
[Federal Register: March 21, 2008 (Volume 73, Number 56)]
[Notices]               
[Page 15230-15236]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr08-116]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57514; File No. SR-Amex-2008-02]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Amendment No. 2 to Proposed Rule Change and Order 
Granting Accelerated Approval of Such Proposed Rule Change, as Modified 
by Amendment Nos. 1 and 2 Thereto, Relating to Rules Permitting the 
Listing and Trading of Managed Fund Shares, Fees Applicable to Such 
Managed Fund Shares, and the Listing and Trading of Shares of the Bear 
Stearns Current Yield Fund

 March 17, 2008.

I. Introduction

    On February 7, 2008, the American Stock Exchange, LLC (``Amex'' 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 seeking to: (1) Adopt new Amex Rules 1000B, 1001B, 
1002B, and 1003B to permit the listing and trading of securities 
(``Managed Fund Shares'') issued by an actively managed, open-end 
investment management company; (2) list and trade the shares 
(``Shares'') of the Bear Stearns Current Yield Fund (``Fund''), an 
investment portfolio of the Bear Stearns Active ETF Trust (``Trust''), 
pursuant to those rules; and (3) amend its original listing and annual 
listing fees to include Managed Fund Shares and make certain other 
changes. The proposed rule change was published for comment in the 
Federal Register on February 14, 2008.\3\ On February 20, 2008, the 
Exchange filed Amendment No. 1 to the proposed rule change.\4\ On March 
14, 2008, the Exchange filed Amendment No. 2 to the proposed rule 
change.\5\ The Commission received no comments regarding the proposal. 
This order provides notice and solicits comments from interested 
persons regarding Amendment No. 2 to the proposed rule change and 
approves the proposed rule change, as modified by Amendment Nos. 1 and 
2 thereto, on an accelerated basis.
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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. 57297 (February 8, 
2008), 73 FR 8723 (``Notice'').
    \4\ In Amendment No. 1, Amex made several clarifying corrections 
to the definitions of ``Disclosed Portfolio'' and ``Portfolio 
Indicative Value'' and conforming changes to Form 19b-4 and Exhibit 
1 thereto to account for such corrections. Because Amendment No. 1 
to the proposed rule change is technical in nature, it is not 
subject to notice and comment.
    \5\ In Amendment No. 2, Amex added Commentary .06 to proposed 
Amex Rule 1000B which would require: (1) the investment adviser to 
the Investment Company (as defined herein) issuing Managed Fund 
Shares to erect a ``firewall'' around personnel who have access to 
information concerning the composition and/or changes to the 
Investment Company portfolio; and (2) personnel who make decisions 
on the Investment Company's portfolio composition to be subject to 
procedures designed to prevent the use and dissemination of material 
non-public information regarding the applicable Investment Company 
portfolio. In addition, Amex provided a representation describing 
the ethical and fiduciary requirements under the Investment Advisers 
Act of 1940 (``Advisers Act''), as they apply to Bear Stearns Asset 
Management, Inc., the investment adviser of the Fund.
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II. Description of the Proposal

    The Exchange proposes to add new Amex Rules 1000B, 1001B, 1002B, 
and 1003B to permit the listing and trading of Managed Fund Shares. 
Pursuant to these new rules, the Exchange proposes to list and trade 
the Shares. Amex states that the Shares will conform to the initial and 
continued listing criteria under proposed Amex Rules 1000B, 1001B, and 
1002B. The Exchange also proposes to amend its original listing and 
annual listing fees in Sections 140 and 141 of the Amex Company Guide 
to include Managed Fund Shares and make certain other technical and 
conforming changes in the Amex rules to incorporate references to the 
new Amex rules proposed herein.

Proposed Listing Rules

    Proposed new Amex Rules 1000B, 1001B (for initial listing), and 
1002B (for continued listing) define and establish listing standards 
for Managed Fund Shares. Proposed Amex Rule 1000B(b) sets forth the 
relevant definitions. In particular, proposed Amex Rule 1000B(b)(1) 
defines ``Managed Fund Share'' as a security that: (a) Represents an 
interest in a registered investment company (``Investment Company''), 
organized as an open-end management investment company or similar 
entity, that invests in a portfolio of securities selected by the 
Investment Company's investment adviser consistent with the

[[Page 15231]]

