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36850 Federal Register / Vol. 71, No.

124 / Wednesday, June 28, 2006 / Notices

C. Self-Regulatory Organization’s Number SR–NYSE–2006–44 on the SECURITIES AND EXCHANGE


Statement on Comments on the subject line. COMMISSION
Proposed Rule Change Received From
Members, Participants or Others Paper Comments [Release No. 34–54026; File No. SR–PCX–
2005–115]
The Exchanges has neither solicited • Send paper comments in triplicate
nor received written comments on the to Nancy M. Morris, Secretary, Self-Regulatory Organizations; Pacific
proposed rule change. Securities and Exchange Commission, Exchange, Inc. (n/k/a NYSE Arca, Inc.);
100 F Street, NE., Washington, DC Notice of Filing of a Proposed Rule
III. Date of Effectiveness of the Change and Amendment Nos. 1 and 2
Proposed Rule Change and Timing for 20549–1090.
Thereto Relating and Order Granting
Commission Action All submissions should refer to File Partial Accelerated Approval To
Because the foregoing proposed rule Number SR–NYSE–2006–44. This file Trading Shares of the Funds of the
change does not: (i) Significantly affect number should be included on the ProShares Trust Pursuant to Unlisted
the protection of investors or the public subject line if e-mail is used. To help the Trading Privileges
interest; (ii) impose any significant Commission process and review your
burden on competition; and (iii) by its comments more efficiently, please use June 21, 2006.
terms, become operative for 30 days only one method. The Commission will Pursuant to Section 19(b)(1) of the
from the date on which it was filed, or post all comments on the Commission’s Securities Exchange Act of 1934
such shorter time as the Commission (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Internet Web site (http://www.sec.gov/
may designate if consistent with the notice is hereby given that on October
rules/sro.shtml). Copies of the
protection of investors and the public 11, 2005, the Pacific Exchange, Inc. (n/
submission, all subsequent k/a NYSE Arca, Inc.) (the ‘‘Exchange’’),
interest, it has become effective amendments, all written statements
pursuant to section 19(b)(3)(A) of the through its wholly owned subsidiary
with respect to the proposed rule PCX Equities, Inc. (n/k/a/ NYSE Arca
Act 10 and Rule 19b–4(f)(6) change that are filed with the
thereunder.11 Equities, Inc.) (‘‘NYSE Arca Equities’’ or
Commission, and all written the ‘‘Corporation’’), filed with the
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not communications relating to the Securities and Exchange Commission
become operative prior to 30 days after proposed rule change between the (‘‘Commission’’) the proposed rule
the date of filing. However, Rule 19b– Commission and any person, other than change as described in Items I and II
4(f)(6)(iii) 12 permits the Commission to those that may be withheld from the below, which Items have been prepared
designate a shorter time if such action public in accordance with the by the Exchange.3 The Exchange filed
is consistent with the protection of provisions of 5 U.S.C. 552, will be Amendment No. 1 to the proposed rule
investors and the public interest. The available for inspection and copying in change on November 21, 2005.4 The
Exchange has requested that the the Commission’s Public Reference Exchange filed Amendment No. 2 to the
Commission waive the 30-day operative Room. Copies of such filing also will be proposed rule change on May 5, 2006.5
delay and designate the proposed rule available for inspection and copying at The Commission is publishing this
change immediately operative upon the principal office of the Exchange. All notice to solicit comments on the
filing. The Commission believes that comments received will be posted proposed rule change, as amended, from
waiver of the 30-day operative delay is without change; the Commission does interested persons and is partially
consistent with the protection of not edit personal identifying approving the proposal, as amended, on
investors and the public interest information from submissions. You an accelerated basis.
because it would allow specialists to should submit only information that I. Self-Regulatory Organization’s
quote more efficiently. Accordingly, the you wish to make available publicly. All Statement of the Terms of Substance of
Commission designates the proposal to submissions should refer to File the Proposed Rule Change
be effective and operative upon filing
Number SR–NYSE–2006–44 and should The Exchange, through its wholly
with the Commission.13
be submitted on or before July 19, 2006. owned subsidiary NYSE Arca Equities,
IV. Solicitation of Comments For the Commission, by the Division of proposes to trade shares (‘‘Shares’’) of
Interested persons are invited to Market Regulation, pursuant to delegated the following twelve funds of the
submit written data, views and authority.14 ProShares Trust (f/k/a xtraShares Trust)
arguments concerning the foregoing, J. Lynn Taylor, (the ‘‘Trust’’): Ultra 500 Fund, Ultra 100
including whether the proposed rule Fund, Ultra 30 Fund, Ultra Mid-Cap 400
Assistant Secretary.
change is consistent witht he Act.
[FR Doc. 06–5754 Filed 6–27–06; 8:45 am]
Comments may be submitted by any of 1 15 U.S.C. 78s(b)(1).
the following methods: BILLING CODE 8010–01–M 2 17 CFR 240.19b–4.
3 On March 6, 2006, the Pacific Exchange, Inc.
Electronic Comments (‘‘PXC’’), filed with the Commission a proposed rule
change, which was effective upon filing, to change
• Use the Commission’s Internet the name of the Exchange, as well as several other
comment form (http://www.sec.gov/ related entities, to reflect Archipelago’s recent
rules/sro.shtml); or acquisition of PCX and the merger of the NYSE with
• Send an e-mail to rule- Archipelago. See File No. SR–PCX–2006–24. All
references herein have been changed to reflect these
comments@sec.gov. Please include File transactions. Telephone Conference between Lisa
Dallmer, Direct, NYSE Arca Equities, Inc., and
10 15 U.S.C. 78s(b)(3)(A). Florence E. Harmon, Senior Special Counsel,
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11 17 CFR 240.19b–4(f)(6). Division of Market Regulation (‘‘Division’’),


12 17 CFR 240.19b–4(f)(6)(iii). Commission, on June 21, 2006.
13 For purposes only of waiving the 30-day 4 Amendment No. 1 replaced and superseded the

operative delay, the Commission has considered the original filing in its entirety.
proposed rule’s impact on efficiency, competition, 5 Amendment No. 2 replaced and superseded

and capital formation. 15 U.S.C. 78c(f). 14 17 CFR 200.30–3(a)(12). Amendment No. 1 in its entirety.

