Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Trading Shares of the PowerShares DB G10 Currency Harvest Fund Pursuant to Unlisted Trading Privileges, 60594-60599 [E6-16952]

Download as PDF 60594 Federal Register / Vol. 71, No. 198 / Friday, October 13, 2006 / Notices All submissions should refer to File Number SR–ISE–2006–56. 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 ISE. 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–ISE–2006–56 and should be submitted on or before November 3, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.7 J. Lynn Taylor, Assistant Secretary. [FR Doc. 06–8646 Filed 10–12–06; 8:45am] BILLING CODE 8011–01–M SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Trading Shares of the PowerShares DB G10 Currency Harvest Fund Pursuant to Unlisted Trading Privileges ycherry on PROD1PC64 with NOTICES2 October 4, 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 September 21, 2006, NYSE Arca, Inc. (‘‘Exchange’’), through its wholly owned CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 15:21 Oct 12, 2006 Jkt 211001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to trade shares (‘‘Shares’’) of the PowerShares DB G10 Currency Harvest Fund (the ‘‘Trust’’ or ‘‘Fund’’) pursuant to unlisted trading privileges (‘‘UTP’’) under Commentary .02 to NYSE Arca Equities Rule 8.200. 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 III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose [Release No. 34–54569; File No. SR– NYSEArca–2006–64] 7 17 subsidiary NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’ or the ‘‘Corporation’’), filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons and is approving the proposal on an accelerated basis. Pursuant to Commentary .02 to NYSE Arca Equities Rule 8.200, the Exchange may approve for listing and trading trust issued receipts (‘‘TIRs’’) investing in shares or securities (‘‘Investment Shares’’) that hold investments in any combination of futures contracts, options on futures contracts, forward contracts, commodities, swaps or high credit quality short-term fixed income securities or other securities.3 The Commission previously approved a proposal to list and trade the Shares of 3 In April 2006, the Commission approved Commentary .02 to NYSE Arca Equities Rule 8.200, which sets forth the rules related to listing and trading criteria for Investment Shares, and approved trading pursuant to UTP the shares of the DB Commodity Index Tracking Fund. See Securities Exchange Act Release No. 53736 (April 27, 2006), 71 FR 26582 (May 5, 2006) (SR–PCX–2006–22). PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 the Fund 4 by the American Stock Exchange LLC (the ‘‘Amex’’).5 The Exchange proposes to trade pursuant to UTP the Shares of the Fund pursuant to Commentary .02 to NYSE Arca Equities Rule 8.200. The Shares represent beneficial ownership interests in the Fund’s net assets, consisting solely of the common units of beneficial interests of the DB G10 Currency Harvest Master Fund (the ‘‘Master Fund’’). The Master Fund is a statutory trust created under Delaware law whose investment portfolio will consist primarily of futures contracts on the currencies comprising the Deutsche Bank G10 Currency Future Harvest Index—Excess ReturnTM (the ‘‘DBCHI’’ or ‘‘Index’’) and will include cash and U.S Treasury securities for margin purposes and other high credit quality short-term fixed income securities. Both the Fund and the Master Fund will be commodity pools operated by DB Commodity Services LLC (the ‘‘Managing Owner’’).6 The investment objective of the Fund and the Master Fund is to reflect the performance of the Index, over time, less the expenses of the operation of the Fund and the Master Fund. The Fund will pursue its investment objective by investing substantially all of its assets in the Master Fund. Each Share will correlate with a Master Fund share issued by the Master Fund and held by the Fund. The Master Fund will pursue its investment objective by taking long futures positions in the three (3) Index Currencies associated with the highest interest rates and short futures positions in the three (3) Index Currencies associated with the lowest interest rates 7 and will adjust its holdings 4 The Fund and Master Fund were previously named the DB Currency Index Value Fund and DB Currency Index Value Master Fund, respectively. Telephone conversation between Michael Cavalier, Associate General Counsel, NYSE, and Ronesha A. Butler, Special Counsel, Division of Market Regulation (‘‘Division’’), Commission, on October 4, 2006. 5 See Securities Exchange Act Release No. 54450 (September 14, 2006) (SR–Amex–2006–44) (the ‘‘Amex Order’’). See also Securities Exchange Act Release No. 54351 (August 23, 2006), 71 FR 51245, as corrected by 71 FR 53492 (September 11, 2006) (SR–Amex–2006–44). 6 The Managing Owner is registered as a commodity pool operator (the ‘‘CPO’’) and commodity trading advisor (the ‘‘CTA’’) with the Commodity Futures Trading Commission (‘‘CFTC’’) and is a member of the National Futures Association (‘‘NFA’’). The Managing Owner will serve as the CPO and CTA of the Fund and the Master Fund. 7 The use of long and short positions in the construction of the Index causes the Index to rise as a result of any upward price movement of Index Currencies expected to gain relative to the U.S. Dollar and to rise as a result of any downward price movement of Index Currencies expected to lose relative to the U.S. Dollar. E:\FR\FM\13OCN1.SGM 13OCN1 Federal Register / Vol. 71, No. 198 / Friday, October 13, 2006 / Notices ycherry on PROD1PC64 with NOTICES2 quarterly as the Index is adjusted. In addition, the Master Fund will also hold cash and U.S. Treasury securities for deposit with futures commission merchants as margin and other high credit quality short-term fixed income securities. The Fund is not managed on a discretionary basis but instead seeks to track the Index pursuant to established rules and procedures. For more information, see the Amex Order. The Index, at any time, is comprised of six (6) currencies from The Group Ten (‘‘G10’’) countries,8 each of which is traded on the Chicago Mercantile Exchange (the ‘‘CME’’). The notional amounts of each index currency included in the Index (‘‘Index Currency’’) are based on the Index closing level as of the period in which the Index is re-weighted.9 The Index closing level reflects an arithmetic weighted average of the change in the futures positions on the Index Currencies’ exchange rates against the U.S. dollar since March 12, 1993. On such date, the Index closing level was $100. The sponsor of the Index is Deutsche Bank AG London (‘‘DB London’’ or the ‘‘Index Sponsor’’). (a) The Shares. A description of the operation of the Fund and the creation and redemption process for the Shares is set forth in the Amex Order. To summarize, issuances of Shares will be made only in one or more blocks of 200,000 Shares or multiples thereof (‘‘Basket Aggregation’’ or ‘‘Basket’’). The Fund will issue and redeem the Shares on a continuous basis, by or through participants that have entered into participant agreements (each, an ‘‘Authorized Participant’’) 10 with the Managing Owner. Baskets will be issued in exchange for an amount of cash equal to the NAV per Share times 200,000 Shares (‘‘Basket Amount’’). The Basket Amount will be determined on each business day by The Bank of New York (‘‘Administrator’’).11 Authorized 8 The G10 currencies are the United States Dollar, the Euro, the Japanese Yen, the Canadian Dollar, the Swiss Franc, the British Pound, the Australian Dollar, the New Zealand Dollar, the Norwegian Krone and the Swedish Krona (the ‘‘Eligible Index Currencies’’). 9 The Index Sponsor reviews and re-weights the Index on a quarterly basis. For more information, see the Amex Order, supra note 5. 10 An ‘‘Authorized Participant’’ is a person, who at the time of submitting to the trustee an order to create or redeem one or more Baskets: (i) Is a registered broker-dealer; (ii) is a Depository Trust Company Participant; and (iii) has in effect a valid Participant Agreement. 11 At or about 4 p.m. Eastern time (‘‘ET’’) each business day, the Administrator will determine the Basket Amount for orders placed by Authorized Participants received before 1 p.m. ET that day. Thus, although Authorized Participants place VerDate Aug<31>2005 15:21 Oct 12, 2006 Jkt 211001 Participants that wish to purchase a Basket must transfer the Basket Amount to the Administrator (the ‘‘Cash Deposit Amount’’). Baskets are then separable upon issuance into the Shares that will be traded on NYSE Arca MarketPlace on a UTP basis.12 The Shares will not be individually redeemable but will only be redeemable in Baskets. To redeem, an Authorized Participant will be required to accumulate enough Shares to constitute a Basket (i.e., 200,000 shares). Authorized Participants that wish to redeem a Basket will receive cash in exchange for each Basket surrendered in an amount equal to the NAV per Basket (the ‘‘Cash Redemption Amount’’). Upon the surrender of the Shares and payment of applicable redemption transaction fee, taxes or charges, the Administrator will deliver to the redeeming Authorized Participant the Cash Redemption Amount. The operation of the Fund and creation and redemption process is described in more detail in the Amex Order. After 4 p.m. Eastern time (‘‘ET’’) each business day, the Administrator will determine the NAV 13 for the Fund, utilizing the current settlement value of the particular long and short exchangetraded futures contracts on the Index Currencies. The calculation methodology for the NAV is described in more detail in the Amex Order. After 4 p.m. ET each business day, the Administrator, Amex and Managing Owner will disseminate the NAV for the Shares and the Basket Amount (for orders placed during the day). The Basket Amount and the NAV are communicated by the Administrator to all Authorized Participants via facsimile or electronic mail message and will be orders to purchase Shares throughout the trading day until 1 p.m. ET, the actual Basket Amount is determined at 4 p.m. ET or thereafter. On each business day, the Administrator will make available immediately prior to 9:30 a.m. ET, the most recent Basket Amount for the creation of a Basket. According to the Amex Order, the Amex will disseminate every 15 seconds throughout the trading day, via the facilities of the Consolidated Tape (‘‘CT’’), an amount representing on a per Share basis, the current value of the Basket Amount. 