Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of the WisdomTree Asia Local Debt Fund, 10073-10076 [2011-3984]

Download as PDF Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices Reactor Regulation, Division of Engineer, U.S. Nuclear Regulatory Commission, Washington, DC 20555– 0001, telephone: 301–415–3152, e-mail: kenneth.miller2@nrc.gov. SUPPLEMENTARY INFORMATION: Pursuant to 10 CFR 51.33(a), the NRC staff is making the Draft RIS available for public review and comment. The public comment period is reopened with publication of this notice and continues until March 19, 2011. Dated at Rockville, Maryland, this 15th day of February, 2011. For the Nuclear Regulatory Commission. Roy Mathew, Acting Branch Chief, Electrical Engineering Branch, Division of Engineering, Office of Nuclear Reactor Regulation. [FR Doc. 2011–3987 Filed 2–22–11; 8:45 am] Commission, and recording secretaries will attend the Closed Meeting. Certain staff members who have an interest in the matters also may be present. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR 200.402(a)(3), (5), (7), 9(ii) and (10), permit consideration of the scheduled matters at the Closed Meeting. Commissioner Aguilar, as duty officer, voted to consider the items listed for the Closed Meeting in a closed session. The subject matter of the Closed Meeting scheduled for Thursday, February 24, 2011 will be: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; and Other matters relating to enforcement proceedings. BILLING CODE 7590–01–P OVERSEAS PRIVATE INVESTMENT CORPORATION Sunshine Act Public Hearing Cancellation Notice; February 24, 2011 OPIC’s Sunshine Act notice of its Public Hearing in Conjunction with each Board meeting was published in the Federal Register (Volume 76, Number 22, Pages 5842 and 5843) on February 2, 2011. No requests were received to provide testimony or submit written statements for the record; therefore, OPIC’s public hearing scheduled for 2 PM, February 24, 2011 in conjunction with OPIC’s March 10, 2011 Board of Directors meeting has been cancelled. Contact Person for Information: Information on the hearing cancellation may be obtained from Connie M. Downs at (202) 336–8438, or via e-mail at Connie.Downs@opic.gov. Dated: February 17, 2011. Connie M. Downs, OPIC Corporate Secretary. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551–5400. Dated: February 17, 2011. Elizabeth M. Murphy, Secretary. [FR Doc. 2011–4078 Filed 2–18–11; 11:15 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63919; File No. SR– NYSEArca–2010–116] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of the WisdomTree Asia Local Debt Fund [FR Doc. 2011–4103 Filed 2–18–11; 11:15 am] BILLING CODE 3210–01–P February 16, 2011. Sunshine Act Meeting mstockstill on DSKH9S0YB1PROD with NOTICES SECURITIES AND EXCHANGE COMMISSION On December 13, 2010, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares of the I. Introduction Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission will hold a Closed Meeting on Thursday, February 24, 2011 at 2 p.m. Commissioners, Counsel to the Commissioners, the Secretary to the VerDate Mar<15>2010 18:50 Feb 22, 2011 Jkt 223001 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00070 Fmt 4703 Sfmt 4703 10073 WisdomTree Asia Local Debt Fund (f/k/ a WisdomTree Asia Bond Fund) under NYSE Arca Equities Rule 8.600. The proposed rule change was published for comment in the Federal Register on January 3, 2011.3 On February 15, 2011, the Exchange filed Amendment No. 1 to the proposed rule change.4 The Commission received no comments on the proposal. This order grants approval of the proposed rule change, as amended. II. Description of the Proposal The Exchange proposes to list and trade shares (‘‘Shares’’) of the WisdomTree Asia Local Debt Fund (‘‘Fund’’) of the WisdomTree Trust (‘‘Trust’’) under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares on the Exchange. The Fund will be an actively managed exchange-traded fund. The Shares will be offered by the Trust, which was established as a Delaware statutory trust on December 15, 2005 and is registered with the Commission as an investment company.5 WisdomTree Asset Management, Inc. (‘‘WisdomTree Asset Management’’) is the investment adviser (‘‘Adviser’’) to the Fund,6 and Mellon Capital Management serves as sub-adviser for the Fund (‘‘Sub-Adviser’’).7 The Bank of New York Mellon is the administrator, custodian, and transfer agent for the Trust, and ALPS Distributors, Inc. serves as the distributor for the Trust. The Fund seeks to provide investors with a high level of total return consisting of both income and capital appreciation. The Fund is designed to provide exposure to a broad range of Asian government and corporate bonds through investment in both local currency (e.g., Hong Kong dollar; South Korean won) and U.S. dollar3 See Securities Exchange Act Release No. 63609 (December 27, 2010), 76 FR 194 (‘‘Notice’’). 4 In Amendment No. 1, the Exchange modified the name of the Fund from ‘‘WisdomTree Asia Bond Fund’’ to ‘‘WisdomTree Asia Local Debt Fund,’’ updated references to the amended Registration Statement (as defined herein), and clarified that the Fund intends to invest in issuers in Australia and New Zealand. Because such modifications are either technical in nature or clarifications, the amendment does not require notice and comment. 5 The Fund has filed a registration statement on Form N–1A (‘‘Registration Statement’’) with the Commission. See Post-Effective Amendment No. 42 to Registration Statement on Form N–1A for the Trust, dated January 24, 2011 (File Nos. 333– 132380 and 811–21864). 6 WisdomTree Investments, Inc. is the parent company of WisdomTree Asset Management. 