[Federal Register Volume 73, Number 136 (Tuesday, July 15, 2008)]
[Notices]
[Pages 40643-40645]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-16059]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58111; File Nos. SR-Amex-2008-40; SR-NASDAQ-2008-046;
SR-NYSE-2008-39; SR-NYSEArca-2008-50]
Self-Regulatory Organizations; American Stock Exchange LLC, New
York Stock Exchange LLC, and NYSE Arca, Inc.: Order Granting Approval
of Proposed Rule Changes To Adopt a Trading Halt Rule in Connection
With the Dissemination of Net Asset Value and Disclosed Portfolio for
Certain Derivative Securities Products; The NASDAQ Stock Market LLC:
Order Granting Approval of Proposed Rule Changes, as Modified by
Amendment No. 1 Thereto, To Adopt a Trading Halt Rule in Connection
With the Dissemination of Net Asset Value and Disclosed Portfolio for
Certain Derivative Securities Products
July 7, 2008.
I. Introduction
On May 14, 2008, the American Stock Exchange LLC (``Amex''), The
NASDAQ Stock Market LLC (``Nasdaq''), the New York Stock Exchange LLC
(``NYSE''), and NYSE Arca, Inc. (``NYSE Arca'' and together with Amex,
Nasdaq, and NYSE, collectively, the ``Exchanges''), through its wholly
owned subsidiary, NYSE Arca Equities, Inc. (``NYSE Arca Equities''),
each 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
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thereunder,\2\ proposed rule changes to amend their respective rules to
require a trading halt (``New Trading Halt Rule'') in certain
derivative securities products when the respective Exchange becomes
aware that the net asset value (``NAV'') and/or disclosed portfolio
(``Disclosed Portfolio''),\3\ as applicable, for such derivative
securities product is not being disseminated to all market participants
at the same time. The proposed rule changes were published for comment
in the Federal Register on June 4, 2008.\4\ On June 17, 2008, Nasdaq
filed Amendment No. 1 to its proposed rule change.\5\ The Commission
received no comments on the proposals. This order approves the proposed
rule changes of Amex, NYSE, and NYSE Arca and approves the proposed
rule change of Nasdaq, 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\ ''Disclosed Portfolio'' is applicable only with respect to a
series of Managed Fund Shares and is defined as the identities and
quantities of the securities and other assets that: (1) Are held by
a registered investment company organized as an open-end management
investment company or similar entity that invests in a portfolio of
securities selected by such investment company's investment adviser
consistent such investment company's investment objectives and
policies; and (2) form the basis for such investment company's
calculation of NAV. See Amex Rule 1002B (setting forth the continued
listing standards for Managed Fund Shares and requiring, among other
things, that the Disclosed Portfolio be disseminated at least once
daily and made available to all market participants at the same
time) and NYSE Arca Equities Rule 8.600 (setting forth the listing
standards for Managed Fund Shares and requiring, among other things,
that the Disclosed Portfolio be disseminated at least once daily and
made available to all market participants at the same time). See
infra note 5 (noting Nasdaq's recent adoption of listing standards
for Managed Fund Shares).
\4\ See Securities Exchange Act Release No. 57881 (May 29,
2008), 73 FR 31902.
\5\ In Amendment No. 1, Nasdaq revised its proposal to reflect
its recent adoption of listing standards for Managed Fund Shares
under Nasdaq Rule 4420(o), which requires, among other things, that
the Disclosed Portfolio be disseminated at least once daily and made
available to all market participants at the same time. See
Securities Exchange Act Release No. 57962 (June 13, 2008), 73 FR
35175 (June 20, 2008) (SR-NASDAQ-2008-039) (approving the adoption
of listing standards for Managed Fund Shares and certain other
related rule changes). Because Amendment No. 1 to Nasdaq's proposed
rule change is technical and conforming in nature, it is not subject
to notice and comment.
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II. Description of the Proposals
Each Exchange proposes to amend its respective rules \6\ to require
a trading halt in certain derivative securities products \7\ that are
listed and trading on such Exchange, if such Exchange becomes aware
that the NAV and/or Disclosed Portfolio, as applicable, for such
derivative product is not being disseminated to all market participants
at the same time. In addition, each Exchange would resume trading in
such halted derivative securities product only when the NAV and/or
Disclosed Portfolio, as applicable, is disseminated to all market
participants.\8\ Each Exchange represents that, in the event the NAV
and/or Disclosed Portfolio, as applicable, for a series of derivative
securities product ceases to be disseminated altogether, such Exchange
would halt trading in such derivative securities product.
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\6\ Amex seeks to adopt new Amex Rule 117A and Commentary.01
thereto (Net Asset Value/Disclosed Portfolio Dissemination and
Trading Halts); Nasdaq seeks to amend Nasdaq Rule 4120 (Trading
Halts); NYSE seeks to amend NYSE Rule 123D (Openings and Halts in
Trading); and NYSE Arca seeks to amend NYSE Arca Equities Rule 7.34
(Trading Sessions).
