82_FR_15834 82 FR 15774 - Transamerica Life Insurance Company, et al.

82 FR 15774 - Transamerica Life Insurance Company, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 60 (March 30, 2017)

Page Range15774-15778
FR Document2017-06247

Federal Register, Volume 82 Issue 60 (Thursday, March 30, 2017)
[Federal Register Volume 82, Number 60 (Thursday, March 30, 2017)]
[Notices]
[Pages 15774-15778]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-06247]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32574; File No. 812-14490]


Transamerica Life Insurance Company, et al.

March 24, 2017.
AGENCY:  Securities and Exchange Commission (``SEC'' or 
``Commission'').

ACTION:  Notice.

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

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

Applicants:  Transamerica Life Insurance Company (``TLIC''), 
Transamerica Financial Life Insurance Company (``TFLIC'') (each a 
``Company'' and together, the ``Companies''), Separate Account VA B, 
and Separate

[[Page 15775]]

Account VA BNY (each, an ``Account'' and together, the ``Accounts''). 
The Companies and the Accounts collectively are referred to herein as 
the ``Applicants.''

Summary of Application:  Applicants seek an order pursuant to Section 
26(c) of the 1940 Act, approving the substitution of shares issued by 
certain series of Transamerica Series Trust (the ``Replacement Funds'') 
for shares of certain registered investment companies currently held by 
sub-accounts of the Accounts (the ``Existing Funds''), to support 
certain variable annuity contracts (collectively, the ``Contracts'') 
issued by the Companies.

Filing Date:  The application was filed on June 15, 2015, and was 
amended on December 8, 2015, July 1, 2016, and November 14, 2016.

Hearing or Notification of Hearing:  An order granting the requested 
relief 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, 
personally or by mail. Hearing requests should be received by the 
Commission by 5:30 p.m. on April 18, 2017 and should be accompanied by 
proof of service on the Applicants in the form of an affidavit or, for 
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, 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 
Commission's Secretary.

ADDRESSES:  Commission: Secretary, SEC, 100 F Street NE., Washington, 
DC 20549-1090. Applicants: Alison C. Ryan, Associate General Counsel, 
Transamerica, 1150 South Olive Street, T-27-01, Los Angeles, CA 90015.

FOR FURTHER INFORMATION CONTACT:  David J. Marcinkus, Branch Chief, at 
(202) 551-6821 (Division of Investment Management, Chief Counsel's 
Office).

SUPPLEMENTARY INFORMATION:  The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
Applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. TLIC is the depositor of Account VA B. TFLIC is the depositor of 
Account VA BNY. Each Company is an indirect, wholly-owned subsidiary of 
AEGON, N.V.
    2. Each Account is a ``separate account'' as defined by Rule 0-1(e) 
under the 1940 Act, and each is registered under the 1940 Act as a unit 
investment trust. Each Account is divided into sub-accounts, which 
reflect the investment performance of certain registered investment 
companies, including Transamerica Series Trust. The Accounts are 
administered and accounted for as part of the general business of the 
Companies. The application sets forth the registration statement file 
numbers for the security interests under the Contracts and the 
Accounts.
    3. The Contracts are individual and group variable annuity 
contracts. Each of the prospectuses for the Contracts discloses that 
the issuing Company reserves the right, subject to compliance with 
applicable law, to substitute shares of another registered open-end 
management investment company for shares of a registered open-end 
management investment company held by a sub-account of an Account.
    4. Transamerica Series Trust is an open-end management investment 
company of the series type that is registered with the Commission under 
the 1940 Act (File No. 811-04419).\1\ Shares of the series are 
registered under the Securities Act of 1933 (File No. 033-00507) and 
are sold to the separate accounts of life insurance companies to fund 
benefits under variable life policies or variable annuity contracts and 
to certain affiliated asset allocation funds.
---------------------------------------------------------------------------

    \1\ Effective May 1, 2008, Transamerica Series Trust changed its 
name from AEGON/Transamerica Series Trust.
---------------------------------------------------------------------------

    5. Transamerica Asset Management, Inc. (``TAM''), an investment 
adviser that is registered with the Commission, has overall 
responsibility for the management of each Transamerica Series Trust 
Replacement Fund. TAM delegates to a sub-adviser the responsibility for 
day-to-day management of the investments of each Transamerica Series 
Trust Replacement Fund, subject to TAM's oversight. TAM may, in the 
future, determine to provide the day-to-day management of any 
Transamerica Series Trust Replacement Fund without the use of a sub-
adviser.
    6. Applicants propose, as set forth below, to substitute shares of 
the Replacement Funds for shares of the Existing Funds 
(``Substitutions'') to fund the Contracts:

------------------------------------------------------------------------
             Existing fund                       Replacement fund
------------------------------------------------------------------------
Wanger USA.............................  Transamerica T. Rowe Price
                                          Small Cap VP (Initial Class).
Invesco V.I. Value Opportunities Fund    Transamerica Barrow Hanley
 (Series II).                             Dividend Focused VP (Initial
                                          Class).
------------------------------------------------------------------------

    7. The Applicants believe that the Replacement Funds have 
investment objectives, policies and risk profiles, as described in 
their prospectuses, that are substantially the same as, or sufficiently 
similar to, the corresponding Existing Funds to make those Replacement 
Funds appropriate candidates as substitutes. Applicants also state that 
the investment objectives and investment strategies of each Replacement 
Fund are similar to the corresponding Existing Fund, or each 
Replacement Fund's underlying portfolio construction and investment 
results are similar to those of the Existing Fund, and therefore the 
fundamental objectives, risk, and performance expectations of those 
Contract owners with interests in sub-accounts of the Existing Funds 
will continue to be met after the Substitutions.
    8. The investment objectives of each Existing Fund and its 
corresponding Replacement Fund are set forth below. Additional 
information for each Existing Fund and Replacement Fund, including 
principal investment strategies, principal risks, and comparative 
performance history, can be found in the application.

