16388 Federal Register / Vol. 72, No. 64 / Wednesday, April 4, 2007 / Notices 

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

2 17 CFR 240.19b–4. 3See Securities Exchange Act Release No. 55187 

(January 29, 2007), 72 FR 5467. 4A ‘‘commodity pool’’ is defined in CFTC 

Regulation 4.10(d)(1) as any investment trust, 

syndicate, or similar form of enterprise operated for 

the purpose of trading commodity interests. CFTC 

regulations further provide that a ‘‘commodity 

interest’’ means a commodity futures contract and 

any contract, agreement or transaction subject to 

Commission regulation under section 4c or 19 of 

the Act. See CFTC Regulation 4.10(a). 5The manager or operator of a ‘‘commodity pool’’

is required to register, unless applicable exclusions 

apply, as a commodity pool operator (‘‘CPO’’) and 

commodity trading advisor (‘‘CTA’’) with the CFTC 

and become a member of the National Futures 

Association (‘‘NFA’’). 

6See proposed Commentary .06(a)(v) to Amex 

Rule 915. 

Dated: March 26, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6218 Filed 4–3–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55547; File No. SR–Amex–

2006–110] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Order 

Granting Approval of Proposed Rule 

Change Relating to Options Based on 

Commodity Pool ETFs 

March 28, 2007. 

I. Introduction 

On November 24, 2006, the American 

Stock Exchange LLC (‘‘Amex’’ 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 

certain rules to permit the listing and 

trading of options on securities issued 

by trust issued receipts (‘‘Commodity 

TIRs’’), partnership units, and other 

entities (referred herein to as 

‘‘Commodity Pool ETFs’’) that hold or 

invest in commodity futures products. 

The proposed rule change was 

published for comment in the Federal 

Register on February 6, 2007.3 The 

Commission received no comments 

regarding the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

The purpose of the proposed rule 

change is to enable the listing and 

trading on the Exchange of options on 

interests in Commodity Pool ETFs that 

trade directly or indirectly commodity 

futures products. As a result, 

Commodity Pool ETFs are subject to the 

Commodity Exchange Act (‘‘CEA’’) due 

to their status as a commodity pool,4

and therefore, regulated by the 

Commodity Futures Trading 

Commission (‘‘CFTC’’).5 Commodity 

Pool ETFs may hold or trade in one or 

more types of investments that may 

include any combination of securities, 

commodity futures contracts, options on 

commodity futures contracts, swaps, 

and forward contracts. 

Currently, Commentary .06 to Amex 

Rule 915 provides securities deemed 

appropriate for options trading shall 

include shares or other securities 

(‘‘Exchange-Traded Fund Shares’’) that 

are principally traded on a national 

securities exchange or through the 

facilities of a national securities 

association and reported as an NMS 

security, and that: (i) Represent an 

interest in a registered investment 

company organized as an open-end 

management investment company, a 

unit investment trust or a similar entity 

which holds securities constituting or 

otherwise based on or representing an 

investment in an index or portfolio of 

securities; or (ii) represent interest in a 

trust or other 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 the deposited non-U.S. 

currency, if any, declared and paid by 

the trust. 

The proposal would amend 

Commentary .06 to Rule 915 to expand 

the type of options to include the listing 

and trading of options based on shares 

of Commodity Pool ETFs (the ‘‘Shares’’) 

that may hold or invest directly or 

indirectly in commodity futures 

products, including but not limited to, 

commodity futures contracts, options on 

commodity futures contracts, swaps, 

and forward contracts. For Commodity 

Pool ETFs, a comprehensive 

surveillance sharing agreement will be 

required between the Exchange and the 

marketplace or marketplaces with last 

sale reporting that represent(s) the 

highest volume in such commodity 

futures contracts and/or options on 

commodity futures contracts on the 

specified commodities or non-U.S. 

currency, which are utilized by the 

national securities exchange where the 

underlying Commodity Pool ETFs are 

listed and traded.6 The Exchange has 

represented that it has an adequate 

surveillance program in place for 

options based on Commodity Pool ETFs. 

Under the applicable continued 

listing criteria in Commentary .07 to 

Amex Rule 916, the options on the 

Shares shall not be deemed to meet the 

Exchange’s requirements for continued 

approval, and the Exchange shall not 

open for trading any additional series of 

option contracts of the class covering 

the Shares whenever the Shares are 

subject to delisting as follows: (1) 

Following the initial twelve-month 

period beginning upon the 

commencement of trading of the Shares, 

there are fewer than 50 record and/or 

beneficial holders of the Shares for 30 

or more consecutive trading days; (2) 

the value of the index, non-U.S. 

currency, portfolio of commodities 

including commodity futures contracts, 

options on commodity futures contracts, 

swaps, forward contracts and/or options 

on physical commodities, or portfolio of 

securities on which the Shares are based 

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 

options on the Shares 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 such Shares, if the Shares are 

halted from trading on their primary 

market, or if the Shares are delisted, or 

the value of the index or portfolio on 

which the Shares are based is no longer 

calculated or available. 

