Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Trade Units of the United States Heating Oil Fund, LP and the United States Gasoline Fund, LP Pursuant to Unlisted Trading Privileges, 8917-8921 [E8-2822]
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Federal Register / Vol. 73, No. 32 / Friday, February 15, 2008 / Notices
facilities and equipment and phone
service charges.5
Pursuant to proposed Rule 309, if a
member, member organization, or allied
member fails to make payment within
forty-five days after the fee or other sum
becomes payable, notice of the arrearage
will be given to the member and the
member will be reported to the Chief
Financial Officer (‘‘CFO’’) of the
Exchange or a designee. The CFO or
designee will be responsible for taking
any remedial action he or she deems
appropriate, including suspension of the
delinquent member’s, member
organization’s, or allied member’s
access to some or all Exchange facilities.
In its filing, the Exchange stated that
the terms ‘‘fees’’ and ‘‘any other sums’’
in the text of proposed Rule 309 will not
include fines levied in connection with
a disciplinary proceeding. The proposed
rule provides that failure to pay such
disciplinary fines will continue to be
governed by the provisions of Exchange
Rule 476(k) (Disciplinary Proceedings
Involving Charges Against Members,
Member Organizations, Allied Members,
Approved Persons, Employees, or
Others).6
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III. Discussion and Commission
Findings
After careful consideration, the
Commission finds that the proposed
rule change, as amended, is consistent
with the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange 7 and, in particular, the
requirements of section 6 of the Act.8
Specifically, the Commission finds that
the proposed rule change is consistent
with section 6(b)(5) of the Act,9 which
requires, among other things, that the
rules of a national securities exchange
be 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.
Currently, under Exchange Rule
476(k), the ability to suspend members,
5 Telephone bills for Exchange-provided portable
phones are paid by the Exchange and thereafter the
Exchange submits an invoice to the member,
member organization, or allied member for
reimbursement.
6 The Exchange stated that in the context of Rule
476(k), ‘‘fine’’ includes a fine levied in connection
with a disciplinary proceeding and related fees also
associated with a disciplinary proceeding.
7 In approving this proposed rule change the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
8 15 U.S.C. 78f.
9 15 U.S.C. 78f(b)(5).
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member organizations, and allied
members for non-payment of sums due
to the Exchange becomes operative after
45 days. According to the Exchange, this
provision currently is not utilized by the
Exchange; instead, arrearages are
referred to the Exchange’s collections
department for resolution, which
generally does not avail itself of the
recourse provided in Exchange Rule
476(k). The Exchange has proposed to
have notice of certain overdue fees
(other than disciplinary fines and fees)
reported to the CFO (or his or her
designee), and to vest in the CFO (or his
or her designee) the authority to
determine what if any remedial action
should be taken upon receipt of a report
that a member, member organization, or
allied member failed to pay a fee.
Specifically, the CFO, or his or her
designee, would be empowered to
suspend access to some or all of the
facilities of the Exchange until payment
of the arrearage is made.
The Commission believes that the
Exchange’s proposal to empower its
Chief Financial Officer, or his or her
designee, to consider and address nonpayment of certain fees and other sums
due to the Exchange, other than
disciplinary fines, after notice has been
given of the arrearage to such member,
member organization, or allied member,
is consistent with the Act.
The proposed rule would not
preclude the Exchange’s CFO from
presenting notice of any arrearage to the
Board pursuant to Exchange Rule 476(k)
where appropriate, but rather provides a
more efficient process for the
Exchange’s senior management to
address non-payment of certain fees and
other sums due to the Exchange, other
than disciplinary fines, without the
need to involve the Exchange’s Board of
Directors in what is normally a purely
business matter.
In approving the proposed rule
change, the Commission has relied on
the Exchange’s representation that
failure to pay disciplinary fines and any
fees assessed in connection with
disciplinary matters will continue to be
governed solely by Rule 476(k), and that
suspension of members for failure to
pay fines or fees arising out of
disciplinary actions continues to be
subject to consideration by the
Exchange’s Board of Directors pursuant
to that rule.
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,10 that the
proposed rule change (File No. SR–
NYSE–2007–119) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–2866 Filed 2–14–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57294; File No. SR–
NYSEArca–2007–78]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change to Trade Units
of the United States Heating Oil Fund,
LP and the United States Gasoline
Fund, LP Pursuant to Unlisted Trading
Privileges
February 8, 2008.
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 July 30,
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. This order provides notice of
the proposed rule change and approves
the proposal 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 trade pursuant to unlisted
trading privileges (‘‘UTP’’) units
(‘‘Units’’) of the United States Heating
Oil Fund, LP (‘‘USHO’’) and the United
States Gasoline Fund, LP (‘‘USG’’) (each,
a ‘‘Partnership,’’ and collectively
‘‘Partnerships’’) pursuant to NYSE Arca
Equities Rule 8.300. The text of the
proposed rule change is available on the
Exchange’s Web site at https://
www.nyse.com, at the Exchange’s
principal office, and at the
Commission’s Public Reference Room.
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
10 15
PO 00000
U.S.C. 78s(b)(2).
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Federal Register / Vol. 73, No. 32 / Friday, February 15, 2008 / Notices
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
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Under NYSE Arca Equities Rule
8.300, the Exchange may propose to list
and/or trade pursuant to UTP
‘‘Partnership Units.’’ The Exchange
proposes to trade the Units pursuant to
UTP under NYSE Arca Equities Rule
8.300.
Each Unit represents ownership of a
fractional undivided beneficial interest
in the net assets of each of USHO or
USG. Each Partnership is a commodity
pool that will issue Units that may be
purchased and sold on the Exchange.
