Self-Regulatory Organizations; American Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1 Thereto Relating to the Trading Pursuant to Unlisted Trading Privileges of the iShares® Lehman TIPS Bond Fund, 73039-73042 [E5-7057]
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Federal Register / Vol. 70, No. 235 / Thursday, December 8, 2005 / Notices
containing the disclosure contemplated
by condition 2 below, by the sole initial
shareholder before offering the Fund’s
shares to the public.
2. The prospectus for each Fund will
disclose the existence, substance, and
effect of any order granted pursuant to
the application. Each Fund will hold
itself out to the public as employing the
management structure described in the
application. The prospectus will
prominently disclose that the Adviser
has ultimate responsibility (subject to
oversight by the Board) to oversee the
Subadvisers and recommend their
hiring, termination, and replacement.
3. Within 90 days of the hiring of a
new Subadviser, the affected Fund
shareholders will be furnished all
information about the new Subadviser
that would be included in a proxy
statement, except as modified to permit
Aggregate Fee Disclosure. This
information will include Aggregate Fee
Disclosure and any change in such
disclosure caused by the addition of the
new Subadviser. To meet this
obligation, the Fund will provide
shareholders within 90 days of the
hiring of a new Subadviser with an
information statement meeting the
requirements of Regulation 14C,
Schedule 14C, and Item 22 of Schedule
14A under the 1934 Act, except as
modified by the order to permit
Aggregate Fee Disclosure.
4. The Adviser will not enter into a
Subadvisory Agreement with any
Affiliated Subadviser without that
agreement, including the compensation
to be paid thereunder, being approved
by the shareholders of the applicable
Fund.
5. Each Fund will comply with the
fund governance standards as defined in
rule 0–1(a)(7) under the Act by the
compliance date for the rule
(‘‘Compliance Date’’). Prior to the
Compliance Date, a majority of the
Board will be Independent Trustees,
and the nomination of new or additional
Independent Trustees will be at the
discretion of the then existing
Independent Trustees.
6. When a Subadviser change is
proposed for a Fund with an Affiliated
Subadviser, the Board, including a
majority of the Independent Trustees,
will make a separate finding, reflected
in the Trust’s Board minutes, that such
change is in the best interests of the
Fund and its shareholders, and does not
involve a conflict of interest from which
the Adviser or the Affiliated Subadviser
derives an inappropriate advantage.
7. Independent legal counsel, as
defined in rule 0–1(a)(6) under the Act,
will be engaged to represent the
Independent Trustees. The selection of
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such counsel will be within the
discretion of the then existing
Independent Trustees.
8. The Adviser will provide the
Board, no less frequently than quarterly,
with information about the profitability
of the Adviser on a per-Fund basis. The
information will reflect the impact on
profitability of the hiring or termination
of any Subadviser during the applicable
quarter.
9. Whenever a Subadviser is hired or
terminated, the Adviser will provide the
Board with information showing the
expected impact on the profitability of
the Adviser.
10. The Adviser will provide general
management services to each Fund,
including overall supervisory
responsibility for the general
management and investment of the
Fund’s assets, and, subject to review
and approval of the Board, will: (a) Set
each Fund’s overall investment
strategies; (b) evaluate, select and
recommend Subadvisers to manage all
or a part of a Fund’s assets; (c) when
appropriate, allocate and reallocate a
Fund’s assets among multiple
Subadvisers; (d) monitor and evaluate
the performance of Subadvisers; and (e)
implement procedures reasonably
designed to ensure that the Subadvisers
comply with each Fund’s investment
objective, policies and restrictions.
11. No trustee or officer of the Trust,
or director or officer of the Adviser, will
own, directly or indirectly (other than
through a pooled investment vehicle
that is not controlled by such person),
any interest in a Subadviser, except for:
(a) Ownership of interests in the
Adviser or any entity that controls, is
controlled by, or is under common
control with the Adviser, or (b)
ownership of less than 1% of the
outstanding securities of any class of
equity or debt of any publicly traded
company that is either a Subadviser or
an entity that controls, is controlled by,
or is under common control with a
Subadviser.
12. Each Fund will disclose in its
registration statement the Aggregate Fee
Disclosure.
13. The requested order will expire on
the effective date of rule 15a–5 under
the Act, if adopted.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jonathan G. Katz,
Secretary.
