Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto to Trade iShares® Lehman Bond Funds Pursuant to Unlisted Trading Privileges, 2916-2920 [E7-870]
Download as PDF
<![CDATA[
2916
Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices
Eligible Clearing Fund Securities. These
securities will be unmatured bonds
which are either an Eligible Clearing
Fund Agency Security, Eligible Clearing
Fund Mortgage-Backed Security, or
Eligible Clearing Fund Treasury
Security.9 An Eligible Clearing Fund
Agency Security will be defined as a
direct obligation of those U.S. agencies
or government sponsored enterprises as
NSCC may designate from time to time
that satisfies such criteria set forth in
notices issued by NSCC from time to
time. An Eligible Clearing Fund
Mortgage-Backed Security will be
defined as a mortgage-backed pass
through obligation issued by those U.S.
agencies or government sponsored
enterprises as NSCC may designate from
time to time that satisfies such criteria
set forth in notices issued by NSCC from
time to time. An Eligible Clearing Fund
Treasury Security will be defined as a
direct obligation of the U.S. government
that satisfies the criteria set forth in
notices issued by NSCC from time to
time.
mstockstill on PROD1PC70 with NOTICES
(3) Security Concentration Provisions
NSCC is also establishing security
concentration provisions for Clearing
Fund deposits. As is currently required,
each member must contribute a
minimum of $10,000 with the first forty
percent but no less than $10,000 of a
member’s Required Deposit being in
cash.10 The remainder of a member’s
deposit may be secured by the pledge of
Eligible Clearing Fund Securities in any
combination of Eligible Clearing Fund
Treasury Securities, Eligible Clearing
Fund Agency Securities, and/or Eligible
Clearing Fund Mortgage-Backed
Securities, subject to the following two
limitations. First, any deposits of
Eligible Clearing Fund Agency
Securities or Eligible Clearing Fund
Mortgage-Backed Securities in excess of
twenty-five percent of the member’s
Required Deposit will be subject to an
additional haircut equal to twice the
percentage noted in the haircut
schedule. Second, no more than twenty
percent of a member’s Required Deposit
secured by pledged Eligible Clearing
Fund Agency Securities may be of a
single issuer.11
9 Initial eligibility criteria for each type of Eligible
Clearing Fund Security will be announced to
members in an Important Notice prior to the
effective date of these proposed rule changes. Any
future changes to the eligibility criteria will also be
announced to members in Important Notices in
advance of such changes becoming effective.
10 See supra note 6.
11 No member may post as collateral Eligible
Clearing Fund Agency Securities for which it is the
issuer. However, a member may pledge Eligible
Clearing Fund Mortgage-Backed Securities for
which it is the issuer subject to a premium haircut.
VerDate Aug<31>2005
19:33 Jan 22, 2007
Jkt 211001
(4) Letters of Credit and Other Adequate
Assurances
The provisions in NSCC’s Rules that
pertain to Letter of Credit Issuers are
being modified to reflect that letters of
credit are no longer a generally accepted
form of Clearing Fund collateral.12
Effective April 1, 2007 (the regular
expiration date of letters of credit),
members that have letters of credit
posted as collateral (other than
members, if any, that have been
required to post letters of credit for legal
risk) will be required to replace the
portion of the Clearing Fund
collateralized by letters of credit with
either cash or Eligible Clearing Fund
Securities.
(5) Implementation Timeframes
The foregoing rule changes will
become effective thirty days after an
Important Notice is issued to members
informing them that NSCC’s systems are
ready to accommodate such changes.
The corresponding changes to NSCC’s
rules will be made at that time. On April
1, 2007, changes pertaining to letters of
credit will be made to NSCC’s rules.
III. Discussion
Section 19(b) of the Act directs the
Commission to approve a proposed rule
change of a self-regulatory organization
if it finds that such proposed rule
change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
such organization.13 Section
17A(b)(3)(F) of the Act requires that the
rules of a clearing agency be designed to
assure the safeguarding of securities and
funds which are in the custody or
control of the clearing agency or for
which it is responsible.14 The
Commission finds that NSCC’s rule
change is consistent with this
requirement because by revising its
rules governing the acceptable forms of
Clearing Fund collateral deposits to
increase the liquidity of its Clearing
Fund and to minimize risk to NSCC and
its members, the proposed rule change
should better enable NSCC to assure the
safeguarding of securities and funds in
That haircut shall be fourteen percent as an initial
matter, and if the member also exceeds the twentyfive percent concentration limit, the haircut shall be
twenty-one percent.
12 NSCC has found that in practice letters of credit
are not as liquid as cash and securities, and
therefore potentially pose more risk to NSCC and
its members when accepted by NSCC as Clearing
Fund collateral. NSCC will, however, reserve the
right to require letters of credit from members in
those instances where a particular member has been
found, by NSCC in its discretion, to present legal
risk.
13 15 U.S.C. 78s(b).
14 15 U.S.C. 78q–1(b)(3)(F).
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
its custody or control or for which it is
responsible.15
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and in
particular Section 17A of the Act and
the rules and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,16 that the
proposed rule change (File No. SR–
NSCC–2006–11) be and hereby is
approved.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.17
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–865 Filed 1–22–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55102; File No. SR–
NYSEArca–2006–63]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto to
Trade iShares Lehman Bond Funds
Pursuant to Unlisted Trading
Privileges
January 12, 2007.
