Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 15545 

43See SR–NYSE–2009–25 (formally submitted on 

March 9, 2009), as amended. 

44See Securities Exchange Act Release No. 59097 

(December 12, 2008), 73 FR 78412 (December 22, 

2008) (SR–FINRA–2008–057). 

45 15 U.S.C. 78f(b). 

46 15 U.S.C. 78f(b)(5). 

47 15 U.S.C. 78k–1(a)(1). 

48 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

will therefore continue to file these 

reports with the NYSE.43

The Exchange proposes to 

correspondingly delete Rule 392—NYSE 

Amex Equities and adopt Rule 5190— 

NYSE Amex Equities in the form 

proposed by the NYSE, subject to such 

changes as are necessary to apply the 

Rule to the Exchange. 

FINRA Rule Filing SR–FINRA–2008– 

057 44

In accordance with FINRA 2008–057, 

the NYSE incorporated changes to 

proposed NYSE Rule 5190. As noted 

above, the Exchange proposes to adopt 

corresponding Rule 5190– NYSE Amex 

Equities in the form proposed by the 

NYSE, subject to such changes as are 

necessary to apply the Rule to the 

Exchange. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule changes are consistent 

with Section 6(b) of the Act,45 in 

general, and further the objectives of 

Section 6(b)(5) of the Act,46 in 

particular, in that they 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 a national market system, and, in 

general, to protect investors and the 

public interest. The proposed rule 

changes also support the principles of 

Section 11A(a)(1) 47 of the Act in that 

they seek to ensure the economically 

efficient execution of securities 

transactions and fair competition among 

brokers and dealers and among 

exchange markets. 

The Exchange believes that the 

proposed rule changes are necessary 

and appropriate to conform the NYSE 

Amex Equities Rules with changes made 

to the corresponding NYSE Rules on 

which they are based. The Exchange 

also believes that the proposed rule 

changes will provide greater 

harmonization among NYSE Rules, 

NYSE Amex Equities Rules and FINRA 

Rules of similar purpose, resulting in 

less burdensome and more efficient 

regulatory compliance for their common 

members and member organizations. To 

the extent the Exchange has proposed 

changes that differ from the NYSE 

version of the Rules, such changes are 

technical in nature and do not change 

the substance of the proposed NYSE 

Amex Equities Rules. The Exchange 

therefore believes that the proposed rule 

changes support the objectives of the 

Act by providing greater regulatory 

clarity and relieving unnecessary 

regulatory burdens. 

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 such proposed 

rule change; or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–NYSEALTR–2009–26 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–NYSEALTR–2009–26. 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 such filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSEALTR–2009–26 and 

should be submitted on or before April 

27, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.48

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7590 Filed 4–3–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59650; File No. SR– 

NYSEArca–2009–24] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NYSE Arca, Inc. To Adopt a Policy With 

Respect to the Treatment of Aberrant 

Trades 

March 30, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’) 2 and Rule 19b–4 


pwalker on PROD1PC71 with NOTICES
15546 Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 59064 

(December 5, 2008), 73 FR 76082 (December 15, 

2008) (SR–NYSE–2008–91). 

5 17 CFR 240.19b–4(f)(6) 

6 15 U.S.C. 78a et seq. 

7See Securities Exchange Act Release No. 59453 

(February 25, 2009), 74 FR 9463 (March 4, 2009) 

(SR–NYSEArca–2009–09). 

thereunder,3 notice is hereby given that, 

on March 18, 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, II, and III below, which Items 

have been prepared by the selfregulatory 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 

The Exchange proposes to amend its 

rules governing NYSE Arca, LLC (also 

referred to as the ‘‘NYSE Arca 

Marketplace’’), which is the equities 

trading facility of NYSE Arca Equities. 

The Exchange proposes to adopt, with 

retroactive effect to January 1, 2008, a 

policy relating to its treatment of trade 

reports that it determines to be 

inconsistent with the prevailing market. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Trades in listed securities 

occasionally occur at prices that deviate 

significantly from prevailing market 

prices and those trades sometimes 

establish a high, low or last sale price 

for a security that does not reflect the 

true market for the security. NYSE Arca 

seeks to address such instances of 

‘‘aberrant’’ trades by adopting a policy 

that is substantially similar to a policy 

of the New York Stock Exchange (the 

‘‘NYSE Policy’’).4 On February 9, 2009, 

NYSE Arca also filed a proposed rule 

change, which it designated as eligible 

for immediate effectiveness pursuant to 

Rule 19b–4(f)(6) 5 under the 

ExchangeAct,6 to adopt a policy relating 

to NYSE Arca’s treatment of trade 

reports that it determines to be 

inconsistent with the prevailing 

market.7 The policy proposed in this 

instant rule change is identical to the 

policy set forth in SR–NYSEArca–2009– 

09, except that the instant proposal is 

retroactive to January 1, 2008. This 

retroactive application is identical to the 

retroactivity provision in the NYSE 

Policy. 

