Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of a Proposed Rule Change Relating to Listing and Trading of WisdomTree Dreyfus Commodity Currency Fund under NYSE Arca Equities Rule 8.600, 47652-47655 [2010-19434]
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47652
Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Notices
June 25, 2010.3 The Commission
received no comment letters on the
proposal. This order approves the
proposed rule change.
In its proposal, NASDAQ described
real-time analytical tools offered by
Correlix to measure the latency of orders
to and from the NASDAQ Market
Center, and also described the terms of
the pricing and the revenue sharing
agreement between Correlix and the
Exchange. In addition, NASDAQ
represented that under the agreement,
NASDAQ will receive 30% of the total
monthly subscription fees received by
Correlix from parties who have
contracted directly with Correlix to use
their RaceTeam latency measurement
service for the NASDAQ Market Center.
According to the Exchange, NASDAQ
will not bill or contract with any
Correlix RaceTeam customer directly.
Pricing for the Correlix RaceTeam
product for the NASDAQ market varies
depending on the number of unique
MPIDs and ports selected by the
customer for monitoring by Correlix. For
NASDAQ (including the NASDAQ
Options Market), the fee will be an
initial $3,000 monthly base fee for the
first unique MPID monitored. For each
additional unique MPID sought to be
monitored, an additional monthly
charge of $1,000 will be assessed. The
monthly price for each unique MPID
includes the monitoring of up to 25
NASDAQ port connections associated
with that particular MPID. Customers
that wish to exceed 25 ports per MPID
for monitoring can purchase additional
25 port blocks for an additional fee of
$1,000 per month per MPID.
According to the Exchange, Correlix
will see an individualized unique
NASDAQ-generated identifier that will
allow Correlix RaceTeam to determine
round-trip order time,4 from the time
the order reaches the NASDAQ extranet,
through the NASDAQ matching engine,
and back out of the NASDAQ extranet.
In its proposal, the Exchange
represented that the RaceTeam product
offering does not measure latency
outside of the NASDAQ extranet.
Further, NASDAQ stated that the
unique identifier serves as a
technological information barrier so that
the RaceTeam data collector will only
be able to view data for Correlix
RaceTeam subscriber firms related to
latency. Accordingly, Correlix will not
see subscriber’s individual order detail
such as security, price or size;
3 See Securities Exchange Act Release No. 62326
(June 18, 2010), 75 FR 36460 (‘‘Notice’’).
4 According to NASDAQ, the product measures
latency of orders regardless of whether the orders
are rejected, executed, or partially executed.
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individual RaceTeam subscribers’ logins
will restrict access to only their own
latency data; and Correlix will not see
specific information regarding the
trading activity of non-subscribers.
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.5 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(4) of the Act,6 which requires that
the rules of a national securities
exchange provide for the equitable
allocation of reasonable dues, fees and
other charges among its members and
issuers and other persons using its
facilities, and with Section 6(b)(5) of the
Act,7 which requires, among other
things, that that the rules of a national
securities exchange 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, and
not be designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
Pursuant to the arrangement,
NASDAQ makes the RaceTeam product
uniformly available to all customers
who voluntarily request it and pay the
fees as detailed in the proposal,
pursuant to a standard nondiscriminatory pricing schedule. In
addition, the Commission believes that
the proposal will further the protection
of investors and the public interest
because: (1) Correlix will only be able to
view data related to latency for Correlix
RaceTeam subscriber firms; (2) Correlix
will not see a subscriber’s individual
order detail such as security, price or
size; (3) individual RaceTeam
subscribers’ logins will restrict access to
only their own latency data; and (4)
Correlix will not see specific
information regarding the trading
activity of non-subscribers.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,8 that the
proposed rule change (SR–NASDAQ–
2010–068) be, and hereby is, approved.
5 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
6 15 U.S.C. 78f(b)(4).
7 15 U.S.C. 78f(b)(5).
8 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–19330 Filed 8–5–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62623; File No. SR–
NYSEArca–2010–51]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
a Proposed Rule Change Relating to
Listing and Trading of WisdomTree
Dreyfus Commodity Currency Fund
under NYSE Arca Equities Rule 8.600
August 2, 2010.
