2040 Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 

1 15 U.S.C. 78q(d). 

2 17 CFR 240.17d–2. 

3 15 U.S.C. 78s(g)(1). 

4 15 U.S.C. 78q(d). 

5 15 U.S.C. 78s(g)(2). 

6 15 U.S.C. 78q(d)(1). 

7See Securities Act Amendments of 1975, Report 

of the Senate Committee on Banking, Housing, and 

Urban Affairs to Accompany S. 249, S. Rep. No. 94–

75, 94th Cong., 1st Session 32 (1975). 

8 17 CFR 240.17d–1 and 17 CFR 240.17d–2, 

respectively. 

9See Securities Exchange Act Release No. 12352 

(April 20, 1976), 41 FR 18808 (May 7, 1976). 

10See Securities Exchange Act Release No. 12935 

(October 28, 1976), 41 FR 49091 (November 8, 

1976). 

11See Securities Exchange Act Release Nos. 

42668 (April 11, 2000), 65 FR 21048 (April 19, 2000 

(File No. 4–431) (notice of filing); and 42815 (May 

23, 2000), 65 FR 34762 (May 31, 2000) (File No. 4–

431) (order). 

12See Securities Exchange Act Release No. 54528 

(September 28, 2006), 71 FR 58650 (October 4, 

2006) (SR–ISE–2006–48). 

13See id. at 71 FR 58654. 

RECORD ACCESS PROCEDURES: 

Persons wishing to obtain information 

on the procedures for gaining access to 

or contesting the contents of this record 

may contact the Privacy Act Officer, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–5100. 

CONTESTING RECORDS PROCEDURES: 

See record access procedures above. 

RECORD SOURCE CATEGORIES: 

The issuing official, Commission 

employee, contractor, volunteer, on-site 

business owner or client, employee of 

other Federal agency, visitor, or press 

member being issued the identification/ 

access card provides the information. 

EXEMPTIONS CLAIMED FOR THE SYSTEM: 

None. 

Dated: January 11, 2007. 

By the Commission. 

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–547 Filed 1–16–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55057; File No. 4–529] 

Program for Allocation of Regulatory 

Responsibilities Pursuant to Rule 17d–

2; Notice of Filing of Proposed Plan for 

the Allocation of Regulatory 

Responsibilities Between the 

International Securities Exchange, LLC 

and the National Association of 

Securities Dealers, Inc. 

January 8, 2007. 

Pursuant to Section 17(d) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 17d–2 thereunder,2

notice is hereby given that on December 

20, 2006, the International Securities 

Exchange, LLC (‘‘ISE’’) and the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’) (together with the ISE, the 

‘‘Parties’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

an amended and restated plan for the 

allocation of regulatory responsibilities. 

The Commission is publishing this 

notice to solicit comments on the 

amended and restated 17d–2 plan from 

interested persons. 

I. Introduction 

Section 19(g)(1) of the Act,3 among 

other things, requires every selfregulatory organization (‘‘SRO’’) 

registered as either a national securities 

exchange or registered national 

securities association to examine for, 

and enforce compliance by, its members 

and persons associated with its 

members with the Act, the rules and 

regulations thereunder, and the SRO’s 

own rules, unless the SRO is relieved of 

this responsibility pursuant to Section 

17(d) 4 or Section 19(g)(2) 5 of the Act. 

Without this relief, the statutory 

obligation of each individual SRO could 

result in a pattern of multiple 

examinations of broker-dealers that 

maintain memberships in more than one 

SRO (‘‘common members’’). Such 

regulatory duplication would add 

unnecessary expenses for common 

members and their SROs. 

Section 17(d)(1) of the Act 6 was 

intended, in part, to eliminate 

unnecessary multiple examinations and 

regulatory duplication.7 With respect to 

a common member, Section 17(d)(1) 

authorizes the Commission, by rule or 

order, to relieve an SRO of the 

responsibility to receive regulatory 

reports, to examine for and enforce 

compliance with applicable statutes, 

rules, and regulations, or to perform 

other specified regulatory functions. 

