Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Continue To List and Trade the Shares of the iShares MSCI Mexico Index Fund, 9395-9398 [E8-3081]

Download as PDF Federal Register / Vol. 73, No. 34 / Wednesday, February 20, 2008 / Notices 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–2007–91 and should be submitted on or before March 6, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–3042 Filed 2–19–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57320; File No. SR– NYSEArca–2008–15] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Continue To List and Trade the Shares of the iShares MSCI Mexico Index Fund rwilkins on PROD1PC63 with NOTICES February 13, 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 January 28, 2008, 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 24 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 16:47 Feb 19, 2008 Jkt 214001 Exchange. NYSE Arca filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to continue to list and trade the shares (‘‘Shares’’) of the iShares MSCI Mexico Index Fund (‘‘Fund’’). 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 Mexican market, as represented by the MSCI Mexico Investable Market Index (‘‘Index’’). The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and www.nyse.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV 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 continue 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’’).5 Although the Shares are currently listed and traded on NYSE Arca, the Exchange submits this proposed rule change 3 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 5 ICUs are securities that represent an interest in a registered investment company or similar entity that (1) holds securities comprising, or otherwise based on or representing an interest in, an index or portfolio of securities, or (2) 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)(i). 4 17 PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 9395 because, as a result of revisions to the methodology for calculating the Index that were implemented on December 1, 2007, the Shares no longer satisfy all of the ‘‘generic’’ listing requirements of Commentary .01(a)(B) to NYSE Arca Equities Rule 5.2(j)(3) applicable to ICUs based on an international or global index or portfolio.6 Specifically, the revised Index fails to satisfy the provisions of Commentary .01(a)(B)(3) to NYSE Arca Equities Rule 5.2(j)(3), which requires that: (1) The most heavily weighted component shall not exceed 25% of the weight of the Index; and (2) the five most heavily weighted component stocks shall not exceed 60% of the weight of the Index.7 The Exchange represents that, except for Commentary .01(a)(B)(3) 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 the continued listing standards under NYSE Arca Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to ICUs continue to apply to the Shares. The Exchange further represents that iShares, Inc. is required to comply with Rule 10A–3 under the Act 8 for the initial and continued listing of the Shares. Detailed descriptions of the Fund, Index (including the methodology used to determine the composition of the Index), procedures and payment requirements for creating and redeeming Shares, transaction fees and expenses, dividends, distributions, taxes, and reports to be distributed to beneficial owners of the Shares can be found in the Registration Statement 9 or on the Internet Web site for the Fund (https:// www.iShares.com), as applicable. 6 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. 7 The Exchange represents that, as of December 3, 2007, the most heavily weighted component of the Index represented 32.2% of the Index weight, and the five most heavily weighted component stocks represented 65.2% of the Index weight. 8 17 CFR 240.10A–3. 9 See Registration Statement on Form N–1A (PostEffective Amendment) filed by iShares, Inc. with the Commission on December 28, 2007 (File Nos. 033–97598 and 811–09102) (‘‘Registration Statement’’). E:\FR\FM\20FEN1.SGM 20FEN1 9396 Federal Register / Vol. 73, No. 34 / Wednesday, February 20, 2008 / Notices rwilkins on PROD1PC63 with NOTICES Availability of Information Regarding the Shares and the Index Morgan Stanley Capital International, Inc. (‘‘MSCI’’) calculates the Index value for each trading day in the Mexican exchange market, the Bolsa Mexicana de Valores, based on official closing prices in such exchange market and publicly disseminates the Index values for the previous day’s close.10 The Index values are reported periodically in major financial publications and are also available through vendors of financial information. MSCI or another thirdparty major market data vendor makes available at least every 60 seconds an updated Index value when the Mexican exchange market trading hours overlap with the NYSE Arca Marketplace (as defined in NYSE Arca Equities Rule 1.1(e)) Core Trading Session (9:30 a.m. to 4:15 p.m. Eastern Time or ‘‘ET’’).11 Otherwise, when the Bolsa Mexicana de Valores is closed during NYSE Arca Marketplace trading hours, the Fund provides closing Index values on https://www.ishares.com. iShares, Inc. causes 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 Shares,12 as well as information relating to the required cash payment representing, in part, the amount of accrued dividends for the Fund. In addition, an independent third party calculates and disseminates the 10 The Exchange notes that, when a broker-dealer or its 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, 46246 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 procedures in place that comply with the requirements of Commentary .01(b)(1) to NYSE Arca Equities Rule 5.2(j)(3), which relate to restricted access of information concerning changes and adjustments to the Index. 11 See Commentary .01(b)(2)(b) to NYSE Arca Equities Rule 5.2(j)(3) (providing that index values for ICUs based on international or global equity portfolios will be widely disseminated by one or more major market data vendors at least every 60 seconds during the Core Trading Session). See also NYSE Arca Equities Rule 7.34 (describing the hours of trading during three trading sessions on the Exchange: Opening Session; Core Trading Session; and Late Trading Session). 