1040 Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / Notices 

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

2 17 CFR 240. 19b–4. 

3See Securities Exchange Act Release No. 54739 

(November 9, 2006), 71 FR 66993 (November 17, 

2006) (SR–Amex–2006–78). 

4 17 CFR 240.19b–4(e). 

5 17 CFR 240.19b–4(c)(1). 6When relying on Rule 19b–4(e), the SRO must 

submit Form 19b–4(e) to the Commission within 

five business days after the exchange begins trading 

the new derivative securities products. See 

Exchange Act Release No. 40761 (December 8, 

1998), 63 FR 70952 (December 22, 1998). 

7See 17 CFR 240.12a–8. 

8See Amex Rule 1000, Commentary .03(a)(A)(5), 

(a)(B)(5) and (a)(C), and Amex Rule 1000A, 

Commentary .02(a)(A)(5), (a)(B)(5) and (a)(C). 

9 17 CFR 242.600. 

declines to accept particular portfolio 

securities of either of the Old Portfolios 

for purchase in-kind of shares of the 

New Portfolio, the applicable Old 

Portfolio will liquidate portfolio 

securities as necessary and purchase 

New Portfolio shares with cash. 

Consistent with Rule 17a–7(d), 

Applicants also agree that no brokerage 

commissions, fees, or other 

remuneration will be paid in connection 

with the in-kind transactions. 

Conclusions 

1. Applicants submit that for the 

reasons and upon the facts set forth in 

their application, the requested order 

meets the standards set forth in Section 

26(c) and should, therefore, be granted. 

2. Section 17 Applicants represent 

that the proposed in-kind transactions 

meet all of the requirements of Section 

17(b) of the Act and that an exemption 

should be granted, to the extent 

necessary, from the provisions of 

Section 17(a). 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–61 Filed 1–8–07; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55018; File No. SR–Amex–

2006–109] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing and Order Granting 

Accelerated Approval of a Proposed 

Rule Change and Amendment No. 1 

Thereto Relating to Listing Standards 

for Series of Portfolio Depositary 

Receipts and Index Fund Shares 

December 28, 2006. 

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 November 

21, 2006, the American Stock Exchange 

LLC (‘‘Amex’’ 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. Amex filed Amendment No. 

1 with the Commission on December 20, 

2006. This order provides notice of the 

proposed rule change as modified by 

Amendment No. 1 and approves the 

proposed rule change on an accelerated 

basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to make 

clarifying changes to Amex Rules 1000, 

1002, 1000A and 1002A and minor, 

typographical changes to Amex Rules 

1000, 1002 and 1002A, relating to listing 

standards for series of portfolio 

depositary receipts and index fund 

shares (collectively, ‘‘exchange-traded 

funds’’ or ‘‘ETFs’’). The text of the 

proposed rule change is available at 

Amex, at http://www.amex.com, 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 

Amex 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 Amex 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to clarify the 

listing standards in Amex Rules 1000, 

1002, 1000A and 1002A governing 

ETFs, amendments to which were 

approved by the Commission on 

November 9, 2006.3 In particular, the 

Commission approved changes to Rules 

1000 and 1000A to include generic 

listing standards for series of ETFs that 

are based on international or global 

indexes. Additionally, the Commission 

approved revisions to Amex Rules 1000 

and 1000A to include generic listing 

standards for ETFs that are based on 

indexes or portfolios previously 

approved by the Commission as an 

underlying benchmark for the trading of 

ETFs, options or other specified indexbased securities. These changes enable 

the Exchange to list exchange-traded 

funds pursuant to Rule 19b–4(e) of the 

Act 4 if each of the conditions set forth 

in Commentary .03 to Rule 1000 or 

Commentary .02 to Rule 1000A is 

satisfied. 

Rule 19b–4(e) provides that the listing 

and trading of a new derivative 

securities product by a self-regulatory 

organization shall not be deemed a 

proposed rule change under Rule 19b–

4(c)(1) of the Act 5 if the Commission 

has approved, pursuant to Section 19(b) 

of the Act, the self-regulatory 

organization’s trading rules, procedures 

and listing standards for the product 

class that would include the new 

derivatives securities product and the 

self-regulatory organization has a 

surveillance program for the product 

class.6

The Commission also approved other 

minor clarifying changes to Amex Rules 

1000, 1002, 1000A and 1002A. 

In connection with those approved 

changes, the Exchange now proposes to 

make additional clarifying changes to 

Rules 1000, 1002, 1000A and 1002A. 

Specifically, the Exchange proposes to 

amend the definition of ‘‘US Component 

Stock’’ in Rules 1000(b)(3) and 

1000A(b)(3). The definition of U.S. 

