
[Federal Register Volume 78, Number 155 (Monday, August 12, 2013)]
[Notices]
[Pages 48920-48922]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19406]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70124; File No. SR-NYSEARCA-2013-78]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca 
Equities Rule 5.3(i)(1)(i) To Specify the Procedures To Be Followed if 
a Listed Derivative Securities Product or a Listed Structured Product 
Is Based on an Index or Portfolio of Securities and Such Index or 
Portfolio Is Modified or Replaced

August 6, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on July 25, 2013, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 amend NYSE Arca Equities Rule 5.3(i)(1)(i) 
to specify the procedures to be followed if a listed Derivative 
Securities Product or a listed Structured Product is based on an index 
or portfolio of securities and such index or portfolio is modified or 
replaced. The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, 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 self-regulatory organization 
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its rules to clarify Exchange 
policies with respect to changes in the index or portfolio on which a 
listed security is based. The proposed rule change is consistent with 
the policies currently applied under existing Exchange rules. In 
particular, the Exchange proposes to adopt specific procedures to be 
followed when a Derivative Securities Product \4\ or a Structured 
Product \5\ based on an index or portfolio of securities is listed on 
the Exchange and: (1) The value of such index or portfolio is no longer 
calculated or available and a new index or portfolio is substituted; or 
(2) such index or portfolio is replaced with a new index or portfolio 
from the same or a different index provider; or (3) the index or 
portfolio is significantly modified (including, but not limited to, a 
significant modification to the index methodology, a change in the 
index provider or a change in control of the index provider) (each of 
(1), (2) and (3), a ``Material Index or Portfolio Change'').
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    \4\ ``Derivative Securities Products'' are (i) investment 
company units listed under NYSE Arca Equities Rule 5.2(j)(3) 
Commentary .01(a)(A)(1) and (ii) securities defined in Section 2 of 
NYSE Arca Equities Rule 8.
    \5\ Pursuant to NYSE Arca Equities Rule 5.1(b)(17), the term 
``Structured Products'' means products that are derived from and/or 
based on a single security or securities, a basket of stocks, an 
index, a commodity, debt issuance and/or a foreign currency, among 
other things. Structured Products include index and equity linked 
notes, term notes and units generally consisting of a contract to 
purchase equity and/or debt securities at a specified time.
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    It is the Exchange's long-standing policy to require the issuer of 
any Derivative Securities Product or Structured Product to submit an 
executed Supplemental Listing Application and to obtain authorization 
from NYSE Regulation prior to the effective date of any change in the 
index or portfolio on which such security is based. Generally, NYSE 
Regulation requires at least two weeks to review and to approve a 
Supplemental Listing Application. The Exchange reminds issuers of this 
policy in an annual reminder letter sent to all listed issuers which 
summarizes important Exchange corporate governance and notice 
requirements. This current policy is appropriate in light of NYSE Arca 
Equities Rule 5.3(i)(1)(i)(N), which requires listed issuers to 
``provide

[[Page 48921]]

