Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 44417 

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. 

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 adviser 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 previously approved listing 

and trading on the Exchange of the following 

actively managed funds under NYSE Arca Equities 

Rule 8.600. See Securities Exchange Act Release 

No. 57619 (April 4, 2008), 73 FR 19544 (April 10, 

2008) (SR–NYSEArca–2008–25) (order approving 

Rule 8.600 and Exchange listing and trading of 

PowerShares Active AlphaQ Fund, PowerShares 

Active Alpha Multi-Cap Fund, PowerShares Active 

Mega-Cap Portfolio and PowerShares Active Low 

Duration Portfolio); Securities Exchange Act 

Release No. 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); 

Securities Exchange Act Release No. 59826 (April 

28, 2009), 74 FR 20512 (May 4, 2009) (SR– 

NYSEArca–2009–22) (order approving listing and 

trading of Grail American Beacon Large Cap Value 

ETF). 

6The Trust is registered under the 1940 Act. On 

June 8, 2009, the Trust filed with the Commission 

post-effective Amendment No. 1 to its registration 

Continued 

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–2009–75 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–2009–75. 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 inspection and copying in 

the Commission’s Public Reference 

Room, 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 

NYSE Arca’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–2009–75 and should be 

submitted on or before September 18, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20785 Filed 8–27–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60552; File No. SR– 

NYSEArca–2009–74] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Relating to Listing Four 

Grail Advisors RP Exchange-Traded 

Funds 

August 20, 2009. 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 2 and Rule 19b–4 

thereunder,3 notice is hereby given that, 

on August 12, 2009, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or the ‘‘Exchange’’) 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 

Pursuant to the provisions of Section 

19(b)(1) of the Act, NYSE Arca, through 

its wholly-owned subsidiary NYSE Arca 

Equities, Inc. (‘‘NYSE Arca Equities’’ or 

the ‘‘Corporation’’), proposes to list and 

trade the following Grail Advisors 

actively managed exchange-traded 

funds, or ‘‘ETFs’’, under NYSE Arca 

Equities Rule 8.600 (‘‘Managed Fund 

Shares’’): RP Growth ETF, RP Focused 

Large Cap Growth ETF, RP Technology 

ETF and the RP Financials ETF (each an 

‘‘ETF’’ or ‘‘Fund’’ and collectively the 

‘‘ETFs or ‘‘Funds’’), each of which is a 

series of Grail Advisors ETF Trust 

(‘‘Trust’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nyx.com, at the 

Exchange’s principal office and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 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: RP Growth ETF, RP 

Focused Large Cap Growth ETF, RP 

Technology ETF and the RP Financials 

ETF.5 The Shares will be offered by 

Grail Advisors ETF 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 Grail Advisors, LLC (the 


hsrobinson on DSK69SOYB1PROD with NOTICES
44418 Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 

statement on Form N–1A under the Securities Act 

of 1933 (15 U.S.C. 77a), and under the 1940 Act 

relating to the Funds (File Nos. 333–148082 and 

811–22154) (‘‘Registration Statement’’). The 

description of the operation of the Trust and the 

Funds herein is based on the Registration 

Statement. 

‘‘Manager’’), a majority owned 

subsidiary of Grail Partners, LLC, acts as 

the Fund’s investment manager. 

RiverPark Advisors, LLC (‘‘RP’’) serves 

as the primary sub-adviser and 

Wedgewood Partners, Inc. 

(‘‘Wedgewood’’) serves as sub-adviser to 

RP Focused Large Cap Growth ETF. RP 

serves as the exclusive sub-adviser of 

the RP Growth, RP Technology and RP 

Financials ETFs. 

The Bank of New York Mellon 

Corporation is the administrator, Fund 

accountant, transfer agent and custodian 

for the Funds. ALPS Distributors, Inc. 

(‘‘Distributor’’), serves as the distributor 

of Creation Units for each ETF on an 

agency basis. The investment objective 

of each of the Funds is long-term capital 

appreciation. The ETFs expect to invest 

primarily in the securities of US 

companies, and may also invest in US 

securities tied economically to foreign 

investments, such as American 

Depositary Receipts. 

RP Growth ETF 

According to the Registration 

Statement, the RP Growth ETF seeks 

long-term capital appreciation by 

investing at least 80% of its net assets 

(plus the amount of any borrowings for 

investment purposes) in equity 

securities of companies that RP, the 

ETF’s sub-adviser, believes have aboveaverage growth prospects. RP uses a 

fundamental research driven approach 

to identifying those industries and 

companies with the strongest growth 

prospects for revenue, earnings and/or 

cash flow over the medium and long 

term and seeks to buy stock in those 

companies at attractive valuations. The 

ETF may invest in companies of any 

market capitalization and in any 

industry. 

