Self-Regulatory Organizations; the NASDAQ Stock Market LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade the Shares of the iShares GSCI Commodity-Indexed Trust Pursuant to Unlisted Trading Privileges, 32153-32156 [E7-11182]

Download as PDF rmajette on DSK8KYBLC1PROD with MISCELLANEOUS Federal Register / Vol. 72, No. 111 / Monday, June 11, 2007 / Notices if such a company relists during the same calendar year that it has previously paid an annual fee, the company will not be subject to a second annual fee in that same year. Nasdaq believes that this waiver is appropriate given that, on average, the review of such an issuer is likely to be simpler than the typical application for several reasons. First, because these companies were previously listed on Nasdaq and compliant with all requirements except the filing requirement, Nasdaq believes it is more likely that they will be compliant with all other quantitative and qualitative requirements. Further, Nasdaq notes that relevant information about these companies is already contained in Nasdaq’s compliance systems. Finally, in its filing, Nasdaq states that it anticipates there would be fewer questions concerning the company’s financial statements given that these companies will often have undergone extensive review by their auditors and, in some cases, by independent investigators and the Commission or other regulatory entities, in order to resolve the issues that caused the late filings.6 Nasdaq is implementing these waivers as an incentive for companies to re-list on Nasdaq upon regaining compliance with the periodic filing requirement. Nasdaq believes that this waiver is appropriate since Nasdaq’s rules governing the delisting of companies that are delinquent in periodic reports are generally stricter than those of other markets. Nasdaq believes that the proposed waivers will promote competition between Nasdaq and other exchange markets. 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.7 In particular, the Commission finds that the proposal is consistent with Section 6(b)(4) of the Act,8 which requires that an exchange have rules that provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. The Commission also finds that the proposal is consistent with Section 6(b)(5) of the 6 The Commission notes that the timely filing of accurate financial reports under the Act is critical to investors and out national market and assures that investors receive up to date financial information about listed companies. 7 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 8 15 U.S.C. 78f(b)(4). VerDate Mar<15>2010 12:15 Mar 07, 2011 Jkt 223001 Act,9 which requires, inter alia, that the rules of a national securities exchange be designed to remove impediments to and perfect the mechanism of a free and open market and a national market system and not designed to permit unfair discrimination between issuers. The Commission notes that Nasdaq has represented that the waiver of listing fees should not have a material financial impact on the exchange, or impact Nasdaq’s resource commitment to its regulatory oversight of the listing process or its regulatory programs. In addition, the proposal does not have any impact on whether a company is actually eligible to list on Nasdaq. Nasdaq has represented that a complete review of compliance with listing standards will be conducted for any company seeking to take advantage of the fee waiver, just as for any company that applies for listing on Nasdaq. Nasdaq has also represented that any fee waiver granted under this rule is predicated upon the company successfully completing the review process and demonstrating compliance with the initial listing standards. Finally, the Commission notes that companies eligible for the fee waiver have previously paid entry and annual fees to Nasdaq. Under the fee waiver, companies must reapply within one year of delisting and are eligible for the wavier of the annual fee only if they relist during the same year for which the annual fee had previously been paid. The Commission believes it reasonable for Nasdaq to conclude that eligible companies should not be charged duplicate fees if they relist within such time periods. Based on the above, the Commission agrees that the proposed waiver does not constitute an inequitable allocation of reasonable dues, fees, and other charges, does not permit unfair discrimination between issuers, and is generally consistent with the Act. It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,10 that the proposed rule change (File No. SR– NASDAQ–2007–040) be, and it hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–11157 Filed 6–8–07; 8:45 am] BILLING CODE 8010–01–P U.S.C. 78f(b)(5). U.S.C. 78s(b)(2). 11 17 CFR 200.30–3(a)(12). SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55861; File No. SR– NASDAQ–2007–054] Self-Regulatory Organizations; the NASDAQ Stock Market LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade the Shares of the iShares GSCI Commodity-Indexed Trust Pursuant to Unlisted Trading Privileges June 5, 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 18, 2007, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. This order provides notice of the proposed rule change and approves the proposed rule change on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to trade shares of the iShares GSCI Commodity-Indexed Trust (the ‘‘Trust’’) pursuant to unlisted trading privileges (‘‘UTP’’). The text of the proposed rule change is available at Nasdaq, the Commission’s Public Reference Room, and nasdaq.complinet.