where such trading occurs. Moreover, the member organization that houses the specialist unit must be a member of FINRA or other self-regulatory organizations, as required by each marketplace where the specialist unit proposes to trade. The NYSE believes that a specialist unit should have the flexibility to transfer its employees among different functions within the unit. Accordingly, the proposed rule does not expressly prohibit specialists from trading in related products; it only bars directly entering or executing trades in related products while on the Floor of the Exchange. 17 As proposed, a specialist unit could transfer a specialist back and forth from the Floor of the Exchange to a specialist unit upstairs desk that trades in related products, so long as that specialist is registered and qualified to trade in related products and non-public order information is not used when trading in related products. In such case, however, a specialist unit must have policies and procedures reasonably designed to ensure that a specialist who moves off the Floor of the Exchange does not make available or use any non-public information or, unless otherwise specified, specialist confidential information, to which the specialist may have had access while on the Floor of the Exchange. As noted above, while off the Floor of the Exchange, specialists continue to be subject to other NYSE rules that govern their access to and use of non-public order information. 17 The Exchange notes that a specialist unit that has not been approved for an exemption from Rule 105 under proposed Rule 98(f)(1) would still be permitted to enter orders in options or single-stock futures from the Floor, subject to the requirements of Rule 105. To ensure that the specialist unit upstairs desk that trades in related products can effectively hedge the specialist unit's positions, the NYSE proposes that the specialist unit upstairs desk have electronic access to the trades by the specialist unit at the Exchange in securities allocated to the specialist unit that have been printed to the Consolidated Tape. Currently, senior managers of specialist member organizations can be privy to information about trading on the Floor of the Exchange as well as any hedging conducted by the specialist member organization, even though such hedging opportunities are limited. For example, currently, a specialist on the Floor can call his or her senior manager to discuss hedging strategies. Under the proposed exemption from Rule 105, the NYSE believes that specialist unit senior managers should be able to continue in that role and provide oversight of both Floor specialist operations and any specialist unit upstairs trading in related products. The NYSE believes that the oversight model that works for larger broker-dealers, whose senior managers have a role with respect to multiple aggregation units, should apply within a specialist unit as well. Accordingly, the NYSE proposes Rule 98(f)(1)(vi) to address how a senior manager of a specialist unit should handle situations where he or she has access to non-public order information in connection with his or her role as a senior manager. As with proposed Rule 98(c)(2)(E), when trading in related products, the specialist unit must have policies and procedures reasonably designed to ensure that the specialist unit senior manager who has access to non-public order information does not provide such information to the specialist unit upstairs trading desk responsible for trading related products or use such non-public information to directly or indirectly influence trading by that upstairs desk. b. Integrated Proprietary Aggregation Unit Risk Management Proposed Rule 98(f)(2) addresses how an integrated proprietary aggregation unit that has been approved pursuant to proposed Rule 98(d) to include a specialist unit could engage in risk management of the specialist unit's positions. At a minimum, an integrated proprietary aggregation unit must have policies and procedures that are reasonably designed to meet the protections enumerated in the rule, including how it trades in related products on behalf of a specialist unit and how it electronically accesses the specialist unit's trades at the Exchange in securities allocated to the specialist unit that have been printed to the Consolidated Tape. In addition, proposed Rule 98(f)(2)(A)(i) would permit an integrated proprietary aggregation unit to send appetites of trading or quoting direction to the specialist unit. In practice, this would permit a non-specialist unit “upstairs” risk management desk that has real-time access both to the specialist unit's positions in securities allocated to it and to the integrated proprietary aggregation unit's positions in related products and other securities to provide electronic direction to the specialist unit of whether to trade or quote in a certain direction. The Exchange believes that permitting an integrated proprietary aggregation unit to send quoting messages that are based on real-time positions of the unit as a whole will enable a specialist unit to better meet any quoting requirements at the Exchange. In other words, the specialist unit will no longer need to operate in a vacuum when determining how or when to quote at the Exchange. As proposed, the specialist unit would be ultimately responsible for whether to accept the electronic trading direction submitted by the integrated proprietary aggregation unit upstairs desk; a specialist unit must comply at all times with its market-marking obligations, including the specialist rules, notwithstanding any electronic trading directions received from that upstairs desk. Stated otherwise, the specialist unit would operate independently and be free to accept or reject the electronic trading directions sent by the integrated proprietary aggregation unit. However, to the extent an integrated proprietary aggregation unit causes a specialist unit to violate one or more of the specialist rules, the Exchange proposes that in such case, the integrated proprietary aggregation unit should also be held to those standards. At this time, as noted above, because of access to non-public order information, the NYSE does not believe it would be feasible to permit communications, whether verbal or electronic, from the specialist or the specialist API to the individuals or systems responsible for trading in related products and other securities within the integrated proprietary aggregation unit, or, if applicable, to an upstairs desk within the specialist unit. However, as the NYSE market model evolves, the NYSE will continue to review how best to integrate a specialist unit within an integrated proprietary aggregation unit, including the possibility of fully integrating the trading systems that interact with the Exchange for the specialist unit and the trading systems that trade in related products and other securities. The NYSE believes that ultimately, a competitive trading model would permit full integration, including permitting two-way communications among trading desks. c. Approved Person Risk Management As proposed, another option available to firms to manage the risk of the specialist unit is to permit a separate integrated proprietary aggregation unit that is housed in either an approved person or a member organization that runs a specialist unit to provide the same level of risk management as proposed for an integrated proprietary aggregation unit that includes a specialist unit. This option would provide flexibility for broker-dealers that want to keep the specialist unit as a separate member organization or aggregation unit, yet still have an approved person or separate aggregation unit provide risk management services for the specialist unit. As with proposed Rule 98(f)(2), proposed Rule 98(f)(3) would require that the approved person not have access to either specialist confidential information and non-public order information, except as provided for in that section of the rule. Specifically, an integrated proprietary aggregation unit of an approved person could have access to the trades by a specialist unit at the Exchange in securities allocated to that unit, so long as such trades have been printed to the Consolidated Tape. And as with proposed Rule 98(f)(2), an approved person could send electronic appetites of how the specialist unit should trade or quote in its allocated securities. As discussed above, a specialist unit would be free to reject or accept such electronic directions as it sees fit to meet its market-making obligations at the Exchange. The Exchange notes that an approved person that provides risk management under this proposed section may not itself be an NYSE member organization. In such case, the individuals at the approved person responsible for making risk management decisions on behalf of the specialist unit should be dually employed by the specialist unit that is part of an NYSE member organization and the approved person so that they are subject to the jurisdiction of NYSE Regulation. 7. Proposed Rule 98(g): Failure To Maintain Confidentiality, Reporting Obligations, and Breaches The NYSE proposes to keep certain provisions of current Rule 98, but adjust them to reflect the changes to the rest of the rule. In particular, current Rule 98(i) has been amended and is included in proposed Rule 98(g); current Rule 98(j) has been amended and is included in proposed Rule 98(h); and, current Rule 98(k) has been amended and is included in proposed Rule 98(i). Under proposed Rule 98(g), as with the current rule, if a specialist becomes aware of non-public material information from its approved person or parent member organization, such specialist may have to cease acting as a specialist in the security involved, which was formerly referred to as “giving up the Book.” The proposed rule does not change how such determinations would be made. However, the proposed rule updates the language of the rule and separates the rule into easier-to-read subsections. Under proposed Rule 98(h), the NYSE proposes adding to the existing reporting obligations that a specialist unit must report any actual breaches or internal investigations of possible breaches of the information barriers required by the rule. The reporting obligation for internal investigations is intended to be similar in effect to the reporting obligation pursuant to NYSE Rules 351(e) and 342.21. In particular, under proposed Rule 98(h)(4), a specialist unit will be required to conduct an internal investigation into any trading activity that may be a result of a breach of the information barriers required by proposed Rules 98(c), (d), (e), and (f). On a quarterly basis, a specialist unit must report in writing to NYSE Regulation whether it has commenced such an internal investigation, the quarterly progress of any open investigations, what remedial measures, if any, were taken, and the completion of any internal investigation, including the methodology and results of such investigation, any internal disciplinary action taken, and any referral of the matter to the NYSE, another self-regulatory organization, or the Commission. Finally, as with the current rule, proposed Rule 98(i) provides that any breach of the proposed Rule could result in disciplinary action, including the withdrawal of one or more securities allocated to the specialist unit or withdrawal of approval to operate a specialist unit. The Exchange notes that as with the current rule, any trading by any person while in possession of material, non-public information received as a result of any breach of internal controls required by proposed Rule 98 may violate Rule 10b-5 of the Act, 18 Rule 14e-3 of the Act, 19 NYSE Rule 104, just and equitable principles of trade or one or more provisions of the Act, or regulations thereunder or rules of the Exchange. The Exchange intends to review carefully any such trading of which it becomes aware with a view towards determining whether any such violation has occurred. 