Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade Shares of the iShares MSCI Japan Small Cap Index Fund, 73394-73397 [E7-24988]

Download as PDF 73394 Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices SR–NYSEArca–2007–87), as modified by Amendment No. 2 thereto, be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–24986 Filed 12–26–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56983; File No. SR– NYSEArca–2007–128] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade Shares of the iShares MSCI Japan Small Cap Index Fund December 18, 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 13, 2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’), through its wholly owned subsidiary, NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. On December 18, 2007, the Exchange filed Amendment No. 1 to the proposed rule change. This order provides notice of the proposed rule change, as amended, and approves the proposed rule change, as modified by Amendment No. 1 thereto, on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change mstockstill on PROD1PC66 with NOTICES The Exchange proposes to list and trade shares (‘‘Shares’’) of the iShares MSCI Japan Small Cap Index Fund (‘‘Fund’’).3 The text of the proposed rule change is available at the Exchange’s principal office, the Commission’s Public Reference Room, and http:// www.nyse.com. 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The Shares will be issued by iShares, Inc., an open-ended management investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a). 1 15 VerDate Aug<31>2005 18:00 Dec 26, 2007 Jkt 214001 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 The Exchange proposes to list and trade the Shares of the Fund under NYSE Arca Equities Rule 5.2(j)(3), the Exchange’s listing standards for Investment Company Units (‘‘ICUs’’).4 The Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the aggregate in the Japanese market, as represented by the MSCI Japan Small Cap Index (the ‘‘Index’’). The Index, which is designed to measure the small capitalization equity market performance in the Japanese market, consists of small capitalization stocks traded primarily on the Tokyo Stock Exchange. NYSE Arca represents that the Shares meet each of the ‘‘generic’’ listing requirements of Commentary .01(a)(B) to NYSE Arca Equities Rule 5.2(j)(3) applicable to the listing of ICUs based on equity securities comprising international or global indexes, except for the requirement set forth in Commentary .01(a)(B)(2) to NYSE Arca Equities Rule 5.2(j)(3), which states that component stocks that, in the aggregate, account for at least 90% of the weight of the index each must have a minimum worldwide monthly trading volume during each of the last six months of at least 250,000 shares. The Exchange represents that, as of December 10, 2007, the component stocks comprising 88% of the weight of the Index traded 4 An Investment Company Unit is a security that represents an interest in a registered investment company that holds securities comprising, or otherwise based on or representing an interest in, an index or portfolio of securities (or holds securities in another registered investment company that holds securities comprising, or otherwise based on or representing an interest in, an index or portfolio of securities). See NYSE Arca Equities Rule 5.2(j)(3)(A). PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 at least 250,000 shares in each of the previous six months. Because the component stocks of the Index fall below the required minimum percentage in Commentary .01(a)(B)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Exchange has filed the proposed rule change to obtain Commission approval to list and trade the Shares. The Exchange represents that, except for Commentary .01(a)(B)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Shares currently satisfy all of the generic listing standards under NYSE Arca Equities Rule 5.2(j)(3) and further represents that the continued listing standards under NYSE Arca Equities Rule 5.5(g)(2) applicable to Investment Company Units shall apply to the Shares. Detailed descriptions of the Fund, the Index (including the methodology used to determine the composition of the Index), investment objective of the Fund, management and structure of the Fund, procedures and payment requirements for creating and redeeming Shares, transaction fees and expenses, dividends, distributions, taxes, reports to be distributed to beneficial owners of the Shares, availability of information regarding the Shares, and calculation and dissemination of key values can be found in the Registration Statement 5 or on the Web site for the Fund (http:// www.ishares.com). Availability of Information. The Exchange states that quotations and lastsale information regarding the Shares will be disseminated through the facilities of the Consolidated Tape Association (‘‘CTA’’). The Index value is calculated by Morgan Stanley Capital International, Inc. (‘‘MSCI’’), the Index provider, for each trading day in the applicable foreign exchange markets based on official closing prices in such exchange markets and publicly disseminates the Index values for the previous day’s close.6 MSCI or thirdparty major market data vendors will make available at least every 60 seconds 5 See iShares, Inc.’s Registration Statement on Form N–1A, as amended through July 19, 2007 (File Nos. 33–97598 and 811–09102) (‘‘Registration Statement’’). 6 The Exchange notes that, when a broker-dealer or a broker-dealer’s affiliate, such as MSCI, is involved in the development and maintenance of a stock index upon which a product such as iShares is based, the broker-dealer or its affiliate should have procedures designed specifically to address the improper sharing of information. See Securities Exchange Act Release No. 52178 (July 29, 2005), 70 FR 46244 n.18 (August 9, 2005) (SR–NYSE–2005– 41) (describing the procedures which must be in place to prevent the improper sharing of information). The Exchange represents that MSCI has implemented procedures to prevent the misuse of material, non-public information regarding changes to component stocks in the MSCI, in accordance with the requirements of Commentary .01(b)(1) to NYSE Arca Equities Rule 5.2(j)(3). E:\FR\FM\27DEN1.SGM 27DEN1 Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices an updated Index value when foreign trading market hours overlap with the Core Trading Session (9:30 a.m. to 4:15 p.m. Eastern Time or ‘‘ET’’).7 When the foreign markets are closed during Exchange trading hours, the Fund will provide closing Index values on