Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of the Shares of the WisdomTree Western Unconstrained Bond Fund of the WisdomTree Trust, 23628-23634 [2015-09763]

Download as PDF 23628 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74780; File No. SR– NASDAQ–2015–012] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of the Shares of the WisdomTree Western Unconstrained Bond Fund of the WisdomTree Trust April 22, 2015. I. Introduction On February 18, 2015, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade the shares (‘‘Shares’’) of the WisdomTree Western Unconstrained Bond Fund (‘‘Fund’’) under Nasdaq Rule 5735. The proposed rule change was published for comment in the Federal Register on March 11, 2015.3 On March 18, 2015, the Exchange filed Amendment No. 1 to the proposed rule change.4 The Commission received no comments on the proposal. This order grants approval of the proposed rule change, as modified by Amendment No. 1 thereto. II. Description of the Proposed Rule Change The Exchange proposes to list and trade Shares of the Fund under Nasdaq Rule 5735, which governs the listing and trading of Managed Fund Shares on the Exchange. The Shares will be offered by the WisdomTree Trust (‘‘Trust’’), which is registered with the Commission as an investment company and has filed a registration statement on Form N–1A (‘‘Registration Statement’’) with the Commission on behalf of the Fund.5 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 74448 (Mar. 5, 2015), 80 FR 12832 (‘‘Notice’’). 4 In Amendment No. 1 to the proposed rule change, the Exchange clarified the use of the defined terms ‘‘Debt Instruments’’ and ‘‘Money Market Securities,’’ and removed certain technical redundancies. Because Amendment No. 1 to the proposed rule change seeks to make certain clarifications and technical corrections, and does not materially affect the substance of the proposed rule change or raise unique or novel regulatory issues, Amendment No. 1 does not require notice and comment. 5 According to the Exchange, the Trust has filed an amendment to its Registration Statement on Form N–1A for the Fund, dated December 19, 2014, asabaliauskas on DSK5VPTVN1PROD with NOTICES 2 17 VerDate Sep<11>2014 18:18 Apr 27, 2015 Jkt 235001 WisdomTree Asset Management, Inc. will be the investment adviser (‘‘Adviser’’) to the Fund, and Western Asset Management Company will serve as sub-adviser (‘‘Sub-Adviser’’). State Street Bank and Trust Company will serve as the administrator, custodian, and transfer agent for the Trust, and ALPS Distributors, Inc. will serve as the distributor. The Exchange represents that neither the Adviser nor Sub-Adviser is registered as, or is affiliated with, a broker-dealer.6 The Exchange also represents that the Shares will be subject to Nasdaq Rule 5735, which sets forth the initial and continued listing criteria applicable to Managed Fund Shares, and that for initial and continued listing, the Fund must be in compliance with Rule 10A–3 under the Act.7 The Exchange has made the following representations and statements in describing the Fund and its investment strategy, including, among other things, portfolio holdings and investment restrictions. A. The Exchange’s Description of the Principal Investments of the Fund According to the Exchange, the Fund seeks to provide a high level of total return consisting of both income and capital appreciation. The Fund intends to achieve its investment objective through direct and indirect investments in ‘‘Debt Instruments,’’ which will include: (i) Fixed income securities, under the Securities Act of 1933 (‘‘Securities Act’’) and the Investment Company Act of 1940 (‘‘1940 Act’’) (File Nos. 333–132380 and 811–21864). The Exchange also represents that the Trust has obtained an order from the Commission granting certain exemptive relief under the 1940 Act (‘‘Exemptive Order’’). In compliance with Nasdaq Rule 5735(b)(5), which applies to Managed Fund Shares based on an international or global portfolio, the Trust’s application for exemptive relief under the 1940 Act states that the Fund will comply with the federal securities laws in accepting securities for deposits and satisfying redemptions with redemption securities, including that the securities accepted for deposits and the securities used to satisfy redemption requests are sold in transactions that would be exempt from registration under the Securities Act. 6 See Nasdaq Rule 5735(g). The Exchange states that, in the event (a) the Adviser or the Sub-Adviser becomes newly affiliated with a broker-dealer or registers as a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer or becomes affiliated with a broker-dealer, the Adviser, the Sub-Adviser, or any new adviser or sub-adviser, as the case may be, will implement a fire wall with respect to its relevant personnel or its broker-dealer affiliate, as applicable, regarding access to information concerning the composition of or changes to the portfolio, and will be subject to procedures designed to prevent the use and dissemination of material, non-public information regarding the portfolio. 7 See 17 CFR 240.10A–3. PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 such as bonds and notes; 8 and (ii) other debt obligations and certain derivatives and other instruments based on Debt Instruments or currency, each as described below. Under normal market conditions,9 the Fund intends to invest at least 80% of its net assets in Debt Instruments (but not more than 35% of Fund assets in derivatives that are Debt Instruments). Specifically, the Fund intends to invest in the following Debt Instruments: (1) Instruments denominated in U.S. dollars or local currencies; (2) securities or other debt obligations issued by corporations or agencies that may receive financial support or backing from local government; (3) securities or other debt obligations issued by supranational organizations, such as the European Investment Bank, International Bank for Reconstructions and Development, the International Finance Corporation, or other regional development banks; (4) ‘‘Government securities,’’ as defined in Section 3(a)(42) of the Act (‘‘Government Securities’’); (5) securities issued or guaranteed by nonU.S. governments, agencies, and instrumentalities; (6) municipal securities (including taxable and taxexempt municipal securities), as defined in Section 3(a)(29) of the Act; (7) ‘‘Putable’’ bonds (bonds that give the holder the right to sell the bond to the issuer prior to the bond’s maturity), when the put date is within a 24 month period; and ‘‘busted’’ convertible securities (convertible securities that are trading well below their conversion values minimizing the likelihood that they will ever reach their convertible prices prior to maturity); (8) loan participation notes; 10 (9) zero-coupon 8 The Fund may invest in fixed income securities that have variable or floating interest rates which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a specified interest rate change occurs in the case of a floating rate instrument. Variable or floating interest rates generally reduce changes in the market price of securities from their original purchase price because, upon readjustment, such rates approximate market rates. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable or floating rate securities than for fixed rate obligations. 9 The term ‘‘under normal market conditions’’ includes, but is not limited to, the absence of extreme volatility or trading halts in the fixed income 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 manmade disaster, act of God, armed conflict, act of terrorism, riot or labor disruption or any similar intervening circumstance. 10 According to the Exchange, the Fund may invest in loan participation notes that have a minimum outstanding principal amount of $200 E:\FR\FM\28APN1.SGM 28APN1 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES securities and interest-only securities; (10) debt securities linked to inflation rates of the U.S. and non-U.S. countries; (11) repurchase agreements backed by Government Securities and non-U.S. government securities; 11 (12) bank loans (including senior loans); (13) Money Market Securities; 12 and (14) mortgage-backed securities (including commercial mortgage-backed securities, collateralized mortgage obligations, adjustable rate mortgage back securities, and interest-only mortgage-backed securities, including, in each case, agency mortgage-backed securities, GSEissued or guaranteed mortgage-backed securities, and privately issued mortgage-backed securities) and assetbacked securities.13 The Fund intends to invest in Debt Instruments originating primarily in developed and emerging markets countries.14 The Fund’s exposure to any single corporate issuer generally will be limited to 10% of the Fund’s assets, and the Fund’s exposure to any single sovereign issuer generally will be limited to 25% of the Fund’s assets (excluding exempted securities as defined in Section 3(a)(12) of the Act). In addition, the Fund’s exposure to any one country (other than the United States) generally will be limited to 30% of the Fund’s assets, though this percentage may change from time to time in response to economic events and changes to the respective credit ratings of the Debt Instruments in such country. The Fund may invest in Debt Instruments with effective or final million that the Adviser or Sub-Adviser deems to be liquid. 11 The Fund may enter into repurchase agreements with counterparties that are deemed to present acceptable credit risks, and may enter into reverse repurchase agreements, which involve the sale of securities held by the Fund subject to its agreement to repurchase the securities at an agreed upon date or upon demand and at a price reflecting a market rate of interest. 12 ‘‘Money Market Securities’’ include: Shortterm, high quality securities issued or guaranteed by the U.S. government or non-U.S. governments, their agencies and instrumentalities; repurchase agreements backed by U.S. government securities and non-U.S. government securities; money market mutual funds; and deposit and other obligations of U.S. and non-U.S. banks and financial institutions. In the event the Fund engages in these temporary defensive strategies that are inconsistent with its investment strategies, the Fund’s ability to achieve its investment objectives may be limited. 13 The Fund may invest up to 20% of its net assets, in the aggregate, in privately issued mortgage-backed securities and privately-issued ABS. Debt Instruments will also include debt securities which are secured with collateral consisting of mortgage-backed securities or assetbacked securities. 14 The Fund may invest up to 50% of Fund assets in securities issued by issuers that are organized in or maintain their principal place of business in emerging market countries. VerDate Sep<11>2014 18:18 Apr 27, 2015 Jkt 235001 maturities of any length. The Fund will seek to keep the average effective duration of its portfolio between –5 and 10 years under normal market conditions. Effective duration is an indication of an investment’s interest rate risk or how sensitive an investment or a fund is to changes in interest rates. Generally, a fund or instrument with a longer effective duration is more sensitive to interest rate fluctuations, and, therefore, more volatile, than a similar fund with a shorter effective duration. To potentially protect the Fund against the impact of rising rates, the Adviser or Sub-Adviser may take the duration of the Fund below zero through strategic short positions in instruments such as U.S. Treasury futures (subject to the Fund’s limits on investments in derivative instruments as described below). A negative duration suggests that the Fund may benefit from a rise in rates.15 The Fund’s actual portfolio duration may be longer or shorter depending on market conditions. In addition, the Fund may invest, in the aggregate, up to 35% of its assets in the following derivatives, which are also Debt Instruments (with no more than 20% of the Fund’s investments in derivative instruments that are not within the definition of ‘‘Debt Instruments’’): (1) Credit-linked notes; 16 (2) listed futures contracts on Debt Instruments; 17 (3) non-deliverable 15 Negative duration would occur when the total duration of the Fund’s liabilities (e.g., through short positions in U.S. government securities or related futures positions) is less than the total duration of the Fund’s assets. 16 The Fund will invest no more than 25% of its net assets in credit-linked notes. 