[Federal Register Volume 73, Number 140 (Monday, July 21, 2008)]
[Notices]
[Pages 42380-42385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-16614]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58161; File No. SR-Amex-2008-39]


Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Granting Approval of Proposed Rule Change, as Modified by Amendment No. 
1 Thereto, Relating to the Listing and Trading of Trust Issued Receipts 
That Directly Hold Investments in Certain Financial Instruments and To 
Permit the Listing and Trading of Shares of Fourteen Funds of the 
Commodities and Currency Trust

July 15, 2008.

I. Introduction

    On May 9, 2008, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') 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 seeking to: (1) Amend Commentary .07 to Amex Rule 
1202 to permit the listing and trading of certain trust issued receipts 
(``TIRs'') that directly hold any combination of investments including 
cash, securities, options on securities and indices, commodities, 
futures contracts, options on futures contracts, forward contracts, 
equity caps, collars, and floors, and swap agreements (collectively, 
``Financial Instruments''); and (2) list and trade the shares 
(``Shares'') of fourteen funds (``Funds'') of the Commodities and 
Currency Trust (``Trust'') based on certain commodity indexes, 
commodities, and currencies pursuant to Commentary .07 to Amex Rule 
1202, as proposed to be amended. On June 4, 2008, the Exchange filed 
Amendment No. 1 to the proposed rule change. The proposed rule change 
was published for comment in the Federal Register on June 12, 2008.\3\ 
The Commission received no comments regarding the proposal. This order 
approves the proposed rule change, as modified by Amendment No. 1 
thereto.
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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. 57932 (June 5, 2008), 
73 FR 33467 (``Notice'').
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II. Description of the Proposal

    The Exchange proposes to amend Commentary .07 to Amex Rule 1202 to 
permit the listing and trading of certain TIRs that directly hold any 
combination of investments in Financial Instruments.\4\ In addition, 
the Exchange proposes to list and trade the Shares of the Funds 
pursuant to Commentary .07 to Amex Rule 1202, as proposed to be 
amended.
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    \4\ The Exchange represents that permissible securities in 
connection with Financial Instruments would not include foreign 
equity securities.
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Proposed Amendments to Commentary .07 to Amex Rule 1202

    Commentary .07 to Amex Rule 1202 currently permits the Exchange to 
list and trade TIRs where the underlying trust holds ``Investment 
Shares.'' \5\ As a result, TIRs that are listed pursuant to current 
Commentary .07 to Amex Rule 1202 are required to be in the form of a 
``master-feeder'' structure, whereby the listed security holds or 
invests in the security of the fund that is investing in the prescribed 
financial instruments.
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    \5\ Investment Shares are defined in Commentary .07(b)(1) to 
Amex Rule 1202 as securities that are (a) issued by a trust, 
partnership, commodity pool, or other similar entity that invests in 
any combination of futures contracts, options on futures contracts, 
forward contracts, commodities, swaps or high credit quality short-
term fixed-income securities or other securities, and (b) issued and 
redeemed daily at net asset value (``NAV'') in amounts correlating 
to the number of receipts created and redeemed in a specified 
aggregate minimum number. See Commentary .07(a) to Amex Rule 1202. 
See also Securities Exchange Act Release No. 53105 (January 11, 
2006), 71 FR 3129 (January 19, 2006) (SR-Amex 2005-059) (approving, 
among other things, the adoption of Commentary .07 to Amex Rule 
1202).
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    As a result of a recent interpretation by the staff of the Internal 
Revenue Service relating to the inability to interpose a grantor trust 
in order to utilize a certain tax reporting form, the Exchange has been 
notified that the need for the current master-feeder structure set 
forth in Commentary .07 to Amex Rule 1202 is no longer necessary. The 
Exchange represents that there are no substantive differences between 
the proposed structure (TIRs directly holding Financial Instruments) 
and the current master-feeder structure (TIRs holding Investment Shares 
that invest in certain financial instruments). Amex states that its 
proposal would provide an alternative for issuers so that TIRs may be 
listed and traded on the Exchange that directly invest in or hold 
Financial Instruments, rather than through an additional security of a 
fund.
    Specifically, the proposal seeks to expand the application of 
Commentary .07 to Amex Rule 1202 to both Investment Shares and 
Financial Instruments. Accordingly, new Commentary .07(b)(4) to Amex 
Rule 1202 would be added to define ``Financial Instrument'' as any 
combination of cash, securities, options on securities and indices, 
commodities, futures contracts, options on futures contracts, forward 
contracts, equity caps, collars, and floors, and swap agreements. Amex 
seeks to add the term ``Financial Instrument'' to where the term 
``Investment Shares'' appears throughout Commentary .07 to Amex Rule 
1202 to indicate that TIRs directly holding Financial Instruments may 
be listed and traded on the Exchange.

