54194 Federal Register / Vol. 73, No. 182 / Thursday, September 18, 2008 / Notices 

3Securities Exchange Act Release No. 58283 

(August 1, 2008), 73 FR 46108 (August 7, 2008) 

(SR–FINRA–2008–040). 

4The member is not required to report yield if the 

TRACE-eligible security is in default; the interest 

rate on the security floats; the interest rate will or 

may be ‘‘stepped-up’’ or ‘‘stepped-down’’, and the 

amount of increase or decrease is an unknown 

variable; the security is a pay-in-kind (‘‘PIK’’) 

security; the principal or interest to be paid is an 

unknown variable or is an amount that is not 

currently ascertainable; or if FINRA determines that 

reporting yield would provide inaccurate or 

misleading information concerning the price of, or 

trading in, the security. See NASD Rule 6230(c)(13). 

5FINRA stated that the standard yield in TRACE: 

(1) Is calculated as the internal rate of return 

according to a discounted cash flow model; (2) is 

calculated, in a principal trade, on the reported 

price, which includes the mark-up/mark-down, and 

in an agency trade, on the reported price and 

reported commission; (3) does not include any fees 

or charges that are not included, in a principal 

trade, as part of the reported price, and in an agency 

trade, in the reported commission; (4) is calculated 

as the lower of yield to call (if the bond is callable) 

and yield to maturity, or so-called ‘‘yield-to-worst;’’ 

and (5) is calculated utilizing a methodology that 

is widely used by professionals in the securities 

industry. 

6Standard yield is included in the disseminated 

TRACE data when the member is required to report 

yield but fails to do so. 

7TRACE would not disseminate a standard yield 

for any transaction where a member currently is not 

required to report yield under NASD Rule 

6230(c)(13). See supra note 4. 

8 17 CFR 240.10b–10. 

9 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

10 15 U.S.C. 78o–3(b)(6). 

11 15 U.S.C. 78s(b)(2). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

yield.’’ The proposal was published for 

comment in the Federal Register on 

August 7, 2008.3 The Commission 

received no comments on the proposal. 

This order approves the proposed rule 

change. 

II. Background 

NASD Rule 6230(c) currently requires 

a member, in connection with a 

transaction in a TRACE-eligible 

security, to report various pieces of 

information to TRACE, including, for 

most transactions, the lower of yield to 

call or yield to maturity.4 Upon receipt 

of that trade report, TRACE 

disseminates certain information about 

the transaction (except if it is a Rule 

144A transaction), including the yield 

as reported by the member. TRACE 

calculates the standard yield 5 but 

generally does not disseminate it.6

FINRA has proposed (1) to eliminate 

the requirement for members to report 

yield; and (2) to disseminate the 

standard yield in most cases.7 FINRA 

stated that there currently is no 

uniformity in the manner by which 

members calculate yield, and that 

disseminating standard yield— 

calculated according to a single formula 

and with a uniform set of assumptions— 

will provide more useful information to 

market participants. Moreover, FINRA 

believes that it may be useful for 

customers to compare the standard yield 

in a transaction as reported by TRACE 

against the member-calculated yield that 

the member provides on the customer 

confirmation required by Rule 10b-10 

under the Act.8

Vendors. FINRA also has proposed to 

require that data vendors and 

redistributors that provide TRACE 

information display the yield. However, 

certain vendors desire to disseminate a 

yield calculated by the vendor, rather 

than the standard yield. FINRA would 

permit this flexibility, provided that a 

vendor displaying a yield other than the 

standard yield disclose that fact. 

Effective Date. FINRA will announce 

the effective date of the proposed rule 

change in a Regulatory Notice to be 

published no later than 60 days 

following Commission approval. The 

effective date would be no later than 90 

days following publication of that 

Regulatory Notice. 

III. Discussion and 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 association.9 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with section 15A(b)(6) of the Act,10

which requires, among other things, that 

FINRA rules be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, and in general to 

protect investors and the public interest. 

The Commission believes that the 

proposal will likely improve 

transparency in the corporate debt 

markets by making available a standard 

yield for most transactions that is 

calculated using an industry-recognized 

formula with a uniform set of 

assumptions. At the same time, the 

proposal reduces regulatory burdens by 

relieving FINRA members of the 

obligation to calculate and report yield 

for each transaction in a TRACE-eligible 

security. 