Investment Company's investment objectives and policies; (b) is issued 
in a specified aggregate minimum number in return for a deposit of a 
specified portfolio of securities and/or a cash amount with a value 
equal to the next determined net asset value (``NAV''); and (c) when 
aggregated in the same specified minimum number, may be redeemed at a 
holder's request for a specified portfolio of securities and/or cash 
with a value equal to the next determined NAV.
    Proposed Amex Rule 1000B(b)(2) defines Disclosed Portfolio as the 
securities and other assets in the Investment Company portfolio that 
will form the basis for the Investment Company's calculation of its 
NAV. The term ``Portfolio Indicative Value,'' set forth in proposed 
Amex Rule 1000B(b)(3), is defined as the estimated indicative value of 
a Managed Fund Share based on updated information regarding the value 
of the securities in the Disclosed Portfolio. Proposed Amex Rule 
1000B(b)(4) defines ``Reporting Authority'' to mean the Exchange, a 
subsidiary of the Exchange, or an institution or service designated by 
the Exchange or its subsidiary as the official source for determining 
and reporting the information relating to a series of Managed Fund 
Shares, including, but not limited to, the Portfolio Indicative Value, 
the Disclosed Portfolio, the amount of any cash distribution to holders 
of Managed Fund Shares, NAV, or other information relating to the 
issuance, redemption, or trading of Managed Fund Shares.
    Proposed Commentaries .01 through .05 to proposed Amex Rule 1000B 
substantially mirror Commentaries .05, .02(j), .06, .08, and .09 to 
current Amex Rule 1000A-AEMI, respectively. Specifically, proposed 
Commentaries .01(a), (b), (c), and (d) are substantively identical to 
Commentaries .05(d), (f), (e), and (c), respectively, to Amex Rule 
1000A-AEMI. The proposed Commentary provisions relate to minimum price 
variation, hours of trading, listing fees, and surveillance procedures. 
In addition, the substance of Commentary .05(a) to Amex Rule 1000A-AEMI 
is set forth in proposed Amex Rule 1000B(b)(3) in connection with the 
dissemination of information. Proposed Commentary .06 to Amex Rule 
1000B is similar to Commentary .02(b)(i) and (iii) to Amex Rule 1000A-
AEMI,\6\ except that the required ``firewall'' to be established around 
certain personnel and procedures designed to prevent such personnel 
from using and disseminating material non-public information reflect 
restricted access and dissemination of the Investment Company's 
portfolio, as opposed to an underlying benchmark index, as is the case 
with index-based exchange-traded funds (``ETFs'').
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    \6\ See Commentary .02(b)(i) and (iii) to Amex Rule 1000A-AEMI 
(providing that: (1) if the index on which a series of Index Fund 
Shares is based is maintained by a broker-dealer or fund advisor, 
the broker-dealer or fund advisor must erect a ``firewall'' around 
the personnel who have access to information concerning changes and 
adjustments to the index, and the index must be calculated by a 
third party who is not a broker-dealer or fund advisor; and (2) any 
advisory committee, supervisory board, or similar entity that 
advises a Reporting Authority or that makes decisions on the index 
or portfolio composition, methodology, and related matters, must 
implement and maintain, or be subject to, procedures designed to 
prevent the use and dissemination of material non-public information 
regarding the applicable index).
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    Proposed Commentary .02 to Amex Rule 1000B is substantively 
identical to existing Commentary .02(j) to Amex Rule 1000A-AEMI, which 
relates to international or global portfolio creations/redemptions. 
With respect to a Managed Fund Share based on an international or 
global portfolio, this provision requires that the statutory prospectus 
or the application for exemption from provisions of the Investment 
Company Act of 1940 (``1940 Act'') for the series of Managed Fund 
Shares state that such series will comply with the federal securities 
laws in accepting securities for deposits and satisfying redemptions 
with redemption securities, including that the securities accepted for 
deposits and the securities used to satisfy redemption requests are 
sold in transactions that would be exempt from registration under the 
Securities Act of 1933.
    Proposed Commentary .03 to Amex Rule 1000B is substantively 
identical to Commentary .06 to Amex Rule 1000A-AEMI in connection with 
Exchange obligations for those Managed Fund Shares that receive an 
exemption from certain prospectus delivery requirements under Section 
24(d) of the 1940 Act. Proposed Commentary .04 to Amex Rule 1000B, 
relating to the limitation of entering multiple limit orders by members 
and member organizations, is also substantively identical to Commentary 
.09 to Amex Rule 1000A-AEMI. Proposed Commentary .05 to Amex Rule 1000B 
relating to ``trading ahead'' is substantively identical to Commentary 
.09 to Amex Rule 1000A-AEMI. Lastly, proposed Commentary .06 to Amex 
Rule 1000B provides that the investment adviser of the Investment 
Company must erect a ``firewall'' around its personnel who have access 
to information regarding the composition and/or changes to the 
Investment Company's portfolio.\7\ In addition, proposed Commentary .06 
further requires that personnel who make decisions on the Investment 
Company's portfolio composition must be subject to procedures designed 
to prevent the use and dissemination of material non-public information 
regarding the Investment Company's portfolio.
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    \7\ The Exchange states that an Investment Company's investment 
adviser, which is required to be registered under the Advisers Act, 
would be subject to the provisions of Rule 204A-1 under the Advisers 
Act (17 CFR 275.204A-1) relating to codes of ethics for investment 
advisers. Rule 204A-1 requires investment advisers to adopt a code 
of ethics that reflects the fiduciary nature of the relationship to 
clients as well as compliance with other applicable securities laws. 
Accordingly, the Exchange notes that ``firewall'' procedures, as 
well as procedures designed to prevent the misuse of non-public 
information by an investment adviser, must be consistent with Rule 
204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under the 
Advisers Act (17 CFR 275.206(4)-7) makes it unlawful for an 
investment adviser to provide investment advice to clients, unless 
such investment adviser has (i) adopted and implemented written 
policies and procedures reasonably designed to prevent violation, by 
the investment adviser and its supervised persons, of the Advisers 
Act and the rules thereunder; (ii) implemented, at a minimum, an 
annual review regarding the adequacy of such policies and procedures 
and the effectiveness of their implementation; and (iii) designated 
an individual (who is a supervised person) responsible for 
administering such policies and procedures. See also Section 204A of 
the Advisers Act (15 U.S.C. 80b-4a) (requiring investment advisers 
to establish, maintain, and enforce written policies and procedures 
reasonably designed to prevent the misuse of material, non-public 
information by such investment adviser or any person associated with 
such investment adviser).
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    With respect to the initial listing standards for Managed Fund 
Shares, proposed Amex Rule 1001B(i) provides that the Exchange will 
establish a minimum number of shares outstanding at the time of 
commencement of trading. In addition, proposed Amex Rule 1001B(ii) 
requires that the Exchange obtain a representation from the issuer of 
each series of Managed Fund Shares that the NAV per share for the 
series will be calculated daily and that the NAV and the Disclosed 
Portfolio will be made available to all market participants at the same 
time. Proposed Commentary .01 to Amex Rule 1001B specifically provides 
that each series of Managed Fund Shares, prior to listing and/or 
trading, is required to submit for Commission review and approval, a 
proposed rule change pursuant to Section 19(b) of the Act. Accordingly, 
each series of Managed Fund Shares will require Commission review and 
approval prior to listing and trading.
    The proposed continued listing criteria set forth in proposed Amex 
Rule 1002B(iii) provides for the delisting of the Shares under any of 
the following circumstances:

