Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Regarding the Annual Certification of Compliance and Supervisory Processes, 19733-19737 [E7-7428]
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Federal Register / Vol. 72, No. 75 / Thursday, April 19, 2007 / Notices
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 Act11 and Rule 19b–
4(f)(6) thereunder.12
A proposed rule change filed under
19b–4(f)(6) normally may not become
operative prior to 30 days after the date
of filing.13 However, Rule 19b–
4(f)(6)(iii) 14 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 permit the
Exchange to immediately update the
effective dates for NSX Rules 2.11 and
2.12. 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.
Number SR–NSX–2007–04 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–55631; File No. SR–NSX–
2006–16]
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
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:
All submissions should refer to File
Number SR–NSX–2007–04. 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 (https://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 NSX. 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–NSX–2007–04 and should
be submitted on or before May 10, 2007.
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–7422 Filed 4–18–07; 8:45 am]
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
13 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. NSX has satisfied the five-day prefiling notice requirement.
14 Id.
15 For 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).
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April 13, 2007.
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 on November
22, 2006, the National Stock Exchange,
Inc. (‘‘NSX’’ 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 Exchange.
On April 9, 2007, the NSX filed
Amendment No. 1 to the proposed rule
change (‘‘Amendment No. 1’’).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 Exchange proposes to adopt NSX
Rule 5.7 and accompanying
Interpretations and Policies .01 (Annual
Compliance and Supervision
Certification) to require each Equity
Trading Permit (‘‘ETP’’) Holder’s Chief
Executive Officer (‘‘CEO’’) to certify
annually to having in place a process to
establish, maintain, review, modify, and
test policies and procedures reasonably
designed to achieve compliance with
applicable Rules of the Exchange, and
federal securities laws and regulations.
The text of the proposed rule and
interpretation is set forth below.
Proposed new language is italicized.
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CHAPTER V.
SUPERVISION
12 17
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Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing of Proposed Rule Change and
Amendment No. 1 Thereto Regarding
the Annual Certification of Compliance
and Supervisory Processes
*
*
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Rule 5.7. Annual Certification of
Compliance and Supervisory Processes
Each ETP Holder shall have its chief
executive officer (or equivalent officer)
certify annually, as set forth in
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1, which supplemented the
original filing, the NSX provided more information
regarding the certification process and corrected a
grammatical error.
2 17
16 17
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Interpretations and Policies .01, that the
ETP Holder has in place processes to
establish, maintain, review, test and
modify written compliance policies and
written supervisory procedures
reasonably designed to achieve
compliance with applicable Rules of the
Exchange and federal securities laws
and regulations.
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Interpretations and Policies .01 Annual
Compliance and Supervision
Certification
The Exchange is issuing this
interpretation to Rule 5.7, which
requires that the ETP Holder’s chief
executive officer (or equivalent officer)
execute annually a certification that the
ETP Holder has in place processes to
establish, maintain, review, test and
modify written compliance policies and
written supervisory procedures
reasonably designed to achieve
compliance with applicable Rules of the
Exchange and federal securities laws
and regulations. The certification for
each ensuing year shall be effected no
later than on the anniversary date of the
previous year’s certification. The
certification shall state the following:
Annual Compliance and Supervision
Certification
The undersigned is the chief executive
officer (or equivalent officer) of [name of
ETP Holder corporation/partnership/
sole proprietorship] (the ‘‘ETP Holder’’).
As required by Rule 5.7, the
undersigned makes the following
certification:
1. The ETP Holder has in place
processes to:
(a) Establish, maintain and review
policies and procedures reasonably
designed to achieve compliance with
applicable Rules of the National Stock
Exchange, Inc. and federal securities
laws and regulations;
(b) Modify such policies and
procedures as business, regulatory and
legislative changes and events dictate;
and
(c) Test the effectiveness of such
policies and procedures on a periodic
basis, the timing and extent of which is
reasonably designed to ensure
continuing compliance with Rules of the
National Stock Exchange, Inc. and
federal securities laws and regulations.
2. The undersigned chief executive
officer (or equivalent officer) has
conducted one or more meetings with
the chief compliance officer in the
preceding 12 months, the subject of
which satisfy the obligations set forth in
Interpretations and Policies .01 to Rule
5.7.
3. The ETP Holder’s processes, with
respect to paragraph 1 above, are
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evidenced in a report reviewed by the
chief executive officer (or equivalent
officer), chief compliance officer, and
such other officers as the ETP Holder
may deem necessary to make this
certification. The final report has been
submitted to the ETP Holder’s board of
directors and audit committee or will be
submitted to the ETP Holder’s board of
directors and audit committee (or
equivalent bodies) at the earlier of their
next scheduled meetings or within 45
days of the date of execution of this
certification.
4. The undersigned chief executive
officer (or equivalent officer) has
consulted with the chief compliance
officer and other officers as applicable
(referenced in paragraph 3 above) and
such other employees, outside
consultants, lawyers and accountants,
to the extent deemed appropriate, in
order to attest to the statements made in
this certification.
