25348 Federal Register / Vol. 72, No. 86 / Friday, May 4, 2007 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5The Exchange has asked the Commission to 

waive the 30-day operative delay required by Rule 

19b–4(f)(6)(iii), 17 CFR 240.19b–4(f)(6)(iii). See 

discussion infra Section III. 

in the Act, or, in the case of a Fund 

whose public shareholders purchased 

shares on the basis of a prospectus 

containing the disclosure contemplated 

by condition 2 below, by the sole initial 

shareholder before offering the Fund’s 

shares to the public. 

2. Each Fund will disclose in its 

prospectus the existence, substance, and 

effect of any order granted pursuant to 

the application. In addition, each Fund 

will hold itself out to the public as 

employing the management structure 

described in the application. The 

prospectus will prominently disclose 

that the Adviser has ultimate 

responsibility, subject to oversight by 

the Board, to oversee Subadvisers and 

recommend their hiring, termination, 

and replacement. 

3. Within 90 days of the hiring of a 

new Subadviser, the affected Fund 

shareholders will be furnished all the 

information about the new Subadviser 

that would be included in a proxy 

statement, except as modified to permit 

Aggregate Fee Disclosure. This 

information will include Aggregate Fee 

Disclosure and any change in such 

disclosure caused by the addition of the 

new Subadviser. To meet this 

obligation, the Fund will provide 

shareholders within 90 days of the 

hiring of a new Subadviser with an 

information statement meeting the 

requirements of Regulation 14C, 

Schedule 14C, and Item 22 of Schedule 

14A under the 1934 Act, except as 

modified by the order to permit 

Aggregate Fee Disclosure. 

4. The Adviser will not enter into a 

Subadvisory Agreement with any 

Affiliated Subadviser without that 

agreement, including the compensation 

to be paid thereunder, being approved 

by the shareholders of the applicable 

Fund. 

5. At all times, at least a majority of 

the Board will be Independent 

Directors, and the nomination of new or 

additional Independent Directors will 

be placed within the discretion of the 

then-existing Independent Directors. 

6. When a Subadviser change is 

proposed for a Fund with an Affiliated 

Subadviser, the Board, including a 

majority of the Independent Directors, 

will make a separate finding, reflected 

in the Board minutes, that the change is 

in the best interests of the Fund and its 

shareholders and does not involve a 

conflict of interest from which the 

Adviser or the Affiliated Subadviser 

derives an inappropriate advantage. 

7. The Adviser will provide general 

management services to each Fund, 

including overall supervisory 

responsibility for the general 

management and investment of the 

Fund’s assets, and, subject to review 

and approval of the Board, will: (a) Set 

each Fund’s overall investment 

strategies, (b) evaluate, select and 

recommend Subadvisers to manage all 

or a part of a Fund’s assets, (c) allocate 

and, when appropriate, reallocate a 

Fund’s assets among multiple 

Subadvisers; (d) monitor and evaluate 

the performance of the Subadvisers, and 

(e) implement procedures reasonably 

designed to ensure that the Subadvisers 

comply with each relevant Fund’s 

investment objective, policies and 

restrictions. 

8. No director or officer of the Funds 

or the Adviser, will own directly or 

indirectly (other than through a pooled 

investment vehicle that is not controlled 

by such person), any interest in a 

Subadviser, except for: (a) ownership of 

interests in the Adviser or any entity 

that controls, is controlled by, or is 

under common control with the 

Adviser, or (b) ownership of less than 

1% of the outstanding securities of any 

class of equity or debt of a publicly 

traded company that is either a 

Subadviser or an entity that controls, is 

controlled by, or is under common 

control with a Subadviser. 

9. The Adviser will provide the 

Board, no less frequently than quarterly, 

with information about the Adviser’s 

profitability on a per-Fund basis. Such 

information will reflect the impact on 

the profitability of the hiring or 

termination of any Subadviser during 

the applicable quarter. 

10. Each Fund will disclose in its 

registration statement the Aggregate Fee 

Disclosure. 

11. The requested order will expire on 

the effective date of rule 15a–5 under 

the Act, if adopted. 

12. Whenever a Subadviser is hired or 

terminated, the Adviser will provide the 

Board with information showing the 

expected impact on the Adviser’s 

profitability. 

13. Independent legal counsel, as 

defined in rule 0–1(a)(6) under the 1940 

Act, will be engaged to represent the 

Independent Directors. The selection of 

such counsel will be within the 

discretion of the then existing 

Independent Directors. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8506 Filed 5–3–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55676; File No. SR–CBOE– 

2007–40] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend the Duration of 

CBOE Rule 6.45A(b) Pertaining to 

Orders Represented in Open Outcry 

April 27, 2007. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on April 25, 

2007, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by the CBOE. 

