Document ID: SEC-2009-0309-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2009-03-09T04:00Z

[Federal Register: March 9, 2009 (Volume 74, Number 44)]
[Notices]               
[Page 10111-10114]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09mr09-95]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59493; File No. SR-NYSEArca-2009-18]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change Relating to the 
Listing and Trading of Bear Market Strategic Accelerated Redemption 
Securities[supreg] Linked to the S&P Small Cap Regional Banks Index

March 3, 2009.
    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 March 2, 2009, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''), 
through its wholly owned subsidiary, NYSE Arca Equities, Inc. (``NYSE 
Arca Equities''), 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. 
NYSE Arca filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)

[[Page 10112]]

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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade Bear Market Strategic 
Accelerated Redemption Securities[supreg] Linked to the S&P Small Cap 
Regional Banks Index (``Notes'') under NYSE Arca Equities Rule 
5.2(j)(6). The text of the proposed rule change is available at http://
www.nyse.com, the Exchange and 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, 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 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 proposes to list and trade the Notes \5\ under NYSE 
Arca Equities Rule 5.2(j)(6), which includes the Exchange's listing 
standards for Equity Index-Linked Securities.\6\ According to the 
Registration Statement, the Notes are Bank of America Corporation 
(``BAC'' or the ``issuer'') senior unsecured debt securities and are 
not guaranteed or insured by the Federal Deposit Insurance Corporation 
or secured by collateral. The Notes will rank equally with all of the 
issuer's other unsecured and unsubordinated debt, and any payments due 
on the Notes, including any repayment of principal, will be subject to 
the credit risk of BAC. The Notes are designed for, but not limited to, 
investors who anticipate that the Observation Level \7\ of the S&P 
Small Cap Regional Banks Index (the ``Index'') on any Observation Date 
will be less than or equal to the Call Level. The Notes provide for an 
automatic call if the Observation Level of the Index on any Observation 
Date is less than or equal to the Call Level.
---------------------------------------------------------------------------

    \5\ See registration statement on Form S-3 filed with the 
Securities and Exchange Commission on May 5, 2006 (Registration No. 
333-133852); Product Supplement No. STR-1, dated January 2, 2009 
(``Product Supplement No. STR-1''); Series L Prospectus Supplement 
dated April 10, 2008; and Preliminary Term Sheet, subject to 
completion, dated January 29, 2009 (``Registration Statement'').
    \6\ Equity Index-Linked Securities are securities that provide 
for the payment at maturity of a cash amount based on the 
performance of an underlying index or indexes of equity securities.
    \7\ Capitalized terms used but not defined herein have the 
meanings set forth in Product Supplement No. STR-1.
---------------------------------------------------------------------------

    The Notes will be called at an amount equal to the $10 principal 
amount per unit plus the Call Premium of between 15% and 19% per annum 
if the closing level of the Index on any Observation Date is less than 
or equal to 100% of its starting value. The Notes have a maturity of 
approximately 18 months. There will be a one-to-one downside loss if 
the Notes are not called prior to maturity and the closing level of the 
Index increases above a Threshold Value, with up to 100% of the 
principal amount at risk. There are no periodic interest payments.
    The Index is a capitalization weighted index. The Index is a sub-
index of the S&P SmallCap 600 Index and is comprised of the regional 
banks included in the ``Financials'' sector of the S&P SmallCap 600 
Index. Regional banks are defined as commercial banks whose businesses 
are derived primarily from commercial lending operations and have 
significant business activity in retail banking and small and medium 
corporate lending. Regional banks tend to operate in limited geographic 
regions. The Index excludes companies classified according to the 
Global Industry Classification Standard (``GICS'') in the Diversified 
Banks and Thrifts & Mortgage Banks sub-industries and also excludes 
investment banks classified in the Investment Banking & Brokerage Sub-
Industry. The GICS methodology has been widely accepted as an industry 
analysis framework for investment research, portfolio management, and 
asset allocation. The Index was developed with a base value of 100 as 
of December 31, 1993. Of the companies included in the S&P SmallCap 600 
Index, 41 were included in the Index as of January 15, 2009.
    The Exchange is submitting this proposed rule change because the 
Index for the Fund does not meet all of the ``generic'' listing 
requirements of NYSE Arca Equities Rule 5.2(j)(6) applicable to listing 
of all Equity Index-Linked Securities. The Index meets all such 
requirements except for those set forth in Rule 
5.2(j)(6)(B)(I)(1)(b)(i).\8\ The Exchange represents that: (1) Except 
for the requirement under 5.2(j)(6)(B)(I)(1)(b)(i), the Notes currently 
satisfy all of the generic listing standards under NYSE Arca Equities 
Rule 5.2(j)(6); and (2) BAC is required to comply with Rule 10A-3 under 
the Act \9\ for the initial and continued listing of the Notes. In 
addition, the Exchange represents that the Notes will comply with all 
other requirements applicable to Equity Index-Linked Securities, 
including, but not limited to, requirements relating to the 
dissemination of key information such as the Index value, rules 
governing the trading of equity securities, trading hours, trading 
halts, surveillance,\10\ and Information Bulletin to ETP Holders, as 
set forth in Exchange rules applicable to Equity Index-Linked 
Securities and in prior Commission orders approving the generic listing 
rules applicable to the listing and trading of Equity Index-Linked 
Securities.\11\ Detailed descriptions of the Notes, the Index 
(including the methodology used to determine the composition of the 
Index), fees, redemption procedures and payment at redemption, payment 
at maturity, taxes, and risk factors relating to the Notes are 
available in the Registration Statement.
---------------------------------------------------------------------------