*
*
*
*
*
The Exchange provides the following
guidance in completing the Certification
above. Included in the processes
requirement is an obligation on the part
of the ETP Holder to conduct one or
more meetings annually between the
chief executive officer (or equivalent
officer) and the chief compliance officer
to: (1) Discuss and review the matters
that are subject of the certification; (2)
discuss and review the ETP Holder ’s
compliance efforts as of the date of such
meetings; and (3) identify and address
significant compliance problems and
plans for emerging business areas.
The report required in paragraph 3 of
the certification must document the ETP
Holder’s processes for establishing,
maintaining, reviewing, testing and
modifying compliance policies, that are
reasonably designed to achieve
compliance with applicable NSX rules
and federal securities laws and
regulations, and any principal
designated by the ETP Holder may
prepare the report. The report must be
produced prior to execution of the
certification and be reviewed by the
chief executive officer (or equivalent
officer), chief compliance officer and
any other officers the ETP Holder deems
necessary to make the certification and
must be provided to the ETP Holder’s
board of directors and audit committee
in final form either prior to execution of
the certification or at the earlier of their
next scheduled meetings or within 45
days of execution of the certification.
The report should include the manner
and frequency in which the processes
are administered, as well as the
identification of officers and supervisors
who have responsibility for such
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administration. The report need not
contain any conclusions produced as a
result of following the processes set
forth therein. The report may be
combined with any other compliance
report or other similar report required
by any other self-regulatory organization
provided that: (1) Such report is clearly
titled in a manner indicating that it is
responsive to the requirements of the
certification and Rule 5.7; (2) an ETP
Holder that submits a report for review
in response to a NSX request must
submit the report in its entirety; and (3)
the ETP Holder makes such report in a
timely manner, i.e., annually.
*
*
*
*
*
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 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
It is critical that each NSX ETP Holder
understand the importance of
employing comprehensive and effective
compliance policies and written
supervisory procedures. Compliance
with applicable NSX rules and Federal
securities laws and regulations is the
foundation of ensuring investor
protection and market integrity and is
essential to the efficacy of selfregulation. Consequently, the Exchange
is proposing to adopt Rule 5.7, that
would require ETP Holders to have their
CEOs, or equivalent officer, certify
annually to having in place processes to
establish, maintain, review, modify, and
test policies and procedures reasonably
designed to achieve compliance with
applicable NSX rules, and Federal
securities laws and regulations.4
4 This new rule should not impose substantial
new obligations on NSX ETP Holders as the
National Association of Securities Dealers, Inc.
(‘‘NASD’’) and the New York Stock Exchange LLC
(‘‘NYSE’’) have implemented similar rules. See
NASD Rule 3013(b) and Interpretative Material—
3013 (‘‘IM 3013’’) (effective Dec. 1, 2004;
amendment to IM 3013 effective March 17, 2006);
NYSE Rule 342.30 (effective Nov. 16, 2005). As a
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Specifically, the proposed rule change
would require the CEO to certify
annually that senior executive
management has in place processes to:
(1) Establish and maintain policies and
procedures reasonably designed to
achieve compliance with applicable
NSX rules and Federal securities laws
and regulations; (2) modify such
policies and procedures as business,
regulatory and legislative changes and
events dictate; and (3) test the
effectiveness of such policies and
procedures on a periodic basis, the
timing of which is reasonably designed
to ensure continuing compliance with
applicable NSX rules, and Federal
securities laws and regulations. The
proposed rule change further would
require the CEO to certify that those
processes are evidenced in a report that
has been reviewed by those executing
the certification, as well as the
member’s board of directors and audit
committee. The proposed rule change
also would create a new Interpretation
and Policy .01 to Rule 5.7, which sets
forth the language of the certification
and gives further guidance as to the
requirements and limitations of the rule.
The proposed rule change states that
included in this processes requirement
is an obligation on the part of the ETP
Holder to conduct one or more meetings
annually between the CEO (or
equivalent officer) and the chief
compliance officer to: (1) Discuss and
review the matters that are subject of the
certification; (2) discuss and review the
ETP Holder’s compliance efforts as of
the date of such meetings; and (3)
identify and address significant
compliance problems and plans for
emerging business areas. The CEO also
may be the same person as the chief
compliance officer.
As noted in the proposed rule change,
the periodic and content requirements
for meetings between the CEO (or
equivalent officer) and the chief
compliance officer, as well as the
pertinent requirements of paragraphs 3
and 4 of the certification, are intended
to indicate the unique and integral role
of the chief compliance officer both in
the discharge of certain compliance
processes and the reporting
requirements that are the subject matter
of the certification and in providing a
reliable basis upon with the CEO can
execute the certification. The chief
compliance officer is the primary
advisor to the ETP Holder on its overall
compliance scheme and the
result, a similar requirement is already in place for
NASD and NYSE member firms, addressing
member firms’ compliance with the rules of those
self-regulatory organizations. The first certifications
pursuant to those rules were due by April 1, 2006.
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particularized rules, policies and
procedures that the ETP Holder adopts.
