Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Amending Rule 5.3, 69182-69183 [E9-30915]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 74, Number 249 (Wednesday, December 30, 2009)]
[Notices]
[Pages 69182-69183]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-30915]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61222; File No. SR-NYSEArca-2009-110]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Amending Rule 5.3

December 22, 2009.
    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 December 4, 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 self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend certain rules in order to enable the 
listing and trading on the Exchange of options on the ETFS Silver Trust 
and the ETFS Gold Trust. The text of the proposed rule change is 
available on NYSE Arca's Web site at https://www.nyse.com, on the 
Commission's Web site at https://www.sec.gov, at NYSE Arca, and at the 
Commission's Public Reference Room. A copy of this filing is available 
on the Exchange's Web site at https://www.nyse.com, at the Exchange's 
principal office and at the Commission's Public Reference Room.

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
    Recently, the U.S. Securities and Exchange Commission (``SEC'' or 
``Commission'') authorized the Exchange to list and trade options on 
the SPDR Gold Trust (``GLD'') \4\ and on the iShares COMEX Gold Trust 
(``IAU'') and the iShares Silver Trust (``SLV'').\5\ Now, the Exchange 
proposes to list and trade options on the ETFS Silver Trust (``SIVR'') 
and the ETFS Gold Trust (``SGOL'').
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 57894 (May 30, 
2008), 73 FR 32061 (June 5, 2008) (order approving SR-NYSEArca-2008-
52).
    \5\ See Securities Exchange Act Release No. 59055 (December 4, 
2008), 73 FR 238 (December 10, 2008) (order approving SR-NYSEArca-
2008-66).
---------------------------------------------------------------------------

    Currently, Rule 5.3 deems appropriate for options trading Exchange-
Traded Fund Shares (``ETFs'' or ``Fund Shares'' or ``Units'') that are 
traded on a national securities exchange and are defined as an ``NMS 
stock'' in Rule 600(b)(47) of Regulation NMS and that represent (i) 
interests in registered investment companies (or series thereof) 
organized as open-end management investment companies, unit investment 
trusts or similar entities that hold portfolios of securities and/or 
financial instruments including, but not limited to, options on 
securities and indexes, equity caps, collars and floors, swap 
agreements, forward contracts, repurchase agreements and reverse 
purchase agreements (the ``Financial Instruments''), and money market 
instruments, including, but not limited to, U.S. government securities 
and repurchase agreements (the ``Money Market Instruments'') comprising 
or otherwise based on or representing investments in indexes or 
portfolios of securities and/or Financial Instruments and Money Market 
Instruments (or that hold securities in one or more other registered 
investment companies that themselves hold such portfolios of securities 
and/or Financial Instruments and Money Marker Instruments); or (ii) 
interests in a trust or similar entity that holds a specified non-U.S. 
currency deposited with the trust or similar entity when aggregated in 
some specified minimum number may be surrendered to the trust by the 
beneficial owner to receive the specified non-U.S. currency, and pays 
the beneficial owner interest and other distributions on deposited non-
U.S. currency, if any, declared and paid by the trust; or (iii) 
commodity pool interests principally engaged, directly or indirectly, 
in holding and/or managing portfolios or baskets of securities, 
commodity futures contracts, options on commodity futures contracts, 
swaps, forward contracts and/or options on physical commodities and/or 
non-U.S. currency (``Commodity Pool Units''), or (iv) represent 
interests in the SPDR Gold Trust, are eligible as underlying securities 
for options traded on the Exchange or (iv) represent interests in the 
SPDR Gold Trust, or (v) represent interests in the iShares COMEX Gold 
Trust, or (vi) represent interests in the iShares Silver Trust, (vii) 
represents an interest in a registered investment company (``Investment 
Company'') organized as an open-end management investment company or 
similar entity, that invests in a portfolio of securities selected by 
the Investment Company's investment adviser consistent with the 
Investment Company's investment objectives and policies, which is 
issued in a specified aggregate minimum number in return for a deposit 
of a specified portfolio of securities and/or a cash amount with a 
value equal to the next determined net asset value (``NAV''), and when 
aggregated in the same specified minimum number, may be redeemed at a 
holder's request, which holder will be paid a specified portfolio of 
securities and/or cash with a value equal to the next determined NAV 
(``Managed Fund Share'').\6\ This rule change proposes to expand the 
types of ETFs that may be approved for options trading on the Exchange 
to include the ETFS Silver Trust and the ETFS Gold Trust.
---------------------------------------------------------------------------

