[Federal Register: November 5, 2008 (Volume 73, Number 215)]
[Notices]
[Page 65892-65900]
[DOCID:fr05no08-99]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-28480; File No. 812-13474]

Allianz Life Insurance Company of North America, et al; Notice of
Application

October 30, 2008.
AGENCY: Securities and Exchange Commission (``SEC'' or ``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
``1940 Act'' or ``Act'') 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: Allianz Life Insurance Company of North America (``Allianz
Life'') and Allianz Life Insurance Company of New York (``Allianz NY'')
(together the ``Insurance Company Applicants''), their respective
separate accounts Allianz Life Variable Account A (``Allianz Account
A''), Allianz Life Variable Account B (``Allianz Account B''), and
Allianz Life of NY Variable Account C (``Allianz Account C'')
(collectively with the Insurance Company Applicants, the
``Applicants''), and Allianz Variable Insurance Products Trust (the
``VIP Trust'' and collectively with the Applicants, the ``Section 17
Applicants'').

Summary of Application: The Applicants seek an order pursuant to
section 26(c) of the 1940 Act, approving the substitution of certain
securities (the ``Substitution'') issued by the Franklin Templeton
Variable Insurance Products Trust (``FTVIPT'') and held by Allianz
Account A, Allianz Account B, or Allianz Account C (collectively, the
``Separate Accounts'') to support certain variable annuity contracts
and variable life insurance contracts (the ``Contracts'') issued by
Allianz Life and Allianz NY. The section 17 Applicants seek an order
pursuant to section 17(b) of the 1940 Act exempting them to the extent
necessary to permit them to engage in certain in-kind transactions in
connection with the Substitution.

Filing Date: The application was filed on January 11, 2008 and amended
on October 30, 2008.

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 should be received by the
Commission by 5:30 p.m. on November 24, 2008, 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, SEC, 100 F Street, NE., Washington, DC 20549-
1090. Applicants, Allianz Life Insurance Company of North America, 5701
Golden Hills Dr., Minneapolis, MN 55416-1297.

FOR FURTHER INFORMATION CONTACT: Sally Samuel, Senior Counsel, or Joyce
M. Pickholz, Branch Chief, Office of Insurance Products, Division of
Investment Management, at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch, 100 F Street, NE., Washington, DC
20549 (tel.<PHONE_NUMBER>).

Applicants' and VIP Trust's Representations

    1. The Applicants propose to substitute certain classes of shares
of the AZL Schroder Emerging Markets Equity Fund (the ``New Fund'') for
the corresponding class of shares of the Templeton Developing Markets
Securities Fund (the ``Replaced Fund'') currently held by the Separate
Accounts. The following table shows the share classes of the New Fund
and the Replaced Fund (each, a ``Fund'' and collectively, the
``Funds'') involved in the Substitution:

----------------------------------------------------------------------------------------------------------------
                                                                   Replaced fund
 New fund (adviser/subadviser)           Share classes               (adviser)              Share classes
----------------------------------------------------------------------------------------------------------------
AZL Schroder Emerging Markets    Class 1                        Templeton           Class 1.
 Equity Fund (Allianz            Class 2.*                       Developing         Class 2.*
 Investment Management LLC/                                      Markets
 Schroder Investment Management                                  Securities Fund
 North America Inc.) **.                                         (Templeton Asset
                                                                 Management Ltd.).
----------------------------------------------------------------------------------------------------------------
\*\ A distribution fee is assessed against assets attributable to this class of shares at the annual rate of
  0.25% of the average daily net assets attributable to the class.
\**\ Prior to December 10, 2007, the AZL Schroder Emerging Markets Equity Fund was subadvised by
  OppenheimerFunds, Inc. and was known as the AZL Oppenheimer Developing Markets Fund. Effective December 10,
  2007, pursuant to an exemptive order issued to the VIP Trust on September 17, 2002, the VIP Trust replaced
  OppenheimerFunds, Inc. with Schroder Investment Management North America Inc. as subadviser to the Fund.

    2. The New Fund is a series of the VIP Trust, a Delaware statutory
trust. The VIP Trust is registered as an open-end management investment
company under the 1940 Act (File No. 811-9491) and its shares are
registered as securities under the Securities Act of 1933, as amended
(the ``1933 Act'') (File No. 333-83423).
    3. Shares of the VIP Trust are sold to separate accounts of Allianz
Life and Allianz NY for the purpose of funding variable annuity
contracts and variable life insurance policies. The New Fund, as well
as all other funds offered by the VIP Trust, is managed by Allianz
Investment Management LLC (``AZIM''), a wholly owned subsidiary of
Allianz Life that was formerly known as Allianz Life Advisers, LLC.
    4. The following table shows the inception date and net assets at
December 31, 2007 for each class of shares of the New Fund:

------------------------------------------------------------------------
                                                 Net assets at December
           New fund            Inception date           31, 2007
------------------------------------------------------------------------
AZL Schroder Emerging Markets
 Equity Fund
    Class 1..................          5/6/07  $359,359.
    Class 2..................          5/1/06  $249.2 million.
------------------------------------------------------------------------

    5. Class 1 and Class 2 shares are substantially identical, except
that Class 1 shares are not assessed a 12b-1 fee while Class 2 shares
are assessed a 12b-1 fee at an annual rate of 0.25% of average daily
net assets attributable to Class 2 shares, which is the maximum 12b-1
fee permitted under the New Fund's Distribution Plan. Class 1 shares
are currently available to owners of certain Contracts that are no
longer offered for sale. Class 2 shares are currently available to
owners of certain Contracts that are currently offered for sale. Both
Class 1 and Class 2 shares are included in the proposed Substitution.
    6. Prior to December 10, 2007, the New Fund was subadvised by
OppenheimerFunds, Inc. and was known as the AZL Oppenheimer Developing
Markets Fund. Effective December 10, 2007, the VIP Trust replaced
OppenheimerFunds, Inc. with Schroder Investment Management North
America Inc. (``SIMNA'') as the subadviser to the New Fund.
    7. The Replaced Fund is a series of FTVIPT. Shares of FTVIPT are
registered as securities under the 1933 Act (File No. 033-23493). The
Replaced Fund is managed by Templeton Asset Management Ltd., which is
not an affiliate of the Insurance Company Applicants.
    8. The following table shows the inception date and net assets at
December 31, 2007, for each class of shares of the Replaced Fund:

------------------------------------------------------------------------
                                                 Net assets at December
        Replaced fund          Inception date           31, 2007
------------------------------------------------------------------------
Templeton Developing Markets
 Securities Fund
    Class 1..................          1/1/97  $753.8 million.
    Class 2..................          5/1/97  $1.1 billion.
------------------------------------------------------------------------

    9. Class 1 and Class 2 shares of the Replaced Fund are currently
available under certain Contracts issued by the Insurance Company
Applicants. Class 1 and Class 2 shares are substantially identical,
except that Class 1 shares are not assessed a 12b-1 fee while Class 2
shares are assessed a 12b-1 fee at an annual rate of 0.25% of average
daily net assets attributable to Class 2 shares. Class 1 shares are
currently available to owners of certain Contracts that are no longer
offered for sale. Class 2 shares are currently available to owners of
certain Contracts that are currently offered for sale. Both Class 1 and
Class 2 shares are included in the proposed Substitution.
    10. Pursuant to a ``manager of managers'' exemptive order issued by
the Commission pursuant to section 6(c) of the 1940 Act providing an
exemption from section 15(a) of the 1940 Act and Rule 18f-2 under the
1940 Act (Order No. 25734, dated September 17, 2002), AZIM selects and
manages subadvisers for the various series of the VIP Trust, subject to
the oversight of the Board of Trustees of the VIP Trust, without
obtaining shareholder approval (the ``Manager of Managers Order''). The
relief granted in the Manager of Managers Order extends to the New
Fund. The New Fund is offered to contract owners via a prospectus
containing disclosure (1) describing the existence, substance, and
effect of the Manager of Managers Order; (2) holding the New Fund out
to the public as employing the management structure described in the
application for the Manager of Managers Order; and (3) explaining that
AZIM has the ultimate responsibility (subject to oversight by the Board
of Trustees of the VIP Trust) to oversee the subadvisers and recommend
their hiring, termination, and replacement. The New Fund's

