Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. Relating to Listing and Trading of Cambria Global Tactical ETF, 54676-54680 [2010-22286]

Download as PDF 54676 Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Notices Reference Section, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filings also will be available for inspection and copying at the principal office of FICC and on FICC’s Web site, https:// www.dtcc.com. 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–FICC– 2010–06 and should be submitted on or before September 29, 2010. For the Commission by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–22351 Filed 9–7–10; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62788; File No. SR– NYSEArca–2010–79] Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. Relating to Listing and Trading of Cambria Global Tactical ETF August 30, 2010. jlentini on DSKJ8SOYB1PROD with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that, on August 23, 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 and II 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 shares of the Cambria Global Tactical ETF under NYSE Arca Equities Rule 8.600. The text of the proposed rule change is available at the principal office of the Exchange, the Commission’s Public Reference Room, and https://www.nyse.com. 10 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 16:41 Sep 07, 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade the following Managed Fund Shares 3 (‘‘Shares’’) under NYSE Arca Equities Rule 8.600: the Cambria Global Tactical ETF (‘‘Fund’’).4 The Shares will be offered by AdvisorShares Trust (the ‘‘Trust’’), a statutory trust organized under the laws of the State of Delaware and registered with the Commission as an open-end management investment company.5 The investment advisor to the Fund is AdvisorShares Investments, 3 A Managed Fund Share is a security that represents an interest in an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a) (‘‘1940 Act’’) organized as an open-end investment company or similar entity that invests in a portfolio of securities selected by its investment advisor consistent with its investment objectives and policies. In contrast, an open-end investment company that issues Investment Company Units, listed and traded on the Exchange under NYSE Arca Equities Rule 5.2(j)(3), seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index or combination thereof. 4 The Commission approved NYSE Arca Equities Rule 8.600 and the listing and trading of certain funds of the PowerShares Actively Managed Exchange-Traded Funds Trust on the Exchange pursuant to Rule 8.600 in Securities Exchange Act Release No. 57619 (April 4, 2008) 73 FR 19544 (April 10, 2008) (SR–NYSEArca–2008–25). The Commission also previously approved listing and trading on the Exchange of a number of actively managed funds under Rule 8.600. See, e.g., Securities Exchange Act Release Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR– NYSEArca–2008–31) (order approving Exchange listing and trading of twelve actively-managed funds of the WisdomTree Trust); 60460 (August 7, 2009), 74 FR 41468 (August 17, 2009) (SR– NYSEArca–2009–55) (order approving listing of Dent Tactical ETF). 5 The Trust is registered under the 1940 Act. On June 30, 2010, the Trust filed with the Commission Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act relating to the Fund (File Nos. 333–157876 and 811–22110) (‘‘Registration Statement’’). The description of the operation of the Trust and the Fund herein is based on the Registration Statement. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 LLC (the ‘‘Advisor’’). Cambria Investment Management, Inc. is the Fund’s sub-advisor (‘‘Cambria’’ or ‘‘SubAdvisor’’) and provides day-to-day portfolio management of the Fund. Foreside Fund Services, LLC (the ‘‘Distributor’’) is the principal underwriter and distributor of the Fund’s Shares. Neither the Advisor nor the Sub-Advisor is affiliated with a broker-dealer.6 Description of the Fund According to the Registration Statement, the Fund’s investment objective is to preserve and grow capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, independent of market direction. The Fund seeks to preserve and grow capital by producing absolute returns with reduced volatility and manageable risk and drawdowns. The Fund’s investment strategies are inherently designed as risk-management and capital preservation approaches. The Fund is an actively managed ETF and thus, does not seek to replicate the performance of a specific index, but rather uses an active investment strategy to meet its investment objective. The Fund is considered a ‘‘fund-offunds’’ that seeks to achieve its investment objective by primarily investing in other exchange-traded funds listed and traded in the United States (the ‘‘Underlying ETFs’’) that offer 6 The Exchange represents that the Advisor and Sub-Advisor and their related personnel are subject to Investment Advisers Act Rule 204A–1. This Rule specifically requires the adoption of a code of ethics by an investment advisor to include, at a minimum: (i) Standards of business conduct that reflect the firm’s/personnel fiduciary obligations; (ii) provisions requiring supervised persons to comply with applicable