Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Trade the iShares MSCI Canada Index Fund Pursuant to UTP, 27874-27876 [E7-9468]

Download as PDF pwalker on PROD1PC71 with NOTICES 27874 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Notices 11A(a)(1)(C)(iii) of the Act,17 which sets forth Congress’s finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotations for and last-sale information regarding the Shares are disseminated through the facilities of the CTA and the Consolidated Quotation System. 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. Furthermore, the Commission believes that the proposal is reasonably designed to preclude trading of the Shares when transparency is impaired. New 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.18 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. 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. 17 15 U.S.C. 78k–1(a)(1)(C)(iii). e.g., NYSE Arca Equities Rule 7.34; Securities Exchange Act Release No. 54997 (December 21, 2006), 71 FR 78501 (December 29, 2006). 18 See VerDate Aug<31>2005 17:15 May 16, 2007 Jkt 211001 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 either Amex or 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,19 that the proposed rule change (SR–CBOE–2007– 37), as modified by Amendment No. 1 thereto, be and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.20 J. Lynn Taylor, Assistant Secretary. [FR Doc. E7–9465 Filed 5–16–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55747; File No. SR–CBOE– 2007–48] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Trade the iShares MSCI Canada 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 May 10, 2007, the Chicago Board Options Exchange, Incorporated (‘‘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 19 19 15 U.S.C. 78s(b)(2). 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 20 20 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 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 Exchange proposes to trade, on the CBOE Stock Exchange (‘‘CBSX’’), shares (‘‘Shares’’) of iShares MSCI Canada Index Fund (‘‘Fund’’) 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. 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 Shares of the Fund pursuant to UTP. The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Canadian market, as measured by the MSCI Canada Index (‘‘Index’’). The Commission previously approved the original listing and trading of the Shares on the American Stock Exchange (‘‘Amex’’).3 Subsequently, the Commission approved the listing and trading of the Shares on the Pacific Exchange, which is now known as NYSE Arca (‘‘NYSE Arca’’).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 3 See Securities Exchange Act Release No. 36947 (March 8, 1996), 61 FR 10606 (March 14, 1996). 4 See Securities Exchange Act Release No. 53230 (February 6, 2006), 71 FR 7594 (February 13, 2006) (approving SR–PCX–2005–116, which permitted the listing and trading on the Pacific Exchange of the Shares, as well as shares of other iShares MSCI international index funds). E:\FR\FM\17MYN1.SGM 17MYN1 pwalker on PROD1PC71 with NOTICES Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Notices the Shares on CBSX will be 8:15 a.m. until 3:15 p.m. Central Time (‘‘CT’’), unless the intraday indicative value (‘‘IIV’’) of the Fund is not being calculated and widely disseminated before 8:30 a.m. CT, in which case trading will begin at 8:30 a.m. CT; and unless Amex closes trading at 3 p.m. CT, in which case trading will end at 3 p.m. CT. Quotations for and last sale information regarding the Shares are disseminated through the Consolidated Quotation System. The value of the Index is updated intra-day on a realtime basis as individual component securities of the Index change in price. The intraday value of the Index is disseminated every 15 seconds throughout the trading day. In addition, a value for the Index is disseminated once each trading day, based on closing prices in the relevant exchange markets. To provide updated information relating to the Shares for use by investors, professionals, and persons wishing to create or redeem them, Amex disseminates through the facilities of the Consolidated Tape Association the IIV for the Fund as calculated by a securities information provider. The IIV is disseminated on a per-share basis every 15 seconds during regular trading hours. CBOE Rule 52.3 provides that, if the IIV ceases to be widely available, CBSX would cease trading the Shares. In connection with the trading of the Shares, the Exchange would inform members and member organizations in an Information Circular of the special characteristics and risks associated with trading the Shares, including how they are created and redeemed, the prospectus or product description delivery requirements applicable to the Shares, applicable Exchange rules, how information about the value of the underlying Index is disseminated, and trading information. In addition, before a member recommends a transaction in the Shares, the member must determine that the Shares are suitable for the customer as required by CBOE Rule 53.6. With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities comprising the underlying index and/or financial instruments of the Fund, or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly VerDate Aug<31>2005 17:15 May 16, 2007 Jkt 211001 market are present. 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.5 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 or the value of the underlying index. The Exchange intends to utilize its existing surveillance procedures applicable to equity security products to monitor trading in the Shares. The Exchange represents that these procedures are adequate to monitor Exchange trading of the Shares. 2. Statutory Basis CBOE believes that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange. Specifically, the Exchange believes that the proposed rule change is consistent with the Section 6(b)(5) 6 requirements that an exchange have rules that are designed 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 to protect investors and the public interest. In addition, CBOE believes that the proposal is consistent with Rule 12f–5 under the Act 7 because it deems 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 5 CBOE Rule 6.3B. U.S.C. 78(f)(b)(5). 7 17 CFR 240.12f–5. 6 15 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 27875 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–2007–48 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–2007–48. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal 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–2007–48 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 E:\FR\FM\17MYN1.SGM 17MYN1 27876 Federal Register / Vol. 72, No. 95 / Thursday, May 17, 2007 / Notices pwalker on PROD1PC71 with NOTICES securities exchange.8 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,9 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. In addition, the Commission finds that the proposal is consistent with Section 12(f) of the Act,10 which permits an exchange to trade, pursuant to UTP, a security that is listed and registered on another exchange.11 The Commission notes that it previously approved the listing and trading of the Shares on Amex and NYSE Arca.12 The Commission also finds that the proposal is consistent with Rule 12f–5 under the Act,13 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,14 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 8 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). 9 15 U.S.C. 78f(b)(5). 10 15 U.S.C. 78l(f). 11 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. 12 See supra notes 3 and 4. 13 17 CFR 240.12f–5. 14 15 U.S.C. 78k–1(a)(1)(C)(iii). VerDate Aug<31>2005 17:15 May 16, 2007 Jkt 211001 and last-sale information regarding the Shares are disseminated through the facilities of the CTA and the Consolidated Quotation System. In addition, the IIV of the 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. 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 the Shares pursuant to UTP. Under this rule, if the listing market halts trading when the IIV is not being calculated or widely 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.15 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. 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. 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 the listing and trading of the Shares on Amex and NYSE Arca to be consistent with the Act. The Commission presently is not aware of any regulatory issue that should cause it 15 See, e.g., NYSE Arca Equities Rule 7.34; Securities Exchange Act Release No. 54997 (December 21, 2006), 71 FR 78501 (December 29, 2006). PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 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,16 that the proposed rule change (SR–CBOE–2007– 48) be and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.17 J. Lynn Taylor, Assistant Secretary. [FR Doc. E7–9468 Filed 5–16–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55750; File No. SR–CBOE– 2007–46] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade the SPDR DJ Global Titans ETF Pursuant to UTP 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 9, 2007, the Chicago Board Options Exchange, Incorporated (‘‘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 (‘‘Exchange’’ or ‘‘CBOE’’) proposes to trade shares (‘‘Shares’’) of the SPDR DJ Global Titans ETF (‘‘Fund’’) pursuant to unlisted trading privileges (‘‘UTP’’). The text of the proposed rule change is available on the 16 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 17 17 E:\FR\FM\17MYN1.SGM 17MYN1

