Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change, As Modified By Amendment No. 1 Thereto, To List and Trade of Shares of the Market Vectors Short High-Yield Municipal Index ETF Under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, 69503-69509 [2013-27667]

Download as PDF Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices 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–ISE–2013–54. 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 (http://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 Number SR–ISE– 2013–54 and should be submitted on or before December 10, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–27625 Filed 11–18–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70871; File No. SR– NYSEArca–2013–118] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change, As Modified By Amendment No. 1 Thereto, To List and Trade of Shares of the Market Vectors Short High-Yield Municipal Index ETF Under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on October 30, 2013, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. On November 8, 2013, the Exchange filed Amendment No. 1 to the proposed rule change.4 The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1 thereto, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to list and trade under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, the shares of the Market Vectors Short High-Yield Municipal Index ETF. 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 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 By Amendment No. 1, the Exchange: (1) Deleted a sentence relating to the Fund holding depositary receipts and to-be-announced transactions; (2) added a phrase that states that the Administrator, through the NSCC, will make available Indicative Per Share Portfolio Value on a continuous basis throughout the day; (3) made clarifying changes to reflect that the Fund will limit itself to holding up to 15% of its net assets in illiquid assets, not just illiquid securities; and (4) modified certain crossreferences. TKELLEY on DSK3SPTVN1PROD with NOTICES 2 15 CFR 200.30–3(a)(12). VerDate Mar<15>2010 17:21 Nov 18, 2013 Jkt 232001 PO 00000 Frm 00142 Fmt 4703 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose November 14, 2013. 1 15 10 17 69503 Sfmt 4703 The Exchange proposes to list and trade shares (‘‘Shares’’) of the Market Vectors Short High Yield Municipal Index ETF (‘‘Fund’’) under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, which governs the listing and trading of Investment Company Units (‘‘Units’’) based on fixed income securities indexes.5 The Fund is a series of the Market Vectors ETF Trust (‘‘Trust’’).6 Van Eck Associates Corporation will be the investment adviser (‘‘Adviser’’) for the Fund. Van Eck Securities Corporation will be the Fund’s distributor (‘‘Distributor’’). Van Eck Associates Corporation also will be the administrator for the Fund (the ‘‘Administrator’’), and will be responsible for certain clerical, recordkeeping and/or bookkeeping services. The Bank of New York Mellon will be the custodian of the Fund’s assets and provides transfer agency and fund accounting services to the Fund. The investment objective of the Fund will be to seek to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays Municipal High Yield Short Duration Index (the ‘‘Short High Yield Index’’ or ‘‘Index’’). The Fund 5 The Commission previously has approved a proposed rule change relating to listing and trading on the Exchange of Units based on municipal bond indexes. See Securities Exchange Act Release No. 67985 (October 4, 2012), 77 FR 61804 (October 11, 2012) (SR–NYSEArca–2012–92) (order approving proposed rule change relating to the listing and trading of iShares 2018 S&P AMT-Free Municipal Series and iShares 2019 S&P AMT-Free Municipal Series under NYSE Arca Equities Rule 5.2(j)(3), Commentary .02). 6 On August 27, 2012, the Trust filed an amendment to its registration statement on Form N–1A under the Securities Act of 1933 (15 U.S.C. 77a) and the Investment Company Act of 1940 (‘‘1940 Act’’) (15 U.S.C. 80a–1) (File Nos. 333– 123257 and 811–10325) (the ‘‘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. 28021 (October 24, 2007) (File No. 812–13426) (‘‘Exemptive Order’’). E:\FR\FM\19NON1.SGM 19NON1 69504 Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices normally 7 will invest at least 80% of its total assets in securities that compose the Index. Depositary receipts or to-beannounced transactions (‘‘TBAs’’) 8 representing securities in the Short High Yield Index may be used by the Fund in seeking performance that corresponds to the Short High Yield Index, and in managing cash flows and may count towards the Fund’s 80% policy. The Fund, using a ‘‘passive’’ or indexing investment approach, will attempt to approximate the investment performance of the Index. The Adviser expects that, over time, the correlation between the Fund’s performance before fees and expenses and that of the Index will be 95% or better. A figure of 100% would indicate perfect correlation. Because of the practical difficulties and expense of purchasing all of the securities in the Index, the Fund will not purchase all of the securities in the Index. Instead, the Adviser will utilize a ‘‘sampling’’ methodology in seeking to achieve the Fund’s objective. As such, the Fund may purchase a subset of the bonds in the Index in an effort to hold a portfolio of bonds with generally the same risk and return characteristics of the Index. TKELLEY on DSK3SPTVN1PROD with NOTICES Other Investments While the Fund normally will invest at least 80% of its total assets in securities that compose the Index, the Fund may invest its remaining assets in other financial instruments, as described below. The Fund may invest its remaining assets in securities not included in the Short High Yield Index, money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments, convertible securities,9 structured notes (notes on which the amount of principal repayment and interest payments are based on the 7 The word ‘‘normally’’ means, without limitation, the absence of extreme volatility or trading halts in the equity markets or the financial markets generally; operational issues causing dissemination of inaccurate market information; or force majeure type events such as systems failure, natural or man-made disaster, act of God, armed conflict, act of terrorism, riot or labor disruption or any similar intervening circumstance. 8 A TBA transaction is a method of trading mortgage-backed securities. In a TBA transaction, the buyer and seller agree upon general trade parameters such as agency, settlement date, par amount, and price. The actual pools delivered generally are determined two days prior to the settlement date. 9 A convertible security is a bond, debenture, note, preferred stock, right, warrant or other security that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. VerDate Mar<15>2010 17:21 Nov 18, 2013 Jkt 232001 movement of one or more specified factors, such as the movement of a particular stock or stock index),10 and certain derivative instruments that are mentioned below. The Fund may also invest, to the extent permitted by the 1940 Act, in other affiliated and unaffiliated funds, such as open-end or closed-end management investment companies, including other exchangetraded funds (‘‘ETFs’’).11 The Fund may invest in repurchase agreements with commercial banks, brokers or dealers to generate income from its excess cash balances and to invest securities lending cash collateral. The Fund may use exchange-traded futures contracts and exchange-traded or over-the-counter (‘‘OTC’’) options thereon, together with positions in cash and money market instruments, to simulate full investment in the Index. The Fund may use cleared or noncleared index, interest rate or credit default swap agreements. Swap agreements are contracts between parties in which one party agrees to make payments to the other party based on the change in market value or level of a specified index or asset. The Adviser represents that currently interest rate swaps and credit default swaps on indexes are cleared. However, credit default swaps on a specific security are currently uncleared. The Fund may invest in exchangetraded warrants, which are equity securities in the form of options issued by a corporation which give the holder the right to purchase stock, usually at a price that is higher than the market price at the time the warrant is issued. The Fund may invest in participation notes, which are issued by banks or broker-dealers and are designed to offer a return linked to the performance of a particular underlying equity security or market. The Fund will only enter into transactions in derivative instruments with counterparties that the Adviser 10 Structured notes are derivative securities for which the amount of principal repayment and/or interest payments is based on the movement of one or more factors, including, but not limited to, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices. 11 For purposes of this filing, ETFs include Investment Company Units (as described in NYSE Arca Equities Rule 5.2(j)(3)); Portfolio Depositary Receipts (as described in NYSE Arca Equities Rule 8.100); and Managed Fund Shares (as described in NYSE Arca Equities Rule 8.600). The ETFs all will be listed and traded in the U.S. on registered exchanges. The Fund may invest in the securities of ETFs registered under the 1940 Act consistent with the requirements of Section 12(d)(1) of the 1940 Act, or any rule, regulation or order of the Commission or interpretation thereof. While the Fund may invest in inverse ETFs, the Fund will not invest in leveraged (e.g., 2X, –2X, 3X or –3X) ETFs. PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 reasonably believes are capable of performing under the contract and will post as collateral as required by the counterparty.12 The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser, in accordance with Commission guidance.13 The Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will 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 assets. Illiquid assets 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.14 Description of the Index The Index is a market size weighted index composed of publicly traded municipal bonds that cover the U.S. 12 The Fund will seek, where possible, to use counterparties, as applicable, whose financial status is such that the risk of default is reduced; however, the risk of losses resulting from default is still possible. The Adviser will evaluate the creditworthiness of counterparties on a regular basis. In addition to information provided by credit agencies, the Adviser will review approved counterparties using various factors, which may include the counterparty’s reputation, the Adviser’s past experience with the counterparty and the price/market actions of debt of the counterparty. 