69726 Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Notices 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(1). 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

amendments proposed in the Short 

Exempt Filing is appropriate in light of 

the delay of the compliance date of SEC 

Regulation SHO. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 9 and paragraph (f)(1) of Rule 

19b–4 thereunder.10 At any time within 

60 days of the filing of the proposed rule 

change, the Commission may 

temporarily suspend 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2010–058 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–FINRA–2010–058. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing 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 

FINRA. 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–FINRA–2010–058 and 

should be submitted on or before 

December 6, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–28608 Filed 11–12–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63271; File No. SR–ISE– 

2010–107] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To List and Trade Options on 

Leveraged Exchange-Traded Notes 

and To Broaden the Definition of 

‘‘Futures-Linked Securities’’ 

November 8, 2010. 

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 

29, 2010, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

in Items I and II 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Rule 502(k) to: (a) Permit trading 

options on leveraged (multiple or 

inverse) exchange-traded notes, and (b) 

broaden the definition of ‘‘FuturesLinked Securities.’’ The text of the 

proposed rule change is available on the 

Exchange’s Web site http:// 

www.ise.com, at the principal office of 

the Exchange, 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 

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 

self-regulatory organization 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 amend ISE 

Rule 502(k) to: (a) Permit trading 

options on leveraged (multiple or 

inverse) exchange-traded notes 

(‘‘ETNs’’), and (b) broaden the definition 

of ‘‘Futures-Linked Securities.’’ ETNs are 

also known as ‘‘Index-Linked 

Securities,’’ which are designed for 

investors who desire to participate in a 

specific market segment by providing 

exposure to one or more identifiable 

underlying securities, commodities, 

currencies, derivative instruments or 

market indexes of the foregoing. IndexLinked Securities are the nonconvertible debt of an issuer that have 

a term of at least one (1) year but not 

greater than thirty (30) years. Despite 

the fact that Index-Linked Securities are 

linked to an underlying index, each 

trade as a single, exchange-listed 

security. Accordingly, rules pertaining 

to the listing and trading of standard 


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Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Notices 69727 

3These ETNs include: The Barclays Short B 

Leveraged Inverse S&P 500 TR ETN (‘‘BXDB’’), the 

Barclays Short C Leveraged Inverse S&P 500 TR 

ETN (‘‘BXDC’’) and the Barclays Short D Leveraged 

Inverse S&P 500 TR ETN (‘‘BXDD’’). 

equity options apply to Index-Linked 

Securities. 

Leveraged ETN Options 

The Exchange proposes to amend 

Rule 502(k) to permit the listing of 

options on leveraged (multiple or 

inverse) ETNs. Multiple leveraged ETNs 

seek to provide investment results that 

correspond to a specified multiple of the 

percentage performance on a given day 

of a particular Reference Asset. Inverse 

leveraged ETNs seek to provide 

investment results that correspond to 

the inverse (opposite) of the percentage 

performance on a given day of a 

particular Reference Asset by a specified 

multiple. Multiple leveraged ETNs and 

inverse leveraged ETNs differ from 

traditional ETNs in that they do not 

merely correspond to the performance 

of a given Reference Asset, but rather 

attempt to match a multiple or inverse 

of a Reference Asset’s performance. 

The Barclays Long B Leveraged S&P 

500 TR ETN (‘‘BXUB’’), the Barclays 

Long C Leveraged S&P 500 TR ETN 

(‘‘BXUC’’) and the UBS AG 2x Monthly 

Leveraged Long Exchange Traded 

Access Securities (‘‘E–TRACS’’) linked 

to the Alerian MLP Infrastructure Index 

due July 9, 2040 (‘‘MLPL’’) currently 

trade on the NYSE Arca Stock Exchange 

and are examples of multiple leveraged 

ETNs. In addition, the Barclays ETN + 

Inverse S&P 500 VIX Short-Term 

Futures ETN (‘‘XXV’’) currently trades 

on the NYSE Arca Stock Exchange and 

is an example of an inverse leveraged 

ETN. The NYSE Arca Stock Exchange 

also lists several other inverse leveraged 

ETNs for trading.3

Currently, ISE Rule 502(k) provides 

that securities deemed appropriate for 

options trading shall include shares or 

other securities (‘‘Equity Index-Linked 

Securities,’’ ‘‘Commodity-Linked 

Securities,’’ ‘‘Currency-Linked 

Securities,’’ ‘‘Fixed Income Index-Linked 

Securities,’’ ‘‘Futures-Linked Securities,’’ 

and ‘‘Multifactor Index-Linked 

Securities,’’ collectively known as 

‘‘Index-Linked Securities’’) that are 

principally traded on a national 

securities exchange and an ‘‘NMS Stock’’ 

