Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Notices 77681 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4A Managed Fund Share is a security that 

represents an interest in an investment company 

registered under the Investment Company Act of 

1940 (15 U.S.C. 80a) (‘‘1940 Act’’) organized as an 

open-end investment company or similar entity that 

invests in a portfolio of securities selected by its 

investment advisor consistent with its investment 

objectives and policies. In contrast, an open-end 

investment company that issues Investment 

Company Units, listed and traded on the Exchange 

under NYSE Arca Equities Rule 5.2(j)(3), seeks to 

provide investment results that correspond 

generally to the price and yield performance of a 

specific foreign or domestic stock index, fixed 

income securities index or combination thereof. 

5The Commission has previously approved the 

listing and trading on the Exchange of other actively 

managed funds under Rule 8.600. See, e.g., 

Securities Exchange Act Release Nos. 57801 (May 

8, 2008), 73 FR 27878 (May 14, 2008) (SR– 

NYSEArca–2008–31) (order approving Exchange 

listing and trading of twelve actively-managed 

funds of the WisdomTree Trust); 60460 (August 7, 

2009) (SR–NYSEArca–2009–55) (order approving 

Exchange listing and trading of AdvisorShares Dent 

Tactical ETF); 61842 (April 5, 2010–10), 75 FR 

18554 (April 12, 2010) (SR–NYSEArca–2010–10) 

(order approving listing of Mars Hill Global Relative 

Value ETF). 

6The Trust is registered under the 1940 Act. On 

September 22, 2010, the Trust filed with the 

Commission Post-Effective Amendment No. 12 to 

Form N–1A under the Securities Act of 1933 (15 

U.S.C. 77a), and under the 1940 Act relating to the 

Fund (File Nos. 333–157876 and 811–22110) (the 

‘‘Registration Statement’’). The Trust has also filed 

an Amended Application for an Order under 

Section 6(c) of the 1940 Act for exemptions from 

various provisions of the 1940 Act and rules 

thereunder (File No. 812–13677 dated May 28, 

2010) (‘‘Exemptive Application’’). The description of 

the operation of the Trust and the Fund herein is 

based on the Registration Statement. 

7An investment adviser to an open-end fund is 

required to be registered under the Investment 

Advisers Act of 1940 (the ‘‘Advisers Act’’). As a 

result, the Adviser and Sub-adviser are subject to 

the provisions of Rule 204A–1 under the Advisers 

Act relating to codes of ethics. This Rule requires 

investment advisers to adopt a code of ethics that 

reflects the fiduciary nature of the relationship to 

clients as well as compliance with other applicable 

securities laws. Accordingly, procedures designed 

to prevent the communication and misuse of nonpublic information by an investment adviser must 

be consistent with Rule 204A–1 under the Advisers 

Act. 

8With respect to the Fund, the Exchange 

represents that the Advisor, as the investment 

advisor of the Fund, as well as the Sub-Advisor to 

the Fund and their related personnel, are subject to 

Investment Advisers Act Rule 204A–1. This Rule 

specifically requires the adoption of a code of ethics 

by an investment advisor to include, at a minimum: 

(i) Standards of business conduct that reflect the 

firm’s/personnel fiduciary obligations; (ii) 

provisions requiring supervised persons to comply 

with applicable Federal securities laws; (iii) 

provisions that require all access persons to report, 

and the firm to review, their personal securities 

transactions and holdings periodically as 

specifically set forth in Rule 204A–1; (iv) provisions 

requiring supervised persons to report any 

violations of the code of ethics promptly to the 

chief compliance officer (‘‘CCO’’) or, provided the 

CCO also receives reports of all violations, to other 

persons designated in the code of ethics; and (v) 

provisions requiring the investment advisor to 

provide each of the supervised persons with a copy 

of the code of ethics with an acknowledgement by 

said supervised persons. In addition, Rule 206(4)– 

7 under the Advisers Act makes it unlawful for an 

investment advisor to provide investment advice to 

clients unless such investment advisor has (i) 

adopted and implemented written policies and 

procedures reasonably designed to prevent 

violation, by the investment advisor and its 

supervised persons, of the Advisers Act and the 

Commission rules adopted thereunder; (ii) 

implemented, at a minimum, an annual review 

Continued 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: December 8, 2010. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–31291 Filed 12–9–10; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63447; File No. SR– 

NYSEArca–2010–107] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing Relating to 

Listing and Trading of AdvisorShares 

Active Bear ETF Under NYSE Arca 

Equities Rule 8.600 

December 7, 2010. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

November 23, 2010, NYSE Arca, Inc. 