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Pursuant to Nasdaq Rule 4630, which permits the Exchange to approve for 9 15 10 15 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 32153 1 15 2 17 E:\ERIC\11JNN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 11JNN1 32154 Federal Register / Vol. 72, No. 111 / Monday, June 11, 2007 / Notices rmajette on DSK8KYBLC1PROD with MISCELLANEOUS UTP trading a ‘‘commodity-related security’’ that is issued by a trust, partnership, commodity pool, or similar entity that invests in any combination of commodities, futures contracts, options on futures contracts, forward contracts, commodity swaps, or other related derivatives, the Exchange proposes to trade pursuant to UTP the shares of the Trust (the ‘‘Shares’’).3 The Shares are currently trading on Nasdaq on a threemonth pilot basis,4 and approval of this proposed rule change would allow the Shares to continue to trade after the expiration of the pilot. The Commission previously approved a proposal to list and trade the Shares on the New York Stock Exchange LLC (‘‘NYSE’’).5 The Shares represent fractional undivided beneficial interests in the net assets of the Trust. Substantially all of the assets of the Trust consist of its holdings of the limited liability company interests of a commodity pool (‘‘Investing Pool Interests’’), which are the only securities in which the Trust may invest. The commodity pool, iShares GSCI Commodity-Indexed Investing Pool LLC (‘‘Investing Pool’’), holds long positions in futures contracts on the GSCI Excess Return Index (‘‘GSCI–ER’’), called ‘‘CERFs,’’ which are listed on the Chicago Mercantile Exchange (‘‘CME’’) and posts margin in the form of cash or short-term securities to collateralize these futures positions. The GSCI–ER is calculated based on the same commodities included in the Goldman Sachs Commodity Index (‘‘GSCI’’), which is a productionweighted index of the prices of a diversified group of futures contracts on physical commodities. The GSCI is administered, calculated, and published by Goldman, Sachs & Co. (the ‘‘Index Sponsor’’), a subsidiary of The Goldman Sachs Group Inc. The Trust’s objective is for the performance of the Shares to correspond generally to the performance of the GSCI Total Return Index (‘‘Index’’) before payment of the Trust’s and the Investing Pool’s expenses and liabilities. The Index is intended to reflect the performance of a diversified group of 3 E-mail from John Yetter, Deputy General Counsel, Nasdaq, to Edward Cho, Special Counsel, Division of Market Regulation, Commission, dated May 31, 2007 (confirming the Nasdaq rule governing the UTP trading of the Shares). 4 See Securities Exchange Act Release No. 55386 (March 2, 2007), 72 FR 10801 (March 9, 2007) (SR– NASDAQ–2007–016) (approving the trading of 16 commodity-related securities, including the Shares, pursuant to UTP for a pilot period of three months beginning on March 5, 2007) (‘‘Pilot Order’’). 5 See Securities Exchange Act Release Nos. 53659 (April 17, 2006), 71 FR 21074 (April 24, 2006) (SR– NYSE–2006–17) (‘‘NYSE Proposal’’) and 54013 (June 16, 2006), 71 FR 36372 (June 26, 2006) (‘‘NYSE Approval Order’’). VerDate Mar<15>2010 12:15 Mar 07, 2011 Jkt 223001 commodities. The Trust and Investing Pool are each commodity pools, as defined in the Commodity Exchange Act and the applicable regulations of the Commodity Futures Trading Commission. Descriptions of the Shares, the Investing Pool, the futures contracts, the Index, the GSCI–ER, the GSCI, and the fees and expenses of the Trustee are set forth in the NYSE Proposal. To summarize, issuances of Shares are made only in baskets of 50,000 Shares or multiples thereof (‘‘Baskets’’). The Trust issues and redeems the Shares on a continuous basis, by or through participants that have entered into participant agreements (each, an ‘‘Authorized Participant’’) with Barclays Global Investors International, Inc. (the ‘‘Sponsor’’) and Barclays Global Investors, N.A. (the ‘‘Trustee’’). Baskets are issued only in exchange for an amount of CERFs and cash (or, at the discretion of the Trustee, ShortTerm Securities 6 in lieu of cash) equal to the Basket Amount (as defined herein) for the business day on which the creation order was received by the Trustee. The ‘‘Basket Amount’’ for a business day has a per-Share value equal to the Net Asset Value (‘‘NAV’’) of the Trust as of such day. However, orders received by the Trustee after 2:40 p.m. Eastern Time (‘‘ET’’) are treated as received on the next following business day. The Trustee notifies the Authorized Participants of the Basket Amount on each business day. Baskets are then separable upon issuance into the Shares that are traded on Nasdaq on a UTP basis. The Shares are not individually redeemable but are redeemable only in Baskets. To redeem, an Authorized Participant is required to accumulate enough Shares to constitute a Basket (i.e., 50,000 Shares). An Authorized Participant that wishes to redeem a Basket receives an amount of CERFs and cash (or, at the discretion of the Trustee, Short-Term Securities in lieu of cash) equal to the Basket Amount on the business day the redemption request is received by the Trustee, in exchange for each Basket surrendered. However, redemption requests received by the Trustee after 2:40 p.m. ET (or, on any day on which CME is scheduled to close early, after the close of trading of CERFs on CME on such day), are treated as received on the next following business day. The operation of the Trust and creation and redemption process are 6 ‘‘Short-Term Securities’’ means U.S. Treasury securities or other short-term securities and similar securities, in each case that are eligible as margin deposits under the rules of CME. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 described in more detail in the NYSE Proposal. On each business day on which NYSE is open for regular trading, as soon as practicable after the close of regular trading of the Shares on NYSE (normally, 4:15 p.m. ET), the Trustee determines the NAV as of that time. The calculation methodology for the NAV is described in more detail in the NYSE Proposal. The NAV for the Shares on each business day on which NYSE is open for regular trading is distributed to all market participants at the same time. The NAV is distributed through major market data vendors and is published online at http://www.ishares.com. The Trust updates the NAV as soon as practicable after each subsequent NAV is calculated. The Web site for the Trust (http:// www.ishares.com), which is publicly accessible at no charge, contains the following information: (1) The prior business day’s NAV and the reported closing price; (2) the midpoint of the bid-ask price in relation to the NAV as of the time the NAV is calculated (the ‘‘Bid-Ask Price’’); 7 (3) calculation of the premium or discount of such price against such NAV; (4) data in chart form displaying the frequency distribution of discounts and premiums of the Bid-Ask Price against the NAV, within appropriate ranges for each of the four previous calendar quarters; (5) the prospectus; (6) the holdings of the Trust, including