17 According to the Exchange, the Adviser has registered with the Commodity Futures Trading Commission as a commodity pool operator under the Commodity Exchange Act with regard to the Fund. The futures contracts in which the Fund may invest will be listed on exchanges in the United States, Brazil, Chile, Germany, Hong Kong, Mexico, Singapore, South Korea, or the United Kingdom. Each of the futures exchange’s primary financial markets regulators are signatories to the International Organization of Securities Commissions (‘‘IOSCO’’) Multilateral Memorandum of Understanding (‘‘MMOU’’), which is a multiparty information sharing arrangement among financial regulators. Both the Commission and the Commodity Futures Trading Commission are signatories to the IOSCO MMOU. In addition, the futures contracts in which the Fund may invest in the United States, Germany, Hong Kong, Singapore, South Korea, or the United Kingdom will be listed on exchanges that are members of the Intermarket Surveillance Group (‘‘ISG’’), which includes affiliates of LIFFE Administration and Management, Eurex Frankfurt A.G., the Hong Kong Exchanges & Clearing Ltd., the Korea Exchange, the Singapore Exchange, Ltd., NASDAQ OMX BX, and NASDAQ OMX PHLX LLC. At least 90% of Fund assets that are invested in exchange-traded derivative instruments will be invested in instruments that trade in markets that are members of ISG or with PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 23629 forward currency contracts; 18 (4) currency swaps; 19 (5) interest rate swaps; (6) listed currency options; and (7) listed options on futures contracts on Debt Instruments. The Fund may invest in combinations of investments that provide similar exposure to local currency debt, such as investment in U.S. dollar denominated bonds combined with forward currency positions or swaps.20 Forward currency contracts and swap positions can be incorporated with bonds denominated in non-U.S. currencies to hedge bond exposures back into U.S. dollars. Conversely, forward currency contracts and swap positions can be implemented in combination with U.S. dollar denominated bonds to create local currency bond exposures. Additionally, the Fund’s use of forward contracts and swaps may be combined with investments in short-term, high quality U.S. Money Market Securities in a manner designed to provide exposure to similar investments in local currency deposits.21 which the Exchange has in place a comprehensive surveillance sharing agreement. 18 According to the Exchange, the Fund may enter into forward currency contracts in order to ‘‘lock in’’ the exchange rate between the currency it will deliver and the currency it will receive for the duration of the contract. The Fund will invest only in currencies, and instruments that provide exposure to such currencies, that have significant foreign exchange turnover and are included in the Bank for International Settlements Triennial Central Bank Survey, December 2013 (‘‘BIS Survey’’). The Fund may invest in currencies, and instruments that provide exposure to such currencies, selected from the top 40 currencies (as measured by percentage share of average daily turnover for the applicable month and year) included in the BIS Survey. 19 See id. 20 To the extent practicable, the Fund will invest in swaps cleared through the facilities of a centralized clearing house. The Fund may also invest in Money Market Securities that would serve as collateral for the futures contracts and swap agreements. 21 According to the Exchange, the Fund will seek, where possible, to use counterparties, as applicable, whose financial status is such that the risk of default is reduced; however, the risk of losses resulting from default is still possible. The Adviser or the Sub-Adviser will evaluate the creditworthiness of counterparties on an ongoing basis. In addition to information provided by credit agencies, the Adviser’s or the Sub-Adviser’s analysis will evaluate each approved counterparty using various methods of analysis and may consider such factors as the counterparty’s liquidity, its reputation, the Adviser’s or the Sub-Adviser’s past experience with the counterparty, its known disciplinary history, and its share of market participation. The Adviser or Sub-Adviser will also attempt to mitigate the Fund’s respective credit risk by transacting only with large, well-capitalized institutions using measures designed to determine the creditworthiness of the counterparty. The Adviser or Sub-Adviser will take various steps to limit counterparty credit risk. The Fund will enter into over-the-counter non-centrally cleared instruments only with financial institutions that E:\FR\FM\28APN1.SGM Continued 28APN1 23630 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES The Fund will use derivative instruments primarily to hedge interest rate risk and actively manage interest rate exposure and, as described below, to hedge foreign currency risk and actively manage foreign currency exposure. The Fund may also use derivative instruments to enhance returns, as a substitute for, or to gain exposure to, a position in an underlying asset, to reduce transaction costs, to maintain full market exposure (which means to adjust the characteristics of its investments to more closely approximate those of the markets in which it invests), to manage cash flows, or to preserve capital. The Fund’s use of derivative instruments will be collateralized by investments in Money Market Securities and other liquid Debt Instruments. All Money Market Securities acquired by the Fund will be rated investment grade,22 except that the Fund may invest in unrated Money Market Securities that are deemed by the Adviser or Sub-Adviser to be of comparable quality to Money Market Securities rated investment grade.23 The Exchange represents that the Fund’s investments in derivative instruments will be made in accordance with the 1940 Act and consistent with the Fund’s investment objectives and policies, and will not be used to enhance leverage. The Fund will comply with the regulatory requirements of the Commission to maintain assets as ‘‘cover,’’ maintain segregate accounts, and make margin payments when it takes positions in meet certain credit quality standards and monitoring policies. The Fund may also use various techniques to minimize credit risk, including early termination or reset and payment, using different counterparties, and limiting the net amount due from any individual counterparty. The Fund generally will collateralize over-the-counter, noncentrally- cleared instruments with cash or certain securities. Such collateral will generally be held for the benefit of the counterparty in a segregated triparty account at the custodian to protect the counterparty against non-payment by the Fund. In the event of a default by the counterparty, and the Fund is owed money in the over-the-counter noncentrally cleared instruments transaction, the Fund will seek withdrawal of the collateral from the segregated account and may incur certain costs exercising its right with respect to the collateral. 22 The term ‘‘investment grade,’’ for purposes of Money Market Securities, means securities rated A1 or A2 by one or more Nationally Recognized Statistical Rating Organizations (‘‘NRSROs’’). 23 The determination that an unrated security is of comparable quality to a rated security (including, as applicable, an investment grade security) by the Adviser or Sub-Adviser will be based on, among other factors, a comparison between the unrated security and securities issued by similarly situated companies to determine where in the spectrum of credit quality the unrated security would fall. The Adviser or Sub-Adviser would also perform an analysis of the unrated security and its issuer similar, to the extent possible, to that performed by a NRSRO in rating similar securities and issuers. VerDate Sep<11>2014 18:18 Apr 27, 2015 Jkt 235001 derivative instruments involving obligations to third parties (i.e., instruments other than purchase options). With respect to certain kinds of derivative transactions entered into by the Fund that involve obligations to make future payments to third parties, including, but not limited to, futures and forward contracts, swap contracts, the purchase of securities on a whenissued or delayed-delivery basis, or reverse repurchase agreements, the Fund, in accordance with applicable federal securities laws, rules, and interpretations thereof, will ‘‘set aside’’ liquid assets, or engage in other measures to ‘‘cover’’ open positions with respect to such transactions. The Exchange represents that liquidity will be an important factor in the Fund’s security selection process.24 Under normal market conditions, at least 80% of the Fund’s net assets that are invested in Debt Instruments will be invested in Debt Instruments that are issued by issuers with outstanding debt of at least $200 million (or the foreign currency equivalent thereof). In addition, while the Fund will be actively-managed and will not be tied to an index, the Exchange represents that the Fund’s investment portfolio will meet the criteria for non-actively managed, index-based, fixed income exchange-traded funds (‘‘ETFs’’) contained in Nasdaq Rule 5705(a)(4)(A).25 24 In reaching liquidity decisions, the Adviser or Sub-Adviser may consider the following factors: The frequency of trades and quotes for the security; the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; dealer undertakings to make a market in the security; and the nature of the security and the nature of the marketplace in which it trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). 25 See Exchange Rule 5705(a)(4)(A). The Fund will meet the following requirements of Rule 5705(a)(4)(A): (i) The index or portfolio must consist of fixed income securities (which are generally defined to include Debt Instruments) (Rule 5705(a)(4)(A)(i)); (ii) components that in the aggregate account for at least 75% of the weight of the index or portfolio must each have a minimum original principal amount outstanding of $100 million or more (Rule 5705(a)(4)(A)(ii)); (iii) a component may be a convertible security, however, once the convertible security converts to an underlying equity security, the component is removed from the index or portfolio (Rule 5705(a)(4)(A)(iii)); (iv) no component fixed-income security (excluding Treasury Securities) will represent more than 30% of the weight of the index or portfolio, and the five highest weighted component fixed-income securities do not in the aggregate account for more than 65% of the weight of the index or portfolio (Rule 5705(a)(4)(A)(iv)); (v) an underlying index or portfolio (excluding exempted securities) must include securities from a minimum of 13 non-affiliated issuers (Rule 5705(a)(4)(A)(v)); and (vi) component securities that in the aggregate account for at least 90% of the weight of the index or portfolio must be from PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 B. The Exchange’s Description of the Other Investments of the Fund As noted above, under normal market conditions, no more than 35% of the Fund’s investments will be in derivative instruments, with no more than 20% of the Fund’s investments in derivative instruments that are not within the definition of ‘‘Debt Instruments.’’ The Fund may invest in the following derivative instruments that are not within the definition of ‘‘Debt Instruments’’: (1) Listed futures contracts (other than on Debt Instruments); 26 (2) total return swaps; (3) credit default swaps; and (4) listed options on futures contracts (other than on Debt Instruments).27 In addition, the Fund may invest up to 20% of its net assets in one or more of the following instruments: (a) Securities of other investment companies (including exchange-traded products (‘‘ETPs’’), such as other ETFs; 28 (b) debt instruments that do not fall within the meaning of ‘‘Debt Instruments’’ above, including bank loans, banker’s acceptances, bank time deposits, commercial paper, and certificates of deposit issued against funds deposited in a bank or savings issuers that have a worldwide market value of its outstanding common equity held by non-affiliates of $700 million or more (Rule 5705(a)(4)(A)(vi)(c)). 26 See supra note 16. 