[Federal Register Volume 67, Number 215 (Wednesday, November 6, 2002)]
[Notices]
[Pages 67666-67673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28187]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46738; File No. SR-Amex-2001-32]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change and Amendment No. 
1 thereto by American Stock Exchange LLC Relating to the Listing of 
Fixed Income Trust Receipts Under Rule 1000A.

October 29, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on May 25, 2001, the American Stock Exchange LLC (the 
``Amex'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``Commission'' or the ``SEC'') the proposed rule change 
as described in Items I and II, which Items have been prepared by the 
Exchange. On October 21, 2002, the Amex submitted Amendment No. 1 to 
the proposed rule change.\3\ The Commission is publishing this notice 
to solicit comments on the proposed rule change, as amended, from 
interested persons and to grant accelerated approval.
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    \1\ 15 U.S.C 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ This notice, representing Amendment No. 1, replaces the 
original Rule 19b-4 filing in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Amex proposes to list under Amex Rule 1000A (``Index Fund Shares'') 
``Fixed Income Trust Receipts'' (``FITRs'') issued by the Exchange 
Traded Fund (``ETF'') Advisors Trust (``Trust''), as described below, 
whose portfolio will consist of investment grade government debt 
securities.

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 Amex 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 Amex 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 the 
Statutory Basis for, the Proposed Rule Change

Purpose
    Amex Rule 1000A provides standards for listing Index Fund Shares, 
which are securities issued by an open-end management investment 
company (open-end mutual fund) for Exchange trading. These securities 
are registered under the Investment Company Act of 1940 \4\ (``1940 
Act'') as well as the Exchange Act.\5\ The Exchange currently trades 
over 80 different index funds under Rule 1000A based on various stock 
indexes,\6\ as well as indexes based on fixed income securities.
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    \4\ 15 U.S.C. 80a.
    \5\ 15 U.S.C. 78a.
    \6\ Standard & Poor's Depositary Receipts[reg], S&P MidCap 
SPDRs, DIAMONDS[reg], and NASDAQ-100 Index Tracking Stock(sm) are 
unit investment trust securities listed under Amex Rules 1000 et 
seq. applicable to Portfolio Depositary Receipts.
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    The Exchange proposes to list FITRs under Rule 1000A issued by 
index funds of ETF Advisors Trust (``Trust''), whose portfolio will 
consist of investment grade government debt securities (e.g., 
securities issued or guaranteed by the U.S. Treasury, an agency or 
instrumentality of the U.S. government, or by a government-sponsored 
entity).\7\
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    \7\ The Commission previously approved amendments to Rule 
1000A(b) to specify that Index Fund Shares (1) may be based on a 
portfolio of fixed income securities; (2) may be issued by an 
investment company in return for a specified portfolio of fixed 
income securities and/or cash, and (3) may be redeemed at a holder's 
request by the investment company, which will pay the redeeming 
holder fixed income securities and/or cash. See Securities Exchange 
Act Release No. 46252 (July 24, 2002), 67 FR 49715 (July 31, 2002) 
(Approving File No. SR-Amex-2001-35).
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1. Fixed Income Trust Receipts
    The Trust is an open-end management investment company offering a 
number of separate investment portfolios of fixed income securities 
(each such portfolio an ``Index Fund'' or a ``Fund''). These securities 
would be listed under Amex Rules 1000A et. seq., including Amex Rule 
1000A as it is proposed to be amended herein. Each Index Fund that is 
the subject of this filing will hold a portfolio of securities selected 
to reflect the duration, and which seek to closely match, before fees 
and expenses, the total return of a specified fixed income securities 
index (individually, an ``Underlying Index'' and collectively, the 
``Underlying Indexes'').\8\ The Underlying Indexes are the Ryan 10 Year 
Treasury Index,\9\ the Ryan 5 Year Treasury Index,\10\ the Ryan 2 Year 
Treasury Index,\11\ and the Ryan 1 Year Treasury Index.\12\ All of the 
Underlying Indexes \13\ are based on total returns of various 
maturities of U.S. Treasury Securities (defined below).
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    \8\ The Trust, ETF Advisors, LLC. (``Advisor''), and ALPs 
Distributors, Inc. (``Applicants'') have filed with the Commission 
an Application for Orders (``Application'') under Section 6(c) of 
the 1940 Act for the purpose of exempting the Index Funds from 
various provisions of the 1940 Act and rules thereunder. See 
Investment Company Act Release No. 25725 (September 3, 2002) , 67 FR 
57464 (September 10, 2002) (File No. 812-12843). The Commission 
granted the requested exemptive relief. See Investment Company Act 
Release No. 25759 (September 27, 2002). The information provided in 
this Rule 19b-4 filing relating to the Index Funds is based on 
information included in the Application. Additional information 
regarding the Index Funds is included in the Application.
    \9\ The Ryan 10 Year Treasury Index is based on the return of 
the most recently auctioned 10 year Treasury note. Calculated once 
each day, the Index is available for periods back to November 1, 
1977. The 10 Year Treasury note is replaced at each new quarterly 
auction.
    \10\ The Ryan 5 Year Treasury Index is based on the return of 
the most recently auctioned 5 year Treasury note. Calculated once 
each day, the Index is available for periods back to August 28, 
1979. The 5 Year Treasury note is replaced at each new quarterly 
auction.
    \11\ The Ryan 2 Year Treasury Index is based on the return of 
the most recently auctioned 2 year Treasury note. Calculated once 
each day, the Index is available for periods back to August 24, 
1973. The 2 Year Treasury note is replaced at each new monthly 
auction.
    \12\ Since May 23, 2001, the Ryan 1 Year Adjusted Treasury Index 
has been based on (a) the return of the most recently auctioned 6 
Month Treasury bill, weighted two-thirds, and (b) the return of the 
most recently auctioned 2 year Treasury note, weighted one-third. 
Calculated once each day, the original Index was created on December 
31, 1988. The 6 Month Treasury bill is replaced at each weekly 
auction, and the 2 Year Treasury note is replaced at each new 
monthly auction.
    \13\ Except for the Ryan 1 Year Adjusted Treasury Index, the 
Underlying Indices listed above have been calculated daily since 
March 21, 1983; Underlying Indices for dates prior to March 21, 1983 
have been constructed from historical databases.
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    The Underlying Indexes were created by Ronald J. Ryan and Ryan 
Holdings LLC, and are compiled and maintained by Ryan Labs Inc. 
(collectively, the ``Index Provider''). Ryan Labs Inc. has calculated 
and published each Underlying Index or its equivalent predecessor and 
related data for over 10 years. The construction, calculation model and 
components of each Underlying Index are based upon measurable objective 
events, instruments and standards; these have remained consistent since 
initial publication in all cases except one where the 1-year Index had 
to be adjusted to reflect the U.S. Treasury's

