Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Trade the streetTRACKS Gold Shares Fund Pursuant to Unlisted Trading Privileges, 27868-27871 [E7-9464]
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Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Notices
from 20 seconds to 5 seconds. The
Participants also proposed to reduce the
time frame in which a Participant must
respond to a Linkage Order from 15 to
5 seconds after receipt of that Order.
SECURITIES AND EXCHANGE
COMMISSION
III. Discussion and Commission
Findings
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change to Trade the
streetTRACKS Gold Shares Fund
Pursuant to Unlisted Trading
Privileges
The Commission previously
determined, pursuant to Rule 608 under
the Act,7 to put into effect summarily on
a temporary basis not to exceed 120
days, the changes to the Linkage Plan
detailed above in Joint Amendment No.
22.8 After careful consideration of Joint
Amendment No. 22, the Commission
finds that approving Joint Amendment
No. 22 is consistent with the
requirements of the Act and the rules
and regulations thereunder.
Specifically, the Commission finds that
Joint Amendment No. 22 is consistent
with Section 11A of the Act 9 and Rule
608 thereunder 10 in that it is
appropriate in the public interest, for
the protection of investors and the
maintenance of fair and orderly markets.
The Commission believes that reducing
the time required by a Participant to
respond to a Linkage Order and the
amount of time a member sending a
Linkage Order must wait before trading
through a nonresponsive Participant
should facilitate the more timely
execution of orders across the options
exchanges.
IV. Conclusion
It is therefore ordered, pursuant to
Section 11A of the Act 11 and Rule 608
thereunder,12 that Joint Amendment No.
22 is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.13
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7–9437 Filed 5–16–07; 8:45 am]
BILLING CODE 8010–01–P
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CFR 242.608.
supra note 6.
9 15 U.S.C. 78k–1.
10 17 CFR 242.608.
11 15 U.S.C. 78k–1.
12 17 CFR 242.608.
13 17 CFR 200.30–3(a)(29).
8 See
17:15 May 16, 2007
May 11, 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 May 8,
2007, the Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’), 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 notice and order provides notice of
the proposed rule change and approves
the proposal on an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Chicago Board Options Exchange,
Incorporated proposes to: (1) trade on its
stock trading facility, CBOE Stock
Exchange (‘‘CBSX’’), the streetTRACKS
Gold Shares (‘‘GLD’’ or ‘‘Shares’’)
pursuant to unlisted trading privileges
(‘‘UTP’’), and (2) adopt Exchange Rule
54.8, which governs the trading of
commodity-based trust shares. The text
of the proposed rule change is available
on the Exchange’s Web site (https://
www.cboe.org/Legal), at the Exchange’s
principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item III below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
7 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to trade
the Shares on CBSX pursuant to UTP.
The Shares represent fractional,
undivided beneficial ownership
interests in the streetTRACKS Gold
Trust (‘‘Trust’’). The Trust is an
investment trust, the sole assets of
which are gold bullion, and from time
to time, cash.3 The Commission
previously approved the original listing
and trading of the Shares on the New
York Stock Exchange (‘‘NYSE’’).4 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. The trading hours for
the Shares on the Exchange would be
from 8:15 a.m. until 3:15 p.m. (Central
Time).
The last-sale price for the Shares is
disseminated over the Consolidated
Tape. Gold pricing information based on
the spot price for a troy ounce of gold
from various financial information
service providers, such as Reuters and
Bloomberg, is available on a 24-hour
basis. Complete real-time data for gold
futures and options prices traded on the
COMEX (a division of the NYMEX) is
available by subscription from Reuters
and Bloomberg. The NYMEX also
provides delayed futures and options
information on current and past trading
sessions and market news free of charge
on its Web site. CBOE, via a link from
its own public Web site (https://
www.cboe.com) to the Trust Web site
(https://
www.streettracksgoldshares.com), will
provide at no charge continuously
updated bids and offers indicative of the
spot price of gold.5
The Trust Web site also will provide
a calculation of the estimated NAV (also
known as the Intraday Indicative Value
or IIV) of a Share as calculated by
multiplying the indicative spot price of
gold by the quantity of gold backing
3 Additional information regarding the
streetTRACKS Gold Shares is at https://
www.streettracksgoldshares.com.
