Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change to Amend Existing Rules for Investment Company Units, 9820-9822 [E7-3739]
Download as PDF
<![CDATA[
9820
Federal Register / Vol. 72, No. 42 / Monday, March 5, 2007 / Notices
the Commission believe [sic] that SROs
and their members also should be free
to distribute their trades
independently.’’ 9
The Commission rescinded the
prohibition in recognition of the fact
that competition in the realm of SRO
trade-report distribution would produce
market forces and innovation that
would benefit the investing public. By
means of the pilot program, the
Exchange would allow internet service
providers and traditional vendors to test
the viability of an alternative market
data fee structure that does not exist
today and to do so without the burden
of the reporting, contracting and other
administrative obligations associated
with most other market data services. If
they believe that the proposed fees
would enable them to make market data
available in the most cost-effective
manner for them and their subscribers
and customers, they will embrace the
pilot program’s proposed fees. If not,
they will continue to make consolidated
last sale prices available pursuant to the
Network A fees currently in effect under
the CTA Plan.
Given that the pilot program proposes
to provide an alternative to existing fees
and does not alter or rescind any
existing fees, 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
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 discussed the
proposed rules change with those
entities that the Exchange believes
would be the most likely to take
advantage of the proposed NYSE RealTime Trade Prices service by becoming
NYSE–Only Vendors. While those
entities have not submitted formal,
written comments on the proposal, the
Exchange has incorporated some of their
ideas into the proposal and the
proposed rule change reflects their
input. The Exchange has not received
any unsolicited written comments from
members or other interested parties.
erjones on PRODPC74 with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
9 See Footnote 638 to Regulation NMS (Securities
Exchange Act Release No. 51808; File No. S7–10–
04 (June 9, 2005), 70 FR 37495 (June 29, 2005)).
VerDate Aug<31>2005
15:17 Mar 02, 2007
Jkt 211001
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding, or
(ii) as to which the NYSE consents, the
Commission will:
A. By order approve such proposed
rule change; or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to
rule-comments@sec.gov. Please include
File Number SR–NYSE–2007–04 on the
subject line.
Number SR–NYSE–2007–04 and should
be submitted on or before March 26,
2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–3750 Filed 3–2–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55339; File No. SR–
NYSEArca–2007–14]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change to Amend Existing Rules
for Investment Company Units
February 23, 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
Paper Comments
8, 2007, NYSE Arca, Inc. (‘‘NYSE Arca’’
• Send paper comments in triplicate
or ‘‘Exchange’’), through its wholly
to Nancy M. Morris, Secretary,
owned subsidiary NYSE Arca Equities,
Securities and Exchange Commission,
Inc. (‘‘NYSE Arca Equities’’), filed with
Station Place, 100 F Street, NE.,
the Securities and Exchange
Washington, DC 20549–1090.
Commission (‘‘Commission’’) the
All submissions should refer to File
proposed rule change as described in
Number SR–NYSE–2007–04. This file
Items I, II and III below, which Items
number should be included on the
subject line if e-mail is used. To help the have been substantially prepared by the
Exchange. The Commission is
Commission process and review your
publishing this notice and order to
comments more efficiently, please use
only one method. The Commission will solicit comment on the proposed rule
post all comments on the Commission’s change from interested persons.
Internet Web site (https://www.sec.gov/
I. Self-Regulatory Organization’s
rules/sro.shtml). Copies of the
Statement of the Terms of Substance of
submission, all subsequent
the Proposed Rule Change
amendments, all written statements
with respect to the proposed rule
NYSE Arca, proposes to modify its
change that are filed with the
listing standards applicable to
Commission, and all written
Investment Company Units
communications relating to the
(‘‘Investment Company Units’’ or
proposed rule change between the
‘‘ICUs’’) by amending Commentary
Commission and any person, other than .01(b)(1) to NYSE Arca Equities Rule
those that may be withheld from the
5.2(j)(3) to eliminate the requirement
public in accordance with the
that the calculation methodology for the
provisions of 5 U.S.C. 552, will be
index underlying a series of ICUs must
available for inspection and copying in
be one of those enumerated in the
the Commission’s Public Reference
Room. Copies of such filing also will be commentary. The text of the proposed
rule change is available at NYSE Arca,
available for inspection and copying at
the principal office of the Exchange. All the Commission’s Public Reference
Room, and https://www.nysearca.com/
comments received will be posted
regulation/filings.asp.