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 20, 2006, the NYSE Arca,
Inc. (the ‘‘Exchange’’), through its
wholly owned subsidiary, NYSE Arca
Equities, Inc. (‘‘NYSE Arca Equities’’),
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been substantially prepared by the
Exchange. The Exchange submitted
Amendment No. 1 to the proposed rule
change on January 8, 2007, which
replaces the original filing in its
entirety. On January 12, 2007, the
Exchange submitted Amendment No. 2
to the proposed rule change.3 The
15 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
16 15 U.S.C. 78s(b)(2).
17 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 2 clarified that Amendment
No. 1 replaced the original filing in its entirety and
E:\FR\FM\23JAN1.SGM
23JAN1
Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices
Commission is publishing this notice to
solicit comment on the proposal, as
amended, from interested persons and
to approve the proposal on an
accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange, through NYSE Arca
Equities, has proposed to trade shares
(‘‘Shares’’) of the following Index Funds
(‘‘Funds’’) pursuant to unlisted trading
privileges (‘‘UTP’’) based on NYSE Arca
Equities Rule 5.2(j)(3): (1) iShares
Lehman Short Treasury Bond Fund; (2)
iShares Lehman 3–7 Year Treasury
Bond Fund; (3) iShares Lehman 10–20
Year Treasury Bond Fund; (4) iShares
Lehman 1–3 Year Credit Bond Fund; (5)
iShares Lehman Intermediate Credit
Bond Fund; (6) iShares Lehman Credit
Bond Fund; (7) iShares Lehman
Intermediate Government/Credit Bond
Fund; and (8) iShares Lehman
Government/Credit Bond Fund. The text
of the proposed rule change is available
at the Exchange, the Commission’s
Public Reference Room, and https://
www.nysearca.com.
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
mstockstill on PROD1PC70 with NOTICES
1. Purpose
Under NYSE Arca Equities Rule
5.2(j)(3), the Exchange may propose to
list or trade pursuant to UTP
‘‘Investment Company Units’’ (‘‘ICUs’’).
The Exchange proposes to trade
pursuant to UTP the Shares of the
Funds under NYSE Arca Equities Rule
5.2(j)(3).4 The Commission has
approved a proposed rule change by the
revised the statutory basis section of the proposed
rule change.
4 NYSE Arca Equities Rule 5.2(j)(3)(A)(i)(a) allows
the listing and trading of ICUs issued by a registered
investment company that holds securities
comprising, or otherwise based on or representing
an interest in, an index or portfolio or securities.
VerDate Aug<31>2005
19:33 Jan 22, 2007
Jkt 211001
New York Stock Exchange LLC (the
‘‘NYSE’’) to list and trade the Shares of
the Funds.5
The Funds will be based on the
following indexes, respectively: (1)
Lehman Brothers Short U.S. Treasury
Index; (2) Lehman Brothers 3–7 Year
U.S. Treasury Index; (3) Lehman
Brothers 10–20 Year U.S. Treasury
Index; (4) Lehman Brothers 1–3 Year
U.S. Credit Index; (5) Lehman Brothers
Intermediate U.S. Credit Index; (6)
Lehman Brothers U.S. Credit Index; (7)
Lehman Brothers Intermediate U.S.
Government/Credit Index; and (8)
Lehman Brothers U.S. Government/
Credit Index.
The indexes are referred to herein
collectively as ‘‘Indexes’’ or
‘‘Underlying Indexes,’’ which are
described in detail in the NYSE
Proposal. Each Fund is an ‘‘index fund’’
that seeks investment results that
correspond generally to the price and
yield performance, before fees and
expenses, of its Underlying Index
developed by Lehman.
Availability of Information Regarding
iShares and the Underlying Index
Quotations for and last sale
information regarding the Shares are
disseminated through the Consolidated
Tape System (‘‘CTS’’). The NYSE
Proposal states that, on each business
day the list of names and amount of
each security constituting the current
Deposit Securities 6 of the Fund
Deposit 7 and the Balancing Amount 8
effective as of the previous business day
will be made available. An amount per
iShare representing the sum of the
estimated Balancing Amount effective
through and including the previous
business day, plus the current value of
the Deposit Securities in U.S. dollars, on
a per iShare basis (the ‘‘Intra-day
Optimized Portfolio Value’’ or ‘‘IOPV’’)
will be calculated by an independent
third party (the ‘‘Value Calculator’’),
such as Bloomberg L.P., every 15
seconds during the Exchange’s regular
trading hours and disseminated every
15 seconds on the Consolidated Tape.
Because NSCC does not disseminate the
new basket amount to market
participants until approximately 6 p.m.
5 See Securities Exchange Act Release No. 54916
(December 12, 2006), 71 FR 76008 (December 19,
2006) (SR–NYSE–2006–70) (the ‘‘NYSE Proposal’’).
6 Deposit Securities are the in-kind deposit of a
designated portfolio of securities, which constitute
a substantial replication, or a portfolio sampling
representation, of the securities in the relevant
Fund’s Underlying Index.
7 The Fund Deposit represents the minimum
initial and subsequent investment amount for a
Creation Unit.
8 Balancing Amount, together with the Deposit
Securities, constitute the ‘‘Fund Deposit.’’