[[Page 67667]]

cessation of issuance of 1-year Treasury bills.
    All of the Underlying Indexes are widely disseminated by various 
media. In particular, the information pertaining to the Underlying 
Indices are published on a daily (e.g., Ryan Indexes,\14\ Bloomberg, 
Reuters and Telerate), weekly (e.g., Barrons and the New York Times), 
bi-weekly (e.g., Grant's Interest Rate Observer), and monthly basis 
(e.g., Bondweek, IOMA's Report on Managing 401(k) plans, DC Plan 
Investing, S&P Fund Services and Check-free Database).
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    \14\ See http://www.ryanindex.com and http://www.ryanlabs.com.
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    The portfolio securities of the Index Funds will primarily consist 
of investment grade debt securities issued or guaranteed by the U.S. 
Treasury (``Treasury Securities''), by an agency or instrumentality of 
the U.S. Government, or by a government-sponsored entity such as the 
Government National Mortgage Association (``Ginnie Mae''), the Federal 
Home Loan Mortgage Corporation (``Freddie Mac'') and Fannie Mae, 
formerly the Federal National Mortgage Corporation (collectively, 
``Agency Securities'' and, together with ``Treasury Securities,'' 
referred to herein as ``Government Securities''). Government Securities 
may be backed by the full faith and credit of the U.S. Treasury, by the 
right to borrow from the U.S. Treasury, or by the agency or 
instrumentality issuing or guaranteeing the security.
    Each Index Fund will issue, on a continuous offering basis, one or 
more groups of a fixed number of Fund Shares (e.g., 50,000 shares) with 
a market value of approximately $5,000,000 to $10,000,000 for each such 
group of Index Fund Shares (a ``Creation Unit Aggregation'').
    FITRs will not be individually redeemable; only FITRs combined into 
Creation Unit Aggregations will be redeemable. It is expected that the 
initial net asset value (``NAV'') of FITRs will be established at 
approximately $85 per FITR.\15\
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    \15\ The Applicants believe that a convenient trading range will 
be between $50-$200 per FITR and each Index Fund reserves the right 
to declare a stock split or a reverse stock split if the trading 
price over time falls outside an appropriate trading range price. 
The Prospectus for each Index Fund will disclose these items, but 
such items may not be included the product description of the Funds.
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    ALPs Distributors, Inc. is a broker-dealer registered under the 
Exchange Act. It will act as the distributor and principal underwriter 
of Creation Unit Aggregations of FITRs (``Distributor'') on an agency 
basis. The Distributor is not an affiliated person of the Trust or the 
Advisor. The Bank of New York (``BNY'') will act as administrator 
(``Administrator''), fund accountant, custodian (``Custodian''), 
transfer agent and dividend disbursing agent for each Index Fund, and 
securities lending agent of the portfolio of securities held by a fund 
(``Portfolio Securities'').
    FITRs will be registered in book-entry form only and the Index 
Funds will not issue individual share certificates. The Depository 
Trust Company (``DTC'') or its nominee will be the record or registered 
owner of all outstanding FITRs. The records of DTC or DTC participants 
(``DTC Participants'') will reflect the beneficial ownership of FITRs. 
FITRs will trade on the Exchange during the hours of 9:30 a.m. to 4:15 
p.m., (Eastern Time (``ET'')).
2. Investment Objectives and Principal Investment Strategies
    Each Underlying Index is based on one or more specified debt 
security series issued by the U.S. Treasury. Each Underlying Index 
serves as a portfolio benchmark by specifying a selected debt 
instrument or instruments that correspond to a specified maturity on 
the U.S. Treasury yield curve. The Index Funds and Underlying Indexes 
that are subject of this Rule 19b-4 filing are as follows:

------------------------------------------------------------------------
            Name of Index Fund                       Ryan Index
------------------------------------------------------------------------
Treasury 10 FITR ETF......................  Ryan 10 Year Treasury Index.
Treasury 5 FITR ETF.......................  Ryan 5 Year Treasury Index.
Treasury 2 FITR ETF.......................  Ryan 2 Year Treasury Index.
Treasury 1 FITR ETF.......................  Ryan 1 Year Adjusted
                                             Treasury Index.
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    The Underlying Indexes, together with the other Treasury indexes 
maintained by the Index Provider, map the U.S. Treasury yield curve as 
described above.\16\ The design principle behind each such index is 
that the most reliable measure of interest rates is the U.S. Treasury 
yield curve. The Ryan 10 Year, 5 Year, and 2 Year Treasury Indices and 
1 year Adjusted Treasury Index also rely on the principle that the most 
liquid measure of every point on the U.S. Treasury yield curve is the 
``on-the-run'' (``OTR'') U.S. Treasury instrument in any given maturity 
range.\17\
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    \16\ See notes 9-13, supra.
    \17\ ``On the run'' means the most recent auctioned U.S. 
Treasury Security in a specified maturity range (e.g., 5 years).
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    The respective investment objective of each Index Fund will be to 
provide investment results that seek to closely match the total return, 
before fees and expenses, of the relevant Underlying Index. A fund's 
total return will be included in the prospectus in a manner consistent 
with the requirements of Form N-1A under the 1940 Act.\18\ Each Index 
Fund will hold Portfolio Securities that in the aggregate will closely 
match the cash flows of its Underlying Index, meaning that each Fund 
will invest in a range of fixed income instruments based upon the 
Advisor's application of quantitative analytical procedures to provide 
a duration and cash flow profile similar to that of the Fund's 
respective Underlying Index. In seeking to achieve the respective 
investment objective of each Index Fund, the Advisor will invest at 
least 90% of each Fund's total assets in Treasury Securities and other 
Government Securities. This is a fundamental investment policy which 
can only be changed by shareholder vote. As a non-fundamental 
investment policy that can be changed by the Board of Trustees 
(``Board'') without shareholder vote, each Fund will invest at least 
80% of its total assets in Treasury Securities that are backed by the 
full-faith and credit of the U.S. Government. An Index Fund may also 
invest up to 10% of its total assets in repurchase agreements, futures 
contracts, options and other derivative instruments, only in 
furtherance of the objective of seeking to closely match the total 
return, before fees and expenses, of that Fund's Underlying Index. 
Applicants expect that the returns of each Fund should be highly 
correlated with the return of its Underlying Index and that the 
correlation coefficient between each Fund and its Underlying Index will 
exceed 98% over extended periods and that the annual tracking error 
will be less than one percentage point of total return relative to its 
Underlying Index. Annual tracking error will be monitored by the 
Advisor under the supervision of the Board of Directors of the Fund. 
Applicants expect that ongoing adjustments will be made in the 
portfolio of each Index Fund in order to provide investment results in 
keeping with its investment objective.
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    \18\ The product descriptions for the Index Funds may not be 
include information pertaining to a Fund's total return.
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    The Underlying Indices are based on the OTR Treasury Securities 
yield curve. An OTR Treasury Security in a given maturity range, such 
as the six-month bill, two, five and ten-year notes and thirty-year 
bond, is the most recently auctioned Treasury Security issue with that 
stated maturity. The OTR Treasury rates for a given maturity have been 
generally regarded as the

