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Federal Register / Vol. 71, No.

150 / Friday, August 4, 2006 / Notices 44339

Nasdaq IM–9216 and IM–11110 to consistent with the protection of subject line if e-mail is used. To help the
correct typographical errors. investors and the public interest. Commission process and review your
Nasdaq has requested that the comments more efficiently, please use
2. Statutory Basis
Commission waive the 30-day pre- only one method. The Commission will
Nasdaq believes that the proposed operative period requirement for ‘‘non- post all comments on the Commission’s
rule change is consistent with the controversial’’ proposals, based upon a Internet Web site (http://www.sec.gov/
provisions of Section 6 of the Act,8 in representation that such waiver will rules/sro.shtml). Copies of the
general, and with Section 6(b)(5) of the allow Nasdaq to implement the rule submission, all subsequent
Act,9 in particular, in that it is designed changes, which have either recently amendments, all written statements
to promote just and equitable principles been made effective as changes to NASD with respect to the proposed rule
of trade, to foster cooperation and rules or are technical in nature, prior to change that are filed with the
coordination with persons engaged in the time when Nasdaq begins to operate Commission, and all written
regulating, clearing, settling, processing as a national securities exchange. The communications relating to the
information with respect to, and Commission believes that waiving the proposed rule change between the
facilitating transactions in securities, to 30-day operative delay is consistent Commission and any person, other than
remove impediments to and perfect the with the protection of investors and the those that may be withheld from the
mechanism of a free and open market public interest. Waiver of the 30-day public in accordance with the
and a national market system, and, in operative period will allow Nasdaq to provisions of 5 U.S.C. 552, will be
general, to protect investors and the implement these changes immediately available for inspection and copying in
public interest; and is not designed to so that they can be in place prior to the the Commission’s Public Reference
permit unfair discrimination between time Nasdaq begins to operate as a Section, 100 F Street, NE., Washington,
customers, issuers, brokers, or dealers. national securities exchange. DC 20549. Copies of such filing also will
Nasdaq believes that the proposed Accordingly, the Commission has be available for inspection and copying
rule change conforms the Nasdaq Rules determined to waive the operative at the principal office of the Nasdaq. All
delay, and the proposed rule change has comments received will be posted
6000, 9000, and 11000 Series of
become effective upon filing with the without change; the Commission does
Nasdaq’s rules to certain changes made
Commission.12 not edit personal identifying
to the corresponding rule series of the
At any time within 60 days of the information from submissions. You
rules of NASD since approval of
filing of the proposed rule change, the should submit only information that
Nasdaq’s rules by the Commission in
Commission may summarily abrogate you wish to make available publicly. All
January 2006 and corrects certain errors
such rule change if it appears to the submissions should refer to File
in the approved rules.
Commission that such action is Number SR–NASDAQ–2006–022 and
B. Self-Regulatory Organization’s necessary or appropriate in the public should be submitted on or before
Statement on Burden on Competition interest, for the protection of investors, August 25, 2006.
Nasdaq does not believe that the or otherwise in furtherance of the For the Commission, by the Division of
purposes of the Act. Market Regulation, pursuant to delegated
proposed rule change will result in any authority.13
burden on competition that is not IV. Solicitation of Comments Jill M. Peterson,
necessary or appropriate in furtherance
of the purposes of the Act, as amended. Interested persons are invited to Assistant Secretary.
submit written data, views, and [FR Doc. E6–12613 Filed 8–3–06; 8:45 am]
C. Self-Regulatory Organization’s arguments concerning the foregoing, BILLING CODE 8010–01–P
Statement on Comments on the including whether the proposed rule
Proposed Rule Change Received From change, is consistent with the Act.
Members, Participants, or Others Comments may be submitted by any of SECURITIES AND EXCHANGE
the following methods: COMMISSION
Written comments were neither
solicited nor received. Electronic Comments [Release No. 34–54231; File No. SR–
NYSEArca-2006–19]
III. Date of Effectiveness of the • Use the Commission’s Internet
Proposed Rule Change and Timing for comment form (http://www.sec.gov/ Self-Regulatory Organizations; NYSE
Commission Action rules/sro.shtml); or Arca, Inc.; Notice of Filing and Order
• Send an e-mail to rule- Granting Accelerated Approval of
Nasdaq has designated the foregoing comments@sec.gov. Please include File Proposed Rule Change and
rule change as a ‘‘non-controversial’’ Number SR–NASDAQ–2006–022 on the Amendment No. 1 Thereto Relating to
rule change pursuant to Section subject line. the Trading of the Index-Linked
19(b)(3)(A) of the Act10 and Rule 19b–
Paper Comments Securities of Barclays Bank PLC
4(f)(6) thereunder11 because the
Linked to the Performance of the
foregoing proposed rule change does • Send paper comments in triplicate GSCI Total Return Index Pursuant to
not: (i) Significantly affect the to Nancy M. Morris, Secretary, Unlisted Trading Privileges
protection of investors or the public Securities and Exchange Commission,
interest; (ii) impose any significant 100 F Street, NE., Washington, DC July 27, 2006.
burden on competition; and (iii) become 20549–1090. Pursuant to Section 19(b)(1) of the
operative for 30 days from the date on Securities Exchange Act of 1934
All submissions should refer to File
which it was filed, or such shorter time (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Number SR–NASDAQ–2006–022. This
as the Commission may designate if
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file number should be included on the notice is hereby given that on May 16,
2006, NYSE Arca, Inc. (‘‘Exchange’’),
8 15 U.S.C. 78f. 12 For purposes only of waiving the operative date
9 15 U.S.C. 78f(b)(5). 13 17 CFR 200.30–3(a)(12).
of this proposal, he Commission has considered the
10 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
proposed rule’s impact on efficiency, competition
11 17 CFR 240.19b–4(f)(6). and capital formation. See 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4.

