Self-Regulatory Organizations; the NASDAQ Stock Market LLC; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change To Trade the Shares of 45 Funds of the Rydex ETF Trust Based on Numerous Domestic Securities Indexes Pursuant to Unlisted Trading Privileges, 72809-72813 [E7-24789]
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Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices
is not necessary or appropriate in
furtherance of the purposes of the Act.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
ISE proposes to amend its Rule 2213,
‘‘Market Maker Trading Licenses,’’ to
eliminate the limitation that an FXPMM
in the Exchange’s FX options cannot
make a market in more than four
currency pairs.3 Under the Exchange’s
current rules, FXPMMs are limited to
making a market in no more than four
currency pairs.4 All four of the FX
options currently listed by the Exchange
are served by the same FXPMM. As a
result of the limitation in ISE Rule 2213,
that FXPMM is prevented from serving
as a primary market maker in additional
currency pairs. The Exchange intends to
launch additional currency pairs in the
near future. In order for the Exchange to
allow the current FXPMM to participate
in the auction for those additional
currency pairs, ISE proposes to
eliminate the limitation in Rule 2213
that a FXPMM cannot act as a primary
market maker in more than four
currency pairs. The Exchange believes
that removing this limitation from its
rules will (1) allow the Exchange to
launch additional currency pairs, (2)
permit the current FXPMM to
participate in the auction for the
additional currency pairs the Exchange
intends to launch, and (3) provide
market participants with an opportunity
to trade those additional currency pairs
as a means to diversify their portfolio.
2. Statutory Basis
The basis under the Act for this
proposed rule change is found in
Section 6(b)(5),5 in that the proposed
change is designed to promote just and
equitable principles of trade, will serve
to remove impediments to and perfect
the mechanisms of a free and open
market and a national market system
and, in general, to protect investors and
the public interest, by permitting
members to become market makers in a
greater number of the Exchange’s FX
options.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
mstockstill on PROD1PC66 with NOTICES
The proposed rule change does not
impose any burden on competition that
3 The Exchange began trading FX options on the
euro, the British pound, the Japanese yen and the
Canadian dollar on April 17, 2007. See Securities
Exchange Act Release No. 55575 (April 3, 2007), 72
FR 17963 (April 10, 2007) (SR–ISE–2006–59).
4 FXPMMs are permitted to quote and trade in FX
options only.
5 15 U.S.C. 78f(b)(5).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission will:
(A) By order approve such proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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:
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–ISE–2007–109 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–ISE–2007–109. 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
PO 00000
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72809
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–ISE–2007–109 and should
be submitted on or before January 11,
2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–24800 Filed 12–20–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56952; File No. SR–
NASDAQ–2007–097]
Self-Regulatory Organizations; the
NASDAQ Stock Market LLC; Notice of
Filing and Order Granting Accelerated
Approval of Proposed Rule Change To
Trade the Shares of 45 Funds of the
Rydex ETF Trust Based on Numerous
Domestic Securities Indexes Pursuant
to Unlisted Trading Privileges
December 12, 2007.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
6, 2007, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been substantially prepared by the
Exchange. This order provides notice of
the proposed rule change and approves
it on an accelerated basis.
6 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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Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to trade, pursuant to
unlisted trading privileges (‘‘UTP’’),
shares (‘‘Shares’’) of 45 funds of the
Rydex ETF Trust (‘‘Trust’’).
The text of the proposed rule change
is available from the Exchange’s Web
site (https://nasdaq.complinet.com), at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
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
mstockstill on PROD1PC66 with NOTICES
1. Purpose
Nasdaq proposes to trade pursuant to
UTP the Shares of the 45 new funds of
the Trust that are designated as Rydex
Leveraged Funds (the ‘‘Leveraged
Funds’’), Rydex Inverse Funds (the
‘‘Inverse Funds’’), and Rydex Leveraged
Inverse Funds (the ‘‘Leveraged Inverse
Funds’’). Each of the Funds has a
distinct investment objective. Each
Fund attempts, on a daily basis, to
achieve its investment objective by
corresponding to a specified multiple of
the performance, or the inverse
performance, of a particular equity
securities index (individually referred to
as the ‘‘Underlying Index’’ and
collectively referred to as the
‘‘Underlying Indexes’’). The American
Stock Exchange LLC (‘‘Amex’’) filed a
proposal with the Commission to list
and trade the Shares, which was
approved by the Commission on
October 29, 2007 (the ‘‘Amex
Proposal’’).3
The Funds are based on the following
benchmark indexes: (1) The S&P 500
Index (the ‘‘S&P 500’’); (2) the S&P
MidCap 400 Index; (3) the S&P Small
3 See
Securities Exchange Act Release No. 56713
(October 29, 2007), 72 FR 61915 (November 1, 2007)
(SR–Amex–2007–74).
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Cap 600 Index; (4) the Russell 1000
Index; (5) the Russell 2000 Index; (6) the
Russell 3000 Index; (7) the S&P 500
Consumer Discretionary Index; (8) the
S&P 500 Consumer Staples Index; (9)
the S&P 500 Energy Index; (10) the S&P
500 Financials Index; (11) the S&P 500
Healthcare Index; (12) the S&P 500
Industrials Index; (13) the S&P 500
Information Technology Index; (14) the
S&P 500 Materials Index; and (15) the
S&P 500 Utilities Index. Certain Funds
seek daily investment results, before
fees and expenses, that correspond to
twice (200%) the daily performance of
the Underlying Indexes (the ‘‘Leveraged
Funds’’). Such a Fund, if successful in
meeting its objective, should gain, on a
percentage basis, approximately twice
as much as the Fund’s Underlying Index
when the prices of the securities in such
Index increase on a given day, and
should lose approximately twice as
much when such prices decline on a
given day.