[FR Doc. E5–7058 Filed 12–7–05; 8:45 am]
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73039
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52870; File No. SR–Amex–
2005–091]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing and Order Granting
Accelerated Approval of Proposed
Rule Change and Amendment No. 1
Thereto Relating to the Trading
Pursuant to Unlisted Trading
Privileges of the iShares Lehman
TIPS Bond Fund
December 1, 2005.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’)1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 13, 2005, the American Stock
Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by the Exchange.
On November 22, 2005, Amex filed
Amendment No. 1 to the proposed rule
change.3 The Commission is publishing
this notice to solicit comments on the
proposed rule change, as amended, from
interested persons and is approving the
proposal on an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Amex proposes to trade shares
(the ‘‘Fund Shares’’ or ‘‘Shares’’) of the
iShares Lehman TIPS Bond Fund
(ticker symbol: TIP) (the ‘‘Fund’’),4
pursuant to unlisted trading privileges
(‘‘UTP’’).
The text of the proposed rule change
is available on the Exchange’s Internet
Web site (https://www.amex.com), at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Amex included statements concerning
the purpose of, and basis for, the
proposed rule change. The text of these
statements may be examined at the
places specified in Item III below, and
is set forth in sections A, B, and C
below.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1, the Exchange clarified
and supplemented certain aspects of its proposal.
4 iShares is a registered trademark of Barclays
Global Investors, N.A.
2 17
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to trade Fund
Shares which are Index Fund Shares
under Amex Rules 1000A et seq.,
pursuant to UTP. The Commission
previously approved the original listing
and trading of the Fund on the New
York Stock Exchange, Inc. (‘‘NYSE’’).5
The Fund is a separate series of the
iShares Trust (the ‘‘Trust’’). Lehman
Brothers maintains and calculates the
Lehman Brothers U.S. Treasury Inflation
Notes Index (the ‘‘Index’’). The Index
will not be calculated or disseminated
intra-day because Lehman Brothers does
not calculate or disseminate intra-day
values for the Index. The value and
return of the Index are calculated and
disseminated each business day, at the
end of the trading day, by Lehman
Brothers. Additional information about
the Fund is also available at https://
www.iShares.com.
The investment objective of the Fund
is to provide investment results that
correspond generally to the performance
of the Index. The Index seeks results
that correspond generally to the price
and yield performance, before fees and
expenses, of the inflation-protected
sector of the United States Treasury
market, as defined by the Index.
Inflation-protected public obligations of
the U.S. Treasury, also called ‘‘TIPS,’’
are securities issued by the U.S.
Treasury that are designed to provide
inflation protection to investors. TIPS
are income-generating instruments
whose interest and principal payments
are adjusted for inflation.
Eastern time or ‘‘ET’’) on each day that
the NYSE is open for trading.6 The Fund
and the index calculation methodology
for the Index are both described in more
detail in the NYSE Order.
In order to provide updated
information relating to the Fund for use
by investors, professionals, and persons
wishing to create or redeem Fund
Shares in creation unit aggregations
(‘‘Creation Units’’), the NYSE
disseminates, through the facilities of
the CTA, the indicative optimized
portfolio value (‘‘IOPV’’), calculated by
Bloomberg L.P., every fifteen (15)
seconds during the trading hours for the
Shares of 9:30 a.m. to 4:15 p.m. ET.
(a) Dissemination of Information About
the Fund Shares
Quotations for and last sale
information regarding the Fund are
disseminated through the Consolidated
Tape Association (‘‘CTA’’). The net asset
value (‘‘NAV’’) of the Fund is calculated
each business day, normally at the close
of regular trading of the NYSE, and is
published in a number of places,
including https://www.iShares.com and
through the facilities of the CTA.
According to the Fund’s prospectus,
Investors Bank & Trust Company, the
administrator, custodian and transfer
agent for the Fund, determines the NAV
for the Fund as of the close of regular
trading on the NYSE (ordinarily 4 p.m.,
(b) Trading Rules
The Exchange deems the Fund Shares
to be equity securities, thus rendering
trading in the Shares subject to the
Exchange’s existing rules governing the
trading of equity securities. The trading
hours for the Fund Shares on the
Exchange will be 9:30 a.m. to 4:15 p.m.
ET. The Shares trade with a minimum
price variation of $0.01.
Amex Rule 190 generally precludes
certain business relationships between
an issuer and the specialist in the
issuer’s securities. Exceptions in the
rule permit specialists in Fund Shares to
enter into Creation Unit transactions to
facilitate the maintenance of a fair and
orderly market. Commentary .04 to
Amex Rule 190 specifically applies to
Index Fund Shares listed on the
Exchange, including the Shares.