4 See Securities Exchange Act Release No. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22).
5 The gold spot price at the Trust’s Web site will
be provided by The Bullion Desk (https://
www.thebulliondesk.com). The Trust’s Web site
will indicate that there are other sources for
obtaining the gold spot price. If the Trust’s Web site
should cease to provide this indicative spot price
from an unaffiliated source (and the intraday
indicative value) of the Shares, CBOE would cease
to trade the Shares.
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each Share. Comparing the IIV with the
last sale price of the Shares helps an
investor to determine whether, and to
what extent, Shares may be selling at a
premium or a discount to the NAV.
Although provided free of charge, the
indicative spot price and IIV per Share
will be provided on an essentially realtime basis.6 The Trust Web site provides
the NAV of the Trust as calculated each
business day by the Sponsor. In
addition, the Trust Web site contains
the following information, on a perShare basis, for the Trust: (a) The IIV as
of the close of the prior business day
and the midpoint of the bid/ask price 7
in relation to such IIV (‘‘Bid/Ask
Price’’), and a calculation of the
premium or discount of such price
against such IIV; and (b) data in chart
format displaying the frequency
distribution of discounts and premiums
of the Bid/Ask Price against the IIV,
within appropriate ranges, for each of
the four previous calendar quarters. The
Trust Web site also provides the Trust’s
prospectus, as well as the two most
recent reports to stockholders. The Trust
Web site provides the last sale price of
the Shares as traded in the U.S. market,
subject to a 20-minute delay.8
In connection with the trading of the
Shares, CBOE would inform its
members in an Information Circular of
the special characteristics and risks
associated with trading the Shares, such
as loss, damage, or theft of the Trust’s
gold, and unanticipated problems
related to the mechanisms and
procedures that were specifically
developed for this relatively new
securities product. CBOE also would
require its members to deliver a
prospectus or product description to
investors purchasing Shares prior to or
concurrently with a transaction in
Shares. In addition, CBOE Rule 53.6
requires member organizations to have a
reasonable basis for recommending the
Shares when recommending a
transaction in the Shares.
CBOE believes that its surveillance
procedures are adequate to address any
concerns about the trading of the Shares
on the Exchange because those
procedures will be comparable to those
used for exchange-traded funds and
trust-issued receipts currently trading
6 The Trust’s Web site, to which the CBOE Web
site will link, will disseminate an indicative spot
price of gold and the IIV, and indicate that these
values are subject to an average delay of five to ten
seconds.
7 The bid/ask price is determined using the
highest bid and lowest offer on the Consolidated
Tape as of the time of calculation of the closing day
IIV.
8 The last sale price of the Shares in the secondary
market is available on a real-time basis for a fee
from regular data vendors.
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17:15 May 16, 2007
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on the Exchange, and will incorporate
and rely upon existing Exchange
surveillance procedures governing
equities. In addition, for intermarket
surveillance purposes, the Exchange has
entered into a reciprocal Memorandum
of Understanding with NYMEX for the
sharing of information related to any
financial instrument based, in whole or
in part, upon an interest in or
performance of gold.
Further, proposed CBOE Rule 54.8
would impose certain obligations on
Market-Makers that would apply in
connection with trading the Shares.
