Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the WisdomTree Global Corporate Bond Fund and the WisdomTree Emerging Markets Corporate Bond Fund, 41968-41971 [2013-16689]

Download as PDF 41968 Federal Register / Vol. 78, No. 134 / Friday, July 12, 2013 / Notices venues. In such an environment, the Exchange must continually review and change its fees and rebates to remain competitive with other exchanges and to offer its ETP Holders and their customers the means to achieve economically efficient securities transactions. The Exchange believes that the proposed rule change reflects this competitive environment. B. Self-Regulatory Organization’s Statement on Burden on Competition As noted above, the Exchange believes that the proposed rule changes are consistent with Section 6(b) of the Act and specifically Section 6(b)(8) in that they do not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that increasing the rebate paid to ETP Holders using the Double Play Order will operate to promote competition by potentially attracting additional liquidity to the Exchange and providing access to liquidity on the CBSX. The Exchange does not believe that passing through the rebate received from the CBSX to ETP Holders imposes a burden on competition for any other Exchange approved Trading Center since other Trading Centers may offer other competitive functions or features such as low cost executions, faster executions, of increased levels of liquidity. The ETP Holder may choose which offering is most attractive and the increased rebate is one factor which an ETP Holder may consider. As stated above, the Exchange operates in a highly competitive market in which market participants can choose competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and rebates to remain competitive with other exchanges. mstockstill on DSK4VPTVN1PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change has taken effect upon filing pursuant to Section 19(b)(3)(A)(ii) of the Exchange Act 16 and subparagraph (f)(2) of Rule 19b–4.17 At any time within 60 days of the filing of such proposed rule change, the 16 15 17 17 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4. VerDate Mar<15>2010 18:46 Jul 11, 2013 Jkt 229001 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. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–NSX–2013–14 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–NSX–2013–14. 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal offices 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–NSX– PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 2013–14, and should be submitted on or before August 2, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–16749 Filed 7–11–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69944; File No. SR–NASDAQ–2013–079] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the WisdomTree Global Corporate Bond Fund and the WisdomTree Emerging Markets Corporate Bond Fund July 8, 2013. I. Introduction On May 17, 2013, The NASDAQ Stock Market LLC (‘‘Exchange’’ or ‘‘Nasdaq’’) 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 relating to the WisdomTree Global Corporate Bond Fund (‘‘Global Fund’’) and the WisdomTree Emerging Markets Corporate Bond Fund (‘‘Emerging Markets Fund,’’ and collectively with the Global Fund, the ‘‘Funds’’) of the WisdomTree Trust (‘‘Trust’’). On May 20, 2013, the Exchange filed Partial Amendment No. 1 to the proposed rule change. The Commission published for comment in the Federal Register notice of the proposed rule change, as modified by Amendment No. 1 thereto, on June 4, 2013.3 The Commission received no comments on the proposed rule change. This order approves the proposed rule change, as modified by Amendment No. 1 thereto. II. Description of the Proposed Rule Change The Commission approved the listing and trading of Shares of each of the Funds under NASDAQ Rule 5735, which governs the listing and trading of Managed Fund Shares on the 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 69657 (May 29, 2013), 78 FR 33457 (‘‘Notice’’). 1 15 E:\FR\FM\12JYN1.SGM 12JYN1 Federal Register / Vol. 78, No. 134 / Friday, July 12, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES Exchange.4 The Funds are actively managed exchange-traded funds (‘‘ETFs’’). The Shares are offered by the Trust, which was established as a Delaware statutory trust on December 15, 2005.5 The Trust, which is registered with the Commission as an investment company, filed a registration statement on Form N–1A with the Commission on behalf of each of the Funds (each, a ‘‘Registration Statement’’).6 WisdomTree Asset Management, Inc. is the investment adviser (‘‘Adviser’’) to the Funds. Western Asset Management Company serves as sub-adviser for the Funds (‘‘Sub-Adviser’’). The proposed rule change seeks to: (i) Allow each Fund to invest up to 40% of its net assets (calculated at the time of investment) in Rule 144A securities that have been deemed liquid by the Adviser or Sub-Adviser, in addition to the 15% investment limitation on illiquid securities (which limitation, following approval of this proposal, would include Rule 144A securities deemed illiquid by the Adviser or SubAdviser); (ii) permit the Global Fund to invest up to 20% of its net assets in sovereign debt; 7 and (iii) amend the definitions of Global Corporate Debt in the Global Fund and Corporate and Quasi-Sovereign Debt in the Emerging Markets Fund to include both (a) inflation-protected debt, fixed income securities and other debt obligations linked to inflation rates of local economies, and (b) variable rate or floating rate securities which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a 4 See Securities Exchange Act Release Nos. 66489 (February 29, 2012), 77 FR 13379 (March 6, 2012) (SR–NASDAQ–2012–004) (order approving listing and trading of WisdomTree Emerging Markets Corporate Bond Fund) (‘‘Emerging Markets Fund Order’’); and 68073 (October 19, 2012), 77 FR 65237 (October 25, 2012) (SR–NASDAQ–2012–98) (order approving listing and trading of WisdomTree Global Corporate Bond Fund) (‘‘Global Fund Order,’’ and collectively the ‘‘Prior Approval Orders’’). 5 The Commission issued an order granting certain exemptive relief to the Trust under the Investment Company Act of 1940 (‘‘1940 Act’’). See Investment Company Act Release No. 28171 (October 27, 2008) (File No. 812–13458) (‘‘Exemptive Order’’). 6 See Post-Effective Amendment Nos. 99 to Registration Statement on Form N–1A for the Trust, dated February 8, 2012 (File Nos. 333–132380 and 811–21864) (relating to the Emerging Markets Fund) and 139 to Registration Statement on Form N–1A for the Trust, dated October 26, 2012 (relating to the Global Fund). 