Joint Industry Plan; Order Granting Permanent Approval to Amendment No. 2 to the Plan for the Purpose of Developing and Implementing Procedures Designed To Facilitate the Listing and Trading of Standardized Options, 57166-57167 [E8-22965]

Download as PDF jlentini on PROD1PC65 with NOTICES 57166 Federal Register / Vol. 73, No. 191 / Wednesday, October 1, 2008 / Notices reasonably designed to monitor any purchases of securities by the Unaffiliated Fund in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of the Unaffiliated Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board of the Unaffiliated Fund will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Fund of Funds in shares of the Unaffiliated Fund. The Board of the Unaffiliated Fund will 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 an Underwriting Affiliate have changed significantly from prior years. The Board of the Unaffiliated Fund will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to ensure that purchases of securities in Affiliated Underwritings are in the best interests of shareholders. 7. Each Unaffiliated Fund 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 made once an investment by a Fund of Funds in the securities of an Unaffiliated Fund exceeds the limit 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 determinations of the Board of the Unaffiliated Fund were made. 8. Prior to its investment in shares of an Unaffiliated Fund in excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated VerDate Aug<31>2005 18:22 Sep 30, 2008 Jkt 214001 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 Fund in excess of the limit in section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated Fund of the investment. At such time, the Fund of Funds will also transmit to the Unaffiliated Fund a list of the names of each Fund of Funds Affiliate and Underwriting Affiliate. The Fund of Funds will notify the Unaffiliated Fund of any changes to the list as soon as reasonably practicable after a change occurs. The Unaffiliated Fund and the Fund of Funds will maintain and preserve a copy of the order, the Participation Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place. 9. Prior to approving any investment advisory contract under section 15 of the Act, each Fund of Funds Board, including a majority of the Disinterested Trustees, will find that the advisory fees charged under the advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Underlying Funds in which the Fund of Funds may invest. This finding, and the basis upon which the finding was made, will be recorded fully in the minute books of the appropriate Fund of Funds. 10. The Adviser will waive fees otherwise payable to it by the Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to a plan adopted by an Unaffiliated Fund under rule 12b–1 under the Act) received by the Adviser, or an affiliated person of the Adviser, from an Unaffiliated Underlying Fund, other than any advisory fees paid to the Adviser or an affiliated person of the Adviser by the Unaffiliated Fund, in connection with the investment by the Fund of Funds in the Unaffiliated Underlying Fund. Any Subadviser will waive fees otherwise payable to the Subadviser, directly or indirectly, by the Fund of Funds in an amount at least equal to any compensation received by the Subadviser, or an affiliated person of the Subadviser, from an Unaffiliated Underlying Fund, other than any advisory fees paid to the Subadviser or an affiliated person of the Subadviser by the Unaffiliated Fund, in connection with the investment by the Fund of PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 Funds in the Unaffiliated Underlying Fund made at the direction of the Subadviser. In the event that the Subadviser waives fees, the benefit of the waiver will be passed through to the Fund of Funds. 11. 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. 12. 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. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Florence E. Harmon, Acting Secretary. [FR Doc. E8–23043 Filed 9–30–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–58630; File No. 4–443] Joint Industry Plan; Order Granting Permanent Approval to Amendment No. 2 to the Plan for the Purpose of Developing and Implementing Procedures Designed To Facilitate the Listing and Trading of Standardized Options September 24, 2008. I. Introduction On August 12, 2008, August 18, 2008, August 15, 2008, August 13, 2008, August 8, 2008, August 14, 2008, August 14, 2008, and August 18, 2008, the American Stock Exchange LLC (‘‘Amex’’), the Boston Stock Exchange, Inc. (‘‘BSE’’), Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), the International Securities Exchange, LLC (‘‘ISE’’), The NASDAQ Stock Market LLC (‘‘Nasdaq’’), NYSE Arca Inc. E:\FR\FM\01OCN1.SGM 01OCN1 Federal Register / Vol. 73, No. 191 / Wednesday, October 1, 2008 / Notices (‘‘NYSE Arca’’), the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’), and the Options Clearing Corporation (‘‘OCC’’) respectively, filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to section 11A of the Securities Exchange Act 1 of 1934 (‘‘Act’’) and Rule 608 thereunder,2 Amendment No. 2 to the Plan for the Purpose of Developing and Implementing Procedures Designed to Facilitate the Listing and Trading of Standardized Options (‘‘the Options Listing Procedures Plan’’ or ‘‘OLPP’’).3 Amendment No. 2 would provide a uniform minimum volume threshold per underlying class to qualify for the introduction of a new expiration year of Long-term Equity AnticiPation securities (‘‘LEAP’’ or ‘‘LEAPS’’) options. On August 19, 2008, the Commission issued notice of and approved Amendment No. 2 on a temporary basis not to exceed 120 days, and solicited comment on the proposal.4 The Commission received no comment letters in response to the Temporary