In addition, Nasdaq proposes to trade
pursuant to UTP shares of the Funds
that seek daily investment results,
before fees and expenses, that
correspond to the inverse or opposite of
the daily performance (¥100%) of the
Underlying Indexes (the ‘‘Inverse
Funds’’). If such a Fund is successful in
meeting its objective, the net asset value
(the ‘‘NAV’’) of shares of the Fund
should increase approximately as much,
on a percentage basis, as the respective
Underlying Index loses when the prices
of the securities in the Index decline on
a given day, or should decrease
approximately as much as the respective
Index gains when the prices of the
securities in the index rise on a given
day.
Finally, Nasdaq proposes to trade
pursuant to UTP shares of the Funds
that seeks daily investment results,
before fees and expenses that
correspond to twice the inverse
(¥200%) of the daily performance of
the Underlying Indexes (the ‘‘Leveraged
Inverse Funds’’). If such a Fund is
successful in meeting its objective, the
NAV of shares of the Fund should
increase approximately twice as much,
on a percentage basis, as the respective
Underlying Index loses when the prices
of the securities in the Index decline on
a given day, or should decrease
approximately twice as much as the
respective Underlying Index gains when
the prices of the securities in the index
rise on a given day.
The Underlying Indexes and the
operation of the Funds are described
further in the Amex Proposal.
The Trust’s Web site (https://
www.rydexinvestments.com), which is
and will be publicly accessible at no
PO 00000
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Sfmt 4703
charge, will contain the following
information for each Fund’s Shares: (1)
The prior business day’s closing NAV,
the reported closing price, and a
calculation of the premium or discount
of such price in relation to the closing
NAV; (2) data for a period covering at
least the four previous calendar quarters
(or the life of a Fund, if shorter)
indicating how frequently each Fund’s
Shares traded at a premium or discount
to NAV based on the daily closing price
and the closing NAV, and the
magnitude of such premiums and
discounts; (3) its prospectus and/or
product description; and (4) other
quantitative information such as daily
trading volume. The prospectus and/or
product description for each Fund will
inform investors that the Trust’s Web
site has information about the premiums
and discounts at which the Fund’s
Shares have traded.
According to the Amex Proposal,
Amex will disseminate for each Fund
on a daily basis by means of
Consolidated Tape Association (‘‘CTA’’)
and CQ High Speed Lines information
with respect to an Indicative Intra-Day
Value (‘‘IIV’’) (as defined and discussed
below), the recent NAV, the number of
shares outstanding, the estimated cash
amount, and the total cash amount per
Creation Unit (as defined in the Amex
Proposal). Amex will make available on
its Web site daily trading volume, the
closing price, the NAV, and the final
dividend amounts to be paid for each
Fund. Amex represented in the Amex
Proposal that it will obtain a
representation from the Trust (for each
Fund), prior to listing, that the NAV per
share for each Fund will be calculated
daily and made available to all market
participants at the same time.4
According to the Amex Proposal, each
Fund’s total portfolio composition is
disclosed on the Web site of the Trust
or another relevant Web site as
determined by the Trust and/or Amex.
The Trust expects that Web site
disclosure of portfolio holdings will be
made daily and will include, as
applicable, the names and number of
shares held of each specific types of
financial instruments and
characteristics of such instruments, cash
equivalents, and the amount of cash
held in the portfolio of each Fund. This
public Web site disclosure of the
portfolio composition of each Fund will
coincide with the disclosure by Rydex
Investments (‘‘Advisor’’) of the ‘‘IIV
File’’ and the ‘‘PCF File’’ provided to an
4 If Amex halts trading in the Shares of the Funds
because the NAV is not being disseminated to all
market participants at the same time, then Nasdaq
would do so as well.
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mstockstill on PROD1PC66 with NOTICES
‘‘Authorized Participant,’’ a brokerdealer or other participant in the
continuous net settlement system of the
National Securities Clearing Corporation
(‘‘NSCC’’) or a Depositary Trust
Company participant, which has
entered into a participant agreement
with the distributor, Rydex Distributors,
Inc.5 The format of the public Web site
disclosure and the IIV File and PCF File
will differ because the public Web site
will list all portfolio holdings while the
IIV File and PCF File will similarly
provide the portfolio holdings but in a
format appropriate for Authorized
Participants, i.e., the exact components
of a Creation Unit.6 Accordingly, each
investor will have access to the current
portfolio composition of each Fund
through the Trust’s Web site, at https://
www.rydexinvestments.com, and/or at
the Amex’s Web site at https://
www.amex.com.
Beneficial owners of Shares will
receive all of the statements, notices,
and reports required under the
Investment Company Act of 1940 7 and
other applicable laws. They will receive,
for example, annual and semiannual
fund reports, written statements
accompanying dividend payments,
proxy statements, annual notifications
detailing the tax status of fund
distributions, and Form 1099-DIVs.
Some of these documents will be
provided to beneficial owners by their
brokers, while others will be provided
by the Fund through the brokers.
The daily closing index value and the
percentage change in the daily closing
index value for each Underlying Index
is publicly available on various Web
sites, e.g., https://www.bloomberg.com.
Data regarding each Underlying Index is
also available from the respective index
provider to subscribers. Several
5 According to the Amex Proposal, at the end of
each business day, the Trust will create a portfolio
composition file (‘‘PCF’’) for each Fund, which it
will transmit to NSCC before the open of business
the next business day. The information in the PCF
will be available to all participants in the NSCC
system. Because the NSCC’s system for the receipt
and dissemination to its participants of the PCF is
not currently capable of processing information
with respect to financial instruments, the Advisor
has developed an ‘‘IIV File,’’ which it will use to
disclose the Funds’ holdings of financial
instruments. The IIV File will contain, for each
Leveraged Fund (to the extent it holds financial
investments) and Inverse and Leveraged Inverse
Fund, information sufficient by itself or in
connection with the PCF File and other available
information for market participants to calculate a
Fund’s IIV and effectively arbitrage the Fund. The
Trust or the Advisor will post the IIV File to a
password-protected Web site before the opening of
business on each business day, and all Authorized
Participants and Amex will have access to a
password and the Web site containing the IIV File.
