Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade Shares of the CurrencySharesSM, 8828-8831 [E7-3291]

Download as PDF 8828 Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices open outcry, the mechanism has not been used frequently enough to supply sufficient evidence to evaluate the effectiveness of the Pilot Program. In order to allow for additional time to compile sufficient evidence as to the effectiveness of the Pilot Program, NYSE Arca proposes to extend the Pilot Program for an additional one-year period ending February 15, 2008. At the end of the extended Pilot Program, the Exchange believes it will be able supply the Commission with a report summarizing the effectiveness of the program. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,8 in general, and furthers the objectives of Section 6(b)(5),9 in particular, in that it is designed to facilitate transactions in securities, to promote just and equitable principles of trade, and to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the 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. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b– 4(f)(6) thereunder.11 8 15 U.S.C. 78f. U.S.C. 78f(b)(5). 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6) also requires the self-regulatory organization to give the Commission notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. NYSE Arca has satisfied the five-day pre-filing requirement. cprice-sewell on PROD1PC62 with NOTICES 9 15 VerDate Aug<31>2005 15:22 Feb 26, 2007 Jkt 211001 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. NYSE Arca has requested that the Commission waive the 30-day operative delay. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because the proposal raises no new regulatory issues and will merely allow the Exchange more time to assess the effectiveness of the Pilot Program. Accordingly, the Commission designates the proposal to be effective and operative upon filing with the Commission.12 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2007–16 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2007–16. 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 12 For purposes only of waiving the 30-day operative delay of this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 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 NYSE Arca. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2007–16 and should be submitted on or before March 20, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–3286 Filed 2–26–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55320; File No. SR– NYSEArca–2007–15] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade Shares of the CurrencySharesSM Japanese Yen Trust Pursuant to Unlisted Trading Privileges February 21, 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 February 12, 2007, 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. This Order provides notice of the proposed rule change and approves the proposed rule change on an accelerated basis. 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\27FEN1.SGM 27FEN1 Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange, through NYSE Arca Equities, proposes to trade shares (the ‘‘Shares’’) of the CurrencyShares SM Japanese Yen Trust (the ‘‘Trust’’) pursuant to unlisted trading privileges (‘‘UTP’’). The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and http://www.nyse.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 Pursuant to NYSE Arca Equities Rule 8.202, which permits the listing and trading of ‘‘Currency Trust Shares,’’ 3 the Exchange proposes to trade pursuant to UTP the Shares of the Trust. The Commission has recently approved the listing and trading of the Shares on the New York Stock Exchange LLC (‘‘NYSE’’).4 The Exchange currently trades Shares of the Euro Currency Trust, CurrencyShares SM Australian Dollar Trust, CurrencyShares SM British Pound Sterling Trust, CurrencyShares SM Canadian Dollar Trust, CurrencyShares SM Mexican Peso Trust, CurrencyShares SM Swedish Krona Trust, and CurrencyShares SM Swiss Franc Trust (the ‘‘CurrencyShares Trusts’’).5 cprice-sewell on PROD1PC62 with NOTICES 3 Currency Trust Shares are securities issued by a trust that represent investors’ discrete, identifiable, and undivided beneficial ownership interest in the non-U.S. currency deposited into the trust. See Securities Exchange Act Release No. 53253 (February 8, 2006), 71 FR 8029 (February 15, 2006) (SR–PCX–2005–123) (granting the Exchange accelerated approval of its proposed listing and trading standards for Currency Trust Shares and approving the UTP trading of shares of the Euro Currency Trust). 4 See Securities Exchange Act Release No. 55268 (February 9, 2007), 72 FR 7793 (February 20, 2007) (SR–NYSE–2007–03) (‘‘NYSE Order’’). 