7 The Sub-Adviser is responsible for day-to-day management of the Fund and, as such, typically makes all decisions with respect to portfolio holdings. The Adviser has ongoing oversight responsibility. E:\FR\FM\23FEN1.SGM 23FEN1 10074 Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices mstockstill on DSKH9S0YB1PROD with NOTICES denominated Fixed Income Securities.8 The Fund seeks to achieve its investment objective through direct and indirect investments in Fixed Income Securities issued by governments and corporations in Asian countries and intends to focus on the developing/ emerging market economies in Asia, primarily China, Hong Kong, India, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. While the Fund is permitted to invest in developed market economies, this is not a focus of the Fund. However, the Fund intends to invest in issuers in Australia and New Zealand. The Fund intends to invest at least 70% of its net assets in Fixed Income Securities. The Fund expects to invest up to 20% of its net assets in Asian corporate bonds. The Fund will invest only in corporate bonds that the Adviser or Sub-Adviser deems to be sufficiently liquid. Generally, a corporate bond must have $200 million or more par amount outstanding and significant par value traded to be considered as an eligible investment. Economic and other conditions in Asia may, from time to time, lead to a decrease in the average par amount outstanding of bond issuances. Therefore, although the Fund does not intend to do so, the Fund may invest up to 5% of its net assets in corporate bonds with less than $200 million par amount outstanding if (i) the Adviser or Sub-Adviser deems such security to be sufficiently liquid based on its analysis of the market for such security (based on, for example, brokerdealer quotations or its analysis of the trading history of the security or the trading history of other securities issued by the issuer), (ii) such investment is consistent with the Fund’s goal of providing exposure to a broad range of Asian government and corporate bonds, and (iii) such investment is deemed by the Adviser or Sub-Adviser to be in the best interest of the Fund. The Fund will hold Fixed Income Securities of at least 13 non-affiliated issuers. The Fund is designed to provide a broad-based, representative exposure to Asian government and corporate bonds and therefore will invest in both investment grade and non-investment grade securities in a manner designed to provide this exposure. The Fund 8 Fixed Income Securities include bonds, notes or other debt obligations, such as government or corporate bonds, denominated in local currencies or U.S. dollars, as well as issues denominated in Asian local currencies that are issued by ‘‘supranational issuers,’’ such as the European Investment Bank, International Bank for Reconstruction and Development, and the International Finance Corporation, as well as development agencies supported by other national governments. VerDate Mar<15>2010 18:50 Feb 22, 2011 Jkt 223001 expects that it will have 75% or more of its assets invested in investment grade securities, and no more than 25% of its assets invested in non-investment grade securities. Because the Fund is designed to provide exposure to a broad range of Asian government and corporate bonds, and because the debt ratings of the Asian governments and those corporate issuers will change from time to time, the exact percentage of the Fund’s investments in investment grade and non-investment grade securities will change from time to time in response to economic events and changes to the credit ratings of the Asian government and corporate issuers. Within the non-investment grade category, some issuers and instruments are considered to be of lower credit quality and at higher risk of default. In order to limit its exposure to these more speculative credits, the Fund will not invest more than 15% of its assets in securities rated B or below by Moody’s, or equivalently rated by S&P or Fitch. The Fund does not intend to invest in unrated securities. However, it may do so to a limited extent, such as where a rated security becomes unrated, if such security is, determined by the Adviser and Sub-Adviser to be of comparable quality. In determining whether a security is of ‘‘comparable quality,’’ the Adviser and Sub-Adviser will consider, for example, whether the issuer of the security has issued other rated securities. The Fund will not invest in non-U.S. equity securities. The Fund intends to invest in Money Market Securities in order to help manage cash flows in and out of the Fund, such as in connection with payment of dividends or expenses, and to satisfy margin requirements, to provide collateral or to otherwise back investments in derivative instruments. For these purposes, Money Market Securities include: short-term, highquality obligations issued or guaranteed by the U.S. Treasury or the agencies or instrumentalities of the U.S. government; short-term, high-quality securities issued or guaranteed by nonU.S. governments, agencies and instrumentalities; repurchase agreements backed by U.S. government securities; money market mutual funds; and deposits and other obligations of U.S. and non-U.S. banks and financial institutions. All Money Market Securities acquired by the Fund will be rated investment grade, except that the Fund may invest in unrated Money Market Securities that are deemed by the Adviser or Sub-Adviser to be of comparable quality to money market securities rated investment grade. PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 The Fund may use derivative instruments as part of its investment strategies. Examples of derivative instruments include listed futures contracts,9 forward currency contracts, non-deliverable forward currency contracts, currency and interest rate swaps, currency options, options on futures contracts, swap agreements and credit-linked notes.10 The Fund’s use of derivative instruments (other than credit-linked notes) will be collateralized or otherwise backed by investments in short term, high-quality U.S. money market securities. The Fund expects that no more than 30% of the value of the Fund’s net assets will be invested in derivative instruments. Such investments will be consistent with the Fund’s investment objective and will not be used to enhance leverage. The Fund may invest in the securities of