[Federal Register Volume 79, Number 191 (Thursday, October 2, 2014)]
[Notices]
[Pages 59535-59537]
[FR Doc No: 2014-23446]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73231; File No. SR-ICC-2014-15]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Clarify
the Implementation of the Revised 2014 ISDA Credit Derivatives
Definitions

September 26, 2014.
    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 September 19, 2014, ICE Clear Credit LLC (``ICC'') 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 primarily by ICC. ICC filed the proposal pursuant to Section
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(4)(i) \4\ thereunder, so
that the proposal was effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(4)(i).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The principal purpose of the proposed changes is to amend the ICC
Clearing Rules (the ``Rules'') in order to make clarifying changes
related to the implementation of the revised Credit Derivatives
Definitions, as published by the International Swaps and Derivatives
Association, Inc. (``ISDA'') on February 21, 2014 (the ``2014 ISDA
Definitions'') in light of changes in the timing of the industry-wide
ISDA protocol.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, ICC 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. ICC has prepared summaries, set forth in sections A, B,
and C below, of the most significant aspects of these statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    On September 5, 2014, the Commission issued an order approving
ICC's rule filing consisting of proposed amendments to the ICC Rules to
incorporate references to the 2014 ISDA Definitions (ICC-2014-11).\5\
At the time of filing, the planned industry implementation date for the
2014 ISDA Definitions was September 22, 2014. As has been publicly
announced by ISDA, following member feedback, the implementation date
for the conversion of existing transactions to the 2014 ISDA
Definitions under the ISDA protocol has been delayed until October 6,
2014. In addition, the industry consensus date for the commencement of
trading of new transactions based on

the 2014 ISDA Definitions has similarly been delayed until October 6,
2014, with the exception of certain European corporate, financial and
sovereign CDS contracts for which new transactions based on the 2014
ISDA Definitions may be entered into commencing on September 22, 2014
(so-called ``protocol excluded transactions''). In an effort to
maintain consistency across the CDS marketplace, ICC proposes to modify
its Rules so that the implementation of clearing of contracts using the
2014 ISDA Definitions at ICC is consistent with this revised schedule.
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    \5\ Order Approving Proposed Rule Change, as Modified by
Amendment No. 2 Thereto, to Revise Rules to Provide for the 2014
ISDA Definitions, Securities Exchange Act Release No. 34-73007
(September 5, 2014), 79 FR 54331 (September 15, 2014) (SR-ICC-2014-
11).
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    ICC proposes to amend its rules to change the definition of the
term ``2003/2014 Changeover Effective Date'' from September 22, 2014 to
October 6, 2014 (or such later date as may be designated by ICE Clear
Credit by Circular), in order to remain consistent with the approach
being taken throughout the CDS market. ICC also proposes to make
conforming changes throughout the ICC Rules to include reference to
recently finalized Standard Terms Supplements related to the index
products cleared by ICC. ICC believes such changes will facilitate the
prompt and accurate clearance and settlement of securities transactions
and derivative agreements, contracts, and transactions for which it is
responsible. The proposed Rule revisions are described in detail as
follows.
    In Rule 20-102 (Definitions), the 2003/2014 Changeover Effective
Date, or the date that ICC will convert converting indices and single
names to 2014 ISDA Definitions, was changed to October 6, 2014 (or such
later date as may be designated by ICE Clear Credit by Circular) to
reflect the delay in the effective date for changes to existing trades
under the industry protocol, as described above. Additionally, the
definition of Converting Contracts was revised to correct a grammatical
typo, revising ``components'' to the singular, ``component.''
    Following initial publication of the 2014 ISDA Definitions, two
versions of the Standard Terms Supplements referred to in Subchapters
26A, 26C and 26F were issued. In order to be explicitly clear and avoid
any potential confusion, ICC has incorporated reference to both the
``Legacy 2014 Supplement'' and ``New 2014 Supplement,'' together the
``2014 Supplements'' in the definitions of ``CDX.NA Untranched Terms
Supplement,'' ``CDX.EM Untranched Terms Supplement'' and ``iTraxx
Europe Untranched Terms Supplement.'' Reference to such other
supplements as may be specified for each index is also added to reflect
ICC's continued intention to be consistent with Standard Terms
Supplements issued by the industry. Corresponding clarifying changes
are made throughout Subchapters 26A, 26C and 26F to properly reference
the 2014 Supplements. Consistent with the approach taken in current
provisions in the ICC Rules that apply to pre-2014 Standard Terms
Supplements, the revisions clarify that certain provisions of the new
referenced standard terms supplements relating to bilateral delivery of
credit event notices and certain other notices do not apply in the
context of cleared contracts. Specifically updates are made in ICC
Rules 26A-316, 26A-317, 26C-316, 26C-317, 26F-316 and 26F-317.
    Section 17A(b)(3)(F) of the Act \6\ requires, among other things,
that the rules of a clearing agency be designed to promote the prompt
and accurate clearance and settlement of securities transactions and,
to the extent applicable, derivative agreements, contracts, and
transactions and to comply with the provisions of the Act and the rules
and regulations thereunder. ICC believes that the proposed rule changes
are consistent with the requirements of the Act and the rules and
regulations thereunder applicable to ICC, in particular, to Section
17(A)(b)(3)(F),\7\ because ICC believes that the proposed rule changes
will facilitate the prompt and accurate clearance and settlement of
swaps. ICC believes the changes proposed herein will provide clarity
and accommodate for changes required by the industry following the
approval of ICC-2014-11. As stated in ICC-2014-11, in an effort to
achieve consistency across the CDS marketplace, ICC's implementation
plan is intended to be fully consistent with the planned ISDA protocol
implementation. The conforming and clarifying changes related to the
revised 2014 ISDA Definitions ensure that ICC's implementation plan is
fully consistent with the planned ISDA protocol implementation. As
such, the proposed rule changes will facilitate the prompt and accurate
clearance and settlement of swaps within the control of ICC within the
meaning of Section 17A(b)(3)(F) \8\ of the Act.
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
    \7\ Id.
    \8\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    ICC does not believe the proposed rule changes would have any
impact, or impose any burden, on competition. The clarifying changes
related to the revised 2014 ISDA Definitions apply uniformly across all
market participants. Therefore, ICC does not believe the proposed rule
changes impose any burden on competition that is inappropriate 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

    Written comments relating to the proposed rule change have not been
solicited or received. ICC will notify the Commission of any written
comments received by ICC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change has become effective upon filing pursuant
to Section 19(b)(3)(A) \9\ of the Act and Rule 19b-4(f)(4)(i) \10\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(4)(i).
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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 email to<EMAIL_ADDRESS>Please include
File Number SR-ICC-2014-15 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-ICC-2014-15. This file
number should be included on the subject line if email 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 Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street NE., Washington, DC 20549, on official business days between the
hours of 10:00 a.m. and 3:00 p.m. Copies of such filings will also be
available for inspection and copying at the principal office of ICE
Clear Credit and on ICE Clear Credit's Web site at https://www.theice.com/clear-credit/regulation.
    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-ICC-2014-15
and should be submitted on or before October 23, 2014.

