Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Relating to Replacement Indexes for PowerShares DB Commodity Index Tracking Fund and PowerShares DB Agriculture Fund, 53528-53532 [E9-25109]
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53528
Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices
the Act 10 and Rule 19b–4(f)(2) 11
thereunder. At any time within 60 days
of the filing of such proposed rule
change, the Commission may summarily
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in 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:
sroberts on DSKD5P82C1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2009–80 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–ISE–2009–80. 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, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of such filing will also 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 No. SR–ISE–2009–
80 and should be submitted on or before
November 9, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–25003 Filed 10–16–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60819; File No. SR–
NYSEArca–2009–89]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and Order
Granting Accelerated Approval of
Proposed Rule Change Relating to
Replacement Indexes for PowerShares
DB Commodity Index Tracking Fund
and PowerShares DB Agriculture Fund
October 13, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on October
8, 2009, NYSE Arca, Inc. (‘‘NYSE Arca’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons and is
approving the proposed rule change on
an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Pursuant to the provisions of Section
19(b)(1) of the Act,3 the Exchange,
through its wholly owned subsidiary
NYSE Arca Equities, Inc. (‘‘NYSE Arca
Equities’’), proposes to describe a
replacement to the indexes underlying
the PowerShares DB Commodity Index
Tracking Fund and the PowerShares DB
Agriculture Fund, which are listed on
the Exchange under Commentary .02 to
NYSE Arca Equities Rule 8.200.
12 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)(1).
1 15
10 15
11 17
U.S.C. 78s(b)(3)(A) [sic].
CFR 240.19b–4(f)(2).
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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
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The PowerShares DB Commodity
Index Tracking Fund (‘‘DBC’’) and the
PowerShares DB Agriculture Fund
(‘‘DBA’’ and together with DBC, the
‘‘Funds’’) 4 are currently listed on the
Exchange under Commentary .02 to
NYSE Arca Equities Rule 8.200 (‘‘Trust
Issued Receipts’’).5 Deutsche Bank AG
4 See Registration Statement on Form S–3 for
PowerShares DB Commodity Index Tracking Fund
(No. 333–158733, dated April 23, 2009) (‘‘DBC
Registration Statement’’) and the Post-Effective
Amendment No. 1 to Form S–1 for PowerShares DB
Agriculture Fund (No. 333–150501, dated April 15,
2009) (‘‘DBA Registration Statement’’). In addition,
the issuer has filed Current Reports on Forms 8–K
with respect to DBC (No. 001–32726, filed Sept. 30,
2009) (‘‘DBC Current Report’’) and DBA (No. 001–
33238, filed Sept. 30, 2009) (‘‘DBA Current Report’’)
regarding replacement of the indexes underlying
the Funds.
5 See Securities Exchange Act Release No. 58993
(November 21, 2008), 73 FR 72548 (November 28,
2008) (SR–NYSEArca–2008–128) (order approving
listing on the Exchange of the Funds) (‘‘NYSE Arca
Order’’). The Funds were previously traded on the
Exchange pursuant to unlisted trading privileges
(‘‘UTP’’). See Securities Exchange Act Release Nos.
53736 (April 27, 2006), 71 FR 26582 (May 5, 2006)
(SR–PCX–2006–22) (order approving UTP trading of
DB Commodity Index Tracking Fund); 55453
(March 13, 2007), 72 FR 13333 (March 21, 2007)
(SR–NYSEArca–2006–62) (order approving UTP
trading of PowerShares DB Agriculture Fund and
other PowerShares commodity-based funds). The
Funds were originally approved for listing on the
American Stock Exchange LLC (the ‘‘Amex’’, now
known as NYSE Amex LLC). See Securities
Exchange Act Release Nos. 53105 (January 11,
2006), 71 FR 3129 (January 19, 2006) (SR–Amex–
2005–59) (approving listing of DB Commodity
Index Tracking Fund (now known as PowerShares
DB Commodity Index Tracking Fund)) (‘‘Amex DBC
Order’’); 55029 (December 29, 2006), 72 FR 806
(January 8, 2007) (SR–Amex–2006–76) (approving
listing of PowerShares DB Agriculture Fund and
other PowerShares commodity-based funds)
(‘‘Amex DBA Order’’). See also, Securities Exchange
Act Release No. 53858 (May 24, 2006), 71 FR 31232
(June 1, 2006) (SR–Amex–2006–53) (‘‘Supplemental
Amex DBC Filing’’, in which the Amex clarified the
manner in which the index underlying DBC is
maintained by providing that the replacement of
expiring futures contracts would be based on
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Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices
London, the ‘‘Index Sponsor’’ for the
Funds, has determined to replace the
commodities indexes underlying these
securities from those previously
approved by the Commission in the
NYSE Arca Order, Amex DBC Order,
and Amex DBA Order (collectively, the
‘‘DBC/DBA Orders’’).
With the exception of the description
of the replacement indexes underlying
DBC and DBA, as described below, the
descriptions of the Funds and the
Shares provided in the DBC/DBA
Orders and the Supplemental Amex
DBC Filing, as applicable, remain
unchanged. In addition, each of the
representations that applied to the
current indexes underlying DBC and
DBA set forth in the DBC/DBA Orders,
as applicable, will continue to apply to
the proposed replacement indexes,
including, without limitation, with
respect to the calculation and
dissemination of index and commodityrelated information.6 Further, other
representations relating to the listing
and trading of shares of DBC and DBA
(‘‘DBC Shares’’ and ‘‘DBA Shares’’,
respectively) on the Exchange,
including, without limitation,
dissemination of certain values, trading
rules governing the trading of the DBC
Shares and DBA Shares, and
surveillance procedures for the DBC
Shares and DBA Shares and the
underlying commodities and
commodity-related derivatives, will
continue to apply. As a result of the
proposed change, the Exchange
represents that the Funds satisfy the
requirements of Rule 8.200,
Commentary .02, and therefore qualify
for continued listing on the Exchange.
In addition, the Funds will continue to
satisfy Rule 10A–3 under the Act.
sroberts on DSKD5P82C1PROD with NOTICES
PowerShares DB Commodity Index
Tracking Fund
The investment objective of DBC and
the Master Fund is to seek to track
changes, whether positive or negative,
in the level of the Deutsche Bank Liquid
Commodity Index Optimum Yield—
‘‘Optimum Yield’’ roll rules for such index, as
described in SR–Amex–2006–53).
6 The Index Sponsor has in place procedures to
prevent the improper sharing of information
between different affiliates and departments.
