Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Trade Units of the United States 12 Month Oil Fund, LP and the United States 12 Month Natural Gas Fund, LP Pursuant to Unlisted Trading Privileges, 67328-67332 [E7-23112]
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Federal Register / Vol. 72, No. 228 / Wednesday, November 28, 2007 / Notices
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of FINRA. 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–FINRA–2007–023 and
should be submitted on or before
December 19, 2007.
IV. 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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23113 Filed 11–27–07; 8:45 am]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FINRA–2007–023 on the
subject line.
ebenthall on PRODPC61 with NOTICES
consistent with the protection of
investors and the public interest
because if SR–NASD–2007–041 is
approved by the Commission, it would
allow firms sufficient time to make the
required technological changes. For
these reasons, the Commission
designates the proposed rule change as
operative upon filing.16
At any time within 60 days of the
filing of such 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 the furtherance of the
purposes of the Act.
SECURITIES AND EXCHANGE
COMMISSION
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–FINRA–2007–023. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
16 For the purposes only of waiving the operative
date of this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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BILLING CODE 8011–01–P
[Release No. 34–56832; File No. SR–
NYSEArca–02007–102]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change to Trade Units
of the United States 12 Month Oil Fund,
LP and the United States 12 Month
Natural Gas Fund, LP Pursuant to
Unlisted Trading Privileges
November 21, 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
2, 2007, NYSE Arca, Inc. (the
‘‘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
substantially prepared by the Exchange.
This order provides notice of the
proposed rule change and approves the
proposed rule change on an accelerated
basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to trade
pursuant to unlisted trading privileges
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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(‘‘UTP’’) units (‘‘Units’’) of the United
States 12 Month Oil Fund, LP (‘‘12
Month Oil Fund’’) and the United States
12 Month Natural Gas Fund, LP (‘‘12
Month Natural Gas Fund’’) (each, a
‘‘Partnership,’’ and collectively, the
‘‘Partnerships’’). The text of the
proposed rule change is available at the
Exchange’s principal office, the
Commission’s Public Reference Room,
and https://www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, 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. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Under NYSE Arca Equities Rule
8.300, which sets forth criteria to permit
the trading of Partnership Units 3 either
by listing or pursuant to UTP, the
Exchange proposes to trade pursuant to
UTP the Units of each Partnership. The
Commission has approved the listing
and trading of such Units on the
American Stock Exchange LLC
(‘‘Amex’’).4
Ownership of each Partnership Unit
represents a fractional undivided unit of
a beneficial interest in the net assets of
the applicable Partnership.5 The net
assets of each of the Partnerships will
consist primarily of investments in
futures contracts for crude oil, heating
oil, gasoline, natural gas, and other
petroleum-based fuels that are traded on
3 NYSE Arca Equities Rule 8.300(b)(2) defines
Partnership Units as securities issued by a
partnership that invests in any combination of
futures contracts, options on futures contracts,
forward contracts, commodities, and/or securities
and that are redeemed daily in specified aggregate
amounts at net asset value (‘‘NAV’’).
4 See Securities Exchange Act Release No. 56831
(November 21, 2007) (SR–Amex–2007–98) (granting
approval to list and trade the Units on Amex);
Securities Exchange Act Release No. 56719 (October
29, 2007), 72 FR 62277 (November 2, 2007) (SR–
Amex–2007–98) (providing notice of Amex’s
proposal to list and trade the Units) (‘‘Amex
Notice’’).
5 Each Partnership is a commodity pool that will
issue Units that may be purchased and sold on the
Exchange.
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the New York Mercantile Exchange
(‘‘NYMEX’’), Intercontinental Exchange
(‘‘ICE Futures’’), or other U.S. and
foreign exchanges (collectively, the
‘‘Futures Contracts’’). In the case of the
12 Month Oil Fund, the predominant
investments are expected to be based
on, or related to, crude oil. Similarly, for
the 12 Month Natural Gas Fund, the
predominant investments are expected
to be based on, or related to, natural gas.
The investment objective of the 12
Month Oil Fund is for the changes in
percentage terms of a Unit’s NAV to
reflect the changes in percentage terms
of the price of light, sweet crude oil
delivered to Cushing, Oklahoma, as
measured by the changes in the average
prices of 12 crude oil futures contracts
traded on NYMEX (the ‘‘Oil Benchmark
Futures Contracts’’), less the 12 Month
Oil Fund’s expenses. The investment
objective of the 12 Month Natural Gas
Fund is for changes in percentage terms
of a Unit’s NAV to reflect the changes
in percentage terms of the price of
natural gas delivered to Henry Hub,
Louisiana, as measured by the changes
in the average of the prices of 12 futures
contracts on natural gas traded on
NYMEX (the ‘‘Natural Gas Benchmark
Futures Contracts’’), less the 12 Month
Natural Gas Fund’s expenses.6
The Exchange represents that quotes
and last-sale information for the Futures
Contracts are widely disseminated
through a variety of market data vendors
worldwide. The daily settlement prices
for the NYMEX-traded Futures
Contracts are publicly available on the
NYMEX Web site at https://
www.nymex.com, and real-time futures
data is available by subscription from
various financial information services.
NYMEX also provides delayed futures
information on current and past trading
sessions and market news free of charge
on its Web site. The specific contract
specifications for the Futures Contracts
6 A detailed discussion of the crude oil, gasoline,
heating oil, and natural gas markets; futures
regulation and the structure and regulation of the
Partnerships; investment strategies (including
specific crude oil- and natural gas-related
investments), objectives, procedures, and policies;
impact of accountability and position limits on the
Futures Contracts; creations and redemptions of
baskets of Units; arbitrage; Partnership termination
events; and calculation methodology of the NAV for
the Units, among others, can be found in the Amex
Notice. In addition, information regarding the
Partnerships and the investment manager for each
Partnership, the manner in which the Units will be
offered and sold, and the investment strategy of the
12 Month Oil Fund and the 12 Month Natural Gas
Fund is included in respective registration
statements of the Partnerships regarding the offering
of the Units filed with the Commission under the
Securities Act of 1933. See 12 Month Oil Fund
Form S–1 filed July 5, 2007, as amended (File No.
333–144348); 12 Month Natural Gas Fund Form S–
1 filed July 6, 2007 (File No. 333–144409).
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15:18 Nov 27, 2007
Jkt 214001
are also available on the NYMEX Web
site and the ICE Futures Web site at
https://www.icefutures.com.