7 Sovereign debt does not fall within the definition of Global Corporate Debt in the Global Fund Order, and it therefore would not be considered as part of the 80% minimum investment in fixed income securities that are Global Corporate Debt within the Global Fund Order. The Registration Statement defines ‘‘sovereign debt’’ as ‘‘debt securities of foreign governments,’’ for purposes of the Global Fund. VerDate Mar<15>2010 18:46 Jul 11, 2013 Jkt 229001 specified interest rate change occurs in the case of a floating rate instrument.8 Under the Prior Approval Orders, the Funds are permitted to hold up to 15% of their respective net assets in illiquid securities (calculated at the time of investment), including (i) Rule 144A securities and (ii) loan interests (such as loan participations and assignments, but not including LPNs). Under the 1940 Act and rules thereunder, the Funds are required to monitor their respective portfolio’s liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and to consider taking appropriate steps in order to maintain adequate liquidity if through a change in values, net assets or other circumstances, more than 15% of the Fund’s net assets are held in illiquid securities.9 The Exchange seeks to modify the Advisor’s representations in the Prior Approval Orders to increase the percentage of Rule 144A securities that each Fund may hold. Under the proposed amendment, each Fund may continue to hold up to an aggregate amount of 15% of its net assets in illiquid securities (calculated at the time of investment), including (i) Rule 144A securities deemed illiquid by the Adviser or Sub-Adviser, and (ii) loan interests (including loan participations and assignments, but not including LPNs).10 In addition, each Fund would 8 Variable or floating interest rates generally reduce changes in the market price of securities from their original purchase price because, upon readjustment, such rates approximate market rates. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable or floating rate securities than for fixed rate obligations. 9 Illiquid securities were defined in the Emerging Markets Fund Order to include securities 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 securities. Illiquid securities were defined in the Global Fund Order to include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets as determined in accordance with Commission staff guidance. See Prior Approval Orders, supra note 4. 10 While the ultimate responsibility for determination of liquidity of securities (including Rule 144A securities) lies with each Fund’s Board of Directors, the Funds’ Sub-Adviser is responsible for complying with each Fund’s restrictions on investing in illiquid securities on a day-to-day basis. In doing that, the Sub-Adviser makes ongoing determinations about the liquidity of Rule 144A securities in which the respective Fund may invest. In reaching liquidity decisions, the Adviser represents that the Sub-Adviser may consider the following factors: The frequency of trades and quotes for the security; the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; dealer undertakings to make a market in the security; and the nature of the security and of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 41969 be permitted under the proposal to hold up to an additional 40% of its net assets (calculated at the time of investment) in Rule 144A securities, so long as those Rule 144A securities are not deemed illiquid by the Adviser or Sub-Adviser. The proposed rule change would, therefore, exclude liquid Rule 144A securities from the 15% limitation on investments in illiquid securities and limit each Fund’s investment in liquid Rule 144A securities to 40% of the Fund’s net assets. The Adviser represents that each Fund’s holdings in Rule 144A securities not deemed illiquid by it or the Sub-Adviser will be comprised of issuances with more than $100 million principal outstanding. The Adviser represents that the purpose of this aspect of the proposed change is to provide the Sub-Adviser greater flexibility to meet each Fund’s investment objectives. Rule 144A securities are securities that are not registered under the Securities Act and which can only be offered and sold to ‘‘qualified institutional buyers’’ under Rule 144A of the Securities Act.11 The Exchange notes that Rule 144A was adopted, in part, to promote a more liquid resale market in unregistered securities among institutional investors,12 and the Adviser represents that liquid institutional markets for Rule 144A securities, including those Rule 144A securities generally held by the Funds, have developed. The Adviser represents that, for example, most reference benchmarks for noninvestment grade corporate bonds include more than 25% Rule 144A securities.13 The Adviser does not expect a materially different result for the Funds since the market for investment grade bonds,14 which the mechanics of transfer). See Securities Act Release No. 6862 (April 23, 1990), 55 FR 17933, 17940 (April 30, 1990) (Resale of Restricted Securities; Changes to Method of Determining Holding Period of Restricted Securities Under Rules 144 and 145). See also Notice, supra note 3. 11 The term ‘‘qualified institutional buyer’’ (QIB) is defined in Rule 144A(a)(1). 17 CFR 230.144A(a)(1). 12 See Securities Act Release No. 6862 (April 23, 1990), 55 FR 17933 (April 30, 1990). 13 See, e.g., Merrill Lynch High Yield Master II index (‘‘Master II index’’), which as of November 6, 2012, was comprised of 32% Rule 144A securities. The Master II index is the benchmark index for the American Century High-Yield Inv ETF (ABHIX). Also, as of March 6, 2013, Barclays High Yield Very Liquid Index was comprised of 43% Rule 144A securities. That index is the benchmark for the SPDR Barclays High Yield Bond ETF (JNK). 14 The Global Fund intends to have 55% 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 in the credit ratings of such issuers. See Global Fund Order at 65238. The Emerging Markets Fund expects to have 65% or more of its assets invested E:\FR\FM\12JYN1.SGM Continued 12JYN1 41970 Federal Register / Vol. 78, No. 134 / Friday, July 12, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES Funds each hold, is typically more liquid than the market for similar noninvestment grade bonds. The Adviser further notes that the average issue size for Rule 144A securities is comparable to the average issue size for registered securities within most high yield bond indices. Finally, the Adviser represents that currently-listed high yield bond ETFs typically include a significant percentage of Rule 144A securities within their respective portfolios.15 Based on these representations, the Exchange believes there is ample existing precedent, and that its proposal is consistent with such precedent, to permit each Fund to invest up to 40% of its net assets (calculated at the time of investment) in liquid Rule 144A securities, in addition to the 15% limitation on illiquid securities, including illiquid Rule 144A securities. The Adviser represents that it does not believe that the ability of the Funds’ agent to calculate Net Asset Value (‘‘NAV’’) and an indicative intra-day value (‘‘IIV’’) for each Fund, and disseminate such IIV every 15 seconds in investment grade securities, though this percentage may change in response to economic events and changes to the ratings of such issuers. See Emerging Markets Order at 13380. The Global Fund Order defines the term ‘‘investment grade’’ to mean securities rated in the Baa/BBB categories or above by one or more nationally recognized statistical rating organizations (‘‘NRSROs’’). If a security is rated by multiple NRSROs, each Fund will treat the security as being rated in the highest rating category received from an NRSRO. Rating categories may include subcategories or gradations indicating relative standing. See Global Fund Order at note 11. The Emerging Markets Fund Order does not define the term ‘‘investment grade.’’ However, the Adviser represents that it intends to apply the definition of ‘‘investment’’ grade’’ in the Global Fund Order to the Emerging Markets Fund. See Notice, supra note 3; see also, Prior Approval Orders, supra note 4. 15 For example, the Adviser represents that as of November 6, 2012, more than 30% of the investment portfolio of the actively-managed Peritus High Yield ETF was comprised of Rule 144A securities. See Securities Exchange Act Release Nos. 63329 (November 17, 2010), 75 FR 71760 (November 24, 2010) (SR–NYSEArca–2010– 86) (order approving proposed rule change relating to listing and trading of Peritus High Yield ETF); and 63041 (October 5, 2010), 75 FR 62905 (October 13, 2010) (SR–NYSEArca–2010–86) (notice of filing of proposed rule change to list the Peritus High Yield ETF). See also Securities Exchange Act Release No. 66818 (April 17, 2012), 77 FR 24233 (April 23, 2012) (SR–NYSEArca–2012–33) (notice of filing and immediate effectiveness of proposed rule change regarding Peritus High Yield ETF). The Adviser also represents that the investment strategies of various index-based high yield ETFs permit active use of Rule 144A securities, provided such securities are deemed liquid. See, e.g., prospectus for SPDR Barclays Capital High Yield Bond ETF, https://www.spdrs.com/library-content/ public/SPDR_SERIES%20TRUST_SAI.pdf, which explicitly permits the fund to invest in Rule 144A securities deemed liquid. The Adviser represents that as of November 6, 2012, the portfolio of the SPDR Barclays High Yield Bond ETF included approximately 37% Rule 144A securities. VerDate Mar<15>2010 18:46 Jul 11, 2013 Jkt 229001 throughout the trading day, has been impeded by the Funds’ current Rule 144A holdings limited to 15% of net assets, and the Adviser does not expect that permitting each Fund to increase its liquid Rule 144A holdings as set forth above will impede the ability of the Funds’ agent to calculate an NAV and an IIV and disseminate such IIV every 15 seconds throughout the trading day. In addition to modifying the percentage of Rule 144A holdings in which the Funds may invest, the Exchange also proposes that the requirements of the Global Fund Order be modified to permit the Global Fund to invest up to 20% of its net assets in sovereign debt, which regarding the Global Fund, is defined as ‘‘debt securities of foreign governments.’’ 16 Finally, the Exchange proposes to modify the definition of Global Corporate Debt with respect to the Global Fund and Corporate and QuasiSovereign Debt with respect to the Emerging Markets Fund to include inflation protected debt and certain variable rate or floating rate securities. The Global Fund Order defined Global Corporate Debt to include fixed income securities, such as bonds, notes, or other debt obligations, including LPNs, as well as debt instruments denominated in U.S. dollars or local currencies. Global Corporate Debt also included fixed income securities or debt obligations issued by companies or agencies that may receive financial support or backing from local governments, as well as money market securities as defined therein.17 The Emerging Markets Fund Order defined Corporate and Quasi-Sovereign Debt as fixed income securities of emerging market countries, such as bonds, notes or other debt obligations, including LPNs, as well as other instruments, such as derivative instruments, collateralized by money market securities, as defined therein. Quasi-Sovereign Debt referred specifically to fixed income securities or debt obligations that are issued by companies or agencies that may receive financial support or backing from a local government. The Exchange proposes that the Prior Approval Orders be modified to amend the definitions of Global Corporate Debt with respect to the Global Fund and Corporate and Quasi-Sovereign Debt with respect to the Emerging Markets Fund, to include (i) inflation-protected debt, including fixed income securities and other debt obligations linked to inflation rates of local economies, and PO 00000 16 See 17 See supra, note 7. Global Fund Order, supra note 4. Frm 00063 Fmt 4703 Sfmt 4703 (ii) variable rate or floating rate securities which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a specified interest rate change occurs in the case of a floating rate instrument. The Adviser represents that these proposed changes regarding permitted investments would allow the Funds to invest in a broader range of market sectors and thus would help further the Funds’ investment objectives to obtain both income and capital appreciation through direct and indirect investments in Global Corporate Debt or Corporate and Quasi-Sovereign Debt, as applicable, and other investments. Additional information regarding the Funds, such as pricing and valuation, including NAV, can be found in the Notice and Prior Approval Orders. Except for the changes discussed herein, all other facts presented and representations made in the Rule 19b– 4 18 filings underlying the Prior Approval Orders remain unchanged. The Exchange represents that the changes proposed would be consistent with the Exemptive Order 19 and the 1940 Act and rules thereunder. III. Discussion and Commission’s Findings The Commission believes that the proposal is consistent with Section 6(b) of the Act,20 in general, and Section 6(b)(5) of the Act,21 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 mechanism of a free and open market and a national market system.22 The Commission understands that, while one aspect of this proposal will allow each Fund to invest up to 40% of its net assets (calculated at the time of investment) in liquid Rule 144A securities, the Funds will continue to be capped at 15% of their respective net assets (calculated at the time of investment) in illiquid securities, including illiquid Rule 144A securities and loan participations or assignments (but not including LPNs). The SubAdviser, who is responsible for day-to18 17 CFR 240.19b–4. supra, note 5. 20 15 U.S.C. 78f. 21 15 U.S.C. 78f(b)(5). 