Federal Register / Vol. 65, No. 186 / Monday, September 25, 2000 / Notices 57633

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 are satisfied.

3. Applicants state that they may not

rely on rule 17a–8 because the Funds

may be deemed to be affiliated for

reasons other than those set forth in the

rule. U.S. Bancorp Affiliates hold a

record 5% or more of the outstanding

shares of each of the Funds, and hold or

share voting power and/or investment

discretion with respect to a portion of

these shares, or have a funding

obligation to defined benefit plans

which own 5% or more of the

outstanding shares of the Acquired

Fund.

4. Section 17(b) of the Act provides

that the Commission 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

complete the Reorganization.

Applicants submit that the

Reorganization satisfies the standards of

section 17(b) of the Act. Applicants state

that the Board has found that

participation in the Reorganization

Agreement is in the best interests of

each Fund and its shareholders, and

that the interests of the existing

shareholders will not be diluted as a

result of the Reorganization. In addition,

applicants state that the exchange of

Acquired Fund shares for Acquiring

Fund shares will be based on net asset

value.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–24546 Filed 9–22–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24646; 812–10518]

Seasons Series Trust, et al.; Notice of

Application

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of application for an

order under section 12(d)(1)(J) of the

Investment Company Act of 1940

(‘‘Act’’) for an exemption from sections

12(d)(1)(A) and (B) of the Act and under

sections 6(c) and 17(b) of the Act for an

exemption from section 17(a) of the Act.

SUMMARY OF THE APPLICATION: The order

would permit certain registered unit

investment trusts or open-end

management investment companies to

acquire shares of registered open-end

management investment companies

both within and outside the same group

of investment companies.

APPLICANTS: Seasons Series Trust

(‘‘Seasons’’), Variable Annuity Account

Five (‘‘Account’’), Anchor National Life

Insurance Company (‘‘Anchor’’), First

SunAmerica Life Insurance Company

(‘‘SunAmerica,’’ together with Anchor,

the ‘‘Insurance Companies’’), and

SunAmerica Asset Management Corp.

(‘‘Adviser’’).

FILING DATES: The application was filed

on February 4, 1997, and amended on

September 12, 2000.

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 October 16, 2000, 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, Commission, 450

Fifth Street, NW., Washington, DC

20549–0609.

APPLICANTS: Seasons, Account, and

Anchor, One SunAmerica Center, Los

Angeles, CA 90067–6022; SunAmerica

and Adviser, the SunAmerica Center,

733 Third Avenue, New York, NY

10017–3204.

FOR FURTHER INFORMATION CONTACT:

Michael W. Mundt, Branch Chief, and

Nadya B. Roytblat, Assistant Director, at

(202) 942–0564 (Office of Investment

Company Regulation, Division of

Investment Management).

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 Branch,

450 Fifth Street, NW, Washington, DC

20549–0102, (202) 942–8090.

Applicants’ Representations

1. The Account, a unit investment

trust registered under the Act, is a

separate account of Anchor consisting of

sixteen subaccounts. Seasons, an openend management investment company

registered under the Act, serves as a

funding medium for variable annuity

contracts offered through the Account

and currently consists of sixteen series.

Applicants state that the Account and

Seasons are part of the ‘‘same group of

investment companies,’’ as that term is

defined in section 12(d)(1)(G) of the Act

(the ‘‘SunAmerica Group’’). The

Adviser, an investment adviser

registered under the Investment

Advisers Act of 1940, serves as

investment adviser to Seasons and is an

indirect, wholly-owned subsidiary of

Anchor. The Insurance Companies are

indirect, wholly-owned subsidiaries of

American International Group, Inc.

2. Applicants request relief to permit

the Account to invest (a) in series of

Seasons and other registered open-end

management investment companies that

are part of the SunAmerica Group

(‘‘Affiliated Funds’’), and (b) in other

registered open-end management

investment companies that are not part

of the SunAmerican Group

(‘‘Unaffiliated Funds,’’ and together

with the Affiliated Funds, the

‘‘Underlying Funds’’). Applicants

request that the relief also apply to (a)

any future separate account that is

registered under the Act as a unit

investment trust (together with the

Account, each a ‘‘Trust of Funds’’ ) and

is established by the Insurance

Companies or another insurance

Company that is in control of,

controlled by, or under common control

with the Insurance Companies (each, a

‘‘Sponsor’’) and (b) any future separate

account that is registered under the Act

as an open-end management investment

company and is established by the

Insurance Companies or another

insurance company that is in control of,

controlled by, or under common control

with the Insurance Companies, or any

open-end management investment

company registered under the Act that

is not a separate account but is within

57634 Federal Register / Vol. 65, No. 186 / Monday, September 25, 2000 / Notices

1All investment companies that currently intend

to rely on the requested order are named as

applicants Any other investment company that

relies on the order in the future will comply with

the terms and conditions of the application.

the SunAmerica Group (each a ‘‘Fund of

Funds’’).1 The Trusts of Funds and

Funds of Funds are each an ‘‘Acquiring

Company,’’ and collectively, the

‘‘Acquiring Companies.’’

