Document ID: SEC-2008-1233-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-09-10T04:00Z

[Federal Register: September 10, 2008 (Volume 73, Number 176)]
[Notices]               
[Page 52711-52717]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se08-75]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58457; File No. SR-NYSEArca-2008-91]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change 
Regarding the Listing of Fourteen Funds of the Commodities and Currency 
Trust

September 3, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that, on August 21, 2008, NYSE Arca, Inc. (``NYSE Arca'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice and order to solicit comments on 
the proposed rule change from interested persons and to approve the 
proposed rule change 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, through its wholly-owned subsidiary NYSE Arca 
Equities, Inc. (``NYSE Arca Equities''), proposes to list and trade 
shares (``Shares'') of fourteen (14) funds (``Funds'') of the 
Commodities and Currency Trust (``Trust'') based on several currencies, 
commodities and commodities indexes.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of 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,

[[Page 52712]]

of the most significant parts of such statements.

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

1. Purpose
    The Exchange proposes to list and trade Shares of the Funds 
pursuant to NYSE Arca Equities Rule 8.200, Commentary .02, which 
permits the trading of Trust Issued Receipts (``TIRs'') either by 
listing or pursuant to unlisted trading privileges (``UTP''). The 
Shares have been approved by the Commission for listing on the American 
Stock Exchange LLC (``Amex'') \3\ and for trading on the Exchange 
pursuant to UTP.\4\ The issuer of the Shares has determined to list the 
Shares on the Exchange. The Exchange represents that the Shares satisfy 
the requirements of NYSE Arca Equities Rule 8.200 and thereby qualify 
for listing on the Exchange.
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    \3\ See Securities Exchange Act Release No. 58161 (July 15, 
2008), 73 FR 42380 [sic] (July 21, 2008) (SR-Amex-2008-39). Notice 
of the Amex proposed rule change was published in Securities 
Exchange Act Release No. 57932 (June 5, 2008), 73 FR 33467 (June 12, 
2008) (``Amex Proposal'').
    \4\ See Securities Exchange Act Release No. 58162 (July 15, 
2008), 73 FR 42391 (July 21, 2008) (SR-NYSEArca-2008-73).
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    Shares of each Fund will be generally subject to the rules that 
apply to TIRs. The Shares represent common units of fractional 
undivided beneficial interest in, and ownership of, each Fund. Each 
Fund will invest the proceeds of its offering of Shares in various 
Financial Instruments \5\ that will provide exposure to the Fund's 
underlying currency, commodity or commodity index. In addition, the 
Funds will also maintain cash positions in cash or money market 
instruments for the purpose of collateralizing such positions taken in 
the Financial Instruments.
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    \5\ Commentary .02(b)(4) to NYSE Arca Equities Rule 8.200 
defines ``Financial Instruments'' as any combination of cash, 
securities, options on securities and indices, futures contracts, 
options on futures contracts, forward contracts, equity caps, 
collars and floors and swap agreements.
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    Shares of seven (7) of the Funds of the Trust will be designated as 
Ultra ProShares while the other seven (7) Funds of the Trust will be 
designated as UltraShort ProShares. Each of the Funds will have a 
distinct investment objective.\6\ The Funds will attempt, on a daily 
basis, to achieve their investment objective by corresponding to a 
specified multiple or an inverse multiple of the performance of a 
particular benchmark commodities index, commodity or currency (each an 
``Underlying Benchmark'' and collectively, the ``Underlying 
Benchmarks'').
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    \6\ The Funds are the Ultra DJ-AIG Commodity ProShares, 
UltraShort DJ-AIG Commodity ProShares, Ultra DJ-AIG Agriculture 
ProShares, UltraShort DJ-AIG Agriculture ProShares, Ultra DJ-AIG 
Crude Oil ProShares, UltraShort DJAIG Crude Oil ProShares, Ultra 
Gold ProShares, UltraShort Gold ProShares, Ultra Silver ProShares, 
UltraShort Silver ProShares, Ultra Euro ProShares, UltraShort Euro 
ProShares, Ultra Yen ProShares and UltraShort Yen ProShares.
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    Six (6) Funds will be based on the following benchmark commodities 
indexes: (i) The Dow Jones-AIG Commodity Index\SM\; (ii) the Dow Jones-
AIG Crude Oil Sub-Index\SM\; and (iii) the Dow Jones-AIG Agriculture 
Sub-Index\SM\ (each, an ``Underlying Index'' and collectively, the 
``Underlying Indexes''). Four (4) Funds will be based on the following 
commodities: (i) Gold; and (ii) silver (each, an ``Underlying 
Commodity'' and collectively, the ``Underlying Commodities''). Four (4) 
Funds will be based on the following benchmark currencies versus the 
U.S. dollar: (1) The Euro; and (2) the Japanese Yen (each, an 
``Underlying Currency'' and collectively, the ``Underlying 
Currencies''). The Exchange proposes to list and trade Shares of the 
Funds that seek daily investment results, before fees and expenses, 
that correspond to twice (200%) the daily performance of the Underlying 
Benchmark (the ``Ultra Funds''). If a Fund is successful in meeting its 
investment objective, the net asset value (``NAV'') \7\ of the Shares 
of each Fund is expected to gain on a percentage basis, approximately 
twice as much as each Fund's respective Underlying Benchmark when the 
price of the Underlying Benchmark increases on a given day, and should 
lose approximately twice as much when such price declines on a given 
day, before fees and expenses.
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    \7\ ``Net asset value'' means the total assets of a Fund 
including, but not limited to, all cash and cash equivalents or 
other debt securities less total liabilities of such Fund, each 
determined on the basis of generally accepted accounting principles 
in the United States, consistently applied under the accrual method 
of accounting. In particular, net asset value includes any 
unrealized profit or loss on open swaps and futures contracts, and 
any other credit or debit accruing to a Fund but unpaid or not 
received by a Fund.
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    The Exchange also proposes to list and trade Shares of the Funds 
that seek daily investment results, before fees and expenses that 
correspond to twice the inverse (-200%) of the daily performance of the 
Underlying Benchmark (the ``UltraShort Funds''). If each Fund is 
successful in meeting its objective, the NAV of the Shares of each Fund 
is expected to increase approximately twice as much, on a percentage 
basis, as the respective Underlying Benchmark loses on a given day, or 
should decrease approximately twice as much as the respective 
Underlying Benchmark gains when the Underlying Benchmark rises on a 
given day, before fees and expenses. The Exchange notes that the 
Commission has permitted the listing and trading on the Exchange and 
other national securities exchanges of securities linked to the 
performance of underlying currencies and commodities.\8\ The

