Document ID: SEC-2006-1217-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-09-21T04:00Z

[Federal Register: September 21, 2006 (Volume 71, Number 183)]
[Notices]               
[Page 55248-55257]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21se06-90]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54458; File No. SR-NYSE-2006-60]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Relating to iShares[supreg] S&P Global Index Funds

September 15, 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 September 14, 2006, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule changes as described in 
Items I and II below, which items have been substantially prepared by 
the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons, and is 
granting accelerated approval to the proposed rule change.
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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 NYSE proposes to list and trade the following: iShares[supreg] 
S&P Global Consumer Discretionary Sector Index

[[Page 55249]]

Fund; iShares S&P Global Consumer Staples Sector Index Fund; iShares 
S&P Global Industrials Sector Index Fund; iShares S&P Global Utilities 
Sector Index Fund; iShares S&P Global Materials Sector Index Fund 
(collectively, the Funds'').\3\ The Funds are exchange-traded funds, 
which are a type of Investment Company Unit (``ICU'').
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    \3\ iShares is a registered trademark of Barclays Global 
Investors, N.A.
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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. The 
text of these statements may be examined at the places specified in 
Item III below. The NYSE 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 has adopted listing standards applicable to Investment 
Company Units (``ICUs'') that it states are consistent with the listing 
criteria currently used by other national securities exchanges, and 
trading standards pursuant to which the Exchange may either list and 
trade ICUs or trade such ICUs on the Exchange on an unlisted trading 
privileges (``UTP'') basis.\4\
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    \4\ In 1996, the Commission approved Section 703.16 of the 
Listed Company Manual, which sets forth the rules related to the 
listing of ICUs. Securities Exchange Act Release No. 36923 (March 5, 
1996), 61 FR 10410 (March 13, 1996).
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    The Exchange now proposes to list and trade under Section 703.16 of 
the NYSE Listed Company Manual (``Manual'') and NYSE Rule 1100 et seq. 
shares of the following, each a series of the iShares Trust (the 
``Trust''): \5\ (1) iShares S&P Global Consumer Discretionary Sector 
Index Fund; (2) iShares S&P Global Consumer Staples Sector Index Fund; 
(3) iShares S&P Global Industrials Sector Index Fund; (4) iShares S&P 
Global Utilities Sector Index Fund; and (5) iShares S&P Global 
Materials Sector Index Fund. Because the Funds invest in non-U.S. 
securities not listed on a national securities exchange or the Nasdaq 
Stock Market, the Funds do not meet the ``generic'' listing 
requirements of Section 703.16 of the Manual applicable to listing of 
ICUs (permitting listing in reliance upon Rule 19b-4(e) \6\ under the 
Act and cannot be listed without a filing pursuant to Rule 19b-4 under 
the Act). Therefore, to list the Funds (or trade pursuant to UTP), the 
Exchange must file, and obtain Commission approval of, a proposed rule 
change pursuant to Rule 19b-4 under the Act.\7\
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    \5\ The Trust is registered under the Investment Company Act of 
1940 (15 U.S.C. 80a), (the ``Investment Company Act''). On April 15, 
2005, the Trust filed with the Commission a Registration Statement 
for the Funds on Form N-1A under the Securities Act of 1933 (15 
U.S.C. 77a), and under the Investment Company Act relating to the 
Funds (File Nos. 333-92935 and 811-09729) (as amended, the 
``Registration Statement'').
    \6\ 17 CFR 240.19b-4(e).
    \7\ 17 CFR 240.19b-4.
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    As set forth in detail below, the Funds will hold certain 
securities (``Component Securities'') selected to correspond generally 
to the performance of the following indexes, (``Underlying Indexes''), 
respectively: (1) S&P Global Consumer Discretionary Index; (2) S&P 
Global Consumer Staples Index; (3) S&P Global Industrials Index; (4) 
S&P Global Utilities Index; and (5) S&P Global Materials Index.
    Each Fund intends to qualify as a ``regulated investment company'' 
(a ``RIC'') under the Internal Revenue Code (the ``Code''). Barclays 
Global Fund Advisors (the ``Advisor'' or ``BGFA'') is the investment 
advisor to the Funds. The Advisor is registered under the Investment 
Advisers Act of 1940.\8\ The Advisor is the wholly owned subsidiary of 
Barclays Global Investors, N.A. (``BGI''), a national banking 
association. BGI is an indirect subsidiary of Barclays Bank PLC of the 
United Kingdom. SEI Investments Distribution Co. (``SEI'' or 
``Distributor''), a Pennsylvania corporation and broker-dealer 
registered under the Act, is the principal underwriter and distributor 
of Creation Unit Aggregations of iShares. The Distributor is not 
affiliated with the Exchange or the Advisor. The Trust has appointed 
Investors Bank & Trust Co. (``IBT'') to act as administrator 
(``Administrator''), custodian, fund accountant, transfer agent, and 
dividend disbursing agent for the Funds. The Exchange expects that 
performance of the Administrator's duties and obligations will be 
conducted within the provisions of the Investment Company Act \9\ and 
the rules thereunder. There is no affiliation between the Administrator 
and the Trust, the Advisor, or the Distributor.
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    \8\ 15 U.S.C. 80b-1.
    \9\ 15 U.S.C. 80a-1.
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Operation of the Funds.\10\
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    \10\ The Exchange states that the information provided herein is 
based on information included in the Registration Statement; 
however, the Commission notes that its approval of the listing and 
trading of these ICUs is subject to the continued operation of the 
Funds and their related Indexes as described herein by the Exchange. 
The Exchange also states that while the Advisor would manage the 
Funds, the Funds' Board of Directors would have overall 
responsibility for the Funds' operations. The composition of the 
Board is, and would be, in compliance with the requirements of 
Section 10 of the Investment Company Act. The Funds are subject to 
and must comply with Section 303A.06 of the Manual, which requires 
that the Funds have an audit committee that complies with SEC Rule 
10A-3, 17 CFR 240.10A-3.
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    The investment objective of the Funds will be to provide investment 
results that correspond generally to the price and yield performance of 
the Underlying Indexes. In seeking to achieve their investment 
objective, the Funds will utilize ``passive'' indexing investment 
strategies. The Funds may fully replicate their respective Underlying 
Index, but currently intend to use a ``representative sampling'' 
strategy to track the applicable Underlying Index. A Fund utilizing a 
representative sampling strategy generally will hold a basket of the 
Component Securities of its Underlying Index, but it may not hold all 
of the Component Securities of its Underlying Index.
    Each Fund will invest at least 90% of its assets in the securities 
of its Underlying Index or in American Depositary Receipts (``ADRs''), 
Global Depositary Receipts (``GDRs''), or European Depositary Receipts 
(``EDRs'') (collectively ``Depositary Receipts'') representing 
securities in the Underlying Index. A Fund may invest the remainder of 
its assets in securities not included in its Underlying Index, but 
which BGFA believes will help the Fund track its Underlying Index. For 
example, a Fund may invest in securities not included in its Underlying 
Index in order to reflect various corporate actions (such as mergers) 
and other changes in its Underlying Index (such as reconstitutions, 
additions and deletions). A Fund also may invest its other assets in 
futures contracts, options on futures contracts, options, and swaps 
related to its Underlying Index, as well as cash and cash equivalents, 
including shares of money market funds affiliated with BGFA.
    From time to time, adjustments may be made in the portfolio of the 
Funds in accordance with changes in the composition of the Underlying 
Indexes or to maintain compliance with requirements applicable to a RIC 
under