[[Page 15232]]

     If, following the initial twelve-month period after 
commencement of trading on the Exchange of a series of Managed Fund 
Shares, there are fewer than 50 beneficial holders of the series of the 
Managed Fund Shares for 30 or more consecutive trading days;
     If the value of the Portfolio Indicative Value is no 
longer calculated or available, or the Disclosed Portfolio is not made 
available to all market participants at the same time;
     If the Trust has not filed, on a timely basis, any 
required filings with the Commission, or if the Exchange becomes aware 
that the Trust is not in compliance with the conditions of any 
exemptive order or no-action relief granted by the Commission to or 
otherwise applicable to the Trust; or
     If such other event shall occur or condition exists which, 
in the opinion of the Exchange, makes further dealings of the Managed 
Fund Shares on the Exchange inadvisable.
    Proposed Amex Rule 1002B also sets forth the continued listing 
criteria relating to the Portfolio Indicative Value and the Disclosed 
Portfolio. Specifically, proposed Amex Rule 1002B(i) requires that the 
Portfolio Indicative Value for a Managed Fund Share be widely 
disseminated by one or more major market data vendors at least every 15 
seconds during the time the Managed Fund Shares are traded on the 
Exchange. Proposed Amex Rule 1002B(ii)(a) provides that the Disclosed 
Portfolio be disseminated at least once daily to all market 
participants at the same time. Further, proposed Amex Rule 1002B(ii)(b) 
requires that the Reporting Authority for the Disclosed Portfolio 
implement and maintain, or be subject to, ``firewall'' procedures 
designed to prevent the use and dissemination of material, non-public 
information regarding the actual components of the Disclosed Portfolio.
    Pursuant to proposed Amex Rule 1002B(iv), the Exchange will halt 
trading under the following circumstances:
     If the circuit breaker parameters of Amex Rule 117 have 
been reached, the Exchange will halt trading in a series of Managed 
Fund Shares.
     If the Portfolio Indicative Value of the Managed Fund 
Shares is not being disseminated as required, the Exchange may halt 
trading during the day in which the interruption to the dissemination 
of the Portfolio Indicative Value occurs. If the interruption to the 
dissemination of the Portfolio Indicative 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.
     If a series of Managed Fund Shares is trading on the 
Exchange pursuant to unlisted trading privileges, the Exchange will 
halt trading in that series if the primary listing market halts trading 
in that series of Managed Fund Shares because the Portfolio Indicative 
Value applicable to that series of Managed Fund Shares is not being 
disseminated as required.
     If the Exchange becomes aware that the NAV or Disclosed 
Portfolio related to a series of Managed Fund Shares is not being 
disseminated to all market participants at the same time, the Exchange 
will halt trading in such Managed Fund Shares. The Exchange may resume 
trading in the Managed Fund Shares only when the NAV or Disclosed 
Portfolio is disseminated to all market participants at the same time.
     Finally, in exercising its discretion to halt or suspend 
trading in Managed Fund Shares, the Exchange may consider factors such 
as those set forth in Amex Rule 918C(b), in addition to other factors 
that may be relevant.
    Proposed Amex Rule 1003B would limit Exchange liability in 
connection with potential claims, damages, losses, or expenses 
regarding a Managed Fund Share. The Exchange states that proposed Amex 
Rule 1003B is substantially similar to current Amex Rule 1003A.

