[Federal Register Volume 76, Number 4 (Thursday, January 6, 2011)]
[Notices]
[Pages 805-807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33362]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63624; File No. SR-NYSEArca-2010-120]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to Listing and Trading Shares of the
SPDR Nuveen S&P High Yield Municipal Bond ETF
December 30, 2010.
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 December 21, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. 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\ 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 list and trade shares of the SPDR Nuveen
S&P High Yield Municipal Bond ETF under NYSE Arca Equities Rule
5.2(j)(3), Commentary .02. The text of the proposed rule change is
available at the Exchange, the Commission's Public Reference Room, and
http://www.nyse.com.
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 list and trade shares (``Shares'') of the
following series of the SPDR Series Trust (``Trust'') under NYSE Arca
Equities Rule 5.2(j)(3), Commentary .02, which governs the listing and
trading of Investment Company Units (``Units''), based on the S&P
Municipal Yield Index (``Index''): SPDR Nuveen S&P HighYield Municipal
Bond ETF (``Fund'' or ``ETF'').\3\
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\3\ The Commission has previously approved listing and trading
of Units based on certain fixed income indexes. See, e.g.,
Securities Exchange Act Release No. 48662 (October 20, 2003), 68 FR
61535 (October 28, 2003) (SR-PCX-2003-41) (approving listing and
trading pursuant to unlisted trading privileges (``UTP'') of fixed
income funds and the UTP trading of certain iShares[reg] fixed
income funds). In addition, the Commission has approved NYSE Arca
generic listing rules for Units based on a fixed income index in
Securities Exchange Act Release No. 55783 (May 17, 2007), 72 FR
29194 (May 24, 2007) (SR-NYSEArca-2007-36). The Commission has
approved pursuant to Section 19(b)(2) of the Exchange Act the
listing on the American Stock Exchange (``Amex'') of exchange traded
funds based on fixed income indexes. See, e.g., Securities Exchange
Act Release No. 48534 (September 24, 2003), 68 FR 56353 (September
30, 2003) (SR-Amex-2003-75) (order approving listing on Amex of
eight series of iShares Lehman Bond Funds). In addition, the
Commission has approved two actively managed funds of the PIMCO ETF
Trust that hold municipal bonds. See Securities Exchange Act Release
No. 60981 (August 27, 2009) (SR-NYSEArca-2009-79) (order approving
PIMCO Short-Term Municipal Bond Strategy Fund and PIMCO Intermediate
Municipal Bond Strategy Fund, among others).
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The SPDR Nuveen S&P High Yield Municipal Bond ETF \4\ seeks to
provide investment results that, before fees and expenses, correspond
generally to the price and yield performance of the Index, which tracks
the U.S. municipal bond market, and to provide income that is exempt
from regular federal income taxes.\5\
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\4\ Standard & Poor's Financial Services LLC is the Index
Sponsor with respect to the Index. The Index Sponsor is not
affiliated with a broker-dealer and has implemented procedures
designed to prevent the use and dissemination of material, non-
public information regarding the Index.
\5\ See the Trust's registration statement on Form N-1A under
the Securities Act of 1933 (15 U.S.C. 77a) and the Investment
Company Act of 1940 (15 U.S.C. 80a), dated February 22, 2010 (File
No. 333-57793 and 811-08839) (``Registration Statement''). The
description of the operation of the Trust and the Fund herein is
based on the Registration Statement.
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The Exchange is submitting this proposed rule change because the
Index for the Fund does not meet all of the ``generic'' listing
requirements of Commentary .02(a)(2) to NYSE Arca Equities Rule
5.2(j)(3) applicable to listing of Units based on U.S. indexes. The
Index meets all such requirements except for those set forth in
Commentary .02(a)(2).\6\ Specifically, as of December 20, 2010, 26.47%
of the weight of the Index components have a minimum principal amount
outstanding of $100 million or more.
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\6\ Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3)
provides that components that in the aggregate account for at least
75% of the weight of the index or portfolio each shall have a
minimum principal amount outstanding of $100 million or more.
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According to the Registration Statement, the Index is designed to
measure the performance of high yield municipal bonds issued by U.S.
states and territories or local governments or agencies, such that
interest on the securities is exempt from U.S. federal income tax, but
may be subject to the alternative minimum tax and to state and local
income taxes. High yield securities are generally rated below
investment grade and are commonly referred to as ``junk bonds.'' The
Index is a sub-set of the Standard & Poor's/Investortools Municipal
Bond Index and the Standard & Poor's/Investortools High Yield Bond
Index and includes publicly issued U.S. dollar denominated, fixed rate,
municipal bonds that have a remaining maturity of at least one year.
