Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade Shares of the iShares FTSE/Xinhua China 25 Index Fund Pursuant to Unlisted Trading Privileges, 57078-57081 [E7-19670]

Download as PDF 57078 Federal Register / Vol. 72, No. 193 / Friday, October 5, 2007 / Notices the meeting should contact Ms. Tull using the information below. Contact Information: Ashley M. Tull, e-mail: amt1@nrc.gov, telephone: (301) 415–5294 or (918) 488–0552. Conduct of the Meeting Leon S. Malmud, M.D., will chair the meeting. Dr. Malmud will conduct the meeting in a manner that will facilitate the orderly conduct of business. The following procedures apply to public participation in the meeting: 1. Persons who wish to provide a written statement should submit an electronic copy to Ms. Tull at the contact information listed above. All submittals must be received by October 17, 2007, and must pertain to the topic on the agenda for the meeting. 2. Questions and comments from members of the public will be permitted during the meeting, at the discretion of the Chairman. 3. The transcript and written comments will be available for inspection on NRC’s web site (http:// www.nrc.gov) and at the NRC Public Document Room, 11555 Rockville Pike, Rockville, MD 20852–2738, telephone (800) 397–4209, on or about January 23, 2008. Minutes of the meeting will be available on or about December 7, 2007. 4. Persons who require special services, such as those for the hearing impaired, should notify Ms. Tull of their planned attendance. This meeting will be held in accordance with the Atomic Energy Act of 1954, as amended (primarily Section 161a); the Federal Advisory Committee Act (5 U.S.C. App); and the Commission’s regulations in Title 10, U.S. Code of Federal Regulations, part 7. Dated at Rockville, Maryland this 1st day of October 2007. J. Samuel Walker, Acting Secretary of the Commission. [FR Doc. E7–19685 Filed 10–4–07; 8:45 am] BILLING CODE 7590–01–P RAILROAD RETIREMENT BOARD yshivers on PROD1PC62 with NOTICES Proposed Collection; Comment Request Summary: In accordance with the requirement of Section 3506 (c)(2)(A) of the Paperwork Reduction Act of 1995 which provides opportunity for public comment on new or revised data collections, the Railroad Retirement Board (RRB) will publish periodic summaries of proposed data collections. Comments are invited on: (a) Whether the proposed information collection is necessary for the proper performance of the functions of the agency, including VerDate Aug<31>2005 15:33 Oct 04, 2007 Jkt 214001 whether the information has practical utility; (b) the accuracy of the RRB’s estimate of the burden of the collection of the information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden related to the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. Title and purpose of information collection: Report of Medicaid State Office on Beneficiary’s Buy-In Status; OMB 3220–0185. Under Section 7(d) of the Railroad Retirement Act, the RRB administers the Medicare program for persons covered by the railroad retirement system. Under Section 1843 of the Social Security Act, states may enter into ‘‘buy-in agreements’’ with the Secretary of Health and Human Services for the purpose of enrolling certain groups of low-income individuals under the Medicare medical insurance (Part B) program and paying the premiums for their insurance coverage. Generally, these individuals are categorically needy under Medicaid and meet the eligibility requirements for Medicare Part B. States can also include in their buy-in agreements, individuals who are eligible for medical assistance only. The RRB uses Form RL–380–F, Report to State Medicaid Office, to obtain information needed to determine if certain railroad beneficiaries are entitled to receive Supplementary Medical Insurance program coverage under a state buy-in agreement in states in which they reside. Completion of Form RL–380-F is voluntary. One response is received from each respondent. At the request of various state Medicaid offices, the RRB proposes revisions to Form RL–380-F to add items requesting a beneficiary’s Part A and Part B effective date. The new information will assist them in locating pertinent records of the subject beneficiary. Other minor non-burden impacting editorial changes are proposed. The estimated completion time for Form RL–380-F remains unchanged at 10 minutes per response. The RRB estimates that approximately 600 responses are received annually. Additional Information or Comments: To request more information or to obtain a copy of the information collection justification, forms, and/or supporting material, please call the RRB Clearance Officer at (312) 751–3363 or send an e-mail request to Charles.Mierzwa@RRB.GOV. Comments regarding the information collection should be addressed to Ronald J. Hodapp, Railroad Retirement PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 Board, 844 North Rush Street, Chicago, Illinois 60611–2092 or send an e-mail to Ronald.Hodapp@RRB.GOV. Written