Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, Relating to Listing and Trading of Shares of the Cambria Shareholder Yield ETF Pursuant to NYSE Arca Equities Rule 8.600, 20162-20164 [2013-07723]

Download as PDF 20162 Federal Register / Vol. 78, No. 64 / Wednesday, April 3, 2013 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69251; File No. SR– NYSEArca–2013–14] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, Relating to Listing and Trading of Shares of the Cambria Shareholder Yield ETF Pursuant to NYSE Arca Equities Rule 8.600 March 28, 2013. I. Introduction On January 31, 2013, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 2 and Rule 19b–4 thereunder,3 a proposed rule change to list and trade shares (‘‘Shares’’) of the Cambria Shareholder Yield ETF (‘‘Fund’’) under NYSE Arca Equities Rule 8.600. On February 13, 2013, the Exchange filed Amendment No. 1 to the proposed rule change.4 The proposed rule change was published for comment in the Federal Register on February 21, 2013.5 The Commission received no comments on the proposal. This order approves the proposed rule change, as modified by Amendment No. 1. II. Description of the Proposed Rule Change The Exchange proposes to list and trade Shares of the Fund under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares 6 on the Exchange. The Shares of mstockstill on DSK4VPTVN1PROD with NOTICES 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 4 In Amendment No. 1, the Exchange: (1) made technical changes to the proposed rule change to clarify how the net asset value of the Cambria Shareholder Yield ETF would be calculated; and (2) stated that quotation and last-sale information for many securities held by the Cambria Shareholder Yield ETF would be available via the Consolidated Tape Association high speed line. 5 See Securities Exchange Act Release No. 68930 (February 14, 2013), 78 FR 12110 (‘‘Notice’’). 6 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. VerDate Mar<15>2010 17:13 Apr 02, 2013 Jkt 229001 the Fund will be offered by Cambria ETF Trust (‘‘Trust’’). The Trust will be registered with the Commission under the 1940 Act as an open-end management investment company.7 Cambria Investment Management, L.P. will serve as the investment adviser to the Fund (‘‘Adviser’’).8 SEI Investments Distribution Co. (‘‘Distributor’’) will be the principal underwriter and distributor of the Fund’s Shares. SEI Investments Global Funds Services (‘‘Administrator’’) will serve as administrator for the Fund. Brown Brothers Harriman & Co. will serve as the custodian and transfer agent for the Fund (‘‘Custodian’’ and ‘‘Transfer Agent,’’ respectively). The Exchange represents that the Shares will conform to the initial and continued listing criteria under NYSE Arca Equities Rule 8.600 and that the Fund will be in compliance with Rule 10A–3 under the Exchange Act,9 as provided by NYSE Arca Equities Rule 5.3. The Fund seeks income and capital appreciation with an emphasis on income from investments in the U.S. equity market. The Fund will seek to achieve its investment objective by investing primarily in equity securities, including the common stock of U.S. companies, that exhibit strong cash flows, as reflected by their payment of dividends to shareholders and their return of capital to shareholders in other forms, such as through net stock buybacks, net debt paydown, mergers, acquisitions, and other forms of reinvestment in the business. The Fund may obtain a limited amount of foreign 7 On July 6, 2012, the Trust filed an amendment to the Trust’s registration statement on Form N–1A under the Securities Act of 1933 (‘‘1933 Act’’) (15 U.S.C. 77a), and under the 1940 Act relating to the Fund (File Nos. 333–180879 and 811–22704) (‘‘Registration Statement’’). The Trust also filed an Amended and Restated Application for an Order under Section 6(c) of the 1940 Act for exemptions from various provisions of the 1940 Act and rules thereunder (File No. 812–13959), dated November 13, 2012 (‘‘Exemptive Application’’). The Commission has issued an order granting certain exemptive relief to the Trust under the 1940 Act. See Investment Company Act Release No. 30340 (January 4, 2013) (‘‘Exemptive Order’’). The Exchange states that investments made by the Fund will comply with the conditions set forth in the Exemptive Application and the Exemptive Order. See Notice, supra note 5, 78 FR at 12110 n.7. 8 The Exchange states that the Advisor is not affiliated with any broker-dealer and, in the event that (a) the Adviser or any sub-adviser becomes newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser becomes affiliated with a broker-dealer, it will implement a fire wall with respect to such broker-dealer regarding access to information concerning the composition of and/or changes to the portfolio, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the portfolio. See Notice, supra note 5, 78 FR at 12111. 