Federal Register / Vol. 72, No. 80 / Thursday, April 26, 2007 / Notices 20905 

13 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

14 15 U.S.C. 78f(b)(5). 

15Securities Exchange Act Release No. 55491 

(March 19, 2007), 72 FR 14145 (March 26, 2007). 

16 15 U.S.C. 78s(b)(2). 

17 Id. 

18 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78(a) et seq. 

3 17 CFR 240.19b–4. 

4Amendment No. 1 replaced the original filing in 

its entirety. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange. 13 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act, 14 which requires 

that an exchange have rules designed, 

among other things, to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and in 

general to protect investors and the 

public interest. 

The listing of the Fund Options does 

not satisfy Commentary .06(b)(i) to 

Amex Rule 915, which requires the 

Fund to meet the following condition: 

‘‘Any non-U.S. component stocks in the 

index or portfolio on which the Fund 

Shares are based that are not subject to 

comprehensive surveillance agreements 

do not in the aggregate represent more 

than 50% of the weight of the index or 

portfolio.’’ Although the Commission 

has been willing to allow an exchange 

to rely on a memorandum of 

understanding entered into between 

regulators where the listing SRO finds it 

impossible to enter into an information 

sharing agreement, it is not clear that 

that Amex has exhausted all avenues of 

discussion with foreign markets, 

including Bolsa, in order to obtain such 

an agreement. 

Consequently, the Commission has 

determined to approve Amex’s listing 

and trading of Fund Options for a sixmonth pilot period during which time 

Amex may rely on the MOU with 

respect to Fund components trading on 

Bolsa. During this period, the Exchange 

has agreed to use its best efforts to 

obtain a comprehensive surveillance 

agreement with Bolsa, which shall 

reflect the following: (1) Express 

language addressing market trading 

activity, clearing activity, and customer 

identity; (2) the Bolsa’s reasonable 

ability to obtain access to and produce 

requested information; and (3) based on 

the CSSA and other information 

provided by the Bolsa, the absence of 

existing rules, law or practices that 

would impede the Exchange from 

obtaining foreign information relating to 

market activity, clearing activity, or 

customer identity, or in the event such 

rules, laws, or practices exist, they 

would not materially impede the 

production of customer or other 

information. 

The Exchange also represents that it 

will regularly update the Commission 

on the status of its negotiations with 

Bolsa. In approving the proposed rule 

change, the Commission notes that 

Amex currently has in place 

surveillance agreements with foreign 

exchanges that cover 48.89% of the 

securities in the Fund and that the 

Index upon which the Fund is based 

appears to be a broad-based index. The 

Commission further notes that it 

recently has approved a proposed rule 

change by another SRO to list and trade 

options on the same product on a sixmonth pilot basis.15

The Exchange has requested 

accelerated approval of the proposed 

rule change. The Commission finds 

good cause, consistent with Section 

19(b)(2) of the Act,16 for approving this 

proposed rule change before the 

thirtieth day after the publication of 

notice thereof in the Federal Register 

because it will enable the Exchange to 

immediately consider listing and 

trading the Fund Options, similar to 

products already traded on another 

SRO, and because it does not raise any 

new regulatory issues. The Exchange 

has agreed to use its best efforts to 

obtain a comprehensive surveillance 

agreement with the Bolsa during a sixmonth pilot period in which the 

Exchange will rely on the MOU. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,17 that the 

proposed rule change (SR–Amex–2007–

09), as modified by Amendment No. 1, 

be, and it hereby is approved on an 

accelerated basis for a six-month pilot 

period ending on October 19, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7956 Filed 4–25–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55650; File No. SR–NYSE–

2007–10] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Amendments to 

Interpretation to Rule 311(b)(5) (‘‘CoDesignation of Principal Executive 

Officers’’) as Modified by Amendment 

No. 1 

April 19, 2007. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),2 and Rule 19b–4 thereunder,3

notice is hereby given that on February 

2, 2007, the New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which items 

have been substantially prepared by the 

Exchange. On April 16, 2007, the 

Exchange submitted Amendment No. 1 

to the proposed rule change.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The NYSE is proposing amendments 

to Interpretation .05 to NYSE Rule 

311(b)(5) regarding co-designation of 

principal executive officers. 

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 

Rule 311 (‘‘Formation and Approval 

of Member Organizations’’) and 

specifically Section (b)(5) thereof 


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20906 Federal Register / Vol. 72, No. 80 / Thursday, April 26, 2007 / Notices 

5Rule 311(b)(5) provides that the board of 

directors of each member organization shall 

designate ‘‘principal executive officers’’ who shall 

have responsibility over the various areas of the 

business of the member organization. In operation, 

the Exchange recognizes four such principal 

executive officers: Chief executive officer (‘‘CEO’’), 

chief operations officer (‘‘COO’’), chief finance 

officer (‘‘CFO’’) and chief compliance officer 

(‘‘CCO’’). 6See Securities Exchange Act Release No. 52391 

(September 7, 2005), 70 FR 54429 (September 14, 

2005) (SR–NYSE–2005–04). 

