[Federal Register Volume 72, Number 36 (Friday, February 23, 2007)]
[Notices]
[Pages 8227-8231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-3076]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55300; File No. SR-NASDAQ-2007-002]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change, as Modified by Amendment No. 1 Thereto, To Trade the 
Shares of Certain Exchange-Traded Funds Based on Fixed Income 
Portfolios Pursuant to Unlisted Trading Privileges

February 15, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 29, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by the Exchange. 
On February 13, 2007, Nasdaq filed Amendment No. 1 to the proposed rule 
change. This Order provides notice of the proposed rule change, as 
modified by Amendment No. 1, and approves the proposed rule change, as 
amended, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq is proposing to trade shares (the ``Shares'') of: (1) The 
iShares Lehman TIPS Bond Fund; (2) the iShares Lehman Aggregate Bond 
Fund; (3) the iShares iBoxx $ Investment Grade Corporate Bond Fund; (4) 
the iShares Lehman 20+ Year Treasury Bond Fund; (5) the iShares 7-10 
Year Treasury Bond Fund; (6) the iShares Lehman 1-3 Year Treasury Bond 
Fund; (7) the iShares Lehman Short Treasury Bond Fund; (8) the iShares 
Lehman 3-7 Year Treasury Bond Fund; (9) the iShares Lehman 10-20 Year 
Treasury Bond Fund; (10) the iShares Lehman 1-3 Year Credit Bond Fund; 
(11) the iShares Lehman Intermediate Credit Bond Fund; (12) the iShares 
Lehman Credit Bond Fund; (13) the iShares Lehman Intermediate 
Government/Credit Bond Fund; and (14) the iShares Lehman Government/
Credit Bond Fund (collectively, the ``Funds'') pursuant to unlisted 
trading privileges (``UTP''). The text of the proposed rule change is 
available at Nasdaq, the Commission's Public Reference Room, and 
nasdaq.complinet.com.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    Nasdaq is proposing to trade pursuant to UTP the Shares of the 
Funds, which are exchange-traded funds (``ETFs'') that invest in fixed 
income securities. Nasdaq represents that its current generic listing 
standards for ETFs do not extend to ETFs that invest in fixed income 
securities. The systems operated by Nasdaq and its affiliates currently 
trade Shares of the Funds on an over-the-counter basis as facilities of 
NASD.

[[Page 8228]]