18 *See* 17 CFR Part 240.10b-5. 19 *See* 17 CFR Part 240.14e-3. C. Proposed Amendments to Related Rules As noted above, because of the shift in paradigm away from approved persons, the NYSE proposes amending those NYSE rules that refer to approved persons and the need for an exemption from Rule 98. 1. Proposed Amendments to Rule 98A NYSE Rule 98A requires approved persons to agree in writing not to cause a specialist or odd-lot dealer to violate rules applicable to the specialist or odd-lot dealer. The rule further requires that approved persons report to the Exchange any off-Floor orders for securities in which an associated specialist member organization specializes for any account in which the approved person has a direct or indirect interest. Because of the proposed changes to Rule 98, and in particular, the recognition that an appropriately walled-off specialist unit ameliorates the need to scrutinize the trading by an approved person, the NYSE proposes eliminating those portions of Rule 98A that concern approved persons. However, the NYSE would keep the limitation on an issuer, or a partner or subsidiary thereof, from becoming an approved person of a specialist unit. 2. Proposed Amendments to Rules 99, 102, 103B, 104, and 113 In their current form, NYSE Rules 99, 103B, 104, and 113 specifically apply to approved persons, unless such approved person has obtained an exemption under Rule 98. To ensure consistency among NYSE rules, and in particular, to ensure that the revised paradigm of proposed Rule 98 is consistently applied, the NYSE proposes to amend Rules 99, 103B, 104, and 113 to eliminate the references to approved persons. 20 20 For the period of time that the current Rule 98 stays in the NYSE Rules as “NYSE Rule 98 (Former),” each of NYSE Rules 99, 103B, 104, and 113 will have two forms: one to meet the requirements of NYSE Rule 98 (Former) and one to meet the requirements of proposed Rule 98. The version of the rules that relate to Rule 98 (Former) will be similarly designated with the “(Former”) title either for the entire rule, or for a section of a rule, as appropriate. In addition, the Exchange proposes to delete Rule 102, which concerns trading in options by odd-lot dealers. Because the Exchange no longer has separate odd-lot dealers and all specialists are also responsible for odd-lot trading in securities in which they are registered, there is no need for a separate rule governing trading in related products by an odd-lot dealer. Accordingly, because Rule 102 is duplicative of the standards set forth in proposed Rules 98 and 105, the Exchange proposes deleting that rule. 3. Proposed Amendments to Rule 460 In addition to amending Rule 460 to ensure consistent application of proposed Rule 98 and making other non-substantive changes, the NYSE proposes eliminating Rule 460.20 that approved persons of specialist member organizations be held to any limits on beneficial ownership of any equity security in which an associated specialist unit is registered. Instead, as proposed, any limitations on beneficial ownership should apply only to the specialist unit that has been approved pursuant to proposed Rule 98, and not to any other aggregation unit or other department or division of the member organization. With respect to the specialist unit's beneficial ownership of outstanding shares of securities allocated to such unit, the NYSE proposes to amend NYSE Rule 460.10 to require that a specialist unit report when its beneficial ownership of outstanding shares exceeds 5% and to update such report if the beneficial ownership either falls below 5% or exceeds 10%. The NYSE thus proposes to eliminate the requirement that a specialist unit seek NYSE Regulation approval before it may have more than 10% beneficial ownership of a listed security. The NYSE believes that because of the reduced market share of the NYSE and the limited impact of specialist trading on securities allocated to a specialist unit, the protections of the existing rule are no longer necessary. However, the NYSE proposes retaining the prohibition on a specialist unit having beneficial ownership of more than 25% of the outstanding shares in a security allocated to such unit. Because the changes to the marketplace are in effect now, the Exchange believes that the changes to Rule 460 should be implemented notwithstanding whether a specialist member organization continues to operate under Rule 98 (Former). Accordingly, the Exchange proposes having a single version of Rule 460 to reflect the proposed amendments. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with and furthers the objectives of section 6(b)(5) of the Act, 21 in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and, in general, to protect investors and the public interest. 21 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. II. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve the proposed rule change, or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSE-2008-45 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2008-45. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSE-2008-45 and should be submitted on or before July 24, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 22 22 17 CFR 200.30-3(a)(12). Florence E. Harmon, Acting Secretary. [FR Doc. E8-15165 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58039; File No. SR-Phlx-2008-44] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Quarterly Options Series Pilot Program June 26, 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 June 19, 2008, the Philadelphia Stock Exchange, Inc. (“Exchange” or “Phlx”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated this proposal as non-controversial under Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Rules 1012 (Series of Options Open for Trading) and 1101A (Terms of Option Contracts), in order to extend for a period of one year an Exchange pilot program (the “Pilot Program”) to permit the listing and trading of options series that may be opened for trading on any business day and expire at the close of business on the last business day of a calendar quarter (“Quarterly Options” or “Quarterly Options Series”). The Pilot Program currently continues through July 10, 2008. 5 The text of the proposed rule change is available on the Exchange's Web site ( *http://www.phlx.com/regulatory/reg_rulefilings.aspx.* ), at the principal office of the Exchange, and at the Commission's Public Reference Room. 5 *See* Securities Exchange Act Release No. 56030 (July 9, 2007), 72 FR 38645 (July 13, 2007) (SR-Phlx-2007-42). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to extend the Pilot Program for a period of one year so that the Exchange may continue to list and trade Quarterly Options within the parameters specified in its Rules 1012 and 1101A. In February 2007, the Commission approved the Pilot Program allowing the listing and trading of Quarterly Options on the Exchange, and thereafter extended the Pilot Program through July 10, 2008. 6 The Exchange is proposing to extend the Pilot Program for one year through July 10, 2009. The Exchange is not proposing any changes to the Pilot Program. 7 6 *See* Securities Exchange Act Release Nos. 55301 (February 15, 2007), 72 FR 8238 (February 23, 2007) (SR-Phlx-2007-08) (establishing the Pilot Program) and 56030 (July 9, 2007), 72 FR 38645 (July 13, 2007) (SR-Phlx-2007-42) (extending the Pilot Program). 7 The Pilot Program was expanded and amended when the Exchange filed a proposed rule change, pursuant to Section 19(b)(3)(A)(iii) of the Act and Rule 19b-4(f)(6) thereunder, to list additional series and implement a delisting policy for outlying series with no open interest. *See* Securities Exchange Act Release No. 57583 (March 31, 2008), 73 FR 18589 (April 4, 2008) (SR-Phlx-2008-23). In the Commission Order approving the Pilot Program, the Commission indicated that if the Exchange seeks extension, expansion, or permanent approval of the Pilot Program, it must submit a Pilot Program Report (the “Report”) that must include, at a minimum:
(1)Data and written analysis on the open interest and trading volume in the classes for which Quarterly Option Series were opened;
(2)an assessment of the appropriateness of the options classes selected for the Phlx Pilot;
(3)an assessment of the impact of the Pilot Program on the capacity of Phlx, Options Price Reporting Authority (“OPRA”), and on market data vendors (to the extent data from market data vendors is available);
(4)any capacity problems or other problems that arose during the operation of the Pilot Program and how Phlx addressed such problems;
(5)any complaints that the Phlx received during the operation of the Pilot Program and how the Phlx addressed them; and
(6)any additional information that would assist in assessing the operation of the Pilot Program. 8 In connection with the Pilot Program expansion, 9 the Commission further requested that the Report include analysis of:
(1)The impact of the additional series on the Exchange's market and quote capacity, and