The net assets of each of USHO and
USG will consist of investments in
futures contracts based on heating oil,
gasoline, crude oil, and other
petroleum-based fuels and natural gas
that are traded on the New York
Mercantile Exchange (‘‘NYMEX’’),
Intercontinental Exchange (‘‘ICE
Futures’’) or other U.S. and foreign
exchanges (collectively, ‘‘Futures
Contracts’’). The Commission has
approved the listing and trading of the
Units on the American Stock Exchange
LLC (‘‘Amex’’).3
Detailed information regarding the
Partnerships; the investment strategies,
objectives, and policies of the
Partnerships; the petroleum-based fuels
market; the structure, management, and
regulation of the Partnerships;
accountability levels and position
limits; the Indicative Partnership Value
(as defined herein); the manner in
which the Units will be offered and
sold; calculation methodologies; and
3 See Securities Exchange Act Release No. 57188
(January 23, 2008) (SR–Amex–2007–70) (approving
Amex’s proposal to list and trade the Units). See
also Securities Exchange Act Release No. 57042
(December 26, 2007), 73 FR 514 (January 3, 2008)
(SR–Amex–2007–70) (providing notice of Amex’s
proposal to list and trade the Units) (‘‘Amex
Proposal’’).
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arbitrage can be found in the Amex
Proposal and in the respective
Registration Statements regarding the
offering of the Units filed with the
Commission under the Securities Act of
1933.4
Dissemination and Availability of
Information About the Underlying
Futures Contracts and the Units
As set forth in the Amex Proposal, the
daily settlement prices for the NYMEXtraded Futures Contracts are publicly
available at https://www.nymex.com.
Quote and last-sale information for the
Futures Contracts are widely
disseminated through a variety of
market data vendors worldwide,
including Bloomberg and Reuters. In
addition, real-time futures data is
available by subscription from Reuters
and Bloomberg. NYMEX also provides
delayed futures information on current
and past trading sessions and market
news free of charge on its Web site. The
specific contract specifications for the
Futures Contracts are also available on
the NYMEX Web site and the ICE
Futures Web site at https://
www.icefutures.com.
Amex will disseminate through the
facilities of the Consolidated Tape
Association (‘‘CTA’’) an updated
Indicative Partnership Value
(‘‘Indicative Partnership Value’’), which
will be disseminated on a per-Unit basis
at least every 15 seconds during regular
Amex trading hours of 9:30 a.m. to 4:15
p.m. Eastern Time (‘‘ET’’). In addition,
shortly after 4 p.m. ET on each business
day, the Administrator, Amex, and the
General Partner will disseminate the
Basket Amount 5 for orders placed
during that day, together with the net
asset value (‘‘NAV’’) for the Units.6 The
Indicative Partnership Value will be
calculated based on the Treasuries and
cash required for creations and
redemptions (i.e., NAV per limit ×
100,000) adjusted to reflect the price
changes of the relevant Benchmark
Futures Contract.
The Indicative Partnership Value is
based on open-outcry trading of the
relevant Benchmark Futures Contract on
4 See USHO’s Registration Statement on Form
S–1 filed on April 19, 2007 (File No. 333–142211);
USG’s Registration Statement on Form S–1 filed on
April 18, 2007 (File No. 333–142206).
5 See infra note 14.
6 E-mail from Tim Malinowski, Director, NYSE
Euronext, to Geoffrey Pemble, Special Counsel,
Division of Trading and Markets, Commission,
dated February 1, 2008 (‘‘NYSE Arca
Confirmation’’). According to the Amex Proposal,
Amex will obtain a representation from each
Partnership that its NAV per Unit will be calculated
daily and made available to all market participants
at the same time. See Amex Proposal, supra note
3.
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the NYMEX. Open-outcry trading on the
NYMEX closes at 2:30 p.m. ET while
NYMEX’s energy futures contracts are
traded on the Chicago Mercantile
Exchanges CME Globex electronic
trading platform on a 24-hour basis.7
After the close of trading on the NYNEX
at 2:30 p.m. ET, the Indicative
Partnership Value will reflect changes to
the relevant Benchmark Futures
Contract as provided for through CME
Globex. The value of the relevant
Benchmark Futures Contract will be
available on a 15-second delayed basis
during the time the Units trade on the
Exchange.8
While the NYMEX is open for trading,
the Indicative Partnership Value can be
expected to closely approximate the
value per Unit of the Basket Amount.
However, during NYSE Arca
Marketplace trading hours when the
Futures Contracts have ceased trading,
spreads and resulting premiums or
discounts may widen and therefore
increase the difference between the
price of the Units and the NAV of the
Units. The Indicative Partnership Value
on a per-Unit basis disseminated from
9:30 a.m. to 4:15 p.m. ET should not be
viewed as a real-time update of the
NAV, which is calculated only once a
day.
Quotations and last-sale information
regarding the Units will be disseminated
through the facilities of the CTA and the
Consolidated Quote High Speed Lines.9
Amex intends to disseminate for each
Partnership on a daily basis information
with respect to the Indicative
Partnership Value, recent NAV, Units
outstanding, and the Basket Amount.
Amex will also make available on its
Web site the following information: (1)
The prior business day’s NAV and the
reported closing price; (2) the mid-point
of the bid-ask price in relation to the
NAV as of the time the NAV is
calculated (‘‘Bid-Ask price’’); 10 (3)
calculation of the premium or discount
of such price against such NAV; (4) data
in chart form displaying the frequency
distribution of discounts and premiums
of the Bid-Ask Price against the NAV,
within appropriate ranges for each of
the four previous calendar quarters; (5)
the prospectus and the most recent
periodic reports filed with the SEC or
required by the CFTC for each of the
Partnerships; (6) the daily trading
volume and closing price of the Units;
7 CME Globex operates on a 24-hour basis each
trading day.
8 See NYSE Arca Confirmation, supra note 6.
9 See id.
10 The Bid-Ask Price of Units is determined using
the highest bid and lowest offer as of the time of
calculation of the NAV.
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Federal Register / Vol. 73, No. 32 / Friday, February 15, 2008 / Notices
and (7) other applicable quantitative
information.
USHO’s and USG’s total portfolio
composition will be disclosed, each
business day that Amex is open for
trading, on their respective Web sites at
https://
www.unitedstatesheatingoilfund.com
and https://
www.unitedstatesgasolinefund.com.
