[Federal Register: February 13, 2006 (Volume 71, Number 29)]
[Notices]
[Page 7594-7602]
[DOCID:fr13fe06-113]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53230; File No. PCX-2005-116]

Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of
Filing and Order Granting Accelerated Approval of Proposed Rule Change
and Amendment Nos. 1, 2, and 3 Thereto To List and Trade Shares of the
iShares MSCI Australia Index Fund, iShares MSCI Austria Index Fund,
iShares MSCI Canada Index Fund, iShares MSCI EMU Index Fund, iShares
MSCI Germany Index Fund, and iShares MSCI Mexico Index Fund

February 6, 2006.
    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 October 11, 2005, the Pacific Exchange, Inc. (``PCX'' or
``Exchange''), through its wholly-owned subsidiary PCX Equities, Inc.
(``PCXE'' or ``Corporation''), 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 PCX filed Amendment No. 1 to the proposed rule change on December
13, 2005.\3\ The PCX filed Amendment No. 2 to the proposed rule change
on December 14, 2005.\4\ The PCX filed Amendment No. 3 to the proposed
rule change on January 24, 2006.\5\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as amended,
from interested persons and is approving the proposal, as amended, on
an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced and superseded the original filing
in its entirety.
    \4\ Amendment No. 2 made clarifying changes to Amendment No. 1.
    \5\ Amendment No. 3 made clarifying changes to Amendment No. 1.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange, through its wholly-owned subsidiary, PCXE, proposes
to amend its rules governing the Archipelago Exchange (``ArcaEx''), the
equities trading facility of PCXE, to list and trade the following
iShares[reg] \6\ MSCI\SM\ \7\ Series Index Funds, which are Investment
Company Units (``ICUs''), governed by PCXE Rule 5.2(j)(3): iShares MSCI
Australia Index Fund, iShares MSCI Austria Index Fund, iShares MSCI
Canada Index Fund, iShares MSCI EMU Index Fund,\8\ iShares MSCI Germany
Index Fund, and iShares MSCI Mexico Index Fund (the ``Funds'').
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    \6\ iShares is a registered trademark of Barclays Global
Investors, N.A.
    \7\ The MSCI and MSCI indices are registered service marks of
Morgan Stanley & Co., Incorporated.
    \8\ The iShares MSCI EMU Index Fund is based on the MSCI EMU
Index, which is currently comprised of companies from eleven of the
twelve European Economic and Monetary Union, or ``EMU'' countries
(i.e., all of the EMU countries except Luxembourg), as follows:
Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy,
the Netherlands, Portugal, and Spain.
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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 Exchange 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 these 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 aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange has adopted listing standards applicable to ICUs,
which are consistent with the listing criteria currently used by the
American Stock Exchange (``Amex'') and other exchanges.\9\ The Exchange
now proposes to list and trade on the basis more fully set forth herein
shares of the Funds, which are ICUs, \10\ governed by PCXE Rule
5.2(j)(3).
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    \9\ In October 1999, the Commission approved PCXE Rule
5.2(j)(3), which sets forth the rules related to the listing and
trading criteria for ICUs. See Securities Exchange Act Release No.
41983 (October 6, 1999), 64 FR 56008 (October 15, 1999) (SR-PCX-
1998-29). In July 2001, the Commission also approved the Exchange's
generic listing standards for the listing and trading, or the
trading pursuant to unlisted trading privileges (``UTP''), of ICUs
under PCX Rule 5.2(j)(3). See Securities Exchange Act Release No.
44551 (July 12, 2001), 66 FR 37716-01 (July 19, 2001) (SR-PCX-2001-
14).
    \10\ The definition of an ICU is set forth under PCXE Rule
5.1(b)(15) (noting that an ICU is a security representing an
interest in a registered investment company that could be organized
as a unit investment trust, an open-end management investment
company or a similar entity).
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a. Description of the Funds
    The Funds are currently listed and traded on the Amex\11\ and trade
on other securities exchanges \12\ and in the over-the-counter market.
The information below describes how the Funds were created and are
traded.\13\
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    \11\ The Index Funds were formerly known as World Entity
Benchmark Shares or WEBS. The iShares MSCI Australia, Austria,
Canada, Germany, and Mexico Index Funds were initially approved for
listing and trading on the Amex in 1996. See Securities Exchange Act
Release No. 36947 (March 8, 1996), 61 FR 10606 (March 14, 1996) (SR-
Amex-95-43). The iShares MSCI EMU Index Fund was initially approved
for listing and trading on the Amex in 2000. See Securities Exchange
Act Release No. 42748 (May 2, 2000), 65 FR 30155 (May 10, 2000) (SR-
Amex-98-49).
    \12\ See, e.g., Securities Exchange Act Release No. 50142
(August 3, 2004), 69 FR 48539 (August 10, 2004) (SR-NYSE-2004-27)
(approving the UTP trading of certain iShares MSCI Index Funds and
the S&P Europe 350 Index Fund).
    \13\ See iShares, Inc. Prospectus and Statement of Additional
Information dated January 1, 2005 (as revised September 23, 2005)
and the Web sites of the Amex (http://www.amex.com) and iShares (http://www.iShares.com). Fund information relating to net asset

value (``NAV''), returns, dividends, component stock holdings and
the like is updated on a daily basis on the Web sites.
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    The shares of the Funds are issued by iShares, Inc. iShares, Inc.
is an open-ended management investment company. Each Fund seeks
investment results that correspond generally to the price and yield
performance, before fees and expenses, of the applicable underlying
index. The Funds utilize representative sampling to invest in a
representative sample of securities in the applicable underlying index.
Barclays Global Fund Advisors (``BGFA''), a subsidiary of Barclays
Global Investors, N.A. (``BGI''), is the investment adviser for each
Fund. BGI is a wholly-owned indirect subsidiary of Barclays Bank PLC of
the United Kingdom. BGFA and its affiliates are not affiliated with the
index provider, MSCI. Investors Bank and Trust Company (``Investors
Bank'') serves as administrator, custodian and transfer

