37190 Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Notices

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

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 42752

(May 3, 2000), 65 FR 30154.

4The current caps are set at 2,000 contracts for

customer trades and 3,000 contracts for member

firm proprietary, non-member broker-dealer,

specialist, and market maker trades.

5See Securities Exchange Act Release No. 42675,

(April 13, 2000), 65 FR 21223 (April 20, 2000).

Acquiring Series after the Fund

Reorganizations; (c) the fact that the

costs estimated to be incurred by the

Series as a result of the Fund

Reorganizations will not be borne by the

Series, but by American General; and (d)

the tax-free nature of the Fund

Reorganizations.

8. The Plans are subject to a number

of conditions precedent, including that:

(a) the Plans will have been approved by

the Boards of each of the Acquired

Series and the Acquiring Series and by

the shareholders of each of the Acquired

Series; (b) each Acquired Series will

solicit proxies from its shareholders

pursuant to definitive proxy materials

filed with the Commission; (c) the

applicants will have received an

opinion of counsel concerning the

federal income tax aspects of the Fund

Reorganizations; and (d) applicants will

have received from the Commission

exemptive relief from section 17(a) of

the Act for the Fund Reorganizations.

Each Plan may be terminated by mutual

agreement of the Boards at any time

prior to the Closing Date. Applicants

agree not to make any material changes

to the Plans that affect the application

without prior SEC approval.

9. Definitive proxy materials have

been filed with the Commission and

were mailed to shareholders of each

Acquired Series on or about June 1,

2000. A special meeting of the

shareholders of each Acquired Series is

scheduled to be held on or about June

22, 2000.

Applicant’s Legal Analysis

1. Section 17(a) of the Act generally

prohibits an affiliated person of a

registered investment company, or an

affiliated person of such a person, acting

as principal, from selling any security

to, or purchasing any security from, the

company. Section 2(a)(3) of the Act

defines an ‘‘affiliated person’’ of another

person to include: (a) any person

directly or indirectly owning,

controlling, or holding with power to

vote 5% or more of the outstanding

voting securities of the other person; (b)

any person 5% or more of whose

securities are directly or indirectly

owned, controlled, or held with power

to vote by the other person; (c) any

person directly or indirectly controlling,

controlled by, or under common control

with the other person; and (d) if the

other person is an investment company,

any investment adviser of that company.

Applicants state that the Series may be

deemed affiliated persons and, thus, the

Fund Reorganizations may be

prohibited by section 17(a).

2. Rule 17a–8 under the Act exempts

from the prohibitions of section 17(a)

mergers, consolidations, or purchasers

or sales of substantially all of the assets

of registered investment companies that

are affiliated persons, or affiliated

persons of an affiliated person, solely by

reason of having a common investment

adviser, common directors, and/or

common officers, provided that certain

conditions set forth in the rule are

satisfied.

3. Applicants believe that they may

not rely on rule 17a–8 in connection

with the Fund Reorganizations because

certain Series may be deemed to be

affiliated for reasons other than those set

forth in the rule. By virtue of the direct

or indirect ownership by VALIC and the

Affiliated Plan of more than 5% (in

some cases, more than 25%) of the

outstanding voting securities of certain

of the Acquired Series, each Acquired

Series may be deemed an affiliated

person of an affiliated person of the

corresponding Acquiring Series.

4. Section 17(b) of the Act provides

that the SEC may exempt a transaction

from the provisions of section 17(a) if

the evidence establishes that the terms

of the proposed transaction, including

the consideration to be paid, are

reasonable and fair and do not involve

overreaching on the part of any person

concerned, and that the proposed

transaction is consistent with the policy

of each registered investment company

concerned and with the general

purposes of the Act.

5. Applicants request an order under

section 17(b) of the Act exempting them

from section 17(a) of the Act to the

extent necessary to permit applicants to

consummate the Fund Reorganizations.

Applicants submit that the Fund

Reorganizations satisfy the standards of

section 17(b) of the Act. Applicants

submit that the Fund Reorganizations

satisfy the standards of section 17(b) of

the Act. Applicants state that the Boards

of AGSPC2 and NAF, including in each

case a majority of their Independent

Trustees, found that participating in the

Fund Reorganizations is in the best

interests of the shareholders of each of

the Series, and that the interests of the

shareholders will not be diluted as a

result of the Fund Reorganizations.