Original and Annual Listing Fees

    The Exchange seeks to amend its rules relating to listing fees to 
include Managed Fund Shares. As proposed, Amex's original listing fee 
applicable to the listing of series of Managed Fund Shares will be 
$5,000, but may be deferred, waived, or rebated upon transfer to Amex 
from another marketplace. In addition, the annual listing fee 
applicable under Section 141 of the Amex Company Guide will be based 
upon the year-end aggregate number of Shares outstanding at the end of 
each calendar year. In connection with Section 140 of the Company 
Guide, the Exchange proposes to make a technical revision so that 
``Trust Units'' are also included among the types of securities whose 
initial listing fees may be deferred, waived, or rebated upon transfer 
to Amex from another marketplace.

Description of the Fund

    The Fund, an exchange-traded fund, is the sole investment portfolio 
of the Trust. The Trust is organized as a Delaware statutory trust and 
is an open-end fund registered under the 1940 Act.\8\ The investment 
objective of the Fund is to seek as high a level of current income as 
is consistent with the preservation of capital and liquidity. The Fund 
will be actively managed by its portfolio manager, who will have 
discretion to choose securities for the Fund's portfolio consistent 
with the Fund's investment objective.\9\ The Fund's portfolio manager 
seeks to attain the Fund's objective by investing primarily in short-
term debt obligations, including U.S. government securities, bank 
obligations, corporate debt obligations, mortgage-backed and asset-
backed securities, municipal obligations, foreign bank obligations 
(U.S. dollar denominated), foreign corporate debt obligations (U.S. 
dollar denominated), repurchase agreements, and reverse repurchase 
agreements.
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    \8\ The Exchange states that the Fund is not a ``money market 
fund'' and is not subject to certain rules and regulations under the 
1940 Act governing money market funds.
    \9\ The Exchange states that the Fund's investment objective may 
be changed without shareholder approval upon 30 days' written notice 
to shareholders.
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    The Exchange proposes to list and trade the Fund Shares pursuant to 
proposed Amex Rules 1000B, 1001B, and 1002B. Amex represents that the 
Shares will conform to the initial and continued listing criteria under 
such proposed rules.\10\ The Registration Statement, including the 
Prospectus and Statement of Additional Information (``SAI''), provides 
a detailed description of the Fund including, but not limited to, the 
structure of the Fund, cash-only creation and redemption processes, 
investment objective and policies, characteristics, tax status, and 
distributions.\11\
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    \10\ The Exchange represents that, for initial and/or continued 
listing, the Shares must also be in compliance with Section 803 of 
the Amex Company Guide and Rule 10A-3 under the Act (17 CFR 240.10A-
3). In addition, the Exchange represents that Bear Stearns Asset 
Management, Inc. (``Bear Stearns Asset Management''), the investment 
adviser of the Fund, and its related personnel are subject to Rule 
204A-1 under the Advisers Act. See supra note 7.
    \11\ See the Trust's Form N-1A/A filed with the Commission on 
August 6, 2007 (File Nos. 333-141421 and 811-22038). Additional 
information regarding arbitrage opportunities relating to the Shares 
can be found in the Notice. See Notice, supra note 3.
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Availability of Information Regarding the Fund and the Shares

    The daily NAV for the Fund will be calculated and disseminated 
publicly each Business Day \12\ to all market participants at the same 
time. In addition, prior to the opening each Business Day, the Fund 
will make

[[Page 15233]]

