[Federal Register Volume 72, Number 170 (Tuesday, September 4, 2007)]
[Notices]
[Pages 50705-50706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-17409]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56328; File No. SR-NYSEArca-2007-73]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change To Amend NYSE Arca Equities Rules 5.2(j)(3) 
(Investment Company Units) and Rule 8.100 (Portfolio Depositary 
Receipts) in Connection With the Dissemination of Information in 
Extended Hours Trading

August 28, 2007.
    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 26, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''), 
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 substantially 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 amend NYSE Arca Equities Rule 5.2(j)(3) 
(Investment Company Units) and Rule 8.100 (Portfolio Depositary 
Receipts) relating to dissemination of the index value and Intraday 
Indicative Value (``IIV'') (as defined in Commentary .01(c) to NYSE 
Arca Equities Rule 5.2(j)(3) and Commentary .01(c) to NYSE Arca 
Equities Rule 8.100) during the Core Trading Session.\3\
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    \3\ NYSE Arca Equities Rule 7.34(a) defines the trading hours on 
the NYSE Arca Marketplace.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nyse.com, at the Exchange's principal office, 
and at the Commission's Public Reference Room.

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
    NYSE Arca Equities Rule 7.34(a) provides for three equities trading 
sessions on the Exchange: The Opening Session (4 a.m. to 9:30 a.m. 
Eastern Time (``E.T.'')), the Core Trading Session (9 a.m. to 4 p.m. 
E.T.), and the Late Trading Session (4 p.m. to 8 p.m. E.T.).
    Currently, NYSE Arca Equities Rules 5.2(j)(3)(E) and 8.100(f) 
provide that the Exchange may designate a series of Investment Company 
Units (``Units'') and Portfolio Depository Receipts (``PDRs'' together 
with Units, referred to herein as exchange-traded funds or ``ETFs''), 
respectively, to trade during the Opening Session and Late Trading 
Session. For an ETF listed on NYSE Arca or traded on the Exchange 
pursuant to unlisted trading privileges (``UTP''), an updated current 
index value must be widely disseminated during the time the ETF trades 
on the Exchange.\4\ Current NYSE Arca Equities Rules 5.2(j)(3)(E) and 
8.100(f) also require that, for an ETF listed or traded on the Exchange 
on a UTP basis, an updated IIV be disseminated during the Core Trading 
Session and, if applicable, the Opening Session. Similar provisions 
relating to the dissemination of index value and IIV apply to Units and 
PDRs based on indexes or portfolios consisting of fixed income 
securities \5\ as well as indexes consisting of both equities and fixed 
income securities.\6\
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    \4\ See NYSE Arca Equities Rule 5.2(j)(3), Commentary .01(b)(2); 
8.100, Commentary. 01(b)(3). See also e-mail from Tim Malinowski, 
Director, NYSE Group, Inc. to Mitra Mehr, Special Counsel, Division 
of Market Regulation, Securities and Exchange Commission on August 
23, 2007 (``NYSEArca e-mail'').
    \5\ See NYSE Arca Equities Rule 5.2(j)(3), Commentary .02(b)(ii) 
and (c); NYSE Arca Equities Rule 8.100, Commentary .02 (b)(ii) and 
(c).
    \6\ See NYSE Arca Equities Rules 5.2(j)(3), Commentary 
.03(a)(ii) and (b); NYSE Arca Equities Rule 8.100, Commentary 
.03(a)(ii) and (b).
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    The Exchange proposes to permit securities listed or traded on the 
Exchange (including on a UTP basis) pursuant to Rule 19b-4(e) to be 
traded in all three trading sessions without the requirement to 
disseminate an IIV or index value.\7\ The Exchange, therefore, in this 
filing is proposing to delete as unnecessary NYSE Arca Equities Rule 
5.2(j)(3)(E) and NYSE Arca Equities Rule 8.100(f), which set forth the 
requirements for the dissemination of such information if the Exchange 
designates a series of Units or PDRs for trading during the Opening and 
Late Trading Sessions, respectively. In addition, the Exchange proposes 
to amend NYSE Arca Equities Rule 5.2(j)(3), Commentaries .01(b)(2) and 
.03(a)(ii), and NYSE Arca Equities Rule 8.100, Commentaries .01(b)(3) 
and .03(a)(ii), to specify that the current index value for a Unit or 
PDR listed or traded on the Exchange pursuant to UTP must be widely 
disseminated during the Core Trading Session, rather than any time the 
security trades on the Exchange

[[Page 50706]]

(i.e., the Opening Session and Late Trading Session). The Exchange also 
proposes to amend NYSE Arca Equities Rule 5.2(j)(3), Commentaries 
.01(c) and .02(c), and NYSE Arca Equities Rule 8.100, Commentaries 
.01(c) and .02(c), to clarify that the IIV must be updated during the 
Core Trading Session, and not both the Core Trading Sessions and the 
Opening Session.
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    \7\ See NYSEArca e-mail. See also NYSEArca-2007-73 (proposing to 
trade securities listed and/or traded on the Exchange on a UTP basis 
other than pursuant to Rule 19b-4(e) in all three trading sessions).
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    The Exchange intends to distribute to its ETP Holders and make 
available on its Web site at http://www.nyse.com a Regulatory 
Information Bulletin titled ``Exchange-Traded Funds--Extended Trading 
Hours'' that discloses, among other things that: (1) The current 
underlying index value and IIV may not be updated during the Opening 
Session and Late Trading Session; (2) the IIV may not be updated during 
the Opening Session and Late Trading Session; (3) lower liquidity in 
the Opening Session or Late Trading Session may impact pricing; (4) 
higher volatility in the Opening Session or Late Trading Session may 
impact pricing; (5) wider spreads may occur in the Opening Session and 
Late Trading Session; (6) the circumstances that trigger trading halts; 
(7) required customer disclosures; and (8) suitability requirements. In 
addition, the Exchange has amended NYSE Arca Equities Rule 7.34(e) 
(Customer Disclosures) to require ETP Holders to disclose to customers 
the additional risk associated with the lack of dissemination of the 
index value and the IIV during extended hours trading in ETFs.\8\
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    \8\ See Securities Exchange Act Release No. 56270 (August 15, 
2007), 72 FR 47109 (August 22, 2007) (NYSEArca-2007-74).
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    The Exchange believes that, with this additional disclosure, it is 
appropriate to permit trading during all Exchange trading sessions 
notwithstanding the absence of dissemination of an updated index value 
or IIV during all or part of the Opening and Late Trading Sessions. In 
addition, the Exchange notes that NYSE Arca Equities Rules 5.2(j)(3) 
and 8.100 would retain the requirement that, if the official index 
value does not change during some or all of the period when trading is 
occurring on the Exchange (for example, because of time zone 
differences or holidays in countries where the index component stocks 
trade), then the last calculated official index value must remain 
available throughout Exchange trading hours. Similarly, if the IIV does 
not change during any portion of Exchange trading hours, then the last 
official calculated IIV must remain available throughout the Exchange's 
trading hours.\9\
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    \9\ See NYSE Arca Equities Rules 5.2(j)(3), Commentary .01(b)(2) 
and (c); 8.100, Commentary .01(b)(3) and (c).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\10\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\11\ 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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 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 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

    Written comments on the proposed rule change were neither solicited 
nor received.

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 shall: (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 [email protected]. Please include 
File No. SR-NYSEArca-2007-73 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2007-73. 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 the 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-2007-73 and should 
be submitted on or before September 25, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Nancy M. Morris,
Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E7-17409 Filed 8-31-07; 8:45 am]
BILLING CODE 8010-01-P