59790 Federal Register / Vol. 70, No. 197 / Thursday, October 13, 2005 / Notices 

4The IARD system is used by both advisers 

registering or registered with the SEC and advisers 

registered or registering with one or more State 

securities authorities. NASAA represents the State 

securities administrators in setting IARD filing fees 

for State-registered advisers. State-registered 

advisers pay their annual system renewal fees in 

December each year, regardless of their fiscal year. 5A copy of the letter is available on our website. 

NASD has not suggested changes to the initial IARD 

filing fees, which are intended to cover the costs 

associated with entitling new registrants on the 

IARD system. NASD represents that the costs per 

adviser have not changed substantially. We are not 

changing or waiving these IARD initial set-up fees, 

which remain $150 for advisers with assets under 

management under $25 million; $800 for advisers 

with assets under management between $25 million 

and $100 million; and $1,100 for advisers with 

assets under management over $100 million. 

6We note that NASAA has announced a one-year 

waiver of annual filing fees and a subsequent 

reduction of 30% in annual filing fees for State 

registered advisers. 

categories. In 2000, the filing fees were 

set based on estimates that nearly half 

of SEC-registered advisers were in the 

smallest fee category. As of the end of 

the 2004 fiscal year, however, fully half 

of SEC-registered advisers were in the 

highest fee category. Furthermore, IARD 

expenses associated with SEC filings 

(SEC-associated IARD expenses) have 

been less than was projected in 2000. 

As a result, SEC-associated IARD 

revenues have exceeded SEC-associated 

IARD expenses, generating a surplus. As 

of June 30, 2005, the cumulative surplus 

of SEC-associated IARD revenues over 

SEC-associated IARD expenses was 

approximately $8.5 million (SECassociated surplus). Following 

discussions among Commission staff, 

representatives of the North American 

Securities Administrators Association, 

Inc. (NASAA) on behalf of the State 

securities authorities,4 and NASD, 

NASD wrote our staff a letter that 

‘‘recommends that the annual IARD fee 

for SEC-registered advisers be waived 

for a one-year period from November 1, 

2005 to October 31, 2006.’’ 5 Advisers 

registered with us pay their IARD 

annual fees when they file their annual 

updating amendment to Form ADV, due 

within 90 days of their fiscal year end. 

In light of the SEC-associated surplus, 

we have determined to waive for one 

year annual filing fees for all SECregistered advisers. This action is 

expected to waive approximately $3.9 

million in IARD system fees. The fee 

waiver will apply to all annual updating 

amendments filed by SEC-registered 

advisers from November 1, 2005 

through October 31, 2006. Based on 

current projections of expected SECassociated IARD revenues and SECassociated IARD expenses in the next 

several years, the Commission believes 

that the current surplus exceeds the 

amount of surplus needed for system 

enhancements. Accordingly, the 

Commission believes that a one-year 

waiver of IARD annual updating 

amendment filing fees is appropriate. 

In addition, we note that NASD’s 

letter further ‘‘recommends that annual 

IARD fees for SEC-registered advisers be 

reduced 30% beginning November 1, 

2006.’’ 6 In this regard, current 

projections of fee revenues and system 

expenses cause us to believe that a 

reduction in annual filing fees will be 

necessary to more closely align the 

IARD filing fees with the costs of those 

filings. Under Advisers Act section 

203A(d), the Commission may require 

advisers to pay filing fees that reflect the 

reasonable costs associated with filings 

made by SEC-registered advisers 

through the IARD. 

Accordingly, we plan to issue shortly 

a notice soliciting comment on the 

appropriate level of IARD filing fees for 

the period after the expiration of the 

one-year waiver. Among the alternatives 

on which we plan to seek comment are 

a percentage fee reduction for annual 

updating amendments filed by SECregistered advisers beginning November 

1, 2006 and a second one-year waiver of 

annual updating amendment fees. 

It is therefore ordered, pursuant to 

sections 203A(d) and 206(A) of the 

Investment Advisers Act of 1940, that: 

For annual updating amendments to 

Form ADV filed from November 1, 2005 

through October 31, 2006, the fee 

otherwise due from SEC-registered 

advisers is waived. 

