15928 Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3An ICU is defined in Section 703.16 of the NYSE 

Manual as a security that represents an interest in 

a registered investment company that could be 

organized as a unit investment trust, an open-end 

management investment company, or a similar 

entity. A registered investment company is 

registered under the Investment Company Act of 

1940, 15 U.S.C. 80a et seq. 

4See Securities Exchange Act Release No. 55343 

(February 23, 2007), 72 FR 9814. 

5 17 CFR 240.19b–4(e). 

6See Section 703.16 of the NYSE Manual. 

7 17 CFR 240.19b–4(e). 

8 17 CFR 240.19b–4(e). 

9 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

10 15 U.S.C. 78f. 

11 15 U.S.C. 78f(b)(5). 

12See Section 703.16(C)(2)(a)(iii) of the NYSE 

Manual. 

13See Section 703.16(C)(2)(a)(iv) of the NYSE 

Manual. 

14See Section 703.16(C)(2)(a)(i) and (a)(ii) of the 

NYSE Manual. 

15See Section 703.16(C)(2)(b)(iii) of the NYSE 

Manual. 

16See Section 703.16(C)(2)(b)(iv) of the NYSE 

Manual. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6082 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55545; File No. SR–NYSE–

2007–12] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Granting Accelerated Approval to a 

Proposed Rule Change as Modified by 

Amendment No. 1 To Amend Section 

703.16 of the NYSE Listed Company 

Manual To Eliminate Requirement 

Regarding Index Weighting and 

Calculation Methodology 

March 27, 2007. 

I. Introduction 

On February 5, 2007, the New York 

Stock Exchange LLC (‘‘NYSE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposal to amend 

Section 703.16 of the NYSE Listed 

Company Manual (‘‘NYSE Manual’’), 

the Exchange’s generic listing standard 

for investment company units 

(‘‘ICUs’’),3 to eliminate the requirement 

that the weighting and calculation 

methodology for the index underlying a 

series of ICUs must be one of those 

specified in Section 703.16(C)(4)(a). On 

February 15, 2007, the NYSE submitted 

Amendment No. 1 to the proposed rule 

change. The proposed rule change was 

published for comment in the Federal 

Register on March 5, 2007 for a 15-day 

comment period.4 The Commission 

received no comments regarding the 

proposal. This order approves the 

proposed rule change, as modified by 

Amendment No. 1, on an accelerated 

basis. 

II. Description of the Proposal 

The Exchange has proposed to amend 

its ‘‘generic’’ listing standard pursuant 

to Rule 19b–4(e) under the Act 5 for 

ICUs (which include exchange-traded 

funds) to eliminate the requirement that 

an eligible index be calculated and 

weighted according to a specific 

methodology. 

The Exchange currently has listing 

and trading standards, which permit the 

Exchange either to list and trade ICUs or 

trade such ICUs on the Exchange on an 

unlisted trading privileges (‘‘UTP’’) 

basis, subject to the procedures 

contained in Rule 19b–4(e) under the 

Act.6 The existence of generic listing 

standards allows qualifying ICUs to list 

or trade without the need to file a rule 

change for each security. Section 

703.16(C)(4)(a) of the NYSE Manual 

requires that, if a series of ICUs is listed 

for trading on the Exchange in reliance 

upon Rule 19b–4(e) under the Act,7 the 

index underlying the series must follow 

a market capitalization, modified market 

capitalization, price, equal-dollar, or 

modified equal-dollar weighting 

methodology, or alternately, a 

methodology weighting components of 

the index based on any, some or all of 

the following: Sales, cash flow, book 

value and dividends. The proposed rule 

change would eliminate this standard, 

and, as a result, the Exchange would no 

longer consider index methodology in 

its review of an ICU’s eligibility for 

listing and trading pursuant to Rule 

19b–4(e) under the Act.8

III. Discussion 

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 9 and, in 

particular, the requirements of Section 6 

of the Act.10 Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,11 which requires, 

among other things, that the rules of a 

national securities exchange be 

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 a national market 

system, and, in general, to protect 

investors and the public interest. 

As the market for ICUs has expanded, 

the variety of weighting and calculation 

methodologies for underlying indexes 

has grown, limiting the applicability of 

NYSE’s current generic listing standards 

for ICUs. The Commission believes that 

eliminating the index methodology 

requirement from the Exchange’s 

generic listing standards for ICUs will 

facilitate bringing ICUs based on 

indexes with nontraditional weighting 

techniques to the market, encourage 

innovation in index construction, 

reduce costs to issuers and other market 

participants, and promote competition. 

The Commission believes that these 

goals may be furthered without 

compromising investor protection. The 

Commission notes that the numerical 

criteria in Section 703.16(C) of the 

NYSE Manual addressing concentration, 

diversity, and liquidity of an underlying 

index’s components would continue to 

apply. For example, the generic listing 

standards for domestic indexes will 

continue to require, without limitation, 

that the most heavily weighted 

component stock of an index not exceed 

30% of the weight of the index, and the 

five most heavily weighted component 

stocks of an index not exceed 65% of 

the weight of the index,12 and that an 

index include a minimum of 13 

component stocks.13 In addition, 

component stocks that in the aggregate 

account for at least 90% of the weight 

of the index must have a market value 

of at least $75 million and minimum 

monthly trading volume of at least 

250,000 shares for each of the last six 

months.14 Similarly, the generic listing 

standards for international or global 

indexes require, without limitation, that 

the most heavily weighted component 

stock of an index not exceed 25% of the 

weight of the index, and the five most 

heavily weighted component stocks of 

an index not exceed 60% of the weight 

of the index,15 and that an index 

include a minimum of 20 component 

stocks.16 Component stocks that in the 

aggregate account for at least 90% of the 

weight of the index must have a market 

value of at least $100 million and 

minimum monthly trading volume of at 

least 250,000 shares for each of the last 


ycherry on PROD1PC64 with NOTICES
Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 15929 

17See Section 703.16(C)(2)(b)(i) and (b)(ii) of the 

NYSE Manual. 