prospectus will be provided to each affected contract owner prior to
the Substitution.
    11. Subaccounts investing in Class 1 shares of the Replaced Fund
and Class 1 shares of the New Fund are currently available only to
owners of certain Contracts that are no longer offered for sale by the
Insurance Company Applicants. Pursuant to the proposed Substitution,
the Insurance Company Applicants will replace Class 1 shares of the
Replaced Fund held in its subaccounts on the date of the Substitution
with Class 1 shares of the New Fund.
    12. Subaccounts investing in Class 2 shares of the Replaced Fund
and Class 2 shares of the New Fund are currently available to owners of
certain Contracts currently offered for sale by the Insurance Company
Applicants. Pursuant to the proposed Substitution, the Insurance
Company Applicants will replace Class 2 shares of the Replaced Fund
held in its subaccounts on the date of the Substitution with Class 2
shares of the New Fund.
    13. It is currently anticipated that the Substitution will occur as
soon as practicable following receipt of the Order of the Commission
requested herein (the ``Substitution Date''). After the Substitution
Date, subaccounts investing in the Replaced Fund will no longer be
available under the Contracts to any contract owner.
    14. Allianz Life is a stock life insurance company organized under
the laws of the state of Minnesota in 1896. Allianz NY is a stock life
insurance company organized under the laws of the state of New York on
September 21, 1982. Allianz Life and Allianz NY are subsidiaries of
Allianz SE, a ``Societas Europaea'' or European stock corporation
headquartered in Munich, Germany.
    15. Allianz Life is the depositor and sponsor of Allianz Account A
and Allianz Account B, and Allianz NY is the depositor and sponsor of
Allianz Account C. Each of the Separate Account Applicants meets the
definition of a ``separate account'' in Rule 0-1(e) under the 1940 Act.
    16. Allianz Account A is a segregated asset account of Allianz
Life. Allianz Account A was established by Allianz Life on May 31,
1985, under Minnesota insurance laws. Allianz Account A is used to fund
certain variable life insurance policies issued by Allianz Life.
Allianz Account A is currently divided into a number of subaccounts,
each of which invests in a specific underlying registered investment
company or portfolio thereof (each an ``Investment Option''). Allianz
Account A is registered as a unit investment trust under the 1940 Act
(File No. 811-04965). Allianz Life does not currently issue any new
Contracts that allow contract owners to invest in any of the
subaccounts of Allianz Account A.
    17. Allianz Account B is a segregated asset account of Allianz
Life. Allianz Account B was established by Allianz Life on May 31,
1985, under Minnesota insurance laws. Allianz Account B is used to fund
certain variable annuity contracts issued by Allianz Life. Allianz
Account B is divided into a number of subaccounts, each of which
invests in a specific Investment Option. Allianz Account B is
registered as a unit investment trust under the 1940 Act (File No. 811-
05618).
    18. Allianz Account C is a segregated asset account of Allianz NY.
Allianz Account C was established by Allianz NY on February 26, 1988,
under New York insurance laws. Allianz Account C is used to fund
certain variable annuity contracts issued by Allianz NY. Allianz
Account C is divided into a number of subaccounts, each of which
invests in a specific Investment Option. Allianz Account C is
registered as a unit investment trust under the 1940 Act (File No. 811-
05716).
    19. The Contracts are variable annuity contracts and variable life
insurance policies. Allianz Life currently issues individual deferred
variable annuity contracts and has previously issued immediate variable
annuity contracts and variable life insurance policies. Allianz NY
issues individual deferred variable annuity contracts offered for sale
in New York.
    20. Allianz Life Financial Services, LLC (``Allianz Life
Financial''), a Minnesota limited liability company and a wholly owned
subsidiary of Allianz Life, serves as the principal underwriter of the
Contracts. Allianz Life Financial is registered as a broker dealer with
the Commission under the Securities Exchange Act of 1934 (the ``1934
Act'') as well as with the securities commissions in the states in
which it operates. Allianz Life Financial does not itself sell the
Contracts on a retail basis. Rather, Allianz Life Financial enters into
selling agreements with other broker-dealers registered under the 1934
Act for the sale of the Contracts. These selling firms include third
party broker/dealers and Questar Capital Corporation, an affiliated
broker/dealer.
    21. Currently, Allianz Life has no effective registration
statements for Contracts sponsored by Allianz Account A. The table
below shows effective registration statements with the Commission for
Contracts sponsored by Allianz Account B that offer the Replaced Fund
as an Investment Option:

----------------------------------------------------------------------------------------------------------------
           Separate account              Registration No.         Contract name             Type of contract
----------------------------------------------------------------------------------------------------------------
Allianz Account B.....................           333-82329  Allianz Alterity (Class 2  Variable Deferred
                                                             shares).                   Annuity.
Allianz Account B.....................           333-90260  Allianz High Five (Class   Variable Deferred
                                                             2 shares).                 Annuity.
Allianz Account B.....................          333-111049  Allianz High Five Bonus    Variable Deferred
                                                             (Class 2 shares).          Annuity.
Allianz Account B.....................          333-120181  Allianz High Five L        Variable Deferred
                                                             (Class 2 shares).          Annuity.
Allianz Account B.....................           333-95729  Allianz Rewards (Class 2   Variable Deferred
                                                             shares).                   Annuity.
Allianz Account B.....................            33-23035  Valuemark II (Class 1      Variable Deferred
                                                             shares).                   Annuity.
Allianz Account B.....................            33-72046  Valuemark III (Class 1     Variable Deferred
                                                             shares).                   Annuity.
Allianz Account B.....................           333-06709  Valuemark IV (Class 1      Variable Deferred
                                                             shares).                   Annuity.
----------------------------------------------------------------------------------------------------------------

    22. In addition, Allianz Life has the following registration
statements that are effective, but no longer updated, for Contracts
sponsored by Allianz Account A and Allianz Account B that are no longer
offered for sale (the ``A and B Great Wested Contracts'') but which
offer the Replaced Fund as an Investment Option:

----------------------------------------------------------------------------------------------------------------
           Separate account              Registration No.         Contract Name             Type of contract
----------------------------------------------------------------------------------------------------------------
Allianz Account A.....................            33-11158  Allianz ValueLife (Class   Flexible Premium Variable
                                                             1 shares).                 Universal Life.

Allianz Account B.....................           333-63719  USAllianz Charter (Class   Variable Deferred
                                                             2 shares).                 Annuity.
Allianz Account B.....................          333-101812  USAllianz Charter II       Variable Deferred
                                                             (Class 2 shares).          Annuity.
Allianz Account B.....................           333-47886  USAllianz Dimensions       Variable Deferred
                                                             (Class 2 shares).          Annuity.
Allianz Account A.....................           333-60206  USAllianz LifeFund (Class  Flexible Premium Variable
                                                             2 shares).                 Universal Life.
Allianz Account B.....................            33-76190  Valuemark Income Plus      Variable Immediate
                                                             (Class 1 shares).          Annuity.
Allianz Account A.....................            33-15464  Valuemark Life (Class 1    Single Premium Variable
                                                             shares).                   Life.
----------------------------------------------------------------------------------------------------------------

    23. Currently Allianz NY has the following effective registration
statements with the Commission for Contracts sponsored by Allianz
Account C that offer the Replaced Fund as an Investment Option:

----------------------------------------------------------------------------------------------------------------
           Separate account              Registration No.         Contract name             Type of contract
----------------------------------------------------------------------------------------------------------------
Allianz Account C.....................           333-19699  Allianz Advantage NY       Variable Deferred
                                                             (Class 2 shares).          Annuity.
Allianz Account C.....................          333-105274  Allianz Charter II NY      Variable Deferred
                                                             (Class 2 shares).          Annuity.
Allianz Account C.....................           333-75718  Allianz Opportunity NY     Variable Deferred
                                                             (Class 2 shares).          Annuity.
----------------------------------------------------------------------------------------------------------------

    24. In addition, Allianz NY has the following registration
statements that are effective, but no longer updated, for Contracts
sponsored by Allianz Account C (the ``C Great Wested Contracts'') that
are no longer offered for sale but which offer the Replaced Fund as an
Investment Option:

----------------------------------------------------------------------------------------------------------------
           Separate account              Registration No.         Contract name             Type of contract
----------------------------------------------------------------------------------------------------------------
Allianz Account C.....................            33-26646  Valuemark II NY (Class 1   Variable Deferred
                                                             shares).                   Annuity.
Allianz Account C.....................           333-19699  Valuemark IV NY (Class 1   Variable Deferred
                                                             shares).                   Annuity.
----------------------------------------------------------------------------------------------------------------

    25. The Contracts allow contract owners to allocate premium and
contract value among the subaccounts investing in a large number of
Investment Options in a wide variety of asset categories that are
managed by a large number of asset managers. The exact number of
Investment Options available varies somewhat from Contract to Contract,
depending on when the Contracts were first offered, whether the
Contracts are currently offered for sale, which separate account issued
the Contract, product design, and other similar factors. All of the
Contracts that are currently offered for sale offer 75 Investment
Options. Both the A and B Great Wested Contracts and the C Great Wested
Contracts offer a minimum of 34 Investment Options. The number of
Investment Options available in the Contracts affected by the
Substitution is shown in the Application.
    26. Under the Contracts, the Insurance Company Applicants reserve
the right, subject to regulatory approval, to substitute one of the
Investment Options with another Investment Option after appropriate
notice. Moreover, the Contracts permit the Insurance Company Applicants
to limit allocation of purchase payments to one or more subaccounts
that invest in an Investment Option. The prospectuses or statements of
additional information for the Contracts also contain appropriate
disclosure of these rights. Thus, subject to regulatory approval, the
Contracts permit the Insurance Company Applicants to stop accepting
purchase payments into one or more Investment Options and/or to
substitute the shares representing an Investment Option held in a
subaccount for the shares representing another Investment Option.
    27. The proposed Substitution is part of an overall business plan
of the Insurance Company Applicants to make their respective products
more efficient to monitor and administer and more competitive (both in
terms of new sales and the retention of existing business). The
Insurance Company Applicants believe that more concentrated and
streamlined operations for Investment Options will result in increased
operational and administrative efficiencies and economies of scale for
the Insurance Company Applicants. In particular, the Insurance Company
Applicants feel that concentrating the number of non-affiliated asset
managers that advise or subadvise the Investment Options available
through the Contracts will simplify the administration of the Contracts
with regard to communications with asset managers and contract owners,
and simplify the preparation of various reports and disclosure
documents. Furthermore, the Insurance Company Applicants feel that by
reducing the number of non-affiliated asset managers that manage
Investment Options underlying their Contracts and increasing the
Investment Options for which AZIM serves as the investment manager,
they will increase their ability to effectively manage the Investment
Options available to contract owners. Because AZIM operates pursuant to
the Manager of Managers Order, the replacement of portfolio managers or
subadvisers when appropriate could be effected more efficiently and the
need for fund changes that may affect contract owners may be reduced,
thereby facilitating appropriate long-term strategic planning for
contract owners.
    28. For these reasons and the reasons discussed below, the
Applicants believe that substituting the New Fund for the Replaced Fund
is appropriate and in the best interests of the contract owners.
    29. The Insurance Company Applicants believe that the New Fund is
an appropriate replacement for the Replaced Fund because its investment
objective and principal investment policies are substantially similar
to those of the Replaced Fund. In addition, the principal investment
risks of the Replaced Fund and the New Fund are substantially similar.
Comparisons of the investment objectives, principal investment policies
and principal investment risks of the Funds are set forth in the
Application.

    30. The following chart compares the management fees and the total
operating expenses (before and after any waivers and reimbursements)
for the year ended December 31, 2007, expressed as an annual percentage
of average daily net assets, of the Replaced Fund and the New Fund.

----------------------------------------------------------------------------------------------------------------
                                                   Templeton developing markets    AZL schroder emerging markets
                                                          securities fund                   equity fund
                                                 ---------------------------------------------------------------
                                                      Class 1         Class 2         Class 1         Class 2
                                                     (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Management Fee..................................            1.23            1.23          * 1.23          * 1.23
Distribution (12b-1) Fees.......................            0.00            0.25            0.00            0.25
Other Expenses..................................            0.25            0.25            0.48            0.48
Acquired Fund Fees and Expenses.................            0.00            0.00            0.00            0.00
Total Annual Fund Operating Expenses............            1.48            1.73            1.71            1.96
Fee Waiver......................................            0.00            0.00         ** 0.31         ** 0.31
Net Annual Fund Operating Expenses..............            1.48            1.73         ** 1.40        ** 1.65
----------------------------------------------------------------------------------------------------------------
* AZIM and the Fund have entered into a written agreement whereby AZIM has voluntarily reduced the management
  fee to 0.95% through April 30, 2009.
** AZIM and the AZL Schroder Emerging Markets Equity Fund have entered into a written contract limiting
  operating expenses to 1.40% and 1.65% for Class 1 and Class 2 shares, respectively through April 30, 2009.
  AZIM and the AZL Schroder Emerging Markets Equity Fund have agreed to limit Fund operating expenses, net of
  acquired fund fees and expenses, to an amount not greater than 1.48% and 1.73% for Class 1 and Class 2 shares
  respectively for 24 months from the date of the Substitution.

    31. The following table shows the assets and performance of the
Funds for the years shown:

----------------------------------------------------------------------------------------------------------------
                                                                          Net assets (M)
                                                 ---------------------------------------------------------------
                                                       At December 31, 2007            At December 31, 2006
                                                 ---------------------------------------------------------------
                                                      Class 1         Class 2         Class 1         Class 2
----------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund....          $753.8        $1,090.6          $749.1          $857.5
AZL Schroder Emerging Markets Equity Fund *.....         (1) 0.4           249.2         (1) N/A        (2) 93.7
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
                                                                       Annual total returns
                                                 ---------------------------------------------------------------
                                                               2007                            2006
                                                 ---------------------------------------------------------------
                                                      Class 1         Class 2         Class 1         Class 2
                                                     (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Securities Fund....           29.09           28.78           28.43           28.09
AZL Schroder Emerging Markets Equity Fund *.....   (1) (3) 19.23           30.32         (1) N/A   (2) (4) 8.65
----------------------------------------------------------------------------------------------------------------
* Prior to December 10, 2007, the AZL Schroder Emerging Markets Equity Fund was subadvised by OppenheimerFunds,
  Inc. and was known as the AZL Oppenheimer Developing Markets Fund.
\1\ Class 1 shares of the AZL Schroder Emerging Markets Equity Fund commenced operations on May 6, 2007.
\2\ Class 2 shares of the AZL Schroder Emerging Markets Equity Fund commenced operations on May 1, 2006.
\3\ Annualized for the period from commencement of operations on May 6, 2007, through December 31, 2007.
\4\ Annualized for the period from commencement of operation on May 1, 2006, through December 31, 2006.

