Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 18495 

1All existing entities that currently intend to rely 

on the order are named as applicants. Any entity 

that relies on the order in the future will do so only 

in accordance with the terms and conditions of the 

application. If the name of any Sub-Advised Fund 

contains the name of a Sub-Adviser (as defined 

below), the name of the Manager that serves as the 

primary adviser to the Sub-Advised Fund will 

precede the name of the Sub-Adviser. 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 

writing within 60 days of this 

publication. 

Comments should be directed to: R. 

Corey Booth, Director/Chief Information 

Officer, Securities and Exchange 

Commission, C/O Shirley Martinson, 

6432 General Green Way, Alexandria, 

Virginia 22312 or send an e-mail to: 

PRA_Mailbox@sec.gov. Comments must 

be submitted to OMB within 60 days of 

this notice. 

Dated: April 5, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6892 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies 

Available From: Securities and 

Exchange Commission, Office of Filings 

and Information Services, Washington, 

DC 20549. 

Extension: Form 10–D; OMB Control 

No. 3235–0604; SEC File No. 270–544. 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) the Securities 

and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on this collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget for approval. 

Form 10–D (17 CFR 249.312) is used 

by asset-backed issuers to file periodic 

distribution reports pursuant to Section 

13 or 15(d) under the Securities 

Exchange Act 1934 (‘‘Exchange Act’’) 

(15 U.S.C. 78a et seq.) within 15 days 

after each required distribution date. 

The information provided by Form 10–

D is mandatory and all information is 

made available to the public upon 

request. Form 10–D takes approximately 

30 hours per response to prepare and is 

filed by 9,500 respondents. We estimate 

that 75% of the 30 hours per response 

(22.5 hours) is prepared by the company 

for a total annual reporting burden of 

213,750 hours (22.5 hours per response 

x 9,500 responses). 

Written comments are invited on: (a) 

Whether this proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden imposed by the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication. 

Please direct your written comments 

to R. Corey Booth, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O Shirley 

Martinson, 6432 General Green Way, 

Alexandria, VA 22312; or send an email to: PRA_Mailbox@sec.gov. 

Dated: April 4, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6894 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

27777; 812–13249] 

Forward Funds, et al.; Notice of 

Application 

April 5, 2007. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from section 15(a) of the Act and rule 

18f–2 under the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order that would permit them 

to enter into and materially amend 

subadvisory agreements without 

shareholder approval. 

APPLICANTS: Forward Funds (the 

‘‘Trust’’) and Forward Management, LLC 

(‘‘Forward Management’’). 

FILING DATES: The application was filed 

on December 20, 2005, and amended on 

April 2, 2007. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on April 30, 2007, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F St., 

NE., Washington, DC 20549–1090; 

Applicants, 433 California Street, 11th 

Floor, San Francisco, CA 94104, Attn.: 

Mary Curran, Esq. 

FOR FURTHER INFORMATION CONTACT: 

Marilyn Mann, Senior Counsel, at (202) 

551–6813, or Nadya B. Roytblat, 

Assistant Director, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained for a fee at the 

Commission’s Public Reference Desk, 

100 F St., NE., Washington, DC 20549–

0102 (telephone (202) 551–5850). 

Applicants’ Representations 

1. The Trust is organized as a 

Delaware statutory trust and is 

registered under the Act as an open-end 

management investment company. The 

Trust has fourteen operating series (the 

‘‘Funds’’). Applicants request that the 

order apply to: (a) The Funds; and (b) 

any future series of the Trust and any 

other registered open-end management 

investment companies or series thereof 

that (1) use the ‘‘manager-of-managers’’

arrangement described in the 

application, (2) comply with the terms 

and conditions of the application, and 

(3) are advised by a Manager (as defined 

below) (the investment companies and 

series thereof, as well as the Funds, the 

‘‘Sub-Advised Funds’’).1

2. Forward Management is registered 

as an investment adviser under the 

Investment Advisers Act of 1940 (the 

‘‘Advisers Act’’) and serves as 

investment adviser to the Funds 

pursuant to an investment advisory 

agreement (‘‘Advisory Agreement’’) with 

the Trust, on behalf of the Funds. The 

Advisory Agreement has been approved 

by the Trust’s board of trustees 

(‘‘Board’’), including a majority of the 


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18496 Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 

2A successor in interest is limited to entities that 

result from a reorganization into another 

jurisdiction or a change in the type of business 

organization. 