(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade the following under NYSE Arca 

Equities Rule 8.600 (‘‘Managed Fund 

Shares’’): AdvisorShares Active Bear 

ETF. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade the following Managed Fund 

Shares 4 (‘‘Shares’’) under NYSE Arca 

Equities Rule 8.600: AdvisorShares 

Active Bear ETF (the ‘‘Fund’’).5 The 

Shares will be offered by AdvisorShares 

Trust (the ‘‘Trust’’), a statutory trust 

organized under the laws of the State of 

Delaware and registered with the 

Commission as an open-end 

management investment company.6 The 

investment advisor to the Fund is 

AdvisorShares Investments, LLC (the 

‘‘Advisor’’). Ranger Alternative 

Management, L.P. (‘‘Ranger’’) is the subadvisor (‘‘Sub-Advisor’’) to the Fund and 

the portfolio manager. Foreside Fund 

Services LLC (‘‘Distributor’’) is the 

distributor for the Fund. The Bank of 

New York Mellon Corporation 

(‘‘Administrator’’) is the administrator, 

custodian, transfer agent and fund 

accounting agent for the Fund. 

Commentary .06 to Rule 8.600 

provides that, if the investment adviser 

to the Investment Company issuing 

Managed Fund Shares is affiliated with 

a broker-dealer, such investment adviser 

shall erect a ‘‘fire wall’’ between the 

investment adviser and the brokerdealer with respect to access to 

information concerning the composition 

and/or changes to such Investment 

Company portfolio. In addition, 

Commentary .06 further requires that 

personnel who make decisions on the 

open-end fund’s portfolio composition 

must be subject to procedures designed 

to prevent the use and dissemination of 

material nonpublic information 

regarding the open-end fund’s 

portfolio.7 Commentary .06 to Rule 

8.600 is similar to Commentary .03(a)(i) 

and (iii) to NYSE Arca Equities Rule 

5.2(j)(3); however, Commentary .06 in 

connection with the establishment of a 

‘‘fire wall’’ between the investment 

adviser and the broker-dealer reflects 

the applicable open-end fund’s 

portfolio, not an underlying benchmark 

index, as is the case with index-based 

funds. Neither the Advisor nor the SubAdvisor is affiliated with a brokerdealer.8 In the event the Advisor or SubVerDate Mar<15>2010 15:42 Dec 10, 2010 Jkt 223001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\13DEN1.SGM 13DEN1

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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. 

9The Fund may sell short only equity securities 

traded in the U.S. on registered exchanges. The 

Fund will not purchase or borrow illiquid securities 

or securities registered pursuant to Rule 144A 

under the Securities Act of 1933. 

10As stated in the Registration Statement, the 

Fund may not, with respect to 75% of its total 

assets, (i) purchase securities of any issuer (except 

securities issued or guaranteed by the U.S. 

Government, its agencies or instrumentalities or 

shares of investment companies) if, as a result, more 

than 5% of its total assets would be invested in the 

securities of such issuer; or (ii) acquire more than 

10% of the outstanding voting securities of any one 

issuer. In addition, the Fund may not purchase any 

securities which would cause 25% or more of its 

total assets to be invested in the securities of one 

or more issuers conducting their principal business 

activities in the same industry or group of 

industries, provided that this limitation does not 

apply to investments in securities issued or 

guaranteed by the U.S. Government, its agencies or 

instrumentalities, or shares of investment 

companies. According to the Registration 

Statement, the Fund will seek to qualify for 

treatment as a Regulated Investment Company 

(‘‘RIC’’) under the Internal Revenue Code. 

Advisor become affiliated with a brokerdealer, they will be required to 

implement a fire wall with respect to 

such broker-dealer regarding access to 

information concerning the composition 

and/or changes to a portfolio. 