Federal securities laws; (iii) provisions that require all access persons to report, and the firm to review, their personal securities transactions and holdings periodically as specifically set forth in Rule 204A–1; (iv) provisions requiring supervised persons to report any violations of the code of ethics promptly to the chief compliance officer (‘‘CCO’’) or, provided the CCO also receives reports of all violations, to other persons designated in the code of ethics; and (v) provisions requiring the investment advisor to provide each of the supervised persons with a copy of the code of ethics with an acknowledgement by said supervised persons. In addition, Rule 206(4)– 7 under the Advisers Act makes it unlawful for an investment advisor to provide investment advice to clients unless such investment advisor has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment advisor and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. E:\FR\FM\08SEN1.SGM 08SEN1 jlentini on DSKJ8SOYB1PROD with NOTICES Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Notices diversified exposure, including inverse exposure to: Global regions, countries, styles (market capitalization, value, growth, etc.) or sectors, and exchangetraded products, including but not limited to: Exchange-traded notes (‘‘ETNs’’), exchange-traded currency trusts and closed-end funds. In addition, as described below, from time to time and to a lesser extent, the Fund may invest in individual equities (stocks), futures contracts, options (calls or puts) in an attempt to limit portfolio risk or enhance returns. The Fund charges its own expenses and also indirectly bears a proportionate share of the Underlying ETFs’ expenses. According to the Registration Statement, the Fund will invest in Underlying ETFs spanning all the major world asset classes including equities, bonds, real estate, commodities, and currencies. The Underlying ETFs are themselves registered investment companies, the shares of which trade on a national securities exchange. The Underlying ETFs will track the performance of a securities index representing an asset class, sector or other market segment. The Sub-Advisor will utilize a quantitative approach with strict risk management controls to actively manage the Fund’s portfolio in an attempt to control downside losses and protect capital. The Fund’s portfolio will be rebalanced to target allocations at least monthly and as often as weekly. The Fund’s strategy utilizes a proprietary quantitative trend-following approach to actively manage a diversified portfolio of world asset classes. The strategy is diversified across markets and timeframes with strict risk control methods that are completely rules-based and systematic. According to the Registration Statement, no effort is made to forecast future market trends or direction; rather, the Fund intends to capture profits in these trends when and where they develop. The Sub-Advisor will select a group of Underlying ETFs and other exchangetraded products for the Fund pursuant to an ‘‘active’’ management strategy for asset allocation, security selection and portfolio construction. The Fund allocates its assets among a group of Underlying ETFs in different percentages of stocks, bonds, commodities and cash that seek to achieve a unique investment objective and the Fund will periodically change the composition of its portfolio to best meet its investment objective. The Fund currently intends to invest primarily in the securities of Underlying ETFs consistent with the requirements of Section 12(d)(1) of the 1940 Act, or VerDate Mar<15>2010 16:41 Sep 07, 2010 Jkt 220001 any rule, regulation or order of the SEC or interpretation thereof. The Underlying ETFs in which the Fund will invest will primarily be indexbased ETFs that hold substantially all of their assets in securities representing a specific index. The Fund may invest in ETNs. ETNs are debt obligations of investment banks which are traded on exchanges and the returns of which are linked to the performance of market indexes. The Fund may invest in closed-end funds, pooled investment vehicles that are registered under the 1940 Act and whose shares are listed and traded on U.S. national securities exchanges. The Fund and the Underlying ETFs may invest in equity securities. Equity securities represent ownership interests in a company or partnership and consist of common stocks, preferred stocks, warrants to acquire common stock, securities convertible into common stock, and investments in master limited partnerships. 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. 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’’). The Fund may purchase and write put and call options on indices and enter into related closing transactions. 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 Securities Act of 1933 (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. 