Federal Register / Vol. 75, No. 197 / Wednesday, October 13, 2010 / Notices 62905 

7Specifically, the amendments approved 

pursuant to SR–FINRA–2009–061 and SR–FINRA– 

2010–003 overlap with respect to the rule text itself 

in Rules 6610, 6622(a)(9) (which is renumbered as 

Rule 6622(a)(7) by SR–FINRA–2009–061), 7310(g) 

and 7410(l). 

In addition, both filings renumbered certain 

provisions in Rules 6420 and 6622(a). This 

proposed rule change reflects conforming changes 

to reconcile the numbering of these provisions. To 

avoid potential confusion as a result of conflicting 

numbering, this proposed rule change reflects all of 

the amendments to Rule 6420 and paragraph (a) of 

Rule 6622 that were approved pursuant to SR– 

FINRA–2009–061, irrespective of whether the rule 

text itself conflicts with the text as amended by SR– 

FINRA–2010–003. Because these amendments were 

previously approved by the Commission, FINRA is 

not re-proposing them in this filing and is including 

them herein solely for ease of reference. 

8 15 U.S.C. 78o–3(b)(6). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

because those changes will not be 

implemented until November 1, 2010. 

Because of the timing of the 

aforementioned filings, certain of the 

amendments that were approved 

pursuant to SR–FINRA–2009–061 must 

be reconciled with the current rule text, 

as amended pursuant to SR–FINRA– 

2010–003. This proposed rule change 

makes no material changes to the 

amendments that were approved 

pursuant to SR–FINRA–2009–061.7

In addition, SR–FINRA–2009–061 and 

SR–FINRA–2010–003 proposed 

identical amendments to Rule 6623, and 

both filings proposed to amend Rules 

7310(j) and 7330(b). FINRA is proposing 

to retain the version of these provisions 

as amended by SR–FINRA–2010–003; 

therefore, this proposed rule change 

does not reflect any conforming changes 

to Rules 6623, 7310(j) or 7330(b). 

Finally, FINRA is proposing in this 

filing an additional amendment that was 

not proposed in SR–FINRA–2010–003 

or SR–FINRA–2009–061. FINRA is 

proposing a technical change to the title 

of the Rule 6620 Series to clarify that 

the series applies to the reporting of 

transactions in Restricted Equity 

Securities as well as OTC Equity 

Securities. 

FINRA has filed the proposed rule 

change for immediate effectiveness. The 

operative date of the proposed rule 

change will be November 1, 2010, the 

date on which SR–FINRA–2009–061 

will be implemented. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,8 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. FINRA believes the 

proposed rule change will provide 

greater clarity to members and the 

public regarding FINRA’s rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in 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 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 9 and Rule 

19b–4(f)(6) thereunder.10

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–FINRA–2010–051 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–FINRA–2010–051. 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 website 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 

FINRA. 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 publicly available. All 

submissions should refer to File 

Number SR–FINRA–2010–051 and 

should be submitted on or before 

November 3, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25740 Filed 10–12–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63041; File No. SR– 

NYSEArca–2010–86] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of a 

Proposed Rule Change Relating to 

Listing of the Peritus High Yield ETF 

October 5, 2010. 

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

Securities Exchange Act of 1934 (‘‘Act’’)1

and Rule 19b–4 thereunder,2 notice is 

hereby given that on September 23, 

2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) filed with the Securities 

mstockstill on DSKH9S0YB1PROD with NOTICES

62906 Federal Register / Vol. 75, No. 197 / Wednesday, October 13, 2010 / Notices 

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 advisor 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 has previously approved 

listing and trading on the Exchange of certain 

actively managed funds under Rule 8.600 that hold 

debt securities. See, e.g., Securities Exchange Act 

Release Nos. 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); 

61365 (January 15, 2010), 75 FR 4124 (January 26, 

2010) (SR–NYSEArca–2009–114) (order approving 

listing and trading of Grail McDonnell Fixed 

Income ETFs); 60981 (November 10, 2009), 74 FR 

59594 (November 18, 2009) (SR–NYSEArca–2009– 

79) (order approving listing of five fixed income 

funds of the PIMCO ETF Trust). 

