Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. To Reflect a Change to the Benchmark Index Applicable to the Russell Equity ETF, 53004-53007 [2011-21592]

Download as PDF wreier-aviles on DSKGBLS3C1PROD with NOTICES 53004 Federal Register / Vol. 76, No. 164 / Wednesday, August 24, 2011 / Notices is publicly available regarding the Fund and the Shares, thereby promoting market transparency. The Fund’s portfolio holdings will be disclosed on its Web site daily after the close of trading on the Exchange and prior to the opening of trading on the Exchange the following day. Moreover, the Portfolio Indicative Value will be disseminated by one or more major market data vendors at least every 15 seconds during the Exchange’s Core Trading Session. On each business day, before commencement of trading in Shares in the Core Trading Session on the Exchange, the Fund will disclose on its Web site the Disclosed Portfolio that will form the basis for the Fund’s calculation of NAV at the end of the business day. Information regarding market price and trading volume of the Shares is and will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services, and quotation and last sale information will be available via the CTA high-speed line. The Web site for the Fund will include a form of the prospectus for the Fund and additional data relating to NAV and other applicable quantitative information. Moreover, 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. Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted. In addition, as noted above, investors will have ready access to information regarding the Fund’s holdings, the Portfolio Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of activelymanaged exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are VerDate Mar<15>2010 15:40 Aug 23, 2011 Jkt 223001 members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, investors will have ready access to information regarding the Fund’s holdings, the Portfolio Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2011–54 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 All submissions should refer to File Number SR–NYSEArca–2011–54. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Section, 100 F Street, NE., Washington, DC 20549–1090, on official business days between 10 a.m. and 3 p.m. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at http:// www.nyse.com. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEArca-2011–54 and should be submitted on or before September 14, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–21591 Filed 8–23–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65161; File No. SR– NYSEArca–2011–53] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change by NYSE Arca, Inc. To Reflect a Change to the Benchmark Index Applicable to the Russell Equity ETF August 18, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the 26 17 E:\FR\FM\24AUN1.SGM CFR 200.30–3(a)(12). 24AUN1 Federal Register / Vol. 76, No. 164 / Wednesday, August 24, 2011 / Notices ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that, on August 3, 2011, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to reflect a change to the benchmark index applicable to Russell Equity ETF (the ‘‘Fund,’’ and formerly known as the ‘‘One Fund’’). Russell Equity ETF is currently listed and traded on the Exchange under NYSE Arca Equities Rule 8.600. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and http://www.nyse.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Commission has approved listing and trading on the Exchange of shares (‘‘Shares’’) of One Fund, a series of U.S. One Trust,3 under NYSE Arca Equities Rule 8.600 (‘‘Managed Fund Shares’’).4 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 61843 (April 5, 2010), 75 FR 18558 (April 12, 2010) (SR– NYSEArca–2010–12) (‘‘One Fund Order’’). See also Securities Exchange Act Release No. 61689 (March 11, 2010), 75 FR 13181 (March 18, 2010) (SR– NYSEArca–2010–12) (‘‘One Fund Notice,’’ and together with the One Fund Order, collectively, the ‘‘One Fund Release’’). 4 A Managed Fund Share is a security that represents an interest in an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a) (‘‘1940 Act’’) organized as an wreier-aviles on DSKGBLS3C1PROD with NOTICES 2 17 VerDate Mar<15>2010 15:40 Aug 23, 2011 Jkt 223001 As of February 23, 2011, Frank Russell Company (‘‘Russell’’) acquired U.S. One, Inc., the previous investment adviser for the Fund. As a result, the Fund’s investment adviser became Russell Investment Management Company (‘‘Adviser’’).5 In addition, effective on April 15, 2011, the name of One Fund was changed to Russell Equity ETF and the name of U.S. One Trust was changed to Russell Exchange Traded Funds Trust (‘‘Trust’’). Further, on or about May 2, 2011, the custodian, transfer agent and administrator for the Fund changed from The Bank of New York to State Street Bank and Trust Company. These administrative changes were implemented as a result of the acquisition of U.S. One, Inc. by Russell. Shareholders of the Fund were notified of the changes to the Fund’s name, the Trust’s name, the Fund’s investment adviser,6 and the custodian, transfer open-end investment company or similar entity that invests in a portfolio of securities selected by its investment adviser consistent with its investment objectives and policies. In contrast, an open-end investment company that issues Investment Company Units, listed and traded on the Exchange under NYSE Arca Equities Rule 5.2(j)(3), seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index or combination thereof. 