9 17 CFR 240.10A–3. PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 and emerging markets exposure through investments in depositary receipts, including American Depositary Receipts (‘‘ADRs’’) and Global Depositary Receipts (‘‘GDRs’’). The Fund will not invest in non-U.S. equity securities other than through ADRs and GDRs. The Fund will not invest in options, futures, or swaps. The Fund’s investments will be consistent with its respective investment objective and will not be used to enhance leverage. Cambria will utilize a quantitative model to identify which securities the Fund might purchase and sell and opportune times for purchases and sales. While the Fund will invest in approximately 100 of the top equity securities as determined by their shareholder yield, the quantity of holdings in the Fund will be based on a number of factors, including the asset size of the Fund and the number of companies that satisfy the Adviser’s quantitative measurements at any one time. The Fund’s portfolio will be rebalanced to the Adviser’s internal target allocations, developed pursuant to the Adviser’s strategy described above, at least quarterly. Additional information regarding the Fund; the Shares; the Fund’s investment objective, strategies, methodology, and restrictions; the Adviser; the distributor; the administrator; the custodian; the transfer agent; risks; fees and expenses; creations and redemptions of Shares; availability of information; trading rules and halts; and surveillance procedures, among other things, can be found in the Registration Statement and in the Notice, as applicable.10 III. Discussion and Commission Findings After careful review, the Commission finds that the Exchange’s proposal to list and trade the Shares is consistent with the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange.11 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Exchange Act,12 which requires, among other things, that the Exchange’s rules be designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in 10 See supra notes 5 and 7. approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition and capital formation. See 15 U.S.C. 78c(f). 12 15 U.S.C. 78f(b)(5). 11 In E:\FR\FM\03APN1.SGM 03APN1 Federal Register / Vol. 78, No. 64 / Wednesday, April 3, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES general, to protect investors and the public interest. The Commission finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Exchange Act, which sets forth Congress’ finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Quotation and last-sale information for the Shares and many securities held by the Fund will be available via the Consolidated Tape Association high-speed line, and the Exchange will disseminate the Portfolio Indicative Value (‘‘PIV’’) at least every 15 seconds during the Core Trading Session through one or more major market data vendors.13 The Fund’s Web site will include additional quantitative information updated on a daily basis, including, for the Fund, (1) the prior business day’s reported closing price, NAV, and mid-point of the bid/ask spread at the time of calculation of such NAV (‘‘Bid/Ask Price’’),14 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.15 Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services.16 NYSE Arca expects that information regarding the previous day’s closing price and trading volume information for the Shares will be published daily in the financial section of newspapers.17 The Commission further believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. The Fund will make available on its Web 13 See Notice, supra note 5, 78 FR at 12114. Bid/Ask Price of the Fund will be determined using the mid-point of the highest bid and the lowest offer on the Exchange as of the time of calculation of the Fund’s NAV. The records relating to Bid/Ask Prices will be retained by the Fund and its service providers. 15 See Notice, supra note 5, 78 FR at 12114. 16 See id. 17 See id. 14 The VerDate Mar<15>2010 17:13 Apr 02, 2013 Jkt 229001 site on each business day before commencement of the Core Trading Session the Disclosed Portfolio that will form the basis for the Fund’s calculation of NAV at the end of the business day.18 The Commission notes that the Exchange will obtain a representation from the Fund 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.19 In addition, the basket composition file will be publicly disseminated daily prior to the opening of the NYSE via NSCC. Further, if the PIV is not being disseminated as required, the Exchange may halt trading during the day in which the interruption occurs; if the interruption persists past the day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption.20 Further, the Commission notes that the Reporting Authority that provides the Disclosed Portfolio must implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material nonpublic information regarding the actual components of the portfolio.21 Finally, the Exchange states that, on its behalf, the Financial Industry Regulatory Authority will communicate as needed regarding trading in the Shares with other markets that are members of the Intermarket Surveillance Group or with which the Exchange has in place a comprehensive surveillance sharing agreement.22 The Exchange has represented that the Shares are equity securities subject to the Exchange’s rules governing the trading of equity securities.23 In support of this proposal, the Exchange has made representations, including: 18 See id. 