[Federal Register Volume 66, Number 94 (Tuesday, May 15, 2001)]
[Proposed Rules]
[Pages 26978-27005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-12131]



[[Page 26977]]

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Part VIII





Securities and Exchange Commission





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17 CFR Part 202 et al.



Registration of National Securities Exchanges Pursuant to Section 6(g) 
of the Securities Exchange Act of 1934 and Proposed Rule Changes of 
National Securities Exchanges and Limited Purpose National Securities 
Associations; Proposed Rule

  Federal Register / Vol. 66, No. 94 / Tuesday, May 15, 2001 / Proposed 
Rules  

[[Page 26978]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 202, 240 and 249

[Release No. 34-44279; File No. S7-10-01]
RIN 3235-AI20


Registration of National Securities Exchanges Pursuant to Section 
6(g) of the Securities Exchange Act of 1934 and Proposed Rule Changes 
of National Securities Exchanges and Limited Purpose National 
Securities Associations

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is 
proposing new Rule 6a-4 under the Securities Exchange Act of 1934 
(``Exchange Act'') and new registration Form 1-N prescribing the 
requirements for designated contract markets and derivative transaction 
execution facilities to register as national securities exchanges 
pursuant to Section 6(g)(1) of the Exchange Act to trade security 
futures. The Commission also is proposing conforming amendments to 
Rules 6a-2 and 6a-3 under the Exchange Act and Rule 202.3 of the 
Commission's procedural rules. In addition, the Commission is proposing 
new Rule 19b-7, new Form 19b-7, and amendments to Rule 19b-4 and Form 
19b-4 to accommodate proposed rule changes submitted by security 
futures product exchanges registered pursuant to Section 6(g) of the 
Exchange Act and limited purpose national securities associations 
registered pursuant to Section 15A(k) of the Exchange Act. These 
proposed rules and forms and amendments to existing rules and forms are 
necessary to implement the Commodity Futures Modernization Act of 2000 
(``CFMA'') and will establish the registration and rule filing 
procedures for those entities that are interested in registering with 
the Commission for the purpose of trading security futures.

DATES: Comments must be received by June 14, 2001.

ADDRESSES: All comments concerning the rule proposals should be 
submitted in triplicate to Jonathan G. Katz, Secretary, U.S. Securities 
and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-
0609. Comments also may be submitted electronically at the following e-
mail address: [email protected]. All comment letters should refer 
to File No. S7-10-01; this file number should be included on the 
subject line if e-mail is used. Comment letters will be available for 
inspection and copying in the public reference room at the same 
address. Electronically submitted comment letters will be posted on the 
Commission's Internet web site (http://www.sec.gov.). Personal 
identifying information, such as names or e-mail addresses, will not be 
edited from electronic submissions. Submit only information you wish to 
make publicly available.

FOR FURTHER INFORMATION CONTACT: Deborah Flynn, Senior Special Counsel, 
at (202) 942-0075; Heather Traeger, Special Counsel, at (202) 942-0763; 
Kelly Riley, Special Counsel, at (202) 942-0752; Michael Gaw, Attorney, 
at (202) 942-0158; and Cyndi Nguyen, Attorney, at (202) 942-4163, 
Division of Market Regulation, Securities and Exchange Commission, 450 
Fifth Street, NW., Washington, DC 20549-1001.

SUPPLEMENTARY INFORMATION: The Commission today is requesting public 
comment on proposed amendments to Rules 6a-2, 6a-3, and 19b-4,\1\ and 
Form 19b-4 of the Exchange Act \2\ as well as Rule 202.3 of the 
Commission's procedural rules,\3\ regarding the requirements for 
designated contract markets and derivative transaction execution 
facilities to register as national securities exchanges and to 
accommodate proposed rule changes submitted by security futures product 
exchanges and limited purpose national securities associations under 
Sections 6(g) and 15A(k) of the Exchange Act, respectively.\4\ The 
Commission also is requesting public comment on proposed new Rules 6a-4 
and 19b-7 \5\ and new Forms 1-N and 19b-7 under the Exchange Act.
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    \1\ 17 CFR 240.6a-2, 240.6a-3, and 240.19b-4.
    \2\ 17 CFR 249.819.
    \3\ 17 CFR 202.3.
    \4\ 15 U.S.C. 78f(g) adn 78o-3(k).
    \5\ Proposed 17 CFR 240.6a-4 and 17 CFR 240.19b-7.
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Table of Contents

I. Introduction
II. Discussion of Proposed Rulemaking
    A. Notice Registration as an Exchange to Trade Security Futures 
Products, Amendments to Such Notice, and Other Supplemental Material
    1. Filing of Notice of Registration
    2. Filing of Periodic Amendments
    3. Filing of Supplemental Material
    4. Proposed Amendments to Exchange Act Rules 6a-2 and 6a-3
    5. Processing of Proposed Form 1-N for Notice Registration
    B. Proposed Procedures for Filing Proposed Rule Changes by 
Security Futures Product Exchanges and Limited Purpose National 
Securities Associations
    1. Proposed Rule 19b-7 and Form 19b-7
    2. Proposed Rule Changes Related to Security Futures Products 
Required to be Filed by Security Futures Product Exchanges and 
Limited Purpose National Securities Associations Pursuant to Section 
19(b)(1) of the Exchange Act
III. Paperwork Reduction Act
    A. Proposed Rule 6a-4 and Form 1-N
    1. Summary of Collection of Information
    2. Proposed Use of Information
    3. Respondents
    4. Total Annual Reporting and Recordkeeping Burden
    5. Record Retention Period
    6. Collection of Information is Mandatory
    7. Responses to Collection of Information Would Not Be Kept 
Confidential
    B. Proposed Rule 19b-7 and Proposed Form 19b-7
    1. Summary of Collection of Information
    2. Proposed Use of Information
    3. Respondents
    4. Total Annual Reporting and Recordkeeping Burden
    5. Record Retention Period
    6. Collection of Information is Mandatory
    7. Responses to Collection of Information Would Not Be Kept 
Confidential
    C. Proposed Amendments to Rule 19b-4 and Form 19b-4
    1. Summary of Collection of Information
    2. Proposed Use of Information
    3. Respondents
    4. Total Annual Reporting and Recordkeeping Burden
    5. Record Retention Period
    6. Collection of Information is Mandatory
    7. Responses to Collection of Information Would Not Be Kept 
Confidential
    D. Proposed Amendments to Rules 6a-2 and 6a-3
    E. Request for Comment
IV. Costs and Benefits of Proposed Rulemaking
    A. Costs and Benefits of Proposed Rule 6a-4, New Registration 
Form 1-N, and Conforming Amendments to Rules 6a-2 and 6a-3 under the 
Exchange Act and Rule 202.3 of the Commission's Procedural Rules
    1. Benefits
    2. Costs
    B. Costs and Benefits of Proposed Rule 19b-7 and Form 19b-7 and 
Conforming Amendments to Rule 19b-4 and Form 19b-4
    1. Benefits
    2. Costs
    C. Request for Comment
V. Consideration of the Burden on Competition, and Promotion of 
Efficiency, Competition and Capital Formation
VI. Regulatory Flexibility Act Certification
VII. Statutory Authority

I. Introduction

    The Commodity Futures Modernization Act of 2000 (``CFMA'') 
authorizes the trading of futures on individual stocks and narrow-based 
stock indexes, including puts, calls, straddles, options, or privileges 
thereon (collectively, ``security futures

[[Page 26979]]

products'').\6\ The CFMA makes security futures ``securities'' under 
the Exchange Act,\7\ the Securities Act of 1933,\8\ the Investment 
Company Act of 1940,\9\ and the Investment Advisers Act of 1940,\10\ 
and contracts of sale for future delivery of a single security or a 
narrow based security index or options thereon under the Commodity 
Exchange Act (``CEA'').\11\ Accordingly, the regulatory framework 
established by the CFMA for the markets and intermediaries trading 
security futures products provides the Commission and the Commodity 
Futures Trading Commission (``CFTC'') with joint jurisdiction.
    Because security futures products are securities under the Exchange 
Act, any organization, association, or group of persons that 
constitutes, maintains, or provides a market place or facilities for 
bringing together purchasers and sellers of security futures products 
must register with the Commission as a national securities 
exchange.\12\ New subsection 6(g) of the Exchange Act \13\ provides an 
expedited process for an exchange that lists or trades security futures 
products to become registered with the Commission as a national 
securities exchange (``Security Futures Product Exchange'') if that 
exchange (i) is a board of trade that has been designated as a contract 
market or is registered as a derivative transaction execution facility; 
and (ii) does not act as a market place for transactions in securities 
other than security futures products.\14\
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    \6\ Pub. L. No. 106-554, Appendix E, 114 Stat. 2763.
    \7\ Section 3(a)(10) of the Exchange Act, 15 U.S.C. 78c(a)(10).
    \8\ Section 2(a)(1) of the Securities Act of 1933, 15 U.S.C. 
77b(a)(1).
    \9\ Section 2(a)(36) of the Investment Company Act of 1940, 15 
U.S.C. 80a-2(a)(36).
    \10\ Section 202(a)(18) of the Investment Advisors Act of 1940, 
15 U.S.C. 80b-2(a)(18).
    \11\ Section 1a(31) of the CEA, 7 U.S.C. 1a(31).
    \12\ See Section 5 of the Exchange Act, 15 U.S.C. 78e. See also 
Section 3(a)(1) of the Exchange Act for the definition of 
``exchange.'' 15 U.S.C. 78c(a)(1).
    \13\ 15 U.S.C. 78f(g).
    \14\ Section 6(g)(1) of the Exchange Act, 15 U.S.C. 78f(g)(1).
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    In addition, the CFMA amended the Exchange Act to require Security 
Futures Product Exchanges and limited purpose national securities 
associations registered pursuant to Section 15A(k) of the Exchange Act 
(``Limited Purpose National Securities Associations'') \15\ to file 
with the Commission proposed rule changes relating only to specific 
types of rules, and to provide an expedited filing process for most of 
these rules.\16\
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    \15\ 15 U.S.C. 780-o3(k). Pursuant to this section, a futures 
association registered under Section 17 of the CEA shall be 
registered as a national securities association for the limited 
purpose of regulating the activities of its members with respect to 
security futures products.
    \16\ Sections 6(g)(4)(B) and 15A(k)(3) of the Exchange Act, 15 
U.S.C. 78f(g)(4)(B) and 15 U.S.C. 78o-3(k)(3).
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II. Discussion of Proposed Rulemaking

A. Notice Registration as an Exchange to Trade Security Futures 
Products, Amendments to Such Notice, and Other Supplemental Material

    Section 6(g)(2)(A) of the Exchange Act provides that an exchange 
required to register with the Commission only because it lists or 
trades security futures products may register by filing a written 
notice with the Commission in such form as the Commission, by rule, may 
prescribe as necessary or appropriate in the public interest or for the 
protection of investors.\17\ Such rule may require that the filing 
contain the rules of the exchange and other information and documents 
concerning the exchange, comparable to the information and documents 
the Commission requires for national securities exchanges registered 
under Section 6(a) of the Exchange Act.\18\ Consistent with this 
provision, the Commission is proposing new Form 1-N to be filed by 
exchanges to register with the Commission under Section 6(g) of the 
Exchange Act.\19\ Proposed Form 1-N requests limited information from 
the exchange, including how it will operate, its rules and procedures, 
criteria for membership, information on subsidiaries or affiliates, and 
the security futures products it intends to trade. Proposed Form 1-N is 
not an application and the Commission would not ``approve'' an exchange 
before it begins to trade security futures products. Instead, proposed 
Form 1-N would be a notice to the Commission that the exchange would be 
trading security futures products and would provide information 
necessary for the Commission to exercise its regulatory 
responsibilities.
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    \17\ 15 U.S.C. 78f(g)(2)(A).
    \18\ 15 U.S.C. 78f(a).
    \19\ 15 U.S.C. 78f(g).
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    Pursuant to Section 6(g)(2)(B) of the Exchange Act, such ``notice 
registration'' will be effective contemporaneously with the submission 
of proposed Form 1-N, unless the registration would be subject to 
suspension or revocation by the CFTC.\20\ A Security Futures Product 
Exchange would be required to file an amendment to proposed Form 1-N to 
correct any previously filed information that has been discovered to be 
incorrect, and to provide any new information or correct any 
information rendered inaccurate.
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    \20\ 15 U.S.C. 78f(g)(2)(B). Pursuant to its authority under the 
CEA, the CFTC may suspend or revoke registration of boards of trade. 
7 U.S.C. 7b.
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    The Commission also is proposing new Rule 6a-4 \21\ to set forth 
the information that must be submitted by an entity to register as a 
Security Futures Product Exchange and the ongoing filing requirements 
for Security Futures Product Exchanges, and to revise Exchange Act 
Rules 6a-2 and 6a-3 \22\ to exclude Security Futures Product Exchanges 
from the requirements of those rules.
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    \21\ Proposed Exchanged Act Rule 6a-4.
    \22\ 17 CFR 240.6a-2 amd 240.6a-3.
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1. Filing of Notice of Registration
    Proposed Rule 6a-4 would require an exchange registering pursuant 
to Section 6(g) of the Exchange Act \23\ to file proposed Form 1-N with 
the Commission. Proposed Rule 6a-4 would provide that an exchange may 
register as a national securities exchange solely for purposes of 
trading security futures products by filing Form 1-N if the exchange is 
a board of trade \24\ that: (i) Has been designated a contract market 
by the CFTC or is registered as a derivative transaction execution 
facility under Section 5a of the CEA,\25\ and (ii) such designation or 
registration is not suspended by the CFTC; \26\ and (iii) such exchange 
does not serve as a market place for transactions in securities other 
than security futures products or futures on exempted securities or 
groups or indexes of securities, or options thereon.
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    \23\ 15 U.S.C. 78f(g).
    \24\ The term ``broad of trade'' has the same meaning as that 
term is defined in the CEA. 7 U.S.C. 1a(2).
    \25\ 7 U.S.C. 7(a).
    \26\ Section 6(g)(1)(A) of the Exchange Act, 15 U.S.C. 
78f(g)(1)(A).
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    Proposed Form 1-N is similar to Form 1, the application used to 
register as a national securities exchange or to apply for an exemption 
from exchange registration based on limited volume pursuant to Section 
6(a) of the Exchange Act.\27\ Because, however, exchanges registering 
with the Commission pursuant to Section 6(g) of the Exchange Act \28\ 
are also subject to the CFTC application and reporting requirements, 
the Commission is proposing to limit the information required to be 
filed on Form 1-N,\29\ compared to the information currently required 
to be filed on the Form 1. Specifically, proposed Form 1-N consists of 
an execution page and nine exhibits, which relate generally to the 
organization of the exchange, its membership requirements, the manner 
in which