    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)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23446 Filed 10-1-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 87, Number 200 (Tuesday, October 18, 2022)]
[Notices]
[Pages 63113-63115]
[FR Doc No: 2022-22555]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96042; File No. SR-NASDAQ-2022-055]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend Nasdaq's Program Providing Eligible Companies With Complimentary
Board Recruiting Services

October 12, 2022.
    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 October 4, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' 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
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to extend Nasdaq's program providing Eligible
Companies with complimentary board recruiting services.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, 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, the Exchange 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 Exchange 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
    Nasdaq is proposing to extend its program, described in IM-5900-9,
providing Eligible Companies \3\ with complimentary board recruiting
services. The rule currently requires Eligible Companies to request
services by December 1, 2022; as revised that deadline would be
extended to December 1, 2023. Nasdaq also proposes to make clarifying
changes to reflect the approval of Rule 5605(f).
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    \3\ Under Nasdaq Rule IM-5900-9, an Eligible Company is:
    (a) any listed Company, except as described below, that
represents to Nasdaq that it does not have (i) at least one director
who self-identifies as female; and (ii) at least one director who
self-identifies as one or more of the following: Black or African
American, Hispanic or Latinx, Asian, Native American or Alaska
Native, Native Hawaiian or Pacific Islander, or Two or More Races or
Ethnicities, or who self-identifies as lesbian, gay, bisexual,
transgender or as a member of the queer community;
    (b) a listed Company that (i) is a Foreign Private Issuer (as
defined in Rule 5005(a)(19), or (ii) is considered a foreign issuer
under Rule 3b-4(b) under the Act and has its principal executive
offices located outside of the United States, if it represents to
Nasdaq that it does not have (i) at least one director who self-
identifies as female; and (ii) at least one director who self-
identifies as one or more of the following: female, an
underrepresented individual based on national, racial, ethnic,
indigenous, cultural, religious or linguistic identity in the
country of the company's principal executive offices, or lesbian,
gay, bisexual, transgender or as a member of the queer community; or
    (c) a listed Company that is a Smaller Reporting Company (as
defined in Rule 12b-2 under the Act), if it represents to Nasdaq
that it does not have (i) at least one director who self-identifies
as female, and (ii) at least one director who self-identifies as one
or more of the following: female, Black or African American,
Hispanic or Latinx, Asian, Native American or Alaska Native, Native
Hawaiian or Pacific Islander, or Two or More Races or Ethnicities,
or who self-identifies as lesbian, gay, bisexual, transgender or as
a member of the queer community.
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    Under IM-5900-9,\4\ Nasdaq provides Eligible Companies with one
year of complimentary access for two users to a board recruiting
service, which provides access to a network of board-ready diverse
candidates for companies to identify and evaluate. Nasdaq believes that
offering this board recruiting solution assists and encourages listed
companies to increase diverse representation on their boards, which can
result in improved corporate governance, thus strengthening the
integrity of the market and building investor confidence.
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    \4\ Securities Exchange Act Release No. 92590 (August 6, 2021),
86 FR 44424 (August 12, 2021) (SR-NASDAQ-2020-082).
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    Currently, Eligible Companies may request the board recruiting
complimentary service on or before December 1, 2022. After evaluating
the service and progress made in enhancing diversity, Nasdaq proposes
to extend the program until December 1, 2023. Under Nasdaq Rule
5605(f)(7), the earliest that a Nasdaq listed company will need to
explain why it does not have at least one Diverse \5\ director, is
August 6, 2023; and the earliest it will have to explain why it does
not have at least two Diverse directors is August 6, 2025.\6\ As such,
Nasdaq believes it continues to be appropriate to offer the
complimentary board recruiting service to Eligible Companies.
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    \5\ Nasdaq Rule 5605(f)(1) provides the definition of
``Diverse''. ``Diverse'' means an individual who self-identifies in
one or more of the following categories: Female, Underrepresented
Minority, or LGBTQ+. ``Female'' means an individual who self-
identifies her gender as a woman, without regard to the individual's
designated sex at birth.
    \6\ Nasdaq Rule 5065(f)(7)(A).
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    In addition, Nasdaq proposes to update the reference in Nasdaq Rule
IM-5900-9 to Nasdaq's proposed rule contained in SR-Nasdaq-2020-081, as
it pertains to the Diverse Board Representation, to instead reference
the approved Nasdaq Rule 5605(f). This change is non-substantive, and
clarifies the rules.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
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 promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
It is also consistent with this provision because it is not designed to
permit unfair discrimination between issuers. Nasdaq also believes that
the proposed rule change is consistent with the provisions of Sections
6(b)(4) \9\ and 6(b)(8),\10\ in that the proposal is designed, among
other things, to provide for the equitable allocation of reasonable
dues, fees, and other charges among Exchange members and issuers and
other persons using its facilities and that the rules of the Exchange
do not impose any burden on competition not