\7\ Amex, Nasdaq, and NYSE Arca seek to apply their respective
New Trading Halt Rules to certain derivative securities products for
which: (1) Each such Exchange has listing and trading standards; and
(2) an NAV and, in the case of Managed Fund Shares, a Disclosed
Portfolio, is disseminated. See proposed Amex Rule 117A (applying
Amex's New Trading Halt Rule to Portfolio Depositary Receipts (Amex
Rule 1000-AEMI), Index Fund Shares (Amex Rule 1000A-AEMI), Trust
Issued Receipts (Commentary.07 to Amex Rule 1202), Managed Fund
Shares (Amex Rule 1000B), Commodity-Based Trust Shares (Amex Rule
1200A), Currency Trust Shares (Amex Rule 1200B), Paired Trust Shares
(Amex Rule 1400), Partnership Units (Amex Rule 1500), and Trust
Units (Amex Rule 1600)); proposed Nasdaq Rule 4120(a)(10) (applying
Nasdaq's New Trading Halt Rule to Portfolio Depository Receipts
(Nasdaq Rule 4420(i)), Index Fund Shares (Nasdaq Rule 4420(j)),
Trust Issued Receipts (Nasdaq Rule 4420(l)), Commodity-Related
Securities (as defined in Nasdaq Rule 4630), Managed Fund Shares
(Nasdaq Rule 4420(o)), and securities representing interests in unit
investment trusts or investment companies); and proposed NYSE Arca
Equities Rule 7.34(a)(5) (applying NYSE Arca's New Trading Halt Rule
to Investment Company Units (NYSE Arca Equities Rule 5.2(j)(3)),
Portfolio Depositary Receipts (NYSE Arca Equities Rule 8.100), Trust
Issued Receipts (NYSE Arca Equities Rule 8.200), Commodity-Based
Trust Shares (NYSE Arca Equities Rule 8.201), Currency Trust Shares
(NYSE Arca Equities Rule 8.202), Commodity Index Trust Shares (NYSE
Arca Equities Rule 8.203), Commodity Futures Trust Shares (NYSE Arca
Equities Rule 8.204), Partnership Units (NYSE Arca Equities Rule
8.300), Paired Trust Shares (NYSE Arca Equities Rule 8.400), Trust
Units (NYSE Arca Equities Rule 8.500), and Managed Fund Shares (NYSE
Arca Equities Rule 8.600)). NYSE seeks to apply its New Trading Halt
Rule to certain derivative securities products for which: (1) NYSE
has listing and trading standards; and (2) an NAV is disseminated
(NYSE does not have listing standards for Managed Fund Shares). See
proposed NYSE Rule 123D(5) (applying NYSE's New Trading Halt Rule to
Investment Company Units (NYSE Rule 1100), Trust Issued Receipts
(NYSE Rule 1200), Currency Trust Shares (NYSE Rule 1300A), and
Commodity Trust Shares (NYSE Rule 1300B)).
\8\ Nasdaq's New Trading Halt Rule also provides that, in the
case of a halted Derivative Securities Products (as defined in
Nasdaq Rule 4120(b)(4)(A)) trading on Nasdaq pursuant to unlisted
trading privileges, Nasdaq would resume trading in such Derivative
Securities Product only until such time trading resumes in the
listing market for such Derivative Securities Product. The Nasdaq
Proposal also seeks to make technical, non-substantive changes to
Nasdaq Rules 4120(a) and (c) to incorporate new Nasdaq Rule
4120(a)(10).
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III. Commission's Findings and Order Granting Approval of the Proposed
Rule
Changes
After careful consideration, the Commission finds that the proposed
rule changes are consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\9\ In particular, the Commission finds that the proposed rule
changes are consistent with Section 6(b)(5) of the Act \10\ in that
they are designed 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 transactions in securities, 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\ In approving these proposed rule changes, the Commission
notes that it has considered the impact on efficiency, competition,
and capital formation of each proposed rule. See 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the Exchanges' respective trading halt
rules are reasonably designed to prevent trading in certain derivative
securities products when the availability of certain information is
impaired. Specifically, each Exchange proposes to require a trading
halt in certain derivative securities products that are listed and
trading on such Exchange, if such Exchange becomes aware that the NAV
and/or Disclosed Portfolio, as applicable, for such derivative product
is not being disseminated to all market participants at the same time.
In addition, each Exchange would resume trading in such halted
derivative securities product only when the NAV and/or Disclosed
Portfolio, as applicable, is disseminated to all market participants.
The Commission believes that the proposed rule changes are intended to
protect investors and the public interest when key information relating
to the NAV or the Disclosed Portfolio becomes unavailable or available
only to some market participants, but not all participants, at the time
of dissemination. The Commission notes that individual listing
standards for many derivative securities products already include a
similar trading halt requirement.\11\ As such, the Commission believes
it is
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reasonable and consistent with the Act for the Exchanges to adopt new
trading halt criteria for certain derivative products in the manner
described in the respective proposals.
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\11\ See, e.g., Amex Rule 1002B(iv)(d); Nasdaq Rule
4420(o)(4)(B)(iv); and NYSE Arca Equities Rule 8.600(d)(2)(D).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule changes (SR-Amex-2008-40; SR-NYSE-2008-
39; SR-NYSEArca-2008-50) and the proposed rule change (SR-NASDAQ-2008-
046), as modified by Amendment No. 1 thereto, be, and they hereby are,
approved.
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\12\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-16059 Filed 8-14-08; 8:45 am]
BILLING CODE 8010-01-P