18500 Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). As required by Rule 

19b–4(f)(6)(iii) under the Act, the Exchange also 

provided with the Commission with written notice 

of its intent to file the proposed rule change, along 

with a brief description and text of the proposed 

rule change, at least five business days prior to the 

date of the proposed rule change. 

12For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

13 17 CFR 242.610(c)(2). 14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 replaced and superseded the 

original filing in its entirety. 

4See Securities Exchange Act Release No. 54992 

(December 21, 2006), 71 FR 78482 (‘‘Notice’’). 

19(b)(3)(A) of the Act 10 and Rule 19b–

4(f)(6) thereunder.11

The Exchange has asked the 

Commission to waive the 30-day 

operative delay and allow the proposed 

rule change to become operative 

immediately. The Commission hereby 

grants that request.12 The Commission 

believes that the Exchange’s proposal 

raises no regulatory issues, as the 

Exchange represents that proposed rule 

change will result in a retroactive 

reduction in fees for all executions in 

non-Nasdaq securities priced under $1 

from March 5, 2007 to March 21, 2007. 

Furthermore, this rule change will allow 

the Exchange to immediately comply 

with the requirements of Rule 610(c)(2) 

of Regulation NMS, which limits the fee 

on an execution of an order against a 

protected quotation, if the price of the 

protected quotation is less than $1, to 

0.3% of the quotation’s price per 

share.13 Therefore, the Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. 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 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

• Send an e-mail to 

rule-comments@sec.gov. Please include 

File Number SR–NASDAQ–2007–038 

on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2007–038. 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 office 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–2007–038 and 

should be submitted on or before May 

3, 2007. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–6879 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55585; File No. SR–NYSE–

2006–75] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Granting Approval to Proposed Rule 

Change as Modified by Amendment 

No. 1 Thereto To List and Trade Four 

iShares GS Commodity Indexed 

Trusts 

April 5, 2007. 

I. Introduction 

On September 22, 2006, 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 proposed rule change to 

list and trade under NYSE Rules 1300B, 

et seq. four iShares GS Commodity 

Indexed Trusts. The Exchange filed 

Amendment No. 1 to the proposed rule 

change on November 22, 2006.3 The 

proposed rule change, as amended, was 

published for comment in the Federal 

Register on December 29, 2006 for a 15- 

day comment period.4 The Commission 

received no comments on the proposed 

rule change. This order approves the 

proposed rule as modified by 

Amendment No. 1. 

II. Description 

The Exchange proposes to list and 

trade under NYSE Rules 1300B et seq. 

(‘‘Commodity Trust Shares’’) shares of 

the following (‘‘Shares’’): iShares GS 

Commodity Light Energy Indexed Trust; 

iShares GS Commodity Industrial 

Metals Indexed Trust; iShares GS 

Commodity Livestock Indexed Trust; 

and iShares GS Commodity Non Energy 

Indexed Trust (collectively, the 

‘‘Trusts’’). Each Trust is a Delaware 

statutory trust that will issue units of 

beneficial interest called Shares, 

representing fractional undivided 

beneficial interests in its net assets. 

Substantially all of the assets of each 

Trust consist of holdings of the limited 

liability company interests of a specified 

commodity pool (‘‘Investing Pool 

Interests’’), which are the only securities 

in which the Trust may invest. The 

Trusts and the Investing Pools are each 

commodity pools managed by a 

commodity pool operator registered as 


rmajette on PROD1PC67 with NOTICES
Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 18501 

5Terms not otherwise defined herein have the 

same meaning as the meaning given in the Notice. 

6 ‘‘Short-Term Securities’’ means U.S. Treasury 

Securities or other short-term securities and similar 

securities, in each case that are eligible as margin 

deposits under the rules of the CME. 

7Barclays Global Investors International, Inc., 

(the ‘‘Sponsor for the Trusts’’) filed Form S–1 on 

behalf of each Trust on August 31, 2006. See 

Registration Nos. 333–135823 through 333–135826. 

