Federal Register / Vol. 77, No. 44 / Tuesday, March 6, 2012 / Notices 13379 

16 15 U.S.C. 78s(b)(3)(A)(ii). 

17 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. 66175 

(January 18, 2012), 77 FR 3520 (‘‘Notice’’). 

4See Post-Effective Amendment No. 56 to 

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

dated July 1, 2011 (File Nos. 333–132380 and 811– 

21864). 

5WisdomTree Investments, Inc. is the parent 

company of the Adviser. 

6The 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. 

7The 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 Nasdaq Rule 5735(b)(5), 

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). 

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 either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.16 At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or 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 email to rule-comments@

sec.gov. Please include File No. SR– 

Phlx–2012–22 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 No. 

SR–Phlx–2012–22. This file number 

should be included on the subject line 

if email 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 No. SR–Phlx–2012– 

22 and should be submitted on or before 

March 27, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–5328 Filed 3–5–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66489; File No. SR– 

NASDAQ–2012–004] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Granting Approval of Proposed Rule 

Change Relating to the Listing and 

Trading of Shares of the Emerging 

Markets Corporate Bond Fund of the 

WisdomTree Trust 

February 29, 2012. 

I. Introduction 

On January 4, 2012, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’ or 

‘‘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 the shares (‘‘Shares’’) of 

the WisdomTree Emerging Markets 

Corporate Bond Fund (‘‘Fund’’) of the 

WisdomTree Trust (‘‘Trust’’) under 

Nasdaq Rule 5735. The proposed rule 

change was published for comment in 

the Federal Register on January 24, 

2012.3 The Commission received no 

comments on the proposal. This order 

grants approval of the proposed rule 

change. 

II. Description of the Proposed Rule 

Change 

The Exchange proposes to list and 

trade the Shares of the Fund under 

Nasdaq Rule 5735, which governs the 

listing and trading of Managed Fund 

Shares on the Exchange. The Fund will 

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 Fund is registered with 

the Commission as an investment 

company and has filed a registration 

statement on Form N–1A (‘‘Registration 

Statement’’) with the Commission.4

WisdomTree Asset Management, Inc. is 

the investment adviser (‘‘Adviser’’) to 

the Fund,5 and Western Asset 

Management Company serves as subadviser for the Fund (‘‘Sub-Adviser’’).6

The Bank of New York Mellon is the 

administrator, custodian, and transfer 

agent for the Trust, and ALPS 

Distributors, Inc. serves as the 

distributor for the Trust.7 The Exchange 

states that, while the Adviser is not 

affiliated with any broker-dealer, the 

Sub-Adviser 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. In 

addition, Sub-Adviser personnel who 

make decisions regarding the Fund’s 

portfolio are subject to procedures 

designed to prevent the use and 


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13380 Federal Register / Vol. 77, No. 44 / Tuesday, March 6, 2012 / Notices 

8See Nasdaq Rule 5735(g). The Exchange further 

represents that, 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, it will 

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

the composition and/or changes to a portfolio, and 

will be subject to procedures designed to prevent 

the use and dissemination of material, non-public 

information regarding such portfolio. 

9According to the Adviser, while there is no 

universally accepted definition of what constitutes 

an ‘‘emerging market,’’ in general, emerging market 

countries are characterized by developing 

commercial and financial infrastructure with 

significant potential for economic growth and 

increased capital market participation by foreign 

investors. The Adviser and Sub-Adviser look at a 

variety of commonly-used factors when 

determining whether a country is an ‘‘emerging’’ 

market. In general, the Adviser and Sub-Adviser 

consider a country to be an emerging market if: 

(1) It is either (a) classified by the World Bank 

in the lower middle or upper middle income 

designation for one of the past 5 years (i.e., per 

capita gross national product of less than U.S. 

$9,385), (b) has not been a member of the 

Organisation for Economic Co-operation and 

Development (‘‘OECD’’) for the past five years, or 

(c) classified by the World Bank as high income and 

a member in OECD in each of the last five years, 

but with a currency that has been primarily traded 

on a non-delivered basis by offshore investors (e.g., 

Korea and Taiwan); and 

(2) the country’s debt market is considered 

relatively accessible by foreign investors in terms of 

capital flow and settlement considerations. 