Commentary .04 states that nothing in
Amex Rule 190(a) should be construed
to restrict a specialist registered in a
security issued by an investment
company from purchasing and
redeeming the listed security, or
securities that can be subdivided or
converted into the listed security, from
the issuer as appropriate to facilitate the
maintenance of a fair and orderly
market.
Amex Rule 154, Commentary .04(c)
provides that stop and stop limit orders
to buy or sell a security (other than an
option, which is covered by Amex Rule
950(f) and Commentary thereto), the
price of which is derivatively priced
based upon another security or index of
securities, may with the prior approval
of a Floor Official, be elected by a
quotation, as set forth in Commentary
.04(c)(i–v). The Exchange has
designated Index Fund Shares,
including the Funds Shares, as eligible
for this treatment.7
5 See Securities Exchange Act Release No. 48881
(December 4, 2003), 68 FR 69739 (December 15,
2003) (SR–NYSE–2003–39) (‘‘NYSE Order’’). The
Funds commenced trading on the NYSE on
December 5, 2003.
6 The Web site for the Trust, https://
www.iShares.com, will make available a variety of
other relevant information about the Shares.
7 See Securities Exchange Act Release No. 29063
(April 10, 1991), 56 FR 15652 (April 17, 1991) (SR–
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The rules of the Exchange require its
members to deliver a prospectus or
product description to investors
purchasing Shares of the Fund prior to
or concurrently with the confirmation of
a transaction in such Shares. The
Exchange notes, however, that although
Amex Rule 1000A provides for delivery
of written descriptions to customers of
funds that have received an exemption
from section 24(d) of the Investment
Company Act of 1940 and the Trust has
received such an exemption, there is at
this time no written description
available for this Fund. The Exchange
will advise its members and member
organizations that delivery of a
prospectus in lieu of a written
description would satisfy the
requirements of Amex Rule 1000A.
The Exchange will cease trading in
the Shares if (a) the primary market
stops trading the Shares because of a
regulatory halt akin to a halt based on
Amex Rule 117 and/or a halt because
dissemination of the IOPV and/or
underlying index value has ceased or (b)
the primary market delists the Shares.8
(c) Surveillance
The Exchange notes that the Index is
broad-based and has components with
significant market capitalizations and
liquidity.9 Nevertheless, the Exchange
represents that its surveillance
procedures are adequate to properly
monitor the trading of the Shares.
Specifically, the Amex will rely on its
existing surveillance procedures
governing Index Fund Shares.
(d) Information Circular
In connection with the trading of the
Shares of each Fund, the Amex will
inform its members in an Information
Circular of the special characteristics
and risks associated with trading of the
Shares, such as, a description of the
Fund and associated Shares, how Fund
Shares are created and redeemed in
Creation Units (e.g., that Fund Shares
are not individually redeemable),
applicable Exchange rules,
dissemination information, trading
information, the applicability of
suitability rules, and a discussion of any
relief provided by the Commission or
the staff from any rules under the Act.
Additionally, in the Information
Circular, the Exchange will advise its
Amex–90–31) at note 9, regarding the Exchange’s
designation of equity derivative securities as
eligible for such treatment under Amex Rule 154,
Commentary .04(c).
8 Telephone conversation between Edward Cho,
Staff Attorney, Division of Market Regulation,
Commission, and Jeffrey Burns, Associate General
Counsel, Amex, on November 17, 2005.
9 Id.
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members to deliver to investors
purchasing Shares of the Fund a
prospectus, as described above, prior to
or concurrently with the confirmation of
a transaction in such Shares. The
Information Circular will also discuss
the information that will be publicly
available about the Shares.
The Information Circular will also
remind members of their suitability
obligations, including those under
Amex Rule 411, which imposes a duty
of due diligence on its members and
member firms to learn the essential facts
relating to every customer prior to
trading the Shares.10
2. Statutory Basis
The proposed rule change, as
amended, is consistent with section 6(b)
of the Act11 in general, and furthers the
objectives of section 6(b)(5)12 in
particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transaction in
securities, and, in general to protect
investors and the public interest. In
addition, the Exchange believes that the
proposal is consistent with Rule 12f–5
under the Act13 because it deems the
Fund Shares to be equity securities, thus
rendering the Shares subject to the
Exchange’s existing rules governing the
trading of equity securities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposed rule change, as amended, will
impose no burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
10 Id.
U.S.C. 78s(b).
12 15 U.S.C. 78s(b)(5).
