Document ID: SEC-2007-0700-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-05-17T04:00Z

[Federal Register: May 17, 2007 (Volume 72, Number 95)]
[Notices]               
[Page 27889-27891]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my07-131]                         

[[Page 27889]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55740; File No. SR-NASDAQ-2007-048]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Trade Claymore MACROshares Oil Up Tradeable Shares and 
Claymore MACROshares Oil Down Tradeable Shares Pursuant to Unlisted 
Trading Privileges

May 10, 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 May 3, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' 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. 
This notice and order provides notice of the proposed rule change and 
approves the proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 privileged 
(``UTP''), (1) Claymore MACROshares Oil Up Tradeable Shares (the ``Up-
MACRO Tradeable Shares'') and (2) Claymore MACROshares Oil Down 
Tradeable Shares (the ``Down-MACRO Tradeable Shares'' and together with 
the Up-MACRO Tradeable Shares, the ``MACRO Tradeable Shares'').
    The text of the proposed rule change is available from Nasdaq's Web 
site at nasdaq.complinet.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, 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
    Nasdaq proposes to trade the MACRO Tradeable Shares pursuant to 
UTP. The MACRO Tradeable Shares are issued by and represent an 
undivided beneficial interest in (1) the Claymore MACROshares Oil Up 
Tradeable Trust (the ``Up-MACRO Tradeable Trust'') and (2) the Claymore 
MACROshares Oil Down Tradeable Trust (the ``Down-MACRO Tradeable 
Trust''), respectively. The assets of these trusts (collectively, the 
``MACRO Tradeable Trusts'') each consists exclusively of a majority of 
the Claymore MACROshares Oil Up Holding Shares (``Up-MACRO Holding 
Shares'') issued by the Claymore MACROshares Oil Up Holding Trust 
(``Up-MACRO Holding Trust'') and the Claymore MACROshares Oil Down 
Holding Shares (``Down-MACRO Holding Shares'') issued by the Claymore 
MACROshares Oil Down Holding Trust (``Down-MACRO Holding Trust'').\3\ 
The Commission previously approved the listing and trading of the MACRO 
Tradeable Shares on the American Stock Exchange (``Amex'').\4\ As 
described in greater detail in the Amex Order, the value of the 
MACROShares Tradeable Shares is dependent upon the settlement price of 
the light sweet crude oil futures contract traded on the New York 
Mercantile Exchange (``NYMEX'').
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    \3\ The Up-MACRO Holding Shares and Down-MACRO Holding Shares 
(collectively, the ``MACRO Holding Shares'') will not be listed or 
traded on Nasdaq.
    \4\ See Securities Exchange Act Release No. 54839 (November 29, 
2006), 71 FR 70804 (December 6, 2006) (SR-Amex-2006-82) (the ``Amex 
Order'').
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    Nasdaq deems the MACRO Tradeable Shares to be equity securities, 
thus rendering trading in the MACRO Tradeable Shares subject to its 
existing rules governing the trading of equity securities, including 
Nasdaq Rule 4630, which governs trading of Commodity-Related 
Securities. The MACRO Tradeable Shares will trade on Nasdaq from 9:30 
a.m. until 4:15 p.m. Eastern Time (``ET'').
    Quotations for and last sale information regarding the MACRO 
Tradeable Shares are disseminated through the Consolidated Quotation 
System. During each trading day, Amex, acting as the calculation agent, 
publishes to the Consolidated Quotation System, at least every 15 
seconds during the entire time that the MACRO Tradeable Shares trade on 
Amex (normally 9:30 a.m. to 4:15 p.m. ET each trading day), an 
Indicative Intraday Value (``IIV'') representing the estimated 
underlying value per share of both the Up-MACRO Tradeable Shares and 
the Down-MACRO Tradeable Shares. Amex also publishes these values on 
its Web site. To enable this calculation, Amex receives real-time price 
data from the NYMEX for the light sweet crude oil futures contract that 
trades on the NYMEX from two major market data vendors, from the 
opening of trading of the light sweet crude oil futures contract on 
NYMEX at 10 a.m. to the close of trading of the MACRO Tradeable Shares 
on Amex at 4:15 p.m. ET. In addition, the closing price of the MACRO 
Tradeable Shares on Nasdaq will be available through the Exchange's Web 
site.
    Because the NYMEX market for the light sweet crude oil futures 
contract is closed for portions of the period from 9:30 a.m. to 4:15 
p.m. ET, the IIV calculated values are fixed during these closures. 
From 9:30 a.m. to 4:15 p.m. ET, however, if trading in the NYMEX light 
sweet crude oil futures contract is occurring on the CME Globex 
electronic trading platform, those trades would be used to update IIV 
values.
    The administrative agent for the MACRO Tradeable Shares, Claymore 
Securities, maintains a Web site (http://www.ClaymoreMacroShares.com) 

that is publicly accessible at no charge and contains the following 
information posted on each NYMEX trading day: the daily price level 
percentage change of the applicable reference price of crude oil; the 
daily underlying value of the Up-MACRO Holding Trust and the per-share 
underlying value of the Up-MACRO Holding Shares and the Up-MACRO 
Tradeable Shares; and the daily underlying value of the Down-MACRO 
Holding Trust and the per-share underlying value of the Down-MACRO 
Holding Shares and the Down-MACRO Tradeable Shares.
    Pricing and other information for NYMEX light sweet crude oil 
futures contracts is available through major market data vendors such 
as Reuters and Bloomberg. Nasdaq has issued an Information Circular to 
inform its members of the special characteristics and risks associated 
with trading the MACRO Tradeable Shares.
    Nasdaq would halt trading in the MACRO Tradeable 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 MACRO Tradeable Shares also would be governed by provisions of 
Nasdaq Rule 4120 relating to temporary interruptions

