
[Federal Register: April 7, 2009 (Volume 74, Number 65)]
[Notices]               
[Page 15803-15804]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap09-134]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59678; File No. SR-NYSEArca-2009-14]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Accelerated Approval of a Proposed Rule Change Relating to the Leverage 
Factor Applicable to the MacroShares Major Metro Housing Trusts

April 1, 2009.
    On March 3, 2009, 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 modify the representation made in SR-NYSEArca-
2008-92 \3\ regarding the leverage factor applicable to the MacroShares 
Major Metro Housing Up Trust (``Up Trust'') and the MacroShares Major 
Metro Housing Down Trust (``Down Trust'') (collectively, the 
``Trusts'') and, specifically, to indicate that the leverage factor to 
be applied will be 3 rather than 2.\4\ The proposed rule change was 
published in the Federal Register on March 16, 2009 for a 15-day 
comment period.\5\ The Commission received no comments on the proposal. 
This order grants approval to the proposed rule change on an 
accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 58704 (October 1, 
2008), 73 FR 59026 (October 8, 2008) (order approving listing and 
trading on the Exchange of the Trusts (``Approval Order'')); See 
also Securities Exchange Act Release No. 58469 (September 5, 2008), 
73 FR 53306 (September 15, 2008) (SR-NYSEArca-2008-92) (notice of 
proposed rule change to list and trade the Trusts on the Exchange) 
(``Initial Notice''). The Shares are being offered by the Trusts 
under the Securities Act of 1933, 15 U.S.C. 77a. On February 17, 
2009, the depositor filed with the Commission preliminary 
Registration Statements on Form S-1 (Amendment No. 3) for the Up 
MacroShares (File No. 333-151522) and for the Down MacroShares (File 
No. 333-151523) (``Registration Statements'').
    \4\ Shares of the Up Trust and the Down Trust are referred to 
collectively as ``Shares.''
    \5\ See Securities Exchange Act Release No. 59542 (March 9, 
2009), 74 FR 11167 (``Notice'').
---------------------------------------------------------------------------

I. Description of the Proposal

    The Commission previously approved, pursuant to Section 19(b)(2) of 
the Act, the Exchange's proposal to list and trade the Up MacroShares 
and the Down MacroShares as Paired Trust Shares under NYSE Arca 
Equities Rule 8.400.\6\
---------------------------------------------------------------------------

    \6\ See Approval Order, supra note 3.
---------------------------------------------------------------------------

    As described in the Approval Order and the Initial Notice, the Up 
Trust and the Down Trust intend to issue Up MacroShares and Down 
MacroShares, respectively, on a continuous basis. The Up MacroShares 
and the Down MacroShares represent undivided beneficial interests in 
the Up Trust and the Down Trust, respectively.
    The Trusts will make quarterly distributions and a final 
distribution that is based on the value of the S&P/Case-Shiller 
Composite-10 Home Price Index (``Index''), as well as on prevailing 
interest rates on U.S. Treasury obligations. The last published value 
of the S&P/Case-Shiller Composite-10 Home Price Index is referred to as 
the ``Reference Value of the Index'' or ``Reference Value'', as 
discussed in the Initial Notice.\7\
---------------------------------------------------------------------------

    \7\ The Reference Value of the Index is the Reference Price for 
purposes of NYSE Arca Equities Rule 8.400.
---------------------------------------------------------------------------

    If the Reference Value rises above its specified starting level, 
the Up Trust's Underlying Value (as described in the Initial Notice) 
will increase to include all of its assets plus a portion of the assets 
of the paired Down Trust. This portion of assets due from the Down 
Trust will be multiplied by a specified ``leverage factor.'' 
Conversely, if the level of the Reference Value of the Index falls 
below its starting level on and after the closing date, the Up Trust's 
Underlying Value will decrease, because a portion of its assets will be 
included in the Underlying Value of its paired Down Trust, such portion 
being multiplied by the leverage factor.
    The Initial Notice stated that the leverage factor would be 2, as 
initially described in the Registration Statements. The Trusts now 
intend to utilize a leverage factor of 3.\8\ The effect of this will be 
to triple any increase or decrease in the Underlying Value of the Up 
Trust or the Down Trust, depending upon whether there is an increase or 
decrease in the Reference Value of the Index.
---------------------------------------------------------------------------

    \8\ With the exception of the proposed change to the leverage 
factor, and a change in the distribution date from a date in 2018 to 
a date in 2014, the Exchange states that all representations made by 
the Exchange in the Initial Notice continue to apply. See Notice, 
supra note 5, 74 FR at 11168, n. 8.
---------------------------------------------------------------------------

    Additional information relating to the Trusts and Shares is 
available in the Registration Statements, the Notice, the Initial 
Notice and the Approval Order.\9\
---------------------------------------------------------------------------

    \9\ See supra notes 3 and 5.
---------------------------------------------------------------------------

II. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the

[[Page 15804]]

requirements of Section 6 of the Act \10\ and the rules and regulations 
thereunder applicable to a national securities exchange.\11\ In 
particular, the Commission finds that the proposal is consistent with 
Section 6(b)(5) of the Act,\12\ which requires, among other things, 
that the Exchange's rules be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transaction 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ In approving this proposed rule change the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that it has previously approved the listing 
and trading of the Trusts under NYSE Arca Equities Rule 8.400.\13\ The 
Commission also notes that the Exchange has represented that, with the 
exception of the change to the leverage factor applicable to the 
Trusts, and a change to the distribution date, all prior 
representations made in the Initial Notice will continue to apply.\14\ 
This approval order is based on the Exchange's representations.
---------------------------------------------------------------------------

    \13\ See Approval Order, supra note 3.
    \14\ See supra notes 5 and 8.
---------------------------------------------------------------------------

    The Commission believes that the increase from 2 to 3 of the 
leverage factor applicable to the Up MacroShares and the Down 
MacroShares, respectively, is reasonable to facilitate the listing and 
trading of the Shares. Additionally, the Commission believes that the 
increase of the leverage factor should help to increase competition 
among market participants and benefit investors. The Commission also 
notes that it has previously approved the listing and trading of other 
exchange-traded products with up to 300% leverage.\15\
---------------------------------------------------------------------------

    \15\ See e.g., Securities Exchange Act Release Nos. 58825 
(October 21, 2008), 73 FR 63756 (October 27, 2008) (SR-NYSEArca-
2008-89) (approving amendment to Rule 5.2(j)(3) to permit listing of 
Investment Company Units where the issuer seeks to provide 
investment results, before fees and expenses, up to -300% of the 
percentage performance on a given day of a particular equity index); 
59332 (January 30, 2009), 74 FR 6338 (February 2, 2009) (SR-
NYSEArca-2008-136) (approving amendment to NYSE Arca Equities Rule 
5.2(j)(6) to permit a loss or negative payment at maturity with 
respect to an issue of Index-Linked Securities to be accelerated by 
a multiple up to three times the performance of an underlying 
Reference Asset, as defined in NYSE Arca Equities Rule 5.2(j)(6)).
---------------------------------------------------------------------------

III. Accelerated Approval

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act,\16\ for approving the proposal prior to the thirtieth day 
after the date of publication of the Notice in the Federal Register. 
The Commission has received no comments regarding the proposed rule 
change, and the Commission finds that the proposed rule change does not 
raise any novel regulatory issues. Additionally, the Commission 
believes that accelerating approval of this proposal should benefit the 
market by making available to investors, without undue delay, 
additional products in the market for Paired Trust Shares.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NYSEArca-2009-14) be, and it 
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------

    \17\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-7775 Filed 4-6-09; 8:45 am]

BILLING CODE 8010-01-P
