24648 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

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

16 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) also 

requires the self-regulatory organization to give the 

Commission notice of its intent to file the proposed 

rule change, along with a brief description and text 

of the proposed rule change, at least five business 

days prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. CBOE has satisfied the five-day prefiling requirement. As set forth in the Commission’s 

initial approval of the Pilot Program, if CBOE 

proposes to: (1) Extend the Pilot Program; (2) 

expand the number of options eligible for inclusion 

in the Pilot Program; or (3) seek permanent 

approval of the Pilot Program, it must submit a Pilot 

Program report to the Commission along with the 

filing of its proposal to extend, expand, or seek 

permanent approval of the Pilot Program. CBOE 

must file any proposal to expand or seek permanent 

approval of the Pilot Program and the Pilot Program 

report with the Commission at least 60 days prior 

to the expiration of the Pilot Program. The Pilot 

Program report must cover the entire time the Pilot 

Program was in effect and must include: (1) Data 

and written analysis on the open interest and 

trading volume for options (at all strike price 

intervals) selected for the Pilot Program; (2) delisted 

options series (for all strike price intervals) for all 

options selected for the Pilot Program; (3) an 

assessment of the appropriateness of $1 strike price 

intervals for the options CBOE selected for the Pilot 

Program; (4) an assessment of the impact of the 

Pilot Program on the capacity of CBOE’s, OPRA’s, 

and vendors’ automated systems; (5) any capacity 

problems or other problems that arose during the 

operation of the Pilot Program and how CBOE 

addressed them; (6) any complaints that CBOE 

received during the operation of the Pilot Program 

and how CBOE addressed them; and (7) any 

additional information that would help to assess the 

operation of the Pilot Program. See Pilot Approval 

Order, supra note 5. 

17 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78s(b)(3)(A)(iii). 

3 17 CFR 240.19b–4(f)(4). 

19(b)(3)(A) of the Act 15 and Rule 19b– 

4(f)(6) thereunder.16

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

<bullet≤ Use the Commission’s 

Internet comment form (http:// 

www.sec.gov/rules/sro.shtml); or 

<bullet≤ Send an e-mail to rulecomments@sec.gov. Please include File 

No. SR–CBOE–2007–38 on the subject 

line. 

Paper Comments 

<bullet≤ 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–CBOE–2007–38. 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 CBOE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File No. 

SR–CBOE–2007–38 and should be 

submitted on or before May 24, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8396 Filed 5–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55681; File No. SR–OCC– 

2007–03] 

Self-Regulatory Organizations; the 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change Relating to 

Amendment No. 5 of the Restated 

Participant Exchange Agreement 

April 27, 2007. 

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

Securities Exchange Act of 1934,1 notice 

is hereby given that on March 13, 2007, 

The Options Clearing Corporation 

(‘‘OCC’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

in Items I, II and III below, which Items 

have been prepared substantially by 

OCC. OCC filed the proposed rule 

change pursuant to Section 

19(b)(3)(A)(iii) of the Act 2 and Rule 

19b–4(f)(4) 3 thereunder so that the 

proposal was effective upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The proposed rule change would 

amend the Restated Participant 

Exchange Agreement (‘‘RPEA’’) between 

and among OCC and its six participant 

exchanges, which are the American 

Stock Exchange LLC, the Boston Stock 

Exchange, Inc., the Chicago Board 

Options Exchange, Inc., the 

International Securities Exchange, LLC 

(‘‘ISE’’), NYSE Arca, Inc., and the 

Philadelphia Stock Exchange, Inc. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

OCC 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. OCC 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 

The proposed rule change amends 

Sections 2(g) and 23 of the RPEA that 

obligates the participant exchanges to 

indemnify OCC against specified losses 

incurred in connection with the 

introduction of new products. 

1. Background 

New derivative products pose a 

variety of legal risks to OCC. While OCC 

generally declines to clear a product if 

it believes that there are valid concerns 

as to the product’s legality, there can be 

no assurance that a product’s legality 

will not be later challenged. Litigating 

such matters can be expensive, and an 

adverse outcome or settlement could 

result in substantial liabilities to OCC. 

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Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 24649 

4 The McGraw-Hill Companies, Inc. v. 

International Securities Exchange, Inc. and The 

Options Clearing Corporation, 05 Civ. 112 (HB) 

(U.S.D.C. S.D.N.Y.) In consideration of OCC’s 

agreeing to clear unlicensed SPDR options, ISE 

agreed to indemnify OCC against any resulting 

liabilities or expenses. 

5 Dow Jones & Company, Inc. v. International 

Securities Exchange, Inc. and The Options Clearing 

Corporation, 05 CV 4954 (U.S.D.C. S.D.N.Y.) As in 

the SPDR case, id., ISE agreed to indemnify OCC 

against any resulting liabilities or expenses. 

6 Dow Jones & Co. v. International Securities 

Exchange, Inc., 451 F.3d 295 (2d Cir. 2006). 

7 Chicago Board Options Exchange, Incorporated, 

et al v. International Securities Exchange, LLC and 

The Options Clearing Corporation, 06 CH 24798, 

Circuit Court of Cook County, Ill., Chancery 

Division. 