[[Page 27890]]

in the calculation or wide dissemination of the IIV or the value of the 
applicable NYMEX light sweet crude oil futures contract. Additionally, 
Nasdaq may cease trading the MACRO Tradeable 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 also would follow any procedures with respect to 
trading halts as set forth in Nasdaq Rule 4120(c). Finally, Nasdaq 
would stop trading the MACRO Tradeable Shares if the listing market 
delists them.
    Nasdaq believes that its surveillance procedures are adequate to 
address any concerns about the trading of the MACRO Tradeable Shares on 
Nasdaq. Trading of the MACRO Tradeable Shares is currently subject to 
NASD's surveillance procedures for equity securities in general and 
ETFs in particular.\5\
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    \5\ NASD surveils trading pursuant to a regulatory services 
agreement. Nasdaq is responsible for NASD's performance under this 
regulatory services agreement.
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    Nasdaq is able to obtain information regarding trading in the MACRO 
Tradeable Shares and NYMEX oil futures contracts through its members in 
connection with the proprietary or customer trades that such members 
effect on any relevant market. In addition, Nasdaq is party to an 
Information Sharing Agreement with NYMEX for the purpose of providing 
information in connection with trading in or related to oil futures 
contracts traded on that market.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \6\ in general and Section 6(b)(5) of the Act \7\ in 
particular, in that in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to remove impediments to a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest. In addition, Nasdaq believes that the proposal is 
consistent with Rule 12f-5 under the Act \8\ because it deems the MACRO 
Tradeable Shares to be an equity securities, thus rendering trading in 
the Macro Tradeable Shares subject to Nasdaq's existing rules governing 
the trading of equity securities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 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.

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-NASDAQ-2007-048 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-NASDAQ-2007-048. 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-NASDAQ-2007-048 and should be submitted on or before 
June 7, 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 is 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 change is 
consistent with Section 6(b)(5) of the Act,\10\ 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 MACRO Tradeable Shares.
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    \9\ 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).
    \10\ 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,\11\ which permits an exchange to trade, 
pursuant to UTP, a security that is listed and registered on another 
exchange.\12\ The Commission notes that it previously approved the 
listing and trading of the MACRO Tradeable Shares on Amex and the 
trading of the MACRO Tradeable Shares on NYSE Arca pursuant to UTP.\13\ 
The Commission also finds that the proposal is consistent with Rule 
12f-5 under the Act,\14\ 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

[[Page 27891]]

class or type of security to which the exchange extends UTP. The 
Exchange has represented that it meets this requirement because it 
deems the MACRO Tradeable Shares to be equity securities, thus 
rendering trading in the MACRO Tradeable Shares subject to the 
Exchange's existing rules governing the trading of equity securities.
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    \11\ 15 U.S.C. 78l(f).
    \12\ 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.
    \13\ See supra note 4. See also Securities Exchange Act Release 
No. 55033 (December 29, 2006) 72 FR 1253 (January 11, 2007) 
(approving UTP trading of MACRO Tradeable Shares on NYSE Arca).
    \14\ 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,\15\ 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 
MACRO Tradeable Shares are disseminated through the facilities of the 
CTA and the Consolidated Quotation System. Furthermore, the IIV, 
updated to reflect changes in currency exchange rates, is calculated by 
Amex and published via the facilities of the Consolidated Tape 
Association on a 15-second delayed basis throughout the trading hours 
for the MACRO Tradeable Shares. In addition, if the listing market 
halts trading when the IIV is not being calculated or disseminated, the 
Exchange would halt trading in the MACRO Tradeable Shares.
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    \15\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    The Commission notes that, if the MACRO Tradeable Shares should be 
delisted by the listing exchange, the Exchange would no longer have 
authority to trade the MACRO Tradeable Shares pursuant to this order.
    In support of this proposal, the Exchange has represented that its 
surveillance procedures are adequate to properly monitor Exchange 
trading of the MACRO Tradeable Shares. This approval order is 
conditioned on the Exchange's adherence to this representation.
    In addition, the Commission recently approved the trading of the 
MACRO Tradeable Shares on the Exchange pursuant to UTP for a pilot 
period of three months.\16\ In the Pilot Order, the Commission noted 
that exchanges that trade commodity-related securities generally have 
in place surveillance arrangements with markets that trade the 
underlying securities. In its proposal to trade the MACRO Tradeable 
Shares for a pilot period, the Exchange represented that it was in the 
process of completing these surveillance arrangements and expected to 
do so ``in the near future.'' The Exchange recently provided the 
Commission with evidence that it has completed these surveillance 
arrangements.
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    \16\ See Securities Exchange Act Release No. 55386 (March 2, 
2007), 72 FR 10801 (March 9, 2007) (SR-NASDAQ-2007-016) (the ``Pilot 
Order'').
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    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 MACRO Tradeable Shares on Amex and 
the trading of the MACRO Tradeable Shares on NYSE Arca pursuant to UTP 
are consistent with the Act. The Commission presently is not aware of 
any regulatory issue that should cause it to revisit those findings or 
would preclude the continued trading of the MACRO Tradeable Shares on 
the Exchange pursuant to UTP. Therefore, accelerating approval of this 
proposal should benefit investors by continuing the additional 
competition in the market for the MACRO Tradeable Shares.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NASDAQ-2007-048), be and it 
hereby is, approved on an accelerated basis.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E7-9467 Filed 5-16-07; 8:45 am]

BILLING CODE 8010-01-P