To implement Section 17(d)(1), the 

Commission adopted two rules: Rule 

17d–1 and Rule 17d–2 under the Act.8

Rule 17d–1 authorizes the Commission 

to name a single SRO as the designated 

examining authority (‘‘DEA’’) to 

examine common members for 

compliance with the financial 

responsibility requirements imposed by 

the Act, or by Commission or SRO 

rules.9 When an SRO has been named as 

a common member’s DEA, all other 

SROs to which the common member 

belongs are relieved of the responsibility 

to examine the firm for compliance with 

the applicable financial responsibility 

rules. On its face, Rule 17d–1 deals only 

with an SRO’s obligations to enforce 

member compliance with financial 

responsibility requirements. Rule 17d–1 

does not relieve an SRO from its 

obligation to examine a common 

member for compliance with its own 

rules and provisions of the federal 

securities laws governing matters other 

than financial responsibility, including 

sales practices and trading activities and 

practices. 

To address regulatory duplication in 

these and other areas, the Commission 

adopted Rule 17d–2 under the Act.10

Rule 17d–2 permits SROs to propose 

joint plans for the allocation of 

regulatory responsibilities with respect 

to their common members. Under 

paragraph (c) of Rule 17d–2, the 

Commission may declare such a plan 

effective if, after providing for notice 

and comment, it determines that the 

plan is necessary or appropriate in the 

public interest and for the protection of 

investors, to foster cooperation and 

coordination among the SROs, to 

remove impediments to, and foster the 

development of, a national market 

system and a national clearance and 

settlement system, and is in conformity 

with the factors set forth in Section 

17(d) of the Act. Commission approval 

of a plan filed pursuant to Rule 17d–2 

relieves an SRO of those regulatory 

responsibilities allocated by the plan to 

another SRO. 

II. Proposed Plan 

The Parties currently operate 

pursuant to a 17d–2 plan in which 

NASD has assumed certain inspection, 

examination, and enforcement 

responsibility for common members 

with respect to certain applicable laws, 

rules, and regulations (the ‘‘current 

NASD–ISE 17d–2 Plan’’).11 On 

September 28, 2006, the Commission 

approved a proposed rule change 

submitted by ISE relating to the 

adoption of rules to govern its electronic 

trading system for equities.12 In that 

filing, ISE represented that it would 

enter into a 17d–2 agreement with 

NASD to delegate to NASD all 

regulatory oversight and enforcement 

responsibilities with respect to the ISE’s 

outbound routing facility pursuant to 

applicable laws.13

On December 20, 2006, the Parties 

submitted an amended and restated 

17d–2 plan for review by the 

Commission. The amended and restated 

17d–2 plan, which would replace and 

supersede the current NASD–ISE 17d–2 

Plan and all prior amendments thereto 

in their entirety, is intended to reduce 

regulatory duplication for firms that are 

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Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 2041 

14See paragraph 1(b) of the amended and restated 

17d–2 plan (defining Common Rules). 

15See paragraph 1(f) of the amended and restated 

17d–2 plan. The Commission notes that there are 

currently no federal securities law rules listed on 

the Certification. 

16See Section 3(a)(2) of the Act (defining 

‘‘facility’’). 15 U.S.C. 78c(a)(2). 

17Apparent violations of such rules by any such 

entity will be processed by, and enforcement 

proceedings will be conducted by, the NASD. See 

paragraph 2(d) of the amended and restated 

17d–2 plan. As of the date of the amended and 

restated 17d–2 plan, ISE Route LLC is the only 

Router Member. 

