[Federal Register: July 29, 2008 (Volume 73, Number 146)]
[Notices]
[Page 43968-43970]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jy08-92]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58208; File No. SR-NYSEArca-2008-77]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade the Barclays Middle East
Equities (MSCI GCC) Non Exchange Traded Notes Due 2038
July 22, 2008.
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 July 17, 2008, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca''),
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, II,
and III 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 shares of the Barclays
Middle East Equities (MSCI GCC) Non Exchange Traded Notes due 2038
(``Notes''), which are linked to the MSCI Gulf Cooperation Council
(GCC) Countries ex-Saudi Arabia Net Total Return Index SM
(U.S. dollar) (``Index''). The text of the proposed rule change is
available at the Exchange, the Commission's Public Reference Room, and
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 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 aspects 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, which are linked
to the Index, under NYSE Arca Equities Rule 5.2(j)(6), which includes
the Exchange's listing standards for Equity Index-Linked Securities.\3\
The Notes are senior unsecured debt obligations of Barclays Bank PLC
(``Barclays''). The Index is comprised of all of the equity securities
(each an ``Index Component'' and, collectively, the ``Index
Components'') that are included in the following five individual
country indices (each a ``Country Index'' and, collectively, the
``Country Indices''): MSCI Bahrain IndexSM, MSCI Kuwait
IndexSM, MSCI Oman IndexSM, MSCI Qatar
IndexSM, and MSCI United Arab Emirates IndexSM.
Each Country Index is a free float-adjusted market capitalization
[[Page 43969]]
index that is designed to measure the market performance, including
price performance and income from dividend payments, of equity
securities in the country it represents. The Index and the Country
Indices are calculated and maintained by MSCI, Inc. (``MSCI'').
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\3\ 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
(``Equity Reference Asset'').
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The Exchange is submitting this proposed rule change because the
Index does not meet all of the ``generic'' listing requirements of NYSE
Arca Equities Rule 5.2(j)(6) applicable to the listing of Equity Index-
Linked Securities. The Index meets all such requirements except for
those set forth in NYSE Arca Equities Rules 5.2(j)(6)(B)(I)(1)(b)(ii)
\4\ and (vi).\5\ The Exchange represents that: (1) Except for NYSE Arca
Equities Rules 5.2(j)(6)(B)(I)(1)(b)(ii) and (vi), the Notes currently
satisfy all of the generic listing standards under NYSE Arca Equities
Rule 5.2(j)(6) applicable to Equity Index-Linked Securities; (2) the
continued listing standards under NYSE Arca Equities Rules 5.2(j)(6)
applicable to Equity Index-Linked Securities shall apply to the Notes;
and (3) Barclays is required to comply with Rule 10A-3 under the Act
\6\ 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 Equity Reference Asset value and Intraday
Indicative Value, rules and policies governing the trading of equity
securities, trading hours, trading halts, surveillance, firewalls, and
Information Bulletin to ETP Holders, as set forth in prior Commission
orders approving the generic listing rules applicable to the listing
and trading of Index-Linked Securities, generally, and Equity Index-
Linked Securities, in particular.\7\
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\4\ NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(ii) provides
that each component security of the underlying index shall have
trading volume in each of the last six months of not less than
1,000,000 shares per month, 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 trading volume shall be at least 500,000 shares per month
in each of the last six months. In each of the last six months,
87.995% of the Index had a trading volume of 1,000,000 shares, and
8.79% of the bottom 10% of the Index had a trading volume of 500,000
shares.
\5\ NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(vi) provides
that all component securities of the underlying index shall be
either (A) securities (other than foreign country securities and
American Depositary Receipts (``ADRs'')) that are (x) issued by an
Act reporting company or by an investment company registered under
the Investment Company Act of 1940, which in each case is listed on
a national securities exchange, and (y) an ``NMS stock'' (as defined
in Rule 600 of Regulation NMS) or (B) foreign country securities or
ADRs, provided that foreign country securities or foreign country
securities underlying ADRs having their primary trading market
outside the United States on foreign trading markets that are not
members of the Intermarket Surveillance Group (``ISG'') or parties
to comprehensive surveillance sharing agreements with the Exchange
will not, in the aggregate, represent more than 20% of the dollar
weight of the index. Subject to the pending approval of a separate
rule filing (Securities Exchange Act Release No. 58142 (July 11,
2008), 73 FR 41147 (July 17, 2008) (SR-NYSEArca-2008-70)), this
subsection will be renumbered as NYSE Arca Equities Rule
5.2(j)(6)(B)(I)(1)(b)(v).
\6\ 17 CFR 240.10A-3.
\7\ See e.g., Securities Exchange Act Release Nos. 56637
(October 10, 2007), 72 FR 58704 (October 16, 2007) (SR-NYSEArca-
2007-92); 57132 (January 11, 2008), 73 FR 3300 (January 17, 2008)
(SR-NYSEArca-2007-125); 56838 (November 26, 2007), 72 FR 67774
(November 30, 2007) (SR-NYSEArca-2007-118); 56879 (December 3, 2007)
72 FR 69271 (December 7, 2007) (SR-NYSEArca-2007-110); 52204 (August
3, 2005), 70 FR 46559 (August 10, 2005) (SR-PCX-2005-63).