CERFs, cash, and Treasury securities; (7) the Basket Amount; and (8) other applicable quantitative information. Nasdaq, on its Web site at http://www.nasdaq.com, includes a hyperlink to the Trust’s Web site. As described above, the NAV for the Trust is calculated and disseminated daily. According to the NYSE Proposal, NYSE disseminates from 9:30 a.m. to 4:15 p.m. ET daily by means of CTA/CQ High Speed Lines information with respect to the Indicative Trust Value (‘‘ITV’’), recent NAV, and Shares outstanding. In order to provide updated information relating to the Trust for use by investors, professionals, and other persons, NYSE disseminates through the facilities of CTA an updated ITV on a per-Share basis. The ITV is disseminated at least every 15 seconds from 9:30 a.m. to 4:15 p.m. ET. The ITV is calculated based on the cash and collateral in a Basket Amount, divided by 50,000, and adjusted to reflect the market value of the Index commodities 7 The Bid-Ask Price of the Shares is determined using the highest bid and lowest offer as of the time of calculation of the NAV. E:\ERIC\11JNN1.SGM 11JNN1 rmajette on DSK8KYBLC1PROD with MISCELLANEOUS Federal Register / Vol. 72, No. 111 / Monday, June 11, 2007 / Notices through investments held by the Investing Pool, i.e., CERFs. The ITV will not reflect price changes to the price of an underlying commodity between the close of trading of the futures contract at the relevant futures exchange and the close of trading on Nasdaq. Accordingly, the value of a Share may be influenced by non-concurrent trading hours between Nasdaq and the various futures exchanges on which the futures contracts based on the Index commodities are traded. When the market for futures trading for each of the Index commodities is open, the ITV can be expected to closely approximate the value per Share of the Basket Amount. However, during Nasdaq trading hours when the futures contracts have ceased trading, spreads and resulting premiums or discounts may widen and, therefore, may increase the difference between the price of the Shares and the NAV of the Shares. ITV on a per-Share basis should not be viewed as a real-time update of the NAV, which is calculated only once a day. Nasdaq deems the Shares to be equity securities, thus rendering trading in the Shares subject to Nasdaq’s existing rules governing the trading of equity securities, including Nasdaq Rule 4630. The Shares will trade on Nasdaq from 9:30 a.m. until 4:15 p.m. ET. Nasdaq will halt trading in the Shares under the conditions specified in Nasdaq Rules 4120 (Trading Halts) and 4121 (Market Closings). The conditions for a halt include a regulatory halt by the original listing market. UTP trading in the Shares will also be governed by provisions of Nasdaq Rule 4120 relating to temporary interruptions in the calculation or wide dissemination of the ITV or the value of the Index. Additionally, Nasdaq may cease trading the Shares if other unusual conditions or circumstances exist which, in the opinion of Nasdaq, make further dealings on Nasdaq detrimental to the maintenance of a fair and orderly market. Nasdaq will also follow any procedures with respect to trading halts as set forth in Nasdaq Rule 4120(c). Finally, Nasdaq will stop trading the Shares if the original listing market delists them. Nasdaq believes that its surveillance procedures are adequate to address any concerns about the trading of the Shares on Nasdaq. Trading of the Shares through Nasdaq facilities is currently subject to NASD’s surveillance procedures for equity securities, in general, and ETFs, in particular.8 8 NASD surveils trading pursuant to a regulatory services agreement. Nasdaq is responsible for VerDate Mar<15>2010 12:15 Mar 07, 2011 Jkt 223001 Nasdaq is able to obtain information regarding trading in the Shares and the underlying futures contracts through its members in connection with the proprietary or customer trades that such members effect on any relevant market. In addition, Nasdaq may obtain trading information via the Intermarket Surveillance Group (‘‘ISG’’) from other exchanges that are members or affiliate members of ISG, including the Chicago Board of Trade, and Nasdaq has Information Sharing Agreements in place with the New York Mercantile Exchange, the Kansas City Board of Trade, ICE Futures, and the London Metal Exchange. If at any time the Index Sponsor includes in the Index a contract traded on any other market, which results in more than 10% of the cumulative weight of the Index not being subject to comprehensive surveillance-sharing arrangements (i.e., the relevant exchange is not a member or affiliate member of ISG or Nasdaq does not have a pre-existing comprehensive surveillance-sharing agreement with it), then, prior to the inclusion of such contract in the Index, Nasdaq would (1) enter into adequate information sharing arrangements with such other market, and (2) contact the Commission to discuss measures that may be appropriate under the circumstances. Nasdaq has issued and would continue to issue an Information Circular to inform its members of the special characteristics and risks associated with trading the Shares, among other things. 2. Statutory Basis The proposal is consistent with Section 6(b) of the Act,9 in general, and Section 6(b)(5) of the Act,10 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to 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. In addition, the proposal is consistent with Rule 12f–5 under the Act 11 because Nasdaq 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. NASD’s performance under this regulatory services agreement. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). 11 17 CFR 240.12f–5. PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 32155 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2007–054 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–NASDAQ–2007–054. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying E:\ERIC\11JNN1.SGM 11JNN1 32156 Federal Register / Vol. 72, No. 111 / Monday, June 11, 2007 / Notices 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 IV. Commission’s Findings and Order 11A(a)(1)(C)(iii) of the Act,18 which sets Granting Accelerated Approval of the forth Congress’ finding that it is in the Proposed Rule Change public interest and appropriate for the After careful review, the Commission protection of investors and the finds that the proposed rule change is maintenance of fair and orderly markets consistent with the requirements of the to assure the availability to brokers, Act and the rules and regulations dealers, and investors of information thereunder applicable to a national with respect to quotations for and securities exchange.12 In particular, the transactions in securities. Quotations for Commission finds that the proposed and last-sale information regarding the rule change is consistent with Section Shares are publicly available on the 6(b)(5) of the Act,13 which requires that Web sites of the Trust, Nasdaq, and an exchange have rules designed, among NYSE. The Web site for the Trust also other things, to promote just and disseminates information about the equitable principles of trade, to remove prior business day’s NAV and the impediments to and perfect the reporting closing price, the midpoint of mechanism of a free and open market the Bid-Ask Price in relation to the NAV and a national market system, and, in as of the time the NAV is calculated, general, to protect investors and the discount and premium information of public interest. The Commission the Bid-Ask Price against the NAV, the believes that this proposal should prospectus, the various holdings of the benefit investors by increasing Trust, the Basket Amount, and other competition among markets that trade applicable information. During regular the Shares. trading hours, major market data In addition, the Commission finds vendors disseminate at least every 15 that the proposal is consistent with seconds the values of the GSCI, GSCI– 14 which permits Section 12(f) of the Act, ER, and Index.19 In addition, NYSE an exchange to trade, pursuant to UTP, disseminates through the facilities of a security that is listed and registered on CTA an updated ITV on a per-Share another exchange.15 The Commission basis at least every 15 seconds during notes that the Shares are currently the trading day. The Trustee calculates trading on Nasdaq pursuant to UTP on and simultaneously disseminates once a pilot basis and that it previously each business day to all market approved the listing and trading of the participants the NAV per Share. Also, 16 The Commission Shares on NYSE. futures quotes and last-sale information also finds that the proposal is consistent for the commodities underlying the 17 which with Rule 12f–5 under the Act, Index and the CERFs are widely provides that an exchange shall not disseminated through a variety of extend UTP to a security unless the market data vendors.20 exchange has in effect a rule or rules The Commission notes that, if the providing for transactions in the class or Shares should be delisted by the type of security to which the exchange original listing exchange, the Exchange extends UTP. The Exchange has would no longer have authority to trade represented that it meets this the Shares pursuant to this order. In support of this proposal, the 12 In approving this rule change, the Commission Exchange has represented that its notes that it has considered the proposed rule’s surveillance procedures are adequate to impact on efficiency, competition, and capital address any concerns associated with formation. See 15 U.S.C. 78c(f). 13 15 U.S.C. 78f(b)(5). the trading of the Shares on Nasdaq on 14 15 U.S.C. 78l(f). a UTP basis. This approval order is 15 Section 12(a) of the Act, 15 U.S.C. 78l(a), conditioned on the Exchange’s generally prohibits a broker-dealer from trading a adherence to this representation. In the security on a national securities exchange unless Pilot Order,21 the Commission noted the security is registered on that exchange pursuant that exchanges that trade commodityto Section 12 of the Act. Section 12(f) of the Act excludes from this restriction trading in any related securities generally have in security to which an exchange ‘‘extends UTP.’’ place surveillance agreements with When an exchange extends UTP to a security, it rmajette on DSK8KYBLC1PROD with MISCELLANEOUS information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASDAQ–2007–054 and should be submitted on or before July 2, 2007. 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. 16 See supra notes 4 and 5. 17 17 CFR 240.12f–5. VerDate Mar<15>2010 12:15 Mar 07, 2011 Jkt 223001 18 15 U.S.C. 78k–1(a)(1)(C)(iii). NYSE Proposal, 71 FR at 21084. 20 See id. 21 See infra note 4. markets that trade the underlying securities. In its proposal to establish the pilot trading period, the Exchange represented that it was in the process of completing these surveillance arrangements and expected to do so ‘‘in the near future.’’ The Exchange recently provided the Commission with evidence that it has completed these surveillance arrangements. The Commission finds good cause for approving this proposal before the thirtieth day after the publication of notice thereof in the Federal Register. As noted above, the Commission previously found that the listing and trading of the Shares on NYSE is consistent with the Act and approved the trading of the Shares on Nasdaq pursuant to UTP on a pilot basis. The Commission presently is not aware of any regulatory issue that should cause it to revisit that finding or would preclude the continued trading of the Shares on the Exchange pursuant to UTP. Therefore, accelerating approval of this proposal should benefit investors by continuing, without undue delay, competition in the market for such Shares. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,22 that the proposed rule change (SR–NASDAQ– 2007–054) be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.23 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–11182 Filed 6–8–07; 8:45 am] BILLING CODE 8010–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #10866 and #10867] Kansas Disaster Number KS–00018 Small Business Administration. Amendment 5. AGENCY: ACTION: SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of Kansas (FEMA– 1699–DR), dated 05/06/2007. Incident: Severe storms, tornadoes, and flooding. Incident Period: 05/04/2007 through 05/18/2007. Effective Date: 06/01/2007. Physical Loan Application Deadline Date: 07/05/2007. 19 See PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 22 15 23 17 E:\ERIC\11JNN1.SGM U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 11JNN1

