194 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 

1Request of the United States Postal Service 

Concerning Priority Mail—Non-Published Rates 

and Notice of Filing Materials Under Seal, 

December 17, 2010 (Request). 

2 Docket Nos. MC2010–29 and CP2010–72, Order 

Approving Postal Service Request to Add Global 

Expedited Package Services—Non-Published Rates 

1 to the Competitive Product List, November 22, 

2010 (Order No. 593). 

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

2 17 CFR 240.19b–4. 

3See Form 19b–4 Information of the proposed 

rule change at 3. 

4The Commission approved NYSE Arca Equities 

Rule 8.600 and the listing and trading of certain 

funds of the PowerShares Actively Managed Funds 

Trust on the Exchange pursuant to Rule 8.600 in 

Securities Exchange Act Release No. 57619 (April 

4, 2008), 73 FR 19544 (April 10, 2008) (SR– 

NYSEArca–2008–25). The Commission also 

previously approved listing and trading on the 

Exchange of a number of 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); 

POSTAL REGULATORY COMMISSION 

[Docket Nos. MC2011–15 and CP2011–51; 

Order No. 616] 

New Postal Product 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice. 

SUMMARY: The Commission is noticing a 

recently-filed Postal Service request to 

add Priority Mail—Non-published Rates 

to the competitive product list. This 

notice addresses procedural steps 

associated with this filing. 

DATES: Comments are due: January 11, 

2011. Reply comments are due: January 

18, 2011. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http://www.prc.

gov. Commenters who cannot submit 

their views electronically should 

contact the person identified in FOR

FURTHER INFORMATION CONTACT by 

telephone for advice on alternatives to 

electronic filing. 

FOR FURTHER INFORMATION CONTACT: 

Stephen L. Sharfman, General Counsel, 

stephen.sharfman@prc.gov or 202–789– 

6820. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

On December 17, 2010, the Postal 

Service requested that the Commission 

add Priority Mail—Non-published Rates 

to the competitive product list within 

the Mail Classification Schedule 

(MCS).1 This product is modeled after 

the Global Expedited Package 

Services—Non-published Rates product 

that the Commission approved in Order 

No. 593.2

Request. In support of its Request, the 

Postal Service filed four attachments as 

follows: 

• Attachment 1—a redacted copy of 

Governors’ Decision No. 10–6 and 

attachments thereto, including MCS 

language describing Priority Mail—Nonpublished Rates, pricing and 

methodology, management analysis, and 

certification that the prices and 

methodology satisfy applicable criteria; 

• Attachment 2—a model contract 

between the Postal Service and a 

customer of Priority Mail—Nonpublished Rates; 

• Attachment 3—a Statement of 

Supporting Justification as required by 

39 CFR 3020.32; and 

• Attachment 4—an application for 

non-public treatment of materials to 

maintain redacted portions of the 

Governors’ Decision, with attachments, 

and supporting documents under seal. 

Comments. Interested persons may 

submit comments on or before January 

11, 2011. Reply comments may be 

submitted no later than January 18, 

2011. 

Public Representative. Pursuant to 39 

U.S.C. 505, the Commission hereby 

appoints Derrick D. Dennis to serve as 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public in this 

proceeding. Neither Derrick D. Dennis 

nor any staff assigned to assist him shall 

participate in or provide any advice on 

any Commission decision in this 

proceeding other than in their 

designated capacity. 

It is ordered: 

1. The Commission establishes Docket 

Nos. MC2011–15 and CP2011–51 to 

consider matters raised in the Postal 

Service’s December 17, 2010 Request. 

2. Comments are due January 11, 

2011. Reply comments are due January 

18, 2011. 

3. Pursuant to 39 U.S.C. 505, the 

Commission appoints Derrick D. Dennis 

to represent the interests of the general 

public in this proceeding. 

4. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2010–32974 Filed 12–30–10; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63609; File No. SR– 

NYSEArca–2010–116] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Relating to the Listing 

and Trading of the WisdomTree Asia 

Bond Fund 

December 27, 2010. 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that, 

on December 13, 2010, NYSE Arca, Inc. 

