27604 Federal Register / Vol. 72, No. 94 / Wednesday, May 16, 2007 / Notices 

11 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). 

12 15 U.S.C. 78f(b)(5). 

13See Securities Exchange Act Release No. 55687 

(May 1, 2007), 72 FR 25824 (May 7, 2007) (SR–

NYSE–2007–27). 

14 15 U.S.C. 78s(b)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55161 

(January 24, 2007), 72 FR 4754 (February 1, 2007) 

(SR–ISE–2006–62) (‘‘Penny Pilot Order’’). 

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. 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–Amex–2007–34 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–Amex–2007–34. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal offices of the Exchange. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–Amex–2007–34 and should 

be submitted on or before June 6, 2007. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

After careful review, 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.11 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,12 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 Commission 

believes that this proposal should 

benefit investors by providing an 

exception to the minimum public 

distribution requirements for certain 

Section 107 Securities issued and traded 

in thousand dollar denominations and 

providing an exception to the 400 

public shareholder requirement for 

Section 107 Securities that are 

redeemable at the option of the holders 

thereof on at least a weekly basis. The 

Commission believes that these 

exceptions are reasonable and should 

allow for the listing and trading of 

certain Section 107 Securities that 

would otherwise not be able to be listed 

and traded on the Exchange. 

The Commission finds good cause for 

approving this proposal before the 

thirtieth day after the publication of 

notice thereof in the Federal Register. 

The Commission notes that it has 

previously approved minimum public 

distribution and minimum public 

shareholder requirements that are 

substantially similar to Amex’s proposal 

and found that such requirements were 

consistent with the Act.13 The 

Commission presently is not aware of 

any regulatory issue that should cause it 

to revisit that finding or would preclude 

the application of the proposed 

exceptions to the minimum public 

distribution and minimum public 

shareholder requirements. Therefore, 

accelerating approval of this proposal 

should benefit investors by creating, 

without undue delay, additional 

competition in the market for such 

securities. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (SR–Amex–2007–

34), as modified by Amendment No.1, 

be, and it hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–9364 Filed 5–15–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55734; File No. SR–ISE–

2007–22] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing of Proposed Rule 

Change as Modified by Amendment 

No. 1 Thereto Relating to Split Prices 

May 10, 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 March 26, 

2007, the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been substantially prepared by the 

ISE. On April 20, 2007, the Exchange 

filed Amendment No. 1 to the proposed 

rule change. 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 ISE proposes to amend its rule 

governing ‘‘Split Prices.’’ Specifically, 

the Exchange proposes to provide for 

executions in its Block, Facilitation and 

Solicitation Mechanisms at half-penny 

prices for certain options classes 

included in the penny pilot program.3

The text of the proposed rule change is 

available at ISE, the Commission’s 

Public Reference Room, and 

www.iseoptions.com. 


cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 94 / Wednesday, May 16, 2007 / Notices 27605 

4See Supplementary Material .06 to ISE Rule 716. 5See Securities Exchange Act Release No. 51666 

(May 9, 2005), 70 FR 25631 (May 13, 2005) (SR–

ISE–2003–07). 6See Penny Pilot Order, supra note 3. 

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

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

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

ISE included statements concerning the 

purpose of, and basis for, the proposed 

rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. The Exchange has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

rule governing ‘‘Split Prices.’’ 4

Specifically, the Exchange proposes to 

provide for executions in its Block, 

Facilitation and Solicitation 

Mechanisms at half-penny prices for 

certain options classes included in the 

penny pilot program. The Exchange’s 

rule governing Split Prices was 

previously approved by the 

Commission.5 Pursuant to the 

Commission’s approval, the Exchange 

currently provides for such ‘‘Split 

Prices’’ in options quoted in standard 

$.05 and $.10 increments. 

On January 26, 2007, the Exchange, 

along with the other options exchanges, 

commenced a six-month pilot program 

to quote certain options classes in 

penny increments.6 The penny pilot 

rules adopted by the Exchange 

specifically state that Split Prices do not 

apply to options trading in penny 

increments. At the time ISE adopted the 

penny pilot rules, the Exchange 

believed that being able to place orders 

and responses in the Block, Facilitation 

and Solicitation Mechanisms in penny 

increments would give its members 

sufficient pricing flexibility. However, 

based on its experience with the penny 

pilot thus far, the Exchange believes that 

the same competitive pressure that led 

to Split Prices in standard increments 

has arisen in the penny pilot options. 

