77422 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Notices 

1 15 U.S.C. 78s(b)(l). 

2 17 CFR 240. 19b–4. 

3Amendment No. 1 supersedes and replaces the 

original rule filing in its entirety. 

4Amendment No. 2 supersedes and replaces the 

original rule filing and Amendment No. 1 in their 

entirety. 

to premium payments made under the 

Contracts should not raise any questions 

as to compliance by Jackson National 

with the provisions of Section 27(i). 

However, to avoid any uncertainty as to 

full compliance with the Act, 

Applicants request an Amended Order 

providing exemption from Section 

2(a)(32) and 27(i)(2)(A), to the extent 

deemed necessary, to permit the 

recapture of the Contract Enhancements, 

including the 5% Contract 

Enhancement under the circumstances 

described herein and in the Application, 

without the loss of relief from Section 

27 provided by Section 27(i). 

7. Applicants state that Section 22(c) 

of the Act authorizes the Commission to 

make rules and regulations applicable to 

registered investment companies and to 

principal underwriters of, and dealers 

in, the redeemable securities of any 

registered investment company to 

accomplish the same purposes as 

contemplated by Section 22(a). Rule 

22c–1 under the Act 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. 

8. Applicants state that it is possible 

that someone might view Jackson 

National’s recapture of the Contract 

Enhancements as resulting in the 

redemption of redeemable securities for 

a price other than one based on the 

current net asset value of the JNL 

Separate Account. Applicants contend, 

however, that the recapture of the 

Contract Enhancement does not violate 

Rule 22c–1. The recapture of some or all 

of the Contract Enhancement does not 

involve either of the evils that Section 

22(c) and Rule 22c–1 were intended to 

eliminate or reduce as far as reasonably 

practicable, namely: (i) The dilution of 

the value of outstanding redeemable 

securities of registered investment 

companies through their sale at a price 

below net asset value or repurchase at 

a price above it, and (ii) other unfair 

results, including speculative trading 

practices. To effect a recapture of a 

Contract Enhancement, Jackson 

National will redeem interests in a 

Contract owner’s contract value at a 

price determined on the basis of the 

current net asset value of the JNL 

Separate Account. The amount 

recaptured will be less than or equal to 

the amount of the Contract 

Enhancement that Jackson National paid 

out of its general account assets. 

Although Contract owners will be 

entitled to retain any investment gains 

attributable to the Contract 

Enhancement and to bear any 

investment losses attributable to the 

Contract Enhancement, the amount of 

such gains or losses will be determined 

on the basis of the current net asset 

values of the JNL Separate Account. 

Thus, no dilution will occur upon the 

recapture of the Contract Enhancement. 

Applicants also submit that the second 

harm that Rule 22c–1 was designed to 

address, namely, speculatively trading 

practices calculated to take advantage of 

backward pricing, will not occur as a 

result of the recapture of the Contract 

Enhancement. Because neither of the 

harms that Rule 22c–1 was meant to 

address is found in the recapture of the 

Contract Enhancement, Rule 22c–1 

should not apply to any Contract 

Enhancement. However, to avoid any 

uncertainty as to full compliance with 

Rule 22c–1, Applicants request an 

Amended Order granting an exemption 

from the provisions of Rule 22c–1 to the 

extent deemed necessary to permit them 

to recapture the Contract Enhancement 

under the Contracts. 

9. Applicants submit that extending 

the requested relief to encompass Future 

Contracts and Other Accounts is 

appropriate in the public interest 

because it promotes competitiveness in 

the variable annuity market by 

eliminating the need to file redundant 

exemptive applications prior to 

introducing new variable annuity 

contracts. Investors would receive no 

benefit or additional protection by 

requiring Applicants to repeatedly seek 

exemptive relief that would present no 

issues under the Act not already 

addressed in the Application. 