According to the Registration 

Statement, the Fund’s investment 

objective is to seek capital appreciation 

through short sales of domestically 

traded equity securities. The SubAdvisor seeks to achieve the Fund’s 

investment objective by short selling a 

portfolio of liquid mid- and large-cap 

U.S. exchange-traded equity securities, 

exchange-traded funds (‘‘ETFs’’) 

registered pursuant to the 1940 Act, 

exchange-traded notes (‘‘ETNs’’), and 

exchange-traded products (‘‘ETPs’’).9 In 

contrast to ETFs, ETNs and ETPs are not 

registered pursuant to the 1940 Act. 

Operation of the Fund 

According to the Registration 

Statement, the Sub-Advisor will utilize 

a disciplined, consistent investment 

approach to both security selection and 

risk management and will implement a 

bottom-up, fundamental, research 

driven security selection process. In 

addition to extensive quantitative 

analysis, careful consideration is given 

to qualitative analysis. The assessment 

of the management team, accounting 

practices, corporate governance and the 

company’s competitive advantage are all 

key items. Once these quantitative and 

qualitative characteristics are 

thoroughly analyzed, the Sub-Advisor 

then determines if there is sufficient 

return to the stock price to warrant an 

investment. Once a position is included 

in the Fund’s portfolio, it is subject to 

regular fundamental and technical risk 

management review. 

According to the Registration 

Statement, in selecting short positions, 

the Sub-Advisor seeks to identify 

securities with market capitalizations 

typically of $1 billion and above, and 

with low earnings quality or aggressive 

accounting. Key factors include, but are 

not limited to: Quality and 

sustainability of revenue, as indicated 

by extended payment terms, changes in 

revenue policies or other factors; 

deterioration of cash flows or declining 

quality of earnings; reserve reversals or 

an increase in ‘‘soft’’ assets which could 

indicate the capitalization of expenses; 

and an analysis of irregular items 

affecting operating or gross margins 

including inventory, payables and taxes. 

The Sub-Advisor will also seek out the 

following qualitative factors: Poor 

corporate governance or significant 

related party transactions; heavy insider 

selling; and unique competitive 

challenges. 

According to the Registration 

Statement, once it is determined that a 

company possesses the proper 

characteristics, it must then be 

determined whether to include that 

position in the Fund’s portfolio. During 

this analysis, the Sub-Advisor considers 

specific factors described in the 

Registration Statement, including 

assessment on individual merits, 

valuation metrics and technical factors. 

The Fund generally targets 

composition of 20 to 50 equity short 

positions, with an average individual 

position size which generally ranges 

between 2–7% of the aggregate portfolio 

exposure. Typically, short positions will 

be initiated at the lower end of the 

position size range in order to gain 

exposure to a particular stock. 

ETFs registered pursuant to the 1940 

Act or other exchange-traded products 

not registered pursuant to the 1940 Act 

will also be utilized to manage exposure 

to broad indexes or certain sectors. 

Exchange traded products positions will 

typically range between 10–15% of the 

Fund’s portfolio. Exchange-traded 

products may be used to gain exposure 

in instances when the Sub-Advisor has 

a more bearish posture with respect to 

the broad market. 

The Fund, from time to time, in the 

ordinary course of business, may 

purchase securities on a when-issued or 

delayed-delivery basis (i.e., delivery and 

payment can take place between a 

month and 120 days after the date of the 

transaction). The Fund may invest in 

U.S. government securities and U.S. 

Treasury zero-coupon bonds.10

To respond to adverse market, 

economic, political or other conditions, 

the Fund may invest 100% of its total 

assets, without limitation, in highquality short-term debt securities and 

money market instruments. The Fund 

may be invested in these instruments for 

extended periods, depending on the 

Sub-Advisor’s assessment of market 

conditions. These debt securities and 

money market instruments include 

shares of other mutual funds, 

commercial paper, certificates of 

deposit, bankers’ acceptances, U.S. 

Government securities, repurchase 

agreements and bonds that are BBB or 

higher. 

Creations and Redemptions 

Creations and redemptions of Shares 

occur in large specified blocks of 

Shares, referred to as ‘‘Creation Units.’’ 

According to the Registration Statement, 

the Shares of the Fund are ‘‘created’’ at 

their net asset value (‘‘NAV’’) by market 

makers, large investors and institutions 

only in block-size Creation Units of 

25,000 shares or more. A ‘‘creator’’ 

enters into an authorized participant 

agreement (a ‘‘Participant Agreement’’) 

with the Distributor or a DTC 

participant that has executed a 

Participant Agreement with the 

Distributor (an ‘‘Authorized 

Participant’’), and deposits into the 

Fund a specified amount of cash 

totaling the NAV of the Creation Unit(s), 

in exchange for 25,000 shares of the 

Fund (or multiples thereof). Similarly, 

Shares can only be redeemed in 

Creation Units, generally 25,000 shares 

or more, for a specified amount of cash 

totaling the NAV of the Creation Unit(s). 