IV. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,11 that the 

proposed rule change (File No. SR– 

FINRA–2008–040) be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant delegated 

authority.12

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–21762 Filed 9–17–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58502; File No. SR– 

NYSEArca–2008–93] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and Order 

Granting Accelerated Approval of 

Proposed Rule Change Relating to the 

Listing of the iShares Lehman Agency 

Bond Fund 

September 10, 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 August 

25, 2008, NYSE Arca, Inc. (‘‘Exchange’’ 

or ‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons 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, through its whollyowned subsidiary NYSE Arca Equities, 

Inc. (‘‘NYSE Arca Equities’’), proposes 

to list and trade shares (‘‘Shares’’) of the 

following fund of iShares Lehman 

Agency Bond Fund. The text of the 

proposed rule change is available on the 

Exchange’s Web site at http:// 

www.nyse.com, at the Exchange’s 

principal office and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

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 


dwashington3 on PRODPC61 with NOTICES
Federal Register / Vol. 73, No. 182 / Thursday, September 18, 2008 / Notices 54195 

3An Investment Company Unit is a security that 

represents an interest in a registered investment 

company that holds securities comprising, or 

otherwise based on or representing an interest in, 

an index or portfolio of securities (or holds 

securities in another registered investment 

company that holds securities comprising, or 

otherwise based on or representing an interest in, 

an index or portfolio of securities). See NYSE Arca 

Equities Rule 5.2(j)(3)(A). 

4Fixed Income Securities are described in NYSE 

Arca Equities Rule 5.2(j)(3), Commentary .02 as debt 

securities that are notes, bonds, debentures or 

evidence of indebtedness that include, but are not 

limited to, U.S. Department of Treasury securities, 

government-sponsored entity securities, municipal 

securities, trust preferred securities, supranational 

debt and debt of a foreign country or a subdivision 

thereof. 

5The Exchange states that, as of August 8, 2008, 

the Index included securities of 10 non-affiliated 

issuers. Approximately 0.59% of the Index weight 

consisted of non-exempted securities. The 

Exchange notes that all 10 non-affiliated issuers of 

issues in the Index are U.S. government or 

government-related agencies. The Exchange 

believes that, under these circumstances, having 10 

non-affiliated issuers rather than 13 non-affiliated 

issuers, as required by Commentary .02(a)(5) to 

NYSE Arca Equities Rule 5.2(j)(3), will have no 

negative impact on investor protection or on 

competition among market participants. E-mail 

from Tim Malinowski, Director, NYSE Euronext, 

Exchange, to Edward Cho, Special Counsel, 

Division of Trading and Markets, Commission, 

dated September 3, 2008. 

6 17 CFR 240.10A–3. 

7See, e.g., Securities Exchange Act Release No. 

55783 (May 17, 2007), 72 FR 29194 (May 24, 2007) 

(SR–NYSEArca–2007–36) (order approving generic 

listing standards for ICUs based on fixed income 

indexes); Securities Exchange Act Release No. 

44551 (July 12, 2001), 66 FR 37716 (July 19, 2001) 

(SR–PCX–2001–14) (order approving generic listing 

standards for ICUs and Portfolio Depositary 

Receipts); Securities Exchange Act Release No. 

41983 (October 6, 1999), 64 FR 56008 (October 15, 

1999) (SR–PCX–98–29) (order approving rules for 

listing and trading of ICUs). 

8See the Trust’s Registration Statement on Form 

N–1A, dated July 16, 2008 (File Nos. 333–92935 

and 811–09729). 

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

10 15 U.S.C. 78f(b)(5). 

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 Exchange proposes to list and 

trade the Shares of the following fund 

under NYSE Arca Equities Rule 5.2(j)(3), 

the Exchange’s listing standards for 

Investment Company Units (‘‘ICUs’’): 3

iShares Lehman Agency Bond Fund (the 

‘‘Fund’’), a series of the iShares Trust 

(‘‘Trust’’). 

The Fund seeks investment results 

that correspond generally to the price 

and yield, before fees and expenses, of 

the agency sector of the U.S. 

government bond market as defined by 

the Lehman Brothers U.S. Agency Index 

(‘‘Index’’). The Index measures the 

performance of the agency sector of the 

U.S. government bond market and is 

comprised of investment grade U.S. 

dollar-denominated debentures issued 

by government and government-related 

agencies. 