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The Index Components are all components of the Country Indices, as
described below. As of April 25, 2008, there were 103 stocks in the
Index of which: 5 were included in the MSCI Bahrain Index \SM\, 47 were
included in the MSCI Kuwait Index \SM\, 9 were included in the MSCI
Oman Index \SM\, 16 were included in the MSCI Qatar Index \SM\, and 26
were included in the MSCI United Arab Emirates Index \SM\. Each Index
Component is included in the Index at a weight that reflects the ratio
of its free float-adjusted market capitalization (i.e., free public
float multiplied by price) to the free float-adjusted market
capitalization of all the Index Components.
As of April 25, 2008, the market capitalization of the Index was
approximately $125.176 billion of which: 1.28% was represented by
components of the MSCI Bahrain Index \SM\, 49.23% was represented by
components of the MSCI Kuwait Index \SM\, 3.56% was represented by
components of the MSCI Oman Index \SM\, 15.00% was represented by
components of the MSCI Qatar Index \SM\, and 30.94% was represented by
components of the MSCI United Arab Emirates Index \SM\, traded on the
Bahrain Stock Exchange, Kuwait Stock Exchange, Muscat Securities
Market, Doha Securities Market, and the Dubai Financial Market or Abu
Dhabi Securities Market (collectively, ``Middle East Exchanges''),
respectively.
With respect to NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(vi),
which requires that at least 80% of the component stock trade on
markets that are members of ISG or parties to comprehensive
surveillance sharing agreements with the Exchange, the Exchange has
attempted to, but to date has not been able to, enter into
comprehensive surveillance sharing agreements with the Middle East
Exchanges. Currently, the Middle East Exchanges are not members of ISG.
Accordingly, the Exchange may not be able to obtain surveillance
information from the Middle East Exchanges regarding the component
stocks.
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products to monitor trading in the
Notes. The Exchange represents that these procedures are adequate to
properly monitor Exchange trading of the Notes in all trading sessions
and to deter and detect violations of Exchange rules. The Exchange's
current trading surveillance focuses on detecting securities trading
outside their normal patterns. When such situations are detected,
surveillance analysis follows and investigations are opened, where
appropriate, to review the behavior of all relevant parties for all
relevant trading violations. The Exchange may obtain information via
ISG from other exchanges who are members of ISG.\8\
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\8\ For a list of the current members and affiliate members of
ISG, see http://www.isgportal.com.
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Notwithstanding the Notes' inability to meet the requirements of
NYSE Arca Equities Rules 5.2(j)(6)(B)(I)(1)(b)(ii) and (vi),\9\ the
Exchange believes that the Index is sufficiently broad-based in scope
and, as such, is less susceptible to potential manipulation: the Index
contains 105 companies, listed in five countries with no one Middle
East Exchange listing greater than 50% of the Index Components. The
Exchange further believes that no one Index Component dominates the
underlying Index, thereby serving to protect the public interest and
promote capital formation.
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\9\ E-mail from Timothy J. Malinowski, Director, NYSE Euronext,
to Edward Cho, Special Counsel, Division of Trading and Markets,
Commission, dated July 21, 2008 (confirming the requirements of NYSE
Arca Equities Rule 5.2(j)(6) applicable to Equity Index-Linked
Securities that the Notes do not satisfy).
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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 will be available in the
Prospectus \10\ or on the Web site for the Notes (http://
www.barclays.com), as applicable.
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\10\ See Barclay's Prospectus, as amended, filed pursuant to
Rule 424(b)(2) under the Act (File No. 333-145845).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with
[[Page 43970]]
Section 6(b) of the Act,\11\ in general, and Section 6(b)(5),\12\ in
particular, in that it is designed to prevent fraudulent and
manipulative acts and 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 mechanism of a free and open
market and a national market system. The Exchange believes that it has
developed adequate trading rules, procedures, surveillance programs,
and listing standards for the initial and continued listing and trading
of the Notes, which promote investor protection in the public
interest.\13\ In addition, the Notes satisfy all of the requirements of
NYSE Arca Equities Rule 5.2(j)(6), with the two exceptions noted
above.\14\
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ E-mail from Timothy J. Malinowski, Director, NYSE Euronext,
to Edward Cho, Special Counsel, Division of Trading and Markets,
Commission, dated July 21, 2008 (confirming the Exchange's statutory
basis for the proposed rule change).
\14\ See id.
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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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
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 No. SR-NYSEArca-2008-77 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2008-77.
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 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-NYSEArca-2008-77 and should
be submitted on or before August 19, 2008.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-17307 Filed 7-28-08; 8:45 am]
BILLING CODE 8010-01-P