Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to Elimination of Calculation Methodology From Generic Listing Standards, 54506-54508 [E7-18821]
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54506
Federal Register / Vol. 72, No. 185 / Tuesday, September 25, 2007 / Notices
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56454; File No. SR–Phlx–
2007–43]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Order Granting
All submissions should refer to File
Accelerated Approval of a Proposed
Number SR–NYSEArca–2007–89. This
Rule Change, as Modified by
file number should be included on the
subject line if e-mail is used. To help the Amendment No. 1 Thereto, Relating to
Elimination of Calculation
Commission process and review your
Methodology From Generic Listing
comments more efficiently, please use
only one method. The Commission will Standards
post all comments on the Commission’s September 18, 2007.
Internet Web site (https://www.sec.gov/
Pursuant to section 19(b)(1) of the
rules/sro.shtml). Copies of the
Securities Exchange Act of 1934
submission, all subsequent
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
amendments, all written statements
notice is hereby given that on June 15,
with respect to the proposed rule
2007, the Philadelphia Stock Exchange,
Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with
change that are filed with the
the Securities and Exchange
Commission, and all written
Commission (‘‘Commission’’) the
communications relating to the
proposed rule change as described in
proposed rule change between the
Commission and any person, other than Items I and II below, which Items have
been substantially prepared by Phlx. On
those that may be withheld from the
September 6, 2007, the Exchange
public in accordance with the
submitted Amendment No. 1 to the
provisions of 5 U.S.C. 552, will be
proposed rule change. This order
available for inspection and copying in
provides notice of the proposed rule
the Commission’s Public Reference
change, as modified by Amendment No.
Room, 100 F Street, NE., Washington,
1, and approves the proposed rule
DC 20549, on official business days
change as amended on an accelerated
between the hours of 10 a.m. and 3 p.m.
basis.
Copies of such filing also will be
I. Self-Regulatory Organization’s
available for inspection and copying at
Statement of the Terms of Substance of
the principal office of NYSE Arca. All
the Proposed Rule Change
comments received will be posted
without change; the Commission does
Phlx proposes to amend its existing
not edit personal identifying
Rule 803 (Criteria for Listing—Tier I) to
information from submissions. You
eliminate the requirement that indexes
should submit only information that
underlying certain Trust Shares and
you wish to make available publicly. All Index Fund Shares (collectively, ‘‘ETFs’’
or ‘‘Exchange Traded Funds’’) 3 are
submissions should refer to File
calculated following a specific
Number SR–NYSEArca–2007–89 and
methodology.
should be submitted on or before
The text of the proposed rule change
October 16, 2007.
is available at Phlx, the Commission’s
For the Commission, by the Division of
Public Reference Room, and https://
Market Regulation, pursuant to delegated
www.phlx.com.
14
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–18819 Filed 9–24–07; 8:45 am]
yshivers on PROD1PC62 with NOTICES
BILLING CODE 8010–01–P
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Phlx 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. Phlx has prepared
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See definitions of Trust Shares and Index Fund
Shares in Phlx Rules 803(i) and 803(l), respectively.
2 17
14 17
CFR 200.30–3(a)(12).
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summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend Phlx Rule 803
(Criteria for Listing—Tier I) regarding
Phlx’s generic listing standards
pursuant to Rule 19b–4(e) under the Act
(‘‘Rule 19b–4(e)’’) 4 for ETFs to eliminate
the requirement that an underlying
index be calculated following one of
five specified methodologies.
The Exchange currently has generic
listing standards which permit the
listing and trading of various ETFs
subject to the procedures contained in
Rule 19b–4(e) (without the need to file
a rule change for each security). By
amending its generic listing standards,
the Exchange intends to reduce the time
frame for listing ETFs based on indexes
that utilize methodologies not currently
identified in the generic listing
standards and thereby reduce the
burdens on issuers and other market
participants.
The generic listing standards for ETFs
presently provide that their underlying
indexes be calculated based on the
market capitalization, modified market
capitalization, price, equal-dollar, or
modified equal-dollar weighting
methodology.5 The proposed rule
change would eliminate this standard
and, as a result, the Exchange would no
longer consider index methodology in
its review of an ETF’s eligibility for
listing and trading pursuant to Rule
19b–4(e).