13 In reaching liquidity decisions, the 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 the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer). 14 The Commission has stated that long-standing Commission guidelines have required open-end funds to hold no more than 15% of their net assets in illiquid securities and other illiquid assets. See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 14618 (March 18, 2008), footnote 34. See also, Investment Company Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 1970) (Statement Regarding ‘‘Restricted Securities’’); Investment Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 20, 1992) (Revisions of Guidelines to Form N–1A). A fund’s portfolio security is illiquid if it cannot be disposed of in the ordinary course of business within seven days at approximately the value ascribed to it by the fund. See Investment Company Act Release No. 14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting amendments to Rule 2a–7 under the 1940 Act); Investment Company Act Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A under the 1933 Act). E:\FR\FM\19NON1.SGM 19NON1 Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices dollar denominated high yield shortterm tax-exempt bond market. The majority of the Index’s constituents are from the revenue sector, with some constituents being from the general obligation sector. The revenue sector is divided into industry sectors that consist of but may not be limited to electric, health care, transportation, education, water and sewer, resource recovery, leasing and special tax. As of December 31, 2012, the Index consisted of approximately 1,935 bonds and 530 unique issuers.15 The Index is calculated using a market value weighting methodology. Index constituents are capitalizationweighted, based on their current amount outstanding. The Index tracks the high yield municipal bond market with a 75% weight in non-investment grade municipal bonds and a 25% weight in Baa/BBB-rated investment grade municipal bonds. It is comprised of three total return, market size weighted benchmark indexes with weights as follows: —50% weight in Muni High Yield/$100 Million Deal Size Index. To be included in the Muni High Yield/ $100 Million Deal Size Index, bonds must be unrated or rated Ba1/BB+ or lower by at least two of the following rating agencies if all three rate the bond: Moody’s Investors Service, Inc. (‘‘Moody’s’’), Standard & Poor’s, Inc. (‘‘S&P’’) and Fitch, Inc. (‘‘Fitch’’). If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be Ba1/BB+ or lower. Bonds in the Muni High Yield/$100 Million Deal Size Index must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $100 million. —25% weight in Muni High Yield/ Under $100 Million Deal Size Index. To be included in the Muni High Yield/Under $100 Million Deal Size Index, bonds must be unrated or rated Ba1/BB+ or lower by at least two of the following rating agencies if all three rate the bond: Moody’s, S&P and TKELLEY on DSK3SPTVN1PROD with NOTICES 15 The Index is published by Barclays Capital, Inc. (‘‘Index Provider’’). The Index Provider is a registered broker-dealer and has implemented a fire wall with respect to its relevant personnel regarding access to information concerning the composition and/or changes to the Index. In addition, the Index Provider is affiliated with a broker-dealer and has implemented a fire wall with respect to its brokerdealer affiliate regarding access to information concerning the composition and/or changes to the Index. The Index Provider and its broker-dealer affiliate have implemented procedures designed to prevent the use and dissemination of material, nonpublic information regarding the Index. VerDate Mar<15>2010 17:21 Nov 18, 2013 Jkt 232001 Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be Ba1/BB+ or lower. Bonds in the Muni High Yield/Under $100 Million Deal Size Index must have an outstanding par value of at least $3 million and be issued as part of a transaction of under $100 million but over $20 million. —25% weight in Muni Baa-Rated/$100 Million Deal Size Index. To be included in the Muni Baa-Rated/$100 Million Deal Size Index, bonds must have a Barclays Index credit quality classification between Baa1/BBB+ and Baa3/BBB¥. Barclays Index credit quality classification is based on the three rating agencies, Moody’s, S&P and Fitch. If two of the three agencies rate the bond equivalently, then that rating is used. If all three rate the bond differently, the middle rating is used. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be Baa1/ BBB+, Baa2/BBB, or Baa3/BBB¥. The bonds must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $100 million. Remarketed issues are not allowed in the benchmark. All bonds must have a fixed rate, a dated-date after December 31, 1990 and a nominal maturity of 1 to 10 years. Taxable municipal bonds, bonds with floating rates and derivatives are excluded from the Index. The composition of the Index is rebalanced monthly. Interest and principal payments earned by the component securities are held in the Index without a reinvestment return until month end when they are removed from the Index. Qualifying securities issued, but not necessarily settled, on or before the month end rebalancing date qualify for inclusion in the Index in the following month. Total returns are calculated based on the sum of price changes, gain/loss on repayments of principal, and coupons received or accrued, expressed as a percentage of beginning market value. The Index is calculated and is available once a day. The Exchange is submitting this proposed rule change because the Index for the Fund does not meet all of the ‘‘generic’’ listing requirements of Commentary .02(a) to NYSE Arca Equities Rule 5.2(j)(3) applicable to the listing of Units based on fixed income securities indexes. The Index meets all PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 69505 such requirements except for those set forth in Commentary .02(a)(2).16 Specifically, as of November 27, 2012, 15.66% of the weight of the Index components have a minimum original principal amount outstanding of $100 million or more. As of November 27, 2012, 72.21% of the weight of the Index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities of the offering. In addition, the total dollar amount outstanding of issues in the Index was approximately $757 billion and the average dollar amount outstanding of issues in the Index was approximately $394 million. Further, the most heavily weighted component represents 2.67% of the weight of the Index and the five most heavily weighted components represent 10.67% of the weight of the Index.17 Therefore, the Exchange believes that, notwithstanding that the Index does not satisfy the criterion in NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 (a)(2), the Index is sufficiently broad-based to deter potential manipulation, given that it is composed of approximately 1,935 issues and 530 unique issuers. In addition, the Index securities are sufficiently liquid to deter potential manipulation in that a substantial portion (72.21%) of the Index weight is composed of maturities that are part of a minimum original principal amount outstanding of $100 million or more, and in view of the substantial total dollar amount outstanding and the average dollar amount outstanding of Index issues, as referenced above. In addition, the average daily notional trading volume for Index components for the period from October 31, 2011 to October 31, 2012 was $2,839,895 and the sum of the notional trading volumes for the same period was $5,480,997,730. The Index value, calculated and disseminated at least once daily, as well as the components of the Index and their percentage weighting, will be 16 Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3) provides that components that in the aggregate account for at least 75% of the weight of the index or portfolio each shall have a minimum original principal amount outstanding of $100 million or more. 17 Commentary .02(a)(4) to NYSE Arca Equities Rule 5.2(j)(3) provides that no component fixedincome security (excluding Treasury Securities and GSE Securities, as defined therein) shall represent more than 30% of the weight of the index or portfolio, and the five most heavily weighted component fixed-income securities in the index or portfolio shall not in the aggregate account for more than 65% of the weight of the index or portfolio. E:\FR\FM\19NON1.SGM 19NON1 69506 Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices available from major market data vendors. In addition, the portfolio of securities held by the Fund will be disclosed daily on the Fund’s Web site at www.marketvectorsetfs.com. The Exchange represents that: (1) Except for Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3), the Shares of the Fund currently satisfy all of the generic listing standards under NYSE Arca Equities Rule 5.2(j)(3); (2) the continued listing standards under NYSE Arca Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to Units shall apply to the Shares; and (3) the Trust is required to comply with Rule 10A–3 under the Act 18 for the initial and continued listing of the Shares. In addition, the Exchange represents that the Shares will comply with all other requirements applicable to Units including, but not limited to, requirements relating to the dissemination of key information such as the value of the Index and the applicable Intraday Indicative Value (‘‘IIV’’),19 rules governing the trading of equity securities, trading hours, trading halts, surveillance, and the Information Bulletin to Equity Trading Permit Holders (‘‘ETP Holders’’), as set forth in Exchange rules applicable to Units and prior Commission orders approving the generic listing rules applicable to the listing and trading of Units.20 The current value of the Index will be widely disseminated by one or more major market data vendors at least once per day, as required by NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 (b)(ii). The IIV for Shares of the Fund will be disseminated by one or more major market data vendors, updated at least every 15 seconds during the Exchange’s Core Trading Session, as required by NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 (c). Creation and Redemption of Shares According to the Registration Statement, the Fund will issue and sell 18 17 CFR 240.10A–3. IIV will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange’s Core Trading Session of 9:30 a.m. to 4:00 p.m., Eastern time. Currently, it is the Exchange’s understanding that several major market data vendors display and/or make widely available IIVs taken from the Consolidated Tape Association (‘‘CTA’’) or other data feeds. 