This is because the chief compliance
officer should have an expertise in the
process of: (1) Gaining an understanding
of the products, services or line
functions that need to be the subject of
written compliance policies and written
supervisory procedures; (2) identifying
the relevant rules, regulations, laws and
standards of conduct pertaining to such
products, services or line functions
based on experience and/or consultation
with those persons who have a technical
expertise in such areas of the ETP
Holder’s business; (3) developing, or
advising other business persons charged
with the obligation to develop, policies
and procedures that are reasonably
designed to achieve compliance with
those relevant rules, regulations, laws
and standards of conduct; (4)
evidencing the supervision by the line
managers who are responsible for the
execution of compliance policies; and
(5) developing programs to test
compliance with the ETP Holder’s
policies and procedures.
It is that expertise in the process of
compliance that makes the chief
compliance officer an indispensable
party to enable the CEO to reach the
conclusions stated in the certification.
Consequently, any certification made by
a CEO under circumstances where the
chief compliance officer has concluded,
after consultation, that there is an
inadequate basis for making such
certification would be, without
limitation, conduct inconsistent with
the observance of the high standards of
commercial honor, and the just and
equitable principles of trade—a
violation of NSX Rule 3.1. Beyond the
certification requirement, it is the
intention of both Rule 5.7 and
Interpretations and Policies .01 to foster
regular and significant interaction
between senior management and the
chief compliance officer regarding the
ETP Holder’s comprehensive
compliance program.
The chief compliance officer and
other compliance officers that report to
the chief compliance officer (as
described in the sentence that
immediately follows) shall perform the
compliance functions contemplated
under paragraphs 3 and 4 of the
certification. Nothing herein is intended
to limit or discourage the participation
of other employees both within and
outside the ETP Holder’s compliance
department in any aspect of the ETP
Holder’s compliance programs or
processes, including those matters
discussed herein. However, it is
understood that the chief compliance
officer and, where applicable, the most
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19735
senior compliance officers having
primary compliance department
responsibility for each of the ETP
Holder’s business segments, will retain
responsibility for the compliance
functions contemplated by paragraphs 3
and 4 of the certification.
As may be necessary to render their
views and advice, the chief compliance
officer and the other officers referenced
in paragraph 3 of the certification who
consult with the CEO (or equivalent
officer) pursuant to paragraph 4, shall,
in turn, consult with other employees,
officers, outside consultants, lawyers
and accountants.
The Exchange recognizes that
supervisors with business line
responsibility are accountable for the
discharge of an ETP Holder’s
compliance policies and written
supervisory procedures. The signatory
to the certification is certifying only as
to having processes in place to establish,
maintain, review, test and modify the
ETP Holder’s written compliance and
supervisory policies and procedures and
the execution of this certification and
any consultation rendered in connection
with such certification does not by itself
establish business line responsibility.
The requirement that an ETP Holder’s
processes include providing the report
to the board of directors and audit
committee (required by paragraph 3 of
the certification) does not apply to ETP
Holders that do not utilize these types
of governing bodies and committees in
the conduct of their business.5
The report required in paragraph 3 of
the certification must document the ETP
Holder’s processes for establishing,
maintaining, reviewing, testing and
modifying compliance policies, that are
reasonably designed to achieve
compliance with applicable NSX rules
and Federal securities laws and
regulations. Any principal designated
by the ETP Holder may prepare the
report. The report must be produced
prior to execution of the certification
and be reviewed by the CEO (or
equivalent officer), chief compliance
officer and any other officers the ETP
Holder deems necessary to make the
certification and must be provided to
the ETP Holder’s board of directors and
audit committee in final form either
prior to execution of the certification, at
the earlier of their next scheduled
meetings or within 45 days of execution
of the certification. The report should
include the manner and frequency in
which the processes are administered,
5 As a part of their process, ETP Holders must
have the report reviewed by their governing bodies
and committees that serve similar functions in lieu
of a board of directors and audit committee.
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as well as the identification of officers
and supervisors who have responsibility
for such administration. The report need
not contain any conclusions produced
as a result of following the processes set
forth therein. The report may be
combined with any other compliance
report or other similar report required
by any other self-regulatory organization
provided that: (1) Such report is clearly
titled in a manner indicating that it is
responsive to the requirements of the
certification and Rule 5.7; (2) an ETP
Holder that submits a report for review
in response to a NSX request must
submit the report in its entirety; and (3)
the ETP Holder makes such report in a
timely manner, for example, annually.
In summary, this proposal recognizes
that responsibility for discharging
compliance policies and written
supervisory procedures rests with
business line supervisors. The proposal
also clarifies that execution of the
certification does not by itself establish
a signatory as having such line
supervisory responsibility. The proposal
also sets forth the particulars regarding
the report that must evidence a
member’s compliance processes. It
states that the report must be produced
prior to execution of the certification
and reviewed by the CEO, and such
other officers as the member deems
necessary. The report also must include
the manner and frequency in which the
processes are administered and identify
those officers and supervisors with
responsibility for such administration.
