Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to NYSE Listed Company Manual Section 703.16 (Investment Company Units), 63816-63818 [E6-18254]

Download as PDF 63816 Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices change is consistent with the Act. Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION Electronic Comments [Release No. 34–54649; File No. SR–NYSE– 2006–88] • 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–NASD–2006–119 on the subject line. Paper Comments cprice-sewell on PROD1PC66 with NOTICES • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASD–2006–119. 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 office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASD–2006–119 and should be submitted on or before November 21, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 Nancy M. Morris, Secretary. [FR Doc. E6–18252 Filed 10–30–06; 8:45 am] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to NYSE Listed Company Manual Section 703.16 (Investment Company Units) October 24, 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 20, 2006, the New York Stock Exchange LLC (‘‘Exchange’’ or ‘‘NYSE’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice and order to solicit comments on the proposed rule change from interested persons and to approve the proposed rule change on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend NYSE Section 703.16(B)(4)(a) of the NYSE Listed Company Manual (‘‘Manual’’). The text of the proposed rule change is available on NYSE’s Web site at (http://www.nyse.com), at the principal office of NYSE, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. BILLING CODE 8011–01–P 1 15 9 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 15:25 Oct 30, 2006 2 17 Jkt 211001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00066 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange has adopted listing standards applicable to Investment Company Units (‘‘ICUs’’ or ‘‘Investment Company Units’’) that are consistent with the listing criteria currently used by other national securities exchanges and trading standards pursuant to which the Exchange may either list and trade ICUs or trade such ICUs on the Exchange on an unlisted trading privileges (‘‘UTP’’) basis.3 An ICU is defined in Section 703.16 of the Manual as a security that represents an interest in a registered investment company that could be organized as a unit investment trust, an open-end management investment company, or a similar entity. A registered investment company is registered under the Investment Company Act of 1940.4 The ‘‘generic’’ listing criteria of Section 703.16 of the Manual permit listing of ICU’s that satisfy such criteria in reliance upon Rule 19b–4(e) under the Act,5 without a filing pursuant to Rule 19b–4 under the Act. Section 703.16(B)(4)(a) of the Manual requires, among other criteria that, if a series of ICUs is listed for trading on the Exchange in reliance upon Rule 19b– 4(e) under the Act, the index underlying the series must be calculated based on either the market capitalization, modified market capitalization, price, equal-dollar, or modified equal-dollar weighting methodology. According to the Exchange, the proposed rule change will specify one additional methodology. The Exchange proposes to amend Section 703.16(B)(4)(a) of the Manual to permit a series of ICUs to be listed under the generic listing standards pursuant to Rule 19b–4(e) under the Act,6 if the underlying index for such series is weighted based on any, some or all of the following: Sales, cash flow, book 3 In 1996, the Commission approved Section 703.16 of the Manual, which sets forth the rules related to the listing of ICUs. See Securities Exchange Act Release No. 36923 (March 5, 1996), 61 FR 10410 (March 13, 1996) (SR–NYSE–95–23). In 2000, the Commission also approved the Exchange’s generic listing standards for listing and trading, or the trading pursuant to UTP, of ICUs under Section 703.16 of the Manual and Exchange Rule 1100. See Securities Exchange Act Release No. 43679 (December 5, 2000), 65 FR 77949 (December 13, 2000) (SR–NYSE–00–46). 4 15 U.S.C. 80a. 5 17 CFR 240.19b–4(e). 6 Id. E:\FR\FM\31OCN1.SGM 31OCN1 cprice-sewell on PROD1PC66 with NOTICES Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices value and dividends (‘‘fundamentals weighted indexes’’).7 ‘‘Sales’’ refers to the total of reported operating revenues less various adjustments to gross sales, such as returns, discounts, allowances, excise taxes, insurance charges, sales taxes and value added taxes. In calculating the sales value, an index provider may opt to average the company’s applicable figures for several prior years (e.g., five prior years as reflected in the company’s Annual Report on Form 10–K). ‘‘Cash Flow’’ refers to operating income plus depreciation. For example, a manufacturer typically reports its operating income as its net sales plus other operating income minus cost of goods sold and selling, general and administrative expenses. Depreciation expense for a manufacturer typically includes the depreciation that is directly related to or associated with tangible fixed assets and includes amortization of fixed assets that are part of plant, property and equipment such as leased assets, leasehold improvements and internal use software. For example, for a manufacturer, depreciation expense excludes amortization of intangible assets. For banks, financial companies and REITs, operating income refers to their total operating revenue minus total operating expenses. For REITs, depreciation expense includes depreciation relating to real estate property and includes corporate fixed asset depreciation if not separated from property depreciation. In calculating cash flow, an index provider may opt to average the company’s applicable figures for several prior years (e.g., five prior years as reflected in the company’s Annual Report on Form 10–K). ‘‘Book Value’’ refers to a company’s book value at the index review date. In accordance with accounting principles, book value generally means total common equity, which is derived from adding share capital and additional paid-in capital to retained earnings. In calculating book value, an index provider may opt to average the company’s applicable figures for several prior years (e.g., five prior years as reflected in the company’s Annual Report on Form 10–K). ‘‘Dividends’’ refers to total dividend distributions, including both special and regular dividends paid in cash. Generally, the total dividend amount that is declared to all classes of common shareholders includes regular cash, as well as special cash dividends, and excludes returns of capital and in-specie 7 In each instance, the index methodology will set forth the means for calculating sales, cash flow, book value and dividends. VerDate Aug<31>2005 15:25 Oct 30, 2006 Jkt 211001 dividends. In calculating dividends, an index provider may opt to average the company’s applicable figures for several prior years (e.g., five prior years as reflected in the company’s Annual Report on Form 10–K). The Exchange believes that the fundamentals weighting methodology is a transparent methodology that is appropriately included in the ICU generic listing criteria (which encompass exchange-traded funds) as an alternative to traditional weighting techniques. According to the Exchange, fundamental indexing provides an investor with additional choices in selecting exchange-traded funds whose underlying index emphasizes financial factors that the investor may believe are important. The NYSE notes that products based on indexes using this methodology are already subject to the other requirements of the generic listing standards pursuant to Rule 19b–4(e) under the Act.8 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act 9 in general, and furthers the objectives of Section 6(b)(5) of the Act 10 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. The Exchange believes the proposed rule change should facilitate listing and trading of ICUs that rely on an index using a fundamentals weighting methodology and should thereby remove the burdens on issuers and other market participants. 