sufficient advance application for the listing of securities in 
substitution for securities, the obligations, rights or privileges of 
which have been altered by merger, acquisition, consolidation or other 
corporate action, unless specifically exempted by the [Exchange].'' The 
Exchange also has the authority to require this notice pursuant to NYSE 
Arca Equities Rule 5.3(i)(1)(i)(O), which requires listed issuers to 
furnish any information concerning their businesses as the Exchange may 
reasonably require.
    The Exchange notes that a Derivative Securities Product or 
Structured Product based on an index or portfolio of securities that is 
listed under a generic listing standard or pursuant to a rule filing 
approved by the Commission is authorized for continued listing only so 
long as it meets the terms of the applicable generic listing standard 
or rule filing. In the event that a Material Index or Portfolio Change 
causes the applicable security to cease to be qualified for listing 
under the applicable generic listing standard or rule filing, then the 
Exchange does not have the authority to continue its listing unless 
such continued listing is authorized pursuant to a rule filing declared 
immediately effective or approved by the Commission.\6\ Similarly, the 
Exchange is required to file a Form 19b-4(e) with the Commission 
whenever it lists a new Derivative Securities Product or Structured 
Product under a generic listing standard and it is the Exchange's 
existing practice to file a new Form 19b-4(e) if there is a Material 
Index or Portfolio Change in relation to such security in cases where 
the security as modified still meets the applicable generic listing 
standard.
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    \6\ There can be no assurance that the Commission will approve a 
rule filing with respect to any specific Material Index or Portfolio 
Change. In the event that any such rule filing is not approved, the 
security in question will be delisted.
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    The Exchange proposes to add a new paragraph (P) to NYSE Arca 
Equities Rule 5.3(i)(1)(i) to provide additional clarity to issuers of 
Derivative Securities Products and Structured Products with respect to 
Exchange rules and policy applicable in the event of any change in the 
index or portfolio on which a security is based would specify. If a 
Material Index or Portfolio Change occurs with respect to a listed 
security, the Exchange will not continue the listing of such security 
unless the new (or modified) index or portfolio meets the requirements 
for listing of the rule under which such security was originally 
listed, either pursuant to Rule 19b-4(e) under the Act (including the 
filing of a Form 19b-4(e) with the Commission) or by Commission 
approval or immediate effectiveness of a filing pursuant to Section 
19(b)(1) of the Act. In such circumstances, the Exchange will have sole 
discretion as to whether it chooses to submit a rule filing pursuant to 
Section 19(b)(1). If an issuer of a listed Derivative Securities 
Product or listed Structured Product effectuates a Material Index or 
Portfolio Change with respect to which approval of a rule filing 
pursuant to Section 19(b)(2) is required and such rule filing has not 
yet been approved or is not immediately effective, then the Exchange 
will immediately halt trading in the applicable security until such 
rule filing is approved. If at any time it becomes clear, in the 
opinion of the Exchange, that such rule filing will not be approved by 
the Commission or become immediately effective, or the Exchange decides 
in its sole discretion to withdraw or not file such rule filing, the 
Exchange will immediately commence delisting procedures with respect to 
such security.
    Proposed NYSE Arca Equities Rule 5.3(i)(1)(i)(P) would also require 
the issuer of any listed Derivative Securities Product or Structured 
Product to notify the Exchange no fewer than ten business days in 
advance of the effective date of any change or modification to the 
index or portfolio associated with such security and, if required by 
the Exchange, to make application for the continued listing of the 
security as so changed and to announce such change via a method 
acceptable under the Exchange's rule with respect to material news 
dissemination, NYSE Arca Equities Rule 5.3(i)(2). The proposed rule 
will advise issuers to consult with NYSE Regulation in advance of any 
Material Index or Portfolio Change which could cause the applicable 
security to cease to be qualified for continued listing without the 
approval or immediate effectiveness of a rule filing pursuant to 
Section 19(b)(1), in which case the proposed rule will advise issuers 
to provide adequate notice to the Exchange to provide sufficient time 
to submit an appropriate rule change prior to implementation of the 
Material Index or Portfolio Change, thereby avoiding any disruption in 
trading.
    The proposed rule change is intended to ensure that the Exchange 
has appropriate notice of modifications to the index or portfolio on 
which a security is based that would give rise to the requirement to 
submit a new rule filing or to file a Form 19b-4(e). The proposal to 
require 10 business days' notice of a modification of the index or 
portfolio on which a security is based is consistent with the 
Exchange's longstanding policy requiring the issuer of any Derivative 
Securities Product or Structured Product to submit an executed 
Supplemental Listing Application and to obtain authorization from NYSE 
Regulation prior to the effective date of any change in the index or 
portfolio on which such security is based. Generally, NYSE Regulation 
requires at least two weeks to review and to approve a Supplemental 
Listing Application. The Exchange reminds issuers of this policy 
annually in a letter summarizing important Exchange corporate 
governance and notice requirements disseminated to all listed issuers. 
The Exchange believes that this current policy is appropriate in light 
of NYSE Arca Equities Rule 5.3(i)(1)(i)(N), which requires listed 
issuers to ``provide sufficient advance application for the listing of 
securities in substitution for securities, the obligations, rights or 
privileges of which have been altered by merger, acquisition, 
consolidation or other corporate action, unless specifically exempted 
by the [Exchange].'' The Exchange also believes that it has the 
authority to require this notice pursuant to NYSE Arca Equities Rule 
5.3(i)(1)(i)(O), which requires listed issuers to furnish any 
information concerning their businesses as the Exchange may reasonably 
require.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \7\ of the Securities Exchange Act of 1934 (the 
``Act''),\8\ in general, and furthers the objectives of Section 6(b)(1) 
of the Act,\9\ in particular in that it is designed to comply, and to 
ensure that the Exchange enforces listed company compliance, with the 
Act, the rules and regulations thereunder, and the rules of the 
Exchange. The Exchange believes that the proposed amendment is 
consistent with Section 6(b)(1) of the Act in that it simply clarifies 
the framework under which the Exchange will handle a Material Index or 
Portfolio Change in relation to a Derivative Securities Product or 
Structured Product. Pursuant to the Act, the Exchange does not have 
authority to continue listing a security that ceases to be qualified 
for listing under an applicable generic listing standard or rule 
filing. In the event that a security ceases to so qualify, the proposed 
rule change merely sets forth the framework for how the Exchange will 
rectify the

[[Page 48922]]

deficiency or ultimately commence delisting proceedings. In this 
regard, the proposed rule change is consistent with Section 6(b)(1) of 
the Act.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78a.
    \9\ 15 U.S.C. 78f(b)(1).
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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. The sole purpose of the 
proposed rule filing is to enable the Exchange to effectively comply 
with its obligations under the Act and Commission rules with respect to 
the listing of Derivative Securities Products and Structured Products 
in the event of a Material Index or Portfolio Change and it therefore 
imposes no burden on competition.

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 filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\13\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires the Exchange to give the Commission written 
notice of the Exchange's 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 satisfied this requirement.
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend 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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(2)(B).
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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 email to rule-comments@sec.gov. Please 
include File Number SR-NYSEARCA-2013-78 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEARCA-2013-78. This 
file number should be included on the subject line if email 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 Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 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-2013-78 and should 
be submitted on or before September 3, 2013.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19406 Filed 8-9-13; 8:45 am]
BILLING CODE 8011-01-P