I. Introduction
On June 10, 2010, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’), 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
(‘‘Shares’’) of the WisdomTree Dreyfus
Commodity Currency Fund (‘‘Fund’’)
under NYSE Arca Equities Rule 8.600.
The proposed rule change was
published for comment in the Federal
Register on June 29, 2010.3 The
Commission received no comment
letters on the proposal. This order
approves the proposed rule change.
II. Description of the Proposal
The Exchange proposes to list and
trade the Shares pursuant to NYSE Arca
Equities Rule 8.600 which governs the
listing and trading of ‘‘Managed Fund
Shares’’ on the Exchange.4
The Fund will be an actively managed
exchange traded fund. The Shares will
9 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 62349
(June 22, 2010), 75 FR 37510 (‘‘Notice’’).
4 Managed Fund Shares are defined as securities
that (a) represent an interest in a registered
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; (b) 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; and (c) 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 net
asset value. See NYSE Arca Equities Rule
8.600(c)(1).
1 15
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Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Notices
sroberts on DSKD5P82C1PROD with NOTICES
be offered by the WisdomTree Trust
(‘‘Trust’’), which was established as a
Delaware statutory trust on December
15, 2005. The Trust is registered with
the Commission as an investment
company.5 WisdomTree Asset
Management, Inc. (‘‘WisdomTree Asset
Management’’) is the investment adviser
(‘‘Adviser’’) to the Fund.6 The Exchange
represents that WisdomTree Asset
Management is not affiliated with any
broker-dealer. The Dreyfus Corporation
(‘‘Dreyfus’’), which will serve as the subadviser for the Fund (‘‘Sub-Adviser’’), is
affiliated with multiple broker-dealers
and, accordingly, has implemented a
‘‘fire wall’’ with respect to such brokerdealers regarding access to information
concerning the composition and/or
changes to the Fund’s portfolio.7 The
Bank of New York is the administrator,
custodian and transfer agent for the
Trust. ALPS Distributors, Inc. serves as
the distributor for the Trust.8
5 See Post-Effective Amendment No. 32 to
Registration Statement on Form N–1A for the Trust,
dated March 19, 2010 (File Nos. 333–132380 and
811–21864), as supplemented on June 8, 2010 (the
‘‘Registration Statement’’). The descriptions of the
Fund and the Shares contained herein are based on
information in the Registration Statement.
6 WisdomTree Investments, Inc. (‘‘WisdomTree
Investments’’) is the parent company of
WisdomTree Asset Management.
7 The Exchange represents that the Adviser and
Sub-Adviser, and their related personnel, are
subject to Investment Advisers Act Rule 204A–1.
This Rule specifically requires the adoption of a
code of ethics by an investment 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.
8 The Commission has issued an order granting
certain exemptive relief to the Trust under the
Investment Company Act of 1940 (15 U.S.C. 80a–
1) (‘‘1940 Act’’). See Investment Company Act
Release No. 28174 (February 27, 2008) (File No.
812–13470). In compliance with Commentary .05 to
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WisdomTree Commodity Currency Fund
The Fund seeks to achieve total
returns reflective of money market rates
in selected commodity-producing
countries and changes to the value of
such countries’ currencies relative to the
U.S. dollar.
The Fund is designed to provide
exposure to both the currencies and
money market rates available to foreign
investors in selected commodityproducing countries. The Fund intends
to invest in commodity-producing
countries such as Australia, Brazil,
Canada, Chile, Indonesia, Mexico, New
Zealand, Norway, Russia and South
Africa. In addition to seeking broad
exposure across countries and
currencies, the Fund intends to seek
exposure across currencies correlated to
each of the key commodity groups:
Industrial metals, precious metals,
energy, agriculture and livestock. The
Fund generally will invest only in
currencies that ‘‘float’’ relative to other
currencies. The value of a floating
currency is largely determined by
supply and demand and prevailing
market rates. In contrast, the value of a
‘‘fixed’’ currency generally is set by a
government or central bank at an official
exchange rate. The Fund generally does
not intend to invest in the currencies of
notable commodity producers, such as
China, Saudi Arabia and the United
Arab Emirates, since they are fixed or
otherwise closely linked to the U.S.
dollar. The Fund will only invest in
currencies that it deems to be
sufficiently liquid and accessible.9
The Fund intends to achieve exposure
to selected commodity-producing
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
Fund 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 (15
U.S.C. 77a).
