Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to the Listing and Trading of Shares of the WisdomTree Emerging Markets Inflation Protection Bond Fund Under NYSE Arca Equities Rule 8.600, 75932-75939 [2011-31044]
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Federal Register / Vol. 76, No. 233 / Monday, December 5, 2011 / Notices
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
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.
jlentini on DSK4TPTVN1PROD with NOTICES
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.
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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
such 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:
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10 a.m. and 3 p.m. Copies of the filing
also will be available for inspection and
copying at the principal office of the
Exchange. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2011–81 and should be
submitted on or before December 27,
2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31045 Filed 12–2–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2011–81 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–2011–81. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
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[Release No. 34–65846; File No. SR–
NYSEArca–2011–82]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to the Listing
and Trading of Shares of the
WisdomTree Emerging Markets
Inflation Protection Bond Fund Under
NYSE Arca Equities Rule 8.600
November 29, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that,
on November 14, 2011, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
28 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 76, No. 233 / Monday, December 5, 2011 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade the shares of the following fund of
the WisdomTree Trust (‘‘Trust’’) under
NYSE Arca Equities Rule 8.600
(‘‘Managed Fund Shares’’): WisdomTree
Emerging Markets Inflation Protection
Bond Fund (‘‘Fund’’). The shares of the
Fund are collectively referred to herein
as the ‘‘Shares.’’ The text of the
proposed rule change is available at the
Exchange, the Commission’s Public
Reference Room, and https://
www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
jlentini on DSK4TPTVN1PROD with NOTICES
The Exchange proposes to list and
trade the Shares of the WisdomTree
Emerging Markets Inflation Protection
Bond Fund under NYSE Arca Equities
Rule 8.600, which governs the listing
and trading of Managed Fund Shares on
the Exchange.3 The Fund will be an
actively managed exchange traded fund
(‘‘ETF’’). The Shares will be offered by
3 The Commission has approved listing and
trading on the Exchange of a number of actively
managed funds under Rule 8.600. See, e.g.,
Securities Exchange Act Release Nos. 57801 (May
8, 2008), 73 FR 27878 (May 14, 2008) (SR–
NYSEArca–2008–31) (order approving Exchange
listing and trading of twelve actively-managed
funds of the WisdomTree Trust); 58564 (September
17, 2008), 73 FR 55194 (September 24, 2008) (SR–
NYSEArca–2008–86) (order approving Exchange
listing and trading of WisdomTree Dreyfus
Emerging Markets Fund); 62604 (July 30, 2010), 75
FR 47323 (August 5, 2010) (SR–NYSEArca–2010–
49) (order approving Exchange listing and trading
of WisdomTree Emerging Markets Local Debt
Fund); 63919 (February 16, 2011), 76 FR 10073
(February 23, 2011) (SR–NYSEArca–2010–116)
(order approving Exchange listing and trading of
WisdomTree Asia Local Debt Fund); 65458
(September 30, 2011), 76 FR 62112 (October 6,
2011) (SR–NYSEArca–2011–54) (order approving
Exchange listing and trading of WisdomTree
Dreyfus Australia and New Zealand Debt Fund).
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the Trust, which was established as a
Delaware statutory trust on December
15, 2005. The Fund is registered with
the Commission as an investment
company and the Fund has filed a
registration statement on Form N–1A
(‘‘Registration Statement’’) with the
Commission.4
Description of the Shares and the Fund
WisdomTree Asset Management, Inc.
(‘‘WisdomTree Asset Management’’) is
the investment adviser (‘‘Adviser’’) to
the Fund.5 Mellon Capital Management
serves as sub-adviser for the Fund
(‘‘Sub-Adviser’’).6 The Bank of New
York Mellon is the administrator,
custodian and transfer agent for the
Trust. ALPS Distributors, Inc.
(‘‘Distributor’’) serves as the distributor
for the Trust.7
Commentary .06 to Rule 8.600
provides that, if the investment adviser
to the investment company issuing
Managed Fund Shares is affiliated with
a broker-dealer, such investment adviser
shall erect a ‘‘fire wall’’ between the
investment adviser and the brokerdealer with respect to access to
information concerning the composition
and/or changes to such investment
company portfolio.8 In addition,
4 See Post-Effective Amendment No. 54 to
Registration Statement on Form N–1A for the Trust,
dated July 1, 2011 (File Nos. 333–132380 and 811–
21864). The descriptions of the Fund and the
Shares contained herein are based, in part, on
information in the Registration Statement.
5 WisdomTree Investments, Inc. (‘‘WisdomTree
Investments’’) is the parent company of
WisdomTree Asset Management.
6 The Sub-Adviser is responsible for day-to-day
management of the Fund and, as such, typically
makes all decisions with respect to portfolio
holdings. The Adviser has ongoing oversight
responsibility.
7 The Commission has issued an order granting
certain exemptive relief to the Trust under the
Investment Company Act of 1940 (15 U.S.C. 80a–
1) (‘‘1940 Act’’). See Investment Company Act
Release No. 28171 (October 27, 2008) (File No. 812–
13458) (‘‘Exemptive Order’’). In compliance with
Commentary .05 to NYSE Arca Equities Rule 8.600,
which applies to Managed Fund Shares based on
an international or global portfolio, 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 (15 U.S.C. 77a).
8 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (‘‘Advisers Act’’). As a result,
the Adviser and Sub-Adviser and their 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
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75933
Commentary .06 further requires that
personnel who make decisions on the
open-end fund’s portfolio composition
must be subject to procedures designed
to prevent the use and dissemination of
material nonpublic information
regarding the open-end fund’s portfolio.
Commentary .06 to Rule 8.600 is similar
to Commentary .03(a)(i) and (iii) to
NYSE Arca Equities Rule 5.2(j)(3);
however, Commentary .06 in connection
with the establishment of a ‘‘fire wall’’
between the investment adviser and the
broker-dealer reflects the applicable
open-end fund’s portfolio, not an
underlying benchmark index, as is the
case with index-based funds.
WisdomTree Asset Management is not
affiliated with any broker-dealer. The
Sub-Adviser is affiliated with multiple
broker-dealers and has implemented a
‘‘fire wall’’ with respect to such brokerdealers regarding access to information
concerning the composition and/or
changes to the Fund’s portfolio. In
addition, Sub-Adviser personnel who
make decisions regarding the Fund’s
portfolio are subject to procedures
designed to prevent the use and
dissemination of material nonpublic
information regarding the Fund’s
portfolio. 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, 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.
WisdomTree Emerging Markets Inflation
Protection Bond Fund
According to the Registration
Statement, the Fund seeks to provide a
high level of income and capital
appreciation representative of
investments in inflation-linked debt of
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.
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Federal Register / Vol. 76, No. 233 / Monday, December 5, 2011 / Notices
emerging market issuers.9 To achieve its
objective, the Fund will invest in Fixed
Income Securities (defined below) and
other instruments designed to provide
protection against inflation.
jlentini on DSK4TPTVN1PROD with NOTICES
Fixed Income Securities
The Fund intends to achieve its
investment objectives through direct
and indirect investments in inflationprotected Fixed Income Securities of
emerging market countries.10 For these
purposes, Fixed Income Securities
include bonds, notes or other debt
obligations, such as government or
corporate bonds, denominated in local
currencies or U.S. dollars, as well as
issues denominated in emerging market
local currencies that are issued by
‘‘supranational issuers,’’ such as the
International Bank for Reconstruction
and Development and the International
Finance Corporation, as well as
development agencies supported by
other national governments. The Fund
expects that it will have at least 70% of
9 According to the Adviser, while there is no
universally accepted definition of what constitutes
an ‘‘emerging market,’’ in general, emerging market
countries are characterized by developing
commercial and financial infrastructure with
significant potential for economic growth and
increased capital market participation by foreign
investors. The Adviser and Sub-Adviser look at a
variety of commonly-used factors when
determining whether a country is an ‘‘emerging’’
market. In general, the Adviser and Sub-Adviser
consider a country to be an emerging market if:
(1) It is either (a) classified by the World Bank
in the lower middle or upper middle income
designation for one of the past 3 years (i.e., per
capita gross national product of less than U.S.
