
[Federal Register: March 13, 2008 (Volume 73, Number 50)]
[Notices]               
[Page 13599-13601]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr08-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57456; File No. SR-NYSEArca-2007-91]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Accelerated Approval of a Proposed Rule Change, as Modified by 
Amendment No. 1 Thereto, Relating to the Listing and Trading of Six 
iShares[supreg] S&P GSCITM Commodity-Indexed Trusts

March 7, 2008.
    On August 30, 2007, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange''), 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 19b-4 
thereunder,\2\ a proposed rule change to list and trade shares 
(``Shares'') of the following trusts pursuant to NYSE Arca Equities 
Rule 8.203: iShares[supreg] S&P GSCITM Energy Commodity-
Indexed Trust; iShares[supreg] S&P GSCITM Natural Gas 
Commodity-Indexed Trust; iShares[supreg] S&P GSCITM 
Industrial Metals Commodity-Indexed Trust; iShares[supreg] S&P 
GSCITM Light Energy Commodity-Indexed Trust; iShares[supreg] 
S&P GSCITM Livestock Commodity-Indexed Trust; and 
iShares[supreg] S&P GSCITM Non-Energy Commodity-Indexed 
Trust (collectively, the ``Trusts'').\3\ On February 11, 2008, the 
Exchange filed Amendment No. 1 to the proposed rule change. The 
proposed rule change, as amended, was published for comment in the 
Federal Register on February 20, 2008, for a 15-day comment period.\4\ 
The Commission received no comments on the proposed rule change. This 
order approves the proposed rule change, as modified by Amendment No. 
1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ iShares[supreg] is a registered trademark of Barclays Global 
Investors, N.A. ``S&P GSCI'' is a trademark of Standard & Poor's 
(``S&P''), a division of The McGraw-Hill Companies, Inc.
    \4\ See Securities Exchange Act Release No. 57318 (February 12, 
2008), 73 FR 9381 (``Notice'').
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I. Description of the Proposal

    NYSE Arca proposes to list and trade Shares, which are units of 
beneficial interest representing fractional undivided beneficial 
interests in the net assets of the Trusts.\5\ The objective of

[[Page 13600]]

each Trust is for the performance of the Shares to correspond generally 
to the performance of the Total Return Indexes.\6\ To achieve this 
goal, the Trusts will hold interests in certain commodity pools, which 
in turn will hold long positions in futures contracts on the Excess 
Return Indexes.
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    \5\ The Commission approved for listing on the New York Stock 
Exchange LLC (``NYSE'') shares of the iShares GS Commodity Light 
Energy Indexed Trust, shares of the iShares GS Commodity Industrial 
Metals Indexed Trust, shares of the iShares GS Commodity Livestock 
Indexed Trust, and shares of the iShares GS Commodity Non-Energy 
Indexed Trust. See Securities Exchange Act Release No. 55585 (April 
5, 2007), 72 FR 18500 (April 12, 2007) (SR-NYSE-2006-75). 
Subsequently, S&P acquired the S&P GSCI (formerly known as the 
``Goldman Sachs Commodity Index''), the S&P GSCI-ER and the Total 
Return Indexes from Goldman Sachs & Co., the prior Index Sponsor, 
effective May 2007. According to the Registration Statements, S&P 
has represented that it will not modify the determination 
methodology for the S&P GSCI Total Return Indexes from that existing 
on the date of transfer (May 9, 2007) for at least one year. 
Thereafter, there can be no assurance as to whether the methodology 
will be changed. To date, the Registration Statements for iShares GS 
Commodity Light Energy Indexed Trust and iShares GS Commodity 
Livestock Indexed Trust have not been updated to reflect S&P's index 
acquisitions from Goldman Sachs. The Sponsor of the Trusts, Barclays 
Global Investors International, Inc., has represented that the 
Registration Statements for iShares GS Commodity Light Energy 
Indexed Trust and iShares GS Commodity Livestock Indexed Trust will 
be updated to reflect S&P's acquisitions prior to commencement of 
secondary market trading of Shares of such Trusts. None of the 
Trusts commenced trading on the NYSE. Pursuant to this proposed rule 
change, the Shares will be listed on NYSE Arca rather than on NYSE, 
and will not trade on NYSE.
    \6\ Terms not otherwise defined herein have the same meaning as 
the meaning given in the Notice, supra at note 4.
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    The Notice contains a more detailed description of the Trusts 
(including information about their management and operation, holdings, 
fees, and expenses), the Total Return Indexes, the Excess Return 
Indexes, procedures and payment requirements for creating and redeeming 
Shares, and reports to be distributed to beneficial owners of the 
Shares.