22 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). 19 See E:\FR\FM\12JYN1.SGM 12JYN1 Federal Register / Vol. 78, No. 134 / Friday, July 12, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES day decisions regarding liquidity of securities, may consider the following factors regarding liquidity: The frequency of trades and quotes for the security; the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; dealer undertakings to make a market in the security; and the nature of the security and of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer).23 Ultimately, however, each Fund’s Board of Directors has responsibility for determining the liquidity of securities (including Rule 144A securities) held by the Funds. The Commission notes that the Adviser represents that each Fund’s holdings in Rule 144A securities deemed liquid by the Sub-Adviser will be part of an issuance with more than $100 million in principal outstanding. Finally, the Exchange has stated that the Adviser represents it does not expect that the proposed rule change will impede the ability of the Funds’ agent to calculate an NAV and an IIV and disseminate such IIV every 15 seconds throughout the trading day. The Commission further notes that pursuant to the 1940 Act and rules thereunder, the Funds are required to monitor their respective portfolio’s liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and to consider taking appropriate steps in order to maintain adequate liquidity if through a change in values, net assets or other circumstances, more than 15% of the Fund’s net assets are held in illiquid securities. Thus, the Commission finds that providing the Adviser and Sub-Adviser additional flexibility with respect to investing in a larger percentage of investments in Rule 144A Securities, given the protections discussed above, is consistent with the Act. The Exchange also proposes to allow the Global Fund to invest up to 20% of its net assets in sovereign debt, which is defined as ‘‘debt securities of foreign governments.’’ 24 Given that the Global Fund will continue to have at least 80% of its net assets in Global Corporate Debt that are fixed income securities and the Fund’s limitation regarding non23 See Securities Act Release No. 6862 (April 23, 1990), 55 FR 17933, 17940 (April 30, 1990) (Resale of Restricted Securities; Changes to Method of Determining Holding Period of Restricted Securities Under Rules 144 and 145). See also supra, note 10. 24 Sovereign debt, according to the Exchange, enjoys a relationship to foreign governments that is not unlike that of Treasury debt securities and the U.S. government. See Notice, supra note 3. VerDate Mar<15>2010 18:46 Jul 11, 2013 Jkt 229001 investment grade securities, the Commission believes it is consistent with the Act for the Exchange to allow up to 20% of net assets of the Global Fund in sovereign debt. Finally, the Commission believes that it is consistent with the Act for the Exchange to amend the definition of Global Corporate Debt in the Global Fund and Corporate and QuasiSovereign Debt in the Emerging Markets Fund, as set forth in the Prior Approval Orders, to include (i) inflation-protected debt, fixed income securities and other debt obligations linked to inflation rates of local economies, and (ii) variable rate or floating rate securities which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a specified interest rate change occurs in the case of a floating rate instrument. The Commission believes that this expansion of the definition is reasonable, given the characteristics of these securities, and would permit the Funds to invest in a broader range of market sectors, and thereby help further the Fund’s objectives to obtain both income and capital appreciation through direct and indirect investments in Global Corporate Debt or Corporate and Quasi-Sovereign Debt, as applicable, and other investments. Thus, the Commission finds this aspect of the proposal is consistent with the Act.25 Importantly, the Commission notes that the Shares will continue to be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NASDAQ Rule 5735. In addition, the Adviser represents there is no change to either Fund’s investment objective, and except for the limited changes discussed herein, all other facts represented and representations made in the Rule 19b– 4 26 filings underlying the Prior Approval Orders, and representations and findings set forth in the Prior Approval Orders, remain unchanged. The Exchange represents that the changes proposed would be consistent with the Exemptive Order 27 and the 1940 Act and rules thereunder. This approval order is based on the Exchange’s representations. IV. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is consistent with Section 25 See, e.g., Securities Act Release Nos. 65458 (September 30, 2011), 76 FR 62112 (October 6, 2011) (SR–NYSEArca–2011–54) and 64935 (July 20, 2011), 76 FR 44966 (July 27, 2011) (SR–NYSEArca– 2011–31). 26 17 CFR 240.19b–4. 27 See supra, note 5. PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 41971 6(b)(5) of the Act 28 and the rules and regulations thereunder applicable to a national securities exchange. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,29 that the proposed rule change (SR–NASDAQ– 2013–079), as modified by Amendment No. 1 thereto, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.30 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–16689 Filed 7–11–13; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice 8376] 30-Day Notice of Proposed Information Collection: Electronic Diversity Visa Entry Form Notice of request for public comment and submission to OMB of proposed collection of information. ACTION: The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment. DATES: Submit comments directly to the Office of Management and Budget (OMB) up to August 12, 2013. ADDRESSES: Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods: • Email: oira_submission@omb.eop.gov. You must include the DS form number, information collection title, and the OMB control number in the subject line of your message. • Fax: 202–395–5806. Attention: Desk Officer for Department of State. FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Sydney Taylor, Visa Services, U.S. SUMMARY: 28 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(2). 30 17 CFR 200.30–3(a)(12). 29 15 E:\FR\FM\12JYN1.SGM 12JYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 134 (Friday, July 12, 2013)]
[Notices]
[Pages 41968-41971]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16689]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69944; File No. SR-NASDAQ-2013-079]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval of Proposed Rule Change, as Modified by Amendment No. 
1 Thereto, Relating to the WisdomTree Global Corporate Bond Fund and 
the WisdomTree Emerging Markets Corporate Bond Fund

