Federal Register / Vol. 76, No. 161 / Friday, August 19, 2011 / Notices 52037 

17See FINRA Regulatory Notices 09–31 (June 

2009), 09–53 (August 2009) and 09–65 (November 

2009) (‘‘FINRA Regulatory Notices’’). 

18As noted above, the Information Bulletin will 

further advise ETP Holders that FINRA has 

implemented increased customer margin 

requirements applicable to leveraged ETFs (which 

include the Shares) and options on leveraged ETFs, 

as discussed in the FINRA Regulatory Notices. See 

supra, note 17. 

19 17 CFR 240.10A–3. 

20The Commission notes that it does not regulate 

the market for futures in which the Fund plans to 

take positions, which is the responsibility of the 

Commodity Futures Trading Commission (‘‘CFTC’’). 

The CFTC has the authority to set limits on the 

positions that any person may take in futures. These 

limits may be directly set by the CFTC or by the 

markets on which the futures are traded. The 

Commission has no role in establishing position 

limits on futures, even though such limits could 

impact an exchange-traded product that is under 

the jurisdiction of the Commission. 

21 15 U.S.C. 78f(b)(5). 

22 15 U.S.C. 78s(b)(2). 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 64464 

(May 11, 2011), 76 FR 28483 (‘‘Notice’’). 

4See Post-Effective Amendment No. 1 dated May 

28, 2010 (File No. 333–163511) and Post-Effective 

Amendment No. 4 dated April 13, 2011 (File No. 

333–163511) to the Funds’ Registration Statement 

on Form S–3 (‘‘Registration Statements’’). 

5Commentary .02 to NYSE Arca Equities Rule 

8.200 applies to Trust Issued Receipts that invest 

in ‘‘Financial Instruments.’’ The term ‘‘Financial 

Instruments,’’ as defined in Commentary .02(b)(4) to 

NYSE Arca Equities Rule 8.200, means any 

combination of investments, including cash; 

securities; options on securities and indices; futures 

Continued 

addition, with respect to any Fund’s 

holdings of futures contracts traded on 

exchanges, not more than 10% of the 

weight of such futures contracts in the 

aggregate shall consist of components 

whose principal trading market is not a 

member of the Intermarket Surveillance 

Group or is a market with which the 

Exchange does not have a 

comprehensive surveillance sharing 

agreement. 

(4) Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders of the suitability 

requirements of NYSE Arca Equities 

Rule 9.2(a) in an Information Bulletin. 

Specifically, ETP Holders will be 

reminded in the Information Bulletin 

that, in recommending transactions in 

the Shares, they must have a reasonable 

basis to believe that (a) the 

recommendation is suitable for a 

customer given reasonable inquiry 

concerning the customer’s investment 

objectives, financial situation, needs, 

and any other information known by 

such member, and (b) the customer can 

evaluate the special characteristics, and 

is able to bear the financial risks, of an 

investment in the Shares. In connection 

with the suitability obligation, the 

Information Bulletin will also provide 

that members must make reasonable 

efforts to obtain the following 

information: (i) The customer’s financial 

status; (ii) the customer’s tax status; (iii) 

the customer’s investment objectives; 

and (iv) such other information used or 

considered to be reasonable by such 

member or registered representative in 

making recommendations to the 

customer. In addition, the Information 

Bulletin will reference the FINRA 

Regulatory Notices regarding sales 

practice and customer margin 

requirements implemented by FINRA, 

applicable to FINRA members, with 

respect to leveraged ETFs (which 

include the Shares) and options on 

leveraged ETFs.17 ETP Holders that 

carry customer accounts will be 

required to follow the FINRA guidance 

set forth in these notices. 

