[Federal Register Volume 79, Number 136 (Wednesday, July 16, 2014)]
[Notices]
[Pages 41613-41616]
[FR Doc No: 2014-16653]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72591; File No. SRNYSEArca-2014-75]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Amending NYSE Arca Equities Rules 7.6, 7.11,
7.16, 7.31, 7.34, 7.35, 7.37 and 7.65 To Eliminate Certain Order Types,
Modifiers and Related References

July 10, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the

``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that,
on June 27, 2014, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s (b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Equities Rules 7.6, 7.11,
7.16, 7.31, 7.34, 7.35, 7.37 and 7.65 to eliminate certain order types,
modifiers and related references. The text of the proposed rule change
is available on the Exchange's Web site at www.nyse.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 self-regulatory organization
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 those 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 parts of such statements.

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

1. Purpose
    The Exchange proposes to amend NYSE Arca Equities Rules 7.6, 7.11,
7.16, 7.31, 7.34, 7.35, 7.37 and 7.65 \4\ to eliminate certain order
types, modifiers and related references. The Exchange proposes to
eliminate the order types and modifiers specified below in order to
streamline its rules and reduce complexity among its order type
offerings.\5\ The Exchange also proposes to eliminate references in
Rules 7.6, 7.34 and 7.35 to the Midpoint Directed Fill and Cleanup
Order, which were recently deleted.\6\
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    \4\ All references to rules in this filing are to the rules of
NYSE Arca Equities.
    \5\ See Mary Jo White, Chair, Securities and Exchange
Commission, Speech at the Sandler O'Neill & Partners, L.P. Global
Exchange and Brokerage Conference (June 5, 2014) (available at
www.sec.gov/News/Speech/Detail/Speech/1370542004312#.U5HI-fmwJiw).
    \6\ See Securities Act Release No. 71331 (January 16, 2014), 79
FR 3907 (January 23, 2014) (SR-NYSEArca-2013-92).
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Elimination of Five Working Orders (Rule 7.31(h))
    The Exchange proposes to eliminate, and thus delete from its rules,
five Working Orders (and certain related combinations), which are
orders, defined in Rule 7.31(h), with a conditional or undisplayed
price and/or size.
    First, the Exchange proposes to eliminate Passive Discretionary
Orders, which are Discretionary Orders that may route to an away market
if marketable upon arrival, but otherwise will not route and will not
trade through a protected quotation. To reflect this elimination, the
Exchange proposes to delete the following:
     Rule 7.31(h)(2)(A), which defines the order type;
     Rule 7.37(b)(2)(A)(iv),\7\ which governs the determination
of a Passive Discretionary Order's execution price; and
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    \7\ The Exchange also proposes to renumber current Rule
7.37(b)(2)(A)(v) as Rule 7.37(b)(2)(A)(iv).
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     the references to Passive Discretionary Orders in Rules
7.11(a)(6), 7.11(a)(6)(C), and 7.37(b)(2)(C).\8\
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    \8\ A Passive Discretionary Order can be used in combination
with a Reserve Order, defined in Rule 7.31(h)(3), as a limit order
with a portion of the size displayed and with a reserve portion of
the size (known as a ``reserve size'') that is undisplayed on the
Exchange. In eliminating Passive Discretionary Orders, the Exchange
will no longer accept this combination, also known as a Passive
Discretionary Reserve Order.
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    Second, the Exchange proposes to eliminate Discretion Limit Orders.
As defined in Rule 7.31(h)(2)(B), if the discretionary price of a
Discretion Limit Order can be matched against trading interest in the
NYSE Arca Book, then such order will be executed at the discretionary
price or better. If the discretionary price of a Discretion Limit Order
can be matched against a Protected Quotation, it would be routed but
only if the displayed share size of the Discretion Limit Order is equal
to or less than the displayed share size of the away market
participant. To effect this elimination, the Exchange proposes to
delete Rule 7.31(h)(2)(B) and references to Discretion Limit Orders in
Rules 7.11(a)(6) and 7.11(a)(6)(C).
    Third, the Exchange proposes to eliminate Sweep Reserve Orders,
which provides for routing the displayed portion of a Reserve Order if
the displayed price of a Sweep Reserve Order is marketable against an
away market participant(s). Based on User instructions, the order may
be routed (1) serially as component orders, such that each component
corresponds to the displayed size, or (2) only once in its entirety,
including both the displayed and reserve portions. To effect this
elimination, the Exchange proposes to delete Rule 7.31(h)(3)(A) and
delete the references to Sweep Reserve Orders in Rule 7.31(h)(3)(C) and
in Rule 7.11(a)(6)(C).\9\
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    \9\ A Sweep Reserve Order can be entered with a discretionary
price (known as a Sweep Reserve with Discretion Order) as well as an
inside limit price (known as an Inside Limit Sweep Reserve). In
deleting Sweep Reserve Orders, the Exchange will also no longer
accept these combinations.
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    Fourth, the Exchange proposes to eliminate Random Reserve Orders,
which have a random reserve value (expressed in share quantity) that,
as a range of round lots, will vary the displayed size of the Reserve
Order. To effect this elimination, the Exchange proposes to delete Rule
7.31(h)(3)(B) and references to the Random Reserve Order in Rule
7.11(a)(6)(C).
    Finally, the Exchange proposes to eliminate PL Select Orders, which
are Passive Liquidity Orders designated as a PL Select Order to buy or
sell a stated amount of a security at a specified, undisplayed price. A
PL Select Order retains its standing in execution priority among
Passive Liquidity Orders but does not interact with incoming orders
that (1) have an IOC time in force condition, or (2) are Intermarket
Sweep Orders (``ISO''). An incoming PL Select Order that is marketable
will execute against all available contra-side interest without
restrictions. To effect this elimination, the Exchange proposes to
delete Rule 7.31(h)(7).
Amendment of Cross Order (Rule 7.31(s))
    The Exchange proposes to amend the Cross Order Rule to provide that
the Exchange will only accept Cross Orders with an Immediate or Cancel
(``IOC'') designation. To effect this change, the Exchange proposes to
amend the definition of Cross Order in Rule 7.31(s), which defines a
Cross Order as a two-sided order with instructions to match the
identified buy-side with the identified sell-side at a specified price,
also known as the ``cross price,'' to add the clause ``designated IOC''
to clarify that only a Cross Order with such a designation can be
entered on the Exchange. Consistent with the current operation of an
IOC Cross Order, currently defined in Rule 7.31(aa), the