[[Page 55250]]

the Code.\11\ For example, if at the end of a calendar quarter a Fund 
would not comply with the RIC diversification tests, the Advisor would 
make adjustments to the portfolio to ensure continued RIC status.
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    \11\ In order for the Funds to qualify for tax treatment as a 
RIC, they must meet several requirements under the Code. Among these 
is a requirement that, at the close of each quarter of the Funds' 
taxable year, (1) at least 50% of the market value of the Funds' 
total assets must be represented by cash items, U.S. government 
securities, securities of other RICs and other securities, with such 
other securities limited for the purpose of this calculation with 
respect to any one issuer to an amount not greater than 5% of the 
value of the Funds' assets and not greater than 10% of the 
outstanding voting securities of such issuer; and (2) not more than 
25% of the value of their total assets may be invested in securities 
of any one issuer, or two or more issuers that are controlled by the 
Funds (within the meaning of Section 851(b)(4)(B) of the Code) and 
that are engaged in the same or similar trades or business (other 
than U.S. government securities of other RICs).
    Compliance with the above referenced RIC asset diversification 
requirements are monitored by the Advisor and any necessary 
adjustments to portfolio issuer weights will be made on a quarterly 
basis or as necessary to ensure compliance with RIC requirements. 
When an iShares Fund's Underlying Index itself is not RIC compliant, 
the Advisor generally employs a representative sampling indexing 
strategy (as described in the Funds' prospectus) in order to achieve 
the Fund's investment objective. The Funds' prospectus also gives 
the Funds additional flexibility to comply with the requirements of 
the Code and other regulatory requirements and to manage future 
corporate actions and index changes in smaller markets by investing 
a percentage of fund assets in securities that are not included in 
the Fund's Underlying Index or in ADRs and GDRs representing such 
securities.
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    To the extent the Funds invest in ADRs, they will be listed on a 
national securities exchange or Nasdaq, and to the extent the Funds 
invest in other Depositary Receipts, they will be listed on a foreign 
exchange. The Funds will not invest in any unlisted Depositary Receipts 
or any listed Depositary Receipts that the Advisor deems to be illiquid 
or for which pricing information is not readily available. In addition, 
all Depositary Receipts must be sponsored (with the exception of 
certain pre-1984 ADRs that are listed and unsponsored because they are 
grandfathered).
    Each Fund will not concentrate its investments (i.e., hold 25% or 
more of its total assets in the stocks of a particular industry or 
group of industries), except that a Fund will concentrate to 
approximately the same extent that its Underlying Index concentrates in 
the stocks of such particular industry or group of industries. In such 
case, a Fund could hold 25% or more of its total assets in the stocks 
of such industry or group of industries. For purposes of this 
limitation, securities of the U.S. Government (including its agencies 
and instrumentalities), repurchase agreements collateralized by U.S. 
Government securities, and securities or state or municipal governments 
and their political subdivisions are not considered to be issued by 
members of any industry.
    The Exchange believes that these requirements and policies prevent 
the Funds from being excessively weighted in any single security or 
small group of securities and significantly reduce concerns that 
trading in the Funds could become a surrogate for trading in 
unregistered securities.
Description of the Index Methodology
    Each of the Indexes is a subset of the Standard & Poor's Global 
1200 Index and thus contains the securities of both domestic and 
international companies as Index components. The Indexes are free float 
adjusted and market capitalization weighted. The Standard & Poor's 
Index Committee (which does not include employees of broker-dealers or 
their affiliates) is responsible for the overall management of these 
S&P Indices.
    Selection Criteria for Domestic Components. Companies (i.e., the 
``Components'') selected for the investments represent a broad range of 
industry segments within the U.S. economy. The starting universe, all 
publicly traded U.S. companies (i.e., companies listed and traded on a 
national securities exchange or the Nasdaq Stock Market), is screened 
to eliminate ADRs, mutual funds, limited partnerships and royalty 
trusts. The following criteria are then analyzed to determine a 
company's eligibility for inclusion in the investments: (1) Ownership 
of a company's outstanding common shares, in order to screen out 
closely held companies; (2) trading volume of a company's stock, in 
order to ensure ample liquidity and efficient share pricing; and (3) 
the financial and operating condition of a company.
    Selection Criteria for International Components.\12\ With respect 
to non-U.S. components of the Underlying Indexes, the eligible universe 
of Index components that are considered for inclusion are from the 
following S&P Indexes: (1) The S&P/Toronto Stock Exchange (``TSX'') 60 
Index, which represents the liquid, large-cap stocks of the publicly 
listed companies in the Canadian equities market; (2) the S&P Tokyo 
Stock Price (``TOPIX'') 150 Index, which represents the liquid, large-
cap stocks of the publicly listed companies in the Japanese equities 
market; (3) the S&P/ Australia Stock Exchange (``ASX'') 50 Index, which 
represents the liquid, large-cap stocks in the Australian equities 
market; (4) the S&P Asia 50 Index, which represents the liquid, large-
cap stocks of four major equities markets in Asia (Hong Kong, Korea, 
Taiwan and Singapore); (5) the S&P Latin America 40 Index, which 
represents the liquid, large-cap stocks from major sectors of the 
Mexico, Brazil, Argentina and Chile equity markets; and (6) the S&P 
Europe 350 Index, which represents the liquid, large-cap stocks of the 
publicly listed companies in the region, covering approximately 70% of 
the region's market capitalization and spanning 17 exchanges. All 
stocks included in these S&P Indexes are in the S&P Global 1200 
Index.\13\
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    \12\ S&P determines a stock's domicile based on a number of 
criteria, including the headquarters of the issuer, its 
registration, its stock listing, its place of operations, the 
residence of the senior officers, and other criteria. Each region's 
Index Committee reviews all criteria before deciding on the domicile 
of a stock. Telephone conversation between Michael Cavalier, 
Associate General Counsel, NYSE, and Florence Harmon, Senior Special 
Counsel, Division of Market Regulation, Commission, on September 15, 
2006 (``September 15 Telephone Conference'').
    \13\ September 15 Telephone Conference.
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    Where there were multiple classes of a particular equity, all 
classes were deemed eligible if they met the criteria for size, 
liquidity and sector representation. The specific securities are then 
screened for industry sector classification; thus, the eligible 
securities are ranked according to Global Industry Classification 
Standards (``GICS''). Then, the Index components, now determined, are 
weighted on the basis of S&P's free float, market capitalization 
methodology. Generally, S&P observes a prospective constituent's 
liquidity over a period of at least 6 months before consideration for 
inclusion. However, it is recognized that there may be extraordinary 
situations when companies should be added immediately (e.g., certain 
privatizations). When a particular company dominates its home market, 
it may be excluded from the Index if analysis of the sectors reveals 
that its securities are not as liquid as those of similar companies in 
other countries. The International Index components may include ADRs 
and GDRs.
    Issue Changes. General oversight responsibility for the S&P 
Indices, including overall policy guidelines and methodology, is 
handled by the S&P Global Index Committee (which does not include 
employees of broker-dealers or their affiliates). Maintenance of 
component investments, including additions and deletions to these 
investments, is the responsibility of separate regional index 
committees

