

[Federal Register: October 12, 2007 (Volume 72, Number 197)]
[Notices]               
[Page 58144-58145]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc07-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56625; File No. SR-NYSEArca-2007-73]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change Relating To Extended Hours Trading of Investment 
Company Units and Portfolio Depository Receipts

October 5, 2007.
    On July 26, 2007, NYSE Arca, Inc. (``NYSE Arca'' 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 to 
amend NYSE Arca Equities Rules 5.2(j)(3) (Investment Company Units) and 
8.100 (Portfolio Depositary Receipts). The proposed rule change was 
published for comment in the Federal Register on September 4, 2007.\3\ 
The Commission received no comment letters on the proposal. This order 
approves the proposed rule change.
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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. 56328 (August 28, 
2007), 72 FR 50705.
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    The Exchange proposes to amend the above-cited rules to permit 
Investment Company Units and Portfolio Depositary Receipts listed or 
traded on the NYSE Arca Marketplace pursuant to Rule 19b-4(e) under the 
Act \4\ to be traded in the Opening Session (4 a.m. to 9:30 a.m. 
Eastern Time (``ET'')) without the requirement that an updated intraday 
indicative value (``IIV'') or index value be disseminated.\5\ The 
Exchange, however, must continue to disseminate an updated IIV and 
index value during the Core Trading Session (9 a.m. to 4:15 p.m.). The 
Exchange intends to distribute to its ETP Holders and make available on 
its Web site at http://www.nyse.com a Regulatory Information Bulletin 

titled ``Exchange-Traded Funds--Extended Trading Hours'' that discloses 
the risks involved in trading in the Opening and Late Trading Session, 
including the lack of dissemination of the index value and IIV, lower 
liquidity, higher volatility and wider spreads. NYSE Arca's Regulatory 
Information Bulletin will also highlight that investors may be at 
disadvantage to market professionals during the Opening and Late 
Sessions in that they may not have access to the updated index value or 
IIV that would otherwise be available during the Core Trading Session. 
In addition, in a separate filing with the Commission, the Exchange 
recently amended NYSE Arca Equities Rule 7.34(e) to require ETP Holders 
to disclose to customers additional risks associated with extended 
hours trading in new derivative securities products.\6\
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    \4\ 17 CFR 240.19b-4(e).
    \5\ In a related filing, the Commission is approving NYSE Arca's 
proposal to expand the trading hours of certain ETFs to include all 
three trading sessions. See Securities Exchange Act Release No. 
56329 (August 28, 2007) (SR-NYSEArca-2007-75).
    \6\ See Securities Exchange Act Release No. 56270 (August 15, 
2007), 72 FR 47109 (August 22, 2007) (SR-NYSEArca-2007-74).
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    After careful review, 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. In 
particular, the Commission finds that the proposed rule change is 
consistent with section 6(b)(5) of the Act.\7\ The Commission

[[Page 58145]]

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). 
Trading during extended hours carries more risks than during regular 
business hours. With ETFs in particular, customers who trade when an 
IIV is not calculated and publicly disseminated may be at a 
disadvantage to professional traders who have their own means of 
calculating a reliable estimate of the net asset value. The Exchange 
has represented that it will distribute to its ETP Holders an 
information bulletin that discusses this particular risk and other 
risks of trading ETFs outside of normal business hours. In view of 
these additional disclosures, the Commission believes it is reasonable 
and consistent with the Act for the Exchange to extend the trading 
hours of certain ETFs in the manner described in this proposal.
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    \7\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NYSEArca-2007-73) be, and 
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).
    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
Nancy M. Morris,
Secretary.
[FR Doc. E7-20121 Filed 10-11-07; 8:45 am]

BILLING CODE 8011-01-P
