

[Federal Register: December 27, 2007 (Volume 72, Number 247)]
[Notices]               
[Page 73388-73392]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27de07-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56985; File No. SR-NASDAQ-2007-098]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change Relating to the Trading of Certain Securities Outside of 
the Regular Market Session

December 18, 2007.
    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 December 7, 2007, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which items have been substantially prepared by the Exchange. 
This order provides notice of and approves the proposed rule change on 
an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to: (1) Amend NASDAQ Rules 4420(i), 4420(j), 
and 4630 to permit the trading of Portfolio Depository Receipts, Index 
Fund Shares, and Commodity-Related Securities (collectively, ``ETFs''), 
respectively, during NASDAQ's Pre- and Post-Market Sessions; \3\ (2) 
add new NASDAQ Rule 4631, which would require certain disclosures to be 
made by members to their non-member customers prior to accepting orders 
for trading as a result of the proposed extended trading hours for 
ETFs; (3) allow certain ETFs currently approved for trading on the 
Exchange pursuant to unlisted trading privileges (``UTP'') to trade 
during NASDAQ's Pre- and Post-Market Sessions; and (4) make certain 
technical, clarifying changes to NASDAQ Rules 4420(i) and 4420(j) 
relating to the dissemination of the underlying index value with 
respect to Non-US Component Stocks \4\ included in the index. The text 
of the proposed rule change is available at the Exchange's principal 
office, the Commission's Public Reference Room, and http://nasdaq.complinet.com
.

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    \3\ NASDAQ defines the Pre-Market Session as the trading session 
that begins at 7 a.m. and continues until 9:30 a.m. The Post-Market 
Session means the trading session that begins at 4 p.m. or 4:15 p.m. 
and continues until 8 p.m. The Regular Market Session means the 
trading session from 9:30 a.m. until 4 p.m. or 4:15 p.m. See NASDAQ 
Rule 4120(b)(4).
    \4\ Non-US Component Stocks are equity securities that: (1) Are 
not registered under Sections 12(a) or 12(g) of the Act (15 U.S.C. 
78l(a) and 15 U.S. 78l(g)); (2) are issued by an entity that is not 
organized, domiciled, or incorporated in the United States; and (3) 
are issued by an entity that is an operating company (including Real 
Estate Investment Trusts and income trusts, but excluding investment 
trusts, unit trusts, mutual funds, and derivatives). See NASDAQ 
Rules 4420(i)(1)(D) and 4420(j)(1)(D).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange 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 III below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ states that its members currently trade a wide variety of 
ETFs on the Exchange pursuant to UTP in accordance with NASDAQ Rules 
4420(i), 4420(j), and 4630 and has confined member trading in such ETFs 
to only the Exchange's Regular Market Session. This trading restriction 
is premised on the unavailability of an updated current index value 
and/or Intraday Indicative Value \5\ during the Pre- and Post-Market 
Sessions. Under the proposal, NASDAQ seeks to permit trading in ETFs 
during the Pre-Market and Post-Market Sessions, provided that its 
members provide non-members certain pre-trade disclosures prior to 
accepting non-member orders in such ETFs. Accordingly, the Exchange 
proposes to amend NASDAQ Rules 4420(i), 4420(j), and 4630 to allow 
members to trade ETFs during all three Market Sessions and limit the 
hours during which the dissemination of applicable current index values 
and updated Intraday Indicative Values \6\ are required. Because the 
applicable current

[[Page 73389]]