without change; the Commission does
not edit personal identifying
information from submissions. You
10 17 CFR 200.30–3(a)(12).
should submit only information that
1 15 U.S.C. 78s(b)(1).
you wish to make publicly available. All
2 17 CFR 240.19b–4.
submissions should refer to File
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
E:\FR\FM\05MRN1.SGM
05MRN1
Federal Register / Vol. 72, No. 42 / Monday, March 5, 2007 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
erjones on PRODPC74 with NOTICES
The Exchange proposes to eliminate
the requirement that the prescribed
calculation methodology for the index
underlying a series of ICUs must be one
of those enumerated in Commentary
.01(b)(1) of Rule 5.2(j)(3). The proposed
rule change is based on proposed rule
changes of both the American Stock
Exchange and New York Stock
Exchange.3
The Exchange has adopted listing
standards applicable to ICUs which are
consistent with the listing criteria
currently used by other national
securities exchanges, and trading
standards pursuant to which the
Exchange may either list and trade ICUs
or trade such ICUs on the Exchange on
an unlisted trading privileges (‘‘UTP’’)
basis.4 An Investment Company Unit is
defined in NYSE Arca Equities Rule
5.1(b)(15) as a security representing an
interest in a registered investment
company that could be organized as a
unit investment trust, an open-end
management investment company or a
similar entity. A registered investment
company is registered under the
Investment Company Act of 1940.5
3 See Securities Exchange Act Release No. 55240
(February 5, 2007), 72 FR 06624 (Februrary 12,
2007). See also SR–NYSE–2007–12 (submitted to
the Commission).
4 In October 1999, the Commission approved
NYSE Arca Equities Rule 5.2(j)(3), which sets forth
the rules related to listing and trading criteria for
Investment Company Units. See Securities
Exchange Act Release No. 41983 (October 6, 1999),
64 FR 56008 (October 15, 1999) (SR–PCX–1998–29).
In July 2001, the Commission also approved the
Exchange’s generic listing standards for listing and
trading, or the trading pursuant to UTP, of
Investment Company Units under NYSE Arca
Equities Rule 5.2(j)(3). See Securities Exchange Act
Release No. 44551 (July 12, 2001), 66 FR 37716
(July 19, 2001) (SR–PCX–2001–14).
5 15 U.S.C. 80a.
VerDate Aug<31>2005
15:17 Mar 02, 2007
Jkt 211001
The ‘‘generic’’ listing criteria of
Commentary .01 to Rule 5.2(j)(3)
permits listing or trading pursuant to
UTP of ICUs that satisfy such criteria in
reliance upon Rule 19b–4(e) under the
Act,6 without a separate filing.
Commentary .01(b)(1) to Rule 5.2(j)(3)
currently requires that where a series of
ICUs approved for trading (including
pursuant to UTP) on the Exchange in
reliance upon Rule 19b–4(e) of the Act,
the index underlying the series of ICUs
must be calculated based on either the
market capitalization, modified market
capitalization, price, equal-dollar or
modified equal-dollar weighting
methodology or a methodology
weighting components of the index
based on any, some or all of the
following: Sales, cash flow, book value,
and dividends.7
The Exchange proposes to delete
Commentary .01(b)(1) to Rule 5.2(j)(3)
and thereby eliminate the calculation
methodology limitation.
In recent years, academics and market
professionals have explored and defined
a growing list of innovations in index
construction. Most recently, the
Commission approved amendments to
the generic listing criteria to
accommodate new index weighting
methodologies based on ranking
companies by financial data such as
sales, cash flow, book value and
dividends.8 The Exchange believes there
are multiple ways for indexes to be
constructed to serve useful market
purposes. Additional methodologies are
under active development by academics
and market professionals and permitting
only certain specified index weighting
methods does not take into account the
rapid innovation in this area. The
Exchange believes that, with respect to
ICUs listed pursuant to Rule 19b–4(e)
under the Act, applying the numerical
weighting and liquidity criteria and
index dissemination requirements set
forth in the remainder of Commentary
.01 to Rule 5.2(j)(3), without imposing
constraints on the index methodology,
will provide greater flexibility to
indexers and ICU issuers to develop
indexes that meet the investment
objectives of investors. In addition, the
proposed rule change would allow ICUs
based on a non-traditional weighting
methodology to be brought to market
more quickly, thereby reducing burdens
6 17
CFR 240.19b–4(e).
