Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 16243 

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

2 17 CFR 240.19b–4. 

were influenced by the investment by 

the Fund of Funds in the Unaffiliated 

Management Company. The Board of 

the Unaffiliated Management Company 

will consider, among other things: (a) 

Whether or not the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Management Company; (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 or not the amount of securities 

purchased by the Unaffiliated 

Management Company in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of the Unaffiliated Management 

Company will take any appropriate 

actions based on its review, including, 

if appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders. 

7. Each Unaffiliated Management 

Company will maintain and preserve 

permanently in an easily accessible 

place a written copy of the procedures 

described in the preceding condition, 

and any modifications to such 

procedures, and will maintain and 

preserve for a period of 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 of 

securities in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of an Unaffiliated 

Management Company exceeds the limit 

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

setting forth the: (a) Party from whom 

the securities were acquired; (b) identity 

of the underwriting syndicate’s 

members; (c) terms of the purchase; and 

(d) information or materials upon which 

the determinations of the Board of the 

Unaffiliated Management Company 

were made. 

8. Prior to its investment in shares of 

an Unaffiliated Management Company 

in excess of the limit set forth in section 

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

Funds and the Unaffiliated Fund will 

execute a Participation Agreement 

stating, without limitation, that their 

boards of directors or trustees and their 

investment advisers understand the 

terms and conditions of the order and 

agree to fulfill their responsibilities 

under the order. At the time of its 

investment in shares of an Unaffiliated 

Management Company in excess of the 

limit set forth in section 12(d)(1)(A)(i), 

a Fund of Funds will notify the 

Unaffiliated Management Company of 

the investment. At such time, the Fund 

of Funds will also transmit to the 

Unaffiliated Management Company a 

list of the names of each Fund of Funds 

Affiliate and Underwriting Affiliate. The 

Fund of Funds will notify the 

Unaffiliated Management Company of 

any changes to the list as soon as 

reasonably practicable after a change 

occurs. The Unaffiliated Management 

Company 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. Before approving any advisory 

contract under section 15 of the Act, the 

Board of each Fund of Funds, including 

a majority of the Independent Trustees, 

shall find that the advisory fees charged 

under the advisory contract are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Fund of Funds may invest. Such 

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. Each Manager 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 pursuant to rule 12b– 

1 under the Act) received from an 

Unaffiliated Fund by the Manager, or an 

affiliated person of the Manager, other 

than any advisory fees paid to the 

Manager or its affiliated person by the 

Unaffiliated Fund, in connection with 

the investment by the Fund of Funds in 

the Unaffiliated Fund. Any Sub-Adviser 

will waive fees otherwise payable to the 

Sub-Adviser, directly or indirectly, by 

the Fund of Funds in an amount at least 

equal to any compensation received by 

the Sub-Adviser, or an affiliated person 

of the Sub-Adviser, from an Unaffiliated 

Fund, other than any advisory fees paid 

to the Sub-Adviser or its affiliated 

person by the Unaffiliated Fund, in 

connection with the investment by the 

Fund of Funds in the Unaffiliated 

Underlying Fund made at the direction 

of the Sub-Adviser. In the event that the 

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 

NASD Conduct Rule 2830, 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 of funds set forth in 

NASD Conduct Rule 2830. 

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 

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. E9–8068 Filed 4–8–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59690; File No. SR–CBOE– 

2009–019] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Cancellation 

Fees 

April 2, 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 March 18, 

2009, the Chicago Board Options 

Exchange, Incorporated (‘‘CBOE’’ or the 


dwashington3 on PROD1PC60 with NOTICES
16244 Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 

3See Securities Exchange Act Release Nos. 58692 

(September 30, 2008), 73 FR 59006 (October 8, 

2008); 58898 (November 4, 2008), 73 FR 67238 

(November 13, 2008); and 59072 (December 10, 

2008), 73 FR 76689 (December 17, 2008). 

4See Securities Exchange Act Release No. 56937 

(December 10, 2007), 72 FR 71465 (December 17, 

2007). 

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

6 15 U.S.C. 78f(b)(4). 