other investment companies (including money market funds and exchange-traded funds). The Fund may invest up to an aggregate amount of 10% of its net assets in illiquid securities. Illiquid securities include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets. Additional details regarding the Trust and the Fund, the investment objective and strategies, creations and redemptions of the Shares, investment risks, net asset value (‘‘NAV’’) calculation, the dissemination of key values and availability of information about the underlying assets, trading halts, applicable trading rules, surveillance, and the Information Bulletin, among other things, can be found in the Notice and/or the Registration Statement, as applicable.11 III. Discussion and Commission’s Findings After careful consideration, the Commission finds that the proposed rule change to list and trade the Shares of the Fund is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.12 In particular, the Commission finds that the proposed rule change is consistent 9 The listed futures contracts in which the Fund will invest may be listed on exchanges either in the U.S. or in either Hong Kong or Singapore. 10 The Fund’s investments in credit-linked notes will be limited to notes providing exposure to Asian Fixed Income Securities. The Fund’s overall investment in credit-linked notes will not exceed 25% of the Fund’s assets. 11 See supra notes 3 and 5. 12 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\23FEN1.SGM 23FEN1 Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices with the requirements of Section 6(b)(5) of the Act,13 which requires, among other things, that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. The Commission notes that the Shares and Fund must comply with the requirements of NYSE Arca Equities Rule 8.600, among other Exchange rules, to be listed and traded on the Exchange. The Commission finds that the proposal to list and trade the Shares on the Exchange is also consistent with Section 11A(a)(1)(C)(iii) of the Act,14 which sets forth Congress’ finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities. Quotation and last-sale information regarding the Shares will be available via the Consolidated Tape Association’s high-speed line. On each business day before commencement of trading in the Shares in the Core Trading Session15 on the Exchange, the Trust will disclose on its Web site the identities and quantities of the portfolio of securities and other assets (‘‘Disclosed Portfolio’’) held by the Fund that will form the basis for the Fund’s calculation of NAV at the end of the business day.16 The Disclosed Portfolio will include, as applicable, the names, quantity, percentage weighting, and market value of Fixed Income Securities and other assets held by the Fund and the characteristics of such assets. The NAV of the Fund’s Shares generally is calculated once daily Monday through Friday as of the close of regular trading on the New York Stock Exchange, generally 4:00 p.m. Eastern time. In addition, an estimated value that reflects an estimated intraday value of 13 15 U.S.C. 78f(b)(5). U.S.C. 78k–1(a)(1)(C)(iii). 15 The Core Trading Session is 9:30 a.m. to 4:00 p.m. Eastern time. 16 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’’). Notwithstanding the foregoing, portfolio trades that are executed prior to the opening of the Exchange on any business day may be booked and reflected in NAV on such business day. 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. mstockstill on DSKH9S0YB1PROD with NOTICES 14 15 VerDate Mar<15>2010 18:50 Feb 22, 2011 Jkt 223001 the Fund’s portfolio, defined in NYSE Arca Equities Rule 8.600 as the ‘‘Portfolio Indicative Value,’’ will also be disseminated. The Portfolio Indicative Value will be based upon the current value for the components of the Disclosed Portfolio and will be updated and disseminated by one or more major market data vendors at least every 15 seconds during the Core Trading Session on the Exchange. In addition, during hours when the markets for securities in the Fund’s portfolio are closed, the Portfolio Indicative Value will be updated at least every 15 seconds during the Core Trading Session to reflect currency exchange fluctuations. Intra-day and end-of-day prices for the Fixed Income Securities, Money Market Securities, and derivative instruments held by the Fund are readily available through major market data providers and broker-dealers. The Web site for the Fund (http:// www.wisdomtree.com) will include a form of the prospectus and additional data relating to NAV and other applicable quantitative information. 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 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.17 If the Exchange becomes aware that the NAV or Disclosed Portfolio with respect to the Shares is not disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV or Disclosed Portfolio is available to all market participants. Further, the Exchange may halt trading during the day in which an interruption to the dissemination of the Portfolio Indicative Value occurs. If the interruption to the dissemination of the Portfolio Indicative Value persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption.18 The 17 See NYSE Arca Equities Rule 8.600(d)(1)(B). 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 and/ or the financial instruments comprising the Disclosed Portfolio of the Fund; or (2) whether other unusual conditions or circumstances 18 See PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 10075 Exchange also represents that the SubAdviser, which is affiliated with multiple broker-dealers, has implemented a ‘‘fire wall’’ with respect to such broker-dealers regarding access to information concerning the composition and/or changes to the Fund’s portfolio. In addition, SubAdviser personnel who make decisions regarding the Fund’s portfolio are subject to procedures designed to prevent the use and dissemination of material non-public information regarding the Fund’s portfolio.19 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.20 The Exchange has represented that the Shares are deemed 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 the following: (1) The Shares will be subject to NYSE Arca Equities Rule 8.600, which sets forth the initial and continued listing criteria applicable to Managed Fund Shares. (2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. (3) 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. (4) 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 in Creation Unit aggregations (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 detrimental to the maintenance of a fair and orderly market are present. 