Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change Relating to the Listing and Trading of Shares of the Emerging Markets Corporate Bond Fund of the WisdomTree Trust, 3520-3527 [2012-1285]
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Federal Register / Vol. 77, No. 15 / Tuesday, January 24, 2012 / Notices
the benefits to investors are reduced if
the Rule’s minimum quotation sizes are
too high and thus act to restrict
transparency for customer limit orders
for OTC equity securities. FINRA based
its conclusion that a larger number of
customer limit orders would be
displayed under its proposal on its
analysis of a recent sample of OATS
data.
Two commenters favored the
proposal. On the other hand, the
commenters that are an OTC market
maker and an inter-dealer quotation
system, respectively, disputed the need
to revise the Rule’s current tier
structure. One of these commenters
argued that FINRA has not adequately
demonstrated that revisions to the
minimum quotation size requirements
for OTC equity securities would benefit
investors and instead countered that the
proposal would degrade the quality of
the market for these securities. The
other commenter that objected to the
proposal believed that the proposal
could impact market liquidity and
increase costs to market makers, which
could result in market makers’
departure from the OTC market. Both of
these commenters urged that the
Commission undertake an economic
analysis of the anticipated effects of the
proposal as part of its consideration and
suggested that, if the Commission
decided to move forward on the
proposal, it should consider placing the
proposed changes to the Rule’s tier
structure on a pilot program.
The Commission believes that
questions are raised as to whether
FINRA’s proposal is consistent with the
requirements of Section 15A(b)(6) of the
Act, including whether the proposed
adjustments to the minimum quote size
requirements would prevent fraudulent
and manipulative acts and practices,
promote just and equitable principles of
trade, remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, protect
investors and the public interest, and
with the requirements of Section
15A(b)(11) of the Act, including
whether the proposed rule change
would produce fair and informative
quotations, prevent fictitious or
misleading quotations, and promote
orderly procedures for collecting,
distributing, and publishing quotations.
While investors who place customer
limit orders that are smaller in size than
the Rule’s current minimum quotation
size requirements would benefit from
the proposed revisions, market quality
for OTC equity securities potentially
could be affected if the proposed tier
sizes are not calibrated appropriately.
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The Commission believes that the issues
raised by the proposed rule change can
benefit from additional consideration
and evaluation.
VI. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data and
arguments with respect to the concerns
identified above, as well as any others
they may have with the proposal. In
particular, the Commission invites the
written views of interested persons
concerning whether the proposed rule
change is inconsistent with Sections
15A(b)(6) and 15A(b)(11) or any other
provision of the Act, or the rules and
regulations thereunder. Although there
do not appear to be any issues relevant
to approval or disapproval that would
be facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
opportunity to make an oral
presentation.91
Interested persons are invited to
submit written data, views and
arguments regarding whether the
proposed rule change should be
disapproved by February 14, 2012. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by February 28, 2012.
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–FINRA–2011–058 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–FINRA–2011–058. 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
91 Section 19(b)(2) of the Act, as amended by the
Securities Act Amendments of 1975, Pub. L. 94–29
(June 4, 1975), grants the Commission flexibility to
determine what type of proceeding—either oral or
notice and opportunity for written comments—is
appropriate for consideration of a particular
proposal by a self-regulatory organization. See
Securities Act Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
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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
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
FINRA. 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–FINRA–2011–058 and
should be submitted on or before
February 14, 2012. Rebuttal comments
should be submitted by February 28,
2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.92
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–1276 Filed 1–23–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66175; File No. SR–
NASDAQ–2012–004]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change
Relating to the Listing and Trading of
Shares of the Emerging Markets
Corporate Bond Fund of the
WisdomTree Trust
January 18, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 4,
2012, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
92 17
CFR 200.30–3(a)(57).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 77, No. 15 / Tuesday, January 24, 2012 / Notices
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by Nasdaq. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes change [sic] to list
and trade the shares of the WisdomTree
Emerging Markets Corporate Bond Fund
(‘‘Fund’’) of the WisdomTree Trust
(‘‘Trust’’) under Nasdaq Rule 5735
(‘‘Managed Fund Shares’’). The shares of
the Fund are collectively referred to
herein as the ‘‘Shares.’’ The text of the
proposed rule change is available at
https://nasdaq.cchwallstreet.com, at
Nasdaq’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of, and basis for, the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below and is
set forth in Sections A, B, and C below.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
srobinson on DSK4SPTVN1PROD with NOTICES
1. Purpose
The Exchange proposes to list and
trade the Shares of the Fund under
Nasdaq Rule 5735, which governs the
listing and trading of Managed Fund
Shares on the Exchange.3 The Fund will
3 The Commission approved Nasdaq Rule 5735 in
Securities Exchange Act Release No. 57962 (June
13, 2008) 73 FR 35175 (June 20, 2008) (SR–
NASDAQ–2008–039). Although the Fund would be
the first actively-managed fund listed on the
Exchange, the Commission has previously approved
the listing and trading of a number of actively
managed WisdomTree Investments funds on NYSE
Arca, Inc. pursuant to Rule 8.600 of that exchange.
See, e.g., Securities Exchange Act Release Nos.
57801 (May 8, 2008), 73 FR 27878 (May 14, 2008)
(SR–NYSEArca–2008–31) (order approving 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 listing and trading of
WisdomTree Dreyfus Emerging Currency Fund);
62604 (July 30, 2010), 75 FR 47323 (August 5, 2010)
(SR–NYSEArca–2010–49) (order approving listing
and trading of WisdomTree Emerging Markets Local
Debt Fund); 62623 (August 2, 2010), 75 FR 47652
(August 6, 2010) (SR–NYSEArca–2010–51) (order
approving listing and trading of WisdomTree
Dreyfus Commodity Currency Fund); 63598
(December 22, 2010), 75 FR 82106 (December 29,
2010) (SR–NYSEArca–2010–98) (order approving
listing and trading of WisdomTree Managed Futures
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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 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 Western Asset Management
Company 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
Paragraph (g) of Rule 5735 provides
that, if the investment adviser to the
investment company issuing Managed
Fund Shares is affiliated with a brokerdealer, 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
Strategy Fund); 63919 (February 16, 2011), 76 FR
10073 (February 23, 2011) (SR–NYSEArca–2010–
116) (order approving listing and trading of
WisdomTree Asia Local Debt Fund); 64643 (June
10, 2011), 76 FR 35062 (June 15, 2011) (SR–
NYSEArca–2011–21) (order approving listing and
trading of WisdomTree Global Real Return Fund).