[[Page 55251]]

composed of S&P staff specialized in the various regional equity 
markets and, in some cases with the assistance of local stock 
exchanges. Public announcements of index changes as the result of 
committee decisions will generally be made two business days in advance 
of the anticipate effective date whenever possible, although for 
exceptional corporate events announcements may be made earlier.
    Index Maintenance. Maintaining the S&P Indices includes monitoring 
and completing the adjustments for company additions and deletions, 
share changes, stock splits, stock dividends, and stock price 
adjustments due to restructuring and spin-offs. Share changes of less 
than 5% are only updated on a quarterly basis on the Friday near the 
end of the calendar quarter.
    A company will be removed from the S&P Indices as a result of 
mergers/acquisitions, bankruptcy, restructuring, or if it is no longer 
representative of its industry group. A company is removed from the 
relevant Index as close as possible to the actual date on which the 
event occurred. A company can be removed from an Index because it no 
longer meets current criteria for inclusion and/or is no longer 
representative of its industry group. All replacement companies are 
selected based on the above component section criteria.
    When calculating index weights, individual constituents' shares 
held by governments, corporations, strategic partners, or other control 
groups are excluded from the company's shares outstanding. Shares owned 
by other companies are also excluded regardless of whether they are 
index constituents.
    In countries with regulated environments, where a foreign 
investment limit exists at the sector or company level, the 
constituent's weight will reflect either the foreign investment limit 
or the percentage float, whichever is the more restrictive.
    Once a year, the float adjustments will be reviewed and potentially 
changed based on such review. Each company's financial statements will 
be used to update the major shareholders' ownership for the float 
adjustments calculation, as the Indexes are free float adjusted, market 
capitalization weighted for each company's shares. However, during the 
course of the year, S&P also monitors each company's Investable Weight 
Factor (IWF), which is S&P's term for the mathematical float factor 
used to calculate the float adjustment. If a change in the IWF is 
caused by a major corporate action (i.e., privatization, merger, 
takeover, or share offering) and the change is equal to or greater than 
5%, a float adjustment will be implemented as soon as reasonably 
possible.
    Changes in the number of shares outstanding driven by corporate 
events such as stock dividends, splits, and rights issues will be 
adjusted on the ex-date. Share changes of 5% or greater are implemented 
when they occur. All share changes of less than 5% are updated on a 
quarterly basis (third Friday of March, June, September, and December 
or at the close of the expiration of futures contracts). Implementation 
of new additions, deletions, and changes to the float adjustment, due 
to corporate actions, will be made available at the close of the third 
Friday in March, June, September and December. Generally, index changes 
due to rebalancing are announced two days before the effective date by 
way of a news release posted on http://www.spglobal.com.

    The S&P Indices are calculated continuously and are available from 
major data vendors. A current list of the Index components is attached 
as Exhibit 3 to the NYSE's filing.
Index Descriptions
    The S&P Global Consumer Discretionary Index measures the 
performance of companies that Standard & Poor's deems to be part of the 
consumer discretionary sector of the economy and that Standard & Poor's 
believes are important to global markets. Component companies include 
manufacturing and service companies. As of the close of business on 
January 31, 2006, the Index was comprised of stocks of companies in the 
following countries: Australia, Belgium, Canada, Chile, France, 
Germany, Hong Kong, Italy, Japan, Korea, Mexico, Netherlands, 
Singapore, Spain, Sweden, Switzerland, United Kingdom, and the United 
States.
    The S&P Global Consumer Staples Index measures the performance of 
companies that Standard & Poor's deems to be part of the consumer 
staples sector of the economy and that Standard & Poor's believes are 
important to global markets. Component companies include manufacturers 
and distributors of food, producers of non-durable household goods, and 
food and drug retailing companies. As of the close of business on 
January 31, 2006, the Index was comprised of stocks of companies in the 
following countries: Australia, Belgium, Brazil, Canada, Chile, 
Germany, Japan, Korea, Mexico, Netherlands, Norway, Spain, Sweden, 
Switzerland, United Kingdom, and the United States.
    The S&P Global Industrials Index measures the performance of 
companies that Standard & Poor's deems to be part of the industrials 
sector of the economy and that Standard & Poor's believes are important 
to global markets. Component companies include manufacturers and 
distributors of capital goods, providers of commercial services and 
supplies, and transportation service providers. As of the close of 
business on January 31, 2006, the Index was comprised of stocks of 
companies in the following countries: Australia, Brazil, Canada, Chile, 
Denmark, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, 
Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, 
Switzerland, United Kingdom and the United States.
    The S&P Global Utilities Index measures the performance of 
companies that Standard & Poor's deems to be part of the Utilities 
sector of the economy and that Standard & Poor's believes are important 
to global markets. Component companies include providers of electric, 
gas or water utilities, or companies that operate as independent 
producers and/or distributors of power. As of the close of business on 
January 31, 2006, the Index was comprised of stocks of companies in the 
following countries: Australia, Brazil, Canada, Chile, Finland, France, 
Germany, Hong Kong, Italy, Japan, Portugal, Spain, United Kingdom, and 
the United States.
    The S&P Global Materials Index measures the performance of 
companies that Standard & Poor's deems to be part of the materials 
sector of the economy and that Standard & Poor's believes are important 
to global markets. Component companies include those companies engaged 
in a wide variety of commodity-related manufacturing. As of the close 
of business on January 31, 2006, the Index was comprised of stocks of 
companies in the following countries: Australia, Belgium, Brazil, 
Canada, Chile, Finland, France, Germany, Ireland, Japan, Korea, 
Luxembourg, Mexico, Netherlands, Portugal, Spain, Sweden, Switzerland, 
Taiwan, United Kingdom, and the United States.
    As of May 31, 2006, the iShares S&P Global Consumer Discretionary 
Sector Index's top three holdings were Toyota Motor Corp., Home Depot, 
Time Warner Inc.; the Index's top three industries were Consumer 
Discretionary and Index components had a total market capitalization of 
approximately $2.8 trillion. The average total market capitalization 
was approximately $14.6 billion. The 10 largest constituents 
represented approximately 28.4% of the Index weight. The five highest 
weighted stocks, which represented 18.2% of the Index weight, had an 
average daily