The report need not contain conclusions
that result from following the specified
processes, such as compliance
deficiencies. Additionally, the report
may be combined with other reports
required by a self-regulatory
organization, provided the report is
made annually, clearly indicates in the
title that it contains the information
required by Rule 5.7, and that the entire
report is provided in response to any
regulatory request for all or part of the
combined report. Finally, with respect
to review of the report, this clarifies that
review by a member’s board of directors
and audit committee only applies to
those members whose corporate
governance structure have such or
similar governing bodies and
committees—it does not impose a
requirement that members create them if
they do not currently exist.
ETP Holders should understand that
the requirements of Rule 5.7 and
Interpretations and Policies .01
represent, in part, a principle-based
requirement to certify that the ETP
Holder has in place processes to
establish, maintain, review, test and
modify written compliance policies and
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written supervisory procedures
reasonably designed to achieve
compliance with applicable NSX rules
and Federal securities laws and
regulations. Consequently, compliance
with the periodic and content
requirements of the Interpretation
pertaining to meetings between the CEO
(or equivalent officer) and the chief
compliance officer does not satisfy the
full extent of these principle-based
obligations that will vary with the facts
and circumstances of an ETP Holder’s
business activities and organizational
structure. Moreover, NSX emphasizes
the testing aspect of this principle-based
requirement; an integral purpose of NSX
rules pertaining to supervision is that
ETP Holders adopt policies and
procedures that are effective as to both
the scope of, and the achievement of
compliance with, applicable NSX rules,
and Federal securities laws and
regulations.
NSX believes the proposal provides
an effective mechanism to compel
substantial and purposeful interaction
between senior management and
compliance personnel, thereby
enhancing the quality of ETP Holders’
supervisory and compliance systems.
NSX further believes the rule change
imposes the minimal additional burden
on ETP Holders that is necessary to
achieve the proposal’s purpose, as the
firms are already obligated to provide
similar certifications in connection with
rules of other self-regulatory
organizations.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,6 in general, and
furthers the objectives of Section
6(b)(5) 7 of the Act, in particular, in that
it is designed to promote just and
equitable principles of trade, to prevent
fraudulent and manipulative acts and
practices, and, in general, to protect
investors and the public interest. NSX
believes that that the proposed rule
change is consistent with the provisions
of the Act noted above in that it will
enhance focus on ETP Holders’
compliance and supervision systems,
thereby decreasing the likelihood of
fraud and manipulative acts and
increasing investor protection.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
6 15
7 15
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U.S.C. 78f(b)(5).
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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 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 NSX consents, the
Commission will:
(A) By order approve the 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NSX–2006–16 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–NSX–2006–16. This file number
should be included in the subject line
if e-mail is used. To help the
Commission process and review
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://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
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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 filings 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 number
SR–NSX–2006–16 and should be
submitted on or before May 10, 2007.
For the Commission by the Division of
Market Regulation, pursuant to the delegated
authority.8
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–7428 Filed 4–18–07; 8:45 am]
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Small Business Size Standards:
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U.S. Small Business
Administration.
ACTION: Notice Denying a Request for a
Waiver of the Nonmanufacturer Rule for
Re-Refining Used Petroleum Lubricating
Oils (MIL–PRF–2104; Type 10W, Type
15W40, Type 30W and Type 40W).
cprice-sewell on PROD1PC66 with NOTICES
AGENCY:
SUMMARY: The U.S. Small Business
Administration (SBA) is denying the
request for a class waiver of the
Nonmanufacturer Rule for Re-Refining
Used Petroleum Lubricating Oils (MIL–
PRF–2104; Type 10W, Type 15W40,
Type 30W and Type 40W), under the
NAICS code 324191. The basis for this
denial is that SBA has determined that
this request is for a product in a specific
solicitation, rather than for a class of
products within a subdivision within a
North American Industry Classification,
as is required for class waivers under 13
CFR 121.1202(d).
DATES: This notice is effective
immediately.
FOR FURTHER INFORMATI0N CONTACT:
Sarah L. Ayers, Program Analyst, by
telephone at (202) 205–6413; by FAX at
(202) 292–3771; or by e-mail at
sarah.ayers@sba.gov.
SUPPLEMENTARY INFORMATION: The SBA
received a request on December 12,
2006, to waive the Nonmanufacturer
8 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
15:39 Apr 18, 2007
Rule for Re-Refining Used Petroleum
Lubricating Oils (MIL–PRF–2104; Type
10W, Type 15W40, Type 30W and Type
40W) prompted by a Defense Supply
Center Richmond (DSCR) solicitation.
In response, on January 5, 2007, SBA
published in the Federal Register, Vol.
72, No. 3, a notice of intent to waive the
Nonmanufacturer Rule for Re-Refining
Used Petroleum Lubricating Oils (MIL–
PRF–2104; Type 10W, Type 15W40,
Type 30W and Type 40W). SBA
explained in the notice that it was
soliciting comments and sources of
small business manufacturers for the
products described in the request. SBA
received one comment. The commenter
indicated that one company currently
supplies re-refined engine oils to the
Federal government, and this same
company also supplies several
distributors with re-refined lubricating
oils. The commenter also indicated the
knowledge of two other companies that
have supplied re-refined lubricating oils
to the Federal market within the last 24
months. However, these companies did
not wish to identify themselves or their
contracting history to SBA for review.