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. 8 17 CFR 240.19b–4(e). U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). 9 15 PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 63817 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 (http://www.sec.gov/ rules/sro.shtml); or • Send e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2006–88 on the subject line. 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–NYSE–2006–88. 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 will also be available for inspection and copying at the principal office of the NYSE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2006–88 and should be submitted on or before November 21, 2006. IV. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change After careful review, 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 E:\FR\FM\31OCN1.SGM 31OCN1 63818 Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices cprice-sewell on PROD1PC66 with NOTICES securities exchange.11 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,12 which requires, among other things, that the rules of a national securities exchange be 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 mechanism for a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposed rule change amends the Exchange’s existing generic listing standards pursuant to Rule 19b–4(e) under the Act 13 for ICUs to provide that an eligible index may be calculated following the ‘‘fundamentals weighted’’ or ‘‘fundamental index’’ methodology. This index calculation methodology weights components based on one or more of the following: sales, cash flow, book value, and dividends.14 Including this index calculation methodology in the Exchange’s generic listing standards will provide investors with more investment choices by offering an alternative to the other index methodologies, such as capitalizationweighted indexes. The Commission notes that the indexes that would be based on the fundamentals weighting methodology will already be subject to the requirements of the generic listing standards pursuant to Rule 19b–4(e) under the Act,15 including trading volume and liquidity requirements. In addition, by amending its generic listing standards pursuant to Rule 19b–4(e) under the Act,16 the Exchange should reduce the time frame for listing or trading ICUs that rely on an index utilizing a fundamentals weighting methodology. The proposed rule change should therefore facilitate the listing or trading of such securities and thereby reduce the burdens on issuers and other market participants. The Exchange has requested accelerated approval of the proposed rule change. The Commission finds good cause for approving the proposed 11 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). 12 15 U.S.C. 78f(b)(5). 13 17 CFR 240.19b–4(e). 14 According to the Exchange, in each instance, the index methodology will set forth the means of calculating sales, cash flow, book value, and dividends and thus will be transparent. 15 17 CFR 240.19b–4(e). 16 Id. VerDate Aug<31>2005 15:25 Oct 30, 2006 Jkt 211001 rule change prior to the 30th day after the date of publication of the notice of filing in the Federal Register. The Commission believes the proposed rule change should provide investors with an alternative to the current index calculation methodologies. The proposed rule change is substantially identical to that approved for another exchange.17 The Commission does not believe that the proposed rule change raises any novel regulatory issues. Therefore, the Commission finds good cause, consistent with Section 19(b)(2) of the Act,18 to approve the proposed rule change on an accelerated basis.19 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,20 that the proposed rule change (SR–NYSE–2006– 88) is approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.21 Nancy M. Morris, Secretary. [FR Doc. E6–18254 Filed 10–30–06; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10676 and # 10677] Florida Disaster # FL–00015 U.S. Small Business Administration. ACTION: Notice. AGENCY: SUMMARY: This is a notice of an Administrative declaration of a disaster for the State of FLORIDA dated 10/25/ 2006. Incident: Flea Market Fire. Incident Period: 09/25/2006. Effective Date: 10/25/2006. Physical Loan Application Deadline Date: 12/26/2006. Economic Injury (EIDL) Loan Application Deadline Date: 07/25/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing And Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, 17 See Securities Exchange Act Release No. 54459 (September 15, 2006), 71 FR 55533 (September 22, 2006) (SR–NASDAQ–2006–035). See also Securities Exchange Act Release No. 54490 (September 22, 2006), 71 FR 58034 (October 2, 2006) (SR– NYSEArca–2006–61). 18 15 U.S.C. 78s(b)(2). 19 The Commission’s approval order is not retroactive in effect. 20 Id. 21 17 CFR 200.30–3(a)(12). PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 U.S. Small Business Administration, 409 3rd Street, SW, Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties Duval. Contiguous Counties Florida: Baker, Clay, Nassau, and St. Johns. The Interest Rates are: Percent Homeowners With Credit Available Elsewhere ......................... Homeowners Without Credit Available Elsewhere .................. Businesses With Credit Available Elsewhere ................................. Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere .................. Other (Including Non-Profit Organizations) With Credit Available Elsewhere ................................. Businesses And Non-Profit Organizations Without Credit Available Elsewhere ......................... 6.250 3.125 7.934 4.000 5.000 4.000 The number assigned to this disaster for physical damage is 10676–5 and for economic injury is 10677–0. The State which received an EIDL Declaration # is Florida. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008.) Dated: October 25, 2006. Steven C. Preston, Administrator. [FR Doc. E6–18299 Filed 10–30–06; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10678 and # 10679] Hawaii Disaster # HI–00005 U.S. Small Business Administration. ACTION: Notice. AGENCY: SUMMARY: This is a Notice of the Presidential declaration of a major disaster for the State of Hawaii (FEMA– 1664–DR), dated 10/23/2006. Incident: Kiholo Bay Earthquake. Incident Period: 10/15/2006. EFFECTIVE DATE: 10/23/2006. Physical Loan Application Deadline Date: 12/22/2006. E:\FR\FM\31OCN1.SGM 31OCN1

