55840 Federal Register / Vol. 75, No. 177 / Tuesday, September 14, 2010 / Notices 

10 15 U.S.C. 78s(b)(3)(A)(ii). 

11 17 CFR 240.19b–4(f)(2). 

12 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. 62585 

(July 28, 2010), 75 FR 47045 (‘‘Notice’’). 

4The Trust is a Delaware statutory trust that is 

registered under the Investment Company Act of 

1940 (15 U.S.C. 80a) (‘‘1940 Act’’). See Registration 

Statement on Amendment No. 15 to Form N–1A for 

the Trust filed with the Securities and Exchange 

Commission on March 10, 2010 (File Nos. 333– 

155395 and 811–22250) (the ‘‘Registration 

Statement’’). 

5The Exchange represents that the Adviser, as the 

investment adviser of the Fund, and its related 

personnel, are subject to Investment Advisers Act 

Rule 204A–1. 

6The Fund has received an order granting certain 

exemptive relief to the Trust under the Investment 

Company Act of 1940 (15 U.S.C. 80a–1) (‘‘1940 

Act’’). In compliance with Commentary .04 to NYSE 

Arca Equities Rule 8.600, which applies to Managed 

Fund Shares, 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). 

See email from Tim Malinowski, Senior Director, 

Global Index and Exchange Traded Funds, 

Exchange, to Ronesha Butler and Kristie Diemer, 

Special Counsels, Division, Commission, dated 

September 2, 2010, clarifying applicability of 

Commentary .04. 

7Commentary .06 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 

broker-dealer with respect to access to information 

concerning the composition and/or changes to such 

Investment Company portfolio. In addition, 

Commentary .06 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 openend fund’s portfolio. The Adviser is affiliated with 

a broker-dealer, Allianz Global Investors 

Distributors LLC, and has implemented a fire wall 

with respect to such broker-dealer regarding access 

to information concerning the composition and/or 

changes to a portfolio. 

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. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

has been designated as a fee change 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act 10 and Rule 19b–4(f)(2) 

thereunder,11 because it establishes or 

changes a due, fee or other charge 

imposed on members by the Exchange. 

Accordingly, the proposal is effective 

upon filing with the Commission. 

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. 

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–BATS–2010–023 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–BATS–2010–023. 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 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 

will also 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–BATS– 

2010–023 and should be submitted on 

or before October 5, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–22836 Filed 9–13–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62856; File No. SR– 

NYSEArca–2010–68] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Granting Approval of 

a Proposed Rule Change Relating to 

Listing and Trading of Shares of the 

PIMCO Build America Bond Strategy 

Fund 

September 7, 2010. 

I. Introduction 

On July 14, 2010, NYSE Arca, Inc. 

(the ‘‘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 (‘‘Shares’’) 

of the PIMCO Build America Bond 

Strategy Fund (the ‘‘Fund’’) of the 

PIMCO ETF Trust (the ‘‘Trust’’) under 

NYSE Arca Equities Rule 8.600 

(Managed Fund Shares). The proposed 

rule change was published in the 

Federal Register on August 4, 2010.3

The Commission received no comments 

on the proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

The Exchange proposes to list and 

trade the Shares pursuant to NYSE Arca 

Equities Rule 8.600, which governs the 

listing and trading of Managed Fund 

Shares. The Shares will be offered by 

the Trust.4 Pacific Investment 

Management Company LLC (‘‘PIMCO’’) 

is the investment adviser (‘‘Adviser’’) for 

the Fund.5 State Street Bank & Trust Co. 

is the custodian and transfer agent for 

the Fund. The Trust’s Distributor is 

Allianz Global Investors Distributors 

LLC (the ‘‘Distributor’’), an indirect 

subsidiary of Allianz Global Investors of 

America L.P. (‘‘AGI’’), PIMCO’s parent 

company.6 The Distributor is a 

registered broker-dealer.7

The Fund seeks to achieve its 

investment objective by investing under 


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Federal Register / Vol. 75, No. 177 / Tuesday, September 14, 2010 / Notices 55841 

8According to the Registration Statement, the 

Fund may invest in ‘‘Fixed Income Instruments,’’ 

consistent with the Fund’s objective. Fixed Income 

Instruments, as used generally in the Registration 

Statement, include: 

• Securities issued or guaranteed by the U.S. 