PO 00000
Frm 00066
Fmt 4703
Sfmt 4703
2917
to 7 p.m. ET, an updated IOPV is not
possible to calculate during the
Exchange’s late trading session (4:15
p.m. to 8 p.m. ET).
The NYSE Proposal indicates that the
NYSE intends to disseminate a variety
of data with respect to each Fund on a
daily basis by means of the
Consolidated Tape Association and CQ
High Speed Lines; information with
respect to recent NAV, shares
outstanding, estimated cash amount and
total cash amount per Creation Unit 9
will be made available each trading day.
The Underlying Indexes are
calculated once each trading day, and
are available from major market data
vendors. The NAV for each Fund will be
calculated and disseminated daily in a
number of places, including
iShares.com and on the Consolidated
Tape. In the NYSE Proposal, the NYSE
stated that it will receive a
representation from the Advisor to the
Funds that the NAV will be calculated
and made available to all market
participants at the same time.
In addition, the Web site for the
iShare Trust (‘‘Trust’’), which will be
publicly accessible at no charge, will
contain the following information, on a
per iShare basis, for each Fund: (a) The
prior business day’s NAV and the midpoint of the bid-ask price and a
calculation of the premium or discount
of such price against such NAV; and (b)
data in chart format displaying the
frequency distribution of discounts and
premiums of the Bid/Ask Price against
the NAV, within appropriate ranges, for
each of the four previous calendar
quarters.
UTP Trading Criteria
The Exchange represents that it 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 (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. UTP trading
in the Shares is also governed by the
trading halts provisions of NYSE Arca
Equities Rule 7.34 relating to temporary
interruptions in the calculation or wide
dissemination of the Intraday Indicative
Value (‘‘IOPV’’) or the value of the
underlying index.
9 Shares of the Funds will be issued on a
continuous offering basis in groups of 50,000 to
100,000 iShares (as specified for each Fund), or
multiples thereof. These ‘‘groups’’ of shares are
called ‘‘Creation Units.’’
E:\FR\FM\23JAN1.SGM
23JAN1
2918
Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices
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 4 a.m.
until 8 p.m. ET, even if the IOPV is not
disseminated from 4:15 p.m. to 8 p.m.
ET.10 The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions. The
minimum trading increment for Shares
on the Exchange will be $0.01.
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 securities
comprising an Underlying Index of a
Fund, 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’’ rule 11 or by the halt or
suspension of trading of the underlying
securities. 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.
mstockstill on PROD1PC70 with NOTICES
Surveillance
The Exchange will utilize its existing
surveillance procedures applicable to
ICUs to monitor trading of the Funds.
Surveillance procedures applicable to
trading in the proposed Shares are
comparable to those applicable to other
ICUs currently trading on the Exchange.
The Exchange represents that these
surveillance procedures are adequate to
properly monitor the trading of the
Funds. The Exchange’s current trading
10 The Exchange relies on the listing market to
monitor dissemination of the IOPV during the
Exchange’s core trading session (9:30 a.m. to 4:15
p.m. ET). Currently the official index sponsors for
the Funds’ indexes do not calculate updated index
values during the Exchange’s late trading session;
however, if the index sponsors did so in the future,
the Exchange will not trade this product unless
such official index value is widely disseminated.
11 See NYSE Arca Equities Rule 7.12.
VerDate Aug<31>2005
19:33 Jan 22, 2007
Jkt 211001
surveillances focus 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.
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 Creation Unit
Aggregations (and that Shares are not
individually redeemable); (2) NYSE
Arca Equities Rule 9.2(a),12 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 IOPV 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 Funds.13 The
Exchange notes that investors
purchasing Shares directly from the
Trust will receive a prospectus. ETP
Holders purchasing Shares from the
Trust for resale to investors will deliver
a prospectus to such investors. The
Information Bulletin will also discuss
any exemptive, no-action and
12 NYSE Arca Equities Rule 9.2(a) (‘‘Diligence as
to Accounts’’) provides 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, with a limited exception, prior to the
execution of a transaction recommended to a noninstitutional customer, 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).
13 See In the Matter of iShares, Inc., Investment
Company Act Release No. 25623 (June 25, 2002),
which permits dealers to sell Shares in the
secondary market unaccompanied by a statutory
prospectus when prospectus delivery is not
required by the Securities Act of 1933. Any product
description used in reliance on the Section 24(d)
exemptive order will comply with all
representations and conditions set forth in the
order.
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
interpretive relief granted by the
Commission from any rules under the
Act.
In addition, the Information Bulletin
will reference that the Trust is subject
to various fees and expenses described
in the Registration Statement. The
Information Bulletin will also disclose
that the NAV for the Shares will be
calculated shortly after 4 p.m. ET each
trading day.
The Commission has granted the
Funds an exemption from certain
prospectus delivery requirements under
Section 24(d) of the Investment
Company Act of 1940 (‘‘1940 Act’’).14
Any product description used in
reliance on the Section 24(d) exemptive
order will comply with all
representations made and all conditions
contained in the Funds’ application for
orders under the 1940 Act.15
In connection with the trading of the
Funds, the Exchange would inform ETP
Holders in an Information Circular of
the special characteristics and risks
associated with trading the Funds,
including how the Funds are created
and redeemed, the prospectus or
product description delivery
requirements applicable to the Funds,
applicable Exchange rules, how
information about the value of the
underlying index is disseminated, and
trading information.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act 16 in general and
Section 6(b)(5) of the Act 17 in particular
in that it is designed 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 and perfect the
mechanisms of a free and open market
and to protect investors and the public
interest.
