Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change To List and Trade the WisdomTree Global Real Return Fund, 35062-35066 [2011-14849]

Download as PDF jlentini on DSK4TPTVN1PROD with NOTICES 35062 Federal Register / Vol. 76, No. 115 / Wednesday, June 15, 2011 / Notices procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interest of shareholders of the Fund. 12. Each Fund will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in Affiliated Underwritings, once an investment by an Investing Fund in the securities of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth from whom the securities were acquired, the identity of the underwriting syndicate’s members, the terms of the purchase, and the information or materials upon which the Board’s determinations were made. 13. Before investing in a Fund in excess of the limits in section 12(d)(1)(A), each Investing Fund and the Fund will execute an Investing Fund Participation Agreement stating, without limitation, that their respective boards of directors or trustees and their investment advisers or Trustee and Sponsor, as applicable, understand the terms and conditions of the order, and agree to fulfill their responsibilities under the order. At the time of its investment in Shares of a Fund in excess of the limit in section 12(d)(1)(A)(i), an Investing Fund will notify the Fund of the investment. At such time, the Investing Fund will also transmit to the Fund a list of the names of each Investing Funds Affiliate and Underwriting Affiliate. The Investing Fund will notify the Fund of any changes to the list of names as soon as reasonably practicable after a change occurs. The Fund and the Investing Fund will maintain and preserve a copy of the order, the Investing Fund Participation Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place. 14. Before approving any advisory contract under section 15 of the Act, the board of directors or trustees of each Investing Management Company, including a majority of the disinterested directors or trustees, will find that the advisory fees charged under such contract are based on services provided that will be in addition to, rather than duplicative of, the services provided VerDate Mar<15>2010 16:42 Jun 14, 2011 Jkt 223001 under the advisory contract(s) of any Fund in which the Investing Management Company may invest. These findings and their basis will be recorded fully in the minute books of the appropriate Investing Management Company. 15. Any sales charges and/or service fees charged with respect to shares of an Investing Fund will not exceed the limits applicable to a fund of funds as set forth in Conduct Rule 2830 of the NASD. 16. No Fund will acquire securities of an investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent permitted by exemptive relief from the Commission permitting the Fund to purchase shares of other investment companies for short-term cash management purposes. For the Commission, by the Division of Investment Management, under delegated authority. Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–14843 Filed 6–14–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] Apparel America, Inc. (n/k/a HSK Industries, Inc.), Decora Industries, Inc., Diversicon Holdings Corp., Flagship Global Health, Inc., Integrated Transportation Network Group, Inc., and Premier Wealth Management, Inc. (a/k/a Premiere Wealth Management, Inc.); Order of Suspension of Trading June 13, 2011. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Apparel America, Inc. (n/k/a HSK Industries, Inc.) because it has not filed any periodic reports since the period ended January 31, 1998. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Decora Industries, Inc. because it has not filed any periodic reports since the period ended June 30, 2000. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Diversicon Holdings Corp. because it has not filed any periodic reports since the period ended December 31, 1998. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Flagship Global Health, Inc. because it has not filed any periodic reports since the period ended March 31, 2008. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Integrated Transportation Network Group, Inc. because it has not filed any periodic reports since the period ended September 30, 1999. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Premier Wealth Management, Inc. (a/k/a Premiere Wealth Management, Inc.) because it has not filed any periodic reports since the period ended September 30, 2007. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the abovelisted companies is suspended for the period from 9:30 a.m. EDT on June 13, 2011, through 11:59 p.m. EDT on June 24, 2011. By the Commission. Jill M. Peterson, Assistant Secretary. [FR Doc. 2011–14986 Filed 6–13–11; 4:15 pm] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64643; File No. SR– NYSEArca–2011–21] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change To List and Trade the WisdomTree Global Real Return Fund June 10, 2011. I. Introduction On April 20, 2011, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade the shares (‘‘Shares’’) of the WisdomTree Global 1 15 2 17 E:\FR\FM\15JNN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 15JNN1 Federal Register / Vol. 76, No. 115 / Wednesday, June 15, 2011 / Notices Real Return Fund (‘‘Fund’’) under NYSE Arca Equities Rule 8.600.3 The proposed rule change was published for comment in the Federal Register on May 10, 2011.4 The Commission received no comments on the proposed rule change. This order grants approval of the proposed rule change. jlentini on DSK4TPTVN1PROD with NOTICES II. Description of the Proposed Rule Change The Exchange proposes to list and trade the Shares pursuant to NYSE Arca Equities Rule 8.600. The Fund will be an actively managed exchange-traded fund that is registered with the Commission as an investment company.5 The Shares will be offered by the WisdomTree Trust (‘‘Trust’’), a Delaware statutory trust established on December 15, 2005. WisdomTree Asset Management, Inc. (‘‘Adviser’’), which will be the investment adviser to the Fund, is not affiliated with any brokerdealer. Mellon Capital Management Corporation (‘‘Sub-Adviser’’), which will serve as the sub-adviser for the Fund,6 is affiliated with multiple broker-dealers and, accordingly, has implemented a ‘‘fire wall’’ with respect to such broker-dealers regarding access to information concerning the composition and/or changes to the Fund’s portfolio.7 The Bank of New 3 The Fund was formerly known as the ‘‘WisdomTree Real Return Fund.’’ See Securities Exchange Act Release No. 61697 (March 12, 2010), 75 FR 13616 (March 22, 2010) (SR–NYSEArca– 2010–04) (approving the listing and trading of the WisdomTree Real Return Fund) (‘‘March 12, 2010 Order’’). The Fund Shares have not yet been listed and have not commenced trading on the Exchange because the Fund seeks to make certain changes to its investment strategy that are not reflected in the March 12, 2010 Order. The Exchange seeks to propose the listing and trading of Shares of the Fund based on this new investment strategy. 4 See Securities Exchange Act Release No. 64411 (May 5, 2011), 76 FR 27127 (‘‘Notice’’). 