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]

Download as PDF 27868 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 pwalker on PROD1PC71 with NOTICES 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 (http:// 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 VerDate Aug<31>2005 [Release No. 34–55752; File No. SR–CBOE– 2007–44] 1 15 2 17 Jkt 211001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00069 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange 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 (http:// www.cboe.com) to the Trust Web site (http:// 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 http:// 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 (http:// 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. E:\FR\FM\17MYN1.SGM 17MYN1 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Notices pwalker on PROD1PC71 with NOTICES 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. VerDate Aug<31>2005 17:15 May 16, 2007 Jkt 211001 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 (http://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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule 10 15 PO 00000 Frm 00070 Fmt 4703 12 17 Sfmt 4703 27869 E:\FR\FM\17MYN1.SGM CFR 240.12f–5. 17MYN1 27870 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Notices 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. VerDate Aug<31>2005 17:15 May 16, 2007 Jkt 211001 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 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 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). E:\FR\FM\17MYN1.SGM 17MYN1 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Notices 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. pwalker on PROD1PC71 with NOTICES 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 (http:// 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 VerDate Aug<31>2005 17:15 May 16, 2007 Jkt 211001 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 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 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 (http://www.amex.com), the NYSE (http://www.nyse.com), and iShares (http:// 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.
---------------------------------------------------------------------------

    \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 (http://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 http://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 (http://www.cboe.com) to the Trust 
Web site (http://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 (http://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.
---------------------------------------------------------------------------

    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 (http://
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 (http://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.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    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