
[Federal Register: September 10, 2008 (Volume 73, Number 176)]
[Notices]               
[Page 52717-52719]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se08-76]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58458; File No. SR-NYSEArca-2008-95]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to Net 
Asset Value Calculations for CurrencyShares Trusts

September 3, 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 August 28, 2008, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
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 prepared by the Exchange. The

[[Page 52718]]

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

    NYSE Arca, through its wholly-owned subsidiary NYSE Arca Equities, 
Inc. (``NYSE Arca Equities''), proposes to provide a description of the 
revised methodology for calculating net asset value (``NAV'') to be 
implemented by the CurrencyShares Euro Trust; CurrencyShares Australian 
Dollar Trust; CurrencyShares British Pound Sterling Trust; 
CurrencyShares Canadian Dollar Trust; CurrencyShares Japanese Yen 
Trust; CurrencyShares Mexican Peso Trust; CurrencyShares Swedish Krona 
Trust; and CurrencyShares Swiss Franc Trust. The text of the proposed 
rule change is available on the Exchange's Web site at www.nyx.com, at 
the Exchange's principal office and at the Commission's Public 
Reference Room.

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 provide a description of the revised 
methodology for calculating net asset value (``NAV'') to be implemented 
by the CurrencyShares Euro Trust; CurrencyShares Australian Dollar 
Trust; CurrencyShares British Pound Sterling Trust; CurrencyShares 
Canadian Dollar Trust; CurrencyShares Japanese Yen Trust; 
CurrencyShares Mexican Peso Trust; CurrencyShares Swedish Krona Trust; 
and CurrencyShares Swiss Franc Trust (the ``Trusts'').\3\ The 
Commission has previously approved the Trusts for listing on the 
Exchange pursuant to NYSE Arca Equities Rule 8.202 (``Currency Trust 
Shares'').\4\ The Trusts were previously listed on the New York Stock 
Exchange LLC (``NYSE'').\5\
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    \3\ See Post-Effective Amendment No. 1 to Form S-1 for 
CurrencyShares Australian Dollar Trust (Registration No. 333-132362, 
dated February 8, 2008); CurrencyShares British Pound Trust 
(Registration No. 333-132361, dated February 8, 2008); 
CurrencyShares Canadian Dollar Trust (Registration No. 333-132363, 
dated February 8, 2008); CurrencyShares Euro Trust (Registration No. 
333-125581, dated February 1, 2008); CurrencyShares Japanese Yen 
Trust (Registration No. 333-138881, dated February 12, 2008); 
CurrencyShares Swiss Franc Trust (Registration No. 333-132364, dated 
February 1, 2008); Prospectus Supplement No. 11 for the 
CurrencyShares Mexican Peso Trust (Registration No. 333-132367, 
dated June 13, 2008); Prospectus Supplement No. 10 for the 
CurrencyShares Swedish Krona Trust (Registration No. 132366, dated 
June 13, 2008) (collectively, ``Registration Statements''). The 
shares of the Trusts represent units of fractional undivided 
beneficial interest in, and ownership of, the respective Trust. The 
investment objective of the Trusts is for the shares issued by the 
Trusts to reflect the price of the applicable foreign currency owned 
by the specific Trust, plus accrued interest, less the expenses and 
liabilities of such Trust, according to the Registration Statements. 
The shares are intended to provide institutional and retail 
investors with a simple, cost-effective means of hedging their 
exposure to a particular foreign currency and otherwise implement 
investment strategies that involve foreign currency (e.g., diversify 
more generally against the risk that the U.S. Dollar (``USD'') would 
depreciate).
    \4\ See Securities Exchange Act Release No. 56131 (July 25, 
2007), 72 FR 42212 (August 1, 2007) (SR-NYSEArca-2007-57) (order 
granting accelerated approval for listing on NYSE Arca of 
CurrencyShares Trusts).
    \5\ See Securities Exchange Act Release Nos. 52843 (November 28, 
2005), 70 FR 72486 (December 5, 2005) (SR-NYSE-2005-65) (order 
granting accelerated approval for NYSE to list and trade shares of 
the Euro Currency Trust, now known as the CurrencyShares Euro 
Trust); 54020 (June 20, 2006), 71 FR 36579 (June 27, 2006) (SR-NYSE-
2006-35) (order granting accelerated approval for NYSE to list and 
trade shares of the CurrencyShares Australian Dollar Trust, 
CurrencyShares British Pound Sterling Trust, CurrencyShares Canadian 
Dollar Trust, CurrencyShares Mexican Peso Trust, CurrencyShares 
Swedish Krona Trust and CurrencyShares Swiss Franc Trust); 55268 
(February 9, 2007), 72 FR 7793 (February 20, 2007) (SR-NYSE-2007-03) 
(order granting accelerated approval for NYSE to list and trade 
shares of the CurrencyShares Japanese Yen Trust).
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    Each of the Trusts currently utilizes the Federal Reserve Bank of 
New York Noon Buying Rate in calculating the NAV for the Trusts and for 
shares (``Shares'') of the Trusts.\6\ The NAV is posted on the Trusts' 
Web site (www.currencyshares.com) as soon as the valuation of the 
foreign currency held by a Trust is complete (ordinarily by 2 p.m. (New 
York time)). Ordinarily, it is posted no more than thirty minutes after 
the Noon Buying Rate is published by the Federal Reserve Bank of New 
York.
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    \6\ As described in the above-noted previous proposed rule 
changes by the Exchange and the NYSE relating to the Trusts, on each 
day that the NYSE is open for regular trading, The Bank of New York 
(``Trustee'') will determine the NAV of each of the Trusts. In so 
doing, the Trustee values the foreign currency held by the Trusts on 
the basis of the Noon Buying Rate, which is the USD/applicable 
foreign currency exchange rate as determined by the Federal Reserve 
Bank of New York as of 12 p.m. (New York time) on each day that the 
NYSE is open for regular trading. The Sponsor (Rydex Specialized 
Products LLC) publishes each Trust's NAV each business day on its 
Web site.
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    As of the operative date of this proposed rule change, the Trusts 
intend to utilize a revised methodology for calculating NAV, as 
follows. To calculate the NAV, the Trustee adds to the amount of 
foreign currency in the Trust at the end of the preceding business day 
accrued but unpaid interest, the foreign currency receivable under 
pending purchase orders and the value of other Trust assets, and 
subtracts the accrued but unpaid Sponsor's fee, the foreign currency 
payable under pending redemption orders and other Trust expenses and 
liabilities, if any. The result is the NAV of the Trust for that 
business day. The Trustee shall also divide the NAV of each Trust by 
the number of Shares outstanding for the date of the evaluation then 
being made, which figure is the ``NAV per Share.'' The NAV will be 
expressed in USD based on the Closing Spot Rate \7\ as determined by 
WM/Reuters at 4 p.m. (London time). If, on a particular evaluation day, 
the Closing Spot Rate has not been determined and announced by 6 p.m. 
(London time), then the most recent Closing Spot Rate shall be used to 
determine the NAV of the Trust unless the Trustee, in consultation with 
the Sponsor, determines that such price is inappropriate to use as the 
basis for such valuation. In the event that the Trustee and the Sponsor 
determine that the most recent Closing Spot Rate is not an appropriate 
basis for valuation of the Trust's currency, the Trustee and the 
Sponsor shall determine an alternative basis for such evaluation to be 
employed by the Trustee. Such an alternative basis may include 
reference to the market price of futures contracts that reflect the 
value of the foreign currency relative to the USD. The use of any 
alternative basis to determine NAV would be disclosed on the Trust's 
Web site. The Trustee also determines the NAV per Share, which equals 
the NAV of the Trust divided by the number of outstanding Shares. The 
Sponsor publishes the NAV and NAV per Share for each Trust on each day 
that the Exchange is open for regular trading on the Trusts' Web 
site.\8\
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    \7\ Closing Spot Rate will be defined in the Registration 
Statements as ``the [Foreign Currency]/USD exchange rate as 
determined by WM/Reuters at 4 p.m. (London time)''. WM/Reuters is a 
joint venture of The WM Company PLC and Thomson Reuters.
    \8\ The Exchange will obtain a representation from the Trusts 
that the NAV per Share will be calculated daily and made available 
to all market participants at the same time.