5The Trust is registered under the 1940 Act. On 

May 11, 2010, the Trust filed with the Commission 

Post-Effective Amendment No. 6 to Form N–1A 

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

relating to the Fund (File Nos. 333–157876 and 

811–22110) (the ‘‘Registration Statement’’). The 

description of the operation of the Trust and the 

Fund herein is based on the Registration Statement. 

6An 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, procedures designed 

to prevent the communication and misuse of nonpublic information by an investment adviser must 

be consistent with Rule 204A–1 under the Advisers 

Act. 

7The Exchange represents that the Advisor and 

Sub-Advisor, and their respective related personnel, 

are subject to Investment Advisers Act Rule 204A– 

1. This Rule specifically requires the adoption of a 

code of ethics by an investment adviser to include, 

at a minimum: (i) Standards of business conduct 

that reflect the firm’s/personnel fiduciary 

obligations; (ii) provisions requiring supervised 

persons to comply with applicable federal securities 

laws; (iii) provisions that require all access persons 

to report, and the firm to review, their personal 

securities transactions and holdings periodically as 

specifically set forth in Rule 204A–1; (iv) provisions 

requiring supervised persons to report any 

violations of the code of ethics promptly to the 

chief compliance officer (‘‘CCO’’) or, provided the 

CCO also receives reports of all violations, to other 

persons designated in the code of ethics; and (v) 

provisions requiring the investment adviser to 

provide each of the supervised persons with a copy 

of the code of ethics with an acknowledgement by 

said supervised persons. 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. 

8Commercial paper consists of short-term, 

promissory notes issued by banks, corporations and 

other entities to finance short-term credit needs. 

These securities generally are discounted but 

sometimes may be interest bearing. As of year end 

2009, $1.137 trillion commercial paper was 

outstanding, and, as of May 31, 2010 $1.0548 

trillion commercial paper was outstanding The 

daily average commercial paper market issuance in 

2009 was $99.044 billion, with 66% having a 

maturity of 1–4 days, 7.1% having a maturity of 5– 

9 days, 3.8% having a maturity of 10–20 days, 

10.4% having a maturity of 21–40 days, 3.6% 

having a maturity of 41–80 days and 8.6% having 

a maturity of 81 days or more. For 2010 (as of May 

31), the daily average commercial paper market 

issuance was $92.758 billion, with 67.6% having a 

maturity of 1–4 days, 7.4% having a maturity of 5– 

9 days, 4% having a maturity of 10–20 days, 10.8% 

having a maturity of 21–40 days, 3.3% having a 

maturity of 41–80 days and 6.9% having a maturity 

of 81 days or more. (Source: Federal Reserve). 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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’’): Peritus High Yield ETF. The 

text of the proposed rule change is 

available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 

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 

The Exchange proposes to list and 

trade the following Managed Fund 

Shares 3 (‘‘Shares’’) under NYSE Arca 

Equities Rule 8.600: Peritus High Yield 

ETF (the ‘‘Fund’’).4 The Shares will be 

offered by AdvisorShares 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

Peritus High Yield ETF 

The investment advisor to the Fund is 

AdvisorShares Investments, LLC (the 

‘‘Advisor’’). Peritus I Asset Management, 

LLC is the Fund’s sub-advisor (‘‘Peritus’’ 

or the ‘‘Sub-Advisor’’). The Bank of New 

York Mellon is the administrator, 

transfer agent and custodian for the 

Fund. 

Commentary .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 brokerdealer with respect to access to 

information concerning the composition 

and/or changes to such Investment 

Company portfolio.6 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 open-end fund’s portfolio. 

The Advisor and Sub-Advisor are not 

affiliated with a broker-dealer.7 Any 

additional Fund sub-advisers that are 

affiliated with a broker-dealer will be 

required to implement a fire wall with 

respect to such broker-dealer regarding 

access to information concerning the 

composition and/or changes to a 

portfolio. 