index values and updated Intraday Indicative Values may not be 
available during the Pre- and Post-Market Sessions, the Exchange will 
require such updated values to be disseminated only during the Regular 
Market Session and the last computed index value and Intraday 
Indicative Value to be disseminated when such values do not change. 
Specifically with respect to NASDAQ Rule 4630, NASDAQ proposes to 
clarify that all securities approved pursuant to this rule are eligible 
for trading during all Exchange Market Sessions, provided that its 
members provide non-member customers certain disclosures prior to 
accepting non-member customer orders for execution in the Pre-Market 
and Post-Market Sessions.
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    \5\ The Intraday Indicative Value is also sometimes referred to 
as the Indicative Optimized Portfolio Value, the Indicative Fund 
Value, the Indicative Trust Value, and the Indicative Partnership 
Value, depending on the type of ETF being traded and the terminology 
used.
    \6\ See NASDAQ Rules 4420(i)(3)(C) and 4420(j)(3)(C) (describing 
the Intraday Indicative Value and its dissemination requirements).
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    NASDAQ proposes to add new Rule 4631, which would require Exchange 
members to disclose to non-member customers the risks associated with 
trading in the Pre-Market and Post-Market Sessions, including the lack 
of dissemination of the applicable updated index value and the Intraday 
Indicative Value for ETFs during such sessions. In particular, new 
NASDAQ Rule 4631 will require members to disclose that, because the 
Intraday Indicative Value is not calculated or widely disseminated 
during the Pre-Market and Post-Market Sessions, an investor who is 
unable to calculate an implied value for an ETF in those sessions may 
be at a disadvantage to market professionals. The Exchange believes 
that requiring members to disclose this risk to non-member customers 
will facilitate informed participation in extended-hours trading. 
NASDAQ notes that NYSE Arca, Inc. has amended its rules to similarly 
allow for extended-hours trading in ETFs, as long as similar mandatory 
disclosures are made by its members prior to accepting non-member 
customer orders.\7\
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    \7\ See Securities Exchange Act Release Nos. 56625 (October 5, 
2007), 72 FR 58144 (October 12, 2007) (SR-NYSEArca-2007-73) 
(approving certain changes to the generic listing standards for 
certain ETFs); 56270 (August 15, 2007), 72 FR 47109 (August 22, 
2007) (SR-NYSEArca-2007-74) (requiring disclosure by members of 
additional risks associated with trading ETFs during all trading 
sessions); and 56627 (October 5, 2007), 72 FR 58145 (October 12, 
2007) (SR-NYSEArca-2007-75) (approving extended trading hours for 
certain ETFs).
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    The Exchange also proposes to make certain technical changes to 
NASDAQ Rules 4420(i) and 4420(j) to make clear that, with respect to 
Non-US Component Stocks that are included in an underlying combination 
index, the impact on such combination index must be disseminated at 
least every 60 seconds during the Regular Market Session. This proposed 
change to NASDAQ Rules 4420(i) and 4420(j) corresponds to the 
dissemination requirements for indexes based on Non-US Component 
Stocks.
    In addition to amending NASDAQ Rules 4420(i), 4420(j), 4630 and 
adding new NASDAQ Rule 4631, the Exchange proposes to permit the 
trading of ETFs, previously approved by the Commission, during the Pre-
Market and Post-Market Sessions, subject to the mandatory disclosure 
requirements proposed in new NASDAQ Rule 4631. Specifically, the 
Exchange proposes that the following ETFs be eligible for trading 
during the Pre-Market and Post-Market Sessions upon approval of the 
proposed amendments to NASDAQ Rules 4420(i), 4420(j), 4630, and new 
NASDAQ Rule 4631:
     iShares GSCI Commodity-Indexed Trust; \8\
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    \8\ See Securities Exchange Act Release No. 55861 (June 5, 
2007), 72 FR 32153 (June 11, 2007) (SR-NASDAQ-2007-054).
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     the PowerShares DB Energy Fund; the PowerShares DB Oil 
Fund; the PowerShares DB Precious Metals Fund; the PowerShares DB Gold 
Fund; the PowerShares DB Silver Fund; the PowerShares DB Base Metals 
Fund; and the PowerShares DB Agriculture Fund; \9\
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    \9\ See Securities Exchange Act Release No. 55862 (June 5, 
2007), 72 FR 32380 (June 12, 2007) (SR-NASDAQ-2007-053).
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     United States Natural Gas Fund; \10\