12 Shares are separate and distinct from the shares of the Master Fund. The Exchange expects that the number of outstanding Shares will increase and decrease from time to time as a result of creations and redemptions of Baskets. 13 The NAV for the Fund is the total assets of the Master Fund less total liabilities of the Master Fund. The NAV is calculated by including any unrealized profit or loss on futures contracts and any other credit or debit accruing to the Master Fund but unpaid or not received by the Master Fund. The NAV is then used to compute all fees (including the management and administrative fees) that are calculated from the value of Master Fund assets. The Administrator will calculate the NAV per Share by dividing the NAV by the number of Shares outstanding. PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 60595 available on the Fund’s Web site at https://www.dbfunds.db.com.14 The Exchange will provide a hyperlink to the Fund’s Web site on its Web site at https://www.nysearca.com. (b) Availability of Information About the Index, the Underlying Futures Contracts and the Shares. In order to provide updated information relating to the Fund for use by investors, professionals and persons wishing to create or redeem the Shares, the Amex will disseminate through the facilities of the CT an updated Indicative Fund Value (the ‘‘IFV’’). The IFV will be disseminated on a per Share basis every 15 seconds from 9:30 a.m. to 4:15 p.m. ET. The IFV will be calculated based on the cash required for creations and redemptions (i.e., NAV x 200,000) adjusted to reflect the price changes of the Index Currencies through investments held by the Master Fund, i.e., futures contracts and options on futures and/or forwards.15 The IFV will not reflect price changes to the price of an underlying currency between the close of trading of the futures contract at the relevant futures exchange and 4:15 p.m. ET. While the Shares will trade on the NYSE Arca Marketplace from 9:30 a.m. to 4:15 p.m. ET, regular trading hours for each of the Index Currencies on the CME is 8:20 a.m. to 3 p.m. (ET), though electronic trading of exchange traded foreign currency products on computerized trading systems (e.g., GLOBEX  at CME) takes place on a nearly 24-hour basis. Therefore, the value of a Share may be influenced by non-concurrent trading hours between the NYSE Arca Marketplace and the various futures exchanges on which the futures contracts based on the Index Currencies are traded. While the market for futures trading for each of the Index Currencies is open, the IFV can be expected to closely approximate the value per Share of the Basket Amount. However, during trading hours when the futures contracts have ceased trading, spreads and resulting premiums or discounts may widen, and therefore, increase the 14 According to the Amex Order, Amex has represented that the NAV for the Fund will be made available to all market participants at the same time. If the NAV is not disseminated to all market participants at the same time, the Amex will halt trading in the Shares. However, if the Fund temporarily does not disseminate the NAV to all market participants at the same time, the Amex has agreed to immediately contact the Commission staff to discuss measures that may be appropriate under the circumstances. 15 On each business day, the Administrator will make available immediately prior to 9:30 a.m. ET via the facilities of the CT the most recent Basket Amount for the creation of a Basket. E:\FR\FM\13OCN1.SGM 13OCN1 60596 Federal Register / Vol. 71, No. 198 / Friday, October 13, 2006 / Notices ycherry on PROD1PC64 with NOTICES2 difference between the price of the Shares and the NAV of the Shares. IFV on a per Share basis should not be viewed as a real time update of the NAV, which is calculated only once a day. DB London, as the Index Sponsor, will publish the value of the Index at least once every fifteen (15) seconds throughout each trading day on the CT, Bloomberg, Reuters, and on its Web site at https://index.db.com and on the Fund’s Web site at https:// www.dbfunds.db.com. The closing Index level will similarly be provided by DB London and the Fund. In addition, any adjustments or changes to the Index will also be provided by DB London and the Fund on their respective Web sites.16 The daily settlement prices for the foreign currency futures contracts comprising the Index and held by the Master Fund are publicly available on the Internet Web sites of the futures exchanges trading the particular contracts, as well as automated quotation systems, published or other public sources, or on-line information services such as Bloomberg or Reuters. In addition, the Exchange will provide a hyperlink on its Internet Web site to the Fund’s Internet Web site. All of the foreign currency futures contracts in which the Master Fund currently expects to invest are traded on the CME, although currency futures contracts on the eligible Index Currencies also trade on other futures exchanges in the United States and the Master Fund may invest in such contracts.17 In addition, various data vendors and news publications publish futures prices and data. Futures quotes and last sale information for the Index Currencies are widely disseminated through a variety of major market data vendors worldwide,18 including Bloomberg and Reuters. In addition, 16 According to the Amex Order, the Sponsor has in place procedures to prevent the improper sharing of information between different affiliates and departments. Specifically, an information barrier exists between the personnel within DB London that calculate and reconstitute the Index and other personnel of the Sponsor, including but not limited to the Managing Owner, sales and trading, external or internal fund managers, and bank personnel who are involved in hedging the bank’s exposure to instruments linked to the Index, in order to prevent the improper sharing of information relating to the recomposition of the Index. 17 Other futures exchanges may include, for example, the New York Board of Trade and other futures exchanges which have a comprehensive surveillance sharing agreement with the Exchange or is an Intermarket Surveillance Group (‘‘ISG’’) member. 18 Telephone conversation between Michael Cavalier, Associate General Counsel, NYSE, and Ronesha A. Butler, Special Counsel, Division, Commission, on October 4, 2006. VerDate Aug<31>2005 15:21 Oct 12, 2006 Jkt 211001 complete real-time data for such futures is available by subscription from Reuters and Bloomberg. The specific contract specifications for the futures contracts are also available from the CME on its Web site, as well as other financial informational sources. The Web site for the Fund is https:// www.dbfunds.db.com, to which the Exchange will hyperlink at https:// www.nysearca.com. The Web site for the Fund, which is publicly accessible at no charge, will contain the following information: (a) The current NAV per Share daily and the prior business day’s NAV and the reported closing price; (b) the mid-point of the bid-ask price in relation to the NAV as of the time the NAV is calculated (the ‘‘Bid-Ask Price’’);19 (c) the calculation of the premium or discount of such price against such NAV; (d) data in chart form displaying the frequency distribution of discounts and premiums of the Bid-Ask Price against the NAV, within appropriate ranges for each of the four (4) previous calendar quarters; (e) the prospectus; and (f) other applicable quantitative information. The Amex will make available on its Web site the daily trading volume of the Shares. Quotations for and last sale information regarding the Shares will be disseminated via the CTA/CQS. Investors may obtain, on a 24-hour basis, currency pricing information from various financial information service providers. Current currency spot prices are also generally available with bid/ask spreads from foreign exchange dealers. Complete real-time data for futures and options prices traded on the CME and the Philadelphia Stock Exchange (‘‘Phlx’’) are also available by subscription from information service providers. CME and Phlx also provide delayed futures and options information on current and past trading sessions and market news free of charge on their respective Web sites. There are a variety of other public Web sites that provide information on currency, such as Bloomberg (https://www.bloomberg.com/ markets/currencies/ eurafr_currencies.html), which regularly reports current foreign currency pricing for a fee. Other service providers include CBS Market Watch (https:// marketwatch.com/tools.stockresearch/ globalmarkets) and Yahoo! Finance (https://finance.yahoo.com/currency). Many of these sites offer price quotations drawn from other published sources, and as the information is 19 The Bid-Ask Price of Shares is determined using the highest bid and lowest offer as of the time of calculation of the NAV. PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 supplied free of charge, it generally is subject to time delays. As noted above, the Administrator calculates the NAV of the Fund once each trading day and disseminates such NAV to all market participants at the same time.20 In addition, the Administrator causes to be made available on a daily basis the Cash Deposit Amount to be deposited in connection with the issuance of the Shares in Baskets. Other investors can also request such information directly from the Administrator. (c) UTP Trading Criteria. The Exchange represents that it will cease trading the Shares if: (a) the listing market stops trading the Shares because of a regulatory halt similar to a halt based on NYSE Arca Equities Rule 7.12 or a halt because the IFV or the value of the Index is no longer available at least every 15 seconds; or (b) the listing market delists the Shares. Additionally, the Exchange may cease trading the Shares if such other event shall occur or condition exists which in the opinion of the Exchange makes further dealings on the Exchange inadvisable. (d) Trading Rules. The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 9:30 a.m. until 4:15 p.m. ET. The Exchange has appropriate rules to facilitate transactions in the Shares during this trading session. The minimum trading increment for Shares on the Exchange will be $0.01. The trading of the Shares will be subject to Commentary .02(e)(1)–(4) to NYSE Arca Equities Rule 8.200, which sets forth certain restrictions on ETP Holders acting as registered Market Makers in TIRs that invest in Investment Shares to facilitate surveillance. With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) the extent to which trading is not occurring in the underlying futures contracts; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. In addition, trading in Shares will be subject to trading halts caused by extraordinary market volatility pursuant to the Exchange’s ‘‘circuit breaker’’ 20 See E:\FR\FM\13OCN1.SGM supra note 14. 