The Exchange believes the proposed rule change
raises no significant issues not previously
addressed in those prior Commission orders.
4 See Post-Effective Amendment No. 56 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). In compliance with NASDAQ Rule
5735(b)(5), 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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3521
company portfolio.8 In addition,
paragraph (g) 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.
Rule 5735(g) is similar to Nasdaq Rule
5705(b)(5)(A)(i), however, paragraph (g)
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, 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. In the
event (a) the Adviser or the Sub-Adviser
becomes newly affiliated with a brokerdealer, or (b) any new adviser or subadviser becomes affiliated with a brokerdealer, they will implement a fire wall
with respect to such broker-dealer
regarding access to information
concerning the composition and/or
changes to a portfolio, and will be
subject to procedures designed to
prevent the use and dissemination of
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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material non-public information
regarding such portfolio.
WisdomTree Emerging Markets
Corporate Bond Fund
srobinson on DSK4SPTVN1PROD with NOTICES
According to the Registration
Statement, the Fund seeks to provide a
high level of total return consisting of
both income and capital appreciation.
To achieve its objective, the Fund will
invest in debt securities of corporations
that are domiciled or economically tied
to emerging market countries.9
This definition could be expanded or
exceptions made depending on the
evolution of market and economic
conditions.
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.10 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 (1) 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 (2) 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
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 5 years (i.e., per
capita gross national product of less than U.S.
$9,385), (b) has not been a member of OECD for the
past five years or (c) classified by the World Bank
as high income and a member in OECD in each of
the last five years, but with a currency that has been
primarily traded on a non-delivered basis by
offshore investors (e.g., Korea and Taiwan); and
(2) the country’s debt market is considered
relatively accessible by foreign investors in terms of
capital flow and settlement considerations.
10 26 U.S.C. 851.
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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.
Corporate and Quasi-Sovereign Debt
The Fund intends to achieve its
investment objectives through direct
and indirect investments in Corporate
and Quasi-Sovereign Debt. For these
purposes, Corporate and QuasiSovereign Debt includes fixed-income
securities of emerging market countries,
such as bonds, notes or other debt
obligations including loan participation
notes (‘‘LPNs’’),11 as well as other
instruments, such as derivative
instruments collateralized by Money
Market Securities as described below.
Quasi-Sovereign Debt, specifically,
refers to fixed income securities or debt
obligations that are issued by companies
or agencies that may receive financial
support or backing from the local
government (collectively, ‘‘QuasiSovereign Institutions’’). Under normal
circumstances,12 the Fund will invest at
least 80% of its net assets in Corporate
11 The Fund may invest in LPNs with a minimum
outstanding principal amount of $200 million that
the Adviser or Sub-Adviser deems to be liquid. The
Adviser represents that LPNs denominated in U.S.
dollars are the predominant form of corporate debt
financing in certain emerging markets, particularly
in Russia, where they constitute approximately
70% of the corporate debt market (approximately
$40 billion outstanding). In aggregate, LPNs
represented over 11% of the JP Morgan Emerging
Markets Corporate Bond Index as of November 30,
2011. LPNs are highly liquid instruments that are
typically eligible for settlement at Eurcoclear,
Clearstream, or in the U.S., through DTC. Moreover,
intra-day quotations in LPNs are generally available
from major broker-dealers and data vendors, such
as Bloomberg.
12 The term ‘‘under normal circumstances’’
includes, but is not limited to, the absence of
extreme volatility or trading halts in the fixed
income markets or the financial markets generally;
operational issues causing dissemination of
inaccurate market information; or force majeure
type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar
intervening circumstance.
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and Quasi-Sovereign Debt that are fixed
income securities.
Under normal circumstances, the
Fund will invest at least 80% of its
assets in fixed income securities. Fixed
income securities include debt
instruments, such as bonds, notes and
other obligations, denominated in U.S.
dollars or local currencies. Fixed
income securities include Money
Market Securities as defined below.
Fixed income securities do not include
derivatives.
The Fund intends to provide exposure
across several geographic regions and
countries. The Fund intends to invest in
Corporate and Quasi-Sovereign Debt
from 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: Argentina, Brazil, Chile, China,
Colombia, Hong Kong, India, Indonesia,
Israel, Jamaica, Kazakhstan, Malaysia,
Mexico, Peru, Philippines, Poland,
Qatar, Russia, Singapore, Saudi Arabia,
South Africa, South Korea, Taiwan,
Thailand, Trinidad & Tobago, Turkey,
Ukraine and the United Arab Emirates.
This list may change, based on market
developments. The Fund’s credit
exposures are consistently monitored
from a risk perspective, and may be
modified, reduced, or eliminated. The
Fund’s exposure to any single issuer
generally will be limited to 10% of the
Fund’s assets. The percentage of the
Fund’s assets in a specific region,
country or issuer will change from time
to time. The Fund’s exposure to any one
country generally will be limited to 30%
of the Fund’s assets though this
percentage may change from time to
time in response to economic events
and changes to the credit ratings of the
Corporate and Quasi-Sovereign Debt of
such countries.
The universe of emerging market
Corporate and Quasi-Sovereign Debt
currently includes securities that are
rated ‘‘investment grade’’ as well as
‘‘non-investment grade.’’ The Fund
intends to provide a broad exposure to
emerging market Corporate and QuasiSovereign Debt and therefore will invest
in both investment grade and noninvestment grade securities. The Fund
expects to have 65% or more of its
assets invested in investment grade
securities, though this percentage may
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
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srobinson on DSK4SPTVN1PROD with NOTICES
than 15% of its assets in securities rated
B or below by Moody’s, or equivalently
rated by S&P or Fitch. The Fund does
not intend to invest in unrated
securities. However, it may do so to a
limited extent, such as where a rated
security becomes unrated, if such
security is determined by the Adviser
and Sub-Adviser to be of comparable
quality. In determining whether a
security is of ‘‘comparable quality,’’ the
Adviser and Sub-Adviser will consider,
for example, whether the issuer of the
security has issued other rated
securities.
