Document ID: SEC-2008-0977-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: American Stock Exchange LLC, New York Stock Exchange LLC, and NYSE Arca, Inc.
Posted Date: 2008-07-15T04:00Z

[Federal Register: July 15, 2008 (Volume 73, Number 136)]
[Notices]               
[Page 40643-40645]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy08-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58111; File Nos. SR-Amex-2008-40; SR-NASDAQ-2008-046; 
SR-NYSE-2008-39; SR-NYSEArca-2008-50]

 
Self-Regulatory Organizations; American Stock Exchange LLC, New 
York Stock Exchange LLC, and NYSE Arca, Inc.: Order Granting Approval 
of Proposed Rule Changes To Adopt a Trading Halt Rule in Connection 
With the Dissemination of Net Asset Value and Disclosed Portfolio for 
Certain Derivative Securities Products; The NASDAQ Stock Market LLC: 
Order Granting Approval of Proposed Rule Changes, as Modified by 
Amendment No. 1 Thereto, To Adopt a Trading Halt Rule in Connection 
With the Dissemination of Net Asset Value and Disclosed Portfolio for 
Certain Derivative Securities Products

July 7, 2008.

I. Introduction

    On May 14, 2008, the American Stock Exchange LLC (``Amex''), The 
NASDAQ Stock Market LLC (``Nasdaq''), the New York Stock Exchange LLC 
(``NYSE''), and NYSE Arca, Inc. (``NYSE Arca'' and together with Amex, 
Nasdaq, and NYSE, collectively, the ``Exchanges''), through its wholly 
owned subsidiary, NYSE Arca Equities, Inc. (``NYSE Arca Equities''), 
each 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

[[Page 40644]]

thereunder,\2\ proposed rule changes to amend their respective rules to 
require a trading halt (``New Trading Halt Rule'') in certain 
derivative securities products when the respective Exchange becomes 
aware that the net asset value (``NAV'') and/or disclosed portfolio 
(``Disclosed Portfolio''),\3\ as applicable, for such derivative 
securities product is not being disseminated to all market participants 
at the same time. The proposed rule changes were published for comment 
in the Federal Register on June 4, 2008.\4\ On June 17, 2008, Nasdaq 
filed Amendment No. 1 to its proposed rule change.\5\ The Commission 
received no comments on the proposals. This order approves the proposed 
rule changes of Amex, NYSE, and NYSE Arca and approves the proposed 
rule change of Nasdaq, as modified by Amendment No. 1 thereto.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ ''Disclosed Portfolio'' is applicable only with respect to a 
series of Managed Fund Shares and is defined as the identities and 
quantities of the securities and other assets that: (1) Are held by 
a registered investment company organized as an open-end management 
investment company or similar entity that invests in a portfolio of 
securities selected by such investment company's investment adviser 
consistent such investment company's investment objectives and 
policies; and (2) form the basis for such investment company's 
calculation of NAV. See Amex Rule 1002B (setting forth the continued 
listing standards for Managed Fund Shares and requiring, among other 
things, that the Disclosed Portfolio be disseminated at least once 
daily and made available to all market participants at the same 
time) and NYSE Arca Equities Rule 8.600 (setting forth the listing 
standards for Managed Fund Shares and requiring, among other things, 
that the Disclosed Portfolio be disseminated at least once daily and 
made available to all market participants at the same time). See 
infra note 5 (noting Nasdaq's recent adoption of listing standards 
for Managed Fund Shares).
    \4\ See Securities Exchange Act Release No. 57881 (May 29, 
2008), 73 FR 31902.
    \5\ In Amendment No. 1, Nasdaq revised its proposal to reflect 
its recent adoption of listing standards for Managed Fund Shares 
under Nasdaq Rule 4420(o), which requires, among other things, that 
the Disclosed Portfolio be disseminated at least once daily and made 
available to all market participants at the same time. See 
Securities Exchange Act Release No. 57962 (June 13, 2008), 73 FR 
35175 (June 20, 2008) (SR-NASDAQ-2008-039) (approving the adoption 
of listing standards for Managed Fund Shares and certain other 
related rule changes). Because Amendment No. 1 to Nasdaq's proposed 
rule change is technical and conforming in nature, it is not subject 
to notice and comment.
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II. Description of the Proposals

