Document ID: SEC-2006-1391-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2006-10-27T04:00Z

[Federal Register: October 27, 2006 (Volume 71, Number 208)]
[Notices]               
[Page 63060-63061]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc06-113]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54636; File No. SR-NYSEArca-2006-70]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of a Proposed Rule Change Relating to the Exchange's Generic Listing 
Standards for Index-Linked Securities

October 20, 2006.
    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 October 2, 2006, NYSE Arca, Inc. (``Exchange''), through its wholly-
owned subsidiary NYSE Arca Equities, Inc. (``NYSE Arca Equities'' or 
the ``Corporation''), 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 prepared by the Exchange. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend NYSE Arca Equities Rule 
5.2(j)(6) to extend the maximum duration of index-linked securities 
(``Index-Linked Securities'') from ten (10) years to thirty (30) years. 
The text of the proposed rule change appears below. Proposed new 
language is in italics; proposed deletions are in [brackets].
* * * * *
NYSE Arca Equities
Rule 5.2(j)(6). Index-Linked Securities
    Index-linked securities are securities that provide for the payment 
at maturity of a cash amount based on the performance of an underlying 
index or indexes. Such securities may or may not provide for the 
repayment of the original principal investment amount. The Corporation 
may submit a rule filing pursuant to Section 19(b)(2) of the Securities 
Exchange Act of 1934 (``Act'') to permit the listing and trading of 
index-linked securities that do not otherwise meet the standards set 
forth below in paragraphs (a) through (k). The Corporation will 
consider for listing and trading pursuant to Rule 19b-4(e) under the 
Act, index-linked securities provided:
* * * * *
    (b) The issue has a minimum term of one (1) year but no greater 
than [ten (10)] thirty (30) years.
* * * * *

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 states that the purpose of the proposed rule change is 
to amend the Exchange's rules to extend the maximum duration of Index-
Linked Securities from ten (10) years to thirty (30) years.
    Pursuant to NYSE Arca Equities Rule 5.2(j)(6), the Exchange may 
approve for listing and trading securities that cannot be readily 
categorized under the listing criteria for common and preferred 
securities, bonds, debentures, or warrants. In August 2005, the 
Commission approved the Exchange's proposal to add NYSE Arca Equities 
Rule 5.2(j) (which was a PCX rule at the time) to the NYSE Arca 
Equities rule for the purpose of adopting generic listing standards 
pursuant to Rule 19b-4(e) \3\ in connection with Index-Linked 
Securities.\4\
---------------------------------------------------------------------------

    \3\ 17 CFR 240.19b-4(e).
    \4\ See Securities Exchange Act Release No. 52204 (August 3, 
2005), 70 FR 46559 (August 10, 2005) (SR-PCX-2005-63). Telephone 
Conference on October 20, 2006 between John Carey, Assistant General 
Counsel, Exchange, and Hong-anh Tran, Special Counsel, Division of 
Market Regulation (``Division''), Commission (Telephone Conference).
---------------------------------------------------------------------------

    NYSE Arca Equities Rule 5.2(j)(6) sets forth criteria that the 
issue and the issuer must meet in order to list and trade Index-Linked 
Securities at the Exchange.\5\ Currently, one of the criteria the 
Exchange considers for the listing and trading of Index-Linked 
Securities, pursuant to NYSE Arca Equities Rule 5.2(j)(6), is that the 
term of the issue must be a minimum term of one (1) year but not 
greater than ten (10) years. The Exchange proposes to amend NYSE Arca 
Equities Rule 5.2(j)(6)(b) to extend the duration of the term of the 
issue from ten (10) years to thirty (30) years. The Exchange believes 
this amendment to NYSE Arca Equities Rule 5.2(j)(6)(b) is appropriate 
due to the increase demand from issuers to list and trade Index-Linked 
Securities that are greater than ten (10) years in duration. In 
addition, the Exchange notes that corporate bonds and other fixed-
income products have historically been issued with terms of up to, or 
greater than, thirty (30) years.
---------------------------------------------------------------------------

    \5\ NYSE Arca Equities Rule 5.2(j)(6) permits the Exchange to 
submit a rule filing pursuant to Section 19(b)(2) of the Act to 
allow the listing and trading of Index-Linked Securities that do not 
otherwise meet the generic listing criteria.
---------------------------------------------------------------------------

    The Exchange believes expanding the duration for Index-Linked 
Securities, subject to generic listing standards in NYSE Arca Equities 
Rule 5.2(j)(6), will help to foster competition and promote enhanced 
efficiency in the marketplace. Incorporating these guidelines into the 
Exchange's generic listing standards for Index-Linked Securities will 
allow Index-Linked Securities that satisfy the listing standards to 
begin trading pursuant to Rule 19b-4(e), without constituting a 
proposed rule change within the meaning of Section 19(b) of the Act and 
Rule 19b-4, for which notice and comment and Commission approval is 
necessary.\6\ The Exchange's ability to rely on Rule 19b-4(e) to list 
such Index-Linked Securities potentially reduces the time frame for 
bringing these securities to the market, thereby promoting competition 
and making such products available to investors more quickly. The 
Exchange also notes that the Commission has approved amendments to the 
generic listing standards for equity-linked notes that removed the 
maximum term limits for those securities.\7\
---------------------------------------------------------------------------

    \6\ Telephone Conference on October 19, 2006 between John Carey, 
Assistant General Counsel, Exchange, and Hong-anh Tran, Special 
Counsel, Division, Commission.
    \7\ Telephone Conference. See Securities Exchange Act Release 
Nos. 42110 (November 5, 1999), 64 FR 61677 (November 12, 1999) (SR-
Amex-99-33); 41992 (October 7, 1999), 64 FR 56007 (October 15, 1999) 
(SR-NYSE-99-22); and 42313 (January 4, 2000), 65 FR 2205 (January 
13, 2000) (SR-Chx-99-19).

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

[[Page 63061]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Section 6(b)(5),\9\ 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 and perfect the mechanism of a 
free and open market, and, in general to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 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 purpose of the Act.

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

    Written comments on the proposed rule change were neither solicited 
nor received.

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 self-regulatory organization 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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NYSEArca-2006-70 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-2006-70. 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. Copies of such 
filings will also 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-2006-70 and should be submitted by November 17, 
2006.

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

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

Nancy M. Morris,
Secretary.
 [FR Doc. E6-17996 Filed 10-26-06; 8:45 am]

BILLING CODE 8011-01-P