26174 Federal Register / Vol. 73, No. 90 / Thursday, May 8, 2008 / Notices 

51 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5See Securities Exchange Act Release No. 54389 

(August 31, 2006), 71 FR 52829 (September 7, 2006) 

(Order Granting an Exemption for Qualified 

Contingent Trades from Rule 611(a) of Regulation 

NMS) (‘‘Exemptive Order’’). 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to, 

and perfect the mechanism of a free and 

open market and a national market 

system, and in general, to protect 

investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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–BSE–2008–25 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–BSE–2008–25. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of such filing also will be 

available for inspection and copying at 

the principal office of the BSE. 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–BSE–2008–25 and should 

be submitted on or before May 29, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.51

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–10094 Filed 5–7–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57767; File No. SR–CHX–

2008–06] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change and 

Amendment No. 1 Thereto Regarding 

the Definition of Qualified Contingent 

Trade 

May 2, 2008. 

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 April 29, 

2008, the Chicago Stock Exchange, Inc. 

(‘‘CHX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by CHX. On May 

1, 2008, CHX submitted Amendment 

No. 1 to the proposed rule change. The 

Exchange has filed the proposal as a 

‘‘non-controversial’’ rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

which renders it effective upon filing 

with the Commission. The Commission 

is publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

rules to delete from the definition of 

Qualified Contingent Trade the 

requirement that such transactions be 

for a minimum size of either 10,000 

shares or $200,000 in transaction value. 

The text of the proposed rule change is 

available at CHX, the Commission’s 

Public Reference Room, and http:// 

www.chx.com/rules/ 

proposed_rules.htm. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CHX 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. CHX 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’s rules currently define 

the term ‘‘Qualified Contingent Trade’’

according to the definition included in 

an exemptive order issued by the 

Commission on August 31, 2006.5

Pursuant to the Exemptive Order, 

Qualified Contingent Trades are exempt 

from the trade-through restrictions of 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 73, No. 90 / Thursday, May 8, 2008 / Notices 26175 

6 17 CFR 242.600 et seq. See 17 CFR 242.611. 

7See Securities Exchange Act Release No. 57620 

(April 4, 2008), 73 FR 19271 (April 9, 2008) (Order 

Modifying the Exemption for Qualified Contingent 

Trades from Rule 611(a) of Regulation NMS) 

(‘‘Revised Exemptive Order’’). 

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

9 15 U.S.C. 78(f)(b)(5). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission written 

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. The Exchange has satisfied the fiveday pre-filing notice requirement. 

13 Id. 

14See Revised Exemptive Order, supra note 7. 

15For the purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

16 15 U.S.C. 78s(b)(3)(C). For purposes of 

calculating the 60-day period within which the 

Commission may summarily abrogate the proposal, 

the Commission considers the period to commence 

on May 1, 2008, the date on which the Exchange 

submitted Amendment No. 1. 

Regulation NMS.6 The Exchange has 

incorporated an identical definition of 

Qualified Contingent Trades in order 

that such trades could also be exempted 

from Exchange rules restricting 

intermarket trade-throughs. 

On April 4, 2008, the Commission 

issued a revised exemptive order 

eliminating one of the elements of the 

original Qualified Contingent Trade 

definition.7 Based upon a request from 

the Chicago Board Options Exchange, 

Incorporated, the Revised Exemptive 

Order deleted the minimum size 

restrictions of 10,000 shares or $200,000 

in transaction value which were part of 

the original definition. The Exchange 

proposes to eliminate the size and value 

restrictions from its own definition of 

Qualified Contingent Trade in order to 

operate its marketplace in a manner 

consistent with Commission directives. 

The Exchange proposes to change its 

rules to eliminate any minimum size or 

value restrictions in its definition of the 

term Qualified Contingent Trade. The 

Exchange also proposes to eliminate an 

obsolete reference in the rule to the 

prospective application of Regulation 

NMS and to correct an erroneous 

citation in Article 20, Rule 5 to the 

Qualified Contingent Trade definition. 

2. Statutory Basis 

CHX believes the proposal is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder that are applicable to a 

national securities exchange, and, in 

particular, with the requirements of 

Section 6(b) of the Act.8 The Exchange 

believes that the proposed changes are 

consistent with Section 6(b)(5) of the 

Act,9 because they would promote just 

and equitable principles of trade, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest by allowing CHX to amend its 

rules to reflect the Revised Exemptive 

Order defining the term Qualified 

Contingent Trade. 

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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule change 

does not: (1) Significantly affect the 

protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for 30 days after the date of 

this filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 10 and Rule 19b–

4(f)(6) thereunder.11

A proposed rule change filed under 

19b–4(f)(6) normally may not become 

operative prior to 30 days after the date 

of filing.12 However, Rule 19b–

4(f)(6)(iii) 13 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because such waiver would allow the 

Exchange to implement the proposal 

without needless delay. The 

Commission notes that it recently 

modified the definition of Qualified 

Contingent Trade originally adopted in 

the Exemptive Order.14 For this reason, 

the Commission designates the 

proposed rule change to be operative 

upon filing with the Commission.15

At any time within 60 days of the 

filing of such 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.16

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–CHX–2008–06 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–CHX–2008–06. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the filing also will be available 

for inspection and copying at the 

principal office of CHX. 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 

mstockstill on PROD1PC66 with NOTICES

26176 Federal Register / Vol. 73, No. 90 / Thursday, May 8, 2008 / Notices 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4 In the separate filing, FINRA plans to propose 

changing the event that triggers the beginning of the 

period within which the principal must review and 

determine whether to approve or reject the 

application. FINRA also intends to propose limiting 

application of the rule to recommended 

transactions. Finally, FINRA plans to propose to 

clarify various other issues, including whether (and, 

if so, under what circumstances) a broker-dealer can 

forward funds to an affiliated insurance company 

prior to the principal’s approval of the transactions. 