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

the Securities and Exchange 

Commission (‘‘Commission’’ or ‘‘SEC’’) 

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 shares of the following fund of 

the WisdomTree Trust (‘‘Trust’’) under 

NYSE Arca Equities Rule 8.600 

(‘‘Managed Fund Shares’’): WisdomTree 

Asia Bond Fund (‘‘Fund’’). The shares of 

the Fund are collectively referred to 

herein as the ‘‘Shares.’’ 3 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 Shares of the WisdomTree 

Asia Bond Fund under NYSE Arca 

Equities Rule 8.600, which governs the 

listing and trading of Managed Fund 

Shares on the Exchange.4 The Fund will 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 195 

58564 (September 17, 2008), 73 FR 55194 

(September 24, 2008) (SR–NYSEArca–2008–86) 

(order approving Exchange listing and trading of 

WisdomTree Dreyfus Emerging Markets Fund); 

62604 (July 30, 2010), 75 FR 47323 (August 5, 2010) 

(SR–NYSEArca–2010–49) (order approving listing 

and trading of WisdomTree Emerging Markets Local 

Debt Fund); 62623 (August 2, 2010), 75 FR 47652 

(August 6, 2010) (SR–NYSEArca–2010–51) (order 

approving listing and trading of WisdomTree 

Dreyfus Commodity Currency Fund). 

5See Post-Effective Amendment No. 41 to 

Registration Statement on Form N–1A for the Trust, 

dated October 19, 2010 (File Nos. 333–132380 and 

811–21864). The descriptions of the Fund and the 

Shares contained herein are based on information 

in the Registration Statement. 

6WisdomTree Investments, Inc. (‘‘WisdomTree 

Investments’’) is the parent company of 

WisdomTree Asset Management. 

7The Sub-Adviser is responsible for day-to-day 

management of the Fund and, as such, typically 

makes all decisions with respect to portfolio 

holdings. The Adviser has ongoing oversight 

responsibility. 

8The Commission has issued an order granting 

certain exemptive relief to the Trust under the 

Investment Company Act of 1940 (15 U.S.C. 80a– 

1) (‘‘1940 Act’’). See Investment Company Act 

Release No. 28171 (October 27, 2008) (File No. 812– 

13458). In compliance with Commentary .05 to 

NYSE Arca Equities Rule 8.600, 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 of 1933 (15 

U.S.C. 77a). 

9An 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 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. 

10The Exchange represents that the Adviser and 

Sub-Adviser, 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 adviser 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 adviser 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 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. 

be an actively managed exchange-traded 

fund. The Shares will be offered by the 

Trust, which was established as a 

Delaware statutory trust on December 

15, 2005. The Trust is registered with 

the Commission as an investment 

company and the Fund has filed a 

registration statement on Form N–1A 

(‘‘Registration Statement’’) with the 

Commission.5

Description of the Shares and the Fund 

WisdomTree Asset Management, Inc. 

(‘‘WisdomTree Asset Management’’) is 

the investment adviser (‘‘Adviser’’) to 

the Fund.6 WisdomTree Asset 

Management is not affiliated with any 

broker-dealer. Mellon Capital 

Management serves as sub-adviser for 

the Fund (‘‘Sub-Adviser’’).7 The Bank of 

New York Mellon is the administrator, 

custodian and transfer agent for the 

Trust. ALPS Distributors, Inc. serves as 

the distributor for the Trust.8

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.9 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. 

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. The SubAdviser is affiliated with multiple 

broker-dealers and has implemented a 

‘‘fire wall’’ with respect to such brokerdealers regarding access to information 

concerning the composition and/or 

changes to the Fund’s portfolio.10 In 

addition, Sub-Adviser personnel who 

make decisions regarding the Fund’s 

portfolio are subject to procedures 

designed to prevent the use and 

dissemination of material nonpublic 

information regarding the Fund’s 

portfolio. In the event (a) the Adviser or 

the Sub-Adviser becomes newly 

affiliated with a broker-dealer, or (b) any 

new adviser or sub-adviser becomes 

affiliated with a broker-dealer, 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 the portfolio. 

WisdomTree Asia Bond Fund 

According to the Registration 

Statement, the Fund seeks to provide 

investors with a high level of total 

return consisting of both income and 

capital appreciation. The Fund is an 

actively managed exchange-traded fund 

(‘‘ETF’’). The Fund is designed to 

provide exposure to a broad range of 

Asian government and corporate bonds 

through investment in both local 

currency (e.g., Hong Kong dollar; South 

Korean won) and U.S. dollardenominated Fixed Income Securities. 