http:// www.ishares.com. iShares, Inc. will cause to be made available daily the names and required number of shares of each of the securities to be deposited in connection with the issuance of the Fund’s Shares, as well as information relating to the required cash payment representing, in part, the amount of accrued dividends for the Fund. In addition, the Indicative Optimized Portfolio Value or ‘‘IOPV’’ on a perShare basis will be calculated by an independent third party and disseminated through the facilities of the CTA at least every 15 seconds during the Core Trading Session.8 The Exchange states that, because the Fund utilizes a representative sampling strategy, the IOPV likely will not reflect the value of all securities included in the Index or necessarily reflect the precise composition of the current portfolio of securities held by the Fund at a particular moment. The Exchange notes that the IOPV disseminated during the Core Trading Session should not be viewed as a real-time update of the NAV of the Fund, which is calculated only once a day. The Fund administrator, State Street Bank and Trust Company, will calculate the net asset value or ‘‘NAV’’ for the Fund once a day on each day that the New York Stock Exchange LLC is open for trading, generally at 4 p.m. ET. The NAV will also be available to the public on http://www.ishares.com, from the Fund distributor by means of a toll-free phone number, and to participants of the National Securities Clearing Corporation. Information with respect to recent NAV, number of Shares outstanding, estimated cash amount and total cash amount per Creation Unit Aggregation,9 and other data with respect to the Fund will also be disseminated prior to the 7 See NYSE Arca Equities Rule 7.34. Exchange states that there is an overlap in trading hours between the foreign and U.S. markets for the Fund and the foreign market that trades securities in the underlying Index. Therefore, the IOPV calculator will update the IOPV at least every 15 seconds to reflect price changes in the applicable foreign market and convert such prices into U.S. dollars based on the currency exchange rate. When the foreign market is closed and the U.S. markets are open, the IOPV will be updated at least every 15 seconds to reflect changes in currency exchange rates after the foreign market closes. 9 See Registration Statement, supra note 5 (providing the definition of Creation Unit Aggregation and the procedures for purchasing and redeeming Shares). mstockstill on PROD1PC66 with NOTICES 8 The VerDate Aug<31>2005 18:00 Dec 26, 2007 Jkt 214001 opening of the Core Trading Session on a daily basis by means of CTA and Consolidated Quote High Speed Lines. In addition, the Web site for the Fund will contain the following information, on a per-Share basis: (1) The prior business day’s NAV, the mid-point of the bid-ask price at the time of calculation of such NAV (‘‘Bid/Ask Price’’),10 and a calculation of the premium or discount of such price against such NAV; and (2) data in chart format 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. Finally, the Exchange states that MSCI’s Web site at http://www.mscibarra.com will make available the components of the Index, and the holdings of the Fund will be available at http:// www.ishares.com. The Exchange represents that the information on the Fund Web site will be available to all market participants at the same time. Trading Rules and Halts. The Exchange 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. The Shares will trade on the Exchange from 4 a.m. to 8 p.m. ET in accordance with NYSE Arca Equities Rule 7.34. The Exchange represents that it has appropriate rules to facilitate transactions in the Shares during all trading sessions, including rules governing trading halts, as provided in NYSE Arca Equities Rule 5.5(g)(2)(b). Surveillance. The Exchange intends to utilize its existing surveillance procedures applicable to ICUs to monitor trading in the Shares. The Exchange represents that these procedures, which focus on detecting when securities trade outside their normal patterns, are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules. The Exchange further represents that it may obtain information via the Intermarket Surveillance Group (‘‘ISG’’) from other exchanges that are members or affiliate members of ISG.11 The 10 The Bid-Ask Price of the Fund is determined using the highest bid and lowest offer on the Exchange as of the time of calculation of the Fund’s NAV. 11 The Exchange notes that the Tokyo Stock Exchange, which is the exchange on which the stocks comprising the Index are primarily traded, is an affiliate member of ISG. The Exchange further notes that one or more of the securities comprising the Index may trade on exchanges that are not members or affiliate members of ISG, and the Exchange may not have in place comprehensive PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 73395 Exchange states that it has a general policy prohibiting the distribution of material, non-public information by its employees. Information Bulletin. Prior to the commencement of trading, the Exchange will inform its ETP Holders 12 in an Information Bulletin (‘‘Bulletin’’) of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss: (1) The procedures for purchases and redemptions of Shares in Creation Unit Aggregations (and that Shares are not individually redeemable); (2) 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 Shares; (3) how information regarding the IOPV is disseminated; (4) the risks involved in trading the shares during the Opening and Late Trading Sessions when an updated IOPV will not be calculated or publicly available; (5) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. In addition, the Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement and will also discuss any exemptive, no-action, or interpretive relief granted by the Commission from provisions of the Act and the rules thereunder. The Bulletin will also disclose that the NAV for the Shares 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,13 in general, and furthers the objectives of section 6(b)(5) of the Act,14 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. surveillance sharing agreements with such exchanges. 12 See NYSE Arca Equities Rule 1.1 (defining ETP Holder as a registered broker or dealer that is a sole proprietorship, partnership, corporation, limited liability company, or other organization in good standing that has been issued an Equity Trading Permit or ‘‘ETP’’). 13 15 U.S.C. 78f(b). 