Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Increasing the Maximum Weighting of Certain Component Stocks in Indexes or Portfolios Underlying Investment Company Units, 33326-33328 [E6-8875]
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33326
Federal Register / Vol. 71, No. 110 / Thursday, June 8, 2006 / Notices
to make this rule change effective on
July 1, 2006. At any time within 60 days
of the filing of such proposed rule
change, the Commission may summarily
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.11
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASD–2006–061 on the
subject line.
cprice-sewell on PROD1PC66 with NOTICES
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASD–2006–061. 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 the filing also will be
available for inspection and copying at
11 The effective date of the original proposed rule
change is May 12, 2006, and the effective date of
Amendment No. 1 is May 15, 2006. For purposes
of calculating the 60-day period within which the
Commission may summarily abrogate the proposed
rule change, as amended, under Section 19(b)(3)(C)
of the Act, the Commission considers the period to
commence on May 15, 2006, the date on which
Nasdaq submitted Amendment No. 1. See 15 U.S.C.
78s(b)(3)(C).
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the principal offices of the NASD. 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–NASD–2006–061 and
should be submitted on or before June
29, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–8877 Filed 6–7–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53934; File No. SR–NYSE–
2006–39]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Order Granting Accelerated
Approval of Proposed Rule Change
Relating to Increasing the Maximum
Weighting of Certain Component
Stocks in Indexes or Portfolios
Underlying Investment Company Units
June 1, 2006.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that
on May 17, 2006, the New York Stock
Exchange LLC (‘‘NYSE’’ 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 NYSE. The
Commission is publishing this notice to
solicit comments on the proposed rule
change 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 Exchange proposes to amend
section 703.16(B)(2)(c) 3 of the NYSE
Listed Company Manual (‘‘Manual’’) to
increase from 25 percent to 30 percent
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The Commission corrected the reference to the
relevant NYSE’s Manual citation provided in the
Form 19b–4 filed with the Commission in
connection with the instant proposed rule change.
Telephone conversation between Michael Cavalier,
Assistant General Counsel, NYSE and Tim Fox,
Special Counsel, Commission on May 23, 2006.
the maximum weight of the most
heavily weighted component stock of an
index or portfolio underlying a series of
Investment Company Units.
The text of the proposed rule change
is available on the NYSE’s Web site
(https://www.nyse.com), at the NYSE’s
principal office, 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
NYSE 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 III below. The NYSE 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
Section 703.16 of the Manual
provides listing standards for
Investment Company Units (‘‘ICUs’’) to
permit listing and trading of these
securities pursuant to Rule 19b–4(e)
under the Exchange Act.4 Rule 19b–4(e)
provides that the listing and trading of
a new derivative securities product by a
self-regulatory organization (‘‘SRO’’)
shall not be deemed a proposed rule
change, pursuant to Rule 19b–4(c)(1)
under the Exchange Act,5 if the
Commission has approved, pursuant to
section 19(b) of the Exchange Act,6 the
SRO’s trading rules, procedures and
listing standards for the product class
that would include the new derivative
securities product, and the SRO has a
surveillance program for the product
class.7 These standards are frequently
referred to as ‘‘generic’’ listing
standards.
In 1996, the Commission approved
Section 703.16 of the Manual, which
sets forth the rules related to the listing
of ICUs.8 In 2000, the Commission also
approved the Exchange’s generic listing
standards for listing and trading, or the
trading pursuant to unlisted trading
12 17
1 15
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Frm 00049
Fmt 4703
Sfmt 4703
4 17
CFR 240.19b–4(e).
CFR 240.19b–4(c)(1).
6 15 U.S.C. 78s(b).
7 See Securities Exchange Act Release No. 40761
(December 8, 1998), 63 FR 70952 (December 22,
1998) (File No. S7–13–98).
8 See Securities Exchange Act Release No. 36923
(March 5, 1996), 61 FR 10410 (March 13, 1996) (SR–
NYSE–95–23).
5 17
E:\FR\FM\08JNN1.SGM
08JNN1
Federal Register / Vol. 71, No. 110 / Thursday, June 8, 2006 / Notices
privileges, of ICUs under Section 703.16
of the Manual and Exchange Rule 1100.9
Section 703.16(B)(2) of the Manual
provides that, upon the initial listing of
a series of ICUs under Rule 19b–4(e),
component stocks that in the aggregate
account for at least 90 percent of the
weight of the index or portfolio
underlying such series must have a
minimum market value of at least $75
million. In addition, the component
stocks in the index must have a
minimum monthly trading volume
during each of the last six months of at
least 250,000 shares for stocks
representing at least 90 percent of the
weight of the index or portfolio. These
standards assure that the underlying
index component stocks are generally
actively traded and with substantial
market capitalization.