[[Page 26980]]

business is conducted on the exchange, and the security futures 
products traded or proposed to be traded. In those instances where the 
exchange has filed information with the CFTC, copies of documents filed 
with the CFTC could be filed with the Commission, instead of preparing 
a new document solely for purposes of filing with the Commission.\30\
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    \27\ 15 U.S.C. 78f(a).
    \28\ 15 U.S.C. 78f(g).
    \29\ See Proposed Form 1-N.
    \30\ See Proposed Form 1-N, instruction 9, and, for amendments, 
proposed Exchange Act Rule 6a-4(b)(6).
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    Proposed Exhibit A to the proposed Form 1-N would require 
submission of the constitution, articles of incorporation or 
association with all subsequent amendments, and by-laws or 
corresponding rules of the Security Futures Product Exchange. Proposed 
Exhibit B to the proposed Form 1-N would require filings of written 
rulings, settled practices \31\ and interpretations of the governing 
board or other committee of the exchange with respect to the rules, by-
laws, constitution, or trading practices that are not included in 
Exhibit A. To ease preparation burdens, the Commission is proposing 
that Exhibits A and B be current as of the latest practicable date 
within 1 month of the date the proposed Form 1-N is filed. Because, 
pursuant to the regulatory framework set forth in the CFMA, the 
Commission does not approve the registration of exchanges filing 
proposed Form 1-N, or grant exemptions from registration, the 
Commission will not be required to make specific determinations as to 
whether such exchanges' systems, rules, and policies are consistent 
with the Exchange Act. Moreover, proposed Form 1-N would be filed with 
the Commission as a supplement to the continued oversight of the 
exchange by the CFTC. Accordingly, the Commission preliminarily 
believes that it would be reasonable for documents provided by 
exchanges filing proposed Form 1-N to be up-to-date within 1 month of 
the date of filing.
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    \31\ For purposes of proposed Exhibit B to proposed Form 1-N, 
the Commission considers settled practices to be the policies of an 
exchange that are not otherwise covered in its written rulings.
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    Proposed Exhibit C to the proposed Form 1-N would require 
information similar to that proposed to be included in Exhibits A and B 
but for affiliates, subsidiaries, and any entity with whom the exchange 
has a contractual or other agreement relating to the operation of an 
electronic trading system to be used to effect transactions in security 
futures products.\32\ The exhibit would require basic information 
regarding any subsidiary, affiliate, or other related entity involved 
in the trading of security futures products. The Commission 
preliminarily does not believe it is necessary for exchanges to file 
the contract or agreement itself as part of Exhibit C. Instead, the 
Commission is seeking to identify the general characteristics of the 
entities and their operational relationship with the Security Futures 
Product Exchange, such as networking, software, or other agreements 
associated with the execution, reporting, clearance, or settlement of 
transactions in security futures products.\33\ For the same reasons 
discussed above, the Commission is proposing that Exhibit C be current 
as of the latest practicable date within 1 month of the date the 
proposed Form 1-N is filed.
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    \32\ Specifically, proposed Exhibit C would require for all such 
entitles: name and address of organization; form of organization; 
name of state and statute citation under which organized; date of 
incorporation in present form; brief description of nature and 
extent of affiliation; brief description of business or functions; a 
copy of the constitution, articles of incorporation or association 
including all amendments, and existing by-laws or corresponding 
rules or instruments; the name and title of the present offices, 
governors, or persons performing similar functions; and an 
indication of whether such business or organization ceased to be 
associated with the Security Futures Product Exchange during the 
previous year and the reasons for such termination.
    \33\ Proposed Exchange Act Rule 61-4(b)(5)(i); see also note 44 
and accompanying text.
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    Proposed Exhibit D would require a description of the manner of 
operation of the Security Futures Product Exchange's systems involving 
the trading of security futures products, including: The procedures 
governing entry and display of quotations; the procedures governing 
execution, reporting, clearance and settlement of transactions in 
connection with the system; proposed fees; the procedures for ensuring 
compliance; the hours of operation; the date of intended commencement 
of operations; and a copy of the users' manuals.\34\
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    \34\ The Commission would expect a narrative description of how 
trading is done on the exchange. The Commission does not expect 
exchanges to submit technical specifications for their automated 
systems.
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    Proposed Exhibit E would require that the Security Futures Product 
Exchange provide general information regarding officers, governors, or 
persons performing similar functions.\35\ Proposed Exhibit F would 
require similar background information for persons with direct 
ownership and control for non-member owned Security Futures Product 
Exchanges.\36\ Proposed Exhibit H would require similar background 
information for members, participants, subscribers or other users of 
the system.\37\ To the extent not covered by an exchange's rules 
submitted in Exhibit A, proposed Exhibit G would require a description 
of the criteria for membership in the exchange, as well as a 
description of the conditions under which members may be subject to, 
and the procedures involved in, suspension or termination of a member. 
The information required in these exhibits would provide the Commission 
with the names and roles of the participants using the exchange's 
system, which the Commission preliminary believes is necessary for 
reviewing the operation and function of the system.
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    \35\ For persons listed in proposed Exhibit E, the exchange 
would be required to provide the name, title, dates of commencement 
and termination of term of office or position, and type of business 
in which each is primarily engaged.
    \36\ Proposed Exhibit F would require a Security Futures Product 
Exchange that is a corporation to list each shareholder that 
directly owns 5% or more of a class of a voting security. If the 
exchange is a partnership, it would be required to list all general 
partners and those limited and special partners that have the right 
to receive upon dissolution, or have contributed 5% or more of, the 
partnership's capital. For these persons, the exchange would be 
required to list the full legal name, title or status, date title or 
status was acquired, approximate ownership interest, and whether the 
person has control (as defined in the instruction to proposed Form 
1-N. The Commission is proposing that Exhibit F be current as of the 
latest practicable date within 1 month of the date the proposed Form 
1-N is filed.
    \37\ For persons listed in proposed Exhibit H, the exchange 
would be required to provide the name, and if such user is an 
individual, the name of the entity with which such individual is 
associated and the relationship of such individual to the entity, a 
brief description of the type of activities primarily engaged in by 
the individual, and the individual's class of membership, 
participation, or other access. The Commission is proposing that 
Exhibit H be current as of the latest practicable date within 1 
month of the date the proposed Form 1-N is filed.
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    Finally, a Security Futures Product Exchange would be required in 
proposed Exhibit I to provide a schedule of the security futures 
products it lists or proposes to list.
    The Commission solicits comment on the proposed notice requirements 
in proposed Form 1-N, including the proposed exhibits. Specifically, 
the Commission seeks comment on whether the proposed requirements would 
be unreasonably burdensome for Security Futures Product Exchanges. Are 
all of the exhibits necessary? Is there other information that should 
be required to be provided or that could replace the information 
proposed to be submitted in the rule? For example, with respect to the 
timeframe as to when information must be current, is one month 
appropriate? Commenters are invited to address the possibility that 
intervening events may make information that is one month old outdated.

[[Page 26981]]

2. Filing of Periodic Amendments
    Once registered, proposed Rule 6a-4 would require a Security 
Futures Product Exchange to file with the Commission an amendment that 
contains written notice of actions that create new or render inaccurate 
information filed on the execution page or as part of proposed Exhibits 
C, E, F or H of its proposed Form 1-N.\38\ Any amendment would be 
required to be filed within 10 days after such action is taken.\39\ In 
addition, each exchange would be required to file as an amendment, on 
or before June 30, 2002 and by June 30 every year thereafter, proposed 
Exhibits F, H, and I, which would be required to be up-to-date as of 
the latest date practicable within three months of the date the 
amendment was filed.\40\ Proposed Rule 6a-4 also would require an 
exchange to file, as an amendment to its Form 1-N, on or before June 
30, 2004 and by June 30 every three years thereafter, complete Exhibits 
A, B, C, and E, which would be required to be up-to-date as of the 
latest date practicable within three months of the date the amendment 
was filed.\41\ The proposed requirements for periodic amendments to the 
proposed Form 1-N parallel the existing requirements for periodic 
amendments to the Form 1. The Commission preliminarily believes that it 
would be inappropriate to require Security Futures Product Exchanges to 
provide additional information on a more frequent basis than is 
required currently of registered national securities exchanges.
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    \38\ Proposed Exchange Act Rule 6a-4(b)(1).
    \39\ Id.
    \40\ Proposed Exchange Act Rule 6a-4(b)(2).
    \41\ Proposed Exchange Act Rule 6a-4(b)(3). In addition, 
proposed Rule 6a-4 would require a Security Futures Product Exchange 
promptly to file an amendment correcting any inaccuracy discovered 
on the filed proposed Form 1-N.
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    As a mechanism to reduce the filing burdens on Security Futures 
Product Exchanges, the Commission is proposing to allow such exchanges 
to comply with certain filing requirements by maintaining the 
information on an Internet web page and providing the location of such 
web site to the Commission.\42\ A Security Futures Product Exchange 
also would be permitted to refer to materials published by, or in 
cooperation with, the exchange that contain the required information or 
to make the information available upon request at its office, instead 
of filing that information in paper.\43\
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    \42\ Proposed Exchange Act Rule 6a-4(b)(4)(iii).
    \43\ Proposed Exchange Act Rule 6a-4(b)(4)(i) and (ii).
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    The Commission is proposing to reduce the reporting burden further 
by providing that an exchange may be exempted from filing the required 
amendments for any affiliate or subsidiary listed in proposed Exhibit C 
of the exchange's notice registration that either is listed in Exhibit 
C of the form for registration or notice registration of one or more 
other national securities exchanges, or was an inactive subsidiary 
throughout the subsidiary's latest fiscal year.\44\
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    \44\ Proposed Exchange Act Rule 6a-4(b)(5). The exemption would 
be granted only if at least one national securities exchange is 
required to file the amendment required by proposed Exchange Act 
Rule 6a-4(b) for an affiliate or subsidiary. While ``inactive 
subsidiary'' is not defined for purposes of this provision, the 
Commission expects to consider a subsidiary to be inactive only if 
it has little or no income and liabilities and, thus, does not have 
the potential to have an impact on the financial condition of the 
Security Futures Product Exchange. The Commission has established 
procedures for an entity to apply for an exemption from its rules. 
17 CFR 240.0-12.
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    Finally, pursuant to Section 6(g)(2)(A) of the Exchange Act,\45\ 
the Commission is proposing that if a Security Futures Product Exchange 
has filed documents with the CFTC, to the extent that such documents 
contain information satisfying the Commission's informational 
requirements, copies of such documents may be filed with the Commission 
in lieu of the required written notice.\46\
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    \45\ 15 U.S.C. 78f(g)(2)(A).
    \46\ Proposed Exchange Act Rule 6a-4(b)(6).
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    The Commission seeks comment on the proposed requirements relating 
to the filing of periodic amendments to the proposed Form 1-N. 
Specifically, commenters are invited to comment on the requirement that 
an amendment be filed within 10 days after any action is taken by the 
Security Futures Product Exchange that creates new information or 
renders inaccurate certain information filed as part of the Form 1-N. 
Should a different timeframe be established for the filing of periodic 
amendments? If so, should it be shorter or longer than the proposed 10 
days? Should inaccuracies relating to information previously filed be 
material before additional disclosure is required?
    Is it appropriate to require annual updates of the information 
required in Exhibits F, H, and I? Should additional exhibits be 
required to be updated on an annual basis, as well? Commenters should 
also address the propriety of the requirement that Exhibits A, B, C, 
and E be updated every three years. Is information up to three months 
old sufficiently current for purposes of the periodic reporting 
requirements? Should information be provided more often or less 
frequently?
    Commenters are also invited to comment on the propriety of 
permitting a Security Futures Product Exchange to comply with certain 
filing requirements by providing to the Commission the location where 
such information is located on a web site, or making the information 
available upon request at its office.
3. Filing of Supplemental Material
    Paragraph (c) of proposed Rule 6a-4 would require Security Futures 
Product Exchanges to furnish to the Commission copies of any materials 
related to the trading of security futures products (including notices, 
circulars, bulletins, lists, and publications) issued or made available 
to members of, or participants in, or subscribers to, the exchange.\47\ 
The exchange would be required to file such information within 10 days 
after issuing or making such material available to members of, or 
participants in, or subscribers to, the exchange.\48\ The Commission 
also is proposing that exchanges be permitted to make the information 
available on an Internet web site and provide the Commission with the 
location of the web site.\49\
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    \47\ Proposed Exchange Act Rule 6a-4(c)(1)(i).
    \48\ Id.
    \49\ Proposed Exchange Act Rule 6a-4(c)(1)(ii).
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    Proposed paragraph (c) of proposed Rule 6a-4 also would require 
that an exchange file transaction reports within 15 days after the end 
of each calendar month containing, for each security futures product 
traded on such exchange, the number of contracts traded, and the type 
of security underlying such contracts. In addition, if the futures 
contract were for a single security, the exchange would be required to 
report the total number of shares underlying the contracts traded.\50\ 
The proposed requirements for the filing of supplemental material 
parallel the existing requirements applicable to registered national 
securities exchanges that filed a Form 1 with the Commission. The 
Commission preliminarily believes that it would be inappropriate to 
require Security Futures Product Exchanges to provide this information 
on a more frequent basis that is required currently of registered 
national securities exchanges.
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    \50\ Proposed Exchange Act Rule 6a-4(c)(2).
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    The Commission solicits comment on whether the type of information 
proposed to be required or the proposed frequency of filing should be 
modified in any way. For example, would it be more appropriate to 
change the monthly filing requirement for transaction reports to a 
quarterly filing requirement? The Commission also seeks comment on the 
proposed requirement that information relating to the trading of

[[Page 26982]]

security futures products be filed within 10 days after it is made 
available to members of, participants in, or subscribers to, the 
exchange. Comment is sought on the propriety of the proposed 
requirement that exchanges file certain transaction information within 
15 days after the end of each calendar month. Specifically, is it 
appropriate for the Commission to request this type of information? Is 
15 days after the end of each calendar month sufficient time to compile 
the requested information? Commenters are also invited to comment on 
the propriety of allowing exchanges to make the information available 
on an Internet web site.
4. Proposed Amendments to Exchange Act Rules 6a-2 and 6a-3
    Rules 6a-2 and 6a-3 under the Exchange Act \51\ set forth the 
ongoing filing requirements for registered or exempted exchanges that 
file applications with the Commission to become national securities 
exchanges pursuant to Rule 6a-1.\52\ Because the Commission is 
proposing a new rule, Rule 6a-4, that incorporates the relevant 
provisions of Rules 6a-2 and 6a-3 that relate to ongoing filing 
obligations, the Commission is proposing to amend Rules 6a-2 and 6a-3 
to exempt Security Futures Product Exchanges from the requirements of 
these rules.
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    \51\ 17 CFR 240.6a-2 and 240.6a-3.
    \52\ 17 CFR 240.6a-1.
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5. Processing of Proposed Form 1-N for Notice Registration
    The Commission proposes to amend paragraph (b) of Rule 202.3 of the 
Commission's procedural rules, ``Processing of Filings,'' to 
accommodate the proposed Form 1-N.\53\ Specifically, the Commission 
proposes to add paragraph (b)(3), which would provide that notice forms 
for registration as a national securities exchange filed with the 
Commission pursuant to Section 6(g)(1) of the Exchange Act \54\ are 
routed to the Division of Market Regulation, which would examine these 
applications to determine whether all necessary information has been 
supplied and whether all required documents have been furnished in 
proper form. Defective applications may be returned with a request for 
correction or held until corrected before being accepted as a filing.
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    \53\ 17 CFR 202.3.
    \54\ 15 U.S.C. 78f(g)(1).
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B. Proposed Procedures for Filing Proposed Rule Changes by Security 
Futures Product Exchanges and Limited Purpose National Securities 
Associations