CBOE Rule 54.8(e) would require that a
Market-Maker in the Shares provide the
Exchange with information related to its
trading in physical gold, gold futures
contracts, options on gold futures, or
any other gold derivatives. CBOE Rule
54.8(g) would prohibit a Market-Maker
in the Shares from using any material
non-public information received from
any person associated with the MarketMaker or employee of such person
regarding trading by such person or
employee in physical gold, gold futures
contracts, options on gold futures, or
any other gold derivatives. In addition,
CBOE Rule 54.8(d) would prohibit a
Market-Maker in the Shares from being
affiliated with a market maker in
physical gold, gold futures contracts,
options on gold futures, or any other
gold derivatives unless the specified
information barriers are in place.
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. In addition,
trading in the Shares would be subject
to trading halts caused by extraordinary
market volatility pursuant to the
Exchange’s ‘‘circuit breaker’’ rule.9
Moreover, the Exchange represents
that it would cease trading the Shares if
the listing market stops trading the
Shares because of a regulatory halt
similar to a halt based on CBOE Rule
6.3. UTP trading in the Shares is also
governed by the trading halts provisions
of CBOE Rule 52.3 relating to temporary
interruptions in the calculation or wide
dissemination of the IIV.
2. Statutory Basis
CBOE believes that the proposal is
consistent with Section 6(b) of the Act 10
in general, and Section 6(b)(5) of the
Act 11 in particular, in that the proposal
9 CBOE
Rule 6.3B.
U.S.C. 78s(b).
11 15 U.S.C. 78s(b)(5).
is designed to promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest.
In addition, CBOE believes that the
proposal is consistent with Rule 12f–5
under the Act 12 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition 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 neither solicited nor
received comments on the proposal.
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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2007–44 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–CBOE–2007–44. 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
10 15
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change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of such filing also will be
available for inspection and copying at
the principal office of 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–CBOE–2007–44 and should
be submitted on or before June 7, 2007.
pwalker on PROD1PC71 with NOTICES
listing and trading of the Shares on the
NYSE.17 The Commission also finds that
the proposal is consistent with Rule
12f–5 under the Act,18 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,19 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
IV. Commission’s Findings and Order
to assure the availability to brokers,
Granting Accelerated Approval of the
dealers, and investors of information
Proposed Rule Change
with respect to quotations for and
After careful review, the Commission
transactions in securities. Quotations for
finds that the proposed rule change is
and last-sale information regarding the
consistent with the requirements of the
Shares are disseminated through the
Act and the rules and regulations
facilities of the CTA and the
thereunder applicable to a national
Consolidated Quotation System.
13 In particular, the
securities exchange.
Furthermore, as noted by the Exchange,
Commission finds that the proposed
various means exist for investors to
rule change is consistent with Section
obtain reliable gold price information
14 which requires that
6(b)(5) of the Act,
and thereby to monitor the underlying
an exchange have rules designed, among
spot market in gold relative to the NAV
other things, to promote just and
of their Shares. In addition, the IIV of
equitable principles of trade, to remove
each Fund is disseminated every 15
impediments to and perfect the
seconds throughout the trading day by
mechanism of a free and open market
the national securities exchange on
and a national market system, and in
which the Fund is listed or by other
general to protect investors and the
information providers or market data
public interest. The Commission
vendors.
believes that this proposal should
Furthermore, the Commission
benefit investors by increasing
believes that the proposal is reasonably
competition among markets that trade
designed to preclude trading of the
the Shares.
Shares when transparency is impaired.
In addition, the Commission finds
CBOE Rule 52.3 sets forth trading halt
that the proposal is consistent with
Section 12(f) of the Act,15 which permits procedures when CBOE trades an ETF
pursuant to UTP. Under this rule, if the
an exchange to trade, pursuant to UTP,
a security that is listed and registered on listing market halts trading when the IIV
is not being calculated or disseminated,
another exchange.16 The Commission
CBOE also would halt trading in the
notes that it previously approved the
Shares. This rule is substantially similar
13 In approving this rule change, the Commission
to those recently adopted by other
notes that it has considered the proposal’s impact
exchanges and found by the
on efficiency, competition, and capital formation.
Commission to be consistent with the
See 15 U.S.C. 78c(f).