Exchange proposes to amend Rule 7.31(s) to provide that Cross Orders
that would lock or cross the PBBO or the BBO would be rejected.\10\
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    \10\ As described below, the Exchange proposes to delete the IOC
Cross Order set forth in Rule 7.31(aa).
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    In connection with this amendment, the Exchange proposes to move
text from Rule 7.31(aa)(1)-(3), which governs the operation of an IOC
Cross Order, to Rule 7.31(s) and delete Rules 7.31(s)(1)-(5) as moot
for the proposed revised definition of a Cross Order, which must be
designated IOC and does not route.
    The Exchange also proposes to delete Rule 7.16(f)(v)(G), which
provides that short sale cross orders priced at or below the current
national best bid will be rejected during the Short Sale Period as
defined in Rule 7.16(f)(iv). This provision is also moot since a Cross
Order with an IOC designation cannot execute at or below the current
national best bid.
Elimination of Six Cross Order Types
    The Exchange also proposes to eliminate the following six
separately-defined Cross Orders.
    First, the Exchange proposes to eliminate the Midpoint Cross Order,
which is a Cross Order priced at the midpoint of the PBBO that will be
rejected when a locked or crossed market of Protected Quotations exists
in that security. To effect this elimination, the Exchange proposes to
delete Rule 7.31(y), which defines the Midpoint Cross Order, and delete
commentary .04 to Rule 7.6 that includes a reference to Midpoint Cross
Orders.
    Second, the Exchange proposes to eliminate the IOC Cross Order. By
amending Rule 7.31(s) as described above, the Exchange no longer needs
to separately define an IOC Cross Order. To effect this elimination,
the Exchange proposes to delete Rule 7.31(aa), which describes the IOC
Cross Order.
    Third, the Exchange proposes to eliminate the Post No Preference
(PNP) Cross Order, which is a Cross Order that is to be executed in
whole or in part on the Exchange with any portion not so executed
canceled, without routing any portion of the PNP Cross Order to another
market center. To effect this elimination, the Exchange proposes to
delete Rule 7.31(bb).
    Fourth, the Exchange proposes to eliminate the Cross-and-Post
Order, which is a Cross Order or PNP Cross Order to be executed in
whole or in part on the Exchange where any unexecuted portion will be
displayed in the NYSE Arca Book at the cross price. To effect this
elimination, the Exchange proposes to delete Rule 7.31(ff) and, as
noted above, delete the references to Cross and Post Order in Rules
7.31(s)(3) and 7.31(s)(5)(B). The Exchange also proposes to delete
references to the PNP Cross and Post Orders in Rules 7.37(d)(1) and
7.37(d)(2) governing order execution.
    Fifth, the Exchange proposes to eliminate the Portfolio Crossing
Service (PCS) Order. A PCS Order is an order to buy or sell a group of
securities, which group includes no fewer than 15 securities having a
total market value of $1 million or more. Each individual component of
a PCS Order resembles a Cross Order, as defined by Rule 7.31(s), but
must also include a unique basket number identifying it as a PCS Order
eligible for entry into the Portfolio Crossing Service pursuant to Rule
7.65. To effect this elimination, the Exchange proposes to delete Rule
7.31(ii), describing the PCS Order, and Rule 7.65, which governs the
entry of such orders into the PCS. The Exchange also proposes to remove
the reference to the PCS in Rule 7.34(g).
    Finally, the Exchange proposes to eliminate the Day Cross Order,
which is a Cross Order accompanied by a Day Modifier. To effect this
elimination, the Exchange proposes, as noted above, to restrict entry
of Cross Orders to those with an IOC designation by amending Rule
7.31(s). A Cross Order with a Day Modifier would thus be rejected.
Additional Order Deletion and Amendment
    The Exchange proposes to eliminate the following additional order
types and modifiers.
    First, the Exchange proposes to eliminate the Market to Limit (MTL)
Order, which is an un-priced order that, upon receipt, is immediately
assigned a limit price equal to the contra NBBO price. To effect this
elimination, the Exchange proposes to delete Rule 7.31(rr).
    Second, the Exchange proposes to amend the definition of an
Auction-Only Order to provide that the Exchange will only accept the
Auction-Only Orders specified in Rule 7.31(t). An Auction Only Order is
currently defined as a limit or market order to be executed during the
next auction following entry of the order and, if not executed in the
auction that it participates in, the balance is cancelled. To effect
this change, the Exchange proposes to amend Rule 7.31(t) to specify
that the only auction-only orders that can be entered on the Exchange
are the separately-defined Limit-on-Open Orders (``LOO Order''),
Market-on-Open Orders (``MOO Order''), Limit-on-Close Orders (``LOC''),
and Market-on-Close Orders (``MOC''). The Exchange also proposes to
replace the references to Auction-Only Limit with LOO in Rule 7.35, and
delete the references to Auction Only Limit Orders in Rule
7.35(f)(3)(E).
    Third, the Exchange proposes to amend the definition of a NOW Order
to provide that NOW Orders with a Reserve modifier would no longer be
accepted. A NOW Order is a Limit Order that is executed in whole or in
part on the Exchange with any unexecuted portion routed pursuant to
Rule 7.37(d) for immediate execution. If any portion of the routed
order is not immediately executed, it will be canceled. To effect this
change, the Exchange proposes to amend the definition of a NOW Order in
Rule 7.31(v) to provide that NOW Orders entered with a Reserve modifier
would be rejected.
    Fourth, the Exchange proposes that Market Orders with a NOW or IOC
modifier would no longer be accepted. Rule 7.31(a) defines a Marker
Order as an order to buy or sell a stated amount of a security that is
to be executed at the NBBO when the order reaches the Exchange. To
effect this change, the Exchange proposes to eliminate the reference to
market orders in the definition of the IOC modifier in Rule 7.31(c)(3),
thereby limiting the use of the IOC modifier to limit orders. A Market
Order entered with an IOC limitation would therefore be rejected.
Similarly, the Exchange proposes to amend the definition of a NOW Order
to provide that NOW Orders entered with a Market modifier would be
rejected.
    Finally, the Exchange proposes to modify the Mid-Point Liquidity
(``MPL'') Order to eliminate the use of a Fill or Kill (``FOK'')
modifier with an MPL Order. An MPL Order is a Passive Liquidity Order
priced at the midpoint of the PBBO. To effect this change, the Exchange
proposes to amend the definition of an MPL Order in Rule 7.31(h)(5) to
provide that an MPL Order entered with a FOK modifier would be
rejected.
References to Deleted Order Types in Rule 7.6, Rule 7.34 and Rule 7.35
    The Exchange proposes to delete commentary .04 to Rule 7.6
governing Trading Differentials. The commentary provides an exception
for Midpoint Cross Orders and Midpoint Directed Fills. As described
above, the Exchange is eliminating the Midpoint Cross Order.