3 Investment Company Act Release No. 26230 

(Oct. 23, 2003). 

trustees (‘‘Trustees’’) who are not 

‘‘interested persons,’’ as defined in 

section 2(a)(19) of the Act, of the Trust 

(the ‘‘Independent Trustees’’), as well as 

by the shareholders of the Funds. The 

term ‘‘Manager’’ refers to Forward 

Management and any existing or future 

entity controlling, controlled by, or 

under common control with Forward 

Management that is an investment 

adviser registered under the Advisers 

Act or exempt from such registration 

and any successor in interest thereto.2

3. Under the terms of the Advisory 

Agreement, the Manager provides 

investment advisory services to each 

Sub-Advised Fund and has the 

authority, subject to Board approval, to 

enter into investment subadvisory 

agreements (‘‘Sub-Advisory 

Agreements’’) with one or more 

subadvisers (‘‘Sub-Advisers’’). Each 

Sub-Adviser is registered under the 

Advisers Act. The Manager will monitor 

and evaluate the Sub-Advisers and 

recommend to the Board their hiring, 

retention or termination. Sub-Advisers 

recommended to the Board by the 

Manager are selected and approved by 

the Board, including a majority of the 

Independent Trustees. Each SubAdviser has discretionary authority to 

invest the assets or a portion of the 

assets of the relevant Fund. The 

Manager compensates each Sub-Adviser 

out of the fees paid to the Manager 

under the Advisory Agreement. 

4. Applicants request an order that 

would permit the Manager to hire SubAdvisers and materially amend SubAdvisory Agreements without obtaining 

shareholder approval. The requested 

relief will not extend to any SubAdviser that is an affiliated person, as 

defined in section 2(a)(3) of the Act, of 

a Sub-Advised Fund or the Manager, 

other than by reason of serving as a SubAdviser to one or more of the SubAdvised Funds (‘‘Affiliated SubAdviser’’). 

Applicants’ Legal Analysis 

1. Section 15(a) of the Act provides, 

in relevant part, that it is unlawful for 

any person to act as an investment 

adviser to a registered investment 

company except under a written 

contract that has been approved by the 

vote of a majority of the company’s 

outstanding voting securities. Rule 18f–

2 under the Act provides that each 

series or class of stock in a series 

company affected by a matter must 

approve such matter if the Act requires 

shareholder approval. 

2. 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 provisions of the 

Act, or from any rule thereunder, if 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 

state that their requested relief meets 

this standard for the reasons discussed 

below. 

3. Applicants assert that the SubAdvised Funds’ shareholders are relying 

on the Manager’s experience to select 

one or more Sub-Advisers best suited to 

achieve a Sub-Advised Fund’s 

investment objectives. Applicants assert 

that, from the perspective of an investor 

in the Sub-Advised Fund, the role of the 

Sub-Advisers is comparable to that of 

the individual portfolio managers 

employed by traditional investment 

company advisory firms. Applicants 

state that requiring shareholder 

approval of each Sub-Advisory 

Agreement would impose costs and 

unnecessary delays on the Sub-Advised 

Funds, and may preclude the Manager 

from acting promptly in a manner 

considered advisable by the Board. 

Applicants note that the Advisory 

Agreement and any Sub-Advisory 

Agreement with an Affiliated SubAdviser will remain subject to section 

15(a) of the Act and rule 18f–2 under 

the Act. 