The ETF invests in industries that RP 

believes are the beneficiaries of longterm secular changes in the global 

economy and companies within those 

industries that are gaining market share 

and have, what RP believes to be, longterm sustainable competitive advantages 

and positions protected by strong 

barriers to entry. RP seeks companies 

with latent pricing power, expanding 

free cash flow and a high return on 

invested capital. RP also looks for 

companies with strong and experienced 

management teams with clear business 

objectives. RP believes it can gain an 

investment advantage not only through 

its primary research and by developing 

conviction in business models, but also 

because it invests with a long-term time 

horizon. 

RP Focused Large Cap Growth ETF 

According to the Registration 

Statement, the RP Focused Large Cap 

Growth ETF seeks long-term capital 

appreciation by investing at least 80% 

of its net assets (plus the amount of any 

borrowings for investment purposes) in 

equity securities of large capitalization 

companies that Wedgewood, the ETF’s 

sub-adviser, believes have aboveaverage growth prospects. The ETF 

considers companies with market 

capitalizations in excess of $5 billion to 

be large capitalization companies. The 

ETF is non-diversified and expects to 

invest in a limited number of 

companies, generally holding securities 

of between 20 and 30 companies. 

RP Technology ETF 

According to the Registration 

Statement, the RP Technology ETF 

seeks long-term capital appreciation by 

investing at least 80% of its net assets 

(plus the amount of any borrowings for 

investment purposes) in equity 

securities of companies that develop, 

produce or distribute technology-related 

products and services. These companies 

participate in many industries within 

the economy including industrial and 

business machines; communications; 

computer hardware and software; 

computer services and peripheral 

products; electronics; electronic media; 

internet; television and video 

equipment and services; satellite 

technology and equipment; and 

semiconductors. 

RP, the ETF’s sub-adviser, uses a 

fundamental research driven approach 

to identify technology-oriented 

companies that are suitable for the 

portfolio, and seeks to buy stock in 

those companies at attractive valuations. 

The ETF will primarily invest in 

companies with mid- to large- market 

capitalizations, but may invest in 

companies of any market capitalization. 

The ETF considers companies with 

market capitalizations of between $2 

billion and $150 billion to be mid- to 

large-capitalization companies. 

RP Financials ETF 

According to the Registration 

Statement, the RP Financials ETF seeks 

long-term capital appreciation by 

investing at least 80% of its net assets 

(plus the amount of any borrowings for 

investment purposes) in equity 

securities of financial services 

companies. The ETF considers financial 

services companies to be those 

companies that participate in any aspect 

of the financial services industry, 

including, but not limited to, banking, 

lending, brokerage, exchanges, 

insurance, and money management, as 

well as real estate investment trusts 

(‘‘REITs’’). 

RP, the ETF’s sub-adviser, uses a 

fundamental research driven approach 

to identify financial services companies 

that are suitable for the portfolio, and 

seeks to buy stock in those companies 

at attractive valuations. The ETF will 

primarily invest in companies with midto large- market capitalizations. The ETF 

considers companies with market 

capitalizations of between $2 billion 

and $150 billion to be mid- to largecapitalization companies. 

With respect to each of the Funds, 

under adverse market conditions, the 

ETF may, for temporary defensive 

purposes, invest up to 100% of its assets 

in cash or cash equivalents, including 

investment grade short-term obligations. 

Investment grade obligations include 

securities issued or guaranteed by the 

U.S. Government, its agencies and 

instrumentalities, as well as securities 

rated in one of the four highest rating 

categories by at least two nationally 

recognized statistical rating 

organizations rating that security. To the 

extent the ETF invokes this strategy, its 

ability to achieve its investment 

objective may be affected adversely. 

None of the Funds will invest in nonU.S. equity securities. 

In addition to the investment 

strategies described in the prospectus 

for the Funds, each ETF may invest up 

to 20% of its total assets in debt 

securities that are investment grade at 

the time of purchase (as described in the 

Registration Statement), including 

obligations of the U.S. Government, its 

agencies and instrumentalities, 

corporate debt securities, mortgagebacked securities, asset-backed 

securities, master-demand notes, 

Yankee dollar and Eurodollar bank 

certificates of deposit, time deposits, 

bankers’ acceptances, commercial paper 

and other notes, inflation-indexed 

securities, and other debt securities. 