Shares are not redeemable from the 

Fund except when aggregated in 

Creation Units. The prices at which 

creations and redemptions occur are 

based on the next calculation of NAV 

after an order is received in a form 

prescribed in the Participant Agreement. 

According to the Registration 

Statement, unlike many other ETFs, 

Creation Units of the Fund are sold only 

for cash. Creation Units are sold at the 

NAV next computed, plus a fixed 

creation transaction fee, assessed per 

transaction. In all cases, such fees will 

be limited in accordance with SEC 

requirements applicable to management 

investment companies offering 

redeemable securities. 

All orders to create must be received 

by the Distributor no later than the close 

of the Core Trading Session on NYSE 

Arca (ordinarily 4 p.m. Eastern Time 


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11 17 CFR 240.10A–3. 

12The Bid/Ask Price of the Fund is determined 

using the highest bid and the lowest offer on the 

Exchange as of the time of calculation of the Fund’s 

NAV. The records relating to Bid/Ask Prices will be 

retained by the Fund and its service providers. 

13Under accounting procedures followed by the 

Fund, trades made on the prior business day (‘‘T’’) 

will be booked and reflected in NAV on the current 

business day (‘‘T+1’’). Accordingly, the Fund will be 

able to disclose at the beginning of the business day 

the portfolio that will form the basis for the NAV 

calculation at the end of the business day. 

14See e-mail from Tim Malinowski, Senior 

Director, NYSE Euronext, Global Index and 

Exchange Traded Funds, to Christopher Chow and 

Kristie Diemer, Special Counsels, Division of 

Trading and Markets, Commission, dated November 

24, 2010. 

15See NYSE Arca Equities Rule 7.12, 

Commentary .04. 

(‘‘E.T.’’)); on the date such order is 

placed in order for the creation of 

Creation Units to be effected based on 

the NAV of Shares of the Fund as next 

determined on such date after receipt of 

the order in proper form. Orders to 

redeem must be received by the 

Administrator no later than 4 p.m. E.T. 

The Shares will conform to the initial 

and continued listing criteria under 

NYSE Arca Equities Rule 8.600. The 

Exchange represents that, for initial 

and/or continued listing, the Fund will 

be in compliance with Rule 10A–3 11

under the Exchange Act, as provided by 

NYSE Arca Equities Rule 5.3. A 

minimum of 100,000 Shares will be 

outstanding at the commencement of 

trading on the Exchange. The Exchange 

will obtain a representation from the 

issuer of the Shares that the NAV and 

the Disclosed Portfolio will be made 

available to all market participants at 

the same time. 

Net Asset Value 

According to the Registration 

Statement, the NAV per Share of the 

Fund is computed by dividing the value 

of the net assets of the Fund (i.e., the 

value of its total assets less total 

liabilities) by the total number of Shares 

of the Fund outstanding, rounded to the 

nearest cent. Expenses and fees, 

including without limitation, the 

management, administration and 

distribution fees, are accrued daily and 

taken into account for purposes of 

determining NAV. The NAV per Share 

for the Fund is calculated by the 

Administrator and determined as of the 

close of the regular trading session on 

NYSE Arca (ordinarily 4 p.m., Eastern 

Time) on each day that the Exchange is 

open. 

In computing the Fund’s NAV, the 

Fund’s securities positions are valued 

based on their last readily available 

market price. Price information on listed 

securities is taken from the exchange 

where the security is primarily traded. 

Securities regularly traded in an overthe-counter market are valued at the 

latest quoted sales price. Securities not 

listed on an exchange or national 

securities market, or securities in which 

there was no last reported sales price, 

are valued at the most recent bid price. 

Other portfolio securities and assets for 

which market quotations are not readily 

available are valued based on fair value 

as determined in good faith by the SubAdvisor in accordance with procedures 

adopted by the Fund’s Board of 

Trustees. 

