Document ID: SEC-2007-0097-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2007-01-22T05:00Z

[Federal Register: January 22, 2007 (Volume 72, Number 13)]
[Notices]               
[Page 2717-2720]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22ja07-111]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55085; File No. SR-NYSEArca-2006-37]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Order Granting Accelerated Approval of Proposed Rule Change as 
Modified by Amendment No. 1 Thereto To Trade the StreetTRACKS Dow Jones 
Global Titans Index Fund Pursuant to Unlisted Trading Privileges

January 11, 2007.
    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 October 18, 2006, NYSE Arca, Inc. (``NYSE Arca'' or ``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 substantially prepared by the Exchange. On January 4, 2007, 
the Exchange amended the proposed rule change (``Amendment No. 1'').\3\ 
This order provides notice of the proposed rule change, as modified by 
Amendment No. 1, and approves the proposed rule change as amended on an 
accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1 the Exchange provided additional 
information relating to the dissemination of the index value and the 
estimates of the value of the fund shares.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly owned subsidiary NYSE Arca 
Equities, Inc. (``NYSE Arca Equities'') proposes to trade shares 
(``Shares'') of the streetTRACKS[supreg] Dow Jones Global Titans Index 
Fund (Symbol: DGT) (``Fund'') pursuant to unlisted trading privileges 
(``UTP'') based on NYSE Arca Equities Rule 5.2(j)(3).
    The text of the proposed rule change is available on the Exchange's 
Web site (http://www.nysearca.com), at the principal office of the 

Exchange, and at the Commission's Public Reference Room.

[[Page 2718]]

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 Exchange 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 these statements may be examined at the places specified in 
Item III below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects 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 trade Shares of the Fund pursuant to 
UTP. The Fund is comprised of 50 common stocks, which are chosen by Dow 
Jones based on a multi-factor methodology. The Fund invests in foreign 
securities, including non-U.S.-dollar-denominated securities traded 
outside the United States and dollar-denominated securities of foreign 
issuers traded in the United States. The Fund's investment objective is 
to replicate as closely as possible, before expenses, the performance 
of the Dow Jones Global Titans Index (``Index''), using an indexing 
investment approach. The net asset value (``NAV'') for the Fund is 
calculated by the Fund's custodian, State Street Global Advisors. After 
calculation, such NAV is disseminated by the American Stock Exchange 
LLC (``Amex'') and is available to the public through the Fund's 
distributor, State Street Capital Markets, LLC. The NAV is also 
available to National Securities Clearing Corporation (``NSCC'') 
participants through data made available from NSCC. The NAV of the Fund 
is determined each business day, normally at the close of regular 
trading of the New York Stock Exchange (``NYSE'').
    The Commission previously approved the original listing and trading 
of the Shares on Amex.\4\ The Exchange deems the Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
The trading hours for the Shares on the Exchange are the same as those 
set forth in NYSE Arca Equities Rule 7.34, except that the Shares will 
not trade during the Opening Session (4 a.m. to 9:30 a.m. Eastern Time) 
unless the Indicative Optimized Portfolio Value (``IOPV'') is 
calculated and disseminated during that time.
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    \4\ See Securities Exchange Act Release No. 43338 (September 25, 
2000), 65 FR 59235 (October 4, 2000) (SR-Amex-00-53).
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    Quotations for and last sale information regarding the Shares are 
disseminated through the Consolidated Quotation System. The value of 
the Index is updated intra-day on a real-time basis as individual 
component securities of the Index change in price. The intra-day value 
of the Index is disseminated every 15 seconds throughout Amex's trading 
day. In addition, a value for the Index is disseminated once each 
trading day, based on closing prices in the relevant exchange market.
    To provide updated information relating to the Shares for use by 
investors, professionals, and persons wishing to create or redeem them, 
Amex disseminates through the facilities of the Consolidated Tape 
Association (``CTA'') the IOPV for the Fund as calculated by a 
securities information provider. The IOPV is disseminated on a per-
share basis every 15 seconds during regular Amex trading hours of 9:30 
a.m. to 4 p.m. or 4:15 p.m. Eastern Time depending on the time Amex 
specifies for the trading of the Shares.
    The Fund includes companies trading in markets with trading hours 
overlapping Amex's regular trading hours. During the overlap period, an 
IOPV calculator updates an IOPV every 15 seconds to reflect price 
changes in the principal foreign markets, and converts such prices into 
U.S. dollars based on the currency exchange rates. When the foreign 
market or markets are closed but Amex is open for trading, the IOPV is 
updated every 15 seconds to reflect changes in currency exchange rates.
    The IOPV may not reflect the value of all securities included in 
the Index. In addition, the IOPV does not necessarily reflect the 
precise composition of the current portfolio of securities held by the 
Fund at a particular point in time. Therefore, the IOPV on a per-share 
basis disseminated during the NYSE's regular trading hours should not 
be viewed as a real time update of the NAV of the Fund, which is 
calculated only once a day. The IOPV is intended to closely approximate 
the value per share of the portfolio of securities for the Fund and 
provide for a close proxy of the NAV at a greater frequency for 
investors.
    The Commission has granted the Fund an exemption from certain 
prospectus delivery requirements under Section 24(d) of the Investment 
Company Act of 1940 (``1940 Act.'') \5\ Any product description used in 
reliance on the Section 24(d) exemptive order will comply with all 
representations made and all conditions contained in the Fund's 
application for orders under the 1940 Act.\6\
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    \5\ 15 U.S.C. 80a-24(d).
    \6\ See Investment Company Act Release No. 25738 (October 11, 
2002).
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    In connection with the trading of the Shares, the Exchange would 
inform ETP Holders in an Information Circular of the special 
characteristics and risks associated with trading the Shares, including 
how they are created and redeemed, the prospectus or product 
description delivery requirements applicable to the Shares, applicable 
Exchange rules, how information about the value of the underlying Index 
is disseminated, and trading information. In addition, before an ETP 
Holder recommends a transaction in the Shares, the ETP Holder must 
determine that the Shares are suitable for the customer as required by 
NYSE Arca Equities Rule 9.2(a)-(b).
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products to monitor trading in the 
Shares. The Exchange represents that these procedures are adequate to 
monitor Exchange trading of the Shares.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \7\ in general and Section 6(b)(5) of the Act \8\ in 
particular in that it is designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments and perfect the mechanisms of a free and open market, and 
to protect investors and the public interest. In addition, the Exchange 
believes that the proposal is consistent with Rule 12f-5 under the Act 
\9\ because it deems the Shares to be equity securities, thus rendering 
trading in the Shares subject to the Exchange's existing rules 
governing the trading of equity securities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 17 CFR 240.12f-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.