The Directed Fill order type was recently eliminated.\11\
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    \11\ See supra note 6.
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    Similarly, Cleanup Orders were recently eliminated.\12\ The
Exchange accordingly proposes to delete references to Cleanup Orders in
Rule 7.34(b)(2), which provides that Market Makers may, at their
discretion, maintain a Cleanup Order for any securities in which they
are registered for each Market Order Auction. The Exchange also
proposes to delete the references to Cleanup Orders in Rule
7.35(c)(2)(A)(1)(v) and Rule 7.35(f)(3)(B).
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    \12\ See id.
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    Because of the technology changes associated with the proposed rule
change, the Exchange proposes to announce the implementation date of
the elimination of the order types via Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Act,\13\ in general, and furthers the objectives of Section
6(b)(5),\14\ in particular, in that it 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 facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. Specifically, the Exchange
believes that eliminating the Passive Discretionary Order, Discretion
Limit Order, Sweep Reserve Order, Random Reserve Order, PL Select
Order, Auction-Only Order, Cross-and-Post Order, Day Cross Order,
Midpoint Cross Order, PNP Cross Order, IOC Cross Order and PCS Order
removes impediments to and perfects a national market system by
simplifying functionality and complexity of its order types. The
Exchange believes that eliminating these order types and modifiers
would not be inconsistent with the public interest and the protection
of investors because investors will not be harmed and in fact would
benefit from the removal of complex functionality. The Exchange further
believes that deleting corresponding references to deleted order types
also removes impediments to and perfects the mechanism of a free and
open market by ensuring that members, regulators and the public can
more easily navigate the Exchange's rulebook and better understand the
orders types available for trading on the Exchange. Similarly, the
Exchange believes that removing cross-references to the Midpoint
Directed Fill and Cleanup Order order types, which the Exchange
recently eliminated in a separate rule filing,\15\ would remove
impediments to and perfect the mechanism of a free and open market
because it would reduce potential confusion that may result from having
such cross references in the Exchange's rulebook. Removing such
obsolete cross references will also further the goal of transparency
and add clarity to the Exchange's rules.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ See supra note 6.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed change is not
designed to address any competitive issue but rather would remove
obsolete cross-references and remove complex functionality, thereby
reducing confusion and making the Exchange's rules easier to understand
and navigate.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be 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-NYSEArca-2014-75 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-NYSEArca-2014-75. 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-NYSEArca-2014-75 and should
be submitted on or before August 6, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16653 Filed 7-15-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: September 14, 2006 (Volume 71, Number 178)]
[Notices]
[Page 54313-54316]
[DOCID:fr14se06-68]