comments should be received within 60 days of this notice. Charles Mierzwa, Clearance Officer. [FR Doc. E7–19709 Filed 10–4–07; 8:45 am] BILLING CODE 7905–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56559; File No. SR–CBOE– 2007–103] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade Shares of the iShares FTSE/Xinhua China 25 Index Fund Pursuant to Unlisted Trading Privileges September 27, 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 September 6, 2007, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ 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 The Exchange proposes to trade on the CBOE Stock Exchange (‘‘CBSX’’) shares of the iShares FTSE/Xinhua China 25 Index Fund (‘‘Fund’’) pursuant to unlisted trading privileges (‘‘UTP’’). The text of the proposed rule change is available at CBOE, the Commission’s Public Reference Room, and http:// www.cboe.org/legal. 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 1 15 2 17 E:\FR\FM\05OCN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 05OCN1 Federal Register / Vol. 72, No. 193 / Friday, October 5, 2007 / Notices 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 yshivers on PROD1PC62 with NOTICES 1. Purpose The Exchange proposes to trade shares of the Fund on CBSX pursuant to UTP. The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE/Xinhua China 25 Index (‘‘Index’’). The Index consists of 25 of the largest and most liquid companies in the Chinese equity market that are available to international investors. The Commission previously approved the original listing and trading of the Fund shares on the New York Stock Exchange LLC (‘‘NYSE’’).3 Subsequently, the Commission approved the listing and trading of the Fund shares on the Pacific Exchange, Inc.,4 which is now known as NYSE Arca, Inc. (‘‘NYSE Arca’’), and the trading of the Fund shares pursuant to UTP on the American Stock Exchange LLC (‘‘Amex’’).5 The Exchange deems the Fund shares to be equity securities, thus rendering trading in the Fund shares subject to the Exchange’s existing rules governing the trading of equity securities. The trading hours for the Fund shares on CBSX will be from 8:15 a.m. until 3:15 p.m. Central Time or 9:15 a.m until 4:15 p.m. Eastern Time (‘‘ET’’). Quotations for and last-sale information regarding the Fund shares are disseminated through the Consolidated Quotation System. The value of the Index is updated intraday on a real-time basis as individual component securities of the Index change in price. The intraday value of the Index is disseminated at least every 60 seconds from 8:15 p.m. until 3 a.m. ET.6 In addition, a value for the Index is disseminated once each trading day, 3 See Securities Exchange Act Release No. 50505 (October 8, 2004), 69 FR 61280 (October 15, 2004) (SR–NYSE–2004–55). 4 See Securities Exchange Act Release No. 50799 (December 6, 2004), 69 FR 72242 (December 13, 2004) (SR–PCX–2004–99). 5 See Securities Exchange Act Release No. 50800 (December 6, 2004), 69 FR 72228 (December 13, 2004) (SR–Amex–2004–85). 6 E-mail from Angelo Evangelou, Assistant General Counsel, CBOE, to Rebekah Goshorn, Division of Market Regulation, Commission, dated September 19, 2007 (correcting the timing of the dissemination of the intraday value of the Index). VerDate Aug<31>2005 15:33 Oct 04, 2007 Jkt 214001 based on closing prices in the relevant exchange market.7 To provide updated information relating to the Fund for use by investors, professionals, and persons wishing to create or redeem the shares, NYSE disseminates through the facilities of the Consolidated Tape Association the Intraday Indicative Value (‘‘IIV’’) for the Fund, as calculated by a securities information provider. The IIV is disseminated on a per-share basis every 15 seconds during regular NYSE trading hours.8 In connection with the trading of the Fund shares, the Exchange will inform members and member organizations in an Information Circular of the special characteristics and risks associated with trading the Fund shares, including how they are created and redeemed, the prospectus or product description delivery requirements applicable to the Fund, applicable Exchange rules, how information about the value of the underlying Index is disseminated, and trading information. In addition, before a member recommends a transaction in the Fund, the member must determine that the Fund is suitable for the customer, as required by CBOE Rule 53.6. The Exchange intends to utilize its existing surveillance procedures applicable to exchange-traded funds to monitor trading in the Fund shares. CBOE represents that these procedures are adequate to monitor Exchange trading of the Fund shares. With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Fund shares. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Fund shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities comprising the Index and/or the financial instruments of the Fund; (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present; or (3) trading of the Fund shares has been halted or suspended in the primary market.9 In addition, trading in the Fund shares will be subject to trading halts caused by extraordinary market volatility pursuant 7 See supra note 4, 69 FR at 72245 (providing a more detailed discussion of the calculation and dissemination of the Index value). 8 See supra note 4, 69 FR at 72246. 9 See CBOE Rule 6.3(a). E-mail from Angelo Evangelou, Assistant General Counsel, CBOE, to Rebekah Goshorn, Division of Market Regulation, Commission, dated September 27, 2007 (clarification on trading halts). PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 57079 to the Exchange’s ‘‘circuit breaker’’ rule.10 UTP trading in the Fund is also governed by the trading halts provisions of CBOE Rule 52.3 relating to temporary interruptions in the calculation or wide dissemination of the IIV or the value of the underlying Index. 2. Statutory Basis CBOE believes that the proposed rule change is consistent with the Act, the rules and regulations thereunder applicable to a national securities exchange, and, in particular, the requirements of Section 6(b) of the Act.11 Specifically, CBOE believes that the proposed rule change is consistent with the Section 6(b)(5) of the Act 12 in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and to protect investors and the public interest. In addition, CBOE believes that the proposal is consistent with Rule 12f–5 under the Act 13 because it deems the Fund shares to be equity securities, thus rendering trading in the Fund shares subject to the Exchange’s existing rules governing the trading of equity securities. 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 10 See CBOE Rule 6.3B. U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(5). 13 17 CFR 240.12f–5. 11 15 E:\FR\FM\05OCN1.SGM 05OCN1 57080 Federal Register / Vol. 72, No. 193 / Friday, October 5, 2007 / Notices equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market Paper Comments and a national market system, and, in • Send paper comments in triplicate general, to protect investors and the to Nancy M. Morris, Secretary, public interest. The Commission Securities and Exchange Commission, believes that this proposal should 100 F Street, NE., Washington, DC benefit investors by increasing 20549–1090. competition among markets that trade shares of the Fund. All submissions should refer to File In addition, the Commission finds Number SR–CBOE–2007–103. This file that the proposal is consistent with number should be included on the 16 subject line if e-mail is used. To help the Section 12(f) of the Act, which permits an exchange to trade, pursuant to UTP, Commission process and review your a security that is listed and registered on comments more efficiently, please use 17 only one method. The Commission will another exchange. The Commission post all comments on the Commission’s notes that it previously approved the listing and trading of the shares on Internet Web site (http://www.sec.gov/ NYSE and NYSE Arca 18 and trading of rules/sro.shtml). Copies of the the Fund shares pursuant to UTP on submission, all subsequent Amex.19 The Commission also finds that amendments, all written statements the proposal is consistent with Rule with respect to the proposed rule 12f–5 under the Act,20 which provides change that are filed with the that an exchange shall not extend UTP Commission, and all written to a security unless the exchange has in communications relating to the effect a rule or rules providing for proposed rule change between the Commission and any person, other than transactions in the class or type of security to which the exchange extends those that may be withheld from the UTP. The Exchange has represented that public in accordance with the it meets this requirement because it provisions of 5 U.S.C. 552, will be deems the Fund shares to be equity available for inspection and copying in securities, thus rendering trading in the Commission’s Public Reference such shares subject to the Exchange’s Room, 100 F Street, NE., Washington, existing rules governing the trading of DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. equity securities. The Commission further believes that Copies of such filing also will be the proposal is consistent with Section available for inspection and copying at 11A(a)(1)(C)(iii) of the Act,21 which sets the principal office of CBOE. All forth Congress’ finding that it is in the comments received will be posted public interest and appropriate for the without change; the Commission does protection of investors and the not edit personal identifying maintenance of fair and orderly markets information from submissions. You to assure the availability to brokers, should submit only information that you wish to make available publicly. All dealers, and investors of information with respect to quotations for and submissions should refer to File transactions in securities. Quotations for Number SR–CBOE–2007–103 