By the Commission. 

Dated: October 7, 2005. 

J. Lynn Taylor, 

Assistant Secretary. 

[FR Doc. E5–5599 Filed 10–12–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release Nos. 33–8623; 34–52575, File No. 

265–23] 

Advisory Committee on Smaller Public 

Companies 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Notice of Meeting of SEC 

Advisory Committee on Smaller Public 

Companies. 

The Securities and Exchange 

Commission Advisory Committee on 

Smaller Public Companies is providing 

notice that it will hold a public meeting 

on Monday and Tuesday, October 24 & 

25, 2005, in Multi-Purpose Room L006 

of the Commission’s headquarters, 100 F 

Street, NE., Washington, DC 20549, 

beginning at 9 a.m. on each day. The 

meeting is expected to last until 

approximately 4 p.m. on each day, with 

a lunch break from approximately noon 

to 1 p.m. The meeting will be audio 

webcast on the Commission’s Web site 

at http://www.sec.gov. 

The agenda for the meeting includes 

consideration of proposals of the 

Advisory Committee’s four 

subcommittees on possible 

recommendations for changes to the 

current securities regulatory system for 

smaller companies. The public is 

invited to submit written statements for 

the meeting. 

DATES: Written statements should be 

received on or before October 17, 2005. 

ADDRESSES: Written statements may be 

submitted by any of the following 

methods: 

Electronic Statements 

• Use the Commission’s Internet 

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

info/smallbus/acspc.shtml); or 

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

Number 265–23 on the subject line; or 

Paper Statements 

• Send paper statements in triplicate 

to Jonathan G. Katz, Committee 

Management Officer, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–9303. 

All submissions should refer to File 

No. 265–23. This file number should be 

included on the subject line if e-mail is 

used. To help us process and review 

your statement more efficiently, please 

use only one method. The Commission 

staff will post all statements on the 

Advisory Committee’s Web site (http:// 

www.sec.gov./info/smallbus/ 

acspc.shtml). 

Statements also will be available for 

public inspection and copying in the 

Commission’s Public Reference Room, 

100 F Street, NE., Room 1580, 

Washington, DC 20549. All statements 

received will be posted without change; 

we do not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Kevin M. O’Neill, Special Counsel, at 

(202) 551–3260, Office of Small 

Business Policy, Division of Corporation 

Finance, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–3628. 

SUPPLEMENTARY INFORMATION: In 

accordance with section 10(a) of the 

Federal Advisory Committee Act, 5 

U.S.C.-App. 1, § 10(a), and the 

Federal Register / Vol. 70, No. 197 / Thursday, October 13, 2005 / Notices 59791 

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

2 17 CFR 240.19b–4 

3Amendment No. 1, which replaced and 

superceded the original filing in its entirety, is 

incorporated in this notice. 

regulations thereunder, Gerald J. 

Laporte, Designated Federal Officer of 

the Committee, has ordered publication 

of this notice. 

Dated: October 7, 2005. 

Jonathan G. Katz, 

Committee Management Officer. 

[FR Doc. 05–20569 Filed 10–7–05; 3:55 pm] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52566; File No. SR-PCX–

2005–56] 

Self-Regulatory Organizations; Pacific 

Exchange, Inc.; Notice of Filing of 

Proposed Rule Change and 

Amendment No. 1 Thereto Relating to 

the Directed Order Process 

October 5, 2005. 

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 21, 

2005, the Pacific Exchange, Inc. (‘‘PCX’’

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 

prepared by the PCX. On October 4, 

2005, the PCX filed Amendment No. 1 

to the proposed rule change.3 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 PCX proposes to modify its 

Directed Order Process as part of its 

continuing efforts to enhance 

participation on the Archipelago 

Exchange (‘‘ArcaEx’’) facility. In 

conjunction with these modifications, 

the Exchange proposes two new 

classifications of Market Makers, 

Designated Market Makers (‘‘DMMs’’) 

and Lead Market Makers (‘‘LMMs’’). 