Agencies

[Federal Register Volume 71, Number 210 (Tuesday, October 31, 2006)]
[Notices]
[Pages 63816-63818]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-18254]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54649; File No. SR-NYSE-2006-88]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of a Proposed 
Rule Change Relating to NYSE Listed Company Manual Section 703.16 
(Investment Company Units)

 October 24, 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 20, 2006, the New York Stock Exchange LLC (``Exchange'' or 
``NYSE'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice and order to solicit comments on 
the proposed rule change from interested persons and to approve the 
proposed rule change on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Section 703.16(B)(4)(a) of the 
NYSE Listed Company Manual (``Manual''). The text of the proposed rule 
change is available on NYSE's Web site at (http://www.nyse.com), at the 
principal office of NYSE, and at the Commission's Public Reference 
Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange has adopted listing standards applicable to Investment 
Company Units (``ICUs'' or ``Investment Company Units'') that are 
consistent with the listing criteria currently used by other national 
securities exchanges and trading standards pursuant to which the 
Exchange may either list and trade ICUs or trade such ICUs on the 
Exchange on an unlisted trading privileges (``UTP'') basis.\3\ An ICU 
is defined in Section 703.16 of the Manual as a security that 
represents an interest in a registered investment company that could be 
organized as a unit investment trust, an open-end management investment 
company, or a similar entity. A registered investment company is 
registered under the Investment Company Act of 1940.\4\
---------------------------------------------------------------------------