12 The closing prices of the securities to be deposited are readily available from, as applicable, the relevant exchanges, automated quotation systems, published or other public sources in Mexico, or online information services such as Bloomberg or Reuters. The exchange rate information required to convert such information into U.S. dollars is also readily available in newspapers and other publications and from a variety of on-line services. VerDate Aug<31>2005 16:47 Feb 19, 2008 Jkt 214001 Indicative Optimized Portfolio Value or ‘‘IOPV’’ on a per-Share basis through the facilities of the Consolidated Tape Association (‘‘CTA’’) at least every 15 seconds during the Core Trading Session.13 The Fund administrator, State Street Bank and Trust Company, calculates the net asset value (‘‘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 is also available to the public on https://www.iShares.com, from the Fund distributor by means of a tollfree phone number, and to participants of the National Securities Clearing Corporation. There is also disseminated a variety of data with respect to the Fund on a daily basis by means of CTA and Consolidated Quote High Speed Lines, which is made available prior to the opening of the Core Trading Session on the NYSE Arca Marketplace. Specifically, information with respect to recent NAV, number of shares outstanding, and the estimated and total cash amount per Creation Unit 14 aggregation are made available prior to the opening of the Core Trading Session. The Exchange disseminates quotation and last-sale information for the Shares through the facilities of the CTA. In addition, the Web site for the Fund, which is publicly accessible at no charge, contains the following information, on a per-Share basis, for the Fund: (1) The prior business day’s NAV and the mid-point of the bid-ask price at the time of calculation of such NAV (‘‘Bid/Ask Price’’) 15 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. The Fund’s holdings are available on the Fund’s Web site, and components of the Index are available to 13 The Exchange notes that there is an overlap in trading hours between the Mexican and U.S. markets for the Fund; trading hours on the Bolsa Mexicana de Valores, where the Index stocks are traded, are from 8:30 a.m. to 3 p.m. Central Standard Time. Therefore, the IOPV calculator updates the applicable IOPV at least every 15 seconds to reflect price changes in the Mexican market, and converts such prices into U.S. dollars based on the currency exchange rate. When the Mexican market is closed, but U.S. markets are open from 9:30 a.m. to 4:15 p.m. ET, the IOPV is updated at least every 15 seconds to reflect changes in currency exchange rates after the Mexican market closes. 14 See Registration Statement, supra note 9 (defining Creation Unit). 15 The Bid-Ask Price of the Fund is determined using the highest bid and lowest offer on the NYSE Arca Marketplace as of the time of calculation of the Fund’s NAV. PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 subscribers at https:// www.mscibarra.com. The information on the Fund’s Web site will be available to all market participants at the same time. If the Exchange becomes aware that the NAV is not being disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV is available to all market participants.16 Trading Rules 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. 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 Rules 5.5(g)(2) and 7.12. Surveillance The Exchange intends to utilize its existing surveillance procedures applicable to derivative products, including ICUs, to monitor trading in the Shares.17 The Exchange represents that these procedures 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’s current trading surveillance focuses on detecting when securities trade 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 states that it may obtain information via the Intermarket Surveillance Group (‘‘ISG’’) from other exchanges who are members or affiliate members of ISG. In addition, the Exchange has a general policy prohibiting the distribution of material, non-public information by its employees. 16 E-mail from Michael Cavalier, Assistant General Counsel, NYSE Euronext, to Edward Cho and Christopher Chow, Special Counsels, Division of Trading and Markets, Commission, dated February 12, 2008. 17 Telephone conversation between Michael Cavalier, Assistant General Counsel, NYSE Euronext, and Christopher Chow, Special Counsel, Division of Trading and Markets, Commission, dated February 12, 2008. E:\FR\FM\20FEN1.SGM 20FEN1 Federal Register / Vol. 73, No. 34 / Wednesday, February 20, 2008 / Notices Information Bulletin The Exchange will inform its ETP Holders 18 in an Information Bulletin (‘‘Bulletin’’) of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in required 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 Index value and 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 for the Fund and discuss any exemptive, no-action, or interpretive relief granted by the Commission from the 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,19 in general, and furthers the objectives of Section 6(b)(5) of the Act,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. rwilkins on PROD1PC63 with 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 16:47 Feb 19, 2008 Jkt 214001 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 received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change: (1) Does not significantly affect the protection of investors or the public interest; (2) does not impose any significant burden on competition; and (3) by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 21 and Rule 19b–4(f)(6) thereunder.22 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative for 30 days after the date of filing. However, Rule 19b– 4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay so that the Exchange can continue to list and trade the Shares without interruption. The Exchange states that it has developed adequate trading rules, procedures, surveillance programs, and listing standards for the continued listing and trading of the Shares. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest.23 Given that the Shares, which are currently listed and trading on the Exchange, comply with all of NYSE Arca’s initial generic listing standards for ICUs (except for narrowly missing two requirements of Commentary .01(a)(B)(3) to NYSE Arca Equities Rule 21 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to provide the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has fulfilled this requirement. 23 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 22 17 18 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’’). 19 15 U.S.C. 78f(b). 20 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 necessary or appropriate in furtherance of the purposes of the Act. PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 9397 5.2(j)(3)), the continued listing and trading of the Shares by NYSE Arca does not appear to present any novel or significant regulatory issues or impose any significant burden on competition. For these reasons, the Commission designates the proposed rule change as operative upon filing. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2008–15 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–2008–15. 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 E:\FR\FM\20FEN1.SGM 20FEN1 9398 Federal Register / Vol. 73, No. 34 / Wednesday, February 20, 2008 / Notices for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEArca–2008–15 and should be submitted on or before March 12, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–3081 Filed 2–19–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57313; File No. SR–Phlx– 2008–10] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Payment for Order Flow and Linkage P/A Orders February 12, 2008. rwilkins on PROD1PC63 with NOTICES 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 January 31, 2008, the Philadelphia Stock Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. Phlx has designated this proposal as one establishing or changing a due, fee, or other charge imposed by Phlx under section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Phlx proposes to amend the Exchange’s payment for order flow program to eliminate the payment for order flow fee on transactions executed 24 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 1 15 VerDate Aug<31>2005 16:47 Feb 19, 2008 Jkt 214001 on the Exchange that correspond with an outbound Linkage Principal Acting as Agent (‘‘P/A’’) order. This proposal is scheduled to become effective for transactions settling on or after February 1, 2008. Also, the Exchange notes that consistent with its current payment for order flow program, this proposal would remain in effect as a pilot program that is scheduled to expire on the same date as the one-year pilot program in effect in connection with the provisions of Exchange Rule 1080(l) relating to Directed Orders.5 The current pilot program is scheduled to expire on May 27, 2008. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and https://www.phlx.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, 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 IV below. Phlx 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 Currently, the following payment for order flow fees are in effect at the Exchange: 6 (1) Equity options (other than those equity options that trade as part of the Exchange’s Penny Pilot Program) 7 and options on the Russell 2000 Index 8 traded under the symbol 5 See Securities Exchange Act Release No. 55803 (May 23, 2007), 72 FR 30413 (May 31, 2007) (SR– Phlx–2007–37). 6 See Securities Exchange Act Release Nos. 53841 (May 19, 2006), 71 FR 30461 (May 26, 2006) (SR– Phlx–2006–33); 54297 (August 9, 2006), 71 FR 47280 (August 16, 2006) (SR–Phlx–2006–47); 54485 (September 22, 2006), 71 FR 57017 (September 28, 2006) (SR–Phlx–2006–56); 55290 (February 13, 2007), 72 FR 8051 (February 22, 2007) (SR–Phlx– 2007–05); 55473 (March 14, 2007), 72 FR 13338 (March 21, 2007) (SR–Phlx–2007–12); and 55891 (June 11, 2007), 72 FR 33271 (June 15, 2007) (SR– Phlx–2007–39). 7 The current Penny Pilot Program, in effect through March 27, 2009, permits certain options series to be quoted and traded in increments of $0.01. See Securities Exchange Act Release No. 56563 (September 27, 2007), 72 FR 56429 (October 3, 2007) (SR–Phlx–2007–62). 8 The Exchange states that Russell 2000 is a trademark and service mark of the Frank Russell PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 RUT, and options on the one-tenth value Russell 2000 Index traded under the symbol RMN, are all assessed $0.70 per contract; and (2) equity options that trade as part of the Exchange’s Penny Pilot Program are assessed $0.25 per contract. Trades resulting from either Directed or non-Directed Orders that are delivered electronically and executed on the Exchange are assessed a payment for order flow fee,9 while nonelectronically-delivered orders (i.e., represented by a floor broker) are not assessed a payment for order flow fee.10 Presently, a payment for order flow fee is charged in connection with Linkage P/A orders. For example, if there is an order resting on the Exchange’s options limit order book, which is part of the Exchange’s trading system, Phlx XL, and a better price is posted at an away market or the requisite volume is available at an away market, that order will be sent through Linkage as a P/A order. When the specialist receives confirmation that the order has been executed, that specialist then completes the transaction by filling the order of the requesting customer. When such order is filled in this way, the specialist must pay a payment for order flow fee.11 Company, used under license. Neither Frank Russell Company’s publication of the Russell Indexes nor its licensing of its trademarks for use in connection with securities or other financial products derived from a Russell Index in any way suggests or implies a representation or opinion by Frank Russell Company as to the attractiveness of investment in any securities or other financial products based upon or derived from any Russell Index. Frank Russell Company is not the issuer of any such securities or other financial products and makes no express or implied warranties of merchantability or fitness for any particular purpose with respect to any Russell Index or any data included or reflected therein, nor as to results to be obtained by any person or any entity from the use of the Russell Index or any data included or reflected therein. 9 Specialists and Directed ROTs who participate in the Exchange’s payment for order flow program are assessed a payment for order flow fee, in addition to ROTs. Therefore, the payment for order flow fee is assessed, in effect, on equity option transactions between a customer and an ROT, a customer and a Directed ROT, or a customer and a specialist. 10 Electronically-delivered orders do not include orders delivered through the Floor Broker Management System pursuant to Exchange Rule 1063. 11 For example, if an order is sent to the Exchange and an away market is displaying a better price, that order would be sent to the away market for execution. Specifically, that order would be sent through Linkage as a P/A order. Under the Exchange’s current payment for order flow program, no payment for order flow fee would be assessed on this transaction. However, after confirmation is received that the order has been executed, the order of the requesting customer would be filled. Currently, the Exchange states that it would assess the specialist a payment for order flow fee when the customer order is filled; however, this proposal seeks to eliminate the payment for order flow fee E:\FR\FM\20FEN1.SGM 20FEN1