II. Discussion and Commission's Findings

    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.\7\ In particular, the Commission finds that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act,\8\ which requires that the Exchange have rules that are 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 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. As noted above, the 
Commission previously approved the listing and trading of shares of 
four of the Trusts on NYSE.\9\
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    \7\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ See supra at note 5.
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    The Commission further believes that the proposal is consistent 
with Section 11A(a)(1)(C)(iii) of the Act,\10\ which sets forth 
Congress' finding that it is in the public interest and appropriate for 
the protection of investors and the maintenance of fair and orderly 
markets to assure the availability to brokers, dealers, and investors 
of information with respect to quotations for and transactions in 
securities. For each Trust, one or more major market data vendors will 
disseminate between 9:30 a.m. and 4:15 p.m. New York Time (``NYT'') an 
IIV on a per Share basis, which will be updated at least every 15 
seconds.\11\ Additionally, the Trusts' Web site (http://
www.ishares.com), which will be publicly accessible at no charge, will 
contain the following information for each Trust: (a) The prior 
Business Day's NAV on a per Share basis and the reported closing price; 
(b) the Bid-Ask Price; (c) calculation of the premium or discount of 
such price against such NAV; (d) data in chart form displaying the 
frequency distribution of discounts and premiums of the Bid-Ask Price 
against the NAV, within appropriate ranges for each of the four 
previous calendar quarters; (e) the prospectus; (f) the holdings of the 
Trusts; (g) the Basket Amount; and (h) other applicable quantitative 
information. The Exchange's Web site (http://www.nyse.com) will include 
a hyperlink to the Trusts' Web site at http://www.ishares.com. Further, 
NYSE Arca represented that: (1) Futures quotes and last-sale 
information for the commodities underlying the applicable indexes are 
widely disseminated through a variety of market data vendors worldwide, 
including Bloomberg and Reuters; (2) complete real-time data for such 
futures is available by subscription from Reuters and Bloomberg; (3) 
the futures exchanges on which the underlying commodities and CERFs 
trade also provide delayed futures information on current and past 
trading sessions and market news, generally free of charge, on their 
respective Web sites; and (4) the specific contract specifications for 
the futures contracts are also available from the futures exchanges on 
their Web sites as well as other financial informational sources.
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    \10\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \11\ During the NYSE Arca Core Trading Session (9:30 a.m. to 
4:15 p.m., NYT) for the Trusts, one or more major market data 
vendors will also disseminate information with respect to recent NAV 
and Shares outstanding on a daily basis.
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    The Commission believes that the proposal to list and trade the 
Shares is reasonably designed to promote fair disclosure of information 
that may be necessary to price the Shares appropriately and to prevent 
trading when a reasonable degree of transparency cannot be assured. The 
Commission also believes that the Exchange's trading halt rules are 
reasonably designed to prevent trading in the Shares when transparency 
is impaired. Trading on the Exchange in the Shares may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the Shares inadvisable. The Exchange may 
consider all relevant factors in exercising its discretion to halt or 
suspend trading in the Shares. These may include: (1) The extent to 
which trading is not occurring in CERFs or the futures contracts 
included in the applicable Index or Indexes; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. In addition, trading may be halted 
because of extraordinary market volatility pursuant to the Exchange's 
``circuit breaker'' rule.\12\ If the value of the Total Return Index 
associated with a Trust's Shares or the applicable IIV is not being 
disseminated on at least a 15 second basis during the hours the Shares 
trade on the Exchange, the Exchange may halt trading during the day in 
which the interruption to the dissemination of the IIV or the Index 
value occurs. If the interruption to the dissemination of the IIV 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. Additionally, if the Exchange becomes 
aware that the NAV is not disseminated to all market participants at 
the same time, it will halt trading in the Shares until such time as 
the NAV is available to all market participants.
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    \12\ See NYSE ARCA Equities Rule 7.12.
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    The Commission further believes that the trading rules and 
procedures to which the Shares will be subject pursuant to this 
proposal are consistent with the Act. The Exchange has represented that 
the Shares will be