3. Applicants state that the requested

relief will enable the Account to offer

investors the potential for additional

diversification among an expended

universe of mutual funds available as

investment options under variable

annuity contracts.

Applicants’ Legal Analysis

A. Section 12(d)(1)

1. Section 12(d)(1)(A) of the Act

prohibits a registered investment

company from acquiring shares of an

investment company if the securities

represent more than 3% of the total

outstanding voting stock of the acquired

company, more than 5% of the total

assets of the acquiring company, or,

together with the securities of any other

investment companies, more than 10%

of the total assets of the acquiring

company. Section 12(d)(1)(B) of the Act

prohibits a registered open-end

investment company from selling its

shares to another investment company if

the sale will cause the acquiring

company to own more than 3% of the

acquired company’s voting stock, or if

the sale will cause more than 10% of the

acquired company’s voting stock to be

owned by investment companies

generally.

2. Section 12(d)(1)(G) provides, in

relevant part, that section 12(d)(1) will

not apply to securities of a registered

open-end investment company acquired

by a registered open-end investment

company or registered unit investment

trust if the acquired company and the

acquiring company are part of the same

group of investment companies,

provided that certain other requirements

contained in section 12(d)(1)(G) are met.

Applicants state that they may not rely

on section 12(d)(1)(G) because an

Acquiring Company will invest in

Unaffiliated Funds in addition to

Affiliated Funds.

3. Section 12(d)(1)(J) 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 provision of section 12(d)(1) if the

exemption is consistent with the public

interest and the Acquiring Company to

acquire shares of an Underlying Fund

and to permit an Underlying Fund to

sell shares to an Acquiring Company

beyond the limits in sections 12(d)(1)

(A) and (B).

4. Applicants state that the proposed

arrangement will not give rise to the

policy concerns underlying sections

12(d)(1) (A) and (B), which include

concerns about undue influence by a

fund or funds over underlying funds,

excessive layering of fees, and overly

complex fund structures. Accordingly,

applicants believe that the requested

exemption is consistent with the public

interest and the protection of investors.

5. Applicants state that the proposed

arrangement will not result in undue

influence by an Acquiring Company or

its affiliates under Underlying Funds.

To limit the control that an Acquiring

Company may have over an Unaffiliated

Fund, applicants propose a condition

prohibiting the Sponsor or Adviser, the

Acquiring Company, and certain

affiliates (individually or in the

aggregate) from controlling an

Unaffiliated Fund within the meaning of

section 2(a)(9) of the Act. To limit

further the potential for undue influence

over Unaffiliated Funds, applicants

propose conditions 2 through 7, stated

below to preclude an Acquiring

Company and its affiliated entities from

taking advantage of an Unaffiliated

Fund with respect to transactions

between the entities and to ensure that

transactions will be on an arm’s length

basis.

6. As an additional assurance that an

Unaffiliated Fund understands the

implications of an investment by an

Acquiring Company under the

requested order, an Acquiring Company

and Unaffiliated Fund will execute an

agreement prior to the investment

stating that the Unaffiliated Fund

understands the terms and conditions of

the order and agrees to fulfill its

responsibilities under the order.

Applicants note that an Unaffiliated

Fund may choose to reject an

investment from the Acquiring

Company.

7. Applicants do not believe that the

proposed arrangement will involve

excessive layering of fees. With respect

to any investment in an Underlying

Fund by an Acquiring Company that is

not a separate account, the aggregate

sales charges, distribution-related fees

and/or service fees of an Acquiring

Company and the Underlying Fund will

not exceed the limits set forth in rule

2830 of the Conduct Rules of the

National Association of Securities

Dealers (‘‘NASD Conduct Rules’’).

Applicants represent that the fees and

charges of an Acquiring Company that

is a separate account and its Underlying

Funds, in the aggregate, will be

reasonable in relation to the services

rendered, expenses to be incurred, and

risks assumed by the Sponsor.

8. In addition, applicants note that a

Trust of Funds, as a unit investment

trust, would not pay an advisory fee,

and that a Fund of Funds would be

subject to a condition under which the

board of directors of the Fund of Funds,

including a majority of the disinterested

directors, would be required to

determine that the advisory fees charged

to the Fund of Funds are based on

services that are in addition to the

services provided under the advisory

contract of any Underlying Fund.