Act.20
14 15 U.S.C. 78f(b)(5).
The Commission notes that, if the
15 15 U.S.C. 78l(f).
Shares should be delisted by the listing
16 Section 12(a) of the Act, 15 U.S.C. 78l(a),
market, the Exchange would no longer
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.
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17:15 May 16, 2007
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17 See
supra note 4.
CFR 240.12f–5.
19 15 U.S.C. 78k–1(a)(1)(C)(iii).
20 See e.g., NYSE Arca Equities Rule 7.34;
Securities Exchange Act Release No. 54997
(December 21, 2006), 71 FR 78501 (December 29,
2006).
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 properly
monitor Exchange trading of the Shares
and to deter and detect violations of
Exchange rules. Among other things, the
Exchange entered into a reciprocal
Memorandum of Understanding with
NYMEX for the sharing of information
related to any financial instrument
based, in whole or in part, upon an
interest in or performance of gold.
2. Prior to the commencement of
trading, the Exchange would inform its
members and member organizations in
an Information Circular of the special
characteristics and risks associated with
trading the Shares.
3. The Information Circular would
include the requirement that members
and member firms deliver a prospectus
to investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction.
This approval order is conditioned on
the Exchange’s adherence to these
representations.
Finally, the Commission believes that
proposed CBOE Rule 54.8, which
imposes information barriers and
trading restrictions on a member acting
as a registered market maker in the
Shares, is consistent with the Act. The
Commission notes that CBOE Rule 54.8
is substantially similar to rules of other
exchanges that previously have been
approved by the Commission.21
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 the NYSE is
consistent with the Act. The
Commission presently is not aware of
any regulatory issue that should cause it
to revisit that finding or would 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
competition in the market for the
Shares.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,22 that the
proposed rule change (SR–CBOE–2007–
18 17
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21 See, e.g., Nasdaq Rule 4630; Securities
Exchange Act Release No. 54765 (November 16,
2006), 71 FR 67668 (November 22, 2006) (approving
SR–Nasdaq–2006–009).
22 15 U.S.C. 78s(b)(2).
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44) be and it hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.23
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E7–9464 Filed 5–16–07; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–55736; File No. SR–CBOE–
2007–37]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change as Modified
by Amendment No. 1 to Trade the
iShares MSCI Index Funds and the
S&P Europe 350 Index Fund Pursuant
to UTP
May 10, 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 April 20,
2007, the Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’), 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.
On May 7, 2007, the Exchange filed
Amendment No. 1 to the proposed rule
change. This notice and order provides
notice of the proposed rule change, as
amended, and approves the proposal on
an accelerated basis.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Chicago Board Options Exchange,
Incorporated proposes to trade on its
subsidiary, the CBOE Stock Exchange
(‘‘CBSX’’), shares of 15 international
exchange-traded funds (‘‘ETFs’’ or
‘‘Funds’’) pursuant to unlisted trading
privileges (‘‘UTP’’). The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.org/Legal), at the Exchange’s
principal office, and at the
Commission’s Public Reference Room.
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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
The purpose of the proposed rule
change is to trade on CBSX shares of 15
international ETFs (the ‘‘Shares’’)
pursuant to UTP. These Funds are:
• iShares MSCI Australia Index Fund
• iShares MSCI Brazil Index Fund
• iShares MSCI EAFE Index Fund
• iShares MSCI Emerging Markets Index
Fund
• iShares MSCI Germany Index Fund
• iShares MSCI Hong Kong Index Fund
• iShares MSCI Malaysia Index Fund
• iShares MSCI Mexico Index Fund
• iShares MSCI Pacific ex-Japan Index
Fund
• iShares MSCI Singapore Index Fund
• iShares MSCI South Africa Index
Fund
• iShares MSCI South Korea Index
Fund
• iShares MSCI Taiwan Index Fund
• iShares MSCI United Kingdom Index
Fund
• iShares S&P Europe 350 Index Fund
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to existing CBSX
rules governing the trading of equity
securities.