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. The Fund may enter into repurchase agreements with financial institutions, which may be deemed to be loans. The Fund may enter into reverse repurchase agreements without limit as part of the Fund’s investment strategy. The Fund may buy and sell stock index futures contracts with respect to any stock index traded on a recognized stock exchange or board of trade. The Fund may enter into swap agreements, PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 54677 including, but not limited to, equity index swaps and interest rate swap agreements. The Fund, or the ETFs in which it invests, may invest in U.S. government securities. The Fund, from time to time, in the ordinary course of business, may purchase securities on a when-issued or delayed-delivery basis (i.e., delivery and payment can take place between a month and 120 days after the date of the transaction). The Fund may invest in U.S. Treasury zero-coupon bonds. 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. Except for Underlying ETFs that may hold non-US issues, the Fund will not otherwise invest in non-U.S. issues. According to the Registration Statement, the Fund will seek to qualify for treatment as a Regulated Investment Company (‘‘RIC’’) under the Internal Revenue Code.7 Creations and redemptions of Shares occur in large specified blocks of Shares, referred to as ‘‘Creation Units’’. According to the Registration Statement, the Shares of the Fund are ‘‘created’’ at their net asset value (‘‘NAV’’) by market makers, large investors and institutions only in block-size Creation Units of 50,000 shares or more. A ‘‘creator’’ enters into an authorized participant agreement (a ‘‘Participant Agreement’’) with the Fund’s Distributor or a Depository Trust Company participant that has executed a Participant Agreement with the Distributor (an ‘‘Authorized Participant’’), and deposits into the Fund a portfolio of securities 7 According to the Registration Statement, one of several requirements for RIC qualification is that a Fund must receive at least 90% of the Fund’s gross income each year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or other income derived with respect to the Fund’s investments in stock, securities, foreign currencies and net income from an interest in a qualified publicly traded partnership (the ‘‘90% Test’’). A second requirement for qualification as a RIC is that a Fund must diversify its holdings so that, at the end of each fiscal quarter of the Fund’s taxable year: (a) At least 50% of the market value of the Fund’s total assets is represented by cash and cash items, U.S. Government securities, securities of other RICs, and other securities, with these other securities limited, in respect to any one issuer, to an amount not greater than 5% of the value of the Fund’s total assets or 10% of the outstanding voting securities of such issuer; and (b) not more than 25% of the value of its total assets are invested in the securities (other than U.S. Government securities or securities of other RICs) of any one issuer or two or more issuers which the Fund controls and which are engaged in the same, similar, or related trades or businesses, or the securities of one or more qualified publicly traded partnership (the ‘‘Asset Test’’). E:\FR\FM\08SEN1.SGM 08SEN1 54678 Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Notices jlentini on DSKJ8SOYB1PROD with NOTICES closely approximating the holdings of the Fund and a specified amount of cash, together totaling the NAV of the Creation Unit(s), in exchange for 50,000 shares of the Fund (or multiples thereof). Similarly, shares can only be redeemed in Creation Units, generally 50,000 shares or more, principally inkind for a portfolio of securities held by the Fund and a specified amount of cash together totaling the NAV of the Creation Unit(s). Shares are not redeemable from the Fund except when aggregated in Creation Units. The prices at which creations and redemptions occur are based on the next calculation of NAV after an order is received in a form prescribed in the Participant Agreement. 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 8 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 NAV and the Disclosed Portfolio will be made available to all market participants at the same time. 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’’),9 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 8 17 CFR 240.10A–3. 9 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. VerDate Mar<15>2010 16:41 Sep 07, 2010 Jkt 220001 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.10 On a daily basis, for each portfolio security of the Fund, the Fund will 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 10 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. PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 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 the Exchange at least every 15 seconds during the Core Trading Session by one or more major market data venders. 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. All terms relating to the Fund that are referred to, but not defined in, this proposed rule change are defined 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.11 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 11 See NYSE Arca Equities Rule 7.12, Commentary .04. E:\FR\FM\08SEN1.SGM 08SEN1 Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Notices trading sessions. As provided in NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price variation (‘‘MPV’’) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001. Surveillance jlentini on DSKJ8SOYB1PROD with NOTICES 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.12 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 12 For a list of the current members of ISG, see https://. The Exchange may obtain information from futures exchanges with which the Exchange has entered into a surveillance sharing agreement or that are ISG members. 