For purposes of this proposed rule 

change, Fixed Income Securities include 

bonds, notes or other debt obligations, 

such as government or corporate bonds, 

denominated in local currencies or U.S. 

dollars, as well as issues denominated 

in Asian local currencies that are issued 

by ‘‘supranational issuers,’’ such as the 

European Investment Bank, 

International Bank for Reconstruction 

and Development, and the International 

Finance Corporation, as well as 

development agencies supported by 

other national governments. The Fund 

may also invest in Money Market 

Securities and derivative instruments, 

as described below. 

The Fund seeks to achieve its 

investment objective through direct and 

indirect investments in Fixed Income 

Securities issued by governments and 

corporations in Asian countries. The 

Fund intends to focus on the 

developing/emerging market economies 

in Asia, primarily China, Hong Kong, 

India, Indonesia, South Korea, Malaysia, 

the Philippines, Singapore, Taiwan and 

Thailand. While the Fund is permitted 

to invest in developed market 

economies, this is not a focus of the 

Fund. Therefore, although the Fund is 

permitted to do so, the Fund is unlikely 

to invest in issuers in Japan, Australia, 

or New Zealand. 

The Fund is designed to provide 

broad exposure to Asian government 

and corporate bonds and will invest in 

a range of instruments with varying 

credit risk and duration. The Fund 


jlentini on DSKJ8SOYB1PROD with NOTICES
196 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 

11The category of ‘‘Asian debt’’ includes both U.S. 

dollar-denominated debt and non-U.S. or ‘‘local’’ 

currency debt. According to the Emerging Markets 

Traders Association, the global dollar amount of 

emerging market debt instruments traded in 2009 

was $4.445 trillion, of which Asian emerging 

market (i.e., excluding Japan) debt represented 

$1.609 trillion. Asian sovereign debt issued by 

major emerging market countries in 2009 included: 

(1) China, $175 billion; (2) Hong Kong, $590 billion; 

(3) India, $164 billion; (4) Indonesia, $63 billion; (5) 

Malaysia, $119 billion; (6) Philippines, $61 billion; 

(7) Singapore, $166 billion; (8) South Korea, $172 

billion; (9) Taiwan, $27 billion; and (10) Thailand, 

$43 billion. Local market instruments traded among 

major Asian emerging markets in 2009 included: (1) 

Hong Kong, $557 billion; (2) India, $148 billion; (3) 

China, $147 billion; (4) Singapore, $146 billion; and 

(5) South Korea, $93 billion. (Source: Emerging 

Markets Traders Association, 2009 Annual Debt 

Trading Volume Survey, March 8, 2010. Additional 

information relating to emerging market corporate 

bonds is available at: http://www.emta.org.) Local 

currency bond issuance in emerging East Asian 

markets (comprising China, Hong Kong, Taiwan, 

Indonesia, South Korea, Malaysia, Philippines, 

Singapore, Thailand and Viet Nam) grew by 18.8% 

through June 2010. (Source: Asian Development 

Bank, Asia’s Local Bond Markets Expand 18.8%, 

Foreign Investment Soars (October 4, 2010), 

http://www.adb.org.) 

The Adviser represents that Asian sovereign debt 

is typically issued in large par size and tends to be 

very liquid. Local currency-denominated Asian 

debt issued by supranational entities is also actively 

traded. Intra-day, executable price quotations on 

such instruments are available from major brokerdealer firms. 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. 

12The Adviser represents that the size and 

liquidity of the market for emerging market bonds, 

including Asian corporate bonds, generally has 

been increasing in recent years. The aggregate dollar 

amount of emerging market corporate bonds traded 

in 2009 was $514 billion, representing a 32% 

increase over the $380 billion traded in 2008. 

Turnover in emerging market corporate debt 

accounted for 12% of the overall volume of 

emerging market debt of $4.445 trillion in 2009, an 

increase over the 9% share in 2008. (Source: 

Emerging Markets Traders Association Press 

Release, March 8, 2010.) Additional information 

relating to emerging market corporate bonds is 

available at: http://www.emta.org. Annual growth in 

the emerging East Asian corporate bond markets 

(comprising China, Hong Kong, Taiwan, Indonesia, 

South Korea, Malaysia, Philippines, Singapore, 

Thailand and Viet Nam) increased by 24.4% 

through June 2010. China’s local currency corporate 

bond market grew by 52.7% over that period. 

