Document ID: SEC-2009-0510-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Change: NYSE Arca, Inc.
Posted Date: 2009-04-13T04:00Z

[Federal Register: April 13, 2009 (Volume 74, Number 69)]
[Notices]               
[Page 16901-16903]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ap09-127]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59708; File No. SR-NYSEArca-2009-12]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change Relating to SPDR Barclays Capital Convertible Bond 
ETF

April 6, 2009.

I. Introduction

    On February 18, 2009, 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 to list and trade shares 
(``Shares'') of the SPDR[supreg] Barclays Capital Convertible Bond ETF. 
The proposed rule change was published for comment in the Federal 
Register on March 6, 2009.\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. 59459 (February 26, 
2009), 74 FR 9860 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade the SPDR[supreg] Barclays 
Capital Convertible Bond ETF (``Fund'') \4\ under NYSE Arca Equities 
Rule 5.2(j)(3), the Exchange's listing standards for Investment Company 
Units (``Units'').\5\
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    \4\ See the Registration Statement on Form N-1A of the SPDR 
Series Trust, dated January 15, 2009 (File Nos. 333-57793 and 811-
08839) (``Registration Statement'').
    \5\ An Investment Company Unit is a security that represents an 
interest in a registered investment company that holds securities 
comprising, or otherwise based on or representing an interest in, an 
index or portfolio of securities (or holds securities in another 
registered investment company that holds securities comprising, or 
otherwise based on or representing an interest in, an index or 
portfolio of securities). See NYSE Arca Equities Rule 5.2(j)(3)(A).

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[[Page 16902]]

