Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to Listing of HTE Global Relative Value ETF, 13194-13198 [2010-5908]

Download as PDF 13194 Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices 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–ISE–2010–17. 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 Commissions Internet Web site (https://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, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE–2010–17 and should be submitted by April 8, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–5906 Filed 3–17–10; 8:45 am] BILLING CODE 8011–01–P sroberts on DSKD5P82C1PROD with NOTICES Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to Listing of HTE Global Relative Value ETF 9 17 1 15 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). VerDate Nov<24>2008 17:08 Mar 17, 2010 Jkt 220001 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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade the following Managed Fund Shares 5 (‘‘Shares’’) under NYSE Arca U.S.C. 78a. CFR 240.19b–4. 4 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. 5 A Managed Fund Share is a security that represents an interest in an investment company 3 17 [Release No. 34–61683; File No. SR– NYSEArca–2010–10] Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the 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 4 (‘‘Shares’’) under NYSE Arca Equities Rule 8.600: HTE Global Relative Value ETF. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and https:// www.nyse.com. 2 15 SECURITIES AND EXCHANGE COMMISSION March 10, 2010. ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on February 25, 2010, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 Equities Rule 8.600: HTE Global Relative Value ETF (the ‘‘Fund’’).6 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.7 HTE Global Relative Value ETF The investment advisor to the Fund is AdvisorShares Investments, LLC (the ‘‘Advisor’’). HTE Asset Management, LLC is the sub-advisor to the Fund (‘‘Sub-Advisor’’). Foreside Fund Services, LLC is the principal underwriter and distributor of the Fund’s Shares. The Bank of New York Mellon is the administrator, transfer agent and custodian for the Fund. Commentary .07 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 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. 6 The Commission previously approved listing and trading on the Exchange of the following actively managed funds under Rule 8.600. See Securities Exchange Act Release Nos. 57619 (April 4, 2008), 73 FR 19544 (April 10, 2008) (SR– NYSEArca–2008–25) (order approving Rule 8.600 and Exchange listing and trading of PowerShares Active AlphaQ Fund, PowerShares Active Alpha Multi-Cap Fund, PowerShares Active Mega-Cap Portfolio and PowerShares Active Low Duration Portfolio); 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); 60717 (September 24, 2009), 74 FR 50853 (October 1, 2009) (SR–NYSEArca–2009–74 (order approving listing of four Grail Advisors RP ETFs); 60975 (November 10, 2009), 74 FR 59590 (November 18, 2009) (SR–NYSEArca–2009–83) (order approving listing of Grail American Beacon International Equity ETF); 60981 (November 10, 2009), 74 FR 59594 (November 18, 2009) (SR–NYSEArca–2009– 79) (order approving listing of five fixed income funds of the PIMCO ETF Trust). 7 The Trust is registered under the 1940 Act. On December 29, 2009, the Trust filed with the Commission Post-Effective Amendment No. 2 to Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a) relating to the Fund (File Nos. 333– 157876 and 811–22110) (the ‘‘Registration Statement’’). The description of the operation of the Trust and the Fund herein is based on the Registration Statement. E:\FR\FM\18MRN1.SGM 18MRN1 Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices sroberts on DSKD5P82C1PROD with NOTICES shall erect a ‘‘fire wall’’ between the investment adviser and the brokerdealer with respect to access to information concerning the composition and/or changes to such Investment Company portfolio.8 In addition, Commentary .07 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. The Advisor and Sub-Advisor are not affiliated with a broker-dealer.9 Any additional Fund sub-advisers that are affiliated with a broker-dealer 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. According to the Registration Statement, the investment goal of the 8 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 investment adviser is 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 nonpublic information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. 9 The Exchange represents that AdvisorShares Investments, LLC, as the investment adviser of the Funds, and HTE Asset Management, LLC as the Sub-Advisor, and their respective 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 adviser 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 adviser 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 adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser 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. VerDate Nov<24>2008 17:08 Mar 17, 2010 Jkt 220001 13195 Fund is average annual returns in excess of the total return of the MSCI World Index (the ‘‘Index’’), with comparable volatility and little to no correlation with the Index. The Fund is considered a ‘‘fund-offunds’’ that seeks to achieve its investment objective by primarily investing in both long and short positions in other exchange-traded funds 10 (the ‘‘Underlying ETFs’’) that offer diversified exposure to global regions, countries, styles (market capitalization, value, growth, etc.) or sectors, and other exchange-traded products, including but not limited to exchange-traded notes (‘‘ETNs’’), exchange-traded currency trusts and closed-end funds. In addition, the Fund may use liquid futures contracts tied to broad market indices (e.g., futures contracts based on the S&P 500 Index, the MSCI EAFE Index and/or the MSCI Emerging Markets Index) when establishing net long or net short exposure on top of the core long/short portfolio.11 According to the Registration Statement, the Underlying ETFs in which the Fund will invest will primarily be index-based ETFs that hold substantially all of their assets in securities representing a specific index. The Sub-Advisor seeks to achieve the Fund’s investment objective by taking long positions in the Underlying ETFs that invest in what it believes to be the most relatively attractive global regions and countries within those regions, and by establishing an equivalent dollar amount of short positions in the Underlying ETFs that invest in what it believes to be the most relatively unattractive global regions and countries within those regions. By maintaining a core portfolio construction of equal long and short dollar exposure, the Sub-Advisor seeks to minimize the influence of directional trends and market exposure (‘‘beta’’), and instead seeks to profit from the relative performance between long and short positions in global regions, countries, styles or sectors. From timeto-time, the Sub-Advisor may also add directional exposure of up to 50% net long or net short exposure on top of its core long/short portfolio. In doing so, the Sub-Advisor seeks to generate additional profits for the Fund by being net long when stock markets are rising and net short when markets are falling. The Fund may invest in futures and options on futures contracts. The Fund will reduce the risk that it will be unable to close out a futures contract by only entering into futures contracts that are traded on a national futures exchange regulated by the Commodity Futures Trading Commission (‘‘CFTC’’). To the extent the Fund uses futures and/ or options on futures, it will do so in accordance with Rule 4.5 under the Commodity Exchange Act (‘‘CEA’’). According to the Registration Statement, the Trust, on behalf of all of its series, including