55530 Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices 

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

2 17 CFR 240.19b–4. 

3 In Amendment No. 2 the BSE requested the 

Commission waive the 5-day pre-filing notice 

requirement and 30-day operative date delay 

contained in Rule 19b–4(f)(6)(iii), and made 

additional clarifications to the proposal. 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(6). 

6The BSE filed another proposed rule, SR–BSE–

2006–36, to retroactively re-establish the market 

opening procedures pilot program for the time 

period August 6, 2006 through September 1, 2006. 

person whose relationship to the 

Unaffiliated Fund is covered by section 

10(f) of the Act is not an Underwriting 

Affiliate). An offering of securities 

during the existence of an underwriting 

or selling syndicate of which a principal 

underwriter is an Underwriting Affiliate 

is an ‘‘Affiliated Underwriting.’’

6. The board of an Unaffiliated 

Underlying Fund, including a majority 

of the disinterested board members, will 

adopt procedures reasonably designed 

to monitor any purchases of securities 

by the Unaffiliated Underlying Fund in 

an Affiliated Underwriting once an 

investment by a Series in the securities 

of the Unaffiliated Underlying Fund 

exceeds the limit of section 

12(d)(1)(A)(i) of the Act, including any 

purchases made directly from an 

Underwriting Affiliate. The board of the 

Unaffiliated Underlying Fund will 

review these purchases periodically, but 

no less frequently than annually, to 

determine whether the purchases were 

influenced by the investment by the 

Series in the Unaffiliated Underlying 

Fund. The board of the Unaffiliated 

Underlying Fund will consider, among 

other things: (a) Whether the purchases 

were consistent with the investment 

objectives and policies of the 

Unaffiliated Underlying Fund; (b) how 

the performance of securities purchased 

in an Affiliated Underwriting compares 

to the performance of comparable 

securities purchased during a 

comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Unaffiliated 

Underlying Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The board 

of the Unaffiliated Underlying Fund 

will take any appropriate actions based 

on its review, including, if appropriate, 

the institution of procedures designed to 

assure that purchases of securities in 

Affiliated Underwritings are in the best 

interests of shareholders. 

7. An Unaffiliated Underlying Fund 

will maintain and preserve permanently 

in an easily accessible place a written 

copy of the procedures described in the 

preceding condition, and any 

modifications to such procedures, and 

will maintain and preserve for a period 

of not less than six years from the end 

of the fiscal year in which any purchase 

in an Affiliated Underwriting occurred, 

the first two years in an easily accessible 

place, a written record of each purchase 

of securities in Affiliated Underwritings 

once an investment by a Series in the 

securities of the Unaffiliated Underlying 

Fund exceeds the limit of section 

12(d)(1)(A)(i) of the Act, setting forth 

from whom the securities were 

acquired, the identity of the 

underwriting syndicate’s members, the 

terms of the purchase, and the 

information or materials upon which 

the determinations of the board of the 

Unaffiliated Underlying Fund were 

made. 

8. Before investing in an Unaffiliated 

Underlying Fund in excess of the limit 

in section 12(d)(1)(A)(i), each Series and 

the Unaffiliated Underlying Fund will 

execute a Participation Agreement 

stating, without limitation, that the 

Depositor and Trustee and the board of 

directors or trustees of the Unaffiliated 

Underlying Fund and the investment 

adviser(s) to the Unaffiliated Underlying 

Fund, understand the terms and 

conditions of the order and agree to 

fulfill their responsibilities under the 

order. At the time of its investment in 

shares of an Unaffiliated Underlying 

Fund in excess of the limit in section 

12(d)(1)(A)(i), a Series will notify the 

Unaffiliated Underlying Fund of the 

investment. At such time, the Series 

also will transmit to the Unaffiliated 

Underlying Fund a list of the names of 

each Series Affiliate and Underwriting 

Affiliate. The Series will notify the 

Unaffiliated Underlying Fund of any 

changes to the list of names as soon as 

reasonably practicable after a change 

occurs. The Unaffiliated Underlying 

Fund and the Series will maintain and 

preserve a copy of the order, the 

Participation Agreement, and the list 

with any updated information for the 

duration of the investment, and for a 

period of not less than six years 

thereafter, the first two years in an 

easily accessible place. 

9. Any sales charges and/or service 

fees charged with respect to Units of a 

Series will not exceed the limits 

applicable to a fund of funds as set forth 

in Rule 2830 of the Conduct Rules of the 

NASD. 

10. No Fund will acquire securities of 

any investment company or company 

relying on section 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–7998 Filed 9–21–06; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54467; File No. SR–BSE–

2006–37] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change, and 

Amendments No. 1 and No. 2 Thereto, 

To Re-Establish the Market Opening 

Pilot Program 

September 18, 2006. 