July 8, 2013.

I. Introduction

    On May 17, 2013, The NASDAQ Stock Market LLC (``Exchange'' or 
``Nasdaq'') 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 relating to the WisdomTree Global Corporate Bond 
Fund (``Global Fund'') and the WisdomTree Emerging Markets Corporate 
Bond Fund (``Emerging Markets Fund,'' and collectively with the Global 
Fund, the ``Funds'') of the WisdomTree Trust (``Trust''). On May 20, 
2013, the Exchange filed Partial Amendment No. 1 to the proposed rule 
change. The Commission published for comment in the Federal Register 
notice of the proposed rule change, as modified by Amendment No. 1 
thereto, on June 4, 2013.\3\ The Commission received no comments on the 
proposed rule change. This order approves the proposed rule change, as 
modified by Amendment No. 1 thereto.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 69657 (May 29, 
2013), 78 FR 33457 (``Notice'').
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II. Description of the Proposed Rule Change

    The Commission approved the listing and trading of Shares of each 
of the Funds under NASDAQ Rule 5735, which governs the listing and 
trading of Managed Fund Shares on the

[[Page 41969]]

Exchange.\4\ The Funds are actively managed exchange-traded funds 
(``ETFs''). The Shares are offered by the Trust, which was established 
as a Delaware statutory trust on December 15, 2005.\5\ The Trust, which 
is registered with the Commission as an investment company, filed a 
registration statement on Form N-1A with the Commission on behalf of 
each of the Funds (each, a ``Registration Statement'').\6\ WisdomTree 
Asset Management, Inc. is the investment adviser (``Adviser'') to the 
Funds. Western Asset Management Company serves as sub-adviser for the 
Funds (``Sub-Adviser'').
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release Nos. 66489 (February 29, 
2012), 77 FR 13379 (March 6, 2012) (SR-NASDAQ-2012-004) (order 
approving listing and trading of WisdomTree Emerging Markets 
Corporate Bond Fund) (``Emerging Markets Fund Order''); and 68073 
(October 19, 2012), 77 FR 65237 (October 25, 2012) (SR-NASDAQ-2012-
98) (order approving listing and trading of WisdomTree Global 
Corporate Bond Fund) (``Global Fund Order,'' and collectively the 
``Prior Approval Orders'').
    \5\ The Commission issued an order granting certain exemptive 
relief to the Trust under the Investment Company Act of 1940 (``1940 
Act''). See Investment Company Act Release No. 28171 (October 27, 
2008) (File No. 812-13458) (``Exemptive Order'').
    \6\ See Post-Effective Amendment Nos. 99 to Registration 
Statement on Form N-1A for the Trust, dated February 8, 2012 (File 
Nos. 333-132380 and 811-21864) (relating to the Emerging Markets 
Fund) and 139 to Registration Statement on Form N-1A for the Trust, 
dated October 26, 2012 (relating to the Global Fund).
---------------------------------------------------------------------------

    The proposed rule change seeks to: (i) Allow each Fund to invest up 
to 40% of its net assets (calculated at the time of investment) in Rule 
144A securities that have been deemed liquid by the Adviser or Sub-
Adviser, in addition to the 15% investment limitation on illiquid 
securities (which limitation, following approval of this proposal, 
would include Rule 144A securities deemed illiquid by the Adviser or 
Sub-Adviser); (ii) permit the Global Fund to invest up to 20% of its 
net assets in sovereign debt; \7\ and (iii) amend the definitions of 
Global Corporate Debt in the Global Fund and Corporate and Quasi-
Sovereign Debt in the Emerging Markets Fund to include both (a) 
inflation-protected debt, fixed income securities and other debt 
obligations linked to inflation rates of local economies, and (b) 
variable rate or floating rate securities which are readjusted on set 
dates (such as the last day of the month or calendar quarter) in the 
case of variable rates or whenever a specified interest rate change 
occurs in the case of a floating rate instrument.\8\
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    \7\ Sovereign debt does not fall within the definition of Global 
Corporate Debt in the Global Fund Order, and it therefore would not 
be considered as part of the 80% minimum investment in fixed income 
securities that are Global Corporate Debt within the Global Fund 
Order. The Registration Statement defines ``sovereign debt'' as 
``debt securities of foreign governments,'' for purposes of the 
Global Fund.
    \8\ Variable or floating interest rates generally reduce changes 
in the market price of securities from their original purchase price 
because, upon readjustment, such rates approximate market rates. 
Accordingly, as interest rates decrease or increase, the potential 
for capital appreciation or depreciation is less for variable or 
floating rate securities than for fixed rate obligations.
---------------------------------------------------------------------------