[[Page 55252]]

trading volume in excess of 66.1 million shares during the period April 
1 through May 31, 2006. 99.98% of the component stocks traded at least 
250,000 shares monthly from December 2005 through May 2006.
    As of May 31, 2006, the iShares S&P Global Consumer Staples Sector 
Index's top three holdings were Procter & Gamble, Altria Group, Inc., 
Wal-Mart Stores; the Index's top three industries were Consumer Staples 
and Index components had a total market capitalization of approximately 
$2.3 trillion. The average total market capitalization was 
approximately $23.5 billion. The 10 largest constituents represented 
approximately 48.3% of the Index weight. The five highest weighted 
stocks, which represented 34.6% of the Index weight, had an average 
daily trading volume in excess of 32.3 million shares during the period 
April 1 through May 31, 2006. 99.6% of the component stocks traded at 
least 250,000 shares monthly from December 2005 through May 2006.
    As of May 31, 2006, the iShares S&P Global Industrials Sector 
Index's top three holdings were General Electric, United Parcel 
Service, Siemens AG; the Index's top three industries were Industrials 
and Index components had a total market capitalization of approximately 
$2.7 trillion. The average total market capitalization was 
approximately $15.3 billion. The 10 largest constituents represented 
approximately 37.1% of the Index weight. The five highest weighted 
stocks, which represented 27.2% of the Index weight, had an average 
daily trading volume in excess of 38.6 million shares during the period 
April 1 through May 31, 2006. 99.65% of the component stocks traded at 
least 250,000 shares monthly from December 2005 through May 2006.
    As of May 31, 2006, the iShares S&P Global Materials Sector Index's 
top three holdings were BHP Billiton Limited, Anglo American, Rio 
Tinto; the Index's top three industries were Materials and Index 
components had a total market capitalization of approximately $1.6 
trillion. The average total market capitalization was approximately 
$12.9 billion. The 10 largest constituents represented approximately 
30.7% of the Index weight. The five highest weighted stocks, which 
represented 19.5% of the Index weight, had an average daily trading 
volume in excess of 66.5 million shares during the period April 1 
through May 31, 2006. 99.31% of the component stocks traded at least 
250,000 shares monthly from December 2005 through May 2006.
    As of May 31, 2006, the iShares S&P Global Utilities Sector Index's 
top three holdings were E.On AG, Suez SA, RWE AG; the Index's top three 
industries were Utilities and Index components had a total market 
capitalization of approximately $1.2 trillion. The average total market 
capitalization was approximately $16.9 billion. The 10 largest 
constituents represented approximately 41.5% of the Index weight. The 
five highest weighted stocks, which represented 25.0% of the Index 
weight, had an average daily trading volume in excess of 47.8 million 
shares during the period April 1 through May 31, 2006. 100% of the 
component stocks traded at least 250,000 shares monthly from December 
2005 through May 2006.
    Additional information regarding the Funds' holdings is available 
at http://www.ishares.com.

Determination of Net Asset Value
    IBT calculates the NAV for each Fund generally once daily Monday 
through Friday generally as of the regularly scheduled close of 
business of the NYSE (normally 4 p.m. Eastern time) on each day that 
the NYSE is open for trading, based on prices at the time of closing, 
provided that (a) any assets or liabilities denominated in currencies 
other than the U.S. dollar shall be translated into U.S. dollars at the 
prevailing market rates on the date of valuation as quoted by one or 
more major banks or dealers that makes a two-way market in such 
currencies (or a major market data service provider based on quotations 
received from such banks or dealers); and (b) U.S. fixed-income assets 
may be valued as of the announced closing time for trading in fixed-
income instruments on any day that the Bond Market Association 
announces an early closing time. The NAV of each Fund is calculated by 
dividing the value of the net assets of such Fund (i.e., the value of 
its total assets less total liabilities) by the total number of 
outstanding shares of the Fund, generally rounded to the nearest cent. 
In calculating a Fund's NAV, a Fund's investments are generally valued 
using market valuations. In the event that current market valuations 
are not readily available or such valuations do not reflect current 
market values, the affected investments will be valued using fair value 
pricing pursuant to the pricing policy and procedures approved by the 
Board of Trustees. The frequency with which a Fund's investments are 
valued using fair value pricing is primarily a function of the types of 
securities and other assets in which the Fund invests pursuant to its 
investment objective, strategies and limitations.
    According to the Funds' prospectus, valuing the Fund's investments 
using fair value pricing will result in using prices for those 
investments that may differ from current market prices. Accordingly, 
fair value pricing could result in a difference between the prices used 
to calculate the Fund's net asset value and the prices used by the 
Fund's benchmark index, which, in turn, could result in a difference 
between the Fund's performance and the performance of the Fund's 
benchmark index.
    Because foreign markets may be open on different days than the days 
during which a shareholder may purchase the Fund's shares, the value of 
the Fund's investments may change on days when shareholders are not 
able to purchase the Fund's shares.
    The value of assets denominated in foreign currencies is converted 
into U.S. dollars using exchange rates deemed appropriate by BGFA as 
investment advisor.\14\
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    \14\ The Fund utilizes foreign exchange rates of major market 
data vendors, such as WM/Reuters. September 15 Telephone Conference.
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Issuance of Creation Unit Aggregations
    In General. Shares of the Funds (the ``iShares'') will be issued on 
a continuous offering basis in groups of iShares, or multiples thereof. 
These ``groups'' of shares are called ``Creation Unit Aggregations.'' 
The Funds will issue and redeem iShares only in Creation Unit 
Aggregations of 50,000 iShares.\15\
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    \15\ Each Creation Unit Aggregation will have an estimated 
initial value of approximately $2,500,000.
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    As with other open-end investment companies, iShares will be issued 
at the net asset value (``NAV'') per share next determined after an 
order in proper form is received. The anticipated price at which the 
iShares will initially trade is approximately $50.
    The NAV per share of the Funds is determined as of the close of the 
regular trading session on the Exchange on each day that the Exchange 
is open. The Trust sells Creation Unit Aggregations of the Funds only 
on business days at the next determined NAV of the Fund. Creation Unit 
Aggregations generally will be issued by the Funds in exchange for the 
in-kind deposit of equity securities designated by the Advisor to 
correspond generally to the price and yield performance of the Fund's 
Underlying Index (the ``Deposit Securities'') and a specified cash 
payment. Creation Unit Aggregations generally will be redeemed by the 
Fund in exchange for portfolio securities of