[[Page 15776]]



------------------------------------------------------------------------
             Existing fund                       Replacement fund
------------------------------------------------------------------------
Wanger USA seeks long-term capital       Transamerica T. Rowe Price
 appreciation.                            Small Cap VP seeks long-term
                                          growth of capital by investing
                                          primarily in common stocks of
                                          small growth companies.
Invesco V.I. Value Opportunities Fund's  Transamerica Barrow Hanley
 investment objective is long-term        Dividend Focused VP seeks
 growth of capital.                       total return gained from the
                                          combination of dividend yield,
                                          growth of dividends and
                                          capital appreciation.
------------------------------------------------------------------------

    9. Applicants state that the Substitutions are designed to allow 
Contract owners to continue their investment in similar or better 
investment options without interruption and at no additional cost to 
them. Contract owners with sub-account balances invested through the 
Accounts in shares of the Replacement Funds will have the same or lower 
total expense ratios taking into account fund expenses (including Rule 
12b-1 fees, if any). With respect to all of the proposed Substitutions, 
the combined management fee and Rule 12b-1 fees paid by the Replacement 
Fund are the same or lower than those of the corresponding Existing 
Fund. The application sets forth the fees and expenses of each Existing 
Fund and its corresponding Replacement Fund in greater detail.
    10. Applicants represent that as of the effective date of the 
Substitutions (``Effective Date'') shares of the Existing Funds will be 
redeemed for cash. The Companies, on behalf of each Existing Fund sub-
account of each relevant Account, will simultaneously place a 
redemption request with each Existing Fund and a purchase order with 
the corresponding Replacement Fund so that the purchase of Replacement 
Fund shares will be for the exact amount of the redemption proceeds. 
Thus, Contract values will remain fully invested at all times.
    11. The Substitutions will take place at relative net asset value 
(in accordance with Rule 22c-1 under the 1940 Act) with no change in 
the amount of any affected Contract owner's contract value, cash value, 
accumulation value, account value or death benefit or in dollar value 
of his or her investment in the applicable Accounts.\2\ No brokerage 
commissions or other fees will be paid by either the Existing Funds or 
the Replacement Funds or by the affected Contract owners in connection 
with the Substitutions.
---------------------------------------------------------------------------

    \2\ Applicants state that, because the Substitutions will occur 
at relative net asset value, and the fees and charges under the 
Contracts will not change as a result of the Substitutions, the 
benefits offered by the guarantees under the Contracts will be the 
same immediately before and after the Substitutions. Applicants also 
state that what effect the Substitutions may have on the value of 
the benefits offered by the Contract guarantees would depend, among 
other things, on the relative future performance of the Existing 
Funds and Replacement Funds, which Applicants cannot predict. 
Nevertheless, Applicants note that at the time of the Substitutions, 
the Contracts will offer a comparable variety of investment options 
with as broad a range of risk/return characteristics.
---------------------------------------------------------------------------

    12. The affected Contract owners will not incur any fees or charges 
as a result of the Substitutions nor will their rights or the 
Companies' obligations under the Contracts be altered in any way. The 
Companies or their affiliates will pay all expenses and transaction 
costs of the Substitutions, including brokerage, legal, accounting, and 
other fees and expenses. The Substitutions will not cause the Contract 
fees and charges currently being paid by affected Contract owners to be 
greater after the Substitutions than before the Substitutions. 
Moreover, the Substitutions will not impose any tax liability on 
affected Contract owners.
    13. As described in the application, after notification of the 
Substitution and for 30 days after the Effective Date, affected 
Contract owners may reallocate the sub-account value of an Existing 
Fund to any other investment option available under their Contract 
without incurring any transfer charges.
    14. All Contract owners affected by the Substitutions will be 
notified of this application by means of supplements to the Contract 
prospectuses at least 30 days prior to the Effective Date. The notice 
will advise Contract owners that from the date of the notice until the 
Effective Date, owners are permitted to make one transfer of Contract 
value out of the Existing Fund sub-account to one or more other sub-
accounts without the transfer (or exchange) being treated as one of a 
limited number of transfers (or exchanges) permitted without a transfer 
charge. Among other information, the notice will inform affected 
Contract owners that the Companies will not exercise any rights 
reserved under any Contract to impose additional restrictions on 
transfers until at least 30 days after the Effective Date.
    15. If affected Contract owners reallocate account value during 
this 60 day period, there will be no charge for the reallocation of 
accumulated value from the Existing Fund sub-accounts and the 
reallocation will not count as a transfer when imposing any applicable 
restriction or limit under the Contract on transfers. Additionally, all 
affected Contract owners will be sent prospectuses of the applicable 
Replacement Funds at least 30 days before the Effective Date.
    16. Within five (5) business days after the Effective Date, 
affected Contract owners will be sent a written confirmation, which 
will include confirmation that the Substitutions were carried out as 
previously notified, a restatement of the information set forth in the 
pre-Substitution notice and values of the Contract owner's position in 
the Existing Fund before the Substitution and the Replacement Fund 
after the Substitution.

Applicants' Legal Analysis

    1. Applicants request that the Commission issue an order pursuant 
to Section 26(c) of the 1940 Act approving the Substitutions. Section 
26(c) requires the depositor of a registered unit investment trust 
holding the securities of a single issuer to obtain Commission approval 
before substituting the securities held by the trust. Section 26(c) 
requires the Commission to issue such an order if the evidence 
establishes that the substitution is consistent with the protection of 
investors and the purposes fairly intended by the policy and provisions 
of the 1940 Act.
    2. Applicants submit that the terms and conditions of the 
Substitutions meet the standards set forth in Section 26(c) and assert 
that the replacement of an Existing Fund with the corresponding 
Replacement Fund is consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the l940 Act. 
As described in the application, for a period of two years following 
the Effective Date, the Companies or their affiliates will reimburse 
any Contract owner affected by the proposed Substitutions involving 
Transamerica Series Trust Replacement Funds and whose sub-account 
invests in the Replacement Fund to the extent a Replacement Fund's net 
annual operating expenses exceeds the net annual operating expenses of 
the corresponding Existing Fund.

[[Page 15777]]