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44340 Federal Register / Vol. 71, No. 150 / Friday, August 4, 2006 / Notices

through its wholly owned subsidiary filed with the Commission by the New the investor will receive less, and
NYSE Arca Equities, Inc. (‘‘NYSE Arca York Stock Exchange LLC (‘‘NYSE’’) 4 possibly significantly less, than the $50
Equities’’ or ‘‘Corporation’’), filed with and approved by the Commission.5 In principal amount per Security. In
the Securities and Exchange SR–NYSEArca–2006–17, the Exchange addition, holders of the Securities will
Commission (‘‘Commission’’) the proposed new Commentary .01 to NYSE not receive any interest payments from
proposed rule change as described in Arca Equities Rule 5.2(j)(6) to the Securities. The Securities will have
Items I and II below, which Items have accommodate trading in the Securities.6 a term of 30 years.
been prepared by the Exchange. On July
(a) The Securities and the Index Holders who have not previously
20, 2006, the Exchange filed
Amendment No. 1 to the proposed rule (i) The Securities redeemed their Securities will receive a
change.3 The Commission is publishing cash payment at maturity equal to the
In August 2005, the Commission
this notice and order to solicit approved NYSE Arca Equities Rule principal amount of their Securities
comments on the proposed rule change 5.2(j)(6), which provides general times the index factor 10 on the Final
from interested persons and is standards for the listing and trading of Valuation Date 11 minus the investor fee
approving the proposal, as amended, on ‘‘Index-Linked Securities.’’ 7 Index- on the Final Valuation Date.
an accelerated basis. Linked Securities are securities that Prior to maturity, holders may, subject
I. Self-Regulatory Organization’s provide for the payment at maturity of to certain restrictions,12 redeem their
Statement of the Terms of Substance of a cash amount based on the Securities on any Redemption Date 13
the Proposed Rule Change performance of an underlying index or during the term of the Securities
indexes. Such securities may or may not provided that they present at least
Through NYSE Arca Equities, the provide for the repayment of the
Exchange proposes to amend its rules 50,000 Securities for redemption, or
original principal investment amount. they act through a broker or other
governing NYSE Arca, L.L.C. (also As permitted in NYSE Arca Equities
referred to as the ‘‘NYSE Arca financial intermediaries (such as a bank
Rule 5.2(j)(6), the Exchange is or other financial institution not
Marketplace’’), the equities trading submitting this rule proposal to the
facility of NYSE Arca Equities. Pursuant required to register as a broker-dealer to
Commission pursuant to Section
to NYSE Arca Equities Rule 5.2(j)(6), the engage in securities transactions) that
19(b)(2) of the Act, to obtain
Exchange proposes to trade pursuant to are willing to bundle their Securities for
Commission approval to trade the
unlisted trading privileges (‘‘UTP’’) the Securities pursuant to UTP. redemption with other investors’
Index-Linked Securities (‘‘Securities’’) A description of the Securities and Securities. If a holder chooses to redeem
of Barclays Bank PLC (‘‘Barclays’’), the Index is set forth in the NYSE such holder’s Securities, the holder will
which are linked to the performance of Proposal.8 The Securities are a series of receive a cash payment on the
the GSCI Total Return Index (‘‘Index’’). medium-term debt securities of Barclays applicable Redemption Date equal to the
II. Self-Regulatory Organization’s that provide for a cash payment at principal amount of such holder’s
Statement of the Purpose of, and maturity or upon earlier exchange at the Securities times the index factor on the
Statutory Basis for, the Proposed Rule holder’s option, based on the applicable Valuation Date minus the
Change performance of the Index subject to the investor fee on the applicable Valuation
adjustments described below. Date. To redeem their Securities,
In its filing with the Commission, the The Securities will not have a holders must instruct their broker or
Exchange included statements minimum principal amount that will be other person through whom they hold
concerning the purpose of, and basis for, repaid and, accordingly, payment on the their Securities to follow certain
the proposed rule change and discussed Securities prior to or at maturity may be
any comments it received on the less than the original issue price of the that day (or, if such day is not a trading day, the
proposed rule change. The text of these Securities. In fact, the value of the Index index factor on the immediately preceding trading
statements may be examined at the must increase for the investor to receive
day) divided by 365. The investor fee is the only
places specified in Item III below. The fee holders will be charged in connection with their
at least the $50 principal amount per ownership of the Securities.
Exchange has prepared summaries, set Security at maturity or upon exchange 10 The ‘‘index factor’’ on any given day will be
forth in Sections A, B, and C below of or redemption. If the value of the Index equal to the closing value of the Index on that day
the most significant aspects of such decreases or does not increase divided by the initial index level. The index factor
statements. sufficiently to offset the investor fee,9
on the Final Valuation Date will be equal to the
final index level divided by the initial index level.
A. Self-Regulatory Organization’s The ‘‘initial index level’’ is the closing value of the
4 See Securities Exchange Act Release No. 53658 Index on the date of issuance of the Securities (the
Statement of the Purpose of, and
(April 14, 2006), 71 FR 21064 (April 24, 2006) (SR– ‘‘Trade Date’’) and the ‘‘final index level’’ is the
Statutory Basis for, the Proposed Rule NYSE–2006–20) (the ‘‘NYSE Proposal’’). closing value of the Index on the Final Valuation
Change 5 See Securities Exchange Act Release No. 53849 Date. Telephone conference between John Carey,
(May 22, 2006), 71 FR 30706 (May 30, 2006) (SR– Assistant General Counsel, NYSE Group, Inc., and
1. Purpose Florence Harmon, Senior Special Counsel, Division,
NYSE–2006–20) (the ‘‘NYSE Order’’).
Pursuant to NYSE Arca Equities Rule 6 See Securities Exchange Act Release No. 54189 Commission, on July 14, 2006.
(July 21, 2006) (SR–NYSEArca–2006–17). 11 The ‘‘Final Valuation Date’’ is the last Thursday
5.2(j)(6), the Exchange proposes to trade
7 See Securities Exchange Act Release No. 52204 before maturity of the Securities.
pursuant to UTP the Securities of 12 Telephone conference between John Carey,
(August 3, 2005), 70 FR 46559 (August 10, 2005)
Barclays, which are linked to the (SR–PCX–2005–63). Assistant General Counsel, NYSE Group, Inc., and
performance of the Index. Barclays 8 See supra note 4. Florence Harmon, Senior Special Counsel, Division
intends to issue the Securities under the 9 The investor fee is equal to 0.75% per year times of Market Regulation (‘‘Division’’), Commission, on
name ‘‘iPathSM Exchange-Traded the principal amount of a holder’s Securities times July 13, 2006.
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13 A ‘‘Redemption Date’’ is the third business day