(as defined in Rule 600 of Regulation 

NMS under the Securities Exchange Act 

of 1934), and represent ownership of a 

security that provides for the payment at 

maturity, as described below: 

• Equity Index-Linked Securities are 

securities that provide for the payment 

at maturity of a cash amount based on 

the performance of an underlying index 

or indexes of equity securities (‘‘Equity 

Reference Asset’’); 

• Commodity-Linked Securities are 

securities that provide for the payment 

at maturity of a cash amount based on 

the performance of one or more physical 

commodities or commodity futures, 

options on commodities, or other 

commodity derivatives or CommodityBased Trust Shares or a basket or index 

of any of the foregoing (‘‘Commodity 

Reference Asset’’); 

• Currency-Linked Securities are 

securities that provide for the payment 

at maturity of a cash amount based on 

the performance of one or more 

currencies, or options on currencies or 

currency futures or other currency 

derivatives or Currency Trust Shares (as 

defined in ISE Rule 502(h), or a basket 

or index of any of the foregoing 

(‘‘Currency Reference Asset’’); 

• Fixed Income Index-Linked 

Securities are securities that provide for 

the payment at maturity of a cash 

amount based on the performance of 

one or more notes, bonds, debentures or 

evidence of indebtedness that include, 

but are not limited to, U.S. Department 

of Treasury securities (‘‘Treasury 

Securities’’), government-sponsored 

entity securities (‘‘GSE Securities’’), 

municipal securities, trust preferred 

securities, supranational debt and debt 

of a foreign country or a subdivision 

thereof or a basket or index of any of the 

foregoing (‘‘Fixed Income Reference 

Asset’’); 

• Futures-Linked Securities are 

securities that provide for the payment 

at maturity of a cash amount based on 

the performance of an index of (a) 

futures on Treasury Securities, GSE 

Securities, supranational debt and debt 

of a foreign country or a subdivision 

thereof, or options or other derivatives 

on any of the foregoing; or (b) interest 

rate futures or options or derivatives on 

the foregoing in this subparagraph (b); 

or (c) CBOE Volatility Index (VIX) 

futures (‘‘Futures Reference Asset’’); and 

• Multifactor Index-Linked Securities 

are securities that provide for the 

payment at maturity of a cash amount 

based on the performance of any 

combination of two or more Equity 

Reference Assets, Commodity Reference 

Assets, Currency Reference Assets, 

Fixed Income References Assets, or 

Futures Reference Assets (‘‘Multifactor 

Reference Asset’’). 

For purposes of ISE Rule 502(k), 

Equity Reference Assets, Commodity 

Reference Asset, Currency Reference 

Assets, Fixed Income Reference Assets, 

Futures Reference Assets together with 

Multifactor Reference Assets, 

collectively are referred to as ‘‘Reference 

Assets.’’ 

In addition, Index-Linked Securities 

must meet the criteria and guidelines for 

underlying securities set forth in Rule 

502(b); or (ii) the Index-Linked 

Securities must be redeemable at the 

option of the holder at least on a weekly 

basis through the issuer at a price 

related to the applicable underlying 

Reference Asset. In addition, the issuing 

company is obligated to issue or 

repurchase the securities in aggregation 

units for cash, or cash equivalents, 

satisfactory to the issuer of IndexLinked Securities which underlie the 

option as described in the Index-Linked 

Securities prospectus. 

The Exchange proposes to amend ISE 

Rule 502(k) to expand the type of IndexLinked Securities that may underlie 

options to include leveraged (multiple 

or inverse) ETNs. To affect this change, 

the Exchange proposes to amend ISE 

Rule 502(k) by adding the phrase, ‘‘or 

the leveraged (multiple or inverse) 

performance’’ to each of the 

subparagraphs ((i) through (vi)) in that 

section which set forth the different 

eligible Reference Assets. 

