Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 72723 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

Board of the Unaffiliated Investment 

Company will take any appropriate 

actions based on its review, including, 

if appropriate, the institution of 

procedures designed to ensure that 

purchases of securities in Affiliated 

Underwritings are in the best interests 

of shareholders. 

7. Each Unaffiliated Investment 

Company will maintain and preserve 

permanently, in an easily accessible 

place, a written copy of the procedures 

described in the preceding condition, 

and any modifications to such 

procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of an Unaffiliated 

Investment Company exceeds the limit 

of section 12(d)(1)(A)(i) of the Act, 

setting forth (1) the party from whom 

the securities were acquired, (2) the 

identity of the underwriting syndicate’s 

members, (3) the terms of the purchase, 

and (4) the information or materials 

upon which the determinations of the 

Board of the Unaffiliated Investment 

Company were made. 

8. Prior to its investment in shares of 

an Unaffiliated Investment Company in 

excess of the limit set forth in section 

12(d)(1)(A)(i) of the Act, the Fund of 

Funds and the Unaffiliated Investment 

Company will execute a Participation 

Agreement stating, without limitation, 

that their Boards and their investment 

advisers understand the terms and 

conditions of the order and agree to 

fulfill their responsibilities under the 

order. At the time of its investment in 

shares of an Unaffiliated Investment 

Company in excess of the limit set forth 

in section 12(d)(1)(A)(i), a Fund of 

Funds will notify the Unaffiliated 

Investment Company of the investment. 

At such time, the Fund of Funds will 

also transmit to the Unaffiliated 

Investment Company a list of the names 

of each Fund of Funds Affiliate and 

Underwriting Affiliate. The Fund of 

Funds will notify the Unaffiliated 

Investment Company of any changes to 

the list as soon as reasonably practicable 

after a change occurs. The Unaffiliated 

Investment Company and the Fund of 

Funds will maintain and preserve a 

copy of the order, the Participation 

Agreement, and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the Act, the 

Board of each Fund of Funds, including 

a majority of the Independent Trustees, 

shall find that the advisory fees charged 

under the advisory contract are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Fund of Funds may invest. Such 

finding, and the basis upon which the 

finding was made, will be recorded fully 

in the minute books of the appropriate 

Fund of Funds. 

10. The Adviser will waive fees 

otherwise payable to it by a Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company 

pursuant to rule 12b–1 under the Act) 

received from an Unaffiliated Fund by 

the Adviser, or an affiliated person of 

the Adviser, other than any advisory 

fees paid to the Adviser or its affiliated 

person by the Unaffiliated Investment 

Company, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund. Any Sub-Adviser 

will waive fees otherwise payable to the 

Sub-Adviser, directly or indirectly, by 

the Fund of Funds in an amount at least 

equal to any compensation received by 

the Sub-Adviser, or an affiliated person 

of the Sub-Adviser, from an Unaffiliated 

Fund, other than any advisory fees paid 

to the Sub-Adviser or its affiliated 

person by the Unaffiliated Investment 

Company, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund made at the direction 

of the Sub-Adviser. In the event that the 

Sub-Adviser waives fees, the benefit of 

the waiver will be passed through to the 

Fund of Funds. 

11. Any sales charges and/or service 

fees charged with respect to shares of a 

Fund of Funds will not exceed the 

limits applicable to funds of funds set 

forth in NASD Conduct Rule 2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the Act, in excess of 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that such Underlying Fund: (a) 

Acquires such securities in compliance 

with section 12(d)(1)(E) of the Act and 

either is an Affiliated Fund or is in the 

same ‘‘group of investment companies’’ 

as its corresponding master fund; (b) 

receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (c) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

Acquire securities of one or more 

investment companies for short-term 

cash management purposes or (ii) 

engage in inter-fund borrowing and 

lending transactions. 

B. Other Investments by Section 

12(d)(1)(G) Funds of Funds 

Applicants agree that the order 

granting the requested relief to permit 

Section 12(d)(1)(G) Funds of Funds to 

invest in Other Investments shall be 

subject to the following condition: 

1. Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

except for paragraph (a)(2) to the extent 

that it restricts any Section 12(d)(1)(G) 

Fund of Funds from investing in Other 

Investments as described in the 

application. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28682 Filed 12–5–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73716; File No. SR– 

NYSEArca–2014–134] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Relating to Listing and 

Trading the following Series of IndexIQ 

Active ETF Trust Under NYSE Arca 

Equities Rule 8.600: IQ Wilshire 

Alternative Strategies ETF 

December 2, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

November 18, 2014, NYSE Arca, Inc. 

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

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72724 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 

4A 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–1), as amended (‘‘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. 

5The Commission has previously approved the 

listing and trading on the Exchange of other of 

actively managed funds under Rule 8.600. See, e.g., 

Securities Exchange Act Release Nos. 60717 

(September 24, 2009), 74 FR 50853 (October 1, 

2009) (SR–NYSEArca–2009–74) (order approving 

listing of Four Grail Advisors RP Exchange-Traded 

Funds) and 67320 (June 29, 2012), 77 FR 39763 

(July 5, 2012) (SR–NYSEArca–2012–44) (order 

approving listing of the iShares Strategic Beta U.S. 

