[Federal Register: November 24, 2008 (Volume 73, Number 227)]
[Notices]
[Page 71073-71074]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24no08-150]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58948; File No. SR-NYSEArca-2008-105]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving
Proposed Rule Change Relating to Listing Certain Derivative Products
Pursuant to Continued Listing Criteria
November 14, 2008.
I. Introduction
On October 1, 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'') 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 relating to listing certain
Derivative Products (as defined in proposed Commentary .01 to NYSE Arca
Equities Rule 5.2(b)) pursuant to continued listing criteria. The
proposed rule change was published for comment in the Federal Register
on October 10, 2008.\3\ The Commission received no comment letters on
the proposed rule change. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 58734 (October 6,
2008), 73 FR 60388.
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II. Description of the Proposed Rule Change
The Exchange proposes to adopt new Commentary .01 to NYSE Arca
Equities Rule 5.2(b) to permit the listing of a Derivative Product \4\
that (1) was originally listed on another registered national
securities exchange (``Other SRO'') and continues to be listed on such
Other SRO, and (2) satisfies the Exchange's continued listing criteria
applicable to the relevant product class that would include such
Derivative Product.
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\4\ Commentary .01 to NYSE Arca Equities Rule 5.2(b) defines
``Derivative Product'' to include securities described in NYSE Arca
Equities Rule 5.2(j)(2) (Equity Linked Notes); NYSE Arca Equities
Rule 5.2(j)(3) (Investment Company Units); NYSE Arca Equities Rule
5.2(j)(4) (Index-Linked Exchangeable Notes); NYSE Arca Equities Rule
5.2(j)(6) (Equity Index-Linked Securities, Commodity-Linked
Securities, Currency-Linked Securities, Fixed Income Index-Linked
Securities, Futures-Linked Securities, and Multifactor Index-Linked
Securities); NYSE Arca Equities Rule 8.100 (Portfolio Depositary
Receipts); and Commentary .01 to NYSE Arca Equities Rule 8.200
(Trust Issued Receipts). Exchange rules relating to the listing and
trading, including trading pursuant to unlisted trading privileges,
of ``Derivative Products,'' as described above, permit the listing
and trading of such products pursuant to Rule 19b-4(e) under the
Act. Rule 19b-4(e) under the Act provides that the listing and
trading of a new derivative securities product by a self-regulatory
organization (``SRO'') shall not be deemed a proposed rule change,
pursuant to paragraph (c)(1) of Rule 19b-4, if the Commission has
approved, pursuant to Section 19(b) of the Act, the SRO's trading
rules, procedures, and listing standards for the product class that
would include the new derivatives securities product, and the SRO
has a surveillance program for the product class. See 17 CFR
240.19b-4(e)(1).
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For example, in the case of an Index-Linked Security that is listed
on an Other SRO, the staff of the Exchange would determine whether the
Index-Linked Security meets the Exchange's continued listing criteria.
If the Index-Linked Security satisfies the Exchange's continued listing
criteria, then NYSE Arca could proceed to list such security on the
Exchange. If the Index-Linked Security does not meet the continued
listing criteria, the staff of the Exchange would then, in its sole
discretion, either file a separate rule filing pursuant to Rule 19b-4
under the Act proposing that the Index-Linked Security be listed on the
Exchange pursuant to the criteria
[[Page 71074]]
set forth in the rule filing or decline to list the Index-Linked
Security on the Exchange.
Prior to listing on the Exchange, the issuer of a Derivative
Product would be required to properly delist from the Other SRO and
satisfy the applicable listing procedures of the Exchange and
applicable statutory and regulatory requirements, including, without
limitation, Section 12 of the Act,\5\ relating to listing such
Derivative Product on the Exchange. In addition, the Exchange
represents that, for any Derivative Product listed pursuant to proposed
Commentary .01 to NYSE Arca Equities Rule 5.2(b), other than the
initial listing standards, the shares or other units of such Derivative
Product will comply with all other pertinent requirements applicable to
the product class that would include such Derivative Product,
including, but not limited to, requirements relating to the
dissemination of key information, such as an index value, reference
asset value, and intraday indicative value, and rules governing the
trading of equity securities, trading hours, trading halts,
surveillance, firewalls, and Information Bulletins to ETP Holders, as
set forth in Exchange rules applicable to such Derivative Product and
prior Commission orders approving the generic listing rules applicable
to the listing and trading of such Derivative Product.