Amex will disseminate through the
facilities of the Consolidated Tape
Association (‘‘CTA’’) an updated
Indicative Partnership Value
(‘‘Indicative Partnership Value’’). The
Indicative Partnership Value for each
Partnership will be disseminated on a
per-Unit basis at least every 15 seconds
during the regular trading hours from
9:30 a.m. to 4:15 p.m. Eastern Time
(‘‘ET’’). The Indicative Partnership
Value is based on open-outcry trading of
the relevant Oil or Natural Gas
Benchmark Futures Contracts on
NYMEX. Open outcry trading on
NYMEX closes daily at 2:30 p.m. ET,
while NYMEX’s energy futures contracts
are traded on the Chicago Mercantile
Exchange’s CME Globex electronic
trading platform on a 24-hour basis.7
After the close of open outcry on
NYMEX at 2:30 p.m. ET, the Indicative
Partnership Value will reflect changes to
the relevant Benchmark Futures
Contracts as provided for through CME
Globex. The value of the relevant
Benchmark Futures Contracts will be
available on a 15-second delayed basis
from 9:30 a.m. to 4:15 p.m. ET.
While NYMEX is open for trading, the
Indicative Partnership Value can be
expected to closely approximate the
value per Unit of the Basket Amount.
However, during Exchange trading
hours when the Futures Contracts have
ceased trading in NYMEX’s open outcry,
spreads and resulting premiums or
discounts may widen and, therefore,
increase the difference between the
price of the Units and the NAV of the
Units. The Exchange submits that the
Indicative Partnership Value
disseminated from 9:30 a.m. to 4:15
p.m. ET, on a per-Unit basis, should not
be viewed as a real-time update of the
NAV, which is calculated only once
daily.
Amex will make available on its Web
site at https://www.amex.com the
following information: (1) The prior
business day’s NAV and the reported
closing price; (2) the mid-point of the
bid-ask price in relation to the NAV as
of the time the NAV is calculated (‘‘BidAsk Price’’); 8 (3) calculation of the
premium or discount of such price
7 CME Globex (‘‘Globex’’) is an open-access
marketplace that operates virtually 24 hours each
trading day. Electronic trading on Globex is
conducted from 6 p.m. ET Sunday through 5:15
p.m. ET Friday each week. There is a 45-minute
break each day between 5:15 p.m. ET and 6 p.m.
ET.
8 The Bid-Ask Price of Units is determined using
the highest bid and lowest offer as of the time of
calculation of the NAV.
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67329
against such NAV; (4) data in chart form
displaying the frequency distribution of
discounts and premiums of the Bid-Ask
Price against the NAV, within
appropriate ranges for each of the four
previous calendar quarters; (5) the
prospectus and the most recent periodic
reports filed with the Commission or
required by the Commodity Futures
Trading Commission (‘‘CFTC’’); and (6)
other applicable quantitative
information.
The total portfolio composition of the
12 Month Oil Fund and the 12 Month
Natural Gas Fund will be disclosed each
business day that Amex is open for
trading on their respective Web sites at
https://www.unitedstates
12monthoilfund.com and https://
www.unitedstates12monthnatural
gasfund.com. The 12 Month Oil Fund’s
Web site disclosure of portfolio holdings
will be made daily and will include, as
applicable, the name and value of each
Futures Contract and other crude oilrelated investments (‘‘Crude Oil
Interests’’), the specific types and
characteristics of the Crude Oil
Interests, short-term obligations of the
United States of two years or less
(‘‘Treasuries’’), and the amount of cash
and cash equivalents held in the
portfolio of the 12 Month Oil Fund. The
12 Month Natural Gas Fund’s Web site
disclosure of portfolio holdings will be
made daily and will include, as
applicable, the name and value of each
Futures Contract and other natural gasrelated investments (‘‘Natural Gas
Interests’’), the specific types and
characteristics of the Natural Gas
Interests, Treasuries, and the amount of
cash and cash equivalents held in the
portfolio of the 12 Month Natural Gas
Fund.
The public Web site disclosure of the
portfolio composition of each of the 12
Month Oil Fund and the 12 Month
Natural Gas Fund will coincide with the
disclosure on each business day of the
NAV for the applicable Units and the
Basket Amount 9 (for orders placed
during the day) for each Partnership.
Therefore, the same portfolio
information will be provided on the
public Web site for each Partnership as
well as in the facsimile or e-mail
9 A ‘‘Basket Amount’’ is the amount equal to the
NAV per Unit, times 100,000 Units (each such
aggregation of Units, a ‘‘Basket’’) calculated for the
purpose of issuing Baskets to Authorized
Purchasers. See Amex Notice, supra note 4, 72 FR
at 62283. An ‘‘Authorized Purchaser’’ is a person,
who, at the time of submitting an order to create
or redeem Units, is (1) a registered broker-dealer or
other market participant, such as a bank or other
financial institution, that is exempt from brokerdealer registration; and (2) a Depository Trust
Company participant. See Amex Notice, supra note
4, 72 FR at 62282 n.14.
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Federal Register / Vol. 72, No. 228 / Wednesday, November 28, 2007 / Notices
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message to Authorized Purchasers
containing the NAV and Basket Amount
(‘‘Daily Dissemination’’). The format of
the public Web site disclosure and the
Daily Dissemination will differ because
the public Web site will list all portfolio
holdings while the Daily Dissemination
will provide the portfolio holdings in a
format appropriate for Authorized
Purchasers, i.e., the exact components of
a Creation Unit.
Each Partnership’s NAV will be
calculated and disseminated daily.10
Amex disseminates for each Partnership
on a daily basis by means of the CTA/
Consolidated Quote (‘‘CQ’’) High Speed
Lines information with respect to the
Indicative Partnership Value, recent
NAV, Units outstanding, Basket
Amount, and Deposit Amount.11 Amex
will also make available on its Web site
daily trading volume, closing prices,
and the NAV for the Units.
The Exchange represents that it will
cease trading the Units of a Partnership
if the listing market stops trading the
Units. The Exchange states further that
UTP trading in the Units is governed by
the trading halts provisions of NYSE
Arca Equities Rule 7.34 relating to
temporary interruptions in the
calculation or wide dissemination of an
Indicative Partnership Value or the
value of the applicable underlying
Benchmark Futures Contracts.12 In
addition, the Exchange may consider all
relevant factors in exercising its
discretion to halt or suspend trading in
the Units. Trading may be halted
because of market conditions or for
reasons that, in the view of the
Exchange, make trading in the Units
inadvisable. These may include: (1) The
extent to which trading is not occurring
in the underlying Futures Contracts; or
(2) whether other unusual conditions or
circumstances detrimental to the
10 Amex will obtain a representation from each
Partnership that the respective NAV per Unit will
be calculated daily and made available to all market
participants at the same time. See Amex Notice,
supra note 4, 72 FR at 62283 n.18.
11 The ‘‘Deposit Amount’’ is the amount
transferred from a purchaser to Brown Brothers
Harriman & Co. for the purpose of purchasing a
Basket of Units. See Amex Notice, supra note 4, 72
FR at 62283.