(Source: Asian Development Bank, Asia’s Local 

Bond Markets Expand 18.8%, Foreign Investment 

Soars (October 4, 2010), http://www.adb.org.) 

Corporate bonds outstanding in representative 

emerging East Asian markets as of June 2010, 

included: (1) China, $546 billion; (2) Hong Kong, 

$73 billion; (3) Indonesia, $10 billion; (4) South 

Korea, $571 billion; (5) Malaysia, $91 billion; (6) 

Philippines, $8 billion; (7) Singapore, $70 billion; 

(8) Thailand, $38 billion; and (9) Viet Nam, $2 

billion (Source: Asian Development Bank, Asia 

Bond Monitor (October 2010), http://www.adb.org.) 

13As of October 19, 2010, government debt of 

China, Hong Kong, India, Malaysia, Singapore, 

South Korea, Taiwan and Thailand was rated 

investment grade by S&P and Fitch. The sovereign 

debt of Indonesia and the Philippines was rated just 

below investment grade. See http:// 

www.standardandpoors.com; http:// 

www.fitchratings.com. 

intends to invest in both bonds and debt 

instruments issued by the governments 

of Asia and their agencies and 

instrumentalities and as well in bonds 

and other debt instruments issued by 

corporations organized in Asian 

countries. The Fund also may invest in 

Fixed Income Securities denominated in 

Asian local currencies that are issued by 

supranational issuers, as described 

above. The Fund also may invest in 

inflation-linked Fixed Income Securities 

denominated in Asian local currencies. 

The Fund intends to invest at least 

70% of its net assets in Fixed Income 

Securities.11 The Fund expects to invest 

up to 20% of its net assets in Asian 

corporate bonds. The Fund will invest 

only in corporate bonds that the Adviser 

or Sub-Adviser deems to be sufficiently 

liquid. Generally, a corporate bond must 

have $200 million or more par amount 

outstanding and significant par value 

traded to be considered as an eligible 

investment.12 Economic and other 

conditions in Asia 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, the Fund may 

invest up to 5% of its net assets in 

corporate bonds with less than $200 

million par amount outstanding if (i) 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, brokerdealer quotations or its analysis of the 

trading history of the security or the 

trading history of other securities issued 

by the issuer), (ii) such investment is 

consistent with the Fund’s goal of 

providing exposure to a broad range of 

Asian government and corporate bonds, 

and (iii) such investment is deemed by 

the Adviser or Sub-Adviser to be in the 

best interest of the Fund. 

According to the Registration 

Statement, the Fund typically will 

maintain aggregate portfolio duration of 

between 2 and 8 years. Aggregate 

portfolio duration is a measure of the 

portfolio’s sensitivity to changes in the 

level of interest rates. The Fund’s actual 

portfolio duration may be longer or 

shorter depending upon market 

conditions. 

The universe of Asian Fixed Income 

Securities includes securities that are 

rated ‘‘investment grade’’ as well as 

‘‘non-investment grade’’ securities. The 

Fund is designed to provide a broadbased, representative exposure to Asian 

government and corporate bonds and 

therefore will invest in both investment 

grade and non-investment grade 

securities in a manner designed to 

provide this exposure. The Fund 

expects that it will have 75% or more 

of its assets invested in investment 

grade securities, and no more than 25% 

of its assets invested in non-investment 

grade securities. Because the Fund is 

designed to provide exposure to a broad 

range of Asian government and 

corporate bonds, and because the debt 

ratings of the Asian governments and 

those corporate issuers will change from 

time to time, the exact percentage of the 

Fund’s investments in investment grade 

and non-investment grade securities 

will change from time to time in 

response to economic events and 

changes to the credit ratings of the 

Asian government and corporate 

issuers.13 Within the non-investment 

grade category, some issuers and 

instruments are considered to be of 

lower credit quality and at higher risk 

of default. In order to limit its exposure 

to these more speculative credits, the 

Fund will not invest more than 15% of 

its assets in securities rated B or below 

by Moody’s, or equivalently rated by 

S&P or Fitch. The Fund does not intend 

to invest in unrated securities. However, 

it may do so to a limited extent, such 

as where a rated security becomes 

unrated, if such security is, determined 

by the Adviser and Sub-Adviser to be of 

comparable quality. In determining 

whether a security is of ‘‘comparable 

quality,’’ the Adviser and Sub-Adviser 

will consider, for example, whether the 

issuer of the security has issued other 

rated securities. 