(5) Prior to the commencement of 

trading, the Exchange also will inform 

its ETP Holders in an Information 

Bulletin of the special characteristics 

and risks associated with trading the 

Shares. Specifically, the Information 

Bulletin will discuss the following: 

(a) The risks involved in trading the 

Shares during the Opening and Late 

Trading Sessions when an updated 

IOPV will not be calculated or publicly 

disseminated; (b) the procedures for 

purchases and redemptions of Shares in 

Creation Baskets and Redemption 

Baskets (and that Shares are not 

individually redeemable); (c) 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; (d) 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 (e) 

trading information.18

(6) The Funds must be in compliance 

with NYSE Arca Equities Rule 5.3 and 

Rule 10A–3 under the Act.19

(7) A minimum of 100,000 Shares for 

each Fund will be outstanding as of the 

start of trading on the Exchange. 

This approval order is based on the 

Exchange’s representations.20

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 21 and the rules and 

regulations thereunder applicable to a 

national securities exchange. 

IV. Conclusion 

It is therfore ordered, pursuant to 

Section 19(b)(2) of the Act,22 that the 

proposed rule change (SR–NYSEArca– 

2011–23) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–21173 Filed 8–18–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65136; File No. SR– 

NYSEArca–2011–24] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Approving a 

Proposed Rule Change To List and 

Trade Shares of the Following Under 

NYSE Arca Equities Rule 8.200: 

ProShares Short DJ–UBS Natural Gas, 

ProShares Ultra DJ–UBS Natural Gas 

and ProShares UltraShort DJ–UBS 

Natural Gas 

August 15, 2011. 

I. Introduction 

On April 28, 2011, NYSE Arca, Inc. 

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

ProShares Short DJ–UBS Natural Gas, 

ProShares Ultra DJ–UBS Natural Gas, 

and ProShares UltraShort DJ–UBS 

Natural Gas under NYSE Arca Equities 

Rule 8.200. The proposed rule change 

was published for comment in the 

Federal Register on May 17, 2011.3 The 

Commission received no comments on 

the proposal. On July 1, 2011, the 

Exchange submitted a request to extend 

the Commission’s action date for the 

proposed rule change to August 15, 

2011. This order grants approval of the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

The Exchange proposes to list and 

trade shares (‘‘Shares’’) of the ProShares 

Short DJ–UBS Natural Gas, ProShares 

Ultra DJ–UBS Natural Gas, and 

ProShares UltraShort DJ–UBS Natural 

Gas (each a ‘‘Fund’’ and, collectively, 

‘‘Funds’’) 4 pursuant to NYSE Arca 

Equities Rule 8.200, Commentary .02, 

which permits the trading of Trust 

Issued Receipts either by listing or 

pursuant to unlisted trading privileges.5


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52038 Federal Register / Vol. 76, No. 161 / Friday, August 19, 2011 / Notices 

contracts; options on futures contracts; forward 

contracts; equity caps, collars and floors; and swap 

agreements. 6To the extent practicable, the Funds will invest 

in swaps cleared through the facilities of a 

centralized clearing house. 

7The Sponsor will also attempt to mitigate the 

Funds’ credit risk by transacting only with large, 

well-capitalized institutions using measures 

designed to determine the creditworthiness of a 

counterparty. The Sponsor will take various steps 

to limit counterparty credit risk. 

8Correlation is the strength of the relationship 

between (1) the change in a Fund’s net asset value 

(‘‘NAV’’) and (2) the change in the underlying Index 

or Benchmark. The statistical measure of correlation 

is known as the ‘‘correlation coefficient.’’ A 

correlation coefficient of +1 indicates a perfect 

positive correlation while a value of ¥1 indicates 

a perfect negative (inverse) correlation. A value of 

zero would mean that there is no correlation 

between the two variables. 

9 17 CFR 240.10A–3. 

10See Notice and Registration Statements, supra 

notes 3 and 4, respectively. 

11 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

Each of the Funds is a series of the 

ProShares Trust II (‘‘Trust’’), a Delaware 

statutory trust. ProShare Capital 

Management LLC (‘‘Sponsor’’) is the 

Trust’s Sponsor, and Wilmington Trust 

Company is the Trust’s trustee. Brown 

Brothers Harriman & Co. 