14 15 U.S.C. 78f(b)(5). E:\FR\FM\27DEN1.SGM 27DEN1 73396 Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices 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 principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2007–128 and should be submitted on or before January 17, 2008. IV. Commission’s Findings and Order Granting Accelerated Approval of the Proposed Rule Change After careful consideration, the Commission finds that the proposed III. Solicitation of Comments rule change is consistent with the Interested persons are invited to requirements of the Act and the rules submit written data, views, and and regulations thereunder applicable to arguments concerning the foregoing, a national securities exchange.15 In including whether the proposed rule particular, the Commission finds that change is consistent with the Act. the proposed rule change is consistent Comments may be submitted by any of with section 6(b)(5) of the Act,16 which the following methods: requires that the rules of a national Electronic Comments securities exchange be designed, among other things, to promote just and • Use the Commission’s Internet equitable principles of trade, to remove comment form (http://www.sec.gov/ impediments to and perfect the rules/sro.shtml); or mechanism of a free and open market • Send an e-mail to ruleand a national market system, and, in comments@sec.gov. Please include File general, to protect investors and the Number SR–NYSEArca–2007–128 on public interest. the subject line. Although NYSE Arca Equities Rule Paper Comments 5.2(j)(3) permits the Exchange to list and trade ICUs, the Shares do not meet all • Send paper comments in triplicate of the generic listing requirements 17 to Nancy M. Morris, Secretary, under such rule because the Securities and Exchange Commission, components of the Index do not meet 100 F Street, NE., Washington, DC the requirements of Commentary 20549–1090. .01(a)(B)(2) to NYSE Arca Equities Rule All submissions should refer to File 5.2(j)(3). Commentary .01(a)(B)(2) to Number SR–NYSEArca–2007–128. This NYSE Arca Equities Rule 5.2(j)(3) file number should be included on the requires that, upon the initial listing of subject line if e-mail is used. To help the any series of ICUs pursuant to Rule 19b– Commission process and review your 4(e) under the Act, component stocks comments more efficiently, please use that, in the aggregate, account for at only one method. The Commission will least 90% of the weight of the Index or post all comments on the Commission’s portfolio, must each have a minimum Internet Web site (http://www.sec.gov/ worldwide trading volume during each rules/sro.shtml). Copies of the of the last six months of at least 250,000 submission, all subsequent shares. According to the Exchange, as of amendments, all written statements with respect to the proposed rule 15 In approving this rule change, the Commission change that are filed with the notes that it has considered the proposed rule’s impact on efficiency, competition, and capital Commission, and all written formation. See 15 U.S.C. 78c(f). communications relating to the 16 15 U.S.C. 78f(b)(5). proposed rule change between the 17 Commission and any person, other than ArcaThe generic listing requirements under NYSE Equities Rule 5.2(j)(3) permit the listing and those that may be withheld from the trading of ICUs pursuant to Rule 19b–4(e) under the Act (17 CFR 240.19b–4(e)). Rule 19b–4(e) provides public in accordance with the that the listing and trading of a new derivative provisions of 5 U.S.C. 552, will be securities product by a self-regulatory organization available for inspection and copying in (‘‘SRO’’) shall not be deemed a proposed rule the Commission’s Public Reference change, pursuant to Rule 19b–4(c)(1), if the Commission has approved, pursuant to Section Room, 100 F Street, NE., Washington, 19(b) of the Act, the SRO’s trading rules, DC 20549, on official business days for the product between the hours of 10 a.m. and 3 p.m. procedures, and listing standards derivatives class that would include the new Copies of such filing also will be securities product, and the SRO has a surveillance program for the product class. available for inspection and copying at mstockstill on PROD1PC66 with NOTICES The Exchange states that written comments on the proposed rule change were neither solicited nor recieved. VerDate Aug<31>2005 18:00 Dec 26, 2007 Jkt 214001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 December 10, 2007, those component stocks comprising the Index that individually exceed the minimum worldwide monthly trading volume of 250,000 shares during each of the previous six months, in the aggregate, accounted for only 88% of the weight of the Index. Such percentage misses the minimum required threshold by 2%, and therefore the Shares cannot be listed and traded pursuant to the generic listing standards of NYSE Arca Equities Rule 5.2(j)(3). The Commission believes, however, that the listing and trading of the Shares is consistent with the Act. The Commission notes that, based on the Exchange’s representations, the Shares otherwise meet all of the other applicable generic listing standards under NYSE Arca Equities Rule 5.2(j)(3). The Commission further notes that it has previously approved the listing and trading of derivative securities products based on indices that were composed of stocks that did not meet certain quantitative generic listing criteria by only a slight margin.18 The Commission also finds that the proposal is consistent with section 11A(a)(1)(C)(iii) of the Act,19 which sets forth Congress’ finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotations and last-sale information for the Shares will be disseminated through the facilities of the CTA. MSCI or thirdparty major market data vendors will make available at least every 60 seconds an updated Index value during the Exchange’s Core Trading Session. In addition, an independent third-party calculator will calculate and disseminate the IOPV through the facilities of the CTA at least every 15 seconds during the Exchange’s Core 18 See, e.g., Securities Exchange Act Release Nos. 55953 (June 25, 2007), 72 FR 36084 (July 2, 2007) (SR–NYSE–2007–46) (approving the listing and trading of shares of the HealthSharesTM Orthopedic Repair exchange-traded fund where the component stocks comprising the index that individually exceeded the minimum worldwide monthly trading volume of 250,000 shares during each of the last six months accounted, in the aggregate, for 86.2% of the weight of the index) and 56695 (October 24, 2007), 72 FR 61413 (October 30, 2007) (SR– NYSEArca–2007–111) (approving the listing and trading of shares Shares of the HealthSharesTM Ophthalmology exchange-traded fund where the component stocks comprising the index that individually exceeded the minimum worldwide monthly trading volume of 250,000 shares during each of the last six months accounted, in the aggregate, for only 88.2% of the weight of the index). 