publicly available on its Web site the Disclosed Portfolio, which is 
the file of all the portfolio securities held by the Fund and the 
quantities thereof, including, as applicable, the specific types and 
amounts of short-term debt securities and the amount of cash held in 
the portfolio of the Fund, as of the close of business on the prior 
Business Day, reflecting all securities bought and sold on such prior 
Business Day. \13\ This information will be available to all investors 
and market participants at the same time and will form the basis for 
the Fund's calculation of NAV as of the close of regular trading on the 
Exchange (ordinarily 4 p.m. Eastern Time).
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    \12\ ``Business Day'' is defined as a day in which the Trust 
will sell and redeem Creation Units of the Fund.
    \13\ The Exchange states that the Trust will comply with its 
obligations to disclose in its SAI its policies and procedures with 
respect to the Disclosed Portfolio and state in its Prospectus that 
a description of the Fund's policies and procedures is available in 
the SAI. See Investment Company Act Release No. 26418 (April 16, 
2004), 69 FR 22300 (April 23, 2004).
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    Amex will disseminate at least every 15 seconds during regular Amex 
trading hours, through the facilities of the Consolidated Tape 
Association (``CTA''), the Portfolio Indicative Value. An independent 
pricing service will calculate the Portfolio Indicative Value during 
the hours of trading on the Exchange by dividing the ``Estimated Fund 
Value'' as of the time of the calculation by the total Shares 
outstanding. ``Estimated Fund Value'' is the sum of the estimated 
amount of cash held in the Fund's portfolio, the estimated value of the 
securities held in the Fund's portfolio, and the estimated amount of 
accrued interest, minus the estimated amount of liabilities.\14\
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    \14\ The Exchange states that the methodology used to calculate 
the Portfolio Indicative Value for the Fund is similar to those used 
by some existing ETFs listed on the Exchange that track fixed-income 
securities indices, as well as numerous fixed-income mutual funds.
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    The Web site for the Fund will display the Prospectus, the SAI, and 
additional quantitative information that is updated on a daily basis, 
including, among other things, the following information, on a per-
Share basis: (a) the prior Business Day's NAV, the reported mid-point 
of the bid-ask spread at the time of NAV calculation (``Bid-Ask 
Price''), and a calculation of the premium or discount of the Bid-Ask 
Price against such NAV; and (b) data in chart format 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. Amex also intends to disseminate a variety 
of data with respect to the Shares on a daily basis, by means of CTA 
and Consolidated Quotation High Speed Lines, including quotation and 
last sale data, information of the previous day's close with respect to 
NAV, and the number of Shares outstanding. In addition, as with other 
ETFs, information regarding secondary market prices and volume of the 
Shares will be broadly available in real-time throughout the trading 
day.

Trading Rules

    The Shares are equity securities subject to Amex rules governing 
the trading of equity securities, including, among others, rules 
governing priority, parity, and precedence of orders, specialist 
responsibilities, account opening, and customer suitability (Amex Rule 
411). Trading rules pertaining to odd-lot trading in Amex equities 
(Amex Rule 205-AEMI) will also apply. Specialist transactions of the 
Shares made in connection with the creation and redemption of Shares 
will not be subject to the prohibitions of Rule 190.\15\
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    \15\ Commentary .04 to Amex Rule 190 states that nothing in Rule 
190(a) should be construed to restrict a specialist registered in a 
security issued by an investment company from purchasing and 
redeeming the listed security, or securities that can be subdivided 
or converted into the listed security, from the issuer as 
appropriate to facilitate the maintenance of a fair and orderly 
market. See Commentary .04 to Amex Rule 190.
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    Amex Rules 154-AEMI(c)(ii) (Election by Quotation of Stop and Stop 
Limit Orders) and 126A-AEMI (Protected Bids and Offers of Away Markets) 
will apply to the trading of the Shares. In addition, Exchange members 
and member organizations will be subject to proposed Commentary .04 to 
Amex Rule 1000B prohibiting such member or member organizations from 
entering into the Exchange's order routing system multiple limit orders 
as agent (i.e., customer agency orders). Further, proposed Commentary 
.05 to Rule 1000B provides that it may be considered inconsistent with 
just and equitable principles of trade for a member or person 
associated with a member to ``trade ahead'' of a related customer order 
in Managed Fund Shares based on material, non-public information 
obtained from such customer order.

Information Circular

    The Exchange will distribute an Information Circular to Exchange 
members and member organizations prior to the commencement of trading 
of the Shares that describes the prospectus delivery requirements and, 
as relevant, the application of proposed Commentary .03 to Amex Rule 
1000B. The Exchange notes that investors purchasing Shares directly 
from the Fund by delivery of a Creation Unit will receive a Prospectus.
    In addition, the Information Circular will inform Exchange members 
and member organizations that procedures for purchases and redemptions 
of Shares in Creation Units are described in the Fund's Prospectus and 
SAI, and that Shares are not individually redeemable, but are 
redeemable only in Creation Units or multiples thereof. The Exchange 
will also inform members and member organizations of the 
characteristics of the Fund and the Shares and of applicable Exchange 
rules, as well as of the suitability requirements of Amex Rule 411 
(Duty to Know and Approve Customers).

Surveillance

    The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the Shares. Specifically, 
Amex will rely on its existing surveillance procedures governing Index 
Fund Shares. In addition, the Exchange also has a general policy 
prohibiting the distribution of material, non-public information by its 
employees.

