Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to the Listing and Trading of Shares of the HealthSharesTM, 61413-61416 [E7-21276]

Download as PDF Federal Register / Vol. 72, No. 209 / Tuesday, October 30, 2007 / Notices for inspection and copying at the principal office of the Exchange. 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–NYSE–2007–90 and should be submitted on or before November 20, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Nancy M. Morris, Secretary. [FR Doc. E7–21284 Filed 10–29–07; 8:45 am] SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to the Listing and Trading of Shares of the HealthSharesTM Ophthalmology Exchange-Traded Fund October 24, 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 19, 2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’), through its wholly owned subsidiary, NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared substantially by the Exchange (‘‘Exchange Proposal’’). This order provides notice of the proposed rule change and approves the proposed rule change on an accelerated basis. sroberts on PROD1PC70 with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade shares of the HealthSharesTM Ophthalmology Exchange-Traded Fund (the ‘‘Fund’’).3 The text of the proposal is available at the Exchange, the CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The Fund is registered under the Investment Company Act of 1940 (the ‘‘1940 Act’’). VerDate Aug<31>2005 20:46 Oct 29, 2007 Jkt 214001 In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below, and the most significant aspects of such statements are set forth in Sections A, B, and C below. 1. Purpose [Release No. 34–56695; File No. SR– NYSEArca–2007–111] 1 15 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P 12 17 Commission’s Public Reference Room, and www.nyse.com. The Exchange proposes to list and trade the shares of the Fund (the ‘‘Shares’’), which is based on the HealthSharesTM Ophthalmology Index (the ‘‘Underlying Index’’), under NYSE Arca Equities Rule 5.2(j)(3). NYSE Arca Equities Rule 5.2(j)(3) states that the Exchange may consider for trading, whether by listing or pursuant to unlisted trading privileges (‘‘UTP’’), Investment Company Units.4 The Fund is currently listed on the New York Stock Exchange LLC (‘‘NYSE’’) and trades on NYSE Arca pursuant to UTP.5 HealthShares, Inc. (the ‘‘Corporation’’) has determined to transfer the listing of the Fund Shares to the Exchange.6 4 NYSE Arca Equities Rule 5.2(j)(3) defines an Investment Company Unit as a security that represents an interest in a registered investment company that could be organized as a unit investment trust, an open-end management investment company, or a similar entity. 5 The Exchange states that the Fund Shares were listed on NYSE on March 12, 2007 pursuant to the ‘‘generic’’ listing criteria contained in Section 703.16(C) of the NYSE Listed Company Manual, which permits the listing of Investment Company Units pursuant to Rule 19b–4(e) under the Act (17 CFR 240.19b–4(e)). NYSE Arca further represents that the Fund Shares commenced trading on the Exchange pursuant to UTP under the generic listing criteria contained in NYSE Arca Equities Rule 5.2(j)(3) applicable to Investment Company Units and Rule 19b–4(e) under the Act on the first day the Fund Shares launched for trading on NYSE. E-mail from Tim Malinowski, Director, Exchange Traded Funds, NYSE Group, Inc., to Edward Cho, Special Counsel, Division of Market Regulation, Commission, dated October 23, 2007 (‘‘Exchange Confirmation’’). 6 The Exchange represents that, except for Commentary .01(B)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Fund Shares currently satisfy all of the generic listing standards under NYSE Arca Equities Rule 5.2(j)(3). See Exchange Confirmation. Commentary .01(B)(2) to NYSE Arca Equities Rule 5.2(j)(3) requires that component stocks that, in the aggregate, account for at least 90% of the weight of PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 61413 The Fund, which can invest in both U.S. securities and non-U.S. securities not listed on a national securities exchange, seeks to track the performance, before fees and expenses, of the Underlying Index. XShares Advisors, LLC, the investment adviser to the Fund (‘‘Advisor’’), uses a passive, or indexing, approach in managing the Fund, investing at least 90% of its assets in the common stocks of Ophthalmology companies in the Underlying Index, or in American Depositary Receipts (‘‘ADRs’’) or Global Depositary Receipts (‘‘GDRs’’) based on securities of international Ophthalmology companies in the Underlying Index. The Fund may also invest up to 10% of its assets in futures contracts, options on futures contracts, options, swaps on securities of companies in the Underlying Index, as well as cash and cash equivalents, such as money market instruments (subject to applicable limitations of the 1940 Act). The Fund attempts to replicate the Underlying Index by matching the weighting of securities in its portfolio with such securities’ weightings in the Underlying Index.7 In managing the Fund, the Advisor seeks a correlation of 0.95 or better between the Fund’s performance and the performance of its Underlying Index. A figure of 1.00 would mean perfect correlation. Detailed descriptions of the Fund, the Underlying Index (including the methodology used to determine the composition of the Underlying Index), procedures and payment requirements for creating and redeeming Shares, the Underlying Index or portfolio, must each have a minimum worldwide trading volume during each of the last six months of at least 250,000 shares. The Exchange states that, as of October 1, 2007, those component stocks comprising the Underlying Index that individually exceed the minimum worldwide monthly trading volume of 250,000 shares during each of the last six months account, in the aggregate, for only 88.2 % of the weight of the Underlying Index (i.e., 1.8% below the required 90% requirement). Therefore, NYSE Arca has filed the instant proposed rule change to obtain Commission approval to list and trade the Shares on the Exchange pursuant to Section 19(b)(2) of the Act (15 U.S.C. 78s(b)(1)) and Rule 19b–4 thereunder (17 CFR 240.19b–4). The Exchange further represents that the continued listing standards under NYSE Arca Equities Rule 5.5(g)(2) applicable to Investment Company Units shall apply to the Fund Shares. See Exchange Confirmation. 7 The Exchange states that, from time to time, it may not be possible, for regulatory or other legal reasons, to replicate the Underlying Index, and in such cases, the Advisor may pursue a sampling strategy in managing the portfolio. Pursuant to this strategy, the Fund may invest the remainder of its assets in securities of companies not included in the Underlying Index if the Advisor believes that such securities will assist the Fund in tracking the Underlying Index. If a Fund pursues a sampling strategy, it will continue to invest at least 90% of its assets in the common stocks, ADRs, or GDRs of the companies in the Underlying Index. E:\FR\FM\30OCN1.SGM 30OCN1 61414 Federal Register / Vol. 72, No. 209 / Tuesday, October 30, 2007 / Notices transaction fees and expenses, dividends, distributions, taxes, reports to be distributed to beneficial owners of the Shares, availability of information regarding the Shares, calculation and dissemination of key values (i.e., Intraday Indicative Value, Underlying Index value, and net asset value or ‘‘NAV’’), trading rules and halts, surveillance, and the Information Bulletin can be found in the Exchange Proposal, the Corporation’s Internet Web site (www.healthsharesinc.com), and/or in the Fund’s Registration Statement,8 as applicable. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,9 in general, and furthers the objectives of Section 6(b)(5) of the Act,10 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change would 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 The Exchange has neither solicited for nor received any 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 sroberts on PROD1PC70 with NOTICES • Use the Commission’s Internet comment form (www.sec.gov/rules/ sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File 8 See Registration Statement on Form N–1A, filed February 14, 2006 (Securities Act File No. 333– 131842 and Investment Company File No. 811– 21855), and amendments thereto filed with the Commission. 9 15 U.S.C. 78f. 10 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 20:46 Oct 29, 2007 Jkt 214001 Number SR–NYSEArca–2007–111 on the subject line. trade, to remove impediments to and perfect the mechanism of a free and open market and a national market Paper Comments system, and, in general, to protect • Send paper comments in triplicate investors and the public interest. Although NYSE Arca Equities Rule to Nancy M. Morris, Secretary, 5.2(j)(3) permits the Exchange to either Securities and Exchange Commission, originally list and trade Investment 100 F Street, NE., Washington, DC Company Units or trade Investment 20549–1090. Company Units pursuant to UTP, the All submissions should refer to File Number SR–NYSEArca–2007–111. This Shares do not meet the generic listing requirements of NYSE Arca Equities file number should be included on the subject line if e-mail is used. To help the Rule 5.2(j)(3), which permit the listing and trading of such securities in Commission process and review your reliance upon Rule 19b–4(e) under the comments more efficiently, please use 13 only one method. The Commission will Act, because the components of the post all comments on the Commission’s Underlying Index do not meet the requirements of Commentary .01(B)(2) Internet Web site (www.sec.gov/rules/ 14 sro.shtml). Copies of the submission, all to NYSE Arca Equities Rule 5.2(j)(3). Commentary .01(B)(2) to NYSE Arca subsequent amendments, all written statements with respect to the proposed Equities Rule 5.2(j)(3) requires that, upon the initial listing of any series of rule change that are filed with the Investment Company Units pursuant to Commission, and all written Rule 19b–4(e) under the Act, component communications relating to the stocks that, in the aggregate, account for proposed rule change between the Commission and any person, other than at least 90% of the weight of the Underlying Index or portfolio, must those that may be withheld from the each have a minimum worldwide public in accordance with the trading volume during each of the last provisions of 5 U.S.C. 552, will be six months of at least 250,000 shares. available for inspection and copying in The Exchange states that, as of October the Commission’s Public Reference 1, 2007, those component stocks Room, 100 F Street, NE., Washington, comprising the Underlying Index that DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. individually exceed the minimum Copies of the filing also will be available worldwide monthly trading volume of 250,000 shares during each of the last for inspection and copying at the six months account, in the aggregate, for principal office of the Exchange. All only 88.2 % of the weight of the comments received will be posted Underlying Index. Because such without change; the Commission does percentage misses the minimum not edit personal identifying required threshold by approximately information from submissions. You 1.8%, the Shares cannot be listed and should submit only information that you wish to make available publicly. All traded pursuant to the generic listing standards of NYSE Arca Equities Rule submissions should refer to File 5.2(j)(3). Number SR–NYSEArca–2007–111 and The Commission believes, however, should be submitted on or before that the listing and trading of the Shares November 20, 2007. would be consistent with the Act. The IV. Commission’s Findings and Order Commission notes that, based on the Granting Accelerated Approval of the Exchange’s representations, the Fund Proposed Rule Change Shares otherwise meet all of the other applicable generic listing standards After careful consideration, the under NYSE Arca Equities Rule Commission finds that the proposed 5.2(j)(3).15 The Commission further rule change is consistent with the notes that it has previously approved requirements of the Act and the rules and regulations thereunder applicable to the listing and trading of derivative securities products based on indices a national securities exchange.11 In that were composed of stocks that did particular, the Commission finds that not meet certain quantitative generic the proposed rule change is consistent listing criteria by only a slight margin.16 12 which with Section 6(b)(5) of the Act, requires that the rules of an exchange be 13 17 CFR 240.19b–4(e). designed, among other things, to 14 See supra note 6. promote just and equitable principles of 15 See id. 11 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). 12 15 U.S.C. 78f(b)(5). PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 16 See Securities Exchange Act Release Nos. 55953 (June 25, 2007), 72 FR 36084 (July 2, 2007) (SR–NYSE–2007–46) (approving the listing and trading of shares of the HealthSharesTM Orthopedic Repair exchange-traded fund where the component stocks comprising the index that individually E:\FR\FM\30OCN1.SGM 30OCN1 Federal Register / Vol. 72, No. 209 / Tuesday, October 30, 2007 / Notices sroberts on PROD1PC70 with NOTICES The Commission also notes that the Fund Shares are currently already trading on the Exchange pursuant to UTP and are substantially similar in structure and operation to other shares of HealthSharesTM exchange-traded funds, the shares of which are currently listed and traded on the Exchange.17 The Commission further believes that the proposal is consistent with Section 11A(a)(1)(C)(iii) of the Act,18 which sets forth Congress’ finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotations and last-sale information for the Shares will be disseminated through the facilities of the Consolidated Tape Association (‘‘CT’’).19 In addition, the Exchange will disseminate through CT or a major market data vendor an amount per Share referred to as the Intraday Indicative Value at least every 15 seconds during Exchange trading hours.20 The value of the Underlying Index will be updated intra-day on a real