    If a self-regulatory organization (``SRO'') \55\ decides to amend, 
add, or delete any provision of its rules (``proposed rule change''), 
it must submit to the Commission, pursuant to Section 19(b) of the 
Exchange Act,\56\ the proposed rule change for notice, comment, and 
Commission approval, prior to implementation, unless it is otherwise 
permitted to become effective pursuant to that Section. The purpose of 
this requirement is to help ensure that, through Commission review and 
the public comment process, SROs carry out the purposes of the Exchange 
Act.\57\
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    \55\ Section 3(a)(26) of the Exchange Act defines a ``self-
regulatory organization'' as any national securities exchange, 
registered securities association, registered clearing agency, and 
for the purposes of Section 19(b) and other limited purposes, the 
Municipal Securities Rulemaking Board (``MSRB''). 15 U.S.C. 
78c(a)(26). Security Futures Product Exchanges and Limited Purpose 
National Securities Associations would fall within this definition.
    \56\ 15 U.S.C. 78s(b).
    \57\ The process of Commission review and public comment helps 
ensure, for example, that SROs refrain from using their regulatory 
powers in an unfair or anticompetitive manner to the detriment of 
investors.
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    The CFMA amended the Exchange Act to exempt Security Futures 
Product Exchanges \58\ and Limited Purpose National Securities 
Associations \59\ from the requirement to submit proposed rule changes 
to the Commission pursuant to Section 19(b) of the Exchange Act, except 
in enumerated circumstances. Specifically, Sections 6(g)(4)(B) \60\ and 
15A(k)(3) \61\ of the Exchange Act require Security Futures Product 
Exchanges and Limited Purpose National Securities Associations to 
submit, pursuant to Section 19(b)(7) of the Exchange Act, proposed rule 
changes that relate to higher margin levels, fraud or manipulation, 
recordkeeping, reporting, listing standards, or decimal pricing for 
security futures products, sales practices for security futures 
products for persons who effect transactions in security futures 
products, or rules effectuating such SRO's obligation to enforce the 
securities laws.\62\ In addition, Security Futures Product Exchanges 
and Limited Purpose National Securities Associations are required to 
submit, pursuant to Section 19(b)(1) of the Exchange Act,\63\ proposed 
rule changes that relate to margin levels, except for those that result 
in higher margin levels, and proposed rule changes that have been 
abrogated by the Commission pursuant to Section 19(b)(7)(C) of the 
Exchange Act.\64\
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    \58\ Section 6(g)(4)(B) of the Exchange Act, 15 U.S.C. 
78f(g)(4)(B).
    \59\ Section 15A(k)(3) of the Exchange Act, 15 U.S.C. 78o-
3(k)(3).
    \60\ 15 U.S.C. 78f(g)(4)(B).
    \61\ 15 U.S.C. 78o-3(k)(3).
    \62\ 15 U.S.C. 78s(b)(7). The Commission is also proposing a 
technical amendment to paragraph (a) of Rule 19b-4 and Part A of 
Form 19b-4 to exclude from the requirement that SROs file proposed 
rule changes on Form 19b-4 those proposed rule changes submitted 
pursuant to Section 19(b)(7)(a) of the Exchange Act. See proposed 
Exchange Act Rule 19b-4 and proposed Form 19b-4.
    \63\ 15 U.S.C. 78s(b)(1).
    \64\ 15 U.S.C. 78s(b)(7)(C).
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1. Proposed Rule 19b-7 and Form 19b-7
    Pursuant to Section 19(b) of the Exchange Act,\65\ the Commission 
has the authority to adopt rules regarding the filing of proposed rule 
changes by the SROs. Section 19(b)(7) of the Exchange Act,\66\ which 
addresses Security Future Product Exchanges' and Limited Purpose 
National Security Associations' rule filings, requires that a proposed 
rule change filed pursuant to this section contain a concise general 
statement of the basis and purpose of the proposed change. Upon such 
filing, the Commission is required to promptly publish notice of such 
proposed rule change and provide interested persons with the 
opportunity to submit comments. Pursuant to Section 19(b)(7) of the 
Exchange Act,\67\ any proposed rule change filed with the Commission 
must be concurrently submitted to the CFTC and may take effect: (i) 
when a written certification has been filed with the CFTC under Section 
5c(c) of the CEA;\68\ (ii) when the CFTC determines that review of the 
proposed rule change is not necessary; or (iii) when the CFTC approves 
the proposed rule change.\69\
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    \65\ 15 U.S.C. 78s(b).
    \66\ 15 U.S.C. 78s(b)(7).
    \67\ Id.
    \68\ Section 5c(c) of the CEA, 7 U.S.C. 7a-2(c). Pursuant to 
Section 5c(c) of the CEA, a registered entity may elect to approve 
and implement any new rule or rule amendment by providing the CFTC a 
written certification that the new rule or rule amendment complies 
with the CEA.
    \69\ 15 U.S.C. 78s(b)(7)(B).
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    Because the Commission is required to publish each proposed rule 
change filed pursuant to Section 19(b)(7) of the Exchange Act,\70\ the 
Commission must develop rules to ensure that each notice of filing 
complies not only with the requirements of that section, but also, with 
the requirements of the Federal Register. Thus, in its efforts to 
ensure that such proposed rule changes conform to these requirements, 
the

[[Page 26983]]

Commission is proposing Rule 19b-7 and Form 19b-7.
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    \70\ 15 U.S.C. 78s(b)(7).
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    Proposed Rule 19b-7 would require proposed rule changes filed 
pursuant to Section 19(b)(7)(A) of the Exchange Act \71\ to be made on 
Form 19b-7. Further, proposed Rule 19b-7 would state that a proposed 
rule change would not be deemed filed with the Commission unless a 
completed Form 19b-7 is submitted, and it is accompanied by a clear and 
accurate statement of the basis and purpose of the proposed rule 
change, including any impact on competition or efficiency, and a 
summary of any written comments received by the SRO pertaining to the 
proposed rule change. As required by the statute, the proposed rule 
would require the Commission to promptly publish such proposed rule 
changes.\72\
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    \71\ 15 U.S.C. 78s(b)(7)(A).
    \72\ Id.
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    Finally, because the statute provides that the Commission will not 
approve proposed rule changes submitted pursuant to proposed Rule 19b-
7,\73\ the proposed rule states that the effectiveness of a proposed 
rule change does not create an inference of whether the proposed rule 
change is in the public interest, including whether it has an impact on 
competition. The Commission would not be taking final action on the 
proposal unless, as discussed below, it abrogates the proposed rule 
change pursuant to Section 19(b)(7)(C) of the Exchange Act,\74\ and 
subsequently issues an order approving or disapproving the proposal 
pursuant to Section 19(b)(7)(D) of the Exchange Act.\75\ Therefore, the 
Commission will not necessarily make a final determination on whether a 
proposed rule change filed pursuant to proposed Rule 19b-7 is in the 
public interest, including whether it has an impact on competition.
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    \73\ Section 19(b)(7) of the Exchange Act, 15 U.S.C. 78s(b)(7).
    \74\ 15 U.S.C. 78s(b)(7)(C).
    \75\ 15 U.S.C. 78s(b)(7)(D).
---------------------------------------------------------------------------

    On proposed Form 19b-7, Security Futures Product Exchanges and 
Limited Purpose National Securities Associations would have to provide 
information sufficient to permit interested persons to submit 
meaningful comment on the proposal and to permit the Commission to 
consider whether the proposal should be abrogated because it unduly 
burdens competition or efficiency, conflicts with securities laws, or 
is inconsistent with the public interest or the protection of 
investors.\76\ Proposed Form 19b-7 would require a Security Futures 
Product Exchange or Limited Purpose National Securities Association to 
submit: (1) A complete description of the terms of its proposal; (2) a 
description of the impact of the proposed rule change on various market 
participants; and (3) a description of how the filing relates to 
existing rules of the exchange or association. Proposed Form 19b-7 also 
would require a senior member of the management of the Security Futures 
Product Exchange or Limited Purpose National Securities Association to 
certify that the filing contains an accurate statement of authority and 
the statutory basis for the proposal and, among other things, that the 
proposal does not conflict with the federal securities laws.
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    \76\ See Section 19(b)(7)(C) of the Exchange Act, 15 U.S.C. 
78s(b)(7)(C).
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    Proposed Form 19b-7 is modeled after proposed Form 19b-6.\77\ The 
Commission preliminarily believes that it is appropriate to use 
proposed Form 19b-6 as a model for proposed Form 19b-7 because it 
reflects the review and evaluation recently conducted by Commission 
staff regarding the Section 19(b) rule filing process, currently 
applicable to SROs. Accordingly, the Commission is proposing that 
proposed Form 19b-7 closely resemble the proposed Form 19b-6.
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    \77\ The Commission recently published a proposal to replace 
Rule 19b-4 and Form 19b-4 with proposed Rule 19b-6 and proposed Form 
19b-6. See Securities Exchange Act Release No. 43860 (January 19, 
2001), 66 FR 8912 (February 5, 2001).
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2. Proposed Rule Changes Related to Security Futures Products Required 
To Be Filed by Security Futures Product Exchanges and Limited Purpose 
National Securities Associations Pursuant to Section 19(b)(1) of the 
Exchange Act
    As discussed above, the Exchange Act exempts Security Futures 
Product Exchanges and Limited Purpose National Securities Associations 
from the filing requirements of Section 19(b) of the Exchange Act.\78\ 
Instead, Security Futures Product Exchanges and Limited Purpose 
National Securities Associations are required to file only proposed 
rule changes relating to specifically enumerated matters, which are 
listed in Section 19(b)(7)(A) of the Exchange Act.\79\ In addition, 
pursuant to Sections 6(g)(4)(B)(ii) and 15A(k)(3)(B) of the Exchange 
Act,\80\ Security Futures Product Exchanges and Limited Purpose 
National Securities Associations, respectively, are required to file 
with the Commission, pursuant to Section 19(b)(1) of the Exchange Act 
\81\ for notice, comment, and Commission approval or disapproval, 
pursuant to Section 19(b)(2) of the Exchange Act,\82\ proposed rule 
changes that relate to margin, except for changes that result in higher 
margin levels.\83\
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    \78\ 15 U.S.C. 78s(b).
    \79\ 15 U.S.C. 78s(b)(7)(A).
    \80\ 15 U.S.C. 78f(g)(4)(B)(ii) and 15 U.S.C. 78o-3(k)(3)(B).
    \81\ 15 U.S.C. 78s(b)(1). Section 19(b)(1) of the Exchange Act 
requires each SRO to file with the Commission its proposed rule 
changes accompanied by a concise general statement of the basis for, 
and purpose of the proposed rule change. Once an SRO files a 
proposed rule change, the Commission must publish notice of it and 
provide opportunity for public comment. The proposed rule change may 
not take effect unless the Commission approves it or it is otherwise 
permitted to become effective under Section 19(b)(3) of the Exchange 
Act.
    \82\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Exchange Act 
sets forth the standards and time periods for the Commission either 
to approve a proposed rule change or to institute and conclude a 
proceeding to determine whether a proposed rule change should be 
disapproved.
    \83\ As discussed above, pursuant to Sections 6(g)(4)(B)(i) and 
15A(k)(3)(B) of the Exchange Act, proposed rule changes that relate 
to higher margin levels must be filed by Security Futures Product 
Exchanges and Limited Purpose National Associations with the 
Commission pursuant to Section 19(b)(7) of the Exchange Act.
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    To implement the requirements of Sections 6(g)(4)(B)(ii) and 
15A(k)(3)(B) of the Exchange Act,\84\ the Commission is proposing to 
require Security Futures Product Exchanges and Limited Purpose National 
Securities Associations to file proposed rule changes related to margin 
(except for changes that result in higher margin levels) under Rule 
19b-4 \85\ for approval under Section 19(b)(2) of the Exchange Act.\86\ 
Rule 19b-4 is the rule under which all other SROs currently file 
proposed rule changes pursuant to Section 19(b)(1) of the Exchange 
Act.\87\ This rule requires that filings with respect to proposed rule 
changes by an SRO be made on Form 19b-4.\88\
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    \84\ 15 U.S.C. 78f(g)(4)(B)(ii) and 15 U.S.C. 78o-3(k)(3)(B).
    \85\ 17 CFR 240.19b-4.
    \86\ 15 U.S.C. 78s(b)(2).
    \87\ 15 U.S.C. 78s(b)(1).
    \88\ See note 77, supra. Security Futures Product Exchanges and 
Limited Purpose National Associations would be required to submit 
their proposed rule changes that relate to margin, except those that 
result in higher margin levels, to the Commission on Form 19b-4 or 
such other form that the Commission may designate as effective as of 
the time of the filing.
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    Section 19(b)(7)(C) of the Exchange Act \89\ provides the 
Commission, after consultation with the CFTC, with the authority to 
summarily abrogate a proposed rule change filed pursuant to Section 
19(b)(7) of the Exchange Act \90\ if it appears to the Commission that 
such rule change unduly burdens