Notes.’’ A rule proposal for the original the index factor, calculated on a daily basis in the
following manner. The investor fee on the date of following a Valuation Date (other than the Final
listing and trading of the Securities was issuance of the Securities will equal zero. On each Valuation Date). A ‘‘Valuation Date’’ is each
subsequent calendar day until maturity or early Thursday from the first Thursday after issuance of
3 In Amendment No. 1, the Exchange clarified redemption, the investor fee will increase by an the Securities until the last Thursday before the
certain aspects of its proposal regarding trading amount equal to 0.75% times the principal amount Final Valuation Date inclusive (or, if such date is
rules and surveillance. of a holder’s Securities times the index factor on not a trading day, the next succeeding trading day).

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Federal Register / Vol. 71, No. 150 / Friday, August 4, 2006 / Notices 44341

procedures as described in the NYSE (b) Dissemination and Availability of replacement page) and is updated on
Proposal.14 Information Reuters 19 at least every 15 seconds 20
If an event of default occurs and the (i) The Intraday Indicative Value during business hours on each day on
maturity of the Securities is accelerated, which the offices of the Index Sponsor
According to the NYSE Proposal, an in New York City are open for business
Barclays will pay the default amount in ‘‘Intraday Indicative Value’’ (or ‘‘IIV’’) (a ‘‘GSCI Business Day’’).21 The
respect of the principal of the Securities meant to approximate the intrinsic settlement price for the Index is also
at maturity. More information regarding economic value of the Securities will be reported on Reuters page GSCI (or any
default procedures, including a calculated and published via the successor or replacement page) on each
quotation period and an objection facilities of the Consolidated Tape GSCI Business Day between 4 p.m. and
period, is set forth in the NYSE Association (‘‘CTA’’) at least every 15 6 p.m., New York time.
Proposal. seconds from 9:30 a.m. to 4 p.m. Eastern
Time (‘‘ET’’) on each day on which the (c) UTP Trading Criteria
(ii) The Index Securities are traded on the NYSE.16 The Exchange will cease trading in
The Index was established in May Additionally, Barclays or an affiliate the Securities if: (1) The listing market
1991 and is designed to be a diversified will calculate and publish the closing stops trading the Securities because of a
benchmark for physical commodities as IIV of the Securities on each trading day regulatory halt similar to a halt based on
at http://www.ipathetn.com. In NYSE Arca Equities Rule 7.12 or a halt
an asset class. The Index reflects the
connection with the Securities, the term because the IIV or the value of the
excess returns that are potentially
‘‘IIV’’ refers to the value at a given time underlying Index is no longer available
available through an unleveraged determined based on the following on at least a 15-second delayed basis; or
investment in the contracts comprising equation: IIV = Principal Amount per (2) the listing market delists the
the GSCI plus the Treasury Bill rate of Unit ($50) multiplied by (Current Index Securities.22 In the event that the
interest that could be earned on funds Level divided by Initial Index Level) 17 Exchange is open for business on a day
committed to the trading of the minus Current Investor Fee.18 that is not a GSCI Business Day, the
underlying contracts.15 The value of the The IIV will not reflect price changes Exchange will not permit trading of the
Index, on any given day, reflects: (i) The to the price of an underlying commodity Securities on that day. Additionally, the
price levels of the contracts included in between the close of trading of the Exchange may cease trading the
the GSCI (which represents the value futures contract at the relevant futures Securities if such other event shall
of the GSCI; (ii) the ‘‘contract daily exchange and 4 p.m. ET. The value of occur or condition exists which, in the
return,’’ which is the percentage change the Securities may accordingly be opinion of the Exchange, makes further
in the total dollar weight of the GSCI influenced by non-concurrent trading dealings on the Exchange inadvisable.
from the previous day to the current hours between the Exchange and the
(d) Trading Rules
day; and (iii) the Treasury Bill rate of various futures exchanges on which the
interest that could be earned on funds futures contracts based on the Index The Exchange deems the Securities to