the Fund, has filed a notice of eligibility for exclusion from the definition of the term ‘‘commodity pool operator’’ in accordance with Rule 4.5 and, therefore, the Fund is not subject to registration or regulation as a commodity pool operator under the CEA. According to the Registration Statement, while the Fund does not anticipate doing so, the Fund may purchase or hold illiquid securities, including securities that are not readily marketable and securities that are not registered (‘‘restricted securities’’) under the 1933 Act, but which can be offered and sold to ‘‘qualified institutional buyers’’ under Rule 144A under the 1933 Act. The Fund will not invest more than 15% of the Fund’s net assets in illiquid securities. If the percentage of the Fund’s net assets invested in illiquid securities exceeds 15% due to market activity, the Fund will take appropriate measures to reduce its holdings of illiquid securities. The term ‘‘illiquid securities’’ for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Fund has valued the securities.12 The Fund may enter into repurchase agreements with financial institutions; may enter into reverse repurchase agreements as referenced in the Registration Statement; 13 may engage in 10 The Fund’s investment in Underlying ETFs will be consistent with the requirements of Section 12(d)(1) of the 1940 Act, or any rule, regulation or order of the SEC or interpretation thereof. The Fund will only make such investments in conformity with the requirements of Section 817 of the Internal Revenue Code of 1986. 11 The Registration Statement states that the Fund may use futures contracts and related options for bona fide hedging; attempting to offset changes in the value of securities held or expected to be acquired or be disposed of; attempting to gain exposure to a particular market, index or instrument; or other risk management purposes. 12 This 15% investment limitation is a nonfundamental policy of the Fund and may be changed with respect to the Fund by the Board. 13 According to the Registration Statement, reverse repurchase agreements involve sales by the Fund of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Generally, the effect of such a transaction is that the Fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement, while the Fund will be able to keep the interest income associated with PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 E:\FR\FM\18MRN1.SGM Continued 18MRN1 sroberts on DSKD5P82C1PROD with NOTICES 13196 Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices short sales transactions; may buy and sell stock index futures contracts with respect to any stock index traded on a recognized stock exchange or board of trade; may purchase and write put and call options on indices and enter into related closing transactions; may enter into swap agreements, including, but not limited to, equity index swaps and interest rate swap agreements; may utilize swap agreements in an attempt to gain exposure to the stocks making up an index of securities in a market without actually purchasing those stocks, or to hedge a position; may purchase securities on a when-issued or delayed-delivery basis; and may invest in U.S. Treasury zero-coupon bonds. The Fund, or the ETFs in which it invests, may invest in U.S. government securities. To respond to adverse market, economic, political or other conditions, the Fund may invest 100% of its total assets, without limitation, in highquality short-term debt securities and money market instruments. The Fund may be invested in these instruments for extended periods, depending on the Sub-Advisor’s assessment of market conditions. These short-term debt securities and money market instruments include shares of other mutual funds, commercial paper, certificates of deposit, bankers’ acceptances, U.S. Government securities and repurchase agreements. The Fund is subject to the following investment limitations that are fundamental policies and may not be changed without the vote of a majority of the outstanding voting securities of the Fund: Diversification. The Fund 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.14 Concentration. The Fund may not invest 25% or more of its total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries. The Fund will not invest 25% or more of its total assets in any investment company that so concentrates. This limitation does not apply to investments in securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, or shares of investment companies. 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 Fund will be in compliance with Rule 10A–3 15 under the Exchange Act, as provided by NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares 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 and the Disclosed Portfolio will be made available to all market participants at the same time. The Underlying ETFs will be traded on a U.S. national securities exchange.16 Except for Underlying ETFs that may hold non-US issues, the Fund will not otherwise invest in non-US issues. Creations and Redemptions of Shares The Trust issues and sells Shares of the Fund only in Creation Units of 25,000 Shares on a continuous basis through the Distributor, at their NAV next determined after receipt, on any Business Day (as defined in the Registration Statement). The consideration for purchase of a Creation Unit of the Fund generally consists of an in-kind deposit of a designated portfolio of securities—the ‘‘Deposit Securities’’— per each Creation Unit constituting a substantial replication, or a representation, of the securities included in the Fund’s portfolio and an amount of cash—the Cash Component— computed as described in the Registration Statement. Together, the Deposit Securities and the Cash Component constitute the ‘‘Fund Deposit,’’ which represents the minimum initial and subsequent investment amount for a Creation Unit of the Fund. Creations and redemption of Shares may be effected only by Authorized Participants, as defined in the Registration Statement.17 Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Fund through the Administrator and only on 15 17 CFR 240.10A–3. e-mail from Michael Cavalier, Chief Counsel, NYSE Euronext, to Geoffrey C. Pemble, Special Counsel, Commission, dated March 10, 2010. 17 Terms relating to the Trust and the Shares referred to, but not defined, herein are defined in the Registration Statement. 16 See those portfolio securities. Such transactions are advantageous only if the interest cost to the Fund of the reverse repurchase transaction is less than the cost of obtaining the cash otherwise. 14 This diversification standard is contained in Section 5(b)(1) of the 1940 Act. VerDate Nov<24>2008 17:08 Mar 17, 2010 Jkt 220001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 a Business Day. The Trust will not redeem shares in amounts less than Creation Units. Unless cash redemptions are available or specified for the Fund, the redemption proceeds for a Creation Unit generally consist of Fund Securities—as announced by the Administrator on the Business Day of the request for redemption received in proper form— plus cash in an amount equal to the difference between the NAV of the shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities (the ‘‘Cash Redemption Amount’’), less a redemption transaction fee. In the event that the Fund Securities have a value greater than the NAV of the shares, a compensating cash payment equal to the differential is required to be made by or through an Authorized Participant by the redeeming shareholder. Availability of Information The Fund’s Web site (https:// www.advisorshares.com), which will be publicly available prior to the public offering of Shares, will include a form of the Prospectus for the Fund that may be downloaded. The Fund’s Web site will include additional quantitative information updated on a daily basis, including, for the Fund, (1) daily trading volume, the prior business day’s reported closing price, NAV and midpoint of the bid/ask spread at the time of calculation of such NAV (the ‘‘Bid/ Ask Price’’),18 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 Fund will disclose on its Web site the Disclosed Portfolio as defined in NYSE Arca Equities Rule 8.600(c)(2) that will form the basis for the Fund’s calculation of NAV at the end of the business day.19 On a daily basis, for each portfolio security of the Fund, the Fund will 18 The Bid/Ask Price of the Fund is determined using the highest bid and the lowest offer on the Exchange as of the time of calculation of the Fund’s NAV. The records relating to Bid/Ask Prices will be retained by the Fund and its service providers. 