Applicants further assert that each Replacement Fund has similar 
investment objectives and investment strategies as the corresponding 
Existing Fund, or each Replacement Fund's underlying portfolio 
construction and investment results are similar to those of the 
corresponding Existing Fund. Accordingly, Applicants believe that the 
fundamental investment objectives, risk and performance expectations of 
the Contract owners will continue to be met after the Substitutions.
    3. Applicants also maintain that it is in the best interests of the 
Contract owners to substitute the Replacement Fund for its 
corresponding Existing Fund. Applicants anticipate that the 
substitution of an Existing Fund with the corresponding Replacement 
Fund will result in a Contract that is administered and managed more 
efficiently, and one that is more competitive with other variable 
products. The rights of affected Contract owners and the obligations of 
the Companies under the Contracts will not be altered by the 
Substitutions. Affected Contract owners will not incur any additional 
tax liability or any additional fees and expenses as a result of the 
Substitutions.
    4. Each of the prospectuses for the Contracts discloses that the 
issuing Company reserves the right, subject to compliance with 
applicable law, to substitute shares of another registered open-end 
management investment company for shares of an open-end management 
investment company held by a sub-account of an Account.
    5. Applicants also assert that none of the proposed Substitutions 
is of the type that Section 26(c) was designed to prevent. Unlike a 
traditional unit investment trust where a depositor could only 
substitute an investment security in a manner which permanently 
affected all the investors in the trust, the Contracts provide each 
Contract owner with the right to exercise his or her own judgment and 
transfer account values into other sub-accounts. Moreover, the 
Contracts will offer affected Contract owners the opportunity to 
transfer amounts out of the affected sub-accounts into any of the 
remaining sub-accounts without cost or other disadvantage. The 
Substitution, therefore, will not result in the type of costly forced 
redemptions that Section 26(c) was designed to prevent. Applicants also 
maintain that the Substitutions are 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 registered 
management open-end investment company in which to invest their account 
values. They also select the specific type of insurance coverage 
offered by the Companies under their Contracts as well as other rights 
and privileges set forth in the Contracts.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. The proposed Substitutions will not be effected unless the 
Companies determine that: (a) The Contracts allow the substitution of 
shares of registered open-end investment companies in the manner 
contemplated by the application; (b) the Substitutions can be 
consummated as described in the application under applicable insurance 
laws; and (c) any regulatory requirements in each jurisdiction where 
the Contracts are qualified for sale have been complied with to the 
extent necessary to complete the Substitutions.
    2. The Companies or their affiliates will pay all expenses and 
transaction costs of the Substitutions, including legal and accounting 
expenses, any applicable brokerage expenses and other fees and 
expenses. No fees or charges will be assessed to the Contract owners to 
effect the Substitutions.
    3. The proposed Substitutions will be effected at the relative net 
asset values of the respective shares in conformity with Section 22(c) 
of the 1940 Act and Rule 22c-1 thereunder without the imposition of any 
transfer or similar charges by Applicants. The Substitutions will be 
effected without change in the amount or value of any Contracts held by 
affected Contract owners.
    4. The proposed Substitutions will in no way alter the tax 
treatment of affected Contract owners in connection with their 
Contracts, and no tax liability will arise for affected Contract owners 
as a result of the Substitutions.
    5. The rights or obligations of the Companies under the Contracts 
of affected Contract owners will not be altered in any way.
    6. Affected Contract owners will be permitted to make at least one 
transfer of Contract value from the sub-account investing in the 
Existing Fund (before the Effective Date) or the Replacement Fund 
(after the Effective Date) to any other available investment option 
under the Contract without charge for a period beginning at least 30 
days before the Effective Date through at least 30 days following the 
Effective Date. Except as described in any market timing/short-term 
trading provisions of the relevant prospectus, the Company will not 
exercise any right it may have under the Contract to impose 
restrictions on transfers between the sub-accounts under the Contracts, 
including limitations on the future number of transfers, for a period 
beginning at least 30 days before the Effective Date through at least 
30 days following the Effective Date.
    7. All affected Contract owners will be notified, at least 30 days 
before the Effective Date about: (a) The intended substitution of 
Existing Funds with the Replacement Funds; (b) the intended Effective 
Date; and (c) information with respect to transfers as set forth in 
Condition 6 above. In addition, the Companies will deliver to all 
affected Contract owners, at least 30 days before the Effective Date, a 
prospectus for each applicable Replacement Fund.
    8. The Companies will deliver to each affected Contract owner 
within five (5) business days of the Effective Date a written 
confirmation which will include: (a) A confirmation that the 
Substitutions were carried out as previously notified; (b) a 
restatement of the information set forth in the pre-Substitution 
notice; and (c) values of the Contract owner's positions in the 
Existing Fund before the Substitution and the Replacement Fund after 
the Substitution.
    9. After the Effective Date the Applicants agree not to change a 
Replacement Fund's sub-adviser without first obtaining shareholder 
approval of either (a) the sub-adviser change or (b) the parties' 
continued ability to rely on their manager-of-managers exemptive order.
    10. For two years following the Effective Date the net annual 
expenses of each Replacement Fund that is a Transamerica Series Trust 
Fund will not exceed the net annual expenses of the corresponding 
Existing Fund as of the fund's most recent fiscal year. To achieve this 
limitation, the Replacement Fund's investment adviser will waive fees 
or reimburse the Replacement Fund in certain amounts to maintain 
expenses at or below the limit. Any adjustments will be made at least 
on a quarterly basis. In addition, the Companies will not increase the 
Contract fees and charges, including asset based charges such as 
mortality expense risk charges deducted from the sub-accounts that 
would otherwise be assessed under the terms of the Contracts for a 
period of at least two years following the Effective Date.


[[Page 15778]]


    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-06247 Filed 3-29-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    15774                        Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices

                                                    fees and expenses as a result of the                    applicable brokerage expenses, and                    Contract owner’s position in the (i)
                                                    Substitutions.                                          other fees and expenses. No fees or                   Existing Fund before the Substitution,
                                                       4. Each of the prospectuses for the                  charges will be assessed to the Contract              and (ii) Replacement Fund after the
                                                    Contracts discloses that the issuing                    owners to effect the Substitutions.                   Substitution.
                                                    Company reserves the right, subject to                     3. The proposed Substitutions will be                 9. After the Effective Date, the
                                                    compliance with applicable law, to                      effected at the relative net asset values             Applicants agree not to change a
                                                    substitute shares of another registered                 of the respective shares in conformity                Replacement Fund’s sub-adviser
                                                    open-end management investment                          with Section 22(c) of the 1940 Act and                without obtaining shareholder approval
                                                    company for shares of an open-end                       Rule 22c–1 thereunder without the                     of either (a) the sub-adviser change or
                                                    management investment company held                      imposition of any transfer or similar                 (b) the parties’ continued ability to rely
                                                    by a sub-account of an Account.                         charges by Applicants. The                            on their manager-of-managers
                                                       5. Applicants also assert that none of               Substitutions will be effected without                exemptive order.
                                                    the proposed Substitutions is of the type               change in the amount or value of any                     10. For two years following the
                                                    that Section 26(c) was designed to                      Contracts held by affected Contract                   Effective Date the net annual expenses
                                                    prevent. Unlike a traditional unit                      owners.                                               of each Replacement Fund that is a
                                                    investment trust where a depositor                         4. The proposed Substitutions will in              Transamerica Series Trust Fund will not
                                                    could only substitute an investment                     no way alter the tax treatment of                     exceed the net annual expenses of the
                                                    security in a manner which                              affected Contract owners in connection                corresponding Existing Fund as of the
                                                    permanently affected all the investors in               with their Contracts, and no tax liability            fund’s most recent fiscal year. To
                                                    the trust, the Contracts provide each                   will arise for affected Contract owners               achieve this limitation, the Replacement
                                                    Contract owner with the right to                        as a result of the Substitutions.                     Fund’s investment adviser will waive
                                                    exercise his or her own judgment and                       5. The rights or obligations of the
                                                                                                                                                                  fees or reimburse the Replacement Fund
                                                    transfer account values into other sub-                 Companies under the Contracts of
                                                                                                                                                                  in certain amounts to maintain expenses
                                                    accounts. Moreover, the Contracts will                  affected Contract owners will not be
                                                                                                                                                                  at or below the limit. Any adjustments
                                                    offer affected Contract owners the                      altered in any way.
                                                                                                               6. Affected Contract owners will be                will be made at least on a quarterly
                                                    opportunity to transfer amounts out of                                                                        basis. In addition, the Insurance
                                                    the affected sub-accounts into any of the               permitted to make at least one transfer
                                                                                                            of Contract value from the sub-account                Companies will not increase the
                                                    remaining sub-accounts without cost or                                                                        Contract fees and charges, including
                                                    other disadvantage. The Substitution,                   investing in the Existing Fund (before
                                                                                                            the Effective Date) or the Replacement                asset based charges such as mortality
                                                    therefore, will not result in the type of
                                                                                                            Fund (after the Effective Date) to any                expense risk charges deducted from the
                                                    costly forced redemptions that Section
                                                                                                            other available investment option under               sub-accounts that would otherwise be
                                                    26(c) was designed to prevent.
                                                                                                            the Contract without charge for a period              assessed under the terms of the
                                                    Applicants also maintain that the
                                                                                                            beginning at least 30 days before the                 Contracts for a period of at least two
                                                    Substitutions are unlike the type of
                                                                                                            Effective Date through at least 30 days               years following the Effective Date.
                                                    substitutions which Section 26(c) was
                                                    designed to prevent in that by                          following the Effective Date. Except as                 For the Commission, by the Division of
                                                    purchasing a Contract, Contract owners                  described in any market timing/short-                 Investment Management, under delegated
                                                                                                            term trading provisions of the relevant               authority.
                                                    select much more than a particular
                                                    registered management open-end                          prospectus, the Company will not                      Eduardo A. Aleman,
                                                    investment company in which to invest                   exercise any right it may have under the              Assistant Secretary.
                                                    their account values. They also select                  Contract to impose restrictions on                    [FR Doc. 2017–06246 Filed 3–29–17; 8:45 am]
                                                    the specific type of insurance coverage                 transfers between the sub-accounts                    BILLING CODE 8011–01–P
                                                    offered by the Companies under their                    under the Contracts, including
                                                    Contracts as well as other rights and                   limitations on the future number of
                                                    privileges set forth in the Contract.                   transfers, for a period beginning at least            SECURITIES AND EXCHANGE
                                                                                                            30 days before the Effective Date                     COMMISSION
                                                    Applicants’ Conditions                                  through at least 30 days following the
                                                      Applicants agree that any order of the                Effective Date.                                       [Investment Company Act Release No.
                                                    Commission granting the requested                          7. All affected Contract owners will be            32574; File No. 812–14490]
                                                    relief will be subject to the following                 notified, at least 30 days before the
                                                    conditions:                                             Effective Date about: (a) The intended                Transamerica Life Insurance Company,
                                                      1. The proposed Substitutions will                    substitution of Existing Funds with the               et al.
                                                    not be effected unless the Companies                    Replacement Funds; (b) the intended
                                                    determine that: (a) The Contracts allow                 Effective Date; and (c) information with              March 24, 2017.
                                                    the substitution of shares of registered                respect to transfers as set forth in                  AGENCY: Securities and Exchange
                                                    open-end investment companies in the                    Condition 6 above. In addition, the                   Commission (‘‘SEC’’ or ‘‘Commission’’).
                                                    manner contemplated by the                              Companies will deliver to all affected                ACTION: Notice.
                                                    application; (b) the Substitutions can be               Contract owners, at least 30 days before
                                                    consummated as described in the                         the Effective Date, a prospectus for each               Notice of application for an order
                                                    application under applicable insurance                  applicable Replacement Fund.                          approving the substitution of certain
                                                    laws; and (c) any regulatory                               8. The Companies will deliver to each              securities pursuant to Section 26(c) of
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    requirements in each jurisdiction where                 affected Contract owner within five (5)               the Investment Company Act of 1940, as
                                                    the Contracts are qualified for sale have               business days of the Effective Date a                 amended (the ‘‘1940 Act’’ or ‘‘Act’’).
                                                    been complied with to the extent                        written confirmation which will                       APPLICANTS: Transamerica Life
                                                    necessary to complete the Substitutions.                include: (a) A confirmation that the                  Insurance Company (‘‘TLIC’’),
                                                      2. The Companies or their affiliates                  Substitutions were carried out as                     Transamerica Financial Life Insurance
                                                    will pay all expenses and transaction                   previously notified; (b) a restatement of             Company (‘‘TFLIC’’) (each a ‘‘Company’’
                                                    costs of the Substitutions, including                   the information set forth in the pre-                 and together, the ‘‘Companies’’),
                                                    legal and accounting expenses, any                      Substitution notice; and (c) values of the            Separate Account VA B, and Separate


                                               VerDate Sep<11>2014   19:09 Mar 29, 2017   Jkt 241001   PO 00000   Frm 00090   Fmt 4703   Sfmt 4703   E:\FR\FM\30MRN1.SGM   30MRN1


                                                                                          Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices                                                          15775