9 The Fund may pursue its objectives through
direct investments in money market instruments
issued by entities in the applicable foreign 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 the Fund
pursues direct investment, eligible investments
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,
and short-term, high-quality corporate debt
obligations designed to provide exposure to the
applicable non-U.S. currency and money market
rates, and U.S. dollar money market instruments.
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47653
countries available to U.S. investors by
investing primarily in short-term U.S.
money market securities and forward
currency contracts and swaps. The
combination of 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. 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.
In order to reduce interest rate risk,
the Fund generally expects to maintain
an average portfolio maturity of 90 days
or less. The ‘‘average portfolio maturity’’
of the Fund is the average of all the
current maturities of the individual
securities in the Fund’s portfolio. All
money market securities acquired by the
Fund will be rated in the upper two
short-term ratings by at least two
nationally recognized statistical rating
organizations (‘‘NRSROs’’) or, if unrated,
deemed by the Adviser to be of
equivalent quality.
As a matter of general policy, the
Fund will invest, under normal
circumstances, at least 80% of its net
assets, plus the amount of any
borrowings for investment purposes, in
investments that are tied economically
to selected commodity-producing
countries available to U.S. investors that
make a significant contribution to the
global export of commodities. If,
subsequent to an investment, the 80%
requirement is no longer met, the
Fund’s future investments will be made
in a manner that will bring the Fund
into compliance with this policy.
The Fund may invest up to an
aggregate amount of 10% of its net
assets in illiquid securities. Illiquid
securities include securities subject to
contractual or other restrictions on
resale and other instruments that lack
readily available markets.
Additional information regarding the
Trust, the Fund, the Shares, the
investment objectives, strategies,
policies, and restrictions, risks, fees and
expenses, creation and redemption
procedures, portfolio holdings,
distributions and taxes, availability of
information, trading rules and halts, and
surveillance procedures, among other
things, can be found in the Registration
Statement and in the Notice, as
applicable.10
10 See
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supra notes 3 and 5.
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47654
Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Notices
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of
Section 6 of the Act 11 and the rules and
regulations thereunder applicable to a
national securities exchange.12 In
particular, the Commission finds that
the proposed rule change is consistent
with the requirements of Section 6(b)(5)
of the Act,13 which requires, among
other things, that the Exchange’s rules
be designed to prevent fraudulent and
manipulative acts and practices,
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The Commission notes
that the Shares must comply with the
requirements of NYSE Arca Equities
Rule 8.600 to be listed and traded on the
Exchange.
The Commission finds that the
proposal to list and trade the Shares on
the Exchange is consistent with Section
11A(a)(1)(C)(iii) of the Act,14 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. Quotation and
last-sale information for the Shares will
be available via the Consolidated Tape
Association’s high-speed line, and the
Portfolio Indicative Value (‘‘PIV’’) will
be updated and disseminated by one or
more major market data vendors at least
every 15 seconds during the Core
Trading Session. In addition, the Trust
will make available on its Web site on
each business day before the
commencement of trading in Shares in
the Core Trading Session the Disclosed
Portfolio that will form the basis for the
calculation of the NAV, which will be
determined at the end of the business
day.15 The Fund’s Web site will also
11 15
U.S.C. 78f.
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).
13 15 U.S.C. 78f(b)(5).
14 15 U.S.C. 78k–1(a)(1)(C)(iii).
15 The Commission notes that the Reporting
Authority providing the Disclosed Portfolio must
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.