$9,385), or (b) classified by the World Bank as high
income in each of the last three years, but with a
currency that has been primarily traded on a nondelivered basis by offshore investors (e.g., Korea
and Taiwan);
(2) the country’s debt market is considered
relatively accessible by foreign investors in terms of
capital flow and settlement considerations; and
(3) the country has issued the equivalent of $5
billion in local currency sovereign debt. The criteria
used to evaluate whether a country is an ‘‘emerging
market’’ will change from time to time based on
economic and other events.
10 As of October 31, 2011, the total market
capitalization of inflation-linked bonds in the
Barclays Capital World Inflation Linked Index, a
leading index of inflation-linked bonds in
developed markets outside the United States, was
approximately $1.06 trillion. As of October 31,
2011, the total market capitalization of inflationlinked bonds in the Barclays Capital Emerging
Markets Government Inflation Linked Bond Index,
a leading index of inflation-linked debt issued by
emerging market governments, was approximately
$452.9 billion. The Adviser represents that
inflation-linked bonds outside the United States are
issued in large par size (i.e., $200 million or more)
and tend to be liquid. Locally-denominated debt
issued by supra-national entities, such as the
European Investment Bank or the International
Bank for Reconstruction and Development, is also
actively traded. Email from Timothy J. Malinowski,
Senior Director, NYSE Euronext, to Edward Y. Cho,
Special Counsel, and Daniel T. Gien, Special
Counsel, Division of Trading and Markets,
Commission, dated November 23, 2011.
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Jkt 226001
its assets invested in Fixed Income
Securities. The Fund will invest in
Fixed Income Securities linked to
inflation rates in emerging markets
throughout the world. 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 may
also invest in Money Market Securities
and derivative instruments, as described
below.
The Fund intends to invest in
inflation-linked Fixed Income Securities
of issuers in the following regions: Asia,
Latin America, Eastern Europe, Africa
and the Middle East. Within these
regions, the Fund is likely to invest in
countries such as Brazil, Chile,
Colombia, Hungary, Indonesia,
Malaysia, Mexico, Peru, Philippines,
Poland, Russia, South Africa, South
Korea, Thailand and Turkey, although
this list may change as market
developments occur and may include
additional emerging market countries
that conform to selected ratings,
liquidity and other criteria. As a general
matter, and subject to the Fund’s
investment guideline to provide
exposure across geographic regions and
countries, the Fund generally will invest
a higher percentage of its assets in
countries with larger and more liquid
debt markets. The Fund’s exposure to
any single country generally will be
limited to 20% of the Fund’s assets. The
percentage of Fund assets invested in a
specific region, country or issuer will
change from time to time. While the
Fund is permitted to invest in
developed market economies, this is not
a focus of the Fund.11
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
11 The Fund expects that it will initially hold
inflation-linked debt issued by the following
emerging market governments: Brazil ($255,861
million outstanding); Chile ($12,689 million
outstanding); Colombia ($2,583 million
outstanding); Israel ($38,757 million outstanding);
Mexico ($50,506 million outstanding); Poland
($5,611 million outstanding); South Africa ($29,316
million outstanding); South Korea ($4,371 million
outstanding); Thailand ($1,343 million
outstanding); and Turkey ($39,048 million
outstanding). Outstanding amounts of debt are as of
October 31, 2011 (Sources: Barclays Capital
Emerging Markets Government Inflation linked
Bond Index; and https://www.channelnewsasia.com/
stories/singaporebusinessnews/view/1141179/1/
.html (for Thailand)). Email from Timothy J.
Malinowski, Senior Director, NYSE Euronext, to
Edward Y. Cho, Special Counsel, and Daniel T.
Gien, Special Counsel, Division of Trading and
Markets, Commission, dated November 23, 2011.
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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. 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
governments and agencies of emerging
market countries, the Fund may invest
up to 20% of its net assets in corporate
bonds. The Fund will invest only in
corporate bonds that the Adviser or SubAdviser deems to be sufficiently
liquid.12 Generally a corporate bond
must have $200 million or more par
amount outstanding and significant par
value traded to be considered as an
eligible investment. Economic and other
conditions may, from time to time, lead
to a decrease in the average par amount
outstanding of bond issuances.
Therefore, although the Fund does not
12 The Adviser represents that the size and
liquidity of the global market for corporate bonds
of emerging market issuers generally has been
increasing in recent years. The aggregate dollar
amount of emerging market corporate bonds traded
in the second quarter of 2011 ($221 billion) was
comparable to the volumes seen in the first quarter
of 2010 ($201 billion). The $514 billion traded in
2009 represented a substantial increase over the
amount traded in 2008 ($380 billion). Turnover in
emerging market corporate debt as an overall
percentage of emerging market debt has also
increased significantly. Turnover in emerging
market corporate debt for 2010 was approximately
13.0% of the overall volume of emerging market
debt of $6.765 trillion for the same period. This is
similar to calendar year 2009 where turnover in
emerging market corporate debt accounted for 12%
of the overall volume of emerging market debt of
$6 trillion in 2009, an increase over the 9% share
in 2008 (Source: Emerging Markets Traders
Association Press Release(s), March 22, 2011,
December 8, 2010, August 12, 2010, May 20, 2010
and March 8, 2010). Email from Timothy J.
Malinowski, Senior Director, NYSE Euronext, to
Edward Y. Cho, Special Counsel, and Daniel T.
Gien, Special Counsel, Division of Trading and
Markets, Commission, dated November 23, 2011.
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Federal Register / Vol. 76, No. 233 / Monday, December 5, 2011 / Notices
intend to do so, the Fund may invest up
to 5% of its net assets in corporate
bonds with less than $200 million par
amount outstanding if (i) the Adviser or
Sub-Adviser deems such security to be
sufficiently liquid based on its analysis
of the market for such security (based
on, for example, broker-dealer
quotations or its analysis of the trading
history of the security or the trading
history of other securities issued by the
issuer), (ii) such investment is deemed
by the Adviser or Sub-Adviser to be in
the best interest of the Fund, and (iii)
such investment is deemed consistent
with the Fund’s goal of providing broad
exposure to inflation-linked Fixed
Income Securities.
The Fund may invest in Fixed Income
Securities with effective or final
maturities of any length. The Fund will
seek to keep the average effective
duration of its portfolio between 2 and
8 years. Effective duration is an
indication of an investment’s interest
rate risk or how sensitive an investment
or a fund is to changes in interest rates.
Generally, a fund or instrument with a
longer effective duration is more
sensitive to interest rate fluctuations,
and, therefore, more volatile, than a
fund with a shorter effective duration.
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).13
The Fund intends to qualify each year
as a regulated investment company
(‘‘RIC’’) under Subchapter M of the
Internal Revenue Code of 1986, as
amended.14 The Fund will invest its
assets, and otherwise conduct its
operations, in a manner that is intended
to satisfy the qualifying income,
diversification and distribution
requirements necessary to establish and
maintain RIC qualification under
Subchapter M. The Subchapter M
diversification tests generally require
that (i) the Fund invest no more than
13 See Form N–1A, Item 9. The Commission has
taken the position that a fund is concentrated if it
invests more than 25% of the value of its total
assets in any one industry. See, e.g., Investment
Company Act Release No. 9011 (October 30, 1975),
40 FR 54241 (November 21, 1975).
14 26 U.S.C. 851.
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25% of its total assets in securities
(other than securities of the U.S.
government or other RICs) of any one
issuer or two or more issuers that are
controlled by the Fund and that are
engaged in the same, similar or related
trades or businesses, and (ii) at least
50% of the Fund’s total assets consist of
cash and cash items, U.S. government
securities, securities of other RICs and
other securities, with investments in
such other securities limited in respect
of any one issuer to an amount not
greater than 5% of the value of the
Fund’s total assets and 10% of the
outstanding voting securities of such
issuer.
In addition to satisfying the above
referenced RIC diversification
requirements, 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’s portfolio and the five highest
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’s portfolio. For these
purposes, the Fund may treat
repurchase agreements collateralized by
U.S. government securities or non-U.S.
government securities as U.S. or nonU.S. government securities, as
applicable.
Money Market Securities
The Fund intends to invest in Money
Market Securities in order to help
manage cash flows in and out of the
Fund, such as in connection with
payment of dividends or expenses, and
to satisfy margin requirements, to
provide collateral or to otherwise back
investments in derivative instruments.