III. Discussion

    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.\16\ In particular, the Commission believes that the proposal 
is consistent with Section 6(b)(5) of the Act,\17\ which requires, 
among other things, that the rules of a national securities exchange be 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and in general, to protect investors and the 
public interest.
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    \16\ 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).
    \17\ 15 U.S.C. 78f(b)(5).
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Proposed Listing Rules for Managed Fund Shares

    The Commission finds that Amex's proposal contains adequate rules 
and procedures to govern the listing and trading of Managed Fund Shares 
on the Exchange.\18\ Prior to listing and/or

[[Page 15234]]

trading on the Exchange, Amex must file a separate proposed rule change 
pursuant to Section 19(b) of the Act for each series of Managed Fund 
Shares. All such securities listed and/or traded under proposed Amex 
Rule 1000B will be subject to the full panoply of Amex rules and 
procedures that currently govern the trading of equity securities on 
the Exchange.
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    \18\ The Commission believes that the proposed rules and 
procedures are adequate with respect to the Fund Shares. However, 
the Commission notes that other proposed series of Managed Fund 
Shares may require additional Exchange rules and procedures to 
govern their listing and trading on the Exchange. For example, in 
the case of a proposed series of Managed Fund Shares that are based 
on a portfolio, at least in part, of non-U.S. securities, rules 
relating to comprehensive surveillance sharing agreements and 
quantitative initial and continued listing standards may be 
required.
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    For the initial listing of each series of Managed Fund Shares under 
proposed Amex Rule 1001B, the Exchange must establish a minimum number 
of Managed Fund Shares required to be outstanding at the commencement 
of trading on the Exchange. In addition, the Exchange must obtain a 
representation from the issuer of Managed Fund Shares that the NAV per 
share will be calculated daily and that the NAV and the Disclosed 
Portfolio will be made available to all market participants at the same 
time.
    The Commission believes that the proposed continued listing and 
trading standards under proposed Amex Rule 1002B are adequate to ensure 
transparency of key values and information regarding the securities. 
For continued listing of each series of Managed Fund Shares, the 
Portfolio Indicative Value must be widely disseminated by one or more 
major market data vendors at least every 15 seconds during the time 
when the Managed Fund Shares trade on the Exchange. Further, the 
Disclosed Portfolio must be disseminated at least once daily and made 
available to all market participants at the same time.
    The Commission finds that the Exchange's rules with respect to 
trading halts under proposed Amex Rule 1002B(iv) should help ensure the 
availability of key values and information relating to Managed Fund 
Shares. If the Portfolio Indicative Value is not being disseminated as 
required, the Exchange may halt trading during the day in which the 
interruption to the dissemination of the Portfolio Indicative Value 
occurs. If the interruption of such value persists past the trading day 
in which it occurred, the Exchange must halt trading no later than the 
beginning of the trading day following the interruption.\19\ In 
addition, if the Exchange becomes aware that the NAV or Disclosed 
Portfolio related to a series of Managed Fund Shares is not being 
disseminated to all market participants at the same time, the Exchange 
will halt trading in such series of Managed Fund Shares. The Exchange 
may resume trading in such series of Managed Fund Shares only when the 
NAV or Disclosed Portfolio is disseminated to all market participants.
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    \19\ Under proposed Amex Rule 1002B(iv)(c), if a series of 
Managed Fund Shares is trading on the Exchange pursuant to unlisted 
trading privileges, the Exchange will halt trading in that series if 
the primary listing market halts trading in that series of Managed 
Fund Shares because the Portfolio Indicative Value applicable to 
that series of Managed Fund Shares is not being disseminated as 
required.
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    The Exchange may also consider the suspension of trading in, or 
removal from listing of, a series of Managed Fund Shares if: (1) 
Following the initial twelve-month period after commencement of trading 
on the Exchange of a series of Managed Fund Shares, there are fewer 
than 50 beneficial holders of the series of the Managed Fund Shares for 
30 or more consecutive trading days; (2) the value of the Portfolio 
Indicative Value is no longer calculated or available, or the Disclosed 
Portfolio is not made available to all market participants at the same 
time; (3) the Trust has not filed, on a timely basis, any required 
filings with the Commission, or if the Exchange becomes aware that the 
Trust is not in compliance with the conditions of any exemptive order 
or no-action relief granted by the Commission to or otherwise 
applicable to the Trust; or (4) such other event shall occur or 
condition exists which, in the opinion of the Exchange, makes further 
dealings of the Managed Fund Shares on the Exchange inadvisable.
    The Commission believes that the foregoing requirements of proposed 
Amex Rules 1001B and 1002B should help to prevent trading when a 
reasonable degree of transparency cannot be assured and to maintain a 
fair and orderly market for Managed Fund Shares.
    The Commission believes that the proposed listing and trading rules 
for Managed Fund Shares, many of which track existing Exchange rules 
relating to Index Fund Shares, are reasonably designed to promote a 
fair and orderly market for such Managed Fund Shares by, among other 
things, requiring disclosure of information that may be necessary to 
price Managed Fund Shares. The proposed rules also prescribe ``trading 
ahead'' restrictions,\20\ require surveillance procedures,\21\ 
establish trading guidelines,\22\ and prospectus and/or product 
description requirements.\23\ In addition, Commentary .06 to proposed 
Amex Rule 1000B requires: (1) The investment adviser of the Investment 
Company to erect a ``firewall'' around its personnel who have access to 
information regarding the composition and/or changes to the Investment 
Company's portfolio; and (2) personnel, who make decisions on the 
Investment Company's portfolio composition, to be subject to procedures 
designed to prevent the use and dissemination of material non-public 
information regarding the Investment Company's portfolio. Lastly, 
proposed Amex Rule 1002B(ii)(b) requires that the Reporting Authority 
that provides the Disclosed Portfolio implement and maintain, or be 
subject to, procedures designed to prevent the use and dissemination of 
material non-public information regarding the actual components of the 
portfolio.
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    \20\ See Commentary .05 to proposed Amex Rule 1000B.
    \21\ See Commentary .01 to proposed Amex Rule 1000B. See also 
supra note 18.
    \22\ See, e.g., Commentaries .01 and .04 to proposed Amex Rule 
1000B.
    \23\ See Commentaries .02 and .03 to proposed Amex Rule 1000B.
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Amendments to Original and Annual Listing Fees