See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
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include additional quantitative
information updated on a daily basis
relating to NAV. Information regarding
the market price and trading volume of
the Shares will be continually available
on a real-time basis throughout the day
on brokers’ computer screens and other
electronic services, and the previous
day’s closing price and trading volume
information will be published daily in
the financial section of newspapers.
The Commission further believes that
the proposed rule change 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 Exchange represents that it
will obtain a representation from the
issuer of the Shares that the net asset
value per share for the Fund will be
calculated daily and that the net asset
value and the Disclosed Portfolio will be
made available to all market
participants at the same time.16
Additionally, if the Exchange becomes
aware that the NAV or the Disclosed
Portfolio is not disseminated daily to all
market participants at the same time,
the Exchange will halt trading until
such time as the NAV or the Disclosed
Portfolio is available to all market
participants.17 Further, if the PIV is not
being disseminated as required, the
Exchange may halt trading during the
day in which the interruption occurs; if
the interruption persists past the trading
day in which it occurred, the Exchange
will halt trading no later than the
beginning of the trading day following
the interruption.18 The Exchange
represented that the Sub-Adviser is
affiliated with multiple broker-dealers
and, accordingly, has implemented a
‘‘fire wall’’ with respect to those brokerdealers regarding access to information
concerning the composition and/or
changes to the Fund’s portfolio. Further,
the Commission notes 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
16 See
NYSE Arca Equities Rule 8.600(d)(1)(B).
NYSE Arca Equities Rule 8.600(d)(2)(D).
18 Id. Trading may also be halted because of
market conditions or for reasons that, in the view
of the Exchange, make trading in the Shares
inadvisable. These may include (1) the extent to
which trading is not occurring in the 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.
17 See
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regarding the open-end fund’s
portfolio.19
The Exchange represented that the
Shares are equity securities subject to
the Exchange’s rules governing the
trading of equity securities. In support
of this proposal, the Exchange has made
representations, including:
(1) The Shares will be subject to the
initial and continued listing criteria
under NYSE Arca Equities Rule
8.600(d).
(2) The Exchange’s surveillance
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.
(3) Before commencement of trading,
the Exchange will inform its ETP
Holders in an Information Bulletin of
the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (a) The
procedures for purchases and
redemptions of shares and that Shares
are not individually redeemable; (b)
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; (c) the risks involved
in trading the Shares during the
Opening and Late Trading Sessions
when an updated PIV will not be
calculated or publicly disseminated; (d)
how information regarding the PIV is
disseminated; (e) 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 (f)
trading information.
(4) The Fund will be in compliance
with Rule 10A–3 under the Act.20
(5) The Fund will not invest in nonU.S. equity securities.
This approval order is based on the
Exchange’s representations.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to a national
securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,21 that the
proposed rule change (SR–NYSEArca–
2010–51) be, and it hereby is, approved.
19 See Commentary .06 to NYSE Arca Equities
Rule 8.600.
20 17 CFR 240.10A–3.
21 15 U.S.C. 78s(b)(2).
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Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–19434 Filed 8–5–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62620; File No. SR–
NYSEArca–2010–71]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the ETFS White Metals Basket Trust
July 30, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on July 22,
2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade ETFS White Metals Basket Shares
of the ETFS White Metals Basket Trust
pursuant to NYSE Arca Equities Rule
8.201. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
sroberts on DSKD5P82C1PROD with NOTICES
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.