For these purposes, Money Market
Securities include: Short-term, highquality obligations issued or guaranteed
by the U.S. Treasury or the agencies or
instrumentalities of the U.S.
government; short-term, high-quality
securities issued or guaranteed by nonU.S. governments, agencies and
instrumentalities; repurchase
agreements backed by short-term U.S.
government securities or non-U.S.
government securities; money market
mutual funds; and deposits and other
obligations of U.S. and non-U.S. banks
and financial institutions. All Money
Market Securities acquired by the Fund
will be rated investment grade. The
Fund does not intend to invest in any
unrated Money Market Securities.
However, it may do so to a limited
extent, such as where a rated Money
Market Security becomes unrated, if
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75935
such Money Market Security is
determined by the Adviser and SubAdviser to be of comparable quality.
Derivative Instruments and Other
Investments
Consistent with the Exemptive Order,
the Fund may use derivative
instruments as part of its investment
strategies. Examples of derivative
instruments include exchange-listed
futures contracts, forward currency
contracts, non-deliverable forward
currency contracts, currency swaps,
interest rate swaps, inflation rate swaps,
currency options, options on futures
contracts, swap agreements and
structured notes. The Fund’s use of
derivatives contracts (other than
structured notes) will be collateralized
or otherwise backed by investments in
short-term, high quality U.S. Money
Market Securities.
The Fund expects that no more than
30% of the value of the Fund’s net
assets will be invested in derivative
instruments. Such investments will be
consistent with the Fund’s investment
objective and will not be used to
enhance leverage. For example, the
Fund may engage in swap transactions
that provide exposure to inflation rates,
inflation-linked bonds, inflationsensitive indices or interest rates.15 The
Fund also may buy or sell listed futures
contracts on U.S. Treasury securities,
non-U.S. government securities and
major non-U.S. currencies.16
With respect to certain kinds of
derivative transactions entered into by
the Fund that involve obligations to
make future payments to third parties,
including, but not limited to, futures
and forward contracts, swap contracts,
the purchase of securities on a whenissued or delayed delivery basis, or
reverse repurchase agreements, the
Fund, in accordance with applicable
federal securities laws, rules, and
15 An inflation-linked swap is an agreement
between two parties to exchange payments at a
future date based on the difference between a fixed
payment and a payment linked to an inflation rate
or value at a future date. A typical interest rate
swap involves the exchange of a floating interest
rate payment for a fixed interest payment.
16 The exchange-listed futures contracts in which
the Fund may invest may be listed on exchanges in
the U.S., London, Hong Kong or Singapore. Each of
the United Kingdom’s primary financial markets
regulator, the Financial Services Authority, Hong
Kong’s primary financial markets regulator, the
Securities and Futures Commission, and
Singapore’s primary financial markets regulator, the
Monetary Authority of Singapore, are signatories to
the International Organization of Securities
Commissions (‘‘IOSCO’’) Multilateral Memorandum
of Understanding (‘‘MMOU’’), which is a multiparty information sharing arrangement among
financial regulators. Both the Commission and the
Commodity Futures Trading Commission are
signatories to the IOSCO MMOU.
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jlentini on DSK4TPTVN1PROD with NOTICES
interpretations thereof, will ‘‘set aside’’
liquid assets, or engage in other
measures to ‘‘cover’’ open positions
with respect to such transactions.17
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
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.18
The Fund may invest in the securities
of other investment companies
(including money market funds and
ETFs). The Fund may invest up to an
aggregate amount of 15% of its net
assets in (a) illiquid securities and (2)
Rule 144A securities. The Commission
staff has interpreted the term ‘‘illiquid’’
in this context to mean a security that
cannot be sold or disposed of within
seven days in the ordinary course of
business at approximately the amount at
which a fund has valued such
security.19
The Fund will not invest in any nonU.S. equity securities.
17 See 15 U.S.C. 80a–18; Investment Company Act
Release No. 10666 (April 18, 1979), 44 FR 25128
(April 27, 1979); Dreyfus Strategic Investing,
Commission No-Action Letter (June 22, 1987);
Merrill Lynch Asset Management, L.P., Commission
No-Action Letter (July 2, 1996).
18 The Fund will invest only in currencies, and
instruments that provide exposure to such
currencies, that are have significant foreign
exchange turnover and are included in the Bank for
International Settlements, Triennial Central Bank
Survey, Report on Global Foreign Exchange Market
Activity in 2010 (December 2010) (‘‘BIS Survey’’).
The Fund 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.
19 The Commission has stated that long-standing
Commission guidelines have required open-end
funds to hold no more than 15% of their net assets
in illiquid securities and other illiquid assets. See
Investment Company Act Release No. 28193 (March
11, 2008), 73 FR 14617 (March 18, 2008), footnote
34. See also, Investment Company Act Release No.
5847 (October 21, 1969), 35 FR 19989 (December
31, 1970) (Statement Regarding ‘‘Restricted
Securities’’); Investment Company Act Release No.
18612 (March 12, 1992), 57 FR 9828 (March 20,
1992) (Revisions of Guidelines to Form N–1A). A
fund’s portfolio security is illiquid if it cannot be
disposed of in the ordinary course of business
within seven days at approximately the value
ascribed to it by the fund. See Investment Company
Act Release No. 14983 (March 12, 1986), 51 FR
9773 (March 21, 1986) (adopting amendments to
Rule 2a–7 under the 1940 Act); Investment
Company Act Release No. 17452 (April 23, 1990),
55 FR 17933 (April 30, 1990) (adopting Rule 144A
under the Securities Act of 1933).
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The Shares
The Fund will issue and redeem
Shares on a continuous basis at net asset
value (‘‘NAV’’) 20 only in large blocks of
Shares (‘‘Creation Units’’) in
transactions with Authorized
Participants. Creation Units generally
consist of 100,000 Shares, though this
may change from time to time. Creation
Units are not expected to consist of less
than 50,000 Shares. The Fund will issue
and redeem Creation Units in exchange
for a portfolio of Fixed Income
Securities closely approximating the
holdings of the Fund or a designated
basket of non-U.S. currency and/or an
amount of U.S. cash. Once created,
Shares of the Fund will trade on the
secondary market in amounts less than
a Creation Unit.
Creations and redemptions must be
made by an Authorized Participant or
through a firm that is either a member
of the National Securities Clearing
Corporation or a Depository Trust
Company participant, and in each case,
must have executed an agreement with
the Distributor with respect to creations
and redemptions of Creation Unit
aggregations.
Additional information regarding the
Shares and the Fund, including
investment strategies, risks, creation and
redemption procedures, fees, portfolio
holdings disclosure policies,
distributions and taxes, is included in
the Registration Statement.
Availability of Information
The Fund’s Web site (https://
www.wisdomtree.com), which will be
publicly available prior to the public
offering of Shares, will include a form
of the prospectus for the Fund that may
be downloaded. The Web site will
include additional quantitative
information updated on a daily basis,
including, for the Fund: (1) The prior
business day’s reported NAV, mid-point
of the bid/ask spread at the time of
calculation of such NAV (‘‘Bid/Ask
Price’’),21 and a calculation of the
premium and discount of the Bid/Ask
Price against the NAV; and (2) data in
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
(‘‘NAV Calculation Time’’). NAV per Share will be
calculated by dividing the Fund’s net assets by the
number of Fund Shares outstanding. For more
information regarding the valuation of Fund
investments in calculating the Fund’s NAV, see
Registration Statement.
21 The Bid/Ask Price of the Fund will be
determined using the midpoint of the highest bid
and the lowest offer on the Exchange as of the time
of calculation of such Fund’s NAV. The records
relating to Bid/Ask Prices will be retained by the
Fund and its service providers.
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
chart format displaying the frequency
distribution of discounts and premiums
of the daily Bid/Ask Price against the
NAV, within appropriate ranges, for
each of the four previous calendar
quarters. On each business day, before
commencement of trading in Shares in
the Core Trading Session 22 on the
Exchange, the Trust will disclose on its
Web site the identities and quantities of
the portfolio of securities and other
assets (‘‘Disclosed Portfolio’’) held by
the Fund that will form the basis for the
Fund’s calculation of NAV at the end of
the business day.23 The Disclosed
Portfolio will include, as applicable, the
names, quantity, percentage weighting
and market value of Fixed Income
Securities, and other assets held by the
Fund and the characteristics of such
assets. The Web site information will be
publicly available at no charge.