12 The Exchange states that NYSE Arca Equities
Rule 7.34(a) literally addresses temporary
interruptions in the calculation or wide
dissemination of the Indicative Intra-Day Value and
the value of an underlying index. The Units of each
Partnership, however, do not have an underlying
index, but have underlying Benchmark Futures
Contracts. Therefore, the Exchange hereby
represents that the provisions in NYSE Arca
Equities Rule 7.34(a) that address interruptions in
the calculation or wide dissemination of the value
of an underlying index shall also apply, in this case,
to interruptions in the calculation or wide
dissemination of the value of the underlying
Benchmark Futures Contracts.
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15:18 Nov 27, 2007
Jkt 214001
maintenance of a fair and orderly
market are present. In addition, trading
in the Units could be halted pursuant to
the Exchange’s ‘‘circuit breaker’’ rule 13
or by the halt or suspension of trading
of the underlying securities.
The Exchange deems the Units to be
equity securities, thus rendering trading
in the Units subject to the Exchange’s
existing rules governing the trading of
equity securities. Units will trade on the
Exchange from 4 a.m. to 8 p.m. ET in
accordance with NYSE Arca Equities
Rule 7.34 (Opening, Core, and Late
Trading Sessions). The Exchange
represents that it has appropriate rules
to facilitate transactions in the Units
during all trading sessions.
The Exchange intends to utilize its
existing surveillance procedures
applicable to derivative products to
monitor trading in the Units. The
Exchange represents that these
procedures are adequate to properly
monitor Exchange trading of the Units
in all trading sessions and to deter and
detect violations of Exchange rules. The
Exchange notes that NYSE Arca Equities
Rule 8.300(e) sets forth certain
restrictions on ETP Holders 14 acting as
registered Market Makers in Units to
facilitate surveillance.
The Exchange may obtain information
via the Intermarket Surveillance Group
(‘‘ISG’’) from other exchanges who are
members or affiliates of the ISG. In
addition, the Exchange has an
information sharing agreement in place
with each of NYMEX and ICE Futures
for the purpose of providing information
in connection with trading in or related
to futures contracts traded on NYMEX
and ICE Futures, respectively. To the
extent that a Partnership invests in
Crude Oil Interests or Natural Gas
Interests traded on other exchanges, the
Exchange will seek to enter into
information sharing agreements with
those particular exchanges.
Prior to the commencement of
trading, the Exchange will inform its
ETP Holders in an Information Bulletin
(‘‘Bulletin’’) of the special
characteristics and risks associated with
trading the Units. Specifically, the
Bulletin will discuss the following: (1)
The risks involved in trading the Units
during the Opening and Late Trading
Sessions when an updated Indicative
Partnership Value will not be calculated
13 See
NYSE Arca Equities Rule 7.12.
Holder’’ means a sole proprietorship,
partnership, corporation, limited liability company,
or other organization in good standing that has been
issued an Equity Trading Permit or ‘‘ETP.’’ An ETP
Holder must be a registered broker or dealer
pursuant to Section 15 of the Act, 15 U.S.C. 78o(b).
14 ‘‘ETP
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Fmt 4703
Sfmt 4703
or publicly disseminated; 15 (2) the
procedures for purchases and
redemptions of Units in Baskets (and
that Units are not individually
redeemable); (3) NYSE Arca Equities
Rule 9.2(a), which imposes a duty of
due diligence on its ETP Holders to
learn the essential facts relating to every
customer prior to trading the Units; (4)
how information regarding the
Indicative Partnership Value is
disseminated; (5) the requirement that
ETP Holders deliver a prospectus to
investors purchasing newly issued Units
prior to or concurrently with the
confirmation of a transaction; and (6)
trading information. In addition, the
Bulletin will reference that each
Partnership is subject to various fees
and expenses described in the relevant
registration statement; there is no
regulated source of last-sale information
regarding physical commodities; the
Commission has no jurisdiction over the
trading of crude oil, natural gas, heating
oil, gasoline, or other petroleum-based
fuels; and the CFTC has regulatory
jurisdiction over the trading of crudeoil-based and natural-gas-based futures
contracts and related options. The
Bulletin will also discuss any
exemptive, no-action, or interpretive
relief granted by the Commission from
any rules under the Act. The Bulletin
will also disclose that the NAV for the
Units will be calculated after 4 p.m. ET
each trading day.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,16 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,17 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 and a national market
system. In addition, the Exchange
believes that the proposed rule change
is consistent with Rule 12f–5 under the
Act 18 because the Exchange deems the
Units to be equity securities, thus
rendering trading in the Units subject to
the Exchange’s existing rules governing
the trading of equity securities.
15 See NYSE Arca Equities rule 7.34(e) (Customer
Disclosures).
16 15 U.S.C. 78f(b).
17 15 U.S.C. 78f(b)(5).
18 17 CFR 240.12f–5.
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Federal Register / Vol. 72, No. 228 / Wednesday, November 28, 2007 / Notices
notes that it has approved the original
listing and trading of the Units on
Amex.24 The Commission finds that the
The Exchange does not believe that
proposal is consistent with Rule 12f–5
the proposed rule change will impose
under the Act,25 which provides that an
any burden on competition that is not
exchange shall not extend UTP to a
necessary or appropriate in furtherance
security unless the exchange has in
of the purposes of the Act.
effect a rule or rules providing for
C. Self-Regulatory Organization’s
transactions in the class or type of
Statement on Comments on the
security to which the exchange extends
Proposed Rule Change Received From
UTP. The Exchange has represented that
it meets this requirement because it
Members, Participants or Others
IV. Commission’s Findings and Order
deems the Units to be equity securities,
Written comments on the proposed
Granting Accelerated Approval of the
thus rendering trading in the Units
rule change were neither solicited nor
Proposed Rule Change
subject to the Exchange’s existing rules
received.