8 OCC’s clearing agreement for futures products, 

which was drafted more recently than the RPEA, 

contains broader indemnification provisions. It 

obligates the futures exchange to indemnify OCC 

against losses resulting from the exchange’s 

violation of ‘‘any law or governmental regulation’’ 

and contains an express indemnity for IP liability. 

9 Section 3 of the RPEA provides that if a 

proposed underlying interest does not fall within 

certain specified categories, OCC cannot be required 

to clear options on it without the approval of its 

Board. Even when the interest does fall within the 

specified categories (e.g., a securities index), OCC 

could not be required to clear options on it if doing 

so would be unlawful. 

10 See e.g., Filings No. SR–OCC–2006–18 (futures 

clearing agreement with PBOT) and 2003–06 

(futures clearing agreement with CFE). 

11 New Sections 23(c) through (g) of the RPEA. 

12 See Section 1 of Amendment No. 5 and 

redesignated Sections 23(c) and (h) of the RPEA. 

13 15 U.S.C. 78s(b)(3)(A)(iii). 

14 17 CFR 240.19b–4(f)(4). 

New products sometimes raise 

intellectual property (‘‘IP’’) issues. For 

example, in January 2005 when the ISE 

proposed to trade unlicensed options on 

SPDRs, Standard & Poor’s parent 

company, the McGraw-Hill Companies, 

sued ISE and OCC asserting that a 

license was required not only to trade 

options on a proprietary index but also 

options on an exchange trade fund 

(‘‘ETF’’) based on a proprietary index.4

In May 2005, when ISE proposed to 

trade unlicensed options on 

DIAMONDS, Dow Jones & Company 

filed a similar action against ISE and 

OCC.5 (The two lawsuits were later 

consolidated and eventually dismissed 

by court order, which order was upheld 

on appeal.) 6 More recently, ISE and 

OCC were sued by the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’) and two co-plaintiffs that 

asserted that ISE had proposed to trade 

unlicensed options on the S&P 500 

Index and the Dow Jones Industrial 

Average in violation of exclusive license 

arrangement between CBOE and each of 

its co-plaintiffs.7

The current RPEA between and 

among OCC and the six options 

exchanges obligates the exchanges to 

indemnify OCC against specified losses 

(e.g., losses resulting from an exchange’s 

violation of the Act or the RPEA or 

failure to make adequate disclosure 

regarding a product that it trades). 

However, the current RPEA does not 

generally obligate the exchanges to 

indemnify OCC against losses resulting 

from a product’s illegality or against IP 

liability.8

2. Discussion 

OCC is not obligated to clear a 

product if doing so would be illegal or 

would violate the IP rights of others.9

However, legal issues are not always 

identifiable in advance. For example, 

claims that a new product violates IP 

rights of third parties may not surface 

until after the product is already 

trading. Even when an issue is 

identified in advance, OCC’s assessment 

of its seriousness may be erroneous. 

For these reasons, no matter how 

carefully OCC analyzes new products, 

there will often be some legal risk. To 

mitigate this risk, OCC and its 

participant exchanges are amending the 

RPEA to obligate an exchange that 

introduces a new product to provide 

indemnification similar to that required 

of futures exchanges for which OCC 

provides clearing services.10 The terms 

of the amendment reflect the agreement 

of each participant exchange to 

severally, and not jointly, indemnify 

OCC and specified affiliates against 

losses and expenses incurred in 

connection with any action based on 

any options claim (i.e., a claim that the 

exchange does not have the right to 

trade an option or that the trading of 

such option by the exchange, that the 

issuance of such option by OCC or that 

the clearance and settlement of trades 

therein or exercises thereof by OCC 

would violate the IP or other rights of 

a third party).11 In addition, the 

amendment redesignates and makes 

certain technical changes in preexisting 

indemnification provisions.12

OCC believes that the proposed 

change is consistent with Section 17A of 

the Act of 1934 and the rules 

promulgated thereunder because it 

reduces the legal exposure borne by 

OCC in connection with issuing and 

clearing new derivative products 

introduced by its participant exchanges 

and thereby strengthening OCC’s ability 

to perform its duties as a registered 

clearing agency. OCC further states that 

the proposed change contributes to the 

safeguarding of securities and funds in 

the custody or control of OCC and that 

the proposed rule change is not 

inconsistent with the existing rules of 

OCC, including any other rules 

proposed to be amended. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

OCC does not believe that the 

proposed rule change would impose any 

burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received from 

Members, Participants or Others 

OCC has not solicited or received 

written comments relating to the 

proposed rule change. OCC will notify 

the Commission of any written 

comments it receives. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 13 and Rule 

19b–4(f)(4) 14 thereunder because it 

effects a change in an existing OCC 

service that does not adversely affect the 

safeguarding of securities or funds in 

OCC’s custody or control or for which 

it is responsible and does not 

significantly affect the respective rights 

or obligations of OCC or persons using 

the service. At any time within 60 days 

of the filing of the proposed rule change, 

the Commission may summarily 

abrogate such rule if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

<bullet≤ Use the Commission’s 

Internet comment form (http:// 

www.sec.gov/rules/sro.shtml); or 

<bullet≤ Send an e-mail to rulecomments@sec.gov. Please include File 

No. SR–OCC–2007–03 on the subject 

line. 