Proposal To List and Trade the Shares of the Funds

    The Shares of each Fund will generally be subject to the Amex rules 
applicable to TIRs. The Shares represent common units of fractional 
undivided beneficial interests in, and ownership of, each Fund. Each 
Fund will invest the proceeds of its offering of Shares in various 
Financial Instruments that will provide exposure to the Funds' 
underlying currency, commodity, or commodity index, as applicable. In 
addition, the Funds will also maintain cash positions in cash or money 
market instruments for the purpose of collateralizing such positions 
taken in the Financial Instruments.
    Shares of seven of the Funds of the Trust will be designated as 
Ultra ProShares while the Shares of the other seven Funds of the Trust 
will be designated as UltraShort ProShares.\6\ Each of the Funds will 
have a distinct

[[Page 42381]]

investment objective. The Funds will attempt, on a daily basis, to 
achieve their investment objective by corresponding to a specified 
multiple or an inverse multiple of the performance of a particular 
benchmark commodities index, commodity, or currency (each an 
``Underlying Benchmark'' and collectively, the ``Underlying 
Benchmarks'').
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    \6\ The Funds are the: (1) Ultra DJ-AIG Commodity ProShares; (2) 
UltraShort DJ-AIG Commodity ProShares; (3) Ultra DJ-AIG Agriculture 
ProShares; (4) UltraShort DJ-AIG Agriculture ProShares; (5) Ultra 
DJ-AIG Crude Oil ProShares; (6) UltraShort DJ-AIG Crude Oil 
ProShares; (7) Ultra Gold ProShares; (8) UltraShort Gold ProShares; 
(9) Ultra Silver ProShares; (10) UltraShort Silver ProShares; (11) 
Ultra Euro ProShares; (12) UltraShort Euro ProShares; (13) Ultra Yen 
ProShares; and (14) UltraShort Yen ProShares. See Exhibit A to 
Amex's proposed rule change on Form 19b-4.
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    Six Funds will be based on the following Underlying Benchmark 
indexes: (1) The Dow Jones-AIG Commodity Index\SM;\ (2) the Dow Jones-
AIG Crude Oil Sub-Index\SM\; and (3) the Dow Jones-AIG Agriculture Sub-
Index\SM\ (each, an ``Underlying Index'' and collectively, the 
``Underlying Indexes''). Four Funds will be based on the following 
Underlying Benchmark commodities: (1) Gold; and (2) silver (each, an 
``Underlying Commodity'' and collectively, the ``Underlying 
Commodities''). Lastly, four Funds will be based on the following 
Underlying Benchmark currencies versus the U.S. dollar: (1) The Euro; 
and (2) the Japanese Yen (each, an ``Underlying Currency'' and 
collectively, the ``Underlying Currencies'').
    The Exchange proposes to list and trade the Shares of the Funds, 
that seek daily investment results, before fees and expenses, that 
correspond to twice (200%) the daily performance of the Underlying 
Benchmark (the ``Ultra Funds''). If each such Fund is successful in 
meeting its investment objective, the NAV \7\ of the Shares of each 
such Fund is expected to gain on a percentage basis, approximately 
twice as much as each such Fund's respective Underlying Benchmark when 
the price of the Underlying Benchmark increases on a given day, and 
should lose approximately twice as much when such price declines on a 
given day, before fees and expenses.
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    \7\ NAV means the total assets of a Fund including, but not 
limited to, all cash and cash equivalents or other debt securities, 
less total liabilities of such Fund, each determined on the basis of 
generally accepted accounting principles in the United States, 
consistently applied under the accrual method of accounting. In 
particular, NAV includes any unrealized profit or loss on open swaps 
and futures contracts and any other credit or debit accruing to a 
Fund but unpaid or not received by a Fund.
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    The Exchange also proposes to list and trade Shares of the Funds, 
that seek daily investment results, before fees and expenses that 
correspond to twice the inverse (-200%) of the daily performance of the 
Underlying Benchmark (the ``UltraShort Funds''). If each such Fund is 
successful in meeting its objective, the NAV of the Shares of each such 
Fund is expected to increase approximately twice as much, on a 
percentage basis, as the respective Underlying Benchmark loses on a 
given day, or should decrease approximately twice as much as the 
respective Underlying Benchmark gains when the Underlying Benchmark 
rises on a given day, before fees and expenses.
    Detailed discussions regarding each of the Underlying Benchmarks, 
the structure and management of the Funds, the investment objective for 
each of the Funds, the Portfolio Investment Methodology, policies and 
procedures for creating and redeeming Shares of the Funds, the Funds' 
investment techniques, and NAV, among others, can be found in the 