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

8 17 CFR 19b–4(f)(2). 

‘‘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 prepared 

by CBOE. 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 amend its Fees 

Schedule regarding its cancellation fee. 

The text of the proposed rule change is 

available on the Exchange’s Web site 

(http://www.cboe.org/legal), at the 

Exchange’s Office of the Secretary 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, 

CBOE 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. CBOE has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspets 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 currently charges an 

executing clearing member $1.50 for 

each cancelled public customer Order 

Routing System (‘‘ORS’’) order in excess 

of the number of public customer orders 

that the executing clearing member 

executes in a month for itself or for a 

correspondent firm. The purpose of the 

fee is to ease order backlogs on ORS and 

related systems and help the Exchange 

recoup its increased costs in processing 

increased order flow traffic. The fee is 

not charged if less than 500 public 

customer orders are cancelled in a 

month by the executing clearing 

member for itself or for a correspondent 

firm. The Exchange aggregates and 

counts as one executed order for 

purposes of the fee all public customer 

options orders from the same executing 

clearing member for itself or for a 

correspondent firm that are executed in 

the same series on the same side of the 

market at the same price within a 30 

second period. The following ORS order 

activity is exempt from the fee: (i) 

Cancelled ORS orders that improve the 

Exchange’s prevailing bid-offer (BBO) 

market when received; (ii) fill and 

cancellation activity occurring within 

the first one minute of trading following 

the opening of each options class; (iii) 

complex order fills and cancels; (iv) 

unfilled Fill-or-Kill (‘‘FOK’’) orders; (v) 

unfilled Immediate-or-Cancel (‘‘IOC’’) 

orders, and (vi) fill and cancellation 

activity in Mini-SPX Index Options 

(XSP). 

The level of canceled orders 

continues to remain quite high. Some 

customers are seeking to avoid the fee 

by executing large quantities of small 

orders in out-of-the-money options to 

offset their cancellation activity in more 

actively traded options. 

The Exchange proposes the following 

changes to the fee to help ease system 

congestion resulting from such activity. 

First, the Exchange proposes to amend 

the manner by which it calculates the 

fee by aggregating together and counting 

as one cancelled order orders that are 

executed at the same price in the same 

underlying symbol, instead of 

aggregating orders that are executed at 

the same price in the same series on the 

same side of the market. The Exchange 

believes this change should prevent 

customers from breaking up their orders 

into a range of options series in the 

same underlying symbol that trade at 

the same premium in order to avoid the 

fee. 

Second, the Exchange proposes to 

extend the current 30 second 

aggregation interval to 300 seconds. The 

Exchange believes that extending the 

aggregation interval to 300 seconds 

should result in a reduction in the 

number of orders that are sent to create 

offsetting trades. 

Third, the Exchange proposes to 

increase the fee from $1.50 to $2.00 per 

cancelled order. The proposed 

cancellation fee is similar to the 

cancellation fee of the International 

Securities Exchange.3

In addition, the Exchange proposes to 

eliminate the exemption for fill and 

cancellation activity in XSP options. 

The Exchange had exempted activity in 

XSP options from the fee for an 

indefinite time period in conjunction 

with a marketing ‘‘re-launch’’ of the XSP 

product.4 The Exchange has reevaluated 

the exemption and determined to 

reapply the fee to activity in XSP 

options. 

Finally, the Exchange proposes to 

change the name of the fee from ‘‘ORS 

(Order Routing System) Cancellation 

Fee’’ to ‘‘OHS (Order Handling System) 

Cancellation Fee’’, to reflect the fact that 

the ORS functionality has been replaced 

by new OHS functionality built on the 

CBOEdirect platform. 

The proposed fee changes will be 

operative on April 1, 2009. 

2. Statutory Basis 

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)(4) 6 of the 

Act in particular, in that it is designed 

to provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among CBOE members and other 

persons using its facilities. In particular, 

the Exchange believes the proposed fee 

change is justified to address the current 

level of cancellation activity and its 

effect on system congestion and 

Exchange systems costs. 

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 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. 