The Exchange is submitting this 

proposed rule change because the Index 

for the Fund does not meet all of the 

‘‘generic’’ listing requirements of 

Commentary .02 to NYSE Arca Equities 

Rule 5.2(j)(3) applicable to listing of 

ICUs based on Fixed Income Securities.4

The Index meets all such requirements 

except for those set forth in 

Commentary .02(a)(5).5 The Exchange 

represents that: (1) Except for the 

requirement under Commentary 

.02(a)(5) to NYSE Arca Equities Rule 

5.2(j)(3) that an underlying index or 

portfolio (excluding one consisting 

entirely of exempted securities) must 

include a minimum of 13 non-affiliated 

issuers, the Shares of the Fund currently 

satisfy all of the applicable generic 

listing standards under NYSE Arca 

Equities Rule 5.2(j)(3); (2) the continued 

listing standards under NYSE Arca 

Equities Rules 5.2(j)(3) and 5.5(g)(2) 

applicable to ICUs shall apply to the 

Shares; and (3) the Trust is required to 

comply with Rule 10A–3 6 under the 

Act for the initial and continued listing 

of the Shares. In addition, the Exchange 

represents that the Shares will comply 

with all other requirements applicable 

to ICUs including, but not limited to, 

requirements relating to the 

dissemination of key information such 

as the Index value and Intraday 

Indicative Value, rules governing the 

trading of equity securities, trading 

hours, trading halts, surveillance, 

firewalls and Information Bulletin to 

ETP Holders, as set forth in prior 

Commission orders approving the 

generic listing rules applicable to the 

listing and trading of ICUs.7

Detailed descriptions of the Fund, the 

Index, procedures for creating and 

redeeming Shares, transaction fees and 

expenses, dividends, distributions, 

taxes, and reports to be distributed to 

beneficial owners of the Shares can be 

found in the Trust’s Registration 

Statement 8 or on the Web site for the 

Fund (http://www.ishares.com), as 

applicable. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 9 of the Act, 

in general, and furthers the objectives of 

Section 6(b)(5),10 in particular, in that it 

is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanisms of a free and 

open market and a national market 

system. The Exchange believes that the 

proposed rule change will facilitate the 

listing and trading of an additional type 

of exchange-traded product that will 

enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

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 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change 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 

No. SR–NYSEArca–2008–93 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2008–93. 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 


dwashington3 on PRODPC61 with NOTICES
54196 Federal Register / Vol. 73, No. 182 / Thursday, September 18, 2008 / Notices 

11 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

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

13See 17 CFR 240.19b–4(e). See also Commentary 

.02 to NYSE Arca Equities Rule 5.2(j)(3). 

14See supra note 5. 

15See 17 CFR 240.10A–3. 

16?See, e.g., Securities Exchange Act Release Nos. 

41983 (October 6, 1999), 64 FR 56008 (October 15, 

1999) (SR–PCX–98–29) (approving the adoption of 

rules governing the listing and trading of ICUs); 

44551 (July 12, 2001), 66 FR 37716 (July 19, 2001) 

(SR–PCX–2001–14) (approving generic listing 

standards for ICUs and portfolio depositary 

receipts); 55783 (May 17, 2007), 72 FR 29194 (May 

24, 2007) (SR–NYSEArca–2007–36) (approving 

generic listing standards for ICUs based on fixed 

income indexes); and 56625 (October 5, 2007), 72 

FR 58144 (October 12, 2007) (SR–NYSEArca–2007– 

73) (approving a proposal relating to extended 

hours trading for ICUs and portfolio depository 

receipts). 

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

18See, e.g., Securities Exchange Act Release Nos. 

58437 (August 28, 2008), 73 FR 51684 (September 

4, 2008) (SR–NYSEArca–2008–77); 57349 (February 

19, 2008), 73 FR 10084 (February 25, 2008) (SR– 

NYSEArca–2008–22); 55953 (June 25, 2007), 72 FR 

36084 (July 2, 2007) (SR–NYSE–2007–46); and 

56695 (October 24, 2007), 72 FR 61413 (October 30, 

2007) (SR–NYSEArca–2007–111). 