19 Under accounting procedures followed by the Fund, trades made on the prior business day (‘‘T’’) will be booked and reflected in NAV on the current business day (‘‘T+1’’). Accordingly, the Fund 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. E:\FR\FM\18MRN1.SGM 18MRN1 sroberts on DSKD5P82C1PROD with NOTICES Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices disclose on its Web site the following information: Ticker symbol, name of security, number of shares held in the portfolio, and percentage weighting of the security in the portfolio. On a daily basis, the Advisor will disclose for each portfolio security or other financial instrument of the Fund 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. The Web site information will be publicly available at no charge. 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 of the New York Stock Exchange (‘‘NYSE’’) via the National Securities Clearing Corporation. The basket represents one Creation Unit of the Fund. The NAV of the Fund will normally be determined as of the close of the regular trading session on the NYSE (ordinarily 4 p.m. Eastern Time) on each business day. Investors can also obtain the Trust’s Statement of Additional Information (‘‘SAI’’), the Fund’s 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 https://www.sec.gov. Information regarding market price and trading 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. 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. 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 Disclosed Portfolio, will allow investors to determine the value of the underlying portfolio of the Fund on a daily basis and to provide a close VerDate Nov<24>2008 17:08 Mar 17, 2010 Jkt 220001 estimate of that value throughout the trading day. 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 Fund.20 Trading in Shares of the Fund 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 comprising the Disclosed Portfolio and/ or the financial instruments of the Fund; 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 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. 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. The minimum trading increment for Shares on the Exchange will be $0.01. 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. 20 See NYSE Arca Equities Rule 7.12, Commentary .04. PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 13197 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 or with which the Exchange has entered into a surveillance sharing agreement.21 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 Fund is 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. 21 For a list of the current members of ISG, see https://www.isgportal.org. The Exchange notes that not all components of the Disclosed Portfolio for the Fund may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. E:\FR\FM\18MRN1.SGM 18MRN1 13198 Federal Register / Vol. 75, No. 52 / Thursday, March 18, 2010 / Notices 2. Statutory Basis The basis under the Exchange Act for this proposed rule change is the requirement under Section 6(b)(5) 22 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of 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 activelymanaged exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. 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. sroberts on DSKD5P82C1PROD with NOTICES 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 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. The Exchange has requested accelerated approval of this proposed rule change prior to the 30th day after the date of publication of notice in the Federal Register. The Commission is considering granting accelerated approval of the proposed rule change at the end of a 15-day comment period. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, 22 15 U.S.C. 78f(b)(5). VerDate Nov<24>2008 17:08 Mar 17, 2010 including whether the proposed rule change is consistent with the Exchange Act. Comments may be submitted by any of the following methods: Electronic Comments • 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–NYSEArca–2010–10 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–2010–10. 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 (https://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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEArca–2010–10 and should be submitted on or before April 2, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–5908 Filed 3–17–10; 8:45 am] BILLING CODE 8011–01–P 23 17 Jkt 220001 PO 00000 CFR 200.30–3(a)(12). Frm 00127 Fmt 4703 Sfmt 4703 DEPARTMENT OF STATE [Public Notice 6923] Bureau of Educational and Cultural Affairs (ECA) Request for Grant Proposals: The Indonesia English Language Study Program Announcement Type: New Grant. Funding Opportunity Number: ECA/ A/E/EAP–2010–IELSP. Catalog of Federal Domestic Assistance Number: 19.009. Key Dates: June 2010–March 2012. Application Deadline: April 29, 2010. Executive Summary The Office of Academic Exchange Programs of the Bureau of Educational and Cultural Affairs announces an open competition to administer the FY2010 Indonesia English Language Study Program. ECA welcomes applications from public and private non-profit organizations or consortia of organizations including accredited postsecondary educational institutions in the United States meeting the provisions described in Internal Revenue Code Section 26 U.S.C. 501(c)(3) in the United States (see Eligibility Information, section III). The grant recipient will administer and manage this initiative, which over the period of one year will enroll approximately 150 Indonesian undergraduate students in one eight-week intensive English language course each at a U.S. college or university and provide participants with an introduction to American institutions, society and culture. The grant recipient will be expected to identify the participating colleges and universities that will host students in groups of no more than 20 at a time. It is anticipated that the total amount of funding for FY2010 administrative and program costs will be $1,443,000. ECA reserves the right to reduce, revise, or increase the proposed budget in accordance with funding availability and the needs of the program. I. Funding Opportunity Description Authority Overall grant making authority for this program is contained in the Mutual Educational and Cultural Exchange Act of 1961, Public Law 87–256, as amended, also known as the FulbrightHays Act. The purpose of the Act is ‘‘to enable the Government of the United States to increase mutual understanding between the people of the United States and the people of other countries * * *; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, E:\FR\FM\18MRN1.SGM 18MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 52 (Thursday, March 18, 2010)]
[Notices]
[Pages 13194-13198]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5908]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61683; File No. SR-NYSEArca-2010-10]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to Listing of HTE Global Relative 
Value ETF