    32. Applicants hereby request the Commission's approval to effect
the substitution of shares of the New Fund for shares of the Replaced
Fund as follows:
     Class 1 shares of the AZL Schroder Emerging Markets Equity
Fund for Class 1 shares of the Templeton Developing Markets Securities
Fund; and
     Class 2 shares of the AZL Schroder Emerging Markets Equity
Fund for Class 2 shares of the Templeton Developing Markets Securities
Fund.
    33. At the close of business on the Substitution Date, Allianz Life
and Allianz NY will each redeem shares of the Replaced Fund held by
their Separate Accounts in kind and apply the proceeds of such
redemptions to the purchase of shares of the New Fund. Thus, after the
Substitution, each subaccount of the Separate Accounts previously
holding shares of the Replaced Fund will hold shares of the New Fund.
    34. Redemption requests and purchase orders will be placed
simultaneously so that redemption of Replaced Fund shares and purchase
of New Fund shares will both occur at the price for such shares
computed as of the close of business on the Substitution Date in a
manner consistent with Rule 22c-1 under the 1940 Act. As a result, the
full net asset value of the Replaced Fund shares held by the Separate
Account Applicants will be reflected in the contract owners' contract
values following the Substitution, without reduction for brokerage or
other such fees or charges. All expenses incurred in connection with
the Substitution, including legal, accounting, transactional, and other
fees and expenses, including brokerage commissions, will be paid by
Allianz Life, Allianz NY, or the manager of the New Fund. Accordingly,
contract value attributable to contract owners then invested in the
Replaced Fund will remain fully invested at all times, and the
Substitution will take place at relative net asset value with no change
in the amount of any contract owner's contract value, death benefit, or
in the

dollar value of his or her investment in the applicable Separate
Account.
    35. Affected contract owners will not incur any fees or charges in
connection with the Substitution so that the net asset value of
redeemed shares of the Replaced Fund held by the Separate Account
Applicants will be reflected in the contract owners' contract values
following the Substitution. Moreover, neither the obligations of the
respective Insurance Company Applicants under the Contracts nor the
rights of contract owners will be altered in any way by the
Substitution. The Substitution will not impose any tax liability or
have any adverse tax consequences on contract owners. The Substitution
will not cause Contract fees and charges currently being paid by
existing owners of Contracts to be greater after the Substitution than
they were before the Substitution. For a period of at least 30 days
following the Substitution, neither Allianz Life nor Allianz NY will
exercise any right it may have under the Contracts to impose
restrictions on transfers, except pursuant to any Investment Option
allocation restrictions under the Contracts. One exception to this
would be restrictions that Allianz Life or Allianz NY may impose to
deter or prevent ``market timing'' activities by owners of Contracts or
their agents.
    36. The Insurance Company Applicants and VIP Trust represent that
AZIM and the VIP Trust have entered into a written contract whereby
during the 24 months following the Substitution Date, the annualized
total net operating expenses, net of any acquired fund fees and
expenses, of the New Fund (taking into account applicable fee waivers
and expense reimbursements) will not exceed the total net operating
expenses, net of any acquired fund fees and expenses, of the Replaced
Fund for the fiscal year ended December 31, 2007. In addition, for the
24 months following the Substitution Date, the Insurance Company
Applicants will not increase asset-based fees and charges for the
Contracts outstanding on the Substitution Date. Thereafter, expenses
for the New Fund will vary from year to year and may exceed those of
the Replaced Fund.
    37. The Insurance Company Applicants mailed a Notice of
Substitution (the ``Notice'') to affected contract owner stating that
during the period from the date of the Notice through the date 30 days
after the Substitution (the ``Free Transfer Period''), the respective
Insurance Company Applicants will allow the affected contract owners to
make one transfer of contract value held in each subaccount investing
in the Replaced Fund (before the Substitution) or New Fund (after the
Substitution) to one or more Investment Options available pursuant to
the Contracts without charge and without assessing transfer fees. Such
a transfer also will not be counted as a transfer request under any
contractual provisions of the Contracts that limit the number of
transfers that may be made without charge.
    38. Under the Manager of Managers Order, subject to the approval of
its Board of Trustees, the VIP Trust may retain one or more subadvisers
for any of its Funds without the approval of shareholders of the Fund.
However, after the Substitution Date, Applicants and VIP Trust
represent that the VIP Trust will not retain any new subadviser for the
New Fund, or otherwise rely on the Manager of Managers Order in
connection with the New Fund, without first obtaining shareholder
approval of either: (1) The new subadviser or (2) the New Fund's
ability to rely on the Manager of Managers Order.
    39. The Notice was mailed to all affected owners on August 11-12,
2008. The Notice informed contract owners of each of the Contracts that
the Applicants have filed the Application seeking approval of the
Substitution. The Notice set forth the anticipated Substitution Date
and advised affected contract owners that contract values allocated to
subaccounts investing in shares of the Replaced Fund will be
transferred to subaccounts investing in shares of the New Fund, without
charge (including sales charges or surrender charges) and without
counting toward the number of transfers that may be permitted without
charge, on the Substitution Date. The Notice also stated that, during
the Free Transfer Period, affected contract owners may make one
transfer of contract value from each subaccount investing in the
Replaced Fund (before the Substitution) or the New Fund (after the
Substitution) to one or more other subaccount(s), subject to any
Investment Option allocation restrictions under their Contract, without
charge and without the transfer counting against any limitations on
transfers. Further, prior to the Substitution, all affected contract
owners will receive a copy of the most recent prospectus for the New
Fund.
    40. Within five days following the Substitution, the Insurance
Company Applicants will send a written notice to affected contract
owners stating that the Substitution was carried out and reiterating
the information set forth in the Notice.

Applicants' Legal Analysis

    1. Section 26(c) of the 1940 Act provides as follows: It shall be
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 shall have approved
such substitution. The Commission shall issue an order approving such
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 this title.
    2. The purposes, terms, and conditions of the Substitution 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.
Contract owners will not be assessed charges in connection with the
Substitution and their annual fund net total operating expenses are
expected to remain the same or decrease. In addition, to the extent a
contract owner does not wish to participate in the Substitution, he or
she is free to make one transfer to any other option available under
the relevant Contract at any time prior to the date of the Substitution
or during the 30-day period following the date of the Substitution
without any transfer fee and without that transfer counting as a
transfer request under any contractual provisions of the Contracts that
limit the number of transfers that may be made without charge.
Moreover, the Contracts have features that provide adequate protection
to contract owners. These features include: (1) A significant number of
different Investment Options; (2) Investment Options that are
reasonably diversified; (3) Investment Options that are reasonably
seasoned; (4) reasonable transferability between Investment Options;
(5) investment choices that include an option that is intended to
reduce or eliminate fluctuation of principal; and (6) reasonable
liquidity in the form of free partial withdrawal rights.
    3. In addition, contract owners will be substituted into the New
Fund whose investment objective, principal investment policies, and
risks will be substantially similar to those of the Replaced Fund, with
net total operating expenses that are anticipated to be equal to or
less than those of the Replaced Fund after applicable fee waivers and
expense reimbursements. Like the Class 1 shares of the Replaced Fund
which are not assessed a 12b-1 fee, the corresponding Class 1 shares of
the New Fund will not be assessed a 12b-1 fee.