The Fund will invest only in
corporate bonds that the Adviser or SubAdviser deems to be sufficiently
liquid.13 The Fund will only buy
performing debt securities and not
distressed debt. 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
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 (1) 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), (2) such investment is deemed
by the Adviser or Sub-Adviser to be in
the best interest of the Fund, and (3)
such investment is deemed consistent
with the Fund’s goal of providing broad
13 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 first two quarters of 2011 ($490 billion)
represented a 36.4% increase compared to the first
two quarters of 2010 ($359 billion). This growth is
consistent with the 71% increase in volume for
calendar year 2010 ($879.45 billion) over 2009. The
$514 billion traded in 2009 represented a
substantial increase over the amount traded in 2008
($380 billion). Turnover in emerging market
corporate debt in the first two quarters of 2011 was
approximately 14.2% of the overall volume of
emerging market debt of $3.443 trillion. In 2010,
emerging market corporate bonds accounted for
16% of the total $6.765 trillion of emerging market
debt trading. This represents a meaningful increase
relative to calendar year 2009 where turnover in
emerging market corporate debt accounted for 12%
of the overall volume of emerging market debt
($4.445 trillion). These figures compared to only a
9% share in 2008. (Source: Emerging Markets
Traders Association Press Release(s), December 8,
2010, August 12, 2010, May 20, 2010, March 8,
2010, March 22, 2011, June 17, 2011 and August 22,
2011).
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exposure to a broad range of emerging
markets countries and issuers.
The Fund may invest in Corporate
and Quasi-Sovereign Debt with effective
or final maturities of any length.
According to the Registration Statement,
the Fund will seek to keep the average
effective duration of its portfolio
between 2 and 10 years under normal
market conditions. 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
Corporate and Quasi-Sovereign Debt 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 their respective agencies
and instrumentalities or governmentsponsored enterprises).14
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.
Under normal circumstances,15 the
Fund may invest up to 25% of its net
assets in Money Market Securities,
although it may exceed this amount
where the Adviser or Sub-Adviser
deems such investment to be necessary
or advisable, due to market conditions.
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 nonU.S. governments, agencies and
instrumentalities; repurchase
agreements backed by U.S. government
securities; money market mutual funds;
14 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 (Oct. 30, 1975), 40
FR 54241 (November 21, 1975).
15 See footnote 12, supra.
PO 00000
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3523
and deposit and other obligations of
U.S. and non-U.S. banks and financial
institutions. All Money Market
Securities acquired by the Fund will be
rated investment grade, except that the
Fund may invest in unrated Money
Market Securities that are deemed by
the Adviser or Sub-Adviser to be of
comparable quality to money market
securities rated investment grade.
Derivative Instruments and Other
Investments
The Fund may use derivative
instruments as part of its investment
strategies. Examples of derivative
instruments include forward currency
contracts,16 interest rate swaps,17 total
return swaps,18 credit linked notes,19
and combinations of investments that
provide similar exposure to local
currency debt, such as investment in
U.S. dollar denominated bonds
combined with forward currency
positions or swaps. If forward currency
and swaps positions are not being
implemented in combination with U.S.
dollar denominated bonds, the Fund’s
use of forward contracts and swaps will
be combined with investments in shortterm, high quality U.S. money market
instruments and will be designed to
provide exposure similar to investments
in local currency deposits.
The Fund expects that no more than
20% 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 corporate debt
or interest rates. The Fund also may buy
or sell listed currency futures
contracts.20
16 A forward currency contract is an agreement to
buy or sell a specific currency on a future date at
a price set at the time of the contract.
17 An interest rate swap involves the exchange of
a floating interest rate payment for a fixed interest
rate payment.
18 A total return swap is an agreement between
two parties in which one party agrees to make
payments of the total return of a reference asset in
return for payments equal to a rate of interest on
another reference asset.
19 A credit linked note is a type of structured note
whose value is linked to an underling reference
asset or entity. Credit linked notes typically provide
periodic payments of interest as well as payment of
principal upon maturity.
20 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
E:\FR\FM\24JAN1.SGM
Continued
24JAN1
3524
Federal Register / Vol. 77, No. 15 / Tuesday, January 24, 2012 / Notices
srobinson on DSK4SPTVN1PROD with NOTICES
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
interpretations thereof, will ‘‘set aside’’
liquid assets, or engage in other
measures to ‘‘cover’’ open positions
with respect to such transactions.21
The Fund may engage in foreign
currency transactions, and may invest
directly in foreign currencies in the
form of bank and financial institution
deposits, and certificates of deposit
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.22
The Fund may invest in the securities
of other investment companies
(including money market funds and
ETFs). The Fund may hold up to an
aggregate amount of 15% of its net
assets in (1) illiquid securities; (2) Rule
144A securities; and (3) loan interests
(such as loan participations and
assignments, but not including LPNs).
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.23
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.
21 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).
22 The Fund will invest only in currencies, and
instruments that provide exposure to such
currencies, that have significant foreign exchange
turnover and are included in the Bank for
International Settlements Triennial Central Bank
Survey, December 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.
23 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
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17:25 Jan 23, 2012
Jkt 226001
The Fund will not invest in any nonU.S. equity securities.
The Shares
The Fund will issue and redeem
Shares on a continuous basis at net asset
value (‘‘NAV’’ 24 only in large blocks of
Shares (‘‘Creation Units’’) in
transactions with Authorized
Participants. Creation Units generally
will 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
Corporate and Quasi-Sovereign Debt
and other instruments 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 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
(www.wisdomtree.com), which will be
publicly available prior to the public
offering of Shares, will include a form
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).
24 The NAV of the Fund’s Shares generally is
calculated once daily Monday through Friday as of
the close of regular trading on the New York Stock
Exchange, generally 4 p.m. Eastern time (‘‘NAV
Calculation Time’’). NAV per Share is 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 the Registration
Statement.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
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’’),25 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 Regular Market Session 26 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.27 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 and information
will be publicly available at no charge.
In addition, for the Fund, an
estimated value, defined in Rule 5735 as
the ‘‘Intraday Indicative Value,’’ that
reflects an estimated intraday value of
the Fund’s portfolio, will be
disseminated. Moreover, the Intraday
Indicative Value, available on the
NASDAQ OMX Information LLC
proprietary index data service,28 will be
25 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.
26 See Nasdaq Rule 4120(b)(4) (describing the
three trading sessions on the Exchange: (1) PreMarket Session from 7 a.m. to 9:30 a.m.; (2) Regular
Market Session from 9:30 a.m. to 4 p.m. or 4:15
p.m.; and (3) Post-Market Session from 4 p.m. or
4:15 p.m. to 8 p.m.).
27 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.
28 Currently, the NASDAQ OMX Global Index
Data Service (‘‘GIDS’’) is the NASDAQ OMX global
index data feed service, offering real-time updates,
daily summary messages, and access to widely
followed indexes and ETFs. GIDS provides
investment professionals with the daily and
historical information needed to track or trade
NASDAQ OMX indexes, listed ETFs or third-party
partner indexes and ETFs.