5 The Adviser is affiliated with multiple brokerdealers and 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, and will continue to be in compliance with Commentary .06 to NYSE Arca Equities Rule 8.600. In the event (a) The Adviser or any sub-adviser becomes newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser becomes affiliated with a broker-dealer, it will implement a fire wall with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. 6 An investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’). As a result, the Adviser and its related personnel are subject to the provisions of Rule 204A–1 under the 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 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 53005 agent and administrator in the updated Fund prospectus, dated April 29, 2011, included in the Fund’s annual prospectus mailing to shareholders.7 In this proposed rule change, the Exchange proposes to reflect a change to the benchmark index applicable to the Fund.8 As a result of the acquisition of U.S. One, Inc. by Russell, the Fund seeks to change its underlying benchmark to the Russell Developed Large Cap Index (‘‘Index’’) from the Fund’s current benchmark, the S&P 500 Index.9 The Index offers investors access to the large-cap segment of the developed equity universe representing approximately 75.4% of the global equity market. The Index includes the largest securities in the Russell Developed Index. As of May 31, 2010, the Index included 2,372 securities in 25 developed countries, with a market capitalization ranging from $238 billion to $1.3 billion; the weighted average market capitalization of Index components was $54.7 billion; and the largest three Index securities and associated Index weights were ExxonMobil (1.58%); Apple Inc. (1.17%); and Chevron Corp. (0.79%). The current benchmark, the S&P 500 Index, includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities. It focuses on large capitalization securities and represents approximately 75% of the U.S. market capitalization. A committee determines the securities included based on a set of published guidelines. The Index includes the Russell 1000®, which represents 90% of U.S. market capitalization. It also includes an additional 1,372 securities which, as of (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. 7 See the Trust’s Post-Effective Amendment No. 5 to Form N–1A, dated April 29, 2011 (File Nos. 333– 160877; 811–22320) (‘‘Registration Statement’’). In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the 1940 Act. See Investment Company Act Release No. 29164 (March 1, 2010) (File No. 812–13815 and 812–13658–01) (‘‘Exemptive Order’’). 8 The Adviser represents that, for one year following implementation of the change to the benchmark Index, materials issued by the Fund relating to Fund performance, including materials posted on the Fund’s Web site (http:// www.russelletfs.com), will reference both the current benchmark and the new benchmark Index, in accordance with Item 27(b)(7) of Form N–1A under the 1940 Act. The Adviser represents that the benchmark Index change will be referenced on Russell’s Web site, and that the quarterly fact sheet for the Fund, available on the Fund’s Web site, will reference the current benchmark and the new benchmark Index for one year. 9 The change to the Fund’s benchmark Index will be effective upon filing with the Commission of an amendment to the Trust’s Registration Statement. E:\FR\FM\24AUN1.SGM 24AUN1 53006 Federal Register / Vol. 76, No. 164 / Wednesday, August 24, 2011 / Notices wreier-aviles on DSKGBLS3C1PROD with NOTICES May 31, 2010, were listed in other developed countries. The Adviser represents that the investment objective of the Fund has not changed, the Index more accurately represents the investment strategy of the Fund, and the change to the Fund’s benchmark will not impact the investment objective or the principal investment strategies for the Fund. The Adviser has represented that it believes the Index is an appropriate broad-based benchmark index for the Fund and the Fund’s investment objective. As represented in the One Fund Release, the