Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change Relating to the Listing and Trading of the Shares of the PowerShares Multi-Strategy Alternative Portfolio, a series of PowerShares Actively Managed Exchange-Traded Fund Trust, 20262-20269 [2014-08127]

Download as PDF 20262 Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices 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 such 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: inspection and copying at the principal office of DTC and on DTC’s Web site at https://dtcc.com/legal/sec-rulefilings.aspx. 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–DTC–2014– 04 and should be submitted on or before May 2, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–08121 Filed 4–10–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71892; File No. SR– NASDAQ–2014–027] Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File No. SR– DTC–2014–04 on the subject line. tkelley on DSK3SPTVN1PROD with NOTICES Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–DTC–2014–04. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filings also will be available for VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change Relating to the Listing and Trading of the Shares of the PowerShares MultiStrategy Alternative Portfolio, a series of PowerShares Actively Managed Exchange-Traded Fund Trust April 7, 2014. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 24, 2014, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Nasdaq. 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 the Substance of the Proposed Rule Change Nasdaq proposes to list and trade the shares of the PowerShares MultiStrategy Alternative Portfolio (the ‘‘Fund’’), a series of PowerShares Actively Managed Exchange-Traded Fund Trust (the ‘‘Trust’’), under Nasdaq Rule 5735 (‘‘Managed Fund Shares’’). The shares of the Fund are collectively referred to herein as the ‘‘Shares.’’ 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 The text of the proposed rule change is available at https:// nasdaq.cchwallstreet.com/, at Nasdaq’s principal office, 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, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade the Shares of the Fund under Nasdaq Rule 5735, which governs the listing and trading of Managed Fund Shares 3 on the Exchange.4 The Fund will be an actively managed exchangetraded fund (‘‘ETF’’) that will use proprietary portfolio management techniques in an effort to exceed a 3 A Managed Fund Share is a security that represents an interest in an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1) (the ‘‘1940 Act’’) organized as an open-end investment company or similar entity that invests in a portfolio of securities selected by its investment adviser consistent with its investment objectives and policies. In contrast, an open-end investment company that issues Index Fund Shares, listed and traded on the Exchange under Nasdaq Rule 5705, seeks to provide investment results that correspond generally to the price and yield performance of a specific foreign or domestic stock index, fixed income securities index or combination thereof. 4 The Commission approved Nasdaq Rule 5735 (formerly Nasdaq Rule 4420(o)) in Securities Exchange Act Release No. 57962 (June 13, 2008), 73 FR 35175 (June 20, 2008) (SR–NASDAQ–2008–039). There are already multiple actively-managed funds listed on the Exchange; see, e.g., Securities Exchange Act Release Nos. 69464 (April 26, 2013), 78 FR 25774 (May 2, 2013) (SR–NASDAQ–2013– 036) (order approving listing and trading of First Trust Senior Loan Fund); 66489 (February 29, 2012), 77 FR 13379 (March 6, 2012) (SR–NASDAQ– 2012–004) (order approving listing and trading of WisdomTree Emerging Markets Corporate Bond Fund). Additionally, the Commission has previously approved the listing and trading of a number of actively-managed funds on NYSE Arca, Inc. pursuant to Rule 8.600 of that exchange. See, e.g., Securities Exchange Act Release No. 68870 (February 8, 2013), 78 FR 11245 (February 15, 2013) (SR–NYSEArca–2012–139) (order approving listing and trading of First Trust Preferred Securities and Income ETF). The Exchange believes the proposed rule change raises no significant issues not previously addressed in those prior Commission orders. E:\FR\FM\11APN1.SGM 11APN1 Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices paragraph (g) further requires that personnel who make decisions on the open-end fund’s portfolio composition must be subject to procedures designed to prevent the use and dissemination of material, non-public information regarding the open-end fund’s portfolio. Rule 5735(g) is similar to Nasdaq Rule 5705(b)(5)(A)(i); however, paragraph (g) in connection with the establishment of a ‘‘fire wall’’ between the investment adviser and the broker-dealer reflects the applicable open-end fund’s portfolio, not an underlying benchmark index, as is the case with index-based funds. The Adviser is not a brokerdealer, although it is affiliated with the Distributor, a broker-dealer. The Adviser has implemented a fire wall with respect to its broker-dealer affiliate regarding access to information concerning the composition and/or changes to the portfolio. In the event (a) the Adviser becomes newly affiliated with a broker-dealer (or becomes a registered broker-dealer), or (b) any new adviser or sub-adviser is a registered broker-dealer or becomes affiliated with a broker-dealer, it will implement a fire wall with respect to its relevant personnel and/or such broker-dealer affiliate, if applicable, regarding access to information concerning the composition and/or changes to the portfolio and will be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding such portfolio.8 tkelley on DSK3SPTVN1PROD with NOTICES benchmark index comprised of securities and other investments similar to those held by the Fund (the ‘‘benchmark’’). The Shares will be offered by the Trust, which was established as a Delaware statutory trust on November 6, 2007. The Trust is registered with the Commission as an investment company and has filed a post-effective amendment to its registration statement on Form N–1A (‘‘Registration Statement’’) with the Commission.5 The Fund is a series of the Trust. All of the exchange-listed securities and derivatives held by the Fund, or indirectly held through a wholly-owned subsidiary controlled by the Fund and organized under the laws of the Cayman Islands (referred to herein as the ‘‘Subsidiary’’), will be traded in a principal trading market that is a member of the Intermarket Surveillance Group (‘‘ISG’’) or a market with which the Exchange has a comprehensive surveillance sharing agreement. Invesco PowerShares Capital Management LLC will be the investment adviser (‘‘Adviser’’) to the Fund. Invesco Distributors, Inc. (the ‘‘Distributor’’) will be the principal underwriter and distributor of the Fund’s Shares. The Bank of New York Mellon will act as the administrator, accounting agent, custodian (‘‘Custodian’’) and transfer agent for the Fund. The Fund may use one or more sub-advisers (‘‘SubAdvisers’’).6 Paragraph (g) of Rule 5735 provides that if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a brokerdealer, such investment adviser shall erect a ‘‘fire wall’’ between the investment adviser and the brokerdealer with respect to access to information concerning the composition and/or changes to such investment company portfolio.7 In addition, Principal Investment Strategies The Fund’s investment objective will be to seek positive total returns that have low correlation to the broader securities markets. The Fund seeks to achieve its investment objective by actively investing in a combination of a varying number of market neutral and other investment strategies (each, a 5 See Registration Statement for the Trust, filed on November 27, 2013 (File Nos. 333–147622 and 811– 22148). The descriptions of the Fund and the Shares contained herein are based, in part, on information in the Registration Statement. In addition, the Commission has issued an order granting certain exemptive relief to the Trust under the1940 Act. See Investment Company Act Release No. 28171 (February 27, 2008) (File No. 812–13386) (‘‘Exemptive Order’’). 6 No sub-adviser has been selected as of the date of this filing. 7 An investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’). As a result, the Adviser and any Sub-Adviser and their related personnel are subject to the provisions of Rule 204A–1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non-public information by an investment adviser must be consistent with Rule 204A–1 under the Advisers Act. In addition, Rule 206(4)–7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. 8 No Sub-Adviser will be a broker-dealer. Any Sub-Adviser to the Fund will comply with these representations and undertakings as a condition to acting as sub-adviser to the Fund. VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 20263 ‘‘Strategy,’’ and together, the ‘‘Strategies’’) that aim to capture nontraditional risk premia across asset classes. The Adviser will allocate the weightings of the Fund’s investments across the multiple Strategies according to a rules-based methodology and will reallocate the Fund’s assets among Strategies to achieve the Fund’s investment objective. The Strategies may include, but are not limited to, quantitative, volatility risk premium and carry Strategies. The Fund’s Strategies are similar to the strategies included in its benchmark and the Fund may hold the same types of instruments in similar weightings as the benchmark. However, the Adviser is not obliged to track the performance of the benchmark and will use proprietary portfolio management techniques to seek to exceed the benchmark’s performance. In pursuing its investment objective, under normal market conditions,9 the Fund as part of investing according to the various Strategies, may take both long and short positions in exchangetraded equity securities and equity index futures.10 The Fund also may take a long and a short position in various currencies by investing in currency forward and/or futures contracts.11 Additionally, the Fund may invest in index options.12 In following various Strategies, the Fund may purchase and sell interest rate futures, including Eurodollar interest rate futures or Euro Euribor interest rate futures, and Chicago Board Options Exchange Volatility Index (‘‘VIX’’) futures contracts.13 9 The term ‘‘under normal market conditions’’ as used herein includes, but is not limited to, the absence of adverse market, economic, political or other conditions, including extreme volatility or trading halts in the securities 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. In periods of extreme market disturbance, the Fund may take temporary defensive positions, by overweighting its portfolio in cash/cash-like instruments; however, to the extent possible, the Adviser would continue to seek to achieve the Fund’s investment objective. 10 These equity securities, including exchangetraded equity securities of registered investment companies, and equity index futures will be traded on U.S. exchanges or non-U.S. exchanges that are ISG members. 11 Currency futures contracts will be traded on U.S. exchanges or non-U.S. exchanges that are ISG members. Currency forward contracts will be traded over-the-counter. 12 Index options will be traded on U.S. exchanges or non-U.S. exchanges that are ISG members. 