6 The composition will be used to calculate the
NAV later that day.
7 15 U.S.C. 80a.
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independent data vendors also package
and disseminate index data in various
value-added formats (including vendors
displaying both securities and index
levels and vendors displaying index
levels only). The value of each
Underlying Index is updated intra-day
as its individual component securities
change in price. These intra-day values
of each Underlying Index are
disseminated at least every 15 seconds
though the trading day by Amex or
another organization authorized by the
relevant Underlying Index provider.
According to the Amex Proposal, to
provide updated information relating to
each Fund for use by investors,
professionals, and persons wishing to
create or redeem Shares, Amex will
disseminate though the facilities of the
CTA: (1) Continuously throughout the
trading day, the market value of a Share;
and (2) at least every 15 seconds
throughout the trading day, a
calculation of the Indicative Intra-Day
Value or ‘‘IIV’’ as calculated by Amex
(the ‘‘IIV Calculator’’). Comparing these
two figures helps an investor to
determine whether, and to what extent,
the Shares may be selling at a premium
or a discount to NAV.
The IIV Calculator (Amex) calculates
an IIV for each Fund in the manner
discussed in the Amex Proposal. The
IIV is designed to provide investors with
a reference value that can be used in
connection with other related market
information. The IIV does not
necessarily reflect the precise
composition of the current portfolio
held by each Fund at a particular point
in time. Therefore, the IIV on a perShare basis disseminated during Amex
trading hours should not be viewed as
a real-time update of the NAV of a
particular Fund, which is calculated
only once a day. While the IIV that will
be disseminated by Amex is expected to
be close to the most recently calculated
Fund NAV on a per-Share basis, it is
possible that the value of the portfolio
held by a Fund may diverge from the IIV
during any trading day. In such case, the
IIV will not precisely reflect the value
of the Fund portfolio.
Nasdaq will halt trading in the Shares
of the Fund under the conditions
specified in Nasdaq Rules 4120 and
4121. The conditions for a halt include
a regulatory halt by the listing market.
UTP trading in the Shares will also be
governed by provisions of Nasdaq Rule
4120(b) relating to temporary
interruptions in the calculation or wide
dissemination of the IIV or the value of
the underlying index. Additionally,
Nasdaq may cease trading the Shares if
other unusual conditions or
circumstances exist which, in the
PO 00000
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72811
opinion of Nasdaq, make further
dealings on Nasdaq detrimental to the
maintenance of a fair and orderly
market. Nasdaq will also follow any
procedures with respect to trading halts
as set forth in Nasdaq Rule 4120(c).
Finally, Nasdaq will stop trading the
Shares if the listing market delists them.
Nasdaq deems the Shares to be equity
securities, thus rendering trading in the
Shares subject to Nasdaq’s existing rules
governing the trading of equity
securities. Nasdaq will allow trading in
the Shares only from 9:30 a.m. until
4:15 p.m. until the Commission acts on
Nasdaq’s proposal to generally allow
trading in ETFs on Nasdaq during the
Pre-Market and Post-Market Sessions,
which would permit trading in the
Shares from 7 a.m. until 8 p.m.8
Nasdaq believes that its surveillance
procedures are adequate to address any
concerns about the trading of the Shares
on Nasdaq. Trading of the Shares
through Nasdaq facilities is currently
subject to FINRA’S surveillance
procedures for equity securities in
general and ETFs in particular.9
Nasdaq will be able to obtain
information regarding trading in the
Shares through its members in
connection with the proprietary or
customer trades that such members
effect on any relevant market. In
addition, Nasdaq may obtain trading
information via the Intermarket
Surveillance Group (‘‘ISG’’) from other
exchanges who are members or affiliates
of the ISG.10 In addition, Nasdaq also
has a general policy prohibiting the
distribution of material, non-public
information by its employees.
Prior to the commencement of
trading, Nasdaq will inform its members
in an Information Circular of the special
characteristics and risks associated with
trading the Shares. Specifically, the
Information Circular will discuss the
following: (1) The procedures for
purchases and redemptions of Shares in
Creation Unit aggregations (and that
Shares are not individually redeemable);
(2) Nasdaq Rule 2310, which imposes
suitability obligations on Nasdaq
members with respect to recommending
transactions in the Shares to customers;
(3) the risks involved in trading the
Shares during the Pre-Market and PostMarket Sessions when an updated IIV
will not be calculated or publicly
disseminated; (4) how information
8 See SR–NASDAQ–2007–098 (filed on December
7, 2007).
9 FINRA surveils trading pursuant to a regulatory
services agreement. Nasdaq is responsible for
FINRA’S performance under this regulatory services
agreement.
10 For a list of the current members and affiliate
members of ISG, see https://www.isgportal.com.
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Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices
regarding the IIV is disseminated; (5) the
requirement that Nasdaq members
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 Information Circular
will reference that the Fund is subject
to various fees and expenses described
in the registration statement for the
Fund. The Information Circular will
also discuss any exemptive, no-action
and interpretive relief granted by the
Commission from section 11(d)(1) of the
Act 11 and certain rules under the Act,
including Rule 10b–10, Rule 14e–5,
Rule 10b–17, Rule 11d1–2, Rules 15cl–
5 and 15cl–6, and Rules 101 and 102 of
Regulation M. The Information Circular
will also disclose that the NAV for the
Shares will be calculated after 4 p.m.