5 See supra note 3. See also Securities Exchange Act Release No. 54043 (June 26, 2006), 71 FR 37967, VerDate Aug<31>2005 15:22 Feb 26, 2007 Jkt 211001 The Shares issued by the Trust represent units of fractional, undivided, and beneficial interests in, and ownership of, the Trust. The Exchange states that the investment objective of the Trust is for the Shares to reflect the price of the Japanese Yen. A detailed discussion of the Trust, its assets and expenses, the creation and redemption of the Shares, the valuation of the Japanese Yen, the calculation methodology of the IIV (as defined herein), and distributions, among others, can be found in the NYSE Order. The Trust’s Web site (http:// www.currencyshares.com) provides information on: (1) The spot price for the Japanese Yen, including the bid and offer and the midpoint between the bid and offer for the Japanese Yen spot price; (2) an intraday indicative value (‘‘IIV’’) per Share, updated at least every 15 seconds;6 (3) a delayed indicative value (subject to a 20-minute delay), used for calculating premium/discount information; (4) premium/discount information, calculated on a 20-minute delayed basis; (5) the net asset value (‘‘NAV’’) of the Trust, calculated each business day; (6) accrued interest per Share; (7) the daily Federal Reserve Bank of New York Noon Buying Rate; (8) the Basket Amount;7 and (9) the last sale price of the Shares as traded in the U.S. market, subject to a 20-minute delay. The Trust’s Web site disseminates the foreign currency spot price for the Japanese Yen and the IIV per Share at least every 15 seconds during NYSE Arca Marketplace’s opening and late trading sessions, as well as during its core trading session.8 The Exchange states that currently, the Consolidated Tape Plan does not provide for dissemination of the spot price of a foreign currency over the Consolidated Tape System (‘‘CTS’’). (July 3, 2006) (SR–NYSEArca–2006–26) (granting accelerated approval for the Exchange to trade shares of six of the CurrencyShares Trusts pursuant to UTP); Securities Exchange Act Release No. 54020 (June 20, 2006), 71 FR 36579 (June 27, 2006) (SR– NYSE–2006–35) (granting approval for the original listing and trading of six of the CurrencyShares Trusts on NYSE). 6 The IIV is analogous to the intraday optimized portfolio value (sometimes referred to as the IOPV) and the indicative portfolio value associated with the trading of exchange-traded funds. 7 The Basket Amount is the amount required to be deposited for the purchase of a Basket of Shares. A Basket of Shares consists of a block of 50,000 Shares. 8 Pursuant to NYSE Arca Equities Rule 7.34(a), the NYSE Arca Marketplace trading hours for exchange-traded funds are as follows: (1) 4 a.m. to 9:30 a.m. Eastern Time (‘‘ET’’) (opening trading session); (2) 9:30 a.m. to 4:15 p.m. ET (core trading session); and (3) 4:15 p.m. to 8 p.m. ET (late trading session). The Exchange states that the currency spot price is available on the Trust’s Web site without interruption 24 hours a day, seven days a week. PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 8829 However, the last sale price for the Shares is disseminated through the CTS, as is the case for all equity securities traded on the Exchange (including exchange-traded funds). Currency price and market information on the Japanese Yen and other foreign currencies is available on a 24-hour basis through public Web sites, major market data vendors, and professional and subscription services. Foreign currency futures and options prices, including information on current and past trading sessions, are also available on a realtime and delayed basis from various financial information sources. In addition, the Exchange states that current foreign currency spot prices are also generally available with bid/ask spreads from foreign currency dealers. The Exchange represents that it will cease trading the Shares if the original listing market stops trading the Shares due a regulatory halt or such listing market delists the Shares.9 UTP trading in the Shares would be governed by the trading halt provisions of NYSE Arca Equities Rule 7.34 relating to temporary interruptions in the calculation or wide dissemination of the IIV or the value (spot price) of the underlying currency.10 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.11 The Exchange states that the Shares would trade as equity securities, and therefore, the Exchange’s rules governing the trading of equity securities would govern the trading of such Shares. The Shares would trade on the NYSE Arca Marketplace from 4 a.m. ET until 8 p.m. ET. The Exchange represents that its equity trading rules would govern transactions in the Shares during all trading sessions. The Shares would be deemed ‘‘Eligible Listed Securities,’’ as defined in NYSE Arca Equities Rule 7.55, for purposes of the Intermarket Trading System Plan, and therefore would be subject to the trade9 E-mail from Timothy J. Malinowski, Director, NYSE Group, Inc., to Edward Cho, Special Counsel, Division of Market Regulation, Commission, dated February 20, 2007 (clarifying when the Exchange will halt trading of the Shares). 10 The Exchange represents that the provisions of NYSE Arca Equities Rule 7.34(a), which address, in part, interruptions in the calculation or wide dissemination of the value of an underlying index, shall also apply to interruptions in the calculation or wide dissemination of the value (spot price) of an underlying currency. For purposes of trading the Shares pursuant to UTP, the applicable value would be the Japanese Yen spot price. 11 See, e.g., NYSE Arca Equities Rule 7.12 (Trading Halts Due to Extraordinary Market Volatility). E:\FR\FM\27FEN1.SGM 27FEN1 8830 Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices through restrictions of NYSE Arca Equities Rule 7.56. The Exchange intends to utilize its existing surveillance procedures applicable to derivative products to monitor trading in the Shares. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules. The Exchange is able to obtain information regarding trading in the Shares and options and futures on the Japanese Yen through proprietary or customer trades which ETP Holders 12 effect on any relevant market. In addition, the Exchange may obtain trading information via the Intermarket Surveillance Group from other exchanges who are members or affiliates thereof. The Exchange states that its general policy prohibits the distribution of material, non-public information by its employees.13 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 Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares; (2) NYSE Arca Equities Rule 9.2(a), 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 IIV and the Japanese Yen 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) other relevant information. cprice-sewell on PROD1PC62 with NOTICES 2. Statutory Basis The proposal is consistent with Section 6(b) of the Act 14 in general and Section 6(b)(5) of the Act 15 in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market, and in general to protect investors and 12 An ETP Holder is a registered broker or dealer that has been issued an Equity Trading Permit (ETP) by NYSE Arca Equities. 13 The Exchange further states that the Sponsor (Rydex Specialized Products LLC), the Trustee (The Bank of New York), the Depository (JPMorgan Chase Bank, N.A., London Branch), and the Distributor (Rydex Distributors, Inc.) are not affiliated with the Exchange or one another, with the exception that the Sponsor and Distributor are affiliated. 14 15 U.S.C. 78f(b). 15 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 15:22 Feb 26, 2007 Jkt 211001 the public interest. In addition, the proposal is consistent with Rule 12f–5 under the Act 16 because 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. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2007–15 and should be submitted on or before March 20, 2007. IV. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change The Exchange has neither solicited After careful review, the Commission nor received written comments on the finds that the proposed rule change is proposed rule change. consistent with the requirements of the III. Solicitation of Comments Act and the rules and regulations thereunder applicable to a national Interested persons are invited to securities exchange.17 In particular, the submit written data, views, and Commission finds that the proposed arguments concerning the foregoing, rule change is consistent with Section including whether the proposed rule 6(b)(5) of the Act,18 which requires that change is consistent with the Act. an exchange have rules designed, among Comments may be submitted by any of other things, to promote just and the following methods: equitable principles of trade, to remove Electronic Comments impediments to and perfect the • Use the Commission’s Internet mechanism of a free and open market comment form (http://www.sec.gov/ and a national market system, and, in rules/sro.shtml); or general, to protect investors and the • Send an e-mail to rulepublic interest. The Commission comments@sec.gov. Please include File believes that this proposal should Number SR–NYSEArca–2007–15 on the benefit investors by increasing subject line. competition among markets that trade the Shares. The Commission notes that Paper Comments it previously approved the original • Send paper comments in triplicate listing and trading of the Shares on to Nancy M. Morris, Secretary, NYSE.19 Securities and Exchange Commission, In addition, the Commission finds 100 F Street, NE., Washington, DC that the proposal is consistent with 20549–1090. Section 12(f) of the Act,20 which permits All submissions should refer to File an exchange to trade, pursuant to UTP, Number SR–NYSEArca–2007–15. This a security that is listed and registered on file number should be included on the another exchange.21 The Commission subject line if e-mail is used. To help the notes that it previously approved for Commission process and review your 17 In approving this rule change, the Commission comments more efficiently, please use only one method. The Commission will notes that it has considered the proposed rule’s impact on efficiency, competition, and capital post all comments on the Commission’s formation. See 15 U.S.C. 78c(f). Internet Web site (http://www.sec.gov/ 18 15 U.S.C. 78f(b)(5). 19 See supra note 4. rules/sro.shtml). Copies of the 20 15 U.S.C. 78l(f). submission, all subsequent 21 Section 12(a) of the Act, 15 U.S.C. 78l(a), amendments, all written statements generally prohibits a broker-dealer from trading a with respect to the proposed rule security on a national securities exchange unless change that are filed with the the security is registered on that exchange pursuant Commission, and all written to Section 12 of the Act. Section 12(f) of the Act excludes from this restriction trading in any communications relating to the security to which an exchange ‘‘extends UTP.’’ proposed rule change between the When an exchange extends UTP to a security, it Commission and any person, other than allows its members to trade the security as if it were 16 17 PO 00000 listed and registered on the exchange even though it is not so listed and registered. CFR 240.12f–5. Frm 00153 Fmt 4703 Sfmt 4703 E:\FR\FM\27FEN1.SGM 27FEN1 cprice-sewell on PROD1PC62 with NOTICES Federal Register / Vol. 72, No. 38 / Tuesday, February 27, 2007 / Notices trading pursuant to UTP on the Exchange the shares issued by the CurrencyShares Trusts, which are similar to the Shares issued by the Trust.22 