Currently, Section 703.16(B)(2)(c) of
the Manual provides that the most
heavily weighted component stock in an
underlying index cannot exceed 25
percent of the weight of the index or
portfolio, and the five most heavily
weighted component stocks cannot
exceed 65 percent of the weight of the
index or portfolio. The Exchange
proposes to increase from 25 percent to
30 percent the permissible weight of the
most heavily weighted component stock
in an underlying index. The five most
heavily weighted stocks would continue
to be required to represent no more than
65 percent of the weight of the index or
portfolio. This change will provide
additional flexibility to issuers of ICUs
to be listed pursuant to Rule 19b–4(e) in
developing ICUs based on indexes or
portfolios.
The Exchange notes that unit
investment trusts and mutual funds are
subject to Internal Revenue Code
Subchapter M requirements applicable
to regulated investment companies. In
order to maintain regulated investment
company status, these entities would be
required to rebalance their portfolios
quarterly to avoid any one stock
exceeding a 25 percent weighting in the
trust’s or fund’s portfolio.10
2. Statutory Basis
cprice-sewell on PROD1PC66 with NOTICES
The Exchange believes that the
proposal is consistent with section 6(b)
9 See Securities Exchange Act Release No. 43679
(December 5, 2000), 65 FR 77949 (December 13,
2000) (SR–NYSE–00–46).
10 According to the NYSE, under Subchapter M of
the Internal Revenue Code, for a fund to qualify as
a regulated investment company, the securities of
a single issuer can account for no more than 25
percent of a fund’s total assets, and at least 50
percent of a fund’s total assets must be comprised
of cash (including government securities) and
securities of single issuers whose securities account
for less than 5 percent of such fund’s total assets.
VerDate Aug<31>2005
15:37 Jun 07, 2006
Jkt 208001
of the Exchange Act,11 in general, and
furthers the objectives of section 6(b)(5)
of the Exchange Act,12 in particular, in
that the proposal is designed to promote
just and equitable principles of trade, to
foster cooperation and coordination
with persons engaged in regulating,
clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Exchange Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were either
solicited or received.
33327
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 NYSE. 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–NYSE–2006–39 and should
be submitted on or before June 29, 2006.
IV. Commission’s Findings and Order
Granting Accelerated Approval of a
Proposed Rule Change
After careful consideration, the
Commission finds that the proposed
rule change is consistent with the
III. Solicitation of Comments
Exchange Act and the rules and
Interested persons are invited to
regulations thereunder applicable to a
submit written data, views, and
national securities exchange.13 In
arguments concerning the foregoing,
particular, the Commission believes that
including whether the proposed rule
the proposal is consistent with section
change is consistent with the Exchange
6(b)(5) of the Exchange Act,14 which
Act. Comments may be submitted by
requires that the rules of an exchange be
any of the following methods:
designed to promote just and equitable
principles of trade, to remove
Electronic Comments
impediments to and perfect the
• Use the Commission’s Internet
mechanism of a free and open market
comment form (https://www.sec.gov/
and a national market system, and, in
rules/sro.shtml); or
general, to protect investors and the
• Send an e-mail to rulepublic interest. The Commission
comments@sec.gov. Please include File
believes that the proposed rule change
Number SR–NYSE–2006–39 on the
is reasonably designed to provide
subject line.
additional flexibility in listing ICUs
Paper Comments
under the Exchange’s generic listing
standards. The Commission further
• Send paper comments in triplicate
believes that the proposed rule change
to Nancy M. Morris, Secretary,
will serve to protect investors and the
Securities and Exchange Commission,
public interest by maintaining the size
Station Place, 100 F Street, NE.,
and liquidity requirements applicable to
Washington, DC 20549–1090.
the securities underlying the relevant
All submissions should refer to File
index or portfolio.
Number SR–NYSE–2006–39. This file
Under section 19(b)(2) of the
number should be included on the
Exchange Act,15 the Commission may
subject line if e-mail is used. To help the
not approve any proposed rule change
Commission process and review your
prior to the thirtieth day after the date
comments more efficiently, please use
only one method. The Commission will of publication of the notice of filing
post all comments on the Commission’s thereof, unless the Commission finds
good cause for so doing. The
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
13 In approving this proposal, the Commission has
submission, all subsequent
considered its impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
14 15 U.S.C. 78f(b)(5).
15 15 U.S.C. 78s(b)(2).