13OCN1 Federal Register / Vol. 71, No. 198 / Friday, October 13, 2006 / Notices rule 21 or by the halt or suspension of trading of the underlying futures contracts. See ‘‘UTP Trading Criteria’’ above for specific instances when the Exchange will cease trading the Shares. Shares will be deemed ‘‘Eligible Listed Securities,’’ as defined in NYSE Arca Equities Rule 7.55, for purposes of the Intermarket Trading System (‘‘ITS’’) Plan and therefore will be subject to the trade through provisions of NYSE Arca Equities Rule 7.56, which require that ETP Holders avoid initiating tradethroughs for ITS securities. Unless exemptive or no-action relief is available, the Shares will be subject to the short sale rule, Rule 10a–1 under the Act.22 If exemptive or no-action relief is provided, the Exchange will issue a notice detailing the terms of the exemption or relief. (e) Surveillance. The Exchange intends to utilize its existing surveillance procedures applicable to derivative products to monitor trading in the Shares. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares and to deter and detect violations of Exchange rules. The Exchange’s current trading surveillance focuses on detecting securities trading outside their normal patterns. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations. Further, trading in the Shares will be subject to Commentary .02(e)(1)–(4) to NYSE Arca Equities Rule 8.200, which sets forth certain restrictions on ETP Holders acting as registered Market Makers in TIRs that invest in Investment Shares to facilitate surveillance. Commentary .02(e)(1) to NYSE Arca Equities Rule 8.200 requires that the ETP Holder acting as a registered Market Maker in the Shares provide the Exchange with information relating to its trading in the underlying physical asset or commodity, related futures or options on futures, or any other related derivatives. In addition, Commentary .02(e)(1) to NYSE Arca Equities Rule 8.200 prohibits the ETP Holder acting as a registered Market Maker in the Shares from being affiliated with a market maker in the underlying physical asset ycherry on PROD1PC64 with NOTICES2 21 See NYSE Arca Equities Rule 7.12. to the Amex Order, the Fund expects to seek relief, in the near future, from the Commission in connection with the trading of the Shares from the operation of the short sale rule, Rule 10a–1 under the Act. If granted, the Shares would be exempt from Rule 10a–1 under the Act permitting sales without regard to the ‘‘tick’’ requirements of Rule 10a–1 under the Act. 22 According VerDate Aug<31>2005 15:21 Oct 12, 2006 Jkt 211001 or commodity, related futures or options on futures or any other related derivative unless adequate information barriers are in place, as provided in NYSE Arca Equities Rule 7.26. Commentary .02(e)(2)–(3) to NYSE Arca Equities Rule 8.200 requires that Market Makers handling the Shares provide the Exchange with all the necessary information relating to their trading in the underlying physical assets or commodities, related futures contracts and options thereon or any other derivative. Commentary .02(e)(4) to NYSE Arca Equities Rule 8.200 prohibits the ETP Holder acting as a registered Market Maker in the Shares from using any material nonpublic information received from any person associated with an ETP Holder or employee of such person regarding trading by such person or employee in the underlying physical asset or commodity, related futures or options on futures or any other related derivative (including the Shares). The Exchange is able to obtain information regarding trading in the Shares and the underlying futures contracts via the Intermarket Surveillance Group (‘‘ISG’’) from other exchanges who are members or affiliates of the ISG, including the CME.23 In addition, to the extent that the Master Fund invests in foreign currency futures contracts traded on futures exchanges other than CME, the Exchange must have a comprehensive surveillance sharing agreement with that futures exchange or the futures exchange must be an ISG member. (f) Information Bulletin. Prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Baskets (and that Shares are not individually redeemable); (2) NYSE Arca Equities Rule 9.2(a),24 which 23 For a list of the current members and affiliate members of ISG, see https://www.isgportal.com. 24 The Exchange recently amended NYSE Arca Equities Rule 9.2(a) (‘‘Diligence as to Accounts’’) to provide that ETP Holders, before recommending a transaction, must have reasonable grounds to believe that the recommendation is suitable for the customer based on any facts disclosed by the customer as to his other security holdings and as to his financial situation and needs. Further, the proposed rule amendment provides, with a limited exception, that prior to the execution of a transaction recommended to a non-institutional customer, the ETP Holders shall make reasonable efforts to obtain information concerning the customer’s financial status, tax status, investment objectives, and any other information that they believe would be useful to make a recommendation. PO 00000 Frm 00137 Fmt 4703 Sfmt 4703 60597 imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) how information regarding the IFV is disseminated; (4) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (5) trading information. In addition, the Information Bulletin will advise ETP Holders, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Fund. The Exchange notes that investors purchasing Shares directly from the Fund (by delivery of the Basket Amount) will receive a prospectus. ETP Holders purchasing Shares from the Fund for resale to investors will deliver a prospectus to such investors. The Information Bulletin will also discuss any exemptive, noaction and interpretive relief granted by the Commission from any rules under the Act. In addition, the Information Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Information Bulletin will also reference that the CFTC has regulatory jurisdiction over the trading of futures contracts. The Information Bulletin will also disclose that the NAV for the Shares will be calculated after 4 p.m. ET each trading day and that information about the Shares and the Index will be publicly available on the Fund Web site to which the Exchange will hyperlink from its Web site. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,25 in general, and furthers the objectives of Section 6(b)(5),26 in particular, because it is designed to prevent fraudulent and manipulative act and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments and perfect the mechanisms of a free and open market, and, in general, to protect investors and the public interest. In addition, the Exchange believes that the proposal is consistent with Rule See Securities Exchange Act Release No. 54045 (June 26, 2006), 71 FR 37971 (July 3, 2006) (SRPCX–2005–115). 25 15 U.S.C. 78f(b). 26 15 U.S.C. 78f(b)(5). E:\FR\FM\13OCN1.SGM 13OCN1 60598 Federal Register / Vol. 71, No. 198 / Friday, October 13, 2006 / Notices ycherry on PROD1PC64 with NOTICES2 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 offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2006–64 and should be submitted on or before November 3, 2006. the Exchange’s existing rules governing the trading of equity securities. The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act,33 which sets forth Congress’s finding that it is in the B. Self-Regulatory Organization’s public interest and appropriate for the Statement on Burden on Competition protection of investors and the The Exchange does not believe that maintenance of fair and orderly markets the proposed rule change will impose to assure the availability to brokers, any burden on competition that is not dealers, and investors of information necessary or appropriate in furtherance with respect to quotations for and of the purposes of the Act. transactions in securities. In support of the proposed rule C. Self-Regulatory Organization’s change, the Exchange has made the Statement on Comments on the following representations: Proposed Rule Change Received From IV. Commission’s Findings and Order Members, Participants or Others 1. The Exchange has appropriate rules Granting Accelerated Approval of to facilitate transactions in this type of Proposed Rule Change Written comments on the proposed security in all trading sessions. rule change were neither solicited nor The Commission finds that the 2. The Exchange’s surveillance received. proposed rule change is consistent with procedures are adequate to properly the requirements of the Act and the III. Solicitation of Comments monitor the trading of the Shares on the rules and regulations thereunder Interested persons are invited to Exchange. applicable to a national securities submit written data, views, and 3. The Exchange will inform its ETP exchange.28 In particular, the arguments concerning the foregoing, Holders in an Information Bulletin of Commission finds that the proposed including whether the proposed rule the special characteristics and risks rule change is consistent with Section change is consistent with the Act. associated with trading the Shares. 