time basis as individual component securities change in price and will be exceeded the minimum worldwide monthly trading volume of 250,000 shares during each of the last six months accounted, in the aggregate, for 86.2 % of the weight of the index); 55699 (May 3, 2007), 72 FR 26435 (May 9, 2007) (SR–NYSEArca–2007–27) (approving the listing and trading of shares of the iShares FTSE NAREIT Residential Index Fund where the weighting of the five highest components of the underlying index was marginally higher than that allowed by NYSE Arca, Inc.’s relevant generic listing standards); and 52826 (November 22, 2005), 70 FR 71874 (November 30, 2005) (SR–NYSEArca– 2005–67) (approving the listing and trading of shares of the iShares Dow Jones U.S. Energy Sector Index Fund and the iShares Dow Jones U.S. Telecommunications Sector Index Fund where the weightings of the most heavily weighted component stock and the five highest components of the underlying indexes, respectively, were higher than that required by NYSE Arca, Inc.’s relevant generic listing standards). See also Securities Exchange Act Release No. 46306 (August 2, 2002), 67 FR 51916 (August 9, 2002) (SR–NYSE–2002–28) (approving the trading pursuant to unlisted trading priveleges of shares of Vanguard Total Stock Market VIPERs, iShares Russell 2000 Index Funds, iShares Russell 2000 Value Index Funds, and iShares Russell 2000 Growth Funds, none of which met the trading volume requirement of the relevant generic listing criteria for NYSE). 17 See Exchange Confirmation, supra note 5 (noting that the shares of other HealthSharesTM exchange-traded funds are listed and traded on the Exchange pursuant to Rule 19b–4(e) under the Act because they meet the generic listing standards under NYSE Arca Equities Rule 5.2(j)(3)). See 17 CFR 240.19b–4(e). 18 15 U.S.C. 78k–1(a)(1)(C)(iii). 19 See Exchange Confirmation, supra note 5 (confirming the information regarding the Shares to be disseminated through CT). 20 See NYSE Arca Equities Rule 7.34 (providing for an Opening, Core, and Late Trading Session, from 4:00 a.m. to 8:00 p.m. Eastern Time or ‘‘ET’’). VerDate Aug<31>2005 20:46 Oct 29, 2007 Jkt 214001 disseminated at least every 15 seconds during the Exchange’s Core Trading Session by one or more major market data vendors.21 In addition, the value of the Underlying Index will be disseminated by one or more major market data vendors once each trading day based on closing prices in the relevant exchange market. The NAV for the Fund is calculated by BNY Asset Management between 4:30 p.m. and 6:30 p.m. ET each trading day and disseminates such value to all market participants at the same time. The updated NAV is available on the Corporation’s Web site at the same time that the NAV is made available to market participants. The Corporation’s Web site also includes: (1) The Fund’s Prospectus and Statement of Additional Information; (2) information regarding the Underlying Index; (3) the prior business day’s NAV; (4) the mid-point of the bid-ask spread at the time of calculation of the NAV (the ‘‘Bid/Ask Price’’); (5) a calculation of the premium or discount the Bid/Ask Price at the time of calculation of the NAV against such NAV; (6) the component securities of the Underlying Index; (7) and a description of the methodologies used in determining the composition of the Underlying Index and certain computations. Finally, the closing prices of the Fund’s Deposit Securities 22 are readily available from, as applicable, the relevant exchange, automated quotation systems, published or other public sources, or on-line information services that are major market data vendors. Similarly, information regarding market prices and volume of the Shares is broadly available on a real-time basis throughout the trading day. The Commission finds that the Exchange’s proposed rules and procedures for trading of the Shares are consistent with the Act. The Shares will trade as equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. The Commission notes that trading of the Shares may be halted and/or the Shares 21 The Exchange states that the official index sponsors for the Underlying Index currently do not calculate an updated Underlying Index value during the Exchange’s Opening and Late Trading Sessions. See Exchange Confirmation, supra note 5 (confirming when the updated value of the Underlying Index is calculated and disseminated). However, if the index sponsors do so in the future, the Exchange represents that it would not trade this product unless such official Underlying Index value is widely disseminated. 22 ‘‘Deposit Securities’’ is defined as the basket of stocks that are part of the Fund’s Underlying Index and deposited with the Corporation by participants for purposes of purchasing a group of a fixed number of Shares, also known as a ‘‘Creation Unit.’’ PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 61415 may be delisted based on circumstances set forth under NYSE Arca Equities Rule 5.5(g)(2).23 In particular, if the Intraday Indicative Value or the value of the Underlying Index is not being disseminated as required, the Exchange may halt trading during the day in which the interruption to the dissemination of such values occurs; if the interruption to the dissemination of any such value persists past the trading day in which it first occurred, the Exchange will halt trading of the Shares. In addition, the Exchange states that it will cease trading the Shares based on NYSE Arca Equities Rule 7.12 (Trading Halts Due to Extraordinary Market Volatility) and may consider other relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Some of these factors may include (1) the extent to which trading is not occurring in the securities comprising the Underlying Index and/or the financial instruments of the Fund, or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Shares may also be halted pursuant to the Exchange’s ‘‘circuit breaker’’ rule 24 or by the halt or suspension of trading of the securities comprising the Underlying Index. In support of this proposal, the Exchange has made the following representations: (1) The Exchange has appropriate rules to facilitate transactions in the Shares during all three trading sessions (Opening, Core, and Late Trading Sessions, from 4 a.m. to 8 p.m. ET).25 (2) The Exchange would utilize its existing surveillance procedures applicable to equity securities to monitor trading of the Shares of the Fund. Surveillance procedures applicable to trading of the Shares are comparable to those applicable to other Investment Company Units currently trading on the Exchange. The Exchange represents that such surveillance procedures are adequate to properly monitor the trading of the Fund Shares. The Exchange’s current trading surveillance focuses on detecting securities trading outside their normal patterns. When such situations are detected, surveillance analysis follows, and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant 23 See supra note 6. NYSE Arca Equities Rule 7.12. 25 See supra note 20. 