The Consolidated Tape Association 

(‘‘CTA’’) offers each Participant in the 

CTA Plan the discretion to append an 

indicator (an ‘‘Aberrant Report 

Indicator’’) to a trade report to indicate 

that the market believes that the trade 

price in a trade executed on that market 

does not accurately reflect the 

prevailing market for the security. The 

CTA recommends that data recipients 

should exclude the price of any trade to 

which the Aberrant Report Indicator has 

been appended from any calculation of 

the high, low and last sale prices for the 

security. 

During the course of surveillance by 

the Exchange or as a result of 

notification by another market, listed 

company or market participant, the 

Exchange may become aware of trade 

prices that do not accurately reflect the 

prevailing market for a security. In such 

a case, the Exchange proposes to adopt 

as policies that it: 

• May determine to append an 

Aberrant Report Indicator to any trade 

report with respect to any trade 

executed on the Exchange that the 

Exchange determines to be inconsistent 

with the prevailing market; and 

• Shall discourage vendors and other 

data recipients from using prices to 

which the Exchange has appended the 

Aberrant Report Indicator in any 

calculation of the high, low or last sale 

price of a security. 

NYSE Arca believes that retroactive 

application of its aberrant trade policy 

is warranted because of the significant 

market volatility and trade reporting 

issues that all market centers 

experienced during 2008. Therefore, 

NYSE Arca believes that it should be 

permitted to act retroactively to append 

the Aberrant Report Indicator to trades 

that do not accurately reflect the 

prevailing market for a security 

commencing as of January 1, 2008. 

The Exchange will urge vendors to 

disclose the exclusion from high, low or 

last sale price data of any aberrant 

trades excluded from high, low or last 

sale price information they disseminate 

and to provide to data users an 

explanation of the parameters used in 

the Exchange’s aberrant trade policy. 

Upon initial adoption of the Aberrant 

Report Indicator, the Exchange will also 

contact all of its listed companies to 

explain the aberrant trade policy and 

will notify users of the information that 

these are still valid trades. The 

Exchange will inform the affected listed 

company each time the Exchange or 

another market appends the Aberrant 

Report Indicator to a trade in an NYSE 

Arca listed stock and will remind the 

users of the information that these are 

still valid trades in that they were 

executed and not unwound as in the 

case of a clearly erroneous trade. 

While the CTA disseminates its own 

calculations of high, low and last sale 

prices, vendors and other data 

recipients—and not the Exchange— 

frequently determine their own 

methodology by which they wish to 

calculate high, low and last sale prices. 

Therefore, the Exchange shall endeavor 

to explain to those vendors and other 

data recipients the deleterious effects 

that can result from including in the 

calculations a trade to which the 

Aberrant Report Indicator has been 

appended. 

In making the determination to 

append the Aberrant Report Indicator, 

the Exchange shall consider all factors 

related to a trade, including, but not 

limited to, the following: 

• Material news released for the 

security; 

• Suspicious trading activity; 

• System malfunctions or 

disruptions; 

• Locked or crossed markets; 

• A recent trading halt or resumption 

of trading in the security; 

• Whether the security is in its initial 

public offering; 

• Volume and volatility for the 

security; 

• Whether the trade price represents 

a 52-week high or low for the security; 

• Whether the trade price deviates 

significantly from recent trading 

patterns in the security; 

• Whether the trade price reflects a 

stock-split, reorganization or other 

corporate action; 

• The validity of consolidated tape 

trades and quotes in comparison to 

national best bids and offers; and 

• The general volatility of market 

conditions. 

In addition, the Exchange proposes 

that its policy shall be to consult with 

the listing exchange (if the Exchange is 

not the listing exchange) and with other 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 15547 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

markets (in the case of executions that 

take place across multiple markets) and 

to seek a consensus as to whether the 

trade price is consistent with the 

prevailing market for the security. 

In determining whether trade prices 

are inconsistent with the prevailing 

market, the Exchange proposes that 

Exchange policy shall be to follow the 

following general guidelines: The 

Exchange will determine whether a 

trade price does not reflect the 

prevailing market for a security if the 

trade occurs during regular trading 

hours (i.e., 9:30 a.m. to 4 p.m.) and 

occurs at a price that deviates from the 

‘‘Reference Price’’ by an amount that 

meets or exceeds the following 

thresholds: 

Trade price Numerical 

threshold 

Between $0 and $15.00 ...... Seven Percent. 

Between $15.01 and $50.00 Five Percent. 

In excess of $50.00 ............. Three Percent. 