Agencies

[Federal Register Volume 72, Number 111 (Monday, June 11, 2007)]
[Notices]
[Pages 32153-32156]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-11182]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55861; File No. SR-NASDAQ-2007-054]


Self-Regulatory Organizations; the NASDAQ Stock Market LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Trade the Shares of the iShares GSCI Commodity-Indexed 
Trust Pursuant to Unlisted Trading Privileges

June 5, 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 18, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
This order provides notice of the proposed rule change and approves the 
proposed rule change on an accelerated basis.
---------------------------------------------------------------------------

    \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

    Nasdaq proposes to trade shares of the iShares GSCI Commodity-
Indexed Trust (the ``Trust'') pursuant to unlisted trading privileges 
(``UTP''). The text of the proposed rule change is available at Nasdaq, 
the Commission's Public Reference Room, and nasdaq.complinet.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Pursuant to Nasdaq Rule 4630, which permits the Exchange to approve 
for

[[Page 32154]]

UTP trading a ``commodity-related security'' that is issued by a trust, 
partnership, commodity pool, or similar entity that invests in any 
combination of commodities, futures contracts, options on futures 
contracts, forward contracts, commodity swaps, or other related 
derivatives, the Exchange proposes to trade pursuant to UTP the shares 
of the Trust (the ``Shares'').\3\ The Shares are currently trading on 
Nasdaq on a three-month pilot basis,\4\ and approval of this proposed 
rule change would allow the Shares to continue to trade after the 
expiration of the pilot. The Commission previously approved a proposal 
to list and trade the Shares on the New York Stock Exchange LLC 
(``NYSE'').\5\
---------------------------------------------------------------------------

