Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Changes to the Means of Achieving the Investment Objective Applicable to the AdvisorShares QAM Equity Hedge ETF, 56764-56766 [2013-22256]

Download as PDF 56764 Federal Register / Vol. 78, No. 178 / Friday, September 13, 2013 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–22305 Filed 9–12–13; 8:45 am] BILLING CODE 8011–01–P A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70347; File No. SR– NYSEArca–2013–85] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Changes to the Means of Achieving the Investment Objective Applicable to the AdvisorShares QAM Equity Hedge ETF September 9, 2013. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on August 27, 2013, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to reflect changes to the means of achieving the investment objective applicable to the AdvisorShares QAM Equity Hedge ETF (‘‘Fund’’). The Fund is currently listed and traded on the Exchange under NYSE Arca Equities Rule 8.600. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. tkelley on DSK3SPTVN1PROD with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text 11 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 18:23 Sep 12, 2013 Jkt 229001 of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. 1. Purpose The Commission has approved listing and trading on the Exchange of shares (‘‘Shares’’) of the AdvisorShares QAM Equity Hedge ETF, a series of AdvisorShares Trust (‘‘Trust’’),4 under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares. The Fund is currently listed and traded on the Exchange under NYSE Arca Equities Rule 8.600. The Shares are offered by the Trust, a statutory trust organized under the laws of the State of Delaware and registered with the Commission as an open-end management investment company.5 The investment advisor to the Fund is AdvisorShares Investments, LLC (‘‘Adviser’’). Commerce Asset Management is the sub-advisor (‘‘SubAdviser’’) to the Fund and provides dayto-day portfolio management of the Fund. In this proposed rule change, the Exchange proposes to reflect changes to the description of the measures the SubAdviser will utilize to implement the Fund’s investment objective.6 4 See Securities Exchange Act Release No. 67559 (August 1, 2012), 77 FR 47482 (August 8, 2012) (SR–NYSEArca–2012–57) (‘‘Prior Order’’). See also Securities Exchange Act Release No. 67196 (June 13, 2012), 77 FR 36591(June 19, 2012) (SR– NYSEArca–2012–57) (‘‘Prior Notice,’’ and together with the Prior Order, the ‘‘Prior Release’’). The Fund and the Shares are currently in compliance with the listing standards and other rules of the Exchange and the requirements set forth in the Prior Release. 5 The Trust is registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’). On September 16, 2011, the Trust filed with the Commission an amendment to its registration statement on Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities Act’’) and under the 1940 Act relating to the Fund (File Nos. 333– 157876 and 811–22110) (‘‘Registration Statement’’). The description of the operation of the Trust and the Fund herein is based, in part, on the Registration Statement. In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the 1940 Act. See Investment Company Act Release No. 28822 (July 20, 2009) (File No. 812–13488) (‘‘Exemptive Order’’). 6 The changes described herein will be effective upon filing with the Commission of another amendment to the Trust’s Registration Statement. See note 5, supra. The Adviser represents that the Adviser and Sub-Adviser have managed and will continue to manage the Fund in the manner described in the Prior Release, and will not PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 As stated in the Prior Release, in managing the Fund’s portfolio, among other proprietary analytics, the SubAdviser utilizes Markov Processes International, LLC’s (‘‘MPI’’) Dynamic Style Analysis (‘‘DSA’’) patented hedge fund analysis software to help select the Fund’s investments and determine the allocation among such investments. The Sub-Adviser identifies approximately 50 market factors that track the aggregated exposure and approximate the returns of the selected universe of long/short equity hedge funds. The Sub-Adviser uses DSA and other proprietary analytics to define and track the various market factors and relative exposures and to adjust the Fund’s portfolio as necessary. As stated in the Prior Release, the Fund’s portfolio typically consists of up to 50 Underlying ETPs and other securities. Going forward, the Fund proposes to implement the following changes from the representations made in the Prior Release. First, in managing the Fund’s portfolio, the Fund will no longer utilize the MPI DSA software. Instead, the SubAdviser will utilize, among other proprietary analytics, its own quantitative techniques, including time dependent factor approximations, to help select the Fund’s investments and determine the allocation among such investments. The Sub-Adviser will use quantitative analysis including other proprietary analytics to define and track the various market factors and relative exposures and to adjust the Fund’s portfolio as necessary. Second, the SubAdviser will identify approximately 100, instead of approximately 50, market factors that track the aggregated exposure and approximate the returns of the selected universe of long/short equity hedge funds.7 Third, the Fund’s portfolio typically will consist of between 40 and 80, instead of up to 50, Underlying ETPs and other securities, as described in the Prior Release. The Adviser represents that the purpose of this change is, first, to provide additional flexibility to the SubAdviser to meet the Fund’s investment objective by substantially increasing the number of market factors that track the aggregated exposure and approximate the returns of the selected universe of long/short equity hedge funds. Such an implement the changes described herein until the instant proposed rule change is operative. 