necessary or appropriate in furtherance of the purposes of the Exchange
Act.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 15 U.S.C. 78f(4).
    \10\ 15 U.S.C. 78f(8).
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    Nasdaq believes that research surrounding the value of diversity on
a company's board and investor interest in more diverse boards \11\
supports the fact that the proposal to offer access to a board
recruiting solution promotes just and equitable principles of trade and
protects investors and the public interest. Nasdaq believes that by
making this service available for a longer duration, more companies
will seek to enhance the diversity of their boards to achieve these
benefits. However, no company is required to use this service. Nasdaq
believes it is reasonable, and not unfairly discriminatory, to offer
the board recruiting solution only to Eligible Companies because these
companies have the greatest need to identify diverse board candidates.
They will need to identify diverse board candidates if they wish to
satisfy that requirement instead of explaining why they do not satisfy
it. Further, Nasdaq believes that companies that already have two
Diverse directors will already be familiar with the benefits of board
diversity and have demonstrated that they do not need Nasdaq's
assistance in identifying diverse candidates.
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    \11\ Securities Exchange Act Release No. 92590 (August 6, 2021),
86 FR 44424 (August 12, 2021) (SR-NASDAQ-2020-082).
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    Under Nasdaq Rule 5605(f), companies will have until August 6, 2023
to have, or explain why they do not have, at least one Diverse director
and until August 6, 2025 to have, or explain why they do not have, at
least two Diverse directors. Some Eligible Companies have already
requested the service, other Eligible Companies may first use an
alternate approach to identify a Diverse director. Therefore, to
provide Eligible Companies with adequate time to determine whether to
utilize the complimentary service before they first need to comply with
Nasdaq Rule 5605(f), Nasdaq believes it is reasonable to extend the
expiration date until December 1, 2023 to begin using the service.
    Nasdaq faces competition in the market for listing services,\12\
and competes, in part, by offering valuable services to companies.
Nasdaq believes that it is reasonable to continue to offer this
complimentary service as a tool to attract and retain listings as part
of this competition. In particular, Nasdaq believes some companies will
view the proposed board recruiting solution as a valuable tool to help
achieve diversity, to the potential benefit of the company and its
investors. Nasdaq also believes that offering this complimentary
service will help it compete to attract and retain listings in light of
the additional requirements contained in Rule 5065(f).
---------------------------------------------------------------------------

    \12\ The Justice Department has noted the intense competitive
environment for exchange listings. See ``NASDAQ OMX Group Inc. and
Intercontinental Exchange Inc. Abandon Their Proposed Acquisition Of
NYSE Euronext After Justice Department Threatens Lawsuit'' (May 16,
2011), available at http://www.justice.gov/atr/public/press_releases/2011/271214.htm.
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    For these reasons, Nasdaq believes it is not an inequitable
allocation of fees, unfairly discriminatory, nor an unnecessary or
inappropriate burden on competition to continue to extend the offer of
board recruiting solution only to Eligible Companies until December 1,
2023. Nasdaq represents that individual listed companies are not given
specially negotiated packages of products or services to list, or
remain listed, which the Commission has previously stated would raise
unfair discrimination issues under the Exchange Act.\13\
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    \13\ See Exchange Act Release No. 79366, 81 FR 85663 at 85665
(citing Securities Exchange Act Release No. 65127 (August 12, 2011),
76 FR 51449, 51452 (August 18, 2011) (approving NYSE-2011-20)).
---------------------------------------------------------------------------

    In addition, the proposal to reflect the approval of SR-Nasdaq-
2020-081, and to directly reference the now-approved Nasdaq Rule
5605(f), is non-substantive, and simply clarifies the rules. The
Exchange believes that this is consistent with Section 6(b) of the
Act,\14\ in general, and furthers the objectives of Section 6(b)(5) of
the Act.\15\
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    \14\ Ibid 9.
    \15\ Ibid 10.
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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. As noted above, Nasdaq faces
competition in the market for listing services, and competes, in part,
by offering valuable services to companies. The proposed rule change
reflects competition, but does not impose any burden on the competition
with other exchanges. Rather, Nasdaq believes that some companies will
find the proposed board recruiting solution an attractive offering and
therefore make listing or remaining listed on Nasdaq more attractive,
which will enhance competition for listings.
    Other exchanges can also offer similar services to companies,
thereby increasing competition to the benefit of those companies and
their shareholders. Accordingly, Nasdaq does not believe the proposed
rule change will impose any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Exchange Act.
    In addition, the proposal to reflect the approval of Nasdaq Rule
5605(f), is non-substantive, and simply aligns the rules in a clear and
consistent manner. Nasdaq does not believe this change will impose any
burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \16\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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 email to [email protected]. Please include
File Number SR-NASDAQ-2022-055 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2022-055. This
file number should be included on the subject line if email 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 website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2022-055 and should be submitted
on or before November 8, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-22555 Filed 10-17-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: April 11, 2007 (Volume 72, Number 69)]
[Notices]
[Page 18284-18290]
[DOCID:fr11ap07-129]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27779; File No. 812-13342]

Jefferson National Life Insurance Company, et al.

April 6, 2007
AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Notice of application for an order of approval pursuant to
Section 26(c) of the Investment Company Act of 1940, as amended (the
``Act'') approving certain substitutions of securities and an order of
exemption pursuant to Section 17(b) of the Act from Section 17(a) of
the Act.

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Applicants: Jefferson National Life Insurance Company (``JNL''),
Jefferson National Life Annuity Account C (``Separate Account C''),
Jefferson National Life Annuity Account E (``Separate Account E''),
Jefferson National Life Annuity Account F (``Separate Account F''),
Jefferson National Life Annuity Account G (``Separate Account G''),
Jefferson National Life Annuity Account H (``Separate Account H''),
Jefferson National Life Annuity Account I (``Separate Account I''),
Jefferson National Life Annuity Account J (``Separate Account J''),
Jefferson National Life Annuity Account K (``Separate Account K''),
Conseco Variable Insurance--Separate Account L (``Separate Account L'',
and together with Separate Account C, Separate Account E, Separate
Account F, Separate Account G, Separate Account H, Separate Account I,
Separate Account J, and Separate Account K, the ``Separate Accounts''
and, collectively with JNL, the ``Applicants''), Northern Lights
Variable Trust (``NLVT'' and collectively with Applicants, the
``Section 17 Applicants'').

Summary of Application: Applicants seek an order approving the proposed
substitution of shares of the 40[verbar]86 Series Trust Equity
Portfolio and 40[verbar]86 Series Trust Balanced Portfolio (the
``Replaced Funds'') with shares of the JNF Equity Portfolio and JNF
Balanced Portfolio (the ``Replacement Funds''), (the
``Substitutions''). Section 17 Applicants seek an order exempting them
from the provisions of Section 17(a) of the Act to the extent necessary
to permit JNL to carry out each of the Substitutions (``Application'').

Filing Date: The application was originally filed on November 9, 2006,
and was amended and restated on January 17, 2007, and April 2, 2007.

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 Secretary of the
Commission and serving Applicants with a copy of the request,
personally or by mail. Hearing requests must be received by the
Commission by 5:30 p.m. on April 27, 2007, 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 requester'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 Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-1090. Applicants, 9920 Corporate Campus
Drive, Suite 1000, Louisville, Kentucky 40223.

