[Federal Register Volume 75, Number 162 (Monday, August 23, 2010)]
[Notices]
[Pages 51863-51864]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20819]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62737; File No. SR-NYSEArca-2010-64]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving
Proposed Rule Change Relating to Listing of the Wilshire Micro-Cap ETF
August 17, 2010.
I. Introduction
On July 1, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
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
list and trade shares (``Shares'') of the Wilshire Micro-Cap ETF. The
proposed rule change was published for comment in the Federal Register
on July 15, 2010.\3\ The Commission received no comment letters on the
proposed rule change. This order approves the proposed rule change.
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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. 62471 (July 8,
2010), 75 FR 41252 (``Notice'').
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II. Description of the Proposed Rule Change
The Exchange proposes to list and trade the Shares of the Wilshire
Micro-Cap ETF (the ``Fund'') \4\ under NYSE Arca Equities Rule
5.2(j)(3), the Exchange's listing standards for Investment Company
Units (``Units'').\5\ The Fund is a series of the Claymore Exchange-
Traded Fund Trust.
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\4\ See the Claymore Exchange-Traded Fund Trust's registration
statement on Form N-1A, dated May 18, 2010 (File Nos. 333-134551;
811-21906) (``Registration Statement'').
\5\ 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 investment results that correspond generally to the
performance, before fees and expenses, of the Wilshire US Micro-Cap
Index \SM\ (``Index''). The Index is designed to represent micro-sized
companies and is a subset of the Wilshire 5000 Total Market Index\SM\
(the ``Wilshire 5000''). The Index represents a float-adjusted, market
capitalization-weighted index of the issues ranked below 2500 by market
capitalization of the Wilshire 5000. As of March 31, 2010, the Index
was comprised of approximately 1,564 securities of micro-capitalization
companies.
The Exchange represents that: (i) Except for Commentaries
.01(a)(A)(1) \6\ and .01(a)(A)(5) \7\ to NYSE Arca Equities Rule
5.2(j)(3), the Shares of the Fund currently satisfy all of the other
generic listing standards under NYSE Arca Equities Rule 5.2(j)(3); (ii)
the continued listing standards under NYSE Arca Equities Rules
5.2(j)(3) and 5.5(g)(2) applicable to Units shall apply to the Shares;
and (iii) the Trust is required to comply with Rule 10A-3 \8\ under the
Act for the initial and continued listing of the Shares. Additionally,
the Exchange represents that the Shares will comply with all other
requirements applicable to Units including, but not limited to,
requirements relating to the dissemination of key information such as
the value of the Index 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
Exchange rules applicable to Units and prior Commission orders
approving the generic listing rules applicable to the listing and
trading of Units.\9\
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\6\ Commentary .01(a)(A)(1) to NYSE Arca Equities Rule 5.2(j)(3)
provides that component stocks (excluding Units and securities
defined in Section 2 of NYSE Arca Equities Rule 8, collectively,
``Derivative Securities Products'') that in the aggregate account
for at least 90% of the weight of the index or portfolio (excluding
such Derivative Securities Products) each shall have a minimum
market value of at least $75 million. The Exchange has represented
that, as of April 21, 2010, 76.93% of the weight of the Index
components had a market capitalization greater than $75 million.
\7\ Commentary .01(a)(A)(5) to NYSE Arca Equities Rule 5.2(j)(3)
provides that all securities in the index or portfolio shall be US
Component Stocks listed on a national securities exchange and shall
be NMS Stocks as defined in Rule 600 of Regulation NMS under the
Act. The Exchange has represented that, as of April 21, 2010, 201 of
approximately 1,564 components in the Index, accounting for
approximately 12.8% of the total stocks in the Index and
approximately 3.7% of the Index weight, were non-NMS stocks that
trade either on the OTC Bulletin Board or the Pink OTC Markets.
\8\ 17 CFR 240.10A-3.
\9\ See, e.g., Securities Exchange Act Release Nos. 44551 (July
12, 2001), 66 FR 37716 (July 19, 2001) (SR-PCX-2001-14) (order
approving generic listing standards for Units and Portfolio
Depositary Receipts); and 41983 (October 6, 1999), 64 FR 56008
(October 15, 1999) (SR-PCX-98-29) (order approving rules for listing
and trading of Units).
