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59380 Federal Register / Vol. 70, No.

196 / Wednesday, October 12, 2005 / Notices

accordance with rule 53(c), affirmatively ENO’s most pressing concern, and the 2000 Order), Entergy’s consolidated
demonstrate that the issue and sale of a immediate cause of its bankruptcy capitalization ratio was approximately
security to finance the acquisition of an filing, is the liquidity crisis resulting 50.0% debt and approximately 50.0%
EWG or the guarantee of a security of an from the hurricane’s severe disruption equity, consisting of approximately
EWG will not have a substantial adverse to operations. ENO estimates that over 5.0% preferred stock and approximately
impact upon the financial integrity of one hundred thousand of its customers 45.0% common stock. As of June 30,
the registered holding company system are presently unable to accept electric 2005, Entergy’s consolidated
and will not have an adverse impact on and gas service, and will remain unable capitalization ratio was approximately
any utility subsidiary, its customers or to accept such service for a period of 50.6% debt and approximately 49.4%
on the ability of State commissions to time that cannot yet be determined. equity, consisting of approximately
protect the subsidiary or customers. Other customers in the New Orleans 2.3% preferred stock and approximately
area who have had their utility services 47.1% common stock. These ratios are
III. Rules 53(b)(1) and 53(c)
restored have been displaced by within industry ranges set by the
A. Rule 53(b)(1) Hurricane Katrina. The ordinary cycle of independent debt rating agencies for
Rule 53(b)(1) states that the safe customer payment of utility bills has BBB-rated electric utility companies.
harbor provided by the rule generally is been shattered. As a result, ENO’s cash 5. As of the date of the Amended
not available if: (1) The registered receipts have been significantly below Declarations, each of the considerations
holding company or any subsidiary normal levels since the hurricane. set forth in the 2000 Order, in support
company having assets with book value B. Rule 53(c) of Entergy’s assertion that its existing
exceeding 10% or more of consolidated and proposed level of investment in
In accordance with rule 53(c), Entergy Exempt Projects would not have an
retained earnings has been the subject of
believes that the transactions authorized adverse impact on any Entergy
a bankruptcy proceeding; (2) the average
in the Original Order, 2000 Order and operating utility subsidiaries or their
consolidated retained earnings for the
2004 Order (to the extent they involve ratepayers, or on the ability of interested
four most recent quarterly periods have
the issuance of securities by Entergy to state commissions to protect the utilities
decreased by 10% from the average for
finance the acquisition of EWGs), (i) and their customers, continues to apply.
the previous four quarterly periods and
will not have a substantial adverse
the aggregate investment in EWGs and For the Commission, by the Division of
impact upon Entergy’s financial
FUCOs exceeds two percent of total Investment Management, pursuant to
integrity and (ii) will not have an
capital invested in utility operations; or delegated authority.
adverse impact on Entergy’s utility
(3) in the previous fiscal year, the Jill M. Peterson,
subsidiaries (including ENO), their
registered holding company reported Assistant Secretary.
customers or on the ability of Entergy’s
operating losses attributable to its direct [FR Doc. E5–5580 Filed 10–11–05; 8:45 am]
state and local regulators to protect the
or indirect investments in EWGs and
subsidiaries or customers. In support of BILLING CODE 8010–01–P
FUCOs, and the losses exceed an
its position, Entergy states that:
amount equal to 5% of consolidated 1. As of June 30, 2005, Entergy’s
retained earnings. aggregate investment in Exempt Projects SECURITIES AND EXCHANGE
On September 23, 2005, Entergy New COMMISSION
was equal to 17% of Entergy’s total
Orleans, Inc. (‘‘ENO’’), a public utility
consolidated capitalization, 15% of [Release No. 34–52563; File No. SR–Amex–
subsidiary of Entergy, filed a voluntary
consolidated net utility plant and 18% 2004–74]
petition for relief under Chapter 11 of
of the market value of Entergy’s
the U.S. Bankruptcy Code (‘‘Bankruptcy
common stock. As of March 31, 2000 Self-Regulatory Organizations;
Code’’) in the United States Bankruptcy
(the most recent calendar quarter American Stock Exchange LLC; Notice
Court for the Eastern District of
preceding the 2000 Order), Entergy’s of Filing of Proposed Rule Change and
Louisiana. The book value of ENO’s
aggregate investment in Exempt Projects Amendment No. 1 Thereto Relating to
assets exceeded 10% of Entergy’s
was equal to 7% of Entergy’s total the Elimination of Commentary .01(5)
‘‘consolidated retained earnings’’ as of
capitalization, 7% of Entergy’s to Amex Rule 916
June 30, 2005. Consequently, the
consolidated net utility plant and 24%
circumstances described in rule 53(b)(1) October 4, 2005.
of the market value of Entergy’s
have occurred. Pursuant to section 19(b)(1) of the
The bankruptcy petition was outstanding common stock.
2. Entergy’s consolidated retained Securities Exchange Act of 1934 (‘‘Act’’
precipitated by the unanticipated and or ‘‘Exchange Act’’),1 and Rule 19b–4
earnings have grown by an average of
devastating impact of Hurricane Katrina, thereunder,2 notice is hereby given that
12% annually during the period since
which destroyed substantial portions of on August 27, 2004, the American Stock
the Commission issued the 2000 Order
ENO’s facilities, disrupted its revenues, Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’)
(i.e., from June 30, 2000 through June
and, with the evacuation of the City of filed with the Securities and Exchange
30, 2005).
New Orleans (‘‘City’’), eliminated at 3. Income from Entergy’s investments Commission (‘‘Commission’’) the
least in the short term, the quality of in Exempt Projects has contributed proposed rule change as described in
ENO’s customer base, which is directly positively to its overall earnings during Items I, II, and III below, which Items
linked to the fortunes of the City. ENO the period since the Commission issued have been prepared by Amex. On
is continuing in possession of its the 2000 Order. September 26, 2005, Amex filed
properties and has continued to operate 4. As of March 31, 2000 (the most Amendment No. 1 to the proposed rule
its business as a debtor-in-possession recent calendar quarter preceding the change.3 The Commission is publishing
pursuant to sections 1107(a) and 1108 of
the Bankruptcy Code.3 allowing ENO to borrow up to $150 million under
1 15 U.S.C 78s(b)(1).
2 17 CFR 240.19b–4.
the credit facility. In addition the order modified
3 On September 26, 2005, the Commission issued two outstanding orders so as to eliminate the 3 In Amendment No. 1, Amex proposed to amend