    \3\ E-mail from John Yetter, Deputy General Counsel, Nasdaq, to 
Edward Cho, Special Counsel, Division of Market Regulation, 
Commission, dated May 31, 2007 (confirming the Nasdaq rule governing 
the UTP trading of the Shares).
    \4\ See Securities Exchange Act Release No. 55386 (March 2, 
2007), 72 FR 10801 (March 9, 2007) (SR-NASDAQ-2007-016) (approving 
the trading of 16 commodity-related securities, including the 
Shares, pursuant to UTP for a pilot period of three months beginning 
on March 5, 2007) (``Pilot Order'').
    \5\ See Securities Exchange Act Release Nos. 53659 (April 17, 
2006), 71 FR 21074 (April 24, 2006) (SR-NYSE-2006-17) (``NYSE 
Proposal'') and 54013 (June 16, 2006), 71 FR 36372 (June 26, 2006) 
(``NYSE Approval Order'').
---------------------------------------------------------------------------

    The Shares represent fractional undivided beneficial interests in 
the net assets of the Trust. Substantially all of the assets of the 
Trust consist of its holdings of the limited liability company 
interests of a commodity pool (``Investing Pool Interests''), which are 
the only securities in which the Trust may invest. The commodity pool, 
iShares GSCI Commodity-Indexed Investing Pool LLC (``Investing Pool''), 
holds long positions in futures contracts on the GSCI Excess Return 
Index (``GSCI-ER''), called ``CERFs,'' which are listed on the Chicago 
Mercantile Exchange (``CME'') and posts margin in the form of cash or 
short-term securities to collateralize these futures positions. The 
GSCI-ER is calculated based on the same commodities included in the 
Goldman Sachs Commodity Index (``GSCI''), which is a production-
weighted index of the prices of a diversified group of futures 
contracts on physical commodities. The GSCI is administered, 
calculated, and published by Goldman, Sachs & Co. (the ``Index 
Sponsor''), a subsidiary of The Goldman Sachs Group Inc.
    The Trust's objective is for the performance of the Shares to 
correspond generally to the performance of the GSCI Total Return Index 
(``Index'') before payment of the Trust's and the Investing Pool's 
expenses and liabilities. The Index is intended to reflect the 
performance of a diversified group of commodities. The Trust and 
Investing Pool are each commodity pools, as defined in the Commodity 
Exchange Act and the applicable regulations of the Commodity Futures 
Trading Commission.
    Descriptions of the Shares, the Investing Pool, the futures 
contracts, the Index, the GSCI-ER, the GSCI, and the fees and expenses 
of the Trustee are set forth in the NYSE Proposal. To summarize, 
issuances of Shares are made only in baskets of 50,000 Shares or 
multiples thereof (``Baskets''). The Trust issues and redeems the 
Shares on a continuous basis, by or through participants that have 
entered into participant agreements (each, an ``Authorized 
Participant'') with Barclays Global Investors International, Inc. (the 
``Sponsor'') and Barclays Global Investors, N.A. (the ``Trustee'').
    Baskets are issued only in exchange for an amount of CERFs and cash 
(or, at the discretion of the Trustee, Short-Term Securities \6\ in 
lieu of cash) equal to the Basket Amount (as defined herein) for the 
business day on which the creation order was received by the Trustee. 
The ``Basket Amount'' for a business day has a per-Share value equal to 
the Net Asset Value (``NAV'') of the Trust as of such day. However, 
orders received by the Trustee after 2:40 p.m. Eastern Time (``ET'') 
are treated as received on the next following business day. The Trustee 
notifies the Authorized Participants of the Basket Amount on each 
business day. Baskets are then separable upon issuance into the Shares 
that are traded on Nasdaq on a UTP basis.
---------------------------------------------------------------------------

    \6\ ``Short-Term Securities'' means U.S. Treasury securities or 
other short-term securities and similar securities, in each case 
that are eligible as margin deposits under the rules of CME.
---------------------------------------------------------------------------