19 See Commentary .06 to NYSE Arca Equities Rule 8.600. In the event (a) the Adviser or the SubAdviser becomes newly affiliated with a brokerdealer, or (b) any new adviser or sub-adviser becomes affiliated with a broker-dealer, they will be required to implement a fire wall with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the portfolio. 20 See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii). E:\FR\FM\23FEN1.SGM 23FEN1 10076 Federal Register / Vol. 76, No. 36 / Wednesday, February 23, 2011 / Notices trading the Shares; (c) 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; (d) how information regarding the Portfolio Indicative Value 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. (5) A minimum of 100,000 Shares will be outstanding at the commencement of trading on the Exchange. (6) For initial and/or continued listing, the Shares must be in compliance with Rule 10A–3 under the Act.21 This approval order is based on the Exchange’s representations. For the foregoing reasons, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,22 that the proposed rule change (SR–NYSEArca– 2010–116), as modified by Amendment No. 1 thereto, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–3984 Filed 2–22–11; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–63918; File No. SR–C2– 2011–005] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change to Adopt Supplemental Rule (a) to Chapter 4 Relating to Proxy Voting mstockstill on DSKH9S0YB1PROD with NOTICES February 16, 2011. 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 February 17 CFR 240.10A–3. U.S.C. 78f(b)(2). 23 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 22 15 VerDate Mar<15>2010 18:50 Feb 22, 2011 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt Supplemental Rule (a), Proxy Voting, to C2 Chapter 4 in accordance with provisions of Section 957 of the DoddFrank Wall Street Reform and Consumer Protection Act (the ‘‘Dodd-Frank Act’’). The text of the rule proposal is available on the Exchange’s Web site (http:// www.cboe.org/legal), at the Exchange’s Office of the Secretary and at the Commission. 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 SECURITIES AND EXCHANGE COMMISSION 21 See 10, 2011, the C2 Options Exchange, Incorporated (‘‘Exchange’’ or ‘‘C2’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II 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, and is approving the proposed rule change on an accelerated basis. 1. Purpose Section 957 of the Dodd-Frank Act adopted new Section 6(b)(10) of the Act,3 which requires the rules of each national securities exchange to prohibit any member that is not the beneficial owner of a security registered under Section 12 of the Act 4 from granting a proxy to vote the security in connection with certain shareholder votes, unless the beneficial owner of the security has instructed the member to vote the proxy in accordance with the voting instructions of the beneficial owner. The shareholder votes covered by Section 957 include any vote with respect to (i) the election of a member of the board of 3 15 4 15 Jkt 223001 PO 00000 U.S.C. 78f(b)(10). U.S.C. 78l. Frm 00073 Fmt 4703 directors of an issuer (except for a vote with respect to the uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act of 1940 (the ‘‘Investment Company Act’’), (ii) executive compensation, or (iii) any other significant matter, as determined by the Commission, by rule.5 Accordingly, in order to carryout the requirements of Section 957 of the Dodd-Frank Act, the Exchange is proposing to adopt Supplemental Rule (a) to C2 Chapter 4. Paragraph (1) of the proposed rule provides that a C2 Permit Holder is prohibited from giving a proxy to vote stock that is registered in its name, unless: (i) Such Permit Holder is the beneficial owner of such stock; (ii) pursuant to the written instructions of the beneficial owner; or (iii) pursuant to the rules of any national securities exchange or association of which it is a member provided that the records of the Permit Holder clearly indicate the procedure it is following. The Exchange is proposing to adopt these provisions because other national securities exchanges and associations do allow proxy voting under certain limited circumstances while the current Exchange Rules are silent on such matters. Therefore, a C2 Permit Holder that is also a member of another national securities exchange or association may vote shares held for a customer when allowed under its membership at another national securities exchange or association, provided that the records of the C2 Permit Holder clearly indicate the procedure it is following. Notwithstanding the above, paragraph (2) of the proposed rule provides that a C2 Permit Holder that is not the beneficial owner of a security registered under Section 12 of the Act is prohibited from granting a proxy to vote the security in connection with a shareholder vote on the election of a member of the board of directors of an issuer (except for a vote with respect to uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act), executive compensation, or any other significant matter, as determined by the Commission, by rule, unless the beneficial owner of the security has instructed the Permit Holder to vote the proxy in accordance with the voting instructions of the beneficial owner. 5 15 Sfmt 4703 E:\FR\FM\23FEN1.SGM U.S.C. 78f(b)(10)(B). 23FEN1