an emergency order (Holding Company Act Release requirements that ENO maintain common equity of the rule text of Amex Rule 915, in order to
No. 28036) authorizing Entergy and ENO to enter at least 30% of its consolidated capitalization and substitute the term ‘‘NMS stock’’ for the term
into a secured $200 million credit facility and investment grade credit ratings. ‘‘national market system security,’’ for consistency

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Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Notices 59381

this notice to solicit comments on the will not be deemed to meet the Moreover, the limitation on new
proposed rule change, as amended, from Exchange’s requirements for continued options series imposed pursuant to
interested persons. approval whenever: Commentary .01(5) causes considerable
5. The issuer has failed to make timely confusion and frustration in the options
I. Self-Regulatory Organization’s
reports as required by applicable marketplace because it only restricts the
Statement of the Terms of Substance of
requirements of the Securities Exchange Act trading of new series in a given option
the Proposed Rule Change
of 1934, and such failure has not been class. The Exchange has found that
The Exchange proposes to eliminate corrected within 30 days after the date the Commentary .01(5) tends to confuse
Commentary .01(5) to Exchange Rule report was due to be filed. both public customers and market
916, which governs the withdrawal of professionals, who find themselves
The Exchange proposes to eliminate this
approval for securities underlying restricted from trading any new options
provision based on its experience in
options traded on the Exchange and series in a given class at the same time
recent years applying this requirement.
amend Exchange Rule 915(a), which that trading occurs in pre-existing
The Exchange believes that this
governs the criteria of underlying options series or the underlying stock
provision limits the ability of investors
securities with respect to which option itself. Still further confusion can arise in
to use options to hedge existing equity
contracts are approved for listing and this process because the Exchange
positions and is not necessary given the
trading on the Exchange. The text of the maintains that Amex, as well as the
entire application of Commentary .01. In
proposed rule change is available on other options exchanges, have no
addition, the Exchange notes that the
Amex’s Web site (http:// independent means to verify whether
underlying security will continue to, at the Office of the any of the listed securities underlying
trade on national securities exchanges,
Secretary of Amex, and at the options traded at the Exchange have
regardless of the late filings or reports
Commission’s Public Reference Room. failed to meet their Exchange Act
required by the Exchange Act.
II. Self-Regulatory Organization’s The Exchange submits that reporting requirements. Accordingly,
Statement of the Purpose of, and Commentary .01(5) potentially harms the options exchanges, including Amex,
Statutory Basis for, the Proposed Rule investors and the marketplace by must rely on other SROs or third parties
Change preventing the use of new options series for such notification, which is always
to hedge positions in the underlying difficult to monitor, particularly since
In its filing with the Commission,
security of companies that fail to make such third-party reports are sometimes
Amex included statements concerning
timely reports required by the Exchange delayed or inaccurate.4
the purpose of and basis for the The Exchange further submits that
proposed rule change and discussed any Act. The Exchange states that this
restriction is inconsistent with the Commentary .01(5) is unnecessary for
comments it received on the proposed the protection of investors and the
rule change. The text of these statements underlying equity markets, whereby
failure to properly file Exchange Act marketplace. For example, underlying
may be examined at the places specified securities that are delisted or fail to be
in Item IV below. Amex has prepared reports does not result in a similar
trading restriction. Accordingly, the NMS securities are no longer approved