common members of both ISE and 

NASD and to address regulation of the 

ISE’s outbound routing facility for its 

new electronic trading system for 

equities. The text of the plan delineates 

regulatory responsibilities with respect 

to the Parties, including responsibility 

for ISE rules. Included in the amended 

and restated plan is an exhibit (the ‘‘ISE 

Certification of Common Rules,’’

referred to herein as the ‘‘Certification’’) 

that lists every ISE rule and the federal 

securities laws, rules, and regulations 

thereunder for which, under the plan, 

NASD would bear responsibility for 

overseeing and enforcing with respect to 

common members. In particular, under 

the amended and restated 17d–2 plan, 

NASD would assume examination and 

enforcement responsibility relating to 

compliance by dual members and 

persons associated therewith with the 

rules of ISE that are substantially similar 

to the applicable rules of NASD 

(‘‘Common Rules’’),14 as well as any 

provisions of the federal securities laws 

and the rules and regulations 

thereunder delineated in the 

Certification.15 Under the plan, ISE 

would retain full responsibility for 

surveillance and enforcement with 

respect to trading activities or practices 

involving ISE’s own marketplace, 

including, without limitation, ISE’s 

rules relating to the rights and 

obligations of market makers; 

registration pursuant to its unique rules 

(i.e., non-Common Rules); its duties as 

a DEA pursuant to Rule 17d–1 under the 

Act; and any rules that are not Common 

Rules, except for ISE rules for any ISE 

member that operates as a facility,16 acts 

as an outbound router for the ISE, and 

is a member of NASD (the ‘‘Router 

Member’’).17

The text of the amended and restated 

17d–2 plan is as follows: 

Agreement Between NASD and 

International Securities Exchange LLC 

Pursuant to Rule 17d–2 Under the 

Securities Exchange Act of 1934 

This Agreement, by and between the 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’) and the 

International Securities Exchange LLC 

(‘‘ISE’’), is made this 20th day of 

December, 2006 (the ‘‘Agreement’’), 

pursuant to Section 17(d) of the 

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’) and Rule 17d–2 

thereunder which permits agreements 

between self-regulatory organizations to 

allocate regulatory responsibility to 

eliminate regulatory duplication. NASD 

and ISE may be referred to individually 

as a ‘‘party’’ and together as the 

‘‘parties.’’

This Agreement amends and restates 

the agreement entered into between the 

parties on April 3, 2000 and amended 

on April 27, 2000, entitled ‘‘Agreement 

Between the National Association of 

Securities Dealers, Inc., NASD 

Regulation, Inc. and the International 

Securities Exchange LLC Pursuant to 

Section 17(d) and Rule 17d–2,’’ and any 

subsequent amendments thereafter. 

Whereas, NASD and ISE desire to 

reduce duplication in the examination 

of their Dual Members (as defined 

herein) and in the filing and processing 

of certain registration and membership 

records; and 

Whereas, NASD and ISE desire to 

execute an agreement covering such 

subjects pursuant to the provisions of 

Rule 17d–2 under the Exchange Act and 

to file such agreement with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘Commission’’) for its 

approval. 

Now, therefore, in consideration of 

the mutual covenants contained 

hereinafter, NASD and ISE hereby agree 

as follows: 

1. Definitions. 

Unless otherwise defined in this 

Agreement or the context otherwise 

requires, the terms used in this 

Agreement shall have the same meaning 

as they have under the Exchange Act 

and the rules and regulations 

thereunder. As used in this Agreement, 

the following terms shall have the 

following meanings: 

(a) ‘‘ISE Rules’’ or ‘‘NASD Rules’’

shall mean the rules of the ISE or NASD, 

respectively, as the rules of an exchange 

or association are defined in Exchange 

Act Section 3(a)(27). 

(b) ‘‘Common Rules’’ shall mean the 

ISE Rules that are substantially similar 

to the applicable NASD Rules in that 

examination for compliance with such 

rules would not require NASD to 

develop one or more new examination 

standards, modules, procedures, or 

criteria in order to analyze the 

application of the rule, or a Dual 

Member’s activity, conduct, or output in 

relation to such rule. 

(c) ‘‘Dual Members’’ shall mean those 

ISE members that are also members of 

NASD and the associated persons 

therewith. 