                                                    Account VA BNY (each, an ‘‘Account’’                                   notification by writing to the                                 3. The Contracts are individual and
                                                    and together, the ‘‘Accounts’’). The                                   Commission’s Secretary.                                      group variable annuity contracts. Each
                                                    Companies and the Accounts                                             ADDRESSES: Commission: Secretary,                            of the prospectuses for the Contracts
                                                    collectively are referred to herein as the                             SEC, 100 F Street NE., Washington, DC                        discloses that the issuing Company
                                                    ‘‘Applicants.’’                                                        20549–1090. Applicants: Alison C.                            reserves the right, subject to compliance
                                                                                                                           Ryan, Associate General Counsel,                             with applicable law, to substitute shares
                                                    SUMMARY OF APPLICATION:    Applicants                                                                                               of another registered open-end
                                                                                                                           Transamerica, 1150 South Olive Street,
                                                    seek an order pursuant to Section 26(c)                                                                                             management investment company for
                                                                                                                           T–27–01, Los Angeles, CA 90015.
                                                    of the 1940 Act, approving the                                                                                                      shares of a registered open-end
                                                    substitution of shares issued by certain                               FOR FURTHER INFORMATION CONTACT:
                                                                                                                           David J. Marcinkus, Branch Chief, at                         management investment company held
                                                    series of Transamerica Series Trust (the                                                                                            by a sub-account of an Account.
                                                    ‘‘Replacement Funds’’) for shares of                                   (202) 551–6821 (Division of Investment
                                                    certain registered investment companies                                Management, Chief Counsel’s Office).                           4. Transamerica Series Trust is an
                                                    currently held by sub-accounts of the                                  SUPPLEMENTARY INFORMATION: The                               open-end management investment
                                                    Accounts (the ‘‘Existing Funds’’), to                                  following is a summary of the                                company of the series type that is
                                                    support certain variable annuity                                       application. The complete application                        registered with the Commission under
                                                    contracts (collectively, the ‘‘Contracts’’)                            may be obtained via the Commission’s                         the 1940 Act (File No. 811–04419).1
                                                    issued by the Companies.                                               Web site by searching for the file                           Shares of the series are registered under
                                                                                                                           number, or for an Applicant using the                        the Securities Act of 1933 (File No. 033–
                                                    FILING DATE:The application was filed                                  Company name box, at http://                                 00507) and are sold to the separate
                                                    on June 15, 2015, and was amended on                                   www.sec.gov/search/search.htm, or by                         accounts of life insurance companies to
                                                    December 8, 2015, July 1, 2016, and                                    calling (202) 551–8090.                                      fund benefits under variable life policies
                                                    November 14, 2016.                                                                                                                  or variable annuity contracts and to
                                                                                                                           Applicants’ Representations
                                                                                                                                                                                        certain affiliated asset allocation funds.
                                                    HEARING OR NOTIFICATION OF HEARING:                                      1. TLIC is the depositor of Account
                                                    An order granting the requested relief                                                                                                5. Transamerica Asset Management,
                                                                                                                           VA B. TFLIC is the depositor of Account
                                                    will be issued unless the Commission                                                                                                Inc. (‘‘TAM’’), an investment adviser
                                                                                                                           VA BNY. Each Company is an indirect,
                                                    orders a hearing. Interested persons may                                                                                            that is registered with the Commission,
                                                                                                                           wholly-owned subsidiary of AEGON,
                                                    request a hearing by writing to the                                                                                                 has overall responsibility for the
                                                                                                                           N.V.
                                                    Secretary of the Commission and                                                                                                     management of each Transamerica
                                                                                                                             2. Each Account is a ‘‘separate
                                                    serving the Applicants with a copy of                                                                                               Series Trust Replacement Fund. TAM
                                                                                                                           account’’ as defined by Rule 0–1(e)
                                                    the request, personally or by mail.                                                                                                 delegates to a sub-adviser the
                                                                                                                           under the 1940 Act, and each is
                                                    Hearing requests should be received by                                 registered under the 1940 Act as a unit                      responsibility for day-to-day
                                                    the Commission by 5:30 p.m. on April                                   investment trust. Each Account is                            management of the investments of each
                                                    18, 2017 and should be accompanied by                                  divided into sub-accounts, which reflect                     Transamerica Series Trust Replacement
                                                    proof of service on the Applicants in the                              the investment performance of certain                        Fund, subject to TAM’s oversight. TAM
                                                    form of an affidavit or, for lawyers, a                                registered investment companies,                             may, in the future, determine to provide
                                                    certificate of service. Pursuant to Rule                               including Transamerica Series Trust.                         the day-to-day management of any
                                                    0–5 under the Act, hearing requests                                    The Accounts are administered and                            Transamerica Series Trust Replacement
                                                    should state the nature of the writer’s                                accounted for as part of the general                         Fund without the use of a sub-adviser.
                                                    interest, any facts bearing upon the                                   business of the Companies. The                                 6. Applicants propose, as set forth
                                                    desirability of a hearing on the matter,                               application sets forth the registration                      below, to substitute shares of the
                                                    the reason for the request, and the issues                             statement file numbers for the security                      Replacement Funds for shares of the
                                                    contested. Persons who wish to be                                      interests under the Contracts and the                        Existing Funds (‘‘Substitutions’’) to fund
                                                    notified of a hearing may request                                      Accounts.                                                    the Contracts:

                                                                                              Existing fund                                                                               Replacement fund

                                                    Wanger USA .............................................................................................   Transamerica T. Rowe Price Small Cap VP (Initial Class).
                                                    Invesco V.I. Value Opportunities Fund (Series II) ...................................                      Transamerica Barrow Hanley Dividend Focused VP (Initial Class).



                                                      7. The Applicants believe that the                                   corresponding Existing Fund, or each                           8. The investment objectives of each
                                                    Replacement Funds have investment                                      Replacement Fund’s underlying                                Existing Fund and its corresponding
                                                    objectives, policies and risk profiles, as                             portfolio construction and investment                        Replacement Fund are set forth below.
                                                    described in their prospectuses, that are                              results are similar to those of the                          Additional information for each Existing
                                                    substantially the same as, or sufficiently                             Existing Fund, and therefore the                             Fund and Replacement Fund, including
                                                    similar to, the corresponding Existing                                 fundamental objectives, risk, and                            principal investment strategies,
                                                    Funds to make those Replacement                                        performance expectations of those                            principal risks, and comparative
                                                    Funds appropriate candidates as                                        Contract owners with interests in sub-                       performance history, can be found in
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    substitutes. Applicants also state that                                accounts of the Existing Funds will                          the application.
                                                    the investment objectives and                                          continue to be met after the
                                                    investment strategies of each                                          Substitutions.
                                                    Replacement Fund are similar to the


                                                      1 Effective May 1, 2008, Transamerica Series

                                                    Trust changed its name from AEGON/Transamerica
                                                    Series Trust.

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                                                    15776                          Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices

                                                                                      Existing fund                                                                 Replacement fund

                                                    Wanger USA seeks long-term capital appreciation .................................    Transamerica T. Rowe Price Small Cap VP seeks long-term growth of
                                                                                                                                           capital by investing primarily in common stocks of small growth com-
                                                                                                                                           panies.
                                                    Invesco V.I. Value Opportunities Fund’s investment objective is long-                Transamerica Barrow Hanley Dividend Focused VP seeks total return
                                                      term growth of capital.                                                              gained from the combination of dividend yield, growth of dividends
                                                                                                                                           and capital appreciation.



