Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to the Vanguard Emerging Markets Stock Index Fund, 62634-62636 [E6-17989]

Download as PDF 62634 Federal Register / Vol. 71, No. 207 / Thursday, October 26, 2006 / Notices the proposed rule change would support the prompt and accurate clearance and settlement of securities transactions. (B) Self-Regulatory Organization’s Statement on Burden on Competition FICC does not believe that the proposed rule change would have any impact or impose any burden on competition. (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments relating to the proposed rule change have not yet been solicited or received. FICC will notify the Commission of any written comments received by FICC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding, or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml) or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–FICC–2006–13 on the subject line. ycherry on PROD1PC64 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–FICC–2006–13. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your 15:21 Oct 25, 2006 Jkt 211001 For the Commission by the Division of Market Regulation, pursuant to delegated authority.7 Nancy M. Morris, Secretary. [FR Doc. E6–17913 Filed 10–25–06; 8:45 am] BILLING CODE 8011–01–P 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: VerDate Aug<31>2005 comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of FICC and on FICC’s Web site at www.ficc.com. 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–FICC–2006–13 and should be submitted on or before November 16, 2006. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54628; File No. SR– NYSEArca–2006–74] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to the Vanguard Emerging Markets Stock Index Fund October 19, 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 October 10, 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 7 17 CFR 200.3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to substitute the index tracked by a class of exchange-traded securities (formerly referred to as Vanguard Emerging Market VIPERs, the ‘‘ETF Shares’’) issued by the Vanguard Emerging Markets Stock Index Fund (‘‘Fund’’).3 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 On August 8, 2005, the Commission approved the Exchange’s filing proposing to trade the ETF Shares pursuant to unlisted trading privileges (‘‘UTP’’).4 The Commission had previously approved the original listing and trading of the ETF Shares by the American Stock Exchange LLC (‘‘Amex’’).5 The Exchange is filing this proposal to obtain the Commission’s approval of the substitution of the index tracked by the ETF Shares issued by the 3 In addition to the ETF Shares, the Fund offers a class of shares that are not exchange-traded, which are referred to as ‘‘Investor Shares.’’ 4 See Securities Exchange Act Release No. 34– 52221 (August 8, 2005), 70 FR 48222 (August 16, 2005) (SR–PCX–2005–74) (the ‘‘Approval Order’’). The Exchange expanded the hours during which the ETF Shares are eligible to trade on the NYSE Arca Marketplace (f/k/a the Archipelago Exchange) in December 2005. See Securities Exchange Act Release No. 34–52927 (December 8, 2005), 70 FR 74397 (December 15, 2005) (SR–PCX–2005–128). 5 See Securities Exchange Act Release No. 50189 (August 12, 2004), 69 FR 51723 (August 20, 2004) (SR–Amex–2005–04) (the ‘‘Amex Approval Order’’). E:\FR\FM\26OCN1.SGM 26OCN1 Federal Register / Vol. 71, No. 207 / Thursday, October 26, 2006 / Notices Fund. The Amex has recently filed a similar proposal.6 The ETF Shares originally sought to track, as closely as possible, the performance of the Select Emerging Markets Index (‘‘Select Index’’), a regional index compiled by Morgan Stanley Capital International (MSCI) 7 (‘‘MSCI’’). Pursuant to the Fund’s prospectus for the ETF Shares and the Amex Approval Order, the Fund has the right to substitute a different index for the Select Index, provided, that the reason for the substitution is determined in good faith, the substitute index measures the same general market as the Select Index and investors are notified of the index substitution. The Vanguard Group, Inc., as investment adviser to the Fund (‘‘Vanguard’’), recently decided to substitute the Select Index with the Vanguard Emerging Markets Index (‘‘Emerging Markets Index’’) and issued a press release announcing such substitution.8 According to the Amex Proposal, the Select Index 9 is modeled on the more expansive Emerging Markets Index with certain adjustments designed to reduce risk including the exclusion of countries because of concerns about illiquidity, repatriation of capital, or entry barriers to those markets. As of June 13, 2006, Colombia, Egypt, Jordan, Malaysia, Morocco, Pakistan, Russia, Sri Lanka, and Venezuela were excluded from the Select Index due to the above noted concerns. Because emerging markets, such as Russia and Malaysia, have become more liquid and accessible, Vanguard believes that additional emerging market countries now warrant inclusion in the Fund. The addition of these emerging markets to the Select Index would result in a benchmark that is effectively the same as the Emerging Markets Index. As a result, it is proposed that the Emerging Markets Index be substituted for the Select Index. The Emerging Markets Index provides exposure to 25 emerging market countries whereas the Select Index only provides exposure to 18 emerging market countries. As of August 24, 2006, the Emerging Markets Index was comprised of 848 constituents with the top five constituents representing the ycherry on PROD1PC64 with NOTICES 6 See SR–Amex–2006–95 (September 29, 2006) (the ‘‘Amex Proposal’’). 