13 These futures contracts will be traded on U.S. exchanges or non-U.S. exchanges that are ISG members. E:\FR\FM\11APN1.SGM 11APN1 tkelley on DSK3SPTVN1PROD with NOTICES 20264 Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices The Subsidiary The Fund may seek to gain exposure to these various derivative investments through investments in the Subsidiary, which in turn would make investments in those derivatives and other instruments. If utilized, the Subsidiary would be wholly-owned and controlled by the Fund, and its investments would be consolidated into the Fund’s financial statements. Should the Fund invest in the Subsidiary, that investment may not exceed 25% of the Fund’s total assets at each quarter-end of the Fund’s fiscal year. Further, should the Fund invest in the Subsidiary, it would be expected to provide the Fund with exposure to futures contracts and other derivatives within the limits of Subchapter M of the Internal Revenue Code applicable to investment companies, such as the Fund, which limit the ability of investment companies to invest directly in derivative instruments. The Subsidiary would be able to invest in the same asset classes in which the Fund may invest. The Subsidiary, accordingly, would be subject to the same general investment policies and restrictions as the Fund, except that unlike the Fund, which must invest in derivatives in compliance with the requirements of Subchapter M of the Internal Revenue Code, federal securities laws and the Commodity Exchange Act, the Subsidiary may invest without limitation in futures contracts. References to the investment strategies and risks of the Fund include the investment strategies and risks of the Subsidiary. The Subsidiary will be advised by the Adviser.14 The Fund may utilize the Subsidiary, but is not required to do so. If it is utilized, the Subsidiary will not be registered under the 1940 Act. As an investor in the Subsidiary, the Fund, as the Subsidiary’s sole shareholder, would not have the protections offered to investors in registered investment companies. However, because the Fund would wholly own and control the Subsidiary, and the Fund and Subsidiary would be managed by the Adviser, the Subsidiary would not take action contrary to the interests of the Fund or the Fund’s shareholders. The Board of Trustees of the Trust (the ‘‘Board’’) has oversight responsibility for the investment activities of the Fund, including any investments in the Subsidiary, and oversees the Fund’s role 14 The Subsidiary also will enter into separate contracts for the provision of custody, transfer agency, and accounting agent services with the same or with affiliates of the same service providers that provide those services to the Fund. VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 as the sole shareholder of the Subsidiary. The Adviser will receive no additional compensation for managing the assets of the Subsidiary. Also, in managing the Subsidiary’s portfolio, the Adviser would be subject to the same investment restrictions and operational guidelines that apply to the management of the Fund, except that the Subsidiary would not be subject to the limitations imposed by Subchapter M of the Internal Revenue Code with respect to the amount of assets that can be invested in futures contracts and derivatives. Changes in the laws of the United States, under which the Trust is organized, or of the Cayman Islands, under which the Subsidiary is organized, could result in the inability of the Fund or the Subsidiary to operate as described in this filing or in the Registration Statement and could negatively affect the Fund and its shareholders. Other Investments The Fund may invest in U.S. government securities, money market instruments, cash and cash equivalents (e.g., corporate commercial paper) to provide liquidity and to collateralize its investments in derivative instruments. The Fund may invest in: (i) Shortterm obligations issued by the U.S. Government 15; (ii) short term negotiable obligations of commercial banks, fixed time deposits and bankers’ acceptances of U.S. and foreign banks and similar institutions 16; and (iii) commercial paper rated at the date of purchase ‘‘Prime-1’’ by Moody’s Investors Service, Inc. or ‘‘A–1+’’ or ‘‘A–1’’ by Standard & Poor’s or, if unrated, of comparable quality, as the Adviser of the Fund determines. In addition, the Fund may invest in non-exchange listed securities of other investment companies (including money market funds) beyond the limits permitted under the 1940 Act, subject to certain terms and conditions set forth in a Commission exemptive order issued pursuant to Section 12(d)(1)(J) of the 1940 Act.17 15 The Fund may invest in U.S. government obligations. Obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities include bills, notes and bonds issued by the U.S. Treasury, as well as ‘‘stripped’’ or ‘‘zero coupon’’ U.S. Treasury obligations representing future interest or principal payments on U.S. Treasury notes or bonds. 16 Time deposits are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Banker’s acceptances are time drafts drawn on commercial banks by borrowers, usually in connection with international transactions. 17 Investment Company Act Release No. 30238 (October 23, 2012) (File No. 812–13820). PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 Investment Restrictions The Fund may not concentrate its investments (i.e., invest more than 25% of the value of its net assets) in securities of issuers in any one industry or group of industries. This restriction will not apply to obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities.18 The Subsidiary’s shares will be offered only to the Fund and the Fund will not sell shares of the Subsidiary to other investors. The Fund and the Subsidiary will not invest in any nonU.S. equity securities (other than shares of the Subsidiary). The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid securities or other illiquid assets (calculated at the time of investment). 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 securities or other illiquid assets. Illiquid securities and other illiquid assets include those subject to contractual or other restrictions on resale and other instruments or assets that lack readily available markets as determined in accordance with Commission staff guidance.19 The Fund intends to qualify for and to elect to be treated as a separate regulated investment company under Subchapter M of the Internal Revenue Code.20 18 See Form N–1A, Item 9. The Commission has taken the position that a fund is concentrated if it invests more than 25% of the value of its total assets in any one industry. See, e.g., Investment Company Act Release No. 9011 (October 30, 1975), 40 FR 54241 (November 21, 1975). 19 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), FN 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 Securities Act of 1933). 20 26 U.S.C. 851. E:\FR\FM\11APN1.SGM 11APN1 Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices tkelley on DSK3SPTVN1PROD with NOTICES The Fund’s and the Subsidiary’s investments will be consistent with the Fund’s investment objective. Additionally, the Fund may engage in frequent and active trading of portfolio securities to achieve its investment objective. One or more of the Strategies may utilize instruments or investment techniques that have a leveraging effect on the Fund. This effective leverage occurs when the Fund’s market exposure exceeds the amounts actually invested. Any instance of effective leverage will be covered in accordance with guidance promulgated by the Commission and its staff.21 The Fund does not presently intend to engage in any form of borrowing for investment purposes, and will not be operated as a ‘‘leveraged ETF,’’ i.e., it will not be operated in a manner designed to seek a multiple of the performance of an underlying reference index. Net Asset Value The Fund’s administrator will calculate the Fund’s net asset value (‘‘NAV’’) per Share as of the close of regular trading (normally 4:00 p.m., Eastern time (‘‘E.T.’’)) on each day the New York Stock Exchange (‘‘NYSE’’) is open for business. NAV per Share will be calculated for the Fund by taking the value of the Fund’s total assets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing such amount by the total number of Shares outstanding. The result, rounded to the nearest cent, will be the NAV per Share (although creations and redemptions will be processed using a price denominated to the fifth decimal point, meaning that rounding to the nearest cent may result in different prices in certain circumstances). Under normal market conditions, the Fund’s holdings will be priced as follows: (a) The value of the currency forwards will be calculated using the spot price and the forward spread of the subject currency; (b) index options will be valued at the official closing price on the market on which they primarily trade; (c) investment company shares will be valued at net asset value, unless the shares are exchange traded, in which case they will be valued at the last sale or official closing price on the market on which they primarily trade; (d) U.S. government securities will be valued at the mean price provided by a third party vendor for U.S. government securities; (e) short term money market instruments and cash equivalents (e.g., corporate commercial paper or bank 21 In re Securities Trading Practices of Investment Companies, SEC Rel. No. IC–10666 (April 27, 1979). VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 instruments) will be valued in accordance with the Trust’s valuation policies and procedures approved by the Trust’s Board; and (f) all other securities held by the Fund will be valued at the last sales price or official closing price as of the close of the exchange where the security primarily is traded. All valuations will be subject to review by the Board or its delegate. In determining NAV, expenses will be accrued and applied daily and securities and other assets for which market quotations are readily available will be valued at market value. Futures and securities listed or traded on an exchange generally will be valued at the last sales price or official closing price that day as of the close of the exchange where the security primarily is traded. The NAV for the Fund will be calculated and disseminated daily. If a security’s market price is not readily available, the security will be valued using pricing provided from independent pricing services or by another method that the Adviser, in its judgment, believes will better reflect the security’s fair value in accordance with the Trust’s valuation policies and procedures approved by the Trust’s Board and with the 1940 Act. Creation and Redemption of Shares The Trust will issue and redeem Shares of the Fund at NAV only with authorized participants (‘‘APs’’) and only in aggregations of 50,000 shares (each, a ‘‘Creation Unit’’), on a continuous basis through the Distributor, without a sales load, at the NAV next determined after receipt, on any business day, of an order in proper form. The consideration for purchase of Creation Unit aggregations of the Fund may consist of (i) cash in lieu of all or a portion of the Deposit Securities, as defined below, or (ii) an ‘‘in-kind’’ deposit of a designated portfolio of securities determined by the Adviser that generally will conform to the holdings of the Fund consistent with its investment objective (the ‘‘Deposit Securities’’) per each Creation Unit aggregation and generally an amount of cash (the ‘‘Cash Component’’) computed as described below. Together, the Deposit Securities and the Cash Component (including the cash in lieu amount) will constitute the ‘‘Fund Deposit,’’ which will represent the minimum initial and subsequent investment amount for a Creation Unit aggregation of the Fund. The consideration for redemption of Creation Unit aggregations of the Fund may consist of (i) cash in lieu of all or a portion of the Fund Securities as PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 20265 defined below, or (ii) a designated portfolio of securities determined by the Adviser that generally will conform to the holdings of the Fund consistent with its investment objective per each Creation Unit aggregation (‘‘Fund Securities’’) and generally a Cash Component, as described below. The Fund typically will issue and redeem Creation Units principally for cash,22 calculated based on the NAV per Share, multiplied by the number of Shares representing a Creation Unit (‘‘Deposit Cash’’), plus a fixed and/or variable transaction fee; however, the Fund also reserves the right to permit or require Creation Units to be issued in exchange for the Deposit Securities together with the Cash Component. The Cash Component is sometimes also referred to as the Balancing Amount. The Cash Component will serve the function of compensating for any differences between the NAV per Creation Unit aggregation and the Deposit Amount (as defined below). For example, for a creation the Cash Component will be an amount equal to the difference between the NAV of Fund Shares (per Creation Unit aggregation) and the ‘‘Deposit Amount’’—an amount equal to the