4. Applicants note that the 

Commission has proposed rule 15a–5 

under the Act and agree that the 

requested order will expire on the 

effective date of rule 15a–5 under the 

Act, if adopted.3

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Before a Sub-Advised Fund may 

rely on the requested order, the 

operation of the Sub-Advised Fund in 

the manner described in the application 

will be approved by a majority of the 

Sub-Advised Fund’s outstanding voting 

securities, as defined in the Act, or in 

the case of a Sub-Advised Fund whose 

public shareholders purchase shares on 

the basis of a prospectus containing the 

disclosure contemplated by condition 2 

below, by the initial shareholder(s) 

before offering shares of that SubAdvised Fund to the public. 

2. Each Sub-Advised Fund will 

disclose in its prospectus the existence, 

substance and effect of the order. In 

addition, each Sub-Advised Fund will 

hold itself out to the public as 

employing the manager-of-managers 

arrangement described in the 

application. The prospectus relating to 

each Sub-Advised Fund will 

prominently disclose that the Manager 

has ultimate responsibility (subject to 

oversight by the Board) to oversee SubAdvisers and to recommend their 

hiring, termination, and replacement. 

3. Within 90 days of the hiring of a 

new Sub-Adviser, the Manager will 

furnish shareholders of the applicable 

Sub-Advised Fund all information about 

the new Sub-Adviser that would be 

included in a proxy statement. To meet 

this condition, the Manager will provide 

shareholders of the applicable SubAdvised Fund with an information 

statement meeting the requirements of 

Regulation 14C, Schedule 14C and Item 

22 of Schedule 14A under the Securities 

Exchange Act of 1934. 

4. The Manager will not enter into a 

Sub-Advisory Agreement with any 

Affiliated Sub-Adviser unless such 

agreement, including the compensation 

to be paid thereunder, has been 

approved by the shareholders of the 

applicable Sub-Advised Fund. 

5. At all times, at least a majority of 

the Board will be Independent Trustees, 

and the nomination of new or additional 

Independent Trustees will be placed 

within the discretion of the thenexisting Independent Trustees. 

6. When a change of Sub-Adviser is 

proposed for a Sub-Advised Fund with 

an Affiliated Sub-Adviser, the Board, 

including a majority of the Independent 

Trustees, will make a separate finding, 

reflected in the Board minutes, that 

such change is in the best interests of 

such Sub-Advised Fund and its 

shareholders and does not involve a 

conflict of interest from which the 

Manager or an Affiliated Sub-Adviser 

derives an inappropriate advantage. 

7. The Manager will provide general 

investment management services to 

each Sub-Advised Fund, including 

overall supervisory responsibility for 

the general management and investment 

of each Sub-Advised Fund’s assets and, 

subject to review and approval by the 

Board, will: (i) Set the Sub-Advised 

Fund’s overall investment strategies; (ii) 

evaluate, select, and recommend SubAdvisers to manage all or a part of the 

Sub-Advised Fund’s assets; (iii) when 

appropriate, allocate and reallocate the 

Sub-Advised Fund’s assets among 

multiple Sub-Advisers; (iv) monitor and 

evaluate the Sub-Advisers’ investment 

performance; and (v) implement 


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Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 18497 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55308 

(Feb. 15, 2007), 71 FR 8215. 

4The regular trading session for certain ETFs 

extends to 3:15 p.m. (Central Time). 

5See CHX Rules, Article 20, Rule 8(c)(3). All 

orders remaining in the Matching System at the end 

of the regular trading session are cancelled back to 

the firms that submitted them; firms must submit 

new orders if they seek to trade in the late trading 

session. 

6Other markets have instituted trading sessions 

that occur after the end of regular trading and that 

involve the execution of cross transactions. See, 

e.g., Boston Stock Exchange Rules, Ch. IIC 

(Extended Hours Crossing Session), Section 4 

(noting that ‘‘only matched orders are eligible for 

execution during the ETS’’); New York Stock 

Exchange 900 Series Rules ((‘‘Off-Hours Trading 

Facility Rules’’) including Rules 902 and 907 

(describing different types of coupled orders that 

can be executed during the NYSE off-hours 

sessions)). 

7See Article 20, Rule 4(b)(4)(defining a cross 

order as one that is equal to or better than the 

NBBO). 