    4. The following chart summarizes the similarities and differences
between the Replaced Fund and the New Fund:

------------------------------------------------------------------------
                                       Templeton         AZL Schroder
                                  developing markets   emerging markets
                                    securities fund       equity fund
------------------------------------------------------------------------
Net Total Operating Expenses (12/ 1.48% (Class 1)...  1.40% (Class 1).
 31/2007).                        1.73% (Class 2)...  1.65% (Class 2).
Investment Objectives...........  Long-term capital   Capital
                                   appreciation.       Appreciation.
Investment Policies (summary)...  The Fund invests    The Fund invests
                                   at least 80% of     at least 80% of
                                   its net assets in   its net assets,
                                   emerging market     plus any
                                   investments.        borrowings for
                                                       investment
                                                       purposes, in
                                                       equity securities
                                                       of companies the
                                                       Fund's subadviser
                                                       believes to be
                                                       ``emerging
                                                       market'' issuers.
Risks...........................  Stock Risk; Value   Market Risk;
                                   Style Investing;    Selection Risk;
                                   Foreign             Capitalization
                                   Securities;         Risk; Foreign
                                   Smaller and         Risk; Emerging
                                   Midsize             Markets Risk;
                                   Companies;          Currency Risk;
                                   Country, Sector     Market Risk;
                                   or Industry         Derivatives Risk;
                                   Focus; Liquidity.   Convertible
                                                       Securities Risk;
                                                       Investments in
                                                       Pooled Vehicles
                                                       Risk; Liquidity
                                                       Risk; Initial
                                                       Public Offerings
                                                       Risk.
Type of Advisory Services.......  Managed by          Subadvised by
                                   Templeton Asset     Schroder
                                   Management Ltd.     Investment
                                                       Management North
                                                       America Inc.
Total Annual Return for period
 ended December 31, 2007
    Class 1.....................  29.09%............  19.23% *.
    Class 2.....................  28.78%............  30.32%.
Assets Under Management at Dec.
 31, 2007
    Class 1.....................  $753.8 million **.  $0.4 million ****.
    Class 2.....................  $1.1 billion **...  $249.2 million.
------------------------------------------------------------------------
* Annualized for the period from commencement of operations on May 1,
  2007 through December 31, 2007.
** Assets held in the Separate Accounts on December 31, 2007, were $85.3
  million for Class 1 shares and $268.3 million for Class 2 shares.
*** Class 1 shares of the AZL Schroder Emerging markets Equity Fund
  commenced operations on May 6, 2007.

    5. For a period of 24 months from the date of the Substitution, the
New Fund ( AZL Schroder Emerging Markets Equity Fund)) will be subject
to an expense cap limiting the net total operating expenses for the New
Fund to a maximum of 1.48% for Class 1 shares and 1.73% for Class 2
shares, respectively. These expense caps are equal to the net total
operating expenses for Class 1 and Class 2 shares of the Replaced Fund
(Templeton Developing Markets Securities Fund) for the fiscal year
ended December 31, 2007. No 12b-1 fees are assessed to Class 1 shares
of either the Replaced Fund or the New Fund. Identical 12b-1 fees of
0.25% of average daily net assets are assessed to Class 2 shares of
both the Replaced Fund and the New Fund.
    6. The investment objectives and policies are substantially similar
for both Funds since both generally invest in common stocks of
companies in emerging markets. The risks listed are very similar for
both Funds and are consistent with the risks generally applicable to
investing in emerging market equity funds.
    7. In addition to substantially similar investment objectives,
principal investment policies and risks, as well as anticipated equal
or lower net total operating expenses, the advisory services that are
provided to the New Fund by its subadviser are comparable to the types
of advisory services currently provided to the Replaced Fund by its
investment adviser. Moreover, because the New Fund operates pursuant to
the Manager of Managers Order, Applicants believe that the proposed
Substitution will provide protection to contract owners by giving AZIM
the flexibility to change the subadviser of the New Fund should such a
change become warranted or advisable, provided that subsequent to the
Substitution, AZIM first obtains shareholder approval of either: (1)
The new subadviser or (2) the New Fund's ability to rely on the Manager
of Managers Order.

Terms and Conditions of Section 26(c) Relief

    1. Applicants submit that the Substitution does not present the
type of costly forced redemption or other harms that section 26(c) was
intended to guard against and is consistent with the protection of
investors and the purposes fairly intended by the 1940 Act. As noted
above, the Substitution is consistent with contract owners' objectives
and risk expectations because the investment objective, principal
investment policies and risks of the New Fund are substantially similar
to those of the Replaced Fund. In addition, the net total operating
expenses of the New Fund are anticipated to be equal to or less than
those of the Replaced Fund, after applicable fee waivers and expense
reimbursements that will be in place for the New Fund for a period of
24 months following the Substitution.
    2. As noted above, the Contracts contain features that provide
adequate protection to contract owners in the event of a substitution.
Moreover, the Substitution will be subject to the following terms and
conditions: (1) A contract owner may request that his or her contract
value be reallocated to another Investment Option, subject to any
Investment Option allocation restrictions under their Contract, at any
time during the Free Transfer Period without charge. The Free Transfer
Period provides sufficient time for contract owners to reconsider their
Investment Options; (2) the Substitution will be at the net asset value
of the respective shares, without the imposition of any transfer,
brokerage or similar charge; (3) neither the contract owners, the
Replaced Fund, nor the New Fund will bear any costs of the
Substitution, and all legal, accounting, and transactional costs and
any brokerage or other costs incurred in the Substitution will be paid
by the Insurance Company Applicants or the manager of the New Fund, and
accordingly, the Substitution will have no impact on the contract
owners' contract values; (4) the Substitution will in no way alter the
contractual obligations of the Insurance Company Applicants or the
rights and privileges

of contract owners under the Contracts; and (5) the Substitution will
in no way alter the tax benefits to contract owners.
    3. The Applicants, on the basis of the facts and circumstances
described herein, have determined that it is in the best interests of
contract owners to substitute shares of the Replaced Fund with shares
of the New Fund.
    4. Applicants request an Order of the Commission pursuant to
Section 26(c) of the 1940 Act approving the Substitution on the terms
set forth in this Application. Applicants believe, for all of the
reasons stated above, that the Substitution is consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the 1940 Act.