Intra-day, executable price quotations
on emerging market Fixed Income
Securities, as well as Money Market
Securities and derivative instruments
are available from major broker-dealer
firms. Intra-day price information is
available through subscription services,
such as Bloomberg and Thomson
Reuters, which can be accessed by
authorized participants and other
investors. Information regarding market
price and volume of the Shares is and
will be continually available on a realtime basis throughout the day on
brokers’ computer screens and other
electronic services. The previous day’s
closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers. Quotation and last sale
information for the Shares will be
available via the Consolidated Tape
Association (‘‘CTA’’) high-speed line.
In addition, for the Fund, an
estimated value, defined in Rule 8.600
as the Portfolio Indicative Value (‘‘PIV’’)
that reflects an estimated intraday value
of the Fund’s portfolio, will be
disseminated. The PIV will be based
upon the current value for the
components of the Disclosed Portfolio
and will be widely disseminated by one
or more major market data vendors at
least every 15 seconds during the Core
22 The Core Trading Session is 9:30 a.m. to 4 p.m.
Eastern time.
23 Under accounting procedures to be followed by
the Fund, trades made on the prior business day
(‘‘T’’) will be booked and reflected in NAV on the
current business day (‘‘T+1’’). Notwithstanding the
foregoing, portfolio trades that are executed prior to
the opening of the Exchange on any business day
may be booked and reflected in NAV on such
business day. Accordingly, the Fund will be able to
disclose at the beginning of the business day the
portfolio that will form the basis for the NAV
calculation at the end of the business day.
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Federal Register / Vol. 76, No. 233 / Monday, December 5, 2011 / Notices
Trading Session on the Exchange.24 In
addition, during hours when the
markets for Fixed Income Securities in
the Fund’s portfolio are closed, the PIV
will be updated at least every 15
seconds during the Core Trading
Session to reflect currency exchange
fluctuations.
The dissemination of the PIV, together
with the Disclosed Portfolio, will allow
investors to determine the value of the
underlying portfolio of the Fund on a
daily basis and to provide a close
estimate of that value throughout the
trading day.
Initial and Continued Listing
The Shares will be subject to Rule
8.600, which sets forth the initial and
continued listing criteria applicable to
Managed Fund Shares. The Exchange
represents that, for initial and/or
continued listing, the Fund must be in
compliance with Rule 10A–3 under the
Exchange Act,25 as provided by NYSE
Arca Equities Rule 5.3. A minimum of
100,000 Shares will be outstanding at
the commencement of trading on the
Exchange. The Exchange will obtain a
representation from the issuer of the
Shares that the NAV per Share will be
calculated daily and that the NAV and
the Disclosed Portfolio will be made
available to all market participants at
the same time.
jlentini on DSK4TPTVN1PROD with NOTICES
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares of
the Fund. Shares of the Fund will be
halted if the ‘‘circuit breaker’’
parameters in NYSE Arca Equities Rule
7.12 are reached. Trading may be halted
because of market conditions or for
reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. These may include: (1) The
extent to which trading is not occurring
in the securities and/or the financial
instruments comprising the Disclosed
Portfolio of the Fund; or (2) whether
other unusual conditions or
circumstances detrimental to the
maintenance of a fair and orderly
market are present. Trading in the
Shares will be subject to Rule
8.600(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund may be halted.
24 Currently, it is the Exchange’s understanding
that several major market data vendors display and/
or make widely available PIVs published on CTA
or other data feeds.
25 See 17 CFR 240.10A–3.
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16:52 Dec 02, 2011
Jkt 226001
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m.
to 8 p.m. Eastern time in accordance
with NYSE Arca Equities Rule 7.34
(Opening, Core, and Late Trading
Sessions). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. As provided in NYSE
Arca Equities Rule 7.6, Commentary .03,
the minimum price variation (‘‘MPV’’)
for quoting and entry of orders in equity
securities traded on the NYSE Arca
Marketplace is $0.01, with the exception
of securities that are priced less than
$1.00 for which the MPV for order entry
is $0.0001.
Surveillance
The Exchange intends to utilize its
existing surveillance procedures
applicable to derivative products (which
includes Managed Fund Shares) to
monitor trading in the Shares. The
Exchange represents that these
procedures are adequate to properly
monitor Exchange trading of the Shares
in all trading sessions and to deter and
detect violations of Exchange rules and
applicable federal securities laws.
The Exchange’s current trading
surveillance focuses on detecting
securities trading outside their normal
patterns. When such situations are
detected, surveillance analysis follows
and investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.
The Exchange may obtain information
via the Intermarket Surveillance Group
(‘‘ISG’’) from other exchanges who are
members of the ISG or with which the
Exchange has entered into a
comprehensive surveillance sharing
agreement.26
In addition, the Exchange also has a
general policy prohibiting the
distribution of material, non-public
information by its employees.
Information Bulletin
Prior to the commencement of
trading, the Exchange will inform its
Equity Trading Permit (‘‘ETP’’) Holders
in an Information Bulletin (‘‘Bulletin’’)
of the special characteristics and risks
26 For a list of the current members of ISG, see
https://www.isgportal.org. The Exchange notes that
not all of the components of the Disclosed Portfolio
for the Fund may trade on exchanges that are
members of the ISG or with which the Exchange has
in place a comprehensive surveillance sharing
agreement.
PO 00000
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Fmt 4703
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75937
associated with trading the Shares.
Specifically, the Bulletin will discuss
the following: (1) The procedures for
purchases and redemptions of Shares in
Creation Unit aggregations (and that
Shares are not individually redeemable);
(2) NYSE Arca Equities Rule 9.2(a),
which imposes a duty of due diligence
on its ETP Holders to learn the essential
facts relating to every customer prior to
trading the Shares; (3) the risks involved
in trading the Shares during the
Opening and Late Trading Sessions
when an updated PIV will not be
calculated or publicly disseminated; (4)
how information regarding the PIV is
disseminated; (5) the requirement that
ETP Holders deliver a prospectus to
investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction; and (6)
trading information.
In addition, the Bulletin will
reference that the Fund is subject to
various fees and expenses described in
the Registration Statement. The Bulletin
will discuss any exemptive, no-action,
and interpretive relief granted by the
Commission from any rules under the
Exchange Act. The Bulletin will also
disclose that the NAV for the Shares
will be calculated after 4 p.m. Eastern
time each trading day.
2. Statutory Basis
The basis under the Exchange Act for
this proposed rule change is the
requirement under Section 6(b)(5) 27
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 Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws. The Exchange may obtain
information via ISG from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. The Sub-Adviser is
affiliated with multiple broker-dealers
and has implemented a ‘‘fire wall’’ with
27 15
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U.S.C. 78f(b)(5).
05DEN1
jlentini on DSK4TPTVN1PROD with NOTICES
75938
Federal Register / Vol. 76, No. 233 / Monday, December 5, 2011 / Notices
respect to such broker-dealers regarding
access to information concerning the
composition and/or changes to the
Fund’s portfolio. In addition, SubAdviser personnel who make decisions
regarding the Fund’s portfolio are
subject to procedures designed to
prevent the use and dissemination of
material nonpublic information
regarding the Fund’s portfolio.
According to the Registration Statement,
the Fund expects that it will have at
least 70% of its assets invested in Fixed
Income Securities. The Fund’s exposure
to any single country generally will be
limited to 20% of the Fund’s assets. 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. 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 may invest up to
20% of its net assets in corporate bonds.
The Fund will invest only in corporate
bonds that the Adviser or Sub-Adviser
deems to be sufficiently liquid and,
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. 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. Such
investments also will not be used to
enhance leverage. The Fund will not
invest in any non-U.S. equity securities.
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 Exchange will
obtain a representation from the issuer
of the Shares that the NAV per Share
will be calculated daily and that the
NAV and the Disclosed Portfolio will be
made available to all market
participants at the same time. In
addition, a large amount of information
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 PIV will be
widely 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
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16:52 Dec 02, 2011
Jkt 226001
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 PIV, 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
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 PIV, 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.
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2011–82 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–2011–82. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
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Federal Register / Vol. 76, No. 233 / Monday, December 5, 2011 / Notices
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
copying at the principal office of the
Exchange. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2011–82 and should be
submitted on or before December 27,
2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–31044 Filed 12–2–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[ File No. 500–1]
ZipGlobal Holdings, Inc., Symbollon
Pharmaceuticals, Inc., Microholdings
US, Inc., ComCam International, Inc.,
Outfront Companies, Augrid Global
Holdings Corp., 1st Global Financial,
Corp.; Order of Suspension of Trading
jlentini on DSK4TPTVN1PROD with NOTICES
December 1, 2011.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of the issuers
listed below. As set forth below for each
issuer, questions have arisen regarding
the accuracy and adequacy of publicly
available information about the issuers.