24 See E:\FR\FM\30OCN1.SGM 30OCN1 61416 Federal Register / Vol. 72, No. 209 / Tuesday, October 30, 2007 / Notices sroberts on PROD1PC70 with NOTICES trading violations. The Exchange may also obtain trading information via the Intermarket Surveillance Group (‘‘ISG’’) from other exchanges who are members or affiliate members of ISG.26 (3) Standard and Poor’s, which acts as the ‘‘Index Administrator’’ and is responsible for maintaining the Underlying Index, is neither a registered broker-dealer nor an ‘‘affiliated person,’’ as defined in Section 2(a)(3) of the 1940 Act, 27 or an affiliated person of the Fund, Advisor, Sub-Advisor,28 Distributor,29 or the Corporation. In addition, the Distributor is not an affiliated person of the Advisor, the Sub-Advisor, the Fund, or the Corporation.30 (4) Prior to the commencement of trading, the Exchange will inform its ETP Holders 31 in an Information Bulletin (‘‘Bulletin’’) of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Unit aggregations; (2) NYSE Arca Equities Rule 9.2(a),32 which imposes a duty of due diligence on ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) the risks involved in trading the Shares 26 The Exchange notes that one or more of the underlying securities may trade on exchanges that are not members or affiliate members of ISG, and the Exchange may not have in place comprehensive surveillance sharing agreements with such exchanges. 27 See 15 U.S.C. 80a–2(a)(3). 28 BNY Investment Advisors acts as the ‘‘SubAdvisor’’ to the Fund. 29 ALPS Distributors, Inc. is a registered brokerdealer and acts as the ‘‘Distributor’’ and underwriter of the Creation Units. 30 See NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(b)(1) (providing for restrictions to access of information concerning changes and adjustments to an index and requirements designed to prevent the use and dissemination of material, non-public information regarding the applicable index, among others). 31 The Exchange defines an ‘‘ETP Holder’’ as a sole proprietorship, partnership, corporation, limited liability company, or other organization in good standing that has been issued an Equity Trading Permit or ‘‘ETP’’ by NYSE Arca Equities for effecting approved securities transactions on NYSE Arca Equities’ trading facilities. An ETP Holder must be a registered broker or dealer pursuant to Section 15 of the Act (15 U.S.C. 78o). 32 NYSE Arca Equities Rule 9.2(a) provides that an ETP Holder, before recommending a transaction, must have reasonable grounds to believe that the recommendation is suitable for the customer based on any facts disclosed by the customer as to his or her other security holdings and as to his or her financial situation and needs. Further, the rule provides, with a limited exception, that prior to the execution of a transaction recommended to a noninstitutional customer, the ETP Holder shall make reasonable efforts to obtain information concerning the customer’s financial status, tax status, investment objectives, and any other information that they believe would be useful to make a recommendation. VerDate Aug<31>2005 20:46 Oct 29, 2007 Jkt 214001 during the Opening and Late Trading Sessions when an updated Intraday Indicative Value and Underlying Index value will not be calculated or publicly disseminated; (4) how information regarding the Intraday Indicative Value is disseminated; (5) the requirement that ETP Holders deliver a Prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. In addition, the Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement,33 discuss any exemptive, noaction, and/or interpretive relief granted by the Commission from any rules under the Act, and disclose that the NAV for the Shares will be calculated after 4 p.m. ET each trading day. This 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 referenced above, the Commission notes that the Fund Shares are currently trading on the Exchange pursuant to UTP 34 and are substantially similar in structure, operation, and function to the shares of other HealthSharesTM exchange-traded funds, the shares of which are currently listed and trading on the Exchange pursuant to Rule 19b– 4(e) under the Act.35 In addition, the Commission notes that it has previously approved the listing and trading of derivative securities products based on indices that were composed of stocks that did not meet certain quantitative generic listing criteria by similar amounts.36 Although the Fund Shares do not meet the initial listing requirement of Commentary .01 to NYSE Arca Equities Rule 5.2(j)(3) and therefore cannot be listed pursuant to Rule 19b–4(e),37 the Commission believes that the Shares are substantially similar to the other HealthSharesTM trading on the Exchange and notes that the Shares would otherwise comply with all other generic listing requirements under NYSE Arca Equities Rule 5.2(j)(3).38 The Commission also notes that the continued listing standards under NYSE Arca Equities Rule 5.5(g)(2) applicable to Investment Company Units would apply to the Fund Shares. The listing and trading of the Shares do not appear to present any 33 See supra note 8. supra note 5. 35 See supra note 17. 36 See supra note 16. 37 See supra note 6. 38 See id. 34 See PO 00000 Frm 00093 Fmt 4703 new or significant regulatory concerns. Therefore, the Commission believes that accelerating approval of this proposal would allow the Shares to trade on the Exchange without undue delay and should generate additional competition in the market for such products. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,39 that the proposed rule change (SR–NYSEArca– 2007–111) be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.40 Nancy M. Morris, Secretary. [FR Doc. E7–21276 Filed 10–29–07; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice 5975] Presidential Permits Concerning Pipeline Facilities on the International Boundaries of the United States ACTION: Section 1(a) of Executive Order 13337, of April 30, 2004, designates and empowers the Secretary of State to ‘‘receive all applications for Presidential permits, as referred to in Executive Order 11423, as amended, for the construction, connection, operation, or maintenance, at the borders of the United States, of facilities for the exportation or importation of petroleum, petroleum products, coal, or other fuels to or from a foreign country.’’ Furthermore, section 1(a) of Executive Order 11423 designates and empowers the Secretary of State to receive ‘‘all applications for permits for the construction, connection, operation, or maintenance, at the borders of the United States, of: (i) Pipelines, conveyor belts, and similar facilities for the exportation or importation of all products, except those specified section 1(a) of [Executive Order 13337] to or from a foreign country; (ii) facilities for the exportation or importation of water or sewage to or from a foreign country* * *’’ This authority is subject to certain exceptions with respect to facilities covered by Executive Order 10485 of September 3, 1953 (concerning electric power and natural gas facilities), and Executive Order 10530 of May 10, 39 15 40 17 Sfmt 4703 Department of State. Notice. AGENCY: E:\FR\FM\30OCN1.SGM U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 30OCN1

