Document ID: SEC-2008-1584-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-11-24T05:00Z

[Federal Register: November 24, 2008 (Volume 73, Number 227)]
[Notices]               
[Page 71073-71074]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24no08-150]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58948; File No. SR-NYSEArca-2008-105]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change Relating to Listing Certain Derivative Products 
Pursuant to Continued Listing Criteria

November 14, 2008.

I. Introduction

    On October 1, 2008, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca''), through its wholly owned subsidiary, NYSE Arca Equities, Inc. 
(``NYSE Arca Equities''), 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 relating to listing certain 
Derivative Products (as defined in proposed Commentary .01 to NYSE Arca 
Equities Rule 5.2(b)) pursuant to continued listing criteria. The 
proposed rule change was published for comment in the Federal Register 
on October 10, 2008.\3\ The Commission received no comment letters on 
the proposed rule change. This order approves the proposed rule change.
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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. 58734 (October 6, 
2008), 73 FR 60388.
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II. Description of the Proposed Rule Change

    The Exchange proposes to adopt new Commentary .01 to NYSE Arca 
Equities Rule 5.2(b) to permit the listing of a Derivative Product \4\ 
that (1) was originally listed on another registered national 
securities exchange (``Other SRO'') and continues to be listed on such 
Other SRO, and (2) satisfies the Exchange's continued listing criteria 
applicable to the relevant product class that would include such 
Derivative Product.
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    \4\ Commentary .01 to NYSE Arca Equities Rule 5.2(b) defines 
``Derivative Product'' to include securities described in NYSE Arca 
Equities Rule 5.2(j)(2) (Equity Linked Notes); NYSE Arca Equities 
Rule 5.2(j)(3) (Investment Company Units); NYSE Arca Equities Rule 
5.2(j)(4) (Index-Linked Exchangeable Notes); NYSE Arca Equities Rule 
5.2(j)(6) (Equity Index-Linked Securities, Commodity-Linked 
Securities, Currency-Linked Securities, Fixed Income Index-Linked 
Securities, Futures-Linked Securities, and Multifactor Index-Linked 
Securities); NYSE Arca Equities Rule 8.100 (Portfolio Depositary 
Receipts); and Commentary .01 to NYSE Arca Equities Rule 8.200 
(Trust Issued Receipts). Exchange rules relating to the listing and 
trading, including trading pursuant to unlisted trading privileges, 
of ``Derivative Products,'' as described above, permit the listing 
and trading of such products pursuant to Rule 19b-4(e) under the 
Act. Rule 19b-4(e) under the Act provides that the listing and 
trading of a new derivative securities product by a self-regulatory 
organization (``SRO'') shall not be deemed a proposed rule change, 
pursuant to paragraph (c)(1) of Rule 19b-4, if the Commission has 
approved, pursuant to Section 19(b) of the Act, the SRO's trading 
rules, procedures, and listing standards for the product class that 
would include the new derivatives securities product, and the SRO 
has a surveillance program for the product class. See 17 CFR 
240.19b-4(e)(1).
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    For example, in the case of an Index-Linked Security that is listed 
on an Other SRO, the staff of the Exchange would determine whether the 
Index-Linked Security meets the Exchange's continued listing criteria. 
If the Index-Linked Security satisfies the Exchange's continued listing 
criteria, then NYSE Arca could proceed to list such security on the 
Exchange. If the Index-Linked Security does not meet the continued 
listing criteria, the staff of the Exchange would then, in its sole 
discretion, either file a separate rule filing pursuant to Rule 19b-4 
under the Act proposing that the Index-Linked Security be listed on the 
Exchange pursuant to the criteria

[[Page 71074]]