Notice.\8\ In addition, the Exchange states that the Registration 
Statement for each Fund will provide a detailed description, including, 
but not limited to, the structure, creation/redemption process, 
investment objective and strategies, characteristics, tax status, and 
distributions. Investors are directed to each Fund's Registration 
Statement for a complete explanation.
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    \8\See Notice, supra note 3. Terms used but not otherwise 
defined herein shall have the same meanings as referenced in the 
Notice.
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    Availability of Information Regarding the Shares. The Web sites for 
the Fund and/or the Exchange, which are publicly accessible at no 
charge, will contain the following information: (1) The daily current 
NAV per Share, the prior business day's NAV per Share, and the reported 
closing price; (2) the mid-point of the bid-ask price in relation to 
the NAV per Share as of the time it is calculated (the ``Bid-Ask 
Price''); \9\ (3) calculation of the premium or discount of such price 
against the NAV per Share; (4) data in chart form displaying the 
frequency distribution of discounts and premiums of the Bid-Ask Price 
against the NAV per Share, within appropriate ranges for each of the 
four previous calendar quarters; (5) the applicable prospectus; and (6) 
other quantitative information.
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    \9\ The Bid-Ask Price of Shares is determined using the highest 
bid and lowest offer as of the time of calculation of the NAV.
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    As described above, the NAV per Share will be calculated and 
disseminated daily.\10\ Amex will disseminate for the Funds on a daily 
basis by means of the Consolidated Tape Association/Consolidated 
Quotation High Speed Lines information with respect to the 
corresponding Indicative Fund Value (as discussed below), recent NAV 
per Share, and the number of Shares outstanding. The Exchange will also 
make available on its Web site daily trading volume of the Shares and 
closing prices of the Shares.
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    \10\ The Exchange stated that it would obtain a representation 
from the Trust, prior to the listing of the Shares, that the NAV per 
Share will be calculated daily and made available to all market 
participants at the same time.
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    Each Fund's total portfolio composition will be disclosed on the 
Web site of the Trust (http://www.proshares.com) or another relevant 
Web site as determined by the Trust and/or the Exchange. The Trust will 
provide Web site disclosure of portfolio holdings daily and will 
include, as applicable, the names and number of Financial Instruments 
and characteristics of such instruments and cash equivalents, and 
amount of cash held in the portfolio of each Fund. This Web site 
disclosure of the portfolio composition of each Fund will occur at the 
same time as the disclosure by the Managing Owner of the portfolio 
composition to Authorized Participants so that all market participants 
are provided portfolio composition information at the same time. 
Therefore, the same portfolio information will be provided on the 
public Web site as well as in electronic files provided to Authorized 
Participants. Accordingly, each investor will have access to the 
current portfolio composition of each Fund through the Trust's Web site 
and/or at the Exchange's Web site at http://www.amex.com.
    The value of each Underlying Benchmark will be updated intra-day on 
a real time basis as its components change in price. The daily closing 
index value and the percentage change in the daily closing index value 
for each Underlying Index will be publicly available on various Web 
sites, such as http://www.ino.com and http://www.finance.yahoo.com. Dow 
Jones will disseminate the levels for each of the Underlying Indexes at 
least every 15 seconds from 8 a.m. to 3 p.m. ET and will publish daily 
Underlying Index levels at approximately 5 p.m. ET each business day on 
its Web site at http://www.djindexes.com. Data regarding each 
Underlying Index is also available from the respective index provider 
to subscribers. In addition, data is also available regarding the 
underlying component commodities of each Underlying Index from those 
futures exchanges that list and trade futures contracts on those 
commodities. Several independent data vendors also package and 
disseminate index data in various value-added formats (including 
vendors displaying both index constituents and index levels and vendors 
displaying index levels only).
    Real-time dissemination of spot pricing for gold, silver, euro, and 
Japanese yen is available on a 24-hour basis worldwide from various 
major market data vendors. Data regarding spot pricing of the 
Underlying

[[Page 42382]]

