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55248 Federal Register / Vol. 71, No.

183 / Thursday, September 21, 2006 / Notices

rule change. The text of these statements 19(b)(3)(A)(i) 7 of the Act and Rule 19b– provisions of 5 U.S.C 552, will be
may be examined at the places specified 4(f)(1) 8 thereunder because it available for inspection and copying in
in Item IV below. NSCC has prepared constitutes a stated policy, practice, or the Commission’s Public Reference
summaries, set forth in sections A, B, interpretation with respect to the Section, 100 F Street, NE., Washington,
and C below, of the most significant meaning, administration, or DC 20549. Copies of such filing also will
aspects of such statements.4 enforcement of an existing rule. At any be available for inspection and copying
time within 60 days of the filing of the at NSCC’s principal office and on
A. Self-Regulatory Organization’s proposed rule change, the Commission NSCC’s Web site at http://
Statement of the Purpose of, and may summarily abrogate such rule www.nscc.com/legal/index.html. All
Statutory Basis for, the Proposed Rule change if it appears to the Commission comments received will be posted
Change that such action is necessary or without change; the Commission does
The purpose of the proposed rule appropriate in the public interest, for not edit personal identifying
change is to further harmonize and the protection of investors, or otherwise information from submissions. You
clarify the rules of The Depository Trust in furtherance of the purposes of the should submit only information that
& Clearing Corporation’s clearing agency Act.9 you wish to make available publicly. All
subsidiaries. In this filing, NSCC submissions should refer to File No.
IV. Solicitation of Comments
proposes to conform NSCC Rule 35 SR–NSCC–2006–02 and should be
concerning providing financial reports Interested persons are invited to submitted on or before October 12,
to its members to the equivalent rule of submit written data, views, and 2006.
The Depository Trust Company arguments concerning the foregoing,
For the Commission by the Division of
(‘‘DTC’’), DTC Rule 15. Specifically, the including whether the proposed rule Market Regulation, pursuant to delegated
rule change would clarify NSCC’s change, as amended, is consistent with authority.10
longstanding practice of providing the Act. Comments may be submitted by Jill M. Peterson,
unaudited quarterly financial statements any of the following methods: Assistant Secretary.
to its members for the first three Electronic Comments [FR Doc. 06–7838 Filed 9–20–06; 8:45 am]
quarters of the calendar year only.5 • Use the Commission’s Internet BILLING CODE 8010–01–P
NSCC believes that the proposed rule comment form (http://www.sec.gov/
change is consistent with the rules/sro.shtml); or
requirements of Section 17A of the Act 6 • Send an e-mail to rule- SECURITIES AND EXCHANGE
and the rules and regulations comments@sec.gov. Please include File COMMISSION
thereunder because it constitutes a No. SR–NSCC–2006–02 on the subject [Release No. 34–54458; File No. SR–NYSE–
stated policy, practice, or interpretation line. 2006–60]
with respect to the meaning,
administration, or enforcement of an Paper Comments Self-Regulatory Organizations; New
existing rule of NSCC and as such does • Send paper comments in triplicate York Stock Exchange LLC; Notice of
not adversely affect the safeguarding of to Nancy M. Morris, Secretary, Filing and Order Granting Accelerated
securities or funds in the custody or Securities and Exchange Commission, Approval of Proposed Rule Change
control of NSCC or for which it is 100 F Street, NE., Washington, DC Relating to iShares S&P Global Index
responsible. 20549–1090. Funds
All submissions should refer to File
B. Self-Regulatory Organization’s No. SR–NSCC–2006–02. This file September 15, 2006.
Statement on Burden on Competition number should be included on the Pursuant to section 19(b)(1) of the
NSCC does not believe that the subject line if e-mail is used. To help the Securities Exchange Act of 1934
proposed rule change will have any Commission process and review your (‘‘Act’’),1 and Rule 19b–4 thereunder,2
impact or impose any burden on comments more efficiently, please use notice is hereby given that on
competition. only one method. The Commission will September 14, 2006, the New York
post all comments on the Commission’s Stock Exchange LLC (‘‘NYSE’’ or
C. Self-Regulatory Organization’s Internet Web site (http://www.sec.gov/ ‘‘Exchange’’) filed with the Securities
Statement on Comments on the rules/sro.shtml). Copies of the and Exchange Commission
Proposed Rule Change Received From submission, all subsequent (‘‘Commission’’ or ‘‘SEC’’) the proposed
Members, Participants, or Others amendments, all written statements rule changes as described in Items I and
NSCC has not solicited or received with respect to the proposed rule II below, which items have been
written comments relating to the change that are filed with the substantially prepared by the Exchange.
proposed rule change. NSCC will notify Commission, and all written The Commission is publishing this
the Commission of any written communications relating to the notice to solicit comments on the
comments it receives. proposed rule change between the proposed rule change from interested
Commission and any person, other than persons, and is granting accelerated
III. Date of Effectiveness of the those that may be withheld from the approval to the proposed rule change.
Proposed Rule Change and Timing for public in accordance with the
Commission Action I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
The foregoing rule change has become 7 15 U.S.C. 78s(b)(3)(A)(i). the Proposed Rule Change
8 17 CFR 240.19b–4(f)(1).
effective pursuant to Section
9 For purposes of calculating the 60-day period The NYSE proposes to list and trade
within which the Commission may summarily the following: iShares S&P Global
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4 The Commission has modified the text of the


abrogate the proposed rule change under Section Consumer Discretionary Sector Index
summaries prepared by NSCC. 19(b)(3)(C) of the Act, the Commission considers
5 Annual audited financial statements are
the period to commence on August 18, 2006, the
10 17 CFR 200.30–3(a)(12).
provided to members after the last calendar quarter date on which the last amendment to the proposed
of the year. rule change was filed with the Commission. 15 1 15 U.S.C. 78s(b)(1).
6 15 U.S.C. 78q–1. U.S.C. 78s(b)(3)(C). 2 17 CFR 240.19b–4.

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Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices 55249

Fund; iShares S&P Global Consumer Index Fund; and (5) iShares S&P Global Operation of the Funds.10
Staples Sector Index Fund; iShares S&P Materials Sector Index Fund. Because
Global Industrials Sector Index Fund; the Funds invest in non-U.S. securities The investment objective of the Funds
iShares S&P Global Utilities Sector not listed on a national securities will be to provide investment results
Index Fund; iShares S&P Global exchange or the Nasdaq Stock Market, that correspond generally to the price
Materials Sector Index Fund the Funds do not meet the ‘‘generic’’ and yield performance of the
(collectively, the Funds’’).3 The Funds listing requirements of Section 703.16 of Underlying Indexes. In seeking to
are exchange-traded funds, which are a the Manual applicable to listing of ICUs achieve their investment objective, the
type of Investment Company Unit Funds will utilize ‘‘passive’’ indexing
(permitting listing in reliance upon Rule
(‘‘ICU’’). investment strategies. The Funds may
19b–4(e) 6 under the Act and cannot be
fully replicate their respective
II. Self-Regulatory Organization’s listed without a filing pursuant to Rule
Underlying Index, but currently intend
Statement of the Purpose of, and 19b–4 under the Act). Therefore, to list
to use a ‘‘representative sampling’’
Statutory Basis for, the Proposed Rule the Funds (or trade pursuant to UTP),
strategy to track the applicable
Change the Exchange must file, and obtain Underlying Index. A Fund utilizing a
Commission approval of, a proposed representative sampling strategy
In its filing with the Commission, the
rule change pursuant to Rule 19b–4 generally will hold a basket of the
Exchange included statements
under the Act.7 Component Securities of its Underlying
concerning the purpose of, and basis for,
the proposed rule change. The text of As set forth in detail below, the Funds Index, but it may not hold all of the
these statements may be examined at will hold certain securities Component Securities of its Underlying
the places specified in Item III below. (‘‘Component Securities’’) selected to Index.
The NYSE has prepared summaries, set correspond generally to the performance Each Fund will invest at least 90% of
forth in Sections A, B, and C below, of of the following indexes, (‘‘Underlying its assets in the securities of its
the most significant aspects of such Indexes’’), respectively: (1) S&P Global Underlying Index or in American
statements. Consumer Discretionary Index; (2) S&P Depositary Receipts (‘‘ADRs’’), Global
Global Consumer Staples Index; (3) S&P Depositary Receipts (‘‘GDRs’’), or
A. Self-Regulatory Organization’s Global Industrials Index; (4) S&P Global
Statement of the Purpose of, and European Depositary Receipts (‘‘EDRs’’)
Utilities Index; and (5) S&P Global (collectively ‘‘Depositary Receipts’’)
Statutory Basis for, the Proposed Rule Materials Index.
Change representing securities in the
Each Fund intends to qualify as a Underlying Index. A Fund may invest
1. Purpose ‘‘regulated investment company’’ (a the remainder of its assets in securities
The Exchange has adopted listing ‘‘RIC’’) under the Internal Revenue Code not included in its Underlying Index,
standards applicable to Investment (the ‘‘Code’’). Barclays Global Fund but which BGFA believes will help the
Company Units (‘‘ICUs’’) that it states Advisors (the ‘‘Advisor’’ or ‘‘BGFA’’) is Fund track its Underlying Index. For
are consistent with the listing criteria the investment advisor to the Funds. example, a Fund may invest in
currently used by other national The Advisor is registered under the securities not included in its Underlying
securities exchanges, and trading Investment Advisers Act of 1940.8 The Index in order to reflect various
standards pursuant to which the Advisor is the wholly owned subsidiary corporate actions (such as mergers) and
Exchange may either list and trade ICUs of Barclays Global Investors, N.A. other changes in its Underlying Index
or trade such ICUs on the Exchange on (‘‘BGI’’), a national banking association. (such as reconstitutions, additions and
an unlisted trading privileges (‘‘UTP’’) BGI is an indirect subsidiary of Barclays deletions). A Fund also may invest its
basis.4 Bank PLC of the United Kingdom. SEI other assets in futures contracts, options
The Exchange now proposes to list Investments Distribution Co. (‘‘SEI’’ or on futures contracts, options, and swaps
and trade under Section 703.16 of the ‘‘Distributor’’), a Pennsylvania related to its Underlying Index, as well
NYSE Listed Company Manual corporation and broker-dealer registered as cash and cash equivalents, including
(‘‘Manual’’) and NYSE Rule 1100 et seq. under the Act, is the principal shares of money market funds affiliated
shares of the following, each a series of underwriter and distributor of Creation with BGFA.
the iShares Trust (the ‘‘Trust’’): 5 (1) Unit Aggregations of iShares. The From time to time, adjustments may
iShares S&P Global Consumer Distributor is not affiliated with the be made in the portfolio of the Funds in
Discretionary Sector Index Fund; (2) Exchange or the Advisor. The Trust has accordance with changes in the
iShares S&P Global Consumer Staples appointed Investors Bank & Trust Co. composition of the Underlying Indexes
Sector Index Fund; (3) iShares S&P (‘‘IBT’’) to act as administrator or to maintain compliance with
Global Industrials Sector Index Fund; (‘‘Administrator’’), custodian, fund requirements applicable to a RIC under
(4) iShares S&P Global Utilities Sector accountant, transfer agent, and dividend
disbursing agent for the Funds. The 10 The Exchange states that the information
3 iShares is a registered trademark of Barclays Exchange expects that performance of provided herein is based on information included
Global Investors, N.A. in the Registration Statement; however, the
4 In 1996, the Commission approved Section the Administrator’s duties and
Commission notes that its approval of the listing
703.16 of the Listed Company Manual, which sets obligations will be conducted within the and trading of these ICUs is subject to the continued
forth the rules related to the listing of ICUs. provisions of the Investment Company operation of the Funds and their related Indexes as
Securities Exchange Act Release No. 36923 (March Act 9 and the rules thereunder. There is described herein by the Exchange. The Exchange
5, 1996), 61 FR 10410 (March 13, 1996). also states that while the Advisor would manage the
5 The Trust is registered under the Investment
no affiliation between the Administrator Funds, the Funds’ Board of Directors would have
Company Act of 1940 (15 U.S.C. 80a), (the and the Trust, the Advisor, or the overall responsibility for the Funds’ operations. The
‘‘Investment Company Act’’). On April 15, 2005, the Distributor. composition of the Board is, and would be, in
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Trust filed with the Commission a Registration compliance with the requirements of Section 10 of
Statement for the Funds on Form N–1A under the 6 17
the Investment Company Act. The Funds are
Securities Act of 1933 (15 U.S.C. 77a), and under CFR 240.19b–4(e). subject to and must comply with Section 303A.06
7 17 CFR 240.19b–4.
the Investment Company Act relating to the Funds of the Manual, which requires that the Funds have
8 15 U.S.C. 80b–1.
(File Nos. 333–92935 and 811–09729) (as amended, an audit committee that complies with SEC Rule
the ‘‘Registration Statement’’). 9 15 U.S.C. 80a–1. 10A–3, 17 CFR 240.10A–3.

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55250 Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices

the Code.11 For example, if at the end instrumentalities), repurchase Exchange (‘‘TSX’’) 60 Index, which
of a calendar quarter a Fund would not agreements collateralized by U.S. represents the liquid, large-cap stocks of
comply with the RIC diversification Government securities, and securities or the publicly listed companies in the
tests, the Advisor would make state or municipal governments and Canadian equities market; (2) the S&P
adjustments to the portfolio to ensure their political subdivisions are not Tokyo Stock Price (‘‘TOPIX’’) 150 Index,
continued RIC status. considered to be issued by members of which represents the liquid, large-cap
To the extent the Funds invest in any industry. stocks of the publicly listed companies
ADRs, they will be listed on a national The Exchange believes that these in the Japanese equities market; (3) the
securities exchange or Nasdaq, and to requirements and policies prevent the S&P/ Australia Stock Exchange (‘‘ASX’’)
the extent the Funds invest in other Funds from being excessively weighted 50 Index, which represents the liquid,
Depositary Receipts, they will be listed in any single security or small group of large-cap stocks in the Australian
on a foreign exchange. The Funds will securities and significantly reduce equities market; (4) the S&P Asia 50
not invest in any unlisted Depositary concerns that trading in the Funds Index, which represents the liquid,
Receipts or any listed Depositary could become a surrogate for trading in large-cap stocks of four major equities
Receipts that the Advisor deems to be unregistered securities. markets in Asia (Hong Kong, Korea,
illiquid or for which pricing information Taiwan and Singapore); (5) the S&P
Description of the Index Methodology
is not readily available. In addition, all Latin America 40 Index, which
Depositary Receipts must be sponsored Each of the Indexes is a subset of the represents the liquid, large-cap stocks
(with the exception of certain pre-1984 Standard & Poor’s Global 1200 Index from major sectors of the Mexico, Brazil,
ADRs that are listed and unsponsored and thus contains the securities of both Argentina and Chile equity markets; and
because they are grandfathered). domestic and international companies (6) the S&P Europe 350 Index, which
Each Fund will not concentrate its as Index components. The Indexes are represents the liquid, large-cap stocks of
investments (i.e., hold 25% or more of free float adjusted and market the publicly listed companies in the
its total assets in the stocks of a capitalization weighted. The Standard & region, covering approximately 70% of
particular industry or group of Poor’s Index Committee (which does not the region’s market capitalization and
industries), except that a Fund will include employees of broker-dealers or spanning 17 exchanges. All stocks
concentrate to approximately the same their affiliates) is responsible for the included in these S&P Indexes are in the
extent that its Underlying Index overall management of these S&P S&P Global 1200 Index.13
concentrates in the stocks of such Indices. Where there were multiple classes of
particular industry or group of Selection Criteria for Domestic a particular equity, all classes were
industries. In such case, a Fund could Components. Companies (i.e., the deemed eligible if they met the criteria
hold 25% or more of its total assets in ‘‘Components’’) selected for the for size, liquidity and sector
the stocks of such industry or group of investments represent a broad range of representation. The specific securities
industries. For purposes of this industry segments within the U.S. are then screened for industry sector
limitation, securities of the U.S. economy. The starting universe, all classification; thus, the eligible
Government (including its agencies and publicly traded U.S. companies (i.e., securities are ranked according to
companies listed and traded on a Global Industry Classification Standards
11 In order for the Funds to qualify for tax national securities exchange or the (‘‘GICS’’). Then, the Index components,
treatment as a RIC, they must meet several Nasdaq Stock Market), is screened to now determined, are weighted on the
requirements under the Code. Among these is a eliminate ADRs, mutual funds, limited basis of S&P’s free float, market
requirement that, at the close of each quarter of the
Funds’ taxable year, (1) at least 50% of the market
partnerships and royalty trusts. The capitalization methodology. Generally,
value of the Funds’ total assets must be represented following criteria are then analyzed to S&P observes a prospective constituent’s
by cash items, U.S. government securities, determine a company’s eligibility for liquidity over a period of at least 6
securities of other RICs and other securities, with inclusion in the investments: (1) months before consideration for
such other securities limited for the purpose of this
calculation with respect to any one issuer to an
Ownership of a company’s outstanding inclusion. However, it is recognized that
amount not greater than 5% of the value of the common shares, in order to screen out there may be extraordinary situations
Funds’ assets and not greater than 10% of the closely held companies; (2) trading when companies should be added
outstanding voting securities of such issuer; and (2) volume of a company’s stock, in order immediately (e.g., certain
not more than 25% of the value of their total assets
may be invested in securities of any one issuer, or
to ensure ample liquidity and efficient privatizations). When a particular
two or more issuers that are controlled by the Funds share pricing; and (3) the financial and company dominates its home market, it
(within the meaning of Section 851(b)(4)(B) of the operating condition of a company. may be excluded from the Index if
Code) and that are engaged in the same or similar Selection Criteria for International analysis of the sectors reveals that its
trades or business (other than U.S. government securities are not as liquid as those of
securities of other RICs).
Components.12 With respect to non-U.S.
Compliance with the above referenced RIC asset components of the Underlying Indexes, similar companies in other countries.
diversification requirements are monitored by the the eligible universe of Index The International Index components
Advisor and any necessary adjustments to portfolio components that are considered for may include ADRs and GDRs.
issuer weights will be made on a quarterly basis or inclusion are from the following S&P Issue Changes. General oversight
as necessary to ensure compliance with RIC responsibility for the S&P Indices,
requirements. When an iShares Fund’s Underlying Indexes: (1) The S&P/Toronto Stock
Index itself is not RIC compliant, the Advisor including overall policy guidelines and
generally employs a representative sampling 12 S&P determines a stock’s domicile based on a methodology, is handled by the S&P
indexing strategy (as described in the Funds’ number of criteria, including the headquarters of Global Index Committee (which does
prospectus) in order to achieve the Fund’s the issuer, its registration, its stock listing, its place not include employees of broker-dealers
investment objective. The Funds’ prospectus also of operations, the residence of the senior officers,
gives the Funds additional flexibility to comply and other criteria. Each region’s Index Committee or their affiliates). Maintenance of
with the requirements of the Code and other reviews all criteria before deciding on the domicile component investments, including
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regulatory requirements and to manage future of a stock. Telephone conversation between additions and deletions to these
corporate actions and index changes in smaller Michael Cavalier, Associate General Counsel, investments, is the responsibility of
markets by investing a percentage of fund assets in NYSE, and Florence Harmon, Senior Special
securities that are not included in the Fund’s Counsel, Division of Market Regulation, separate regional index committees
Underlying Index or in ADRs and GDRs Commission, on September 15, 2006 (‘‘September
representing such securities. 15 Telephone Conference’’). 13 September 15 Telephone Conference.

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Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices 55251

composed of S&P staff specialized in the offering) and the change is equal to or The S&P Global Industrials Index
various regional equity markets and, in greater than 5%, a float adjustment will measures the performance of companies
some cases with the assistance of local be implemented as soon as reasonably that Standard & Poor’s deems to be part
stock exchanges. Public announcements possible. of the industrials sector of the economy
of index changes as the result of Changes in the number of shares and that Standard & Poor’s believes are
committee decisions will generally be outstanding driven by corporate events important to global markets. Component
made two business days in advance of such as stock dividends, splits, and companies include manufacturers and
the anticipate effective date whenever rights issues will be adjusted on the ex- distributors of capital goods, providers
possible, although for exceptional date. Share changes of 5% or greater are of commercial services and supplies,
corporate events announcements may be implemented when they occur. All and transportation service providers. As
made earlier. share changes of less than 5% are of the close of business on January 31,
Index Maintenance. Maintaining the updated on a quarterly basis (third 2006, the Index was comprised of stocks
S&P Indices includes monitoring and Friday of March, June, September, and of companies in the following countries:
completing the adjustments for December or at the close of the Australia, Brazil, Canada, Chile,
company additions and deletions, share expiration of futures contracts). Denmark, France, Germany, Hong Kong,
changes, stock splits, stock dividends, Implementation of new additions, Ireland, Italy, Japan, Korea, Mexico,
and stock price adjustments due to deletions, and changes to the float Netherlands, Norway, Portugal,
restructuring and spin-offs. Share adjustment, due to corporate actions, Singapore, Spain, Sweden, Switzerland,
changes of less than 5% are only will be made available at the close of the United Kingdom and the United States.
updated on a quarterly basis on the third Friday in March, June, September The S&P Global Utilities Index
Friday near the end of the calendar and December. Generally, index changes measures the performance of companies
quarter. due to rebalancing are announced two that Standard & Poor’s deems to be part
A company will be removed from the days before the effective date by way of of the Utilities sector of the economy
S&P Indices as a result of mergers/ a news release posted on http:// and that Standard & Poor’s believes are
acquisitions, bankruptcy, restructuring, important to global markets. Component
www.spglobal.com.
or if it is no longer representative of its companies include providers of electric,
industry group. A company is removed The S&P Indices are calculated
gas or water utilities, or companies that
from the relevant Index as close as continuously and are available from
operate as independent producers and/
possible to the actual date on which the major data vendors. A current list of the
or distributors of power. As of the close
event occurred. A company can be Index components is attached as Exhibit
of business on January 31, 2006, the
removed from an Index because it no 3 to the NYSE’s filing.
Index was comprised of stocks of
longer meets current criteria for Index Descriptions companies in the following countries:
inclusion and/or is no longer Australia, Brazil, Canada, Chile,
representative of its industry group. All The S&P Global Consumer
Finland, France, Germany, Hong Kong,
replacement companies are selected Discretionary Index measures the
Italy, Japan, Portugal, Spain, United
based on the above component section performance of companies that Standard Kingdom, and the United States.
criteria. & Poor’s deems to be part of the The S&P Global Materials Index
When calculating index weights, consumer discretionary sector of the measures the performance of companies
individual constituents’ shares held by economy and that Standard & Poor’s that Standard & Poor’s deems to be part
governments, corporations, strategic believes are important to global markets. of the materials sector of the economy
partners, or other control groups are Component companies include and that Standard & Poor’s believes are
excluded from the company’s shares manufacturing and service companies. important to global markets. Component
outstanding. Shares owned by other As of the close of business on January companies include those companies
companies are also excluded regardless 31, 2006, the Index was comprised of engaged in a wide variety of
of whether they are index constituents. stocks of companies in the following commodity-related manufacturing. As of
In countries with regulated countries: Australia, Belgium, Canada, the close of business on January 31,
environments, where a foreign Chile, France, Germany, Hong Kong, 2006, the Index was comprised of stocks
investment limit exists at the sector or Italy, Japan, Korea, Mexico, of companies in the following countries:
company level, the constituent’s weight Netherlands, Singapore, Spain, Sweden, Australia, Belgium, Brazil, Canada,
will reflect either the foreign investment Switzerland, United Kingdom, and the Chile, Finland, France, Germany,
limit or the percentage float, whichever United States. Ireland, Japan, Korea, Luxembourg,
is the more restrictive. The S&P Global Consumer Staples Mexico, Netherlands, Portugal, Spain,
Once a year, the float adjustments will Index measures the performance of Sweden, Switzerland, Taiwan, United
be reviewed and potentially changed companies that Standard & Poor’s Kingdom, and the United States.
based on such review. Each company’s deems to be part of the consumer staples As of May 31, 2006, the iShares S&P
financial statements will be used to sector of the economy and that Standard Global Consumer Discretionary Sector
update the major shareholders’ & Poor’s believes are important to global Index’s top three holdings were Toyota
ownership for the float adjustments markets. Component companies include Motor Corp., Home Depot, Time Warner
calculation, as the Indexes are free float manufacturers and distributors of food, Inc.; the Index’s top three industries
adjusted, market capitalization weighted producers of non-durable household were Consumer Discretionary and Index
for each company’s shares. However, goods, and food and drug retailing components had a total market
during the course of the year, S&P also companies. As of the close of business capitalization of approximately $2.8
monitors each company’s Investable on January 31, 2006, the Index was trillion. The average total market
Weight Factor (IWF), which is S&P’s comprised of stocks of companies in the capitalization was approximately $14.6
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term for the mathematical float factor following countries: Australia, Belgium, billion. The 10 largest constituents
used to calculate the float adjustment. If Brazil, Canada, Chile, Germany, Japan, represented approximately 28.4% of the
a change in the IWF is caused by a Korea, Mexico, Netherlands, Norway, Index weight. The five highest weighted
major corporate action (i.e., Spain, Sweden, Switzerland, United stocks, which represented 18.2% of the
privatization, merger, takeover, or share Kingdom, and the United States. Index weight, had an average daily

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55252 Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices

trading volume in excess of 66.1 million As of May 31, 2006, the iShares S&P Fund invests pursuant to its investment
shares during the period April 1 through Global Utilities Sector Index’s top three objective, strategies and limitations.
May 31, 2006. 99.98% of the component holdings were E.On AG, Suez SA, RWE According to the Funds’ prospectus,
stocks traded at least 250,000 shares AG; the Index’s top three industries valuing the Fund’s investments using
monthly from December 2005 through were Utilities and Index components fair value pricing will result in using
May 2006. had a total market capitalization of prices for those investments that may
As of May 31, 2006, the iShares S&P approximately $1.2 trillion. The average differ from current market prices.
Global Consumer Staples Sector Index’s total market capitalization was Accordingly, fair value pricing could
top three holdings were Procter & approximately $16.9 billion. The 10 result in a difference between the prices
Gamble, Altria Group, Inc., Wal-Mart largest constituents represented used to calculate the Fund’s net asset
Stores; the Index’s top three industries approximately 41.5% of the Index value and the prices used by the Fund’s
were Consumer Staples and Index weight. The five highest weighted benchmark index, which, in turn, could
components had a total market stocks, which represented 25.0% of the result in a difference between the
capitalization of approximately $2.3 Index weight, had an average daily Fund’s performance and the
trillion. The average total market trading volume in excess of 47.8 million performance of the Fund’s benchmark
capitalization was approximately $23.5 shares during the period April 1 through index.
billion. The 10 largest constituents May 31, 2006. 100% of the component Because foreign markets may be open
represented approximately 48.3% of the stocks traded at least 250,000 shares on different days than the days during
Index weight. The five highest weighted monthly from December 2005 through which a shareholder may purchase the
stocks, which represented 34.6% of the May 2006. Fund’s shares, the value of the Fund’s
Index weight, had an average daily investments may change on days when
Additional information regarding the
trading volume in excess of 32.3 million shareholders are not able to purchase
Funds’ holdings is available at http://
shares during the period April 1 through the Fund’s shares.
www.ishares.com. The value of assets denominated in
May 31, 2006. 99.6% of the component
stocks traded at least 250,000 shares Determination of Net Asset Value foreign currencies is converted into U.S.
monthly from December 2005 through dollars using exchange rates deemed
IBT calculates the NAV for each Fund appropriate by BGFA as investment
May 2006.
As of May 31, 2006, the iShares S&P generally once daily Monday through advisor.14
Global Industrials Sector Index’s top Friday generally as of the regularly
scheduled close of business of the NYSE Issuance of Creation Unit Aggregations
three holdings were General Electric,
United Parcel Service, Siemens AG; the (normally 4 p.m. Eastern time) on each In General. Shares of the Funds (the
Index’s top three industries were day that the NYSE is open for trading, ‘‘iShares’’) will be issued on a
Industrials and Index components had a based on prices at the time of closing, continuous offering basis in groups of
total market capitalization of provided that (a) any assets or liabilities iShares, or multiples thereof. These
approximately $2.7 trillion. The average denominated in currencies other than ‘‘groups’’ of shares are called ‘‘Creation
total market capitalization was the U.S. dollar shall be translated into Unit Aggregations.’’ The Funds will
approximately $15.3 billion. The 10 U.S. dollars at the prevailing market issue and redeem iShares only in
largest constituents represented rates on the date of valuation as quoted Creation Unit Aggregations of 50,000
approximately 37.1% of the Index by one or more major banks or dealers iShares.15
weight. The five highest weighted that makes a two-way market in such As with other open-end investment
stocks, which represented 27.2% of the currencies (or a major market data companies, iShares will be issued at the
Index weight, had an average daily service provider based on quotations net asset value (‘‘NAV’’) per share next
trading volume in excess of 38.6 million received from such banks or dealers); determined after an order in proper
shares during the period April 1 through and (b) U.S. fixed-income assets may be form is received. The anticipated price
May 31, 2006. 99.65% of the component valued as of the announced closing time at which the iShares will initially trade
stocks traded at least 250,000 shares for trading in fixed-income instruments is approximately $50.
monthly from December 2005 through on any day that the Bond Market The NAV per share of the Funds is
May 2006. Association announces an early closing determined as of the close of the regular
As of May 31, 2006, the iShares S&P time. The NAV of each Fund is trading session on the Exchange on each
Global Materials Sector Index’s top calculated by dividing the value of the day that the Exchange is open. The
three holdings were BHP Billiton net assets of such Fund (i.e., the value Trust sells Creation Unit Aggregations of
Limited, Anglo American, Rio Tinto; the of its total assets less total liabilities) by the Funds only on business days at the
Index’s top three industries were the total number of outstanding shares next determined NAV of the Fund.
Materials and Index components had a of the Fund, generally rounded to the Creation Unit Aggregations generally
total market capitalization of nearest cent. In calculating a Fund’s will be issued by the Funds in exchange
approximately $1.6 trillion. The average NAV, a Fund’s investments are for the in-kind deposit of equity
total market capitalization was generally valued using market securities designated by the Advisor to
approximately $12.9 billion. The 10 valuations. In the event that current correspond generally to the price and
largest constituents represented market valuations are not readily yield performance of the Fund’s
approximately 30.7% of the Index available or such valuations do not Underlying Index (the ‘‘Deposit
weight. The five highest weighted reflect current market values, the Securities’’) and a specified cash
stocks, which represented 19.5% of the affected investments will be valued payment. Creation Unit Aggregations
Index weight, had an average daily using fair value pricing pursuant to the generally will be redeemed by the Fund
trading volume in excess of 66.5 million pricing policy and procedures approved in exchange for portfolio securities of
jlentini on PROD1PC65 with NOTICES

shares during the period April 1 through by the Board of Trustees. The frequency
14 The Fund utilizes foreign exchange rates of
May 31, 2006. 99.31% of the component with which a Fund’s investments are
major market data vendors, such as WM/Reuters.
stocks traded at least 250,000 shares valued using fair value pricing is September 15 Telephone Conference.
monthly from December 2005 through primarily a function of the types of 15 Each Creation Unit Aggregation will have an

May 2006. securities and other assets in which the estimated initial value of approximately $2,500,000.

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Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices 55253

the Fund (‘‘Fund Securities’’) and a next-announced Fund Deposit Unit Aggregations must deliver to the
specified cash payment. Fund Securities composition is made available. Fund (the ‘‘Creation List’’) and which a
received on redemption may not be The identity and number of shares of redeemer will receive from the Funds
identical to Deposit Securities deposited the Deposit Securities required for the (the ‘‘Redemption List’’). The Creation
in connection with creations of Creation Fund Deposit for each Fund will change List is identical to the list of the names
Unit Aggregations for the same day. from time to time. The composition of and the required numbers of shares of
All orders to purchase iShares in the Deposit Securities may change in each Deposit Security included in the
Creation Unit Aggregations must be response to adjustments to the current Fund Deposit.
placed through an Authorized weighting or composition of the In addition, just as the Balancing
Participant. An Authorized Participant Component Securities in the Underlying Amount is delivered by the purchaser of
must be either a ‘‘Participating Party,’’ Index. In addition, the Trust reserves Creation Unit Aggregations to the
i.e., a broker-dealer or other participant the right to permit or require the Funds, the Trust will also deliver to the
in the clearing process through the substitution of an amount of cash—i.e., redeeming beneficial owner in cash the
National Securities Clearing Corporation a ‘‘cash in lieu’’ amount—to be added to ‘‘Cash Redemption Payment.’’ The Cash
(‘‘NSCC’’) Continuous Net Settlement the Balancing Amount to replace any Redemption Payment on any given
System (the ‘‘Clearing Process’’), a Deposit Security that may not be business day will be an amount
clearing agency that is registered with available in sufficient quantity for calculated in the same manner as that
the SEC, or a Depository Trust Company delivery or that may not otherwise be for the Balancing Amount, although the
(‘‘DTC’’) participant, and in each case, eligible for transfer. The Trust also actual amounts may differ if the Fund
must enter into a Participant Agreement. reserves the right to permit or require a Securities received upon redemption are
The Funds impose a transaction fee in ‘‘cash in lieu’’ amount where the not identical to the Deposit Securities
connection with the issuance and delivery of the Deposit Security by the applicable for creations on the same
redemption of iShares to offset transfer Authorized Participant would be day. To the extent that the Fund
and other transaction costs. The restricted under the securities laws or Securities have a value greater than the
transaction fee in connection with the where the delivery of the Deposit NAV of iShares being redeemed, a cash
issuance and redemption of Creation Security to the Authorized Participant payment equal to the differential is
Unit Aggregations of the Funds are would result in the disposition of the required to be paid by the redeeming
estimated to be approximately between Deposit Security by the Authorized beneficial owner to the applicable Fund.
$2,200 and $8,800. Participant becoming restricted under The Trust may also make redemptions
In-Kind Deposit of Portfolio the securities laws, or in certain other in cash in lieu of transferring one or
Securities. Payment for Creation Unit situations. The adjustments described more Fund Securities to a redeemer if
Aggregations will be made by the above will reflect changes known to the the Trust determines, in its discretion,
purchasers generally by an in-kind Advisor on the date of announcement to that such method is warranted due to
deposit with the applicable Fund of the be in effect by the time of delivery of the unusual circumstances. An unusual
Deposit Securities together with an Fund Deposit, in the composition of the circumstance could arise, for example,
amount of cash (the ‘‘Balancing applicable Underlying Index or when a redeeming entity is restrained
Amount’’) specified by the Advisor in resulting from certain corporate actions. by regulation or policy from transacting
the manner described below. The in certain Fund Securities, such as the
Balancing Amount is an amount equal Redemption of iShares
presence of such Fund Securities on a
to the difference between (1) the NAV Creation Unit Aggregations of the redeeming investment banking firm’s
(per Creation Unit Aggregation) of the Funds will be redeemable at the NAV restricted list.
Fund and (2) the total aggregate market next determined after receipt of a
value (per Creation Unit Aggregation) of request for redemption. Creation Unit Availability of Information Regarding
the Deposit Securities (such value Aggregations of the Funds generally will iShares and the Underlying Index
referred to herein as the ‘‘Deposit be redeemed in-kind, together with a On each business day the list of
Amount’’). The Balancing Amount balancing cash payment (although, as names and amount of each security
serves the function of compensating for described below, Creation Unit constituting the current Deposit
differences, if any, between the NAV per Aggregations may sometimes be Securities of the Fund Deposit and the
Creation Unit Aggregation and that of redeemed for cash). The value of the Balancing Amount effective as of the
the Deposit Amount. The deposit of the Funds’ redemption payments on a previous business day, per outstanding
requisite Deposit Securities and the Creation Unit Aggregation basis will share of each Fund, will be made
Balancing Amount are collectively equal the NAV per the appropriate available. An amount per iShare
referred to herein as a ‘‘Fund Deposit.’’ number of iShares of the Funds. Owners representing the sum of the estimated
The Advisor will make available to the of iShares may sell their iShares in the Balancing Amount effective through and
market through the NSCC on each secondary market but must accumulate including the previous business day,
business day, prior to the opening of enough iShares to constitute a Creation plus the current value of the Deposit
trading on the Exchange (currently 9:30 Unit Aggregation in order to redeem Securities in U.S. dollars, on a per
a.m. Eastern Time), the list of the names through the Funds. Redemption orders iShare basis (the ‘‘Intra-day Optimized
and the required number of shares of must be placed by or through an Portfolio Value’’ or ‘‘IOPV’’) will be
each Deposit Security included in the Authorized Participant. calculated by an independent third
current Fund Deposit (based on Creation Unit Aggregations of the party that is a major market data vendor
information at the end of the previous Funds generally will be redeemable on (the ‘‘Value Calculator’’), such as
business day) for each Fund. The Fund any business day in exchange for Bloomberg L.P., every 15 seconds
Deposit will be applicable to the applicable Fund Securities and the Cash during the Exchange’s regular trading
jlentini on PROD1PC65 with NOTICES

relevant Fund (subject to any Redemption Payment (defined below) in hours and disseminated every 15
adjustments to the Balancing Amount, effect on the date a request for seconds on the Consolidated Tape.
as described below) in order to effect redemption is made. The Advisor will The IOPV reflects the current value of
purchases of Creation Unit Aggregations publish daily through NSCC the list of the Deposit Securities and the Balancing
of such Fund until such time as the securities which a creator of Creation Amount. The IOPV also reflects changes

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55254 Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices

in currency exchange rates between the Indexes once each trading day, based on make distributions on a more frequent
U.S. dollar and the applicable home closing prices in the relevant exchange basis to comply with the distribution
foreign currency.16 market, utilizing the WM/Reuters (or requirements of the Code and consistent
Since the Funds will utilize a other major market information vendor) with the Investment Company Act.
representative sampling strategy, the currency exchange rates. In each S&P Dividends and other distributions on
IOPV may not reflect the value of all Index, the prices used to calculate the iShares of the Funds will be distributed
securities included in the Underlying S&P Indices are the official exchange on a pro rata basis to beneficial owners
Indexes. In addition, the IOPV does not closing prices or those figures accepted of such iShares. Dividend payments will
necessarily reflect the precise as such. S&P reserves the right to use an be made through the Depository and the
composition of the current portfolio of alternative pricing source on any given DTC Participants to beneficial owners
securities held by the Funds at a day. then of record with amounts received
particular point in time. Therefore, the The NAV for the Fund will be from the Fund.
IOPV on a per Fund share basis calculated and disseminated daily. The The Trust currently does not intend to
disseminated during the Exchange’s Funds’ NAV will be calculated by IBT. make the DTC book-entry Dividend
trading hours should not be viewed as IBT will disseminate the information to Reinvestment Service (the ‘‘Service’’)
a real time update of the NAV of the BGI, SEI and others, including the available for use by beneficial owners
Funds, which is calculated only once a NYSE. The Funds’ NAV will be for reinvestment of their cash proceeds,
day. published in a number of places, but certain individual brokers may make
While the IOPV disseminated by the including, http://www.iShares.com and the Service available to their clients.
Exchange at 9:30 a.m. is expected to be on the Consolidated Tape. The Advisor The Statement of Additional
generally very close to the most recently for the Funds has informed the Information (‘‘SAI’’) will inform
calculated Fund NAV on a per Fund Exchange that the Funds will make the investors of this fact and direct
share basis, it is possible that the value NAV for the Funds available to all interested investors to contact such
of the portfolio of securities held by market participants at the same time. If investor’s broker to ascertain the
each Fund may diverge from the Deposit the NAV is not disseminated to all availability and a description of the
Securities values during any trading market participants at the same time, Service through such broker. The SAI
day. In such case, the IOPV will not the Exchange will halt trading in the will also caution interested beneficial
precisely reflect the value of each Shares of the Funds.17 owners that they should note that each
Fund’s portfolio. However, during the Closing prices of the Funds’ Deposit broker may require investors to adhere
trading day, the IOPV can be expected Securities are readily available from, as to specific procedures and timetables in
to closely approximate the value per applicable, the relevant exchanges, order to participate in the Service and
Fund share of the portfolio of securities automated quotation systems, published
such investors should ascertain from
for each Fund except under unusual their broker such necessary details. The
or other public sources in the relevant
circumstances (e.g., in the case of Funds acquired pursuant to the Service
country, or on-line information services
extensive rebalancing of multiple will be held by the beneficial owners in
such as Bloomberg or Reuters. The
securities in a Fund at the same time by the same manner and subject to the
exchange rate information required to
the Advisor). same terms and conditions, as for
The Exchange believes that convert such information into U.S.
original ownership of the Funds.
dissemination of the IOPV based on the dollars is also readily available in Beneficial owners of the Funds will
Deposit Securities provides additional newspapers and other publications and receive all of the statements, notices,
information regarding the Funds that is from a variety of on-line services. and reports required under the
not otherwise available to the public In addition, the Web site for the Trust, Investment Company Act and other
and is useful to professionals and http://www.iShares.com, which will be applicable laws. They will receive, for
investors in connection with Fund publicly accessible at no charge, will example, annual and semi-annual
shares trading on the Exchange or the contain the following information, (1) reports, written statements
creation or redemption of Fund shares. the prior business day’s NAV and the accompanying dividend payments,
There is an overlap in trading hours mid-point of the bid-ask price at the proxy statements, annual notifications
between the foreign and U.S. markets time of calculation of such NAV (‘‘Bid/ detailing the tax status of distributions,
with respect to the Funds. Therefore, Ask Price’’), and a calculation of the IRS Form 1099–DIVs, etc. Because the
the Value Calculator will update the premium or discount of such price Trust’s records reflect ownership of
applicable IOPV every 15 seconds to against such NAV; and (2) data in chart iShares by DTC only, the Trust will
reflect price changes in the applicable format displaying the frequency make available applicable statements,
foreign market or markets, and convert distribution of discounts and premiums notices, and reports to the DTC
such prices into U.S. dollars based on of the Bid/Ask Price against the NAV, Participants who, in turn, will be
the currency exchange rate. When the within appropriate ranges, for each of responsible for distributing them to the
foreign market or markets are closed but the four previous calendar quarters. beneficial owners.
U.S. markets are open, the IOPV will be Dividends and Distributions
updated every 15 seconds to reflect Other Issues
changes in currency exchange rates after Dividends are accrued daily from net Criteria for Initial and Continued
the foreign market closes. The IOPV will investment income and will be declared Listing. The Funds are subject to the
also include the applicable cash and paid to beneficial owners of record criteria for initial and continued listing
component for each Fund. at least annually by the Funds. of Investment Company Units in Section
In addition, there will be Distributions of realized securities 703.16 of the Manual. A minimum of
disseminated a value for the Underlying gains, if any, generally will be declared two Creation Units (100,000 iShares)
jlentini on PROD1PC65 with NOTICES

and paid once a year, but the Funds may will be required to be outstanding at the
16 The IOPV ticker is available at
start of trading. This minimum number
www.ishares.com and Intra-day IOPV is publicly 17 The Exchange will immediately contact the

available utilizing this ticker through various Commission staff to discuss measures that may be
of shares of each Fund required to be
financial Web sites such as http:// appropriate under the circumstances. September 15 outstanding at the start of trading will
finance.yahoo.com. Telephone Conference. be comparable to requirements that have

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Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices 55255

been applied to previously traded series calculated or disseminated or the NAV The minimum price variation for
of ICUs. is not disseminated to all market quoting will be $.01.
Prospectus Delivery. The Commission participants at the same time.19
has granted the Trust an exemption Due Diligence. The Information Memo 2. Statutory Basis
from certain prospectus delivery to members will note, for example, NYSE believes that the proposed rule
requirements under section 24(d) of the Exchange responsibilities including that change is consistent with section 6(b)(5)
Investment Company Act.18 Any before an Exchange member, member of the Act 22 requiring that an exchange
product description used in reliance on organization, or employee thereof have rules that are designed, among
a section 24(d) exemptive order will recommends a transaction in the Funds, other things, to prevent fraudulent and
comply with all representations made a determination must be made that the manipulative acts and practices, to
therein and all conditions thereto. The recommendation is in compliance with promote just and equitable principles of
Exchange, in an Information Memo to all applicable Exchange and Federal trade, to remove impediments to, and
Exchange members and member rules and regulations, including due perfect the mechanism of a free and
organizations, will inform members and diligence obligations under Exchange open market and, in general, to protect
member organizations, prior to Rule 405 (Diligence as to Accounts). investors and the public interest.
commencement of trading, of the Purchases and Redemptions in
prospectus or product description Creation Unit Size. In the Memo B. Self-Regulatory Organization’s
delivery requirements applicable to the referenced above, members and member Statement on Burden on Competition
Funds and will refer members and organizations will be informed that The Exchange does not believe that
member organizations to NYSE Rule procedures for purchases and the proposed rule change will impose
1100(b). There is not currently a product redemptions of shares of the Funds in any burden on competition that is not
description available for the Funds. The Creation Unit Size are described in the necessary or appropriate in furtherance
Information Memo will also advise Funds’ Prospectus and SAI 20 and that of the purposes of the Act.
members and member organizations that Funds’ shares are not individually C. Self-Regulatory Organization’s
delivery of a prospectus to customers in redeemable but are redeemable only in Statement on Comments on the
lieu of a product description would Creation Unit Size aggregations or Proposed Rule Change Received From
satisfy the requirements of Rule 1100(b). multiples thereof. Members, Participants or Others
Information Memo. The Exchange Surveillance. The Exchange will
will distribute an Information Memo to utilize its existing surveillance The Exchange has neither solicited
its members in connection with the procedures applicable to ICUs monitor nor received written comments on the
trading of the Funds. The Memo will trading of the shares of the Funds. proposed rule change.
discuss the special characteristics and Surveillance procedures applicable to III. Solicitation of Comments
risks of trading this type of security. trading in the proposed iShares are
Specifically, the Memo, among other comparable to those applicable to other Interested persons are invited to
things, will discuss what the Funds are, ICUs currently trading on the Exchange. submit written data, views and
how the Funds’ shares are created and The Exchange represents that these arguments concerning the foregoing,
redeemed, the requirement that surveillance procedures are adequate to including whether the proposed rule
members and member firms deliver a properly monitor the trading of the change is consistent with the Exchange
prospectus or product description to Funds.21 The Exchange’s current trading Act. Comments may be submitted by
investors purchasing shares of the surveillances focus on detecting any of the following methods:
Funds prior to or concurrently with the securities trading outside their normal Electronic Comments
confirmation of a transaction, applicable patterns. When such situations are
Exchange rules, dissemination detected, surveillance analysis follows • Use the Commission’s Internet
information, trading information and and investigations are opened, where comment form (http://www.sec.gov/
the applicability of suitability rules appropriate, to review the behavior of rules/sro.shtml); or
(including Exchange Rule 405). The all relevant parties for all relevant • Send e-mail to rule-
Memo will also discuss exemptive, no- trading violations. The Exchange may comments@sec.gov. Please include File
action and interpretive relief, if granted obtain trading information via the Number SR–NYSE–2006–60 on the
by the Commission from certain rules Intermarket Surveillance Group (‘‘ISG’’) subject line.
under the Act. from other exchanges who are members Paper Comments
Trading Halts. In order to halt the or affiliates of the ISG. For a list of the
trading of the Funds, the Exchange may • Send paper comments in triplicate
current members and affiliate members
consider, among other things, factors to Nancy M. Morris Secretary, Securities
of ISG, see http://www.isgportal.com.
such as the extent to which trading is Hours of Trading/Minimum Price and Exchange Commission, Station
not occurring in underlying security(s) Variation. The Funds will trade on the Place, 100 F Street, NE., Washington,
and whether other unusual conditions Exchange until 4:15 p.m. (Eastern time). DC 20549–1090.
or circumstances detrimental to the All submissions should refer to File
maintenance of a fair and orderly 19 Under such circumstances, the Exchange Number SR–NYSE–2006–60. This file
market are present. In addition, trading would immediately contact the Commission staff to number should be included on the
in the Funds’ shares is subject to trading
discuss appropriate measures that may be subject line if e-mail is used. To help the
appropriate under the circumstances. September 15 Commission process and review your
halts caused by extraordinary market Telephone Conference.
volatility pursuant to Exchange Rule 20 See Securities Exchange Act Release Nos.
comments more efficiently, please use
80B. The Exchange will halt trading in 44990 (October 25, 2001), 66 FR 56869 (November only one method. The Commission will
a Fund if the Index Value or IOPV 13, 2001) (SR–Amex–2001–45); 42748 (May 2, post all comments on the Commission’s
jlentini on PROD1PC65 with NOTICES

2000), 65 FR 30155 (May 10, 2000) (SR–Amex–98– Internet Web site (http://www.sec.gov/
applicable to such Fund is no longer 49); and 36947 (March 8, 1996), 61 FR 10606
(March 14, 1996) (SR–Amex–95–43).
rules/sro/shtml). Copies of the
18 See In the Matter of iShares, Inc., et al., 21 The Exchange states that it submitted such submission, all subsequent
Investment Company Act Release No. 25623 (June surveillance procedures to the Commission staff in
25, 2002). the past. September 15 Telephone Conference. 22 15 U.S.C. 78f(b)(5).

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55256 Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices

amendments, all written statements following issues, the Commission to deliver a prospectus or product
with respect to the proposed rule believes that the listing and trading of description to all investors (in
change that are filed with the the Funds’ shares satisfies established accordance with NYSE Rule 1100(b))
Commission, and all written standards. and highlight the characteristics of the
communications relating to the Funds. The memo will also remind
A. Fund Characteristics members of their suitability obligations,
proposed rule change between the
Commission and any person, other than The Commission believes that the including NYSE Rule 405 (Diligence as
those that may be withheld from the proposed Funds are reasonably to Accounts). Additionally, for example,
public in accordance with the designed to provide investors with an the information memo will also inform
provisions of 5 U.S.C. 552, will be investment vehicle that substantially members and member organizations that
available for inspection and copying in reflects in value the performance of the Funds’ shares are not individually
the Commission’s Public Reference respective Underlying Indexes and will redeemable, but are redeemable only in
Room. Copies of such filing will also be provide investors with an alternative to Creation-Unit-size aggregations or
available for inspection and copying at trading a range of securities on an multiples thereof as set forth in the
the principal office of the NYSE. All individual basis. Investors will be able Fund Prospectus and SAI. The
comments received will be posted to trade shares in the Fund continuously Commission believes that the disclosure
without change; the Commission does throughout the business day in included in the information memo is
not edit personal identifying secondary market transactions at appropriate and consistent with the Act.
information from submissions. You negotiated prices. Accordingly, the
C. Dissemination of Fund Information
should submit only information that proposed Fund will allow investors to:
you wish to make available publicly. All (1) Respond quickly to market changes With respect to pricing, once each
submissions should refer to File number through intra-day trading opportunities; day, the NAV for the Fund will be
SR–NYSE–2006–60 and should be (2) engage in hedging strategies similar calculated and disseminated by IBT, to
submitted on or before October 12, to those used by institutional investors; various sources, including the NYSE,
2006. and (3) reduce transaction costs for and made available on http://
trading a portfolio of securities. www.iShares.com and the Consolidated
IV. Commission’s Findings and Order The Commission also notes that the Tape. The Exchange represents that the
Granting Accelerated Approval of market capitalization and liquidity of NAV will be made available to all
Proposed Rule Change the underlying Indexes’ component market participants at the same time;
The Commission finds that the securities is also a deterrent to otherwise, the Exchange will halt
proposed rule change is consistent with manipulation of the Fund shares. trading in the Funds’ shares. Also,
the requirements of the Act and the Because each Fund’s Underlying Index during the Exchange’s regular trading
rules and regulations thereunder, is broad-based and well diversified, the hours, the IOPV Calculator will
applicable to a national securities Exchange represents that it does not determine and disseminate every 15
exchange.23 In particular, the believe that the Fund will be so highly seconds the IOPV for each Fund. The
Commission finds that the proposed concentrated such that it becomes a IOPV will reflect price changes in the
rule change is consistent with section surrogate for trading unregistered applicable foreign market or markets
6(b)(5) of the Act 24 and will promote foreign securities on the Exchange. and changes in currency exchange rates.
While the Commission believes that The Exchange also represents that the
just and equitable principles of trade,
these requirements should help to value of the underlying Indexes will be
and facilitate transactions in securities,
reduce concerns that the Funds could calculated and disseminated at least
and, in general, protect investors and
become a surrogate for trading in a every 15 seconds during the time the
the public interest.
single or a few unregistered stocks, if Funds’ shares trade on the Exchange. If
The Commission believes that the
the characteristics of the Funds, or their the IOPV and underlying Index values
NYSE’s proposal should advance the
underlying Indexes, changed materially are not so disseminated, the Exchange
public interest by providing investors
from the characteristics described the will halt trading in the Funds’ shares.
with increased flexibility in satisfying The Commission notes that a variety
their investment needs and by allowing Exchange,26 the Fund would not be in
of additional information about each
them to purchase and sell Fund shares compliance with the listing and trading
Fund will be readily available.
at negotiated prices throughout the standards approved herein, and the
Information with respect to recent NAV,
business day that generally track the Commission would expect the NYSE to
shares outstanding, estimated cash
price and yield performance of the file a proposed rule change pursuant to
amount and total cash amount per
Underlying Index. Rule 19b–4 of the Act, which must be
Creation Unit Aggregation will be made
Furthermore, the Commission approved to permit continued trading of available prior to the opening of the
believes that the proposed rule change the Funds’ shares. Exchange. In addition, the Web site for
raises no issues that have not been B. Disclosure the Trust, http://www.iShares.com,
previously considered by the which will be publicly accessible at no
Commission. The Fund is similar in The Exchange represents that it will
charge, will contain relevant
structure and operation to exchange- circulate an information memo detailing
information about the Funds and their
traded funds that the Commission has applicable prospectus and product
shares. Also, the closing prices of the
previously approved for listing and description delivery requirements. The
Fund’s Deposit Securities are available
trading on national securities exchanges memo will also discuss any exemptive,
from, as applicable, the relevant
under section 19(b)(2) of the Act.25 no-action and interpretive relief granted
exchanges, automated quotation
Further, with respect to each of the by the Commission from certain rules
systems, published or other public
under the Act. The memo also will
jlentini on PROD1PC65 with NOTICES

sources in the relevant country, or on-


23 In approving this proposal, the Commission has address NYSE members’ responsibility
considered its impact on efficiency, competition,
line information services, such as
and capital formation. 15 U.S.C. 78c(f). 26 Substitution of an underlying index or Bloomberg or Reuters. The exchange
24 15 U.S.C. 78f(b)(5).
significant alteration of the index methodology rate information required to convert
25 15 U.S.C. 78s(b)(2). described herein would be a material change. such information into U.S. dollars is

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Federal Register / Vol. 71, No. 183 / Thursday, September 21, 2006 / Notices 55257

also readily available in newspapers and by trading these products as soon as On August 31, 2006, the Exchange
other publications and from a variety of possible. filed Amendment No. 4.6 This order
on-line services. grants accelerated approval of
Based on the representations made in V. Conclusion
Amendment No. 4, and solicits
the NYSE proposal, the Commission It is therefore ordered, pursuant to comments from interested persons on
believes that pricing and other section 19(b)(2) of the Act, that the Amendment No. 4.
important information about the Fund is proposed rule change (SR–NYSE–2006–
adequate and consistent with the Act. 60) is hereby approved on an I. Description of the Proposal
accelerated basis.30 A. Fees for Manually Executed Linkage
D. Listing and Trading
For the Commission, by the Division of Orders
The Commission finds that adequate Market Regulation, pursuant to delegated
rules and procedures exist to govern the authority.31 NYSE Arca proposes to combine two
listing and trading of the Funds’ shares. J. Lynn Taylor, existing fees associated with certain
Fund shares will be deemed equity Assistant Secretary. Linkage Orders.7 Presently, the
securities subject to NYSE rules Exchange assesses on Linkage Orders a
[FR Doc. 06–7896 Filed 9–20–06; 8:45 am]
governing the trading of equity $0.21 transaction fee and a $0.05
BILLING CODE 8010–01–P
securities, including, among others, comparison fee.8 To simplify the
rules governing trading halts, Schedule, the Exchange proposes
responsibilities of the specialist, SECURITIES AND EXCHANGE combining these fees into one
account opening and customer COMMISSION transaction fee of $0.26 for Linkage
suitability requirements, and the Orders executed manually. This fee is
election of stop and stop limit orders. In [Release No. 34–54430; File No. SR– equal to the fee for manually executed
addition, the Exchange states that NYSEArca–2006–20] orders from broker-dealers.
iShares are subject to the criteria for
initial and continued listing of ICUs in Self-Regulatory Organizations; NYSE B. Fees for Electronically Executed
Section 703.16 of the NYSE Manual. Arca, Inc.; Notice of Filing and Order Linkage Orders
Granting Accelerated Approval to
E. Surveillance Amendment No. 4 to a Proposed Rule Under the current NYSE Arca
The Exchange represents that its Change Relating to the Exchange’s Schedule, electronically executed orders
surveillance procedures are adequate to Schedule of Fees and Charges from broker-dealers are charged $0.50
properly monitor the trading of the per contract (‘‘BD Electronic
September 12, 2006. Transaction Fee’’). The BD Electronic
Funds. The Exchange states that it is
able to obtain trading information from I. Introduction Transaction Fee was recently revised to
ISG from other exchanges that are combine a previously assessed
On May 17, 2006, NYSE Arca, Inc. transaction fee of $0.26 and a BD
members or affiliates of the ISG. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed Surcharge of $0.25.9 The current $0.50
F. Accelerated Approval with the Securities and Exchange BD Electronic Transaction Fee
Commission (‘‘Commission’’) pursuant represents a $0.01 reduction in the total
The Commission finds good cause,
to Section 19(b)(1) of the Securities fee for electronic executions of orders
pursuant to section 19(b)(2) of the Act,27
Exchange Act of 1934 (‘‘Act’’),1 and from broker-dealers. In Amendment No.
for approving the proposed rule change
Rule 19b–4 thereunder,2 the proposed 4, the Exchange proposes to modify its
prior to the thirtieth day after the date
rule change to amend the Trade Related Schedule to make clear that
of publication of notice in the Federal
Charges portion of its Schedule of Fees
Register. The Commission notes that the
and Charges (‘‘Schedule’’). On May 26,
proposal is consistent with the listing 46, not the instant proposed rule change. See e-mail
2006, the Exchange filed Amendment from Janet Angstadt, Acting General Counsel, NYSE
and trading standards in NYSE Rule
No. 1 to the proposed rule change. On Arca, to Timothy Fox, Special Counsel, Division of
703.16 (ICUs), and the Commission has
June 30, 2006, the Exchange filed Market Regulation, Commission, dated August 16,
previously approved similar products 2006. The Commission believes that the
Amendment No. 2 to the proposed rule
based on foreign indices.28 The Funds commenters’ concerns do not relate to the instant
are substantially identical in structure to change. On July 7, 2006, the Exchange proposed rule change and, as such, these letters are
other iShares Funds based on foreign filed Amendment No. 3 to the proposed not addressed in this order.
stock indexes, including the iShares rule change.3 The proposed rule change, 6 Amendment No. 4 was filed to reconcile the

as amended, was published for original filing, as amended, with the subsequent
S&P Global 1200 Index Fund, which has immediately effective rule filing, as discussed infra
an established and active trading history comment in the Federal Register on July note 9 and accompanying text. Amendment No. 4
on the NYSE and other exchanges.29 20, 2006.4 Two comment letters were replaces and supersedes the original filing and
The Commission does not believe that submitted in connection with this subsequent amendments in their entirety.
the proposed rule change, as amended, filing.5 7 ‘‘Linkage Orders’’ are immediate or cancel

orders containing certain information that are


raises novel regulatory issues. 30 15 routed through the Intermarket Linkage System
U.S.C. 78s(b)(2).
Consequently, the Commission believes 31 17 CFR 200.30–3(a)(12).
(‘‘Linkage’’). See Section 2(16) of the Plan for the
that it is appropriate to permit investors Purpose of Creating and Operating an Intermarket
1 15 U.S.C. 78s(b)(1).
Option Linkage (‘‘Linkage Plan’’). As used in this
to benefit from the flexibility afforded 2 17 CFR 240.19b–4.
approval order, the term, ‘‘Linkage Orders,’’ refers
3 See Form 19b–4 dated July 7, 2006 only to Principal Acting as Agent Orders and
27 15 U.S.C. 78s(b)(2). (‘‘Amendment No. 3’’). Amendment No. 3 replaced Principal Orders. See Sections 2(16)(a) and 2(16)(b)
28 See Securities Exchange Act Release Nos. and superseded the original filing and Amendments of the Linkage Plan.
44990 (October 25, 2001), 66 FR 56869 (November No. 1 and 2 in their entirety. 8 These fees are applicable through an Exchange

13, 2001) (SR–Amex–2001–45); 42748 (May 2, 4 See Securities Exchange Act Release No. 54130 Pilot Program due to expire on July 31, 2007. See
jlentini on PROD1PC65 with NOTICES

2000), 65 FR 30155 (May 10, 2000) (SR–Amex–98– (July 11, 2006), 71 FR 41305. Securities Exchange Act Release No. 54230 (July 27,
49); and 36947 (March 8, 1996), 61 FR 10606 5 See letter from Arthur J. Gross, Arthur J. Gross 2006), 71 FR 44757 (August 7, 2006) (SR–
(March 14, 1996) (SR–Amex–95–43). SP, dated August 9, 2006, and letter from Gennaro NYSEArca–2006–41).
29 See Securities Exchange Act Release No. 52178 J. Lettera, dated August 9, 2006. The Exchange 9 See Securities Exchange Act Release No. 54309

(July 29, 2005), 70 FR 46244 (August 9, 2005) (SR– believes that these commenters intended to address (August 11, 2006), 71 FR 48571 (August 21, 2006)
NYSE–2005–41) a separate proposed rule change, SR–NYSE–2006– (SR–NYSEArca–2006–25).

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