20 See, e.g., Securities Exchange Act Release Nos. 55783 (May 17, 2007), 72 FR 29194 (May 24, 2007) (SR–NYSEArca–2007–36) (order approving NYSE Arca generic listing standards for Units based on a fixed income index); 44551 (July 12, 2001), 66 FR 37716 (July 19, 2001) (SR–PCX–2001–14) (order approving generic listing standards for Units and Portfolio Depositary Receipts); 41983 (October 6, 1999), 64 FR 56008 (October 15, 1999) (SR–PCX– 98–29) (order approving rules for listing and trading of Units). TKELLEY on DSK3SPTVN1PROD with NOTICES 19 The VerDate Mar<15>2010 17:21 Nov 18, 2013 Jkt 232001 Shares only in ‘‘Creation Units’’ of 100,000 Shares or multiples thereof on a continuous basis through the Distributor, without an initial sales load, at their net asset value (‘‘NAV’’) next determined after receipt, on any business day, of an order in proper form. The consideration for a purchase of Creation Units generally will consist of cash, in-kind, or a combination of cash and in-kind. The in-kind purchase of Creation Units will consist of the deposit of a designated portfolio of fixed income securities (the ‘‘Deposit Securities’’) that compose the Index and an amount of cash computed as described below (the ‘‘Cash Component’’) or, as permitted or required by the Fund, of the cash value of the Deposit Securities (the ‘‘Deposit Cash’’) and the Cash Component computed as described below. When accepting purchases of Creation Units for cash, the Fund may incur additional costs associated with the acquisition of Deposit Securities. The Cash Component together with the Deposit Securities or the Deposit Cash, as applicable, are referred to as the ‘‘Fund Deposit,’’ which represents the minimum initial and subsequent investment amount for Shares. The specified Deposit Securities generally will correspond, pro rata, to the extent practicable, to the component securities of the Fund’s portfolio. The Cash Component represents the difference between the NAV of a Creation Unit and the market value of Deposit Securities and may include a ‘‘Dividend Equivalent Payment’’. The Dividend Equivalent Payment will enable the Fund to make a complete distribution of dividends on the next dividend payment date, and is an amount equal, on a per Creation Unit basis, to the dividends on all the securities held by the Fund (‘‘Fund Securities’’) with exdividend dates within the accumulation period for such distribution (the ‘‘Accumulation Period’’), net of expenses and liabilities for such period, as if all of the Fund Securities had been held by the Trust for the entire Accumulation Period. The Accumulation Period begins on the exdividend date for the Fund and ends on the next ex-dividend date. The Trust may determine to issue Shares on an all cash basis (i.e., in exchange for the Deposit Cash and the Cash Component) if the Trust and the Adviser believe such method would substantially minimize the Fund’s transactional costs or would enhance the Fund’s operational efficiencies. This may occur on days when a substantial PO 00000 Frm 00145 Fmt 4703 Sfmt 4703 rebalancing of the Fund’s portfolio is required. The Administrator, through the National Securities Clearing Corporation (‘‘NSCC’’), will make available on each business day, immediately prior to the opening of business on the Exchange (currently 9:30 a.m. Eastern time), the list of the names and the required principal amounts of each Deposit Security to be included in the current Fund Deposit (based on information at the end of the previous business day) as well as the Cash Component for the Fund. Such Fund Deposit is applicable, subject to any adjustments as described in the Registration Statement, in order to effect creations of Creation Units of the Fund until such time as the nextannounced Deposit Securities composition or the required amount of Deposit Cash, as applicable, is made available. In addition to the list of names and numbers of securities constituting the current Deposit Securities of a Fund Deposit, the Administrator, through the NSCC, also will make available (i) on each business day, the Dividend Equivalent Payment, if any, and the estimated Cash Component effective through and including the previous business day, per outstanding Shares of the Fund, and (ii) on a continuous basis throughout the day, the Indicative Per Share Portfolio Value. All orders to create Creation Units must be placed in multiples of 100,000 Shares of the Fund. All orders to create Creation Units must be received by the Distributor no later than the closing time of the close of the NYSE Core Trading Session NYSE Arca (‘‘Closing Time’’, ordinarily 4:00 p.m. Eastern time) on the date such order is placed in order for creation of Creation Units to be effected based on the NAV of the Fund as determined on such date. Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Distributor, only on a business day and only through a ‘‘Participating Party’’ or Depository Trust Company (‘‘DTC’’) Participant who has executed a ‘‘Participant Agreement’’, as described in the Registration Statement. The Trust will not redeem Shares in amounts less than Creation Units. The Administrator, through NSCC, will make available immediately prior to the opening of business on the Exchange (currently 9:30 a.m. Eastern time) on each day that the Exchange is open for business, the Fund Securities that will be delivered to satisfy (subject to possible amendment or correction) redemption requests received in proper E:\FR\FM\19NON1.SGM 19NON1 TKELLEY on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices form (as defined below) on that day. The Fund Securities generally will correspond, pro rata, to the extent practicable, to the component securities of the Fund’s portfolio. If the Trust determines, based on information available to the Trust when a redemption request is submitted by an Authorized Participant, that (i) the short interest of the Fund in the marketplace is greater than or equal to 100% and (ii) redemption orders in the aggregate from all Authorized Participants on a business day represent 25% or more of the outstanding Shares of the Fund, such Authorized Participant will be required to verify to the Trust the accuracy of its representations that are deemed to have been made by submitting a request for redemption. If, after receiving notice of the verification requirement, the Authorized Participant does not verify the accuracy of its representations that are deemed to have been made by submitting a request for redemption in accordance with this requirement, its redemption request will be considered not to have been received in proper form. Unless cash redemptions are permitted or required for the Fund, the redemption proceeds for a Creation Unit generally will consist of Fund Securities as announced by the Administrator on the business day of the request for redemption, plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities, less the redemption transaction fee and variable fees described below. An Authorized Participant may receive the cash equivalent of one or more Fund Securities because it was restricted from transacting in one or more Fund Securities. Should the Fund Securities have a value greater than the NAV of the Shares being redeemed, a compensating cash payment to the Trust equal to the differential plus the applicable redemption transaction fee will be required to be arranged for by or on behalf of the redeeming shareholder. The Fund reserves the right to honor a redemption request by delivering a basket of securities or cash that differs from the Fund Securities. Orders to redeem Creation Units of the Fund must be delivered through a DTC Participant that has executed the Participant Agreement with the Distributor and with the Trust. A DTC Participant who wishes to place an order for redemption of Creation Units of the Fund to be effected need not be a Participating Party, but such orders must state that redemption of Creation VerDate Mar<15>2010 17:21 Nov 18, 2013 Jkt 232001 Units of the Fund will instead be effected through transfer of Creation Units of the Fund directly through DTC. An order to redeem Creation Units of the Fund will be deemed received by the Administrator on the ‘‘Transmittal Date’’ if (i) such order is received by the Administrator not later than 4:00 p.m. Eastern time on such Transmittal Date; (ii) such order is preceded or accompanied by the requisite number of Shares of Creation Units specified in such order, which delivery must be made through DTC to the Administrator no later than 11:00 a.m. Eastern time, on such Transmittal Date (the ‘‘DTC CutOff-Time’’); and (iii) all other procedures set forth in the Participant Agreement are properly followed. A standard creation and redemption transaction fee will be imposed to offset transfer and other transaction costs that may be incurred by the Fund. All persons creating and redeeming Shares during a business day will be treated in the same manner with respect to payment of proceeds in-kind, in cash, or in a combination thereof. Detailed descriptions of the Fund, the Index, procedures for creating and redeeming Shares, transaction fees and expenses, dividends, distributions, taxes, risks, and reports to be distributed to beneficial owners of the Shares can be found in the Registration Statements or on the Web site for the Fund (www.marketvectorsetfs.com), as applicable. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) 21 that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 5.2(j)(3). The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Financial Industry Regulatory Authority (‘‘FINRA’’) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal 21 15 PO 00000 U.S.C. 78f(b)(5). Frm 00146 Fmt 4703 Sfmt 4703 69507 securities laws.22 The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations. FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares with other markets that are members of the Intermarket Surveillance Group (‘‘ISG’’) or with which the Exchange has in place a comprehensive surveillance sharing agreement. The Index Provider is not a broker-dealer or affiliated with a brokerdealer and has implemented procedures designed to prevent the use and dissemination of material, non-public information regarding the Index. As of December 31, 2012, there were approximately 1935 issues in the Index. The Index meets all such requirements except for those set forth in Commentary .02(a)(2).23 Specifically, as of November 27, 2012, 15.66% of the weight of the Index components have a minimum original principal amount outstanding of $100 million or more. As of November 27, 2012, 72.21% of the weight of the Index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities of the offering. In addition, the total dollar amount outstanding of issues in the Index was approximately $757 billion and the average dollar amount outstanding of issues in the Index was approximately $394 million. Further, the most heavily weighted component represents 2.67% of the weight of the Index and the five most heavily weighted components represent 10.67% of the weight of the Index.24 Therefore, the Exchange believes that, notwithstanding that the Index does not satisfy the criterion in NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 (a)(2), the Index is sufficiently 22 FINRA surveils trading on the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA’s performance under this regulatory services agreement. 23 See note 15 [sic] and accompanying text, supra. 24 See note 16 [sic], supra. E:\FR\FM\19NON1.SGM 19NON1 TKELLEY on DSK3SPTVN1PROD with NOTICES 69508 Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices broad-based to deter potential manipulation, given that it is composed of approximately 1,935 issues. In addition, the Index securities are sufficiently liquid to deter potential manipulation in that a substantial portion (72.21%) of the Index weight is composed of maturities that are part of a minimum original principal amount outstanding of $100 million or more, and in view of the substantial total dollar amount outstanding and the average dollar amount outstanding of Index issues, as referenced above. In addition, the average daily notional trading volume for Index components for the period from October 31, 2011 to October 31, 2012 was $2,839,895.20 and the sum of the notional trading volumes for the same period was approximately $5,480,997,730. The Index value, calculated and disseminated at least once daily, as well as the components of the Index and their respective percentage weightings, will be available from major market data vendors. In addition, the portfolio of securities held by the Fund will be disclosed on the Fund’s Web site. The IIV for Shares of the Fund will be disseminated by one or more major market data vendors, updated at least every 15 seconds during the Exchange’s Core Trading Session, According to the Registration Statements, The Adviser represents that bonds that share similar characteristics tend to trade similarly to one another; therefore, within these categories, the issues may be considered fungible from a portfolio management perspective. Within a single municipal bond issuer, the Adviser represents that separate issues by the same issuer are also likely to trade similarly to one another. In addition, the Adviser represents that individual CUSIPs within the Index that share characteristics with other CUSIPs have a high yield to maturity correlation, and frequently have a correlation of one or close to one. The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest. In addition, a large amount of information is publicly available regarding the Fund and the Shares, thereby promoting market transparency. The Fund’s portfolio holdings will be disclosed on the Fund’s Web site daily after the close of trading on the Exchange and prior to the opening of trading on the Exchange the following day. Moreover, the IIV will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange’s Core Trading Session. The current value of the Index will be disseminated by one VerDate Mar<15>2010 17:21 Nov 18, 2013 Jkt 232001 or more major market data vendors at least once per day. Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services, and quotation and last sale information will be available via the CTA high-speed line. The Web site for the Fund will include the prospectus for the Fund and additional data relating to NAV and other applicable quantitative information. Moreover, prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. If the Exchange becomes aware that the NAV is not being disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV is available to all market participants. With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund. Trading also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. If the IIV or the Index values are not being disseminated as required, the Corporation may halt trading during the day in which the interruption to the dissemination of the applicable IIV or Index value occurs. If the interruption to the dissemination of the applicable IIV or Index value persists past the trading day in which it occurred, the Corporation will halt trading. Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to NYSE Arca Equities Rule 7.34, which sets forth circumstances under which Shares of the Fund may be halted. In addition, investors will have ready access to information regarding the IIV, and quotation and last sale information for the Shares. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to PO 00000 Frm 00147 Fmt 4703 Sfmt 4703 trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, investors will have ready access to information regarding the IIV and quotation and last sale information for the Shares. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an additional type of exchange-traded product that holds municipal bonds and that will enhance competition among market participants, to the benefit of investors and the marketplace. 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File No. SR– NYSEArca–2013–118 on the subject line. E:\FR\FM\19NON1.SGM 19NON1 Federal Register / Vol. 78, No. 223 / Tuesday, November 19, 2013 / Notices 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 No. SR–NYSEArca–2013–118. 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 Web site (http://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 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– 2013–118 and should be submitted on or before December 10, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–27667 Filed 11–18–13; 8:45 am] TKELLEY on DSK3SPTVN1PROD with NOTICES BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70865; File No. SR–BATS– 2013–057] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the BATS Competitive Liquidity Provider Program November 13, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 12, 2013, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) 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 filed a proposal to amend Interpretation and Policy .02 to Rule 11.8, entitled ‘‘Competitive Liquidity Provider Program.’’ The text of the proposed rule change is available at the Exchange’s Web site at http://www.batstrading.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 Exchange 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 these 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 On August 30, 2011, the Exchange received approval of rules applicable to 1 15 25 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 17:21 Nov 18, 2013 2 17 Jkt 232001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00148 Fmt 4703 Sfmt 4703 69509 the qualification, listing and delisting of securities of issuers on the Exchange.3 More recently, the Exchange received approval to operate a program that is designed to incentivize certain market makers registered with the Exchange as Competitive Liquidity Providers (‘‘CLPs’’) to enhance liquidity on the Exchange in Exchange-listed securities (the ‘‘Competitive Liquidity Provider Program’’ or ‘‘CLP Program’’).4 The Exchange subsequently adopted financial incentives for the CLP Program5 and thereafter amended certain of the financial incentives and criteria for the CLP Program.6 The purpose of this filing is to modify Interpretation and Policy .02 of Rule 11.8 regarding certain details around the implementation of the CLP Program. Specifically, effective December 1, 2013, the Exchange proposes to: (1) Award up to three CLPs, or more in the case of a tie, at each size event test (‘‘SET’’) with credits (‘‘SET Credits’’) based on their rank in aggregate size at the NBB or NBO at the time of the SET; (2) base the allocation of daily financial rewards on the number of SET Credits awarded to CLPs; (3) change the allocation of the daily financial rewards to a set dollar value per CLP in each class of security; and (4) make certain cleanup and clarifying changes to Interpretation and Policy .02 to Rule 11.8. Increasing Winning SETs and Awarding SET Credits The Exchange is proposing to award Winning Bid SETs7 and Winning Offer SETs8 (collectively, ‘‘Winning SETs’’) along with SET Credits to at least three CLPs each for the bid (‘‘Bid SET Credits’’) and offer (‘‘Offer SET Credits’’) based on a CLP’s rank in aggregate size at the NBB or NBO at the time of a SET. Currently, only the CLP with the greatest aggregate size at the NBB and the CLP with the greatest aggregate size at the NBO at the time of a SET are considered to have a Winning Bid SET and a Winning Offer SET, respectively. 3 See Securities Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 (September 6, 2011) (SR–BATS–2011–018). 4 See Securities Exchange Act Release No. 66307 (February 2, 2012), 77 FR 6608 (February 8, 2012) (SR–BATS–2011–051). 5 See Securities Exchange Act Release No. 66427 (February 21, 2012), 77 FR 11608 (February 27, 2012) (SR–BATS–2012–011). 6 See Securities Exchange Act Release Nos. 67854 (September 13, 2012), 77 FR 58198 (September 19, 2012) (SR–BATS–2012–036) and 69190 (March 20 2013), 78 FR 18384 (March 26, 2013) (SR–BATS– 2013–005). 7 As defined in Interpretation and Policy .02 (g)(1) to BATS Rule 11.8. 8 Id. E:\FR\FM\19NON1.SGM 19NON1