and and last-sale information regarding the should be submitted on or before Fund shares are disseminated through October 26, 2007. the Consolidated Quotation System. The IV. Commission’s Findings and Order value of the Index is disseminated every Granting Accelerated Approval of the 60 seconds from 8:15 p.m. until 3 a.m. Proposed Rule Change ET. In addition, NYSE disseminates through the facilities of the After careful review, the Commission Consolidated Tape Association the IIV finds that the proposed rule change, is consistent with the requirements of the 16 15 U.S.C. 78l(f). Act and the rules and regulations 17 Section 12(a) of the Act, 15 U.S.C. 78l(a), thereunder applicable to a national generally prohibits a broker-dealer from trading a 14 In particular, the securities exchange. security on a national securities exchange unless the security is registered on that exchange pursuant Commission finds that the proposed to Section 12 of the Act. Section 12(f) of the Act rule change is consistent with Section excludes from this restriction trading in any 6(b)(5) of the Act,15 which requires that security to which an exchange ‘‘extends UTP.’’ an exchange have rules designed, among When an exchange extends UTP to a security, it allows its members to trade the security as if it were other things, to promote just and yshivers on PROD1PC62 with NOTICES Number SR–CBOE–2007–103 on the subject line. 14 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). 15 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 15:33 Oct 04, 2007 Jkt 214001 listed and registered on the exchange even though it is not so listed and registered. 18 See supra notes 3 and 4. 19 See supra note 5. 20 17 CFR 240.12f–5. 21 15 U.S.C. 78k–1(a)(1)(C)(iii). PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 for the Fund on a per-share basis every 15 seconds during regular NYSE trading hours. Moreover, the proposal appears reasonably designed to halt trading in the Fund shares when transparency is impaired. UTP trading in the Fund is also governed by the trading halts provisions of CBOE Rule 52.3 relating to temporary interruptions in the calculation or wide dissemination of the IIV or the value of the underlying Index. If the listing market halts trading in the shares, or the IIV or the Index value is not being calculated or disseminated as required, the Exchange would halt trading in the shares. The Commission notes that, if the Fund shares should be delisted by the 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 made the following representations: (1) The Exchange represents that its surveillance procedures are adequate to monitor Exchange trading of the Fund shares. (2) The Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Fund shares, including suitability recommendation requirements. (3) The Exchange will require its members to deliver a prospectus or product description to investors purchasing shares of the Fund and will note this prospectus delivery requirement in the Information Circular. This approval order is based on the Exchange’s representations. The Commission finds good cause for approving this proposal before the thirtieth day after the publication of notice thereof in the Federal Register. As noted above, the Commission previously found that the listing and trading of the Fund shares on NYSE and NYSE Arca is consistent with the Act.22 In addition, the Commission notes that it previously approved the trading of the Fund shares on Amex pursuant to UTP.23 The Commission presently is not aware of any regulatory issue that should cause it to revisit these findings or would preclude the trading of the Fund shares on the Exchange pursuant to UTP. Therefore, accelerating approval of this proposal should benefit investors by creating, without undue delay, additional competition in the market for such shares. 22 See 23 See E:\FR\FM\05OCN1.SGM supra notes 3 and 4. supra note 5. 05OCN1 Federal Register / Vol. 72, No. 193 / Friday, October 5, 2007 / Notices V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act 24 that the proposed rule change (SR–CBOE–2007– 103), be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.25 Nancy M. Morris, Secretary. [FR Doc. E7–19670 Filed 10–4–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56585; File No. SR–FINRA– 2007–008] Self-Regulatory Organizations: Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to Amending the Definition of Office of Supervisory Jurisdiction in NASD Rule 3010(g)(1) To Exempt Locations That Solely Conduct Final Approval of Research Reports October 1, 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 August 30, 2007, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (f/k/a the National Association of Securities Dealers, Inc. (‘‘NASD’’)) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. yshivers on PROD1PC62 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend the definition of Office of Supervisory Jurisdiction (‘‘OSJ’’) in NASD Rule 3010(g)(1) to exempt locations