The Exchange filed the proposal as a 

‘‘non-controversial’’ proposed rule 

change pursuant to Section 

19(b)(3)(A)(iii) of the Act 3 and Rule 

19b–4(f)(6) thereunder,4 which renders 

it effective upon filing with the 

Commission.5 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 CBOE proposes to extend the 

duration of CBOE Rule 6.45A(b) (the 

‘‘Rule’’), relating to the allocation of 

orders represented in open outcry in 

equity option classes designated by the 

Exchange to be traded on the CBOE 

Hybrid Trading System (‘‘Hybrid’’) 

through July 31, 2007. No other changes 

are being made to the Rule. The text of 

the proposed rule change is available at 

CBOE, the Commission’s Public 

Reference Room, and (http:// 

www.cboe.org/Legal). 

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 

CBOE included statements concerning 

the purpose of, and basis for, the 


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Federal Register / Vol. 72, No. 86 / Friday, May 4, 2007 / Notices 25349 

6See Securities Exchange Act Release No. 51366 

(March 14, 2005), 70 FR 13217 (March 18, 2005) 

(SR–CBOE–2004–75). 

7See Securities Exchange Act Release Nos. 52423 

(September 14, 2005), 70 FR 55194 (September 20, 

2005) (SR–CBOE–2005–76) (extending the duration 

of the Rule through December 14, 2005); 52957 

(December 15, 2005), 70 FR 76085 (December 22, 

2005) (SR–CBOE–2005–102) (extending the Rule 

through March 14, 2006); 53524 (March 21, 2006), 

71 FR 15235 (March 27, 2006) (SR–CBOE–2006–22) 

(extending the duration of the Rule through July 14, 

2006); 54164 (July 17, 2006), 71 FR 42143 (July 25, 

2006) (SR–CBOE–2006–60) (extending the duration 

of the Rule through October 31, 2006); 54680 

(November 1, 2006), 71 FR 65554 (November 8, 

2006) (SR–CBOE–2006–86) (extending the duration 

of the Rule through January 31, 2007); and 55219 

(February 1, 2007), 72 FR 6305 (February 9, 2007) 

(SR–CBOE–2007–10) (extending the duration of the 

Rule through April 30, 2007). 

8 In order to effect proprietary transactions on the 

floor of the Exchange, in addition to complying 

with the requirements of the Rule, members are also 

required to comply with the requirements of 

Section 11(a)(1) of the Act, 15 U.S.C. 78k(a)(1), or 

qualify for an exemption. Section 11(a)(1) restricts 

securities transactions of a member of any national 

securities exchange effected on that exchange for (i) 

the member’s own account, (ii) the account of a 

person associated with the member, or (iii) an 

account over which the member or a person 

associated with the member exercises discretion, 

unless a specific exemption is available. The 

Exchange has issued regulatory circulars to 

members informing them of the applicability of 

these Section 11(a)(1) requirements each time the 

duration of the Rule was extended. See CBOE 

Regulatory Circulars RG05–103 (November 2, 2005), 

RG06–001 (January 3, 2006), RG06–34 (April 7, 

2006), RG06–79 (July 31, 2006), RG06–115 

(November 8, 2006) and RG07–21 (February 8, 

2007). The Exchange represents that it expects to 

issue a similar regulatory circular to members 

reminding them of the applicability of the Section 

11(a)(1) requirements with respect to the proposed 

rule change. 

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). 

13Pursuant to Rule 19b–4(f)(6)(iii), the Exchange 

has given the Commission written notice of its 

intent to file the proposed rule change, along with 

a brief description and text of the proposed rule 

change, at least five business days prior to the date 

on which the Exchange filed the proposed rule 

change. See 17 CFR 240.19b–4(f)(6)(iii). 

14 17 CFR 240.19b–4(f)(6). 

15For the purposes only of waiving the operative 

date of this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

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

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 

In March 2005, the Commission 

approved revisions to CBOE Rule 6.45A 

related to the introduction of Remote 

Market-Makers.6 Among other things, 

the Rule, pertaining to the allocation of 

orders represented in open outcry in 

equity options classes traded on Hybrid, 

was amended to clarify that only incrowd market participants would be 

eligible to participate in open outcry 

trade allocations. In addition, the Rule 

was amended to limit the duration of 

the Rule until September 14, 2005. The 

duration of the Rule was thereafter 

extended through April 30, 2007.7 As 

the duration period expires on April 30, 

2007, the Exchange proposes to extend 

the effectiveness of the Rule through 

July 31, 2007.8

2. Statutory Basis 

Extension of the duration of the Rule 

will allow the Exchange to continue to 

operate under the existing allocation 

parameters for orders represented in 

open outcry in Hybrid on an 

uninterrupted basis. Accordingly, CBOE 

believes the proposed rule change is 

consistent with the Act and the rules 

and regulations under the Act 

applicable to a national securities 

exchange and, in particular, the 

requirements of Section 6(b) of the Act.9

Specifically, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 10 requirements that 

the rules of an exchange be designed to 

promote just and equitable principles of 

trade, to prevent fraudulent and 

manipulative acts, and, in general, to 

protect investors and the public interest. 