(2)the implementation and effects of the delisting policy, including the number of series eligible for delisting during the period covered by the report, the number of series actually delisted during that period (pursuant to the delisting policy or otherwise), and documentation of any customer requests to maintain Quarterly Options Series strikes that were otherwise eligible for delisting. The Exchange has submitted, under separate cover, a Report in connection with this filing, which Report seeks confidential treatment under the Freedom of Information Act. 8 *See* Securities Exchange Act Release No. 55301, *supra* note 6. 9 *See* Securities Exchange Act Release No. 57583, *supra* note 7. The Report reviews the Exchange's experience with the Pilot Program and clearly supports the Exchange's belief that extension of the Pilot Program is proper. Among other things, the Exchange believes that the Report shows the strength and efficacy of the Pilot Program on the Exchange as reflected by the strong volume of Quarterly Options traded on Phlx since the Pilot Program's inception in February 2007. The Exchange further believes that the Report establishes that the Pilot Program has not created, and in the future should not create, capacity problems for the Exchange or the OPRA system. Moreover, the Exchange represents that it has the necessary systems capacity to support new options series that will result from the introduction of Quarterly Options Series. The Exchange believes that extending the Pilot Program would continue to provide investors with a flexible and valuable tool to manage risk exposure, minimize capital outlays, and be more responsive to the timing of events affecting the securities that underlie option contracts. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act, 10 in general, and furthers the objectives of Section 6(b)(5), specifically, 11 in that it is designed to promote just and equitable principles of trade, to perfect the mechanism of a free and open market and the national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposal would achieve this by allowing continued listing of Quarterly Options, thereby stimulating customer interest in such options and creating greater trading opportunities and flexibility and providing customers with the ability to more closely tailor their investment strategies. 10 15 U.S.C. 78f(b). 11 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 not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has designated the proposed rule change as one that:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)does not become operative for 30 days from the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. Therefore, the foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 12 and subparagraph (f)(6) of Rule 19b-4 thereunder. 13 12 15 U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires a self-regulatory organization to provide the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has fulfilled this requirement. The Exchange has asked the Commission to waive the operative delay to permit the proposed rule change to become operative prior to the 30th day after filing. The Commission has determined that waiving the 30-day operative delay of the Exchange's proposal is consistent with the protection of investors and the public interest and will promote competition because such waiver will allow Phlx to continue the existing Pilot without interruption. 14 Therefore, the Commission designates the proposal operative upon filing. 14 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-Phlx-2008-44 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2008-44. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-Phlx-2008-44 and should be submitted on or before July 24, 2008. 15 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 15 Florence E. Harmon, Acting Secretary. [FR Doc. E8-15099 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-58049; File No. SR-Phlx-2008-46] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Fees for Options on the Full-Size Nasdaq 100 Index and Options on the Mini Nasdaq 100 Index June 27, 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 June 13, 2008, the Philadelphia Stock Exchange, Inc. (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. The Exchange has designated this proposal as one establishing or changing a due, fee, or other charge applicable only to a member, pursuant to Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Phlx proposes to assess equity option charges, as opposed to index option charges, on:
(1)Options on the full value of the Nasdaq 100 Index 5 traded under the symbol NDX (the “Full-size Nasdaq 100 Index”); and
(2)options on the one-tenth of the value of the Nasdaq 100 Index traded under the symbol MNX (the “Mini Nasdaq 100 Index”) (collectively referred to herein as the “Nasdaq Index Products”). 6 Therefore, the Exchange proposes to charge the Nasdaq Index Products, which are index options, in a similar manner that it charges for equity options, except that there will be a fee assessed for customer transactions. 7 Specifically, for purposes of the option transaction charge, the Exchange proposes to adopt a specific customer option transaction charge of $0.12 per contract side customer execution transaction fee on the Nasdaq Index Products. 5 NASDAQ®, NASDAQ-100® and NASDAQ-100 Index® are registered trademarks of The NASDAQ OMX Group, Inc. (which with its affiliates are the “Corporations”) and are licensed for use by the Philadelphia Stock Exchange, Inc. in connection with the trading of options products based on the NASDAQ-100 Index®. The options products have not been passed on by the Corporations as to their legality or suitability. The options products are not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the options products. 6 *See* Securities Exchange Act Release No. 57936 (June 6, 2008), 73 FR 33481 (June 12, 2008) (SR-Phlx-2008-36) (proposed rule change relating to the listing and trading of options on the Nasdaq Index Products). 7 Phlx has clarified that the index option transaction charge for customer executions, which is currently $0.40 per contract, applies to broker-dealer transactions. Pursuant to this proposed rule change, Phlx has stated that broker-dealer transactions in MNX and MDX index options will be assessed the equity option transaction charges as set forth on the Exchange's current Summary of Equity Option and RUT and RMN Charges fee schedule. Pursuant to that fee schedule, the broker-dealer equity option transaction charges are either $0.45 per contract for AUTOM-delivered orders or $0.25 per contract for non-AUTOM-delivered orders. Email communication to Heather Seidel, Assistant Director, Division of Trading and Markets (“Division”), Commission, and Leah Mesfin, Special Counsel, Division, Commission, from Cynthia Hoekstra, Vice President, Phlx, on June 24, 2008. In addition, the Exchange proposes to adopt a $0.10 per contract side license fee on “firm-related” comparison and transaction charges for the Nasdaq Index Products. 8 This license fee will be imposed only after the Exchange's $60,000 firm-related equity option and index option comparison and transaction charge cap is reached. 9 8 Specifically, “firm-related” charges include equity option firm/proprietary comparison charges, equity option firm/proprietary transaction charges, equity option firm/proprietary facilitation transaction charges, index option firm (proprietary and customer executions) comparison charges, index option firm/proprietary transaction charges, and index option firm/proprietary facilitation transaction charges (collectively the “firm-related charges”). 9 Currently, the Exchange imposes a per contract side license fee for equity option and index option “firm” transactions on certain licensed products (collectively “licensed products”) after the $60,000 cap per member organization on all “firm-related” equity option and index option comparison and transaction charges combined is reached Therefore, when a member organization exceeds the $60,000 cap (comprised of firm-related charges), the member organization is charged $60,000, plus the applicable license fee per contract side for any contracts in licensed products (if any) over those that were included in reaching the $60,000 cap. Thus, such firm-related charges in the aggregate for one billing month may not exceed $60,000 per month per member organization. For a complete list of the licensed products that are assessed a license fee per contract side after the $60,000 cap is reached, *see* $60,000 “Firm Related” Equity Option and Index Option Cap on the Exchange's fee schedule. In addition, the Exchange proposes to amend its Summary of Equity Option and RUT and RMN Charges to reflect that a $0.10 license fee on the Nasdaq Index Products will be assessed in connection with the Exchange's current cap on Registered Options Traders (“ROT”) comparison charges and ROT and specialist transaction charges 10 on non-AUTOM delivered equity option contracts 11 when an ROT or specialist executes over 14,000 contracts calculated on a daily basis. These terms apply only to transactions when an ROT or specialist is the contra-party to a customer order. 12 Therefore, after the 14,000 non-AUTOM delivered contract level is reached in a specific option, additional comparison and transaction charges are not assessed on subsequent option contracts in excess of 14,000 that are executed on that day in that specific option when the ROT or specialist is the contra-party to a customer order. Even when the 14,000 cap is reached, the license fee will be imposed on applicable ROTs and specialists for equity option transactions on those licensed products that carry a license fee. 13 10 The Exchange does not currently assess a comparison charge on specialist transactions. Therefore, the cap applies to ROT comparison and transaction charges combined and separately to specialist transaction charges. 11 For purposes of this fee, orders delivered via the Floor Broker Management System are deemed to be non-AUTOM delivered orders. *See* Phlx Rule 1063. 12 *See* Securities Exchange Act Release No. 54659 (October 27, 2006), 71 FR 64603 (November 2, 2006) (SR-Phlx-2006-67) (capping ROT comparison charges and ROT and specialist transaction charges when certain requirements are met). 