Section 17(b) Relief

    1. The section 17 Applicants also request that the Commission issue
an order pursuant to section 17(b) of the 1940 Act exempting them from
section 17(a) of the 1940 Act to the extent necessary to permit them to
carry out the Substitution through in-kind purchases and sales of the
New Fund shares.
    2. Section 17(a)(1) of the 1940 Act prohibits any affiliated person
of a registered investment company, or an affiliated person of an
affiliated person, acting as principal, from selling any security or
other property to such registered investment company. Section 17(a)(2)
of the 1940 Act prohibits any of the persons described above, acting as
principal, from purchasing any security or other property from such
registered investment company.
    3. The Section 17 Applicants may be considered affiliates of the
New Fund based upon the definition of ``affiliated person'' in section
2(a)(3) of the 1940 Act. Shares of the funds of the VIP Trust are held
solely by the Separate Accounts. Because shares held by a separate
account of an insurance company are legally owned by the insurance
company, Allianz Life and Allianz NY and their affiliates collectively
own of record all of the shares of the funds of the VIP Trust,
including the New Fund. Further, AZIM, an affiliated person of the VIP
Trust by virtue of section 2(a)(3)(E) of the 1940 Act, is a wholly
owned subsidiary of Allianz Life. For these reasons, the VIP Trust and
the New Fund are arguably under the control of Allianz Life and Allianz
NY notwithstanding the fact that contract owners may be considered the
beneficial owners of those shares held in the Separate Accounts. If the
VIP Trust and the New Fund are under the control of Allianz Life and
Allianz NY, then each of Allianz Life and Allianz NY, or any person
controlling Allianz Life and Allianz NY, or any person under common
control with Allianz Life and Allianz NY, is an affiliated person of
the VIP Trust and the New Fund. Similarly, if the VIP Trust and the New
Fund are under the control of Allianz Life and Allianz NY, then the VIP
Trust and the New Fund are affiliated persons of Allianz Life and
Allianz NY, and of any persons that control Allianz Life and Allianz NY
or are under common control with Allianz Life and Allianz NY.
    4. At the close of business on the Substitution Date, the Insurance
Company Applicants will redeem shares of the Replaced Fund either in-
kind or in cash and use the proceeds of such redemptions to purchase
shares of the New Fund, with each subaccount of the applicable Separate
Account investing the proceeds of its redemption from the Replaced Fund
in the New Fund. Thus, the proposed transactions may involve a transfer
of portfolio securities by the Replaced Fund to Allianz Life and
Allianz NY. Immediately thereafter, Allianz Life and Allianz NY would
purchase shares of the New Fund with the portfolio securities received
from the Replaced Fund. This aspect of the Substitution may be deemed
to involve one or more sales by Allianz Life or Allianz NY of
securities or other property to the New Fund, and could therefore be
viewed as being prohibited by section 17(a). Accordingly, the section
17 Applicants seek relief from section 17(a) for the in-kind purchases
and sales of the New Fund shares. The section 17 Applicants do not
believe that the redemption of shares of the Replaced Fund in
connection with the Substitution would involve a transaction with a
registered investment company of which it is an affiliated person. The
redemption of shares of the Replaced Fund will be carried out in
accordance with the Signature Financial Group no-action letter
(publicly available December 28, 1999).
    5. Any in-kind redemptions and purchases for purposes of the
Substitution will be effected in a manner consistent with the
investment objectives and policies of the Replaced Fund and the New
Fund. Subject to the oversight of AZIM, the subadviser of the New Fund
will review the securities holdings of the Replaced Fund and determine
which of the Replaced Fund's portfolio holdings would be suitable
investments for the New Fund in the overall context of the New Fund's
investment objective and policies and consistent with its management of
the New Fund, and will accept only those securities as consideration
for shares that it would have acquired for each such Fund in a cash
transaction. The section 17 Applicants represent that these portfolio
securities will be of the type and quality that the New Fund would have
acquired with the proceeds from share sales had the shares been sold
for cash.
    6. The section 17 Applicants state that any securities to be paid
out as redemption proceeds and subsequently contributed to the New Fund
to effect the contemplated in-kind purchases of shares will be valued
based on the procedures established by the board of VIP Trust. The
redeeming and purchasing values will be the same. Consistent with Rule
17a-7(d) under the 1940 Act, no brokerage commissions, fees, or other
remuneration will be paid by the Replaced Fund or the New Fund in
connection with the in-kind transactions. If AZIM declines to accept
particular portfolio securities of the Replaced Fund for purchase in-
kind of shares of the New Fund, those positions will be liquidated by
the Replaced Fund and shares of the New Fund will be purchased with
cash.
    7. Section 17(b) of the 1940 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
found under the 1940 Act; and (3) the proposed transaction is
consistent with the general purposes of the 1940 Act.
    8. The section 17 Applicants submit that the terms of the
Substitution, including the consideration to be paid and received, are
reasonable and fair and do not involve overreaching on the part of any
person concerned principally because the transactions will conform with
all but one of the conditions enumerated in Rule 17a-7 under the 1940
Act. The use of in-kind transactions will not cause contract owner
interests to be diluted. The proposed transactions will take place at
relative net asset value in conformity with the requirements of section
22(c) of the 1940 Act and Rule 22c-1 thereunder with no change in the
amount of any contract owner's contract value or death benefit or in
the dollar value of his or her investment in any of the Separate
Accounts. The proposed transaction

cannot be effected at a price that is disadvantageous to either the
Replaced Fund or the New Fund. Contract owners will not suffer any
adverse tax consequences as a result of the Substitution. Fees and
charges under the Contracts will not increase because of the
Substitution. Even though they may not rely on Rule 17a-7 under the
1940 Act, the section 17 Applicants submit 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 in connection with an investment company by its
affiliated persons.
    9. The board of the VIP Trust has adopted procedures, as required
by paragraph (e)(1) of Rule 17a-7 under the 1940 Act, pursuant to which
the New Fund may purchase and sell securities to and from its
affiliates. The section 17 Applicants will carry out the proposed in-
kind purchases in conformity with all of the conditions of Rule 17a-7
and the New Fund's procedures thereunder, except that the consideration
paid for the securities being purchased or sold may not be entirely
cash. Nevertheless, the circumstances surrounding the proposed
Substitution will be such as to offer to the New Fund the same degree
of protection from overreaching that Rule 17a-7 provides to the New
Fund generally in connection with its purchase and sale of securities
under that Rule in the ordinary course of its business. In particular,
Allianz Life and Allianz NY (or any of their affiliates) cannot effect
the proposed transactions at a price that is disadvantageous to the New
Fund. 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 respective
registration statement and as required by Rule 22c-1 under the 1940
Act. No brokerage commission, fee, or other remuneration will be paid
to any party in connection with the proposed transactions. Further, the
transactions will be reviewed by the Chief Compliance Officer of the
VIP Trust on behalf of the VIP Trust's Board of Trustees and will be
reported to VIP Trust's Board of Trustees in the same manner as any
other Rule 17a-7 transaction involving the New Fund would be reported.
    10. The proposed transactions also are reasonable and fair in that
they will be effected in a manner consistent with the public interest
and the protection of investors. Contract owners will be fully informed
of the terms of the Substitution and they will be provided a prospectus
for the New Fund. In addition, contract owners will have the
opportunity to make a free transfer from the New Fund to any other
available Investment Option offered under their Contract, subject to
any Investment Option allocation restrictions under their Contract,
during the Free Transfer Period.
    11. The section 17 Applicants also submit that the Substitution is
consistent with the policies of the Replaced Fund and the VIP Trust as
recited in the current registration statement and reports filed under
the 1940 Act.
    12. In addition, section 17 Applicants submit that the proposed
Substitution is consistent with the general purposes of the 1940 Act as
stated in the Findings and Declaration of Policy in section 1 of the
1940 Act. The proposed transactions do not present any of the
conditions or abuses that the 1940 Act was designed to prevent.
Securities to be paid out as redemption proceeds from the Replaced Fund
and subsequently contributed to the New Fund to effect the contemplated
in-kind purchases of shares will be valued in accordance with the
requirements of Rule 17(a)-7. Therefore, there will be no change in
value to any contract owner as a result of the Substitution.

Conclusion

    For the reasons and upon the facts set forth above, the Applicants
and the section 17 Applicants believe that the requested order meets
the standards set forth in section 26(c) and section 17(b),
respectively, and should therefore, be granted.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-26390 Filed 11-4-08; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 163 (Thursday, August 24, 2017)]
[Notices]
[Pages 40188-40190]
[FR Doc No: 2017-17908]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81436; File No. SR-GEMX-2017-38]

Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Related to Quoting
at the Opening

August 18, 2017.
    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 August 17, 2017, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend GEMX Rule 701, entitled ``Opening.''
    The text of the proposed rule change is available on the Exchange's
Web site at www.ise.com, 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
    The purpose of this rule change is to amend GEMX Rule 701,
``Opening'' to specifically amend opening obligations for Primary
Market Makers or ``PMMs.'' The Exchange notes that the proposed rule
change is similar to a Nasdaq MRX, LLC (``MRX'') rule.\3\
---------------------------------------------------------------------------

    \3\ See MRX Rule 701.
---------------------------------------------------------------------------