7 As stated in the Prior Release, at any given time, such market factors may include country exposure, sector exposure, industry exposure, and currency exposure. In seeking to achieve its investment objective, the Fund seeks to remain invested at all times in securities or derivatives (as described in the Prior Release) that provide the desired exposures to market factors. E:\FR\FM\13SEN1.SGM 13SEN1 Federal Register / Vol. 78, No. 178 / Friday, September 13, 2013 / Notices tkelley on DSK3SPTVN1PROD with NOTICES increase will permit the Fund to include a broader range of market sectors in the mid- and large-cap equity securities and Underlying ETPs in which the Fund invests, and will further the Fund’s objective to seek capital appreciation. Second, the Fund will utilize proprietary quantitative techniques to select the Fund’s investments and allocations, which will provide the Fund with additional control over its investments. Third, the Fund will substantially increase the maximum number of Underlying ETPs and other securities that will compose the Fund’s portfolio, which will also provide additional flexibility to the Fund to include a broader range of securities in furtherance of the Fund’s investment objectives. The Exchange also notes that the Prior Release stated that the Sub-Adviser is affiliated with a broker-dealer. The Adviser represents that the Sub-Adviser is no longer affiliated with a brokerdealer. The Adviser represents that there is no change to the Fund’s investment objective. The Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. Except for the changes noted above, all other facts presented and representations made in the Prior Release remain unchanged. All terms referenced but not defined herein are defined in the Prior Release. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 8 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will continue to be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600. The Adviser represents that the purpose of this change is, first, to provide additional flexibility to the Sub-Adviser to meet the Fund’s investment objective by substantially increasing the number of market factors that track the aggregated exposure and approximate the returns of the selected universe of long/short equity hedge funds. Such an increase 8 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 18:23 Sep 12, 2013 Jkt 229001 will permit the Fund to include a broader range of market sectors in the mid- and large-cap equity securities and Underlying ETPs in which the Fund invests, and will further the Fund’s objective to seek capital appreciation. Second, the Fund will utilize proprietary quantitative techniques to select the Fund’s investments and allocations, which will provide the Fund with additional control over its investments. Third, the Fund will substantially increase the maximum number of Underlying ETPs and other securities that will compose the Fund’s portfolio, which will also provide additional flexibility to the Fund to include a broader range of securities in furtherance of the Fund’s investment objectives. The Adviser represents that there is no change to the Fund’s investment objective. The Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Adviser represents that there is no change to the Fund’s investment objective. The Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. The Adviser represents that the purpose of this change is to provide additional flexibility to the Sub-Adviser to meet the Fund’s investment objective, as discussed above. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that the Fund will continue to comply with all initial and continued listing requirements under NYSE Arca Equities Rule 8.600. The Adviser represents that the purpose of this change is to provide additional flexibility to the Sub-Adviser to meet the Fund’s investment objective, as discussed above. The Adviser represents that there is no change to the Fund’s investment objective. Except for the changes noted above, all other representations made in the Prior Release remain unchanged. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed changes to the Fund’s means of achieving the investment objective will permit the Fund to invest in a broader number of market sectors and a greater number of Underlying ETPs and PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 56765 other securities, and will enhance competition among issues of Managed Fund Shares that invest in equity securities. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 9 and Rule 19b–4(f)(6) thereunder.10 A proposed rule change filed under Rule 19b–4(f)(6) 11 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),12 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission notes that waiver of the operative delay would permit the Fund to immediately implement the changes proposed herein. Under the proposal,13 (1) the Fund would seek to employ certain 9 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 11 Id. 12 17 CFR 240.19b–4(f)(6)(iii). 