This definition could be expanded or exceptions 

made depending on the evolution of market and 

economic conditions. 

10The Fund may invest in LPNs with a minimum 

outstanding principal amount of $200 million that 

the Adviser or Sub-Adviser deems to be liquid. The 

Adviser represents that LPNs denominated in U.S. 

dollars are the predominant form of corporate debt 

financing in certain emerging markets, particularly 

in Russia, where they constitute approximately 

70% of the corporate debt market (approximately 

$40 billion outstanding). In aggregate, LPNs 

represented over 11% of the JP Morgan Emerging 

Markets Corporate Bond Index as of November 30, 

2011. The Exchange states that LPNs are typically 

eligible for settlement at Eurcoclear, Clearstream, or 

in the U.S., through The Depository Trust 

Company. Moreover, intra-day quotations in LPNs 

are generally available from major broker-dealers 

and data vendors, such as Bloomberg. 

11The term ‘‘under normal circumstances’’ 

includes, but is not limited to, the absence of 

extreme volatility or trading halts in the fixed 

income markets or the financial markets generally; 

operational issues causing dissemination of 

inaccurate market information; or force majeure 

type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of 

terrorism, riot or labor disruption or any similar 

intervening circumstance. 

12The Adviser represents that the size and 

liquidity of the global market for corporate bonds 

of emerging market issuers generally has been 

increasing in recent years. The aggregate dollar 

amount of emerging market corporate bonds traded 

in the first two quarters of 2011 ($490 billion) 

represented a 36.4% increase compared to the first 

two quarters of 2010 ($359 billion). This growth is 

consistent with the 71% increase in volume for 

calendar year 2010 ($879.45 billion) over 2009. The 

$514 billion traded in 2009 represented a 

substantial increase over the amount traded in 2008 

($380 billion). Turnover in emerging market 

corporate debt in the first two quarters of 2011 was 

approximately 14.2% of the overall volume of 

emerging market debt of $3.443 trillion. In 2010, 

emerging market corporate bonds accounted for 

16% of the total $6.765 trillion of emerging market 

debt trading. This represents a meaningful increase 

relative to calendar year 2009 where turnover in 

emerging market corporate debt accounted for 12% 

of the overall volume of emerging market debt 

($4.445 trillion). These figures compared to only a 

9% share in 2008. (Source: Emerging Markets 

Traders Association Press Release(s), December 8, 

2010, August 12, 2010, May 20, 2010, March 8, 

2010, March 22, 2011, June 17, 2011 and August 22, 

2011). 

dissemination of material, non-public 

information regarding the Fund’s 

portfolio.8

WisdomTree Emerging Markets 

Corporate Bond Fund 

The Fund seeks to provide a high 

level of total return consisting of both 

income and capital appreciation. To 

achieve its objective, the Fund will 

invest in debt securities of corporations 

that are domiciled or economically tied 

to emerging market countries.9

Specifically, the Fund intends to 

achieve its investment objectives 

through direct and indirect investments 

in Corporate and Quasi-Sovereign Debt. 

For these purposes, Corporate and 

Quasi-Sovereign Debt includes fixedincome securities of emerging market 

countries, such as bonds, notes, or other 

debt obligations, including loan 

participation notes (‘‘LPNs’’),10 as well 

as other instruments, such as derivative 

instruments collateralized by Money 

Market Securities as described below. 

Quasi-Sovereign Debt, specifically, 

refers to fixed income securities or debt 

obligations that are issued by companies 

or agencies that may receive financial 

support or backing from the local 

government (collectively, ‘‘QuasiSovereign Institutions’’). 

Under normal circumstances,11 the 

Fund will invest at least 80% of its net 

assets in Corporate and Quasi-Sovereign 

Debt that are fixed income securities. 

Fixed income securities include debt 

instruments, such as bonds, notes, and 

other obligations, denominated in U.S. 

dollars or local currencies. Fixed 

income securities include Money 

Market Securities as defined below. 