that solely conduct final approval of research reports. The text of the proposed rule change is available at FINRA, the Commission’s Public Reference Room, and http:// www.finra.org. 24 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 15:33 Oct 04, 2007 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD Rule 3010(g)(1) defines OSJ to mean any office of a member at which any one or more of the following functions takes place: (a) Order execution and/or market making; (b) structuring of public offerings or private placements; (c) maintaining custody of customers’ funds and/or securities; (d) final acceptance (approval) of new accounts on behalf of the member; (e) review and endorsement of customer orders, pursuant to paragraph (d) above; (f) final approval of advertising or sales literature for use by persons associated with the member, pursuant to NASD Rule 2210(b)(1); or (g) responsibility for supervising the activities of persons associated with the member at one or more other branch offices of the member. In July 2006, amendments to the branch office definition under NASD Rule 3010(g)(2) went into effect (‘‘Uniform Branch Office Definition’’).3 The Uniform Branch Office Definition was developed collectively by FINRA (then known as NASD), the New York Stock Exchange (‘‘NYSE’’) and the North American Securities Administrators Association (‘‘NASAA’’) to establish a broad national standard. In conjunction with the new Uniform Branch Office Definition, a new Form BR was introduced to provide a more efficient, standardized method for members to register branch office locations. Although FINRA (then NASD) and NYSE sought to adopt consistent interpretations of the new Uniform Branch Office Definition, there are nevertheless different classifications of a location where final approval by a principal of research reports occurs. 3 See Securities Exchange Act Release No. 52403 (September 9, 2005), 70 FR 54782 (September 16, 2005) (SR–NASD–2003–104) (order approving Uniform Branch Office Definition). 25 17 VerDate Aug<31>2005 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA 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 IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. Jkt 214001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 57081 Under NASD rules, final review of advertising or sales literature (which includes research reports) makes a location an OSJ, and therefore a branch office. The NYSE rules, however, do not include an OSJ definition,4 and NYSE stated in Information Memo 06–13 that it deems a location where a member stations a Series 16 qualified supervisory analyst solely to review research reports as a ‘‘non-sales location,’’ which is an express exclusion from the Uniform Branch Office Definition.5 Because of the definition of OSJ set forth in NASD Rule 3010(g)(1), FINRA cannot classify such locations as ‘‘non-sales locations’’ under NASD rules.6 This inconsistency led an NYSE/ NASD rule harmonization industry committee to recommend that FINRA consider eliminating the OSJ definition to prevent such locations from being treated differently under NASD and NYSE rules. As a result, FINRA published Notice to Members 07–12 in February 2007 seeking comment on a rule harmonization proposal to eliminate the definition of OSJ from the NASD manual. In its place, FINRA proposed to adopt express definitions for the terms ‘‘supervisory branch office,’’ ‘‘limited supervisory branch office,’’ ‘‘non-supervisory branch office,’’ and ‘‘non-branch location.’’ 7 FINRA received twenty comments on the original proposal set forth in its Notice to Members 07–12. After reviewing the commenters’ concerns, FINRA has determined not to move forward with the broad proposal to eliminate the definition of OSJ and adopt new classifications for office locations. Instead, consistent with many commenters’ recommendation, FINRA is proposing a more streamlined proposal to amend the definition of OSJ in the NASD rules to exclude locations that solely conduct final approval of research reports, thereby enabling FINRA to deem such locations to be 4 See NYSE Rule 342 (Offices—Approval, Supervision and Control), which contains the Uniform Branch Office Definition. 5 See NYSE Information Memo 06–13 (March 22, 2006) (Joint Interpretive Guidance from NYSE and NASD Relating to the Uniform Branch Office Definition, Question and Answer #5). 6 The FINRA rulebook currently consists of both NASD rules and certain NYSE rules that FINRA has incorporated, including NYSE Rule 342 (Offices— Approval, Supervision and Control). The incorporated NYSE rules apply solely to members of FINRA that are also members of NYSE on or after July 30, 2007, referred to as ‘‘Dual Members.’’ Dual Members also must comply with NASD rules. 7 FINRA also sought comment in Notice to Members 07–12 on a proposal to amend NASD Rule 2711 to define the term ‘‘initial public offering’’ consistent with the definition of such term in NYSE Rule 472. E:\FR\FM\05OCN1.SGM 05OCN1

