Federal Register / Vol. 66, No. 89 / Tuesday, May 8, 2001 / Notices 23283

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

2 17 CFR 240.19b–4.

Acquired Fund will take place on or

about May 24, 2001.

Applicants’ Legal Analysis

1. Section 17(a) of the Act generally

prohibits an affiliated person of a

registered investment company, or an

affiliated person of such a person, acting

as principal, from selling any security

to, or purchasing any security from, 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 the power to vote 5% or more

of the outstanding voting securities of

the other person; (b) any person 5% or

more of whose securities are directly or

indirectly owned, controlled, or held

with power to vote by the other person;

(e) any person directly or indirectly

controlling, controlled by, or under

common control with the other person;

and (d) if such other person is an

investment company, any investment

adviser of that company. Applicants

state that the Funds may be deemed

affiliated persons and thus the

Reorganization may be prohibited by

section 17(a).

2. Rule 17a–8 under the Act exempts

from the prohibitions of section 17(a)

mergers, consolidations, or purchases or

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 set forth in the rule 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. Applicants state that DeAm, Inc.

owns more than 60% of the outstanding

shares of the Acquired Fund. DeAm,

Inc. is an affiliate of the Acquiring Fund

because DeAm, Inc. and Bankers Trust,

the adviser to the Acquiring Fund, are

under the ‘‘common control’’ of

Deutsche Bank AG. The Funds,

therefore, might be deemed to be

affiliated with each other for reasons

other than those set forth in the rule.

4. Section 17(b) of the Act provides

that the Commission may exempt a

transaction from the provisions of

section 17(a) of the Act if the evidence

establishes that the terms of the

proposed transaction, including the

consideration to be paid or received, 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 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 complete the

Reorganization. Applicants submit that

the Reorganization satisfies the

standards of section 17(b) of the Act.

Applicants state that the terms of the

proposed Reorganization are fair and

reasonable and do not involve

overreaching and that the Funds have

substantially similar investment

objectives and policies. Applicants also

state that the Boards, including a

majority of the Independent Trustees,

have found that participation in the

Reorganization is in the best interests of

each Fund, and that the interests of the

existing shareholders will not be diluted

as a result of the Reorganization. In

addition, applicants state that the

Reorganization will be based on the

Funds’ relative net asset values.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11251 Filed 5–7–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44244; File No. SR–CBOE–

2001–12]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange, Inc.

To Amend Its Rules Governing SplitPrice Executions on Its Retail

Automatic Execution System

May 1, 2001.

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

Securities and Exchange Act of 1934

(‘‘Act’’),1 and the Rule 19b–4

thereunder,2 notice is hereby given that

March 16, 2001, the Chicago Board

Options Exchange, Inc. (‘‘CBOE’’ 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 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

The CBOE proposes to amend its rules

to provide that the applicability of the

split-price execution functionality for

RAES orders may be determined by the

appropriate Floor Procedure Committee

on a class-by-class basis. Below is the

text of the proposed rule change. New

text is in italics. Proposed deletions are

in [brackets].

* * * * *

Chicago Board Options Exchange,

Incorporated Rules

* * * * *

Rule 6.8. RAES Operations

This Rule governs RAES operations in

all classes of options, except to the

extent otherwise expressly provided in

this or other Rules in respect of

specified classes of options.

(a) (i) Firms on the Exchange’s Order

Routing System (‘‘ORS’’) will

automatically be on the Exchange’s

Retail Automatic Execution System

(‘‘RAES’’) for purposes of routing small

public customer market or marketable

limit orders into the RAES system.

Those orders which are eligible for

routing to RAES may be subject to such

contingencies as the appropriate Floor

Procedure Committee (‘‘FPC’’) shall

approve. Public customer orders are

orders for accounts other than accounts

in which a member, non-member

participant in a joint-venture with a

member, or any non-member brokerdealer (including a foreign broker-dealer

as defined in Rule 1.1(xx)) has an

interest. The appropriate Floor

Procedure Committee (‘‘FPC’’) shall

determine the size of orders eligible for

entry into RAES in accordance with

paragraph (e) of this Rule. For purposes

of determining what a small customer

order is, a customer’s order cannot be

split up such that its parts are eligible

for entry into RAES. Firms on ORS have

the ability to go on and off ORS at will.

Firms not on ORS that wish to

participate will be given access to RAES

from terminals at their booths on the

floor.

(ii) When RAES receives an order, the

system automatically will attach to the

order its execution price, determined by

the prevailing market quote at the time

of the order’s entry to the system, except

as otherwise provided in paragraph (b)

of this Rule in instances where the best

bid or offer on the Exchange’s book

constitutes the prevailing market best

bid or offer, and as otherwise provided

in Interpretation and Policy .02 under

this Rule 6.8 in respect of multiplyVerDate 11<MAY>2000 17:50 May 07, 2001 Jkt 194001 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 E:\FR\FM\08MYN1.SGM pfrm02 PsN: 08MYN1
23284 Federal Register / Vol. 66, No. 89 / Tuesday, May 8, 2001 / Notices

3Securities Exchange Release No. 41995 (October

8, 1999), 64 FR 56547 (October 20, 1999).