19 15 U.S.C. 78k–1(a)(1)(C)(iii). E:\FR\FM\27DEN1.SGM 27DEN1 mstockstill on PROD1PC66 with NOTICES Federal Register / Vol. 72, No. 247 / Thursday, December 27, 2007 / Notices Trading Session. Further, the Fund’s Web site will disseminate information relating to the NAV and the Bid/Ask Price for the Shares, as well as the specific holdings of the Fund. The Commission believes that the proposed rule change is reasonably designed to promote fair disclosure of information that may be necessary to appropriately price the Shares. Under Rule 5.2(j)(3)(v), the Exchange is required to obtain a representation from iShares, Inc. that the NAV per Share will be calculated daily and made available to all market participants at the same time. In addition, the Exchange represents that the Web site disclosure of the information regarding the Shares and the portfolio composition of the Fund will be made to all market participants at the same time. The Exchange further represents that MSCI has procedures in place that comply with the requirements of Commentary .01(b)(1) to NYSE Arca Equities Rule 5.2(j)(3), which relates to restricted access of information concerning changes and adjustments to the Index. The Commission further believes that the trading rules and procedures to which the Shares would be subject pursuant to this proposal are consistent with the Act. The Shares would trade as equity securities and be subject to NYSE Arca’s rules governing the trading of equity securities. The Commission also believes that the Exchange’s trading halt rules under NYSE Arca Equities Rule 5.5(g)(2)(b) are reasonably designed to prevent trading in the Shares when transparency is impaired. In support of this proposal, the Exchange has made the following representations: 1. The Exchange would utilize its existing surveillance procedures applicable to ICUs to monitor trading of the Shares. The Exchange represents that such surveillance procedures are adequate to properly monitor the trading of the Shares. The Exchange may obtain trading information via the ISG from other exchanges that are members or affiliate members of ISG.20 2. Prior to the commencement of trading, the Exchange will inform its ETP Holders in the Bulletin of the special characteristics and risks (including the risks involved in trading the shares during the Opening and Late Trading Sessions when an updated IOPV will not be calculated or publicly available) associated with trading the Shares. The Bulletin will discuss the procedures for purchases and redemptions of Shares, the Exchange’s 20 See supra note 11. VerDate Aug<31>2005 18:00 Dec 26, 2007 Jkt 214001 suitability requirements, information regarding the IOPV, and prospectus delivery requirements. 3. The Exchange represents that iShares, Inc. is required to comply with Rule 10A–3 under the Act 21 for the initial and continued listing of the Shares. This approval order is based on the Exchange’s representations. The Commission finds good cause, pursuant to section 19(b)(2) of the Act,22 for approving the proposed rule change prior to the 30th day after the date of publication of notice in the Federal Register. The Commission notes that the Shares are substantially similar in structure, operation, and function to the shares of other exchange-traded funds, the shares of which are currently listed and trading in the marketplace.23 As mentioned above, the Commission has previously approved the listing and trading of other derivative securities products based on indices that narrowly missed a quantitative generic listing criterion but satisfied all the others.24 Given that the Shares comply with all of NYSE Arca’s initial generic listing standards for ICUs (except for the one requirement of Commentary .01(a)(B)(2) to NYSE Arca Equities Rule 5.2(j)(3)) and would be subject to NYSE Arca’s continued listing requirements for ICUs under NYSE Arca Equities Rule 5.5(g)(2), the listing and trading of the Shares does not appear to present any novel or significant regulatory issues. Therefore, the Commission believes that accelerating approval of this proposal should benefit investors by creating, without undue delay, additional competition in the market for such products. Accordingly, the Commission finds that there is good cause, consistent with section 6(b)(5) of the Act,25 to approve the proposed rule change, as modified by Amendment No. 1 thereto, on an accelerated basis. V. Conclusion IT IS THEREFORE ORDERED, pursuant to section 19(b)(2) under the Act,26 that the proposed rule change 21 17 CFR 240.10A–3. U.S.C. 78s(b)(2). 23 See, e.g., Securities Exchange Release Nos. 52178 (July 29, 2005), 70 FR 46244 (August 9, 2005) (SR–NYSE–2005–41) (approving the listing and trading of shares of the iShares MSCI EAFE Growth Index Fund and the iShares MSCI EAFE Value Index Fund, the underlying indices of which are composed of non-U.S. component stocks) and 52761 (November 10, 2005), 70 FR 70010 (November 18, 2005) (SR–NYSE–2005–76) (approving the listing and trading of shares of a number of iShares foreign equity index funds). 24 See supra note 18. 25 15 U.S.C. 78f(b)(5). 26 15 U.S.C. 78s(b)(2). 22 15 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 73397 (SR–NYSEArca–2007–128), as modified by Amendment No. 1 thereto, be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–24988 Filed 12–26–07; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56987; File No. SR– NYSEArca-2007–119] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To List and Trade the BearLinxSM Alerian MLP Select Index ETN December 18, 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 16, 2007, NYSE Arca, Inc. (‘‘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. On November 20, 2007, NYSE Arca filed Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons and to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange, through its whollyowned subsidiary NYSE Arca Equities, proposes to list and trade the BearLinxSM Alerian MLP Select Index ETN (‘‘Notes’’) of Bear Stearns Companies Inc. (‘‘Company’’), which are linked to the performance of the Alerian MLP Select Index (‘‘Index’’), pursuant to NYSE Arca Equities Rule 5.2(j)(6). The text of the proposed rule change is available at http://www.nyse.com, at the Exchange and at the Commission’s Public Reference Room. 27 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\27DEN1.SGM 27DEN1