[[Page 67668]]

``ultimate'' fixed income benchmarks for U.S. dollar-denominated debt 
because the OTR Treasury instrument yield is the base yield for each 
maturity against which all other Treasury instruments and most other 
dollar-denominated fixed income instruments are evaluated. Other 
dollar-denominated debt instruments are usually traded or referenced at 
a spread to the appropriate OTR Treasury rate.
    To ensure that each Underlying Index correctly reflects the current 
OTR rate, the Index Provider updates each such index by replacing the 
component security or securities of such index (the ``Component 
Security or Securities''), so that the old OTR Treasury Security (now 
the most recent ``off-the-run'' Treasury Security) is replaced with the 
new OTR Treasury Security at the time such new Treasury Security is 
auctioned (this process is referred to as a ``roll'' strategy or 
``rolling'' the old OTR position into the new OTR Treasury Security). 
For example, the Ryan 2 Year Treasury Index is updated by rolling the 
old OTR position in a two-year note to the new OTR two-year note at the 
time of each Treasury auction of a two-year note. Returns for each such 
Underlying Index are calculated to reflect the prices and yields of its 
component securities, based on the assumption that a ``roll'' strategy 
is employed.
3. Qualification as a Regulated Investment Company
    Each Index Fund intends to qualify for and to elect treatment as a 
Regulated Investment Company (``RIC'') for U.S. federal income tax 
purposes, with the result that each Fund effectively will be treated as 
if it were a separate entity and will generally not be subject to U.S. 
federal income tax on its income to the extent it distributes 
substantially all of its investment company taxable income and net 
capital gains and satisfies other applicable requirements of the 
Internal Revenue Code.
4. Description of the Underlying Indices and OTR Treasury Securities
    Each Underlying Index is based on one or more specified debt 
security series issued by the U.S. Treasury. Each Underlying Index 
serves as a portfolio benchmark by specifying a selected debt 
instrument or instruments that correspond to a specified maturity on 
the U.S. Treasury yield curve.
    Rather than matching an Index Fund's Portfolio Securities 
exclusively to the Component Security or Securities of its Underlying 
Index, the Advisor, when seeking to closely match the average dollar-
weighted duration of the portfolio of the Index Fund to the duration of 
its Underlying Index, will also invest in Government Securities such as 
other Treasury Securities, Agency Securities, or related repurchase 
agreements, futures contracts, options and other derivative 
instruments. In addition to Government Securities, the Advisor may use 
repurchase agreements, futures, options and other derivative or 
synthetic instruments in constructing the portfolio of an Index Fund. 
The actual positions held in the portfolio of a Fund may consist of OTR 
Treasury Securities, ``off-the-run'' Treasury Securities,\19\ other 
Treasury Securities such as STRIPS \20\ of any duration, Agency 
Securities and related repurchase agreements, futures contracts, 
options and other derivative instruments, subject to limitations 
discussed in the Application.
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    \19\ ``Off-the-Run'' means U.S. Treasury securities auctioned 
before the current on-the-run issue.
    \20\ Separate Trading of Registered Interest and Principal of 
Securities (``STRIPS'').
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    The Advisor will be constrained when managing the portfolio of each 
Index Fund to an average effective duration for the entire Fund's 
portfolio that will differ by no more than 1 month from the duration of 
the Ryan 1 Year Adjusted Treasury Index for the 1 year FITRs, by no 
more than 2 months from the duration of the Ryan 2 Year Treasury Index 
for the 2 year FITRs, by no more than 6 months from the duration of the 
Ryan 5 Year Treasury Index for the 5 year FITRs, and by no more than 6 
months from the duration of the Ryan 10 Year Treasury Index for the 10 
year FITRs. If an Index Fund does not meet those standards at the close 
of trading on any Business Day, the portfolio of such Fund will be 
brought into compliance as quickly as practicable.
5. Sales of FITRs
    FITRs of an Index Fund will be issued and sold only in Creation 
Unit Aggregations of a fixed number of shares (e.g., 50,000 shares), as 
specified in the prospectus for such Fund. Creation Unit Aggregations 
will be sold through the Distributor on a continuous basis at the NAV 
per share next determined after an order in proper form is received. 
The NAV of each Index Fund is expected to be determined as of the close 
of the regular trading session on the New York Stock Exchange 
(``NYSE''), (ordinarily 4:00 p.m., (ET))\21\ on each Business Day 
(defined immediately below), and the Trust will sell and redeem 
Creation Unit Aggregations of each Index Fund only on Business 
Days.\22\
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    \21\ The nominal ``closing time'' for the Government Securities 
markets is generally 3:00 p.m., ET. Trading; however, although less 
active, continues in such markets after 3:00 p.m., ET.
    \22\ A ``Business Day'' is defined as any day that the (i) 
Government Securities markets in the United States, (ii) the 
Custodian and (iii) the NYSE, the Amex or relevant other exchange 
(as described in the Application) are open for business. The term 
Business Day, therefore does not include certain federal holidays 
when banks and the Government Securities market are closed but 
national securities exchanges are open, currently Columbus Day and 
Veterans Day.
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    Creation Unit Aggregations may be purchased only by or through an 
``Authorized Participant'' which is any entity that is a DTC 
Participant, which has entered into a Participant Agreement (defined 
below) with the Administrator and the Distributor. Such Authorized 
Participant will agree pursuant to the terms of such agreement (a 
``Participant Agreement'') on behalf of itself or any investor on whose 
behalf it will act, as the case may be, to certain conditions, 
including that such Authorized Participant will make available for each 
purchase of Creation Unit Aggregations an amount of cash sufficient to 
pay the Balancing Amount, once the NAV of a Creation Unit Aggregation 
is next determined after receipt of the purchase order in proper form, 
together with a Transaction Fee imposed by each Fund in connection with 
effecting purchases or redemptions. The Authorized Participant may 
require an investor to enter into an agreement with such Authorized 
Participant with respect to certain matters, including payment of the 
Balancing Amount. An investor does not have to be an Authorized 
Participant, but must place an order through, and make appropriate 
arrangements with, an Authorized Participant. An Authorized Participant 
is not required to be a member of the Exchange.
    The Applicant states that in order to keep costs low and permit 
each Index Fund to be as fully invested as possible, FITRs of each 
Index Fund generally will be purchased in Creation Unit Aggregations in 
exchange for the purchaser's ``in-kind'' deposit of a portfolio of 
particular securities (``Deposit Securities''), together with the 
deposit of a specified cash payment (``Balancing Amount'')(collectively 
with the Deposit Securities, a ``Portfolio Deposit''). The Deposit 
Securities will consist of a portfolio of particular securities 
designated by the Advisor in the aggregate to closely match the total 
return of the relevant Underlying Index.\23\
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    \23\ The Custodian of each Index Fund will make available, prior 
to the Exchange's opening, the Creation List identifying Deposit 
Securities required for a Creation Unit aggregation. See 
Dissemination of Fund Information, below.