1. ZipGlobal Holdings, Inc. is a
Delaware corporation with its principal
place of business in Massachusetts.
Questions have arisen concerning the
adequacy and accuracy of its public
filings concerning the company’s
issuance of shares in company stock and
its financial statements.
2. Symbollon Pharmaceuticals, Inc.
(f/k/a Symbollon Corp.) is a Delaware
corporation with its principal place of
business in Massachusetts. Questions
have arisen concerning the adequacy
and accuracy of publicly available
information about the company
28 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
19:11 Dec 02, 2011
Jkt 226001
concerning the company’s issuance of
shares in company stock. Questions
have also arisen concerning the
adequacy and accuracy of publicly
available information about the
company because it has not filed any
periodic reports since the period ended
March 31, 2011.
3. Microholdings US, Inc. is an
Oklahoma corporation with its principal
place of business in Washington.
Questions have arisen concerning the
adequacy and accuracy of publicly
available information about the
company concerning the company’s
issuance of shares in company stock.
4. ComCam International, Inc. is a
Delaware company with its principal
place of business in Pennsylvania.
Questions have arisen concerning the
adequacy and accuracy of publicly
available information about the
company.
5. Outfront Companies has its
principal place of business in Florida.
Questions have arisen concerning the
adequacy and accuracy of publicly
available information about the
company.
6. Augrid Global Holdings Corp. has
its principal place of business in Texas.
Questions have arisen concerning the
adequacy and accuracy of publicly
available information about the
company.
7. 1st Global Financial, Corp. has its
principal place of business in Nevada.
Questions have arisen concerning the
adequacy and accuracy of publicly
available information about the
company.
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 above-listed companies
is suspended for the period from 12
noon EST on December 1, 2011, through
11:59 p.m. EST on December 14, 2011.
By the Commission.
Elizabeth M. Murphy,
Secretary.
75939
Division, dated December 6, 2010, the
United States Small Business
Administration hereby revokes the
license of First Growth Capital, Inc. a
Georgia Corporation, to function as a
small business investment company
under the Small Business Investment
Company License No. 04045251 issued
to First Growth Capital, Inc., on
December 13, 1989 and said license is
hereby declared null and void as of
December 6, 2010.
Dated: October 24, 2011.
By: United States Small Business
Administration.
Sean J. Greene,
Associate Administrator for Investment.
U.S. Small Business Administration
Office of Liquidation
409 Third Street SW., Sixth Floor
Washington, DC 20416
MEMORANDUM
Date: October 5, 2011
To: Jacqueline K. White
Chief, Administration Information Branch
From: Associate Administrator for
Investment
Subject: Publication of License Surrender
First Growth Capital, Inc.
License #: 04045251
Enclosed are the original, five hard copies,
and a computer disk copy of the Notice of
License Surrender of a Small Business
Investment Company License. I certify that
the hard copy and the disk copy match.
Please have the attached Notice of
Surrender of a Small Business Investment
Company License published in the Federal
Register and return one copy for our office
records.
If you have any questions about this
Federal Register Notice request, please
contact Charlotte Johnson at (202) 205–6502.
Thank you in advance for your
cooperation.
lllllllllllllllllllll
Sean J. Greene
Associate Administrator for Investment
Attachment: 5 copies and 1 disk
lllllllllllllllllllll
Legal
lllllllllllllllllllll
Date
[FR Doc. 2011–31069 Filed 12–2–11; 8:45 am]
BILLING CODE 8025–01–P
[FR Doc. 2011–31261 Filed 12–1–11; 4:15 pm]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice 7707]
SMALL BUSINESS ADMINISTRATION
Revocation of License of Small
Business Investment Company
Pursuant to the authority granted to
the United States Small Business
Administration by the Wind-Up Order
of the United States District Court of the
Middle District Court of Georgia, Macon
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
Culturally Significant Objects Imported
for Exhibition Determinations: ‘‘Works
of Art Coming to the U.S. for
Exhibition’’
Notice is hereby given of the
following determinations: Pursuant to
the authority vested in me by the Act of
October 19, 1965 (79 Stat. 985; 22 U.S.C.
SUMMARY:
E:\FR\FM\05DEN1.SGM
05DEN1
]]>Agencies
[Federal Register Volume 76, Number 233 (Monday, December 5, 2011)]
[Notices]
[Pages 75932-75939]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31044]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65846; File No. SR-NYSEArca-2011-82]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to the Listing and Trading of Shares
of the WisdomTree Emerging Markets Inflation Protection Bond Fund Under
NYSE Arca Equities Rule 8.600
November 29, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that, on November 14, 2011, NYSE Arca, Inc.
(``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C.78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 75933]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade the shares of the following
fund of the WisdomTree Trust (``Trust'') under NYSE Arca Equities Rule
8.600 (``Managed Fund Shares''): WisdomTree Emerging Markets Inflation
Protection Bond Fund (``Fund''). The shares of the Fund are
collectively referred to herein as the ``Shares.'' The text of the
proposed rule change is available at the Exchange, the Commission's
Public Reference Room, and https://www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade the Shares of the
WisdomTree Emerging Markets Inflation Protection Bond Fund under NYSE
Arca Equities Rule 8.600, which governs the listing and trading of
Managed Fund Shares on the Exchange.\3\ The Fund will be an actively
managed exchange traded fund (``ETF''). The Shares will be offered by
the Trust, which was established as a Delaware statutory trust on
December 15, 2005. The Fund is registered with the Commission as an
investment company and the Fund has filed a registration statement on
Form N-1A (``Registration Statement'') with the Commission.\4\
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\3\ The Commission has approved listing and trading on the
Exchange of a number of actively managed funds under Rule 8.600.
See, e.g., Securities Exchange Act Release Nos. 57801 (May 8, 2008),
73 FR 27878 (May 14, 2008) (SR-NYSEArca-2008-31) (order approving
Exchange listing and trading of twelve actively-managed funds of the
WisdomTree Trust); 58564 (September 17, 2008), 73 FR 55194
(September 24, 2008) (SR-NYSEArca-2008-86) (order approving Exchange
listing and trading of WisdomTree Dreyfus Emerging Markets Fund);
62604 (July 30, 2010), 75 FR 47323 (August 5, 2010) (SR-NYSEArca-
2010-49) (order approving Exchange listing and trading of WisdomTree
Emerging Markets Local Debt Fund); 63919 (February 16, 2011), 76 FR
10073 (February 23, 2011) (SR-NYSEArca-2010-116) (order approving
Exchange listing and trading of WisdomTree Asia Local Debt Fund);
65458 (September 30, 2011), 76 FR 62112 (October 6, 2011) (SR-
NYSEArca-2011-54) (order approving Exchange listing and trading of
WisdomTree Dreyfus Australia and New Zealand Debt Fund).
\4\ See Post-Effective Amendment No. 54 to Registration
Statement on Form N-1A for the Trust, dated July 1, 2011 (File Nos.
333-132380 and 811-21864). The descriptions of the Fund and the
Shares contained herein are based, in part, on information in the
Registration Statement.
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Description of the Shares and the Fund
WisdomTree Asset Management, Inc. (``WisdomTree Asset Management'')
is the investment adviser (``Adviser'') to the Fund.\5\ Mellon Capital
Management serves as sub-adviser for the Fund (``Sub-Adviser'').\6\ The
Bank of New York Mellon is the administrator, custodian and transfer
agent for the Trust. ALPS Distributors, Inc. (``Distributor'') serves
as the distributor for the Trust.\7\
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\5\ WisdomTree Investments, Inc. (``WisdomTree Investments'') is
the parent company of WisdomTree Asset Management.
\6\ The Sub-Adviser is responsible for day-to-day management of
the Fund and, as such, typically makes all decisions with respect to
portfolio holdings. The Adviser has ongoing oversight
responsibility.
\7\ The Commission has issued an order granting certain
exemptive relief to the Trust under the Investment Company Act of
1940 (15 U.S.C. 80a-1) (``1940 Act''). See Investment Company Act
Release No. 28171 (October 27, 2008) (File No. 812-13458)
(``Exemptive Order''). In compliance with Commentary .05 to NYSE
Arca Equities Rule 8.600, which applies to Managed Fund Shares based
on an international or global portfolio, 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 (15 U.S.C. 77a).