Fund’s investment objective is to seek long-term capital appreciation. [sic] by investing at least 80% of its total assets in exchangetraded funds (‘‘Underlying ETFs’’) that track various securities indices comprised of large, mid and small capitalization companies in the United States, Europe and Asia, as well as other developed and emerging markets. As stated in the One Fund Release, the Adviser intends to hold Underlying ETFs that hold equity securities of large, mid and small capitalization companies in the United States, as well as other developed countries and developing countries, and that give the Fund exposure to most major developed and developing markets around the world.10 Thus, whereas the S&P 500 Index mostly reflects U.S.-based companies, the Index includes a broader range of issuers from both the domestic and international markets, and such range is 10 The Adviser employs an asset allocation strategy focused on increasing shareholder return and reducing risk through exposure to a variety of domestic and foreign market segments. The Adviser’s asset allocation strategy pre-determines a target mix of investment types for the Fund to achieve its investment objective and then implements the strategy by selecting securities that best represent each of the desired investment types. The strategy also calls for periodic review of the Fund’s holdings as markets rise and fall to ensure that the portfolio adheres to the target mix and indicates purchases and sales necessary to return to the target mix. The Adviser selects Underlying ETFs based on their ability to accurately represent the underlying stock market to which the Adviser seeks exposure for the Fund, and seeks to construct a portfolio that will outperform its benchmark. Additionally, the Adviser seeks to maintain a low after-tax cost structure for the Fund and, therefore, also evaluates ETFs based on their underlying costs. The Adviser employs a buy and hold strategy, meaning that it buys and holds securities for a long period of time, with minimal portfolio turnover. The Fund, using a buy and hold strategy, seeks to achieve its investment objective through investment in Underlying ETFs that track certain securities indices. While the Fund intends to primarily invest in Underlying ETFs that hold equity securities, the Adviser may also invest in Underlying ETFs that may hold U.S. and foreign government debt and investment grade corporate bonds. According to the Registration Statement, the Fund does not invest in derivatives. See One Fund Release, note 4, supra. VerDate Mar<15>2010 15:40 Aug 23, 2011 Jkt 223001 consistent with, and should better reflect, the Fund’s investment objective. Except for the changes noted above, all other representations made in the One Fund Release remain unchanged.11 The Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. 2. Statutory Basis The basis under the Exchange Act for this proposed rule change is the requirement under Section 6(b)(5) 12 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600. The Fund’s benchmark Index will continue to be a broad-based index of large capitalization companies. The Index represents approximately 75.4% of the global equity market and includes the largest securities in the Russell Developed Index. As of May 31, 2010, the Index included 2,372 securities in 25 developed countries, with a market capitalization ranging from $238 billion to $1.3 billion; the weighted average market capitalization of Index components was $54.7 billion. The Fund’s investment objective is to seek long-term capital appreciation by investing at least 80% of its total assets in Underlying ETFs that track various securities indices comprised of large, mid and small capitalization companies in the United States, Europe and Asia, as well as other developed and emerging markets. All Underlying ETFs are listed and traded on a national securities exchange. The Index includes a broader range of issuers from both the domestic and international markets compared to the S&P 500 Index, and such range is consistent with, and should better reflect, the Fund’s investment objective. The Adviser represents that the investment objective of the Fund has not changed, the Index more accurately represents the investment strategy of the Fund, and the change to the Fund’s benchmark will not impact the investment objective or the principal investment strategies for the Fund. 11 See 12 15 PO 00000 note 3, supra. U.S.C. 78f(b)(5). Frm 00077 Fmt 4703 Sfmt 4703 Except for Underlying ETFs that may hold non-U.S. issues, the Fund will not otherwise invest in non-U.S.