In addition, the proposed rule change
is consistent with Rule 12f–5 18 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
14 15
U.S.C. 80a–24(d).
In the Matter of iShares, Inc., Investment
Company Act Release No. 25623 (June 25, 2002).
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
18 17 CFR 240.12f–5.
15 See
E:\FR\FM\23JAN1.SGM
23JAN1
Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices
11A(a)(1)(C)(iii) of the Act,25 which sets
forth Congress’s finding that it is in the
public interest and appropriate for the
IV. Commission’s Findings and Order
C. Self-Regulatory Organization’s
protection of investors and the
Granting Accelerated Approval of
Statement on Comments on the
maintenance of fair and orderly markets
Proposed Rule Change
Proposed Rule Change Received From
to assure the availability to brokers,
Members, Participants or Others
The Commission finds that the
dealers, and investors of information
proposed rule change is consistent with with respect to quotations for and
The Exchange has neither solicited
the requirements of the Act and the
nor received written comments on the
transactions in securities. Quotations for
rules and regulations thereunder
proposed rule change.
and last sale information regarding the
applicable to a national securities
Shares are disseminated through the
III. Solicitation of Comments
19 In particular, the
exchange.
Consolidated Quotation System.
Interested persons are invited to
Commission finds that the proposed
Furthermore, a Value Calculator
submit written data, views, and
rule change is consistent with Section
disseminates the value of IOPV every 15
arguments concerning the foregoing,
6(b)(5) of the Act,20 which requires that
seconds. Because of the importance of
including whether the proposed rule
an exchange have rules designed, among this information, if a Value Calculator
change is consistent with the Act.
other things, to promote just and
ceases to maintain or to calculate the
Comments may be submitted by any of
equitable principles of trade, to remove
value of the IOPV or if the value of the
the following methods:
impediments to and perfect the
index ceases to be widely available,
mechanism of a free and open market
NYSE Arca Equities Rule 7.34 would
Electronic Comments
and a national market system, and in
require the Exchange to cease trading
• Use the Commission’s Internet
general to protect investors and the
the Shares.
comment form (https://www.sec.gov/
public interest. The Commission
Finally, the Commission notes that, if
rules/sro.shtml); or
believes that this proposal will benefit
the Shares should be delisted by NYSE,
• Send an e-mail to ruleinvestors by increasing competition
the original listing exchange, the
comments@sec.gov. Please include File
among markets that trade Shares of the
Exchange would no longer have
No. SR–NYSEArca–2006–63 on the
Funds.
authority to trade the Shares pursuant to
subject line.
In addition, the Commission finds
this order.
that the proposal is consistent with
In support of this proposal, the
Paper Comments
Section 12(f) of the Act,21 which permits Exchange has made the following
• Send paper comments in triplicate
an exchange to trade, pursuant to UTP,
representations:
to Nancy M. Morris, Secretary,
a security that is listed and registered on
1. The Exchange’s surveillance
Securities and Exchange Commission,
another exchange.22 The Commission
procedures are adequate to address any
Station Place, 100 F Street NE.,
notes that it previously approved the
concerns associated with the trading of
Washington, DC 20549–1090.
listing and trading of the Shares on the
the Shares on a UTP basis.
All submissions should refer to File No. NYSE.23 The Commission also finds that
2. The Exchange will distribute an
SR–NYSEArca–2006–63. This file
information circular to its ETP Holders
the proposal is consistent with Rule
number should be included on the
prior to the commencement of trading of
12f–5 under the Act,24 which provides
subject line if e-mail is used. To help the that an exchange shall not extend UTP
the Shares on the Exchange that
Commission process and review your
explains the terms, characteristics, and
to a security unless the exchange has in
comments more efficiently, please use
risks of trading the Shares.
effect a rule or rules providing for
only one method. The Commission will transactions in the class or type of
3. The Exchange will require ETP
post all comments on the Commission’s security to which the exchange extends
Holders to deliver a prospectus to
Internet Web site (https://www.sec.gov/
UTP. The Exchange has represented that investors purchasing newly issued
rules/sro.shtml). Copies of the
Shares and will note this prospectus
it meets this requirement because it
submission, all subsequent
delivery requirement in the information
deems the Shares to be an equity
amendments, all written statements
circular.
security, thus rendering trading in the
with respect to the proposed rule
This approval order is conditioned on
Shares subject to the Exchange’s
change that are filed with the
the Exchange’s adherence to these
existing rules governing the trading of
Commission, and all written
representations.
equity securities.
communications relating to the
The Commission finds good cause for
The Commission further believes that
proposed rule change between the
approving this proposal before the
the proposal is consistent with Section
Commission and any person, other than
thirtieth day after the publication of
19 In approving this rule change, the Commission
those that may be withheld from the
notice thereof in the Federal Register.
notes that it has considered the proposed rule’s
public in accordance with the
As noted previously, the Commission
impact on efficiency, competition, and capital
provisions of 5 U.S.C. 552, will be
previously found that the listing and
formation. See 15 U.S.C. 78c(f).