4Securities Exchange Act Release No. 43932

(February 6, 2001), 66 FR 10332 (February 14,

2001).

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

traded options. A buy order will pay the

offer, a sell order will sell at the bid. A

Market-Maker logged on to participate

in RAES (a ‘‘Participating MarketMaker’’) will be designated as contrabroker on the trade. A trade executed on

RAES at an erroneous quote should be

treated as a trade reported at an

erroneous price and adjusted to reflect

the accurate market after receiving a

Floor Official’s approval.

(iii) This rule shall apply to RAES in

classes handled by DPM’s except that

the MTS Appointments Committee may

make available additional series or raise

the size of eligible orders in a DPM’s

classes pursuant to Rule 8.80.

(b) When the best bid or offer on the

Exchange’s book constitutes the best bid

or offer on the Exchange, contra-side

incoming RAES orders shall be executed

in accordance with either (i) or (ii)

below, as determined by the appropriate

Floor Procedure Committee on a classby-class basis.

(i) When the best bid or offer on the

Exchange’s book constitutes the best bid

or offer on the Exchange and is for a size

less than the RAES order eligibility size

for that class, such fact shall be denoted

in the Exchange’s disseminated quote by

a ‘‘Book Indicator.’’ [It is possible that

the best bid or offer on the Exchange’s

book constitutes the prevailing market

bid or offer. In those instances, a] An

incoming RAES order will be executed

against the order in the book. In the

event, the order in the book is for a

smaller number of contracts than the

RAES order, the balance of RAES order

will be assigned to participating marketmakers at the same price at which the

initial portion of the order was executed

up to an amount prescribed by the

appropriate Floor Procedure Committee

on a class-by-class basis (the ‘‘Book

Price Commitment Quantity’’). Any

remaining balance thereafter shall be (i)

routed to the crowd PAR terminal if

Autoquote is not in effect for that series;

(ii) assigned to participating marketmakers at the Autoquote price if

Autoquote constitutes the new

prevailing market bid or offer; or (iii)

executed against any order in the book

that constitutes the new prevailing

market bid or offer with the balance of

the RAES order being assigned to

participating market-makers at that

price up to the Book Price Commitment

Quality. Any additional remaining

balance of a RAES order shall be

handled in accordance with (ii) or (iii)

of this paragraph.

(ii) An incoming RAES order will be

executed against the order in the book.

In the event the order in the book is for

a smaller number of contracts than the

RAES order, the balance of the RAES

order will be assigned to participating

market-makers at the same price at

which the initial portion of the RAES

order was executed.

(c)–(g) Unchanged.

* * * Interpretations and Policies:

.01–.08 Unchanged.

* * * * *

II. Self-Regulatory Organization’s

Statement of the Purposed of, and

Statutory Basis for, the Propose 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

On December 1, 1998, the

Commission approved a CBOE rule

change establishing the Exchange’s

Automated Book Priority System

(‘‘ABP’’).3 ABP allows an order entered

into RAES to trade directly with an

order on the Exchange’s customer limit

order book in those cases where the best

bid or offer on the Exchange’s book is

equal to the prevailing market bid or

offer. As originally approved, ABP

provided that in the event the order in

the book was for a smaller number of

contracts than the RAES order, the

entire balance of the RAES order would

be assigned to participating marketmakers at the same price at which the

initial portion of the order was executed

against the book, regardless of the next

prevailing best bid or offer on the

Exchange. Thus, if the book contained

an order for one contract that

represented the best bid, an incoming

market order to sell 50 contracts would

execute against the book for one

contract and then against the trading

crown for 49 contracts at the book price,

regardless of the trading crowd’s best

bid.

On February 6, 2001, the Commission

approved a CBOE rule change filing to

enhance ABP to provide that RAES

orders subject to ABP be executed

against the book price up to the

applicable book size or a larger amount

as pre-determined by the appropriate

Floor Procedure Committee (‘‘FPC’’) for

the subject option class.4 The rule

change allows for split-price executions

on RAES when the CBOE’s best bid

(offer) is established by an order in

CBOE’s book that is for a smaller size

than the RAES contract execution

guarantee. However, as approved, the

revised rule does not allow for a

controlled class by class

implementation of the split-price

functionality.

Accordingly, CBOE now seeks to

modify that rule to merely provide that

the applicability of the split-price

execution functionality to a particular

option class be determined by the FPC,

Thus, the FPC would pre-determine, on

a class by class basis, if incoming RAES

orders will be subject to split-price

executions when the CBOE’s best bid

(offer) is established by a booked order,

or if incoming RAES orders will be

executed in their entirety at the booked

order’s price as has been the case since

the inception of ABP. The CBOE

believes the change will provide the

Exchange with the needed flexibility to

roll out the split-price functionality in a

controlled manner.