March 10, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on February 25, 2010, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 \4\ (``Shares'') under NYSE Arca Equities Rule 8.600: HTE Global 
Relative Value ETF. The text of the proposed rule change is available 
at the Exchange, the Commission's Public Reference Room, and https://www.nyse.com.
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    \4\ 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.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the following Managed Fund 
Shares \5\ (``Shares'') under NYSE Arca Equities Rule 8.600: HTE Global 
Relative Value ETF (the ``Fund'').\6\ 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.\7\
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    \5\ 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.
    \6\ The Commission previously approved listing and trading on 
the Exchange of the following actively managed funds under Rule 
8.600. See Securities Exchange Act Release Nos. 57619 (April 4, 
2008), 73 FR 19544 (April 10, 2008) (SR-NYSEArca-2008-25) (order 
approving Rule 8.600 and Exchange listing and trading of PowerShares 
Active AlphaQ Fund, PowerShares Active Alpha Multi-Cap Fund, 
PowerShares Active Mega-Cap Portfolio and PowerShares Active Low 
Duration Portfolio); 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); 60717 (September 24, 
2009), 74 FR 50853 (October 1, 2009) (SR-NYSEArca-2009-74 (order 
approving listing of four Grail Advisors RP ETFs); 60975 (November 
10, 2009), 74 FR 59590 (November 18, 2009) (SR-NYSEArca-2009-83) 
(order approving listing of Grail American Beacon International 
Equity ETF); 60981 (November 10, 2009), 74 FR 59594 (November 18, 
2009) (SR-NYSEArca-2009-79) (order approving listing of five fixed 
income funds of the PIMCO ETF Trust).
    \7\ The Trust is registered under the 1940 Act. On December 29, 
2009, the Trust filed with the Commission Post-Effective Amendment 
No. 2 to Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a) 
relating to the Fund (File Nos. 333-157876 and 811-22110) (the 
``Registration Statement''). The description of the operation of the 
Trust and the Fund herein is based on the Registration Statement.
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HTE Global Relative Value ETF
    The investment advisor to the Fund is AdvisorShares Investments, 
LLC (the ``Advisor''). HTE Asset Management, LLC is the sub-advisor to 
the Fund (``Sub-Advisor''). Foreside Fund Services, LLC is the 
principal underwriter and distributor of the Fund's Shares. The Bank of 
New York Mellon is the administrator, transfer agent and custodian for 
the Fund.
    Commentary .07 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

