Document ID: SEC-2008-1685-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2008-12-16T05:00Z

[Federal Register: December 16, 2008 (Volume 73, Number 242)]
[Notices]               
[Page 76433-76435]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16de08-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59070; File No. SR-NASDAQ-2008-092]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Trade the Shares of the MacroShares $100 Oil Up Trust and the 
MacroShares $100 Oil Down Trust

December 9, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 1, 2008, The NASDAQ Stock Market LLC (``Nasdaq'' or the 
``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 Nasdaq. Nasdaq has 
designated the proposed rule change as constituting a rule change under 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to trade, pursuant to unlisted trading privileges 
(``UTP''), shares of the MacroShares $100 Oil Up Trust (``Up Trust'') 
and the MacroShares $100 Oil Down Trust (``Down Trust'', and, together 
with the Up Trust, the ``Trusts''). The shares of the Up Trust are 
referred to as the Up MacroShares, and the shares of the Down Trust are 
referred to as the Down MacroShares (collectively, the ``Shares'').
    The text of the proposed rule change is available from Nasdaq's Web 
site at http://nasdaq.cchwallstreet.com, at Nasdaq's principal office, 
and at the Commission's Public Reference Room.

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

    In its filing with the Commission, Nasdaq included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below, and is set forth in Sections A, B, and C below.

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

1. Purpose
    Nasdaq proposes to trade the Shares pursuant to UTP. The Commission 
has recently approved the substantially identical filing of NYSE Arca, 
Inc. for the listing and trading of the same product.\5\ Also, the 
Commission has previously approved the listing and/or trading of a 
product similar to the Shares.\6\ The Up MacroShares and the Down 
MacroShares will be offered by the Up Trust and the Down Trust, 
respectively, established by MACRO Securities Depositor LLC, as 
depositor, under the laws of the State of New York. The Trusts are not 
registered with the Commission as investment companies.\7\ The Trusts 
are currently listed on NYSE Alternext U.S. LLC (``NYSE Alternext US'' 
(formerly, the American Stock Exchange LLC (``Amex'')) and are traded 
pursuant to UTP.\8\ Prior to listing on NYSE Arca, Inc., the Trusts 
would be required to satisfy the applicable delisting procedures of 
NYSE Alternext U.S. and applicable statutory and regulatory 
requirements, including, without limitation, Section 12 of the Act,\9\ 
relating to listing the Shares on NYSE Arca, Inc.\10\
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    \5\ See Securities Exchange Act Release No. 58873 (October 28, 
2008), 73 FR 65709 (November 4, 2008) (SR-NYSEArca-2008-110) (``NYSE 
Arca Order'').
    \6\ The Commission approved the trading of a similar product on 
Nasdaq pursuant to UTP when it approved Securities Exchange Act 
Release No. 55740 (May 10, 2007) (SR-NASDAQ-2007-048), 72 FR 27889 
(May 17, 2007) (approving UTP trading of Claymore MACROshares Oil Up 
Tradeable Shares and Claymore MACROshares Oil Down Tradeable 
Shares). See also Securities Exchange Act Release No. 55033 
(December 29, 2006), 72 FR 1253 (January 10, 2007) (SR-NYSEArca-
2006-75) (approving UTP trading of Claymore MACROshares Oil Up 
Tradeable Shares and Claymore MACROshares Oil Down Tradeable 
Shares). The Commission also approved such product for listing and 
trading on the American Stock Exchange LLC. See Securities Exchange 
Act Release No. 54839 (November 29, 2006), 71 FR 70804 (December 6, 
2006) (SR-Amex-2006-82) (approving listing and trading Claymore 
MACROshares Oil Up Tradeable Shares and Claymore MACROshares Oil 
Down Tradeable Shares).
    \7\ The Shares are being offered by the Trusts under the 
Securities Act of 1933, as amended. On April 17, 2008, the depositor 
filed with the Commission a Registration Statement on Form S-1 for 
both the Up MacroShares (File No. 333-150282-01) (``Up Trust 
Registration Statement'') and the Down MacroShares (File No. 333-
150282-02) (``Down Trust Registration Statement'' and together with 
the Up Trust Registration Statement, the ``Registration 
Statements'').
    \8\ See Securities Exchange Act Release No. 58057 (June 30, 
2008), 73 FR 38474 (July 7, 2008) (SR-Amex-2008-36) (order approving 
listing of the Trusts on the Amex) (``Amex Order''); Securities 
Exchange Act Release No. 58058 (June 30, 2008), 73 FR 38484 (July 7, 
2008) (SR-NYSEArca-2008-65) (order approving trading of the Trusts 
on the Exchange pursuant to UTP).
    \9\ 15 U.S.C. 78(l).
    \10\ NYSE Arca, Inc. has represented that it will seek the 
voluntary consent of the issuer of the Shares to be delisted from 
NYSE Alternext U.S. and listed on NYSE Arca, Inc. NYSE Arca, Inc. 
has noted that its approval of the Trusts' listing applications 
would be required prior to listing. See NYSE Arca Order, supra note 
3, 73 FR at 65710.
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    Nasdaq deems the Shares to be equity securities, thus rendering the 
trading in the Shares subject to its existing rules governing the 
trading of equity securities, including Nasdaq Rule 4630, which governs 
trading of Commodity-related Securities. The Shares will trade on 
Nasdaq from 7 a.m. until 8 p.m. Eastern Time (``ET'').\11\ The Trusts 
have represented that they are relying on the exemption provided for 
passive trusts under Rule 10A-3(c)(7)\12\ under the Act with respect to 
establishment of an independent audit committee.
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    \11\ See E-mail from Jonathan Cayne, Associate General Counsel, 
NASDAQ OMX to Mitra Mehr, Special Counsel, Division of Trading and 
Markets, Commission, dated December 8, 2008 (clarifying trading 
hours).
    \12\ 17 CFR 240.10A-3(c)(7).
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    More information regarding the Shares, the Trusts, the Applicable 
Reference Price of Crude Oil, quarterly distributions, final 
distributions, underlying values, risks, fees and expenses, termination 
triggers, and creation and redemption procedures can be found in the 
Registration Statements and the Amex Order.\13\
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    \13\ Terms relating to the Trusts referred to, but not defined 
herein, are defined in the Registration Statements.
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Availability of Information
    Intraday Indicative Values. Quotations for and last sale 
information regarding the Shares are disseminated through the 
Consolidated Tape Association (``CTA''). Throughout each price 
determination day, NYSE