18See Securities Exchange Act Release No. 55544 

(March 27, 2007). NYSE Arca, Inc. has also 

proposed a parallel rule change, which the 

Commission is approving concurrently with this 

one. See Securities Exchange Act Release No. 55546 

(March 27, 2007). 

19 15 U.S.C. 78s(b)(2). 

20 15 U.S.C. 78s(b)(2). 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3An ICU is defined in NYSE Arca Equities Rule 

5.1(b)(15) as a security representing an interest in 

a registered investment company that could be 

organized as a unit investment trust, an open-end 

management investment company, or a similar 

entity. A registered investment company is 

registered under the Investment Company Act of 

1940, 15 U.S.C. 80a et seq. 

4See Securities Exchange Act Release No. 55339 

(February 23, 2007), 72 FR 9820. 

5 17 CFR 240.19b–4(e). 

6See NYSE Arca Equities Rule 5.2(j)(3). 

7 17 CFR 240.19b–4(e). 

8 17 CFR 240.19b–4(e). 

9 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

10 15 U.S.C. 78f. 

11 15 U.S.C. 78f(b)(5). 

six months.17 Therefore, the 

Commission believes that indexes 

underlying ICUs will continue to be 

sufficiently broad-based in scope to 

minimize potential manipulation. 

Additionally, ICUs and their underlying 

indexes would continue to be subject to 

all other requirements of Section 703.16 

of the NYSE Manual. 

The Commission believes that 

accelerating approval of the proposed 

rule change would enable the Exchange 

and issuers to immediately benefit from 

the expected efficiencies resultant from 

this proposed rule change without delay 

while at the same time still ensuring 

adequate protection for investors and 

the public in general. The Commission 

notes that NYSE’s proposal 

substantively tracks a recently approved 

rule change by the American Stock 

Exchange LLC18 and raises no new 

regulatory issues. Thus, the Commission 

finds good cause, consistent with 

Section 19(b)(2) of the Act,19 to grant 

accelerated approval of the proposed 

rule change, as amended, prior to the 

thirtieth day after the notice is 

published for comment in the Federal 

Register. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,20 that the 

proposed rule change (SR–NYSE–2007–

12), as modified by Amendment No. 1, 

be, and is hereby approved on an 

accelerated basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6084 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55546; File No. SR–

NYSEArca–2007–14] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Granting Accelerated 

Approval To a Proposed Rule Change 

to Amend Existing Rules for 

Investment Company Units To 

Eliminate Requirement Regarding 

Index Weighting and Calculation 

Methodology 

March 27, 2007. 

I. Introduction 

On February 8, 2007, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’), through 

its wholly owned subsidiary NYSE Arca 

Equities, Inc. (‘‘NYSE Arca Equities’’), 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposal to revise 

its generic listing standards applicable 

to Investment Company Units 

(‘‘Investment Company Units’’ or 

‘‘ICUs’’) 3 to eliminate the requirement 

that the weighting and calculation 

methodology for the index underlying a 

series of ICUs must be one of those 

specified in Commentary .01(b)(1) to 

NYSE Arca Equities Rule 5.2(j)(3). The 

proposed rule change was published for 

comment in the Federal Register on 

March 5, 2007 for a 15-day comment 

period.4 The Commission received no 

comments regarding the proposal. This 

order approves the proposed rule 

change on an accelerated basis. 

II. Description of the Proposal 

The Exchange has proposed to amend 

its ‘‘generic’’ listing standard pursuant 

to Rule 19b–4(e) under the Act 5 for 

ICUs (which include exchange-traded 

funds) to eliminate the requirement that 

an eligible index be calculated and 

weighted according to a specific 

methodology. 

The Exchange currently has listing 

and trading standards, which permit the 

Exchange either to list and trade ICUs or 

trade such ICUs on the Exchange on an 

unlisted trading privileges (‘‘UTP’’) 

basis, subject to the procedures 

contained in Rule 19b–4(e) under the 

Act.6 The existence of generic listing 

standards allows qualifying ICUs to list 

or trade without the need to file a rule 

change for each security. Commentary 

.01(b)(1) to NYSE Arca Equities Rule 

5.2(j)(3) currently requires that, if a 

series of ICUs is listed for trading (or 

traded pursuant to UTP) on the 

Exchange in reliance upon Rule 19b–

4(e) under Rule 19b–4 under the Act,7

the index underlying the series must 

follow the market capitalization, 

modified market capitalization, price, 

equal-dollar or modified equal-dollar 

weighting methodology, or alternately, a 

methodology weighting components of 

the index based on any, some or all of 

the following: sales, cash flow, book 

value, and dividends. The proposed rule 

change would eliminate this standard, 

and, as a result, the Exchange would no 

longer consider index methodology in 

its review of an ICU’s eligibility for 

listing and trading pursuant to Rule 

19b–4(e) under the Act.8

III. Discussion 

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 9 and, in 

particular, the requirements of Section 6 

of the Act.10 Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,11 which requires, 

among other things, that the rules of a 

national securities exchange be 

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 a national market 

system, and, in general, to protect 

investors and the public interest. 

As the market for ICUs has expanded, 

the variety of weighting and calculation 

methodologies for underlying indexes 

has grown, limiting the applicability of 

NYSE Arca’s current generic listing 

standards for ICUs. The Commission 

believes that eliminating the index 

methodology requirement from the 

Exchange’s generic listing standards for 

ICUs will facilitate bringing ICUs based 


ycherry on PROD1PC64 with NOTICES