[Federal Register Volume 70, Number 143 (Wednesday, July 27, 2005)]
[Notices]
[Pages 43488-43490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4000]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52081; File No. SR-NYSE-2005-44]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing and Order Granting Accelerated Approval to a Proposed 
Rule Change Relating to an Amendment to Section 703.16 of the Listed 
Company Manual Regarding Dissemination of Index Value and Indicative 
Value

July 20, 2005.
    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 June 23, 2005, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in items I and 
II below, which items have been prepared by the NYSE. The

[[Page 43489]]

Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons. In addition, the 
Commission is granting accelerated approval of the proposed rule 
change.
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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 NYSE proposes to amend section 703.16 (B)(3) of the Listed 
Company Manual (``Company Manual'') to provide that if a series of 
Investment Company Units (``ICUs'') is listed, or traded on the NYSE 
pursuant to unlisted trading privileges in reliance upon Rule 19b-4(e) 
under the Act,\3\ the current value of the underlying index must be 
widely disseminated by one or more major market data vendors or 
disseminated over the Consolidated Tape at least every 15 seconds 
during trading hours on the NYSE. The Exchange similarly seeks approval 
for the intraday ``estimate'' of a series of ICUs, sometimes known as 
the Intraday Indicative Value (``IIV'') or Intraday Optimized Portfolio 
Value (``IOPV'') to be widely disseminated by one or more major market 
data vendors or disseminated over the Consolidated Tape at least every 
15 seconds during NYSE trading hours for ICUs, currently 9:30 a.m. to 
4:15 p.m.\4\ In addition, the Exchange proposes to make a technical 
amendment to section 703.16(E) of the Company Manual to reflect that 
ICUs trade in increments of $.01 rather than in fractions. The text of 
the proposed rule change is available on the NYSE's Web site (http://www.nyse.com), at the principal office of the NYSE, and at the 
Commission's Public Reference Room.
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    \3\ 17 CFR 240.19b-4(e).
    \4\ Telephone conversation between Mike Cavalier, Assistant 
General Counsel, NYSE, and Florence Harmon, Senior Special Counsel, 
Division of Market Regulation, Commission, on July 12, 2005.
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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 NYSE included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it had received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
item III below. The NYSE 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 NYSE has adopted NYSE Rule 1100 (Investment Company Units) and 
Section 703.16 of the Company Manual, which set forth listing standards 
applicable to ICUs, and trading standards pursuant to which the 
Exchange may either list and trade ICUs or trade such ICUs on the 
Exchange on an unlisted trading privileges (``UTP'') basis. In 1996, 
the Commission approved section 703.16 of the Company Manual, which 
sets forth the rules related to the listing of ICUs.\5\ In 2000, the 
Commission also approved the Exchange's ``generic'' listing standards 
for listing and trading pursuant to Rule 19b-4(e) of the Act, or the 
trading pursuant to UTP, of ICUs under section 703.16 of the Company 
Manual and NYSE Rule 1100.\6\
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    \5\ See Securities Exchange Act Release No. 36923 (March 5, 
1996), 61 FR 10410 (March 13, 1996) (SR-NYSE-95-23).
    \6\ See Securities Exchange Act Release No. 43679 (December 5, 
2000), 65 FR 77949 (March 13, 2000) (SR-NYSE-00-46).
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    Section 703.16 of the Company Manual enumerates the criteria that 
must be met in order to commence trading ICUs pursuant to Rule 19b-4(e) 
of the Act. ICUs include securities representing an interest in a 
registered investment company organized as a unit investment trust or 
an open-end management investment company (commonly referred to as 
``Exchange-Traded Funds'' or ``ETFs''). Among these criteria is the 
requirement that the current value of the index underlying a series of 
ICUs be disseminated over the Consolidated Tape every 15 seconds during 
trading hours. Additionally, an estimated value for the ICU shares 
(sometimes called the IIV or IOPV) must be updated every 15 seconds on 
the Consolidated Tape during NYSE trading hours. The IIV (or IOPV) 
reflects an estimate of the value of the Fund's shares and may be based 
on the required deposit of securities plus any cash amount to permit 
creation of new shares of the series or upon the index value.\7\
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    \7\ The IIV reflects the current value of the Deposit Securities 
and the Cash Balancing Amount. For Funds that utilize a 
representative sampling strategy, the IIV may not reflect the value 
of all securities included in the Underlying Indexes. In addition, 
the IIV does not necessarily reflect the precise composition of the 
current portfolio of securities held by the Funds at a particular 
point in time. Therefore, the IIV on a per Fund share basis 
disseminated during the Exchange's trading hours should not be 
viewed as a real time update of the net asset value (``NAV'') of the 
Funds, which is calculated only once a day. Telephone conversation 
between Mike Cavalier, Assistant General Counsel, NYSE, and Florence 
Harmon, Senior Special Counsel, Division of Market Regulation, 
Commission, on July 12, 2005.
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    Widespread dissemination of the index value and IIV relating to a 
particular series of ICUs is important information for the investing 
public to have. However, the Exchange believes it is unnecessary that 
such dissemination be over the Consolidated Tape (Tape A or Tape B) in 
order to permit listing or trading under the expedited procedures 
permitted by Rule 19b-4(e) of the Act. Index values and other index 
information, such as the IIV (as calculated by an independent third 
party, known as a ``Value Calculator''), are widely available to the 
public and market participants through major vendors of financial 
information and market data, such as Reuters, ILX, and Bloomberg.
    The NYSE, therefore, proposes to amend the generic listing 
standards in Section 703.16 to permit listing or trading a series of 
ICUs under Rule 19b-4(e) of the Act \8\ if the current index value and 
IIV for that series is widely disseminated by one or more major market 
vendors or is disseminated over the Consolidated Tape at least every 15 
seconds during trading hours on the Exchange. Major market vendors 
would encompass those vendors that are well-known, accepted and 
reputable among securities market participants. The Exchange believes 
that the proposed rule change will continue to assure ready, widespread 
access to index information by the financial community and the 
investing public.
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    \8\ 17 CFR 240.19b-4(e).
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    In addition, the NYSE proposes to make a technical amendment to 
Section 703.16(E) of the Company Manual to reflect that ICUs currently 
trade in increments of $.01 rather than in fractions.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the provisions of section 6(b) of the Act,\9\ in general, and furthers 
the objectives of section 6(b)(5) of the Act,\10\ in particular, in 
that it is designed 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose

[[Page 43490]]

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. 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 [email protected]. Please include 
File Number SR-NYSE-2005-44 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NYSE-2005-44. 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 Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of the NYSE. 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 publicly available. All 
submissions should refer to File Number SR-NYSE-2005-44 and should be 
submitted on or before August 17, 2005.

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

    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 proposed 
rule change is consistent with section 6(b)(5) of the Act,\12\ which 
requires among other things, that the rules of the Exchange are 
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. The Commission believes that the proposed change would 
continue to provide for widespread availability of index information in 
connection with listing or trading ICUs under the generic standards in 
Section 703.16 of the Company Manual and will facilitate the 
utilization of the generic standards, while maintaining comparable or 
increased public availability of index information.\13\
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    \11\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ See Securities Exchange Act Release Nos. 51748 (May 26, 
2005), 70 FR 32684 (June 3, 2005) (SR-NASD-2005-024); and 51868 
(June 17, 2005), 70 FR 36672 (June 24, 2005) (SR-Amex-2005-44).
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    The NYSE has requested that the Commission find good cause for 
approving the proposed rule change prior to the thirtieth day after 
publication of notice thereof in the Federal Register. The Commission 
notes that it has recently approved similar proposals regarding the 
dissemination of the underlying index value for ICU's traded on Nasdaq 
and the American Stock Exchange LLC (``Amex'').\14\ The Commission 
believes that granting accelerated approval of the proposal will allow 
the NYSE to immediately implement these listing standards for 
dissemination of the underlying index value that already are in place 
on Nasdaq and the Amex, along with dissemination of the IIV through one 
or more major market vendors. Accordingly, the Commission finds good 
cause, pursuant to section 19(b)(2) of the Act,\15\ for approving the 
proposed rule change prior to the thirtieth day after the date of 
publication of notice thereof in the Federal Register.
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    \14\ Id.
    \15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-NYSE-2005-44) be, and hereby 
is, approved on an accelerated basis.
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    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-4000 Filed 7-26-05; 8:45 am]
BILLING CODE 8010-01-P