Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of a Proposed Rule Change To List and Trade Shares of Cambria Global Tactical ETF, 63874-63876 [2010-26132]
Download as PDF
<![CDATA[
63874
Federal Register / Vol. 75, No. 200 / Monday, October 18, 2010 / Notices
Commission received no comment
letters about the proposed rule change.
This order approves the proposed rule
change.
mstockstill on DSKH9S0YB1PROD with NOTICES
II. Description of the Proposed Rule
Change
The proposed rule change consists of
an interpretive notice regarding Rule G–
37, on political contributions and
prohibitions on municipal securities
business.4 Under Rule G–37, certain
contributions to elected officials of
municipal securities issuers made by
brokers, dealers and municipal
securities dealers (‘‘dealers’’), municipal
finance professionals (‘‘MFPs’’)
associated with dealers, and political
action committees (‘‘PACs’’) controlled
by dealers and their MFPs (‘‘dealercontrolled PACs’’) 5 may result in
prohibitions on dealers from engaging in
municipal securities business with such
issuers for a period of two years from
the date of any triggering contributions.
Rule G–37 requires dealers to disclose
certain contributions to issuer officials,
state or local political parties, and bond
ballot campaigns, as well as other
information, on Form G–37 to allow
public scrutiny of such contributions
and the municipal securities business of
a dealer. In addition, dealers and MFPs
generally are prohibited from soliciting
others (including affiliates of the dealer
or any PACs) to make contributions to
officials of issuers with which the dealer
is engaging or seeking to engage in
municipal securities business, or to
political parties of a state or locality
where the dealer is engaging or seeking
to engage in municipal securities
business. Dealers and MFPs are
prohibited from circumventing Rule G–
37 by direct or indirect actions through
any other persons or means.6
4 Rule G–37 defines municipal securities business
as: (i) The purchase of a primary offering of
municipal securities from an issuer on other than
a competitive bid basis; (ii) the offer or sale of a
primary offering of municipal securities on behalf
of an issuer; (iii) the provision of financial advisory
or consultant services to or on behalf of an issuer
with respect to a primary offering of municipal
securities in which the dealer was chosen to
provide such services on other than a competitive
bid basis; or (iv) the provision of remarketing agent
services to or on behalf of an issuer with respect
to a primary offering of municipal securities in
which the dealer was chosen to provide such
services on other than a competitive bid basis.
5 The MSRB has previously stated that the matter
of control depends upon whether or not the dealer
or the MFP has the ability to direct or cause the
direction of the management or policies of the PAC
(MSRB Question & Answer No. IV. 24—Dealer
Controlled PAC).
6 Rule G–37(d) provides that no broker, dealer or
municipal securities dealer or any municipal
finance professional shall, directly or indirectly,
through or by any other person or means, do any
act which would result in a violation of sections (b)
or (c) of the rule. Section (b) relates to the ban on
VerDate Mar<15>2010
16:45 Oct 15, 2010
Jkt 223001
Due to changes in the financial
markets since the adoption of Rule G–
37 and recent market turmoil, many
dealers have become affiliated with a
broad range of other entities in
increasingly diverse organizational
structures. Some of these affiliated
entities (including but not limited to
banks, bank holding companies,
insurance companies and investment
management companies) have formed or
otherwise maintain relationships with
PACs (‘‘affiliated PACs’’) and other
political organizations, many of which
may make contributions to issuer
officials. Such relationships raise
questions regarding the extent to which
affiliated PACs may effectively be
controlled by dealers or their MFPs and
thereby constitute dealer-controlled
PACs whose contributions are subject to
Rule G–37. Further, such relationships
raise concerns regarding whether the
contributions of such affiliated PACs,
even if not viewed as dealer-controlled
PACs, may be used by dealers or their
MFPs to circumvent Rule G–37 as
indirect contributions for the purpose of
obtaining or retaining municipal
securities business. As a result, the
MSRB has filed the proposed rule
change to provide additional guidance
with regard to the potential for affiliated
PACs to be viewed as dealer-controlled
PACs. A more complete description of
the proposal is contained in the
Commission’s Notice.
The MSRB has requested an effective
date for the proposed rule change of
sixty days after Commission approval of
the proposed rule change.