USHO’s Web site disclosure of portfolio
holdings will be made available daily
and will include, as applicable, the
name and value of each Heating Oil
Interest,11 the specific types and
characteristics of such Heating Oil
Interests, Treasuries,12 and the amount
of cash and cash equivalents held in the
portfolio of USHO. USG’s Web site
disclosure of portfolio holdings will be
made available daily and will include,
as applicable, the name and value of
each Gasoline Interest,13 the specific
types and characteristics of such
Gasoline Interests, Treasuries, and the
amount of cash and cash equivalents
held in the portfolio of USG. The public
Web site disclosure of the portfolio
composition of each of USHO and USG
will coincide with the disclosure by
Brown Brothers Harriman & Co. (the
‘‘Administrator’’) of the NAV for the
Units and the Basket Amount 14 (for
orders placed during the day) for each
Partnership on each business day.
Trading Rules
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The Exchange deems the Units to be
equity securities, thus rendering trading
in the Units subject to its existing rules
governing the trading of equity
securities. The Exchange represents that
the Units will trade on the NYSE Arca
Marketplace from 4 a.m. to 8 p.m. ET.
The Exchange represents that it has
appropriate rules to facilitate
transactions in the Units during all
trading sessions.
11 Heating Oil Interests are defined as investments
in Futures Contracts and other heating-oil-related
investments, such as cash-settled options on
Futures Contracts, forward contracts for heating oil,
and over-the-counter (‘‘OTC’’) contracts that are
based on the price of heating oil, oil, and other
petroleum-based fuels, Futures Contracts, and
indices based on the foregoing. See Amex Proposal,
supra note 3, 73 FR at 514.
12 Treasuries are defined as short-term obligations
of the United States of two years or less. See id.
13 Gasoline Interests are defined as investments in
Futures Contracts and other gasoline-related
investments, such as cash-settled options on
Futures Contracts, forward contracts for gasoline,
and OTC transactions that are based on the price
of gasoline, oil, and other petroleum-based fuels,
Futures Contracts, and indices based on the
foregoing. See id.
14 See id., 73 FR at 519 (defining Basket Amount
as the amount of Treasuries and/or cash equal to the
NAV per Unit times 100,000 Units required for the
purchase of a basket of Units).
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To facilitate surveillance, NYSE Arca
Equities Rule 8.300(e) sets forth certain
restrictions on ETP Holders acting as
registered Market Makers in Units.
NYSE Arca Equities Rule 8.300(e)(2)–(3)
requires that an ETP Holder acting as a
registered Market Maker in the Units
provide the Exchange with necessary
information relating to its trading in
underlying assets or commodities,
related futures or options on futures, or
any other related derivatives. NYSE
Arca Equities Rule 8.300(e)(4) prohibits
the ETP Holder acting as a registered
Market Maker in the Units from using
any material nonpublic information
received from any person associated
with an ETP Holder or employee of such
person regarding trading by such person
or employee in the underlying asset or
commodity, related futures or options
on futures, or any other related
derivative (including the Units). In
addition, NYSE Arca Equities Rule
8.300(e)(1) prohibits the ETP Holder
acting as a registered Market Maker in
the Units from being affiliated with a
market maker in the underlying asset or
commodity, related futures or options
on futures, or any other related
derivative unless adequate information
barriers are in place, as provided in
NYSE Arca Equities Rule 7.26.
Trading Halts
The Exchange may consider all
relevant factors in exercising its
discretion to halt or suspend trading in
the Units. Trading may be halted
because of market conditions or for
reasons that, in the view of the
Exchange, make trading in the Units
inadvisable. These may include: (1) The
extent to which trading is not occurring
in the underlying Futures Contracts, or
(2) whether other unusual conditions or
circumstances detrimental to the
maintenance of a fair and orderly
market are present. In addition, trading
in Units could be halted pursuant to the
Exchange’s ‘‘circuit breaker’’ rule 15 or
by the halt or suspension of trading of
the underlying securities.
In addition, the Exchange represents
that it will cease trading the Units of a
Partnership if: (a) The listing market
stops trading the Units because of a
regulatory halt similar to a halt based on
NYSE Arca Equities Rule 7.12; or (b) the
listing market delists the Units.
Additionally, the Exchange may cease
trading the Units if such other event
shall occur or condition exists which in
the opinion of the Exchange makes
further dealings on the Exchange
inadvisable. UTP trading in the Units is
also governed by the trading halts
15 See
PO 00000
NYSE Arca Equities Rule 7.12.
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Sfmt 4703
8919
provisions of NYSE Arca Equities Rule
7.34 relating to temporary interruptions
in the calculation or wide dissemination
of an Indicative Partnership Value or the
value of an underlying Benchmark
Futures Contract.16
Surveillance
The Exchange intends to utilize its
existing surveillance procedures
applicable to derivative products to
monitor trading in the Units. The
Exchange represents that these
procedures are adequate to properly
monitor Exchange trading of the Units
in all trading sessions and to deter and
detect violations of Exchange rules.
The Exchange’s current trading
surveillance focuses on detecting
securities trading outside their normal
patterns. When such situations are
detected, surveillance analysis follows
and investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.
The Exchange may obtain information
via the Intermarket Surveillance Group
(‘‘ISG’’) from other exchanges that are
members or affiliates of the ISG.17 In
addition, the Exchange has an
Information Sharing Agreement in place
with NYMEX and ICE Futures for the
purpose of providing information in
connection with trading in or related to
futures contracts traded on NYMEX and
ICE Futures, respectively. To the extent
that a Partnership invests in Heating Oil
Interests or Gasoline Interests traded on
other exchanges, the Exchange will seek
to enter into information sharing
agreements with those particular
exchanges.
In addition, the Exchange also 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 in an Information Bulletin
(‘‘Bulletin’’) of the special
characteristics and risks associated with
trading the Units. Specifically, the
16 NYSE Arca Equities Rule 7.34(a) literally
addresses temporary interruptions in the
calculation or wide dissemination of the Indicative
Intra-Day Value and the value of an underlying
index. The Units of each Partnership, however, do
not have an underlying index, but have an
underlying Benchmark Futures Contract. Therefore,
the Exchange hereby represents that the provisions
in NYSE Arca Equities Rule 7.34(a) that address
interruptions in the calculation or wide
dissemination of the value of an underlying index
shall also apply to interruptions in the calculation
or wide dissemination of the value of an underlying
Benchmark Futures Contract.
17 For a list of the current members and affiliate
members of ISG, see https://www.isgportal.com.
