Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Peritus High Yield ETF, 24233-24236 [2012-9663]
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[FR Doc. 2012–9758 Filed 4–20–12; 8:45 am]
[FR Doc. 2012–9631 Filed 4–20–12; 8:45 am]
BILLING CODE 6325–39–P
BILLING CODE P
RAILROAD RETIREMENT BOARD
SECURITIES AND EXCHANGE
COMMISSION
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Actuarial Advisory Committee With
Respect to the Railroad Retirement
Account; Notice of Public Meeting
Notice is hereby given in accordance
with Public Law 92–463 that the
Actuarial Advisory Committee will hold
a meeting on May 30, 2012, at 9:30 a.m.
at the office of the Chief Actuary of the
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the conduct of the 25th Actuarial
Valuation of the Railroad Retirement
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will include a discussion of the results
and presentation of the 25th Actuarial
Valuation. The text and tables which
constitute the Valuation will have been
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public. Persons wishing to submit
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Authorization No.
24233
Jkt 226001
[Release No. 34–66818; File No. SR–
NYSEArca–2012–33]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to the Peritus
High Yield ETF
April 17, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that,
on April 10, 2012, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to reflect a
change to the holdings of the Peritus
High Yield ETF to achieve its
investment objective to include equity
securities. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Commission has approved a
proposal to list and trade on the
Exchange shares (‘‘Shares’’) of the
Peritus High Yield ETF (‘‘Fund’’) under
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Federal Register / Vol. 77, No. 78 / Monday, April 23, 2012 / Notices
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NYSE Arca Equities Rule 8.600,3 which
governs the listing and trading of
Managed Fund Shares.4 The Shares are
offered by AdvisorShares Trust
(‘‘Trust’’), a statutory trust organized
under the laws of the State of Delaware
and registered with the Commission as
an open-end management investment
company.5 The Fund is currently listed
and traded on the Exchange under
NYSE Arca Equities Rule 8.600.
The investment adviser to the Fund is
AdvisorShares Investments, LLC
(‘‘Adviser’’). Peritus I Asset
Management, LLC is the Fund’s subadviser (‘‘Sub-Adviser’’).
According to the Registration
Statement and as stated in the Prior
Release, the Fund’s investment objective
is to achieve high current income with
a secondary goal of capital appreciation.
The Sub-Adviser seeks to achieve the
Fund’s investment objective by
selecting, among other investments, a
focused portfolio of high yield debt
securities, which include senior and
subordinated corporate debt obligations
(such as bonds, debentures, notes, and
commercial paper). The Fund does not
have any portfolio maturity limitation
and may invest its assets from time to
time primarily in instruments with
short-term, medium-term, or long-term
maturities. The Adviser represents that
the investment objective of the Fund is
not changing.
3 See Securities Exchange Act Release No. 63329
(November 17, 2010), 75 FR 71760 (November 24,
2010) (SR–NYSEArca–2010–86) (‘‘Prior Order’’).
The notice with respect to the Prior Order was
published in Securities Exchange Act Release No.
63041 (October 5, 2010), 75 FR 62905 (October 13,
2010) (‘‘Prior Notice’’ and, together with the Prior
Order, ‘‘Prior Release’’).
4 A Managed Fund Share is a security that
represents an interest in an investment company
registered under the Investment Company Act of
1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as
an open-end investment company or similar entity
that invests in a portfolio of securities selected by
its investment adviser consistent with its
investment objectives and policies. In contrast, an
open-end investment company that issues
Investment Company Units, listed and traded on
the Exchange under NYSE Arca Equities Rule
5.2(j)(3), seeks to provide investment results that
correspond generally to the price and yield
performance of a specific foreign or domestic stock
index, fixed income securities index or combination
thereof.
5 The Trust is registered under the 1940 Act. On
October 28, 2011, the Trust filed with the
Commission an amendment to its registration
statement on Form N–1A under the Securities Act
of 1933 (15 U.S.C. 77a) and the 1940 Act relating
to the Fund (File Nos. 333–157876 and 811–22110)
(‘‘Registration Statement’’). The description of the
operation of the Trust and the Fund herein is based,
in part, on the Registration Statement. In addition,
the Commission has issued an order granting
certain exemptive relief to the Trust under the 1940
Act. See Investment Company Act Release No.
