Document ID: SEC-2011-0217-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2011-02-16T05:00Z

[Federal Register Volume 76, Number 32 (Wednesday, February 16, 2011)]
[Notices]
[Pages 9065-9067]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-3441]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63881; File No. SR-NYSEArca-2010-120]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change To List and Trade Shares of the SPDR Nuveen S&P 
High Yield Municipal Bond ETF

February 9, 2011.

I. Introduction

    On December 21, 2010, NYSE Arca, Inc. (``Exchange'') 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 thereunder,\2\ a proposed rule change to list and trade 
shares (``Shares'') of the SPDR Nuveen S&P High Yield Municipal Bond 
ETF (``ETF'' or ``Fund'') under NYSE Arca Equities Rule 5.2(j)(3), 
Commentary .02. The proposed rule change was published for comment in 
the Federal Register on January 6, 2011.\3\ The Commission received no 
comments on the proposal. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 63624 (December 30, 
2010), 76 FR 805 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to list and trade shares (``Shares'') under 
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, which governs the 
listing and trading of Investment Company Units (``Units''), of the 
following series of the SPDR Series

[[Page 9066]]

Trust (``Trust'') based on the S&P Municipal Yield Index (``Index''): 
SPDR Nuveen S&P HighYield Municipal Bond ETF (``Fund'' or ``ETF'').
    The SPDR Nuveen S&P High Yield Municipal Bond ETF\4\ seeks to 
provide investment results that, before fees and expenses, correspond 
generally to the price and yield performance of the Index, which tracks 
the U.S. municipal bond market, and to provide income that is exempt 
from regular Federal income taxes.\5\
---------------------------------------------------------------------------

    \4\ Standard & Poor's Financial Services LLC is the Index 
Sponsor with respect to the Index. The Exchange has represented that 
the Index Sponsor is not affiliated with a broker-dealer and has 
implemented procedures designed to prevent the use and dissemination 
of material, non-public information regarding the Index.
    \5\ See the Trust's registration statement on Form N-1A under 
the Securities Act of 1933 (15 U.S.C. 77a) and the Investment 
Company Act of 1940 (15 U.S.C. 80a), dated February 22, 2010 (File 
No. 333-57793 and 811-08839) (``Registration Statement'').
---------------------------------------------------------------------------

    The Index consists of categories of bonds in the following 
proportions: (i) 70% of the Index constituents are components of the 
Standard & Poor's/Investortools High Yield Bond Index,\6\ which are 
non-rated or are rated below investment grade; (ii) 20% of the Index 
constituents are components of the Standard & Poor's/Investortools Bond 
Index that are rated Baa3, Baa2, or Baa1 by Moody's Investors Service, 
or BBB-, BBB, or BBB+ by Standard and Poor's or Fitch; and (iii) 10% of 
the Index constituents are components of the Standard & Poor's/
Investortools Bond Index that are rated A3, A2, or A1 by Moody's 
Investor Services, or A-, A, or A+ by Standard & Poor's or Fitch.\7\ As 
of December 20, 2010, there were approximately 21,141 issues included 
in the Index.
---------------------------------------------------------------------------

    \6\ The Standard & Poor's/Investortools Municipal Bond Index is 
composed of bonds held by managed municipal bond fund customers of 
Standard & Poor's Securities Pricing, Inc. that are priced daily. 
Only bonds with total outstanding amounts of $2,000,000 or more 
qualify for inclusion. The Standard and Poor's/Investortools 
Municipal Bond High Yield Index is comprised of all bonds in the 
Standard and Poor's/Investortools Municipal Bond Index that are non-
rated or whose ratings are BB+ S&P and/or BA-1 Moody's or lower. 
This index does not contain bonds that are prerefunded or are 
escrowed to maturity.
    \7\ Where the ratings assigned by the agencies are not 
consistent, the Index will use the middle rating if three ratings 
are available, and the lower of two ratings if only two ratings are 
available.
---------------------------------------------------------------------------