Eastern Time each trading day.
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to a national
securities exchange. Specifically,
Nasdaq believes that the proposed rule
change is consistent with the section
6(b)(5) 12 requirements that an exchange
have rules designed to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. In addition, Nasdaq
believes that the proposal is consistent
with Rule 12f–5 under the Act 13
because it deems the Shares to be equity
securities, thus rendering trading in the
Shares subject to the Exchange’s
existing rules governing the trading of
equity securities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
mstockstill on PROD1PC66 with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange neither solicited nor
received comments on the proposal.
11 15
U.S.C. 78k(d)(1).
U.S.C. 78f(b)(5).
13 17 CFR 240.12f–5.
12 15
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consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.14 In particular, the
Commission finds that the proposed
rule change is consistent with section
6(b)(5) of the Act,15 which requires that
an exchange have rules designed, among
other things, to promote just and
Electronic Comments
equitable principles of trade, to remove
impediments to and perfect the
• Use the Commission’s Internet
mechanism of a free and open market
comment form (https://www.sec.gov/
and a national market system, and in
rules/sro.shtml); or
general to protect investors and the
• Send an e-mail to rulepublic interest. The Commission
comments@sec.gov. Please include File
Number SR–NASDAQ–2007–097 on the believes that this proposal should
benefit investors by increasing
subject line.
competition among markets that trade
Paper Comments
the Shares.
• Send paper comments in triplicate
In addition, the Commission finds
to Nancy M. Morris, Secretary,
that the proposal is consistent with
Securities and Exchange Commission,
section 12(f) of the Act,16 which permits
100 F Street, NE., Washington, DC
an exchange to trade, pursuant to UTP,
20549–1090.
a security that is listed and registered on
another exchange.17 The Commission
All submissions should refer to File
notes that it previously approved the
Number SR–NASDAQ–2007–097. This
listing and trading of the Shares on
file number should be included on the
subject line if e-mail is used. To help the Amex.18 The Commission also finds that
the proposal is consistent with Rule
Commission process and review your
12f–5 under the Act,19 which provides
comments more efficiently, please use
only one method. The Commission will that an exchange shall not extend UTP
post all comments on the Commission’s to a security unless the exchange has in
effect a rule or rules providing for
Internet Web site (https://www.sec.gov/
transactions in the class or type of
rules/sro.shtml ). Copies of the
security to which the exchange extends
submission, all subsequent
UTP. The Exchange has represented that
amendments, all written statements
it meets this requirement because it
with respect to the proposed rule
deems the Shares to be equity securities,
change that are filed with the
thus rendering trading in the Shares
Commission, and all written
subject to the Exchange’s existing rules
communications relating to the
governing the trading of equity
proposed rule change between the
Commission and any person, other than securities.
The Commission further believes that
those that may be withheld from the
the proposal is consistent with section
public in accordance with the
11A(a)(1)(C)(iii) of the Act,20 which sets
provisions of 5 U.S.C. 552, will be
forth Congress’s finding that it is in the
available for inspection and copying in
public interest and appropriate for the
the Commission’s Public Reference
protection of investors and the
Room, 100 F Street, NE., Washington,
maintenance of fair and orderly markets
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m. to assure the availability to brokers,
dealers, and investors of information
Copies of such filing also will be
available for inspection and copying at
14 In approving this rule change, the Commission
the principal office of the Exchange. All
notes that it has considered the proposal’s impact
comments received will be posted
on efficiency, competition, and capital formation.
without change; the Commission does
See 15 U.S.C. 78c(f).
not edit personal identifying
15 15 U.S.C. 78f(b)(5).
16 15 U.S.C. 78l(f).
information from submissions. You
17 Section 12(a) of the Act, 15 U.S.C. 78l(a),
should submit only information that
you wish to make available publicly. All generally prohibits a broker-dealer from trading a
security on a national securities exchange unless
submissions should refer to File
the security is registered on that exchange pursuant
Number SR–NASDAQ–2007–097 and
to Section 12 of the Act. Section 12(f) of the Act
should be submitted on or before
excludes from this restriction trading in any
security to which an exchange ‘‘extends UTP.’’
January 11, 2008.
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:
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
PO 00000
Frm 00148
Fmt 4703
Sfmt 4703
When an exchange extends UTP to a security, it
allows its members to trade the security as if it were
listed and registered on the exchange even though
it is not so listed and registered.
18 See supra note 3.
19 17 CFR 240.12f–5.
20 15 U.S.C. 78k–1(a)(1)(C)(iii).
E:\FR\FM\21DEN1.SGM
21DEN1
mstockstill on PROD1PC66 with NOTICES
Federal Register / Vol. 72, No. 245 / Friday, December 21, 2007 / Notices
with respect to quotations for and
transactions in securities. Quotations for
and last-sale information regarding the
Shares are disseminated through the
facilities of the CTA and the
Consolidated Quotation System. In
addition, Amex will calculate and
disseminate the IIV per Share for each
Fund through the facilities of the
Consolidated Tape Association at least
every 15 seconds throughout the trading
hours for the Shares. The value of each
Underlying Index will also be updated
intra-day on a real-time basis as its
individual component securities change
in price and will be disseminated at
least every 15 seconds throughout the
trading hours for the Shares. Finally, the
Trust’s Web site provides various
information for each Fund’s Shares.
The Commission also believes that the
proposal appears reasonably designed to
preclude trading of the Shares when
transparency is impaired. Trading in the
Shares will be subject to Nasdaq Rule
4120(b), which provides that, if the
listing market halts trading when the IIV
or value of the underlying index is not
being calculated or disseminated, the
Exchange also would halt trading.