29291 (May 28, 2010) (File No. 812–13677)
(‘‘Exemptive Order’’).
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15:11 Apr 20, 2012
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The Exchange proposes to reflect a
change to the holdings of the Fund to
achieve its investment objective to
include equity securities. Thus, in
addition to the investments referenced
in the Prior Release, the Fund seeks to
invest to a lesser extent (generally, no
more than 10% of its net assets) in
equity securities that the Sub-Adviser
believes will yield high dividends.6
According to the Registration Statement,
equity securities in which the Fund may
invest will include common stock,
preferred stock, warrants, convertible
securities, rights, master limited
partnerships, depositary receipts
(including American Depositary
Receipts (‘‘ADRs’’) and Global
Depositary Receipts (‘‘GDRs’’)),7 and
real estate investment trusts. Depositary
receipts held by the Fund may be
sponsored or unsponsored, provided
that no more than 10% of the Fund’s net
assets will be invested in unsponsored
depositary receipts. With the exception
of unsponsored depositary receipts, all
equity securities held by the Fund will
be listed and traded on U.S. national
securities exchanges.
Pursuant to the terms of the
Exemptive Order, the Fund will not
invest in options contracts, futures
contracts, or swap agreements. The
Fund’s investments will be consistent
with its investment objective and will
not be used to enhance leverage.
As stated in the Prior Release, on each
business day, before commencement of
trading in Shares in the Core Trading
Session on the Exchange, the Fund
discloses on its Web site the Disclosed
Portfolio, which will include
information relating to equity securities,
among other investments, that will form
the basis for the Fund’s calculation of
net asset value (‘‘NAV’’) at the end of
the business day. The intra-day, closing,
and settlement prices of the portfolio
securities, including any equity
securities held by the Fund, are also
readily available from the national
securities exchanges trading such
securities, automated quotation systems,
6 The change to the Fund’s holdings to include
equity securities will be effective upon filing with
the Commission of an amendment to the Trust’s
Registration Statement on Form N–1A, and
shareholders will be notified of such change by
means of such amendment.
7 According to the Registration Statement, ADRs
and GDRs are certificates evidencing ownership of
shares of a foreign issuer. These certificates are
issued by depositary banks and generally trade on
an established market in the United States or
elsewhere. The underlying shares are held in trust
by a custodian bank or similar financial institution
in the issuer’s home country. The depositary bank
may not have physical custody of the underlying
securities at all times and may charge fees for
various services, including forwarding dividends
and interest and corporate actions.
PO 00000
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published or other public sources, or
on-line information services. All
representations made in the Prior
Release regarding the availability of
information relating to the Shares,
trading halts, trading rules, the Portfolio
Indicative Value, and surveillance,
among others, will continue to apply to
trading in the Shares.
The Adviser represents that the
proposed change to permit limited
investment in equity securities, as
described above, is consistent with the
Fund’s investment objective, and will
further assist the Adviser and SubAdviser to achieve such investment
objective. Specifically, by investing to a
limited extent in equity securities, the
Fund will have additional flexibility to
achieve high current income through
investments in dividend-paying equity
securities, and to achieve the secondary
goal of capital appreciation through
possible price appreciation of such
equity investments. Except for the
change noted above, all other
representations made in the Prior
Release remain unchanged.8 The Fund
will continue to comply with all initial
and continued listing requirements
under NYSE Arca Equities Rule 8.600.
2. Statutory Basis
The basis under the Exchange Act for
this proposed rule change is the
requirement under Section 6(b)(5) 9 that
an exchange have rules that are
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to, and
perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices in that the Shares will
be listed and traded on the Exchange
pursuant to the initial and continued
listing criteria in NYSE Arca Equities
Rule 8.600. The Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws. The Exchange may obtain
information via the Intermarket
Surveillance Group (‘‘ISG’’) from other
exchanges that are members of ISG or
with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. No more than 10%
of the Fund’s net assets will be invested
8 See note 3, supra. All terms referenced but not
defined herein are defined in the Prior Release.
9 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 77, No. 78 / Monday, April 23, 2012 / Notices
in unsponsored depositary receipts.