The Exchange notes that, as the
market for Trust Shares and Index Fund
Shares in particular and exchange
traded funds in general has grown and
the relevant product lines have matured,
there has been an increase in the
number of methodologies used to
calculate the underlying indexes. To
accommodate this development, the
Exchange proposes to eliminate any
calculation methodology for the
underlying index from generic listing
standards, as has been done by other
exchanges, including the American
Stock Exchange LLC (‘‘Amex’’).6
4 17
CFR 240.19b–4(e).
Phlx Rule 803(i)(11)(d) and (l)(6)(D)
regarding Trust Shares and Index Fund Shares,
respectively.
6 See Securities Exchange Act Release No. 55544
(March 27, 2007), 72 FR 15923 (April 3, 2007) (SR–
Amex–2007–07) (order approving the elimination
from the Amex’s generic listing standards for
portfolio depositary receipts of the requirement that
5 See
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Federal Register / Vol. 72, No. 185 / Tuesday, September 25, 2007 / Notices
yshivers on PROD1PC62 with NOTICES
The Exchange believes that the
proposed elimination of any index
methodology from its generic listing
standards for ETFs would potentially
reduce the time frame for bringing
products based on indexes with
nontraditional weighting techniques to
the market, thereby reducing the
burdens on issuers and other market
participants and promoting competition.
The Exchange notes that the indexes
underlying ETFs would continue to be
subject to the other requirements of the
generic listing standards pursuant to
Rule 19b–4(e). For example, the generic
listing standards for Trust Shares will
continue to require, without limitation:
that the most heavily weighted
component stock of an index not exceed
25% of the weight of the index where
the index is comprised solely of NonU.S. Component Stocks or of both U.S.
Component Stocks and Non-U.S.
Component Stocks (‘‘Combination
Stocks’’) or 30% where the index is
comprised solely of U.S. Component
Stocks; 7 that the five most heavily
weighted component stocks of an index
not exceed 60% of the weight of the
index where the index is comprised
solely of Non-U.S. Component Stocks or
of Combination Stocks or 65% of the
weight of the index where the index is
comprised solely of U.S. Component
Stocks; and that an index include a
minimum of 20 component stocks
where the index is comprised solely of
Non-U.S. Component Stocks or of
Combination Stocks or 13 component
stocks where the index is comprised
solely of U.S. Component Stocks.8 The
generic listing standards for Index Fund
Shares will continue to have similar
requirements that are dependent on
whether the index is comprised of U.S.
Component Stocks, Non-U.S.
Component Stocks, or Combination
Stocks.9 The Exchange believes that
such requirements will ensure that the
indexes are sufficiently diversified, and
that their components are sufficiently
liquid to underlie the ETFs.
an eligible index be calculated and weighted
following a specified methodology).
7 A U.S. Component Stock is an equity security
that is registered under Sections 12(b) or 12(g) of
the Act or an American Depository Receipt (ADR)
the underlying equity security of which is
registered under Sections 12(b) or 12(g) of the Act.
A Non-U.S. Component Stock is an equity security
that is not registered under Sections 12(b) or 12(g)
of the Act and that is issued by an entity that (a)
is not organized, domiciled or incorporated in the
United States, and (b) is an operating company
(including real estate investment trusts (REITs) and
income trusts, but excluding investment trusts, unit
trusts, mutual funds, and derivatives). See Phlx
Rules 803(i)(1) and 803(l)(2).
8 See Phlx Rule 803(i)(11)(a) and (b).
9 See Phlx Rule 803(l)(6)(A) and (B).
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of section 6 of the Act,10
in general, and with section 6(b)(5) of
the Act,11 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 a free
and open market and a national market
system, and, in general, to protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would result
in any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were neither
solicited nor received.
54507
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, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of Phlx. 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–Phlx–2007–43 and should
be submitted on or before October 16,
2007.