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[[Page 67669]]

    The Balancing Amount is an amount equal to the difference between 
(1) The NAV (per Creation Unit Aggregation) of the Index Fund and (2) 
the total aggregate market value (per Creation Unit Aggregation) of the 
Deposit Securities (such sum referred to herein as the ``Deposit 
Amount''). The Balancing Amount serves the function of compensating for 
differences, if any, between the NAV per Creation Unit Aggregation and 
the Deposit Amount.
6. Redemption of FITRs
    It is presently expected that redemptions of Creation Unit 
Aggregations generally will be made by each Index Fund through delivery 
of designated Portfolio Securities (``Redemption Securities'') and a 
specified cash payment (``Cash Redemption Payment'') collectively, a 
``Redemption Payment.'' The Custodian, upon receipt of the relevant 
information from the Advisor, will cause to be published daily the list 
of Deposit Securities which a creator of Creation Unit Aggregations 
must deliver to an Index Fund (``Creation List'') and the list of 
Redemption Securities which a redeemer will receive from the Index Fund 
(``Redemption List'').
    The Applicants note that in some circumstances it may not be 
practicable or convenient for an Index Fund to operate on an in-kind 
basis exclusively. Therefore, the Trust may permit, in its discretion, 
with respect to an Index Fund, under certain circumstances, an ``in-
kind'' purchaser to substitute cash in lieu of depositing some or all 
of the requisite Deposit Securities. The Trust reserves the right to 
determine in the future that FITRs of an Index Fund may be purchased in 
Creation Unit Aggregations on a ``cash-only'' basis. The decision to 
permit cash-only purchases of Creation Unit Aggregations, to the extent 
made at all in the future, would be made if the Trust and the Advisor 
believed such method would reduce the Trust's transaction costs or 
would enhance the Trust's operating efficiency. This would likely 
happen only in limited circumstances.
    The Custodian will make available through the National Securities 
Clearing Corporation (``NSCC'') on each Business Day, prior to the 
opening of trading on the Amex (currently 9:30 a.m. ET) the Creation 
List which will contain the names and the required number and maturity 
of the Deposit Securities included in the current Portfolio Deposit 
(based on information at the end of the previous Business Day) for each 
Index Fund. Such Portfolio Deposit will be applicable, subject to any 
adjustments to the Balancing Amount as described below, in order to 
effect purchases of Creation Unit Aggregations of a given Index Fund 
until such time as the next-announced Portfolio Deposit composition is 
made available.
    Creation Unit Aggregations of each Index Fund will be redeemable at 
their NAV per FITR next determined after receipt of a request for 
redemption by the relevant Index Fund. Each Index Fund has, pursuant to 
its organizational documents, the right to make redemption payments in 
respect of an Index Fund in cash, in-kind, or in a combination of each, 
provided the value of its redemption payments on a Creation Unit 
Aggregation basis equals the NAV per the appropriate number of FITRs of 
such Index Fund.
    Applicants currently contemplate that Creation Unit Aggregations of 
each Index Fund will be redeemed principally ``in-kind'' by the 
delivery of Redemption Securities (together with the Cash Redemption 
Payment). Creation Unit Aggregations of any Index Fund will generally 
be redeemable on any Business Day in exchange for the Cash Redemption 
Payment and Redemption Securities in effect on the date a request for 
redemption is made, along with payment of a Transaction Fee. In 
addition, just as the Balancing Amount is delivered by the purchaser of 
Creation Unit Aggregations to the Index Fund, the Index Fund will also 
deliver to the redeeming beneficial owner (through the Authorized 
Participant) in cash the Cash Redemption Payment, which on any given 
Business Day will be an amount calculated in the same manner as that 
for the Balancing Amount, although the actual amounts may differ if the 
Redemption List is not identical to the Creation List. To the extent 
that the Redemption Securities on the Redemption List have a value 
greater than the NAV of FITRs being redeemed, a cash payment equal to 
the differential is required to be paid by the redeeming beneficial 
owner (through the Authorized Participant) to the Index Fund. The Index 
Fund will transfer the Cash Redemption Payment and the Redemption 
Securities to the redeeming beneficial owner on T+1, which is the 
Business Day following the Transmittal Date on which request for 
redemption is made. The Index Fund may also make redemptions in ``cash 
in lieu'' of transferring one or more Redemption Securities to a 
redeemer if the Index Fund determines, in its discretion, that such 
method is warranted in the interest of such fund.
7. Passive Management of the Index Funds
    The Applicant characterizes the Index Funds as being passively 
managed. According to the Applicants, passive strategies attempt to 
track the performance of an underlying benchmark with a stated minimum 
degree of precision. The analytics behind these strategies focus on 
reducing negative benchmark tracking differences by bringing a fund's 
portfolio cash flows in line with those of its benchmark index. In 
contrast, active managers seek to outperform the benchmark by taking 
risks involving departures from the benchmark. According to the 
Applicants, the FITRs' index tracking objective and methodology 
identifies and classifies the FITRs with other index-based ETFs and 
fixed income index funds. The Applicants states that any incidental 
out-performance of an Index Fund's Underlying Index will be achieved 
without taking significant interest rate or credit risk; the Advisor 
will look for securities lending and valuation opportunities in cash 
flow packaging or will use instruments with similar cash flows which 
are temporarily selling at attractive prices. Applicants note that 
these are all common fixed income index fund techniques.
8. The FITRs and Creation Unit Aggregation Clearing Process
    FITRs traded in the secondary market will be cleared and settled on 
a ``regular way'' basis, currently on T+3, through DTC and NSCC and 
therefore, these transactions will be processed and settled pursuant to 
DTC and NSCC procedures including the NSCC guarantee of settlement 
within the NSCC system. The Amex provides daily trade data to the NSCC 
for clearing in accordance with NSCC rules and procedures.
    Purchases and redemptions of Creation Unit Aggregations of FITRs 
will settle according to the government securities markets' convention 
of T+1 settlement. Creation Unit Aggregations of FITRs will be debited 
or credited directly by BNY, as Transfer Agent, in the DTC accounts of 
the Authorized Participants. BNY will effect the Fund's side of the 
transaction (issuance of the FITRs owed to the Authorized Participant 
in the case of a creation, and the transfer of Redemption Securities to 
the Authorized Participant in the case of a redemption) only after 
confirmation of receipt of the Authorized Participant's incoming cash 
and/or security transfer (Deposit Securities and Balancing Amount in 
the case of a creation, and