The Commission finds that the proposal is consistent with Rule 12f-5 under the Act,23 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 equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act,24 which sets forth Congress’ 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. The last sale price of the Shares is available through CTS. Although the CTS does not provide for dissemination of the spot price of the Japanese Yen, the Trust’s Web site disseminates the spot price every five to ten seconds, as well as the IIV per Share at least every 15 seconds, the NAV once daily, the Basket Amount, and the last sale price of the Shares. In addition, currency prices and market information on the Japanese Yen, including futures and options prices, are available through various major market data vendors, financial information sources, and professional and subscription services. If the listing market halts trading in the Shares, or the IIV or the value of the underlying currency is not being calculated or disseminated, the Exchange would halt trading in the Shares. The Commission notes that, if the Shares should be delisted by the 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 would inform its members in an Information Bulletin of supra note 5. CFR 240.12f–5. 24 15 U.S.C. 78k–1(a)(1)(C)(iii). the special characteristics and risks associated with trading the Shares, including suitability recommendation requirements. (3) The Exchange would require its members to deliver a prospectus or product description to investors purchasing Shares prior to or concurrently with a transaction in such Shares and will note this prospectus delivery requirement in the Information Bulletin. 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 above, the Commission previously approved the original listing and trading of the Shares on NYSE and the trading of shares issued by the CurrencyShares Trusts, which are similar to the Shares issued by the Trust, pursuant to UTP on the Exchange. The Commission presently is not aware of any regulatory issue that should cause it to revisit those findings or would preclude the trading of the Shares on the Exchange pursuant to UTP. Accelerating approval of this proposal should benefit investors by creating, without undue delay, additional competition in the market for such Shares. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,25 that the proposed rule change (SR–NYSEArca– 2007–15) be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.26 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–3291 Filed 2–26–07; 8:45 am] 25 15 VerDate Aug<31>2005 15:22 Feb 26, 2007 26 17 Jkt 211001 PO 00000 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). Frm 00154 Fmt 4703 [Release No. 34–55321; File No. SR–Phlx– 2006–85] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Order Granting Accelerated Approval of Proposed Rule Change Relating To Listing Standards for Basket Linked Notes February 21, 2007. I. Introduction On December 12, 2006, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposal to amend Phlx Rule 803—Criteria for Listing—Tier 1, to increase the number of underlying securities that may be linked to a Basket Linked Note (‘‘BLN’’). The proposed rule change was published for comment in the Federal Register on January 31, 2007 for a 15-day comment period.3 The Commission received no comments regarding the proposal. This order approves the proposed rule change on an accelerated basis. II. Description of the Proposal A BLN is non-convertible debt of an issuer whose value is based, at least in part, on the performance of highly capitalized, actively traded common stock, or non-convertible preferred stock of other issuers.4 Rule 803(k) currently permits the Exchange to list and trade BLNs linked to more than one equity security but no more than 20.5 Phlx proposes to amend Rule 803(k) to increase the number of underlying securities that may be linked to a BLN from no more than 20 to no more than 30. U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 55173 (January 25, 2007), 72 FR 4552. 4 Phlx Rule 803(k)(3) currently requires, among other things, that each of the underlying securities linked to a BLN either: (i) Have a minimum market capitalization of $3 billion and during the 12 months preceding listing are shown to have traded at least 2.5 million shares; (ii) have a minimum market capitalization of $1.5 billion and during the 12 months preceding listing are shown to have traded at least 10 million shares; or (iii) have a minimum market capitalization of $500 million and during the 12 months preceding listing are shown to have traded at least 15 million shares. 5 See Securities Exchange Act Release No. 43690 (December 7, 2000), 65 FR 78523 (December 15, 2000) (SR–Phlx–2000–90). 2 17 22 See 23 17 SECURITIES AND EXCHANGE COMMISSION 1 15 BILLING CODE 8010–01–P Sfmt 4703 8831 E:\FR\FM\27FEN1.SGM 27FEN1

Agencies

[Federal Register Volume 72, Number 38 (Tuesday, February 27, 2007)]
[Notices]
[Pages 8828-8831]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3291]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55320; File No. SR-NYSEArca-2007-15]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change To 
Trade Shares of the CurrencySharesSM Japanese Yen Trust 
Pursuant to Unlisted Trading Privileges

February 21, 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 February 12, 2007, 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. 