(d) ‘‘Effective Date’’ shall have the 

meaning set forth in paragraph 14. 

(e) ‘‘Enforcement Responsibilities’’

shall mean the conduct of appropriate 

proceedings, in accordance with the 

NASD Code of Procedure (the Rule 9000 

Series) and other applicable NASD 

procedural rules, to determine whether 

violations of pertinent laws, rules or 

regulations have occurred, and if such 

violations are deemed to have occurred, 

the imposition of appropriate sanctions 

as specified under the NASD’s Code of 

Procedure and sanctions guidelines. 

(f) ‘‘Regulatory Responsibilities’’ shall 

mean the examination responsibilities 

and Enforcement Responsibilities 

relating to compliance by the Dual 

Members with the Common Rules and 

the provisions of the Exchange Act and 

the rules and regulations thereunder, 

and other applicable laws, rules and 

regulations, each as set forth on Exhibit 

1 attached hereto. 

2. Regulatory and Enforcement 

Responsibilities. 

NASD shall assume Regulatory 

Responsibilities and Enforcement 

Responsibilities for Dual Members. 

Attached as Exhibit 1 to this Agreement 

and made part hereof, ISE furnished 

NASD with a current list of Common 

Rules and certified to NASD that such 

rules are substantially similar to the 

corresponding NASD rule (the 

‘‘Certification’’). NASD hereby agrees 

that the rules listed in the Certification 

are Common Rules as defined in this 

Agreement. Each year following the 

Effective Date of this Agreement, or 

more frequently if required by changes 

in either the rules of ISE or NASD, ISE 

shall submit an updated list of Common 

Rules to NASD for review which shall 

add ISE rules not included in the 

current list of Common Rules that 

qualify as Common Rules as defined in 

this Agreement; delete ISE rules 

included in the current list of Common 

Rules that no longer qualify as Common 

Rules as defined in this Agreement; and 

confirm that the remaining rules on the 

current list of Common Rules continue 

to be ISE rules that qualify as Common 

Rules as defined in this Agreement. 

Within 30 days of receipt of such 

updated list, NASD shall confirm in 

writing whether the rules listed in any 

updated list are Common Rules as 

defined in this Agreement. 

Notwithstanding anything herein to the 

contrary, it is explicitly understood that 

the term ‘‘Regulatory Responsibilities’’

does not include, and ISE shall retain 

full responsibility for (unless otherwise 

addressed by separate agreement or 

rule) the following: 

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2042 Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 

(a) Surveillance and enforcement with 

respect to trading activities or practices 

involving ISE’s own marketplace, 

including without limitation ISE’s rules 

relating to the rights and obligations of 

market makers; 

(b) registration pursuant to its 

applicable rules of associated persons 

(i.e., registration rules that are not 

Common Rules); 

(c) discharge of its duties and 

obligations as a Designated Examining 

Authority pursuant to Rule 17d–1 under 

the Exchange Act; and 

(d) any ISE Rules that are not 

Common Rules, except for ISE Rules for 

any ISE member that operates as a 

facility (as defined in Section 3(a)(2) of 

the Exchange Act), acts as an outbound 

router for the ISE and is a member of 

NASD (‘‘Router Member’’) as provided 

in paragraph 6. As of the date of this 

Agreement, ISE Route LLC is the only 

Router Member. 

3. Dual Members. 

Prior to the Effective Date, ISE shall 

furnish NASD with a current list of Dual 

Members, which shall be updated no 

less frequently than once each quarter. 

4. No Charge. 

There shall be no charge to ISE by 

NASD for performing the Regulatory 

Responsibilities and Enforcement 

Responsibilities under this Agreement 

except as hereinafter provided. NASD 

shall provide ISE with ninety (90) days 

advance written notice in the event 

NASD decides to impose any charges to 

ISE for performing the Regulatory 

Responsibilities under this Agreement. 