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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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 ETFS White Metals Basket Shares
(‘‘Shares’’) of the ETFS White Metals
Basket Trust (‘‘Trust’’) under NYSE Arca
Equities Rule 8.201. Under NYSE Arca
Equities Rule 8.201, the Exchange may
propose to list and/or trade pursuant to
unlisted trading privileges (‘‘UTP’’)
‘‘Commodity-Based Trust Shares.’’ 3 The
Commission has previously approved
listing on the Exchange under NYSE
Arca Equities Rule 8.201 of other issues
of Commodity-Based Trust Shares. The
Commission has approved listing on the
Exchange of ETFS Silver Trust 4, ETFS
Gold Trust 5, ETFS Platinum Trust 6 and
ETFS Palladium Trust (collectively, the
‘‘ETFS Trusts’’).7 In addition, The
Commission has approved listing on the
Exchange of streetTRACKS Gold Trust
and iShares COMEX Gold Trust.8 Prior
to their listing on the Exchange, the
Commission approved listing of the
streetTRACKS Gold Trust on the New
York Stock Exchange (‘‘NYSE’’) and
listing of iShares COMEX Gold Trust on
the American Stock Exchange LLC (now
known as ‘‘NYSE Amex LLC’’).9 In
addition, the Commission has approved
trading of the streetTRACKS Gold Trust
and iShares Silver Trust on the
Exchange pursuant to UTP.10 The
3 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
4 Securities Exchange Act Release No. 59781
(April 17, 2009), 74 FR 18771 (April 24, 2009) (SR–
NYSEArca–2009–28).
5 Securities Exchange Act Release No. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40).
6 Securities Exchange Act Release No. 61219
(December 22, 2009), 74 FR 68886 (December 29,
2009) (SR–NYSEArca–2009–95).
7 Securities Exchange Act Release No. 61220
(December 22, 2009), 74 FR 68895 (December 29,
2009) (SR–NYSEArca–2009–94).
8 See Securities Exchange Act Release Nos. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
(SR–NYSEArca–2007–76) (order approving listing
on the Exchange of the streetTRACKS Gold Trust);
56041 (July 11, 2007), 72 FR 39114 (July 17, 2007)
(SR–NYSEArca–2007–43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
9 See Securities Exchange Act Release Nos. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22) (order approving listing of
streetTRACKS Gold Trust on NYSE); 51058
(January 19, 2005), 70 FR 3749 (January 26, 2005)
(SR–Amex–2004–38) (order approving listing of
iShares COMEX Gold Trust on the American Stock
Exchange LLC).
10 See Securities Exchange Act Release Nos.
53520 (March 20, 2006), 71 FR 14977 (March 24,
2006) (SR–PCX–2005–117) (order approving trading
on the Exchange pursuant to UTP of the iShares
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
47655
Commission also has approved listing of
the iShares Silver Trust on the
Exchange 11 and, previously, listing of
the iShares Silver Trust on the
American Stock Exchange LLC.12
The Trust will issue Shares which
represent units of fractional undivided
beneficial interest in and ownership of
the Trust. The investment objective of
the Trust is for the Shares to reflect the
performance of the price of physical
silver, platinum and palladium in the
proportions held by the Trust, less the
expenses of the Trust’s operations.13
ETFS Services USA LLC is the
sponsor of the Trust (‘‘Sponsor’’), The
Bank of New York Mellon is the trustee
of the Trust (‘‘Trustee’’),14 and JPMorgan
Chase Bank, N.A. is the custodian of the
Trust (‘‘Custodian’’).15
Silver Trust); 51245 (February 23, 2005), 70 FR
10731 (March 4, 2005) (SR–PCX–2004–117) (order
approving trading on the Exchange of the
streetTRACKS Gold Trust pursuant to UTP).
11 See Securities Exchange Act Release Nos.
58956 (November 14, 2008), 73 FR 71074
(November 24, 2008) (SR–NYSEArca–2008–124)
(order approving listing on the Exchange of the
iShares Silver Trust).
12 See Securities Exchange Act Release No. 53521
(March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR–Amex–2005–72) (order approving listing on the
American Stock Exchange LLC of the iShares Silver
Trust).
13 See the registration statement for the Trust on
Form S–1, filed with the Commission on May 27,
2010 (No. 333–167166) (‘‘Registration Statement’’).
The descriptions of the Trust, the Shares, the
Bullion, and the regulation and operation of the
commodity markets contained herein are based on
the Registration Statement.