This Order provides notice of the proposed rule change and approves the 
proposed rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 8829]]

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

    The Exchange, through NYSE Arca Equities, proposes to trade shares 
(the ``Shares'') of the CurrencyShares SM Japanese Yen Trust 
(the ``Trust'') pursuant to unlisted trading privileges (``UTP''). The 
text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and http://www.nyse.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
    Pursuant to NYSE Arca Equities Rule 8.202, which permits the 
listing and trading of ``Currency Trust Shares,'' \3\ the Exchange 
proposes to trade pursuant to UTP the Shares of the Trust. The 
Commission has recently approved the listing and trading of the Shares 
on the New York Stock Exchange LLC (``NYSE'').\4\ The Exchange 
currently trades Shares of the Euro Currency Trust, CurrencyShares 
SM Australian Dollar Trust, CurrencyShares SM 
British Pound Sterling Trust, CurrencyShares SM Canadian 
Dollar Trust, CurrencyShares SM Mexican Peso Trust, 
CurrencyShares SM Swedish Krona Trust, and CurrencyShares 
SM Swiss Franc Trust (the ``CurrencyShares Trusts'').\5\
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    \3\ Currency Trust Shares are securities issued by a trust that 
represent investors' discrete, identifiable, and undivided 
beneficial ownership interest in the non-U.S. currency deposited 
into the trust. See Securities Exchange Act Release No. 53253 
(February 8, 2006), 71 FR 8029 (February 15, 2006) (SR-PCX-2005-123) 
(granting the Exchange accelerated approval of its proposed listing 
and trading standards for Currency Trust Shares and approving the 
UTP trading of shares of the Euro Currency Trust).
    \4\ See Securities Exchange Act Release No. 55268 (February 9, 
2007), 72 FR 7793 (February 20, 2007) (SR-NYSE-2007-03) (``NYSE 
Order'').
    \5\ See supra note 3. See also Securities Exchange Act Release 
No. 54043 (June 26, 2006), 71 FR 37967, (July 3, 2006) (SR-NYSEArca-
2006-26) (granting accelerated approval for the Exchange to trade 
shares of six of the CurrencyShares Trusts pursuant to UTP); 
Securities Exchange Act Release No. 54020 (June 20, 2006), 71 FR 
36579 (June 27, 2006) (SR-NYSE-2006-35) (granting approval for the 
original listing and trading of six of the CurrencyShares Trusts on 
NYSE).
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    The Shares issued by the Trust represent units of fractional, 
undivided, and beneficial interests in, and ownership of, the Trust. 
The Exchange states that the investment objective of the Trust is for 
the Shares to reflect the price of the Japanese Yen. A detailed 
discussion of the Trust, its assets and expenses, the creation and 
redemption of the Shares, the valuation of the Japanese Yen, the 
calculation methodology of the IIV (as defined herein), and 
distributions, among others, can be found in the NYSE Order.