5 See Post Effective Amendment No. 43 to the Registration Statement on Form N–1A for the Trust filed with the Securities and Exchange Commission on February 4, 2011 (File Nos. 333–132380 and 811–21864) (‘‘Registration Statement’’). In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the Investment Company Act of 1940 (‘‘1940 Act’’). See Investment Company Act Release No. 28471 (October 27, 2008) (File No. 812–13458). In compliance with Commentary .04 to NYSE Arca Equities Rule 8.600, the Trust’s application for exemptive relief under the 1940 Act states that the Fund will comply with the Federal securities laws in accepting securities for deposits and satisfying redemptions with redemption securities, including that the securities accepted for deposits and the securities used to satisfy redemption requests are sold in transactions that would be exempt from registration under the Securities Act of 1933. 6 The Sub-Adviser will be responsible for the dayto-day management of the Fund and, as such, will typically make all decisions with respect to portfolio holdings. The Adviser will have ongoing oversight responsibility. 7 See Commentary .06 to NYSE Arca Equities Rule 8.600. The Exchange represents that, in the VerDate Mar<15>2010 16:42 Jun 14, 2011 Jkt 223001 York Mellon will be the administrator, custodian, and transfer agent for the Fund, and ALPS Distributors, Inc. will serve as the distributor for the Fund. The Fund will seek total returns that exceed the rate of inflation over longterm investment horizons. To achieve its objective, the Fund will invest in Fixed Income Securities 8 and other instruments designed to provide protection against inflation. The Fund will be actively managed and will have targeted exposure to commodities and commodity strategies. Using this approach, the Fund will seek to provide investors with both inflation protection and income. The Fund intends to invest at least 70% of its net assets in Fixed Income Securities tied to U.S. inflation rates, such as U.S. Treasury Inflation Protected Securities (‘‘TIPS’’), as well as inflation-linked Fixed Income Securities tied to non-U.S. inflation rates. The Fund’s investments outside the United States will focus on inflation-linked securities from countries that are leading exporters of global commodities, such as Australia, Brazil, Canada, Chile, and South Africa. The Fund will not invest more than 35% of its net assets in Fixed Income Securities of issuers in emerging markets. The Fund may invest in Fixed Income Securities that are not linked to inflation, such as U.S. or nonU.S. government bonds, as well as Fixed Income Securities that pay variable or floating rates. The Fund expects that it will have at least 70% of its assets invested in investment grade securities, and no more than 30% of its assets invested in non-investment grade securities. Because the debt ratings of issuers will change from time to time, the exact percentage of the Fund’s investments in investment grade and non-investment grade Fixed Income Securities will change from time-to-time in response to economic events and changes to the credit ratings of such 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 10% of its assets in securities rated BB or below by Moody’s, or 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, such adviser and/or sub-adviser will implement a fire wall with respect to such brokerdealer regarding access to information concerning the composition and/or changes to the portfolio. 8 For these purposes, Fixed Income Securities include bonds, notes, or other debt obligations, such as government or corporate bonds, denominated in U.S. dollars or non-U.S. currencies. PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 35063 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.9 While the Fund intends to focus its investments in Fixed Income Securities on bonds and other obligations of U.S. and non-U.S. governments and agencies, the Fund may invest up to 20% of its net assets in corporate bonds.10 The Fund may invest in securities with effective or final maturities of any length and will seek to keep the average effective duration of its portfolio between 2 and 8 years. The Fund’s actual portfolio duration may be longer or shorter depending on market conditions. The Fund intends to invest in Fixed Income Securities of at least 13 nonaffiliated issuers. The Fund will not concentrate 25% or more of the value of its total assets (taken at market value at the time of each investment) in any one industry, as that term is used in the 1940 Act (except that this restriction does not apply to obligations issued by the U.S. government or any non-U.S. government or their respective agencies and instrumentalities, or governmentsponsored enterprises). Although the Fund intends to invest in a variety of securities and instruments, the Fund will be considered non-diversified, which means that it may invest more of its assets in the securities of a smaller number of issuers than if it were a diversified Fund. In addition, the Fund intends to qualify each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and no portfolio security held by the Fund (other than U.S. government securities and non-U.S. government securities) will represent more than 30% of the weight of the Fund, and the five highest 9 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. 10 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. However, 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 SubAdviser 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), and (ii) such investment is deemed by the Adviser or Sub-Adviser to be in the best interest of the Fund. E:\FR\FM\15JNN1.SGM 15JNN1 35064 Federal Register / Vol. 76, No. 115 / Wednesday, June 15, 2011 / Notices jlentini on DSK4TPTVN1PROD with NOTICES weighted portfolio securities of the Fund (other than U.S. government securities and/or non-U.S. government securities) will not in the aggregate account for more than 65% of the weight of the Fund. The Fund intends to invest in Money Market Securities 11 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. All Money Market Securities acquired by the Fund will be rated investment grade. The Fund does not intend to invest in any unrated Money Market Securities. The Fund may use derivative instruments as part of its investment strategies. 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’s use of derivative instruments will be collateralized or otherwise backed by investments in short-term, high-quality U.S. money market securities. The Fund may engage in foreign currency transactions and may invest directly in foreign currencies in the form of bank and financial institution deposits, certificates of deposit, and bankers acceptances denominated in a specified non-U.S. currency. The Fund also may enter into forward currency contracts in order to ‘‘lock in’’ the exchange rate between the currency it will deliver and the currency it will receive for the duration of the contract.12 In addition, the Fund may invest in the securities of other investment companies (including money market funds and ETFs) and up to an aggregate amount of 15% of its net 11 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; shortterm, 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. 