According to the Registration 

Statement, the Fund’s investment 

objective is high current income with a 

secondary goal of capital appreciation. 

The Sub-Advisor seeks to achieve the 

Fund’s investment objective by selecting 

a focused portfolio of high yield debt 

securities, which include senior and 

subordinated corporate debt obligations 

(such as bonds, debentures, notes and 

commercial paper 8). The Fund does not 

have any portfolio maturity limitation 

and may invest its assets from time to 

time primarily in instruments with 

short-term, medium-term or long-term 

maturities. 

In selecting securities for the Fund’s 

portfolio, Peritus performs its own 

independent investment analysis of 

each issuer to determine its 

creditworthiness. Peritus focuses on the 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 197 / Wednesday, October 13, 2010 / Notices 62907 

9The Fund represents that the portfolio will 

include a minimum of 13 non-affiliated issuers. 

10See e-mail from Tim Malinowski, Senior 

Director, Exchange, to David Liu, Senior Special 

Counsel, Edward Cho, Special Counsel, and 

Andrew Madar, Special Counsel, Commission, 

dated October 4, 2010. 

11The Fund has represented that it will invest 

only in U.S.-registered bonds that are listed or 

traded in the United States. However, certain of the 

Fund’s debt holdings may be issued by corporations 

domiciled outside the United States. 

12 Distressed debt is debt that is currently in 

default and is not expected to pay the current 

coupon. 

13This diversification standard is contained in 

Section 5(b)(1) of the 1940 Act. 

14 17 CFR 240.10A–3. 15Terms relating to the Trust and the Shares 

referred to, but not defined, herein are defined in 

the Registration Statement. 

secondary market, predominantly 

investing in assets at a discount to par 

($100), allowing for a potential 

opportunity to generate capital gains in 

addition to current yield. 

According to the Registration 

Statement, Peritus places limited value 

on credit ratings and instead focuses on 

true cash flow while looking to buy 

credit at prices that it feels provide a 

margin of safety. Additional factors are 

considered when constructing the 

portfolio including, but not limited to, 

excess cash on the balance sheet and/or 

a history of producing real free cash 

flow, as well as a capital structure that 

can be sustained on conservative 

forecasts. 

According to the Registration 

Statement, Peritus reverse engineers the 

traditional financial analysis process 

when reviewing each issuer’s 

creditworthiness. Each analysis 

considers the issuer’s Statement of Cash 

Flows, the Balance Sheet and then the 

Income Statement, in that order. The 

investment team looks at a complete 

appraisal of the business’ intrinsic 

value, rather than just traditional credit 

analysis. Through fundamental and 

valuation analysis, the Sub-Advisor 

determines whether an investment 

should be made in a certain company, 

and where in the capital structure 

(secured, senior, or subordinate) the 

risk/return is most attractive. The 

Fund’s portfolio will typically consist of 

40–60 holdings.9

The Fund’s portfolio holdings will be 

disclosed on its Web site (http:// 

www.advisorshares.com) daily after the 

close of trading on the Exchange and 

prior to the opening of trading on the 

Exchange the following day. 

According to the Registration 

Statement, the Fund may invest in debt 

securities and may seek investment in 

corporate debt securities representative 

of one or more high yield bond or credit 

derivative indices, which may change 

from time to time. Selection will 

generally be dependent on independent 

credit analysis or fundamental analysis 

performed by the Sub-Advisor.10 The 

Fund may invest in all grades of 

corporate securities including below 

investment grade.11 The Fund will only 

invest in liquid securities. The Fund 

will only purchase performing 

securities, not distressed debt.12 To a 

lesser extent, the Fund also may invest 

in unrated securities. 

The Fund may invest in the securities 

of other investment companies to the 

extent that such an investment would be 

consistent with the requirements of 

Section 12(d)(1) of the 1940 Act, or any 

rule, regulation or order of the SEC. 

The Fund may make short-term 

investments in U.S. Government 

securities and may invest in U.S. 