The Fund will hold Fixed Income 

Securities of at least 13 non-affiliated 

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 any non-U.S. 

government, or their 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 Revenue Code of 1986, as 

amended. The Fund will invest its 

assets, and otherwise conduct its 

operations, in a manner that is intended 

to satisfy the qualifying income, 

diversification and distribution 

requirements necessary to establish and 

maintain RIC qualification under 

Subchapter M. The Subchapter M 

diversification tests generally require 

that (i) the Fund invest no more than 

25% of its total assets in securities 

(other than securities of the U.S. 

government or other RICs) of any one 

issuer or two or more issuers that are 


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Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 197 

14The listed futures contracts in which the Fund 

will invest may be listed on exchanges either in the 

U.S. or in either Hong Kong or Singapore. Both 

Hong Kong’s primary financial markets regulator, 

the Securities and Futures Commission, and 

Singapore’s primary financial markets regulator, the 

Monetary Authority of Singapore, are signatories to 

the International Organization of Securities 

Commissions (‘‘IOSCO’’) Multilateral Memorandum 

of Understanding (‘‘MMOU’’), which is a multi-party 

information sharing arrangement among major 

financial regulators. Both the SEC and the 

Commodity Futures Trading Commission are 

signatories to the IOSCO MMOU. 

15The Fund may invest in credit-linked notes. A 

credit linked note is a type of structured note whose 

value is linked to an underlying reference asset. 

Credit linked notes typically provide periodic 

payments of interest as well as payment of principal 

upon maturity. The value of the periodic payments 

and the principal amount payable upon maturity 

are tied (positively or negatively) to a reference 

asset such as an index, government bond, interest 

rate or currency exchange rate. The ongoing 

payments and principal upon maturity typically 

will increase or decrease depending on increases or 

decreases in the value of the reference asset. The 

Fund’s investments in credit-linked notes will be 

limited to notes providing exposure to Asian Fixed 

Income Securities. The Fund’s overall investment 

in credit-linked notes will not exceed 25% of the 

Fund’s assets. 

16The NAV of the Fund’s Shares generally is 

calculated once daily Monday through Friday as of 

the close of regular trading on the New York Stock 

Exchange, generally 4 p.m. Eastern time (‘‘NAV 

Calculation Time’’). NAV per Share is calculated by 

dividing the Fund’s net assets by the number of 

Fund Shares outstanding. For more information 

regarding the valuation of Fund investments in 

calculating the Fund’s NAV, see the Registration 

Statement. 

17See E-mail from Timothy Malinowski, Senior 

Director, NYSE Euronext, to Daniel Gien, Staff 

Attorney, Division of Trading and Markets, 

Commission, dated December 15, 2010. 

controlled by the Fund and that are 

engaged in the same, similar or related 

trades or businesses, and (ii) at least 

50% of the Fund’s total assets consist of 

cash and cash items, U.S. government 

securities, securities of other RICs and 

other securities, with investments in 

such other securities limited in respect 

of any one issuer to an amount not 

greater than 5% of the value of the 

Fund’s total assets and 10% of the 

outstanding voting securities of such 

issuer. 

In addition to satisfying the above 

referenced RIC diversification 

requirements, no portfolio security held 

by the Fund (other than U.S. 

government securities and non-U.S. 

government securities) will represent 

more than 30% of the weight of the 

portfolio and the five highest weighted 

portfolio securities of the Fund (other 

than U.S. government securities and/or 

non-U.S. government securities) will not 

in the aggregate account for more than 

65% of the weight of the portfolio. For 

these purposes, the Fund may treat 

repurchase agreements collateralized by 

U.S. government securities or non-U.S. 

government securities as U.S. or nonU.S. government securities, as 

applicable. 

Money Market Securities 

The Fund intends to invest in Money 

Market Securities in order to help 

manage cash flows in and out of the 

Fund, such as in connection with 

payment of dividends or expenses, and 

to satisfy margin requirements, to 

provide collateral or to otherwise back 

investments in derivative instruments. 

For these purposes, Money Market 

Securities include: short-term, highquality obligations issued or guaranteed 

by the U.S. Treasury or the agencies or 

instrumentalities of the U.S. 

government; short-term, high-quality 

securities issued or guaranteed by nonU.S. governments, agencies and 

instrumentalities; repurchase 

agreements backed by U.S. government 

securities; money market mutual funds; 

and deposits and other obligations of 

U.S. and non-U.S. banks and financial 

institutions. All Money Market 

Securities acquired by the Fund will be 

rated investment grade; 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. 