Based on SBA’s review of the comments
received, and its further examination of
the waiver request, SBA is denying the
requested class waiver because it does
not seek a waiver for a ‘‘class of
products’’ within the contemplation of
13 CFR 121.1202(d). In particular, a
‘‘class of products’’ for purposes of the
class waiver procedures provided in 13
CFR 121.1204(a), is comprised of
products within a ‘‘subdivision under a
NAICS Industry Number.’’ See 13 CFR
121.1202(d). By contrast, the individual
waiver procedures under 13 CFR
121.1204(b) apply when a request for a
waiver of the Nonmanufacturer Rule is
‘‘for a product in a specific solicitation.’’
See 13 CFR 121.1203. Since the instant
request is ‘‘for a product in a specific
solicitation,’’ it is governed by the
procedures for an individual waiver
under 13 CFR 121.1204(b). According to
that provision, only a contracting officer
may request an individual waiver for a
specific solicitation.
SBA is therefore denying the instant
request for a class waiver because it
constitutes a request for an ‘‘individual
waiver for a product in a specific
solicitation,’’ which must be initiated by
a contracting officer pursuant to 13 CFR
121.1204(b).
Authority: 15 U.S.C. 637(a)(17).
Arthur E. Collins,
Acting Director for Government Contracting.
[FR Doc. E7–7454 Filed 4–18–07; 8:45 am]
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19737
DEPARTMENT OF STATE
[Public Notice 5780]
Bureau of Educational and Cultural
Affairs (ECA) Request for Grant
Proposals: Fellowships in the Visual
Arts, Film, and Architecture and Urban
Design
Announcement Type: New
Cooperative Agreement.
Funding Opportunity Number: ECA/
PE/C/CU–07–60.
Catalog of Federal Domestic
Assistance Number: 00.000.
Key Dates:
Application Deadline: May 29, 2007.
Executive Summary: The Bureau of
Educational and Cultural Affairs will
award up to three Cooperative
Agreements to support programs for
short residency and training programs
in the United States for emerging and
mid-career visual artists, film artists,
and architecture and urban design
professionals from selected countries.
Each Cooperative Agreement may
support artists from one or more of the
three categories. The foreign
participants will be nominated by the
Public Affairs Sections of U.S.
Embassies, in consultation with the
grantee. Grantees will develop 30–60
day programs in the United States for
the nominated participants,
individually or in small groups. Each
program should be built around a
residency experience, which may be
supplemented by other program
elements designed to enhance and
expand upon the activities of the
residency. The goal of each project is to
increase cross-cultural understanding
internationally by providing program
participants with an in-depth exposure
to their professional discipline as
practiced in the United States; outreach
to U.S. colleagues and publics, and
opportunities for creation and
exhibition of their work.
I. Funding Opportunity Description:
Authority:
Overall grant making authority for
this program is contained in the Mutual
Educational and Cultural Exchange Act
of 1961, Public Law 87–256, as
amended, also known as the FulbrightHays Act. The purpose of the Act is ‘‘to
enable the Government of the United
States to increase mutual understanding
between the people of the United States
and the people of other countries * * *;
to strengthen the ties which unite us
with other nations by demonstrating the
educational and cultural interests,
developments, and achievements of the
people of the United States and other
nations * * * and thus to assist in the
E:\FR\FM\19APN1.SGM
19APN1
Agencies
[Federal Register Volume 72, Number 75 (Thursday, April 19, 2007)]
[Notices]
[Pages 19733-19737]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-7428]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55631; File No. SR-NSX-2006-16]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto
Regarding the Annual Certification of Compliance and Supervisory
Processes
April 13, 2007.
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 on November 22, 2006, the National Stock Exchange, Inc. (``NSX''
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 Exchange. On April
9, 2007, the NSX filed Amendment No. 1 to the proposed rule change
(``Amendment No. 1'').\3\ The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1, which supplemented the original filing, the
NSX provided more information regarding the certification process
and corrected a grammatical error.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt NSX Rule 5.7 and accompanying
Interpretations and Policies .01 (Annual Compliance and Supervision
Certification) to require each Equity Trading Permit (``ETP'') Holder's
Chief Executive Officer (``CEO'') to certify annually to having in
place a process to establish, maintain, review, modify, and test
policies and procedures reasonably designed to achieve compliance with
applicable Rules of the Exchange, and federal securities laws and
regulations. The text of the proposed rule and interpretation is set
forth below. Proposed new language is italicized.
* * * * *
CHAPTER V.
SUPERVISION
* * * * *
Rule 5.7. Annual Certification of Compliance and Supervisory Processes
Each ETP Holder shall have its chief executive officer (or
equivalent officer) certify annually, as set forth in
[[Page 19734]]
Interpretations and Policies .01, that the ETP Holder has in place
processes to establish, maintain, review, test and modify written
compliance policies and written supervisory procedures reasonably
designed to achieve compliance with applicable Rules of the Exchange
and federal securities laws and regulations.