[[Page 26984]]

competition or efficiency, conflicts with the securities laws, or is 
inconsistent with the public interest and the protection of 
investors.\91\ In the event that this occurs, Security Futures Product 
Exchanges and Limited Purpose National Securities Associations would be 
required, pursuant to Sections 6(g)(4)(B)(iii) \92\ and 15A(k)(3)(C) 
\93\ of the Exchange Act, respectively, to refile the proposed rule 
change pursuant to the requirements of Section 19(b)(1) of the Exchange 
Act.\94\ The Commission is proposing that Security Futures Product 
Exchanges and Limited Purpose National Securities Associations use Form 
19b-4 to file the abrogated proposed rule change. The Commission is 
proposing amendments to Form 19b-4 to accommodate proposed rule changes 
that have been abrogated pursuant to Section 19(b)(7)(C) of the 
Exchange Act.\95\
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    \89\ 15 U.S.C. 78s(b)(7)(C).
    \90\ 15 U.S.C. 78s(b)(7). Pursuant to this section, Commission 
action to abrogate a rule change will not affect the validity or 
force of the rule change during the period it was in effect.
    \91\ The Commission notes that it currently exercises similar 
authority pursuant to Section 19(b)(3)(C) of the Exchange Act, 15 
U.S.C. 78s(b)(3)(C), with respect to proposed rule changes filed by 
the existing SROs that are immediately effective upon filing 
pursuant to Section 19(b)(3)(A) of the Exchange Act, 15 U.S.C. 
78s(b)(3)(A).
    \92\ 15 U.S.C. 78f(g)(4)(B)(iii).
    \93\ 15 U.S.C. 78o-3(k)(3)(C).
    \94\ 15 U.S.C. 78s(b)(1).
    \95\ See supra note 77. If the Commission were to determine to 
adopt the proposed Rule 19b-6 and Form 19b-6, amendments similar to 
those proposed here for Rule 19b-4 and Form 19b-4 would be required 
to accommodate proposed rule changes related to margin (other than 
higher margin) and proposed rule changes that have been abrogated 
pursuant to Section 19(b)(7)(C) of the Exchange Act.
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    Section 19(b)(7)(D) of the Exchange Act \96\ sets forth standards 
for review and approval of proposed rule changes that have been 
abrogated pursuant to Section 19(b)(7)(C) of the Exchange Act \97\ and 
refiled pursuant to Section 19(b)(1) of the Exchange Act.\98\ 
Specifically, the Commission must, within 35 days of the date of 
publication of notice of the filing of the proposed rule change, or 
within such longer period as the Commission may designate up to 90 days 
after such date if the Commission finds such longer period to be 
appropriate and publishes its reasons for so finding, or as to which 
the SRO consents, either by order approve the proposed rule change or, 
after consultation with the CFTC, institute disapproval 
proceedings.\99\ The Commission is proposing to amend Form 19b-4 to add 
language to this effect.\100\
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    \96\ 15 U.S.C. 78s(b)(7)(D).
    \97\ 15 U.S.C. 78s(b)(7)(C).
    \98\ 15 U.S.C. 78s(b)(1).
    \99\ The Commission notes that this is similar to the system 
currently in place for SRO filings, except for the CFTC's role and 
the approval standard to be applied by the Commission.
    \100\ See Part E of proposed Form 19b-4. See also supra note 77.
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    Section 19(b)(7)(D)(ii) of the Exchange Act \101\ states that the 
Commission must approve a proposed rule change that has been abrogated 
and refiled under Section 19(b)(1) of the Exchange Act \102\ if the 
Commission finds that it does not unduly burden competition or 
efficiency, does not conflict with the securities laws, and is not 
inconsistent with the public interest or the protection of investors. 
The Commission is proposing that Security Futures Product Exchanges and 
Limited Purpose National Securities Associations affirmatively set 
forth in Form 19b-4 that an abrogated proposed rule change that is 
being refiled satisfies these requirements.\103\
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    \101\ 15 U.S.C. 78s(b)(7)(D)(ii).
    \102\ 15 U.S.C. 78s(b)(1).
    \103\ See Information to be Included in the Completed Form, Item 
3 of proposed Form 19b-4.
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    The Commission seeks comment on the proposed procedures for filing 
proposed rule changes pursuant to proposed Rule 19b-7 and Form 19b-7, 
and proposed amendments to Rule 19b-4 and Form 19b-4.
    Commenters should specifically address the requirements of the 
proposed rules and associated forms, describing in detail any 
recommendations for modifying the proposed approach in such a way as to 
be consistent with the statutory requirements. For example, is the 
proposed certification requirement of the proposed Form 19b-7 
appropriate? Is there a more appropriate procedure for the filing of 
proposed rule changes relating to margin (other than higher margin) and 
the refiling of proposed rule changes that have been abrogated pursuant 
to Section 19(b)(7)(C) of the Exchange Act that would not require the 
use of Form 19b-4?
    Finally, if the Commission were to adopt the proposed Rule 19b-6 
and Form 19b-6, amendments similar to those proposed for Rule 19b-4 and 
Form 19b-4 would need to be made to accommodate proposed rule changes 
relating to margin, other than higher margin, and proposed rule changes 
that have been abrogated pursuant to Section 19(b)(7)(C) of the 
Exchange Act. The Commission seeks comment on how proposed Rule 19b-6 
or Form 19b-6 would need to be modified to clarify the limited 
circumstances in which the proposed Rule 19b-6 and Form 19b-6 would be 
used by Security Futures Product Exchanges and Limited Purpose National 
Securities Associations.

III. Paperwork Reduction Act

    Certain provisions of the proposed rules and forms contain 
``collection of information requirements'' within the meaning of the 
Paperwork Reduction Act of 1995.\104\ Accordingly, the Commission 
submitted the collection of information requirements contained in the 
rules and forms to the Office of Management and Budget (``OMB'') in 
accordance with 44 U.S.C. 3507 and 5 CFR 1320.11. The Commission is 
proposing to adopt two new collections of information titled ``Rule 6a-
4 and Form 1-N'' and ``Rule 19b-7 and Form 19b-7.'' The Commission is 
also proposing to revise a collection of information titled ``Rule 19b-
4 and Form 19b-4,'' OMB Control No. 3235-0045. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid control 
number.
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    \104\ 5 U.S.C. 603(a).
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A. Proposed Rule 6a-4 and Form 1-N

1. Summary of Collection of Information
    Proposed Rule 6a-4 would set out procedures for certain futures 
markets that wish to trade security futures products to file notices 
with the Commission on new Form 1-N to become Security Futures Product 
Exchanges. Proposed Form 1-N calls for information regarding: how the 
exchange operates, its criteria for membership, its subsidiaries and 
affiliates, its rules and procedures, and the security futures products 
it intends to trade.
2. Proposed Use of Information
    The information obtained under proposed Rule 6a-4 and proposed Form 
1-N would provide the Commission and the public with basic information 
about exchanges that would trade security futures products but would 
not otherwise be required to register with the Commission. This 
information would assist the Commission to ascertain that such 
exchanges' activities do not unduly burden competition or efficiency, 
conflict with the securities laws, or are not inconsistent with the 
public interest and the protection of investors and, thus, assist the 
Commission's efforts to protect investors and the public interest.
3. Respondents
    The Commission expects that 7 respondents could seek to become 
Security Futures Product Exchanges by filing notice on proposed Form 1-
N.

[[Page 26985]]

4. Total Annual Reporting and Recordkeeping Burden
a. One-Time Costs
    Proposed Rule 6a-4 would require each entity wishing to become a 
Security Futures Product Exchange to file proposed Form 1-N. The 
Commission estimates that each Form 1-N submission would take 
approximately 31 hours to file at a cost of approximately $3,000 
(representing approximately 20 hours of legal work at $128/hour,\105\ 
11 hours of clerical work at $31/hour,\106\ and $100 for miscellaneous 
clerical expenses). As the Commission believes that 7 entities would 
file to become Security Futures Product Exchanges, the Commission 
estimates that the total burden for filing initial Form 1-Ns for all 
respondents would be 217 hours (7 respondents  x  31 hours/respondent), 
for a total cost of $21,000 (7 responses  x  $3,000/response).
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    \105\ SIA Management and Professional Earnings, Table 107 
(Attorney, New York), plus a 35 percent differential for bonus, 
overhead, and other expenses. The Commission believes that New York 
salaries are an appropriate basis for its estimates, as nearly all 
of the attorneys who would contribute to the filing of Form 1-Ns 
would be based in New York or cities with comparable legal markets. 
The same estimate for the cost of legal work has been used 
throughout this section.
    \106\ SIA Management and Professional Earnings, Table 012 
(Secretary) plus a 35 percent differential for bonus, overhead, and 
other expenses. The same estimate for the cost of clerical work has 
been used throughout this section.
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b. Annual Costs
    After an entity becomes a Security Futures Product Exchange by 
properly filing the initial Form 1-N, the exchange would be subject to 
ongoing responsibilities to file: (1) amendments to the Form 1-N in the 
event of material changes to the information provided in the initial 
Form 1-N; (2) periodic updates of certain information provided in the 
original Form 1-N; (3) certain supplemental information, such as 
information that is provided to the exchange's members; and (4) a 
monthly report summarizing the exchange's trading of security futures 
products.
    The Commission estimates each Security Futures Product Exchange 
would have to file one amendment or periodic update per year, resulting 
in a burden of approximately 15 hours and $1,438 (representing 
approximately 9 hours of legal work at $128/hour, 6 hours of clerical 
work at $31/hour, and $100 of miscellaneous clerical expenses). The 
Commission estimates that the total annual burden for all respondents 
to provide the required amendments and updates would be 105 hours (15 
hours/respondent per year  x  7 respondents), for a total cost of 
$10,066 ($1,438/response  x  7 responses/year).
    The Commission estimates that each Security Futures Product 
Exchange would file supplemental information 13 times per year and 
would make 12 monthly reports. The Commission believes that, to meet 
these requirements, each respondent would be required only to copy and 
send documents likely to be prepared for their own internal uses. 
Accordingly, the Commission estimates that each of these 25 filings 
would impose a burden of approximately $21 (0.5 hours of clerical work 
at $31/hour and $5 for miscellaneous clerical expenses). The total 
annual burden for the collection of the supplemental information and 
monthly reports would be 87.5 hours (25 filings/respondent  x  7 
respondents  x  0.5 hours/response), for a total cost of $3,675 (25 
filings/respondent per year  x  7 respondents  x  $21/response).
    Therefore, the Commission concludes that the total annual burden 
for all Security Futures Product Exchanges (not including the one-time 
cost of filing the initial Form 1-N) would be 192.5 hours (105 + 87.5), 
for a total cost of $13,741 ($10,066 + $3,675).
5. Record Retention Period
    As set forth in Rule 17a-1 under the Exchange Act,\107\ a national 
securities exchange is required to retain records of the collection of 
information for at least five years, the first two years in an easily 
accessible place. However, Security Futures Product Exchanges must 
retain only those records relating to persons, accounts, agreements, 
contracts, and transactions involving security futures products.\108\
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    \107\ 17 CFR 240.17a-1.
    \108\ See 15 U.S.C. 78q(b)(4)(B).
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6. Collection of Information Is Mandatory
    This collection of information is mandatory.
7. Responses to Collection of Information Would Not Be Kept 
Confidential
    The collection of information pursuant to proposed Rule 6a-4 and 
proposed Form 1-N would not be kept confidential.

B. Proposed Rule 19b-7 and Proposed Form 19b-7

1. Summary of Collection of Information
    Proposed Rule 19b-7 would require a Security Futures Product 
Exchange or Limited Purpose National Securities Association that 
proposes to add to, change, or delete any of its existing rules 
relating to certain subjects \109\ to submit such proposed rule change 
to the Commission on Form 19b-7. Proposed Form 19b-7 calls for a 
description of: the terms of the proposed rule change, the proposed 
rule change's impact on various market segments, and the relationship 
between the proposed rule change and the existing rules of the Security 
Futures Product Exchange or Limited Purpose National Securities 
Association. Proposed Form 19b-7 also calls for an accurate statement 
of the authority and statutory basis for, and purpose of, the proposed 
rule change, the proposal's impact on competition, and a summary of any 
written comments on the proposed rule change received by the Security 
Futures Product Exchange or Limited Purpose National Securities 
Association.
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    \109\ See 15 U.S.C. 78f(g)(4)(B)(i) and 78o-3(k)(3)(A).
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2. Proposed Use of Information
    The Commission would use the information obtained under proposed 
Rule 19b-7 to review proposed rule changes of Security Futures Product 
Exchanges and Limited Purpose National Securities Associations and to 
provide notice of these proposals to the public. The Commission would 
rely on the information provided in proposed Form 19b-7, as well as 
public comment regarding such proposals, in taking any action with 
respect to proposed rule changes. This information would assist the 
Commission to ascertain that the activities of Security Futures Product 
Exchanges and Limited Purpose National Securities Associations do not 
unduly burden competition or efficiency, conflict with the securities 
laws, or are not inconsistent with the public interest and the 
protection of investors and, thus, assist the Commission's efforts to 
protect investors and the public interest.
3. Respondents
    As noted above, the Commission expects that 7 respondents could 
become Security Futures Product Exchanges by filing notice of 
registration on proposed Form 1-N. Upon doing so, these exchanges would 
become subject to the requirement to file proposed Form 19b-7 whenever 
they propose to add, delete, or amend certain rules relating to 
security futures products. In addition, the Commission anticipates that 
there would be one Limited Purpose National Securities Association (the 
National Futures Association) that also would be required to file 
certain rule changes relating to

[[Page 26986]]

security futures products on proposed Form 19b-7. Therefore, the 
Commission estimates that there would be 8 respondents.
4. Total Annual Reporting and Recordkeeping Burden
    The Commission estimates that respondents would average 15 proposed 
rule changes per year that would have to be filed on proposed Form 19b-
7. The Commission notes that, although it receives approximately 20 to 
100 proposed rule changes on Form 19b-4 per year from each of the 
existing SROs, these Form 19b-4 filings cover a wide range of subject 
areas, including trading, membership, dispute resolution, exchange 
governance, and fees. By contrast, Security Futures Product Exchanges 
and Limited Purpose National Securities Associations would be required 
to file on proposed Form 19b-7 only certain types of proposed rule 
changes regarding security futures products. Given the limited types of 
rule changes that the proposed Form 19b-7 filings would cover, the 
Commission believes that 15 filings per respondent per year is a 
reasonable estimate.
    The Commission estimates that an average Form 19b-7 would require 
approximately 16.5 hours to complete at a cost of approximately $1,824 
(representing 12.5 hours of legal work at $128/hour, four hours of 
clerical work at $31/hour, and $100 for miscellaneous clerical 
expenses). These figures represent approximately one-half of the 
burdens that the Commission recently estimated would be required for 
submissions on proposed Form 19b-6.\110\ Although proposed Forms 19b-6 
and 19b-7 are quite similar, the Commission believes that one-half is 
an appropriate reduction in the estimated burden for proposed Form 19b-
7, as proposed rule changes submitted on Form 19b-7 generally would 
become effective on filing and would not require any action by the 
Commission or any additional supporting information from the SRO. By 
contrast, many of the rule changes filed on proposed Form 19b-6 would 
require specific Commission approval and, thus, would require 
supporting information and perhaps even formal amendments from the SRO 
before they could be approved. Thus, the Commission expects that the 
burden of filing a proposed rule change on proposed Form 19b-7 
generally would be substantially less than the burden of filing a 
proposed rule change on proposed Form 19b-6.
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    \110\ See supra note 77.
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    The Commission estimates that the total annual burden for all 
respondents to file proposed Form 19b-7 would be 1,980 hours 
(representing 15 filings/year per respondent  x  8 respondents  x  16.5 
hours/filing), for a total cost of $218,880 ($1,824/filing  x  15 
filings/year per respondent  x  8 respondents).
5. Record Retention Period
    As set forth in Rule 17a-1 under the Exchange Act,\111\ a national 
securities exchange or a national securities association is required to 
retain records of the collection of information for at least five 
years, the first two years in an easily accessible place. However, 
Security Futures Product Exchanges and Limited Purpose National 
Securities Associations must retain only those records relating to 
persons, accounts, agreements, contracts, and transactions involving 
security futures products.\112\
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    \111\ 17 CFR 240.17a-1.
    \112\ See 15 U.S.C. 78q(b)(4)(B).
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6. Collection of Information Is Mandatory
    The collection of information requirements imposed by proposed Rule 
19b-7 under the Exchange Act and proposed Form 19b-7 would be 
mandatory.
7. Responses to Collection of Information Would Not Be Kept 
Confidential
    The collection of information pursuant to proposed Rule 19b-7 and 
proposed Form 19b-7 would be made publicly available.