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    \10\ See Securities Exchange Act Release No. 55781 (May 17, 
2007), 72 FR 29191 (May 24, 2007) (SR-NASDAQ-2007-052).
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     PowerShares DB Commodity Index Tracking Fund; \11\
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    \11\ See Securities Exchange Act Release No. 55767 (May 15, 
2007), 72 FR 28733 (May 22, 2007) (SR-NASDAQ-2007-051).
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     PowerShares DB G10 Currency Harvest Fund; \12\
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    \12\ See Securities Exchange Act Release No. 55739 (May 10, 
2007), 72 FR 27885 (May 17, 2007) (SR-NASDAQ-2007-049).
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     Claymore MACROshares Oil Up Tradeable Shares and Claymore 
MACROshares Oil Down Tradeable Shares; \13\
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    \13\ See Securities Exchange Act Release No. 55740 (May 10, 
2007), 72 FR 27889 (May 17, 2007) (SR-NASDAQ-2007-048).
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     iPath Exchange-Traded Notes Linked to the Performance of 
the GSCI Total Return Index; iPath Exchange-Traded Notes Linked to the 
Performance of the Dow Jones--AIG Commodity Index Total Return; and 
iPath Exchange Traded Notes Linked to the Performance of the Goldman 
Sachs Crude Oil Total Return Index; \14\
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    \14\ See Securities Exchange Act Release No. 55760 (May 15, 
2007), 72 FR 28736 (May 22, 2007) (SR-NASDAQ-2007-046).
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     United States Oil Fund, LP; \15\
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    \15\ See Securities Exchange Act Release No. 55761 (May 15, 
2007), 72 FR 28739 (May 22, 2007) (SR-NASDAQ-2007-045).
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     PowerShares DB U.S. Dollar Index Bullish Fund and 
PowerShares DB U.S. Dollar Index Bearish Fund; \16\
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    \16\ See Securities Exchange Act Release No. 55489 (March 19, 
2007), 72 FR 13843 (March 23, 2007) (SR-NASDAQ-2007-023).
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     iShares Silver Trust; \17\
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    \17\ See Securities Exchange Act Release No. 55385 (March 2, 
2007), 72 FR 10797 (March 9, 2007) (SR-NASDAQ-2007-018).
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     iShares COMEX Gold Trust; \18\
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    \18\ See Securities Exchange Act Release No. 55380 (March 1, 
2007), 72 FR 10280 (March 7, 2007) (SR-NASDAQ-2007-014).
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     Four Ultra Funds listed and traded on the American Stock 
Exchange LLC (``Amex'') pursuant to Commission order on May 10, 2006: 
(1) Ultra S&P 500; (2) Ultra Nasdaq-100; (3) Ultra Dow 30; and (4) 
Ultra S&P MidCap 400; and 27 Ultra Funds listed and traded on Amex 
pursuant to Commission order on January 17, 2007: (1) Ultra Russell 
2000; (2) Ultra S&P SmallCap 600; (3) Ultra S&P500/Citigroup Value; (4) 
Ultra S&P500/Citigroup Growth; (5) Ultra S&P MidCap 400/Citigroup 
Value; (6) Ultra S&P MidCap 400/Citigroup Growth; (7) Ultra S&P 
SmallCap 600/Citigroup Value; (8) Ultra S&P SmallCap600/Citigroup 
Growth; (9) Ultra Basic Materials; (10) Ultra Consumer Goods; (11) 
Ultra Consumer Services; (12) Ultra Financials; (13) Ultra Health Care; 
(14) Ultra Industrials; (15) Ultra Oil & Gas; (16) Ultra Real Estate; 
(17) Ultra Semiconductors; (18) Ultra Technology; (19) Ultra Utilities; 
(20) Ultra Russell Midcap Index; (21) Ultra Russell Midcap Growth 
Index; (22) Ultra Russell Midcap Value Index; (23) Ultra Russell 1000 
Index; (24) Ultra Russell 1000 Growth Index; (25) Ultra Russell 1000 
Value Index; (26) Ultra Russell 2000 Growth Index; and (27) Ultra 
Russell 2000 Value Index; \19\
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    \19\ See Securities Exchange Act Release No. 55353 (February 26, 
2007), 72 FR 9802 (March 5, 2007) (SR-NASDAQ-2007-011).
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     Four Short Funds listed and traded on Amex pursuant to 
Commission order on May 10, 2006: (1) Short S&P 500; (2) Short Nasdaq-
100; (3) Short Dow 30; and (4) Short S&P MidCap 400; and 27 Short Funds 
listed and traded on Amex pursuant to Commission order on January 17, 
2007: (1) Short Russell 2000; (2) Short S&P SmallCap 600; (3) Short 
S&P500/Citigroup Value; (4) Short S&P500/Citigroup Growth; (5) Short 
S&P MidCap 400/Citigroup Value; (6) Short S&P MidCap 400/Citigroup 
Growth; (7) Short S&P SmallCap 600/Citigroup Value; (8) Short S&P 
SmallCap 600/Citigroup Growth; (9) Short Basic Materials; (10) Short