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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-27477; File No. 812-13244]

National Life Insurance Company, et al.

September 7, 2006.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of application for an order pursuant to Section 26(c) of
the Investment Company Act of 1940, as amended (the ``Act''), approving
a certain substitution of securities.

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    Applicants: National Life Insurance Company (``NLIC''), National
Variable Annuity Account II (``Annuity Account''), and National
Variable Life Insurance Account (``Life Account'') (NLIC, Annuity
Account and Life Account collectively, the ``Applicants''). Summary of
Application: Applicants have submitted an application for an order of
the Commission, pursuant to Section 26(c) of the Act, permitting NLIC
to substitute securities issued by Fidelity VIP Index 500 Portfolio
(``Fidelity Fund''), a series of Variable Insurance Products Fund II,
or DWS Equity Index 500 VIP (``DWS Fund''), a series of DWS Investments
VIT Funds, to support variable annuity contracts or variable life
insurance contracts (separately, ``Contract'', collectively,
``Contracts'') issued by NLIC, for securities issued by Sentinel
Variable Products Growth Index Fund (``Sentinel Fund''), a series of
Sentinel Variable Products Trust, held by both the Annuity Account or
the Life Account (individually, ``Account'' and collectively,
``Accounts'').
    Filing Date: The application was filed on October 28, 2005, amended
on February 2, 2006, June 16, 2006, July 17, 2006, and September 1,
2006.
    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 the Applicants with a copy of the request in
person or by mail. Hearing requests must be received by the Commission
by 5:30 p.m., on October 2, 2006 and should be accompanied by proof of
service of Applicants in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request and the issues contested.
Persons may request notification of a hearing by writing to the
Secretary of the Commission.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE., Washington, DC 20549-0609. Applicants, c/o Kerry A. Jung, Esq.,
Senior Counsel, National Life Insurance Company, One National Life
Drive, Montpelier, VT 05604.

