Federal Register / Vol. 74, No. 165 / Thursday, August 27, 2009 / Notices 43737 

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

2 17 CFR 240.19b–4. 

or VLI Accounts not registered as 

investment companies under the Act, 

pass-through voting privileges will be 

extended to owners of such Contracts to 

the extent granted by the Participating 

Insurance Company. Accordingly, such 

Participating Insurance Companies, 

where applicable, will vote the shares of 

each Fund held in their VLI Accounts 

and VA Accounts in a manner 

consistent with voting instructions 

timely received from Variable Contract 

owners. Participating Insurance 

Companies will be responsible for 

assuring that each of their VLI and VA 

Accounts investing in a Fund calculates 

voting privileges in a manner consistent 

with all other Participating Insurance 

Companies investing in that Fund. 

The obligation to calculate voting 

privileges as provided in this 

Application shall be a contractual 

obligation of all Participating Insurance 

Companies under their participation 

agreement with the Fund. Each 

Participating Insurance Company will 

vote shares of each Fund held in its VLI 

or VA Accounts for which no timely 

voting instructions are received, as well 

as shares attributed to it, in the same 

proportion as those shares for which 

voting instructions are received. Each 

Plan will vote as required by applicable 

law, governing Plan documents and as 

provided in this application. 

7. As long as the Act requires passthrough voting privileges to be provided 

to Variable Contract owners or the 

Commission interprets the Act to 

require the same, a Fund investment 

adviser (or its affiliates) will vote their 

shares of the Fund in the same 

proportion as all votes cast on behalf of 

all Variable Contract owners having 

voting rights; provided, however, that 

such an investment adviser (or affiliates) 

shall vote its shares in such other 

manner as may be required by the 

Commission or its staff. 

8. Each Fund will comply with all 

provisions of the Act requiring voting by 

shareholders (which, for these purposes, 

shall be the persons having a voting 

interest in its shares), and, in particular, 

the Fund will either provide for annual 

meetings (except to the extent that the 

Commission may interpret Section 16 of 

the Act not to require such meetings) or 

comply with Section 16(c) of the Act 

(although each Fund is not, or will not 

be, one of those trusts of the type 

described in Section 16(c) of the Act), as 

well as with Section 16(a) of the Act 

and, if and when applicable, Section 

16(b) of the Act. Further, each Fund will 

act in accordance with the 

Commission’s interpretations of the 

requirements of Section 16(a) with 

respect to periodic elections of 

directors/trustees and with whatever 

rules the Commission may promulgate 

thereto. 

9. A Fund will make its shares 

available to the VLI Accounts, VA 

Accounts, and Plans at or about the time 

it accepts any seed capital from its 

investment adviser (or affiliates) or from 

a general account of a Participating 

Insurance Company. 

10. Each Fund has notified, or will 

notify, all Participants that disclosure 

regarding potential risks of mixed and 

shared funding may be appropriate in 

VLI Account and VA Account 

prospectuses or Plan documents. Each 

Fund will disclose, in its prospectus 

that: (a) Shares of the Fund may be 

offered to both VA Accounts and VLI 

Accounts and, if applicable, to Plans, (b) 

due to differences in tax treatment and 

other considerations, the interests of 

various Variable Contract owners 

participating in the Fund and the 

interests of Plan participants investing 

in the Fund, if applicable, may conflict, 

and (c) the Fund’s Board will monitor 

events in order to identify the existence 

of any material irreconcilable conflicts 

and to determine what action, if any, 

should be taken in response to any such 

conflicts. 

11. If and to the extent Rule 6e–2 and 

Rule 6e–3(T) under the Act are 

amended, or Rule 6e–3 under the Act is 

adopted, to provide exemptive relief 

from any provision of the Act, or the 

rules thereunder, with respect to mixed 

or shared funding, on terms and 

conditions materially different from any 

exemptions granted in the order 

requested in this Application, then each 

Fund and/or Participating Insurance 

Companies, as appropriate, shall take 

such steps as may be necessary to 

comply with Rules 6e–2 or 6e–3(T), as 

amended, or Rule 6e–3, to the extent 

such rules are applicable. 

12. Each Participant, at least annually, 

shall submit to the Board of each Fund 

such reports, materials or data as the 

Board reasonably may request so that 

the directors/trustees of the Board may 

fully carry out the obligations imposed 

upon the Board by the conditions 

contained in this Application. Such 

reports, materials and data shall be 

submitted more frequently if deemed 

appropriate by the Board of a Fund. The 

obligations of the Participants to 

provide these reports, materials and 

data to the Board, when it so reasonably 

requests, shall be a contractual 

obligation of all Participants under their 

participation agreement with the Fund. 