[[Page 73390]]

Consumer Goods; (11) Short Consumer Services; (12) Short Financials; 
(13) Short Health Care; (14) Short Industrials; (15) Short Oil & Gas; 
(16) Short Real Estate; (17) Short Semiconductors; (18) Short 
Technology; (19) Short Utilities; (20) Short Russell Midcap Index; (21) 
Short Russell Midcap Growth Index; (22) Short Russell Midcap Value 
Index; (23) Short Russell 1000 Index; (24) Short Russell 1000 Growth 
Index; (25) Short Russell 1000 Value Index; (26) Short Russell 2000 
Growth Index; and (27) Short Russell 2000 Value Index; \20\
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    \20\ See id.
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     Four UltraShort Funds listed and traded on Amex pursuant 
to Commission order on June 23, 2006: (1) UltraShort S&P 500; (2) 
UltraShort Nasdaq-100; (3) UltraShort Dow 30; and (4) UltraShort S&P 
MidCap 400; and 27 UltraShort funds listed and traded on Amex pursuant 
to Commission order on January 17, 2007: (1) UltraShort Russell 2000; 
(2) UltraShort S&P SmallCap 600; (3) UltraShort S&P500/Citigroup Value; 
(4) UltraShort S&P500/Citigroup Growth; (5) UltraShort S&P MidCap 400/
Citigroup Value; (6) UltraShort S&P MidCap 400/Citigroup Growth; (7) 
UltraShort S&P SmallCap 600/Citigroup Value; (8) UltraShort S&P 
SmallCap 600/Citigroup Growth; (9) UltraShort Basic Materials; (10) 
UltraShort Consumer Goods; (11) UltraShort Consumer Services; (12) 
UltraShort Financials; (13) UltraShort Health Care; (14) UltraShort 
Industrials; (15) UltraShort Oil & Gas; (16) UltraShort Real Estate; 
(17) UltraShort Semiconductors; (18) UltraShort Technology; (19) 
UltraShort Utilities; (20) UltraShort Russell Midcap Index; (21) 
UltraShort Russell Midcap Growth Index; (22) UltraShort Russell Midcap 
Value Index; (23) UltraShort Russell 1000 Index; (24) UltraShort 
Russell 1000 Growth Index; (25) UltraShort Russell 1000 Value Index; 
(26) UltraShort Russell 2000 Growth Index; and (27) UltraShort Russell 
2000 Value Index; \21\
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    \21\ See id.
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     iShares Lehman TIPS Bond Fund; iShares Lehman Aggregate 
Bond Fund; iShares iBoxx $ Investment Grade Corporate Bond Fund; 
iShares Lehman 20+ Year Treasury Bond Fund; iShares 7-10 Year Treasury 
Bond Fund; iShares Lehman 1-3 Year Treasury Bond Fund; iShares Lehman 
Short Treasury Bond Fund; iShares Lehman 3-7 Year Treasury Bond Fund; 
iShares Lehman 10-20 Year Treasury Bond Fund; iShares Lehman 1-3 Year 
Credit Bond Fund; iShares Lehman Intermediate Credit Bond Fund; iShares 
Lehman Credit Bond Fund; iShares Lehman Intermediate Government/Credit 
Bond Fund; and iShares Lehman Government/Credit Bond Fund; \22\ and
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    \22\ See Securities Exchange Act Release No. 55300 (February 15, 
2007), 72 FR 8227 (February 23, 2007) (SR-NASDAQ-2007-002).
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     CurrencyShares\TM\ Australian Dollar Trust that issues 
Australian Dollar Shares; CurrencyShares\TM\ British Pound Sterling 
Trust that issues British Pound Sterling Shares; CurrencyShares\TM\ 
Canadian Dollar Trust that issues Canadian Dollar Shares; 
CurrencyShares\TM\ Euro Trust that issues Euro Shares; 
CurrencyShares\TM\ Japanese Yen Trust that issues Japanese Yen Shares; 
CurrencyShares\TM\ Mexican Peso Trust that issues Mexican Peso Shares; 
CurrencyShares\TM\ Swedish Krona Trust that issues Swedish Krona 
Shares; and CurrencyShares\TM\ Swiss Franc Trust that issues Swiss 
Franc Shares.\23\
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    \23\ See Securities Exchange Act Release No. 55344 (February 23, 
2007), 72 FR 9799 (March 5, 2007) (SR-NASDAQ-2006-057).
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    In support of this proposed rule change, the Exchange states that 