E:\FR\FM\24JAN1.SGM
24JAN1
Federal Register / Vol. 77, No. 15 / Tuesday, January 24, 2012 / Notices
srobinson on DSK4SPTVN1PROD with NOTICES
based upon the current value for the
components of the Disclosed Portfolio
and will be updated and widely
disseminated by one or more major
market data vendors at least every 15
seconds during the Regular Market
Session. In addition, during hours when
the markets for local debt in the Fund’s
portfolio are closed, the Intraday
Indicative Value will be updated at least
every 15 seconds during the Regular
Market Session to reflect currency
exchange fluctuations.
The dissemination of the Intraday
Indicative Value, 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.
Intra-day, executable price quotations
on emerging market Corporate and
Quasi-Sovereign Debt, as well as
derivative instruments are available
from major broker-dealer firms. Intraday 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 on GIDs,
which contains information for widely
followed indexes and ETFs.
Initial and Continued Listing
The Shares will be subject to Rule
5735, 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
Act.29 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.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
29 See
17 CFR 240.10A–3.
VerDate Mar<15>2010
17:25 Jan 23, 2012
Jkt 226001
halt or suspend trading in the Shares of
the Fund. Nasdaq will halt trading in
the Shares under the conditions
specified in Nasdaq Rules 4120 and
4121; for example, the Shares of the
Fund will be halted if the ‘‘circuit
breaker’’ parameters in Nasdaq Rule
4120(a)(11) 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 also will be subject to Rule
5735(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund may be halted.
Trading Rules
Nasdaq deems the Shares to be equity
securities, thus rendering trading in the
Shares subject to Nasdaq’s existing rules
governing the trading of equity
securities. Nasdaq will allow trading in
the Shares from 7 a.m. until 8 p.m. ET.
The Exchange has appropriate rules to
facilitate transactions in the Shares
during all trading sessions. As provided
in Nasdaq Rule 5735(b)(3), the
minimum price variation for quoting
and entry of orders in Managed Fund
Shares traded on the Exchange is $0.01.
Surveillance
Nasdaq believes that its surveillance
procedures are adequate to properly
monitor the trading of the Shares on
Nasdaq during all trading sessions and
to deter and detect violations of
Exchange rules and the applicable
federal securities laws. Trading of the
Shares through Nasdaq will be subject
to FINRA’s surveillance procedures for
derivative products, including Managed
Fund Shares.30 The Exchange may
obtain information via the Intermarket
Surveillance Group (‘‘ISG’’) from other
exchanges who are members or affiliates
of the ISG.31 The Exchange prohibits the
distribution of material non-public
information by its employees.
Information Circular
Prior to the commencement of
trading, the Exchange will inform its
members in an Information Circular of
30 FINRA surveils trading on Nasdaq pursuant to
a regulatory services agreement. Nasdaq is
responsible for FINRA’s performance under this
regulatory services agreement.
31 For a list of the current members and affiliate
members of ISG, see www.isgportal.com.
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
3525
the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Circular
will discuss the following: (1) The
procedures for purchases and
redemptions of Shares in Creation Units
(and that Shares are not individually
redeemable); (2) Nasdaq Rule 2310,
which imposes suitability obligations on
Nasdaq members with respect to
recommending transactions in the
Shares to customers; (3) how
information regarding the Intraday
Indicative Value is disseminated; (4) the
risks involved in trading the Shares
during the Pre-Market and Post-Market
Sessions when an updated Intraday
Indicative Value will not be calculated
or publicly disseminated; (5) the
requirement that members 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 Information Circular
will advise members, prior to the
commencement of trading, of the
prospectus delivery requirements
applicable to the Fund. Members
purchasing Shares from the Fund for
resale to investors will deliver a
prospectus to such investors. The
Information Circular will also discuss
any exemptive, no-action and
interpretive relief granted by the
Commission from any rules under the
Act.
In addition, the Information Circular
will reference that the Fund is subject
to various fees and expenses described
in the Registration Statement. The
Information Circular will also disclose
the trading hours of the Shares of the
Fund and the applicable NAV
Calculation Time for the Shares. The
Information Circular will disclose that
information about the Shares of the
Fund will be publicly available on the
Fund’s Web site. In addition, the
Information Circular will reference that
the Trust is subject to various fees and
expenses described in the Fund’s
Registration Statement.
2. Statutory Basis
Nasdaq believes that the proposal is
consistent with Section 6(b) of the Act 32
in general and Section 6(b)(5) of the
Act 33 in particular in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, and to remove
impediments to and perfect the
32 15
33 15
E:\FR\FM\24JAN1.SGM
U.S.C. 78f.
U.S.C. 78f(b)(5).
24JAN1
srobinson on DSK4SPTVN1PROD with NOTICES
3526
Federal Register / Vol. 77, No. 15 / Tuesday, January 24, 2012 / Notices
mechanism of a free and open market
and a national market system.
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 Nasdaq Rule 5735. The
Exchange believes that its surveillance
procedures are adequate to properly
monitor the trading of the Shares on
Nasdaq during all trading sessions and
to deter and detect violations of
Exchange rules and the applicable
federal securities laws. 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. The SubAdviser 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. 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. According to the
Registration Statement, the Fund
expects that it will have at least 80% of
its assets invested in Corporate and
Quasi-Sovereign Debt that are fixed
income securities. Under normal
circumstances, the Fund will invest at
least 80% of its assets in fixed income
securities. The Fund’s exposure to any
single issuer generally will be limited to
10% of the Fund’s assets. The Fund’s
exposure to any single country generally
will be limited to 30% of the Fund’s
assets. The Fund expects to have 65%
or more of its assets invested in
investment grade securities, though this
percentage may change from time to
time in response to economic events
and changes to the credit ratings of such
issuers. The Fund will not invest more
than 15% of its assets in securities rated
B or below by Moody’s, or equivalently
rated by S&P or Fitch. The Fund 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 intends to invest in Corporate
and Quasi-Sovereign Debt of at least 13
VerDate Mar<15>2010
17:25 Jan 23, 2012
Jkt 226001
non-affiliated issuers. The Fund expects
that no more than 20% 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. Under normal
circumstances, the Fund also may invest
up to 25% of its net assets in Money
Market Securities, although it may
exceed this amount where the Adviser
or Sub-Adviser deems such investment
to be necessary or advisable, due to
market conditions. Also, The Fund may
hold up to an aggregate amount of 15%
of its net assets in illiquid securities and
Rule 144A securities and loan interests
(such as loan participations and
assignments, but not including LPNs).
