Document ID: SEC-2009-0694-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Regarding the Minimum Creation and Redemption Size Applicable to the MacroShares Major Metro Housing Trusts
Posted Date: 2009-05-22T04:00Z

[Federal Register: May 22, 2009 (Volume 74, Number 98)]
[Notices]               
[Page 24055-24057]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22my09-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59932; File No. SR-NYSEArca-2009-43]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Regarding the 
Minimum Creation and Redemption Size Applicable to the MacroShares 
Major Metro Housing Trusts

May 15, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on May 13, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. NYSE Arca filed the proposed rule change pursuant to 
Section 19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6) thereunder,\5\ 
which renders it effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly-owned subsidiary NYSE Arca 
Equities, Inc. (``NYSE Arca Equities''), proposes to modify the 
representation made in SR-NYSEArca-2008-92 regarding the minimum 
creation and redemption size aggregation applicable to the MacroShares 
Major Metro Housing Up Trust (``Up Trust'') and the MacroShares Major 
Metro Housing Down Trust (``Down Trust'') (collectively, the 
``Trusts''). The shares of the Up Trust are referred to as the Up 
MacroShares, and the shares of the Down Trust are referred to as the 
Down MacroShares (collectively, the ``Shares''). The text of

[[Page 24056]]

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 
Public Reference Room of the Securities and Exchange Commission (the 
``Commission'').

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 self-regulatory organization 
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission has approved pursuant to Section 19(b)(2) of the Act 
the Exchange's proposal to list and trade the Up MacroShares and the 
Down MacroShares under NYSE Arca Equities Rule 8.400.\6\ As described 
in the Approval Order and Notice, the Up Trust and the Down Trust 
intend to issue Up MacroShares and Down MacroShares, respectively, on a 
continuous basis. The Up MacroShares and the Down MacroShares represent 
undivided beneficial interests in the Up Trust and the Down Trust, 
respectively. As of May 12, 2009, the Shares have not commenced trading 
on the Exchange.
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    \6\ See Securities Exchange Act Release Nos. 58704 (October 1, 
2008), 73 FR 59026 (October 8, 2008) (order approving listing and 
trading on the Exchange of the Trusts (``Approval Order'')); 58469 
(September 5, 2008), 73 FR 53306 (September 15, 2008) (SR-NYSEArca-
2008-92) (notice of proposed rule change to list and trade the 
Trusts on the Exchange (``Notice'')). See also, Securities Exchange 
Act Release No. 59542 (April 1, 2009), 74 FR 15803 (April 7, 2009) 
(``Modifying Order'') (order approving change to the leverage factor 
applicable to the Trusts). The Shares are being offered by the 
Trusts under the Securities Act of 1933, 15 U.S.C. 77a. On April 29, 
2009, the depositor filed with the Commission preliminary 
Registration Statements on Form S-1 (Amendment No. 6) for the Up 
MacroShares (File No. 333-151522) and for the Down MacroShares (File 
No. 333-151523) (``Registration Statements''). The descriptions 
herein relating to the operation of the Trusts is based on the 
Registration Statements.
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    The assets of the Down Trust will consist of an income distribution 
agreement and settlement contracts entered into with the Up Trust. 
Similarly, the assets of the Up Trust will consist of an income 
distribution agreement and settlement contracts entered into with the 
Down Trust.\7\ Each Trust will also hold U.S. Treasuries, repurchase 
agreements on U.S. Treasuries and cash to secure its obligations under 
the income distribution agreement and the settlement contracts. The 
trustee for the Trusts is State Street Bank and Trust Company.
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    \7\ Terms referenced herein relating to the Trusts but not 
defined are defined in the Registration Statements.
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    As described in the Notice, the Trusts will make quarterly 
distributions of net income, if any, on the treasuries and a final 
distribution of all assets they hold on deposit on the final scheduled 
termination date, an early termination date or a redemption date. Each 
quarterly and final distribution will be based on the value of the S&P/
Case-Shiller Composite-10 Home Price Index (``Index''), as well as on 
prevailing interest rates on U.S. Treasury obligations. The last 
published value of the Index is referred to as the ``Reference Value of 
the Index'' or ``Reference Value'', as discussed in the Notice.
    The Notice stated that the Up MacroShares may be issued only in 
MacroShares Units consisting of a minimum of 50,000 Up MacroShares 
issued by the Up Trust and 50,000 Down MacroShares issued by the Down 
Trust. In addition, the Notice stated that the Up MacroShares must be 
redeemed together with Down MacroShares by any holder who is an 
authorized participant on any business day in MacroShares Units 
consisting of a minimum of 50,000 Up MacroShares and 50,000 Down 
MacroShares, at the respective Underlying Value of those Shares, as 
measured on the applicable redemption date.
    Since the date of the Approval Order, the Trusts have amended the 
Registration Statements to provide that the minimum size aggregation 
for issuance and redemption of Shares will be 10,000 rather than 50,000 
Up MacroShares and Down MacroShares (collectively ``MacroShare 
Units''). The Exchange notes that since the Up MacroShares and Down 
MacroShares are created and redeemed in tandem, the aggregate creation 
and redemption size of the MacroShares Units will be approximately 
$1.25 million upon the initial issuance.\8\ The Exchange also notes 
that the minimum initial issuance upon commencement of Exchange trading 
must be at least 100,000 Up MacroShares and Down MacroShares, as 
specified in the Notice. The Exchange believes that the change to the 
size of MacroShares Units will not adversely impact investors or 
Exchange trading. In addition, reduction in the size of MacroShares 
Units may facilitate creation and redemption activity in Shares, with 
potential benefits to investors, which may include tighter bid/ask 
spreads. Aside from the update to the minimum size aggregations for 
issuance and redemption of Shares, there is no other change to the 
operation of the Trusts.
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    \8\ Generally, the aggregate creation and redemption unit size 
for exchange-traded funds is approximately $1.25 million upon the 
initial issuance.
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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 the 
Shares, which will enhance competition among market participants, to 
the benefit of investors and the marketplace.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the foregoing proposed rule change: (1) Does not significantly 
affect the

[[Page 24057]]

protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) by its terms does not become 
operative for 30 days of this filing, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \13\ and subparagraph (f)(6) 
of Rule 19b-4 thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing.\15\ 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing. In support, the Exchange 
states that the proposed reduction in the size of the MacroShares Units 
may facilitate creation and redemption activity in the Shares, which 
could result in tighter bid/ask spreads.
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    \15\ See id. In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to provide 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 filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public 
interest.\16\ The proposed rule change seeks to amend a representation 
the Exchange made in the Notice, to reflect a proposed change in the 
minimum Share aggregation for issuance and redemption from 50,000 to 
10,000 MacroShares Units. The Commision believes that this proposal 
does not raise any regulatory concerns. The Commission notes that it 
has previously approved both the listing and trading of Shares of the 
Trusts on the Exchange, and an amendment to the leverage factor of this 
product.\17\
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    \16\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition and capital formation. 15 U.S.C. 
78c(f).
    \17\ See Approval Order and Modifying Order, supra note 6.
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    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 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-NYSEArca-2009-43 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2009-43. 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 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-2009-43 and should 
be submitted on or before June 12, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-11940 Filed 5-21-09; 8:45 am]

BILLING CODE 8010-01-P