Availability of Information 

The Fund’s Web site (http:// 

www.advisorshares.com), which will be 

publicly available prior to the public 

offering of Shares, will include a form 

of the Prospectus for the Fund that may 

be downloaded. The Fund’s Web site 

will include additional quantitative 

information updated on a daily basis, 

including, for the Fund, (1) daily trading 

volume, the prior business day’s 

reported closing price, NAV and midpoint of the bid/ask spread at the time 

of calculation of such NAV (the ‘‘Bid/ 

Ask Price’’),12 and a calculation of the 

premium and discount of the Bid/Ask 

Price against the NAV, and (2) data in 

chart format displaying the frequency 

distribution of discounts and premiums 

of the daily Bid/Ask Price against the 

NAV, within appropriate ranges, for 

each of the four previous calendar 

quarters. On each business day, before 

commencement of trading in Shares in 

the Core Trading Session on the 

Exchange, the Fund will disclose on its 

Web site the Disclosed Portfolio as 

defined in NYSE Arca Equities Rule 

8.600(c)(2) that will form the basis for 

the Fund’s calculation of NAV at the 

end of the business day.13

On a daily basis, for each portfolio 

security position of the Fund, the Fund 

will disclose on its Web site the 

following information: ticker symbol, 

name of security, positions 14 held long 

or short in the portfolio, and percentage 

weighting of the security in the 

portfolio. The Web site information will 

be publicly available at no charge. 

In addition, a portfolio composition 

file which includes the cash amount 

required to be delivered in exchange for 

each Fund share, will be publicly 

disseminated daily prior to the opening 

of the New York Stock Exchange 

(‘‘NYSE’’) via the National Securities 

Clearing Corporation. The NAV of the 

Fund will normally be determined as of 

the close of the regular trading session 

on the NYSE (ordinarily 4 p.m. Eastern 

Time) on each business day. 

Investors can also obtain the Trust’s 

Statement of Additional Information 

(‘‘SAI’’), the Fund’s Shareholder Reports, 

and its Form N–CSR and Form N–SAR, 

filed twice a year. The Trust’s SAI and 

Shareholder Reports are available free 

upon request from the Trust, and those 

documents and the Form N–CSR and 

Form N–SAR may be viewed on-screen 

or downloaded from the Commission’s 

Web site at http://www.sec.gov. 

Information regarding market price and 

trading volume of the Shares is and will 

be continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services. Information regarding the 

previous day’s closing price and trading 

volume information will be published 

daily in the financial section of 

newspapers. Quotation and last sale 

information for the Shares will be 

available via the Consolidated Tape 

Association (‘‘CTA’’) high-speed line. In 

addition, the Portfolio Indicative Value, 

as defined in NYSE Arca Equities Rule 

8.600(c)(3), will be disseminated by one 

or more major market data vendors at 

least every 15 seconds during the Core 

Trading Session. 

Additional information regarding the 

Trust and the Shares, including 

investment strategies, risks, creation and 

redemption procedures, fees, portfolio 

holdings disclosure policies, 

distributions and taxes is included in 

the Registration Statement. All terms 

relating to the Fund that are referred to, 

but not defined in, this proposed rule 

change are defined in the Registration 

Statement. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares of 

the Fund.15 Trading in Shares of the 

Fund will be halted if the circuit breaker 

parameters in NYSE Arca Equities Rule 

7.12 have been reached. 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. These may 

include: (1) The extent to which trading 

is not occurring in the securities 

comprising the Disclosed Portfolio and/ 

or the financial instruments of the Fund; 

or (2) whether other unusual conditions 

or circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. Trading in the 

Shares will be subject to NYSE Arca 

Equities Rule 8.600(d)(2)(D), which sets 


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77684 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Notices 

16For a list of the current members of ISG, see 

http://www.isgportal.org. The Exchange notes that 

not all components of the Disclosed Portfolio for the 

Fund may trade on markets that are members of ISG 

or with which the Exchange has in place a 

comprehensive surveillance sharing agreement. 

17 15 U.S.C. 78f(b). 

18 15 U.S.C. 78f(b)(5). 

forth circumstances under which Shares 

of the Fund may be halted. 