8The Commission has previously approved 

listing on the Exchange of the iShares GSCI 

Commodity Indexed Trust. See Securities Exchange 

Act Release No. 54013 (June 16, 2006), 71 FR 36372 

(June 26, 2006) (SR–NYSE–2006–17). 

9The Index Sponsor, Goldman, Sachs & Co., is a 

broker dealer. Therefore, appropriate firewalls must 

exist around the personnel who have access to 

information concerning changes and adjustments to 

an index and the trading personnel of the brokerdealer. Prior to commencement of trading of the 

Shares on the Exchange, the Index Sponsor will 

represent to the Exchange that it (1) has 

implemented and maintained procedures 

reasonably designed to prevent the use and 

dissemination by personnel of the Index Sponsor, 

in violation of applicable laws, rules and 

regulations, of material non-public information 

relating to changes in the composition or method 

of computation or calculation of the Total Return 

Indexes; and (2) periodically checks the application 

of such procedures as they relate to such personnel 

of the Index Sponsor directly responsible for such 

changes. In addition, the Policy Committee 

members are subject to written policies with respect 

to material, non-public information. 

such with the Commodity Futures 

Trading Commission (‘‘CFTC’’). 

According to the Registration 

Statements,5 neither the Trusts nor the 

Investing Pools are investment 

companies registered under the 

Investment Company Act of 1940. 

In its proposal, the Exchange 

provided detailed description regarding 

the structure of the Trusts and the 

listing and trading of the Shares. In 

particular, the Exchange addressed (i) 

The designation and calculation of each 

underlying index that each Trust tracks, 

(ii) the calculation and dissemination of 

net asset value (‘‘NAV’’), (iii) the 

application of continued listing criteria, 

(iv) the creation and redemption 

process, (v) dissemination of pricing 

and other information pertaining to the 

Shares, including the indicative value, 

Share price, and underlying index 

values, (vi) listing fees, (vii) applicable 

Exchange trading rules, (viii) events 

triggering trading halts and/or delisting, 

(ix) the distribution of an information 

memo regarding the Shares to Exchange 

members, and (x) surveillance 

procedures. Key features of the proposal 

are noted below. 

Product Description 

Each Trust, through its respective 

Investing Pool, will be a passive 

investor in CERFs, which are cashsettled futures contracts listed on the 

Chicago Mercantile Exchange (‘‘CME’’) 

that have a term of approximately five 

years after listing and whose settlement 

at expiration is based on the value of the 

respective Index at that time, and the 

cash or Short-Term Securities 6 posted 

as margin to collateralize the Investing 

Pool’s CERF positions. The Investing 

Pools will hold long positions in CERFs 

and will also earn interest on the assets 

used to collateralize its holdings of 

CERFs. 

Neither such Trust nor the respective 

Investing Pool will engage in any 

activities designed to obtain a profit 

from, or to ameliorate losses caused by, 

changes in the value of CERFs or 

securities posted as margin. Each 

Investing Pool, and some other types of 

market participants, will be required to 

deposit margin with a value equal to 

100% of the value of each CERF 

position at the time it is established. 

Those market participants not subject to 

the 100% margin requirement are 

required to deposit margin generally 

with a value of 3% to 5% of the 

established position. Interest paid on 

the collateral deposited as margin, net of 

expenses, will be reinvested by the 

Investing Pool or, at the Trustee’s 

discretion, may be distributed from time 

to time to the Shareholders. The 

Investing Pool’s profit or loss on its 

CERF positions should correlate with 

increases and decreases in the value of 

the applicable Index, although this 

correlation will not be exact. The 

interest on the collateral deposited by 

the Investing Pool as margin, together 

with the returns corresponding to the 

performance of the applicable Index, is 

expected to result in a total return for 

the Investing Pool that corresponds 

generally, but is not identical, to the 

applicable Index. 