The Fund will not invest in any nonU.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 Intraday
Indicative Value, available on the GIDs
will be disseminated by one or more
major market data vendors at least every
15 seconds during the Regular Market
Session. On each business day, before
commencement of trading in Shares in
the Regular Market 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 for
the Shares will be available on the GIDs,
which contains information for the most
widely followed indexes and ETFs. 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. Trading in Shares of the
Fund will be halted if the circuit breaker
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
parameters in Nasdaq Rule 4120(a)(11)
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 Nasdaq
Rule 5735(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 Intraday 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 Intraday Indicative Value,
the Disclosed Portfolio, and quotation
and last sale information for the Shares.
For the above reasons, Nasdaq
believes the proposed rule change is
consistent with the requirements of
Section 6(b)(5) of the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq 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
Written comments were neither
solicited nor received.
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
E:\FR\FM\24JAN1.SGM
24JAN1
Federal Register / Vol. 77, No. 15 / Tuesday, January 24, 2012 / Notices
(ii) as to which the Exchange consents,
the Commission shall:
(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:
srobinson on DSK4SPTVN1PROD with NOTICES
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–NASDAQ–2012–004 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2012–004. 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
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
Nasdaq. 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–NASDAQ–2012–004 and
VerDate Mar<15>2010
17:25 Jan 23, 2012
Jkt 226001
should be submitted on or before
February 14, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–1285 Filed 1–23–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66177; File No. SR–CHX–
2012–02]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing of Proposed Rule Change To
Add to and Amend Its Rules Regarding
the Obligations of Institutional Brokers
Registered With the Exchange
January 18, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on January
6, 2012, the Chicago Stock Exchange,
Inc. (‘‘CHX’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CHX proposes to amend
Interpretation and Policy .02 to Article
17, Rule 1 regarding the registration of
Institutional Brokers, amend Article 17,
Rule 3 regarding the obligations of
Institutional Brokers, add Article 17,
Rule 6 regarding information barrier
procedures between Institutional Broker
and non-Institutional Broker units of the
same broker-dealer and make various
typographical and clarifying changes
throughout its rules. The text of this
proposed rule change is available on the
Exchange’s Web site at (www.chx.com)
and in the Commission’s Public
Reference Room.
34 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
3527
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
CHX included statements concerning
the purpose of and basis for the
proposed rule changes and discussed
any comments it received regarding the
proposal. The text of these statements
may be examined at the places specified
in Item IV below. The CHX has prepared
summaries, set forth in sections A, B
and C below, of the most significant
aspects 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 is proposing various
rule amendments and additions to
permit broker-dealers registered as
Institutional Brokers with the CHX to
operate a non-Institutional Broker unit
within the same Participant Firm. The
Exchange proposes to amend
Interpretation and Policy .02 to Article
17, Rule 1 (Registration and
Appointment of Institutional Brokers) to
clarify that an Institutional Broker
Representative (‘‘IBR’’) shall be
considered those individual persons
who accept orders, enter bids and offers
and execute transactions on behalf of an
Institutional Broker and are registered
with the Exchange as an IBR. Subject to
compliance with proposed new Rule 6
of Article 17, the amended
Interpretation and Policy provides that
the responsibilities and duties of
Institutional Brokers as provided for in
Article 17, Rule 3 (Obligations), Article
21, Rule 6 (Submission of Clearing
Information for Transactions Executed
Off-Exchange) and Article 9, Rule 14
(Reporting Riskless Principal
Transactions) would be limited to the
activities of individuals designated as
an IBR of firms registered as
Institutional Brokers, and clerks
assigned thereto. The amended
interpretation would specify that only
registered IBRs may act on behalf of
Institutional Brokers in making clearing
submissions pursuant to Article 21,
Rule 6, submitting Benchmark orders to
the Exchange pursuant to Article 20,
Rule 4.b.(2), or entering Riskless
Principal trading reports pursuant to
Article 9, Rule 14. The Exchange seeks
to amend Article 17, Rule 3(e) to clarify
the recordkeeping obligations owed by
Institutional Brokers. The Exchange
proposes to add Article 17, Rule 6
creating requirements for information
barrier procedures between Institutional
E:\FR\FM\24JAN1.SGM
24JAN1
]]>Agencies
[Federal Register Volume 77, Number 15 (Tuesday, January 24, 2012)]
[Notices]
[Pages 3520-3527]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-1285]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66175; File No. SR-NASDAQ-2012-004]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change Relating to the Listing and
Trading of Shares of the Emerging Markets Corporate Bond Fund of the
WisdomTree Trust
January 18, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 4, 2012, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
[[Page 3521]]
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Nasdaq. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes change [sic] to list and trade the shares of the
WisdomTree Emerging Markets Corporate Bond Fund (``Fund'') of the
WisdomTree Trust (``Trust'') under Nasdaq Rule 5735 (``Managed Fund
Shares''). The shares of the Fund are collectively referred to herein
as the ``Shares.'' The text of the proposed rule change is available at
https://nasdaq.cchwallstreet.com, at Nasdaq's principal office, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below and is set forth in Sections A, B, and C below.
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 Fund
under Nasdaq Rule 5735, 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 has filed a registration statement on Form N-1A
(``Registration Statement'') with the Commission.\4\
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\3\ The Commission approved Nasdaq Rule 5735 in Securities
Exchange Act Release No. 57962 (June 13, 2008) 73 FR 35175 (June 20,
2008) (SR-NASDAQ-2008-039). Although the Fund would be the first
actively-managed fund listed on the Exchange, the Commission has
previously approved the listing and trading of a number of actively
managed WisdomTree Investments funds on NYSE Arca, Inc. pursuant to
Rule 8.600 of that exchange. See, e.g., Securities Exchange Act
Release Nos. 57801 (May 8, 2008), 73 FR 27878 (May 14, 2008) (SR-
NYSEArca-2008-31) (order approving 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 listing and trading of WisdomTree Dreyfus Emerging
Currency Fund); 62604 (July 30, 2010), 75 FR 47323 (August 5, 2010)
(SR-NYSEArca-2010-49) (order approving listing and trading of
WisdomTree Emerging Markets Local Debt Fund); 62623 (August 2,
2010), 75 FR 47652 (August 6, 2010) (SR-NYSEArca-2010-51) (order
approving listing and trading of WisdomTree Dreyfus Commodity
Currency Fund); 63598 (December 22, 2010), 75 FR 82106 (December 29,
2010) (SR-NYSEArca-2010-98) (order approving listing and trading of
WisdomTree Managed Futures Strategy Fund); 63919 (February 16,
2011), 76 FR 10073 (February 23, 2011) (SR-NYSEArca-2010-116) (order
approving listing and trading of WisdomTree Asia Local Debt Fund);
64643 (June 10, 2011), 76 FR 35062 (June 15, 2011) (SR-NYSEArca-
2011-21) (order approving listing and trading of WisdomTree Global
Real Return Fund). The Exchange believes the proposed rule change
raises no significant issues not previously addressed in those prior
Commission orders.