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Federal Register / Vol. 73, No. 32 / Friday, February 15, 2008 / Notices
Bulletin will discuss the following: (1)
The risks involved in trading the Units
during the Opening and Late Trading
Sessions when an updated Indicative
Partnership Value will not be calculated
or publicly disseminated; (2) the
procedures for purchases and
redemptions of Units in Baskets (and
that Units are not individually
redeemable); (3) NYSE Arca Equities
Rule 9.2(a); 18 (4) how information
regarding the Indicative Partnership
Value is disseminated; (5) the
requirement that ETP Holders deliver a
prospectus to investors purchasing
newly issued Units prior to or
concurrently with the confirmation of a
transaction; and (6) trading information.
In addition, the Bulletin will
reference that each Partnership is
subject to various fees and expenses;
there is no regulated source of last-sale
information regarding physical
commodities; the Commission has no
jurisdiction over the trading of heating
oil, gasoline, crude oil, natural gas, or
other petroleum-based fuels; and the
CFTC has regulatory jurisdiction over
the trading of heating oil-based and
gasoline-based futures contracts and
related options. The Bulletin will also
discuss any exemptive, no-action, or
interpretive relief granted by the
Commission from any rules under the
Act, and will disclose the trading hours
of the Units of each Partnership and that
the NAV for the Units will be calculated
after 4 p.m. ET each trading day.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,19 in general, and
furthers the objectives of section
6(b)(5),20 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
18 NYSE Arca Equities Rule 9.2(a) provides that
an ETP Holder, before recommending a transaction,
must have reasonable grounds to believe that the
recommendation is suitable for the customer based
on any facts disclosed by the customer as to his
other security holdings and as to his financial
situation and needs. Further, the rule provides,
with a limited exception, that prior to the execution
of a transaction recommended to a non-institutional
customer the ETP Holder shall make reasonable
efforts to obtain information concerning the
customer’s financial status, tax status, investment
objectives, and any other information that it
believes would be useful to make a
recommendation. See Securities Exchange Act
Release No. 54045 (June 26, 2006), 71 FR 37971
(July 3, 2006) (SR–PCX–2005–115).
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(5).
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15:58 Feb 14, 2008
Jkt 214001
perfect the mechanism of a free and
open market and a national market
system.
In addition, the Exchange believes
that the proposed rule change is
consistent with Rule 12f–5 under the
Act 21 because it deems the Units to be
equity securities, thus rendering the
Units subject to the Exchange’s 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.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments on the proposed
rule change were neither solicited nor
received.
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 NYSE Arca. 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–2007–78 and
should be submitted on or before March
7, 2008.
IV. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
III. Solicitation of Comments
After careful review, the Commission
Interested persons are invited to
finds that the proposed rule change is
submit written data, views, and
consistent with the requirements of the
arguments concerning the foregoing,
Act and the rules and regulations
including whether the proposed rule
thereunder applicable to a national
change is consistent with the Act.
securities exchange.22 In particular, the
Comments may be submitted by any of
Commission finds that the proposed
the following methods:
rule change is consistent with section
6(b)(5) of the Act,23 which requires that
Electronic Comments
an exchange have rules designed, among
• Use the Commission’s Internet
other things, to promote just and
comment form (https://www.sec.gov/
equitable principles of trade, to remove
rules/sro.shtml); or
impediments to and perfect the
• Send an e-mail to rulemechanism of a free and open market
comments@sec.gov. Please include File
Number SR–NYSEArca–2007–78 on the and a national market system, and, in
general, to protect investors and the
subject line.
public interest. The Commission
Paper Comments
believes that this proposal should
benefit investors by increasing
• Send paper comments in triplicate
competition among markets that trade
to Nancy M. Morris, Secretary,
the Units.
Securities and Exchange Commission,
In addition, the Commission finds
100 F Street, NE., Washington, DC
that the proposal is consistent with
20549–1090.
section 12(f) of the Act,24 which permits
All submissions should refer to File
an exchange to trade, pursuant to UTP,
Number SR–NYSEArca–2007–78. This
a security that is listed and registered on
file number should be included on the
25
subject line if e-mail is used. To help the another exchange. The Commission
Commission process and review your
22 In approving this rule change, the Commission
comments more efficiently, please use
notes that it has considered the proposed rule’s
only one method. The Commission will impact on efficiency, competition, and capital
post all comments on the Commission’s formation. See 15 U.S.C. 78c(f).
23 15 U.S.C. 78f(b)(5).
Internet Web site (https://www.sec.gov/
24 15 U.S.C. 78l(f).
rules/sro.shtml). Copies of the
25 Section 12(a) of the Act, 15 U.S.C. 78l(a),
submission, all subsequent
generally prohibits a broker-dealer from trading a
amendments, all written statements
security on a national securities exchange unless
the security is registered on that exchange pursuant
with respect to the proposed rule
to Section 12 of the Act. Section 12(f) of the Act
change that are filed with the
excludes from this restriction trading in any
Commission, and all written
security to which an exchange ‘‘extends UTP.’’
21 17
PO 00000
When an exchange extends UTP to a security, it
allows its members to trade the security as if it were
CFR 240.12f–5.
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rwilkins on PROD1PC63 with NOTICES
Federal Register / Vol. 73, No. 32 / Friday, February 15, 2008 / Notices
notes that it approved the original
listing and trading of the Units on
Amex.26 The Commission also finds that
the proposal is consistent with Rule
12f–5 under the Act,27 which provides
that an exchange shall not extend UTP
to a security unless the exchange has in
effect a rule or rules providing for
transactions in the class or type of
security to which the exchange extends
UTP. The Exchange has represented that
it meets this requirement because it
deems the Units to be equity securities,
thus rendering trading in the Units
subject to the Exchange’s existing rules
governing the trading of equity
securities.
The Commission further believes that
the proposal is consistent with section
11A(a)(1)(C)(iii) of the Act,28 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 regarding the
Units will be disseminated through the
facilities of the CTA and Consolidated
Quote High Speed Lines. The daily
settlement prices for the Futures
Contracts are publicly available on
various Web sites, and market data
vendors and news publications publish
futures prices and related data,
including quotation and last-sale
information for the Futures Contracts.
