[Federal Register Volume 75, Number 199 (Friday, October 15, 2010)]
[Notices]
[Pages 63530-63532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25949]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63067; File No. SR-NYSEArca-2010-78]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Change Relating to Listing and Trading Shares
of Jefferies Commodity Real Return ETF
October 8, 2010.
I. Introduction
On August 17, 2010, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
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 Jefferies Commodity Real Return
ETF (the ``Fund''). The proposed rule change was published for comment
in the
[[Page 63531]]
Federal Register on September 3, 2010.\3\ The Commission received no
comments on the proposal. 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. 62768 (August 26,
2010), 75 FR 54199 (``Notice'').
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II. Description of the Proposal
The Exchange proposes to list and trade the Shares pursuant to NYSE
Arca Equities Rule 8.200, Commentary .02, which governs the listing and
trading of Trust Issuer Receipts (``TIRs'') that invest in ``Financial
Instruments.'' The Exchange represents that the Shares satisfy the
requirements of NYSE Arca Equities Rule 8.200, Commentary .02, and
thereby qualify for listing on the Exchange.
As described in greater detail in the Notice, the Fund will invest
substantially all of its assets in exchange-traded futures in
commodities that comprise the Thomson Reuters/Jefferies CRB 3 Month
Forward Index (``Index''), or in other derivatives. The Fund
establishes long positions in futures contracts on the nineteen
physical commodities that comprise the Index (``Index Commodities'')
with the goal of tracking the changes, either positive or negative, to
the Index over time. The Managing Owner of the Fund adjusts the Fund's
portfolio from time to time to conform to periodic changes in the
identity and/or relative weighting of the Index Commodities.
The Exchange deems the Shares to be equity securities, which
subjects trading in the Shares to the Exchange's existing rules
governing the trading of equity securities, and has represented that
trading in the Shares on the Exchange will occur in accordance with
NYSE Arca Equities Rule 8.200(e). The Exchange has also represented
that it has appropriate rules to facilitate transactions in the Shares
during all trading sessions.
Additional details regarding the Shares and the Fund including,
among other things, the organization and structure of the Fund, the
dissemination and availability of information about the Fund and the
Index, trading halts, applicable trading rules, surveillance, and the
Information Bulletin can be found in the Notice.\4\
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\4\ See supra note 3.
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III. Discussion and Commission's Findings
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\5\ In particular, the Commission finds that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act,\6\ which requires, among other things, that the Exchange's rules
be designed 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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\5\ In approving this proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\6\ 15 U.S.C. 78f(b)(5).
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The Commission notes that it has previously permitted the listing
and trading of TIRs based on commodities indexes.\7\ In addition, the
Shares will be listed and traded pursuant to Commentary .02 to NYSE
Arca Equities Rule 8.200, and the Exchange represents that the Shares
will conform to the existing initial and continued listing criteria
under this rule.
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\7\ See Securities Exchange Act Release No. 58457 (September 3,
2008), 73 FR 52711 (September 10, 2008) (SR-NYSEArca-2008-91)
(Listing of fourteen funds of the Currency and Commodity Trust
pursuant to Rule 8.200, Commentary .02.)
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In addition, the Commission finds that the proposal to list and
trade the Shares on the Exchange is consistent with Section
11A(a)(1)(C)(iii) of the Act,\8\ which sets forth Congress' finding
that it is in the public interest and appropriate for the protection of
investors and the maintenance of fair and orderly markets to assure the
availability to brokers, dealers and investors of information with
respect to quotations for and transactions in securities.
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\8\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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Quotation and last-sale information for the Shares will be
disseminated through the facilities of the Consolidated Tape
Association. The Intra-day Indicative Value (``IIV'') will be published
by the Fund's Index Calculation Agent every 15 seconds through one or
more major market data vendors and on the Fund's Managing Owner's Web
site. The Net Asset Value (``NAV'') of the Fund will be published by
the Managing Owner of the Fund, and will be disseminated to all market
participants at the same time. The Exchange has also noted that
information regarding the closing prices and settlement prices of
futures on the Index Commodities are readily available from Web sites
of the applicable futures exchanges, automated quotation systems,
published or other public sources, or online information services such
as Bloomberg or Reuters. The relevant futures exchanges also provide
delayed futures information on current and past trading sessions and
market news free of charge on their respective Web sites. Moreover, the
Fund's Web site (http://www.jamfunds.com/jcis) will also disseminate
the Fund holdings on a daily basis.
The Exchange shall make available on its Web site daily trading
volume of the Shares, closing prices of the Shares, and the
corresponding NAV. In addition, the Fund's website will provide the
following information: (1) The current net asset value per share daily
and the prior business day's NAV and the reported closing price; (2)
the mid-point of the bid-ask price in relation to the NAV as of the
time the NAV is calculated; (3) a calculation of the premium or
discount of such price against such NAV; (4) data in chart format
displaying the frequency distribution of discounts and premiums of the
Bid/Ask Price against the NAV, within appropriate ranges, for each of
the four previous calendar quarters; (5) the Fund's prospectus; and (6)
other applicable quantitative information.
The Commission further believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Exchange has represented that the NAV for the Fund will be
disseminated to all market participants at the same time. If the
Exchange becomes aware that the NAV with respect to the Shares is not
being disseminated to all market participants at the same time, it will
halt trading in the Shares until such time as the NAV is available to
all market participants. Furthermore, the Exchange has represented that
it may halt trading during the day in which the interruption to the
dissemination of the IIV, the Index or the value of the underlying
futures occurs.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which trading is not occurring in the
underlying futures contracts; or (2) whether other unusual conditions
or circumstances detrimental to the maintenance of a fair
[[Page 63532]]
and orderly market are present. In addition, trading in Shares will be
subject to trading halts caused by extraordinary market volatility
pursuant to the Exchange's ``circuit breaker'' rule or by the halt or
suspension of trading in the underlying futures contracts.
In addition, NYSE Arca Equities Rule 8.200(e) sets forth certain
requirements for ETP Holders acting as registered Market Makers in the
Shares to facilitate surveillance.
In support of this proposal, the Exchange has made representations,
including:
(1) The Fund will meet the initial and continued listing criteria
under NYSE Arca Equities Rule 8.200, Commentary .02.
(2) The Exchange's surveillance procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable Federal
securities laws.
(3) Prior to the commencement of trading, the Exchange will inform
its ETP Holders in an Information Bulletin of the special
characteristics and risks associated with trading the Shares.
Specifically, the Information Bulletin will discuss the following: (a)
The risks involved in trading the Shares during the Opening and Late
Trading Sessions when an updated IIV will not be calculated or publicly
disseminated; (b) the procedures for purchases and redemptions of
Shares in Baskets (including noting that Shares are not individually
redeemable); (c) NYSE Arca Equities Rule 9.2(a), which imposes a duty
of due diligence on its ETP Holders to learn the essential facts
relating to every customer prior to trading the Shares; (d) how
information regarding the IIV is disseminated; (e) the requirement that
ETP Holders deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction;
and (f) trading information.
This approval order is based on the Exchange's representations.
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act \9\ and the
rules and regulations thereunder applicable to a national securities
exchange.
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\9\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSEArca-2010-78), be, and
it hereby is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25949 Filed 10-14-10; 8:45 am]
BILLING CODE 8011-01-P