available for inspection and copying in
trading of the Shares on NYSE is
20 15 U.S.C. 78f(b)(5).
the Commission’s Public Reference
21 15 U.S.C. 78l(f).
consistent with the Act.26 The
Room. Copies of such filing also will be
22 Section 12(a) of the Act, 15 U.S.C. 78l(a),
Commission presently is not aware of
generally prohibits a broker-dealer from trading a
available for inspection and copying at
any regulatory issue that should cause it
security on a national securities exchange unless
the principal offices of the Exchange.
to revisit that earlier finding or preclude
the security is registered on that exchange pursuant
All comments received will be posted
the trading of the Shares on the
to Section 12 of the Act. Section 12(f) of the Act
without change; the Commission does
Exchange pursuant to UTP. Therefore,
excludes from this restriction trading in any
security to which an exchange ‘‘extends UTP.’’
not edit personal identifying
accelerating approval of this proposal
When an exchange extends UTP to a security, it
information from submissions. You
should benefit investors by creating,
allows its members to trade the security as if it were
should submit only information that
without undue delay, additional
listed and registered on the exchange even though
you wish to make available publicly. All it is not so listed and registered.
25 15 U.S.C. 78k–1(a)(1)(C)(iii).
23 See NYSE Proposal, supra note 5.
submissions should refer to File No.
26 See NYSE Proposal, supra note 5.
24 17 CFR 240.12f–5.
SR–NYSEArca–2006–63 and should be
necessary or appropriate in furtherance
of the purposes of the Act.
mstockstill on PROD1PC70 with NOTICES
submitted on or before February 13,
2007.
2919
VerDate Aug<31>2005
19:33 Jan 22, 2007
Jkt 211001
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
E:\FR\FM\23JAN1.SGM
23JAN1
2920
Federal Register / Vol. 72, No. 14 / Tuesday, January 23, 2007 / Notices
competition in the market for the
Shares.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,27 that the
proposed rule change (SR–NYSEArca–
2006–63), as modified by Amendment
Nos. 1 and 2, be and hereby is, approved
on an accelerated basis.
Hamilton, Haskell, Hodgeman,
Jewell, Kearny, Kiowa, Lane, Logan,
Meade, Morton, Ness, Norton,
Osborne, Pawnee, Phillips, Rawlins,
Rooks, Rush, Russell, Scott,
Seward, Sheridan, Sherman, Smith,
Stafford, Stanton, Stevens, Thomas,
Trego, Wallace, Wichita
The Interest Rates are:
Percent
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.28
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–870 Filed 1–22–07; 8:45 am]
BILLING CODE 8011–01–P
Other (Including Non-Profit Organizations) With Credit Available
Elsewhere ...................................
Businesses And Non-Profit Organizations Without Credit Available
Elsewhere ...................................
SMALL BUSINESS ADMINISTRATION
The number assigned to this disaster
for physical damage is 10784.
5.250
4.000
[Disaster Declaration #10784]
James E. Rivera,
Acting Associate Administrator for Disaster
Assistance.
[FR Doc. E7–896 Filed 1–22–07; 8:45 am]
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
BILLING CODE 8025–01–P
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Kansas (FEMA–1675–DR) ,
dated 01/07/2007.
Incident: Severe Winter Storm.
Incident Period: 12/28/2006 through
12/31/2006.
Effective Date: 01/07/2007.
Physical Loan Application Deadline
Date: 03/08/2007.
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,
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
President’s major disaster declaration on
01/07/2007, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications 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:
Cheyenne, Clark, Comanche, Decatur,
Edwards, Ellis, Finney, Ford, Gove,
Graham, Grant, Gray, Greeley,
SUMMARY:
mstockstill on PROD1PC70 with NOTICES
The Interest Rates are:
(Catalog of Federal Domestic Assistance
Number 59008)
Kansas Disaster #KS–00015
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties:
Adams, Antelope, Blaine, Boone,
Brown, Buffalo, Cedar, Chase,
Cheyenne, Clay, Custer, Dawson,
Dixon, Dundy, Fillmore, Franklin,
Frontier, Furnas, Garden, Garfield,
Gosper, Greeley, Hall, Hamilton,
Harlan, Hayes, Hitchcock, Holt,
Howard, Kearney, Keith, Keya Paha,
Kimball, Knox, Lincoln, Logan,
Loup, Madison, Merrick, Morrill,
Nance, Nuckolls, Perkins, Phelps,
Pierce, Platte, Polk, Red Willow,
Rock, Seward, Sherman, Stanton,
Valley, Wayne, Webster, Wheeler
York
27 15
28 17
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
19:33 Jan 22, 2007
Jkt 211001
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #10783]
Nebraska Disaster #NE–00011
Small Business Administration.
ACTION: Notice.
AGENCY:
SUMMARY: This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Nebraska (FEMA–1674–DR),
dated 01/07/2007.
Incident: Severe Winter Storms.
Incident Period: 12/19/2006 through
01/01/2007.
Effective Date: 01/07/2007.
Physical Loan Application Deadline
Date: 03/08/2007.
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,
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
President’s major disaster declaration on
01/07/2007, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications at the
address listed above or other locally
announced locations.