III. Discussion and Commission
Findings
The Commission has carefully
considered the proposed rule change
and finds that the proposed rule change
is consistent with the requirements of
the Exchange Act and the rules and
regulations thereunder applicable to the
MSRB 7 and, in particular, the
requirements of Section 15B(b)(2)(C) of
the Exchange Act 8 and the rules and
regulations thereunder. Section
15B(b)(2)(C) of the Exchange Act
requires, among other things, that the
MSRB’s rules be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
business and Section (c) relates to the prohibition
on soliciting and coordinating contributions.
7 In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition
and capital formation. 15 U.S.C. 78c(f).
8 15 U.S.C. 78o–4(b)(2)(C).
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
processing information with respect to,
and facilitating transactions in
municipal securities, to remove
impediments to and perfect the
mechanism of a free and open market in
municipal securities, and, in general, to
protect investors and the public
interest.9 The Commission believes that
the proposed rule change is consistent
with the Exchange Act because it will
help to inhibit practices constituting
real and perceived attempts to influence
the awarding of municipal securities
business through contributions made by
or through dealer-affiliated PACs. The
Commission also believes that the
proposed rule change will facilitate
dealer compliance with Rule G–37 and
Rule G–27, on supervision. The
proposal will become effective sixty
days after Commission approval of the
proposed rule change, as requested by
the MSRB.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,10
that the proposed rule change (SR–
MSRB–2010–07), be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–26131 Filed 10–15–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63076; File No. SR–
NYSEArca–2010–79]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
a Proposed Rule Change To List and
Trade Shares of Cambria Global
Tactical ETF
October 12, 2010.
I. Introduction
On August 23, 2010, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) 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 shares (‘‘Shares’’)
of the Cambria Global Tactical ETF
(‘‘Fund’’) under NYSE Arca Equities
Rule 8.600. The proposed rule change
was published for comment in the
9 Id.
10 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
11 17
E:\FR\FM\18OCN1.SGM
18OCN1
Federal Register / Vol. 75, No. 200 / Monday, October 18, 2010 / Notices
Federal Register on September 8, 2010.3
The Commission received no comments
on the proposal. This order grants
approval of the proposed rule change.
mstockstill on DSKH9S0YB1PROD with NOTICES
II. Description of the Proposed Rule
Change
The Exchange proposes to list and
trade Shares of the Fund under NYSE
Arca Equities Rule 8.600, which governs
the listing of Managed Fund Shares.4
The Shares will be offered by
AdvisorShares Trust (‘‘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
(‘‘Advisor’’), and the day-to-day portfolio
management of the Fund is provided by
the sub-advisor to the Fund, Cambria
Investment Management, Inc. (‘‘SubAdvisor’’).6 The Exchange represents
that the Shares will conform to the
initial and continued listing criteria
under NYSE Arca Equities Rule 8.600
and that the Fund will be in compliance
with Rule 10A–3 under the Act,7 as
provided by NYSE Arca Equities Rule
5.3.
The Fund is a ‘‘fund of funds,’’ which
means that the Fund seeks to invest
primarily in other exchange-traded
funds listed and traded in the United
States (‘‘Underlying ETFs’’) and certain
other exchange-traded products
including, but not limited to, exchangetraded notes, exchange-traded currency
trusts and closed-end funds. The Fund
seeks to achieve its investment objective
of preserving and growing capital from
investments in the U.S. and foreign
equity, fixed income, commodity and
currency markets, independent of
market direction, by producing absolute
returns with reduced volatility and
manageable risk and drawdowns. The
Sub-Advisor will utilize a proprietary
quantitative trend-following approach to
actively manage the Fund’s portfolio.
No effort is made by the Sub-Advisor to
forecast future market trends or
direction; rather, the Fund seeks to
capture profits in these trends when and
where they develop. The strategy is
diversified across markets and
3 See Securities Exchange Act Release No. 62788
(August 30, 2010), 75 FR 54676 (‘‘Notice’’).
4 See NYSE Arca Equities Rule 8.600.
5 The Trust is registered under the Investment
Company Act of 1940. On June 30, 2010, the Trust
filed with the Commission a registration statement
on Form N–1A (File Nos. 333–157876 and 811–
22110) (‘‘Registration Statement’’).
6 The Exchange represents that neither the
Advisor nor the Sub-Advisor is affiliated with a
broker-dealer. See Commentary .06 to NYSE Arca
Equities Rule 8.600.
7 17 CFR 240.10A–3.
VerDate Mar<15>2010
16:45 Oct 15, 2010
Jkt 223001
timeframes with strict risk control
methods that are rules-based and
systematic. Except for Underlying ETFs
that may hold non-U.S. issues, the Fund
will not otherwise invest in non-U.S.
issues.