FOR FURTHER INFORMATION CONTACT: Patrick Scott, Senior Counsel, Office
of Insurance Products, Division of Investment Management, at (202) 551-
6763, or Harry Eisenstein, Branch Chief, at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application is available for a fee from the
Public Reference Branch of the Commission, 100 F Street, NE.,
Washington, D.C. 20549<PHONE_NUMBER>).

Applicants' and Section 17 Applicants' Representations

    1. JNL is a stock life insurance company originally organized in
1937 under the laws of Texas. JNL was formerly a subsidiary of Conseco
Variable Insurance Company. JNL is currently an affiliate of Inviva,
Inc., which purchased JNL in 2002.
    2. Separate Account C was established in 1980. Separate Account C
is registered under the Act as a unit investment trust (File No. 811-
04819) and is used to fund variable annuity contracts issued by JNL.
Two variable annuity contracts funded by Separate Account C are
affected by the Substitutions.
    Separate Account E was established in 1993. Separate Account E is
registered under the Act as a unit investment trust (File No. 811-
08288) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account E is affected
by the Substitutions.
    Separate Account F was established in 1997. Separate Account F is
registered under the Act as a unit investment trust (File No. 811-
08483) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account F is affected
by the Substitutions.
    Separate Account G was established in 1996. Separate Account G is
registered under the Act as a unit investment trust (File No. 811-
07501) and is used to fund variable annuity contracts issued by JNL.
Three variable annuity contracts funded by Separate Account G are
affected by the Substitutions.
    Separate Account H was established in 1999. Separate Account H is
registered under the Act as a unit investment trust (File No. 811-
09693) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account H is affected
by the Substitutions.
    Separate Account I was established in 2000. Separate Account I is
registered under the Act as a unit investment trust (File No. 811-
10213) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account I is affected
by the Substitutions.
    Separate Account J was established in 2003. Separate Account J is
registered under the Act as a unit investment trust (File No. 811-
21498) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account J is affected
by the Substitutions.
    Separate Account K was established in 2003. Separate Account K is
registered under the Act as a unit investment trust (File No. 811-
21500) and is used to fund variable annuity contracts issued by JNL.
One variable annuity contract funded by Separate Account K is affected
by the Substitutions.
    Separate Account L was established in 2000. Separate Account L is
registered under the Act as a unit investment trust (File No. 811-
10271) and is used to fund variable universal life contracts issued by
JNL. One variable universal life contract funded by Separate Account L
is affected by the Substitutions (all eleven variable annuity contracts
and the one variable universal life contract affected by the
Substitutions are collectively referred to as the ``Contracts'').
    3. NLVT was organized in Delaware as a statutory trust on November
2, 2005 and is registered under the Act as an open-end management
investment company.
    4. 40/86 Advisors, Inc. (``Advisors'') is the investment adviser to
the Replaced Funds, and is a subsidiary of Conseco Inc., JNL's former
parent. The two Replaced Funds are portfolios of the 40/86 Series
Trust, formerly known as the Conseco Series Trust (``CST''). JNF
Advisors, Inc. (``JNF Advisor'') is a newly formed investment adviser
under common control with JNL. JNF Advisor will serve as investment
adviser to the Replacement Funds, which will be portfolios of NLVT.
Chicago Equity Partners (``CEP'') is a registered investment adviser
and is currently 40/86 Series Trust Equity Portfolio's sub-adviser. CEP
is also currently the 40/86 Series Trust Balanced Portfolio's sub-
adviser for the equity portion of the fund. After the Substitutions,
CEP will be sub-adviser for both Replacement Funds, including the fixed
income portion of the JNF Balanced Portfolio. There are no corporate
affiliations between any of these three investment advisers.
    5. Purchase payments under the Contracts may be allocated to one or
more sub-accounts of the Separate Accounts (the ``Sub-Accounts'').
Income, gains and losses, whether or not realized, from assets
allocated to the Separate Accounts are, as provided in the Contracts,
credited to or charged against the Separate Accounts without regard to
other income, gains or losses of JNL. The assets maintained in the
Separate Accounts will not be charged with any liabilities arising out
of any other business conducted by JNL. Nevertheless, all obligations
arising under the Contracts, including the commitment to make annuity
payments or death benefit payments, are general corporate obligations
of JNL. Accordingly, all of the assets of JNL are available to meet its
obligations under the Contracts.

    6. The Contracts permit allocations of account value to available
Sub-Accounts that invest in specific investment portfolios of
underlying registered investment companies (each a ``Fund'' and,
collectively, the ``Mutual Funds''). The Mutual Funds are registered
under the Act as open-end management investment companies.
    7. The Contracts permit transfers of accumulation value from one
Sub-Account to another Sub-Account at any time subject to certain
restrictions. No sales charge applies to such a transfer of
accumulation value among Sub-Accounts.
    8. The Contracts reserve the right, upon notice to contract owners
(the ``Contract Owners''), to substitute shares of another mutual fund
for shares of a Fund held by a Sub-Account.
    9. Account C was established in 1980 as a management investment
company. Effective May 1, 1993, Account C was restructured into a unit
investment trust, pursuant to Commission exemptive relief. As a
condition of this exemptive relief, certain Contract Owners' contracts
were endorsed to limit the advisory fees the Contract Owner paid on
investments in the 40/86 Series Trust Equity Portfolio. Investments by
those Contract Owners in the corresponding Replacement Fund will
continue to benefit from the advisory fee limitations which were a
condition of the prior exemptive relief.
    10. The Replaced Funds involved in the Substitutions include 2
separate 4086 Series Trust portfolios. After the Substitutions, the
investment objective and policies of each Replacement Fund will be the
same as or substantially similar to the investment objective and
policies of the corresponding Replaced Fund. The Substitutions are
being proposed for several reasons. First, the accumulated assets in
the Replaced Funds were derived from an earlier time, prior to 2002,
when Conseco Inc., JNL's former parent, formed a large commissioned
broker-dealer network that was familiar with, and loyal to, the CST
funds. That broker-dealer network dissolved after Conseco experienced
financial difficulties in the summer of 2002. Today JNL, as an
affiliate of Inviva, Inc. (which purchased JNL (f/k/a Conseco Variable
Insurance Company)), has almost no access to the broker-dealer network
that was responsible for the growth in assets in the CST funds. In
addition, JNL has developed its own, very different target audience:
the fee-based and fee-only adviser, as opposed to the traditional
commission-based representative. Second, as part of the discussions
related to the Substitutions of the Replaced Funds, Advisors has
indicated to JNL that sponsoring an insurance-dedicated mutual fund
complex did not have a place in its parent corporation's long-term
business plan. Advisors intends to continue to serve in its current
capacity with respect to the Replaced Funds to facilitate a smooth
transition. The Board of Trustees of 40/86 Series Trust voted to
liquidate, on or about March 23, 2007, the Trust's three other
portfolios, the Fixed Income, Government Securities and Money Market
Portfolios, and these portfolios have been liquidated.
    Currently all of the Mutual Funds are unaffiliated investment
companies and changes due to investment performance, style drift, or
management practice issues require substantial systems, filing, and
printing resources, which slows the process to make changes, if
necessary. Because it is anticipated the Replacement Funds and JNF
Advisors will have ``manager of managers'' exemptive relief, JNF
Advisor, as investment adviser, will be able to act more quickly and
efficiently to protect Contract Owners' interests if the investment
strategy, management team or performance of a sub-adviser does not meet
expectations. JNF Advisor plans to file an application for ``manager of
managers'' exemptive relief within 6 months from the date that the
Substitutions are effected. The ``manager of managers'' exemptive
relief would permit JNF Advisor, as the investment adviser for the
existing series, to replace any sub-adviser or to employ a new sub-
adviser without submitting such actions for the approval of
shareholders of the affected series. Before a Replacement Fund relies
on any Commission order or rule that would permit the Replacement Fund
to enter into contracts with subadvisers without obtaining shareholder
approval, the Replacement Fund's reliance on the order or rule will be
approved, following the Substitutions, by a majority of the Replacement
Fund's outstanding voting securities.
    11. JNF Advisor will serve as the investment adviser for each
Replacement Fund. However, the management of each Replacement Fund will
be sub-advised as described below. Additional information, including
the investment objective, fee structure and expenses for the fiscal
year ending in 2006 for each of the Replaced and each Replacement Fund,
is shown in the tables that follow:
    12. Substitution 1