Agencies

[Federal Register Volume 72, Number 193 (Friday, October 5, 2007)]
[Notices]
[Pages 57078-57081]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-19670]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56559; File No. SR-CBOE-2007-103]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change To Trade Shares of the iShares FTSE/Xinhua 
China 25 Index Fund Pursuant to Unlisted Trading Privileges

September 27, 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 September 6, 2007, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' 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

    The Exchange proposes to trade on the CBOE Stock Exchange 
(``CBSX'') shares of the iShares FTSE/Xinhua China 25 Index Fund 
(``Fund'') pursuant to unlisted trading privileges (``UTP''). The text 
of the proposed rule change is available at CBOE, the Commission's 
Public Reference Room, and http://www.cboe.org/legal.

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

[[Page 57079]]

proposed rule change. The text of these statements may be examined at 
the places specified in Item III below. The Exchange has prepared 
summaries, set forth in Sections A, B, and C below, of the most 
significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to trade shares of the Fund on CBSX pursuant 
to UTP. The Fund seeks investment results that correspond generally to 
the price and yield performance, before fees and expenses, of the FTSE/
Xinhua China 25 Index (``Index''). The Index consists of 25 of the 
largest and most liquid companies in the Chinese equity market that are 
available to international investors. The Commission previously 
approved the original listing and trading of the Fund shares on the New 
York Stock Exchange LLC (``NYSE'').\3\ Subsequently, the Commission 
approved the listing and trading of the Fund shares on the Pacific 
Exchange, Inc.,\4\ which is now known as NYSE Arca, Inc. (``NYSE 
Arca''), and the trading of the Fund shares pursuant to UTP on the 
American Stock Exchange LLC (``Amex'').\5\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 50505 (October 8, 
2004), 69 FR 61280 (October 15, 2004) (SR-NYSE-2004-55).
    \4\ See Securities Exchange Act Release No. 50799 (December 6, 
2004), 69 FR 72242 (December 13, 2004) (SR-PCX-2004-99).
    \5\ See Securities Exchange Act Release No. 50800 (December 6, 
2004), 69 FR 72228 (December 13, 2004) (SR-Amex-2004-85).
---------------------------------------------------------------------------

    The Exchange deems the Fund shares to be equity securities, thus 
rendering trading in the Fund shares subject to the Exchange's existing 
rules governing the trading of equity securities. The trading hours for 
the Fund shares on CBSX will be from 8:15 a.m. until 3:15 p.m. Central 
Time or 9:15 a.m until 4:15 p.m. Eastern Time (``ET'').
    Quotations for and last-sale information regarding the Fund shares 
are disseminated through the Consolidated Quotation System. The value 
of the Index is updated intraday on a real-time basis as individual 
component securities of the Index change in price. The intraday value 
of the Index is disseminated at least every 60 seconds from 8:15 p.m. 
until 3 a.m. ET.\6\ In addition, a value for the Index is disseminated 
once each trading day, based on closing prices in the relevant exchange 
market.\7\
---------------------------------------------------------------------------

    \6\ E-mail from Angelo Evangelou, Assistant General Counsel, 
CBOE, to Rebekah Goshorn, Division of Market Regulation, Commission, 
dated September 19, 2007 (correcting the timing of the dissemination 
of the intraday value of the Index).
    \7\ See supra note 4, 69 FR at 72245 (providing a more detailed 
discussion of the calculation and dissemination of the Index value).
---------------------------------------------------------------------------

    To provide updated information relating to the Fund for use by 
investors, professionals, and persons wishing to create or redeem the 
shares, NYSE disseminates through the facilities of the Consolidated 
Tape Association the Intraday Indicative Value (``IIV'') for the Fund, 
as calculated by a securities information provider. The IIV is 
disseminated on a per-share basis every 15 seconds during regular NYSE 
trading hours.\8\
---------------------------------------------------------------------------

    \8\ See supra note 4, 69 FR at 72246.
---------------------------------------------------------------------------

    In connection with the trading of the Fund shares, the Exchange 
will inform members and member organizations in an Information Circular 
of the special characteristics and risks associated with trading the 
Fund shares, including how they are created and redeemed, the 
prospectus or product description delivery requirements applicable to 
the Fund, applicable Exchange rules, how information about the value of 
the underlying Index is disseminated, and trading information. In 
addition, before a member recommends a transaction in the Fund, the 
member must determine that the Fund is suitable for the customer, as 
required by CBOE Rule 53.6.
    The Exchange intends to utilize its existing surveillance 
procedures applicable to exchange-traded funds to monitor trading in 
the Fund shares. CBOE represents that these procedures are adequate to 
monitor Exchange trading of the Fund shares.
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Fund shares. Trading may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Fund shares inadvisable. These may include: (1) The 
extent to which trading is not occurring in the securities comprising 
the Index and/or the financial instruments of the Fund; (2) whether 
other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present; or (3) trading of 
the Fund shares has been halted or suspended in the primary market.\9\ 
In addition, trading in the Fund shares will be subject to trading 
halts caused by extraordinary market volatility pursuant to the 
Exchange's ``circuit breaker'' rule.\10\ UTP trading in the Fund is 
also governed by the trading halts provisions of CBOE Rule 52.3 
relating to temporary interruptions in the calculation or wide 
dissemination of the IIV or the value of the underlying Index.
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    \9\ See CBOE Rule 6.3(a). E-mail from Angelo Evangelou, 
Assistant General Counsel, CBOE, to Rebekah Goshorn, Division of 
Market Regulation, Commission, dated September 27, 2007 
(clarification on trading halts).
    \10\ See CBOE Rule 6.3B.
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2. Statutory Basis
    CBOE believes that the proposed rule change is consistent with the 
Act, the rules and regulations thereunder applicable to a national 
securities exchange, and, in particular, the requirements of Section 
6(b) of the Act.\11\ Specifically, CBOE believes that the proposed rule 
change is consistent with the Section 6(b)(5) of the Act \12\ in that 
it is designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and to protect investors and the 
public interest. In addition, CBOE believes that the proposal is 
consistent with Rule 12f-5 under the Act \13\ because it deems the Fund 
shares to be equity securities, thus rendering trading in the Fund 
shares subject to the Exchange's existing rules governing the trading 
of equity securities.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 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