(‘‘Administrator’’) serves as the 

administrator, custodian, and transfer 

agent of the Funds. SEI Investments 

Distribution Co. serves as distributor of 

the Shares. 

The Funds seek daily investment 

results (before fees and expenses) that 

correspond to the inverse (opposite) of 

the daily performance, a multiple of the 

daily performance, or an inverse 

multiple of the daily performance of the 

Dow Jones-UBS Natural Gas Sub-Index, 

the benchmark index for each of the 

Funds (‘‘Benchmark’’ or ‘‘Index’’). The 

Index, which is comprised of New York 

Mercantile Exchange (‘‘NYMEX’’) 

Natural Gas futures contracts (‘‘Natural 

Gas Futures Contracts’’), is intended to 

reflect the performance of natural gas as 

measured by the performance of Natural 

Gas Futures Contracts, including roll 

costs, without regard to income earned 

on cash positions. The Index rolls (or 

sells its existing position prior to 

settlement while purchasing a new 

position further from settlement) the 

component Natural Gas Futures 

Contracts every other month. The roll 

for each Index component occurs over a 

period of five NYMEX business days. 

Each Fund will seek to achieve its 

respective investment objective by 

investing under normal market 

conditions in Natural Gas Futures 

Contracts. In the event position 

accountability rules are reached with 

respect to Natural Gas Futures 

Contracts, the Sponsor may, in its 

commercially reasonable judgment, 

cause the Funds to obtain exposure 

through swaps referencing the Index or 

particular Natural Gas Futures 

Contracts, or invest in other futures 

contracts or swaps not based on the 

particular Natural Gas Futures Contracts 

if such instruments tend to exhibit 

trading prices or returns that correlate 

with the Index or any Natural Gas 

Futures Contract and will further the 

investment objective of such Fund.6

Each Fund may also invest in swaps if 

the market for a specific futures contract 

experiences emergencies (e.g., natural 

disaster, terrorist attack, or an act of 

God) or disruptions (e.g., a trading halt 

or a flash crash) that would prevent 

such Fund from obtaining the 

appropriate amount of investment 

exposure to the affected Natural Gas 

Futures Contracts directly or to other 

futures contracts.7 In addition, each 

Fund may invest in cash, cash 

equivalents, and/or U.S. Treasury 

Securities or other high credit quality 

short-term fixed-income or similar 

securities (such as shares of money 

market funds, bank deposits, bank 

money market accounts, certain 

variable-rate demand notes, and 

repurchase agreements collateralized by 

government securities) that will serve as 

collateral for any futures contracts or 

swap agreements held by the Funds. 

The Sponsor expects the Funds to 

have a statistical correlation 8 over time 

of ¥0.95 or better (for ProShares Short 

DJ–UBS Natural Gas and ProShares 

UltraShort DJ–UBS Natural Gas) and 

+0.95 or better (for ProShares Ultra DJ– 

UBS Natural Gas) when correlating the 

daily return of a Fund’s NAV against the 

daily return of its relevant Benchmark. 

If ProShares Short DJ–UBS Natural 

Gas is successful in meeting its 

objective, its value on a given day 

(before fees and expenses) should gain 

approximately as much on a percentage 

basis as its Benchmark when the 

Benchmark falls on a given day. 

Conversely, its value on a given day 

(before fees and expenses) should lose 

approximately as much on a percentage 

basis as the Benchmark when the 

Benchmark rises on a given day. If the 

ProShares Ultra DJ–UBS Natural Gas 

Fund is successful in meeting its 

objective, its value (before fees and 

expenses) should gain approximately 

twice as much on a percentage basis as 

the Benchmark when it rises on a given 

day. Conversely, its value (before fees 

and expenses) should lose 

approximately twice as much on a 

percentage basis as the Benchmark 

when it declines on a given day. If the 

ProShares UltraShort DJ–UBS Natural 

Gas Fund is successful in meeting its 

objective, its value (before fees and 

expenses) should gain approximately 

twice as much on a percentage basis as 

the Benchmark when it declines on a 

given day. Conversely, its value (before 

fees and expenses) should lose 

approximately twice as much on a 

percentage basis as the Benchmark 

when it rises on a given day. 

