Document ID: SEC-2008-0786-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2008-06-06T04:00Z

[Federal Register: June 6, 2008 (Volume 73, Number 110)]
[Notices]               
[Page 32369-32373]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn08-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57884; File No. SR-CHX-2008-07]

 
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change to Trade Shares of 12 Funds of the ProShares Trust Pursuant 
to Unlisted Trading Privileges

May 30, 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 May 15, 2008, the Chicago Stock Exchange, Inc. (``CHX'' or 
``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 the 
Exchange. This order provides notice of the proposed rule change and 
approves the proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to trade shares (``Shares'') of the following 
12 funds of the ProShares Trust (f/k/a xtraShares Trust) (``Trust'') 
pursuant to unlisted trading privileges (``UTP''): (1) Ultra S&P 500 
ProShares (f/k/a Ultra 500 Fund); (2) Ultra QQQ ProShares (f/k/a Ultra 
100 Fund); (3) Ultra Dow 30 ProShares (f/k/a Ultra 30 Fund); (4) Ultra 
Mid-Cap 400 ProShares (f/k/a Ultra Mid-Cap 400 Fund); (5) Short S&P

[[Page 32370]]

500 ProShares (f/k/a Short 500 Fund); (6) Short QQQ ProShares (f/k/a 
Short 100 Fund); (7) Short Dow 30 ProShares (f/k/a Short 30 Fund); (8) 
Short Mid-Cap 400 ProShares (f/k/a Short Mid-Cap 400 Fund); (9) 
UltraShort S&P 500 ProShares (f/k/a Ultra Short 500 Fund); (10) 
UltraShort QQQ ProShares (f/k/a Ultra Short 100 Fund); (11) UltraShort 
Dow 30 ProShares (f/k/a Ultra Short 30 Fund); and (12) UltraShort Mid-
Cap 400 ProShares (Ultra Short Mid-Cap 400 Fund) (collectively, 
``Funds''). The text of this proposed rule change is available on the 
Exchange's Web site at http://www.chx.com/content/Participant_
Information/Rules_Filings.html, 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 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 trade pursuant to UTP the Shares of the 
Funds, which are ``investment company units'' under CHX Article 22, 
Rule 24 (``Rule 24''). \3\The Shares seek to provide investment results 
that exceed the daily performance of a specified stock index by a 
specified percentage, or that seek to provide investment results that 
correspond to the inverse or opposite of the index's daily performance 
or twice the inverse or opposite (-200%) of the index's daily 
performance. The Commission previously approved the original listing 
and trading of the Shares of the 12 Funds on the American Stock 
Exchange LLC (``Amex'').\4\ In addition, the Funds are currently 
trading pursuant to UTP on NYSE Arca, Inc.\5\
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    \3\ CHX Rule 24(A)(1)(a) allows the listing and trading of 
investment company units issued by a registered investment company 
that holds securities comprising, or otherwise based on or 
representing an interest in, an index of portfolio or securities. 
The Exchange represents that the Shares qualify under CHX Rule 24 
because they are being registered under the Investment Company Act 
of 1940 (``1940 Act'') and are ``otherwise based on'' an index.
    \4\ See Securities Exchange Act Release No. 52553 (October 3, 
2005), 70 FR 59100 (October 11, 2005) (SR-Amex-2004-62) (``Amex 
Order I'') (approving the listing and trading on Amex of the 
following eight Funds: Ultra 500 Fund, Ultra 100 Fund, Ultra 30 
Fund, Ultra Mid-Cap 400 Fund, Short 500 Fund, Short 100 Fund, Short 
30 Fund, and Short Mid-Cap 400 Fund); Securities Exchange Act 
Release No. 52197 (August 2, 2005), 70 FR 46228 (August 9, 2005) 
(SR-Amex-2004-62) (``Amex Notice''). See also Securities Exchange 
Act Release No. 54040 (June 23, 2006) (SR-Amex-2006-41) (``Amex 
Order II'', together with Amex Order I and Amex Notice, ``Amex 
Releases'') (approving the listing and trading on Amex of the 
following four funds: Ultra Short 500 Fund, Ultra Short 100 Fund, 
Ultra Short 30 Fund, and Ultra Short Mid-Cap 400 Fund).
    \5\ See Securities Exchange Act Release No. 54026 (June 21, 
2006), 71 FR 36850 (June 28, 2006) (SR-PCX-2005-115) (order 
approving the trading pursuant to UTP of the Ultra 500 Fund, Ultra 
100 Fund, Ultra 30 Fund, Ultra Mid-Cap 400 Fund, Short 500 Fund, 
Short 100 Fund, Short 30 Fund, and Short Mid-Cap 400 Fund); 
Securities Exchange Act Release No. 54045 (June 26, 2006), 71 FR 
37971 (July 3, 2006) (SR-PCX-2005-115) (order approving the trading 
of the Ultra Short 500 Fund, Ultra Short 100 Fund, Ultra Short 30 