Pursuant to another condition to the

order, the Adviser to a Fund of Funds

or trustee or depositor of a Trust of

Funds will waive or offset fees

otherwise payable by the Acquiring

Company to the Adviser or trustee or

depositor in an amount at least equal to

any compensation (including fees paid

pursuant to a plan adopted by an

Unaffiliated Fund under rule 12b–1

under the Act (‘‘12b–1 Fees’’)) received

by the Adviser or trustee or depositor,

or an affiliated person of the Adviser or

trustee or depositor, from an

Unaffiliated Fund in connection with

the investment by an Acquiring

Company in the Unaffiliated Fund.

9. Applicants state that the proposed

arrangement will not create an overly

complex fund structure. Applicants note

that an Underlying Fund will be

prohibited from acquiring securities of

any investment company in excess of he

limits contained in section 12(d)(1)(A).

Applicants also represent that an

Acquiring Company’s prospectus and

sales literature will contain concise,

‘‘plain English’’ disclosure designed to

inform investors of the unique

characteristics of the Acquiring

Company’s structure, including, but not

limited to, its expense structure and the

additional expenses of investing in

Underlying Funds.

B. Section 17(a)

1. Section 17(a) of the Act generally

prohibits sales or purchases of securities

between a registered investment

company and any affiliated person of

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 outstanding voting

securities are directly or indirectly

owned, controlled, or held with power

to vote by the other person; and (c) any

person directly or indirectly controlling,

Federal Register / Vol. 65, No. 186 / Monday, September 25, 2000 / Notices 57635

controlled by, or under common control

with the other person.

2. Applicants state that a Fund of

Funds and Affiliated Funds might be

deemed to be under the common control

of the Adviser. Applicants also state that

an Acquiring Company and an

Underlying Fund might become

affiliated persons if the Acquiring

Company acquires more than 5% of the

Underlying Fund’s outstanding voting

securities. In light of these possible

affiliation, section 17(a) could prevent

an Underlying Fund from selling shares

to and redeeming shares from an

Acquiring Company.

3. Section 17(b) of the Act authorizes

the Commission to grant an order

permitting a transaction otherwise

prohibited by section 17(a) if it finds

that (a) the terms of the proposed

transaction are fair and reasonable and

do not involve overreaching on the part

of any person concerned; (b) the

proposed transaction is consistent with

the policies of each registered

investment company involved; and (c)

the proposed transaction is consistent

with the general purposes of the Act.

Section 6(c) of the Act permits the

Commission to exempt any person or

transactions from any provision of the

Act 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.

4. Applicants submit that the

proposed arrangement satisfies the

standards for relief under sections 17(b)

and 6(c) of the Act. Applicants state that

the terms of the arrangement are fair and

reasonable and do not involve

overreaching. Applicants note that the

consideration paid for the sale and

redemption of shares of the Underlying

Funds will be based on the net asset

values of the Underlying Funds.

Applicants state that the proposed

arrangement will be consistent with the

policies of each Acquiring Company

and Underlying Fund and with the

general purposes of the Act.

Applicants’ Conditions

Applicants agree that the requested

order will be subject to the following

conditions:

1. (a) The Sponsor or Adviser, (b) any

person controlling, controlled by, or

under common control with the

Sponsor or Adviser, and (c) any

investment company and any issuer that

would be an investment company but

for section 3(c)(1) or section 3(c)(7) of

the Act sponsored by the Sponsor or

advised by the Adviser or by any person

controlling, controlled by, or under

common control with the Sponsor or

Adviser (collectively, the ‘‘Group’’) will

not control (individually or in the

aggregate) an Unaffiliated Fund within

the meaning of section 2(a)(9) of the Act.

If, as a result of a decrease in the

outstanding voting securities of an

Unaffiliated Fund, the Group, in the

aggregate, becomes a holder of more

than 25% of the outstanding voting

securities of the Unaffiliated Fund, the

Group (except for any member of the

Group that is a separate account of the

Insurance Companies registered under

the Act (‘‘Separate Account’’)) will vote

its shares of the Unaffiliated Fund in the

same proportion as the vote of all other

holders of the Unaffiliated Fund’s

shares. A Separate Account will seek

voting instructions from its

contractholders and vote its shares in

accordance with the instructions

received and will vote those shares for

which no instructions were received in

the same proportion as the shares for

which instructions were received.