After careful review, the Commission
governing the trading of equity
finds that the proposed rule change is
III. Solicitation of Comments
securities.
consistent with the requirements of the
The Commission further believes that
Interested persons are invited to
Act and the rules and regulations
the proposal is consistent with Section
submit written data, views, and
thereunder applicable to a national
11A(a)(1)(C)(iii) of the Act,26 which sets
arguments concerning the foregoing,
securities exchange.19 In particular, the
forth Congress’ finding that it is in the
including whether the proposed rule
Commission finds that the proposed
public interest and appropriate for the
change is consistent with the Act.
rule change is consistent with Section
protection of investors and the
Comments may be submitted by any of
6(b)(5) of the Act,20 which requires that
maintenance of fair and orderly markets
the following methods:
an exchange have rules designed, among to assure the availability to brokers,
other things, to promote just and
dealers, and investors of information
Electronic Comments
equitable principles of trade, to remove
with respect to quotations for and
• Use the Commission’s Internet
impediments to and perfect the
transactions in securities. Quotations for
comment form (https://www.sec.gov/
mechanism of a free and open market
and last-sale information regarding the
rules/sro.shtml); or
and a national market system, and, in
Units will be disseminated through the
• Send an e-mail to rulegeneral, to protect investors and the
Consolidated Quotation System and
comments@sec.gov. Please include File
public interest. The Commission
CTA, respectively.27 In addition, Amex
Number SR–NYSEArca–2007–102 on
believes that this proposal should
will disseminate a variety of
the subject line.
benefit investors by increasing
information for each Partnership on a
competition among markets that trade
daily basis through the facilities of the
Paper Comments
the Units. The Commission notes that it CTA/CQ High Speed Lines including
• Send paper comments in triplicate
previously approved for trading on the
the Indicative Partnership Value on a
to Nancy M. Morris, Secretary,
Exchange pursuant to UTP Partnership
per-Unit basis, at least every 15 seconds
Securities and Exchange Commission,
Units issued by the United States Oil
during regular Amex trading hours, the
100 F Street, NE., Washington, DC
Fund, LP and the United States Natural
recent NAV, the number of Units
20549–1090.
Gas Fund, LP, which are similar to the
outstanding, the Basket Amount, and
All submissions should refer to File
Units that the Exchange proposes to
the Deposit Amount. The daily closing
Number SR–NYSEArca–2007–102. This trade herein.21
and settlement prices for the NYMEXfile number should be included on the
In addition, the Commission finds
traded Futures Contracts held by each
subject line if e-mail is used. To help the that the proposal is consistent with
Partnership, delayed futures
22 which permits
Commission process and review your
Section 12(f) of the Act,
information on current and past trading
comments more efficiently, please use
an exchange to trade, pursuant to UTP,
sessions, and market news are publicly
only one method. The Commission will a security that is listed and registered on available on the NYMEX Web site.
post all comments on the Commission’s another exchange.23 The Commission
Quotations and last-sale information for
Internet Web site (https://www.sec.gov/
the Futures Contracts are widely
19 In approving this rule change, the Commission
rules/sro.shtml). Copies of the
disseminated through a variety of
notes that it has considered the proposed rule’s
submission, all subsequent
market data vendors worldwide. Amex’s
impact on efficiency, competition, and capital
amendments, all written statements
Web site contains information related to
formation. See 15 U.S.C. 78c(f).
with respect to the proposed rule
20 15 U.S.C. 78f(b)(5).
the NAV, the premium or discount of
change that are filed with the
21 See Securities Exchange Act Release No. 53875
the Bid-Ask Price against the NAV, the
(May 25, 2006), 71 FR 32164 (June 2, 2006) (SR–
Commission, and all written
prospectus and other periodically-filed
NYSEArca–2006–11) (approving NYSE Arca
communications relating to the
reports, daily trading volume data, Unit
Equities Rule 8.300 and the trading of Partnership
proposed rule change between the
Units of the United States Oil Fund, LP pursuant
Commission and any person, other than to UTP); Securities Exchange Act Release No. 56042 When an exchange extends UTP to a security, it
allows its members to trade the security as if it were
(July 11, 2007), 72 FR 39118 (July 17, 2007) (SR–
those that may be withheld from the
listed and registered on the exchange even though
NYSEArca–2007–45) (approving the trading of
public in accordance with the
it is not so listed and registered.
Partnership Units of the United States Natural Gas
provisions of 5 U.S.C. 552, will be
24 See supra note 4.
Fund, LP pursuant to UTP).
available for inspection and copying in
25 17 CFR 240.12f–5.
22 15 U.S.C. 78l(f).
26 15 U.S.C. 78k–1(a)(1)(C)(iii).
the Commission’s Public Reference
23 Section 12(a) of the Act, 15 U.S.C. 78l(a),
27 E-mail from Timothy J. Malinowski, Director,
generally prohibits a broker-dealer from trading a
Room, 100 F Street, NE., Washington,
security on a national securities exchange unless
NYSE Euronext, to Edward Cho, Special Counsel,
DC 20549, on official business days
registered on that
between the hours of 10 a.m. and 3 p.m. the security isof the Act. Section exchange pursuant Division of Trading and Markets, Commission,
to Section 12
12(f) of the Act
dated November 15, 2007 (confirming the
Copies of such filing also will be
excludes from this restriction trading in any
dissemination of information concerning quotations
and last-sale information).
security to which an exchange ‘‘extends UTP.’’
available for inspection and copying at
B. Self-Regulatory Organization’s
Statement on Burden on Competition
ebenthall on PRODPC61 with NOTICES
the principal offices 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–2007–102 and
should be submitted on or before
December 19, 2007.
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67332
Federal Register / Vol. 72, No. 228 / Wednesday, November 28, 2007 / Notices
ebenthall on PRODPC61 with NOTICES
closing prices, and other quantitative
information. Finally, the 12 Month Oil
Fund and the 12 Month Natural Gas
Fund’s Web sites will disclose, on each
business day that the Amex is open for
trading, the total portfolio composition.
The Commission also believes that the
Exchange’s trading halt rules are
reasonably designed to prevent trading
in the Units when transparency is
impaired. Existing NYSE Arca Equities
Rule 7.34(a)(4), which will apply to the
trading of the Units, provides that, if the
Benchmark Futures Contract or
Indicative Partnership Value is no
longer calculated or disseminated as
required (a) during the Opening Session
(4 a.m. to 9:30 a.m. ET), the Exchange
may continue to trade the Units for the
remainder of the Opening Session; (b)
during the Core Trading Session (9:30
a.m. to 4 p.m. ET), the Exchange must
halt trading in the Units; and (c) during
the Late Trading Session (4 p.m. to 8
p.m. ET), the Exchange may continue
trading in the Units only if the original
listing market traded such Units until
the close of its regular trading session
without halt. If the Benchmark Futures
Contract or Indicative Partnership Value
continues not to be calculated or
disseminated as of the next business
day’s Opening Session, the Exchange
will not commence trading in the Units
in such Opening Session.28
The Commission notes that, if the
Units should be delisted by the listing
exchange, the Exchange would no
longer have authority to trade the Units
pursuant to this order.
In support of this proposal, the
Exchange has made the following
representations:
(1) The Exchange’s surveillance
procedures are adequate to properly
monitor the trading of the Units on a
UTP basis during all trading sessions.
(2) The Exchange would inform its
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Units,
including risks inherent with trading
the Units during the Opening and Late
Trading Sessions when the updated
Indicative Partnership Value is not
calculated and disseminated and
suitability recommendation
requirements.