13 In the proposed rule change, the Exchange also clarified that the Sub-Adviser is no longer affiliated with a broker-dealer. The Commission notes that, as stated in the Prior Release, in the event the SubAdviser becomes newly affiliated with a brokerdealer, it will implement a fire wall with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the portfolio and will be subject to procedures designed 10 17 E:\FR\FM\13SEN1.SGM Continued 13SEN1 tkelley on DSK3SPTVN1PROD with NOTICES 56766 Federal Register / Vol. 78, No. 178 / Friday, September 13, 2013 / Notices proprietary techniques, in lieu of the MPI DSA software, in addition to other proprietary analytics, to help select and determine the allocation of its investments and to define and track the various market factors and relative exposures and to adjust the Fund’s portfolio, as necessary, (2) the SubAdviser would seek to identify approximately 100, instead of approximately 50, market factors that track the aggregated exposure and approximate the returns of the selected universe of long/short equity hedge funds, and (3) the Fund’s portfolio would seek to consist of between 40 and 80, instead of up to 50, Underlying ETPs and other securities. The Commission believes that utilizing certain proposed proprietary techniques, in addition to other proprietary analytics, increasing the number of identifiable market factors to track the aggregated exposure and approximate the returns of the selected universe of long/short equity hedge funds and raising the maximum number of Underlying ETPs and other securities in which the Fund may invest would allow for additional flexibility for the Fund to include a broader and more diversified range of market sectors and securities investments, in furtherance of the Fund’s investment objective to seek investment results that exceed the risk adjusted performance of approximately 50% of the long/short equity hedge fund universe, as defined by the HFRI Equity Hedge (Total) Index constituents.14 In addition, the Exchange represents that, by investing in a broader range of market sectors, the Sub-Adviser may be able to reduce some of the market risk associated with investment in a smaller number of market sectors and reduce price volatility in the Fund’s Shares. The Exchange represents that the Fund’s investment objective is not changing, all other representations made in the Prior Release remain unchanged, and the Fund will continue to comply with all of the listing requirements under NYSE Arca Equities Rule 8.600. For the foregoing reasons, the Commission believes that the proposed change does not raise novel or unique regulatory issues and is consistent with the protection of investors and the public interest. Therefore, the Commission waives the 30-day operative delay requirement and designates the proposed rule change as operative upon filing.15 to prevent the use and dissemination of material, non-public information regarding such portfolio. 14 See Prior Release, supra note 4 (providing additional details regarding the investment objective of the Fund). 15 For purposes only of waiving the 30-day operative delay, the Commission has considered the VerDate Mar<15>2010 18:23 Sep 12, 2013 Jkt 229001 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2013–85 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2013–85. 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 the filing also will be available for proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–NYSEArca– 2013–85 and should be submitted on or before October 4, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–22256 Filed 9–12–13; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice 8473] Culturally Significant Objects Imported for Exhibition Determinations: ‘‘Antonio Berni: Juanito and Ramona’’ Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, et seq.; 22 U.S.C. 6501 note, et seq.), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236–3 of August 28, 2000, and, as appropriate, Delegation of Authority No. 257 of April 15, 2003, I hereby determine that the objects to be included in the exhibition ‘‘Antonio Berni: Juanito and Ramona,’’ imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Museum of Fine Arts, Houston, Houston, Texas, from on or about November 8, 2013, until on or about February 2, 2014, and at possible additional exhibitions or venues yet to be determined, is in the national interest. I have ordered that Public Notice of these Determinations be published in the Federal Register. FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Paul W. Manning, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6469). The mailing address is U.S. Department of SUMMARY: 16 17 E:\FR\FM\13SEN1.SGM CFR 200.30–3(a)(12). 13SEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 178 (Friday, September 13, 2013)]
[Notices]
[Pages 56764-56766]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22256]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70347; File No. SR-NYSEArca-2013-85]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to Changes
to the Means of Achieving the Investment Objective Applicable to the
AdvisorShares QAM Equity Hedge ETF