commodities are traded. be equity securities, thus rendering
committed to the trading of the
While the market for futures trading trading in the Securities subject to the
underlying contracts.
for each of the Index commodities is Exchange’s rules governing the trading
The GSCI, upon which the Index is open, the IIV can be expected to closely
based, is a proprietary index on a approximate the redemption value of 19 The intraday information with respect to the

production-weighted basket of futures Index reported on Reuters is derived solely from


the Securities. However, during NYSE trading prices on the principal trading markets for
contracts on physical commodities Arca Marketplace trading hours when the various Index components. For example, the
traded on trading facilities in major the futures contracts have ceased Index currently includes contracts traded on the
industrialized countries. The value of trading, spreads and resulting premiums Intercontinental Exchange (formerly known as the
International Petroleum Exchange, which now
the GSCI has been normalized such or discounts may widen, and therefore, operates its futures business through ICE Futures)
that its hypothetical level on January 2, increase the difference between the and the London Metal Exchange (‘‘LME’’), both of
1970 was 100. Futures contracts on the price of the Securities and their which are located in London and consequently
have trading days that end several hours before
GSCI, and options on such futures redemption value. The IIV should not be
those of the U.S.-based markets on which the rest
contracts, are currently listed for trading viewed as a real-time update of the of the Index components are traded. During the
on the Chicago Mercantile Exchange. redemption value. portion of the New York trading day when ICE
More information regarding the Futures and LME are closed, the last reported prices
(ii) The Index for Index Components traded on ICE Futures or
operation, calculation methodology, LME are used to calculate the intraday Index
According to the NYSE Proposal, the
weighting, and historical performance of information disseminated on Reuters.
Index Sponsor makes the official 20 Telephone conference between John Carey,
the Index is set forth in the NYSE
calculations of the GSCI. At present, Assistant General Counsel, NYSE Group, Inc., and
Proposal.
this calculation is performed Florence Harmon, Senior Special Counsel, Division,
continuously and is reported on Reuters Commission, on July 27, 2006 (clarifying that the
14 If holders elect to redeem their Securities, Index value will be disseminated at least every 15
Barclays may request that Barclays Capital Inc. (a
page GSCI (or any successor or seconds, not every 3 minutes, during the time the
broker-dealer) purchase the Securities for the cash Securities trade on the Exchange).
16 The IIV calculation will be provided for
amount that would otherwise have been payable by 21 NYSE, as the listing exchange, will not permit

Barclays upon redemption. In this case, Barclays reference purposes only. trading in the Securities if certain information about
will remain obligated to redeem the Securities if 17 The Current Index Level is the most recent the Index value is not disseminated on, for
Barclays Capital Inc. fails to purchase the published level of the Index as reported by the example, a date that is not a GSCI Business Day.
Securities. Any Securities purchased by Barclays Index Sponsor, whereas the Initial Index Level is In such event, NYSE Arca would not permit trading
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Capital Inc. may remain outstanding. the Index level on the initial trade date for the in the Securities. See supra.
15 The Treasury Bill rate of interest used for Securities. 22 E-mail between Janet Kissane, Assistant

purposes of calculating the index on any day is the 18 The Current Investor Fee is the most recent General Counsel, NYSE Group, Inc., and Florence
91-day auction high rate for U.S. Treasury Bills, as daily calculation of the investor fee with respect to Harmon, Senior Special Counsel, Division,
reported on Telerate page 56, or any successor page, the Securities, determined as described above Commission, dated July 31, 2006 (clarifying that the
on the most recent of the weekly auction dates prior (which, during any trading day, will be the investor Securities will cease trading during all trading
to such day. fee determined on the preceding calendar day). hours).

