[Federal Register Volume 75, Number 248 (Tuesday, December 28, 2010)]
[Notices]
[Pages 81697-81701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32608]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63587; File No. SR-NYSEArca-2010-118]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to the Listing and Trading of the SiM
Dynamic Allocation Diversified Income ETF and SiM Dynamic Allocation
Growth Income ETF
December 21, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that, on December 15, 2010, NYSE Arca, Inc.
(``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change 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 list and trade the following Managed Fund
Shares under NYSE Arca Equities Rule 8.600: SiM Dynamic Allocation
Diversified Income ETF and SiM Dynamic Allocation Growth Income ETF.
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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade the following Managed Fund
Shares \3\ (``Shares'') under NYSE Arca Equities Rule 8.600: SiM
Dynamic Allocation Diversified Income ETF and SiM Dynamic Allocation
Growth Income ETF (each a ``Fund'' and, collectively, the
``Funds'').\4\ The Shares will be offered by AdvisorShares Trust (the
``Trust''), a statutory trust organized under the laws of the State of
Delaware and registered with the Commission as an open-end management
investment company.\5\ The investment advisor to the Funds is
AdvisorShares Investments, LLC (the ``Advisor''). Strategic Income
Management, LLC (``Sub-Advisor'' or ``SiM'') serves as investment sub-
advisor to the Funds. The Sub-Advisor is responsible for selecting the
Funds' investments according to the Funds' investment objectives,
policies and restrictions. Each of the Funds will periodically change
the composition of its portfolio to best meet its investment objective.
Foreside Fund Services, LLC (the ``Distributor'') is the principal
underwriter and distributor of the Funds' shares. The Bank of New York
Mellon Corporation serves as the administrator (``Administrator''),
custodian, transfer agent and fund accounting agent for the Funds.
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\3\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a) (``1940 Act'') organized as an
open-end investment company or similar entity that invests in a
portfolio of securities selected by its investment advisor
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Investment Company Units,
listed and traded on the Exchange under NYSE Arca Equities Rule
5.2(j)(3), seeks to provide investment results that correspond
generally to the price and yield performance of a specific foreign
or domestic stock index, fixed income securities index or
combination thereof.
\4\ The Commission previously approved listing and trading on
the Exchange of actively-managed funds under Rule 8.600. See, e.g.,
Securities Exchange Act Release Nos. 57801 (May 8, 2008), 73 FR
27878 (May 14, 2008) (SR-NYSEArca-2008-31) (order approving Exchange
listing and trading of twelve actively-managed funds of the
WisdomTree Trust); 59826 (April 28, 2009), 74 FR 20512 (May 4, 2009)
(SR-NYSEArca-2009-22) (order approving Exchange listing and trading
of Grail American Beacon Large Cap Value ETF); 60460 (August 7,
2009), 74 FR 41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order
approving Exchange listing and trading of Dent Tactical ETF).
\5\ The Trust is registered under the 1940 Act. On October 14,
2010, the Trust filed with the Commission Post-Effective Amendment
No. 13 to Form N-1A under the Securities Act of 1933 (15 U.S.C.
77a), and under the 1940 Act relating to the Funds (File Nos. 333-
157876 and 811-22110) (``Registration Statement''). The description
of the operation of the Trust and the Funds herein is based on the
Registration Statement.
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Each Fund is an actively-managed exchange-traded fund and thus does
not seek to replicate the performance of a specified index, but uses an
active investment strategy to meet its investment objective.
Accordingly, the Sub-Advisor manages each Fund's portfolio in
accordance with each Fund's investment objective.
Commentary .06 to Rule 8.600 provides that, if the investment
adviser to the Investment Company issuing Managed Fund Shares is
affiliated with a broker-dealer, such investment adviser shall erect a
``fire wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such Investment Company portfolio.\6\ In addition,
Commentary .06 further requires that personnel who make decisions on
the open-end fund's portfolio composition must be subject to procedures
designed to prevent the use and dissemination of material nonpublic
information regarding the open-end fund's portfolio. Commentary .06 to
Rule 8.600 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca
Equities Rule 5.2(j)(3); however, Commentary .06 in connection with the
establishment of a ``fire wall'' between the investment adviser and the
broker-dealer reflects the applicable open-end fund's portfolio, not an
underlying benchmark index, as is the case with index-based funds.