The Exchange’s current continuing 

listing standards for ETN options will 

continue to apply. Specifically, under 

ISE Rule 503(k), ETN options shall not 

be deemed to meet the Exchange’s 

requirements for continued approval, 

and the Exchange shall not open for 

trading any additional series or option 

contracts of the class covering such 

Securities whenever the underlying 

Securities are delisted and trading in the 

Securities is suspended on a national 

securities exchange, or the Securities are 

no longer an ‘‘NMS Stock’’ (as defined in 

Rule 600 of Regulation NMS under the 

Securities Exchange Act of 1934). In 

addition, the Exchange shall consider 

the suspension of opening transactions 

in any series of options of the class 

covering Index-Linked Securities in any 

of the following circumstances: (1) The 

underlying Index-Linked Security fails 

to comply with the terms of ISE Rule 

502(k); (2) in accordance with the terms 

of ISE Rules 503(a) and (b), in the case 

of options covering Index-Linked 

Securities when such options were 

approved pursuant to ISE Rule 502(k), 

except that, in the case of options 

covering Index-Linked Securities 

approved pursuant to ISE Rule 502(k)(3) 

that are redeemable at the option of the 

holder at least on a weekly basis, then 

option contracts of the class covering 

such Securities may only continue to be 

open for trading as long as the Securities 

are listed on a national securities 

exchange and are ‘‘NMS’’ stock as 

defined in Rule 600 of Regulation NMS; 

(3) in the case of any Index-Linked 

Security trading pursuant to ISE Rule 


srobinson on DSKHWCL6B1PROD with NOTICES
69728 Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Notices 

4See ISE Rules 412, Position Limits and 414, 

Exercise Limits. 

5See ISE Rules 1200–1204, the Exchange’s rules 

governing margin. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 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. 

10For 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). 

11See Securities Exchange Act Release No. 63202 

(October 28, 2010), 75 FR 67794 (November 3, 2010) 

(SR–CBOE–2010–080). 

502(k), the value of the Reference Asset 

is no longer calculated; or (4) such other 

event shall occur or condition exist that 

in the opinion of the Exchange make 

further dealing in such options on the 

Exchange inadvisable. Expanding the 

eligible types of ETNs for options 

trading under ISE Rule 502(k) will not 

have any effect on the rules pertaining 

to position and exercise limits 4 or 

margin.5

This proposal is necessary to enable 

the Exchange to list and trade options 

on shares of the BXUB, BXUC, XXV, 

BXDB, BXDC, BXDD and the MLPL. The 

Exchange believes the ability to trade 

options on leveraged (multiple or 

inverse) ETNs will provide investors 

with greater risk management tools. The 

proposed amendment to the Exchange’s 

listing criteria for options on ETNs is 

necessary to ensure that the Exchange 

will be able to list options on the above 

listed leveraged (multiple and inverse) 

ETNs as well as other leveraged 

(multiple and inverse) ETNs that may be 

introduced in the future. 

The Exchange represents that its 

existing surveillance procedures 

applicable to trading in options are 

adequate to properly monitor the 

trading in leveraged (multiple and 

inverse) ETN options. 

It is expected that The Options 

Clearing Corporation will seek to revise 

the Options Disclosure Document 

(‘‘ODD’’) to accommodate the listing and 

trading of leveraged (multiple and 

inverse) ETN options. 

Broaden the Definition of ‘‘FuturesLinked Securities’’ 

The second change being proposed by 

this filing is to amend the definition of 

‘‘Future [sic]-Linked Securities’’ set forth 

in ISE Rule 502(k)(1)(v). Currently, the 

definition of ‘‘Futures-Linked 

Securities’’ is limited to securities that 

provide for the payment at maturity of 

a cash amount based on the 

performance of an index of (a) Futures 

on Treasury Securities, GSE Securities, 

supranational debt and debt of a foreign 

country or a subdivision thereof, or 

options or other derivatives on any of 

the foregoing; or (b) interest rate futures 

or options or derivatives on the 

foregoing in this subparagraph (b); or (c) 

CBOE Volatility Index (VIX) futures. 

ISE Rule 502 sets forth generic listing 

criteria for securities that may serve as 

underlyings for listed options trading. 