C. Proposed Amendments to Rule 19b-4 and Form 19b-4

1. Summary of Collection of Information
    Section 19 of the Exchange Act \113\ establishes a procedure by 
which SROs must file proposals to add, delete, or amend their rules. 
Rule 19b-4 implements this procedure and requires SROs to file proposed 
rule changes on Form 19b-4. Certain proposals submitted on Form 19b-4 
must be approved by the Commission before they may take effect.
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    \113\ 15 U.S.C. 78s.
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    Although the primary means by which Security Futures Product 
Exchanges and Limited Purpose National Securities Associations would 
notify the Commission of proposed rule changes would be by filing a 
Form 19b-7, there are two circumstances in which such entities would be 
required to file a Form 19b-4: (1) a proposed rule change that relates 
to margin, except for a change that results in higher margin levels; or 
(2) a proposed rule change that has been abrogated by the Commission 
because it appears that the proposal unduly burdens competition or 
efficiency, conflicts with the securities laws, or is inconsistent with 
the public interest and the protection of investors. A proposed rule 
change that was filed on proposed Form 19b-7 but is abrogated by the 
Commission must be refiled on Form 19b-4.
2. Proposed Use of Information
    The Commission uses the information obtained under Rule 19b-4 to 
review proposed rule changes by SROs and to provide notice of these 
proposals to the public. The Commission relies on the information 
provided in the Form 19b-4, as well as public comment regarding such 
proposals, in taking any action with respect to proposed rule changes. 
This information would assist the Commission to ascertain that the 
activities of Security Futures Product Exchanges and Limited Purpose 
National Securities Associations do not unduly burden competition or 
efficiency, conflict with the securities laws, or are not inconsistent 
with the public interest and the protection of investors and, thus, 
assist the Commission's efforts to protect investors and the public 
interest.
3. Respondents
    Security Futures Product Exchanges and Limited Purpose National 
Securities Associations would be required to comply with Rule 19b-4 and 
use Form 19b-4 in the two circumstances described above. The Commission 
believes that 7 entities would likely seek to become Security Futures 
Product Exchanges, and that there would be one Limited Purpose National 
Securities Association, the National Futures Association. In addition, 
all other SROs are currently required to comply with Rule 19b-4 and use 
Form 19b-4.
4. Total Annual Reporting and Recordkeeping Burden
    The Commission estimates that the proposed amendments to Rule 19b-4 
would result in an additional 8 filings per year on Form 19b-4. The 
Commission estimates these new respondents would devote, on average, 
approximately 35 hours to the filing of each Form 19b-4, at a cost of 
$3,660 per filing (representing 25 hours of legal work at $128/hour, 10 
hours of clerical work at $31/hour and $150 for miscellaneous clerical 
expenses). The Commission estimates that the total annual burden for 
all respondents resulting from the proposed amendments to the Form 19b-
4 would be 280 hours (8 filings  x  35 hours/

[[Page 26987]]

filing), for a total cost of $29,280 (8 filings  x  $3,660/
filing).\114\
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    \114\ However, these estimates do not include burdens associated 
with filings that propose wholesale additions or amendments to an 
SRO's rules. Such filings could result, for example, from the 
development of a new trading system. Past experience has 
demonstrated that about 1 percent of Form 19b-4 filings are of this 
sort. Because these filings typically represents so few of the total 
number of Form 19b-4 filings, and he scope of these filings may vary 
greatly from one filing to the next, the Commission has omitted them 
from the computation of the average cost associated with the 
respondent's reporting burden.
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5. Record Retention Period
    As set forth in Rule 17a-1 under the Exchange Act,\115\ SROs are 
required to retain records of the collection of information for at 
least five years, the first two years in an easily accessible place. 
However, Security Futures Product Exchanges and Limited Purpose 
National Securities Associations would be required to retain only those 
records relating to persons, accounts, agreements, contracts, and 
transactions involving security futures products.\116\
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    \115\ 17 CFR 240.17a-1.
    \116\ See U.S.C. 78q(b)(4)(B).
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6. Collection of Information is Mandatory
    The collection of information requirements imposed by existing Rule 
19b-4 and Form 19b-4 under the Exchange Act are mandatory.
7. Responses to Collection of Information Would Not Be Kept 
Confidential
    The collection of information required pursuant to proposed Rule 
19b-7 and proposed Form 19b-7 would be made publicly available.

D. Proposed Amendments to Rules 6a-2 and 6a-3

    These amendments are technical in nature and are intended only to 
clarify that Security Futures Product Exchanges are not subject to the 
collection of information requirements imposed by these rules. The 
amendments would neither add new respondents nor increase the burden on 
existing respondents.

E. Request for Comment

    Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits 
comments to:
    (1) Evaluate whether the proposed collections of information are 
necessary for the proper performance of the Commission's functions, 
including whether the information would have practical utility;
    (2) Evaluate the accuracy of the Commission's estimate of the 
burden of the proposed collections of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collections of information on those 
who are to respond, including through the use of automated collection 
techniques or other forms of information technology.
    Persons wishing to submit comments on the collection of information 
requirements proposed above should direct them to the following 
persons: (1) Desk Officer for the Securities and Exchange Commission, 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10102, New Executive Office Building, Washington, DC 
20503; and (2) Jonathan G. Katz, Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609, with 
reference to File No. S7-10-01. OMB is required to make a decision 
concerning the collection of information between 30 and 60 days after 
publication, so a comment to OMB is best assured of having its full 
effect if OMB receives it within 30 days of publication. The Commission 
has submitted the proposed collections of information to OMB for 
approval. Requests for the materials submitted to OMB by the Commission 
with regard to these collections of information should be in writing, 
refer to File No. S7-10-01, and be submitted to the Securities and 
Exchange Commission, Records Management, Office of Filings and 
Information Services, 450 Fifth Street, NW, Washington, DC 20549.

IV. Costs and Benefits of the Proposed Rulemaking

    The Commission is proposing new Rule 6a-4 under the Exchange Act 
\117\ and new registration Form 1-N prescribing the requirements for 
designated contract markets and derivative transaction execution 
facilities to register as national securities exchanges pursuant to 
Section 6(g)(1) of the Exchange Act \118\ to list and trade futures on 
individual stocks and narrow-based stock indexes, including puts, 
calls, straddles, options, or privileges thereon. The Commission also 
is proposing conforming amendments to Rules 6a-2 and 6a-3 under the 
Exchange Act \119\ and Rule 202.3 of the Commission's procedural 
rules.\120\ In addition, the Commission is proposing new Rule 19b-
7,\121\ new Form 19b-7, and amendments to Rule 19b-4 \122\ and Form 
19b-4 to accommodate certain proposed rule changes submitted by 
Security Futures Product Exchanges and limited purpose national 
securities associations registered pursuant to Section 15A(k) of the 
Exchange Act.\123\
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    \117\ Proposed Exchange Act Rule 6a-4.
    \118\ 15 U.S.C. 78f(g)(1).
    \119\ 17 CFR 240.6a-2 and 240.6a--3.
    \120\ 17 CFR 202.3.
    \121\ Proposed Rule 19b-7.
    \122\ 17 CFR 240.19b-4.
    \123\ 15 U.S.C. 78o-3(k).
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    The proposed rules, forms, and conforming amendments are in 
response to the mandate of the CFMA,\124\ which, among other things, 
requires the Commission to prescribe, by rule, the process for notice 
registration to be used by Security Futures Product Exchanges. Pursuant 
to the CFMA, the Commission has proposed Rule 6a-4 to prescribe 
information and documents to be submitted by Security Futures Product 
Exchanges that is comparable to the requirements applicable to national 
securities exchanges registered pursuant to Section 6(a) of the 
Exchange Act.\125\ In addition, the CFMA directs the Commission to 
establish, by rule, the procedures for filing proposed rule changes by 
Security Futures Product Exchanges and Limited Purpose National 
Securities Associations that relate to certain matters, including 
higher margin levels, fraud or manipulation, recordkeeping, reporting, 
listing standards, or decimal pricing for security futures products, 
sales practices for security futures products for persons who effect 
transactions in security futures products, or rules effectuating such 
Security Futures Product Exchanges' and Limited Purpose National 
Securities' obligations to enforce the securities laws. The CFMA also 
amended the Exchange Act to require that proposed rule changes relating 
to margin, except for changes that result in higher margin levels, and 
proposed rule changes that have been abrogated pursuant to Section 
19(b)(7)(C) of the Exchange Act \126\ be filed under Section 19(b)(1) 
of the Exchange Act.\127\
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    \124\ Pub. L. No. 106-554, Appendix E, 114 Stat. 2763
    \125\ 15 U.S.C. 78f(a).
    \126\ 15 U.S.C. 78s(b)(7)(C).
    \127\ 15 U.S.C. 78s(b)(1).
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    The Commission is considering the costs and benefits of the 
proposed rules, forms, and conforming amendments and encourages 
commenters to identify, discuss, analyze, and supply relevant data 
regarding any additional costs or benefits.

[[Page 26988]]

A. Costs and Benefits of Proposed Rule 6a-4, New Registration Form 1-N, 
and Conforming Amendments to Rules 6a-2 and 6a-3 under the Exchange Act 
and Rule 202.3 of the Commission's Procedural Rules

    The Commission is proposing new Rule 6a-4 \128\ to set forth the 
information that must be submitted by an entity to register as a 
national securities exchange and the ongoing filing requirements for 
Security Futures Product Exchanges, and to revise Exchange Act Rules 
6a-2 and 6a-3 \129\ to exclude Security Futures Product Exchanges from 
the requirements of those rules.
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    \128\ Proposed Exchange Act Rule 6a-4.
    \129\ 17 CFR 240.6a-2 and 240.6a-3.
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    Proposed Rule 6a-4 would require an exchange registering pursuant 
to Section 6(g) of the Exchange Act \130\ to file proposed Form 1-N 
\131\ with the Commission. Once registered, proposed Rule 6a-4 would 
require a Security Futures Product Exchange to file with the Commission 
written notice of actions that create new information or render 
inaccurate information filed on the execution page or as part of 
proposed Exhibits C, E, F or H of its proposed Form 1-N within 10 days 
after such action is taken,\132\ to file as an amendment, on or before 
June 30, 2002 and by June 30 every year thereafter, proposed Exhibits 
F, H, and I, which would be required to be up-to-date as of the latest 
date practicable within three months of the date the amendment was 
filed,\133\ and to file, as an amendment to its Form 1-N, on or before 
June 30, 2004 and by June 30 every three years thereafter, complete 
Exhibits A, B, C, and E, which would be required to be up-to-date as of 
the latest date practicable within three months of the date the 
amendment was filed.\134\ The conforming amendments to Rules 6a-2 and 
6a-3 exclude respondents from the requirements of these rules, and, 
therefore, the Commission preliminarily believes that there would be no 
costs imposed on, nor benefits accruing to, the respondents arising 
from the proposed conforming amendments. Finally, Rule 202.3 of the 
Commission's procedural rules provides that notice forms for 
registration as a national securities exchange filed with the 
Commission are routed to the Division of Market Regulation, and, 
therefore, the Commission preliminarily believes that there would be no 
costs imposed on, nor benefits accruing to, the respondents arising 
from the proposed conforming amendment.
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    \130\ 15 U.S.C. 78f(g).
    \131\ Proposed Form 1-N, 17 CFR 249.10.
    \132\ Proposed Exchange Act Rule 6a-4(b)(1).
    \133\ Proposed Exchange Act Rule 6a-4(b)(2).
    \134\ Proposed Exchange Act Rule 6a-4(b)(3).
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1. Benefits
    The proposed rules provide for an expedited filing process for a 
market to become registered with the Commission as a Security Futures 
Product Exchange since Form 1-N is not an application that requires an 
approval from the Commission. Because an exchange registering with the 
Commission pursuant to Section 6(g) of the Exchange Act \135\ is also 
subject to the CFTC application and reporting requirements, the Form 1-
N only requests limited basic information. Therefore, the Commission 
expects that the amount of time required to complete the Form 1-N to be 
one-third less than the amount of time currently required to complete 
the Form 1. Furthermore, pursuant to Section 6(g)(2)(A) of the Exchange 
Act,\136\ in those instances where the exchange has filed information 
with the CFTC, to the extent that such documents contain information 
satisfying the Commission's informational requirements, copies of such 
documents could be filed with the Commission in lieu of completing 
those portions of the Form, therefore reducing an exchange's burden of 
compiling information.\137\ Pursuant to Section 6(g)(2)(B) of the 
Exchange Act,\138\ such notice registration will be effective 
contemporaneously with the submission of proposed Form 1-N, unless the 
registration would be subject to suspension or revocation by the CFTC. 
The information provided by exchanges filing proposed Form 1-Ns would 
be required to be up-to-date as of 1 month of the date of filing, which 
should provide the exchanges with additional flexibility in the 
preparation of the required documents.
---------------------------------------------------------------------------

    \135\ 15 U.S.C. 78f(g).
    \136\ 15 U.S.C. 78f(g)(2)(A).
    \137\ Proposed Exchange Act Rule 6a-4(b)(6).
    \138\ 15 U.S.C. 78f(g)(2)(B).
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    As a mechanism to further reduce the filing burdens on Security 
Futures Product Exchanges, the Commission is proposing to allow such 
exchanges to comply with the requirements for filing amendments and 
supplemental materials by maintaining the information on an Internet 
web page and providing the location of such web site to the 
Commission.\139\ Instead of filing amendments in paper form, a Security 
Futures Product Exchange also would be permitted to refer to materials 
published by, or in cooperation with, the exchange that contains the 
required information or to make the information available upon request 
at its office.\140\ Permitting respondents to use the Internet as a 
means of compliance should ease burdens by reducing expenses associated 
with clerical time, postage, and copying and increase the speed, 
accuracy, and availability of information beneficial to investors and 
financial markets.
---------------------------------------------------------------------------

    \139\ Proposed Exchange Act Rule 6a-4(b)(4)(iii) and (c)(l)(ii).
    \140\ Proposed Exchange Act Rule 6a-4(b)(4)(i) and (ii).
---------------------------------------------------------------------------

    Furthermore, the Commission is proposing to exempt a Security 
Futures Product Exchange from filing the required amendments for any 
affiliate or subsidiary listed in proposed Exhibit C of the exchange's 
notice registration that either is listed in Exhibit C to the form for 
registration or notice registration of one or more other national 
securities exchanges, or was an inactive subsidiary throughout the 
subsidiary's latest fiscal year.\141\ Proposed amendments to Rules 6a-2 
and 6a-3 \142\ also would exempt Security Futures Product Exchanges 
from the ongoing filing requirements for registered or exempted 
exchanges, which file applications with the Commission pursuant to Rule 
6a-1.\143\ This would further reduce the filing burdens placed on the 
Security Futures Product Exchanges.
---------------------------------------------------------------------------

    \141\ Proposed Exchange Act Rule 6a-4(b)(5).
    \142\ 17 CFR 240.6a-2 and 240.6a-3.
    \143\ 17 CFR 240.6a-1.
---------------------------------------------------------------------------

    The Commission's proposal also should enhance the Commission's 
ability to oversee the exchanges trading security futures products, 
which is critical to the continued integrity of our markets. The 
Commission believes that its oversight, in conjunction with that of the 
CFTC, over trading activities in security futures products should 
benefit the public and the markets generally by helping to prevent 
fraud and manipulation.
2. Costs
    The proposed rules, forms, and conforming amendments would require 
the respondents to comply with the initial notice and amendment 
requirements, which would require some effort to gather this 
information to file with the Commission. Most of this information, 
however, already exists and is currently provided to the CFTC, and the 
exchanges may provide copies of existing documents provided to the CFTC 
to the Commission in lieu of completing the Form to the extent that 
such documents contain information satisfying the Commission's 
informational requirements.\144\ Therefore, the Commission