Additional information regarding the
Fund, the Shares, the Fund’s investment
objective, strategies, methodology, and
restrictions, the Advisor and SubAdvisor, risks, fees and expenses,
creations and redemptions of Shares,
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.8
III. Discussion and Commission’s
Findings
After careful review, the Commission
finds that the Exchange’s proposal to list
and trade the Shares is consistent with
the Act and the rules and regulations
thereunder applicable to a national
securities exchange.9 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,10 which requires,
among other things, that the Exchange’s
rules be designed to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
The Commission 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, which sets
forth Congress’s 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 high-speed line, and the
Exchange will disseminate the Portfolio
Indicative Value (‘‘PIV’’) at least every 15
seconds during the Core Trading
Session through one or more major
market data vendors. In addition, the
Fund will make available on its website
on each business day before
commencement of the Core Trading
Session the Disclosed Portfolio that will
form the basis for the Fund’s calculation
8 See
supra notes 3 and 5.
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).
10 15 U.S.C. 78f(b)(5).
9 In
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
63875
of the net asset value (‘‘NAV’’).11 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 NYSE via the National
Securities Clearing Corporation. The
Fund’s website will also include
additional quantitative information
updated on a daily basis relating to
trading volume, the prior business day’s
reported NAV, mid-point of the bid/ask
spread at the time of calculation of such
NAV (the ‘‘Bid/Ask Price’’),12 and a
calculation of the premium and
discount of the Bid/Ask Price against
the NAV and 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. 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 for the Shares will
be published daily in the financial
sections of newspapers.
The Commission further believes that
the proposal to list and trade the Shares
is reasonably designed to promote fair
disclosure of information that may be
necessary to price the Shares
appropriately and to prevent trading
when a reasonable degree of
transparency cannot be assured. The
Commission notes that the Advisor and
Sub-Advisor to the Fund are not
affiliated with a broker-dealer.13 The
11 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 NAV of the Fund
will normally be determined as of the close of the
regular trading session on the New York Stock
Exchange, Inc. (‘‘NYSE’’) (ordinarily 4:00 p.m.
Eastern Time) on each business day.
12 The Bid/Ask Price of the Fund is determined
using the midpoint of the highest bid and the
lowest offer on the Exchange as of the time of
calculation of the NAV. The records relating to Bid/
Ask Prices will be retained by the Fund and its
service providers.
13 See Commentary .06 to NYSE Arca Equities
Rule 8.600. The Commission notes that
Commentary .06 to NYSE Arca Equities Rule 8.600
requires that any investment advisers to the Fund
that are affiliated with a broker-dealer are required
to implement a fire-wall with respect to such
broker-dealer regarding access to information
concerning the composition of the portfolio.
Commentary .06 to NYSE Arca Equities Rule 8.600
also requires that any personnel who make
E:\FR\FM\18OCN1.SGM
Continued
18OCN1
63876
Federal Register / Vol. 75, No. 200 / Monday, October 18, 2010 / Notices
mstockstill on DSKH9S0YB1PROD with NOTICES
Commission also notes that the
Exchange will obtain a representation
from the Fund that the NAV per Share
will be calculated daily and that the
NAV and the Disclosed Portfolio will be
made available to all market
participants at the same time.14
Additionally, if it becomes aware that
the NAV or the Disclosed Portfolio is
not disseminated to all market
participants at the same time, the
Exchange will halt trading in the Shares
until such information is available to all
market participants. 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 day in which it occurred, the
Exchange will halt trading no later than
the beginning of the trading day
following the interruption.15 Finally,
the Commission notes that the
Reporting Authority that provides 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.16
The Exchange has 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 conform to the
initial and continued listing criteria
under NYSE Arca Equities Rule 8.600.
(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) Prior to the 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
decisions on the Fund’s portfolio composition must
be subject to procedures designed to prevent the use
and dissemination of material non-public
information regarding the portfolio.
14 See NYSE Arca Equities Rule 8.600(d)(1)(B).
15 See NYSE Arca Equities Rule 8.600(d)(2)(D).
Trading in the Shares 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 the Fund; or (2) whether
other unusual conditions or circumstances
detrimental to the maintenance of a fair and orderly
market are present.
16 See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
VerDate Mar<15>2010
16:45 Oct 15, 2010
Jkt 223001
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.17
(5) Except for Underlying ETFs that
may hold non-U.S. issues, the Fund will
not otherwise invest in non-U.S. issues.