13 For a complete list of the licensed products that are currently assessed a license fee per contract side after the 14,000 equity option contract is reached, see $60,000 “Firm Related” Equity Option and Index Option Cap on the Exchange's fee schedule. This proposal is schedule to become effective for transactions settling on or after June 16, 2008. The text of the proposed rule change is available at the Exchange's principal office, on the Exchange's Web site at *http://www.phlx.com/regulatory/reg_rulefilings.aspx* , and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for the proposed rule change, and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposal is to assess equity option charges, including payment for order flow charges, on the Nasdaq Index Products that are competitive with charges assessed on these same products by other exchanges. 14 14 *See e.g.* , Securities Exchange Act Release Nos. 57052 (December 27, 2007), 73 FR 523 (January 3, 2008) (SR-Amex-2007-140) (assessing license fee of $0.16 per contract side for NDX and MNX options); 51351 (March 9, 2005), 70 FR 12917 (March 16, 2005) (relating to transaction fees and license fees for the Nasdaq Index Products); 57128 (January 10, 2008), 73 FR 2969 (January 16, 2008) (SR-ISE-2008-02) (assessing license fee of $0.16 per contract for trading in options on NDX and MNX); 52983 (December 20, 2005), 70 FR 76475 (December 27, 2005) (SR-ISE-2005-047) (adopting a flat execution fee for public customer orders in “Premium Products”); 52493 (September 22, 2005), 70 FR 56941 (September 29, 2005) (SR-Amex-2005-087) (certain transaction fees applicable to the Nasdaq Index Products); and 55193 (January 30, 2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111) (amending certain public customer fees for other indexes, ETFs and HOLDRs). The purpose of assessing the Nasdaq Index Products a license fee of $0.10 per contract side after reaching the $60,000 cap and the 14,000 cap as described herein is to help defray licensing costs associated with the trading of these products, while still capping member organizations' fees enough to attract volume from other exchanges. 15 The caps operate this way in order to offer an incentive for additional volume without leaving the Exchange with significant out-of-pocket costs. This proposal is scheduled to become effective for transactions settling on or after June 16, 2008. 15 *Id.* 2. Statutory Basis The Exchange believes that its proposal to amend its schedule of fees is consistent with Section 6(b) of the Act 16 in general, and furthers the objectives of Section 6(b)(4) of the Act 17 in particular, in that it is an equitable allocation of reasonable fees and other charges among Exchange members, as all the applicable equity option charges will be assessed on the Nasdaq Index Products. Additionally, assessing customer transaction and license fees on the Nasdaq Index Products, as described herein, should help the Exchange remain competitive by attracting additional order flow to the Exchange. 16 15 U.S.C. 78f(b). 17 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 not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change is establishing or changing a due, fee, or other charge applicable only to a member, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act 18 and Rule 19b-4(f)(2) thereunder. 19 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. 18 15 U.S.C. 78s(b)(3)(A)(ii). 19 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-Phlx-2008-46 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2008-46. 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-Phlx-2008-46 and should be submitted on or before July 24, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. 20 Florence E. Harmon, Acting Secretary. 20 17 CFR 200.30-3(a)(12). [FR Doc. E8-15103 Filed 7-2-08; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF TRANSPORTATION Office of the Secretary [Docket No. DOT-OST-2007-0108] National Task Force To Develop Model Contingency Plans To Deal With Lengthy Airline On-Board Ground Delays AGENCY: Office of the Secretary (OST), Department of Transportation (DOT). ACTION: Notice of meeting of advisory committee. SUMMARY: This notice announces a meeting of the National Task Force to Develop Model Contingency Plans to Deal with Lengthy Airline On-Board Ground Delays. DATES: The Task Force meeting is scheduled for July 24, 2008, from 8:30 a.m. to 5 p.m., Eastern Time. ADDRESSES: The Task Force meeting will be held at the U.S. Department of Transportation (U.S. DOT), 1200 New Jersey Avenue, SE., Washington, DC, in the Oklahoma City Conference Room on the lobby level of the West Building. For Further Information or to Contact the Department Concerning the Task Force: Livaughn Chapman, Jr., or Kathleen Blank-Riether, Office of the General Counsel, U.S. Department of Transportation, 1200 New Jersey Ave., SE., W-96-429, Washington, DC 20590-0001; Phone:
(202)366-9342; Fax:
(202)366-7152; E-mail: *Livaughn.Chapman@dot.gov* , or *Kathleen.Blankriether@dot.gov* . SUPPLEMENTARY INFORMATION: In accordance with the Federal Advisory Committee Act (FACA), 5 U.S.C. App.2, and the General Services Administration regulations covering management of Federal advisory committees, 41 CFR Part 102-3, this notice announces a meeting of the National Task Force to Develop Model Contingency Plans to Deal with Lengthy Airline On-Board Ground Delays. The Meeting will be held on July 24, 2008, between 8:30 a.m. and 5 p.m. at the U.S. Department of Transportation (U.S. DOT), 1200 New Jersey Avenue, SE., Washington, DC, in the Oklahoma City Conference Room on the lobby level of the West Building. DOT's Office of Inspector General recommended, in its audit report, entitled “Actions Needed to Minimize Long, On-Board Flight Delays,” issued on September 25, 2007, that the Secretary of Transportation establish a national task force of airlines, airports, and the Federal Aviation Administration
(FAA)to coordinate and develop contingency plans to deal with lengthy delays, such as working with carriers and airports to share facilities and make gates available in an emergency. To effectuate this recommendation, on January 3, 2008, the Department, consistent with the requirements of the FACA, established the National Task Force to Develop Model Contingency Plans to Deal with Lengthy Airline On-Board Ground Delays. The first meeting of the Task Force took place on February 26, 2008. The agenda topics for the July 24, 2008, meeting will include the following:
(1)An update by the Contingency Plan Working Group, the working group that is tasked with reviewing existing airline and airport contingency plans for extended tarmac delays for best practices and developing a model contingency plan, on the Working Group's progress; and
(2)one or more presentations on recent tarmac delay events and efforts to avoid them. Attendance is open to the public, and time will be provided for comments by members of the public. Since access to the U.S. DOT headquarters building is controlled for security purposes, any member of the general public who plans to attend this meeting must notify the Department contact noted above ten
(10)calendar days prior to the meeting. Attendance will be necessarily limited by the size of the meeting room. Members of the public may present written comments at any time and, at the discretion of the Chairman and time permitting, oral comments at the meeting. Any oral comments permitted must be limited to agenda items and will be limited to five
(5)minutes per person. Members of the public who wish to present oral comments must notify the Department contact noted above via email that they wish to attend and present oral comments at least ten
(10)calendar days prior to the meeting. For this July 24, 2008, meeting, no more than one hour will be set aside for oral comments. Although written material may be filed in the docket at any time, comments regarding upcoming meeting topics should be sent to the Task Force docket,
(10)calendar days prior to the meeting. Members of the public may also contact the Department contact noted above to be placed on the Task Force mailing list. Persons with a disability requiring special accommodations, such as an interpreter for the hearing impaired, should contact the Department contact noted above at least seven
(7)calendar days prior to the meeting. Notice of this meeting is provided in accordance with the FACA and the General Service Administration regulations covering management of Federal advisory committees. Issued on: June 30, 2008. Samuel Podberesky, Assistant General Counsel for Aviation Enforcement & Proceedings, U.S. Department of Transportation. [FR Doc. E8-15145 Filed 7-2-08; 8:45 am] BILLING CODE 4910-9X-P DEPARTMENT OF TRANSPORTATION Federal Highway Administration [Docket No. FHWA-2008-0088] Agency Information Collection Activities: Notice of Request for Extension of Currently Approved Information Collection AGENCY: Federal Highway Administration (FHWA), DOT. ACTION: Notice and request for comments. SUMMARY: The FHWA has forwarded the information collection request described in this notice to the Office of Management and Budget
(OMB)to renew an information collection. We published a **Federal Register** Notice with a 60-day public comment period on this information collection on March 28, 2008. We are required to publish this notice in the **Federal Register** by the Paperwork Reduction Act of 1995. DATES: Please submit comments by August 4, 2008. ADDRESSES: You may send comments within 30 days to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW., Washington, DC 20503, Attention DOT Desk Officer. You are asked to comment on any aspect of this information collection, including:
(1)Whether the proposed collection is necessary for the FHWA's performance;
(2)the accuracy of the estimated burden;
(3)ways for the FHWA to enhance the quality, usefulness, and clarity of the collected information; and
(4)ways that the burden could be minimized, including the use of electronic technology, without reducing the quality of the collected information. All comments should include the Docket number FHWA-2008-0088. FOR FURTHER INFORMATION CONTACT: Mr. Kreig Larson, 202-366-2056, Office of Project Development and Environmental Review, Office of Planning and Environment, Federal Highway Administration, Department of Transportation, 1200 New Jersey Avenue, SE., Washington, DC 20590. Office hours are from 8 a.m. to 4:30 p.m., Monday through Friday, except Federal holidays. SUPPLEMENTARY INFORMATION: *Title:* Environmental Streamlining: Measuring the Performance of Stakeholders in the Transportation Project Development Process, Third Survey. *OMB Control Number:* 2125-0591. *Background:* The U.S. Department of Transportation (DOT), FHWA, has contracted with the Gallup Organization to conduct a survey of professionals associated with transportation and resource agencies in order to gather their views about the workings of the environmental review process for transportation projects and how the process can become more efficient. The purpose of the survey is to:
(1)Collect the responses of agency professionals to questions about their involvement in conducting the decision-making processes mandated by the National Environmental Policy Act
(NEPA)and other resource protection laws in order to develop benchmark performance measures; and
(2)identify where the performance of the process might be improved by the application of techniques for streamlining. This is a survey conducted of only local, state, and federal officials who work with the NEPA process. *Respondents:* Approximately 2,000 professionals/officials from transportation and natural resource agencies. *Frequency:* This is the third time in seven years that this survey will be conducted. *Estimated Average Burden per Response: Annual Burden Hours:* The FHWA estimates that each respondent will complete the survey in approximately 15 minutes. Respondents will have the option of answering the survey's questions either over the telephone or online. *Estimated Total Annual Burden Hours:* With a potential total of 2,000 survey respondents, an estimated 500 hours is the total burden. *Electronic Access:* For access to the docket to read background documents or comments received, go to *http://www.regulations.gov.* Follow the online instructions for accessing the dockets. Authority: The Paperwork Reduction Act of 1995; 44 U.S.C. Chapter 35, as amended; and 49 CFR 1.48. Issued on: June 30, 2008. James R. Kabel, Chief, Management Programs and Analysis Division. [FR Doc. E8-15146 Filed 7-2-08; 8:45 am] BILLING CODE 4910-22-P DEPARTMENT OF TRANSPORTATION Federal Highway Administration Environmental Impact Statement: Riverside and Orange Counties, CA AGENCY: Federal Highway Administration (FHWA), DOT. ACTION: Notice of Intent. SUMMARY: The FHWA, on behalf of the California Department of Transportation (Caltrans), is issuing this notice to advise the public that an Environmental Impact Statement
(EIS)will be prepared for the proposed State Route 91 (SR-91) Corridor Improvement Project, in the Counties of Orange and Riverside, California. FOR FURTHER INFORMATION CONTACT: Russell Williams, Office Chief, California Department of Transportation, Division of Environmental Planning, 464 West 4th Street, 11th Floor, San Bernardino, CA 92401; or call
(909)383-1554. SUPPLEMENTARY INFORMATION: Effective July 1, 2007, the Federal Highway Administration
(FHWA)assigned, and Caltrans assumed environmental responsibilities for this project pursuant to 23 U.S.C. 327. Caltrans will prepare an EIS on a proposal to increase capacity within the project segments of the SR-91 (between the State Route 241 and Pierce Street) and the Interstate 15 (between Cajalco Road and Hidden Valley Parkway), in the Counties of Orange and Riverside, California. The proposed improvements is considered necessary to facilitate movement of people and goods between the Counties of Orange and Riverside, by improving travel conditions for work, recreation, school, commerce, as well as all other trip purposes. Alternatives under consideration include
(1)Taking no action;
(2)High Occupancy Vehicle
(HOV)Lanes;
(3)High Occupancy Toll
(HOT)Lanes. Letters describing the proposed action and soliciting comments will be sent to appropriate Federal, State and local agencies, and to private organizations and citizens who have previously expressed or are known to have interest in this proposal. In addition, interested Tribal governments will be involved as determined by the Native American Heritage Commission consultation. Public information meetings will be held to discuss the alternatives and the potential impacts of the proposed action. Public notice will be given of the time and place of the public meetings as well as the public hearings. The draft EIS will be available for public and agency review and comment prior to the first public meeting. To ensure that the full range of issues related to this proposed action is addressed and that all significant concerns are identified, comments and suggestions are invited from all interested parties. Comments or questions concerning this proposed action and the EIS should be directed to Caltrans' contact at the address provided above. (Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.) Issued on: June 26, 2008. Nancy Bobb, Director, State Programs, Federal Highway Administration, Sacramento, California. [FR Doc. E8-15111 Filed 7-2-08; 8:45 am] BILLING CODE 4910-22-P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration Reports, Forms and Record Keeping Requirements; Agency Information Collection Activity Under OMB Review AGENCY: National Highway Traffic Safety Administration, DOT. ACTION: Notice. SUMMARY: In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), this notice announces that the Information Collection Request
(ICR)abstracted below has been forwarded to the Office of Management and Budget
(OMB)for review and comment. The ICR describes the nature of the information collections and their expected burden. The **Federal Register** Notice with a 60-day comment period was published on December 28, 2007 [72 FR 73972]. DATES: Comments must be submitted on or before August 4, 2008. FOR FURTHER INFORMATION CONTACT: David Sparks, National Highway Traffic Safety Administration, Office of Odometer Fraud Investigation (NVS-230), 202-366-4761. 1200 New Jersey Avenue, SE., Room W55-318, Washington, DC 20590. SUPPLEMENTARY INFORMATION: National Highway Traffic Safety Administration *Title:* 49 CFR part 580 Odometer Disclosure Statement. *OMB Number:* 2127-0047. *Type of Request:* Extension of a currently approved collection. *Abstract:* The Federal Odometer Law, 49 U.S.C. Chapter 327, and implementing regulations, 49 CFR part 580 require each transferor of a motor vehicle to provide the transferee with a written disclosure of the vehicle's mileage. This disclosure is to be made on the vehicle's title, or in the case of a vehicle that has never been titled, on a separate form. If the title is lost or is held by a lien holder, and where permitted by state law, the disclosure can be made on a state-issued, secure power of attorney. NHTSA received comments from: South Dakota Department of Revenue & Regulation, Texas Department of Transportation Vehicle Titles and Registration, Virginia Department of Motor Vehicles, and Wisconsin Department of Transportation. Each commenter cites a need for the ability to disclose odometer information electronically in a paperless environment. Texas and Virginia specifically reference a petition filed with NHTSA by the Virginia Department of Motor Vehicles seeking approval of alternate odometer disclosure requirements, to wit, electronic odometer statements. NHTSA has preliminarily granted Virginia's proposed alternate disclosure requirements and is seeking public comments concerning Virginia's proposal via the **Federal Register** through July 24, 2008. NHTSA's initial determination concerning Virginia's petition was published in the **Federal Register** on June 24, 2008 (73 FR 35617-23). Additionally, Wisconsin suggests eliminating the ten-year exemption for odometer disclosure statements and conversely Virginia supports the ten-year exemption. NHTSA is reviewing the ten-year exemption and may seek comments in a future **Federal Register** notice. This ICR notice concerns only the information collection requirements under current law, and does not relate to the issues raised by those commenting. *Affected Public:* Households, Business, other for-profit, and not-for-profit institutions, Federal Government, and State, Local, or Tribal Government. *Estimated Total Annual Burden:* 2,034,910. ADDRESSES: Send comments, within 30 days, to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725-17th Street, NW., Washington, DC 20503, Attention NHTSA Desk Officer. *Comments are invited on:* Whether the proposed collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; the accuracy of the Department's estimate of the burden of the proposed information collection; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. A Comment to OMB is most effective if OMB receives it within 30 days of publication. Issued in Washington, DC, on June 27, 2008. David W. Sparks, Director, Office of Odometer Fraud Investigation. [FR Doc. E8-15057 Filed 7-2-08; 8:45 am] BILLING CODE 4910-59-P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration [Docket No. NHTSA-2008-0048; Notice 2] Hyundai Motor Company, Grant of Petition for Decision of Inconsequential Noncompliance Hyundai Motor Company (Hyundai), has determined that certain vehicles that it manufactured during the period beginning July 14, 2006 through November 23, 2007, did not fully comply with paragraph S9.5 of 49 CFR 571.225 (Federal Motor Vehicle Safety Standard (FMVSS) No. 225 Child Restraint Anchorage Systems). On November 28, 2007 Hyundai filed an appropriate report pursuant to 49 CFR Part 573, Defect and Noncompliance Responsibility and Reports. Pursuant to 49 U.S.C. 30118(d) and 30120(h) and the rule implementing those provisions at 49 CFR Part 556, Hyundai has petitioned for an exemption from the notification and remedy requirements of 49 U.S.C. Chapter 301 on the basis that this noncompliance is inconsequential to motor vehicle safety. Notice of receipt of the petition was published, with a 30-day public comment period, on March 25, 2008 in the **Federal Register** (73 FR 15835). No comments were received. To view the petition and all supporting documents log onto the Federal Docket Management System
(FDMS)Web site at: *http://www.regulations.gov/* . Then follow the online search instructions to locate docket number “NHTSA-2008-0048.” For further information on this decision, contact Mr. Ed Chan, Office of Vehicle Safety Compliance, the National Highway Traffic Safety Administration (NHTSA), telephone
(202)493-0335, facsimile
(202)366-3081. Affected are approximately 115,000 model years 2007 and 2008 Hyundai Elantra passenger cars produced beginning July 14, 2006 through November 23, 2007. Paragraph S9.5 of 49 CFR 571.225 requires in pertinent part that: S9.5 Marking and conspicuity of the lower anchorages. Each vehicle shall comply with S9.5(a) or (b).