a. Description of the Funds
The following funds are listed on the
American Stock Exchange (‘‘Amex’’):
• iShares MSCI Australia Index Fund
• iShares MSCI Brazil Index Fund
• iShares MSCI Germany Index Fund
• iShares MSCI Hong Kong Index Fund
• iShares MSCI Malaysia Index Fund
• iShares MSCI Mexico Index Fund
• iShares MSCI Singapore Index Fund
• iShares MSCI South Korea Index
Fund
• iShares MSCI Taiwan Index Fund
• iShares MSCI United Kingdom Index
Fund
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27871
• iShares S&P Europe 350 Index Fund
The following funds are listed on the
New York Stock Exchange (‘‘NYSE’’):3
• iShares MSCI EAFE Index Fund
• iShares MSCI Emerging Markets Index
Fund
• iShares MSCI Pacific ex-Japan Index
Fund
• iShares MSCI South Africa Index
Fund
In addition to being listed on the
Amex or NYSE, the Shares 4 are traded
on those and other securities exchanges
and in the over-the-counter market.5
The information below is intended to
provide a description of how the Shares
were created and are traded.6
The Shares are issued by iShares, Inc.,
except for iShares MSCI EAFE and S&P
Europe 350, which are issued by iShares
Trust. iShares, Inc. and iShares Trust
are open-ended management investment
companies. Each Fund seeks investment
results that correspond generally to the
price and yield performance, before fees
and expenses, of the applicable
3 Effective February 16, 2007, the iShares MSCI
Index Funds for EAFE, Emerging Markets, Pacific
ex-Japan, and South Africa transferred their primary
listing to the NYSE and are no longer listed on
Amex. See Supplement dated February 16, 2007 to
the Prospectus dated January 1, 2007 for the iShares
MSCI Series, and Supplement dated February 16,
2007 to the Prospectus dated December 1, 2006 for
the iShares Goldman Sachs Series and the iShares
MSCI EAFE Series.
4 The Funds (with the exception of the MSCI
EAFE and S&P Europe 350 Funds) were formerly
known as World Equity Benchmark Shares or
WEBS. An initial series of WEBS, including the
iShares MSCI Australia, Germany, Hong Kong,
Malaysia, Mexico, Singapore, and United Kingdom
Index Funds were initially approved for listing and
trading on Amex in 1996. See Securities Exchange
Act Release No. 36947 (March 8, 1996), 61 FR
10606 (March 14, 1996) (SR–Amex–95–43).
Additional WEBS series were approved for listing
and trading in 2000, including iShares MSCI Brazil,
iShares MSCI Taiwan, iShares MSCI South Africa
and iShares MSCI South Korea. See Securities
Exchange Act Release No. 42748 (May 2, 2000), 65
FR 30155 (May 10, 2000) (SR–Amex–98–49).
iShares MSCI EAFE and iShares S&P Europe 350,
issued by iShares Trust, were approved for Amex
listing and trading in, respectively, in 2001. See
Securities Exchange Release No. 44700 (August 14,
2001), 66 FR 43927 (August 21, 2001) (SR–Amex–
2001–34); Securities Exchange Act Release No.
42786 (May 15, 2000), 65 FR 33586 (May 24, 2000)
(SR–Amex–99–49) (collectively, ‘‘Listing Approval
Orders’’).
5 See, e.g., Securities Exchange Act Release No.
50142 (August 3, 2004), 69 FR 48539 (August 10,
2004) (SR–NYSE–2004–27) (approving trading of
the Shares pursuant to UTP).