market value of the Deposit Securities and/or cash in lieu of all or a portion of the Deposit Securities. If the Cash Component is a positive number (i.e., the NAV per Creation Unit aggregation exceeds the Deposit Amount), the AP will deliver the Cash Component. If the Cash Component is a negative number (i.e., the NAV per Creation Unit aggregation is less than the Deposit Amount), the AP will receive the Cash Component. To the extent that the Fund permits Creation Units to be issued in-kind, the Custodian, through the National Securities Clearing Corporation (‘‘NSCC’’), will make available on each business day, prior to the opening of business of the NYSE (currently 9:30 a.m., E.T.), the list of the names and the quantity of each Deposit Security to be included in the current Fund Deposit (based on information at the end of the previous business day) for the Fund. Such Fund Deposit will be applicable, subject to any adjustments as described below or in the Registration Statement, to effect creations of Creation Units of the Fund until such time as the next22 The Fund reserves the right to issue and redeem Creation Units in-kind in instances in which a certain security or other asset can be delivered in-kind, and when such in-kind issuance and redemptions are in the best interest of the Fund, such as instances in which receipt or payment of in-kind assets would facilitate the orderly management of the Fund. E:\FR\FM\11APN1.SGM 11APN1 tkelley on DSK3SPTVN1PROD with NOTICES 20266 Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices announced composition of the Deposit Securities is made available. To the extent that the Fund permits Creation Units to be redeemed in-kind, the Custodian, through the NSCC, will make available on each business day, prior to the opening of business of NYSE (currently 9:30 a.m., E.T.), the identity of the Fund Securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form on that day. Fund Securities received on redemption may not be identical to Deposit Securities that are applicable to creations of Creation Units. When applicable, during times that the Fund permits in-kind creations, the identity and quantity of the Deposit Securities required for a Fund Deposit for the Shares may change as rebalancing adjustments and corporate action events occur and are reflected within the Fund from time to time by the Adviser, consistent with the investment objective of the Fund. In addition, the Trust reserves the right to permit or require the substitution of an amount of cash—i.e., a ‘‘cash in lieu’’ amount—to be added to the Cash Component to replace any Deposit Security that may not be available in sufficient quantity for delivery or which might not be eligible for trading by an AP or the investor for which it is acting or other relevant reason. In addition to the list of names and numbers of securities constituting the current Deposit Securities of a Fund Deposit, the Custodian, through the NSCC, also will make available on each business day, the estimated Cash Component, effective through and including the previous business day, per Creation Unit aggregation of the Fund. To be eligible to place orders with respect to creations and redemptions of Creation Units, an entity must be (i) a ‘‘Participating Party,’’ i.e., a brokerdealer or other participant in the clearing process through the continuous net settlement system of the NSCC or (ii) a Depository Trust Company (‘‘DTC’’) Participant (a ‘‘DTC Participant’’). In addition, each Participating Party or DTC Participant (each, an AP) must execute an agreement that has been agreed to by the Distributor and the Custodian with respect to purchases and redemptions of Creation Units. All orders to create Creation Unit aggregations must be received by the transfer agent no later than the closing time of the regular trading session on the NYSE (ordinarily 4:00 p.m., E.T.) in each case on the date such order is placed in order for creations of Creation Unit aggregations to be effected based VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 on the NAV of Shares of the Fund as next determined on such date after receipt of the order in proper form. In order to redeem Creation Units of the Fund, an AP must submit an order to redeem for one or more Creation Units. All such orders must be received by the Fund’s transfer agent in proper form no later than the close of regular trading on the NYSE (ordinarily 4:00 p.m. E.T.) in order to receive that day’s closing NAV per Share. Availability of Information The Fund’s Web site (www.invescopowershares.com), which will be publicly available prior to the public offering of Shares, will include a form of the prospectus for the Fund that may be downloaded. The Web site will include the Share’s ticker, CUSIP and exchange information, along with additional quantitative information updated on a daily basis, including, for the Fund: (1) Daily trading volume, the prior business day’s reported NAV and closing price, mid-point of the bid/ask spread at the time of calculation of such NAV (the ‘‘Bid/Ask Price’’),23 and a calculation of the premium and discount of the Bid/Ask Price against the NAV; and (2) data in chart format displaying the frequency distribution of discounts and premiums of the daily Bid/Ask Price against the NAV, within appropriate ranges, for the most recently completed calendar year and each of the four most recently completed calendar quarters since that year (or the life of the Fund if shorter). On each business day, before commencement of trading in Shares in the Regular Market Session 24 on the Exchange, the Fund will disclose on its Web site the identities and quantities of the portfolio of securities and other assets (the ‘‘Disclosed Portfolio’’ as defined in Nasdaq Rule 5735(c)(2)) held by the Fund and, if applicable, the Subsidiary that will form the basis for the Fund’s calculation of NAV at the end of the business day.25 23 The Bid/Ask Price of the Fund will be determined using the mid-point of the highest bid and the lowest offer on the Exchange as of the time of calculation of the Fund’s NAV. The records relating to Bid/Ask Prices will be retained by the Fund and its service providers. 24 See Nasdaq Rule 4120(b)(4) (describing the three trading sessions on the Exchange: (1) PreMarket Session from 4 a.m. to 9:30 a.m. E.T.; (2) Regular Market Session from 9:30 a.m. to 4 p.m. or 4:15 p.m. E.T.; and (3) Post-Market Session from 4 p.m. or 4:15 p.m. to 8 p.m. E.T.). 25 Under accounting procedures to be followed by the Fund, trades made on the prior business day (‘‘T’’) will be booked and reflected in NAV on the current business day (‘‘T+1’’). Notwithstanding the foregoing, portfolio trades that are executed prior to the opening of the Exchange on any business day may be booked and reflected in NAV on such business day. Accordingly, the Fund will be able to PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 The Disclosed Portfolio will include, as applicable, the names, quantity, percentage weighting and market value of securities and other assets held by the Fund and the Subsidiary and the characteristics of such assets. The Web site information will be publicly available at no charge. In addition, for the Fund, an estimated value, defined in Rule 5735(c)(3) as the ‘‘Intraday Indicative Value,’’ that reflects an estimated intraday value of the Fund’s portfolio (including the Subsidiary’s portfolio), will be disseminated. Moreover, the Intraday Indicative Value, available on the NASDAQ OMX Information LLC proprietary index data service 26 will be based upon the current value for the components of the Disclosed Portfolio and will be updated and widely disseminated by one or more major market data vendors and broadly displayed at least every 15 seconds during the Regular Market Session. The dissemination of the Intraday Indicative Value, together with the Disclosed Portfolio, will allow investors to determine the value of the underlying portfolio of the Fund on a daily basis and will provide a close estimate of that value throughout the trading day. Intra-day, executable price quotations on the securities and other assets held by the Fund and the Subsidiary will be available from major broker-dealer firms or on the exchange on which they are traded, as applicable. Intra-day price information on the securities and other assets held by the Fund will also be available through subscription or free services that can be accessed by APs and other investors: (a) Pricing information for equity securities, investment company securities, and equity index futures will be publicly available on public financial Web sites, and through subscription services such as Bloomberg and Thompson Reuters; and (b) pricing information related to currency forward and futures contracts, index options, VIX futures contracts, and interest rate futures contracts will be available through subscription services such as Bloomberg and Thompson Reuters. Pricing information for U.S. Government securities and cash equivalents will be available through disclose at the beginning of the business day the portfolio that will form the basis for the NAV calculation at the end of the business day. 26 Currently, the NASDAQ OMX Global Index Data Service (‘‘GIDS’’) is the NASDAQ OMX global index data feed service, offering real-time updates, daily summary messages, and access to widely followed indexes and Intraday Indicative Values for ETFs. GIDS provides investment professionals with the daily information needed to track or trade NASDAQ OMX indexes, listed ETFs, or third-party partner indexes and ETFs. E:\FR\FM\11APN1.SGM 11APN1 Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices tkelley on DSK3SPTVN1PROD with NOTICES subscription services such as Bloomberg, Markit and Thompson Reuters. Investors will also be able to obtain the Fund’s Statement of Additional Information (‘‘SAI’’), the Fund’s Shareholder Reports, and its Trust’s Form N–CSR and Form N–SAR, each of which is filed twice a year except the SAI which is filed at least annually. The Fund’s SAI and Shareholder Reports will be available free upon request from the Trust, and those documents and the Form N–CSR and Form N–SAR may be viewed on-screen or downloaded from the Commission’s Web site at www.sec.gov. 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. Information regarding the previous day’s closing price and trading volume for the Shares will be published daily in the financial section of newspapers. Quotation and last sale information for the Shares will be available via Nasdaq proprietary quote and trade services, as well as in accordance with the Unlisted Trading Privileges and the Consolidated Tape Association plans or through the Options Price Reporting Authority, as applicable, for the Shares. Similarly, quotation and last sale information for any underlying exchange-traded products will also be available via the quote and trade services of their respective primary exchanges, as well as in accordance with the Unlisted Trading Privileges and the Consolidated Tape Association plans for any such underlying exchange-traded products. Additional information regarding the Fund and the Shares, including investment strategies, risks, creation and redemption procedures, fees, portfolio holdings disclosure policies, distributions and taxes will be included in the Registration Statement. Initial and Continued Listing The Shares will conform to the initial and continued listing criteria applicable to Managed Fund Shares, as set forth under Rule 5735. The Exchange represents that, for initial and/or continued listing, the Fund and the Subsidiary will be in compliance with Rule 10A–3 27 under the Act. A minimum of 100,000 Shares will be outstanding at the commencement of trading on the Exchange. The Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio 27 See 17 CFR 240.10A–3. VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 will be made available to all market participants at the same time. Trading Halts 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. Nasdaq will halt trading in the Shares under the conditions specified in Nasdaq Rules 4120 and 4121, including the trading pauses under Nasdaq Rules 4120(a)(11) and (12). Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and other assets constituting the Disclosed Portfolio of the Fund and the Subsidiary; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Shares also will be subject to Rule 5735(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted. Trading Rules Nasdaq deems the Shares to be equity securities, thus rendering trading in the Shares subject to Nasdaq’s existing rules governing the trading of equity securities. Nasdaq will allow trading in the Shares from 4:00 a.m. until 8:00 p.m. E.T. The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in Nasdaq Rule 5735(b)(3), the minimum price variation for quoting and entry of orders in Managed Fund Shares traded on the Exchange is $0.01. Surveillance The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and also 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.28 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 28 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. PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 20267 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 and other exchange-traded securities and instruments held by the Fund and the Subsidiary with other markets and other entities that are members of the ISG,29 and FINRA may obtain trading information regarding trading in the Shares and other exchange-traded securities and instruments held by the Fund and the Subsidiary from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and other exchange-traded securities and instruments held by the Fund and the Subsidiary from markets and other entities that are members of ISG, which includes securities and futures exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, to the extent that the Fund or the Subsidiary were to invest in derivative instruments, such instruments held by the Fund or the Subsidiary shall have their principal trading market be a member of ISG or a market with which the Exchange has a comprehensive surveillance sharing agreement. In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. Information Circular Prior to the commencement of trading, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares. Specifically, the Information Circular will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); (2) Nasdaq Rule 2111A, which imposes suitability obligations on Nasdaq members with respect to recommending transactions in the Shares to customers; (3) how information regarding the Intraday Indicative Value is disseminated; (4) the risks involved in trading the Shares during the Pre-Market and Post-Market 29 For a list of the current members of ISG, see www.isgportal.org. The Exchange notes that not all components of the Disclosed Portfolio may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. E:\FR\FM\11APN1.SGM 11APN1 20268 Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices tkelley on DSK3SPTVN1PROD with NOTICES Sessions when an updated Intraday Indicative Value will not be calculated or publicly disseminated; (5) the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. In addition, the Information Circular will advise members, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Fund. Members purchasing Shares from the Fund for resale to investors will deliver a prospectus to such investors. The Information Circular will also discuss any exemptive, no-action and interpretive relief granted by the Commission from any rules under the Act. Additionally, the Information Circular will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Information Circular will also disclose the trading hours of the Shares of the Fund and the applicable NAV calculation time for the Shares. The Information Circular will disclose that information about the Shares of the Fund will be publicly available on the Fund’s Web site. 2. Statutory Basis Nasdaq believes that the proposal is consistent with Section 6(b) of the Act in general, and Section 6(b)(5) 30 of the Act in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and 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 Nasdaq Rule 5735. The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and FINRA, on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws and are adequate to properly monitor trading in the Shares in all trading sessions. The Adviser is affiliated with a broker-dealer and has implemented a fire wall with 30 15 U.S.C. 78(f)(b)(5). VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 respect to its broker-dealer affiliate regarding access to information concerning the composition and/or changes to the Fund’s portfolio.31 In addition, paragraph (g) of Nasdaq Rule 5735 further requires that personnel who make decisions on an open-end fund’s portfolio composition must be subject to procedures designed to prevent the use and dissemination of material, non-public information regarding the open-end fund’s portfolio. The Fund’s and the Subsidiary’s investments will be consistent with the Fund’s investment objective. Additionally, the Fund may engage in frequent and active trading of portfolio securities to achieve its investment objective. One or more of the Strategies may utilize instruments or investment techniques that have a leveraging effect on the Fund. This effective leverage occurs when the Fund’s market exposure exceeds the amounts actually invested. Any instance of effective leverage will be covered in accordance with guidance promulgated by the Commission and its staff.32 The Fund does not presently intend to engage in any form of borrowing for investment purposes, and will not be operated as a ‘‘leveraged ETF,’’ i.e., it will not be operated in a manner designed to seek a multiple of the performance of an underlying reference index. FINRA may obtain information via ISG from other exchanges that are members of ISG. In addition, the Exchange may obtain information regarding trading in the Shares and other exchange-traded securities and instruments held by the Fund and the Subsidiary from markets and other entities that are members of ISG, which includes securities and futures exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, to the extent that the Subsidiary were to invest in derivative instruments, such instruments held by the Subsidiary shall have their principal trading market be a member of ISG or a market with which the Exchange has a comprehensive surveillance sharing agreement. If the Fund invests in the Subsidiary, it will invest no more than 25% of its total assets in the Subsidiary. The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid 31 To the extent the Fund uses a Sub-Adviser, that Sub-Adviser will also implement a fire wall with respect to its broker-dealer affiliates, if any, regarding access to information concerning the composition and/or changes to the Fund’s portfolio. 32 In re Securities Trading Practices of Investment Companies, SEC Rel. No. IC–10666 (April 27, 1979). PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 securities or other illiquid assets (calculated at the time of investment). The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time. In addition, a large amount of information will be publicly available regarding the Fund and the Shares, thereby promoting market transparency. Moreover, the Intraday Indicative Value, available on the NASDAQ OMX Information LLC proprietary index data service will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Regular Market Session. On each business day, before commencement of trading in Shares in the Regular Market Session on the Exchange, the Fund will disclose on its Web site the Disclosed Portfolio of the Fund and the Subsidiary that will form the basis for the Fund’s calculation of NAV at the end of the business day. Information regarding market price and trading volume of the Shares 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 for the Shares will be available via Nasdaq proprietary quote and trade services, as well as in accordance with the Unlisted Trading Privileges and the Consolidated Tape Association plans for the Shares. Similarly, quotation and last sale information for any underlying exchange-traded products will also be available via the quote and trade services of their respective primary exchanges, as well as in accordance with the Unlisted Trading Privileges and the Consolidated Tape Association plans or through the Options Price Reporting Authority, as applicable, for any such underlying exchange-traded products. Intra-day price information will be available through public financial Web sites or subscription services, such as Bloomberg, Markit and Thomson Reuters, which can be accessed by Authorized APs and other investors. The Fund’s Web site will include a form of 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 members in an Information Circular of the special characteristics and risks associated with E:\FR\FM\11APN1.SGM 11APN1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 70 / Friday, April 11, 2014 / Notices trading the Shares. Trading in Shares of the Fund will be halted under the conditions specified in Nasdaq Rules 4120 and 4121 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 Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted. In addition, as noted above, investors will have ready access to information regarding the Fund’s holdings, the Intraday Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of activelymanaged exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, FINRA, on behalf of the Exchange, has in place surveillance procedures relating to trading in the Shares and will communicate as needed regarding trading in the Shares and other exchange-traded securities and instruments held by the Fund and the Subsidiary with other markets and other entities that are members of the ISG. FINRA also may obtain trading information regarding trading in the Shares and other exchange-traded securities and instruments held by the Fund and the Subsidiary from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and other exchange-traded securities and instruments held by the Fund and the Subsidiary from markets and other entities that are members of ISG, which includes securities and futures exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. Furthermore, as noted above, investors will have ready access to information regarding the Fund’s holdings, the Intraday Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares. For the above reasons, Nasdaq believes the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. 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 VerDate Mar<15>2010 18:55 Apr 10, 2014 Jkt 232001 of the purposes of the Act. The Exchange believes that the proposed rule change will facilitate the listing and trading of an additional type of activelymanaged exchange-traded fund 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 Written comments were neither solicited nor received. 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 (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission shall: (a) By order approve or disapprove such 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2014–027 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2014–027. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 20269 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 Number SR– NASDAQ–2014–027, and should be submitted on or before May 2, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.33 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–08127 Filed 4–10–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71884; File No. SR–ISE– 2014–22] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Rule 703A April 7, 2014. 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 April 4, 2014, the International Securities Exchange, LLC (‘‘Exchange’’ or ‘‘ISE’’) 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 Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 33 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\11APN1.SGM 11APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 70 (Friday, April 11, 2014)]
[Notices]
[Pages 20262-20269]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08127]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71892; File No. SR-NASDAQ-2014-027]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change Relating to the Listing and
Trading of the Shares of the PowerShares Multi-Strategy Alternative
Portfolio, a series of PowerShares Actively Managed Exchange-Traded
Fund Trust