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
Percent
Other (Including Non-Profit Organizations) With Credit Available
Elsewhere ...................................
Businesses And Non-Profit Organizations Without Credit Available
Elsewhere ...................................
5.250
4.000
The number assigned to this disaster
for physical damage is 10783.
(Catalog of Federal Domestic Assistance
Number 59008)
James E. Rivera,
Acting Associate Administrator for Disaster
Assistance.
[FR Doc. E7–897 Filed 1–22–07; 8:45 am]
BILLING CODE 8025–01–P
SOCIAL SECURITY ADMINISTRATION
[Document No. 2007–SSA–0004]
The Ticket To Work and Work
Incentives Advisory Panel Meeting
AGENCY:
Social Security Administration
(SSA).
ACTION:
Notice of Quarterly Meeting.
February 8, 2007—9 a.m. to 5
p.m. February 9, 2007—8:30 a.m. to 12
p.m.
ADDRESSES: Atlanta Marriott Marquis,
265 Peachtree Center Avenue Atlanta,
GA 30303. Phone: 404–521–0000.
SUPPLEMENTARY INFORMATION:
Type of meeting: On February 8–9,
2007, the Ticket to Work and Work
Incentives Advisory Panel (the ‘‘Panel’’)
will hold a quarterly meeting open to
the public.
Purpose: In accordance with section
10(a)(2) of the Federal Advisory
Committee Act, the Social Security
Administration (SSA) announces a
DATES:
E:\FR\FM\23JAN1.SGM
23JAN1
]]>Agencies
[Federal Register Volume 72, Number 14 (Tuesday, January 23, 2007)]
[Notices]
[Pages 2916-2920]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-870]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55102; File No. SR-NYSEArca-2006-63]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto to Trade iShares[supreg] Lehman Bond
Funds Pursuant to Unlisted Trading Privileges
January 12, 2007.
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 20, 2006, the NYSE Arca, Inc. (the ``Exchange''), through
its wholly owned subsidiary, NYSE Arca Equities, Inc. (``NYSE Arca
Equities''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by the Exchange.
The Exchange submitted Amendment No. 1 to the proposed rule change on
January 8, 2007, which replaces the original filing in its entirety. On
January 12, 2007, the Exchange submitted Amendment No. 2 to the
proposed rule change.\3\ The
[[Page 2917]]
Commission is publishing this notice to solicit comment on the
proposal, as amended, from interested persons and to approve the
proposal on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 2 clarified that Amendment No. 1 replaced the
original filing in its entirety and revised the statutory basis
section of the proposed rule change.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange, through NYSE Arca Equities, has proposed to trade
shares (``Shares'') of the following Index Funds (``Funds'') pursuant
to unlisted trading privileges (``UTP'') based on NYSE Arca Equities
Rule 5.2(j)(3): (1) iShares[supreg] Lehman Short Treasury Bond Fund;
(2) iShares Lehman 3-7 Year Treasury Bond Fund; (3) iShares Lehman 10-
20 Year Treasury Bond Fund; (4) iShares Lehman 1-3 Year Credit Bond
Fund; (5) iShares Lehman Intermediate Credit Bond Fund; (6) iShares
Lehman Credit Bond Fund; (7) iShares Lehman Intermediate Government/
Credit Bond Fund; and (8) iShares Lehman Government/Credit Bond Fund.
The text of the proposed rule change is available at the Exchange, the
Commission's Public Reference Room, and https://www.nysearca.com.
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
Under NYSE Arca Equities Rule 5.2(j)(3), the Exchange may propose
to list or trade pursuant to UTP ``Investment Company Units''
(``ICUs''). The Exchange proposes to trade pursuant to UTP the Shares
of the Funds under NYSE Arca Equities Rule 5.2(j)(3).\4\ The Commission
has approved a proposed rule change by the New York Stock Exchange LLC
(the ``NYSE'') to list and trade the Shares of the Funds.\5\
---------------------------------------------------------------------------
\4\ NYSE Arca Equities Rule 5.2(j)(3)(A)(i)(a) allows the
listing and trading of ICUs issued by a registered investment
company that holds securities comprising, or otherwise based on or
representing an interest in, an index or portfolio or securities.
\5\ See Securities Exchange Act Release No. 54916 (December 12,
2006), 71 FR 76008 (December 19, 2006) (SR-NYSE-2006-70) (the ``NYSE
Proposal'').
---------------------------------------------------------------------------
The Funds will be based on the following indexes, respectively: (1)
Lehman Brothers Short U.S. Treasury Index; (2) Lehman Brothers 3-7 Year
U.S. Treasury Index; (3) Lehman Brothers 10-20 Year U.S. Treasury
Index; (4) Lehman Brothers 1-3 Year U.S. Credit Index; (5) Lehman
Brothers Intermediate U.S. Credit Index; (6) Lehman Brothers U.S.
Credit Index; (7) Lehman Brothers Intermediate U.S. Government/Credit
Index; and (8) Lehman Brothers U.S. Government/Credit Index.
The indexes are referred to herein collectively as ``Indexes'' or
``Underlying Indexes,'' which are described in detail in the NYSE
Proposal. Each Fund is an ``index fund'' that seeks investment results
that correspond generally to the price and yield performance, before
fees and expenses, of its Underlying Index developed by Lehman.