\4\ See Post-Effective Amendment No. 56 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\ Western Asset
Management Company 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). In
compliance with NASDAQ Rule 5735(b)(5), 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).
---------------------------------------------------------------------------
Paragraph (g) of Rule 5735 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, paragraph
(g) 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. Rule 5735(g) is similar to
Nasdaq Rule 5705(b)(5)(A)(i), however, paragraph (g) 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, they will implement a fire wall with respect to such
broker-dealer regarding access to information concerning the
composition and/or changes to a portfolio, and will be subject to
procedures designed to prevent the use and dissemination of
[[Page 3522]]
material non-public information regarding such portfolio.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
WisdomTree Emerging Markets Corporate Bond Fund
According to the Registration Statement, the Fund seeks to provide
a high level of total return consisting of both income and capital
appreciation. To achieve its objective, the Fund will invest in debt
securities of corporations that are domiciled or economically tied to
emerging market countries.\9\
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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 5
years (i.e., per capita gross national product of less than U.S.
$9,385), (b) has not been a member of OECD for the past five years
or (c) classified by the World Bank as high income and a member in
OECD in each of the last five years, but with a currency that has
been primarily traded on a non-delivered basis by offshore investors
(e.g., Korea and Taiwan); and
(2) the country's debt market is considered relatively
accessible by foreign investors in terms of capital flow and
settlement considerations.
---------------------------------------------------------------------------
This definition could be expanded or exceptions made depending on the
evolution of market and economic conditions.
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.\10\ 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 (1)
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
(2) 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.
---------------------------------------------------------------------------
\10\ 26 U.S.C. 851.
---------------------------------------------------------------------------
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.
Corporate and Quasi-Sovereign Debt
The Fund intends to achieve its investment objectives through
direct and indirect investments in Corporate and Quasi-Sovereign Debt.
For these purposes, Corporate and Quasi-Sovereign Debt includes fixed-
income securities of emerging market countries, such as bonds, notes or
other debt obligations including loan participation notes
(``LPNs''),\11\ as well as other instruments, such as derivative
instruments collateralized by Money Market Securities as described
below. Quasi-Sovereign Debt, specifically, refers to fixed income
securities or debt obligations that are issued by companies or agencies
that may receive financial support or backing from the local government
(collectively, ``Quasi-Sovereign Institutions''). Under normal
circumstances,\12\ the Fund will invest at least 80% of its net assets
in Corporate and Quasi-Sovereign Debt that are fixed income securities.
---------------------------------------------------------------------------
\11\ The Fund may invest in LPNs with a minimum outstanding
principal amount of $200 million that the Adviser or Sub-Adviser
deems to be liquid. The Adviser represents that LPNs denominated in
U.S. dollars are the predominant form of corporate debt financing in
certain emerging markets, particularly in Russia, where they
constitute approximately 70% of the corporate debt market
(approximately $40 billion outstanding). In aggregate, LPNs
represented over 11% of the JP Morgan Emerging Markets Corporate
Bond Index as of November 30, 2011. LPNs are highly liquid
instruments that are typically eligible for settlement at
Eurcoclear, Clearstream, or in the U.S., through DTC. Moreover,
intra-day quotations in LPNs are generally available from major
broker-dealers and data vendors, such as Bloomberg.
\12\ The term ``under normal circumstances'' includes, but is
not limited to, the absence of extreme volatility or trading halts
in the fixed income markets or the financial markets generally;
operational issues causing dissemination of inaccurate market
information; or force majeure type events such as systems failure,
natural or man-made disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption or any similar intervening
circumstance.
---------------------------------------------------------------------------
Under normal circumstances, the Fund will invest at least 80% of
its assets in fixed income securities. Fixed income securities include
debt instruments, such as bonds, notes and other obligations,
denominated in U.S. dollars or local currencies. Fixed income
securities include Money Market Securities as defined below. Fixed
income securities do not include derivatives.
The Fund intends to provide exposure across several geographic
regions and countries. The Fund intends to invest in Corporate and
Quasi-Sovereign Debt from 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: Argentina, Brazil,
Chile, China, Colombia, Hong Kong, India, Indonesia, Israel, Jamaica,
Kazakhstan, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia,
Singapore, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand,
Trinidad & Tobago, Turkey, Ukraine and the United Arab Emirates. This
list may change, based on market developments. The Fund's credit
exposures are consistently monitored from a risk perspective, and may
be modified, reduced, or eliminated. The Fund's exposure to any single
issuer generally will be limited to 10% of the Fund's assets. The
percentage of the Fund's assets in a specific region, country or issuer
will change from time to time. The Fund's exposure to any one country
generally will be limited to 30% of the Fund's assets though this
percentage may change from time to time in response to economic events
and changes to the credit ratings of the Corporate and Quasi-Sovereign
Debt of such countries.
The universe of emerging market Corporate and Quasi-Sovereign Debt
currently includes securities that are rated ``investment grade'' as
well as ``non-investment grade.'' The Fund intends to provide a broad
exposure to emerging market Corporate and Quasi-Sovereign Debt and
therefore will invest in both investment grade and non-investment grade
securities. The Fund expects to have 65% or more of its assets invested
in investment grade securities, though this percentage may 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
[[Page 3523]]
than 15% of its assets in securities rated B or below by Moody's, or
equivalently rated by S&P or Fitch. The Fund does not intend to invest
in unrated securities. However, it may do so to a limited extent, such
as where a rated security becomes unrated, if such security is
determined by the Adviser and Sub-Adviser to be of comparable quality.
In determining whether a security is of ``comparable quality,'' the
Adviser and Sub-Adviser will consider, for example, whether the issuer
of the security has issued other rated securities.
