Self-Regulatory Organizations; American Stock Exchange LLC; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Criteria for Securities That Underlie Options Traded on the Exchange, 59123-59125 [E7-20533]

Download as PDF Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices 30. The Applicants request that the Commission issue an order pursuant to section 17(b) of the Act exempting the Separate Accounts, the Insurance Companies, MLIF, Met Series Fund and each Replacement Fund from the provisions of section 17(a) of the Act to the extent necessary to permit the Insurance Companies on behalf of the Separate Accounts to carry out, as part of the substitutions, the in-kind redemption and purchase of shares of the Existing Fund and Replacement Funds which may be deemed to be prohibited by section 17(a) of the Act. 31. The Applicants represent that the proposed in-kind redemptions and purchases meet all of the requirements of section 17(b) of the Act and that an exemption should be granted, to the extent necessary, from the provisions of section 17(a). Conclusion Applicants assert that for the reasons summarized above the proposed substitutions and related transactions meet the standards of section 26(c) of the Act and are consistent with the standards of section 17(b) of the Act and that the requested orders should be granted. For the Commission, by the Division of Investment Management pursuant to delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E7–20542 Filed 10–17–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56650; File No. SR–Amex– 2007–35] Self-Regulatory Organizations; American Stock Exchange LLC; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Criteria for Securities That Underlie Options Traded on the Exchange mstockstill on PROD1PC66 with NOTICES October 12, 2007. I. Introduction On April 5, 2007, the American Stock Exchange LLC (‘‘Amex’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change to amend certain rules to permit the initial and continued listing and 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Aug<31>2005 21:55 Oct 17, 2007 Jkt 214001 trading on the Exchange of options on Index Multiple Exchange Traded Fund Shares (‘‘Multiple Fund Shares’’) and Index Inverse Exchange Traded Fund Shares (‘‘Inverse Fund Shares’’) (collectively, the ‘‘Fund Shares’’). On August 20, 2007, the Exchange filed Amendment No. 1 to the proposed rule change.3 The proposed rule change, as modified by Amendment No. 1, was published for comment in the Federal Register on September 6, 2007.4 The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change as modified by Amendment No. 1. II. Description of the Proposal The purpose of the proposed rule change is to revise Amex Rules 915 and 916 to enable the listing and trading on the Exchange of options on Multiple Fund Shares 5 and Inverse Fund Shares.6 Multiple and Index Fund Shares differ from traditional exchangetraded fund (‘‘ETFs’’) shares in that they do not merely correspond to the performance of a given index, but rather attempt to match a multiple or inverse of such underlying index performance. Current Multiple Fund Shares trading on the Exchange include the ProShares Ultra Funds and Index Inverse Fund Shares trading on the Exchange include the Short Funds and UltraShort Funds.7 In order to achieve investment results that provide either a positive multiple or inverse of the benchmark index, 3 Amendment No. 1 superseded and replaced the original filing in its entirety. 4 See Securities Exchange Act Release No. 56336 (August 29, 2007), 72 FR 51281. 5 Multiple Fund Shares seek to provide investment results, before fees and expenses, that correspond to a specified multiple of the percentage performance on a given day of a particular foreign or domestic stock index. 6 Inverse Fund Shares seek to provide investment results, before fees and expenses, that correspond to the inverse (opposite) of the percentage performance on a given day of a particular foreign or domestic stock index by a specified multiple. 7 See Securities Exchange Act Release Nos. 52553 (October 3, 2005), 70 FR 59100 (October 11, 2005) (SR–Amex–2004–62) (approving the listing and trading of the Ultra Funds and Short Funds) and 54040 (June 23, 2006), 71 FR 37629 (June 30, 2006) (SR–Amex–2006–41) (approving the listing and trading of the UltraShort Funds). The Ultra Funds are expected to gain, on a percentage basis, approximately twice (200%) as much as the underlying benchmark index and should lose approximately twice (200%) as much as the underlying benchmark index when such prices decline. The Short Funds are expected to achieve investment results, before fees and expenses, that correspond to the inverse or opposite of the daily performance (¥100%) of an underlying benchmark index. Lastly, the UltraShort Funds are expected to achieve investment results, before fees and expenses that correspond to twice the inverse or opposite of the daily performance (¥200%) of the underlying benchmark index. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 59123 Multiple Fund Shares or Inverse Fund Shares may hold a combination of financial instruments, including, among other things, stock index futures contracts; options on futures; options on securities and indices; equity caps, collars and floors; swap agreements; forward contracts; repurchase agreements; and reverse repurchase agreements (the ‘‘Financial Instruments’’). The underlying portfolios of Multiple Fund Shares generally will hold at least 85% of their assets in the component securities of the underlying relevant benchmark index. The remainder of any assets are devoted to Financial Instruments that are intended to create the additional needed exposure to such Underlying Index necessary to pursue its investment objective. Normally, 100% of the value of the underlying portfolios of Inverse Fund Shares will be devoted to Financial Instruments and money market instruments, including U.S. government securities and repurchase agreements (the ‘‘Money Market Instruments’’). Currently, Commentary .06 to Amex Rule 915 provides