[[Page 55253]]

the Fund (``Fund Securities'') and a specified cash payment. Fund 
Securities received on redemption may not be identical to Deposit 
Securities deposited in connection with creations of Creation Unit 
Aggregations for the same day.
    All orders to purchase iShares in Creation Unit Aggregations must 
be placed through an Authorized Participant. An Authorized Participant 
must be either a ``Participating Party,'' i.e., a broker-dealer or 
other participant in the clearing process through the National 
Securities Clearing Corporation (``NSCC'') Continuous Net Settlement 
System (the ``Clearing Process''), a clearing agency that is registered 
with the SEC, or a Depository Trust Company (``DTC'') participant, and 
in each case, must enter into a Participant Agreement. The Funds impose 
a transaction fee in connection with the issuance and redemption of 
iShares to offset transfer and other transaction costs. The transaction 
fee in connection with the issuance and redemption of Creation Unit 
Aggregations of the Funds are estimated to be approximately between 
$2,200 and $8,800.
    In-Kind Deposit of Portfolio Securities. Payment for Creation Unit 
Aggregations will be made by the purchasers generally by an in-kind 
deposit with the applicable Fund of the Deposit Securities together 
with an amount of cash (the ``Balancing Amount'') specified by the 
Advisor in the manner described below. The Balancing Amount is an 
amount equal to the difference between (1) the NAV (per Creation Unit 
Aggregation) of the Fund and (2) the total aggregate market value (per 
Creation Unit Aggregation) of the Deposit Securities (such value 
referred to herein as the ``Deposit Amount''). The Balancing Amount 
serves the function of compensating for differences, if any, between 
the NAV per Creation Unit Aggregation and that of the Deposit Amount. 
The deposit of the requisite Deposit Securities and the Balancing 
Amount are collectively referred to herein as a ``Fund Deposit.'' The 
Advisor will make available to the market through the NSCC on each 
business day, prior to the opening of trading on the Exchange 
(currently 9:30 a.m. Eastern Time), the list of the names and the 
required number of shares of each Deposit Security included in the 
current Fund Deposit (based on information at the end of the previous 
business day) for each Fund. The Fund Deposit will be applicable to the 
relevant Fund (subject to any adjustments to the Balancing Amount, as 
described below) in order to effect purchases of Creation Unit 
Aggregations of such Fund until such time as the next-announced Fund 
Deposit composition is made available.
    The identity and number of shares of the Deposit Securities 
required for the Fund Deposit for each Fund will change from time to 
time. The composition of the Deposit Securities may change in response 
to adjustments to the weighting or composition of the Component 
Securities in the Underlying Index. In addition, the Trust reserves the 
right to permit or require the substitution of an amount of cash--i.e., 
a ``cash in lieu'' amount--to be added to the Balancing Amount to 
replace any Deposit Security that may not be available in sufficient 
quantity for delivery or that may not otherwise be eligible for 
transfer. The Trust also reserves the right to permit or require a 
``cash in lieu'' amount where the delivery of the Deposit Security by 
the Authorized Participant would be restricted under the securities 
laws or where the delivery of the Deposit Security to the Authorized 
Participant would result in the disposition of the Deposit Security by 
the Authorized Participant becoming restricted under the securities 
laws, or in certain other situations. The adjustments described above 
will reflect changes known to the Advisor on the date of announcement 
to be in effect by the time of delivery of the Fund Deposit, in the 
composition of the applicable Underlying Index or resulting from 
certain corporate actions.
Redemption of iShares
    Creation Unit Aggregations of the Funds will be redeemable at the 
NAV next determined after receipt of a request for redemption. Creation 
Unit Aggregations of the Funds generally will be redeemed in-kind, 
together with a balancing cash payment (although, as described below, 
Creation Unit Aggregations may sometimes be redeemed for cash). The 
value of the Funds' redemption payments on a Creation Unit Aggregation 
basis will equal the NAV per the appropriate number of iShares of the 
Funds. Owners of iShares may sell their iShares in the secondary market 
but must accumulate enough iShares to constitute a Creation Unit 
Aggregation in order to redeem through the Funds. Redemption orders 
must be placed by or through an Authorized Participant.
    Creation Unit Aggregations of the Funds generally will be 
redeemable on any business day in exchange for applicable Fund 
Securities and the Cash Redemption Payment (defined below) in effect on 
the date a request for redemption is made. The Advisor will publish 
daily through NSCC the list of securities which a creator of Creation 
Unit Aggregations must deliver to the Fund (the ``Creation List'') and 
which a redeemer will receive from the Funds (the ``Redemption List''). 
The Creation List is identical to the list of the names and the 
required numbers of shares of each Deposit Security included in the 
current Fund Deposit.
    In addition, just as the Balancing Amount is delivered by the 
purchaser of Creation Unit Aggregations to the Funds, the Trust will 
also deliver to the redeeming beneficial owner in cash the ``Cash 
Redemption Payment.'' The Cash Redemption Payment on any given business 
day will be an amount calculated in the same manner as that for the 
Balancing Amount, although the actual amounts may differ if the Fund 
Securities received upon redemption are not identical to the Deposit 
Securities applicable for creations on the same day. To the extent that 
the Fund Securities have a value greater than the NAV of iShares being 
redeemed, a cash payment equal to the differential is required to be 
paid by the redeeming beneficial owner to the applicable Fund. The 
Trust may also make redemptions in cash in lieu of transferring one or 
more Fund Securities to a redeemer if the Trust determines, in its 
discretion, that such method is warranted due to unusual circumstances. 
An unusual circumstance could arise, for example, when a redeeming 
entity is restrained by regulation or policy from transacting in 
certain Fund Securities, such as the presence of such Fund Securities 
on a redeeming investment banking firm's restricted list.
Availability of Information Regarding iShares and the Underlying Index
    On each business day the list of names and amount of each security 
constituting the current Deposit Securities of the Fund Deposit and the 
Balancing Amount effective as of the previous business day, per 
outstanding share of each Fund, will be made available. An amount per 
iShare representing the sum of the estimated Balancing Amount effective 
through and including the previous business day, plus the current value 
of the Deposit Securities in U.S. dollars, on a per iShare basis (the 
``Intra-day Optimized Portfolio Value'' or ``IOPV'') will be calculated 
by an independent third party that is a major market data vendor (the 
``Value Calculator''), such as Bloomberg L.P., every 15 seconds during 
the Exchange's regular trading hours and disseminated every 15 seconds 
on the Consolidated Tape.
    The IOPV reflects the current value of the Deposit Securities and 
the Balancing Amount. The IOPV also reflects changes