For each dollar invested in the Funds, 

each Fund will seek the requisite 

exposure in Natural Gas Futures 

Contracts to pursue its respective 

investment objective. The Funds’ 

investment techniques may involve a 

small investment relative to the amount 

of investment exposure assumed and 

may result in losses exceeding the 

amounts invested. Such techniques, 

particularly when used to create 

leverage, may expose the Funds to 

potentially dramatic changes (losses or 

gains) in the value of their investments 

and imperfect correlation between the 

value of the investments and the 

security or index. The Sponsor does not 

intend to invest directly in any 

commodity. 

The Exchange represents that the 

Funds will be subject to the criteria in 

NYSE Arca Equities Rule 8.200 and 

Commentary .02 thereto for the initial 

and continued listing of the Shares. The 

Exchange further represents that, for the 

initial and continued listing of the 

Shares, the Funds will be in compliance 

with NYSE Arca Equities Rule 5.3 and 

Rule 10A–3 under the Act 9 and a 

minimum of 100,000 Shares for each 

Fund will be outstanding as of the start 

of trading on the Exchange. 

Additional details regarding the Trust, 

Shares, trading policies of the Fund, 

creations and redemptions of the 

Shares, Natural Gas Futures Contracts, 

investment risks, Benchmark 

performance, NAV calculation, the 

dissemination and availability of 

information about the underlying assets, 

trading halts, applicable trading rules, 

surveillance, and the Information 

Bulletin, among other things, can be 

found in the Notice and/or the 

Registration Statements, as applicable.10

III. Discussion and Commission’s 

Findings 

After careful review, the Commission 

finds that the proposed rule change to 

list and trade the Shares of the Funds is 

consistent with the requirements of 

Section 6 of the Act and the rules and 

regulations thereunder applicable to a 

national securities exchange.11 In 

particular, the Commission finds that 

the proposed rule change is consistent 


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12 15 U.S.C. 78f(b)(5). 

13 15 U.S.C. 78k–1(a)(1)(C)(iii). 

14The daily closing Index level and the 

percentage change in the daily closing Index level 

will be publicly available on various websites, e.g., 

http://www.bloomberg.com, and data regarding the 

Index will also be available from the Dow Jones & 

Company, Inc. to subscribers. In addition, data will 

be available for the Natural Gas Futures Contracts 

in the Index and for other futures contracts from 

those futures exchanges that list and trade futures 

contracts on such commodity. Several independent 

data vendors also package and disseminate data in 

various value-added formats (including vendors 

displaying both Index constituents and Index levels 

and vendors displaying Index levels only). 

15The value of a Share may be influenced by nonconcurrent trading hours between NYSE Arca and 

NYMEX when the Shares are traded on NYSE Arca 

after normal trading hours of NYMEX. The IFV will 

be updated during the NYSE Arca Core Trading 

Session when Natural Gas Futures Contracts held 

by the Funds are traded. However, a static IFV will 

be disseminated between the close of trading of 

Natural Gas Futures Contracts and the close of the 

NYSE Arca Core Trading Session. 

16The Exchange will obtain a representation 

(prior to listing the Shares of the Funds) from the 

Trust that the NAV per Share will be calculated 

daily and made available to all market participants 

at the same time. 

17With respect to trading halts, the Exchange may 

consider other relevant factors in exercising its 

discretion to halt or suspend trading in the Shares 

of the Funds. Trading in the Shares of the Funds 

will be subject to halts caused by extraordinary 

market volatility pursuant to the Exchange’s circuit 

breaker rules in NYSE Arca Equities Rule 7.12. 

