Federal Register / Vol. 73, No. 24 / Tuesday, February 5, 2008 / Notices 6759 

7 17 CFR 240.19d–1(c)(2). 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Currency-Linked Securities are securities that 

provide for payment at maturity of a cash amount 

based on the performance of one or more 

currencies, or options or currency futures or other 

currency derivatives or Currency Trust Shares (as 

defined in NYSE Arca Equities Rule 8.202), or a 

basket or index of any of the foregoing (‘‘Currency 

Reference Asset’’). See NYSE Arca Equities Rule 

5.2(j)(6). 

Act,7 which governs minor rule 

violation plans. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NYSE Arca does not believe that the 

proposed rule change will impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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 rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2008–08 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–NYSEArca–2008–08. 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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

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–NYSEArca–2008–08 and 

should be submitted on or before 

February 26, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–1967 Filed 2–4–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57227; File No. SR–

NYSEArca–2008–12] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Relating to Pricing 

Information for Components 

Underlying Currency-Linked Securities 

January 29, 2008. 

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 January 

17, 2008, 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’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been substantially prepared by the 

Exchange. 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

NYSE Arca Equities Rule 

5.2(j)(6)(B)(III)(1), which sets forth the 

Exchange’s initial listing criteria for 

Currency-Linked Securities,3 to permit 

the listing and trading of CurrencyLinked Securities where the pricing 

information for one or more currencies 

comprising the Currency Reference 

Asset is the generally accepted forward 

price for the currency exchange rate in 

question. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.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, the 

Exchange 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. The 

Exchange 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 

The Exchange proposes to amend 

NYSE Arca Equities Rule 

5.2(j)(6)(B)(III)(1) to permit the listing of 

Currency-Linked Securities where the 

pricing information for some or all of 

the components of the Currency 

Reference Asset is the generally 

accepted forward price for the currency 

exchange rate in question. The ability 

for an issuer to use forward pricing 

information under proposed NYSE Arca 

Equities Rule 5.2(j)(6)(B)(III)(1)(b) for 

any component of a Currency Reference 


rmajette on PROD1PC64 with NOTICES
6760 Federal Register / Vol. 73, No. 24 / Tuesday, February 5, 2008 / Notices 

4See Bank for International Settlements (‘‘BIS’’), 

Triennial Central Bank Survey of Foreign Exchange 

and Derivatives Market Activity in April 2007, 

Statistical Annex Tables—Foreign Exchange 

Markets (2007) (‘‘2007 BIS Report’’); BIS, Triennial 

Central Bank Survey of Foreign Exchange and 

Derivatives Market Activity in April 2004, Statistical 

Annex Tables—Foreign Exchange Markets (2004); 

and BIS, Triennial Central Bank Survey of Foreign 

Exchange and Derivatives Market Activity in April 

2001, Statistical Annex Tables—Foreign Exchange 

Markets (2001). 

Asset would be restricted to the 

following currencies, based on high 

volumes of forward contract 

transactions in such currencies: U.S. 

Dollar, Euro, Japanese Yen, British 

Pound Sterling, Swiss Franc, Canadian 

Dollar, Australian Dollar, Brazilian Real, 

Chinese Renminbi, Czech Koruna, 

Danish Krone, Hong Kong Dollar, 

Hungarian Forint, Indian Rupee, 

Indonesian Rupiah, Korean Won, 

Mexican Peso, Norwegian Krone, New 

Zealand Dollar, Philippine Peso, Polish 

Zloty, Russian Ruble, Swedish Krona, 

South African Rand, Singapore Dollar, 

Taiwan Dollar, Thai Baht or New 

Turkish Lira. The volume in these 

currencies is as follows: 4

FX FORWARD AVERAGE DAILY VOLUME IN MILLIONS USD 

Currency 2001 2004 2007 Average 

U.S. Dollar ....................................................................................................................... 110,795 170,357 289,435 190,196 

Euro ................................................................................................................................. 54,327 88,243 137,391 93,320 

Japanese Yen .................................................................................................................. 33,257 47,135 61,453 47,282 

British Pound Sterling ...................................................................................................... 16,826 31,338 46,274 31,479 

Swiss Franc ..................................................................................................................... 6,637 11,307 21,186 13,043 

Canadian Dollar ............................................................................................................... 4,335 8,947 15,280 9,521 

Australian Dollar .............................................................................................................. 5,416 9,788 20,463 11,889 

Brazilian Real ................................................................................................................... 1,259 1,072 5,259 2,530 

Chinese Renminbi ........................................................................................................... 55 811 4,572 1,813 

Czech Koruna .................................................................................................................. 96 253 1,432 594 

Danish Krone ................................................................................................................... 888 1,347 2,841 1,692 

Hong Kong Dollar ............................................................................................................ 3,055 2,221 6,022 3,766 

Hungarian Forint .............................................................................................................. 28 308 1,357 564 

Indian Rupee ................................................................................................................... 428 1,531 5,815 2,591 

Indonesian Rupiah ........................................................................................................... 103 267 1,292 554 

Korean Won ..................................................................................................................... 1,671 6,048 10,013 5,911 