Agencies

[Federal Register Volume 78, Number 223 (Tuesday, November 19, 2013)]
[Notices]
[Pages 69503-69509]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27667]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70871; File No. SR-NYSEArca-2013-118]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change, As Modified By Amendment No. 1 Thereto, To 
List and Trade of Shares of the Market Vectors Short High-Yield 
Municipal Index ETF Under NYSE Arca Equities Rule 5.2(j)(3), Commentary 
.02

November 14, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on October 30, 2013, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. On November 8, 2013, the Exchange filed Amendment No. 1 
to the proposed rule change.\4\ The Commission is publishing this 
notice to solicit comments on the proposed rule change, as modified by 
Amendment No. 1 thereto, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ By Amendment No. 1, the Exchange: (1) Deleted a sentence 
relating to the Fund holding depositary receipts and to-be-announced 
transactions; (2) added a phrase that states that the Administrator, 
through the NSCC, will make available Indicative Per Share Portfolio 
Value on a continuous basis throughout the day; (3) made clarifying 
changes to reflect that the Fund will limit itself to holding up to 
15% of its net assets in illiquid assets, not just illiquid 
securities; and (4) modified certain cross-references.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade under NYSE Arca Equities 
Rule 5.2(j)(3), Commentary .02, the shares of the Market Vectors Short 
High-Yield Municipal Index ETF. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
Market Vectors Short High Yield Municipal Index ETF (``Fund'') under 
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02, which governs the 
listing and trading of Investment Company Units (``Units'') based on 
fixed income securities indexes.\5\ The Fund is a series of the Market 
Vectors ETF Trust (``Trust'').\6\
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    \5\ The Commission previously has approved a proposed rule 
change relating to listing and trading on the Exchange of Units 
based on municipal bond indexes. See Securities Exchange Act Release 
No. 67985 (October 4, 2012), 77 FR 61804 (October 11, 2012) (SR-
NYSEArca-2012-92) (order approving proposed rule change relating to 
the listing and trading of iShares 2018 S&P AMT-Free Municipal 
Series and iShares 2019 S&P AMT-Free Municipal Series under NYSE 
Arca Equities Rule 5.2(j)(3), Commentary .02).
    \6\ On August 27, 2012, the Trust filed an amendment to its 
registration statement on Form N-1A under the Securities Act of 1933 
(15 U.S.C. 77a) and the Investment Company Act of 1940 (``1940 
Act'') (15 U.S.C. 80a-1) (File Nos. 333-123257 and 811-10325) (the 
``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. 28021 (October 24, 2007) (File 
No. 812-13426) (``Exemptive Order'').
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    Van Eck Associates Corporation will be the investment adviser 
(``Adviser'') for the Fund. Van Eck Securities Corporation will be the 
Fund's distributor (``Distributor''). Van Eck Associates Corporation 
also will be the administrator for the Fund (the ``Administrator''), 
and will be responsible for certain clerical, recordkeeping and/or 
bookkeeping services. The Bank of New York Mellon will be the custodian 
of the Fund's assets and provides transfer agency and fund accounting 
services to the Fund.
    The investment objective of the Fund will be to seek to replicate 
as closely as possible, before fees and expenses, the price and yield 
performance of the Barclays Municipal High Yield Short Duration Index 
(the ``Short High Yield Index'' or ``Index''). The Fund

[[Page 69504]]

normally \7\ will invest at least 80% of its total assets in securities 
that compose the Index. Depositary receipts or to-be-announced 
transactions (``TBAs'') \8\ representing securities in the Short High 
Yield Index may be used by the Fund in seeking performance that 
corresponds to the Short High Yield Index, and in managing cash flows 
and may count towards the Fund's 80% policy.
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    \7\ The word ``normally'' means, without limitation, the absence 
of extreme volatility or trading halts in the equity markets or the 
financial markets generally; operational issues causing 
dissemination of inaccurate market information; or force majeure 
type events such as systems failure, natural or man-made disaster, 
act of God, armed conflict, act of terrorism, riot or labor 
disruption or any similar intervening circumstance.
    \8\ A TBA transaction is a method of trading mortgage-backed 
securities. In a TBA transaction, the buyer and seller agree upon 
general trade parameters such as agency, settlement date, par 
amount, and price. The actual pools delivered generally are 
determined two days prior to the settlement date.
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    The Fund, using a ``passive'' or indexing investment approach, will 
attempt to approximate the investment performance of the Index. The 
Adviser expects that, over time, the correlation between the Fund's 
performance before fees and expenses and that of the Index will be 95% 
or better. A figure of 100% would indicate perfect correlation. Because 
of the practical difficulties and expense of purchasing all of the 
securities in the Index, the Fund will not purchase all of the 
securities in the Index. Instead, the Adviser will utilize a 
``sampling'' methodology in seeking to achieve the Fund's objective. As 
such, the Fund may purchase a subset of the bonds in the Index in an 
effort to hold a portfolio of bonds with generally the same risk and 
return characteristics of the Index.
Other Investments
    While the Fund normally will invest at least 80% of its total 
assets in securities that compose the Index, the Fund may invest its 
remaining assets in other financial instruments, as described below.
    The Fund may invest its remaining assets in securities not included 
in the Short High Yield Index, money market instruments, including 
repurchase agreements or other funds which invest exclusively in money 
market instruments, convertible securities,\9\ structured notes (notes 
on which the amount of principal repayment and interest payments are 
based on the movement of one or more specified factors, such as the 
movement of a particular stock or stock index),\10\ and certain 
derivative instruments that are mentioned below. The Fund may also 
invest, to the extent permitted by the 1940 Act, in other affiliated 
and unaffiliated funds, such as open-end or closed-end management 
investment companies, including other exchange-traded funds 
(``ETFs'').\11\
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    \9\ A convertible security is a bond, debenture, note, preferred 
stock, right, warrant or other security that may be converted into 
or exchanged for a prescribed amount of common stock or other 
security of the same or a different issuer or into cash within a 
particular period of time at a specified price or formula.
    \10\ Structured notes are derivative securities for which the 
amount of principal repayment and/or interest payments is based on 
the movement of one or more factors, including, but not limited to, 
currency exchange rates, interest rates (such as the prime lending 
rate or LIBOR), referenced bonds and stock indices.
    \11\ For purposes of this filing, ETFs include Investment 
Company Units (as described in NYSE Arca Equities Rule 5.2(j)(3)); 
Portfolio Depositary Receipts (as described in NYSE Arca Equities 
Rule 8.100); and Managed Fund Shares (as described in NYSE Arca 
Equities Rule 8.600). The ETFs all will be listed and traded in the 
U.S. on registered exchanges. The Fund may invest in the securities 
of ETFs registered under the 1940 Act consistent with the 
requirements of Section 12(d)(1) of the 1940 Act, or any rule, 
regulation or order of the Commission or interpretation thereof. 
While the Fund may invest in inverse ETFs, the Fund will not invest 
in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
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    The Fund may invest in repurchase agreements with commercial banks, 
brokers or dealers to generate income from its excess cash balances and 
to invest securities lending cash collateral.
    The Fund may use exchange-traded futures contracts and exchange-
traded or over-the-counter (``OTC'') options thereon, together with 
positions in cash and money market instruments, to simulate full 
investment in the Index.
    The Fund may use cleared or non-cleared index, interest rate or 
credit default swap agreements. Swap agreements are contracts between 
parties in which one party agrees to make payments to the other party 
based on the change in market value or level of a specified index or 
asset. The Adviser represents that currently interest rate swaps and 
credit default swaps on indexes are cleared. However, credit default 
swaps on a specific security are currently uncleared.
    The Fund may invest in exchange-traded warrants, which are equity 
securities in the form of options issued by a corporation which give 
the holder the right to purchase stock, usually at a price that is 
higher than the market price at the time the warrant is issued.
    The Fund may invest in participation notes, which are issued by 
banks or broker-dealers and are designed to offer a return linked to 
the performance of a particular underlying equity security or market.
    The Fund will only enter into transactions in derivative 
instruments with counterparties that the Adviser reasonably believes 
are capable of performing under the contract and will post as 
collateral as required by the counterparty.\12\
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    \12\ The Fund will seek, where possible, to use counterparties, 
as applicable, whose financial status is such that the risk of 
default is reduced; however, the risk of losses resulting from 
default is still possible. The Adviser will evaluate the 
creditworthiness of counterparties on a regular basis. In addition 
to information provided by credit agencies, the Adviser will review 
approved counterparties using various factors, which may include the 
counterparty's reputation, the Adviser's past experience with the 
counterparty and the price/market actions of debt of the 
counterparty.
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    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), 
including Rule 144A securities deemed illiquid by the Adviser, in 
accordance with Commission guidance.\13\ The Fund will monitor its 
portfolio liquidity on an ongoing basis to determine whether, in light 
of current circumstances, an adequate level of liquidity is being 
maintained, and will 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 assets. Illiquid assets 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.\14\
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    \13\ In reaching liquidity decisions, the 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 the nature of the marketplace trades (e.g., the time 
needed to dispose of the security, the method of soliciting offers, 
and the mechanics of transfer).
    \14\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the 1933 Act).
---------------------------------------------------------------------------

Description of the Index
    The Index is a market size weighted index composed of publicly 
traded municipal bonds that cover the U.S.