Treasury zero-coupon bonds. 

To respond to adverse market, 

economic, political or other conditions, 

the Fund may invest 100% of its total 

assets, without limitation, in highquality short-term debt securities and 

money market instruments. The Fund 

may be invested in these instruments for 

extended periods, depending on the 

Sub-Advisor’s assessment of market 

conditions. These short-term debt 

securities and money market 

instruments include shares of other 

mutual funds, commercial paper, 

certificates of deposit, bankers’ 

acceptances, and U.S. Government 

securities. 

The Fund is subject to the following 

investment limitations: 

Diversification. The Fund may not (i) 

with respect to 75% of its total assets, 

purchase securities of any issuer (except 

securities issued or guaranteed by the 

U.S. Government, its agencies or 

instrumentalities or shares of 

investment companies) if, as a result, 

more than 5% of its total assets would 

be invested in the securities of such 

issuer; or (ii) acquire more than 10% of 

the outstanding voting securities of any 

one issuer. For purposes of this policy, 

the issuer of a Depository Receipt will 

be deemed to be the issuer of the 

respective underlying security.13

Concentration. The Fund may not 

invest 25% or more of its total assets in 

the securities of one or more issuers 

conducting their principal business 

activities in the same industry or group 

of industries. The Fund will not invest 

25% or more of its total assets in any 

investment company that so 

concentrates. This limitation does not 

apply to investments in securities 

issued or guaranteed by the U.S. 

Government, its agencies or 

instrumentalities, or shares of 

investment companies. For purposes of 

this policy, the issuer of a Depository 

Receipt will be deemed to be the issuer 

of the respective underlying security. 

The Fund, under normal 

circumstances, will invest at least 80% 

of its net assets, plus any borrowings for 

investment purposes, in high yield debt 

securities. The Fund intends to 

maintain the level of diversification 

necessary to qualify as a regulated 

investment company under Subchapter 

M of the Internal Revenue Code of 1986, 

as amended. 

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 14

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 (‘‘NAV’’) and the Disclosed 

Portfolio will be made available to all 

market participants at the same time. 

The Fund will not invest in non-US 

issues. 

Creations and Redemptions of Shares 

The Trust issues and sells Shares of 

the Fund only in Creation Units of 

50,000 Shares on a continuous basis 

through the Distributor, at their NAV 

next determined after receipt, on any 

Business Day (as defined in the 

Registration Statement). The 

consideration for purchase of a Creation 

Unit of the Fund generally consists of an 

in-kind deposit of a designated portfolio 

of securities (the ‘‘Deposit Securities’’) 

per each Creation Unit constituting 

securities included in the Fund’s 

portfolio and an amount of cash (the 

‘‘Cash Component’’) computed as 

described in the Registration Statement. 

Together, the Deposit Securities and the 

Cash Component constitute the ‘‘Fund 

Deposit,’’ which represents the 

minimum initial and subsequent 

investment amount for a Creation Unit 

of the Fund. Creations and redemption 

of Shares may be effected only by 

Authorized Participants, as defined in 

the Registration Statement.15

Shares may be redeemed only in 

Creation Units at their NAV next 

determined after receipt of a redemption 

request in proper form by the Fund 

through the Administrator and only on 

a Business Day. The Trust will not 

redeem shares in amounts less than 

Creation Units. 

Unless cash redemptions are available 

or specified for the Fund, the 

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62908 Federal Register / Vol. 75, No. 197 / Wednesday, October 13, 2010 / Notices 

16The Bid/Ask Price of the Fund is determined 

using the highest bid and the lowest offer on the 

Exchange as of the time of calculation of the Fund’s 

NAV. The records relating to Bid/Ask Prices will be 

retained by the Fund and its service providers. 

17Under accounting procedures 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’’). 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. 

