17726 Federal Register / Vol. 76, No. 61 / Wednesday, March 30, 2011 / Notices 

6 In the years leading up to its 1966 

recommendation, the Commission took the position 

that the substitution of portfolio securities of a unit 

investment trust constituted an offer of exchange 

under Section 11 of the [1940] Act requiring prior 

Commission approval. The Commission proposed 

Section 26(c) in order to specifically address 

substitutions by unit investment trusts which 

previously had been scrutinized under Section 11 

of the [1940] Act. See House Committee on 

Interstate and Foreign Commerce, Report of the 

Securities and Exchange Commission on the Public 

Policy Implications of Investment Company 

Growth, H.R. Rep. No. 2337, 89th Cong., 2d Sess. 

337 (1966). 

7S. Rep. No. 184, 91st Cong., 1st Sess. 41 (1969), 

reprinted in 1970 U.S. Code Cong. & Admin. News 

4897, 4936 (1970). 

8While Section 26(c), by its terms, applies only 

to a unit investment trust holding the securities of 

one issuer, the Commission has interpreted Section 

26(c) to apply to ‘‘a substitution of securities in any 

subaccount of a registered separate account.’’ 

Adoption of Permanent Exemptions from Certain 

Provisions of the Investment Company Act of 1940 

for Registered Separate Accounts and Other 

Persons, Investment Company Act Rel. No. 12678 

(Sept. 21, 1982) (emphasis added). 

Section 26 be amended to require that 

a proposed substitution of the 

underlying investments of a trust 

receive prior Commission approval.6

Congress responded to the 

Commissioners’ concerns by enacting 

Section 26(c) to require that the 

Commission approve all substitutions 

by the depositor of investments held by 

unit investment trusts. The Senate 

Report on the bill explained the purpose 

of the amendment as follows: 

The proposed amendment recognizes that 

in the case of the unit investment trust 

holding the securities of a single issuer 

notification to shareholders does not provide 

adequate protection since the only relief 

available to shareholders, if dissatisfied, 

would be to redeem their shares. A 

shareholder who redeems and reinvests the 

proceeds in another unit investment trust or 

in an open-end company would under most 

circumstances be subject to a new sales load. 

The proposed amendment would close this 

gap in shareholder protection by providing 

for Commission approval of the substitution. 

The Commission would be required to issue 

an order approving the substitution if it finds 

the substitution consistent with the 

protection of the investors and provisions of 

the [1940] Act.7

42. Applicants represent that the 

proposed substitution appears to 

involve the substitution of securities 

within the meaning of Section 26(c) of 

the 1940 Act.8 Applicants therefore 

request an order from the Commission 

pursuant to Section 26(c) approving the 

proposed substitution. 

43. Applicants represent that all the 

Contracts expressly reserve for the 

Company the right, subject to 

compliance with applicable law, to 

substitute shares of one fund or 

portfolio held by a subaccount of an 

Account for another. The prospectuses 

for the Contracts and the Accounts 

contain appropriate disclosure of this 

right. The Company has reserved this 

right of substitution both to protect itself 

and its Contract owners in situations 

where it believes an underlying fund is 

no longer appropriate for Contract 

owners or where either might be harmed 

or disadvantaged by circumstances 

surrounding the issuer of the shares 

held by one or more of its separate 

accounts, and to afford the opportunity 

to replace such shares where to do so 

could benefit itself and Contract owners. 

44. Applicants maintain that Contract 

owners will be better served by the 

proposed substitution and that the 

proposed substitution is appropriate 

given the Replacement Portfolio, the 

Replaced Portfolio, and other 

investment options available under the 

Contracts. In the last four (4) out of the 

last five (5) years, the Replacement 

Portfolio has had investment 

performance superior to that of the 

Replaced Portfolio. In addition, for each 

one-year, five-year and since inception 

periods ended December 31, 2009, the 

Replacement Portfolio has had 

investment performance superior to that 

of the Replaced Portfolio. The 

Replacement Portfolio has also had 

substantially lower expenses than the 

Replaced Portfolio over these same 

periods. 