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’’). 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. See id. 19 See id. at 12112. 20 See NYSE Arca Equities Rule 8.600(d)(2)(D). Trading in the Shares may also 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 composing the Disclosed Portfolio and/or the financial instruments of the Fund; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. See Notice, supra note 5, 78 FR at 12114. 21 See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii). 22 See Notice, supra note 5, 78 FR at 12115. 23 See id. at 12114. PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 20163 (1) The Shares will conform to the initial and continuing listing criteria under NYSE Arca Equities Rule 8.600. (2) The Exchange’s surveillance procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. (3) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. (4) Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders (‘‘ETP Holders’’) in an Information Bulletin of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (a) The procedures for purchases and redemptions of Shares and that Shares are not individually redeemable; (b) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (c) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated PIV will not be calculated or publicly disseminated; (d) how information regarding the PIV is disseminated; (e) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information. (5) For initial and continued listing, the Fund will be in compliance with Rule 10A–3 under the Exchange Act,24 as provided by NYSE Arca Equities Rule 5.3.25 (6) The Fund will not invest in nonU.S. equity securities other than through ADRs and GDRs. (7) The Fund will not invest in options, futures or swaps. (8) The Fund’s investments will be consistent with its respective investment objective and will not be used to enhance leverage. (9) The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid securities (calculated at the time of investment), including Rule 144A securities. (10) The Fund will not loan its securities if, as a result, the aggregate amount of all outstanding securities loans by the Fund exceeds 33 1⁄3% of its total assets (including the market value of collateral received). (11) A minimum of 100,000 Shares for the Fund will be outstanding at the 24 17 CFR 240.10A–3. Notice, supra note 5, 78 FR at 12112. 25 See E:\FR\FM\03APN1.SGM 03APN1 20164 Federal Register / Vol. 78, No. 64 / Wednesday, April 3, 2013 / Notices commencement of trading on the Exchange. This order is based on the Exchange’s representations. For the forgoing reasons, the Commission believes the Exchange’s proposal to list and trade the Shares is consistent with the Exchange Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,26 that the proposed rule change (SR– NYSEArca–2013–14), as modified by Amendment No. 1, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–07723 Filed 4–2–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69256; File No. SR– NYSEArca-2012–28] Self-Regulatory Organizations; NYSE Arca, Inc.; Response to Comments Submitted After the Issuance on December 14, 2012, of a Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change as Modified by Amendment No. 1 To List and Trade Shares of the JPM XF Physical Copper Trust Pursuant to NYSE Arca Equities Rule 8.201 March 28, 2013. mstockstill on DSK4VPTVN1PROD with NOTICES I. Introduction On April 2, 2012, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares (‘‘Shares’’) of the JPM XF Physical Copper Trust (‘‘Trust’’) pursuant to NYSE Arca Equities Rule 8.201. The proposed rule change was published for comment in the Federal Register on April 20, 2012.3 On December 14, 2012, the Commission approved the proposed 26 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Securities Exchange Act Release No. 66816 (April 16, 2012), 77 FR 23772 (‘‘Notice’’). 27 17 VerDate Mar<15>2010 17:13 Apr 02, 2013 Jkt 229001 rule change,4 finding that it was consistent with the requirements of the Act. In its Approval Order, the Commission invited interested persons to submit written data, views, and arguments concerning the Approval Order, including whether Amendment No. 1 to the proposed rule change is consistent with the Act.5 In response to the solicitation of comments, the Commission received two comment letters.6 Both letters opposed the approval of the proposed rule change, and one commenter specifically requested that the Commission reconsider and reverse its decision, and disapprove the proposed rule change.7 This Response addresses those comments. 