(3) The Exchange would require its
members to deliver a prospectus to
investors purchasing Units prior to or
concurrently with a transaction in such
Units and will note this prospectus
28 The Exchange may resume trading in the Units
only if the calculation and dissemination of the
Benchmark Futures Contract or Indicative
Partnership Value resumes, or trading in the Units
resumes in the original listing market. See NYSE
Arca Equities Rule 7.34(a)(4)(C)(2).
VerDate Aug<31>2005
15:18 Nov 27, 2007
Jkt 214001
delivery requirement in the Information
Bulletin.
This approval order is based on the
Exchange’s representations.
The Commission finds good cause for
approving this proposal before the
thirtieth day after the publication of
notice thereof in the Federal Register.
As noted above, the Commission has
approved the original listing and trading
of the Units on Amex.29 The
Commission presently is not aware of
any regulatory issue that should cause it
to revisit that finding or would preclude
the trading of the Units on the Exchange
pursuant to UTP. Accelerating approval
of this proposal should benefit investors
by creating, without undue delay,
additional competition in the market for
such Units.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,30 that the
proposed rule change (SR–NYSEArca–
2007–102) be, and it hereby is, approved
on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23112 Filed 11–27–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56828; File No. SR–Phlx–
2007–87]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to the Trading
Sessions for Selected ETFs
19(b)(3)(A)(iii) of the Act 3 and Rule
19b–4(f)(6) thereunder,4 which renders
it effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Phlx proposes to update the list in
Phlx Rule 101 of securities eligible to
trade in one or more, but not all three,
of the Exchange’s trading sessions. The
securities to be added are: (1) iShares
MSCI Canada Index Fund; (2) iShares
MSCI EAFE Index Fund; (3) iShares
MSCI EAFE Value Index Fund; (4)
iShares MSCI Emerging Markets Index
Fund; (5) iShares MSCI S&P Europe
350 Index Fund; (6) SPDR DJ Global
Titans ETF; and (7) Vanguard Emerging
Markets ETF.5 The text of the proposed
rule change is available at Phlx’s
principal office, the Commission’s
Public Reference Room, and https://
www.phlx.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Phlx included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of those
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 parts of such
statements.
November 20, 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 November
19, 2007, the Philadelphia Stock
Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been substantially prepared by Phlx.
The Exchange filed the proposal as a
‘‘non-controversial’’ proposed rule
change pursuant to Section
29 See
supra note 4.
U.S.C. 78s(b)(2).
31 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
30 15
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
3 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
5 Recently, NYSEArca, Inc. (‘‘NYSEArca’’) filed
and received approval for a proposed rule change
to expand the trading hours of the securities of
certain exchange-traded funds (‘‘ETFs’’) traded on
the NYSE Arca Marketplace to include all three
trading sessions. See Securities Exchange Act
Release No. 56627 (October 5, 2007), 72 FR 58145
(October 12, 2007) (SR–NYSEArca–2007–75). Phlx
is not proposing to adopt these changes at this time.
Prior to this, NYSEArca restricted the trading of
certain ETFs, including those referred to in this
proposed rule change, to one or two, but not all
three, of its trading sessions. In this proposed rule
change, Phlx is proposing to adopt the same
restricted sessions that NYSEArca had for the
named ETFs prior to the approval of SR–
NYSEArca–2007–75.
4 17
E:\FR\FM\28NON1.SGM
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]]>Agencies
[Federal Register Volume 72, Number 228 (Wednesday, November 28, 2007)]
[Notices]
[Pages 67328-67332]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-23112]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56832; File No. SR-NYSEArca-02007-102]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Change to
Trade Units of the United States 12 Month Oil Fund, LP and the United
States 12 Month Natural Gas Fund, LP Pursuant to Unlisted Trading
Privileges
November 21, 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 2, 2007, NYSE Arca, Inc. (the ``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 substantially prepared by the Exchange.
This order provides notice of the proposed rule change and approves the
proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to trade pursuant to unlisted trading
privileges (``UTP'') units (``Units'') of the United States 12 Month
Oil Fund, LP (``12 Month Oil Fund'') and the United States 12 Month
Natural Gas Fund, LP (``12 Month Natural Gas Fund'') (each, a
``Partnership,'' and collectively, the ``Partnerships''). The text of
the proposed rule change is available at the Exchange's principal
office, the Commission's Public Reference Room, and https://
www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, 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. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Under NYSE Arca Equities Rule 8.300, which sets forth criteria to
permit the trading of Partnership Units \3\ either by listing or
pursuant to UTP, the Exchange proposes to trade pursuant to UTP the
Units of each Partnership. The Commission has approved the listing and
trading of such Units on the American Stock Exchange LLC (``Amex'').\4\
---------------------------------------------------------------------------
\3\ NYSE Arca Equities Rule 8.300(b)(2) defines Partnership
Units as securities issued by a partnership that invests in any
combination of futures contracts, options on futures contracts,
forward contracts, commodities, and/or securities and that are
redeemed daily in specified aggregate amounts at net asset value
(``NAV'').
\4\ See Securities Exchange Act Release No. 56831 (November 21,
2007) (SR-Amex-2007-98) (granting approval to list and trade the
Units on Amex); Securities Exchange Act Release No. 56719 (October
29, 2007), 72 FR 62277 (November 2, 2007) (SR-Amex-2007-98)
(providing notice of Amex's proposal to list and trade the Units)
(``Amex Notice'').
---------------------------------------------------------------------------
Ownership of each Partnership Unit represents a fractional
undivided unit of a beneficial interest in the net assets of the
applicable Partnership.\5\ The net assets of each of the Partnerships
will consist primarily of investments in futures contracts for crude
oil, heating oil, gasoline, natural gas, and other petroleum-based
fuels that are traded on
[[Page 67329]]
the New York Mercantile Exchange (``NYMEX''), Intercontinental Exchange
(``ICE Futures''), or other U.S. and foreign exchanges (collectively,
the ``Futures Contracts''). In the case of the 12 Month Oil Fund, the
predominant investments are expected to be based on, or related to,
crude oil. Similarly, for the 12 Month Natural Gas Fund, the
predominant investments are expected to be based on, or related to,
natural gas.
---------------------------------------------------------------------------
\5\ Each Partnership is a commodity pool that will issue Units
that may be purchased and sold on the Exchange.