45. Applicants believe that the 

Replacement Portfolio and the Replaced 

Portfolio are substantially the same in 

their stated investment objectives and 

principal investment strategies as to 

afford investors continuity of 

investment and risk. In addition, 

Applicants generally submit that the 

proposed substitution meets the 

standards that the Commission and its 

staff have applied to similar 

substitutions that have been approved 

in the past. 

46. Applicants believe that Contract 

owners will be better off with the 

Replacement Portfolio than with the 

Replaced Portfolio. The proposed 

substitution retains for Contract owners 

the investment flexibility that is a 

central feature of the Contracts. If the 

proposed substitution is carried out, all 

Contract owners will be permitted to 

allocate purchase payments and transfer 

Contract values between and among the 

remaining subaccounts as they could 

before the proposed substitution. 

47. Applicants assert that the 

proposed substitution is not the type of 

substitution that Section 26(c) was 

designed to prevent. Unlike traditional 

unit investment trusts where a depositor 

could only substitute an investment 

security in a manner which 

permanently affected all the investors in 

the trust, the Contracts provide each 

Contract owner with the right to 

exercise his or her own judgment and 

transfer Contract values into other 

subaccounts and the fixed account. 

Moreover, the Contracts will offer 

Contract owners the opportunity to 

transfer amounts out of the affected 

subaccount into any of the remaining 

subaccounts without cost or 

disadvantage. The proposed 

substitution, therefore, will not result in 

the type of costly forced redemption 

that Section 26(c) was designed to 

prevent. 

48. Applicants state that the proposed 

substitution is also unlike the type of 

substitution that Section 26(c) was 

designed to prevent in that by 

purchasing a Contract, Contract owners 

select much more than a particular 

investment company in which to invest 

their Contract values. They also select 

the specific type of coverage offered by 

the Company under the Contracts, as 

well as numerous other rights and 

privileges set forth in the Contracts. 

Contract owners may also have 

considered the size, financial condition, 

type, and reputation for service of the 

Company, from whom they purchased 

their Contract in the first place. These 

factors will not change because of the 

proposed substitution. 

Conclusion 

Applicants request an order of the 

Commission pursuant to Section 26(c) 

of the 1940 Act approving the proposed 

substitution by the Company. 

Applicants submit that, for all the 

reasons stated above, the proposed 

substitution is consistent with the 

protection of investors and the purposes 

fairly intended by the policy and 

provisions of the 1940 Act. 

For the Commission, by the Division of 

Investment Management pursuant to 

delegated authority. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7418 Filed 3–29–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

In the Matter of Euro Solar Parks, Inc.; 

Order of Suspension of Trading 

March 28, 2011. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Euro Solar 

Parks, Inc. (‘‘Euro Solar’’) because of 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 76, No. 61 / Wednesday, March 30, 2011 / Notices 17727 

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

2Securities Exchange Act Release No. 34–63811 

(February 1, 2011), 76 FR 6648 (February 7, 2011). 

3A reference security may be an exchange-traded 

fund (‘‘ETF’’). 

4Securities Exchange Act Release No. 34–63575 

(December 17, 2010), 75 FR 81320 (December 27, 

2010) [File No. SR–Phlx–2010–176]. 

5The combination of the two components is 

referred to as an ‘‘Alpha Pair.’’ The first component 

of each Alpha Pair is referred to as the ‘‘Target 

Component’’ and the second component is referred 

to as the ‘‘Benchmark Component.’’ 

6 15 U.S.C. 78q–1(b)(3)(F). 

7 15 U.S.C. 78q–1. 

8 15 U.S.C. 78s(b)(2). 

9 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition and capital formation. 15 

U.S.C. 78c(f). 

10 17 CFR 200.30–3(a)(12). 

possible manipulative conduct 

occurring in the market for the 

company’s stock. Euro Solar is quoted 

on the OTC Bulletin Board and OTC 

Link under the ticker symbol ESLP. 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of the above-listed 

company. 

Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in the 

securities of the above-listed company is 

suspended for the period from 9:30 a.m. 

EDT on March 28, 2011, through 11:59 

p.m. EDT on April 8, 2011. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–7572 Filed 3–28–11; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64119; File No. SR–OCC– 

2011–02] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Approving Proposed Rule Change To 

Accommodate the Clearance of 

Relative Performance Options 

March 24, 2011. 