April 7, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 24, 2014, The NASDAQ Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by Nasdaq. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------

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

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

Nasdaq proposes to list and trade the shares of the PowerShares
Multi-Strategy Alternative Portfolio (the ``Fund''), a series of
PowerShares Actively Managed Exchange-Traded Fund Trust (the
``Trust''), under Nasdaq Rule 5735 (``Managed Fund Shares''). The
shares of the Fund are collectively referred to herein as the
``Shares.''
The text of the proposed rule change is available at https://nasdaq.cchwallstreet.com/, at Nasdaq's principal office, 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, Nasdaq included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. Nasdaq has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.

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

1. Purpose
The Exchange proposes to list and trade the Shares of the Fund
under Nasdaq Rule 5735, which governs the listing and trading of
Managed Fund Shares \3\ on the Exchange.\4\ The Fund will be an
actively managed exchange-traded fund (``ETF'') that will use
proprietary portfolio management techniques in an effort to exceed a

[[Page 20263]]

benchmark index comprised of securities and other investments similar
to those held by the Fund (the ``benchmark''). The Shares will be
offered by the Trust, which was established as a Delaware statutory
trust on November 6, 2007. The Trust is registered with the Commission
as an investment company and has filed a post-effective amendment to
its registration statement on Form N-1A (``Registration Statement'')
with the Commission.\5\ The Fund is a series of the Trust. All of the
exchange-listed securities and derivatives held by the Fund, or
indirectly held through a wholly-owned subsidiary controlled by the
Fund and organized under the laws of the Cayman Islands (referred to
herein as the ``Subsidiary''), will be traded in a principal trading
market that is a member of the Intermarket Surveillance Group (``ISG'')
or a market with which the Exchange has a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------

\3\ A Managed Fund Share is a security that represents an
interest in an investment company registered under the Investment
Company Act of 1940 (15 U.S.C. 80a-1) (the ``1940 Act'') organized
as an open-end investment company or similar entity that invests in
a portfolio of securities selected by its investment adviser
consistent with its investment objectives and policies. In contrast,
an open-end investment company that issues Index Fund Shares, listed
and traded on the Exchange under Nasdaq Rule 5705, seeks to provide
investment results that correspond generally to the price and yield
performance of a specific foreign or domestic stock index, fixed
income securities index or combination thereof.
\4\ The Commission approved Nasdaq Rule 5735 (formerly Nasdaq
Rule 4420(o)) in Securities Exchange Act Release No. 57962 (June 13,
2008), 73 FR 35175 (June 20, 2008) (SR-NASDAQ-2008-039). There are
already multiple actively-managed funds listed on the Exchange; see,
e.g., Securities Exchange Act Release Nos. 69464 (April 26, 2013),
78 FR 25774 (May 2, 2013) (SR-NASDAQ-2013-036) (order approving
listing and trading of First Trust Senior Loan Fund); 66489
(February 29, 2012), 77 FR 13379 (March 6, 2012) (SR-NASDAQ-2012-
004) (order approving listing and trading of WisdomTree Emerging
Markets Corporate Bond Fund). Additionally, the Commission has
previously approved the listing and trading of a number of actively-
managed funds on NYSE Arca, Inc. pursuant to Rule 8.600 of that
exchange. See, e.g., Securities Exchange Act Release No. 68870
(February 8, 2013), 78 FR 11245 (February 15, 2013) (SR-NYSEArca-
2012-139) (order approving listing and trading of First Trust
Preferred Securities and Income ETF). The Exchange believes the
proposed rule change raises no significant issues not previously
addressed in those prior Commission orders.
\5\ See Registration Statement for the Trust, filed on November
27, 2013 (File Nos. 333-147622 and 811-22148). The descriptions of
the Fund and the Shares contained herein are based, in part, on
information in the Registration Statement. In addition, the
Commission has issued an order granting certain exemptive relief to
the Trust under the1940 Act. See Investment Company Act Release No.
28171 (February 27, 2008) (File No. 812-13386) (``Exemptive
Order'').
---------------------------------------------------------------------------

Invesco PowerShares Capital Management LLC will be the investment
adviser (``Adviser'') to the Fund. Invesco Distributors, Inc. (the
``Distributor'') will be the principal underwriter and distributor of
the Fund's Shares. The Bank of New York Mellon will act as the
administrator, accounting agent, custodian (``Custodian'') and transfer
agent for the Fund. The Fund may use one or more sub-advisers (``Sub-
Advisers'').\6\
---------------------------------------------------------------------------

\6\ No sub-adviser has been selected as of the date of this
filing.
---------------------------------------------------------------------------

Paragraph (g) of Rule 5735 provides that if the investment adviser
to the investment company issuing Managed Fund Shares is affiliated
with a broker-dealer, such investment adviser shall erect a ``fire
wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such investment company portfolio.\7\ In addition, paragraph
(g) further requires that personnel who make decisions on the open-end
fund's portfolio composition must be subject to procedures designed to
prevent the use and dissemination of material, non-public information
regarding the open-end fund's portfolio. Rule 5735(g) is similar to
Nasdaq Rule 5705(b)(5)(A)(i); however, paragraph (g) in connection with
the establishment of a ``fire wall'' between the investment adviser and
the broker-dealer reflects the applicable open-end fund's portfolio,
not an underlying benchmark index, as is the case with index-based
funds. The Adviser is not a broker-dealer, although it is affiliated
with the Distributor, a broker-dealer. The Adviser has implemented a
fire wall with respect to its broker-dealer affiliate regarding access
to information concerning the composition and/or changes to the
portfolio. In the event (a) the Adviser becomes newly affiliated with a
broker-dealer (or becomes a registered broker-dealer), or (b) any new
adviser or sub-adviser is a registered broker-dealer or becomes
affiliated with a broker-dealer, it will implement a fire wall with
respect to its relevant personnel and/or such broker-dealer affiliate,
if applicable, regarding access to information concerning the
composition and/or changes to the portfolio and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding such portfolio.\8\
---------------------------------------------------------------------------

\7\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and any Sub-Adviser and their
related personnel are subject to the provisions of Rule 204A-1 under
the Advisers Act relating to codes of ethics. This Rule requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
\8\ No Sub-Adviser will be a broker-dealer. Any Sub-Adviser to
the Fund will comply with these representations and undertakings as
a condition to acting as sub-adviser to the Fund.
---------------------------------------------------------------------------

Principal Investment Strategies
The Fund's investment objective will be to seek positive total
returns that have low correlation to the broader securities markets.
The Fund seeks to achieve its investment objective by actively
investing in a combination of a varying number of market neutral and
other investment strategies (each, a ``Strategy,'' and together, the
``Strategies'') that aim to capture non-traditional risk premia across
asset classes.
The Adviser will allocate the weightings of the Fund's investments
across the multiple Strategies according to a rules-based methodology
and will reallocate the Fund's assets among Strategies to achieve the
Fund's investment objective. The Strategies may include, but are not
limited to, quantitative, volatility risk premium and carry Strategies.
The Fund's Strategies are similar to the strategies included in its
benchmark and the Fund may hold the same types of instruments in
similar weightings as the benchmark. However, the Adviser is not
obliged to track the performance of the benchmark and will use
proprietary portfolio management techniques to seek to exceed the
benchmark's performance.
In pursuing its investment objective, under normal market
conditions,\9\ the Fund as part of investing according to the various
Strategies, may take both long and short positions in exchange-traded
equity securities and equity index futures.\10\ The Fund also may take
a long and a short position in various currencies by investing in
currency forward and/or futures contracts.\11\
---------------------------------------------------------------------------

\9\ The term ``under normal market conditions'' as used herein
includes, but is not limited to, the absence of adverse market,
economic, political or other conditions, including extreme
volatility or trading halts in the securities 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. In periods of
extreme market disturbance, the Fund may take temporary defensive
positions, by overweighting its portfolio in cash/cash-like
instruments; however, to the extent possible, the Adviser would
continue to seek to achieve the Fund's investment objective.
\10\ These equity securities, including exchange-traded equity
securities of registered investment companies, and equity index
futures will be traded on U.S. exchanges or non-U.S. exchanges that
are ISG members.
\11\ Currency futures contracts will be traded on U.S. exchanges
or non-U.S. exchanges that are ISG members. Currency forward
contracts will be traded over-the-counter.
---------------------------------------------------------------------------

Additionally, the Fund may invest in index options.\12\ In
following various Strategies, the Fund may purchase and sell interest
rate futures, including Eurodollar interest rate futures or Euro
Euribor interest rate futures, and Chicago Board Options Exchange
Volatility Index (``VIX'') futures contracts.\13\
---------------------------------------------------------------------------

\12\ Index options will be traded on U.S. exchanges or non-U.S.
exchanges that are ISG members.
\13\ These futures contracts will be traded on U.S. exchanges or
non-U.S. exchanges that are ISG members.