29 which requires that 6(b)(5) of the Act, Comments may be submitted by any of 4. The Exchange will require its ETP an exchange have rules designed, among the following methods: Holders to deliver a prospectus to other things, to promote just and investors purchasing newly issued Electronic Comments equitable principles of trade, to remove Shares prior to or concurrently with the impediments to and perfect the • Use the Commission’s Internet confirmation of a transaction and will mechanism of a free and open market comment form (https://www.sec.gov/ note this prospectus delivery and a national market system, and in rules/sro.shtml); or requirement in the Information Bulletin. general to protect investors and the • Send an e-mail to rule5. The Exchange will cease trading the public interest. comments@sec.gov. Please include File Shares of a Fund if: (a) the listing In addition, the Commission finds Number SR–NYSEArca–2006–64 on the market stops trading the Shares because that the proposal is consistent with subject line. Section 12(f) of the Act,30 which permits of a regulatory halt similar to a halt Paper Comments based on NYSE Arca Equities Rule 7.12 an exchange to trade, pursuant to UTP, a security that is listed and registered on or a halt because the IOPV or the value • Send paper comments in triplicate of the applicable Underlying Index is no another exchange.31 The Commission to Nancy M. Morris, Secretary, also finds that the proposal is consistent longer available; or (b) the listing market Securities and Exchange Commission, with Rule 12f–5 under the Act,32 which delists the Shares. Station Place, 100 F Street, NE., This approval order is conditioned on provides that an exchange shall not Washington, DC 20549–1090. the Exchange’s adherence to these extend UTP to a security unless the All submissions should refer to File representations. exchange has in effect a rule or rules Number SR–NYSEArca–2006–64. This providing for transactions in the class or The Commission finds good cause for file number should be included on the approving this proposed rule change subject line if e-mail is used. To help the type of security to which the exchange extends UTP. NYSEArca rules deem the before the thirtieth day after the Commission process and review your Shares to be equity securities, thus publication of notice thereof in the comments more efficiently, please use Federal Register. As noted above, the only one method. The Commission will trading in the Shares will be subject to Commission previously found that the post all comments on the Commission’s 28 In approving this rule change, the Commission listing and trading of these Shares on Internet Web site (https://www.sec.gov/ notes that it has considered the proposed rule’s the Amex is consistent with the Act.34 rules/sro.shtml). Copies of the impact on efficiency, competition, and capital The Commission presently is not aware submission, all subsequent formation. See 15 U.S.C. 78c(f). of any issue that would cause it to amendments, all written statements 28 15 U.S.C. 78f(b)(5). revisit that earlier finding or preclude 30 15 U.S.C. 78l(f). with respect to the proposed rule 31 Section 12(a) of the Act, 15 U.S.C. 78l(a), the trading of these funds on the change that are filed with the generally prohibits a broker-dealer from trading a Exchange pursuant to UTP. Therefore, Commission, and all written security on a national securities exchange unless accelerating approval of this proposed communications relating to the the security is registered on that exchange pursuant rule change should benefit investors by proposed rule change between the to Section 12 of the Act. Section 12(f) of the Act creating, without undue delay, Commission and any person, other than excludes from this restriction trading in any security to which an exchange ‘‘extends UTP.’’ additional competition in the market for those that may be withheld from the When an exchange extends UTP to a security, it these Shares. public in accordance with the allows its members to trade the security as if it were provisions of 5 U.S.C. 552, will be listed and registered on the exchange even though 12f–5 under the Act 27 because it deems the Shares to be equity securities, thus rendering the Shares subject to the Exchange’s existing rules governing the trading of equity securities. 27 17 it is not so listed and registered. 32 17 CFR 240.12f–5. CFR 240.12f–5. VerDate Aug<31>2005 15:21 Oct 12, 2006 Jkt 211001 PO 00000 Frm 00138 Fmt 4703 Sfmt 4703 33 15 U.S.C. 78k–1(a)(1)(C)(iii). Amex Order, supra note 4. 34 See E:\FR\FM\13OCN1.SGM 13OCN1 Federal Register / Vol. 71, No. 198 / Friday, October 13, 2006 / Notices V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR–NYSEArca– 2006–64), is hereby approved on an accelerated basis.35 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.36 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–16952 Filed 10–12–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54572; File No. SR–OCC– 2006–12] Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to an Escrow Program Fee To Be Charged to Escrow Banks October 4, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on July 12, 2006, The Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission the proposed rule change as described in Items I, II and III below, which Items have been prepared primarily by OCC. 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 proposed rule change would amend OCC’s Schedule of Fees by adding a $200 escrow fee to be charged to OCC-approved banks. ycherry on PROD1PC64 with NOTICES2 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, OCC 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 self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, 35 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 36 17 VerDate Aug<31>2005 15:21 Oct 12, 2006 Jkt 211001 of the most significant aspects of such statements.2 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change The purpose of the proposed rule change is to amend OCC’s Schedule of Fees by adding a $200 escrow fee to be charged to OCC-approved banks. As background, OCC’s escrow deposit program allows a custodian bank that has entered into an escrow agreement with OCC (‘‘escrow bank’’) to make deposits of eligible collateral on behalf of its customers with respect to stock option contracts and index option contracts carried in short positions and to rollover and withdraw such deposits by submitting electronic instructions to OCC through OCC’s escrow deposit system.3 Escrow deposits are pledged to both the customer’s clearing member and to OCC in order to satisfy the customer’s obligation to deposit customer level margin at the clearing member and in order to satisfy the clearing member’s obligation to deposit clearing level margin at OCC with respect to a specified short position in stock or index options.4 Under OCC’s form of escrow agreement, an escrow bank is obligated to hold the deposited collateral subject to the lien of OCC and the clearing member until such liens are released. In 2005, the escrow deposit system was integrated into OCC’s clearing system, which enabled escrow banks to access the escrow system through the internet. Before the integration, escrow banks were required to lease or buy a personal computer that was configured by OCC to provide secure access to the escrow deposit system. Banks that elected the lease alternative are charged a $200.00 monthly fee of which $150.00 is an equipment leasing fee and $50.00 is an access fee.5 Banks that (i) Elected the purchase alternative or (ii) became escrow banks after the systems 2 The Commission has modified the text of the summaries prepared by OCC. 3 Escrow banks also use the escrow deposit system to receive and review OCC and relevant clearing member responses and to access reports. 4 Escrow deposits may include: (i) the underlying securities for any stock option contract; (ii) cash, short-term U.S. Government securities, and/or common stocks for any index call option contract; and (iii) cash and/or short-term U.S. Government securities for stock or index put options. 5 OCC has continued to charge current escrow banks with leased equipment the $200.00 per month total fee as they have retained such equipment as a back-up to Internet access to the escrow system. However, a different back-up solution is being implemented for all escrow banks, which is rendering the leased equipment obsolete for purposes of accessing the escrow system. PO 00000 Frm 00139 Fmt 4703 Sfmt 4703 60599 integration are charged only the $50 access fee, which is intended to cover the costs associated with administering the escrow deposit program. Costs to administer the program include: (1) Legal costs related to addressing the contractual aspects of the program; (2) audit costs related to ensuring compliance with the external audit reporting requirements of the program; and (3) staff costs related to servicing program users (i.e., escrow banks and clearing members). In connection with reviewing different back-up solutions to Internet access, OCC also examined its costs to administer the escrow program and concluded that the costs greatly exceed the $50.00 per month access fee. Accordingly, OCC has determined to charge all escrow banks a $200.00 per month escrow program fee, which would be reflected in OCC’s Schedule of Fees. The proposed program fee will allow OCC to partially offset its escrow program administration costs but will not affect the overwhelming majority of escrow banks which already pay $200.00 per month in aggregate escrow deposit program fees. OCC believes that the proposed change is consistent with Section 17A of the Act 6 and the rules thereunder because it amends OCC’s Schedule of Fees to include a reasonable fee to be charged to escrow banks that utilize OCC’s escrow deposit system to partially offset OCC’s cost to administer the escrow program. The proposed rule change is not inconsistent with the existing rules of OCC including any other rules proposed to be amended. B. Self-Regulatory Organization’s Statement on Burden on Competition OCC does not believe that the proposed rule change would impose any burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others OCC has not solicited or received written comments with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the Federal Register or within such longer period (i) As the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or 6 15 E:\FR\FM\13OCN1.SGM U.S.C. 78q–1. 13OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 198 (Friday, October 13, 2006)]
[Notices]
[Pages 60594-60599]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-16952]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54569; File No. SR-NYSEArca-2006-64]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change 
Relating to Trading Shares of the PowerShares DB G10 Currency Harvest 
Fund Pursuant to Unlisted Trading Privileges

