Document ID: SEC-2010-1667-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-10-29T04:00Z

[Federal Register: October 29, 2010 (Volume 75, Number 209)]
[Notices]               
[Page 66815-66817]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29oc10-139]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63176; File No. SR-NYSEArca-2010-94]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Listing of the iShares[supreg] Taxable Municipal Bond Fund

October 25, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that, on October 21, 2010, 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 prepared by the Exchange. 
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade under NYSE Arca Equities 
Rule 5.2(j)(3), Commentary .02, the following series of the 
iShares[supreg] Trust: iShares[supreg] Taxable Municipal Bond Fund. The 
text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and the Exchange's Web site at 
http://www.nyse.com.

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 self-regulatory organization 
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 those 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 shares (``Shares'') of the 
following series of the iShares[supreg] Trust (``Trust'') under NYSE 
Arca Equities Rule 5.2(j)(3), Commentary .02, which governs the listing 
and trading of Investment Company Units (``ICUs''): iShares[supreg] 
Taxable Municipal Bond Fund (``Fund'').\3\
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    \3\ The Commission has previously approved listing and trading 
of ICUs based on certain fixed income indexes. See, e.g., Securities 
Exchange Act Release No. 48662 (October 20, 2003), 68 FR 61535 
(October 28, 2003) (SR-PCX-2003-41) (approving listing and trading 
pursuant to unlisted trading privileges (``UTP'') of fixed income 
funds and the UTP trading of certain iShares[supreg] fixed income 
funds). In addition, the Commission has approved NYSE Arca generic 
listing rules for Investment Company Units based on a fixed income 
index in Securities Exchange Act Release No. 55783 (May 17, 2007), 
72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36). The Commission has 
approved pursuant to Section 19(b)(2) of the Exchange Act the 
listing on the American Stock Exchange of exchange traded funds 
based on fixed income indexes. See, e.g., Securities Exchange Act 
Release No. 48534 (September 24, 2003), 68 FR 56353 (September 30, 
2003) (SR-Amex-2003-75) (order approving listing on Amex of eight 
series of iShares Lehman Bond Funds). In addition, the Commission 
recently has approved for listing on NYSE Arca under NYSE Arca 
Equities Rule 8.600 (``Managed Fund Shares'') two actively managed 
ETFs of the PIMCO ETF Trust that hold municipal bonds. See 
Securities Exchange Act Release No. 60981 (August 27 [sic], 2009) 
(SR-NYSEArca-2009-79) (order approving [sic] PIMCO Short-Term 
Municipal Bond Strategy Fund and PIMCO Intermediate Municipal Bond 
Strategy Fund, among others).
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    The Trust is registered with the Commission as an investment 
company under the Investment Company Act of 1940 (``1940 Act'') (15 
U.S.C. 80a).\4\ Blackrock Fund Advisors serves as the investment 
adviser (``Adviser'') to the Fund.
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    \4\ See Registration Statement on Form N-1A for the Trust filed 
with the Securities and Exchange Commission on September 30, 2010 
(File Nos. 333-92935 and 811-09729) (the ``Registration 
Statement''). The descriptions of the Fund and the Shares contained 
herein are based on information in the Registration Statement.
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Description of the Shares and the Fund
    According to the Registration Statement, the Fund seeks investment 
results that correspond generally to the price and yield performance, 
before fees and expenses, of The BofA Merrill Lynch Broad U.S. Taxable 
Municipal Securities Index (the ``Underlying Index'').
    The Underlying Index measures the performance of investment-grade 
taxable debt securities of the U.S. municipal bond market. As of 
October 1, 2010, there were 1,779 issues in the Underlying Index.
    The Underlying Index includes fixed-rate municipal bonds issued 
publicly in the U.S. market by U.S. States and territories and their 
political subdivisions. The interest payments on the bonds in the 
Underlying Index are generally subject to U.S. Federal income taxes. 
Each bond must have an investment grade rating based on the average 
rating by Moody's Investors Service, Inc. (``Moody's''), Standard & 
Poor's Financial Services LLC (a subsidiary of The McGraw-Hill 
Companies, Inc.) (``S&P''), and Fitch, Inc. (``Fitch''). Each bond must 
be denominated in U.S. dollars.
    The Exchange is submitting this proposed rule change because the 
Underlying Index for the Fund does not meet all of the ``generic'' 
listing requirements of Commentary .02(a) to NYSE Arca Equities Rule 
5.2(j)(3) applicable to listing of ICUs based on fixed income indexes. 
The Underlying Index meets all such requirements except for those set 
forth in Commentary .02(a)(2).\5\ Specifically, as of October 1, 2010, 
70.85% of the weight of the Underlying Index