[[Page 67670]]

a Creation Unit Aggregation of FITRs and Cash Redemption Payment in the 
case of a redemption).
    When purchasing FITRs in Creation Unit Aggregations, the Authorized 
Participant will tender to BNY in its capacity as Custodian, the 
Deposit Securities through Fedwire, the Government Securities Clearing 
Corporation or any other means acceptable to BNY for the delivery of 
Government Securities and Balancing Amount by any means acceptable to 
BNY. As Transfer Agent, BNY will observe the pending receipt of any 
Balancing Amount and the Deposit Securities go ``final'' on its 
settlement system, and take the necessary steps to release the FITRs in 
Creation Unit Aggregations and credit them in real time to the 
Authorized Participant's DTC account, completing the transaction. Once 
such FITRs are acknowledged and credited by DTC, the delivery will go 
``final'' and appear in the Authorized Participant's DTC account, all 
on T+1.
    Alternatively, Creation Unit Aggregations may be purchased by an 
Authorized Participant in advance of receipt by BNY of all or a portion 
of the applicable Deposit Securities. In these circumstances, the 
Authorized Participant must deposit with BNY, as Custodian, cash in an 
amount equal to the sum of (i) the Balancing Amount, plus (ii) 105% of 
the market value of any, or all, of the undelivered Deposit Securities 
(the ``Additional Cash Deposit''). An additional amount of cash will 
be, required to be deposited with BNY pending delivery of the missing 
Deposit Securities to the extent necessary to maintain the Additional 
Cash Deposit with BNY in an amount at least equal to 105% of the daily 
market-to-market value of the missing Deposit Securities. To the extent 
that missing Deposit Securities are not received by 1:00 p.m., ET, on 
the first Business Day next following the day on which the purchase 
order is deemed received by the Distributor or in the event a market-
to-market payment is not made within one Business Day following 
notification by the Distributor that such a payment is required, the 
Trust may instruct BNY to use the cash on deposit to purchase the 
missing Deposit Securities in order to complete the purchase order. The 
Authorized Participant will be liable to the Trust and Fund for the 
costs incurred by the Trust in connection with any such purchases. 
These costs will include the amount by which the actual purchase price 
of the Deposit Securities exceeds the market value of such Deposit 
Securities on the day the purchase order was deemed received by the 
Distributor plus the brokerage and related transaction costs associated 
with such purchases. BNY will return any unused portion of the 
Additional Cash Deposit once all of the missing Deposit Securities have 
been properly received by BNY or purchased by the Trust and deposited 
into the Trust.
    When redeeming FITRS in Creation Unit Aggregations the Authorized 
Participant will transfer to BNY, as Transfer Agent for cancellation, 
the requisite amount of FITRs through DTC. The Authorized Participant 
will deliver to BNY as Custodian a cash payment equal to any 
differential that is required to be paid through the Fedwire. BNY will 
then transfer the requisite Redemption Securities and any Cash 
Redemption Payment for receipt by the Authorized Participant on T+1.
    In all instances, if an order is not placed in proper form or 
federal funds in the appropriate amount are not received in accordance 
with the terms of the Participant Agreement, BNY may reject the order.
9. Dividend Distributions
    Dividends from net investment income will be declared and paid at 
least annually by each Index Fund in the same manner as by other open-
end investment companies. Certain of the Index Funds may pay dividends 
on a semi-annual or more frequent basis. Distributions of realized 
securities gains, if any, generally will be declared and paid once a 
year. The dividend amount paid by each Index Fund will be made 
available on http://www.amextrader.com.
    The Trust will not make the DTC book-entry Dividend Reinvestment 
Service available for use by beneficial owners for reinvestment of 
their cash proceeds, but certain individual brokers may make a dividend 
reinvestment service available to their clients. The Statement of 
Additional Information (``SAI'') will inform investors of this fact and 
direct interested investors to contact such investor's broker to 
ascertain the availability and a description of such a service through 
such broker.
    The Trust will furnish notifications with respect to each 
distribution and an annual notification as to the tax status of such 
Fund's distributions to the DTC Participants for distribution to 
beneficial owners of FITRs of each Index Fund. The Trust will also 
distribute its annual report containing audited financial statements 
and copies of annual and semi-annual shareholder reports to the DTC 
Participants for distribution to beneficial owners of FITRs.
10. Dissemination of Fund Information
    The Custodian of each Index Fund, through NSCC, will make available 
prior to the opening on the Exchange on each Business Day, the Creation 
List identifying by name and quantity the Deposit Securities required 
for a Creation Unit Aggregation, the Redemption List identifying by 
name and quantity the Redemption Securities for such Index Fund, as 
well as information regarding the Balancing Amount and the Cash 
Redemption Payment. The NAV for each Index Fund will be calculated and 
disseminated on each Business Day by the Custodian in the manner 
described in the SAI for each such Fund. On Business Days, the Amex 
with respect to each Index Fund intends to disseminate, every 15 
seconds, during regular Amex trading hours, through the facilities of 
the Consolidated Tape Association (``CTA''), Network B, an amount per 
FITR for each Index Fund.
    In this regard, the Amex will disseminate an amount per FITR every 
15 seconds, as stated above, for each Index Fund representing its 
approximate intraday value: The IntraDay Proxy Value (``IDPV''). The 
data used to provide the IDPV for FITRs will come from third party 
pricing sources that frequently obtain dealers' yield quotes for the 
OTR Treasuries and also for the quoted spreads applicable to various 
off the run Treasuries and other government securities.
    The IDPV will be calculated by the Amex but it will not be 
calculated on days the Government Securities markets are closed and the 
Amex is open. To calculate the IDPV, the Amex intends to obtain primary 
pricing information from Reuters but may use other or additional third-
party pricing sources in the event that Reuters' pricing information 
becomes unavailable.\24\ The Amex will not be involved in, or 
responsible for, the calculation of the estimated Balancing Amount nor 
will it guarantee the accuracy or completeness of the IDPV. Neither the 
Trust nor any Index Fund will be involved in, or responsible for, the 
calculation or dissemination of