    The Exchange submitted this proposed rule change because the Index 
underlying the Fund does not meet all of the ``generic'' listing 
requirements of Commentary .02(a)(2) to NYSE Arca Equities Rule 
5.2(j)(3) applicable to listing of Units based on US indexes. 
Specifically, the Index does not meet the requirement set forth in 
Commentary .02(a)(2): \8\ As of December 20, 2010, 26.47% of the weight 
of the Index components have a minimum principal amount outstanding of 
$100 million or more. The Exchange represents that: (1) Except for 
Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Shares 
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 Units shall 
apply to the Shares; and (3) the Trust is required to comply with Rule 
10A-3 \9\ under the Exchange Act 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 Units including, 
but not limited to, requirements relating to the dissemination of key 
information such as the value of the Index and Intraday Indicative 
Value, rules governing the trading of equity securities, trading hours, 
trading halts, surveillance, and the Information Bulletin to ETP 
Holders, as set forth in Exchange rules applicable to Units and prior 
Commission orders approving the generic listing rules applicable to the 
listing and trading of Units.\10\
---------------------------------------------------------------------------

    \8\ Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that components that in the aggregate account for at least 
75% of the weight of the index or portfolio each shall have a 
minimum principal amount outstanding of $100 million or more.
    \9\ 17 CFR 240.10A-3.
    \10\ See, e.g., Securities Exchange Act Release Nos. 55783 (May 
17, 2007), 72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36) (order 
approving NYSE Arca generic listing standards for Units based on a 
fixed income index); 44551 (July 12, 2001), 66 FR 37716 (July 19, 
2001) (SR-PCX-2001-14) (order approving generic listing standards 
for Units and Portfolio Depositary Receipts); 41983 (October 6, 
1999), 64 FR 56008 (October 15, 1999) (SR-PCX-98-29) (order 
approving rules for listing and trading of Units).
---------------------------------------------------------------------------

    Detailed descriptions of the Fund, the 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.spdr.com), as 
applicable.

III. Discussion and Commission's Findings

    After careful consideration, 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.\11\ In particular, the Commission believes that the proposal 
is consistent with Section 6(b)(5) of the Act,\12\ which requires, 
among other things, that the rules of a national securities exchange be 
designed 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.
---------------------------------------------------------------------------

    \11\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Although NYSE Arca Equities Rule 5.2(j)(3) permits the Exchange to 
list Units based on U.S. indexes pursuant to Rule 19b-4(e) under the 
Act,\13\ the Index for the Fund does not meet all of the generic 
listing requirements applicable to the listing of Units based on U.S. 
indexes. Specifically, the Index does not satisfy Commentary .02(a)(2) 
to NYSE Arca Equities Rule 5.2(j)(3), which requires that components 
that in the aggregate account for at least 75% of the weight of the 
index or portfolio each shall have a minimum principal amount 
outstanding of $100 million or more. According to the Exchange, as of 
December 20, 2010, 26.47% of the weight of the Index components had a 
minimum principal amount outstanding of $100 million or more.
---------------------------------------------------------------------------

    \13\ See 17 CFR 240.19b-4(e). See also Commentary .02 to NYSE 
Arca Equities Rule 5.2(j)(3).
---------------------------------------------------------------------------

    The Commission believes that the listing and trading of the Shares 
is consistent with the Act. The Commission believes that the Index is 
not susceptible to manipulation. As of December 20, 2010, there were 
approximately 21,141 issues included in the Index and the total dollar 
amount outstanding of issues in the Index was approximately $532.82 
billion. Further, the most heavily weighted component represents 0.86% 
of the weight of the Index and the five most heavily weighted 
components represent 2.52% of the weight of the Index.
    The Commission also notes that, based on the Exchange's 
representations: (1) The Shares currently satisfy all of the generic 
listing standards under NYSE Arca Equities Rule 5.2(j)(3), except for 
the requirement under Commentary .02(a)(2); (2) the Shares will be 
subject to all of the continued listing standards under NYSE Arca 
Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to Units; and (3) the 
Trust is required to comply with Rule 10A-3 under the Act for the 
initial and continued listing of Shares.\14\ The Commission also notes 
that Shares of

[[Page 9067]]

the Fund will comply with all other requirements of NYSE Arca Equities 
Rule 5.2(j)(3), applicable to Units including, but not limited to, 
requirements relating to the dissemination of key information such as 
the Index value and Intraday Indicative Value, rules governing the 
trading of equity securities, trading hours, trading halts, 
surveillance, firewalls, and Information Bulletins to ETP Holders, as 
set forth in prior Commission orders approving the generic listing 
rules applicable to the listing and trading of Units.
---------------------------------------------------------------------------

    \14\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \15\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
---------------------------------------------------------------------------

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

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-NYSEArca-2010-120), be, and 
it hereby is, approved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3441 Filed 2-15-11; 8:45 am]
BILLING CODE 8011-01-P