Agencies

[Federal Register Volume 73, Number 34 (Wednesday, February 20, 2008)]
[Notices]
[Pages 9395-9398]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-3081]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57320; File No. SR-NYSEArca-2008-15]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Continue To List 
and Trade the Shares of the iShares MSCI Mexico Index Fund

February 13, 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 January 28, 2008, 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. 
NYSE Arca filed the proposal pursuant to Section 19(b)(3)(A) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to continue to list and trade the shares 
(``Shares'') of the iShares MSCI Mexico Index Fund (``Fund''). 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 Mexican market, as 
represented by the MSCI Mexico Investable Market Index (``Index''). The 
text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and www.nyse.com.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV 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 continue 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'').\5\ Although 
the Shares are currently listed and traded on NYSE Arca, the Exchange 
submits this proposed rule change because, as a result of revisions to 
the methodology for calculating the Index that were implemented on 
December 1, 2007, the Shares no longer satisfy all of the ``generic'' 
listing requirements of Commentary .01(a)(B) to NYSE Arca Equities Rule 
5.2(j)(3) applicable to ICUs based on an international or global index 
or portfolio.\6\
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    \5\ ICUs are securities that represent an interest in a 
registered investment company or similar entity that (1) holds 
securities comprising, or otherwise based on or representing an 
interest in, an index or portfolio of securities, or (2) 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)(i).
    \6\ 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.
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    Specifically, the revised Index fails to satisfy the provisions of 
Commentary .01(a)(B)(3) to NYSE Arca Equities Rule 5.2(j)(3), which 
requires that: (1) The most heavily weighted component shall not exceed 
25% of the weight of the Index; and (2) the five most heavily weighted 
component stocks shall not exceed 60% of the weight of the Index.\7\ 
The Exchange represents that, except for Commentary .01(a)(B)(3) 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 the continued listing standards under NYSE Arca Equities Rules 
5.2(j)(3) and 5.5(g)(2) applicable to ICUs continue to apply to the 
Shares. The Exchange further represents that iShares, Inc. is required 
to comply with Rule 10A-3 under the Act \8\ for the initial and 
continued listing of the Shares.
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    \7\ The Exchange represents that, as of December 3, 2007, the 
most heavily weighted component of the Index represented 32.2% of 
the Index weight, and the five most heavily weighted component 
stocks represented 65.2% of the Index weight.
    \8\ 17 CFR 240.10A-3.
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    Detailed descriptions of the Fund, Index (including the methodology 
used to determine the composition of the Index), procedures and payment 
requirements for creating and redeeming Shares, transaction fees and 
expenses, dividends, distributions, taxes, and reports to be 
distributed to beneficial owners of the Shares can be found in the 
Registration Statement \9\ or on the Internet Web site for the Fund 
(https://www.iShares.com), as applicable.
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    \9\ See Registration Statement on Form N-1A (Post-Effective 
Amendment) filed by iShares, Inc. with the Commission on December 
28, 2007 (File Nos. 033-97598 and 811-09102) (``Registration 
Statement'').