[[Page 13195]]

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.\8\ In 
addition, Commentary .07 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. The 
Advisor and Sub-Advisor are not affiliated with a broker-dealer.\9\ Any 
additional Fund sub-advisers that are affiliated with a broker-dealer 
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.
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    \8\ 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 investment adviser is 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.
    \9\ The Exchange represents that AdvisorShares Investments, LLC, 
as the investment adviser of the Funds, and HTE Asset Management, 
LLC as the Sub-Advisor, and their respective 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 adviser 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 adviser 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 adviser to provide 
investment advice to clients unless such investment adviser has (i) 
adopted and implemented written policies and procedures reasonably 
designed to prevent violation, by the investment adviser 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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    According to the Registration Statement, the investment goal of the 
Fund is average annual returns in excess of the total return of the 
MSCI World Index (the ``Index''), with comparable volatility and little 
to no correlation with the Index.
    The Fund is considered a ``fund-of-funds'' that seeks to achieve 
its investment objective by primarily investing in both long and short 
positions in other exchange-traded funds \10\ (the ``Underlying ETFs'') 
that offer diversified exposure to global regions, countries, styles 
(market capitalization, value, growth, etc.) or sectors, and other 
exchange-traded products, including but not limited to exchange-traded 
notes (``ETNs''), exchange-traded currency trusts and closed-end funds. 
In addition, the Fund may use liquid futures contracts tied to broad 
market indices (e.g., futures contracts based on the S&P 500 Index, the 
MSCI EAFE Index and/or the MSCI Emerging Markets Index) when 
establishing net long or net short exposure on top of the core long/
short portfolio.\11\ According to the Registration Statement, the 
Underlying ETFs in which the Fund will invest will primarily be index-
based ETFs that hold substantially all of their assets in securities 
representing a specific index.
---------------------------------------------------------------------------