27 See id. 28 The Exchange states that ETPs in which the Fund may invest include, without limitation: Portfolio Depository Receipts and Index Fund Shares (as described in Nasdaq Rule 5705); Securities Linked to the Performance of Indexes and Commodities (as described in Nasdaq Rule 5710); Index-Linked Exchangeable Notes; Equity Gold Shares; Trust Certificates; Commodity-Based Trust Shares; Currency Trust Shares; Commodity Index Trust Shares; Commodity Futures Trust Shares; Partnership Units; Trust Units; Managed Trust Securities; and Currency Warrants (as described in Nasdaq Rule 5711); Alpha-Index Linked Securities (as described in Nasdaq Rule 5712); Equity-Linked Debt Securities (as described in Nasdaq Rule 5715); Trust Issued Receipts (as described in Nasdaq Rule 5720); Index Warrants (as described in Nasdaq Rule 5725); Securities Not Otherwise Specified (as described in Nasdaq Rule 5730); Managed Fund Shares (as described in Nasdaq Rule 5735); and closed-end funds. According to the Exchange, the ETPs in which the Fund may invest all will be listed and traded on U.S. registered exchanges. The Fund will invest in the securities of registered investment company ETPs consistent with the requirements of Section 12(d)(1) of the 1940 Act or any rule, regulation, or order of the Commission or interpretation thereof. The ETPs in which the Fund may invest will primarily be indexed-based ETFs that hold substantially all of their assets in securities representing a specific index. While the Fund may invest in ETPs, the Fund will not invest in leveraged or inverse leveraged (e.g., 2X, –2X) ETPs. E:\FR\FM\28APN1.SGM 28APN1 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices and loan association; (c) U.S. and nonU.S. equity securities; 29 and (d) cash.30 In addition, in response to adverse market, economic, political, or other conditions the Fund reserves the right to invest in U.S. government securities, Money Market Securities, and cash, without limitation, as determined by the Adviser or Sub-Adviser. asabaliauskas on DSK5VPTVN1PROD with NOTICES C. The Exchange’s Description of Investment Restrictions of the Fund The Fund will invest only in corporate bonds that the Adviser or SubAdviser deems to be sufficiently liquid. The Fund will only buy performing debt securities and not distressed debt. Generally, a corporate bond will be required to have $150 million or more par amount outstanding and significant par value traded to be considered as an eligible investment. Economic and other conditions may, from time to time, lead to a decrease in the average par amount outstanding of bond issuances. Therefore, although the Fund does not intend to do so, it may invest up to 5% of its net assets in corporate bonds with less than $150 million par amount outstanding if (1) the Adviser or SubAdviser deems such security to be sufficiently liquid based on its analysis of the market for such security (based on, for example, broker-dealer quotations or its analysis of the trading history of the security or the trading history of other securities issued by the issuer), (2) such investment is deemed by the Adviser or Sub-Adviser to be in the best interest of the Fund, and (3) such investment is deemed consistent with the Fund’s goal of providing exposure to a broad range of countries and issuers. The Fund will not concentrate 25% or more of the value of its total assets (taken at market value at the time of each investment) in any one industry, as that term is used in the 1940 Act (except that this restriction does not apply to obligations issued by the U.S. government or its respective agencies and instrumentalities or governmentsponsored enterprises). The Fund intends to qualify each year as a regulated investment company (‘‘RIC’’) under Subchapter M of the Internal 29 The equity securities in which the Fund may invest will be limited to securities that trade on markets that are members of the ISG. The Fund may invest in non-U.S. equity securities by means of American Depository Receipts, European Depository Receipts, and Global Depository Receipts. 30 According to the Exchange, the Fund may engage in foreign currency transactions, and may invest directly in foreign currencies in the form of bank and financial institution deposits and certificates of deposit denominated in a specified non-U.S. currency. VerDate Sep<11>2014 18:18 Apr 27, 2015 Jkt 235001 Revenue Code of 1986, as amended. In addition to satisfying the RIC diversification requirements, no portfolio security held by the Fund (other than U.S. government securities) will represent more than 30% of the weight of the Fund’s portfolio and the five highest weighted portfolio securities of the Fund (other than U.S. government securities) will not, in the aggregate, account for more than 65% of the weight of the Fund’s portfolio. For these purposes, the Fund may treat repurchase agreements collateralized by U.S. government securities as U.S. government securities. The Fund may hold up to an aggregate of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser or Sub-Adviser. The Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity if, through a change in values, net assets, or other circumstances, more than 15% of the Fund’s net assets are held in illiquid assets. Illiquid assets include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets as determined in accordance with Commission staff guidance. Additional information regarding the Trust, Fund, and Shares, including investment strategies and restrictions, risks, creation and redemption procedures, fees, portfolio holdings disclosure policies, distributions and taxes, calculation of net asset value per share (‘‘NAV’’), availability of information, trading rules and halts, and surveillance procedures, among other things, can be found in the Notice, Registration Statement, and Exemptive Order, as applicable.31 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of Section 6 of the Act 32 and the rules and regulations thereunder applicable to a national securities exchange.33 In particular, the Commission finds that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act,34 which requires, among other things, that the Exchange’s rules be 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, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission also finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Act,35 which sets forth the finding of Congress that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities. Quotation and last-sale information 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 and any underlying ETPs.36 In addition, the Intraday Indicative Value (as defined in Nasdaq Rule 5735(c)(3)), which will be based upon the current value of the components of the Disclosed Portfolio (as defined in Nasdaq Rule 5735(c)(2)), will be available on the NASDAQ OMX Information LLC proprietary index data service,37 and will be updated and widely disseminated and broadly displayed at least every 15 seconds during the Regular Market Session.38 During hours when the markets for local debt and other assets in the Fund’s portfolio are closed, the Intraday Indicative Value will be updated at least every 15 seconds during the Regular Market Session to reflect currency exchange fluctuations. On each business day, before commencement of trading in Shares in the Regular Market Session on the Exchange, the Trust will disclose on its Web site (www.wisdomtree.com) the identities and quantities of the portfolio of securities and other assets (‘‘Disclosed Portfolio,’’ as defined in Nasdaq Rule 5732(c)(2)) held by the 34 15 31 See Notice, supra note 3; see also Registration Statement and Exemptive Order, supra note 5 and accompanying text. 32 15 U.S.C. 78(f). 33 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 23631 U.S.C. 78f(b)(5). U.S.C. 78k–1(a)(1)(C)(iii). 36 See Notice, supra note 3, 80 FR at 12839. 37 According to the Exchange, the NASDAQ OMX Global Index Data Service is the NASDAQ OMX global index data feed service, offering real-time updates, daily summary messages, and access to widely followed indexes and ETFs. See id. 38 See id. 35 15 E:\FR\FM\28APN1.SGM 28APN1 23632 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES Fund that will form the basis for the Fund’s calculation of NAV at the end of the business day.39 The NAV of the Fund will normally be determined as of the close of the regular trading session on the Exchange (ordinarily 4:00 p.m. ET) on each business day.40 Information regarding market price and volume of 39 On a daily basis, the Fund will disclose on the Fund’s Web site the following information regarding each portfolio holding, as applicable to the type of holding: Ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding); the identity of the security or other asset or instrument underlying the holding, if any; for options, the option strike price; quantity held (as measured by, for example, par value, notional value or number of shares, contracts or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and the percentage weighting of the holding in the Fund’s portfolio. See id. The Web site and information will be publicly available at no charge. See id. 40 See id., 80 FR at 12838. The Exchange notes that, for purposes of calculating the Fund’s NAV per Share, the Fund’s investment will generally be valued using market valuations. In the event that current market valuations are not readily available or such valuations do not reflect current market value, the Trust’s procedures require the Pricing Committee to determine an asset’s fair value if a market price is not readily available in accordance with the 1940 Act. Bank deposits held in U.S. dollars will be valued at their actual dollar amount; bank deposits held in foreign currencies will be converted into U.S. dollars and valued at their actual amounts in U.S. dollars. According to the Adviser, Debt Instruments (as well as debt instruments not within the meaning of ‘‘Debt Instruments’’), will generally be valued using prices received from independent Pricing Services as of the announced closing time for trading in fixedincome instruments in the respective market or exchange. Exchange traded assets (including without limitation, equity securities, listed futures contracts, listed currency options, listed options on futures, and ETPs) will be valued at the last reported sale price or the official closing price on that exchange where the security or other instrument is primarily traded on the day that the valuation is made. Shares of money market funds will be valued at their net asset values as reported on the applicable fund’s Web site or to major market vendors. With respect to derivative instruments, if, however, neither the last sales price nor the official closing price is available, each of these derivative instruments will be valued at either the last reported sale price or official closing price as of the close of regular trading of the principal market on which the instrument is listed consistent with the primary benchmark. Spot currencies and non-exchange–traded derivatives, including nondeliverable forward currency contracts, currency swaps, interest rate swaps, total return swaps, credit default swaps, and credit-linked notes, will normally be valued on the basis of quotes obtained from brokers and dealers or Pricing Services using data reflecting the earlier closing of the principal markets for those assets. International Data Corporation is expected to be the primary price source for the Fund’s assets. The Fund may also rely, however, on other recognized third-party pricing sources, including, without limitation, Bloomberg, WM Reuters, JP Morgan, Markit, and JJ Kenney, to provide prices for certain asset categories, including, among others, currency swaps, forward currency contracts, spot currencies, and corporate securities, in each case as determined, from time to time, by the Fund’s board of trustees. Each of these pricing sources is a ‘‘Pricing Service’’ for purposes of this Fund. VerDate Sep<11>2014 20:11 Apr 27, 2015 Jkt 235001 the Shares will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services.41 The previous day’s closing price and trading volume information for the Shares will be published daily in the financial section of newspapers.42 Pricing information for ETFs and exchange-traded derivatives and other instruments will be available from the exchanges on which they trade and from major market vendors. Pricing information for Debt Instruments, forward currency contracts, spot currencies, and debt instruments that do not fall within the meaning of ‘‘Debt Instruments’’ as defined above will be available from major broker-dealer firms, major market data vendors, or Pricing Services, as applicable. Money market funds are typically priced once each business day, and their prices will be available through the applicable fund’s Web site or from major market vendors.43 Intra-day, executable price quotations on Debt Instruments as well as derivative instruments are available from major broker-dealer firms.44 Intraday price information is available through subscription services, such as Bloomberg and Thomson Reuters, which can be accessed by Authorized Participants and other investors.45 In addition, State Street Bank and Trust Company, through the National Securities Clearing Corporation, will make available on each business day, immediately prior to the opening of business on the Exchange’s Core Trading Session (currently 9:30 a.m. Eastern time), the list of names and the required number or amount of each security and/or the amount of cash, to be included in the current ‘‘Fund Deposit’’ (based on information at the end of the previous business day) for the Fund.46 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.47 The Commission further believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. The Commission notes that the Exchange will obtain a representation from the 41 See id., 80 FR at 12839. id. 43 See id., 80 FR at 12840. 44 See id., 80 FR at 12842. 45 See id. 46 See id., 80 FR at 12837. 47 See id., 80 FR at 12842. 