------------------------------------------------------------------------
                                  Replaced fund       Replacement fund
------------------------------------------------------------------------
Fund Name...................  40/86 Series Trust    JNF Equity;
                               Equity Portfolio.     subadvised by CEP
Investment Objective........  Seeks to provide a    Seeks to provide a
                               high total return     high total return
                               consistent with       consistent with
                               preservation of       preservation of
                               capital and a         capital and a
                               prudent level of      prudent level of
                               risk. Normally        risk. Normally
                               invests at least      invests at least
                               80% of its assets     80% of its assets
                               in U.S. common        in U.S. common
                               stocks. May also      stocks. May also
                               invest in other       invest in other
                               U.S. and foreign      U.S. and foreign
                               securities,           securities,
                               including             including
                               convertible           convertible
                               securities and        securities and
                               warrants. Is          warrants. Is
                               normally widely       normally widely
                               diversified by        diversified by
                               industry and          industry and
                               company, with a       company, with a
                               focus on small and    focus on small and
                               medium-size           medium-size
                               companies. Uses a     companies. Uses a
                               proprietary multi-    proprietary multi-
                               factor model to       factor model to
                               select securities.    select securities.
                               The model includes    The model includes
                               momentum, value and   momentum, value and
                               quality factors.      quality factors.
                               The process focuses   The process focuses
                               on security           on security
                               selection while       selection while
                               remaining industry,   remaining industry,
                               sector, style and     sector, style and
                               capitalization        capitalization
                               neutral.              neutral.
Principal Risks.............   Market Risk   Market
                                                     Risk.
                               Small-        Small-
                               Company Risk.         Company Risk.
                               Price         Price
                               Volatility.           Volatility.
Adviser/Subadviser..........  40/86 Advisors        JNF Advisor/CEP.
                               Partners/CEP.
Fund Asset Level as of 9/30/  $169,387,929........  $0
 06.
Mgmt. Fee...................  0.79%\*\............  0.79%\*\
12b-1 Fee...................  0.25%...............  0.25%
Other Expenses..............  0.12%...............  0.20%
                             -------------------------------------------

    Total Annual Operating    1.16%...............  1.24%
     Expns..
                             -------------------------------------------
    Fee Reduction...........  -0.06%..............  -0.14%
                             ===========================================
    Net Total Annual          1.10%...............  1.10%
     Expenses.
------------------------------------------------------------------------
\*\ The advisory fee schedule does not contain breakpoints.

    The Applicants believe that the Replacement Fund is an appropriate
substitute for the Replaced Fund because the investment objective and
policies of the Replacement Fund are nearly identical to those of the
Replaced Fund. Additionally, the Replacement Fund will be managed by
the same sub-adviser as the Replaced Fund, and will continue using the
same style and strategy as is used in managing the Replaced Fund.
    13. Substitution 2