Specifically, an information barrier exists between
the personnel within the Index Sponsor that
calculate and reconstitute the replacement indexes
(the Calculation Group) and other Deutsche Bank
personnel, including but not limited to the
Managing Owner, sales and trading, external or
internal fund managers, and bank personnel who
are involved in hedging the bank’s exposure to
instruments linked to the replacement indexes, in
order to prevent the improper sharing of
information relating to the recomposition of such
indexes. The replacement indexes are not
calculated by a broker-dealer.
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16:51 Oct 16, 2009
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Excess ReturnTM (‘‘DBLCI–OYER’’), less
the expenses of the operations of DBC
and the DBC Master Fund. A
description of the DBLCI–OYER,
commodity futures contracts and related
options, operation of DBC, creation and
redemption procedures, and the Shares
is set forth in the NYSE Arca Order, the
Amex DBC Order, and the
Supplemental Amex DBC Filing.7
As described in the DBC Current
Report (‘‘DBC Index Description’’), the
Index Sponsor has made the
determination that changes in regulatory
circumstances (the ‘‘DBC Changes’’)
affecting the DBLCI–OYER have arisen,
and, in the view of the Index Sponsor,
such DBC Changes necessitate the
replacement of the DBLCI–OYER.8
Because of such DBC Changes, the
Index Sponsor has determined that the
replacement index should include
additional commodities that are not
currently part of the DBLCI–OYER in
order to permit the replacement index to
reflect, broadly and in proportion to
historical levels, the world’s production
and supplies of certain commodities.
The DBC Index Description will reflect
the replacement of the DBLCI–OYER
with the Deutsche Bank Liquid
Commodity Index–Optimum Yield
Diversified Excess ReturnTM (‘‘DBLCI–
OY Diversified ER’’).
According to the DBC Index
Description, the DBLCI–OY Diversified
ER is intended to reflect, broadly and in
proportion to historical levels, the
world’s production and supplies of
certain commodities. The commodities
7 E-mail from Michael Cavalier, Chief Counsel,
NYSE Euronext, to Daniel Gien, Staff Attorney,
Division of Trading and Markets, Commission,
dated Oct. 13, 2009.
8 The action by the Funds to replace the
commodity indexes currently underlying the Funds
is in response to an announcement by the
Commodity Futures Trading Commission (‘‘CFTC’’)
in Release 5695–09 (August 19, 2009) (‘‘CFTC
Release’’), that the CFTC is withdrawing two noaction letters that provided relief from federal
agricultural speculative positions limits set forth in
CFTC regulations (17 CFR 150.2). The CFTC Release
stated, in part, as follows: ‘‘In CFTC Letter 06–09
(May 5, 2006), the agency’s Division of Market
Oversight (DMO) granted no-action relief to DB
Commodity Services LLC, a commodity pool
operator (CPO) and commodity trading advisor
(CTA), permitting the DB Commodity Index
Tracking Master Fund to take positions in corn and
wheat futures that exceed federal speculative
position limits set forth in CFTC Regulation 150.2.
Subsequently, in CFTC Letter 06–19 (September 6,
2006), DMO granted similar no-action relief to a
CPO/CTA employing a proprietary commodity
investment strategy that includes positions in
Chicago Board of Trade corn, soybeans and wheat
futures contracts. Among other things, DMO’s noaction position in both cases stated that any change
in circumstances or conditions could result in a
different conclusion. DMO has previously stated
that the trading strategies employed by these
entities would not qualify for a bona fide hedge
exemption under the Commission’s regulations.’’
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Frm 00068
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of the DBLCI–OY Diversified ER are (1)
Light, Sweet Crude Oil (WTI), (2)
Heating Oil, (3) RBOB Gasoline, (4)
Natural Gas, (5) Brent Crude, (6) Gold,
(7) Silver, (8) Aluminum, (9) Zinc, (10)
Copper Grade A, (11) Corn, (12) Wheat,
(13) Soybeans, and (14) Sugar.9 Each
commodity is represented in the
DBLCI–OY Diversified ERTM as an index
with respect to that specific commodity
(‘‘Single Commodity Index’’). Each
Single Commodity Index is assigned a
weight (the ‘‘DBC Index Base Weight’’)
which is intended to reflect the world’s
production and supplies of each such
index commodity.
According to the DBC Index
Description, the DBLCI–OY Diversified
ER has been calculated back to a base
date (the ‘‘DBC Base Date’’) of
September 3, 1997. On the DBC Base
Date, the closing level of the DBLCI–OY
Diversified ERTM was 100.
Single Commodity Index
Light, Sweet
Crude Oil
(WTI).
Heating Oil .....
RBOB Gasoline.
Natural Gas ....
Brent Crude ....
Gold ................
Silver ..............
Aluminum .......
Zinc .................
Copper Grade
A.
Corn ................
Wheat .............
Soybeans .......
Sugar ..............
DBC Index
Base
Weight
(%)
Exchange 10
12.375
NYMEX
12.375
12.375
NYMEX
NYMEX
5.500
12.375
8.000
2.000
4.167
4.167
4.167
NYMEX
ICE–UK
COMEX
COMEX
LME
LME
LME
5.625
5.625
5.625
5.625
CBOT
CBOT
CBOT
ICE–US
According to the DBC Current Report,
each Single Commodity Index of the
DBLCI–OY Diversified ERTM employs a
rules-based approach when it ‘‘rolls’’
from one futures contract to another for
each commodity. Rather than select a
new futures contract based on a
predetermined schedule (e.g., monthly),
each Single Commodity Index rolls to
the futures contract which generates the
9 The DBLCI–OY Diversified ER includes all of
the commodities in the previous DBLCI–OYER,
and, in addition to such commodities, includes
Brent Crude, RBOB Gasoline, Natural Gas, Silver,
Zinc, Copper Grade A, Soybeans, and Sugar.
10 The referenced exchanges with respect to the
commodities for DBC and DBA, as applicable, are
as follows: NYMEX (New York Mercantile
Exchange); ICE–UK (ICE Futures Europe); COMEX
(Commodity Exchange Inc.); LME (The London
Metal Exchange Limited); CBOT (Chicago Board of
Trade); CME (Chicago Mercantile Exchange); ICE–
US (ICE Futures U.S.), Inc.; KCB (Kansas City Board
of Trade).
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Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices
sroberts on DSKD5P82C1PROD with NOTICES
maximum ‘‘implied roll yield.’’ The
futures contract having a delivery
month within the next thirteen months
which generates the highest implied roll
yield will be included in each Single
Commodity Index.
