45498 Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

Applicants state that multiple classes of 

shares of the Funds may violate section 

18(i) of the Act because each class 

would be entitled to exclusive voting 

rights with respect to matters solely 

related to that class. 

3. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security or transaction or any 

class or classes of persons, securities or 

transactions from any provision of the 

Act, or from any rule thereunder, if and 

to the extent such exemption is 

necessary or appropriate in the public 

interest and consistent with the 

protection of investors and the purposes 

fairly intended by the policy and 

provisions of the Act. Applicants 

request an exemption under section 6(c) 

from sections 18(c) and 18(i) to permit 

the Funds to issue multiple classes of 

shares. 

4. Applicants submit that the 

proposed allocation of expenses and 

voting rights among multiple classes is 

equitable and will not discriminate 

against any group or class of 

shareholders. Applicants submit that 

the proposed arrangements would 

permit a Fund to facilitate the 

distribution of its shares and provide 

investors with a broader choice of 

shareholder services. Applicants assert 

that the proposed closed-end 

investment company multiple class 

structure does not raise the concerns 

underlying section 18 of the Act to any 

greater degree than open-end 

investment companies’ multiple class 

structures that are permitted by rule 

18f–3 under the Act. Applicants state 

that each Fund will comply with the 

provisions of rule 18f–3 as if it were an 

open-end investment company. 

Early Withdrawal Charges 

1. Section 23(c) of the Act provides, 

in relevant part, that no registered 

closed-end investment company will 

purchase securities of which it is the 

issuer, except: (a) On a securities 

exchange or other open market; (b) 

pursuant to tenders, after reasonable 

opportunity to submit tenders given to 

all holders of securities of the class to 

be purchased; or (c) under other 

circumstances as the Commission may 

permit by rules and regulations or 

orders for the protection of investors. 

2. Rule 23c–3 under the Act permits 

a registered closed-end investment 

company (an ‘‘interval fund’’) to make 

repurchase offers of between five and 

twenty-five percent of its outstanding 

shares at net asset value at periodic 

intervals pursuant to a fundamental 

policy of the interval fund. Rule 23c– 

3(b)(1) under the Act provides that an 

interval fund may deduct from 

repurchase proceeds only a repurchase 

fee, not to exceed two percent of the 

proceeds, that is reasonably intended to 

compensate the fund for expenses 

directly related to the repurchase. 

3. Section 23(c)(3) provides that the 

Commission may issue an order that 

would permit a closed-end investment 

company to repurchase its shares in 

circumstances in which the repurchase 

is made in a manner or on a basis that 

does not unfairly discriminate against 

any holders of the class or classes of 

securities to be purchased. As noted 

above, section 6(c) provides that the 

Commission may exempt any person, 

security or transaction from any 

provision of the Act, if and to the extent 

that the exemption is necessary or 

appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. Applicants request relief under 

sections 6(c) and 23(c) from rule 23c–3 

to the extent necessary for the Funds to 

impose EWCs on shares of the Funds 

submitted for repurchase that have been 

held for less than a specified period. 

4. Applicants believe that the 

requested relief meets the standards of 

sections 6(c) and 23(c)(3). Rule 6c–10 

under the Act permits open-end 

investment companies to impose 

contingent deferred sales loads 

(‘‘CDSLs’’), subject to certain conditions. 

Applicants state that EWCs are 

functionally similar to CDSLs imposed 

by open-end investment companies 

under rule 6c–10. Applicants state that 

EWCs may be necessary for the 

distributor to recover distribution costs. 

Applicants state that any EWC imposed 

by the Funds will comply with rule 6c– 

10 under the Act as if the rule were 

applicable to closed-end investment 

companies. The Funds also will disclose 

EWCs in accordance with the 

requirements of Form N–1A concerning 

CDSLs. Applicants further state that the 

Funds will apply the EWC (and any 

waivers or scheduled variations of the 

EWC) uniformly to all shareholders in a 

given class and consistently with the 

requirements of rule 22d–1 under the 

Act. 

Asset-based Distribution Fees 

1. Section 17(d) of the Act and rule 

17d–1 under the Act prohibit an 

affiliated person of a registered 

investment company or an affiliated 

person of such person, acting as 

principal, from participating in or 

effecting any transaction in connection 

with any joint enterprise or joint 

arrangement in which the investment 

company participates unless the 

Commission issues an order permitting 

the transaction. In reviewing 

applications submitted under section 

17(d) and rule 17d–1, the Commission 

considers whether the participation of 

the investment company in a joint 

enterprise or joint arrangement is 

consistent with the provisions, policies 

and purposes of the Act, and the extent 

to which the participation is on a basis 

different from or less advantageous than 

that of other participants. 