[[Page 26989]]

preliminarily believes that the costs incurred by the proposed rules 
and forms have been minimized.
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    \144\ Proposed Exchange Act Rule 6a-4(b)(6).
---------------------------------------------------------------------------

    As discussed above, the Commission estimates that the average 
paperwork cost per initial registration would be $3,000 for each 
respondent.\145\
---------------------------------------------------------------------------

    \145\ See Paperwork Reduction Act discussion at notes 105-108 
and accompanying text.
---------------------------------------------------------------------------

    The proposed amendments to Rules 6a-2 and 6a-3 \146\ would exclude 
Security Futures Product Exchanges from the ongoing collection of 
information required by these rules. However, Rule 6a-4 would impose 
ongoing requirements on respondents. Proposed Rule 6a-4 would require 
respondents to provide periodic amendments to their initial 
registration. First, respondents would be required to file amendments 
due to material changes or new information filed on the execution page 
or as part of Exhibits C, E, F, or H of its proposed Form 1-N.\147\ 
Second, respondents would be required to file amendments to, on or 
before June 30, 2002 and by June 30 every year thereafter, proposed 
Exhibits F, H, and I.\148\ Third, proposed Rule 6a-4 also would require 
an exchange to file, as an amendment to its proposed Form 1-N, on or 
before June 30, 2004 and by June 30 every year thereafter, complete 
Exhibits A, B, C, and E.\149\ As discussed above, the Commission 
estimates that the average paperwork cost for each amendment and 
periodic update would be $1,438.\150\
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    \146\ 17 CFR 240.6a-2 and 240.6a-3.
    \147\ Proposed Exchange Act Rule 6a-4(b)(1).
    \148\ Proposed Exchange Act Rule 6a-4(b)(2).
    \149\ Proposed Exchange Act Rule 6a-4(b)(3).
    \150\ See Paperwork Reduction Act discussion at notes 105-108 
and accompanying text.
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    Much of the required information would not change frequently, and 
the option of posting information on an Internet web site should 
encourage more frequent updating of current information and reduce the 
cost of filing the amendments on paper.
    Finally, paragraph (c) of proposed Rule 6a-4 would require Security 
Futures Product Exchanges to furnish to the Commission copies of all 
materials related to the trading of security futures products 
(including notices, circulars, bulletins, lists, and publications) 
issued or made available to members of, participants in or subscribers 
to, the exchange.\151\ Exchanges would be permitted to make the 
information available on an Internet web site and provide the 
Commission with the location of the web site. Paragraph (c) of proposed 
Rule 6a-4 also would require Security Futures Product Exchanges to file 
transaction reports within fifteen days after the end of each calendar 
month containing, for each security futures product traded on such 
exchange, the number of contracts traded, and the type of security 
underlying such contract. In addition, if the futures contract were for 
a single security, the exchange would be required to report the total 
number of shares underlying the contracts traded.\152\ As discussed 
above, the Commission estimates that each respondent would incur an 
average paperwork cost of $21 for each filing.\153\
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    \151\ Proposed Exchange Act Rule 6a-4(c)(1)(i).
    \152\ Proposed Exchange Act Rule 6a-4(c)(2).
    \153\ See Paperwork Reduction Act discussion.
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B. Costs and Benefits of Proposed Rule 19b-7 and Form 19b-7 and 
Conforming Amendments to Rule 19b-4 and Form 19b-4

    Proposed Rule 19b-7 would require the Commission to promptly 
publish Security Futures Product Exchanges' and Limited Purpose 
National Securities Associations' proposed rule changes that were filed 
pursuant to Section 19(b)(7) of the Exchange Act \154\ on proposed Form 
19b-7.
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    \154\ Specifically, Sections 6(g)(4)(B) and 15A(k)(3) of the 
Exchange Act, 15 U.S.C. 78f(g)(4)(B) and 15 U.S.C. 78o-3(k)(3)(B), 
require Security Futures Product Exchanges and Limited Purpose 
National Securities Associations to submit, pursuant to Section 
19(b)(7) of the Exchange Act, 15 U.S.C. 78s(b)(7), proposed rule 
changes that relate to higher margin levels, fraud or manipulation, 
recordkeeping, reporting, listing standards, or decimal pricing for 
security futures products, sales practices for security futures 
products for persons who effect transactions in security futures 
products, or rules effectuating such SRO's obligation to enforce the 
securities laws.
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    Pursuant to Sections 6(g)(4)(B)(ii) and 15A(k)(3)(B) of the 
Exchange Act,\155\ the Commission is proposing to amend Rule 19b-4 to 
require Security Futures Product Exchanges and Limited Purpose National 
Securities Associations to file proposed rule changes related to margin 
(except for changes that result in higher margin levels) under Rule 
19b-4 and to submit such margin changes on Form 19b-4. In addition, 
these amendments to Rule 19b-4 and Form 19b-4 should accommodate 
proposed rule changes that have been abrogated pursuant to Section 
19(b)(7)(C) of the Exchange Act \156\ and refiled under Section 
19(b)(1) of the Exchange Act.\157\
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    \155\ 15 U.S.C. 78f(g)(4)(B)(ii) and 15 U.S.C. 78o-3(k)(3)(B).
    \156\ 15 U.S.C. 78s(b)(7)(C).
    \157\ 15 U.S.C. 78s(b)(1).
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1. Benefits
    Pursuant to the statutory mandate, the Commission would not be 
approving proposed rule changes submitted pursuant to proposed Rule 
19b-7. Instead, a proposed rule change filed on proposed Form 19b-7 
would become effective upon: (i) an exchange's filing of a written 
certification with the CFTC under Section 5c(c) of the CEA; \158\ (ii) 
a determination by the CFTC that review of the proposed rule change is 
not necessary; or (iii) approval of the proposed rule change by the 
CFTC.
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    \158\ 7 U.S.C. 7a-2(c)
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    The new rule and form and amendments to existing rule and form are 
designed to provide information sufficient to permit interested persons 
to submit meaningful comment on the proposal and permit the Commission 
to consider whether the proposal should be abrogated because it unduly 
burdens competition or efficiency, conflicts with securities laws, or 
is inconsistent with the public interest or the protection of 
investors. These proposals should enable the Commission to carry out 
its statutorily-mandated oversight functions, including ensuring that 
SROs carry out their regulatory functions. This process protects the 
integrity of the markets, investors, and the public interest.
    Proposed rule changes filed with the Commission would be required 
to be filed concurrently with the CFTC. However, although respondents 
must file with two agencies, there would, in effect, be only one effort 
in the collection and compilation of information.
2. Costs
    The Commission believes that the costs associated with filing rule 
changes are predominately the paperwork costs. As discussed above, the 
Commission estimates that the average paperwork cost per proposed rule 
change submitted on Form 19b-7 would be $1,824.00.\159\ The Commission 
estimates each respondent would file 15 proposed rule changes per year 
and incur an annual average burden of 247.5 hours for a total annual 
average cost of $27,360.00. In addition, the Commission estimates that 
the average paperwork cost per respondent to file proposed rule changes 
that relate to margin, except for changes that result in higher margin 
levels, or that have been abrogated pursuant to Section 19(b)(7)(C) of 
the Exchange Act \160\ and refiled under Section 19(b)(1) of the 
Exchange Act,\161\ would be $3,660.00.\162\ In addition, the Commission 
estimates that the time associated with refiling an abrogated

[[Page 26990]]

19b-7 filing would delay the filing process by 30 days.
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    \159\ See Paperwork Reduction Act, Section III.B.
    \160\ 15 U.S.C. 78s(b)(7)(C).
    \161\ 15 U.S.C. 78s(b)(1).
    \162\ See supra note.
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C. Request for Comment

    The Commission requests data to quantify the costs and the value of 
the benefits above. The Commission seeks estimates of these costs and 
benefits, as well as any costs and benefits not already defined, which 
may result from the adoption of these proposed rules, forms, and 
conforming amendments.
    The Commission requests comment on the estimated number of 
respondents that would be filing proposed Forms 
1-N and 19b-7 and the costs and benefits associated with complying with 
proposed Rules 6a-4 and 19b-7. The Commission specifically requests 
comments on the recordkeeping costs and data maintenance associated 
with the proposals and whether these costs would be significant.
    The Commission requests comment on the costs and benefits 
associated with the Commission's proposed amendments to Rules 6a-2, 6a-
3, and 19b-4.
    The Commission also requests comment on the costs and benefits of 
filing Form 19b-4 for respondents' proposed rule changes related to 
margin, except for changes that result in higher margin levels, and 
proposed rule changes that have been abrogated pursuant to Section 
19(b)(7)(C) of the Exchange Act \163\ and refiled under Section 
19(b)(1) of the Exchange Act,\164\ including the accuracy of the 
Commission's estimates for the additional time necessary to refile an 
abrogated filing on Form 19b-4.
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    \163\ 15 U.S.C. 78s(b)(7)(C).
    \164\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

    The Commission generally requests comment on the competitive or 
anticompetitive effects of the rules on any market participants if the 
proposals are adopted as proposed. The Commission also requests comment 
on what impact the proposals, if adopted, would have on efficiency and 
capital formation. Commenters should provide analysis and empirical 
data to support their views on the costs and benefits associated with 
the proposal.

V. Consideration of the Burden on Competition, and Promotion of 
Efficiency, Competition and Capital Formation

    Section 3(f) of the Exchange Act \165\ requires the Commission, 
whenever it is engaged in rulemaking, and is required to consider or 
determine whether an action is necessary or appropriate in the public 
interest, to consider whether the action will promote efficiency, 
competition, and capital formation. In addition, Section 23(a)(2) of 
the Exchange Act \166\ requires the Commission, when promulgating rules 
under the Exchange Act, to consider the impact any such rules would 
have on competition. Section 23(a)(2) of the Exchange Act further 
provides that the Commission may not adopt a rule that would impose a 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Exchange Act.
---------------------------------------------------------------------------

    \165\ 15 U.S.C. 78c(f).
    \166\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    The Commission has considered the proposed rules in light of the 
standards set forth in Sections 3(f) \167\ and 23(a)(2) \168\ of the 
Exchange Act. As noted above, the CFMA amended the Exchange Act and the 
CEA to allow trading of security futures products and to provide for 
joint regulation of the markets for such products by the Commission and 
the CFTC. Accordingly, the Commission preliminarily does not believe 
that the information required by the proposed rules and associated 
forms will create a competitive imbalance between the securities 
markets and the futures markets. These filings of proposed rule changes 
are specifically contemplated by the Exchange Act, as amended by the 
CFMA, and are designed to enable the Commission to discharge its 
regulatory responsibilities under the Exchange Act. The Commission does 
not anticipate that the requirement that these filings of proposed rule 
changes be made on the proposed forms pursuant to the proposed rules 
would place any unreasonable burden on competition. The Commission 
solicits comments on the impact of the proposed rules on competition, 
including competition between Security Futures Product Exchanges and 
Limited Purpose National Securities Associations, on the one hand, and 
all other SROs, on the other.
---------------------------------------------------------------------------

    \167\ 15 U.S.C. 78c(f).
    \168\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    Although there are certain legal and clerical costs involved in 
responding to the collections of information set forth in the proposed 
rules, the Commission preliminarily believes that these burdens are 
relatively small. Commenters are invited to submit comments on the 
effect of the proposed rules on efficiency and capital formation.

VI. Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act \169\ requires the 
Commission to undertake an initial regulatory flexibility analysis of 
the proposed rules on small entities unless the Chairman certifies that 
the rule, if adopted, would not have a significant economic impact on a 
substantial number of small entities.\170\ Proposed Rule 6a-4 and 
proposed Form 1-N would apply to Security Futures Product Exchanges 
that list and trade security futures products. Proposed Rule 19b-7 and 
proposed Form 19b-7 would be used by these national securities 
exchanges and Limited Purpose National Securities Associations that 
propose rule changes that relate to certain matters.\171\ The 
Commission believes there could be seven Security Futures Product 
Exchanges and one Limited Purpose National Securities Association that 
would be subject to the proposed rules, none of which are small 
entities. The Acting Chairman has certified that the proposed rules, 
forms, and conforming amendments, if adopted, would not have a 
significant economic impact on a substantial number of small entities. 
A copy of the certification is attached as Appendix A.
---------------------------------------------------------------------------

    \169\ 5 U.S.C. 603(a).
    \170\ 5 U.S.C. 605(b).
    \171\ These matters are higher margin levels, fraud or 
manipulation, recordkeeping, reporting, listing standards, or 
decimal pricing for security futures products, sales practices for 
security futures products for persons who affect transactions in 
security futures products, or rules effectuating the obligation of 
Security Futures Product Exchanges and Limited Purpose National 
Securities Associations to enforce the securities laws. See 15 
U.S.C. 78s(b)(7)(A).
---------------------------------------------------------------------------

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996, the Commission also is requesting information regarding 
the potential impact of the proposed rule on the economy on an annual 
basis. Commentators should provide empirical data to support their 
views.

VII. Statutory Authority

    The Commission is proposing the rules pursuant to its authority 
under Exchange Act Sections 3(b), 5, 6, 11, 11A, 17(a) and (b), 19, and 
23(a).

List of Subjects

17 CFR Part 202

    Administrative practice and procedure, Securities.

[[Page 26991]]

17 CFR Part 240

    Brokers-dealers, Fraud, Issuers, Reporting and recordkeeping 
requirements, Securities.

17 CFR Part 249

    Reporting and recordkeeping requirements, Securities.

Text of the Proposed Rules

    For the reasons set out in the preamble, Title 17, Chapter II of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 202--INFORMAL AND OTHER PROCEDURES

    1. The authority citation for part 202 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77s, 77t, 78d-1, 78u, 78w, 78ll(d), 79r, 
79t, 77sss, 77uuu, 80a-37, 80a-41, 80b-9, and 80b-11, unless 
otherwise noted.
* * * * *
    2. The authority citation following Sec. 202.3 is removed.
    3. Section 202.3 is amended by adding paragraph (b)(3) to read as 
follows:


Sec. 202.3  Processing of filings.

* * * * *
    (b)(1) * * *
    (3) Notice forms for registration as national securities exchanges 
pursuant to section 6(g)(1) of the Securities Exchange Act of 1934 (15 
U.S.C. 78f(g)(1)) filed with the Commission are routed to the Division 
of Market Regulation, which examines these applications to determine 
whether all necessary information has been supplied and whether all 
other required documents have been furnished in proper form. Defective 
applications may be returned with a request for correction or held 
until corrected before being accepted as a filing.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

    4. The general authority citation for part 240 is revised to read 
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-
3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
    5. The authority citations following Secs. 240.6a-2 and 240.6a-3 
are removed.
    6. Section 240.6a-2 is amended by revising paragraph (e) and adding 
paragraph (f) to read as follows:


Sec. 240.6a-2  Amendments to application.