Agencies

[Federal Register Volume 72, Number 247 (Thursday, December 27, 2007)]
[Notices]
[Pages 73394-73397]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24988]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56983; File No. SR-NYSEArca-2007-128]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of a Proposed Rule Change, as 
Modified by Amendment No. 1 Thereto, To List and Trade Shares of the 
iShares MSCI Japan Small Cap Index Fund

December 18, 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 13, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''), 
through its wholly owned subsidiary, NYSE Arca Equities, Inc. (``NYSE 
Arca Equities''), filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
On December 18, 2007, the Exchange filed Amendment No. 1 to the 
proposed rule change. This order provides notice of the proposed rule 
change, as amended, and approves the proposed rule change, as modified 
by Amendment No. 1 thereto, on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares (``Shares'') of the 
iShares MSCI Japan Small Cap Index Fund (``Fund'').\3\ The text of the 
proposed rule change is available at the Exchange's principal office, 
the Commission's Public Reference Room, and http://www.nyse.com.
---------------------------------------------------------------------------

    \3\ The Shares will be issued by iShares, Inc., an open-ended 
management investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a).
---------------------------------------------------------------------------

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
    The Exchange proposes to list and trade the Shares of the Fund 
under NYSE Arca Equities Rule 5.2(j)(3), the Exchange's listing 
standards for Investment Company Units (``ICUs'').\4\ The Fund seeks to 
provide investment results that correspond generally to the price and 
yield performance, before fees and expenses, of publicly traded 
securities in the aggregate in the Japanese market, as represented by 
the MSCI Japan Small Cap Index (the ``Index''). The Index, which is 
designed to measure the small capitalization equity market performance 
in the Japanese market, consists of small capitalization stocks traded 
primarily on the Tokyo Stock Exchange.
---------------------------------------------------------------------------

    \4\ An Investment Company Unit is a security that represents an 
interest in a registered investment company that holds securities 
comprising, or otherwise based on or representing an interest in, an 
index or portfolio of securities (or holds securities in another 
registered investment company that holds securities comprising, or 
otherwise based on or representing an interest in, an index or 
portfolio of securities). See NYSE Arca Equities Rule 5.2(j)(3)(A).
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    NYSE Arca represents that the Shares meet each of the ``generic'' 
listing requirements of Commentary .01(a)(B) to NYSE Arca Equities Rule 
5.2(j)(3) applicable to the listing of ICUs based on equity securities 
comprising international or global indexes, except for the requirement 
set forth in Commentary .01(a)(B)(2) to NYSE Arca Equities Rule 
5.2(j)(3), which states that component stocks that, in the aggregate, 
account for at least 90% of the weight of the index each must have a 
minimum worldwide monthly trading volume during each of the last six 
months of at least 250,000 shares. The Exchange represents that, as of 
December 10, 2007, the component stocks comprising 88% of the weight of 
the Index traded at least 250,000 shares in each of the previous six 
months. Because the component stocks of the Index fall below the 
required minimum percentage in Commentary .01(a)(B)(2) to NYSE Arca 
Equities Rule 5.2(j)(3), the Exchange has filed the proposed rule 
change to obtain Commission approval to list and trade the Shares. The 
Exchange represents that, except for Commentary .01(a)(B)(2) to NYSE 
Arca Equities Rule 5.2(j)(3), the Shares currently satisfy all of the 
generic listing standards under NYSE Arca Equities Rule 5.2(j)(3) and 
further represents that the continued listing standards under NYSE Arca 
Equities Rule 5.5(g)(2) applicable to Investment Company Units shall 
apply to the Shares.
    Detailed descriptions of the Fund, the Index (including the 
methodology used to determine the composition of the Index), investment 
objective of the Fund, management and structure of the Fund, procedures 
and payment requirements for creating and redeeming Shares, transaction 
fees and expenses, dividends, distributions, taxes, reports to be 
distributed to beneficial owners of the Shares, availability of 
information regarding the Shares, and calculation and dissemination of 
key values can be found in the Registration Statement \5\ or on the Web 
site for the Fund (http://www.ishares.com).
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    \5\ See iShares, Inc.'s Registration Statement on Form N-1A, as 
amended through July 19, 2007 (File Nos. 33-97598 and 811-09102) 
(``Registration Statement'').
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    Availability of Information. The Exchange states that quotations 
and last-sale information regarding the Shares will be disseminated 
through the facilities of the Consolidated Tape Association (``CTA''). 
The Index value is calculated by Morgan Stanley Capital International, 
Inc. (``MSCI''), the Index provider, for each trading day in the 
applicable foreign exchange markets based on official closing prices in 
such exchange markets and publicly disseminates the Index values for 
the previous day's close.\6\ MSCI or third-party major market data 
vendors will make available at least every 60 seconds

