Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 15923 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55240 

(February 5, 2007), 72 FR 6624. 

4Amendment No. 2 is a technical amendment, 

which revises the proposal to reflect the 

implementation of Amex’s Auction and Electronic 

Market Integration (‘‘AEMI’’) platform and 

corresponding adoption of Rules 1000–AEMI and 

1000A–AEMI, which replace former Amex rules 

1000 and 1000A. As such, it is not subject to notice 

and comment. 

5 17 CFR 240.19b–4(e). 

6PDRs and index fund shares are registered 

investment companies under the Investment 

Company Act of 1940 and are referred to in this 

filing as exchange traded funds (‘‘ETFs’’). 

7 17 CFR 240.19b–4(e). 

8See Commentary .03(b)(i) to Amex Rule 1000–

AEMI and Commentary .02(b)(i) to Amex Rule 

1000A–AEMI. 

9 17 CFR 240.19b–4(e). 

10 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). 

11 15 U.S.C. 78f. 

12 15 U.S.C. 78f(b)(5). 

or her federal and state income tax 

returns and a report of the investment 

activities of such Fund during such 

year. 

6. Each Fund and the Managers of 

each Fund will maintain and preserve, 

for the life of each Series of that Fund 

and at least six years thereafter, such 

accounts, books and other documents as 

constitute the record forming the basis 

for the audited financial statements and 

annual reports of such Series to be 

provided to its Fund Investors, and 

agree that all such records will be 

subject to examination by the 

Commission and its staff. All such 

records will be maintained in an easily 

accessible place for at least the first two 

years. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6081 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold the following 

meeting during the week of April 2, 

2007: 

An Open Meeting will be held on 

Wednesday, April 4, 2007 at 10 a.m. in 

the Auditorium, Room L–002. 

The subject matter of the Open 

Meeting scheduled for Wednesday, 

April 4, 2007 will be: 

The Commission will consider its 

staff’s approach to (1) the Public 

Company Accounting Oversight Board’s 

(‘‘PCAOB’’) Proposed Auditing 

Standard—An Audit of Internal Control 

Over Financial Reporting That Is 

Integrated with An Audit of Financial 

Statements; and (2) the PCAOB’s 

Proposed Auditing Standard—

Considering and Using the Work of 

Others in an Audit. 

Commissioner Casey, as duty officer, 

determined that no earlier notice thereof 

was possible. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: March 29, 2007. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6124 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55544; File No. SR–Amex–

2007–07] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Order 

Approving a Proposed Rule Change 

Revising Existing Rules for Portfolio 

Depositary Receipts and Index Fund 

Shares 

March 27, 2007. 

I. Introduction 

On January 11, 2007, 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 revise its 

existing rules for portfolio depositary 

receipts (Amex Rule 1000–AEMI) and 

index fund shares (Amex Rule 1000A–

AEMI) to eliminate the methodology 

standards for eligible indexes. On 

January 25, 2007, the Amex submitted 

Amendment No. 1 to the proposed rule 

change. The proposed rule change, as 

modified by Amendment No. 1, was 

published for comment in the Federal 

Register on February 12, 2007 for a 15- 

day comment period.3 The Commission 

received no comments regarding the 

proposal. On March 14, 2007, Amex 

filed Amendment No. 2 to the proposed 

rule change.4 This order approves the 

proposed rule change, as amended. 

II. Description of the Proposal 

The purpose of this proposed rule 

change is to amend Amex’s existing 

generic listing standards pursuant to 

Rule 19b–4(e) under the Act 5 for 

portfolio depositary receipts (‘‘PDRs’’) 

and index fund shares 6 to eliminate the 

requirement that an eligible index be 

calculated and weighted following a 

specified methodology. 

The Exchange currently has generic 

listing standards (within the meaning of 

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

permit the listing and trading of various 

qualifying ETFs subject to the 

procedures contained in Rule 19b–4(e). 

The existence of generic listing 

standards allows qualifying ETFs to list 

or trade without the need to file a rule 

change for each security. The generic 

listing standards for ETFs presently 

provide that eligible indexes be 

calculated based on the market 

capitalization, modified market 

capitalization, price, equal-dollar, or 

modified equal-dollar weighting 

methodology.8 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 ETF’s eligibility for 

listing and trading pursuant to Rule 

19b–4(e) under the Act.9

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 10 and, in 

particular, the requirements of Section 6 

of the Act.11 Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,12 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 ETFs has grown, the 

variety of weighting and calculation 

methodologies for underlying indexes 

has also expanded, limiting the 

applicability of Amex’s current generic 

ETF listing standards. The Commission 

believes that the proposed elimination 

of index methodology from its generic 


ycherry on PROD1PC64 with NOTICES
15924 Federal Register / Vol. 72, No. 63 / Tuesday, April 3, 2007 / Notices 

13See Commentary .03(a)(A)(3) to Amex Rule 

1000–AEMI and Commentary .02(a)(A)(3) to Amex 

Rule 1000A–AEMI. 14See Commentary .03(a)(A)(4) to Amex Rule 

1000–AEMI and Commentary .02(a)(A)(4) to Amex 

Rule 1000A–AEMI. 15See Commentary .03(a)(B)(3) to Amex Rule 

1000–AEMI and Commentary .02(a)(B)(3) to Amex 

Rule 1000A–AEMI. 16See Commentary .03(a)(B)(4) to Amex Rule 

1000–AEMI and Commentary .02(a)(B)(4) to Amex 

Rule 1000A–AEMI. 