7See NYSE Information Memo 05–69 (September 

16, 2005). 

8All present co-designations have involved two 

persons, and that may be the optimal number for 

such sharing of responsibility. However, to assure 

maximum member organization operational 

flexibility, the proposed interpretation does not 

limit the number to two, but would allow three codesignees where a compelling case for such 

allocation is made. The Commission notes that 

while the Exchange states above that it would allow 

three co-designees, the proposed change to the 

Interpretation .05 of rule 311(b)(5) does not specify 

a limit on the number of co-designees permitted. 

9Although to date only co-CCOs have chosen to 

seek separate status, it would not be unreasonable 

to extend the same treatment to co-COOs where 

their duties are subject to rational separation. 

provide that ‘‘principal executive 

officers’’ shall exercise principal 

executive responsibility over the various 

areas of the business of the member 

corporation. Interpretation .05 to Rule 

311(b)(5) (the ‘‘Interpretation’’) sets 

forth the regulatory framework under 

which member organizations may 

request approval for assigning two 

persons as the ‘‘principal executive 

officers’’ 5 for the same function 

pursuant to Rule 311(b)(5). It presently 

provides that no understanding or 

agreement purporting to limit or 

apportion the joint and several 

responsibility of each such co-officer 

will be recognized by the Exchange. The 

proposed amended Interpretation would 

qualify that prohibition to permit 

certain principal executive officers to 

allocate specific responsibility, subject 

to Exchange approval. 

Background 

On September 7, 2005, the 

Commission approved changes to Rule 

311.6 In promulgating the changes to the 

Interpretation, the Exchange 

explained: 7

Co-Designation of Principal Executive 

Officers 

The Exchange believes that codesignating principal executive officer 

titles (i.e., assigning or sharing of the 

same title to two persons) is a 

potentially troublesome practice in that 

it can lead to confusion as to which 

designee is ultimately responsible and 

accountable for assigned functions. 

However, there may be instances where 

such arrangements are supported by 

valid business reasons, such as when 

each co-designee has special expertise 

in critical areas within the purview of 

the principal executive officer job 

description or co-principal executive 

officers have functional responsibility 

for separate business lines. In light of 

such circumstances, the Exchange has 

permitted the co-designation of certain 

principal executive officer titles at 

member organizations on a limited 

basis. Accordingly, the amendments 

continue to permit such codesignations, but only pursuant to a 

written request and subject to the prior 

written approval of the Exchange (see 

new Section /05). 

Written requests to the Exchange must 

set forth the reason for the codesignation and explain how the 

arrangement is structured. Further, 

since such co-designations raise issues 

regarding which person has ultimate 

authority and accountability, the request 

must make clear that each co-designee 

has joint and several responsibility for 

discharging the duties of the principal 

executive officer designation and that 

no understanding or agreement 

purporting to apportion or limit such 

responsibility will be recognized by the 

Exchange. 

In situations where authority is, by its 

nature, indivisible, such as in the cases 

of CEOs and CFOs, the basis for this 

position is unarguable. The Exchange 

now believes, however, that there are 

legitimate situations where other 

principal executive officers exercise 

supervisory authority over discrete and 

naturally separate business functions, 

consistent with the internal corporate 

structure of the particular member 

organization. As an example, the 

Exchange has seen a reasonable division 

of supervisory jurisdictions and 

responsibility between CCOs whereby 

one is responsible for the member 

organization’s retail brokerage activities 

and another deals with the firm’s 

investment banking functions. While 

there are inevitable areas of overlap 

between the two, as where new offerings 

are readied for distribution by the retail 

sales force, and any proposed request 

for recognition of the differing areas 

would need to address such overlap, the 

greater part of the two functions are 

mutually exclusive, and lend 

themselves logically to separation.8

It can be seen that a joint and several 

responsibility could expose one of the 

co-CCOs to regulatory sanctions for 

actions in an area which he or she did 

not and could not reasonably supervise. 

This needs to be balanced against the 

need to avoid the situation where each 

such officer attempts to disclaim 

responsibility for the supervision of the 

area in question. 