Amex will disseminate through the
facilities of the CTA an updated
Indicative Partnership Value on a perUnit basis at least every 15 seconds
during regular Amex trading hours.
Amex intends to disseminate for each
Partnership on a daily basis information
with respect to the Indicative
Partnership Value, the NAV, the number
of Units outstanding, the Basket
Amount, and daily trading volumes and
closing prices of the Units. Finally,
USHO’s and USG’s total portfolio
composition will be disclosed, each
business day that the Amex is open for
trading, on their respective Web sites.
The Commission also believes that the
Exchange’s trading halt rules are
reasonably designed to prevent trading
in the Units when transparency is
impaired. If the listing market halts
trading when the Indicative Fund Value
is not being calculated or disseminated,
the Exchange would halt trading in the
listed and registered on the exchange even though
it is not so listed and registered.
26 See supra note 3.
27 17 CFR 240.12f–5.
28 15 U.S.C. 78k–1(a)(1)(C)(iii).
VerDate Aug<31>2005
15:58 Feb 14, 2008
Jkt 214001
Units. The Exchange has represented
that it would follow the procedures with
respect to trading halts set forth in
NYSE Arca Equities Rule 7.34.
The Commission notes that, if the
Units should be delisted by the listing
exchange, the Exchange would no
longer have authority to trade the Units
pursuant to this order.
In support of this proposal, the
Exchange has made the following
representations:
1. The Exchange’s surveillance
procedures are adequate to properly
monitor Exchange trading of the Units
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
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Units,
including risks inherent with trading
the Units during the Opening and Late
Trading Sessions when the updated
Indicative Partnership Value is not
calculated and disseminated, and of
suitability recommendation
requirements.
3. The Information Bulletin also
would discuss the requirement that ETP
Holders deliver a prospectus to
investors purchasing newly issued Units
prior to or concurrently with the
confirmation of a transaction.
4. Trading in the Units will be subject
to NYSE Arca Equities Rule 8.300(e),
which sets forth certain restrictions on
ETP Holders acting as registered Market
Makers in Units to facilitate
surveillance.
This approval order is based on these
representations.
The Commission finds good cause for
approving this proposal before the
thirtieth day after the publication of
notice thereof in the Federal Register.
As noted previously, the Commission
previously found that the listing and
trading of the Units on Amex is
consistent with the Act.29 The
Commission presently is not aware of
any regulatory issue that should cause it
to revisit that finding or would preclude
the trading of the Units on the Exchange
pursuant to UTP. Therefore, accelerating
approval of this proposal should benefit
investors by creating, without undue
delay, additional competition in the
market for the Units.
V. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,30 that the
proposed rule change (SR–NYSEArca–
2007–78) 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.31
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–2822 Filed 2–14–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57298; File No. SR–DTC–
2007–13]
Self-Regulatory Organizations; The
Depository Trust Company; Order
Granting Approval of a Proposed Rule
Change Relating to the Foreign
Currency Payment Option
February 8, 2007.
I. Introduction
On September 26, 2007, The
Depository Trust Company (‘‘DTC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–DTC–2007–13 pursuant
to section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’).1 Notice
of the proposal was published in the
Federal Register on December 3, 2007.2
No comment letters were received. For
the reasons discussed below, the
Commission is granting approval of the
proposed rule change.
II. Description
The proposed rule change provides
that DTC’s Foreign Currency Payment
Option (‘‘FCP Option’’) may be used (1)
in relation to securities denominated in
U.S. dollars and (2) regardless of
whether the terms of the issue originally
contemplated the option of payment in
one or more currencies. Currently, DTC
offers the FCP Option in order for
participants to elect to receive dividend,
interest, principal, redemption, or
maturity payments either in foreign
currency outside of DTC or in U.S.
dollars within DTC with respect to a
foreign denominated issue when the
foreign currency option is included in
the initial offering terms of the DTCeligible issue.
U.S. Denominated Securities
The rule change clarifies that the FCP
Option will be made available for U.S.
denominated securities as well as
foreign denominated securities. When
31 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 56840
(November 27, 2007), 72 FR 67987.
1 15
29 See
30 15
PO 00000
supra note 3.
U.S.C. 78s(b)(2).
Frm 00078
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8921
E:\FR\FM\15FEN1.SGM
15FEN1
]]>Agencies
[Federal Register Volume 73, Number 32 (Friday, February 15, 2008)]
[Notices]
[Pages 8917-8921]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-2822]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57294; File No. SR-NYSEArca-2007-78]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Change to
Trade Units of the United States Heating Oil Fund, LP and the United
States Gasoline Fund, LP Pursuant to Unlisted Trading Privileges
February 8, 2008.
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 July 30, 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. This order provides
notice of the proposed rule change and approves the proposal 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, through its wholly-owned subsidiary NYSE Arca
Equities, proposes to trade pursuant to unlisted trading privileges
(``UTP'') units (``Units'') of the United States Heating Oil Fund, LP
(``USHO'') and the United States Gasoline Fund, LP (``USG'') (each, a
``Partnership,'' and collectively ``Partnerships'') pursuant to NYSE
Arca Equities Rule 8.300. The text of the proposed rule change is
available on the Exchange's Web site at https://www.nyse.com, at the
Exchange's principal office, and at the Commission's Public Reference
Room.
[[Page 8918]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Under NYSE Arca Equities Rule 8.300, the Exchange may propose to
list and/or trade pursuant to UTP ``Partnership Units.'' The Exchange
proposes to trade the Units pursuant to UTP under NYSE Arca Equities
Rule 8.300.
Each Unit represents ownership of a fractional undivided beneficial
interest in the net assets of each of USHO or USG. Each Partnership is
a commodity pool that will issue Units that may be purchased and sold
on the Exchange. The net assets of each of USHO and USG will consist of
investments in futures contracts based on heating oil, gasoline, crude
oil, and other petroleum-based fuels and natural gas that are traded on
the New York Mercantile Exchange (``NYMEX''), Intercontinental Exchange
(``ICE Futures'') or other U.S. and foreign exchanges (collectively,
``Futures Contracts''). The Commission has approved the listing and
trading of the Units on the American Stock Exchange LLC (``Amex'').\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 57188 (January 23,
2008) (SR-Amex-2007-70) (approving Amex's proposal to list and trade
the Units). See also Securities Exchange Act Release No. 57042
(December 26, 2007), 73 FR 514 (January 3, 2008) (SR-Amex-2007-70)
(providing notice of Amex's proposal to list and trade the Units)
(``Amex Proposal'').