Benchmark commodities (gold and silver) is publicly available on a 24-
hour basis from various financial information service providers, such 
as Reuters and Bloomberg. In addition, the daily London fix for gold 
and silver is also disseminated by various market data vendors and is 
available from the LBMA Web site at http://www.lbma.org.uk. The closing 
and settlement prices of the futures contracts held by the Funds are 
also readily available from CME, NYMEX, CBOT, ICE/NYBOT, LME, automated 
quotation systems, published or other public sources, or on-line 
information services such as Bloomberg or Reuters. There is 
considerable public price and data information regarding the Underlying 
Benchmark currencies (euro and Japanese yen). Spot pricing related to 
the foreign currency exchange is available to investors and market 
professionals on a 24-hour basis. A variety of public Web sites and 
professional and subscription services provide market and price 
information regarding the euro and the yen. Current spot prices are 
also generally available from foreign exchange dealers.
    To provide updated information relating to the Funds for use by 
investors, professionals, and persons wishing to create or redeem the 
Shares, the Exchange will disseminate an updated ``Indicative Fund 
Value.'' The Indicative Fund Value will be disseminated on a per-Share 
basis at least every 15 seconds during regular Amex trading hours of 
9:30 a.m. to 4 p.m. ET. The Indicative Fund Value will be calculated 
based on the cash required for creations and redemptions for a Fund, 
adjusted to reflect the price changes of the Financial Instruments.
    Criteria for Initial and Continued Listing. The Funds will be 
subject to the criteria in Commentary .07(d) of Amex Rule 1202 for 
initial and continued listing of the Shares. The Funds will accept 
subscriptions for Shares in Creation Units from Authorized Participants 
expected to be in a range from $20 to $70 per Share during an initial 
offering period, commencing with the initial effective date of the 
prospectus and terminating no later than the 90th day following such 
date, subject to certain exceptions. The anticipated minimum number of 
Shares for each Fund to be outstanding at the start of trading will be 
50,000 Shares. The Exchange represents that, for the initial and 
continued listing of the Shares, the Shares must be in compliance with 
Section 803 of the Amex Company Guide and Rule 10A-3 under the Act.\11\
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    \11\See 17 CFR 240.10A-3.
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    Trading Rules. The Shares are equity securities subject to Amex 
rules governing the trading of equity securities, including, among 
others, rules governing priority, parity, and precedence of orders, 
specialist responsibilities and account opening, and customer 
suitability (Amex Rule 411). Initial equity margin requirements of 50% 
will apply to transactions in the Shares. The Shares will trade on Amex 
until 4 p.m. ET each business day and will trade in a minimum price 
variation of $0.01 pursuant to Amex Rule 127-AEMI. Trading rules 
pertaining to odd-lot trading in Amex equities (Amex Rule 205-AEMI), 
stop and stop limit orders for securities that are derivatively priced 
(Amex Rule 154-AEMI), and the prevention of trade-through transactions 
of protected quotations (Amex Rule 126A-AEMI) will also apply to the 
Shares.
    Specialist transactions in the Shares made in connection with the 
creation and redemption of Shares will not be subject to the 
prohibitions of Amex Rule 190(a).\12\ The Shares will generally be 
subject to the Exchange's stabilization rule (Amex Rule 170), except 
that specialists may buy on ``plus ticks'' and sell on ``minus ticks,'' 
in order to bring the Shares into parity with (i) The underlying asset 
or commodity on which the Shares are based, (ii) the NAV of the Shares, 
or (iii) the futures contract(s) on the underlying asset or commodity 
on which the Shares are based.\13\
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    \12\ Amex Rule 190(a) states that no specialist or his member 
organization, or any member, officer, employee, or approved person 
therein, may, directly or indirectly, effect any business 
transaction with a company or any officer, director or 10% 
stockholder of a company in which stock the specialist is 
registered. See Commentary .05 to Amex Rule 190 (exempting 
specialists registered in a security issued by a trust, listed 
pursuant to, among other rules, Amex Rule 1202, from the 
requirements of Amex Rule 190(a)).
    \13\ See Commentary .07(f) to Amex Rule 1202.
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    The trading of the Shares will also be subject to certain conflict 
of interest provisions set forth in Commentary .07(e) to Amex Rule 
1202. Lastly, Commentary .07(g)(3) to Amex Rule 1202 prohibits the 
specialist in the Shares from using any material, non-public 
information received from any person associated with a member, member 
organization, or employee of such person regarding trading by such 
person or employee in the Underlying Index commodities, related 
futures, or options on futures, or any other related derivatives.
    Surveillance. The Exchange represents that its surveillance 
procedures are adequate to detect and deter violations of Exchange 
rules relating to the trading of the Shares. The surveillance 
procedures will be similar to those used for other commodity-based 
TIRs, Commodity-Based Trust Shares, Currency Trust Shares, and 
exchange-traded funds and will incorporate and rely upon existing Amex 
surveillance procedures governing options and equities.
    The Exchange represents that it currently has in place 
comprehensive surveillance sharing agreements with ICE, LME, and NYMEX 
for the purpose of providing information in connection with the trading 
in futures contracts traded on their respective exchanges comprising 
the Underlying Benchmarks, and notes that CBOT, CME, and NYBOT are 
members of the Intermarket Surveillance Group. As a result, the 
Exchange asserts that market surveillance information is available from 
relevant futures exchanges, if necessary, due to regulatory concerns 
that may arise in connection with the futures contracts
    Information Circular. Amex will distribute an Information Circular 
to its members in connection with the trading of the Shares. The 
Information Circular will discuss the special characteristics and risks 
of trading this type of security, such as commodity or currency 
fluctuation risk. Specifically, the Information Circular, among other 
things, will discuss: (1) What the Shares are and how Shares are 
created and redeemed; (2) the requirement that members and member firms 
deliver a prospectus to investors purchasing the Shares prior to or 
concurrently with the confirmation of a transaction, applicable Amex 
rules; (3) dissemination information and trading information; (4) 
applicable suitability rules;\14\ (5) that the Fund is subject to 
various fees and expenses described in the Registration Statement; (6) 
that there is no regulated source of last-sale information regarding 
physical commodities and currencies, that the SEC has no jurisdiction 
over the trading of physical commodities or currencies, and that the 
CFTC has regulatory jurisdiction over the trading