13 17 CFR 240.12f–5.
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16:29 Dec 07, 2005
6(b)(5) of the Act,15 which requires that
an exchange have rules designed, among
• Use the Commission’s Internet
other things, to promote just and
comment form (https://www.sec.gov/
equitable principles of trade, to remove
rules/sro.shtml); or
impediments to and perfect the
• Send an e-mail to rulemechanism of a free and open market
comments@sec.gov. Please include File
and a national market system, and in
Number SR–Amex–2005–091 on the
general to protect investors and the
subject line.
public interest.
Paper Comments
In addition, the Commission finds
that the proposal is consistent with
• Send paper comments in triplicate
section 12(f) of the Act,16 which permits
to Jonathan G. Katz, Secretary,
an exchange to trade, pursuant to UTP,
Securities and Exchange Commission,
a security that is listed and registered on
Station Place, 100 F Street, NE.,
another exchange.17 The Commission
Washington, DC 20549–9303.
notes that it previously approved the
All submissions should refer to File
listing and trading of the Shares on the
Number SR–Amex–2005–091. This file
NYSE.18 The Commission also finds that
number should be included on the
the proposal is consistent with Rule
subject line if e-mail is used. To help the 12f–5 under the Act,19 which provides
Commission process and review your
that an exchange shall not extend UTP
comments more efficiently, please use
to a security unless the exchange has in
only one method. The Commission will effect a rule or rules providing for
post all comments on the Commission’s transactions in the class or type of
Internet Web site (https://www.sec.gov/
security to which the exchange extends
rules/sro.shtml). Copies of the
UTP. Amex rules deem the Shares to be
submission, all subsequent
equity securities, and thus, trading in
amendments, all written statements
Shares will be subject to the Exchange’s
with respect to the proposed rule
existing rules governing the trading of
change that are filed with the
equity securities.20
Commission, and all written
The Commission further believes that
communications relating to the
the proposal is consistent with section
proposed rule change between the
21
Commission and any person, other than 11A(a)(1)(C)(iii) of the Act, which sets
forth Congress’s finding that it is in the
those that may be withheld from the
public interest and appropriate for the
public in accordance with the
protection of investors and the
provisions of 5 U.S.C. 552, will be
maintenance of fair and orderly markets
available for inspection and copying in
to assure the availability to brokers,
the Commission’s Public Reference
Room. Copies of such filing also will be dealers, and investors of information
with respect to quotations for and
available for inspection and copying at
transactions in securities. Quotations for
the principal office of the Amex. All
and last sale information regarding the
comments received will be posted
Shares are disseminated through the
without change; the Commission does
Consolidated Quotation System.
not edit personal identifying
Furthermore, the NYSE disseminates
information from submissions. You
through the facilities of CTA an updated
should submit only information that
you wish to make available publicly. All
15 15 U.S.C. 78f(b)(5).
submissions should refer to File
16 5 U.S.C. 78l(f).
Number SR–Amex–2005–091 and
17 Section 12(a) of the Act, 15 U.S.C. 78l(a),
should be submitted on or before
generally prohibits a broker-dealer from trading a
December 29, 2005.
security on a national securities exchange unless
Electronic Comments
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the
proposed rule change, as amended, is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.14 In particular, the
Commission finds that the proposed
rule change is consistent with section
14 In approving this rule change, the Commission
notes that it has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
11 15
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73041
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the security is registered on that exchange pursuant
to section 12 of the Act. Section 12(f) of the Act
excludes from this restriction trading in any
security to which an exchange ‘‘extends UTP.’’
When an exchange extends UTP to a security, it
allows its members to trade the security as if it were
listed and registered on the exchange even though
it is not so listed and registered.
18 See NYSE Order, supra note 5.
19 17 CFR 240.12f–5.
20 The Commission notes that Commentary .04 to
existing Amex Rule 190 will permit a specialist in
the Shares to create or redeem Creation Units of this
Fund to facilitate the maintenance of a fair and
orderly market. The Commission previously has
found Commentary .04 to Amex Rule 190 to be
consistent with the Act. See Securities Exchange
Act Release No. 36947 (March 8, 1996), 61 FR
10606, 10612 (March 14, 1996) (SR–Amex–95–43).
21 15 U.S.C. 78k–1(a)(1)(C)(iii).
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IOPV for the Shares every 15 seconds
from 9:30 a.m. to 4:15 p.m. E.T.