    Under the Prior Approval Orders, the Funds are permitted to hold up 
to 15% of their respective net assets in illiquid securities 
(calculated at the time of investment), including (i) Rule 144A 
securities and (ii) loan interests (such as loan participations and 
assignments, but not including LPNs). Under the 1940 Act and rules 
thereunder, the Funds are required to monitor their respective 
portfolio's liquidity on an ongoing basis to determine whether, in 
light of current circumstances, an adequate level of liquidity is being 
maintained, and to consider taking appropriate steps in order to 
maintain adequate liquidity if through a change in values, net assets 
or other circumstances, more than 15% of the Fund's net assets are held 
in illiquid securities.\9\
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    \9\ Illiquid securities were defined in the Emerging Markets 
Fund Order to include securities 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 securities. 
Illiquid securities were defined in the Global Fund Order to include 
securities subject to contractual or other restrictions on resale 
and other instruments that lack readily available markets as 
determined in accordance with Commission staff guidance. See Prior 
Approval Orders, supra note 4.
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    The Exchange seeks to modify the Advisor's representations in the 
Prior Approval Orders to increase the percentage of Rule 144A 
securities that each Fund may hold. Under the proposed amendment, each 
Fund may continue to hold up to an aggregate amount of 15% of its net 
assets in illiquid securities (calculated at the time of investment), 
including (i) Rule 144A securities deemed illiquid by the Adviser or 
Sub-Adviser, and (ii) loan interests (including loan participations and 
assignments, but not including LPNs).\10\ In addition, each Fund would 
be permitted under the proposal to hold up to an additional 40% of its 
net assets (calculated at the time of investment) in Rule 144A 
securities, so long as those Rule 144A securities are not deemed 
illiquid by the Adviser or Sub-Adviser. The proposed rule change would, 
therefore, exclude liquid Rule 144A securities from the 15% limitation 
on investments in illiquid securities and limit each Fund's investment 
in liquid Rule 144A securities to 40% of the Fund's net assets. The 
Adviser represents that each Fund's holdings in Rule 144A securities 
not deemed illiquid by it or the Sub-Adviser will be comprised of 
issuances with more than $100 million principal outstanding.
---------------------------------------------------------------------------

    \10\ While the ultimate responsibility for determination of 
liquidity of securities (including Rule 144A securities) lies with 
each Fund's Board of Directors, the Funds' Sub-Adviser is 
responsible for complying with each Fund's restrictions on investing 
in illiquid securities on a day-to-day basis. In doing that, the 
Sub-Adviser makes ongoing determinations about the liquidity of Rule 
144A securities in which the respective Fund may invest. In reaching 
liquidity decisions, the Adviser represents that the Sub-Adviser may 
consider the following factors: The frequency of trades and quotes 
for the security; the number of dealers wishing to purchase or sell 
the security and the number of other potential purchasers; dealer 
undertakings to make a market in the security; and the nature of the 
security and of the marketplace trades (e.g., the time needed to 
dispose of the security, the method of soliciting offers, and the 
mechanics of transfer). See Securities Act Release No. 6862 (April 
23, 1990), 55 FR 17933, 17940 (April 30, 1990) (Resale of Restricted 
Securities; Changes to Method of Determining Holding Period of 
Restricted Securities Under Rules 144 and 145). See also Notice, 
supra note 3.
---------------------------------------------------------------------------

    The Adviser represents that the purpose of this aspect of the 
proposed change is to provide the Sub-Adviser greater flexibility to 
meet each Fund's investment objectives. Rule 144A securities are 
securities that are not registered under the Securities Act and which 
can only be offered and sold to ``qualified institutional buyers'' 
under Rule 144A of the Securities Act.\11\ The Exchange notes that Rule 
144A was adopted, in part, to promote a more liquid resale market in 
unregistered securities among institutional investors,\12\ and the 
Adviser represents that liquid institutional markets for Rule 144A 
securities, including those Rule 144A securities generally held by the 
Funds, have developed. The Adviser represents that, for example, most 
reference benchmarks for non-investment grade corporate bonds include 
more than 25% Rule 144A securities.\13\ The Adviser does not expect a 
materially different result for the Funds since the market for 
investment grade bonds,\14\ which the

[[Page 41970]]

Funds each hold, is typically more liquid than the market for similar 
non-investment grade bonds. The Adviser further notes that the average 
issue size for Rule 144A securities is comparable to the average issue 
size for registered securities within most high yield bond indices. 
Finally, the Adviser represents that currently-listed high yield bond 
ETFs typically include a significant percentage of Rule 144A securities 
within their respective portfolios.\15\ Based on these representations, 
the Exchange believes there is ample existing precedent, and that its 
proposal is consistent with such precedent, to permit each Fund to 
invest up to 40% of its net assets (calculated at the time of 
investment) in liquid Rule 144A securities, in addition to the 15% 
limitation on illiquid securities, including illiquid Rule 144A 
securities.
---------------------------------------------------------------------------