42 See PO 00000 Frm 00137 Fmt 4703 Sfmt 4703 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.48 Further, trading in the Shares will be subject to Nasdaq 5735(d)(2)(D), which sets forth circumstances under which trading in the Shares may be halted.49 The Exchange may also halt trading in the Shares if trading is not occurring in the securities or the financial instruments constituting the Disclosed Portfolio or if other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present.50 Further, the Commission notes that the Reporting Authority that provides the Disclosed Portfolio must implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material, non-public information regarding the actual components of the portfolio.51 The Exchange states that it has a general policy prohibiting the distribution of material, non-public information by its employees.52 The Exchange also states that neither the Adviser nor Sub-Adviser is registered as, or affiliated with, a broker-dealer.53 48 See id. id., 80 FR at 12840. 50 See id. See also Nasdaq Rule 5735(d)(2)(C) (providing additional considerations for the suspension of trading in or removal from listing of Managed Fund Shares on the Exchange). 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 or pause 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 also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. See id. 51 See Nasdaq Rule 5735(d)(2)(B)(ii). 52 See Notice, supra note 3, 80 FR at 12840. 53 See supra note 6 and accompanying text. The Exchange further represents that an investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (‘‘Advisers Act’’). As a result, the Adviser, the 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 applicable federal securities laws as defined in Rule 204A–1(e)(4). Accordingly, procedures designed to prevent the communication and misuse of nonpublic 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 49 See E:\FR\FM\28APN1.SGM 28APN1 asabaliauskas on DSK5VPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices The Financial Industry Regulatory Authority (‘‘FINRA’’), on behalf of the Exchange, will communicate as needed regarding trading in the Shares and the U.S and non-U.S. equity securities, ETPs, listed options, and listed futures contracts and other instruments held by the Fund with other markets and other entities that are members of the ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. FINRA, on behalf of the Exchange, may obtain trading information regarding trading in the Shares and the U.S. and non-U.S. equity securities, ETPs, listed options, listed futures contracts, and other instruments held by the Fund from such markets and other entities. FINRA, on behalf of the Exchange, also is able to obtain trading information regarding certain Debt Instruments held by the Fund reported to FINRA’s Trade Reporting and Compliance Engine.54 In addition, the Exchange may obtain information regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.55 The Exchange represents that it deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange’s existing rules governing the trading of equity securities. In support of this proposal, the Exchange has also made the following representations: (1) The Shares will be subject to Rule 5735, which sets forth the initial and continued listing criteria applicable to Managed Fund Shares. (2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. (3) Prior to the commencement of trading of the Shares, 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: (a) The procedures for purchases and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); (b) Nasdaq Rule 2310, which imposes suitability obligations on Nasdaq members with respect to recommending transactions in the 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. 54 See Notice, supra note 3, 80 FR at 12840. 55 For a list of the current members of ISG, see www.isgportal.org. VerDate Sep<11>2014 20:11 Apr 27, 2015 Jkt 235001 Shares to customers; (c) how and by whom information regarding the Intraday Indicative Value and Disclosed Portfolio are disseminated; (d) the risks involved in trading the Shares during the Pre-Market and Post-Market Sessions when an updated Intraday Indicative Value will not be calculated or publicly disseminated; (e) the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information. (4) Trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and also FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.56 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. (5) For initial and continued listing, the Fund must be in compliance with Rule 10A–3 under the Act.57 (6) A minimum of 100,000 Shares will be outstanding at the commencement of trading on the Exchange. (7) Under normal circumstances, the Fund will invest at least 80% of its net assets in Debt Instruments, and no more than 35% of Fund assets in derivatives that are Debt Instruments. In addition, the Fund will invest no more than 20% of its net assets in derivative instruments that are not Debt Instruments. (8) The Fund may hold up to an aggregate of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser or Sub-Adviser. The Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity if through a change in values, net assets, or other circumstances, more than 15% of the Fund’s net assets are held in illiquid assets. (9) While the Fund may invest in ETPs, the Fund will not invest in leveraged or inverse leveraged ETPs. 56 According to the Exchange, 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. See Notice, supra note 3, 80 FR at 12840. 57 17 CFR 240.10A–3. PO 00000 Frm 00138 Fmt 4703 Sfmt 4703 23633 (10) The Fund may invest in loan participation notes that have a minimum outstanding principal amount of $200 million that the Adviser or SubAdviser deems to be liquid. In addition, the Fund will invest no more than 25% of its net assets in credit-linked notes. (11) At least 90% of Fund assets that are invested in exchange-traded derivative instruments will be invested in instruments that trade in markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, the equity securities in which the Fund may invest will be limited to securities that trade on markets that are members of the ISG. (12) The Fund will invest only in currencies, and instruments that provide exposure to such currencies, that have significant foreign exchange turnover and are included in the BIS Survey. The Fund may invest in currencies, and instruments that provide exposure to such currencies, selected from the top 40 currencies (as measured by percentage share of average daily turnover for the applicable month and year) included in the BIS Survey. (13) The Adviser or the Sub-Adviser will evaluate the creditworthiness of counterparties on an ongoing basis. In addition to information provided by credit agencies, the Adviser’s or the Sub-Adviser’s analysis will evaluate each approved counterparty using various methods of analysis and may consider such factors as the counterparty’s liquidity, its reputation, the Adviser’s or the Sub-Adviser’s past experience with the counterparty, its known disciplinary history, and its share of market participation. The Adviser or Sub-Adviser will also attempt to mitigate the Fund’s respective credit risk by transacting only with large, well-capitalized institutions using measures designed to determine the creditworthiness of the counterparty. The Adviser or SubAdviser will take various steps to limit counterparty credit risk. (14) Under normal market conditions, at least 80% of the Fund’s net assets that are invested in Debt Instruments will be invested in Debt Instruments that are issued by issuers with outstanding debt of at least $200 million (or the foreign currency equivalent thereof). In addition, while the Fund will be actively-managed and will not be tied to an index, the Exchange represents that the Fund’s investment portfolio will meet the criteria for non-actively managed, index-based, fixed income ETFs contained in Nasdaq Rule 5705(a)(4)(A). E:\FR\FM\28APN1.SGM 28APN1 23634 Federal Register / Vol. 80, No. 81 / Tuesday, April 28, 2015 / Notices (15) The Fund may invest up to 20% of its net assets, in the aggregate, in privately issued mortgage backed securities and privately-issued ABSs. (16) The Exchange represents that the Fund’s investments in derivative instruments will be made in accordance with the 1940 Act and consistent with the Fund’s investment objectives and policies, and will not be used to enhance leverage. The Commission notes that the Fund and the Shares must comply with the requirements of Nasdaq Rule 5735 to be initially and continuously listed and traded on the Exchange. This approval order is based on all of the Exchange’s representations and description of the Fund, including those set forth above and in the Notice. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,58 that the proposed rule change (SR–NASDAQ– 2015–012), as modified by Amendment No. 1 thereto, be, and it hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.59 Brent J. Fields, Secretary. [FR Doc. 2015–09763 Filed 4–27–15; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Incident: Severe Winter Storm. incident period: 02/15/2015 through 02/17/2015. Effective Date: 04/20/2015. Physical Loan Application Deadline Date: 06/19/2015. Economic Injury (EIDL) Loan Application Deadline Date: 01/20/2016. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is Percent hereby given that as a result of the President’s major disaster declaration on 04/20/2015, Private Non-Profit 3.625 organizations that provide essential services of governmental nature may file 1.813 disaster loan applications at the address 6.000 listed above or other locally announced locations. The following areas have been 4.000 determined to be adversely affected by 2.625 the disaster: Primary Counties: Banks, Barrow, Dawson, Elbert, Forsyth, Franklin, 2.625 Habersham, Hall, Jackson, Lumpkin, Madison, Oglethorpe, Pickens, Stephens, White. The Interest Rates are: U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Duval. Contiguous Counties: Florida: Baker, Clay, Nassau, Saint Johns. The Interest Rates are: For Physical Damage: Homeowners With Credit Available Elsewhere ...................... Homeowners Without Credit Available Elsewhere .............. Businesses With Credit Available Elsewhere ...................... Businesses Without Credit Available Elsewhere .............. Non-Profit Organizations With Credit Available Elsewhere ... Non-Profit Organizations Without Credit Available Elsewhere ..................................... For Economic Injury: Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere .............. Non-Profit Organizations Without Credit Available Elsewhere ..................................... 4.000 Percent 2.625 [Disaster Declaration # 14282 and # 14283] The number assigned to this disaster for physical damage is 14282 5 and for economic injury is 14283 0. The States which received an EIDL Declaration # are Florida. Florida Disaster # FL–00104 U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a notice of an Administrative declaration of a disaster for the State of FLORIDA dated 04/22/ 2015. Incident: Pecan Park Flea and Farmers’ Market Fire. Incident Period: 04/06/2015. Effective Date: 04/22/2015. Physical Loan Application Deadline Date: 06/22/2015. Economic Injury (EIDL) Loan Application Deadline Date: 01/22/2016. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, asabaliauskas on DSK5VPTVN1PROD with NOTICES SUMMARY: 58 15 59 17 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). VerDate Sep<11>2014 20:11 Apr 27, 2015 Jkt 235001 (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Dated: April 22, 2015. Maria Contreras-Sweet, Administrator. [FR Doc. 2015–09817 Filed 4–27–15; 8:45 am] For Physical Damage: Non-Profit Organizations With Credit Available Elsewhere ... Non-Profit Organizations Without Credit Available Elsewhere ..................................... For Economic Injury: Non-Profit Organizations Without Credit Available Elsewhere ..................................... 2.625 2.625 2.625 The number assigned to this disaster for physical damage is 14284B and for economic injury is 14285B BILLING CODE 8025–01–P (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) SMALL BUSINESS ADMINISTRATION Joseph P. Loddo, Acting Associate Administrator for Disaster Assistance. [Disaster Declaration #14284 and #14285] [FR Doc. 2015–09819 Filed 4–27–15; 8:45 am] Georgia Disaster #GA–00063 BILLING CODE 8025–01–P U.S. Small Business Administration. ACTION: Notice. AGENCY: SMALL BUSINESS ADMINISTRATION This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of georgia (FEMA–4215–DR), dated 04/20/2015. SUMMARY: PO 00000 Frm 00139 Fmt 4703 Sfmt 4703 [Disaster Declaration #4261 and #14262] Tennessee Disaster Number TN–00087 U.S. Small Business Administration. AGENCY: E:\FR\FM\28APN1.SGM 28APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 81 (Tuesday, April 28, 2015)]
[Notices]
[Pages 23628-23634]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-09763]



