Federal Register / Vol. 74, No. 37 / Thursday, February 26, 2009 / Notices 8829 

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

2 17 CFR 240.19b–4. 

where applicable, will vote the shares of 

each Insurance Fund held in their VLI 

Accounts and VA Accounts in a manner 

consistent with voting instructions 

timely received from Variable Contract 

owners. Participating Insurance 

Companies will be responsible for 

assuring that each of their VLI and VA 

Accounts investing in an Insurance 

Fund calculates voting privileges in a 

manner consistent with all other 

Participating Insurance Companies 

investing in that Fund. The obligation to 

calculate voting privileges as provided 

in this Application shall be a 

contractual obligation of all 

Participating Insurance Companies 

under their Participation Agreement 

with the Insurance Fund. Each 

Participating Insurance Company will 

vote shares of each Insurance Fund held 

in its VLI or VA Accounts for which no 

timely voting instructions are received, 

as well as shares held by its general 

account or otherwise attributed to it, in 

the same proportion as those shares for 

which voting instructions are received. 

Each Plan will vote as required by 

applicable law, governing Plan 

documents and as provided in this 

application. 

7. As long as the Act requires passthrough voting privileges to be provided 

to Variable Contract owners or the 

Commission interprets the Act to 

require the same, an Insurance Fund 

investment adviser (or its affiliates) or 

any general account will vote their 

shares of the Insurance Fund in the 

same proportion as all votes cast on 

behalf of all Variable Contract owners 

having voting rights; provided, however, 

that such an investment adviser (or 

affiliates) shall vote its shares in such 

other manner as may be required by the 

Commission or its staff. 

8. Each Insurance Fund will comply 

with all provisions of the Act requiring 

voting by shareholders (which, for these 

purposes, shall be the persons having a 

voting interest in its shares), and, in 

particular, the Insurance Fund will 

either provide for annual meetings 

(except to the extent that the 

Commission may interpret Section 16 of 

the Act not to require such meetings) or 

comply with Section 16(c) of the Act 

(although each Insurance Fund is not, or 

will not be, one of those trusts of the 

type described in Section 16(c) of the 

Act), as well as with Section 16(a) of the 

Act and, if and when applicable, 

Section 16(b) of the Act. Further, each 

Insurance Fund will act in accordance 

with the Commission’s interpretations 

of the requirements of Section 16(a) 

with respect to periodic elections of 

directors/trustees and with whatever 

rules the Commission may promulgate 

thereto. 

9. An Insurance Fund will make its 

shares available to the VLI Accounts, 

VA Accounts, and Plans at or about the 

time it accepts any capital from its 

investment adviser (or affiliates) or from 

a general account of a Participating 

Insurance Company. 

10. Each Insurance Fund has notified, 

or will notify, all Participants that 

disclosure regarding potential risks of 

mixed and shared funding may be 

appropriate in VLI Account and VA 

Account prospectuses or Plan 

documents. Each Insurance Fund will 

disclose, in its prospectus that: (a) 

Shares of the Fund may be offered to 

both VA Accounts and VLI Accounts 

and, if applicable, to Plans, (b) due to 

differences in tax treatment and other 

considerations, the interests of various 

Variable Contract owners participating 

in the Insurance Fund and the interests 

of Plan participants investing in the 

Insurance Fund, if applicable, may 

conflict, and (c) the Insurance Fund’s 

Board will monitor events in order to 

identify the existence of any material 

irreconcilable conflicts and to determine 

what action, if any, should be taken in 

response to any such conflicts. 

11. If and to the extent Rule 6e–2 and 

Rule 6e–3(T) under the Act are 

amended, or Rule 6e–3 under the Act is 

adopted, to provide exemptive relief 

from any provision of the Act, or the 

rules thereunder, with respect to mixed 

or shared funding, on terms and 

conditions materially different from any 

exemptions granted in the order 

requested in this Application, then each 

Insurance Fund and/or Participating 

Insurance Companies, as appropriate, 

shall take such steps as may be 

necessary to comply with Rules 6e–2 or 

6e–3(T), as amended, or Rule 6e–3, to 

the extent such rules are applicable. 