Underlying Indexes 

The objective of each Trust is for the 

performance of the Shares to correspond 

generally to the performance of the 

following indexes, respectively, before 

payment of the Trust’s and the Investing 

Pool’s expenses and liabilities: Goldman 

Sachs Industrial Metals Total Return 

Index; Goldman Sachs Light Energy 

Total Return Index; Goldman Sachs 

Livestock Total Return Index, and 

Goldman Sachs Non Energy Total 

Return Index (the ‘‘Total Return 

Indexes’’).7

Each of the Total Return Indexes is 

comprised of a group of commodities 

included in the Goldman Sachs 

Commodity Index (‘‘GSCI’’),8 which is a 

production-weighted index of the prices 

of a diversified group of futures 

contracts on physical commodities. 

Each Total Return Index reflects the 

return of the corresponding Goldman 

Sachs Excess Return Index together with 

the return on specified U.S. Treasury 

securities that are deemed to have been 

held to collateralize a hypothetical long 

position in the futures contracts 

comprising the corresponding index. 

The Index Sponsor has established a 

Policy Committee to assist it with the 

operation of the GSCI. The principal 

purpose of the Policy Committee is to 

advise the Index Sponsor with respect 

to, among other things, the calculation 

of the GSCI, the effectiveness of the 

GSCI as a measure of commodity futures 

market performance and the need for 

changes in the composition or the 

methodology of the GSCI. All decisions 

with respect to the composition, 

calculation and operation of the GSCI 

are made by the Index Sponsor.9

Creations and Redemptions of Baskets 

Creations of Baskets 

Creation and redemption of interests 

in the Trusts, and the corresponding 

creation and redemption of interests in 

the respective Investing Pools, will 

generally be effected through 

transactions in ‘‘exchanges of futures for 

physicals,’’ or ‘‘EFPs.’’ In the context of 

CERFs, CME rules permit the execution 

of EFPs consisting of simultaneous 

purchases (sales) of CERFs and sales 

(purchases) of Shares. This mechanism 

will generally be used by the Trusts in 

connection with the creation and 

redemption of Baskets. Specifically, it is 

anticipated that an Authorized 

Participant requesting the creation of 

additional Baskets typically will transfer 

CERFs and cash (or, in the discretion of 

the Trustee, Short-Term Securities in 

lieu of cash) to the Trusts in return for 

Shares. 

The Trusts will offer Shares on a 

continuous basis on each Business Day, 

but only in Baskets consisting of 50,000 

Shares. Baskets will be typically issued 

only in exchange for an amount of 

CERFs and cash (or, in the discretion of 

the Trustee, Short-Term Securities in 

lieu of cash) equal to the Basket Amount 

for the Business Day on which the 

creation order was received by the 

Trustee. The Basket Amount for a 

Business Day will have a per Share 

value equal to the NAV as of such day. 

However, orders received by the Trustee 

after 2:40 p.m., New York time, will be 

treated as received on the next following 

Business Day. The Trustee will notify 

the Authorized Participants of the 

Basket Amount on each Business Day. 

It is expected that delivery of the 

Shares will be made against transfer of 

consideration on the next Business Day 

following the Business Day on which 


rmajette on PROD1PC67 with NOTICES
18502 Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 

10The price at which the Shares trade should be 

disciplined by arbitrage opportunities created by 

the ability to purchase or redeem shares of the Trust 

in Basket size. This should help ensure that the 

Shares will not trade at a material discount or 

premium to their net asset value or redemption 

value. 

11The bid-ask price of Shares is determined using 

the highest bid and lowest offer as of the time of 

calculation of the NAV. 