    Today, GEMX Rule 701(c)(3) states that the PMM assigned in a
particular equity option must enter a Valid Width Quote not later than
one minute following the dissemination of a quote or trade by the
market for the underlying security or, in the case of index options,
following the receipt of the opening price in the underlying index. The
PMM assigned in a particular U.S. dollar-settled foreign currency
option must enter a Valid Width Quote not later than one minute after
the announced market opening.
    First, the Exchange proposes to add the words ``or index'' to
further clarify that the requirement applies to equities and index
options. The Exchange proposes this addition to further clarify the
requirement in Rule 701(c)(3) clearly applies to equity and index
options.
    Second, the Exchange proposes to modify the PMM's current
obligation to enter Valid Width Quotes not later than one minute
following the dissemination of a quote or trade by the market for the
underlying security or, in the case of index options, following the
receipt of the opening price in the underlying index for all assigned
options, or in the case of a U.S. dollar-settled foreign currency
option after the announced market opening. The Exchange believes that
the current requirement is very burdensome and instead proposes to add
``in 90% of their assigned series'' to require a PMM to enter a Valid
Width Quote not later than one minute following the dissemination of a
quote or trade by the market for the underlying security or, in the
case of index options, following the receipt of the opening price in
90% of their assigned series, or in the case of a U.S. dollar-settled
foreign currency option in 90% of their assigned series not later than
one minute after the announced market opening.
    Further, the Exchange proposes to require PMMs to promptly enter a
Valid Width Quote in the remainder of their assigned series, which did
not open within one minute following the dissemination of a quote or
trade by the market for the underlying security or, in the case of
index options, following the receipt of the opening price, in the
underlying index or, with respect to a U.S. dollar-settled foreign
currency option, following the announced market opening. The Exchange's
proposal is intended to account for market conditions which may prevent
a PMM from opening all assigned series, for example an extremely
volatile market which may impact the PMM's ability to enter aggressive
quotes. Another example would be that news pertaining to a specific
security is causing the underlying price to fluctuate rapidly and
significantly, thereby causing the PMM to await the underlying equity
price to settle before entering a Valid Width Quote. The Exchange's
surveillance staff would monitor to ensure that PMMs are complying with
these requirements during the Opening Process.
    Today, the Opening Process for an options series will be conducted
on or after 9:30 a.m. if the system has received, within two minutes
(or such shorter time as determined by the Exchange and disseminated to
membership on the Exchange's Web site) of the opening trade or quote on
the market for the underlying security in the case of equity options
or, in the case of index options, within two minutes of the receipt of
the opening price in the underlying index (or such shorter time as
determined by the Exchange and disseminated to membership on the
Exchange's Web site), or within two minutes of market opening for the
underlying currency in the case of a U.S. dollar-settled foreign
currency option (or such shorter time as determined by the Exchange and
disseminated to membership on the Exchange's Web site) the PMM's Valid
Width Quote, the Valid Width Quotes of two Competitive Maker [sic]
Makers (``CMMs'') or if neither the PMM's Valid Width Quote nor the
Valid Width Quote of two CMMs have been submitted within such
timeframe, if one CMM has submitted a Valid Width Quote.\4\
---------------------------------------------------------------------------

    \4\ See Rule 701(c)(1)(i)-(iii).
---------------------------------------------------------------------------

Implementation
    The Exchange proposes to implement this rule change on September
29, 2017.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b)

of the Act,\5\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\6\ 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
for the reasons stated below.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange's first proposal at Rule 701(c)(3) to clarify that the
requirement applies to equities and index options will make clear the
applicability of the PMM's requirement to enter Valid Width Quotes.
This proposed amendment is non-substantive and is intended to add
clarity to the rules.
    The second proposal to amend a PMM's requirement to enter Valid
Width Quotes during the Opening Process is consistent with the Act
because the 90% requirement to provide a Valid Width Quote in a series
to which the PMM is assigned will continue to ensure that options
series are opened in a timely manner, while not imposing a burdensome
requirement on market participants. PMMs would be required to promptly
enter a Valid Width Quote in the remainder of their assigned series,
which did not open within one minute of the dissemination of a quote or
trade by the market for the underlying security or in the case of index
options, following the receipt of the opening price or, with respect to
U.S. dollar-settled foreign currency options, following the announced
market opening. The Exchange would monitor PMMs to ensure that they
promptly provided a Valid Width Quote for the remainder of the series
within a reasonable amount of time. The Exchange notes that market
conditions could cause a PMM to experience circumstances where opening
100% of all of their assigned series within one minute of the
dissemination of a quote or trade by the market for the underlying
security or, in the case of index options, following the receipt of the
opening price in the underlying index or, with respect to U.S. dollar-
settled foreign currency options, following the announced market
opening, is not feasible.
    The Exchange believes that the proposed 90% Valid Width Quoting
obligation, not later than one minute following the dissemination of a
quote or trade by the market for the underlying security or, in the
case of index options, following the receipt of the opening price in
the underlying index or, with respect to U.S. dollar-settled foreign
currency options, following the announced market opening, along with
the ``prompt'' standard for the remaining 10% of their assigned series
will ensure all series are opened in a timely manner. The Exchange's
proposal accounts for market conditions which may prevent a PMM from
opening all assigned series, for example an extremely volatile market
which may impact the PMM's ability to enter aggressive quotes. Another
example would be that news pertaining to a specific security is causing
the underlying price to fluctuate rapidly and significantly, thereby
causing the PMM to await the underlying equity price to settle before
entering a Valid Width Quote. The Exchange believes that the time frame
for PMMs to provide a Valid Width Quote in 90% of their assigned series
not later than one minute following the dissemination of a quote or
trade by the market for the underlying security or, in the case of
index options, following the receipt of the opening price in the
underlying index or, with respect to U.S. dollar-settled foreign
currency options, following the announced market opening will ensure
liquidity on GEMX during the Opening Process. The Exchange desires to
encourage PMMs to continue to make markets on GEMX at the Opening. The
Exchange believes that requiring PMMs to provide a Valid Width Quote in
90% of their assigned options not later than one minute following the
dissemination of a quote or trade by the market for the underlying
security or, in the case of index options, following the receipt of the
opening price in the underlying index or, with respect to U.S. dollar-
settled foreign currency options, following the announced market
opening along with the ``prompt'' standard for the remaining 10% will
enhance the market making functions for PMMs and serve to maintain a
fair and orderly market thereby promoting the protection of investors
and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposal does not change
the intense competition that exists among the options markets for
options business including on the opening. Nor does the Exchange
believe that the proposal will impose any burden on intra-market
competition; the Opening Process involves many types of participants
and interest.
    The Exchange's proposal to require a PMM to enter a Valid Width
Quote in 90% of their assigned series not later than one minute time
following the dissemination of a quote or trade by the market for the
underlying security or, in the case of index options, following the
receipt of the opening price in the underlying index or, with respect
to U.S. dollar-settled foreign currency options, following the
announced market opening and promptly enter a Valid Width quote for the
remaining 10% their assigned series does not create an undue burden on
competition. The proposal will continue to ensure that options series
are opened in a timely manner, while not imposing a burdensome
requirement on market participants. PMMs would be required to promptly
enter a Valid Width Quote in the remainder of their assigned series
which were not open within one minute following the dissemination of a
quote or trade by the market for the underlying security or, in the
case of index options, following the receipt of the opening price in
the underlying index or, with respect to U.S. dollar-settled foreign
currency options, following the announced market opening. The Exchange
would monitor PMMs to ensure that they promptly entered a Valid Width
Quote for the remainder of their assigned series within a reasonable
amount of time. The Exchange notes that market conditions could cause a
PMM to experience circumstances where entering a Valid Width Quote for
100% of all of their assigned series within one minute following the
dissemination of a quote or trade by the market for the underlying
security or, in the case of index options, following the receipt of the
opening price in the underlying index or with respect to U.S. dollar-
settled foreign currency options within one minute after the announced
market opening is not feasible. The Exchange believes that the proposed
90% obligation to enter a Valid Width Quote not later than one minute
following the dissemination of a quote or trade by the market for the
underlying security or, in the case of index options, following the
receipt of the opening price in the underlying index or, with respect
to U.S. dollar-settled foreign currency options, following the
announced market opening for the underlying security along with the
``prompt'' standard for the remaining series will ensure all series are
opened in a timely manner.