securities deemed appropriate for options trading shall include shares or other securities (‘‘Exchange-Traded Fund Shares’’) that are principally traded on a national securities exchange or through the facilities of a national securities association and defined as an ‘‘NMS stock’’ under Rule 600 of Regulation NMS, and that (i) represent an interest in a registered investment company organized as an open-end management investment company, a unit investment trust or a similar entity which holds securities constituting or otherwise based on or representing an investment in an index or portfolio of securities; (ii) represent interest in a trust or other similar entity that holds a specified nonU.S. currency and/or currencies deposited with the trust or similar entity when aggregated in some specified minimum number may be surrendered to the trust by the beneficial owner to receive the specified non-U.S. currency and/or currencies and pays the beneficial owner interest and other distributions on the deposited non-U.S. currency and/or currencies, if any, declared and paid by the trust; or (iii) represent commodity pool interests principally engaged, directly or indirectly, in holding and/or managing portfolios or baskets of securities, commodity futures contracts, options on commodity futures contracts, swaps, forward contracts and/or options on physical commodities and/or non-U.S. currency (‘‘Commodity Pool ETFs’’). E:\FR\FM\18OCN1.SGM 18OCN1 mstockstill on PROD1PC66 with NOTICES 59124 Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices The Exchange proposes to amend Commentary .06 to Amex Rule 915 to expand the type of options to include the listing and trading of options based on Multiple Fund Shares and Inverse Fund Shares 8 that may hold or invest in any combination of securities, Financial Instruments and/or Money Market Instruments. Multiple Fund Shares and Inverse Fund Shares will continue to otherwise satisfy the listing standards in Commentary .06 to Amex Rule 915. In addition, the Exchange proposes to remove the reference to a ‘‘national securities association’’ in Commentary .06 to Amex Rule 915. As set forth in proposed amended Commentary .06 to Amex Rule 915, Multiple Fund Shares and Inverse Fund Shares must be traded on a national securities exchange and must be an ‘‘NMS stock’’ as defined under Rule 600 of Regulation NMS. In addition, Multiple Fund Shares and Inverse Fund Shares must meet either: (i) The criteria and guidelines under Commentary .01 to Amex Rule 915; or (ii) be available for creation or redemption each business day in cash or in kind from the investment company at a price related to net asset value. In addition, the investment company shall provide that shares may be created even though some or all of the securities and/or cash (in lieu of the Financial Instruments) needed to be deposited have not been received by the investment company, provided the authorized creation participant has undertaken to deliver the shares and/or cash as soon as possible and such undertaking has been secured by the delivery and maintenance of collateral consisting of cash or cash equivalents satisfactory to the fund which underlies the option as described in the prospectus. The current continuing or maintenance listing standards for options on Exchange Traded Fund Shares will continue to apply. The Exchange proposes to amend Commentary .07 to Amex Rule 916 to indicate that the index or portfolio may consist of securities, Financial Instruments and/or Money Market Instruments. The Exchange also seeks to delete references to ‘‘national market securities,’’ ‘‘national securities association’’, and ‘‘national market association’’ set forth in Commentary .07 to Amex Rule 916. Under the applicable continued listing criteria in Commentary .07 to Amex Rule 916, options on Fund Shares may be subject to the suspension of opening transactions as follows: (1) Following the initial twelve-month 8 See Amex Rule 1000A–AEMI(b)(2). VerDate Aug<31>2005 21:55 Oct 17, 2007 Jkt 214001 period beginning upon the commencement of trading of the Fund Shares, there are fewer than 50 record and/or beneficial holders of the Fund Shares for 30 or more consecutive trading days; (2) the value of the index, non-U.S. currency, portfolio of commodities including commodity futures contracts, options on commodity futures contracts, swaps, forward contracts and/or options on physical commodities, or portfolio of securities and/or Financial Instruments on which the Fund Shares are based is no longer calculated or available; or (3) such other event occurs or condition exists that in the opinion of the Exchange makes further dealing on the Exchange inadvisable. Additionally, the Fund Shares shall not be deemed to meet the requirements for continued approval, and the Exchange shall not open for trading any additional series of option contracts of the class covering such Multiple Fund Shares or Inverse Fund Shares, if the Shares are halted from trading on their primary market or if the Shares are delisted in accordance with the terms of Amex Rule 916 or the value of the index or portfolio on which the Shares are based is no longer calculated or available. The Exchange represents that the expansion of the types of investments that may be held by Multiple Fund Shares or Inverse Fund Shares under Commentary .06 to Amex Rule 915 will not have any effect on the rules pertaining to position and exercise limits 9 or margin.10 In addition, the Exchange also seeks to add ‘‘reverse repurchase agreements’’ within the rule text of Amex Rule 1000A–AEMI(b)(2)(ii) in order to correct the definition of Financial Instruments. The Exchange has represented that its existing surveillance procedures applicable to trading in options are adequate to properly monitor the trading in Multiple Fund Shares options and Inverse Fund Shares options. III. Discussion 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,11 and in particular, the requirements of section 6(b) of the Act.12 Specifically, the Commission finds that the proposed 9 See Amex Rules 904 and 905. Amex Rule 462. 