7 MSCI is a service mark of Morgan Stanley & Co. Incorporated. 8 See http://onlinepressroom.net/vanguard/. 9 The Select Index includes approximately 668 common stocks of companies located in Argentina, Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Israel, Korea, Mexico, Peru, Philippines, Poland, South Africa, Taiwan, Thailand and Turkey. VerDate Aug<31>2005 15:21 Oct 25, 2006 Jkt 211001 following weights: 4.07%, 2.84%, 2.1%, 1.84% and 1.77%. Countries represented in the Emerging Markets Index include Argentina, Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Malaysia, Mexico, Morocco, Pakistan, Peru, the Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, and Turkey. MSCI periodically adjusts the list of included countries to keep pace with the evolution in world markets (such adjustments are made on a forwardlooking basis, so past performance of the Emerging Markets Index always reflects actual country representation during the relevant period). MSCI (http://www.msci.com) administers the Emerging Markets Index exclusively. Similar to the Select Index, the Emerging Markets Index is a capitalization-weighted index whose component securities are adjusted for available float and must meet objective criteria for inclusion in the Index. The Emerging Markets Index aims to capture 85% of the publicly available total market capitalization in each emerging market included in the Emerging Markets Index. The Emerging Markets Index is rebalanced quarterly, calculated in U.S. Dollars on a real time basis, and disseminated every 60 seconds during market trading hours. The Fund’s investment objectives, policies and methodology, MSCI’s index maintenance procedures and standards and the dissemination of Index information as described in the Approval Order and the Amex Approval Order will not be affected by the index substitution. For example, the Fund will continue to employ a ‘‘representative sampling’’ methodology to track the Emerging Markets Index, which means that the Fund invests in a representative sample of securities in the Index that have a similar investment profile as the Index.10 The Exchange believes that the Fund’s investment policies will continue to prevent the Fund from being excessively weighted in any single security or small group of securities and significantly reduce concerns that trading in the ETF Shares could become a surrogate for trading in unregistered securities. It is also expected that the expense ratios of the ETF Shares will remain at 0.30% and the Fund will not generate any capital gains as a result of the substitution. The Exchange has reviewed the Emerging Markets Index and believes 10 As of August 24, 2006, the Fund was comprised of 851 constituents, according to the Amex Proposal. The aggregate percentage weighting of the top 5, 10, and 20 constituents in the Fund were 11.07%, 18.17% and 28.09%, respectively. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 62635 that sufficient mechanisms exist that would provide the Exchange with adequate surveillance and regulatory information with respect to the Index. Specifically, the Exchange represents that it will rely on existing surveillance procedures governing derivative products trading on the Exchange. In addition, the Exchange, Vanguard, and MSCI have a general policy prohibiting the distribution of material, non-public information by their employees. Due to MSCI’s role as a broker-dealer that maintains the Index, MSCI has represented that a functional separation, such as a firewall, exists between its trading desk and the research persons responsible for maintaining the Index. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) 11 of the Act, in general, and furthers the objectives of Section 6(b)(5) 12 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanisms of a free and open market and a national market system. In addition, the proposed rule change is consistent with Rule 12f–5 13 under the Act because it deems the Shares to be equity securities, thus rendering the Shares subject to the Exchange’s rules governing the trading of equity securities. 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 No written comments on the proposed rule change were 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 Act. 11 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 13 17 CFR 240.12f–5. 12 15 E:\FR\FM\26OCN1.SGM 26OCN1 62636 Federal Register / Vol. 71, No. 207 / Thursday, October 26, 2006 / Notices rule change is consistent with Section 6(b)(5) of the Act,15 which requires that an exchange have rules designed, among Electronic Comments other things, to promote just and • Use the Commission’s Internet equitable principles of trade, to remove comment form (http://www.sec.gov/ impediments to and perfect the rules/sro.shtml); or mechanism of a free and open market • Send an e-mail to ruleand a national market system, and in comments@sec.gov. Please include File general to protect investors and the Number SR–NYSEArca–2006–74 on the public interest. subject line. The Commission finds good cause for approving this proposed rule change Paper Comments before the thirtieth day after the • Send paper comments in triplicate publication of notice thereof in the to Nancy