13. All reports of potential or existing 

conflicts received by a Board, and all 

Board action with regard to determining 

the existence of a conflict, notifying 

Participants of a conflict and 

determining whether any proposed 

action adequately remedies a conflict, 

will be properly recorded in the minutes 

of the Board or other appropriate 

records, and such minutes or other 

records shall be made available to the 

Commission upon request. 

14. Each Fund will not accept a 

purchase order from a Qualified Plan if 

such purchase would make the Plan an 

owner of 10 percent or more of the net 

assets of the Fund unless the Plan 

executes an agreement with the Fund 

governing participation in the Fund that 

includes the conditions set forth herein 

to the extent applicable. A Plan will 

execute an application containing an 

acknowledgement of this condition at 

the time of its initial purchase of shares. 

Conclusion 

Applicants submit, for all the reasons 

explained above, that the exemptions 

requested are appropriate in the public 

interest and 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. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20599 Filed 8–26–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60554; File No. SR– 

NYSEAmex–2009–42] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval of a Proposed 

Rule Change, as Modified by 

Amendment No. 1, Relating to the 

Electronic Trading of Complex Orders 

August 21, 2009. 

I. Introduction 

On July 9, 2009, NYSE Amex LLC 

(‘‘NYSE Amex’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’),1 and 

Rule 19b–4 thereunder,2 a proposal to 

adopt rules relating to the electronic 

trading of complex orders. The 

proposed rule change was published for 

comment in the Federal Register on July 

mstockstill on DSKH9S0YB1PROD with NOTICES

43738 Federal Register / Vol. 74, No. 165 / Thursday, August 27, 2009 / Notices 

3See Securities Exchange Act Release No. 60297 

(July 13, 2009), 74 FR 35223. 

4Amendment No. 1 modifies the text of the 

proposed rule to add to NYSE Amex Rule 

980NY(c)(i) a reference to ‘‘quotes’’ that was 

omitted erroneously, and to replace an incorrect 

cross-reference in NYSE Amex Rule 980NY(c)(ii) 

with a reference to executions ‘‘against such new 

order(s) or quote(s)’’ to describe the execution of 

resting Electronic Complex Orders. The revision to 

NYSE Amex Rule 980NY(c)(ii) harmonizes the rule 

text with the description provided in the purpose 

section of the proposal. 

5See NYSE Amex Rule 980NY. NYSE Amex Rule 

900.3NY(e) defines a Complex Order as ‘‘any order 

involving the simultaneous purchase and/or sale of 

two or more different option series in the same 

underlying security, for the same account, in a ratio 

that is equal to or greater than one-to-three (.333) 

and less than or equal to three-to-one (3.00) and for 

the purpose of executing a particular investment 

strategy.’’ NYSE Rule 900.3NY(h) defines a Stock/ 

option Order as ‘‘an order to buy or sell a stated 

number of units of an underlying stock or a security 

convertible into the underlying stock (‘‘convertible 

security’’) coupled with the purchase or sale of 

option contract(s) on the opposite side of the market 

representing either (A) the same number of units of 

the underlying stock or convertible security, or (B) 

the number of units of the underlying stock 

necessary to create a delta neutral position, but in 

no case in a ratio greater than 8 option contracts per 

unit of trading of the underlying stock or 

convertible security established for that series by 

the Clearing Corporation.’’ 

6See NYSE Amex Rule 980NY(c). 

7See NYSE Amex Rule 980NY(a). 

8 Id. 

9See NYSE Amex Rule 980NY(b). 

10See NYSE Amex Rule 980NY(c)(i). 

11 Id. 

12See NYSE Amex Rule 980NY(c)(ii). 

13See NYSE Amex Rule 980NY(c)(iii). 

14See NYSE Amex Rules 980NY(c)(i) and (iii). 

15See NYSE Amex Rule 980NY, Commentary .01. 16See NYSE Amex Rule 980NY, Commentary .02. 17See NYSE Amex Rule 980NY, Commentary 

.03(c). 

18See NYSE Amex Rule 980NY, Commentary 

.03(b). 

19See NYSE Amex Rule 980NY, Commentary 

.03(d). 

20 In approving the proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

21 15 U.S.C. 78f(b)(5). 

20, 2009.3 NYSE Amex filed 

Amendment No. 1 to the proposal on 

August 19, 2009.4 The Commission 

received no comments regarding the 

proposed rule change. This order 

provides notice of filing of Amendment 

No. 1 to the proposed rule change and 

grants accelerated approval to the 

proposed rule change, as modified by 

Amendment No. 1. 