    \10\ The Fund's investment in Underlying ETFs will be consistent 
with the requirements of Section 12(d)(1) of the 1940 Act, or any 
rule, regulation or order of the SEC or interpretation thereof. The 
Fund will only make such investments in conformity with the 
requirements of Section 817 of the Internal Revenue Code of 1986.
    \11\ The Registration Statement states that the Fund may use 
futures contracts and related options for bona fide hedging; 
attempting to offset changes in the value of securities held or 
expected to be acquired or be disposed of; attempting to gain 
exposure to a particular market, index or instrument; or other risk 
management purposes.
---------------------------------------------------------------------------

    The Sub-Advisor seeks to achieve the Fund's investment objective by 
taking long positions in the Underlying ETFs that invest in what it 
believes to be the most relatively attractive global regions and 
countries within those regions, and by establishing an equivalent 
dollar amount of short positions in the Underlying ETFs that invest in 
what it believes to be the most relatively unattractive global regions 
and countries within those regions. By maintaining a core portfolio 
construction of equal long and short dollar exposure, the Sub-Advisor 
seeks to minimize the influence of directional trends and market 
exposure (``beta''), and instead seeks to profit from the relative 
performance between long and short positions in global regions, 
countries, styles or sectors. From time-to-time, the Sub-Advisor may 
also add directional exposure of up to 50% net long or net short 
exposure on top of its core long/short portfolio. In doing so, the Sub-
Advisor seeks to generate additional profits for the Fund by being net 
long when stock markets are rising and net short when markets are 
falling.
    The Fund may invest in futures and options on futures contracts. 
The Fund will reduce the risk that it will be unable to close out a 
futures contract by only entering into futures contracts that are 
traded on a national futures exchange regulated by the Commodity 
Futures Trading Commission (``CFTC''). To the extent the Fund uses 
futures and/or options on futures, it will do so in accordance with 
Rule 4.5 under the Commodity Exchange Act (``CEA''). According to the 
Registration Statement, the Trust, on behalf of all of its series, 
including the Fund, has filed a notice of eligibility for exclusion 
from the definition of the term ``commodity pool operator'' in 
accordance with Rule 4.5 and, therefore, the Fund is not subject to 
registration or regulation as a commodity pool operator under the CEA.
    According to the Registration Statement, while the Fund does not 
anticipate doing so, the Fund may purchase or hold illiquid securities, 
including securities that are not readily marketable and securities 
that are not registered (``restricted securities'') under the 1933 Act, 
but which can be offered and sold to ``qualified institutional buyers'' 
under Rule 144A under the 1933 Act. The Fund will not invest more than 
15% of the Fund's net assets in illiquid securities. If the percentage 
of the Fund's net assets invested in illiquid securities exceeds 15% 
due to market activity, the Fund will take appropriate measures to 
reduce its holdings of illiquid securities. The term ``illiquid 
securities'' for this purpose means securities that cannot be disposed 
of within seven days in the ordinary course of business at 
approximately the amount at which the Fund has valued the 
securities.\12\
---------------------------------------------------------------------------

    \12\ This 15% investment limitation is a non-fundamental policy 
of the Fund and may be changed with respect to the Fund by the 
Board.
---------------------------------------------------------------------------