Securities Exchange Act Release No. 54490
(September 22, 2006), 71 FR 58034 (October 2,
2006) (SR–NYSEArca–2006–61) (approving
underlying index weightings for: sales, cash flow,
book value and dividends).
8 See Securities Exchange Act Release No. 54649
(October 24, 2006); 71 FR 63816 (October 31, 2006)
(SR–NYSE–2006–88).
7 See
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
9821
on ICU issuers and other market
participants and promoting competition.
The Exchange notes that the
numerical criteria in Commentary .01
already define the concentration limits,
diversity requirements and liquidity
requirements of the companies in the
underlying index. For example, the
generic listing standards for domestic
indexes require, among other things,
that an index include at least 13 stocks,
that the most heavily weighted
component stock of an index cannot
exceed 30% of the index or portfolio
weight, and the five most heavily
weighted component stocks of an index
cannot exceed 65% of the index or
portfolio weight. ICUs and their
underlying indexes would continue to
be subject to all other requirements of
Rule 5.2(j)(3) and Commentary .01.
Under these circumstances, the
Exchange believes that removal of the
index weighting requirements of
Commentary .01(b)(1) will not
compromise investor protection.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 9 of the Act,
in general, and furthers the objectives of
Section 6(b)(5) 10 in particular in that it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and to remove impediments to and
perfect the mechanisms of a free and
open market and a national market
system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments on the proposed
rule change were neither solicited nor
received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 15
E:\FR\FM\05MRN1.SGM
05MRN1
9822
Federal Register / Vol. 72, No. 42 / Monday, March 5, 2007 / Notices
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve the proposed
modifications, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
The Exchange has requested
accelerated approval of this proposed
rule change. The Commission has
determined that a 15-day comment
period is appropriate in this case.
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–2007–14 and should be
submitted on or before March 20, 2007.
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:
SECURITIES AND EXCHANGE
COMMISSION
erjones on PRODPC74 with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulescomments@sec.gov. Please include File
No. SR–NYSEArca–2007–14 on the
subject line.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–3739 Filed 3–2–07; 8:45 am]
BILLING CODE 8010–01–P
[Release No. 34–55340; File No. SR–
NYSEArca–2007–18]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Clarifying the Operative
Date of Rules Relating to Regulation
NMS
February 23, 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
22, 2007, the NYSE Arca, Inc. (‘‘NYSE
Paper Comments
Arca’’ or ‘‘Exchange’’) filed with the
• Send paper comments in triplicate
Securities and Exchange Commission
to Nancy M. Morris, Secretary,
(‘‘Commission’’) the proposed rule
Securities and Exchange Commission,
change as described in Items I and II
100 F Street NE, Washington, DC
below, which Items have been
20549–1090.
substantially prepared by NYSE Arca.
All submissions should refer to File No. The Exchange has filed the proposal as
SR–NYSEArca–2007–14. This file
a ‘‘non-controversial’’ rule change
number should be included on the
pursuant to Section 19(b)(3)(A) of the
subject line if e-mail is used. To help the Act 3 and Rule 19b–4(f)(6) thereunder,4
Commission process and review your
which renders it effective upon filing
comments more efficiently, please use
with the Commission. The Commission
only one method. The Commission will is publishing this notice to solicit
post all comments on the Commission’s comments on the proposed rule change
Internet Web site (https://www.sec.gov/
from interested persons.
rules/sro.shtml). Copies of the
I. Self-Regulatory Organization’s
submission, all subsequent
Statement of the Terms of Substance of
amendments, all written statements
the Proposed Rule Change
with respect to the proposed rule
change that are filed with the
NYSE Arca proposes to clarify the
Commission, and all written
operative date of the rule changes made
communications relating to the
in connection with Regulation NMS,5
proposed rule change between the
from February 4, 2007 to March 5,
Commission and any person, other than 2007.6 There is no new rule text.
those that may be withheld from the
public in accordance with the
11 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
provisions of 5 U.S.C. 552, will be
2 17 CFR 240.19b–4.
available for inspection and copying in
3 15 U.S.C. 78s(b)(3)(A).
the Commission’s Public Reference
4 17 CFR 240.19b–4(f)(6).