Fixed income securities do not include 

derivatives. 

The Fund intends to provide exposure 

across several geographic regions and 

countries by investing in Corporate and 

Quasi-Sovereign Debt from the 

following regions: Asia, Latin America, 

Eastern Europe, Africa, and the Middle 

East. Within these regions, the Fund is 

likely to invest in countries such as: 

Argentina, Brazil, Chile, China, 

Colombia, Hong Kong, India, Indonesia, 

Israel, Jamaica, Kazakhstan, Malaysia, 

Mexico, Peru, Philippines, Poland, 

Qatar, Russia, Singapore, Saudi Arabia, 

South Africa, South Korea, Taiwan, 

Thailand, Trinidad & Tobago, Turkey, 

Ukraine, and the United Arab Emirates. 

This list may change based on market 

developments. The Fund’s credit 

exposures are consistently monitored 

from a risk perspective and may be 

modified, reduced, or eliminated. The 

Fund’s exposure to any single issuer 

generally will be limited to 10% of the 

Fund’s assets. The percentage of the 

Fund’s assets in a specific region, 

country, or issuer will change from time 

to time. The Fund’s exposure to any one 

country generally will be limited to 30% 

of the Fund’s assets, though this 

percentage may change in response to 

economic events and changes to the 

credit ratings of the Corporate and 

Quasi-Sovereign Debt of such countries. 

The universe of emerging market 

Corporate and Quasi-Sovereign Debt 

currently includes securities that are 

rated ‘‘investment grade’’ as well as 

‘‘non-investment grade.’’ The Fund 

intends to provide a broad exposure to 

emerging market Corporate and QuasiSovereign Debt and therefore will invest 

in both investment grade and noninvestment grade securities. The Fund 

expects to have 65% or more of its 

assets invested in investment grade 

securities, though this percentage may 

change in response to economic events 

and changes to the credit ratings of such 

issuers. 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. Although the Fund does 

not intend to invest in unrated 

securities, 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 SubAdviser 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 invest only in 

corporate bonds that the Adviser or SubAdviser deems to be sufficiently 

liquid.12 The Fund will only buy 

performing debt securities and will not 

buy distressed debt. 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. 

Economic and other conditions may 


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Federal Register / Vol. 77, No. 44 / Tuesday, March 6, 2012 / Notices 13381 

13The exchange-listed futures contracts in which 

the Fund may invest may be listed on exchanges in 

the U.S., London, Hong Kong or Singapore. Each of 

the United Kingdom’s primary financial markets 

regulator, the Financial Services Authority, 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 multiparty information sharing arrangement among 

financial regulators. Both the Commission and the 

Commodity Futures Trading Commission are 

signatories to the IOSCO MMOU. 

14The Fund will invest only in currencies, and 

instruments that provide exposure to such 

currencies, which have significant foreign exchange 

turnover and are included in the Bank for 

International Settlements Triennial Central Bank 

Survey, December 2010 (‘‘BIS Survey’’). The Fund 

may invest in currencies, and instruments that 

provide exposure to such currencies, selected from 

the top 40 currencies (as measured by percentage 

share of average daily turnover for the applicable 

month and year) included in the BIS Survey. 

15 26 U.S.C. 851. 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 (1) the 

Fund invest no more than 25% of its total assets 

Continued 

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 (1) the Adviser or 

Sub-Adviser deems such security to be 

sufficiently liquid based on its analysis 

of the market for such security (for 

example, broker-dealer quotations or 

trading history of the security or other 

securities issued by the issuer), (2) such 

investment is deemed by the Adviser or 

Sub-Adviser to be in the best interest of 

the Fund, and (3) such investment is 

deemed consistent with the Fund’s goal 

of providing broad exposure to a broad 

range emerging markets countries and 

issuers. 