Interpretations and Policies .01 Annual Compliance and Supervision
Certification
The Exchange is issuing this interpretation to Rule 5.7, which
requires that the ETP Holder's chief executive officer (or equivalent
officer) execute annually a certification that the ETP Holder has in
place processes to establish, maintain, review, test and modify written
compliance policies and written supervisory procedures reasonably
designed to achieve compliance with applicable Rules of the Exchange
and federal securities laws and regulations. The certification for each
ensuing year shall be effected no later than on the anniversary date of
the previous year's certification. The certification shall state the
following:
Annual Compliance and Supervision Certification
The undersigned is the chief executive officer (or equivalent
officer) of [name of ETP Holder corporation/partnership/sole
proprietorship] (the ``ETP Holder''). As required by Rule 5.7, the
undersigned makes the following certification:
1. The ETP Holder has in place processes to:
(a) Establish, maintain and review policies and procedures
reasonably designed to achieve compliance with applicable Rules of the
National Stock Exchange, Inc. and federal securities laws and
regulations;
(b) Modify such policies and procedures as business, regulatory and
legislative changes and events dictate; and
(c) Test the effectiveness of such policies and procedures on a
periodic basis, the timing and extent of which is reasonably designed
to ensure continuing compliance with Rules of the National Stock
Exchange, Inc. and federal securities laws and regulations.
2. The undersigned chief executive officer (or equivalent officer)
has conducted one or more meetings with the chief compliance officer in
the preceding 12 months, the subject of which satisfy the obligations
set forth in Interpretations and Policies .01 to Rule 5.7.
3. The ETP Holder's processes, with respect to paragraph 1 above,
are evidenced in a report reviewed by the chief executive officer (or
equivalent officer), chief compliance officer, and such other officers
as the ETP Holder may deem necessary to make this certification. The
final report has been submitted to the ETP Holder's board of directors
and audit committee or will be submitted to the ETP Holder's board of
directors and audit committee (or equivalent bodies) at the earlier of
their next scheduled meetings or within 45 days of the date of
execution of this certification.
4. The undersigned chief executive officer (or equivalent officer)
has consulted with the chief compliance officer and other officers as
applicable (referenced in paragraph 3 above) and such other employees,
outside consultants, lawyers and accountants, to the extent deemed
appropriate, in order to attest to the statements made in this
certification.
* * * * *
The Exchange provides the following guidance in completing the
Certification above. Included in the processes requirement is an
obligation on the part of the ETP Holder to conduct one or more
meetings annually between the chief executive officer (or equivalent
officer) and the chief compliance officer to: (1) Discuss and review
the matters that are subject of the certification; (2) discuss and
review the ETP Holder 's compliance efforts as of the date of such
meetings; and (3) identify and address significant compliance problems
and plans for emerging business areas.
The report required in paragraph 3 of the certification must
document the ETP Holder's processes for establishing, maintaining,
reviewing, testing and modifying compliance policies, that are
reasonably designed to achieve compliance with applicable NSX rules and
federal securities laws and regulations, and any principal designated
by the ETP Holder may prepare the report. The report must be produced
prior to execution of the certification and be reviewed by the chief
executive officer (or equivalent officer), chief compliance officer and
any other officers the ETP Holder deems necessary to make the
certification and must be provided to the ETP Holder's board of
directors and audit committee in final form either prior to execution
of the certification or at the earlier of their next scheduled meetings
or within 45 days of execution of the certification. The report should
include the manner and frequency in which the processes are
administered, as well as the identification of officers and supervisors
who have responsibility for such administration. The report need not
contain any conclusions produced as a result of following the processes
set forth therein. The report may be combined with any other compliance
report or other similar report required by any other self-regulatory
organization provided that: (1) Such report is clearly titled in a
manner indicating that it is responsive to the requirements of the
certification and Rule 5.7; (2) an ETP Holder that submits a report for
review in response to a NSX request must submit the report in its
entirety; and (3) the ETP Holder makes such report in a timely manner,
i.e., annually.
* * * * *
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 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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
It is critical that each NSX ETP Holder understand the importance
of employing comprehensive and effective compliance policies and
written supervisory procedures. Compliance with applicable NSX rules
and Federal securities laws and regulations is the foundation of
ensuring investor protection and market integrity and is essential to
the efficacy of self-regulation. Consequently, the Exchange is
proposing to adopt Rule 5.7, that would require ETP Holders to have
their CEOs, or equivalent officer, certify annually to having in place
processes to establish, maintain, review, modify, and test policies and
procedures reasonably designed to achieve compliance with applicable
NSX rules, and Federal securities laws and regulations.\4\
---------------------------------------------------------------------------
\4\ This new rule should not impose substantial new obligations
on NSX ETP Holders as the National Association of Securities
Dealers, Inc. (``NASD'') and the New York Stock Exchange LLC
(``NYSE'') have implemented similar rules. See NASD Rule 3013(b) and
Interpretative Material--3013 (``IM 3013'') (effective Dec. 1, 2004;
amendment to IM 3013 effective March 17, 2006); NYSE Rule 342.30
(effective Nov. 16, 2005). As a result, a similar requirement is
already in place for NASD and NYSE member firms, addressing member
firms' compliance with the rules of those self-regulatory
organizations. The first certifications pursuant to those rules were
due by April 1, 2006.