The Fund will invest only in corporate bonds that the Adviser or
Sub-Adviser deems to be sufficiently liquid.\13\ The Fund will only buy
performing debt securities and not distressed debt. 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 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 (1) 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), (2) such
investment is deemed by the Adviser or Sub-Adviser to be in the best
interest of the Fund, and (3) such investment is deemed consistent with
the Fund's goal of providing broad exposure to a broad range of
emerging markets countries and issuers.
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\13\ 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 first two
quarters of 2011 ($490 billion) represented a 36.4% increase
compared to the first two quarters of 2010 ($359 billion). This
growth is consistent with the 71% increase in volume for calendar
year 2010 ($879.45 billion) over 2009. The $514 billion traded in
2009 represented a substantial increase over the amount traded in
2008 ($380 billion). Turnover in emerging market corporate debt in
the first two quarters of 2011 was approximately 14.2% of the
overall volume of emerging market debt of $3.443 trillion. In 2010,
emerging market corporate bonds accounted for 16% of the total
$6.765 trillion of emerging market debt trading. This represents a
meaningful increase relative to calendar year 2009 where turnover in
emerging market corporate debt accounted for 12% of the overall
volume of emerging market debt ($4.445 trillion). These figures
compared to only a 9% share in 2008. (Source: Emerging Markets
Traders Association Press Release(s), December 8, 2010, August 12,
2010, May 20, 2010, March 8, 2010, March 22, 2011, June 17, 2011 and
August 22, 2011).
---------------------------------------------------------------------------
The Fund may invest in Corporate and Quasi-Sovereign Debt with
effective or final maturities of any length. According to the
Registration Statement, the Fund will seek to keep the average
effective duration of its portfolio between 2 and 10 years under normal
market conditions. 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 Corporate and Quasi-Sovereign Debt 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 their respective agencies
and instrumentalities or government-sponsored enterprises).\14\
---------------------------------------------------------------------------
\14\ 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 (Oct. 30, 1975), 40 FR 54241
(November 21, 1975).
---------------------------------------------------------------------------
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. Under normal circumstances,\15\ the Fund may
invest up to 25% of its net assets in Money Market Securities, although
it may exceed this amount where the Adviser or Sub-Adviser deems such
investment to be necessary or advisable, due to market conditions. For
these purposes ``Money Market Securities'' include: short-term, high
quality obligations issued or guaranteed by the U.S. Treasury or the
agencies or instrumentalities of the U.S. government; short-term, high
quality securities issued or guaranteed by non-U.S. governments,
agencies and instrumentalities; repurchase agreements backed by U.S.
government securities; money market mutual funds; and deposit and other
obligations of U.S. and non-U.S. banks and financial institutions. All
Money Market Securities acquired by the Fund will be rated investment
grade, except that the Fund may invest in unrated Money Market
Securities that are deemed by the Adviser or Sub-Adviser to be of
comparable quality to money market securities rated investment grade.
---------------------------------------------------------------------------
\15\ See footnote 12, supra.
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Derivative Instruments and Other Investments
The Fund may use derivative instruments as part of its investment
strategies. Examples of derivative instruments include forward currency
contracts,\16\ interest rate swaps,\17\ total return swaps,\18\ credit
linked notes,\19\ and combinations of investments that provide similar
exposure to local currency debt, such as investment in U.S. dollar
denominated bonds combined with forward currency positions or swaps. If
forward currency and swaps positions are not being implemented in
combination with U.S. dollar denominated bonds, the Fund's use of
forward contracts and swaps will be combined with investments in short-
term, high quality U.S. money market instruments and will be designed
to provide exposure similar to investments in local currency deposits.
---------------------------------------------------------------------------
\16\ A forward currency contract is an agreement to buy or sell
a specific currency on a future date at a price set at the time of
the contract.
\17\ An interest rate swap involves the exchange of a floating
interest rate payment for a fixed interest rate payment.
\18\ A total return swap is an agreement between two parties in
which one party agrees to make payments of the total return of a
reference asset in return for payments equal to a rate of interest
on another reference asset.
\19\ A credit linked note is a type of structured note whose
value is linked to an underling reference asset or entity. Credit
linked notes typically provide periodic payments of interest as well
as payment of principal upon maturity.
---------------------------------------------------------------------------
The Fund expects that no more than 20% 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 corporate debt or interest rates.
The Fund also may buy or sell listed currency futures contracts.\20\
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\20\ 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.
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[[Page 3524]]
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
interpretations thereof, will ``set aside'' liquid assets, or engage in
other measures to ``cover'' open positions with respect to such
transactions.\21\
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\21\ 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).
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The Fund may engage in foreign currency transactions, and may
invest directly in foreign currencies in the form of bank and financial
institution deposits, and certificates of deposit 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.\22\
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\22\ The Fund will invest only in currencies, and instruments
that provide exposure to such currencies, that have significant
foreign exchange turnover and are included in the Bank for
International Settlements Triennial Central Bank Survey, December
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 hold up to an
aggregate amount of 15% of its net assets in (1) illiquid securities;
(2) Rule 144A securities; and (3) loan interests (such as loan
participations and assignments, but not including LPNs). 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.\23\
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\23\ 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'' \24\ only in large blocks of Shares (``Creation
Units'') in transactions with Authorized Participants. Creation Units
generally will 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 Corporate and Quasi-Sovereign Debt and
other instruments 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 trade on the secondary market in
amounts less than a Creation Unit.
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\24\ The NAV of the Fund's Shares generally is calculated once
daily Monday through Friday as of the close of regular trading on
the New York Stock Exchange, generally 4 p.m. Eastern time (``NAV
Calculation Time''). NAV per Share is 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 the 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 (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''),\25\ 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 Regular Market Session
\26\ 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.\27\ 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 and information will be publicly available at
no charge.
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\25\ 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.
\26\ See Nasdaq Rule 4120(b)(4) (describing the three trading
sessions on the Exchange: (1) Pre-Market Session from 7 a.m. to 9:30
a.m.; (2) Regular Market Session from 9:30 a.m. to 4 p.m. or 4:15
p.m.; and (3) Post-Market Session from 4 p.m. or 4:15 p.m. to 8
p.m.).
\27\ 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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In addition, for the Fund, an estimated value, defined in Rule 5735
as the ``Intraday Indicative Value,'' that reflects an estimated
intraday value of the Fund's portfolio, will be disseminated. Moreover,
the Intraday Indicative Value, available on the NASDAQ OMX Information
LLC proprietary index data service,\28\ will be
[[Page 3525]]
based upon the current value for the components of the Disclosed
Portfolio and will be updated and widely disseminated by one or more
major market data vendors at least every 15 seconds during the Regular
Market Session. In addition, during hours when the markets for local
debt in the Fund's portfolio are closed, the Intraday Indicative Value
will be updated at least every 15 seconds during the Regular Market
Session to reflect currency exchange fluctuations.