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Federal Register / Vol. 71, No. 124 / Wednesday, June 28, 2006 / Notices 36851

Fund, Short 500 Fund, Short 100 Fund, (3) For purposes of this Rule, the term the index’s daily performance or twice
Short 30 Fund, Short Mid-Cap 400 ‘‘non-institutional customers’’ shall the inverse or opposite (¥200%) of the
Fund, Ultra Short 500 Fund, Ultra Short mean a customer that does not qualify index’s daily performance, qualify as
100 Fund, Ultra Short 30 Fund and as an ‘‘institutional account.’’ The term Investment Company shares as defined
Ultra Short Mid-Cap 400 Fund (the ‘‘institutional account’’ means the in NYSE Arca Equities Rule 5.2(j)(3).7
‘‘Funds’’) pursuant to unlisted trading account of a bank, savings and loan To accommodate the trading of the
privileges (‘‘UTP’’) and to amend NYSE association, insurance company, Shares, the Exchange is proposing to
Arca Equities Rule 9.2(a) (‘‘Diligence as registered investment company, amend NYSE Arca Equities Rule 9.2(a)
to Accounts’’) to accommodate the investment adviser registered either with (‘‘Diligence as to Accounts’’), as more
trading of the Shares. While the the Securities and Exchange fully described below under the heading
Commission is publishing the Commission under Section 203 of the ‘‘Information Bulletin.’’ The
Exchange’s entire proposal for notice, Investment Advisers Act of 1940 or with Commission previously approved the
the Commission is only approving, on a state securities commission (or any original listing and trading of the Shares
an accelerated basis, the portion of the agency or office performing like of eight of the Funds on the American
proposal pertaining to the trading, functions), or any other natural person Stock Exchange LLC (‘‘Amex’’).8 A
pursuant to UTP, of the Ultra 500 Fund, or entity with total assets of at least $50 proposal to list and trade the Shares of
Ultra 100 Fund, Ultra 30 Fund, Ultra million. the remaining four Funds has been filed
Mid-Cap 400 Fund, Short 500 Fund, * * * * * with the Commission by Amex, but has
Short 100 Fund, Short 30 Fund, Short not yet been approved by the
Mid-Cap 400 Fund and the portion of II. Self-Regulatory Organization’s Commission.9
the proposal pertaining to NYSE Arca Statement of the Purpose of, and Four of the Funds—the Ultra 500,
Equities Rule 9.2(a) because the four Statutory Basis for, the Proposed Rule Ultra 100, Ultra 30, and Ultra Mid-Cap
remaining funds have not been Change 400 Funds (the ‘‘Bullish Funds’’)—seek
approved for trading on the primary In its filing with the Commission, the daily investment results, before fees and
listing exchange, the American Stock Exchange included statements expenses, that correspond to twice
Exchange LLC (‘‘AMEX’’). concerning the purpose of, and basis for, (200%) the daily performance of the
The text of the proposed rule change the proposed rule change. The text of Standard & Poor’s 500 Index (‘‘S&P
appears below. Additions are in italic. these statements may be examined at 500’’), the Nasdaq-100 Index (‘‘Nasdaq
* * * * * the places specified in Item III below, 100’’), the Dow Jones Industrial
and is set forth in Sections A, B, and C AverageSM (‘‘DJIA’’), and the S&P
Rules of NYSE Arca Equities, Inc. below. MidCap400TM Index (‘‘S&P Midcap’’),
Rule 9 respectively. Each such index is referred
A. Self-Regulatory Organization’s to herein individually as an
Conducting Business With The Public Statement of the Purpose of, and the ‘‘Underlying Index’’ or ‘‘Index’’ and
Rule 9.2(a). Statutory Basis for, the Proposed Rule collectively as ‘‘Underlying
Change Indexes,’’10Each of these Funds if
Diligence As To Accounts
I. Purpose successful in meeting its objective,
(1) Every ETP Holder, through a should gain, on a percentage basis,
general partner, a principal executive Under NYSE Area Equities Rule
officer or a designated authorized 5.2(j)(3), the Exchange may propose to 7 NYSE Arca Equities Rule 5.2(j)(3)(A)(i)(a) allows

person, shall use due diligence to learn list and/or trade pursuant to UTP the listing and trading of Investment Company
the essential facts relative to every ‘‘Investment Company Shares.’’ 6 With Shares issued by a registered investment company
this filing, the Exchange proposes to that holds securities comprising, or otherwise based
customer, every order, every account on or representing an interest in, an index or
accepted or carried by such ETP Holder trade pursuant to UTP the Shares of the portfolio or securities. The Exchange represents that
and every person holding power of Funds under NYSE Arca Equities Rule the Shares qualify under NYSE Arca Equities Rule
attorney over any account accepted or 5.2(j)(3). The Exchange represents that 5.2(j)(3) because the Shares are being registered
the Shares, which seek to provide under the Investment Company Act of 1940 (the
carried by such ETP Holder. ‘‘1940 Act’’) and are ‘‘otherwise based on’’ an index.
(2) In recommending to a customer investment results that exceed the daily 8 See Securities Exchange Act Release No. 34–