Component Stock was designed to 

include any equity security that is 

registered under Sections 12(b) or 12(g) 

of the Act, and therefore to comprise all 

securities that are subject to 

Commission oversight through 

registration. This definition was 

intended to include American 

Depositary Receipts (‘‘ADRs’’), the 

underlying security of which is 

registered under Section 12(b) or 12(g) 

of the Act. In the case of listed ADRs, 

it is the equity security underlying an 

ADR that is registered pursuant to 

Section 12 of the Act, not the ADRs.7

Under Amex’s generic listing 

standards,8 the ADR would also be 

required to be listed on a national 

securities exchange and be an NMS 

Stock as defined in Rule 600 of 

Regulation NMS.9 Consequently, the 

Exchange proposes to revise the 

definition of U.S. Component Stock to 

clarify that, while the ADR would be 

considered the U.S. Component Stock 

and therefore the index component for 

purposes of satisfying the eligibility 

criteria, the ADR can only qualify as a 

‘‘US Component Stock’’ if the equity 

security underlying that ADR is 


ycherry on PROD1PC63 with NOTICES
Federal Register / Vol. 72, No. 5 / Tuesday, January 9, 2007 / Notices 1041 

10 15 U.S.C. 78f(b). 

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

12 In approving this proposal, the Commission has 

considered its impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14The Commission notes that, pursuant to the 

Amex’s listing rules, an ADR must also be listed on 

a national securities exchange and must be an NMS 

stock under Rule 600 of Regulation NMS. 17 CFR 

242.600. 

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

16 15 U.S.C. 78s(b)(2). 

17 17 CFR 200.30–3(a)(12). 

registered under Section 12(b) or 

Section 12(d) of the Act. 

The Exchange also proposes to modify 

Rule 1002(a)(ii) and Rule 1002A(a)(ii) to 

specify that the ETF issuer must provide 

the Exchange with a representation that 

the net asset value per share will be 

calculated daily and made available to 

all market participants at the same time. 

Finally, the Exchange is proposing to 

make a number of minor, typographical 

changes to Rules 1000, 1002 and 1002A. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6 of the Act,10 in general, and 

furthers the objectives of Section 

6(b)(5),11 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 mechanism of a free and 

open market and a national market 

system. 

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. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange did not receive any 

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, as amended, is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form at http://www.sec.gov/ 

rules/sro.shtml or send an e-mail to 

rule-comments@sec.gov. Please include 

File No. SR–Amex–2006–109 on the 

subject line. 

Paper Comments 

• 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–Amex–2006–109. 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 at 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, 100 F Street, NE., Washington, 

DC 20549. Copies of such 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–Amex–2006–109 and 

should be submitted on or before 

January 30, 2007. 

IV. Discussion and Commission’s 

Findings 

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.12 In particular, the 

Commission believes that the proposal 

is consistent with Section 6(b)(5) of the 

Act,13 which requires that the rules of 

an exchange be 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 mechanism of a free and 

open market and a national market 

system, and in general protect investors 

and the public interest. 

The Commission believes that the 

proposal clarifies the Exchange’s listing 

criteria applicable to ETFs. The 

definition of ‘‘US Component Stock’’ in 

Amex Rules 1000(b)(3) and 

1000A(b)(3)1000 and 1000A will be 

amended to make clear that it is the 

equity security underlying an ADR that 

must be registered pursuant to Section 

12 of the Act, not the ADR itself. The 

Commission believes that this change is 

consistent with the intent that the 

Exchange’s definition of ‘‘US 

Component Stock’’ includes only 

securities that publicly disclose 

information under the federal securities 

laws.14 In addition, the Commission 

believes the Exchange’s revisions to its 

Rules 1002(a)(ii) and 1002A(a)(ii) 

specifying that the ETF issuer must 

provide a representation that the net 

asset value per share will be calculated 

daily and disseminated to market 

participants at the same time is 

consistent with the Act. The 

Commission further believes that the 

additional proposed revisions to Amex 

Rules 1000, 1002 and 1002A are minor, 

and should serve to clarify the 

Exchange’s listing standards. 

Accelerated Approval 

The Commission finds good cause, 

consistent with Section 19(b)(2) of the 

Act,15 for approving this proposed rule 

change, as amended, before the thirtieth 

day after the publication of notice 

thereof in the Federal Register. The 

Commission notes that accelerating 

approval will enable the proposed rule 

clarifications to be implemented 

immediately to the benefit of market 

participants. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,16 that the 

proposed rule change, as amended (SR–

Amex–2006–109), is hereby approved 

on an accelerated basis. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.17

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. E7–62 Filed 1–8–07; 8:45 am] 

BILLING CODE 8011–01–P 


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