12. Each Participant, at least annually, 

shall submit to the Board of each 

Insurance Fund such reports, materials 

or data as the Board reasonably may 

request so that the directors/trustees of 

the Board may fully carry out the 

obligations imposed upon the Board by 

the conditions contained in this 

Application. Such reports, materials and 

data shall be submitted more frequently 

if deemed appropriate by the Board of 

an Insurance Fund. The obligations of 

the Participants to provide these reports, 

materials and data to the Board, when 

it so reasonably requests, shall be a 

contractual obligation of all Participants 

under their Participation Agreement 

with the Insurance Fund. 

13. All reports of potential or existing 

conflicts received by the Board of each 

Insurance Fund, and all Board action 

with regard to determining the existence 

of a conflict, notifying Participants of a 

conflict and determining whether any 

proposed action adequately remedies a 

conflict, will be properly recorded in 

the minutes of the Board or other 

appropriate records, and such minutes 

or other records shall be made available 

to the Commission upon request. 

14. Each Insurance Fund will not 

accept a purchase order from a Plan if 

such purchase would make the Plan an 

owner of 10 percent or more of the net 

assets of the Insurance Fund unless the 

Plan executes an agreement with the 

Insurance Fund governing participation 

in the Insurance Fund that includes the 

conditions set forth herein to the extent 

applicable. A Plan will execute an 

application containing an 

acknowledgement of this condition at 

the time of its initial purchase of shares. 

15. Each Insurance Fund will make its 

shares available through an Account at 

or about the same time that the 

Insurance Fund receives any seed 

money from the general account of a 

Participating Insurance Company. 

Conclusion: 

For the reasons summarized above, 

applicants assert that the requested 

exemptions are 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. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4064 Filed 2–25–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59425; File No. SR–CBOE– 

2009–009] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing of a 

Proposed Rule Change To Amend Its 

Rules Prohibiting Members From 

Functioning as Market-Makers 

February 19, 2009. 

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 February 

18, 2009, the Chicago Board Options 

Exchange, Incorporated (the ‘‘Exchange’’ 

or ‘‘CBOE’’) filed with the Securities 

and Exchange Commission (the 

8830 Federal Register / Vol. 74, No. 37 / Thursday, February 26, 2009 / Notices 

3The Exchange notes that the Commission has 

previously found that it is consistent with the Act 

for an options exchange not to prohibit a user of its 

market from effectively operating as a market maker 

by holding itself out as willing to buy and sell 

options contracts on a regular or continuous basis 

without registering as a market maker. See 

Securities Exchange Act Release No. 57478 (March 

12, 2008), 73 FR 14521 (March 18, 2008) (SR– 

NASDAQ–2007–004 and SR–NASDAQ–2007–080) 

(order approving, among other things, the rules 

governing the trading of options on the NASDAQ 

Options Market (‘‘NOM’’)). The Exchange also notes 

that the Commission has published a rule proposal 

for the NYSE Alternext U.S. LLC (‘‘Amex’’) that 

would only prohibit de facto market making 

through the use of customer orders, since customer 

orders have priority at any price over the bids and 

offers of non-customers but that would not prohibit 

such activity for other non-market maker brokerdealers. See Securities Exchange Act Release No. 

59142 (December 22, 2008), 73 FR 80494 (December 

31, 2008) (SR–NYSEALTR–2008–14) (notice of 

proposal to, among other things, adopt rules 

governing the trading of options on a new Amex 

trading platform). 

4A Voluntary Professional is a new category of 

non-member market participant on the Exchange. 