                                                       9. Applicants state that the                          commissions or other fees will be paid               and the reallocation will not count as a
                                                    Substitutions are designed to allow                      by either the Existing Funds or the                  transfer when imposing any applicable
                                                    Contract owners to continue their                        Replacement Funds or by the affected                 restriction or limit under the Contract
                                                    investment in similar or better                          Contract owners in connection with the               on transfers. Additionally, all affected
                                                    investment options without interruption                  Substitutions.                                       Contract owners will be sent
                                                    and at no additional cost to them.                          12. The affected Contract owners will             prospectuses of the applicable
                                                    Contract owners with sub-account                         not incur any fees or charges as a result            Replacement Funds at least 30 days
                                                    balances invested through the Accounts                   of the Substitutions nor will their rights           before the Effective Date.
                                                    in shares of the Replacement Funds will                  or the Companies’ obligations under the                 16. Within five (5) business days after
                                                    have the same or lower total expense                     Contracts be altered in any way. The                 the Effective Date, affected Contract
                                                    ratios taking into account fund expenses                 Companies or their affiliates will pay all           owners will be sent a written
                                                    (including Rule 12b–1 fees, if any). With                expenses and transaction costs of the                confirmation, which will include
                                                    respect to all of the proposed                           Substitutions, including brokerage,                  confirmation that the Substitutions were
                                                    Substitutions, the combined                              legal, accounting, and other fees and                carried out as previously notified, a
                                                    management fee and Rule 12b–1 fees                       expenses. The Substitutions will not                 restatement of the information set forth
                                                    paid by the Replacement Fund are the                     cause the Contract fees and charges                  in the pre-Substitution notice and
                                                    same or lower than those of the                          currently being paid by affected                     values of the Contract owner’s position
                                                    corresponding Existing Fund. The                         Contract owners to be greater after the              in the Existing Fund before the
                                                    application sets forth the fees and                      Substitutions than before the                        Substitution and the Replacement Fund
                                                    expenses of each Existing Fund and its                   Substitutions. Moreover, the                         after the Substitution.
                                                    corresponding Replacement Fund in                        Substitutions will not impose any tax                Applicants’ Legal Analysis
                                                    greater detail.                                          liability on affected Contract owners.
                                                                                                                13. As described in the application,                 1. Applicants request that the
                                                       10. Applicants represent that as of the
                                                                                                             after notification of the Substitution and           Commission issue an order pursuant to
                                                    effective date of the Substitutions
                                                                                                             for 30 days after the Effective Date,                Section 26(c) of the 1940 Act approving
                                                    (‘‘Effective Date’’) shares of the Existing
                                                                                                             affected Contract owners may reallocate              the Substitutions. Section 26(c) requires
                                                    Funds will be redeemed for cash. The
                                                                                                             the sub-account value of an Existing                 the depositor of a registered unit
                                                    Companies, on behalf of each Existing
                                                                                                             Fund to any other investment option                  investment trust holding the securities
                                                    Fund sub-account of each relevant
                                                                                                             available under their Contract without               of a single issuer to obtain Commission
                                                    Account, will simultaneously place a
                                                                                                             incurring any transfer charges.                      approval before substituting the
                                                    redemption request with each Existing
                                                                                                                14. All Contract owners affected by               securities held by the trust. Section
                                                    Fund and a purchase order with the
                                                                                                             the Substitutions will be notified of this           26(c) requires the Commission to issue
                                                    corresponding Replacement Fund so
                                                                                                             application by means of supplements to               such an order if the evidence establishes
                                                    that the purchase of Replacement Fund
                                                                                                             the Contract prospectuses at least 30                that the substitution is consistent with
                                                    shares will be for the exact amount of
                                                                                                             days prior to the Effective Date. The                the protection of investors and the
                                                    the redemption proceeds. Thus,
                                                                                                             notice will advise Contract owners that              purposes fairly intended by the policy
                                                    Contract values will remain fully
                                                                                                             from the date of the notice until the                and provisions of the 1940 Act.
                                                    invested at all times.                                                                                           2. Applicants submit that the terms
                                                       11. The Substitutions will take place                 Effective Date, owners are permitted to
                                                                                                             make one transfer of Contract value out              and conditions of the Substitutions meet
                                                    at relative net asset value (in accordance                                                                    the standards set forth in Section 26(c)
                                                    with Rule 22c–1 under the 1940 Act)                      of the Existing Fund sub-account to one
                                                                                                             or more other sub-accounts without the               and assert that the replacement of an
                                                    with no change in the amount of any                                                                           Existing Fund with the corresponding
                                                    affected Contract owner’s contract                       transfer (or exchange) being treated as
                                                                                                             one of a limited number of transfers (or             Replacement Fund is consistent with
                                                    value, cash value, accumulation value,                                                                        the protection of investors and the
                                                    account value or death benefit or in                     exchanges) permitted without a transfer
                                                                                                             charge. Among other information, the                 purposes fairly intended by the policy
                                                    dollar value of his or her investment in                                                                      and provisions of the l940 Act. As
                                                    the applicable Accounts.2 No brokerage                   notice will inform affected Contract
                                                                                                             owners that the Companies will not                   described in the application, for a
                                                       2 Applicants state that, because the Substitutions    exercise any rights reserved under any               period of two years following the
                                                    will occur at relative net asset value, and the fees     Contract to impose additional                        Effective Date, the Companies or their
                                                    and charges under the Contracts will not change as       restrictions on transfers until at least 30          affiliates will reimburse any Contract
                                                                                                                                                                  owner affected by the proposed
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    a result of the Substitutions, the benefits offered by   days after the Effective Date.
                                                    the guarantees under the Contracts will be the same                                                           Substitutions involving Transamerica
                                                    immediately before and after the Substitutions.             15. If affected Contract owners
                                                    Applicants also state that what effect the               reallocate account value during this 60              Series Trust Replacement Funds and
                                                    Substitutions may have on the value of the benefits      day period, there will be no charge for              whose sub-account invests in the
                                                    offered by the Contract guarantees would depend,         the reallocation of accumulated value                Replacement Fund to the extent a
                                                    among other things, on the relative future                                                                    Replacement Fund’s net annual
                                                    performance of the Existing Funds and                    from the Existing Fund sub-accounts
                                                    Replacement Funds, which Applicants cannot
                                                                                                                                                                  operating expenses exceeds the net
                                                    predict. Nevertheless, Applicants note that at the       comparable variety of investment options with as     annual operating expenses of the
                                                    time of the Substitutions, the Contracts will offer a    broad a range of risk/return characteristics.        corresponding Existing Fund.


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                                                                                 Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices                                            15777