    The Fund may enter into repurchase agreements with financial 
institutions; may enter into reverse repurchase agreements as 
referenced in the Registration Statement; \13\ may engage in

[[Page 13196]]

short sales transactions; may buy and sell stock index futures 
contracts with respect to any stock index traded on a recognized stock 
exchange or board of trade; may purchase and write put and call options 
on indices and enter into related closing transactions; may enter into 
swap agreements, including, but not limited to, equity index swaps and 
interest rate swap agreements; may utilize swap agreements in an 
attempt to gain exposure to the stocks making up an index of securities 
in a market without actually purchasing those stocks, or to hedge a 
position; may purchase securities on a when-issued or delayed-delivery 
basis; and may invest in U.S. Treasury zero-coupon bonds. The Fund, or 
the ETFs in which it invests, may invest in U.S. government securities.
---------------------------------------------------------------------------

    \13\ According to the Registration Statement, reverse repurchase 
agreements involve sales by the Fund of portfolio assets 
concurrently with an agreement by the Fund to repurchase the same 
assets at a later date at a fixed price. Generally, the effect of 
such a transaction is that the Fund can recover all or most of the 
cash invested in the portfolio securities involved during the term 
of the reverse repurchase agreement, while the Fund will be able to 
keep the interest income associated with those portfolio securities. 
Such transactions are advantageous only if the interest cost to the 
Fund of the reverse repurchase transaction is less than the cost of 
obtaining the cash otherwise.
---------------------------------------------------------------------------

    To respond to adverse market, economic, political or other 
conditions, the Fund may invest 100% of its total assets, without 
limitation, in high-quality short-term debt securities and money market 
instruments. The Fund may be invested in these instruments for extended 
periods, depending on the Sub-Advisor's assessment of market 
conditions. These short-term debt securities and money market 
instruments include shares of other mutual funds, commercial paper, 
certificates of deposit, bankers' acceptances, U.S. Government 
securities and repurchase agreements.
    The Fund is subject to the following investment limitations that 
are fundamental policies and may not be changed without the vote of a 
majority of the outstanding voting securities of the Fund:
    Diversification. The Fund 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.\14\
---------------------------------------------------------------------------

    \14\ This diversification standard is contained in Section 
5(b)(1) of the 1940 Act.
---------------------------------------------------------------------------

    Concentration. The Fund may not invest 25% or more of its total 
assets in the securities of one or more issuers conducting their 
principal business activities in the same industry or group of 
industries. The Fund will not invest 25% or more of its total assets in 
any investment company that so concentrates. This limitation does not 
apply to investments in securities issued or guaranteed by the U.S. 
Government, its agencies or instrumentalities, or shares of investment 
companies.
    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 Fund will be in 
compliance with Rule 10A-3 \15\ under the Exchange Act, as provided by 
NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares 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 and the Disclosed Portfolio will be made 
available to all market participants at the same time.
---------------------------------------------------------------------------

    \15\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    The Underlying ETFs will be traded on a U.S. national securities 
exchange.\16\ Except for Underlying ETFs that may hold non-US issues, 
the Fund will not otherwise invest in non-US issues.
---------------------------------------------------------------------------

    \16\ See e-mail from Michael Cavalier, Chief Counsel, NYSE 
Euronext, to Geoffrey C. Pemble, Special Counsel, Commission, dated 
March 10, 2010.
---------------------------------------------------------------------------

Creations and Redemptions of Shares
    The Trust issues and sells Shares of the Fund only in Creation 
Units of 25,000 Shares on a continuous basis through the Distributor, 
at their NAV next determined after receipt, on any Business Day (as 
defined in the Registration Statement). The consideration for purchase 
of a Creation Unit of the Fund generally consists of an in-kind deposit 
of a designated portfolio of securities--the ``Deposit Securities''--
per each Creation Unit constituting a substantial replication, or a 
representation, of the securities included in the Fund's portfolio and 
an amount of cash--the Cash Component--computed as described in the 
Registration Statement. Together, the Deposit Securities and the Cash 
Component constitute the ``Fund Deposit,'' which represents the minimum 
initial and subsequent investment amount for a Creation Unit of the 
Fund. Creations and redemption of Shares may be effected only by 
Authorized Participants, as defined in the Registration Statement.\17\
---------------------------------------------------------------------------