---------------------------------------------------------------------------
Detailed information regarding the Partnerships; the investment
strategies, objectives, and policies of the Partnerships; the
petroleum-based fuels market; the structure, management, and regulation
of the Partnerships; accountability levels and position limits; the
Indicative Partnership Value (as defined herein); the manner in which
the Units will be offered and sold; calculation methodologies; and
arbitrage can be found in the Amex Proposal and in the respective
Registration Statements regarding the offering of the Units filed with
the Commission under the Securities Act of 1933.\4\
---------------------------------------------------------------------------
\4\ See USHO's Registration Statement on Form S-1 filed on April
19, 2007 (File No. 333-142211); USG's Registration Statement on Form
S-1 filed on April 18, 2007 (File No. 333-142206).
---------------------------------------------------------------------------
Dissemination and Availability of Information About the Underlying
Futures Contracts and the Units
As set forth in the Amex Proposal, the daily settlement prices for
the NYMEX-traded Futures Contracts are publicly available at https://
www.nymex.com. Quote and last-sale information for the Futures
Contracts are widely disseminated through a variety of market data
vendors worldwide, including Bloomberg and Reuters. In addition, real-
time futures data is available by subscription from Reuters and
Bloomberg. NYMEX also provides delayed futures information on current
and past trading sessions and market news free of charge on its Web
site. The specific contract specifications for the Futures Contracts
are also available on the NYMEX Web site and the ICE Futures Web site
at https://www.icefutures.com.
Amex will disseminate through the facilities of the Consolidated
Tape Association (``CTA'') an updated Indicative Partnership Value
(``Indicative Partnership Value''), which will be disseminated on a
per-Unit basis at least every 15 seconds during regular Amex trading
hours of 9:30 a.m. to 4:15 p.m. Eastern Time (``ET''). In addition,
shortly after 4 p.m. ET on each business day, the Administrator, Amex,
and the General Partner will disseminate the Basket Amount \5\ for
orders placed during that day, together with the net asset value
(``NAV'') for the Units.\6\ The Indicative Partnership Value will be
calculated based on the Treasuries and cash required for creations and
redemptions (i.e., NAV per limit x 100,000) adjusted to reflect the
price changes of the relevant Benchmark Futures Contract.
---------------------------------------------------------------------------
\5\ See infra note 14.
\6\ E-mail from Tim Malinowski, Director, NYSE Euronext, to
Geoffrey Pemble, Special Counsel, Division of Trading and Markets,
Commission, dated February 1, 2008 (``NYSE Arca Confirmation'').
According to the Amex Proposal, Amex will obtain a representation
from each Partnership that its NAV per Unit will be calculated daily
and made available to all market participants at the same time. See
Amex Proposal, supra note 3.
---------------------------------------------------------------------------
The Indicative Partnership Value is based on open-outcry trading of
the relevant Benchmark Futures Contract on the NYMEX. Open-outcry
trading on the NYMEX closes at 2:30 p.m. ET while NYMEX's energy
futures contracts are traded on the Chicago Mercantile Exchanges CME
Globex[supreg] electronic trading platform on a 24-hour basis.\7\ After
the close of trading on the NYNEX at 2:30 p.m. ET, the Indicative
Partnership Value will reflect changes to the relevant Benchmark
Futures Contract as provided for through CME Globex. The value of the
relevant Benchmark Futures Contract will be available on a 15-second
delayed basis during the time the Units trade on the Exchange.\8\
---------------------------------------------------------------------------
\7\ CME Globex operates on a 24-hour basis each trading day.
\8\ See NYSE Arca Confirmation, supra note 6.
---------------------------------------------------------------------------
While the NYMEX is open for trading, the Indicative Partnership
Value can be expected to closely approximate the value per Unit of the
Basket Amount. However, during NYSE Arca Marketplace trading hours when
the Futures Contracts have ceased trading, spreads and resulting
premiums or discounts may widen and therefore increase the difference
between the price of the Units and the NAV of the Units. The Indicative
Partnership Value on a per-Unit basis disseminated from 9:30 a.m. to
4:15 p.m. ET should not be viewed as a real-time update of the NAV,
which is calculated only once a day.
Quotations and last-sale information regarding the Units will be
disseminated through the facilities of the CTA and the Consolidated
Quote High Speed Lines.\9\ Amex intends to disseminate for each
Partnership on a daily basis information with respect to the Indicative
Partnership Value, recent NAV, Units outstanding, and the Basket
Amount. Amex will also make available on its Web site the following
information: (1) The prior business day's NAV and the reported closing
price; (2) the mid-point of the bid-ask price in relation to the NAV as
of the time the NAV is calculated (``Bid-Ask price''); \10\ (3)
calculation of the premium or discount of such price against such NAV;
(4) data in chart form displaying the frequency distribution of
discounts and premiums of the Bid-Ask Price against the NAV, within
appropriate ranges for each of the four previous calendar quarters; (5)
the prospectus and the most recent periodic reports filed with the SEC
or required by the CFTC for each of the Partnerships; (6) the daily
trading volume and closing price of the Units;
[[Page 8919]]
and (7) other applicable quantitative information.
---------------------------------------------------------------------------
\9\ See id.
\10\ The Bid-Ask Price of Units is determined using the highest
bid and lowest offer as of the time of calculation of the NAV.
---------------------------------------------------------------------------
USHO's and USG's total portfolio composition will be disclosed,
each business day that Amex is open for trading, on their respective
Web sites at https://www.unitedstatesheatingoilfund.com and https://
www.unitedstatesgasolinefund.com. USHO's Web site disclosure of
portfolio holdings will be made available daily and will include, as
applicable, the name and value of each Heating Oil Interest,\11\ the
specific types and characteristics of such Heating Oil Interests,
Treasuries,\12\ and the amount of cash and cash equivalents held in the
portfolio of USHO. USG's Web site disclosure of portfolio holdings will
be made available daily and will include, as applicable, the name and
value of each Gasoline Interest,\13\ the specific types and
characteristics of such Gasoline Interests, Treasuries, and the amount
of cash and cash equivalents held in the portfolio of USG. The public
Web site disclosure of the portfolio composition of each of USHO and
USG will coincide with the disclosure by Brown Brothers Harriman & Co.