FOR FURTHER INFORMATION CONTACT: Curtis A. Young, Senior Counsel, or
Harry Eisentein, Branch Chief, Office of Insurance Products, Division
of Invstmetn Management, at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The following is a summary of the amended
and restated application. The complete application may be obtained for
a fee from the Public Reference Room, 100 F street, NE., Washington, DC
20549, or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. NLIC is a stock life insurance company, all the outstanding
stock of which is indirectly owned by National Life Holding Company, a
mutual insurance holding company. All owners of NLIC contracts,
including the Contracts, are voting members of National Life Holding
Company. NLIC is authorized to transact life insurance and annuity
business in Vermont and 50 other jurisdictions. For purposes of the
Act, NLIC is the depositor and sponsor of the Accounts as those terms
have been interpreted by the Commission with respect to variable life
insurance and variable annuity separate accounts.
    2. NLIC established the Annuity Account on November 1, 1996 and the
Life Account on February 1, 1985, as segregated investment accounts
under Vermont law. Under Vermont law, the assets of each Account
attributable to the Contracts through which interests in that Account
are issued are owned by NLIC but are held separately from all other
assets of NLIC for the benefit of the owners of, and the persons
entitled to payment under, those Contracts. Consequently, such assets
in each Account equal to the reserves and other liabilities with
respect to such Account are not chargeable with liabilities arising out
of any other business that NLIC may conduct. Income, gains and losses,
realized and unrealized, from assets allocated to each Account are
credited to or charged against that Account without regard to the other
income, gains or losses of NLIC. Each Account is a ``separate account''
as defined by Rule 0-1(e) under the Act (File No. 811-08015 for the
Annuity Account and File No. 811-09044 for the Life Account).
    3. The Annuity Account is divided into forty-nine subaccounts. Each
subaccount invests exclusively in a corresponding series of one of
thirteen management investment companies. The assets of the Annuity
Account support variable annuity contracts, and interests in the
Account offered through the Contracts have been registered under the
Securities Act of 1933, as amended (``1933 Act'') on Form N-4 (File No.
333-19583).
    4. The Life Account is divided into one hundred and twenty-nine
subaccounts. Each subaccount invests exclusively in shares representing
an interest in a corresponding series of one of thirteen management
investment companies. The assets of the Life Account support variable
life insurance contracts, and interests in this Account offered through
the Contracts have been registered under the 1933 Act on Form N-6 (File
Nos. 33-91938, 333-44723, and 333-67003).
    5. The Sentinel Variable Products Trust was organized as a business
trust in Delaware on March 14, 2000, and is currently registered under
the Act as an open-end diversified management investment company. It is
a series investment company as defined by Rule 18f-2 under the Act.
    6. The Sentinel Fund's investment advisor, Sentinel Asset
Management, Inc. (``SAM''), is an affiliated person of NLIC because it
is controlled by NLIC.
    7. The Variable Insurance Products Fund II was created under an
initial declaration of trust dated March 21, 1988, and is currently
registered under the Act as an open-end management investment company.
It is a series investment company as defined by Rule 18f-2 under the
Act.
    8. The DWS Investments VIT Funds was organized on January 18, 1996,
under the laws of the Commonwealth of Massachusetts, and is currently
registered under the Act as an open-end management investment company.
SVIT

is a series investment company as defined by Rule 18f-2 under the Act.
    9. Neither NLIC nor the Accounts are affiliated with the Fidelity
Fund or the DWS Fund. In consideration for administrative services
provided by NLIC to the Fidelity and DWS Funds, NLIC is paid an annual
fee of 0.05% and 0.13%, respectively, of each fund's average net assets
that are attributable to the Accounts.
    10. The Contracts are flexible premium variable life insurance
Contracts and individual flexible premium deferred variable annuity
Contracts. The Contracts provide for the accumulation of values on a
variable basis, fixed basis, or both, during the accumulation period,
and provide settlement or annuity payment options on a fixed basis. In
each of the prospectuses for the Contracts, NLIC reserves the right to
substitute shares of one series of an investment company for shares of
another series, including a series of a different investment company.
    11. Contract owners may transfer among the subaccounts of the
Variable Account and, subject to certain limitations, among the
Variable Account, the fixed account and the guaranteed accounts.
Contract owners may transfer among the subaccounts of the Life Account
and between the Life Account and NLIC's general account, where
available. Currently there is no charge for transfers. However, NLIC
reserves the right to assess a $25 charge for each transfer in excess
of twelve in any Contract year. Each series of an investment company in
which a subaccount invests may also impose its own redemption fees.
    12. NLIC proposes to substitute (a) The Fidelity Fund, which is
currently offered as an investment option, for the Sentinel Fund in the
Annuity Account and the VariTrak and Sentinel Estate Provider products
of the Life Account and (b) the DWS Fund, which is currently offered as
an investment option, for the Sentinel Fund in the Sentinel Benefit
Provider product of the Life Account. NLIC believes that by making the
proposed substitution in each of the Accounts they can better serve the
interests of the Contracts owners.
    13. The investment objective and principal investment strategies of
each of the Sentinel Fund, the Fidelity Fund and the DWS Fund are as
follows:

----------------------------------------------------------------------------------------------------------------
            Fund                        Objective                            Principal strategies
----------------------------------------------------------------------------------------------------------------
Sentinel Fund..............  Seeks to match, as closely as    Invests at all times at least 80% of its total
                              possible before expenses, the    assets in the common stocks of the companies that
                              performance of the S&P 500/      comprise the Index.
                              Citigroup Growth Index          Normally intends to invest substantially all its
                              (``Index''), by investing in     total assets in these common stocks, in
                              common stocks of the companies   approximately the same weightings as the Index.
                              comprising the Index in         May hold up to 20% of its assets in money market
                              approximately the same           instruments and stock index options and futures,
                              weightings as the Index.         which it intends to buy, if at all, only in
                                                               anticipation of buying stocks. The Fund may not
                                                               purchase or sell derivative instruments if, as a
                                                               result, the aggregate initial margin and options
                                                               premiums required to establish these positions
                                                               exceed 5% of the Fund's total assets.
Fidelity Fund..............  Seeks investment results that    Normally invests at least 80% of assets in common
                              correspond to the total return   stocks included in the S&P 500.
                              of common stocks publicly       May buy and sell futures contracts, swaps, and
                              traded in the United States,     exchange traded funds, to increase or decrease
                              as represented by the S&P 500.   the Fund's exposure to changing security prices
                                                               or other factors that affect security values. The
                                                               Fund will not purchase any option if, as a
                                                               result, more than 5% of its total assets would be
                                                               invested in option premiums. Under normal
                                                               conditions, the Fund will not enter into any
                                                               futures contract, option, or swap agreement if,
                                                               as a result, the sum of (i) the current value of
                                                               assets hedged in the case of strategies involving
                                                               the sale of securities, and (ii) the current
                                                               value of the indices or other instruments
                                                               underlying the fund's other futures, options, or
                                                               swaps positions, would exceed 35% of the Fund's
                                                               total assets. These limitations do not apply to
                                                               options attached to, or acquired or traded
                                                               together with their underlying securities, and do
                                                               not apply to securities that incorporate features
                                                               similar to futures, options or swaps.
                                                              Lends securities to earn income for the Fund.
DWS Fund...................  Seeks to replicate, as closely   Investments at least 80% of its assets in the
                              as possible, before the          securities of the companies included in the
                              deduction of expenses, the       Standard & Poor's 500 Composite Stock Price Index
                              performance of the S&P 500.      (``S&P 500 Index'') and derivative instruments
                                                               such as futures contracts and options, relating
                                                               to the benchmark.
                                                              May not invest more than 15% of assets in options
                                                               on securities indices and may not invest more
                                                               than 5% of assets in futures on securities
                                                               indices or on options on futures.
                                                              Invests in a statistically selected sample of the
                                                               securities found in the S&P 500 Index, using a
                                                               process known as ``optimization.''
                                                              May exclude or remove any S&P stock if its
                                                               investment advisor believes that the stock is
                                                               illiquid or that the merit of the investment has
                                                               been impaired by financial conditions or other
                                                               extraordinary events.
                                                              May purchase a stock not included in the S&P 500
                                                               Index when it is believed to be a cost-efficient
                                                               way of approximating the S&P 500 Index's
                                                               performance.
                                                              May hold assets in short-term debt securities or
                                                               money market instruments for liquidity purposes.
                                                              My lend its investment securities up to 30% of its
                                                               total assets.
----------------------------------------------------------------------------------------------------------------

    14. Projected advisory fees and expense ratios for the Fidelity
Fund and DWS Fund are lower than the advisory fees and net expense
ratios of the Sentinel Fund as of December 31, 2005.