II. Description of the Proposal 

NYSE Amex proposes to adopt NYSE 

Amex Rule 980NY, ‘‘Electronic 

Complex Order Trading,’’ to describe 

the trading of Electronic Complex 

Orders on NYSE Amex. Electronic 

Complex Orders include any Complex 

Order, as defined in NYSE Amex Rule 

900.3NY(e), and any Stock/option 

Order, as defined in NYSE Amex Rule 

9003.NY(h), that is entered into the 

NYSE Amex system.5 The definition of 

Complex Order is consistent with the 

definition of complex trade used for 

purposes of the Plan For the Purpose of 

Creating and Operating an Intermarket 

Option Linkage (‘‘Linkage Plan’’) in 

connection with the Linkage Plan’s 

exemption from trade-through liability 

for complex trades. Accordingly, the 

individual legs of an Electronic 

Complex Order may be executed at 

prices outside the National Best Bid or 

Offer, although no leg of an Electronic 

Complex Order will be executed at a 

price outside of the NYSE Amex best 

bid or offer for that leg.6

An Electronic Complex Order entered 

into the NYSE Amex system is routed to 

the Complex Matching Engine (‘‘CME’’) 

for possible execution against other 

Electronic Complex Orders or against 

individual quotes and orders in the 

Consolidated Book.7 Electronic 

Complex Orders that are not executed 

immediately by the CME are routed to 

the Consolidated Book.8 Electronic 

Complex Orders in the Consolidated 

Book are ranked in price/time priority 

based on the total net debit or credit 

price for the order and the time of order 

entry, provided that customer Electronic 

Complex Orders are ranked ahead of 

non-customer Complex Orders at the 

same price.9

The CME will automatically execute 

an incoming marketable Electronic 

Complex Order against an Electronic 

Complex Order in the Consolidated 

Book or, if the incoming order is not 

marketable against another Electronic 

Complex Order, against individual 

orders or quotes in the Consolidated 

Book that can fill the incoming order in 

full or in a permissible ratio.10

Notwithstanding the foregoing, 

individual Customer orders in the 

Consolidated Book that could fill an 

incoming Electronic Complex Order in 

full, or in a permissible ratio, would 

have priority over an Electronic 

Complex Order in the Consolidated 

Book at the same price.11

Non-marketable Electronic Complex 

Orders will rest in the Consolidated 

Book. The CME will monitor interest in 

the leg markets, and will execute a 

resting Electronic Complex Order 

against new order(s) or quote(s) entered 

into the Consolidated Book if the new 

order(s) or quote(s) can execute the 

resting Electronic Complex Order in full 

or in a permissible ratio.12

NYSE Amex market participants will 

be able to view Electronic Complex 

Orders in the Consolidated Book via an 

electronic interface and may submit 

Electronic Complex Orders to the CME 

to trade against orders in the 

Consolidated Book.13 A Specialist will 

not have a guaranteed allocation when 

an Electronic Complex Order executes 

against either the Specialist’s Electronic 

Complex Order or its interest in the leg 

market.14

Electronic Complex Orders may be 

executed in one-cent increments 

regardless of the minimum price 

variation otherwise applicable to the 

individual legs of the order.15 In 

addition, the price of at least one leg of 

an Electronic Complex Order must trade 

at a price that is better than the 

corresponding price of all customer bids 

or offers in the Consolidated Book for 

the same series by at least one standard 

trading increment, as defined in NYSE 

Amex Rule 960NY.16

Stock/option Orders with one options 

leg that are submitted to the CME will 

trade in the following sequence: (1) 

Against other Stock/option Orders in 

the Consolidated Book, using public 

customer priority and then time 

priority; (2) against individual orders or 

quotes, provided that the Stock/option 

Order can be executed in full or in a 

permissible ratio; and (3) against orders 

or quotes submitted by market 

participants.17 Notwithstanding these 

priority provisions, the option leg of a 

Stock/option Order will not be executed 

at NYSE Amex’s best bid or offer in that 

series if one or more public customer 

orders are resting at that price unless the 

options leg trades with such public 

customer order(s).18 A Stock/option 

Order with more than one options leg 

will be handled in the same manner as 

a Stock/option Order with a single 

option leg, except that the requirement 

to trade with existing public customer 

interest at NYSE Amex’s best bid or 

offer will apply only if there are public 

customer orders at NYSE Amex’s best 

bid or offer for each of the legs of the 

order.19

III. Discussion 

After careful review, the Commission 

finds that the proposed rule change, as 

amended, is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.20 In 

particular, the Commission finds that 

the proposal, as amended, is consistent 

with Section 6(b)(5) of the Act,21 which 

requires, in part, that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 74, No. 165 / Thursday, August 27, 2009 / Notices 43739 

22See NYSE Amex Rule 980NY(b). 