M. Morris, Secretary, Federal Register. As noted above, the Securities and Exchange Commission, Commission previously found that the Station Place, 100 F Street, NE., trading of these ETF Shares on the Washington, DC 20549–1090. Exchange is consistent with the Act.16 All submissions should refer to File Substituting the Emerging Markets Number SR–NYSEArca–2006–74. This Index for the Select Index does not file number should be included on the change the Commission’s analysis, and subject line if e-mail is used. To help the the Commission believes accelerating Commission process and review your approval of this proposed rule change is comments more efficiently, please use appropriate. only one method. The Commission will post all comments on the Commission’s V. Conclusion Internet Web site (http://www.sec.gov/ It is therefore ordered, pursuant to rules/sro.shtml). Copies of the Section 19(b)(2) of the Act, that the submission, all subsequent proposed rule change (SR–NYSEArca– amendments, all written statements 2006–74), is hereby approved on an with respect to the proposed rule accelerated basis.17 change that are filed with the For the Commission, by the Division of Commission, and all written Market Regulation, pursuant to delegated communications relating to the authority.18 proposed rule change between the Nancy M. Morris, Commission and any person, other than Secretary. those that may be withheld from the [FR Doc. E6–17989 Filed 10–25–06; 8:45 am] public in accordance with the provisions of 5 U.S.C. 552, will be BILLING CODE 8011–01–P available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be SOCIAL SECURITY ADMINISTRATION available for inspection and copying at [Document No. 2006 SSA–0088] the principal offices of the Exchange. All comments received will be posted Office of the Commissioner; Cost-ofwithout change; the Commission does Living Increase and Other not edit personal identifying Determinations for 2007 information from submissions. You should submit only information that AGENCY: Social Security Administration. you wish to make available publicly. All ACTION: Notice. submissions should refer to File Number SR–NYSEArca–2006–74 and SUMMARY: The Commissioner has should be submitted on or before determined— November 16, 2006. (1) A 3.3 percent cost-of-living ycherry on PROD1PC64 with NOTICES Comments may be submitted by any of the following methods: 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.14 In particular, the Commission finds that the proposed 14 In approving this rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Aug<31>2005 15:21 Oct 25, 2006 Jkt 211001 increase in Social Security benefits under title II of the Social Security Act (the Act), effective for December 2006; (2) An increase in the Federal Supplemental Security Income (SSI) monthly benefit amounts under title XVI of the Act for 2007 to $623 for an eligible individual, $934 for an eligible individual with an eligible spouse, and $312 for an essential person; 15 15 U.S.C. 78f(b)(5). Approval Order, supra note 4. 17 15 U.S.C. 78s(b)(2). 18 17 CFR 200.30–3(a)(12). 16 See PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 (3) The student earned income exclusion to be $1,510 per month in 2007 but not more than $6,100 in all of 2007; (4) The dollar fee limit for services performed as a representative payee to be $34 per month ($66 per month in the case of a beneficiary who is disabled and has an alcoholism or drug addiction condition that leaves him or her incapable of managing benefits) in 2007; (5) The dollar limit on the administrative-cost assessment charged to attorneys representing claimants to be $77 in 2007; (6) The national average wage index for 2005 to be $36,952.94; (7) The Old-Age, Survivors, and Disability Insurance (OASDI) contribution and benefit base to be $97,500 for remuneration paid in 2007 and self-employment income earned in taxable years beginning in 2007; (8) The monthly exempt amounts under the Social Security retirement earnings test for taxable years ending in calendar year 2007 to be $1,080 and $2,870; (9) The dollar amounts (‘‘bend points’’) used in the primary insurance amount benefit formula for workers who become eligible for benefits, or who die before becoming eligible, in 2007 to be $680 and $4,100; (10) The dollar amounts (‘‘bend points’’) used in the formula for computing maximum family benefits for workers who become eligible for benefits, or who die before becoming eligible, in 2007 to be $869, $1,255, and $1,636; (11) The amount of taxable earnings a person must have to be credited with a quarter of coverage in 2007 to be $1,000; (12) The ‘‘old-law’’ contribution and benefit base to be $72,600 for 2007; (13) The monthly amount deemed to constitute substantial gainful activity for statutorily blind individuals in 2007 to be $1,500, and the corresponding amount for non-blind disabled persons to be $900; (14) The earnings threshold establishing a month as a part of a trial work period to be $640 for 2007; and (15) Coverage thresholds for 2007 to be $1,500 for domestic workers and $1,300 for election workers. FOR FURTHER INFORMATION CONTACT: Jeffrey L. Kunkel, Office of the Chief Actuary, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235, (410) 965–3013. Information relating to this announcement is available on our Internet site at www.socialsecurity.gov/ OACT/COLA/index.html. For information on eligibility or claiming E:\FR\FM\26OCN1.SGM 26OCN1