18See NYSE Arca Equities Rule 7.12, 

Commentary .04. 

redemption proceeds for a Creation Unit 

generally consist of Fund Securities 

(securities included in the Fund’s 

portfolio)—as announced by the 

Administrator on the Business Day of 

the request for redemption received in 

proper form—plus cash in an amount 

equal to the difference between the NAV 

of the shares being redeemed, as next 

determined after a receipt of a request 

in proper form, and the value of the 

Fund Securities (the ‘‘Cash Redemption 

Amount’’), less a redemption transaction 

fee. In the event that the Fund Securities 

have a value greater than the NAV of the 

shares, a compensating cash payment 

equal to the differential is required to be 

made by or through an Authorized 

Participant by the redeeming 

shareholder. 

Availability of Information 

The Fund’s Web site (http:// 

www.advisorshares.com), which will be 

publicly available prior to the public 

offering of Shares, will include a form 

of the Prospectus for the Fund that may 

be downloaded. The Fund’s Web site 

will include additional quantitative 

information updated on a daily basis, 

including, for the Fund, (1) daily trading 

volume, the prior business day’s 

reported closing price, NAV and midpoint of the bid/ask spread at the time 

of calculation of such NAV (the ‘‘Bid/ 

Ask Price’’),16 and a calculation of the 

premium and discount of the Bid/Ask 

Price against the NAV, and (2) data in 

chart format displaying the frequency 

distribution of discounts and premiums 

of the daily Bid/Ask Price against the 

NAV, within appropriate ranges, for 

each of the four previous calendar 

quarters. On each business day, before 

commencement of trading in Shares in 

the Core Trading Session on the 

Exchange, the Fund will disclose on its 

Web site the Disclosed Portfolio as 

defined in NYSE Arca Equities Rule 

8.600(c)(2) that will form the basis for 

the Fund’s calculation of NAV at the 

end of the business day.17

On a daily basis, the Advisor will 

disclose for each portfolio security or 

other financial instrument of the Fund 

the following information: Ticker 

symbol (if applicable), name of security 

or financial instrument, number of 

shares or dollar value of financial 

instruments held in the portfolio, and 

percentage weighting of the security or 

financial instrument in the portfolio. 

The Web site information will be 

publicly available at no charge. In 

addition, price information for the debt 

securities held by the Fund will be 

available through major market data 

vendors. 

In addition, a basket composition file, 

which includes the security names and 

share quantities required to be delivered 

in exchange for Fund shares, together 

with estimates and actual cash 

components, will be publicly 

disseminated daily prior to the opening 

of the New York Stock Exchange 

(‘‘NYSE’’) via the National Securities 

Clearing Corporation. The basket 

represents one Creation Unit of the 

Fund. The NAV of the Fund will 

normally be determined as of the close 

of the regular trading session on the 

NYSE (ordinarily 4:00 p.m. Eastern 

Time) on each business day. 

Investors can also obtain the Trust’s 

Statement of Additional Information 

(‘‘SAI’’), the Fund’s Shareholder Reports, 

and its Form N–CSR and Form N–SAR, 

filed twice a year. The Trust’s SAI and 

Shareholder Reports are available free 

upon request from the Trust, and those 

documents and the Form N–CSR and 

Form N–SAR may be viewed on-screen 

or downloaded from the Commission’s 

Web site at http://www.sec.gov. 

Information regarding market price and 

trading volume of the Shares is and will 

be continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services. Information regarding the 

previous day’s closing price and trading 

volume information will be published 

daily in the financial section of 

newspapers. Quotation and last sale 

information for the Shares will be 

available via the Consolidated Tape 

Association (‘‘CTA’’) high-speed line. In 

addition, the Portfolio Indicative Value, 

as defined in NYSE Arca Equities Rule 

8.600 (c)(3), will be disseminated by one 

or more major market data vendors at 

least every 15 seconds during the Core 

Trading Session. The dissemination of 

the Portfolio Indicative Value, together 

with the Disclosed Portfolio, will allow 

investors to determine the value of the 

underlying portfolio of the Fund on a 

daily basis and to provide a close 

estimate of that value throughout the 

trading day. 