    The Trust's Web site (http://www.currencyshares.com) provides 
information on: (1) The spot price for the Japanese Yen, including the 
bid and offer and the midpoint between the bid and offer for the 
Japanese Yen spot price; (2) an intraday indicative value (``IIV'') per 
Share, updated at least every 15 seconds;\6\ (3) a delayed indicative 
value (subject to a 20-minute delay), used for calculating premium/
discount information; (4) premium/discount information, calculated on a 
20-minute delayed basis; (5) the net asset value (``NAV'') of the 
Trust, calculated each business day; (6) accrued interest per Share; 
(7) the daily Federal Reserve Bank of New York Noon Buying Rate; (8) 
the Basket Amount;\7\ and (9) the last sale price of the Shares as 
traded in the U.S. market, subject to a 20-minute delay. The Trust's 
Web site disseminates the foreign currency spot price for the Japanese 
Yen and the IIV per Share at least every 15 seconds during NYSE Arca 
Marketplace's opening and late trading sessions, as well as during its 
core trading session.\8\
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    \6\ The IIV is analogous to the intraday optimized portfolio 
value (sometimes referred to as the IOPV) and the indicative 
portfolio value associated with the trading of exchange-traded 
funds.
    \7\ The Basket Amount is the amount required to be deposited for 
the purchase of a Basket of Shares. A Basket of Shares consists of a 
block of 50,000 Shares.
    \8\ Pursuant to NYSE Arca Equities Rule 7.34(a), the NYSE Arca 
Marketplace trading hours for exchange-traded funds are as follows: 
(1) 4 a.m. to 9:30 a.m. Eastern Time (``ET'') (opening trading 
session); (2) 9:30 a.m. to 4:15 p.m. ET (core trading session); and 
(3) 4:15 p.m. to 8 p.m. ET (late trading session). The Exchange 
states that the currency spot price is available on the Trust's Web 
site without interruption 24 hours a day, seven days a week.
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    The Exchange states that currently, the Consolidated Tape Plan does 
not provide for dissemination of the spot price of a foreign currency 
over the Consolidated Tape System (``CTS''). However, the last sale 
price for the Shares is disseminated through the CTS, as is the case 
for all equity securities traded on the Exchange (including exchange-
traded funds). Currency price and market information on the Japanese 
Yen and other foreign currencies is available on a 24-hour basis 
through public Web sites, major market data vendors, and professional 
and subscription services. Foreign currency futures and options prices, 
including information on current and past trading sessions, are also 
available on a real-time and delayed basis from various financial 
information sources. In addition, the Exchange states that current 
foreign currency spot prices are also generally available with bid/ask 
spreads from foreign currency dealers.
    The Exchange represents that it will cease trading the Shares if 
the original listing market stops trading the Shares due a regulatory 
halt or such listing market delists the Shares.\9\ UTP trading in the 
Shares would be governed by the trading halt provisions of NYSE Arca 
Equities Rule 7.34 relating to temporary interruptions in the 
calculation or wide dissemination of the IIV or the value (spot price) 
of the underlying currency.\10\ 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.\11\
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    \9\ E-mail from Timothy J. Malinowski, Director, NYSE Group, 
Inc., to Edward Cho, Special Counsel, Division of Market Regulation, 
Commission, dated February 20, 2007 (clarifying when the Exchange 
will halt trading of the Shares).
    \10\ The Exchange represents that the provisions of NYSE Arca 
Equities Rule 7.34(a), which address, in part, interruptions in the 
calculation or wide dissemination of the value of an underlying 
index, shall also apply to interruptions in the calculation or wide 
dissemination of the value (spot price) of an underlying currency. 
For purposes of trading the Shares pursuant to UTP, the applicable 
value would be the Japanese Yen spot price.
    \11\ See, e.g., NYSE Arca Equities Rule 7.12 (Trading Halts Due 
to Extraordinary Market Volatility).
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    The Exchange states that the Shares would trade as equity 
securities, and therefore, the Exchange's rules governing the trading 
of equity securities would govern the trading of such Shares. The 
Shares would trade on the NYSE Arca Marketplace from 4 a.m. ET until 8 
p.m. ET. The Exchange represents that its equity trading rules would 
govern transactions in the Shares during all trading sessions. The 
Shares would be deemed ``Eligible Listed Securities,'' as defined in 
NYSE Arca Equities Rule 7.55, for purposes of the Intermarket Trading 
System Plan, and therefore would be subject to the trade-

[[Page 8830]]

through restrictions of NYSE Arca Equities Rule 7.56.