agent for each Fund, and SEI Investments Distribution Co. (the
``Distributor'') is the principal underwriter and distributor of shares
of the Funds. Neither Investors Bank nor the Distributor is affiliated
with iShares, Inc., MSCI, or the Exchange.
    iShares, Inc. will issue and redeem the shares of the Funds only in
aggregations of substantial size, which varies for the various Funds
but is at least 50,000 shares (each aggregation of shares is a
``Creation Unit''; one or more Creation Units are sometimes referred to
as ``Creation Unit Aggregations''). As of December 5, 2005, the value
of a Creation Unit of each of the Funds is as follows: The iShares MSCI
Australia Index Fund--$3,861,867; the iShares MSCI Austria Index Fund--
$2,710,144; the iShares MSCI Canada Index Fund--$2,159,521; the iShares
MSCI EMU Index Fund--$3,826,520; the iShares MSCI Germany Index Fund--
$5,920,760; and the iShares MSCI Mexico Index Fund--$3,582,278. Each
Fund issues and sells shares of each Fund only in Creation Units
through the Distributor on an ongoing basis at prices based on the next
calculation of NAV after an order is received. Creation Unit
Aggregations may be purchased only by or through a participant that has
entered into an authorized participant agreement with the Distributor
(``Authorized Participant''). Each Authorized Participant must be
either a member of the Continuous Net Settlement System of the National
Securities Clearing Corporation (``NSCC'') or a Depository Trust
Company (``DTC'') participant. Authorized Participants must place an
irrevocable purchase order for Creation Units of each of the Funds
before 4 p.m. (ET) on any Business Day \14\ to receive that Business
Day's NAV.
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    \14\ A ``Business Day'' with respect to each Fund is any day on
which ArcaEx is open for business.
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    An Authorized Participant wishing to purchase newly-issued Creation
Units from a Fund may do so in exchange for: (i) An in-kind deposit of
a portfolio of equity securities constituting an optimized
representation of the Fund's underlying index (the ``Deposit
Securities''), and (ii) a cash component more fully described below
(together, the ``Portfolio Deposit''). The cash component is an amount
equal to the ``Dividend Equivalent Payment'' (as described below), plus
or minus, as the case may be, a ``Balancing Amount'' (as described
below). The ``Dividend Equivalent Payment'' is an amount equal, on a
per Creation Unit basis, to the dividends on all the portfolio
securities of the Fund with ex-dividend dates within the accumulation
period for such distribution, net of expenses and liabilities for such
period, as if all of the portfolio securities had been held by iShares,
Inc. for the entire period. The ``Balancing Amount'' is an amount equal
to the difference between (a) the NAV per Creation Unit of the Fund and
(b) the sum of (i) the Dividend Equivalent Payment and (ii) the market
value per Creation Unit of the securities deposited with iShares, Inc.
(the sum of (i) and (ii) is referred to as the ``Deposit Amount''). The
Balancing Amount serves the function of compensating for any
differences between the NAV per Creation Unit and the value of the
Deposit Amount.
    Each Fund reserves the right to permit or require the substitution
of an amount of cash or the substitution of any security to replace any
Deposit Security that may be unavailable or unavailable in sufficient
quantity for delivery to iShares, Inc. or for other similar reasons.
    BGFA makes available through the NSCC daily, prior to the opening
of business (currently 9:30 a.m. Eastern time (``ET'')),\15\ the names
and required number of shares of each Deposit Security to be included
in the current Portfolio Deposit for each Fund (``New Basket Amount'').
It is anticipated that Portfolio Deposits will be made primarily by
institutional investors and arbitrageurs. Creation Units are separable
upon issuance into identical shares that will be listed and traded on
the Exchange by professionals and institutional and retail investors.
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    \15\ Usually, NSCC disseminates the estimated Portfolio
Securities and Cash Amount between 6 p.m. and 8 p.m. (ET) on the
prior business day for both creation and redemption request placed
the following day. Telephone Conference between David Strandberg,
Attorney, Archipelago, and Florence E. Harmon, Senior Special
Counsel, Division of Market Regulation (``Division''), Commission,
on February 2, 2006.
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    Shares of the Funds will only be redeemable in Creation Unit
Aggregations through each Fund. To redeem, an investor will have to
accumulate enough shares of a Fund to constitute a Creation Unit
Aggregation. An investor redeeming a Creation Unit Aggregation
generally will receive Deposit Securities as announced by BGFA on the
day of the redemption request, plus cash in an amount equal to the
difference between the NAV of the shares being redeemed and the value
of the Deposit Securities, less a redemption transaction fee, noted
below. With respect to each Fund BGFA makes available through the NSCC
prior to 9:30 a.m. (ET) on each business day, the Portfolio Securities
that will be applicable (subject to possible amendment or correction)
to redemption requests received in proper form by 4 p.m. (ET) on any
business day.\16\
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    \16\ Id.
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    Investors purchasing Creation Unit Aggregations are charged a
standard creation transaction fee, regardless of how many Creation
Units are purchased on a particular day. The transaction fees are
$2,400 for the iShares MSCI Australia Index Fund, $600 for the iShares
MSCI Austria Index Fund, $1,900 for the iShares MSCI Canada Index Fund,
$8,000 for the iShares MSCI EMU Index Fund, $1,500 for the iShares MSCI
Germany Index Fund, and $1,400 for the iShares MSCI Mexico Index Fund.
Likewise, investors redeeming Creation Unit Aggregations at NAV are
also charged a standard redemption transaction fee, regardless of how
many Creation Units are redeemed on a particular day. The redemption
transaction fees are the same as the creation transaction fees noted
above.
    Each Fund makes distributions of dividends from net investment
income, including net foreign currency gains, if any, at least
annually. The Funds will not make the DTC book-entry Dividend
Reinvestment Service (the ``Service'') available for use by beneficial
owners for reinvestment of their cash proceeds, but certain individual
brokers may make the Service available to their clients.
b. MSCI Indices
i. Generally
    The MSCI indices are owned and compiled by Morgan Stanley Capital
International Inc., a Delaware corporation of which Morgan Stanley is
the majority owner, and The Capital Group of Companies, Inc. is the
minority shareholder. MSCI is not affiliated with iShares, Inc., BGI,
BGFA, Investors Bank, the Distributor, or the Exchange. MSCI and Morgan
Stanley do not share any employees that are directly involved in the
index compilation. MSCI employees directly involved in the index
compilation do not report directly to any Morgan Stanley personnel.
MSCI has established policies and procedures for the handling and
monitoring the dissemination of confidential, non-public information
relating to the MSCI indices. These policies and procedures include
specific ``firewall'' procedures regulating the flow of information
between MSCI and Morgan Stanley personnel. BGI and its affiliates have
no involvement in selection of component stocks in the underlying
indices.
    MSCI applies the same criteria and calculation methodology across
all

markets for all equity indices. The MSCI indices are calculated
assuming that dividends (net of taxes) paid by the securities in the
index are reinvested in index securities.\17\
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    \17\ See the iShares, Inc. Prospectus and Statement of
Additional Information dated January 1, 2005 (as revised September
23, 2005).
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ii. Weighting
    The underlying indices for the Funds are market capitalization
weighted. All single-country MSCI indices are free-float weighted,
i.e., companies are included in the indices at the value of their free
public float (free float multiplied by price). MSCI defines ``free
float'' as total shares excluding shares held by strategic investors
such as governments, corporations, controlling shareholders and
management, and shares subject to foreign ownership restrictions.
MSCI's standard equity indices generally seek to have 85% of the free
float-adjusted market capitalization of a country's stock market
reflected in the MSCI index for such country.\18\ With respect to the
MSCI EMU Index, market capitalization weighting, combined with a
consistent target of 85% of free float-adjusted market capitalization,
seeks to ensure that each country's weight in the MSCI EMU Index
approximates its weight in the total universe of developing and
emerging markets.
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    \18\ Id.
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iii. Selection Criteria
    MSCI undertakes an index construction process, which involves: (i)
Defining the equity universe; (ii) adjusting the total market
capitalization of all securities in the universe for free float
available to foreign investors; (iii) classifying the universe of
securities under the Global Industry Classification Standard (the
``GICS''); and (iv) selecting securities for inclusion according to
MSCI's index construction rules and guidelines.
    The index construction process starts at the country level, with
the identification of all listed securities for that country. MSCI
classifies each company and its securities in only one country. This
allows securities to be sorted distinctly by their respective
countries. In general, companies and their respective securities are
classified as belonging to the country in which they are incorporated.
All listed equity securities, or listed securities that exhibit
characteristics of equity securities, except investment trusts, mutual
funds and equity derivatives, are eligible for inclusion in the
universe. Shares of non-domiciled companies generally are not eligible
for inclusion in the universe.
iv. Adjusting Total Market Capitalization for Free Float
    After identifying the universe of securities, MSCI calculates the
free float-adjusted market capitalization of each security in that
universe using publicly available information. The process of free
float adjusting market capitalization involves (i) defining and
estimating the free float available to foreign investors for each
security, using MSCI's definition of free float, (ii) assigning a free
float-adjustment factor to each security, and (iii) calculating the
free float-adjusted market capitalization of each security.
v. GICS Classification
    In addition to the free float-adjustment of market capitalization,
all securities in the universe are assigned to an industry-based
hierarchy that describes their business activities. To this end, MSCI
has designed, in conjunction with Standard & Poor's, the GICS. This
comprehensive classification scheme provides a universal approach to
industries worldwide and forms the basis for achieving MSCI's objective
of reflecting broad and fair industry representation in its indices.
vi. Selection of Securities
    In an attempt to ensure a broad and fair representation in the
indices of the diversity of business activities in the universe, MSCI
follows a ``bottom-up'' approach to index construction, building
indices up to the industry group level. The bottom-up approach to index
construction requires a thorough analysis and understanding of the
characteristics of the universe. This analysis drives the individual
security selection decisions, which aim to reflect the overall features
of the universe in the country index. MSCI targets an 85% free float-
adjusted market representation level within each industry group, within
each country.
    The security selection process within each industry group is based
on the careful analysis of: (i) Each company's business activities and
the diversification that its securities would bring to the index; (ii)
the size (based on free float-adjusted market capitalization) and
liquidity of securities; \19\ and (iii) the estimated free float for
the company and its individual share classes. Only securities of
companies with estimated free float greater than 15% are, in general,
considered for inclusion. Exceptions to this general rule are made only
in significant cases, where not including a security of a large company
would compromise the index's ability to fully and fairly represent the
characteristics of the underlying market.
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    \19\ All else being equal, MSCI targets for inclusion the most
sizable and liquid securities in an indusry group. In addition,
securities that do not meet the minimum size guidelines discussed
below and/or securities with inadequate liquidity are not considered
for inclusion. Telephone Conference between David Strandberg,
Attorney, Archipelago, and Florence E. Harmon, Senior Special
Counsel, Division, Commission, on January 31, 2006 (correcting
typographical error).
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vii. Free Float
    MSCI defines the free float of a security as the proportion of
shares outstanding that are deemed to be available for purchase in the
public equity markets by international investors. In practice,
limitations on free float available to international investors include:
(i) Strategic and other shareholdings not considered part of available
free float and (ii) limits on share ownership for foreigners.
    Under MSCI's free float-adjustment methodology, a constituent
inclusion factor is equal to its estimated free float rounded-up to the
closet 5% for constituents with free float equal to or exceeding 15%.
For example, a constituent security with a free float of 23.2% will be
included in the index at 25% of its market capitalization. For
securities with a free float of less than 15% that are included on an
exceptional basis, the estimated free float is adjusted to the nearest
1%.
viii. Changes to the Indices
    According to the Registration Statement, the MSCI indices are
maintained with the objective of reflecting, on a timely basis, the
evolution of the underlying equity markets. In maintaining the MSCI
indices, emphasis is also placed on continuity, replicability and
minimizing turnover in the indices. Maintaining the MSCI indices
involves many aspects, including additions to and deletions from the
indices and changes in number of shares and changes in Foreign
Inclusion Factors (``FIFs'') as a result of updated free float
estimates.
    Potential additions are analyzed not only with respect to their
industry group, but also with respect to their industry or sub-industry
group, in order to represent a wide range of economic and business
activities. All additions are considered in the context of MSCI's
methodology, including the index constituent eligibility rules and
guidelines.
    In assessing deletions, it is important to emphasize that indices
must