12 The Fund and the Subsidiary (as defined herein) will invest only in currencies, and instruments that provide exposure to such currencies, that have significant foreign exchange turnover and are included in the Bank for International Settlements Triennial Central Bank Survey, December 2007 (‘‘BIS Survey’’). Specifically, the Fund and Subsidiary may invest in currencies, and instruments that provide exposure to such currencies, selected from the top 40 currencies (as measured by percentage share of average daily turnover for the applicable month and year) included in the BIS Survey. VerDate Mar<15>2010 16:42 Jun 14, 2011 Jkt 223001 assets in illiquid securities, including securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets. The Fund intends to have targeted exposure to commodities across a number of sectors, such as energy, precious metals, and agriculture, primarily through its investments in a wholly-owned subsidiary organized in the Cayman Islands (‘‘Subsidiary’’). The Subsidiary is wholly-owned and controlled by the Fund, and its investments will be consolidated into the Fund’s financial statements. The Fund’s investment in the Subsidiary may not exceed 25% of the Fund’s total assets at the end of each fiscal quarter. The Subsidiary’s shares will be offered only to the Fund, and the Fund will not sell shares of the Subsidiary to other investors. The Fund will not invest in any non-U.S. equity securities (other than shares of the Subsidiary). The Subsidiary will comply with the 1940 Act and will have essentially the same compliance policies and procedures as the Fund, except that, unlike the Fund, the Subsidiary may invest without limitation in commodity-linked investments.13 The Subsidiary will otherwise operate in essentially the same manner as the Fund. Because the Subsidiary’s investments are consolidated into the Fund’s, the Fund’s combined holdings (including the investments in the Subsidiary) must comply with the 1940 Act. 13 The Subsidiary will achieve exposure to commodities through investments in a combination of listed commodity futures, commodity index swaps, and structured notes that provide commodity returns. The Subsidiary’s investments will be subject to applicable requirements of the Commodity Exchange Act and rules thereunder, and to rules of the applicable U.S. futures exchanges. The Subsidiary’s investments in commodity futures contracts will be limited by the application of position limits imposed by the Commodity Futures Trading Commission and U.S. futures exchanges intended to prevent undue influence on prices by a single trader or group of affiliated traders. The Adviser has represented that the Subsidiary intends to invest only in listed futures contracts that are heavily traded and are based on some of the world’s most liquid and actively-traded commodities. The Subsidiary intends to invest in or have exposure to the following listed futures contracts: Cocoa; coffee; corn; cotton; light crude oil; gold; heating oil; high grade copper; lean hogs; live cattle; natural gas; silver; soybeans; sugar; unleaded gas; and wheat. In addition, the Subsidiary intends to enter into overthe-counter swap transactions only with respect to transactions based on the commodities described herein or on major commodity indexes or indicators, such as the S&P GSCI Total Return Index, Dow Jones-UBS Commodity Returns Index or the AFT Commodity Trends Indicator. The Subsidiary also may invest in commodity-linked notes, which will be limited to notes providing exposure to the commodities described herein or any commodity index. PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 Additional information regarding the Trust, the Fund, the Shares, the investment objectives, strategies, policies, and restrictions, risks, fees and expenses, creation and redemption procedures, portfolio holdings, distributions and taxes, availability of information, trading rules and halts, and surveillance procedures, among other things, can be found in the Registration Statement and in the Notice, as applicable.14 III. Discussion and Commission’s Findings After careful review, the Commission finds that NYSE Arca’s proposal to list and trade the Shares of the Fund is consistent with the requirements of Section 6 of the Act 15 and the rules and regulations thereunder applicable to a national securities exchange.16 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,17 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, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission notes that the Shares must comply with the requirements of NYSE Arca Equities Rule 8.600 to be listed and traded on the Exchange. The Commission finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Act,18 which sets forth Congress’ finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotation and last-sale information for the Shares will be available via the Consolidated Tape Association high-speed line, and the Portfolio Indicative Value, as defined in NYSE Arca Equities Rule 8.600(c)(3), will be updated and disseminated by one or more major market data vendors at least every 15 seconds during the 14 See supra notes 4 and 5. U.S.C. 78f. 16 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). 17 15 U.S.C. 78f(b)(5). 18 15 U.S.C. 78k–1(a)(1)(C)(iii). 15 15 E:\FR\FM\15JNN1.SGM 15JNN1 Federal Register / Vol. 76, No. 115 / Wednesday, June 15, 2011 / Notices Core Trading Session. In addition, the Trust will disclose on its Web site on each business day before the commencement of trading in Shares in the Core Trading Session the Disclosed Portfolio,19 as defined in NYSE Arca Equities Rule 8.600(c)(2), that will form the basis for the calculation of the net asset value (‘‘NAV’’), which will be determined at the end of each business day.20 The Fund’s Web site will also include additional quantitative information updated on a daily basis relating to NAV. Information regarding the market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services, and the previous day’s closing price and trading volume information will be published daily in the financial section of newspapers. In addition, the intra-day, executable price quotations and/or end-of-day prices on futures contracts, commodities, and other Fund investments are available from major broker-dealer firms and/or through subscription services, such as Bloomberg and Thomson Reuters. The Fund’s Web site will also include a form of the prospectus, information relating to NAV, and other quantitative and trading information. The Commission further believes that the proposal 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 that the NAV per share for the Fund will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time.21 In addition, the Exchange will halt trading in the Shares under the specific circumstances set forth in NYSE Arca Equities Rule 8.600(d)(2)(D), and may halt trading in the Shares to the extent to which trading is not occurring in the securities and/or the financial instruments comprising the Disclosed Portfolio of the Funds, or whether other unusual conditions or circumstances jlentini on DSK4TPTVN1PROD with NOTICES 19 The Adviser will disclose for each portfolio security or other financial instrument of the Fund the following information: Ticker symbol (if applicable), name or description 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. 