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

[[Page 20264]]

The Subsidiary
The Fund may seek to gain exposure to these various derivative
investments through investments in the Subsidiary, which in turn would
make investments in those derivatives and other instruments. If
utilized, the Subsidiary would be wholly-owned and controlled by the
Fund, and its investments would be consolidated into the Fund's
financial statements.
Should the Fund invest in the Subsidiary, that investment may not
exceed 25% of the Fund's total assets at each quarter-end of the Fund's
fiscal year. Further, should the Fund invest in the Subsidiary, it
would be expected to provide the Fund with exposure to futures
contracts and other derivatives within the limits of Subchapter M of
the Internal Revenue Code applicable to investment companies, such as
the Fund, which limit the ability of investment companies to invest
directly in derivative instruments.
The Subsidiary would be able to invest in the same asset classes in
which the Fund may invest. The Subsidiary, accordingly, would be
subject to the same general investment policies and restrictions as the
Fund, except that unlike the Fund, which must invest in derivatives in
compliance with the requirements of Subchapter M of the Internal
Revenue Code, federal securities laws and the Commodity Exchange Act,
the Subsidiary may invest without limitation in futures contracts.
References to the investment strategies and risks of the Fund include
the investment strategies and risks of the Subsidiary.
The Subsidiary will be advised by the Adviser.\14\ The Fund may
utilize the Subsidiary, but is not required to do so. If it is
utilized, the Subsidiary will not be registered under the 1940 Act. As
an investor in the Subsidiary, the Fund, as the Subsidiary's sole
shareholder, would not have the protections offered to investors in
registered investment companies. However, because the Fund would wholly
own and control the Subsidiary, and the Fund and Subsidiary would be
managed by the Adviser, the Subsidiary would not take action contrary
to the interests of the Fund or the Fund's shareholders. The Board of
Trustees of the Trust (the ``Board'') has oversight responsibility for
the investment activities of the Fund, including any investments in the
Subsidiary, and oversees the Fund's role as the sole shareholder of the
Subsidiary. The Adviser will receive no additional compensation for
managing the assets of the Subsidiary. Also, in managing the
Subsidiary's portfolio, the Adviser would be subject to the same
investment restrictions and operational guidelines that apply to the
management of the Fund, except that the Subsidiary would not be subject
to the limitations imposed by Subchapter M of the Internal Revenue Code
with respect to the amount of assets that can be invested in futures
contracts and derivatives. Changes in the laws of the United States,
under which the Trust is organized, or of the Cayman Islands, under
which the Subsidiary is organized, could result in the inability of the
Fund or the Subsidiary to operate as described in this filing or in the
Registration Statement and could negatively affect the Fund and its
shareholders.
---------------------------------------------------------------------------

\14\ The Subsidiary also will enter into separate contracts for
the provision of custody, transfer agency, and accounting agent
services with the same or with affiliates of the same service
providers that provide those services to the Fund.
---------------------------------------------------------------------------

Other Investments
The Fund may invest in U.S. government securities, money market
instruments, cash and cash equivalents (e.g., corporate commercial
paper) to provide liquidity and to collateralize its investments in
derivative instruments.
The Fund may invest in: (i) Short-term obligations issued by the
U.S. Government \15\; (ii) short term negotiable obligations of
commercial banks, fixed time deposits and bankers' acceptances of U.S.
and foreign banks and similar institutions \16\; and (iii) commercial
paper rated at the date of purchase ``Prime-1'' by Moody's Investors
Service, Inc. or ``A-1+'' or ``A-1'' by Standard & Poor's or, if
unrated, of comparable quality, as the Adviser of the Fund determines.
---------------------------------------------------------------------------

\15\ The Fund may invest in U.S. government obligations.
Obligations issued or guaranteed by the U.S. Government, its
agencies and instrumentalities include bills, notes and bonds issued
by the U.S. Treasury, as well as ``stripped'' or ``zero coupon''
U.S. Treasury obligations representing future interest or principal
payments on U.S. Treasury notes or bonds.
\16\ Time deposits are non-negotiable deposits maintained in
banking institutions for specified periods of time at stated
interest rates. Banker's acceptances are time drafts drawn on
commercial banks by borrowers, usually in connection with
international transactions.
---------------------------------------------------------------------------

In addition, the Fund may invest in non-exchange listed securities
of other investment companies (including money market funds) beyond the
limits permitted under the 1940 Act, subject to certain terms and
conditions set forth in a Commission exemptive order issued pursuant to
Section 12(d)(1)(J) of the 1940 Act.\17\
---------------------------------------------------------------------------

\17\ Investment Company Act Release No. 30238 (October 23, 2012)
(File No. 812-13820).
---------------------------------------------------------------------------

Investment Restrictions
The Fund may not concentrate its investments (i.e., invest more
than 25% of the value of its net assets) in securities of issuers in
any one industry or group of industries. This restriction will not
apply to obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities.\18\
---------------------------------------------------------------------------

\18\ See Form N-1A, Item 9. The Commission has taken the
position that a fund is concentrated if it invests more than 25% of
the value of its total assets in any one industry. See, e.g.,
Investment Company Act Release No. 9011 (October 30, 1975), 40 FR
54241 (November 21, 1975).
---------------------------------------------------------------------------

The Subsidiary's shares will be offered only to the Fund and the
Fund will not sell shares of the Subsidiary to other investors. The
Fund and the Subsidiary will not invest in any non-U.S. equity
securities (other than shares of the Subsidiary).
The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid securities or other illiquid assets (calculated at
the time of investment). 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 securities or other illiquid assets. Illiquid securities and
other illiquid assets include those subject to contractual or other
restrictions on resale and other instruments or assets that lack
readily available markets as determined in accordance with Commission
staff guidance.\19\
---------------------------------------------------------------------------

\19\ 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), FN 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 Securities Act of 1933).
---------------------------------------------------------------------------

The Fund intends to qualify for and to elect to be treated as a
separate regulated investment company under Subchapter M of the
Internal Revenue Code.\20\
---------------------------------------------------------------------------

\20\ 26 U.S.C. 851.

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

[[Page 20265]]

The Fund's and the Subsidiary's investments will be consistent with
the Fund's investment objective. Additionally, the Fund may engage in
frequent and active trading of portfolio securities to achieve its
investment objective. One or more of the Strategies may utilize
instruments or investment techniques that have a leveraging effect on
the Fund. This effective leverage occurs when the Fund's market
exposure exceeds the amounts actually invested. Any instance of
effective leverage will be covered in accordance with guidance
promulgated by the Commission and its staff.\21\ The Fund does not
presently intend to engage in any form of borrowing for investment
purposes, and will not be operated as a ``leveraged ETF,'' i.e., it
will not be operated in a manner designed to seek a multiple of the
performance of an underlying reference index.
---------------------------------------------------------------------------

\21\ In re Securities Trading Practices of Investment Companies,
SEC Rel. No. IC-10666 (April 27, 1979).
---------------------------------------------------------------------------

Net Asset Value
The Fund's administrator will calculate the Fund's net asset value
(``NAV'') per Share as of the close of regular trading (normally 4:00
p.m., Eastern time (``E.T.'')) on each day the New York Stock Exchange
(``NYSE'') is open for business. NAV per Share will be calculated for
the Fund by taking the value of the Fund's total assets, including
interest or dividends accrued but not yet collected, less all
liabilities, and dividing such amount by the total number of Shares
outstanding. The result, rounded to the nearest cent, will be the NAV
per Share (although creations and redemptions will be processed using a
price denominated to the fifth decimal point, meaning that rounding to
the nearest cent may result in different prices in certain
circumstances). Under normal market conditions, the Fund's holdings
will be priced as follows: (a) The value of the currency forwards will
be calculated using the spot price and the forward spread of the
subject currency; (b) index options will be valued at the official
closing price on the market on which they primarily trade; (c)
investment company shares will be valued at net asset value, unless the
shares are exchange traded, in which case they will be valued at the
last sale or official closing price on the market on which they
primarily trade; (d) U.S. government securities will be valued at the
mean price provided by a third party vendor for U.S. government
securities; (e) short term money market instruments and cash
equivalents (e.g., corporate commercial paper or bank instruments) will
be valued in accordance with the Trust's valuation policies and
procedures approved by the Trust's Board; and (f) all other securities
held by the Fund will be valued at the last sales price or official
closing price as of the close of the exchange where the security
primarily is traded. All valuations will be subject to review by the
Board or its delegate.
In determining NAV, expenses will be accrued and applied daily and
securities and other assets for which market quotations are readily
available will be valued at market value. Futures and securities listed
or traded on an exchange generally will be valued at the last sales
price or official closing price that day as of the close of the
exchange where the security primarily is traded. The NAV for the Fund
will be calculated and disseminated daily. If a security's market price
is not readily available, the security will be valued using pricing
provided from independent pricing services or by another method that
the Adviser, in its judgment, believes will better reflect the
security's fair value in accordance with the Trust's valuation policies
and procedures approved by the Trust's Board and with the 1940 Act.
Creation and Redemption of Shares
The Trust will issue and redeem Shares of the Fund at NAV only with
authorized participants (``APs'') and only in aggregations of 50,000
shares (each, a ``Creation Unit''), on a continuous basis through the
Distributor, without a sales load, at the NAV next determined after
receipt, on any business day, of an order in proper form.
The consideration for purchase of Creation Unit aggregations of the
Fund may consist of (i) cash in lieu of all or a portion of the Deposit
Securities, as defined below, or (ii) an ``in-kind'' deposit of a
designated portfolio of securities determined by the Adviser that
generally will conform to the holdings of the Fund consistent with its
investment objective (the ``Deposit Securities'') per each Creation
Unit aggregation and generally an amount of cash (the ``Cash
Component'') computed as described below. Together, the Deposit
Securities and the Cash Component (including the cash in lieu amount)
will constitute the ``Fund Deposit,'' which will represent the minimum
initial and subsequent investment amount for a Creation Unit
aggregation of the Fund.
The consideration for redemption of Creation Unit aggregations of
the Fund may consist of (i) cash in lieu of all or a portion of the
Fund Securities as defined below, or (ii) a designated portfolio of
securities determined by the Adviser that generally will conform to the
holdings of the Fund consistent with its investment objective per each
Creation Unit aggregation (``Fund Securities'') and generally a Cash
Component, as described below.
The Fund typically will issue and redeem Creation Units principally
for cash,\22\ calculated based on the NAV per Share, multiplied by the
number of Shares representing a Creation Unit (``Deposit Cash''), plus
a fixed and/or variable transaction fee; however, the Fund also
reserves the right to permit or require Creation Units to be issued in
exchange for the Deposit Securities together with the Cash Component.
The Cash Component is sometimes also referred to as the Balancing
Amount. The Cash Component will serve the function of compensating for
any differences between the NAV per Creation Unit aggregation and the
Deposit Amount (as defined below). For example, for a creation the Cash
Component will be an amount equal to the difference between the NAV of
Fund Shares (per Creation Unit aggregation) and the ``Deposit
Amount''--an amount equal to the market value of the Deposit Securities
and/or cash in lieu of all or a portion of the Deposit Securities. If
the Cash Component is a positive number (i.e., the NAV per Creation
Unit aggregation exceeds the Deposit Amount), the AP will deliver the
Cash Component. If the Cash Component is a negative number (i.e., the
NAV per Creation Unit aggregation is less than the Deposit Amount), the
AP will receive the Cash Component.
---------------------------------------------------------------------------