the representations in the Commission approval orders for the foregoing 
ETFs continue to apply and would be applicable to trading during all 
three trading sessions on NASDAQ. Specifically, the Exchange makes the 
following representations:
    1. The Exchange has appropriate rules to facilitate transactions in 
shares of the above ETFs during all trading sessions. The Exchange 
deems such shares to be equity securities, thus rendering trading in 
such shares subject to NASDAQ's existing rules governing the trading of 
equity securities.
    2. NASDAQ's surveillance procedures are adequate to properly 
monitor trading of shares of the above ETFs in all trading 
sessions.\24\
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    \24\ NASDAQ states that it may obtain information via the 
Intermarket Surveillance Group (``ISG'') from other exchanges that 
are members or affiliate members of ISG. In addition, as referenced 
in the applicable Commission approval orders, NASDAQ has in place 
information sharing agreements with the relevant exchange(s).
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    3. NASDAQ has distributed an Information Circular to members prior 
to the commencement of trading of the shares of the above ETFs on the 
Exchange that explains the terms, characteristics, and risks of trading 
such shares.
    4. NASDAQ will require members with a customer who purchases newly-
issued shares of the above ETFs in any trading session on the Exchange 
to provide that customer with a product description, if available, or a 
prospectus, and has noted this delivery requirement in the Information 
Circular.
    5. When NASDAQ is the UTP trading market, NASDAQ will cease trading 
in the shares of ETFs during all trading sessions if (a) the listing 
market stops trading such shares, or (b) the listing market delists 
such shares. Additionally, NASDAQ may cease trading the shares if such 
other event shall occur or condition exists which, in the opinion of 
the Exchange, makes further dealings on NASDAQ inadvisable. UTP trading 
in the shares of ETFs is also governed by the trading halt provisions 
of NASDAQ Rules 4120 and 4121.
    6. When NASDAQ is the listing market, NASDAQ may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the shares of an ETF. Trading may be halted because of 
market conditions or for reasons that, in the view of the Exchange, 
make trading in the shares inadvisable. Factors for consideration may 
include (a) the extent to which trading is not occurring in the 
securities or other instruments underlying an ETF, or (b) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. In addition, trading in the shares 
of listed ETFs are subject to trading halts caused by extraordinary 
market volatility pursuant to NASDAQ's ``circuit breaker'' rule (NASDAQ 
Rule 4121) or by the halt or suspension of trading of the underlying 
securities or other instruments underlying an ETF. If the Intraday 
Indicative Value or the index value applicable to a series of shares is 
not being disseminated as required, the Exchange may halt trading 
during the day in which the interruption to the dissemination of the 
Intraday Indicative Value or the index value occurs. If the 
interruption to the dissemination of the Intraday Indicative Value or 
the index value persists past the trading day in which it occurred, the 
Exchange will halt trading no later than the beginning of the trading 
day following the interruption.
    7. The Intraday Indicative Value and/or index value (or value of 
the underlying asset or instrument, if not an index) will continue to 
be disseminated during all three trading sessions, as reflected in the 
relevant proposed rule changes filed by the Exchange and approved by 
the Commission.
    NASDAQ intends to distribute to its members and make available on 
its Web site at http://www.nasdaqtrader.com a Regulatory Alert titled 