October 4, 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 September 21, 2006, NYSE Arca, Inc. (``Exchange''), through its 
wholly owned subsidiary NYSE Arca Equities, Inc. (``NYSE Arca 
Equities'' or the ``Corporation''), filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to trade shares (``Shares'') of the 
PowerShares DB G10 Currency Harvest Fund (the ``Trust'' or ``Fund'') 
pursuant to unlisted trading privileges (``UTP'') under Commentary .02 
to NYSE Arca Equities Rule 8.200.

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 III below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    Pursuant to Commentary .02 to NYSE Arca Equities Rule 8.200, the 
Exchange may approve for listing and trading trust issued receipts 
(``TIRs'') investing in shares or securities (``Investment Shares'') 
that hold investments in any combination of futures contracts, options 
on futures contracts, forward contracts, commodities, swaps or high 
credit quality short-term fixed income securities or other 
securities.\3\ The Commission previously approved a proposal to list 
and trade the Shares of the Fund \4\ by the American Stock Exchange LLC 
(the ``Amex'').\5\ The Exchange proposes to trade pursuant to UTP the 
Shares of the Fund pursuant to Commentary .02 to NYSE Arca Equities 
Rule 8.200.
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    \3\ In April 2006, the Commission approved Commentary .02 to 
NYSE Arca Equities Rule 8.200, which sets forth the rules related to 
listing and trading criteria for Investment Shares, and approved 
trading pursuant to UTP the shares of the DB Commodity Index 
Tracking Fund. See Securities Exchange Act Release No. 53736 (April 
27, 2006), 71 FR 26582 (May 5, 2006) (SR-PCX-2006-22).
    \4\ The Fund and Master Fund were previously named the DB 
Currency Index Value Fund and DB Currency Index Value Master Fund, 
respectively. Telephone conversation between Michael Cavalier, 
Associate General Counsel, NYSE, and Ronesha A. Butler, Special 
Counsel, Division of Market Regulation (``Division''), Commission, 
on October 4, 2006.
    \5\ See Securities Exchange Act Release No. 54450 (September 14, 
2006) (SR-Amex-2006-44) (the ``Amex Order''). See also Securities 
Exchange Act Release No. 54351 (August 23, 2006), 71 FR 51245, as 
corrected by 71 FR 53492 (September 11, 2006) (SR-Amex-2006-44).
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    The Shares represent beneficial ownership interests in the Fund's 
net assets, consisting solely of the common units of beneficial 
interests of the DB G10 Currency Harvest Master Fund (the ``Master 
Fund''). The Master Fund is a statutory trust created under Delaware 
law whose investment portfolio will consist primarily of futures 
contracts on the currencies comprising the Deutsche Bank G10 Currency 
Future Harvest Index--Excess Return^TM (the ``DBCHI'' or 
``Index'') and will include cash and U.S Treasury securities for margin 
purposes and other high credit quality short-term fixed income 
securities. Both the Fund and the Master Fund will be commodity pools 
operated by DB Commodity Services LLC (the ``Managing Owner'').\6\
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    \6\ The Managing Owner is registered as a commodity pool 
operator (the ``CPO'') and commodity trading advisor (the ``CTA'') 
with the Commodity Futures Trading Commission (``CFTC'') and is a 
member of the National Futures Association (``NFA''). The Managing 
Owner will serve as the CPO and CTA of the Fund and the Master Fund.
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    The investment objective of the Fund and the Master Fund is to 
reflect the performance of the Index, over time, less the expenses of 
the operation of the Fund and the Master Fund. The Fund will pursue its 
investment objective by investing substantially all of its assets in 
the Master Fund. Each Share will correlate with a Master Fund share 
issued by the Master Fund and held by the Fund. The Master Fund will 
pursue its investment objective by taking long futures positions in the 
three (3) Index Currencies associated with the highest interest rates 
and short futures positions in the three (3) Index Currencies 
associated with the lowest interest rates \7\ and will adjust its 
holdings

