Document ID: SEC-2007-1166-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca,  Inc.
Posted Date: 2007-08-22T04:00Z

[Federal Register: August 22, 2007 (Volume 72, Number 162)]
[Notices]               
[Page 47109-47110]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au07-166]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56270; File No. SR-NYSEArca-2007-74]

 
Self-Regulatory Organizations; NYSEArca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending Rule 
7.34(e) and Clarifying Certain Customer Disclosures Relating to ETF 
Trading

August 15, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 13, 2007, NYSE Arca, Inc. (the ``NYSEArca'' or the 
``Exchange'') 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 
NYSEArca. The Exchange has filed the proposed rule change as one 
constituting a stated policy, practice, or interpretation with respect 
to the meaning, administration, or enforcement of an existing rule 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(1) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------

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'' or ``Corporation''), proposes to 
amend NYSE Arca Equities Rule 7.34(e) (the ``Rule''). The changes 
described in this rule proposal clarify the customer disclosures ETP 
Holders must make to non-ETP Holders. The text of the proposed rule 
change is available at the Exchange, the Commission's Public Reference 
Room, and http://www.nysearca.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
    Pursuant to the Rule, ETP Holders may not accept orders from Non-
ETP Holders for execution in the Opening or Late Trading Sessions 
without first disclosing certain risks. To facilitate extended hours 
trading and enhance customer disclosures, the Exchange proposes to 
require ETP Holders to disclose to their Non-ETP Holder customers an 
additional risk associated with extended trading hours in exchange-
traded funds (``ETFs'').\5\
---------------------------------------------------------------------------

    \5\ ETFs include securities described in NYSE Arca Equities 
Rules 5.1(b)(13), 5.2(j)(3), 5.2(j)(6), 8.100, 8.200, 8.201, 8.202, 
8.203, 8.300, and 8.400, which relate to Unit Investment Trusts, 
Investment Company Units, Index-Linked Securities, Portfolio 
Depositary Receipts, Trust Issued Receipts, Commodity-Based Trust 
Shares, Currency Trust Shares, Commodity Index Trust Shares, 
Partnership Units, and Paired Trust Securities, respectively.
---------------------------------------------------------------------------

    Specifically, the Exchange proposes to amend NYSE Arca Equities 
Rule 7.34(e)(3) and 7.34(e)(3)(7) by addressing the risk associated 
with the lack of calculation or dissemination of the underlying index 
value or Intraday Indicative Value (``IIV''). For ETFs, an updated 
underlying index value or IIV may not be calculated or publicly 
disseminated in extended trading hours. Since the underlying index 
value and IIV are not calculated or widely disseminated during the 
Opening and Late Trading Sessions, an investor who is unable to 
calculate implied values for certain derivative securities products in 
those sessions may be at a disadvantage to market professionals. The 
Exchange believes that requiring ETP Holders to disclose this risk to 
Non-ETP Holders will facilitate informed participation in extended 
hours trading.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \6\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \7\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and

[[Page 47110]]

coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 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

    Because the foregoing proposed rule change constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the Exchange, it 
has become effective pursuant to Section 19(b)(3)(A)(i) of the Act \8\ 
and Rule 19b-4(f)(1) thereunder.\9\ At any time within 60 days of the 
filing of the proposed rule change, the Commission may summarily 
abrogate such proposed 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(i).
    \9\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------

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-2007-74 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-2007-74. 
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-2007-74 and 
should be submitted on or before September 12, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-16580 Filed 8-21-07; 8:45 am]

BILLING CODE 8010-01-P