In support of this proposal, the
Exchange has made the following
additional representations:
1. The Exchange’s surveillance
procedures are adequate to properly
monitor Exchange trading of the Shares
in all trading sessions and to deter and
detect violations of Exchange rules.
2. Prior to the commencement of
trading, the Exchange would inform its
members in an Information Bulletin of
the special characteristics and risks
associated with trading the Shares.
3. The Information Bulletin also
would discuss the requirement that
members deliver a prospectus to
investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction.
This approval order is based on the
Exchange’s representations.
The Commission notes that, if the
Shares should be delisted by the listing
exchange, the Exchange would no
longer have authority to trade the Shares
pursuant to this order.
The Commission finds good cause for
approving this proposal before the
thirtieth day after the publication of
notice thereof in the Federal Register.
As noted above, the Commission
previously found that the listing and
trading of the Shares on Amex is
consistent with the Act. 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 Shares on the
VerDate Aug<31>2005
18:37 Dec 20, 2007
Jkt 214001
Exchange pursuant to UTP. Therefore,
accelerating approval of this proposal
should benefit investors by creating,
without undue delay, additional
competition in the market for the
Shares.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,21 that the
proposed rule change (SR–NASDAQ–
2007–097) be, and it hereby is, approved
on anaccelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–24789 Filed 12–20–07; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Application of Taga Air Charter
Service, Inc. for Commuter Air Carrier
Authorization
Department of Transportation.
Notice of Order to Show Cause
(Order 2007–12–11), Docket DOT–OST–
2006–25577.
AGENCY:
ACTION:
SUMMARY: The Department of
Transportation is directing all interested
persons to show cause why it should
not issue an order finding that Taga Air
Charter Service, Inc., is not a U.S.
citizen, as defined in 49 U.S.C.
40102(a)(15), and that its application for
Commuter Air Carrier Authorization
under section 41738 of the Statute is
denied. In addition, we propose to
cancel its existing air taxi registration
pursuant to 49 U.S.C. 40109(f) and 14
CFR part 298.
DATES: Persons wishing to file
objections should do so no later than
January 22, 2008.
ADDRESSES: Objections and answers to
objections should be filed in Docket
DOT–OST–2006–25577, and addressed
to U.S. Department of Transportation,
Docket Operations, West Building
Ground Floor, (M–30, Room W12–140)
1200 New Jersey Avenue, SE.,
Washington, DC 20590, and should be
served upon the parties listed in
Attachment A to the order.
FOR FURTHER INFORMATION CONTACT:
ˆ
Ronale Taylor, Air Carrier Fitness
Division (X–56, West Building, 8th
Floor), U.S. Department of
Transportation, 1200 New Jersey
21 15
22 17
PO 00000
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
Frm 00149
Fmt 4703
Sfmt 4703
72813
Avenue, SE., Washington, DC 20590,
(202) 366–9721.
Dated: December 17, 2007.
Andrew B. Steinberg,
Assistant Secretary for Aviation and
International Affairs.
[FR Doc. E7–24868 Filed 12–20–07; 8:45 am]
BILLING CODE 4910–62–P
DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
Alternatives Analysis/Environmental
Impact Statement for Rapid Transit in
Utah County, UT
Federal Transit Administration
(FTA), U.S. Department of
Transportation (DOT).
ACTION: Notice of Intent To Prepare an
Alternatives Analysis/Environmental
Impact Statement.
AGENCY:
SUMMARY: The Federal Transit
Administration (FTA), Utah Transit
Authority (UTA), and Mountainland
Association of Governments (MAG)
intend to prepare an Alternatives
Analysis/Environmental Impact
Statement (AA/EIS) for potential highcapacity fixed-guideway transit
improvements and roadway
infrastructure improvements in Utah
County, Utah. The project’s purposes
are to serve transit markets along the
corridor including two universities
(Brigham Young University and Utah
Valley State College), existing and
planned student housing, retail malls,
several employment centers, historic
downtown Provo, and two major
regional intermodal centers; provide
circulation and distribution for future
transit projects including commuter rail;
and to accommodate future travel
demand while maintaining efficient
traffic flow. The project termini are the
planned Orem intermodal center near
Utah Valley State College (UVSC) on the
north and a location near the Provo
Towne Center Mall and East Bay
Business Complex (Novell Campus) on
the south. The general location of the
corridor is on or near University
Parkway and University Avenue in Utah
County and length of the project is
approximately 9 miles. The timeframe
for the environmental review process is
from January 2008 to January 2010.
The AA/EIS will be prepared in
accordance with section 102(2)c of the
National Environmental Policy Act of
1969 (NEPA) and pursuant to the
Council on the Environmental Quality’s
regulations (40 CFR parts 1500–1508),
FTA/FHWA joint regulations (23 CFR
771) as well as provisions of the Safe,
E:\FR\FM\21DEN1.SGM
21DEN1
]]>Agencies
[Federal Register Volume 72, Number 245 (Friday, December 21, 2007)]
[Notices]
[Pages 72809-72813]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24789]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56952; File No. SR-NASDAQ-2007-097]
Self-Regulatory Organizations; the NASDAQ Stock Market LLC;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change To Trade the Shares of 45 Funds of the Rydex ETF Trust
Based on Numerous Domestic Securities Indexes Pursuant to Unlisted
Trading Privileges
December 12, 2007.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 6, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by the Exchange.
This order provides notice of the proposed rule change and approves it
on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 72810]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to trade, pursuant to unlisted trading privileges
(``UTP''), shares (``Shares'') of 45 funds of the Rydex ETF Trust
(``Trust'').
The text of the proposed rule change is available from the
Exchange's Web site (https://nasdaq.complinet.com), at the principal
office of the Exchange, and at the Commission's Public Reference Room.