[[Page 60595]]

quarterly as the Index is adjusted. In addition, the Master Fund will 
also hold cash and U.S. Treasury securities for deposit with futures 
commission merchants as margin and other high credit quality short-term 
fixed income securities. The Fund is not managed on a discretionary 
basis but instead seeks to track the Index pursuant to established 
rules and procedures. For more information, see the Amex Order.
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    \7\ The use of long and short positions in the construction of 
the Index causes the Index to rise as a result of any upward price 
movement of Index Currencies expected to gain relative to the U.S. 
Dollar and to rise as a result of any downward price movement of 
Index Currencies expected to lose relative to the U.S. Dollar.
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    The Index, at any time, is comprised of six (6) currencies from The 
Group Ten (``G10'') countries,\8\ each of which is traded on the 
Chicago Mercantile Exchange (the ``CME''). The notional amounts of each 
index currency included in the Index (``Index Currency'') are based on 
the Index closing level as of the period in which the Index is re-
weighted.\9\ The Index closing level reflects an arithmetic weighted 
average of the change in the futures positions on the Index Currencies' 
exchange rates against the U.S. dollar since March 12, 1993. On such 
date, the Index closing level was $100. The sponsor of the Index is 
Deutsche Bank AG London (``DB London'' or the ``Index Sponsor'').
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    \8\ The G10 currencies are the United States Dollar, the Euro, 
the Japanese Yen, the Canadian Dollar, the Swiss Franc, the British 
Pound, the Australian Dollar, the New Zealand Dollar, the Norwegian 
Krone and the Swedish Krona (the ``Eligible Index Currencies'').
    \9\ The Index Sponsor reviews and re-weights the Index on a 
quarterly basis. For more information, see the Amex Order, supra 
note 5.
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    (a) The Shares. A description of the operation of the Fund and the 
creation and redemption process for the Shares is set forth in the Amex 
Order. To summarize, issuances of Shares will be made only in one or 
more blocks of 200,000 Shares or multiples thereof (``Basket 
Aggregation'' or ``Basket''). The Fund will issue and redeem the Shares 
on a continuous basis, by or through participants that have entered 
into participant agreements (each, an ``Authorized Participant'') \10\ 
with the Managing Owner.
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    \10\ An ``Authorized Participant'' is a person, who at the time 
of submitting to the trustee an order to create or redeem one or 
more Baskets: (i) Is a registered broker-dealer; (ii) is a 
Depository Trust Company Participant; and (iii) has in effect a 
valid Participant Agreement.
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    Baskets will be issued in exchange for an amount of cash equal to 
the NAV per Share times 200,000 Shares (``Basket Amount''). The Basket 
Amount will be determined on each business day by The Bank of New York 
(``Administrator'').\11\ Authorized Participants that wish to purchase 
a Basket must transfer the Basket Amount to the Administrator (the 
``Cash Deposit Amount''). Baskets are then separable upon issuance into 
the Shares that will be traded on NYSE Arca MarketPlace on a UTP 
basis.\12\
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    \11\ At or about 4 p.m. Eastern time (``ET'') each business day, 
the Administrator will determine the Basket Amount for orders placed 
by Authorized Participants received before 1 p.m. ET that day. Thus, 
although Authorized Participants place orders to purchase Shares 
throughout the trading day until 1 p.m. ET, the actual Basket Amount 
is determined at 4 p.m. ET or thereafter. On each business day, the 
Administrator will make available immediately prior to 9:30 a.m. ET, 
the most recent Basket Amount for the creation of a Basket. 
According to the Amex Order, the Amex will disseminate every 15 
seconds throughout the trading day, via the facilities of the 
Consolidated Tape (``CT''), an amount representing on a per Share 
basis, the current value of the Basket Amount.
    \12\ Shares are separate and distinct from the shares of the 
Master Fund. The Exchange expects that the number of outstanding 
Shares will increase and decrease from time to time as a result of 
creations and redemptions of Baskets.
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    The Shares will not be individually redeemable but will only be 
redeemable in Baskets. To redeem, an Authorized Participant will be 
required to accumulate enough Shares to constitute a Basket (i.e., 
200,000 shares). Authorized Participants that wish to redeem a Basket 
will receive cash in exchange for each Basket surrendered in an amount 
equal to the NAV per Basket (the ``Cash Redemption Amount''). Upon the 
surrender of the Shares and payment of applicable redemption 
transaction fee, taxes or charges, the Administrator will deliver to 
the redeeming Authorized Participant the Cash Redemption Amount. The 
operation of the Fund and creation and redemption process is described 
in more detail in the Amex Order.
    After 4 p.m. Eastern time (``ET'') each business day, the 
Administrator will determine the NAV \13\ for the Fund, utilizing the 
current settlement value of the particular long and short exchange-
traded futures contracts on the Index Currencies. The calculation 
methodology for the NAV is described in more detail in the Amex Order.
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    \13\ The NAV for the Fund is the total assets of the Master Fund 
less total liabilities of the Master Fund. The NAV is calculated by 
including any unrealized profit or loss on futures contracts and any 
other credit or debit accruing to the Master Fund but unpaid or not 
received by the Master Fund. The NAV is then used to compute all 
fees (including the management and administrative fees) that are 
calculated from the value of Master Fund assets. The Administrator 
will calculate the NAV per Share by dividing the NAV by the number 
of Shares outstanding.
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    After 4 p.m. ET each business day, the Administrator, Amex and 
Managing Owner will disseminate the NAV for the Shares and the Basket 
Amount (for orders placed during the day). The Basket Amount and the 
NAV are communicated by the Administrator to all Authorized 
Participants via facsimile or electronic mail message and will be 
available on the Fund's Web site at https://www.dbfunds.db.com.\14\ The 
Exchange will provide a hyperlink to the Fund's Web site on its Web 
site at https://www.nysearca.com.
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    \14\ According to the Amex Order, Amex has represented that the 
NAV for the Fund will be made available to all market participants 
at the same time. If the NAV is not disseminated to all market 
participants at the same time, the Amex will halt trading in the 
Shares. However, if the Fund temporarily does not disseminate the 
NAV to all market participants at the same time, the Amex has agreed 
to immediately contact the Commission staff to discuss measures that 
may be appropriate under the circumstances.
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    (b) Availability of Information About the Index, the Underlying 
Futures Contracts and the Shares. In order to provide updated 
information relating to the Fund for use by investors, professionals 
and persons wishing to create or redeem the Shares, the Amex will 
disseminate through the facilities of the CT an updated Indicative Fund 
Value (the ``IFV''). The IFV will be disseminated on a per Share basis 
every 15 seconds from 9:30 a.m. to 4:15 p.m. ET. The IFV will be 
calculated based on the cash required for creations and redemptions 
(i.e., NAV x 200,000) adjusted to reflect the price changes of the 
Index Currencies through investments held by the Master Fund, i.e., 
futures contracts and options on futures and/or forwards.\15\
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    \15\ On each business day, the Administrator will make available 
immediately prior to 9:30 a.m. ET via the facilities of the CT the 
most recent Basket Amount for the creation of a Basket.
---------------------------------------------------------------------------

    The IFV will not reflect price changes to the price of an 
underlying currency between the close of trading of the futures 
contract at the relevant futures exchange and 4:15 p.m. ET. While the 
Shares will trade on the NYSE Arca Marketplace from 9:30 a.m. to 4:15 
p.m. ET, regular trading hours for each of the Index Currencies on the 
CME is 8:20 a.m. to 3 p.m. (ET), though electronic trading of exchange 
traded foreign currency products on computerized trading systems (e.g., 
GLOBEX [supreg] at CME) takes place on a nearly 24-hour basis. 
Therefore, the value of a Share may be influenced by non-concurrent 
trading hours between the NYSE Arca Marketplace and the various futures 
exchanges on which the futures contracts based on the Index Currencies 
are traded.
    While the market for futures trading for each of the Index 
Currencies is open, the IFV can be expected to closely approximate the 
value per Share of the Basket Amount. However, during trading hours 
when the futures contracts have ceased trading, spreads and resulting 
premiums or discounts may widen, and therefore, increase the