    \17\ Terms relating to the Trust and the Shares referred to, but 
not defined, herein are defined in the Registration Statement.
---------------------------------------------------------------------------

    Shares may be redeemed only in Creation Units at their NAV next 
determined after receipt of a redemption request in proper form by the 
Fund through the Administrator and only on a Business Day. The Trust 
will not redeem shares in amounts less than Creation Units.
    Unless cash redemptions are available or specified for the Fund, 
the redemption proceeds for a Creation Unit generally consist of Fund 
Securities--as announced by the Administrator on the Business Day of 
the request for redemption received in proper form--plus cash in an 
amount equal to the difference between the NAV of the shares being 
redeemed, as next determined after a receipt of a request in proper 
form, and the value of the Fund Securities (the ``Cash Redemption 
Amount''), less a redemption transaction fee. In the event that the 
Fund Securities have a value greater than the NAV of the shares, a 
compensating cash payment equal to the differential is required to be 
made by or through an Authorized Participant by the redeeming 
shareholder.
Availability of Information
    The Fund's Web site (https://www.advisorshares.com), which will be 
publicly available prior to the public offering of Shares, will include 
a form of the Prospectus for the Fund that may be downloaded. The 
Fund's Web site will include additional quantitative information 
updated on a daily basis, including, for the Fund, (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''),\18\ 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 Fund will disclose on its Web site the Disclosed 
Portfolio as defined in NYSE Arca Equities Rule 8.600(c)(2) that will 
form the basis for the Fund's calculation of NAV at the end of the 
business day.\19\
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    \18\ The Bid/Ask Price of the Fund is determined using the 
highest bid and the lowest offer on the Exchange as of the time of 
calculation of the Fund's NAV. The records relating to Bid/Ask 
Prices will be retained by the Fund and its service providers.
    \19\ Under accounting procedures followed by the Fund, trades 
made on the prior business day (``T'') will be booked and reflected 
in NAV on the current business day (``T+1''). Accordingly, the Fund 
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.
---------------------------------------------------------------------------

    On a daily basis, for each portfolio security of the Fund, the Fund 
will

[[Page 13197]]

disclose on its Web site the following information: Ticker symbol, name 
of security, number of shares held in the portfolio, and percentage 
weighting of the security in the portfolio. On a daily basis, the 
Advisor will disclose for each portfolio security or other financial 
instrument of the Fund 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. The Web site information will be publicly available at no 
charge.
    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 of the New York 
Stock Exchange (``NYSE'') via the National Securities Clearing 
Corporation. The basket represents one Creation Unit of the Fund. The 
NAV of the Fund will normally be determined as of the close of the 
regular trading session on the NYSE (ordinarily 4 p.m. Eastern Time) on 
each business day.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Fund's 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 https://www.sec.gov. 
Information regarding market price and trading 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. 
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. 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 Disclosed Portfolio, will allow investors to 
determine the value of the underlying portfolio of the Fund on a daily 
basis and to provide a close estimate of that value throughout the 
trading day.
    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 Fund.\20\ Trading in Shares of the Fund 
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 comprising 
the Disclosed Portfolio and/or the financial instruments of the Fund; 
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 Fund may be 
halted.
---------------------------------------------------------------------------

    \20\ See NYSE Arca Equities Rule 7.12, Commentary .04.
---------------------------------------------------------------------------

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. The minimum 
trading increment for Shares on the Exchange will be $0.01.
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 or with which the Exchange has entered into a surveillance sharing 
agreement.\21\
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    \21\ For a list of the current members of ISG, see https://www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for the Fund 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 Fund is 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.

[[Page 13198]]

2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \22\ that an exchange have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of 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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    \22\ 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 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The Exchange has requested accelerated approval of this proposed 
rule change prior to the 30th day after the date of publication of 
notice in the Federal Register. The Commission is considering granting 
accelerated approval of the proposed rule change at the end of a 15-day 
comment period.

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 Exchange Act. Comments may be submitted 
by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-10 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-2010-10. 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 (https://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 the filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEArca-2010-10 and should be submitted on or before April 2, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5908 Filed 3-17-10; 8:45 am]
BILLING CODE 8011-01-P

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