Room. Copies of such filing also will be
5 See Securities Exchange Act Release No. 54549
available for inspection and copying at
(September 29, 2006), 71 FR 59179 (October 6,
the principal offices of the Exchange.
2006) (SR–NYSEArca–2006–59).
All comments received will be posted
6 See Securities Exchange Act Release No. 55160
(January 24, 2007), 72 FR 4202 (January 30, 2007).
without change; the Commission does
VerDate Aug<31>2005
15:17 Mar 02, 2007
Jkt 211001
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NYSE Arca included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. NYSE
Arca has prepared summaries, set forth
in Sections A, B, and C below, of the
most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The proposed rule change clarifies the
operative date of the rule changes made
in connection with Regulation NMS 7
from February 4, 2007 to March 5, 2007.
This clarification stems in part from the
Commission’s extension of the Trading
Phase Date of Regulation NMS to March
5, 2007.8
2. Statutory Basis
NYSE Arca believes the proposed rule
change is consistent with Section 6(b) of
the Act,9 in general, and furthers the
objectives of Section 6(b)(5) of the Act,10
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were either
solicited or received.
7 See
supra note 5.
supra note 6.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
8 See
E:\FR\FM\05MRN1.SGM
05MRN1
]]>Agencies
[Federal Register Volume 72, Number 42 (Monday, March 5, 2007)]
[Notices]
[Pages 9820-9822]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3739]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55339; File No. SR-NYSEArca-2007-14]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change to Amend Existing Rules for Investment Company
Units
February 23, 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 8, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``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, II
and III below, which Items have been substantially prepared by the
Exchange. The Commission is publishing this notice and order to solicit
comment on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NYSE Arca, proposes to modify its listing standards applicable to
Investment Company Units (``Investment Company Units'' or ``ICUs'') by
amending Commentary .01(b)(1) to NYSE Arca Equities Rule 5.2(j)(3) to
eliminate the requirement that the calculation methodology for the
index underlying a series of ICUs must be one of those enumerated in
the commentary. The text of the proposed rule change is available at
NYSE Arca, the Commission's Public Reference Room, and https://
www.nysearca.com/regulation/filings.asp.
[[Page 9821]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to eliminate the requirement that the
prescribed calculation methodology for the index underlying a series of
ICUs must be one of those enumerated in Commentary .01(b)(1) of Rule
5.2(j)(3). The proposed rule change is based on proposed rule changes
of both the American Stock Exchange and New York Stock Exchange.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 55240 (February 5,
2007), 72 FR 06624 (Februrary 12, 2007). See also SR-NYSE-2007-12
(submitted to the Commission).
---------------------------------------------------------------------------
The Exchange has adopted listing standards applicable to ICUs which
are consistent with the listing criteria currently used by other
national securities exchanges, and trading standards pursuant to which
the Exchange may either list and trade ICUs or trade such ICUs on the
Exchange on an unlisted trading privileges (``UTP'') basis.\4\ An
Investment Company Unit is defined in NYSE Arca Equities Rule
5.1(b)(15) as a security representing an interest in a registered
investment company that could be organized as a unit investment trust,
an open-end management investment company or a similar entity. A
registered investment company is registered under the Investment
Company Act of 1940.\5\
---------------------------------------------------------------------------
\4\ In October 1999, the Commission approved NYSE Arca Equities
Rule 5.2(j)(3), which sets forth the rules related to listing and
trading criteria for Investment Company Units. See Securities
Exchange Act Release No. 41983 (October 6, 1999), 64 FR 56008
(October 15, 1999) (SR-PCX-1998-29). In July 2001, the Commission
also approved the Exchange's generic listing standards for listing
and trading, or the trading pursuant to UTP, of Investment Company
Units under NYSE Arca Equities Rule 5.2(j)(3). See Securities
Exchange Act Release No. 44551 (July 12, 2001), 66 FR 37716 (July
19, 2001) (SR-PCX-2001-14).