    The iShares Lehman TIPS Bond Fund seeks investment results that 
correspond generally to the price and yield performance, before fees 
and expenses, of the inflation-protected sector of the U.S. Treasury 
market, as defined by the Lehman Brothers U.S. TIPS Index.\3\ The 
Lehman Brothers U.S. TIPS Index measures the performance of inflation-
protected public obligations of the U.S. Treasury, commonly known as 
``TIPS.'' The Commission previously approved the original listing and 
trading of shares of this Fund on the New York Stock Exchange, Inc. 
(``NYSE'').\4\
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    \3\ E-mail from John Yetter, Deputy General Counsel, Nasdaq, to 
Edward Cho, Special Counsel, Division of Market Regulation, 
Commission, on February 8, 2007 (correcting the name of the Lehman 
Brothers U.S. TIPS Index).
    \4\ See Securities Exchange Act Release No. 48881 (December 4, 
2003), 68 FR 69739 (December 15, 2003) (SR-NYSE-2003-39).
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    The iShares Lehman Aggregate Bond Fund seeks investment results 
that correspond generally to the price and yield performance, before 
fees and expenses, of the total U.S. investment-grade bond market, as 
defined by the Lehman Brothers U.S. Aggregate Index. The Lehman 
Brothers U.S. Aggregate Index measures the performance of the total 
U.S. investment-grade bond market, which includes investment-grade U.S. 
Treasury bonds, government-related bonds, investment-grade corporate 
bonds, mortgage pass-through securities, commercial mortgage-backed 
securities, and asset-backed securities that are publicly offered for 
sale in the United States. The Commission previously approved the 
original listing and trading of shares of this Fund on the American 
Stock Exchange LLC (``Amex'').\5\
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    \5\ See Securities Exchange Act Release No. 48534 (September 24, 
2003), 68 FR 56353 (September 30, 2003) (SR-Amex-2003-75).
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    The iShares iBoxx $ Investment Grade Corporate Bond Fund (formerly 
the iShares GS $ InvesTop Corporate Bond Fund) seeks investment results 
that correspond generally to the price and yield performance, before 
fees and expenses, of a segment of the U.S. investment-grade corporate 
bond market, as defined by the iBoxx $ Liquid Investment Grade Index 
(formerly the GS $ InvesTop Index). The iBoxx $ Liquid Investment Grade 
Index measures the performance of a fixed number of highly liquid, 
investment-grade corporate bonds. The Commission previously approved 
the original listing and trading of shares of this Fund on Amex.\6\
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    \6\ See Securities Exchange Act Release No. 46252 (July 24, 
2002), 67 FR 49715 (July 31, 2002) (SR-Amex-2001-35).
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    The iShares Lehman 20+ Year Treasury Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the long-term sector of the U.S. Treasury 
market, as defined by the Lehman Brothers 20+ Year U.S. Treasury Index. 
The Lehman Brothers 20+ Year Treasury Index measures the performance of 
public obligations of the U.S. Treasury that have a remaining maturity 
of 20 or more years. The Commission previously approved the original 
listing and trading of shares of this Fund on Amex.\7\
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    \7\ See id.
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    The iShares Lehman 7-10 Year Treasury Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the intermediate-term sector of the U.S. 
Treasury market, as defined by the Lehman Brothers 7-10 Year U.S. 
Treasury Index. The Lehman Brothers 7-10 Year Treasury Index measures 
the performance of public obligations of the U.S. Treasury that have a 
remaining maturity of greater than or equal to seven years and less 
than ten years. The Commission previously approved the original listing 
and trading of shares of this Fund on Amex.\8\
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    \8\ See id.
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    The iShares Lehman 1-3 Year Treasury Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the short-term sector of the U.S. Treasury 
market, as defined by the Lehman Brothers 1-3 Year U.S. Treasury Index. 
The Lehman Brothers 1-3 Year U.S. Treasury Index measures the 
performance of public obligations of the U.S. Treasury that have a 
remaining maturity of greater than or equal to one year and less than 
three years. The Commission previously approved the original listing 
and trading of shares of this Fund on Amex.\9\
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    \9\ See id.
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    The iShares Lehman Short Treasury Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the short-term sector of the U.S. Treasury 
market, as defined by the Lehman Brothers Short U.S. Treasury Index. 
The Lehman Brothers Short U.S. Treasury Index measures the performance 
of public obligations of the U.S. Treasury that have a remaining 
maturity of between one and 12 months. The Commission previously 
approved the original listing and trading of shares of this Fund on 
NYSE.\10\
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    \10\ See Securities Exchange Act Release No. 54916 (December 11, 
2006), 71 FR 76008 (December 19, 2006) (SR-NYSE-2006-70).
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    The iShares Lehman 3-7 Year Treasury Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the intermediate-term sector of the U.S. 
Treasury market, as defined by the Lehman Brothers 3-7 Year U.S. 
Treasury Index. The Lehman Brothers 3-7 Year U.S. Treasury Index 
measures the performance of public obligations of the U.S. Treasury 
that have a remaining maturity of greater than or equal to three years 
and less than seven years. The Commission previously approved the 
original listing and trading of shares of this Fund on NYSE.\11\
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    \11\ See id.
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    The iShares Lehman 10-20 Year Treasury Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the long-term sector of the U.S. Treasury 
market, as defined by the Lehman Brothers 10-20 Year U.S. Treasury 
Index. The Lehman Brothers 10-20 Year U.S. Treasury Index measures the 
performance of public obligations of the U.S. Treasury that have a 
remaining maturity of greater than or equal to ten years and less than 
20 years. The Commission previously approved the original listing and 
trading of shares of this Fund on NYSE.\12\
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    \12\ See id.
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    The iShares Lehman 1-3 Year Credit Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the investment-grade credit sector of the 
U.S. bond market, as defined by the Lehman Brothers 1-3 Year U.S. 
Credit Index. The Lehman Brothers 1-3 Year U.S. Credit Index measures 
the performance of investment-grade corporate debt and sovereign, 
supranational, local authority, and non-U.S. agency bonds that have a 
remaining maturity of greater than or equal to one year and less than 
three years. The Commission previously approved the original listing 
and trading of shares of this Fund on NYSE.\13\
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    \13\ See id.
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    The iShares Lehman Intermediate Credit Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the investment-grade credit sector of the 
U.S. bond market, as defined by the Lehman Brothers Intermediate U.S. 
Credit Index. The

[[Page 8229]]

