27344 Federal Register / Vol. 72, No. 93 / Tuesday, May 15, 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). 

4 17 CFR 240.19b–4(f)(6). 

of the investment. At such time, the 

Fund of Funds will also transmit to the 

Unaffiliated Fund a list of the names of 

each Fund of Funds Affiliate and 

Underwriting Affiliate. The Fund of 

Funds will notify the Unaffiliated Fund 

of any changes to the list as soon as 

reasonably practicable after a change 

occurs. The Unaffiliated Fund and the 

Fund of Funds 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. Prior to approving any advisory 

contract under section 15 of the Act, the 

Board of each Fund of Funds, including 

a majority of the Disinterested Trustees, 

will find that the advisory fees charged 

under the advisory contract are based on 

services provided that are in addition to, 

rather than duplicative of, the services 

provided under the advisory contract(s) 

of any Affiliated Underlying Fund or 

Unaffiliated Funds in which the Fund of 

Funds may invest. This finding, and the 

basis upon which the finding was made, 

will be recorded fully in the minute 

books of the appropriate Fund of Funds. 

10. The Fund of Funds Advisers will 

waive fees otherwise payable to it by a 

Fund of Funds in an amount at least 

equal to any compensation (including 

fees received pursuant to any plan 

adopted by an Unaffiliated Fund under 

rule 12b–1 under the Act) received by 

the Fund of Funds Adviser, or an 

affiliated person of the Fund of Funds 

Adviser, other than any advisory fees 

paid to the Fund of Funds Adviser or its 

affiliated person by the Unaffiliated 

Fund, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Underlying Fund. Any 

Fund of Funds Sub-Adviser will waive 

fees otherwise payable to the Fund of 

Funds Sub-Adviser, directly or 

indirectly, by the Fund of Funds in an 

amount at least equal to any 

compensation received from an 

Unaffiliated Underlying Fund by the 

Fund of Funds Sub-Adviser, or an 

affiliated person of the Fund of Funds 

Sub-Adviser, other than any advisory 

fees paid to the Fund of Funds SubAdviser or its affiliated person by an 

Unaffiliated Fund, in connection with 

the investment by the Fund of Funds in 

the Unaffiliated Fund made at the 

direction of the Fund of Funds SubAdviser. In the event that the Fund of 

Funds Sub-Adviser waives fees, the 

benefit of the waiver will be passed 

through to the Fund of Funds. 

11. With respect to Registered 

Separate Accounts that invest in a Fund 

of Funds, no sales load will be charged 

at the Fund of Funds level or at the 

Underlying Fund level. Other sales 

charges and service fees, as defined in 

rule 2830 of the Conduct Rules of the 

National Association of Securities 

Dealers (‘‘NASD’’), if any, will only be 

charged at the Fund of Funds level or 

at the Underlying Fund level, not both. 

With respect to other investments in a 

Fund of Funds, any sales charges and/ 

or service fees charged with respect to 

shares of a Fund of Funds will not 

exceed the limits applicable to funds set 

forth in rule 2830 of the NASD Conduct 

Rules. 

12. No Underlying Fund will acquire 

securities of any other 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, except to the 

extent that such Underlying Fund: (a) 

Receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (b) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

Acquire securities of one or more 

affiliated investment companies for 

short-term cash management purposes, 

or (ii) engage in interfund borrowing 

and lending transactions. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–9270 Filed 5–14–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55721; File No. SR–

NASDAQ–2007–047] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Establish an 

Opening and Closing Cross for 

Securities Listed on the NYSE, Amex, 

and Regional Exchanges 

May 7, 2007. 

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 May 1, 

2007, The NASDAQ Stock Market LLC 

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

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘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 proposed rule change 

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

Act3 and Rule 19b–4(f)(6) 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 

Nasdaq proposes a rule change to 

provide an open and close that matches 

orders where possible and provides a 

useful, tradable, robust opening and 

closing price for all securities listed on 

the New York Stock Exchange 

(‘‘NYSE’’), the American Stock 

Exchange (‘‘Amex’’), and regional 

exchanges. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nasdaq.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, 

Nasdaq 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. Nasdaq 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 

Nasdaq’s Opening and Closing 

Crosses are price discovery facilities 

that cross orders at a single price. 