With the exception of unsponsored
depositary receipts, all equity securities
held by the Fund will be listed and
traded on U.S. national securities
exchanges.
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 NAV per
Share is calculated daily and that the
NAV and the Disclosed Portfolio is
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 Portfolio
Indicative Value, as defined in NYSE
Arca Equities Rule 8.600 (c)(3), is
disseminated by one or more major
market data vendors at least every 15
seconds during the Exchange’s Core
Trading Session. On each business day,
before commencement of trading in
Shares in the Core Trading Session on
the Exchange, the Fund discloses 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 is
available via the Consolidated Tape
Association high-speed line. The intraday, closing, and settlement prices of
the portfolio securities, including any
equity securities held by the Fund, are
also readily available from the national
securities exchanges trading such
securities, automated quotation systems,
published or other public sources, or
on-line information services. Trading in
Shares of the Fund will be halted if the
circuit breaker parameters in NYSE Arca
Equities Rule 7.12 have been reached or
because of market conditions or for
reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable. Trading in the Shares is
subject to NYSE Arca Equities Rule
8.600(d)(2)(D), which sets forth
circumstances under which Shares of
the Fund may be halted. The Web site
for the Fund includes a form of the
prospectus for the Fund and additional
data relating to NAV and other
applicable quantitative information. In
addition, as stated in the Prior Notice,
investors have ready access to
information regarding the Fund’s
holdings, the Portfolio Indicative Value,
the Disclosed Portfolio, and quotation
and last-sale information for the Shares.
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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. 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 stated
in the Prior Notice, investors have ready
access to information regarding the
Fund’s holdings, the Portfolio Indicative
Value, the Disclosed Portfolio, and
quotation and last-sale information for
the Shares.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6) thereunder.11 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
11 17
PO 00000
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24235
to Rule 19b–4(f)(6)(iii),12 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission notes that
waiver of the operative delay would
permit the Fund to invest immediately
in equity securities that the Sub-Adviser
believes will yield high dividends.13
With the exception of unsponsored
depositary receipts in which the Fund
may invest up to 10% of its net assets,
all equity securities proposed to be held
by the Fund would be listed and traded
on U.S. national securities exchanges. In
addition, the Fund will generally not
invest more than 10% of its net assets
in such equity securities. The Exchange
represents that the limited investments
in equity securities would be consistent
with the Fund’s investment objective,
which is to achieve high current income
and capital appreciation. Specifically,
the Exchange represents that, by
investing to a limited extent in equity
securities, the Fund would have
additional flexibility to achieve high
current income through investments in
dividend-paying equity securities and to
achieve capital appreciation through
possible price appreciation of such
equity investments. Further, the
Exchange represents that such
investment objective is not changing, all
other representations made in the Prior
Release remain unchanged, and the
Fund will continue to comply with all
of the listing requirements under NYSE
Arca Equities Rule 8.600. For the
foregoing reasons, the Commission
believes that the proposed change does
not raise novel or unique regulatory
issues that should delay the
implementation of the Fund’s proposed
investments in certain equity securities.
Therefore, the Commission waives the
30-day operative delay requirement
because the rule change is consistent
with the protection of investors and the
public interest.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
12 17
CFR 240.19b–4(f)(6)(iii).
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
13 For
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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:
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2012–33 on the
subject line.
Paper Comments
rmajette on DSK2TPTVN1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2012–33. 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 the
Exchange. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca–2012–33 and should be
submitted on or before May 14, 2012.
15:11 Apr 20, 2012
[FR Doc. 2012–9663 Filed 4–20–12; 8:45 am]
Jkt 226001
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Kevin M. O’Neill,
Deputy Secretary.
[Release No. 34–66820; File No. SR–
NYSEAmex–2012–22]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing of
Proposed Rule Change Amending
NYSE Amex Equities Rule 107B To
Add a Class of Supplemental Liquidity
Providers That Are Registered as
Market Makers at the Exchange
April 17, 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 April 4,
2012, NYSE Amex LLC (‘‘NYSE Amex’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
NYSE Amex Equities Rule 107B to add
a class of Supplemental Liquidity
Providers (‘‘SLP’’) that are registered as
market makers at the Exchange. The text
of the proposed rule change is available
at the Exchange, the Commission’s
Public Reference Room, and
www.nyse.com.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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1. Purpose
The Exchange proposes to amend
NYSE Amex Equities Rule 107B (‘‘Rule
107B’’), which currently operates on a
pilot basis, to add a class of SLPs that
are registered as market makers at the
Exchange.