[[Page 42383]]

of futures contracts and options on futures contracts; (7) the 
procedures for purchases and redemptions of Shares and that Shares are 
not individually redeemable but are redeemable only in one or more 
Creation Units; (8) any relief, if granted, by the Commission from any 
rules under the Act; (9) that the trading hours of the Shares will be 
from 9:30 a.m. to 4 p.m. ET and that the NAV for the Shares will be 
calculated shortly after 4 p.m. ET each trading day; and (10) 
information about the Shares will be publicly available on the Amex Web 
site and the Funds' Web sites.
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    \14\ The Exchange notes that pursuant to Amex Rule 411, members 
and member organizations are required in connection with 
recommending transactions in the Shares to have a reasonable basis 
to believe that a customer is suitable for the particular investment 
given reasonable inquiry concerning the customer's investment 
objectives, financial situation, needs, and any other information 
known by such member. See Commentary .05 to Amex Rule 411 (providing 
heightened suitability requirements for derivative securities 
seeking to provide investment results that either exceed the 
performance of an underlying reference asset by a specified multiple 
or that correspond to the inverse (opposite) of the performance of 
an underlying reference asset by a specified multiple).
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    Trading Halts. The Exchange represents that the Information 
Circular will also inform members of Exchange policies regarding 
trading halts in the Shares. Specifically, trading in the Shares will 
be halted in the event the market volatility trading halt parameters 
set forth in Amex Rule 117 have been reached. Second, in addition to 
the parameters set forth in Amex Rule 117, the Exchange will halt 
trading in the Shares if trading in a significant number of underlying 
related futures contract(s) is halted or suspended. Third, the Exchange 
will halt trading if it becomes aware that a Fund's NAV or disclosure 
of the portfolio composition is not being disseminated or has not been 
disseminated to all market participants at the same time. Fourth, the 
Exchange will halt trading in the Shares if the value of an Underlying 
Benchmark is no longer calculated or available on at least a 15-second 
basis through one or more major market data vendors during the time the 
Shares trade on Amex or if an Indicative Fund Value per Share updated 
every 15 seconds is no longer calculated or available.\15\ Fifth, with 
respect to a halt in trading that is not specified above, the Exchange 
may also consider other relevant factors and the existence of unusual 
conditions or circumstances that may be detrimental to the maintenance 
of a fair and orderly market.
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    \15\ If the value of the Underlying Benchmark or the Indicative 
Fund Value is not being disseminated on at least a 15-second basis 
during the hours the Shares trade on the Exchange, the Exchange may 
halt trading during the day in which the interruption to the 
dissemination of the value of the Underlying Benchmark or the 
Indicative Fund Value occurs. If the interruption to the 
dissemination of the value of the Underlying Benchmark or the 
Indicative Fund Value persists past the trading day in which it 
occurred, the Exchange will halt trading no later than the beginning 
of the trading day following the interruption.
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III. Discussion