Trading also may be halted because of market 

conditions or for reasons that, in the view of the 

Exchange, make trading in the Shares inadvisable. 

18UBS Securities LLC, a co-sponsor of the Index, 

is a registered broker-dealer and has represented to 

the Exchange that it will: (1) Implement and 

maintain procedures reasonably designed to 

prevent the use and dissemination by its relevant 

personnel of material non-public information 

relating to changes in the composition or method 

of computation or calculation of the Index; and (2) 

periodically review the requirements of such 

procedures as they relate to certain of its personnel 

directly responsible for such changes. CME Group 

Index Services LLC, another co-sponsor of the 

Index, is not engaged in the business of trading in 

commodities or securities. CME Group Inc., which, 

together with its subsidiaries, operates derivatives 

exchanges, maintains a Code of Conduct applicable 

to all personnel that prohibits disclosure of any 

confidential information obtained during the course 

of one’s employment and the use or disclosure of 

any material non-public information relating to 

changes to the composition of the Index or changes 

to the Index methodology in violation of applicable 

laws, rules or regulations. Dow Jones & Company, 

Inc. also maintains a Code of Conduct applicable to 

all personnel that prohibits disclosure of any 

confidential information relating to changes to the 

composition of the Index or changes to the Index 

methodology obtained during the course of one’s 

employment and the use of any material non-public 

information in violation of applicable laws, rules or 

regulations. 

19See NYSE Arca Equities Rule 1.1(n) (defining 

ETP Holder). 

20See NYSE Arca Equities Rule 1.1(u) (defining 

Market Maker). 

with the requirements of Section 6(b)(5) 

of the Act,12 which requires, among 

other things, that the Exchange’s rules 

be designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The Commission notes 

that the Funds and the Shares must 

comply with the requirements of NYSE 

Arca Equities Rule 8.200 and 

Commentary .02 thereto to be listed and 

traded on the Exchange. The 

Commission finds that the proposal to 

list and trade the Shares on the 

Exchange is consistent with Section 

11A(a)(1)(C)(iii) of the Act,13 which sets 

forth Congress’s finding that it is in the 

public interest and appropriate for the 

protection of investors and the 

maintenance of fair and orderly markets 

to assure the availability to brokers, 

dealers, and investors of information 

with respect to quotations for, and 

transactions in, securities. Quotation 

and last-sale information for the Shares 

will be available via the Consolidated 

Tape Association high-speed line, and 

the Index level will be disseminated by 

one or more major market data vendors 

and will be updated at least every 15 

seconds during the NYSE Arca Core 

Trading Session, except for that period 

after the end of the NYMEX Natural Gas 

pit trading session at 2:30 p.m. Eastern 

Time (‘‘E.T.’’), at which point the Index 

value will be static.14 In addition, the 

Indicative Fund Value (‘‘IFV’’) for each 

Fund will be disseminated on a perShare basis by one or more major market 

data vendors at least every 15 seconds 

during the NYSE Arca Core Trading 

Session.15 The NAV for the Funds’ 

Shares will be calculated by the 

Administrator once a day and will be 

disseminated daily to all market 

participants at 2:30 p.m. E.T. Each 

Fund’s total portfolio composition will 

be disclosed on the Funds’ Web site or 

another relevant Web site as determined 

by the Trust and/or the Exchange. The 

Trust will provide Web site disclosure 

of portfolio holdings daily and will 

include, as applicable, the names and 

notional value (in U.S. dollars) of 

Natural Gas Futures Contracts and swap 

agreements, if any, cash equivalents and 

amount of cash held in the portfolio of 

each Fund. The intra-day, closing, and 

settlement prices of the futures contracts 

held by the Funds are available from 

NYMEX, automated quotation systems, 

published or other public sources, or 

on-line information services such as 

Bloomberg or Reuters. In addition, the 

Web site for the Funds and/or the 

Exchange will contain the prospectus 

and additional data relating to NAV and 

other applicable quantitative 

information. 