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44342 Federal Register / Vol. 71, No. 150 / Friday, August 4, 2006 / Notices

of equity securities. Trading in the 5.2(j)(6) will prohibit the ETP Holder all relevant parties for all relevant
Securities on the NYSE Arca acting as a registered Market Maker in trading violations.
Marketplace will occur from 4 a.m. to 8 the Securities from being affiliated with The Exchange is able to obtain
p.m. ET in accordance with NYSE Arca a market maker in the Index information regarding trading in the
Equities Rule 7.34(a).23 The Exchange components, the commodities Securities and the Index components
has appropriate rules to facilitate underlying the Index components, or through ETP Holders in connection with
transactions in the Securities during all any derivative instruments based on the such ETP Holders’ proprietary or
trading sessions. The minimum trading Index or based on any Index component customer trades which they affect on
increment for Securities on the or any physical commodity underlying any relevant market. In addition, with
Exchange will be $0.01. an Index component unless adequate regard to the Index components, the
Further, Commentary .01 to NYSE information barriers are in place, as Exchange can obtain market
Arca Equities Rule 5.2(j)(6) sets forth provided in NYSE Arca Equities Rule surveillance information, including
certain restrictions on ETP Holders 7.26. customer identity information, with
acting as registered Market Makers in With respect to trading halts, the respect to transactions occurring on the
the Securities to facilitate Exchange may consider all relevant New York Mercantile Exchange
surveillance.24 Commentary .01(b)–(c) factors in exercising its discretion to (‘‘NYMEX’’), the Kansas City Board of
to NYSE Arca Equities Rule 5.2(j)(6) will halt or suspend trading in the Trade, ICE Futures, and the LME,
require that the ETP Holder acting as a Securities. Trading in the Securities pursuant to its comprehensive
registered Market Maker in the may be halted because of market
Securities provide the Exchange with information sharing agreements with
conditions or for reasons that, in the each of those exchanges. All of the other
necessary information relating to its view of the Exchange, make trading in
trading in the Index components, the trading venues on which current Index
the Securities inadvisable. These may components are traded are members of
commodities underlying the Index
include: (1) The extent to which trading the Intermarket Surveillance Group
components, or options, futures or
is not occurring in the Index (‘‘ISG’’), and the Exchange therefore has
options on futures on the Index, or any
components or (2) whether other access to all relevant trading
other derivatives (collectively,
unusual conditions or circumstances information with respect to those
‘‘derivative instruments’’) based on the
detrimental to the maintenance of a fair contracts without any further action
Index or based on any Index component
and orderly market are present. In being required on the part of the
or any physical commodity underlying
addition, trading in Securities will be Exchange.
an Index component. Commentary
subject to trading halts caused by
.01(d) to NYSE Arca Equities Rule (f) Information Bulletin
5.2(j)(6) will prohibit the ETP Holder extraordinary market volatility pursuant
acting as a registered Market Maker in to the Exchange’s ‘‘circuit breaker’’ Prior to the commencement of
the Securities from using any material rule 25 or by the halt or suspension of trading, the Exchange will inform its
nonpublic information received from the trading of the Index components.26 ETP Holders in an Information Bulletin
any person associated with an ETP The Securities will be deemed of the special characteristics and risks
Holder or employee of such person ‘‘Eligible Listed Securities,’’ as defined associated with trading the Securities.
regarding trading by such person or in NYSE Arca Equities Rule 7.55, for Specifically, the Information Bulletin
employee in the Index components, the purposes of the Intermarket Trading will discuss the following: (1) The
commodities underlying the Index System (‘‘ITS’’) Plan and therefore will procedures for redemptions of
components, or any derivative be subject to the trade through Securities (and that Securities are not
instruments based on the Index or based provisions of NYSE Arca Equities Rule individually redeemable but are
on any Index component or any 7.56, which require that ETP Holders redeemable only in aggregations of at
physical commodity underlying an avoid initiating trade-throughs for ITS least 50,000 Securities); (2) NYSE Arca
Index component (including the securities. Equities Rule 9.2(a),27 which imposes a
Securities). In addition, Commentary (e) Surveillance duty of due diligence on its ETP Holders
.01(a) to NYSE Arca Equities Rule to learn the essential facts relating to
The Exchange’s surveillance every customer prior to trading the
23 During all NYSE Arca Equities trading sessions, procedures will incorporate and rely Securities; (3) how information
the Exchange represents that if the official Index upon existing Exchange surveillance regarding the IIV is disseminated; (4) the
Sponsor calculates an updated Index value, then
such value will be updated and disseminated at procedures governing equities. The requirement that ETP Holders deliver a
least every 15 seconds during such trading session, Exchange believes that these procedures prospectus to investors purchasing
and always will be so during the Exchange’s core are adequate to monitor Exchange newly issued Securities prior to or
trading session (although during this session, the trading of the Securities in all trading
Exchange may rely on the listing exchange to
monitor such calculation and dissemination). The sessions and to detect violations of 27 The Exchange recently amended NYSE Arca