the purchase, sale or exchange of any performance of a specified stock index 52553 (October 3, 2005), 70 FR 59100 (October 11,
security, an ETP Holder shall have by a specified percentage or that seek to 2005) (SR–SMEX–2004–62) (the ‘‘Amex Order’’)
provide investment results that (approving the listing and trading on Amex of the
reasonable grounds for believing that following eight Funds: Ultra 500 Fund, Ultra 100
the recommendation is suitable for such correspond to the inverse or opposite of Fund, Ultra 30 Fund, Ultra Mid-Cap 400 Fund ;
customer upon the basis of any facts Short 500 Fund, Short 100 Fund, Ultra 100 Fund,
disclosed by the customer as to his other 6 In October 1999, the Commission approved Ultra 100 Fund, Ultra 30 Fund, Ultra Mid-Cap 400
NYSE Arca Equities Rule 5.2(j)(3), which sets forth Fund; Short 500 Fund, Short 100 Fund, Short 30
security holdings, financial situation the rules related to listing and trading criteria for Fund and Short Mid-Cap 400 Fund). See also
and needs. Prior to the execution of a Investment Company Shares. See Securities Securities Exchange Act Release No. 52197 (August
transaction recommended to a non- Exchange Act Release No. 41983 (October 6, 1999), 2, 2005), 70 FR 46228 August 9, 2005) (SR–AMEX–
institutional customer (defined below), 64 FR 56008 (October 15, 1999) (SR–PCX–1998–29). 2004–62) (the ‘‘Amex Notice’’).
In July 2001, the Commission also approved the 9 See SR–AMEX–2006–41 (April 28, 2006) (the
other than transactions with customers Exchange’s generic listing standards for listing and ‘‘Amex Proposal’’) (seeking accelerated approval to
where investments are limited to money trading, or the trading pursuant to UTP, of list and trade on Amex the Ultra Short 500 Fund,
market mutual funds, an ETP Holder Investment Company Shares under NYSE Arca Ultra Short 100 Fund, Ultra Short 30 Fund and
shall make reasonable efforts to obtain Equities Rule 5.2(j)(3). See Securities Exchange Act Ultra short Mid-Cap 400 Fund).
Release No. 44551 (July 12, 2001), 66 FR 37716 10 Exchange-traded funds based on the
information concerning the customer’s (July 19, 2001) (SR–PCX–2001–14). The definition Underlying Indexes are traded on the NYSE Arca
financial status, tax status, investment of an Investment Company Unit is set forth in NYSE Marketplace. The Statement of Additional
jlentini on PROD1PC65 with NOTICES

objectives, and such other information Arca Equities Rule 5.1(b)(15), which provides that Information (‘‘SAI’’) for the Funds discloses that
used or considered to be reasonable by an Investment Company Unit is a security each Fund reserves the right to substitute a different
representing an interest in a registered investment Underlying Index under certain circumstances. In
such ETP Holder or registered company that could be organized as a unit the event a Fund substitutes a different index, the
representative in making investment trust, an open-end management Exchange will file a new Rule 19b–4 filing with the
recommendations to the customer. investment company or a similar entity. Commission if the listing market does so.

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36852 Federal Register / Vol. 71, No. 124 / Wednesday, June 28, 2006 / Notices