Fund, and Ultra Short Mid-Cap 400 Fund).
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    Four of the Funds--the Ultra S&P 500 ProShares, Ultra QQQ 
ProShares, Ultra Dow 30 ProShares, and Ultra Mid-Cap 400 ProShares 
(``Bullish Funds'')--seek daily investment results, before fees and 
expenses, that correspond to twice (200%) the daily performance of the 
Standard & Poor's 500[reg] Index (``S&P 500''), the Nasdaq-100[reg] 
Index (``Nasdaq 100''), the Dow Jones Industrial Average\SM\ 
(``DJIA''), and the S&P MidCap400\TM\ Index (``S&P MidCap''), 
respectively. Each such index is referred to herein individually as an 
``Underlying Index'' or ``Index'' and collectively as ``Underlying 
Indexes.'' \6\ Any such Fund, if successful in meeting its objective, 
should gain, on a percentage basis, approximately twice as much as the 
Fund's Underlying Index when the prices of the securities in such Index 
increase on a given day, and should lose approximately twice as much 
when such prices decline on a given day.
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    \6\ Exchange-traded funds based on the Underlying Indexes are 
traded on several exchanges, including the CHX. The Statement of 
Additional Information (``SAI'') of each Fund discloses that such 
Fund reserves the right to substitute a different Underlying Index 
under certain circumstances.
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    In addition, four Funds-the Short S&P 500 ProShares, Short QQQ 
ProShares, Short Dow 30 ProShares, and Short Mid-Cap 400 ProShares 
(``Initial Bearish Funds'')--seek daily investment results, before fees 
and expenses, which correspond to the inverse or opposite of the daily 
performance (-100%) of the S&P 500, Nasdaq 100, DJIA, and S&P MidCap, 
respectively. If one such Fund is successful in meeting its objective, 
the net asset value (``NAV'') of shares of the Fund should increase 
approximately as much, on a percentage basis, as the respective 
Underlying Index decreases when the prices of the securities in the 
Index decline on a given day; or should decrease approximately as much, 
on a percentage basis, as the respective Index gains when the prices of 
the securities in the index rise on a given day.
    The remaining four Funds--the UltraShort S&P 500 ProShares, 
UltraShort QQQ ProShares, UltraShort Dow 30 ProShares, and UltraShort 
Mid-Cap 400 ProShares (the ``Additional Bearish Funds'')--seek daily 
investment results, before fees and expenses, that correspond to twice 
(or two times) the inverse or opposite (-200%) of the daily performance 
of the S&P 500, Nasdaq 100, DJIA, and S&P MidCap, respectively. If one 
such Fund is successful in meeting its objective, the NAV of the Shares 
of the Fund should increase approximately twice as much, on a 
percentage basis, as the respective Underlying Index loses when the 
prices of the securities in the Index decline on a given day; or should 
decrease approximately twice as much as the respective Underlying Index 
gains when the prices of the securities in the Index rise on a given 
day. The ``Initial Bearish Funds'' and the ``Additional Bearish Funds'' 
are referred to herein collectively as ``Bearish Funds.''
    Each Share represents a beneficial ownership interest in the net 
assets of the corresponding Fund, less expenses. Each Bullish Fund 
generally will hold at least 80% of its assets in the component equity 
securities of the relevant Underlying Index (``Equity Securities''). 
The remainder of assets will be devoted to Financial Instruments (as 
defined below) that are intended to create the additional needed 
exposure to such Underlying Index necessary to pursue the Fund's 
investment objective. A Bearish Fund will not invest directly in the 
component securities of the relevant Underlying Index, but instead, 
will create short exposure to such Index. At least 80% of the value of 
the portfolio of each Bearish Fund will be devoted to Financial 
Instruments (defined below), debt instruments, and money market 
instruments, including U.S. government securities and repurchase 
agreements (``Money Market Instruments''). The financial instruments to 
be held by any of the Bullish or Bearish Funds may include stock index 
futures contracts; options on futures contracts; options on securities 
and indices; equity caps, collars, and floors; swap agreements; forward 
contracts; repurchase agreements and reverse repurchase agreements 
(``Financial Instruments'');