The Exchange will cease trading in
the Shares if (a) the primary market
stops trading the Shares because of a
regulatory halt similar to a halt based on
Amex Rule 117 and/or a halt because
dissemination of the IOPV and/or
underlying index value has ceased or (b)
the primary market delists the Shares.
In support of this proposed rule
change, the Exchange has made the
following representations:
1. Amex has appropriate rules to
facilitate transactions in this type of
security;
2. Amex surveillance procedures are
adequate to properly monitor the
trading of the Shares on the Exchange;
3. Amex will distribute an
Information Circular to its members
prior to the commencement of trading of
the Shares on the Exchange that
explains the terms, characteristics, and
risks of trading such shares;
4. Amex will require a member with
a customer that purchases the Shares on
the Exchange to provide that customer
with a product prospectus and will note
this prospectus delivery requirement in
the Information Circular; and
5. Amex will cease trading in the
Shares if (a) the primary market stops
trading the Shares because of a
regulatory halt similar to a halt based on
Amex Rule 117 and/or a halt because
dissemination of the IOPV and/or
underlying index value has ceased or (b)
the primary market delists the Shares.
This approval order is conditioned on
Amex’s adherence to these
representations.
The Commission finds good cause for
approving this proposed rule change, as
amended, before the thirtieth day after
the publication of notice thereof in the
Federal Register. As noted earlier, the
Commission previously found that the
listing and trading of these Shares on
the NYSE are consistent with the Act.22
The Commission presently is not aware
of any issue that would cause it to
revisit that earlier finding or preclude
the trading of these funds on the
Exchange pursuant to UTP. Therefore,
accelerating approval of this proposed
rule change should benefit investors by
creating, without undue delay,
additional competition in the market for
these Shares.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act, that the
proposed rule change (SR–Amex–2005–
22 See
NYSE Order, supra note 5.
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16:29 Dec 07, 2005
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091), as amended, is hereby approved
on an accelerated basis.23
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.24
Jonathan G. Katz,
Secretary.
[FR Doc. E5–7057 Filed 12–7–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52871; File No. SR–CBOE–
2005–88]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1
Thereto Relating to Transaction Fees
and a Fee Waiver for Options on the
Mini-SPX
December 1, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
25, 2005, the Chicago Board Options
Exchange, Incorporated (‘‘CBOE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. On December 1, 2005,
the Exchange filed Amendment No. 1 to
the proposed rule change.3 The CBOE
submitted the proposed rule change
under Section 19(b)(3)(A) of the Act 4
and Rule 19b–4(f)(2) thereunder,5 which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule to establish fees for
options on the Mini-SPX (‘‘XSP’’). The
Exchange also proposes to waive all fees
for trading in XSP options beginning
with the launch of trading through
23 15
U.S.C. 78s(b)(2).
24 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, the Exchange proposed to
reduce the XSP non-member market-maker
transaction fee to $.17 per contract regardless of the
premium.
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(2).
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January 31, 2006. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.com), at the Exchange’s
Office of the Secretary and at the
Commission.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
CBOE included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. The CBOE has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
a. XSP Fees
The Exchange proposes to establish
fees for XSP options, which commenced
trading on October 25, 2005. XSP
options are options that are based on
one-tenth the value of the Standard &
Poor’s 500 Index. XSP options trade on
CBOE’s Hybrid 2.0 trading system.
The transaction fee for customer
orders in XSP options will be $.15 per
contract. The market-maker transaction
fee will also be $.15 per contract.6 The
Exchange believes the $.15 marketmaker transaction fee will act as an
incentive for market-makers to provide
liquidity in the XSP product. Member
firm proprietary transaction fees will be
$.20 for facilitation of customer orders
and $.24 for non-facilitation orders. The
broker-dealer transaction fee will be
$.25 per contract, the remote marketmaker transaction fee will be $.26 per
contract, and the non-member marketmaker fee will be $.17 per contract.
As per the current CBOE Fee
Schedule, the floor brokerage fee for
XSP options will be $.04 per contract
and $.02 per contract for crossed orders.
The Marketing Fee and the RAES
Access Fee will not apply.
b. Fee Waiver
The Exchange proposes to waive all
fees for trading in XSP options
beginning with the launch of trading in
XSP options through January 31, 2006.
6 XSP options trade without a Designated Primary
Market-Maker (‘‘DPM’’), Electronic-DPM (‘‘e-DPM’’)
or Lead Market-Maker (‘‘LMM’’), under CBOE’s
index option hybrid rules.