Exchange represents that the official Index Sponsor Exchange rules, thereby deterring Equities Rule 9.2(a) (‘‘Diligence as to Accounts’’) to
calculates and disseminates the Index value from 8 manipulation. provide that ETP Holders, before recommending a
a.m. to 4 p.m. ET. Because this product is not in transaction, must have reasonable grounds to
continuous distribution, an IIV is not required to be The Exchange’s current trading believe that the recommendation is suitable for the
disseminated at least every 15 seconds in all trading surveillance focuses on detecting customer based on any facts disclosed by the
sessions; however, because of the weekly securities trading outside their normal customer as to his other security holdings and as
redemption process for this product, such to his financial situation and needs. Further, the
dissemination of the IIV is required during the
patterns. When such situations are proposed rule amendment provides that prior to the
Exchange’s core trading session. The Exchange may detected, surveillance analysis follows execution of a transaction recommended to a non-
rely on the listing market to monitor such and investigations are opened, where institutional customer, the ETP Holders should
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dissemination of the IIV during the Exchange’s core appropriate, to review the behavior of make reasonable efforts to obtain information
trading session. Telephone conference between concerning the customer’s financial status, tax
John Carey, Assistant General Counsel, NYSE status, investment objectives and any other
Group, Inc., and Florence Harmon, Senior Special 25 See NYSE Arca Equities Rule 7.12. information that they believe would be useful to
Counsel, Division, Commission, on July 12, 2006. 26 See ‘‘UTP Trading Criteria’’ above for specific make a recommendation. See Securities Exchange
24 See Securities Exchange Act Release No. 54189 instances when the Exchange will cease trading the Act Release No. 54045 (June 26, 2006), 71 FR 37971
(July 21, 2006) (SR–NYSEArca–2006–17). Securities. (July 3, 2006) (SR–PCX–2005–115).

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Federal Register / Vol. 71, No. 150 / Friday, August 4, 2006 / Notices 44343

concurrently with the confirmation of a III. Solicitation of Comments thereunder applicable to a national
transaction; and (5) trading information. Interested persons are invited to securities exchange.31 In particular, the
The Information Bulletin will also submit written data, views, and Commission finds that the proposed
reference the fact that there is no arguments concerning the foregoing, rule change is consistent with Section
regulated source of last sale information including whether the proposed rule 6(b)(5) of the Act,32 which requires that
regarding physical commodities, and change, as amended, is consistent with an exchange have rules designed, among
that the Commission has no jurisdiction the Act. Comments may be submitted by other things, to promote just and
over the trading of physical any of the following methods: equitable principles of trade, to remove
commodities such as aluminum, gold, impediments to and perfect the
crude oil, heating oil, corn, and wheat, Electronic Comments mechanism of a free and open market
or the futures contracts on which the • Use the Commission’s Internet and a national market system, and in
value of the Securities is based. comment form (http://www.sec.gov/ general to protect investors and the
rules/sro.shtml); or public interest.
The Information Bulletin will also In addition, the Commission finds
discuss terms of no-action or exemptive • Send an e-mail to rule-
comments@sec.gov. Please include File that the proposal is consistent with
relief by the Commission staff in Section 12(f) of the Act,33 which permits
connection with the Securities under Number SR–NYSEArca–2006–19 on the
an exchange to trade, pursuant to UTP,
the Act. subject line.
a security that is listed and registered on
2. Statutory Basis Paper Comments another exchange.34 The Commission
• Send paper comments in triplicate notes that it previously approved the
The Exchange believes that the basis to Nancy M. Morris, Secretary, listing and trading of the Securities on
under the Act for this proposed rule Securities and Exchange Commission, the NYSE.35 The Commission also finds
change is consistent with the 100 F Street, NE., Washington, DC that the proposal is consistent with Rule
requirements under Section 6(b)(5) 28 20549–1090. 12f–5 under the Act,36 which provides
that an exchange have rules that are that an exchange shall not extend UTP
All submissions should refer to File to a security unless the exchange has in
designed to prevent fraudulent and Number SR–NYSEArca–2006–19. This
manipulative acts and practices, to effect a rule or rules providing for
file number should be included on the transactions in the class or type of
promote just and equitable principles of subject line if e-mail is used. To help the security to which the exchange extends
trade, to foster cooperation and Commission process and review your
coordination with persons engaged in UTP. NYSE Arca Equities rules deem
comments more efficiently, please use the Securities to be equity securities,
facilitating transaction in securities, to only one method. The Commission will thus trading in the Securities will be
remove impediments and perfect the post all comments on the Commission’s subject to the Exchange’s rules
mechanisms of a free and open market, Internet Web site (http://www.sec.gov/
and, in general, to protect investors and governing the trading of equity
rules/sro.shtml). Copies of the securities and the specific rules set forth
the public interest. submission, all subsequent herein for this product class.
In addition, the Exchange believes amendments, all written statements The Commission further believes that
that the proposal is consistent with Rule with respect to the proposed rule the proposal is consistent with Section
12f–5 under the Act 29 because it deems change that are filed with the 11A(a)(1)(C)(iii) of the Act,37 which sets
the Securities to be equity securities, Commission, and all written forth Congress’s finding that it is in the
thus rendering the Securities subject to communications relating to the public interest and appropriate for the
the Exchange’s rules governing the proposed rule change between the protection of investors and the
trading of equity securities.30 Commission and any person, other than maintenance of fair and orderly markets
B. Self-Regulatory Organization’s those that may be withheld from the to assure the availability to brokers,
Statement on Burden on Competition public in accordance with the dealers, and investors of information
provisions of 5 U.S.C. 552, will be with respect to quotations for and
The Exchange does not believe that available for inspection and copying in transactions in securities.
the proposed rule change will impose the Commission’s Public Reference In support of the portion of the
any burden on competition that is not Room. Copies of such filing also will be proposed rule change regarding UTP of
necessary or appropriate in furtherance available for inspection and copying at the Securities, the Exchange has made
of the purposes of the Act. the principal offices of the Exchange. the following representations:
All comments received will be posted
C. Self-Regulatory Organization’s without change; the Commission does 31 In approving this rule change, the Commission
Statement on Comments on the not edit personal identifying notes that it has considered the proposed rule’s
Proposed Rule Change Received From information from submissions. You impact on efficiency, competition, and capital
Members, Participants or Others formation. See 15 U.S.C. 78c(f).
should submit only information that 32 15 U.S.C. 78f(b)(5).