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[[Page 52719]]

    The Exchange understands that the Closing Spot Rate as determined 
by WM/Reuters is an internationally accepted currency exchange rate and 
is the rate generally used in currency swap transactions. The Closing 
Spot Rate for various currencies is published in the Financial Times. 
According to WM/Reuters, the majority of main equity and bond index 
compilers use the WM/Reuters exchange rates in their calculations.\9\ 
The Exchange believes that the WM/Reuters Closing Spot Rate is a 
widely-accepted, transparent and widely-disseminated measure of 
currency exchange rates and does not believe that a transition to using 
WM/Reuters data will adversely impact investors or market transparency.
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    \9\ See ``Spot & Forward Rates Guide'' published by WM/Reuters, 
available at www.wmcompany.com.
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    Prior to implementation of the revised NAV calculation procedures 
as described above, the Exchange will issue an Information Bulletin 
informing ETP Holders of the new procedures and that the NAV for the 
Trusts will be available on the Trusts' Web site. Notice to investors 
of changes to the NAV calculation methodology will be posted on the 
Trusts' Web site. In addition, the Registration Statements will be 
supplemented to reflect the revised methodology.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \10\ of 
the Act, in general, and furthers the objectives of Section 
6(b)(5),\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 mechanisms of a free and open 
market and a national market system. The Exchange believes that the 
proposed revisions to NAV calculation methodology for the Trusts will 
continue to ensure transparency of the NAV calculation based upon 
widely-accepted information sources.
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    \10\ 15 U.S.C. 78f(b).
    \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 
impose 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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The Exchange has designated the proposed rule change as one that: 
(1) Does not significantly affect the protection of investors or the 
public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days from the 
date of filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
Therefore, the foregoing rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with written notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has fulfilled this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
    NYSE Arca believes that the proposed rule change is 
noncontroversial in that the Trusts will continue to use an 
internationally-accepted, transparent and widely-disseminated measure 
of currency exchange rates as the basis for NAV calculation. Use of the 
Closing Spot Rate by the Trusts in place of the Noon Buying Rate should 
not adversely impact investors or market transparency.\14\
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    \14\ E-mail from Tim Malinowski, Director, NYSE Euronext, to 
Edward Cho, Special Counsel, Division of Trading and Markets, 
Commission, dated September 3, 2008.
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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-2008-95 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-2008-95. 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, 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-NYSEArca-2008-95 and should be submitted on or before 
October 1, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-20963 Filed 9-9-08; 8:45 am]

BILLING CODE 8010-01-P