Lehman Brothers Intermediate U.S. Credit Index measures the performance 
of investment-grade corporate debt and sovereign, supranational, local 
authority, and non-U.S. agency bonds that have a remaining maturity of 
greater than or equal to one year and less than ten years. The 
Commission previously approved the original listing and trading of 
shares of this Fund on NYSE.\14\
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    \14\ See id.
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    The iShares Lehman Credit Bond Fund seeks investment results that 
correspond generally to the price and yield performance, before fees 
and expenses, of the investment-grade credit sector of the U.S. bond 
market, as defined by the Lehman Brothers U.S. Credit Index. The Lehman 
Brothers U.S. Credit Index measures the performance of investment-grade 
corporate debt and sovereign, supranational, local authority, and non-
U.S. agency bonds that have a remaining maturity of greater than or 
equal to one year. The Commission previously approved the original 
listing and trading of shares of this Fund on NYSE.\15\
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    \15\ See id.
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    The iShares Lehman Intermediate Government/Credit Bond Fund seeks 
investment results that correspond generally to the price and yield 
performance, before fees and expenses, of the investment-grade credit 
sector of the U.S. bond market and the total U.S. Treasury market, as 
defined by the Lehman Brothers Intermediate U.S. Government/Credit 
Index. The Lehman Brothers Intermediate U.S. Government/Credit Index 
measures the performance of U.S. dollar-denominated U.S. Treasury 
securities and government-related and investment-grade U.S. corporate 
securities that have a remaining maturity of greater than or equal to 
one year and less than ten years. The Commission previously approved 
the original listing and trading of shares of this Fund on NYSE.\16\
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    \16\ See id.
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    The iShares Lehman Government/Credit Bond Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of the U.S. government and investment-grade 
U.S. corporate securities of the U.S. bond market, as defined by the 
Lehman Brothers U.S. Government/Credit Index. The Lehman Brothers U.S. 
Government/Credit Index measures the performance of U.S. dollar-
denominated U.S. Treasury securities and government-related and 
investment-grade U.S. corporate securities that have a remaining 
maturity of greater than or equal to one year. The Commission 
previously approved the original listing and trading of shares of this 
Fund on NYSE.\17\
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    \17\ See id.
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    The foregoing underlying indexes on which the Funds are based are 
referred to herein collectively as the ``Indexes.'' The exact 
composition and methodologies of each Index are described in detail in 
the filings pursuant to which NYSE and Amex sought to originally list 
and trade the Shares of the Funds.\18\
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    \18\ See supra notes 4, 5, 6, and 10.
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    Quotations for and last sale information regarding the Fund Shares 
are disseminated through the Consolidated Tape System (``CTS''). On 
each business day, the list of names and amount of each security 
constituting the current Deposit Securities \19\ and the Balancing 
Amount \20\ effective as of the previous business day will be made 
available through the National Securities Clearing Corporation 
(``NSCC''). An amount per Share representing the sum of the estimated 
Balancing Amount effective through and including the previous business 
day, plus the current value of the Deposit Securities in U.S. dollars, 
on a per-Share basis (the Intraday Optimized Portfolio Value or 
``IOPV''), will be calculated by an independent third party, such as 
Bloomberg L.P., every 15 seconds during Nasdaq's regular trading hours 
and disseminated every 15 seconds through the CTS. Because NSCC does 
not disseminate information about the Portfolio Deposit immediately 
following the end of regular market hours, an updated IOPV cannot be 
calculated during Nasdaq's post-market trading session, 4:15 p.m. to 8 
p.m. Eastern Time (``ET'').
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    \19\ Deposit Securities are the designated portfolio of 
securities that correspond generally to the price and yield 
performance of the relevant Fund's Index to be deposited in-kind for 
the purchase of blocks of 50,000 Shares, each such block referred to 
as a ``Creation Unit Aggregation.''
    \20\ The Balancing Amount is an amount equal to the difference 
between the net asset value (``NAV'') of the Fund and the total 
aggregate market value, per Creation Unit Aggregation, of the 
Deposit Securities. The deposit of the requisite Deposit Securities 
and the Balancing Amount are collectively referred to as the 
``Portfolio Deposit,'' which represents the minimum initial and 
subsequent investment amount for a Creation Unit Aggregation.
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    Nasdaq states that NYSE and Amex, as applicable, disseminate on a 
daily basis a variety of data with respect to each Fund by means of the 
Consolidated Tape Association/Consolidated Quotation High Speed Lines, 
including information with respect to recent NAV for each Fund, shares 
outstanding, and the estimated cash amount and total cash amount per 
Creation Unit Aggregation. In addition, the iShares Web site (http://www.ishares.com/fund_info), which is publicly accessible at no charge, 
contains the following information, on a per-Share basis, for each 
Fund: (1) The prior business day's NAV; (2) the mid-point of the bid-
ask price and a calculation of the premium or discount of such price 
against such NAV; and (3) data in chart format displaying the frequency 
distribution of discounts and premiums of the bid-ask price against the 
NAV, within appropriate ranges, for each of the four previous calendar 
quarters.
    The value of each Index is calculated once each trading day and is 
available from major market data vendors. The NAV for each Fund is 
calculated and disseminated daily through a number of sources, 
including the Web sites of the original listing exchanges, as 
applicable, the iShares Web site, and CTS.
    Nasdaq states that it will halt trading in the Shares of a Fund 
under the conditions specified in Nasdaq Rules 4120 and 4121. The 
conditions for a trading halt include a regulatory halt by the original 
listing market. UTP trading in the Shares will also be governed by 
provisions of Nasdaq Rule 4120 relating to temporary interruptions in 
the calculation or wide dissemination of the IOPV or the value of the 
Index.\21\ Additionally, the Exchange states that it may cease trading 
the Shares if other unusual conditions or circumstances exist, which, 
in the opinion of the Exchange, make further dealings on the Exchange 
detrimental to the maintenance of a fair and orderly market. The 
Exchange represents that it would follow any procedures with respect to 
trading halts as set forth in Nasdaq Rule 4120(b).
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    \21\ See Securities Exchange Act Release No. 55269 (February 9, 
2007), 72 FR 7490 (February 15, 2007) (SR-NASDAQ-2006-050).
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    Nasdaq deems the Shares of the Funds to be equity securities, and 
therefore, trading in the Shares will be subject to Nasdaq's existing 
rules governing the trading of equity securities. The primary trading 
hours for the Shares on Nasdaq will be 9:30 a.m. to 4:15 p.m. ET. The 
Shares will also be traded on Nasdaq in a post-market session from 4:15 
p.m. to 8 p.m. ET.\22\ Nasdaq represents that it has in place 
appropriate rules to facilitate