---------------------------------------------------------------------------
The investment objective of the 12 Month Oil Fund is for the
changes in percentage terms of a Unit's NAV to reflect the changes in
percentage terms of the price of light, sweet crude oil delivered to
Cushing, Oklahoma, as measured by the changes in the average prices of
12 crude oil futures contracts traded on NYMEX (the ``Oil Benchmark
Futures Contracts''), less the 12 Month Oil Fund's expenses. The
investment objective of the 12 Month Natural Gas Fund is for changes in
percentage terms of a Unit's NAV to reflect the changes in percentage
terms of the price of natural gas delivered to Henry Hub, Louisiana, as
measured by the changes in the average of the prices of 12 futures
contracts on natural gas traded on NYMEX (the ``Natural Gas Benchmark
Futures Contracts''), less the 12 Month Natural Gas Fund's expenses.\6\
---------------------------------------------------------------------------
\6\ A detailed discussion of the crude oil, gasoline, heating
oil, and natural gas markets; futures regulation and the structure
and regulation of the Partnerships; investment strategies (including
specific crude oil- and natural gas-related investments),
objectives, procedures, and policies; impact of accountability and
position limits on the Futures Contracts; creations and redemptions
of baskets of Units; arbitrage; Partnership termination events; and
calculation methodology of the NAV for the Units, among others, can
be found in the Amex Notice. In addition, information regarding the
Partnerships and the investment manager for each Partnership, the
manner in which the Units will be offered and sold, and the
investment strategy of the 12 Month Oil Fund and the 12 Month
Natural Gas Fund is included in respective registration statements
of the Partnerships regarding the offering of the Units filed with
the Commission under the Securities Act of 1933. See 12 Month Oil
Fund Form S-1 filed July 5, 2007, as amended (File No. 333-144348);
12 Month Natural Gas Fund Form S-1 filed July 6, 2007 (File No. 333-
144409).
---------------------------------------------------------------------------
The Exchange represents that quotes and last-sale information for
the Futures Contracts are widely disseminated through a variety of
market data vendors worldwide. The daily settlement prices for the
NYMEX-traded Futures Contracts are publicly available on the NYMEX Web
site at https://www.nymex.com, and real-time futures data is available
by subscription from various financial information services. NYMEX also
provides delayed futures information on current and past trading
sessions and market news free of charge on its Web site. The specific
contract specifications for the Futures Contracts are also available on
the NYMEX Web site and the ICE Futures Web site at https://
www.icefutures.com.
Amex will disseminate through the facilities of the Consolidated
Tape Association (``CTA'') an updated Indicative Partnership Value
(``Indicative Partnership Value''). The Indicative Partnership Value
for each Partnership will be disseminated on a per-Unit basis at least
every 15 seconds during the regular trading hours from 9:30 a.m. to
4:15 p.m. Eastern Time (``ET''). The Indicative Partnership Value is
based on open-outcry trading of the relevant Oil or Natural Gas
Benchmark Futures Contracts on NYMEX. Open outcry trading on NYMEX
closes daily at 2:30 p.m. ET, while NYMEX's energy futures contracts
are traded on the Chicago Mercantile Exchange's CME Globex[reg]
electronic trading platform on a 24-hour basis.\7\ After the close of
open outcry on NYMEX at 2:30 p.m. ET, the Indicative Partnership Value
will reflect changes to the relevant Benchmark Futures Contracts as
provided for through CME Globex[reg]. The value of the relevant
Benchmark Futures Contracts will be available on a 15-second delayed
basis from 9:30 a.m. to 4:15 p.m. ET.
---------------------------------------------------------------------------
\7\ CME Globex[reg] (``Globex'') is an open-access marketplace
that operates virtually 24 hours each trading day. Electronic
trading on Globex is conducted from 6 p.m. ET Sunday through 5:15
p.m. ET Friday each week. There is a 45-minute break each day
between 5:15 p.m. ET and 6 p.m. ET.
---------------------------------------------------------------------------
While NYMEX is open for trading, the Indicative Partnership Value
can be expected to closely approximate the value per Unit of the Basket
Amount. However, during Exchange trading hours when the Futures
Contracts have ceased trading in NYMEX's open outcry, spreads and
resulting premiums or discounts may widen and, therefore, increase the
difference between the price of the Units and the NAV of the Units. The
Exchange submits that the Indicative Partnership Value disseminated
from 9:30 a.m. to 4:15 p.m. ET, on a per-Unit basis, should not be
viewed as a real-time update of the NAV, which is calculated only once
daily.
Amex will make available on its Web site at https://www.amex.com the
following information: (1) The prior business day's NAV and the
reported closing price; (2) the mid-point of the bid-ask price in
relation to the NAV as of the time the NAV is calculated (``Bid-Ask
Price''); \8\ (3) calculation of the premium or discount of such price
against such NAV; (4) data in chart form displaying the frequency
distribution of discounts and premiums of the Bid-Ask Price against the
NAV, within appropriate ranges for each of the four previous calendar
quarters; (5) the prospectus and the most recent periodic reports filed
with the Commission or required by the Commodity Futures Trading
Commission (``CFTC''); and (6) other applicable quantitative
information.
---------------------------------------------------------------------------
\8\ The Bid-Ask Price of Units is determined using the highest
bid and lowest offer as of the time of calculation of the NAV.
---------------------------------------------------------------------------
The total portfolio composition of the 12 Month Oil Fund and the 12
Month Natural Gas Fund will be disclosed each business day that Amex is
open for trading on their respective Web sites at https://
www.unitedstates12monthoilfund.com and https://
www.unitedstates12monthnaturalgasfund.com. The 12 Month Oil Fund's Web
site disclosure of portfolio holdings will be made daily and will
include, as applicable, the name and value of each Futures Contract and
other crude oil-related investments (``Crude Oil Interests''), the
specific types and characteristics of the Crude Oil Interests, short-
term obligations of the United States of two years or less
(``Treasuries''), and the amount of cash and cash equivalents held in
the portfolio of the 12 Month Oil Fund. The 12 Month Natural Gas Fund's
Web site disclosure of portfolio holdings will be made daily and will
include, as applicable, the name and value of each Futures Contract and
other natural gas-related investments (``Natural Gas Interests''), the
specific types and characteristics of the Natural Gas Interests,
Treasuries, and the amount of cash and cash equivalents held in the
portfolio of the 12 Month Natural Gas Fund.
The public Web site disclosure of the portfolio composition of each
of the 12 Month Oil Fund and the 12 Month Natural Gas Fund will
coincide with the disclosure on each business day of the NAV for the
applicable Units and the Basket Amount \9\ (for orders placed during
the day) for each Partnership. Therefore, the same portfolio
information will be provided on the public Web site for each
Partnership as well as in the facsimile or e-mail
[[Page 67330]]
message to Authorized Purchasers containing the NAV and Basket Amount
(``Daily Dissemination''). The format of the public Web site disclosure
and the Daily Dissemination will differ because the public Web site
will list all portfolio holdings while the Daily Dissemination will
provide the portfolio holdings in a format appropriate for Authorized
Purchasers, i.e., the exact components of a Creation Unit.