---------------------------------------------------------------------------
[[Page 19735]]
Specifically, the proposed rule change would require the CEO to
certify annually that senior executive management has in place
processes to: (1) Establish and maintain policies and procedures
reasonably designed to achieve compliance with applicable NSX rules and
Federal securities laws and regulations; (2) modify such policies and
procedures as business, regulatory and legislative changes and events
dictate; and (3) test the effectiveness of such policies and procedures
on a periodic basis, the timing of which is reasonably designed to
ensure continuing compliance with applicable NSX rules, and Federal
securities laws and regulations. The proposed rule change further would
require the CEO to certify that those processes are evidenced in a
report that has been reviewed by those executing the certification, as
well as the member's board of directors and audit committee. The
proposed rule change also would create a new Interpretation and Policy
.01 to Rule 5.7, which sets forth the language of the certification and
gives further guidance as to the requirements and limitations of the
rule.
The proposed rule change states that included in this processes
requirement is an obligation on the part of the ETP Holder to conduct
one or more meetings annually between the CEO (or equivalent officer)
and the chief compliance officer to: (1) Discuss and review the matters
that are subject of the certification; (2) discuss and review the ETP
Holder's compliance efforts as of the date of such meetings; and (3)
identify and address significant compliance problems and plans for
emerging business areas. The CEO also may be the same person as the
chief compliance officer.
As noted in the proposed rule change, the periodic and content
requirements for meetings between the CEO (or equivalent officer) and
the chief compliance officer, as well as the pertinent requirements of
paragraphs 3 and 4 of the certification, are intended to indicate the
unique and integral role of the chief compliance officer both in the
discharge of certain compliance processes and the reporting
requirements that are the subject matter of the certification and in
providing a reliable basis upon with the CEO can execute the
certification. The chief compliance officer is the primary advisor to
the ETP Holder on its overall compliance scheme and the particularized
rules, policies and procedures that the ETP Holder adopts. This is
because the chief compliance officer should have an expertise in the
process of: (1) Gaining an understanding of the products, services or
line functions that need to be the subject of written compliance
policies and written supervisory procedures; (2) identifying the
relevant rules, regulations, laws and standards of conduct pertaining
to such products, services or line functions based on experience and/or
consultation with those persons who have a technical expertise in such
areas of the ETP Holder's business; (3) developing, or advising other
business persons charged with the obligation to develop, policies and
procedures that are reasonably designed to achieve compliance with
those relevant rules, regulations, laws and standards of conduct; (4)
evidencing the supervision by the line managers who are responsible for
the execution of compliance policies; and (5) developing programs to
test compliance with the ETP Holder's policies and procedures.
It is that expertise in the process of compliance that makes the
chief compliance officer an indispensable party to enable the CEO to
reach the conclusions stated in the certification. Consequently, any
certification made by a CEO under circumstances where the chief
compliance officer has concluded, after consultation, that there is an
inadequate basis for making such certification would be, without
limitation, conduct inconsistent with the observance of the high
standards of commercial honor, and the just and equitable principles of
trade--a violation of NSX Rule 3.1. Beyond the certification
requirement, it is the intention of both Rule 5.7 and Interpretations
and Policies .01 to foster regular and significant interaction between
senior management and the chief compliance officer regarding the ETP
Holder's comprehensive compliance program.
The chief compliance officer and other compliance officers that
report to the chief compliance officer (as described in the sentence
that immediately follows) shall perform the compliance functions
contemplated under paragraphs 3 and 4 of the certification. Nothing
herein is intended to limit or discourage the participation of other
employees both within and outside the ETP Holder's compliance
department in any aspect of the ETP Holder's compliance programs or
processes, including those matters discussed herein. However, it is
understood that the chief compliance officer and, where applicable, the
most senior compliance officers having primary compliance department
responsibility for each of the ETP Holder's business segments, will
retain responsibility for the compliance functions contemplated by
paragraphs 3 and 4 of the certification.
As may be necessary to render their views and advice, the chief
compliance officer and the other officers referenced in paragraph 3 of
the certification who consult with the CEO (or equivalent officer)
pursuant to paragraph 4, shall, in turn, consult with other employees,
officers, outside consultants, lawyers and accountants.
The Exchange recognizes that supervisors with business line
responsibility are accountable for the discharge of an ETP Holder's
compliance policies and written supervisory procedures. The signatory
to the certification is certifying only as to having processes in place
to establish, maintain, review, test and modify the ETP Holder's
written compliance and supervisory policies and procedures and the
execution of this certification and any consultation rendered in
connection with such certification does not by itself establish
business line responsibility.