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 \7\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 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, along
with a brief description and text of 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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_ADDRESS>Please include
File Number SR-GEMX-2017-38 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-GEMX-2017-38. 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 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; 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-GEMX-2017-38 and should be
submitted on or before September 14, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-17908 Filed 8-23-17; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 80, Number 242 (Thursday, December 17, 2015)]
[Notices]
[Pages 78797-78799]
[FR Doc No: 2015-31687]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76631; File No. SR-Phlx-2015-98]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Exchange's Pricing Schedule Under Section VIII With Respect to
Execution and Routing of Orders in Securities Priced at $1 or More Per
Share

December 11, 2015.
    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 November 30, 2015, NASDAQ OMX PHLX LLC (``Phlx'' 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Pricing Schedule
under Section VIII, entitled ``NASDAQ OMX PSX FEES,'' with respect to
execution and routing of orders in securities priced at $1 or more per
share.
    While the changes proposed herein are effective upon filing, the
Exchange has designated the amendments become operative on December 1,
2015.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/, 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
    The purpose of the proposed rule change is to amend certain charges
and fees for order execution and routing applicable to the use of the
order execution and routing services of the NASDAQ OMX PSX System
(``PSX'') by member organizations for all securities traded at $1 or
more per share.
    Specifically, under subparagraph (a)(1) of the rule the Exchange is
proposing to increase the charges assessed member organizations that
enter orders that execute in PSX. First, the Exchange is proposing to
increase the charge for executions in Nasdaq-listed securities from
$0.0028 to $0.0029 per share executed. Second, the Exchange is
proposing to increase the charge for executions in NYSE-listed
securities from $0.0027 to $0.0028 per share executed. Lastly, the
Exchange is proposing to increase the charge for executions in
securities listed on exchanges other than Nasdaq and NYSE from $0.0026
to $0.0028 per share executed.
    The Exchange is also proposing to increase credits provided to
member organizations that provide displayed liquidity through PSX under
subparagraph (a)(1) of the rule. First, the Exchange is proposing to
increase the credit provided for Quotes/Orders entered by a member
organization that provides and accesses 0.35% or more of Consolidated
Volume during the month from $0.0028 to $0.0031 per share executed.
Second, the Exchange is proposing to increase the credit provided for
Quotes/Orders entered by a member organization that provides and
accesses 0.25% or more of Consolidated Volume during the month from
$0.0027 to $0.0029 per share executed. Lastly, the Exchange is
eliminating the $0.0023 per share executed credit provided for Quotes/
Orders entered by a member organization that provides and accesses
daily volume of 100,000 or more shares during the month, and is
increasing the ``default'' credit (i.e., the credit received for
providing displayed liquidity that does not otherwise qualify for a
higher credit) provided for all other Quotes/Orders from $0.0020 to
$0.0023 per share executed.
    Finally, the Exchange is proposing to eliminate text from
subparagraph (a) of the rule that defines the term ``regular market
hours,'' which was erroneously left in the rule text when the tier it
provided reference to was deleted. Currently, no fee or credit
references the definition. Thus, the Exchange is proposing to delete
the reference.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\3\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\4\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility or system which Nasdaq operates or controls and is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable

principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, 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; and are not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, for example, the Commission indicated that market forces should
generally determine the price of non-core market data because national
market system regulation ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \5\ Likewise, in NetCoalition v. NYSE
Arca, Inc., 615 F.3d 525 (D.C. Cir. 2010), the D.C. Circuit upheld the
Commission's use of a market-based approach in evaluating the fairness
of market data fees against a challenge claiming that Congress mandated
a cost-based approach.\6\ As the court emphasized, the Commission
``intended in Regulation NMS that `market forces, rather than
regulatory requirements' play a role in determining the market data . .
. to be made available to investors and at what cost.'' \7\
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    \5\ See Exchange Act Release No. 34-51808 (June 9, 2005)
(``Regulation NMS Adopting Release'').
    \6\ See NetCoalition, 615 F.3d at 534.
    \7\ Id. at 537.
---------------------------------------------------------------------------

    Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers' . . . .'' \8\
---------------------------------------------------------------------------

    \8\ NetCoalition, 615 F.3d at 539 (quoting ArcaBook Order, 73 FR
at 74782-74783).
---------------------------------------------------------------------------

    The proposed increases to the credits and charges in the fee
schedule under the Exchange's Pricing Schedule under Section VIII are
reflective of the Exchange's ongoing efforts to use pricing incentives
to attract order flow to the Exchange and improve market quality. The
goal of these pricing incentives is to provide meaningful incentives
for members to increase their participation on the Exchange.
    The Exchange is proposing to increase the charges to a member
organization entering an order that executes in PSX and is also
proposing to increase credits provided to member organizations. As a
general principle, the Exchange must, from time to time, adjust the
level of fees and credits provided to most efficiently allocate reduced
fees and credits in terms of market improving behavior. In this regard,
the Exchange is limited in how far it may reduce fees and in the amount
of credits that it can provide to market participants.
    The Exchange believes that the increases to the charges assessed a
member organization entering an order that executes in PSX are
reasonable because they reflect the Exchange's need to adjust its
credits and fees in response to the costs and benefits provided by the
Exchange. In addition to covering Exchange costs, the increased fees
will allow the Exchange to offer credits to market participants that
provide beneficial liquidity to PSX, to the benefit of all of its
participants. The Exchange notes that it is increasing the charge
assessed for executions in securities listed on exchanges other than
Nasdaq and NYSE by a greater amount than for securities listed on
Nasdaq and NYSE because it still wishes to offer lower fees for removal
of liquidity for securities not listed on Nasdaq while balancing the
exchanges' fees with its credits. The Exchange believes that the
proposed increases to the charges assessed a member organization
entering an order that executes in PSX are consistent with an equitable
allocation of fees and are not unfairly discriminatory because they
apply to all member organizations that enter orders in the securities
based on the listing venue of the security.
    The Exchange believes that the proposed increases to the credits
provided to a member organization that provides displayed liquidity
through PSX are reasonable because the Exchange seeks to improve market
quality by providing increased incentives to market participants to
provide beneficial displayed liquidity. To achieve this, the Exchange
must, from time to time, adjust the levels of credits and the related
qualification requirements in reaction to market behavior. In the
present case, the Exchange is proposing to increase two of the credit
tiers, eliminate the lowest credit tier, and increase the ``default''
credit to the level of the eliminated credit tier. The Exchange
believes providing the greatest incentive to market participants that
also provide and access the highest level of Consolidated Volume during
the month may significantly increase the number of member organizations
that provide such high levels of market improving participation, to the
benefit of all participants. Elimination of the credit tier and
increasing the level of the default credit to the level of the
eliminated tier is reasonable as it is reflective of the Exchange's
desire to make PSX an attractive venue to any member organization that
is willing to provide displayed liquidity. The Exchange believes that
the proposed increases to the credits provided for displayed liquidity
through PSX and elimination of a credit tier are consistent with an
equitable allocation of fees and are not unfairly discriminatory
because they apply to all member organizations that provide displayed
liquidity through PSX and meet the criteria of the credit tier. In
addition, member organizations that previously would have qualified
under the eliminated tier would continue to receive the same credit
under the ``default'' credit tier.
    The Exchange believes that the elimination of rule text that
defines a term no longer used in the fee schedule is consistent with
the protection of investors and the public interest because it will
avoid investor confusion that may occur by including it.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.\9\
Phlx notes that it operates in a highly competitive market in which
market participants can readily favor dozens of different competing
exchanges and alternative trading systems if they deem charges at a
particular venue to be excessive, or credit opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its charges and credits to remain competitive
with other exchanges. Because competitors are free to modify their own
charges and credits in response, and because market participants may
readily adjust their order routing practices, the Exchange believes
that the degree to which changes to charges and credits in this market
may impose any burden on competition is extremely limited.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(8).

---------------------------------------------------------------------------

    In this instance, the changes to charges and credits do not impose
a burden on competition because the Exchange membership is optional and
is the subject of competition from other exchanges. The increased
credits and charges are reflective of the intent to increase the order
flow on the Exchange. For these reasons, the Exchange does not believe
that any of the proposed changes will impair the ability of members or
competing order execution venues to maintain their competitive standing
in the financial markets. Moreover, because there are numerous
competitive alternatives to the use of the Exchange, it is likely that
the Exchange will lose market share as a result of the changes if they
are unattractive to market participants.
    Accordingly, the Exchange does not believe that the proposed rule
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\10\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-Phlx-2015-98 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-Phlx-2015-98. 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 (https://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 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; 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-Phlx-2015-98 and should be
submitted on or before January 7, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31687 Filed 12-16-15; 8:45 am]
BILLING CODE 8011-01-P