    As proposed, Amex's original listing and annual listing fees will 
be applicable to a series of Managed Fund Shares under Sections 140 and 
141 of the Amex Company Guide. In connection with Section 140 of the 
Company Guide, the Exchange also proposes to make a technical revision 
so that ``Trust Units'' are also included among the types of securities 
whose initial listing fees may be deferred, waived, or rebated upon 
transfer to Amex from another marketplace. The Commission finds that 
the changes made to Amex's original listing and annual listing fees to 
include Managed Fund Shares, and the technical revision to add ``Trust 
Units'' to Section 140 of the Amex Company Guide, are reasonable and 
promote transparency of the fees to be imposed with respect to a series 
of Managed Fund Shares and Trust Units.

Proposal To List and Trade the Shares of the Fund

    The Exchange proposes to list and trade the Fund Shares pursuant to 
proposed Amex Rules 1000B, 1001B, and 1002B. Amex represents that the 
Shares will conform to the initial and continued listing criteria under 
such proposed rules.
    The Commission believes that the proposal to list and trade the 
Shares of the Fund on the Exchange is consistent

[[Page 15235]]

with Section 11A(a)(1)(C)(iii) of the Act,\24\ 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. Quotations and last-sale information for the Shares will be 
disseminated by means of CTA and Consolidated Quotation High Speed 
Lines. In addition, the Portfolio Indicative Value will be disseminated 
at least every 15 seconds throughout Amex's trading hours, in 
accordance with proposed Amex Rule 1002B(i). Amex will also disseminate 
via CTA and Consolidated Quotation High Speed Lines various other data, 
including information of the previous day's close with respect to NAV 
and the number of Shares outstanding. The daily NAV for the Fund will 
be calculated and disseminated publicly each Business Day to all market 
participants at the same time, and, prior to the opening each Business 
Day, the Fund will make the Disclosed Portfolio available to all market 
participants at the same time on its Web site. The Fund's Web site will 
also contain a variety of other information for the Shares, including a 
display of the Prospectus and SAI and quantitative information on a 
per-Share basis.
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    \24\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    Furthermore, 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 notes that the Exchange is required to obtain a 
representation from the Trust, prior to listing, that the NAV per Share 
for the Fund will be calculated daily, and that the NAV and the 
Disclosed Portfolio will be made available to all market participants 
at the same time.\25\ The Exchange may consider the suspension of 
trading in, or removal from listing of, the Shares if the value of the 
Portfolio Indicative Value is no longer calculated or available or the 
Disclosed Portfolio is not made available to all market participants at 
the same time. Commentary .05 to proposed Amex Rule 1000B restricts 
members or persons associated with members who have knowledge of all 
material terms and conditions of an order being facilitated or orders 
being crossed to enter, based on such knowledge, an order to buy or 
sell a Share that is the subject of the order, an order to buy or sell 
the overlying option class, or an order to buy or sell any related 
instrument \26\ until all the terms of the order are disclosed to the 
trading crowd or the trade is no longer imminent in view of the passage 
of time since the order was received. Commentary .06 to proposed Amex 
Rule 1000B restricts certain personnel of Bear Stearns Asset Management 
with respect to access, use, and dissemination of information 
concerning the composition and/or changes to the Fund's portfolio.\27\ 
In addition, proposed Amex Rule 1002B(ii)(b) requires that the 
Reporting Authority that provides the Disclosed Portfolio implement and 
maintain, or be subject to, procedures designed to prevent the use and 
dissemination of material non-public information regarding the actual 
components of the portfolio.
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    \25\ See proposed Amex Rule 1001B(ii).
    \26\ For purposes of Commentary .05, an order to buy or sell a 
``related instrument'' means an order to buy or sell securities that 
have been disclosed as comprising 10% or more of the weight of the 
Managed Fund Share portfolio. See Commentary .05 to proposed Amex 
Rule 1000B.
    \27\ See supra notes 7 and 10.
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    For the reasons discussed above, the Commission believes that the 
Exchange's trading halt rules are reasonably designed to prevent 
trading in the Shares when transparency is impaired. Proposed Amex Rule 
1002B(iv)(a) provides that the Exchange will halt trading in the Shares 
if the circuit breaker parameters of Amex Rule 117 have been reached. 
In addition, proposed Amex Rule 1002B(iv)(b) provides that, if the 
Portfolio Indicative Value applicable to the Shares is not being 
disseminated as required, the Exchange may halt trading during the day 
in which the interruption to the dissemination occurs. If the 
interruption to the dissemination of the Portfolio Indicative 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.\28\ In addition, if the Exchange becomes aware that 
the NAV or Disclosed Portfolio related to the Shares is not being 
disseminated to all market participants at the same time, the Exchange 
will halt trading in the Shares. The Exchange may resume trading in the 
Shares only when the NAV or Disclosed Portfolio is disseminated to all 
market participants. Finally, in exercising its discretion to halt or 
suspend trading in the Shares, the Exchange may consider factors such 
as those set forth in Amex Rule 918C(b) and other relevant factors.
---------------------------------------------------------------------------