12See Rule 10A–3(c)(7), 17 CFR 240.10A–3(c)(7) 

(stating that a listed issuer is not subject to the 

requirements of Rule 10A–3 if the issuer is 

the creation order is received by the 

Trustee. If the Trustee has not received 

the required consideration for the 

Shares to be delivered on the delivery 

date, by 11 a.m., New York time, the 

Trustee may cancel the creation order.10

Redemptions of Baskets 

Authorized Participants may typically 

surrender Baskets in exchange only for 

an amount of CERFs and cash (or, in the 

discretion of the Trustee, Short-Term 

Securities in lieu of cash) equal to the 

Basket Amount on the Business Day the 

redemption request is received by the 

Trustee. However, redemption requests 

received by the Trustee after 2:40 p.m., 

New York time (or, on any day on 

which the CME is scheduled to close 

early, after the close of trading of CERFs 

on the CME on such day), will be 

treated as received on the next following 

Business Day. Holders of Baskets who 

are not Authorized Participants will be 

able to redeem their Baskets only 

through an Authorized Participant. It is 

expected that Authorized Participants 

may redeem Baskets for their own 

accounts or on behalf of Shareholders 

who are not Authorized Participants, 

but they are under no obligation to do 

so. 

It is expected that delivery of the 

CERFs, cash or Short-Term Securities to 

the redeeming Shareholder will be made 

against transfer of the Baskets on the 

next Business Day following the 

Business Day on which the redemption 

request is received by the Trustee. If the 

Trustee’s DTC account has not been 

credited with the total number of Shares 

to be redeemed pursuant to the 

redemption order by 11 a.m., New York 

time, on the delivery date, the Trustee 

may cancel the redemption order. 

Dissemination of Information Relating 

to the Shares 

Computation of Trust’s Net Asset Value 

On each Business Day on which the 

NYSE is open for regular trading, as 

soon as practicable after the close of 

regular trading of the Shares on the 

NYSE (normally, 4:15 p.m., New York 

time), the Trustee will determine the net 

asset value of the Trusts and the NAV 

as of that time. 

The Trustee will value the Trusts’

assets based upon the determination by 

the Manager, which may act through the 

Investing Pool Administrator, of the net 

asset value of the Investing Pool. The 

Manager will determine the net asset 

value of the Investing Pool as of the 

same time that the Trustee determines 

the net asset value of the Trusts. 

Once the value of the Trusts’

Investing Pool Interests have been 

determined and provided to the Trustee, 

the Trustee will subtract all accrued 

expenses and other liabilities of each 

Trust from the total value of the assets 

of the Trust, in each case as of the 

calculation time. The resulting amount 

is the net asset value of the Trust. The 

Trustee will determine the NAV by 

dividing the net asset value of the Trust 

by the number of Shares outstanding at 

the time the calculation is made. 

Indicative Value 

In order to provide updated 

information relating to the Trusts for use 

by investors, professionals, and other 

persons, the Exchange will disseminate 

through the facilities of CTA an updated 

Indicative Value on a per Share basis as 

calculated by Bloomberg. The Indicative 

Value will be disseminated at least 

every 15 seconds from 9:30 a.m. to 4:15 

p.m. New York time. The Indicative 

Value will be calculated based on the 

cash and collateral in a Basket Amount 

divided by 50,000, adjusted to reflect 

the market value of the investments 

held by the applicable Investing Pool, 

i.e. CERFs. The Indicative Value will 

not reflect price changes to the price of 

an underlying commodity between the 

close of trading of the futures contract 

at the relevant futures exchange and the 

close of trading on the NYSE at 4:15 

p.m. New York time. The value of a 

Share may accordingly be influenced by 

non-concurrent trading hours between 

the NYSE and the various futures 

exchanges on which the futures 

contracts based on the Index 

commodities are traded. 

Other Pricing Information 

The Web site for the Trusts (http:// 

www.ishares.com), which will be 

publicly accessible at no charge, will 

contain the following information: (a) 

The prior Business Day’s NAV and the 

reported closing price; (b) the mid-point 

of the bid-ask price 11 in relation to the 

NAV as of the time the NAV is 

calculated (the ‘‘Bid-Ask Price’’); (c) 

calculation of the premium or discount 

of such price against such NAV; (d) data 

in chart form 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; (e) 

the prospectus; (f) the holdings of the 

Trusts, including CERFs, cash and 

Treasury securities; (g) the Basket 

Amount, and (h) other applicable 

quantitative information. The Exchange 

on its Web site at http://www.nyse.com 

will include a hyperlink to the Trusts’

Web site at http://www.ishares.com. The 

Exchange will also make available on 

http://www.nyse.com daily trading 

volume, closing prices, and the NAV. 