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
Nasdaq proposes to trade pursuant to UTP the Shares of the 45 new
funds of the Trust that are designated as Rydex Leveraged Funds (the
``Leveraged Funds''), Rydex Inverse Funds (the ``Inverse Funds''), and
Rydex Leveraged Inverse Funds (the ``Leveraged Inverse Funds''). Each
of the Funds has a distinct investment objective. Each Fund attempts,
on a daily basis, to achieve its investment objective by corresponding
to a specified multiple of the performance, or the inverse performance,
of a particular equity securities index (individually referred to as
the ``Underlying Index'' and collectively referred to as the
``Underlying Indexes''). The American Stock Exchange LLC (``Amex'')
filed a proposal with the Commission to list and trade the Shares,
which was approved by the Commission on October 29, 2007 (the ``Amex
Proposal'').\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 56713 (October 29,
2007), 72 FR 61915 (November 1, 2007) (SR-Amex-2007-74).
---------------------------------------------------------------------------
The Funds are based on the following benchmark indexes: (1) The S&P
500 Index (the ``S&P 500''); (2) the S&P MidCap 400 Index; (3) the S&P
Small Cap 600 Index; (4) the Russell 1000 Index; (5) the Russell 2000
Index; (6) the Russell 3000 Index; (7) the S&P 500 Consumer
Discretionary Index; (8) the S&P 500 Consumer Staples Index; (9) the
S&P 500 Energy Index; (10) the S&P 500 Financials Index; (11) the S&P
500 Healthcare Index; (12) the S&P 500 Industrials Index; (13) the S&P
500 Information Technology Index; (14) the S&P 500 Materials Index; and
(15) the S&P 500 Utilities Index. Certain Funds seek daily investment
results, before fees and expenses, that correspond to twice (200%) the
daily performance of the Underlying Indexes (the ``Leveraged Funds'').
Such a Fund, if successful in meeting its objective, should gain, on a
percentage basis, approximately twice as much as the Fund's Underlying
Index when the prices of the securities in such Index increase on a
given day, and should lose approximately twice as much when such prices
decline on a given day.
In addition, Nasdaq proposes to trade pursuant to UTP shares of the
Funds that seek daily investment results, before fees and expenses,
that correspond to the inverse or opposite of the daily performance (-
100%) of the Underlying Indexes (the ``Inverse Funds''). If such a Fund
is successful in meeting its objective, the net asset value (the
``NAV'') of shares of the Fund should increase approximately as much,
on a percentage basis, as the respective Underlying Index loses when
the prices of the securities in the Index decline on a given day, or
should decrease approximately as much as the respective Index gains
when the prices of the securities in the index rise on a given day.
Finally, Nasdaq proposes to trade pursuant to UTP shares of the
Funds that seeks daily investment results, before fees and expenses
that correspond to twice the inverse (-200%) of the daily performance
of the Underlying Indexes (the ``Leveraged Inverse Funds''). If such a
Fund is successful in meeting its objective, the NAV of shares of the
Fund should increase approximately twice as much, on a percentage
basis, as the respective Underlying Index loses when the prices of the
securities in the Index decline on a given day, or should decrease
approximately twice as much as the respective Underlying Index gains
when the prices of the securities in the index rise on a given day.
The Underlying Indexes and the operation of the Funds are described
further in the Amex Proposal.
The Trust's Web site (https://www.rydexinvestments.com), which is
and will be publicly accessible at no charge, will contain the
following information for each Fund's Shares: (1) The prior business
day's closing NAV, the reported closing price, and a calculation of the
premium or discount of such price in relation to the closing NAV; (2)
data for a period covering at least the four previous calendar quarters
(or the life of a Fund, if shorter) indicating how frequently each
Fund's Shares traded at a premium or discount to NAV based on the daily
closing price and the closing NAV, and the magnitude of such premiums
and discounts; (3) its prospectus and/or product description; and (4)
other quantitative information such as daily trading volume. The
prospectus and/or product description for each Fund will inform
investors that the Trust's Web site has information about the premiums
and discounts at which the Fund's Shares have traded.
According to the Amex Proposal, Amex will disseminate for each Fund
on a daily basis by means of Consolidated Tape Association (``CTA'')
and CQ High Speed Lines information with respect to an Indicative
Intra-Day Value (``IIV'') (as defined and discussed below), the recent
NAV, the number of shares outstanding, the estimated cash amount, and
the total cash amount per Creation Unit (as defined in the Amex
Proposal). Amex will make available on its Web site daily trading
volume, the closing price, the NAV, and the final dividend amounts to
be paid for each Fund. Amex represented in the Amex Proposal that it
will obtain a representation from the Trust (for each Fund), prior to
listing, that the NAV per share for each Fund will be calculated daily
and made available to all market participants at the same time.\4\
---------------------------------------------------------------------------
\4\ If Amex halts trading in the Shares of the Funds because the
NAV is not being disseminated to all market participants at the same
time, then Nasdaq would do so as well.
---------------------------------------------------------------------------
According to the Amex Proposal, each Fund's total portfolio
composition is disclosed on the Web site of the Trust or another
relevant Web site as determined by the Trust and/or Amex. The Trust
expects that Web site disclosure of portfolio holdings will be made
daily and will include, as applicable, the names and number of shares
held of each specific types of financial instruments and
characteristics of such instruments, cash equivalents, and the amount
of cash held in the portfolio of each Fund. This public Web site
disclosure of the portfolio composition of each Fund will coincide with
the disclosure by Rydex Investments (``Advisor'') of the ``IIV File''
and the ``PCF File'' provided to an
[[Page 72811]]
``Authorized Participant,'' a broker-dealer or other participant in the
continuous net settlement system of the National Securities Clearing
Corporation (``NSCC'') or a Depositary Trust Company participant, which
has entered into a participant agreement with the distributor, Rydex
Distributors, Inc.\5\ The format of the public Web site disclosure and
the IIV File and PCF File will differ because the public Web site will
list all portfolio holdings while the IIV File and PCF File will
similarly provide the portfolio holdings but in a format appropriate
for Authorized Participants, i.e., the exact components of a Creation
Unit.\6\ Accordingly, each investor will have access to the current
portfolio composition of each Fund through the Trust's Web site, at
https://www.rydexinvestments.com, and/or at the Amex's Web site at
https://www.amex.com.