Background
Rule 107B, which was adopted as a
pilot program in January 2010,
established a new class of off-Floor
market participants referred to as
Supplemental Liquidity Providers or
‘‘SLPs.’’ 3 Approved Exchange member
organizations are eligible to be an SLP.
SLPs supplement the liquidity provided
by Designated Market Makers (‘‘DMM’’).
SLPs have monthly quoting
requirements that may qualify them to
receive SLP rebates, which are larger
than the general rebate available to nonSLP market participants.
The goal of the SLP program is to
encourage participants to quote more
often and to add displayed liquidity to
the market. Thus, Rule 107B(a) requires
that an SLP maintain a bid and/or an
offer at the NBB or NBO averaging at
least 5% of the trading day for each
assigned security. Meeting this quoting
requirement will enable an SLP to
receive the basic SLP rebate (currently
$0.0032 per executed share) on securityby-security basis and to maintain their
SLP status.4
To qualify as an SLP under Rule
107B(c), a member organization is
subject to a number of conditions,
including adequate trading
infrastructure to support SLP trading
activity, quoting and volume
performance that demonstrates an
ability to meet the 5% average quoting
requirement, and use of specified SLP
mnemonics. In addition, the business
unit of the member organization acting
as an SLP must enter proprietary orders
only and have adequate information
barriers between the SLP unit and any
member organization’s customer,
3 See Securities Exchange Act Release No. 61308
(January 7, 2010), 75 FR 2573 (January 5, 2010) (SR–
NYSEAmex–2009–98) (establishing pilot program
for market participants referred to as
‘‘Supplemental Liquidity Providers’’ or ‘‘SLPs.’’),
which is based on the SLP program of the New York
Stock Exchange, LLC (‘‘NYSE’’). The pilot is
currently scheduled to end on July 31, 2012.
4 The Exchange may, from time to time, change
the amounts of the scaled SLP rebates by filing a
proposed rule change under Rule 19b–4(f)(2) of the
Act. 17 CFR 240.19b–4(f)(2).
E:\FR\FM\23APN1.SGM
23APN1
]]>Agencies
[Federal Register Volume 77, Number 78 (Monday, April 23, 2012)]
[Notices]
[Pages 24233-24236]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-9663]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66818; File No. SR-NYSEArca-2012-33]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to the
Peritus High Yield ETF
April 17, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that, on April 10, 2012, NYSE Arca, Inc. (``Exchange''
or ``NYSE Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to reflect a change to the holdings of the
Peritus High Yield ETF to achieve its investment objective to include
equity securities. The text of the proposed rule change is available at
the Exchange, the Commission's Public Reference Room, and www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission has approved a proposal to list and trade on the
Exchange shares (``Shares'') of the Peritus High Yield ETF (``Fund'')
under
[[Page 24234]]
NYSE Arca Equities Rule 8.600,\3\ which governs the listing and trading
of Managed Fund Shares.\4\ The Shares are offered by AdvisorShares
Trust (``Trust''), a statutory trust organized under the laws of the
State of Delaware and registered with the Commission as an open-end
management investment company.\5\ The Fund is currently listed and
traded on the Exchange under NYSE Arca Equities Rule 8.600.
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\3\ See Securities Exchange Act Release No. 63329 (November 17,
2010), 75 FR 71760 (November 24, 2010) (SR-NYSEArca-2010-86)
(``Prior Order''). The notice with respect to the Prior Order was
published in Securities Exchange Act Release No. 63041 (October 5,
2010), 75 FR 62905 (October 13, 2010) (``Prior Notice'' and,
together with the Prior Order, ``Prior Release'').
\4\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') organized as an
open-end investment company or similar entity that invests in a
portfolio of securities selected by its investment adviser
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Investment Company Units,
listed and traded on the Exchange under NYSE Arca Equities Rule
5.2(j)(3), seeks to provide investment results that correspond
generally to the price and yield performance of a specific foreign
or domestic stock index, fixed income securities index or
combination thereof.