Investment grade securities include 

securities issued or guaranteed by the 

U.S. Government, its agencies and 

instrumentalities, as well as securities 

rated in one of the four highest rating 

categories by at least two nationally 

recognized statistical rating 

organizations (‘‘Rating Organizations’’) 

rating that security, such as Standard & 

Poor’s Ratings Services or Moody’s 

Investors Service, Inc., or rated in one 

of the four highest rating categories by 

one Rating Organization if it is the only 

Rating Organization rating that security 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 44419 

7 17 CFR 240.10A–3. 

8An 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 investment adviser is 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, ‘‘firewall’’ procedures 

as well as procedures designed to prevent the 

misuse of non-public information by an investment 

adviser must be consistent with Rule 204A–1 under 

the Advisers Act. 

9The Exchange represents that Grail Advisors, 

LLC, as the investment adviser of the Funds, and 

its related personnel, and Wedgewood Partners, 

Inc., the sub-adviser to RP Focused Large Cap 

Growth ETF, are subject to Investment Advisers Act 

Continued 

or unrated, if deemed to be of 

comparable quality by an ETF’s subadviser and traded publicly on the 

world market. Obligations rated in the 

fourth highest rating category are 

limited to 25% of each ETF’s debt 

allocations. An ETF, at the discretion of 

its sub-adviser, may retain a debt 

security that has been downgraded 

below the initial investment criteria. 

The Registration Statement 

enumerates investment policies which 

may be changed with respect to an ETF 

only by a vote of the holders of a 

majority of the ETF’s outstanding voting 

securities. Among these policies are the 

following: (1) Regarding diversification, 

an ETF, with the exception of the RP 

Focused Large Cap Growth ETF, may 

not invest more than 5% of its total 

assets (taken at market value) in 

securities of any one issuer, other than 

obligations issued by the U.S. 

Government, its agencies and 

instrumentalities, or purchase more 

than 10% of the voting securities of any 

one issuer, with respect to 75% of an 

ETF’s total assets; and (2) regarding 

concentration, an ETF, with the 

exception of the RP Technology ETF or 

RP Financials ETF, may not invest more 

than 25% of its total assets in the 

securities of companies primarily 

engaged in any one industry or group of 

industries provided that: (i) This 

limitation does not apply to obligations 

issued or guaranteed by the U.S. 

Government, its agencies and 

instrumentalities; and (ii) municipalities 

and their agencies and authorities are 

not deemed to be industries. 

According to the Registration 

Statement, the ETFs may invest in US 

securities tied economically to foreign 

investments, such as American 

Depositary Receipts. Although not 

currently anticipated, the ETFs may use 

options and futures for various 

purposes, including for hedging and 

investment purposes. The ETFs’ ability 

to write and purchase call and put 

options is limited by the requirements 

for qualifying as a regulated investment 

company under the Internal Revenue 

Code. An ETF may also invest in overthe-counter (‘‘OTC’’) options. To the 

extent consistent with applicable law, 

the ETFs may invest in futures contracts 

on, among other things, financial 

instruments (such as a U.S. government 

security or other fixed income security), 

individual equity securities (‘‘single 

stock futures’’), securities indices, 

interest rates, currencies, inflation 

indices, and commodities or 

commodities indices. An ETF’s 

purchase and sale of index futures is 

limited to contracts and exchanges 

approved by the Commodity Futures 

Trading Commission. 

An ETF may engage in transactions 

involving the use of futures on interest 

rates. These transactions may be in 

connection with investments in U.S. 

government securities and other fixed 

income securities. An ETF may use 

options on futures contracts in lieu of 

writing or buying options directly on 

the underlying securities or purchasing 

and selling the underlying futures 

contracts. An ETF may directly or 

indirectly use various different types of 

swaps, such as swaps on securities and 

securities indices, interest rate swaps, 

currency swaps, credit default swaps, 

commodity swaps, inflation swaps, and 

other types of available swap 

agreements, depending on the ETF’s 

investment objective and policies. An 

ETF may use interest rate caps, floors, 

and collars for the same or similar 

purposes as they use interest rate 

futures contracts and related options 

and, as a result, will be subject to 

similar risks. 

The ETFs may invest in convertible 

securities, equity-linked securities, 

preferred stocks, mortgage-related and 

other asset-backed securities, warrants, 

rights, repurchase agreements, debt and 

other fixed income securities, zero 

coupon securities, high yield securities, 

municipal securities, real estate 

investment trusts and other real estaterelated investments. An ETF may invest 

up to 15% of its net assets in illiquid 

securities. For this purpose, ‘‘illiquid 

securities’’ are securities that an ETF 

may not sell or dispose of within seven 

days in the ordinary course of business 

at approximately the amount at which 

the ETF has valued the securities. Each 

ETF may invest in the securities of other 

investment companies to the extent 

permitted by law. Subject to applicable 

regulatory requirements, an ETF may 

invest in shares of both open- and 

closed-end investment companies 

(including money market funds and 

ETFs). According to the Registration 

Statement, the ETFs have claimed an 

exclusion from the definition of 

‘‘commodity pool operator’’ under the 

Commodity Exchange Act and, 

therefore, are not subject to registration 

or regulation as a pool operator under 

that Act. 