17 15 U.S.C. 78s(b)(2). 

18 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)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5See Securities Exchange Act Release No. 54084 

(June 30, 2006), 71 FR 38935 (July 10, 2006) (order 

approving SR–NASD–2005–087). 

6See Securities Exchange Act Release No. 54798 

(November 21, 2006), 71 FR 69156 (November 29, 

2006) (order approving SR–NASD–2006–104). 

7See Securities Exchange Act Release Nos. 54984 

(December 20, 2006), 71 FR 78245 (December 28, 

2006) (notice of filing and immediate effectiveness 

of SR–NASD–2006–135) and 55274 (February 12, 

2007), 72 FR 7785 (February 20, 2007) (notice of 

filing and immediate effectiveness of SR–NASD–

2007–012). 

listing standards for ETFs would 

potentially reduce the time frame for 

bringing ETFs based on indexes with 

nontraditional weighting techniques to 

the market, thereby reducing the 

burdens on issuers and other market 

participants and promoting competition, 

without compromising investor 

protection. 

The Commission notes that 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,13 and that an index include a 

minimum of 13 component stocks.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 Therefore, the Commission 

believes that indexes underlying ETFs 

will continue to be sufficiently broadbased in scope to minimize potential 

manipulation. 

The Commission believes that the 

proposed rule change will enable the 

Exchange and issuers to benefit from the 

expected efficiencies resultant from this 

proposed rule change while at the same 

time still ensuring adequate protection 

for investors and the public in general. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,17 that the 

proposed rule change (SR–Amex–2007–

07), as amended, be, and is hereby 

approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6083 Filed 4–2–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55538; File No. SR–NASD–

2007–018] 

Self-Regulatory Organizations: 

National Association of Securities 

Dealers, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend the NASD Rule 

7000 Series To Delete References To 

Systems and Services That Will No 

Longer Be Provided by NASD 

March 27, 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 March 1, 

2007, the National Association of 

Securities Dealers, Inc. (‘‘NASD’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared substantially by 

NASD. NASD has designated this 

proposal as ‘‘establishing or changing a 

due, fee, or other charge’’ under Section 

19(b)(3)(A)(ii) of the Act 3 and Rule 19b–

4(f)(2) thereunder,4 which renders the 

proposal effective upon filing with the 

Commission. 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 the Substance 

of the Proposed Rule Change 

NASD is proposing to amend the 

NASD Rule 7000 Series (Charges for 

Services and Equipment) to delete 

references to systems and services that 

will no longer be provided by NASD 

upon the operation of NASD’s 

Alternative Display Facility (the ‘‘ADF’’) 

for non-Nasdaq exchange-listed 

securities, which is anticipated to be 

March 5, 2007. The Rule 7000 Series 

only will apply to NASD’s OTC Bulletin 

Board Service, OTC Reporting Facility 

(‘‘ORF’’) and Trade Reporting and 

Compliance Engine (‘‘TRACE’’). In this 

proposed rule change, NASD also is 

providing notice relating to the 

calculation of fees under Rule 7010 for 

use of NASD’s Intermarket Trading 

System/Computer Assisted Execution 

Service (the ‘‘ITS/CAES System’’) on 

March 1 and 2, 2007, which will apply 

if the changes proposed herein are 

implemented on March 5, 2007 as 

anticipated. The text of the proposed 

rule change is available at NASD, the 

Commission’s Public Reference Room, 

and www.nasd.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, 

NASD 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. NASD 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 

On June 30, 2006, the Commission 

approved SR–NASD–2005–087, which, 

among other things, proposed an 

implementation strategy for the 

operation of the Nasdaq Stock Market 

LLC (the ‘‘Nasdaq Exchange’’) as a 

national securities exchange for Nasdaqlisted securities during a transitional 

period.5 On November 21, 2006, the 

Commission approved SR–NASD–2006–

104, which, among other things, 

proposed amendments necessary to 

reflect the complete separation of The 

Nasdaq Stock Market Inc. (‘‘Nasdaq’’) 

from NASD upon the operation of the 

Nasdaq Exchange as a national 

securities exchange for non-Nasdaq 

exchange-listed securities.6 As 

described in SR–NASD–2006–135, for a 

transitional period, Nasdaq has 

continued to operate the 

SuperIntermarket (SiM) trading platform 

on NASD’s behalf via the Transitional 

System and Regulatory Services 

Agreement, even upon commencement 

of the Nasdaq Exchange’s operation as 

an exchange for non-Nasdaq exchangelisted securities on February 12, 2007.7

Upon the operation of the ADF for nonNasdaq exchange-listed securities, SiM 


ycherry on PROD1PC64 with NOTICES