IV. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
III. Solicitation of Comments
After careful consideration, the
Interested persons are invited to
Commission finds that the proposed
submit written data, views, and
rule change is consistent with the
arguments concerning the foregoing,
requirements of the Act and the rules
including whether the proposed rule
and regulations thereunder applicable to
change is consistent with the Act.
a national securities exchange 12 and, in
Comments may be submitted by any of
particular, the requirements of section 6
the following methods:
of the Act.13 Specifically, the
Electronic Comments
Commission finds that the proposed
rule change is consistent with section
• Use the Commission’s Internet
6(b)(5) of the Act,14 which requires,
comment form (https://www.sec.gov/
among other things, that the rules of a
rules/sro.shtml); or
national securities exchange be
• Send an e-mail to ruledesigned to prevent fraudulent and
comments@sec.gov. Please include File
manipulative acts and practices, to
Number SR–Phlx–2007–43 on the
promote just and equitable principles of
subject line.
trade, to remove impediments to and
Paper Comments
perfect the mechanism of a free and
• Send paper comments in triplicate
open market and a national market
to Nancy M. Morris, Secretary,
system, and, in general, to protect
Securities and Exchange Commission,
investors and the public interest.
100 F Street, NE., Washington, DC
As the market for ETFs has grown, the
20549–1090.
variety of weighting and calculation
methodologies for underlying indexes
All submissions should refer to File
has also expanded, limiting the
Number SR–Phlx–2007–43. This file
applicability of Phlx’s current generic
number should be included on the
subject line if e-mail is used. To help the ETF listing standards. The Commission
believes that the proposed elimination
Commission process and review your
of index methodology from its generic
comments more efficiently, please use
only one method. The Commission will listing standards for ETFs would
post all comments on the Commission’s potentially reduce the time frame for
bringing ETFs based on indexes with
Internet Web site (https://www.sec.gov/
nontraditional weighting techniques to
rules/sro.shtml). Copies of the
submission, all subsequent
12 In approving this proposed rule change, the
amendments, all written statements
Commission has considered the proposed rule’s
with respect to the proposed rule
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
13 15 U.S.C. 78f.
14 15 U.S.C. 78f(b)(5).
10 15
U.S.C. 78f.
11 15 U.S.C. 78f(b)(5).
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54508
Federal Register / Vol. 72, No. 185 / Tuesday, September 25, 2007 / Notices
the market, thereby reducing the
burdens on issuers and other market
participants and promoting competition,
without compromising investor
protection.
The Commission notes that Phlx’s
generic listing standards for Trust
Shares and Index Fund Shares based on
domestic indexes or portfolios will
continue to require, without limitation,
that the most heavily weighted
component stock of an index not exceed
30% of the weight of the index, the five
most heavily weighted component
stocks of an index not exceed 65% of
the weight of the index, and that an
index include a minimum of 13
component stocks.15 Therefore, the
Commission believes that indexes
underlying ETFs will continue to be
sufficiently broad-based in scope to
minimize potential manipulation.
Acceleration
The Commission finds good cause for
approving the proposed rule change, as
amended, prior to the 30th day after the
date of publication of the notice of filing
thereof in the Federal Register. The
Commission notes that Phlx’s proposal
is substantially similar to a proposed
rule change of another exchange
recently approved by the Commission.16
Phlx’s proposal does not raise any novel
regulatory issues and, therefore, the
Commission believes that good cause
exists for approving the filing in an
expedited basis.
Therefore, the Commission finds good
cause, consistent with section 19(b)(2)
of the Act,17 to approve the proposed
rule change as amended on an
accelerated basis.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,18 that the
proposed rule change (SR–Phlx–2007–
43), as modified by Amendment No. 1,
be, and it hereby is, approved on an
accelerated basis.
yshivers on PROD1PC62 with NOTICES
15 See
Phlx Rules 803(i)(11)(a) and 803(l)(6)(A).In
addition, on July 11, 2007, the Commission
approved generic listing standards for ETFs based
on international or global indexes. See Securities
Exchange Act Release No. 56049 (July 11, 2007), 72
FR 39121 (July 17, 2007) (SR–Phlx–2007–20). These
newly adopted generic listing standards require,
without limitation, that the most heavily weighted
component stock of an index not exceed 25% of the
weight of the index, the five most heavily weighted
component stocks of an index not exceed 60% of
the weight of the index, and that an index include
a minimum of 20 component stocks.
16 See supra note 6.
17 15 U.S.C. 78s(b)(2).