------------------------------------------------------------------------
                                  Replaced fund       Replacement fund
------------------------------------------------------------------------
Fund Name...................  40/86 Series Trust    JNF Balanced;
                               Balanced Portfolio.   subadvised by CEP.
Investment Objective........  Seeks a high total    Seeks a high total
                               investment return     investment return
                               consistent with the   consistent with the
                               preservation of       preservation of
                               capital and prudent   capital and prudent
                               investment risk.      investment risk.
                               Normally, invests     Normally, invests
                               approximately 50-     approximately 50-
                               65% of assets in      65% of assets in
                               equities, and the     equities, and the
                               remainder in a        remainder in a
                               combination of        combination of
                               fixed income          fixed income
                               securities, or cash   securities, or cash
                               equivalents. The      equivalents. The
                               equity portion of     equity portion of
                               the Portfolio is      the Portfolio is
                               invested primarily    invested primarily
                               in U.S. common        in U.S. common
                               stocks but may also   stocks but may also
                               invest in other       invest in other
                               U.S. and foreign      U.S. and foreign
                               securities,           securities,
                               including             including
                               convertible           convertible
                               securities and        securities and
                               warrants. Normally,   warrants. Normally,
                               the equity portion    the equity portion
                               will be widely        will be widely
                               diversified by        diversified by
                               industry and          industry and
                               company. It will      company. It will
                               focus on large and    focus on large and
                               medium-size           medium-size
                               companies.            companies.
                              The fixed income      The fixed income
                               portion of the        portion of the
                               Portfolio will        portfolio will
                               normally maintain     normally maintain
                               at least 25% of the   at least 25% of the
                               value of the          value of the
                               Portfolio's assets    Portfolio's assets
                               in a wide range of    in a wide range of
                               domestic and          domestic and
                               foreign fixed-        foreign fixed-
                               income securities,    income securities,
                               including non-U.S.    including non-U.S.
                               dollar denominated    dollar denominated
                               securities. The       securities. The
                               majority of foreign   majority of foreign
                               investments will be   investments will be
                               in Yankee Bonds.      in Yankee Bonds.
                               These fixed-income    These fixed-income
                               securities will       securities will
                               have primarily        have primarily
                               intermediate and/or   intermediate and/or
                               long-term             long-term
                               maturities. The       maturities. The
                               Portfolio may also    Portfolio may also
                               invest in below       invest in below
                               investment grade      investment grade
                               fixed-income          fixed-income
                               securities that are   securities that are
                               not believed to       not believed to
                               involve undue risk    involve undue risk
                               to income or          to income or
                               principal. The        principal. The
                               lowest rating         lowest rating
                               categories in which   categories in which
                               the Portfolio will    the Portfolio will
                               invest are rated      invest are rated
                               Caa/CCC by Moody's/   Caa/CCC by Moody's/
                               S&P.                  S&P.
Principal Risks.............   Market Risk   Market
                                                     Risk.
                               Midsize       Midsize
                               Company Risk.         Company Risk.
                               Price         Price
                               Volatility.           Volatility.
                               Principal     Principal
                               Loss.                 Loss.
                               Credit Risk   Credit
                                                     Risk.
                               Interest      Interest
                               Rate Risk.            Rate Risk.
                               Foreign       Foreign
                               Risk.                 Risk.
                               Leverage      Leverage
                               Risk.                 Risk.
Adviser/Subadviser..........  40/86/CEP--Equity...  JNF Advisor/CEP.
                              40/86 Advisors--
                               Fixed Income
Fund Asset Level as of 9/30/  $42,161,064.........  $0
 06.
Mgmt. Fee...................  0.79%*..............  0.79%*
12b-1 Fee...................  0.25%...............  0.25%
Other Expenses..............  0.16%...............  0.23%
                             -------------------------------------------
    Total Annual Operating    1.20%...............  1.27%
     Expenses.
                             -------------------------------------------
    Fee Reduction...........  -0.10%..............  -0.17%
                             ===========================================
    Net Total Annual          1.10%...............  1.10%
     Expenses.
------------------------------------------------------------------------
\*\ The advisory fee schedule does not contain breakpoints.

    The Applicants believe that the Replacement Fund is an appropriate
substitute for the Replaced Fund because the investment objective and
policies of the Replacement Fund are substantially similar to those of
the Replaced Fund. Additionally, the Replacement Fund will be managed
by the same sub-adviser as the Replaced

Fund, and will continue using the same style and strategy as is used in
managing the Replaced Fund.
    14. The Substitutions will take place at the Funds' relative net
asset values determined on the date of the Substitutions in accordance
with Section 22 of the Act and Rule 22c-1 thereunder with no change in
the amount of any Contract Owner's account value or death benefit or in
the dollar value of his or her investment in any of the Sub-Accounts.
Accordingly, there will be no financial impact on any Contract Owner.
The Substitutions will generally be effected by having each of the Sub-
Accounts that invests in the Replaced Funds redeem its shares at the
net asset value calculated on the date of the Substitutions and
purchase shares of the respective Replacement Funds at the net asset
value calculated on the same date.
    15. In the alternative, should a Replaced Fund determine that a
cash redemption would adversely affect its shareholders, it may redeem
the interest ``in-kind.'' In that case, the Substitutions will be
effected by the Sub-Account contributing all the securities it receives
from the Replaced Fund for an amount of Replacement Fund shares equal
to the fair market value of the securities contributed. All in-kind
redemptions from a Replaced Fund of which any of the Applicants is an
affiliated person will be effected in accordance with the conditions
set forth in the Commission's no-action letter issued to Signature
Financial Group, Inc. (available December 28, 1999).
    16. The Substitutions will be described in a supplement to the
prospectuses for the Contracts (``Supplements'') filed with the
Commission and mailed to Contract Owners. The Supplements will provide
Contract Owners with notice of the Substitutions and describe the
reasons for engaging in the Substitutions. The Supplements also will
inform Contract Owners with assets allocated to a Sub-Account investing
in the Replaced Funds that the Replaced Funds will not be an available
investment option after the date of the Substitutions and that Contract
Owners will have the opportunity to reallocate account value once:
     Prior to the Substitutions, from the Sub-Accounts
investing in the Replaced Funds, and
     For 30 days after the Substitutions, from the Sub-Accounts
investing in the Replacement Funds to Sub-Accounts investing in other
Funds available under the respective Contracts, without diminishing the
number of free transfers that may be made in a given contract year and
without the imposition of any transfer charge or limitation, other than
any applicable limitations in place to deter potentially harmful
excessive trading. To the extent a Contract Owner has account value
allocated to both Sub-Accounts investing in a Replaced Fund, the
Contract Owner will be permitted one reallocation from each Sub-
Account. If a Contract Owner reallocates from both Sub-Accounts on the
same day, they will have exhausted the number of permitted
reallocations.
    17. The prospectuses for the Contracts will contain the substance
of the information contained in the Supplements concerning the
Substitutions. Each Contract Owner will be provided with a prospectus
for the Replacement Funds before the Substitutions, except that with
respect to Replacement Funds that become effective contemporaneously
with the Substitutions, a prospectus will be sent to affected Contract
Owners with the written confirmation. Within five days after the
Substitutions, JNL will send affected Contract Owners written
confirmation that the Substitutions have occurred and notice that
Contract Owners will have the opportunity to reallocate account value,
for 30 days after the Substitutions, from the Sub-Accounts investing in
the Replacement Funds to Sub-Accounts investing in other Funds
available under the respective Contracts, without diminishing the
number of free transfers that may be made in a given contract year and
without the imposition of any transfer charge or limitation, other than
any applicable limitations in place to deter potentially harmful
excessive trading.
    18. JNL will pay all direct and indirect expenses and transaction
costs of the Substitutions, including all legal, accounting and
brokerage expenses relating to the Substitutions. No costs will be
borne by Contract Owners. Affected Contract Owners will not incur any
fees or charges as a result of the Substitutions, nor will their rights
or the obligations of the Applicants under the Contracts be altered in
any way. The Substitutions will not cause the fees and charges under
the Contracts currently being paid by Contract Owners to be greater
after the Substitutions than before the Substitutions. The
Substitutions will have no adverse tax consequences to Contract Owners
and will in no way alter the tax benefits to Contract Owners.
    19. Applicants believe that their request satisfies the standards
for relief pursuant to Section 26(c) of the Act, as set forth below,
because the affected Contract Owners will have:
    (1) Account values allocated to a Sub-Account invested in a
Replacement Fund with an investment objective and policies
substantially similar to the investment objective and policies of the
Replaced Fund; and
    (2) Replacement Funds whose current total annual expenses will be
no higher than those of the Replaced Funds for their 2006 fiscal year,
because as described below, JNL has agreed to, for a period of 24
months following the Substitutions, limit the total net expenses of a
Replacement Fund to those of the Replaced Fund for the 2006 fiscal
year. At the end of the 24-month period it is possible that the
expenses of the Replacement Funds may be higher.