[[Page 69505]]

dollar denominated high yield short-term tax-exempt bond market. The 
majority of the Index's constituents are from the revenue sector, with 
some constituents being from the general obligation sector. The revenue 
sector is divided into industry sectors that consist of but may not be 
limited to electric, health care, transportation, education, water and 
sewer, resource recovery, leasing and special tax. As of December 31, 
2012, the Index consisted of approximately 1,935 bonds and 530 unique 
issuers.\15\
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    \15\ The Index is published by Barclays Capital, Inc. (``Index 
Provider''). The Index Provider is a registered broker-dealer and 
has implemented a fire wall with respect to its relevant personnel 
regarding access to information concerning the composition and/or 
changes to the Index. In addition, the Index Provider is affiliated 
with a broker-dealer and has implemented a fire wall with respect to 
its broker-dealer affiliate regarding access to information 
concerning the composition and/or changes to the Index. The Index 
Provider and its broker-dealer affiliate have implemented procedures 
designed to prevent the use and dissemination of material, non-
public information regarding the Index.
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    The Index is calculated using a market value weighting methodology. 
Index constituents are capitalization-weighted, based on their current 
amount outstanding. The Index tracks the high yield municipal bond 
market with a 75% weight in non-investment grade municipal bonds and a 
25% weight in Baa/BBB-rated investment grade municipal bonds. It is 
comprised of three total return, market size weighted benchmark indexes 
with weights as follows:

--50% weight in Muni High Yield/$100 Million Deal Size Index. To be 
included in the Muni High Yield/$100 Million Deal Size Index, bonds 
must be unrated or rated Ba1/BB+ or lower by at least two of the 
following rating agencies if all three rate the bond: Moody's Investors 
Service, Inc. (``Moody's''), Standard & Poor's, Inc. (``S&P'') and 
Fitch, Inc. (``Fitch''). If only two of the three agencies rate the 
security, the lower rating is used to determine index eligibility. If 
only one of the three agencies rates a security, the rating must be 
Ba1/BB+ or lower. Bonds in the Muni High Yield/$100 Million Deal Size 
Index must have an outstanding par value of at least $3 million and be 
issued as part of a transaction of at least $100 million.
--25% weight in Muni High Yield/Under $100 Million Deal Size Index. To 
be included in the Muni High Yield/Under $100 Million Deal Size Index, 
bonds must be unrated or rated Ba1/BB+ or lower by at least two of the 
following rating agencies if all three rate the bond: Moody's, S&P and 
Fitch. If only two of the three agencies rate the security, the lower 
rating is used to determine index eligibility. If only one of the three 
agencies rates a security, the rating must be Ba1/BB+ or lower. Bonds 
in the Muni High Yield/Under $100 Million Deal Size Index must have an 
outstanding par value of at least $3 million and be issued as part of a 
transaction of under $100 million but over $20 million.
--25% weight in Muni Baa-Rated/$100 Million Deal Size Index. To be 
included in the Muni Baa-Rated/$100 Million Deal Size Index, bonds must 
have a Barclays Index credit quality classification between Baa1/BBB+ 
and Baa3/BBB-. Barclays Index credit quality classification is based on 
the three rating agencies, Moody's, S&P and Fitch. If two of the three 
agencies rate the bond equivalently, then that rating is used. If all 
three rate the bond differently, the middle rating is used. If only two 
of the three agencies rate the security, the lower rating is used to 
determine index eligibility. If only one of the three agencies rates a 
security, the rating must be Baa1/BBB+, Baa2/BBB, or Baa3/BBB-. The 
bonds must have an outstanding par value of at least $7 million and be 
issued as part of a transaction of at least $100 million. Remarketed 
issues are not allowed in the benchmark.

    All bonds must have a fixed rate, a dated-date after December 31, 
1990 and a nominal maturity of 1 to 10 years. Taxable municipal bonds, 
bonds with floating rates and derivatives are excluded from the Index.
    The composition of the Index is rebalanced monthly. Interest and 
principal payments earned by the component securities are held in the 
Index without a reinvestment return until month end when they are 
removed from the Index. Qualifying securities issued, but not 
necessarily settled, on or before the month end rebalancing date 
qualify for inclusion in the Index in the following month.
    Total returns are calculated based on the sum of price changes, 
gain/loss on repayments of principal, and coupons received or accrued, 
expressed as a percentage of beginning market value. The Index is 
calculated and is available once a day.
    The Exchange is submitting this proposed rule change because the 
Index for the Fund does not meet all of the ``generic'' listing 
requirements of Commentary .02(a) to NYSE Arca Equities Rule 5.2(j)(3) 
applicable to the listing of Units based on fixed income securities 
indexes. The Index meets all such requirements except for those set 
forth in Commentary .02(a)(2).\16\ Specifically, as of November 27, 
2012, 15.66% of the weight of the Index components have a minimum 
original principal amount outstanding of $100 million or more.
---------------------------------------------------------------------------

    \16\ Commentary .02(a)(2) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that components that in the aggregate account for at least 
75% of the weight of the index or portfolio each shall have a 
minimum original principal amount outstanding of $100 million or 
more.
---------------------------------------------------------------------------

    As of November 27, 2012, 72.21% of the weight of the Index 
components was composed of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding of $100 million or more for all maturities of the offering. 
In addition, the total dollar amount outstanding of issues in the Index 
was approximately $757 billion and the average dollar amount 
outstanding of issues in the Index was approximately $394 million. 
Further, the most heavily weighted component represents 2.67% of the 
weight of the Index and the five most heavily weighted components 
represent 10.67% of the weight of the Index.\17\ Therefore, the 
Exchange believes that, notwithstanding that the Index does not satisfy 
the criterion in NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 
(a)(2), the Index is sufficiently broad-based to deter potential 
manipulation, given that it is composed of approximately 1,935 issues 
and 530 unique issuers. In addition, the Index securities are 
sufficiently liquid to deter potential manipulation in that a 
substantial portion (72.21%) of the Index weight is composed of 
maturities that are part of a minimum original principal amount 
outstanding of $100 million or more, and in view of the substantial 
total dollar amount outstanding and the average dollar amount 
outstanding of Index issues, as referenced above.
---------------------------------------------------------------------------

    \17\ Commentary .02(a)(4) to NYSE Arca Equities Rule 5.2(j)(3) 
provides that no component fixed-income security (excluding Treasury 
Securities and GSE Securities, as defined therein) shall represent 
more than 30% of the weight of the index or portfolio, and the five 
most heavily weighted component fixed-income securities in the index 
or portfolio shall not in the aggregate account for more than 65% of 
the weight of the index or portfolio.
---------------------------------------------------------------------------

    In addition, the average daily notional trading volume for Index 
components for the period from October 31, 2011 to October 31, 2012 was 
$2,839,895 and the sum of the notional trading volumes for the same 
period was $5,480,997,730.
    The Index value, calculated and disseminated at least once daily, 
as well as the components of the Index and their percentage weighting, 
will be

[[Page 69506]]

available from major market data vendors. In addition, the portfolio of 
securities held by the Fund will be disclosed daily on the Fund's Web 
site at www.marketvectorsetfs.com.
    The Exchange represents that: (1) Except for Commentary .02(a)(2) 
to NYSE Arca Equities Rule 5.2(j)(3), the Shares of the Fund currently 
satisfy all of the generic listing standards under NYSE Arca Equities 
Rule 5.2(j)(3); (2) the continued listing standards under NYSE Arca 
Equities Rules 5.2(j)(3) and 5.5(g)(2) applicable to Units shall apply 
to the Shares; and (3) the Trust is required to comply with Rule 10A-3 
under the Act \18\ for the initial and continued listing of the Shares. 
In addition, the Exchange represents that the Shares will comply with 
all other requirements applicable to Units including, but not limited 
to, requirements relating to the dissemination of key information such 
as the value of the Index and the applicable Intraday Indicative Value 
(``IIV''),\19\ rules governing the trading of equity securities, 
trading hours, trading halts, surveillance, and the Information 
Bulletin to Equity Trading Permit Holders (``ETP Holders''), as set 
forth in Exchange rules applicable to Units and prior Commission orders 
approving the generic listing rules applicable to the listing and 
trading of Units.\20\
---------------------------------------------------------------------------