Approval Order. This order approves Amendment No. 2 on a permanent basis. II. Description of the Proposal Currently, Plan Sponsors may list a new LEAP expiration year at the appropriate time without any consideration as to the activity level of the class of options. Amendment No. 2 proposes to apply a uniform minimum volume threshold per underlying class to qualify for the introduction of a new expiration year of LEAP options. By agreeing to a minimum volume threshold per underlying class to qualify for an additional year of LEAP series, the Plan Sponsors intend to mitigate the number of option series available for trading. It is intended that this will in turn mitigate quote traffic, because Participants will not be submitting quotes in the not-listed series. The Plan Sponsors have agreed on a minimum volume threshold of 1,000 contracts national average daily volume in the 1 15 U.S.C. 78k–1. CFR 242.608. 3 On July 6, 2001, the Commission approved the OLPP, which was originally proposed by the Amex, CBOE, ISE, OCC, Phlx, and Pacific Exchange, Inc. (k/n/a NYSE Arca). See Securities Exchange Act Release No. 44521, 66 FR 36809 (July 13, 2001). On February 5, 2004, BSE was added as a sponsor to the OLPP. See Securities Exchange Act Release No. 49199, 69 FR 7030 (February 12, 2004). On March 21, 2008, Nasdaq was added as a sponsor to the OLPP. See Securities Exchange Act Release No. 57546 (March 21, 2008), 73 FR 16393 (March 27, 2008). 4 See Securities Exchange Act Release No. 58385 (August 19, 2008), 73 FR 50375 (August 26, 2008) (‘‘Temporary Approval Order’’). jlentini on PROD1PC65 with NOTICES 2 17 VerDate Aug<31>2005 18:22 Sep 30, 2008 Jkt 214001 preceding three calendar months (excluding volume in LEAP and FLEX series) to qualify for the introduction of a new LEAP expiration year.5 The Amendment does not restrict the introduction of a new LEAP expiration year in Index options, or in classes that have had options products trading at any exchange for less than six months. In addition, it also does not restrict, for a particular options class, the introduction of new LEAP series with an expiration year that has already been introduced by at least one Exchange. III. Discussion After careful review, the Commission finds that Amendment No. 2 is consistent with the requirements of the Act and the rules and regulations thereunder.6 Specifically, the Commission finds that Amendment No. 2 to the OLPP is consistent with section 11A of the Act 7 and Rule 608 thereunder 8 in that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets. Specifically, the Commission believes that by adopting a uniform minimum volume threshold per underlying class to qualify for the introduction of a new expiration year for LEAP series, the options exchanges should reduce the number of option series available for trading, and thus may reduce increases in the options quote rate because market participants would not be submitting quotes in the not-yet-available LEAP series. Accordingly, the Commission believes that it is necessary or appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect mechanisms of, a national market system to approve Amendment No. 2 to the OLPP on a permanent basis. IV. Conclusion It is therefore ordered, pursuant to section 11A of the Act,9 and Rule 608 thereunder,10 that proposed Amendment No. 2 to the OLPP be, and 5 The Plan Sponsors represented that, in 2007, if this proposal had been in effect, the industry would not have added a new expiration year in 550 underlying securities, which would have reduced the overall number of listed series (LEAP and nonLEAP series) by 8%. These LEAP series generated only .43% of industry trading volume in a typical (non-expiration) sample week. 6 In approving this proposed OPRA Plan Amendment, the Commission has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78k–1. 8 17 CFR 242.608. 9 15 U.S.C. 78k–1. 10 17 CFR 242.608. PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 57167 it hereby is, approved on a permanent basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Florence E. Harmon, Acting Secretary. [FR Doc. E8–22965 Filed 9–30–08; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release Nos. 33–8962; 34–58657; File No. 4–567] Roundtable on Modernizing the SEC’s Disclosure System Securities and Exchange Commission. AGENCY: Notice of roundtable discussion; request for comment. ACTION: SUMMARY: On October 8, 2008 from 9 a.m. to 1 p.m., the Securities and Exchange Commission will hold a roundtable to discuss ways in which its current disclosure system can be modernized to provide investors more useful and timely information to help them make investment choices. The roundtable will be organized as two panels. The panels will be moderated by Commission staff and will include investor representatives, company officials, information intermediaries, practitioners, and academics. The roundtable is part of the Commission’s 21st Century Disclosure Initiative. The roundtable will be held in the auditorium of SEC headquarters at 100 F Street, NE., Washington, DC, from 9 a.m. until approximately 1 p.m. The roundtable will be open to the public with seating on a first-come, first-served basis. The roundtable discussions will be Webcast on the Commission’s Web site at http://www.sec.gov. The roundtable agenda and other related materials, including a list of participants and moderators, will be accessible at http://www.sec.gov/disclosureinitiative. The Commission welcomes comments regarding any of the topics to be addressed at the roundtable and is particularly interested in comments responding to the questions that are set forth below. We must receive comments on or before October 22, 2008. DATES: You may submit your comments by any of the following methods: ADDRESSES: 11 17 E:\FR\FM\01OCN1.SGM CFR 200.30–3(a)(29). 01OCN1

