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]

Download as PDF 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 (http://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 http:// 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). VerDate Aug<31>2005 15:20 Sep 24, 2007 Jkt 211001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 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 E:\FR\FM\25SEN1.SGM 25SEN1 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). VerDate Aug<31>2005 15:20 Sep 24, 2007 Jkt 211001 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 (http://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 (http://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). PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 E:\FR\FM\25SEN1.SGM 25SEN1 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). VerDate Aug<31>2005 15:20 Sep 24, 2007 Jkt 211001 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: ........................ PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 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. E:\FR\FM\25SEN1.SGM 25SEN1

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]


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

    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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