11 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 12 12 15 U.S.C. 78f(b). 10 See PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 rule change is consistent with section 6(b)(5) of the Act,13 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. Surveillance The Commission notes that the Exchange has represented that its existing surveillance procedures applicable to trading options are adequate to properly monitor trading in Multiple Fund Shares options and Inverse Fund Shares options. In addition, the Exchange represented that the expansion of the types of investments that may be held by Multiple Fund Shares or Inverse Fund Shares under Commentary .06 to Amex Rule 915 will not have any effect on the rules pertaining to position and exercise limits 14 or margin.15 Listing and Trading Options on Fund Shares The Commission notes that, pursuant to the proposed rule change, the Exchange represented that the current continuing or maintenance listing standards for options on Exchange Traded Fund Shares will continue to apply. These provisions include requirements regarding initial and continued listing standards, suspension of opening transactions, and trading halts. Proposed amended Commentary .06 to Amex Rule 915, would require that Multiple Fund Shares and Inverse Fund Shares be traded on a national securities exchange and must be an ‘‘NMS stock’’ as defined under Rule 600 of Regulation NMS.16 The Commission believes that this proposal is necessary to enable the Exchange to list and trade options on the shares of the Ultra Fund, Short Fund and UltraShort Fund of the ProShares Trust. The Commission believes that the ability to trade options on the Multiple and Inverse Fund Shares will provide investors with additional risk management tools. The Commission further believes that the proposed amendment to the Exchange’s listing criteria for options on Exchange Traded Fund Shares will ensure that the Exchange will be able to list options on 13 13 15 U.S.C. 78f(b)(5). Amex Rules 904 and 905. 15 See Amex Rule 462. 16 17 CFR 242.600(b)(47). 14 See E:\FR\FM\18OCN1.SGM 18OCN1 Federal Register / Vol. 72, No. 201 / Thursday, October 18, 2007 / Notices the Funds of the ProShares Trust as well as other Multiple Fund Shares or Inverse Fund Shares that may be introduced in the future, thereby affording investors greater investment choices. IV. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,17 that the proposed rule change (SR–Amex–2007– 35), as modified by Amendment No. 1, be, and hereby is, approved. the fact that Sun Microsystems, Inc. has changed its trading symbol from SUNW to JAVA. The text of the proposed rule change is available at the Commission’s Public Reference Room and on the Exchange’s Web site http:// www.bostonstock.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change For the Commission, by the Division of Market Regulation, pursuant to delegated authority.18 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–20533 Filed 10–17–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56652; File No. SR–BSE– 2007–48] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Reflect the Fact That Sun Microsystems, Inc. Has Changed Its Trading Symbol From SUNW to JAVA October 12, 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 October 4, 2007, the Boston Stock Exchange, Inc. (‘‘BSE’’ 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 BSE. The Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which rendered the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. mstockstill on PROD1PC66 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to change a reference in the BOX rule text to reflect 17 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. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 21:55 Oct 17, 2007 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 change a reference in the BOX Rules, Chapter V, Section 33(b), to reflect the fact that Sun Microsystems, Inc. has changed its trading symbol from SUNW to JAVA. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act 5 in general, and furthers the objectives of Section 6(b)(5) of the Act,6 in particular, in that it is designed to perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest and promote just and equitable principles of trade. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose 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 No written comments were either solicited or received by the Exchange. 18 17 VerDate Aug<31>2005 In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. 5 15 6 15 Jkt 214001 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00057 Fmt 4703 Sfmt 4703 59125 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 7 and Rule 19b–4(f)(6) thereunder,8 because the foregoing proposed rule does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. A proposed rule change filed under Rule 19b–4(f)(6) normally may not become operative prior to 30-days after the date of filing.9 However, Rule 19b– 4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest.10 The Exchange has requested that the Commission waive the 5-day pre-filing requirement and the 30-day operative delay. The Commission believes that waiving the 5-day pre-filing requirement and the 30-day operative delay is consistent with the protection of investors and the public interest because such waiver will promote clarity in the Exchange’s rules and will prevent investor confusion. For these reasons, the Commission designates the proposal to be operative upon filing with the Commission.11 At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.12 IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule 7 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 9 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 19b–4(f)(6)(iii) requires the self-regulatory organization to give the Commission notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 10 17 CFR 240.19b–4(f)(6)(iii). 11 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 12 See 15 U.S.C. 78s(b)(3)(C). 8 17 E:\FR\FM\18OCN1.SGM 18OCN1