* * * * *
    (e) The Commission may exempt a national securities exchange, or an 
exchange exempted from such registration based on limited volume, from 
filing the amendment required by this section for any affiliate or 
subsidiary listed in Exhibit C of the exchange's application for 
registration, as amended, that either:
    (1) Is listed in Exhibit C of the application for registration or 
notice of registration, as amended, of one or more other national 
securities exchanges; or
    (2) Was an inactive subsidiary throughout the subsidiary's latest 
fiscal year. Any such exemption may be granted upon terms and 
conditions the Commission deems necessary or appropriate in the public 
interest or for the protection of investors, provided however, that at 
least one national securities exchange shall be required to file the 
amendments required by this section for an affiliate or subsidiary 
described in paragraph (e)(1) of this section.
    (f) A national securities exchange registered pursuant to Section 
6(g)(1) of the Act (15 U.S.C. 78f(g)(1)) shall be exempt from the 
requirements of this section.
    7. Section 240.6a-3 is amended by adding paragraph (c) to read as 
follows:


Sec. 240.6a-3  Supplemental material to be filed by exchanges.

* * * * *
    (c) A national securities exchange registered pursuant to section 
6(g)(1) of the Act (15 U.S.C. 78f(g)(1)) shall be exempt from the 
requirements of this section.
    8. Section 240.6a-4 is added to read as follow:


Sec. 240.6a-4  Notice of registration under section 6(g) of the Act, 
amendment to such notice, and supplemental materials to be filed by 
exchanges registered under Section 6(g) of the Act.

    (a) Notice of registration. (1) An exchange may register as a 
national securities exchange solely for the purposes of trading 
security futures products by filing Form 1-N (Sec. 249.10 of this 
chapter) (``notice of registration''), in accordance with the 
instructions contained therein, if:
    (i) The exchange is a board of trade, as that term in defined in 
the Commodity Exchange Act (7 U.S.C. 1a(2)), that:
    (A) Has been designated a contract market by the Commodity Futures 
Trading Commission and such designation is not suspended by order of 
the Commodity Futures Trading Commission; or
    (B) Is registered as a derivative transaction execution facility 
under section 5a of the Commodity Exchange Act (7 U.S.C. 7a) and such 
registration is not suspended by the Commodity Futures Trading 
Commission; and
    (ii) Such exchange does not serve as a market place for 
transactions in securities other than:
    (A) Security futures products; or
    (B) Futures on exempted securities or on groups or indexes of 
securities or options thereon that have been authorized under section 
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2a).
    (2) Promptly after the discovery that any information filed on Form 
1-N (Sec. 249.10 of this chapter) was inaccurate when filed, the 
exchange shall file with the Commission an amendment correcting such 
inaccuracy.
    (b) Amendment to notice of registration. (1) A national securities 
exchange registered pursuant to section 6(g)(1) of the Act (15 U.S.C. 
78f(g)(1)) (``Security Futures Product Exchange'') shall file an 
amendment to Form 1-N (Sec. 249.10 of this chapter), which shall set 
forth the nature and effective date of the action taken and shall 
provide any new information and correct any information rendered 
inaccurate, on Form 1-N (Sec. 249.10 of this chapter), within 10 days 
after any action is taken that renders inaccurate, or that causes to be 
incomplete, any of the following:
    (i) Information filed on the Execution Page of Form 1-N 
(Sec. 249.10 of this chapter), or amendment thereto; or
    (ii) Information filed as part of Exhibits C, E, F, or H to Form 1-
N (Sec. 249.10 of this chapter), or any amendments thereto.
    (2) On or before June 30, 2002 and by June 30 every year 
thereafter, a Security Futures Product Exchange shall file, as an 
amendment to Form 1-N (Sec. 249.10 of this chapter), Exhibits F, H, and 
I, which shall be up to date as of the latest date practicable within 
three months of the date the amendment is filed.
    (3) On or before June 30, 2004, and by June 30 every three years 
thereafter, a Security Futures Product Exchange shall file, as an 
amendment to Form 1-N (Sec. 249.10 of this chapter), complete Exhibits 
A, B, C, and E. The information filed under this paragraph (b)(3) shall 
be current as of the latest practicable date, but shall, at a minimum, 
be up to date within three months as of the date the amendment is 
filed.
    (4)(i) If a Security Futures Product Exchange, on an annual or more 
frequent basis, publishes, or cooperates in the publication of, any of 
the information required to be filed by paragraphs (b)(2) and (b)(3) of 
this

[[Page 26992]]

section, in lieu of filing such information, a Security Futures Product 
Exchange may:
    (A) Identify the publication in which such information is 
available, the name, address, and telephone number of the person from 
whom such publication may be obtained, and the price of such 
publication; and
    (B) Certify to the accuracy of such information as of its 
publication date.
    (ii) If a Security Futures Product Exchange keeps the information 
required under paragraphs (b)(2) and (b)(3) of this section up to date 
and makes it available to the Commission and the public upon request, 
in lieu of filing such information, a Security Futures Product Exchange 
may certify that the information is kept up to date and is available to 
the Commission and the public upon request.
    (iii) If the information required to be filed under paragraphs 
(b)(2) and (b)(3) of this section is available continuously on an 
Internet web site controlled by a Security Futures Product Exchange, in 
lieu of filing such information with the Commission, such Security 
Futures Product Exchange may:
    (A) Indicate the location of the Internet web site where such 
information may be found; and
    (B) Certify that the information available at such location is 
accurate as of its date.
    (5) The Commission may exempt a Security Futures Product Exchange 
from filing the amendment required by this section for any affiliate or 
subsidiary listed in Exhibit C to Form 1-N (Sec. 249.10 of this 
chapter), as amended, that either:
    (i) Is listed in Exhibit C to Form 1 (Sec. 249.1 of this chapter) 
or to Form 1-N (Sec. 249.10 of this chapter), as amended, of one or 
more other national securities exchanges; or
    (ii) Was an inactive subsidiary throughout the subsidiary's latest 
fiscal year. Any such exemption may be granted upon terms and 
conditions the Commission deems necessary or appropriate in the public 
interest or for the protection of investors, provided however, that at 
least one national securities exchange shall be required to file the 
amendments required by this section for an affiliate or subsidiary 
described in paragraph (b)(5)(i) of this section.
    (6) If such Security Futures Product Exchange has filed documents 
with the Commodity Futures Trading Commission, to the extent that such 
documents contain information satisfying the Commission's informational 
requirements, copies of such documents may be filed with the Commission 
in lieu of the required written notice.
    (c) Supplemental material to be filed by Security Futures Product 
Exchanges. (1)(i) A national securities exchange registered pursuant to 
section 6(g)(1) of the Act (15 U.S.C. 78f(g)(1)) shall file with the 
Commission any material related to the trading of security futures 
products (including notices, circulars, bulletins, lists, and 
periodicals) issued or made generally available to members of, or 
participants or subscribers to, the exchange. Such material shall be 
filed with the Commission within ten days after issuing or making such 
material available to members, participants or subscribers.
    (ii) If the information required to be filed under paragraph 
(c)(1)(i) of this section is available continuously on an Internet web 
site controlled by an exchange, in lieu of filing such information with 
the Commission, such exchange may:
    (A) Indicate the location of the Internet web site where such 
information may be found; and
    (B) Certify that the information available at such location is 
accurate as of its date.
    (2) Within fifteen days after the end of each calendar month, a 
national securities exchange registered pursuant to section 6(g)(1) of 
the Act (15 U.S.C. 78f(g)(1)) shall file a report concerning the 
security futures products traded on such exchange during the calendar 
month. Such report shall set forth:
    (i) The number of contracts of sale for future delivery of a single 
security and the number of shares and type of security underlying such 
contracts; and
    (ii) The number of contracts of sale for future delivery of a 
narrow-based security index and the type of index underlying such 
contracts.
    9. Section 240.19b-4 is amended by revising paragraph (a) to read 
as follows:


Sec. 240.19b-4  Filing with respect to proposed rule changes by self-
regulatory organizations.

    (a) Filings with respect to proposed rule changes by a self-
regulatory organization, except filings with respect to proposed rule 
changes by self-regulatory organizations submitted pursuant to section 
19(b)(7)(A) of the Act (15 U.S.C. 78s(b)(7)(A)), shall be made on Form 
19b-4 (17 CFR 249.819).
* * * * *
    10. Section 240.19b-7 is added to read as follows:


Sec. 240.19b-7  Filings with respect to proposed rule changes submitted 
pursuant to section 19(b)(7) of the Act.

    (a) Filings with respect to proposed rule changes required to be 
submitted pursuant to section 19(b)(7)(A) of the Act (15 U.S.C. 
78s(b)(7)(A)), shall be made on Form 19b-7 (17 CFR 249.822). The 
Commission will promptly publish a notice of filing of such proposed 
rule change.
    (b) A proposed rule change will not be deemed filed on the date it 
is received by the Commission unless:
    (1) A completed Form 19b-7 (17 CFR 249.822) is submitted; and
    (2) In order to elicit meaningful comment, it is accompanied by:
    (i) A clear and accurate statement of the basis and purpose of such 
rule change, including the impact on competition or efficiency, if any; 
and
    (ii) A summary of any written comments (including e-mail) received 
by the self-regulatory organization on the proposed rule change.
    (c) The effectiveness of a proposed rule change pursuant to section 
19(b)(7) of the Act (15 U.S.C. 78s(b)(7)) does not create an inference 
of whether such proposed rule change is in the public interest, 
including whether it has an impact on competition.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    11. The authority citation for Part 249 continues to read in part 
as follows:

    Authority: 15 U.S.C. 78a, et seq., unless otherwise noted;
* * * * *
    12. Section 249.10 and Form 1-N are added to read as follows:

    Note: Form 1-N is attached as Appendix B to this document. Form 
1-N will not appear in the Code of Federal Regulations.

Sec. 249.10  Form 1-N for notice registration as a national securities 
exchange.

    This form shall be used for notice, and amendments to the notice, 
to permit an exchange to register as a national securities exchange 
solely for the purposes of trading security futures products pursuant 
to section 6(g) of the Act (15 U.S.C. 78f(g)).
    13. Section 249.819 is revised to read as follows:


Sec. 249.819  Form 19b-4, for filings with respect to proposed rule 
changes by all self-regulatory organizations, pursuant to section 
19(b)(1) of the Securities Exchange Act of 1934.

    This form shall be used by all self-regulatory organizations, as 
defined in section 3(a)(26) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(26)), to file proposed rule changes with the Commission 
pursuant to section 19(b)(1) of that Act (15 U.S.C. 78s(b)(1)) and Rule 
19b-4 (17 CFR 240.19b-4) thereunder.

[[Page 26993]]

    14. Form 19b-4 (referenced in Sec. 249.819) is amended by:
    a. In General Instruction A, ``Use of the Form,'' revise the first 
sentence;
    b. In General Instruction C, ``Documents Comprising the Completed 
Form,'' revise the last sentence;
    c. In General Instruction E, ``Completion of Action by the Self-
Regulatory Organization on the Proposed Rule Change,'' revise the last 
two sentences;
    d. In General Instruction F, ``Signature and Filing of Completed 
Form,'' revise the first sentence;
    e. In Information to Be Included in the Completed Form, item 3 
``Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change,'' revise the second and 
third sentences of the introductory text and paragraph (b);
    f. In Information to Be Included in the Completed Form revise item 
6, ``Extension of Time Period for Commission Action;'
    g. In Information to Be Included in the Completed Form, item 7, 
``Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for 
Accelerated Effectiveness Pursuant to Section 19(b)(2),'' revise the 
title and paragraph (d); and
    h. In Exhibit 1, Information to Be Included in the Completed 
Notice, add two undesignated paragraphs to the end of Item III, ``Date 
of Effectiveness of the Proposed Rule Change and Timing for Commission 
Action.''
    The revisions and additions read as follows:


    Note: Form 19b-4 and these amendments do not appear in the Code 
of Federal Regulations.

Form 19b-4

* * * * *

General Instructions

A. Use of the Form

    This form shall be used for filings of proposed rule changes by all 
self-regulatory organizations pursuant to Section 19(b) of the 
Securities Exchange Act of 1934 (the ``Act'') except filings with 
respect to proposed rule changes by self-regulatory organizations 
submitted pursuant to Section 19(b)(7)(A) of the Act.* * *
* * * * *

C. Documents Comprising the Completed Form

    * * * Each filing shall be marked on the facing sheet with the 
initials of the self-regulatory organization, the four-digit year, and 
the number of the filing for the year.
* * * * *

E. Completion of Action by the Self-Regulatory Organization on the 
Proposed Rule Change

    * * * Nevertheless, proposed rule changes (other than proposed rule 
changes that are to take, or to be put into, effect pursuant to Section 
19(b)(3) of the Act) may be initially filed before the completion of 
all such action if the self-regulatory organization consents, under 
Item 6 of this form, to an extension of the period of time specified in 
Section 19(b)(2) or Section 19(b)(7)(D) of the Act until at least 
thirty-five days after the self-regulatory organization has filed an 
appropriate amendment setting forth the taking of all such action. If a 
proposed rule change to be filed for review under Section 19(b)(2) or 
Section 19(b)(7)(D) of the Act is in preliminary form, the self-
regulatory organization may elect to file initially Exhibit 1 setting 
forth a description of the subjects and issues expected to be involved.

F. Signature and Filing of the Completed Form

    Nine copies of Form 19b-4, nine copies of Exhibit 1, four copies of 
Exhibits 2 and 3, and two copies of Exhibit 4 shall be filed with, in 
the case of filings by securities exchanges, the Assistant Director for 
Derivatives and Exchange Oversight; in the case of filings by 
securities associations or the Municipal Securities Rulemaking Board, 
the Assistant Director for NMS and OTC; and in the case of filings by 
clearing agencies, the Assistant Director for Securities Processing, 
Division of Market Regulation, Securities and Exchange Commission, 450 
Fifth Street, NW., Washington, DC 20549-1001; in the case of filings by 
securities exchanges registered pursuant to Section 6(g)(1) of the Act 
and national securities associations registered pursuant to Section 
15A(k) of the Act, the Assistant Director for Security Futures 
Products, Division of Market Regulation, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549-1003.* * *
* * * * *

Information To Be Included in the Completed Form

3. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change
    * * * With respect to proposed rule changes filed pursuant to 
Section 19(b)(1) of the Act, except for proposed rule changes that have 
been abrogated pursuant to Section 19(b)(7)(C) of the Act, the 
statement should be sufficiently detailed and specific to support a 
finding under Section 19(b)(2) of the Act that the proposed rule change 
is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to the self-regulatory organization. 
With respect to proposed rule changes filed pursuant to Section 
19(b)(1) of the Act that have been abrogated pursuant to Section 
19(b)(7)(C) of the Act, the statement should be sufficiently detailed 
and specific to support a finding under Section 19(b)(7)(D) of the Act 
that the proposed rule change does not unduly burden competition or 
efficiency, does not conflict with the securities laws, and is not 
inconsistent with the public interest or the protection of investors.* 
* *
* * * * *
    (b) With respect to proposed rule changes filed pursuant to both 
Sections 19(b)(1) and 19(b)(2) of the Act, explain why the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to the self-regulatory 
organization. A mere assertion that the proposed rule change is 
consistent with those requirements is not sufficient. With respect to 
proposed rule changes filed pursuant Section 19(b)(1) of the Act that 
have been abrogated pursuant to Section 19(b)(7)(C) of the Act, explain 
why the proposed rule change does not unduly burden competition or 
efficiency, does not conflict with the securities laws, and is not 
inconsistent with the public interest and the protection of investors, 
in accordance with Section 19(b)(7)(D) of the Act. A mere assertion 
that the proposed rule change satisfies these requirements is not 
sufficient. In the case of a registered clearing agency, also explain 
how the proposed rule change will be implemented consistently with the 
safeguarding of securities and funds in its custody or control or for 
which it is responsible. Certain limitations that the Act imposes on 
self-regulatory organizations are summarized in the notes that follow.
* * * * *
6. Extension of Time for Commission Action
    State whether the self-regulatory organization consents to an 
extension of the time period specified in Section 19(b)(2) or Section 
19(b)(7)(D) of the Act and the duration of the extension, if any, to 
which the self-regulatory organization consents.