The Commission further believes that 

the proposal to list and trade the Shares 

is reasonably designed to promote fair 

disclosure of information that may be 

necessary to price the Shares 

appropriately and to prevent trading 

when a reasonable degree of 

transparency cannot be assured. If the 

Exchange becomes aware that the NAV 

with respect to the Shares is not 

disseminated to all market participants 

at the same time, it will halt trading in 

the Shares until such time as the NAV 

is available to all market participants.16

Further, the Exchange represents that it 

may halt trading during the day in 

which an interruption to the 

dissemination of the Index value, IFV, 

or the value of the underlying futures 

contracts occurs. If the interruption to 

the dissemination of the Index value, 

IFV, or the value of the underlying 

futures contracts persists past the 

trading day in which it occurred, the 

Exchange will halt trading no later than 

the beginning of the trading day 

following the interruption. In addition, 

the Web site disclosure of the portfolio 

composition of each Fund will occur at 

the same time as the disclosure by the 

Sponsor of the portfolio composition to 

Authorized Participants so that all 

market participants are provided 

portfolio composition information at the 

same time. Therefore, the same portfolio 

information will be provided on the 

public Web site as well as in electronic 

files provided to Authorized 

Participants. Accordingly, each investor 

will have access to the current portfolio 

composition of each Fund through the 

Funds’ Web site and/or at the 

Exchange’s Web site. The Exchange may 

halt trading in the Shares if trading is 

not occurring in the underlying futures 

contracts or if other unusual conditions 

or circumstances detrimental to the 

maintenance of a fair and orderly 

market are present.17 In addition, the 

Exchange represents that certain parties 

involved with the sponsoring and/or 

maintenance of the Index will be subject 

to restrictions on the use or disclosure 

of any material non-public information 

relating to changes to the composition 

and/or the calculation of the Index.18

Lastly, the trading of the Shares will be 

subject to NYSE Arca Equities Rule 

8.200, Commentary .02(e), which sets 

forth certain restrictions on ETP 

Holders 19 acting as registered Market 

Makers 20 in Trust Issued Receipts to 

facilitate surveillance. 

The Exchange has represented that 

the Shares are deemed to be equity 


jlentini on DSK4TPTVN1PROD with NOTICES
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21FINRA has implemented increased sales 

practice and customer margin requirements for 

FINRA members applicable to leveraged ETFs 

(which include the Shares) and options on 

leveraged ETFs, as described in FINRA Regulatory 

Notices 09–31 (June 2009), 09–53 (August 2009) 

and 09–65 (November 2009) (‘‘FINRA Regulatory 

Notices’’). The Exchange represents that ETP 

Holders that carry customer accounts will be 

required to follow the FINRA guidance set forth in 

these notices. 

22The Commission notes that it does not regulate 

the market for futures in which the Fund plans to 

take positions, which is the responsibility of the 

Commodity Futures Trading Commission (‘‘CFTC’’). 

The CFTC has the authority to set limits on the 

positions that any person may take in futures. These 

limits may be directly set by the CFTC or by the 

markets on which the futures are traded. The 

Commission has no role in establishing position 

limits on futures, even though such limits could 

impact an exchange-traded product that is under 

the jurisdiction of the Commission. 

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

24 15 U.S.C. 78s(b)(2). 

25 17 CFR 200.30–3(a)(12). 

securities, thus rendering trading in the 

Shares subject to the Exchange’s 

existing rules governing the trading of 

equity securities. In support of this 

proposal, the Exchange has made 

representations, including: 

(1) The Funds will be subject to the 

criteria in NYSE Arca Equities Rule 

8.200 and Commentary .02 thereto for 

initial and continued listing of the 

Shares. 

(2) The Exchange has appropriate 

rules to facilitate transactions in the 

Shares during all trading sessions. 