Government, its agencies or government-sponsored 

enterprises (‘‘U.S. Government Securities’’); 

• Corporate debt securities of U.S. and non-U.S. 

issuers, including corporate commercial paper; 

• Mortgage-backed and other asset-backed 

securities; 

• Inflation-indexed bonds issued both by 

governments and corporations; 

• Trust preferred securities; 

• Delayed funding loans and revolving credit 

facilities; 

• Bank certificates of deposit, fixed time deposits 

and bankers’ acceptances; 

• Repurchase agreements on Fixed Income 

Instruments and reverse repurchase agreements on 

Fixed Income Instruments; 

• Debt securities issued by states or local 

governments and their agencies, authorities and 

other government-sponsored enterprises; 

• Obligations of non-U.S. governments or their 

subdivisions, agencies and government-sponsored 

enterprises; and 

• Obligations of international agencies or 

supranational entities. 

9 Issuance of Build America Bonds will cease on 

December 31, 2010 unless the relevant provisions 

of the 2009 Act are extended. In the event that the 

Build America Bond program is not extended, the 

Build America Bonds outstanding at such time will 

continue to be eligible for the federal interest rate 

subsidy, which continues for the life of the Build 

America Bonds; however, no bonds issued 

following expiration of the Build America Bond 

program will be eligible for the federal tax subsidy. 

If the Build America Bond program is not extended, 

the Fund will evaluate the Fund’s investment 

strategy and make appropriate changes that it 

believes are in the best interests of the Fund, 

including changing the Fund’s investment strategy 

to invest in other taxable municipal securities. 

The Exchange has represented that in the event 

the Build America Bond program is not extended 

and the Fund determines to change its investment 

strategy, the Exchange will file a proposed rule 

change pursuant to Rule 19b–4 under the Act to 

permit continued listing of the Fund, and the Fund 

has represented to the Exchange that it will not 

change its investment strategy until such proposed 

rule change is approved by the Commission or 

becomes effective under Section 19(b) of the Act. 

10The Exchange states that a minimum of 100,000 

Shares will be outstanding at the commencement of 

trading on the Exchange, and the Exchange will 

obtain a representation from the issuer of the Shares 

that the net asset value (‘‘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. See Notice, 

supra note 3. 

11 17 CFR 240.10A–3. 

12See supra notes 3 and 4. 

13 15 U.S.C. 78f. 

14 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). 

15 17 U.S.C. 78f(b)(5). 

16 15 U.S.C. 78k–1(a)(1)(C)(iii). 

normal circumstances at least 80% of its 

assets in taxable municipal debt 

securities publicly issued under the 

Build America Bond program. The 

Build America Bond program was 

created as part of the American 

Recovery and Reinvestment Act of 2009 

(the ‘‘2009 Act’’) (‘‘Build America 

Bonds’’). The Fund invests in U.S. 

dollar-denominated Fixed Income 

Instruments that are primarily 

investment grade, but may invest up to 

20% of its total assets in high yield 

securities (‘‘junk bonds’’) rated B or 

higher by Moody’s Investors Service, 

Inc., or equivalently rated by Standard 

& Poor’s Ratings Services or Fitch, Inc., 

or, if unrated, determined by PIMCO to 

be of comparable quality.8

The average portfolio duration of the 

Fund normally varies within two years 

(plus or minus) of the duration of The 

Barclays Capital Build America Bond 

Index, which as of June 25, 2010, was 

approximately 12 years. 

Municipal bonds generally are issued 

by or on behalf of states and local 

governments and their agencies, 

authorities and other instrumentalities. 

Unlike most municipal bonds, interest 

received on Build America Bonds is 

subject to federal and state income tax. 