[[Page 26994]]


    Note: The self-regulatory organization may elect to consent to 
an extension of the time period specified in Section 19(b)(2) or 
Section 19(b)(7)(D) of the Act until it shall file an amendment 
which specifically states that the time period specified in Section 
19(b)(2) or Section 19(b)(7)(D) of the Act shall begin to run on the 
date of filing such amendment.

* * * * *
7. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for 
Accelerated Effectiveness Pursuant to Section 19(b)(2) or Section 
19(b)(7)(D)
* * * * *
    (d) If accelerated effectiveness pursuant to Section 19(b)(2) or 
Section 19(b)(7)(D) of the Act is requested, provide a statement 
explaining why there is good cause for the Commission to accelerate 
effectiveness.
* * * * *

Exhibit 1

* * * * *

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

* * * * *
    (If the proposed rule change is to be considered by the Commission 
pursuant to Section 19(b)(7)(D) of the Act, the following paragraph 
should be used.)
    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 self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) After consultation with the Commodity Futures Trading 
Commission, institute proceedings to determine whether the proposed 
rule change should be disapproved.
* * * * *
    15. Section 249.822 and Form 19b-7 are added to read as follows:

    Note: Form 19b-7 is attached as Appendix C to this document. 
Form 19b-7 will not appear in the Code of Federal Regulations.

Sec. 249.822  Form 19b-7, for filings with respect to proposed rule 
changes by all self-regulatory organizations, pursuant to section 
19(b)(7)(A) of the Securities Exchange Act of 1934.

    This form shall be used by all self-regulatory organizations, as 
defined in section 3(a)(26) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(26)), to file proposed rule changes with the Commission 
pursuant to section 19(b)(7)(A) of that Act (15 U.S.C. 78s(b)(7)(A)) 
and Rule 19b-4 (17 CFR 240.19b-4) thereunder.

    By the Commission.

    Dated: May 8, 2001.
Margaret H. McFarland,
Deputy Secretary.

Appendix A

    Note: Appendix A to the preamble will not appear in the Code of 
Federal Regulations.

Regulatory Flexibility Act Certification

    I, Laura S. Unger, Acting Chairman of the Securities and 
Exchange Commission, hereby certify pursuant to 5 U.S.C. Sec. 605(b) 
that proposed Rule 6a-4 and Form 1-N, conforming amendments to Rules 
6a-2 and 6a-3 under the Securities Exchange Act of 1934 (``Exchange 
Act''), and Rule 202.3 of the Securities and Exchange Commission's 
procedural rules, which would provide for the notice registration of 
designated contract markets and derivative transaction execution 
facilities as national securities exchanges (``Security Futures 
Product Exchanges'') to list and trade futures on individual stocks 
and narrow-based stock indexes, would not have a significant 
economic impact on a substantial number of small entities. Proposed 
Rule 19b-7, Form 19b-7, and conforming amendments to Rule 19b-4 and 
Form 19b-4 under the Exchange Act, which propose procedures for the 
filing of proposed rule changes, likely would apply to seven 
Security Futures Product Exchanges and one limited purpose national 
securities association registered pursuant to Section 15A(k) of the 
Exchange Act, none of which is a small entity for the purpose of the 
Regulatory Flexibility Act. Accordingly, the proposed rules, forms, 
and conforming amendments, if adopted, would not have a significant 
impact on a substantial number of small entities.


    Dated: May 8, 2001.
Laura S. Unger,
Acting Chairman.

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BILLING CODE 8010-01-C

General Instructions

When Should This Form Be Used?

    This form must be used for filings of proposed rule changes by 
all self-regulatory organizations (``SROs'') that are required to 
submit proposed rule changes pursuant to Section 19(b)(7) of the 
Securities Exchange Act of 1934 (``Act''). National securities 
exchanges registered pursuant to Section 6(g), and national 
securities associations registered pursuant to Section 15A(k) of the 
Act, are SROs for purposes of this form.

Terms

    Unless the context clearly indicates otherwise, terms used in 
this form have the meaning ascribed to them in the Act, as amended, 
and Rule 19b-7 thereunder.

Format Requirements

    The Notice section of this Form 19b-7 must comply with the 
guidelines for publication in the Federal Register as well as any 
requirements for electronic filing as published by the Securities 
and Exchange Commission (``SEC'' or ``Commission'') (if applicable). 
The Office of the Federal Register (``OFR'') [http://www.nara.gov/fedreg] offers guidance on Federal Register publication requirements 
in the Federal Register Document Drafting Handbook, October 1998 
Revision. For example, all references to the federal securities laws 
and the Commodity Exchange Act must include the corresponding cite 
to the United States Code in a footnote. All references to SEC and 
Commodity Futures Trading Commission (``CFTC'') rules must include 
the corresponding cite to the Code of Federal Regulations in a 
footnote. All references to Securities Exchange Act Releases and 
CFTC decisions, orders or letters must include the release number, 
release date, Federal Register cite, Federal Register date, and 
corresponding file number (e.g., SR-[SRO]-

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xxxx-xx). Failure to provide this information will result in the 
proposed rule change being deemed not properly filed. In addition, 
the OFR's Drafting Legal Documents is a general style guide to clear 
and concise legal writing.

When Is a Proposed Rule Change Considered Filed?

    To be considered filed, an SRO must include with its proposed 
rule change: a completed Form 19b-7 that includes the cover sheet, 
Notice, any written Certification submitted to the CFTC pursuant to 
Section 5c(c) of the Commodity Exchange Act (``CFTC 
Certification''), and applicable Exhibits. The proposed rule change 
will be considered filed on the date that the Commission receives it 
if the filing complies with all requirements of this form and the 
requirements of Rule 19b-7. Any filing that does not comply with all 
of the requirements of this form will not be considered filed with 
the Commission and will be returned to the SRO.
    The SRO must provide all required information, presented in a 
clear and comprehensible manner, to enable the public to provide 
meaningful comment on the proposal. This information also is 
necessary for the Commission to determine whether abrogation of the 
proposal is appropriate because it unduly burdens competition or 
efficiency, conflicts with the securities laws or is inconsistent 
with the public interest and the protection of investors. It is the 
responsibility of the SRO to prepare Items I and II of the Notice.

What Other Information Must an SRO Include When Filing a Proposed 
Rule Change?

Exhibit 1

    (a) Copies of all notices issued by the SRO soliciting comment 
on the proposed rule change.
    (b) Copies of all written comments on the proposed rule change 
received by the SRO, even if the SRO did not solicit comments. All 
comments should be presented in alphabetical order, together with an 
alphabetical listing of the commenters.
    (c) Any transcript of comments on the proposed rule change made 
at any public meeting or, if a transcript is not available, a 
summary of comments on the proposed rule change made at any meeting.
    (d) Any correspondence or other communications reduced to 
writing (including comment letters and e-mails) concerning the 
proposed rule change prepared or received by the SRO. All 
correspondence or other communications should be presented in 
alphabetical order together with an alphabetical listing of the 
authors.
    (e) If after the proposed rule change is filed but before the 
Commission takes final action on it, the SRO prepares or receives 
any correspondence or other communications reduced to writing 
(including comment letters and e-mails) concerning the proposed rule 
change, copies of the communications must be filed as previously 
instructed in paragraph (b) above.

Exhibit 2

    Copies of any form, report, or questionnaire that the SRO 
proposes to use to help implement or operate the proposed rule 
change, or that is referred to by the proposed rule change.

What To Do if There Is an Amendment to the Proposed Rule Change?

    If information on the Form 19b-7, the CFTC Certification, the 
Notice, or any applicable Exhibit is or becomes inaccurate or 
incomplete before the proposed rule change becomes effective, the 
SRO must file correcting amendments. Nine copies of amendments, 
including one manually signed copy, must be provided. SROs may file 
amendments electronically in accordance with Commission 
instructions.
    If an amendment alters the text of the proposed rule change as 
it appeared prior to the amendment, the amendment must mark the 
text, in any convenient manner, to indicate additions to and 
deletions from the immediately preceding filing. The purpose of this 
requirement is to permit the staff to immediately identify any 
changes made to the previous version of the rule text.

Where and How To File

    Nine copies of Form 19b-7 and all applicable exhibits must be 
filed with the Office of Market Supervision, Division of Market 
Regulation, Securities and Exchange Commission, 450 Fifth Street, 
N.W., Washington D.C. 20549-1003. The chief executive officer, 
general counsel, or other officer or director of the SRO that 
exercises similar authority must manually sign at least one copy of 
the completed Form 19b-7. The form also may be filed electronically 
with the Commission in compliance with such guidelines as may be 
published by the Commission from time to time. Please note that any 
information filed by the SRO requesting confidential treatment must 
be filed on paper with the Commission.

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Form 19b-7 Notice

Securities and Exchange Commission (Release No. 34-______; File No. 
SR-______)

Self-Regulatory Organization; [Notice of Filing and Immediate 
Effectiveness of a] Proposed Rule Change by [Name of Self-Regulatory 
Organization] Relating to [Brief Description of Proposed Rule Change]

    Pursuant to section 19(b)(7) of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-7 under the Act,\3\ notice is hereby 
given that on [date\4\], the [name of self-regulatory organization] 
filed with the Securities and Exchange Commission (``SEC'' or 
``Commission'') the proposed rule change described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons. [Self-
regulatory organization] has filed the proposed rule change with the 
Commodity Futures Trading Commission (``CFTC'').
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    \2\ 15 U.S.C. 78s(b)(7).
    \3\ 17 CFR 240.19b-7.
    \4\ To be completed by the Commission. This date will be the 
date on which the Commission receives the proposed rule change 
filing if the filing complies with all requirements of this form. 
See General Instructions.
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    Section 19(b)(7)(B) provides that a proposed rule change may 
take effect upon the occurrence of one of three events. The self-
regulatory organization should include the following sentence, if 
applicable.
    Pursuant to section 19(b)(7)(B) of the Act,\5\ the [self-
regulatory organization] filed a written certification with the CFTC 
under Section 5c(c) of the Commodity Exchange Act on [date].
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    \5\ 15 U.S.C. 78s(b)(7)(B).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    (Supply a brief statement of the terms of substance of the 
proposed rule change. If the proposed rule change is relatively 
brief, a separate statement need not be prepared, and the text of 
the proposed rule change may be inserted in lieu of the statement of 
the terms of substance. If the proposed rule change amends an 
existing rule, indicate the changes in the rule by brackets for 
words to be deleted and underscoring for words to be added.)

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    [Self-regulatory organization] has prepared statements 
concerning the purpose of, and basis for, the proposed rule change, 
burdens on competition, and comments received from members, 
participants, and others. These statements are set forth in Sections 
A, B, and C below. Section D below sets forth the text of the 
proposed rule change.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose

    Provide a statement of the purpose of the proposed rule. The 
statement must:
     Describe the text of the proposed rule change in a 
sufficiently detailed and specific manner as to permit interested 
persons to submit comments; 
     Describe the reasons for adopting the proposed rule 
change, any problems the proposed rule change is intended to 
address, the manner in which the proposed rule change will resolve 
those problems, the manner in which the proposed rule change will 
affect various market participants, and any significant problems 
known to the self-regulatory organization that persons affected are 
likely to have in complying with the proposed rule change; 
     Describe how the proposed rule change relates to 
existing rules of the self-regulatory organization; 
     Describe how the proposed rule change relates to any 
applicable provisions of the federal securities laws and the rules 
and regulations thereunder; 
     Identify rules of the self-regulatory organization and 
provisions of the federal securities laws that the self-regulatory 
organization reasonably expects the proposed rule change to affect 
and describe the anticipated effect of the proposed rule change on 
each applicable provision of the federal securities laws and 
applicable rules of the self-regulatory organization; and
     Set forth the file numbers and the Commission Release 
number, the Federal Register citation, and other identifying 
information for prior filings relating to the affected rule and 
disclose any prior CFTC order or release impacting the proposed rule 
change. 

2. Statutory Basis

     Provide a statement of the proposed rule change's basis 
under the Act and the rules and regulations under the Act applicable 
to the self-regulatory organization.

B. Self-Regulatory Organization's Statement on Burden on 
Competition

    The information required by this section must be sufficiently 
detailed and specific to support the premise that the proposed rule 
change does not unduly burden competition. In responding to this 
section, the self-regulatory organization must:
     State whether the proposed rule change will impose or 
relieve any burden on, or promote, competition; 
     Specify the particular categories of persons and kinds 
of businesses that will be burdened and the ways in which the 
proposed rule change will affect them; 
     Set forth and respond in detail to written comments 
addressing significant impacts or burdens on competition; and 
     Explain why any burden on competition is not undue; or, 
if the self-regulatory organization does not believe that the burden 
on competition is significant, explain why. 

C. Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants, or Others

    State whether or not comments were solicited or received. 
Summarize all comments received (solicited or unsolicited) and 
respond in detail to any significant issues raised about the 
proposed rule change.
    If an issue is summarized and responded to in detail elsewhere 
in this notice, that response need not be duplicated if an 
appropriate cross-reference is made to the place where the response 
can be found.

D. Text of the Proposed Rule Change

    Insert text of the proposed rule change, with deletions in 
brackets and additions underlined. If the self-regulatory 
organization is amending only part of the text of a lengthy rule, it 
may file only those portions of the text being amended if the filing 
is clearly understandable on its face.

[[Page 27005]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The self-regulatory organization shall include the following, if 
applicable:
    The proposed rule change has become effective on [insert date of 
filing of written certification with the CFTC under Section 5c(c) of 
the Commodity Exchange Act].
    Within 60 days of the date of effectiveness of the proposed rule 
change, the Commission, after consultation with the CFTC, may 
summarily abrogate the proposed rule change and require that the 
proposed rule change be refiled in accordance with the provisions of 
Section 19(b)(1) of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed 
rule change conflicts with the Act. Persons making written 
submissions should file nine copies of the submission with the 
Secretary, Securities and Exhange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609. Comments also may be submitted 
electronically to the following e-mail address: [email protected]. 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 these filings will also be 
available for inspection and copying at the principal office of the 
[name of self-regulatory organization]. Electronically submitted 
comments will be posted on the Commission's Internet website (http://www.sec.gov). All submissions should refer to File No. [insert file 
number] and should be submitted by [insert date 21 days from date of 
publication in the Federal Register \6\.
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    \6\ To be completed by the Federal Register.
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    This Notice was prepared by the [insert name of self-regulatory 
organization.] The Commission has not reviewed the substance of the 
proposed rule change prior to publication.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).

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[Insert name of Secretary],

Secretary.
[FR Doc. 01-12131 Filed 5-14-01; 8:45 am]
BILLING CODE 8010-01-P