4 See Securities Exchange Act Release No. 68440, 77 FR 75468 (December 20, 2012) (‘‘Approval Order’’). Prior to approving the proposed rule change, the Commission: (1) Extended the time period for Commission action to July 19, 2012, see Securities Exchange Act Release No. 67075 (May 30, 2012), 77 FR 33258 (June 5, 2012); (2) instituted proceedings to determine whether to approve or disapprove the proposed rule change, see Securities Exchange Act Release No. 67470 (July 19, 2012), 77 FR 43620 (July 25, 2012); and (3) issued a notice of designation of longer period for Commission action on proceedings to determine whether to approve or disapprove the proposed rule change, see Securities Exchange Act Release No. 67965 (October 2, 2012), 77 FR 61457 (October 9, 2012). 5 See Approval Order, supra note 4, 77 FR 75487. 6 See letter from Robert B. Bernstein, Partner, Eaton & Van Winkle LLP (‘‘EVW’’), to Elizabeth M. Murphy, Secretary, Commission, dated January 9, 2013 (‘‘EVW January 9 Letter’’); and email from Janet Klein, dated January 7, 2013 (‘‘Klein Email’’). Comment letters are available at https:// www.sec.gov/comments/sr-nysearca-2012–28/ nysearca201228.shtml. Ms. Klein asserted that approval of the proposed rule change would: (1) Be ‘‘contrary to rational oversight of wise practice,’’ without explaining the basis for her judgment; (2) not contribute to the economy; and (3) promote ‘‘speculative swings of a commodity price not related to supply/demand,’’ again without explaining the basis for her conclusion. See Klein Email, supra. The Commission discussed the likelihood of any impact of the proposed rule change on the price of copper in the Approval Order. See Approval Order, supra note 4, 77 FR 75477–82. 7 See EVW January 9 Letter, supra note 6. This commenter submitted seven comment letters opposing the proposed rule change prior to the Commission’s issuance of the Approval Order. See letters from Vandenberg & Feliu, LLP (‘‘V&F’’), received May 9, 2012 (‘‘V&F May 9 Letter’’); Robert B. Bernstein, V&F, to Elizabeth M. Murphy, Secretary, Commission, dated July 13, 2012; Robert B. Bernstein, V&F, to Elizabeth M. Murphy, Secretary, Commission, dated August 24, 2012 (‘‘V&F August 24 Letter’’); Robert B. Bernstein, V&F, to Elizabeth M. Murphy, Secretary, Commission, dated September 10, 2012 (‘‘V&F September 10 Letter’’); Robert B. Bernstein, V&F, to Elizabeth M. Murphy, Secretary, Commission, dated October 23, 2012; Robert B. Bernstein, V&F, to Elizabeth M. Murphy, Secretary, Commission, dated November 16, 2012; and Robert B. Bernstein, EVW, to Elizabeth M. Murphy, Secretary, Commission, dated December 7, 2012 (‘‘EVW December 7 Letter’’). PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 II. Response to Comments One commenter (referred to herein as ‘‘the commenter’’) repeated many concerns that had been previously raised, considered by the Commission, and expressly addressed in the Approval Order. This commenter, however, expanded upon and clarified some of his prior arguments.8 Accordingly, the Commission responds below to certain comments made by the commenter after the Commission approved the proposed rule change.9 A. Direct Participation in Trading on the London Metal Exchange (‘‘LME’’) The commenter asserts that the Approval Order contained an incorrect statement of fact regarding who may trade directly on the LME. The commenter asserts that the Commission was incorrect in stating that ‘‘[o]nly eligible organizations or members are able to participate directly in trading on the LME,’’ and asserts that only ‘‘open outcry’’ trading on the LME is limited to eligible organizations or members, and that most trading on the LME takes place in inter-office trading that is open to anyone who has a telephone and a computer screen.10 The commenter further states that the Commission relied on this conclusion in reaching its decision.11 The Commission believes that the description in the Approval Order regarding trading on the LME is correct.12 The Commission understands that trading on the LME can occur in a number of ways, all of which must occur through a member.13 Trading can occur in the LME’s open-outcry trading floor (the ‘‘Ring’’), but such trading is limited to ring-dealing members.14 Electronic trading can occur through LMEselect; although clients can access LMEselect, such access is available only via member systems or member8 See 9 The supra note 7. other comment is addressed supra at note 6. 10 See EVW January 9 Letter, supra note 6, at 4– 5 (quoting Approval Order, supra note 4, 77 FR 75469). 11 See EVW January 9 Letter, supra note 6, at 5. 12 The Approval Order expressly states that this description comes from the description of the copper market that the Exchange included in its filing. See Approval Order, supra note 4, 77 FR 75469. In the notice of the proposed rule change, the Exchange stated: ‘‘The LME is a principal-toprincipal market where only eligible organizations or ‘members’ are able to participate directly in trading.’’ Notice, supra note 3, 77 FR 23776. The commenter did not raise any concerns about the Exchange’s description of the LME in any of the comment letters he previously submitted. 13 See Approval Order, supra note 4, 77 FR 75469. 14 See LME, Trading, Venues and Systems, The Ring, https://lme.com/trading/venues-and-systems/ ring/. E:\FR\FM\03APN1.SGM 03APN1