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. VerDate Mar<15>2010 16:41 Sep 07, 2010 Jkt 220001 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. 2. Statutory Basis The basis under the Exchange Act for this proposed rule change is the requirement under Section 6(b)(5) 13 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. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which 13 15 PO 00000 U.S.C. 78f(b)(5). Frm 00094 Fmt 4703 Sfmt 4703 54679 the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2010–79 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–2010–79. 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 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– E:\FR\FM\08SEN1.SGM 08SEN1 54680 Federal Register / Vol. 75, No. 173 / Wednesday, September 8, 2010 / Notices NYSEArca–2010–79 and should be submitted on or before September 29, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–22286 Filed 9–7–10; 8:45 am] (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–62795; File No. SR–DTC– 2010–11] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules Relating to Authority To Suspend or Waive DTC Rules and Procedures August 30, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on August 23, 2010, The Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by DTC.2 DTC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) and Rule 19b– 4(f)(3) thereunder so that the proposed rule change was effective upon filing with the Commission.3 The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change will amend DTC rules to provide that any officer having a rank of Managing Director or higher is authorized to suspend or waive DTC rules and procedures. jlentini on DSKJ8SOYB1PROD 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, DTC included statements concerning the purpose of and basis for the 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 The text of the proposed rule change is attached as Exhibit 5 to DTC’s filing and is available at https://www.dtcc.com/downloands/legal/ rule_filings/2010/dtc/2010-11.pdf. 3 15 U.S.C. 78s(b)(3)(A)(iii) and 17 CFR 240.19b– 4(f)(3). 1 15 VerDate Mar<15>2010 16:41 Sep 07, 2010 Jkt 220001 proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. DTC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.4 The proposed rule change amends Rule 18 of the DTC’s Rules, Bylaws and Organization Certificate of The Depository Trust Company 5 (‘‘Rules’’) to state that the Rules and procedures of DTC may be suspended or waived by any officer having a rank of Managing Director or higher. Prior to the proposed amendment, Rule 18 provided such authority to officers having a rank of Vice President or higher.6 This proposed rule change also harmonizes DTC’s rules with those of the Fixed Income Clearing Corporation’s (‘‘FICC’’) Government Securities Division and Mortgage-Backed Securities Division as well as those of the National Securities Clearing Corporation (‘‘NSCC’’) as the rules relate to the authority to suspend or waive rules.7 DTC believes that the proposed rule change is consistent with the requirements of Section 17A of the Act 8 and the rules and regulations thereunder that are applicable to DTC because the proposed rule will require a more senior level of management to authorize a suspension or waiver of DTC rules under the proposed rule change thereby ensuring more equitable compliance with DTC’s rules and procedures. (B) Self-Regulatory Organization’s Statement on Burden on Competition DTC 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. 4 The Commission has modified the text of the summaries prepared by the DTC. 5 DTC’s rules are available at https:// www.dtcc.com/legal/rules_proc/dtc_rules.pdf. 6 Managing Director is a more senior level of officer than that of Vice President. 7 On August 20, 2010, FICC filed and on August 23, 2010, NSCC filed similar rule changes. Securities Exchange Act Release No. 62796 (August 30, 2010) [SR–FICC–2010–06] and 62794 (August 30, 2010) [File No. SR–NSCC–2010–08] respectively. 8 15 U.S.C. 78q–1. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 (C) Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments relating to the proposed rule change have been solicited or received. DTC will notify the Commission of any written comments received by DTC. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective upon filing pursuant to Section 19(b)(3)(A)(iii) of the Act 9 and Rule 19b–4(f)(3) 10 thereunder because it is concerned solely with the administration of DTC. At any time within sixty days of the filing of such rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml) or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–DTC–2010–11 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–DTC–2010–11. 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 9 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(3). 10 17 E:\FR\FM\08SEN1.SGM 08SEN1