Agencies

[Federal Register Volume 76, Number 36 (Wednesday, February 23, 2011)]
[Notices]
[Pages 10073-10076]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-3984]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63919; File No. SR-NYSEArca-2010-116]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change, as Modified by Amendment No. 1 
Thereto, Relating to the Listing and Trading of the WisdomTree Asia 
Local Debt Fund

February 16, 2011.

I. Introduction

    On December 13, 2010, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade shares of the WisdomTree Asia 
Local Debt Fund (f/k/a WisdomTree Asia Bond Fund) under NYSE Arca 
Equities Rule 8.600. The proposed rule change was published for comment 
in the Federal Register on January 3, 2011.\3\ On February 15, 2011, 
the Exchange filed Amendment No. 1 to the proposed rule change.\4\ The 
Commission received no comments on the proposal. This order grants 
approval of the proposed rule change, as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 63609 (December 27, 
2010), 76 FR 194 (``Notice'').
    \4\ In Amendment No. 1, the Exchange modified the name of the 
Fund from ``WisdomTree Asia Bond Fund'' to ``WisdomTree Asia Local 
Debt Fund,'' updated references to the amended Registration 
Statement (as defined herein), and clarified that the Fund intends 
to invest in issuers in Australia and New Zealand. Because such 
modifications are either technical in nature or clarifications, the 
amendment does not require notice and comment.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to list and trade shares (``Shares'') of the 
WisdomTree Asia Local Debt Fund (``Fund'') of the WisdomTree Trust 
(``Trust'') under NYSE Arca Equities Rule 8.600, which governs the 
listing and trading of Managed Fund Shares on the Exchange. The Fund 
will be an actively managed exchange-traded fund. The Shares will be 
offered by the Trust, which was established as a Delaware statutory 
trust on December 15, 2005 and is registered with the Commission as an 
investment company.\5\ WisdomTree Asset Management, Inc. (``WisdomTree 
Asset Management'') is the investment adviser (``Adviser'') to the 
Fund,\6\ and Mellon Capital Management serves as sub-adviser for the 
Fund (``Sub-Adviser'').\7\ The Bank of New York Mellon is the 
administrator, custodian, and transfer agent for the Trust, and ALPS 
Distributors, Inc. serves as the distributor for the Trust.
---------------------------------------------------------------------------