[[Page 52713]]

Commission also has approved for trading on the Exchange on a UTP basis 
under NYSE Arca Equities Rule 5.2(j)(3) UltraFunds, Short Funds and 
UltraShort Funds of the ProShares Trust.\9\
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    \8\ The Commission has previously approved issues of Commodity-
Based Trust Shares, Currency Trust Shares and Commodity Index Trust 
Shares, which have certain characteristics similar to the proposed 
TIRs, for exchange listing and trading. See, e.g., Securities 
Exchange Act Release No. 50603 (October 28, 2004), 69 FR 64614 
(November 5, 2004) (SR-NYSE-2004-22) (order approving listing on the 
New York Stock Exchange (``NYSE'') of streetTRACKS Gold Trust); 
Securities Exchange Act Release No. 51058 (January 19, 2005), 70 FR 
3749 (January 26, 2005) (SR-Amex-2004-38) (order approving listing 
on the American Stock Exchange (``Amex'') of the iShares COMEX Gold 
Trust); Securities Exchange Act Release No. 53521 (March 20, 2006), 
71 FR 14967 (March 24, 2006) (SR-Amex-2005-72) (order approving 
listing on Amex of the iShares Silver Trust); Securities Exchange 
Act Release No. 56041 (July 11, 2007), 72 FR 39114 (July 17, 2007) 
(SR-NYSEArca-2007-43) (order granting accelerated approval to list 
on NYSE Arca the iShares COMEX Gold Trust); Securities Exchange Act 
Release No. 52843 (November 28, 2005), 70 FR 72486 (December 5, 
2005) (SR-NYSE 2005-65) (order granting accelerated approval for 
NYSE to list and trade shares of the CurrencyShares Euro Trust); 
Securities Exchange Act Release No. 54020 (June 20, 2006), 71 FR 
36579 (June 27, 2006) (SR-NYSE-2006-35) (order granting accelerated 
approval for NYSE to list and trade shares of the CurrencyShares 
Australian Dollar Trust, CurrencyShares British Pound Sterling 
Trust, CurrencyShares Canadian Dollar Trust, CurrencyShares Mexican 
Peso Trust, CurrencyShares Swedish Krona Trust and CurrencyShares 
Swiss Franc Trust); Securities Exchange Act Release No. 55268 
(February 9, 2007), 72 FR 7793 (February 20, 2007) (SR-NYSE-2007-03) 
(order granting accelerated approval for NYSE to list and trade 
shares of the CurrencyShares Japanese Yen Trust); Securities 
Exchange Act Release No. 56131 (July 25, 2007), 72 FR 42212 (August 
1, 2007) (SR-NYSEArca-2007-57) (order granting accelerated approval 
for listing on NYSE Arca of CurrencyShares Trusts); Securities 
Exchange Act Release No. 54013 (June 16, 2006), 71 FR 36372 (June 
26, 2006) (SR-NYSE-2006-17) (approving listing on the NYSE of the 
iShares GSCI Trust); Securities Exchange Act Release No. 55585 
(April 5, 2007), 72 FR 18500 (April 12, 2007) (SR-NYSE-2006-75) 
(approving for NYSE listing the iShares GS Commodity Light Energy 
Indexed Trust; iShares GS Commodity Industrial Metals Indexed Trust; 
iShares GS Commodity Livestock Indexed Trust and iShares GS 
Commodity Non-Energy Indexed Trust); Securities Exchange Act Release 
No. 56932 (December 7, 2007), 72 FR 71178 (December 14, 2007) (SR-
NYSEArca-2007-112) (order granting accelerated approval to list 
iShares S&P GSCI Commodity-Indexed Trust); Securities Exchange Act 
Release No. 57456 (March 7, 2008), 73 FR 13599 (March 13, 2008) (SR-
NYSEArca-2007-91) (order granting accelerated approval for NYSE Arca 
listing the iShares S&P GSCI Energy Commodity-Indexed Trust; iShares 
S&P GSCI Natural Gas Commodity-Indexed Trust; iShares S&P GSCI 
Industrial Metals Commodity-Indexed Trust; iShares S&P GSCI Light 
Energy Commodity-Indexed Trust; iShares S&P GSCI Livestock 
Commodity-Indexed Trust; and iShares S&P GSCI Non-Energy Commodity-
Indexed Trust).
    \9\ See Securities Exchange Act Release No. 55125 (January 18, 
2007), 72 FR 3462 (January 25, 2007) (SR-NYSEArca-2006-87); 
Securities Exchange Act Release No. 57017 (December 20, 2007), 72 FR 
73955 (December 28, 2007) (SR-NYSEArca-2007-108).
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    A description of each of the Underlying Indexes, commodities 
Underlying Benchmarks and currency Underlying Benchmarks is set forth 
in the Amex Proposal.\10\ In addition, information regarding the 
structure and investment objective of the Funds, the portfolio 
investment methodology, investment techniques, and creation and 
redemption of Shares is provided in the respective Registration 
Statements and in the Amex Proposal.
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    \10\ See note 3, supra.
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    Net Asset Value (NAV). The NAV of a Fund is total assets including, 
but not limited to, all cash and cash equivalents or other debt 
securities, less total liabilities, each determined on the basis of 
generally accepted accounting principles. In particular, the NAV 
includes any unrealized profit or loss on open Financial Instruments 
and any other credit or debit accruing to a Fund, but unpaid or not 
received.
    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. Expenses 
and fees are accrued daily and taken into account for purposes of 
determining NAV. The NAV of each Fund is calculated by the 
Administrator and is determined each business day as described further 
in the Amex Proposal.
    The Exchange represents that it will obtain a representation (prior 
to listing the Shares of the Funds) from the Trust that the NAV per 
Share will be calculated daily and made available to all market 
participants at the same time.