The term ‘‘Voluntary Professional,’’ means any 

person or entity that is not a broker or dealer in 

securities that elects, in writing, to be treated in the 

same manner as a broker or dealer in securities for 

purposes of certain order handling, order execution, 

and cancel fee calculation purposes. See Rule 

1.1(fff) and Securities Exchange Act Release No. 

58327 (August 7, 2008), 73 FR 47988 (August 15, 

2008) (SR–CBOE–2008–09). As part of this rule 

change, the Exchange is proposing to amend Rule 

1.1(fff) to provide that a Voluntary Professional will 

be treated in the same manner as a broker or dealer 

in securities for purposes of Rule 6.8C. 

5The Exchange notes that this rule change would 

only eliminate the restrictions of Rule 6.8C in the 

manner proposed. Members would continue to 

remain subject to the requirements of Rule 4.18 

(which requires members to establish, maintain and 

enforce written policies and procedures reasonably 

designed, taking into consideration the nature of 

such member’s business, to prevent the misuse of 

material, nonpublic information by such member or 

persons associated with such member); Rule 6.9(e), 

(which considers it conduct inconsistent with just 

and equitable principles of trade and a violation of 

Rule 4.1 for any member or person associated with 

a member, who has knowledge of all material terms 

and conditions of an original order and a solicited 

order, including a facilitation order, that matches 

the original order’s limit, the execution of which are 

imminent, to enter, based on such knowledge, an 

order to buy or sell an option of the same class as 

an option that is the subject of the original order, 

or an order to buy or sell the security underlying 

such class, or an order to buy or sell any related 

instrument until either (i) all the terms and 

conditions of the original order and any changes in 

the terms and conditions of the original order of 

which that member or associated person has 

knowledge are disclosed to the trading crowd or (ii) 

the solicited trade can no longer reasonably be 

considered imminent in view of the passage of time 

since the solicitation); Rules 6.45A.01 and 6.45B.01 

(which provide that order entry firms may not 

execute as principal against orders they represent 

as agent unless: (i) agency orders are first exposed 

on the Hybrid System for at least one second, (ii) 

the order entry firm has been bidding or offer for 

at least one second prior to receiving an agency 

order that is executable against such bid or offer, 

or (iii) the order entry firm proceeds in accordance 

with the crossing rules contained in Rule 6.74); and 

Rules 6.45A.02 and 6.45B.02 (which provide that 

order entry firms must expose orders they represent 

as agent for at least one second before such orders 

may be executed electronically via the electronic 

execution mechanism of the Hybrid System, in 

whole or in part, against orders solicited from 

members and non-member broker-dealers to 

transact with such orders). 

6See note 3, supra. 

‘‘Commission’’) the proposed rule 

change as 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 6.8C, Prohibition Against Members 

Functioning as Market-Makers, to 

eliminate some of its restrictions. The 

Exchange also proposes to make a 

related cross-reference update to Rule 

1.1(fff), which pertains to Voluntary 

Professionals. The text of the proposed 

rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.org/Legal), at the Office of the 

Secretary, CBOE and at the Commission. 

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 

self-regulatory organization 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 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 

The Exchange is proposing to amend 

Rule 6.8C in order to eliminate some of 

its restrictions. First, Rule 6.8C 

currently provides that a member, acting 

either as principal or agent, may neither 

enter nor permit the entry of orders into 

the Exchange’s electronic order routing 

system if (i) the orders are limit orders 

for the account or accounts of the same 

beneficial owner(s) and (ii) the limit 

orders are entered in such a manner that 

the beneficial owner(s) effectively is 

operating as a market maker by holding 

itself out as willing to buy and sell such 

securities on a regular or continuous 

basis. The Exchange is proposing that 

these restrictions be amended to only be 

applicable to customer orders (i.e., nonbroker-dealer orders) that are not 

Voluntary Professional orders (as 

described below), since such customer 

orders have priority at any price over 

the bids and offers of non-customers.3

The restrictions would no longer be 

applicable to instances where a member 

is acting as principal on its own behalf 

or is acting as agent on behalf of other 

broker-dealer orders or Voluntary 

Professional orders (which are a subcategory of customer orders that are 

treated in the same manner as brokerdealer orders).4

Rule 6.8C was adopted in 2001 to 

limit the ability of members that are not 

Designated Primary Market-Makers or 

market makers to compete on 

preferential terms within CBOE’s 

automated systems. Because customer 

orders are provided with certain 

benefits such as priority of bids and 

offers, the Exchange continues to 

believe that customer orders should be 

subject to the Rule’s restrictions. 