Written comments on the proposed you wish to make available publicly. All 33 15 U.S.C. 78l(f).

rule change were neither solicited nor submissions should refer to File 34 Section 12(a) of the Act, 15 U.S.C. 78l(a),

received. Number SR–NYSEArca–2006–19 and generally prohibits a broker-dealer from trading a


should be submitted on or before security on a national securities exchange unless
the security is registered on that exchange pursuant
28 15
August 25, 2006. to Section 12 of the Act. Section 12(f) of the Act
U.S.C. 78s(b)(5).
29 17 CFR 240.12f–5. IV. Commission’s Findings and Order excludes from this restriction trading in any
30 Telephone conference between John Carey, security to which an exchange ‘‘extends UTP.’’
Granting Accelerated Approval of When an exchange extends UTP to a security, it
gechino on PROD1PC61 with NOTICES

Assistant General Counsel, NYSE Group, Inc., and


Florence Harmon, Senior Special Counsel, Division,
Proposed Rule Change allows its members to trade the security as if it were
Commission, on July 12, 2006 (the Exchange listed and registered on the exchange even though
The Commission finds that the it is not so listed and registered.
requested that the Commission delete the word
‘‘existing’’ to clarify that the Securities will be
proposed rule change, as amended, is 35 See NYSE Order, supra note 5.

subject to all applicable Exchange rules governing consistent with the requirements of the 36 17 CFR 240.12f–5.

the trading of equity securities for the Securities). Act and the rules and regulations 37 15 U.S.C. 78k–1(a)(1)(C)(iii).

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44344 Federal Register / Vol. 71, No. 150 / Friday, August 4, 2006 / Notices