---------------------------------------------------------------------------
\5\ According to the Amex Proposal, at the end of each business
day, the Trust will create a portfolio composition file (``PCF'')
for each Fund, which it will transmit to NSCC before the open of
business the next business day. The information in the PCF will be
available to all participants in the NSCC system. Because the NSCC's
system for the receipt and dissemination to its participants of the
PCF is not currently capable of processing information with respect
to financial instruments, the Advisor has developed an ``IIV File,''
which it will use to disclose the Funds' holdings of financial
instruments. The IIV File will contain, for each Leveraged Fund (to
the extent it holds financial investments) and Inverse and Leveraged
Inverse Fund, information sufficient by itself or in connection with
the PCF File and other available information for market participants
to calculate a Fund's IIV and effectively arbitrage the Fund. The
Trust or the Advisor will post the IIV File to a password-protected
Web site before the opening of business on each business day, and
all Authorized Participants and Amex will have access to a password
and the Web site containing the IIV File.
\6\ The composition will be used to calculate the NAV later that
day.
---------------------------------------------------------------------------
Beneficial owners of Shares will receive all of the statements,
notices, and reports required under the Investment Company Act of 1940
\7\ and other applicable laws. They will receive, for example, annual
and semiannual fund reports, written statements accompanying dividend
payments, proxy statements, annual notifications detailing the tax
status of fund distributions, and Form 1099-DIVs. Some of these
documents will be provided to beneficial owners by their brokers, while
others will be provided by the Fund through the brokers.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 80a.
---------------------------------------------------------------------------
The daily closing index value and the percentage change in the
daily closing index value for each Underlying Index is publicly
available on various Web sites, e.g., https://www.bloomberg.com. Data
regarding each Underlying Index is also available from the respective
index provider to subscribers. Several independent data vendors also
package and disseminate index data in various value-added formats
(including vendors displaying both securities and index levels and
vendors displaying index levels only). The value of each Underlying
Index is updated intra-day as its individual component securities
change in price. These intra-day values of each Underlying Index are
disseminated at least every 15 seconds though the trading day by Amex
or another organization authorized by the relevant Underlying Index
provider.
According to the Amex Proposal, to provide updated information
relating to each Fund for use by investors, professionals, and persons
wishing to create or redeem Shares, Amex will disseminate though the
facilities of the CTA: (1) Continuously throughout the trading day, the
market value of a Share; and (2) at least every 15 seconds throughout
the trading day, a calculation of the Indicative Intra-Day Value or
``IIV'' as calculated by Amex (the ``IIV Calculator''). Comparing these
two figures helps an investor to determine whether, and to what extent,
the Shares may be selling at a premium or a discount to NAV.
The IIV Calculator (Amex) calculates an IIV for each Fund in the
manner discussed in the Amex Proposal. The IIV is designed to provide
investors with a reference value that can be used in connection with
other related market information. The IIV does not necessarily reflect
the precise composition of the current portfolio held by each Fund at a
particular point in time. Therefore, the IIV on a per-Share basis
disseminated during Amex trading hours should not be viewed as a real-
time update of the NAV of a particular Fund, which is calculated only
once a day. While the IIV that will be disseminated by Amex is expected
to be close to the most recently calculated Fund NAV on a per-Share
basis, it is possible that the value of the portfolio held by a Fund
may diverge from the IIV during any trading day. In such case, the IIV
will not precisely reflect the value of the Fund portfolio.
Nasdaq will halt trading in the Shares of the Fund under the
conditions specified in Nasdaq Rules 4120 and 4121. The conditions for
a halt include a regulatory halt by the listing market. UTP trading in
the Shares will also be governed by provisions of Nasdaq Rule 4120(b)
relating to temporary interruptions in the calculation or wide
dissemination of the IIV or the value of the underlying index.
Additionally, Nasdaq may cease trading the Shares if other unusual
conditions or circumstances exist which, in the opinion of Nasdaq, make
further dealings on Nasdaq detrimental to the maintenance of a fair and
orderly market. Nasdaq will also follow any procedures with respect to
trading halts as set forth in Nasdaq Rule 4120(c). Finally, Nasdaq will
stop trading the Shares if the listing market delists them.
Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. Nasdaq will allow trading in the Shares
only from 9:30 a.m. until 4:15 p.m. until the Commission acts on
Nasdaq's proposal to generally allow trading in ETFs on Nasdaq during
the Pre-Market and Post-Market Sessions, which would permit trading in
the Shares from 7 a.m. until 8 p.m.\8\
---------------------------------------------------------------------------
\8\ See SR-NASDAQ-2007-098 (filed on December 7, 2007).
---------------------------------------------------------------------------
Nasdaq believes that its surveillance procedures are adequate to
address any concerns about the trading of the Shares on Nasdaq. Trading
of the Shares through Nasdaq facilities is currently subject to FINRA'S
surveillance procedures for equity securities in general and ETFs in
particular.\9\
---------------------------------------------------------------------------
\9\ FINRA surveils trading pursuant to a regulatory services
agreement. Nasdaq is responsible for FINRA'S performance under this
regulatory services agreement.