The Fund may invest in Corporate 

and Quasi-Sovereign Debt with effective 

or final maturities of any length, but the 

Fund will seek to keep the average 

effective duration of its portfolio 

between two and ten years under 

normal market conditions. Effective 

duration is an indication of an 

investment’s interest rate risk or how 

sensitive an investment or a fund is to 

changes in interest rates. Generally, a 

fund or instrument with a longer 

effective duration is more sensitive to 

interest rate fluctuations, and, therefore, 

more volatile, than a fund with a shorter 

effective duration. The Fund’s actual 

portfolio duration may be longer or 

shorter depending on market 

conditions. 

The Fund intends to invest in 

Corporate and Quasi-Sovereign Debt of 

at least 13 non-affiliated issuers and 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 their 

respective agencies and 

instrumentalities or governmentsponsored enterprises). 

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. 

Under normal circumstances, the Fund 

may invest up to 25% of its net assets 

in Money Market Securities, although it 

may exceed this amount where the 

Adviser or Sub-Adviser deems such 

investment to be necessary or advisable, 

due to market conditions. For these 

purposes ‘‘Money Market Securities’’ 

include: Short-term, high quality 

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 deposit 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 and Other 

Investments 

The Fund may use derivative 

instruments as part of its investment 

strategy. Examples of derivative 

instruments include forward currency 

contracts, interest rate swaps, total 

return swaps, credit linked notes, and 

combinations of investments that 

provide similar exposure to local 

currency debt, such as investment in 

U.S. dollar denominated bonds 

combined with forward currency 

positions or swaps. If forward currency 

and swaps positions are not being 

implemented in combination with U.S. 

dollar denominated bonds, the Fund’s 

use of forward contracts and swaps will 

be combined with investments in shortterm, high quality U.S. money market 

instruments and will be designed to 

provide exposure similar to investments 

in local currency deposits. 

The Fund expects that no more than 

20% 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. For example, the 

Fund may engage in swap transactions 

that provide exposure to corporate debt 

or interest rates. The Fund also may buy 

or sell listed currency futures 

contracts.13

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 

and forward contracts, swap contracts, 

the purchase of securities on a whenissued or delayed delivery basis, or 

reverse repurchase agreements, the 

Fund, in accordance with applicable 

federal securities laws, rules, and 

interpretations thereof, will ‘‘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 and certificates of deposit 

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.14

The Fund may invest in the securities 

of other investment companies 

(including money market funds and 

ETFs). The Fund may hold up to an 

aggregate amount of 15% of its net 

assets in (1) illiquid securities; (2) Rule 

144A securities; and (3) loan interests 

(such as loan participations and 

assignments, but not including LPNs). 

The Commission staff has interpreted 

the term ‘‘illiquid’’ in this context to 

mean a security that cannot be sold or 

disposed of within seven days in the 

ordinary course of business at 

approximately the amount at which a 

fund has valued such security. 

The Fund will not invest in any nonU.S. equity securities. In addition, 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.15


pmangrum on DSK3VPTVN1PROD with NOTICES
13382 Federal Register / Vol. 77, No. 44 / Tuesday, March 6, 2012 / Notices 

in securities (other than securities of the U.S. 

government or other RICs) of any one issuer or two 

or more issuers that are controlled by the Fund and 

that are engaged in the same, similar or related 

trades or businesses, and (2) 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 Fund’s 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 Fund’s portfolio. For these purposes, 

the Fund may treat repurchase agreements 

collateralized by U.S. government securities or nonU.S. government securities as U.S. or non-U.S. 

government securities, as applicable. 

16See supra notes 3 and 4, and accompanying 

text, respectively. 

17 15 U.S.C. 78f. 

18 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

19 15 U.S.C. 78f(b)(5). 

20 15 U.S.C. 78k–1(a)(1)(C)(iii). 21 GIDS is the NASDAQ OMX global index data 

feed service, offering real-time updates, daily 

summary messages, and access to widely followed 

indexes and ETFs. GIDS provides investment 

professionals with the daily and historical 

information needed to track or trade NASDAQ 

OMX indexes, listed ETFs, or third-party partner 

indexes and ETFs. 22See Nasdaq Rule 4120(b)(4) (describing the 

three trading sessions on the Exchange: (1) PreMarket Session from 7 a.m. to 9:30 a.m.; (2) Regular 

Market Session from 9:30 a.m. to 4 p.m. or 4:15 

p.m.; and (3) Post-Market Session from 4 p.m. or 

4:15 p.m. to 8 p.m.). 