6 Much of the information in this filing was taken
from the Prospectuses and Statements of Additional
Information of iShares, Inc. dated January 1, 2007,
the Prospectus of iShares S&P Europe 350, dated
August 1, 2006, the Prospectus of iShares Trust
MSCI EAFE, dated December 1, 2006, and the Web
sites of Amex (https://www.amex.com), the NYSE
(https://www.nyse.com), and iShares (https://
www.ishares.com). Fund information relating to net
asset value (‘‘NAV’’), returns, dividends,
component stock holdings, and the like is updated
on a daily basis on the Web sites.
E:\FR\FM\17MYN1.SGM
17MYN1
]]>Agencies
[Federal Register Volume 72, Number 95 (Thursday, May 17, 2007)]
[Notices]
[Pages 27868-27871]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-9464]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55752; File No. SR-CBOE-2007-44]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Order Granting Accelerated Approval
of Proposed Rule Change to Trade the streetTRACKS Gold Shares Fund
Pursuant to Unlisted Trading Privileges
May 11, 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 May 8, 2007, the Chicago Board Options Exchange, Incorporated (the
``Exchange'' or ``CBOE''), 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 notice and order provides notice of the proposed
rule change and approves the proposal 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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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Chicago Board Options Exchange, Incorporated proposes to: (1)
trade on its stock trading facility, CBOE Stock Exchange (``CBSX''),
the streetTRACKS Gold Shares (``GLD'' or ``Shares'') pursuant to
unlisted trading privileges (``UTP''), and (2) adopt Exchange Rule
54.8, which governs the trading of commodity-based trust shares. The
text of the proposed rule change is available on the Exchange's Web
site (https://www.cboe.org/Legal), at the Exchange's principal office,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item 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
The Exchange is proposing to trade the Shares on CBSX pursuant to
UTP. The Shares represent fractional, undivided beneficial ownership
interests in the streetTRACKS Gold Trust (``Trust''). The Trust is an
investment trust, the sole assets of which are gold bullion, and from
time to time, cash.\3\ The Commission previously approved the original
listing and trading of the Shares on the New York Stock Exchange
(``NYSE'').\4\ 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. The trading hours for
the Shares on the Exchange would be from 8:15 a.m. until 3:15 p.m.
(Central Time).
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\3\ Additional information regarding the streetTRACKS Gold
Shares is at https://www.streettracksgoldshares.com.
\4\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22).
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The last-sale price for the Shares is disseminated over the
Consolidated Tape. Gold pricing information based on the spot price for
a troy ounce of gold from various financial information service
providers, such as Reuters and Bloomberg, is available on a 24-hour
basis. Complete real-time data for gold futures and options prices
traded on the COMEX (a division of the NYMEX) is available by
subscription from Reuters and Bloomberg. The NYMEX also provides
delayed futures and options information on current and past trading
sessions and market news free of charge on its Web site. CBOE, via a
link from its own public Web site (https://www.cboe.com) to the Trust
Web site (https://www.streettracksgoldshares.com), will provide at no
charge continuously updated bids and offers indicative of the spot
price of gold.\5\
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\5\ The gold spot price at the Trust's Web site will be provided
by The Bullion Desk (https://www.thebulliondesk.com). The Trust's Web
site will indicate that there are other sources for obtaining the
gold spot price. If the Trust's Web site should cease to provide
this indicative spot price from an unaffiliated source (and the
intraday indicative value) of the Shares, CBOE would cease to trade
the Shares.