---------------------------------------------------------------------------
\9\ A ``Basket Amount'' is the amount equal to the NAV per Unit,
times 100,000 Units (each such aggregation of Units, a ``Basket'')
calculated for the purpose of issuing Baskets to Authorized
Purchasers. See Amex Notice, supra note 4, 72 FR at 62283. An
``Authorized Purchaser'' is a person, who, at the time of submitting
an order to create or redeem Units, is (1) a registered broker-
dealer or other market participant, such as a bank or other
financial institution, that is exempt from broker-dealer
registration; and (2) a Depository Trust Company participant. See
Amex Notice, supra note 4, 72 FR at 62282 n.14.
---------------------------------------------------------------------------
Each Partnership's NAV will be calculated and disseminated
daily.\10\ Amex disseminates for each Partnership on a daily basis by
means of the CTA/Consolidated Quote (``CQ'') High Speed Lines
information with respect to the Indicative Partnership Value, recent
NAV, Units outstanding, Basket Amount, and Deposit Amount.\11\ Amex
will also make available on its Web site daily trading volume, closing
prices, and the NAV for the Units.
---------------------------------------------------------------------------
\10\ Amex will obtain a representation from each Partnership
that the respective NAV per Unit will be calculated daily and made
available to all market participants at the same time. See Amex
Notice, supra note 4, 72 FR at 62283 n.18.
\11\ The ``Deposit Amount'' is the amount transferred from a
purchaser to Brown Brothers Harriman & Co. for the purpose of
purchasing a Basket of Units. See Amex Notice, supra note 4, 72 FR
at 62283.
---------------------------------------------------------------------------
The Exchange represents that it will cease trading the Units of a
Partnership if the listing market stops trading the Units. The Exchange
states further that UTP trading in the Units is governed by the trading
halts provisions of NYSE Arca Equities Rule 7.34 relating to temporary
interruptions in the calculation or wide dissemination of an Indicative
Partnership Value or the value of the applicable underlying Benchmark
Futures Contracts.\12\ In addition, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Units. Trading may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Units inadvisable. These may include: (1) The extent to
which trading is not occurring in the underlying Futures Contracts; or
(2) whether other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present. In addition,
trading in the Units could be halted pursuant to the Exchange's
``circuit breaker'' rule \13\ or by the halt or suspension of trading
of the underlying securities.
---------------------------------------------------------------------------
\12\ The Exchange states that NYSE Arca Equities Rule 7.34(a)
literally addresses temporary interruptions in the calculation or
wide dissemination of the Indicative Intra-Day Value and the value
of an underlying index. The Units of each Partnership, however, do
not have an underlying index, but have underlying Benchmark Futures
Contracts. Therefore, the Exchange hereby represents that the
provisions in NYSE Arca Equities Rule 7.34(a) that address
interruptions in the calculation or wide dissemination of the value
of an underlying index shall also apply, in this case, to
interruptions in the calculation or wide dissemination of the value
of the underlying Benchmark Futures Contracts.
\13\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------
The Exchange deems the Units to be equity securities, thus
rendering trading in the Units subject to the Exchange's existing rules
governing the trading of equity securities. Units will trade on the
Exchange from 4 a.m. to 8 p.m. ET in accordance with NYSE Arca Equities
Rule 7.34 (Opening, Core, and Late Trading Sessions). The Exchange
represents that it has appropriate rules to facilitate transactions in
the Units during all trading sessions.
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products to monitor trading in the
Units. The Exchange represents that these procedures are adequate to
properly monitor Exchange trading of the Units in all trading sessions
and to deter and detect violations of Exchange rules. The Exchange
notes that NYSE Arca Equities Rule 8.300(e) sets forth certain
restrictions on ETP Holders \14\ acting as registered Market Makers in
Units to facilitate surveillance.
---------------------------------------------------------------------------
\14\ ``ETP Holder'' means a sole proprietorship, partnership,
corporation, limited liability company, or other organization in
good standing that has been issued an Equity Trading Permit or
``ETP.'' An ETP Holder must be a registered broker or dealer
pursuant to Section 15 of the Act, 15 U.S.C. 78o(b).
---------------------------------------------------------------------------
The Exchange may obtain information via the Intermarket
Surveillance Group (``ISG'') from other exchanges who are members or
affiliates of the ISG. In addition, the Exchange has an information
sharing agreement in place with each of NYMEX and ICE Futures for the
purpose of providing information in connection with trading in or
related to futures contracts traded on NYMEX and ICE Futures,
respectively. To the extent that a Partnership invests in Crude Oil
Interests or Natural Gas Interests traded on other exchanges, the
Exchange will seek to enter into information sharing agreements with
those particular exchanges.
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin (``Bulletin'') of the special
characteristics and risks associated with trading the Units.
Specifically, the Bulletin will discuss the following: (1) The risks
involved in trading the Units during the Opening and Late Trading
Sessions when an updated Indicative Partnership Value will not be
calculated or publicly disseminated; \15\ (2) the procedures for
purchases and redemptions of Units in Baskets (and that Units are not
individually redeemable); (3) NYSE Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its ETP Holders to learn the
essential facts relating to every customer prior to trading the Units;
(4) how information regarding the Indicative Partnership Value is
disseminated; (5) the requirement that ETP Holders deliver a prospectus
to investors purchasing newly issued Units prior to or concurrently
with the confirmation of a transaction; and (6) trading information. In
addition, the Bulletin will reference that each Partnership is subject
to various fees and expenses described in the relevant registration
statement; there is no regulated source of last-sale information
regarding physical commodities; the Commission has no jurisdiction over
the trading of crude oil, natural gas, heating oil, gasoline, or other
petroleum-based fuels; and the CFTC has regulatory jurisdiction over
the trading of crude-oil-based and natural-gas-based futures contracts
and related options. The Bulletin will also discuss any exemptive, no-
action, or interpretive relief granted by the Commission from any rules
under the Act. The Bulletin will also disclose that the NAV for the
Units will be calculated after 4 p.m. ET each trading day.
---------------------------------------------------------------------------
\15\ See NYSE Arca Equities rule 7.34(e) (Customer Disclosures).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\16\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\17\ 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 and a national market system.
In addition, the Exchange believes that the proposed rule change is
consistent with Rule 12f-5 under the Act \18\ because the Exchange
deems the Units to be equity securities, thus rendering trading in the
Units subject to the Exchange's existing rules governing the trading of
equity securities.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
\18\ 17 CFR 240.12f-5.
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[[Page 67331]]
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
Written comments on the proposed rule change were neither solicited
nor received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2007-102 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-2007-102. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal offices 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-2007-102 and should
be submitted on or before December 19, 2007.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\19\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\20\ which
requires that an exchange have rules designed, among other things, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest. The Commission believes that this proposal should benefit
investors by increasing competition among markets that trade the Units.