23The 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. 

24Under accounting procedures to be 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. 

25 In addition, during hours when the markets for 

local debt in the Fund’s portfolio are closed, the 

Intraday Indicative Value will be updated at least 

every 15 seconds during the Regular Market Session 

to reflect currency exchange fluctuations. 

26See Nasdaq Rule 5735(d)(2)(C)(ii). 

Additional information regarding the 

Shares and the Fund, including 

investment strategies, risks, creation and 

redemption procedures, fees, portfolio 

holdings disclosure policies, availability 

of Fund values and other information, 

and distributions and taxes, among 

other things, can be found in the Notice 

and/or Registration Statement, as 

applicable.16

III. Discussion and Commission 

Findings 

The Commission has carefully 

reviewed the proposed rule change and 

finds that it is consistent with the 

requirements of Section 6 of the Act 17

and the rules and regulations 

thereunder applicable to a national 

securities exchange.18 In particular, the 

Commission finds that the proposal is 

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

Act,19 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 Fund and the Shares must 

comply with the requirements of 

Nasdaq Rule 5735 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,20 which sets 

forth Congress’ 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 on NASDAQ OMX 

Global Index Data Service (‘‘GIDS’’),21

which contains information for widely 

followed indexes and ETFs. On each 

business day, before commencement of 

trading in Shares in the Regular Market 

Session 22 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 net asset value (‘‘NAV’’) 

at the end of the business day.23 The 

NAV of the Fund’s Shares generally will 

be 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.24 Moreover, the Intraday 

Indicative Value, available on GIDS, 

will be based upon the current value for 

the components of the Disclosed 

Portfolio and will be updated and 

widely disseminated by one or more 

major market data vendors at least every 

15 seconds during the Regular Market 

Session.25 In addition, information 

regarding market price and trading 

volume of the Shares will be continually 

available on a real-time basis throughout 

the day on brokers’ computer screens 

and other electronic services, and the 

previous day’s closing price and trading 

volume information for the Shares will 

be published daily in the financial 

section of newspapers. Intra-day, 

executable price quotations on emerging 

market Corporate and Quasi-Sovereign 

Debt, as well as derivative instruments, 

will be 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. The Web site for the 

Fund will include a form of the 

prospectus for the Fund 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. The 

Commission notes that the Exchange 

will obtain a representation from the 

issuer of the Shares 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. In 

addition, the Exchange will halt trading 

in the Shares under the conditions 

specified in Nasdaq Rules 4120 and 

4121. 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 

the 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 also will be subject to Rule 

5735(d)(2)(D), which sets forth 

circumstances under which Shares of 

the Fund may be halted. The Exchange 

will consider the suspension of trading 

in or removal from listing of the Shares 

if the Intraday Indicative Value is no 

longer calculated or available or the 

Disclosed Portfolio is not made 

available to all market participants at 

the same time.26 The Exchange 


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Federal Register / Vol. 77, No. 44 / Tuesday, March 6, 2012 / Notices 13383 

27See Nasdaq Rule 5735(g), supra note 8 and 

accompanying text. The Commission notes that an 

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 and their related personnel 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 non-public information by an 

investment adviser must be consistent with Rule 

204A–1 under the Advisers Act. 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. 

28See Nasdaq Rule 5735(d)(2)(B)(ii). 

29The Exchange states that FINRA surveils 

trading on Nasdaq pursuant to a regulatory services 

agreement. Nasdaq is responsible for FINRA’s 

performance under this regulatory services 

agreement. 

30See 17 CFR 240.10A–3. 

31 15 U.S.C. 78f(b)(5). 

32 15 U.S.C. 78s(b)(2). 

33 17 CFR 200.30–3(a)(12). 

represents that the Sub-Adviser is 

affiliated with multiple broker-dealers 

and has implemented a ‘‘fire wall’’ with 

respect to such broker-dealers regarding 

access to information concerning the 

composition and/or changes to the 

Fund’s portfolio.27 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.28 The Exchange states that it 

prohibits the distribution of material, 

non-public information by its 

employees. 