``Exchange-Traded Funds--Extended Trading Hours'' that discloses, among 
other things: (1) That the current underlying index value and Intraday 
Indicative Value may not be updated during the

[[Page 73391]]

Pre-Market and Post-Market Sessions; (2) that commodity and currency 
spot prices are available during the Regular Market Session, and 
commodity and currency futures prices generally will not be available 
during the Pre-Market and Post-Market Sessions; \25\ (3) that lower 
liquidity in the Pre-Market and Post-Market Sessions may impact 
pricing; (4) that higher volatility in the Pre-Market and Post-Market 
Sessions may impact pricing; (5) that wider spreads may occur in the 
Pre-Market and Post-Market Sessions; (6) the circumstances that trigger 
trading halts; (7) required customer disclosures; \26\ and (8) 
suitability requirements.
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    \25\ Nasdaq states that, in certain cases, the futures or 
options markets for a particular commodity may be closed during part 
of the Regular Market Session, and the Intraday Indicative Value 
would be static for that particular future or options price, but 
widely disseminated. In addition, the prices of certain futures 
contracts in commodities (e.g., gold) and currencies are available 
on a 24-hour basis.
    \26\ See proposed NASDAQ Rule 4631.
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    The Exchange believes that, with this additional disclosure, it is 
appropriate to permit trading during all three of NASDAQ's trading 
sessions, notwithstanding the absence of a disseminated updated index 
value or Intraday Indicative Value during all or part of NASDAQ's 
trading hours. In addition, NASDAQ notes that, if the official index 
value does not change during some or all of the period when trading is 
occurring on the Exchange (for example, because of time zone 
differences or holidays in countries where the index component stocks 
trade), then the last calculated official index value must remain 
available throughout NASDAQ trading hours. Similarly, if the Intraday 
Indicative Value does not change during any portion of NASDAQ trading 
hours, then the last official calculated Intraday Indicative Value must 
remain available throughout NASDAQ trading hours.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\27\ in general, and furthers the 
objectives of section 6(b)(5) of the Act,\28\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices; 
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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    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. 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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NASDAQ-2007-098 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC, 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2007-098. 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 such filing also will be available for 
inspection and copying at the principal office of the Exchange. 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-NASDAQ-2007-098 and should 
be submitted on or before January 17, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, 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.\29\ In particular, the Commission finds that the proposed 
rule change is consistent with section 6(b)(5) of the Act,\30\ which 
requires, among other things, that the rules of a national securities 
exchange be 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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    \29\ 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).
    \30\ 15 U.S.C. 78f(b)(5).
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    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. Trading during extended hours carries more risks 
than during regular business hours. With ETFs in particular, customers 
who trade when a fund's Intraday Indicative Value 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 
fund's net asset value or ``NAV.'' The Exchange has represented that it 
will distribute to its members a Regulatory Alert that discusses this 
particular risk and other risks of trading ETFs outside of the Regular 
Market Session. 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

[[Page 73392]]

the ETFs in the manner described in this proposal.
    The Commission finds good cause for approving the proposed rule 
change before the 30th day after the date of publication of notice of 
filing thereof in the Federal Register. The Commission notes that it 
has previously approved similar proposals made by another national 
securities exchange.\31\ Those proposals were subject to full notice-
and-comment periods before Commission action, and no comments were 
received. The Commission presently is not aware of any regulatory issue 
that should cause it to revisit those findings or should preclude the 
extension of trading hours of the ETFs on the Exchange. Therefore, the 
Commission believes that accelerating approval of this proposal is 
reasonable.
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    \31\ See Securities Exchange Act Release Nos. 56625 (October 5, 
2007), 72 FR 58144 (October 12, 2007) (SR-NYSEArca-2007-73) 
(approving certain changes made to the generic listing standards for 
certain ETFs) and 56627 (October 5, 2007), 72 FR 58145 (October 12, 
2007) (SR-NYSEArca-2007-75) (approving extended trading hours for 
certain ETFs).
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V. Conclusion

    IT IS THEREFORE ORDERED, pursuant to section 19(b)(2) of the 
Act,\32\ that the proposed rule change (SR-NASDAQ-2007-098) be, and it 
hereby is, approved on an accelerated basis.
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    \32\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-24989 Filed 12-26-07; 8:45 am]

BILLING CODE 8011-01-P