                                              Expense Ratios for the Twelve Months Ended December 31, 2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Total annual       Waivers and       New annual
                    Fund                       Management fee       12b-1 fee      Other expenses     expense ratio    reimbursements     expense ratio
                                                  (percent)                           (percent)         (percent)         (percent)         (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sentinel Fund...............................              0.30  ................              1.59              1.89           \1\1.29              0.60
Fidelity Fund...............................              0.10              0.25              0.00              0.35  ................          \2\ 0.35
DWS Fund....................................              0.19  ................              0.15              0.34           \3\0.06             0.28
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ SAM and/or an affiliate has agreed to waive fees and/or reimbursement expenses so that the net annual expense ratio of the Sentinel Fund, after
  expense offsets, is no more than 0.60% through December 31, 2006.
\2\ Fidelity management & Research Company (``FMR'') has contractually agreed to reimburse the Fidelity Fund to the extent that total operating expenses
  (excluding interest, taxes, certain securities lending costs, brokerage commissions and extraordinary expenses) as a percentage of average net assets
  exceed 0.35%. The expense limitation may not be increased without approval of the Fidelity Fund's shareholders and board of trustees. Therefore the
  expense limit is required by contact and is not voluntary on the Fidelity Fund manager's part.
\3\ Effective September 19, 2005, the DWS Fund's advisor contractually agreed to waive its fees and/or reimbursement expenses to the extent necessary to
  limit all expenses to 0.28% for Class A Shares until April 30, 2009.

    15. The Applicants note that the primary differences between the
Sentinel Fund and the Fidelity Fund are that (1) The Fidelity Fund
seeks to match the S&P 500 index, while the Sentinel Fund seeks to
match only the Citigroup Growth portion of the S&P 500 Index and (2)
the Fidelity Fund may lend securuities while the Sentinel Fund does
not. Applicants state the primary difference between the Sentinel Fund
and the DWS Fund are that (1) The DWS Fund seeks to match the S&P 500
Index, while the Sentinel Fund seeks to match only the Citigroup Growth
portion of the S&P 500 Index, (2) the DWS Fund may invest in securities
other than those included in the S&P 500 Index under certain
cirucmstances in which the Sentinel Fund could not and (3) DWS Fund may
lend securities, while the Sentinel Fund does not. While there are some
differences in these strategies, NLIC believes that the Fidelity Fund
and the DWS Fund offer an investment strategy that is sufficiently
similar to the Sentinel Fund considering the benefits of the proposed
substitution.
    16. Applicants state that the Fidelity and DWS Funds each have
significantly more assets than the Sentinel Fund. In addition, each of
the Fidelity and DWS Funds has also significantly outperformed the
Sentinel Fund in the one and three year peiods ended June 30, 2006 as
well as the period since the inception of the Sentinel fund.

                                                             Performance as of June 30, 2006
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Since
                          Fund                                1-year          3-year          5-year          10-year        inception    Since 11/30/00
                                                             (percent)       (percent)       (percent)       (percent)       (percent)       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sentinel Fund...........................................            3.81            6.42           -0.26           (\1\)           -3.36            3.36
Fidelity Fund...........................................            8.57           11.04            2.27            8.05           10.26            8.76
DWS Fund................................................            8.34           10.91            2.18           (\1\)            4.64            0.76
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Not applicable.

    17. Supplements to the prospectus will advise Contract owners that
they are permitted from the date of the supplement until the date of
the proposed substitution to make transfers of all amounts under the
Contracts invested in the Sentinel Fund subaccount to another
subaccount available under the Contracts without those transfers
counting as ``free'' transfers permitted under the Contracts at any
time prior to the substitution.
    18. The proposed substitution will take place at relative net asset
value with no change in the amount of any Contract owner's account
value or death benefit or in the dollar value of any Account. Contract
owners will not incur any fees or charges as a result of the proposed
substitutions, nor will their rights or NLIC's obligations under the
Contracts be altered in any way. All expenses incurred in connection
with the proposed substitution is not expected to impose any tax
liability on Contract owners. The proposed substitution will not cause
the Contract fees and charges currently being paid by Contract owners
to be greater than those being charged at the time of the substitution.
The proposed substituting will not be treated as a transfer or exchange
for purposes of assessing transfer charges or for determining the
number of remaining ``free'' transfers or exchanges in a Contract year.
    19. Within five days of the substitution, Contract owners affected
by the substitution will be sent a written notice informing them that
the substitution was carried out and that for the next 30 days they may
make transfers of all accumulated or contract value under a Contract
invested in the Fidelity Fund or DWS Fund subaccount, as applicable, on
the date of the notice to another subaccount available under the
Contract without the transfers counting as part of the limited number
of transfers permitted in a Contract year free of charge. The notice as
delivered in certain states also may explain that, under the insurance
regulations in those states, Contract owners who are affected by the
substitutions may exchange their Contracts for fixed-benefit life
insurance contracts or annuity contracts, as applicable, issued by NLIC
during the 60 days following the proposed substitutions. A current
prospectus for the Fidelity Fund or DWS Fund, as applicable, each of
which is a currently available investment option under the applicable
Contract, will precede or accompany the notice.
    20. NLIC will not receive, for three years from the date of the
substitution, any direct or indirect benefits from the Fidelity Fund or
the DWS Fund or their respective advisors or underwriters or any of
their respective affiliates in connection with the assets attributable
to the Contracts, which in the aggregate (including, without
limitation, all advisory, 12b-1, shareholder servicing, administration,
marketing support or similar fees) is higher than the benefit it would
have received from the