Agencies

[Federal Register Volume 72, Number 95 (Thursday, May 17, 2007)]
[Notices]
[Pages 27874-27876]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-9468]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55747; File No. SR-CBOE-2007-48]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change to Trade the iShares MSCI Canada 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 May 10, 2007, the Chicago Board Options Exchange, Incorporated 
(``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.
---------------------------------------------------------------------------

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

    The Exchange proposes to trade, on the CBOE Stock Exchange 
(``CBSX''), shares (``Shares'') of iShares MSCI Canada Index Fund 
(``Fund'') 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.

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 Shares of the Fund pursuant to 
UTP. The Fund seeks to provide investment results that correspond 
generally to the price and yield performance, before fees and expenses, 
of publicly traded securities in the Canadian market, as measured by 
the MSCI Canada Index (``Index'').
    The Commission previously approved the original listing and trading 
of the Shares on the American Stock Exchange (``Amex'').\3\ 
Subsequently, the Commission approved the listing and trading of the 
Shares on the Pacific Exchange, which is now known as NYSE Arca (``NYSE 
Arca'').\4\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 36947 (March 8, 
1996), 61 FR 10606 (March 14, 1996).
    \4\ See Securities Exchange Act Release No. 53230 (February 6, 
2006), 71 FR 7594 (February 13, 2006) (approving SR-PCX-2005-116, 
which permitted the listing and trading on the Pacific Exchange of 
the Shares, as well as shares of other iShares MSCI international 
index funds).
---------------------------------------------------------------------------