DBLCI–OY Diversified ERTM is
calculated in U.S. dollars on both an
excess return (unfunded) and total
return (funded) index levels.
proportion of such commodity relative
to such index.13
The DBLCI Diversified Agriculture ER
has been calculated back to a base date
of January 18, 1989 (the ‘‘Base Date’’).
On the Base Date, the closing level of
the DBLCI Diversified Agriculture ERTM
was 100.
PowerShares DB Agriculture Fund
DBA is designed to track the Deutsche
Bank Liquid Commodity Index—
Optimum Yield Agriculture Excess
ReturnTM (‘‘DBLCI–OY Agriculture
ER’’), which is intended to reflect the
agricultural sector. A description of the
DBLCI–OY Agriculture ER, commodity
futures contracts and related options,
operation of DBA, creation and
redemption procedures, and the DBA
Shares is set forth in the NYSE Arca
Order and the Amex DBA Order.
As is the case with respect to DBC, as
discussed above, the Index Sponsor has
made the determination that changes in
regulatory circumstances (‘‘DBA
Changes’’) affecting the DBLCI–OY
Agriculture ER have arisen, and, in the
view of the Index Sponsor, such DBA
Changes necessitate replacement of the
DBLCI–OY Agriculture ER.11
As described in the DBA Current
Report (‘‘DBA Index Description’’),12
because of the DBA Changes, the Index
Sponsor has determined that the
replacement index should include
additional commodities that are not
currently part of the DBLCI–OY
Agriculture ER in order to permit the
replacement index to reflect the
performance of the agricultural sector.
The DBA Index Description will reflect
the replacement of the DBLCI–OY
Agriculture ER with the Deutsche Bank
Liquid Commodity Index Diversified
Agriculture Excess ReturnTM (‘‘DBLCI
Diversified Agriculture ER’’).
The DBLCI Diversified Agriculture ER
is intended to reflect the performance of
the agricultural commodities sector and
is calculated on an excess return, or
unfunded basis. The DBLCI Diversified
Agriculture ER methodology provides
that the replacement of expiring futures
contracts in part would be based on
‘‘Optimum Yield’’ roll rules for such
index, as described in the DBA Current
Report. In addition, the DBLCI
Diversified Agriculture ER, in part, is
rolled on a non-Optimum Yield basis.
Each commodity in the DBLCI
Diversified Agriculture ER is assigned a
weight (the ‘‘DBA Index Base Weight’’)
which is intended to reflect the
Exchange
11 See
12 See
note 8, supra.
note 4, supra.
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16:51 Oct 16, 2009
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Single Commodity
Index 14
DBA Index
Base
Weight
(%)
Corn ....................
Soybeans ............
Wheat .................
Kansas Wheat ....
Sugar ..................
Cocoa .................
Coffee .................
Cotton .................
Live Cattle ...........
Feeder Cattle ......
Lean Hogs ..........
12.50
12.50
6.25
6.25
12.50
11.11
11.11
2.78
12.50
4.17
8.33
CBOT
CBOT
CBOT
KCB
ICE–US
ICE–US
ICE–US
ICE–US
CME
CME
CME
DBLCI Diversified Agriculture ER is
calculated in U.S. dollars on both an
excess return (unfunded) and total
return (funded) index levels.
Dissemination of Information About the
Underlying Futures Contracts
The closing prices and daily
settlement prices for the futures
contracts held by the applicable Master
Funds are publicly available on the Web
sites of the futures exchanges trading
the particular contracts. The particular
futures exchange for each futures
contract in the DBLCI–OY Diversified
ER, with Web site information, is as
follows: (i) Aluminum, zinc and
copper—LME at www.lme.com; (ii)
corn, wheat and soybeans—CBOT at
www.cmegroup.com; (iii) Brent Crude—
ICE–UK at www.theice.com; (iv) sugar—
ICE–US at www.theice.com; and (v)
light, sweet crude oil (WTI), heating oil,
RBOB gasoline, natural gas, gold and
silver—NYMEX at www.nymex.com.
The particular futures exchange for
each futures contract in the DBLCI
Diversified Agriculture ER with Web
site information is as follows: (i) Corn,
soybeans and wheat—CBOT at
www.cmegroup.com; (ii) Kansas
wheat—KCB at www.kcbt.com; (iii)
sugar, coffee, cocoa and cotton—ICE–US
at www.theice.com; and (iv) live cattle,
13 The DBLCI Diversified Agriculture ER includes
all of the commodities in the previous DBLCI–OY
Agriculture ER, and, in addition to such
commodities, includes Kansas Wheat, Cocoa,
Coffee, Cotton, Live Cattle, Feeder Cattle, and Lean
Hogs.
14 Futures contracts on Corn, Soybeans, Wheat,
Kansas Wheat, and Sugar are rolled on an Optimum
Yield basis. Futures contracts on Cocoa, Coffee,
Cotton, Live Cattle, Feeder Cattle and Lean Hogs are
rolled on a Non-Optimum Yield basis.
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Fmt 4703
Sfmt 4703
feeder cattle and lean hogs—CME at
www.cmegroup.com.
The Exchange will issue an
Information Bulletin regarding the
replacement indexes for DBC and DBA
in connection with trading of DBC and
DBA based on such indexes.
All terms relating to the Funds that
are referred to, but not defined, in this
proposed rule change are defined in the
DBC Registration Statement, the DBC
Current Report, the DBA Registration
Statement, and the DBA Current Report,
as applicable.
Surveillance
The Exchange currently has in place
an Information Sharing Agreement with
the ICE Futures U.S., ICE Futures
Europe, LME, and KCB, for the purpose
of providing information in connection
with trading in or related to futures
contracts traded on their respective
exchanges comprising the Indexes. The
Exchange may obtain information via
the Intermarket Surveillance Group
(‘‘ISG’’) from other exchanges who are
members of the ISG, including CME,
CBOT and NYMEX.15
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act 16 in general and
Section 6(b)(5) of the Act 17 in particular
in that it is designed 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 and perfect the
mechanisms of a free and open market
and to protect investors and the public
interest. The Exchange believes that the
proposed rule change accommodates an
expansion of the commodities included
in the indexes underlying the Funds,
which has been undertaken in response
to action by the CFTC referred to
above,18 to the benefit of investors and
the marketplace. In addition, the listing
and trading criteria set forth in Rule
8.200 are intended to protect investors
and the public interest.