    \3\ In 1996, the Commission approved Section 703.16 of the 
Manual, which sets forth the rules related to the listing of ICUs. 
See Securities Exchange Act Release No. 36923 (March 5, 1996), 61 FR 
10410 (March 13, 1996) (SR-NYSE-95-23). In 2000, the Commission also 
approved the Exchange's generic listing standards for listing and 
trading, or the trading pursuant to UTP, of ICUs under Section 
703.16 of the Manual and Exchange Rule 1100. See Securities Exchange 
Act Release No. 43679 (December 5, 2000), 65 FR 77949 (December 13, 
2000) (SR-NYSE-00-46).
    \4\ 15 U.S.C. 80a.
---------------------------------------------------------------------------

    The ``generic'' listing criteria of Section 703.16 of the Manual 
permit listing of ICU's that satisfy such criteria in reliance upon 
Rule 19b-4(e) under the Act,\5\ without a filing pursuant to Rule 19b-4 
under the Act. Section 703.16(B)(4)(a) of the Manual requires, among 
other criteria that, if a series of ICUs is listed for trading on the 
Exchange in reliance upon Rule 19b-4(e) under the Act, the index 
underlying the series must be calculated based on either the market 
capitalization, modified market capitalization, price, equal-dollar, or 
modified equal-dollar weighting methodology.
---------------------------------------------------------------------------

    \5\ 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------

    According to the Exchange, the proposed rule change will specify 
one additional methodology. The Exchange proposes to amend Section 
703.16(B)(4)(a) of the Manual to permit a series of ICUs to be listed 
under the generic listing standards pursuant to Rule 19b-4(e) under the 
Act,\6\ if the underlying index for such series is weighted based on 
any, some or all of the following: Sales, cash flow, book

[[Page 63817]]

value and dividends (``fundamentals weighted indexes'').\7\
---------------------------------------------------------------------------

    \6\ Id.
    \7\ In each instance, the index methodology will set forth the 
means for calculating sales, cash flow, book value and dividends.
---------------------------------------------------------------------------

    ``Sales'' refers to the total of reported operating revenues less 
various adjustments to gross sales, such as returns, discounts, 
allowances, excise taxes, insurance charges, sales taxes and value 
added taxes. In calculating the sales value, an index provider may opt 
to average the company's applicable figures for several prior years 
(e.g., five prior years as reflected in the company's Annual Report on 
Form 10-K).
    ``Cash Flow'' refers to operating income plus depreciation. For 
example, a manufacturer typically reports its operating income as its 
net sales plus other operating income minus cost of goods sold and 
selling, general and administrative expenses. Depreciation expense for 
a manufacturer typically includes the depreciation that is directly 
related to or associated with tangible fixed assets and includes 
amortization of fixed assets that are part of plant, property and 
equipment such as leased assets, leasehold improvements and internal 
use software. For example, for a manufacturer, depreciation expense 
excludes amortization of intangible assets. For banks, financial 
companies and REITs, operating income refers to their total operating 
revenue minus total operating expenses. For REITs, depreciation expense 
includes depreciation relating to real estate property and includes 
corporate fixed asset depreciation if not separated from property 
depreciation. In calculating cash flow, an index provider may opt to 
average the company's applicable figures for several prior years (e.g., 
five prior years as reflected in the company's Annual Report on Form 
10-K).
    ``Book Value'' refers to a company's book value at the index review 
date. In accordance with accounting principles, book value generally 
means total common equity, which is derived from adding share capital 
and additional paid-in capital to retained earnings. In calculating 
book value, an index provider may opt to average the company's 
applicable figures for several prior years (e.g., five prior years as 
reflected in the company's Annual Report on Form 10-K).
    ``Dividends'' refers to total dividend distributions, including 
both special and regular dividends paid in cash. Generally, the total 
dividend amount that is declared to all classes of common shareholders 
includes regular cash, as well as special cash dividends, and excludes 
returns of capital and in-specie dividends. In calculating dividends, 
an index provider may opt to average the company's applicable figures 
for several prior years (e.g., five prior years as reflected in the 
company's Annual Report on Form 10-K).
    The Exchange believes that the fundamentals weighting methodology 
is a transparent methodology that is appropriately included in the ICU 
generic listing criteria (which encompass exchange-traded funds) as an 
alternative to traditional weighting techniques. According to the 
Exchange, fundamental indexing provides an investor with additional 
choices in selecting exchange-traded funds whose underlying index 
emphasizes financial factors that the investor may believe are 
important. The NYSE notes that products based on indexes using this 
methodology are already subject to the other requirements of the 
generic listing standards pursuant to Rule 19b-4(e) under the Act.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \10\ 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. 
The Exchange believes the proposed rule change should facilitate 
listing and trading of ICUs that rely on an index using a fundamentals 
weighting methodology and should thereby remove the burdens on issuers 
and other market participants.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(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 (http://
www.sec.gov/rules/sro.shtml); or
     Send e-mail to rule-comments@sec.gov. Please include File 
Number SR-NYSE-2006-88 on the subject line.