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Commentary .06 to Rule 8.600 provides that, if the investment
adviser to the investment company issuing Managed Fund Shares is
affiliated with a broker-dealer, such investment adviser shall erect a
``fire wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such investment company portfolio.\8\ In addition,
Commentary .06 further requires that personnel who make decisions on
the open-end fund's portfolio composition must be subject to procedures
designed to prevent the use and dissemination of material nonpublic
information regarding the open-end fund's portfolio. Commentary .06 to
Rule 8.600 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca
Equities Rule 5.2(j)(3); however, Commentary .06 in connection with the
establishment of a ``fire wall'' between the investment adviser and the
broker-dealer reflects the applicable open-end fund's portfolio, not an
underlying benchmark index, as is the case with index-based funds.
WisdomTree Asset Management is not affiliated with any broker-dealer.
The Sub-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. In addition, Sub-Adviser personnel who
make decisions regarding the Fund's portfolio are subject to procedures
designed to prevent the use and dissemination of material nonpublic
information regarding the Fund's portfolio. 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, 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.
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\8\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (``Advisers
Act''). As a result, the Adviser and Sub-Adviser and their 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.
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WisdomTree Emerging Markets Inflation Protection Bond Fund
According to the Registration Statement, the Fund seeks to provide
a high level of income and capital appreciation representative of
investments in inflation-linked debt of
[[Page 75934]]
emerging market issuers.\9\ To achieve its objective, the Fund will
invest in Fixed Income Securities (defined below) and other instruments
designed to provide protection against inflation.
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\9\ According to the Adviser, while there is no universally
accepted definition of what constitutes an ``emerging market,'' in
general, emerging market countries are characterized by developing
commercial and financial infrastructure with significant potential
for economic growth and increased capital market participation by
foreign investors. The Adviser and Sub-Adviser look at a variety of
commonly-used factors when determining whether a country is an
``emerging'' market. In general, the Adviser and Sub-Adviser
consider a country to be an emerging market if:
(1) It is either (a) classified by the World Bank in the lower
middle or upper middle income designation for one of the past 3
years (i.e., per capita gross national product of less than U.S.
$9,385), or (b) classified by the World Bank as high income in each
of the last three years, but with a currency that has been primarily
traded on a non-delivered basis by offshore investors (e.g., Korea
and Taiwan);
(2) the country's debt market is considered relatively
accessible by foreign investors in terms of capital flow and
settlement considerations; and
(3) the country has issued the equivalent of $5 billion in local
currency sovereign debt. The criteria used to evaluate whether a
country is an ``emerging market'' will change from time to time
based on economic and other events.
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Fixed Income Securities
The Fund intends to achieve its investment objectives through
direct and indirect investments in inflation-protected Fixed Income
Securities of emerging market countries.\10\ For these purposes, Fixed
Income Securities include bonds, notes or other debt obligations, such
as government or corporate bonds, denominated in local currencies or
U.S. dollars, as well as issues denominated in emerging market local
currencies that are issued by ``supranational issuers,'' such as the
International Bank for Reconstruction and Development and the
International Finance Corporation, as well as development agencies
supported by other national governments. The Fund expects that it will
have at least 70% of its assets invested in Fixed Income Securities.
The Fund will invest in Fixed Income Securities linked to inflation
rates in emerging markets throughout the world. 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 may also invest in Money
Market Securities and derivative instruments, as described below.
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\10\ As of October 31, 2011, the total market capitalization of
inflation-linked bonds in the Barclays Capital World Inflation
Linked Index, a leading index of inflation-linked bonds in developed
markets outside the United States, was approximately $1.06 trillion.
As of October 31, 2011, the total market capitalization of
inflation-linked bonds in the Barclays Capital Emerging Markets
Government Inflation Linked Bond Index, a leading index of
inflation-linked debt issued by emerging market governments, was
approximately $452.9 billion. The Adviser represents that inflation-
linked bonds outside the United States are issued in large par size
(i.e., $200 million or more) and tend to be liquid. Locally-
denominated debt issued by supra-national entities, such as the
European Investment Bank or the International Bank for
Reconstruction and Development, is also actively traded. Email from
Timothy J. Malinowski, Senior Director, NYSE Euronext, to Edward Y.
Cho, Special Counsel, and Daniel T. Gien, Special Counsel, Division
of Trading and Markets, Commission, dated November 23, 2011.
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The Fund intends to invest in inflation-linked Fixed Income
Securities of issuers in the following regions: Asia, Latin America,
Eastern Europe, Africa and the Middle East. Within these regions, the
Fund is likely to invest in countries such as Brazil, Chile, Colombia,
Hungary, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland,
Russia, South Africa, South Korea, Thailand and Turkey, although this
list may change as market developments occur and may include additional
emerging market countries that conform to selected ratings, liquidity
and other criteria. As a general matter, and subject to the Fund's
investment guideline to provide exposure across geographic regions and
countries, the Fund generally will invest a higher percentage of its
assets in countries with larger and more liquid debt markets. The
Fund's exposure to any single country generally will be limited to 20%
of the Fund's assets. The percentage of Fund assets invested in a
specific region, country or issuer will change from time to time. While
the Fund is permitted to invest in developed market economies, this is
not a focus of the Fund.\11\
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\11\ The Fund expects that it will initially hold inflation-
linked debt issued by the following emerging market governments:
Brazil ($255,861 million outstanding); Chile ($12,689 million
outstanding); Colombia ($2,583 million outstanding); Israel ($38,757
million outstanding); Mexico ($50,506 million outstanding); Poland
($5,611 million outstanding); South Africa ($29,316 million
outstanding); South Korea ($4,371 million outstanding); Thailand
($1,343 million outstanding); and Turkey ($39,048 million
outstanding). Outstanding amounts of debt are as of October 31, 2011
(Sources: Barclays Capital Emerging Markets Government Inflation
linked Bond Index; and https://www.channelnewsasia.com/stories/singaporebusinessnews/view/1141179/1/.html (for Thailand)). Email
from Timothy J. Malinowski, Senior Director, NYSE Euronext, to
Edward Y. Cho, Special Counsel, and Daniel T. Gien, Special Counsel,
Division of Trading and Markets, Commission, dated November 23,
2011.
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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. 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 governments and agencies
of emerging market countries, the Fund may invest up to 20% of its net
assets in corporate bonds. The Fund will invest only in corporate bonds
that the Adviser or Sub-Adviser deems to be sufficiently liquid.\12\
Generally a corporate bond must have $200 million or more par amount
outstanding and significant par value traded to be considered as an
eligible investment. Economic and other conditions may, from time to
time, lead to a decrease in the average par amount outstanding of bond
issuances. Therefore, although the Fund does not
[[Page 75935]]
intend to do so, the Fund may invest up to 5% of its net assets in
corporate bonds with less than $200 million par amount outstanding if
(i) the Adviser or Sub-Adviser deems such security to be sufficiently
liquid based on its analysis of the market for such security (based on,
for example, broker-dealer quotations or its analysis of the trading
history of the security or the trading history of other securities
issued by the issuer), (ii) such investment is deemed by the Adviser or
Sub-Adviser to be in the best interest of the Fund, and (iii) such
investment is deemed consistent with the Fund's goal of providing broad
exposure to inflation-linked Fixed Income Securities.
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\12\ The Adviser represents that the size and liquidity of the
global market for corporate bonds of emerging market issuers
generally has been increasing in recent years. The aggregate dollar
amount of emerging market corporate bonds traded in the second
quarter of 2011 ($221 billion) was comparable to the volumes seen in
the first quarter of 2010 ($201 billion). The $514 billion traded in
2009 represented a substantial increase over the amount traded in
2008 ($380 billion). Turnover in emerging market corporate debt as
an overall percentage of emerging market debt has also increased
significantly. Turnover in emerging market corporate debt for 2010
was approximately 13.0% of the overall volume of emerging market
debt of $6.765 trillion for the same period. This is similar to
calendar year 2009 where turnover in emerging market corporate debt
accounted for 12% of the overall volume of emerging market debt of
$6 trillion in 2009, an increase over the 9% share in 2008 (Source:
Emerging Markets Traders Association Press Release(s), March 22,
2011, December 8, 2010, August 12, 2010, May 20, 2010 and March 8,
2010). Email from Timothy J. Malinowski, Senior Director, NYSE
Euronext, to Edward Y. Cho, Special Counsel, and Daniel T. Gien,
Special Counsel, Division of Trading and Markets, Commission, dated
November 23, 2011.