(the ``Administrator'') of the NAV for the Units and the Basket Amount
\14\ (for orders placed during the day) for each Partnership on each
business day.
---------------------------------------------------------------------------
\11\ Heating Oil Interests are defined as investments in Futures
Contracts and other heating-oil-related investments, such as cash-
settled options on Futures Contracts, forward contracts for heating
oil, and over-the-counter (``OTC'') contracts that are based on the
price of heating oil, oil, and other petroleum-based fuels, Futures
Contracts, and indices based on the foregoing. See Amex Proposal,
supra note 3, 73 FR at 514.
\12\ Treasuries are defined as short-term obligations of the
United States of two years or less. See id.
\13\ Gasoline Interests are defined as investments in Futures
Contracts and other gasoline-related investments, such as cash-
settled options on Futures Contracts, forward contracts for
gasoline, and OTC transactions that are based on the price of
gasoline, oil, and other petroleum-based fuels, Futures Contracts,
and indices based on the foregoing. See id.
\14\ See id., 73 FR at 519 (defining Basket Amount as the amount
of Treasuries and/or cash equal to the NAV per Unit times 100,000
Units required for the purchase of a basket of Units).
---------------------------------------------------------------------------
Trading Rules
The Exchange deems the Units to be equity securities, thus
rendering trading in the Units subject to its existing rules governing
the trading of equity securities. The Exchange represents that the
Units will trade on the NYSE Arca Marketplace from 4 a.m. to 8 p.m. ET.
The Exchange represents that it has appropriate rules to facilitate
transactions in the Units during all trading sessions.
To facilitate surveillance, NYSE Arca Equities Rule 8.300(e) sets
forth certain restrictions on ETP Holders acting as registered Market
Makers in Units. NYSE Arca Equities Rule 8.300(e)(2)-(3) requires that
an ETP Holder acting as a registered Market Maker in the Units provide
the Exchange with necessary information relating to its trading in
underlying assets or commodities, related futures or options on
futures, or any other related derivatives. NYSE Arca Equities Rule
8.300(e)(4) prohibits the ETP Holder acting as a registered Market
Maker in the Units from using any material nonpublic information
received from any person associated with an ETP Holder or employee of
such person regarding trading by such person or employee in the
underlying asset or commodity, related futures or options on futures,
or any other related derivative (including the Units). In addition,
NYSE Arca Equities Rule 8.300(e)(1) prohibits the ETP Holder acting as
a registered Market Maker in the Units from being affiliated with a
market maker in the underlying asset or commodity, related futures or
options on futures, or any other related derivative unless adequate
information barriers are in place, as provided in NYSE Arca Equities
Rule 7.26.
Trading Halts
The Exchange may consider all relevant factors in exercising its
discretion to halt or suspend trading in the Units. Trading may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Units inadvisable. These may include:
(1) The extent to which trading is not occurring in the underlying
Futures Contracts, or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present. In addition, trading in Units could be halted
pursuant to the Exchange's ``circuit breaker'' rule \15\ or by the halt
or suspension of trading of the underlying securities.
---------------------------------------------------------------------------
\15\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------
In addition, the Exchange represents that it will cease trading the
Units of a Partnership if: (a) The listing market stops trading the
Units because of a regulatory halt similar to a halt based on NYSE Arca
Equities Rule 7.12; or (b) the listing market delists the Units.
Additionally, the Exchange may cease trading the Units if such other
event shall occur or condition exists which in the opinion of the
Exchange makes further dealings on the Exchange inadvisable. UTP
trading in the Units is also governed by the trading halts provisions
of NYSE Arca Equities Rule 7.34 relating to temporary interruptions in
the calculation or wide dissemination of an Indicative Partnership
Value or the value of an underlying Benchmark Futures Contract.\16\
---------------------------------------------------------------------------
\16\ NYSE Arca Equities Rule 7.34(a) literally addresses
temporary interruptions in the calculation or wide dissemination of
the Indicative Intra-Day Value and the value of an underlying index.
The Units of each Partnership, however, do not have an underlying
index, but have an underlying Benchmark Futures Contract. Therefore,
the Exchange hereby represents that the provisions in NYSE Arca
Equities Rule 7.34(a) that address interruptions in the calculation
or wide dissemination of the value of an underlying index shall also
apply to interruptions in the calculation or wide dissemination of
the value of an underlying Benchmark Futures Contract.
---------------------------------------------------------------------------
Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products to monitor trading in the
Units. The Exchange represents that these procedures are adequate to
properly monitor Exchange trading of the Units in all trading sessions
and to deter and detect violations of Exchange rules.
The Exchange's current trading surveillance focuses on detecting
securities trading outside their normal patterns. When such situations
are detected, surveillance analysis follows and investigations are
opened, where appropriate, to review the behavior of all relevant
parties for all relevant trading violations.
The Exchange may obtain information via the Intermarket
Surveillance Group (``ISG'') from other exchanges that are members or
affiliates of the ISG.\17\ In addition, the Exchange has an Information
Sharing Agreement in place with NYMEX and ICE Futures for the purpose
of providing information in connection with trading in or related to
futures contracts traded on NYMEX and ICE Futures, respectively. To the
extent that a Partnership invests in Heating Oil Interests or Gasoline
Interests traded on other exchanges, the Exchange will seek to enter
into information sharing agreements with those particular exchanges.
---------------------------------------------------------------------------
\17\ For a list of the current members and affiliate members of
ISG, see https://www.isgportal.com.
---------------------------------------------------------------------------
In addition, the Exchange also 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 in an Information Bulletin (``Bulletin'') of the special
characteristics and risks associated with trading the Units.