Agencies

[Federal Register Volume 72, Number 201 (Thursday, October 18, 2007)]
[Notices]
[Pages 59123-59125]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20533]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56650; File No. SR-Amex-2007-35]


Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Granting Approval of a Proposed Rule Change, as Modified by Amendment 
No. 1 Thereto, Relating to the Criteria for Securities That Underlie 
Options Traded on the Exchange

October 12, 2007.

I. Introduction

    On April 5, 2007, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend certain rules to permit the initial and 
continued listing and trading on the Exchange of options on Index 
Multiple Exchange Traded Fund Shares (``Multiple Fund Shares'') and 
Index Inverse Exchange Traded Fund Shares (``Inverse Fund Shares'') 
(collectively, the ``Fund Shares''). On August 20, 2007, the Exchange 
filed Amendment No. 1 to the proposed rule change.\3\ The proposed rule 
change, as modified by Amendment No. 1, was published for comment in 
the Federal Register on September 6, 2007.\4\ The Commission received 
no comment letters on the proposed rule change. This order approves the 
proposed rule change as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 superseded and replaced the original filing 
in its entirety.
    \4\ See Securities Exchange Act Release No. 56336 (August 29, 
2007), 72 FR 51281.
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II. Description of the Proposal

    The purpose of the proposed rule change is to revise Amex Rules 915 
and 916 to enable the listing and trading on the Exchange of options on 
Multiple Fund Shares \5\ and Inverse Fund Shares.\6\ Multiple and Index 
Fund Shares differ from traditional exchange-traded fund (``ETFs'') 
shares in that they do not merely correspond to the performance of a 
given index, but rather attempt to match a multiple or inverse of such 
underlying index performance. Current Multiple Fund Shares trading on 
the Exchange include the ProShares Ultra Funds and Index Inverse Fund 
Shares trading on the Exchange include the Short Funds and UltraShort 
Funds.\7\
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    \5\ Multiple Fund Shares seek to provide investment results, 
before fees and expenses, that correspond to a specified multiple of 
the percentage performance on a given day of a particular foreign or 
domestic stock index.
    \6\ Inverse Fund Shares seek to provide investment results, 
before fees and expenses, that correspond to the inverse (opposite) 
of the percentage performance on a given day of a particular foreign 
or domestic stock index by a specified multiple.
    \7\ See Securities Exchange Act Release Nos. 52553 (October 3, 
2005), 70 FR 59100 (October 11, 2005) (SR-Amex-2004-62) (approving 
the listing and trading of the Ultra Funds and Short Funds) and 
54040 (June 23, 2006), 71 FR 37629 (June 30, 2006) (SR-Amex-2006-41) 
(approving the listing and trading of the UltraShort Funds). The 
Ultra Funds are expected to gain, on a percentage basis, 
approximately twice (200%) as much as the underlying benchmark index 
and should lose approximately twice (200%) as much as the underlying 
benchmark index when such prices decline. The Short Funds are 
expected to achieve investment results, before fees and expenses, 
that correspond to the inverse or opposite of the daily performance 
(-100%) of an underlying benchmark index. Lastly, the UltraShort 
Funds are expected to achieve investment results, before fees and 
expenses that correspond to twice the inverse or opposite of the 
daily performance (-200%) of the underlying benchmark index.
---------------------------------------------------------------------------

