Federal Register: January 7, 2009 (Volume 74, Number 4)
DOCID: fr07ja09-68 FR Doc E9-6
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-59180; File No. SR-NYSEArca-2008-121]
NOTICE: NOTICES
DOCID: fr07ja09-68
ACTION: Self-Regulatory Organizations; Proposed Rule Changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change Amending Rule 5.2(j)(6) To Increase the Permissible Aggregate Weight of Underlying Foreign Country Securities
DOCUMENT SUMMARY:
December 30, 2008.
I. Introduction
On October 29, 2008, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca''), through its wholly owned subsidiary, NYSE Arca Equities, Inc.
(``NYSE Arca Equities''), 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 19b4
thereunder\2\ a proposed rule change amending NYSE Arca Equities Rule
5.2(j)(6) relating to the listing of Equity IndexLinked Securities.\3\
The proposed rule change was published for comment in the Federal
Register on November 28, 2008.\4\ The Commission received no comment
letters on the proposed rule change. This order approves the proposed rule change.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ Equity IndexLinked Securities are securities, the payment
at maturity of which is based on the performance of an underlying
index or indexes of equity securities (``Equity Reference Asset'').
\4\ See Securities Exchange Act Release No. 58984 (November 20, 2008), 73 FR 72546.
II. Description of the Proposed Rule Change
The Exchange's listing standards for Equity IndexLinked Securities, among other criteria, currently limit the permissible aggregate weight of underlying foreign country securities and American Depository Receipts (``ADRs'') that can be included in the Equity Reference Asset to 20% of the overall index where the primary trading markets of such foreign country securities or foreign country securities underlying such ADRs are not members of the Intermarket Surveillance Group (``ISG'') or parties to comprehensive surveillance sharing agreements (``CSSAs'') with the Exchange. The Exchange proposes to amend NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(v) to increase the permissible aggregate weight of such underlying foreign country securities and ADRs up to 50% of the overall index, subject to certain other limitations.
Specifically, the proposal would permit the listing and trading of Equity IndexLinked Securities where the underlying foreign country securities and/or foreign country securities underlying ADRs primarily trading on nonU.S. markets that are not ISG members or otherwise subject to a CSSA agreement with the Exchange account for up to 50% of the aggregate dollar weight of the index, provided that: (1) The securities of any one primary foreign market which is not an ISG member or does not have a CSSA with the Exchange (``NonReciprocal Foreign Markets'') do not represent more than 20% of the dollar weight of the index; and (2) the securities of any two NonReciprocal Foreign Markets do not represent more than 33% of the dollar weight of the index. The Exchange also seeks to make technical and nonsubstantive modifications to NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(v).
III. Discussion and Commission's Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of Section 6 of the
Act \5\ and the rules and regulations thereunder applicable to a national securities exchange.\6\ In particular, the
[[Page 755]]
Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\7\ which requires that the rules of the
Exchange be designed, among other things, 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.
\5\ 15 U.S.C. 78f.
\6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(5).
The Commission believes that the proposal reasonably balances the
removal of impediments to a free and open market with the protection of
investors and the public interest, two principles set forth in Section
6(b)(5) of the Act. As a result of the proposal, the permissible
percentage of underlying foreign country securities and/or foreign
country securities underlying ADRs trading on foreign markets that are
not ISG members or parties to a CSSA with the Exchange would be limited
to 50% of the overall dollar weight of the index. The Commission
believes that this portion of the proposal would permit increased
flexibility with respect to listing and trading Equity IndexLinked
Securities. At the same time, the proposed amendment also provides that
the securities trading on: (1) Any one NonReciprocal Foreign Market
must not constitute more than 20% of the overall dollar weight of the
index; and (2) any two NonReciprocal Foreign Markets must not
constitute more than 33% of the overall dollar weight of the index.
These conditions establish concentration limits designed to ensure that
a significant percentage of an underlying index is not composed of
securities trading on any one or two NonReciprocal Foreign Markets.
Additionally, in light of its proposed revision to the listing criteria
for Equity IndexLinked Securities, the Exchange has renewed its
representation that its surveillance procedures applicable to Equity
IndexLinked Securities are adequate to detect and deter violations of its Rules and all applicable federal securities laws.\8\
\8\ See eMail from Tim Malinowski, Director, NYSE Euronext, to
Christopher W. Chow, Special Counsel, Commission, dated December 23,
2008. See also Securities Exchange Act Release No. 56637 (October 10, 2007), 72 FR 58704, 58709 (October 16, 2007).
The Commission also believes that the technical and nonsubstantive changes to NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(v) clarify the format and application of the proposed amendment related to Equity IndexLinked Securities.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\9\ that the proposed rule change (SRNYSEArca2008121) be, and it hereby is, approved.
\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\
\10\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Acting Secretary.