[[Page 32371]]

and Money Market Instruments. ProShare Advisors LLC is the investment 
adviser (``Advisor'') to each Fund.
    (a) The Shares. A description of the Trust, the operation of the 
Funds, and the creation and redemption process for the Shares is set 
forth in the Amex Releases. To summarize, issuances of Shares will be 
made only in aggregations of at least 75,000 Shares or multiples 
thereof (``Creation Units''). Each Fund will issue and redeem the 
Creation Units on a continuous basis, by or through participants that 
have entered into participant agreements (each, an ``Authorized 
Participant'') with the distributor.
    The NAV per Share of each Fund is computed by dividing the value of 
the net assets of such Fund (i.e., the value of its total assets less 
total liabilities) by its total number of Shares outstanding. The NAV 
of each Fund is calculated by the accounting agent for the Fund and 
determined each business day at the close of regular trading of the New 
York Stock Exchange (ordinarily 4 p.m. Eastern Time (``ET'')).
    (b) Dissemination of Information About the Shares and the 
Underlying Indexes. The Trust's or Advisor's Web site, which is and 
will be publicly accessible at no charge (and to which the Exchange 
will provide a hyperlink on its Web site), will contain the following 
information for each Fund's Shares: (1) The prior business day's 
closing NAV, the reported closing price, and a calculation of the 
premium or discount of such price in relation to the closing NAV; (2) 
data for a period covering at least the four previous calendar quarters 
(or the life of a Fund, if shorter) indicating how frequently each 
Fund's Shares traded at a premium or discount to NAV based on the 
reported closing price and NAV, and the magnitude of such premiums and 
discounts; (3) its prospectus and Product Description; and (4) other 
quantitative information such as daily trading volume.
    Amex represented that it will disseminate for each Fund on a daily 
basis by means of Consolidated Tape Association (``CTA'') and CQ High 
Speed Lines information with respect to an Indicative Intra-Day Value 
(``IIV'') (discussed below), recent NAV, shares outstanding, estimated 
cash amount, and total cash amount per Creation Unit. Quotations for 
and last-sale information regarding the Shares are disseminated through 
the facilities of the Consolidated Tape Association and Consolidated 
Quotation System. Amex also represented that it will make available on 
its Web site (http://www.amex.com) daily trading volume, closing price, 
the NAV, and final dividend amounts, if any, to be paid for each Fund. 
The closing prices of the Shares are readily available from exchanges, 
automated quotation systems, published or other public sources, or on-
line information services such as Bloomberg or Reuters.
    Each Fund's total portfolio composition will be disclosed on the 
Web site of the trust (http://www.profunds.com). The Trust expects that 
Web site disclosure of portfolio holdings will be made daily and will 
include, as applicable, the names and number of shares held of each 
specific Equity Security, the specific types of Financial Instruments 
and characteristics of such instruments, cash equivalents, and amount 
of cash held in the portfolio of each Fund.\7\
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    \7\ The same portfolio information (including accrued expenses 
and dividends) will be provided on the public Web site as well as in 
the IIV File and PCF File provided to Authorized Participants. The 
format of the public Web site disclosure and the IIV and PCF Files 
will differ because the public Web site will list all portfolio 
holdings, whereas the IIV and PCF Files provide the portfolio 
holdings in a different format appropriate for Authorized 
Participants, i.e., the exact components of a Creation Unit.
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    The daily closing index value and the percentage change in the 
daily closing index value for each Underlying Index will be publicly 