Agencies

[Federal Register Volume 78, Number 64 (Wednesday, April 3, 2013)]
[Notices]
[Pages 20162-20164]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07723]



[[Page 20162]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69251; File No. SR-NYSEArca-2013-14]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 1, Relating to 
Listing and Trading of Shares of the Cambria Shareholder Yield ETF 
Pursuant to NYSE Arca Equities Rule 8.600

March 28, 2013.

I. Introduction

    On January 31, 2013, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act of 1934 (``Exchange Act'') \2\ and Rule 19b-4 
thereunder,\3\ a proposed rule change to list and trade shares 
(``Shares'') of the Cambria Shareholder Yield ETF (``Fund'') under NYSE 
Arca Equities Rule 8.600. On February 13, 2013, the Exchange filed 
Amendment No. 1 to the proposed rule change.\4\ The proposed rule 
change was published for comment in the Federal Register on February 
21, 2013.\5\ The Commission received no comments on the proposal. This 
order approves the proposed rule change, as modified by Amendment No. 
1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ In Amendment No. 1, the Exchange: (1) made technical changes 
to the proposed rule change to clarify how the net asset value of 
the Cambria Shareholder Yield ETF would be calculated; and (2) 
stated that quotation and last-sale information for many securities 
held by the Cambria Shareholder Yield ETF would be available via the 
Consolidated Tape Association high speed line.
    \5\ See Securities Exchange Act Release No. 68930 (February 14, 
2013), 78 FR 12110 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade Shares of the Fund under 
NYSE Arca Equities Rule 8.600, which governs the listing and trading of 
Managed Fund Shares \6\ on the Exchange. The Shares of the Fund will be 
offered by Cambria ETF Trust (``Trust''). The Trust will be registered 
with the Commission under the 1940 Act as an open-end management 
investment company.\7\ Cambria Investment Management, L.P. will serve 
as the investment adviser to the Fund (``Adviser'').\8\ SEI Investments 
Distribution Co. (``Distributor'') will be the principal underwriter 
and distributor of the Fund's Shares. SEI Investments Global Funds 
Services (``Administrator'') will serve as administrator for the Fund. 
Brown Brothers Harriman & Co. will serve as the custodian and transfer 
agent for the Fund (``Custodian'' and ``Transfer Agent,'' 
respectively). The Exchange represents that the Shares will conform to 
the initial and continued listing criteria under NYSE Arca Equities 
Rule 8.600 and that the Fund will be in compliance with Rule 10A-3 
under the Exchange Act,\9\ as provided by NYSE Arca Equities Rule 5.3.
---------------------------------------------------------------------------