\5\ The Trust is registered under the 1940 Act. On October 28,
2011, the Trust filed with the Commission an amendment to its
registration statement on Form N-1A under the Securities Act of 1933
(15 U.S.C. 77a) and the 1940 Act relating to the Fund (File Nos.
333-157876 and 811-22110) (``Registration Statement''). The
description of the operation of the Trust and the Fund herein is
based, in part, on the Registration Statement. In addition, the
Commission has issued an order granting certain exemptive relief to
the Trust under the 1940 Act. See Investment Company Act Release No.
29291 (May 28, 2010) (File No. 812-13677) (``Exemptive Order'').
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The investment adviser to the Fund is AdvisorShares Investments,
LLC (``Adviser''). Peritus I Asset Management, LLC is the Fund's sub-
adviser (``Sub-Adviser'').
According to the Registration Statement and as stated in the Prior
Release, the Fund's investment objective is to achieve high current
income with a secondary goal of capital appreciation. The Sub-Adviser
seeks to achieve the Fund's investment objective by selecting, among
other investments, a focused portfolio of high yield debt securities,
which include senior and subordinated corporate debt obligations (such
as bonds, debentures, notes, and commercial paper). The Fund does not
have any portfolio maturity limitation and may invest its assets from
time to time primarily in instruments with short-term, medium-term, or
long-term maturities. The Adviser represents that the investment
objective of the Fund is not changing.
The Exchange proposes to reflect a change to the holdings of the
Fund to achieve its investment objective to include equity securities.
Thus, in addition to the investments referenced in the Prior Release,
the Fund seeks to invest to a lesser extent (generally, no more than
10% of its net assets) in equity securities that the Sub-Adviser
believes will yield high dividends.\6\ According to the Registration
Statement, equity securities in which the Fund may invest will include
common stock, preferred stock, warrants, convertible securities,
rights, master limited partnerships, depositary receipts (including
American Depositary Receipts (``ADRs'') and Global Depositary Receipts
(``GDRs'')),\7\ and real estate investment trusts. Depositary receipts
held by the Fund may be sponsored or unsponsored, provided that no more
than 10% of the Fund's net assets will be invested in unsponsored
depositary receipts. With the exception of unsponsored depositary
receipts, all equity securities held by the Fund will be listed and
traded on U.S. national securities exchanges.
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\6\ The change to the Fund's holdings to include equity
securities will be effective upon filing with the Commission of an
amendment to the Trust's Registration Statement on Form N-1A, and
shareholders will be notified of such change by means of such
amendment.
\7\ According to the Registration Statement, ADRs and GDRs are
certificates evidencing ownership of shares of a foreign issuer.
These certificates are issued by depositary banks and generally
trade on an established market in the United States or elsewhere.
The underlying shares are held in trust by a custodian bank or
similar financial institution in the issuer's home country. The
depositary bank may not have physical custody of the underlying
securities at all times and may charge fees for various services,
including forwarding dividends and interest and corporate actions.
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Pursuant to the terms of the Exemptive Order, the Fund will not
invest in options contracts, futures contracts, or swap agreements. The
Fund's investments will be consistent with its investment objective and
will not be used to enhance leverage.
As stated in the Prior Release, on each business day, before
commencement of trading in Shares in the Core Trading Session on the
Exchange, the Fund discloses on its Web site the Disclosed Portfolio,
which will include information relating to equity securities, among
other investments, that will form the basis for the Fund's calculation
of net asset value (``NAV'') at the end of the business day. The intra-
day, closing, and settlement prices of the portfolio securities,
including any equity securities held by the Fund, are also readily
available from the national securities exchanges trading such
securities, automated quotation systems, published or other public
sources, or on-line information services. All representations made in
the Prior Release regarding the availability of information relating to
the Shares, trading halts, trading rules, the Portfolio Indicative
Value, and surveillance, among others, will continue to apply to
trading in the Shares.
The Adviser represents that the proposed change to permit limited
investment in equity securities, as described above, is consistent with
the Fund's investment objective, and will further assist the Adviser
and Sub-Adviser to achieve such investment objective. Specifically, by
investing to a limited extent in equity securities, the Fund will have
additional flexibility to achieve high current income through
investments in dividend-paying equity securities, and to achieve the
secondary goal of capital appreciation through possible price
appreciation of such equity investments. Except for the change noted
above, all other representations made in the Prior Release remain
unchanged.\8\ The Fund will continue to comply with all initial and
continued listing requirements under NYSE Arca Equities Rule 8.600.