set forth in the rule filing or decline to list the Index-Linked 
Security on the Exchange.
    Prior to listing on the Exchange, the issuer of a Derivative 
Product would be required to properly delist from the Other SRO and 
satisfy the applicable listing procedures of the Exchange and 
applicable statutory and regulatory requirements, including, without 
limitation, Section 12 of the Act,\5\ relating to listing such 
Derivative Product on the Exchange. In addition, the Exchange 
represents that, for any Derivative Product listed pursuant to proposed 
Commentary .01 to NYSE Arca Equities Rule 5.2(b), other than the 
initial listing standards, the shares or other units of such Derivative 
Product will comply with all other pertinent requirements applicable to 
the product class that would include such Derivative Product, 
including, but not limited to, requirements relating to the 
dissemination of key information, such as an index value, reference 
asset value, and intraday indicative value, and rules governing the 
trading of equity securities, trading hours, trading halts, 
surveillance, firewalls, and Information Bulletins to ETP Holders, as 
set forth in Exchange rules applicable to such Derivative Product and 
prior Commission orders approving the generic listing rules applicable 
to the listing and trading of such Derivative Product.
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    \5\ 15 U.S.C. 78(l).
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III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of Section 6 of the 
Act \6\ 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 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 
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.
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    \6\ 15 U.S.C. 78f.
    \7\ In approving this proposed rule change, the Commission 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 proposal would permit the Exchange to list and trade any 
Derivative Product that (1) was originally listed on an Other SRO and 
continues to be listed on such Other SRO, and (2) satisfies the 
Exchange's continued listing criteria applicable to the product class 
that would include such Derivative Product. The Commission believes 
that the proposal reasonably balances the removal of impediments to a 
free and open market with the protection of investors and the public 
interest, two principles set forth in Section 6(b)(5) of the Act. The 
Commission notes that (1) it has previously approved the generic 
listing standards, including the continued listing criteria, applicable 
to each product class that would include such Derivative Product, and 
(2) the continued listing criteria applicable to a Derivative Product 
are substantially similar to those of Other SROs that list such 
Derivative Product.\9\ The Commission also notes that, for any 
Derivative Product listed on the Exchange pursuant to proposed 
Commentary .01 to NYSE Arca Equities Rule 5.2(b), the shares of such 
Derivative Product must comply with all of the other pertinent 
requirements applicable to the product class that would include such 
Derivative Product including, without limitation, requirements relating 
to the dissemination of key values and the rules governing the trading 
of equity securities, trading hours, trading halts, surveillance, 
firewalls, and Information Bulletins to ETP Holders, as set forth in 
the applicable Exchange rules and prior Commission orders approving the 
generic listing rules applicable to the listing and trading of such 
Derivative Product. In addition, prior to listing on the Exchange, the 
issuer of a Derivative Product must properly delist from the Other SRO 
and satisfy all relevant Exchange listing procedures and applicable 
statutory and regulatory requirements, including, without limitation, 
Section 12 of the Act. If the Exchange seeks to list a Derivative 
Product that does not satisfy the Exchange's continued listing 
standards applicable to such product, it may not do so pursuant to 
proposed Commentary .01 to NYSE Arca Equities Rule 5.2(b). Instead, the 
Exchange must obtain prior Commission approval pursuant to Section 
19(b)(2) of the Act.
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    \9\ For example, the following are NYSE Alternext US LLC (``NYSE 
Alternext'') listing standards for Derivative Products having 
similar or identical continued listing standards to those of the 
Exchange: Index Fund Shares (NYSE Alternext Equities Rule 1000A et 
seq.); Portfolio Depositary Receipts (Rules 1000 et seq.); Trust 
Issued Receipts (Rules 1200 et seq.); and securities listed under 
Section 107 of the NYSE Alternext Company Guide, including Equity-
Linked Term Notes; Index-Linked Exchangeable Notes; Index-Linked 
Securities; Commodity-Linked Securities; Currency-Linked Securities; 
Fixed Income-Linked Securities; Futures-Linked Securities; and 
Combination-Linked Securities.
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    The Commission believes that the Exchange's proposal would 
facilitate the timely and efficient listing and continuous trading of a 
Derivative Product should an issuer of such Derivative Product, 
originally listed on an Other SRO, choose to delist from such Other SRO 
and list such Derivative Product on the Exchange, provided that all of 
the requirements with respect to the Derivative Product referenced 
herein, including all of the applicable requirements governing the 
trading of such Derivative Product, as set forth in Exchange rules and 
prior applicable Commission orders, are satisfied. For the foregoing 
reasons, the Commission believes that the proposed rule change is 
consistent with the Act and finds good cause for approving the proposed 
rule change.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NYSEArca-2008-105) be, and 
it hereby is, approved.
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    \10\ 15 U.S.C. 78s(b)(1).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-27878 Filed 11-21-08; 8:45 am]

BILLING CODE 8011-01-P