available on various Web sites (e.g., http://www.bloomberg.com).\8\ The 
value of each Underlying Index will be updated intra-day on a real time 
basis as its individual component securities change in price. These 
intra-day values of each Underlying Index will be disseminated every 15 
seconds throughout the trading day by the Amex or another organization 
authorized by the relevant Underlying Index provider.
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    \8\ Data regarding each Underlying Index are also available from 
the respective index provider to subscribers. Several independent 
data vendors also package and disseminate index data in various 
value-added formats (including vendors displaying both securities 
and index levels and vendors displaying index levels only).
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    To provide updated information relating to each Fund, Amex will 
disseminate through the facilities of the CTA from 9:30 a.m. ET to 4:15 
p.m. ET: (1) Continuously, the market value of a Share; and (2) every 
15 seconds, a calculation of the IIV as calculated by a third-party 
calculator. Comparing these two figures helps an investor to determine 
whether, and to what extent, the Shares may be selling at a premium or 
a discount to NAV. The IIV is designed to provide investors with a 
reference value that can be used in connection with other related 
market information. The IIV may not reflect the value of all securities 
included in the Underlying Index or the precise composition of the 
current portfolio of securities held by each Fund at a particular point 
in time. Therefore, the IIV should not be viewed as a real-time update 
of the NAV of a particular Fund, which is calculated only once a day.
    (c) UTP Trading Criteria. The Exchange represents that it would 
immediately halt trading the Shares during the listing market's trading 
hours if: (1) The listing market stops trading the Shares because of a 
regulatory halt similar to a halt based on CHX Article 20, Rule 2 or a 
halt because the IIV or the value of the applicable Underlying Index is 
no longer widely disseminated; (2) the listing market delists the 
Shares; or (3) in the situations described in ``Trading Rules'' below. 
Additionally, the Exchange may cease trading the Shares if such other 
event shall occur or condition exists which in the opinion of the 
Exchange makes further dealings on the Exchange inadvisable.
    The Exchange also represents that it would immediately halt trading 
the Shares of a Fund upon notification by the listing market that the 
NAV is not being disseminated to all market participants at the same 
time. The Exchange would resume trading only when trading in the Shares 
resumes on the listing market.
    (d) Other Trading Rules. The Exchange deems the Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
Shares will trade on CHX during both its regular trading session (from 
8:30 a.m. to 3 p.m. (Central Time (``CT''))) and during its late 
trading session (from 3 p.m. to 4 p.m. CT), even if the IIV is not 
disseminated from 3:14 to 4 p.m. CT.\9\ The Exchange has appropriate 
rules to facilitate transactions in the Shares during all trading 
sessions.
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    \9\ Because NSCC does not disseminate the new basket amount to 
market participants until approximately 6 p.m. to 7 p.m. ET, an 
updated IIV is not possible to calculate during the Exchange's late 
trading session. Currently the official index sponsors for the 
Funds' indexes do not calculate updated index values during the 
Exchange's late trading session; however, if the index sponsors did 
so in the future, the Exchange would not trade this product unless 
such official index value is widely disseminated.
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    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of a Fund. Trading may be halted because of 
market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable. These may include: (1) The 
extent to which