[FR Doc. E96 Filed 1609; 8:45 am]
BILLING CODE 801101P
SUMMARY:
NYSE Arca, Inc.,
DOCUMENT BODY 2:
December 30, 2008.
I. Introduction
On October 29, 2008, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca''), through its wholly owned subsidiary, NYSE Arca Equities, Inc.
(``NYSE Arca Equities''), 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 19b4
thereunder\2\ a proposed rule change amending NYSE Arca Equities Rule
5.2(j)(6) relating to the listing of Equity IndexLinked Securities.\3\
The proposed rule change was published for comment in the Federal
Register on November 28, 2008.\4\ The Commission received no comment
letters on the proposed rule change. This order approves the proposed rule change.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ Equity IndexLinked Securities are securities, the payment
at maturity of which is based on the performance of an underlying
index or indexes of equity securities (``Equity Reference Asset'').
\4\ See Securities Exchange Act Release No. 58984 (November 20, 2008), 73 FR 72546.
II. Description of the Proposed Rule Change
The Exchange's listing standards for Equity IndexLinked Securities, among other criteria, currently limit the permissible aggregate weight of underlying foreign country securities and American Depository Receipts (``ADRs'') that can be included in the Equity Reference Asset to 20% of the overall index where the primary trading markets of such foreign country securities or foreign country securities underlying such ADRs are not members of the Intermarket Surveillance Group (``ISG'') or parties to comprehensive surveillance sharing agreements (``CSSAs'') with the Exchange. The Exchange proposes to amend NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(v) to increase the permissible aggregate weight of such underlying foreign country securities and ADRs up to 50% of the overall index, subject to certain other limitations.
Specifically, the proposal would permit the listing and trading of Equity IndexLinked Securities where the underlying foreign country securities and/or foreign country securities underlying ADRs primarily trading on nonU.S. markets that are not ISG members or otherwise subject to a CSSA agreement with the Exchange account for up to 50% of the aggregate dollar weight of the index, provided that: (1) The securities of any one primary foreign market which is not an ISG member or does not have a CSSA with the Exchange (``NonReciprocal Foreign Markets'') do not represent more than 20% of the dollar weight of the index; and (2) the securities of any two NonReciprocal Foreign Markets do not represent more than 33% of the dollar weight of the index. The Exchange also seeks to make technical and nonsubstantive modifications to NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(v).
III. Discussion and Commission's Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of Section 6 of the
Act \5\ and the rules and regulations thereunder applicable to a national securities exchange.\6\ In particular, the
[[Page 755]]
Commission finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\7\ which requires that the rules of the
Exchange be designed, among other things, 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.
\5\ 15 U.S.C. 78f.
\6\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(5).
The Commission believes that the proposal reasonably balances the
removal of impediments to a free and open market with the protection of
investors and the public interest, two principles set forth in Section
6(b)(5) of the Act. As a result of the proposal, the permissible
percentage of underlying foreign country securities and/or foreign
country securities underlying ADRs trading on foreign markets that are
not ISG members or parties to a CSSA with the Exchange would be limited
to 50% of the overall dollar weight of the index. The Commission
believes that this portion of the proposal would permit increased
flexibility with respect to listing and trading Equity IndexLinked
Securities. At the same time, the proposed amendment also provides that
the securities trading on: (1) Any one NonReciprocal Foreign Market
must not constitute more than 20% of the overall dollar weight of the
index; and (2) any two NonReciprocal Foreign Markets must not
constitute more than 33% of the overall dollar weight of the index.
These conditions establish concentration limits designed to ensure that
a significant percentage of an underlying index is not composed of
securities trading on any one or two NonReciprocal Foreign Markets.
Additionally, in light of its proposed revision to the listing criteria
for Equity IndexLinked Securities, the Exchange has renewed its
representation that its surveillance procedures applicable to Equity
IndexLinked Securities are adequate to detect and deter violations of its Rules and all applicable federal securities laws.\8\
\8\ See eMail from Tim Malinowski, Director, NYSE Euronext, to
Christopher W. Chow, Special Counsel, Commission, dated December 23,
2008. See also Securities Exchange Act Release No. 56637 (October 10, 2007), 72 FR 58704, 58709 (October 16, 2007).
The Commission also believes that the technical and nonsubstantive changes to NYSE Arca Equities Rule 5.2(j)(6)(B)(I)(1)(b)(v) clarify the format and application of the proposed amendment related to Equity IndexLinked Securities.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\9\ that the proposed rule change (SRNYSEArca2008121) be, and it hereby is, approved.
\9\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\
\10\ 17 CFR 200.303(a)(12).
Florence E. Harmon,
Acting Secretary.
[FR Doc. E96 Filed 1609; 8:45 am]
BILLING CODE 801101P