[[Page 55254]]

in currency exchange rates between the U.S. dollar and the applicable 
home foreign currency.\16\
---------------------------------------------------------------------------

    \16\ The IOPV ticker is available at http://www.ishares.com and Intra-

day IOPV is publicly available utilizing this ticker through various 
financial Web sites such as http://finance.yahoo.com.

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

    Since the Funds will utilize a representative sampling strategy, 
the IOPV may not reflect the value of all securities included in the 
Underlying Indexes. In addition, the IOPV does not necessarily reflect 
the precise composition of the current portfolio of securities held by 
the Funds at a particular point in time. Therefore, the IOPV on a per 
Fund share basis disseminated during the Exchange's trading hours 
should not be viewed as a real time update of the NAV of the Funds, 
which is calculated only once a day.
    While the IOPV disseminated by the Exchange at 9:30 a.m. is 
expected to be generally very close to the most recently calculated 
Fund NAV on a per Fund share basis, it is possible that the value of 
the portfolio of securities held by each Fund may diverge from the 
Deposit Securities values during any trading day. In such case, the 
IOPV will not precisely reflect the value of each Fund's portfolio. 
However, during the trading day, the IOPV can be expected to closely 
approximate the value per Fund share of the portfolio of securities for 
each Fund except under unusual circumstances (e.g., in the case of 
extensive rebalancing of multiple securities in a Fund at the same time 
by the Advisor).
    The Exchange believes that dissemination of the IOPV based on the 
Deposit Securities provides additional information regarding the Funds 
that is not otherwise available to the public and is useful to 
professionals and investors in connection with Fund shares trading on 
the Exchange or the creation or redemption of Fund shares.
    There is an overlap in trading hours between the foreign and U.S. 
markets with respect to the Funds. Therefore, the Value Calculator will 
update the applicable IOPV every 15 seconds to reflect price changes in 
the applicable foreign market or markets, and convert such prices into 
U.S. dollars based on the currency exchange rate. When the foreign 
market or markets are closed but U.S. markets are open, the IOPV will 
be updated every 15 seconds to reflect changes in currency exchange 
rates after the foreign market closes. The IOPV will also include the 
applicable cash component for each Fund.
    In addition, there will be disseminated a value for the Underlying 
Indexes once each trading day, based on closing prices in the relevant 
exchange market, utilizing the WM/Reuters (or other major market 
information vendor) currency exchange rates. In each S&P Index, the 
prices used to calculate the S&P Indices are the official exchange 
closing prices or those figures accepted as such. S&P reserves the 
right to use an alternative pricing source on any given day.
    The NAV for the Fund will be calculated and disseminated daily. The 
Funds' NAV will be calculated by IBT. IBT will disseminate the 
information to BGI, SEI and others, including the NYSE. The Funds' NAV 
will be published in a number of places, including, http://www.iShares.com
 and on the Consolidated Tape. The Advisor for the Funds 

has informed the Exchange that the Funds will make the NAV for the 
Funds available to all market participants at the same time. If the NAV 
is not disseminated to all market participants at the same time, the 
Exchange will halt trading in the Shares of the Funds.\17\
    Closing prices of the Funds' Deposit Securities are readily 
available from, as applicable, the relevant exchanges, automated 
quotation systems, published or other public sources in the relevant 
country, or on-line information services such as Bloomberg or Reuters. 
The exchange rate information required to convert such information into 
U.S. dollars is also readily available in newspapers and other 
publications and from a variety of on-line services.
---------------------------------------------------------------------------

    \17\ The Exchange will immediately contact the Commission staff 
to discuss measures that may be appropriate under the circumstances. 
September 15 Telephone Conference.
---------------------------------------------------------------------------

    In addition, the Web site for the Trust, http://www.iShares.com, 

which will be publicly accessible at no charge, will contain the 
following information, (1) the prior business day's NAV and the mid-
point of the bid-ask price at the time of calculation of such NAV 
(``Bid/Ask Price''), and a calculation of the premium or discount of 
such price against such NAV; and (2) data in chart format displaying 
the frequency distribution of discounts and premiums of the Bid/Ask 
Price against the NAV, within appropriate ranges, for each of the four 
previous calendar quarters.
Dividends and Distributions
    Dividends are accrued daily from net investment income and will be 
declared and paid to beneficial owners of record at least annually by 
the Funds. Distributions of realized securities gains, if any, 
generally will be declared and paid once a year, but the Funds may make 
distributions on a more frequent basis to comply with the distribution 
requirements of the Code and consistent with the Investment Company 
Act.
    Dividends and other distributions on iShares of the Funds will be 
distributed on a pro rata basis to beneficial owners of such iShares. 
Dividend payments will be made through the Depository and the DTC 
Participants to beneficial owners then of record with amounts received 
from the Fund.
    The Trust currently does not intend to make the DTC book-entry 
Dividend Reinvestment Service (the ``Service'') available for use by 
beneficial owners for reinvestment of their cash proceeds, but certain 
individual brokers may make the Service available to their clients. The 
Statement of Additional Information (``SAI'') will inform investors of 
this fact and direct interested investors to contact such investor's 
broker to ascertain the availability and a description of the Service 
through such broker. The SAI will also caution interested beneficial 
owners that they should note that each broker may require investors to 
adhere to specific procedures and timetables in order to participate in 
the Service and such investors should ascertain from their broker such 
necessary details. The Funds acquired pursuant to the Service will be 
held by the beneficial owners in the same manner and subject to the 
same terms and conditions, as for original ownership of the Funds.
    Beneficial owners of the Funds will receive all of the statements, 
notices, and reports required under the Investment Company Act and 
other applicable laws. They will receive, for example, annual and semi-
annual reports, written statements accompanying dividend payments, 
proxy statements, annual notifications detailing the tax status of 
distributions, IRS Form 1099-DIVs, etc. Because the Trust's records 
reflect ownership of iShares by DTC only, the Trust will make available 
applicable statements, notices, and reports to the DTC Participants 
who, in turn, will be responsible for distributing them to the 
beneficial owners.
Other Issues
    Criteria for Initial and Continued Listing. The Funds are subject 
to the criteria for initial and continued listing of Investment Company 
Units in Section 703.16 of the Manual. A minimum of two Creation Units 
(100,000 iShares) will be required to be outstanding at the start of 
trading. This minimum number of shares of each Fund required to be 
outstanding at the start of trading will be comparable to requirements 
that have