Sentinel Fund or its advisor, underwriter or affiliates absent any
waivers.
    21. Applicants state that the substitution and selection of the
Fidelity Fund and the DWS Fund was not motivated by any financial
consideration paid or to be paid to NLIC or its affiliates by the
Fidelity Fund or the DWS Fund or their respective advisor, underwriters
or affiliates.

Applicants' Legal Analysis

    1. Applicants state that the proposed substitution is a
substitution within the meaning of Section 26(c) of the Act, which
requires the depositor of a registered unit investment trust holding
the securities of a single issuer to receive commission approval before
substituting the securities held by the trust.
    2. Applicants note that the prospectuses disclose that the
Contracts expressly reserve for NLIC the right, subject to compliance
with applicable law, to substitute shares of one series of an
investment company held by a subaccount for another series, including a
series of a different investment company, when, among other things, in
NLIC's judgment the investment in such series is inappropriate.
    3. Applicants assert that the proposed substitution will provide
Contract owners a sufficiently similar investment strategy considering
the opportunity for lower expenses and greater economies of scale. In
addition, Applicants generally submit that the proposed substitution
meets the standards that the Commission and its staff have applied to
similar substitutions that have been approved in the past.
    4. Applicants anticipate that Contract owners will be at least as
well off with the proposed array of subaccounts offered after the
proposed substitution as they have been with the array of subaccounts
offered prior to the substitution. Applicants' assert that the proposed
substitution retains for Contract owners the investment flexibility
that is a central feature of the Contracts.
    5. Applicants assert that the proposed substitution is not the type
of substitution which Section 26(c) was designed to prevent. Unlike
traditional unit investment trusts where a depositor could only
substitute an investment security in a manner that permanently affected
all the investors in the trust, the Contracts provide each Contract
owner with the right to exercise her or his own judgment and transfer
accumulation and contract values into other subaccounts.
    6. Applicants note that the Contracts will offer Contract owners an
opportunity to transfer amounts out of the Sentinel Fund, prior to the
substitution, or the Fidelity Fund or DWS Fund, as applicable, after
the substitution, into any of the remaining subaccounts without cost or
other disadvantage. The proposed substitution, therefore, will not
result in the type of costly forced redemption which Section 26(c) was
designed to prevent.
    7. The Applicants note that within five days after the proposed
substitution, Contract owners affected by the substitution will be sent
a written notice informing them that the substitution was carried out
and that, for the next 30 days, they may make one transfer of all
accumulated or contract value under a Contract invested in the Fidelity
Fund or the DWS Fund, as applicable, on the date of the notice to
another subaccount available under their Contract without the transfer
counting as one of a limited number of transfers permitted in a
Contract year free of charge.
    8. Applicants state the proposed substitution in also unlike the
type of substitutions which Section 26(c) was designed to prevent in
that by purchasing a Contract, Contract owners select much more than a
particular investment company in which to invest their account values.
They also select the specific type of insurance coverage offered by
NLIC under their Contract as well as numerous other rights and
privileges set forth in the Contract. Contract owners may also have
considered NLIC's size, financial condition, type and its reputation
for service in selecting their Contract. These factors will not change
as a result of the proposed substitution.

Conclusion

    Applicants submit that, for all the reasons stated above, the
proposed substitution is consistent with the protection of investors
and the purposes fairly intended by the policy and provisions of the
Act.

    For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06-7641 Filed 9-13-06; 8:45 am]

BILLING CODE 8010-01-M