---------------------------------------------------------------------------
Nasdaq will be able to obtain information regarding trading in the
Shares through its members in connection with the proprietary or
customer trades that such members effect on any relevant market. In
addition, Nasdaq may obtain trading information via the Intermarket
Surveillance Group (``ISG'') from other exchanges who are members or
affiliates of the ISG.\10\ In addition, Nasdaq also has a general
policy prohibiting the distribution of material, non-public information
by its employees.
---------------------------------------------------------------------------
\10\ For a list of the current members and affiliate members of
ISG, see https://www.isgportal.com.
---------------------------------------------------------------------------
Prior to the commencement of trading, Nasdaq will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) The procedures for purchases
and redemptions of Shares in Creation Unit aggregations (and that
Shares are not individually redeemable); (2) Nasdaq Rule 2310, which
imposes suitability obligations on Nasdaq members with respect to
recommending transactions in the Shares to customers; (3) the risks
involved in trading the Shares during the Pre-Market and Post-Market
Sessions when an updated IIV will not be calculated or publicly
disseminated; (4) how information
[[Page 72812]]
regarding the IIV is disseminated; (5) the requirement that Nasdaq
members 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 Information Circular will reference that the Fund
is subject to various fees and expenses described in the registration
statement for the Fund. The Information Circular will also discuss any
exemptive, no-action and interpretive relief granted by the Commission
from section 11(d)(1) of the Act \11\ and certain rules under the Act,
including Rule 10b-10, Rule 14e-5, Rule 10b-17, Rule 11d1-2, Rules
15cl-5 and 15cl-6, and Rules 101 and 102 of Regulation M. The
Information Circular will also disclose that the NAV for the Shares
will be calculated after 4 p.m. Eastern Time each trading day.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78k(d)(1).
---------------------------------------------------------------------------
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to a
national securities exchange. Specifically, Nasdaq believes that the
proposed rule change is consistent with the section 6(b)(5) \12\
requirements that an exchange have rules designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. In addition,
Nasdaq believes that the proposal is consistent with Rule 12f-5 under
the Act \13\ because it deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b)(5).
\13\ 17 CFR 240.12f-5.
---------------------------------------------------------------------------
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
The Exchange neither solicited nor received comments on the
proposal.
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-NASDAQ-2007-097 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-NASDAQ-2007-097. 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 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-NASDAQ-2007-097 and should
be submitted on or before January 11, 2008.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\14\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\15\ which
requires that an exchange have rules designed, among other things, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and in general to protect investors and the public
interest. The Commission believes that this proposal should benefit
investors by increasing competition among markets that trade the
Shares.
---------------------------------------------------------------------------
\14\ In approving this rule change, the Commission notes that it
has considered the proposal's impact on efficiency, competition, and
capital formation. See 15 U.S.C. 78c(f).
\15\ 15 U.S.C. 78f(b)(5).
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In addition, the Commission finds that the proposal is consistent
with section 12(f) of the Act,\16\ which permits an exchange to trade,
pursuant to UTP, a security that is listed and registered on another
exchange.\17\ The Commission notes that it previously approved the
listing and trading of the Shares on Amex.\18\ The Commission also
finds that the proposal is consistent with Rule 12f-5 under the
Act,\19\ 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 Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities.
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\16\ 15 U.S.C. 78l(f).
\17\ Section 12(a) of the Act, 15 U.S.C. 78l(a), generally
prohibits a broker-dealer from trading a security on a national
securities exchange unless the security is registered on that
exchange pursuant to Section 12 of the Act. Section 12(f) of the Act
excludes from this restriction trading in any security to which an
exchange ``extends UTP.'' When an exchange extends UTP to a
security, it allows its members to trade the security as if it were
listed and registered on the exchange even though it is not so
listed and registered.
\18\ See supra note 3.
\19\ 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,\20\ which sets forth
Congress's 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
[[Page 72813]]
with respect to quotations for and transactions in securities.
Quotations for and last-sale information regarding the Shares are
disseminated through the facilities of the CTA and the Consolidated
Quotation System. In addition, Amex will calculate and disseminate the
IIV per Share for each Fund through the facilities of the Consolidated
Tape Association at least every 15 seconds throughout the trading hours
for the Shares. The value of each Underlying Index will also be updated
intra-day on a real-time basis as its individual component securities
change in price and will be disseminated at least every 15 seconds
throughout the trading hours for the Shares. Finally, the Trust's Web
site provides various information for each Fund's Shares.
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\20\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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The Commission also believes that the proposal appears reasonably
designed to preclude trading of the Shares when transparency is
impaired. Trading in the Shares will be subject to Nasdaq Rule 4120(b),
which provides that, if the listing market halts trading when the IIV
or value of the underlying index is not being calculated or
disseminated, the Exchange also would halt trading.
In support of this proposal, the Exchange has made the following
additional representations:
1. The Exchange's surveillance procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules.
2. Prior to the commencement of trading, the Exchange would inform
its members in an Information Bulletin of the special characteristics
and risks associated with trading the Shares.
3. The Information Bulletin also would discuss the requirement that
members deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction.
This approval order is based on the Exchange's representations.
The Commission notes that, if the Shares should be delisted by the
listing exchange, the Exchange would no longer have authority to trade
the Shares pursuant to this order.
The Commission finds good cause for approving this proposal before
the thirtieth day after the publication of notice thereof in the
Federal Register. As noted above, the Commission previously found that
the listing and trading of the Shares on Amex is consistent with the
Act. 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 Shares on the Exchange pursuant to UTP. Therefore, accelerating
approval of this proposal should benefit investors by creating, without
undue delay, additional competition in the market for the Shares.
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\21\ that the proposed rule change (SR-NASDAQ-2007-097) be, and it
hereby is, approved on an accelerated basis.
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\21\ 15 U.S.C. 78s(b)(2).
\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-24789 Filed 12-20-07; 8:45 am]
BILLING CODE 8011-01-P