    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

[[Page 27875]]

the Shares on CBSX will be 8:15 a.m. until 3:15 p.m. Central Time 
(``CT''), unless the intraday indicative value (``IIV'') of the Fund is 
not being calculated and widely disseminated before 8:30 a.m. CT, in 
which case trading will begin at 8:30 a.m. CT; and unless Amex closes 
trading at 3 p.m. CT, in which case trading will end at 3 p.m. CT.
    Quotations for and last sale information regarding the Shares are 
disseminated through the Consolidated Quotation System. The value of 
the Index is updated intra-day on a real-time basis as individual 
component securities of the Index change in price. The intraday value 
of the Index is disseminated every 15 seconds throughout the trading 
day. In addition, a value for the Index is disseminated once each 
trading day, based on closing prices in the relevant exchange markets.
    To provide updated information relating to the Shares for use by 
investors, professionals, and persons wishing to create or redeem them, 
Amex disseminates through the facilities of the Consolidated Tape 
Association the IIV for the Fund as calculated by a securities 
information provider. The IIV is disseminated on a per-share basis 
every 15 seconds during regular trading hours. CBOE Rule 52.3 provides 
that, if the IIV ceases to be widely available, CBSX would cease 
trading the Shares.
    In connection with the trading of the Shares, the Exchange would 
inform members and member organizations in an Information Circular of 
the special characteristics and risks associated with trading the 
Shares, including how they are created and redeemed, the prospectus or 
product description delivery requirements applicable to the Shares, 
applicable Exchange rules, how information about the value of the 
underlying Index is disseminated, and trading information. In addition, 
before a member recommends a transaction in the Shares, the member must 
determine that the Shares are suitable for the customer as required by 
CBOE Rule 53.6.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. Trading may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable. These may include: (1) The extent to 
which trading is not occurring in the securities comprising the 
underlying index and/or financial instruments of the Fund, or (2) 
whether other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. In addition, 
trading in the Shares would be subject to trading halts caused by 
extraordinary market volatility pursuant to the Exchange's ``circuit 
breaker'' rule.\5\
---------------------------------------------------------------------------

    \5\ CBOE Rule 6.3B.
---------------------------------------------------------------------------

    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 or the value of the underlying index.
    The Exchange intends to utilize its existing surveillance 
procedures applicable to equity security products to monitor trading in 
the Shares. The Exchange represents that these procedures are adequate 
to monitor Exchange trading of the Shares.
2. Statutory Basis
    CBOE believes that the proposed rule change is consistent with the 
Act and the rules and regulations thereunder applicable to a national 
securities exchange.
    Specifically, the Exchange believes that the proposed rule change 
is consistent with the Section 6(b)(5) \6\ requirements that an 
exchange have rules that are designed 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 to protect 
investors and the public interest. In addition, CBOE believes that the 
proposal is consistent with Rule 12f-5 under the Act \7\ because it 
deems Shares to be equity securities, thus rendering trading in the 
Shares subject to the Exchange's existing rules governing the trading 
of equity securities.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78(f)(b)(5).
    \7\ 17 CFR 240.12f-5.
---------------------------------------------------------------------------

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-2007-48 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-2007-48. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal 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-2007-48 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

[[Page 27876]]

securities exchange.\8\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\9\ 
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.
---------------------------------------------------------------------------

    \8\ 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).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In addition, the Commission finds that the proposal is consistent 
with Section 12(f) of the Act,\10\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\11\ The Commission notes that it previously approved the 
listing and trading of the Shares on Amex and NYSE Arca.\12\ The 
Commission also finds that the proposal is consistent with Rule 12f-5 
under the Act,\13\ 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78l(f).
    \11\ 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.
    \12\ See supra notes 3 and 4.
    \13\ 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,\14\ 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. In addition, the IIV of the 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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    \14\ 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 the Shares pursuant to UTP. Under this rule, if the listing 
market halts trading when the IIV is not being calculated or widely 
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.\15\
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    \15\ 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.
    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.
    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 
the listing and trading of the Shares on Amex and NYSE Arca to be 
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,\16\ that the proposed rule change (SR-CBOE-2007-48) be and it 
hereby is, approved on an accelerated basis.
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    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E7-9468 Filed 5-16-07; 8:45 am]
BILLING CODE 8010-01-P