approximately twice as much as the the Fund’s investment objective. The redemption of Creation Unit
Fund’s Underlying Index when the Bearish Funds will not invest directly in Aggregations of the Bearish Funds is
prices of the securities in such Index the component securities of the relevant due to the limited transferability of
increase on a given day, and should lose Underlying Index, but instead, will Financial Instruments. The Exchange
approximately twice as much when create short exposure to such Index. believes that Bearish Fund Shares will
such prices decline on a given day. Normally 100% of the value of the not trade at a material discount or
In addition, four Funds— the Short portfolios of each Bearish Fund will be premium to the underlying securities
500, Short 100, Short 30, and Short Mid- devoted to Financial Instruments held by a Fund based on potential
Cap 400 Funds (the ‘‘Initial Bearish (defined below) and money market arbitrage opportunities.12
Funds’’)—seek daily investment results, instruments, including U.S. government NAV per Share of each Fund is
before fees and expenses, which securities and repurchase agreements computed by dividing the value of the
correspond to the inverse or opposite of (the ‘‘Money Market Instruments’’). net assets of such Fund (i.e., the value
the daily performance (¥100%) of the The financial instruments to be held of its total assets less total liabilities) by
S&P 500, Nasdaq 100, DJIA and S&P by any of the Bullish or Bearish Funds its total number of Shares outstanding.
MidCap, respectively. If each of these may include stock index futures Expenses and fees are accrued daily and
Funds is successful in meeting its contracts, options on futures contracts, taken into account for purposes of
objective, the net asset value (the options on securities and indices, equity determining NAV. The NAV of each
‘‘NAV’’) 11 of shares of each Fund caps, collars and floors as well as swap Fund is calculated by the accounting
should increase approximately as much, agreements, forward contracts, agent for the Fund and determined each
on a percentage basis, as the respective repurchase agreements and reverse business day at the close of regular
Underlying Index decreases when the repurchase agreements (the ‘‘Financial trading of the NYSE (ordinarily 4:00
prices of the securities in the Index Instruments’’), and Money Market p.m. New York time). More information
decline on a given day; or should Instruments. ProShare Advisors LLC is regarding the calculation of the NAV is
decrease approximately as much, on a the investment adviser (the ‘‘Advisor’’) set forth in the Amex Order.
percentage basis, as the respective Index to each Fund. (b) Dissemination of Information
gains when the prices of the securities (a) The Shares. A description of the About the Shares and the Underlying
in the index rise on a given day. Trust, the operation of the Funds and Indexes. The Trust’s or Advisor’s Web
The remaining four Funds—the Ultra the creation and redemption process for site, which is and will be publicly
Short 500, Ultra Short 100, Ultra Short the Shares is set forth in the Amex accessible at no charge (and to which
30, and Ultra Short Mid-Cap 400 Funds Notice, the Amex Order and the Amex the Exchange ill provide a hyperlink on
(the ‘‘Additional Bearish Funds’’)—seek Proposal. To summarize, issuances of its Web site), will contain the following
daily investment results, before fees and Shares will be made only in information for each Fund’s Shares: (i)
expenses, that correspond to twice (or aggregations of at least 50,000 Shares or The prior business day’s closing NAV,
two times) the inverse or opposite multiples thereof (‘‘Creation Shares’’ or the reported closing price, and a
(¥200%) of the daily performance of ‘‘Creation Unit Aggregations’’). The calculation of the premium or discount
the S&P 500, Nasdaq 100, DJIA and S&P Funds will issue and redeem the Shares of such price in relation to the closing
MidCap, respectively. If each of these on a continuous basis, by or through NAV; (ii) data for a period covering at
Funds is successful in meeting its participants that have entered into least the four previous calendar quarters
objective, the net asset value (the participant agreements (each, an (or the life of a Fund, if shorter)
‘‘NAV’’) of the Shares of each Fund ‘‘Authorized Participant’’) with the indicating how frequently each Fund’s
should increase approximately twice as Distributor. Shares traded at a premium or discount
Persons purchasing Creation Unit to NAV based on the reported closing
much, on a percentage basis, as the
Aggregations from the Bullish Funds do price and NAV, and the magnitude of
respective Underlying Index loses when
so through an ‘‘in-kind’’ process in such premiums and discounts; (iii) its
the prices of the securities in the Index which a basket of securities (the
decline on a given day, or should Prospectus and Product Description;
‘‘Deposit Securities’’), together with an and (iv) other quantitative information
decrease approximately twice as much amount of cash (the ‘‘Cash Balancing
as the respective Underlying Index gains such as daily trading volume.
Amount’’), plus the applicable According to the Amex Order, the
when the prices of the securities in the transaction fee is deposited with the
Index rise on a given day. The ‘‘Initial Amex will disseminate for each Fund
Fund. The redeeming Authorized on a daily basis by means of
Bearish Funds’’ and the ‘‘Additional Participant deposits Bullish Fund
Bearish Funds’’ are referred to herein Consolidated Tape Association (‘‘CTA’’)
Shares in Creation Unit Aggregations in and CQ High Speed Lines information
collectively as the ‘‘Bearish Funds.’’ exchange for a basket of securities (the
The Shares represent beneficial with respect to in Indicative Intra-Day
‘‘Redemption Securities’’), which in Value (the ‘‘IIV’’) (discussed below),
ownership interests in the net assets of most cases will be the same as the
the Funds, less expenses. The Bullish Deposit Securities required of investors 12 According to the Amex Order, in their 1940 Act
Funds generally will hold at least 85% purchasing Creation Shares on the same Application, the Applicants stated that they do not
of their assets in the component equity day. The redeeming Authorized believe that All-Cash Payments will affect arbitrage
securities (‘‘Equity Securities’’) of the Participant may receive from or pay to
efficiency. This is because the Applicants believe it
relevant Underlying Index. The makes little difference to an arbitrageur whether
the Fund a Cash Balancing Amount and Creation Unit Aggregations are purchased in
remainder of assets will be devoted to also must pay to the Fund a transaction exchange for a basket of securities or cash. The
Financial Instruments (as defined fee. A Fund has the right to require important function of the arbitrageur is to bid the
below) that are intended to create the creation payments or a right to make
share price of any Fund up or down until it
additional needed exposure to such converges with the NAV. Applicants state that this
redemption payments in cash, in kind, can occur regardless of whether the arbitrageur is
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Underlying Index necessary to pursue or a combination of each. allowed to create in cash or with a Deposit Basket.
The Bearish Funds will be purchased In either case, the arbitrageur can effectively hedge
11 The NAV of each Fund is calculated and a position in a Fund in a variety of ways, including
determined each business day at the close of regular
and redeemed entirely for cash (‘‘All- the use of market-on-close contracts to buy or sell
trading at the Amex, typically 4 p.m. eastern time Cash Payments’’). The use of an All- the underlying Equity Securities and/or Financial
(‘‘ET’’). Cash Payment for the purchase and Instruments.

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Federal Register / Vol. 71, No. 124 / Wednesday, June 28, 2006 / Notices 36853