Applicants submit, for the reasons 

stated herein, that their exemptive 

request meets the standards set out in 

Section 6(c) of the Act, namely, that the 

exemptions requested are appropriate in 

the public interest and consistent with 

the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act and that, 

therefore, the Commission should grant 

the requested order. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Nancy M. Morris, 

Secretary. 

[FR Doc. E6–22009 Filed 12–22–06; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54943; File No. SR–Amex–

2006–90] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing of a Proposed Rule Change as 

Revised by Amendment Nos. 1 and 2 

Thereto Relating to the Listing and 

Trading of Notes Linked to the 

Performance of the Hang Seng China 

Enterprises Index 

December 15, 2006. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934, as 

amended (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on September 22, 2006, the American 

Stock Exchange LLC (‘‘Amex’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by Amex. On 

November 15, 2006, Amex submitted 

Amendment No. 1 to the proposed rule 

change.3 On December 12, 2006, Amex 

submitted Amendment No. 2 to the 

proposed rule change.4 The Commission 

is publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade notes linked to the performance of 

the Hang Seng China Enterprises Index 

(‘‘Index’’). The text of the proposed rule 

change (including Appendix A) is 

available on Amex’s Web site at http:// 

www.amex.com, at Amex’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, 

Amex included statements concerning 

the purpose of, and basis for, the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item III below. Amex has prepared 

summaries, set forth in Sections A, B, 


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5See Securities Exchange Act Release No. 27753 

(March 1, 1990), 55 FR 8626 (March 8, 1990) (order 

approving File No. SR–Amex–89–29). 

6The Exchange submits that the proposal is 

similar to several instruments that it currently lists 

and trades. See Securities Exchange Act Release No. 

51563 (April 15, 2005), 70 FR 21257 (April 25, 

2005) (SR–Amex–2005–01); Securities Exchange 

Act Release No. 51227 (February 18, 2005), 70 FR 

9395 (February 25, 2005) (SR–Amex–2005–010); 

and Securities Exchange Act Release No. 50016 

(July 14, 2004), 69 FR 43639 (July 21, 2004) (SR–

Amex–2004–43). 

7The initial listing standards for the Notes 

require: (1) A market value of at least $4 million 

and (2) a minimum public distribution requirement 

of one million trading units with a minimum of 400 

public shareholders. In addition, the listing 

guidelines require that the issuer have assets in 

excess of $100 million and stockholders’ equity of 

at least $10 million, and pre-tax income of at least 

$750,000 in the last fiscal year or in two of the three 

prior fiscal years. In the case of an issuer which is 

unable to satisfy the earning criteria stated in 

Section 101 of the Company Guide, the Exchange 

requires the issuer to have the following: (1) Assets 

in excess of $200 million and stockholders’ equity 

of at least $10 million; or (2) assets in excess of $100 

million and stockholders’ equity of at least $20 

million. 

8The Exchange’s continued listing guidelines are 

set forth in Sections 1001 through 1003 of Part 10 

to the Exchange’s Company Guide. Section 1002(b) 

of the Company Guide states that the Exchange 

would consider removing from listing any security 

where, in the opinion of the Exchange, it appears 

that the extent of public distribution or aggregate 

market value has become so reduced to make 

further dealings on the Exchange inadvisable. With 

respect to continued listing guidelines for 

distribution of the Notes, the Exchange would rely, 

in part, on the guidelines for bonds in Section 

1003(b)(iv). Section 1003(b)(iv)(A) provides that the 

Exchange would normally consider suspending 

dealings in, or removing from the list, a security if 

the aggregate market value or the principal amount 

of bonds publicly held is less than $400,000. 

9A negative return of the Index would reduce the 

redemption amount at maturity with the potential 

that the holder of the Note could lose his entire 

investment amount. 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Under Section 107A of the Amex 

Company Guide, the Exchange may 

approve for listing and trading securities 

which cannot be readily categorized 

under the listing criteria for common 

and preferred stocks, bonds, debentures, 

or warrants.5 Amex proposes to list for 

trading under Section 107A of the 

Company Guide notes linked to the 

performance of the Index (‘‘Notes’’). 