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\8\ See note 3, supra. All terms referenced but not defined
herein are defined in the Prior Release.
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2. Statutory Basis
The basis under the Exchange Act for this proposed rule change is
the requirement under Section 6(b)(5) \9\ that an exchange have rules
that are designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Equities Rule
8.600. The Exchange has in place surveillance procedures that are
adequate to properly monitor trading in the Shares in all trading
sessions and to deter and detect violations of Exchange rules and
applicable federal securities laws. The Exchange may obtain information
via the Intermarket Surveillance Group (``ISG'') from other exchanges
that are members of ISG or with which the Exchange has entered into a
comprehensive surveillance sharing agreement. No more than 10% of the
Fund's net assets will be invested
[[Page 24235]]
in unsponsored depositary receipts. With the exception of unsponsored
depositary receipts, all equity securities held by the Fund will be
listed and traded on U.S. national securities exchanges.
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 NAV per Share is calculated daily and that the NAV and the
Disclosed Portfolio is 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 Portfolio Indicative Value, as defined in NYSE Arca
Equities Rule 8.600 (c)(3), is disseminated by one or more major market
data vendors at least every 15 seconds during the Exchange's Core
Trading Session. On each business day, before commencement of trading
in Shares in the Core Trading Session on the Exchange, the Fund
discloses 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 is available via the Consolidated
Tape Association high-speed line. The intra-day, closing, and
settlement prices of the portfolio securities, including any equity
securities held by the Fund, are also readily available from the
national securities exchanges trading such securities, automated
quotation systems, published or other public sources, or on-line
information services. Trading in Shares of the Fund will be halted if
the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have
been reached or because of market conditions or for reasons that, in
the view of the Exchange, make trading in the Shares inadvisable.
Trading in the Shares is subject to NYSE Arca Equities Rule
8.600(d)(2)(D), which sets forth circumstances under which Shares of
the Fund may be halted. The Web site for the Fund includes a form of
the prospectus for the Fund and additional data relating to NAV and
other applicable quantitative information. In addition, as stated in
the Prior Notice, investors have ready access to information regarding
the Fund's holdings, the Portfolio Indicative Value, the Disclosed
Portfolio, and quotation and last-sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest. 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 stated in the Prior Notice, investors have
ready access to information regarding the Fund's holdings, the
Portfolio Indicative Value, the Disclosed Portfolio, and quotation and
last-sale information for the Shares.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative prior to 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission notes that
waiver of the operative delay would permit the Fund to invest
immediately in equity securities that the Sub-Adviser believes will
yield high dividends.\13\
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\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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With the exception of unsponsored depositary receipts in which the
Fund may invest up to 10% of its net assets, all equity securities
proposed to be held by the Fund would be listed and traded on U.S.
national securities exchanges. In addition, the Fund will generally not
invest more than 10% of its net assets in such equity securities. The
Exchange represents that the limited investments in equity securities
would be consistent with the Fund's investment objective, which is to
achieve high current income and capital appreciation. Specifically, the
Exchange represents that, by investing to a limited extent in equity
securities, the Fund would have additional flexibility to achieve high
current income through investments in dividend-paying equity securities
and to achieve capital appreciation through possible price appreciation
of such equity investments. Further, the Exchange represents that such
investment objective is not changing, all other representations made in
the Prior Release remain unchanged, and the Fund will continue to
comply with all of the listing requirements under NYSE Arca Equities
Rule 8.600. For the foregoing reasons, the Commission believes that the
proposed change does not raise novel or unique regulatory issues that
should delay the implementation of the Fund's proposed investments in
certain equity securities. Therefore, the Commission waives the 30-day
operative delay requirement because the rule change is consistent with
the protection of investors and the public interest.
At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
[[Page 24236]]
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2012-33 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2012-33. 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 the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2012-33 and should
be submitted on or before May 14, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-9663 Filed 4-20-12; 8:45 am]
BILLING CODE 8011-01-P