[[Page 67671]]

the IDPV, and will make no warranty as to its accuracy.
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    \24\ Applicants have chosen to use Reuters initially, as the 
source for primary bond pricing information because it is a major 
provider of financial data information, including bond-pricing 
information. Applicants have been advised that Reuters obtains 
Government Securities pricing information directly from major 
participants in the government securities markets and updates such 
information on a frequent basis. In the future, another third-party 
pricing data provider may be utilized if Applicants believe that 
such source provides equivalent or more accurate data, and such a 
change in the primary data provider will be fully disclosed.
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    The Trust intends to maintain a website that will include the 
Prospectus and SAI, as well as additional quantitative information on a 
per FITR basis, including, but not limited to: (a) The prior Business 
Day's NAV and the bid price (the ``Bid Price'') \25\ at the time of 
calculation of such NAV, and a calculation of the premium or discount 
of the Bid Price against such NAV; and (b) data in chart format 
displaying the frequency distribution of discounts and premiums of the 
daily Bid Price against the NAV, within appropriate ranges, for each of 
the previous calendar quarters. The Amex intends to disseminate a 
variety of data with respect to each Index Fund listed on the Amex on a 
daily basis by means of CTA and CQ High Speed Lines; information with 
respect to recent NAV, dividends, shares outstanding, estimated cash 
amount, and total cash amount per Creation Unit Aggregation will be 
made available daily prior to the opening of the Amex. When and if 
yield and spread quotations for each Index Fund are made available, 
they will not be disseminated by the Index Fund. However, the yields of 
the underlying OTR Treasuries are widely available through various 
quotation services (e.g., Bloomberg, Reuters, ILX Systems).
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    \25\ The Bid Price per FITR of an Index Fund is determined using 
the highest bid price on the Exchange on which FITRs of such Index 
Fund are listed for trading as of the time of calculation of such 
Index Fund's NAV.
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    The Exchange states that daily and 3:00 p.m. market prices of each 
Index Fund's Deposit Securities are readily available from a variety of 
sources, including, as applicable, the Exchange, automated quotation 
systems, published or other public sources or on-line information 
services such as Dow Jones Capital Markets, Bridge and Bloomberg. 
Similarly, the Exchange states that information regarding market prices 
and volume of FITRs will be broadly available on a real time basis 
throughout the trading day. Information on the Underlying Indices will 
be limited or unavailable on days when the Government Securities 
markets are closed. The previous day's closing price and volume 
information for FITRs will be published daily in the financial sections 
of many newspapers.
11. Criteria for Initial and Continued Listing
    FITRs are subject to the criteria for initial and continued listing 
of Index Fund Shares in Rule 1002A. A minimum of two Creation Units 
(e.g., 50,000 FITRs per Creation Unit) will be required to be 
outstanding at the start of trading. This minimum number will be 
comparable to requirements that have been applied to previously listed 
series of Portfolio Depositary Receipts and Index Fund Shares.
    The Exchange believes that the proposed minimum number of Shares 
outstanding at the start of trading is sufficient to provide market 
liquidity and to further the Fund's objective to seek to provide 
investment results that correspond generally to the price and yield 
performance of the applicable Index.
12. Original and Annual Listing Fees
    The Amex original listing fee applicable to the listing of FITRs is 
$5,000 for each Index Fund. In addition, the annual listing fee 
applicable to the Fund under Section 141 of the Amex Company Guide will 
be based upon the year-end aggregate number of outstanding shares in 
all Index Funds of the Trust listed on the Exchange.
13. Stop and Stop Limit Orders
    Amex Rule 154, Commentary .04(c) provides that stop and stop limit 
orders to buy or sell a security (other than an option, which is 
covered by Rule 950(f) and Commentary thereto) the price of which is 
derivatively priced upon another security or index of securities, may 
with the prior approval of a Floor Official, be elected by a quotation, 
as set forth in Commentary .04(c) (i-v). The Exchange has designated 
Index Fund Shares, including FITRs as eligible for this treatment.\26\
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    \26\ See Securities Exchange Act Release No. 29063, note 9 
(April 10, 1991), 56 FR 15652 (April 17, 1991) (File No. SR-Amex-90-
31) regarding Exchange designation for equity derivative securities 
as eligible for such treatment under Rule 154, Commentary .04(c).
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14. Rule 190
    Rule 190, Commentary .04 applies to Index Fund Shares listed on the 
Exchange, including FITRs. Commentary .04 states that nothing in Rule 
190(a) should be construed to restrict a specialist registered in a 
security issued by an investment company from purchasing and redeeming 
the listed security, or securities that can be subdivided or converted 
into the listed security, from the issuer as appropriate to facilitate 
the maintenance of a fair and orderly market.
15. Prospectus Delivery
    The Exchange, in an Information Circular to Exchange members and 
member organizations, will inform members and member organizations, 
prior to commencement of trading, of the applicable Product Description 
delivery obligation to investors purchasing FITRs. The Trust's 
Application included a request for an exemptive order granting relief 
from certain prospectus delivery requirements under section 24(d) of 
the 1940 Act,\27\ which the Commission granted.\28\ Therefore, Amex 
Rule 1000A, Commentary .03 applies. The product description used in 
reliance on the section 24(d) exemption will comply with all 
representations made therein and all conditions thereto.
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    \27\ See Investment Company Act Release No. 25725 (September 3, 
2002) , 67 FR 57464 (September 10, 2002).
    \28\ See Investment Company Act Release No. 25759 (September 27, 
2002).
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16. Trading Halts
    In addition to other factors that may be relevant, the Exchange may 
consider factors such as those set forth in Rule 918C (b) in exercising 
its discretion to halt or suspend trading in Index Fund Shares, 
including FITRs. These factors would include, but are not limited to: 
(1) The extent to which trading is not occurring in securities 
underlying the index; or (2) whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\29\ In addition, trading in Shares will be halted 
if the circuit breaker parameters under Amex Rule 117 have been 
reached.
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    \29\ See Amex Rule 918C.
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17. Suitability
    Prior to commencement of trading, the Exchange will issue an 
Information Circular informing members and member organizations of the 
characteristics of the Index Funds and of applicable Exchange rules, as 
well as of the requirements of Amex Rule 411 (Duty to Know and Approve 
Customers).
18. Purchases and Redemption in Creation Unit Size
    In the Information Circular referenced above, members and member 
organizations will be informed that procedures for purchases and 
redemptions of Shares in Creation Unit Size are described in the Fund 
prospectus and Statement of Additional Information, and that Shares are 
not individually redeemable but are redeemable only in Creation Unit 
Size aggregations or multiples thereof.
19. Surveillance
    Exchange surveillance procedures applicable to trading in the 
proposed FITRs are comparable to those