Citigroup Funding Inc. (‘‘Issuer’’) will 

issue the Notes under the name ‘‘Stock 

Market Upturn Notes.’’ The Notes 

provide for a multiplier of any positive 

performance of the Index during the 

stated term, subject to a maximum 

payment amount or ceiling to be 

determined at the time of issuance 

(‘‘Capped Value’’).6

The Notes would conform to the 

initial listing guidelines under Section 

107A 7 and continued listing guidelines 

under Sections 1001–1003 8 of the 

Company Guide. The Notes would be 

senior non-convertible debt securities of 

the Issuer. The Issuer would issue the 

Notes on an ‘‘Issue Date’’ approximately 

three business days after the ‘‘Trade 

Date’’ (as defined below) in 

denominations of whole units, with 

each unit representing a single Note. 

The Notes would mature on March 7, 

2008 (‘‘Maturity Date’’) approximately 

1.5 years after the Issue Date. The 

original public offering price would be 

$10 per Note. The Notes would entitle 

the owner at maturity to receive an 

amount based upon the percentage 

change of the Index. The Notes would 

not have a minimum principal amount 

that would be repaid; accordingly, 

payment on the Notes prior to or at 

maturity might be less than the original 

issue price of the Notes.9 The Notes 

would not be callable by the issuer, 

Citigroup, or redeemable by the holder. 

The payment that a holder or investor 

of a Note would be entitled to receive 

(‘‘Redemption Amount’’) would depend 

on the relation of: (1) The level of the 

Index at the close of the market on a 

single business day, March 4, 2008 

(‘‘Valuation Date’’), shortly prior to 

maturity of the Notes (‘‘Final Index 

Level’’); and (2) the closing value of the 

Index on the date the Notes are priced 

for initial sale to the public (‘‘Initial 

Index Level’’). If there is a ‘‘Market 

Disruption Event’’ (as defined below) 

when determining the Final Index 

Level, the Final Index Level may be 

deferred up to two business days if 

deemed appropriate by the calculation 

agent. 

Depending upon whether the Final 

Index Level (as defined below) is less 

than or equal to or greater than the 

Initial Index Level (as defined below), 

the Notes would entitle the owner at 

maturity to receive: 

• If the Final Index Level is less than 

or equal to Initial Index Level: 

$ $ 10 10 + × ( ) Final Index Level Initial Index Level −

Initial Index Level





 



 















• If the Final Index Level is greater 

than Initial Index Level: 

$ $ 10 10 + × ( ) Final Index Level Initial Index Level −

Initial Index Level Participation Rate not to exceed 



 



 × 















, the Capped Value

The Initial Index Level would be the 

closing level of the Index on August 24, 

2006, the date the Notes priced for 

initial sale to the public (‘‘Trade Date’’) 

and the Final Index Level would be the 

closing level of the Index on the 

Valuation Date on March 4, 2008. The 

Participation Rate (in the formula above) 

is 300%. 

The Hang Seng China Enterprises Index 

The Hang Seng China Enterprises 

Index was launched on August 8, 1994, 

to track the performance of the shares of 

all Chinese enterprises listed on the 

Stock Exchange of Hong Kong (‘‘HShares’’). This was one year after the 

first H-Share company was listed on the 

Stock Exchange of Hong Kong. Before 

the launch of the 200-stock Hang Seng 

Composite Index (‘‘HSCI’’) on October 3, 

2001, the Index included all H-Shares 

listed on the Main Board of the Stock 

Exchange of Hong Kong, but after the 

launch of the HSCI, the Index contains 

only those components that are 

included in the HSCI. Constituents of 

the Index comprise only the largest HVerDate Aug<31>2005 16:15 Dec 22, 2006 Jkt 211001 PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 E:\FR\FM\26DEN1.SGM 26DEN1

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77424 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Notices 

10HSI Services Limited is a member of the Hang 

Seng Bank Group and affiliated with broker dealers. 

