[Federal Register Volume 76, Number 32 (Wednesday, February 16, 2011)]
[Notices]
[Pages 9065-9067]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3441]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63881; File No. SR-NYSEArca-2010-120]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a
Proposed Rule Change To List and Trade Shares of the SPDR Nuveen S&P
High Yield Municipal Bond ETF
February 9, 2011.
I. Introduction
On December 21, 2010, NYSE Arca, Inc. (``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 the SPDR Nuveen S&P High Yield Municipal Bond
ETF (``ETF'' or ``Fund'') under NYSE Arca Equities Rule 5.2(j)(3),
Commentary .02. The proposed rule change was published for comment in
the Federal Register on January 6, 2011.\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. 63624 (December 30,
2010), 76 FR 805 (``Notice'').
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II. Description of the Proposal
The Exchange proposes to list and trade shares (``Shares'') under
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, which governs the
listing and trading of Investment Company Units (``Units''), of the
following series of the SPDR Series
[[Page 9066]]
Trust (``Trust'') based on the S&P Municipal Yield Index (``Index''):
SPDR Nuveen S&P HighYield Municipal Bond ETF (``Fund'' or ``ETF'').
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 Exchange has represented that
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'').
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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,\6\ 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.\7\ As
of December 20, 2010, there were approximately 21,141 issues included
in the Index.
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\6\ 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.
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.
\7\ 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 two ratings if only two ratings are
available.
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The Exchange submitted this proposed rule change because the Index
underlying 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 US indexes.
Specifically, the Index does not meet the requirement set forth in
Commentary .02(a)(2): \8\ 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. The Exchange represents that: (1) Except for
Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Shares
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 \9\ 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.\10\
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\8\ 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.
\9\ 17 CFR 240.10A-3.
\10\ 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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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.
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.\11\ In particular, the Commission believes that the proposal
is consistent with Section 6(b)(5) of the Act,\12\ which requires,
among other things, that the rules of a national securities exchange be
designed to promote just and equitable principles of trade, 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 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).
\12\ 15 U.S.C. 78f(b)(5).
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Although NYSE Arca Equities Rule 5.2(j)(3) permits the Exchange to
list Units based on U.S. indexes pursuant to Rule 19b-4(e) under the
Act,\13\ the Index for the Fund does not meet all of the generic
listing requirements applicable to the listing of Units based on U.S.
indexes. Specifically, the Index does not satisfy Commentary .02(a)(2)
to NYSE Arca Equities Rule 5.2(j)(3), which requires 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. According to the Exchange, as of
December 20, 2010, 26.47% of the weight of the Index components had a
minimum principal amount outstanding of $100 million or more.
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\13\ See 17 CFR 240.19b-4(e). See also Commentary .02 to NYSE
Arca Equities Rule 5.2(j)(3).
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The Commission believes that the listing and trading of the Shares
is consistent with the Act. The Commission believes that the Index is
not susceptible to manipulation. As of December 20, 2010, there were
approximately 21,141 issues included in the Index and the total dollar
amount outstanding of issues in the Index was approximately $532.82
billion. 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.
The Commission also notes that, based on the Exchange's
representations: (1) The Shares currently satisfy all of the generic
listing standards under NYSE Arca Equities Rule 5.2(j)(3), except for
the requirement under Commentary .02(a)(2); (2) the Shares will be
subject to all of the continued listing standards under NYSE Arca
Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to Units; and (3) the
Trust is required to comply with Rule 10A-3 under the Act for the
initial and continued listing of Shares.\14\ The Commission also notes
that Shares of
[[Page 9067]]
the Fund will comply with all other requirements of NYSE Arca Equities
Rule 5.2(j)(3), applicable to Units including, but not limited to,
requirements relating to the dissemination of key information such as
the Index value and Intraday Indicative Value, rules governing the
trading of equity securities, trading hours, trading halts,
surveillance, firewalls, and Information Bulletins to ETP Holders, as
set forth in prior Commission orders approving the generic listing
rules applicable to the listing and trading of Units.
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\14\ See 17 CFR 240.10A-3.
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For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act \15\ and the
rules and regulations thereunder applicable to a national securities
exchange.
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\15\ 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,\16\ that the proposed rule change (SR-NYSEArca-2010-120), be, and
it hereby is, approved.
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\16\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3441 Filed 2-15-11; 8:45 am]
BILLING CODE 8011-01-P