20 The NAV of the Fund’s Shares generally will be calculated once daily Monday through Friday as of the close of regular trading on the New York Stock Exchange, generally 4 p.m. Eastern time. 21 See NYSE Arca Equities Rule 8.600(d)(1)(B). VerDate Mar<15>2010 16:42 Jun 14, 2011 Jkt 223001 detrimental to the maintenance of a fair and orderly market are present.22 The Exchange represents that the SubAdviser is affiliated with multiple broker-dealers and, accordingly, has implemented a ‘‘fire wall’’ with respect to such broker-dealers regarding access to information concerning the composition and/or changes to the Fund’s portfolio.23 Further, 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.24 The Exchange represents that the Shares are deemed to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. In support of this proposal, the Exchange has made representations, including: (1) The Shares will be subject to NYSE Arca Equities Rule 8.600(d), which sets forth the initial and continued listing criteria applicable to Managed Fund Shares. (2) The Exchange’s surveillance procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and 22 With respect to trading halts, the Exchange may consider other relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Funds. Trading in Shares of the Funds 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. 23 See supra note 7 and accompanying text. With respect to the Fund, the Exchange represents that the Adviser and Sub-Adviser and their related personnel are subject to the provisions of Rule 204A–1 under the Investment Advisers Act of 1940 (‘‘Advisers Act’’) relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. 24 See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii). PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 35065 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 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. (4) For initial and/or continued listing, the Fund must be in compliance with Rule 10A–3 under the Act.25 (5) The Fund will not invest in nonU.S. equity securities (other than shares of the Subsidiary). (6) The Fund’s investments in derivative instruments will be consistent with the Fund’s investment objective and will not be used to enhance leverage. (7) A minimum of 100,000 Shares of the Fund will be outstanding at the commencement of trading on the Exchange. 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 Section 6(b)(5) of the Act 26 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,27 that the proposed rule change (SR–NYSEArca– 2011–21) be, and it hereby is, approved. 25 See 17 CFR 240.10A–3. U.S.C. 78f(b)(5). 27 15 U.S.C. 78s(b)(1). 28 17 CFR 200.30–3(a)(12). 26 15 E:\FR\FM\15JNN1.SGM 15JNN1 35066 Federal Register / Vol. 76, No. 115 / Wednesday, June 15, 2011 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.28 Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–14849 Filed 6–14–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–64642; File No. SR–CBOE– 2011–052] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Linkage Fees June 10, 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 June 1, 2011, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) 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 Linkage fees. The text of the proposed rule change is available on the Exchange’s Web site (https:// www.cboe.org/legal), at the Exchange’s Office of the Secretary, and at the Commission. jlentini on DSK4TPTVN1PROD with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Mar<15>2010 16:42 Jun 14, 2011 Jkt 223001 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose On March 1, 2011, the Exchange ceased passing through or otherwise charging orders, including noncustomer orders, routed to other exchanges in connection with the Options Order Protection and Locked/ Crossed Market Plan (‘‘Linkage’’) that were originally transmitted to the Exchange from the trading floor through an Exchange-sponsored terminal (e.g. a Floor Broker Workstation).3 However, the institution of this waiver had the unintended consequence of brokersdealers submitting large-volume noncustomer orders to the Exchange that CBOE ended up routing through the Linkage system to other exchanges. The Exchange was then forced to incur the costs of this process without making up for those costs in the collection of transaction fees. Therefore, the Exchange proposes to limit this Linkage Fees exception to customer orders. As a result, the $0.50 per contract Linkage Fee under Section 20 of the Fees Schedule, plus customary CBOE execution charges, will apply to all noncustomer orders. Customer orders originally transmitted to the Exchange from the trading floor through an Exchange-sponsored terminal (e.g. a Floor Broker Workstation) will still be exempt from such fees. This change is consistent with the Exchange’s philosophy regarding the handling of non-customer Linkage orders, which is that the Exchange should not be responsible for covering non-customer Linkage costs. The change will allow the Exchange to equitably assess reasonable fees incurred for processing such orders, and permit the Exchange to recoup administrative and other costs. This fee change is to take effect as of June 1, 2011. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,4 in general, and furthers the objectives of Section 6(b)(4) 5 of the Act in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among CBOE Trading Permit Holders and other persons using its facilities. The Exchange believes limiting the exception from Linkage Fees to 3 See Securities Exchange Act Release No. 64057 (March 8, 2011), 76 FR 13690 (March 14, 2011) (SR– CBOE–2011–019). 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(4). PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 customer orders is equitable, reasonable and not unfairly discriminatory because non-customer (e.g., broker-dealer proprietary) orders originate from broker-dealers who are by and large more sophisticated than public customers and can readily control the exchange to which their orders are routed. While there may be some sophisticated customers who are capable of directing the exchange to which their orders are routed, generally, retail customers submit orders to their brokerages but do not or cannot specify the exchange to which a customer order is sent. Therefore, non-customer order flow can, in most cases, more easily route directly to other markets if desired and thus avoid Linkage Fees. This includes the ability of broker-dealers to sweep better-priced away markets in connection with routing large orders to CBOE’s floor for handling by floor brokers. Moreover, the Commission has a long history of permitting differential treatment of customers and noncustomer investors.6 Therefore, it is equitable to assess a reasonable fee to cover the costs incurred for processing non-customer Linkage orders while continuing to exempt such customer orders. B. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition 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 The proposed rule change is designated by the Exchange as establishing or changing a due, fee, or other charge, thereby qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A) of the Act 7 and 6 See the Exchange Fees Schedule, which provides for differential treatment of customer and non-customer orders in at least 14 places, and has been permitted by the Commission, and more directly, the BATS Exchange, Inc. (‘‘BZX’’), BATS Y–Exchange, Inc. (‘‘BYX’’), NASDAQ Options Market (‘‘NOM’’) and NYSE Amex LLC (‘‘NYSE Amex’’) Fee Schedules, which provide for different pricing for the routing of customer and noncustomer orders through Linkage. 7 15 U.S.C. 78s(b)(3)(A). E:\FR\FM\15JNN1.SGM 15JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 115 (Wednesday, June 15, 2011)]
[Notices]
[Pages 35062-35066]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14849]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64643; File No. SR-NYSEArca-2011-21]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change To List and Trade the WisdomTree 
Global Real Return Fund