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-NYSE-2006-88. 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 will also be available for inspection and copying at the 
principal office of the NYSE. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2006-88 and should be submitted on or before 
November 21, 2006.

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

    After careful review, 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

[[Page 63818]]

securities exchange.\11\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\12\ 
which requires, among other things, that the rules of a national 
securities exchange be 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 mechanism for a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest.
---------------------------------------------------------------------------

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

    The proposed rule change amends the Exchange's existing generic 
listing standards pursuant to Rule 19b-4(e) under the Act \13\ for ICUs 
to provide that an eligible index may be calculated following the 
``fundamentals weighted'' or ``fundamental index'' methodology. This 
index calculation methodology weights components based on one or more 
of the following: sales, cash flow, book value, and dividends.\14\
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(e).
    \14\ According to the Exchange, in each instance, the index 
methodology will set forth the means of calculating sales, cash 
flow, book value, and dividends and thus will be transparent.
---------------------------------------------------------------------------

    Including this index calculation methodology in the Exchange's 
generic listing standards will provide investors with more investment 
choices by offering an alternative to the other index methodologies, 
such as capitalization-weighted indexes. The Commission notes that the 
indexes that would be based on the fundamentals weighting methodology 
will already be subject to the requirements of the generic listing 
standards pursuant to Rule 19b-4(e) under the Act,\15\ including 
trading volume and liquidity requirements. In addition, by amending its 
generic listing standards pursuant to Rule 19b-4(e) under the Act,\16\ 
the Exchange should reduce the time frame for listing or trading ICUs 
that rely on an index utilizing a fundamentals weighting methodology. 
The proposed rule change should therefore facilitate the listing or 
trading of such securities and thereby reduce the burdens on issuers 
and other market participants.
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    \15\ 17 CFR 240.19b-4(e).
    \16\ Id.
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    The Exchange has requested accelerated approval of the proposed 
rule change. The Commission finds good cause for approving the proposed 
rule change prior to the 30th day after the date of publication of the 
notice of filing in the Federal Register. The Commission believes the 
proposed rule change should provide investors with an alternative to 
the current index calculation methodologies. The proposed rule change 
is substantially identical to that approved for another exchange.\17\ 
The Commission does not believe that the proposed rule change raises 
any novel regulatory issues. Therefore, the Commission finds good 
cause, consistent with Section 19(b)(2) of the Act,\18\ to approve the 
proposed rule change on an accelerated basis.\19\
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    \17\ See Securities Exchange Act Release No. 54459 (September 
15, 2006), 71 FR 55533 (September 22, 2006) (SR-NASDAQ-2006-035). 
See also Securities Exchange Act Release No. 54490 (September 22, 
2006), 71 FR 58034 (October 2, 2006) (SR-NYSEArca-2006-61).
    \18\ 15 U.S.C. 78s(b)(2).
    \19\ The Commission's approval order is not retroactive in 
effect.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule change (SR-NYSE-2006-88) is approved on 
an accelerated basis.
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    \20\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-18254 Filed 10-30-06; 8:45 am]
BILLING CODE 8011-01-P