If NASD determines to impose a charge, 

ISE shall have the right at the time of 

the imposition of such charge to 

terminate this Agreement; provided, 

however, that NASD’s Regulatory 

Responsibilities under this Agreement 

shall continue until the Commission 

approves the termination of this 

Agreement. 

5. Reassignment of Regulatory 

Responsibilities. 

Notwithstanding any provision 

hereof, this Agreement shall be subject 

to any statute, or any rule or order of the 

Commission, or industry agreement, 

restructuring the regulatory framework 

of the securities industry or reassigning 

Regulatory Responsibilities between 

self-regulatory organizations. To the 

extent such action is inconsistent with 

this Agreement, such action shall 

supersede the provisions hereof to the 

extent necessary for them to be properly 

effectuated and the provisions hereof in 

that respect shall be null and void. 

6. Notification of Violations. 

In the event that NASD becomes 

aware of apparent violations of any ISE 

Rules, which are not listed as Common 

Rules, discovered pursuant to the 

performance of the Regulatory 

Responsibilities assumed hereunder, 

NASD shall notify ISE of those apparent 

violations for such response as ISE 

deems appropriate. Apparent violations 

of all other applicable rules, including 

violations of the Common Rules, various 

securities acts, and rules and regulations 

thereunder, shall be processed by, and 

enforcement proceedings in respect 

thereto shall be conducted by NASD as 

provided hereinbefore; provided, 

however, that in the event a Dual 

Member is the subject of an 

investigation relating to a transaction on 

the ISE, ISE may in its discretion 

assume concurrent jurisdiction and 

responsibility. With respect to apparent 

violations of any ISE Rules by any 

Router Member, NASD shall not make 

referrals to ISE pursuant to this 

paragraph 6. Such apparent violations 

shall be processed by, and enforcement 

proceedings in respect thereto will be 

conducted by, NASD as provided in this 

Agreement. Each party agrees to make 

available promptly all files, records and 

witnesses necessary to assist the other 

in its investigation or proceedings. 

7. Continued Assistance. 

NASD shall make available to ISE all 

information obtained by NASD in the 

performance by it of the Regulatory 

Responsibilities hereunder in respect to 

the Dual Members subject to this 

Agreement. In particular, and not in 

limitation of the foregoing, NASD shall 

furnish ISE any information it obtains 

about Dual Members which reflects 

adversely on their financial condition. It 

is understood that such information is 

of an extremely sensitive nature and, 

accordingly, ISE acknowledges and 

agrees to take all reasonable steps to 

maintain its confidentiality. ISE shall 

make available to NASD any 

information coming to its attention that 

reflects adversely on the financial 

condition of Dual Members or indicates 

possible violations of applicable laws, 

rules or regulations by such firms. 

8. Dual Member Applications. 

a. Dual Members subject to this 

Agreement shall be required to submit, 

and NASD shall be responsible for 

processing and acting upon all 

applications submitted on behalf of 

allied persons, partners, officers, 

registered personnel and any other 

person required to be approved by the 

rules of both ISE and NASD or 

associated with Dual Members thereof. 

Upon request, NASD shall advise ISE of 

any changes of allied members, 

partners, officers, registered personnel 

and other persons required to be 

approved by the rules of both ISE and 

NASD. 

b. Dual Members shall be required to 

send to NASD all letters, termination 

notices or other material respecting the 

individuals listed in paragraph 8(a). 

c. When as a result of processing such 

submissions NASD becomes aware of a 

statutory disqualification as defined in 

the Exchange Act with respect to a Dual 

Member, NASD shall determine 

pursuant to Sections 15A(g) and/or 

Section 6(c) of the Exchange Act the 

acceptability or continued applicability 

of the person to whom such 

disqualification applies and keep ISE 

advised of its actions in this regard for 

such subsequent proceedings as ISE 

may initiate. 