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\28\ Currently, the NASDAQ OMX Global Index Data Service
(``GIDS'') is the NASDAQ OMX global index data feed service,
offering real-time updates, daily summary messages, and access to
widely followed indexes and ETFs. GIDS provides investment
professionals with the daily and historical information needed to
track or trade NASDAQ OMX indexes, listed ETFs or third-party
partner indexes and ETFs.
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The dissemination of the Intraday Indicative Value, 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.
Intra-day, executable price quotations on emerging market Corporate
and Quasi-Sovereign Debt, as well as 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 on
GIDs, which contains information for widely followed indexes and ETFs.
Initial and Continued Listing
The Shares will be subject to Rule 5735, 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
Act.\29\ 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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\29\ 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. Nasdaq will halt trading in the
Shares under the conditions specified in Nasdaq Rules 4120 and 4121;
for example, the Shares of the Fund will be halted if the ``circuit
breaker'' parameters in Nasdaq Rule 4120(a)(11) 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 also will be subject to Rule
5735(d)(2)(D), which sets forth circumstances under which Shares of the
Fund may be halted.
Trading Rules
Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. Nasdaq will allow trading in the Shares
from 7 a.m. until 8 p.m. ET. The Exchange has appropriate rules to
facilitate transactions in the Shares during all trading sessions. As
provided in Nasdaq Rule 5735(b)(3), the minimum price variation for
quoting and entry of orders in Managed Fund Shares traded on the
Exchange is $0.01.
Surveillance
Nasdaq believes that its surveillance procedures are adequate to
properly monitor the trading of the Shares on Nasdaq during all trading
sessions and to deter and detect violations of Exchange rules and the
applicable federal securities laws. Trading of the Shares through
Nasdaq will be subject to FINRA's surveillance procedures for
derivative products, including Managed Fund Shares.\30\ The Exchange
may obtain information via the Intermarket Surveillance Group (``ISG'')
from other exchanges who are members or affiliates of the ISG.\31\ The
Exchange prohibits the distribution of material non-public information
by its employees.
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\30\ FINRA surveils trading on Nasdaq pursuant to a regulatory
services agreement. Nasdaq is responsible for FINRA's performance
under this regulatory services agreement.
\31\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com.
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Information Circular
Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) The procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (2) Nasdaq Rule 2310, which imposes
suitability obligations on Nasdaq members with respect to recommending
transactions in the Shares to customers; (3) how information regarding
the Intraday Indicative Value is disseminated; (4) the risks involved
in trading the Shares during the Pre-Market and Post-Market Sessions
when an updated Intraday Indicative Value will not be calculated or
publicly disseminated; (5) the requirement that members 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 Information Circular will advise members, prior to
the commencement of trading, of the prospectus delivery requirements
applicable to the Fund. Members purchasing Shares from the Fund for
resale to investors will deliver a prospectus to such investors. The
Information Circular will also discuss any exemptive, no-action and
interpretive relief granted by the Commission from any rules under the
Act.
In addition, the Information Circular will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Circular will also disclose the trading
hours of the Shares of the Fund and the applicable NAV Calculation Time
for the Shares. The Information Circular will disclose that information
about the Shares of the Fund will be publicly available on the Fund's
Web site. In addition, the Information Circular will reference that the
Trust is subject to various fees and expenses described in the Fund's
Registration Statement.
2. Statutory Basis
Nasdaq believes that the proposal is consistent with Section 6(b)
of the Act \32\ in general and Section 6(b)(5) of the Act \33\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the
[[Page 3526]]
mechanism of a free and open market and a national market system.
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\32\ 15 U.S.C. 78f.
\33\ 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 Nasdaq Rule 5735. The
Exchange believes that its surveillance procedures are adequate to
properly monitor the trading of the Shares on Nasdaq during all trading
sessions and to deter and detect violations of Exchange rules and the
applicable federal securities laws. 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. 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. 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. According to the
Registration Statement, the Fund expects that it will have at least 80%
of its assets invested in Corporate and Quasi-Sovereign Debt that are
fixed income securities. Under normal circumstances, the Fund will
invest at least 80% of its assets in fixed income securities. The
Fund's exposure to any single issuer generally will be limited to 10%
of the Fund's assets. The Fund's exposure to any single country
generally will be limited to 30% of the Fund's assets. The Fund expects
to have 65% or more of its assets invested in investment grade
securities, though this percentage may change from time to time in
response to economic events and changes to the credit ratings of such
issuers. The Fund will not invest more than 15% of its assets in
securities rated B or below by Moody's, or equivalently rated by S&P or
Fitch. The Fund 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 intends to invest in Corporate and Quasi-Sovereign
Debt of at least 13 non-affiliated issuers. The Fund expects that no
more than 20% 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. Under normal circumstances, the Fund also may invest
up to 25% of its net assets in Money Market Securities, although it may
exceed this amount where the Adviser or Sub-Adviser deems such
investment to be necessary or advisable, due to market conditions.
Also, The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid securities and Rule 144A securities and loan
interests (such as loan participations and assignments, but not
including LPNs). 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 Intraday Indicative Value, available on
the GIDs will be disseminated by one or more major market data vendors
at least every 15 seconds during the Regular Market Session. On each
business day, before commencement of trading in Shares in the Regular
Market 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 for the Shares will be available on the GIDs,
which contains information for the most widely followed indexes and
ETFs. 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. Trading in Shares of the Fund will be halted
if the circuit breaker parameters in Nasdaq Rule 4120(a)(11) 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 Nasdaq Rule 5735(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 Intraday 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 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 Intraday Indicative Value, the Disclosed Portfolio, and quotation
and last sale information for the Shares.
For the above reasons, Nasdaq believes the proposed rule change is
consistent with the requirements of Section 6(b)(5) of the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq 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
Written comments were neither solicited nor received.
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
[[Page 3527]]
(ii) as to which the Exchange consents, the Commission shall:
(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:
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-NASDAQ-2012-004 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2012-004. 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 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 Nasdaq. 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-NASDAQ-2012-004 and should
be submitted on or before February 14, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-1285 Filed 1-23-12; 8:45 am]
BILLING CODE 8011-01-P