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.
15 For a list of the current members of ISG, see
www.isgportal.org.
16 15 U.S.C. 78s(b).
17 15 U.S.C. 78s(b)(5).
18 See note 8, supra.
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Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
sroberts on DSKD5P82C1PROD with NOTICES
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve the proposed
rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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
Section, 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 will also 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–2009–89 and
should be submitted on or before
November 9, 2009.
V. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
After careful consideration, the
Commission finds that the proposed
IV. Solicitation of Comments
rule change is consistent with the
Interested persons are invited to
requirements of the Act and the rules
submit written data, views, and
and regulations thereunder applicable to
arguments concerning the foregoing,
a national securities exchange.19 In
including whether the proposed rule
particular, the Commission finds that
change is consistent with the Act.
the proposed rule change is consistent
Comments may be submitted by any of
with the requirements of Section 6(b)(5)
the following methods:
of the Act,20 which requires, among
other things, that the Exchange’s rules
Electronic Comments
be designed to promote just and
• Use the Commission’s Internet
equitable principles of trade, to foster
comment form (https://www.sec.gov/
cooperation and coordination with
rules/sro.shtml); or
persons engaged in regulating, clearing,
• Send an e-mail to rulesettling, processing information with
comments@sec.gov. Please include File
respect to, and facilitating transactions
Number SR–NYSEArca–2009–89 on the in securities, to remove impediments to
subject line.
and perfect the mechanism of a free and
open market and national market
Paper Comments
system, and in general, to protect
• Send paper comments in triplicate
investors and the public interest. The
to Elizabeth M. Murphy, Secretary,
Commission notes that the new
Securities and Exchange Commission,
replacement indexes, DBLCI–OY
100 F Street, NE., Washington, DC
Diversified ER and DBLCI Diversfied
20549–1090.
Agriculture ER, reflect more commodity
All submissions should refer to File
components and are more diversified
Number SR–NYSEArca–2009–89. This
than the current indexes underlying
file number should be included on the
DBC and DBA, respectively.21 In
subject line if e-mail is used. To help the addition, with the exception of the
Commission process and review your
description of the replacement indexes
comments more efficiently, please use
underlying DBC and DBA, the
only one method. The Commission will Commission notes that the descriptions
post all comments on the Commission’s of the Funds and the Shares provided in
Internet Web site (https://www.sec.gov/
the DBC/DBA Orders and the
rules/sro.shtml). Copies of the
Supplemental Amex DBC Filing, as
submission, all subsequent
applicable, remain unchanged. The
amendments, all written statements
19 In approving the proposed rule change, the
with respect to the proposed rule
Commission notes that it has considered the
change that are filed with the
proposed rule’s impact on efficiency, competition,
Commission, and all written
and capital formation. See 15 U.S.C. 78c(f).
20 15 U.S.C. 78f(b)(5).
communications relating to the
21 See supra notes 9 and 13.
proposed rule change between the
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16:51 Oct 16, 2009
Jkt 220001
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
53531
Commission further notes that each of
the representations that applied to the
current indexes underlying DBC and
DBA set forth in the DBC/DBA Orders,
as applicable, will continue to apply to
the proposed replacement indexes,
including, without limitation, with
respect to the calculation and
dissemination of index and commodityrelated information. In addition, other
representations relating to the listing
and trading of the DBC Shares and DBA
Shares on the Exchange, including,
without limitation, dissemination of
certain values, trading rules governing
the trading of the DBC Shares and DBA
Shares, and surveillance procedures for
the DBC Shares and DBA Shares and the
underlying commodities and
commodity-related derivatives, will
continue to apply. As a result of the
proposed change, the Exchange
represents that the Funds will continue
to satisfy the requirements of
Commentary .02 to NYSE Arca Equities
Rule 8.200 and therefore qualify for
listing on the Exchange. This approval
order is based on the Exchange’s
representations.
The Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,22 for approving the proposed rule
change prior to the 30th day after
publication of notice in the Federal
Register. The Commission notes that the
DBC Shares and DBA Shares are
currently listed and trading on the
Exchange based on the DBLCI–OYER
and the DBLCI–OY Agriculture ER,
respectively. The Commission believes
that the Exchange’s proposal to replace
such current indexes with the DBLCI–
OY Diversified ER and DBLCI
Diversified Agriculture ER, which are
more broad-based than the current
indexes, does not appear to present any
novel issues or significant regulatory
concerns. The Commission notes that,
with the exception of the description of
the replacement indexes underlying
DBC and DBA, the descriptions of the
Funds and the Shares, as provided in
the DBC/DBA Orders and the
Supplemental Amex DBC Filing, as
applicable, and the representations
previously made by the Exchange
relating to the indexes and the trading
of the DBC Shares and DBA Shares on
the Exchange will continue to apply.
The Commission also notes that the
Exchange’s proposal represents action
in response to the CFTC Release. The
Commission believes that accelerating
approval of this proposal should benefit
investors and the marketplace by
providing, without undue delay, for
certain commodity-based products
22 15
E:\FR\FM\19OCN1.SGM
U.S.C. 78s(b)(2).
19OCN1
53532
Federal Register / Vol. 74, No. 200 / Monday, October 19, 2009 / Notices
currently listed and trading on an
exchange to be based on an expanded
and more diversified set of commodity
components.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,23 that the
proposed rule change (SR–NYSEArca–
2009–89) be, and it hereby is, approved
on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–25109 Filed 10–16–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60809; File No. SR–NYSE–
2009–104]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC Amending NYSE
Rule 123C(8)(a)(1) To Extend the
Operation of the Extreme Order
Imbalances Pilot
October 9, 2009.
sroberts on DSKD5P82C1PROD with NOTICES
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on October
5, 2009, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. 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 amend
NYSE Rule 123C(8)(a)(1) to extend the
operation of the pilot to temporarily
suspend certain NYSE requirements
relating to the closing of securities on
the Exchange until the earlier of
Securities and Exchange Commission
approval to make such pilot permanent
or December 31, 2009. The text of the
proposed rule change is available at the
23 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
24 17
VerDate Nov<24>2008
16:51 Oct 16, 2009
Jkt 220001
Exchange, the Commission’s Public
Reference Room, and https://
www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NYSE Rule 123C(8)(a)(1) allows the
Exchange to temporarily suspend
certain rule requirements at the close
when extreme order imbalances may
cause significant dislocation to the
closing price. The rule has operated on
a pilot basis since April 2009 (‘‘Extreme
Order Imbalances Pilot’’ or Pilot).4
Through this filing, NYSE proposes to
extend the Pilot until the earlier of
Securities and Exchange Commission
approval to make such Pilot permanent
or December 31, 2009.5
Background
Pursuant to NYSE Rule 123C(8)(a)(1),
the Exchange may suspend NYSE Rule
52 (Hours of Operation) to resolve an
extreme order imbalance that may result
in a closing price dislocation at the
close as a result of an order entered into
Exchange systems, or represented to a
DMM orally at or near the close.6 The
provisions of NYSE Rule 123C(8)(a)(1)
operate as the Extreme Order Imbalance
Pilot.