2. Statutory Basis

The proposed rule change is

consistent with and furthers the

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

in that it is designed to remove

impediments to a free and open market

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 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

Because the foregoing rule change

establishes a change in an existing

CBOE trading system that does not

significantly affect the protection of

investors or the public interest, that

Federal Register / Vol. 66, No. 89 / Tuesday, May 8, 2001 / Notices 23285

6 15 U.S.C. 78s(b)(3)(A).

7 17 CFR 240.19b–4(f)(5).

8 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See Letter from Sara Nelson Bloom, Associate

General Counsel, Nasdaq, to Katherine A. England,

Assistant Director, Division of Market Regulation,

Commission (April 25, 2001). In Amendment No. 1,

Nasdaq provided a chart that clarifies the proposed

schedule for implementing the new listing

standards and made certain technical corrections to

the proposal.

does not impose any significant burden

on competition, and that does not have

the effect of limiting the access to or

availability of the system, it has become

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

of the Act 6 and subparagraph (f)(5) of

the Rule 19b–4 thereunder.7 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.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549–0609. Copies of

the submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are fled 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 CBOE. All

submissions should refer to File No.

CBOE–2001–12 and should be

submitted by May 29, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11474 Filed 5–7–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44243; File No. SR–NASD–

2001–14]

Self-Regulatory Organizations; Notice

of Filing and Order Accelerating Partial

Approval of Proposed Rule Change

and Amendment No. 1 Thereto by the

National Association of Securities

Dealers, Inc. To Modify Certain Initial

and Continued Listing Standards on

Nasdaq

May 1, 2001.

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

Securities Exchange Act of 1934

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

notice is hereby given that on March 8,

2001, the National Association of

Securities Dealers, Inc. (‘‘NASD’’),

through its subsidiary, The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’) 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 Nasdaq. On

April 26, 2001, Nasdaq submitted

Amendment No. 1 to the proposal.3 The

proposal would modify certain initial

and continued listing standards on

Nasdaq. Nasdaq has also proposed a

pilot program that would give

immediate effectiveness to certain of the

new listing standards. The Commission

is publishing this notice and order to

solicit comments on the proposed rule

change from interested persons and to

grant accelerated approval to that

portion of the proposal relating to the

pilot program.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq has filed with the

Commission a proposal to amend NASD

Rules 4200, 4310, 4320, 4420, and 4450

and thereby modify certain quantitative

initial and continued listing standards

on Nasdaq. Nasdaq proposes to

implement a pilot program that would

allow issuers, with respect to certain of

the new standards, to comply with

either the existing standards or the

proposed new standards. The pilot

program is designed to ensure that

issuers that meet the new standards but

not the existing standards are not

delisted before the Commission takes

final action on the proposed rule

change. The standards that would be

included in the pilot are: (1) The new

bid price requirement found in NASD

Rule 4450(b)(4); and (2) the new equity

standard, which replaces the old net

tangible assets standard, found in NASD

Rules 4310(c)(2)(A)(i), 4310(c)(2)(B)(i),

4320(e)(2)(A)(i), 4320(e)(2)(B)(i),

4420(a)(5), 4420(b)(1), and 4450(a)(3).

Nasdaq has proposed that the pilot

program would expire on July 1, 2001,

or such earlier time as the Commission

takes action on the overall proposal.

Below is the text of the proposed rule

change. Proposed new language is

underlined; proposed deletions are in

brackets.

* * * * *

4200. Definitions

(a) For purposes of the Rule 4000

Series, unless the context requires

otherwise:

(1)–(27) No change.

(28) Reserved [‘‘Net Tangible Assets’’

shall mean total assets (including the

value of patents, copyrights and trade

marks but excluding the value of

goodwill) less total liabilities.]

(29)–(36) No change.

4310. Qualification Requirements for

Domestic and Canadian Securities

To qualify for inclusion in Nasdaq, a

security of a domestic or Canadian

issuer shall satisfy all applicable

requirements contained in paragraphs

(a) or (b), and (c) hereof.

(a)–(b) No change.

(c) In addition to the requirements

contained in paragraph (a) or (b) above,

and unless otherwise indicated, a

security shall satisfy the following

criteria for inclusion in Nasdaq:

(1) For initial inclusion, the issue

shall have three registered and active

market makers, and for continued

inclusion, the issue shall have two

registered and active market makers,

one of which may be a market maker

entering a stabilizing bid.

(2) (A) For initial inclusion, the issuer

shall have:

(i) [net tangible assets of $4 million]

stockholders’ equity of $5 million;

(ii) market capitalization of $50

million (currently traded issuers must

meet this requirement and the bid price

requirement under Rule 4310(c)(4) for

90 consecutive trading days prior to

applying for listing); or

(iii) net income of $750,000

(excluding extraordinary or nonrecurring items) in the most recently

completed fiscal year or in two of the