---------------------------------------------------------------------------
The Fund may invest in Fixed Income Securities with effective or
final maturities of any length. The Fund will seek to keep the average
effective duration of its portfolio between 2 and 8 years. Effective
duration is an indication of an investment's interest rate risk or how
sensitive an investment or a fund is to changes in interest rates.
Generally, a fund or instrument with a longer effective duration is
more sensitive to interest rate fluctuations, and, therefore, more
volatile, than a fund with a shorter effective duration. 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 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).\13\
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\13\ See Form N-1A, Item 9. The Commission has taken the
position that a fund is concentrated if it invests more than 25% of
the value of its total assets in any one industry. See, e.g.,
Investment Company Act Release No. 9011 (October 30, 1975), 40 FR
54241 (November 21, 1975).
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The Fund intends to qualify each year as a regulated investment
company (``RIC'') under Subchapter M of the Internal Revenue Code of
1986, as amended.\14\ The Fund will invest its assets, and otherwise
conduct its operations, in a manner that is intended to satisfy the
qualifying income, diversification and distribution requirements
necessary to establish and maintain RIC qualification under Subchapter
M. The Subchapter M diversification tests generally require that (i)
the Fund invest no more than 25% of its total assets in securities
(other than securities of the U.S. government or other RICs) of any one
issuer or two or more issuers that are controlled by the Fund and that
are engaged in the same, similar or related trades or businesses, and
(ii) at least 50% of the Fund's total assets consist of cash and cash
items, U.S. government securities, securities of other RICs and other
securities, with investments in such other securities limited in
respect of any one issuer to an amount not greater than 5% of the value
of the Fund's total assets and 10% of the outstanding voting securities
of such issuer.
---------------------------------------------------------------------------
\14\ 26 U.S.C. 851.
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In addition to satisfying the above referenced RIC diversification
requirements, 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's portfolio and the
five highest 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's
portfolio. For these purposes, the Fund may treat repurchase agreements
collateralized by U.S. government securities or non-U.S. government
securities as U.S. or non-U.S. government securities, as applicable.
Money Market Securities
The Fund intends to invest in Money Market Securities in order to
help manage cash flows in and out of the Fund, such as in connection
with payment of dividends or expenses, and to satisfy margin
requirements, to provide collateral or to otherwise back investments in
derivative instruments. For these purposes, Money Market Securities
include: Short-term, high-quality obligations issued or guaranteed by
the U.S. Treasury or the agencies or instrumentalities of the U.S.
government; short-term, high-quality securities issued or guaranteed by
non-U.S. governments, agencies and instrumentalities; repurchase
agreements backed by short-term U.S. government securities or non-U.S.
government securities; money market mutual funds; and deposits and
other obligations of U.S. and non-U.S. banks and financial
institutions. All Money Market Securities acquired by the Fund will be
rated investment grade. The Fund does not intend to invest in any
unrated Money Market Securities. However, it may do so to a limited
extent, such as where a rated Money Market Security becomes unrated, if
such Money Market Security is determined by the Adviser and Sub-Adviser
to be of comparable quality.
Derivative Instruments and Other Investments
Consistent with the Exemptive Order, the Fund may use derivative
instruments as part of its investment strategies. Examples of
derivative instruments include exchange-listed futures contracts,
forward currency contracts, non-deliverable forward currency contracts,
currency swaps, interest rate swaps, inflation rate swaps, currency
options, options on futures contracts, swap agreements and structured
notes. The Fund's use of derivatives contracts (other than structured
notes) will be collateralized or otherwise backed by investments in
short-term, high quality U.S. Money Market Securities.
The Fund expects that no more than 30% of the value of the Fund's
net assets will be invested in derivative instruments. Such investments
will be consistent with the Fund's investment objective and will not be
used to enhance leverage. For example, the Fund may engage in swap
transactions that provide exposure to inflation rates, inflation-linked
bonds, inflation-sensitive indices or interest rates.\15\ The Fund also
may buy or sell listed futures contracts on U.S. Treasury securities,
non-U.S. government securities and major non-U.S. currencies.\16\
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\15\ An inflation-linked swap is an agreement between two
parties to exchange payments at a future date based on the
difference between a fixed payment and a payment linked to an
inflation rate or value at a future date. A typical interest rate
swap involves the exchange of a floating interest rate payment for a
fixed interest payment.
\16\ The exchange-listed futures contracts in which the Fund may
invest may be listed on exchanges in the U.S., London, Hong Kong or
Singapore. Each of the United Kingdom's primary financial markets
regulator, the Financial Services Authority, Hong Kong's primary
financial markets regulator, the Securities and Futures Commission,
and Singapore's primary financial markets regulator, the Monetary
Authority of Singapore, are signatories to the International
Organization of Securities Commissions (``IOSCO'') Multilateral
Memorandum of Understanding (``MMOU''), which is a multi-party
information sharing arrangement among financial regulators. Both the
Commission and the Commodity Futures Trading Commission are
signatories to the IOSCO MMOU.
---------------------------------------------------------------------------
With respect to certain kinds of derivative transactions entered
into by the Fund that involve obligations to make future payments to
third parties, including, but not limited to, futures and forward
contracts, swap contracts, the purchase of securities on a when-issued
or delayed delivery basis, or reverse repurchase agreements, the Fund,
in accordance with applicable federal securities laws, rules, and
[[Page 75936]]
interpretations thereof, will ``set aside'' liquid assets, or engage in
other measures to ``cover'' open positions with respect to such
transactions.\17\
---------------------------------------------------------------------------
\17\ See 15 U.S.C. 80a-18; Investment Company Act Release No.
10666 (April 18, 1979), 44 FR 25128 (April 27, 1979); Dreyfus
Strategic Investing, Commission No-Action Letter (June 22, 1987);
Merrill Lynch Asset Management, L.P., Commission No-Action Letter
(July 2, 1996).
---------------------------------------------------------------------------
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 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.\18\
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\18\ The Fund will invest only in currencies, and instruments
that provide exposure to such currencies, that are have significant
foreign exchange turnover and are included in the Bank for
International Settlements, Triennial Central Bank Survey, Report on
Global Foreign Exchange Market Activity in 2010 (December 2010)
(``BIS Survey''). The Fund 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.
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The Fund may invest in the securities of other investment companies
(including money market funds and ETFs). The Fund may invest up to an
aggregate amount of 15% of its net assets in (a) illiquid securities
and (2) Rule 144A securities. The Commission staff has interpreted the
term ``illiquid'' in this context to mean a security that cannot be
sold or disposed of within seven days in the ordinary course of
business at approximately the amount at which a fund has valued such
security.\19\
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\19\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14617 (March 18, 2008), footnote 34. See also, Investment Company
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31,
1970) (Statement Regarding ``Restricted Securities''); Investment
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio
security is illiquid if it cannot be disposed of in the ordinary
course of business within seven days at approximately the value
ascribed to it by the fund. See Investment Company Act Release No.
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990)
(adopting Rule 144A under the Securities Act of 1933).
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The Fund will not invest in any non-U.S. equity securities.
The Shares
The Fund will issue and redeem Shares on a continuous basis at net
asset value (``NAV'') \20\ only in large blocks of Shares (``Creation
Units'') in transactions with Authorized Participants. Creation Units
generally consist of 100,000 Shares, though this may change from time
to time. Creation Units are not expected to consist of less than 50,000
Shares. The Fund will issue and redeem Creation Units in exchange for a
portfolio of Fixed Income Securities closely approximating the holdings
of the Fund or a designated basket of non-U.S. currency and/or an
amount of U.S. cash. Once created, Shares of the Fund will trade on the
secondary market in amounts less than a Creation Unit.
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\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 (``NAV
Calculation Time''). NAV per Share will be calculated by dividing
the Fund's net assets by the number of Fund Shares outstanding. For
more information regarding the valuation of Fund investments in
calculating the Fund's NAV, see Registration Statement.
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Creations and redemptions must be made by an Authorized Participant
or through a firm that is either a member of the National Securities
Clearing Corporation or a Depository Trust Company participant, and in
each case, must have executed an agreement with the Distributor with
respect to creations and redemptions of Creation Unit aggregations.