The proposal would amend Amex 

Rule 3 to require members to establish, 

maintain, and enforce written policies 

and procedures to prevent the misuse of 

material nonpublic information it might 

have or receive in a related security, 

option or derivative or in the applicable 

related commodity, commodity futures 

or options on commodity futures, or any 

other related commodity derivatives. 

The proposal would also amend Amex 

Rule 957 to ensure that the specialist 

and Registered Traders handling the 

Shares provide the Exchange with all 

necessary information relating to their 

trading in the applicable, physical 

commodities, physical commodity 

options, commodity futures contracts, 

options on commodity futures contracts, 

any other derivatives based on such 

commodity. Lastly, the revision to Rule 

957 would prohibit a specialist or 

Registered Trader engaging in physical 

commodities, physical commodity 

options, commodity futures contracts, 

options on commodity futures contracts, 

any other derivatives based on such 

commodity from trading in an account 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 72, No. 64 / Wednesday, April 4, 2007 / Notices 16389 

7 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). 

8 15 U.S.C. 78f. 

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

10See Amex Rules 904 and 905. 

11See Amex Rule 462. 

12 17 CFR 242.600(b)(47). 

13 17 CFR 240.19b–4(e). 

14 15 U.S.C. 78s(b)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

which has not been reported to the 

Exchange. 

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 7 and, in 

particular, the requirements of Section 6 

of the Act.8 Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,9 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed 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. 

Surveillance 

The Commission notes that the 

Exchange has represented that it has an 

adequate surveillance program in place 

for options based on Commodity Pool 

ETFs. The Exchange may obtain trading 

information via the Intermarket 

Surveillance Group (‘‘ISG’’) from other 

exchanges who are members or affiliates 

of the ISG and have entered into 

numerous comprehensive surveillance 

sharing agreements with various 

commodity futures exchanges 

worldwide. Prior to listing and trading 

options on Commodity Pool ETFs, the 

Exchange represented that it will either 

have the ability to obtain specific 

trading information via ISG or through 

a comprehensive surveillance sharing 

agreement with the exchange or 

exchanges where the particular 

commodity futures and/or options on 

commodity futures are traded. In 

addition, the Exchange represented that 

the addition of Commodity Pool ETF 

options will not have any effect on the 

rules pertaining to position and exercise 

limits 10 or margin.11

Listing and Trading of Options on 

Commodity Pool ETFs 

The Commission notes that, pursuant 

to the proposed rule change, a 

Commodity Pool ETF will be subject to 

the provisions of Amex Rules 915 and 

916, as applicable. These provisions 

include requirements regarding initial 

and continued listing standards, the 

creation/redemption process for ETFs, 

and trading halts. All Commodity Pool 

ETFs must be traded through a national 

securities exchange or through the 

facilities of a national securities 

association, and must be ‘‘NMS stock’’

as defined under Rule 600 of Regulation 

NMS.12

The Commission believes that this 

proposal is necessary to enable the 

Exchange to list and trade options on an 

expanding range of Commodity Pool 

ETFs currently approved for trading and 

that it is reasonable to expect other 

types of Commodity Pool ETFs to be 

introduced for trading in the future. 

This proposal would help ensure that 

the Exchange will be able to list options 

on Commodity Pool ETFs that have 

been recently launched as well as any 

other similar Commodity Pool ETFs that 

may be listed and traded in the future 13

thereby offering investors greater option 

choices. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (SR–Amex–2006–

110), is hereby approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6200 Filed 4–3–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55550; File No. SR–

NASDAQ–2007–010) 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change and 

Amendment No. 2 Thereto To Amend 

Rule 4611 Relating to Sponsored 

Access 

March 28, 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 February 

16, 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 Nasdaq. 

On February 23, 2007, Nasdaq filed 

Amendment No. 1 to the proposed rule 

change but subsequently withdrew it. 

On February 23, 2007, Nasdaq filed 

Amendment No. 2 to the proposed rule 

change. The Exchange has filed the 

proposal as a ‘‘non-controversial’’ rule 

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

of the Act 3 and Rule 19b–4(f)(6) 

thereunder,4 which renders it effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Nasdaq proposes to amend the 

Nasdaq Rule 4611 to update and codify 

the requirements applicable to Nasdaq 

members that provide sponsored access 

to other firms and customers to the 

Nasdaq execution system. The text of 

the proposed rule change is available at 

Nasdaq, the Commission’s Public 

Reference Room, and http:// 

www.nasdaq.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, 

Nasdaq 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. Nasdaq 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 proposes to amend the 

Nasdaq Rule 4611 to update and codify 

the requirements applicable to Nasdaq 

members that provide sponsored access 

to other firms and customers to the 

Nasdaq execution system. Currently, 

Nasdaq members provide sponsored 

access consistent with guidance set 

forth in NASD Notice to Members 98–

66 as updated by the NASD in Notice 


jlentini on PROD1PC65 with NOTICES