recent NAV, shares outstanding, Beneficial owners of Shares each Fund at a particular point in time.
estimated cash amount, and total cash (‘‘Beneficial Owners’’) will receive all of Therefore, the IIV should not be viewed
amount per Creation Unit. The Amex the statements, notices, and reports as a real time update of the NAV of a
will make available on its Web site required under the 1940 Act and other particular Fund which is calculated
(http://www.amex.com) daily trading applicable laws. They will receive, for only once a day.
volume, closing price, the NAV, and example, annual and semi-annual fund (c) UTP Trading Criteria. The
final dividend amounts, if any, to be reports, written statements Exchange represents that it will cease
paid for each Fund. The closing prices accompanying dividend payments, trading the Shares of a Fund during the
of the Deposit Securities are readily proxy statements, annual notifications listing market’s trading hours if: (a) the
available from, as applicable, exchanges, detailing the tax status of fund listing market stops trading the Shares
automated quotation systems, published distributions, and Form 1099–DIVs. because of a regulatory halt similar to a
or other public sources, or on-line Some of these documents will be halt based on NYSE Arca Equities Rule
information services such as Bloomberg provided to Beneficial Owners by their 7.12 or a halt because the IIV or the
or Reuters. brokers, while others will be provided value of the applicable Underlying
Each Fund’s total portfolio by the Fund through the brokers. Index is no longer available; or (b) the
composition will be disclosed on the The daily closing index value and the listing market delists the shares.
Web site of the trust (http:// percentage change in the daily closing Additionally, the Exchange may cease
www.profunds.com). The Trust expects index value for each Underlying Index trading the Shares of a Fund if such
that Web site disclosure of portfolio will be publicly available on various other event shall occur or condition
holdings will be made daily and will Web sites, e.g., http:// exists which in the opinion of the
include, as applicable, the names and www.bloomberg.com. Data regarding Exchange makes further dealings on the
number of shares held of each specific each Underlying Index is also available Exchange inadvisable.
from the respective index provider to (d) Trading Rules. The Exchange
Equity Security, the specific types of
subscribers. Several independent data deems the Shares to be equity securities,
Financial Instruments and
vendors also package and disseminate thus rendering trading in the Shares
characteristics of such instruments, cash
index data in various value-added subject to the Exchange’s existing rules
equivalents and amount of cash held in
formats (including vendors displaying governing the trading of equity
the portfolio of each Fund. This public
both securities and index levels and securities. Shares will trade on the
Web site disclosure of the portfolio
vendors displaying index levels only). NYSE Arca Marketplace from 9:30 a.m.
composition of each Fund will coincide
The value of each Underlying Index will ET until 8 p.m. ET, even if the IIV is not
with the disclosure by the Advisor of
be updated intra-day on a real time basis disseminated from 4:14 p.m. ET to 8
the ‘‘IIV File’’ and the ‘‘PCF File’’.13 p.m. ET.14 The Exchange has
as its individual component securities
Therefore, the same portfolio appropriate rules to facilitate
change in price. According to the Amex
information (including accrued transactions in the Shares during all
Order, these intra-day values of each
expenses and dividends) will be trading sessions. The minimum trading
Underlying Index will be disseminated
provided on the public Web site as well increment for Shares on the Exchange
every 15 seconds throughout the trading
as in the IIV File and PCF File provided will be $0.01.
day by the Amex or another
to authorized Participants. The format of With respect to trading halts, the
organization authorized by the relevant
the public Web site disclosure and the Underlying Index provider. Exchange may consider all relevant
IIV and PCF Files will differ because the In order to provide updated factors in exercising its discretion to
public Web site will list all portfolio information relating to each Fund for halt or suspend trading in the Shares of
holdings, whereas the IIV and PCF Files use by investors, professionals, and a Fund. Trading may be halted because
will similarly provide the portfolio persons wishing to create or redeem of market conditions or for reasons that,
holdings but in a format appropriate for Shares, the Amex will disseminate in the view of the Exchange, make
Authorized Participants, i.e., the exact through the facilities of the CTA from trading in the Shares inadvisable. These
components of a Creation Unit. 9:30 a.m. ET to 4:15 p.m. ET: (i) may include: (1) The extent to which
Accordingly, all investors will have continuously, the market value of a trading is not occurring in the securities
access to the current portfolio share; and (ii) every 15 seconds, a comprising a Underlying Index and/or
composition of each Fund through the calculation of the IIV as calculated by a the Financial Instruments of a Fund, or
Trust Web site at http:// third-party calculator (the ‘‘IIV (2) whether other unusual conditions or
www.profunds.com. Calculator’’) currently expected to be circumstances detrimental to the
Amex, according to the Amex Order. maintenance of a fair and orderly
13 According the Amex Order, at the end of each
Comparing these two figures helps an market are present. In addition, trading
business day, the Trust will create a portfolio investor to determine whether, and to in Shares will be subject to trading halts
composition file (‘‘PCF’’) for each Fund, which it
will transmit via JPMorgan Chase Bank (the ‘‘Index what extent, the Shares may be selling caused by extraordinary market
Receipt Agent’’) to the National Securities Clearing at a premium or a discount to NAV. volatility pursuant to the Exchange’s
Corporation (‘‘NSCC’’) before the open of business Information regarding the calculation
the next business day. Because the NSCC’s system methodology for the IIV for the Bullish 14 Because NSCC does not disseminate the new
for the receipt and dissemination to its participants basket amount to market participant until
of the PCF is not currently capable of processing Funds and the Bearish Funds is set forth
approximately 6 p.m. to 7 p.m. ET, an updated IIV
information with respect to Financial Instruments, in the Amex Order. is not possible to calculate during the Exchange’s
the Advisor has developed an ‘‘IIV File,’’ which it The IIV is designed to provide late trading session. The Exchange also states that
will use to disclose the Fund’s holdings of investors with a reference value that can currently the official index sponsors for the Funds’
Financial Instruments. The IIV File will contain, for indexes do not calculate updated index values
each Bullish Fund (to the extent that it holds
be used in connection with other related
during the Exchange’s late trading session;
Financial Instruments) and Bearish Fund, market information. The IIV may not however, if the index sponsors did so in the future,
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information sufficient by itself or in connection reflect the value of all securities the Exchange will not trade this product unless
with the PCF File and other available information included in the Underlying Index. In such official index value is widely disseminated.
for market participants to calculate a Fund’s IIV and Telephone Conference between Lisa Dallmer,
effectively arbitrage the Fund. The information in
addition, the IIV does not necessarily Director, NYSE Arca Equities, Inc., and Florence E.
the PCF File and the IIV File will be available to reflect the precise composition of the Harmon, Senior Special Counsel, Division,
all participants in the NSCC system. current portfolio of securities held by Commission, on June 21, 2006.

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36854 Federal Register / Vol. 71, No. 124 / Wednesday, June 28, 2006 / Notices