Agencies

[Federal Register Volume 75, Number 173 (Wednesday, September 8, 2010)]
[Notices]
[Pages 54676-54680]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22286]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62788; File No. SR-NYSEArca-2010-79]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NYSE Arca, Inc. Relating to Listing and Trading of Cambria 
Global Tactical ETF

August 30, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on August 23, 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 and II 
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\ 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 shares of the Cambria 
Global Tactical ETF under NYSE Arca Equities Rule 8.600. The text of 
the proposed rule change is available at the principal office of the 
Exchange, the Commission's Public Reference Room, and https://www.nyse.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the following Managed Fund 
Shares \3\ (``Shares'') under NYSE Arca Equities Rule 8.600: the 
Cambria Global Tactical ETF (``Fund'').\4\ The Shares will be offered 
by AdvisorShares Trust (the ``Trust''), a statutory trust organized 
under the laws of the State of Delaware and registered with the 
Commission as an open-end management investment company.\5\ The 
investment advisor to the Fund is AdvisorShares Investments, LLC (the 
``Advisor''). Cambria Investment Management, Inc. is the Fund's sub-
advisor (``Cambria'' or ``Sub-Advisor'') and provides day-to-day 
portfolio management of the Fund. Foreside Fund Services, LLC (the 
``Distributor'') is the principal underwriter and distributor of the 
Fund's Shares. Neither the Advisor nor the Sub-Advisor is affiliated 
with a broker-dealer.\6\
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    \3\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment advisor 
consistent with its investment objectives and policies. In contrast, 
an open-end investment company that issues Investment Company Units, 
listed and traded on the Exchange under NYSE Arca Equities Rule 
5.2(j)(3), seeks to provide investment results that correspond 
generally to the price and yield performance of a specific foreign 
or domestic stock index, fixed income securities index or 
combination thereof.
    \4\ The Commission approved NYSE Arca Equities Rule 8.600 and 
the listing and trading of certain funds of the PowerShares Actively 
Managed Exchange-Traded Funds Trust on the Exchange pursuant to Rule 
8.600 in Securities Exchange Act Release No. 57619 (April 4, 2008) 
73 FR 19544 (April 10, 2008) (SR-NYSEArca-2008-25). The Commission 
also previously approved listing and trading on the Exchange of a 
number of actively managed funds under Rule 8.600. See, e.g., 
Securities Exchange Act Release Nos. 57801 (May 8, 2008), 73 FR 
27878 (May 14, 2008) (SR-NYSEArca-2008-31) (order approving Exchange 
listing and trading of twelve actively-managed funds of the 
WisdomTree Trust); 60460 (August 7, 2009), 74 FR 41468 (August 17, 
2009) (SR-NYSEArca-2009-55) (order approving listing of Dent 
Tactical ETF).
    \5\ The Trust is registered under the 1940 Act. On June 30, 
2010, the Trust filed with the Commission Form N-1A under the 
Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act 
relating to the Fund (File Nos. 333-157876 and 811-22110) 
(``Registration Statement''). The description of the operation of 
the Trust and the Fund herein is based on the Registration 
Statement.
    \6\ The Exchange represents that the Advisor and Sub-Advisor and 
their related personnel are subject to Investment Advisers Act Rule 
204A-1. This Rule specifically requires the adoption of a code of 
ethics by an investment advisor to include, at a minimum: (i) 
Standards of business conduct that reflect the firm's/personnel 
fiduciary obligations; (ii) provisions requiring supervised persons 
to comply with applicable Federal securities laws; (iii) provisions 
that require all access persons to report, and the firm to review, 
their personal securities transactions and holdings periodically as 
specifically set forth in Rule 204A-1; (iv) provisions requiring 
supervised persons to report any violations of the code of ethics 
promptly to the chief compliance officer (``CCO'') or, provided the 
CCO also receives reports of all violations, to other persons 
designated in the code of ethics; and (v) provisions requiring the 
investment advisor to provide each of the supervised persons with a 
copy of the code of ethics with an acknowledgement by said 
supervised persons. In addition, Rule 206(4)-7 under the Advisers 
Act makes it unlawful for an investment advisor to provide 
investment advice to clients unless such investment advisor has (i) 
adopted and implemented written policies and procedures reasonably 
designed to prevent violation, by the investment advisor and its 
supervised persons, of the Advisers Act and the Commission rules 
adopted thereunder; (ii) implemented, at a minimum, an annual review 
regarding the adequacy of the policies and procedures established 
pursuant to subparagraph (i) above and the effectiveness of their 
implementation; and (iii) designated an individual (who is a 
supervised person) responsible for administering the policies and 
procedures adopted under subparagraph (i) above.
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Description of the Fund
    According to the Registration Statement, the Fund's investment 
objective is to preserve and grow capital from investments in the U.S. 
and foreign equity, fixed income, commodity and currency markets, 
independent of market direction. The Fund seeks to preserve and grow 
capital by producing absolute returns with reduced volatility and 
manageable risk and drawdowns. The Fund's investment strategies are 
inherently designed as risk-management and capital preservation 
approaches. The Fund is an actively managed ETF and thus, does not seek 
to replicate the performance of a specific index, but rather uses an 
active investment strategy to meet its investment objective.
    The Fund is considered a ``fund-of-funds'' that seeks to achieve 
its investment objective by primarily investing in other exchange-
traded funds listed and traded in the United States (the ``Underlying 
ETFs'') that offer