    \5\ The Fund has filed a registration statement on Form N-1A 
(``Registration Statement'') with the Commission. See Post-Effective 
Amendment No. 42 to Registration Statement on Form N-1A for the 
Trust, dated January 24, 2011 (File Nos. 333-132380 and 811-21864).
    \6\ WisdomTree Investments, Inc. is the parent company of 
WisdomTree Asset Management.
    \7\ The Sub-Adviser is responsible for day-to-day management of 
the Fund and, as such, typically makes all decisions with respect to 
portfolio holdings. The Adviser has ongoing oversight 
responsibility.
---------------------------------------------------------------------------

    The Fund seeks to provide investors with a high level of total 
return consisting of both income and capital appreciation. The Fund is 
designed to provide exposure to a broad range of Asian government and 
corporate bonds through investment in both local currency (e.g., Hong 
Kong dollar; South Korean won) and U.S. dollar-

[[Page 10074]]

denominated Fixed Income Securities.\8\ The Fund seeks to achieve its 
investment objective through direct and indirect investments in Fixed 
Income Securities issued by governments and corporations in Asian 
countries and intends to focus on the developing/emerging market 
economies in Asia, primarily China, Hong Kong, India, Indonesia, South 
Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. 
While the Fund is permitted to invest in developed market economies, 
this is not a focus of the Fund. However, the Fund intends to invest in 
issuers in Australia and New Zealand.
---------------------------------------------------------------------------

    \8\ Fixed Income Securities include bonds, notes or other debt 
obligations, such as government or corporate bonds, denominated in 
local currencies or U.S. dollars, as well as issues denominated in 
Asian local currencies that are issued by ``supranational issuers,'' 
such as the European Investment Bank, International Bank for 
Reconstruction and Development, and the International Finance 
Corporation, as well as development agencies supported by other 
national governments.
---------------------------------------------------------------------------