Mexican Peso .................................................................................................................. 673 1,716 4,594 2,328 

Norwegian Krone ............................................................................................................. 1,187 2,543 6,498 3,409 

New Zealand Dollar ......................................................................................................... 579 1,462 6,639 2,893 

Philippine Peso ................................................................................................................ 73 232 1,123 476 

Polish Zloty ...................................................................................................................... 439 483 2,644 1,189 

Russian Ruble ................................................................................................................. 52 253 1,253 519 

Swedish Krona ................................................................................................................. 3,207 4,158 8,543 5,303 

South African Rand ......................................................................................................... 825 1,122 3,458 1,802 

Singapore Dollar .............................................................................................................. 825 1,242 2,962 1,676 

Taiwan Dollar ................................................................................................................... 603 2,798 4,724 2,708 

Thai Baht ......................................................................................................................... 231 490 847 523 

New Turkish Lira .............................................................................................................. 164 239 535 313 

Total (divided by 2) ................................................................................................... 125,018 199,858 337,956 220,944 

The Exchange states that the total 

amount of contracts reflected in the 

chart above is divided by two because 

each contract is denominated in two 

currencies. For example, one contract 

will reflect cross rates in two currencies: 

U.S. Dollar against Euro, Singapore 

Dollar against New Turkish Lira, etc. 

The daily notional turnover for the 

currency forward contracts reflected in 

the chart above ranged from US$535 

million to US$289 billion in April 2007. 

In addition, the forward price will be 

used for pricing purposes only to the 

extent that the Currency Reference Asset 

is based on the forward price. In the 

event a Currency Reference Asset is 

based on the forward price, and the 

forward price becomes unavailable due 

to a holiday, the spot price may be used 

for calculating the price of the 

component(s) comprising the Currency 

Reference Asset. The pricing 

information of such Currency Reference 

Asset on the following business day 

must be the forward price. The 

Exchange states that this exception will 

permit certain hedged products that use 

forward pricing information to use the 

spot price, which is quoted in the 

United States, when the forward price, 

which is derived from the spot price, is 

unavailable due to a foreign holiday. 


rmajette on PROD1PC64 with NOTICES
Federal Register / Vol. 73, No. 24 / Tuesday, February 5, 2008 / Notices 6761 

5See generally Securities Exchange Act Release 

No. 55268 (February 9, 2007), 72 FR 7793 (February 

20, 2007) (SR–NYSE–2007–03) (providing 

background and information relating to the foreign 

exchange markets). 

6See Sam Y. Cross, Federal Reserve Bank of New 

York, All About . . . the Foreign Exchange Market 

in the United States, at 38 (1998) (available at 

http://www.newyorkfed.org/education/addpub/ 

usfxm). 

7See id. 

8See id. 

9See 2007 BIS Report (Table 1), supra note 4. 

10See supra note 5. 

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

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

The Exchange states that the foreign 

exchange market is predominantly an 

over-the-counter (‘‘OTC’’) market with 

no fixed location, and it operates 24 

hours a day, five days a week. London, 

New York, and Tokyo are the principal 

geographic centers of the worldwide 

foreign exchange market, with 

approximately 58% of all foreign 

exchange business executed in the 

United Kingdom, United States, and 

Japan. Other smaller markets include 

Singapore, Zurich, and Frankfurt.5

There are three major types of 

transactions in the traditional foreign 

exchange markets: spot transactions, 

outright forwards, and foreign exchange 

swaps. ‘‘Forward’’ trades are 

transactions involving the exchange of 

two currencies at a rate agreed on the 

date of the contract for value on delivery 

(cash settlement) at some time in the 

future. These trades account for 12% of 

the reported daily volume. Forward 

rates are quoted among dealers in 

premiums or discounts from the spot 

rate.6 The premium or discount is 

measured in ‘‘points’’ that represent the 

interest rate differential between two 

currencies for the period of the forward, 

converted into foreign exchange.7 The 

generally accepted forward price is 

calculated as follows: 8

Forward For Rate = Spot Rate Terms Currency Interest Rate ×

1 w + ×ard Days Interest Rate Year

Base Currency Interest Rate

/

1+ ×

−

Forward Days/Interest Rate Year

Points = Forward Rate Spot Rate 

The Exchange states that the OTC 

foreign currency market is a very liquid 

market. In 2007, the average daily spot 

turnover accounted for over US$1 

trillion, and the average daily forward 

turnover accounted for US$362 billion.9

In addition to liquidity, the Exchange 

states that the forward market is 

extremely transparent. Bloomberg, 

Reuters, and other major market 

information providers disseminate 

quotes for the forward market provided 

by OTC market makers. 