Date of Effectiveness of the Proposed 

Rule Change and Timing for 

Commission Action. 

Because the foregoing proposed rule 

change establishes or changes a due, fee, 

or other charged imposed by the 

Exchange, it has become effective 

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

Act 7 and Rule 19b–4(f)(2) 8 thereunder. 

At any time within 60 days of the filing 

of the proposed rule change the 

Commission may summarily abrogate 

such proposed 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. 


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 67 / Thursday, April 9, 2009 / Notices 16245 

9 17 CFR 200.30–3(a)(12). 

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

2See Securities Exchange Act Release No. 56458 

(September 18, 2007), 72 FR 54309 (September 24, 

2007) (SR–CBOE–2007–107) for a description of the 

Temporary Membership status under Rule 3.19.02. 

3See Securities Exchange Act Release No. 58178 

(July 17, 2008), 73 FR 42634 (July 22, 2008) (SR– 

CBOE–2008–40) for a description of the Interim 

Trading Permits under Rule 3.27. 

4Rule 3.27(b) defines the clearing firm floating 

monthly rate as the floating monthly rate that a 

Clearing Member designates, in connection with 

transferable membership leases that the Clearing 

Member assisted in facilitating, for leases that 

utilize that monthly rate. 

5The concepts of an indicative lease rate and of 

a clearing firm floating month rate were previously 

utilized in the CBOE rule filings that set and 

adjusted the Temporary Member access fee. Both 

concepts are also codified in Rule 3.27(b) in relation 

to ITPs. 

III. 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–2009–019 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–2009–019. 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 the filing also will be available 

for inspection and copying at the 

principal office of 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–2009–019 and 

should be submitted on or before April 

30, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7998 Filed 4–8–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59694; File No. SR–CBOE– 

2009–023] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to Temporary 

Membership Status and Interim 

Trading Permit Access Fees 

April 2, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 notice is hereby given that on 

March 31, 2009, the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’ or the ‘‘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 prepared by the CBOE. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested parties. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

CBOE proposes to adjust (i) the 

monthly access fee for persons granted 

temporary CBOE membership status 

(‘‘Temporary Members’’) pursuant to 

Interpretation and Policy .02 under 

CBOE Rule 3.19 (‘‘Rule 3.19.02’’) and 

(ii) the monthly access fee for Interim 

Trading Permit (‘‘ITP’’) holders under 

CBOE Rule 3.27. The text of the 

proposed rule change is available on the 

Exchange’s Web site (http:// 

www.cboe.org/Legal/), at the Exchange’s 

Office of the Secretary, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

CBOE 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 CBOE 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 current access fee for Temporary 

Members under Rule 3.19.02 2 and the 

current access fee for ITP holders under 

Rule 3.27 3 are both $9,809 per month. 

Both access fees are currently set at the 

indicative lease rate (as defined below) 

for March 2009. The Exchange proposes 

to adjust both access fees effective at the 

beginning of April 2009 to be equal to 

the indicative lease rate for April 2009 

(which is $8,817). Specifically, the 

Exchange proposes to revise both the 

Temporary Member access fee and the 

ITP access fee to be $8,817 per month 

commencing on April 1, 2009. 

The indicative lease rate is defined 

under Rule 3.27(b) as the highest 

clearing firm floating monthly rate 4 of 

the CBOE Clearing Members that assist 

in facilitating at least 10% of the CBOE 

transferable membership leases.5 The 

Exchange determined the indicative 

lease rate for April 2009 by polling each 

of these Clearing Members and 

obtaining the clearing firm floating 

monthly rate designated by each of 

these Clearing Members for that month. 

The Exchange used the same process 

to set the proposed Temporary Member 

and ITP access fees that it used to set 

the current Temporary Member and ITP 

access fees. The only difference is that 

the Exchange used clearing firm floating 

monthly rate information for the month 

of April 2009 to set the proposed access 

fees (instead of clearing firm floating 

monthly rate information for the month 

of March 2009 as was used to set the 

current access fees) in order to take into 

account changes in clearing firm 


dwashington3 on PROD1PC60 with NOTICES