    The Fund intends to invest at least 70% of its net assets in Fixed 
Income Securities. The Fund expects to invest up to 20% of its net 
assets in Asian corporate bonds. The Fund will invest only in corporate 
bonds that the Adviser or Sub-Adviser deems to be sufficiently liquid. 
Generally, a corporate bond must have $200 million or more par amount 
outstanding and significant par value traded to be considered as an 
eligible investment. Economic and other conditions in Asia may, from 
time to time, lead to a decrease in the average par amount outstanding 
of bond issuances. Therefore, although the Fund does not intend to do 
so, the Fund may invest up to 5% of its net assets in corporate bonds 
with less than $200 million par amount outstanding if (i) the Adviser 
or Sub-Adviser deems such security to be sufficiently liquid based on 
its analysis of the market for such security (based on, for example, 
broker-dealer quotations or its analysis of the trading history of the 
security or the trading history of other securities issued by the 
issuer), (ii) such investment is consistent with the Fund's goal of 
providing exposure to a broad range of Asian government and corporate 
bonds, and (iii) such investment is deemed by the Adviser or Sub-
Adviser to be in the best interest of the Fund. The Fund will hold 
Fixed Income Securities of at least 13 non-affiliated issuers.
    The Fund is designed to provide a broad-based, representative 
exposure to Asian government and corporate bonds and therefore will 
invest in both investment grade and non-investment grade securities in 
a manner designed to provide this exposure. The Fund expects that it 
will have 75% or more of its assets invested in investment grade 
securities, and no more than 25% of its assets invested in non-
investment grade securities. Because the Fund is designed to provide 
exposure to a broad range of Asian government and corporate bonds, and 
because the debt ratings of the Asian governments and those corporate 
issuers will change from time to time, the exact percentage of the 
Fund's investments in investment grade and non-investment grade 
securities will change from time to time in response to economic events 
and changes to the credit ratings of the Asian government and corporate 
issuers. Within the non-investment grade category, some issuers and 
instruments are considered to be of lower credit quality and at higher 
risk of default. In order to limit its exposure to these more 
speculative credits, the Fund will not invest more than 15% of its 
assets in securities rated B or below by Moody's, or equivalently rated 
by S&P or Fitch. The Fund does not intend to invest in unrated 
securities. However, it may do so to a limited extent, such as where a 
rated security becomes unrated, if such security is, determined by the 
Adviser and Sub-Adviser to be of comparable quality. In determining 
whether a security is of ``comparable quality,'' the Adviser and Sub-
Adviser will consider, for example, whether the issuer of the security 
has issued other rated securities. The Fund will not invest in non-U.S. 
equity securities.
    The Fund intends to invest in Money Market Securities in order to 
help manage cash flows in and out of the Fund, such as in connection 
with payment of dividends or expenses, and to satisfy margin 
requirements, to provide collateral or to otherwise back investments in 
derivative instruments. For these purposes, Money Market Securities 
include: short-term, high-quality obligations issued or guaranteed by 
the U.S. Treasury or the agencies or instrumentalities of the U.S. 
government; short-term, high-quality securities issued or guaranteed by 
non-U.S. governments, agencies and instrumentalities; repurchase 
agreements backed by U.S. government securities; money market mutual 
funds; and deposits and other obligations of U.S. and non-U.S. banks 
and financial institutions. All Money Market Securities acquired by the 
Fund will be rated investment grade, except that the Fund may invest in 
unrated Money Market Securities that are deemed by the Adviser or Sub-
Adviser to be of comparable quality to money market securities rated 
investment grade.
    The Fund may use derivative instruments as part of its investment 
strategies. Examples of derivative instruments include listed futures 
contracts,\9\ forward currency contracts, non-deliverable forward 
currency contracts, currency and interest rate swaps, currency options, 
options on futures contracts, swap agreements and credit-linked 
notes.\10\ The Fund's use of derivative instruments (other than credit-
linked notes) will be collateralized or otherwise backed by investments 
in short term, high-quality U.S. money market securities. The Fund 
expects that no more than 30% of the value of the Fund's net assets 
will be invested in derivative instruments. Such investments will be 
consistent with the Fund's investment objective and will not be used to 
enhance leverage.
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    \9\ The listed futures contracts in which the Fund will invest 
may be listed on exchanges either in the U.S. or in either Hong Kong 
or Singapore.
    \10\ The Fund's investments in credit-linked notes will be 
limited to notes providing exposure to Asian Fixed Income 
Securities. The Fund's overall investment in credit-linked notes 
will not exceed 25% of the Fund's assets.
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    The Fund may invest in the securities of other investment companies 
(including money market funds and exchange-traded funds). The Fund may 
invest up to an aggregate amount of 10% of its net assets in illiquid 
securities. Illiquid securities include securities subject to 
contractual or other restrictions on resale and other instruments that 
lack readily available markets.
    Additional details regarding the Trust and the Fund, the investment 
objective and strategies, creations and redemptions of the Shares, 
investment risks, net asset value (``NAV'') calculation, the 
dissemination of key values and availability of information about the 
underlying assets, trading halts, applicable trading rules, 
surveillance, and the Information Bulletin, among other things, can be 
found in the Notice and/or the Registration Statement, as 
applicable.\11\
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    \11\ See supra notes 3 and 5.
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III. Discussion and Commission's Findings

    After careful consideration, the Commission finds that the proposed 
rule change to list and trade the Shares of the Fund is consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\12\ In particular, the 
Commission finds that the proposed rule change is consistent

[[Page 10075]]