Availability of Information Regarding the Shares

    The Web sites for the Funds and/or the Exchange, which are publicly 
accessible at no charge, will contain the following information: (a) 
The current NAV per Share daily and the prior business day's NAV per 
Share and the reported closing price; (b) the mid-point of the bid-ask 
price in relation to the NAV per Share as of the time it is calculated 
(the ``Bid-Asked Price''); (c) calculation of the premium or discount 
of such price against the NAV per Share; (d) data in chart form 
displaying the frequency distribution of discounts and premiums of the 
Bid-Ask Price against the NAV per Share, within appropriate ranges for 
each of the four (4) previous calendar quarters; (e) the Prospectus; 
and (f) other applicable quantitative information.
    The NAV per Share will be calculated and disseminated daily. The 
Exchange will disseminate for the Funds on a daily basis by means of 
CTA/CQ High Speed Lines information with respect to the corresponding 
``Indicative Value'' (as discussed below), recent NAV per Share and 
Shares outstanding. The Exchange will also make available on its Web 
site (http://www.nyse.com) daily trading volume of the Shares, closing 
prices of the Shares, and the NAV per Share. The closing price and 
settlement prices of the futures contracts held by the Funds are also 
readily available from the Chicago Mercantile Exchange (``CME''), New 
York Mercantile Exchange (``NYMEX''), Chicago Board of Trade 
(``CBOT''), Intercontinental Exchange/New York Board of Trade (``ICE/
NYBOT''), London Metal Exchange (``LME''), automated quotation systems, 
published or other public sources, or on-line information services such 
as Bloomberg or Reuters. Real-time dissemination of spot pricing for 
gold, silver, euro and Japanese yen is available on a 24-hour basis 
worldwide from various major market data vendors.

Portfolio Disclosure

    Each Fund's total portfolio composition will be disclosed on the 
Web site of the Trust (http://www.proshares.com) or another relevant 
Web site as determined by the Trust and/or the Exchange. The Trust will 
provide Web site disclosure of portfolio holdings daily and will 
include, as applicable, the names and number of Financial Instruments 
and characteristics of such instruments, cash equivalents and amount of 
cash held in the portfolio of each Fund. This public Web site 
disclosure of the portfolio composition of each Fund will occur at the 
same time as the disclosure by the Managing Owner of the portfolio 
composition to Authorized Participants, so that all market participants 
are provided portfolio composition information at the same time. 
Therefore, the same portfolio information will be provided on the 
public Web site as well as in electronic files provided to Authorized 
Participants. Accordingly, each investor will have access to the 
current portfolio composition of each Fund through the Trust's Web 
site, at http://www.proshares.com, and/or at the Exchange's Web site.

