[Federal Register: April 15, 2008 (Volume 73, Number 73)]
[Notices]
[Page 20344-20349]
[DOCID:fr15ap08-136]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57636; File No. SR-NYSEArca-2008-09]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of a Proposed Rule Change, and Amendment No. 1 Thereto, Relating to the
Listing and Trading of Shares of the AirShares \TM\ EU Carbon
Allowances Fund

April 8, 2008.
    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 March 14, 2008, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''),
through its wholly owned subsidiary, NYSE Arca Equities, Inc. (``NYSE
Arca Equities''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been substantially prepared by the
Exchange. On April 4, 2008, the Exchange filed Amendment No. 1 to the
proposed rule change. The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to adopt new NYSE Arca Equities Rule 8.204
(Commodity Futures Trust Shares) and to list and trade shares
(``Shares'') of the AirShares \TM\ EU Carbon Allowances Fund (``Fund'')
pursuant to the proposed rule. The text of the proposed rule change is
available at the Exchange, the Commission's Public Reference Room, and
http://www.nyse.com.

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

    In its filing with the Commission, the 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 proposes to adopt new NYSE Arca Equities Rule 8.204 to
permit the listing and trading, or trading pursuant to unlisted trading
privileges (``UTP''), of shares issued by a trust that is a commodity
pool, as defined in the Commodity Exchange Act (``CEA'') and
regulations thereunder, and that is managed by a commodity pool
operator (``CPO'') registered with the Commodity Futures Trading
Commission (``CFTC''). Such shares would hold long positions in futures
contracts on a specified commodity or interests in a commodity pool
which, in turn, would hold such long positions. In addition, such
shares would be issuable and redeemable daily in specified aggregate
amounts at net asset value (``NAV'').\3\ The Exchange also proposes to
amend NYSE Arca Equities Rule 7.34 (Trading Sessions) to reference the
securities described in proposed NYSE Arca Equities Rule 8.204.
Additionally, the Exchange proposes to amend its listing fees by
incorporating the securities described in proposed NYSE Arca Equities
Rule 8.204 in the term ``Derivative Securities Products.''
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    \3\ The Commission has approved similar NYSE Arca Equities rules
to list and trade products based on or related to commodities. See
Securities Exchange Act Release Nos. 54025 (June 21, 2006), 71 FR
36856 (June 28, 2006) (SR-NYSEArca-2006-12) (approving new NYSE Arca
Equities Rule 8.203 ``Commodity-Indexed Trust Shares'' for trading
pursuant to UTP the iShares GSCI Commodity-Indexed Trust); 51067
(January 21, 2005), 70 FR 3952 (January 27, 2005) (SR-PCX-2004-132)
(approving new NYSE Arca Equities Rule 8.201 ``Commodity-Based Trust
Shares'' for trading pursuant to UTP the iShares COMEX Gold Trust);
56041 (July 11, 2007), 72 FR 39114 (July 17, 2007) (SR-NYSEArca-
2007-43) (approving listing of shares of iShares COMEX Gold Trust
pursuant to NYSE Arca Equities Rule 8.201); 53875 (May 25, 2006), 71
FR 32164 (June 2, 2006) (SR-NYSEArca-2006-11) (approving new NYSE
Arca Equities Rule 8.300 ``Partnership Shares'' for trading pursuant
to UTP the United States Oil Fund, LP); and 53736 (April 27, 2006),
71 FR 26582 (May 5, 2006) (SR-PCX-2006-22) (approving new Commentary
.02 to NYSE Arca Equities Rule 8.200 ``Investment Shares'' for
trading pursuant to UTP the DB Commodity Index Tracking Fund).
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    Further, pursuant to this proposed rule change, the Exchange
proposes to list and trade the Shares of the Fund. The Shares, which
represent ownership of a fractional undivided beneficial interest in
the net assets of the Fund, will conform to the initial and continued
listing criteria under proposed NYSE Arca Equities Rule 8.204. The Fund
is a commodity pool, as defined in the CEA and the applicable rules of
the CFTC, and was formed as a Delaware statutory trust on August 13,
2007.\4\ XShares Advisors LLC, a Delaware limited liability company,
will serve as sponsor of the Fund (``Sponsor''). The Sponsor was formed
on March 15, 2006, is a wholly owned subsidiary of XShares Group LLC, a
Delaware limited liability company, and will serve as the CPO of the
Fund. The Sponsor will be registered as a CPO with the CFTC and will be
a member of the National Futures Association (``NFA'') prior to the
commencement of operations of the Fund.