    \11\ The term ``qualified institutional buyer'' (QIB) is defined 
in Rule 144A(a)(1). 17 CFR 230.144A(a)(1).
    \12\ See Securities Act Release No. 6862 (April 23, 1990), 55 FR 
17933 (April 30, 1990).
    \13\ See, e.g., Merrill Lynch High Yield Master II index 
(``Master II index''), which as of November 6, 2012, was comprised 
of 32% Rule 144A securities. The Master II index is the benchmark 
index for the American Century High-Yield Inv ETF (ABHIX). Also, as 
of March 6, 2013, Barclays High Yield Very Liquid Index was 
comprised of 43% Rule 144A securities. That index is the benchmark 
for the SPDR Barclays High Yield Bond ETF (JNK).
    \14\ The Global Fund intends to have 55% 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 
in the credit ratings of such issuers. See Global Fund Order at 
65238. The Emerging Markets Fund expects to have 65% or more of its 
assets invested in investment grade securities, though this 
percentage may change in response to economic events and changes to 
the ratings of such issuers. See Emerging Markets Order at 13380.
    The Global Fund Order defines the term ``investment grade'' to 
mean securities rated in the Baa/BBB categories or above by one or 
more nationally recognized statistical rating organizations 
(``NRSROs''). If a security is rated by multiple NRSROs, each Fund 
will treat the security as being rated in the highest rating 
category received from an NRSRO. Rating categories may include sub-
categories or gradations indicating relative standing. See Global 
Fund Order at note 11. The Emerging Markets Fund Order does not 
define the term ``investment grade.'' However, the Adviser 
represents that it intends to apply the definition of ``investment'' 
grade'' in the Global Fund Order to the Emerging Markets Fund. See 
Notice, supra note 3; see also, Prior Approval Orders, supra note 4.
    \15\ For example, the Adviser represents that as of November 6, 
2012, more than 30% of the investment portfolio of the actively-
managed Peritus High Yield ETF was comprised of Rule 144A 
securities. See Securities Exchange Act Release Nos. 63329 (November 
17, 2010), 75 FR 71760 (November 24, 2010) (SR-NYSEArca-2010-86) 
(order approving proposed rule change relating to listing and 
trading of Peritus High Yield ETF); and 63041 (October 5, 2010), 75 
FR 62905 (October 13, 2010) (SR-NYSEArca-2010-86) (notice of filing 
of proposed rule change to list the Peritus High Yield ETF). See 
also Securities Exchange Act Release No. 66818 (April 17, 2012), 77 
FR 24233 (April 23, 2012) (SR-NYSEArca-2012-33) (notice of filing 
and immediate effectiveness of proposed rule change regarding 
Peritus High Yield ETF). The Adviser also represents that the 
investment strategies of various index-based high yield ETFs permit 
active use of Rule 144A securities, provided such securities are 
deemed liquid. See, e.g., prospectus for SPDR Barclays Capital High 
Yield Bond ETF, https://www.spdrs.com/library-content/public/SPDR_SERIES%20TRUST_SAI.pdf, which explicitly permits the fund to invest 
in Rule 144A securities deemed liquid. The Adviser represents that 
as of November 6, 2012, the portfolio of the SPDR Barclays High 
Yield Bond ETF included approximately 37% Rule 144A securities.
---------------------------------------------------------------------------

    The Adviser represents that it does not believe that the ability of 
the Funds' agent to calculate Net Asset Value (``NAV'') and an 
indicative intra-day value (``IIV'') for each Fund, and disseminate 
such IIV every 15 seconds throughout the trading day, has been impeded 
by the Funds' current Rule 144A holdings limited to 15% of net assets, 
and the Adviser does not expect that permitting each Fund to increase 
its liquid Rule 144A holdings as set forth above will impede the 
ability of the Funds' agent to calculate an NAV and an IIV and 
disseminate such IIV every 15 seconds throughout the trading day.
    In addition to modifying the percentage of Rule 144A holdings in 
which the Funds may invest, the Exchange also proposes that the 
requirements of the Global Fund Order be modified to permit the Global 
Fund to invest up to 20% of its net assets in sovereign debt, which 
regarding the Global Fund, is defined as ``debt securities of foreign 
governments.'' \16\
---------------------------------------------------------------------------

    \16\ See supra, note 7.
---------------------------------------------------------------------------

    Finally, the Exchange proposes to modify the definition of Global 
Corporate Debt with respect to the Global Fund and Corporate and Quasi-
Sovereign Debt with respect to the Emerging Markets Fund to include 
inflation protected debt and certain variable rate or floating rate 
securities.
    The Global Fund Order defined Global Corporate Debt to include 
fixed income securities, such as bonds, notes, or other debt 
obligations, including LPNs, as well as debt instruments denominated in 
U.S. dollars or local currencies. Global Corporate Debt also included 
fixed income securities or debt obligations issued by companies or 
agencies that may receive financial support or backing from local 
governments, as well as money market securities as defined therein.\17\
---------------------------------------------------------------------------

    \17\ See Global Fund Order, supra note 4.
---------------------------------------------------------------------------

    The Emerging Markets Fund Order defined Corporate and Quasi-
Sovereign Debt as fixed income securities of emerging market countries, 
such as bonds, notes or other debt obligations, including LPNs, as well 
as other instruments, such as derivative instruments, collateralized by 
money market securities, as defined therein. Quasi-Sovereign Debt 
referred specifically to fixed income securities or debt obligations 
that are issued by companies or agencies that may receive financial 
support or backing from a local government.
    The Exchange proposes that the Prior Approval Orders be modified to 
amend the definitions of Global Corporate Debt with respect to the 
Global Fund and Corporate and Quasi-Sovereign Debt with respect to the 
Emerging Markets Fund, to include (i) inflation-protected debt, 
including fixed income securities and other debt obligations linked to 
inflation rates of local economies, and (ii) variable rate or floating 
rate securities which are readjusted on set dates (such as the last day 
of the month or calendar quarter) in the case of variable rates or 
whenever a specified interest rate change occurs in the case of a 
floating rate instrument. The Adviser represents that these proposed 
changes regarding permitted investments would allow the Funds to invest 
in a broader range of market sectors and thus would help further the 
Funds' investment objectives to obtain both income and capital 
appreciation through direct and indirect investments in Global 
Corporate Debt or Corporate and Quasi-Sovereign Debt, as applicable, 
and other investments.
    Additional information regarding the Funds, such as pricing and 
valuation, including NAV, can be found in the Notice and Prior Approval 
Orders.
    Except for the changes discussed herein, all other facts presented 
and representations made in the Rule 19b-4 \18\ filings underlying the 
Prior Approval Orders remain unchanged. The Exchange represents that 
the changes proposed would be consistent with the Exemptive Order \19\ 
and the 1940 Act and rules thereunder.
---------------------------------------------------------------------------

    \18\ 17 CFR 240.19b-4.
    \19\ See supra, note 5.
---------------------------------------------------------------------------

III. Discussion and Commission's Findings

    The Commission believes that the proposal is consistent with 
Section 6(b) of the Act,\20\ in general, and Section 6(b)(5) of the 
Act,\21\ 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 mechanism of a free and open 
market and a national market system.\22\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78f.
    \21\ 15 U.S.C. 78f(b)(5).
    \22\ 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).
---------------------------------------------------------------------------