As a condition of the approval to
operate the Pilot, the Exchange
committed to provide the Commission
with information regarding: (i) How
often a Rule 52 temporary suspension
pursuant to the Pilot was invoked
during the six months following its
approval; and (ii) the Exchange’s
determination as to how to proceed with
technical modifications to reconfigure
4 See Securities and Exchange Act Release No.
597755 [sic] (April 13, 2009) 74 FR 18009 (April 20,
2009)(SR–NYSE–2009–15).
5 The Exchange notes that parallel changes are
proposed to be made to the rules of NYSE Amex
LLC. See SR–NYSE–Amex–2009–70.
6 See NYSE Rule 123C(8)(a)(1).
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
Exchange systems to accept orders
electronically after 4:00 p.m.
The Extreme Order Imbalance Pilot is
scheduled to end operation on October
13, 2009. The Exchange is currently
preparing a rule filing seeking
permission to make the provisions of
the Pilot permanent with certain
modifications but does not expect that
filing to be completed and approved by
the Commission before October 13,
2009.
Proposal To Extend the Operation of the
Extreme Order Imbalance Pilot
The Exchange established the Extreme
Order Imbalance Pilot to create a
mechanism for ensuring a fair and
orderly close when interest is received
at or near the close that could negatively
affect the closing transaction. The
Exchange believes that this tool has
proved very useful to resolve an extreme
order imbalance that may result in a
closing price dislocation at the close as
a result of an order entered into
Exchange systems, or represented to a
DMM orally at or near the close.
As the Exchange has previously
stated, invocation of the provisions of
NYSE Rule 123C(8) to attract offsetting
interest is intended to be used for
extreme and likely rare circumstances
where there exists such a large
imbalance at the close that a DMM is
unable to close the security without
significantly dislocating the price of the
security. This is evidenced by the fact
that during the course of the Pilot, the
Exchange invoked the provisions of
NYSE Rule 123C(8), including the
provisions of the Extreme Order
Imbalance Pilot pursuant to NYSE Rule
123C(8)(a)(1), in only one security on
August 31, 2009.
In addition, during the operation of
the Pilot, the Exchange determined that
it would not be as onerous as previously
believed to modify Exchange systems to
accept orders electronically after 4 p.m.
The Exchange anticipates that such
system modifications could be
completed by December 31, 2009.
Given the above, the Exchange
believes that provisions governing the
Extreme Order Imbalance Pilot should
be made permanent. Through this filing
the Exchange seeks to extend the
current operation of the Pilot in order to
allow the Exchange to formally submit
a filing to the Commission to convert
the provisions governing the Pilot to
permanent rules and complete the
technological modifications required to
accept orders electronically after 4 p.m.
The Exchange therefore request and [sic]
extension from the current expiration
date of October 13, 2009, until the
earlier of Securities and Exchange
E:\FR\FM\19OCN1.SGM
19OCN1
]]>Agencies
[Federal Register Volume 74, Number 200 (Monday, October 19, 2009)]
[Notices]
[Pages 53528-53532]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25109]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60819; File No. SR-NYSEArca-2009-89]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Order Granting Accelerated Approval of Proposed Rule Change
Relating to Replacement Indexes for PowerShares DB Commodity Index
Tracking Fund and PowerShares DB Agriculture Fund
October 13, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on October 8, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons and is approving the
proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) of the Act,\3\ the
Exchange, through its wholly owned subsidiary NYSE Arca Equities, Inc.
(``NYSE Arca Equities''), proposes to describe a replacement to the
indexes underlying the PowerShares DB Commodity Index Tracking Fund and
the PowerShares DB Agriculture Fund, which are listed on the Exchange
under Commentary .02 to NYSE Arca Equities Rule 8.200.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
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 self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The PowerShares DB Commodity Index Tracking Fund (``DBC'') and the
PowerShares DB Agriculture Fund (``DBA'' and together with DBC, the
``Funds'') \4\ are currently listed on the Exchange under Commentary
.02 to NYSE Arca Equities Rule 8.200 (``Trust Issued Receipts'').\5\
Deutsche Bank AG
[[Page 53529]]
London, the ``Index Sponsor'' for the Funds, has determined to replace
the commodities indexes underlying these securities from those
previously approved by the Commission in the NYSE Arca Order, Amex DBC
Order, and Amex DBA Order (collectively, the ``DBC/DBA Orders'').
---------------------------------------------------------------------------
\4\ See Registration Statement on Form S-3 for PowerShares DB
Commodity Index Tracking Fund (No. 333-158733, dated April 23, 2009)
(``DBC Registration Statement'') and the Post-Effective Amendment
No. 1 to Form S-1 for PowerShares DB Agriculture Fund (No. 333-
150501, dated April 15, 2009) (``DBA Registration Statement''). In
addition, the issuer has filed Current Reports on Forms 8-K with
respect to DBC (No. 001-32726, filed Sept. 30, 2009) (``DBC Current
Report'') and DBA (No. 001-33238, filed Sept. 30, 2009) (``DBA
Current Report'') regarding replacement of the indexes underlying
the Funds.