At present, official calculation by the 

Index Sponsor of the value of each GS 

Index is performed continuously and is 

updated on Reuters at least every fifteen 

seconds during NYSE trading hours for 

the Shares and during business hours on 

each Business Day on which the offices 

of Goldman Sachs in New York City are 

open for business. In the event that the 

Exchange is open for business on a day 

that is not a GSCI Business Day, the 

Exchange will not permit trading of the 

Shares on that day. 

In addition, values updated at least 

every fifteen seconds are disseminated 

on Reuters for the Total Return Indexes 

during Exchange trading hours. Daily 

settlement values for the GS Indexes, 

Total Return Indexes and Excess Return 

Indexes are also widely disseminated. 

Various data vendors and news 

publications publish futures prices and 

data. Futures quotes and last sale 

information for the commodities 

underlying the Index are widely 

disseminated through a variety of 

market data vendors worldwide, 

including Bloomberg and Reuters. In 

addition, complete real-time data for 

such futures is available by subscription 

from Reuters and Bloomberg. The 

futures exchanges or which the 

underlying commodities and CERFs 

trade also provide delayed futures 

information on current and past trading 

sessions and market news generally free 

of charge on their respective Web sites. 

The specific contract specifications for 

the futures contracts are also available 

from the futures exchanges on their Web 

sites as well as other financial 

informational sources. 

Exchange Trading Rules and Policies 

The Shares are considered 

‘‘securities’’ pursuant to NYSE Rule 3 

and are subject to all applicable trading 

rules. 

The Trust is exempt from corporate 

governance requirements in Section 

303A of the NYSE Listed Company 

Manual, including the Exchange’s audit 

committee requirements in Section 

303A.06.12


rmajette on PROD1PC67 with NOTICES
Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 18503 

organized as a trust or other unincorporated 

association that does not have a board of directors 

and the activities of the issuer are limited to 

passively owning or holding securities or other 

assets on behalf of or for the benefit of the holders 

of the listed securities). 

See also Securities Exchange Act Release Nos. 

48745 (November 4, 2003), 68 FR 64154 (November 

12, 2003) (SR–NYSE–2002–33, SR–NASD–2002–77, 

et al.) (specifically noting that the corporate 

governance standards will not apply to, among 

others, passive business organizations in the form 

of trusts); and 47654 (April 25, 2003), 68 FR 18788 

(April 16, 2003) (noting in Section II(F)(3)(c) that 

‘‘SROs may exclude from Exchange Act Rule 10A–

3’s requirements issuers that are organized as trusts 

or other unincorporated associations that do not 

have a board of directors or persons acting in a 

similar capacity and whose activities are limited to 

passively owning or holding (as well as 

administering and distributing amounts in respect 

of) securities, rights, collateral or other assets on 

behalf of or for the benefit of the holders of the 

listed securities’’). 

13 In particular, NYSE Rule 1300B provides that 

Rule 105(m) is deemed to prohibit an equity 

specialist, his member organization, other member, 

allied member or approved person in such member 

organization or officer or employee thereof from 

acting as a market maker or functioning in any 

capacity involving market-making responsibilities 

in the applicable futures contracts, except as 

otherwise provided therein. 

14 In approving this proposal, the Commission has 

considered its impact on efficiency, competition, 

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

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

16Securities Exchange Act Release No. 54013, 

supra note 8. 

17 15 U.S.C. 78k–1(a)(1)(C)(iii). 