Availability of Information Regarding iShares and the Underlying Index
Quotations for and last sale information regarding the Shares are
disseminated through the Consolidated Tape System (``CTS''). The NYSE
Proposal states that, on each business day the list of names and amount
of each security constituting the current Deposit Securities \6\ of the
Fund Deposit \7\ and the Balancing Amount \8\ effective as of the
previous business day will be made available. An amount per iShare
representing the sum of the estimated Balancing Amount effective
through and including the previous business day, plus the current value
of the Deposit Securities in U.S. dollars, on a per iShare basis (the
``Intra-day Optimized Portfolio Value'' or ``IOPV'') will be calculated
by an independent third party (the ``Value Calculator''), such as
Bloomberg L.P., every 15 seconds during the Exchange's regular trading
hours and disseminated every 15 seconds on the Consolidated Tape.
Because NSCC does not disseminate the new basket amount to market
participants until approximately 6 p.m. to 7 p.m. ET, an updated IOPV
is not possible to calculate during the Exchange's late trading session
(4:15 p.m. to 8 p.m. ET).
---------------------------------------------------------------------------
\6\ Deposit Securities are the in-kind deposit of a designated
portfolio of securities, which constitute a substantial replication,
or a portfolio sampling representation, of the securities in the
relevant Fund's Underlying Index.
\7\ The Fund Deposit represents the minimum initial and
subsequent investment amount for a Creation Unit.
\8\ Balancing Amount, together with the Deposit Securities,
constitute the ``Fund Deposit.''
---------------------------------------------------------------------------
The NYSE Proposal indicates that the NYSE intends to disseminate a
variety of data with respect to each Fund on a daily basis by means of
the Consolidated Tape Association and CQ High Speed Lines; information
with respect to recent NAV, shares outstanding, estimated cash amount
and total cash amount per Creation Unit \9\ will be made available each
trading day.
---------------------------------------------------------------------------
\9\ Shares of the Funds will be issued on a continuous offering
basis in groups of 50,000 to 100,000 iShares (as specified for each
Fund), or multiples thereof. These ``groups'' of shares are called
``Creation Units.''
---------------------------------------------------------------------------
The Underlying Indexes are calculated once each trading day, and
are available from major market data vendors. The NAV for each Fund
will be calculated and disseminated daily in a number of places,
including iShares.com and on the Consolidated Tape. In the NYSE
Proposal, the NYSE stated that it will receive a representation from
the Advisor to the Funds that the NAV will be calculated and made
available to all market participants at the same time.
In addition, the Web site for the iShare[supreg] Trust (``Trust''),
which will be publicly accessible at no charge, will contain the
following information, on a per iShare basis, for each Fund: (a) The
prior business day's NAV and the mid-point of the bid-ask price and a
calculation of the premium or discount of such price against such NAV;
and (b) data in chart format displaying the frequency distribution of
discounts and premiums of the Bid/Ask Price against the NAV, within
appropriate ranges, for each of the four previous calendar quarters.
UTP Trading Criteria
The Exchange represents that it 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 (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. UTP trading in the Shares is also
governed by the trading halts provisions of NYSE Arca Equities Rule
7.34 relating to temporary interruptions in the calculation or wide
dissemination of the Intraday Indicative Value (``IOPV'') or the value
of the underlying index.
[[Page 2918]]
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 4 a.m. until 8 p.m. ET, even if the IOPV
is not disseminated from 4:15 p.m. to 8 p.m. ET.\10\ The Exchange has
appropriate rules to facilitate transactions in the Shares during all
trading sessions. The minimum trading increment for Shares on the
Exchange will be $0.01.
---------------------------------------------------------------------------
\10\ The Exchange relies on the listing market to monitor
dissemination of the IOPV during the Exchange's core trading session
(9:30 a.m. to 4:15 p.m. ET). Currently the official index sponsors
for the Funds' indexes do not calculate updated index values during
the Exchange's late trading session; however, if the index sponsors
did so in the future, the Exchange will not trade this product
unless such official index value is widely disseminated.
---------------------------------------------------------------------------
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 securities comprising an
Underlying Index of a Fund, 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'' rule \11\ or by the halt or suspension
of trading of the underlying securities. See ``UTP Trading Criteria''
above for specific instances when the Exchange will cease trading the
Shares.
---------------------------------------------------------------------------
\11\ 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.
Surveillance
The Exchange will utilize its existing surveillance procedures
applicable to ICUs to monitor trading of the Funds. Surveillance
procedures applicable to trading in the proposed Shares are comparable
to those applicable to other ICUs currently trading on the Exchange.
The Exchange represents that these surveillance procedures are adequate
to properly monitor the trading of the Funds. The Exchange's current
trading surveillances focus 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.
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 Creation Unit Aggregations (and
that Shares are not individually redeemable); (2) NYSE Arca Equities
Rule 9.2(a),\12\ 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 IOPV 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.
---------------------------------------------------------------------------
\12\ NYSE Arca Equities Rule 9.2(a) (``Diligence as to
Accounts'') provides 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, with a limited
exception, prior to the execution of a transaction recommended to a
non-institutional customer, 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 Funds.\13\ The Exchange notes that
investors purchasing Shares directly from the Trust will receive a
prospectus. ETP Holders purchasing Shares from the Trust 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.