Pursuant to the 2009 Act, issuers of 

‘‘direct pay’’ Build America Bonds (i.e., 

taxable municipal bonds issued to 

provide funds for qualified capital 

expenditures) are entitled to receive 

payments from the U.S. Treasury over 

the life of the bond equal to 35% (or 

45% in the case of Recovery Zone 

Economic Development Bonds) of the 

interest paid. The federal interest 

subsidy continues for the life of the 

bonds.9

The Exchange states that the Shares 

will be subject to the initial and 

continued listing criteria under NYSE 

Arca Equities Rule 8.600 applicable to 

Managed Fund Shares 10 and that the 

Shares will comply with Rule 10A–3 

under the Act,11 as provided by NYSE 

Arca Equities Rule 5.3. 

Additional information regarding the 

Trust, the Fund, the Shares, the Fund’s 

investment objectives, strategies, 

policies, and restrictions, risks, fees and 

expenses, creation and redemption 

procedures, portfolio holdings and 

policies, distributions and taxes, 

availability of information, trading rules 

and halts, and surveillance procedures, 

among other things, can be found in the 

Registration Statement and in the 

Notice, as applicable.12

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 13

and the rules and regulations 

thereunder applicable to a national 

securities exchange.14 In particular, the 

Commission finds that the proposal is 

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

Act,15 which requires, among other 

things, that the Exchange’s rules be 

designed 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 Commission notes 

that the Shares must comply with the 

requirements of NYSE Arca Equities 

Rule 8.600 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,16 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 via the Consolidated Tape 

Association (‘‘CTA’’) high-speed line, 

and the Exchange will disseminate the 

Portfolio Indicative Value (‘‘PIV’’) at 

least every 15 seconds during the Core 

Trading Session on the Exchange. In 

addition, the Fund will make available 

on a website on each business day the 

identities and quantities of the portfolio 

of securities and other assets (‘‘Disclosed 

Portfolio’’) that will form the basis for 

the calculation of the NAV, which will 

be determined as of the close of the 

regular trading session on the Exchange 

(ordinarily 4 p.m. Eastern Time) on each 

business day. The Fund’s website will 

also include additional quantitative 

information updated on a daily basis 

relating to trading volume, prices, and 

NAV. Information regarding the market 

price and volume of the Shares will be 

continually available on a real-time 

basis throughout the day via electronic 

services, and the previous day’s closing 

price and trading volume information 

for the Shares will be published daily in 

the financial sections of newspapers. 

The Commission further believes that 

the proposal 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 that the NAV per Share will be 

calculated daily and that the NAV and 

the Disclosed Portfolio will be made 


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17See NYSE Arca Equities Rule 8.600(d)(1)(B). 

18See NYSE Arca Equities Rule 8.600(d)(2)(D). 

19 Id. Trading in the Shares may also be halted 

because of market conditions or for reasons that, in 

the view of the Exchange, make trading in the 

Shares inadvisable. These may include: (1) The 

extent to which trading is not occurring in the 

securities comprising the Disclosed Portfolio and/ 

or the financial instruments of the Fund; or (2) 

whether other unusual conditions or circumstances 

detrimental to the maintenance of a fair and orderly 

market are present. 

20See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii). 

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

22 17 CFR 200.30–3(a)(12). 

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

2Securities Exchange Act Release No. 62454 (July 

6, 2010), 75 FR 39715 (July 12, 2010). 

3The current FINRA rulebook consists of (1) 

FINRA Rules, (2) NASD Rules, and (3) rules 

incorporated from NYSE (‘‘Incorporated NYSE 

Rules’’) (together, the NASD Rules and Incorporated 

NYSE Rules are referred to as the ‘‘Transitional 

Rulebook’’). While the NASD Rules generally apply 

to all FINRA members, the Incorporated NYSE 

Rules apply only to those members of FINRA that 

are also members of the NYSE (‘‘Dual Members’’). 