\5\ See Securities Exchange Act Release No. 58993 (November 21,
2008), 73 FR 72548 (November 28, 2008) (SR-NYSEArca-2008-128) (order
approving listing on the Exchange of the Funds) (``NYSE Arca
Order''). The Funds were previously traded on the Exchange pursuant
to unlisted trading privileges (``UTP''). See Securities Exchange
Act Release Nos. 53736 (April 27, 2006), 71 FR 26582 (May 5, 2006)
(SR-PCX-2006-22) (order approving UTP trading of DB Commodity Index
Tracking Fund); 55453 (March 13, 2007), 72 FR 13333 (March 21, 2007)
(SR-NYSEArca-2006-62) (order approving UTP trading of PowerShares DB
Agriculture Fund and other PowerShares commodity-based funds). The
Funds were originally approved for listing on the American Stock
Exchange LLC (the ``Amex'', now known as NYSE Amex LLC). See
Securities Exchange Act Release Nos. 53105 (January 11, 2006), 71 FR
3129 (January 19, 2006) (SR-Amex-2005-59) (approving listing of DB
Commodity Index Tracking Fund (now known as PowerShares DB Commodity
Index Tracking Fund)) (``Amex DBC Order''); 55029 (December 29,
2006), 72 FR 806 (January 8, 2007) (SR-Amex-2006-76) (approving
listing of PowerShares DB Agriculture Fund and other PowerShares
commodity-based funds) (``Amex DBA Order''). See also, Securities
Exchange Act Release No. 53858 (May 24, 2006), 71 FR 31232 (June 1,
2006) (SR-Amex-2006-53) (``Supplemental Amex DBC Filing'', in which
the Amex clarified the manner in which the index underlying DBC is
maintained by providing that the replacement of expiring futures
contracts would be based on ``Optimum Yield'' roll rules for such
index, as described in SR-Amex-2006-53).
---------------------------------------------------------------------------
With the exception of the description of the replacement indexes
underlying DBC and DBA, as described below, the descriptions of the
Funds and the Shares provided in the DBC/DBA Orders and the
Supplemental Amex DBC Filing, as applicable, remain unchanged. In
addition, each of the representations that applied to the current
indexes underlying DBC and DBA set forth in the DBC/DBA Orders, as
applicable, will continue to apply to the proposed replacement indexes,
including, without limitation, with respect to the calculation and
dissemination of index and commodity-related information.\6\ Further,
other representations relating to the listing and trading of shares of
DBC and DBA (``DBC Shares'' and ``DBA Shares'', respectively) on the
Exchange, including, without limitation, dissemination of certain
values, trading rules governing the trading of the DBC Shares and DBA
Shares, and surveillance procedures for the DBC Shares and DBA Shares
and the underlying commodities and commodity-related derivatives, will
continue to apply. As a result of the proposed change, the Exchange
represents that the Funds satisfy the requirements of Rule 8.200,
Commentary .02, and therefore qualify for continued listing on the
Exchange. In addition, the Funds will continue to satisfy Rule 10A-3
under the Act.
---------------------------------------------------------------------------
\6\ The Index Sponsor has in place procedures to prevent the
improper sharing of information between different affiliates and
departments. Specifically, an information barrier exists between the
personnel within the Index Sponsor that calculate and reconstitute
the replacement indexes (the Calculation Group) and other Deutsche
Bank personnel, including but not limited to the Managing Owner,
sales and trading, external or internal fund managers, and bank
personnel who are involved in hedging the bank's exposure to
instruments linked to the replacement indexes, in order to prevent
the improper sharing of information relating to the recomposition of
such indexes. The replacement indexes are not calculated by a
broker-dealer.
---------------------------------------------------------------------------
PowerShares DB Commodity Index Tracking Fund
The investment objective of DBC and the Master Fund is to seek to
track changes, whether positive or negative, in the level of the
Deutsche Bank Liquid Commodity Index Optimum Yield--Excess Return\TM\
(``DBLCI-OYER''), less the expenses of the operations of DBC and the
DBC Master Fund. A description of the DBLCI-OYER, commodity futures
contracts and related options, operation of DBC, creation and
redemption procedures, and the Shares is set forth in the NYSE Arca
Order, the Amex DBC Order, and the Supplemental Amex DBC Filing.\7\
---------------------------------------------------------------------------
\7\ E-mail from Michael Cavalier, Chief Counsel, NYSE Euronext,
to Daniel Gien, Staff Attorney, Division of Trading and Markets,
Commission, dated Oct. 13, 2009.
---------------------------------------------------------------------------
As described in the DBC Current Report (``DBC Index Description''),
the Index Sponsor has made the determination that changes in regulatory
circumstances (the ``DBC Changes'') affecting the DBLCI-OYER have
arisen, and, in the view of the Index Sponsor, such DBC Changes
necessitate the replacement of the DBLCI-OYER.\8\
---------------------------------------------------------------------------
\8\ The action by the Funds to replace the commodity indexes
currently underlying the Funds is in response to an announcement by
the Commodity Futures Trading Commission (``CFTC'') in Release 5695-
09 (August 19, 2009) (``CFTC Release''), that the CFTC is
withdrawing two no-action letters that provided relief from federal
agricultural speculative positions limits set forth in CFTC
regulations (17 CFR 150.2). The CFTC Release stated, in part, as
follows: ``In CFTC Letter 06-09 (May 5, 2006), the agency's Division
of Market Oversight (DMO) granted no-action relief to DB Commodity
Services LLC, a commodity pool operator (CPO) and commodity trading
advisor (CTA), permitting the DB Commodity Index Tracking Master
Fund to take positions in corn and wheat futures that exceed federal
speculative position limits set forth in CFTC Regulation 150.2.
Subsequently, in CFTC Letter 06-19 (September 6, 2006), DMO granted
similar no-action relief to a CPO/CTA employing a proprietary
commodity investment strategy that includes positions in Chicago
Board of Trade corn, soybeans and wheat futures contracts. Among
other things, DMO's no-action position in both cases stated that any
change in circumstances or conditions could result in a different
conclusion. DMO has previously stated that the trading strategies
employed by these entities would not qualify for a bona fide hedge
exemption under the Commission's regulations.''
---------------------------------------------------------------------------
Because of such DBC Changes, the Index Sponsor has determined that
the replacement index should include additional commodities that are
not currently part of the DBLCI-OYER in order to permit the replacement
index to reflect, broadly and in proportion to historical levels, the
world's production and supplies of certain commodities. The DBC Index
Description will reflect the replacement of the DBLCI-OYER with the
Deutsche Bank Liquid Commodity Index-Optimum Yield Diversified Excess
Return\TM\ (``DBLCI-OY Diversified ER'').
According to the DBC Index Description, the DBLCI-OY Diversified ER
is intended to reflect, broadly and in proportion to historical levels,
the world's production and supplies of certain commodities. The
commodities of the DBLCI-OY Diversified ER are (1) Light, Sweet Crude
Oil (WTI), (2) Heating Oil, (3) RBOB Gasoline, (4) Natural Gas, (5)
Brent Crude, (6) Gold, (7) Silver, (8) Aluminum, (9) Zinc, (10) Copper
Grade A, (11) Corn, (12) Wheat, (13) Soybeans, and (14) Sugar.\9\ Each
commodity is represented in the DBLCI-OY Diversified ER\TM\ as an index
with respect to that specific commodity (``Single Commodity Index'').