The Commission notes that it previously approved for trading on the
Exchange pursuant to UTP Partnership Units issued by the United States
Oil Fund, LP and the United States Natural Gas Fund, LP, which are
similar to the Units that the Exchange proposes to trade herein.\21\
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\19\ 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).
\20\ 15 U.S.C. 78f(b)(5).
\21\ See Securities Exchange Act Release No. 53875 (May 25,
2006), 71 FR 32164 (June 2, 2006) (SR-NYSEArca-2006-11) (approving
NYSE Arca Equities Rule 8.300 and the trading of Partnership Units
of the United States Oil Fund, LP pursuant to UTP); Securities
Exchange Act Release No. 56042 (July 11, 2007), 72 FR 39118 (July
17, 2007) (SR-NYSEArca-2007-45) (approving the trading of
Partnership Units of the United States Natural Gas Fund, LP pursuant
to UTP).
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In addition, the Commission finds that the proposal is consistent
with Section 12(f) of the Act,\22\ which permits an exchange to trade,
pursuant to UTP, a security that is listed and registered on another
exchange.\23\ The Commission notes that it has approved the original
listing and trading of the Units on Amex.\24\ The Commission finds that
the proposal is consistent with Rule 12f-5 under the Act,\25\ which
provides that an exchange shall not extend UTP to a security unless the
exchange has in effect a rule or rules providing for transactions in
the class or type of security to which the exchange extends UTP. The
Exchange has represented that it meets this requirement because it
deems the Units to be equity securities, thus rendering trading in the
Units subject to the Exchange's existing rules governing the trading of
equity securities.
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\22\ 15 U.S.C. 78l(f).
\23\ Section 12(a) of the Act, 15 U.S.C. 78l(a), generally
prohibits a broker-dealer from trading a security on a national
securities exchange unless the security is registered on that
exchange pursuant to Section 12 of the Act. Section 12(f) of the Act
excludes from this restriction trading in any security to which an
exchange ``extends UTP.'' When an exchange extends UTP to a
security, it allows its members to trade the security as if it were
listed and registered on the exchange even though it is not so
listed and registered.
\24\ See supra note 4.
\25\ 17 CFR 240.12f-5.
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The Commission further believes that the proposal is consistent
with Section 11A(a)(1)(C)(iii) of the Act,\26 \which sets forth
Congress' finding that it is in the public interest and appropriate for
the protection of investors and the maintenance of fair and orderly
markets to assure the availability to brokers, dealers, and investors
of information with respect to quotations for and transactions in
securities. Quotations for and last-sale information regarding the
Units will be disseminated through the Consolidated Quotation System
and CTA, respectively.\27\ In addition, Amex will disseminate a variety
of information for each Partnership on a daily basis through the
facilities of the CTA/CQ High Speed Lines including the Indicative
Partnership Value on a per-Unit basis, at least every 15 seconds during
regular Amex trading hours, the recent NAV, the number of Units
outstanding, the Basket Amount, and the Deposit Amount. The daily
closing and settlement prices for the NYMEX-traded Futures Contracts
held by each Partnership, delayed futures information on current and
past trading sessions, and market news are publicly available on the
NYMEX Web site. Quotations and last-sale information for the Futures
Contracts are widely disseminated through a variety of market data
vendors worldwide. Amex's Web site contains information related to the
NAV, the premium or discount of the Bid-Ask Price against the NAV, the
prospectus and other periodically-filed reports, daily trading volume
data, Unit
[[Page 67332]]
closing prices, and other quantitative information. Finally, the 12
Month Oil Fund and the 12 Month Natural Gas Fund's Web sites will
disclose, on each business day that the Amex is open for trading, the
total portfolio composition.
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\26\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
\27\ E-mail from Timothy J. Malinowski, Director, NYSE Euronext,
to Edward Cho, Special Counsel, Division of Trading and Markets,
Commission, dated November 15, 2007 (confirming the dissemination of
information concerning quotations and last-sale information).
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The Commission also believes that the Exchange's trading halt rules
are reasonably designed to prevent trading in the Units when
transparency is impaired. Existing NYSE Arca Equities Rule 7.34(a)(4),
which will apply to the trading of the Units, provides that, if the
Benchmark Futures Contract or Indicative Partnership Value is no longer
calculated or disseminated as required (a) during the Opening Session
(4 a.m. to 9:30 a.m. ET), the Exchange may continue to trade the Units
for the remainder of the Opening Session; (b) during the Core Trading
Session (9:30 a.m. to 4 p.m. ET), the Exchange must halt trading in the
Units; and (c) during the Late Trading Session (4 p.m. to 8 p.m. ET),
the Exchange may continue trading in the Units only if the original
listing market traded such Units until the close of its regular trading
session without halt. If the Benchmark Futures Contract or Indicative
Partnership Value continues not to be calculated or disseminated as of
the next business day's Opening Session, the Exchange will not commence
trading in the Units in such Opening Session.\28\
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\28\ The Exchange may resume trading in the Units only if the
calculation and dissemination of the Benchmark Futures Contract or
Indicative Partnership Value resumes, or trading in the Units
resumes in the original listing market. See NYSE Arca Equities Rule
7.34(a)(4)(C)(2).
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The Commission notes that, if the Units should be delisted by the
listing exchange, the Exchange would no longer have authority to trade
the Units pursuant to this order.
In support of this proposal, the Exchange has made the following
representations:
(1) The Exchange's surveillance procedures are adequate to properly
monitor the trading of the Units on a UTP basis during all trading
sessions.
(2) The Exchange would inform its ETP Holders in an Information
Bulletin of the special characteristics and risks associated with
trading the Units, including risks inherent with trading the Units
during the Opening and Late Trading Sessions when the updated
Indicative Partnership Value is not calculated and disseminated and
suitability recommendation requirements.
(3) The Exchange would require its members to deliver a prospectus
to investors purchasing Units prior to or concurrently with a
transaction in such Units and will note this prospectus delivery
requirement in the Information Bulletin.
This approval order is based on the Exchange's representations.
The Commission finds good cause for approving this proposal before
the thirtieth day after the publication of notice thereof in the
Federal Register. As noted above, the Commission has approved the
original listing and trading of the Units on Amex.\29\ The Commission
presently is not aware of any regulatory issue that should cause it to
revisit that finding or would preclude the trading of the Units on the
Exchange pursuant to UTP. Accelerating approval of this proposal should
benefit investors by creating, without undue delay, additional
competition in the market for such Units.
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\29\ See supra note 4.
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\30\ that the proposed rule change (SR-NYSEArca-2007-102) be, and
it hereby is, approved on an accelerated basis.
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\30\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-23112 Filed 11-27-07; 8:45 am]
BILLING CODE 8011-01-P