HSI Services Limited has represented to the 

Exchange that the following exist: (1) Appropriate 

firewalls to ensure independence of operations 

among different units within the Hang Seng Group; 

and (2) policies and procedures containing among 

other things, insider trading prohibitions, designed 

to prevent conflicts of interest. 

11Options and futures contracts relating to the 

Index, the Hang Seng China Enterprises Index, or 

stocks comprising the Hang Seng Enterprises Index 

are indicators of the liquidity of said stocks or 

indexes. 

12See Amex Rule 462. 

Shares companies that are included in 

the HSCI. The Index is a capitalizationweighted index. The base value of the 

Index is 2000 as of January 3, 2000. The 

Index replaced the old HSCE index on 

October 3, 2001. The Index components 

are subject to review semi-annually at 

the same time as the HSCI. H-Share 

companies joining or leaving the HSCI 

are automatically included or excluded 

from the Index. 

As of July 31, 2006, the Index 

consisted of H-Shares of 38 separate 

entities. Information relating to the 

Index and components is available on 

the Web site for the Stock Exchange of 

Hong Kong at http://www.hkex.com.hk, 

Hang Seng Indexes at http:// 

www.hsi.com.hk, as well as various 

market data vendors and financial news 

publications. 

Annual Reweighting and Rebalancing of 

the Index 

The Index is published and compiled 

by HSI Services Limited, a wholly 

owned subsidiary of Hang Seng Bank.10

The Index is reviewed twice each year 

at the same time the HSCI is reviewed. 

As previously mentioned, H-Share 

companies joining or leaving the HSCI 

are automatically included or excluded 

from the Index. The weightings 

(freefloat-adjusted market capitalization 

weightings, described below) for the 

Index, as well as any associated Cap 

Factors (described below), are reviewed 

and announced generally twice each 

year within the first six weeks of Q1 and 

Q3 under the supervision of HSI 

Services Limited. The current 

weightings, as listed in Appendix A, 

were updated on August 11, 2006, 

which resulted in 37 companies being 

included in the Index. 

To ensure that no H-Share company 

has a weighting exceeding 15%, a Cap 

Factor (‘‘CF’’) is calculated based on 

market value as of each regular semiannual review date. A review of the CF 

is conducted semi-annually to coincide 

with the regular review of the freefloatadjusted market capitalization 

weightings for the Index. For 

constituents whose weightings do not 

exceed 15% of the Index, the CF is set 

at 100% and for those constituents 

whose weightings exceed 15% of the 

Index, the CF is set so as to ensure the 

weighting does not exceed 15% as of the 

semi-annual review date. Individual 

constituent weightings may exceed 15% 

during the periods between the semiannual reviews. The current CFs for the 

Index were set as of September 8, 2006, 

with a CF of 100% for all constituent 

companies other than PetroChina (CF of 

77.66%). 

A freefloat-adjusted market 

capitalization weighting with a cap of 

15% for the H-Share portion of each 

constituent company has been adopted 

for the Index calculation since March 6, 

2006. The freefloat adjustment is 

calculated by excluding the following 

types of holdings: 

• Shares held by strategic 

shareholder(s) who individually or 

collectively control more than 30% of 

the shareholdings (‘‘Strategic 

Holdings’’); 

• Shares held by director(s) who 

individually control more than 5% of 

the shareholdings (‘‘Directors’

Holdings’’); 

• Shares held by a Hong Kong-listed 

company which controls more than 5% 

of the shareholdings as investments 

(‘‘Cross-Holdings’’); and 

• Shares held by shareholder(s) who 

individually or collectively represent 

more than 5% of the shareholdings in 

the company and with a publicly 

disclosed lock-up arrangement (‘‘LockUp Shares’’). 