    \6\ 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.
    \7\ On July 6, 2012, the Trust filed an amendment to the Trust's 
registration statement on Form N-1A under the Securities Act of 1933 
(``1933 Act'') (15 U.S.C. 77a), and under the 1940 Act relating to 
the Fund (File Nos. 333-180879 and 811-22704) (``Registration 
Statement''). The Trust also filed an Amended and Restated 
Application for an Order under Section 6(c) of the 1940 Act for 
exemptions from various provisions of the 1940 Act and rules 
thereunder (File No. 812-13959), dated November 13, 2012 
(``Exemptive Application''). The Commission has issued an order 
granting certain exemptive relief to the Trust under the 1940 Act. 
See Investment Company Act Release No. 30340 (January 4, 2013) 
(``Exemptive Order''). The Exchange states that investments made by 
the Fund will comply with the conditions set forth in the Exemptive 
Application and the Exemptive Order. See Notice, supra note 5, 78 FR 
at 12110 n.7.
    \8\ The Exchange states that the Advisor is not affiliated with 
any broker-dealer and, in the event that (a) the Adviser or any sub-
adviser becomes newly affiliated with a broker-dealer, or (b) any 
new adviser or sub-adviser becomes affiliated with a broker-dealer, 
it will implement a fire wall with respect to such broker-dealer 
regarding access to information concerning the composition of and/or 
changes to the portfolio, and will be subject to procedures designed 
to prevent the use and dissemination of material non-public 
information regarding the portfolio. See Notice, supra note 5, 78 FR 
at 12111.
    \9\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    The Fund seeks income and capital appreciation with an emphasis on 
income from investments in the U.S. equity market. The Fund will seek 
to achieve its investment objective by investing primarily in equity 
securities, including the common stock of U.S. companies, that exhibit 
strong cash flows, as reflected by their payment of dividends to 
shareholders and their return of capital to shareholders in other 
forms, such as through net stock buybacks, net debt paydown, mergers, 
acquisitions, and other forms of reinvestment in the business. The Fund 
may obtain a limited amount of foreign and emerging markets exposure 
through investments in depositary receipts, including American 
Depositary Receipts (``ADRs'') and Global Depositary Receipts 
(``GDRs''). The Fund will not invest in non-U.S. equity securities 
other than through ADRs and GDRs. The Fund will not invest in options, 
futures, or swaps. The Fund's investments will be consistent with its 
respective investment objective and will not be used to enhance 
leverage.
    Cambria will utilize a quantitative model to identify which 
securities the Fund might purchase and sell and opportune times for 
purchases and sales. While the Fund will invest in approximately 100 of 
the top equity securities as determined by their shareholder yield, the 
quantity of holdings in the Fund will be based on a number of factors, 
including the asset size of the Fund and the number of companies that 
satisfy the Adviser's quantitative measurements at any one time. The 
Fund's portfolio will be rebalanced to the Adviser's internal target 
allocations, developed pursuant to the Adviser's strategy described 
above, at least quarterly.
    Additional information regarding the Fund; the Shares; the Fund's 
investment objective, strategies, methodology, and restrictions; the 
Adviser; the distributor; the administrator; the custodian; the 
transfer agent; risks; fees and expenses; creations and redemptions of 
Shares; availability of information; trading rules and halts; and 
surveillance procedures, among other things, can be found in the 
Registration Statement and in the Notice, as applicable.\10\
---------------------------------------------------------------------------

    \10\ See supra notes 5 and 7.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposal to list and trade the Shares is consistent with the Exchange 
Act and the rules and regulations thereunder applicable to a national 
securities exchange.\11\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Exchange 
Act,\12\ which requires, among other things, that the Exchange's rules 
be designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in

[[Page 20163]]

general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \11\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition and 
capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission finds that the proposal to list and trade the Shares 
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the 
Exchange Act, which sets forth Congress' finding that it is in the 
public interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for and transactions in securities. Quotation and last-sale 
information for the Shares and many securities held by the Fund will be 
available via the Consolidated Tape Association high-speed line, and 
the Exchange will disseminate the Portfolio Indicative Value (``PIV'') 
at least every 15 seconds during the Core Trading Session through one 
or more major market data vendors.\13\ The Fund's Web site will include 
additional quantitative information updated on a daily basis, 
including, for the Fund, (1) the prior business day's reported closing 
price, NAV, and mid-point of the bid/ask spread at the time of 
calculation of such NAV (``Bid/Ask Price''),\14\ 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.\15\ Information regarding market price and trading volume of 
the Shares will be continually available on a real-time basis 
throughout the day on brokers' computer screens and other electronic 
services.\16\ NYSE Arca expects that information regarding the previous 
day's closing price and trading volume information for the Shares will 
be published daily in the financial section of newspapers.\17\
---------------------------------------------------------------------------

    \13\ See Notice, supra note 5, 78 FR at 12114.
    \14\ The Bid/Ask Price of the Fund will be determined using the 
mid-point of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of the Fund's NAV. The records relating 
to Bid/Ask Prices will be retained by the Fund and its service 
providers.
    \15\ See Notice, supra note 5, 78 FR at 12114.
    \16\ See id.
    \17\ See id.
---------------------------------------------------------------------------