The Exchange represents that the 

Shares are deemed to be equity 

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 Shares will be subject to 

Nasdaq Rule 5735, which sets forth the 

initial and continued listing criteria 

applicable to Managed Fund Shares. 

(2) The Exchange has appropriate 

rules to facilitate transactions in the 

Shares during all trading sessions. 

(3) Trading of the Shares will be 

subject to the Financial Industry 

Regulatory Authority’s (‘‘FINRA’’) 

surveillance procedures for derivative 

products, including Managed Fund 

Shares.29 The Exchange’s surveillance 

procedures are adequate to properly 

monitor the trading of the Shares on 

Nasdaq during all trading sessions and 

to deter and detect violations of 

Exchange rules and the applicable 

federal securities laws. 

(4) Prior to the commencement of 

trading, the Exchange will inform its 

members in an Information Circular 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 in Creation Units 

(and that Shares are not individually 

redeemable); (b) Nasdaq Rule 2310, 

which imposes suitability obligations on 

Nasdaq members with respect to 

recommending transactions in the 

Shares to customers; (c) how 

information regarding the Intraday 

Indicative Value is disseminated; (d) the 

risks involved in trading the Shares 

during the Pre-Market and Post-Market 

Sessions when an updated Intraday 

Indicative Value will not be calculated 

or publicly disseminated; (e) the 

requirement that members deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; and (f) trading information. 

(5) For initial and/or continued 

listing, the Fund must be in compliance 

with Rule 10A–3 under the Act.30

(6) The Fund may hold up to an 

aggregate amount of 15% of its net 

assets in (a) illiquid securities, (b) Rule 

144A securities, and (c) loan interests 

(such as loan participations and 

assignments, but not including LPNs). 

(7) The Fund will not invest in any 

non-U.S. registered equity securities. 

(8) The Fund expects that no more 

than 20% 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. 

(9) A minimum of 100,000 Shares will 

be outstanding at the commencement of 

trading on the Exchange. 

This approval order is based on all of 

the Exchange’s representations. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 31 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,32 that the 

proposed rule change (SR–NASDAQ– 

2012–004) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–5367 Filed 3–5–12; 8:45 am] 

BILLING CODE 8011–01–P 

STATE DEPARTMENT 

[Public Notice: 7604] 

Foreign Affairs Policy Board Meeting 

Notice; Closed Meeting 

In accordance with section 10(a)(2) of 

the Federal Advisory Committee Act, 5 

U.S.C. App. 10(a)(2), the Department of 

State announces a meeting of the 

Foreign Affairs Policy Board to take 

place on March 19, 2012, at the 

Department of State, Washington, DC. 

The Foreign Affairs Policy Board 

reviews and assesses: (1) Global threats 

and opportunities; (2) trends that 

implicate core national security 

interests; (3) tools and capacities of the 

civilian foreign affairs agencies; and (4) 

priorities and strategic frameworks for 

U.S. foreign policy. Pursuant to section 

10(d) of the Federal Advisory 

Committee Act, 5 U.S.C. App. 10(d), and 

5 U.S.C. 552b(c)(1), it has been 

determined that this meeting will be 

closed to the public as the Board will be 

reviewing and discussing matters 

properly classified in accordance with 

Executive Order 13526. 

For more information, contact 

Samantha Raddatz at (202) 647–2372. 

This announcement might appear in the 

Federal Register less than 15 days prior 

to the advisory committee meeting. The 

Department of State finds: (1) That there 

is an exceptional circumstance to hold 

this meeting with less than a 15-day 

notice, in that a senior government 

official must address this committee 

meeting, and (2) further postponing this 

meeting to accommodate this official’s 

schedule would result in an 

unacceptable delay in the work of this 

advisory committee. 

Dated: February 29, 2012. 

Dan Kurtz-Phelan, 

Designated Federal Officer. 

[FR Doc. 2012–5407 Filed 3–5–12; 8:45 am] 

BILLING CODE 4710–10–P 


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