Trading Rules 

The Exchange 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. Shares will trade on 

the NYSE Arca Marketplace from 4 a.m. 

to 8 p.m. E.T. in accordance with NYSE 

Arca Equities Rule 7.34 (Opening, Core, 

and Late Trading Sessions). The 

Exchange has appropriate rules to 

facilitate transactions in the Shares 

during all trading sessions. As provided 

in NYSE Arca Equities Rule 7.6, 

Commentary .03, the minimum price 

variation (‘‘MPV’’) for quoting and entry 

of orders in equity securities traded on 

the NYSE Arca Marketplace is $0.01, 

with the exception of securities that are 

priced less than $1.00 for which the 

MPV for order entry is $0.0001. 

Surveillance 

The Exchange intends to utilize its 

existing surveillance procedures 

applicable to derivative products (which 

include Managed Fund Shares) to 

monitor trading in the Shares. The 

Exchange represents that these 

procedures are adequate to properly 

monitor Exchange trading of the Shares 

in all trading sessions and to deter and 

detect violations of Exchange rules and 

applicable Federal securities laws. 

The Exchange’s current trading 

surveillance focuses on detecting 

securities trading outside their normal 

patterns. When such situations are 

detected, surveillance analysis follows 

and investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

The Exchange may obtain information 

via the Intermarket Surveillance Group 

(‘‘ISG’’) from other exchanges that are 

members of ISG.16

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

Equity Trading Permit (‘‘ETP’’) Holders 

in an Information Bulletin (‘‘Bulletin’’) 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Bulletin will discuss 

the following: (1) The procedures for 

purchases and redemptions of Shares in 

Creation Unit aggregations (and that 

Shares are not individually redeemable); 

(2) NYSE Arca Equities Rule 9.2(a), 

which imposes a duty of due diligence 

on its ETP Holders to learn the essential 

facts relating to every customer prior to 

trading the Shares; (3) the risks involved 

in trading the Shares during the 

Opening and Late Trading Sessions 

when an updated Portfolio Indicative 

Value will not be calculated or publicly 

disseminated; (4) how information 

regarding the Portfolio Indicative Value 

is disseminated; (5) the requirement that 

ETP Holders deliver a prospectus to 

investors purchasing newly issued 

Shares prior to or concurrently with the 

confirmation of a transaction; and (6) 

trading information. 

In addition, the Bulletin will 

reference that the Fund is subject to 

various fees and expenses described in 

the Registration Statement. The Bulletin 

will discuss any exemptive, no-action, 

and interpretive relief granted by the 

Commission from any rules under the 

Exchange Act. The Bulletin will also 

disclose that the NAV for the Shares 

will be calculated after 4 p.m. E.T. each 

trading day. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Exchange Act,17 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Exchange Act,18 in particular, in 

that it is designed to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. The 

Exchange believes that the proposed 

rule change will facilitate the listing and 

trading of additional types of actively 

managed exchange-traded products that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2010–107 on 

the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEARCA–2010–107. 

This file number should be included on 

the subject line if e-mail is used. To help 

the Commission process and review 

your comments more efficiently, please 

use only one method. The Commission 

will post all comments on the 

Commission’s Internet Web site (http:// 

www.sec.gov/rules/sro.shtml). Copies of 

the submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Notices 77685 

19 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4NYSE has filed a companion rule filing to 

conform its Rules to the changes proposed in this 

filing. See SR–NYSE–2010–76, formally submitted 

November 29, 2010. 

5See Securities Exchange Act Release No. 56017 

(Jul. 5, 2007), 72 FR 38110 (Jul. 12, 2007) (SR– 

NYSE–2007–21). 

6See NASD Rule 2111 and IM–2110–2. 

7See Securities Exchange Act Release No. 56968 

(Dec. 14, 2007), 72 FR 72432 (Dec. 20, 2007) (SR– 

NYSE–2007–114). 

8See Securities Exchange Act Release Nos. 57682 

(Apr. 17, 2008), 73 FR 22193 (Apr. 24, 2008) (SR– 

NYSE–2008–29); 59621 (Mar. 23, 2009), 74 FR 

14179 (Mar. 30, 2009) (SR–NYSE–2009–30); 60396 

(July 30, 2009), 74 FR 39126 (Aug. 5, 2009) (SR– 

NYSE–2009–73); 61251 (Dec. 29, 2009), 75 FR 482 

(Jan. 5, 2010) (SR–NYSE–2009–129); and 62541 

(July 21, 2010), 75 FR 44042 (July 27, 2010) (SR– 

NYSE–2010–52). 