    \18\ 17 CFR 240.10A-3.
    \19\ The IIV will be widely disseminated by one or more major 
market data vendors at least every 15 seconds during the Exchange's 
Core Trading Session of 9:30 a.m. to 4:00 p.m., Eastern time. 
Currently, it is the Exchange's understanding that several major 
market data vendors display and/or make widely available IIVs taken 
from the Consolidated Tape Association (``CTA'') or other data 
feeds.
    \20\ See, e.g., Securities Exchange Act Release Nos. 55783 (May 
17, 2007), 72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36) (order 
approving NYSE Arca generic listing standards for Units based on a 
fixed income index); 44551 (July 12, 2001), 66 FR 37716 (July 19, 
2001) (SR-PCX-2001-14) (order approving generic listing standards 
for Units and Portfolio Depositary Receipts); 41983 (October 6, 
1999), 64 FR 56008 (October 15, 1999) (SR-PCX-98-29) (order 
approving rules for listing and trading of Units).
---------------------------------------------------------------------------

    The current value of the Index will be widely disseminated by one 
or more major market data vendors at least once per day, as required by 
NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 (b)(ii). The IIV for 
Shares of the Fund will be disseminated by one or more major market 
data vendors, updated at least every 15 seconds during the Exchange's 
Core Trading Session, as required by NYSE Arca Equities Rule 5.2(j)(3), 
Commentary .02 (c).
Creation and Redemption of Shares
    According to the Registration Statement, the Fund will issue and 
sell Shares only in ``Creation Units'' of 100,000 Shares or multiples 
thereof on a continuous basis through the Distributor, without an 
initial sales load, at their net asset value (``NAV'') next determined 
after receipt, on any business day, of an order in proper form.
    The consideration for a purchase of Creation Units generally will 
consist of cash, in-kind, or a combination of cash and in-kind. The in-
kind purchase of Creation Units will consist of the deposit of a 
designated portfolio of fixed income securities (the ``Deposit 
Securities'') that compose the Index and an amount of cash computed as 
described below (the ``Cash Component'') or, as permitted or required 
by the Fund, of the cash value of the Deposit Securities (the ``Deposit 
Cash'') and the Cash Component computed as described below. When 
accepting purchases of Creation Units for cash, the Fund may incur 
additional costs associated with the acquisition of Deposit Securities.
    The Cash Component together with the Deposit Securities or the 
Deposit Cash, as applicable, are referred to as the ``Fund Deposit,'' 
which represents the minimum initial and subsequent investment amount 
for Shares. The specified Deposit Securities generally will correspond, 
pro rata, to the extent practicable, to the component securities of the 
Fund's portfolio. The Cash Component represents the difference between 
the NAV of a Creation Unit and the market value of Deposit Securities 
and may include a ``Dividend Equivalent Payment''. The Dividend 
Equivalent Payment will enable the Fund to make a complete distribution 
of dividends on the next dividend payment date, and is an amount equal, 
on a per Creation Unit basis, to the dividends on all the securities 
held by the Fund (``Fund Securities'') with ex-dividend dates within 
the accumulation period for such distribution (the ``Accumulation 
Period''), net of expenses and liabilities for such period, as if all 
of the Fund Securities had been held by the Trust for the entire 
Accumulation Period. The Accumulation Period begins on the ex-dividend 
date for the Fund and ends on the next ex-dividend date.
    The Trust may determine to issue Shares on an all cash basis (i.e., 
in exchange for the Deposit Cash and the Cash Component) if the Trust 
and the Adviser believe such method would substantially minimize the 
Fund's transactional costs or would enhance the Fund's operational 
efficiencies. This may occur on days when a substantial rebalancing of 
the Fund's portfolio is required.
    The Administrator, through the National Securities Clearing 
Corporation (``NSCC''), will make available on each business day, 
immediately prior to the opening of business on the Exchange (currently 
9:30 a.m. Eastern time), the list of the names and the required 
principal amounts of each Deposit Security to be included in the 
current Fund Deposit (based on information at the end of the previous 
business day) as well as the Cash Component for the Fund. Such Fund 
Deposit is applicable, subject to any adjustments as described in the 
Registration Statement, in order to effect creations of Creation Units 
of the Fund until such time as the next-announced Deposit Securities 
composition or the required amount of Deposit Cash, as applicable, is 
made available.
    In addition to the list of names and numbers of securities 
constituting the current Deposit Securities of a Fund Deposit, the 
Administrator, through the NSCC, also will make available (i) on each 
business day, the Dividend Equivalent Payment, if any, and the 
estimated Cash Component effective through and including the previous 
business day, per outstanding Shares of the Fund, and (ii) on a 
continuous basis throughout the day, the Indicative Per Share Portfolio 
Value.
    All orders to create Creation Units must be placed in multiples of 
100,000 Shares of the Fund. All orders to create Creation Units must be 
received by the Distributor no later than the closing time of the close 
of the NYSE Core Trading Session NYSE Arca (``Closing Time'', 
ordinarily 4:00 p.m. Eastern time) on the date such order is placed in 
order for creation of Creation Units to be effected based on the NAV of 
the Fund as determined on such date.
    Shares may be redeemed only in Creation Units at their NAV next 
determined after receipt of a redemption request in proper form by the 
Distributor, only on a business day and only through a ``Participating 
Party'' or Depository Trust Company (``DTC'') Participant who has 
executed a ``Participant Agreement'', as described in the Registration 
Statement. The Trust will not redeem Shares in amounts less than 
Creation Units.
    The Administrator, through NSCC, will make available immediately 
prior to the opening of business on the Exchange (currently 9:30 a.m. 
Eastern time) on each day that the Exchange is open for business, the 
Fund Securities that will be delivered to satisfy (subject to possible 
amendment or correction) redemption requests received in proper

[[Page 69507]]

form (as defined below) on that day. The Fund Securities generally will 
correspond, pro rata, to the extent practicable, to the component 
securities of the Fund's portfolio. If the Trust determines, based on 
information available to the Trust when a redemption request is 
submitted by an Authorized Participant, that (i) the short interest of 
the Fund in the marketplace is greater than or equal to 100% and (ii) 
redemption orders in the aggregate from all Authorized Participants on 
a business day represent 25% or more of the outstanding Shares of the 
Fund, such Authorized Participant will be required to verify to the 
Trust the accuracy of its representations that are deemed to have been 
made by submitting a request for redemption. If, after receiving notice 
of the verification requirement, the Authorized Participant does not 
verify the accuracy of its representations that are deemed to have been 
made by submitting a request for redemption in accordance with this 
requirement, its redemption request will be considered not to have been 
received in proper form.
    Unless cash redemptions are permitted or required for the Fund, the 
redemption proceeds for a Creation Unit generally will consist of Fund 
Securities as announced by the Administrator on the business day of the 
request for redemption, plus cash in an amount equal to the difference 
between the NAV of the Shares being redeemed, as next determined after 
a receipt of a request in proper form, and the value of the Fund 
Securities, less the redemption transaction fee and variable fees 
described below. An Authorized Participant may receive the cash 
equivalent of one or more Fund Securities because it was restricted 
from transacting in one or more Fund Securities. Should the Fund 
Securities have a value greater than the NAV of the Shares being 
redeemed, a compensating cash payment to the Trust equal to the 
differential plus the applicable redemption transaction fee will be 
required to be arranged for by or on behalf of the redeeming 
shareholder. The Fund reserves the right to honor a redemption request 
by delivering a basket of securities or cash that differs from the Fund 
Securities.
    Orders to redeem Creation Units of the Fund must be delivered 
through a DTC Participant that has executed the Participant Agreement 
with the Distributor and with the Trust. A DTC Participant who wishes 
to place an order for redemption of Creation Units of the Fund to be 
effected need not be a Participating Party, but such orders must state 
that redemption of Creation Units of the Fund will instead be effected 
through transfer of Creation Units of the Fund directly through DTC. An 
order to redeem Creation Units of the Fund will be deemed received by 
the Administrator on the ``Transmittal Date'' if (i) such order is 
received by the Administrator not later than 4:00 p.m. Eastern time on 
such Transmittal Date; (ii) such order is preceded or accompanied by 
the requisite number of Shares of Creation Units specified in such 
order, which delivery must be made through DTC to the Administrator no 
later than 11:00 a.m. Eastern time, on such Transmittal Date (the ``DTC 
Cut-Off-Time''); and (iii) all other procedures set forth in the 
Participant Agreement are properly followed.
    A standard creation and redemption transaction fee will be imposed 
to offset transfer and other transaction costs that may be incurred by 
the Fund.
    All persons creating and redeeming Shares during a business day 
will be treated in the same manner with respect to payment of proceeds 
in-kind, in cash, or in a combination thereof.
    Detailed descriptions of the Fund, the Index, procedures for 
creating and redeeming Shares, transaction fees and expenses, 
dividends, distributions, taxes, risks, and reports to be distributed 
to beneficial owners of the Shares can be found in the Registration 
Statements or on the Web site for the Fund (www.marketvectorsetfs.com), 
as applicable.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \21\ 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.
---------------------------------------------------------------------------