The Exchange has adopted NYSE 

Rules 1300B (‘‘Commodity Trust 

Shares’’) to deal with issues related to 

the trading of the Shares. Specifically, 

for purposes of NYSE Rules 13 

(‘‘Definitions of Orders’’), 36.30 

(‘‘Communications Between Exchange 

and Members’ Offices’’), 98 

(‘‘Restrictions on Approved Person 

Associated with a Specialist’s Member 

Organization), 104 (‘‘Dealings by 

Specialists’’), 105(m) (‘‘Guidelines for 

Specialists’ Specialty Stock Option 

Transactions Pursuant to Rule 105’’), 

460.10 (‘‘Specialists Participating in 

Contests’’), 1002 (‘‘Availability of 

Automatic Feature’’), and 1005 (‘‘Order 

May Not Be Broken Into Smaller 

Accounts’’), the Shares will be treated 

similar to Investment Company Units.13

III. Discussion and Commission’s 

Findings 

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.14 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with the requirements of Section 6(b)(5) 

of the Act 15 which requires, among 

other things, that the Exchange’s rules 

be designed 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 notes 

that the listing and trading of shares of 

the iShares GS Commodity Indexed 

Trusts pursuant to NYSE Rules 1300B et 

seq. has been previously approved by 

the Commission.16

The Commission further believes that 

the proposal is consistent with Section 

11A(a)(1)(C)(iii) of the Exchange Act,17

which sets forth Congress’ 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. Key information will be 

disseminated at least every 15 seconds 

throughout the trading day, including 

the Indicative Value on a per-Share 

basis, as well as the value of each GS 

Index. Official calculation of each GS 

Index is currently performed 

continuously by the Index Sponsor and 

is updated at least every fifteen seconds 

on Reuters. The Sponsor for the Trusts 

has represented to the Exchange that the 

Trustee for the Trusts will make the 

NAV for the Trusts available to all 

market participants at the same time. In 

addition, futures quotes and last sale 

information for the commodities 

underlying the Indexes are widely 

disseminated through a variety of major 

market data vendors, and complete realtime data for such futures are available 

by subscription from such vendors. 

Daily settlement values for the Indexes 

are also widely disseminated. The 

Exchange’s Web site will also disclose 

information regarding the Shares, 

including, among other things, their 

daily trading volume, closing prices, 

and NAVs. 

The Commission notes that, prior to 

commencement of trading of the Shares 

on the Exchange, the Index Sponsor, a 

broker-dealer, will represent to the 

Exchange that it (a) Has implemented 

and maintained procedures reasonably 

designed to prevent the use and 

dissemination by personnel of the Index 

Sponsor, in violation of applicable laws, 

rules and regulations, of material nonpublic information relating to changes 

in the composition or method of 

computation or calculation of the Total 

Return Indexes; and (b) periodically 

checks the application of such 

procedures as they relate to such 

personnel of the Index Sponsor directly 

responsible for such changes. In 

addition, Policy Committee members 

will be subject to written policies with 

respect to material, non-public 

information. 

In support of this proposal, the 

Exchange has made the following 

representations: 

(1) NYSE would rely on its existing 

surveillance procedures, which are 

adequate to properly monitor the 

trading of the Shares, to detect 

violations of applicable rules and deter 

manipulation. Specifically, the 

Exchange will rely upon existing 

procedures governing equities with 

respect to surveillance of the Shares. In 

addition, pursuant to its comprehensive 

information sharing agreements with 

each exchange, the Exchange can obtain 

market surveillance information, 

including customer identity 

information, with respect to transactions 

occurring on the New York Mercantile 

Exchange, the Kansas City Board of 

Trade, ICE and the LME, in order to 

monitor for fraudulent and 

manipulative trading practices. All of 

the other trading venues on which 

current components of the Total Return 

Indexes and CERFs are traded are 

members of the Intermarket 

Surveillance Group and the Exchange 

therefore has access to all relevant 

trading information with respect to 

those contracts without any further 

action being required on the part of the 

Exchange. 