E:\FR\FM\08DEN1.SGM
08DEN1
]]>Agencies
[Federal Register Volume 70, Number 235 (Thursday, December 8, 2005)]
[Notices]
[Pages 73039-73042]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-7057]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52870; File No. SR-Amex-2005-091]
Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change and Amendment No. 1 Thereto Relating to the Trading
Pursuant to Unlisted Trading Privileges of the iShares[supreg] Lehman
TIPS Bond Fund
December 1, 2005.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 13, 2005, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
On November 22, 2005, Amex filed Amendment No. 1 to the proposed rule
change.\3\ The Commission is publishing this notice to solicit comments
on the proposed rule change, as amended, from interested persons and is
approving the proposal on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange clarified and supplemented
certain aspects of its proposal.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Amex proposes to trade shares (the ``Fund Shares'' or
``Shares'') of the iShares[supreg] Lehman TIPS Bond Fund (ticker
symbol: TIP) (the ``Fund''),\4\ pursuant to unlisted trading privileges
(``UTP'').
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\4\ iShares[supreg] is a registered trademark of Barclays Global
Investors, N.A.
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The text of the proposed rule change is available on the Exchange's
Internet Web site (https://www.amex.com), at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Amex included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item III below, and is set forth in sections A, B, and C below.
[[Page 73040]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to trade Fund Shares which are Index Fund
Shares under Amex Rules 1000A et seq., pursuant to UTP. The Commission
previously approved the original listing and trading of the Fund on the
New York Stock Exchange, Inc. (``NYSE'').\5\ The Fund is a separate
series of the iShares Trust (the ``Trust''). Lehman Brothers maintains
and calculates the Lehman Brothers U.S. Treasury Inflation Notes Index
(the ``Index''). The Index will not be calculated or disseminated
intra-day because Lehman Brothers does not calculate or disseminate
intra-day values for the Index. The value and return of the Index are
calculated and disseminated each business day, at the end of the
trading day, by Lehman Brothers. Additional information about the Fund
is also available at https://www.iShares.com.
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\5\ See Securities Exchange Act Release No. 48881 (December 4,
2003), 68 FR 69739 (December 15, 2003) (SR-NYSE-2003-39) (``NYSE
Order''). The Funds commenced trading on the NYSE on December 5,
2003.
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The investment objective of the Fund is to provide investment
results that correspond generally to the performance of the Index. The
Index seeks results that correspond generally to the price and yield
performance, before fees and expenses, of the inflation-protected
sector of the United States Treasury market, as defined by the Index.
Inflation-protected public obligations of the U.S. Treasury, also
called ``TIPS,'' are securities issued by the U.S. Treasury that are
designed to provide inflation protection to investors. TIPS are income-
generating instruments whose interest and principal payments are
adjusted for inflation.
(a) Dissemination of Information About the Fund Shares
Quotations for and last sale information regarding the Fund are
disseminated through the Consolidated Tape Association (``CTA''). The
net asset value (``NAV'') of the Fund is calculated each business day,
normally at the close of regular trading of the NYSE, and is published
in a number of places, including https://www.iShares.com and through the
facilities of the CTA. According to the Fund's prospectus, Investors
Bank & Trust Company, the administrator, custodian and transfer agent
for the Fund, determines the NAV for the Fund as of the close of
regular trading on the NYSE (ordinarily 4 p.m., Eastern time or ``ET'')
on each day that the NYSE is open for trading.\6\ The Fund and the
index calculation methodology for the Index are both described in more
detail in the NYSE Order.
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\6\ The Web site for the Trust, https://www.iShares.com, will
make available a variety of other relevant information about the
Shares.
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In order to provide updated information relating to the Fund for
use by investors, professionals, and persons wishing to create or
redeem Fund Shares in creation unit aggregations (``Creation Units''),
the NYSE disseminates, through the facilities of the CTA, the
indicative optimized portfolio value (``IOPV''), calculated by
Bloomberg L.P., every fifteen (15) seconds during the trading hours for
the Shares of 9:30 a.m. to 4:15 p.m. ET.
(b) Trading Rules
The Exchange deems the Fund Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. The trading hours for
the Fund Shares on the Exchange will be 9:30 a.m. to 4:15 p.m. ET. The
Shares trade with a minimum price variation of $0.01.
Amex Rule 190 generally precludes certain business relationships
between an issuer and the specialist in the issuer's securities.