8 In approving this 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). 

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

10See, e.g., Boston Stock Exchange Rules, Ch. IIC 

(Extended Hours Crossing Session), Section 4; New 

York Stock Exchange 900 Series Rules ((‘‘Off-Hours 

Trading Facility Rules’’) including Rules 902 and 

907 (describing different types of coupled orders 

that can be executed during the NYSE off-hours 

sessions)). 

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

12 17 CFR 200.30–3(a)(12). 

procedures reasonably designed to 

ensure compliance by the SubAdviser(s) with the Sub-Advised Fund’s 

investment objectives, policies and 

restrictions. 

8. No Trustee or officer of the Trust, 

or director or officer of the Manager, 

will own directly or indirectly (other 

than through a pooled investment 

vehicle over which such person does 

not have control) any interest in a SubAdviser serving in reliance on the order, 

except for ownership of less than 1% of 

the outstanding securities of any class of 

equity or debt of any publicly traded 

company. 

9. The requested order will expire on 

the effective date of rule 15a–5 under 

the Act, if adopted. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6891 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55584; File No. SR–CHX–

2006–38] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Order 

Granting Approval to Proposed Rule 

Change to Extend the Late Trading 

Session and to Permit Only the 

Execution of Cross Orders During That 

Session 

April 5, 2007. 

I. Introduction 

On December 22, 2006, the Chicago 

Stock Exchange, Inc. (the ‘‘CHX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

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

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

proposed rule change (i) To extend its 

late trading session until 4:00 p.m. 

(Central Time) and (ii) to provide that 

only cross orders may be executed 

during that session. The proposed rule 

change was published for comment in 

the Federal Register on February 23, 

2007.3 The Commission received no 

comments on the proposed rule change. 

This order approves the proposed rule 

change. 

II. Description of the Proposal 

The Exchange conducts two trading 

sessions in its new trading model. The 

first session—called the regular trading 

session—is held from 8:30 a.m. (Central 

Time) to 3 p.m. (Central Time).4 The 

second trading session—called the late 

trading session—is held from the end of 

the regular session until 3:30 p.m. 

(Central Time). The Exchange’s 

Matching System begins accepting 

orders for the late trading session 

immediately after the closing of the 

regular trading session in a security.5

The proposed rule change would 

extend the Exchange’s late trading 

session by one-half hour, to 4 p.m. 

(Central Time), and confirm that only 

cross orders may be executed during the 

late trading session. The Exchange states 

that the longer trading session is 

designed to allow CHX participants to 

trade for a full hour after the normal 

close of the regular trading session. The 

Exchange further states that the crossorders-only rule simply confirms that 

CHX participants may only submit cross 

orders for execution during the late 

trading session. The Exchange believes 

that it is appropriate to limit the late 

trading session to cross orders for a 

variety of reasons—including the fact 

that doing so is consistent with the 

types of orders currently submitted by 

CHX participants during its current 

after-hours trading session. The 

Exchange also believes that this 

proposal is consistent with late trading 

sessions operated by other markets.6

As part of the proposed rule change, 

the Exchange is also proposing a change 

in its definition of ‘‘NBBO’’ to confirm 

that it applies only to protected quotes 

disseminated during regular trading 

hours. Without this change, the 

Exchange explained that a cross order in 

the late trading session technically 

would be required to be submitted at a 

price that is at or better than the NBBO 

during the late trading session (if 

markets are disseminating protected 

quotes), even though the trade-through 

provisions of Rule 611 of Regulation 

NMS do not apply during that session.7

III. Discussion 

After careful review of the proposal, 

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.8 In 

particular, the Commission finds that 

the proposal is consistent with Section 

6(b)(5) of the Act,9 which requires, 

among other things, that the rules of an 

exchange be designed to promote just 

and equitable principles of trade, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and the national market system, and, in 

general, to protect investors and the 

public interest. In making this finding, 

the Commission notes that other 

markets operate late trading sessions 

involving the execution of cross 

transactions.10

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

proposed rule change (SR–CHX–2006–

38) be, and hereby is, approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6893 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 


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