Applicants also note that the exchange

of the Acquired Series’ assets for shares

of the Acquiring Series will be based on

the Series’ relative NAVs.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14849 Filed 6–12–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42872; File No. SR–Amex–

00–18]

Self-Regulatory Organizations;

American Stock Exchange LLC; Order

Granting Accelerated Approval of

Proposed Rule Change to Raise Equity

Options Transaction Fees for NonMember Broker-Dealers

May 31, 2000.

I. Introduction

On April 7, 2000, the American Stock

Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’),

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

Securities Exchange Act of 1934

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

proposed rule change was published for

comment in the Federal Register on

May 10, 2000.3 The Commission

received no comments on the proposal.

This order grants accelerated approval

of the proposal.

II. Description of the Proposal

The Amex proposes to increase equity

options transaction fees for non-member

broker-dealer orders. The Amex

currently imposes a transaction charge

on options trades executed on the

Exchange. The charges vary depending

on whether the transaction involves an

equity or index option and whether the

transaction is executed for a specialist

or market maker account, a member

firm’s proprietary account, a nonmember broker-dealer, or a customer

account. The Amex also imposes a

charge for clearance of options trades

and an options floor brokerage charge,

which also depends upon the type of

account for which the trade is executed.

In addition, all three types of charges—

transactions, options clearance, and

options floor brokerage—are subject to

caps on the number of options contracts

subject to the charges on a given day.4

Recently, the Amex eliminated all

options transaction, clearance, and floor

brokeage fees for customer equity

options orders.5 To offset the

elimination of these fees for customer

equity options orders, the Exchange

raised the equity options transaction fee

Federal Register / Vol. 65, No. 114 / Tuesday, June 13, 2000 / Notices 37191

6LEAPS are Long Term Equity Anticipation

Securities or options with durations of up to 36

months. See Amex Rule 903c.

7FLEX options are customized options with

individually specified terms such as strike price,

expiration date, and exercise style. See Amex Rule

900G.

8 15 U.S.C. 78f. In approving this rule, the

Commission has considered the proposed rule’s

impact on efficiency, competition, and capital

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

9 15 U.S.C. 78f(b)(4).

10See Securities Exchange Act Release No. 42675,

(April 13, 2000), 65 FR 21223 (April 20, 2000)

(approving SR–Amex–00–15).

11 15 U.S.C. 78f(b)(5) and 78s(b)(2).

12 15 U.S.C. 78s(b)(2).

13 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3Exchange Act Release No. 38928 (August 12,

1997), 62 FR 44296.

4Letters from James I. Gelbort to the

Commissioners, SEC, dated September 7, 1997

(‘‘Gelbort Letter’’); Scott Kilrea, President, Letco,

Lee E. Tenzer Trading Company, to Jonathan G.

Katz, Secretary, SEC, dated February 20, 1998

(‘‘Letco Letter No. 1’’); and Scott Kilrea, President

Letco, Lee E. Tenzer Trading Company, et al, to

Heather Seidal, Division of Market Regulation

(‘‘Division’’), SEC, dated August 7, 1998 (‘‘Letco

Letter No. 2’’).

5Letter from Timothy H. Thompson, Director,

Regulatory Affairs, Legal Department, CBOE, to

Heather Seidel, Division, SEC, dated July 22, 1998

(‘‘Amendment No. 1’’). In Amendment No. 1, the

Exchange amended the proposal by establishing a

floor percentage that may be set by the Market

Performance Committee (‘‘MPC’’) that limits a

market maker’s total transactions and contract

volume executed on RAES. The CBOE also

proposed that the market maker percentages should

be established and calculated on a quarterly basis.

Amendment No. 1 contained guidelines to be used

by the MPC when determining whether to exempt

market maker activity on one or more trading days

during the applicable calendar quarter and

guidelines for the exercise of discretion by the MPC

pursuant to Interpretation .01 of the proposed rule

change, which permits the MPC to apply the

eligibility requirements to fewer than all classes

traded at a particular trading station. Finally, the

CBOE responded to issues raised in Letco Letter No.

1 (see supra note 4).

6Letter from Timothy Thompson, Director,

Regulatory Affairs, Legal Department, CBOE, to

Richard Strasser, Division, SEC, dated September

23, 1999 (‘‘Amendment No. 2’’). In Amendment No.