Exceptions in the rule permit specialists in Fund Shares to enter into
Creation Unit transactions to facilitate the maintenance of a fair and
orderly market. Commentary .04 to Amex Rule 190 specifically applies to
Index Fund Shares listed on the Exchange, including the Shares.
Commentary .04 states that nothing in Amex Rule 190(a) should be
construed to restrict a specialist registered in a security issued by
an investment company from purchasing and redeeming the listed
security, or securities that can be subdivided or converted into the
listed security, from the issuer as appropriate to facilitate the
maintenance of a fair and orderly market.
Amex Rule 154, Commentary .04(c) provides that stop and stop limit
orders to buy or sell a security (other than an option, which is
covered by Amex Rule 950(f) and Commentary thereto), the price of which
is derivatively priced based upon another security or index of
securities, may with the prior approval of a Floor Official, be elected
by a quotation, as set forth in Commentary .04(c)(i-v). The Exchange
has designated Index Fund Shares, including the Funds Shares, as
eligible for this treatment.\7\
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\7\ See Securities Exchange Act Release No. 29063 (April 10,
1991), 56 FR 15652 (April 17, 1991) (SR-Amex-90-31) at note 9,
regarding the Exchange's designation of equity derivative securities
as eligible for such treatment under Amex Rule 154, Commentary
.04(c).
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The rules of the Exchange require its members to deliver a
prospectus or product description to investors purchasing Shares of the
Fund prior to or concurrently with the confirmation of a transaction in
such Shares. The Exchange notes, however, that although Amex Rule 1000A
provides for delivery of written descriptions to customers of funds
that have received an exemption from section 24(d) of the Investment
Company Act of 1940 and the Trust has received such an exemption, there
is at this time no written description available for this Fund. The
Exchange will advise its members and member organizations that delivery
of a prospectus in lieu of a written description would satisfy the
requirements of Amex Rule 1000A.
The Exchange will cease trading in the Shares if (a) the primary
market stops trading the Shares because of a regulatory halt akin to a
halt based on Amex Rule 117 and/or a halt because dissemination of the
IOPV and/or underlying index value has ceased or (b) the primary market
delists the Shares.\8\
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\8\ Telephone conversation between Edward Cho, Staff Attorney,
Division of Market Regulation, Commission, and Jeffrey Burns,
Associate General Counsel, Amex, on November 17, 2005.
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(c) Surveillance
The Exchange notes that the Index is broad-based and has components
with significant market capitalizations and liquidity.\9\ Nevertheless,
the Exchange represents that its surveillance procedures are adequate
to properly monitor the trading of the Shares. Specifically, the Amex
will rely on its existing surveillance procedures governing Index Fund
Shares.
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\9\ Id.
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(d) Information Circular
In connection with the trading of the Shares of each Fund, the Amex
will inform its members in an Information Circular of the special
characteristics and risks associated with trading of the Shares, such
as, a description of the Fund and associated Shares, how Fund Shares
are created and redeemed in Creation Units (e.g., that Fund Shares are
not individually redeemable), applicable Exchange rules, dissemination
information, trading information, the applicability of suitability
rules, and a discussion of any relief provided by the Commission or the
staff from any rules under the Act. Additionally, in the Information
Circular, the Exchange will advise its
[[Page 73041]]
members to deliver to investors purchasing Shares of the Fund a
prospectus, as described above, prior to or concurrently with the
confirmation of a transaction in such Shares. The Information Circular
will also discuss the information that will be publicly available about
the Shares.
The Information Circular will also remind members of their
suitability obligations, including those under Amex Rule 411, which
imposes a duty of due diligence on its members and member firms to
learn the essential facts relating to every customer prior to trading
the Shares.\10\
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\10\ Id.
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2. Statutory Basis
The proposed rule change, as amended, is consistent with section
6(b) of the Act\11\ in general, and furthers the objectives of section
6(b)(5)\12\ in particular, in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transaction in
securities, and, in general to protect investors and the public
interest. In addition, the Exchange believes that the proposal is
consistent with Rule 12f-5 under the Act\13\ because it deems the Fund
Shares to be equity securities, thus rendering the Shares subject to
the Exchange's existing rules governing the trading of equity
securities.
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\11\ 15 U.S.C. 78s(b).
\12\ 15 U.S.C. 78s(b)(5).
\13\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change, as amended,
will impose no burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Amex-2005-091 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-Amex-2005-091. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the Amex. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-Amex-2005-091 and should be submitted on or before
December 29, 2005.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\14\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\15\ which
requires that an exchange have rules designed, among other things, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and in general to protect investors and the public
interest.