2. An Acquiring Company and its

Sponsor or Adviser, promoter, and

principal underwriter, and any person

controlling, controlled by, or under

common control with any of those

entities (each an ‘‘Acquiring Company

Affiliate’’) will not cause any existing or

potential investment by the Acquiring

Company in shares of an Unaffiliated

Fund to influence the terms of any

services or transactions between the

Acquiring Company or an Acquiring

Company Affiliate and the Unaffiliated

Fund or its investment adviser,

promoter, and principal underwriter,

and any person controlling, controlled

by, or under common control with any

of those entities (each an ‘‘Unaffiliated

Fund Affiliate’’).

3. The board of directors of a Fund of

Funds, including a majority of the

disinterested directors, will adopt

procedures reasonably designed to

assure that the Adviser is conducting

the investment program of the Fund of

Funds without taking into account any

consideration received by the Fund of

Funds or an Acquiring Company

Affiliate from an Unaffiliated Fund or

an Unaffiliated Fund Affiliate in

connection with any services or

transactions.

4. Once an investment by an

Acquiring Company in the securities of

an Unaffiliated Fund exceeds the limits

of section 12(d)(1)(A)(i) of the Act, the

board of directors of the Unaffiliated

Fund, including a majority of the

disinterested directors, will determine

that any consideration paid by the

Unaffiliated Fund to an Acquiring

Company or an Acquiring Company

Affiliate in connection with any services

or transactions: (a) Is fair and reasonable

in relation to the nature and quality of

the services and benefits received by the

Unaffiliated Fund; (b) is within the

range of consideration that the

Unaffiliated Fund would be required to

pay to another unaffiliated entity in

connection with the same services or

transactions; and (c) does not involve

overreaching on the part of any person

concerned.

5. No Acquiring Company or

Acquiring Company Affiliate will cause

an Unaffiliated Fund to purchase a

security from any underwriting or

selling syndicate in which a principal

underwriter is an officer, director,

member of an advisory board,

investment adviser, employee, or

sponsor of the Acquiring Company, or a

person of which any such officer,

director, member of an advisory board,

investment adviser, employee, or

sponsor is an affiliated person (each an

‘‘Underwriting Affiliate’’). An offering

during the existence of an underwriting

or selling syndicate of which a principal

underwriter is an Underwriting Affiliate

is considered an ‘‘Affiliated

Underwriting.’’

6. The board of directors of an

Unaffiliated Fund, including a majority

of the disinterested directors, will adopt

procedures reasonably designed to

monitor any purchases by the

Unaffiliated Fund of securities in

Affiliated Underwritings once an

investment by an Acquiring Company in

the securities of the Unaffiliated Fund

exceeds the limits of section

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

purchases made directly from an

Underwriting Affiliate. The board of

directors will review these purchases

periodically, but no less frequently than

annually, to determine whether the

purchases were influenced by the

investment by the Acquiring Company

in shares of the Unaffiliated Fund. The

board of directors should consider,

among other things, (a) whether the

purchases were consistent with the

investment objectives and policies of

the Unaffiliated 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 Fund in

Affiliated Underwritings and the

amount purchased directly from

Underwriting Affiliates have changed

significantly from prior years. The board

of directors shall take any appropriate

57636 Federal Register / Vol. 65, No. 186 / Monday, September 25, 2000 / Notices

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

2 17 CFR 240.19b–4.

3See letter from Jaime Galvan, Attorney, Legal

Division, CBOE to Deborah Flynn, Senior Special

Counsel, Division of Market Regulation

(‘‘Division’’), Commission, dated August 22, 2000

(‘‘Amendment No. 1’’). Amendment No. 1 moves

certain proposed language from Interpretation and

Policy .01 of CBOE Rule 6.51 to the body of CBOE

Rule 6.51. The CBOE also requested accelerated

approval of the portion of the proposal that

amended CBOE Rule 6.51.

4See letter from Jaime Galvan, Attorney, Legal

Division, CBOE to Deborah Flynn, Senior Special

Counsel, Division, Commission, dated September 5,

2000 (‘‘Amendment No. 2’’). In Amendment No. 2,

the CBOE confirmed that the failure to report an

options transaction within 90 seconds of execution

would be considered a violation of CBOE Rule 6.51.

Amendment No. 2 also deletes footnote 5 to Exhibit

1, which defined the term ‘‘offense’’ for purposes

of CBOE Rule 17.50(g)(4) as the first instance that

a pattern or practice of late reporting or failure to

report has been determined. In Amendment No. 2,

the Exchange proposes to add a similar footnote to

the text of CBOE Rule 17.50(g)(4).

actions based on its review, including,

if appropriate, the institution of

procedures designed to assure that

purchases of securities from Affiliated

Underwritings are in the best interests

of shareholders.