Nasdaq proposes to extend the success 

of Nasdaq’s Opening and Closing Cross 

matching functionality, which has been 

widely accepted in the industry, for all 

of the securities listed on the NYSE, 

Amex, and regional exchanges (the 

‘‘non-Nasdaq securities’’) with 

adjustments, as necessary, to comply 

with National Market System Plans and 

SEC rules specific to those securities, 


cprice-sewell on PROD1PC62 with NOTICES
Federal Register / Vol. 72, No. 93 / Tuesday, May 15, 2007 / Notices 27345 

5Nasdaq Rule 3350, which governs short sales in 

Nasdaq securities, uses the latest bid change to 

determine the validity of a short sale. SEC Rule 

10a–1, which governs short sales in non-Nasdaq 

securities, uses the last sale change to determine the 

validity of a short sale. Nasdaq will ensure that the 

Opening and Closing Crosses for non-Nasdaq 

securities comply with SEC Rule 10a–1. This 

difference will not impact the way orders are 

entered, displayed, priced or executed within the 

crosses; it is entirely a change that is internal to 

Nasdaq. 

6Nasdaq Rule 4752 currently limits the Opening 

Cross to Nasdaq-listed securities. Nasdaq proposes 

to remove that restriction and leave the substance 

of the rule unchanged. Nasdaq Rule 4754, governing 

the Closing Cross, contains no parallel restriction, 

therefore no change to Rule 4754 is required. 

7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 

such as SEC Rule 10a–1. 5 Other than 

the exception described above, the 

processing will be exactly the same for 

the non-Nasdaq securities as the current 

process for Nasdaq securities.6

The proposed rule changes would 

provide Nasdaq with an open and close 

that matches orders and provides a 

useful, tradable, robust opening and 

closing price. Additionally, the process 

used will add transparency to the open 

and close in the same orderly process 

that is used for securities listed on 

Nasdaq. The same order types currently 

offered in the opening and closing 

process will be applied to non-Nasdaq 

securities, including: ‘‘On Open,’’

‘‘Opening Imbalance Only,’’ ‘‘On 

Close,’’ ‘‘Closing Imbalance Only,’’ and 

‘‘Imbalance Only.’’ The methodology 

used to determine the Opening and 

Closing Cross prices for non-Nasdaq 

securities as well as the execution 

algorithm for determining order priority 

will be identical to those currently 

employed for Nasdaq securities. 

Continuous information regarding the 

imbalances and indicative prices will be 

disseminated prior to the Opening and 

Closing Crosses exactly as it is currently 

disseminated for Nasdaq securities. 

Like the current Opening and Closing 

Crosses for Nasdaq-listed securities, the 

Crosses for non-Nasdaq securities will 

have built in parameters to protect 

investors against executions that are not 

in line with normal trading in a given 

security. For non-Nasdaq securities the 

benchmark will be adjusted as necessary 

to account for the fact that a large 

percentage of share volume is traded on 

other markets. 

Nasdaq will launch the Opening and 

Closing Crosses for non-Nasdaq 

securities in a phased manner. Nasdaq’s 

current intention is to begin with less 

than ten securities and, after 

determining that it is prudent to 

proceed, select another larger group of 

less than one hundred securities and, 

once again after determining that it is 

prudent to proceed, continue the rollout in a prudent manner until the rollout is complete. Using a phased-in 

approach should ensure a smooth and 

orderly transition from the current 

opening process to the Nasdaq Opening 

and Closing Crosses and should be 

completed within several weeks of its 

initiation. 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,7 in 

general and with Section 6(b)(5) of the 

Act,8 in particular, in that it is designed 

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 of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. The proposed rule 

change is based on successful 

experience with the Opening and 

Closing Cross for Nasdaq listed 

securities and is consistent with these 

requirements in that the changes are 

designed to address market participant 

input. 

B. Self Regulatory Organization’s 

Statement on Burden on Competition 

Nasdaq does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

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 

Because the foregoing proposed rule 

change: (1) Does not significantly affect 

the protection of investors or the public 

interest; (2) does not impose any 

significant burden on competition; and 

(3) does not become operative for 30 

days from the date of filing, or such 

shorter time as the Commission may 

designate if consistent with the 

protection of investors and the public 

interest, the proposed rule change has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 9 and Rule 19b–

4(f)(6) thereunder.10 As required by Rule 

19b–4(f)(6)(iii), Nasdaq provided the 

Commission with written notice of its 

intent to file the proposed rule change 

at least five business days prior to filing 

the proposal with the Commission or 

such shorter period as designated by the 

Commission. At any time within 60 

days of the filing of the 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2007–047 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2007–047. 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. Copies of such filing will also be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 


cprice-sewell on PROD1PC62 with NOTICES
27346 Federal Register / Vol. 72, No. 93 / Tuesday, May 15, 2007 / Notices 

11 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). 