    The Fund's investment objective is to provide investment results 
that, before fees and expenses, correspond generally to the price and 
yield performance of the Barclays Capital U.S. Convertible Bond $500MM 
Index (``Index''), which aims to track the performance of the U.S. 
dollar-denominated convertibles markets with outstanding issue sizes 
greater than $500 million. The Index includes the following major 
classes of convertible securities--cash pay bonds, zero-coupon/Original 
Issue Discount bonds, preferred securities, and mandatories.
    The Index includes both U.S. convertible bonds and convertible 
preferred equity securities.\6\ The Index components consisting of U.S. 
convertible bonds separately meet the criteria set forth in Commentary 
.02(a) of Rule 5.2(j)(3) applicable to Units based on a fixed income 
index or portfolio. However, the Index components consisting of 
convertible preferred stocks do not separately meet the criteria set 
forth in Commentary .01(a) of Rule 5.2(j)(3) applicable to Units based 
on U.S. indexes or portfolios.
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    \6\ Commentary .03 to Rule 5.2(j)(3) provides that the 
Corporation may list a series of Units based on a combination of 
indexes or a portfolio of component securities representing the U.S. 
or domestic equity market, the international equity market, and the 
fixed income market for listing and trading pursuant to Rule 19b-
4(e) under the Act provided each index or portfolio of equity and 
fixed income component securities separately meet either the 
criteria set forth in Commentary .01(a) of Rule 5.2(j)(3) 
(applicable to Units based on U.S., international or global equity 
indexes or portfolios) or Commentary .02(a) (applicable to Units 
based on a fixed income index or portfolio).
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    The Exchange represents that: (i) except for Commentaries 
.01(a)(A)(2) \7\ and .01(a)(A)(5) \8\ to NYSE Arca Equities Rule 
5.2(j)(3), the Shares currently satisfy all other of the generic 
listing standards under the rule; (ii) the continued listing standards 
under NYSE Arca Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to 
Units shall apply to the Shares; and (iii) the Trust is required to 
comply with Rule 10A-3 \9\ under the Act for the initial and continued 
listing of the Shares. Additionally, the Exchange represents that the 
Shares will comply with all other requirements applicable to Units 
including, but not limited to, requirements relating to the 
dissemination of key information such as the Index 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 prior Commission orders 
approving the generic listing rules applicable to the listing and 
trading of Units.\10\ Detailed descriptions of the Fund, the Underlying 
Index, procedures for creating and redeeming Shares, transaction fees 
and expenses, dividends, distributions, taxes, and reports to be 
distributed to beneficial owners of the Shares can be found in the 
Registration Statement or on the Web site for the Fund (http://
www.SPDRETFs.com).\11\
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    \7\ Commentary .01(a)(A)(2) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that component stocks that in the aggregate account for at 
least 90% of the weight of the index or portfolio each shall have a 
minimum worldwide monthly trading volume during each of the last six 
months of at least 250,000 shares. According to the Exchange, the 
Index does not meet the requirements of Commentary .01(a)(A)(2) in 
that convertible preferred stocks accounting for 78.56% of the 
weight of the convertible preferred portion of the Index each had a 
minimum worldwide monthly trading volume during each of the last six 
months of at least 250,000 shares, as of November 30, 2008.
    \8\ Commentary .01(a)(A)(5) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that all securities in the Index or portfolio shall be US 
Component Stocks, as defined in Rule 5.2(j)(3) listed on a national 
securities exchange and shall be NMS Stocks as defined in Rule 600 
of Regulation NMS under the Act. The Exchange states that, while the 
Index does not include any non-U.S. securities, as of November 30, 
2008, six of the 31 convertible preferred securities in the Index, 
accounting for 8% of the Index weight, were not listed on a national 
securities exchange; those issues were traded over-the-counter.
    \9\ 17 CFR 240.10A-3.
    \10\ See, e.g., Securities Exchange Act Release Nos. 55783 (May 
17, 2007), 72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36) (order 
approving generic listing standards for Units based on fixed income 
indexes); 44551 (July 12, 2001), 66 FR 37716 (July 19, 2001) (SR-
PCX-2001-14) (order approving generic listing standards for Units 
and Portfolio Depositary Receipts); and 41983 (October 6, 1999), 64 
FR 56008 (October 15, 1999) (SR-PCX-98-29) (order approving rules 
for listing and trading of Units).
    \11\ See also Notice, supra, note 3.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that NYSE Arca's 
proposal to list and trade the Shares is consistent with the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\12\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\13\ 
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 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.
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    \12\ 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).
    \13\ 15 U.S.C. 78f(b)(5).
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    NYSE Arca Equities Rule 5.2(j)(3) permits the Exchange to consider 
qualifying Units for listing and trading pursuant to Rule 19b-4(e) 
under the Act. The Shares, however, do not qualify for generic listing 
under the Exchange's rule because, although the Index components 
consisting of U.S. convertible bonds separately meet the criteria set 
forth in Commentary .02(a) of Rule 5.2(j)(3) applicable to Units based 
on a fixed income index or portfolio, the Index components consisting 
of convertible preferred stocks do not separately meet the criteria set 
forth in Commentaries .01(a)(A)(2) and .01(a)(A)(5) of the rule 
applicable to Units based on U.S. indexes or portfolios.\14\
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    \14\ See notes 7 and 8, supra.
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    The Commission believes that the listing and trading of the Shares 
is consistent with the Act. The Shares currently satisfy all but two of 
the generic listing standards under the rule, and the Commission 
believes that the composition of the Index, despite failing to satisfy 
the requirements of Commentaries .01(a)(A)(2) and .01(a)(A)(5) to NYSE 
Arca Equities Rule 5.2(j)(3), does not raise any regulatory concerns. 
Additionally, the continued listing standards under NYSE Arca Equities 
Rules 5.2(j)(3) and 5.5(g)(2) applicable to Units will apply to the 
Shares, and the Trust is required to comply with Rule 10A-3 \15\ under 
the Act for the initial and continued listing of the Shares. Finally, 
the Commission notes that it has not received any comments regarding 
the proposed rule change.
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    \15\ 17 CFR 240.10A-3.
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IV. Conclusion

    For the foregoing reasons, the Commission believes that the 
Exchange's proposal to list and trade the Shares is consistent with the 
Act. This order is based on the Exchange's representations.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-NYSEArca-2009-12) be, and it 
hereby is, approved.
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    \16\ 15 U.S.C. 78s(b)(1).

[[Page 16903]]

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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-8326 Filed 4-10-09; 8:45 am]

BILLING CODE 8010-01-P