(2) The Exchange will halt trading of 

the Shares if the NAV of each Fund is 

not calculated or disseminated daily or 

not made available to all market 

participants at the same time, and the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares, 

including the extent to which trading is 

not occurring in the underlying 

commodities. Likewise, if the value of 

the Total Return Index associated with 

a Trust’s Shares or the applicable 

Indicative Value is not being 

disseminated on at least a 15 second 

basis during the hours the Shares trade 

on the Exchange, the Exchange may halt 

trading during the day in which the 

interruption to the dissemination of the 

Indicative Value or the Index value 

occurs. If the interruption to the 

dissemination of the Indicative Value or 

the Index value persists past the trading 

day in which it occurred, the Exchange 

will halt trading no later than the 

beginning of the trading day following 

the interruption. 

(3) NYSE will distribute an 

Information Memo to its members 

providing guidance with regard to the 

special characteristics and risks of 

trading this type of security, the creation 


rmajette on PROD1PC67 with NOTICES
18504 Federal Register / Vol. 72, No. 70 / Thursday, April 12, 2007 / Notices 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 In Amendment No. 1, which supplemented the 

original filing, the Exchange amended the filing to 

note that the need to remove an arbitrator might 

arise from a failure to disclose information that 

should have been disclosed, or from a conflict that 

arises after the commencement of the hearing. The 

Exchange also amended the filing to eliminate the 

proposal to provide the Director of Arbitration with 

discretion to limit a party’s additional information 

requests of an arbitrator. 

4See Exchange Act Release No. 54233 (July 27, 

2006), 71 FR 44751 (Aug. 7, 2006) (the ‘‘Notice’’). 

5See letter from Seth E. Lipner (Aug. 28, 2006) 

(‘‘Lipner Letter’’). 

6 In Amendment No. 2, which supplemented the 

original filing, the Exchange modified the proposed 

rule to provide that the Director of Arbitration may 

remove an arbitrator from a panel based on 

information that was not known to the parties when 

the arbitrator was appointed. Amendment No. 2 

also limited the reasons for which the Director of 

Arbitration may remove an arbitrator to information 

not known to the parties when the arbitrator was 

appointed and information required to be disclosed 

pursuant to NYSE Rule 610 that was not previously 

disclosed. The rule, as amended by Amendment 

No. 1, had not required the parties to be unaware 

of the information serving as the basis for the 

Director of Arbitration’s decision, and had not 

limited the reasons for removal of the arbitrator. 

7 In Amendment No. 3, which supplemented the 

original filing, the Exchange corrected an ambiguity 

in Amendment No. 2. Amendment No. 3 clarified 

that the Director of Arbitration could remove an 

arbitrator for information that should have been 

disclosed pursuant to NYSE Rule 610, providing for 

disclosure of conflicts, and that either was not 

known to the parties prior to the commencement of 

the hearing, or that represented a new conflict, 

arising after the commencement of the hearing. The 

amendment also clarified that the Director of 

Arbitration could also remove an arbitrator where 

circumstances known to the parties before the 

commencement of the hearing developed into a 

conflict after the commencement of the hearing. 

The rule as amended by Amendment No. 2 did not 

clearly establish these requirements for removal. 

8See Notice, supra note 4. 

9See Lipner Letter, supra note 5. 

and redemption procedures, applicable 

Exchange rules, the various fees and 

expenses, and the prospectus delivery 

requirements applicable to the Shares. 

This Order is conditioned on NYSE’s 

adherence to the foregoing 

representations. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (SR–NYSE–2006–

75), as modified by Amendment No. 1, 

be, and it hereby is, approved. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.19

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–6897 Filed 4–11–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55593; File No. SR–NYSE–

2004–56] 

Self-Regulatory Organizations; New 

York Stock Exchange Inc. (n/k/a New 

York Stock Exchange LLC); Notice of 

Filing and Order Granting Accelerated 

Approval to Proposed Rule Change 

Relating to Amendments to Exchange 

Rule 611, ‘‘Disqualification or Other 

Disability of Arbitrators’’

April 6, 2007. 