Agencies

[Federal Register Volume 71, Number 207 (Thursday, October 26, 2006)]
[Notices]
[Pages 62634-62636]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-17989]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54628; File No. SR-NYSEArca-2006-74]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change 
Relating to the Vanguard Emerging Markets Stock Index Fund

 October 19, 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 October 10, 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.
---------------------------------------------------------------------------

    \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 is proposing to substitute the index tracked by a 
class of exchange-traded securities (formerly referred to as Vanguard 
Emerging Market VIPERs, the ``ETF Shares'') issued by the Vanguard 
Emerging Markets Stock Index Fund (``Fund'').\3\
---------------------------------------------------------------------------

    \3\ In addition to the ETF Shares, the Fund offers a class of 
shares that are not exchange-traded, which are referred to as 
``Investor Shares.''
---------------------------------------------------------------------------

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
    On August 8, 2005, the Commission approved the Exchange's filing 
proposing to trade the ETF Shares pursuant to unlisted trading 
privileges (``UTP'').\4\ The Commission had previously approved the 
original listing and trading of the ETF Shares by the American Stock 
Exchange LLC (``Amex'').\5\ The Exchange is filing this proposal to 
obtain the Commission's approval of the substitution of the index 
tracked by the ETF Shares issued by the

[[Page 62635]]

Fund. The Amex has recently filed a similar proposal.\6\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 34-52221 (August 8, 
2005), 70 FR 48222 (August 16, 2005) (SR-PCX-2005-74) (the 
``Approval Order''). The Exchange expanded the hours during which 
the ETF Shares are eligible to trade on the NYSE Arca Marketplace 
(f/k/a the Archipelago Exchange) in December 2005. See Securities 
Exchange Act Release No. 34-52927 (December 8, 2005), 70 FR 74397 
(December 15, 2005) (SR-PCX-2005-128).
    \5\ See Securities Exchange Act Release No. 50189 (August 12, 
2004), 69 FR 51723 (August 20, 2004) (SR-Amex-2005-04) (the ``Amex 
Approval Order'').
    \6\ See SR-Amex-2006-95 (September 29, 2006) (the ``Amex 
Proposal'').
---------------------------------------------------------------------------

    The ETF Shares originally sought to track, as closely as possible, 
the performance of the Select Emerging Markets Index (``Select 
Index''), a regional index compiled by Morgan Stanley Capital 
International (MSCI[supreg]) \7\ (``MSCI''). Pursuant to the Fund's 
prospectus for the ETF Shares and the Amex Approval Order, the Fund has 
the right to substitute a different index for the Select Index, 
provided, that the reason for the substitution is determined in good 
faith, the substitute index measures the same general market as the 
Select Index and investors are notified of the index substitution. The 
Vanguard Group, Inc., as investment adviser to the Fund (``Vanguard''), 
recently decided to substitute the Select Index with the 
Vanguard[supreg] Emerging Markets Index (``Emerging Markets Index'') 
and issued a press release announcing such substitution.\8\
---------------------------------------------------------------------------

    \7\ MSCI[supreg] is a service mark of Morgan Stanley & Co. 
Incorporated.
    \8\ See http://onlinepressroom.net/vanguard/.
---------------------------------------------------------------------------

    According to the Amex Proposal, the Select Index \9\ is modeled on 
the more expansive Emerging Markets Index with certain adjustments 
designed to reduce risk including the exclusion of countries because of 
concerns about illiquidity, repatriation of capital, or entry barriers 
to those markets. As of June 13, 2006, Colombia, Egypt, Jordan, 
Malaysia, Morocco, Pakistan, Russia, Sri Lanka, and Venezuela were 
excluded from the Select Index due to the above noted concerns. Because 
emerging markets, such as Russia and Malaysia, have become more liquid 
and accessible, Vanguard believes that additional emerging market 
countries now warrant inclusion in the Fund. The addition of these 
emerging markets to the Select Index would result in a benchmark that 
is effectively the same as the Emerging Markets Index. As a result, it 
is proposed that the Emerging Markets Index be substituted for the 
Select Index.
---------------------------------------------------------------------------

    \9\ The Select Index includes approximately 668 common stocks of 
companies located in Argentina, Brazil, Chile, China, Czech 
Republic, Hungary, India, Indonesia, Israel, Korea, Mexico, Peru, 
Philippines, Poland, South Africa, Taiwan, Thailand and Turkey.
---------------------------------------------------------------------------