\22\ The Fund reserves the right to issue and redeem Creation
Units in-kind in instances in which a certain security or other
asset can be delivered in-kind, and when such in-kind issuance and
redemptions are in the best interest of the Fund, such as instances
in which receipt or payment of in-kind assets would facilitate the
orderly management of the Fund.
---------------------------------------------------------------------------

To the extent that the Fund permits Creation Units to be issued in-
kind, the Custodian, through the National Securities Clearing
Corporation (``NSCC''), will make available on each business day, prior
to the opening of business of the NYSE (currently 9:30 a.m., E.T.), the
list of the names and the quantity of each Deposit Security to be
included in the current Fund Deposit (based on information at the end
of the previous business day) for the Fund. Such Fund Deposit will be
applicable, subject to any adjustments as described below or in the
Registration Statement, to effect creations of Creation Units of the
Fund until such time as the next-

[[Page 20266]]

announced composition of the Deposit Securities is made available.
To the extent that the Fund permits Creation Units to be redeemed
in-kind, the Custodian, through the NSCC, will make available on each
business day, prior to the opening of business of NYSE (currently 9:30
a.m., E.T.), the identity of the Fund Securities that will be
applicable (subject to possible amendment or correction) to redemption
requests received in proper form on that day. Fund Securities received
on redemption may not be identical to Deposit Securities that are
applicable to creations of Creation Units.
When applicable, during times that the Fund permits in-kind
creations, the identity and quantity of the Deposit Securities required
for a Fund Deposit for the Shares may change as rebalancing adjustments
and corporate action events occur and are reflected within the Fund
from time to time by the Adviser, consistent with the investment
objective of the Fund. In addition, the Trust reserves the right to
permit or require the substitution of an amount of cash--i.e., a ``cash
in lieu'' amount--to be added to the Cash Component to replace any
Deposit Security that may not be available in sufficient quantity for
delivery or which might not be eligible for trading by an AP or the
investor for which it is acting or other relevant reason.
In addition to the list of names and numbers of securities
constituting the current Deposit Securities of a Fund Deposit, the
Custodian, through the NSCC, also will make available on each business
day, the estimated Cash Component, effective through and including the
previous business day, per Creation Unit aggregation of the Fund.
To be eligible to place orders with respect to creations and
redemptions of Creation Units, an entity must be (i) a ``Participating
Party,'' i.e., a broker-dealer or other participant in the clearing
process through the continuous net settlement system of the NSCC or
(ii) a Depository Trust Company (``DTC'') Participant (a ``DTC
Participant''). In addition, each Participating Party or DTC
Participant (each, an AP) must execute an agreement that has been
agreed to by the Distributor and the Custodian with respect to
purchases and redemptions of Creation Units.
All orders to create Creation Unit aggregations must be received by
the transfer agent no later than the closing time of the regular
trading session on the NYSE (ordinarily 4:00 p.m., E.T.) in each case
on the date such order is placed in order for creations of Creation
Unit aggregations to be effected based on the NAV of Shares of the Fund
as next determined on such date after receipt of the order in proper
form.
In order to redeem Creation Units of the Fund, an AP must submit an
order to redeem for one or more Creation Units. All such orders must be
received by the Fund's transfer agent in proper form no later than the
close of regular trading on the NYSE (ordinarily 4:00 p.m. E.T.) in
order to receive that day's closing NAV per Share.
Availability of Information
The Fund's Web site (www.invescopowershares.com), which will be
publicly available prior to the public offering of Shares, will include
a form of the prospectus for the Fund that may be downloaded. The Web
site will include the Share's ticker, CUSIP and exchange information,
along with additional quantitative information updated on a daily
basis, including, for the Fund: (1) Daily trading volume, the prior
business day's reported NAV and closing price, mid-point of the bid/ask
spread at the time of calculation of such NAV (the ``Bid/Ask
Price''),\23\ and a calculation of the premium and discount of the Bid/
Ask Price against the NAV; and (2) data in chart format displaying the
frequency distribution of discounts and premiums of the daily Bid/Ask
Price against the NAV, within appropriate ranges, for the most recently
completed calendar year and each of the four most recently completed
calendar quarters since that year (or the life of the Fund if shorter).
On each business day, before commencement of trading in Shares in the
Regular Market Session \24\ on the Exchange, the Fund will disclose on
its Web site the identities and quantities of the portfolio of
securities and other assets (the ``Disclosed Portfolio'' as defined in
Nasdaq Rule 5735(c)(2)) held by the Fund and, if applicable, the
Subsidiary that will form the basis for the Fund's calculation of NAV
at the end of the business day.\25\ The Disclosed Portfolio will
include, as applicable, the names, quantity, percentage weighting and
market value of securities and other assets held by the Fund and the
Subsidiary and the characteristics of such assets. The Web site
information will be publicly available at no charge.
---------------------------------------------------------------------------

\23\ The Bid/Ask Price of the Fund will be determined using the
mid-point of the highest bid and the lowest offer on the Exchange as
of the time of calculation of the Fund's NAV. The records relating
to Bid/Ask Prices will be retained by the Fund and its service
providers.
\24\ See Nasdaq Rule 4120(b)(4) (describing the three trading
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30
a.m. E.T.; (2) Regular Market Session from 9:30 a.m. to 4 p.m. or
4:15 p.m. E.T.; and (3) Post-Market Session from 4 p.m. or 4:15 p.m.
to 8 p.m. E.T.).
\25\ Under accounting procedures to be followed by the Fund,
trades made on the prior business day (``T'') will be booked and
reflected in NAV on the current business day (``T+1'').
Notwithstanding the foregoing, portfolio trades that are executed
prior to the opening of the Exchange on any business day may be
booked and reflected in NAV on such business day. Accordingly, the
Fund will be able to disclose at the beginning of the business day
the portfolio that will form the basis for the NAV calculation at
the end of the business day.
---------------------------------------------------------------------------

In addition, for the Fund, an estimated value, defined in Rule
5735(c)(3) as the ``Intraday Indicative Value,'' that reflects an
estimated intraday value of the Fund's portfolio (including the
Subsidiary's portfolio), will be disseminated. Moreover, the Intraday
Indicative Value, available on the NASDAQ OMX Information LLC
proprietary index data service \26\ will be based upon the current
value for the components of the Disclosed Portfolio and will be updated
and widely disseminated by one or more major market data vendors and
broadly displayed at least every 15 seconds during the Regular Market
Session.
---------------------------------------------------------------------------

\26\ Currently, the NASDAQ OMX Global Index Data Service
(``GIDS'') is the NASDAQ OMX global index data feed service,
offering real-time updates, daily summary messages, and access to
widely followed indexes and Intraday Indicative Values for ETFs.
GIDS provides investment professionals with the daily information
needed to track or trade NASDAQ OMX indexes, listed ETFs, or third-
party partner indexes and ETFs.
---------------------------------------------------------------------------

The dissemination of the Intraday Indicative Value, together with
the Disclosed Portfolio, will allow investors to determine the value of
the underlying portfolio of the Fund on a daily basis and will provide
a close estimate of that value throughout the trading day.
Intra-day, executable price quotations on the securities and other
assets held by the Fund and the Subsidiary will be available from major
broker-dealer firms or on the exchange on which they are traded, as
applicable. Intra-day price information on the securities and other
assets held by the Fund will also be available through subscription or
free services that can be accessed by APs and other investors: (a)
Pricing information for equity securities, investment company
securities, and equity index futures will be publicly available on
public financial Web sites, and through subscription services such as
Bloomberg and Thompson Reuters; and (b) pricing information related to
currency forward and futures contracts, index options, VIX futures
contracts, and interest rate futures contracts will be available
through subscription services such as Bloomberg and Thompson Reuters.
Pricing information for U.S. Government securities and cash equivalents
will be available through

[[Page 20267]]

subscription services such as Bloomberg, Markit and Thompson Reuters.
Investors will also be able to obtain the Fund's Statement of
Additional Information (``SAI''), the Fund's Shareholder Reports, and
its Trust's Form N-CSR and Form N-SAR, each of which is filed twice a
year except the SAI which is filed at least annually. The Fund's SAI
and Shareholder Reports will be available free upon request from the
Trust, and those documents and the Form N-CSR and Form N-SAR may be
viewed on-screen or downloaded from the Commission's Web site at
www.sec.gov. 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. Information regarding the previous day's closing price and
trading volume for the Shares will be published daily in the financial
section of newspapers. Quotation and last sale information for the
Shares will be available via Nasdaq proprietary quote and trade
services, as well as in accordance with the Unlisted Trading Privileges
and the Consolidated Tape Association plans or through the Options
Price Reporting Authority, as applicable, for the Shares. Similarly,
quotation and last sale information for any underlying exchange-traded
products will also be available via the quote and trade services of
their respective primary exchanges, as well as in accordance with the
Unlisted Trading Privileges and the Consolidated Tape Association plans
for any such underlying exchange-traded products.
Additional information regarding the Fund and the Shares, including
investment strategies, risks, creation and redemption procedures, fees,
portfolio holdings disclosure policies, distributions and taxes will be
included in the Registration Statement.
Initial and Continued Listing
The Shares will conform to the initial and continued listing
criteria applicable to Managed Fund Shares, as set forth under Rule
5735. The Exchange represents that, for initial and/or continued
listing, the Fund and the Subsidiary will be in compliance with Rule
10A-3 \27\ under the Act. A minimum of 100,000 Shares will be
outstanding at the commencement of trading on the Exchange. The
Exchange will obtain a representation from the issuer of the Shares
that the NAV per Share will be calculated daily and that the NAV and
the Disclosed Portfolio will be made available to all market
participants at the same time.
---------------------------------------------------------------------------