Only DMMs and LMMs will be eligible 

to participate in the Directed Order 

Process as Market Makers. 

The text of the proposed rule change, 

as amended, appears below. Additions 

are in italics. Deleted items are in 

brackets. 

Rule 1 

Definitions 

Definitions 

Rule 1.1 (a)–(aaa)—No change. 

(bbb) The term ‘‘Designated Market 

Maker’’ shall mean a registered Market 

Maker that participates in the Directed 

Order Process. 

(ccc) The term ‘‘Lead Market Maker’’

shall mean a registered Market Maker 

that is the exclusive Designated Market 

Maker in listings for which the 

Corporation is the primary market. 

* * * * * 

Rule 7 

Equities Trading 

Registration of Market Makers in a 

Security 

Rule 7.22 (a)–(b)—No change. 

(c) The Corporation may limit the 

number of Designated Market Makers in 

a security upon prior written notice to 

ETP Holders. 

(d) Designated Market Makers and 

Lead Market Makers shall be selected by 

the Corporation. Such selection shall be 

based on, but is not limited to, the 

following: experience with making 

markets in equities; adequacy of capital; 

willingness to promote the Exchange as 

a marketplace; issuer preference; 

operational capacity; support personnel; 

and history of adherence to Exchange 

rules and securities laws. 

[(c)] (e) Voluntary Termination of 

Security Registration. A Market Maker 

may voluntarily terminate its 

registration in a security by providing 

the Corporation with a one-day written 

notice of such termination. A Market 

Maker that fails to give advanced 

written notice of termination to the 

Corporation may be subject to formal 

disciplinary action pursuant to Rule 10. 

[(d)] (f) The Corporation may suspend 

or terminate any registration of a Market 

Maker in a security or securities under 

this Rule whenever, in the Corporation’s 

judgment, the interests of a fair and 

orderly market are best served by such 

action. 

[(e)] (g) An ETP Holder may seek 

review of any action taken by the 

Corporation pursuant to this Rule, 

including the denial of the application 

for, or the termination or suspension of, 

a Market Maker’s registration in a 

security or securities, in accordance 

with Rule 10.13. 

* * * * * 

Rule 7 

Equities Trading 

Designated Market Maker Performance 

Standards 

Rule 7.24 [Reserved]. 

(a) Designated Market Makers will be 

required to maintain minimum 

performance standards the levels of 

which may be determined from time to 

time by the Corporation. Such levels will 

vary depending on the price, liquidity, 

and volatility of the security in which 

the Designated Market Maker is 

registered. The performance 

measurements will include (i) percent of 

time at the NBBO; (ii) percent of 

executions better than the NBBO; (iii) 

average displayed size; (iv) average 

quoted spread; and (v) in the event the 

security is a derivative security, the 

ability of the Designated Market Maker 

to transact in underlying markets. 

(b) Designated Market Makers that are 

Lead Market Makers will be held to 

higher performance standards in the 

securities in which they are registered as 

Lead Market Maker than Designated 

Market Makers that are not Lead Market 

Makers. 

(c) Market Makers that are not 

Designated Market Makers will not be 

required to maintain the minimum 

performance standards as described in 

paragraph (a) above. 

* * * * * 

Rule 7 

Equities Trading 

Registration of Odd Lot Dealers 

Rule 7.25 (a)—No change. 

(b) Market Makers Registered in a 

Security. For each security in which a 

Market Maker is registered, the Market 

Maker may become an Odd Lot Dealer 

in that security. For each security in 

which a Market Maker is registered as 

Lead Market Maker, the Lead Market 

Maker must also register as an Odd Lot 

Dealer in that security. 

Rule 7.25 (c)–(e)—No change. 

* * * * * 

Rule 7 

Equities Trading 

Orders and Modifiers 

Rule 7.31 (a)–(h)—No change. 

(i) Directed Order. 

(1) Any market or limit order to buy 

or sell which has been directed to a 

particular Designated Market Maker by 

the User. Users must be permissioned by 

Designated Market Makers to send a 

Directed Order to that Designated 

Market Maker. 

[(2) The Corporation shall suspend 

the Directed Order Process for a security