represent the full-investment cycle, including bull as well as bear
markets. Out-of-favor industries and their securities may exhibit
declining prices, declining market capitalization, and/or declining
liquidity, and yet are not deleted because they continue to be good
representatives of their industry group.
    As a general policy, changes in number of shares are coordinated
with changes in FIFs to accurately reflect the investability of the
underlying securities. In addition, MSCI continuously strives to
improve the quality of its free float estimates and the related FIFs.
Additional shareholder information may come from better disclosure by
companies or more stringent disclosure requirements by a country's
authorities. It may also come from MSCI's ongoing examination of new
information sources for the purpose of further enhancing free float
estimates and better understanding shareholder structures. When MSCI
identifies useful additional sources of information, it seeks to
incorporate them into its free float analysis.
    Overall, index maintenance can be described by three broad
categories of implementation of changes: (i) Annual full country index
reviews that systematically re-assess the various dimensions of the
equity universe for all countries and are conducted on a fixed annual
timetable; (ii) quarterly index reviews, aimed at promptly reflecting
other significant market events; and (iii) ongoing event-related
changes, such as mergers and acquisitions, which are generally
implemented in the indices rapidly as they occur.
    Potential changes in the status of countries (stand-alone,
emerging, developed) follow their own separate timetables. These
changes are normally implemented in one or more phases at the regular
annual full country index review and quarterly index review dates.
    The annual full country index review for the MSCI standard country
indices is carried out once every 12 months and implemented as of the
close of the last business day of May. The implementation of changes
resulting from a quarterly index review occurs on only three dates
throughout the year, as of the close of the last business day of
February, August, and November. Any country indices may be impacted at
the quarterly index review. MSCI index additions and deletions due to
quarterly index rebalancings are announced at least two weeks in
advance. The intra-day values of the underlying indexes are
disseminated every 60 seconds \20\ throughout the trading day by
organizations authorized by the index providers and are available
through major financial information vendors.
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    \20\ See Amendment No. 3.
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ix. Recent Data for the MSCI Indices
    As of November 30, 2005, the iShares MSCI Australia Index's top
three holdings were BHP Billiton Ltd., Commonwealth Bank of Australia,
and National Australia Bank Ltd. The Index's top three industries were
diversified banks, diversified metals and mining, and real estate
investment trusts.\21\ The Index components had a total market
capitalization of approximately $521.6 billion. The average total
market capitalization was approximately $6.3 billion. The ten largest
constituents represented approximately 51.1% of the Index weight. The
five highest weighted stocks, which represented 37.8% of the Index
weight, had an average daily trading volume of 7,726,309 shares during
the past two months. Each of the component stocks had a daily trading
volume of at least 26,690 shares for any given trading day in the six
months ended November 30, 2005.\22\
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    \21\ Each reference to market capitalization in this section
(``Recent Data for the MSCI Indices'') is a reference to free-float
adjusted market capitalization. According to the Statement of
Additional Information for iShares, Inc. dated January 1, 2006, MSCI
defines ``free float'' as total shares excluding shares held by
strategic investors such as governments, corporations, controlling
shareholders and management, and shares subject to foreign ownership
restrictions. MSCI calculates the free float-adjusted market
capitalization of each security using publicly available
information. The process of free float adjusting market
capitalization involves: (i) Defining and estimating the free float
available to foreign investors for each security, using MSCI's
definition of free float; (ii) assigning a free float-adjustment
factor to each security; and (iii) calculating the free float-
adjusted market capitalization of each security. See Amendment No.
3.
    \22\ See Amendment No. 3.
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    As of November 30, 2005, the iShares MSCI Austria Index's top three
holdings were OMV AG, Telekom Austria AG, and Erste Bank Der Oester
Spark. The Index's top three industries were integrated oil and gas,
integrated telecommunications services, and diversified banks. The
Index components had a total market capitalization of approximately
$40.1 billion. The average total market capitalization was
approximately $3.1 billion. The ten largest constituents represented
approximately 95.5% of the Index weight. The five highest weighted
stocks, which represented 74.2% of the Index weight, had an average
daily trading volume of 654,786 shares during the past two months. Each
of the component stocks had a daily trading volume of at least 1,874
shares for any given day in the six months ended November 30, 2005.\23\
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    \23\ Id.
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    As of November 30, 2005, the iShares MSCI Canada Index's top three
holdings were Royal Bank of Canada, Manulife Financial Corp., and
Encana Corp. The Index's top three industries were diversified banks,
oil and gas exploration and production, and life and health insurance.
The Index components had a total market capitalization of approximately
$741.3 billion. The average total market capitalization was
approximately $7.9 billion. The ten largest constituents represented
approximately 47.7% of the Index weight. The five highest weighted
stocks, which represented 26.9% of the Index weight, had an average
daily trading volume of 2,101,668 shares during the past two months.
Each of the component stocks had a daily trading volume of at least
1,230 shares for any given day in the six months ended November 30,
2005.\24\
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    \24\ Id.
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    As of November 30, 2005, the iShares MSCI EMU Index's top three
holdings were Total SA, Sanofi Aventis, and Nokia OYJ. The Index's top
three industries were diversified banks, integrated oil and gas, and
integrated telecommunications services. The Index components had a
total market capitalization of approximately $3,099.9 billion. The
average total market capitalization was approximately $9.9 billion. The
ten largest constituents represented approximately 25.5% of the Index
weight. The five highest weighted stocks, which represented 14.5% of
the Index weight, had an average daily trading volume of 32,013,459
shares during the past two months. Each of the component stocks had a
daily trading volume of at least 398 shares for any given day in the
six months ended November 30, 2005.\25\
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    \25\ Id.
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    As of November 30, 2005, the iShares MSCI Germany Index's top three
holdings were Siemens AG-REG, E.ON AG, and Allianz AG-REG. The Index's
top three industries were automobile manufacturers, diversified
chemicals, and industrial conglomerates. The Index components had a
total market capitalization of approximately $663.8 billion. The
average total market capitalization was approximately $13.3 billion.
The ten largest constituents represented approximately 67.7% of the
Index weight. The five highest weighted stocks, which represented 40.6%
of the Index weight, had an average daily