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    \4\ The Fund is not an investment company registered under the
Investment Company Act of 1940, according to the Registration
Statement on Form S-1 for the Fund, which was filed with the
Commission on December 14, 2007 (File No. 333-145448)
(``Registration Statement''). The information in this proposed rule
change is based upon representations in the Registration Statement.

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a. Proposed Listing Rules
    Proposed NYSE Arca Equities Rule 8.204(c) defines a ``Commodity
Futures Trust Share'' as a security that: (1) Is issued by a trust that
(a) is a commodity pool, as defined in the CEA and regulations
thereunder, managed by a CPO registered with the CFTC, and (b) holds
positions in futures contracts that track the performance of a
specified commodity, or interests in a commodity pool which, in turn,
holds such positions; and (2) is issued and redeemed daily in specified
aggregate amounts at NAV. The term ``futures contract'' is a ``contract
of sale of a commodity for future delivery'' set forth in Section 2(a)
of the CEA. The term ``commodity'' is defined in Section 1(a)(4) of the
CEA.
    Proposed NYSE Arca Equities Rule 8.204(d) provides that the
Exchange may trade, either by listing or pursuant to UTP, Commodity
Futures Trust Shares that are based on an underlying commodity futures
contract. Each issue of Commodity Futures Trust Shares would be
designated as a separate series and would be identified by a unique
symbol.
    The Commodity Futures Trust Shares will be subject to the criteria
for the listing and trading set forth in proposed NYSE Arca Equities
Rule 8.204(e). Proposed NYSE Arca Equities Rule 8.204(e)(1) provides
that the Exchange will establish a minimum number of Commodity Futures
Trust Shares that will be required to be outstanding at the time of
commencement of trading. The proposed continued listing criteria in
proposed NYSE Arca Equities Rule 8.204(e)(2) provide for the suspension
of trading in or removal from listing of the Commodity Futures Trust
Shares under any of the following circumstances:
     If, following the initial 12-month period beginning upon
the commencement of trading of the Shares: (1) The trust has fewer than
50,000 Shares issued and outstanding; (2) the market value of all
Shares is less than $1,000,000; or (3) there are fewer than 50 record
and/or beneficial holders of Commodity Futures Trust Shares for 30
consecutive trading days;
     If the value of the underlying futures contract is no
longer calculated or available on at least a 15-second delayed basis
during the Exchange's Core Trading Session, as defined in NYSE Arca
Equities Rule 7.34(a), from a source unaffiliated with the sponsor, the
trust, or the trustee;
     If the NAV for the trust is no longer disseminated to all
market participants at the same time;
     If the Indicative Trust Value is no longer disseminated on
at least a 15-second delayed basis during the Exchange's Core Trading
Session, as defined in NYSE Arca Equities Rule 7.34(a); or
     If such other event shall occur or condition exists that,
in the opinion of the Exchange, makes further dealings on the Exchange
inadvisable.
In addition, the Exchange will remove the Commodity Futures Trust
Shares from listing upon termination of the trust.

    Proposed NYSE Arca Equities Rule 8.204(e)(3) provides that the term
of a trust is as stated in the trust's prospectus, but that the trust
may be terminated earlier as may be specified in the prospectus.
Proposed NYSE Arca Equities Rule 8.204(e)(4) sets forth proposed
requirements for the trustee of a trust: (1) The trustee of a trust
must be a trust company or banking institution having substantial
capital and surplus and the experience and facilities for handling
corporate trust business; in cases where, for any reason, an individual
has been appointed as trustee, a qualified trust company or banking
institution must be appointed co-trustee; and (2) no change is to be
made in the trustee of a listed issue without prior notice to and
approval of the Exchange. Proposed NYSE Arca Equities Rule 8.204(e)(5)
provides that voting rights will be as set forth in the applicable
trust prospectus.