Additional information regarding the 

Trust and the Shares, including 

investment strategies, risks, creation and 

redemption procedures, fees, portfolio 

holdings disclosure policies, 

distributions and taxes is included in 

the Registration Statement. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares of 

the Fund.18 Trading in Shares of the 

Fund will be halted if the circuit breaker 

parameters in NYSE Arca Equities Rule 

7.12 have been reached. Trading also 

may be halted because of market 

conditions or for reasons that, in the 

view of the Exchange, make trading in 

the Shares inadvisable. 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. Trading in the 

Shares will be subject to NYSE Arca 

Equities Rule 8.600(d)(2)(D), which sets 

forth circumstances under which Shares 

of the Fund may be halted. 

Trading Rules 

The Exchange deems the Shares to be 

equity securities, thus rendering trading 

in the Shares subject to the Exchange’s 

existing rules governing the trading of 

equity securities. Shares will trade on 

the NYSE Arca Marketplace from 4 a.m. 

to 8 p.m. Eastern Time in accordance 

with NYSE Arca Equities Rule 7.34 

(Opening, Core, and Late Trading 

Sessions). The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. As provided in NYSE 

Arca Equities Rule 7.6, Commentary .03, 

the minimum price variation (‘‘MPV’’) 

for quoting and entry of orders in equity 

securities traded on the NYSE Arca 

Marketplace is $0.01, with the exception 

of securities that are priced less than 

$1.00 for which the MPV for order entry 

is $0.0001. 

Surveillance 

The Exchange intends to utilize its 

existing surveillance procedures 

applicable to derivative products (which 

include Managed Fund Shares) to 

monitor trading in the Shares. The 

Exchange represents that these 

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. 

The Exchange’s current trading 

surveillance focuses on detecting 

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Federal Register / Vol. 75, No. 197 / Wednesday, October 13, 2010 / Notices 62909 

19For a list of the current members of ISG, see. 

The Exchange notes that not all components of the 

Disclosed Portfolio for the Fund may trade on 

markets that are members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement. 20 15 U.S.C. 78f(b)(5). 21 17 CFR 200.30–3(a)(12). 

securities trading outside their normal 

patterns. When such situations are 

detected, surveillance analysis follows 

and investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

The Exchange may obtain information 

via the Intermarket Surveillance Group 

(‘‘ISG’’) from other exchanges that are 

members of ISG or with which the 

Exchange has entered into a 

surveillance sharing agreement.19

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

Equity Trading Permit (‘‘ETP’’) Holders 

in an Information Bulletin (‘‘Bulletin’’) 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Bulletin will discuss 

the following: (1) The procedures for 

purchases and redemptions of Shares in 

Creation Unit aggregations (and that 

Shares are not individually redeemable); 

(2) 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; (3) the risks involved 

in trading the Shares during the 

Opening and Late Trading Sessions 

when an updated Portfolio Indicative 

Value will not be calculated or publicly 

disseminated; (4) how information 

regarding the Portfolio Indicative Value 

is disseminated; (5) 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 (6) 

trading information. 

In addition, the Bulletin will 

reference that the Fund is subject to 

various fees and expenses described in 

the Registration Statement. The Bulletin 

will discuss any exemptive, no-action, 

and interpretive relief granted by the 

Commission from any rules under the 

Exchange Act. The Bulletin will also 

disclose that the NAV for the Shares 

will be calculated after 4:00 p.m. 

Eastern Time each trading day. 

2. Statutory Basis 

The basis under the Exchange Act for 

this proposed rule change is the 

requirement under Section 6(b)(5) 20

that an exchange have rules that 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, in general, to protect 

investors and the public interest. The 

Exchange believes that the proposed 

rule change will facilitate the listing and 

trading of an additional type of activelymanaged exchange-traded product that 

will enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

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 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate 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 or disapprove 

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–2010–86 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–2010–86. 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 website 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 

publicly available. All submissions 

should refer to File Number SR– 

NYSEArca–2010–86 and should be 

submitted on or before November 3, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–25621 Filed 10–12–10; 8:45 am] 

BILLING CODE 8011–01–P 

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