Agencies

[Federal Register Volume 72, Number 209 (Tuesday, October 30, 2007)]
[Notices]
[Pages 61413-61416]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-21276]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56695; File No. SR-NYSEArca-2007-111]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of a Proposed Rule Change 
Relating to the Listing and Trading of Shares of the 
HealthSharesTM Ophthalmology Exchange-Traded Fund

October 24, 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 19, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''), 
through its wholly owned subsidiary, NYSE Arca Equities, Inc. (``NYSE 
Arca Equities''), filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared substantially by the Exchange 
(``Exchange Proposal''). 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 list and trade shares of the 
HealthSharesTM Ophthalmology Exchange-Traded Fund (the 
``Fund'').\3\ The text of the proposal is available at the Exchange, 
the Commission's Public Reference Room, and www.nyse.com.
---------------------------------------------------------------------------

    \3\ The Fund is registered under the Investment Company Act of 
1940 (the ``1940 Act'').
---------------------------------------------------------------------------

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

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

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

1. Purpose
    The Exchange proposes to list and trade the shares of the Fund (the 
``Shares''), which is based on the HealthSharesTM 
Ophthalmology Index (the ``Underlying Index''), under NYSE Arca 
Equities Rule 5.2(j)(3). NYSE Arca Equities Rule 5.2(j)(3) states that 
the Exchange may consider for trading, whether by listing or pursuant 
to unlisted trading privileges (``UTP''), Investment Company Units.\4\ 
The Fund is currently listed on the New York Stock Exchange LLC 
(``NYSE'') and trades on NYSE Arca pursuant to UTP.\5\ HealthShares, 
Inc. (the ``Corporation'') has determined to transfer the listing of 
the Fund Shares to the Exchange.\6\
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    \4\ NYSE Arca Equities Rule 5.2(j)(3) defines an Investment 
Company Unit as a security that represents an interest in a 
registered investment company that could be organized as a unit 
investment trust, an open-end management investment company, or a 
similar entity.
    \5\ The Exchange states that the Fund Shares were listed on NYSE 
on March 12, 2007 pursuant to the ``generic'' listing criteria 
contained in Section 703.16(C) of the NYSE Listed Company Manual, 
which permits the listing of Investment Company Units pursuant to 
Rule 19b-4(e) under the Act (17 CFR 240.19b-4(e)). NYSE Arca further 
represents that the Fund Shares commenced trading on the Exchange 
pursuant to UTP under the generic listing criteria contained in NYSE 
Arca Equities Rule 5.2(j)(3) applicable to Investment Company Units 
and Rule 19b-4(e) under the Act on the first day the Fund Shares 
launched for trading on NYSE. E-mail from Tim Malinowski, Director, 
Exchange Traded Funds, NYSE Group, Inc., to Edward Cho, Special 
Counsel, Division of Market Regulation, Commission, dated October 
23, 2007 (``Exchange Confirmation'').
    \6\ The Exchange represents that, except for Commentary 
.01(B)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Fund Shares 
currently satisfy all of the generic listing standards under NYSE 
Arca Equities Rule 5.2(j)(3). See Exchange Confirmation. Commentary 
.01(B)(2) to NYSE Arca Equities Rule 5.2(j)(3) requires that 
component stocks that, in the aggregate, account for at least 90% of 
the weight of the Underlying Index or portfolio, must each have a 
minimum worldwide trading volume during each of the last six months 
of at least 250,000 shares. The Exchange states that, as of October 
1, 2007, those component stocks comprising the Underlying Index that 
individually exceed the minimum worldwide monthly trading volume of 
250,000 shares during each of the last six months account, in the 
aggregate, for only 88.2 % of the weight of the Underlying Index 
(i.e., 1.8% below the required 90% requirement). Therefore, NYSE 
Arca has filed the instant proposed rule change to obtain Commission 
approval to list and trade the Shares on the Exchange pursuant to 
Section 19(b)(2) of the Act (15 U.S.C. 78s(b)(1)) and Rule 19b-4 
thereunder (17 CFR 240.19b-4). The Exchange further represents that 
the continued listing standards under NYSE Arca Equities Rule 
5.5(g)(2) applicable to Investment Company Units shall apply to the 
Fund Shares. See Exchange Confirmation.
---------------------------------------------------------------------------

    The Fund, which can invest in both U.S. securities and non-U.S. 
securities not listed on a national securities exchange, seeks to track 
the performance, before fees and expenses, of the Underlying Index. 
XShares Advisors, LLC, the investment adviser to the Fund 
(``Advisor''), uses a passive, or indexing, approach in managing the 
Fund, investing at least 90% of its assets in the common stocks of 
Ophthalmology companies in the Underlying Index, or in American 
Depositary Receipts (``ADRs'') or Global Depositary Receipts (``GDRs'') 
based on securities of international Ophthalmology companies in the 
Underlying Index. The Fund may also invest up to 10% of its assets in 
futures contracts, options on futures contracts, options, swaps on 
securities of companies in the Underlying Index, as well as cash and 
cash equivalents, such as money market instruments (subject to 
applicable limitations of the 1940 Act). The Fund attempts to replicate 
the Underlying Index by matching the weighting of securities in its 
portfolio with such securities' weightings in the Underlying Index.\7\ 
In managing the Fund, the Advisor seeks a correlation of 0.95 or better 
between the Fund's performance and the performance of its Underlying 
Index. A figure of 1.00 would mean perfect correlation.
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    \7\ The Exchange states that, from time to time, it may not be 
possible, for regulatory or other legal reasons, to replicate the 
Underlying Index, and in such cases, the Advisor may pursue a 
sampling strategy in managing the portfolio. Pursuant to this 
strategy, the Fund may invest the remainder of its assets in 
securities of companies not included in the Underlying Index if the 
Advisor believes that such securities will assist the Fund in 
tracking the Underlying Index. If a Fund pursues a sampling 
strategy, it will continue to invest at least 90% of its assets in 
the common stocks, ADRs, or GDRs of the companies in the Underlying 
Index.
---------------------------------------------------------------------------