    In order to achieve investment results that provide either a 
positive multiple or inverse of the benchmark index, Multiple Fund 
Shares or Inverse Fund Shares may hold a combination of financial 
instruments, including, among other things, stock index futures 
contracts; options on futures; options on securities and indices; 
equity caps, collars and floors; swap agreements; forward contracts; 
repurchase agreements; and reverse repurchase agreements (the 
``Financial Instruments''). The underlying portfolios of Multiple Fund 
Shares generally will hold at least 85% of their assets in the 
component securities of the underlying relevant benchmark index. The 
remainder of any assets are devoted to Financial Instruments that are 
intended to create the additional needed exposure to such Underlying 
Index necessary to pursue its investment objective. Normally, 100% of 
the value of the underlying portfolios of Inverse Fund Shares will be 
devoted to Financial Instruments and money market instruments, 
including U.S. government securities and repurchase agreements (the 
``Money Market Instruments'').
    Currently, Commentary .06 to Amex Rule 915 provides securities 
deemed appropriate for options trading shall include shares or other 
securities (``Exchange-Traded Fund Shares'') that are principally 
traded on a national securities exchange or through the facilities of a 
national securities association and defined as an ``NMS stock'' under 
Rule 600 of Regulation NMS, and that (i) represent an interest in a 
registered investment company organized as an open-end management 
investment company, a unit investment trust or a similar entity which 
holds securities constituting or otherwise based on or representing an 
investment in an index or portfolio of securities; (ii) represent 
interest in a trust or other similar entity that holds a specified non-
U.S. currency and/or currencies deposited with the trust or similar 
entity when aggregated in some specified minimum number may be 
surrendered to the trust by the beneficial owner to receive the 
specified non-U.S. currency and/or currencies and pays the beneficial 
owner interest and other distributions on the deposited non-U.S. 
currency and/or currencies, if any, declared and paid by the trust; or 
(iii) represent commodity pool interests principally engaged, directly 
or indirectly, in holding and/or managing portfolios or baskets of 
securities, commodity futures contracts, options on commodity futures 
contracts, swaps, forward contracts and/or options on physical 
commodities and/or non-U.S. currency (``Commodity Pool ETFs'').

[[Page 59124]]

    The Exchange proposes to amend Commentary .06 to Amex Rule 915 to 
expand the type of options to include the listing and trading of 
options based on Multiple Fund Shares and Inverse Fund Shares \8\ that 
may hold or invest in any combination of securities, Financial 
Instruments and/or Money Market Instruments. Multiple Fund Shares and 
Inverse Fund Shares will continue to otherwise satisfy the listing 
standards in Commentary .06 to Amex Rule 915. In addition, the Exchange 
proposes to remove the reference to a ``national securities 
association'' in Commentary .06 to Amex Rule 915.
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    \8\ See Amex Rule 1000A-AEMI(b)(2).
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    As set forth in proposed amended Commentary .06 to Amex Rule 915, 
Multiple Fund Shares and Inverse Fund Shares must be traded on a 
national securities exchange and must be an ``NMS stock'' as defined 
under Rule 600 of Regulation NMS. In addition, Multiple Fund Shares and 
Inverse Fund Shares must meet either: (i) The criteria and guidelines 
under Commentary .01 to Amex Rule 915; or (ii) be available for 
creation or redemption each business day in cash or in kind from the 
investment company at a price related to net asset value. In addition, 
the investment company shall provide that shares may be created even 
though some or all of the securities and/or cash (in lieu of the 
Financial Instruments) needed to be deposited have not been received by 
the investment company, provided the authorized creation participant 
has undertaken to deliver the shares and/or cash as soon as possible 
and such undertaking has been secured by the delivery and maintenance 
of collateral consisting of cash or cash equivalents satisfactory to 
the fund which underlies the option as described in the prospectus.
    The current continuing or maintenance listing standards for options 
on Exchange Traded Fund Shares will continue to apply.
    The Exchange proposes to amend Commentary .07 to Amex Rule 916 to 
indicate that the index or portfolio may consist of securities, 
Financial Instruments and/or Money Market Instruments. The Exchange 
also seeks to delete references to ``national market securities,'' 
``national securities association'', and ``national market 
association'' set forth in Commentary .07 to Amex Rule 916.
    Under the applicable continued listing criteria in Commentary .07 
to Amex Rule 916, options on Fund Shares may be subject to the 
suspension of opening transactions as follows: (1) Following the 
initial twelve-month period beginning upon the commencement of trading 
of the Fund Shares, there are fewer than 50 record and/or beneficial 
holders of the Fund Shares for 30 or more consecutive trading days; (2) 
the value of the index, non-U.S. currency, portfolio of commodities 
including commodity futures contracts, options on commodity futures 
contracts, swaps, forward contracts and/or options on physical 
commodities, or portfolio of securities and/or Financial Instruments on 
which the Fund Shares are based is no longer calculated or available; 
or (3) such other event occurs or condition exists that in the opinion 
of the Exchange makes further dealing on the Exchange inadvisable. 
Additionally, the Fund Shares shall not be deemed to meet the 
requirements for continued approval, and the Exchange shall not open 
for trading any additional series of option contracts of the class 
covering such Multiple Fund Shares or Inverse Fund Shares, if the 
Shares are halted from trading on their primary market or if the Shares 
are delisted in accordance with the terms of Amex Rule 916 or the value 
of the index or portfolio on which the Shares are based is no longer 
calculated or available.
    The Exchange represents that the expansion of the types of 
investments that may be held by Multiple Fund Shares or Inverse Fund 
Shares under Commentary .06 to Amex Rule 915 will not have any effect 
on the rules pertaining to position and exercise limits \9\ or 
margin.\10\
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    \9\ See Amex Rules 904 and 905.
    \10\ See Amex Rule 462.
---------------------------------------------------------------------------