d. Notwithstanding the foregoing, 

NASD shall not review the membership 

application, reports, filings, fingerprint 

cards, notices, or other writings filed to 

determine if such documentation 

submitted by a broker or dealer, or a 

person associated therewith or other 

persons required to register or qualify by 

examination: (i) Meets the ISE 

requirements for general membership or 

for specified categories of membership 

or participation in the ISE, such as (A) 

Primary Market Maker Membership 

(‘‘PMM’’); (B) Competitive Market 

Maker Membership (‘‘CMM’’); (C) 

Electronic Access Membership (‘‘EAM’’) 

(or any similar type of ISE membership 

or participation that is created after this 

Agreement is executed); or (ii) meets the 

ISE requirements to be associated with, 

or employed by, an ISE member or 

participant in any capacity, such a 

Designated Trading Representative 

(‘‘DTR’’) (or any similar type of 

participation, employment category or 

title, or associate-person category or 

class that is created after this Agreement 

is executed). NASD shall not review 

applications or other documentation 

filed to request a change in the rights or 

status described in this paragraph 8(d), 

including termination or limitation on 

activities, of a member or a participant 

of the ISE, or a person associated with, 

or requesting association with, a 

member or participant of the ISE. 

9. Branch Office Information. 

NASD shall also be responsible for 

processing and, if required, acting upon 

all requests for the opening, address 

changes, and terminations of branch 

offices by Dual Members and any other 

applications required of Dual Members 

with respect to the Common Rules as 

they may be amended from time to time. 

NASD shall advise ISE monthly of the 

opening, address change and 

termination of branch and main offices 

of Dual Members and the names of such 

branch office managers. 

10. Customer Complaints. 

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Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 2043 

ISE shall forward to NASD copies of 

all customer complaints involving Dual 

Members received by ISE relating to 

NASD’s Regulatory Responsibilities 

under this Agreement. It shall be 

NASD’s responsibility to review and 

take appropriate action in respect to 

such complaints. 

11. Advertising. 

NASD shall assume responsibility to 

review the advertising of Dual Members 

subject to the Agreement, provided that 

such material is filed with NASD in 

accordance with NASD’s filing 

procedures and is accompanied with 

any applicable filing fees set forth in 

NASD Rules. Such review shall be made 

in accordance with then applicable 

NASD rules and interpretations. The 

advertising of Dual Members shall be 

subject only to compliance with 

appropriate NASD rules and 

interpretations. 

12. No Restrictions on Regulatory 

Action. 

Nothing contained in this Agreement 

shall restrict or in any way encumber 

the right of either party to conduct its 

own independent or concurrent 

investigation, examination or 

enforcement proceeding of or against 

Dual Members, as either party, in its 

sole discretion, shall deem appropriate 

or necessary. 

13. Termination. 

This Agreement may be terminated by 

ISE or NASD at any time upon the 

approval of the Commission after one 

(1) year’s written notice to the other 

party, except as provided in paragraph 

4. 

14. Effective Date. 

This Agreement shall be effective 

upon approval of the Commission. 

15. Arbitration. 

In the event of a dispute between the 

parties as to the operation of this 

Agreement, ISE and NASD hereby agree 

that any such dispute shall be settled by 

arbitration in Washington, DC in 

accordance with the rules of the 

American Arbitration Association then 

in effect, or such other procedures as the 

parties may mutually agree upon. 

Judgment on the award rendered by the 

arbitrator(s) may be entered in any court 

having jurisdiction. 

16. Separate Agreement. 

This Agreement is wholly separate 

from the multiparty Agreement made 

pursuant to Rule 17d–2 of the Exchange 

Act between the American Stock 

Exchange LLC, the Boston Stock 

Exchange, Inc., the Chicago Board 

Options Exchange, Inc., the 

International Securities Exchange LLC, 

the National Association of Securities 

Dealers, Inc., the New York Stock 

Exchange, Inc., the Pacific Exchange, 

Inc., and the Philadelphia Stock 

Exchange, Inc. involving the allocation 

of regulatory responsibilities with 

respect to common members for 

compliance with common rules relating 

to the conduct by broker-dealers of 

accounts for listed options or index 

warrants entered into on January 14, 

2004, and as may be amended from time 

to time. 