‘‘circuit breaker’’ rule15 or by the halt or investors purchasing newly issued principles of trade, to foster cooperation
suspension of trading of the underlying Shares prior to or concurrently with the and coordination with persons engaged
securities.16 confirmation of a transaction; and (5) in facilitating transaction in securities,
Shares will be deemed ‘‘Eligible trading information. Specifically, the to remove impediments and perfect the
Listed Securities,’’ as defined in NYSE proposed amendment to NYSE Arca mechanisms of a free and open market,
Arca Equities Rule 7.55, for purposes of Equities Rule 9.2(a), which will be and, in general, to protect investors and
the Intermarket Trading System (‘‘ITS’’) discussed in the Information Bulletin as the public interest.
Plan and therefore will be subject to the noted above, provides that ETP Holders, In addition, the Exchange believes
trade through provisions of NYSE Arca before recommending a transaction in that the proposal is consistent with Rule
Equities Rule 7.56, which require that the Shares, must have reasonable 12f–5 under the Act 20 because it deems
ETP Holders avoid initiating trade- grounds to believe that the the Shares to be equity securities, thus
throughs for ITS securities. recommendation is suitable for the rendering the Shares subject to the
(e) Surveillance. The Exchange customer based on any facts disclosed Exchange’s existing rules governing the
intends to utilize its existing by the customer as to his other security trading of equity securities.
surveillance procedures applicable to holdings and as to his financial
derivative products to monitor trading situation and needs. Further, the B. Self-Regulatory Organization’s
in the Shares. The Exchange represents proposed rule amendment provides that Statement on Burden on Competition
that these procedures are adequate to prior to the execution of a transaction The Exchange does not believe that
monitor Exchange trading of the Shares. recommended to a non-institutional the proposed rule change will impose
The Exchange’s current trading customer, ETP Holders should make any burden on competition that is not
surveillance focuses on detecting reasonable efforts to obtain information necessary or appropriate in furtherance
securities trading outside their normal concerning the customer’s financial of the purposes of the Act.
patterns. When such situations are status, tax status, investment objectives
C. Self-Regulatory Organization’s
detected, surveillance analysis follows and any other information that they
Statement on Comments on the
and investigations are opened, where believe would be useful to make a
Proposed Rule Change Received From
appropriate, to review the behavior of recommendation.
In addition, the Information Bulletin Members, Participants or Others
all relevant parties for all relevant
trading violations. will advise ETP Holders, prior to the Written comments on the proposed
The Exchange is able to obtain commencement of trading, of the rule change were neither solicited nor
information regarding trading in the prospectus delivery requirements received.
Shares and the securities comprising the applicable to the Funds.17 The
III. Solicitation of Comments
Underlying Indexes through ETP Exchange notes that investors
Holders in connection with such ETP purchasing Shares directly from the Interested persons are invited to
Holders’ proprietary or customer trades Trust will receive a prospectus. ETP submit written data, views and
which they effect on any relevant Holders purchasing Shares from the arguments concerning the foregoing,
market. In addition, the Exchange may Trust for resale to investors will deliver including whether the proposed rule
obtain trading information via the a prospectus to such investors. The change, as amended, is consistent with
Intermarket Surveillance Group (‘‘ISG’’) Information Bulletin will also discuss the Act. Comments may be submitted by
from other exchanges who are members any relief, if granted, by the Commission any of the following methods:
or affiliates of the ISG. or the staff from any rules under the Electronic Comments
In addition, the Exchange also has a Act.
general policy prohibiting the In addition, the Information Bulletin • Use the Commission’s Internet
distribution of material, non-public will reference that the Trust is subject comment form (http://www.sec.gov/
information by its employees. to various fees and expenses described rules/sro.shtml); or
(f) Information Bulletin. Prior to the in the Registration Statement. The • Send an e-mail to rule-
commencement of trading, the Exchange Information Bulletin will also disclose comments@sec.gov. Please include File
will inform its ETP Holders in an that the NAV for the Shares will be Number SR–PCX–2005–115 on the
Information Bulletin of the special calculated shortly after 4 p.m. ET each subject line.
characteristics and risks associated with trading day. Paper Comments
trading the Shares. Specifically, the 2. Statutory Basis • Send paper comments in triplicate
Information Bulletin will discuss the
The Exchange believes that the to Nancy M. Morris, Secretary,
following: (1) The procedures for
proposed rule change is consistent with Securities and Exchange Commission,
purchases and redemptions of Shares in
Section 6(b) of the Act,18 in general, and Station Place, 100 F Street, NE.,
Creation Unit Aggregations (and that
furthers the objectives of Section Washington, DC 20549–1090.
Shares are not individually redeemable);
6(b)(5),19 in particular, in that it is All submissions should refer to File
(2) NYSE Arca Equities Rule 9.2(a), as
designed to promote just and equitable Number SR–PCX–2005–115. This file
amended herein and more fully
number should be included on the
described below, which imposes a duty
17 According to the Amex Order, their 1940 Act subject line if e-mail is used. To help the
of due diligence on its ETP Holders to Application included a request that the exemptive Commission process and review your
learn the essential facts relating to every order also grant relief from Section 24(d) of the comments more efficiently, please use
customer prior to trading the Shares; (3) 1940 Act, which would permit dealers to sell
Shares in the secondary market unaccompanied by only one method. The Commission will
how information regarding the IIV is
a statutory prospectus when prospectus delivery is post all comments on the Commission’s
disseminated; (4) the requirement that not required by the Securities Act of 1933. Any Internet Web site (http:///www.sec.gov/
ETP Holders deliver a prospectus to
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Product Description used in reliance on Section rules.sro.shtml). Copies of the


24(d) exemptive relief will comply with all
15 SeeNYSE Arca Equities Rule 7.12. representations and conditions set forth in the submission, all subsequent
16 See‘‘UTP Trading Criteria’’ above for specific order. amendments, all written statements
18 15 U.S.C. 78s(b).
instances when the Exchange will cease trading the
Shares. 19 15 U.S.C. 78s(b)(5). 20 17 CFR 240.12f–5.

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Federal Register / Vol. 71, No. 124 / Wednesday, June 28, 2006 / Notices 36855