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 

September 1, 2006, the Boston Stock 

Exchange, Inc. (‘‘BSE’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the BSE. On 

September 8, 2006, the BSE filed 

Amendment No. 1 to the proposed rule 

change. On September 12, 2006, the BSE 

withdrew Amendment No. 1. On 

September 12, 2006, the BSE filed 

Amendment No. 2 to the proposed rule 

change.3 Pursuant to Section 19(b)(3)(A) 

of the Act 4 and Rule 19b–4(f)(6) 

thereunder,5 the BSE has designated 

this proposal as ‘‘non-controversial,’’

which renders the proposed rule change 

effective immediately upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The BSE is proposing to amend its 

rules to extend from September 1, 2006 

to August 6, 2007 the pilot program 

related to market opening procedures on 

the Boston Options Exchange facility 

(‘‘BOX’’). That pilot program expired on 

August 6, 2006.6 The only change to the 

pilot program is an extension of the 

effective date from September 1, 2006 to 

August 6, 2007. The BSE does not 


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Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices 55531 

7See supra footnote 6. 

8 17 CFR 240.19b–4(f)(6)(iii). 

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

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). 

13See 15 U.S.C. 78(b)(3)(C). For the purpose of 

calculating the 60-day abrogation period, the 

Commission considers the proposed rule change to 

have been filed on September 12, 2006, the date the 

BSE filed Amendment No. 2. 

14 17 CFR 240.19b–4(f)(6)(iii). 

15For the purpose of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

propose making any substantive 

changes to the pilot program. 

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 

BSE included statements concerning the 

purpose of and basis for the proposed 

rule change, as amended, and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

BSE has prepared summaries, set forth 

in Sections A, B, and C below, of the 

most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the original rule filing 

and Amendment No. 2 to the proposed 

rule is to re-establish BOX’s market 

opening procedures pilot program 

which lapsed on August 6, 2006, for the 

time period September 1, 2006 through 

August 6, 2007.7 Since approval of the 

initial pilot program, BOX has followed 

the pilot program market opening 

procedures. Amendment No. 2 requests 

the Commission waive the standard 

five-day pre-filing and 30-day operative 

delay requirements as specified in Rule 

19b–4(f)(6)(iii) of the Act,8 in order to 

re-establish the pilot program 

immediately. Amendment No. 2 also 

provides additional clarification to the 

original filing. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b) 9 of the Act in 

general, and Section 6(b)(5) 10 of the Act 

in particular, that an exchange have 

rules that are designed to prevent 

fraudulent and manipulative practices, 

to promote just and equitable principles 

of trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to and 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 

proposed rule change, as amended, will 

re-establish the market opening 

procedures pilot program, which 

provides a quick, efficient, fair and 

orderly market opening process. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The BSE does not believe that the 

proposed rule change, as amended, will 

result in any burden on competition that 

is 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 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

This proposed rule change is filed 

pursuant to paragraph (A) of Section 

19(b)(3) of the Act 11 and Rule 19b–

4(f)(6) 12 thereunder. The proposed rule 

change, as amended, does not 

significantly affect the protection of 

investors or the public interest, does not 

impose any significant burden on 

competition, and, 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. At any time within 60 days 

of the filing of the proposed rule change, 

the Commission may summarily 

abrogate such rule change, as amended, 

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.13

The BSE requests the Commission 

waive the standard five-day pre-filing 

and thirty-day operative delay 

requirements as specified in Rule 19b–

4(f)(6)(iii) 14 so that BOX has a market 

opening procedure which commences 

immediately. The Commission waives 

the 5-day pre-filing requirement. In 

addition, the Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because it will allow BOX to reinstate 

the opening procedures rules on a pilot 

basis immediately.15 For these reasons, 

the Commission designates the 

proposal, as amended, to be effective 

and operative upon filing with the 

Commission. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, 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–BSE–2006–37 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BSE–2006–37. 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, as amended, 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. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the BSE. 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–BSE–2006–37 and should 

be submitted on or before October 13, 

2006. 


sroberts on PROD1PC70 with NOTICES
55532 Federal Register / Vol. 71, No. 184 / Friday, September 22, 2006 / Notices 

16 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5CBOE represents that, as used in its Fees 

Schedule, the term ‘‘customer’’ refers to a public 

customer. Telephone conference between David 

Liu, Special Counsel, Division of Market 

Regulation, Commission, and Patrick Sexton, 

Associate General Counsel, Exchange, on 

September 12, 2006. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.16

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–8038 Filed 9–21–06; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54465; File No. SR–CBOE–

2006–76] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Its Marketing 

Fee Program 

September 18, 2006. 