Availability of Information About the Underlying Benchmarks

    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.ino.com and http://
www.finance.yahoo.com. Data regarding each Underlying Index is also 
available from the respective index provider to subscribers. In 
addition, data is available regarding the underlying component 
commodities of each Underlying Index from those futures exchanges that 
list and trade futures contracts on those commodities. Several 
independent data vendors also package and disseminate index data in 
various value-added formats (including vendors displaying both index 
constituents and index levels and vendors displaying index levels 
only).
    Data regarding spot pricing of the Underlying Commodities (gold and 
silver) is publicly available on a 24-hour basis from various financial 
information service providers, such as Reuters and Bloomberg. In 
addition, the daily London fix for gold and silver is also disseminated 
by various market data vendors and is available from the London Bullion 
Market Association (``LBMA'') Web site at http://www.lbma.org.uk.
    Data regarding futures contracts and options on futures contracts 
in connection with the Underlying Commodities is also available from 
the NYMEX at http://nymex.com. There is considerable public price and 
data information regarding the Underlying Currencies (euro and Japanese 
yen). Spot pricing related to foreign exchange is available to 
investors and market professionals on a 24-hour basis. A variety of 
public Web sites and professional and subscription services provide 
market and price information regarding the euro and the yen. Current 
spot prices are also generally available from foreign exchange dealers.
    The value of each Underlying Benchmark will be updated intra-day on 
a real time basis as its components change in price. 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, such as http://www.ino.com and http://www.finance.yahoo.com. 
Data regarding each Underlying Index is also available from the 
respective index provider to subscribers. In addition, data is also 
available regarding the underlying component commodities of each

[[Page 52714]]

Underlying Index from those futures exchanges that list and trade 
futures contracts on those commodities. Several independent data 
vendors also package and disseminate index data in various value-added 
formats (including vendors displaying both index constituents and index 
levels and vendors displaying index levels only).
    Data regarding spot pricing of the Underlying Benchmark commodities 
(gold and silver) is publicly available on a 24-hour basis from various 
financial information service providers, such as Reuters and Bloomberg. 
In addition, the daily London fix for gold and silver is also 
disseminated by various market data vendors and is available from the 
LBMA Web site at http://www.lbma.org.uk. Data regarding futures 
contracts and options on futures contracts in connection with the 
Underlying Benchmark commodities is also available from NYMEX at http:/
/www.nymex.com.
    There is considerable public price and data information regarding 
the Underlying Benchmark currencies (euro and Japanese yen). Spot 
pricing related to the foreign currency exchange is available to 
investors and market professionals on a 24-hour basis. A variety of 
public Web sites and professional and subscription services provide 
market and price information regarding the euro and the yen. Current 
spot prices are also generally available from foreign exchange dealers.

Dissemination of Net Asset Value and Indicative Value

    The Administrator calculates and disseminates, once each trading 
day, the NAV per Share to market participants. The Exchange will obtain 
a representation (prior to listing of the Funds) from the Trust that 
the NAV per Share will be calculated daily and made available to all 
market participants at the same time. In addition, the Administrator 
causes to be made available on a daily basis the corresponding Cash 
Deposit Amounts to be deposited in connection with the issuance of the 
respective Shares.
    In order to provide updated information relating to the Fund for 
use by investors, professionals and persons wishing to create or redeem 
the Shares, the Exchange will disseminate an updated Indicative Value. 
The Indicative Value will be disseminated on a per-Share basis at least 
every 15 seconds during Exchange Core Trading Session trading hours of 
9:30 a.m. to 4 p.m. ET. The Indicative Value will be calculated based 
on the cash required for creations and redemptions for a Fund adjusted 
to reflect the price changes of the Financial Instruments.
    Criteria for Initial and Continued Listing. The Funds will be 
subject to the criteria in NYSE Arca Equity Rule 8.200(d) and 
Commentary .02(d) to Rule 8.200 for initial and continued listing of 
the Shares. The Funds will accept subscriptions for Shares in Creation 
Units from Authorized Participants expected to be in a range from $20 
to $70 per Share during an initial offering period, commencing with the 
initial effective date of the prospectus and terminating no later than 
the ninetieth (90) day following such date, unless (i) the subscription 
minimum is reached before that date and the Managing Owner determines 
to end the initial offering period early or (ii) that date is extended 
by the Managing Owner for up to an additional 90 days.
    The anticipated minimum number of Shares for each Fund to be 
outstanding at the start of trading will be 50,000 Shares. The Exchange 
believes that this anticipated minimum number of Shares for each Fund 
to be outstanding at the start of trading is sufficient to provide 
adequate market liquidity and to further the objectives of the Funds. 
The Exchange represents that, for the initial and continued listing of 
the Shares, the Shares must be in compliance with NYSE Arca Equities 
Rule 5.3 and Rule 10A-3 under the Exchange Act.