(a)Above each bar installed pursuant to S4, the vehicle shall be permanently marked with a circle:
(1)That is not less than 13 mm in diameter;
(2)That is either solid or open, with or without words, symbols or pictograms, provided that if words, symbols or pictograms are used, their meaning is explained to the consumer in writing, such as in the vehicle's owners manual; and
(3)That is located such that its center is on each seat back between 50 and 100 mm above or on the seat cushion 100 (±) 25 mm forward of the intersection of the vertical transverse and horizontal longitudinal planes intersecting at the horizontal centerline of each lower anchorage, as illustrated in Figure 22. The center of the circle must be in the vertical longitudinal plane that passes through the center of the bar (±25 mm).
(4)The circle may be on a tag.
(b)The vehicle shall be configured such that the following is visible: Each of the bars installed pursuant to S4, or a permanently attached guide device for each bar. The bar or guide device must be visible without the compression of the seat cushion or seat back, when the bar or device is viewed, in a vertical longitudinal plane passing through the center of the bar or guide device, along a line making an upward 30 degree angle with a horizontal plane. Seat backs are in the nominal design riding position. The bars may be covered by a removable cap or cover, provided that the cap or cover is permanently marked with words, symbols or pictograms whose meaning is explained to the consumer in written form as part of the owner's manual. Hyundai described the noncompliance as the failure to provide specific written explanation of the meaning of the pictogram that appears on the lower anchorage identification circles in the owner's manuals provided with the affected vehicles. Hyundai explained its belief that paragraph S9.5 of FMVSS No. 225 requires that above each child restraint lower anchorage the vehicle shall be permanently marked with: A circle that is not less than 13 mm in diameter, that is either solid or open, with or without words, symbols or pictograms, provided that if words, symbols or pictograms are used, their meaning is explained to the consumer in writing, such as in the vehicle's owner's manual. Hyundai also explained that the owner's manuals of the affected vehicles contain a section titled “Child seat lower anchorages” that provides illustrations indicating the locations of the child restraint lower anchorages and written descriptions of the locations of the child restraint lower anchorages. Hyundai expressed its belief that the vehicles are properly marked, as required by paragraph S9.5 of FMVSS No. 225, with solid circles to identify the locations of the lower anchorages. Hyundai also stated that those solid circles contain pictograms, which represent a child seated in a child restraint. However, the owner's manuals provided with the affected vehicles do not contain a specific written explanation of the meaning of the pictogram that appears on the identification circles. Hyundai states that it believes the noncompliance is inconsequential to motor vehicle safety for the following reasons:
(1)When the requirements of paragraph S9.5 were first implemented over 7 years ago, there may have been the potential to misunderstand the newly adopted child restraint lower anchorage identification mark. Therefore, NHTSA decided that a circle must be used, to standardize the symbol used to identify the anchorages, because standardization would likely increase user recognition of the symbol. The standardized circle has now appeared in almost every U.S. vehicle for more than 7 years, allowing the public to gain familiarity with its purpose. In reference to the identification circles, FMVSS 225 No. S9.5(a)(2) states that they may be “with or without words, symbols or pictograms”. If the identification circle does not contain any pictogram, it does not require a written explanation.
(2)The simple pictogram representing a child seated in a child restraint enhances the identification provided by the circle. The missing written explanation of the meaning of the pictogram does not affect the ability of a person to locate the lower anchorages, aided by the visual indication of the identification circles and the illustrations and written explanations provided in the owner's manual, and does not affect the ability of the lower anchorages to properly secure a child restraint. In addition, Hyundai stated that even though it will include a written explanation in future printings of the subject owner's manual, it strongly believes that the missing written explanation is an inconsequential noncompliance that poses no threat to the safety of its customers. Hyundai also states that no customer complaints have been received related to the lack of a written explanation of the meaning of the pictogram or any problems that may have resulted from the lack of a written explanation of the meaning of the pictogram. Hyundai requested that NHTSA consider its petition and grant an exemption from the recall requirements of the National Traffic and Motor Vehicle Safety Act on the basis that the noncompliance described above is inconsequential as it relates to motor vehicle safety. NHTSA Decision NHTSA agrees with Hyundai that the noncompliance is inconsequential to motor vehicle safety. The pictogram that Hyundai imprinted on the lower anchorage identification circles is designated by the ISO (the International Organization for Standardization), a worldwide federation of national standards bodies, as a “child seat” 1 symbol for use in road vehicle controls, indicators and tell-tales. 1 ISO 2575: Road vehicles—Symbols for controls, indicators and tell-tales. Although a description of the pictogram in the owner's manual can improve a user's recognition of the purpose for the lower anchorages, we think the risk created by this particular noncompliance is negligible with no impact on child occupant safety. In consideration of the foregoing, NHTSA has decided that Hyundai has met its burden of persuasion that the labeling noncompliances described are inconsequential to motor vehicle safety. Accordingly, Hyundai's petition is granted and the petitioner is exempted from the obligation of providing notification of, and a remedy for, the noncompliances under 49 U.S.C. 30118 and 30120. Authority: 49 U.S.C. 30118, 30120; delegations of authority at 49 CFR 1.50 and 501.8. Issued on: June 27, 2008. Daniel C. Smith, Associate Administrator for Enforcement. [FR Doc. E8-15130 Filed 7-2-08; 8:45 am] BILLING CODE 4910-59-P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration [NHTSA Docket No. NHTSA-2008-0126] National EMS Advisory Council; Notice of Federal Advisory Committee Meeting AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT. ACTION: National EMS Advisory Council; Notice of Federal Advisory Committee Meeting. SUMMARY: NHTSA announces a meeting of the National Emergency Medical Services Advisory Council (NEMSAC) to be held in the Metropolitan Washington, DC area. This notice announces the date, time and location of the meeting, which will be open to the public. The purpose of NEMSAC is to provide a nationally recognized council of emergency medical services representatives and consumers to provide advice and recommendations regarding EMS to the U.S. DOT's National Highway Traffic Safety Administration (NHTSA). DATES: The meeting will be held on July 17, 2008, from 9 a.m. to 5 p.m. and July 18, 2008, from 9 a.m. to Noon. A public comment period will take place on July 18, 2008, between 10:45 a.m. and 11:15 a.m. *Comment Date:* Written comments or requests to make oral presentations must be received by July 10, 2008. ADDRESSES: The meeting will be held at the Marriott Crystal City at Reagan National Airport, 1999 Jefferson Davis Highway, Arlington, VA 22202. Persons wishing to make an oral presentation or who are unable to attend or speak at the meeting may submit written comments. Written comments and requests to make oral presentations at the meeting should reach Drew Dawson at the address listed below and must be received by July 10, 2008. All submissions received must include the docket number, NHTSA-2008-0126 and may be submitted by any one of the following methods: You may submit or retrieve comments online through the Document Management System
(DMS)at *http://www.regulations.gov/* under the docket number listed at the beginning of this notice. The DMS is available 24 hours each day, 365 days each year. Electronic submission and retrieval help guidelines are available under the help section of the Web site. An electronic copy of this document may be downloaded from the **Federal Register** 's home page at *http://www.archives.gov* and the Government Printing Office's database at *http://www.access.gpo.gov/nara* . Please note that even after the comment closing date, we will continue to file relevant information in the docket as it becomes available. E-mail: *drew.dawson@dot.gov* or *susan.mchenry@dot.gov* . Fax:
(202)366-7149. FOR FURTHER INFORMATION CONTACT: Drew Dawson, Director, Office of Emergency Medical Services, National Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE., NTI-140, Washington, DC 20590, Telephone number
(202)366-9966; E-mail *Drew.Dawson@dot.gov* . SUPPLEMENTARY INFORMATION: Notice of this meeting is given under the Federal Advisory Committee Act (FACA), Public Law 92-463, as amended (5 U.S.C. App. 1 *et seq.* ) The NEMSAC will be holding its second meeting on Thursday and Friday, July 17 and 18, 2008, at the Marriott Crystal City at Reagan National Airport, 1999 Jefferson Davis Highway, Arlington, VA 22202. Agenda of Council Meeting, July 17-18, 2008 The tentative agenda includes the following: Thursday, July 17, 2008
(1)Opening Remarks and Swearing in of members not in attendance at first meeting;
(2)Introduction of Members and all in attendance;
(3)Review and Approval of Minutes of last meeting;
(4)Discussion of process for prioritizing EMS Issues identified at first meeting;
(5)Voting on priority EMS Issues;
(6)Discussion of potential committees and committee charges. Friday, July 18, 2008
(1)Welcome and Introductions;
(2)Unfinished Business from July 17th;
(3)Federal Interagency Committee on Emergency Medical Services Report;
(4)New Issues or Concerns;
(5)Public comment period;
(6)Next steps and future meetings. A public comment period will take place on July 18, 2008, between 10:45 a.m. and 11:15 a.m. *Public Attendance:* The meeting is open to the public. Persons with disabilities who require special assistance should advise Drew Dawson of their anticipated special needs as early as possible. Members of the public who wish to make comments on Friday, July 18 between 10:45 a.m. and 11:15 a.m. are requested to register in advance. In order to allow as many people as possible to speak, speakers are requested to limit their remarks to 3 minutes. For those wishing to submit written comments, please follow the procedure noted above. This meeting will be open to the public. Individuals wishing to register must provide their name, affiliation, phone number, and e-mail address to Drew Dawson by e-mail at *drew.dawson@dot.gov* or by telephone at