    The Shares are not individually redeemable but are redeemable only 
in Baskets. To redeem, an Authorized Participant is required to 
accumulate enough Shares to constitute a Basket (i.e., 50,000 Shares). 
An Authorized Participant that wishes to redeem a Basket receives an 
amount of CERFs and cash (or, at the discretion of the Trustee, Short-
Term Securities in lieu of cash) equal to the Basket Amount on the 
business day the redemption request is received by the Trustee, in 
exchange for each Basket surrendered. However, redemption requests 
received by the Trustee after 2:40 p.m. ET (or, on any day on which CME 
is scheduled to close early, after the close of trading of CERFs on CME 
on such day), are treated as received on the next following business 
day. The operation of the Trust and creation and redemption process are 
described in more detail in the NYSE Proposal.
    On each business day on which NYSE is open for regular trading, as 
soon as practicable after the close of regular trading of the Shares on 
NYSE (normally, 4:15 p.m. ET), the Trustee determines the NAV as of 
that time. The calculation methodology for the NAV is described in more 
detail in the NYSE Proposal.
    The NAV for the Shares on each business day on which NYSE is open 
for regular trading is distributed to all market participants at the 
same time. The NAV is distributed through major market data vendors and 
is published online at http://www.ishares.com. The Trust updates the 
NAV as soon as practicable after each subsequent NAV is calculated.
    The Web site for the Trust (http://www.ishares.com), which is 
publicly accessible at no charge, contains the following information: 
(1) The prior business day's NAV and the reported closing price; (2) 
the midpoint of the bid-ask price in relation to the NAV as of the time 
the NAV is calculated (the ``Bid-Ask Price''); \7\ (3) calculation of 
the premium or discount of such price against such NAV; (4) data in 
chart form displaying the frequency distribution of discounts and 
premiums of the Bid-Ask Price against the NAV, within appropriate 
ranges for each of the four previous calendar quarters; (5) the 
prospectus; (6) the holdings of the Trust, including CERFs, cash, and 
Treasury securities; (7) the Basket Amount; and (8) other applicable 
quantitative information. Nasdaq, on its Web site at http://www.nasdaq.com, includes a hyperlink to the Trust's Web site.
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    \7\ The Bid-Ask Price of the Shares is determined using the 
highest bid and lowest offer as of the time of calculation of the 
NAV.
---------------------------------------------------------------------------

    As described above, the NAV for the Trust is calculated and 
disseminated daily. According to the NYSE Proposal, NYSE disseminates 
from 9:30 a.m. to 4:15 p.m. ET daily by means of CTA/CQ High Speed 
Lines information with respect to the Indicative Trust Value (``ITV''), 
recent NAV, and Shares outstanding.
    In order to provide updated information relating to the Trust for 
use by investors, professionals, and other persons, NYSE disseminates 
through the facilities of CTA an updated ITV on a per-Share basis. The 
ITV is disseminated at least every 15 seconds from 9:30 a.m. to 4:15 
p.m. ET. The ITV is calculated based on the cash and collateral in a 
Basket Amount, divided by 50,000, and adjusted to reflect the market 
value of the Index commodities

[[Page 32155]]

through investments held by the Investing Pool, i.e., CERFs. The ITV 
will not reflect price changes to the price of an underlying commodity 
between the close of trading of the futures contract at the relevant 
futures exchange and the close of trading on Nasdaq. Accordingly, the 
value of a Share may be influenced by non-concurrent trading hours 
between Nasdaq and the various futures exchanges on which the futures 
contracts based on the Index commodities are traded.
    When the market for futures trading for each of the Index 
commodities is open, the ITV can be expected to closely approximate the 
value per Share of the Basket Amount. However, during Nasdaq trading 
hours when the futures contracts have ceased trading, spreads and 
resulting premiums or discounts may widen and, therefore, may increase 
the difference between the price of the Shares and the NAV of the 
Shares. ITV on a per-Share basis should not be viewed as a real-time 
update of the NAV, which is calculated only once a day.
    Nasdaq deems the Shares to be equity securities, thus rendering 
trading in the Shares subject to Nasdaq's existing rules governing the 
trading of equity securities, including Nasdaq Rule 4630. The Shares 
will trade on Nasdaq from 9:30 a.m. until 4:15 p.m. ET.
    Nasdaq will halt trading in the Shares under the conditions 
specified in Nasdaq Rules 4120 (Trading Halts) and 4121 (Market 
Closings). The conditions for a halt include a regulatory halt by the 
original listing market. UTP trading in the Shares will also be 
governed by provisions of Nasdaq Rule 4120 relating to temporary 
interruptions in the calculation or wide dissemination of the ITV or 
the value of the Index. Additionally, Nasdaq may cease trading the 
Shares if other unusual conditions or circumstances exist which, in the 
opinion of Nasdaq, make further dealings on Nasdaq detrimental to the 
maintenance of a fair and orderly market. Nasdaq will also follow any 
procedures with respect to trading halts as set forth in Nasdaq Rule 
4120(c). Finally, Nasdaq will stop trading the Shares if the original 
listing market delists them.
    Nasdaq believes that its surveillance procedures are adequate to 
address any concerns about the trading of the Shares on Nasdaq. Trading 
of the Shares through Nasdaq facilities is currently subject to NASD's 
surveillance procedures for equity securities, in general, and ETFs, in 
particular.\8\ Nasdaq is able to obtain information regarding trading 
in the Shares and the underlying futures contracts through its members 
in connection with the proprietary or customer trades that such members 
effect on any relevant market. In addition, Nasdaq may obtain trading 
information via the Intermarket Surveillance Group (``ISG'') from other 
exchanges that are members or affiliate members of ISG, including the 
Chicago Board of Trade, and Nasdaq has Information Sharing Agreements 
in place with the New York Mercantile Exchange, the Kansas City Board 
of Trade, ICE Futures, and the London Metal Exchange. If at any time 
the Index Sponsor includes in the Index a contract traded on any other 
market, which results in more than 10% of the cumulative weight of the 
Index not being subject to comprehensive surveillance-sharing 
arrangements (i.e., the relevant exchange is not a member or affiliate 
member of ISG or Nasdaq does not have a pre-existing comprehensive 
surveillance-sharing agreement with it), then, prior to the inclusion 
of such contract in the Index, Nasdaq would (1) enter into adequate 
information sharing arrangements with such other market, and (2) 
contact the Commission to discuss measures that may be appropriate 
under the circumstances. Nasdaq has issued and would continue to issue 
an Information Circular to inform its members of the special 
characteristics and risks associated with trading the Shares, among 
other things.
---------------------------------------------------------------------------