    \6\ See Rule 5.3(g).
---------------------------------------------------------------------------

    Apart from allowing the ETFS Silver Trust and ETFS Gold Trust to be 
underlyings for options traded on the Exchange as described above, the 
listing standards for ETFs will remain unchanged from those that apply 
under current Exchange rules. ETFs on which options may be listed and 
traded must still be listed and traded on a national securities 
exchange and must satisfy the other listing standards set forth in Rule 
5.3(g).
    Specifically, in addition to satisfying the aforementioned listing 
requirements, Units must meet either (1) the criteria and guidelines 
under Rule 5.3(a) and (b) or (2) they must be available for creation or 
redemption each business day from or through the issuer in cash or in 
kind at a price

[[Page 69183]]

related to net asset value, and the issuer must be obligated to issue 
Units in a specified aggregate number even if some or all of the 
investment assets required to be deposited have not been received by 
the issuer, subject to the condition that the person obligated to 
deposit the investments has undertaken to deliver the investment assets 
as soon as possible and such undertaking is secured by the delivery and 
maintenance of collateral consisting of cash or cash equivalents 
satisfactory to the issuer, as provided in the respective prospectus.
    The Exchange states that the current continued listing standards 
for options on ETFs will apply to options on the ETFS Silver Trust and 
the ETFS Gold Trust. Specifically, under Rule 5.4(k), options on Units 
may be subject to the suspension of opening transactions as follows: 
(1) Following the initial twelve-month period beginning upon the 
commencement of trading of the Units, there are fewer than 50 record 
and/or beneficial holders of the Units for 30 or more consecutive 
trading days; (2) the value of the underlying silver or underlying gold 
is no longer calculated or available; or (3) such other event occurs or 
condition exists that in the opinion of the Exchange makes further 
dealing on the Exchange inadvisable.
    Additionally, the ETFS Silver Trust and the ETFS Gold Trust shall 
not be deemed to meet the requirements for continued approval, and the 
Exchange shall not open for trading any additional series of option 
contracts of the class covering the ETFS Silver Trust or the ETFS Gold 
Trust, respectively, if the ETFS Silver Trust or the ETFS Gold Trust 
ceases to be an ``NMS stock'' as provided for in Rule 5.4(b)(5) or the 
ETFS Silver Trust or the ETFS Gold Trust is halted from trading on its 
primary market.
    The addition of the ETFS Silver Trust and the ETFS Gold Trust to 
Rule 5.3(g) will not have any effect on the rules pertaining to 
position and exercise limits \7\ or margin.\8\
---------------------------------------------------------------------------

    \7\ See Rule 6.8 regarding positions limits, and Rule 6.9 
regarding exercise limits.
    \8\ See Rules 4.15 and 4.16 regarding margins.
---------------------------------------------------------------------------

    The Exchange represents that its surveillance procedures applicable 
to trading in options on the ETFS Silver Trust and the ETFS Gold Trust 
will be similar to those applicable to all other options on other ETFs 
currently traded on the Exchange. Also, the Exchange may obtain 
information from the New York Mercantile Exchange, Inc. (``NYMEX'') (a 
member of the Intermarket Surveillance Group) related to any financial 
instrument traded there that is based, in whole or part, upon an 
interest in or performance of silver or gold.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \9\ of the 
Securities Exchange Act of 1934 (the ``Act'') in general, and furthers 
the objectives of Section 6(b)(5) \10\ 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 mechanisms of 
a free and open market and a national market system.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    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-2009-110 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-2009-110. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of 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-2009-110 and should 
be submitted on or before January 20, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30915 Filed 12-29-09; 8:45 am]
BILLING CODE 8011-01-P