18 Id.
19 17 CFR 200.30–3(a)(12).
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15:20 Sep 24, 2007
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For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.19
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–18821 Filed 9–24–07; 8:45 am]
The number assigned to this disaster
for physical damage is 11042.
(Catalog of Federal Domestic Assistance
Number 59008)
BILLING CODE 8010–01–P
Roger B. Garland,
Acting Associate Administrator for Disaster
Assistance.
[FR Doc. E7–18887 Filed 9–24–07; 8:45 am]
SMALL BUSINESS ADMINISTRATION
BILLING CODE 8025–01–P
[Disaster Declaration #11042]
Iowa Disaster #IA–00012
DEPARTMENT OF STATE
U.S. Small Business
Administration.
ACTION: Notice.
[Public Notice 5941]
AGENCY:
SUMMARY: This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of IOWA (FEMA–1727–DR),
dated 09/14/2007.
Incident: Severe Storms and Flooding.
Incident Period: 08/17/2007 through
09/05/2007.
EFFECTIVE DATE: 09/14/2007.
Physical Loan Application Deadline
Date: 11/13/2007.
ADDRESSES: Submit completed loan
applications to:
U.S. Small Business Administration,
Processing and Disbursement Center,
14925 Kingsport Road, Fort Worth, TX
76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster
Assistance,U.S. Small Business
Administration, 409 3rd Street, SW.,
Suite 6050, Washington, DC 20416.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
09/14/2007, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications at the
address listed above or other locally
announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties:
Allamakee, Appanoose, Boone,
Calhoun, Cherokee, Davis,
Humboldt, Mahaska, Palo Alto,
Pocahontas, Van Buren, Wapello.
Wayne, Webster.
The Interest Rates are:
Percent
Other (Including Non-Profit Organizations) With Credit Available
Elsewhere: ................................
Businesses and Non-Profit Organizations Without Credit Available Elsewhere: ........................
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5.250
4.000
Department of State Performance
Review Board Members (at Large
Board)
In accordance with section 4314(c)(4)
of the Civil Service Reform Act of 1978
(Pub. L. 95–454), the Executive
Resources Board of the Department of
State has appointed the following
individuals to the Department of State
Performance Review Board (At-Large):
Richard L. Greene, Deputy Director,
Office of the Director of U.S. Foreign
Assistance, Department of State;
Glen H. Johnson, Office Director, Office
of Verification Operations, Bureau of
Verification, Compliance and
Implementation, Department of State;
Catherine J. Russell, Associate Director
for Management, Office of the
Executive Director, Foreign Service
Institute, Department of State;
James H. Thessin, Deputy Legal Adviser,
Office of the Legal Adviser,
Department of State;
Linda Thomas-Greenfield, Principal
Deputy Assistant Secretary, Bureau of
African Affairs, Department of State;
(Outside Member).
Dated: September 16, 2007.
Heather M. Hodges,
Acting Director General of the Foreign Service
and Director of Human Resources,
Department of State.
[FR Doc. E7–18845 Filed 9–24–07; 8:45 am]
BILLING CODE 4710–15–P
TENNESSEE VALLEY AUTHORITY
Sunshine Act Meeting
Tennessee
Valley Authority (Meeting No. 07–05).
TIME AND DATE: 9 a.m. CDT, September
27, 2007, Huntsville Marriott, 5
Tranquility Base, Huntsville, Alabama
35805.
AGENCY HOLDING THE MEETING:
Agenda
Old Business
Approval of minutes of August 1,
2007, Board Meeting.
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]]>Agencies
[Federal Register Volume 72, Number 185 (Tuesday, September 25, 2007)]
[Notices]
[Pages 54506-54508]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-18821]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56454; File No. SR-Phlx-2007-43]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Notice of Filing and Order Granting Accelerated Approval of a Proposed
Rule Change, as Modified by Amendment No. 1 Thereto, Relating to
Elimination of Calculation Methodology From Generic Listing Standards
September 18, 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 June 15, 2007, the Philadelphia Stock Exchange, Inc. (``Phlx'' 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 Phlx. On
September 6, 2007, the Exchange submitted Amendment No. 1 to the
proposed rule change. This order provides notice of the proposed rule
change, as modified by Amendment No. 1, and approves the proposed rule
change as amended 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
Phlx proposes to amend its existing Rule 803 (Criteria for
Listing--Tier I) to eliminate the requirement that indexes underlying
certain Trust Shares and Index Fund Shares (collectively, ``ETFs'' or
``Exchange Traded Funds'') \3\ are calculated following a specific
methodology.