    The Emerging Markets Index provides exposure to 25 emerging market 
countries whereas the Select Index only provides exposure to 18 
emerging market countries. As of August 24, 2006, the Emerging Markets 
Index was comprised of 848 constituents with the top five constituents 
representing the following weights: 4.07%, 2.84%, 2.1%, 1.84% and 
1.77%. Countries represented in the Emerging Markets Index include 
Argentina, Brazil, Chile, China, Colombia, the Czech Republic, Egypt, 
Hungary, India, Indonesia, Israel, Jordan, Malaysia, Mexico, Morocco, 
Pakistan, Peru, the Philippines, Poland, Russia, South Africa, South 
Korea, Taiwan, Thailand, and Turkey. MSCI periodically adjusts the list 
of included countries to keep pace with the evolution in world markets 
(such adjustments are made on a forward-looking basis, so past 
performance of the Emerging Markets Index always reflects actual 
country representation during the relevant period).
    MSCI (http://www.msci.com) administers the Emerging Markets Index 
exclusively. Similar to the Select Index, the Emerging Markets Index is 
a capitalization-weighted index whose component securities are adjusted 
for available float and must meet objective criteria for inclusion in 
the Index. The Emerging Markets Index aims to capture 85% of the 
publicly available total market capitalization in each emerging market 
included in the Emerging Markets Index. The Emerging Markets Index is 
rebalanced quarterly, calculated in U.S. Dollars on a real time basis, 
and disseminated every 60 seconds during market trading hours.
    The Fund's investment objectives, policies and methodology, MSCI's 
index maintenance procedures and standards and the dissemination of 
Index information as described in the Approval Order and the Amex 
Approval Order will not be affected by the index substitution. For 
example, the Fund will continue to employ a ``representative sampling'' 
methodology to track the Emerging Markets Index, which means that the 
Fund invests in a representative sample of securities in the Index that 
have a similar investment profile as the Index.\10\ The Exchange 
believes that the Fund's investment policies will continue to prevent 
the Fund from being excessively weighted in any single security or 
small group of securities and significantly reduce concerns that 
trading in the ETF Shares could become a surrogate for trading in 
unregistered securities. It is also expected that the expense ratios of 
the ETF Shares will remain at 0.30% and the Fund will not generate any 
capital gains as a result of the substitution.
---------------------------------------------------------------------------

    \10\ As of August 24, 2006, the Fund was comprised of 851 
constituents, according to the Amex Proposal. The aggregate 
percentage weighting of the top 5, 10, and 20 constituents in the 
Fund were 11.07%, 18.17% and 28.09%, respectively.
---------------------------------------------------------------------------

    The Exchange has reviewed the Emerging Markets Index and believes 
that sufficient mechanisms exist that would provide the Exchange with 
adequate surveillance and regulatory information with respect to the 
Index. Specifically, the Exchange represents that it will rely on 
existing surveillance procedures governing derivative products trading 
on the Exchange. In addition, the Exchange, Vanguard, and MSCI have a 
general policy prohibiting the distribution of material, non-public 
information by their employees. Due to MSCI's role as a broker-dealer 
that maintains the Index, MSCI has represented that a functional 
separation, such as a firewall, exists between its trading desk and the 
research persons responsible for maintaining the Index.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \11\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) \12\ in particular in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanisms of 
a free and open market and a national market system.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In addition, the proposed rule change is consistent with Rule 12f-5 
\13\ under the Act because it deems the Shares to be equity securities, 
thus rendering the Shares subject to the Exchange's rules governing the 
trading of equity securities.
---------------------------------------------------------------------------

    \13\ 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

    No written comments on the proposed rule change were 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 Act.

[[Page 62636]]

Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2006-74 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-2006-74. 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 (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for 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-2006-74 and should be submitted on or before 
November 16, 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.\14\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\15\ which requires that an 
exchange have rules designed, among other things, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
in general to protect investors and the public interest.
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    \14\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \15\ 15 U.S.C. 78f(b)(5).
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    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 trading of these ETF Shares on the Exchange is 
consistent with the Act.\16\ Substituting the Emerging Markets Index 
for the Select Index does not change the Commission's analysis, and the 
Commission believes accelerating approval of this proposed rule change 
is appropriate.
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    \16\ See Approval Order, supra note 4.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSEArca-2006-74), is hereby approved 
on an accelerated basis.\17\
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    \17\ 15 U.S.C. 78s(b)(2).
    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
Nancy M. Morris,
Secretary.
 [FR Doc. E6-17989 Filed 10-25-06; 8:45 am]
BILLING CODE 8011-01-P