I. Introduction 

On October 12, 2004, the New York 

Stock Exchange Inc. (n/k/a 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 proposed rule change 

amending NYSE Rule 611 

(‘‘Disqualification or other Disability of 

Arbitrators’’) to give the Director of 

Arbitration the authority to remove an 

arbitrator in the event a conflict comes 

to the attention of the parties or the 

Exchange that, for any reason, was not 

appropriately disclosed pursuant to 

NYSE rules. On May 26, 2006, the 

Exchange filed Amendment No. 1 to the 

proposed rule change (‘‘Amendment No. 

1’’).3 The proposed rule change, as 

amended by Amendment No. 1, was 

published for comment in the Federal 

Register on August 7, 2006.4 The 

Commission received one comment on 

the proposal, as amended.5 On January 

11, 2007, the NYSE filed Amendment 

No. 2 (‘‘Amendment No. 2’’),6 and on 

March 21, 2007, the Exchange filed 

Amendment No. 3 (‘‘Amendment No. 

3’’) 7 to the proposed rule change. This 

order approves the proposed rule 

change, as amended, on an accelerated 

basis, and solicits comment from 

interested persons on the proposed rule 

change as modified by Amendment Nos. 

2 and 3. 

II. Description of the Proposed Rule 

Change 

A. Description of the Proposal 

At present, once an arbitrator has 

taken the Oath of Arbitrators for a 

particular case, NYSE rules do not 

provide for the Director of Arbitration to 

remove an arbitrator from serving on 

that case. Rather, NYSE Rule 610 

permits the Director of Arbitration to 

remove an arbitrator prior to, but not 

after, the commencement of the hearing. 

The need to remove a sitting arbitrator 

could arise if, for example, an item that 

should have been disclosed by the 

arbitrator pursuant to Exchange rules 

had not been disclosed, or a conflict 

arises after commencement of the 

hearing. Historically, when this 

situation has arisen, the remedy has 

been for the arbitrator to recuse himself 

or herself. Nevertheless, the Exchange 

proposed to amend its rules, indicating 

that it would be prudent to give the 

Director of Arbitration the authority to 

remove an arbitrator in the event a 

conflict comes to the attention of the 

parties or the Exchange that for any 

reason was not appropriately disclosed 

pursuant to NYSE rules and was 

unknown to the parties, or if a conflict 

arises after the commencement of the 

hearing. 

B. Comment Summary and NYSE’s 

Response 

1. Comments Received 

The proposal was published for 

comment in the Federal Register on 

August 7, 2006,8 and the Commission 

received one comment.9 The commenter 

generally supported the proposed rule 

change, but expressed concern that it 

would not sufficiently protect against 

possible gamesmanship or delays in 

seeking to remove arbitrators. In the 

commenter’s view, a party who is aware 

of grounds for removal but does not act 

should be prevented from bringing a 

later challenge to remove the arbitrator. 

2. NYSE’s Response to Comments 

The NYSE responded to the 

commenter’s concerns by filing 

Amendment No. 2 to the proposed rule 

change, providing that the Director of 

Arbitration may remove an arbitrator 

from an arbitration panel solely for 

information not disclosed pursuant to 

NYSE Rule 610 or based on information 

not known to the parties when the 

arbitrator was appointed. Subsequently, 

the NYSE filed Amendment No. 3, 

correcting an ambiguity in the rule, and 

clearly setting forth that the grounds for 

removal from the panel would be either 

a new conflict, arising after the 

commencement of the hearing (whether 

arising from circumstances known to 

the parties prior to the commencement 

of the hearing but only developing into 

a conflict after the commencement of 

the hearing, or from circumstances 

arising after the hearing), or, 

alternatively, an undisclosed conflict of 

which the parties were previously 

unaware. 


rmajette on PROD1PC67 with NOTICES