    Detailed descriptions of the Fund, the Underlying Index (including 
the methodology used to determine the composition of the Underlying 
Index), procedures and payment requirements for creating and redeeming 
Shares,

[[Page 61414]]

transaction fees and expenses, dividends, distributions, taxes, reports 
to be distributed to beneficial owners of the Shares, availability of 
information regarding the Shares, calculation and dissemination of key 
values (i.e., Intraday Indicative Value, Underlying Index value, and 
net asset value or ``NAV''), trading rules and halts, surveillance, and 
the Information Bulletin can be found in the Exchange Proposal, the 
Corporation's Internet Web site (www.healthsharesinc.com), and/or in 
the Fund's Registration Statement,\8\ as applicable.
---------------------------------------------------------------------------

    \8\ See Registration Statement on Form N-1A, filed February 14, 
2006 (Securities Act File No. 333-131842 and Investment Company File 
No. 811-21855), and amendments thereto filed with the Commission.
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\9\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\10\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f.
    \10\ 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 
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

    The Exchange has neither solicited for nor received any 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 (www.sec.gov/
rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2007-111 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-NYSEArca-2007-111. 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 (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 the filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-NYSEArca-2007-111 and should 
be submitted on or before November 20, 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.\11\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\12\ which 
requires that the rules of an exchange be 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.
---------------------------------------------------------------------------

    \11\ 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).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Although NYSE Arca Equities Rule 5.2(j)(3) permits the Exchange to 
either originally list and trade Investment Company Units or trade 
Investment Company Units pursuant to UTP, the Shares do not meet the 
generic listing requirements of NYSE Arca Equities Rule 5.2(j)(3), 
which permit the listing and trading of such securities in reliance 
upon Rule 19b-4(e) under the Act,\13\ because the components of the 
Underlying Index do not meet the requirements of Commentary .01(B)(2) 
to NYSE Arca Equities Rule 5.2(j)(3).\14\ Commentary .01(B)(2) to NYSE 
Arca Equities Rule 5.2(j)(3) requires that, upon the initial listing of 
any series of Investment Company Units pursuant to Rule 19b-4(e) under 
the Act, component stocks that, in the aggregate, account for at least 
90% of the weight of the Underlying Index or portfolio, must each have 
a minimum worldwide trading volume during each of the last six months 
of at least 250,000 shares. The Exchange states that, as of October 1, 
2007, those component stocks comprising the Underlying Index that 
individually exceed the minimum worldwide monthly trading volume of 
250,000 shares during each of the last six months account, in the 
aggregate, for only 88.2 % of the weight of the Underlying Index. 
Because such percentage misses the minimum required threshold by 
approximately 1.8%, the Shares cannot be listed and traded pursuant to 
the generic listing standards of NYSE Arca Equities Rule 5.2(j)(3).
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(e).
    \14\ See supra note 6.
---------------------------------------------------------------------------

    The Commission believes, however, that the listing and trading of 
the Shares would be consistent with the Act. The Commission notes that, 
based on the Exchange's representations, the Fund Shares otherwise meet 
all of the other applicable generic listing standards under NYSE Arca 
Equities Rule 5.2(j)(3).\15\ The Commission further notes that it has 
previously approved the listing and trading of derivative securities 
products based on indices that were composed of stocks that did not 
meet certain quantitative generic listing criteria by only a slight 
margin.\16\

[[Page 61415]]

The Commission also notes that the Fund Shares are currently already 
trading on the Exchange pursuant to UTP and are substantially similar 
in structure and operation to other shares of HealthSharesTM 
exchange-traded funds, the shares of which are currently listed and 
traded on the Exchange.\17\
---------------------------------------------------------------------------

    \15\ See id.
    \16\ See Securities Exchange Act Release Nos. 55953 (June 25, 
2007), 72 FR 36084 (July 2, 2007) (SR-NYSE-2007-46) (approving the 
listing and trading of shares of the HealthSharesTM 
Orthopedic Repair exchange-traded fund where the component stocks 
comprising the index that individually exceeded the minimum 
worldwide monthly trading volume of 250,000 shares during each of 
the last six months accounted, in the aggregate, for 86.2 % of the 
weight of the index); 55699 (May 3, 2007), 72 FR 26435 (May 9, 2007) 
(SR-NYSEArca-2007-27) (approving the listing and trading of shares 
of the iShares FTSE NAREIT Residential Index Fund where the 
weighting of the five highest components of the underlying index was 
marginally higher than that allowed by NYSE Arca, Inc.'s relevant 
generic listing standards); and 52826 (November 22, 2005), 70 FR 
71874 (November 30, 2005) (SR-NYSEArca-2005-67) (approving the 
listing and trading of shares of the iShares Dow Jones U.S. Energy 
Sector Index Fund and the iShares Dow Jones U.S. Telecommunications 
Sector Index Fund where the weightings of the most heavily weighted 
component stock and the five highest components of the underlying 
indexes, respectively, were higher than that required by NYSE Arca, 
Inc.'s relevant generic listing standards). See also Securities 
Exchange Act Release No. 46306 (August 2, 2002), 67 FR 51916 (August 
9, 2002) (SR-NYSE-2002-28) (approving the trading pursuant to 
unlisted trading priveleges of shares of Vanguard Total Stock Market 
VIPERs, iShares Russell 2000 Index Funds, iShares Russell 2000 Value 
Index Funds, and iShares Russell 2000 Growth Funds, none of which 
met the trading volume requirement of the relevant generic listing 
criteria for NYSE).
    \17\ See Exchange Confirmation, supra note 5 (noting that the 
shares of other HealthSharesTM exchange-traded funds are 
listed and traded on the Exchange pursuant to Rule 19b-4(e) under 
the Act because they meet the generic listing standards under NYSE 
Arca Equities Rule 5.2(j)(3)). See 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------