[[Page 32372]]

trading is not occurring in the securities comprising an Underlying 
Index and/or the Financial Instruments of a Fund, or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. In addition, trading in Shares 
will be subject to trading halts caused by extraordinary market 
volatility pursuant to the Exchange's ``circuit breaker'' rule or by 
the halt or suspension of trading of the underlying securities.
    Shares will be deemed ``NMS stocks'' and therefore will be subject 
to, among other things, Rule 611 of Regulation NMS under the Act 
(``Order Protection Rule'').
    (e) Surveillance. The Exchange intends to utilize its existing 
surveillance procedures applicable to Investment Company Units to 
monitor trading in the Shares. The Exchange represents that these 
procedures are adequate to monitor Exchange trading of the Shares and 
to deter and detect violations of Exchange rules.
    The Exchange's current trading surveillance focuses on detecting 
securities trading on the Exchange outside their normal patterns. When 
such situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations
    (f) Information Bulletin. Prior to the commencement of trading, the 
Exchange will inform its Participants in an Information Bulletin of the 
special characteristics and risks associated with trading the Shares. 
Specifically, the Information Bulletin will discuss the following: (1) 
The procedures for purchases and redemptions of Shares in Creation Unit 
Aggregations (and that Shares are not individually redeemable); (2) CHX 
Rules 11 and 16, which impose a suitability obligation and a duty of 
due diligence on Participants to learn the essential facts relating to 
every customer prior to trading the Shares; (3) how information 
regarding the IIV is disseminated; (4) the requirement that 
Participants deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (5) trading information.
    The Information Bulletin also will advise Participants, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Funds.\10\ The Exchange notes that investors 
purchasing Shares directly from the Trust will receive a prospectus. 
Participants purchasing Shares from the Trust for resale to investors 
will deliver a prospectus to such investors. The Information Bulletin 
will also discuss any relief, if granted, by the Commission or the 
staff from any rules under the Act. In addition, the Information 
Bulletin will reference that the Trust is subject to various fees and 
expenses described in the Registration Statement. The Information 
Bulletin will also disclose that the NAV for the Shares will be 
calculated shortly after 4 p.m. ET each trading day.
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    \10\ The Commission issued an exemptive order pursuant to, among 
other things, Section 24(d) of the 1940 Act that permits dealers to 
sell Shares in the secondary market unaccompanied by a statutory 
prospectus when prospectus delivery is not required by the 
Securities Act of 1933. See ProShares Trust, et al., Investment 
Company Act Release Nos. 27323 (May 18, 2006) (notice) and 27394 
(June 13, 2006) (order), as subsequently amended by ProShares Trust, 
et al., Investment Company Act Release Nos. 27609 (December 22, 
2006) (notice) and 27666 (January 18, 2007) (order). Under the 
orders, certain investors will receive a product description 
(``Product Description'') describing the Trust, the Funds, and the 
Shares. This Product Description will contain information about the 
Shares that is tailored to meet the needs of investors purchasing 
the Shares in the secondary market.
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2. Statutory Basis
    The CHX believes the proposal is consistent with the requirements 
of the Act and the rules and regulations thereunder that are applicable 
to a national securities exchange, and, in particular, with the 
requirements of Section 6(b).\11\ The proposed rule change is 
consistent with Section 6(b)(5) of the Act because it would promote 
just and equitable principles of trade; remove impediments to, and 
perfect the mechanism of, a free and open market and a national market 
system; and, in general, protect investors and the public interest by 
allowing CHX participants to trade these products.
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    \11\ 15 U.S.C. 78(f)(b).
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    In addition, the Exchange believes that the proposal is consistent 
with Rule 12f-5 under the Act \12\ because it deems the Shares to be 
equity securities, thus rendering the Shares subject to the Exchange's 
existing rules governing the trading of equity securities.
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    \12\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement of Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments Regarding the 
Proposed Rule Changes Received From Members, Participants or Others

    No written comments were either solicited or received.

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 rule-comments@sec.gov. Please include 
File Number SR-CHX-2008-07 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CHX-2008-07. 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 CHX. 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-CHX-2008-07 and should be 
submitted on or before June 27, 2008.