The requirement that an ETP Holder's processes include providing
the report to the board of directors and audit committee (required by
paragraph 3 of the certification) does not apply to ETP Holders that do
not utilize these types of governing bodies and committees in the
conduct of their business.\5\
---------------------------------------------------------------------------
\5\ As a part of their process, ETP Holders must have the report
reviewed by their governing bodies and committees that serve similar
functions in lieu of a board of directors and audit committee.
---------------------------------------------------------------------------
The report required in paragraph 3 of the certification must
document the ETP Holder's processes for establishing, maintaining,
reviewing, testing and modifying compliance policies, that are
reasonably designed to achieve compliance with applicable NSX rules and
Federal securities laws and regulations. Any principal designated by
the ETP Holder may prepare the report. The report must be produced
prior to execution of the certification and be reviewed by the CEO (or
equivalent officer), chief compliance officer and any other officers
the ETP Holder deems necessary to make the certification and must be
provided to the ETP Holder's board of directors and audit committee in
final form either prior to execution of the certification, at the
earlier of their next scheduled meetings or within 45 days of execution
of the certification. The report should include the manner and
frequency in which the processes are administered,
[[Page 19736]]
as well as the identification of officers and supervisors who have
responsibility for such administration. The report need not contain any
conclusions produced as a result of following the processes set forth
therein. The report may be combined with any other compliance report or
other similar report required by any other self-regulatory organization
provided that: (1) Such report is clearly titled in a manner indicating
that it is responsive to the requirements of the certification and Rule
5.7; (2) an ETP Holder that submits a report for review in response to
a NSX request must submit the report in its entirety; and (3) the ETP
Holder makes such report in a timely manner, for example, annually.
In summary, this proposal recognizes that responsibility for
discharging compliance policies and written supervisory procedures
rests with business line supervisors. The proposal also clarifies that
execution of the certification does not by itself establish a signatory
as having such line supervisory responsibility. The proposal also sets
forth the particulars regarding the report that must evidence a
member's compliance processes. It states that the report must be
produced prior to execution of the certification and reviewed by the
CEO, and such other officers as the member deems necessary. The report
also must include the manner and frequency in which the processes are
administered and identify those officers and supervisors with
responsibility for such administration. The report need not contain
conclusions that result from following the specified processes, such as
compliance deficiencies. Additionally, the report may be combined with
other reports required by a self-regulatory organization, provided the
report is made annually, clearly indicates in the title that it
contains the information required by Rule 5.7, and that the entire
report is provided in response to any regulatory request for all or
part of the combined report. Finally, with respect to review of the
report, this clarifies that review by a member's board of directors and
audit committee only applies to those members whose corporate
governance structure have such or similar governing bodies and
committees--it does not impose a requirement that members create them
if they do not currently exist.
ETP Holders should understand that the requirements of Rule 5.7 and
Interpretations and Policies .01 represent, in part, a principle-based
requirement to certify that the ETP Holder has in place processes to
establish, maintain, review, test and modify written compliance
policies and written supervisory procedures reasonably designed to
achieve compliance with applicable NSX rules and Federal securities
laws and regulations. Consequently, compliance with the periodic and
content requirements of the Interpretation pertaining to meetings
between the CEO (or equivalent officer) and the chief compliance
officer does not satisfy the full extent of these principle-based
obligations that will vary with the facts and circumstances of an ETP
Holder's business activities and organizational structure. Moreover,
NSX emphasizes the testing aspect of this principle-based requirement;
an integral purpose of NSX rules pertaining to supervision is that ETP
Holders adopt policies and procedures that are effective as to both the
scope of, and the achievement of compliance with, applicable NSX rules,
and Federal securities laws and regulations.
NSX believes the proposal provides an effective mechanism to compel
substantial and purposeful interaction between senior management and
compliance personnel, thereby enhancing the quality of ETP Holders'
supervisory and compliance systems. NSX further believes the rule
change imposes the minimal additional burden on ETP Holders that is
necessary to achieve the proposal's purpose, as the firms are already
obligated to provide similar certifications in connection with rules of
other self-regulatory organizations.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of Section 6(b)(5) \7\ of the Act, in particular, in that it
is designed to promote just and equitable principles of trade, to
prevent fraudulent and manipulative acts and practices, and, in
general, to protect investors and the public interest. NSX believes
that that the proposed rule change is consistent with the provisions of
the Act noted above in that it will enhance focus on ETP Holders'
compliance and supervision systems, thereby decreasing the likelihood
of fraud and manipulative acts and increasing investor protection.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78(f)(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
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 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 NSX consents, the Commission will:
(A) By order approve the 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 (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NSX-2006-16 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-NSX-2006-16. This file
number should be included in the subject line if e-mail is used. To
help the Commission process and review comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://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
[[Page 19737]]
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
filings 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 number SR-NSX-2006-16 and should be submitted on or before May 10,
2007.
For the Commission by the Division of Market Regulation,
pursuant to the delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-7428 Filed 4-18-07; 8:45 am]
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