September 9, 2013.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on August 27, 2013, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange proposes to reflect changes to the means of achieving
the investment objective applicable to the AdvisorShares QAM Equity
Hedge ETF (``Fund''). The Fund is currently listed and traded on the
Exchange under NYSE Arca Equities Rule 8.600. The text of the proposed
rule change is available on the Exchange's Web site at www.nyse.com, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Commission has approved listing and trading on the Exchange of
shares (``Shares'') of the AdvisorShares QAM Equity Hedge ETF, a series
of AdvisorShares Trust (``Trust''),\4\ under NYSE Arca Equities Rule
8.600, which governs the listing and trading of Managed Fund Shares.
The Fund is currently listed and traded on the Exchange under NYSE Arca
Equities Rule 8.600.
---------------------------------------------------------------------------

\4\ See Securities Exchange Act Release No. 67559 (August 1,
2012), 77 FR 47482 (August 8, 2012) (SR-NYSEArca-2012-57) (``Prior
Order''). See also Securities Exchange Act Release No. 67196 (June
13, 2012), 77 FR 36591(June 19, 2012) (SR-NYSEArca-2012-57) (``Prior
Notice,'' and together with the Prior Order, the ``Prior Release'').
The Fund and the Shares are currently in compliance with the listing
standards and other rules of the Exchange and the requirements set
forth in the Prior Release.
---------------------------------------------------------------------------

The Shares are offered by the Trust, a statutory trust organized
under the laws of the State of Delaware and registered with the
Commission as an open-end management investment company.\5\ The
investment advisor to the Fund is AdvisorShares Investments, LLC
(``Adviser''). Commerce Asset Management is the sub-advisor (``Sub-
Adviser'') to the Fund and provides day-to-day portfolio management of
the Fund.
---------------------------------------------------------------------------

\5\ The Trust is registered under the Investment Company Act of
1940 (15 U.S.C. 80a-1) (``1940 Act''). On September 16, 2011, the
Trust filed with the Commission an amendment to its registration
statement on Form N-1A under the Securities Act of 1933 (15 U.S.C.
77a) (``Securities Act'') and under the 1940 Act relating to the
Fund (File Nos. 333-157876 and 811-22110) (``Registration
Statement''). The description of the operation of the Trust and the
Fund herein is based, in part, on the Registration Statement. In
addition, the Commission has issued an order granting certain
exemptive relief to the Trust under the 1940 Act. See Investment
Company Act Release No. 28822 (July 20, 2009) (File No. 812-13488)
(``Exemptive Order'').
---------------------------------------------------------------------------

In this proposed rule change, the Exchange proposes to reflect
changes to the description of the measures the Sub-Adviser will utilize
to implement the Fund's investment objective.\6\
---------------------------------------------------------------------------

\6\ The changes described herein will be effective upon filing
with the Commission of another amendment to the Trust's Registration
Statement. See note 5, supra. The Adviser represents that the
Adviser and Sub-Adviser have managed and will continue to manage the
Fund in the manner described in the Prior Release, and will not
implement the changes described herein until the instant proposed
rule change is operative.
---------------------------------------------------------------------------