Specifically, the Exchange stated that it 

has seen floor-based exchanges print 

large blocks at two prices, one-cent 

apart, effectively providing for a halfpenny block print. For competitive 

reasons, and to allow its members the 

same pricing flexibility that floor-based 

exchanges appear to be providing to 

their members, the ISE proposes to 

extend Split Prices to options classes 

included in the penny pilot program. 

The Exchange also represents that the 

Options Clearing Corporation will 

continue to accept and clear trades at 

sub-penny prices and that orders that 

are on the ISE book will be protected 

and executed at the midpoint prices. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,7 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,8 in particular, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. In 

particular, the proposal will provide 

additional pricing flexibility in penny 

pilot options and allow the Exchange to 

compete more effectively with floorbased exchanges. 

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 

Written comments on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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 

No. SR–ISE–2007–22 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–ISE–2007–22. 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 

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 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–ISE–2007–22 and should be 

submitted on or before June 6, 2007. 


cprice-sewell on PROD1PC66 with NOTICES
27606 Federal Register / Vol. 72, No. 94 / Wednesday, May 16, 2007 / Notices 

9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 54871 

(December 5, 2006), 71 FR 74970 (December 13, 

2006) (SR–NASD–2006–124) (‘‘Notice’’). 

4See e-mail from Frederick G. Ferrara, Chief 

Compliance Office, Panattoni Securities, Inc. dated 

December 20, 2006 (‘‘Ferrara 1’’); e-mail from Philip 

C. McMorrow, President, Cantella Co., Inc. dated 

December 21, 2006 (‘‘McMorrow’’); e-mail from E.C. 

Blitz dated December 22, 2006 (‘‘Blitz’’); letter from 

Kenneth M. Cherrier, Chief Compliance Officer, 

Fintegra, to Nancy M. Morris, Secretary, 

Commission, dated December 22, 2006 (‘‘Cherrier’’); 

e-mail from Michael A. Pagano, 1st Global Capital 

Corp. dated December 22, 2006 (‘‘Pagano’’); e-mail 

from Christine E. Saccente, Vice President, Chief 

Compliance Officer, Operations Manager, Maxwell 

Noll Inc. dated December 27, 2006 (‘‘Saccente’’); email from William R. Sykes, Sykes Financial 

Services LLC dated December 28, 2006 (‘‘Sykes’’); 

e-mail from John Harris, Chief Executive Officer, 

BondMart, Inc. dated December 30, 2006 (‘‘Harris’’); 

letter from Noland Cheng, Chairman, SIFMA 

Operations Committee, to Nancy M. Morris, 

Secretary, Commission, dated January 12, 2007 

(‘‘Cheng’’). 

5Amendment No. 1 modified the text of proposed 

Rule 2342. 

6See e-mail from Frederick G. Ferrara, Chief 

Compliance Officer, Panattoni Securities, Inc. dated 

February 13, 2007 (‘‘Ferrara 2’’) 

7Amendment No. 2 further modified the text of 

proposed Rule 2342 and proposed changing the 

effective date of the rule change. 

8See Cherrier. 9See Cheng. 10See Ferrara 1; McMorrow; Blitz; Pagano; 

Saccente; Sykes; Harris. 11See McMorrow; Blitz; Pagano; Saccente; Sykes; 

Harris. 

12See Pagano; Saccente. 

13See Pagano. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–9365 Filed 5–15–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55737; File No. SR–NASD–

2006–124] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Notice of Filing of 

Amendment Nos. 1 and 2 to, and Order 

Granting Accelerated Approval of, a 

Proposed Rule Change as Modified by 

Amendment Nos. 1 and 2 To Require 

the Provision of Certain Information 

About the Securities Investor 

Protection Corporation to Customers 

May 10, 2007. 