[[Page 76434]]

Alternext US, acting as the calculation agent for each Trust, will 
calculate and disseminate, at least every 15 seconds from 9:30 a.m. 
until 4:15 p.m. during the time the Shares trade on Nasdaq, through the 
facilities of the CTA, an estimated value (referred to as an ``Intraday 
Indicative Value'' or ``IIV'') for the underlying value per Share of 
both the Up MacroShares and the Down MacroShares. The purpose of this 
disclosure is to promote liquidity and intraday pricing transparency 
with respect to these estimated per-Share underlying values, which can 
be used in connection with other related market information. To enable 
this calculation, the NYSE Alternext U.S. will receive real time price 
data from the NYMEX through two major market data vendors for the light 
sweet crude oil futures contract of the designated maturity that trades 
on the NYMEX.
    Because the NYMEX market for the light sweet crude oil futures 
contract will be closed for portions of the period from 9:30 a.m. until 
4:15 p.m. ET, the IIV calculated values will become fixed and will not 
be updated at such times that the NYMEX contract is not trading.\14\ 
Conversely, at times when the light sweet crude oil futures contract of 
the designated maturity is trading on NYMEX, those trades will be used 
to update the IIV values.
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    \14\ The IIV calculated during the period following the daily 
opening of the regular session trading at 9:30 a.m. but prior to any 
trades taking place on the NYMEX in the relevant light sweet crude 
oil futures contract will be based on the final price of the futures 
contract on the prior trading day.
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    Availability of Other Information and Data. At the end of each 
price determination day, NYSE Alternext U.S. will also calculate the 
premium or discount of the midpoint of the bid/offer for the Up 
MacroShares at their close relative to the underlying value of one of 
those Shares for that price determination day. NYSE Alternext U.S. will 
also perform the same calculation with respect to the Down MacroShares. 
MacroMarkets LLC (``MacroMarkets'') will then post thesepremiums/
discounts, together with the end-of-day price information for the 
Shares, on itsWeb site at http: //www.macromarkets.com. Further, 
MacroMarkets will post on its Web site the Applicable Reference Price 
of Crude Oil that was reported by NYMEX for any price determination 
day. NYSE Arca, Inc. also intends to disseminate a variety of data with 
respect to the Shares on a daily basis by means of CTA and CQ High 
Speed Lines, including quotation and last sale data information.
    On each price determination day, State Street Bank and Trust 
Company, the trustee for the Trusts, will calculate the underlying 
value of the Up Trust and the Down Trust and the per-Share underlying 
value of one Up MacroShare and one Down MacroShare, based on the 
Applicable Reference Price of Crude Oil established and reported by 
NYMEX. The trustee will then provide such values to MacroMarkets, which 
will post them on its Web site, and information posted on such Web site 
will be made available to all market participants at the same time. All 
investors and marketparticipants will have access to MacroMarkets' Web 
site at no charge. Information regarding secondary market prices and 
volume of the Shares will be broadly available on a real-time basis 
throughout the trading day on brokers' computer screens and other 
electronic services. The previous day's closing price and trading 
volume information will be published daily in the financial section of 
newspapers.
Trading Halts
    Nasdaq will halt trading in the Shares under the conditions 
specified in Nasdaq Rules 4120 and 4121. The conditions for a halt 
include a regulatory halt by the listing market. UTP trading in the 
Shares will also be governed by provisions of Nasdaq Rule 4120(b) 
relating to temporary interruptions in the calculation or wide 
dissemination of the IIV. Additionally, Nasdaq may cease trading the 
Shares if other unusual conditions or circumstances exist which, in the 
opinion of Nasdaq, make further dealings on Nasdaq detrimental to the 
maintenance of a fair and orderly market. Nasdaq will also follow any 
procedures with respect to trading halts as set forth in Nasdaq Rule 
4120(c). Nasdaq also will stop trading the Shares if the listing market 
delists them.
    If the Exchange becomes aware that the underlying value per Share 
of each Up Share and Down Share is not disseminated to all market 
participants at the same time, it will halt trading in the Up 
MacroShares or the Down MacroShares, as the case may be, until such 
time as the underlying value per share is available to all market 
participants.
Trading Rules
    Nasdaq deems the Shares to be equity securities, thus rendering 
trading in the Shares subject to its existing rules governing the 
trading of equity securities, including Rule 4630, which governs 
trading of Commodity-Related Securities. The trading hours for the 
Shares on the Exchange would be 7 a.m. to 8 p.m., ET, unless such 
trading hours are changed by a subsequent rule change.
Surveillance
    Nasdaq believes that its surveillance procedures are adequate to 
address any concerns about the trading of the Shares on Nasdaq. Trading 
of the Shares through Nasdaq will be subject to FINRA's surveillance 
procedures for equity securities in general and ETFs in particular.\15\ 
The Exchange may obtain information via the Intermarket Surveillance 
Group (``ISG'') from other exchanges who are members or affiliates of 
the ISG.\16\
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    \15\ FINRA surveils trading on Nasdaq pursuant to a regulatory 
services agreement. Nasdaq is responsible for FINRA's performance 
under this regulatory services agreement.
    \16\ For a list of the current members and affiliate members of 
ISG, see http://www.isgportal.com.
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Information Circular
    Prior to the commencement of trading, the Exchange will inform its 
members in an Information Circular of the special characteristics and 
risks associated with trading the Shares. Specifically, the Information 
Circular will discuss the following: (1) The procedures for purchases 
and redemptions of Shares of the Trusts (and that Shares are not 
individually redeemable); (2) Nasdaq Rule 2310, which imposes 
suitability obligations on Nasdaq members with respect to recommending 
transactions in the Shares to customers; (3) how information regarding 
the IIV is disseminated; (4) the requirement that members deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; (5) the risks 
involved in trading the Shares during the Pre-Market and Post-Market 
Sessions when an updated IIV will not be calculated or publicly 
disseminated; and (6) trading information.
    The Exchange notes that investors purchasing Shares directly from a 
Trust will receive a prospectus. Members purchasing Shares from a Trust 
for resale to investors will deliver a prospectus to such investors. 
The Information Circular will also discuss any exemptive, no-action and 
interpretive relief granted by the Commission from any rules under the 
Act.
    In addition, the Information Circular will reference that the 
Shares are subject to various fees and expenses described in the 
Registration Statements. The Information Circular will also reference 
that the CFTC has regulatory jurisdiction over the trading of futures 
contracts.