Specifically, the
[[Page 8920]]
Bulletin will discuss the following: (1) The risks involved in trading
the Units during the Opening and Late Trading Sessions when an updated
Indicative Partnership Value will not be calculated or publicly
disseminated; (2) the procedures for purchases and redemptions of Units
in Baskets (and that Units are not individually redeemable); (3) NYSE
Arca Equities Rule 9.2(a); \18\ (4) how information regarding the
Indicative Partnership Value is disseminated; (5) the requirement that
ETP Holders deliver a prospectus to investors purchasing newly issued
Units prior to or concurrently with the confirmation of a transaction;
and (6) trading information.
---------------------------------------------------------------------------
\18\ NYSE Arca Equities Rule 9.2(a) provides that an ETP Holder,
before recommending a transaction, must have reasonable grounds to
believe that the recommendation is suitable for the customer based
on any facts disclosed by the customer as to his other security
holdings and as to his financial situation and needs. Further, the
rule provides, with a limited exception, that prior to the execution
of a transaction recommended to a non-institutional customer the ETP
Holder shall make reasonable efforts to obtain information
concerning the customer's financial status, tax status, investment
objectives, and any other information that it believes would be
useful to make a recommendation. See Securities Exchange Act Release
No. 54045 (June 26, 2006), 71 FR 37971 (July 3, 2006) (SR-PCX-2005-
115).
---------------------------------------------------------------------------
In addition, the Bulletin will reference that each Partnership is
subject to various fees and expenses; there is no regulated source of
last-sale information regarding physical commodities; the Commission
has no jurisdiction over the trading of heating oil, gasoline, crude
oil, natural gas, or other petroleum-based fuels; and the CFTC has
regulatory jurisdiction over the trading of heating oil-based and
gasoline-based futures contracts and related options. The Bulletin will
also discuss any exemptive, no-action, or interpretive relief granted
by the Commission from any rules under the Act, and will disclose the
trading hours of the Units of each Partnership and that the NAV for the
Units will be calculated after 4 p.m. ET each trading day.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\19\ in general, and furthers the
objectives of section 6(b)(5),\20\ 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.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In addition, the Exchange believes that the proposed rule change is
consistent with Rule 12f-5 under the Act \21\ because it deems the
Units to be equity securities, thus rendering the Units subject to the
Exchange's rules governing the trading of equity securities.
---------------------------------------------------------------------------
\21\ 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
Written comments on the proposed rule change were neither solicited
nor received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2007-78 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-2007-78. 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 the filing also will be available for
inspection and copying at the principal office of NYSE Arca. 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-2007-78 and should
be submitted on or before March 7, 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.\22\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\23\ which
requires that an exchange have rules designed, among other things, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest. The Commission believes that this proposal should benefit
investors by increasing competition among markets that trade the Units.
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\22\ 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).
\23\ 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,\24\ which permits an exchange to trade,
pursuant to UTP, a security that is listed and registered on another
exchange.\25\ The Commission
[[Page 8921]]
notes that it approved the original listing and trading of the Units on
Amex.\26\ The Commission also finds that the proposal is consistent
with Rule 12f-5 under the Act,\27\ which provides that an exchange
shall not extend UTP to a security unless the exchange has in effect a
rule or rules providing for transactions in the class or type of
security to which the exchange extends UTP. The Exchange has
represented that it meets this requirement because it deems the Units
to be equity securities, thus rendering trading in the Units subject to
the Exchange's existing rules governing the trading of equity
securities.
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\24\ 15 U.S.C. 78l(f).
\25\ 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.
\26\ See supra note 3.
\27\ 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,\28\ 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 regarding the Units
will be disseminated through the facilities of the CTA and Consolidated
Quote High Speed Lines. The daily settlement prices for the Futures
Contracts are publicly available on various Web sites, and market data
vendors and news publications publish futures prices and related data,
including quotation and last-sale information for the Futures
Contracts. Amex will disseminate through the facilities of the CTA an
updated Indicative Partnership Value on a per-Unit basis at least every
15 seconds during regular Amex trading hours. Amex intends to
disseminate for each Partnership on a daily basis information with
respect to the Indicative Partnership Value, the NAV, the number of
Units outstanding, the Basket Amount, and daily trading volumes and
closing prices of the Units. Finally, USHO's and USG's total portfolio
composition will be disclosed, each business day that the Amex is open
for trading, on their respective Web sites.
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\28\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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The Commission also believes that the Exchange's trading halt rules
are reasonably designed to prevent trading in the Units when
transparency is impaired. If the listing market halts trading when the
Indicative Fund Value is not being calculated or disseminated, the
Exchange would halt trading in the Units. The Exchange has represented
that it would follow the procedures with respect to trading halts set
forth in NYSE Arca Equities Rule 7.34.
The Commission notes that, if the Units should be delisted by the
listing exchange, the Exchange would no longer have authority to trade
the Units pursuant to this order.
In support of this proposal, the Exchange has made the following
representations:
1. The Exchange's surveillance procedures are adequate to properly
monitor Exchange trading of the Units 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 ETP Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Units, including
risks inherent with trading the Units during the Opening and Late
Trading Sessions when the updated Indicative Partnership Value is not
calculated and disseminated, and of suitability recommendation
requirements.
3. The Information Bulletin also would discuss the requirement that
ETP Holders deliver a prospectus to investors purchasing newly issued
Units prior to or concurrently with the confirmation of a transaction.
4. Trading in the Units will be subject to NYSE Arca Equities Rule
8.300(e), which sets forth certain restrictions on ETP Holders acting
as registered Market Makers in Units to facilitate surveillance.
This approval order is based on these representations.
The Commission finds good cause for approving this proposal before
the thirtieth day after the publication of notice thereof in the
Federal Register. As noted previously, the Commission previously found
that the listing and trading of the Units on Amex is consistent with
the Act.\29\ The Commission presently is not aware of any regulatory
issue that should cause it to revisit that finding or would preclude
the trading of the Units on the Exchange pursuant to UTP. Therefore,
accelerating approval of this proposal should benefit investors by
creating, without undue delay, additional competition in the market for
the Units.
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\29\ See supra note 3.
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V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\30\ that the proposed rule change (SR-NYSEArca-2007-78) thereto,
be and it hereby is, approved on an accelerated basis.
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\30\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-2822 Filed 2-14-08; 8:45 am]
BILLING CODE 8011-01-P