    \28\ See supra note 19 and accompanying text.
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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 are equity securities subject to Amex's rules governing the 
trading of equity securities.
    In support of this proposal, the Exchange has made the following 
representations:
    (1) The Shares will conform to the initial and continued listing 
criteria under proposed Amex Rules 1000B, 1001B, and 1002B.
    (2) The Exchange's surveillance procedures are adequate to properly 
monitor the trading of the Shares. Specifically, Amex will rely on its 
existing surveillance procedures governing Index Fund Shares.\29\
---------------------------------------------------------------------------

    \29\ See supra note 18.
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    (3) Prior to the commencement of trading, the Exchange will inform 
its members and member organizations in an Information Circular 
regarding the prospectus delivery requirements and, as relevant, the 
application of Commentary .03 to Amex Rule 1000B. The Information 
Circular will also provide guidance with regard to the characteristics 
of the Fund and the Shares and of applicable Exchange rules, including 
the suitability requirements of Amex Rule 411. In addition, the 
Information Circular will disclose that the procedures for purchases 
and redemptions of Shares in Creation Units are described in each 
Fund's Prospectus and SAI, and that Shares are not individually 
redeemable, but are redeemable only in Creation Unit aggregations or 
multiples thereof.
    (4) The Exchange represents that the Trust is required to comply 
with Section 803 of the Amex Company Guide and Rule 10A-3 under the Act 
\30\ for the initial and continued listing of the Shares.
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    \30\ 17 CFR 240.10A-3. See supra note 10.
---------------------------------------------------------------------------

    This approval order is based on the Exchange's representations.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 2 to the proposed rule change, 
including whether the proposed rule change, as modified by Amendment 
Nos. 1 and 2 thereto, is consistent with the Act. Comments may be 
submitted by any of the following methods:

[[Page 15236]]

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-Amex-2008-02 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-Amex-2008-02. 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 the 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-Amex-2008-02 and should be 
submitted on or before April 11, 2008.

V. Accelerated Approval

    The Commission finds good cause for approving the proposed rule 
change, as modified by Amendment Nos. 1 and 2 thereto, prior to the 
thirtieth day after the date of publication of notice of filing of 
Amendment No. 2 in the Federal Register. In Amendment No. 2, Amex 
provided additional safeguards in Commentary .06 to proposed Amex Rule 
1000B that relate to restricted access and dissemination of key 
information regarding the composition of, and changes to, the 
Investment Company portfolio, including the requirement of 
``firewalls'' to be erected around certain personnel of the investment 
adviser to the Investment Company and procedures designed to prevent 
the use and dissemination of material non-public information regarding 
such portfolio. In addition, the Exchange represented that Bear Stearns 
Asset Management, the investment adviser of the Fund, would be subject 
to such requirements and is already subject to the provisions of Rule 
204A-1 under the Advisers Act.\31\ The Commission notes that Commentary 
.06 is based on, and substantially similar to, Commentary .02(b)(i) and 
(iii) to Amex Rule 1000A-AEMI.\32\ The Commission believes that 
Amendment No. 2 strengthens the proposal by promoting fair disclosure 
of Investment Company portfolio information and raises no new 
regulatory issues. Accordingly, the Commission finds good cause for 
approving the proposal, as modified by Amendment Nos. 1 and 2 thereto, 
on an accelerated basis.
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    \31\ See supra notes 7 and 10.
    \32\ See supra note 6 and accompanying text.
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\33\ that the proposed rule change (SR-Amex-2008-02), as modified 
by Amendment Nos. 1 and 2 thereto, be, and it hereby is, approved on an 
accelerated basis.
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    \33\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
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    \34\ See 17 CFR 200.30-3(a)(12).

Jill M. Peterson,
Assistant Secretary.
[FR Doc. E8-5718 Filed 3-20-08; 8:45 am]

BILLING CODE 8011-01-P