---------------------------------------------------------------------------
\3\ See definitions of Trust Shares and Index Fund Shares in
Phlx Rules 803(i) and 803(l), respectively.
---------------------------------------------------------------------------
The text of the proposed rule change is available at Phlx, the
Commission's Public Reference Room, and https://www.phlx.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, Phlx 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. Phlx has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend Phlx Rule 803
(Criteria for Listing--Tier I) regarding Phlx's generic listing
standards pursuant to Rule 19b-4(e) under the Act (``Rule 19b-4(e)'')
\4\ for ETFs to eliminate the requirement that an underlying index be
calculated following one of five specified methodologies.
---------------------------------------------------------------------------
\4\ 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------
The Exchange currently has generic listing standards which permit
the listing and trading of various ETFs subject to the procedures
contained in Rule 19b-4(e) (without the need to file a rule change for
each security). By amending its generic listing standards, the Exchange
intends to reduce the time frame for listing ETFs based on indexes that
utilize methodologies not currently identified in the generic listing
standards and thereby reduce the burdens on issuers and other market
participants.
The generic listing standards for ETFs presently provide that their
underlying indexes be calculated based on the market capitalization,
modified market capitalization, price, equal-dollar, or modified equal-
dollar weighting methodology.\5\ The proposed rule change would
eliminate this standard and, as a result, the Exchange would no longer
consider index methodology in its review of an ETF's eligibility for
listing and trading pursuant to Rule 19b-4(e).
---------------------------------------------------------------------------
\5\ See Phlx Rule 803(i)(11)(d) and (l)(6)(D) regarding Trust
Shares and Index Fund Shares, respectively.
---------------------------------------------------------------------------
The Exchange notes that, as the market for Trust Shares and Index
Fund Shares in particular and exchange traded funds in general has
grown and the relevant product lines have matured, there has been an
increase in the number of methodologies used to calculate the
underlying indexes. To accommodate this development, the Exchange
proposes to eliminate any calculation methodology for the underlying
index from generic listing standards, as has been done by other
exchanges, including the American Stock Exchange LLC (``Amex'').\6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 55544 (March 27,
2007), 72 FR 15923 (April 3, 2007) (SR-Amex-2007-07) (order
approving the elimination from the Amex's generic listing standards
for portfolio depositary receipts of the requirement that an
eligible index be calculated and weighted following a specified
methodology).
---------------------------------------------------------------------------
[[Page 54507]]
The Exchange believes that the proposed elimination of any index
methodology from its generic listing standards for ETFs would
potentially reduce the time frame for bringing products based on
indexes with nontraditional weighting techniques to the market, thereby
reducing the burdens on issuers and other market participants and
promoting competition. The Exchange notes that the indexes underlying
ETFs would continue to be subject to the other requirements of the
generic listing standards pursuant to Rule 19b-4(e). For example, the
generic listing standards for Trust Shares will continue to require,
without limitation: that the most heavily weighted component stock of
an index not exceed 25% of the weight of the index where the index is
comprised solely of Non-U.S. Component Stocks or of both U.S. Component
Stocks and Non-U.S. Component Stocks (``Combination Stocks'') or 30%
where the index is comprised solely of U.S. Component Stocks; \7\ that
the five most heavily weighted component stocks of an index not exceed
60% of the weight of the index where the index is comprised solely of
Non-U.S. Component Stocks or of Combination Stocks or 65% of the weight
of the index where the index is comprised solely of U.S. Component
Stocks; and that an index include a minimum of 20 component stocks
where the index is comprised solely of Non-U.S. Component Stocks or of
Combination Stocks or 13 component stocks where the index is comprised
solely of U.S. Component Stocks.\8\ The generic listing standards for
Index Fund Shares will continue to have similar requirements that are
dependent on whether the index is comprised of U.S. Component Stocks,
Non-U.S. Component Stocks, or Combination Stocks.\9\ The Exchange
believes that such requirements will ensure that the indexes are
sufficiently diversified, and that their components are sufficiently
liquid to underlie the ETFs.