17. Notification of Members. 

ISE and NASD shall notify Dual 

Members of this Agreement after the 

Effective Date by means of a uniform 

joint notice. 

18. Amendment. 

This Agreement may be amended in 

writing duly approved by each party. 

All such amendments must be filed 

with and approved by the Commission 

before they become effective. 

19. Limitation of Liability. 

Neither NASD nor ISE nor any of their 

respective directors, governors, officers 

or employees shall be liable to the other 

party to this Agreement for any liability, 

loss or damage resulting from or 

claimed to have resulted from any 

delays, inaccuracies, errors or omissions 

with respect to the provision of 

Regulatory Responsibilities as provided 

hereby or for the failure to provide any 

such responsibility, except with respect 

to such liability, loss or damages as 

shall have been suffered by one or the 

other of NASD or ISE and caused by the 

willful misconduct of the other party or 

their respective directors, governors, 

officers or employees. No warranties, 

express or implied, are made by NASD 

or ISE with respect to any of the 

responsibilities to be performed by each 

of them hereunder. 

20. Relief from Responsibility. 

Pursuant to Sections 17(d)(1)(A) and 

19(g) of the Exchange Act and Rule 17d–

2 thereunder, NASD and ISE join in 

requesting the Commission, upon its 

approval of this Agreement or any part 

thereof, to relieve ISE of any and all 

responsibilities with respect to matters 

allocated to NASD pursuant to this 

Agreement; provided, however, that this 

Agreement shall not be effective until 

the Effective Date. 

Exhibit 1—ISE Certification of Common 

Rules 

ISE hereby certifies that the 

requirements contained in the rules 

listed below for ISE are identical to, or 

substantially similar to, the comparable 

NASD rules identified. 

ISE Rule(s) NASD Rule(s) 

408. Prevention of the Misuse of Material, Nonpublic Information .......... 3010(a)(2) Supervision. 

409. Disciplinary Action ............................................................................ 3070(a)(1) and (a)(10) Reporting Requirements. 

604. Continuing Education for Registered Persons* ................................ 1120 Continuing Education Requirements. 

622. Transfer of Accounts ........................................................................ 11870 Customer Account Transfer Contracts. 

624. Brokers’ Blanket Bonds* ................................................................... 3020 Fidelity Bonds. 

626. Telephone Solicitation* ..................................................................... 2212 Telemarketing. 

1400. Maintenance, Retention, and Furnishing of Books, Records and 

Other Information.

3110(a) Books and Records—Requirements. 

1407. Market Maker Hedge Exemption from Nasdaq Short Sale Rule* .. 5100 Short Sale Rule; IM–6130 Trade Reporting of Short Sales. 

2114. Doing Business with the Public 1 ................................................... 2310 Recommendations to Customers (Suitability); 2320 Best Execution and Interpositioning; 2330 Customers’ Securities or Funds; 2340 

Customer Account Statements; 2341 Margin Disclosure Statement; 

2350 Broker/Dealer Conduct on the Premises of Financial Institutions; 2360 Approval Procedures for Day-Trading Accounts; 2361 

Day-Trading Risk Disclosure Statement; 2370 Borrowing From or 

Lending to Customers. 

1 In connection with the approval of ISE Rule 2114, the Commission noted that since the ISE is requiring Equity EAMs that do business with 

the public to become members of NASD, those ISE members are required to comply with NASD rules that govern the practice of members when 

doing business with the public. The Commission noted that, among other things, these members would be obligated to comply with these listed 

NASD Rules. See Securities Exchange Act Release No. 54401 (September 1, 2006), 71 FR 53483 (September 11, 2006) (SR–ISE–2006–53). 

* ISE will be responsible for any significant differences between its rules and the comparable NASD rule identified, until such time amendments 

to such rule(s) may be approved. 