    Proposed NYSE Arca Equities Rule 8.204(f) sets forth certain
restrictions on ETP Holders acting as registered Market Makers in
Commodity Futures Trust Shares to facilitate surveillance. Proposed
NYSE Arca Equities Rules 8.204(f)(2)-(3) require that the ETP Holder
acting as a registered Market Maker in the Commodity Futures Trust
Shares provide the Exchange with necessary information relating to its
trading in the underlying commodity, related futures or options on
futures, or any other related derivatives. Proposed NYSE Arca Equities
Rule 8.204(f)(4) prohibits the ETP Holder acting as a registered Market
Maker in the Commodity Futures Trust Shares from using any material
non-public information received from any person associated with an ETP
Holder or employee of such person regarding trading by such person or
employee in the underlying commodity, related futures or options on
futures, or any other related derivative (including the Commodity
Futures Trust Shares). In addition, proposed NYSE Arca Equities Rule
8.204(f)(1) prohibits the ETP Holder acting as a registered Market
Maker in the Commodity Futures Trust Shares from being affiliated with
a market maker in the underlying commodity, related futures or options
on futures, or any other related derivative, unless adequate
information barriers are in place, as provided in NYSE Arca Equities
Rule 7.26.
    Proposed NYSE Arca Equities Rule 8.204(g) relates to the Exchange's
limitation of liability. Proposed NYSE Arca Equities Rule 8.204(h)
specifically provides that the Exchange will file separate proposals
under Section 19(b) of the Act \5\ before listing and trading separate
and distinct Commodity Futures Trust Shares.
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    \5\ 15 U.S.C. 78s(b).
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    Commentary .01 to proposed NYSE Arca Equities Rule 8.204 requires
ETP Holders to provide all purchasers of newly issued Commodity Futures
Trust Shares with a prospectus. Commentary .02 to proposed NYSE Arca
Equities Rule 8.204 provides that trading in the Commodity Futures
Trust Shares will occur during the trading hours specified in NYSE Arca
Equities Rule 7.34. Commentary .03 to proposed NYSE Arca Equities Rule
8.204 requires that if the Indicative Trust Value or the value of the
underlying futures contract is not being disseminated as required, the
Exchange may halt trading during the day in which the interruption to
the dissemination of the Indicative Trust Value or the value of the
underlying futures contract occurs. If the interruption to the
dissemination of the Indicative Trust Value or the value of the
underlying futures contract persists past the trading day in which it
occurred, the Exchange will halt trading no later than the beginning of
the trading day following the interruption. In addition, if the
Exchange becomes aware that the NAV with respect to a series of
Commodity Futures Trust Shares is not disseminated to all market
participants at the same time, it will halt trading in such series
until such time as the NAV or the Disclosed Portfolio is available to
all market participants. Commentary .04 to proposed NYSE Arca Equities
Rule 8.204 provides that the Exchange's rules governing the trading of
equity securities apply to Commodity Futures Trust Shares. Commentary
.05 to proposed NYSE Arca Equities Rule 8.204 provides that the
Exchange will implement written surveillance procedures for Commodity
Futures Trust Shares.
b. Amendments to NYSE Arca Equities Rule 7.34
    The Exchange proposes to amend NYSE Arca Equities Rule 7.34(a)(3)
to

add Commodity Futures Trust Shares to the list of securities for which
the Core Trading Session on the Exchange concludes at 4:15 p.m. Eastern
Time (``ET''). In addition, the Exchange proposes to amend NYSE Arca
Equities Rule 7.34(a)(4) to include Commodity Futures Trust Shares
under ``Derivative Securities Products'' with respect to trading halts
of certain derivative securities products trading pursuant to UTP on
the Exchange.
c. Amendments to Listing Fees
    The Exchange proposes to add Commodity Futures Trust Shares to the
securities included under the term ``Derivative Securities Products''
in note 3 of the NYSE Arca Equities Schedule of Fees and Charges for
Exchange Services.
d. Description of the Fund
    The Sponsor has appointed Environmental Capital Management, LLC, an
Arizona limited liability company, to serve as the commodity trading
advisor (``CTA'') of the Fund. The CTA will be registered with the CFTC
prior to commencement of the Fund's operations and will be a member of
the NFA in such capacity. The CTA is not an affiliate of the Sponsor or
the Fund. The Sponsor has appointed: (1) Brown Brothers Harriman
(``Brown Brothers'' or ``Administrator'') as the administrator,
custodian, and transfer agent of the Fund; and (2) ALPS Distributors,
Inc. (``Distributor'') to assist the Sponsor and the Administrator with
certain functions and duties relating to distribution and marketing.