11 15
U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
PO 00000
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E:\FR\FM\08JNN1.SGM
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33328
Federal Register / Vol. 71, No. 110 / Thursday, June 8, 2006 / Notices
Commission hereby finds good cause for
approving the proposed rule change
prior to the thirtieth day after
publishing notice of filing thereof in the
Federal Register. The Commission notes
that it has previously approved similar
proposals by the American Stock
Exchange (‘‘Amex’’) and Chicago Board
Options Exchange (‘‘CBOE’’) to increase
to thirty percent the permissible weight
of the most heavily weighted
component stock in an underlying
index.16
For the reasons set forth above, the
Commission finds good cause to
accelerate approval of the proposed rule
change pursuant to section 19(b)(2) of
the Exchange Act.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Exchange Act,
that the proposed rule change (SR–
NYSE–2006–39) is hereby approved on
an accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–8875 Filed 6–7–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53932; File No. SR–NYSE–
2006–01]
Self-Regulatory Organizations; New
York Stock Exchange, Inc. (n/k/a New
York Stock Exchange LLC); Notice of
Filing of Proposed Rule Change
Relating to Exchange Rule 1000 (NYSE
Direct+)
June 1, 2006.
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 January
17, 2006, the New York Stock Exchange,
Inc.3 (n/k/a New York Stock Exchange
LLC) (‘‘NYSE’’ or ‘‘Exchange’’) filed
cprice-sewell on PROD1PC66 with NOTICES
16 See
Securities Exchange Act Release Nos.44532
(July 10, 2001), 66 FR 37078 (July 16, 2001) (SR–
Amex–2001–25) (Approving an increase for indexes
underlying Portfolio Depositary Receipts and Index
Fund shares listed on the Amex) and 44908
(October 4, 2001), 66 FR 52161 (October 12, 2001)
(SR–CBOE–2001–38) (Approving an increase for
indexes underlying Index Portfolio Receipts and
Index Portfolio Shares listed on the CBOE).
17 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The Exchange is now known as the New York
Stock Exchange LLC. See Securities Exchange Act
Release No. 53382 (February 27, 2006), 71 FR 11251
(March 6, 2006).
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Jkt 208001
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Exchange Rule 1000 (NYSE Direct+) to
eliminate subsection (v), an exception to
Exchange Rule 1000 which suspends
the Exchange’s Direct+ facility if the
specialist publishes a bid and/or offer
that is more than five cents away from
the last reported transaction price when
an Exchange Rule 127 block cross
transaction is being executed.4 The
Exchange proposes to replace this
procedure with a rule that requires the
specialist to quote a 100 × 100 share
market price when all Exchange Rule
127 block cross transactions are being
executed, regardless of the amount the
cross price is away from the last
reported transaction price in the subject
security on the Exchange. The text of
the proposed rule change is available on
the Exchange’s Web site (https://
www.nyse.com), at the Exchange’s
Office of Secretary, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change, and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
4 On March 22, 2006, the Commission approved
the Exchange’s proposal to establish a ‘‘Hybrid
Market.’’ See Securities Exchange Act Release No.
53539, 71 FR 16353 (March 31, 2006) (‘‘Hybrid
Market Approval Order’’). In the Hybrid Market
Approval Order, the Commission approved the
Exchange’s plan to implement the Hybrid Market in
multiple phases. To date, the Exchange has not
implemented the approved changes to Exchange
Rule 1000. The Commission notes that in this
proposal, the Exchange proposes to amend existing
Exchange Rule 1000, rather than the text of Rule
1000 as approved in the Hybrid Market Approval
Order. Once the Exchange implements the
approved text to Exchange Rule 1000, the
Commission notes that Rule 1000, as approved in
the Hybrid Market Approval Order, would
supersede the changes proposed herein.
PO 00000
Frm 00051
Fmt 4703
Sfmt 4703
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to simplify and improve the
protective measures afforded to Direct+
customers when automatic executions
are delayed due to the completion of an
Exchange Rule 127 block cross
transaction.
Exchange Rule 1000 provides that
auto ex orders receive an immediate,
automatic execution against orders
reflected in the Exchange’s published
quotation and are immediately reported
as Exchange transactions. NYSE Direct+
currently provides for the automatic
execution of straight limit orders (‘‘auto
ex orders’’) of 1,099 shares or less
(10,000 shares or less for Investment
Company Units, as defined in paragraph
703.16 of the Listed Company Manual,
and any securities governed by the same
rules as Investment Company Units,
such as streetTRACKS Gold Shares,5
and Trust Issued Receipts, such as
HOLDRs, as defined in Exchange Rule
1200) against trading interest reflected
in the Exchange’s published quotation.