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[[Page 9396]]

Availability of Information Regarding the Shares and the Index
    Morgan Stanley Capital International, Inc. (``MSCI'') calculates 
the Index value for each trading day in the Mexican exchange market, 
the Bolsa Mexicana de Valores, based on official closing prices in such 
exchange market and publicly disseminates the Index values for the 
previous day's close.\10\ The Index values are reported periodically in 
major financial publications and are also available through vendors of 
financial information. MSCI or another third-party major market data 
vendor makes available at least every 60 seconds an updated Index value 
when the Mexican exchange market trading hours overlap with the NYSE 
Arca Marketplace (as defined in NYSE Arca Equities Rule 1.1(e)) Core 
Trading Session (9:30 a.m. to 4:15 p.m. Eastern Time or ``ET'').\11\ 
Otherwise, when the Bolsa Mexicana de Valores is closed during NYSE 
Arca Marketplace trading hours, the Fund provides closing Index values 
on https://www.ishares.com. iShares, Inc. causes 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 Shares,\12\ 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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    \10\ The Exchange notes that, when a broker-dealer or its 
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, 46246 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 procedures in place that comply with the requirements of 
Commentary .01(b)(1) to NYSE Arca Equities Rule 5.2(j)(3), which 
relate to restricted access of information concerning changes and 
adjustments to the Index.
    \11\ See Commentary .01(b)(2)(b) to NYSE Arca Equities Rule 
5.2(j)(3) (providing that index values for ICUs based on 
international or global equity portfolios will be widely 
disseminated by one or more major market data vendors at least every 
60 seconds during the Core Trading Session). See also NYSE Arca 
Equities Rule 7.34 (describing the hours of trading during three 
trading sessions on the Exchange: Opening Session; Core Trading 
Session; and Late Trading Session).
    \12\ The closing prices of the securities to be deposited are 
readily available from, as applicable, the relevant exchanges, 
automated quotation systems, published or other public sources in 
Mexico, or online information services such as Bloomberg or Reuters. 
The exchange rate information required to convert such information 
into U.S. dollars is also readily available in newspapers and other 
publications and from a variety of on-line services.
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    In addition, an independent third party calculates and disseminates 
the Indicative Optimized Portfolio Value or ``IOPV'' on a per-Share 
basis through the facilities of the Consolidated Tape Association 
(``CTA'') at least every 15 seconds during the Core Trading 
Session.\13\ The Fund administrator, State Street Bank and Trust 
Company, calculates the net asset value (``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 is also available to the 
public on https://www.iShares.com, from the Fund distributor by means of 
a toll-free phone number, and to participants of the National 
Securities Clearing Corporation.
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    \13\ The Exchange notes that there is an overlap in trading 
hours between the Mexican and U.S. markets for the Fund; trading 
hours on the Bolsa Mexicana de Valores, where the Index stocks are 
traded, are from 8:30 a.m. to 3 p.m. Central Standard Time. 
Therefore, the IOPV calculator updates the applicable IOPV at least 
every 15 seconds to reflect price changes in the Mexican market, and 
converts such prices into U.S. dollars based on the currency 
exchange rate. When the Mexican market is closed, but U.S. markets 
are open from 9:30 a.m. to 4:15 p.m. ET, the IOPV is updated at 
least every 15 seconds to reflect changes in currency exchange rates 
after the Mexican market closes.
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    There is also disseminated a variety of data with respect to the 
Fund on a daily basis by means of CTA and Consolidated Quote High Speed 
Lines, which is made available prior to the opening of the Core Trading 
Session on the NYSE Arca Marketplace. Specifically, information with 
respect to recent NAV, number of shares outstanding, and the estimated 
and total cash amount per Creation Unit \14\ aggregation are made 
available prior to the opening of the Core Trading Session. The 
Exchange disseminates quotation and last-sale information for the 
Shares through the facilities of the CTA. In addition, the Web site for 
the Fund, which is publicly accessible at no charge, contains the 
following information, on a per-Share basis, for the Fund: (1) The 
prior business day's NAV and the mid-point of the bid-ask price at the 
time of calculation of such NAV (``Bid/Ask Price'') \15\ 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. 
The Fund's holdings are available on the Fund's Web site, and 
components of the Index are available to subscribers at https://
www.mscibarra.com. The information on the Fund's Web site will be 
available to all market participants at the same time. If the Exchange 
becomes aware that the NAV is not being disseminated to all market 
participants at the same time, it will halt trading in the Shares until 
such time as the NAV is available to all market participants.\16\
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    \14\ See Registration Statement, supra note 9 (defining Creation 
Unit).
    \15\ The Bid-Ask Price of the Fund is determined using the 
highest bid and lowest offer on the NYSE Arca Marketplace as of the 
time of calculation of the Fund's NAV.
    \16\ E-mail from Michael Cavalier, Assistant General Counsel, 
NYSE Euronext, to Edward Cho and Christopher Chow, Special Counsels, 
Division of Trading and Markets, Commission, dated February 12, 
2008.
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Trading Rules
    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. 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 Rules 5.5(g)(2) and 7.12.