23See NYSE Amex Rule 980NY(c)(i). 

24See NYSE Amex Rule 980NY, Commentary .02. 

25See NYSE Amex Rule 963NY(d). The 

Commission notes that the proposed rules 

governing the handling of Stock/option Orders are 

substantially similar to rules adopted by the 

Chicago Board Options Exchange, Incorporated, 

which the Commission reviewed previously. See 

CBOE Rule 6.53C, Commentary .06. See also 

Securities Exchange Act Release Nos. 56903 

(December 5, 2007), 72 FR 70356 (December 11, 

2007) (File No. SR–CBOE–2007–68) (order 

approving rules relating to the electronic handling 

and execution of stock-option orders); and 59585 

(March 17, 2009), 74 FR 12416 (March 24, 2009) 

(File No. SR–CBOE–2009–017) (notice of filing and 

immediate effectiveness of rules allowing 

conversions and reversals to be routed to the 

electronic complex order book). 

26 15 U.S.C. 78s(b)(2). 

27 15 U.S.C. 78s(b)(2). 

28 17 CFR 200.30–3(a)(12). 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

As discussed above, all NYSE Amex 

market participants will be able to view 

Electronic Complex Orders in the 

Consolidated Book and submit 

Electronic Complex Orders to the CME 

to trade against orders in the 

Consolidated Book. Accordingly, the 

Commission believes that the proposal 

could increase the transparency of 

Electronic Complex Orders and 

facilitate their execution. 

The proposal provides customer 

Electronic Complex Orders with priority 

over non-customer Electronic Complex 

Orders at the same price,22 and also 

preserves the priority of customer orders 

in the individual leg markets. In this 

regard, if individual customer orders in 

the Consolidated Book can execute an 

incoming Electronic Complex Order in 

full, or in a permissible ratio, at the 

same total net debit or credit as an 

Electronic Complex Order in the 

Consolidated Book, the individual 

customer orders will have priority.23

Further, when an Electronic Complex 

Order is executed, the price of at least 

one leg of the order must trade at a price 

that is better than the corresponding 

price of all customer bids or offers in the 

Consolidated Book for that series by at 

least one standard trading increment.24

The Commission believes that it is 

reasonable and consistent with the Act 

for NYSE Amex not to provide a 

guaranteed allocation to Specialists, as 

described above, because Specialists do 

not have quoting obligations for 

complex strategies. 

Finally, the Commission believes that 

the proposal could facilitate the 

execution of stock-option orders on the 

Amex by providing for the electronic 

handling and execution of these orders, 

which currently must be handled 

manually. The Commission notes that 

proposal provides for the execution of 

stock-option orders submitted to the 

CME in a manner that is consistent with 

the Amex’s existing priority rules for 

stock-option orders, which provide the 

options leg of a stock-option order with 

priority over bids (offers) in the trading 

crowd at the same price, but not over 

public customer orders in the 

Consolidated Book.25 Accordingly, the 

Commission finds that the NYSE Amex 

rules concerning the execution of Stock/ 

option Orders submitted to the CME are 

consistent with the Act. 

IV. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendment No. 1, prior to 

the thirtieth day after publication for 

comment in the Federal Register. 

Amendment No. 1, which inserts a 

reference to ‘‘quotes’’ that was omitted 

erroneously and replaces an incorrect 

cross-reference in the proposed rule 

text, help to clarify the proposed rule 

change and do not differ materially from 

the proposal as published in the Federal 

Register on July 19, 2009. Accordingly, 

the Commission finds good cause, 

consistent with Section 19(b)(2) of the 

Act,26 to approve the proposed rule 

change, as modified by Amendment No. 

1, on an accelerated basis. 

V. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning Amendment No. 

1, including whether Amendment No. 1 

is consistent with the Act. Comments 

may be submitted by any of the 

following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–NYSEAmex–2009–42 on 

the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEAmex–2009–42. This 

file number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the filing also will be available 

for inspection and copying at the 

principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. 

All submissions should refer to File 

Number SR–NYSEAmex–2009–42 and 

should be submitted on or before 

September 17, 2009. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,27 that the 

proposed rule change (SR–NYSEAmex– 

2009–42), as modified by Amendment 

No. 1, is approved on an accelerated 

basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20654 Filed 8–26–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60556; File No. SR–CBOE– 

2009–061] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Clarify the Definition 

of ‘‘Narrow-Based Index’’ 

August 21, 2009. 

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

Securities Exchange Act of 1934 (the 

mstockstill on DSKH9S0YB1PROD with NOTICES