                                                    Applicants further assert that each                     registered management open-end                        prospectus, the Company will not
                                                    Replacement Fund has similar                            investment company in which to invest                 exercise any right it may have under the
                                                    investment objectives and investment                    their account values. They also select                Contract to impose restrictions on
                                                    strategies as the corresponding Existing                the specific type of insurance coverage               transfers between the sub-accounts
                                                    Fund, or each Replacement Fund’s                        offered by the Companies under their                  under the Contracts, including
                                                    underlying portfolio construction and                   Contracts as well as other rights and                 limitations on the future number of
                                                    investment results are similar to those of              privileges set forth in the Contracts.                transfers, for a period beginning at least
                                                    the corresponding Existing Fund.                                                                              30 days before the Effective Date
                                                                                                            Applicants’ Conditions
                                                    Accordingly, Applicants believe that the                                                                      through at least 30 days following the
                                                    fundamental investment objectives, risk                    Applicants agree that any order                    Effective Date.
                                                    and performance expectations of the                     granting the requested relief will be
                                                    Contract owners will continue to be met                 subject to the following conditions:                    7. All affected Contract owners will be
                                                    after the Substitutions.                                   1. The proposed Substitutions will                 notified, at least 30 days before the
                                                       3. Applicants also maintain that it is               not be effected unless the Companies                  Effective Date about: (a) The intended
                                                    in the best interests of the Contract                   determine that: (a) The Contracts allow               substitution of Existing Funds with the
                                                    owners to substitute the Replacement                    the substitution of shares of registered              Replacement Funds; (b) the intended
                                                    Fund for its corresponding Existing                     open-end investment companies in the                  Effective Date; and (c) information with
                                                    Fund. Applicants anticipate that the                    manner contemplated by the                            respect to transfers as set forth in
                                                    substitution of an Existing Fund with                   application; (b) the Substitutions can be             Condition 6 above. In addition, the
                                                    the corresponding Replacement Fund                      consummated as described in the                       Companies will deliver to all affected
                                                    will result in a Contract that is                       application under applicable insurance                Contract owners, at least 30 days before
                                                    administered and managed more                           laws; and (c) any regulatory                          the Effective Date, a prospectus for each
                                                    efficiently, and one that is more                       requirements in each jurisdiction where               applicable Replacement Fund.
                                                    competitive with other variable                         the Contracts are qualified for sale have
                                                                                                                                                                     8. The Companies will deliver to each
                                                    products. The rights of affected Contract               been complied with to the extent
                                                                                                                                                                  affected Contract owner within five (5)
                                                    owners and the obligations of the                       necessary to complete the Substitutions.
                                                                                                                                                                  business days of the Effective Date a
                                                    Companies under the Contracts will not                     2. The Companies or their affiliates
                                                                                                            will pay all expenses and transaction                 written confirmation which will
                                                    be altered by the Substitutions. Affected
                                                                                                            costs of the Substitutions, including                 include: (a) A confirmation that the
                                                    Contract owners will not incur any
                                                                                                            legal and accounting expenses, any                    Substitutions were carried out as
                                                    additional tax liability or any additional
                                                    fees and expenses as a result of the                    applicable brokerage expenses and other               previously notified; (b) a restatement of
                                                    Substitutions.                                          fees and expenses. No fees or charges                 the information set forth in the pre-
                                                       4. Each of the prospectuses for the                  will be assessed to the Contract owners               Substitution notice; and (c) values of the
                                                    Contracts discloses that the issuing                    to effect the Substitutions.                          Contract owner’s positions in the
                                                    Company reserves the right, subject to                     3. The proposed Substitutions will be              Existing Fund before the Substitution
                                                    compliance with applicable law, to                      effected at the relative net asset values             and the Replacement Fund after the
                                                    substitute shares of another registered                 of the respective shares in conformity                Substitution.
                                                    open-end management investment                          with Section 22(c) of the 1940 Act and                  9. After the Effective Date the
                                                    company for shares of an open-end                       Rule 22c–1 thereunder without the                     Applicants agree not to change a
                                                    management investment company held                      imposition of any transfer or similar                 Replacement Fund’s sub-adviser
                                                    by a sub-account of an Account.                         charges by Applicants. The                            without first obtaining shareholder
                                                       5. Applicants also assert that none of               Substitutions will be effected without                approval of either (a) the sub-adviser
                                                    the proposed Substitutions is of the type               change in the amount or value of any                  change or (b) the parties’ continued
                                                    that Section 26(c) was designed to                      Contracts held by affected Contract                   ability to rely on their manager-of-
                                                    prevent. Unlike a traditional unit                      owners.                                               managers exemptive order.
                                                    investment trust where a depositor                         4. The proposed Substitutions will in
                                                    could only substitute an investment                     no way alter the tax treatment of                        10. For two years following the
                                                    security in a manner which                              affected Contract owners in connection                Effective Date the net annual expenses
                                                    permanently affected all the investors in               with their Contracts, and no tax liability            of each Replacement Fund that is a
                                                    the trust, the Contracts provide each                   will arise for affected Contract owners               Transamerica Series Trust Fund will not
                                                    Contract owner with the right to                        as a result of the Substitutions.                     exceed the net annual expenses of the
                                                    exercise his or her own judgment and                       5. The rights or obligations of the                corresponding Existing Fund as of the
                                                    transfer account values into other sub-                 Companies under the Contracts of                      fund’s most recent fiscal year. To
                                                    accounts. Moreover, the Contracts will                  affected Contract owners will not be                  achieve this limitation, the Replacement
                                                    offer affected Contract owners the                      altered in any way.                                   Fund’s investment adviser will waive
                                                    opportunity to transfer amounts out of                     6. Affected Contract owners will be                fees or reimburse the Replacement Fund
                                                    the affected sub-accounts into any of the               permitted to make at least one transfer               in certain amounts to maintain expenses
                                                    remaining sub-accounts without cost or                  of Contract value from the sub-account                at or below the limit. Any adjustments
                                                    other disadvantage. The Substitution,                   investing in the Existing Fund (before                will be made at least on a quarterly
                                                    therefore, will not result in the type of               the Effective Date) or the Replacement                basis. In addition, the Companies will
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    costly forced redemptions that Section                  Fund (after the Effective Date) to any                not increase the Contract fees and
                                                    26(c) was designed to prevent.                          other available investment option under               charges, including asset based charges
                                                    Applicants also maintain that the                       the Contract without charge for a period              such as mortality expense risk charges
                                                    Substitutions are unlike the type of                    beginning at least 30 days before the                 deducted from the sub-accounts that
                                                    substitutions which Section 26(c) was                   Effective Date through at least 30 days               would otherwise be assessed under the
                                                    designed to prevent in that by                          following the Effective Date. Except as               terms of the Contracts for a period of at
                                                    purchasing a Contract, Contract owners                  described in any market timing/short-                 least two years following the Effective
                                                    select much more than a particular                      term trading provisions of the relevant               Date.


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                                                    15778                           Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices

                                                      For the Commission, by the Division of                   places specified in Item IV below. The                equipment.5 Furthermore, the Exchange
                                                    Investment Management, under delegated                     Exchange has prepared summaries, set                  will provide for the connection of such
                                                    authority.                                                 forth in sections A, B, and C below, of               servers and equipment to the trading
                                                    Eduardo A. Aleman,                                         the most significant aspects of such                  floor and to off-site locations, including
                                                    Assistant Secretary.                                       statements.                                           the remote offices of members and
                                                    [FR Doc. 2017–06247 Filed 3–29–17; 8:45 am]                                                                      member organizations.
                                                    BILLING CODE 8011–01–P
                                                                                                               A. Self-Regulatory Organization’s                        The Exchange proposes to charge its
                                                                                                               Statement of the Purpose of, and the                  members, member organizations and
                                                                                                               Statutory Basis for, the Proposed Rule                non-members new fees for providing
                                                    SECURITIES AND EXCHANGE                                    Change                                                them with these upgraded facilities and
                                                    COMMISSION                                                                                                       services. In particular, the Exchange
                                                                                                               1. Purpose
                                                                                                                                                                     proposes to charge monthly fees for
                                                    [Release No. 34–80305; File No. SR–Phlx–
                                                                                                                  The purpose of the proposed rule                   providing dedicated half cabinets ($250
                                                    2017–25]
                                                                                                               change is to amend the Exchange’s                     per month) or whole cabinets ($800 per
                                                    Self-Regulatory Organizations;                             Pricing Schedule at Section VII(A),                   month) in its data center to house the
                                                    NASDAQ PHLX, LLC; Notice of Filing                         entitled ‘‘Option Trading Floor Fees,’’ to            servers and telecommunications
                                                    and Immediate Effectiveness of                             add certain new fees that it will charge              equipment of its members, member
                                                    Proposed Rule Change To Amend the                          to members, member organizations and                  organizations and non-members and
                                                    Exchange’s Pricing Schedule at                             non-members that install and operate                  their telecommunications vendors.6 The
                                                    Section VII(A)                                             server and telecommunications                         Exchange also proposes to charge a
                                                                                                               equipment on the premises of the                      monthly fee of $50 to connect one
                                                    March 24, 2017.                                                                                                  cabinet to another cabinet and the same
                                                                                                               Exchange, and connect such servers and
                                                       Pursuant to Section 19(b)(1) of the                                                                           monthly fee to connect a cabinet to off-
                                                                                                               equipment to off-site locations, such as
                                                    Securities Exchange Act of 1934                                                                                  site locations, including to a member’s
                                                                                                               their remote offices, in connection with
                                                    (‘‘Act’’),1 and Rule 19b–4 thereunder,2                                                                          or member organization’s remote office.7
                                                                                                               conducting a floor trading business.
                                                    notice is hereby given that on March 20,                                                                         Lastly, the Exchange proposes a fee of
                                                    2017, NASDAQ PHLX, LLC (‘‘Phlx’’ or                           The Exchange recently moved to a                   $150 per hour (billable on a quarter
                                                    ‘‘Exchange’’) filed with the Securities                    new state-of-the-art operations center.3              hour basis) for ‘‘remote hands,’’
                                                    and Exchange Commission (‘‘SEC’’ or                        The new operations center will provide                meaning technical support that
                                                    ‘‘Commission’’) the proposed rule                          significantly upgraded facilities for the             Exchange personnel provides with
                                                    change as described in Items I, II, and                    Exchange’s members and member                         respect to the installation, configuration,
                                                    III, below, which Items have been                          organizations to conduct their floor                  maintenance, and repair of hardware,
                                                    prepared by the Exchange. The                              trading business. Among these upgraded                cables, and circuits.
                                                    Commission is publishing this notice to                    facilities are a new trading floor,
                                                                                                                                                                     2. Statutory Basis
                                                    solicit comments on the proposed rule                      equipped with intercooled Erich Keller
                                                    change from interested persons.                            workstations specifically designed for                   The Exchange believes that its
                                                                                                               trading floors, and a new data center                 proposal is consistent with the
                                                    I. Self-Regulatory Organization’s                                                                                provisions of Section 6(b) of the Act,8 in
                                                    Statement of the Terms of Substance of                     supported by enhanced power
                                                                                                               supplies.4 The Exchange anticipates                   general, and furthers the objectives of
                                                    the Proposed Rule Change                                                                                         Sections 6(b)(4) and 6(b)(5) of the Act,9
                                                                                                               increased utility and operational costs
                                                       The Exchange proposes to amend                          due to the above described                            in particular, in that it provides for the
                                                    Section VII(A) of the Exchange’s Pricing                   enhancements. In the past, members                    equitable allocation of reasonable dues,
                                                    Schedule, as described in further detail                   and member organizations installed and                fees, and other charges among its
                                                    below.                                                     operated their own server and                         members, issuers, and other persons
                                                       While the changes proposed herein                       telecommunications equipment on the                   using its facilities, and does not unfairly
                                                    are effective upon filing, the Exchange                    premises of the Exchange in an ad hoc                 discriminate between customers,
                                                    has designated that the amendments be                      manner, supervised by the Exchange. In                issuers, brokers or dealers.
                                                    operative on May 1, 2017.                                                                                           The proposed fees are equitable and
                                                                                                               an effort to establish greater oversight
                                                       The text of the proposed rule change                                                                          non-discriminatory in that they are
                                                                                                               and control over such activities, to                  applicable to all members, member
                                                    is available on the Exchange’s Web site
                                                                                                               standardize the manner in which these                 organizations and non-members that
                                                    at http://nasdaqphlx.cchwallstreet.com,
                                                    at the principal office of the Exchange,                   activities occur, and to generally                    choose to house their servers and
                                                    and at the Commission’s Public                             provide for a more secure and orderly
                                                    Reference Room.                                            operating environment for both the                       5 The Exchange will assign each member, member
                                                                                                               Exchange and its members and member                   organization and non-member a minimum of one
                                                    II. Self-Regulatory Organization’s                         organizations, the Exchange will                      half cabinet in its new data center.
                                                    Statement of the Purpose of, and                           provide dedicated, segregated, and                       6 The Exchange proposes to charge substantially

                                                    Statutory Basis for, the Proposed Rule                                                                           less for half cabinets than whole cabinets to
                                                                                                               access-limited space (‘‘cabinets’’) in its            incentivize members, member organizations, and
                                                    Change                                                     new data center to members, member                    non-members to make efficient use of the limited
                                                      In its filing with the Commission, the                   organizations and non-members for                     space in the new data center. That is, the Exchange
                                                                                                               their telecommunications vendors to                   seeks to discourage the purchase of a whole cabinet
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    Exchange included statements                                                                                     if the purchase of a half cabinet would suffice.
                                                    concerning the purpose of and basis for                    house servers and telecommunications                     7 The proposed Pricing Schedule refers to this as

                                                    the proposed rule change and discussed                                                                           a ‘‘Cabinet to MPOE Connectivity’’ fee, where
                                                    any comments it received on the                              3 The Exchange relocated its premises from 1900     ‘‘MPOE’’ refers to the ‘‘Main Point of Entry,’’
                                                                                                               Market Street in Philadelphia, Pennsylvania to a      meaning the place within the Exchange’s facilities
                                                    proposed rule change. The text of these                                                                          where members and member organizations can
                                                                                                               new location at FMC Tower, 2929 Walnut Street in
                                                    statements may be examined at the                          Philadelphia, Pennsylvania.                           connect to the Exchange using external
                                                                                                                 4 The new trading floor will be driven by brand     telecommunications lines.
                                                      1 15   U.S.C. 78s(b)(1).                                                                                          8 15 U.S.C. 78f(b).
                                                                                                               new 300 kVA UPS units, with an 800 kw back-up
                                                      2 17   CFR 240.19b–4.                                    generator.                                               9 15 U.S.C. 78f(b)(4) and (5).




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Document Created: 2017-03-30 01:35:33
Document Modified: 2017-03-30 01:35:33
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice.
DatesThe application was filed on June 15, 2015, and was amended on December 8, 2015, July 1, 2016, and November 14, 2016.
ContactDavid J. Marcinkus, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation82 FR 15774 

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