Neither the Advisor nor the Sub-Advisor is affiliated with a broker-
dealer.\7\ In the
[[Page 81698]]
event (a) the Advisor or the Sub-Advisor becomes newly affiliated with
a broker-dealer, or (b) any new advisor or sub-advisor becomes
affiliated with a broker-dealer, they will be required to implement a
fire wall with respect to such broker-dealer regarding access to
information concerning the composition and/or changes to a portfolio,
and will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio.
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\6\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Advisor and Sub-Advisor are subject to the
provisions of Rule 204A-1 under the Advisers Act relating to codes
of ethics. This Rule requires investment advisers to adopt a code of
ethics that reflects the fiduciary nature of the relationship to
clients as well as compliance with other applicable securities laws.
Accordingly, procedures designed to prevent the communication and
misuse of non-public information by an investment adviser must be
consistent with Rule 204A-1 under the Advisers Act.
\7\ With respect to the Funds, the Exchange represents that the
Advisor, as the investment advisor of the Funds, and SiM as the Sub-
Advisor, and their related personnel, are subject to Investment
Advisers Act Rule 204A-1. This Rule specifically requires the
adoption of a code of ethics by an investment advisor to include, at
a minimum: (i) Standards of business conduct that reflect the
firm's/personnel fiduciary obligations; (ii) provisions requiring
supervised persons to comply with applicable federal securities
laws; (iii) provisions that require all access persons to report,
and the firm to review, their personal securities transactions and
holdings periodically as specifically set forth in Rule 204A-1; (iv)
provisions requiring supervised persons to report any violations of
the code of ethics promptly to the chief compliance officer
(``CCO'') or, provided the CCO also receives reports of all
violations, to other persons designated in the code of ethics; and
(v) provisions requiring the investment advisor to provide each of
the supervised persons with a copy of the code of ethics with an
acknowledgement by said supervised persons. In addition, Rule
206(4)-7 under the Advisers Act makes it unlawful for an investment
advisor to provide investment advice to clients unless such
investment advisor has (i) adopted and implemented written policies
and procedures reasonably designed to prevent violation, by the
investment advisor and its supervised persons, of the Advisers Act
and the Commission rules adopted thereunder; (ii) implemented, at a
minimum, an annual review regarding the adequacy of the policies and
procedures established pursuant to subparagraph (i) above and the
effectiveness of their implementation; and (iii) designated an
individual (who is a supervised person) responsible for
administering the policies and procedures adopted under subparagraph
(i) above.
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SiM Dynamic Allocation Diversified Income ETF
According to the Registration Statement, the Fund will seek to
provide total return, consisting primarily of reinvestment and growth
of income with some long-term capital appreciation. The Fund is
considered a ``fund-of-funds'' that will seek to achieve its investment
objective by primarily investing in other exchange-traded funds
(``ETFs'') that offer diversified exposure to various investment types
(equities, bonds, etc.), global regions, countries, styles (market
capitalization, value, growth, etc.) or sectors, and exchange-traded
products (``ETPs,'' and, together with ETFs, the ``Underlying ETPs'')
including, but not limited to, exchange-traded notes (``ETNs''),
exchange-traded currency trusts and closed-end funds.\8\
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\8\ Underlying ETPs include Investment Company Units (as
described in NYSE Arca Equities Rule 5.2(j)(3)); Index-Linked
Securities (as described in NYSE Arca Equities Rule 5.2(j)(6));
Portfolio Depositary Receipts (as described in NYSE Arca Equities
Rule 8.100); Trust Issued Receipts (as described in NYSE Arca
Equities Rule 8.200); Commodity-Based Trust Shares (as described in
NYSE Arca Equities Rule 8.201); Currency Trust Shares (as described
in NYSE Arca Equities Rule 8.202); Commodity Index Trust Shares (as
described in NYSE Arca Equities Rule 8.203); Trust Units (as
described in NYSE Arca Equities Rule 8.500); Managed Fund Shares (as
described in NYSE Arca Equities Rule 8.600), and closed-end funds.
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The Fund will seek to offer the potential for total return from a
high level of income and a low level of capital growth, with exposure
to a low level of principal risk. The Fund through its investments in
the Underlying ETPs generally will invest at least 60% of its net
assets in domestic and international fixed income funds.
The Fund will allocate its assets among Underlying ETPs in
accordance with the Sub-Advisor's outlook for the economy, the
financial markets and the relative market valuations of the Underlying
ETPs. The Fund will sell interests or reduce investment exposure among
market segments or Underlying ETPs, if appropriate, when the Sub-
Advisor's fundamental and quantitative factors indicate a low relative
strength of such market segments and that such market segments are
likely to underperform the market as a whole.
According to the Registration Statement, under normal market
conditions, the Fund's portfolio will generally:
Invest up to 85% of its assets in Underlying ETPs that
hold fixed-income securities as well as cash equivalents;
Not invest more than 40% of its net assets in Underlying
ETPs that primarily hold equity securities; and
Invest up to 20% of its assets in any single Underlying
ETP.
The Fund's portfolio may temporarily exceed these percentage ranges
for short periods without notice, and the Sub-Advisor, due to certain
market conditions, may alter the percentage ranges when it deems
appropriate.
SiM Dynamic Allocation Growth Income ETF
According to the Registration Statement, the Fund will seek to
provide total return, consisting primarily of long term capital
appreciation with some reinvestment and growth of income. The Fund is
considered a ``fund-of-funds'' that will seek to achieve its investment
objective by primarily investing in Underlying ETPs that offer
diversified exposure to various investment types (equities, bonds,
etc.), global regions, countries, styles (market capitalization, value,
growth, etc.) or sectors, and ETPs including, but not limited to, ETNs,
exchange-traded currency trusts and closed-end funds.\9\
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\9\ See note 7 supra [sic].
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In general, the Fund will seek to offer investors the potential for
total return from a low to medium level of income and a medium to high
level of capital growth, while exposing them to a medium to high level
of principal risk. The Fund, through its investments in the Underlying
ETPs, generally will invest at least 60% of its net assets in domestic
and international equity funds.
The Fund will allocate its assets among Underlying ETPs in
accordance with the Sub-Advisor's outlook for the economy, the
financial markets and the relative market valuations of the Underlying
ETPs. The Fund will sell interests or reduce investment exposure among
market segments or Underlying ETPs when the Sub-Advisor's fundamental
and quantitative factors indicate a low relative strength of such
market segments and that such market segments are likely to
underperform the market as a whole.
Under normal market conditions, the Fund's portfolio will
generally:
Invest up to 85% of its assets in Underlying ETPs that
hold equity securities as well as cash equivalents;
Not invest more than 40% of its net assets in Underlying
ETPs that primarily hold fixed income securities; and
Invest up to 20% of its assets in any single Underlying
ETP.
The Fund's portfolio may temporarily exceed these percentage ranges
for short periods without notice, and the Sub-Advisor, due to certain
market conditions, may alter the percentage ranges when it deems
appropriate.
Other Investments
The Funds and the Underlying ETPs may invest in equity securities
representing ownership interests in a company or partnership and that
consist of common stocks, preferred stocks, warrants to acquire common
stock, securities convertible into common stock, and investments in
master limited partnerships.\10\ The Funds may enter into repurchase
agreements with financial institutions, which may be deemed to be
loans. The Funds may enter into reverse repurchase agreements as part
of the Funds' investment strategy.
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\10\ The Funds will hold only equity securities traded in the
U.S. on registered exchanges.
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The Funds may invest in U.S. government securities and in U.S.
Treasury zero-coupon bonds. The Funds may invest in shares of real
estate investment trusts (``REITs''), which are pooled investment
vehicles which invest primarily in real estate or real estate related
loans. To respond to adverse market, economic, political or other
conditions, the Funds may invest 100% of their total assets, without
[[Page 81699]]
limitation, in high-quality short-term debt securities and money market
instruments.
The Funds may not (i) with respect to 75% of its total assets,
purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or
shares of investment companies) if, as a result, more than 5% of its
total assets would be invested in the securities of such issuer; or
(ii) acquire more than 10% of the outstanding voting securities of any
one issuer. The Funds may not invest 25% or more of total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry or group of industries. The Funds will
not invest 25% or more of total assets in any investment company that
so concentrates.
Underlying ETPs will be listed on a national securities exchange.
Except for Underlying ETPs that may hold non-U.S. issues, the Funds
will not otherwise invest in non-U.S. issues.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Equities Rule 8.600. The Exchange represents
that, for initial and/or continued listing, the Funds will be in
compliance with Rule 10A-3 \11\ under the Exchange Act, as provided by
NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares for each Fund
will be outstanding at the commencement of trading on the Exchange. The
Exchange will obtain a representation from the issuer of the Shares
that the net asset value (``NAV'') and the Disclosed Portfolio will be
made available to all market participants at the same time.
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\11\ 17 CFR 240.10A-3.
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Creation and Redemption of Shares
The Funds will offer and issue shares at NAV only in aggregated
lots of 50,000 or more shares (each a ``Creation Unit'' or a ``Creation
Unit Aggregation''), generally in exchange for: (i) A basket of
portfolio securities (the ``Deposit Securities''); and (ii) an amount
of cash (the ``Cash Component''). Together, the Deposit Securities and
the Cash Component constitute the ``Fund Deposit.'' Shares are
redeemable only in Creation Unit Aggregations, and, generally, in
exchange for portfolio securities and a specified cash payment.
Creations or redemptions of Shares will be effected by or through an
Authorized Participant, as described in the Registration Statement, or
a Depository Trust Company participant.
The Administrator, through the National Securities Clearing
Corporation (``NSCC''), will make available on each Business Day,\12\
immediately prior to the opening of business on the NYSE, the list of
the names and the required number of shares of each Deposit Security to
be included in the current Fund Deposit (based on information at the
end of the previous Business Day) for a Fund. The identity and number
of shares of the Deposit Securities required for a Fund Deposit for a
Fund will change as rebalancing adjustments and corporate action events
are reflected from time to time by the Sub-Advisor with a view to the
investment objective of a Fund.\13\
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\12\ A ``Business Day'' with respect to the Funds is any day on
which the New York Stock Exchange (``NYSE'') is open for business.
\13\ Terms relating to the Trust and the Shares referred to, but
not defined, herein are defined in the Registration Statement.
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In addition to the list of names and numbers of securities
constituting the current Deposit Securities of a Fund Deposit, the
Administrator, through the NSCC, also will make available on each
Business Day, the estimated Cash Component, effective through and
including the previous Business Day, per outstanding Creation Unit of a
Fund.
Net Asset Value
According to the Registration Statement, the NAV per Share of each
Fund will be computed by dividing the value of the net assets of such
Fund (i.e., the value of its total assets less total liabilities) by
the total number of Shares of the Fund outstanding, rounded to the
nearest cent. Expenses and fees, including without limitation, the
management, administration and distribution fees, will be accrued daily
and taken into account for purposes of determining NAV. The NAV per
Share for the Funds will be calculated by the Administrator and
determined as of the close of the regular trading session on the NYSE
Arca (ordinarily 4 p.m., Eastern Time) on each day that the Exchange is
open.
In computing each Fund's NAV, each Fund's securities holdings will
be valued based on their last readily available market price. Price
information on listed securities is taken from the exchange where the
security is primarily traded. Securities regularly traded in an over-
the-counter market are valued at the latest quoted sales price on the
primary exchange or national securities market on which such securities
are traded. Securities not listed on an exchange or national securities
market, or securities in which there was no last reported sales price,
are valued at the most recent bid price. Other portfolio securities and
assets for which market quotations are not readily available will be
valued based on fair value as determined in good faith by the Sub-
Advisor in accordance with procedures adopted by the Funds' Board of
Trustees.
Availability of Information
The Funds' Web site (http://www.advisorshares.com), which will be
publicly available prior to the public offering of Shares, will include
a form of the Prospectus for the Funds that may be downloaded. The
Funds' Web site will include additional quantitative information
updated on a daily basis, including, for the Funds, (1) daily trading
volume, the prior business day's reported closing price, NAV and mid-
point of the bid/ask spread at the time of calculation of such NAV (the
``Bid/Ask Price''),\14\ and a calculation of the premium and discount
of the Bid/Ask Price against the NAV, and (2) data in chart format
displaying the frequency distribution of discounts and premiums of the
daily Bid/Ask Price against the NAV, within appropriate ranges, for
each of the four previous calendar quarters. On each business day,
before commencement of trading in Shares in the Core Trading Session on
the Exchange, the Funds will disclose on their Web site the Disclosed
Portfolio as defined in NYSE Arca Equities Rule 8.600(c)(2) that will
form the basis for the Funds' calculation of NAV at the end of the
business day.\15\
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\14\ The Bid/Ask Price of the Funds will be determined using the
highest bid and the lowest offer on the Exchange as of the time of
calculation of the Funds' NAV. The records relating to Bid/Ask
Prices will be retained by the Funds and their service providers.
\15\ Under accounting procedures followed by the Funds, trades
made on the prior business day (``T'') will be booked and reflected
in NAV on the current business day (``T+1''). Accordingly, the Funds
will be able to disclose at the beginning of the business day the
portfolio that will form the basis for the NAV calculation at the
end of the business day.
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On a daily basis, the Advisor will disclose for each portfolio
security or other financial instrument of the Funds the following
information: Ticker symbol (if applicable), name of security or
financial instrument, number of shares or dollar value of financial
instruments held in the portfolio, and percentage weighting of the
security or financial instrument in the portfolio.