2. Rule 17d–3 under the Act provides 

an exemption from section 17(d) and 

rule 17d–1 to permit open-end 

investment companies to enter into 

distribution arrangements pursuant to 

rule 12b–1 under the Act. Applicants 

request an order under section 17(d) and 

rule 17d–1 under the Act to permit the 

Fund to impose asset-based distribution 

fees. Applicants have agreed to comply 

with rules 12b–1 and 17d–3 as if those 

rules applied to closed-end investment 

companies. 

Applicants’ Condition 

Applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

Each Fund relying on the order will 

comply with the provisions of rules 6c– 

10, 12b–1, 17d–3, 18f–3, 22d–1, and, 

where applicable, 11a–3 under the Act, 

as amended from time to time, as if 

those rules applied to closed-end 

management investment companies, 

and will comply with the NASD Sales 

Charge Rule, as amended from time to 

time, as if that rule applied to all closedend management investment 

companies. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21138 Filed 9–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60572; File No. SR–CBOE– 

2009–060] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Hybrid Quote 

Locks 

August 26, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices 45499 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b-4(f)(6). 

5Under Rule 6.45B, an exception applies when 

the market locks in a Hybrid 3.0 class. In such 

cases, there is no counting period. Locked quotes 

will not automatically execute against each other 

and will remain locked until a quote is cancelled 

or changed. See Rule 6.45A(d)(i)(C). 

6See Securities Exchange Act Release No. 51680 

(May 10, 2005), 70 FR 28326 (May 17, 2005) (SR– 

CBOE–2004–87) (notice of proposed rule change 

relating to trading rules on the Hybrid System for 

index options and options on ETFs); see also 

Securities Exchange Act Release No. 51822 (June 

10, 2005), 70 FR 35321 (June 17, 2005) (order 

approving SR–CBOE–2004–87). 

7 15 U.S.C. 78s(b)(1). [sic] 

8 15 U.S.C. 78f(b). 

notice is hereby given that on August 

19, 2009, the Chicago Board Options 

Exchange, Incorporated (‘‘Exchange’’ or 

‘‘CBOE’’) filed with the Securities and 

Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A)(iii) of 

the Act 3 and Rule 19b–4(f)(6) 

thereunder.4 The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to amend 

Rules 6.45A, Priority and Allocation of 

Equity Option Trades on the CBOE 

Hybrid System, and 6.45B, Priority and 

Allocation of Trades in Index Options 

and Options on ETFs on the CBOE 

Hybrid System, to eliminate provisions 

in each respective rule that provide that 

Market-Makers whose quotes are locked 

(or inverted) will receive a quote update 

notification. CBOE is also proposing to 

amend Rule 6.45A to provide that the 

length of the quote lock counting period 

will be established by the Exchange, 

may vary by product, and will not 

exceed one second. The text of the 

proposed rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.org/Legal), at the Exchange’s 

Office of the Secretary and at the 

Commission. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of 

and basis for the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Rules 6.45A(d) and 6.45B(d) describe 

how the Hybrid System operates in the 

event that a Market-Maker’s 

disseminated quotes interact with the 

disseminated quote(s) of other MarketMakers, resulting in a ‘‘locked’’ quote 

(e.g., $1.00 bid—$1.00 offer). In the 

event of a quote lock, the following 

currently occurs: 

(i) The Exchange will disseminate the 

locked market and both quotes will be 

deemed ‘‘firm’’ disseminated market 

quotes. 

(ii) The Market-Makers whose quotes 

are locked will receive a quote update 

notification advising that their quotes 

are locked. 

(iii) When the market locks, a 

‘‘counting period’’ will begin during 

which Market-Makers whose quotes are 

locked may eliminate the locked market. 

Provided, however, in accordance with 

paragraph (i) above a Market-Maker will 

be obligated to execute customer and 

broker-dealer orders eligible for 

automatic execution pursuant to Rule 

6.13, CBOE Hybrid System’s Automatic 

Execution Feature, at his disseminated 

quote in accordance with Rule 8.51, 

Firm Disseminated Market Quotes. If at 

the end of the counting period the 

quotes remain locked, the locked quotes 

will automatically execute against each 

other in accordance with the applicable 

allocation algorithm. Under Rule 6.45A 

(applicable to equity options), the 

counting period is one second. Under 

Rule 6.45B (applicable to index and ETF 

options), the length of the counting 

period is established by the Exchange, 

may vary by product, and will not 

exceed one second.5

(iv) The Hybrid System will not 

disseminate an internally crossed 

market (i.e., the CBOE best bid is higher 

than the CBOE best offer). If a MarketMaker submits a quote (‘‘incoming 

quote’’) that would invert an existing 

quote (‘‘existing quote’’), the Hybrid 

System will change the incoming quote 

such that it locks the first quote and 

send a notice to the second MarketMaker indicating that its quote was 

changed. Locked markets are handled in 

accordance with paragraphs (i) through 

(iii) above. During the lock period, if the 

existing quote is cancelled subsequent 

to the time the incoming quote is 

changed, the incoming quote will 

automatically be restored to its original 

terms. 