19See Securities Exchange Act Release No. 57356 

(February 20, 2008), 73 FR 10314 (February 26, 

2008) (SR–Amex–2007–115) (approving the listing 

and trading of shares of the SPDR Barclays Capital 

Global Inflation Linked Exchange-Traded Fund). 

20 15 U.S.C. 78s(b)(2). 

21 17 CFR 200.30–3(a)(12). 

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–2008–93 and 

should be submitted on or before 

October 9, 2008. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

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.11 In 

particular, the Commission believes that 

the proposal 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 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. 

Although NYSE Arca Equities Rule 

5.2(j)(3) permits the Exchange to list 

ICUs based on Fixed Income Securities 

pursuant to Rule 19b–4(e) under the 

Act,13 the Index for the Fund does not 

meet all of the generic listing 

requirements applicable to ICUs based 

on Fixed Income Securities. 

Specifically, the Index does not satisfy 

Commentary .02(a)(5) to NYSE Arca 

Equities Rule 5.2(j)(3), which requires 

that an underlying index or portfolio 

(excluding one consisting entirely of 

exempted securities) include a 

minimum of 13 non-affiliated issuers. 

According to the Exchange, as of August 

8, 2008, the Index included securities of 

only 10 non-affiliated issuers, all of 

which are U.S. government or 

government-related agencies. The 

Exchange has noted that approximately 

0.59% of the weight of the Index 

consists of non-exempted securities.14

The Commission believes that the 

listing and trading of the Shares is 

consistent with the Act. The 

Commission notes that all of the issuers 

of the Fixed Income Securities 

comprising the Index are either U.S. 

government or other government-related 

agencies. In addition, the Commission 

notes that, based on the Exchange’s 

representations: (1) the Shares will meet 

all of the applicable generic listing 

standards under NYSE Arca Equities 

Rule 5.2(j)(3), except for the requirement 

under Commentary .02(a)(5) thereto that 

the Index include a minimum of 13 nonaffiliated issuers; (2) the Shares will be 

subject to all of the continued listing 

standards under NYSE Arca Equities 

Rules 5.2(j)(3) and 5.5(g)(2) applicable to 

ICUs; and (3) the Trust is required to 

comply with Rule 10A–3 under the 

Act.15 The Commission also notes that 

Shares of the Fund will comply with all 

other requirements of NYSE Arca 

Equities Rule 5.2(j)(3), applicable to 

ICUs including, but not limited to, 

requirements relating to the 

dissemination of key information such 

as the Index value and Intraday 

Indicative Value and rules governing the 

trading of equity securities, trading 

hours, trading halts, surveillance, 

firewalls, and Information Bulletins to 

ETP Holders, as set forth in prior 

Commission orders approving the 

generic listing rules applicable to the 

listing and trading of ICUs.16

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,17 for approving the proposal prior 

to the thirtieth day after the date of 

publication of the Notice in the Federal 

Register. The Commission notes that, 

because the Shares comply with all of 

NYSE Arca Equities’ generic listing 

standards for ICUs based on Fixed 

Income Securities (except for the 

requirement relating to the minimum 

number of non-affiliated issuers), the 

listing and trading of the Shares by the 

Exchange does not appear to present 

any novel or significant regulatory 

issues, significantly affect the protection 

of investors or the public interest, or 

impose any significant burden on 

competition. The Commission further 

notes that it has previously approved 

the listing and trading of derivative 

securities products based on underlying 

assets that did not meet certain 

quantitative generic listing criteria 18

and, more specifically, the listing and 

trading of an exchange-traded fund 

based on an underlying index of Fixed 

Income Securities, which similarly did 

not satisfy the generic listing 

requirement relating to minimum 

number of non-affiliated issuers.19 The 

Commission believes that accelerating 

approval of this proposal should benefit 

investors by creating, without undue 

delay, additional competition in the 

market for ICUs. Therefore, the 

Commission finds good cause, 

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

Act, to approve the proposed rule 

change on an accelerated basis. This 

order is based on the Exchange’s 

representations. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,20 that the 

proposed rule change (SR–NYSEArca– 

2008–93) be, and it hereby is, approved 

on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–21758 Filed 9–17–08; 8:45 am] 

BILLING CODE 8010–01–P 


dwashington3 on PRODPC61 with NOTICES