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. Trading in the Shares 
on the Exchange will occur in accordance with NYSE Arca Equities Rule 
7.34(a). The Exchange has appropriate rules to facilitate transactions 
in the Shares during this time. The minimum trading increment for 
Shares on the Exchange will be $0.01.
    Further, NYSE Arca Equities Rules 8.200, Commentary .02 sets forth 
certain restrictions on equity trading permit holders (``ETP Holders'') 
acting as registered Market Makers in Trust Issued Receipts to 
facilitate surveillance. Rule 8.200, Commentary .02(e)(3) requires that 
the ETP Holder acting as a registered Market Maker in the Shares 
provide the Exchange with information relating to its trading in the 
applicable physical asset or commodity, related futures or options on 
futures, or any other related derivatives as may be requested. NYSE 
Arca Equities Rule 8.200, Commentary .02(e)(4) prohibits the ETP Holder 
acting as a registered Market Maker in the Shares from using any 
material nonpublic information received from any person associated with 
an ETP Holder or employee of such person regarding trading by such 
person or employee in the applicable underlying physical asset or 
commodity, related futures or options on futures, or any other related 
derivative (including the TIRs). In addition, NYSE Arca Equities Rule 
8.200, Commentary .02(e)(1) prohibits the ETP Holder acting as a 
registered Market Maker in the Shares from being affiliated with a 
market maker in the applicable physical asset or commodity, related 
futures or any other related derivatives unless adequate information 
barriers are in place, as provided in NYSE Arca Equities Rule 7.26.
    As a general matter, the Exchange has regulatory jurisdiction over 
its ETP Holders and any person or entity controlling an ETP Holder. The 
Exchange also has regulatory jurisdiction over a subsidiary or 
affiliate of an ETP Holder that is in the securities business. A 
subsidiary or affiliate of an ETP Holder that does business only in 
commodities or futures contracts would not be subject to Exchange 
jurisdiction, but the Exchange could obtain certain information 
regarding the activities of such subsidiary or affiliate through 
surveillance sharing agreements with regulatory organizations of which 
such subsidiary or affiliate is a member.

Surveillance

    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products, including TIRs, to 
monitor trading in the Shares. The Exchange represents that these 
procedures are adequate to properly monitor Exchange trading of the 
Shares in all trading sessions and to deter and detect violations of 
Exchange rules and applicable federal securities laws.
    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 is able to 
obtain information regarding trading in the Shares, and certain of the 
Financial Instruments held by TIRs including securities, options on 
securities and indices, commodities, futures contracts, and options on 
futures contracts, through ETP Holders, in connection with such ETP 
Holders' proprietary or customer trades which they effect on any 
relevant market. The Exchange currently has in place

[[Page 52715]]

comprehensive surveillance sharing agreements with ICE, LME and NYMEX 
for the purpose of providing information in connection with trading in 
or related to futures contracts traded on their respective exchanges 
comprising the Underlying Benchmarks. The Exchange also notes that 
CBOT, CME and NYBOT are members of the Intermarket Surveillance Group 
(``ISG'').

Information Bulletin

    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin of the special characteristics 
and risks associated with trading the Shares, including risks inherent 
with trading the Shares during the Opening and Late Trading Sessions 
when the updated Indicative Value is not calculated and disseminated 
and suitability recommendation requirements.
    Specifically, the Information Bulletin will discuss the following: 
(1) The procedures for purchases and redemptions of Shares in Baskets; 
(2) NYSE Arca Equities Rule 9.2(a),\11\ which imposes a duty of due 
diligence on its ETP Holders to learn the essential facts relating to 
every customer prior to trading the Shares; (3) how information 
regarding the Indicative Value is disseminated; (4) the requirement 
that ETP Holders deliver a prospectus to investors purchasing newly 
issued Shares prior to or concurrently with the confirmation of a 
transaction; and (5) trading information. For example, the Information 
Bulletin will advise ETP Holders, prior to the commencement of trading, 
of the prospectus delivery requirements applicable to the Trust. The 
Exchange notes that investors purchasing Shares directly from the Funds 
(by delivery of the Basket Amount) will receive a prospectus. ETP 
Holders purchasing Shares from the Trust for resale to investors will 
deliver a prospectus to such investors.
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    \11\ NYSE Arca Equities Rule 9.2(a) (``Diligence as to 
Accounts'') provides that an ETP Holder, before recommending a 
transaction, must have reasonable grounds to believe that the 
recommendation is suitable for the customer based on any facts 
disclosed by the customer as to his other security holdings and as 
to his financial situation and needs. Further, the proposed rule 
amendment provides, with a limited exception, that prior to the 
execution of a transaction recommended to a non-institutional 
customer, the ETP Holder shall make reasonable efforts to obtain 
information concerning the customer's financial status, tax status, 
investment objectives, and any other information that the ETP Holder 
believes would be useful to make a recommendation. See Securities 
Exchange Act Release No. 54045 (June 26, 2006), 71 FR 37971 (July 3, 
2006) (SR-PCX-2005-115).
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    In addition, the Information Bulletin will reference that the Trust 
is subject to various fees and expenses described in each Fund's 
Registration Statement. The Information Bulletin will also reference 
the fact that there is no regulated source of last sale information 
regarding physical commodities, that the Commission has no jurisdiction 
over the trading of physical commodities or the futures contracts on 
which the value of the Shares is based.