Exchange Rule 1000 subsections (i)
through (vi) allow for exceptions to
Exchange Rule 1000, making Direct+
unavailable when any exception is in
place. Exchange Rule 1000(ii) provides
that Direct+ is unavailable when the
execution price of an automatic
execution ‘‘would be more than five
cents away from the last reported
transaction price in the subject security
on the Exchange.’’ Exchange Rule
1000(v) specifically provides that when
a transaction outside the NYSE’s
published bid or offer pursuant to Rule
127 is in the process of being
completed, the specialist should
‘‘publish a bid and/or offer that is more
than five cents away from the last
reported transaction price in the subject
security on the Exchange.’’ The
proposed amendment seeks to amend
the current Rule 1000(v) procedure.
Exchange Rule 127 (Block
Positioning) describes the process
required for proper execution of a block
cross transaction. Exchange Rule 127
requires a member seeking to cross
block orders outside the prevailing
quotation to inform the specialist of his
or her intention to execute the
transaction at a pre-determined,
specified price that is either a premium
5 See
E:\FR\FM\08JNN1.SGM
Exchange Rule 1300.
08JNN1
]]>Agencies
[Federal Register Volume 71, Number 110 (Thursday, June 8, 2006)]
[Notices]
[Pages 33326-33328]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8875]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53934; File No. SR-NYSE-2006-39]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change Relating to Increasing the Maximum Weighting of Certain
Component Stocks in Indexes or Portfolios Underlying Investment Company
Units
June 1, 2006.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on May 17, 2006, the New York Stock Exchange LLC (``NYSE''
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 NYSE. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons, and is approving the proposal on an
accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend section 703.16(B)(2)(c) \3\ of the
NYSE Listed Company Manual (``Manual'') to increase from 25 percent to
30 percent the maximum weight of the most heavily weighted component
stock of an index or portfolio underlying a series of Investment
Company Units.
---------------------------------------------------------------------------
\3\ The Commission corrected the reference to the relevant
NYSE's Manual citation provided in the Form 19b-4 filed with the
Commission in connection with the instant proposed rule change.
Telephone conversation between Michael Cavalier, Assistant General
Counsel, NYSE and Tim Fox, Special Counsel, Commission on May 23,
2006.
---------------------------------------------------------------------------
The text of the proposed rule change is available on the NYSE's Web
site (https://www.nyse.com), at the NYSE's principal office, 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 NYSE 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 III below. The NYSE 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
Section 703.16 of the Manual provides listing standards for
Investment Company Units (``ICUs'') to permit listing and trading of
these securities pursuant to Rule 19b-4(e) under the Exchange Act.\4\
Rule 19b-4(e) provides that the listing and trading of a new derivative
securities product by a self-regulatory organization (``SRO'') shall
not be deemed a proposed rule change, pursuant to Rule 19b-4(c)(1)
under the Exchange Act,\5\ if the Commission has approved, pursuant to
section 19(b) of the Exchange Act,\6\ the SRO's trading rules,
procedures and listing standards for the product class that would
include the new derivative securities product, and the SRO has a
surveillance program for the product class.\7\ These standards are
frequently referred to as ``generic'' listing standards.
---------------------------------------------------------------------------
\4\ 17 CFR 240.19b-4(e).
\5\ 17 CFR 240.19b-4(c)(1).
\6\ 15 U.S.C. 78s(b).
\7\ See Securities Exchange Act Release No. 40761 (December 8,
1998), 63 FR 70952 (December 22, 1998) (File No. S7-13-98).
---------------------------------------------------------------------------
In 1996, the Commission approved Section 703.16 of the Manual,
which sets forth the rules related to the listing of ICUs.\8\ In 2000,
the Commission also approved the Exchange's generic listing standards
for listing and trading, or the trading pursuant to unlisted trading
[[Page 33327]]
privileges, of ICUs under Section 703.16 of the Manual and Exchange
Rule 1100.\9\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 36923 (March 5,
1996), 61 FR 10410 (March 13, 1996) (SR-NYSE-95-23).
\9\ See Securities Exchange Act Release No. 43679 (December 5,
2000), 65 FR 77949 (December 13, 2000) (SR-NYSE-00-46).