The ‘‘Reference Price’’ refers to (a) if 

the primary market for the security is 

open at the time of the trade, the 

national best bid or offer for the 

security, or (b) if the primary market for 

the security is not open at the time of 

the trade, the first executable quote or 

print for the security on the primary 

market after execution of the trade in 

question. However, if the circumstances 

suggest that a different Reference Price 

would be more appropriate, the 

Exchange will use the different 

Reference Price. For instance, if the 

national best bid and offer for the 

security are so wide apart as to fail to 

reflect the market for the security, the 

Exchange might use as the Reference 

Price a trade price or best bid or offer 

that was available prior to the trade in 

question. 

If the Exchange determines that a 

trade price does not reflect the 

prevailing market for a security and the 

trade represented the last sale of the 

security on the Exchange during a 

trading session, the Exchange may also 

determine to remove that trade’s 

designation as the last sale. The 

Exchange may do so either on the day 

of the trade or at a later date, so as to 

provide reasonable time for the 

Exchange to conduct due diligence 

regarding the trade, including the 

consideration of input from markets and 

other market participants. 

NYSE Arca advises that it proposes to 

use the Aberrant Report Indicator in 

accordance with the guidelines set forth 

above and that it may apply the 

Aberrant Trade Report on a retroactive 

basis commencing January 1, 2008. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Exchange Act,8 in 

general, and furthers the objectives of 

Section 6(b)(5) of the Exchange Act,9 in 

particular in that it is designed 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 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. 

In particular, the Aberrant Report 

Indicator is consistent with the 

protection of investors and the public 

interest in that the Exchange will seek 

to ensure a proper understanding of the 

Aberrant Report Indicator among 

securities market participants by: (i) 

Urging vendors to disclose the exclusion 

from high, low or last sale price data of 

any aberrant trades excluded from high, 

low or last sale price information they 

disseminate and to provide to data users 

an explanation of the parameters used 

in the Exchange’s aberrant trade policy; 

(ii) informing the affected listed 

company each time the Exchange or 

another market appends the Aberrant 

Report Indicator to a trade in an NYSE 

Arca listed stock; and (iii) reminding the 

users of the information that these are 

still valid trades in that they were 

executed and not unwound as in the 

case of a clearly erroneous trade. 

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 Exchange Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments on the proposed 

rule change were neither solicited nor 

received. 

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. 

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–2009–24 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2009–24. 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 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. 


pwalker on PROD1PC71 with NOTICES
15548 Federal Register / Vol. 74, No. 64 / Monday, April 6, 2009 / Notices 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A 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. 

4The Commission previously approved listing 

and trading on the Exchange of the following 

actively managed funds under 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). 

5The Trust is registered under the 1940 Act. On 

January 14, 2009, the Trust filed with the 

Commission pre-effective amendment 1 to its 

registration statement on Form N–1A under the 

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

the 1940 Act relating to the Fund (File Nos. 333– 

148082 and 811–22154) (‘‘Registration Statement’’). 

The description of the operation of the Trust herein 

is based on the Registration Statement. 

6 17 CFR 240.10A–3. 

7An 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, ‘‘fire wall’’ 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. 

8The Exchange represents that Grail Advisors, 

LLC, as the investment adviser of the Fund, and its 

related personnel, are subject to Investment 

All submissions should refer to File 

Number SR–NYSEArca–2009–24 and 

should be submitted on or before April 

27, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7584 Filed 4–3–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59651; File No. SR– 

NYSEArca–2009–22] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To List and Trade Shares 

of the Grail American Beacon Large 

Cap Value ETF 

March 30, 2009. 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

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

thereunder,2 notice is hereby given that, 

on March 13, 2009, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’), through 

its wholly owned subsidiary, NYSE 

Arca Equities, Inc. (‘‘NYSE Arca 

Equities’’ or ‘‘Corporation’’), filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade the following under NYSE Arca 

Equities Rule 8.600 (‘‘Managed Fund 

Shares’’): The Grail American Beacon 

Large Cap Value ETF. 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 3 (‘‘Shares’’) under NYSE Arca 

Equities Rule 8.600: The Grail American 

Beacon Large Cap Value ETF (‘‘Fund’’).4

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.5

Grail Advisors, LLC (the ‘‘Manager’’), a 

majority owned subsidiary of Grail 

Partners, LLC, acts as the Fund’s 

investment manager. The Fund is 

subadvised by American Beacon 

Advisors, Inc. (‘‘ABA’’). The Bank of 

New York Mellon Corporation is the 

administrator, Fund accountant, transfer 

agent and custodian for the Fund. ALPS 

Distributors, Inc. (the ‘‘Distributor’’) 

serves as the distributor for the Fund. 

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 6

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.7 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 the 

portfolio.8


pwalker on PROD1PC71 with NOTICES