[[Page 60596]]

difference between the price of the Shares and the NAV of the Shares. 
IFV on a per Share basis should not be viewed as a real time update of 
the NAV, which is calculated only once a day.
    DB London, as the Index Sponsor, will publish the value of the 
Index at least once every fifteen (15) seconds throughout each trading 
day on the CT, Bloomberg, Reuters, and on its Web site at https://
index.db.com and on the Fund's Web site at https://www.dbfunds.db.com. 
The closing Index level will similarly be provided by DB London and the 
Fund. In addition, any adjustments or changes to the Index will also be 
provided by DB London and the Fund on their respective Web sites.\16\
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    \16\ According to the Amex Order, the Sponsor has in place 
procedures to prevent the improper sharing of information between 
different affiliates and departments. Specifically, an information 
barrier exists between the personnel within DB London that calculate 
and reconstitute the Index and other personnel of the Sponsor, 
including but not limited to the Managing Owner, sales and trading, 
external or internal fund managers, and bank personnel who are 
involved in hedging the bank's exposure to instruments linked to the 
Index, in order to prevent the improper sharing of information 
relating to the recomposition of the Index.
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    The daily settlement prices for the foreign currency futures 
contracts comprising the Index and held by the Master Fund are publicly 
available on the Internet Web sites of the futures exchanges trading 
the particular contracts, as well as automated quotation systems, 
published or other public sources, or on-line information services such 
as Bloomberg or Reuters. In addition, the Exchange will provide a 
hyperlink on its Internet Web site to the Fund's Internet Web site. All 
of the foreign currency futures contracts in which the Master Fund 
currently expects to invest are traded on the CME, although currency 
futures contracts on the eligible Index Currencies also trade on other 
futures exchanges in the United States and the Master Fund may invest 
in such contracts.\17\
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    \17\ Other futures exchanges may include, for example, the New 
York Board of Trade and other futures exchanges which have a 
comprehensive surveillance sharing agreement with the Exchange or is 
an Intermarket Surveillance Group (``ISG'') member.
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    In addition, various data vendors and news publications publish 
futures prices and data. Futures quotes and last sale information for 
the Index Currencies are widely disseminated through a variety of major 
market data vendors worldwide,\18\ including Bloomberg and Reuters. In 
addition, complete real-time data for such futures is available by 
subscription from Reuters and Bloomberg. The specific contract 
specifications for the futures contracts are also available from the 
CME on its Web site, as well as other financial informational sources.
---------------------------------------------------------------------------

    \18\ Telephone conversation between Michael Cavalier, Associate 
General Counsel, NYSE, and Ronesha A. Butler, Special Counsel, 
Division, Commission, on October 4, 2006.
---------------------------------------------------------------------------

    The Web site for the Fund is https://www.dbfunds.db.com, to which 
the Exchange will hyperlink at https://www.nysearca.com. The Web site 
for the Fund, which is publicly accessible at no charge, will contain 
the following information: (a) The current NAV per Share daily and the 
prior business day's NAV and the reported closing price; (b) the mid-
point of the bid-ask price in relation to the NAV as of the time the 
NAV is calculated (the ``Bid-Ask Price'');\19\ (c) the calculation of 
the premium or discount of such price against such NAV; (d) data in 
chart form displaying the frequency distribution of discounts and 
premiums of the Bid-Ask Price against the NAV, within appropriate 
ranges for each of the four (4) previous calendar quarters; (e) the 
prospectus; and (f) other applicable quantitative information. The Amex 
will make available on its Web site the daily trading volume of the 
Shares. Quotations for and last sale information regarding the Shares 
will be disseminated via the CTA/CQS.
---------------------------------------------------------------------------

    \19\ The Bid-Ask Price of Shares is determined using the highest 
bid and lowest offer as of the time of calculation of the NAV.
---------------------------------------------------------------------------

    Investors may obtain, on a 24-hour basis, currency pricing 
information from various financial information service providers. 
Current currency spot prices are also generally available with bid/ask 
spreads from foreign exchange dealers. Complete real-time data for 
futures and options prices traded on the CME and the Philadelphia Stock 
Exchange (``Phlx'') are also available by subscription from information 
service providers. CME and Phlx also provide delayed futures and 
options information on current and past trading sessions and market 
news free of charge on their respective Web sites. There are a variety 
of other public Web sites that provide information on currency, such as 
Bloomberg (https://www.bloomberg.com/markets/currencies/eurafr_
currencies.html), which regularly reports current foreign currency 
pricing for a fee. Other service providers include CBS Market Watch 
(https://marketwatch.com/tools.stockresearch/globalmarkets) and Yahoo! 
Finance (https://finance.yahoo.com/currency). Many of these sites offer 
price quotations drawn from other published sources, and as the 
information is supplied free of charge, it generally is subject to time 
delays.
    As noted above, the Administrator calculates the NAV of the Fund 
once each trading day and disseminates such NAV to all market 
participants at the same time.\20\ In addition, the Administrator 
causes to be made available on a daily basis the Cash Deposit Amount to 
be deposited in connection with the issuance of the Shares in Baskets. 
Other investors can also request such information directly from the 
Administrator.
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    \20\ See supra note 14.
---------------------------------------------------------------------------

    (c) UTP Trading Criteria. The Exchange represents that it will 
cease trading the Shares if: (a) the listing market stops trading the 
Shares because of a regulatory halt similar to a halt based on NYSE 
Arca Equities Rule 7.12 or a halt because the IFV or the value of the 
Index is no longer available at least every 15 seconds; or (b) the 
listing market delists the Shares. Additionally, the Exchange may cease 
trading the Shares if such other event shall occur or condition exists 
which in the opinion of the Exchange makes further dealings on the 
Exchange inadvisable.
    (d) Trading Rules. The Exchange deems the Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
Shares will trade on the NYSE Arca Marketplace from 9:30 a.m. until 
4:15 p.m. ET. The Exchange has appropriate rules to facilitate 
transactions in the Shares during this trading session. The minimum 
trading increment for Shares on the Exchange will be $0.01.
    The trading of the Shares will be subject to Commentary .02(e)(1)-
(4) to NYSE Arca Equities Rule 8.200, which sets forth certain 
restrictions on ETP Holders acting as registered Market Makers in TIRs 
that invest in Investment Shares to facilitate surveillance.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. Trading may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. These may include: (1) the extent to 
which trading is not occurring in the underlying futures contracts; or 
(2) whether other unusual conditions or circumstances detrimental to 
the maintenance of a fair and orderly market are present. In addition, 
trading in Shares will be subject to trading halts caused by 
extraordinary market volatility pursuant to the Exchange's ``circuit 
breaker''

[[Page 60597]]

rule \21\ or by the halt or suspension of trading of the underlying 
futures contracts. See ``UTP Trading Criteria'' above for specific 
instances when the Exchange will cease trading the Shares.
---------------------------------------------------------------------------

    \21\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

    Shares will be deemed ``Eligible Listed Securities,'' as defined in 
NYSE Arca Equities Rule 7.55, for purposes of the Intermarket Trading 
System (``ITS'') Plan and therefore will be subject to the trade 
through provisions of NYSE Arca Equities Rule 7.56, which require that 
ETP Holders avoid initiating trade-throughs for ITS securities.
    Unless exemptive or no-action relief is available, the Shares will 
be subject to the short sale rule, Rule 10a-1 under the Act.\22\ If 
exemptive or no-action relief is provided, the Exchange will issue a 
notice detailing the terms of the exemption or relief.
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    \22\ According to the Amex Order, the Fund expects to seek 
relief, in the near future, from the Commission in connection with 
the trading of the Shares from the operation of the short sale rule, 
Rule 10a-1 under the Act. If granted, the Shares would be exempt 
from Rule 10a-1 under the Act permitting sales without regard to the 
``tick'' requirements of Rule 10a-1 under the Act.
---------------------------------------------------------------------------

