Document ID: SEC-2007-1359-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-10-02T04:00Z

[Federal Register: October 2, 2007 (Volume 72, Number 190)]
[Notices]               
[Page 56114-56115]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02oc07-87]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56525; File No. SR-NYSE-2007-76]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Granting Accelerated Approval to Proposed Rule Change Relating to 
Requirements for the Listing and Trading of Commodity-Linked Securities 
and Currency-Linked Securities

September 25, 2007.

I. Introduction

    On August 22, 2007, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend the generic listing standards for 
commodity-linked securities (``Commodity-Linked Securities'') and 
currency-linked securities (``Currency-Linked Securities'') under 
section 703.22 of the NYSE Listed Company Manual (``Manual''). The 
proposed rule change was published for comment in the Federal Register 
on September 6, 2007 for a 15-day comment period.\3\ The Commission 
received no comments on the proposal. This order approves 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.
    \3\ See Securities Exchange Act Release No. 56332 (August 29, 
2007), 72 FR 51285 (``Notice'').
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II. Description of the Proposal

    The Exchange proposed to amend section 703.22(B)(II)(1)(b) and 
section 703.22(B)(III)(1)(b) of the Manual to permit the listing and 
trading of Commodity-Linked Securities and Currency-Linked Securities, 
respectively, where the underlying Commodity Reference Asset \4\ or 
Currency Reference Asset,\5\ as the case may be, may include components 
representing not more than 10% of the dollar weight of such Commodity 
Reference Asset or Currency Reference Asset, for which the pricing 
information is derived from markets which do not meet the general 
requirements of the respective rule, as described below. In addition, 
the Exchange proposed that no single component of a Commodity Reference 
Asset or Currency Reference Asset, as the case may be, subject to the 
foregoing proposed exception may exceed 7% of the dollar weight of such 
Commodity Reference Asset or Currency Reference Asset, as applicable.
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    \4\ Commodity Reference Asset is defined as one or more physical 
commodities or commodity futures, options or other commodity 
derivatives or Commodity Trust Shares (as defined in NYSE Rule 
1300B) or a basket or index of any of the foregoing. See Section 
703.22 of the Manual.
    \5\ Currency Reference Asset is defined as one or more 
currencies, options or currency futures or other currency 
derivatives or Currency Trust Shares (as defined in NYSE Rule 1300A) 
or a basket or index of any of the foregoing. See id.
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    Under section 703.22(B)(II)(1) of the Manual, an issuance of 
Commodity-Linked Securities currently cannot be listed unless either:
     The Commodity Reference Asset to which the security is 
linked shall have been reviewed and approved for the trading of 
Commodity Trust Shares or options or other derivatives by the 
Commission under Section 19(b)(2) \6\ of the Act and rules thereunder 
and the conditions set forth in the Commission's approval order, 
including with respect to comprehensive surveillance sharing agreements 
(``CSSAs''), continue to be satisfied; or
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    \6\ 15 U.S.C. 78s(b)(2).
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     The pricing information for each component of a Commodity 
Reference Asset is derived from a market which is

[[Page 56115]]

an Intermarket Surveillance Group (``ISG'') member or affiliate or with 
which the Exchange has a CSSA. Notwithstanding the previous sentence, 
pricing information for gold and silver may be derived from the London 
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Bullion Market Association.

    Similarly, under section 703.22(B)(III)(1) of the Manual, an 
issuance of Currency-Linked Securities currently cannot be listed 
unless either:

     The Currency Reference Asset to which the security is 
linked shall have been reviewed and approved for the trading of 
Currency Trust Shares or options or other derivatives by the Commission 
under Section 19(b)(2) of the Act and rules thereunder and the 
conditions set forth in the Commission's approval order, including with 
respect to CSSAs, continue to be satisfied; or
     The pricing information for each component of a Currency 
Reference Asset must be (1) The generally accepted spot price for the 
currency exchange rate in question or (2) derived from a market which 
is (a) An ISG member or affiliate or with which the Exchange has a CSSA 
and (b) the pricing source for components of a Currency Reference Asset 
that has previously been approved by the Commission.
    The Exchange proposed to amend the requirements as to the source of 
pricing information for components of Commodity-Linked Securities and 
Currency-Linked Securities so as to permit the listing of such 
securities where a maximum of 10% of the dollar weight of the Commodity 
Reference Asset or Currency Reference Asset, as the case may be, is 
made up of components that do not meet the respective general pricing 
information requirements. In addition, the Exchange proposed that no 
single component subject to the proposed exception may exceed 7% of the 
dollar weight of the Commodity Reference Asset or Commodity Reference 
Asset, as the case may be.
    The Exchange stated that many commodity and currency markets are 
not members or affiliates of ISG, and the Exchange frequently 
experiences difficulty entering into CSSAs with such markets. The 
Exchange noted that the proposed amendment would provide the Exchange 
with greater flexibility to list securities under section 703.22 of the 
Manual that are linked to a broader range of underlying assets, such as 
commodities and currencies, thereby providing issuers with a faster and 
less cumbersome means of listing new Commodity-Linked Securities and 
Currency-Linked Securities and benefiting the investing public.

III. 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 Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\7\ In particular, the Commission finds that the proposed rule 
change is consistent with the requirements of section 6(b)(5) of the 
Act,\8\ which requires, among other things, that the Exchange's rules 
be designed 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 transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system and, in general, to protect investors and the public interest. 
The Commission believes that the Exchange's surveillance procedures 
would not be materially hampered as long as the Exchange has access to 
trading and pricing information of the underlying components that 
constitute at least 90% of the dollar weight of the Commodity Reference 
Asset or Currency Reference Asset, as the case may be. In addition, the 
Commission believes that so long as the pricing information for at 
least 90% of the dollar weight of the Commodity Reference Asset or 
Currency Reference Asset, as the case may be, is based on the general 
pricing information requirements, the proposed amendment to the 
Exchange's generic listing standards should not constitute a material 
risk to investors, while potentially benefiting investors by providing 
the Exchange flexibility to list a broader array of products.
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    \7\ In approving this proposed 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).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission finds good cause for approving the proposed rule 
change before the 30th day after the date of publication of notice of 
filing thereof in the Federal Register. The Commission notes that it 
has previously approved similar approaches to the instant proposal, 
including another provision in section 703.22 of the Manual permitting 
the listing of Equity Index-Linked Securities,\9\ where the underlying 
equity index may include foreign country securities or foreign country 
securities underlying American Depositary Receipts having their primary 
trading market outside the United States on foreign trading markets 
that are not members or affiliates of ISG or parties to CSSAs with the 
Exchange, as long as such securities do not, in the aggregate, 
represent more than 20% of the dollar weight of such underlying 
index.\10\ The Commission believes that accelerated approval of the 
proposed rule change should expedite the listing and trading of 
additional Commodity-Linked Securities and Currency-Linked Securities, 
subject to the standards discussed herein, to the benefit of the 
investing public. Therefore, the Commission finds good cause, 
consistent with section 19(b)(2) of the Act,\11\ to approve the 
proposed rule change on an accelerated basis.
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    \9\ Equity Index-Linked Securities are defined as securities 
that provide for the payment at maturity of a cash amount based on 
the performance of an underlying index or indexes of equity 
securities. See Section 703.22 of the Manual.
    \10\ See Section 703.22(B)(I)(2)(vii) of the Manual. See also 
Securities Exchange Act Release Nos. 55687 (May 1, 2007), 72 FR 
25824 (May 7, 2007) (SR-NYSE-2007-27) (approving the generic listing 
and trading standards for Index-Linked Securities, including Equity 
Index-Linked Securities); and 54013 (June 16, 2006), 71 FR 36372 
(June 26, 2006) (SR-NYSE-2006-17) (approving the listing and trading 
of shares of the iShares GSCI Commodity Indexed Trust and providing 
that, if a new component is added to the underlying index that 
constitutes more than 10% of the overall weight of the index and 
with whose principal trading market the Exchange does not have a 
comprehensive surveillance sharing agreement, the Exchange would 
seek to delist such shares).
    \11\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-NYSE-2007-76) be, and it 
hereby is, approved on an accelerated basis.
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    \12\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-19362 Filed 10-1-07; 8:45 am]

BILLING CODE 8011-01-P