    \8\ NASD surveils trading pursuant to a regulatory services 
agreement. Nasdaq is responsible for NASD's performance under this 
regulatory services agreement.
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2. Statutory Basis
    The proposal is consistent with Section 6(b) of the Act,\9\ in 
general, and Section 6(b)(5) of the Act,\10\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to 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. In addition, the proposal is consistent with Rule 12f-
5 under the Act \11\ because Nasdaq 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2007-054 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-NASDAQ-2007-054. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal offices of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying

[[Page 32156]]

information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NASDAQ-2007-054 and should be submitted on or before 
July 2, 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.\12\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\13\ 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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    \12\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \13\ 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,\14\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\15\ The Commission notes that the Shares are currently 
trading on Nasdaq pursuant to UTP on a pilot basis and that it 
previously approved the listing and trading of the Shares on NYSE.\16\ 
The Commission also finds that the proposal is consistent with Rule 
12f-5 under the Act,\17\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78l(f).
    \15\ 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.
    \16\ See supra notes 4 and 5.
    \17\ 17 CFR 240.12f-5.
---------------------------------------------------------------------------

    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\18\ 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 publicly available on the Web sites of the Trust, Nasdaq, 
and NYSE. The Web site for the Trust also disseminates information 
about the prior business day's NAV and the reporting closing price, the 
midpoint of the Bid-Ask Price in relation to the NAV as of the time the 
NAV is calculated, discount and premium information of the Bid-Ask 
Price against the NAV, the prospectus, the various holdings of the 
Trust, the Basket Amount, and other applicable information. During 
regular trading hours, major market data vendors disseminate at least 
every 15 seconds the values of the GSCI, GSCI-ER, and Index.\19\ In 
addition, NYSE disseminates through the facilities of CTA an updated 
ITV on a per-Share basis at least every 15 seconds during the trading 
day. The Trustee calculates and simultaneously disseminates once each 
business day to all market participants the NAV per Share. Also, 
futures quotes and last-sale information for the commodities underlying 
the Index and the CERFs are widely disseminated through a variety of 
market data vendors.\20\
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \19\ See NYSE Proposal, 71 FR at 21084.
    \20\ See id.
---------------------------------------------------------------------------

    The Commission notes that, if the Shares should be delisted by the 
original listing exchange, the Exchange would no longer have authority 
to trade the Shares pursuant to this order.
    In support of this proposal, the Exchange has represented that its 
surveillance procedures are adequate to address any concerns associated 
with the trading of the Shares on Nasdaq on a UTP basis. This approval 
order is conditioned on the Exchange's adherence to this 
representation. In the Pilot Order,\21\ the Commission noted that 
exchanges that trade commodity-related securities generally have in 
place surveillance agreements with markets that trade the underlying 
securities. In its proposal to establish the pilot trading period, the 
Exchange represented that it was in the process of completing these 
surveillance arrangements and expected to do so ``in the near future.'' 
The Exchange recently provided the Commission with evidence that it has 
completed these surveillance arrangements.
---------------------------------------------------------------------------

    \21\ See infra note 4.
---------------------------------------------------------------------------

    The Commission finds good cause for approving this proposal before 
the thirtieth day after the publication of notice thereof in the 
Federal Register. As noted above, the Commission previously found that 
the listing and trading of the Shares on NYSE is consistent with the 
Act and approved the trading of the Shares on Nasdaq pursuant to UTP on 
a pilot basis. The Commission presently is not aware of any regulatory 
issue that should cause it to revisit that finding or would preclude 
the continued trading of the Shares on the Exchange pursuant to UTP. 
Therefore, accelerating approval of this proposal should benefit 
investors by continuing, without undue delay, competition in the market 
for such Shares.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\22\ that the proposed rule change (SR-NASDAQ-2007-054) be, and it 
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------



    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-11182 Filed 6-8-07; 8:45 am]
BILLING CODE 8010-01-P