I. Introduction 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’) has filed Amendment Nos. 1 

and 2 to the proposed rule change, 

which, as amended, would adopt 

proposed NASD Rule 2342 to require 

NASD members, except those excluded 

from membership in the Securities 

Investor Protection Corporation 

(‘‘SIPC’’) or who sell only investments 

ineligible for SIPC protection, to provide 

new customers, and all customers 

annually, with certain information 

about SIPC. This order provides notice 

of and solicits comments from 

interested persons on the proposed rule 

change as modified by Amendment Nos. 

1 and 2, and approves the proposed rule 

change as amended on an accelerated 

basis. 

II. Description of the Proposal 

NASD filed the proposed rule change 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) on 

November 9, 2006. The Commission 

published the proposal for comment in 

the Federal Register on December 13, 

2006.3 The Commission received nine 

comments in response to the Notice.4

On February 7, 2007, NASD filed 

Amendment No. 1 to the proposed rule 

change, which also responded to the 

comments.5 The Commission received 

one comment in response to 

Amendment No. 1.6 All of the 

comments received by the Commission 

regarding the proposed rule change are 

available on the Commission’s Internet 

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

sro.shtml). On April 19, 2007, NASD 

filed Amendment No. 2 to the proposed 

rule change, which also responded to 

the comment on the proposed rule 

change as modified by Amendment No. 

1.7

NASD filed the proposed rule change 

to adopt proposed NASD Rule 2342, 

which would require NASD members to 

advise all new customers, in writing, at 

the opening of an account, and all 

customers at least once each year that 

they may obtain information about 

SIPC, including the SIPC brochure, by 

contacting SIPC, and to provide such 

customers with SIPC’s telephone 

number and Web site address. 

Amendment No. 1 proposed that firms 

that are excluded from membership in 

SIPC pursuant to Section 3(a)(2)(A)(i) 

through (iii) of the Securities Investor 

Protection Act of 1970 (‘‘SIPA’’) and 

that are not SIPC members be exempt 

from the requirements of proposed Rule 

2342. Amendment No. 2 proposed to 

exempt firms whose business consists 

exclusively of the sale of investments 

that are ineligible for SIPC protection 

from the requirements of proposed Rule 

2342. Below is the text of the proposed 

rule change, as modified by Amendment 

Nos. 1 and 2. Proposed new language is 

in italics. 

2000. BUSINESS CONDUCT 

* * * * * 

2300. Transactions with Customers 

* * * * * 

2342. SIPC Information 

All members, except those members: 

(a) that pursuant to Section 3(a)(2)(A)(i) 

through (iii) of the Securities Investor 

Protection Act of 1970 (SIPA) are 

excluded from membership in the 

Securities Investor Protection 

Corporation (SIPC) and that are not 

SIPC members; and (b) whose business 

consists exclusively of the sale of 

investments that are ineligible for SIPC 

protection, shall advise all new 

customers, in writing, at the opening of 

an account, that they may obtain 

information about SIPC, including the 

SIPC brochure, by contacting SIPC, and 

also shall provide the Web site address 

and telephone number of SIPC. In 

addition, such members shall provide 

all customers with the same 

information, in writing, at least once 

each year. In cases where both an 

introducing firm and clearing firm 

service an account, the firms may assign 

these requirements to one of the firms. 

III. Summary of Comments on the 

Proposal and Amendment No. 1 

Two commenters supported the 

proposed rule change. One believed that 

the disclosure required by proposed 

NASD Rule 2342 would remind clients 

that they are buying a product that is 

not directly underwritten or supported 

by a bank or covered by the Federal 

Deposit Insurance Corporation 

(‘‘FDIC’’).8 Another believed that public 

customers would benefit from broader 

dissemination of information about 

SIPC.9

Seven commenters generally opposed 

the proposed rule change.10 Five 

questioned the need for disseminating 

the information that would be required 

by proposed Rule 2342.11 Two 

suggested that the proposed rule be 

revised to mandate that firms include on 

their Web sites a link to SIPC’s Web 

site.12 One questioned whether 

investors need, or are interested in, 

information about SIPC, suggested that 

investors are unlikely to read the 

proposed disclosure, and questioned the 

cost of implementing it.13 Another 

stated that customers will be made 


cprice-sewell on PROD1PC66 with NOTICES