[[Page 55255]]

been applied to previously traded series of ICUs.
    Prospectus Delivery. The Commission has granted the Trust an 
exemption from certain prospectus delivery requirements under section 
24(d) of the Investment Company Act.\18\ Any product description used 
in reliance on a section 24(d) exemptive order will comply with all 
representations made therein and all conditions thereto. The Exchange, 
in an Information Memo to Exchange members and member organizations, 
will inform members and member organizations, prior to commencement of 
trading, of the prospectus or product description delivery requirements 
applicable to the Funds and will refer members and member organizations 
to NYSE Rule 1100(b). There is not currently a product description 
available for the Funds. The Information Memo will also advise members 
and member organizations that delivery of a prospectus to customers in 
lieu of a product description would satisfy the requirements of Rule 
1100(b).
---------------------------------------------------------------------------

    \18\ See In the Matter of iShares, Inc., et al., Investment 
Company Act Release No. 25623 (June 25, 2002).
---------------------------------------------------------------------------

    Information Memo. The Exchange will distribute an Information Memo 
to its members in connection with the trading of the Funds. The Memo 
will discuss the special characteristics and risks of trading this type 
of security. Specifically, the Memo, among other things, will discuss 
what the Funds are, how the Funds' shares are created and redeemed, the 
requirement that members and member firms deliver a prospectus or 
product description to investors purchasing shares of the Funds prior 
to or concurrently with the confirmation of a transaction, applicable 
Exchange rules, dissemination information, trading information and the 
applicability of suitability rules (including Exchange Rule 405). The 
Memo will also discuss exemptive, no-action and interpretive relief, if 
granted by the Commission from certain rules under the Act.
    Trading Halts. In order to halt the trading of the Funds, the 
Exchange may consider, among other things, factors such as the extent 
to which trading is not occurring in underlying security(s) and whether 
other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. In addition, 
trading in the Funds' shares is subject to trading halts caused by 
extraordinary market volatility pursuant to Exchange Rule 80B. The 
Exchange will halt trading in a Fund if the Index Value or IOPV 
applicable to such Fund is no longer calculated or disseminated or the 
NAV is not disseminated to all market participants at the same 
time.\19\
---------------------------------------------------------------------------

    \19\ Under such circumstances, the Exchange would immediately 
contact the Commission staff to discuss appropriate measures that 
may be appropriate under the circumstances. September 15 Telephone 
Conference.
---------------------------------------------------------------------------

    Due Diligence. The Information Memo to members will note, for 
example, Exchange responsibilities including that before an Exchange 
member, member organization, or employee thereof recommends a 
transaction in the Funds, a determination must be made that the 
recommendation is in compliance with all applicable Exchange and 
Federal rules and regulations, including due diligence obligations 
under Exchange Rule 405 (Diligence as to Accounts).
    Purchases and Redemptions in Creation Unit Size. In the Memo 
referenced above, members and member organizations will be informed 
that procedures for purchases and redemptions of shares of the Funds in 
Creation Unit Size are described in the Funds' Prospectus and SAI \20\ 
and that Funds' shares are not individually redeemable but are 
redeemable only in Creation Unit Size aggregations or multiples 
thereof.
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release Nos. 44990 (October 25, 
2001), 66 FR 56869 (November 13, 2001) (SR-Amex-2001-45); 42748 (May 
2, 2000), 65 FR 30155 (May 10, 2000) (SR-Amex-98-49); and 36947 
(March 8, 1996), 61 FR 10606 (March 14, 1996) (SR-Amex-95-43).
---------------------------------------------------------------------------

    Surveillance. The Exchange will utilize its existing surveillance 
procedures applicable to ICUs monitor trading of the shares of the 
Funds. Surveillance procedures applicable to trading in the proposed 
iShares are comparable to those applicable to other ICUs currently 
trading on the Exchange. The Exchange represents that these 
surveillance procedures are adequate to properly monitor the trading of 
the Funds.\21\ The Exchange's current trading surveillances focus on 
detecting securities trading 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. The Exchange 
may obtain trading information via the Intermarket Surveillance Group 
(``ISG'') from other exchanges who are members or affiliates of the 
ISG. For a list of the current members and affiliate members of ISG, 
see http://www.isgportal.com.

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

    \21\ The Exchange states that it submitted such surveillance 
procedures to the Commission staff in the past. September 15 
Telephone Conference.
---------------------------------------------------------------------------

    Hours of Trading/Minimum Price Variation. The Funds will trade on 
the Exchange until 4:15 p.m. (Eastern time). The minimum price 
variation for quoting will be $.01.
2. Statutory Basis
    NYSE believes that the proposed rule change is consistent with 
section 6(b)(5) of the Act \22\ requiring that an exchange have rules 
that are designed, among other things, to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of a free and open market and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \22\ 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. 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 Exchange 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-NYSE-2006-60 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NYSE-2006-60. 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

[[Page 55256]]

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 filing will also be available for 
inspection and copying at the principal office of the NYSE. 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-NYSE-2006-60 and should be 
submitted on or before October 12, 2006.