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[[Page 51864]]
Detailed descriptions of the Fund, the Index, procedures for
creating and redeeming Shares, transaction fees and expenses,
dividends, distributions, taxes, risks, and reports to be distributed
to beneficial owners of the Shares can be found in the Registration
Statement or on the Web site for the Fund (http://www.claymore.com), as
applicable.\10\
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\10\ See also Notice, supra, note 3.
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III. Discussion and Commission's Findings
After careful review, the Commission finds that the Exchange's
proposal to list and trade the Shares is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\11\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\12\
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, 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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\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).
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NYSE Arca Equities Rule 5.2(j)(3) permits the Exchange to consider
qualifying Units for listing and trading pursuant to Rule 19b-4(e)
under the Act. Commentary .01(a)(A) of Rule 5.2(j)(3) sets forth the
generic listing requirements applicable to Units based on U.S. indexes
or portfolios.\13\ These generic listing standards are designed to
ensure that the securities composing the indexes and portfolios
underlying the Units are well capitalized and actively traded, and
serve to prevent fraudulent and manipulative acts.\14\ As discussed
above, the Shares do not qualify for generic listing under the
Exchange's rule because the Index does not meet the criteria set forth
in Commentaries .01(a)(A)(1) and .01(a)(A)(5) of NYSE Arca Equities
Rule 5.2(j)(3) applicable to Units based on U.S. indexes or
portfolios.\15\
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\13\ In addition to the requirements set forth in Commentaries
.01(a)(A)(1) and .01(a)(A)(5) discussed above, Rule 5.2(j)(3) also
provides, among other things, that (i) the component stocks
(excluding Derivative Securities Products) representing at least 70%
of the weight of the index or portfolio (excluding such Derivative
Securities Products) must have a minimum monthly trading volume
during each of the last six months of at least 250,000 shares, or
minimum notional monthly trading volume of $25 million, (ii) the
most heavily weighted component stock (excluding Derivative
Securities Products) in an underlying index or portfolio cannot
exceed 30% of the weight of the index or portfolio, and the five
most heavily weighted component stocks (excluding Derivative
Securities Products) cannot together exceed 65% of the weight of the
index or portfolio, and (iii) the index or portfolio must include a
minimum of 13 stocks. See Commentaries .01(a)(A)(2), .01(a)(A)(3)
and .01(a)(A)(4) to NYSE Arca Equities Rule 5.2(j)(3).
\14\ See Securities Exchange Act Release No. 44551 (July 12,
2001), 66 FR 37716 (July 19, 2001) (SR-PCX-2001-14).
\15\ See notes 6 and 7, supra.
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The Commission believes that the listing and trading of the Shares
is consistent with the Act. The Shares currently satisfy all but two of
the generic listing standards under the rule, and the Commission
believes that the composition of the Index, despite failing to satisfy
the requirements of Commentaries .01(a)(A)(1) and .01(a)(A)(5) to NYSE
Arca Equities Rule 5.2(j)(3), does not raise any regulatory concerns.
The capitalization criterion of Commentary .01(a)(A)(1), together with
the liquidity requirement applicable to the Index components, are
designed to prevent fraudulent or manipulative acts.\16\ The Commission
believes that the Index should not be susceptible to manipulation in
light of the characteristics of the Index components when viewed as a
whole. The generic listing requirement that all securities in the Index
be NMS Stocks is designed to ensure that listed Units are not used as
surrogates for trading in unregistered securities.\17\ The Commission
believes that the Shares will not serve this function because non-NMS
stocks account for only approximately 3.7% of the Index weight.
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\16\ See Securities Exchange Act Release No. 44551, supra note
14, 66 FR at 37719.
\17\ See Securities Exchange Act Release No. 55621 (April 12,
2007), 72 FR 19571, 19576 (April 18, 2007) (SR-NYSEArca-2006-86).
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In addition, the Commission notes that it has not received any
comments regarding the proposed rule change.
IV. Conclusion
For the forgoing reasons, the Commission believes that the
Exchange's proposal to list and trade the Shares is consistent with the
Act. This order is based on the Exchange's representations.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-NYSEArca-2010-64) be, and it
hereby is, approved.
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\18\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-20819 Filed 8-20-10; 8:45 am]
BILLING CODE 8010-01-P