-registered issues. Except for the changes noted above, all other representations made in the One Fund Release remain unchanged. The Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the new benchmark Index will continue to be calculated and disseminated in a manner consistent with representations in the One Fund Order. The Adviser has represented that it believes the Index is an appropriate broad-based benchmark index for the Fund. In addition, the Adviser has represented that the change to the Fund’s benchmark will not impact shareholders of the Fund, and that the new benchmark Index more accurately reflects the Fund’s principal investment strategy and will not result in a change to such strategy. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will permit the Fund to utilize an alternative broad-based, large capitalization benchmark Index that the Adviser believes is an appropriate benchmark for the Fund. The change to the Fund’s benchmark Index will be effective upon filing with the Commission of an amendment to the Trust’s Registration Statement. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory E:\FR\FM\24AUN1.SGM 24AUN1 Federal Register / Vol. 76, No. 164 / Wednesday, August 24, 2011 / Notices organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: wreier-aviles on DSKGBLS3C1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml ); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2011–53 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2011–53. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Section, 100 F Street, NE., Washington, DC 20549–1090, on official business days between 10 a.m. and 3 p.m. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at http:// www.nyse.com. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions VerDate Mar<15>2010 15:40 Aug 23, 2011 Jkt 223001 53007 should refer to File Number SR– NYSEArca–2011–53 and should be submitted on or before September 14, 2011. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Elizabeth M. Murphy, Secretary. In its filing with the Commission, NASDAQ 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 these statements may be examined at the places specified in Item IV below. NASDAQ has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. [FR Doc. 2011–21592 Filed 8–23–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65159; File No. SR– NASDAQ–2011–118] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Change the Name and Modify the Contents of the NASDAQ Ouch BBO Feed August 18, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on August 12, 2011, the NASDAQ Stock Market LLC (‘‘NASDAQ’’) 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 NASDAQ. 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 the Substance of the Proposed Rule Change The Exchange is filing this proposed rule change to change the name of the NASDAQ Ouch BBO Feed to the NASDAQ MatchView Feed (the ‘‘Feed’’) and to modify the contents of the Feed in two ways. The Feed provides a view of how the Exchange views the Best Bid and Offer (‘‘BBO’’) available from all market centers for each individual security the Exchange trades. The text of the proposed rule change is available at http:// nasdaq.cchwallstreet.com/, at NASDAQ’s principal office, and at the Commission’s Public Reference Room. 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose This proposal regards the NASDAQ MatchView Feed (formerly known as the NASDAQ Ouch BBO Feed), a data feed that represents the Exchange’s view of best bid and offer data received from all market centers. The Feed is available to all Exchange members and market participants equally at no charge, offering all participants transparent, real-time data concerning the Exchange’s view of the BBO data. The Exchange makes the Feed available on a subscription basis to market participants that are connected to the Exchange whether through extranets, direct connection, or Internet-based virtual private networks. Currently, the Feed reflects the Exchange’s view of the BBO data, at any given time, based on orders executed on the Exchange and updated quote information from the network processors.3 The Feed contains the following data elements: symbol, bid price, and ask price.4 Unlike the Nasdaq TotalView feed, the MatchView feed does not contain information about individual orders, either those residing within the Exchange system or those executed or routed by the Exchange. Unlike the network processor feeds containing the National Best Bid and Offer (‘‘NBBO’’), the MatchView Feed does not identify either the market center quoting the BBO or the size of the 3 The Feed does not reflect all information available to the Exchange. Specifically, the Feed excludes information about the routing of orders to away exchanges. Thus, although the Exchange execution system and routing engine know when a bid or offer from an away market is no longer available because the Exchange has routed an order to the bid or offer, the Feed does not reflect such routing activity. 4 The Feed also contains a time stamp and message type field for reference. E:\FR\FM\24AUN1.SGM 24AUN1