Newedge USA, LLC (``Newedge USA'') executes and clears the Fund's
futures transactions and provides other brokerage-related services.
Newedge Alternative Strategies, Inc. may execute foreign exchange or
other over-the-counter transactions with the Fund, as principal. A
variety of executing brokers selected by the Sponsor may execute
futures transactions on behalf of the Fund. The executing brokers will
give up all such transactions to Newedge USA, which will serve as the
Fund's clearing broker.
    The investment objective of the Fund is to provide investors with
investment results that correspond generally, before payment of the
Fund's expenses and liabilities, to the performance of a basket of
exchange-traded futures contracts for carbon equivalent emissions
allowances (``EUAs'') issued under the European Union Emissions Trading
Scheme (``EU ETS''). The EU ETS \6\ is a ``cap and trade'' emissions
trading program instituted by the European Union (``EU''), in
furtherance of the joint commitment of its member states under the
Kyoto Protocol to achieve certain reductions in their emissions of
greenhouse gases from 2008 to 2012.
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    \6\ According to the Registration Statement, while the
investment objective of the Fund is to track generally the value of
the underlying futures contracts, the Fund's portfolio of fixed
income securities, as well as other factors such as the Fund's
expenses, and its hedging activities may cause a lack of correlation
between the NAV of the Shares and the value of the Fund's portfolio
of futures contracts.
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    The net assets of the Fund will consist of long positions in ICE
Futures ECX Carbon Financial Instrument Futures Contracts (``ECX CFI
Futures Contracts'').\7\ The ECX CFI Futures Contracts are standardized
contracts developed by the European Climate Exchange (``ECX'') and are
listed and admitted to trading on ICE Futures \8\ on the London-based
electronic platform, owned and operated by IntercontinentalExchange,
Inc. (also known as the ICE Platform). ECX CFI Futures Contracts are
standardized contractual instruments for futures on deliverable EUAs
issued under the EU ETS. Each ECX CFI Futures Contract provides for
delivery of 1,000 EUAs on a specified date at a specified price, with
each EUA being an entitlement to emit one ton of carbon dioxide
equivalent gas.\9\
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    \7\ The Fund represents that the ECX CFI Futures Contracts meets
the definition of ``futures contract'' as set forth in Section 2(a)
of the CEA. The Exchange states that carbon equivalent emissions
allowances meet the definition of ``commodity'' as defined in
Section 1(a)(4) of the CEA.
    \8\ The Exchange states that ICE Futures, which is a subsidiary
of the IntercontinentalExchange, Inc. is a Recognised Investment
Exchange in the United Kingdom and is supervised by the Financial
Services Authority under the terms of the Financial Services and
Markets Act (2000).
    \9\ The ECX CFI Futures Contract had average daily trading
volume of $135,717,089 (USD), or approximately 87,587,602 Euro,
representing 3,551 contracts traded daily from January 1, 2008
through March 11, 2008.
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    The ECX CFI Futures Contracts trade on the London-based ICE
Platform from 7 a.m. to 5 p.m. Greenwich Mean Time. According to ECX,
ICE Futures is the most liquid, pan-European platform for carbon
emissions trading, attracting over 80% of the exchange-traded volume in
that market.
    Initially, the Fund will hold long positions in ECX CFI Futures
Contracts. The Fund may also invest in other EUAs, including those that
trade on other exchanges.\10\ The Exchange will file a proposed change
pursuant to Rule 19b-4 under the Act \11\ seeking approval to continue
trading the Shares if the Fund invests in EUAs that constitute more
than 10% of the weight of the Fund and where the principal trading
market for such component is not a member or affiliate member of the
Intermarket Surveillance Group (``ISG'') or where the Exchange does not
have a comprehensive surveillance sharing agreement with such market.
If the Kyoto Protocol or the EU ETS is extended beyond 2012, the
Sponsor will determine and publicly disclose by no later than September
30, 2012 whether it will extend the operation of the Fund beyond
December 2012. The Fund will not be actively managed in that it will
not engage in activities designed to obtain a profit from, or to
ameliorate losses caused by, changes in the value of its portfolio of
EUAs.
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    \10\ The Exchange will file a Form 19b-4 to obtain Commission
approval for the continued listing and trading of the Shares should
the Fund hold positions in EUAs other than ECX CFI Futures
Contracts.
    \11\ 15 U.S.C. 78a.
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    More information about the Kyoto Protocol, the EU ETS, the ECX CFI
Futures Contracts, the Fund's investment strategy, as well as further
descriptions of the Shares, risks, NAV, creation, and redemption is
contained in the Registration Statement.\12\
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    \12\ See supra at note 4.
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e. Description of the Shares
    The Fund will create and redeem Shares from time to time, but only
by authorized participants in one or more baskets, with each basket
constituting a block of 100,000 Shares. In connection with the Fund, a
minimum of 100,000 Shares will be required to be outstanding at the
start of trading. The Exchange states that this minimum number of
Shares required to be outstanding is generally higher than requirements
that have been applied to previously listed series of exchange-traded
funds. The Exchange believes that the proposed minimum number of Shares
outstanding at the start of trading will be sufficient to provide
market liquidity.
f. Dissemination and Availability of Information About the Underlying
Futures Contracts and the Shares
    The daily settlement prices for the EUAs are publicly available on
the ICE Futures Web site at http://www.icefutures.com. In addition,
various market data vendors and news publications publish futures
prices and related data. Quote and last-sale information for the EUAs
are widely disseminated through a variety of market data vendors
worldwide. ICE Futures also provides delayed futures information on
current and past trading sessions and market news free of charge

on its Web site. The specific contract specifications for the EUAs are
also available on the ICE Futures Web site.
    The Web site for the Fund at http://www.airsharesfund.com, which is
publicly accessible at no charge, will contain the following
information: (1) The prior business day's NAV per Share \13\ and the
reported closing price; (2) the mid-point of the bid-ask price in
relation to the NAV per Share as of the time the NAV is calculated
(``Bid-Ask Price''); \14\ (3) calculation of the premium or discount of
such price against such NAV per Share; (4) data in chart form
displaying the frequency distribution of discounts and premiums of the
Bid-Ask Price against the NAV per Share, within appropriate ranges for
each of the four previous calendar quarters; (5) the prospectus and the
most recent periodic reports filed with the Commission or required by
the CFTC; \15\ and (6) other applicable quantitative information.
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    \13\ The most recent end-of-day NAV of the Fund and NAV per
Share will be published by the Sponsor as of 4 p.m. ET on Reuters
and/or Bloomberg and on the Fund's Web site at http://
www.airsharesfund.com. The end-of-day NAV per Share will also be
published the following morning on the consolidated tape.
    \14\ The Bid-Ask Price of Shares is determined using the highest
bid and lowest offer as of the time of calculation of the NAV per
Share.
    \15\ Monthly account statements conforming to CFTC and NFA
requirements are posted on the Fund's Web site at http://
www.airsharesfund.com. Additional reports may be posted on the
Fund's Web site in the discretion of the Sponsor or as required by
regulatory authorities.
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    The Fund's total portfolio composition, consisting primarily of
long positions in ECX CFI Futures Contracts and cash, will be disclosed
each business day that the Exchange is open for trading on the Fund's
Web site. The Fund has informed the Exchange that Web site disclosure
of portfolio holdings will be made daily and will include, as
applicable, the name and value of each EUA and amount of cash held in
the portfolio of the Fund.
    As noted above, the Fund's NAV will be calculated and disseminated
daily.\16\ The Exchange will disseminate for the Fund on a daily basis
by means of Consolidated Tape Association CQ High Speed Lines
information with respect to the Indicative Fund Value (as discussed
below), recent Fund NAV, Shares outstanding, and the Basket amount. The
Exchange will also make available on its Web site daily trading volume,
closing prices, and the Fund's NAV per Share. The closing price and
settlement prices of the EUAs held by the Fund are also readily
available from ICE Futures, automated quotation systems, published or
other public sources, or on-line information services.
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    \16\ The Exchange will obtain a representation from the Fund
that the Fund's NAV per Share will be calculated daily and made
available to all market participants at the same time.
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    Information regarding market price and volume of the Shares is and
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. The
previous day's closing price and trading volume information will be
published daily in the financial section of newspapers. Quotation and
last-sale information for the Shares will be available via the
facilities of the Consolidated Tape Association.
    All pricing information will be quoted in U.S. dollars, other than
the current trading value of the Euro-denominated EUAs, which will be
quoted in Euro. The current trading price per Share will be published
continuously as trades occur throughout each trading day on the
consolidated tape, Reuters, and/or Bloomberg. The most recent trading
value of each EUA is published on the Web site of the ECX at http://
www.ecxeurope.com, under the heading ``Market Data,'' and each vintage
futures contract in the Fund's portfolio will be published on the
Fund's Web site at http://www.airsharesfund.com, or any successor
thereto.
    To provide updated information relating to the Fund for use by
investors, professionals and persons wishing to create or redeem the
Shares, the Exchange or a major market data vendor will disseminate
through the facilities of the Consolidated Tape Association an updated
Indicative Fund Value (``Indicative Fund Value''). \17\ The Indicative
Fund Value, which is also known as intraday indicative value (IIV) or
intraday optimized portfolio value (IOPV), is an estimate, updated on a
real-time basis at least every 15 seconds, of the NAV, which is
disclosed only once per day. The Indicative Fund Value for the Fund
will be disseminated on a per-Share basis at least every 15 seconds
during the Exchange's Core Trading Session. The Indicative Fund Value
will be calculated based on the previously-disclosed portfolio
composition of the Fund, i.e., the futures contracts in the Fund's
portfolio, and will be adjusted to reflect the price changes of the
relevant EUAs.
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    \17\ The Indicative Fund Value is referred to as the Indicative
Trust Value in proposed new NYSE Arca Equities Rule 8.204(e)(2)(iv).
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    The value of a Share may be influenced by the non-concurrent
trading hours between the Exchange and the exchanges on which the EUAs
trade. While the Shares will trade from 4 a.m. to 8 p.m. ET, the ECX
CFI Futures Contracts, for example, trade on the London-based ICE
Platform from 7 a.m. to 5 p.m. local time in London, England. When the
ICE Platform and the Exchange are both open for trading, the Indicative
Fund Value can be expected to closely approximate the NAV per Share.
When the ICE Platform is closed and the Exchange is open, trading
spreads and the resulting premium or discount on the Shares may widen
and, therefore, increase the difference between the public trading
price of the Shares and the NAV per Share. The Indicative Fund Value on
a per-Share basis disseminated during the Exchange's Core Trading
Session should not be viewed as a real-time update of the Fund's NAV,
which is calculated only once a day.
g. Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares.\18\ Trading in the Shares will be halted if the
circuit breaker parameters under NYSE Arca Equities Rule 7.12 are
reached. Trading may also be halted because of market conditions or for
reasons that, in the view of the Exchange, make trading in the Shares
inadvisable. These may include: (1) The extent to which trading is not
occurring in the underlying EUA futures contracts; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present. Trading in the Shares also will be
subject to Commentary .03 to proposed NYSE Arca Equities Rule 8.204,
which sets forth circumstances under which trading in the Shares may be
halted.
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    \18\ See Commentary .04 to NYSE Arca Equities Rule 7.12.
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h. Trading Rules
    Under proposed NYSE Arca Equities Rule 8.204(b), Commodity Futures
Trust Shares are included within the Exchange's definition of
``securities.'' The Exchange deems the Shares to be equity securities,
thus rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Commentary .02 to
proposed NYSE Arca Equities Rule 8.204 provides that transactions in
Commodity Futures Trust Shares will occur during the trading hours
specified in Rule 7.34. Therefore, in accordance with NYSE Arca
Equities Rule 7.34, the Shares will trade on the NYSE Arca Marketplace
from 4 a.m. to 8 p.m. ET. The Exchange states that it has appropriate
rules to facilitate

transactions in the Shares during all trading sessions.
i. Surveillance
    The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (which will include
Commodity Futures Trust Shares) to monitor trading in the Shares. The
Exchange represents that these procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules and applicable federal
securities laws.