7. The Unaffiliated Fund shall

maintain and preserve permanently in

an easily accessible place a written copy

of the procedures described in the

preceding condition, and any

modifications, and shall maintain and

preserve for a period not less than six

years from the end of the fiscal year in

which any purchase from an Affiliated

Underwriting occurred, the first two

years in an easily accessible place, a

written record of each purchase made

once an investment by an Acquiring

Company in the securities of an

Unaffiliated Fund exceeds the limits 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 board’s determinations were made.

8. Prior to an investment in an

Unaffiliated Fund in excess of the limit

in section 12(d)(1)(A)(i), the Acquiring

Company and the Unaffiliated Fund

will execute an agreement stating,

without limitation, that the Unaffiliated

Fund understands the terms and

conditions of the order and agrees to

fulfill its responsibilities under the

order. At the time of its investment in

shares of an Unaffiliated Fund in excess

of the limit in section 12(d)(1)(A)(i), an

Acquiring Company will notify the

Unaffiliated Fund of the investment. At

such time, the Acquiring Company also

will transmit to the Unaffiliated Fund a

list of the names of each Acquiring

Company Affiliate and Underwriting

Affiliate. The Acquiring Company 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 Acquiring

Company will maintain and reserve a

copy of the order, the agreement, and

the list with any updated information

for a period not less than 6 years from

the end of the fiscal year in which any

investment occurred, the first 2 years in

an easily accessible place.

9. Prior to approving any advisory

contract under section 15 of the Act, the

board of directors of each Fund of

Funds, including a majority of the

disinterested directors, must find that

the advisory fees charged under the

contract are based on services that are

in addition to, rather than duplicative

of, services provided to Underlying

Funds in which the Fund of Funds will

invest. This finding and the basis upon

which the finding was made, will be

recorded fully in the minute books of

the Fund of Funds.

10. The Adviser to a Fund of Funds

or trustee or depositor of a Trust of

Funds will waive or offset fees

otherwise payable by the Acquiring

Company to the Adviser or trustee or

depositor in an amount at least equal to

any compensation (included 12b–1

Fees) received by the Adviser or trustee

or depositor, or an affiliated person of

the Adviser or trustee or depositor, from

an Unaffiliated Fund in connection with

the investment by an Acquiring

Company in the Unaffiliated Fund.

11. With respect to any investment in

an Underlying Fund by an Acquiring

Company that is not a separate account,

any sales charges, distribution-related

fees, and/or services fees charged with

respect to shares of an Acquiring

Company, when aggregated with any

sales charges, distribution-related fees,

and/or service fees paid by the

Acquiring Company with respect to its

acquisition, holding, or disposition of

shares of an Underlying Fund, will not

exceed the limits set forth in rule 2830

of the NASD Conduct rules.

12. No Underlying Fund will acquire

securities of any other investment

company in excess of the limits

contained in section 12(d)(1)(A) of the

Act.

For the SEC, by the Division of Investment

Management, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–24547 Filed 9–22–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43250; File No. SR–CBOE–

00–37]

Self-Regulatory Organizations; Notice

of Filing and Order Granting Partial

Accelerated Approval of Proposed

Rule Change by the Chicago Board

Options Exchange, Inc. Relating to the

Reporting of Options Transactions

September 6, 2000.

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 August

11, 2000, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ or the

‘‘Exchange’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change relating to the reporting of

options transactions. The CBOE filed

Amendment No. 1 to the proposed rule

change on August 23, 2000.3 On

September 6, 2000, the CBOE filed

Amendment No. 2 to the proposed rule

change.4 The proposed rule change, as

amended, is described in Items I, II, and

III below, which Items have been

prepared by the Exchange. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and to

grant partial accelerated approval to that

portion of the proposal that amends

CBOE Rule 6.51.

Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend

CBOE Rule 6.51, ‘‘Reporting Duties,’’ to

require the reporting of options

transactions within 90 seconds. In

addition, the proposed rule change

would amend CBOE Rule 17.50, which

set forth the CBOE’s minor rule

violation find plan. The text of the

proposed rule change, as amended,

follows. New text is italicized and

deleted text is bracketed.

Chicago Board Options Exchange,

Incorporated Rules

* * * * *

Chapter VI—Doing Business on the

Exchange Floor

* * * * *

Section C: Trading Practices and Procedures

Rule 6.51. Reporting Duties

(a) Designated member must report

transaction. (i) A participant in each

transaction to be designated by the Exchange

[shall immediately] must report or ensure the

transaction is reported to the Exchange

within 90 seconds of the execution in a form

and manner prescribed by the Exchange so

that the trade information may be reported to