Agencies

[Federal Register Volume 73, Number 191 (Wednesday, October 1, 2008)]
[Notices]
[Pages 57166-57167]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-22965]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58630; File No. 4-443]


Joint Industry Plan; Order Granting Permanent Approval to 
Amendment No. 2 to the Plan for the Purpose of Developing and 
Implementing Procedures Designed To Facilitate the Listing and Trading 
of Standardized Options

September 24, 2008.

I. Introduction

    On August 12, 2008, August 18, 2008, August 15, 2008, August 13, 
2008, August 8, 2008, August 14, 2008, August 14, 2008, and August 18, 
2008, the American Stock Exchange LLC (``Amex''), the Boston Stock 
Exchange, Inc. (``BSE''), Chicago Board Options Exchange, Incorporated 
(``CBOE''), the International Securities Exchange, LLC (``ISE''), The 
NASDAQ Stock Market LLC (``Nasdaq''), NYSE Arca Inc.

[[Page 57167]]

(``NYSE Arca''), the Philadelphia Stock Exchange, Inc. (``Phlx''), and 
the Options Clearing Corporation (``OCC'') respectively, filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
section 11A of the Securities Exchange Act \1\ of 1934 (``Act'') and 
Rule 608 thereunder,\2\ Amendment No. 2 to the Plan for the Purpose of 
Developing and Implementing Procedures Designed to Facilitate the 
Listing and Trading of Standardized Options (``the Options Listing 
Procedures Plan'' or ``OLPP'').\3\ Amendment No. 2 would provide a 
uniform minimum volume threshold per underlying class to qualify for 
the introduction of a new expiration year of Long-term Equity 
AnticiPation securities (``LEAP'' or ``LEAPS'') options.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ On July 6, 2001, the Commission approved the OLPP, which was 
originally proposed by the Amex, CBOE, ISE, OCC, Phlx, and Pacific 
Exchange, Inc. (k/n/a NYSE Arca). See Securities Exchange Act 
Release No. 44521, 66 FR 36809 (July 13, 2001). On February 5, 2004, 
BSE was added as a sponsor to the OLPP. See Securities Exchange Act 
Release No. 49199, 69 FR 7030 (February 12, 2004). On March 21, 
2008, Nasdaq was added as a sponsor to the OLPP. See Securities 
Exchange Act Release No. 57546 (March 21, 2008), 73 FR 16393 (March 
27, 2008).
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    On August 19, 2008, the Commission issued notice of and approved 
Amendment No. 2 on a temporary basis not to exceed 120 days, and 
solicited comment on the proposal.\4\ The Commission received no 
comment letters in response to the Temporary Approval Order. This order 
approves Amendment No. 2 on a permanent basis.
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    \4\ See Securities Exchange Act Release No. 58385 (August 19, 
2008), 73 FR 50375 (August 26, 2008) (``Temporary Approval Order'').
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II. Description of the Proposal

