Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Federal Register: October 30, 2008 (Volume 73, Number 211)
Notices
Page 64649-64651
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr30oc08-83
SECURITIES AND EXCHANGE COMMISSION
Release No. 34-58856; File No. SR-NYSEArca-2008-112
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the
Listing of the NETS S&P/MIB Index Fund (Italy)
October 24, 2008.
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 October 21, 2008, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 C.F.R. 240.19b-4.
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Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to list and trade shares (``Shares'') of the following fund of the NETS Trust (``Trust''): NETS S&P/MIB Index Fund
(Italy). The text of
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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
Public Reference Room of the Commission.
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Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization 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 parts of such statements.
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Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change 1. Purpose
The Exchange proposes to list and trade the Shares of the following fund under NYSE Arca Equities Rule 5.2(j)(3), the Exchange's listing standards for Investment Company Units (``ICUs''): \3\ NETS S&P/MIB
Index Fund (Italy) (the ``Fund'').
\3\ An Investment Company Unit is a security that represents an interest in a registered investment company that holds securities comprising, or otherwise based on or representing an interest in, an index or portfolio of securities (or holds securities in another registered investment company that holds securities comprising, or otherwise based on or representing an interest in, an index or portfolio of securities). See NYSE Arca Equities Rule 5.2(j)(3)(A).
The Fund is currently listed on NYSE Alternext US LLC (``NYSE
Alternext US'') (formerly, American Stock Exchange LLC) and is traded on the Exchange pursuant to unlisted trading privileges (``UTP'').
Prior to listing on the Exchange, the Fund would be required to satisfy the applicable delisting procedures of NYSE Alternext US and applicable statutory and regulatory requirements, including, without limitation,
Section 12 of the Act,\4\ relating to listing the Fund on the
Exchange.\5\
\4\ 15 U.S.C. 78(l).
\5\ The Exchange will seek the voluntary consent of the issuer of the Fund to be delisted from NYSE Alternext US and listed on the
Exchange. The Exchange notes that its approval of the Fund's listing application would be required prior to listing.
The Fund is an ``index fund'' that seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly-traded securities in the aggregate in the Italian equity markets, as represented by the S&P/MIB
Index (``Index''). The primary market for securities in the Index is principally the Borsa Italiana.
The Exchange is submitting this proposed rule change because the
Index for the Fund does not meet all of the ``generic'' listing requirements of Commentary .01(a)(B) to NYSE Arca Equities Rule 5.2(j)(3) applicable to listing of ICUs based on international or global indexes. The Index meets all such requirements except for those set forth in Commentary .01(a)(B)(3).\6\ The Exchange represents that:
(1) Except for the requirement under Commentary .01(a)(B)(3) to NYSE
Arca Equities Rule 5.2(j)(3) that the five most heavily weighted component stocks shall not exceed 60% of the weight of the Index, the
Shares of the Fund currently satisfy all of the generic listing standards under NYSE Arca Equities Rule 5.2(j)(3); (2) the continued listing standards under NYSE Arca Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to ICUs shall apply to the Shares; and (3) the
Trust is required to comply with Rule 10A-3 \7\ under the Act for the initial and continued listing of the Shares. In addition, the Exchange represents that the Shares will comply with all other requirements applicable to ICUs including, but not limited to, requirements relating to the dissemination of key information such as the Index value and
Intraday Indicative Value, rules governing the trading of equity securities, trading hours, trading halts, surveillance,\8\ and
Information Bulletin to ETP Holders, as set forth in Exchange rules applicable to ICUs and in prior Commission orders approving the generic listing rules applicable to the listing and trading of ICUs.\9\
\6\ The Exchange states that the Index satisfies the first requirement under Commentary .01(a)(B)(3) to NYSE Arca Equities Rule 5.2(j)(3) that the most heavily weighted component stock shall not exceed 25% of the weight of the index or portfolio. However, the
Index fails to meet the second requirement of Commentary
.01(a)(B)(3) to NYSE Arca Equities Rule 5.2(j)(3) that the five most heavily weighted component stocks shall not exceed 60% of the weight of the Index. The Exchange states that, as of September 22, 2008, the five most heavily weighted component stocks represented 60.616% of the Index weight.