\5\ 15 U.S.C. 80a.
---------------------------------------------------------------------------
The ``generic'' listing criteria of Commentary .01 to Rule
5.2(j)(3) permits listing or trading pursuant to UTP of ICUs that
satisfy such criteria in reliance upon Rule 19b-4(e) under the Act,\6\
without a separate filing. Commentary .01(b)(1) to Rule 5.2(j)(3)
currently requires that where a series of ICUs approved for trading
(including pursuant to UTP) on the Exchange in reliance upon Rule 19b-
4(e) of the Act, the index underlying the series of ICUs must be
calculated based on either the market capitalization, modified market
capitalization, price, equal-dollar or modified equal-dollar weighting
methodology or a methodology weighting components of the index based on
any, some or all of the following: Sales, cash flow, book value, and
dividends.\7\
---------------------------------------------------------------------------
\6\ 17 CFR 240.19b-4(e).
\7\ See Securities Exchange Act Release No. 54490 (September 22,
2006), 71 FR 58034 (October 2, 2006) (SR-NYSEArca-2006-61)
(approving underlying index weightings for: sales, cash flow, book
value and dividends).
---------------------------------------------------------------------------
The Exchange proposes to delete Commentary .01(b)(1) to Rule
5.2(j)(3) and thereby eliminate the calculation methodology limitation.
In recent years, academics and market professionals have explored
and defined a growing list of innovations in index construction. Most
recently, the Commission approved amendments to the generic listing
criteria to accommodate new index weighting methodologies based on
ranking companies by financial data such as sales, cash flow, book
value and dividends.\8\ The Exchange believes there are multiple ways
for indexes to be constructed to serve useful market purposes.
Additional methodologies are under active development by academics and
market professionals and permitting only certain specified index
weighting methods does not take into account the rapid innovation in
this area. The Exchange believes that, with respect to ICUs listed
pursuant to Rule 19b-4(e) under the Act, applying the numerical
weighting and liquidity criteria and index dissemination requirements
set forth in the remainder of Commentary .01 to Rule 5.2(j)(3), without
imposing constraints on the index methodology, will provide greater
flexibility to indexers and ICU issuers to develop indexes that meet
the investment objectives of investors. In addition, the proposed rule
change would allow ICUs based on a non-traditional weighting
methodology to be brought to market more quickly, thereby reducing
burdens on ICU issuers and other market participants and promoting
competition.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 54649 (October 24,
2006); 71 FR 63816 (October 31, 2006) (SR-NYSE-2006-88).
---------------------------------------------------------------------------
The Exchange notes that the numerical criteria in Commentary .01
already define the concentration limits, diversity requirements and
liquidity requirements of the companies in the underlying index. For
example, the generic listing standards for domestic indexes require,
among other things, that an index include at least 13 stocks, that the
most heavily weighted component stock of an index cannot exceed 30% of
the index or portfolio weight, and the five most heavily weighted
component stocks of an index cannot exceed 65% of the index or
portfolio weight. ICUs and their underlying indexes would continue to
be subject to all other requirements of Rule 5.2(j)(3) and Commentary
.01. Under these circumstances, the Exchange believes that removal of
the index weighting requirements of Commentary .01(b)(1) will not
compromise investor protection.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \9\ of the
Act, in general, and furthers the objectives of Section 6(b)(5) \10\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to
[[Page 9822]]
90 days of such date if it finds such longer period to be appropriate
and publishes its reasons for so finding or (ii) as to which the self-
regulatory organization consents, the Commission will:
(A) By order approve the proposed modifications, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
The Exchange has requested accelerated approval of this proposed
rule change. The Commission has determined that a 15-day comment period
is appropriate in this case.
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 (https://
www.sec.gov/rules/sro.shtml) or
Send an e-mail to rules-comments@sec.gov. Please include
File No. SR-NYSEArca-2007-14 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 No. SR-NYSEArca-2007-14. 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-2007-14 and should be submitted on or before March
20, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3739 Filed 3-2-07; 8:45 am]
BILLING CODE 8010-01-P