with respect to the proposed rule the Act,23 which permits an exchange to 2. The Exchange’s surveillance
change that are filed with the trade, pursuant to UTP, a security that procedures are adequate to properly
Commission, and all written is listed and registered on another monitor the trading of the Shares on the
communications relating to the exchange.24 The Commission notes that Exchange.
proposed rule change between the it previously approved the listing and 3. The Exchange will distribute an
Commission and any person, other than trading of the Shares of the Original Information Bulletin to its members
those that may be withheld from the Funds on the Amex.25 The Commission prior to the commencement of trading of
public in accordance with the also finds that the proposal is consistent the Shares on the Exchange that
provisions of 5 U.S.C. 552, will be with Rule 12f–5 under the Act,26 which explains the special characteristics and
available for inspection and copying in provides that an exchange shall not risks of trading the Shares.
the Commission’s Public Reference extend UTP to a security unless the
4. The Exchange will require a
Room. Copies of such filing also will be exchange has in effect a rule or rules
member with a customer who purchases
available for inspection and copying at providing for transactions in the class or
newly issued Shares on the Exchange to
the principal office of the Exchange. All type of security to which the exchange
provide that customer with a product
comments received will be posted extends UTP. NYSEArca rules deem the
prospectus and will note this prospectus
without change; the Commission does Shares to be equity securities, thus
delivery requirement in the Information
not edit personal identifying trading in the Shares will be subject to
Bulletin.
information from submissions. You the Exchange’s existing rules governing
should submit only information that the trading of equity securities. 5. The Exchange will cease trading in
you wish to make available publicly. All The Commission further believes that the Shares if (1) the listing market stops
submissions should refer to File the proposal is consistent with Section trading the Shares because of a
Number SR–PCX–2005–115 and should 11A(a)(1)(C)(iii) of the Act,27 which sets regulatory halt similar to a halt based on
be submitted on or before July 19, 2006. forth Congress’s finding that it is in the NYSE Arca Equities Rule 7.12 and/or a
public interest and appropriate for the halt because the Indicative Partnership
IV. Commission’s Findings and Order protection of investors and the Value or the value of the applicable
Granting Accelerated Partial Approval maintenance of fair and orderly markets Underlying Index is no longer available,
of Proposed Rule Change to assure the availability to brokers, or (2) the listing market delists the
The Commission is approving the dealers, and investors of information Shares.
portion of the proposed rule change, as with respect to quotations for and This approval order is conditioned on
amended, pertaining to the trading transactions in securities. the Exchange’s adherence to these
pursuant to UTP of eight Funds: Ultra In connection with the Exchange’s representations.
500 Fund, Ultra 100 Fund Ultra 30 UTP of the Shares, of the Original The Commission finds good cause for
Fund, Ultra Mid-Cap 400 Fund, Short Funds, the Exchange will cease trading partially approving this proposed rule
500 Fund, Short 100 Fund, Short 30 in the Shares if: (1) the listing market change with regard to the UTP of the
Fund, and Short Mid-Cap 400 Fund stops trading the Shares because of a Original Funds and Rule 9.2(a)
(‘‘Original Funds’’). The Commission is regulatory halt similar to NYSE Arca ‘‘Diligence to Accounts’’ before the
also approving the Exchange’s Rule Equities Rule 7.12 or a halt because the thirtieth day after the publication of
9.2(a) with respect to ‘‘Diligence to Indicative Partnership Value or the notice thereof in the Federal Register.
Accounts.’’ With regard to the trading value of the applicable Underlying As noted previously, the Commission
pursuant to UTP of the Original Funds Index is no longer available, or (b) the previously found that the listing and
and the implementation of Rule 9.2(a) listing market delists the Shares.
trading of these Shares on the amex is
‘‘Diligence to Accounts,’’ the Additionally, the Exchange may cease
consistent with the Act.28 The
Commission finds that the proposed trading the Shares if such other event
Commission presently is not aware of
rule change, as amended, is consistent shall occur or condition exists which in
any issue that would cause it to revisit
with the requirements of the Act and the the opinion of the Exchange makes
that earlier finding or preclude the
rules regulations thereunder applicable further dealings on the Exchange
trading of these funds on the Exchange
to a national securities exchange.21 In inadvisable.
particular, the Commission finds that In support of the portion of the pursuant to UTP. Rule 9.2(a) ‘‘Diligence
the portion of the proposed rule change proposed rule change regarding UTP of as to Accounts’’ is substantially similar
pertaining to the Original Funds and the Shares, of the Original Funds, the to the suitability standards previously
Rule 9.2(a) is consistent with Section Exchange has made the following approved for other self-regulatory
6(b)(5) of the Act,22 which requires that representations: organizations. Therefore, accelerating
an exchange have rules designed, among 1. The Exchange has appropriate rules approval of this proposed rule change
other things, to promote just and to facilitate transactions in this type of should benefit investors by creating,
equitable principles of trade, to remove security in all trading sessions. without undue delay, additional
impediments to and perfect the competition in the market for these
mechanism of a free and open market 23 15 U.S.C. 78l(f). Shares and suitability standards that
and a national market system, and in
24 Section 12(a) of the Act, 15 U.S.C. 781(a), will enhance investor protection.
generally prohibits a broker-dealer from trading a
general to protect investors and the security on a national securities exchange unless V. Conclusion
public interest. the security is registered on that exchange pursuant
In addition, the Commission finds to Section 12 of the Act. Section 12(f) of the Act It is therefore ordered, pursuant to
that the portion of the proposal excludes from this restriction trading in any Section 19(b)(2) of the Act, that the
security to which an exchange ‘‘extends UTP.’’ proposed rule change (SR–PCX–2005–
pertaining to the trading the Original When an exchange extends UTP to a security, it
Funds is consistent with Section 12(f) of allows its members to trade the security as if it were 115), as amended, is hereby approved
jlentini on PROD1PC65 with NOTICES

listed and registered on the exchange even though on an accelerated basis.29


21 In approving this rule change, the Commission it is not so listed and registered.
25 See Amex Order and Amex Notice, supra note
notes that it has considered the proposed rule’s 28 See Amex Order and Amex Notice, supra note
impact on efficiency, competition, and capital 8.
8.
formation. See 15 U.S.C. 78c(f). 26 17 CFR 240.12f–5.
22 15 U.S.C. 78f(b)(5). 27 15 U.S.C. 78k–1(a)(1)(C)(iii). 29 15 U.S.C. 78s(b)(2).