Trading Halts

    The Exchange will halt trading if it becomes aware that a Fund's 
NAV or disclosure of the portfolio composition is not being 
disseminated or has not been disseminated to all market participants at 
the same time.\12\ In addition, the Exchange will halt trading in the 
Shares if the value of an Underlying Benchmark is no longer calculated 
or available on at least a 15-second basis through one or more major 
market data vendors during the time the Shares trade on the Exchange or 
if an Indicative Fund Value [sic] per Share updated every 15 seconds is 
no longer calculated or available.\13\
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    \12\ Pursuant to NYSE Arca Equities Rule 7.34(a)(5), if the 
Exchange becomes aware that the NAV is not being disseminated to all 
market participants at the same time, it will halt trading in the 
Shares until such time as the NAV is available to all market 
participants.
    \13\ See NYSE Arca Equities Rule 7.12, Commentary .04. If the 
value of the Underlying Benchmark or the Indicative Fund Value [sic] 
is not being disseminated on at least a 15-second basis during the 
hours the Shares trade on the Exchange, the Exchange may halt 
trading during the day in which the interruption to the 
dissemination of the value of the Underlying Benchmark or the 
Indicative Fund Value [sic] occurs. If the interruption to the 
dissemination the value of the Underlying Benchmark or the 
Indicative Fund Value [sic] persists past the trading day in which 
it occurred, the Exchange will halt trading no later than the 
beginning of the trading day following the interruption.
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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. 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 trading is not occurring in the underlying securities; or (2) 
whether other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \14\ of 
the Exchange Act in general and furthers the objectives of Section 
6(b)(5) \15\ 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 regulating, clearing, settling, processing 
information with respect to, and facilitating transaction in 
securities, and, in general to protect investors and the public 
interest. The Exchange believes that the proposal will facilitate the 
listing and trading of additional types of commodity and currency-based 
investments that will enhance competition among market participants, to 
the benefit of investors and the marketplace.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. 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 an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2008-91 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2008-91. 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

[[Page 52716]]

Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of the filing also will be available for inspection and 
copying at the principal office of the Exchange. All comments received 
will be posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEArca-2008-91 and should be submitted 
on or before October 1, 2008.