(202)366-9966 no later than July 10, 2008. There will be limited seating, so please register early. Pre-registration is necessary to enable proper arrangements. Minutes of the NEMSAC Meeting will be available to the public online through the DOT Document Management System
(DMS)at: *http://www.regulations.gov* under the docket number listed at the beginning of this notice. Issued on: June 27, 2008. Jeffrey P. Michael, Acting Associate Administrator for Research and Program Development. [FR Doc. E8-15056 Filed 7-2-08; 8:45 am] BILLING CODE 4910-59-P 73 129 Thursday, July 3, 2008 CORRECTIONS Amelia ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 86 [EPA-HQ-OAR-2003-0190; FRL-8545-3] RIN 2060-AM06 Control of Emissions of Air Pollution From Locomotive Engines and Marine Compression-Ignition Engines Less Than 30 Liters per Cylinder; Republication Correction In rule document R8-7999 beginning on page 37096 in the issue of Monday, June 30, 2008, make the following correction: § 86.117-96 [Corrected] On page 37192, in § 86.117-96(d)(2), the equation is being reprinted to read as follows: ER06MY08.008 [FR Doc. Z8-7999 Filed 7-2-08; 8:45 am] BILLING CODE 1505-01-D 73 129 Thursday, July 3, 2008 Presidential Documents Part II The President Proclamation 8272—To Modify Duty-Free Treatment Under the Generalized System of Preferences, Take Certain Actions Under the African Growth and Opportunity Act, and for Other Purposes Title 3— The President Proclamation 8272 of June 30, 2008 To Modify Duty-Free Treatment Under the Generalized System of Preferences, Take Certain Actions Under the African Growth and Opportunity Act, and for Other Purposes By the President of the United States of America A Proclamation 1. Pursuant to section 503(c)(2)(A) of the Trade Act of 1974, as amended (the “1974 Act”) (19 U.S.C. 2463(c)(2)(A)), beneficiary developing countries, except those designated as least-developed beneficiary developing countries or beneficiary sub-Saharan African countries as provided in section 503(c)(2)(D) of the 1974 Act (19 U.S.C. 2463(c)(2)(D)), are subject to competitive need limitations on the preferential treatment afforded under the Generalized System of Preferences
(GSP)to eligible articles. 2. Pursuant to sections 501 and 503(a)(1)(A) of the 1974 Act (19 U.S.C. 2461 and 2463(a)(1)(A)), the President may designate articles as eligible for preferential tariff treatment under the GSP. 3. Section 503(c)(2)(F)(i) of the 1974 Act (19 U.S.C. 2463(c)(2)(F)(i)) provides that the President may disregard the competitive need limitation provided in section 503(c)(2)(A) (i)(II) of the 1974 Act (19 U.S.C. 2463(c)(2)(A)(i)(II)) with respect to any eligible article from any beneficiary developing country if the aggregate appraised value of the imports of such article into the United States during the preceding calendar year does not exceed an amount set forth in section 503(c)(2)(F)(ii) of the 1974 Act (19 U.S.C. 2463(c)(2)(F)(ii)). 4. Pursuant to section 503(d)(1) of the 1974 Act (19 U.S.C. 2463(d)(1)), the President may waive the application of the competitive need limitations in section 503(c)(2)(A) of the 1974 Act with respect to any eligible article from any beneficiary developing country if certain conditions are met. 5. Pursuant to section 503(d)(5) of the 1974 Act (19 U.S.C. 2463(d)(5)), any waiver granted under section 503(d) shall remain in effect until the President determines that such waiver is no longer warranted due to changed circumstances. 6. Section 502(e) of the 1974 Act (19 U.S.C. 2462(e)) provides that the President shall terminate the designation of a country as a beneficiary developing country for purposes of the GSP if the President determines that such country has become a “high income” country as defined by the official statistics of the International Bank for Reconstruction and Development. Termination is effective on January 1 of the second year following the year in which such determination is made. 7. Pursuant to section 503(c)(2)(A) of the 1974 Act, I have determined that in 2007 certain beneficiary developing countries have exported certain eligible articles in quantities exceeding the applicable competitive need limitations, and I therefore terminate the duty-free treatment for such articles from such beneficiary developing countries. 8. Pursuant to section 503(c)(2)(F) of the 1974 Act, I have determined that the competitive need limitation provided in section 503(c)(2)(A)(i)(II) of the 1974 Act should be disregarded with respect to certain eligible articles from certain beneficiary developing countries. 9. Pursuant to section 503(d)(1) of the 1974 Act, I have received the advice of the United States International Trade Commission on whether any industries in the United States are likely to be adversely affected by such waivers, and I have determined, based on that advice and on the considerations described in sections 501 and 502(c) of the 1974 Act (19 U.S.C. 2462(c)), and after giving great weight to the considerations in section 503(d)(2) of the 1974 Act (19 U.S.C. 2463(d)(2)), that such waivers are in the national economic interest of the United States. Accordingly, I have determined that the competitive need limitations of section 503(c)(2)(A) of the 1974 Act should be waived with respect to certain eligible articles from certain beneficiary developing countries. 10. Pursuant to section 503(d)(5) of the 1974 Act, I have determined that certain previously granted waivers of the competitive need limitations of section 503(c)(2)(A) of the 1974 Act are no longer warranted due to changed circumstances. 11. Pursuant to section 502(e) of the 1974 Act, I have determined that Trinidad and Tobago has become a “high income” country, and I am terminating the designation of that country as a beneficiary developing country for purposes of the GSP, effective January 1, 2010. 12. Section 502(a)(1) of the 1974 Act (19 U.S.C. 2462(a)(1)) authorizes the President to designate countries as beneficiary developing countries for purposes of the GSP. In Proclamation 7912 of June 29, 2005, I designated Serbia and Montenegro as a beneficiary developing country for purposes of the GSP. On June 3, 2006, upon Montenegro's declaration of independence from Serbia and Montenegro, the country separated into two independent republics: the Republic of Serbia and the Republic of Montenegro. Pursuant to section 502 of the 1974 Act, and taking into account the factors set forth in section 502(c) of that Act, I have determined that, in light of the separation of Serbia and Montenegro into two countries, the Republic of Serbia and the Republic of Montenegro should each be designated as a beneficiary developing country for purposes of the GSP. 13. Section 506A(a)(1) of the 1974 Act (19 U.S.C. 2466a(a)(1)), as added by section 111(a) of the African Growth and Opportunity Act (title I of Public Law 106-200, 114 Stat. 254) (AGOA), authorizes the President to designate a country listed in section 107 of the AGOA (19 U.S.C. 3706) as a beneficiary sub-Saharan African country if the President determines that the country meets the eligibility requirements set forth in section 104 of the AGOA (19 U.S.C. 3703) and the eligibility criteria set forth in section 502 of the 1974 Act (19 U.S.C. 2462). 14. Section 104 of the AGOA authorizes the President to designate a country listed in section 107 of the AGOA as an eligible sub-Saharan African country if the President determines that the country meets certain eligibility requirements. 15. Section 112(c) of the AGOA (19 U.S.C. 3721(c)), as added by section 6002(a) of the Africa Investment Incentive Act of 2006 (division D of title VI of Public Law 109-432, 120 Stat. 2922), provides special rules for certain apparel articles imported from lesser developed beneficiary sub-Saharan African countries. 16. Pursuant to section 104 of the AGOA and section 506A(a)(1) of the 1974 Act, I have determined that the Union of the Comoros (Comoros) meets the eligibility requirements set forth or referenced therein, and I have decided to designate Comoros as an eligible sub-Saharan African country and beneficiary sub-Saharan African country. 17. I have further determined that Comoros satisfies the criterion for treatment as a lesser developed beneficiary sub- Saharan African country under section 112(c)(5)(D)(i) of the AGOA. 18. On August 5, 2004, the United States entered into the Dominican Republic-Central America-United States Free Trade Agreement (the “Agreement”) with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The Congress approved the Agreement in section 101(a) of the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (the “CAFTA-DR Act”) (19 U.S.C. 4011). 19. Pursuant to section 403(a) of the CAFTA-DR Act (19 U.S.C. 4111(a)), the President is to report biennially to the Congress on the matters described in that section and, as the President deems appropriate, in section 403(b)(2) of the CAFTA-DR Act (19 U.S.C. 4111(b)(2)). 20. Pursuant to section 403(a)(4) of the CAFTA-DR Act (19 U.S.C. 4111(a)(4)), the President is to establish a mechanism to solicit public comments on the matters described in section 403(a)(3)(D) of the CAFTA-DR Act (19 U.S.C. 4111(a)(3)(D)). 21. In Presidential Proclamation 8213 of December 20, 2007, I modified the Harmonized Tariff Schedule of the United States
(HTS)pursuant to section 1634 of the Pension Protection Act of 2006 (Public Law 109-280, 120 Stat. 780) to carry out the understandings described in that section. Technical rectifications to the HTS are required to provide the intended tariff treatment. 22. In Presidential Proclamation 8240 of April 17, 2008, pursuant to section 503(c)(2)(A) of the 1974 Act, I modified the HTS to withdraw duty-free treatment for certain articles from Jamaica. A technical rectification to the HTS is required to provide the intended tariff treatment. 23. Section 604 of the 1974 Act (19 U.S.C. 2483) authorizes the President to embody in the HTS the substance of the relevant provisions of that Act, and of other Acts affecting import treatment, and actions thereunder, including the removal, modification, continuance, or imposition of any rate of duty or other import restriction. NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, acting under the authority vested in me by the Constitution and the laws of the United States, including but not limited to title V and section 604 of the 1974 Act, section 104 of the AGOA, section 301 of title 3, United States Code (3 U.S.C. 301), and section 403 of the CAFTA-DR Act, do proclaim that:
(1)In order to provide that one or more countries should no longer be treated as beneficiary developing countries with respect to one or more eligible articles for purposes of the GSP, general note 4(d) to the HTS is modified as set forth in section A of Annex I to this proclamation.