    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.\16\ In particular, the Commission believes that the proposal 
is consistent with Section 6(b)(5) of the Act,\17\ which requires, 
among other things, that the rules of a national securities exchange 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. The Commission notes that it has permitted the listing 
and trading of exchange-traded fund-like products linked to the 
performance of underlying currencies and commodities.\18\ The 
Commission further notes that the shares of other UltraFunds and 
UltraShort Funds based on various securities indexes have previously 
been approved by the Commission.\19\
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    \16\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ See, e.g., Securities Exchange Act Release Nos. 55632 
(April 13, 2007), 72 FR 19987 (April 20, 2007) (SR-Amex-2006-112) 
(approving the listing and trading of the United States Natural Gas 
Fund, LP); 53582 (March 31, 2006), 71 FR 17510 (April 6, 2006) (SR-
Amex 2005-127) (approving the listing and trading of the United 
States Oil Fund, LP); 53521 (March 20, 2006), 71 FR 14967 (March 24, 
2006) (SR-Amex 2005-072) (approving the listing and trading of the 
iShares Silver Trust); 53105 (January 11, 2006), 71 FR 3129 (January 
19, 2006) (SR-Amex 2005-059) (approving the listing and trading of 
the DB Commodity Index Tracking Fund); 53059 (January 5, 2006), 71 
FR 2072 (January 12, 2006) (SR-Amex 2005-128) (approving the trading 
of the Euro Currency Trust pursuant to unlisted trading privileges 
(``UTP'')); 51058 (January 19, 2005), 70 FR 3749 (January 26, 2005) 
(SR-Amex 2004-38) (approving the listing and trading of the iShares 
COMEX Gold Trust); and 51446 (March 29, 2005), 70 FR 17272 (April 5, 
2005) (SR-Amex-2005-032) (approving the trading of streetTRACKS Gold 
Shares pursuant to UTP). See also Securities Exchange Act Release 
Nos. 55029 (December 29, 2006), 72 FR 806 (January 8, 2007) (SR-Amex 
2006-76) (approving the listing and trading of the DB Multi-Sector 
Commodity Trust); 54450 (September 14, 2006), 71 FR 55230 (September 
21, 2006) (SR-Amex 2006-44) (approving the listing and trading of 
shares of the DB Currency Index Value Fund); 55292 (February 14, 
2007), 72 FR 8406 (February 26, 2007) (SR-Amex 2006-86) (approving 
the listing and trading of shares of the PowerShares DB U.S. Dollar 
Index Bullish Fund and the PowerShares DB U.S. Dollar Index Bearish 
Fund); 56969 (December 14, 2007), 72 FR 72424 (December 20, 2007) 
(approving the listing and trading of shares on the GreenHaven 
Continuous Commodity Index Fund).
    \19\ See, e.g., Securities Exchange Act Release Nos. 52553 
(October 3, 2005), 70 FR 59100 (October 11, 2005) (SR-Amex-2004-62) 
(approving the listing and trading of shares of the xtraShares 
Trust); 54040 (June 23, 2006), 71 FR 37629 (June 30, 2006) (SR-Amex-
2006-41) (approving the listing and trading of shares of the 
ProShares Trust); 55117 (January 17, 2007), 72 FR 3442 (January 25, 
2007) (SR-Amex 2006-101) (approving the listing and trading of 
shares of the ProShares Trust); 56592 (October 1, 2007), 72 FR 57364 
(October 9, 2007) (SR-Amex-2007-60) (approving the listing and 
trading of shares of the ProShares Trust based on international 
equity indexes); and 56998 (December 19, 2007), 72 FR 73404 
(December 27, 2007) (SR-Amex-2007-104) (approving the listing and 
trading of shares of the ProShares Trust).
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Proposed Amendments to Commentary .07 to Amex Rule 1202

    The Commission notes that Amex's proposal to permit the listing and 
trading of TIRs that directly hold any combination of investments in 
Financial Instruments on the Exchange is subject to existing rules, 
safeguards, and procedures governing the listing and trading of TIRs, 
generally, and Commentary .07 to Amex Rule 1202, in particular. Prior 
to listing and trading on the Exchange, Amex must file a separate 
proposed rule change pursuant to Section 19(b) of the Act for each 
series of TIRs based on separate Investment Shares or Financial 
Instruments. In addition, all such securities listed and/or traded 
under Commentary .07 to Amex Rule 1202, as proposed to be amended, will 
be subject to the full panoply of Amex rules and procedures that 
currently govern the trading of equity securities on the Exchange. The 
Commission believes that the proposed rule change will facilitate the 
listing and trading of additional types of exchange-traded derivative 
securities products that will enhance competition among market 
participants, to the benefit of investors and the marketplace.