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The Trust Web site also will provide a calculation of the estimated
NAV (also known as the Intraday Indicative Value or IIV) of a Share as
calculated by multiplying the indicative spot price of gold by the
quantity of gold backing
[[Page 27869]]
each Share. Comparing the IIV with the last sale price of the Shares
helps an investor to determine whether, and to what extent, Shares may
be selling at a premium or a discount to the NAV. Although provided
free of charge, the indicative spot price and IIV per Share will be
provided on an essentially real-time basis.\6\ The Trust Web site
provides the NAV of the Trust as calculated each business day by the
Sponsor. In addition, the Trust Web site contains the following
information, on a per-Share basis, for the Trust: (a) The IIV as of the
close of the prior business day and the midpoint of the bid/ask price
\7\ in relation to such IIV (``Bid/Ask Price''), and a calculation of
the premium or discount of such price against such IIV; and (b) data in
chart format displaying the frequency distribution of discounts and
premiums of the Bid/Ask Price against the IIV, within appropriate
ranges, for each of the four previous calendar quarters. The Trust Web
site also provides the Trust's prospectus, as well as the two most
recent reports to stockholders. The Trust Web site provides the last
sale price of the Shares as traded in the U.S. market, subject to a 20-
minute delay.\8\
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\6\ The Trust's Web site, to which the CBOE Web site will link,
will disseminate an indicative spot price of gold and the IIV, and
indicate that these values are subject to an average delay of five
to ten seconds.
\7\ The bid/ask price is determined using the highest bid and
lowest offer on the Consolidated Tape as of the time of calculation
of the closing day IIV.
\8\ The last sale price of the Shares in the secondary market is
available on a real-time basis for a fee from regular data vendors.
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In connection with the trading of the Shares, CBOE would inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares, such as loss, damage, or
theft of the Trust's gold, and unanticipated problems related to the
mechanisms and procedures that were specifically developed for this
relatively new securities product. CBOE also would require its members
to deliver a prospectus or product description to investors purchasing
Shares prior to or concurrently with a transaction in Shares. In
addition, CBOE Rule 53.6 requires member organizations to have a
reasonable basis for recommending the Shares when recommending a
transaction in the Shares.
CBOE believes that its surveillance procedures are adequate to
address any concerns about the trading of the Shares on the Exchange
because those procedures will be comparable to those used for exchange-
traded funds and trust-issued receipts currently trading on the
Exchange, and will incorporate and rely upon existing Exchange
surveillance procedures governing equities. In addition, for
intermarket surveillance purposes, the Exchange has entered into a
reciprocal Memorandum of Understanding with NYMEX for the sharing of
information related to any financial instrument based, in whole or in
part, upon an interest in or performance of gold.
Further, proposed CBOE Rule 54.8 would impose certain obligations
on Market-Makers that would apply in connection with trading the
Shares. CBOE Rule 54.8(e) would require that a Market-Maker in the
Shares provide the Exchange with information related to its trading in
physical gold, gold futures contracts, options on gold futures, or any
other gold derivatives. CBOE Rule 54.8(g) would prohibit a Market-Maker
in the Shares from using any material non-public information received
from any person associated with the Market-Maker or employee of such
person regarding trading by such person or employee in physical gold,
gold futures contracts, options on gold futures, or any other gold
derivatives. In addition, CBOE Rule 54.8(d) would prohibit a Market-
Maker in the Shares from being affiliated with a market maker in
physical gold, gold futures contracts, options on gold futures, or any
other gold derivatives unless the specified information barriers are in
place.
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. In addition, trading in the Shares
would be subject to trading halts caused by extraordinary market
volatility pursuant to the Exchange's ``circuit breaker'' rule.\9\
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\9\ CBOE Rule 6.3B.
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Moreover, the Exchange represents that it would cease trading the
Shares if the listing market stops trading the Shares because of a
regulatory halt similar to a halt based on CBOE Rule 6.3. UTP trading
in the Shares is also governed by the trading halts provisions of CBOE
Rule 52.3 relating to temporary interruptions in the calculation or
wide dissemination of the IIV.
2. Statutory Basis
CBOE believes that the proposal is consistent with Section 6(b) of
the Act \10\ in general, and Section 6(b)(5) of the Act \11\ in
particular, in that the proposal is designed to promote just and
equitable principles of trade, remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
protect investors and the public interest. In addition, CBOE believes
that the proposal is consistent with Rule 12f-5 under the Act \12\
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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\10\ 15 U.S.C. 78s(b).
\11\ 15 U.S.C. 78s(b)(5).
