
[Federal Register: June 6, 2008 (Volume 73, Number 110)]
[Notices]               
[Page 32377-32379]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn08-130]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57906; File No. SR-NYSEArca-2008-40]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to the Listing and Trading of Shares 
of the NETS Tokyo Stock Exchange REIT Index Fund

June 2, 2008.
    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 May 22, 2008, 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'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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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 list and trade shares (``Shares'') of the 
NETS\TM\ Tokyo Stock Exchange REIT Index Fund (``Fund'') issued by the 
NETS Trust (``Trust''). The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
http://www.nyse.com.

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 IV 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
    The Exchange proposes to list and trade the Shares under NYSE Arca 
Equities Rule 5.2(j)(3), the Exchange's listing standards for 
Investment Company Units (``ICUs'').\3\
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    \3\ An Investment Company Unit is a security that represents an 
interest in a registered investment company that holds securities 
comprising, or otherwise based on or representing an interest in, an 
index or portfolio of securities (or holds securities in another 
registered investment company that holds securities comprising, or 
otherwise based on or representing an interest in, an index or 
portfolio of securities). See NYSE Arca Equities Rule 5.2(j)(3)(A).
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    The Fund seeks to provide investment results that correspond 
generally to the price and yield performance, before fees and expenses, 
of publicly-traded securities in the aggregate in the Japanese market, 
as represented by the Tokyo Stock Exchange REIT Index (``Underlying 
Index'' or ``Index''). The Underlying Index is a market capitalization 
weighted index consisting of stocks of all of the real estate 
investment trusts traded primarily on the Tokyo Stock Exchange.
    The Exchange is submitting this proposed rule change because the 
Underlying Index does not meet all of the ``generic'' listing 
requirements of Commentary .01(a)(B) to NYSE Arca Equities Rule 
5.2(j)(3) applicable to listing of ICUs based on international or 
global indexes. The Underlying Index meets all such requirements except 
for those set forth in Commentary .01(a)(B)(2).\4\ The Exchange 
represents that: (1) Except for Commentary .01(a)(B)(2) to NYSE Arca 
Equities Rule 5.2(j)(3), the Shares currently satisfy all of the 
generic listing standards under NYSE Arca Equities Rule 5.2(j)(3); (2) 
the continued listing standards under NYSE Arca Equities Rules 
5.2(j)(3) and 5.5(g)(2) applicable to ICUs shall apply to the Shares; 
and (3) the Trust is required to comply with Rule 10A-3 \5\ under the 
Act for the initial and continued listing of the Shares. In addition, 
the Exchange represents that

[[Page 32378]]

the Shares will comply with all other requirements applicable to ICUs 
including, but not limited to, requirements relating to the 
dissemination of key information such as the Index value and Intraday 
Indicative Value, rules governing the trading of equity securities, 
trading hours, trading halts, surveillance, and Information Bulletin to 
ETP Holders, as set forth in prior Commission orders approving the 
generic listing rules applicable to the listing and trading of ICUs.\6\
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    \4\ Commentary .01(a)(B)(2) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that component stocks that in the aggregate account for at 
least 90% of the weight of the index or portfolio each shall have a 
minimum worldwide monthly trading volume during each of the last six 
months of at least 250,000 shares.
    \5\ 17 CFR 240.10A-3.
    \6\ See, e.g., Securities Exchange Act Release Nos. 55621 (April 
12, 2007), 72 FR 19571 (April 18, 2007) (SR-NYSEArca-2006-86) 
(approving generic listing standards for ICUs based on international 
or global indexes); 44551 (July 12, 2001), 66 FR 37716 (July 19, 
2001) (SR-PCX-2001-14) (approving generic listing standards for ICUs 
and Portfolio Depositary Receipts); and 41983 (October 6, 1999), 64 
FR 56008 (October 15, 1999) (SR-PCX-98-29) (approving rules for the 
listing and trading of ICUs). See also email from Michael Cavalier, 
Associate General Counsel, NYSE Euronext, to Christopher W. Chow, 
Special Counsel, Commission, dated June 2, 2008.
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    As of April 11, 2008, there were 41 stocks in the Index. For the 
period of October 2007 up to and including March 2008, component stocks 
that in the aggregate accounted for at least 90% of the weight of the 
Index had a minimum worldwide monthly trading volume of 2,918 
shares.\7\
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    \7\ During the same period, component stocks that in the 
aggregate accounted for at least 90% of the weight of the Index had 
an average worldwide monthly trading volume of 16,693 shares. The 
Exchange notes, however, that the average price of the Index stocks 
was extremely high compared to prices of stocks included in index 
ETFs generally. As of March 31, 2008, the average price of the 
stocks in the Index was approximately $5,350. The total market 
capitalization of the Index stocks was $42,391,307,254 and the 
average market capitalization of the Index stocks was 
$1,033,934,323. The average market capitalization of the Index 
stocks in the top 70% of the Index weight was $2,015,574,320. There 
were 15 stocks in the bottom 10% weight of the Index. The highest 
weighted stock was Nippon Building Fund Inc. REIT, which accounted 
for 16.25% of the Index weight.
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    In view of the high average price of the Index component stocks, as 
noted above, the Exchange believes it is appropriate to use global 
notional volume traded (number of shares traded multiplied by price of 
security) as a measure of the trading activity of such stocks. For the 
period of October 2007 up to and including March 2008, component stocks 
that in the aggregate accounted for 93.42% of the weight of the Index 
each had global notional volume traded per month of at least 
$25,000,000, averaged over the last six months. The Exchange believes 
that averaged notional volume traded is an appropriate measure of the 
liquidity of component stocks of the Index. Specifically, notional 
volume nullifies the volume discrepancies that generally occur between 
low priced and high priced stocks \8\ and averaging the volume and 
notional volume over a specific time period (e.g., six months) 
eliminates seasonal volume fluctuations that may occur in the trading 
volume of a particular underlying security represented in an index.
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    \8\ For example, a stock priced at $10 per share that trades 
2,500,000 shares in a month has a notional volume of $25,000,000. 
Conversely, a stock priced at $100 per share that trades 250,000 
shares in a month has a notional volume of $25,000,000.
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    Detailed descriptions of the Fund, the Underlying Index, procedures 
for creating and redeeming Shares, transaction fees and expenses, 
dividends, distributions, taxes, and reports to be distributed to 
beneficial owners of the Shares can be found in the Registration 
Statement \9\ or on the Web site for the Fund (http://
www.netsetfs.com), as applicable.
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    \9\ See the Trust's Registration Statement on Form N-1A, dated 
February 13, 2008 (File Nos. 333-147077 and 811-22140) 
(``Registration Statement'').
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\10\ in general, and Section 6(b)(5) of the Act,\11\ 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 facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Exchange believes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of exchange-traded product that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace.
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    \10\ 15 U.S.C. 78f.
    \11\ 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

    The Exchange states that written comments on the proposed rule 
change were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reason for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. 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 an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2008-40 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2008-40. 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

[[Page 32379]]

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-NYSEArca-2008-40 and should 
be submitted on or before June 27, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Florence E. Harmon,
Acting Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E8-12705 Filed 6-5-08; 8:45 am]

BILLING CODE 8010-01-P