Agencies

[Federal Register Volume 76, Number 164 (Wednesday, August 24, 2011)]
[Notices]
[Pages 53004-53007]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-21592]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65161; File No. SR-NYSEArca-2011-53]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change by NYSE Arca, Inc. To Reflect a Change to the 
Benchmark Index Applicable to the Russell Equity ETF

August 18, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 53005]]

``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that, 
on August 3, 2011, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (the ``Commission'') 
the proposed rule change as described in Items I and II below, which 
Items have been prepared by the self-regulatory organization. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect a change to the benchmark index 
applicable to Russell Equity ETF (the ``Fund,'' and formerly known as 
the ``One Fund''). Russell Equity ETF is currently listed and traded on 
the Exchange under NYSE Arca Equities Rule 8.600. The text of the 
proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, and http://www.nyse.com.

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

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

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

1. Purpose
    The Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of One Fund, a series of U.S. One Trust,\3\ under 
NYSE Arca Equities Rule 8.600 (``Managed Fund Shares'').\4\ As of 
February 23, 2011, Frank Russell Company (``Russell'') acquired U.S. 
One, Inc., the previous investment adviser for the Fund. As a result, 
the Fund's investment adviser became Russell Investment Management 
Company (``Adviser'').\5\ In addition, effective on April 15, 2011, the 
name of One Fund was changed to Russell Equity ETF and the name of U.S. 
One Trust was changed to Russell Exchange Traded Funds Trust 
(``Trust''). Further, on or about May 2, 2011, the custodian, transfer 
agent and administrator for the Fund changed from The Bank of New York 
to State Street Bank and Trust Company. These administrative changes 
were implemented as a result of the acquisition of U.S. One, Inc. by 
Russell. Shareholders of the Fund were notified of the changes to the 
Fund's name, the Trust's name, the Fund's investment adviser,\6\ and 
the custodian, transfer agent and administrator in the updated Fund 
prospectus, dated April 29, 2011, included in the Fund's annual 
prospectus mailing to shareholders.\7\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 61843 (April 5, 
2010), 75 FR 18558 (April 12, 2010) (SR-NYSEArca-2010-12) (``One 
Fund Order''). See also Securities Exchange Act Release No. 61689 
(March 11, 2010), 75 FR 13181 (March 18, 2010) (SR-NYSEArca-2010-12) 
(``One Fund Notice,'' and together with the One Fund Order, 
collectively, the ``One Fund Release'').
    \4\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment adviser 
consistent with its investment objectives and policies. In contrast, 
an open-end investment company that issues Investment Company Units, 
listed and traded on the Exchange under NYSE Arca Equities Rule 
5.2(j)(3), seeks to provide investment results that correspond 
generally to the price and yield performance of a specific foreign 
or domestic stock index, fixed income securities index or 
combination thereof.
    \5\ The Adviser is affiliated with multiple broker-dealers and 
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, and will continue to be in 
compliance with Commentary .06 to NYSE Arca Equities Rule 8.600. In 
the event (a) The Adviser or any sub-adviser becomes newly 
affiliated with a broker-dealer, or (b) any new adviser or sub-
adviser becomes affiliated with a broker-dealer, it will implement a 
fire wall with respect to such broker-dealer regarding access to 
information concerning the composition and/or changes to the 
portfolio, and will be subject to procedures designed to prevent the 
use and dissemination of material non-public information regarding 
such portfolio.
    \6\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and its related personnel are 
subject to the provisions of Rule 204A-1 under the 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.
    \7\ See the Trust's Post-Effective Amendment No. 5 to Form N-1A, 
dated April 29, 2011 (File Nos. 333-160877; 811-22320) 
(``Registration Statement''). In addition, the Commission has issued 
an order granting certain exemptive relief to the Trust under the 
1940 Act. See Investment Company Act Release No. 29164 (March 1, 
2010) (File No. 812-13815 and 812-13658-01) (``Exemptive Order'').
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    In this proposed rule change, the Exchange proposes to reflect a 
change to the benchmark index applicable to the Fund.\8\
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    \8\ The Adviser represents that, for one year following 
implementation of the change to the benchmark Index, materials 
issued by the Fund relating to Fund performance, including materials 
posted on the Fund's Web site (http://www.russelletfs.com), will 
reference both the current benchmark and the new benchmark Index, in 
accordance with Item 27(b)(7) of Form N-1A under the 1940 Act. The 
Adviser represents that the benchmark Index change will be 
referenced on Russell's Web site, and that the quarterly fact sheet 
for the Fund, available on the Fund's Web site, will reference the 
current benchmark and the new benchmark Index for one year.
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    As a result of the acquisition of U.S. One, Inc. by Russell, the 
Fund seeks to change its underlying benchmark to the Russell Developed 
Large Cap Index (``Index'') from the Fund's current benchmark, the S&P 
500 Index.\9\ The Index offers investors access to the large-cap 
segment of the developed equity universe representing approximately 
75.4% of the global equity market. The Index includes the largest 
securities in the Russell Developed Index. As of May 31, 2010, the 
Index included 2,372 securities in 25 developed countries, with a 
market capitalization ranging from $238 billion to $1.3 billion; the 
weighted average market capitalization of Index components was $54.7 
billion; and the largest three Index securities and associated Index 
weights were ExxonMobil (1.58%); Apple Inc. (1.17%); and Chevron Corp. 
(0.79%). The current benchmark, the S&P 500 Index, includes 500 leading 
companies in leading industries of the U.S. economy, capturing 75% 
coverage of U.S. equities. It focuses on large capitalization 
securities and represents approximately 75% of the U.S. market 
capitalization. A committee determines the securities included based on 
a set of published guidelines. The Index includes the Russell 
1000[supreg], which represents 90% of U.S. market capitalization. It 
also includes an additional 1,372 securities which, as of