[[Page 8230]]

transactions in the Shares during all trading sessions.
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    \22\ Nasdaq relies on the listing market to monitor 
dissemination of the IOPV during Nasdaq's regular market hours (9:30 
a.m. to 4:15 p.m. ET). Currently, updated Index values are not 
calculated during Nasdaq's post-market session; however, if in the 
future such values are calculated, Nasdaq would not trade the Fund 
Shares unless such official Index values were widely disseminated.
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    In connection with the trading of the Shares, Nasdaq will inform 
its members in an Information Circular of the special characteristics 
and risks associated with trading the Shares, as well as the 
requirements of Nasdaq Rule 2310, which requires Nasdaq members to 
determine that a particular security is suitable for a customer before 
recommending a transaction in it. Nasdaq also would require its members 
to deliver a prospectus or product description to investors purchasing 
the Shares prior to or concurrently with a transaction in the Shares.
    Nasdaq believes that its surveillance procedures are adequate to 
address any concerns about the trading of the Shares on Nasdaq. Trading 
of the Shares through NASD facilities operated by Nasdaq is currently 
subject to NASD's surveillance procedures for equity securities in 
general and ETFs in particular. After Nasdaq begins to operate as an 
exchange with respect to securities not listed on Nasdaq, NASD, on 
behalf of Nasdaq, will continue to surveil Nasdaq trading, including 
Nasdaq trading of the Shares. Nasdaq's transition to exchange status 
will not result in any change in the surveillance process with respect 
to the Shares.\23\
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    \23\ Surveillance of all trading on NASD facilities operated by 
Nasdaq is currently conducted by NASD. Following Nasdaq's transition 
to exchange status, NASD will continue to surveil trading, pursuant 
to a regulatory services agreement. Nasdaq is responsible for NASD's 
performance under this regulatory services agreement.
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2. Statutory Basis
    The proposal is consistent with Section 6(b) of the Act \24\ in 
general and Section 6(b)(5) of the Act \25\ in particular in that it is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to, and perfect the mechanism of a free and open market, and, in 
general, to protect investors and the public interest. In addition, the 
proposal is consistent with Rule 12f-5 under the Act \26\ because 
Nasdaq deems the Shares to be equity securities, thus rendering trading 
in the Shares subject to the Exchange's existing rules governing the 
trading of equity securities.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purpose 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 neither solicited nor received written comments on 
the proposed rule change.

III. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an e-mail to <a href="/cdn-cgi/l/email-protection#9ceee9f0f9b1fff3f1f1f9f2e8efdceff9ffb2fbf3ea"><span class="__cf_email__" data-cfemail="9fedeaf3fab2fcf0f2f2faf1ebecdfecfafcb1f8f0e9">[email protected]</span></a>. Please include 
File Number SR-NASDAQ-2007-002 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2007-002. 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 inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal offices of Nasdaq. 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-NASDAQ-2007-002 and should be submitted on or before 
March 16, 2007.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\27\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\28\ 
which requires that an exchange have rules designed, among other 
things, to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and in general to protect investors and the 
public interest. The Commission believes that this proposal should 
benefit investors by increasing competition among markets that trade 
the Shares.
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    \27\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \28\ 15 U.S.C. 78f(b)(5).
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    In addition, the Commission finds that the proposal is consistent 
with Section 12(f) of the Act,\29\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\30\ The Commission notes that it previously approved the 
listing and trading of the Shares on NYSE and Amex, as applicable.\31\ 
The Commission also finds that the proposal is consistent with Rule 
12f-5 under the Act,\32\ which provides that an exchange shall not 
extend UTP to a security unless the exchange has in effect a rule or 
rules providing for transactions in the class or type of security to 
which the exchange extends UTP. The Exchange has represented that it 
meets this requirement because it deems the Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules

[[Page 8231]]

governing the trading of equity securities.
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    \29\ 15 U.S.C. 78l(f).
    \30\ Section 12(a) of the Act, 15 U.S.C. 78l(a), generally 
prohibits a broker-dealer from trading a security on a national 
securities exchange unless the security is registered on that 
exchange pursuant to Section 12 of the Act. Section 12(f) of the Act 
excludes from this restriction trading in any security to which an 
exchange ``extends UTP.'' When an exchange extends UTP to a 
security, it allows its members to trade the security as if it were 
listed and registered on the exchange even though it is not so 
listed and registered.
    \31\ See supra notes 4, 5, 6, and 10.
    \32\ 17 CFR 240.12f-5.
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    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\33\ which sets forth 
Congress's finding that it is in the public interest and appropriate 
for the protection of investors and the maintenance of fair and orderly 
markets to assure the availability to brokers, dealers, and investors 
of information with respect to quotations for and transactions in 
securities. Quotations for and last sale information regarding the Fund 
Shares are disseminated through CTS. Furthermore, an IOPV for each 
Fund, updated to reflect changes in the amount of the Portfolio 
Deposit, on a per-Share basis, is calculated and published by a third-
party service provider through CTS on a 15-second delayed basis during 
Nasdaq's regular trading hours. Major market data vendors calculate and 
disseminate once each trading day the value of each Index and the NAV 
for each Fund. Amex and NYSE, as applicable, disseminate information 
with respect to NAV and cash amounts per Creation Unit Aggregation, and 
the iShares Web site supplies additional trading data for the Shares, 
both current and historical. If the listing market halts trading in the 
Shares, or the IOPV or any Index value is not being calculated or 
disseminated, the Exchange would halt trading in the Shares.
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    \33\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    The Commission notes that, if the Shares should be delisted by the 
listing exchange, the Exchange would no longer have authority to trade 
the Shares pursuant to this order.
    In support of this proposal, the Exchange has made the following 
representations:
    (1) The Exchange's surveillance procedures are adequate to address 
any concerns associated with the trading of the Shares on a UTP basis.
    (2) The Exchange would inform its members in an Information 
Circular of the special characteristics and risks associated with 
trading the Shares, including suitability recommendation requirements.
    (3) The Exchange would require its members to deliver a prospectus 
or product description to investors purchasing Shares prior to or 
concurrently with a transaction in such Shares and will note this 
prospectus delivery requirement in the Information Circular.
    This approval order is conditioned on the Exchange's adherence to 
these representations.
    The Commission finds good cause for approving this proposal before 
the thirtieth day after the publication of notice thereof in the 
Federal Register. As noted above, the Commission previously found that 
the listing and trading of the Shares on NYSE and Amex, as applicable, 
is consistent with the Act. The Commission presently is not aware of 
any regulatory issue that should cause it to revisit that finding or 
would preclude the trading of the Shares on the Exchange pursuant to 
UTP. Furthermore, accelerated approval of this proposal will facilitate 
Nasdaq's ability to continue trading certain non-Nasdaq-listed ETFs as 
Nasdaq becomes an exchange with respect to non-Nasdaq-listed 
securities, where there appears to be no regulatory concerns about such 
trading. Therefore, accelerating approval of this proposal should 
benefit investors by creating, without undue delay, additional 
competition in the market for such Shares.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\34\ that the proposed rule change (SR-NASDAQ-2007-002), as 
modified by Amendment No. 1, be, and it hereby is, approved on an 
accelerated basis. 
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    \34\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-3076 Filed 2-22-07; 8:45 am]
BILLING CODE 8010-01-P


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