In addition, the Commission notes
that it has not received any comments
regarding the proposed rule change.
For the forgoing reasons, the
Commission believes that the
Exchange’s proposal to list and trade the
Shares is consistent with the Act. This
order is based on the Exchange’s
representations.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,18 that the
proposed rule change (SR–NYSEArca–
2010–79) be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–26132 Filed 10–15–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63071; File No. SR–Phlx–
2010–139]
Self-Regulatory Organizations;
NASDAQ OMX PHLX, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Floor Broker Responsibilities
October 8, 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 October
5, 2010, NASDAQ OMX PHLX, Inc.
17 17
CFR 240.10A–3.
U.S.C. 78s(b)(2).
19 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
18 15
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
(‘‘Phlx’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. 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 amend
Exchange Rule 1063, Responsibility of
Floor Brokers, and Option Floor
Procedure Advice (‘‘OFPA’’) C–2,
Options Floor Broker Management
System: to: (i) Require floor brokers to
enter specific identifying information on
their orders; and (ii) amend the current
language applicable to the entry of
clearing information by floor brokers.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.nasdaqtrader.com/
micro.aspx?id=PHLXRulefilings, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
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
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of those
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to require floor brokers to
enter certain identifying information on
their orders to enhance the Exchange’s
audit trail to provide more specificity in
identifying a market participant’s
executing order. The Exchange is
proposing to require floor brokers 3 to
3 An Options Floor Broker (‘‘Floor Broker’’) is an
individual who is registered with the Exchange for
the purpose, while on the Options Floor, of
accepting and executing options orders received
from members and member organizations. An
Options Floor Broker shall not accept an order from
any other source unless he is the nominee of a
member organization qualified to transact business
E:\FR\FM\18OCN1.SGM
18OCN1
]]>Agencies
[Federal Register Volume 75, Number 200 (Monday, October 18, 2010)]
[Notices]
[Pages 63874-63876]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-26132]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63076; File No. SR-NYSEArca-2010-79]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of a Proposed Rule Change To List and Trade Shares of Cambria
Global Tactical ETF
October 12, 2010.
I. Introduction
On August 23, 2010, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
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 shares (``Shares'') of the Cambria Global Tactical ETF
(``Fund'') under NYSE Arca Equities Rule 8.600. The proposed rule
change was published for comment in the
[[Page 63875]]
Federal Register on September 8, 2010.\3\ The Commission received no
comments on the proposal. This order grants approval of the proposed
rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 62788 (August 30,
2010), 75 FR 54676 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The Exchange proposes to list and trade Shares of the Fund under
NYSE Arca Equities Rule 8.600, which governs the listing of Managed
Fund Shares.\4\ The Shares will be offered by AdvisorShares Trust
(``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 (``Advisor''), and the day-to-day
portfolio management of the Fund is provided by the sub-advisor to the
Fund, Cambria Investment Management, Inc. (``Sub-Advisor'').\6\ The
Exchange represents that the Shares will conform to the initial and
continued listing criteria under NYSE Arca Equities Rule 8.600 and that
the Fund will be in compliance with Rule 10A-3 under the Act,\7\ as
provided by NYSE Arca Equities Rule 5.3.
---------------------------------------------------------------------------
\4\ See NYSE Arca Equities Rule 8.600.
\5\ The Trust is registered under the Investment Company Act of
1940. On June 30, 2010, the Trust filed with the Commission a
registration statement on Form N-1A (File Nos. 333-157876 and 811-
22110) (``Registration Statement'').
\6\ The Exchange represents that neither the Advisor nor the
Sub-Advisor is affiliated with a broker-dealer. See Commentary .06
to NYSE Arca Equities Rule 8.600.
\7\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------
The Fund is a ``fund of funds,'' which means that the Fund seeks to
invest primarily in other exchange-traded funds listed and traded in
the United States (``Underlying ETFs'') and certain other exchange-
traded products including, but not limited to, exchange-traded notes,
exchange-traded currency trusts and closed-end funds. The Fund seeks to
achieve its investment objective of preserving and growing capital from
investments in the U.S. and foreign equity, fixed income, commodity and
currency markets, independent of market direction, by producing
absolute returns with reduced volatility and manageable risk and
drawdowns. The Sub-Advisor will utilize a proprietary quantitative
trend-following approach to actively manage the Fund's portfolio. No
effort is made by the Sub-Advisor to forecast future market trends or
direction; rather, the Fund seeks to capture profits in these trends
when and where they develop. The strategy is diversified across markets
and timeframes with strict risk control methods that are rules-based
and systematic. Except for Underlying ETFs that may hold non-U.S.
issues, the Fund will not otherwise invest in non-U.S. issues.