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 

September 1, 2006, the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. CBOE has 

designated this proposal as one 

establishing or changing a due, fee, or 

other charge imposed by CBOE under 

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

Rule 19b–4(f)(2) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. 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 

CBOE proposes to amend its 

marketing fee program. Below is the text 

of the proposed rule change. Proposed 

new language is in italics; deleted 

language is in [brackets]. 

Chicago Board Options Exchange, Inc. 

Fees Schedule 

[August 29]September 1, 2006 

1. No Change. 

2. Marketing Fee (6)(16): $.65 

3.–4. No Change. 

FOOTNOTES: 

(1)–(5) No Change. 

(6) The Marketing Fee will be 

assessed only on transactions of MarketMakers, RMMs, e-DPMs, DPMs, and 

LMMs resulting from [orders for less 

than 1,000 contracts] (i) orders for less 

than 1,000 contracts from payment 

accepting firms, or (ii) customer orders 

for less than 1,000 contracts that have 

designated a ‘‘Preferred Market-Maker’’

under CBOE Rule 8.13 at the rate of $.65 

per contract on all classes of equity 

options, options on HOLDRs, options on 

SPDRs, options on DIA, options on 

NDX, and options on RUT. The fee will 

not apply to: Market-Maker-to-MarketMaker transactions including 

transactions resulting from orders from 

non-member market-makers; 

transactions resulting from inbound P/A 

orders or a transaction resulting from 

the execution of an order against the 

DPM’s account if an order directly 

related to that order is represented and 

executed through the Linkage Plan 

using the DPM’s account; transactions 

resulting from accommodation 

liquidations (cabinet trades); and 

transactions resulting from dividend 

strategies, merger strategies, and short 

stock interest strategies as defined in 

footnote 13 of this Fees Schedule. This 

fee shall not apply to index options and 

options on ETFs (other than options on 

SPDRs, options on DIA, options on 

NDX, and options on RUT). A Preferred 

Market-Maker will only be given access 

to the marketing fee funds generated 

from a Preferred order if the Preferred 

Market-Maker has an appointment in 

the class in which the Preferred order is 

received and executed. 

Rebate/Carryover Process. If less than 

80% of the marketing fee funds 

collected in a given month is paid out 

by the DPM/LMM or Preferred MarketMaker in a given month, then the 

Exchange would refund such surplus at 

the end of the month on a pro rata basis 

based upon contributions made by the 

Market-Makers, RMMs, e-DPMs, DPMs 

and LMMs in that month. However, if 

80% or more of the funds collected in 

a given month is paid out by the DPM/ 

LMM or Preferred Market-Maker, there 

will not be a rebate for that month and 

the excess funds will be included in an 

Excess Pool of funds to be used by the 

DPM/LMM or Preferred Market-Maker 

in subsequent months. The total balance 

of the Excess Pool of funds for a DPM/ 

LMM cannot exceed $25,000, and the 

total balance of the Excess Pool of funds 

for a Preferred Market-Maker cannot 

exceed $80,000. If in any month the 

DPM/LMM Excess Pool balance were to 

exceed $25,000, or the Preferred MarketMaker Excess Pool balance were to 

exceed $80,000, the funds in excess of 

$25,000 or $80,000, respectively, would 

be refunded on a pro rata basis based 

upon contributions made by the MarketMakers, RMMs, DPMs, e-DPMs and 

LMMs in that month. 

CBOE’s marketing fee program as 

described above will be in effect until 

June 2, 2007. 

Remainder of Fees Schedule—No 

change. 

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 

Exchange 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 these 

statements may be examined at the 

places specified in Item IV below. CBOE 

has prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

CBOE proposes to amend its 

marketing fee program as it relates to 

orders designating a ‘‘Preferred MarketMaker’’ under CBOE Rule 8.13. Going 

forward, CBOE proposes to assess the 

fee only on transactions of MarketMakers, RMMs, e-DPMs, DPMs, and 

LMMs (collectively ‘‘Market-Makers’’) 

resulting from customer orders 5 for less 

than 1,000 contracts that have 

designated a ‘‘Preferred Market-Maker’’

under CBOE Rule 8.13. The Exchange 

states that previously, transactions of 

Market-Makers resulting from all orders 

of 1,000 contracts or less that have 

designated a ‘‘Preferred Market-Maker’’

under CBOE Rule 8.13 were assessed 

the marketing fee. CBOE would 

continue to assess the fee on 

transactions of Market-Makers resulting 

from orders for less than 1,000 contracts 

from payment accepting firms. 

CBOE states that it is not amending its 

marketing fee program in any other 

respects. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 


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