Each Single Commodity Index is assigned a weight (the ``DBC Index Base
Weight'') which is intended to reflect the world's production and
supplies of each such index commodity.
---------------------------------------------------------------------------
\9\ The DBLCI-OY Diversified ER includes all of the commodities
in the previous DBLCI-OYER, and, in addition to such commodities,
includes Brent Crude, RBOB Gasoline, Natural Gas, Silver, Zinc,
Copper Grade A, Soybeans, and Sugar.
---------------------------------------------------------------------------
According to the DBC Index Description, the DBLCI-OY Diversified ER
has been calculated back to a base date (the ``DBC Base Date'') of
September 3, 1997. On the DBC Base Date, the closing level of the
DBLCI-OY Diversified ER\TM\ was 100.
------------------------------------------------------------------------
DBC Index
Single Commodity Index Base Weight Exchange \10\
(%)
------------------------------------------------------------------------
Light, Sweet Crude Oil (WTI)....... 12.375 NYMEX
Heating Oil........................ 12.375 NYMEX
RBOB Gasoline...................... 12.375 NYMEX
Natural Gas........................ 5.500 NYMEX
Brent Crude........................ 12.375 ICE-UK
Gold............................... 8.000 COMEX
Silver............................. 2.000 COMEX
Aluminum........................... 4.167 LME
Zinc............................... 4.167 LME
Copper Grade A..................... 4.167 LME
Corn............................... 5.625 CBOT
Wheat.............................. 5.625 CBOT
Soybeans........................... 5.625 CBOT
Sugar.............................. 5.625 ICE-US
------------------------------------------------------------------------
---------------------------------------------------------------------------
\10\ The referenced exchanges with respect to the commodities
for DBC and DBA, as applicable, are as follows: NYMEX (New York
Mercantile Exchange); ICE-UK (ICE Futures Europe); COMEX (Commodity
Exchange Inc.); LME (The London Metal Exchange Limited); CBOT
(Chicago Board of Trade); CME (Chicago Mercantile Exchange); ICE-US
(ICE Futures U.S.), Inc.; KCB (Kansas City Board of Trade).
---------------------------------------------------------------------------
According to the DBC Current Report, each Single Commodity Index of
the DBLCI-OY Diversified ER\TM\ employs a rules-based approach when it
``rolls'' from one futures contract to another for each commodity.
Rather than select a new futures contract based on a predetermined
schedule (e.g., monthly), each Single Commodity Index rolls to the
futures contract which generates the
[[Page 53530]]
maximum ``implied roll yield.'' The futures contract having a delivery
month within the next thirteen months which generates the highest
implied roll yield will be included in each Single Commodity Index.
DBLCI-OY Diversified ERTM is calculated in U.S. dollars
on both an excess return (unfunded) and total return (funded) index
levels.
PowerShares DB Agriculture Fund
DBA is designed to track the Deutsche Bank Liquid Commodity Index--
Optimum Yield Agriculture Excess ReturnTM (``DBLCI-OY
Agriculture ER''), which is intended to reflect the agricultural
sector. A description of the DBLCI-OY Agriculture ER, commodity futures
contracts and related options, operation of DBA, creation and
redemption procedures, and the DBA Shares is set forth in the NYSE Arca
Order and the Amex DBA Order.
As is the case with respect to DBC, as discussed above, the Index
Sponsor has made the determination that changes in regulatory
circumstances (``DBA Changes'') affecting the DBLCI-OY Agriculture ER
have arisen, and, in the view of the Index Sponsor, such DBA Changes
necessitate replacement of the DBLCI-OY Agriculture ER.\11\
---------------------------------------------------------------------------
\11\ See note 8, supra.
---------------------------------------------------------------------------
As described in the DBA Current Report (``DBA Index
Description''),\12\ because of the DBA Changes, the Index Sponsor has
determined that the replacement index should include additional
commodities that are not currently part of the DBLCI-OY Agriculture ER
in order to permit the replacement index to reflect the performance of
the agricultural sector. The DBA Index Description will reflect the
replacement of the DBLCI-OY Agriculture ER with the Deutsche Bank
Liquid Commodity Index Diversified Agriculture Excess
ReturnTM (``DBLCI Diversified Agriculture ER'').
---------------------------------------------------------------------------
\12\ See note 4, supra.
---------------------------------------------------------------------------
The DBLCI Diversified Agriculture ER is intended to reflect the
performance of the agricultural commodities sector and is calculated on
an excess return, or unfunded basis. The DBLCI Diversified Agriculture
ER methodology provides that the replacement of expiring futures
contracts in part would be based on ``Optimum Yield'' roll rules for
such index, as described in the DBA Current Report. In addition, the
DBLCI Diversified Agriculture ER, in part, is rolled on a non-Optimum
Yield basis. Each commodity in the DBLCI Diversified Agriculture ER is
assigned a weight (the ``DBA Index Base Weight'') which is intended to
reflect the proportion of such commodity relative to such index.\13\
---------------------------------------------------------------------------
\13\ The DBLCI Diversified Agriculture ER includes all of the
commodities in the previous DBLCI-OY Agriculture ER, and, in
addition to such commodities, includes Kansas Wheat, Cocoa, Coffee,
Cotton, Live Cattle, Feeder Cattle, and Lean Hogs.
---------------------------------------------------------------------------
The DBLCI Diversified Agriculture ER has been calculated back to a
base date of January 18, 1989 (the ``Base Date''). On the Base Date,
the closing level of the DBLCI Diversified Agriculture ERTM
was 100.
------------------------------------------------------------------------
DBA Index
Single Commodity Index \14\ Base Exchange
Weight (%)
------------------------------------------------------------------------
Corn................................ 12.50 CBOT
Soybeans............................ 12.50 CBOT
Wheat............................... 6.25 CBOT
Kansas Wheat........................ 6.25 KCB
Sugar............................... 12.50 ICE-US
Cocoa............................... 11.11 ICE-US
Coffee.............................. 11.11 ICE-US
Cotton.............................. 2.78 ICE-US
Live Cattle......................... 12.50 CME
Feeder Cattle....................... 4.17 CME
Lean Hogs........................... 8.33 CME
------------------------------------------------------------------------
---------------------------------------------------------------------------
\14\ Futures contracts on Corn, Soybeans, Wheat, Kansas Wheat,
and Sugar are rolled on an Optimum Yield basis. Futures contracts on
Cocoa, Coffee, Cotton, Live Cattle, Feeder Cattle and Lean Hogs are
rolled on a Non-Optimum Yield basis.