14 The Trustee is generally responsible for the
day-to-day administration of the Trust, including
keeping the Trust’s operational records. The
Trustee’s principal responsibilities include (1)
transferring the Trust’s Bullion (silver, platinum
and palladium) as needed to pay the Sponsor’s Fee
in Bullion (Bullion transfers are expected to occur
approximately monthly in the ordinary course), (2)
valuing the Trust’s Bullion and calculating the NAV
of the Trust and the NAV per Share, (3) receiving
and processing orders from Authorized Participants
to create and redeem Baskets and coordinating the
processing of such orders with the Custodian and
DTC, (4) selling the Trust’s Bullion as needed to pay
any extraordinary Trust expenses that are not
assumed by the Sponsor, (5) when appropriate,
making distributions of cash or other property to
Shareholders, and (6) receiving and reviewing
reports from or on the Custodian’s custody of and
transactions in the Trust’s Bullion.
15 The Custodian is responsible for safekeeping
for the Trust Bullion deposited with it by
Authorized Participants in connection with the
creation of Baskets. The Custodian is also
responsible for selecting the Zurich Sub-Custodians
and its other subcustodians, if any. The Custodian
facilitates the transfer of Bullion in and out of the
Trust through the unallocated Bullion accounts it
or a Bullion clearing bank will maintain for each
Authorized Participant and the unallocated and
allocated Bullion accounts it will maintain for the
Trust. The Custodian will hold at its London,
England vault premises that portion of the Trust’s
allocated Bullion to be held in London. The Zurich
Sub-Custodians will hold at their Zurich,
Switzerland vault premises that portion of the
Trust’s allocated platinum and palladium to be held
E:\FR\FM\06AUN1.SGM
Continued
06AUN1
]]>Agencies
[Federal Register Volume 75, Number 151 (Friday, August 6, 2010)]
[Notices]
[Pages 47652-47655]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19434]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62623; File No. SR-NYSEArca-2010-51]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of a Proposed Rule Change Relating to Listing and Trading of
WisdomTree Dreyfus Commodity Currency Fund under NYSE Arca Equities
Rule 8.600
August 2, 2010.
I. Introduction
On June 10, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca''),
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 (``Shares'') of the WisdomTree Dreyfus
Commodity Currency Fund (``Fund'') under NYSE Arca Equities Rule 8.600.
The proposed rule change was published for comment in the Federal
Register on June 29, 2010.\3\ The Commission received no comment
letters on the proposal. This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 62349 (June 22, 2010),
75 FR 37510 (``Notice'').
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II. Description of the Proposal
The Exchange proposes to list and trade the Shares pursuant to NYSE
Arca Equities Rule 8.600 which governs the listing and trading of
``Managed Fund Shares'' on the Exchange.\4\
---------------------------------------------------------------------------
\4\ Managed Fund Shares are defined as securities that (a)
represent an interest in a registered 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; (b) 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; and (c) 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
net asset value. See NYSE Arca Equities Rule 8.600(c)(1).
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The Fund will be an actively managed exchange traded fund. The
Shares will
[[Page 47653]]
be offered by the WisdomTree Trust (``Trust''), which was established
as a Delaware statutory trust on December 15, 2005. The Trust is
registered with the Commission as an investment company.\5\ WisdomTree
Asset Management, Inc. (``WisdomTree Asset Management'') is the
investment adviser (``Adviser'') to the Fund.\6\ The Exchange
represents that WisdomTree Asset Management is not affiliated with any
broker-dealer. The Dreyfus Corporation (``Dreyfus''), which will serve
as the sub-adviser for the Fund (``Sub-Adviser''), is affiliated with
multiple broker-dealers and, accordingly, has implemented a ``fire
wall'' with respect to such broker-dealers regarding access to
information concerning the composition and/or changes to the Fund's
portfolio.\7\ The Bank of New York is the administrator, custodian and
transfer agent for the Trust. ALPS Distributors, Inc. serves as the
distributor for the Trust.\8\
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\5\ See Post-Effective Amendment No. 32 to Registration
Statement on Form N-1A for the Trust, dated March 19, 2010 (File
Nos. 333-132380 and 811-21864), as supplemented on June 8, 2010 (the
``Registration Statement''). The descriptions of the Fund and the
Shares contained herein are based on information in the Registration
Statement.