Derivative Instruments 

The Fund may use derivative 

instruments as part of its investment 

strategies. Examples of derivative 

instruments include listed futures 

contracts,14 forward currency contracts, 

non-deliverable forward currency 

contracts, currency and interest rate 

swaps, currency options, options on 

futures contracts, swap agreements and 

credit-linked notes.15 The Fund’s use of 

derivative instruments (other than 

credit-linked notes) will be 

collateralized or otherwise backed by 

investments in short term, high-quality 

U.S. money market securities. The Fund 

expects that no more than 30% of the 

value of the Fund’s net assets will be 

invested in derivative instruments. Such 

investments will be consistent with the 

Fund’s investment objective and will 

not be used to enhance leverage. 

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, 

forward contracts, swap contracts, the 

purchase of securities on a when-issued 

or delayed delivery basis, or reverse 

repurchase agreements, under 

applicable Federal securities laws, rules, 

and interpretations thereof, the Fund 

must ‘‘set aside’’ liquid assets, or engage 

in other measures to ‘‘cover’’ open 

positions with respect to such 

transactions. 

The Fund may engage in foreign 

currency transactions, and may invest 

directly in foreign currencies in the 

form of bank and financial institution 

deposits, certificates of deposit, and 

bankers acceptances denominated in a 

specified non-U.S. currency. 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 may enter into swap 

agreements, including interest rate 

swaps and currency swaps (e.g., Hong 

Kong dollar vs. U.S. dollar), and may 

buy or sell put and call options on 

foreign currencies, either on exchanges 

or in the over-the-counter market. 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. 

The Fund may invest in the securities 

of other investment companies 

(including money market funds and 

ETFs). The Fund may invest up to an 

aggregate amount of 10% of its net 

assets in illiquid securities. Illiquid 

securities include securities subject to 

contractual or other restrictions on 

resale and other instruments that lack 

readily available markets. 

The Fund will not invest in non-U.S. 

equity securities. 

The Shares 

The Fund issues and redeems Shares 

on a continuous basis at NAV 16 only in 

large blocks of shares (‘‘Creation Units’’) 

in transactions with authorized 

participants. Creation Units consist of 

100,000 Shares.17 The Fund issues and 

redeems Creation Units in exchange for 

a portfolio of Fixed Income Securities 

closely approximating the holdings of 

the Fund and/or an amount of cash in 

U.S. dollars. Once created, Shares of the 

Fund trade on the secondary market in 

amounts less than a Creation Unit. 

Additional information regarding the 

Shares and the Fund, including 

investment strategies, risks, creation and 

redemption procedures, fees, portfolio 

holdings disclosure policies, 

distributions and taxes is included in 

the Registration Statement. 

Availability of Information 

The Fund’s Web site (http:// 

www.wisdomtree.com), which will be 


jlentini on DSKJ8SOYB1PROD with NOTICES
198 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 

18The Bid/Ask Price of the Fund is determined 

using the midpoint of the highest bid and the 

lowest offer on the Exchange as of the time of 

calculation of such Fund’s NAV. The records 

relating to Bid/Ask Prices will be retained by the 

Fund and its service providers. 

19The Core Trading Session is 9:30 a.m. to 4 p.m. 

Eastern time. 

20Under 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’’). Notwithstanding the 

foregoing, portfolio trades that are executed prior to 

the opening of the Exchange on any business day 

may be booked and reflected in NAV on such 

business day. Accordingly, the Fund will be able to 

disclose at the beginning of the business day the 

portfolio that will form the basis for the NAV 

calculation at the end of the business day. 21See 17 CFR 240.10A–3. 