[[Page 32373]]

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful review, 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.\13\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\14\ which 
requires that an exchange have rules designed, among other things, 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 believes that this proposal should benefit 
investors by increasing competition among markets that trade the 
Shares.
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    \13\ In approving this rule change, the Commission notes that it 
has considered the proposal's impact on efficiency, competition, and 
capital formation. See 15 U.S.C. 78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
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    In addition, the Commission finds that the proposal is consistent 
with Section 12(f) of the Act,\15\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\16\ The Commission notes that it previously approved the 
listing and trading of the Shares on Amex.\17\ The Commission also 
finds that the proposal is consistent with Rule 12f-5 under the 
Act,\18\ which provides that an exchange shall not extend UTP to a 
security unless the exchange has in effect a rule or rules providing 
for transactions in the class or type of security to which the exchange 
extends UTP. The Exchange has represented that it meets this 
requirement because it deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities.
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    \15\ 15 U.S.C. 78l(f).
    \16\ Section 12(a) of the Act, 15 U.S.C. 78l(a), generally 
prohibits a broker-dealer from trading a security on a national 
securities exchange unless the security is registered on that 
exchange pursuant to Section 12 of the Act. Section 12(f) of the Act 
excludes from this restriction trading in any security to which an 
exchange ``extends UTP.'' When an exchange extends UTP to a 
security, it allows its members to trade the security as if it were 
listed and registered on the exchange even though it is not so 
listed and registered.
    \17\ See supra notes 4 and 5.
    \18\ 17 CFR 240.12f-5.
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    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\19\ 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. Quotations for and last-sale information regarding the 
Shares are disseminated through the facilities of the CTA and the 
Consolidated Quotation System. Furthermore, the IIV, updated to reflect 
changes in currency exchange rates, will be calculated by Amex and 
publicly disseminated on a 15-second delayed basis from 8:30 a.m. to 
3:14 p.m. CT. As mentioned above, Amex's Web site provides various 
information about the value of the Shares, such as the prior business 
day's closing NAV, the reported closing price, and the daily trading 
volume.
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    \19\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    The Commission also believes that the Exchange's trading halt 
procedures are reasonably designed to prevent trading in the Shares 
when transparency is impaired. CHX has represented that if the listing 
market halts trading when the IIV is not being calculated or 
disseminated, the Exchange would halt trading in the Shares until 
trading resumes on the listing market.
    The Commission notes that, if the Shares should be delisted by the 
listing exchange, the Exchange would no longer have authority to trade 
the Shares pursuant to this order.
    In support of this proposal, the Exchange has made the following 
representations:
    1. The Exchange's surveillance procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules.
    2. Prior to the commencement of trading, the Exchange would inform 
its Participants in an Information Bulletin of the special 
characteristics and risks associated with trading the Shares.
    3. Prior to the commencement of trading, the Exchange would inform 
its Participants in an Information Bulletin of the requirement that 
Participants deliver a prospectus or Product Description to investors 
purchasing newly issued Shares prior to or concurrently with the 
confirmation of a transaction.
    This approval order is based on the Exchange's representations.
    The Commission finds good cause for approving this proposal before 
the thirtieth day after the publication of notice thereof in the 
Federal Register. As noted previously, the Commission previously found 
that the listing and trading of the Shares on other exchanges is 
consistent with the Act.\20\ The Commission presently is not aware of 
any regulatory issue that should cause it to revisit those findings or 
would preclude the trading of the Shares on the Exchange pursuant to 
UTP. Therefore, accelerating approval of this proposal should benefit 
investors by creating, without undue delay, additional competition in 
the market for the Shares.
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    \20\ See supra notes 4 and 5.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-CHX-2008-07) be, and it 
hereby is, approved on an accelerated basis.
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    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Florence E. Harmon,
Acting Secretary.
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    \22\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E8-12629 Filed 6-5-08; 8:45 am]

BILLING CODE 8010-01-P