trading volume of 4,312,091 shares during the past two months. Each of
the component stocks had a daily trading volume of at least 2,847
shares for any given day in the six months ended November 30, 2005.\26\
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    \26\ Id.
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    As of November 30, 2005, the iShares MSCI Mexico Index's top three
holdings were America Movil SA DE CV--SER L, Cemex SA-CPO, and
Telefonos de Mexico SA--SER L. The Index's top three industries were
wireless telecommunication services, construction materials, and
integrated telecommunication services. The Index components had a total
market capitalization of approximately $100.7 billion. The average
total market capitalization was approximately $4.6 billion. The ten
largest constituents represented approximately 89.2% of the Index
weight. The five highest weighted stocks, which represented 75.9% of
the Index weight, had an average daily trading volume of 12,691,256
shares during the past two months. Each of the component stocks had a
daily trading volume of at least 13 shares for any given day in the six
months ended November 30, 2005.\27\
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    \27\ Id.
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x. Prices and Exchange Rates
    The prices used to calculate the MSCI indices are the official
exchange closing prices or those figures accepted as such. MSCI
reserves the right to use an alternative pricing source on any given
day.
    The MSCI indices are calculated by MSCI for each trading day in the
applicable foreign exchange markets based on official closing prices in
such exchange markets. For exchange rates for the MSCI indices, MSCI
uses the FX rates published by WM Reuters at 4 p.m. London time. MSCI
uses WM Reuters' rates for all developed and emerging markets. Exchange
rates are taken daily at 4 p.m. London time by the WM Reuters and are
sourced whenever possible from multi-contributor quotes on Reuters.
Representative rates are selected for each currency based on a number
of ``snapshots'' of the latest contributed quotations taken from the
Reuters service at short intervals around 4 p.m. WM Reuters provides
closing bid and offer rates. MSCI uses these to calculate the mid-point
to 5 decimal places.
    MSCI continues to monitor exchange rates independently and may,
under exceptional circumstances, elect to use an alternative exchange
rate if the WM Reuters rate is believed not to be representative for a
given currency on a particular day.\28\
---------------------------------------------------------------------------

    \28\ If MSCI elects, under exceptional circumstances, to use
alternative sources of exchange rates when the WM Reuters rates are
not available or MSCI determines that such rates are not reflective
of market circumstances for a given currency on a particular day,
the Exchange believes that it is unnecessary for a filing pursuant
to Section 19(b) under the Act to be submitted to the Commission.
The Exchange submits that under exceptional circumstances, it may be
appropriate for MSCI to make such an election. However, the Exchange
represents that if the use of an alternative exchange rate source is
more than of a temporary nature, a rule filing will be submitted
pursuant to Section 19(b) of the Act. See Amendment No. 3.
---------------------------------------------------------------------------

c. Funds' Assets and Industry Concentration
    The Funds' prospectus states that each Fund will typically invest
at least 95% of its assets in the component securities of its
underlying index and American Depositary Receipts (``ADRs'') based on
such component securities. Each of the iShares MSCI Canada, EMU, and
Germany Index Funds will invest at all times at least 90% of its assets
in the component securities of its underlying index and ADRs based on
such component securities. Each of the iShares MSCI Australia, Austria,
and Mexico Index Funds will invest at all times at least 80% of its
assets in the component securities of its underlying index and ADRs
based on such component securities, and at least 90% of its assets in
the component securities of its underlying index or in securities
included in the relevant market, but not in its underlying index, or in
ADRs based on the component securities of the underlying index.
Therefore, each of the iShares MSCI Australia, Austria and Mexico Index
Funds will invest not more than 10% of fund assets in ADRs and other
securities, which are not included in or based on the component
securities of its Underlying Index and are also not included in the
relevant market.\29\
---------------------------------------------------------------------------

    \29\ Telephone Conference between David Strandberg, Attorney,
Archipelago, and Florence E. Harmon, Senior Special Counsel,
Division, Commission, on February 2, 2006.
---------------------------------------------------------------------------

    The NAV for the Funds will be calculated directly by Investors Bank
as of the close of regular trading (normally 4 p.m. (ET)), according to
the Funds' prospectus. The NAV of each Fund is calculated by dividing
the value of the net assets of such Fund (total assets less total
liabilities) by the total number of outstanding shares of the Fund.
Generally, each Fund's investments are valued using market valuations.
If current market valuations are not available or such valuations do
not reflect current market values, the affected investments will be
valued using fair value pricing. The value of assets denominated in
foreign currencies is converted into U.S. dollars using exchange rates
selected by BGFA. The NAV will be available to the public on http://www.iShares.com
, from iShares, Inc. by means of a toll-free number, and

to NSCC participants through data made available from the NSCC.
    Each of the Funds will not concentrate its investments (i.e., hold
25% or more of its total assets in the stocks of a particular industry
or group of industries), except that, to the extent practicable, the
Fund will concentrate to approximately the same extent that its
underlying index concentrates in the stocks of such particular industry
or group of industries. As of October 31, 2005, the iShares MSCI
Australia Index Fund held 25% or more of its total assets in banks; the
iShares MSCI Canada Index Fund held 25% or more of its total assets in
energy; and the iShares SCI Mexico Index Fund held 25% or more of its
total assets in the telecommunications industry.\30\ Each Fund's top
portfolio holdings can be found at http://www.iShares.com.

---------------------------------------------------------------------------

    \30\ Industry concentration is a function of the market
capitalization of the companies in the particular industry divided
by the total market capitalization of the index. The total market
capitalization of an index does not determine its industry
concentration, nor does the total market capitalization of the index
reflect the total market capitalization of the country. Each index
uses a bottom-up sampling approach (rules based) to achieve a
balance between fair market representation and investability. See
Amendment No. 3.
---------------------------------------------------------------------------

    Each Fund will maintain regulated investment company compliance,
which requires, among other things, that, at the close of each quarter
of the Fund's taxable year, not more than 25% of its total assets may
be invested in the securities of any one issuer. In order for a Fund to
qualify for tax treatment as a regulated investment company, it must
meet several requirements under the Internal Revenue Code. Among these
is the requirement that, at the close of each quarter of the Fund's
taxable year, (a) at least 50% of the market value of the Fund's total
assets must be represented by cash items, U.S. government securities,
securities of other regulated investment companies and other
securities, with such other securities limited for purposes of this
calculation in respect of any one issuer to an amount not greater than
5% of the value of the Fund's assets and not greater than 10% of the
outstanding voting securities of such issuer, and (b) not more than 25%
of the value of its total assets may be invested in the securities of
any one issuer or of two or more issuers that are

controlled by the particular Fund (within the meaning of Section
851(b)(3)(B) of the Internal Revenue Code) and that are engaged in the
same or similar trades or businesses or related trades or businesses
(other than U.S. government securities or the securities of other
regulated investment companies) or for taxable years beginning after
October 24, 2004, the securities of one or more qualified publicly
traded partnerships.
    The Exchange believes that these requirements and policies prevent
any Fund from being excessively weighted in any single security or
small group of securities and significantly reduce concerns that
trading in the shares of a Fund could become a surrogate for trading in
unregistered securities.
d. Tracking Error
    According to the Funds' prospectus, BGFA expects that over time,
the correlation between each Fund's performance and that of its
underlying index, before fees and expenses, will be 95% or better. A
figure of 100% would indicate perfect correlation. Any correlation of
less than 100% is called ``tracking error.'' A Fund using a
representative sampling strategy (which all of the Funds utilize) can
be expected to have a greater tracking error than a Fund using a
replication strategy. Replication is a strategy in which a Fund invests
in substantially all of the securities in its underlying index in
approximately the same proportions as in the underlying index.
    The Funds have chosen to pursue a representative sampling strategy
that, by its very nature, entails some risk of tracking error. Fund
expenses, the timing of cash flows, and other factors all contribute to
tracking error. The Web site for the Funds, http://www.iShares.com,

contains detailed information on the performance and the tracking error
for each Fund.
e. Availability of Information Regarding Funds and Underlying Indexes
    There will also be disseminated a variety of data with respect to
the Fund on a daily basis by means of CTA and CQ High Speed Lines or
major market data vendor, which will be made available prior to the
opening of trading on the Exchange. Information with respect to recent
NAV, shares outstanding, estimated cash amount and total cash amount
per Creation Unit Aggregation will be made available prior to 9:30 a.m.
(ET). In addition, the Web site for the Funds, http://www.iShares.com,

which will be publicly accessible at no charge, will contain the
following information, on a per iShare basis, for the Funds: (i) The
prior business day's NAV and the mid-point of the bid-ask price at the
time of calculation of such NAV (``Bid/Ask Price'') \31\ and a
calculation of the premium or discount of such price against such NAV;
and (ii) 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.\32\
---------------------------------------------------------------------------