Applicants' and Section 17 Applicants' Legal Analysis

    1. Section 26(c) of the Act makes it unlawful for any depositor or
trustee of a registered unit investment trust holding the security of a
single issuer to substitute another security for such security unless
the Commission approves the substitution. The Commission will approve
such a substitution if the evidence establishes that it is consistent
with the protection of investors and the purposes fairly intended by
the policy and provisions of the Act.
    2. The purpose of Section 26(c) is to protect the expectation of
investors in a unit investment trust that the unit investment trust
will accumulate shares of a particular issuer by preventing
unscrutinized substitutions that might, in effect, force shareholders
dissatisfied with the substituted security to redeem their shares,
thereby possibly incurring either a loss of the sales load deducted
from initial premium payments, an additional sales load upon
reinvestment of the redemption proceeds, or both. Moreover, in the
insurance product context, a Contract Owner forced to redeem may suffer
adverse tax consequences. Section 26(c) affords this protection to
investors by preventing a depositor or trustee of a unit investment
trust that holds shares of one issuer from substituting for those
shares the shares of another issuer, unless the Commission approves
that substitution.
    3. Applicants assert that the purposes, terms and conditions of the
Substitutions are consistent with the principles and purposes of
Section 26(c) and do not entail any of the abuses that Section 26(c) is
designed to prevent. Applicants have reserved the right to make such a
substitution under the Contracts and this reserved right is disclosed
in the prospectus for the Contracts.

    4. In both Substitutions, Applicants maintain, the investment
objectives and policies of the Replacement Funds are sufficiently
similar to those of the corresponding Replaced Funds that Contract
Owners will have reasonable continuity in investment expectations.
Accordingly, the Replacement Funds are appropriate investment vehicles
for those Contract Owners who have account values allocated to the
Replaced Funds.
    5. Applicants state that, for the 24-month period following the
date of the Substitutions, JNL agrees to limit the total operating
expenses of a Replacement Fund (taking into account any expense waiver
or reimbursement) on an annualized basis to the net expense level of
the corresponding Replaced Fund for the 2006 fiscal year. In addition,
for 24 months following the Substitutions, JNL will not increase asset-
based fees or charges for Contracts outstanding on the day of the
Substitutions. JNL represents that the Substitutions and the selection
of the Replacement Funds were not motivated by any financial
consideration paid or to be paid by the Replacement Funds, their
advisers or underwriters, or their respective affiliates.
    6. Applicants submit that, the Substitutions will not result in the
type of costly forced redemption that Section 26(c) was intended to
guard against and, for the following reasons, is consistent with the
protection of investors and the purposes fairly intended by the Act:
    (1) Each of the Replacement Funds is an appropriate fund to which
to move Contract Owners with account values allocated to the Replaced
Funds because the new funds have substantially similar investment
objectives and policies.
    (2) The costs of the Substitutions, including any brokerage costs,
will be borne by JNL and will not be borne by Contract Owners. No
charges will be assessed to effect the Substitutions.
    (3) The Substitutions will be at the net asset values of the
respective shares without the imposition of any transfer or similar
charge and with no change in the amount of any Contract Owner's account
value.
    (4) The Substitutions will not cause the fees and charges under the
Contracts currently being paid by Contract Owners to be greater after
the Substitutions than before the Substitutions and will result in
Contract Owners' account values being moved to a Fund with the same or
lower current total annual expenses.
    (5) All Contract Owners will be given notice of the Substitutions
prior to the Substitutions and will have an opportunity before, and for
30 days after, the Substitutions to reallocate account value among
other available Sub-Accounts without diminishing the number of free
transfers that may be made in a given contract year and without the
imposition of any transfer charge or limitation, other than any
applicable limitations in place to deter potentially harmful excessive
trading or disintermediation involving the fixed accounts available
with the variable annuity contracts.
    (6) Within five days after a Substitution, JNL will send to its
affected Contract Owners written confirmation that a Substitution has
occurred.
    (7) The Substitutions will in no way alter the insurance benefits
to Contract Owners or the contractual obligations of JNL.
    (8) The Substitutions will have no adverse tax consequences to
Contract Owners and will in no way alter the tax benefits to Contract
Owners.
    (9) Before a Replacement Fund relies on any Commission order or
rule that would permit the Replacement Fund to enter into contracts
with sub-advisers without obtaining shareholder approval, the
Replacement Fund's reliance on the order or rule will be approved,
following the Substitutions, by a majority of the Replacement Fund's
outstanding voting securities.
    7. The Section 17 Applicants request an order under Section 17(b)
exempting them from the provisions of Section 17(a) to the extent
necessary to permit JNL to carry out each of the proposed
Substitutions. Section 17(a)(1) of the Act, in relevant part, prohibits
any affiliated person of a registered investment company, or any
affiliated person of such person, acting as principal, from knowingly
selling any security or other property to that company. Section
17(a)(2) of the Act generally prohibits the persons described above,
acting as principal, from knowingly purchasing any security or other
property from the registered company.
    8. Applicants state that, JNL, as depositor of the Separate
Accounts, is an affiliate of the Separate Accounts and also JNF
Advisor, which serves as investment adviser for the affected NLVT
series. As such, JNF Advisor could be deemed to control the affected
NLVT series and be an affiliate of the affected NLVT series. Assuming,
for this or other reasons, that an affected NLVT series is an affiliate
of an affiliate of JNL, to the extent the Separate Accounts each use
assets received in-kind to purchase Replacement Fund Shares, the
Substitutions would involve one or more purchases or sales of
securities or property between persons who are affiliates of
affiliates. Accordingly, the Section 17 Applicants are seeking relief,
to the extent necessary, from Section 17(a) for the in-kind purchases
and sales of Replacement Fund Shares.
    9. Section 17(b) of the Act provides that the Commission may, upon
application, grant an order exempting any transaction from the
prohibitions of Section 17(a) if the evidence establishes that:
    (1) 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;
    (2) the proposed transaction is consistent with the policy of each
registered investment company concerned, as recited in its registration
statement and records filed under the Act; and
    (3) the proposed transaction is consistent with the general
purposes of the Act.
    10. The Section 17 Applicants submit that, for all the reasons set
forth in paragraphs 3-9 above, the terms of the proposed in-kind
purchases of shares of the Replacement Funds by the Separate Accounts,
including the consideration to be paid and received, are reasonable and
fair and do not involve overreaching on the part of any person
concerned. The Section 17 Applicants also submit that the proposed in-
kind purchases by the Separate Accounts are consistent with the
policies of JNL and the affected NLVT series. Finally, the Section 17
Applicants submit that the proposed substitutions are consistent with
the general purposes of the Act.
    11. To the extent the Separate Account's in-kind purchases of
Replacement Fund shares are deemed to involve principal transactions
between entities which are affiliates of affiliates, the procedures
described below, Applicants and Section 17 Applicants contend, should
be sufficient to assure that the terms of the proposed transactions are
reasonable and fair to all participants. The Section 17 Applicants
maintain that the terms of the proposed in-kind purchase transactions,
including the consideration to be paid and received by each Fund
involved, are reasonable, fair and do not involve overreaching. In
addition, although not applicable, the in-kind transactions will
conform with all except one of the conditions enumerated in Rule 17a-7.
The proposed transactions will take place at relative net asset value
in conformity with the requirements of Section 22(c) of the Act and
Rule 22c-1 thereunder

