Federal Register / Vol. 74, No. 189 / Thursday, October 1, 2009 / Notices 50855 

12See NYSE Arca Equities Rule 8.600(d)(1)(B). 

13See NYSE Arca Equities Rule 8.600(d)(2)(D). 

14Trading in the Shares may also 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. 

15The Exchange also represents that RP, the 

Fund’s primary sub-adviser, is not affiliated with a 

broker-dealer, and that any additional Fund subadvisers 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 the portfolio. 

16See Notice, 74 FR at 44420. 

17See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii). 

18 15 U.S.C. 78s(b)(2). 

19See, e.g., Securities Exchange Act Release Nos. 

58512 (September 11, 2008), 73 FR 53915 

(September 17, 2008) (SR–NYSEArca–2008–85) 

(approving the listing and trading of shares of the 

PowerShares Active U.S. Real Estate Fund); and 

57619 (April 4, 2008), 73 FR 19544 (April 10, 2008) 

(SR–NYSEArca–2008–25) (approving the listing and 

trading of shares of the PowerShares Active AlphaQ 

Fund, PowerShares Active Alpha Multi-Cap Fund, 

and PowerShares Active Mega-Cap Portfolio, among 

other funds). 

20See supra note 4. 

21 15 U.S.C. 78s(b)(2). 

22 17 CFR 200.30–3(a)(12). 

promote fair disclosure of information 

that may be necessary to price the 

Shares appropriately and to prevent 

trading when a reasonable degree of 

transparency cannot be assured. The 

Commission notes that the Exchange 

will obtain a representation from the 

Fund that the NAV per Share will be 

calculated daily and that the NAV and 

the Disclosed Portfolio will be made 

available to all market participants at 

the same time.12 Additionally, if it 

becomes aware that the NAV or the 

Disclosed Portfolio is not disseminated 

daily to all market participants at the 

same time, the Exchange will halt 

trading in the Shares until such 

information is available to all market 

participants.13 Further, if the PIV is not 

being disseminated as required, the 

Exchange may halt trading during the 

day in which the disruption occurs; if 

the interruption persists past the day in 

which it occurred, the Exchange will 

halt trading no later than the beginning 

of the trading day following the 

interruption.14 The Exchange represents 

that the Manager has implemented a 

‘‘fire wall’’ between it and its brokerdealer affiliate with respect to access to 

information concerning the composition 

and/or changes to the Fund’s portfolio. 

Similarly, one of the sub-advisors, 

Wedgewood, a registered broker-dealer, 

also has implemented such a ‘‘fire 

wall.’’ 15 Any additional Fund 

subadvisers affiliated with a brokerdealer will be required to implement a 

firewall to prevent its broker-dealer 

affiliate from accessing information 

concerning the composition and/or 

changes to the Fund’s portfolio.16

Further, the Commission notes that the 

Reporting Authority that provides the 

Disclosed Portfolio must implement and 

maintain, or be subject to, procedures 

designed to prevent the use and 

dissemination of material non-public 

information regarding the actual 

components of the portfolio.17

The Exchange has represented that 

the Shares are equity securities subject 

to the Exchange’s rules governing the 

trading of equity securities. In support 

of this proposal, the Exchange has made 

representations, including: 

(1) The Shares will conform to the 

initial and continued listing criteria 

under NYSE Arca Equities Rule 8.600. 

(2) The Exchange’s surveillance 

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. 

(3) Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an Information Bulletin 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Circular 

will discuss the following: (a) The 

procedures for purchases and 

redemptions of Shares and that Shares 

are not individually redeemable; (b) 

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; (c) the risks involved 

in trading the Shares during the 

Opening and Late Trading Sessions 

when an updated PIV will not be 

calculated or publicly disseminated; (d) 

how information regarding the PIV is 

disseminated; (e) 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 (f) 

trading information. 

(4) The Funds will be in compliance 

with Rule 10A–3 under the Act. 

(5) The Funds will not invest in nonU.S. equity securities. 

This approval order is based on the 

Exchange’s representations. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,18 for approving the proposal prior 

to the thirtieth day after the date of 

publication of the Notice in the Federal 

Register. The Commission notes that it 

has approved the listing and trading on 

the Exchange of shares of other actively 

managed exchange-traded funds based 

on a portfolio of securities, the 

characteristics of which are similar to 

those to be invested by the Fund.19 The 

Commission also notes that it has 

received no comments regarding the 

proposed rule change. Further, the 

Commission believes that the increased 

creation and redemption unit sizes for 

the Funds described in Amendment No. 

1 20 do not raise any regulatory 

concerns. The Commission finds that 

the proposed rule change does not raise 

any novel regulatory issues and believes 

that accelerating approval of this 

proposal should benefit investors by 

creating, without undue delay, 

additional competition in the market for 

Managed Fund Shares. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,21 that the 

proposed rule change (SR–NYSEArca– 

2009–74), as modified by Amendment 

No. 1 thereto, be, and it hereby is, 

approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–23626 Filed 9–30–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60725, File No. SR–MSRB– 

2009–12] 

Self-Regulatory Organizations; 

Municipal Securities Rulemaking 

Board; Order Approving Proposed 

Rule Change Relating to Amendments 

to Rule G–11(i) (Settlement of 

Syndicate or Similar Account), Rule G– 

11(j) (Payment of Designations), and 

Rule G–12(i) (Settlement of Joint or 

Similar Account) 

September 28, 2009. 