[[Page 67672]]

applicable to other Index Fund Shares currently trading on the 
Exchange. The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the FITRs.\30\
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    \30\ Telephone conversation between Michael Cavalier, Associate 
General Counsel, American Stock Exchange and Florence Harmon, Senior 
Special Counsel, and Marc McKayle, Special Counsel, Division of 
Market Regulation, Commission, on October 28, 2002.
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Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Exchange Act,\31\ in general, and furthers the 
objectives of section 6(b)(5),\32\ 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 regulating, clearing, 
settling, processing information with respect to, and facilitating 
transaction in securities, and in general to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78f.
    \32\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

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. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful review, the Commission finds that implementation of 
the proposed rule change is consistent with the requirements of section 
6 of the Exchange Act,\33\ and the rules and regulations thereunder 
applicable to a national securities exchange.\34\ Specifically, the 
Commission believes that the proposal is consistent with section 
6(b)(5) of the Exchange Act.\35\ The Commission believes that the 
Exchange's proposal to list and trade FITRs will provide investors with 
a convenient way of participating in the investment grade government 
debt securities.\36\ The Exchange's proposal should help to provide 
investors with increased flexibility in satisfying their investment 
needs by allowing them to purchase and sell securities at negotiated 
prices throughout the business day that replicate the performance of 
several portfolios of fixed income securities. The Commission believes 
that the availability of the FITRs will provide an instrument for 
investors to achieve desired investment results that correspond 
generally to the price and yield performance of the underlying U.S. 
Treasury, Government/Credit, or Corporate Bond Index. The investment 
objective of each FITRs will be to provide investment results that 
correspond generally to the price and yield performance of the 
underlying index based on fixed income securities. Accordingly, the 
Commission finds that the Exchange's proposal will facilitate 
transactions in securities, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, protect investors and the public interest, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.\37\
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    \33\ 15 U.S.C. 78f.
    \34\ 15 U.S.C. 78f(b)(5).
    \35\ Id.
    \36\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \37\ Pursuant to Section 6(b)(5) of the Act, the Commission must 
predicate approval of exchange trading for new products upon a 
finding that the introduction of the product is in the public 
interest. Such a finding would be difficult with respect to a 
product that served no investment, hedging or other economic 
functions, because any benefits that might be derived by market 
participants would likely be outweighed by the potential for 
manipulation, diminished public confidence in the integrity of the 
markets, and other valid regulatory concerns.
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    The Commission finds that because of the nature of the particular 
debt securities to be included in the portfolios of the Index Fund 
Shares (i.e., U.S. Government securities and investment grade 
government debt securities), the pricing information should be 
available. The Exchange has indicated that the underlying indexes are 
widely disseminated by various media such as Bloomberg, Reuters, Dow 
Jones Telerate. Additional analytical data and pricing information may 
also be obtained through vendors such as Barrons, the New York Times, 
Grants Interest Rate Observer, and Bondweek. In addition, the Ryan 
indexes are published daily on two Ryan websites.\38\
---------------------------------------------------------------------------

    \38\ See note 14, supra.
---------------------------------------------------------------------------