\6\ WisdomTree Investments, Inc. (``WisdomTree Investments'') is
the parent company of WisdomTree Asset Management.
\7\ The Exchange represents that the Adviser and Sub-Adviser,
and their related personnel, are subject to Investment Advisers Act
Rule 204A-1. This Rule specifically requires the adoption of a code
of ethics by an investment 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.
\8\ The Commission has issued an order granting certain
exemptive relief to the Trust under the Investment Company Act of
1940 (15 U.S.C. 80a-1) (``1940 Act''). See Investment Company Act
Release No. 28174 (February 27, 2008) (File No. 812-13470). 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 Fund 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 (15 U.S.C. 77a).
---------------------------------------------------------------------------
WisdomTree Commodity Currency Fund
The Fund seeks to achieve total returns reflective of money market
rates in selected commodity-producing countries and changes to the
value of such countries' currencies relative to the U.S. dollar.
The Fund is designed to provide exposure to both the currencies and
money market rates available to foreign investors in selected
commodity-producing countries. The Fund intends to invest in commodity-
producing countries such as Australia, Brazil, Canada, Chile,
Indonesia, Mexico, New Zealand, Norway, Russia and South Africa. In
addition to seeking broad exposure across countries and currencies, the
Fund intends to seek exposure across currencies correlated to each of
the key commodity groups: Industrial metals, precious metals, energy,
agriculture and livestock. The Fund generally will invest only in
currencies that ``float'' relative to other currencies. The value of a
floating currency is largely determined by supply and demand and
prevailing market rates. In contrast, the value of a ``fixed'' currency
generally is set by a government or central bank at an official
exchange rate. The Fund generally does not intend to invest in the
currencies of notable commodity producers, such as China, Saudi Arabia
and the United Arab Emirates, since they are fixed or otherwise closely
linked to the U.S. dollar. The Fund will only invest in currencies that
it deems to be sufficiently liquid and accessible.\9\
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\9\ The Fund may pursue its objectives through direct
investments in money market instruments issued by entities in the
applicable foreign 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 the Fund pursues direct investment, eligible
investments 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, and short-term, high-quality corporate debt obligations
designed to provide exposure to the applicable non-U.S. currency and
money market rates, and U.S. dollar money market instruments.
---------------------------------------------------------------------------
The Fund intends to achieve exposure to selected commodity-
producing countries available to U.S. investors by investing primarily
in short-term U.S. money market securities and forward currency
contracts and swaps. The combination of 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. 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.
In order to reduce interest rate risk, the Fund generally expects
to maintain an average portfolio maturity of 90 days or less. The
``average portfolio maturity'' of the Fund is the average of all the
current maturities of the individual securities in the Fund's
portfolio. All money market securities acquired by the Fund will be
rated in the upper two short-term ratings by at least two nationally
recognized statistical rating organizations (``NRSROs'') or, if
unrated, deemed by the Adviser to be of equivalent quality.
As a matter of general policy, the Fund will invest, under normal
circumstances, at least 80% of its net assets, plus the amount of any
borrowings for investment purposes, in investments that are tied
economically to selected commodity-producing countries available to
U.S. investors that make a significant contribution to the global
export of commodities. If, subsequent to an investment, the 80%
requirement is no longer met, the Fund's future investments will be
made in a manner that will bring the Fund into compliance with this
policy.
The Fund may invest up to an aggregate amount of 10% of its net
assets in illiquid securities. Illiquid securities include securities
subject to contractual or other restrictions on resale and other
instruments that lack readily available markets.
Additional information regarding the Trust, the Fund, the Shares,
the investment objectives, strategies, policies, and restrictions,
risks, fees and expenses, creation and redemption procedures, portfolio
holdings, distributions and taxes, availability of information, trading
rules and halts, and surveillance procedures, among other things, can
be found in the Registration Statement and in the Notice, as
applicable.\10\
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\10\ See supra notes 3 and 5.