I. Introduction 

On January 19, 2011, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change SR–OCC–2011–02 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’).1 The proposed rule change was 

published for comment in the Federal 

Register on February 7, 2011.2 No 

comment letters were received on the 

proposal. This order approves the 

proposal. 

II. Description 

The purpose of this rule change is to 

accommodate the clearance of options 

on certain indexes measuring the 

relative performance of one reference 

security or reference index relative to a 

second reference security or reference 

index (‘‘Relative Performance 

Options’’).3 The revised rules have been 

broadly drafted to cover Alpha Options, 

a Relative Performance Option 

described below, and any similar 

product that may be listed on any 

participant exchange in the future. 

NASDAQ OMX PHLX LLC (‘‘Phlx’’) is 

proposing to list options (‘‘Alpha 

Options’’) 4 on NASDAQ OMX Alpha 

Indexes (‘‘Alpha Indexes’’), a family of 

indexes developed by NASDAQ OMX 

Group, Inc. (‘‘Nasdaq’’). Alpha Indexes 

measure relative total returns of one 

underlying stock and one underlying 

ETF, which are also traded on the Phlx.5

An Alpha Index is calculated by 

measuring the total return performance 

of the Target Component relative to the 

total return performance of the 

Benchmark Component based upon 

prices of transactions on the primary 

listing exchange of each underlying 

component. Each Alpha Index will 

initially be set at 100.00. Alpha Options 

will be cash-settled, European-style 

options. In the event of a corporate 

event that eliminates one of the 

underlying components of an Alpha 

Index, Nasdaq will cease calculation of 

the Alpha Index for that pair of 

underlying components, and all 

outstanding option positions will be 

immediately settled at the last 

disseminated price of that Alpha Index. 

Relative Performance Options are 

highly similar to other index options 

cleared by OCC except for the identity 

and nature of the underlying index. 

Therefore, OCC believes that the 

provisions of its By-Laws and Rules 

governing index options, as they are 

currently in effect, are generally 

sufficient to support the clearance and 

settlement of Relative Performance 

Options. However, minor modifications 

are needed to support the clearance and 

settlement of Alpha Options and other 

types of Relative Performance Options 

that may be introduced in the future. 

For example, OCC’s current Rules do 

not account for the possibility of an 

index having a negative value as could 

occur for certain Relative Performance 

Indexes. If this should ever occur, the 

index value would be deemed to be 

equal to zero or, because certain systems 

may not accept a zero index value, a 

near-zero positive amount. Therefore, 

OCC is modifying its By-Laws to 

provide for such potential adjustments 

of the index value by either the listing 

exchange or OCC. 

In addition, OCC’s current By-Laws 

do not account for the possibility that an 

expiration date may be accelerated 

when a reference security (i.e., an 

individual reference security and not a 

reference index) that is one of the 

components of an underlying relative 

performance index ceases to be 

published as a result of a cash-out 

merger or similar corporate event. If the 

value of an underlying Relative 

Performance Index ceases to be 

published as a result of such an event, 

the value of the overlying options would 

become fixed. Therefore, OCC proposes 

to modify its By-Laws to provide that 

OCC will either accelerate or not 

accelerate the expiration in consultation 

with the relevant exchange on which 

the index underlying a Relative 

Performance Option is listed. 

III. Discussion 

Section 17A(b)(3)(F) of the Act 6

requires, among other things, that the 

rules of a clearing agency be designed to 

remove impediments to and perfect the 

mechanism of a national system for the 

prompt and accurate clearance and 

settlement of securities transactions. 

Because the proposed rule change 

modifies OCC’s Rules and By-Laws to 

support the clearance of Alpha Options 

and other types of Relative Performance 

Options that may be introduced in the 

future, the proposed rule change is 

facilitating the perfection of the national 

system for the clearance and settlement 

of securities transactions and therefore 

is consistent with the requirements of 

Section 17A(b)(3)(F) of the Act. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the Act 7

and the rules and regulations 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,8 that the 

proposed rule change (File No. SR– 

OCC–2011–02) be, and hereby is, 

approved.9

For the Commission by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7366 Filed 3–29–11; 8:45 am] 

BILLING CODE 8011–01–P 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES