Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Accelerated Approval of Proposed Rule Change Relating to the Listing and Trading of Shares of Twelve Actively Managed Exchange-Traded Funds of the WisdomTree Trust, 27878-27882 [E8-10724]
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27878
Federal Register / Vol. 73, No. 94 / Wednesday, May 14, 2008 / Notices
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,13 in general, and
furthers the objectives of section 6(b)(5)
of the Act,14 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system. The Exchange believes that the
proposed rules will facilitate the listing
and trading of additional types of
exchange-traded products that will
enhance competition among market
participants, to the benefit of investors
and the marketplace. In addition, the
Exchange believes that the listing and
trading criteria set forth in the proposed
rules are intended to protect investors
and the public interest.
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
The Exchange states that written
comments on the proposed rule change
were neither solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission will:
A. By order approve such proposed
rule change; or
B. Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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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:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–57801; File No. SR–
NYSEArca–2008–31]
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2008–039 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
14 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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May 8, 2008.
I. Introduction
On April 4, 2008, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’), through
its wholly owned subsidiary, NYSE
Arca Equities, Inc. (‘‘NYSE Arca
All submissions should refer to File
Equities’’), filed with the Securities and
Number SR–NASDAQ–2008–039. This
Exchange Commission (‘‘Commission’’),
file number should be included on the
pursuant to section 19(b)(1) of the
subject line if e-mail is used. To help the Securities Exchange Act of 1934
Commission process and review your
(‘‘Act’’)1 and Rule 19b–4 thereunder,2 a
comments more efficiently, please use
proposed rule change to list and trade
only one method. The Commission will the shares of twelve actively managed
post all comments on the Commission’s exchange-traded funds of the
Internet Web site (https://www.sec.gov/
WisdomTree Trust (‘‘Trust’’) pursuant to
rules/sro.shtml). Copies of the
NYSE Arca Equities Rule 8.600
submission, all subsequent
(Managed Fund Shares). The proposed
amendments, all written statements
rule change was published for comment
with respect to the proposed rule
in the Federal Register on April 21,
change that are filed with the
2008 for a 15-day comment period.3 The
Commission, and all written
Commission received no comments on
communications relating to the
the proposal. This order approves the
proposed rule change between the
proposed rule change on an accelerated
Commission and any person, other than basis.
those that may be withheld from the
II. Description of the Proposal
public in accordance with the
provisions of 5 U.S.C. 552, will be
The Exchange proposes to list and
available for inspection and copying in
trade the shares (‘‘Shares’’) of the
the Commission’s Public Reference
following twelve actively managed
Room, 100 F Street, NE., Washington,
exchange-traded funds of the Trust
DC 20549, on official business days
pursuant to NYSE Arca Equities Rule
between the hours of 10 a.m. and 3 p.m. 8.600 (Managed Fund Shares): (1)
Copies of the filing also will be available WisdomTree U.S. Current Income Fund
for inspection and copying at the
(‘‘Current Income Fund’’); (2)
principal office of the Exchange. All
WisdomTree Dreyfus Australian Dollar
comments received will be posted
Fund; (3) WisdomTree Dreyfus Brazilian
without change; the Commission does
Real Fund; (4) WisdomTree Dreyfus
not edit personal identifying
British Pound Sterling Fund; (5)
information from submissions. You
WisdomTree Dreyfus Canadian Dollar
should submit only information that
Fund; (6) WisdomTree Dreyfus Chinese
you wish to make available publicly. All Yuan Fund; (7) WisdomTree Dreyfus
submissions should refer to File
Euro Fund; (8) WisdomTree Dreyfus
Number SR–NASDAQ–2008–039 and
Indian Rupee Fund; (9) WisdomTree
should be submitted on or before June
Dreyfus Japanese Yen Fund; (10)
4, 2008.
WisdomTree Dreyfus New Zealand
Dollar Fund; (11) WisdomTree Dreyfus
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
South African Rand Fund; and (12)
authority.15
WisdomTree Dreyfus South Korean
Won Fund (‘‘International Currency
Florence E. Harmon,
Income Funds,’’ and together with the
Deputy Secretary.
BILLING CODE 8010–01–P
13 15
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Accelerated
Approval of Proposed Rule Change
Relating to the Listing and Trading of
Shares of Twelve Actively Managed
Exchange-Traded Funds of the
WisdomTree Trust
PO 00000
Fmt 4703
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 57670
(April 15, 2008), 73 FR 21397.
2 17
CFR 200.30–3(a)(12).
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Federal Register / Vol. 73, No. 94 / Wednesday, May 14, 2008 / Notices
Current Income Fund, collectively, the
‘‘Funds’’).
The Exchange proposes to list and
trade the Shares of the Funds pursuant
to NYSE Arca Equities Rule 8.600,
which governs the listing and trading of
Managed Fund Shares on the
Exchange.4 Each Fund will be an
actively managed exchange-traded fund.
The Shares will be offered by the Trust,
which was established as a Delaware
statutory trust on December 15, 2005
and is registered with the Commission
as an investment company.5
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Description of the Funds and the Shares
WisdomTree Asset Management, Inc.
(‘‘WisdomTree Asset Management’’) is
the investment adviser to each Fund.6
The Exchange represents that
WisdomTree Asset Management is not
affiliated with any broker-dealer. Mellon
Capital Management serves as the subadviser for the Current Income Fund.
The Dreyfus Corporation serves as the
sub-adviser to each International
Currency Income Fund. The Bank of
New York is the administrator,
custodian, and transfer agent for each
Fund. ALPS Distributors, Inc. serves as
the distributor for the Funds.7
4 ‘‘Managed Fund Shares’’ are securities that: (1)
Represent an interest in a registered investment
company (‘‘Investment Company’’) organized as an
open-end management investment company or
similar entity, that invests in a portfolio of
securities selected by the Investment Company’s
investment adviser consistent with the Investment
Company’s investment objectives and policies; (2)
are issued in a specified aggregate minimum
number in return for a deposit of a specified
portfolio of securities and/or a cash amount with a
value equal to the next determined net asset value
(‘‘NAV’’); and (3) when aggregated in the same
specified minimum number, may be redeemed at a
holder’s request, which holder will be paid a
specified portfolio of securities and/or cash with a
value equal to the next determined NAV. See NYSE
Arca Equities Rule 8.600(c)(1) (defining Managed
Fund Shares). See also Securities Exchange Act
Release No. 57619 (April 4, 2008), 73 FR 19544
(April 10, 2008) (SR–NYSEArca–2008–25)
(approving, among other things, rules permitting
the listing and trading of Managed Fund Shares).
5 See Post-Effective Amendment No. 14 to
Registration Statement on Form N–1A for the Trust
(File Nos. 333–132380 and 811–21864)
(‘‘Registration Statement’’).
6 WisdomTree Investments, Inc. (‘‘WisdomTree
Investments’’) is the parent company of
WisdomTree Asset Management.
7 The Exchange states that the Trust has received
and been granted by Commission order certain
exemptive relief under the Investment Company
Act of 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’). In
compliance with Commentary .05 to NYSE Arca
Equities Rule 8.600, which applies to Managed
Fund Shares based on an international or global
portfolio, the Trust’s application for exemptive
relief under the 1940 Act states that the Funds will
comply with the federal securities laws in accepting
securities for deposits and satisfying redemptions
with redemption securities, including that the
securities accepted for deposits and the securities
used to satisfy redemption requests are sold in
transactions that would be exempt from registration
under the Securities Act of 1933.
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The Current Income Fund. The
Current Income Fund seeks to earn
current income while preserving capital
and maintaining liquidity by investing
primarily in very short term, highquality money market securities
denominated in U.S. dollars. Eligible
investments include commercial paper,
time deposits and certificates of
deposits, asset-backed securities,
government bills, government notes,
corporate notes, and repurchase
agreements. The Current Income Fund
intends to maintain an average portfolio
maturity of 90 days or less and will not
purchase any money market security
with a remaining maturity of more than
397 calendar days.
The International Currency Income
Funds. Each of the WisdomTree Dreyfus
Australian Dollar Fund, British Pound
Sterling Fund, Canadian Dollar Fund,
Euro Fund, and Japanese Yen Fund
seeks (1) to earn current income
reflective of money market rates
available to foreign investors in the
specified country or region, and (2) to
maintain liquidity and preserve capital
measured in the currency of the
specified country or region. Each of
these Funds intends to invest primarily
in very short term, investment grade
money market securities denominated
in the non-U.S. currency specified in its
name. Eligible investments include
short-term securities issued by non-U.S.
governments, agencies, or
instrumentalities, bank debt obligations
and time deposits, bankers’ acceptances,
commercial paper, short-term corporate
debt obligations, mortgage-backed
securities, and asset-backed securities.
Each of the WisdomTree Dreyfus
Brazilian Real Fund, Chinese Yuan
Fund, Indian Rupee Fund, New Zealand
Dollar Fund, South African Rand Fund,
and South Korean Won Fund seeks (1)
to earn current income reflective of
money market rates available to foreign
investors in the specified country, and
(2) to provide exposure to changes in
the value of the designated non-U.S.
currency relative to the U.S. dollar. Each
of these Funds intends to achieve
exposure to the non-U.S. market
designated by its name using the
following strategy. Each of the Funds
will invest primarily in short-term U.S.
money market securities. In addition,
each such Fund will invest a smaller
portion of its assets in forward currency
contracts and swaps8 designed to
provide exposure to exchange rates
and/or money market instruments
8 A forward currency contract is an agreement to
buy or sell a specific currency at a future date at
a price set at the time of the contract. A currency
swap is an agreement between two parties to
exchange one currency for another at a future rate.
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available to foreign investors in the nonU.S. market designated in the Fund’s
name. The combination of U.S. money
market securities with forward currency
contracts and currency swaps is
designed to create a position
economically similar to a money market
instrument denominated in a non-U.S.
currency.9
Each International Currency Income
Fund generally will maintain a
weighted average portfolio maturity of
90 days or less and will not purchase
any money market instrument with a
remaining maturity of more than 397
calendar days. The Exchange represents
that none of the Funds will invest in
non-U.S. equity securities.
The Shares. Each Fund will issue and
redeem Shares on a continuous basis at
NAV10 only in large blocks of shares,
typically 50,000 shares or more
(‘‘Creation Units’’), in transactions with
authorized participants. Each
International Currency Income Fund
may issue and redeem Creation Units in
exchange for a designated basket of nonU.S. currency and an amount of U.S.
dollar-denominated cash, a basket of
non-U.S. money market instruments and
a designated amount of cash, or simply
a designated amount of cash. In
addition, creations and redemptions of
the Current Income Fund and the
WisdomTree Dreyfus Brazilian Real
Fund, Chinese Yuan Fund, Indian
Rupee Fund, New Zealand Dollar Fund,
South African Rand Fund, and South
Korean Won Fund would usually occur
in exchange for a basket of U.S. money
market instruments and/or a designated
amount of cash. Once created, Shares of
the Funds will trade on the secondary
9 The Exchange states that each of these Funds
may pursue its objectives through direct
investments in money market instruments issued by
entities in the applicable non-U.S. country and
denominated in the applicable non-U.S. currency
when WisdomTree Asset Management believes it is
in the best interest of the Fund to do so. The
decision to secure exposure directly or indirectly
will be a function of, among other things, market
accessibility, credit exposure, and tax ramifications
for foreign investors. If any of these Funds pursues
direct investment, eligible investments will include
short-term securities issued by the applicable
foreign government and its agencies or
instrumentalities, bank debt obligations and time
deposits, bankers’ acceptances, commercial paper,
short-term corporate debt obligations, mortgagebacked securities, and asset-backed securities.
10 The NAV of each Fund’s Shares generally is
calculated once daily Monday through Friday as of
the close of regular trading on the New York Stock
Exchange LLC, generally 4 p.m. Eastern Time or
‘‘ET.’’ NAV per Share is calculated by dividing a
Fund’s net assets by the number of Fund Shares
outstanding. The Exchange states that more
information regarding the valuation of Fund
investments in calculating a Fund’s NAV can be
found in the Registration Statement.
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market in amounts less than a Creation
Unit.
More information regarding the
Shares and the Funds, including
investment strategies, risks, creation and
redemption procedures, fees, portfolio
holdings disclosure policies,
distributions, and taxes can be found in
the Registration Statement.11
Availability of Information
The Funds’ Web site (https://
www.wisdomtree.com), which will be
publicly available prior to the public
offering of the Shares, will include a
form of the Prospectus for each Fund
that may be downloaded. The Web site
will include additional quantitative
information updated on a daily basis,
including, for each Fund: (1) The prior
business day’s reported NAV, mid-point
of the bid/ask spread at the time of
calculation of such NAV (the ‘‘Bid/Ask
Price’’),12 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 the Core Trading
Session,13 the Trust will disclose on its
Web site the identities and quantities of
the portfolio of securities and other
assets (the ‘‘Disclosed Portfolio’’)14 held
by each Fund that will form the basis for
the Fund’s calculation of NAV at the
end of the business day.15 The Web site
information will be publicly available at
no charge.
In addition, for each Fund, an
estimated value, defined in Rule 8.600
11 See
supra note 5.
Bid/Ask Price of a Fund is determined
using the midpoint of the highest bid and the
lowest offer on the Exchange as of the time of
calculation of such Fund’s NAV. The records
relating to Bid/Ask Prices will be retained by the
Funds and their service providers.
13 The Core Trading Session is 9:30 a.m. to 4 p.m.
ET.
14 See NYSE Arca Equities Rule 8.600(c)(2)
(defining the Disclosed Portfolio for a series of
Managed Fund Shares as the identities and
quantities of the securities and other assets held by
the Investment Company that will form the basis for
the Investment Company’s calculation of NAV at
the end of the business day).
15 Under accounting procedures followed by the
Funds, trades made on the prior business day (‘‘T’’)
will be booked and reflected in the NAV on the
current business day (‘‘T+1’’). Notwithstanding the
foregoing, portfolio trades that are executed prior to
the opening of the Exchange on any business day
may be booked and reflected in the NAV on such
business day. 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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12 The
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16:39 May 13, 2008
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as the Portfolio Indicative Value,16 will
be updated and disseminated by the
Exchange at least every 15 seconds
during the Core Trading Session on the
Exchange through the facilities of the
Consolidated Tape Association. The
Exchange states that the dissemination
of the Portfolio Indicative Value,
together with the Disclosed Portfolio,
will allow investors to determine the
value of the underlying portfolio of a
Fund on a daily basis and to provide a
close estimate of that value throughout
the trading day.
Information regarding market price
and volume of the Shares is and will be
continually available on a real-time
basis throughout the day on brokers’
computer screens and other electronic
services. The previous day’s closing
price and trading volume information
will be published daily in the financial
section of newspapers. Quotation and
last-sale information for the Shares will
be available via the facilities of the
Consolidated Tape Association.
Initial and Continued Listing
The Exchange represents that the
Shares will be subject to NYSE Arca
Equities Rule 8.600(d), which sets forth
the initial and continued listing criteria
applicable to Managed Fund Shares.17
The Exchange further represents that,
for initial and/or continued listing, the
Shares must be in compliance with Rule
10A–3 under the Exchange Act,18 as
provided by NYSE Arca Equities Rule
5.3.
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
a Fund. The Shares of the Funds will be
halted if the ‘‘circuit breaker’’
parameters in NYSE Arca Equities Rule
7.12 are reached. Trading 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 comprising the
Disclosed Portfolio and/or the financial
instruments of a Fund; or (2) whether
other unusual conditions or
circumstances detrimental to the
maintenance of a fair and orderly
16 NYSE
Arca Equities Rule 8.600(c)(3) (defining
Portfolio Indicative Value as the estimated
indicative value of a Managed Fund Share based on
current information regarding the value of the
securities and other assets in the Disclosed
Portfolio).
17 See also supra note 7 (describing the Funds’
compliance with Commentary .05 to NYSE Arca
Equities Rule 8.600).
18 See 17 CFR 240.10A–3.
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market are present. In addition, 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 a Fund may be halted.
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. The Shares will trade
on the NYSE Arca Marketplace from 4
a.m. to 8 p.m. ET in accordance with
NYSE Arca Equities Rule 7.34 (Opening,
Core, and Late Trading Sessions). The
Exchange states that it has appropriate
rules to facilitate transactions in the
Shares during all such trading sessions.
The minimum trading increment for the
Shares on the Exchange will be $0.01.
Surveillance
The Exchange intends to utilize its
existing surveillance procedures
applicable to derivative products (which
will 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 states
that it may obtain information via the
Intermarket Surveillance Group (‘‘ISG’’)
from other exchanges who are members
or affiliate members of ISG.19 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
ETP Holders 20 in an Information
Bulletin (‘‘Bulletin’’) of the special
characteristics and risks associated with
trading the Shares. Specifically, the
19 The Exchange notes that not all of the
components of the Disclosed Portfolio for each
Fund may trade on exchanges that are members or
affiliate members of ISG.
20 ETP Holder refers to a sole proprietorship,
partnership, corporation, limited liability company,
or other organization in good standing that has been
issued an Equity Trading Permit or ‘‘ETP.’’ An ETP
Holder must be a registered broker or dealer
pursuant to Section 15 of the Act. See NYSE Arca
Equities Rule 1.1(n).
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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),21 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 Fund is
subject to various fees and expenses
described in the Registration Statement,
discuss any exemptive, no-action, and
interpretive relief granted by the
Commission from any rules under the
Act, and disclose that the NAV for the
Shares will be calculated after 4 p.m. ET
each trading day.
jlentini on PROD1PC65 with NOTICES
III. Discussion and Commission’s
Findings
The Commission has carefully
reviewed the proposed rule change and
finds that it is consistent with the
requirements of section 6 of the Act 22
and the rules and regulations
thereunder applicable to a national
securities exchange.23 In particular, the
Commission finds that the proposal is
consistent with section 6(b)(5) of the
Act,24 which requires, among other
things, that the Exchange’s rules be
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
21 NYSE Arca Equities Rule 9.2(a) provides that
an ETP Holder, before recommending a transaction,
must have reasonable grounds to believe that the
recommendation is suitable for the customer based
on any facts disclosed by the customer as to his
other security holdings and as to his financial
situation and needs. Further, the rule provides,
with a limited exception, that prior to the execution
of a transaction recommended to a non-institutional
customer, the ETP Holder shall make reasonable
efforts to obtain information concerning the
customer’s financial status, tax status, investment
objectives, and any other information that the ETP
Holder believes would be useful to make a
recommendation.
22 15 U.S.C. 78f.
23 In approving this proposed rule change the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
24 15 U.S.C. 78f(b)(5).
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16:39 May 13, 2008
Jkt 214001
public interest. The Commission notes
that, for the Shares to be listed and
traded on the Exchange, such Shares
must be in compliance with the initial
and continued listing requirements
under NYSE Arca Equities Rule 8.600.
The Commission believes that the
proposal to list and trade the Shares on
the Exchange is consistent with section
11A(a)(1)(C)(iii) of the Act,25 which sets
forth Congress’ finding that it is in the
public interest and appropriate for the
protection of investors and the
maintenance of fair and orderly markets
to assure the availability to brokers,
dealers, and investors of information
with respect to quotations for and
transactions in securities. Quotations
and last-sale information for the Shares
will be disseminated by means of the
facilities of the Consolidated Tape
Association. In addition, the Portfolio
Indicative Value will be updated and
disseminated at least every 15 seconds
during the Core Trading Session on the
Exchange through the facilities of the
Consolidated Tape Association, and, on
each business day before
commencement of the Core Trading
Session, the Trust will disseminate the
Disclosed Portfolio on its Web site. The
Commission also notes that information
regarding market price and volume of
the Shares is and will be continually
available on a real-time basis throughout
the day on brokers’ computer screens
and other electronic services, and the
previous day’s closing price and trading
volume information will be published
daily in the financial section of
newspapers. Additionally, the following
information will be available on the
Funds’ Web site (https://
www.wisdomtree.com), which will be
publicly accessible at no charge: (1) The
prior business day’s reported NAV, the
Bid/Ask Price, 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.
Furthermore, the Commission
believes that the proposal to list and
trade the Shares is reasonably designed
to promote fair disclosure of
information that may be necessary to
price the Shares appropriately and to
prevent trading when a reasonable
degree of transparency cannot be
assured. The Commission notes that the
Exchange is required to obtain a
representation from the Trust, prior to
listing, that the NAV per Share will be
25 15
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calculated daily, and that the NAV and
the Disclosed Portfolio will be made
available to all market participants at
the same time.26 The Exchange may
consider the suspension of trading in, or
removal from listing of, the Shares if the
value of the Portfolio Indicative Value is
no longer calculated or available or the
Disclosed Portfolio is not made
available to all market participants at
the same time.27 In addition, NYSE Arca
Equities Rule 8.600(d)(2)(B)(ii) requires
that the Reporting Authority that
provides the Disclosed Portfolio
implement and maintain, or be subject
to, procedures designed to prevent the
use and dissemination of material nonpublic information regarding the actual
components of the portfolio. Lastly, the
Commission notes that the Exchange
will halt trading in the Shares under the
specific circumstances set forth in NYSE
Arca Equities Rule 8.600(d)(2)(D) and
that, if WisdomTree Asset Management
becomes affiliated with a broker-dealer,
WisdomTree Asset Management must
erect a firewall between it and such
broker-dealer with respect to access to
information concerning the composition
and/or changes to the investment
portfolio of the Funds, in accordance
with Commentary .07 to NYSE Arca
Equities Rule 8.600.
The Commission further believes that
the trading rules and procedures to
which the Shares will be subject
pursuant to this proposal are consistent
with the Act. The Exchange has
represented that the Shares are equity
securities subject to Exchange’s rules
governing the trading of equity
securities.
In support of this proposal, the
Exchange has made the following
representations:
1. The Shares will be subject to the
initial and continued listing criteria
applicable to Managed Fund Shares
and, for initial and/or continued listing,
the Shares must comply with Rule 10A–
3 under the Act,28 as provided by NYSE
Arca Equities Rule 5.3.
2. The Exchange’s surveillance
procedures are adequate to properly
monitor the trading of the Shares.
Specifically, NYSE Arca will rely on its
existing surveillance procedures
applicable to derivative products, which
will include Managed Fund Shares.29
26 See
NYSE Arca Equities Rule 8.600(d)(1)(B).
NYSE Arca Equities Rule 8.600(d)(2)(C)(ii).
28 17 CFR 240.10A–3.
29 The Commission notes that none of the Funds
will invest in non-U.S. equity securities and
believes that the Exchange’s proposed rules and
procedures are adequate with respect to the Shares.
However, the Commission notes that other
proposed series of Managed Fund Shares may
27 See
U.S.C. 78k–1(a)(1)(C)(iii).
Frm 00088
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Continued
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27882
Federal Register / Vol. 73, No. 94 / Wednesday, May 14, 2008 / Notices
jlentini on PROD1PC65 with NOTICES
3. Prior to the commencement of
trading, the Exchange will inform its
members and member organizations in
an Information Bulletin of 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
Information Bulletin will reference that
the Fund is subject to various fees and
expenses described in the Registration
Statement, discuss any exemptive, noaction, and interpretive relief granted by
the Commission from any rules under
the Act, and disclose that the NAV for
the Shares will be calculated after 4:00
p.m. ET each trading day.
This approval order is based on the
Exchange’s representations.
The Commission finds good cause for
approving the proposed rule change
before the 30th day after the date of
publication of notice of filing thereof in
the Federal Register. The Commission
notes that the investment objectives of
the Funds are similar to those
applicable to other Managed Fund
Shares, the listing and trading of which
the Commission has previously
approved for other national securities
exchanges.30 The Commission believes
require additional Exchange rules and procedures
to govern their listing and trading on the Exchange.
For example, in the case of a proposed series of
Managed Fund Shares that are based on a portfolio,
at least in part, of non-U.S. equity securities, rules
relating to comprehensive surveillance sharing
agreements and quantitative initial and continued
listing standards may be required.
30 See, e.g., Securities Exchange Act Release Nos.
57619 (April 4, 2008), 73 FR 19544 (April 10, 2008)
(SR–NYSEArca–2008–25) (approving, among other
things, the listing and trading of shares of the
PowerShares Active Low Duration Portfolio, which
seeks to exceed the total return of the Lehman
Brothers 1–3 Year U.S. Treasury Index by investing,
normally, at least 80% of its assets in a diversified
portfolio of U.S. government and corporate debt
securities); and 57514 (March 17, 2008), 73 FR
15230 (March 21, 2008) (SR–Amex–2008–02)
(approving the listing and trading of shares of the
Bear Stearns Current Yield Fund, which seeks to
invest primarily in short-term debt obligations,
including U.S. government securities, bank
obligations, corporate debt obligations, foreign bank
VerDate Aug<31>2005
16:39 May 13, 2008
Jkt 214001
that accelerated approval of the
proposed rule change should provide
additional choices for investors in, and
promote additional competition in the
market for, Managed Fund Shares.
Therefore, the Commission finds good
cause, consistent with section 19(b)(2)
of the Act, to approve the proposed rule
change on an accelerated basis.
Partners II as defined in Sec. 105.50 of
the regulations.
Notice is hereby given that any
interested person may submit written
comments on the transaction, within 15
days, to the Associate Administrator for
Investment, U.S. Small Business
Administration, 409 Third Street, SW.,
Washington, DC 20416.
IV. Conclusion
A. Joseph Shepard,
Associate Administrator for Investment.
[FR Doc. E8–10758 Filed 5–13–08; 8:45 am]
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,31 that the
proposed rule change (SR–NYSEArca–
2008–31) be, and it hereby is, approved
on an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–10724 Filed 5–13–08; 8:45 am]
BILLING CODE 8010–01–P
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[License No. 09/79–0454]
Emergence Capital Partners SBIC,
L.P.; Notice Seeking Exemption Under
Section 312 of the Small Business
Investment Act, Conflicts of Interest
Notice is hereby given that C3 Capital
Partners II, L.P., 4520 Main Street, Suite
1600, Kansas City, Missouri, 64111–
7700, a Federal Licensee under the
Small Business Investment Act of 1958,
as amended (‘‘the Act’’), in connection
with the financing of a small concern,
has sought an exemption under section
312 of the Act and section 107.730,
Financings Which Constitute Conflicts
of Interest of the Small Business
Administration (‘‘SBA’’) rules and
regulations (13 CFR 107.730 (2008)). C3
Capital Partners II, L.P. proposes to
provide loans to Clinical Research
Investments, LLC, (holding company for
Clinical Research Holding, LLC) 4520
Main St., Ste. 1600, Kansas City, MO
64111. The financing is contemplated
for the acquisition of an Alabama based
manager of clinical trials.
The financing is brought within the
purview of Sec. 107.730(a)(1) of the
Regulations because C3 Capital Partners,
LP, an Associate of C3 Capital Partners
II, L.P., currently owns greater than 10
percent of Clinical Research
Investments, LLC, and therefore,
Clinical Research Investments, LLC, is
considered an Associate of C3 Capital
Notice is hereby given that Emergence
Capital Partners SBIC, L.P., 160 Bovet
Road, Suite 300, San Mateo, CA 94402,
a Federal Licensee under the Small
Business Investment Act of 1958, as
amended (‘‘the Act’’), in connection
with the financing of a small concern,
has sought an exemption under Section
312 of the Act and Section 107.730,
Financings which Constitute Conflicts
of Interest of the Small Business
Administration (‘‘SBA’’) Rules and
Regulations (13 CFR 107.730).
Emergence Capital Partners SBIC, L.P.
proposes to provide equity/debt security
financing to Intacct Corporation, 125
South Market Street, Suite 600, San
Jose, CA 95113. The financing is
contemplated for working capital and
general corporate purposes.
The financing is brought within the
purview of § 107.730(a)(1) of the
Regulations because Emergence Capital
Partners, L.P. and Emergence Capital
Associates, L.P., all Associates of
Emergence Capital Partners SBIC, L.P.,
own more than ten percent of Intacct
Corporation and therefore Intacct
Corporation is considered an Associate
of Emergence Capital Partners SBIC, L.P.
as detailed in § 107.50 of the
Regulations.
Notice is hereby given that any
interested person may submit written
comments on the transaction to the
Associate Administrator for Investment,
U.S. Small Business Administration,
409 Third Street, SW., Washington, DC
20416.
obligations (U.S. dollar denominated), foreign
corporate debt obligations (U.S. dollar
denominated), and other financial instruments).
31 15 U.S.C. 78s(b)(2).
Dated: April 15, 2008.
A. Joseph Shepard,
Associate Administrator for Investment.
[FR Doc. E8–10760 Filed 5–13–08; 8:45 am]
SMALL BUSINESS ADMINISTRATION
C3 Capital Partners II, L.P. (License No.
07/07–0113); Notice Seeking
Exemption Under 312 of the Small
Business Investment Act, Conflicts of
Interest
32 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00089
Fmt 4703
Sfmt 4703
BILLING CODE 8025–01–P
E:\FR\FM\14MYN1.SGM
14MYN1
]]>Agencies
[Federal Register Volume 73, Number 94 (Wednesday, May 14, 2008)]
[Notices]
[Pages 27878-27882]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-10724]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57801; File No. SR-NYSEArca-2008-31]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Accelerated Approval of Proposed Rule Change Relating to the Listing
and Trading of Shares of Twelve Actively Managed Exchange-Traded Funds
of the WisdomTree Trust
May 8, 2008.
I. Introduction
On April 4, 2008, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange''),
through its wholly owned subsidiary, NYSE Arca Equities, Inc. (``NYSE
Arca Equities''), filed with the Securities and Exchange Commission
(``Commission''), pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade the shares of twelve actively
managed exchange-traded funds of the WisdomTree Trust (``Trust'')
pursuant to NYSE Arca Equities Rule 8.600 (Managed Fund Shares). The
proposed rule change was published for comment in the Federal Register
on April 21, 2008 for a 15-day comment period.\3\ The Commission
received no comments on the proposal. This order approves the proposed
rule change on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 57670 (April 15,
2008), 73 FR 21397.
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to list and trade the shares (``Shares'') of
the following twelve actively managed exchange-traded funds of the
Trust pursuant to NYSE Arca Equities Rule 8.600 (Managed Fund Shares):
(1) WisdomTree U.S. Current Income Fund (``Current Income Fund''); (2)
WisdomTree Dreyfus Australian Dollar Fund; (3) WisdomTree Dreyfus
Brazilian Real Fund; (4) WisdomTree Dreyfus British Pound Sterling
Fund; (5) WisdomTree Dreyfus Canadian Dollar Fund; (6) WisdomTree
Dreyfus Chinese Yuan Fund; (7) WisdomTree Dreyfus Euro Fund; (8)
WisdomTree Dreyfus Indian Rupee Fund; (9) WisdomTree Dreyfus Japanese
Yen Fund; (10) WisdomTree Dreyfus New Zealand Dollar Fund; (11)
WisdomTree Dreyfus South African Rand Fund; and (12) WisdomTree Dreyfus
South Korean Won Fund (``International Currency Income Funds,'' and
together with the
[[Page 27879]]
Current Income Fund, collectively, the ``Funds'').
The Exchange proposes to list and trade the Shares of the Funds
pursuant to NYSE Arca Equities Rule 8.600, which governs the listing
and trading of Managed Fund Shares on the Exchange.\4\ Each Fund will
be an actively managed exchange-traded fund. The Shares will be offered
by the Trust, which was established as a Delaware statutory trust on
December 15, 2005 and is registered with the Commission as an
investment company.\5\
---------------------------------------------------------------------------
\4\ ``Managed Fund Shares'' are securities that: (1) Represent
an interest in a registered investment company (``Investment
Company'') organized as an open-end management investment company or
similar entity, that invests in a portfolio of securities selected
by the Investment Company's investment adviser consistent with the
Investment Company's investment objectives and policies; (2) are
issued in a specified aggregate minimum number in return for a
deposit of a specified portfolio of securities and/or a cash amount
with a value equal to the next determined net asset value (``NAV'');
and (3) when aggregated in the same specified minimum number, may be
redeemed at a holder's request, which holder will be paid a
specified portfolio of securities and/or cash with a value equal to
the next determined NAV. See NYSE Arca Equities Rule 8.600(c)(1)
(defining Managed Fund Shares). See also Securities Exchange Act
Release No. 57619 (April 4, 2008), 73 FR 19544 (April 10, 2008) (SR-
NYSEArca-2008-25) (approving, among other things, rules permitting
the listing and trading of Managed Fund Shares).
\5\ See Post-Effective Amendment No. 14 to Registration
Statement on Form N-1A for the Trust (File Nos. 333-132380 and 811-
21864) (``Registration Statement'').
---------------------------------------------------------------------------
Description of the Funds and the Shares
WisdomTree Asset Management, Inc. (``WisdomTree Asset Management'')
is the investment adviser to each Fund.\6\ The Exchange represents that
WisdomTree Asset Management is not affiliated with any broker-dealer.
Mellon Capital Management serves as the sub-adviser for the Current
Income Fund. The Dreyfus Corporation serves as the sub-adviser to each
International Currency Income Fund. The Bank of New York is the
administrator, custodian, and transfer agent for each Fund. ALPS
Distributors, Inc. serves as the distributor for the Funds.\7\
---------------------------------------------------------------------------
\6\ WisdomTree Investments, Inc. (``WisdomTree Investments'') is
the parent company of WisdomTree Asset Management.
\7\ The Exchange states that the Trust has received and been
granted by Commission order certain exemptive relief under the
Investment Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act''). In
compliance with Commentary .05 to NYSE Arca Equities Rule 8.600,
which applies to Managed Fund Shares based on an international or
global portfolio, the Trust's application for exemptive relief under
the 1940 Act states that the Funds will comply with the federal
securities laws in accepting securities for deposits and satisfying
redemptions with redemption securities, including that the
securities accepted for deposits and the securities used to satisfy
redemption requests are sold in transactions that would be exempt
from registration under the Securities Act of 1933.
---------------------------------------------------------------------------
The Current Income Fund. The Current Income Fund seeks to earn
current income while preserving capital and maintaining liquidity by
investing primarily in very short term, high-quality money market
securities denominated in U.S. dollars. Eligible investments include
commercial paper, time deposits and certificates of deposits, asset-
backed securities, government bills, government notes, corporate notes,
and repurchase agreements. The Current Income Fund intends to maintain
an average portfolio maturity of 90 days or less and will not purchase
any money market security with a remaining maturity of more than 397
calendar days.
The International Currency Income Funds. Each of the WisdomTree
Dreyfus Australian Dollar Fund, British Pound Sterling Fund, Canadian
Dollar Fund, Euro Fund, and Japanese Yen Fund seeks (1) to earn current
income reflective of money market rates available to foreign investors
in the specified country or region, and (2) to maintain liquidity and
preserve capital measured in the currency of the specified country or
region. Each of these Funds intends to invest primarily in very short
term, investment grade money market securities denominated in the non-
U.S. currency specified in its name. Eligible investments include
short-term securities issued by non-U.S. governments, agencies, or
instrumentalities, bank debt obligations and time deposits, bankers'
acceptances, commercial paper, short-term corporate debt obligations,
mortgage-backed securities, and asset-backed securities.
Each of the WisdomTree Dreyfus Brazilian Real Fund, Chinese Yuan
Fund, Indian Rupee Fund, New Zealand Dollar Fund, South African Rand
Fund, and South Korean Won Fund seeks (1) to earn current income
reflective of money market rates available to foreign investors in the
specified country, and (2) to provide exposure to changes in the value
of the designated non-U.S. currency relative to the U.S. dollar. Each
of these Funds intends to achieve exposure to the non-U.S. market
designated by its name using the following strategy. Each of the Funds
will invest primarily in short-term U.S. money market securities. In
addition, each such Fund will invest a smaller portion of its assets in
forward currency contracts and swaps\8\ designed to provide exposure to
exchange rates and/or money market instruments available to foreign
investors in the non-U.S. market designated in the Fund's name. The
combination of U.S. money market securities with forward currency
contracts and currency swaps is designed to create a position
economically similar to a money market instrument denominated in a non-
U.S. currency.\9\
---------------------------------------------------------------------------
\8\ A forward currency contract is an agreement to buy or sell a
specific currency at a future date at a price set at the time of the
contract. A currency swap is an agreement between two parties to
exchange one currency for another at a future rate.
\9\ The Exchange states that each of these Funds may pursue its
objectives through direct investments in money market instruments
issued by entities in the applicable non-U.S. country and
denominated in the applicable non-U.S. currency when WisdomTree
Asset Management believes it is in the best interest of the Fund to
do so. The decision to secure exposure directly or indirectly will
be a function of, among other things, market accessibility, credit
exposure, and tax ramifications for foreign investors. If any of
these Funds pursues direct investment, eligible investments will
include short-term securities issued by the applicable foreign
government and its agencies or instrumentalities, bank debt
obligations and time deposits, bankers' acceptances, commercial
paper, short-term corporate debt obligations, mortgage-backed
securities, and asset-backed securities.
---------------------------------------------------------------------------
Each International Currency Income Fund generally will maintain a
weighted average portfolio maturity of 90 days or less and will not
purchase any money market instrument with a remaining maturity of more
than 397 calendar days. The Exchange represents that none of the Funds
will invest in non-U.S. equity securities.
The Shares. Each Fund will issue and redeem Shares on a continuous
basis at NAV\10\ only in large blocks of shares, typically 50,000
shares or more (``Creation Units''), in transactions with authorized
participants. Each International Currency Income Fund may issue and
redeem Creation Units in exchange for a designated basket of non-U.S.
currency and an amount of U.S. dollar-denominated cash, a basket of
non-U.S. money market instruments and a designated amount of cash, or
simply a designated amount of cash. In addition, creations and
redemptions of the Current Income Fund and the WisdomTree Dreyfus
Brazilian Real Fund, Chinese Yuan Fund, Indian Rupee Fund, New Zealand
Dollar Fund, South African Rand Fund, and South Korean Won Fund would
usually occur in exchange for a basket of U.S. money market instruments
and/or a designated amount of cash. Once created, Shares of the Funds
will trade on the secondary
[[Page 27880]]
market in amounts less than a Creation Unit.
---------------------------------------------------------------------------
\10\ The NAV of each Fund's Shares generally is calculated once
daily Monday through Friday as of the close of regular trading on
the New York Stock Exchange LLC, generally 4 p.m. Eastern Time or
``ET.'' NAV per Share is calculated by dividing a Fund's net assets
by the number of Fund Shares outstanding. The Exchange states that
more information regarding the valuation of Fund investments in
calculating a Fund's NAV can be found in the Registration Statement.
---------------------------------------------------------------------------
More information regarding the Shares and the Funds, including
investment strategies, risks, creation and redemption procedures, fees,
portfolio holdings disclosure policies, distributions, and taxes can be
found in the Registration Statement.\11\
---------------------------------------------------------------------------
\11\ See supra note 5.
---------------------------------------------------------------------------
Availability of Information
The Funds' Web site (https://www.wisdomtree.com), which will be
publicly available prior to the public offering of the Shares, will
include a form of the Prospectus for each Fund that may be downloaded.
The Web site will include additional quantitative information updated
on a daily basis, including, for each Fund: (1) The prior business
day's reported NAV, mid-point of the bid/ask spread at the time of
calculation of such NAV (the ``Bid/Ask Price''),\12\ 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 the Core Trading
Session,\13\ the Trust will disclose on its Web site the identities and
quantities of the portfolio of securities and other assets (the
``Disclosed Portfolio'')\14\ held by each Fund that will form the basis
for the Fund's calculation of NAV at the end of the business day.\15\
The Web site information will be publicly available at no charge.
---------------------------------------------------------------------------
\12\ The Bid/Ask Price of a Fund is determined using the
midpoint of the highest bid and the lowest offer on the Exchange as
of the time of calculation of such Fund's NAV. The records relating
to Bid/Ask Prices will be retained by the Funds and their service
providers.
\13\ The Core Trading Session is 9:30 a.m. to 4 p.m. ET.
\14\ See NYSE Arca Equities Rule 8.600(c)(2) (defining the
Disclosed Portfolio for a series of Managed Fund Shares as the
identities and quantities of the securities and other assets held by
the Investment Company that will form the basis for the Investment
Company's calculation of NAV at the end of the business day).
\15\ Under accounting procedures followed by the Funds, trades
made on the prior business day (``T'') will be booked and reflected
in the NAV on the current business day (``T+1''). Notwithstanding
the foregoing, portfolio trades that are executed prior to the
opening of the Exchange on any business day may be booked and
reflected in the NAV on such business day. 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.
---------------------------------------------------------------------------
In addition, for each Fund, an estimated value, defined in Rule
8.600 as the Portfolio Indicative Value,\16\ will be updated and
disseminated by the Exchange at least every 15 seconds during the Core
Trading Session on the Exchange through the facilities of the
Consolidated Tape Association. The Exchange states that the
dissemination of the Portfolio Indicative Value, together with the
Disclosed Portfolio, will allow investors to determine the value of the
underlying portfolio of a Fund on a daily basis and to provide a close
estimate of that value throughout the trading day.
---------------------------------------------------------------------------
\16\ NYSE Arca Equities Rule 8.600(c)(3) (defining Portfolio
Indicative Value as the estimated indicative value of a Managed Fund
Share based on current information regarding the value of the
securities and other assets in the Disclosed Portfolio).
---------------------------------------------------------------------------
Information regarding market price and volume of the Shares is and
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. The
previous day's closing price and trading volume information will be
published daily in the financial section of newspapers. Quotation and
last-sale information for the Shares will be available via the
facilities of the Consolidated Tape Association.
Initial and Continued Listing
The Exchange represents that the Shares will be subject to NYSE
Arca Equities Rule 8.600(d), which sets forth the initial and continued
listing criteria applicable to Managed Fund Shares.\17\ The Exchange
further represents that, for initial and/or continued listing, the
Shares must be in compliance with Rule 10A-3 under the Exchange
Act,\18\ as provided by NYSE Arca Equities Rule 5.3.
---------------------------------------------------------------------------
\17\ See also supra note 7 (describing the Funds' compliance
with Commentary .05 to NYSE Arca Equities Rule 8.600).
\18\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------
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 a Fund. The Shares of the Funds will be halted
if the ``circuit breaker'' parameters in NYSE Arca Equities Rule 7.12
are reached. Trading 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 comprising the Disclosed Portfolio and/or
the financial instruments of a Fund; or (2) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present. In addition, 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 a Fund may be halted.
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. The Shares will trade
on the NYSE Arca Marketplace from 4 a.m. to 8 p.m. ET in accordance
with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading
Sessions). The Exchange states that it has appropriate rules to
facilitate transactions in the Shares during all such trading sessions.
The minimum trading increment for the Shares on the Exchange will be
$0.01.
Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (which will 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 states that
it may obtain information via the Intermarket Surveillance Group
(``ISG'') from other exchanges who are members or affiliate members of
ISG.\19\ In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
---------------------------------------------------------------------------
\19\ The Exchange notes that not all of the components of the
Disclosed Portfolio for each Fund may trade on exchanges that are
members or affiliate members of ISG.
---------------------------------------------------------------------------
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders \20\ in an Information Bulletin (``Bulletin'') of the
special characteristics and risks associated with trading the Shares.
Specifically, the
[[Page 27881]]
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),\21\ 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 Fund is subject to
various fees and expenses described in the Registration Statement,
discuss any exemptive, no-action, and interpretive relief granted by
the Commission from any rules under the Act, and disclose that the NAV
for the Shares will be calculated after 4 p.m. ET each trading day.
---------------------------------------------------------------------------
\20\ ETP Holder refers to a sole proprietorship, partnership,
corporation, limited liability company, or other organization in
good standing that has been issued an Equity Trading Permit or
``ETP.'' An ETP Holder must be a registered broker or dealer
pursuant to Section 15 of the Act. See NYSE Arca Equities Rule
1.1(n).
\21\ NYSE Arca Equities Rule 9.2(a) provides that an ETP Holder,
before recommending a transaction, must have reasonable grounds to
believe that the recommendation is suitable for the customer based
on any facts disclosed by the customer as to his other security
holdings and as to his financial situation and needs. Further, the
rule provides, with a limited exception, that prior to the execution
of a transaction recommended to a non-institutional customer, the
ETP Holder shall make reasonable efforts to obtain information
concerning the customer's financial status, tax status, investment
objectives, and any other information that the ETP Holder believes
would be useful to make a recommendation.
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III. Discussion and Commission's Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of section 6 of the
Act \22\ and the rules and regulations thereunder applicable to a
national securities exchange.\23\ In particular, the Commission finds
that the proposal is consistent with section 6(b)(5) of the Act,\24\
which requires, among other things, that the Exchange's rules be
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest. The Commission notes that, for the Shares to be listed
and traded on the Exchange, such Shares must be in compliance with the
initial and continued listing requirements under NYSE Arca Equities
Rule 8.600.
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\22\ 15 U.S.C. 78f.
\23\ In approving this proposed rule change the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\24\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the proposal to list and trade the
Shares on the Exchange is consistent with section 11A(a)(1)(C)(iii) of
the Act,\25\ which sets forth Congress' finding that it is in the
public interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities. Quotations and last-sale
information for the Shares will be disseminated by means of the
facilities of the Consolidated Tape Association. In addition, the
Portfolio Indicative Value will be updated and disseminated at least
every 15 seconds during the Core Trading Session on the Exchange
through the facilities of the Consolidated Tape Association, and, on
each business day before commencement of the Core Trading Session, the
Trust will disseminate the Disclosed Portfolio on its Web site. The
Commission also notes that information regarding market price and
volume of the Shares is and will be continually available on a real-
time basis throughout the day on brokers' computer screens and other
electronic services, and the previous day's closing price and trading
volume information will be published daily in the financial section of
newspapers. Additionally, the following information will be available
on the Funds' Web site (https://www.wisdomtree.com), which will be
publicly accessible at no charge: (1) The prior business day's reported
NAV, the Bid/Ask Price, 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.
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\25\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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Furthermore, the Commission believes that the proposal to list and
trade the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Commission notes that the Exchange is required to obtain a
representation from the Trust, prior to listing, that the NAV per Share
will be calculated daily, and that the NAV and the Disclosed Portfolio
will be made available to all market participants at the same time.\26\
The Exchange may consider the suspension of trading in, or removal from
listing of, the Shares if the value of the Portfolio Indicative Value
is no longer calculated or available or the Disclosed Portfolio is not
made available to all market participants at the same time.\27\ In
addition, NYSE Arca Equities Rule 8.600(d)(2)(B)(ii) requires that the
Reporting Authority that provides the Disclosed Portfolio implement and
maintain, or be subject to, procedures designed to prevent the use and
dissemination of material non-public information regarding the actual
components of the portfolio. Lastly, the Commission notes that the
Exchange will halt trading in the Shares under the specific
circumstances set forth in NYSE Arca Equities Rule 8.600(d)(2)(D) and
that, if WisdomTree Asset Management becomes affiliated with a broker-
dealer, WisdomTree Asset Management must erect a firewall between it
and such broker-dealer with respect to access to information concerning
the composition and/or changes to the investment portfolio of the
Funds, in accordance with Commentary .07 to NYSE Arca Equities Rule
8.600.
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\26\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
\27\ See NYSE Arca Equities Rule 8.600(d)(2)(C)(ii).
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The Commission further believes that the trading rules and
procedures to which the Shares will be subject pursuant to this
proposal are consistent with the Act. The Exchange has represented that
the Shares are equity securities subject to Exchange's rules governing
the trading of equity securities.
In support of this proposal, the Exchange has made the following
representations:
1. The Shares will be subject to the initial and continued listing
criteria applicable to Managed Fund Shares and, for initial and/or
continued listing, the Shares must comply with Rule 10A-3 under the
Act,\28\ as provided by NYSE Arca Equities Rule 5.3.
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\28\ 17 CFR 240.10A-3.
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2. The Exchange's surveillance procedures are adequate to properly
monitor the trading of the Shares. Specifically, NYSE Arca will rely on
its existing surveillance procedures applicable to derivative products,
which will include Managed Fund Shares.\29\
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\29\ The Commission notes that none of the Funds will invest in
non-U.S. equity securities and believes that the Exchange's proposed
rules and procedures are adequate with respect to the Shares.
However, the Commission notes that other proposed series of Managed
Fund Shares may require additional Exchange rules and procedures to
govern their listing and trading on the Exchange. For example, in
the case of a proposed series of Managed Fund Shares that are based
on a portfolio, at least in part, of non-U.S. equity securities,
rules relating to comprehensive surveillance sharing agreements and
quantitative initial and continued listing standards may be
required.
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[[Page 27882]]
3. Prior to the commencement of trading, the Exchange will inform
its members and member organizations in an Information Bulletin of 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 Information Bulletin will
reference that the Fund is subject to various fees and expenses
described in the Registration Statement, discuss any exemptive, no-
action, and interpretive relief granted by the Commission from any
rules under the Act, and disclose that the NAV for the Shares will be
calculated after 4:00 p.m. ET each trading day.
This approval order is based on the Exchange's representations.
The Commission finds good cause for approving the proposed rule
change before the 30th day after the date of publication of notice of
filing thereof in the Federal Register. The Commission notes that the
investment objectives of the Funds are similar to those applicable to
other Managed Fund Shares, the listing and trading of which the
Commission has previously approved for other national securities
exchanges.\30\ The Commission believes that accelerated approval of the
proposed rule change should provide additional choices for investors
in, and promote additional competition in the market for, Managed Fund
Shares. Therefore, the Commission finds good cause, consistent with
section 19(b)(2) of the Act, to approve the proposed rule change on an
accelerated basis.
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\30\ See, e.g., Securities Exchange Act Release Nos. 57619
(April 4, 2008), 73 FR 19544 (April 10, 2008) (SR-NYSEArca-2008-25)
(approving, among other things, the listing and trading of shares of
the PowerShares Active Low Duration Portfolio, which seeks to exceed
the total return of the Lehman Brothers 1-3 Year U.S. Treasury Index
by investing, normally, at least 80% of its assets in a diversified
portfolio of U.S. government and corporate debt securities); and
57514 (March 17, 2008), 73 FR 15230 (March 21, 2008) (SR-Amex-2008-
02) (approving the listing and trading of shares of the Bear Stearns
Current Yield Fund, which seeks to invest primarily in short-term
debt obligations, including U.S. government securities, bank
obligations, corporate debt obligations, foreign bank obligations
(U.S. dollar denominated), foreign corporate debt obligations (U.S.
dollar denominated), and other financial instruments).
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IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\31\ that the proposed rule change (SR-NYSEArca-2008-31) be, and it
hereby is, approved on an accelerated basis.
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\31\ 15 U.S.C. 78s(b)(2).
\32\ 17 CFR 200.30-3(a)(12).
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-10724 Filed 5-13-08; 8:45 am]
BILLING CODE 8010-01-P