with no change in the amount of any Contract Owner's account value or
death benefit or in the dollar value of his or her investment in any
Sub-Account. Contract Owners will not suffer any adverse tax
consequences as a result of the substitutions. The fees and charges
under the Contracts will not increase because of the substitutions.
Even though they may not rely on Rule 17a-7, the Section 17 Applicants
believe that the Rule's conditions outline the type of safeguards that
result in transactions that are fair and reasonable to registered
investment company participants and preclude overreaching.
    12. The Section 17 Applicants state that they will carry out the
proposed in-kind purchases in conformity with all of the conditions of
Rule 17a-7 and each Fund's procedures thereunder, except that the
consideration paid for the securities being purchased or sold may not
be entirely cash. Nevertheless, they contend, the circumstances
surrounding the proposed Substitutions will be such as to offer the
same degree of protection to each Replacement Fund from overreaching
that Rule 17a-7 provides to them generally in connection with their
purchase and sale of securities under that Rule in the ordinary course
of their business. In particular, JNL (or any of its affiliates) cannot
effect the proposed transactions at a price that is disadvantageous to
any of the Replacement Funds. Although the transactions may not be
entirely for cash, each will be effected based upon (1) the independent
market price of the portfolio securities valued as specified in
paragraph (b) of Rule 17a-7, and (2) the net asset value per share of
each Fund involved valued in accordance with the procedures disclosed
in its registration statement and as required by Rule 22c-1 under the
Act. No brokerage commission, fee (except for customary transfer fees),
or other remuneration will be paid to any party in connection with the
proposed in-kind transactions.
    13. Applicants state that the sale of shares of Replacement Funds
for investment securities, as contemplated by the proposed in-kind
transactions, is consistent with the investment policy and restrictions
of the Replacement Funds because (1) the shares are sold at their net
asset value, and (2) the portfolio securities are of the type and
quality that the Replacement Funds would each have acquired with the
proceeds from share sales had the shares been sold for cash. To assure
that the second of these conditions is met, each Replacement Funds'
sub-adviser will examine the portfolio securities being offered to each
Replacement Fund and accept only those securities as consideration for
shares that it would have acquired for each such fund in a cash
transaction.
    14. The proposed in-kind transactions, Applicants state, are
consistent with the general purposes of the Act as stated in the
Findings and Declaration of Policy in Section 1 of the Act. The
proposed transactions do not present any of the conditions or abuses
that the Act was designed to prevent. In particular, Sections 1(b)(2)
and (3) of the Act state, among other things, that the national public
interest and the interest of investors are adversely affected ``when
investment companies are organized, operated, managed, or their
portfolio securities are selected in the interest of directors,
officers, investment advisers, depositors, or other affiliated persons
thereof, or in the interests of other investment companies or persons
engaged in other lines of business, rather than in the interest of all
classes of such companies' security holders; * * * when investment
companies issue securities containing inequitable or discriminatory
provisions, or fail to protect the preferences and privileges of the
holders of their outstanding securities * * *''. For all the reasons
stated in the Application, the Section 17 Applicants state that, the
abuses described in Sections l(b)(2) and (3) of the Act will not occur
in connection with the proposed in-kind purchases.
    15. The Commission has previously granted exemptions from Section
17(a) in circumstances substantially similar in all material respects
to those presented in this Application to applicants affiliated with an
open-end management investment company that proposed to purchase shares
issued by the company with investment securities of the type that the
company might otherwise have purchased for its portfolio. In these
cases, the Commission issued an order pursuant to Section 17(b) of the
Act where the expense of liquidating such investment securities and
using the cash-proceeds to purchase shares of the investment company
would have reduced the value of investors' ultimate investment in such
shares.

Conclusions

    1. Applicants request an order of the Commission pursuant to
Section 26(c) of the 1940 Act approving the Substitutions. Section
26(c), in pertinent part, provides that the Commission shall issue an
order approving a substitution of securities if the evidence
establishes that it is consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the 1940
Act. For the reasons and upon the facts set forth in the Application,
the Applicants state that the requested order meets the standards set
forth in Section 26(c) and should, therefore, be granted.
    2. Section 17 Applicants request that the Commission issue an order
pursuant to Section 17(b) of the Act exempting the Separate Accounts,
JNL and the affected NLVT series from the provisions of Section 17(a)
of the Act to the extent necessary to permit, as part of the
Substitutions, the in-kind purchase of shares of the Replacement Funds
which may be deemed to be prohibited by Section 17(a) of the Act. The
Section 17 Applicants represent that the proposed in-kind transactions
meet all of the requirements of Section 17(b) of the Act and that an
exemption should be granted, to the extent necessary, from the
provisions of Section 17(a).

    For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-6867 Filed 4-10-07; 8:45 am]

BILLING CODE 8010-01-P