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 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 

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 proposed rule 

change does not: (1) Significantly affect 

the protection of investors or the public 

interest; (2) impose any significant 

burden on competition; and (3) become 

operative for thirty 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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 11 and Rule 19b– 

4(f)(6) 12 thereunder.13

A proposed rule change filed under 

Commission Rule 19b–4(f)(6) 14

normally does not become operative 

prior to thirty days after the date of 

filing. The CBOE requests that the 

Commission waive the 30-day operative 

delay, as specified in Rule 19b– 

4(f)(6)(iii), and designate the proposed 

rule change to become operative 

immediately to allow the Exchange to 

continue to operate under the existing 

allocation parameters for orders 

represented in open outcry in Hybrid on 

an uninterrupted basis. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest because such waiver will 

allow the CBOE to continue to operate 

under the Rule without interruption. 

For these reasons, the Commission 

designates the proposed rule change as 

operative upon filing.15

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 the 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–2007–40 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–CBOE–2007–40. 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 


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25350 Federal Register / Vol. 72, No. 86 / Friday, May 4, 2007 / 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). 

4 17 CFR 240.19b–4(f)(1). 

5See Rule 8.3A.01. 

6 ‘‘Any actions taken by the President of the 

Exchange pursuant to this paragraph will be 

submitted to the SEC in a rule filing pursuant to 

Section 19(b)(3)(A) of the Exchange Act.’’ Rule 

8.3A.01(c). 

7The Exchange is requesting this increase in the 

CQL due to increased trading volume in NYX. 

Telephone conversation between Angela Muehr, 

Attorney, Division of Market Regulation, 

Commission, and Patrick Sexton, Associate General 

Counsel, CBOE, on March 7, 2007. 

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

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

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

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. 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–2007–40 and should 

be submitted on or before May 25, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–8505 Filed 5–3–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55418; File No. SR–CBOE– 

2007–22] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Increase the Class 

Quoting Limit in the Option Class 

NYSE Group, Inc. (NYX); Republication 

March 7, 2007. 

Editorial Note: FR Doc. E7–4589 originally 

published at pages 11924–11925 in the issue 

of Wednesday, March 14, 2007. The original 

publication contained footnote omissions. As 

a result, the corrected document is being 

republished in its entirety. 

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 February 

23, 2007, 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 and II 

below, which Items have been 

substantially prepared by the Exchange. 

The Exchange filed the proposed rule 

change pursuant to Section 19(b)(3)(A) 

of the Act 3 and Rule 19b–4(f)(1) 

thereunder, which renders it effective 

upon filing with the Commission.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 

CBOE proposes to increase the class 

quoting limit in the option class NYSE 

Group, Inc. (NYX). The text of the 

proposed rule change is available at the 

CBOE, the Commission’s Public 

Reference Room, and http:// 

www.cboe.com. 

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 Exchange 

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 Rule 8.3A, Maximum Number 

of Market Participants Quoting 

Electronically per Product, establishes 

class quoting limits (‘‘CQLs’’) for each 

class traded on the Hybrid Trading 

System.5 A CQL is the maximum 

number of quoters that may quote 

electronically in a given product and the 

current levels are established from 25– 

40, depending on the trading activity of 

the particular product. 

Rule 8.3A, Interpretation .01(c) 

provides a procedure by which the 

President of the Exchange may increase 

the CQL for a particular product. In this 

regard, the President of the Exchange 

may increase the CQL in exceptional 

circumstances, which are defined in the 

rule as ‘‘* * * substantial trading 

volume, whether actual or expected.’’ 6

The effect of an increase in the CQL is 

procompetitive in that it increases the 

number of market participants that may 

quote electronically in a product. The 

purpose of this filing is to increase the 

CQL in the option class NYSE Group, 

Inc. (NYX) from its current limit of 40 

to 45.7

Increasing the CQL in NYX options 

will enable the Exchange to enhance the 

liquidity offered, thereby offering 

deeper and more liquid markets. 

2. Statutory Basis 

CBOE believes the proposed rule 

change is consistent with the Act and 

the rules and regulations under the Act 

applicable to a national securities 

exchange and, in particular, the 

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

Specifically, the Exchange believes the 

proposed rule change is consistent with 

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 and, in general, to 

protect investors and the public interest. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange 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 written comments on the 

proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change constitutes a stated policy, 

practice, or interpretation with respect 

to the meaning, administration, or 

enforcement of an existing rule, it has 

become effective pursuant to Section 

19(b)(3)(A) 10 and Rule 19b–4(f)(1) 


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