    \31\ The Bid-Ask Price of the Funds is determined using the
highest bid and lowest offer on the Exchange as of the time of
calculation of the Funds' NAV.
    \32\ Telephone Conference between David Strandberg, Attorney,
Archipelago, and Florence E. Harmon, Senior Special Counsel,
Division, Commission, on February 2, 2006 (as to additional
information disseminated about the Funds).
---------------------------------------------------------------------------

    The closing prices of the Funds' Deposit Securities are readily
available from, as applicable, the relevant exchanges, automated
quotation systems, published or other public sources in the relevant
country, or online information services such as Bloomberg or Reuters.
The exchange rate information required to convert such information into
U.S. dollars is also readily available in newspapers and other
publications and from a variety of on-line services.\33\
---------------------------------------------------------------------------

    \33\ Telephone Conference between David Strandberg, Attorney,
Archipelago, and Florence E. Harmon, Senior Special Counsel,
Division, Commission, on February 2, 2006 (as to closing price and
exchange rate).
---------------------------------------------------------------------------

    The value of each underlying index will be updated intra-day on a
real time basis as individual component securities of that index change
in price. The intra-day values of the indices will be disseminated
every 60 seconds throughout the trading day by organizations authorized
by the index providers and major financial information vendors when
foreign market hours overlap with ArcaEx trading hours from 9:30 a.m.
(ET) to 8 p.m. (ET).\34\ When the foreign market is closed during the
ArcaEx trading hours from 9:30 a.m. (ET) to 8 p.m. (ET), investors may
refer to the closing index values provided by MSCI at http://www.msci.com.
 The values of the MSCI Australia Index, the MSCI Canada

Index, and the MSCI Germany Index are reported daily in The Wall Street
Journal.
---------------------------------------------------------------------------

    \34\ The index value may be disseminated through either the
Consolidated Tape Association or one or more major market data
vendors. PCXE Rule 5.2(j)(3), Commentary .01(b)(3). See Securities
Exchange Act Release No. 52806 (November 18, 2005), 70 FR 71358
(November 28, 2005) (SR-PCX 2005-88). Telephone Conference between
David Strandberg, Attorney, Archipelago, and Florence E. Harmon,
Senior Special Counsel, Division, Commission, on January 31, 2006.
---------------------------------------------------------------------------

    To provide current Fund pricing information, the Exchange will
disseminate through the facilities of the Consolidated Tape Association
or one or more major market data vendors \35\ an indicative optimized
portfolio value (``IOPV'') for the Funds. The IOPV is an amount per
iShare representing the sum of the estimated Balancing Amount effective
through and including the previous business day, plus the current value
of the Deposit Securities in U.S. Dollars.\36\ The IOPV will be
calculated by an independent third party, such as Bloomberg, L.P. The
IOPV will be disseminated every 15 seconds between 9:30 a.m. and 4:15
p.m. (ET).\37\ The IOPV likely will not reflect the value of all
securities included in the applicable indices. In addition, the IOPV
will not necessarily reflect the precise composition of the current
portfolio of securities held by the Funds at a particular moment. In
addition, the foreign exchange rate used in computing NAV of a Fund may
differ materially from that used by the IOPV calculator. Thus, the IOPV
should not be viewed as a real-time update of the NAV of the Funds,
which is calculated only once a day. It is expected, however, that
during the trading day the IOPV will closely approximate the value per
share of the portfolio of securities for the Funds except under unusual
circumstances.
---------------------------------------------------------------------------

    \35\ The IOPV may be disseminated through either the
Consolidated Tape Association or one or more major market data
vendors pursuant to PCXE Rule 5.2(c). See Securities Exchange Act
Release No. 52809 (November 18, 2005), 70 FR 71590 (November 29,
2005) (SR-PCX-2005-108). Telephone Conference between David
Strandberg, Attorney, Archipelago, and Florence E. Harmon, Senior
Special Counsel, Division, Commission, on January 31, 2006.
    \36\ Telephone Conference between David Strandberg, Attorney,
Archipelago, and Florence E. Harmon, Senior Special Counsel,
Division, Commission, on February 2, 2006 (as to description of
IOPV).
    \37\ The Commission expects any exchange listing and trading
shares of exchange traded funds (``ETFs'') or similar products to do
so only when the underlying index value and IOPV is updated and
disseminated on a real time basis. For these products, however, the
Commission has permitted index dissemination every 60 seconds when
the applicable foreign market is open, which would be applicable to
ArcaEx's after-hours trading sessions. However, since NSCC does not
disseminate the New Basket Amount until approximately 6 p.m. to 8
p.m., an updated IOPV after the 4 p.m. NAV determination is not
possible during ArcaEx's late trading session from 4 p.m. to 8 p.m.
Accordingly, the Commission will permit ArcaEx to trade these EFTs
without dissemination of the IOPV in its late trading session.
However, to trade in all other ArcaEx trading sessions, an IOPV must
be disseminated at least every 15 seconds. Telephone Conference
between David Strandberg, Attorney, Archipelago, and Florence E.
Harmon, Senior Special Counsel, Division, Commission, on February 2,
2006.
---------------------------------------------------------------------------

    For the iShares MSCI Australia Index Fund, there is no overlap in
trading

hours between the foreign and U.S. markets. Therefore, for this Fund,
the IOPV calculator will utilize closing prices (denominated in the
foreign currency) in the principal foreign market for securities in the
Fund's portfolio and convert the price to U.S. dollars.\38\ This IOPV
will be updated every 15 seconds from 9:30 a.m. to 4:15 p.m. (ET) to
reflect changes in currency exchange rates between the U.S. dollar and
the applicable foreign currency.
---------------------------------------------------------------------------

    \38\ The IOPV Calculator at the time of this filing is
Bloomberg, L.P. (``Bloomberg''). When determining the foreign
exchange rate, Bloomberg uses an aggregation of bank provided rates
that may differ from the aggregation of bank provided rates utilized
by WM Reuters in determining the foreign exchange rate. See
Amendment No. 3.
---------------------------------------------------------------------------

    For the iShares MSCI Austria, Canada, EMU, Germany, and Mexico
Index Funds, there is an overlap in trading hours between the foreign
and U.S. markets. Therefore, during any overlap period that occurs
between 9:30 a.m. and 4:15 p.m. (ET), the IOPV calculator will update
the applicable IOPV every 15 seconds to reflect price changes in the
applicable foreign market or markets and convert such prices into U.S.
dollars based on the currency exchange rate. When the foreign market or
markets are closed between 9:30 a.m. and 4:15 p.m. (ET), the IOPV will
be updated every 15 seconds to reflect changes in currency exchange
rates after the foreign market closes.
    For each Fund, in addition to having an equity securities value
component, the IOPV will also include the applicable cash component
consisting of estimated accrued dividend and other income, less
expenses. The Exchange believes that dissemination of the IOPV based on
the Deposit Securities provides additional information regarding the
Funds that is not otherwise available to the public and is useful to
professionals and investors in connection with trading shares of the
Funds on the Exchange or the creation or redemption of Fund shares.\39\
---------------------------------------------------------------------------

    \39\ Telephone Conference between David Strandberg, Attorney,
Archipelago, and Florence E. Harmon, Senior Special Counsel,
Division, Commission, on February 2, 2006.
---------------------------------------------------------------------------

f. Information Circular
    In connection with the trading of the Funds, the PCX intends to
inform its equity trading permit holders (``ETP Holders'') in an
Information Circular of the special characteristics and risks
associated with trading the Funds, including how shares in the Funds
are created and redeemed, the requirement that ETP Holders deliver a
prospectus to investors purchasing shares of the Funds prior to or
concurrently with the confirmation of a transaction, applicable
Exchange rules, how information regarding the per share IOPV is
disseminated, trading information, and the applicability of suitability
rules (as set forth in PCXE Rule 9.2(a)-(b)).\40\ The circular will
also discuss exemptive, no-action and interpretive relief granted by
the Commission from certain rules under the Act.
---------------------------------------------------------------------------

    \40\ The Commission has issued an order (``Order'') granting the
Funds an exemption from Section 24(d) of the Investment Company Act
of 1940. See, e.g., Investment Company Act Release No. 25623 (June
25, 2002). Any Product Description used in reliance on the Section
24(d) exemptive order will comply with all representations made and
all conditions contained in the Application for the Order.
---------------------------------------------------------------------------

    g. Initial Share Issuance and Continued Trading
    The Funds are subject to the criteria for initial and continued
listing of ICUs pursuant to PCXE Rule 5.2(j)(3), Commentary .01 (d),
which requires that a minimum of 100,000 shares of a series of ICUs be
outstanding at commencement of trading. As noted in the Funds'
prospectus, one Creation Unit consists of 300,000 shares with respect
to the iShares MSCI Germany Index Fund; 200,000 shares with respect to
the iShares MSCI Australia Index Fund; 100,000 shares with respect to
each of the iShares MSCI Austria, Canada and Mexico Index Funds; and
50,000 shares with respect to the iShares MSCI EMU Index Fund.
Therefore, one Creation Unit outstanding at the commencement of trading
of each country-specific Fund on the Exchange, and two Creation Units
outstanding at the commencement of trading of the iShares MSCI EMU
Index Fund on the Exchange, will satisfy the Exchange's initial listing
criteria. The Exchange believes that the proposed number of shares
outstanding at the commencement of trading for each Fund is sufficient
to provide market liquidity and to further the Funds' investment
objective.
    As the listing exchange for the Funds, the PCX will consider the
halting of trading and delisting of a Fund in any of the following
circumstances: (i) Following the initial twelve-month period beginning
upon the commencement of trading of the Fund, there are fewer than 50
record and/or beneficial holders of the Fund for 30 or more consecutive
trading days; (ii) the value of the underlying index is no longer
calculated or available; or (iii) such other event occurs or condition
exists that, in the opinion of the Exchange, makes further dealings on
the Exchange inadvisable. The Exchange will halt trading in a Fund if
the Index Value or IOPV applicable to such Fund is no longer calculated
or disseminated.\41\ In addition, the PCX will remove a Fund from
trading and listing upon termination of the Fund that issued the shares
of the Fund.\42\
---------------------------------------------------------------------------

    \41\ In the event an Index value or IOPV is no longer calculated
or disseminated from 9:30 a.m. (ET) to 4:15 p.m. (ET), the Exchange
would immediately contact the Commission to discuss measures that
may be appropriate under the circumstances. As stated, the Funds may
trade in ArcaEx's late trading session without dissemination of the
IOPV in its late trading session. However, to trade in all other
ArcaEx trading session, an IOPV must be disseminated at least every
15 seconds. Telephone Conference between David Strandberg, Attorney,
Archipelago, and Florence E. Harmon, Senior Special Counsel,
Division, Commission, on February 2, 2006.
    \42\ PCXE Rule 5.5(g)(2).
---------------------------------------------------------------------------

h. Initial Listing and Annual Listing Maintenance Fees
    The Exchange initial listing fee applicable to the listing of the
Funds is $20,000, which covers all of the Funds.\43\ In addition, the
annual listing maintenance fee applicable to the Funds will be based
upon the year-end aggregate total shares outstanding of the Funds.\44\
---------------------------------------------------------------------------

    \43\ The initial listing fee covers all funds listed by a fund
issuer or ``family.'' There will be no initial listing fees for any
subsequent funds that may be listed on the Exchange by iShares, Inc.
See Securities Exchange Act Release No. 34-50591 (October 26, 2004),
69 FR 63427 (November 1, 2004) (SR-PCX-2004-63) (approving adoption
of new listings fees for exchange-traded funds and closed-end
funds); Securities Exchange Act Release No. 34-51519 (April 11,
2005), 70 FR 20199 (April 18, 2005) (SR-PCX-2005-37) (extending
implementation date to April 1, 2005).
    \44\ Id. The calculation of the aggregate total shares
outstanding will also include the shares outstanding of any
subsequent funds that may be listed on the Exchange by iShares, Inc.
---------------------------------------------------------------------------

i. Surveillance Procedures
    The Exchange will closely monitor activity in the trading of the
shares of the Funds to identify and deter any potential improper
trading activity in the Funds. Additionally, the Exchange represents
that its surveillance procedures are adequate to properly monitor the
trading of the Funds. Specifically, the Exchange will rely on its
existing surveillance procedures governing equities and exchange-traded
funds, which have been deemed adequate under the Act. The Exchange has
developed procedures to closely monitor activity in the shares of the
Funds to identify and deter potential improper trading activity.
    The Exchange also has a general policy prohibiting the distribution
of material, non-public information by its employees. As detailed above
in the description of the generic standards, if the issuer or a broker-
dealer is responsible for maintaining (or has a role in maintaining)
the underlying

index, such issuer or broker-dealer is required to erect and maintain a
``firewall'' in a form satisfactory to the Exchange, in order to
prevent the flow of information regarding the underlying index from the
index production personnel to sales and trading personnel. In addition,
the Exchange will require that calculation of underlying indexes be
performed by an independent third party who is not a broker-dealer.
j. Exchange Trading Rules and Policies
    As ICUs under PCXE Rule 5.2(j)(3), the shares of the Funds will be
treated as equity instruments and will be subject to all Exchange rules
governing the trading of equity securities. With respect to trading
halts, the PCX may consider all relevant factors in exercising its
discretion to halt trading in the Funds. Trading on the PCX in the
Funds may be halted because of market conditions or for reasons that,
in the view of the PCX, make trading in the Funds inadvisable. These
may include (1) the extent to which trading is not occurring in the
underlying securities or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.\45\ In addition, PCXE Rule 7.12 sets forth the
trading parameters, i.e., ``circuit breakers,'' applicable to the Funds
in periods of extraordinary market volatility.
---------------------------------------------------------------------------

    \45\ See supra note 41.
---------------------------------------------------------------------------

    Shares of the Funds will trade on ArcaEx from 9:30 a.m. (ET) until
8 p.m., even if the IOPV is not disseminated from 4:15 p.m. (ET) until
8 p.m. (ET). Shares of the Funds will trade in a minimum price
variation of $0.01 pursuant to PCXE Rule 7.6. Trading pertaining to
odd-lot trading in Exchange equities (PCXE Rule 7.38) will also apply.
Shares of the Funds will be deemed ``Eligible Securities'' as defined
in PCXE Rule 7.55(a)(3), for purposes of the Intermarket Trading System
(``ITS'') Plan, and therefore will be subject to the trade-through
provisions of PCXE Rule 7.56, which require that ETP Holders avoid
initiating trade-throughs for ITS securities.
k. Due Diligence
    The Information Circular will note that, pursuant to PCX Rule
9.2(a), each ETP Holder, through a general partner, a principal
executive officer or a designated authorized person, shall use due
diligence to learn the essential facts relative to every customer,
every order, every account accepted or carried by such ETP Holder and
every person holding power of attorney over any account accepted or
carried by such ETP Holder.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) \46\ of the Act, in general, and furthers the
objectives of Section 6(b)(5),of the Act,\47\ in particular, because it
is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and to remove impediments and
perfect the mechanisms of a free and open market and to protect
investors and the public interest.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78f(b).
    \47\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    Written comments on the proposed rule change were neither solicited
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The Exchange requests the Commission to find good cause to
accelerate effectiveness of this rule filing pursuant to Section
19(b)(2) of the Act for approving the proposed rule change prior to the
30th day after publication of the proposed rule change in the Federal
Register. The Funds are substantially the same in structure as other
iShares index funds, which have an established and active trading
history on the exchanges. The Exchange believes that its proposal will
facilitate transactions in securities, remove impediments to and
perfect the mechanism of a free and open market and a national system,
and, in general, protect investors and the public interest.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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_ADDRESS>Please include

File Number SR-PCX-2005-116 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-PCX-2005-116. 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 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 inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the Exchange. 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-PCX-2005-116 and should be submitted on or before March
6, 2006.