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\5\ 15 U.S.C. 78(l).
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III. Discussion and Commission's Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of Section 6 of the
Act \6\ and the rules and regulations thereunder applicable to a
national securities exchange.\7\ In particular, the Commission finds
that the proposed rule change is consistent with Section 6(b)(5) of the
Act,\8\ which requires, among other things, that the Exchange's rules
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.
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\6\ 15 U.S.C. 78f.
\7\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b)(5).
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The proposal would permit the Exchange to list and trade any
Derivative Product that (1) was originally listed on an Other SRO and
continues to be listed on such Other SRO, and (2) satisfies the
Exchange's continued listing criteria applicable to the product class
that would include such Derivative Product. The Commission believes
that the proposal reasonably balances the removal of impediments to a
free and open market with the protection of investors and the public
interest, two principles set forth in Section 6(b)(5) of the Act. The
Commission notes that (1) it has previously approved the generic
listing standards, including the continued listing criteria, applicable
to each product class that would include such Derivative Product, and
(2) the continued listing criteria applicable to a Derivative Product
are substantially similar to those of Other SROs that list such
Derivative Product.\9\ The Commission also notes that, for any
Derivative Product listed on the Exchange pursuant to proposed
Commentary .01 to NYSE Arca Equities Rule 5.2(b), the shares of such
Derivative Product must comply with all of the other pertinent
requirements applicable to the product class that would include such
Derivative Product including, without limitation, requirements relating
to the dissemination of key values and the rules governing the trading
of equity securities, trading hours, trading halts, surveillance,
firewalls, and Information Bulletins to ETP Holders, as set forth in
the applicable Exchange rules and prior Commission orders approving the
generic listing rules applicable to the listing and trading of such
Derivative Product. In addition, prior to listing on the Exchange, the
issuer of a Derivative Product must properly delist from the Other SRO
and satisfy all relevant Exchange listing procedures and applicable
statutory and regulatory requirements, including, without limitation,
Section 12 of the Act. If the Exchange seeks to list a Derivative
Product that does not satisfy the Exchange's continued listing
standards applicable to such product, it may not do so pursuant to
proposed Commentary .01 to NYSE Arca Equities Rule 5.2(b). Instead, the
Exchange must obtain prior Commission approval pursuant to Section
19(b)(2) of the Act.
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\9\ For example, the following are NYSE Alternext US LLC (``NYSE
Alternext'') listing standards for Derivative Products having
similar or identical continued listing standards to those of the
Exchange: Index Fund Shares (NYSE Alternext Equities Rule 1000A et
seq.); Portfolio Depositary Receipts (Rules 1000 et seq.); Trust
Issued Receipts (Rules 1200 et seq.); and securities listed under
Section 107 of the NYSE Alternext Company Guide, including Equity-
Linked Term Notes; Index-Linked Exchangeable Notes; Index-Linked
Securities; Commodity-Linked Securities; Currency-Linked Securities;
Fixed Income-Linked Securities; Futures-Linked Securities; and
Combination-Linked Securities.
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The Commission believes that the Exchange's proposal would
facilitate the timely and efficient listing and continuous trading of a
Derivative Product should an issuer of such Derivative Product,
originally listed on an Other SRO, choose to delist from such Other SRO
and list such Derivative Product on the Exchange, provided that all of
the requirements with respect to the Derivative Product referenced
herein, including all of the applicable requirements governing the
trading of such Derivative Product, as set forth in Exchange rules and
prior applicable Commission orders, are satisfied. For the foregoing
reasons, the Commission believes that the proposed rule change is
consistent with the Act and finds good cause for approving the proposed
rule change.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSEArca-2008-105) be, and
it hereby is, approved.
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\10\ 15 U.S.C. 78s(b)(1).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-27878 Filed 11-21-08; 8:45 am]
BILLING CODE 8011-01-P