1. NYSE Arca Equities has For the Commission, by the Division of may be necessary to continue work on
appropriate rules to facilitate Market Regulation, pursuant to delegated some of these issues beyond the
transactions in this type of security in authority.40 amendment cycle ending on May 1,
all trading sessions. Nancy M. Morris, 2007.
Secretary. As so prefaced, the Commission has
2. NYSE Arca Equities surveillance
[FR Doc. E6–12635 Filed 8–3–06; 8:45 am] identified the following tentative
procedures are adequate to properly
BILLING CODE 8010–01–P priorities:
monitor the trading of the Securities on (1) Implementation of crime
the Exchange. legislation enacted during the 109th
3. NYSE Arca Equities will distribute UNITED STATES SENTENCING Congresses warranting a Commission
an Information Bulletin to its members COMMISSION response, including (A) the Stop
prior to the commencement of trading of Counterfeiting in Manufactured Goods
the Securities on the Exchange that Sentencing Guidelines for United Act, Pub. L. 109–181; (B) the USA
explains the terms, characteristics, and States Courts PATRIOT Improvement and
risks of trading such securities. Reauthorization Act of 2005, Pub. L.
AGENCY: United States Sentencing 109–177; (C) the Violence Against
4. NYSE Arca Equities will require a Commission. Women and Department of Justice
member with a customer who purchases
ACTION: Notice of proposed priorities; Reauthorization Act of 2005, Pub. L.
newly issued Securities on the
request for public comment. 109–162; (D) the Trafficking Victims
Exchange to provide that customer with Protection Reauthorization of 2005, Pub.
a product prospectus and will note this SUMMARY: As part of its statutory L. 109–164; (E) the Safe, Accountable,
prospectus delivery requirement in the authority and responsibility to analyze Flexible, Efficient Transportation Equity
Information Bulletin. sentencing issues, including operation Act: A Legacy for Users, Pub. L. 109–59;
5. The Exchange will cease trading in of the Federal sentencing guidelines, and (F) other legislation authorizing
the Securities if: (1) The primary market and in accordance with Rule 5.2 of its statutory penalties, creating new
stops trading the securities because of a Rules of Practice and Procedure, the offenses, or pertaining to victims, that
regulatory halt similar to a halt based on Commission is seeking comment on requires incorporation into the
NYSE Arca Equities Rule 7.12 and/or a possible priority policy issues for the guidelines;
halt because the updated IIV or Index amendment cycle ending May 1, 2007. (2) Continuation of its work with the
value are not disseminated at least every DATES: Public comment should be congressional, executive, and judicial
15 seconds; or (2) if such other event received on or before September 1, branches of the government and other
occurs or condition exists which, in the 2006. interested parties on appropriate
opinion of the Exchange, makes further ADDRESSES: Send comments to: United responses to United States v. Booker,
dealings on the Exchange inadvisable; States Sentencing Commission, One including any appropriate guideline
or (3) the primary market delists the Columbus Circle, NE., Suite 2–500, changes in light of the Commission’s
Securities. South Lobby, Washington, DC 20002– 2006 report to Congress, Final Report on
8002, Attention: Public Affairs-Priorities the Impact of United States v. Booker on
This approval order is conditioned on Federal Sentencing, as well as its
NYSE Arca Equities’ adherence to these Comment.
continued analysis of post-Booker data,
representations. FOR FURTHER INFORMATION CONTACT:
case law, and other feedback, including
The Commission finds good cause for Michael Courlander, Public Affairs reasons for departures and variances
approving this proposed rule change, as Officer, Telephone: (202) 502–4590. stated by sentencing courts;
amended, before the thirtieth day after SUPPLEMENTARY INFORMATION: The (3) Continuation of its policy work
the publication of notice thereof in the United States Sentencing Commission is regarding immigration offenses,
Federal Register. As noted previously, an independent agency in the judicial specifically, offenses sentenced under
the Commission previously found that branch of the United States 2L1.1 (Smuggling, Transporting, or
the listing and trading of these Government. The Commission Harboring an Unlawful Alien) and 2L1.2
Securities on the NYSE is consistent promulgates sentencing guidelines and (Unlawfully Entering or Remaining in
with the Act.38 The Commission policy statements for Federal sentencing the United States) and implementation
presently is not aware of any issue that courts pursuant to 28 U.S.C. 994(a). The of any immigration legislation that may
Commission also periodically reviews be enacted;
would cause it to revisit that earlier
and revises previously promulgated (4) Continuation of its work with the
finding or preclude the trading of these
guidelines pursuant to 28 U.S.C. 994(o) congressional, executive, and judicial
funds on the Exchange pursuant to UTP.
and submits guideline amendments to branches of the government and other
Therefore, accelerating approval of this
the Congress not later than the first day interested parties on cocaine sentencing
proposed rule change should benefit
of May each year pursuant to 28 U.S.C. policy, to possibly include a hearing on
investors by creating, without undue 994(p). this issue and a reevaluation of the
delay, additional competition in the The Commission provides this notice Commission’s 2002 report to Congress,
market for these Securities. to identify tentative priorities for the Cocaine and Federal Sentencing Policy;
V. Conclusion amendment cycle ending May 1, 2007. (5) Consideration and possible
The Commission recognizes, however, development of guideline simplification
It is therefore ordered, pursuant to that other factors, such as the enactment options that might improve the
Section 19(b)(2) of the Act, that the of any legislation requiring Commission operation of the sentencing guidelines;
proposed rule change (NYSEArca– action, may affect the Commission’s (6) Continuation of its policy work, in
gechino on PROD1PC61 with NOTICES

2006–19), as amended, is hereby ability to complete work on any of the light of the Commission’s prior research
approved on an accelerated basis.39 tentative priorities by the statutory on criminal history, to develop and
deadline of May 1, 2007. Accordingly, it consider possible options that might
38 See NYSE Order, supra note 5. improve the operation of Chapter Four
39 15 U.S.C. 78s(b)(2). 40 17 CFR 200.30–3(a)(12). (Criminal History);

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