[[Page 54677]]

diversified exposure, including inverse exposure to: Global regions, 
countries, styles (market capitalization, value, growth, etc.) or 
sectors, and exchange-traded products, including but not limited to: 
Exchange-traded notes (``ETNs''), exchange-traded currency trusts and 
closed-end funds. In addition, as described below, from time to time 
and to a lesser extent, the Fund may invest in individual equities 
(stocks), futures contracts, options (calls or puts) in an attempt to 
limit portfolio risk or enhance returns. The Fund charges its own 
expenses and also indirectly bears a proportionate share of the 
Underlying ETFs' expenses.
    According to the Registration Statement, the Fund will invest in 
Underlying ETFs spanning all the major world asset classes including 
equities, bonds, real estate, commodities, and currencies. The 
Underlying ETFs are themselves registered investment companies, the 
shares of which trade on a national securities exchange. The Underlying 
ETFs will track the performance of a securities index representing an 
asset class, sector or other market segment.
    The Sub-Advisor will utilize a quantitative approach with strict 
risk management controls to actively manage the Fund's portfolio in an 
attempt to control downside losses and protect capital. The Fund's 
portfolio will be rebalanced to target allocations at least monthly and 
as often as weekly. The Fund's strategy utilizes a proprietary 
quantitative trend-following approach to actively manage a diversified 
portfolio of world asset classes. The strategy is diversified across 
markets and timeframes with strict risk control methods that are 
completely rules-based and systematic. According to the Registration 
Statement, no effort is made to forecast future market trends or 
direction; rather, the Fund intends to capture profits in these trends 
when and where they develop.
    The Sub-Advisor will select a group of Underlying ETFs and other 
exchange-traded products for the Fund pursuant to an ``active'' 
management strategy for asset allocation, security selection and 
portfolio construction. The Fund allocates its assets among a group of 
Underlying ETFs in different percentages of stocks, bonds, commodities 
and cash that seek to achieve a unique investment objective and the 
Fund will periodically change the composition of its portfolio to best 
meet its investment objective.
    The Fund currently intends to invest primarily in the securities of 
Underlying ETFs 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 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 Fund may invest in ETNs. ETNs are debt obligations of 
investment banks which are traded on exchanges and the returns of which 
are linked to the performance of market indexes. The Fund may invest in 
closed-end funds, pooled investment vehicles that are registered under 
the 1940 Act and whose shares are listed and traded on U.S. national 
securities exchanges.
    The Fund and the Underlying ETFs may invest in equity securities. 
Equity securities represent ownership interests in a company or 
partnership and consist of common stocks, preferred stocks, warrants to 
acquire common stock, securities convertible into common stock, and 
investments in master limited partnerships.
    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. 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'').
    The Fund may purchase and write put and call options on indices and 
enter into related closing transactions.
    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 Securities Act of 1933 
(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. 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.
    The Fund may enter into repurchase agreements with financial 
institutions, which may be deemed to be loans. The Fund may enter into 
reverse repurchase agreements without limit as part of the Fund's 
investment strategy. The Fund may buy and sell stock index futures 
contracts with respect to any stock index traded on a recognized stock 
exchange or board of trade. The Fund may enter into swap agreements, 
including, but not limited to, equity index swaps and interest rate 
swap agreements.
    The Fund, or the ETFs in which it invests, may invest in U.S. 
government securities. The Fund, from time to time, in the ordinary 
course of business, may purchase securities on a when-issued or 
delayed-delivery basis (i.e., delivery and payment can take place 
between a month and 120 days after the date of the transaction). The 
Fund may invest in U.S. Treasury zero-coupon bonds. 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.
    Except for Underlying ETFs that may hold non-US issues, the Fund 
will not otherwise invest in non-U.S. issues.
    According to the Registration Statement, the Fund will seek to 
qualify for treatment as a Regulated Investment Company (``RIC'') under 
the Internal Revenue Code.\7\
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    \7\ According to the Registration Statement, one of several 
requirements for RIC qualification is that a Fund must receive at 
least 90% of the Fund's gross income each year from dividends, 
interest, payments with respect to securities loans, gains from the 
sale or other disposition of stock, securities or foreign 
currencies, or other income derived with respect to the Fund's 
investments in stock, securities, foreign currencies and net income 
from an interest in a qualified publicly traded partnership (the 
``90% Test''). A second requirement for qualification as a RIC is 
that a Fund must diversify its holdings so that, at the end of each 
fiscal quarter of the Fund's taxable year: (a) At least 50% of the 
market value of the Fund's total assets is represented by cash and 
cash items, U.S. Government securities, securities of other RICs, 
and other securities, with these other securities limited, in 
respect to any one issuer, to an amount not greater than 5% of the 
value of the Fund's total assets or 10% of the outstanding voting 
securities of such issuer; and (b) not more than 25% of the value of 
its total assets are invested in the securities (other than U.S. 
Government securities or securities of other RICs) of any one issuer 
or two or more issuers which the Fund controls and which are engaged 
in the same, similar, or related trades or businesses, or the 
securities of one or more qualified publicly traded partnership (the 
``Asset Test'').
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    Creations and redemptions of Shares occur in large specified blocks 
of Shares, referred to as ``Creation Units''. According to the 
Registration Statement, the Shares of the Fund are ``created'' at their 
net asset value (``NAV'') by market makers, large investors and 
institutions only in block-size Creation Units of 50,000 shares or 
more. A ``creator'' enters into an authorized participant agreement (a 
``Participant Agreement'') with the Fund's Distributor or a Depository 
Trust Company participant that has executed a Participant Agreement 
with the Distributor (an ``Authorized Participant''), and deposits into 
the Fund a portfolio of securities