    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\18\ which sets forth 
Congress' finding that it is in the public interest and appropriate for 
the protection of investors and the maintenance of fair and orderly 
markets to assure the availability to brokers, dealers, and investors 
of information with respect to quotations for and transactions in 
securities. Quotations and last-sale information for the Shares will be 
disseminated through the facilities of the Consolidated Tape 
Association (``CT'').\19\ In addition, the Exchange will disseminate 
through CT or a major market data vendor an amount per Share referred 
to as the Intraday Indicative Value at least every 15 seconds during 
Exchange trading hours.\20\ The value of the Underlying Index will be 
updated intra-day on a real time basis as individual component 
securities change in price and will be disseminated at least every 15 
seconds during the Exchange's Core Trading Session by one or more major 
market data vendors.\21\ In addition, the value of the Underlying Index 
will be disseminated by one or more major market data vendors once each 
trading day based on closing prices in the relevant exchange market. 
The NAV for the Fund is calculated by BNY Asset Management between 4:30 
p.m. and 6:30 p.m. ET each trading day and disseminates such value to 
all market participants at the same time. The updated NAV is available 
on the Corporation's Web site at the same time that the NAV is made 
available to market participants. The Corporation's Web site also 
includes: (1) The Fund's Prospectus and Statement of Additional 
Information; (2) information regarding the Underlying Index; (3) the 
prior business day's NAV; (4) the mid-point of the bid-ask spread at 
the time of calculation of the NAV (the ``Bid/Ask Price''); (5) a 
calculation of the premium or discount the Bid/Ask Price at the time of 
calculation of the NAV against such NAV; (6) the component securities 
of the Underlying Index; (7) and a description of the methodologies 
used in determining the composition of the Underlying Index and certain 
computations. Finally, the closing prices of the Fund's Deposit 
Securities \22\ are readily available from, as applicable, the relevant 
exchange, automated quotation systems, published or other public 
sources, or on-line information services that are major market data 
vendors. Similarly, information regarding market prices and volume of 
the Shares is broadly available on a real-time basis throughout the 
trading day.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \19\ See Exchange Confirmation, supra note 5 (confirming the 
information regarding the Shares to be disseminated through CT).
    \20\ See NYSE Arca Equities Rule 7.34 (providing for an Opening, 
Core, and Late Trading Session, from 4:00 a.m. to 8:00 p.m. Eastern 
Time or ``ET'').
    \21\ The Exchange states that the official index sponsors for 
the Underlying Index currently do not calculate an updated 
Underlying Index value during the Exchange's Opening and Late 
Trading Sessions. See Exchange Confirmation, supra note 5 
(confirming when the updated value of the Underlying Index is 
calculated and disseminated). However, if the index sponsors do so 
in the future, the Exchange represents that it would not trade this 
product unless such official Underlying Index value is widely 
disseminated.
    \22\ ``Deposit Securities'' is defined as the basket of stocks 
that are part of the Fund's Underlying Index and deposited with the 
Corporation by participants for purposes of purchasing a group of a 
fixed number of Shares, also known as a ``Creation Unit.''
---------------------------------------------------------------------------

    The Commission finds that the Exchange's proposed rules and 
procedures for trading of the Shares are consistent with the Act. The 
Shares will trade as equity securities, thus rendering trading in the 
Shares subject to the Exchange's existing rules governing the trading 
of equity securities. The Commission notes that trading of the Shares 
may be halted and/or the Shares may be delisted based on circumstances 
set forth under NYSE Arca Equities Rule 5.5(g)(2).\23\ In particular, 
if the Intraday Indicative Value or the value of the Underlying Index 
is not being disseminated as required, the Exchange may halt trading 
during the day in which the interruption to the dissemination of such 
values occurs; if the interruption to the dissemination of any such 
value persists past the trading day in which it first occurred, the 
Exchange will halt trading of the Shares. In addition, the Exchange 
states that it will cease trading the Shares based on NYSE Arca 
Equities Rule 7.12 (Trading Halts Due to Extraordinary Market 
Volatility) and may consider other relevant factors in exercising its 
discretion to halt or suspend trading in the Shares of the Fund because 
of market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable. Some of these factors may 
include (1) the extent to which trading is not occurring in the 
securities comprising the Underlying Index and/or the financial 
instruments of the Fund, or (2) whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present. Trading in the Shares may also be halted pursuant 
to the Exchange's ``circuit breaker'' rule \24\ or by the halt or 
suspension of trading of the securities comprising the Underlying 
Index.
---------------------------------------------------------------------------

    \23\ See supra note 6.
    \24\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

    In support of this proposal, the Exchange has made the following 
representations:
    (1) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all three trading sessions (Opening, Core, and 
Late Trading Sessions, from 4 a.m. to 8 p.m. ET).\25\
---------------------------------------------------------------------------

    \25\ See supra note 20.
---------------------------------------------------------------------------

    (2) The Exchange would utilize its existing surveillance procedures 
applicable to equity securities to monitor trading of the Shares of the 
Fund. Surveillance procedures applicable to trading of the Shares are 
comparable to those applicable to other Investment Company Units 
currently trading on the Exchange. The Exchange represents that such 
surveillance procedures are adequate to properly monitor the trading of 
the Fund Shares. The Exchange's current trading surveillance focuses on 
detecting securities trading outside their normal patterns. When such 
situations are detected, surveillance analysis follows, and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant

[[Page 61416]]

trading violations. The Exchange may also obtain trading information 
via the Intermarket Surveillance Group (``ISG'') from other exchanges 
who are members or affiliate members of ISG.\26\
---------------------------------------------------------------------------

    \26\ The Exchange notes that one or more of the underlying 
securities may trade on exchanges that are not members or affiliate 
members of ISG, and the Exchange may not have in place comprehensive 
surveillance sharing agreements with such exchanges.
---------------------------------------------------------------------------

    (3) Standard and Poor's, which acts as the ``Index Administrator'' 
and is responsible for maintaining the Underlying Index, is neither a 
registered broker-dealer nor an ``affiliated person,'' as defined in 
Section 2(a)(3) of the 1940 Act, \27\ or an affiliated person of the 
Fund, Advisor, Sub-Advisor,\28\ Distributor,\29\ or the Corporation. In 
addition, the Distributor is not an affiliated person of the Advisor, 
the Sub-Advisor, the Fund, or the Corporation.\30\
---------------------------------------------------------------------------

    \27\ See 15 U.S.C. 80a-2(a)(3).
    \28\ BNY Investment Advisors acts as the ``Sub-Advisor'' to the 
Fund.
    \29\ ALPS Distributors, Inc. is a registered broker-dealer and 
acts as the ``Distributor'' and underwriter of the Creation Units.
    \30\ See NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(b)(1) 
(providing for restrictions to access of information concerning 
changes and adjustments to an index and requirements designed to 
prevent the use and dissemination of material, non-public 
information regarding the applicable index, among others).
---------------------------------------------------------------------------

    (4) Prior to the commencement of trading, the Exchange will inform 
its ETP Holders \31\ in an Information Bulletin (``Bulletin'') of the 
special characteristics and risks associated with trading the Shares. 
Specifically, the Bulletin will discuss the following: (1) The 
procedures for purchases and redemptions of Shares in Creation Unit 
aggregations; (2) NYSE Arca Equities Rule 9.2(a),\32\ which imposes a 
duty of due diligence on ETP Holders to learn the essential facts 
relating to every customer prior to trading the Shares; (3) the risks 
involved in trading the Shares during the Opening and Late Trading 
Sessions when an updated Intraday Indicative Value and Underlying Index 
value will not be calculated or publicly disseminated; (4) how 
information regarding the Intraday Indicative Value is disseminated; 
(5) the requirement that ETP Holders deliver a Prospectus to investors 
purchasing newly issued Shares prior to or concurrently with the 
confirmation of a transaction; and (6) trading information. In 
addition, the Bulletin will reference that the Fund is subject to 
various fees and expenses described in the Registration Statement,\33\ 
discuss any exemptive, no-action, and/or interpretive relief granted by 
the Commission from any rules under the Act, and disclose that the NAV 
for the Shares will be calculated after 4 p.m. ET each trading day.
---------------------------------------------------------------------------

    \31\ The Exchange defines an ``ETP Holder'' as a sole 
proprietorship, partnership, corporation, limited liability company, 
or other organization in good standing that has been issued an 
Equity Trading Permit or ``ETP'' by NYSE Arca Equities for effecting 
approved securities transactions on NYSE Arca Equities' trading 
facilities. An ETP Holder must be a registered broker or dealer 
pursuant to Section 15 of the Act (15 U.S.C. 78o).
    \32\ NYSE Arca Equities Rule 9.2(a) provides that an ETP Holder, 
before recommending a transaction, must have reasonable grounds to 
believe that the recommendation is suitable for the customer based 
on any facts disclosed by the customer as to his or her other 
security holdings and as to his or her financial situation and 
needs. Further, the rule provides, with a limited exception, that 
prior to the execution of a transaction recommended to a non-
institutional customer, the ETP Holder shall make reasonable efforts 
to obtain information concerning the customer's financial status, 
tax status, investment objectives, and any other information that 
they believe would be useful to make a recommendation.
    \33\ See supra note 8.
---------------------------------------------------------------------------

    This 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 referenced above, the Commission notes that the 
Fund Shares are currently trading on the Exchange pursuant to UTP \34\ 
and are substantially similar in structure, operation, and function to 
the shares of other HealthShares\TM\ exchange-traded funds, the shares 
of which are currently listed and trading on the Exchange pursuant to 
Rule 19b-4(e) under the Act.\35\ In addition, the Commission notes that 
it has previously approved the listing and trading of derivative 
securities products based on indices that were composed of stocks that 
did not meet certain quantitative generic listing criteria by similar 
amounts.\36\ Although the Fund Shares do not meet the initial listing 
requirement of Commentary .01 to NYSE Arca Equities Rule 5.2(j)(3) and 
therefore cannot be listed pursuant to Rule 19b-4(e),\37\ the 
Commission believes that the Shares are substantially similar to the 
other HealthShares\TM\ trading on the Exchange and notes that the 
Shares would otherwise comply with all other generic listing 
requirements under NYSE Arca Equities Rule 5.2(j)(3).\38\ The 
Commission also notes that the continued listing standards under NYSE 
Arca Equities Rule 5.5(g)(2) applicable to Investment Company Units 
would apply to the Fund Shares. The listing and trading of the Shares 
do not appear to present any new or significant regulatory concerns. 
Therefore, the Commission believes that accelerating approval of this 
proposal would allow the Shares to trade on the Exchange without undue 
delay and should generate additional competition in the market for such 
products.
---------------------------------------------------------------------------

    \34\ See supra note 5.
    \35\ See supra note 17.
    \36\ See supra note 16.
    \37\ See supra note 6.
    \38\ See id.
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\39\ that the proposed rule change (SR-NYSEArca-2007-111) be, and 
it hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\40\
Nancy M. Morris,
Secretary.
---------------------------------------------------------------------------

    \40\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

 [FR Doc. E7-21276 Filed 10-29-07; 8:45 am]
BILLING CODE 8011-01-P