V. Commission Findings

    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.\48\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act \49\ and will promote just
and equitable principles of trade, and facilitate transactions in
securities,

and, in general, protect investors and the public interest. The
Commission believes that the Exchange's listing standards, trading
rules, suitability and disclosure rules for the Funds are consistent
with the Act. The Commission also believes that the proposed rule
change raises no issues that have not been previously considered by the
Commission. The Commission notes that it previously approved the
original listing and trading of the Funds on the Amex.\50\ Further,
with respect to each of the following key issues, the Commission
believes that the Funds satisfy established standards.
---------------------------------------------------------------------------

    \48\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
    \49\ 15 U.S.C. 78f(b)(5).
    \50\ See Securities Exchange Act Release No. 36947 (March 8,
1996), 61 FR 10606 (March 14, 1996) (SR-Amex-95-43).
---------------------------------------------------------------------------

A. Surveillance

    The Commission notes that the Underlying Indexes are broad-based
and are composed of securities having significant trading volumes and
market capitalization, thus impeding improper trading practices in the
Shares, the ability to use the Shares to manipulate the underlying
securities, and the ability to use the Shares as a surrogate to trade
one or a few unregistered securities. Nevertheless, the PCX represents
that its surveillance procedures applicable to trading in the proposed
iShares are adequate to properly monitor the trading of the Funds. The
Exchange also is able to obtain information regarding trading in both
the Fund shares and the Component Securities by its members on any
relevant market. In addition, the Commission notes that the Exchange
may obtain trading information via the Intermarket Surveillance Group
(``ISG'') from other exchanges who are members or affiliates of the
ISG.
    As stated, when a broker-dealer, or a broker-dealer's affiliate
such as MSCI, is involved in the development and maintenance of a stock
index upon which a product such as iShares is based, the broker-dealer
or its affiliate should have procedures designed specifically to
address the improper sharing of information. The Commission notes that
the Exchange has represented that MSCI has implemented procedures to
prevent the misuse of material, non-public information regarding
changes to component stocks in the MSCI Indices.

B. Dissemination of Information About the Shares

    In approving the Funds for listing and trading on the PCX, the
Commission notes that the Underlying Indexes are broad-based indexes.
If there is an overlap between the foreign jurisdiction and the PCX
trading hours, these index values are disseminated through various main
market data vendors at least every 60 seconds during such overlap in
trading hours. Otherwise, the Funds provide the Index closing value at
http://www.iShares.com. Additionally, the Commission notes that the

Exchange will disseminate through the facilities of CTA during NYSE
trading hours at least every 15 seconds a calculation of the IOPV
(which will reflect price changes in the applicable foreign market and
changes in currency exchange rates), along with an updated market value
of the Shares. Comparing these two figures will help investors to
determine whether, and to what extent, the Shares may be selling at a
premium or discount to NAV and thus will facilitate arbitrage of the
Shares in relation to the Index component securities.
    The Commission also notes that the Web site for the Funds (http://www.iShares.com
), which is and will be publicly accessible at no

charge, will contain the Shares' prior business day NAV, the reported
closing price, and a calculation of the premium or discount of such
price in relation to the closing NAV.

C. Listing and Trading

    The Commission finds that the Exchange's rules and procedures for
the proposed listing and trading of the Funds are consistent with the
Act. Shares of the Funds will trade as equity securities subject to PCX
rules including, among others, rules governing trading halts,
prospectus delivery, and customer suitability requirements. In
addition, the Funds will be subject to PCX listing and delisting/halt
rules and procedures governing the trading of Index Fund Shares on the
Exchange. The Commission believes that listing and delisting criteria
for the Shares should help to maintain a minimum level of liquidity and
therefore minimize the potential for manipulation of the Shares.
Finally, the Commission believes that the Information Circular the
Exchange will distribute will inform members and member organizations
about the terms, characteristics, and risks in trading the Shares,
including suitability and prospectus delivery requirements.

D. Accelerated Approval

    The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\51\ for approving the proposed rule change prior to the
thirtieth day after the date of publication of notice in the Federal
Register. The Commission notes that the proposal is consistent with the
listing and trading standards in PCXE Rule 5.2(j)(3) (ICUs), and the
Commission has previously approved the listing of these securities on
the Amex.\52\ Therefore, the Commission does not believe that the
proposed rule change raises issues that have not been previously
considered by the Commission.
---------------------------------------------------------------------------

    \51\ 15 U.S.C. 78s(b)(2).
    \52\ See Securities Exchange Act Release No. 36947 (March 8,
1996), 61 FR 10606 (March 14, 1996) (approving the listing and
trading of the ICUs for trading on the Amex).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\53\ that the proposed rule change (SR-PCX-2005-116), as amended,
is hereby approved on an accelerated basis.
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\54\
---------------------------------------------------------------------------

    \54\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-1931 Filed 2-10-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 84, Number 29 (Tuesday, February 12, 2019)]
[Rules and Regulations]
[Pages 3299-3300]
[FR Doc No: 2019-02065]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 73

[Docket No. FAA-2018-1080; Airspace Docket No. 18-AGL-26]
RIN 2120-AA66

Amendment of Restricted Areas R-5502A and R-5502B; Lacarne, OH

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule; technical amendment.

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SUMMARY: This action updates the using agency information for
restricted areas R-5502A and R-5502B; Lacarne, OH, and updates the
controlling agency information for R-5502A. Additionally, this action
adds exclusion language to the R-5502B boundaries information to
overcome potential controlling agency confusion caused when both
restricted areas are active in the same volume of airspace. These are
administrative changes to reflect the current organizations tasked with
using agency and controlling agency responsibilities for the restricted
areas. It does not affect the overall R-5502 restricted area complex
boundaries, designated

altitudes, time of designation, or activities conducted within the
restricted areas.

DATES: Effective date: 0901 UTC, April 24, 2019.

FOR FURTHER INFORMATION CONTACT: Colby Abbott, Airspace Policy Group,
Office of Airspace Services, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority. This rulemaking is promulgated under the authority described
in Subtitle VII, Part A, Subpart I, Section 40103. Under that section,
the FAA is charged with prescribing regulations to assign the use of
the airspace necessary to ensure the safety of aircraft and the
efficient use of airspace. This regulation is within the scope of that
authority as it updates the using agency and controlling agency for
restricted areas R-5502A and R-5502B to reflect the current responsible
organizations, and adds exclusion language to the R-5502B boundaries
information to overcome potential controlling agency confusion caused
when both restricted areas are active at the same time.

The Rule

    This rule amends Title 14 Code of Federal Regulations (14 CFR) part
73 by updating the using agency name for restricted areas R-5502A and
R-5502B, updating the controlling agency name for restricted area R-
5502A, and updating the boundaries information for R-5502B by adding
exclusion language. The using agency for R-5502A and R-5502B is changed
from ``The Adjutant General, state of Ohio,'' to ``U.S. Army, Camp
Perry Joint Training Center, OH.'' The controlling agency for R-5502A
is changed from ``FAA, Cleveland ARTCC,'' to ``FAA, Toledo Approach
Control.'' The boundaries information for R-5502B is changed to include
the language ``excluding R-5502A'' at the end. This action is necessary
in order to reflect the current organizations tasked with using agency
and controlling agency responsibilities for the restricted areas.
    This is an administrative change that does not affect the overall
R-5502 restricted area complex boundaries, designated altitudes, time
of designation, or activities conducted within the restricted areas;
therefore, notice and public procedure under 5 U.S.C. 553(b) are
unnecessary.

Regulatory Notices and Analyses

    The FAA has determined that this action only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore: (1) Is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
only affects air traffic procedures and air navigation, it is certified
that this rule, when promulgated, does not have a significant economic
impact on a substantial number of small entities under the criteria of
the Regulatory Flexibility Act.

Environmental Review

    The FAA has determined that this action of updating the using
agency for restricted areas R-5502A and R-5502B; Lacarne, OH, updating
the controlling agency information for R-5502A, and adding exclusion
language to R-5502B qualifies for categorical exclusion under the
National Environmental Policy Act, and in accordance with FAA Order
1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-
6.5.d, ``Modification of the technical description of special use
airspace (SUA) that does not alter the dimensions, altitudes, or times
of designation of the airspace (such as changes in designation of the
controlling or using agency, or correction of typographical errors).''
This airspace action is an administrative change to the description of
restricted areas R-5502A and R-5502B; Lacarne, OH, to update the using
agency and controlling agency names to R-5502A, update the using agency
to R-5502B, and add exclusion information to R-5502B. It does not alter
the overall R-5502 restricted area complex dimensions, designated
altitudes, time of designation, or use of the airspace. Therefore, this
airspace action is not expected to result in any significant
environmental impacts. In accordance with FAA Order 1050.1F, paragraph
5-2 regarding Extraordinary Circumstances, this action has been
reviewed for factors and circumstances in which a normally
categorically excluded action may have a significant environmental
impact requiring further analysis, and it is determined that no
extraordinary circumstances exist that warrant preparation of an
environmental assessment.

List of Subjects in 14 CFR Part 73

    Airspace, Prohibited areas, Restricted areas.

The Amendment

    In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 73, as follows:

PART 73--SPECIAL USE AIRSPACE

0
1. The authority citation for part 73 continues to read as follows:

    Authority: 49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O.
10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  73.55   Ohio [Amended]

0
2. Sec.  73.55 is amended as follows:

R-5502A Lacarne, OH [Amended]

    Boundaries. Beginning at lat. 41[deg]35'19'' N, long.
82[deg]55'30'' W; to lat. 41[deg]32'30'' N, long. 83[deg]01'00'' W;
to lat. 41[deg]36'35'' N, long. 83[deg]04'52'' W; thence via a 5 NM
arc centered at lat. 41[deg]32'30'' N, long. 83[deg]01'00'' W; to
the point of beginning.
    Designated altitudes. Surface to 5,000 feet MSL.
    Time of designation. 0800 to 1700 local time, April 1 to
November 30; 0800 to 1700 local time, Tuesday, Wednesday and
Thursday, December 1 to March 31; other times by NOTAM 48 hours in
advance.
    Controlling agency. FAA, Toledo Approach Control.
    Using agency. U.S. Army, Camp Perry Joint Training Center, OH.

R-5502B Lacarne, OH [Amended]

    Boundaries. Beginning at lat. 41[deg]41'30'' N, long.
83[deg]00'00'' W; to lat. 41[deg]35'40'' N, long. 82[deg]54'50'' W;
to lat. 41[deg]32'30'' N, long. 83[deg]01'00'' W; to lat.
41[deg]36'35'' N, long. 83[deg]04'52'' W; to lat. 41[deg]41'30'' N,
long. 83[deg]07'30'' W; to the point of beginning, excluding R-
5502A.
    Designated altitudes. Surface to 23,000 feet MSL.
    Time of designation. 0800 to 1700 local time, Tuesday, Wednesday
and Thursday; other times by NOTAM 48 hours in advance.
    Controlling agency. FAA, Cleveland ARTCC.
    Using agency. U.S. Army, Camp Perry Joint Training Center, OH.

    Issued in Washington, DC, on February 5, 2019.
Rodger A. Dean Jr.,
Manager, Airspace Policy Group.
[FR Doc. 2019-02065 Filed 2-11-19; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 77, Number 116 (Friday, June 15, 2012)]
[Notices]
[Page 35959]
[FR Doc No: 2012-14619]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP12-468-000]

Atlas Pipeline Mid-Continent WestTex, LLC; Pioneer Natural
Resources USA, Inc.; Notice of Application

    Take notice that on May 30, 2012, Atlas Pipeline Mid-Continent
WestTex, LLC (Atlas) and Pioneer Natural Resources USA, Inc. (Pioneer),
filed in the above referenced docket a joint application pursuant to
section 7(c) of the Natural Gas Act (NGA) and Part 157 of the
Commission's regulations, for a limited jurisdiction certificate
authorizing Atlas and Pioneer to construct and operate a jointly-owned
10.2-mile natural gas pipeline (the Driver Residue Pipeline) in Midland
County, Texas, all as more fully set forth in the application which is
on file with the Commission and open to public inspection. The pipeline
will be used to transport natural gas from a natural gas processing
plant (the Driver Plant), which Atlas and Pioneer are planning to
construct to interconnections with three gas transmission pipeline
systems. Atlas and Pioneer are the only parties that will transport gas
on the proposed pipeline and therefore are seeking general waivers of
the Commission's tariff and rate regulations. The filing is available
for review at the Commission in the Public Reference Room or may be
viewed on the Commission's Web site at http://www.ferc.gov using the
``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. For
assistance, contact FERC at<EMAIL_ADDRESS>or call toll-
free,<PHONE_NUMBER> or TYY,<PHONE_NUMBER>.
    Any questions concerning this application may be directed for Atlas
to James F. Bowe, Jr., King & Spalding, 1700 Pennsylvania Ave. NW.,
Suite 200, Washington, DC 20006, by telephone at<PHONE_NUMBER> or by
email at<EMAIL_ADDRESS>and Gerald Shrader, Vice President and General
Counsel, Atlas Pipeline Mid-Continent, LLC, 110 W. 7th Street, Suite
2300, Tulsa, OK 74119, by telephone at<PHONE_NUMBER> or
<EMAIL_ADDRESS>or for Pioneer to Bryan L. Clark, Senior
Counsel, Pioneer Natural Resources USA, Inc., 5205 North O'Connor
Blvd., Suite 200, Irving, TX 75039, by telephone at<PHONE_NUMBER> or
<EMAIL_ADDRESS>    Pursuant to Section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
Complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding, or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is issued, it will indicate, among other
milestones, the anticipated date for the Commission staff's issuance of
the final environmental impact statement (FEIS) or EA for this
proposal. The filing of the EA in the Commission's public record for
this proceeding or the issuance of a Notice of Schedule for
Environmental Review will serve to notify federal and state agencies of
the timing for the completion of all necessary reviews, and the
subsequent need to complete all federal authorizations within 90 days
of the date of issuance of the Commission staff's FEIS or EA.
    There are two ways to become involved in the Commission's review of
this project. First, any person wishing to obtain legal status by
becoming a party to the proceedings for this project should, on or
before the comment date stated below file with the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426, a
motion to intervene in accordance with the requirements of the
Commission's Rules of Practice and Procedure (18 CFR 385.214 or
385.211) and the Regulations under the NGA (18 CFR 157.10). A person
obtaining party status will be placed on the service list maintained by
the Secretary of the Commission and will receive copies of all
documents filed by the applicant and by all other parties. A party must
submit 14 copies of filings made in the proceeding with the Commission
and must mail a copy to the applicant and to every other party. Only
parties to the proceeding can ask for court review of Commission orders
in the proceeding.
    However, a person does not have to intervene in order to have
comments considered. The second way to participate is by filing with
the Secretary of the Commission, as soon as possible, an original and
two copies of comments in support of or in opposition to this project.
The Commission will consider these comments in determining the
appropriate action to be taken, but the filing of a comment alone will
not serve to make the filer a party to the proceeding. The Commission's
rules require that persons filing comments in opposition to the project
provide copies of their protests only to the party or parties directly
involved in the protest.
    Persons who wish to comment only on the environmental review of
this project should submit an original and two copies of their comments
to the Secretary of the Commission. Environmental commentors will be
placed on the Commission's environmental mailing list, will receive
copies of the environmental documents, and will be notified of meetings
associated with the Commission's environmental review process.
Environmental commentors will not be required to serve copies of filed
documents on all other parties. However, the non-party commentors will
not receive copies of all documents filed by other parties or issued by
the Commission (except for the mailing of environmental documents
issued by the Commission) and will not have the right to seek court
review of the Commission's final order.
    Motions to intervene, protests and comments may be filed
electronically via the Internet in lieu of paper; see, 18 CFR
385.2001(a)(1)(iii) and the instructions on the Commission's Web site
under the ``e-Filing'' link. The Commission strongly encourages
electronic filings.
    Comment Date: June 29, 2012.

    Dated: June 8, 2012.
Kimberly D. Bose,
Secretary.
[FR Doc. 2012-14619 Filed 6-14-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 77, Number 19 (Monday, January 30, 2012)]
[Notices]
[Page 4591]
[FR Doc No: 2012-2034]

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SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission Advisory Committee on Small and Emerging
Companies will hold a public meeting on Wednesday, February 1, 2012, in
Multi-Purpose Room LL-006 at the Commission's headquarters, 100 F
Street NE., Washington, DC. The meeting will begin at 10 a.m. (EST) and
will be open to the public. Seating will be on a first-come, first-
served basis. Doors will open at 9:30 a.m. Visitors will be subject to
security checks. The meeting will be webcast on the Commission's Web
site at www.sec.gov.
    Commissioner Walter, as duty officer, determined that no earlier
notice thereof was possible.
    On January 10, 2012, the Commission published notice of the
Committee meeting (Release No. 33-9293), indicating that the meeting is
open to the public and inviting the public to submit written comments
to the Committee. This Sunshine Act notice is being issued because a
majority of the Commission may attend the meeting.
    The agenda for the meeting includes consideration of
recommendations and other matters relating to rules and regulations
affecting small and emerging companies under the federal securities
laws.
    For further information, please contact the Office of the Secretary
at<PHONE_NUMBER>.

    Dated: January 26, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-2034 Filed 1-26-12; 4:15 pm]
BILLING CODE 8011-01-P