[[Page 73395]]

an updated Index value when foreign trading market hours overlap with 
the Core Trading Session (9:30 a.m. to 4:15 p.m. Eastern Time or 
``ET'').\7\ When the foreign markets are closed during Exchange trading 
hours, the Fund will provide closing Index values on http://
www.ishares.com. iShares, Inc. will cause to be made available daily 
the names and required number of shares of each of the securities to be 
deposited in connection with the issuance of the Fund's Shares, as well 
as information relating to the required cash payment representing, in 
part, the amount of accrued dividends for the Fund.
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    \6\ The Exchange notes that, when a broker-dealer or a broker-
dealer's affiliate, such as MSCI, is involved in the development and 
maintenance of a stock index upon which a product such as iShares is 
based, the broker-dealer or its affiliate should have procedures 
designed specifically to address the improper sharing of 
information. See Securities Exchange Act Release No. 52178 (July 29, 
2005), 70 FR 46244 n.18 (August 9, 2005) (SR-NYSE-2005-41) 
(describing the procedures which must be in place to prevent the 
improper sharing of information). The Exchange represents that MSCI 
has implemented procedures to prevent the misuse of material, non-
public information regarding changes to component stocks in the 
MSCI, in accordance with the requirements of Commentary .01(b)(1) to 
NYSE Arca Equities Rule 5.2(j)(3).
    \7\ See NYSE Arca Equities Rule 7.34.
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    In addition, the Indicative Optimized Portfolio Value or ``IOPV'' 
on a per-Share basis will be calculated by an independent third party 
and disseminated through the facilities of the CTA at least every 15 
seconds during the Core Trading Session.\8\ The Exchange states that, 
because the Fund utilizes a representative sampling strategy, the IOPV 
likely will not reflect the value of all securities included in the 
Index or necessarily reflect the precise composition of the current 
portfolio of securities held by the Fund at a particular moment. The 
Exchange notes that the IOPV disseminated during the Core Trading 
Session should not be viewed as a real-time update of the NAV of the 
Fund, which is calculated only once a day.
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    \8\ The Exchange states that there is an overlap in trading 
hours between the foreign and U.S. markets for the Fund and the 
foreign market that trades securities in the underlying Index. 
Therefore, the IOPV calculator will update the IOPV at least every 
15 seconds to reflect price changes in the applicable foreign market 
and convert such prices into U.S. dollars based on the currency 
exchange rate. When the foreign market is closed and the U.S. 
markets are open, the IOPV will be updated at least every 15 seconds 
to reflect changes in currency exchange rates after the foreign 
market closes.
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    The Fund administrator, State Street Bank and Trust Company, will 
calculate the net asset value or ``NAV'' for the Fund once a day on 
each day that the New York Stock Exchange LLC is open for trading, 
generally at 4 p.m. ET. The NAV will also be available to the public on 
http://www.ishares.com, from the Fund distributor by means of a toll-
free phone number, and to participants of the National Securities 
Clearing Corporation.
    Information with respect to recent NAV, number of Shares 
outstanding, estimated cash amount and total cash amount per Creation 
Unit Aggregation,\9\ and other data with respect to the Fund will also 
be disseminated prior to the opening of the Core Trading Session on a 
daily basis by means of CTA and Consolidated Quote High Speed Lines. In 
addition, the Web site for the Fund will contain the following 
information, on a per-Share basis: (1) The prior business day's NAV, 
the mid-point of the bid-ask price at the time of calculation of such 
NAV (``Bid/Ask Price''),\10\ and a calculation of the premium or 
discount of such price against such NAV; and (2) data in chart format 
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. Finally, the Exchange states that 
MSCI's Web site at http://www.mscibarra.com will make available the 
components of the Index, and the holdings of the Fund will be available 
at http://www.ishares.com. The Exchange represents that the information 
on the Fund Web site will be available to all market participants at 
the same time.
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    \9\ See Registration Statement, supra note 5 (providing the 
definition of Creation Unit Aggregation and the procedures for 
purchasing and redeeming Shares).
    \10\ The Bid-Ask Price of the Fund is determined using the 
highest bid and lowest offer on the Exchange as of the time of 
calculation of the Fund's NAV.
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    Trading Rules and Halts. The Exchange 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. 
The Shares will trade on the Exchange from 4 a.m. to 8 p.m. ET in 
accordance with NYSE Arca Equities Rule 7.34. The Exchange represents 
that it has appropriate rules to facilitate transactions in the Shares 
during all trading sessions, including rules governing trading halts, 
as provided in NYSE Arca Equities Rule 5.5(g)(2)(b).
    Surveillance. The Exchange intends to utilize its existing 
surveillance procedures applicable to ICUs to monitor trading in the 
Shares. The Exchange represents that these procedures, which focus on 
detecting when securities trade outside their normal patterns, are 
adequate to properly monitor Exchange trading of the Shares in all 
trading sessions and to deter and detect violations of Exchange rules. 
The Exchange further represents that it may obtain information via the 
Intermarket Surveillance Group (``ISG'') from other exchanges that are 
members or affiliate members of ISG.\11\ The Exchange states that it 
has a general policy prohibiting the distribution of material, non-
public information by its employees.
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    \11\ The Exchange notes that the Tokyo Stock Exchange, which is 
the exchange on which the stocks comprising the Index are primarily 
traded, is an affiliate member of ISG. The Exchange further notes 
that one or more of the securities comprising the Index may trade on 
exchanges that are not members or affiliate members of ISG, and the 
Exchange may not have in place comprehensive surveillance sharing 
agreements with such exchanges.
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    Information Bulletin. Prior to the commencement of trading, the 
Exchange will inform its ETP Holders \12\ in an Information Bulletin 
(``Bulletin'') of the special characteristics and risks associated with 
trading the Shares. Specifically, the Bulletin will discuss: (1) The 
procedures for purchases and redemptions of Shares in Creation Unit 
Aggregations (and that Shares are not individually redeemable); (2) 
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 Shares; (3) how information regarding the 
IOPV is disseminated; (4) the risks involved in trading the shares 
during the Opening and Late Trading Sessions when an updated IOPV will 
not be calculated or publicly available; (5) the requirement that ETP 
Holders deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (6) trading information. In addition, the Bulletin will reference 
that the Fund is subject to various fees and expenses described in the 
Registration Statement and will also discuss any exemptive, no-action, 
or interpretive relief granted by the Commission from provisions of the 
Act and the rules thereunder. The Bulletin will also disclose that the 
NAV for the Shares will be calculated after 4 p.m. ET each trading day.
---------------------------------------------------------------------------