[[Page 66816]]

components have a minimum original principal amount outstanding of $100 
million or more.
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    \5\ Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3) 
provides components of an index or portfolio underlying a series of 
ICUs that in the aggregate account for at least 75% of the weight of 
the index or portfolio each must have a minimum original principal 
amount outstanding of $100 million or more.
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    The Exchange represents that: (1) Except for Commentary .02(a)(2) 
to NYSE Arca Equities Rule 5.2(j)(3), the Shares of the Fund currently 
satisfy all of the generic listing standards under NYSE Arca Equities 
Rule 5.2(j)(3); (2) the continued listing standards under NYSE Arca 
Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to ICUs shall apply 
to the Shares; and (3) the Trust is required to comply with Rule 10A-3 
under the Exchange Act \6\ for the initial and continued listing of the 
Shares. In addition, the Exchange represents that the Shares will 
comply with all other requirements applicable to ICUs including, but 
not limited to, requirements relating to the dissemination of key 
information such as the value of the Underlying Index and Intraday 
Indicative Value, rules governing the trading of equity securities, 
trading hours, trading halts, surveillance, information barriers and 
Information Bulletin to ETP Holders, as set forth in Exchange rules 
applicable to ICUs and prior Commission orders approving the generic 
listing rules applicable to the listing and trading of ICUs.\7\
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    \6\ 17 CFR 240.10A-3.
    \7\ See, e.g., Securities Exchange Act Release No. 44551 (July 
12, 2001), 66 FR 37716 (July 19, 2001) (SR-PCX-2001-14) (order 
approving generic listing standards for ICUs and Portfolio 
Depositary Receipts); Securities Exchange Act Release No. 41983 
(October 6, 1999), 64 FR 56008 (October 15, 1999) (SR-PCX-98-29) 
(order approving rules for listing and trading of ICUs).
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    Detailed descriptions of the Fund, the Underlying Index, procedures 
for creating and redeeming Shares, transaction fees and expenses, 
dividends, distributions, taxes, risks, and reports to be distributed 
to beneficial owners of the Shares can be found in the Registration 
Statement or on the Web site for the Fund (http://www.ishares.com), as 
applicable.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \8\ that an exchange have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest. The 
Exchange believes that the proposed rule change will facilitate the 
listing and trading of additional types of exchange-traded products 
that will enhance competition among market participants, to the benefit 
of investors and the marketplace. In addition, the listing and trading 
criteria set forth in NYSE Arca Equities Rule 5.2(j)(3) and Commentary 
.02 thereto and continued listing criteria in NYSE Arca Equities Rule 
5.5(g)(2) are intended to protect investors and the public interest.
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    \8\ 15 U.S.C. 78f(b)(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

    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 proposed rule change does not significantly affect the 
protection of investors or the public interest, does not impose any 
significant burden on competition, and, by its terms, does not become 
operative for 30 days from the date on which it was filed, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) 
thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 satisfied this requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. 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. 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 Shares.
    The Commission believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
The Commission notes that the Underlying Index for the Fund fails to 
meet the requirements set forth in Commentary .02(a)(2) to NYSE Arca 
Equities Rule 5.2(j)(3) by only a small amount (4.15%) and that the 
Exchange represents that the Shares of the Fund currently satisfy all 
of the other generic listing standards under NYSE Arca Equities Rule 
5.2(j)(3) and all other requirements applicable to ICUs, as set forth 
in Exchange rules and prior Commission orders approving the generic 
listing rules applicable to the listing and trading of ICUs. The 
Commission also notes that there are approximately 1,779 issues in the 
Underlying Index as of October 1, 2010. The Commission believes that 
the listing and trading of the Shares do not present any novel or 
significant issues or impose any significant burden on competition, and 
that waiving the 30-day operative delay would benefit the market and 
investors by providing market participants with additional investing 
choices. For these reasons, the Commission designates the proposal 
operative upon filing.\11\
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    \11\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed 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 summarily may temporarily suspend 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-2010-94 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-2010-94. This 
file number should be included on the

[[Page 66817]]

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 Web site viewing and printing 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-2010-94 and should be submitted on or before 
November 19, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27368 Filed 10-28-10; 8:45 am]
BILLING CODE 8011-01-P