2, the CBOE amended the proposal to limit its

application to those options classes identified by

the Exchange as having market makers that trade an

inordinate percentage of their transactions on

RAES. The Exchange also reiterated its belief that

the proposed rule language afforded protections

against potential discrimination by the MPC when

it determines which trading days to exempt from

the percentage calculations because the MPC will

not know the identity of market makers from the

data it reviews. Finally, the Exchange responded to

issues raised in Letco Letter No. 2 (see supra note

4).

7Letter from Stephanie C. Mullins, Attorney,

CBOE, to Kelly Riley, Division, SEC, dated

December 7, 1999 (‘‘Amendment No. 3’’). In

Amendment No. 3, the CBOE amended the

proposed rule change to provide an exemption from

the proposed RAES percentage requirements for

designated primary market makers (‘‘DPMs’’) and

their designees, when acting in the capacity as a

DPM in an option class.

8Letter from Timothy Thompson, Director,

Regulatory Affairs, Legal Department, CBOE, to

Kelly Riley, Division, SEC, dated March 21, 2000

(‘‘Amendment No. 4’’). In Amendment No. 4, the

CBOE corrected rule language submitted in

Amendment No. 3, which failed to reflect the

revisions proposed in Amendment No. 2.

from $0.07 to $0.19 per contract side for

member firm proprietary orders and

from $0.08 to $0.17 per contract side for

specialist and market maker orders. To

further offset the elimination of options

transaction, clearance and brokerage

fees for customer equity option orders,

the Exchange proposes to increase the

equity options transaction fee for nonmember broker-dealer orders from $0.07

to $0.19 per contract side. This revised

fee will also apply to both LEAPS 6 and

FLEX 7 options. Equity options

clearance and floor brokerage fees for

non-member broker-dealers will remain

unchanged at $0.04 and $0.03 per

contract side, respectively.

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange and in particular, with the

requirements of Section 6 of the Act.8

Specifically, the Commission finds that

the proposal is consistent with Section

6(b)(4) of the Act, which requires a

registered national securities exchange

to promulgate rules that provide for the

equitable allocation of reasonable dues,

fees, and other charges among its

members and other persons using its

facilities.9 The Commission believes

that the proposed increase in the equity

options transaction fee for non-member

broker-dealer orders is not unreasonable

and should not discriminate unfairly

among market participants. In addition,

the Commission notes that member firm

proprietary orders are charged the same

options transaction fee as is proposed

for non-member proprietary orders.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice thereof in the

Federal Register. Approval of the

proposal will enable the Exchange to

offset the recent elimination of options

transaction, clearance, and floor

brokerage fees for customer equity

options orders in an expeditious

manner. The Commission notes that the

Exchange recently raised the equity

options transaction fee for member firm

proprietary orders to help offset the

elimination of options transaction,

clearance, and floor brokerage fees for

customer equity options orders, and no

comments were received on that

proposal.10 Therefore, the Commission

believes it is consistent with Section

6(b)(5) and Section 19(b)(2) of the Act to

grant accelerated approval to the

proposed rule change.11

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,12 that the

proposed rule change (SR–Amex–00–

18) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14820 Filed 6–12–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42870; File No. SR–CBOE–

97–37]

Self-Regulatory Organizations;

Chicago Board Options Exchange,

Inc.; Order Approving Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval of

Amendment Nos. 1, 2, 3, 4 and 5 to the

Proposed Rule Change Relating to

Eligibility Requirements for

Participation on the RAES System

May 31, 2000.

I. Introduction

On August 6, 1997, the Chicago Board

Options Exchange, Inc. (‘‘CBOE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

amend its Retail Automatic Execution

System (‘‘RAES’’) eligibility

requirements for market makers. The

proposed rule change was published in

the Federal Register on August 20,

1997.3 The Commission received three

comment letters on the proposed rule

change.4

On July 23, 1998, the CBOE submitted

Amendment No. 1 to the proposed rule

change. 5 On September 28, 1999, the

CBOE submitted Amendment No. 2 to

the proposed rule change.6 On

December 8, 1999, the CBOE submitted

Amendment No. 3 to the proposed rule

change.7 On March 22, 2000, the CBOE

submitted Amendment No. 4 to the

proposed rule change.8 Finally, on May

19, 2000, the CBOE submitted