[[Page 23628]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74780; File No. SR-NASDAQ-2015-012]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval of Proposed Rule Change, as Modified by Amendment No. 
1 Thereto, Relating to the Listing and Trading of the Shares of the 
WisdomTree Western Unconstrained Bond Fund of the WisdomTree Trust

April 22, 2015.

I. Introduction

    On February 18, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade the shares (``Shares'') of the 
WisdomTree Western Unconstrained Bond Fund (``Fund'') under Nasdaq Rule 
5735. The proposed rule change was published for comment in the Federal 
Register on March 11, 2015.\3\ On March 18, 2015, the Exchange filed 
Amendment No. 1 to the proposed rule change.\4\ The Commission received 
no comments on the proposal. This order grants approval of the proposed 
rule change, as modified by Amendment No. 1 thereto.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 74448 (Mar. 5, 
2015), 80 FR 12832 (``Notice'').
    \4\ In Amendment No. 1 to the proposed rule change, the Exchange 
clarified the use of the defined terms ``Debt Instruments'' and 
``Money Market Securities,'' and removed certain technical 
redundancies. Because Amendment No. 1 to the proposed rule change 
seeks to make certain clarifications and technical corrections, and 
does not materially affect the substance of the proposed rule change 
or raise unique or novel regulatory issues, Amendment No. 1 does not 
require notice and comment.
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade Shares of the Fund under 
Nasdaq Rule 5735, which governs the listing and trading of Managed Fund 
Shares on the Exchange. The Shares will be offered by the WisdomTree 
Trust (``Trust''), which is registered with the Commission as an 
investment company and has filed a registration statement on Form N-1A 
(``Registration Statement'') with the Commission on behalf of the 
Fund.\5\
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    \5\ According to the Exchange, the Trust has filed an amendment 
to its Registration Statement on Form N-1A for the Fund, dated 
December 19, 2014, under the Securities Act of 1933 (``Securities 
Act'') and the Investment Company Act of 1940 (``1940 Act'') (File 
Nos. 333-132380 and 811-21864). The Exchange also represents that 
the Trust has obtained an order from the Commission granting certain 
exemptive relief under the 1940 Act (``Exemptive Order''). In 
compliance with Nasdaq Rule 5735(b)(5), which applies to Managed 
Fund Shares based on an international or global portfolio, the 
Trust's application for exemptive relief under the 1940 Act states 
that the Fund will comply with the federal securities laws in 
accepting securities for deposits and satisfying redemptions with 
redemption securities, including that the securities accepted for 
deposits and the securities used to satisfy redemption requests are 
sold in transactions that would be exempt from registration under 
the Securities Act.
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    WisdomTree Asset Management, Inc. will be the investment adviser 
(``Adviser'') to the Fund, and Western Asset Management Company will 
serve as sub-adviser (``Sub-Adviser''). State Street Bank and Trust 
Company will serve as the administrator, custodian, and transfer agent 
for the Trust, and ALPS Distributors, Inc. will serve as the 
distributor.
    The Exchange represents that neither the Adviser nor Sub-Adviser is 
registered as, or is affiliated with, a broker-dealer.\6\ The Exchange 
also represents that the Shares will be subject to Nasdaq Rule 5735, 
which sets forth the initial and continued listing criteria applicable 
to Managed Fund Shares, and that for initial and continued listing, the 
Fund must be in compliance with Rule 10A-3 under the Act.\7\
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    \6\ See Nasdaq Rule 5735(g). The Exchange states that, in the 
event (a) the Adviser or the Sub-Adviser becomes newly affiliated 
with a broker-dealer or registers as a broker-dealer, or (b) any new 
adviser or sub-adviser is a registered broker-dealer or becomes 
affiliated with a broker-dealer, the Adviser, the Sub-Adviser, or 
any new adviser or sub-adviser, as the case may be, will implement a 
fire wall with respect to its relevant personnel or its broker-
dealer affiliate, as applicable, regarding access to information 
concerning the composition of or changes to the portfolio, and will 
be subject to procedures designed to prevent the use and 
dissemination of material, non-public information regarding the 
portfolio.
    \7\ See 17 CFR 240.10A-3.
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    The Exchange has made the following representations and statements 
in describing the Fund and its investment strategy, including, among 
other things, portfolio holdings and investment restrictions.

A. The Exchange's Description of the Principal Investments of the Fund

    According to the Exchange, the Fund seeks to provide a high level 
of total return consisting of both income and capital appreciation. The 
Fund intends to achieve its investment objective through direct and 
indirect investments in ``Debt Instruments,'' which will include: (i) 
Fixed income securities, such as bonds and notes; \8\ and (ii) other 
debt obligations and certain derivatives and other instruments based on 
Debt Instruments or currency, each as described below. Under normal 
market conditions,\9\ the Fund intends to invest at least 80% of its 
net assets in Debt Instruments (but not more than 35% of Fund assets in 
derivatives that are Debt Instruments).
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    \8\ The Fund may invest in fixed income securities that have 
variable or floating interest rates which are readjusted on set 
dates (such as the last day of the month or calendar quarter) in the 
case of variable rates or whenever a specified interest rate change 
occurs in the case of a floating rate instrument. Variable or 
floating interest rates generally reduce changes in the market price 
of securities from their original purchase price because, upon 
readjustment, such rates approximate market rates. Accordingly, as 
interest rates decrease or increase, the potential for capital 
appreciation or depreciation is less for variable or floating rate 
securities than for fixed rate obligations.
    \9\ The term ``under normal market conditions'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the fixed income 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.
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    Specifically, the Fund intends to invest in the following Debt 
Instruments: (1) Instruments denominated in U.S. dollars or local 
currencies; (2) securities or other debt obligations issued by 
corporations or agencies that may receive financial support or backing 
from local government; (3) securities or other debt obligations issued 
by supranational organizations, such as the European Investment Bank, 
International Bank for Reconstructions and Development, the 
International Finance Corporation, or other regional development banks; 
(4) ``Government securities,'' as defined in Section 3(a)(42) of the 
Act (``Government Securities''); (5) securities issued or guaranteed by 
non-U.S. governments, agencies, and instrumentalities; (6) municipal 
securities (including taxable and tax-exempt municipal securities), as 
defined in Section 3(a)(29) of the Act; (7) ``Putable'' bonds (bonds 
that give the holder the right to sell the bond to the issuer prior to 
the bond's maturity), when the put date is within a 24 month period; 
and ``busted'' convertible securities (convertible securities that are 
trading well below their conversion values minimizing the likelihood 
that they will ever reach their convertible prices prior to maturity); 
(8) loan participation notes; \10\ (9) zero-coupon

[[Page 23629]]

securities and interest-only securities; (10) debt securities linked to 
inflation rates of the U.S. and non-U.S. countries; (11) repurchase 
agreements backed by Government Securities and non-U.S. government 
securities; \11\ (12) bank loans (including senior loans); (13) Money 
Market Securities; \12\ and (14) mortgage-backed securities (including 
commercial mortgage-backed securities, collateralized mortgage 
obligations, adjustable rate mortgage back securities, and interest-
only mortgage-backed securities, including, in each case, agency 
mortgage-backed securities, GSE-issued or guaranteed mortgage-backed 
securities, and privately issued mortgage-backed securities) and asset-
backed securities.\13\
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    \10\ According to the Exchange, the Fund may invest in loan 
participation notes that have a minimum outstanding principal amount 
of $200 million that the Adviser or Sub-Adviser deems to be liquid.
    \11\ The Fund may enter into repurchase agreements with 
counterparties that are deemed to present acceptable credit risks, 
and may enter into reverse repurchase agreements, which involve the 
sale of securities held by the Fund subject to its agreement to 
repurchase the securities at an agreed upon date or upon demand and 
at a price reflecting a market rate of interest.
    \12\ ``Money Market Securities'' include: Short-term, high 
quality securities issued or guaranteed by the U.S. government or 
non-U.S. governments, their agencies and instrumentalities; 
repurchase agreements backed by U.S. government securities and non-
U.S. government securities; money market mutual funds; and deposit 
and other obligations of U.S. and non-U.S. banks and financial 
institutions. In the event the Fund engages in these temporary 
defensive strategies that are inconsistent with its investment 
strategies, the Fund's ability to achieve its investment objectives 
may be limited.
    \13\ The Fund may invest up to 20% of its net assets, in the 
aggregate, in privately issued mortgage-backed securities and 
privately-issued ABS. Debt Instruments will also include debt 
securities which are secured with collateral consisting of mortgage-
backed securities or asset-backed securities.
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    The Fund intends to invest in Debt Instruments originating 
primarily in developed and emerging markets countries.\14\ The Fund's 
exposure to any single corporate issuer generally will be limited to 
10% of the Fund's assets, and the Fund's exposure to any single 
sovereign issuer generally will be limited to 25% of the Fund's assets 
(excluding exempted securities as defined in Section 3(a)(12) of the 
Act). In addition, the Fund's exposure to any one country (other than 
the United States) generally will be limited to 30% of the Fund's 
assets, though this percentage may change from time to time in response 
to economic events and changes to the respective credit ratings of the 
Debt Instruments in such country.
---------------------------------------------------------------------------

    \14\ The Fund may invest up to 50% of Fund assets in securities 
issued by issuers that are organized in or maintain their principal 
place of business in emerging market countries.
---------------------------------------------------------------------------

    The Fund may invest in Debt Instruments with effective or final 
maturities of any length. The Fund will seek to keep the average 
effective duration of its portfolio between -5 and 10 years under 
normal market conditions. Effective duration is an indication of an 
investment's interest rate risk or how sensitive an investment or a 
fund is to changes in interest rates. Generally, a fund or instrument 
with a longer effective duration is more sensitive to interest rate 
fluctuations, and, therefore, more volatile, than a similar fund with a 
shorter effective duration. To potentially protect the Fund against the 
impact of rising rates, the Adviser or Sub-Adviser may take the 
duration of the Fund below zero through strategic short positions in 
instruments such as U.S. Treasury futures (subject to the Fund's limits 
on investments in derivative instruments as described below). A 
negative duration suggests that the Fund may benefit from a rise in 
rates.\15\ The Fund's actual portfolio duration may be longer or 
shorter depending on market conditions.
---------------------------------------------------------------------------

    \15\ Negative duration would occur when the total duration of 
the Fund's liabilities (e.g., through short positions in U.S. 
government securities or related futures positions) is less than the 
total duration of the Fund's assets.
---------------------------------------------------------------------------

    In addition, the Fund may invest, in the aggregate, up to 35% of 
its assets in the following derivatives, which are also Debt 
Instruments (with no more than 20% of the Fund's investments in 
derivative instruments that are not within the definition of ``Debt 
Instruments''): (1) Credit-linked notes; \16\ (2) listed futures 
contracts on Debt Instruments; \17\ (3) non-deliverable forward 
currency contracts; \18\ (4) currency swaps; \19\ (5) interest rate 
swaps; (6) listed currency options; and (7) listed options on futures 
contracts on Debt Instruments.
---------------------------------------------------------------------------