(2)In order to provide that one or more countries should not be treated as beneficiary developing countries with respect to certain eligible articles for purposes of the GSP, the Rates of Duty 1-Special subcolumn for such HTS subheadings is modified as set forth in section B of Annex I to this proclamation.
(3)In order to designate certain articles as eligible articles for purposes of the GSP, the Rates of Duty 1-Special subcolumn for such HTS subheadings is modified as set forth in section C of Annex I to this proclamation.
(4)The competitive need limitation provided in section 503(c)(2)(A)(i)(II) of the 1974 Act is disregarded with respect to the eligible articles in the HTS subheadings and to the beneficiary developing countries listed in Annex II to this proclamation.
(5)A waiver of the application of section 503(c)(2)(A) of the 1974 Act shall apply to the eligible articles in the HTS subheadings and to the beneficiary developing countries set forth in Annex III to this proclamation.
(6)The waivers of the application of section 503(c)(2)(A) of the 1974 Act to the articles in the HTS subheadings and to the beneficiary developing countries listed in Annex IV to this proclamation are revoked.
(7)The designation of Trinidad and Tobago as a beneficiary developing country for purposes of the GSP is terminated, effective on January 1, 2010.
(8)In order to reflect this termination in the HTS, general note 4(a) to the HTS is modified by deleting “Trinidad and Tobago” from the list of independent countries, effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after January 1, 2010.
(9)The Republic of Serbia is designated as a beneficiary developing country for purposes of the GSP.
(10)In order to reflect this designation in the HTS, general note 4(a) is modified by deleting “Serbia and Montenegro” and adding in alphabetical order “Serbia” to the list of independent countries, effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after the thirtieth day after the date of this proclamation.
(11)The Republic of Montenegro is designated as a beneficiary developing country for purposes of the GSP.
(12)In order to reflect this designation in the HTS, general note 4(a) is modified by adding in alphabetical order “Montenegro” to the list of independent countries, effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after the thirtieth day after the date of this proclamation.
(13)Comoros is designated as an eligible sub-Saharan African country and as a beneficiary sub-Saharan African country for purposes of the AGOA.
(14)In order to reflect this designation in the HTS, general note 16(a) to the HTS is modified by inserting in alphabetical sequence in the list of beneficiary sub-Saharan African countries “Union of the Comoros,” effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after July 1, 2008.
(15)For purposes of section 112(c) of the AGOA, Comoros is a lesser developed beneficiary sub-Saharan African country.
(16)The modifications to the HTS set forth in Annexes I and IV to this proclamation shall be effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after the dates set forth in the respective annex.
(17)The Secretary of Labor, in consultation with the United States Trade Representative, shall carry out the reporting function under sections 403(a) and 403(b)(2) of the CAFTA-DR Act.
(18)The Secretary of Labor, in consultation with the United States Trade Representative, shall solicit public comments under section 403(a)(4) of the CAFTA-DR Act.
(19)In order to provide the intended tariff treatment to certain articles of Jamaica, the HTS is modified as set forth in Annex V to this proclamation.
(20)The modifications to the HTS set forth in Annex V to this proclamation shall be effective with respect to articles entered, or withdrawn from warehouse for consumption, on or after the date set forth in Annex V.
(21)In order to provide the intended tariff treatment to goods subject to the understandings carried out in Proclamation 8213, the HTS is modified as set forth in Annex VI to this proclamation.
(22)The modifications to the HTS set forth in Annex VI to this proclamation shall enter into effect on the date that the modifications to the HTS set out in section C or D of the Annex to Proclamation 8213, as appropriate, enter into force, and shall be effective with respect to goods entered, or withdrawn from warehouse for consumption, on or after that date.
(23)Any provisions of previous proclamations and Executive Orders that are inconsistent with the actions taken in this proclamation are superseded to the extent of such inconsistency. IN WITNESS WHEREOF, I have hereunto set my hand this thirtieth day of June in the year of our Lord two thousand eight, and of the Independence of the United States of America the two hundred and thirty-second. GWBOLD.EPS Billing code 3195-W8-P ED03JY08.000 ED03JY08.001 ED03JY08.002 ED03JY08.003 ED03JY08.004 [FR Doc. 08-1413 Filed 7-2-08; 10:01 am]
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CFR
- Radiological criteria for unrestricted use.§ 20.1402
- Expiration and termination of licenses and decommissioning of sites and separate buildings or outdoor areas.§ 30.36
- Delegation of authority to Director of Division of Trading and Markets.§ 200.30-3
- NMS security designation and definitions.§ 242.600
- Order protection rule.§ 242.611
- Definition of "short sale" and marking requirements.§ 242.200
U.S. Code
- Contracting authority§ 8902
- Authority to extend preferences§ 2461
- Registration, responsibilities, and oversight of self-regulatory organizations§ 78s
- Definitions and application§ 78c
- National securities exchanges§ 78f
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Short title§ 78a
- National market system for securities; securities information processors§ 78k–1
- Trading by members of exchanges, brokers, and dealers§ 78k
- Surface transportation project delivery program§ 327
- Purposes§ 3501
- Notification of defects and noncompliance§ 30118
- Designation of eligible articles§ 2463
- Designation of beneficiary developing countries§ 2462
- Designation of sub-Saharan African countries for certain benefits§ 2466a
- Sub-Saharan Africa defined§ 3706
- Eligibility requirements§ 3703
- Treatment of certain textiles and apparel§ 3721
- Approval and entry into force of the Agreement§ 4011
- Periodic reports and meetings on labor obligations and labor capacity-building provisions§ 4111
- Consequential changes in Tariff Schedules of the United States§ 2483
- General authorization to delegate functions; publication of delegations§ 301
23 references not yet in our index
- 10 CFR 51
- 10 CFR 35
- 10 CFR 20
- 5 CFR 890.701
- 17 CFR 240.9
- 17 CFR 240.19
- 17 CFR 240.10
- 17 CFR 240.14
- 41 CFR 102
- 49 CFR 1.48
- 49 CFR 580
- 49 CFR 571.225
- 49 CFR 573
- 49 CFR 556
- 49 CFR 1.50
- Pub. L. 92-463
- 40 CFR 86
- Pub. L. 106-200
- 114 Stat. 254
- Pub. L. 109-432
- 120 Stat. 2922
- Pub. L. 109-280
- 120 Stat. 780
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cites case law
Notices
Issuance of Environmental Assessment and Finding of No Significant Impact for License Amendment
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