    (e) Surveillance. The Exchange intends to utilize its existing 
surveillance procedures applicable to derivative products to monitor 
trading in the Shares. The Exchange represents that these procedures 
are adequate to properly monitor Exchange trading of the Shares and to 
deter and detect violations of Exchange rules.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations.
    Further, trading in the Shares will be subject to Commentary 
.02(e)(1)-(4) to NYSE Arca Equities Rule 8.200, which sets forth 
certain restrictions on ETP Holders acting as registered Market Makers 
in TIRs that invest in Investment Shares to facilitate surveillance. 
Commentary .02(e)(1) to NYSE Arca Equities Rule 8.200 requires that the 
ETP Holder acting as a registered Market Maker in the Shares provide 
the Exchange with information relating to its trading in the underlying 
physical asset or commodity, related futures or options on futures, or 
any other related derivatives. In addition, Commentary .02(e)(1) to 
NYSE Arca Equities Rule 8.200 prohibits the ETP Holder acting as a 
registered Market Maker in the Shares from being affiliated with a 
market maker in the underlying physical asset or commodity, related 
futures or options on futures or any other related derivative unless 
adequate information barriers are in place, as provided in NYSE Arca 
Equities Rule 7.26. Commentary .02(e)(2)-(3) to NYSE Arca Equities Rule 
8.200 requires that Market Makers handling the Shares provide the 
Exchange with all the necessary information relating to their trading 
in the underlying physical assets or commodities, related futures 
contracts and options thereon or any other derivative. Commentary 
.02(e)(4) to NYSE Arca Equities Rule 8.200 prohibits the ETP Holder 
acting as a registered Market Maker in the Shares from using any 
material nonpublic information received from any person associated with 
an ETP Holder or employee of such person regarding trading by such 
person or employee in the underlying physical asset or commodity, 
related futures or options on futures or any other related derivative 
(including the Shares).
    The Exchange is able to obtain information regarding trading in the 
Shares and the underlying futures contracts via the Intermarket 
Surveillance Group (``ISG'') from other exchanges who are members or 
affiliates of the ISG, including the CME.\23\ In addition, to the 
extent that the Master Fund invests in foreign currency futures 
contracts traded on futures exchanges other than CME, the Exchange must 
have a comprehensive surveillance sharing agreement with that futures 
exchange or the futures exchange must be an ISG member.
---------------------------------------------------------------------------

    \23\ For a list of the current members and affiliate members of 
ISG, see https://www.isgportal.com.
---------------------------------------------------------------------------

    (f) Information Bulletin. Prior to the commencement of trading, the 
Exchange will inform its ETP Holders in an Information Bulletin of the 
special characteristics and risks associated with trading the Shares. 
Specifically, the Information Bulletin will discuss the following: (1) 
The procedures for purchases and redemptions of Shares in Baskets (and 
that Shares are not individually redeemable); (2) NYSE Arca Equities 
Rule 9.2(a),\24\ which imposes a duty of due diligence on its ETP 
Holders to learn the essential facts relating to every customer prior 
to trading the Shares; (3) how information regarding the IFV is 
disseminated; (4) the requirement that ETP Holders deliver a prospectus 
to investors purchasing newly issued Shares prior to or concurrently 
with the confirmation of a transaction; and (5) trading information.
---------------------------------------------------------------------------

    \24\ The Exchange recently amended NYSE Arca Equities Rule 
9.2(a) (``Diligence as to Accounts'') to provide that ETP Holders, 
before recommending a transaction, must have reasonable grounds to 
believe that the recommendation is suitable for the customer based 
on any facts disclosed by the customer as to his other security 
holdings and as to his financial situation and needs. Further, the 
proposed rule amendment provides, with a limited exception, that 
prior to the execution of a transaction recommended to a non-
institutional customer, the ETP Holders shall make reasonable 
efforts to obtain information concerning the customer's financial 
status, tax status, investment objectives, and any other information 
that they believe would be useful to make a recommendation. See 
Securities Exchange Act Release No. 54045 (June 26, 2006), 71 FR 
37971 (July 3, 2006) (SR-PCX-2005-115).
---------------------------------------------------------------------------

    In addition, the Information Bulletin will advise ETP Holders, 
prior to the commencement of trading, of the prospectus delivery 
requirements applicable to the Fund. The Exchange notes that investors 
purchasing Shares directly from the Fund (by delivery of the Basket 
Amount) will receive a prospectus. ETP Holders purchasing Shares from 
the Fund for resale to investors will deliver a prospectus to such 
investors. The Information Bulletin will also discuss any exemptive, 
no-action and interpretive relief granted by the Commission from any 
rules under the Act.
    In addition, the Information Bulletin will reference that the Fund 
is subject to various fees and expenses described in the Registration 
Statement. The Information Bulletin will also reference that the CFTC 
has regulatory jurisdiction over the trading of futures contracts.
    The Information Bulletin will also disclose that the NAV for the 
Shares will be calculated after 4 p.m. ET each trading day and that 
information about the Shares and the Index will be publicly available 
on the Fund Web site to which the Exchange will hyperlink from its Web 
site.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\25\ in general, and furthers the 
objectives of Section 6(b)(5),\26\ in particular, because it is 
designed to prevent fraudulent and manipulative act and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments and perfect the mechanisms of a free 
and open market, and, in general, to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In addition, the Exchange believes that the proposal is consistent 
with Rule

[[Page 60598]]

12f-5 under the Act \27\ because it deems the Shares to be equity 
securities, thus rendering the Shares subject to the Exchange's 
existing rules governing the trading of equity securities.
---------------------------------------------------------------------------

    \27\ 17 CFR 240.12f-5.
---------------------------------------------------------------------------

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 Act.

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

    Written comments on the proposed rule change were neither solicited 
nor 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 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-NYSEArca-2006-64 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-NYSEArca-2006-64. 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 offices of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEArca-2006-64 and should be submitted on or before 
November 3, 2006.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\28\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\29\ 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.
---------------------------------------------------------------------------

    \28\ 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).
    \28\ 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,\30\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\31\ The Commission also finds that the proposal is consistent 
with Rule 12f-5 under the Act,\32\ 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. NYSEArca rules deem the 
Shares to be equity securities, thus trading in the Shares will be 
subject to the Exchange's existing rules governing the trading of 
equity securities.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78l(f).
    \31\ 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.
    \32\ 17 CFR 240.12f-5.
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    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\33\ 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.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    In support of the proposed rule change, the Exchange has made the 
following representations:
    1. The Exchange has appropriate rules to facilitate transactions in 
this type of security in all trading sessions.
    2. The Exchange's surveillance procedures are adequate to properly 
monitor the trading of the Shares on the Exchange.
    3. The Exchange will inform its ETP Holders in an Information 
Bulletin of the special characteristics and risks associated with 
trading the Shares.
    4. The Exchange will require its ETP Holders to deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction and will note this 
prospectus delivery requirement in the Information Bulletin.
    5. The Exchange will cease trading the Shares of a Fund if: (a) the 
listing market stops trading the Shares because of a regulatory halt 
similar to a halt based on NYSE Arca Equities Rule 7.12 or a halt 
because the IOPV or the value of the applicable Underlying Index is no 
longer available; or (b) the listing market delists the Shares.
    This approval order is conditioned on the Exchange's adherence to 
these representations.
    The Commission finds good cause for approving this proposed rule 
change before the thirtieth day after the publication of notice thereof 
in the Federal Register. As noted above, the Commission previously 
found that the listing and trading of these Shares on the Amex is 
consistent with the Act.\34\ 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.
---------------------------------------------------------------------------

    \34\ See Amex Order, supra note 4.

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[[Page 60599]]

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSEArca-2006-64), is hereby approved 
on an accelerated basis.\35\
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-16952 Filed 10-12-06; 8:45 am]
BILLING CODE 8011-01-P

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