    \16\ The Fund will invest no more than 25% of its net assets in 
credit-linked notes.
    \17\ According to the Exchange, the Adviser has registered with 
the Commodity Futures Trading Commission as a commodity pool 
operator under the Commodity Exchange Act with regard to the Fund. 
The futures contracts in which the Fund may invest will be listed on 
exchanges in the United States, Brazil, Chile, Germany, Hong Kong, 
Mexico, Singapore, South Korea, or the United Kingdom. Each of the 
futures exchange's primary financial markets regulators are 
signatories to the International Organization of Securities 
Commissions (``IOSCO'') Multilateral Memorandum of Understanding 
(``MMOU''), which is a multi-party information sharing arrangement 
among financial regulators. Both the Commission and the Commodity 
Futures Trading Commission are signatories to the IOSCO MMOU. In 
addition, the futures contracts in which the Fund may invest in the 
United States, Germany, Hong Kong, Singapore, South Korea, or the 
United Kingdom will be listed on exchanges that are members of the 
Intermarket Surveillance Group (``ISG''), which includes affiliates 
of LIFFE Administration and Management, Eurex Frankfurt A.G., the 
Hong Kong Exchanges & Clearing Ltd., the Korea Exchange, the 
Singapore Exchange, Ltd., NASDAQ OMX BX, and NASDAQ OMX PHLX LLC. At 
least 90% of Fund assets that are invested in exchange-traded 
derivative instruments will be invested in instruments that trade in 
markets that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
    \18\ According to the Exchange, the Fund may enter into forward 
currency contracts in order to ``lock in'' the exchange rate between 
the currency it will deliver and the currency it will receive for 
the duration of the contract. The Fund will invest only in 
currencies, and instruments that provide exposure to such 
currencies, that have significant foreign exchange turnover and are 
included in the Bank for International Settlements Triennial Central 
Bank Survey, December 2013 (``BIS Survey''). The Fund may invest in 
currencies, and instruments that provide exposure to such 
currencies, selected from the top 40 currencies (as measured by 
percentage share of average daily turnover for the applicable month 
and year) included in the BIS Survey.
    \19\ See id.
---------------------------------------------------------------------------

    The Fund may invest in combinations of investments that provide 
similar exposure to local currency debt, such as investment in U.S. 
dollar denominated bonds combined with forward currency positions or 
swaps.\20\ Forward currency contracts and swap positions can be 
incorporated with bonds denominated in non-U.S. currencies to hedge 
bond exposures back into U.S. dollars. Conversely, forward currency 
contracts and swap positions can be implemented in combination with 
U.S. dollar denominated bonds to create local currency bond exposures. 
Additionally, the Fund's use of forward contracts and swaps may be 
combined with investments in short-term, high quality U.S. Money Market 
Securities in a manner designed to provide exposure to similar 
investments in local currency deposits.\21\
---------------------------------------------------------------------------

    \20\ To the extent practicable, the Fund will invest in swaps 
cleared through the facilities of a centralized clearing house. The 
Fund may also invest in Money Market Securities that would serve as 
collateral for the futures contracts and swap agreements.
    \21\ According to the Exchange, the Fund will seek, where 
possible, to use counterparties, as applicable, whose financial 
status is such that the risk of default is reduced; however, the 
risk of losses resulting from default is still possible. The Adviser 
or the Sub-Adviser will evaluate the creditworthiness of 
counterparties on an ongoing basis. In addition to information 
provided by credit agencies, the Adviser's or the Sub-Adviser's 
analysis will evaluate each approved counterparty using various 
methods of analysis and may consider such factors as the 
counterparty's liquidity, its reputation, the Adviser's or the Sub-
Adviser's past experience with the counterparty, its known 
disciplinary history, and its share of market participation. The 
Adviser or Sub-Adviser will also attempt to mitigate the Fund's 
respective credit risk by transacting only with large, well-
capitalized institutions using measures designed to determine the 
creditworthiness of the counterparty. The Adviser or Sub-Adviser 
will take various steps to limit counterparty credit risk. The Fund 
will enter into over-the-counter non-centrally cleared instruments 
only with financial institutions that meet certain credit quality 
standards and monitoring policies. The Fund may also use various 
techniques to minimize credit risk, including early termination or 
reset and payment, using different counterparties, and limiting the 
net amount due from any individual counterparty. The Fund generally 
will collateralize over-the-counter, non-centrally- cleared 
instruments with cash or certain securities. Such collateral will 
generally be held for the benefit of the counterparty in a 
segregated tri-party account at the custodian to protect the 
counterparty against non-payment by the Fund. In the event of a 
default by the counterparty, and the Fund is owed money in the over-
the-counter non-centrally cleared instruments transaction, the Fund 
will seek withdrawal of the collateral from the segregated account 
and may incur certain costs exercising its right with respect to the 
collateral.

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[[Page 23630]]

    The Fund will use derivative instruments primarily to hedge 
interest rate risk and actively manage interest rate exposure and, as 
described below, to hedge foreign currency risk and actively manage 
foreign currency exposure. The Fund may also use derivative instruments 
to enhance returns, as a substitute for, or to gain exposure to, a 
position in an underlying asset, to reduce transaction costs, to 
maintain full market exposure (which means to adjust the 
characteristics of its investments to more closely approximate those of 
the markets in which it invests), to manage cash flows, or to preserve 
capital. The Fund's use of derivative instruments will be 
collateralized by investments in Money Market Securities and other 
liquid Debt Instruments. All Money Market Securities acquired by the 
Fund will be rated investment grade,\22\ except that the Fund may 
invest in unrated Money Market Securities that are deemed by the 
Adviser or Sub-Adviser to be of comparable quality to Money Market 
Securities rated investment grade.\23\
---------------------------------------------------------------------------

    \22\ The term ``investment grade,'' for purposes of Money Market 
Securities, means securities rated A1 or A2 by one or more 
Nationally Recognized Statistical Rating Organizations (``NRSROs'').
    \23\ The determination that an unrated security is of comparable 
quality to a rated security (including, as applicable, an investment 
grade security) by the Adviser or Sub-Adviser will be based on, 
among other factors, a comparison between the unrated security and 
securities issued by similarly situated companies to determine where 
in the spectrum of credit quality the unrated security would fall. 
The Adviser or Sub-Adviser would also perform an analysis of the 
unrated security and its issuer similar, to the extent possible, to 
that performed by a NRSRO in rating similar securities and issuers.
---------------------------------------------------------------------------

    The Exchange represents that the Fund's investments in derivative 
instruments will be made in accordance with the 1940 Act and consistent 
with the Fund's investment objectives and policies, and will not be 
used to enhance leverage. The Fund will comply with the regulatory 
requirements of the Commission to maintain assets as ``cover,'' 
maintain segregate accounts, and make margin payments when it takes 
positions in derivative instruments involving obligations to third 
parties (i.e., instruments other than purchase options). With respect 
to certain kinds of derivative transactions entered into by the Fund 
that involve obligations to make future payments to third parties, 
including, but not limited to, futures and forward contracts, swap 
contracts, the purchase of securities on a when-issued or delayed-
delivery basis, or reverse repurchase agreements, the Fund, in 
accordance with applicable federal securities laws, rules, and 
interpretations thereof, will ``set aside'' liquid assets, or engage in 
other measures to ``cover'' open positions with respect to such 
transactions.
    The Exchange represents that liquidity will be an important factor 
in the Fund's security selection process.\24\ Under normal market 
conditions, at least 80% of the Fund's net assets that are invested in 
Debt Instruments will be invested in Debt Instruments that are issued 
by issuers with outstanding debt of at least $200 million (or the 
foreign currency equivalent thereof). In addition, while the Fund will 
be actively-managed and will not be tied to an index, the Exchange 
represents that the Fund's investment portfolio will meet the criteria 
for non-actively managed, index-based, fixed income exchange-traded 
funds (``ETFs'') contained in Nasdaq Rule 5705(a)(4)(A).\25\
---------------------------------------------------------------------------

    \24\ In reaching liquidity decisions, the Adviser or Sub-Adviser 
may consider the following factors: The frequency of trades and 
quotes for the security; the number of dealers wishing to purchase 
or sell the security and the number of other potential purchasers; 
dealer undertakings to make a market in the security; and the nature 
of the security and the nature of the marketplace in which it trades 
(e.g., the time needed to dispose of the security, the method of 
soliciting offers and the mechanics of transfer).
    \25\ See Exchange Rule 5705(a)(4)(A). The Fund will meet the 
following requirements of Rule 5705(a)(4)(A): (i) The index or 
portfolio must consist of fixed income securities (which are 
generally defined to include Debt Instruments) (Rule 
5705(a)(4)(A)(i)); (ii) components that in the aggregate account for 
at least 75% of the weight of the index or portfolio must each have 
a minimum original principal amount outstanding of $100 million or 
more (Rule 5705(a)(4)(A)(ii)); (iii) a component may be a 
convertible security, however, once the convertible security 
converts to an underlying equity security, the component is removed 
from the index or portfolio (Rule 5705(a)(4)(A)(iii)); (iv) no 
component fixed-income security (excluding Treasury Securities) will 
represent more than 30% of the weight of the index or portfolio, and 
the five highest weighted component fixed-income securities do not 
in the aggregate account for more than 65% of the weight of the 
index or portfolio (Rule 5705(a)(4)(A)(iv)); (v) an underlying index 
or portfolio (excluding exempted securities) must include securities 
from a minimum of 13 non-affiliated issuers (Rule 5705(a)(4)(A)(v)); 
and (vi) component securities that in the aggregate account for at 
least 90% of the weight of the index or portfolio must be from 
issuers that have a worldwide market value of its outstanding common 
equity held by non-affiliates of $700 million or more (Rule 
5705(a)(4)(A)(vi)(c)).
---------------------------------------------------------------------------

B. The Exchange's Description of the Other Investments of the Fund

    As noted above, under normal market conditions, no more than 35% of 
the Fund's investments will be in derivative instruments, with no more 
than 20% of the Fund's investments in derivative instruments that are 
not within the definition of ``Debt Instruments.'' The Fund may invest 
in the following derivative instruments that are not within the 
definition of ``Debt Instruments'': (1) Listed futures contracts (other 
than on Debt Instruments); \26\ (2) total return swaps; (3) credit 
default swaps; and (4) listed options on futures contracts (other than 
on Debt Instruments).\27\
---------------------------------------------------------------------------

    \26\ See supra note 16.
    \27\ See id.
---------------------------------------------------------------------------

    In addition, the Fund may invest up to 20% of its net assets in one 
or more of the following instruments: (a) Securities of other 
investment companies (including exchange-traded products (``ETPs''), 
such as other ETFs; \28\ (b) debt instruments that do not fall within 
the meaning of ``Debt Instruments'' above, including bank loans, 
banker's acceptances, bank time deposits, commercial paper, and 
certificates of deposit issued against funds deposited in a bank or 
savings