The data used for the freefloat 

adjustment are taken from publicly 

available sources, including annual 

reports and Securities Notification 

History Reports from Hong Kong 

Exchanges and Clearing Limited. 

Index Calculation Disruption Events 

From time to time, disruptions can 

occur in trading on exchanges. The 

daily calculation of the Index would be 

adjusted in the event of the occurrence 

or existence of any suspension of or 

limitation imposed on trading (by 

reason of movements in price exceeding 

limits permitted by any relevant 

exchange or market or otherwise) of, or 

the unavailability, through a recognized 

system of public dissemination of 

transaction information, for a period 

longer than two hours, or during the 

one-half hour period preceding the close 

of trading, on the applicable exchange 

or market, of accurate price, volume or 

related information in respect of: 

(1) Stocks which then comprise 20% 

or more of the value of the Hang Seng 

China Enterprises Index or any 

successor index; 

(2) Any options or futures contracts, 

or any options on such futures contracts 

relating to the Hang Seng China 

Enterprises Index or any successor 

index; or 

(3) Any options or futures contracts 

relating to stocks which then comprise 

20% or more of the value of the Hang 

Seng China Enterprises Index or any 

successor index on any exchange or 

market, if in each case, any such 

suspension, limitation, or unavailability 

is considered to be material by Citigroup 

Global Markets (each, a ‘‘Market 

Disruption Event’’).11

In the case of a temporary disruption 

in connection with the trading of the HShares comprising the Index or a Market 

Disruption Event, the Exchange believes 

that it is unnecessary for a filing 

pursuant to Section 19(b) under the Act 

to be submitted to the Commission. The 

Exchange submits that for a temporary 

disruption of said securities or a Market 

Disruption Event, the Exchange would 

typically use the last available price, 

except that if and to the extent 

determined by Citigroup Global Markets 

the value of the Index for that day 

would be the arithmetic mean of the 

value of the Index obtained from as 

many dealers in equity securities, but 

not exceeding three such dealers (‘‘fair 

value’’ pricing). The Exchange 

represents that, if the use of the last 

available price or ‘‘fair value’’ pricing 

for an Index constituent or the Index is 

more than of a temporary nature, the 

Exchange will submit a proposed rule 

change pursuant to Rule 19b–4 seeking 

the Commission’s approval to continue 

to trade the Notes. Unless approved for 

continued trading, the Exchange would 

commence delisting proceedings. 

Exchange Rules Applicable to the Notes 

The Notes are cash-settled in U.S. 

dollars and do not give the holder any 

right or other ownership interest in the 

Index or commodities comprising the 

Index. The Notes are designed for 

investors who desire to participate in, or 

gain exposure to, an index composed of 

H-Shares and are willing to hold the 

investment to maturity. 

The Notes would trade as equity 

securities subject to Amex equity 

trading rules including, among others, 

rules governing priority, parity, and 

precedence of orders; specialist 

responsibilities; account opening, and 

customer suitability requirements. In 

addition, the Notes would be subject to 

the equity margin rules of the 

Exchange.12 The Exchange would, prior 

to trading the Notes, distribute a circular 

to the membership providing guidance 

with regard to member firm compliance 


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13See 17 CFR 240.10A–3(c)(1). 

14 15 U.S.C. 78f(b). 

15 15 U.S.C. 78f(b)(5). 

responsibilities (including suitability 

recommendations) when handling 

transactions in the Notes and 

highlighting the special risks and 

characteristics of the Notes. With 

respect to suitability recommendations 

and risks, the Exchange would require 

members, member organizations, and 

employees thereof recommending a 

transaction in the Notes: (1) To 

determine that such transaction is 

suitable for the customer; and (2) to 

have a reasonable basis for believing 

that the customer can evaluate the 

special characteristics of, and is able to 

bear the financial risks of, such 

transaction. In addition, the Issuer 

would deliver a prospectus in 

connection with the initial sales of the 

Notes. 