[[Page 53006]]

May 31, 2010, were listed in other developed countries. The Adviser 
represents that the investment objective of the Fund has not changed, 
the Index more accurately represents the investment strategy of the 
Fund, and the change to the Fund's benchmark will not impact the 
investment objective or the principal investment strategies for the 
Fund.
---------------------------------------------------------------------------

    \9\ The change to the Fund's benchmark Index will be effective 
upon filing with the Commission of an amendment to the Trust's 
Registration Statement.
---------------------------------------------------------------------------

    The Adviser has represented that it believes the Index is an 
appropriate broad-based benchmark index for the Fund and the Fund's 
investment objective. As represented in the One Fund Release, the 
Fund's investment objective is to seek long-term capital appreciation. 
[sic] by investing at least 80% of its total assets in exchange-traded 
funds (``Underlying ETFs'') that track various securities indices 
comprised of large, mid and small capitalization companies in the 
United States, Europe and Asia, as well as other developed and emerging 
markets. As stated in the One Fund Release, the Adviser intends to hold 
Underlying ETFs that hold equity securities of large, mid and small 
capitalization companies in the United States, as well as other 
developed countries and developing countries, and that give the Fund 
exposure to most major developed and developing markets around the 
world.\10\ Thus, whereas the S&P 500 Index mostly reflects U.S.-based 
companies, the Index includes a broader range of issuers from both the 
domestic and international markets, and such range is consistent with, 
and should better reflect, the Fund's investment objective.
---------------------------------------------------------------------------