[[Page 23631]]

and loan association; (c) U.S. and non-U.S. equity securities; \29\ and 
(d) cash.\30\
---------------------------------------------------------------------------

    \28\ The Exchange states that ETPs in which the Fund may invest 
include, without limitation: Portfolio Depository Receipts and Index 
Fund Shares (as described in Nasdaq Rule 5705); Securities Linked to 
the Performance of Indexes and Commodities (as described in Nasdaq 
Rule 5710); Index-Linked Exchangeable Notes; Equity Gold Shares; 
Trust Certificates; Commodity-Based Trust Shares; Currency Trust 
Shares; Commodity Index Trust Shares; Commodity Futures Trust 
Shares; Partnership Units; Trust Units; Managed Trust Securities; 
and Currency Warrants (as described in Nasdaq Rule 5711); Alpha-
Index Linked Securities (as described in Nasdaq Rule 5712); Equity-
Linked Debt Securities (as described in Nasdaq Rule 5715); Trust 
Issued Receipts (as described in Nasdaq Rule 5720); Index Warrants 
(as described in Nasdaq Rule 5725); Securities Not Otherwise 
Specified (as described in Nasdaq Rule 5730); Managed Fund Shares 
(as described in Nasdaq Rule 5735); and closed-end funds. According 
to the Exchange, the ETPs in which the Fund may invest all will be 
listed and traded on U.S. registered exchanges. The Fund will invest 
in the securities of registered investment company ETPs consistent 
with the requirements of Section 12(d)(1) of the 1940 Act or any 
rule, regulation, or order of the Commission or interpretation 
thereof. The ETPs in which the Fund may invest will primarily be 
indexed-based ETFs that hold substantially all of their assets in 
securities representing a specific index. While the Fund may invest 
in ETPs, the Fund will not invest in leveraged or inverse leveraged 
(e.g., 2X, -2X) ETPs.
    \29\ The equity securities in which the Fund may invest will be 
limited to securities that trade on markets that are members of the 
ISG. The Fund may invest in non-U.S. equity securities by means of 
American Depository Receipts, European Depository Receipts, and 
Global Depository Receipts.
    \30\ According to the Exchange, the Fund may engage in foreign 
currency transactions, and may invest directly in foreign currencies 
in the form of bank and financial institution deposits and 
certificates of deposit denominated in a specified non-U.S. 
currency.
---------------------------------------------------------------------------

    In addition, in response to adverse market, economic, political, or 
other conditions the Fund reserves the right to invest in U.S. 
government securities, Money Market Securities, and cash, without 
limitation, as determined by the Adviser or Sub-Adviser.

C. The Exchange's Description of Investment Restrictions of the Fund

    The Fund will invest only in corporate bonds that the Adviser or 
Sub-Adviser deems to be sufficiently liquid. The Fund will only buy 
performing debt securities and not distressed debt. Generally, a 
corporate bond will be required to have $150 million or more par amount 
outstanding and significant par value traded to be considered as an 
eligible investment. Economic and other conditions may, from time to 
time, lead to a decrease in the average par amount outstanding of bond 
issuances. Therefore, although the Fund does not intend to do so, it 
may invest up to 5% of its net assets in corporate bonds with less than 
$150 million par amount outstanding if (1) the Adviser or Sub-Adviser 
deems such security to be sufficiently liquid based on its analysis of 
the market for such security (based on, for example, broker-dealer 
quotations or its analysis of the trading history of the security or 
the trading history of other securities issued by the issuer), (2) such 
investment is deemed by the Adviser or Sub-Adviser to be in the best 
interest of the Fund, and (3) such investment is deemed consistent with 
the Fund's goal of providing exposure to a broad range of countries and 
issuers.
    The Fund will not concentrate 25% or more of the value of its total 
assets (taken at market value at the time of each investment) in any 
one industry, as that term is used in the 1940 Act (except that this 
restriction does not apply to obligations issued by the U.S. government 
or its respective agencies and instrumentalities or government-
sponsored enterprises). The Fund intends to qualify each year as a 
regulated investment company (``RIC'') under Subchapter M of the 
Internal Revenue Code of 1986, as amended. In addition to satisfying 
the RIC diversification requirements, no portfolio security held by the 
Fund (other than U.S. government securities) will represent more than 
30% of the weight of the Fund's portfolio and the five highest weighted 
portfolio securities of the Fund (other than U.S. government 
securities) will not, in the aggregate, account for more than 65% of 
the weight of the Fund's portfolio. For these purposes, the Fund may 
treat repurchase agreements collateralized by U.S. government 
securities as U.S. government securities.
    The Fund may hold up to an aggregate of 15% of its net assets in 
illiquid assets (calculated at the time of investment), including Rule 
144A securities deemed illiquid by the Adviser or Sub-Adviser. The Fund 
will monitor its portfolio liquidity on an ongoing basis to determine 
whether, in light of current circumstances, an adequate level of 
liquidity is being maintained, and will consider taking appropriate 
steps in order to maintain adequate liquidity if, through a change in 
values, net assets, or other circumstances, more than 15% of the Fund's 
net assets are held in illiquid assets. Illiquid assets include 
securities subject to contractual or other restrictions on resale and 
other instruments that lack readily available markets as determined in 
accordance with Commission staff guidance.
    Additional information regarding the Trust, Fund, and Shares, 
including investment strategies and restrictions, risks, creation and 
redemption procedures, fees, portfolio holdings disclosure policies, 
distributions and taxes, calculation of net asset value per share 
(``NAV''), availability of information, trading rules and halts, and 
surveillance procedures, among other things, can be found in the 
Notice, Registration Statement, and Exemptive Order, as applicable.\31\
---------------------------------------------------------------------------

    \31\ See Notice, supra note 3; see also Registration Statement 
and Exemptive Order, supra note 5 and accompanying text.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of Section 6 of the Act \32\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.\33\ In particular, the Commission finds that the 
proposed rule change is consistent with the requirements of Section 
6(b)(5) of the Act,\34\ which requires, among other things, that the 
Exchange's rules be 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, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Commission also finds that the proposal to list and trade the 
Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of 
the Act,\35\ which sets forth the finding of Congress that it is in the 
public interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for, and transactions in, securities.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78(f).
    \33\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \34\ 15 U.S.C. 78f(b)(5).
    \35\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    Quotation and last-sale information 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 and any underlying ETPs.\36\ In addition, the Intraday 
Indicative Value (as defined in Nasdaq Rule 5735(c)(3)), which will be 
based upon the current value of the components of the Disclosed 
Portfolio (as defined in Nasdaq Rule 5735(c)(2)), will be available on 
the NASDAQ OMX Information LLC proprietary index data service,\37\ and 
will be updated and widely disseminated and broadly displayed at least 
every 15 seconds during the Regular Market Session.\38\ During hours 
when the markets for local debt and other assets in the Fund's 
portfolio are closed, the Intraday Indicative Value will be updated at 
least every 15 seconds during the Regular Market Session to reflect 
currency exchange fluctuations.
---------------------------------------------------------------------------

    \36\ See Notice, supra note 3, 80 FR at 12839.
    \37\ According to the Exchange, the NASDAQ OMX Global Index Data 
Service is the NASDAQ OMX global index data feed service, offering 
real-time updates, daily summary messages, and access to widely 
followed indexes and ETFs. See id.
    \38\ See id.
---------------------------------------------------------------------------

    On each business day, before commencement of trading in Shares in 
the Regular Market Session on the Exchange, the Trust will disclose on 
its Web site (www.wisdomtree.com) the identities and quantities of the 
portfolio of securities and other assets (``Disclosed Portfolio,'' as 
defined in Nasdaq Rule 5732(c)(2)) held by the

[[Page 23632]]

Fund that will form the basis for the Fund's calculation of NAV at the 
end of the business day.\39\ The NAV of the Fund will normally be 
determined as of the close of the regular trading session on the 
Exchange (ordinarily 4:00 p.m. ET) on each business day.\40\ 
Information regarding market price and volume of the Shares will be 
continually available on a real-time basis throughout the day on 
brokers' computer screens and other electronic services.\41\ The 
previous day's closing price and trading volume information for the 
Shares will be published daily in the financial section of 
newspapers.\42\ Pricing information for ETFs and exchange-traded 
derivatives and other instruments will be available from the exchanges 
on which they trade and from major market vendors. Pricing information 
for Debt Instruments, forward currency contracts, spot currencies, and 
debt instruments that do not fall within the meaning of ``Debt 
Instruments'' as defined above will be available from major broker-
dealer firms, major market data vendors, or Pricing Services, as 
applicable. Money market funds are typically priced once each business 
day, and their prices will be available through the applicable fund's 
Web site or from major market vendors.\43\ Intra-day, executable price 
quotations on Debt Instruments as well as derivative instruments are 
available from major broker-dealer firms.\44\ Intra-day price 
information is available through subscription services, such as 
Bloomberg and Thomson Reuters, which can be accessed by Authorized 
Participants and other investors.\45\ In addition, State Street Bank 
and Trust Company, through the National Securities Clearing 
Corporation, will make available on each business day, immediately 
prior to the opening of business on the Exchange's Core Trading Session 
(currently 9:30 a.m. Eastern time), the list of names and the required 
number or amount of each security and/or the amount of cash, to be 
included in the current ``Fund Deposit'' (based on information at the 
end of the previous business day) for the Fund.\46\ 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.\47\
---------------------------------------------------------------------------