    The Commission also believes that pricing information for the 
Treasury securities should also be available. Quote and trade 
information regarding Treasury securities is widely available to market 
participants from a variety of sources. The electronic trade and quote 
systems of the dealers and inter-dealer brokers are one such source. 
Groups of dealers and inter-dealer brokers also furnish trade and quote 
information to vendors such as Bloomberg, Reuters, Bridge, Moneyline, 
Telerate, and CQG.\39\
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    \39\ The Commission notes that the underlying index value is not 
disseminated every 15 seconds in contrast to the IDPV and notes that 
this is predicated on the income components in this product.
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    The Commission has also granted the issuer, ETF Advisors Trust, 
exemptive relief from section 24(d) of the 1940 Act \40\ so that 
dealers may effect secondary market transaction in Barclays ETF shares 
without delivery of a prospectus to the purchaser. Instead, under the 
exemption and under Amex's listing standards, sales in the secondary 
market must be accompanied by a ``product description,'' describing the 
ETF and its shares. The Commission believes a product description, 
which not only highlights the basic characteristics of the product and 
the manner in which the ETF shares trade in the secondary market, but 
also highlights the differences of the Index Fund Shares from existing 
equity ETFs and notes the unique characteristics and risks of this 
product, should provide market participants with adequate notice of the 
salient features of the product.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 80a-24(d).
---------------------------------------------------------------------------

    The Commission also notes that upon the initial listing of any ETF 
under Amex Rule 1000A the Exchange issues a circular to its members 
explaining the unique characteristics and risks of the security; in 
this instance, Fixed Income ETFs. In particular, the circular should 
include, among other things, a discussion of the risks that may be 
associated with the Index Fund Shares, in addition to details on the 
composition of the fixed income indices upon which they are based and 
how each Index Fund Shares would use a representative sampling strategy 
to track its index. The circular also should note Exchange members' 
responsibilities under Exchange Rule 411 (``know your customer rule'') 
regarding transactions in such Fixed Income ETFs. Exchange Rule 411 
generally requires that members use due diligence to learn the 
essential facts relative to every customer, every order or account 
accepted.\41\ The circular also will address members' prospectus 
delivery requirements as well as highlight the characteristics of 
purchases in Index Fund Shares, including that they only are redeemable 
in Creation Unit size aggregations. Based on these factors, the

[[Page 67673]]

Commission finds that the proposal to trade the Index Fund Shares is 
consistent with Section 6(b)(5) of the Exchange Act.\42\
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    \41\ Amex Rule 411.
    \42\ 15 U.S.C. 78f(b)(f).
---------------------------------------------------------------------------

    The Commission also notes that the Exchange's rules and procedures 
should address the special concerns attendant to the trading of new 
derivative products. In particular, by imposing the Index Fund Share 
listing standards in Amex Rule 1000A, and addressing the suitability, 
disclosure, and compliance requirements noted above, the Commission 
believes that the Exchange has addressed adequately the potential 
problems that could arise from the derivative nature of the FITRs.
    In particular, the Commission finds that adequate rules and 
procedures exist to govern the trading of Index Fund Shares, including 
FITRs. Index Fund Shares will be deemed equity securities subject to 
Amex rules governing the trading of equity securities. These rules 
include: General and Floor Rules, such as priority, parity, and 
precedence of orders, market volatility related trading halt provisions 
pursuant to Rule 117, members dealing for their own accounts, 
specialists, odd-lot brokers, and registered traders, and handling of 
orders and reports; \43\ Office Rules, such as conduct of accounts, 
margin rules, and advertising; \44\ and Contracts in Securities, such 
as duty to report transactions, comparisons of transactions, marking to 
the market, delivery of securities, dividends and interest, closing of 
contracts, and money and security loans.\45\ The Amex also will 
consider halting trading in any series of Index Funds Shares under 
certain other circumstances including those set forth in Amex Rule 
918C(b)(4) regarding the presence of other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market. The Commission believes that the application of these rules 
should strengthen the integrity of the FITRs.
---------------------------------------------------------------------------

    \43\ Amex Rules 1-236.
    \44\ Amex Rules 300-590.
    \45\ Amex Rules 700-891.
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    The Commission believes that the Amex has appropriate surveillance 
procedures in place to detect and deter potential manipulation for 
similar index-linked products. By applying these procedures to the 
FITRs, the Commission believes that the potential for manipulation 
should be minimized, while protecting investors and the public 
interest.
    The Exchange requests that the proposed rule change be approved on 
an accelerated basis pursuant to section 19(b) of the Exchange Act.\46\ 
The Exchange believes there is good cause to grant accelerated approval 
insofar as the 1940 Act Application relating to the FITRs has been 
reviewed by the Division of Investment Management and notice of the 
Application has been published in the Federal Register.\47\ No comments 
were submitted and the Commission granted the relief requested in the 
Application.\48\ The FITRs will trade on the Exchange in the same 
manner as Index Fund Shares previously approved by the Commission, 
including Index Fund Shares based on an index of fixed income 
securities.\49\ The proposed rule change presents no novel issues with 
respect to trading of Index Fund Shares. The Exchange anticipates that 
FITRs will be in a position to begin trading on the Exchange prior to 
the 30-35 period for Commission action under section 19(b) of the 
Exchange Act \50\ and accelerated approval will permit Exchange trading 
to begin within the time frame established by the Trust. Based on the 
above, the Commission finds good cause to accelerate approval of the 
proposed rule change, as amended, prior to the thirtieth day after the 
date of publication of notice of filing thereof in the Federal 
Register. The Commission believes, therefore, that granting accelerated 
approval of the proposed rule change is appropriate and consistent with 
section 6 of the Act.\51\
---------------------------------------------------------------------------

    \46\ 15 U.S.C 78s(b).
    \47\ See Investment Company Act Release No. 25725 (September 3, 
2002), 67 FR 57464 (September 10, 2002).
    \48\ See Investment Company Act Release No. 25759 (September 27, 
2002).
    \49\ See Securities Exchange Act Release No. 46252 (July 24, 
2002), 67 FR 49715 (July 31, 2002).
    \50\ 15 U.S.C. 78s(b).
    \51\ 15 U.S.C. 78f.
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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 Exchange Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609. 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 will also be available for inspection and copying at the 
principal office of the Amex. All submissions should refer to File No. 
SR-AMEX-2001-32 and should be submitted by November 27, 2002.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Exchange Act,\52\ that the proposed rule change (File No. SR-Amex-2001-
32), as amended, is hereby approved on an accelerated basis.
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\53\
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    \53\ 17 CFR 200.3-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-28187 Filed 11-5-02; 8:45 am]
BILLING CODE 8010-01-P