---------------------------------------------------------------------------
DBLCI Diversified Agriculture ER is calculated in U.S. dollars on
both an excess return (unfunded) and total return (funded) index
levels.
Dissemination of Information About the Underlying Futures Contracts
The closing prices and daily settlement prices for the futures
contracts held by the applicable Master Funds are publicly available on
the Web sites of the futures exchanges trading the particular
contracts. The particular futures exchange for each futures contract in
the DBLCI-OY Diversified ER, with Web site information, is as follows:
(i) Aluminum, zinc and copper--LME at www.lme.com; (ii) corn, wheat and
soybeans--CBOT at www.cmegroup.com; (iii) Brent Crude--ICE-UK at
www.theice.com; (iv) sugar--ICE-US at www.theice.com; and (v) light,
sweet crude oil (WTI), heating oil, RBOB gasoline, natural gas, gold
and silver--NYMEX at www.nymex.com.
The particular futures exchange for each futures contract in the
DBLCI Diversified Agriculture ER with Web site information is as
follows: (i) Corn, soybeans and wheat--CBOT at www.cmegroup.com; (ii)
Kansas wheat--KCB at www.kcbt.com; (iii) sugar, coffee, cocoa and
cotton--ICE-US at www.theice.com; and (iv) live cattle, feeder cattle
and lean hogs--CME at www.cmegroup.com.
The Exchange will issue an Information Bulletin regarding the
replacement indexes for DBC and DBA in connection with trading of DBC
and DBA based on such indexes.
All terms relating to the Funds that are referred to, but not
defined, in this proposed rule change are defined in the DBC
Registration Statement, the DBC Current Report, the DBA Registration
Statement, and the DBA Current Report, as applicable.
Surveillance
The Exchange currently has in place an Information Sharing
Agreement with the ICE Futures U.S., ICE Futures Europe, LME, and KCB,
for the purpose of providing information in connection with trading in
or related to futures contracts traded on their respective exchanges
comprising the Indexes. The Exchange may obtain information via the
Intermarket Surveillance Group (``ISG'') from other exchanges who are
members of the ISG, including CME, CBOT and NYMEX.\15\
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\15\ For a list of the current members of ISG, see
www.isgportal.org.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \16\ in general and Section 6(b)(5) of the
Act \17\ in particular in that it is designed 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 and perfect the mechanisms of a free and open market
and to protect investors and the public interest. The Exchange believes
that the proposed rule change accommodates an expansion of the
commodities included in the indexes underlying the Funds, which has
been undertaken in response to action by the CFTC referred to
above,\18\ to the benefit of investors and the marketplace. In
addition, the listing and trading criteria set forth in Rule 8.200 are
intended to protect investors and the public interest.
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\16\ 15 U.S.C. 78s(b).
\17\ 15 U.S.C. 78s(b)(5).
\18\ See note 8, supra.
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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.
[[Page 53531]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2009-89 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2009-89. 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 Section, 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 will also 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-2009-89 and should
be submitted on or before November 9, 2009.
V. Commission's Findings and Order Granting Accelerated Approval of the
Proposed Rule Change
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\19\ In particular, the Commission finds that the proposed
rule change is consistent with the requirements of Section 6(b)(5) of
the Act,\20\ which requires, among other things, that the Exchange's
rules be designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and national market
system, and in general, to protect investors and the public interest.
The Commission notes that the new replacement indexes, DBLCI-OY
Diversified ER and DBLCI Diversfied Agriculture ER, reflect more
commodity components and are more diversified than the current indexes
underlying DBC and DBA, respectively.\21\ In addition, with the
exception of the description of the replacement indexes underlying DBC
and DBA, the Commission notes that the descriptions of the Funds and
the Shares provided in the DBC/DBA Orders and the Supplemental Amex DBC
Filing, as applicable, remain unchanged. The Commission further notes
that each of the representations that applied to the current indexes
underlying DBC and DBA set forth in the DBC/DBA Orders, as applicable,
will continue to apply to the proposed replacement indexes, including,
without limitation, with respect to the calculation and dissemination
of index and commodity-related information. In addition, other
representations relating to the listing and trading of the DBC Shares
and DBA Shares on the Exchange, including, without limitation,
dissemination of certain values, trading rules governing the trading of
the DBC Shares and DBA Shares, and surveillance procedures for the DBC
Shares and DBA Shares and the underlying commodities and commodity-
related derivatives, will continue to apply. As a result of the
proposed change, the Exchange represents that the Funds will continue
to satisfy the requirements of Commentary .02 to NYSE Arca Equities
Rule 8.200 and therefore qualify for listing on the Exchange. This
approval order is based on the Exchange's representations.
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\19\ In approving the proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\20\ 15 U.S.C. 78f(b)(5).
\21\ See supra notes 9 and 13.
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The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\22\ for approving the proposed rule change prior to the 30th
day after publication of notice in the Federal Register. The Commission
notes that the DBC Shares and DBA Shares are currently listed and
trading on the Exchange based on the DBLCI-OYER and the DBLCI-OY
Agriculture ER, respectively. The Commission believes that the
Exchange's proposal to replace such current indexes with the DBLCI-OY
Diversified ER and DBLCI Diversified Agriculture ER, which are more
broad-based than the current indexes, does not appear to present any
novel issues or significant regulatory concerns. The Commission notes
that, with the exception of the description of the replacement indexes
underlying DBC and DBA, the descriptions of the Funds and the Shares,
as provided in the DBC/DBA Orders and the Supplemental Amex DBC Filing,
as applicable, and the representations previously made by the Exchange
relating to the indexes and the trading of the DBC Shares and DBA
Shares on the Exchange will continue to apply. The Commission also
notes that the Exchange's proposal represents action in response to the
CFTC Release. The Commission believes that accelerating approval of
this proposal should benefit investors and the marketplace by
providing, without undue delay, for certain commodity-based products
[[Page 53532]]
currently listed and trading on an exchange to be based on an expanded
and more diversified set of commodity components.
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\22\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\23\ that the proposed rule change (SR-NYSEArca-2009-89) be, and it
hereby is, approved on an accelerated basis.
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\23\ 15 U.S.C. 78s(b)(2).
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. E9-25109 Filed 10-16-09; 8:45 am]
BILLING CODE 8011-01-P