    Currently, Plan Sponsors may list a new LEAP expiration year at the 
appropriate time without any consideration as to the activity level of 
the class of options. Amendment No. 2 proposes to apply a uniform 
minimum volume threshold per underlying class to qualify for the 
introduction of a new expiration year of LEAP options.
    By agreeing to a minimum volume threshold per underlying class to 
qualify for an additional year of LEAP series, the Plan Sponsors intend 
to mitigate the number of option series available for trading. It is 
intended that this will in turn mitigate quote traffic, because 
Participants will not be submitting quotes in the not-listed series. 
The Plan Sponsors have agreed on a minimum volume threshold of 1,000 
contracts national average daily volume in the preceding three calendar 
months (excluding volume in LEAP and FLEX series) to qualify for the 
introduction of a new LEAP expiration year.\5\
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    \5\ The Plan Sponsors represented that, in 2007, if this 
proposal had been in effect, the industry would not have added a new 
expiration year in 550 underlying securities, which would have 
reduced the overall number of listed series (LEAP and non-LEAP 
series) by 8%. These LEAP series generated only .43% of industry 
trading volume in a typical (non-expiration) sample week.
---------------------------------------------------------------------------

    The Amendment does not restrict the introduction of a new LEAP 
expiration year in Index options, or in classes that have had options 
products trading at any exchange for less than six months. In addition, 
it also does not restrict, for a particular options class, the 
introduction of new LEAP series with an expiration year that has 
already been introduced by at least one Exchange.

III. Discussion

    After careful review, the Commission finds that Amendment No. 2 is 
consistent with the requirements of the Act and the rules and 
regulations thereunder.\6\ Specifically, the Commission finds that 
Amendment No. 2 to the OLPP is consistent with section 11A of the Act 
\7\ and Rule 608 thereunder \8\ in that it is in the public interest 
and appropriate for the protection of investors and the maintenance of 
fair and orderly markets. Specifically, the Commission believes that by 
adopting a uniform minimum volume threshold per underlying class to 
qualify for the introduction of a new expiration year for LEAP series, 
the options exchanges should reduce the number of option series 
available for trading, and thus may reduce increases in the options 
quote rate because market participants would not be submitting quotes 
in the not-yet-available LEAP series. Accordingly, the Commission 
believes that it is necessary or appropriate in the public interest, 
for the protection of investors and the maintenance of fair and orderly 
markets, to remove impediments to, and perfect mechanisms of, a 
national market system to approve Amendment No. 2 to the OLPP on a 
permanent basis.
---------------------------------------------------------------------------

    \6\ In approving this proposed OPRA Plan Amendment, the 
Commission has considered its impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78k-1.
    \8\ 17 CFR 242.608.
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IV. Conclusion

    It is therefore ordered, pursuant to section 11A of the Act,\9\ and 
Rule 608 thereunder,\10\ that proposed Amendment No. 2 to the OLPP be, 
and it hereby is, approved on a permanent basis.
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    \9\ 15 U.S.C. 78k-1.
    \10\ 17 CFR 242.608.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(29).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-22965 Filed 9-30-08; 8:45 am]
BILLING CODE 8010-01-P