    \8\ Rule 5.2(j)(6)(B)(I)(1)(b)(i) requires that each component 
security in the index to which the security is linked has a minimum 
market value of at least $75 million, except that for each of the 
lowest dollar weighted component securities in the index that in the 
aggregate account for no more than 10% of the dollar weight of the 
index, the market value can be at least $50 million. The Exchange 
states that, as of February 20, 2009, the Index fails to meet the 
requirement of Rule 5.2(j)(6)(B)(I)(1)(b)(i) in that, with respect 
to each of the lowest dollar weighted component securities in the 
Index that in the aggregate account for no more than 10% of the 
dollar weight of the Index, two securities, accounting for a total 
of 0.35% of the Index weight, have a market value of less than $50 
million. These two Index securities have a market value of 
approximately $32 million and $25 million, respectively. Index 
components comprising the top 90% of the Index weight have a market 
value of at least $75 million. In addition, 99.65% of the total 
Index weight is comprised of securities with a market value of at 
least $50 million. The average and median market capitalization of 
Index stocks is $406 million and $349.7 million, respectively, as of 
February 20, 2009.
    \9\ 17 CFR 240.10A-3.
    \10\ The Exchange may obtain information for surveillance 
purposes via the Intermarket Surveillance Group (``ISG'') from other 
exchanges who are members of ISG. For a list of the current members 
of ISG, see http://www.isgportal.org.
    \11\ See, e.g., Securities Exchange Act Release No. 56637 
(October 10, 2007), 72 FR 58704 (October 16, 2007) (SR-NYSEArca-
2007-92) (order approving generic listing standards under NYSE Arca 
Equities Rule 5.2(j)(6)).
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the

[[Page 10113]]

Act,\12\ in general, and furthers the objectives of Section 
6(b)(5),\13\ in particular, in that it is designed to prevent 
fraudulent and manipulative practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to, and perfect the mechanisms of, a free and open 
market and a national market system. The proposed rule change will 
allow the listing and trading of the Notes on the Exchange, which the 
Exchange believes will enhance competition among market participants, 
to the benefit of investors and the marketplace.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms does not become operative for 30 days after the 
date of this filing, or such shorter time as the Commission may 
designate if consistent with the protection of investors and the public 
interest, the proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(6) of Rule 
19b-4 \15\ thereunder.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has fulfilled the pre-filing requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative for 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii),\17\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange requests that the 
Commission waive the 30-day operative delay so that the proposal may 
become operative immediately upon filing. The Exchange states that the 
proposed rule change does not significantly affect the protection of 
investors or the public interest and does not impose any significant 
burden on competition. NYSE Arca believes that the proposed rule change 
is non-controversial in that the Index for the Notes fail to meet the 
requirements set forth in NYSE Arca Equities Rule 
5.2(j)(6)(B)(I)(1)(b)(i) by only a small amount: Two securities 
accounting for a total of .35% of the Index weight have a market value 
of less than 50 million and the top 90% of the Index weight have a 
market value of $75 million. The Notes currently satisfy all of the 
other applicable generic listing standards under NYSE Arca Equities 
Rule 5.2(j)(6) and all other requirements applicable to Index-Linked 
Securities and, in particular, Equity Index-Linked Securities, as set 
forth in Exchange rules and prior Commission orders approving the 
generic listing rules applicable to the listing and trading of Index-
Linked Securities. In addition, the Exchange believes that it has 
developed adequate trading rules, procedures, surveillance programs, 
and listing standards for the continued listing and trading of the 
Notes.
---------------------------------------------------------------------------

    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public 
interest.\18\ Given that the Notes comply with all of the NYSE Arca 
Equities generic listing standards for Equity Index-Linked Securities 
(except for narrowly missing the requirement that lowest dollar 
weighted component securities in the Index have a market value of at 
least $50 million), the listing and trading of the Notes by NYSE Arca 
does not appear to present any novel or significant regulatory issues 
or impose any significant burden on competition. For these reasons, the 
Commission designates the proposed rule change as operative upon 
filing.
---------------------------------------------------------------------------

    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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-NYSEArca-2009-18 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2009-18. 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, 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-2009-18 and should 
be submitted on or before March 30, 2009.

[[Page 10114]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4877 Filed 3-6-09; 8:45 am]

BILLING CODE 8011-01-P