[[Page 2719]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. 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-2006-37 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2006-37. 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. Copies of such 
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-2006-37 and should be submitted on or before 
February 12, 2007.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\10\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act,\11\ 
which requires that an exchange have rules designed, among other 
things, 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. The Commission believes that this proposal should 
benefit investors by increasing competition among markets that trade 
the Shares.
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    \10\ In approving this rule change, the Commission notes that it 
has considered the proposal's impact on efficiency, competition, and 
capital formation. See 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
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    In addition, the Commission finds that the proposal is consistent 
with Section 12(f) of the Act,\12\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\13\ The Commission notes that it previously approved the 
listing and trading of the Shares on Amex.\14\ The Commission also 
finds that the proposal is consistent with Rule 12f-5 under the 
Act,\15\ which provides that an exchange shall not extend UTP to a 
security unless the exchange has in effect a rule or rules providing 
for transactions in the class or type of security to which the exchange 
extends UTP. The Exchange has represented that it meets this 
requirement because it deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities.
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    \12\ 15 U.S.C. 78l(f).
    \13\ Section 12(a) of the Act, 15 U.S.C. 78l(a), generally 
prohibits a broker-dealer from trading a security on a national 
securities exchange unless the security is registered on that 
exchange pursuant to Section 12 of the Act. Section 12(f) of the Act 
excludes from this restriction trading in any security to which an 
exchange ``extends UTP.'' When an exchange extends UTP to a 
security, it allows its members to trade the security as if it were 
listed and registered on the exchange even though it is not so 
listed and registered.
    \14\ See supra note 4.
    \15\ 17 CFR 240.12f-5.
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    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\16\ which sets forth 
Congress' finding that it is in the public interest and appropriate for 
the protection of investors and the maintenance of fair and orderly 
markets to assure the availability to brokers, dealers, and investors 
of information with respect to quotations for and transactions in 
securities. Quotations for and last sale information regarding the 
Shares are disseminated through the Consolidated Quotation System. 
Furthermore, an IOPV calculator updates the IOPV every 15 seconds to 
reflect price changes in the principal foreign markets and converts 
such prices into U.S. dollars based on the current currency exchange 
rate. When the foreign market or markets are closed but Amex is open 
for trading, the IOPV is updated every 15 seconds to reflect changes in 
currency exchange rates. NYSE Arca Equities Rule 7.34 describes the 
situations when the Exchange would halt trading when the IOPV or the 
value of the Index underlying one of the Funds is not calculated or 
widely available.
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    \16\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    The Commission notes that, if the Shares should be delisted by 
Amex, the original listing exchange, the Exchange would no longer have 
authority to trade the Shares pursuant to this order.
    In support of this proposal, the Exchange has made the following 
representations:
    1. The Exchange's surveillance procedures are adequate to monitor 
the trading of the Shares.
    2. In connection with the trading of the Shares, the Exchange would 
inform ETP Holders in an Information Circular of the special 
characteristics and risks associated with trading the Shares.
    3. The Information Circular would inform participants of the 
prospectus or product delivery requirements applicable to the Shares.
This approval order is conditioned on the Exchange's adherence to these 
representations.

    The Commission finds good cause for approving this proposal before 
the thirtieth day after the publication of notice thereof in the 
Federal Register. As noted previously, the Commission previously found 
that the listing and trading of the Shares on Amex is consistent with 
the Act.\17\ The Commission presently is not aware of any regulatory 
issue that should cause it to revisit that earlier finding or preclude 
the trading of the Shares on the Exchange pursuant to UTP. Therefore, 
accelerating approval of this proposal should benefit investors by 
creating, without undue delay, additional

[[Page 2720]]

competition in the market for the Shares.
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    \17\ See supra note 4.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\18\ that the proposed rule change (SR-NYSEArca-2006-37), as 
modified by Amendment No. 1, be, and it hereby is, approved on an 
accelerated basis.
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    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-756 Filed 1-19-07; 8:45 am]

BILLING CODE 8011-01-P