Document ID: SEC-2008-1408-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2008-10-10T04:00Z

[Federal Register: October 10, 2008 (Volume 73, Number 198)]
[Notices]               
[Page 60388-60390]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10oc08-151]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58734; File No. SR-NYSEArca-2008-105]

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

 October 6, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on October 1, 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, II, 
and III below, which Items have been prepared by NYSE Arca. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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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

    NYSE Arca, through its wholly owned subsidiary NYSE Arca Equities, 
Inc. (``NYSE Arca Equities''), proposes to adopt Commentary .01 to Rule 
5.2(b) to allow NYSE Arca to list Derivative Products (as defined in 
the proposed Commentary .01 to Rule 5.2(b)) that (1) were originally 
listed on another registered national securities exchange on an initial 
listing basis and continue to be listed on such other registered 
national securities exchange, and (2) satisfy the Exchange's continued 
listing criteria. The text of the proposed rule change is set forth 
below (new language is in italics):
    Rule 5.2(b)
* * * * *
    Commentary:
    .01 The Exchange is permitted to list any Derivative Product, as 
described below, 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 that are applicable to the product class that would include 
such Derivative Product. For the purposes of this rule, the term 
``Derivative Product'' shall include securities described in NYSE Arca 
Equities Rules 5.2(j)(2) (Equity Linked Notes); 5.2(j)(3) (Investment 
Company Units); 5.2(j)(4) (Index-Linked Exchangeable Notes); 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); 8.100 (Portfolio 
Depositary Receipts); and Commentary .01 to Rule 8.200 (Trust Issued 
Receipts).

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 those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant 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 is proposing to adopt Commentary .01 to NYSE Arca 
Equities Rule 5.2(b) to allow NYSE Arca to list Derivative Products (as 
defined in the proposed Commentary .01 to Rule 5.2(b)) \3\ that (1) 
were originally listed on

[[Page 60389]]

another registered national securities exchange (``Other SRO'') on an 
initial listing basis and continue to be listed on such Other SRO and 
(2) satisfy the Exchange's continued listing criteria applicable to the 
relevant product class. Such Derivative Products would be listed 
pursuant to NYSE Arca Equities continued listing criteria.
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    \3\ For purposes of proposed Rule 5.2(b), Commentary .01, the 
term ``Derivative Products'' includes securities described in Rule 
5.2(j)(2) (Equity-Linked Notes); Rule 5.2(j)(3) (Investment Company 
Units); Rule 5.2(j)(4) (Index-Linked Exchangeable Notes); and Rule 
5.2(j)(6) (Index-Linked Securities); and the following securities 
enumerated in provisions of section 2 to Rule 8: Portfolio 
Depositary Receipts; and Trust Issued Receipts to be listed pursuant 
to Rule 8.200, Commentary .01. Exchange rules relating to listing 
and trading, including trading pursuant to unlisted trading 
privileges, of ``Derivative Products'' as described above permit 
listing and trading pursuant to Rule 19b-4(e) under the Exchange 
Act. Rule 19b-4(e) under the Exchange 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 section (c)(1) of Rule 19b-4, if the 
Commission has approved, pursuant to Section 19(b) of the Exchange 
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 Securities Exchange Act Release No. 40761 (December 8, 
1998), 63 FR 70952 (December 22, 1998) (File No. S7-13-98).
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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 met the continued listing criteria. If the Index-
Linked Security met the continued listing criteria, then the Exchange 
would proceed to list such security on the Exchange. If the Index-
Linked Security did not meet the continued listing criteria, the staff 
of the Exchange would then, in its sole discretion, either file a 
separate rule filing under Rule 19b-4 of the Exchange Act proposing 
that the Index-Linked Security be listed on the Exchange pursuant to 
the criteria set forth in the rule filing, or decline to list the 
Index-Linked Security on the Exchange.
    The Exchange believes that application of continued listing 
criteria is appropriate to facilitate the listing of Derivative 
Products from Other SROs to the Exchange. Because the Exchange's 
continued listing criteria are similar or identical to those of certain 
Other SROs, the Exchange believes there would be no significant 
regulatory concerns with facilitating the efficient and timely listing 
of Other SRO-listed Derivative Products by allowing such products to 
satisfy continued listing criteria.\4\ Also, in light of the similar 
nature of the continued listing criteria of the Exchange and Other 
SROs, such as the Amex, the Exchange believes that having the ability 
to apply continued listing criteria in verifying that the Derivatives 
Products are qualified to be listed on the Exchange will not harm 
investors. In addition, such flexibility will assist certain issuers of 
Derivative Products in remaining listed and traded on a national 
securities exchange, without risking possible delisting based on a 
failure to meet the applicable Exchange initial listing criteria.
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    \4\ For example, the following are American Stock Exchange LLC 
(``Amex'') listing standards for Derivative Products having similar 
or identical continued listing standards to those of the Exchange: 
Index Fund Shares (Amex 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 Amex 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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    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.
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    \5\ 15 U.S.C. 78(l).
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    The Exchange represents that, for any Derivative Product listed 
pursuant to proposed Commentary .01 to Rule 5.2(b), other than the 
initial listing standards, the shares 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, 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.\6\
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    \6\ See email from Michael Cavalier, Chief Counsel, NYSE 
Euronext, to Christopher Chow, Special Counsel, Commission, dated 
October 2, 2008.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the 
Act in general and furthers the objectives of Section 6(b)(5) \8\ 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 proposed rule change would assist Other-SRO Derivative 
Product issuers to list on the Exchange, thus removing a potential 
impediment to the mechanism of a free and open market and protecting 
the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve the proposed rule change; or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2008-105 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-2008-105. 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

[[Page 60390]]

Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the 
submission, all subsequent amendments, all written statements with 
respect to the proposed rule change that are filed with the Commission, 
and all written communications relating to the proposed rule change 
between the Commission and any person, other than those that may be 
withheld from the public in accordance with the provisions of 5 U.S.C. 
552, will be available for inspection and copying in the Commission's 
Public Reference Room, 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-2008-105 and should be submitted on or before 
October 31, 2008.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-24180 Filed 10-9-08; 8:45 am]

BILLING CODE 8011-01-P