As stated in the Prior Release, in managing the Fund's portfolio,
among other proprietary analytics, the Sub-Adviser utilizes Markov
Processes International, LLC's (``MPI'') Dynamic Style Analysis
(``DSA'') patented hedge fund analysis software to help select the
Fund's investments and determine the allocation among such investments.
The Sub-Adviser identifies approximately 50 market factors that track
the aggregated exposure and approximate the returns of the selected
universe of long/short equity hedge funds. The Sub-Adviser uses DSA and
other proprietary analytics to define and track the various market
factors and relative exposures and to adjust the Fund's portfolio as
necessary. As stated in the Prior Release, the Fund's portfolio
typically consists of up to 50 Underlying ETPs and other securities.
Going forward, the Fund proposes to implement the following changes
from the representations made in the Prior Release. First, in managing
the Fund's portfolio, the Fund will no longer utilize the MPI DSA
software. Instead, the Sub-Adviser will utilize, among other
proprietary analytics, its own quantitative techniques, including time
dependent factor approximations, to help select the Fund's investments
and determine the allocation among such investments. The Sub-Adviser
will use quantitative analysis including other proprietary analytics to
define and track the various market factors and relative exposures and
to adjust the Fund's portfolio as necessary. Second, the Sub-Adviser
will identify approximately 100, instead of approximately 50, market
factors that track the aggregated exposure and approximate the returns
of the selected universe of long/short equity hedge funds.\7\ Third,
the Fund's portfolio typically will consist of between 40 and 80,
instead of up to 50, Underlying ETPs and other securities, as described
in the Prior Release.
---------------------------------------------------------------------------

\7\ As stated in the Prior Release, at any given time, such
market factors may include country exposure, sector exposure,
industry exposure, and currency exposure. In seeking to achieve its
investment objective, the Fund seeks to remain invested at all times
in securities or derivatives (as described in the Prior Release)
that provide the desired exposures to market factors.
---------------------------------------------------------------------------

The Adviser represents that the purpose of this change is, first,
to provide additional flexibility to the Sub-Adviser to meet the Fund's
investment objective by substantially increasing the number of market
factors that track the aggregated exposure and approximate the returns
of the selected universe of long/short equity hedge funds. Such an

[[Page 56765]]

increase will permit the Fund to include a broader range of market
sectors in the mid- and large-cap equity securities and Underlying ETPs
in which the Fund invests, and will further the Fund's objective to
seek capital appreciation. Second, the Fund will utilize proprietary
quantitative techniques to select the Fund's investments and
allocations, which will provide the Fund with additional control over
its investments. Third, the Fund will substantially increase the
maximum number of Underlying ETPs and other securities that will
compose the Fund's portfolio, which will also provide additional
flexibility to the Fund to include a broader range of securities in
furtherance of the Fund's investment objectives.
The Exchange also notes that the Prior Release stated that the Sub-
Adviser is affiliated with a broker-dealer. The Adviser represents that
the Sub-Adviser is no longer affiliated with a broker-dealer.
The Adviser represents that there is no change to the Fund's
investment objective. The Fund will continue to comply with all initial
and continued listing requirements under NYSE Arca Equities Rule 8.600.
Except for the changes noted above, all other facts presented and
representations made in the Prior Release remain unchanged. All terms
referenced but not defined herein are defined in the Prior Release.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \8\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will continue to be listed and traded on the Exchange pursuant
to the initial and continued listing criteria in NYSE Arca Equities
Rule 8.600. The Adviser represents that the purpose of this change is,
first, to provide additional flexibility to the Sub-Adviser to meet the
Fund's investment objective by substantially increasing the number of
market factors that track the aggregated exposure and approximate the
returns of the selected universe of long/short equity hedge funds. Such
an increase will permit the Fund to include a broader range of market
sectors in the mid- and large-cap equity securities and Underlying ETPs
in which the Fund invests, and will further the Fund's objective to
seek capital appreciation. Second, the Fund will utilize proprietary
quantitative techniques to select the Fund's investments and
allocations, which will provide the Fund with additional control over
its investments. Third, the Fund will substantially increase the
maximum number of Underlying ETPs and other securities that will
compose the Fund's portfolio, which will also provide additional
flexibility to the Fund to include a broader range of securities in
furtherance of the Fund's investment objectives. The Adviser represents
that there is no change to the Fund's investment objective. The Fund
will continue to comply with all initial and continued listing
requirements under NYSE Arca Equities Rule 8.600.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Adviser represents that there is no change to the Fund's
investment objective. The Fund will continue to comply with all initial
and continued listing requirements under NYSE Arca Equities Rule 8.600.
The Adviser represents that the purpose of this change is to provide
additional flexibility to the Sub-Adviser to meet the Fund's investment
objective, as discussed above.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that the Fund will continue to comply with all
initial and continued listing requirements under NYSE Arca Equities
Rule 8.600. The Adviser represents that the purpose of this change is
to provide additional flexibility to the Sub-Adviser to meet the Fund's
investment objective, as discussed above. The Adviser represents that
there is no change to the Fund's investment objective. Except for the
changes noted above, all other representations made in the Prior
Release remain unchanged.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed changes to the
Fund's means of achieving the investment objective will permit the Fund
to invest in a broader number of market sectors and a greater number of
Underlying ETPs and other securities, and will enhance competition
among issues of Managed Fund Shares that invest in equity securities.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