    \21\ 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 be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in NYSE Arca Equities Rule 
5.2(j)(3). The Exchange represents that trading in the Shares will be 
subject to the existing trading surveillances, administered by the 
Financial Industry Regulatory Authority (``FINRA'') on behalf of the 
Exchange, which are designed to detect violations of Exchange rules and 
applicable federal securities laws.\22\ The Exchange represents that 
these procedures are adequate to properly monitor Exchange trading of 
the Shares in all trading sessions and to deter and detect violations 
of Exchange rules and applicable federal securities laws. The 
surveillances referred to above generally focus on detecting securities 
trading outside their normal patterns, which could be indicative of 
manipulative or other violative activity. When such situations are 
detected, surveillance analysis follows and investigations are opened, 
where appropriate, to review the behavior of all relevant parties for 
all relevant trading violations. FINRA, on behalf of the Exchange, will 
communicate as needed regarding trading in the Shares with other 
markets that are members of the Intermarket Surveillance Group 
(``ISG'') or with which the Exchange has in place a comprehensive 
surveillance sharing agreement. The Index Provider is not a broker-
dealer or affiliated with a broker-dealer and has implemented 
procedures designed to prevent the use and dissemination of material, 
non-public information regarding the Index. As of December 31, 2012, 
there were approximately 1935 issues in the Index. The Index meets all 
such requirements except for those set forth in Commentary 
.02(a)(2).\23\ Specifically, as of November 27, 2012, 15.66% of the 
weight of the Index components have a minimum original principal amount 
outstanding of $100 million or more.
---------------------------------------------------------------------------

    \22\ FINRA surveils trading on the Exchange pursuant to a 
regulatory services agreement. The Exchange is responsible for 
FINRA's performance under this regulatory services agreement.
    \23\ See note 15 [sic] and accompanying text, supra.
---------------------------------------------------------------------------

    As of November 27, 2012, 72.21% of the weight of the Index 
components was composed of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding of $100 million or more for all maturities of the offering. 
In addition, the total dollar amount outstanding of issues in the Index 
was approximately $757 billion and the average dollar amount 
outstanding of issues in the Index was approximately $394 million. 
Further, the most heavily weighted component represents 2.67% of the 
weight of the Index and the five most heavily weighted components 
represent 10.67% of the weight of the Index.\24\ Therefore, the 
Exchange believes that, notwithstanding that the Index does not satisfy 
the criterion in NYSE Arca Equities Rule 5.2(j)(3), Commentary .02 
(a)(2), the Index is sufficiently

[[Page 69508]]

broad-based to deter potential manipulation, given that it is composed 
of approximately 1,935 issues. In addition, the Index securities are 
sufficiently liquid to deter potential manipulation in that a 
substantial portion (72.21%) of the Index weight is composed of 
maturities that are part of a minimum original principal amount 
outstanding of $100 million or more, and in view of the substantial 
total dollar amount outstanding and the average dollar amount 
outstanding of Index issues, as referenced above. In addition, the 
average daily notional trading volume for Index components for the 
period from October 31, 2011 to October 31, 2012 was $2,839,895.20 and 
the sum of the notional trading volumes for the same period was 
approximately $5,480,997,730. The Index value, calculated and 
disseminated at least once daily, as well as the components of the 
Index and their respective percentage weightings, will be available 
from major market data vendors. In addition, the portfolio of 
securities held by the Fund will be disclosed on the Fund's Web site. 
The IIV for Shares of the Fund will be disseminated by one or more 
major market data vendors, updated at least every 15 seconds during the 
Exchange's Core Trading Session, According to the Registration 
Statements, The Adviser represents that bonds that share similar 
characteristics tend to trade similarly to one another; therefore, 
within these categories, the issues may be considered fungible from a 
portfolio management perspective. Within a single municipal bond 
issuer, the Adviser represents that separate issues by the same issuer 
are also likely to trade similarly to one another. In addition, the 
Adviser represents that individual CUSIPs within the Index that share 
characteristics with other CUSIPs have a high yield to maturity 
correlation, and frequently have a correlation of one or close to one.
---------------------------------------------------------------------------

    \24\ See note 16 [sic], supra.
---------------------------------------------------------------------------

    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
In addition, a large amount of information is publicly available 
regarding the Fund and the Shares, thereby promoting market 
transparency. The Fund's portfolio holdings will be disclosed on the 
Fund's Web site daily after the close of trading on the Exchange and 
prior to the opening of trading on the Exchange the following day. 
Moreover, the IIV will be widely disseminated by one or more major 
market data vendors at least every 15 seconds during the Exchange's 
Core Trading Session. The current value of the Index will be 
disseminated by one or more major market data vendors at least once per 
day. Information regarding market price and trading volume of the 
Shares will be continually available on a real-time basis throughout 
the day on brokers' computer screens and other electronic services, and 
quotation and last sale information will be available via the CTA high-
speed line. The Web site for the Fund will include the prospectus for 
the Fund and additional data relating to NAV and other applicable 
quantitative information. Moreover, prior to the commencement of 
trading, the Exchange will inform its ETP Holders in an Information 
Bulletin of the special characteristics and risks associated with 
trading the Shares. If the Exchange becomes aware that the NAV is not 
being disseminated to all market participants at the same time, it will 
halt trading in the Shares until such time as the NAV is available to 
all market participants. With respect to trading halts, the Exchange 
may consider all relevant factors in exercising its discretion to halt 
or suspend trading in the Shares of the Fund. Trading also may be 
halted because of market conditions or for reasons that, in the view of 
the Exchange, make trading in the Shares inadvisable. If the IIV or the 
Index values are not being disseminated as required, the Corporation 
may halt trading during the day in which the interruption to the 
dissemination of the applicable IIV or Index value occurs. If the 
interruption to the dissemination of the applicable IIV or Index value 
persists past the trading day in which it occurred, the Corporation 
will halt trading. Trading in Shares of the Fund will be halted if the 
circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been 
reached or because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the Shares inadvisable, and 
trading in the Shares will be subject to NYSE Arca Equities Rule 7.34, 
which sets forth circumstances under which Shares of the Fund may be 
halted. In addition, investors will have ready access to information 
regarding the IIV, and quotation and last sale information for the 
Shares.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an additional type of exchange-traded product that will enhance 
competition among market participants, to the benefit of investors and 
the marketplace. As noted above, the Exchange has in place surveillance 
procedures relating to trading in the Shares and may obtain information 
via ISG from other exchanges that are members of ISG or with which the 
Exchange has entered into a comprehensive surveillance sharing 
agreement. In addition, investors will have ready access to information 
regarding the IIV and quotation and last sale information for the 
Shares.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of an 
additional type of exchange-traded product that holds municipal bonds 
and that will enhance competition among market participants, to the 
benefit of investors and the marketplace.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File No. SR-NYSEArca-2013-118 on the subject line.

[[Page 69509]]

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 No. SR-NYSEArca-2013-118. 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 Web site (http://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 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-2013-118 and should be 
submitted on or before December 10, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27667 Filed 11-18-13; 8:45 am]
BILLING CODE 8011-01-P