9The NYSE Amex Equities Rules, which became 

operative on December 1, 2008, are substantially 

identical to the current NYSE Rules 1–1004 and the 

Exchange continues to update the NYSE Amex 

Equities Rules as necessary to conform with rule 

changes to corresponding NYSE Rules filed by the 

NYSE. See Securities Exchange Act Release Nos. 

58705 (Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008) 

(SR–Amex–2008–63); 58833 (Oct. 22, 2008), 73 FR 

64642 (Oct. 30, 2008) (SR–NYSE–2008–106); 58839 

(Oct. 23, 2008), 73 FR 64645 (October 30, 2008) 

(SR–NYSEALTR–2008–03); 59022 (Nov. 26, 2008), 

73 FR 73683 (Dec. 3, 2008) (SR–NYSEALTR–2008– 

10); and 59027 (Nov. 28, 2008), 73 FR 73681 (Dec. 

3, 2008) (SR–NYSEALTR–2008–11). 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Section, 100 F Street, NE., 

Washington, DC 20549–1090 on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing will 

also be available for inspection and 

copying at the NYSE’s principal office 

and on its Internet Web site at http:// 

www.nyse.com. All comments received 

will be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca–2010–107 and should be 

submitted on or before January 3, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–31132 Filed 12–10–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63454; File No. SR– 

NYSEAmex–2010–111] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Amex LLC Extending the Operative 

Date of NYSE Amex Equities Rule 

92(c)(3) From December 31, 2010 to 

August 1, 2011 

December 7, 2010. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on November 

29, 2010, NYSE Amex LLC (the 

‘‘Exchange’’ or ‘‘NYSE Amex’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

operative date of NYSE Amex Equities 

Rule 92(c)(3) from December 31, 2010 to 

August 1, 2011. The text of the proposed 

rule change is available at the Exchange, 

the Commission’s Public Reference 

Room, on the Commission’s Web site at 

http://www.sec.gov, and http:// 

www.nyse.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to extend 

the delayed operative date of Rule 

92(c)(3) from December 31, 2010 to 

August 1, 2011. The Exchange believes 

that this extension will provide the time 

necessary for the Exchange, the New 

York Stock Exchange LLC (‘‘NYSE’’), and 

the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) to harmonize 

their respective rules concerning 

customer order protection to achieve a 

standardized industry practice.4

Background 

On July 5, 2007, the Commission 

approved amendments to NYSE Rule 92 

to permit riskless principal trading at 

the NYSE.5 These amendments were 

filed in part to begin the harmonization 

process between NYSE Rule 92 and 

FINRA’s Manning Rule.6 In connection 

with those amendments, the NYSE 

implemented for an operative date of 

January 16, 2008, NYSE Rule 92(c)(3), 

which permits NYSE member 

organizations to submit riskless 

principal orders to the NYSE, but 

requires them to submit to a designated 

NYSE database a report of the execution 

of the facilitated order. That rule also 

requires members to submit to that same 

database sufficient information to 

provide an electronic link of the 

execution of the facilitated order to all 

of the underlying orders. 

For purposes of NYSE Rule 92(c)(3), 

the NYSE informed member 

organizations that when executing 

riskless principal transactions, firms 

must submit order execution reports to 

the NYSE’s Front End Systemic Capture 

(‘‘FESC’’) database linking the execution 

of the riskless principal order on the 

NYSE to the specific underlying orders. 

The information provided must be 

sufficient for both member firms and the 

NYSE to reconstruct in a timesequenced manner all orders, including 

allocations to the underlying orders, 

with respect to which a member 

organization is claiming the riskless 

principal exception. 

Because the rule change required both 

the NYSE and member organizations to 

make certain changes to their trading 

and order management systems, the 

NYSE filed to delay to May 14, 2008 the 

operative date of the NYSE Rule 92(c)(3) 

requirements, including submitting endof-day allocation reports for riskless 

principal transactions and using the 

riskless principal account type 

indicator.7 The NYSE filed for 

additional extensions of the operative 

date of Rule 92(c)(3) to December 31, 

2010.8 Because NYSE Amex adopted 

NYSE Rule 92 in its then current form,9

the delayed operative date for the NYSE 

Rule 92(c)(3) reporting requirements 

also applied for NYSE Amex Equities 

Rule 92(c)(3) reporting requirements 


wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1