[[Page 13601]]

traded on the Exchange similar to other equity securities.\13\
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    \13\ The Commission notes that NYSE Arca Equities Rules 
8.203(g)--(i) set forth certain restrictions on ETP Holders acting 
as registered Market Makers in Commodity Index Trust Shares to 
facilitate surveillance. NYSE Arca Equities Rule 8.203(h) requires 
that the ETP Holder acting as a registered Market Maker in the 
Shares provide the Exchange with information relating to its trading 
in the applicable physical commodities included in, or options, 
futures or options on futures on, the applicable Index or any other 
derivatives based on the Index. NYSE Arca Equities Rule 8.203(i) 
prohibits the ETP Holder acting as a registered Market Maker in the 
Shares from using any material nonpublic information received from 
any person associated with an ETP Holder or employee of such person 
regarding trading by such person or employee in the applicable 
physical commodities included in, or options, futures or options on 
futures on, the Index or any other derivatives based on the Index 
(including the Shares). In addition, as stated above, NYSE Arca 
Equities Rule 8.203(g) prohibits the ETP Holder acting as a 
registered Market Maker in the Shares from being affiliated with a 
market maker in the applicable physical commodities included in, or 
options, futures or options on futures on, the Index or any other 
derivatives based on the Index unless adequate information barriers 
are in place, as provided in NYSE Arca Equities Rule 7.26.
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    In support of this proposal, the Exchange has made the following 
representations:

    (1) It has obtained from the Sponsor a representation that the 
Trustee will make the NAV per Share available to all market 
participants at the same time.
    (2) The Exchange will utilize its existing surveillance 
procedures applicable to derivative products to monitor trading in 
the Shares. The Exchange represents that these procedures are 
adequate to properly monitor Exchange trading of the Shares in all 
trading sessions and to deter and detect violations of Exchange 
rules. The Exchange is able to obtain information regarding trading 
in the Shares, the physical commodities included in, or options, 
futures or options on futures on, an index underlying an issue of 
Commodity Index Trust Shares or any other derivatives based on such 
index, through ETP Holders, in connection with such ETP Holders' 
proprietary or customer trades which they effect on any relevant 
market. With regard to the Index components, the Exchange can obtain 
market surveillance information, including customer identity 
information, with respect to transactions occurring on the NYM, the 
Kansas City Board of Trade, ICE and the LME, pursuant to its 
comprehensive information sharing agreements with each of those 
exchanges. All of the other trading venues on which current Index 
components are traded are members of the ISG, and the Exchange 
therefore has access to all relevant trading information with 
respect to those contracts without any additional action being 
required on the part of the Exchange.
    (3) Prior to the commencement of trading, the Exchange will 
inform its ETP Holders in an Information Bulletin of the special 
characteristics and risks associated with trading the Shares, 
including risks inherent with trading the Shares during the Opening 
and Late Trading Sessions when the updated IIV is not calculated and 
disseminated, and suitability recommendation requirements.\14\
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    \14\ The Notice describes in greater detail the information that 
will be included in the Information Bulletin.

This approval order is based on the Exchange's representations.
    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 the listing on NYSE of four of the proposed 
products and that no comments were received during the 15-day comment 
period. The Commission believes that the proposed rule change, as 
modified by Amendment No. 1, does not raise any novel regulatory 
issues. Consequently, the Commission believes that it is appropriate to 
permit investors to benefit from these additional investment choices 
without delay.

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-NYSEArca-2007-91), as 
modified by Amendment No. 1 thereto, be, and it hereby is, approved on 
an accelerated basis.
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    \15\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-5034 Filed 3-12-08; 8:45 am]

BILLING CODE 8011-01-P