The Exchange believes that the current 

definition of ‘‘Futures-Linked 

Securities’’ is unnecessarily restrictive 

and requires the Exchange to submit a 

filing to amend the definition each time 

a new ETN is issued that tracks the 

performance of an index of futures/ 

options on futures that is not 

enumerated in the existing rule. To 

address this issue, the Exchange is 

proposing to revise the definition of 

‘‘Futures-Linked Securities’’ to provide 

that they are securities that for the 

payment at maturity of a cash amount 

based on the performance or the 

leveraged (multiple or inverse) 

performance of an index or indexes of 

futures contracts or options or 

derivatives on futures contracts 

(‘‘Futures Reference Asset’’). The 

Exchange notes that all ETNs eligible for 

options trading must be principally 

traded on a national securities exchange 

and must be an ‘‘NMS Stock.’’ As a 

result, the Exchange believes that 

broadening the definition of ‘‘FuturesLinked Securities’’ by no longer 

specifically listing the types of futures 

and options on futures contracts that 

may be tracked by an ETN is 

appropriate. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) 6 of the Securities Exchange 

Act of 1934 (the ‘‘Act’’) and the rules and 

regulations under the Act, in general, 

and furthers the objectives of Section 

6(b)(5),7 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, and, in general, to protect 

investors and the public interest. The 

Exchange believes that the proposed 

rules applicable to trading pursuant to 

generic listing and trading criteria serve 

to foster investor protection. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change does not 

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 has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

members or other interested parties. 

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 8 and Rule 

19b–4(f)(6) thereunder.9

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 list and trade options 

on leveraged (multiple or inverse) ETNs 

and implement the amended definition 

of ‘‘Futures-Linked Securities’’ 

immediately. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest.10 The 

Commission notes the proposal is 

substantively identical a proposal that 

was recently approved by the 

Commission, and does not raise any 

new regulatory issues.11 For these 

reasons, the Commission designates the 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Notices 69729 

12The text of the proposed rule change is 

available on the Commission’s Web site at http:// 

www.sec.gov. 

13 17 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. 

4See NYSE Arca Equities Rule 7.37 (Order 

Execution). The Tracking Order Process is available 

during Core Trading Hours only, during which 

orders may be matched and executed in the 

Tracking Order Process as follows: If an order has 

not been executed in its entirety pursuant to the 

Directed Order, Display Order or Working Order 

processes, the NYSE Arca Marketplace shall match 

and execute any remaining part of the order in the 

Tracking Order Process in price/time priority, 

except that (1) any portion of an order received 

from another market center or market participant 

shall be cancelled immediately, and (2) an 

incoming ISO order shall not interact with the 

Tracking Order Process. 

proposed rule change as operative upon 

filing. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–ISE–2010–107 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–2010–107. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing 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.12 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–ISE– 

2010–107 and should be submitted on 

or before December 6, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–28686 Filed 11–12–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63272; File No. SR– 

NYSEArca–2010–96] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Arca Equities 

Rule 7.31(f) To Modify the Functionality 

of Tracking Orders 

November 8, 2010. 

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 

29, 2010, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 Arca Equities Rule 7.31(f) to 

modify the functionality of Tracking 

Orders. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://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 

The Exchange proposes to amend 

NYSE Arca Equities Rule 7.31(f) to 

modify the functionality of Tracking 

Orders. 

A Tracking Order is an undisplayed, 

priced round lot order that is eligible for 

execution in the Tracking Order 

Process 4 against orders equal to or less 

than the aggregate size of Tracking 

Order interest available at that price. 

Presently, if a Tracking Order is 

executed but not exhausted, the 

remaining portion of the order is 

cancelled, without routing the order to 

another market center or market 

participant. An ETP Holder that wishes 

to maintain its Tracking Order on the 

Exchange after partial execution must 

re-enter another Tracking Order. 

The Exchange proposes to modify the 

functionality of Tracking Orders to 

eliminate the current cancellation 

feature. Specifically, the Exchange 

proposes that, upon partial execution of 

a Tracking Order, the Tracking Order 

would not be cancelled, but rather the 

remaining portion of the order would 

repost in the Tracking Order Process 

with a new time priority. The reposted 

Tracking Order would remain available 

for execution within the Tracking Order 

Process until either the total posted size 

is exhausted or the Tracking Order is 


srobinson on DSKHWCL6B1PROD with NOTICES