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

    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.\23\ In 
particular, the Commission finds that the proposed rule change is 
consistent with section 6(b)(5) of the Act \24\ and will promote just 
and equitable principles of trade, and facilitate transactions in 
securities, and, in general, protect investors and the public interest.
---------------------------------------------------------------------------

    \23\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the NYSE's proposal should advance the 
public interest by providing investors with increased flexibility in 
satisfying their investment needs and by allowing them to purchase and 
sell Fund shares at negotiated prices throughout the business day that 
generally track the price and yield performance of the Underlying 
Index.
    Furthermore, the Commission believes that the proposed rule change 
raises no issues that have not been previously considered by the 
Commission. The Fund is similar in structure and operation to exchange-
traded funds that the Commission has previously approved for listing 
and trading on national securities exchanges under section 19(b)(2) of 
the Act.\25\ Further, with respect to each of the following issues, the 
Commission believes that the listing and trading of the Funds' shares 
satisfies established standards.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

A. Fund Characteristics

    The Commission believes that the proposed Funds are reasonably 
designed to provide investors with an investment vehicle that 
substantially reflects in value the performance of the respective 
Underlying Indexes and will provide investors with an alternative to 
trading a range of securities on an individual basis. Investors will be 
able to trade shares in the Fund continuously throughout the business 
day in secondary market transactions at negotiated prices. Accordingly, 
the proposed Fund will allow investors to: (1) Respond quickly to 
market changes through intra-day trading opportunities; (2) engage in 
hedging strategies similar to those used by institutional investors; 
and (3) reduce transaction costs for trading a portfolio of securities.
    The Commission also notes that the market capitalization and 
liquidity of the underlying Indexes' component securities is also a 
deterrent to manipulation of the Fund shares. Because each Fund's 
Underlying Index is broad-based and well diversified, the Exchange 
represents that it does not believe that the Fund will be so highly 
concentrated such that it becomes a surrogate for trading unregistered 
foreign securities on the Exchange.
    While the Commission believes that these requirements should help 
to reduce concerns that the Funds could become a surrogate for trading 
in a single or a few unregistered stocks, if the characteristics of the 
Funds, or their underlying Indexes, changed materially from the 
characteristics described the Exchange,\26\ the Fund would not be in 
compliance with the listing and trading standards approved herein, and 
the Commission would expect the NYSE to file a proposed rule change 
pursuant to Rule 19b-4 of the Act, which must be approved to permit 
continued trading of the Funds' shares.
---------------------------------------------------------------------------

    \26\ Substitution of an underlying index or significant 
alteration of the index methodology described herein would be a 
material change.
---------------------------------------------------------------------------

B. Disclosure

    The Exchange represents that it will circulate an information memo 
detailing applicable prospectus and product description delivery 
requirements. The memo will also discuss any exemptive, no-action and 
interpretive relief granted by the Commission from certain rules under 
the Act. The memo also will address NYSE members' responsibility to 
deliver a prospectus or product description to all investors (in 
accordance with NYSE Rule 1100(b)) and highlight the characteristics of 
the Funds. The memo will also remind members of their suitability 
obligations, including NYSE Rule 405 (Diligence as to Accounts). 
Additionally, for example, the information memo will also inform 
members and member organizations that Funds' shares are not 
individually redeemable, but are redeemable only in Creation-Unit-size 
aggregations or multiples thereof as set forth in the Fund Prospectus 
and SAI. The Commission believes that the disclosure included in the 
information memo is appropriate and consistent with the Act.

C. Dissemination of Fund Information

    With respect to pricing, once each day, the NAV for the Fund will 
be calculated and disseminated by IBT, to various sources, including 
the NYSE, and made available on http://www.iShares.com and the 

Consolidated Tape. The Exchange represents that the NAV will be made 
available to all market participants at the same time; otherwise, the 
Exchange will halt trading in the Funds' shares. Also, during the 
Exchange's regular trading hours, the IOPV Calculator will determine 
and disseminate every 15 seconds the IOPV for each Fund. The IOPV will 
reflect price changes in the applicable foreign market or markets and 
changes in currency exchange rates. The Exchange also represents that 
the value of the underlying Indexes will be calculated and disseminated 
at least every 15 seconds during the time the Funds' shares trade on 
the Exchange. If the IOPV and underlying Index values are not so 
disseminated, the Exchange will halt trading in the Funds' shares.
    The Commission notes that a variety of additional information about 
each Fund will be readily available. Information with respect to recent 
NAV, shares outstanding, estimated cash amount and total cash amount 
per Creation Unit Aggregation will be made available prior to the 
opening of the Exchange. In addition, the Web site for the Trust, 
http://www.iShares.com, which will be publicly accessible at no charge, 

will contain relevant information about the Funds and their shares. 
Also, the closing prices of the Fund's Deposit Securities are available 
from, as applicable, the relevant exchanges, automated quotation 
systems, published or other public sources in the relevant country, or 
on-line information services, such as Bloomberg or Reuters. The 
exchange rate information required to convert such information into 
U.S. dollars is

[[Page 55257]]

also readily available in newspapers and other publications and from a 
variety of on-line services.
    Based on the representations made in the NYSE proposal, the 
Commission believes that pricing and other important information about 
the Fund is adequate and consistent with the Act.

D. Listing and Trading

    The Commission finds that adequate rules and procedures exist to 
govern the listing and trading of the Funds' shares. Fund shares will 
be deemed equity securities subject to NYSE rules governing the trading 
of equity securities, including, among others, rules governing trading 
halts, responsibilities of the specialist, account opening and customer 
suitability requirements, and the election of stop and stop limit 
orders. In addition, the Exchange states that iShares are subject to 
the criteria for initial and continued listing of ICUs in Section 
703.16 of the NYSE Manual.

E. Surveillance

    The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the Funds. The Exchange 
states that it is able to obtain trading information from ISG from 
other exchanges that are members or affiliates of the ISG.

F. Accelerated Approval

    The Commission finds good cause, pursuant to section 19(b)(2) of 
the Act,\27\ for approving the proposed rule change prior to the 
thirtieth day after the date of publication of notice in the Federal 
Register. The Commission notes that the proposal is consistent with the 
listing and trading standards in NYSE Rule 703.16 (ICUs), and the 
Commission has previously approved similar products based on foreign 
indices.\28\ The Funds are substantially identical in structure to 
other iShares Funds based on foreign stock indexes, including the 
iShares S&P Global 1200 Index Fund, which has an established and active 
trading history on the NYSE and other exchanges.\29\ The Commission 
does not believe that the proposed rule change, as amended, raises 
novel regulatory issues. Consequently, the Commission believes that it 
is appropriate to permit investors to benefit from the flexibility 
afforded by trading these products as soon as possible.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(2).
    \28\ See Securities Exchange Act Release Nos. 44990 (October 25, 
2001), 66 FR 56869 (November 13, 2001) (SR-Amex-2001-45); 42748 (May 
2, 2000), 65 FR 30155 (May 10, 2000) (SR-Amex-98-49); and 36947 
(March 8, 1996), 61 FR 10606 (March 14, 1996) (SR-Amex-95-43).
    \29\ See Securities Exchange Act Release No. 52178 (July 29, 
2005), 70 FR 46244 (August 9, 2005) (SR-NYSE-2005-41)
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change (SR-NYSE-2006-60) is hereby approved on 
an accelerated basis.\30\
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(2).
    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\31\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06-7896 Filed 9-20-06; 8:45 am]

BILLING CODE 8010-01-P