Criteria for Initial and Continued 

Listing 

The Exchange represents that it 

prohibits the initial and/or continued 

listing of any security that is not in 

compliance with Rule 10A–3 under the 

Securities Act of 1934.13 The Exchange 

also has a general policy that prohibits 

the distribution of material, non-public 

information by its employees. 

The Exchange represents that it would 

file a proposed rule change pursuant to 

Rule 19b–4 under the Act, seeking 

approval to continue trading the Notes 

and unless approved, the Exchange 

would commence delisting the Notes if: 

• HSCI substantially changes either 

the index component selection 

methodology or the weighting 

methodology; 

• If a new component is added to the 

Index (or pricing information is used for 

a new or existing component) that 

constitutes more than 10% of the weight 

of the Index with whose principal 

trading market the Exchange does not 

have a comprehensive surveillance 

sharing agreement; or 

• If a successor or substitute index is 

used in connection with the Notes. The 

filing would address, among other 

things the listing and trading 

characteristics of the successor or 

substitute index and the Exchange’s 

surveillance procedures applicable 

thereto. 

If the Index value does not change 

during some or all of the period when 

trading is occurring on the Exchange 

because of time zone differences or 

holidays in Hong Kong, then the last 

official calculated Index value would 

remain available throughout Exchange 

trading hours. 

Trading Halts 

The Exchange would halt trading in 

the Notes if the circuit breaker 

parameters of Exchange Rule 117 have 

been reached. In exercising its 

discretion to halt or suspend trading in 

the Notes, the Exchange may consider 

factors such as those set forth in 

Exchange Rule 918C(b), in addition to 

other factors that may be relevant. In 

particular, if the Index value is not 

being disseminated as required, the 

Exchange may halt trading during the 

day in which the interruption to the 

dissemination of the Index value occurs. 

If the interruption to the dissemination 

of the Index value persists past the 

trading day in which it occurred, the 

Exchange would halt trading no later 

than the beginning of the trading day 

following the interruption. 

The Exchange represents that its 

surveillance procedures are adequate to 

properly monitor the trading of the 

Notes. Amex, has stated that it would 

rely on its existing surveillance 

procedures governing index-linked 

securities. The Exchange currently has 

in place an Information Sharing 

Agreement with the Stock Exchange of 

Hong Kong for the purpose of providing 

information in connection with trading 

in or related to the components 

comprising the Index. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6 of the Act 14 in general and 

furthers the objectives of Section 

6(b)(5) 15 in particular in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange did not receive any 

written comments on the proposed rule 

change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

As the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

Amex has requested accelerated 

approval of this proposed rule change, 

as amended, prior to the 30th day after 

the date of publication of the notice of 

the filing thereof, following the 

conclusion of a 15-day comment period. 

The Commission has determined that a 

15-day comment period is appropriate 

before taking any action. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form at http://www.sec.gov/ 

rules/sro.shtml or send an e-mail to 

rule-comments@sec.gov. Please include 

File No. SR–Amex–2006–90 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File No. 

SR–Amex–2006–90. This file number 

should be included on the subject line 

if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site at http://www.sec.gov/ 

rules/sro.shtml. Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 


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77426 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Notices 

16 17 CFR 200.30–3(a)(12). 

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. 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–Amex–2006–90 and should be 

submitted on or before January 10, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.16

Nancy M. Morris 

Secretary. 

BILLING CODE 8011–01–P 


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sroberts on PROD1PC70 with NOTICESEN26DE06.002</GPH>
77428 Federal Register / Vol. 71, No. 247 / Tuesday, December 26, 2006 / Notices 

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). 

5See Securities Exchange Act Release No. 54365 

(Aug. 25, 2006), 71 FR 52192 (Sept. 1, 2006). 