---------------------------------------------------------------------------
\13\ See In the Matter of iShares, Inc., Investment Company Act
Release No. 25623 (June 25, 2002), which permits dealers to sell
Shares in the secondary market unaccompanied by a statutory
prospectus when prospectus delivery is not required by the
Securities Act of 1933. Any product description used in reliance on
the Section 24(d) exemptive order will comply with all
representations and conditions set forth in the order.
---------------------------------------------------------------------------
In addition, the Information Bulletin will reference that the Trust
is subject to various fees and expenses described in the Registration
Statement. The Information Bulletin will also disclose that the NAV for
the Shares will be calculated shortly after 4 p.m. ET each trading day.
The Commission has granted the Funds an exemption from certain
prospectus delivery requirements under Section 24(d) of the Investment
Company Act of 1940 (``1940 Act'').\14\ Any product description used in
reliance on the Section 24(d) exemptive order will comply with all
representations made and all conditions contained in the Funds'
application for orders under the 1940 Act.\15\
---------------------------------------------------------------------------
\14\ 15 U.S.C. 80a-24(d).
\15\ See In the Matter of iShares, Inc., Investment Company Act
Release No. 25623 (June 25, 2002).
---------------------------------------------------------------------------
In connection with the trading of the Funds, the Exchange would
inform ETP Holders in an Information Circular of the special
characteristics and risks associated with trading the Funds, including
how the Funds are created and redeemed, the prospectus or product
description delivery requirements applicable to the Funds, applicable
Exchange rules, how information about the value of the underlying index
is disseminated, and trading information.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \16\ in general and Section 6(b)(5) of the
Act \17\ in particular in that it is designed 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 and perfect the mechanisms of a free and open market
and to protect investors and the public interest.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In addition, the proposed rule change is consistent with Rule 12f-5
\18\ 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.
---------------------------------------------------------------------------
\18\ 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
[[Page 2919]]
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
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change 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 No. SR-NYSEArca-2006-63 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 No. SR-NYSEArca-2006-63. 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 No. SR-NYSEArca-2006-63 and should be submitted on or before
February 13, 2007.
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.\19\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\20\ 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. The Commission
believes that this proposal will benefit investors by increasing
competition among markets that trade Shares of the Funds.
---------------------------------------------------------------------------
\19\ 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).
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In addition, the Commission finds that the proposal is consistent
with Section 12(f) of the Act,\21\ which permits an exchange to trade,
pursuant to UTP, a security that is listed and registered on another
exchange.\22\ The Commission notes that it previously approved the
listing and trading of the Shares on the NYSE.\23\ The Commission also
finds that the proposal is consistent with Rule 12f-5 under the
Act,\24\ 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. The Exchange has represented that it meets this
requirement because it deems the Shares to be an equity security, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities.
---------------------------------------------------------------------------
\21\ 15 U.S.C. 78l(f).
\22\ 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.
\23\ See NYSE Proposal, supra note 5.
\24\ 17 CFR 240.12f-5.
---------------------------------------------------------------------------
The Commission further believes that the proposal is consistent
with Section 11A(a)(1)(C)(iii) of the Act,\25\ which sets forth
Congress's finding that it is in the public interest and appropriate
for the protection of investors and the maintenance of fair and orderly
markets to assure the availability to brokers, dealers, and investors
of information with respect to quotations for and transactions in
securities. Quotations for and last sale information regarding the
Shares are disseminated through the Consolidated Quotation System.
Furthermore, a Value Calculator disseminates the value of IOPV every 15
seconds. Because of the importance of this information, if a Value
Calculator ceases to maintain or to calculate the value of the IOPV or
if the value of the index ceases to be widely available, NYSE Arca
Equities Rule 7.34 would require the Exchange to cease trading the
Shares.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
Finally, the Commission notes that, if the Shares should be
delisted by NYSE, the original listing exchange, the Exchange would no
longer have authority to trade the Shares pursuant to this order.
In support of this proposal, the Exchange has made the following
representations:
1. The Exchange's surveillance procedures are adequate to address
any concerns associated with the trading of the Shares on a UTP basis.
2. The Exchange will distribute an information circular to its ETP
Holders prior to the commencement of trading of the Shares on the
Exchange that explains the terms, characteristics, and risks of trading
the Shares.
3. The Exchange will require ETP Holders to deliver a prospectus to
investors purchasing newly issued Shares and will note this prospectus
delivery requirement in the information circular.
This approval order is conditioned on the Exchange's adherence to these
representations.
The Commission finds good cause for approving this proposal before
the thirtieth day after the publication of notice thereof in the
Federal Register. As noted previously, the Commission previously found
that the listing and trading of the Shares on NYSE is consistent with
the Act.\26\ The Commission presently is not aware of any regulatory
issue that should cause it to revisit that earlier finding or preclude
the trading of the Shares on the Exchange pursuant to UTP. Therefore,
accelerating approval of this proposal should benefit investors by
creating, without undue delay, additional
[[Page 2920]]
competition in the market for the Shares.
---------------------------------------------------------------------------
\26\ See NYSE Proposal, supra note 5.
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\27\ that the proposed rule change (SR-NYSEArca-2006-63), as
modified by Amendment Nos. 1 and 2, be and hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-870 Filed 1-22-07; 8:45 am]
BILLING CODE 8011-01-P