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products to monitor trading in the 
Shares. The Exchange represents that these procedures are adequate to 
properly monitor Exchange trading of the Shares in all trading sessions 
and to deter and detect violations of Exchange rules. The Exchange is 
able to obtain information regarding trading in the Shares and options 
and futures on the Japanese Yen through proprietary or customer trades 
which ETP Holders \12\ effect on any relevant market. In addition, the 
Exchange may obtain trading information via the Intermarket 
Surveillance Group from other exchanges who are members or affiliates 
thereof. The Exchange states that its general policy prohibits the 
distribution of material, non-public information by its employees.\13\
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    \12\ An ETP Holder is a registered broker or dealer that has 
been issued an Equity Trading Permit (ETP) by NYSE Arca Equities.
    \13\ The Exchange further states that the Sponsor (Rydex 
Specialized Products LLC), the Trustee (The Bank of New York), the 
Depository (JPMorgan Chase Bank, N.A., London Branch), and the 
Distributor (Rydex Distributors, Inc.) are not affiliated with the 
Exchange or one another, with the exception that the Sponsor and 
Distributor are affiliated.
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    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 
Bulletin will discuss the following: (1) The procedures for purchases 
and redemptions of Shares; (2) NYSE Arca Equities Rule 9.2(a), 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 IIV and the Japanese Yen 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) other relevant 
information.
2. Statutory Basis
    The proposal is consistent with Section 6(b) of the Act \14\ in 
general and Section 6(b)(5) of the Act \15\ in particular in that it is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to, and perfect the mechanism of a free and open market, and in general 
to protect investors and the public interest. In addition, the proposal 
is consistent with Rule 12f-5 under the Act \16\ because 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.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purpose 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 (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2007-15 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-NYSEArca-2007-15. 
This file number should be included on the subject line if e-mail is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal offices of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEArca-2007-15 and should be submitted on or before 
March 20, 2007.

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 securities 
exchange.\17\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\18\ 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 should benefit 
investors by increasing competition among markets that trade the 
Shares. The Commission notes that it previously approved the original 
listing and trading of the Shares on NYSE.\19\
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    \17\ 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).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ See supra note 4.
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    In addition, the Commission finds that the proposal is consistent 
with Section 12(f) of the Act,\20\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\21\ The Commission notes that it previously approved for

[[Page 8831]]

trading pursuant to UTP on the Exchange the shares issued by the 
CurrencyShares Trusts, which are similar to the Shares issued by the 
Trust.\22\ The Commission finds that the proposal is consistent with 
Rule 12f-5 under the Act,\23\ 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 equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities.
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    \20\ 15 U.S.C. 78l(f).
    \21\ 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.
    \22\ See supra note 5.
    \23\ 17 CFR 240.12f-5.
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    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\24\ which sets forth 
Congress' 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. The last sale price of the Shares is available through CTS. 
Although the CTS does not provide for dissemination of the spot price 
of the Japanese Yen, the Trust's Web site disseminates the spot price 
every five to ten seconds, as well as the IIV per Share at least every 
15 seconds, the NAV once daily, the Basket Amount, and the last sale 
price of the Shares. In addition, currency prices and market 
information on the Japanese Yen, including futures and options prices, 
are available through various major market data vendors, financial 
information sources, and professional and subscription services. If the 
listing market halts trading in the Shares, or the IIV or the value of 
the underlying currency is not being calculated or disseminated, the 
Exchange would halt trading in the Shares.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    The Commission notes that, if the Shares should be delisted by the 
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 would inform its members in an Information 
Bulletin of the special characteristics and risks associated with 
trading the Shares, including suitability recommendation requirements.
    (3) The Exchange would require its members to deliver a prospectus 
or product description to investors purchasing Shares prior to or 
concurrently with a transaction in such Shares and will note this 
prospectus delivery requirement in the Information Bulletin.
    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 above, the Commission previously approved 
the original listing and trading of the Shares on NYSE and the trading 
of shares issued by the CurrencyShares Trusts, which are similar to the 
Shares issued by the Trust, pursuant to UTP on the Exchange. The 
Commission presently is not aware of any regulatory issue that should 
cause it to revisit those findings or would preclude the trading of the 
Shares on the Exchange pursuant to UTP. Accelerating approval of this 
proposal should benefit investors by creating, without undue delay, 
additional competition in the market for such Shares.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\25\ that the proposed rule change (SR-NYSEArca-2007-15) be, and it 
hereby is, approved on an accelerated basis.
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    \25\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-3291 Filed 2-26-07; 8:45 am]
BILLING CODE 8010-01-P