The FINRA Rules apply to all FINRA members 

unless such rules have a more limited application 

by their terms. For more information about the 

rulebook consolidation process, see FINRA’s 

Information Notice, March 12, 2008 (Rulebook 

Consolidation Process). 

available to all market participants at 

the same time.17 Additionally, if it 

becomes aware that the NAV or the 

Disclosed Portfolio is not disseminated 

daily to all market participants at the 

same time, the Exchange will halt 

trading in the Shares until such 

information is available to all market 

participants.18 Further, if the PIV is not 

being disseminated as required, the 

Exchange may halt trading during the 

day in which the disruption occurs; if 

the interruption persists past the trading 

day in which it occurred, the Exchange 

will halt trading no later than the 

beginning of the trading day following 

the interruption.19 The Exchange 

represents that the Adviser is affiliated 

with a broker-dealer, Allianz Global 

Investors Distributors LLC, and has 

implemented a ‘‘fire wall’’ between it 

and its broker-dealer affiliate with 

respect to access to information 

concerning the composition and/or 

changes to the Fund’s portfolio. 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.20

The Exchange has represented that 

the Shares are equity securities subject 

to the Exchange’s rules governing the 

trading of equity securities. In support 

of this proposal, the Exchange has made 

representations, including: 

(1) The Shares will be subject to the 

initial and continued listing criteria 

under NYSE Arca Equities Rule 

8.600(d). 

(2) The Exchange’s surveillance 

procedures are adequate to properly 

monitor Exchange trading of the Shares 

in all trading sessions and to deter and 

detect violations of Exchange rules and 

applicable federal securities laws. 

(3) Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an Information Bulletin 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Bulletin 

will discuss the following: (a) The 

procedures for purchases and 

redemptions of Shares in Creation Units 

and that Shares are not individually 

redeemable; (b) NYSE Arca Equities 

Rule 9.2(a), which imposes a duty of 

due diligence on its ETP Holders to 

learn the essential facts relating to every 

customer prior to trading the Shares; (c) 

the risks involved in trading the Shares 

during the Opening and Late Trading 

Sessions when an updated PIV will not 

be calculated or publicly disseminated; 

(d) how information regarding the PIV is 

disseminated; (e) the requirement that 

ETP Holders deliver a prospectus to 

investors purchasing newly issued 

Shares prior to or concurrently with the 

confirmation of a transaction; and (f) 

trading information. 

(4) The Fund will be in compliance 

with Rule 10A–3 under the Act. 

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

This approval order is based on the 

Exchange’s representations. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–NYSEArca– 

2010–68), be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–22835 Filed 9–13–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62842; File No. SR– 

FINRA–2010–030] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority; Order Granting Approval of 

a Proposed Rule Change To Adopt 

FINRA Rule 11000 Series (Uniform 

Practice Code) in the Consolidated 

FINRA Rulebook 

September 3, 2010. 

I. Introduction 

On June 14, 2010, Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) proposed 

rule change SR–FINRA–2010–030 

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

Securities Exchange Act of 1934 

(‘‘Act’’).1 Notice of the proposal was 

published in the Federal Register on 

July 12, 2010.2 The Commission 

received no comment letters. For the 

reasons discussed below, the 

Commission is granting approval of the 

proposed rule change. 

II. Description 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’), 

FINRA will adopt the NASD Rule 11000 

Series (Uniform Practice Code [‘‘UPC’’]) 

into the Consolidated FINRA Rulebook, 

subject to certain amendments 

described below.3 The UPC was 

originally adopted on January 20, 1941, 

and became effective on August 1, 1941. 

The UPC prescribes the manner in 

which over-the-counter securities 

transactions other than those cleared 

through a registered clearing agency are 

compared, cleared, and settled between 

member firms. 

As a general matter, the UPC does not 

apply to: 

a. Transactions in securities between 

members that are compared, cleared, or 

settled through the facilities of a 

registered clearing agency; 

b. Transactions in securities exempted 

under Section 3(a)(12) of the Act or in 

municipal securities as defined in 

Section 3(a)(29) of the Act; 

c. Transactions in redeemable 

securities issued by companies 

registered under the Investment 

Company Act of 1940; or 

d. Transactions in Direct Participation 

Program securities. 

The UPC is designed to make 

uniform, where practicable, custom, 

practice, usage, and trading technique in 

the investment banking and securities 

business, particularly with respect to 

operational and settlement issues. This 

can include such matters as trade terms, 

deliveries, payments, dividends, rights, 

interest, stamp taxes, claims, 


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