    The Exchange's current trading surveillance focuses on detecting
securities trading outside their normal patterns. When such situations
are detected, surveillance analysis follows and investigations are
opened, where appropriate, to review the behavior of all relevant
parties for all relevant trading violations.
    The Exchange may obtain information via the ISG from other
exchanges who are members or affiliate members of the ISG. In addition,
the Exchange has an Information Sharing Agreement in place with ICE
Futures for the purpose of providing information in connection with
trading in, or related to, futures contracts traded on ICE Futures. In
addition, the Exchange will file a proposed change pursuant to Rule
19b-4 under the Act \19\ seeking approval to continue trading the
Shares if the Fund invests in EUAs (or pricing information is used for
a new or existing component) that constitute more than 10% of the
weight of the Fund where the principal trading market for such
component is not a member or affiliate member of ISG or where the
Exchange does not have a comprehensive surveillance sharing agreement
with such market. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
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    \19\ 15 U.S.C. 78a.
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j. Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its
ETP Holders \20\ in an Information Bulletin (``Bulletin'') of the
special characteristics and risks associated with trading the Shares.
Specifically, the Bulletin will discuss the following: (1) The risks
involved in trading the Shares during the Opening and Late Trading
Sessions \21\ when an updated Indicative Fund Value will not be
calculated or publicly disseminated; (2) the procedures for purchases
and redemptions of Shares (and that Shares are not individually
redeemable); (3) Rule 9.2(a),\22\ which imposes a duty of due diligence
on its ETP Holders to learn the essential facts relating to every
customer prior to trading the Shares; (4) the risk involved in trading
the Shares during the Core and Late Trading Sessions when the ECX CFI
Futures Contracts are not trading on the ICE Platform; (5) how
information regarding the Indicative Fund Value is disseminated; (6)
the requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; and (7) trading information.
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    \20\ See NYSE Arca Equities Rule 1.1(n) (defining ETP Holder).
    \21\ The Opening Trading Session is from 4 a.m. to 9:30 a.m. ET
and the Late Trading Session is from 4:15 p.m. to 8 p.m. ET. See
NYSE Arca Equities Rule 7.34.
    \22\ NYSE Arca Equities Rule 9.2(a) provides that ETP Holders,
before recommending a transaction, must have reasonable grounds to
believe that the recommendation is suitable for the customer based
on any facts disclosed by the customer as to his other security
holdings and as to his financial situation and needs. Further, the
rule provides, with a limited exception, that prior to the execution
of a transaction recommended to a non-institutional customer, the
ETP Holder shall make reasonable efforts to obtain information
concerning the customer's financial status, tax status, investment
objectives, and any other information that the ETP Holder believes
would be useful to make a recommendation.
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    In addition, the Bulletin will reference that: (1) The Fund is
subject to various fees and expenses described in the relevant
registration statement; (2) that there is no regulated source of last-
sale information regarding physical commodities; (3) the Commission has
no jurisdiction over the trading of EUAs; and (4) the Financial
Services Authority in the United Kingdom has regulatory jurisdiction
over the trading of EUAs and related options. The Bulletin will also
discuss any exemptive, no-action, and interpretive relief granted by
the Commission from any rules under the Act and disclose that the NAV
for the Shares will be calculated after 4 p.m. ET each trading day.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \23\ that a national securities
exchange have rules that are designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest. The Exchange believes that the proposed rules will
facilitate the listing and trading of additional types of exchange-
traded products that will enhance competition among market
participants, to the benefit of investors and the marketplace. In
addition, the listing and trading criteria set forth in the proposed
rules are intended to protect investors and the public interest.
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    \23\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2008-09 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-NYSEArca-2008-09. 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, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. 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-NYSEArca-2008-09 and should
be submitted on or before May 6, 2008.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-7934 Filed 4-14-08; 8:45 am]

BILLING CODE 8011-01-P