\27\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts
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. Nasdaq will halt trading in the
Shares under the conditions specified in Nasdaq Rules 4120 and 4121,
including the trading pauses under Nasdaq Rules 4120(a)(11) and (12).
Trading may be halted because of market conditions or for reasons that,
in the view of the Exchange, make trading in the Shares inadvisable.
These may include: (1) The extent to which trading is not occurring in
the securities and other assets constituting the Disclosed Portfolio of
the Fund and the Subsidiary; or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present. Trading in the Shares also will be subject to Rule
5735(d)(2)(D), which sets forth circumstances under which Shares of the
Fund may be halted.
Trading Rules
Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. Nasdaq will allow trading in the Shares
from 4:00 a.m. until 8:00 p.m. E.T. The Exchange has appropriate rules
to facilitate transactions in the Shares during all trading sessions.
As provided in Nasdaq Rule 5735(b)(3), the minimum price variation for
quoting and entry of orders in Managed Fund Shares traded on the
Exchange is $0.01.
Surveillance
The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by both Nasdaq and
also 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.\28\ 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.
---------------------------------------------------------------------------

\28\ 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.
---------------------------------------------------------------------------

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 and other exchange-traded securities and instruments held by
the Fund and the Subsidiary with other markets and other entities that
are members of the ISG,\29\ and FINRA may obtain trading information
regarding trading in the Shares and other exchange-traded securities
and instruments held by the Fund and the Subsidiary from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and other exchange-traded securities
and instruments held by the Fund and the Subsidiary from markets and
other entities that are members of ISG, which includes securities and
futures exchanges, or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

\29\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Disclosed Portfolio may trade on markets that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------

In addition, to the extent that the Fund or the Subsidiary were to
invest in derivative instruments, such instruments held by the Fund or
the Subsidiary shall have their principal trading market be a member of
ISG or a market with which the Exchange has a comprehensive
surveillance sharing agreement.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Circular
Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) The procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (2) Nasdaq Rule 2111A, which imposes
suitability obligations on Nasdaq members with respect to recommending
transactions in the Shares to customers; (3) how information regarding
the Intraday Indicative Value is disseminated; (4) the risks involved
in trading the Shares during the Pre-Market and Post-Market

[[Page 20268]]

Sessions when an updated Intraday Indicative Value will not be
calculated or publicly disseminated; (5) the requirement that members
deliver a prospectus to investors purchasing newly issued Shares prior
to or concurrently with the confirmation of a transaction; and (6)
trading information.
In addition, the Information Circular will advise members, prior to
the commencement of trading, of the prospectus delivery requirements
applicable to the Fund. Members purchasing Shares from the Fund for
resale to investors will deliver a prospectus to such investors. The
Information Circular will also discuss any exemptive, no-action and
interpretive relief granted by the Commission from any rules under the
Act.
Additionally, the Information Circular will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Circular will also disclose the trading
hours of the Shares of the Fund and the applicable NAV calculation time
for the Shares. The Information Circular will disclose that information
about the Shares of the Fund will be publicly available on the Fund's
Web site.
2. Statutory Basis
Nasdaq believes that the proposal is consistent with Section 6(b)
of the Act in general, and Section 6(b)(5) \30\ of the Act in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and in general, to protect investors and the public interest.
---------------------------------------------------------------------------

\30\ 15 U.S.C. 78(f)(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 Nasdaq Rule 5735. The
Exchange represents that trading in the Shares will be subject to the
existing trading surveillances, administered by both Nasdaq and FINRA,
on behalf of the Exchange, which are designed to detect violations of
Exchange rules and applicable federal securities laws and are adequate
to properly monitor trading in the Shares in all trading sessions. The
Adviser 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 Fund's
portfolio.\31\ In addition, paragraph (g) of Nasdaq Rule 5735 further
requires that personnel who make decisions on an open-end fund's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material, non-public information regarding
the open-end fund's portfolio. The Fund's and the Subsidiary's
investments will be consistent with the Fund's investment objective.
Additionally, the Fund may engage in frequent and active trading of
portfolio securities to achieve its investment objective. One or more
of the Strategies may utilize instruments or investment techniques that
have a leveraging effect on the Fund. This effective leverage occurs
when the Fund's market exposure exceeds the amounts actually invested.
Any instance of effective leverage will be covered in accordance with
guidance promulgated by the Commission and its staff.\32\ The Fund does
not presently intend to engage in any form of borrowing for investment
purposes, and will not be operated as a ``leveraged ETF,'' i.e., it
will not be operated in a manner designed to seek a multiple of the
performance of an underlying reference index.
---------------------------------------------------------------------------

\31\ To the extent the Fund uses a Sub-Adviser, that Sub-Adviser
will also implement a fire wall with respect to its broker-dealer
affiliates, if any, regarding access to information concerning the
composition and/or changes to the Fund's portfolio.
\32\ In re Securities Trading Practices of Investment Companies,
SEC Rel. No. IC-10666 (April 27, 1979).
---------------------------------------------------------------------------

FINRA may obtain information via ISG from other exchanges that are
members of ISG. In addition, the Exchange may obtain information
regarding trading in the Shares and other exchange-traded securities
and instruments held by the Fund and the Subsidiary from markets and
other entities that are members of ISG, which includes securities and
futures exchanges, or with which the Exchange has in place a
comprehensive surveillance sharing agreement. In addition, to the
extent that the Subsidiary were to invest in derivative instruments,
such instruments held by the Subsidiary shall have their principal
trading market be a member of ISG or a market with which the Exchange
has a comprehensive surveillance sharing agreement.
If the Fund invests in the Subsidiary, it will invest no more than
25% of its total assets in the Subsidiary. The Fund may hold up to an
aggregate amount of 15% of its net assets in illiquid securities or
other illiquid assets (calculated at the time of investment).
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be calculated daily and that the NAV
and the Disclosed Portfolio will be made available to all market
participants at the same time. In addition, a large amount of
information will be publicly available regarding the Fund and the
Shares, thereby promoting market transparency. Moreover, the Intraday
Indicative Value, available on the NASDAQ OMX Information LLC
proprietary index data service will be widely disseminated by one or
more major market data vendors at least every 15 seconds during the
Regular Market Session. On each business day, before commencement of
trading in Shares in the Regular Market Session on the Exchange, the
Fund will disclose on its Web site the Disclosed Portfolio of the Fund
and the Subsidiary that will form the basis for the Fund's calculation
of NAV at the end of the business day. Information regarding market
price and trading volume of the Shares 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 for
the Shares will be available via Nasdaq proprietary quote and trade
services, as well as in accordance with the Unlisted Trading Privileges
and the Consolidated Tape Association plans for the Shares. Similarly,
quotation and last sale information for any underlying exchange-traded
products will also be available via the quote and trade services of
their respective primary exchanges, as well as in accordance with the
Unlisted Trading Privileges and the Consolidated Tape Association plans
or through the Options Price Reporting Authority, as applicable, for
any such underlying exchange-traded products. Intra-day price
information will be available through public financial Web sites or
subscription services, such as Bloomberg, Markit and Thomson Reuters,
which can be accessed by Authorized APs and other investors.
The Fund's Web site will include a form of 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 members in an Information
Circular of the special characteristics and risks associated with

[[Page 20269]]

trading the Shares. Trading in Shares of the Fund will be halted under
the conditions specified in Nasdaq Rules 4120 and 4121 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 Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances
under which Shares of the Fund may be halted. In addition, as noted
above, investors will have ready access to information regarding the
Fund's holdings, the Intraday Indicative Value, the Disclosed
Portfolio, and quotation and last sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. As noted above, FINRA, on behalf of the
Exchange, has in place surveillance procedures relating to trading in
the Shares and will communicate as needed regarding trading in the
Shares and other exchange-traded securities and instruments held by the
Fund and the Subsidiary with other markets and other entities that are
members of the ISG. FINRA also may obtain trading information regarding
trading in the Shares and other exchange-traded securities and
instruments held by the Fund and the Subsidiary from such markets and
other entities. In addition, the Exchange may obtain information
regarding trading in the Shares and other exchange-traded securities
and instruments held by the Fund and the Subsidiary from markets and
other entities that are members of ISG, which includes securities and
futures exchanges, or with which the Exchange has in place a
comprehensive surveillance sharing agreement. Furthermore, as noted
above, investors will have ready access to information regarding the
Fund's holdings, the Intraday Indicative Value, the Disclosed
Portfolio, and quotation and last sale information for the Shares.
For the above reasons, Nasdaq believes the proposed rule change is
consistent with the requirements of Section 6(b)(5) of the Act.

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

The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change will facilitate the listing and trading of an
additional type of actively-managed exchange-traded fund 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

Written comments were neither solicited nor received.

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 (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2014-027 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2014-027. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal 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-NASDAQ-2014-027, and should
be submitted on or before May 2, 2014.

For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\33\
---------------------------------------------------------------------------

\33\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-08127 Filed 4-10-14; 8:45 am]
BILLING CODE 8011-01-P

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