Through this rule change, the 

Exchange is seeking to amend the 

locked quote process in two respects. 

First, the Exchange is proposing to 

eliminate the provisions that provide 

that Market-Makers whose quotes are 

locked (or inverted) will receive a quote 

update notification message (as 

described in paragraphs (ii) and (iv) 

above). The Exchange will continue to 

disseminate the locked market and have 

a counting period during which MarketMakers whose quotes are locked may 

eliminate the locked market in the same 

manner as described above. The 

Exchange believes that elimination of 

the notification messages will permit its 

systems to operate more efficiently. In 

addition, the Exchange believes that it is 

no longer necessary for Market-Makers 

to have a separate notification to react 

to a quote lock. For example, they can 

instead react based on a disseminated 

locked market. 

Second, the Exchange is amending 

Rule 6.45A (applicable to equity 

options) to provide that the length of the 

counting period, which is currently 

fixed at one-second, will instead be 

established by the Exchange, may vary 

by product, and will not exceed one 

second. This change will provide more 

flexibility in the administration of the 

rule and is consistent with the counting 

period language that already exists in 

Rule 6.45B (applicable to index and ETF 

options). The Exchange had previously 

indicated that the ability to vary the 

timer by product is more important in 

an index setting where there are larger 

trading crowds than there are in an 

equity setting.6 However, the Exchange 

believes we no longer need to have that 

distinction and we should have the 

same flexibility to reduce the timer in 

an equity setting. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the Act 7

and the rules and regulations 

thereunder and, in particular, the 

requirements of Section 6(b) of the Act.8

Specifically, the Exchange believes the 

proposed rule change is consistent with 


jlentini on DSKJ8SOYB1PROD with NOTICES
45500 Federal Register / Vol. 74, No. 169 / Wednesday, September 2, 2009 / Notices 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

the Section 6(b)(5) 9 requirements that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, to prevent fraudulent and 

manipulative acts, to remove 

impediments to and to perfect the 

mechanism for a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. In particular, the 

Exchange believes that the elimination 

of the notification messages will permit 

its systems to operate more efficiently 

and the change to the counting period 

for equity options classes will provide 

more flexibility in the administration of 

the rule in a manner consistent with the 

existing rule for index and ETF options 

classes. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

CBOE does not believe that the 

proposed rule change will impose any 

burden on competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing rule change (i) 

does not significantly affect the 

protection of investors or the public 

interest; (ii) does not impose any 

significant burden on competition; and 

(iii) by its terms, does not become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate if 

consistent with the protection of 

investors and the public interest, 

provided that the self-regulatory 

organization has given the Commission 

written notice of its intent to file the 

proposed rule change at least five 

business days prior to the date of filing 

of the proposed rule change or such 

shorter time as designated by the 

Commission, the proposed rule change 

has become effective pursuant to 

Section 19(b)(3)(A) of the Act 10 and 

Rule 19b–4(f)(6) thereunder.11 At any 

time within 60 days of the filing of such 

proposed rule change, the Commission 

may summarily abrogate such rule 

change if it appears to the Commission 

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–CBOE–2009–060 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–CBOE–2009–060. 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 such filing also will be 

available for inspection and copying at 

the principal office of the CBOE. 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–CBOE–2009–060 and 

should be submitted on or before 

September 23, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21135 Filed 9–1–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60573; File No. SR–NYSE– 

2009–86] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Extending the 

Length of Time That Exchange 

Systems Transmit Odd-Lot Order-byOrder Information to the DMM Unit 

Algorithm Prior to the Opening 

Transaction From August 31, 2009 to 

October 31, 2009 

August 26, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that, on August 

21, 2009, New York Stock Exchange 

LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Exchange designated the proposal 

eligible for immediate effectiveness 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder.4

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

length of time that Exchange systems 

transmit odd-lot order-by-order 

information to the DMM unit algorithm 

prior to the opening transaction from 

August 31, 2009 to October 31, 2009. 

The text of the proposed rule change is 

available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 


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