In addition, a basket composition file, which includes the security
names and share quantities required to be delivered in exchange for
Fund shares, together with estimates and actual cash components, will
be publicly disseminated daily prior to the opening
[[Page 81700]]
of the NYSE via the NSCC. The basket represents one Creation Unit of
the Funds. The Web site information will be publicly available at no
charge.
Investors can also obtain the Trust's Statement of Additional
Information (``SAI''), the Funds' Shareholder Reports, and its Form N-
CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder
Reports are available free upon request from the Trust, and those
documents and the Form N-CSR and Form N-SAR may be viewed on-screen or
downloaded from the Commission's Web site at http://www.sec.gov.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding 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 Consolidated Tape Association (``CTA'') high-speed
line. Information regarding market price and trading volume of the
Underlying ETPs will be continually available on a real-time basis
throughout the day from major market data vendors. Last sale and
closing price information for Underlying ETPs will be available on the
Web site of the national securities exchange on which such securities
are listed or through major market data vendors. In addition, the
Portfolio Indicative Value, as defined in NYSE Arca Equities Rule
8.600(c)(3), will be disseminated by one or more major market data
vendors at least every 15 seconds during the Core Trading Session. The
dissemination of the Portfolio Indicative Value, together with the
securities and/or financial instruments comprising the Disclosed
Portfolio, will allow investors to determine the value of the
underlying portfolio of each of the Funds on a daily basis and to
provide a close estimate of that value throughout the Core Trading
Session.
Additional information regarding the Trust and the Shares,
including investment strategies, risks, creation and redemption
procedures, fees, portfolio holdings disclosure policies, distributions
and taxes is included in the Registration Statement.
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 of the Funds.\16\ Trading in Shares of the Funds
will be halted if the circuit breaker parameters in NYSE Arca Equities
Rule 7.12 have been reached. Trading also may 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 securities and/or the
financial instruments comprising the Disclosed Portfolio of the Funds;
or (2) whether other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present. Trading in
the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D),
which sets forth circumstances under which Shares of the Funds may be
halted.
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\16\ See NYSE Arca Equities Rule 7.12, Commentary .04.
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Trading Rules
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. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern Time in
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late
Trading Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price
variation (``MPV'') for quoting and entry of orders in equity
securities traded on the NYSE Arca Marketplace is $0.01, with the
exception of securities that are priced less than $1.00 for which the
MPV for order entry is $0.0001.
Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (which include Managed
Fund 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 Intermarket
Surveillance Group (``ISG'') from other exchanges that are members of
ISG, including those exchanges trading the Underlying ETPs and other
securities held by the Funds, described above under ``Other
Investments''.\17\
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\17\ For a list of the current members of ISG, see http://www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio for the Funds may trade on markets that are
members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
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In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit (``ETP'') Holders 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 procedures for purchases and redemptions of Shares
in Creation Unit aggregations (and that Shares are not individually
redeemable); (2) NYSE Arca Equities Rule 9.2(a), 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; (3) the risks
involved in trading the Shares during the Opening and Late Trading
Sessions when an updated Portfolio Indicative Value will not be
calculated or publicly disseminated; (4) how information regarding the
Portfolio Indicative Value is disseminated; (5) 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 (6) trading information.
In addition, the Bulletin will reference that the Funds are subject
to various fees and expenses described in the Registration Statement.
The Bulletin will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Exchange Act.
The Bulletin will also disclose that the NAV for the Shares will be
calculated after 4 p.m. Eastern Time each trading day.
2. Statutory Basis
The basis under the Exchange Act for this proposed rule change is
the requirement under Section 6(b)(5) \18\ that an exchange have rules
that are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of
[[Page 81701]]
trade, to remove impediments to, and perfect the mechanism of a free
and open market and, in general, to protect investors and the public
interest. The Exchange believes that the proposed rule change will
facilitate the listing and trading of an additional type of actively
managed exchange-traded product that will enhance competition among
market participants, to the benefit of investors and the marketplace.
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\18\ 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
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate 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 or disapprove the 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 protected]. Please include
File Number SR-NYSEArca-2010-118 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2010-118. 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 Web site
viewing and printing 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
publicly available. All submissions should refer to File Number SR-
NYSEArca-2010-118 and should be submitted on or before January 18,
2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-32608 Filed 12-27-10; 8:45 am]
BILLING CODE 8011-01-P