\12\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition 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 neither solicited nor received comments on the
proposal.
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 Number SR-CBOE-2007-44 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-CBOE-2007-44. 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
[[Page 27870]]
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Room. Copies of such filing also will be available for
inspection and copying at the principal office of 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-CBOE-2007-44 and should be
submitted on or before June 7, 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.\13\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\14\ 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.
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\13\ In approving this rule change, the Commission notes that it
has considered the proposal's impact on efficiency, competition, and
capital formation. See 15 U.S.C. 78c(f).
\14\ 15 U.S.C. 78f(b)(5).
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In addition, the Commission finds that the proposal is consistent
with Section 12(f) of the Act,\15\ which permits an exchange to trade,
pursuant to UTP, a security that is listed and registered on another
exchange.\16\ The Commission notes that it previously approved the
listing and trading of the Shares on the NYSE.\17\ The Commission also
finds that the proposal is consistent with Rule 12f-5 under the
Act,\18\ 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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\15\ 15 U.S.C. 78l(f).
\16\ 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.
\17\ See supra note 4.
\18\ 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,\19\ 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. Quotations for and last-sale information regarding the
Shares are disseminated through the facilities of the CTA and the
Consolidated Quotation System. Furthermore, as noted by the Exchange,
various means exist for investors to obtain reliable gold price
information and thereby to monitor the underlying spot market in gold
relative to the NAV of their Shares. In addition, the IIV of each Fund
is disseminated every 15 seconds throughout the trading day by the
national securities exchange on which the Fund is listed or by other
information providers or market data vendors.
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\19\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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Furthermore, the Commission believes that the proposal is
reasonably designed to preclude trading of the Shares when transparency
is impaired. CBOE Rule 52.3 sets forth trading halt procedures when
CBOE trades an ETF pursuant to UTP. Under this rule, if the listing
market halts trading when the IIV is not being calculated or
disseminated, CBOE also would halt trading in the Shares. This rule is
substantially similar to those recently adopted by other exchanges and
found by the Commission to be consistent with the Act.\20\
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\20\ See e.g., NYSE Arca Equities Rule 7.34; Securities Exchange
Act Release No. 54997 (December 21, 2006), 71 FR 78501 (December 29,
2006).
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The Commission notes that, if the Shares should be delisted by the
listing market, 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 properly
monitor Exchange trading of the Shares and to deter and detect
violations of Exchange rules. Among other things, the Exchange entered
into a reciprocal Memorandum of Understanding with NYMEX for the
sharing of information related to any financial instrument based, in
whole or in part, upon an interest in or performance of gold.
2. Prior to the commencement of trading, the Exchange would inform
its members and member organizations in an Information Circular of the
special characteristics and risks associated with trading the Shares.
3. The Information Circular would include the requirement that
members and member firms deliver a prospectus to investors purchasing
newly issued Shares prior to or concurrently with the confirmation of a
transaction.
This approval order is conditioned on the Exchange's adherence to
these representations.
Finally, the Commission believes that proposed CBOE Rule 54.8,
which imposes information barriers and trading restrictions on a member
acting as a registered market maker in the Shares, is consistent with
the Act. The Commission notes that CBOE Rule 54.8 is substantially
similar to rules of other exchanges that previously have been approved
by the Commission.\21\
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\21\ See, e.g., Nasdaq Rule 4630; Securities Exchange Act
Release No. 54765 (November 16, 2006), 71 FR 67668 (November 22,
2006) (approving SR-Nasdaq-2006-009).
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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 the NYSE is consistent
with the Act. The Commission presently is not aware of any regulatory
issue that should cause it to revisit that finding or would 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 competition in the market for
the Shares.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\22\ that the proposed rule change (SR-CBOE-2007-
[[Page 27871]]
44) be and it hereby is, approved on an accelerated basis.
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\22\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E7-9464 Filed 5-16-07; 8:45 am]
BILLING CODE 8010-01-P