Proposed Amendments 

Accordingly, the Exchange proposes 

to amend the Interpretation to permit 

co-CCOs and co-COO 9 to allocate 

supervisory responsibility in a fashion 

acceptable to the Exchange. Where a 

member organization seeks to divide 

regulatory responsibility between more 

than one principal executive officer 

bearing the same or similar titles 

without the assumption of joint and 

several responsibility, it must provide 

the Exchange with a plan acceptable to 

the Exchange allocating specific 

responsibility and making unambiguous 

provisions, especially for the 

supervision of areas where the separate 

functions interact. It should be clearly 

understood that joint and several 

responsibility remains in effect for any 

area not specifically included in the 

plan approved by the Exchange. In 

addition, because the CCO of a member 

organization has unique responsibilities 

under Rule 342.30 (‘‘Annual Reports’’), 

the revised Interpretation would also 

require a representation that the 

certification required by Rule 342.30(e) 

will further confirm the qualification of 

each such co-CCO and that the 

responsibility of the co-CCOs 

encompasses every aspect of the 

business of the member organization. Of 

necessity, each of the co-CCOs would 

meet with and advise the CEO as part 

of the Rule 342.30 certification process. 

As proposed, the Interpretation would 

read: 

The prior written approval of the 

Exchange is required to assign [two] 

more than one person[s] to a single 

‘‘principal executive officer’’

designation pursuant to Rule 311(b)(5). 

Member organizations seeking approval 

for such co-designations must submit a 

written request to the Exchange that sets 

forth the reason for the co-designation, 

explains how the arrangement is 

structured, and makes clear that each 

co-designee has joint and several 

responsibility for discharging the duties 

of that principal executive officer 

designation[;]. However, the Exchange 

may approve a specific plan identifying 

the business need and other justification 

for an arrangement which does not 

provide for joint and several 

responsibility for principal executive 

officers other than the chief executive 

officer and chief financial officer. Such 

a plan must identify the areas and 

functions subject to separate 

supervisory responsibility and make 

specific provisions for the supervisory 


rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 72, No. 80 / Thursday, April 26, 2007 / Notices 20907 

10 15 U.S.C. 78f(b)(5). 11 17 CFR 200.30–3(a)(12). 

responsibility of functions, activities 

and areas which can reasonably be 

expected to overlap. [no understanding 

or agreement purporting to apportion or 

limit such responsibility will be 

recognized by the Exchange.] In 

addition, in the case of co-CCOs, the 

written approval request submitted in 

accordance with this Interpretation 

shall include a representation to the 

Exchange, to the effect that the CEO’s 

Annual Report and Certification 

required by Rule 342.30(e) will further 

state, in addition to the fact that each 

such CCO has met the qualification 

requirements set forth at 342.30(d)/01, 

that the collective authority, 

accountability, and responsibility of 

such co-equal CCOs encompasses, 

without exception, every aspect of the 

business of such member organization. 

Implementation Date 

The proposed amendments would be 

effective upon SEC approval. 

2. Statutory Basis 

The proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange, and in particular, 

with the requirements of Sections 

6(b)(5)10 of the Act. Section 6(b)(5) 

requires, among other things, that the 

rules of an exchange be designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and national market 

system, and in general, to protect 

investors and the public interest. The 

proposed amendments will provide 

member organizations with 

organizational flexibility in the 

allocation of certain regulatory 

responsibilities. 

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 

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 rulecomments@sec.gov. Please include File 

Number SR–NYSE–2007–10 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2007–10. 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 will also be 

available for inspection and copying at 

the principal office of the NYSE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File number SR–NYSE–

2007–10 and should be submitted by 

May 17, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–7939 Filed 4–25–07; 8:45 am] 

BILLING CODE 8010–01–P 

SMALL BUSINESS ADMINISTRATION 

National Small Business Development 

Center Advisory Board; Public Meeting 

The U.S. Small Business 

Administration National Small Business 

Development Center Advisory Board 

will be hosting a public meeting via 

conference call to discuss such matters 

that may be presented by members, and 

the staff of the U.S. Small Business 

Administration or interested others. The 

conference call will take place on 

Tuesday, May 15, 2007 at 1 p.m. Eastern 

Standard Time. 

The purpose of the meeting is to 

discuss the initial White Paper draft 

regarding management of the SBDC 

program, and arrangements for the 

Board site visit in June to visit the Ohio 

SBDC network in Columbus. 

Anyone wishing to make an oral 

presentation to the Board must contact 

Erika Fischer, Senior Program Analyst, 

U.S. Small Business Administration, 

Office of Small Business Development 

Centers, 409 3rd Street, SW., 

Washington, DC 20416, telephone (202) 

205–7045 or fax (202) 481–0681. 

Matthew Teague, 

Committee Management Officer. 

[FR Doc. E7–8021 Filed 4–25–07; 8:45 am] 

BILLING CODE 8025–01–P 


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