with the requirements of Section 6(b)(5) of the Act,\13\ which 
requires, among other things, that the Exchange's rules be designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system. The Commission notes 
that the Shares and Fund must comply with the requirements of NYSE Arca 
Equities Rule 8.600, among other Exchange rules, to be listed and 
traded on the Exchange.
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    \12\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Commission finds that the proposal to list and trade the Shares 
on the Exchange is also consistent with Section 11A(a)(1)(C)(iii) of 
the Act,\14\ which sets forth Congress' finding that it is in the 
public interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for, and transactions in, securities. Quotation and last-
sale information regarding the Shares will be available via the 
Consolidated Tape Association's high-speed line. On each business day 
before commencement of trading in the Shares in the Core Trading 
Session\15\ on the Exchange, the Trust will disclose on its Web site 
the identities and quantities of the portfolio of securities and other 
assets (``Disclosed Portfolio'') held by the Fund that will form the 
basis for the Fund's calculation of NAV at the end of the business 
day.\16\ The Disclosed Portfolio will include, as applicable, the 
names, quantity, percentage weighting, and market value of Fixed Income 
Securities and other assets held by the Fund and the characteristics of 
such assets. The NAV of the Fund's Shares generally is calculated once 
daily Monday through Friday as of the close of regular trading on the 
New York Stock Exchange, generally 4:00 p.m. Eastern time. In addition, 
an estimated value that reflects an estimated intraday value of the 
Fund's portfolio, defined in NYSE Arca Equities Rule 8.600 as the 
``Portfolio Indicative Value,'' will also be disseminated. The 
Portfolio Indicative Value will be based upon the current value for the 
components of the Disclosed Portfolio and will be updated and 
disseminated by one or more major market data vendors at least every 15 
seconds during the Core Trading Session on the Exchange. In addition, 
during hours when the markets for securities in the Fund's portfolio 
are closed, the Portfolio Indicative Value will be updated at least 
every 15 seconds during the Core Trading Session to reflect currency 
exchange fluctuations. Intra-day and end-of-day prices for the Fixed 
Income Securities, Money Market Securities, and derivative instruments 
held by the Fund are readily available through major market data 
providers and broker-dealers. The Web site for the Fund (http://www.wisdomtree.com) will include a form of the prospectus and 
additional data relating to NAV and other applicable quantitative 
information.
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    \14\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \15\ The Core Trading Session is 9:30 a.m. to 4:00 p.m. Eastern 
time.
    \16\ 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''). Notwithstanding the 
foregoing, portfolio trades that are executed prior to the opening 
of the Exchange on any business day may be booked and reflected in 
NAV on such business day. 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.
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    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 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.\17\ If the Exchange becomes aware that the NAV or 
Disclosed Portfolio with respect to the Shares is not disseminated to 
all market participants at the same time, it will halt trading in the 
Shares until such time as the NAV or Disclosed Portfolio is available 
to all market participants. Further, the Exchange may halt trading 
during the day in which an interruption to the dissemination of the 
Portfolio Indicative Value occurs. If the interruption to the 
dissemination of the Portfolio Indicative Value persists past the 
trading day in which it occurred, the Exchange will halt trading no 
later than the beginning of the trading day following the 
interruption.\18\ The Exchange also represents that the Sub-Adviser, 
which is affiliated with multiple broker-dealers, has implemented a 
``fire wall'' with respect to such broker-dealers regarding access to 
information concerning the composition and/or changes to the Fund's 
portfolio. In addition, Sub-Adviser personnel who make decisions 
regarding the Fund's portfolio are subject to procedures designed to 
prevent the use and dissemination of material non-public information 
regarding the Fund's portfolio.\19\ 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.\20\
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    \17\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
    \18\ 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 and/or the financial 
instruments comprising the Disclosed Portfolio of the Fund; or (2) 
whether other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present.
    \19\ See Commentary .06 to NYSE Arca Equities Rule 8.600. In the 
event (a) the Adviser or the Sub-Adviser becomes newly affiliated 
with a broker-dealer, or (b) any new adviser or sub-adviser becomes 
affiliated with a broker-dealer, they will be required to implement 
a fire wall with respect to such broker-dealer regarding access to 
information concerning the composition and/or changes to the 
portfolio.
    \20\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
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    The Exchange has represented that the Shares are deemed 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 the following:
    (1) The Shares will be subject to NYSE Arca Equities Rule 8.600, 
which sets forth the initial and continued listing criteria applicable 
to Managed Fund Shares.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) 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.
    (4) 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 in Creation Unit 
aggregations (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

[[Page 10076]]

trading the Shares; (c) 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; (d) 
how information regarding the Portfolio Indicative Value 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.
    (5) A minimum of 100,000 Shares will be outstanding at the 
commencement of trading on the Exchange.
    (6) For initial and/or continued listing, the Shares must be in 
compliance with Rule 10A-3 under the Act.\21\
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    \21\ See 17 CFR 240.10A-3.

This approval order is based on the Exchange's representations.
    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\22\ that the proposed rule change (SR-NYSEArca-2010-116), as 
modified by Amendment No. 1 thereto, be, and it hereby is, approved.
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    \22\ 15 U.S.C. 78f(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-3984 Filed 2-22-11; 8:45 am]
BILLING CODE 8011-01-P