    In addition, the Exchange also seeks to add ``reverse repurchase 
agreements'' within the rule text of Amex Rule 1000A-AEMI(b)(2)(ii) in 
order to correct the definition of Financial Instruments.
    The Exchange has represented that its existing surveillance 
procedures applicable to trading in options are adequate to properly 
monitor the trading in Multiple Fund Shares options and Inverse Fund 
Shares options.

III. Discussion

    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,\11\ and in particular, the requirements of section 6(b) of 
the Act.\12\ Specifically, the Commission finds that the proposed rule 
change is consistent with section 6(b)(5) of the Act,\13\ 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.
---------------------------------------------------------------------------

    \11\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 12 15 U.S.C. 78f(b).
    \13\ 13 15 U.S.C. 78f(b)(5).
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Surveillance

    The Commission notes that the Exchange has represented that its 
existing surveillance procedures applicable to trading options are 
adequate to properly monitor trading in Multiple Fund Shares options 
and Inverse Fund Shares options. In addition, the Exchange represented 
that the expansion of the types of investments that may be held by 
Multiple Fund Shares or Inverse Fund Shares under Commentary .06 to 
Amex Rule 915 will not have any effect on the rules pertaining to 
position and exercise limits \14\ or margin.\15\
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    \14\ See Amex Rules 904 and 905.
    \15\ See Amex Rule 462.
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Listing and Trading Options on Fund Shares

    The Commission notes that, pursuant to the proposed rule change, 
the Exchange represented that the current continuing or maintenance 
listing standards for options on Exchange Traded Fund Shares will 
continue to apply. These provisions include requirements regarding 
initial and continued listing standards, suspension of opening 
transactions, and trading halts. Proposed amended Commentary .06 to 
Amex Rule 915, would require that Multiple Fund Shares and Inverse Fund 
Shares be traded on a national securities exchange and must be an ``NMS 
stock'' as defined under Rule 600 of Regulation NMS.\16\
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    \16\ 17 CFR 242.600(b)(47).
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    The Commission believes that this proposal is necessary to enable 
the Exchange to list and trade options on the shares of the Ultra Fund, 
Short Fund and UltraShort Fund of the ProShares Trust. The Commission 
believes that the ability to trade options on the Multiple and Inverse 
Fund Shares will provide investors with additional risk management 
tools. The Commission further believes that the proposed amendment to 
the Exchange's listing criteria for options on Exchange Traded Fund 
Shares will ensure that the Exchange will be able to list options on

[[Page 59125]]

the Funds of the ProShares Trust as well as other Multiple Fund Shares 
or Inverse Fund Shares that may be introduced in the future, thereby 
affording investors greater investment choices.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-Amex-2007-35), as modified 
by Amendment No. 1, be, and hereby is, approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-20533 Filed 10-17-07; 8:45 am]
BILLING CODE 8011-01-P