June 10, 2011.

I. Introduction

    On April 20, 2011, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
list and trade the shares (``Shares'') of the WisdomTree Global

[[Page 35063]]

Real Return Fund (``Fund'') under NYSE Arca Equities Rule 8.600.\3\ The 
proposed rule change was published for comment in the Federal Register 
on May 10, 2011.\4\ The Commission received no comments on the proposed 
rule change. This order grants approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Fund was formerly known as the ``WisdomTree Real Return 
Fund.'' See Securities Exchange Act Release No. 61697 (March 12, 
2010), 75 FR 13616 (March 22, 2010) (SR-NYSEArca-2010-04) (approving 
the listing and trading of the WisdomTree Real Return Fund) (``March 
12, 2010 Order''). The Fund Shares have not yet been listed and have 
not commenced trading on the Exchange because the Fund seeks to make 
certain changes to its investment strategy that are not reflected in 
the March 12, 2010 Order. The Exchange seeks to propose the listing 
and trading of Shares of the Fund based on this new investment 
strategy.
    \4\ See Securities Exchange Act Release No. 64411 (May 5, 2011), 
76 FR 27127 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade the Shares pursuant to NYSE 
Arca Equities Rule 8.600. The Fund will be an actively managed 
exchange-traded fund that is registered with the Commission as an 
investment company.\5\ The Shares will be offered by the WisdomTree 
Trust (``Trust''), a Delaware statutory trust established on December 
15, 2005. WisdomTree Asset Management, Inc. (``Adviser''), which will 
be the investment adviser to the Fund, is not affiliated with any 
broker-dealer. Mellon Capital Management Corporation (``Sub-Adviser''), 
which will serve as the sub-adviser for the Fund,\6\ is affiliated with 
multiple broker-dealers and, accordingly, has implemented a ``fire 
wall'' with respect to such broker-dealers regarding access to 
information concerning the composition and/or changes to the Fund's 
portfolio.\7\ The Bank of New York Mellon will be the administrator, 
custodian, and transfer agent for the Fund, and ALPS Distributors, Inc. 
will serve as the distributor for the Fund.
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    \5\ See Post Effective Amendment No. 43 to the Registration 
Statement on Form N-1A for the Trust filed with the Securities and 
Exchange Commission on February 4, 2011 (File Nos. 333-132380 and 
811-21864) (``Registration Statement''). In addition, the Commission 
has issued an order granting certain exemptive relief to the Trust 
under the Investment Company Act of 1940 (``1940 Act''). See 
Investment Company Act Release No. 28471 (October 27, 2008) (File 
No. 812-13458). In compliance with Commentary .04 to NYSE Arca 
Equities Rule 8.600, the Trust's application for exemptive relief 
under the 1940 Act states that the Fund will comply with the Federal 
securities laws in accepting securities for deposits and satisfying 
redemptions with redemption securities, including that the 
securities accepted for deposits and the securities used to satisfy 
redemption requests are sold in transactions that would be exempt 
from registration under the Securities Act of 1933.
    \6\ The Sub-Adviser will be responsible for the day-to-day 
management of the Fund and, as such, will typically make all 
decisions with respect to portfolio holdings. The Adviser will have 
ongoing oversight responsibility.
    \7\ See Commentary .06 to NYSE Arca Equities Rule 8.600. The 
Exchange represents that, 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, 
such adviser and/or sub-adviser will implement a fire wall with 
respect to such broker-dealer regarding access to information 
concerning the composition and/or changes to the portfolio.
---------------------------------------------------------------------------