The Index consists of categories of bonds in the following
proportions: (i) 70% of the Index constituents are components of the
Standard & Poor's/Investortools High Yield Bond Index, which are non-
rated or are rated below investment grade; (ii) 20% of the Index
constituents are components of the Standard & Poor's/Investortools Bond
Index that are rated Baa3, Baa2, or Baa1 by Moody's Investors Service,
or BBB-, BBB, or BBB+ by Standard and Poor's or Fitch; and (iii) 10% of
the Index constituents are components of the Standard & Poor's/
Investortools Bond Index that are rated A3, A2, or A1 by Moody's
Investor Services, or A-, A, or A+ by Standard & Poor's or Fitch. Bonds
that have been escrowed will not be included in the Index. Prerefunded
bonds will not be included in the Index. Where the ratings assigned by
the agencies are not consistent, the Index will use the middle rating
if three ratings are available, and the lower of
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two ratings if only two ratings are available.\7\
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\7\ The Standard & Poor's/Investortools Municipal Bond Index is
composed of bonds held by managed municipal bond fund customers of
Standard & Poor's Securities Pricing, Inc. that are priced daily.
Index calculations are provided by Investortools, Inc. Only bonds
with total outstanding amounts of $2,000,000 or more qualify for
inclusion. The Standard and Poor's/Investortools Municipal Bond High
Yield Index is comprised of all bonds in the Standard and Poor's/
Investortools Municipal Bond Index that are non-rated or whose
ratings are BB+ S&P and/or BA-1 Moody's or lower. This index does
not contain bonds that are prerefunded or are escrowed to maturity.
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As of December 20, 2010, there were approximately 21,141 issues
included in the Index.
The Exchange represents that: (1) Except for Commentary .02(a)(2)
to NYSE Arca Equities Rule 5.2(j)(3), the Shares of the Fund currently
satisfy all of the generic listing standards under NYSE Arca Equities
Rule 5.2(j)(3); (2) 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 (3) the Trust is required to comply with Rule 10A-3
\8\ under the Exchange Act for the initial and continued listing of the
Shares. In addition, 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 the 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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\8\ 17 CFR 240.10A-3.
\9\ See, e.g., Securities Exchange Act Release Nos. 55783 (May
17, 2007), 72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36) (order
approving NYSE Arca generic listing standards for Units based on a
fixed income index); 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); 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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As of December 20, 2010, there were approximately 21,141 issues
included in the Index and 46.47% of the weight of the Index components
was comprised of individual maturities that were part of an entire
municipal bond offering with a minimum original principal amount
outstanding of $100 million or more for all maturities of the offering.
In addition, the total dollar amount outstanding of issues in the Index
was approximately $532.82 billion and the average dollar amount
outstanding of issues in the Index was approximately $25.22 million.
Further, the most heavily weighted component represents 0.86% of the
weight of the Index and the five most heavily weighted components
represent 2.52% of the weight of the Index.\10\ Therefore, the Exchange
believes that, notwithstanding that the Index does not satisfy the
criterion in NYSE Arca Equities Rule 5.2(j)(3), Commentary .02(a)(2),
the Index is sufficiently broad-based to deter potential manipulation,
given that the Index is comprised of approximately 21,141 issues. In
addition, the Index securities are sufficiently liquid to deter
potential manipulation in that a substantial portion (46.47%) of the
Index weight is comprised of maturities that are part of a minimum
original principal amount outstanding of $100 million or more; and in
view of the substantial total dollar amount outstanding and the average
dollar amount outstanding of Index issues, as referenced above.
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\10\ Commentary .02(a)(4) to NYSE Arca Equities Rule 5.2(j)(3)
provides that no component fixed-income security (excluding Treasury
Securities and GSE Securities) shall represent more than 30% of the
weight of the index or portfolio, and the five most heavily weighted
component fixed-income securities in the index or portfolio shall
not in the aggregate account for more than 65% of the weight of the
index or portfolio.
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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.spdr.com), as
applicable.
2. Statutory Basis
The basis under the Exchange Act for this proposed rule change is
the requirement under Section 6(b)(5) \11\ that an exchange have rules
that are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest. The
Exchange believes that the proposed rule change will facilitate the
listing and trading of an additional type of exchange-traded product
that will enhance competition among market participants, to the benefit
of investors and the marketplace. In addition, the listing and trading
criteria set forth in NYSE Arca Equities Rule 5.2(j)(3) and Commentary
.02 thereto are intended to protect investors and the public interest.
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\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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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 [email protected]. Please include
File Number SR-NYSEArca-2010-120 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-2010-120. 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
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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
20549-1090 on official business days between 10 a.m. and 3 p.m. Copies
of the filing will also be available for inspection and copying at the
Exchange's principal office. 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-2010-120 and should be submitted on or before
January 27, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33362 Filed 1-5-11; 8:45 am]
BILLING CODE 8011-01-P