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\14\ In approving this rule change, the Commission notes that it
has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\15\ 15 U.S.C. 78f(b)(5).
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In addition, the Commission finds that the proposal is consistent
with section 12(f) of the Act,\16\ which permits an exchange to trade,
pursuant to UTP, a security that is listed and registered on another
exchange.\17\ The Commission notes that it previously approved the
listing and trading of the Shares on the NYSE.\18\ The Commission also
finds that the proposal is consistent with Rule 12f-5 under the
Act,\19\ which provides that an exchange shall not extend UTP to a
security unless the exchange has in effect a rule or rules providing
for transactions in the class or type of security to which the exchange
extends UTP. Amex rules deem the Shares to be equity securities, and
thus, trading in Shares will be subject to the Exchange's existing
rules governing the trading of equity securities.\20\
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\16\ 5 U.S.C. 78l(f).
\17\ Section 12(a) of the Act, 15 U.S.C. 78l(a), generally
prohibits a broker-dealer from trading a security on a national
securities exchange unless the security is registered on that
exchange pursuant to section 12 of the Act. Section 12(f) of the Act
excludes from this restriction trading in any security to which an
exchange ``extends UTP.'' When an exchange extends UTP to a
security, it allows its members to trade the security as if it were
listed and registered on the exchange even though it is not so
listed and registered.
\18\ See NYSE Order, supra note 5.
\19\ 17 CFR 240.12f-5.
\20\ The Commission notes that Commentary .04 to existing Amex
Rule 190 will permit a specialist in the Shares to create or redeem
Creation Units of this Fund to facilitate the maintenance of a fair
and orderly market. The Commission previously has found Commentary
.04 to Amex Rule 190 to be consistent with the Act. See Securities
Exchange Act Release No. 36947 (March 8, 1996), 61 FR 10606, 10612
(March 14, 1996) (SR-Amex-95-43).
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The Commission further believes that the proposal is consistent
with section 11A(a)(1)(C)(iii) of the Act,\21\ which sets forth
Congress's finding that it is in the public interest and appropriate
for the protection of investors and the maintenance of fair and orderly
markets to assure the availability to brokers, dealers, and investors
of information with respect to quotations for and transactions in
securities. Quotations for and last sale information regarding the
Shares are disseminated through the Consolidated Quotation System.
Furthermore, the NYSE disseminates through the facilities of CTA an
updated
[[Page 73042]]
IOPV for the Shares every 15 seconds from 9:30 a.m. to 4:15 p.m. E.T.
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\21\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
The Exchange will cease trading in the Shares if (a) the primary
market stops trading the Shares because of a regulatory halt similar to
a halt based on Amex Rule 117 and/or a halt because dissemination of
the IOPV and/or underlying index value has ceased or (b) the primary
market delists the Shares.
In support of this proposed rule change, the Exchange has made the
following representations:
1. Amex has appropriate rules to facilitate transactions in this
type of security;
2. Amex surveillance procedures are adequate to properly monitor
the trading of the Shares on the Exchange;
3. Amex will distribute an Information Circular to its members
prior to the commencement of trading of the Shares on the Exchange that
explains the terms, characteristics, and risks of trading such shares;
4. Amex will require a member with a customer that purchases the
Shares on the Exchange to provide that customer with a product
prospectus and will note this prospectus delivery requirement in the
Information Circular; and
5. Amex will cease trading in the Shares if (a) the primary market
stops trading the Shares because of a regulatory halt similar to a halt
based on Amex Rule 117 and/or a halt because dissemination of the IOPV
and/or underlying index value has ceased or (b) the primary market
delists the Shares.
This approval order is conditioned on Amex's adherence to these
representations.
The Commission finds good cause for approving this proposed rule
change, as amended, before the thirtieth day after the publication of
notice thereof in the Federal Register. As noted earlier, the
Commission previously found that the listing and trading of these
Shares on the NYSE are consistent with the Act.\22\ The Commission
presently is not aware of any issue that would cause it to revisit that
earlier finding or preclude the trading of these funds on the Exchange
pursuant to UTP. Therefore, accelerating approval of this proposed rule
change should benefit investors by creating, without undue delay,
additional competition in the market for these Shares.
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\22\ See NYSE Order, supra note 5.
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V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change (SR-Amex-2005-091), as amended, is hereby
approved on an accelerated basis.\23\
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\23\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-7057 Filed 12-7-05; 8:45 am]
BILLING CODE 8010-01-P