Proposal to List and Trade the Shares of the Funds

    The Exchange proposes to list and trade the Shares pursuant to 
Commentary .07 to Amex Rule 1202, as proposed to be amended.\20\ Amex 
represents that the Shares will conform to the existing initial and 
continued listing criteria under such rule and must be in compliance 
with Section 803 of the Amex Company Guide and Rule 10A-3 under the 
Act.\21\
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    \20\ The Commission believes that the Exchange's existing rules 
and procedures are adequate with respect to the Shares. However, the 
Commission notes that other proposed series of TIRs may require 
additional Exchange rules and procedures to govern their listing and 
trading on the Exchange. For example, in the case of a proposed 
series of TIRs that are based on a portfolio, at least in part, of 
non-U.S. equity securities, rules relating to comprehensive 
surveillance sharing agreements and quantitative initial and 
continued listing standards may be required.
    \21\ See supra note 11.
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    The Commission believes that the proposal to list and trade the 
Shares of the Funds on the Exchange is consistent with Section 
11A(a)(1)(C)(iii) of the Act,\22\ which sets forth Congress' finding

[[Page 42384]]

that it is in the public interest and appropriate for the protection of 
investors and the maintenance of fair and orderly markets to assure the 
availability to brokers, dealers, and investors of information with 
respect to quotations for and transactions in securities. Quotations 
and last-sale information for the Shares will be disseminated by means 
of CTA and Consolidated Quotation High Speed Lines.\23\ In addition, 
the value of each Underlying Benchmark will be updated intra-day on a 
real time basis as its components change in price. The Indicative Fund 
Value will be disseminated at least every 15 seconds throughout Amex's 
trading hours, in accordance with Commentary .07(d)(2)(iii) to Amex 
Rule 1202, and the NAV of each Fund will be calculated by the 
Administrator and made available each business day at the times set 
forth in the Notice.\24\ Real-time dissemination of spot pricing for 
gold, silver, euro, and Japanese yen is available on a 24-hour basis 
worldwide from various major market data vendors. Data regarding spot 
pricing of the Underlying Benchmark commodities (gold and silver) is 
publicly available on a 24-hour basis from various financial 
information service providers, such as Reuters and Bloomberg. In 
addition, the daily London fix for gold and silver is also disseminated 
by various market data vendors and is available from the LBMA Web site. 
The closing and settlement prices of the futures contracts held by the 
Funds are also readily available from CME, NYMEX, CBOT, ICE/NYBOT, LME, 
automated quotation systems, published or other public sources, or on-
line information services such as Bloomberg or Reuters. Spot pricing 
related to the foreign currency exchange is available to investors and 
market professionals on a 24-hour basis. A variety of public Web sites 
and professional and subscription services provide market and price 
information regarding the euro and the yen. Current spot prices are 
also generally available from foreign exchange dealers. Moreover, each 
Fund's total portfolio composition will be disclosed on the Web site of 
the Trust (http://www.proshares.com) or another relevant Web site as 
determined by the Trust and/or the Exchange. The Trust will provide Web 
site disclosure of portfolio holdings daily and will include, as 
applicable, the names and number of Financial Instruments and 
characteristics of such instruments and cash equivalents, and amount of 
cash held in the portfolio of each Fund. Amex will also disseminate via 
CTA and Consolidated Quotation High Speed Lines various other data, 
including corresponding Indicative Fund Values, recent NAV per Share, 
and the number of Shares outstanding. In addition, the Exchange will 
also make available on its Web site daily trading volume of the Shares, 
closing prices of the Shares, and the NAV per Share. The Fund's Web 
site will also contain a variety of other information for the Shares, 
including a display of the applicable prospectus and quantitative 
information on a per-Share basis.
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    \22\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \23\ E-mail from Daniel Mollin, Associate General Counsel, Amex, 
to Edward Cho, Special Counsel, Division of Trading and Markets, 
Commission, dated July 9, 2008 (confirming dissemination of 
quotations and last-sale information regarding the Shares).
    \24\ See Notice, supra note 3, at 33471.
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    Furthermore, the Commission believes that the proposal to list and 
trade the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Commission notes that the Exchange will obtain a 
representation from the Trust, prior to listing, that the NAV per Share 
for the Funds will be calculated daily, and that the NAV will be made 
available to all market participants at the same time.\25\ The Exchange 
has represented that the disclosure of the portfolio composition for 