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[[Page 47654]]
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of Section 6 of the Act \11\
and the rules and regulations thereunder applicable to a national
securities exchange.\12\ In particular, the Commission finds that the
proposed rule change is consistent with the requirements of Section
6(b)(5) of the Act,\13\ which requires, among other things, that the
Exchange's rules be designed to prevent fraudulent and manipulative
acts and practices, promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
The Commission notes that the Shares must comply with the requirements
of NYSE Arca Equities Rule 8.600 to be listed and traded on the
Exchange.
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\11\ 15 U.S.C. 78f.
\12\ 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).
\13\ 15 U.S.C. 78f(b)(5).
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The Commission finds that the proposal to list and trade the Shares
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the
Act,\14\ 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. Quotation and last-sale
information for the Shares will be available via the Consolidated Tape
Association's high-speed line, and the Portfolio Indicative Value
(``PIV'') will be updated and disseminated by one or more major market
data vendors at least every 15 seconds during the Core Trading Session.
In addition, the Trust will make available on its Web site on each
business day before the commencement of trading in Shares in the Core
Trading Session the Disclosed Portfolio that will form the basis for
the calculation of the NAV, which will be determined at the end of the
business day.\15\ The Fund's Web site will also include additional
quantitative information updated on a daily basis relating to NAV.
Information regarding the market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services, and the
previous day's closing price and trading volume information will be
published daily in the financial section of newspapers.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
\15\ The Commission notes that the Reporting Authority providing
the Disclosed Portfolio must 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. See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
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The Commission further believes that the proposed rule change 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
Exchange represents that it will obtain a representation from the
issuer of the Shares that the net asset value per share for the Fund
will be calculated daily and that the net asset value and the Disclosed
Portfolio will be made available to all market participants at the same
time.\16\ Additionally, if the Exchange becomes aware that the NAV or
the Disclosed Portfolio is not disseminated daily to all market
participants at the same time, the Exchange will halt trading until
such time as the NAV or the Disclosed Portfolio is available to all
market participants.\17\ Further, if the PIV is not being disseminated
as required, the Exchange may halt trading during the day in which the
interruption occurs; if the interruption persists past the trading day
in which it occurred, the Exchange will halt trading no later than the
beginning of the trading day following the interruption.\18\ The
Exchange represented that the Sub-Adviser is affiliated with multiple
broker-dealers and, accordingly, has implemented a ``fire wall'' with
respect to those broker-dealers regarding access to information
concerning the composition and/or changes to the Fund's portfolio.
Further, the Commission notes 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.\19\
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\16\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
\17\ See NYSE Arca Equities Rule 8.600(d)(2)(D).
\18\ Id. Trading may also be halted because of market conditions
or for reasons that, in the view of the Exchange, make trading in
the Shares inadvisable. These may include (1) the extent to which
trading is not occurring in the 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.
\19\ See Commentary .06 to NYSE Arca Equities Rule 8.600.
---------------------------------------------------------------------------
The Exchange represented that the Shares are equity securities
subject to the Exchange's rules governing the trading of equity
securities. In support of this proposal, the Exchange has made
representations, including:
(1) The Shares will be subject to the initial and continued listing
criteria under NYSE Arca Equities Rule 8.600(d).
(2) The Exchange's surveillance 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.
(3) Before commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (a) The procedures for
purchases and redemptions of shares and that Shares are not
individually redeemable; (b) 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;
(c) the risks involved in trading the Shares during the Opening and
Late Trading Sessions when an updated PIV will not be calculated or
publicly disseminated; (d) how information regarding the PIV is
disseminated; (e) 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 (f) trading information.
(4) The Fund will be in compliance with Rule 10A-3 under the
Act.\20\
---------------------------------------------------------------------------
\20\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------
(5) The Fund will not invest in non-U.S. equity securities.
This approval order is based on the Exchange's representations.
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\21\ that the proposed rule change (SR-NYSEArca-2010-51) be, and it
hereby is, approved.
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\21\ 15 U.S.C. 78s(b)(2).
[[Page 47655]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19434 Filed 8-5-10; 8:45 am]
BILLING CODE 8010-01-P