Paper Comments 

<bullet≤ 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–OCC–2007–03. This file number 

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24650 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

15 17 CFR 200.30–3(a)(12). 

should be included on the subject line 

if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Section, 100 F Street, NE., Washington, 

DC 20549. Copies of such filing also will 

be available for inspection and copying 

at OCC’s principal office and on OCC’s 

Web site at http://www.theocc.com/ 

publications/rules/proposed—changes/ 

proposed—changes.jsp. 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–OCC–2007– 

03 and should be submitted on or before 

May 24, 2007. 

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8429 Filed 5–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration ● 10855 and ● 10856] 

New Jersey Disaster ● NJ–00006 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a Notice of the 

Presidential declaration of a major 

disaster for the State of New Jersey 

(FEMA–1694–DR), dated April 26, 2007. 

Incident: Severe Storms and Inland 

and Coastal Flooding. 

Incident Period: April 14, 2007 

through April 20, 2007. 

Effective Date: April 26, 2007. 

Physical Loan Application Deadline 

Date: June 25, 2007. 

Economic Injury (EIDL) Loan 

Application Deadline Date: January 28, 

2008. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street, SW., Suite 6050, 

Washington, DC 20416. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

President’s major disaster declaration on 

04/26/2007, applications for disaster 

loans may be filed at the address listed 

above or other locally announced 

locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties (Physical Damage and 

Economic Injury Loans): 

Bergen, Burlington, Essex, Passaic, 

Somerset, Union. 

Contiguous Counties (Economic Injury 

Loans Only): 

New Jersey: Atlantic, Camden, 

Hudson, Hunterdon, Mercer, 

Middlesex, Monmouth, Morris, 

Ocean, Sussex. 

New York: Bronx, York, Orange, 

Rockland, Westchester. 

Pennsylvania: Bucks, Philadelphia. 

The Interest Rates are: 

Percent 

For Physical Damage: 

Homeowners With Credit 

Available Elsewhere .......... 5.750 

Homeowners Without Credit 

Available Elsewhere .......... 2.875 

Businesses With Credit Available Elsewhere .................. 8.000 

Other (Including Non-Profit 

Organizations) With Credit 

Available Elsewhere .......... 5.250 

Businesses And Non-Profit 

Organizations Without 

Credit Available Elsewhere 4.000 

For Economic Injury: 

Businesses & Small Agricultural Cooperatives Without 

Credit Available Elsewhere 4.000 

The number assigned to this disaster 

for physical damage is 108556 and for 

economic injury is 108560. 

(Catalog of Federal Domestic Assistance 

Numbers 59002 and 59008) 

Jane M. Pease, 

Acting Associate Administrator for Disaster 

Assistance. 

[FR Doc. E7–8425 Filed 5–2–07; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

Notice of Action Subject to 

Intergovernmental Review Under 

Executive Order 12372 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice of Action Subject to 

Intergovernmental Review Under 

Executive Order 12372. 

SUMMARY: The Small Business 

Administration (SBA) is notifying the 

public that it intends to grant the 

pending applications of 22 existing 

Small Business Development Centers 

(SBDCs) for refunding on October 1, 

2007, subject to the availability of funds. 

Six states do not participate in the EO 

12372 process; therefore, their addresses 

are not included. A short description of 

the SBDC program follows in the 

supplementary information below. 

The SBA is publishing this notice at 

least 60 days before the expected 

refunding date. The SBDCs and their 

mailing addresses are listed below in 

the address section. A copy of this 

notice also is being furnished to the 

respective State single points of contact 

designated under the Executive Order. 

Each SBDC application must be 

consistent with any area-wide small 

business assistance plan adopted by a 

State-authorized agency. 

DATES: A State single point of contact 

and other interested State or local 

entities may submit written comments 

regarding an SBDC refunding within 30 

days from the date of publication of this 

notice to the SBDC. 

ADDRESSES: 

Addresses of Relevant Sbdc State 

Directors 

Mr. Al Salgado, Region Director, Univ. 

of Texas at San Antonio, 501 West 

Durango Blvd., San Antonio, TX 

78207, (210) 458–2450. 

Mr. Clinton Tymes, State Director, 

University of Delaware, One 

Innovation Way, Suite 301, Newark, 

DE 19711, (302) 831–2747. 

Ms. M.E. Gamble, State Director, West 

Virginia Development Office, Capitol 

Complex, Building 6, Room 652, 

Charleston, WV 25301, (304) 558– 

2960. 

Ms. Carmen Marti, SBDC Director, Inter 

American University of Puerto Rico, 

Ponce de Leon Avenue, ι416, Edificio 

Union Plaza, Seventh Floor, Hato Rey, 

PR 00918, (787) 763–6811. 

Mr. Michael Young, Region Director, 

University of Houston, 2302 Fannin, 

Suite 200, Houston, TX 77002, (713) 

752–8425. 

Ms. Liz Klimback, Region Director, 

Dallas Community College, 1402 

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