Additional information regarding the Fund, the Shares, the Fund's
investment objective, strategies, methodology, and restrictions, the
Advisor and Sub-Advisor, risks, fees and expenses, creations and
redemptions of Shares, 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.\8\
---------------------------------------------------------------------------
\8\ See supra notes 3 and 5.
---------------------------------------------------------------------------
III. Discussion and Commission's Findings
After careful review, the Commission finds that the Exchange's
proposal to list and trade the Shares is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\9\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\10\
which requires, among other things, that the Exchange's rules be
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------
\9\ 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).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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, which sets forth Congress's 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 high-speed line, and the Exchange will disseminate the
Portfolio Indicative Value (``PIV'') at least every 15 seconds during
the Core Trading Session through one or more major market data vendors.
In addition, the Fund will make available on its website on each
business day before commencement of the Core Trading Session the
Disclosed Portfolio that will form the basis for the Fund's calculation
of the net asset value (``NAV'').\11\ 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 NYSE via the National Securities Clearing
Corporation. The Fund's website will also include additional
quantitative information updated on a daily basis relating to trading
volume, the prior business day's reported NAV, mid-point of the bid/ask
spread at the time of calculation of such NAV (the ``Bid/Ask
Price''),\12\ and a calculation of the premium and discount of the Bid/
Ask Price against the NAV and 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. 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 for the Shares will be published daily in the
financial sections of newspapers.
---------------------------------------------------------------------------
\11\ 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 NAV of the Fund will normally be determined as of the close of
the regular trading session on the New York Stock Exchange, Inc.
(``NYSE'') (ordinarily 4:00 p.m. Eastern Time) on each business day.
\12\ The Bid/Ask Price of the Fund is determined using the
midpoint of the highest bid and the lowest offer on the Exchange as
of the time of calculation of the NAV. The records relating to Bid/
Ask Prices will be retained by the Fund and its service providers.
---------------------------------------------------------------------------
The Commission further believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Commission notes that the Advisor and Sub-Advisor to the
Fund are not affiliated with a broker-dealer.\13\ The
[[Page 63876]]
Commission also notes that the Exchange will obtain a representation
from the Fund that the NAV per Share will be calculated daily and that
the NAV and the Disclosed Portfolio will be made available to all
market participants at the same time.\14\ Additionally, if it becomes
aware that the NAV or the Disclosed Portfolio is not disseminated to
all market participants at the same time, the Exchange will halt
trading in the Shares until such information is available to all market
participants. 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 day in which
it occurred, the Exchange will halt trading no later than the beginning
of the trading day following the interruption.\15\ Finally, the
Commission notes that the Reporting Authority that provides 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.\16\
---------------------------------------------------------------------------
\13\ See Commentary .06 to NYSE Arca Equities Rule 8.600. The
Commission notes that Commentary .06 to NYSE Arca Equities Rule
8.600 requires that any investment advisers to the Fund that are
affiliated with a broker-dealer are required to implement a fire-
wall with respect to such broker-dealer regarding access to
information concerning the composition of the portfolio. Commentary
.06 to NYSE Arca Equities Rule 8.600 also requires that any
personnel who make decisions on the Fund's portfolio composition
must be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding the
portfolio.
\14\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
\15\ See NYSE Arca Equities Rule 8.600(d)(2)(D). Trading in the
Shares 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 the Fund; or (2)
whether other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present.
\16\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
---------------------------------------------------------------------------
The Exchange has 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 conform to the initial and continued listing
criteria under NYSE Arca Equities Rule 8.600.
(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) Prior to the 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.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------
(5) Except for Underlying ETFs that may hold non-U.S. issues, the
Fund will not otherwise invest in non-U.S. issues.
In addition, the Commission notes that it has not received any
comments regarding the proposed rule change.
For the forgoing reasons, the Commission believes that the
Exchange's proposal to list and trade the Shares is consistent with the
Act. This order is based on the Exchange's representations.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-NYSEArca-2010-79) be, and it
hereby is, approved.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------
\19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-26132 Filed 10-15-10; 8:45 am]
BILLING CODE 8011-01-P