summaries, set forth in Sections A, B, for options trading under existing rules.
and C below, of the most significant Exchange maintains that Commentary
.01(5) limits the ability of investors who Specifically, existing Commentary .01(6)
aspects of such statements. to Rule 916 provides that an underlying
may wish to hedge their underlying
A. Self-Regulatory Organization’s stock positions with new options series, security will no longer be approved for
Statement of the Purpose of, and the at a time when the ability to hedge may options transactions when:
Statutory Basis for, the Proposed Rule be particularly important. ‘‘(6) The issue, in the case of an underlying
Change The Exchange believes that security that is principally traded on a
Commentary .01(5) has substantially national securities exchange, is delisted from
1. Purpose trading on that exchange and neither meets
outlived any usefulness and now serves
The purpose of the proposed rule NMS criteria nor traded through the facilities
to unnecessarily burden and confuse the
change is to eliminate Commentary
investing public. Commentary .01(5) to
.01(5) to Amex Rule 916. Commentary 4 The Exchange notes that it has a procedure in
Rule 916 has been a part of the place to monitor when an underlying security
.01 sets forth the guidelines to be
Exchange’s continued listing criteria previously approved for option transaction ceases
considered by the Exchange in to trade on or is delisted from its primary listed
since late 1976, shortly after the listing
determining whether an underlying market. The Exchange’s Listing Qualification
and trading of standardized options
security previously approved for Department (‘‘Department’’) monitors: (1) The daily
commenced on the Exchange. In list services issued by the primary listing markets
options trading continues to be
contrast to 1976, the Exchange states (such as the New York Stock Exchange, Inc., Amex,
appropriate. Specifically, Rule 916 and and The Nasdaq Stock Market); (2) press releases
that the standardized options market
related Commentary .01 provide that if issued by the primary listing markets and the news
today is a mature market largely
an underlying security previously wires; and (3) information circulars issued by the
consisting of sophisticated investors primary listing markets. If the Department is aware
approved by the Exchange does not
with significant access to information, that an underlying security may be halted for
meet the then current requirements for trading on or delisted from its primary listed
such as information on the failure of a
continuance, the Exchange will not market, the Department would monitor such
company to make timely Exchange Act
open for trading additional series of security closely on a daily basis. In the event of a
reports. Therefore, the Exchange delisting of the underlying security from its primary
such options class and may also limit
contends that there is no reason to limit listed market, Amex will cease opening new series
any new opening transactions in those of options in such security and allow the existing
the opportunity for investors to execute
options series that have previously been series of options to expire. Additionally, if the
transactions in options classes
opened for trading. underlying security has been halted or suspended
(including new series within those in the primary market, the Exchange may halt
Commentary .01(5), in particular,
classes) simply because a company is trading in the option class pursuant to Amex Rule
provides that an underlying security 918(b) and shall halt trading pursuant to Amex Rule
not timely in filing its Exchange Act
117. Telephone conversation between Jeffrey Burns,
with Regulation NMS. See Securities Exchange Act
reports, when investors are not similarly Associate General Counsel, Amex, and Steve L.
Release No. 51808 (June 9, 2005), 70 FR 37496 (June restricted from purchasing or selling Kuan, Special Counsel, Division of Market
29, 2005). shares in the underlying company. Regulation, Commission, September 29, 2005.

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59382 Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Notices