    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Fund will make available on its Web site on each business 
day before commencement of the Core Trading Session the Disclosed 
Portfolio that will form the basis for the Fund's calculation of NAV at 
the end of the business day.\18\ The Commission notes that the Exchange 
will obtain a representation from the Fund 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.\19\ In 
addition, the basket composition file will be publicly disseminated 
daily prior to the opening of the NYSE via NSCC. Further, if the PIV is 
not being disseminated as required, the Exchange may halt trading 
during the day in which the interruption occurs; if the interruption 
persists past the day in which it occurred, the Exchange will halt 
trading no later than the beginning of the trading day following the 
interruption.\20\ Further, the Commission notes that the Reporting 
Authority that provides the Disclosed Portfolio must implement and 
maintain, or be subject to, procedures designed to prevent the use and 
dissemination of material non-public information regarding the actual 
components of the portfolio.\21\ Finally, the Exchange states that, on 
its behalf, the Financial Industry Regulatory Authority will 
communicate as needed regarding trading in the Shares with other 
markets that are members of the Intermarket Surveillance Group or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement.\22\
---------------------------------------------------------------------------

    \18\ See id. 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''). 
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. See id.
    \19\ See id. at 12112.
    \20\ See NYSE Arca Equities Rule 8.600(d)(2)(D). Trading in the 
Shares may also 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 composing the Disclosed 
Portfolio and/or the financial instruments of the Fund; or (2) 
whether other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. See Notice, 
supra note 5, 78 FR at 12114.
    \21\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
    \22\ See Notice, supra note 5, 78 FR at 12115.
---------------------------------------------------------------------------

    The Exchange has represented that the Shares are equity securities 
subject to the Exchange's rules governing the trading of equity 
securities.\23\ In support of this proposal, the Exchange has made 
representations, including:
---------------------------------------------------------------------------

    \23\ See id. at 12114.
---------------------------------------------------------------------------

    (1) The Shares will conform to the initial and continuing listing 
criteria under NYSE Arca Equities Rule 8.600.
    (2) The Exchange's surveillance procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and applicable federal 
securities laws.
    (3) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (4) Prior to the commencement of trading, the Exchange will inform 
its Equity Trading Permit Holders (``ETP Holders'') in an Information 
Bulletin of the special characteristics and risks associated with 
trading the Shares. Specifically, the Information Bulletin will discuss 
the following: (a) The procedures for purchases and redemptions of 
Shares and that Shares are not individually redeemable; (b) NYSE Arca 
Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP 
Holders to learn the essential facts relating to every customer prior 
to trading the Shares; (c) the risks involved in trading the Shares 
during the Opening and Late Trading Sessions when an updated PIV will 
not be calculated or publicly disseminated; (d) how information 
regarding the PIV is disseminated; (e) the requirement that ETP Holders 
deliver a prospectus to investors purchasing newly issued Shares prior 
to or concurrently with the confirmation of a transaction; and (f) 
trading information.
    (5) For initial and continued listing, the Fund will be in 
compliance with Rule 10A-3 under the Exchange Act,\24\ as provided by 
NYSE Arca Equities Rule 5.3.\25\
---------------------------------------------------------------------------

    \24\ 17 CFR 240.10A-3.
    \25\ See Notice, supra note 5, 78 FR at 12112.
---------------------------------------------------------------------------

    (6) The Fund will not invest in non-U.S. equity securities other 
than through ADRs and GDRs.
    (7) The Fund will not invest in options, futures or swaps.
    (8) The Fund's investments will be consistent with its respective 
investment objective and will not be used to enhance leverage.
    (9) The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid securities (calculated at the time of investment), 
including Rule 144A securities.
    (10) The Fund will not loan its securities if, as a result, the 
aggregate amount of all outstanding securities loans by the Fund 
exceeds 33 \1/3\% of its total assets (including the market value of 
collateral received).
    (11) A minimum of 100,000 Shares for the Fund will be outstanding 
at the

[[Page 20164]]

commencement of trading on the Exchange.

This order is based on the Exchange's representations.

    For the forgoing reasons, the Commission believes the Exchange's 
proposal to list and trade the Shares is consistent with the Exchange 
Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\26\ that the proposed rule change (SR-NYSEArca-2013-14), 
as modified by Amendment No. 1, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
Kevin M. O'Neill,
Deputy Secretary.
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2013-07723 Filed 4-2-13; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.