5See SEC Order Approving FINRA’s NASD Rule 

2821 Regarding Members’ Responsibilities for 

Deferred Variable Annuities, Securities Exchange 

Act Release No. 56375 (Sept. 7, 2007), 72 FR 52403 

(Sept. 13, 2007) (SR–NASD–2004–183); SEC 

Corrective Order, Securities Exchange Act Release 

No. 56375A (Sept. 14, 2007), 72 FR 53612 (Sept. 19, 

2007) (SR–NASD–2004–183) (correcting the rule’s 

effective date). 

should refer to File Number SR–CHX–

2008–06 and should be submitted on or 

before May 29, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–10210 Filed 5–7–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57769; File No. SR–FINRA–

2008–015] 

Self-Regulatory Organizations: 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Delay the Effective 

Date of Certain FINRA Rule Changes 

Approved in SR–NASD–2004–183 

May 2, 2008. 

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 April 17, 

2008, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

substantially prepared by FINRA. 

FINRA has designated the proposed rule 

change as constituting a ‘‘noncontroversial’’ rule change under 

paragraph (f)(6) of Rule 19b–4 under the 

Act,3 which renders the proposal 

effective upon receipt of this filing by 

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 Substance of 

the Proposed Rule Change 

FINRA is proposing a rule change to 

delay the effective date of paragraphs (c) 

and (d) of Rule 2821, as approved in 

SR–NASD–2004–183, until after the 

Commission has approved or 

disapproved a proposed substantive rule 

change to Rule 2821 that FINRA intends 

to file in the near future. That 

substantive rule change is not included 

in this proposed rule change, but will be 

the subject of a separate filing with the 

SEC.4 There are no changes to the text 

of NASD Rule 2821 in this proposed 

rule change. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA 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. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On September 7, 2007, the 

Commission noticed the filing of 

Amendment Nos. 3 and 4 and granted 

accelerated approval of SR–NASD–

2004–183, FINRA’s new NASD Rule 

2821, regarding broker-dealers’

compliance and supervisory 

responsibilities for transactions in 

deferred variable annuities.5 On 

November 6, 2007, FINRA published 

Regulatory Notice 07–53, which 

announced the Commission’s approval 

of Rule 2821 and established May 5, 

2008 as the rule’s effective date. 

Following SEC approval of the rule and 

publication of the Regulatory Notice, 

several firms requested that the effective 

date of the approved rule be delayed to 

allow firms additional time to make 

necessary systems changes. In addition, 

some firms raised various concerns 

regarding paragraph (c) of Rule 2821 

(Principal Review and Approval), which 

had been revised by Amendment No. 4. 

Rule 2821(c), in part, requires 

principal review and approval ‘‘[p]rior 

to transmitting a customer’s application 

for a deferred variable annuity to the 

issuing insurance company for 

processing, but no later than seven 

business days after the customer signs 

the application.’’ A number of firms 

asserted that seven business days 

beginning at the time when the 

customer signs the application may not 

allow for a thorough principal review in 

all cases. These firms asked that a 

different timing mechanism be used. 

Rule 2821(c) also states that a 

principal must treat ‘‘all transactions as 

if they have been recommended for 

purposes of this principal review’’ and 

may only approve the transaction if he 

or she determines ‘‘that there is a 

reasonable basis to believe that the 

transaction would be suitable based on 

the factors delineated in paragraph (b) of 

this Rule.’’ A principal who determines 

that the transaction is unsuitable 

nonetheless may authorize the 

processing of the transaction if the 

principal determines that the 

transaction was not recommended and 

that the customer, after being informed 

of the reason why the principal found 

it to be unsuitable, affirms that he or she 

wants to proceed with the purchase or 

exchange of the deferred variable 

annuity. Some firms questioned 

whether broker-dealers that do not make 

any recommendations to customers (and 

generally do not employ principals to 

perform suitability reviews) should be 

subject to this provision. 

Finally, in Regulatory Notice 07–53, 

FINRA stated that Rule 2821(c) does not 

permit the depositing of a customer’s 

funds in an account at the insurance 

company prior to completion of 

principal review. In response to the 

Regulatory Notice, a number of firms 

explained that insurers’ financial 

controls regarding the receipt of money 

from customers often include holding 

such funds in a general ‘‘suspense’’

account at the insurer. According to 

these firms, insurers use an identifier to 

track money held in the suspense 

account and, if a contract is not issued, 

the funds are promptly returned to the 

customer. The firms further stated that 

this process has been used for many 

years without complications, makes 

processing much more efficient and 

effective, and receives significant 

scrutiny by examiners from the SEC and 

state insurance departments. 

Accordingly, these firms asked that 

insurers be allowed to deposit customer 

funds in suspense accounts under 

certain circumstances. 

In light of those concerns, among 

others, FINRA staff believed it was 

prudent to give further consideration to 

paragraph (c) of Rule 2821 and the 

mstockstill on PROD1PC66 with NOTICES