    \12\ See NYSE Arca Equities Rule 1.1 (defining ETP Holder as a 
registered broker or dealer that is a sole proprietorship, 
partnership, corporation, limited liability company, or other 
organization in good standing that has been issued an Equity Trading 
Permit or ``ETP'').
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\13\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\14\ 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).

---------------------------------------------------------------------------

[[Page 73396]]

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 states that written comments on the proposed rule 
change were neither solicited nor recieved.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2007-128 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-2007-128. 
This file number should be included on the subject line if e-mail is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of 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-2007-128 and should 
be submitted on or before January 17, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\15\ In particular, the Commission finds that the proposed 
rule change is consistent with section 6(b)(5) of the Act,\16\ which 
requires that the rules of a national securities exchange be designed, 
among other things, to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \15\ 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).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Although NYSE Arca Equities Rule 5.2(j)(3) permits the Exchange to 
list and trade ICUs, the Shares do not meet all of the generic listing 
requirements \17\ under such rule because the components of the Index 
do not meet the requirements of Commentary .01(a)(B)(2) to NYSE Arca 
Equities Rule 5.2(j)(3). Commentary .01(a)(B)(2) to NYSE Arca Equities 
Rule 5.2(j)(3) requires that, upon the initial listing of any series of 
ICUs pursuant to Rule 19b-4(e) under the Act, component stocks that, in 
the aggregate, account for at least 90% of the weight of the Index or 
portfolio, must each have a minimum worldwide trading volume during 
each of the last six months of at least 250,000 shares. According to 
the Exchange, as of December 10, 2007, those component stocks 
comprising the Index that individually exceed the minimum worldwide 
monthly trading volume of 250,000 shares during each of the previous 
six months, in the aggregate, accounted for only 88% of the weight of 
the Index. Such percentage misses the minimum required threshold by 2%, 
and therefore the Shares cannot be listed and traded pursuant to the 
generic listing standards of NYSE Arca Equities Rule 5.2(j)(3).
---------------------------------------------------------------------------

    \17\ The generic listing requirements under NYSE Arca Equities 
Rule 5.2(j)(3) permit the listing and trading of ICUs pursuant to 
Rule 19b-4(e) under the Act (17 CFR 240.19b-4(e)). Rule 19b-4(e) 
provides that the listing and trading of a new derivative securities 
product by a self-regulatory organization (``SRO'') shall not be 
deemed a proposed rule change, pursuant to Rule 19b-4(c)(1), if the 
Commission has approved, pursuant to Section 19(b) of the Act, the 
SRO's trading rules, procedures, and listing standards for the 
product class that would include the new derivatives securities 
product, and the SRO has a surveillance program for the product 
class.
---------------------------------------------------------------------------

    The Commission believes, however, that the listing and trading of 
the Shares is consistent with the Act. The Commission notes that, based 
on the Exchange's representations, the Shares otherwise meet all of the 
other applicable generic listing standards under NYSE Arca Equities 
Rule 5.2(j)(3). The Commission further notes that it has previously 
approved the listing and trading of derivative securities products 
based on indices that were composed of stocks that did not meet certain 
quantitative generic listing criteria by only a slight margin.\18\
---------------------------------------------------------------------------

    \18\ See, e.g., Securities Exchange Act Release Nos. 55953 (June 
25, 2007), 72 FR 36084 (July 2, 2007) (SR-NYSE-2007-46) (approving 
the listing and trading of shares of the HealthShares\TM\ Orthopedic 
Repair exchange-traded fund where the component stocks comprising 
the index that individually exceeded the minimum worldwide monthly 
trading volume of 250,000 shares during each of the last six months 
accounted, in the aggregate, for 86.2% of the weight of the index) 
and 56695 (October 24, 2007), 72 FR 61413 (October 30, 2007) (SR-
NYSEArca-2007-111) (approving the listing and trading of shares 
Shares of the HealthShares\TM\ Ophthalmology exchange-traded fund 
where the component stocks comprising the index that individually 
exceeded the minimum worldwide monthly trading volume of 250,000 
shares during each of the last six months accounted, in the 
aggregate, for only 88.2% of the weight of the index).
---------------------------------------------------------------------------