[[Page 76435]]

    The Information Circular will also disclose the trading hours of 
the Shares and that the NAV for the Shares will be calculated after 4 
p.m. ET each trading day. The Information Circular will disclose that 
information about the Shares and the corresponding Indexes will be 
publicly available on the Shares' Web site.
2. Statutory Basis
    Nasdaq believes that the proposal is consistent with Section 6(b) 
of the Act \17\ in general and Section 6(b)(5) of the Act \18\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, remove impediments to a free and open market and a 
national market system, and, in general, to protect investors and the 
public interest. The Commission has approved the NYSE Arca, Inc. 
listing and trading of the Shares.\19\
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ See supra note 5.
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    In addition, Nasdaq believes that the proposal is consistent with 
Rule 12f-5 under the Act \20\ because it deems the Shares to be an 
equity securities, thus rendering trading in the Shares subject to 
Nasdaq's existing rules governing the trading of equity securities.
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    \20\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq 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

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \21\ 
and Rule 19b-4(f)(6) thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6). The Commission notes that Nasdaq 
has satisfied the five day pre-filing notice requirement.
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    Nasdaq has asked the Commission to waive the 30-day operative 
delay. The Commission believes that such waiver is consistent with the 
protection of investors and the public interest because such waiver 
should benefit investors by creating, without undue delay, additional 
competition in the market for the Shares. The Commission has previously 
approved the listing and trading of the Shares on another exchange \23\ 
and does not believe that the proposed rule change presents any novel 
or significant regulatory issues. Therefore, the Commission designates 
the proposed rule change as operative upon filing.\24\
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    \23\ See supra note 5.
    \24\ For purposes only of waiving the operative date of this 
proposal, the Commission has considered the rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.

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-NASDAQ-2008-092 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2008-092. 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 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 on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-NASDAQ-2008-092 and should be submitted on or before 
January 6, 2009.

Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-29695 Filed 12-15-08; 8:45 am]

BILLING CODE 8011-01-P