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 7

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 net asset 

value and the Disclosed Portfolio will be 

made available to all market 

participants at the same time. 

Commentary .07 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.8 In addition, 

Commentary .07 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 .07 to Rule 8.600 is similar 

to Commentary .03(a)(i) and (iii) to 

NYSE Arca Equities Rule 5.2(j)(3); 

however, Commentary .07 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. Grail 

Advisors, LLC is affiliated with a 

broker-dealer, Grail Securities, LLC, and 

has implemented a fire wall with 

respect to such broker-dealer regarding 

access to information concerning the 

composition and/or changes to a 

portfolio. RP, the Fund’s primary subadviser, is not affiliated with a brokerdealer. Wedgewood Partners, Inc. is 

registered as an investment adviser and 

as a broker-dealer, and has implemented 

a fire wall with respect to such brokerdealer regarding access to information 

concerning the composition and/or 

changes to a portfolio.9 Any additional 


hsrobinson on DSK69SOYB1PROD with NOTICES
44420 Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 

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. 

10The Bid/Ask Price of each 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 Funds and its service providers. 

11Under accounting procedures followed by the 

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

will be booked and reflected in NAV on the current 

business day (‘‘T+1’’). Accordingly, the Funds 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. 

12See NYSE Arca Equities Rule 7.12, 

Commentary .04. 

Fund sub-advisers that are affiliated 

with a broker-dealer 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. 

Description of the Funds 

Creations and redemptions of Shares 

occur in large specified blocks of 

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

The Creation Unit size for the Fund is 

25,000 Shares. 

Availability of Information 

The Funds’ Web site (http:// 

www.grailadvisors.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 Funds’ Web site 

will include additional quantitative 

information updated on a daily basis, 

including, for each 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’’),10 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 Funds will disclose on its 

Web site the Disclosed Portfolio as 

defined in proposed Rule 8.600(c)(2) 

that will form the basis for the Fund’s 

calculation of NAV at the end of the 

business day.11 In addition, a basket 

composition file, which includes the 

security names and share quantities 

required to be delivered in exchange for 

Fund shares, together with estimates 

and actual cash components, is publicly 

disseminated daily prior to the opening 

of the NYSE via the National Securities 

Clearing Corporation (‘‘NSCC’’). The 

basket represents one ‘‘Creation Unit of 

the Fund.’’ The Web site information 

will be publicly available at no charge. 

The NAV of the Fund will normally 

be determined as of the close of the 

regular trading session on the New York 

Stock Exchange (ordinarily 4 p.m. 

Eastern time) on each business day. 

Investors can also obtain the Trust’s 

Statement of Additional Information 

(‘‘SAI’’), the Funds’ 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 the Exchange at 

least every 15 seconds during the Core 

Trading Session through the facilities of 

CTA. The dissemination of the Portfolio 

Indicative Value, together with the 

Disclosed Portfolio, will allow investors 

to determine the value of the underlying 

portfolio of a Fund on a daily basis and 

to provide a close estimate of that value 

throughout the trading day. 

Additional information regarding the 

Shares and the Funds, 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 Funds 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 Funds. 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 

Funds; 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 Funds 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.12 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. The minimum trading 

increment for Shares on the Exchange 

will be $0.01. 

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 


hsrobinson on DSK69SOYB1PROD with NOTICES
Federal Register / Vol. 74, No. 166 / Friday, August 28, 2009 / Notices 44421 

13For a list of the current members of ISG, see 

http://www.isgportal.org. 

14 15 U.S.C. 78f(b)(5). 15 17 CFR 200.30–3(a)(12). 

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.13

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 

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 Funds are 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) 14

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 an additional type of activelymanaged exchange-traded product 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 35 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 the proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The Exchange has requested 

accelerated approval of this proposed 

rule change prior to the 30th day after 

the date of publication of the notice in 

the Federal Register. The Commission 

is considering granting accelerated 

approval of the proposed rule change at 

the end of a 15-day comment period. 

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–2009–74 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–2009–74. 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 inspection and copying 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 the filing also will be available 

for inspection and copying at the 

principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2009–74 and 

should be submitted on or before 

September 14, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–20787 Filed 8–27–09; 8:45 am] 

BILLING CODE 8010–01–P 


hsrobinson on DSK69SOYB1PROD with NOTICES