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

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Exchange Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\16\ In particular, the Commission believes that 
the proposal is consistent with Section 6(b)(5) of the Exchange 
Act,\17\ which requires, among other things, that the rules of a 
national securities exchange be designed 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 notes that 
it has permitted the listing and trading of TIRs and other exchange-
traded fund-like products linked to the performance of underlying 
currencies and commodities.\18\ The Commission further notes that the 
shares of other UltraFunds and UltraShort Funds based on various 
securities indexes have previously been approved by the Commission.\19\
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    \16\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ See, e.g., Securities Exchange Act Release Nos. 55268 
(February 9, 2007), 72 FR 7793 (February 20, 2007) (SR-NYSE-2007-03) 
(approving the listing and trading of shares of the CurrencyShares 
Japanese Yen Trust); 54020 (June 20, 2006), 71 FR 36579 (June 27, 
2006) (SR-NYSE-2006-35) (approving the listing and trading of shares 
of six CurrencyShares Trusts); and 52843 (November 28, 2005), 70 FR 
72486 (December 5, 2005) (SR-NYSE-2005-65) (approving the listing 
and trading of shares of the Euro Currency Trust, n/k/a the 
CurrencyShares Euro Trust). See also, e.g., Securities Exchange Act 
Release Nos. 56969 (December 14, 2007), 72 FR 72424 (December 20, 
2007) (SR-Amex-2007-53) (approving the listing and trading of the 
GreenHaven Continuous Commodity Index Fund); 55632 (April 13, 2007), 
72 FR 19987 (April 20, 2007) (SR-Amex-2006-112) (approving the 
listing and trading of the United States Natural Gas Fund, LP); 
55292 (February 14, 2007), 72 FR 8406 (February 26, 2007) (SR-Amex 
2006-86) (approving the listing and trading of the PowerShares DB 
U.S. Dollar Index Bullish Fund and the PowerShares DB U.S. Dollar 
Index Bearish Fund); 55029 (December 29, 2006), 72 FR 806 (January 
8, 2007) (SR-Amex 2006-76) (approving the listing and trading of the 
DB Multi-Sector Commodity Trust); 54450 (September 14, 2006), 71 FR 
55230 (September 21, 2006) (SR-Amex 2006-44) (approving the listing 
and trading of the DB Currency Index Value Fund); 53582 (March 31, 
2006), 71 FR 17510 (April 6, 2006) (SR-Amex 2005-127) (approving the 
listing and trading of the United States Oil Fund, LP); 53521 (March 
20, 2006), 71 FR 14967 (March 24, 2006) (SR-Amex 2005-072) 
(approving the listing and trading of the iShares Silver Trust); 
53105 (January 11, 2006), 71 FR 3129 (January 19, 2006) (SR-Amex 
2005-059) (approving the listing and trading of the DB Commodity 
Index Tracking Fund); 53059 (January 5, 2006), 71 FR 2072 (January 
12, 2006) (SR-Amex 2005-128) (approving the trading of the Euro 
Currency Trust pursuant to UTP); 51058 (January 19, 2005), 70 FR 
3749 (January 26, 2005) (SR-Amex 2004-38) (approving the listing and 
trading of the iShares COMEX Gold Trust); and 51446 (March 29, 
2005), 70 FR 17272 (April 5, 2005) (SR-Amex-2005-032) (approving the 
trading of streetTRACKS Gold Shares pursuant to UTP).
    \19\ See, e.g., Securities Exchange Act Release Nos. 56998 
(December 19, 2007), 72 FR 73404 (December 27, 2007) (SR-Amex-2007-
104) (approving the listing and trading of shares of the ProShares 
Trust); 56592 (October 1, 2007), 72 FR 57364 (October 9, 2007) (SR-
Amex -2007-60) (approving the listing and trading of shares of the 
ProShares Trust based on international equity indexes); 54040 (June 
23, 2006), 71 FR 37629 (June 30, 2006) (SR-Amex-2006-41) (approving 
the listing and trading of shares of the ProShares Trust); 55117 
(January 17, 2007), 72 FR 3442 (January 25, 2007) (SR-Amex 2006-101) 
(approving the listing and trading of shares of the ProShares 
Trust); and 52553 (October 3, 2005), 70 FR 59100 (October 11, 2005) 
(SR-Amex-2004-62) (approving the listing and trading of shares of 
the xtraShares Trust).
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    The Exchange proposes to list and trade the Shares pursuant to 
Commentary .02 to NYSE Arca Equities Rule 8.200.\20\ NYSE Arca 
represents that the Shares will conform to the existing initial and 
continued listing criteria under such rule and must be in compliance 
with NYSE Arca Equities Rule 5.3 and Rule 10A-3 under the Exchange Act.
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    \20\ The Commission believes that the Exchange's existing rules 
and procedures are adequate with respect to the Shares. However, the 
Commission notes that other proposed series of TIRs may require 
additional Exchange rules and procedures to govern their listing and 
trading on the Exchange. For example, in the case of a proposed 
series of TIRs that are based on a portfolio, at least in part, of 
non-U.S. equity securities, rules relating to comprehensive 
surveillance sharing agreements and quantitative initial and 
continued listing standards may be required.
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    The Commission believes that the proposal to list and trade the 
Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of 
the Exchange Act,\21\ 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 and last-sale 
information for the Shares will be disseminated by means of CTA and 
Consolidated Quotation High Speed Lines.\22\ In addition, the value of 
each Underlying Benchmark will be updated intra-day on a real time 
basis as its components change in price. The Indicative Value will be 
disseminated at least every 15 seconds during the Exchange's Core 
Trading Session (9:30 a.m. to 4 p.m. Eastern Time), and the NAV of each 
Fund will be calculated by the Administrator and made available to all 
market participants at the same time.
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    \21\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \22\ E-mail from Tim Malinowski, Director, NYSE Euronext, to 
Edward Cho and Christopher Chow, Special Counsels, Division of 
Trading and Markets, Commission, dated September 3, 2008 (confirming 
the means of dissemination of quotations and last-sale information 
for the Shares).
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    The Exchange has noted the wide availability of information 
regarding the Underlying Benchmarks. For example, data regarding spot 
pricing of the Underlying Benchmark commodities (gold and silver) is 
publicly available on a 24-hour basis from various financial 
information service providers, such as Reuters and Bloomberg. In 
addition, the daily London fix for gold and silver is also disseminated 
by various market data vendors and is available from the LBMA Web site 
(http://www.lbma.org.uk). Data regarding futures contracts and options 
on futures contracts in connection with the Underlying Benchmark 
commodities is also available from NYMEX at http://www.nymex.com. Spot 
pricing related to the foreign currency exchange is available to 
investors and market professionals on a 24-hour basis. A variety of 
public Web sites and professional and subscription services provide 
market and price information regarding the euro and the yen. Currency 
spot prices are also generally available from foreign exchange dealers.
    Moreover, each Fund's total portfolio composition will be disclosed 
on the Web site of the Trust (http://www.proshares.com) or another 
relevant Web site as determined by the Trust and/or the Exchange. The 
Trust will provide Web site disclosure of portfolio holdings daily and 
will include, as applicable, the names and number of