    The Commission understands that, while one aspect of this proposal 
will allow each Fund to invest up to 40% of its net assets (calculated 
at the time of investment) in liquid Rule 144A securities, the Funds 
will continue to be capped at 15% of their respective net assets 
(calculated at the time of investment) in illiquid securities, 
including illiquid Rule 144A securities and loan participations or 
assignments (but not including LPNs). The Sub-Adviser, who is 
responsible for day-to-

[[Page 41971]]

day decisions regarding liquidity of securities, may consider the 
following factors regarding liquidity: The frequency of trades and 
quotes for the security; the number of dealers wishing to purchase or 
sell the security and the number of other potential purchasers; dealer 
undertakings to make a market in the security; and the nature of the 
security and of the marketplace trades (e.g., the time needed to 
dispose of the security, the method of soliciting offers, and the 
mechanics of transfer).\23\ Ultimately, however, each Fund's Board of 
Directors has responsibility for determining the liquidity of 
securities (including Rule 144A securities) held by the Funds. The 
Commission notes that the Adviser represents that each Fund's holdings 
in Rule 144A securities deemed liquid by the Sub-Adviser will be part 
of an issuance with more than $100 million in principal outstanding. 
Finally, the Exchange has stated that the Adviser represents it does 
not expect that the proposed rule change will impede the ability of the 
Funds' agent to calculate an NAV and an IIV and disseminate such IIV 
every 15 seconds throughout the trading day.
---------------------------------------------------------------------------

    \23\ See Securities Act Release No. 6862 (April 23, 1990), 55 FR 
17933, 17940 (April 30, 1990) (Resale of Restricted Securities; 
Changes to Method of Determining Holding Period of Restricted 
Securities Under Rules 144 and 145). See also supra, note 10.
---------------------------------------------------------------------------

    The Commission further notes that pursuant to the 1940 Act and 
rules thereunder, the Funds are required to monitor their respective 
portfolio's liquidity on an ongoing basis to determine whether, in 
light of current circumstances, an adequate level of liquidity is being 
maintained, and to consider taking appropriate steps in order to 
maintain adequate liquidity if through a change in values, net assets 
or other circumstances, more than 15% of the Fund's net assets are held 
in illiquid securities.
    Thus, the Commission finds that providing the Adviser and Sub-
Adviser additional flexibility with respect to investing in a larger 
percentage of investments in Rule 144A Securities, given the 
protections discussed above, is consistent with the Act.
    The Exchange also proposes to allow the Global Fund to invest up to 
20% of its net assets in sovereign debt, which is defined as ``debt 
securities of foreign governments.'' \24\ Given that the Global Fund 
will continue to have at least 80% of its net assets in Global 
Corporate Debt that are fixed income securities and the Fund's 
limitation regarding non-investment grade securities, the Commission 
believes it is consistent with the Act for the Exchange to allow up to 
20% of net assets of the Global Fund in sovereign debt.
---------------------------------------------------------------------------

    \24\ Sovereign debt, according to the Exchange, enjoys a 
relationship to foreign governments that is not unlike that of 
Treasury debt securities and the U.S. government. See Notice, supra 
note 3.
---------------------------------------------------------------------------

    Finally, the Commission believes that it is consistent with the Act 
for the Exchange to amend the definition of Global Corporate Debt in 
the Global Fund and Corporate and Quasi-Sovereign Debt in the Emerging 
Markets Fund, as set forth in the Prior Approval Orders, to include (i) 
inflation-protected debt, fixed income securities and other debt 
obligations linked to inflation rates of local economies, and (ii) 
variable rate or floating rate securities which are readjusted on set 
dates (such as the last day of the month or calendar quarter) in the 
case of variable rates or whenever a specified interest rate change 
occurs in the case of a floating rate instrument. The Commission 
believes that this expansion of the definition is reasonable, given the 
characteristics of these securities, and would permit the Funds to 
invest in a broader range of market sectors, and thereby help further 
the Fund's objectives to obtain both income and capital appreciation 
through direct and indirect investments in Global Corporate Debt or 
Corporate and Quasi-Sovereign Debt, as applicable, and other 
investments. Thus, the Commission finds this aspect of the proposal is 
consistent with the Act.\25\
---------------------------------------------------------------------------

    \25\ See, e.g., Securities Act Release Nos. 65458 (September 30, 
2011), 76 FR 62112 (October 6, 2011) (SR-NYSEArca-2011-54) and 64935 
(July 20, 2011), 76 FR 44966 (July 27, 2011) (SR-NYSEArca-2011-31).
---------------------------------------------------------------------------

    Importantly, the Commission notes that the Shares will continue to 
be listed and traded on the Exchange pursuant to the initial and 
continued listing criteria in NASDAQ Rule 5735. In addition, the 
Adviser represents there is no change to either Fund's investment 
objective, and except for the limited changes discussed herein, all 
other facts represented and representations made in the Rule 19b-4 \26\ 
filings underlying the Prior Approval Orders, and representations and 
findings set forth in the Prior Approval Orders, remain unchanged. The 
Exchange represents that the changes proposed would be consistent with 
the Exemptive Order \27\ and the 1940 Act and rules thereunder.
---------------------------------------------------------------------------

    \26\ 17 CFR 240.19b-4.
    \27\ See supra, note 5.
---------------------------------------------------------------------------

    This approval order is based on the Exchange's representations.

IV. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \28\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\29\ that the proposed rule change (SR-NASDAQ-2013-079), as 
modified by Amendment No. 1 thereto, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
---------------------------------------------------------------------------

    \30\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-16689 Filed 7-11-13; 8:45 am]
BILLING CODE 8011-01-P

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