6See Securities Exchange Act Release No. 54546 

(Sept. 29, 2006), 71 FR 59161 (Oct. 6, 2006). 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

9For purposes of calculating the 60-day period 

within which the Commission may summarily 

abrogate the proposed rule change under Section 

19(b)(3)(C) of the Act, the Commission considers 

the period to commence on December 14, 2006, the 

date on which the BSE filed Amendment No. 1. See 

15 U.S.C. 78s(b)(3)(C). 

[FR Doc. 06–9844 Filed 12–22–06; 8:45 am] 

BILLING CODE 8011–01–C 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54949; File No. SR–BSE–

2006–53] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change and 

Amendment No. 1 Thereto To Allow 

Exchange Traded Funds To Trade on 

the Boston Equities Exchange Until 

4:15 p.m. Eastern Standard Time 

December 18, 2006. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

30, 2006, the Boston Stock Exchange, 

Inc. (‘‘Exchange’’ or ‘‘BSE’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II and III below, which Items 

have been substantially prepared by the 

Exchange. On December 14, 2006, the 

BSE submitted Amendment No. 1 to the 

proposed rule change. The Exchange 

filed the proposed rule change pursuant 

to Section 19(b)(3)(A) of the Act 3 and 

Rule 19b–4(f)(6) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The BSE proposes to allow Exchange 

Traded Funds, or ETFs, to trade on the 

Boston Equities Exchange (‘‘BeX’’) until 

4:15 p.m. Eastern Standard Time each 

business day. Additionally, by this 

filing the BSE is providing notice to its 

Members that the Good Till Time order 

type will not be available for 

approximately six to eight weeks 

following the November 20, 2006 

launch of the BeX marketplace. The BSE 

will provide its Members with at least 

one day’s notice of the date Good Till 

Time order types will be accepted on 

BeX. 

The text of the proposed rule changes 

is available on the Exchange’s Web site 

(http://www.bse.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 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 

On June 13, 2006, the BSE filed 

Amendment No. 3 to SR–BSE–2006–22, 

a rule filing submitted in connection 

with the implementation of the first of 

two phases of BeX, a fully automated 

electronic book for the display and 

execution of orders in securities. On 

August 25, 2006, SR–BSE–2006–22 was 

approved by the Commission.5 On 

August 3, 2006, the BSE filed, in 

connection with the implementation of 

the second phase of the BeX trading 

system and in connection with 

satisfying the requirements of 

Regulation NMS, SR–BSE–2006–30. On 

September 29, 2006, the Commission 

approved SR–BSE–2006–30.6

The purpose of this filing is to amend 

the operating hours of the BeX 

marketplace to reflect that ETFs may 

trade on BeX until 4:15 p.m. Eastern 

Standard Time each business day. The 

Amendment to the filing clarifies that 

although ETFs may trade on BeX until 

4:15 p.m. Eastern Standard Time, ETFs 

cannot be submitted as Limit or Close 

Orders, will not participate in the 

Market on Close Period described in 

Chapter XXXVII, Section 3(f)(i) of the 

BSE Rules, and will not be placed in the 

Authorized Reserve State described in 

Chapter XXXVII, Section 3(f)(ii) of the 

BSE Rules. Rather, ETFs will simply 

cease matching in the BeX system after 

4:15 p.m. 

Further, by this filing, the BSE is 

providing notice to its Members that the 

Good Till Time order type will not be 

available for approximately six to eight 

weeks following the November 20, 2006 

launch of the BeX marketplace. The BSE 

will provide its Members with at least 

one day’s notice of the date Good Till 

Time order types will be accepted on 

BeX. 

2. Statutory Basis 

The Exchange believes that the 

proposal, as amended, is consistent with 

the requirements of 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 foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest.9

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 comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate if 

consistent with the protection of 

investors and the public interest, 

provided that the Exchange has given 

the Commission written notice of its 

intent to file the proposed rule change 


sroberts on PROD1PC70 with NOTICES