Additional information regarding the Shares and the Fund, including
investment strategies, risks, creation and redemption procedures, fees,
portfolio holdings disclosure policies, distributions and taxes, is
included in the Registration Statement.
Availability of Information
The Fund's Web site (https://www.wisdomtree.com), which will be
publicly available prior to the public offering of Shares, will include
a form of the prospectus for the Fund that may be downloaded. The Web
site will include additional quantitative information updated on a
daily basis, including, for the Fund: (1) The prior business day's
reported NAV, mid-point of the bid/ask spread at the time of
calculation of such NAV (``Bid/Ask Price''),\21\ and a calculation of
the premium and discount of the Bid/Ask Price against the NAV; and (2)
data in chart format displaying the frequency distribution of discounts
and premiums of the daily Bid/Ask Price against the NAV, within
appropriate ranges, for each of the four previous calendar quarters. On
each business day, before commencement of trading in Shares in the Core
Trading Session \22\ on the Exchange, the Trust will disclose on its
Web site the identities and quantities of the portfolio of securities
and other assets (``Disclosed Portfolio'') held by the Fund that will
form the basis for the Fund's calculation of NAV at the end of the
business day.\23\ The Disclosed Portfolio will include, as applicable,
the names, quantity, percentage weighting and market value of Fixed
Income Securities, and other assets held by the Fund and the
characteristics of such assets. The Web site information will be
publicly available at no charge.
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\21\ The Bid/Ask Price of the Fund will be determined using the
midpoint of the highest bid and the lowest offer on the Exchange as
of the time of calculation of such Fund's NAV. The records relating
to Bid/Ask Prices will be retained by the Fund and its service
providers.
\22\ The Core Trading Session is 9:30 a.m. to 4 p.m. Eastern
time.
\23\ Under accounting procedures to be followed by the Fund,
trades made on the prior business day (``T'') will be booked and
reflected in NAV on the current business day (``T+1'').
Notwithstanding the foregoing, portfolio trades that are executed
prior to the opening of the Exchange on any business day may be
booked and reflected in NAV on such business day. Accordingly, the
Fund will be able to disclose at the beginning of the business day
the portfolio that will form the basis for the NAV calculation at
the end of the business day.
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Intra-day, executable price quotations on emerging market Fixed
Income Securities, as well as Money Market Securities and derivative
instruments are available from major broker-dealer firms. Intra-day
price information is available through subscription services, such as
Bloomberg and Thomson Reuters, which can be accessed by authorized
participants and other investors. Information regarding market price
and 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. The previous day's closing price and trading
volume information for the Shares will be published daily in the
financial section of newspapers. Quotation and last sale information
for the Shares will be available via the Consolidated Tape Association
(``CTA'') high-speed line.
In addition, for the Fund, an estimated value, defined in Rule
8.600 as the Portfolio Indicative Value (``PIV'') that reflects an
estimated intraday value of the Fund's portfolio, will be disseminated.
The PIV will be based upon the current value for the components of the
Disclosed Portfolio and will be widely disseminated by one or more
major market data vendors at least every 15 seconds during the Core
[[Page 75937]]
Trading Session on the Exchange.\24\ In addition, during hours when the
markets for Fixed Income Securities in the Fund's portfolio are closed,
the PIV will be updated at least every 15 seconds during the Core
Trading Session to reflect currency exchange fluctuations.
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\24\ Currently, it is the Exchange's understanding that several
major market data vendors display and/or make widely available PIVs
published on CTA or other data feeds.
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The dissemination of the PIV, together with the Disclosed
Portfolio, will allow investors to determine the value of the
underlying portfolio of the Fund on a daily basis and to provide a
close estimate of that value throughout the trading day.
Initial and Continued Listing
The Shares will be subject to Rule 8.600, which sets forth the
initial and continued listing criteria applicable to Managed Fund
Shares. The Exchange represents that, for initial and/or continued
listing, the Fund must be in compliance with Rule 10A-3 under the
Exchange Act,\25\ as provided by NYSE Arca Equities Rule 5.3. A minimum
of 100,000 Shares will be outstanding at the commencement of trading on
the Exchange. The Exchange will obtain a representation from the issuer
of the Shares that the NAV per Share will be calculated daily and that
the NAV and the Disclosed Portfolio will be made available to all
market participants at the same time.
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\25\ See 17 CFR 240.10A-3.
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Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund. Shares of the Fund will be halted if
the ``circuit breaker'' parameters in NYSE Arca Equities Rule 7.12 are
reached. Trading may be halted because of market conditions or for
reasons that, in the view of the Exchange, make trading in the Shares
inadvisable. These may include: (1) The extent to which trading is not
occurring in the securities and/or the financial instruments comprising
the Disclosed Portfolio of the Fund; or (2) whether other unusual
conditions or circumstances detrimental to the maintenance of a fair
and orderly market are present. Trading in the Shares will be subject
to Rule 8.600(d)(2)(D), which sets forth circumstances under which
Shares of the Fund may be halted.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern time in
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late
Trading Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price
variation (``MPV'') for quoting and entry of orders in equity
securities traded on the NYSE Arca Marketplace is $0.01, with the
exception of securities that are priced less than $1.00 for which the
MPV for order entry is $0.0001.
Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (which includes Managed
Fund Shares) to monitor trading in the Shares. The Exchange represents
that these procedures are adequate to properly monitor Exchange trading
of the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws.
The Exchange's current trading surveillance focuses on detecting
securities trading outside their normal patterns. When such situations
are detected, surveillance analysis follows and investigations are
opened, where appropriate, to review the behavior of all relevant
parties for all relevant trading violations.
The Exchange may obtain information via the Intermarket
Surveillance Group (``ISG'') from other exchanges who are members of
the ISG or with which the Exchange has entered into a comprehensive
surveillance sharing agreement.\26\
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\26\ For a list of the current members of ISG, see https://www.isgportal.org. The Exchange notes that not all of the components
of the Disclosed Portfolio for the Fund may trade on exchanges that
are members of the ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
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In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
Equity Trading Permit (``ETP'') Holders in an Information Bulletin
(``Bulletin'') of the special characteristics and risks associated with
trading the Shares. Specifically, the Bulletin will discuss the
following: (1) The procedures for purchases and redemptions of Shares
in Creation Unit aggregations (and that Shares are not individually
redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty
of due diligence on its ETP Holders to learn the essential facts
relating to every customer prior to trading the Shares; (3) the risks
involved in trading the Shares during the Opening and Late Trading
Sessions when an updated PIV will not be calculated or publicly
disseminated; (4) how information regarding the PIV is disseminated;
(5) the requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; and (6) trading information.
In addition, the Bulletin will reference that the Fund is subject
to various fees and expenses described in the Registration Statement.
The Bulletin will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Exchange Act.
The Bulletin will also disclose that the NAV for the Shares will be
calculated after 4 p.m. Eastern time each trading day.
2. Statutory Basis
The basis under the Exchange Act for this proposed rule change is
the requirement under Section 6(b)(5) \27\ 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.
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\27\ 15 U.S.C. 78f(b)(5).
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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 Exchange has in place surveillance procedures that are
adequate to properly monitor trading in the Shares in all trading
sessions and to deter and detect violations of Exchange rules and
applicable federal securities laws. The Exchange may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. The Sub-Adviser is affiliated with multiple broker-dealers
and has implemented a ``fire wall'' with
[[Page 75938]]
respect to such broker-dealers regarding access to information
concerning the composition and/or changes to the Fund's portfolio. In
addition, Sub-Adviser personnel who make decisions regarding the Fund's
portfolio are subject to procedures designed to prevent the use and
dissemination of material nonpublic information regarding the Fund's
portfolio. According to the Registration Statement, the Fund expects
that it will have at least 70% of its assets invested in Fixed Income
Securities. The Fund's exposure to any single country generally will be
limited to 20% of the Fund's assets. 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. 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 may invest up to 20% of its net assets in corporate
bonds. The Fund will invest only in corporate bonds that the Adviser or
Sub-Adviser deems to be sufficiently liquid and, 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. 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.
Such investments also will not be used to enhance leverage. The Fund
will not invest in any non-U.S. equity securities.
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 Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information 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 PIV will be widely 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 PIV, 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 actively-managed 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 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 PIV, 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2011-82 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-2011-82. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the
[[Page 75939]]
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of such
filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEArca-2011-82 and should be submitted on or before
December 27, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31044 Filed 12-2-11; 8:45 am]
BILLING CODE 8011-01-P