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36856 Federal Register / Vol. 71, No. 124 / Wednesday, June 28, 2006 / Notices

For the Commission, by the Division of in a commodity pool that, in turn, holds Trust Shares based on particular
Market Regulation, pursuant to delegated such long positions (‘‘Commodity Index securities shall be designated as a
authority.30 Trust Shares’’) and trading, pursuant to separate series and shall be identified
J. Lynn Taylor, UTP, shares (‘‘Shares’’) of the iShares by a unique symbol.
Assistant Secretary. GSCI Commodity-Indexed Trust (the (e) Initial and Continued Listing.
[FR Doc. 06–5729 Filed 6–27–06; 8:45 am] ‘‘Trust’’).4 Commodity Index Trust Shares will be
The text of the proposed rule change listed and traded on the Corporation
BILLING CODE 8010–01–M
appears below. All text is new. subject to application of the following
* * * * * criteria:
SECURITIES AND EXCHANGE (1) Initial Listing—the Corporation
Rules of NYSE Arca Equities, Inc. will establish a minimum number of
COMMISSION
Rule 8.203 Commodity Index Trust Shares required
[Release No. 34–54025; File No. SR– to be outstanding at the time of
NYSEArca–2006–12] Commodity Index Trust Shares commencement of trading on the
Self-Regulatory Organizations; NYSE (a) The Corporation will consider for Corporation.
trading, whether by listing or pursuant (2) Continued Listing—the
Arca, Inc.; Notice of Filing and Order
to unlisted trading privileges, Corporation will consider the
Granting Accelerated Approval of
Commodity Index Trust Shares that suspension of trading in or removal
Proposed Rule Change and
meet the criteria of this Rule. from listing of a series of Commodity
Amendment No. 1 Relating to iShares
(b) Applicability. This Rule is Index Trust Shares under any of the
GSCI Commodity-Indexed Trust
applicable only to Commodity Index following circumstances:
June 21, 2006. Trust Shares. Except to the extent (i) following the initial twelve-month
Pursuant to section 19(b)(1) of the inconsistent with this Rule, or unless the period beginning upon the
Securities Exchange Act of 1934 context otherwise requires, the commencement of trading of the
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 provisions of the trust issued receipts Commodity Index Trust Shares, there
notice is hereby given that on April 26, rules, Bylaws, and all other rules and are fewer than 50 record and/or
2006, NYSE Arca, Inc. (the ‘‘Exchange’’), procedures of the Board of Directors beneficial holders of Commodity Index
through its wholly owned subsidiary shall be applicable to the trading on the Trust Shares for 30 or more consecutive
NYSE Arca Equities, Inc. (‘‘NYSE Arca Corporation of such securities. trading days;
Equities’’ or the ‘‘Corporation’’), filed Commodity Index Trust Shares are (ii) if the value of the applicable
with the Securities and Exchange included within the definition of underlying index is no longer calculated
Commission (‘‘Commission’’) the ‘‘security’’ or ‘‘securities’’ as such terms or available on at least a 15-second
proposed rule change as described in are used in the Bylaws and Rules of the delayed basis from a source unaffiliated
Items I and II below, which Items have Corporation. with the sponsor, the Trust or the trustee
been prepared by the Exchange. On June (c) Commodity Index Trust Shares. of the Trust; or
19, 2006, the Exchange submitted The term ‘‘Commodity Index Trust (iii) if the net asset value for the trust
Amendment No. 1 to the proposed rule Shares’’ as used in the Rules shall, is no longer disseminated to all market
change.3 The Commission is publishing unless the context otherwise requires, participants at the same time;
this notice to solicit comments on the mean a security that (a) is issued by a (vi) if the Indicative Trust Value is no
proposed rule change, as amended, from trust (‘‘Trust’’) that (i) is a commodity longer made available on at least a 15-
interested persons and is approving the pool as defined in the Commodity second delayed basis; or
proposal, as amended, on an accelerated Exchange Act and regulations (v) if such other event shall occur or
basis. thereunder, and that is managed by a condition exists which in the opinion of
commodity pool operator registered the Corporation makes further dealings
1. Self-Regulatory Organization’s on the Corporation inadvisable.
Statement of the Terms of Substance of with the Commodity Futures Trading
Commission, and (ii) that holds long Upon termination of a Trust, the
the Proposed Rule Change Corporation requires that Commodity
positions in futures contracts on a
The Exchange, through its wholly specified commodity index, or interests Index Trust Shares issued in connection
owned subsidiary NYSE Arca Equities, in a commodity pool which, in turn, with such entity Trust be removed from
proposes to amend its rules governing holds such long positions; (b) when Corporation listing. A Trust may
NYSE Arca, LLC (also referred to as the aggregated in some specified minimum terminate in accordance with the
‘‘NYSE Arca Marketplace’’), the equities number may be surrendered to the Trust provisions of the Trust prospectus,
trading facility of NYSE Arca Equities. by the beneficial owner to receive which may provide for termination if
The Exchange proposes new NYSE Arca positions in futures contracts on a the value of the Trust falls below a
Equities Rule 8.203 in order to permit specified index and cash or short term specified amount.
trading, either by listing or pursuant to securities. The term ‘‘futures contract’’ (3) Term—The stated term of the
unlisted trading privileges (‘‘UTP’’), is commonly known as a ‘‘contract of Trust shall be as stated in the Trust
shares issued by a trust that is a sale of a commodity for future delivery’’ prospectus. However, a Trust may be
commodity pool that holds long set forth in Section 2(a) of the terminated under such earlier
positions in futures contracts on a Commodity Exchange Act. circumstances as may be specified in
specified commodity index, or interests (d) Designation. The Corporation may the Trust prospectus.
trade, either by listing or pursuant to (4) Trustee—The following
30 17 CFR 200.30–3(a)(12).
unlisted trading privileges, Commodity requirements apply:
1 15 U.S.C. 78s(b)(1). (i) The trustee of a Trust must be a
Index Trust Shares based on one or
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2 17 CFR 240.19b–4.
trust company or banking institution
3 Amendment No. 1 made changes to the more securities. The Commodity Index
having substantial capital and surplus
proposed rule text, as well as to corresponding
sections of the Purpose section. Amendment No. 1 4 iShares is a registered trademark of Barclays and the experience and facilities for
also made other clarifying changes to the Purpose Global Investors, N.A. GSCI is a registered handling corporate trust business. In
section. trademark of Goldman, Sachs & Co. cases where, for any reason, an

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