22For a list of the current members of ISG, see 

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

not all of the components of the Disclosed Portfolio 

for the Fund may trade on exchanges that are 

members of the ISG or with which the Exchange has 

in place a comprehensive surveillance sharing 

agreement. 

publicly available prior to the public 

offering of Shares, will include a form 

of the Prospectus for the Fund that may 

be downloaded. The Web site will 

include additional quantitative 

information updated on a daily basis, 

including, for the Fund: (1) The prior 

business day’s reported NAV, mid-point 

of the bid/ask spread at the time of 

calculation of such NAV (‘‘Bid/Ask 

Price’’),18 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 19 on the 

Exchange, the Trust will disclose on its 

Web site the identities and quantities of 

the portfolio of securities and other 

assets (‘‘Disclosed Portfolio’’) held by the 

Fund that will form the basis for the 

Fund’s calculation of NAV at the end of 

the business day.20 The Disclosed 

Portfolio will include, as applicable, the 

names, quantity, percentage weighting 

and market value of Fixed Income 

Securities, and other assets held by the 

Fund and the characteristics of such 

assets. The Web site and information 

will be publicly available at no charge. 

In addition, for the Fund, an 

estimated value, defined in Rule 8.600 

as the ‘‘Portfolio Indicative Value,’’ that 

reflects an estimated intraday value of 

the Fund’s portfolio, will be 

disseminated. The Portfolio Indicative 

Value will be based upon the current 

value for the components of the 

Disclosed Portfolio and will be updated 

and disseminated by one or more major 

market data vendors at least every 15 

seconds during the Core Trading 

Session on the Exchange. In addition, 

during hours when the markets for 

Fixed Income Securities in the Fund’s 

portfolio are closed, the Portfolio 

Indicative Value will be updated at least 

every 15 seconds during the Core 

Trading Session to reflect currency 

exchange fluctuations. 

The dissemination of the Portfolio 

Indicative Value, together with the 

Disclosed Portfolio, will allow investors 

to determine the value of the underlying 

portfolio of the Fund on a daily basis 

and to provide a close estimate of that 

value throughout the trading day. 

Information regarding market price 

and 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. 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 high-speed line. 

Intra-day and end-of-day prices are 

readily available through major market 

data providers and broker-dealers for 

the Fixed Income Securities, Money 

Market Securities and derivative 

instruments held by the Fund. 

Initial and Continued Listing 

The Shares will be subject to Rule 

8.600, which sets forth the initial and 

continued listing criteria applicable to 

Managed Fund Shares. The Exchange 

represents that, for initial and/or 

continued listing, the Shares must be in 

compliance with Rule 10A–3 under the 

Exchange Act,21 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. 

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. Shares of the Fund will be 

halted if the ‘‘circuit breaker’’ parameters 

in NYSE Arca Equities Rule 7.12 are 

reached. Trading may be halted because 

of market conditions or for reasons that, 

in the view of the Exchange, make 

trading in the Shares inadvisable. These 

may include: (1) The extent to which 

trading is not occurring in the securities 

and/or financial instruments comprising 

the Disclosed Portfolio 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 Rule 

8.600(d)(2)(D), which sets 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. Eastern time 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 

includes 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 who are 

members of the ISG or with which the 

Exchange has entered into a 

comprehensive surveillance sharing 

agreement.22

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 


jlentini on DSKJ8SOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 199 

23 15 U.S.C. 78f(b)(5). 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

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 4:00 p.m. 

Eastern time each trading day. 

2. Statutory Basis 

The basis under the Exchange Act for 

this proposed rule change is the 

requirement under Section 6(b)(5) 23

that an exchange have rules that are 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to, and 

perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest. The 

Exchange believes that the proposed 

rule change will facilitate the listing and 

trading of additional types of exchangetraded products that will enhance 

competition among market participants, 

to the benefit of investors and the 

marketplace. In addition, the listing and 

trading criteria set forth in Rule 8.600 

are intended to protect investors and the 

public interest. 

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 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–NYSEArca–2010–116 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–2010–116. 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 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca-2010–116 and should be 

submitted on or before January 18, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–32943 Filed 12–30–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63610; File No. SR– 

NYSEArca–2010–10] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Granting Approval of 

Proposed Rule Change Relating to the 

Listing and Trading of the ProShares 

VIX Short-Term Futures ETF and the 

ProShares VIX Mid-Term Futures ETF 

December 27, 2010. 

I. Introduction 

On November 5, 2010, NYSE Arca, 

Inc. (‘‘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 shares (‘‘Shares’’) of the 

ProShares VIX Short-Term Futures ETF 

and the ProShares VIX Mid-Term 

Futures ETF (‘‘Funds’’) of the ProShares 

Trust II (‘‘Trust’’) under NYSE Arca 

Equities Rule 8.200, Commentary .02. 


jlentini on DSKJ8SOYB1PROD with NOTICES