Because the proposed rule change does not: (i) Significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Commission notes that
waiver of the operative delay would permit the Fund to immediately
implement the changes proposed herein.
---------------------------------------------------------------------------

\11\ Id.
\12\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

Under the proposal,\13\ (1) the Fund would seek to employ certain

[[Page 56766]]

proprietary techniques, in lieu of the MPI DSA software, in addition to
other proprietary analytics, to help select and determine the
allocation of its investments and to define and track the various
market factors and relative exposures and to adjust the Fund's
portfolio, as necessary, (2) the Sub-Adviser would seek to identify
approximately 100, instead of approximately 50, market factors that
track the aggregated exposure and approximate the returns of the
selected universe of long/short equity hedge funds, and (3) the Fund's
portfolio would seek to consist of between 40 and 80, instead of up to
50, Underlying ETPs and other securities. The Commission believes that
utilizing certain proposed proprietary techniques, in addition to other
proprietary analytics, increasing the number of identifiable market
factors to track the aggregated exposure and approximate the returns of
the selected universe of long/short equity hedge funds and raising the
maximum number of Underlying ETPs and other securities in which the
Fund may invest would allow for additional flexibility for the Fund to
include a broader and more diversified range of market sectors and
securities investments, in furtherance of the Fund's investment
objective to seek investment results that exceed the risk adjusted
performance of approximately 50% of the long/short equity hedge fund
universe, as defined by the HFRI Equity Hedge (Total) Index
constituents.\14\ In addition, the Exchange represents that, by
investing in a broader range of market sectors, the Sub-Adviser may be
able to reduce some of the market risk associated with investment in a
smaller number of market sectors and reduce price volatility in the
Fund's Shares.
---------------------------------------------------------------------------

\13\ In the proposed rule change, the Exchange also clarified
that the Sub-Adviser is no longer affiliated with a broker-dealer.
The Commission notes that, as stated in the Prior Release, in the
event the Sub-Adviser becomes newly affiliated with a broker-dealer,
it will implement a fire wall with respect to such broker-dealer
regarding access to information concerning the composition and/or
changes to the portfolio and will be subject to procedures designed
to prevent the use and dissemination of material, non-public
information regarding such portfolio.
\14\ See Prior Release, supra note 4 (providing additional
details regarding the investment objective of the Fund).
---------------------------------------------------------------------------

The Exchange represents that the Fund's investment objective is not
changing, all other representations made in the Prior Release remain
unchanged, and the Fund will continue to comply with all of the listing
requirements under NYSE Arca Equities Rule 8.600. For the foregoing
reasons, the Commission believes that the proposed change does not
raise novel or unique regulatory issues and is consistent with the
protection of investors and the public interest. Therefore, the
Commission waives the 30-day operative delay requirement and designates
the proposed rule change as operative upon filing.\15\
---------------------------------------------------------------------------

\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2013-85 on the subject line.

Paper Comments

Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2013-85. 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 the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-NYSEArca-2013-85 and should be
submitted on or before October 4, 2013.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22256 Filed 9-12-13; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.