    The Fund will seek total returns that exceed the rate of inflation 
over long-term investment horizons. To achieve its objective, the Fund 
will invest in Fixed Income Securities \8\ and other instruments 
designed to provide protection against inflation. The Fund will be 
actively managed and will have targeted exposure to commodities and 
commodity strategies. Using this approach, the Fund will seek to 
provide investors with both inflation protection and income.
---------------------------------------------------------------------------

    \8\ For these purposes, Fixed Income Securities include bonds, 
notes, or other debt obligations, such as government or corporate 
bonds, denominated in U.S. dollars or non-U.S. currencies.
---------------------------------------------------------------------------

    The Fund intends to invest at least 70% of its net assets in Fixed 
Income Securities tied to U.S. inflation rates, such as U.S. Treasury 
Inflation Protected Securities (``TIPS''), as well as inflation-linked 
Fixed Income Securities tied to non-U.S. inflation rates. The Fund's 
investments outside the United States will focus on inflation-linked 
securities from countries that are leading exporters of global 
commodities, such as Australia, Brazil, Canada, Chile, and South 
Africa. The Fund will not invest more than 35% of its net assets in 
Fixed Income Securities of issuers in emerging markets. The Fund may 
invest in Fixed Income Securities that are not linked to inflation, 
such as U.S. or non-U.S. government bonds, as well as Fixed Income 
Securities that pay variable or floating rates.
    The Fund expects that it will have at least 70% of its assets 
invested in investment grade securities, and no more than 30% of its 
assets invested in non-investment grade securities. Because the debt 
ratings of issuers will change from time to time, the exact percentage 
of the Fund's investments in investment grade and non-investment grade 
Fixed Income Securities will change from time-to-time in response to 
economic events and changes to the credit ratings of such 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 10% of its assets in 
securities rated BB 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.\9\
---------------------------------------------------------------------------

    \9\ 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.
---------------------------------------------------------------------------

    While the Fund intends to focus its investments in Fixed Income 
Securities on bonds and other obligations of U.S. and non-U.S. 
governments and agencies, the Fund may invest up to 20% of its net 
assets in corporate bonds.\10\ The Fund may invest in securities with 
effective or final maturities of any length and will seek to keep the 
average effective duration of its portfolio between 2 and 8 years. The 
Fund's actual portfolio duration may be longer or shorter depending on 
market conditions.
---------------------------------------------------------------------------

    \10\ 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. However, 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), and (ii) such 
investment is deemed by the Adviser or Sub-Adviser to be in the best 
interest of the Fund.
---------------------------------------------------------------------------

    The Fund intends to invest in Fixed Income Securities of at least 
13 non-affiliated issuers. The Fund will not concentrate 25% or more of 
the value of its total assets (taken at market value at the time of 
each investment) in any one industry, as that term is used in the 1940 
Act (except that this restriction does not apply to obligations issued 
by the U.S. government or any non-U.S. government or their respective 
agencies and instrumentalities, or government-sponsored enterprises). 
Although the Fund intends to invest in a variety of securities and 
instruments, the Fund will be considered non-diversified, which means 
that it may invest more of its assets in the securities of a smaller 
number of issuers than if it were a diversified Fund. In addition, the 
Fund intends to qualify each year as a regulated investment company 
under Subchapter M of the Internal Revenue Code of 1986, as amended, 
and no portfolio security held by the Fund (other than U.S. government 
securities and non-U.S. government securities) will represent more than 
30% of the weight of the Fund, and the five highest

[[Page 35064]]

weighted portfolio securities of the Fund (other than U.S. government 
securities and/or non-U.S. government securities) will not in the 
aggregate account for more than 65% of the weight of the Fund.
    The Fund intends to invest in Money Market Securities \11\ 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. All Money Market Securities acquired by the 
Fund will be rated investment grade. The Fund does not intend to invest 
in any unrated Money Market Securities.
---------------------------------------------------------------------------