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

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) also 

requires the self-regulatory organization to give the 

Commission 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 of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. NYSE Arca has satisfied the five-day 

pre-filing requirement. As set forth in the 

Commission’s initial approval of the Pilot Program 

and in its order extending the operation of the Pilot 

Program through June 5, 2005, if NYSE Arca 

proposes to: (1) extend the Pilot Program; (2) 

expand the number of options eligible for inclusion 

in the Pilot Program; or (3) seek permanent 

approval of the Pilot Program, it must submit a Pilot 

Program report to the Commission along with the 

filing of its proposal to extend, expand, or seek 

permanent approval of the Pilot Program. NYSE 

Arca must file any proposal to expand or seek 

permanent approval of the Pilot Program and the 

Pilot Program report with the Commission at least 

60 days prior to the expiration of the Pilot Program. 

The Pilot Program report must cover the entire time 

the Pilot Program was in effect and must include: 

(1) data and written analysis on the open interest 

and trading volume for options (at all strike price 

intervals) selected for the Pilot Program; (2) delisted 

options series (for all strike price intervals) for all 

options selected for the Pilot Program; (3) an 

assessment of the appropriateness of $1 strike price 

intervals for the options NYSE Arca selected for the 

Pilot Program; (4) an assessment of the impact of 

the Pilot Program on the capacity of NYSE Arca’s, 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File number 

SR–NASDAQ–2007–047 and should be 

submitted on or before June 5, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–9249 Filed 5–14–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55718; File No. SR–

NYSEArca–2007–42] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Extend the $1 Strike 

Pilot Program for an Additional Year 

May 7, 2007. 

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 May 3, 

2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ 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 

substantially prepared by NYSE Arca. 

The Exchange has filed the proposal as 

a ‘‘non-controversial’’ rule change 

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

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

which renders it 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 

NYSE Arca proposes to amend its 

rules to extend the $1 strike pilot 

program (‘‘Pilot Program’’) for an 

additional year. The text of the 

proposed rule change is available at 

NYSE Arca, the Commission’s Public 

Reference Room, and 

www.nysearca.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 text of these 

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 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 Exchange proposes to extend its 

Pilot Program for one year. The current 

Pilot Program expires on June 5, 2007. 

NYSE Arca notes that OTP Firms have 

expressed a continued interest in listing 

additional strike prices on low-priced 

stocks so that they can provide their 

customers with greater flexibility in 

their investment choices. For this 

reason, the Exchange proposes to extend 

the Pilot Program. The Exchange notes 

that the Pilot Program will remain 

unchanged in all material respects, 

including: The procedures for adding $1 

strike intervals; the procedures for 

phasing out $2.50 strike price intervals; 

the prohibition against listing long-term 

options (‘‘LEAPS’’) in equity option 

classes at $1 strike intervals; the 

procedures for adding expiration 

months; and the procedures for deleting 

$1 strike intervals. In support of the 

Exchange’s proposal to extend the Pilot 

Program until June 5, 2008, the 

Exchange is submitting a report to the 

Commission (‘‘Pilot Program Report’’), 

attached as Exhibit 3 to the proposal, 

offering detailed data from, and analysis 

of, the Pilot Program. 

2. Statutory Basis 

The Exchange believes that the 

continuing the Pilot Program will 

stimulate customer interest in options 

overlying lower-priced stocks by 

creating greater trading opportunities 

and flexibility. The Exchange further 

believes that continuing the Pilot 

Program will provide customers with 

the ability to more closely tailor 

investment strategies to the precise 

movement of the underlying security. 

For these reasons, the Exchange believes 

the proposed rule change is consistent 

with Section 6(b) of the Act,5 in general, 

and furthers the objectives of Section 

6(b)(5) of the Act,6 in particular, in that 

it is designed to facilitate transactions in 

securities, to promote just and equitable 

principles of trade, and to protect 

investors and the public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in the 

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 on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing 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 30 days from the date of 

this filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 7 and Rule 19b–

4(f)(6) thereunder.8


cprice-sewell on PROD1PC62 with NOTICES