    Each Exchange proposes to amend its respective rules \6\ to require 
a trading halt in certain derivative securities products \7\ that are 
listed and trading on such Exchange, if such Exchange becomes aware 
that the NAV and/or Disclosed Portfolio, as applicable, for such 
derivative product is not being disseminated to all market participants 
at the same time. In addition, each Exchange would resume trading in 
such halted derivative securities product only when the NAV and/or 
Disclosed Portfolio, as applicable, is disseminated to all market 
participants.\8\ Each Exchange represents that, in the event the NAV 
and/or Disclosed Portfolio, as applicable, for a series of derivative 
securities product ceases to be disseminated altogether, such Exchange 
would halt trading in such derivative securities product.
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    \6\ Amex seeks to adopt new Amex Rule 117A and Commentary.01 
thereto (Net Asset Value/Disclosed Portfolio Dissemination and 
Trading Halts); Nasdaq seeks to amend Nasdaq Rule 4120 (Trading 
Halts); NYSE seeks to amend NYSE Rule 123D (Openings and Halts in 
Trading); and NYSE Arca seeks to amend NYSE Arca Equities Rule 7.34 
(Trading Sessions).
    \7\ Amex, Nasdaq, and NYSE Arca seek to apply their respective 
New Trading Halt Rules to certain derivative securities products for 
which: (1) Each such Exchange has listing and trading standards; and 
(2) an NAV and, in the case of Managed Fund Shares, a Disclosed 
Portfolio, is disseminated. See proposed Amex Rule 117A (applying 
Amex's New Trading Halt Rule to Portfolio Depositary Receipts (Amex 
Rule 1000-AEMI), Index Fund Shares (Amex Rule 1000A-AEMI), Trust 
Issued Receipts (Commentary.07 to Amex Rule 1202), Managed Fund 
Shares (Amex Rule 1000B), Commodity-Based Trust Shares (Amex Rule 
1200A), Currency Trust Shares (Amex Rule 1200B), Paired Trust Shares 
(Amex Rule 1400), Partnership Units (Amex Rule 1500), and Trust 
Units (Amex Rule 1600)); proposed Nasdaq Rule 4120(a)(10) (applying 
Nasdaq's New Trading Halt Rule to Portfolio Depository Receipts 
(Nasdaq Rule 4420(i)), Index Fund Shares (Nasdaq Rule 4420(j)), 
Trust Issued Receipts (Nasdaq Rule 4420(l)), Commodity-Related 
Securities (as defined in Nasdaq Rule 4630), Managed Fund Shares 
(Nasdaq Rule 4420(o)), and securities representing interests in unit 
investment trusts or investment companies); and proposed NYSE Arca 
Equities Rule 7.34(a)(5) (applying NYSE Arca's New Trading Halt Rule 
to Investment Company Units (NYSE Arca Equities Rule 5.2(j)(3)), 
Portfolio Depositary Receipts (NYSE Arca Equities Rule 8.100), Trust 
Issued Receipts (NYSE Arca Equities Rule 8.200), Commodity-Based 
Trust Shares (NYSE Arca Equities Rule 8.201), Currency Trust Shares 
(NYSE Arca Equities Rule 8.202), Commodity Index Trust Shares (NYSE 
Arca Equities Rule 8.203), Commodity Futures Trust Shares (NYSE Arca 
Equities Rule 8.204), Partnership Units (NYSE Arca Equities Rule 
8.300), Paired Trust Shares (NYSE Arca Equities Rule 8.400), Trust 
Units (NYSE Arca Equities Rule 8.500), and Managed Fund Shares (NYSE 
Arca Equities Rule 8.600)). NYSE seeks to apply its New Trading Halt 
Rule to certain derivative securities products for which: (1) NYSE 
has listing and trading standards; and (2) an NAV is disseminated 
(NYSE does not have listing standards for Managed Fund Shares). See 
proposed NYSE Rule 123D(5) (applying NYSE's New Trading Halt Rule to 
Investment Company Units (NYSE Rule 1100), Trust Issued Receipts 
(NYSE Rule 1200), Currency Trust Shares (NYSE Rule 1300A), and 
Commodity Trust Shares (NYSE Rule 1300B)).
    \8\ Nasdaq's New Trading Halt Rule also provides that, in the 
case of a halted Derivative Securities Products (as defined in 
Nasdaq Rule 4120(b)(4)(A)) trading on Nasdaq pursuant to unlisted 
trading privileges, Nasdaq would resume trading in such Derivative 
Securities Product only until such time trading resumes in the 
listing market for such Derivative Securities Product. The Nasdaq 
Proposal also seeks to make technical, non-substantive changes to 
Nasdaq Rules 4120(a) and (c) to incorporate new Nasdaq Rule 
4120(a)(10).
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III. Commission's Findings and Order Granting Approval of the Proposed 
Rule

Changes

    After careful consideration, the Commission finds that the proposed 
rule changes are consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\9\ In particular, the Commission finds that the proposed rule 
changes are consistent with Section 6(b)(5) of the Act \10\ in that 
they are designed 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 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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    \9\ In approving these proposed rule changes, the Commission 
notes that it has considered the impact on efficiency, competition, 
and capital formation of each proposed rule. See 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the Exchanges' respective trading halt 
rules are reasonably designed to prevent trading in certain derivative 
securities products when the availability of certain information is 
impaired. Specifically, each Exchange proposes to require a trading 
halt in certain derivative securities products that are listed and 
trading on such Exchange, if such Exchange becomes aware that the NAV 
and/or Disclosed Portfolio, as applicable, for such derivative product 
is not being disseminated to all market participants at the same time. 
In addition, each Exchange would resume trading in such halted 
derivative securities product only when the NAV and/or Disclosed 
Portfolio, as applicable, is disseminated to all market participants. 
The Commission believes that the proposed rule changes are intended to 
protect investors and the public interest when key information relating 
to the NAV or the Disclosed Portfolio becomes unavailable or available 
only to some market participants, but not all participants, at the time 
of dissemination. The Commission notes that individual listing 
standards for many derivative securities products already include a 
similar trading halt requirement.\11\ As such, the Commission believes 
it is

[[Page 40645]]

reasonable and consistent with the Act for the Exchanges to adopt new 
trading halt criteria for certain derivative products in the manner 
described in the respective proposals.
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    \11\ See, e.g., Amex Rule 1002B(iv)(d); Nasdaq Rule 
4420(o)(4)(B)(iv); and NYSE Arca Equities Rule 8.600(d)(2)(D).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule changes (SR-Amex-2008-40; SR-NYSE-2008-
39; SR-NYSEArca-2008-50) and the proposed rule change (SR-NASDAQ-2008-
046), as modified by Amendment No. 1 thereto, be, and they hereby are, 
approved.
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16059 Filed 8-14-08; 8:45 am]

BILLING CODE 8010-01-P