    \11\ 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.
---------------------------------------------------------------------------

    The Fund may use derivative instruments as part of its investment 
strategies. 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's use of derivative 
instruments will be collateralized or otherwise backed by investments 
in short-term, high-quality U.S. money market securities. The Fund may 
engage in foreign currency transactions and may invest directly in 
foreign currencies in the form of bank and financial institution 
deposits, certificates of deposit, and bankers acceptances denominated 
in a specified non-U.S. currency. The Fund also may enter into forward 
currency contracts in order to ``lock in'' the exchange rate between 
the currency it will deliver and the currency it will receive for the 
duration of the contract.\12\ In addition, the Fund may invest in the 
securities of other investment companies (including money market funds 
and ETFs) and up to an aggregate amount of 15% of its net assets in 
illiquid securities, including securities subject to contractual or 
other restrictions on resale and other instruments that lack readily 
available markets.
---------------------------------------------------------------------------

    \12\ The Fund and the Subsidiary (as defined herein) will invest 
only in currencies, and instruments that provide exposure to such 
currencies, that have significant foreign exchange turnover and are 
included in the Bank for International Settlements Triennial Central 
Bank Survey, December 2007 (``BIS Survey''). Specifically, the Fund 
and Subsidiary may invest in currencies, and instruments that 
provide exposure to such currencies, selected from the top 40 
currencies (as measured by percentage share of average daily 
turnover for the applicable month and year) included in the BIS 
Survey.
---------------------------------------------------------------------------

    The Fund intends to have targeted exposure to commodities across a 
number of sectors, such as energy, precious metals, and agriculture, 
primarily through its investments in a wholly-owned subsidiary 
organized in the Cayman Islands (``Subsidiary''). The Subsidiary is 
wholly-owned and controlled by the Fund, and its investments will be 
consolidated into the Fund's financial statements. The Fund's 
investment in the Subsidiary may not exceed 25% of the Fund's total 
assets at the end of each fiscal quarter. The Subsidiary's shares will 
be offered only to the Fund, and the Fund will not sell shares of the 
Subsidiary to other investors. The Fund will not invest in any non-U.S. 
equity securities (other than shares of the Subsidiary). The Subsidiary 
will comply with the 1940 Act and will have essentially the same 
compliance policies and procedures as the Fund, except that, unlike the 
Fund, the Subsidiary may invest without limitation in commodity-linked 
investments.\13\ The Subsidiary will otherwise operate in essentially 
the same manner as the Fund. Because the Subsidiary's investments are 
consolidated into the Fund's, the Fund's combined holdings (including 
the investments in the Subsidiary) must comply with the 1940 Act.
---------------------------------------------------------------------------

    \13\ The Subsidiary will achieve exposure to commodities through 
investments in a combination of listed commodity futures, commodity 
index swaps, and structured notes that provide commodity returns. 
The Subsidiary's investments will be subject to applicable 
requirements of the Commodity Exchange Act and rules thereunder, and 
to rules of the applicable U.S. futures exchanges. The Subsidiary's 
investments in commodity futures contracts will be limited by the 
application of position limits imposed by the Commodity Futures 
Trading Commission and U.S. futures exchanges intended to prevent 
undue influence on prices by a single trader or group of affiliated 
traders. The Adviser has represented that the Subsidiary intends to 
invest only in listed futures contracts that are heavily traded and 
are based on some of the world's most liquid and actively-traded 
commodities. The Subsidiary intends to invest in or have exposure to 
the following listed futures contracts: Cocoa; coffee; corn; cotton; 
light crude oil; gold; heating oil; high grade copper; lean hogs; 
live cattle; natural gas; silver; soybeans; sugar; unleaded gas; and 
wheat. In addition, the Subsidiary intends to enter into over-the-
counter swap transactions only with respect to transactions based on 
the commodities described herein or on major commodity indexes or 
indicators, such as the S&P GSCI Total Return Index, Dow Jones-UBS 
Commodity Returns Index or the AFT Commodity Trends Indicator. The 
Subsidiary also may invest in commodity-linked notes, which will be 
limited to notes providing exposure to the commodities described 
herein or any commodity index.
---------------------------------------------------------------------------

    Additional information regarding the Trust, the Fund, the Shares, 
the investment objectives, strategies, policies, and restrictions, 
risks, fees and expenses, creation and redemption procedures, portfolio 
holdings, distributions and taxes, availability of information, trading 
rules and halts, and surveillance procedures, among other things, can 
be found in the Registration Statement and in the Notice, as 
applicable.\14\
---------------------------------------------------------------------------

    \14\ See supra notes 4 and 5.
---------------------------------------------------------------------------