---------------------------------------------------------------------------
\7\ A U.S. Component Stock is an equity security that is
registered under Sections 12(b) or 12(g) of the Act or an American
Depository Receipt (ADR) the underlying equity security of which is
registered under Sections 12(b) or 12(g) of the Act. A Non-U.S.
Component Stock is an equity security that is not registered under
Sections 12(b) or 12(g) of the Act and that is issued by an entity
that (a) is not organized, domiciled or incorporated in the United
States, and (b) is an operating company (including real estate
investment trusts (REITs) and income trusts, but excluding
investment trusts, unit trusts, mutual funds, and derivatives). See
Phlx Rules 803(i)(1) and 803(l)(2).
\8\ See Phlx Rule 803(i)(11)(a) and (b).
\9\ See Phlx Rule 803(l)(6)(A) and (B).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of section 6 of the Act,\10\ in general, and with
section 6(b)(5) of the Act,\11\ 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 a free
and open market and a national market system, and, in general, to
protect investors and the public interest.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(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 would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-Phlx-2007-43 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-Phlx-2007-43. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of Phlx. 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-Phlx-2007-43 and should be
submitted on or before October 16, 2007.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
After careful consideration, 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\ and, in particular, the requirements of section 6 of the
Act.\13\ Specifically, the Commission finds that the proposed rule
change is consistent with section 6(b)(5) of the Act,\14\ which
requires, among other things, that the rules of a national securities
exchange be 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.
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\12\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(5).
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As the market for ETFs has grown, the variety of weighting and
calculation methodologies for underlying indexes has also expanded,
limiting the applicability of Phlx's current generic ETF listing
standards. The Commission believes that the proposed elimination of
index methodology from its generic listing standards for ETFs would
potentially reduce the time frame for bringing ETFs based on indexes
with nontraditional weighting techniques to
[[Page 54508]]
the market, thereby reducing the burdens on issuers and other market
participants and promoting competition, without compromising investor
protection.
The Commission notes that Phlx's generic listing standards for
Trust Shares and Index Fund Shares based on domestic indexes or
portfolios will continue to require, without limitation, that the most
heavily weighted component stock of an index not exceed 30% of the
weight of the index, the five most heavily weighted component stocks of
an index not exceed 65% of the weight of the index, and that an index
include a minimum of 13 component stocks.\15\ Therefore, the Commission
believes that indexes underlying ETFs will continue to be sufficiently
broad-based in scope to minimize potential manipulation.
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\15\ See Phlx Rules 803(i)(11)(a) and 803(l)(6)(A).In addition,
on July 11, 2007, the Commission approved generic listing standards
for ETFs based on international or global indexes. See Securities
Exchange Act Release No. 56049 (July 11, 2007), 72 FR 39121 (July
17, 2007) (SR-Phlx-2007-20). These newly adopted generic listing
standards require, without limitation, that the most heavily
weighted component stock of an index not exceed 25% of the weight of
the index, the five most heavily weighted component stocks of an
index not exceed 60% of the weight of the index, and that an index
include a minimum of 20 component stocks.
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Acceleration
The Commission finds good cause for approving the proposed rule
change, as amended, prior to the 30th day after the date of publication
of the notice of filing thereof in the Federal Register. The Commission
notes that Phlx's proposal is substantially similar to a proposed rule
change of another exchange recently approved by the Commission.\16\
Phlx's proposal does not raise any novel regulatory issues and,
therefore, the Commission believes that good cause exists for approving
the filing in an expedited basis.
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\16\ See supra note 6.
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Therefore, the Commission finds good cause, consistent with section
19(b)(2) of the Act,\17\ to approve the proposed rule change as amended
on an accelerated basis.
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\17\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-Phlx-2007-43), as modified
by Amendment No. 1, be, and it hereby is, approved on an accelerated
basis.
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\18\ Id.
\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
Florence E. Harmon,
Deputy Secretary.9
[FR Doc. E7-18821 Filed 9-24-07; 8:45 am]
BILLING CODE 8010-01-P