---------------------------------------------------------------------------
Section 703.16(B)(2) of the Manual provides that, upon the initial
listing of a series of ICUs under Rule 19b-4(e), component stocks that
in the aggregate account for at least 90 percent of the weight of the
index or portfolio underlying such series must have a minimum market
value of at least $75 million. In addition, the component stocks in the
index must have a minimum monthly trading volume during each of the
last six months of at least 250,000 shares for stocks representing at
least 90 percent of the weight of the index or portfolio. These
standards assure that the underlying index component stocks are
generally actively traded and with substantial market capitalization.
Currently, Section 703.16(B)(2)(c) of the Manual provides that the
most heavily weighted component stock in an underlying index cannot
exceed 25 percent of the weight of the index or portfolio, and the five
most heavily weighted component stocks cannot exceed 65 percent of the
weight of the index or portfolio. The Exchange proposes to increase
from 25 percent to 30 percent the permissible weight of the most
heavily weighted component stock in an underlying index. The five most
heavily weighted stocks would continue to be required to represent no
more than 65 percent of the weight of the index or portfolio. This
change will provide additional flexibility to issuers of ICUs to be
listed pursuant to Rule 19b-4(e) in developing ICUs based on indexes or
portfolios.
The Exchange notes that unit investment trusts and mutual funds are
subject to Internal Revenue Code Subchapter M requirements applicable
to regulated investment companies. In order to maintain regulated
investment company status, these entities would be required to
rebalance their portfolios quarterly to avoid any one stock exceeding a
25 percent weighting in the trust's or fund's portfolio.\10\
---------------------------------------------------------------------------
\10\ According to the NYSE, under Subchapter M of the Internal
Revenue Code, for a fund to qualify as a regulated investment
company, the securities of a single issuer can account for no more
than 25 percent of a fund's total assets, and at least 50 percent of
a fund's total assets must be comprised of cash (including
government securities) and securities of single issuers whose
securities account for less than 5 percent of such fund's total
assets.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposal is consistent with section
6(b) of the Exchange Act,\11\ in general, and furthers the objectives
of section 6(b)(5) of the Exchange Act,\12\ in particular, in that the
proposal is designed to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, to remove impediments to
and perfect the mechanism of a free and open market and a national
market system and, in general, to protect investors and the public
interest.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Exchange 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-NYSE-2006-39 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2006-39. 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 NYSE. 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-NYSE-2006-39 and should be submitted on or before June
29, 2006.
IV. Commission's Findings and Order Granting Accelerated Approval of a
Proposed Rule Change
After careful consideration, the Commission finds that the proposed
rule change is consistent with the Exchange Act and the rules and
regulations thereunder applicable to a national securities
exchange.\13\ In particular, the Commission believes that the proposal
is consistent with section 6(b)(5) of the Exchange Act,\14\ which
requires that the rules of an exchange be designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. The
Commission believes that the proposed rule change is reasonably
designed to provide additional flexibility in listing ICUs under the
Exchange's generic listing standards. The Commission further believes
that the proposed rule change will serve to protect investors and the
public interest by maintaining the size and liquidity requirements
applicable to the securities underlying the relevant index or
portfolio.
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\13\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. See 15
U.S.C. 78c(f).
\14\ 15 U.S.C. 78f(b)(5).
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Under section 19(b)(2) of the Exchange Act,\15\ the Commission may
not approve any proposed rule change prior to the thirtieth day after
the date of publication of the notice of filing thereof, unless the
Commission finds good cause for so doing. The
[[Page 33328]]
Commission hereby finds good cause for approving the proposed rule
change prior to the thirtieth day after publishing notice of filing
thereof in the Federal Register. The Commission notes that it has
previously approved similar proposals by the American Stock Exchange
(``Amex'') and Chicago Board Options Exchange (``CBOE'') to increase to
thirty percent the permissible weight of the most heavily weighted
component stock in an underlying index.\16\
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\15\ 15 U.S.C. 78s(b)(2).
\16\ See Securities Exchange Act Release Nos.44532 (July 10,
2001), 66 FR 37078 (July 16, 2001) (SR-Amex-2001-25) (Approving an
increase for indexes underlying Portfolio Depositary Receipts and
Index Fund shares listed on the Amex) and 44908 (October 4, 2001),
66 FR 52161 (October 12, 2001) (SR-CBOE-2001-38) (Approving an
increase for indexes underlying Index Portfolio Receipts and Index
Portfolio Shares listed on the CBOE).
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For the reasons set forth above, the Commission finds good cause to
accelerate approval of the proposed rule change pursuant to section
19(b)(2) of the Exchange Act.
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Exchange Act, that the proposed rule change (SR-NYSE-2006-39) is hereby
approved on an accelerated basis.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-8875 Filed 6-7-06; 8:45 am]
BILLING CODE 8010-01-P