each Fund will be made available to all market participants at the same 
time. The Exchange may consider the suspension of trading in, or 
removal from listing of, the Shares if, among others: (1) the 
underlying index or portfolio is no longer calculated or available on 
at least a 15-second delayed basis through one or more major market 
data vendors during the time the TIRs trade on the Exchange; or (2) the 
Indicative Fund Value is no longer made available on at least a 15-
second delayed basis. Commentary .07(e) to Amex Rule 1202 restricts any 
equity specialist, his member organization, or any other member, 
limited partner, officer, or approved person thereof from acting as a 
market maker in an underlying asset or commodity, related futures or 
options on futures, or any other related derivatives, unless certain 
procedures restricting the flow of material, non-public market 
information are established. In addition, Commentary .07(g)(3) to Amex 
Rule 1202 states that, in connection with trading the underlying 
physical asset or commodity, related futures or options on futures or 
any other related derivative (including TIRs), the specialist 
registered as such in TIRs may not use any material, non-public 
information received from any person associated with a member, member 
organization, or employee of such person regarding trading by such 
person or employee in the physical asset or commodity, futures or 
options on futures, or any other related derivatives.
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    \25\ See infra note 26.
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    The Commission believes that the Exchange's trading halt rules are 
reasonably designed to prevent trading in the Shares when transparency 
is impaired. Trading in the Shares will be halted: (1) In the event the 
market volatility trading halt parameters set forth in Amex Rule 117 
have been reached; (2) if trading in a significant number of underlying 
related futures contract(s) is halted or suspended; (3) if the Exchange 
becomes aware that a Fund's NAV or disclosure of the portfolio 
composition is not being disseminated or has not been disseminated to 
all market participants at the same time; \26\ (4) if the value of an 
Underlying Benchmark is no longer calculated or available on at least a 
15-second basis through one or more major market data vendors during 
the time the Shares trade on Amex or if an Indicative Fund Value per 
Share updated every 15 seconds is no longer calculated or 
available.\27\ With respect to a halt in trading not specified above, 
the Exchange may also consider other relevant factors and the existence 
of unusual conditions or circumstances that may be detrimental to the 
maintenance of a fair and orderly market.
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    \26\ See also Securities Exchange Release No. 58111 (July 7, 
2008), 73 FR 40643 (July 15, 2008) (SR-Amex-2008-40; SR-NASDAQ-2008-
046; SR-NYSE-2008-39; SR-NYSEArca-2008-50) (adopting, among other 
things, new Amex Rule 117A and Commentary.01 thereto, which requires 
that the Exchange halt trading in the Shares once it becomes aware 
that the NAV for such Shares are not being disseminated to all 
market participants at the same time).
    \27\ See supra note 15.
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    The Commission further believes that the trading rules and 
procedures to which the Shares will be subject pursuant to this 
proposal are consistent with the Act. The Exchange has represented that 
the Shares are equity securities subject to Amex's rules governing the 
trading of equity securities.
    In support of this proposal, the Exchange has made the following 
representations:
    (1) The Shares will conform to the initial and continued listing 
criteria under Commentary .07 to Amex Rule 1202, as proposed to be 
amended.

[[Page 42385]]

    (2) The Exchange's surveillance procedures are adequate to deter 
and detect violations of Exchange rules relating to the trading of the 
Shares. Specifically, the surveillance procedures will be similar to 
those used for other commodity-based TIRs, Commodity-Based Trust 
Shares, Currency Trust Shares, and exchange-traded funds. In addition, 
the Exchange will incorporate and rely upon existing Amex surveillance 
procedures governing options and equities.
    (3) The Exchange will distribute an Information Circular, the 
contents of which are more fully described herein, to its members in 
connection with the trading of the Shares.
    (4) The Exchange represents that the Trust is required to comply 
with Section 803 of the Amex Company Guide and Rule 10A-3 under the Act 
\28\ for the initial and continued listing of the Shares.
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    \28\ 17 CFR 240.10A-3.
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    This approval order is based on the Exchange's representations.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\29\ that the proposed rule change (SR-Amex-2008-39), as modified 
by Amendment No. 1 thereto, be, and it hereby is, approved.
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    \29\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ See 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16614 Filed 7-18-08; 8:45 am]
BILLING CODE 8010-01-P