III. Discussion and Commission's Findings

    After careful review, the Commission finds that NYSE Arca's 
proposal to list and trade the Shares of the Fund is consistent with 
the requirements of Section 6 of the Act \15\ and the rules and 
regulations thereunder applicable to a national securities 
exchange.\16\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\17\ 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, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The Commission notes that 
the Shares must comply with the requirements of NYSE Arca Equities Rule 
8.600 to be listed and traded on the Exchange.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f.
    \16\ 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).
    \17\ 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,\18\ which sets forth Congress' finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for and transactions in securities. Quotation and last-sale 
information for the Shares will be available via the Consolidated Tape 
Association high-speed line, and the Portfolio Indicative Value, as 
defined in NYSE Arca Equities Rule 8.600(c)(3), will be updated and 
disseminated by one or more major market data vendors at least every 15 
seconds during the

[[Page 35065]]

Core Trading Session. In addition, the Trust will disclose on its Web 
site on each business day before the commencement of trading in Shares 
in the Core Trading Session the Disclosed Portfolio,\19\ as defined in 
NYSE Arca Equities Rule 8.600(c)(2), that will form the basis for the 
calculation of the net asset value (``NAV''), which will be determined 
at the end of each business day.\20\ The Fund's Web site will also 
include additional quantitative information updated on a daily basis 
relating to NAV. Information regarding the market price and trading 
volume of the Shares will be continually available on a real-time basis 
throughout the day on brokers' computer screens and other electronic 
services, and the previous day's closing price and trading volume 
information will be published daily in the financial section of 
newspapers. In addition, the intra-day, executable price quotations 
and/or end-of-day prices on futures contracts, commodities, and other 
Fund investments are available from major broker-dealer firms and/or 
through subscription services, such as Bloomberg and Thomson Reuters. 
The Fund's Web site will also include a form of the prospectus, 
information relating to NAV, and other quantitative and trading 
information.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \19\ The Adviser will disclose for each portfolio security or 
other financial instrument of the Fund the following information: 
Ticker symbol (if applicable), name or description 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.
    \20\ The NAV of the Fund's Shares generally will be calculated 
once daily Monday through Friday as of the close of regular trading 
on the New York Stock Exchange, generally 4 p.m. Eastern time.
---------------------------------------------------------------------------

    The Commission further believes that the proposal 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 
that the NAV per share for the Fund will be calculated daily and that 
the NAV and the Disclosed Portfolio will be made available to all 
market participants at the same time.\21\ In addition, the Exchange 
will halt trading in the Shares under the specific circumstances set 
forth in NYSE Arca Equities Rule 8.600(d)(2)(D), and may halt trading 
in the Shares to the extent to which trading is not occurring in the 
securities and/or the financial instruments comprising the Disclosed 
Portfolio of the Funds, or whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\22\ The Exchange represents that the Sub-Adviser is 
affiliated with multiple broker-dealers and, accordingly, has 
implemented a ``fire wall'' with respect to such broker-dealers 
regarding access to information concerning the composition and/or 
changes to the Fund's portfolio.\23\ Further, 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.\24\
---------------------------------------------------------------------------

    \21\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
    \22\ With respect to trading halts, the Exchange may consider 
other relevant factors in exercising its discretion to halt or 
suspend trading in the Shares of the Funds. Trading in Shares of the 
Funds 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.
    \23\ See supra note 7 and accompanying text. With respect to the 
Fund, the Exchange represents that the Adviser and Sub-Adviser and 
their related personnel are subject to the provisions of Rule 204A-1 
under the Investment Advisers Act of 1940 (``Advisers Act'') 
relating to codes of ethics. This Rule requires investment advisers 
to adopt a code of ethics that reflects the fiduciary nature of the 
relationship to clients as well as compliance with other applicable 
securities laws. Accordingly, procedures designed to prevent the 
communication and misuse of non-public information by an investment 
adviser must be consistent with Rule 204A-1 under the Advisers Act. 
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful 
for an investment adviser to provide investment advice to clients 
unless such investment adviser has (i) adopted and implemented 
written policies and procedures reasonably designed to prevent 
violation, by the investment adviser and its supervised persons, of 
the Advisers Act and the Commission rules adopted thereunder; (ii) 
implemented, at a minimum, an annual review regarding the adequacy 
of the policies and procedures established pursuant to subparagraph 
(i) above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above.
    \24\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
---------------------------------------------------------------------------

    The Exchange represents that the Shares are deemed to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
In support of this proposal, the Exchange has made representations, 
including:
    (1) The Shares will be subject to NYSE Arca Equities Rule 8.600(d), 
which sets forth the initial and continued listing criteria applicable 
to Managed Fund Shares.
    (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 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.
    (4) For initial and/or continued listing, the Fund must be in 
compliance with Rule 10A-3 under the Act.\25\
---------------------------------------------------------------------------

    \25\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (5) The Fund will not invest in non-U.S. equity securities (other 
than shares of the Subsidiary).
    (6) The Fund's investments in derivative instruments will be 
consistent with the Fund's investment objective and will not be used to 
enhance leverage.
    (7) A minimum of 100,000 Shares of the Fund will be outstanding at 
the commencement of trading on the Exchange.
    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 Section 6(b)(5) of the Act \26\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\27\ that the proposed rule change (SR-NYSEArca-2011-21) be, and it 
hereby is, approved.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(1).
    \28\ 17 CFR 200.30-3(a)(12).


[[Page 35066]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-14849 Filed 6-14-11; 8:45 am]
BILLING CODE 8011-01-P

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