    The Commission also finds that the proposal is consistent with 
section 11A(a)(1)(C)(iii) of the Act,\19\ which sets forth Congress' 
finding that it is in the public interest and appropriate for the 
protection of investors and the maintenance of fair and orderly markets 
to assure the availability to brokers, dealers, and investors of 
information with respect to quotations for and transactions in 
securities. Quotations and last-sale information for the Shares will be 
disseminated through the facilities of the CTA. MSCI or third-party 
major market data vendors will make available at least every 60 seconds 
an updated Index value during the Exchange's Core Trading Session. In 
addition, an independent third-party calculator will calculate and 
disseminate the IOPV through the facilities of the CTA at least every 
15 seconds during the Exchange's Core

[[Page 73397]]

Trading Session. Further, the Fund's Web site will disseminate 
information relating to the NAV and the Bid/Ask Price for the Shares, 
as well as the specific holdings of the Fund.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change is reasonably 
designed to promote fair disclosure of information that may be 
necessary to appropriately price the Shares. Under Rule 5.2(j)(3)(v), 
the Exchange is required to obtain a representation from iShares, Inc. 
that the NAV per Share will be calculated daily and made available to 
all market participants at the same time. In addition, the Exchange 
represents that the Web site disclosure of the information regarding 
the Shares and the portfolio composition of the Fund will be made to 
all market participants at the same time. The Exchange further 
represents that MSCI has procedures in place that comply with the 
requirements of Commentary .01(b)(1) to NYSE Arca Equities Rule 
5.2(j)(3), which relates to restricted access of information concerning 
changes and adjustments to the Index.
    The Commission further believes that the trading rules and 
procedures to which the Shares would be subject pursuant to this 
proposal are consistent with the Act. The Shares would trade as equity 
securities and be subject to NYSE Arca's rules governing the trading of 
equity securities. The Commission also believes that the Exchange's 
trading halt rules under NYSE Arca Equities Rule 5.5(g)(2)(b) are 
reasonably designed to prevent trading in the Shares when transparency 
is impaired.
    In support of this proposal, the Exchange has made the following 
representations:
    1. The Exchange would utilize its existing surveillance procedures 
applicable to ICUs to monitor trading of the Shares. The Exchange 
represents that such surveillance procedures are adequate to properly 
monitor the trading of the Shares. The Exchange may obtain trading 
information via the ISG from other exchanges that are members or 
affiliate members of ISG.\20\
---------------------------------------------------------------------------

    \20\ See supra note 11.
---------------------------------------------------------------------------

    2. Prior to the commencement of trading, the Exchange will inform 
its ETP Holders in the Bulletin of the special characteristics and 
risks (including the risks involved in trading the shares during the 
Opening and Late Trading Sessions when an updated IOPV will not be 
calculated or publicly available) associated with trading the Shares. 
The Bulletin will discuss the procedures for purchases and redemptions 
of Shares, the Exchange's suitability requirements, information 
regarding the IOPV, and prospectus delivery requirements.
    3. The Exchange represents that iShares, Inc. is required to comply 
with Rule 10A-3 under the Act \21\ for the initial and continued 
listing of the Shares.

    \21\ 17 CFR 240.10A-3.

This approval order is based on the Exchange's representations.
    The Commission finds good cause, pursuant to section 19(b)(2) of 
the Act,\22\ for approving the proposed rule change prior to the 30th 
day after the date of publication of notice in the Federal Register. 
The Commission notes that the Shares are substantially similar in 
structure, operation, and function to the shares of other exchange-
traded funds, the shares of which are currently listed and trading in 
the marketplace.\23\ As mentioned above, the Commission has previously 
approved the listing and trading of other derivative securities 
products based on indices that narrowly missed a quantitative generic 
listing criterion but satisfied all the others.\24\ Given that the 
Shares comply with all of NYSE Arca's initial generic listing standards 
for ICUs (except for the one requirement of Commentary .01(a)(B)(2) to 
NYSE Arca Equities Rule 5.2(j)(3)) and would be subject to NYSE Arca's 
continued listing requirements for ICUs under NYSE Arca Equities Rule 
5.5(g)(2), the listing and trading of the Shares does not appear to 
present any novel or significant regulatory issues. Therefore, the 
Commission believes that accelerating approval of this proposal should 
benefit investors by creating, without undue delay, additional 
competition in the market for such products. Accordingly, the 
Commission finds that there is good cause, consistent with section 
6(b)(5) of the Act,\25\ to approve the proposed rule change, as 
modified by Amendment No. 1 thereto, on an accelerated basis.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(2).
    \23\ See, e.g., Securities Exchange Release Nos. 52178 (July 29, 
2005), 70 FR 46244 (August 9, 2005) (SR-NYSE-2005-41) (approving the 
listing and trading of shares of the iShares MSCI EAFE Growth Index 
Fund and the iShares MSCI EAFE Value Index Fund, the underlying 
indices of which are composed of non-U.S. component stocks) and 
52761 (November 10, 2005), 70 FR 70010 (November 18, 2005) (SR-NYSE-
2005-76) (approving the listing and trading of shares of a number of 
iShares foreign equity index funds).
    \24\ See supra note 18.
    \25\ 15 U.S.C. 78f(b)(5).
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V. Conclusion

    IT IS THEREFORE ORDERED, pursuant to section 19(b)(2) under the 
Act,\26\ that the proposed rule change (SR-NYSEArca-2007-128), as 
modified by Amendment No. 1 thereto, be, and it hereby is, approved on 
an accelerated basis.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-24988 Filed 12-26-07; 8:45 am]
BILLING CODE 8011-01-P