    \10\ The Adviser employs an asset allocation strategy focused on 
increasing shareholder return and reducing risk through exposure to 
a variety of domestic and foreign market segments. The Adviser's 
asset allocation strategy pre-determines a target mix of investment 
types for the Fund to achieve its investment objective and then 
implements the strategy by selecting securities that best represent 
each of the desired investment types. The strategy also calls for 
periodic review of the Fund's holdings as markets rise and fall to 
ensure that the portfolio adheres to the target mix and indicates 
purchases and sales necessary to return to the target mix. The 
Adviser selects Underlying ETFs based on their ability to accurately 
represent the underlying stock market to which the Adviser seeks 
exposure for the Fund, and seeks to construct a portfolio that will 
outperform its benchmark. Additionally, the Adviser seeks to 
maintain a low after-tax cost structure for the Fund and, therefore, 
also evaluates ETFs based on their underlying costs. The Adviser 
employs a buy and hold strategy, meaning that it buys and holds 
securities for a long period of time, with minimal portfolio 
turnover. The Fund, using a buy and hold strategy, seeks to achieve 
its investment objective through investment in Underlying ETFs that 
track certain securities indices. While the Fund intends to 
primarily invest in Underlying ETFs that hold equity securities, the 
Adviser may also invest in Underlying ETFs that may hold U.S. and 
foreign government debt and investment grade corporate bonds. 
According to the Registration Statement, the Fund does not invest in 
derivatives. See One Fund Release, note 4, supra.
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    Except for the changes noted above, all other representations made 
in the One Fund Release remain unchanged.\11\ The Fund will continue to 
comply with all initial and continued listing requirements under NYSE 
Arca Equities Rule 8.600.
---------------------------------------------------------------------------

    \11\ See note 3, supra.
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2. Statutory Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) \12\ that an exchange have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
8.600. The Fund's benchmark Index will continue to be a broad-based 
index of large capitalization companies. The Index represents 
approximately 75.4% of the global equity market and includes the 
largest securities in the Russell Developed Index. As of May 31, 2010, 
the Index included 2,372 securities in 25 developed countries, with a 
market capitalization ranging from $238 billion to $1.3 billion; the 
weighted average market capitalization of Index components was $54.7 
billion. The Fund's investment objective is to seek long-term capital 
appreciation by investing at least 80% of its total assets in 
Underlying ETFs that track various securities indices comprised of 
large, mid and small capitalization companies in the United States, 
Europe and Asia, as well as other developed and emerging markets. All 
Underlying ETFs are listed and traded on a national securities 
exchange. The Index includes a broader range of issuers from both the 
domestic and international markets compared to the S&P 500 Index, and 
such range is consistent with, and should better reflect, the Fund's 
investment objective. The Adviser represents that the investment 
objective of the Fund has not changed, the Index more accurately 
represents the investment strategy of the Fund, and the change to the 
Fund's benchmark will not impact the investment objective or the 
principal investment strategies for the Fund. Except for Underlying 
ETFs that may hold non-U.S. issues, the Fund will not otherwise invest 
in non-U.S.-registered issues. Except for the changes noted above, all 
other representations made in the One Fund Release remain unchanged. 
The Fund will continue to comply with all initial and continued listing 
requirements under NYSE Arca Equities Rule 8.600.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the new benchmark Index will continue to be calculated and 
disseminated in a manner consistent with representations in the One 
Fund Order. The Adviser has represented that it believes the Index is 
an appropriate broad-based benchmark index for the Fund. In addition, 
the Adviser has represented that the change to the Fund's benchmark 
will not impact shareholders of the Fund, and that the new benchmark 
Index more accurately reflects the Fund's principal investment strategy 
and will not result in a change to such strategy.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will permit the Fund to utilize an 
alternative broad-based, large capitalization benchmark Index that the 
Adviser believes is an appropriate benchmark for the Fund. The change 
to the Fund's benchmark Index will be effective upon filing with the 
Commission of an amendment to the Trust's Registration Statement.

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

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

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

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

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) As the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory

[[Page 53007]]

organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml ); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2011-53 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2011-53. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Section, 100 
F Street, NE., Washington, DC 20549-1090, on official business days 
between 10 a.m. and 3 p.m. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at http://www.nyse.com. All comments received will be 
posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEArca-2011-53 and should be submitted 
on or before September 14, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-21592 Filed 8-23-11; 8:45 am]
BILLING CODE 8011-01-P