    \39\ On a daily basis, the Fund will disclose on the Fund's Web 
site the following information regarding each portfolio holding, as 
applicable to the type of holding: Ticker symbol, CUSIP number or 
other identifier, if any; a description of the holding (including 
the type of holding); the identity of the security or other asset or 
instrument underlying the holding, if any; for options, the option 
strike price; quantity held (as measured by, for example, par value, 
notional value or number of shares, contracts or units); maturity 
date, if any; coupon rate, if any; effective date, if any; market 
value of the holding; and the percentage weighting of the holding in 
the Fund's portfolio. See id. The Web site and information will be 
publicly available at no charge. See id.
    \40\ See id., 80 FR at 12838. The Exchange notes that, for 
purposes of calculating the Fund's NAV per Share, the Fund's 
investment will generally be valued using market valuations. In the 
event that current market valuations are not readily available or 
such valuations do not reflect current market value, the Trust's 
procedures require the Pricing Committee to determine an asset's 
fair value if a market price is not readily available in accordance 
with the 1940 Act. Bank deposits held in U.S. dollars will be valued 
at their actual dollar amount; bank deposits held in foreign 
currencies will be converted into U.S. dollars and valued at their 
actual amounts in U.S. dollars. According to the Adviser, Debt 
Instruments (as well as debt instruments not within the meaning of 
``Debt Instruments''), will generally be valued using prices 
received from independent Pricing Services as of the announced 
closing time for trading in fixed-income instruments in the 
respective market or exchange. Exchange traded assets (including 
without limitation, equity securities, listed futures contracts, 
listed currency options, listed options on futures, and ETPs) will 
be valued at the last reported sale price or the official closing 
price on that exchange where the security or other instrument is 
primarily traded on the day that the valuation is made. Shares of 
money market funds will be valued at their net asset values as 
reported on the applicable fund's Web site or to major market 
vendors. With respect to derivative instruments, if, however, 
neither the last sales price nor the official closing price is 
available, each of these derivative instruments will be valued at 
either the last reported sale price or official closing price as of 
the close of regular trading of the principal market on which the 
instrument is listed consistent with the primary benchmark. Spot 
currencies and non-exchange-traded derivatives, including non-
deliverable forward currency contracts, currency swaps, interest 
rate swaps, total return swaps, credit default swaps, and credit-
linked notes, will normally be valued on the basis of quotes 
obtained from brokers and dealers or Pricing Services using data 
reflecting the earlier closing of the principal markets for those 
assets. International Data Corporation is expected to be the primary 
price source for the Fund's assets. The Fund may also rely, however, 
on other recognized third-party pricing sources, including, without 
limitation, Bloomberg, WM Reuters, JP Morgan, Markit, and JJ Kenney, 
to provide prices for certain asset categories, including, among 
others, currency swaps, forward currency contracts, spot currencies, 
and corporate securities, in each case as determined, from time to 
time, by the Fund's board of trustees. Each of these pricing sources 
is a ``Pricing Service'' for purposes of this Fund.
    \41\ See id., 80 FR at 12839.
    \42\ See id.
    \43\ See id., 80 FR at 12840.
    \44\ See id., 80 FR at 12842.
    \45\ See id.
    \46\ See id., 80 FR at 12837.
    \47\ See id., 80 FR at 12842.
---------------------------------------------------------------------------

    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Commission notes 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.\48\ 
Further, trading in the Shares will be subject to Nasdaq 5735(d)(2)(D), 
which sets forth circumstances under which trading in the Shares may be 
halted.\49\ The Exchange may also halt trading in the Shares if trading 
is not occurring in the securities or the financial instruments 
constituting the Disclosed Portfolio or if other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\50\ Further, the Commission notes that the 
Reporting Authority that provides the Disclosed Portfolio must 
implement and maintain, or be subject to, procedures designed to 
prevent the use and dissemination of material, non-public information 
regarding the actual components of the portfolio.\51\ The Exchange 
states that it has a general policy prohibiting the distribution of 
material, non-public information by its employees.\52\ The Exchange 
also states that neither the Adviser nor Sub-Adviser is registered as, 
or affiliated with, a broker-dealer.\53\

[[Page 23633]]

The Financial Industry Regulatory Authority (``FINRA''), on behalf of 
the Exchange, will communicate as needed regarding trading in the 
Shares and the U.S and non-U.S. equity securities, ETPs, listed 
options, and listed futures contracts and other instruments held by the 
Fund with other markets and other entities that are members of the ISG 
or with which the Exchange has in place a comprehensive surveillance 
sharing agreement. FINRA, on behalf of the Exchange, may obtain trading 
information regarding trading in the Shares and the U.S. and non-U.S. 
equity securities, ETPs, listed options, listed futures contracts, and 
other instruments held by the Fund from such markets and other 
entities. FINRA, on behalf of the Exchange, also is able to obtain 
trading information regarding certain Debt Instruments held by the Fund 
reported to FINRA's Trade Reporting and Compliance Engine.\54\ In 
addition, the Exchange may obtain information regarding trading in the 
Shares and the exchange-traded securities and instruments held by the 
Fund from markets and other entities that are members of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement.\55\
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    \48\ See id.
    \49\ See id., 80 FR at 12840.
    \50\ See id. See also Nasdaq Rule 5735(d)(2)(C) (providing 
additional considerations for the suspension of trading in or 
removal from listing of Managed Fund Shares on the Exchange). 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 or pause 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 also may be halted because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the 
Shares inadvisable. See id.
    \51\ See Nasdaq Rule 5735(d)(2)(B)(ii).
    \52\ See Notice, supra note 3, 80 FR at 12840.
    \53\ See supra note 6 and accompanying text. The Exchange 
further represents that an investment adviser to an open-end fund is 
required to be registered under the Investment Advisers Act of 1940 
(``Advisers Act''). As a result, the Adviser, the 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 applicable federal securities laws as defined in 
Rule 204A-1(e)(4). Accordingly, procedures designed to prevent the 
communication and misuse of nonpublic 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.
    \54\ See Notice, supra note 3, 80 FR at 12840.
    \55\ For a list of the current members of ISG, see 
www.isgportal.org.
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    The Exchange represents that it deems the Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
In support of this proposal, the Exchange has also made the following 
representations:
    (1) The Shares will be subject to Rule 5735, which sets forth the 
initial and continued listing criteria applicable to Managed Fund 
Shares.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) Prior to the commencement of trading of the Shares, 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: (a) 
The procedures for purchases and redemptions of Shares in Creation 
Units (and that Shares are not individually redeemable); (b) Nasdaq 
Rule 2310, which imposes suitability obligations on Nasdaq members with 
respect to recommending transactions in the Shares to customers; (c) 
how and by whom information regarding the Intraday Indicative Value and 
Disclosed Portfolio are disseminated; (d) the risks involved in trading 
the Shares during the Pre-Market and Post-Market Sessions when an 
updated Intraday Indicative Value will not be calculated or publicly 
disseminated; (e) the requirement that members deliver a prospectus to 
investors purchasing newly issued Shares prior to or concurrently with 
the confirmation of a transaction; and (f) trading information.
    (4) Trading in the Shares will be subject to the existing trading 
surveillances, administered by both Nasdaq and also FINRA on behalf of 
the Exchange, which are designed to detect violations of Exchange rules 
and applicable federal securities laws.\56\ 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.
---------------------------------------------------------------------------

    \56\ According to the Exchange, 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. See Notice, supra note 3, 80 FR at 12840.
---------------------------------------------------------------------------

    (5) For initial and continued listing, the Fund must be in 
compliance with Rule 10A-3 under the Act.\57\
---------------------------------------------------------------------------

    \57\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (6) A minimum of 100,000 Shares will be outstanding at the 
commencement of trading on the Exchange.
    (7) Under normal circumstances, the Fund will invest at least 80% 
of its net assets in Debt Instruments, and no more than 35% of Fund 
assets in derivatives that are Debt Instruments. In addition, the Fund 
will invest no more than 20% of its net assets in derivative 
instruments that are not Debt Instruments.
    (8) The Fund may hold up to an aggregate of 15% of its net assets 
in illiquid assets (calculated at the time of investment), including 
Rule 144A securities deemed illiquid by the Adviser or Sub-Adviser. The 
Fund will monitor its portfolio liquidity on an ongoing basis to 
determine whether, in light of current circumstances, an adequate level 
of liquidity is being maintained, and will consider taking appropriate 
steps in order to maintain adequate liquidity if through a change in 
values, net assets, or other circumstances, more than 15% of the Fund's 
net assets are held in illiquid assets.
    (9) While the Fund may invest in ETPs, the Fund will not invest in 
leveraged or inverse leveraged ETPs.
    (10) The Fund may invest in loan participation notes that have a 
minimum outstanding principal amount of $200 million that the Adviser 
or Sub-Adviser deems to be liquid. In addition, the Fund will invest no 
more than 25% of its net assets in credit-linked notes.
    (11) At least 90% of Fund assets that are invested in exchange-
traded derivative instruments will be invested in instruments that 
trade in markets that are members of ISG or with which the Exchange has 
in place a comprehensive surveillance sharing agreement. In addition, 
the equity securities in which the Fund may invest will be limited to 
securities that trade on markets that are members of the ISG.
    (12) The Fund will invest only in currencies, and instruments that 
provide exposure to such currencies, that have significant foreign 
exchange turnover and are included in the BIS Survey. The Fund may 
invest in currencies, and instruments that provide exposure to such 
currencies, selected from the top 40 currencies (as measured by 
percentage share of average daily turnover for the applicable month and 
year) included in the BIS Survey.
    (13) The Adviser or the Sub-Adviser will evaluate the 
creditworthiness of counterparties on an ongoing basis. In addition to 
information provided by credit agencies, the Adviser's or the Sub-
Adviser's analysis will evaluate each approved counterparty using 
various methods of analysis and may consider such factors as the 
counterparty's liquidity, its reputation, the Adviser's or the Sub-
Adviser's past experience with the counterparty, its known disciplinary 
history, and its share of market participation. The Adviser or Sub-
Adviser will also attempt to mitigate the Fund's respective credit risk 
by transacting only with large, well-capitalized institutions using 
measures designed to determine the creditworthiness of the 
counterparty. The Adviser or Sub-Adviser will take various steps to 
limit counterparty credit risk.
    (14) Under normal market conditions, at least 80% of the Fund's net 
assets that are invested in Debt Instruments will be invested in Debt 
Instruments that are issued by issuers with outstanding debt of at 
least $200 million (or the foreign currency equivalent thereof). In 
addition, while the Fund will be actively-managed and will not be tied 
to an index, the Exchange represents that the Fund's investment 
portfolio will meet the criteria for non-actively managed, index-based, 
fixed income ETFs contained in Nasdaq Rule 5705(a)(4)(A).

[[Page 23634]]

    (15) The Fund may invest up to 20% of its net assets, in the 
aggregate, in privately issued mortgage backed securities and 
privately-issued ABSs.
    (16) The Exchange represents that the Fund's investments in 
derivative instruments will be made in accordance with the 1940 Act and 
consistent with the Fund's investment objectives and policies, and will 
not be used to enhance leverage.

The Commission notes that the Fund and the Shares must comply with the 
requirements of Nasdaq Rule 5735 to be initially and continuously 
listed and traded on the Exchange. This approval order is based on all 
of the Exchange's representations and description of the Fund, 
including those set forth above and in the Notice.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\58\ that the proposed rule change (SR-NASDAQ-2015-012), as 
modified by Amendment No. 1 thereto, be, and it hereby is, approved.
---------------------------------------------------------------------------

    \58\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\59\
---------------------------------------------------------------------------

    \59\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-09763 Filed 4-27-15; 8:45 am]
 BILLING CODE 8011-01-P

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