of a national securities association, or the perfect the mechanism of a free and Internet Web site (
issue, in the case of an underlying security open market and a national market rules/sro.shtml). Copies of the
that is principally traded through the system. submission, all subsequent
facilities or a national securities association, amendments, all written statements
is no longer designated as an NMS B. Self-Regulatory Organization’s
security.’’ 5
with respect to the proposed rule
Statement on Burden on Competition change that are filed with the
Amex believes a better approach is to
limit or suspend options trading when The Exchange does not believe that Commission, and all written
the underlying security itself has been the proposed rule change will impose communications relating to the
delisted and not subject the process to any burden on competition. proposed rule change between the
the inherent uncertainty of a failure of Commission and any person, other than
C. Self-Regulatory Organization’s
the underlying company to timely file those that may be withheld from the
Statement on Comments on the
its Exchange Act reports. The Exchange public in accordance with the
Proposed Rule Change Received From
accordingly submits that Commentary provisions of 5 U.S.C. 552, will be
Members, Participants or Others
.01(5) should be eliminated. available for inspection and copying in
No written comments were solicited the Commission’s Public Reference
Moreover, the Exchange is amending
or received with respect to the proposed Room. Copies of such filing also will be
Amex Rule 915(a) to substitute ‘‘NMS
rule change. available for inspection and copying at
stock’’ as defined in Regulation NMS for
the previous description of a national III. Date of Effectiveness of the the principal office of the Exchange. All
market system security. In addition, the Proposed Rule Change and Timing for comments received will be posted
Exchange is updating Commentary Commission Action without change; the Commission does
.01(6) of Rule 916 in light of Regulation not edit personal identifying
Within 35 days of the date of information from submissions. You
NMS. publication of this notice in the Federal
Both of these provisions include a should submit only information that
Register or within such longer period (i) you wish to make available publicly. All
requirement that the underlying security as the Commission may designate up to
must be a national market system submissions should refer to File
90 days of such date if it finds such Number SR–Amex–2004–74 and should
security (‘‘NMS security’’). As part of longer period to be appropriate and
the recently adopted Regulation NMS, be submitted on or before November 2,
publishes its reasons for so finding or 2005.
among other things, the Commission (ii) as to which the self-regulatory
revised the definition of an ‘‘NMS For the Commission, by the Division of
organization consents, the Commission Market Regulation, pursuant to delegated
security.’’ 6 Specifically, Rule 600(b)(46) will:
under Regulation NMS defines an NMS authority.9
(A) By order approve such proposed Jill M. Peterson,
security as ‘‘any security or class of rule change, or
securities for which transaction reports Assistant Secretary.
(B) institute proceedings to determine
are collected, processed, and made [FR Doc. E5–5574 Filed 10–11–05; 8:45 am]
whether the proposed rule change
available pursuant to an effective should be disapproved. BILLING CODE 8010–01–P
transaction reporting plan, or an
effective national market system plan IV. Solicitation of Comments
for reporting transactions in listed Interested persons are invited to SECURITIES AND EXCHANGE
options.’’ Rule 600(b)(47) also defines submit written data, views and COMMISSION
an ‘‘NMS stock’’ as any NMS security arguments concerning the foregoing, [Release No. 34–52562; File No. SR–CBOE–
other than an option. As such, Exchange including whether the proposed rule 2004–37]
Rule 915(a) and Commentary .01(6) of change is consistent with the Act.
Exchange Rule 916 will be amended to Comments may be submitted by any of Self-Regulatory Organizations;
reflect these new terms. the following methods: Chicago Board Options Exchange,
Incorporated; Notice of Filing of
2. Statutory Basis Electronic Comments Proposed Rule Change and
The Exchange believes that the • Use the Commission’s Internet Amendment No. 1 Thereto Relating to
proposed rule change is consistent with comment form ( the Deletion of Interpretation and
Section 6(b) of the Act,7 in general, and rules/sro.shtml); or Policy .01(e) to CBOE Rule 5.4
furthers the objectives of Section 6(b)(5) • Send an e-mail to rule- October 4, 2005.
of the Act,8 in particular, in that it is Please include File
designed to prevent fraudulent and Pursuant to section 19(b)(1) of the
Number SR–Amex–2004–74 on the Securities Exchange Act of 1934 (‘‘Act’’
manipulative acts and practices, to subject line.
promote just and equitable principles of or ‘‘Exchange Act’’),1 and Rule 19b–4
change, to foster cooperation and Paper Comments thereunder,2 notice is hereby given that
on July 1, 2004, the Chicago Board
coordination with persons engaged in • Send paper comments in triplicate
facilitating transactions in securities, Options Exchange, Incorporated
to Jonathan G. Katz, Secretary,
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the
and to remove impediments to and Securities and Exchange Commission, Securities and Exchange Commission
100 F Street, NE., Washington, DC (‘‘Commission’’) the proposed rule
5 In Amendment No. 1, the Exchange proposed to
20549–9303. change as described in Items I, II, and
amend Amex Rule 916, Commentary .01(6) to
update the rule text with respect to the definition All submissions should refer to File III below, which Items have been
of ‘‘NMS stock’’ in Regulation NMS under the Act. Number SR–Amex–2004–74. This file prepared by the CBOE. On September
Telephone conversation between Jeffrey Burns, number should be included on the 21, 2005, the Exchange filed
Associate General Counsel, Amex, and Steve L. subject line if e-mail is used. To help the Amendment No. 1 to the proposed rule
Kuan, Special Counsel, Division of Market
Regulation Commission, September 29, 2005. Commission process and review your
6 See supra note 3. comments more efficiently, please use 9 17 CFR 200.30–3(a)(12).
7 15 U.S.C. 78f. only one method. The Commission will 1 15 U.S.C. 78s(b)(1).
8 15 U.S.C. 78f(b)(5). post all comments on the Commission’s 2 17 CFR 240.19b–4.

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