[[Page 57080]]

Number SR-CBOE-2007-103 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2007-103. 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 CBOE. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CBOE-2007-103 and should be 
submitted on or before October 26, 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.\14\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\15\ 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 shares of 
the Fund.
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    \14\ 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).
    \15\ 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,\16\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\17\ The Commission notes that it previously approved the 
listing and trading of the shares on NYSE and NYSE Arca \18\ and 
trading of the Fund shares pursuant to UTP on Amex.\19\ The Commission 
also finds that the proposal is consistent with Rule 12f-5 under the 
Act,\20\ 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 Fund shares to be equity securities, 
thus rendering trading in such shares subject to the Exchange's 
existing rules governing the trading of equity securities.
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    \16\ 15 U.S.C. 78l(f).
    \17\ 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.
    \18\ See supra notes 3 and 4.
    \19\ See supra note 5.
    \20\ 17 CFR 240.12f-5.
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    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\21\ 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 Fund 
shares are disseminated through the Consolidated Quotation System. The 
value of the Index is disseminated every 60 seconds from 8:15 p.m. 
until 3 a.m. ET. In addition, NYSE disseminates through the facilities 
of the Consolidated Tape Association the IIV for the Fund on a per-
share basis every 15 seconds during regular NYSE trading hours.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    Moreover, the proposal appears reasonably designed to halt trading 
in the Fund shares when transparency is impaired. UTP trading in the 
Fund is also governed by the trading halts provisions of CBOE Rule 52.3 
relating to temporary interruptions in the calculation or wide 
dissemination of the IIV or the value of the underlying Index. If the 
listing market halts trading in the shares, or the IIV or the Index 
value is not being calculated or disseminated as required, the Exchange 
would halt trading in the shares.
    The Commission notes that, if the Fund shares should be delisted by 
the 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 made the following 
representations:
    (1) The Exchange represents that its surveillance procedures are 
adequate to monitor Exchange trading of the Fund shares.
    (2) The Exchange will inform its members in an Information Circular 
of the special characteristics and risks associated with trading the 
Fund shares, including suitability recommendation requirements.
    (3) The Exchange will require its members to deliver a prospectus 
or product description to investors purchasing shares of the Fund and 
will note this prospectus delivery requirement in the Information 
Circular.
    This approval order is based on the Exchange's representations.
    The Commission finds good cause for approving this proposal before 
the thirtieth day after the publication of notice thereof in the 
Federal Register. As noted above, the Commission previously found that 
the listing and trading of the Fund shares on NYSE and NYSE Arca is 
consistent with the Act.\22\ In addition, the Commission notes that it 
previously approved the trading of the Fund shares on Amex pursuant to 
UTP.\23\ The Commission presently is not aware of any regulatory issue 
that should cause it to revisit these findings or would preclude the 
trading of the Fund shares on the Exchange pursuant to UTP. Therefore, 
accelerating approval of this proposal should benefit investors by 
creating, without undue delay, additional competition in the market for 
such shares.
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    \22\ See supra notes 3 and 4.
    \23\ See supra note 5.

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[[Page 57081]]

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\24\ that the proposed rule change (SR-CBOE-2007-103), be, and it 
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-19670 Filed 10-4-07; 8:45 am]
BILLING CODE 8011-01-P