[[Page 54678]]

closely approximating the holdings of the Fund and a specified amount 
of cash, together totaling the NAV of the Creation Unit(s), in exchange 
for 50,000 shares of the Fund (or multiples thereof). Similarly, shares 
can only be redeemed in Creation Units, generally 50,000 shares or 
more, principally in-kind for a portfolio of securities held by the 
Fund and a specified amount of cash together totaling the NAV of the 
Creation Unit(s). Shares are not redeemable from the Fund except when 
aggregated in Creation Units. The prices at which creations and 
redemptions occur are based on the next calculation of NAV after an 
order is received in a form prescribed in the Participant Agreement.
    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 \8\ 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 NAV and the Disclosed Portfolio will be made available to all 
market participants at the same time.
---------------------------------------------------------------------------

    \8\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

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''),\9\ 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.\10\
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    \9\ 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.
    \10\ 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 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 the Exchange at 
least every 15 seconds during the Core Trading Session by one or more 
major market data venders. 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. All terms relating 
to the Fund that are referred to, but not defined in, this proposed 
rule change are defined 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.\11\ 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.
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    \11\ See NYSE Arca Equities Rule 7.12, Commentary .04.
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Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern Time in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all

[[Page 54679]]

trading sessions. As provided in NYSE Arca Equities Rule 7.6, 
Commentary .03, the minimum price variation (``MPV'') for quoting and 
entry of orders in equity securities traded on the NYSE Arca 
Marketplace is $0.01, with the exception of securities that are priced 
less than $1.00 for which the MPV for order entry is $0.0001.
Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (which include Managed 
Fund Shares) to monitor trading in the Shares. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable Federal securities laws.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations.
    The Exchange may obtain information via the Intermarket 
Surveillance Group (``ISG'') from other exchanges that are members of 
ISG.\12\
---------------------------------------------------------------------------

    \12\ For a list of the current members of ISG, see https://. The 
Exchange may obtain information from futures exchanges with which 
the Exchange has entered into a surveillance sharing agreement or 
that are ISG members. 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.
---------------------------------------------------------------------------

    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.
2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \13\ 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-79 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-2010-79. 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 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-

[[Page 54680]]

NYSEArca-2010-79 and should be submitted on or before September 29, 
2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-22286 Filed 9-7-10; 8:45 am]
BILLING CODE 8010-01-P
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