\7\ 17 CFR 240.10A-3.
\8\ The Exchange may obtain information for surveillance purposes via the Intermarket Surveillance Group (``ISG'') from other exchanges who are members of ISG. For a list of the current members of ISG, see http://www.isgportal.org. The Exchange does not have in place a comprehensive surveillance sharing agreement with the Borsa
Italiana and such exchange is not an ISG member.
\9\ See, e.g., Securities Exchange Act Release No. 55621 (April 12, 2007), 72 FR 19571 (April 18, 2007) (SR-NYSEArca-2006-86) (order approving generic listing standards for ICUs based on international or global indexes); Securities Exchange Act Release No. 44551 (July 12, 2001), 66 FR 37716 (July 19, 2001) (SR-PCX-2001-14) (order approving generic listing standards for ICUs and Portfolio
Depositary Receipts); Securities Exchange Act Release No. 41983
(October 6, 1999), 64 FR 56008 (October 15, 1999) (SR-PCX-98-29)
(order approving rules for listing and trading of ICUs).
Detailed descriptions of the Fund, the Index, procedures for creating and redeeming Shares, transaction fees and expenses, dividends, distributions, taxes, and reports to be distributed to beneficial owners of the Shares can be found in the Trust's
Registration Statement \10\ or on the Web site for the Fund (http:// www.netsetfs.com), as applicable.
\10\ See the Trust's Registration Statement on Form N-1A, dated
March 17, 2008, and supplement thereto dated September 3, 2008 (File
Nos. 333-147077 and 811-22140).
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Statutory Basis
The Exchange believes the proposed rule change is consistent with and furthers the objectives of Section 6(b)(5) of the Act,\11\ in that it is designed to prevent fraudulent and manipulative practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposed rule change will allow the listing and trading of the Fund on the Exchange, which the Exchange believes will be to the benefit of investors and the marketplace.
\11\ 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate in furtherance of the purpose of the Act.
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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.
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Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated the proposed rule change as one that:
(i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) by its terms, does not become operative for 30 days from the date on
Page 64651
which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. Therefore, the foregoing proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b- 4(f)(6) thereunder.\13\
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative until 30 days after the date of filing.\14\
However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay so that it can list and trade the Shares immediately. The Exchange states that the proposed rule change does not significantly affect the protection of investors or the public interest and does not impose any significant burden on competition. The Exchange also believes that the proposal is non- controversial because, although the Underlying Index fails to meet the requirement set forth in Commentary .01(a)(B)(3) to NYSE Arca Equities
Rule 5.2(j)(3) that the five most heavily weighted component stocks not exceed 60% of the weight of the Index by a small amount (0.616%), the
Shares currently satisfy all of the other applicable generic listing standards under NYSE Arca Equities Rule 5.2(j)(3) and all other requirements applicable to ICUs as set forth in Exchange Rules and prior Commission orders approving the generic listing rules applicable to the listing and trading of ICUs.
\14\ Id. In addition, Rule 19b-4(f)(6)(iii) requires a self- regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement.
\15\ 15 17 CFR 240.19b-4(f)(6).
The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest.\16\ Given that the Shares comply with all of the NYSE Arca
Equities generic listing standards for ICUs (except for narrowly missing the requirement that the five most heavily weighted component stocks not exceed 60% of the weight of the Index), the listing and trading of the Shares by NYSE Arca does not appear to present any novel or significant regulatory issues or impose any significant burden on competition. For these reasons, the Commission designates the proposed rule change as operative upon filing.
\16\ 16 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
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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 rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2008-112 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2008-112. 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 self-regulatory organization. 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-2008-112 and should be submitted on or before November 20, 2008.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\
\17\ 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Acting Secretary.
FR Doc. E8-25924 Filed 10-29-08; 8:45 am
BILLING CODE 8011-01-P