(3) 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. 

(4) Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders of the suitability 

requirements of NYSE Arca Equities 

Rule 9.2(a) in an Information Bulletin. 

Specifically, ETP Holders will be 

reminded in the Information Bulletin 

that, in recommending transactions in 

the Shares, they must have a reasonable 

basis to believe that (a) the 

recommendation is suitable for a 

customer given reasonable inquiry 

concerning the customer’s investment 

objectives, financial situation, needs, 

and any other information known by 

such member, and (b) the customer can 

evaluate the special characteristics, and 

is able to bear the financial risks, of an 

investment in the Shares. In connection 

with the suitability obligation, the 

Information Bulletin will also provide 

that members must make reasonable 

efforts to obtain the following 

information: (i) The customer’s financial 

status; (ii) the customer’s tax status; (iii) 

the customer’s investment objectives; 

and (iv) such other information used or 

considered to be reasonable by such 

member or registered representative in 

making recommendations to the 

customer.21 Further, the Exchange’s 

Information Bulletin regarding the 

Funds will provide information 

regarding the suitability of an 

investment in the Shares, as stated in 

the Registration Statements. 

(5) With respect to the Funds’ futures 

contracts traded on exchanges, not more 

than 10% of the weight of such futures 

contracts in the aggregate shall consist 

of components whose principal trading 

market is not a member of the 

Intermarket Surveillance Group or is a 

market with which the Exchange does 

not have a comprehensive surveillance 

sharing agreement. 

(6) 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 Bulletin 

will discuss the following: (a) The risks 

involved in trading the Shares during 

the Opening and Late Trading Sessions 

when an updated IFV will not be 

calculated or publicly disseminated; (b) 

the procedures for purchases and 

redemptions of Shares in creation 

baskets and redemption baskets (and 

that Shares are not individually 

redeemable); (c) 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; (d) 

how information regarding the IFV is 

disseminated; (e) a static IFV will be 

disseminated between the close of 

trading of Natural Gas Futures Contracts 

on NYMEX and the close of the NYSE 

Arca Core Trading Session; (f) 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 (g) trading information. 

In addition, the Information Bulletin 

will reference the FINRA Regulatory 

Notices regarding sales practice and 

customer margin requirements for 

FINRA members applicable to leveraged 

products. 

(7) A minimum of 100,000 Shares will 

be outstanding as of the start of trading 

on the Exchange. 

(8) For the initial and continued 

listing of the Shares, the Funds will be 

in compliance with NYSE Arca Equities 

Rule 5.3 and Rule 10A–3 under the Act. 

This approval order is based on the 

Exchange’s representations.22

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 23 and the rules and 

regulations thereunder applicable to a 

national securities exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,24 that the 

proposed rule change (SR–NYSEArca– 

2011–24) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–21175 Filed 8–18–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65137; File No. SR–FINRA– 

2011–040] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Order Granting Accelerated Approval 

of Proposed Rule Change To Amend 

the Supplementary Material to FINRA 

Rule 1230(b)(6) (Operations 

Professional) 

August 15, 2011. 

On August 12, 2011, 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 

substantially prepared by FINRA. The 

Commission is publishing this notice 

and order to solicit comment on the 

proposed rule change and approve the 

proposed rule change on an accelerated 

basis. 

I. Description of Proposed Rule Change 

FINRA is proposing to amend the 

supplementary material to FINRA Rule 

1230(b)(6) (Operations Professional), 

FINRA Rule 1230.06 (Scope of 

Operations Professional Requirement), 

to clarify the application of the 

Operations Professional requirements to 

employees of a foreign broker-dealer 

whose activities, relating to certain 

transactions in foreign securities on 

behalf of a member’s customers, as 

further detailed herein, are limited to 

facilitating the clearance and settlement 

of such transactions. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 


jlentini on DSK4TPTVN1PROD with NOTICES