The Exchange notes that most trading 

in the global OTC foreign currency 

markets is conducted by regulated 

financial institutions such as banks and 

broker-dealers. In addition, in the 

United States, the Foreign Exchange 

Committee of the New York Federal 

Reserve Bank has issued Guidelines for 

Foreign Exchange Trading, and centralbank sponsored committees in Japan 

and Singapore have published similar 

best practices guidelines. In the United 

Kingdom, the Bank of England has 

published the Non-Investment Products 

Code, which covers foreign currency 

trading. The Financial Markets 

Association, the members of which 

include major international banking 

organizations, has also established best 

practices guidelines called the Model 

Code.10 Participants in the U.S. OTC 

market for foreign currencies are 

generally regulated by their oversight 

regulators. For example, participating 

banks are regulated by the banking 

authorities. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,11 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,12 in particular, in that it is 

designed to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, 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. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange states that it has neither 

solicited nor received written comments 

on the proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission will: 

A. By order approve such proposed 

rule change, or 

B. Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

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 rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2008–12 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–NYSEArca–2008–12. 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 


rmajette on PROD1PC64 with NOTICESEN05FE08.002</MATH>
6762 Federal Register / Vol. 73, No. 24 / Tuesday, February 5, 2008 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Multiple Fund Shares seek to provide 

investment results, before fees and expenses, that 

correspond to a specific multiple of the percentage 

performance on a given day of a particular foreign 

or domestic stock index. 

4 Inverse Fund Shares seek to provide investment 

results, before fees and expenses, that correspond 

to the inverse (opposite) of the percentage 

performance on a given day of a particular foreign 

or domestic stock index by a specified multiple. 

5See Securities Exchange Act Release Nos. 56763 

(November 7, 2007), 72 FR 94103 (November 14, 

2007) (SR–NYSEArca–2007–81); 56601 (October 2, 

2007), 72 FR 57625 (October 10, 2007) (SR–

NYSEArca–2007–79); 55125 (January 18, 2007), 72 

FR 3462 (January 25, 2007) (SR–NYSEArca–2006–

87); 54026 (June 21, 2006), 71 FR 36850 (June 28, 

2006) (SR–PCX–2005–115). 

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, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the 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–NYSEArca–2008–12 and 

should be submitted on or before 

February 26, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–1969 Filed 2–4–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57226; File No. SR–

NYSEArca–2008–03] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and Order 

Granting Accelerated Approval of 

Proposed Rule Change, Relating to 

Rules 5.3 and 5.4 To Enable Listing 

and Trading of Options on Multiple 

Fund and Inverse Fund Shares 

January 29, 2008. 

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 January 8, 

2008, NYSE Arca, Inc. (the ‘‘Exchange’’), 

through its wholly-owned subsidiary, 

NYSE Arca Equities, Inc. (‘‘NYSE Arca 

Equities’’), 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. The Commission hereby 

provides notice of filing of the proposed 

rule change 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 revise 

NYSE Arca Rules 5.3 and 5.4 to enable 

listing and trading on the Exchange of 

options on Multiple Fund Shares and 

Inverse Fund Shares. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and http:// 

www.nyse.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, the 

Exchange 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 

Exchange 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 

The purpose of the proposed rule 

change is to revise NYSE Arca Rules 5.3 

and 5.4 to enable the listing and trading 

on the Exchange of options on Multiple 

Fund Shares 3 and Inverse Fund 

Shares.4 Multiple and Inverse Fund 

Shares differ from traditional exchangetraded fund shares (‘‘Exchange-Traded 

Fund Shares’’ or ‘‘Fund Shares’’) in that 

they do not merely correspond to the 

performance of a given index, but rather 

attempt to match a multiple or inverse 

of such underlying index performance. 

Currently, Multiple Fund Shares issued 

by ProShares Trust and Rydex ETF 

Trust trade on the Exchange pursuant to 

unlisted trading privileges (‘‘UTP’’) 

under NYSE Arca Equities Rule 

5.2(j)(3).5

In order to achieve investment results 

that provide either a positive multiple 

or inverse of the benchmark index, 

Multiple Fund Shares or Inverse Fund 

Shares may hold a combination of 

financial instruments, including among 

other things: stock index future 

contracts; options on futures; options on 

securities and indices; equity caps, 

collars and floors; swap agreements; 

forward contracts; repurchase 

agreements; and reverse repurchase 

agreements (the ‘‘Financial 

Instruments’’). The underlying 

portfolios of Multiple Fund Shares 

generally will hold at least 85% of their 

assets in the component securities of the 

underlying relevant benchmark index. 

The remainder of any assets is devoted 

to Financial Instruments that are 

intended to create the additional needed 

exposure to such underlying index 

necessary to pursue its investment 

objective. Normally, 100% of the value 

of the underlying portfolios of Inverse 

Fund Shares will be devoted to 

Financial Instruments and money 

market instruments, including U.S. 

government securities and repurchase 

agreements (the ‘‘Money Market 

Instruments’’). Currently, NYSE Arca 

Rule 5.3(g) provides securities deemed 

appropriate for options trading shall 

include shares or other securities that 

are traded on a national securities 

exchange and are defined as an ‘‘NMS 

Stock’’ under Rule 600 of Regulation 

NMS, 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 interests in a trust or 

similar entity that holds a specified nonU.S. currency deposited with the trust 

or a 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 U.S. 

currency, if any, declared and paid by 

the trust; or (iii) represent commodity 

pool interests principally engaged, 

directly or indirectly, in holding and/or 


rmajette on PROD1PC64 with NOTICES