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2044 Federal Register / Vol. 72, No. 10 / Wednesday, January 17, 2007 / Notices 

18 15 U.S.C. 78q(d)(1). 

19 17 CFR 240.17d–2. 20 17 CFR 200.30–3(a)(34). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 renamed the proposed 

procedure for equity options as ‘‘at-risk’’ cross 

transactions; provided that the eligible order size 

would be at least 50 contracts; clarified certain 

descriptions of the proposal in Section II.A.1 below; 

and made minor revisions to the text of the 

proposed rule change. Amendment No. 1 replaced 

and superseded the original filing in its entirety. 

4Amendment No. 2 revised the proposed rule 

text to clarify that, under Commentary .02(c) of 

Amex Rule 950—ANTE(d), the member, on behalf 

of the public customer whose order is subject to 

facilitation, must establish priority consistent with 

the Exchange’s customer priority rules. Amendment 

No. 2 also made a technical correction to the 

Purpose section of the proposed rule change. 

* * * * * 

III. Date of Effectiveness of the 

Proposed Plan and Timing for 

Commission Action 

Pursuant to Section 17(d)(1) of the 

Act 18 and Rule 17d–2 thereunder,19

after February 7, 2007, the Commission 

may, by written notice, declare the plan 

submitted by ISE and NASD, File No. 4–

529, to be effective if the Commission 

finds that the plan is necessary or 

appropriate in the public interest and 

for the protection of investors, to foster 

cooperation and coordination among 

self-regulatory organizations, or to 

remove impediments to and foster the 

development of the national market 

system and a national system for the 

clearance and settlement of securities 

transactions and in conformity with the 

factors set forth in Section 17(d) of the 

Act. 

IV. Solicitation of Comments 

In order to assist the Commission in 

determining whether to approve the 

amended and restated 17d–2 plan and 

to relieve ISE of the responsibilities 

which would be assigned to NASD, 

interested persons are invited to submit 

written data, views, and arguments 

concerning the foregoing. Comments 

may be submitted by any of the 

following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/other.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number 4–529 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number 4–529. 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/ 

other.shtml). Copies of the submission, 

all subsequent amendments, all written 

statements with respect to the proposed 

plan that are filed with the Commission, 

and all written communications relating 

to the proposed plan 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 the plan also will be 

available for inspection and copying at 

the principal offices of ISE and NASD. 

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 4–529 and should be submitted 

on or before February 7, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–539 Filed 1–16–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

Pathways Group, Inc. (n/k/a Bicoastal 

Communications, Inc.); Order of 

Suspension of Trading 

January 12, 2007. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Pathways 

Group, Inc. (n/k/a Bicoastal 

Communications, Inc.) because it has 

not filed any periodic reports since the 

period ended September 30, 2000. 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of the above-listed 

company. 

Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in securities of 

the above-listed company is suspended 

for the period from 9:30 a.m. EST on 

January 12, 2007, through 11:59 p.m. 

EST on January 26, 2007. 

By the Commission. 

J. Lynn Taylor, 

Assistant Secretary. 

[FR Doc. 07–159 Filed 1–12–07; 11:25 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55068; File No. SR–Amex–

2006–17] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing of Proposed Rule Change and 

Amendment Nos. 1 and 2 Thereto 

Relating to Procedures for At-Risk 

Cross Transactions 

January 9, 2007. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on February 

17, 2006, the American Stock Exchange 

LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been substantially prepared by the 

Amex. On November 9, 2006, the 

Exchange filed Amendment No. 1 to the 

proposed rule change.3 On December 1, 

2006, the Exchange filed 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 Amex proposes to revise the 

procedures applicable to cross 

transactions in equity options to provide 

procedures for at-risk cross transactions. 

The text of the proposed rule change is 

available at the Amex, on the Amex’s 

Web site at http://amex.com, 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 

Amex included statements concerning 

the purpose of, and basis for, the 

mstockstill on PROD1PC61 with NOTICES