[[Page 52717]]

Financial Instruments and characteristics of such instruments and cash 
equivalents, and amount of cash held in the portfolio of each Fund. 
NYSE Arca will also make available on its Web site daily trading volume 
of the Shares, closing prices of the Shares, and the NAV per Share. In 
addition, the Web sites for the Funds and/or the Exchange will publish 
the following information: (a) The current NAV per Share daily and the 
prior business day's NAV per Share and the reported closing price; (b) 
the Bid-Asked Price; (c) calculation of the premium or discount of such 
price against the NAV per Share; (d) data in chart form displaying the 
frequency distribution of discounts and premiums of the Bid-Ask Price 
against the NAV per Share, within appropriate ranges for each of the 
four previous calendar quarters; (e) the prospectus; and (f) other 
applicable quantitative information.
    Furthermore, the Commission believes that the proposal to list and 
trade the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Commission notes that the Exchange will obtain a 
representation from the Trust, prior to listing, that the NAV per Share 
for the Funds will be calculated daily, and that the NAV will be made 
available to all market participants at the same time. The Exchange has 
represented that the disclosure of the portfolio composition for each 
Fund will be made available to all market participants at the same 
time. The Exchange may consider the suspension of trading in, or 
removal from listing of, the Shares if, among others: (1) The value of 
the underlying index or portfolio is no longer calculated or available 
on at least a 15-second delayed basis or the Exchange stops providing a 
hyperlink on its Web site to any such asset or investment value; or (2) 
the Indicative Value is no longer made available on at least a 15-
second delayed basis.\23\ Further, Commentary .02 to NYSE Arca Equities 
Rules 8.200 sets forth certain restrictions, described above, on ETP 
Holders acting as registered Market Makers in TIRs to facilitate 
surveillance.
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    \23\ See Commentary .02(d)(2)(ii) and (iii) to NYSE Arca 
Equities Rule 8.200.
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    The Exchange's trading halt rules are reasonably designed to 
prevent trading in the Shares when transparency is impaired. As 
discussed above, trading in the Shares will be halted: (1) If the 
Exchange becomes aware that a Fund's NAV or disclosure of the portfolio 
composition is not being disseminated or has not been disseminated to 
all market participants at the same time; or (2) if the value of an 
Underlying Benchmark is no longer calculated or available on at least a 
15-second basis through one or more major market data vendors during 
the time the Shares trade on the Exchange or if an Indicative Value per 
Share updated every 15 seconds is no longer calculated or available. 
The Exchange also may consider all relevant factors in exercising its 
discretion to halt or suspend trading in the Shares. Trading may be 
halted because of market conditions or for reasons that make trading in 
the Shares inadvisable, including: (1) The extent to which trading is 
not occurring in the underlying securities; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present.
    The Commission further believes that the trading rules and 
procedures to which the Shares will be subject pursuant to this 
proposal are consistent with the Exchange Act. The Exchange has 
represented that the Shares are equity securities subject to NYSE 
Arca's rules governing the trading of equity securities.
    In support of this proposal, the Exchange has made the following 
representations:
    (1) The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.200(d) and Commentary .02(d) 
to NYSE Arca Equities Rule 8.200.
    (2) The Exchange's surveillance procedures are adequate to properly 
monitor trading of the Shares in all trading sessions and to deter and 
detect violations of Exchange rules and applicable federal securities 
laws.
    (3) The Exchange will distribute an Information Bulletin, the 
contents of which are more fully described above, to ETP Holders in 
connection with the trading of the Shares.
    (4) The Exchange represents that the Trust is required to comply 
with NYSE Arca Equities Rule 5.3 and Rule 10A-3 under the Exchange Act.

This approval order is based on the Exchange's representations.
    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\24\ for approving the proposed rule change prior to the 30th 
day after the date of publication of notice in the Federal Register. 
The Commission notes that it has previously approved the listing and 
trading of the Shares on Amex \25\ and believes that the Exchange's 
proposal to list and trade such Shares does not appear to present any 
novel or significant regulatory issues that should cause it to revisit 
that previous finding. As mentioned above, the Shares are substantially 
similar to the shares of other TIRs and exchange-traded products, the 
shares of which are currently listed and trading in the 
marketplace,\26\ and the Commission has previously approved the listing 
and trading of shares of other UltraFunds and UltraShort Funds based on 
various securities indexes.\27\ As such, the Commission believes that 
accelerating approval of this proposal should benefit investors by 
creating, without undue delay, additional competition in the market for 
such products.
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    \24\ 15 U.S.C. 78s(b)(2).
    \25\ See supra note 3. The Shares have also been approved for 
trading on the Exchange pursuant to UTP. See supra note 4.
    \26\ See supra note 18.
    \27\ See supra note 19.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\28\ that the proposed rule change (SR-NYSEArca-2008-91) 
be, and it hereby is, approved on an accelerated basis.
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    \28\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-20962 Filed 9-9-08; 8:45 am]

BILLING CODE 8010-01-P