However, because broker-dealer orders 

are not subject to priority that is any 

better than market makers, the Exchange 

no longer believes it is necessary to 

impose the Rule’s restrictions on the 

entry of broker-dealer orders. Similarly, 

because Voluntary Professionals are not 

subject to priority that is any better than 

market makers, the Exchange does not 

believe it is necessary to impose the 

Rule’s restrictions on Voluntary 

Professionals.5

Second, in those instances where the 

restrictions are applicable, Rule 6.8C 

currently provides that, in determining 

whether a beneficial owner effectively is 

operating as a market maker, the 

Exchange will consider, among other 

things, the simultaneous or near 

simultaneous entry of limit orders to 

buy and sell the same security, the entry 

of multiple limit orders at different 

prices in the same security, and the 

multiple acquisition and liquidation of 

positions in the security during the 

same day. The Exchange is proposing to 

remove this latter condition pertaining 

to the multiple acquisition and 

liquidation of positions from its list of 

factors used for determining whether a 

beneficial owner is operating as a 

market maker. In light of the 

proliferation of day trading activity and 

the fact that such a prohibition does not 

exist on at least one other market,6 the 

Exchange no longer believes this 

activity should be considered a factor in 

determining whether a beneficial owner 

is effectively acting as a market maker. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

Federal Register / Vol. 74, No. 37 / Thursday, February 26, 2009 / Notices 8831 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 9 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4Changes are marked to the rule text that appears 

in the electronic manual of Nasdaq found at 

http://nasdaqomx.cchwallstreet.com. 

6(b) of the Act,7 in general, and furthers 

the objectives of Section 6(b)(5) of the 

Act,8 in particular, in that it is designed 

to prevent fraudulent and manipulative 

acts and practices, promote just and 

equitable principles of trade, remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. The proposed changes to the 

rule should continue to contribute to the 

Exchange’s ability to maintain a fair and 

orderly market in a manner that will 

limit unfair advantage and encourage 

competition. 

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 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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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–2009–009 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2009–009. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

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–2009–009 and 

should be submitted on or before March 

19, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4120 Filed 2–25–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59424; File No. SR– 

NASDAQ–2009–009] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Clarify 

Nasdaq’s Definition of ‘‘Controlled 

Company’’ 

February 19, 2009. 

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 

10, 2009, The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by Nasdaq. Nasdaq has designated the 

proposed rule change as effecting a 

change described under Rule 19b–4(f)(6) 

under the Act,3 which renders the 

proposal effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

Nasdaq proposes to clarify its 

definition of a ‘‘controlled company.’’ 

Nasdaq will implement the proposed 

rule upon approval [sic]. The text of the 

proposed rule change is below. 

Proposed new language is in italics.4

* * * * * 

4350. Qualitative Listing 

Requirements for Nasdaq Issuers Except 

for Limited Partnerships. 

(a)–(b) No change. 

(c) Independent Directors 

(1)–(4) No change. 

(5) A Controlled Company is exempt 

from the requirements of this Rule 

4350(c), except for the requirements of 

subsection (c)(2) which pertain to 

executive sessions of independent 

directors. A Controlled Company is a 

company of which more than 50% of 

the voting power for the election of 

directors is held by an individual, a 

group or another company. A Controlled 

Company relying upon this exemption 

must disclose in its annual meeting 

proxy statement (or, if the issuer does