Surveillance

    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products, including ICUs, to 
monitor trading in the Shares.\17\ The Exchange represents that these 
procedures 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's current trading surveillance focuses on 
detecting when securities trade 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.
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    \17\ Telephone conversation between Michael Cavalier, Assistant 
General Counsel, NYSE Euronext, and Christopher Chow, Special 
Counsel, Division of Trading and Markets, Commission, dated February 
12, 2008.
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    The Exchange states that it may obtain information via the 
Intermarket Surveillance Group (``ISG'') from other exchanges who are 
members or affiliate members of ISG. In addition, the Exchange has a 
general policy prohibiting the distribution of material, non-public 
information by its employees.

[[Page 9397]]

Information Bulletin
    The Exchange will inform its ETP Holders \18\ in an Information 
Bulletin (``Bulletin'') of the special characteristics and risks 
associated with trading the Shares. Specifically, the Bulletin will 
discuss the following: (1) The procedures for purchases and redemptions 
of Shares in required 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 Index value and 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.
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    \18\ 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'').
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    In addition, the Bulletin will reference that the Fund is subject 
to various fees and expenses described in the Registration Statement 
for the Fund and discuss any exemptive, no-action, or interpretive 
relief granted by the Commission from the 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,\19\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\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.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
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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 received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \21\ and Rule 19b-4(f)(6) 
thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has fulfilled this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requests that the Commission waive 
the 30-day operative delay so that the Exchange can continue to list 
and trade the Shares without interruption. The Exchange states that it 
has developed adequate trading rules, procedures, surveillance 
programs, and listing standards for the continued listing and trading 
of the Shares.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public 
interest.\23\ Given that the Shares, which are currently listed and 
trading on the Exchange, comply with all of NYSE Arca's initial generic 
listing standards for ICUs (except for narrowly missing two 
requirements of Commentary .01(a)(B)(3) to NYSE Arca Equities Rule 
5.2(j)(3)), the continued listing and trading of the Shares by NYSE 
Arca does not appear to present any novel or significant regulatory 
issues or impose any significant burden on competition. For these 
reasons, the Commission designates the proposed rule change as 
operative upon filing.
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    \23\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2008-15 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-2008-15. 
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

[[Page 9398]]

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-2008-15 and should 
be submitted on or before March 12, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-3081 Filed 2-19-08; 8:45 am]
BILLING CODE 8011-01-P
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