On August 6, 2009, the Municipal 

Securities Rulemaking Board (‘‘MSRB’’), 

filed with the Securities and Exchange 

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

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

Securities Exchange Act of 1934 


PWALKER on DSK8KYBLC1PROD with NOTICES
50856 Federal Register / Vol. 74, No. 189 / Thursday, October 1, 2009 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 60487 

(Aug. 12, 2009), 74 FR 41771 (August 18, 2009) 

(‘‘Commission’s Notice’’). 

4See letter from Michael Decker and Mike 

Nicholas, Co-Chief Executive Officers, Regional 

Bond Dealers Association (‘‘RBDA’’), dated 

September 8, 2009. 

5See letter from Margaret C. Henry, Associate 

General Counsel, MSRB, to Elizabeth M. Murphy, 

Secretary, SEC, dated September 22, 2009 

(‘‘Response Letter’’). 

6See supra note 4. 

7 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition 

and capital formation. 15 U.S.C. 78c(f). 

8 15 U.S.C. 78o–4(b)(2)(C). 

9 Id. 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a 

proposed rule change to amend Rule G– 

11(i) (settlement of syndicate or similar 

account), Rule G–11(j) (payment of 

designations), and Rule G–12(i) 

(settlement of joint or similar account). 

The proposed rule change was 

published for comment in the Federal 

Register on August 18, 2009.3 The 

Commission received one comment 

letter about the proposed rule change.4

On September 22, 2009, the MSRB filed 

a response to the comment letter.5 This 

order approves the proposed rule 

change. 

The proposed rule change would 

accelerate the settlement of syndicate 

accounts and secondary market trading 

accounts, and the payment of 

designations, by shortening certain time 

periods within the rules. These 

proposals are designed to reduce the 

exposure of syndicate and secondary 

market trading account members to the 

risk of potential deterioration in the 

credit of the syndicate or account 

manager during the pendency of 

account settlements. For the proposed 

amendments to Rule G–11, the MSRB 

requested that the amendments become 

effective for new issues of municipal 

securities for which the Time of Formal 

Award (as defined in Rule G– 

34(a)(ii)(C)(1)(a)) is more than 30 

calendar days after the date the 

amendments are approved by the SEC. 

For the proposed amendments to Rule 

G–12, the MSRB requested that the 

amendments become effective for 

secondary market trading accounts 

formed more than 30 days after the date 

the amendments are approved by the 

SEC. A full description of the proposal 

is contained in the Commission’s 

Notice. 

As previously noted, the Commission 

received one comment letter relating to 

the proposed rule change.6 The RBDA 

generally supported the spirit of the 

MSRB’s proposal and applauded the 

MSRB for acting to reduce risks faced by 

syndicate members, but expressed 

concern about the proposed 

amendments to Rule G–11(j). The RBDA 

supported the proposal to amend Rule 

G–11(i) to reduce the time period for 

closing syndicate accounts to 30 

calendar days following the date the 

issuer delivers the securities to the 

syndicate and also supported the 

proposed amendment to Rule G–12(i) to 

reduce the time to close joint or similar 

accounts—secondary market trading 

accounts—to 30 calendar days following 

the date all securities have been 

delivered by the account manager to the 

account members. However, the RBDA 

believes that the proposed amendments 

to Rule G–11(j) related to payments of 

designations imposing a deadline of two 

business days for submissions of 

designations and 10 calendar days for 

payments of designations is too short 

and would create undue burdens for 

both syndicate members and managers. 

The RBDA recommended that the MSRB 

maintain the current 30-day deadline for 

the payments of designations. 

The MSRB stated in its Response 

Letter that the proposed amendments to 

Rule G–11(j) are intended to reduce the 

exposure of co-managers to the credit 

risk of the senior manager. The MSRB 

noted that in most underwriting 

syndicates, a large percentage of the 

syndicate profits are distributed as 

payments for designations. The MSRB 

believes that the shorter time periods 

are reasonable and that any 

administrative burdens associated with 

the changes are more than outweighed 

by the significant reduction in credit 

risk to co-managers, especially in the 

case of smaller firms. Accordingly, the 

MSRB did not propose to modify the 

proposal. 

The Commission has carefully 

considered the proposed rule change, 

the comment letter received, and the 

MSRB’s response to the comment letter 

and finds that the proposed rule change 

is consistent with the requirements of 

the Act and the rules and regulations 

thereunder applicable to the MSRB7

and, in particular, the requirements of 

Section 15B(b)(2)(C) of the Act 8 and the 

rules and regulations thereunder. 

Section 15B(b)(2)(C) of the Act requires, 

among other things, that the MSRB’s 

rules be designed to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in municipal 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market in municipal securities, 

and, in general, to protect investors and 

the public interest.9 In particular, the 

Commission finds that the proposed 

rule change is consistent with the Act 

because it will further the free and open 

market in municipal securities by 

reducing the exposure of dealers to the 

potential deterioration of the credit of 

syndicate managers during the period 

prior to settlement of syndicate accounts 

and by providing a comparable rule for 

the settlement of secondary market 

trading accounts. The proposed 

amendments will become effective on 

the dates requested by the MSRB. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–MSRB–2009– 

12), be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–23701 Filed 9–30–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60722; File No. SR–FINRA– 

2009–063] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend to November 

30, 2010, the Implementation of FINRA 

Rule 4240 (Margin Requirements for 

Credit Default Swaps) 

September 25, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on September 21, 2009, Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by FINRA. FINRA has designated the 

proposed rule change as constituting a 

‘‘non-controversial’’ rule change under 

paragraph (f)(6) of Rule 19b–4 under the 

Act,3 which renders the proposal 

effective upon receipt of this filing by 

the Commission. The Commission is 


PWALKER on DSK8KYBLC1PROD with NOTICES