Large Cap Fund and iShares Strategic Beta U.S. 

Small Cap Fund). 

6The Trust is registered under the 1940 Act. On 

April 25, 2014, the Trust filed with the Commission 

an amendment to its registration statement on Form 

N–1A relating to the Fund (File Nos. 333–193560 

and 811–22739) (the ‘‘Registration Statement’’). The 

description of the operation of the Trust and the 

Fund herein is based, in part, on the Registration 

Statement. In addition, the Commission has issued 

an order granting certain exemptive relief to the 

Trust under the 1940 Act. See Investment Company 

Act Release No. 30198 (September 10, 2012) (File 

No. 812–13956) (the ‘‘Exemptive Order’’). 

7An investment adviser to an open-end fund is 

required to be registered under the Investment 

Advisers Act of 1940 (the ‘‘Advisers Act’’). The 

Adviser, Wilshire and the underlying managers that 

are sub-advisers to the Fund (the ‘‘Underlying 

Managers’’) are each registered as an investment 

adviser under the Advisers Act. As a result, each 

of the Adviser, Wilshire and the Underlying 

Managers and its related personnel are subject to 

the provisions of Rule 204A–1 under the Advisers 

Act relating to codes of ethics. This Rule requires 

investment advisers to adopt a code of ethics that 

reflects the fiduciary nature of the relationship to 

clients as well as compliance with other applicable 

securities laws. Accordingly, procedures designed 

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

be consistent with Rule 204A–1 under the Advisers 

Act. In addition, each of the Adviser, Wilshire and 

the Underlying Managers and its related personnel 

are subject to the provisions of Rule 206(4)–7 under 

the Advisers Act, which 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. 

8The term ‘‘under normal circumstances’’ 

includes, but is not limited to, the absence of 

adverse market, economic, political or other 

conditions, including extreme volatility or trading 

halts in the fixed income markets or the financial 

markets generally; operational issues causing 

dissemination of inaccurate market information; or 

force majeure type events such as systems failure, 

natural or man-made disaster, act of God, armed 

conflict, act of terrorism, riot or labor disruption or 

any similar intervening circumstance. 

9According to the Registration Statement, the 

investment of Fund assets not allocated to the 

Underlying Managers may be directly managed by 

the Advisor, although the Advisor does not 

currently intend to manage a significant portion of 

the Fund’s assets directly, and to the extent the 

Advisor does manage a portion of the Fund’s assets 

it would invest such assets in the same manner as 

the Underlying Managers. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to list and 

trade the following series of IndexIQ 

Active ETF Trust under NYSE Arca 

Equities Rule 8.600 (‘‘Managed Fund 

Shares’’): IQ Wilshire Alternative 

Strategies ETF. The text of the proposed 

rule change is available on the 

Exchange’s Web site at www.nyse.com, 

at the principal office of the Exchange, 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade shares (‘‘Shares’’) of the IQ 

Wilshire Alternative Strategies ETF (the 

‘‘Fund’’) under NYSE Arca Equities 

Rule 8.600, which governs the listing 

and trading of Managed Fund Shares 4

on the Exchange.5 The Fund is a series 

of the IndexIQ Active ETF Trust (the 

‘‘Trust’’).6

The Fund is an actively-managed 

exchange-traded fund and does not seek 

to replicate the performance of a 

specified index. 

IndexIQ Advisors LLC (the ‘‘Adviser’’) 

is the investment adviser for the Fund.7

The Bank of New York Mellon 

(‘‘Administrator’’), is the administrator, 

custodian, transfer agent and securities 

lending agent for the Fund. ALPS 

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

distributor 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. 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. 

Commentary .06 to Rule 8.600 is similar 

to Commentary .03(a)(i) and (iii) to 

NYSE Arca Equities Rule 5.2(j)(3); 

however, Commentary .06 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. In the 

event (a) any of the Adviser, Wilshire or 

the Underlying Managers is or becomes 

a broker-dealer or newly affiliated with 

a broker-dealer, or (b) any new adviser 

or subadviser is a registered brokerdealer or becomes affiliated with a 

broker-dealer, then, to the extent the 

broker-dealer or affiliated broker-dealer 

is not a limited purpose broker-dealer 

used for marketing and not trading 

purposes, it will implement a firewall 

with respect to its relevant personnel or 

its broker-dealer affiliate regarding 

access to information concerning the 

composition and/or changes to a 

portfolio, and will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 

portfolio. 

According to the Registration 

Statement, the Fund will seek long-term 

capital appreciation. Under normal 

circumstances,8 100% of the Fund’s 

assets will be allocated among the 

Underlying Managers and that will 

employ a variety of alternative 

investment strategies.9 In making these 

allocations, the Advisor will seek to 

combine the strategies of the Underlying 

Managers efficiently and systematically 

so that the Fund will generate a positive 

total return with relatively low volatility 

and low sensitivity or correlation to 

market indices. 

According to the Registration 

Statement, Wilshire Associates 

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Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 72725 

10According to the Registration Statement, an 

equity hedge (long/short) strategy will seek to 

identify equities that are trading under or over their 

perceived intrinsic value or are deemed to be 

mispriced based on fundamental, statistical, 

technical or other factors. 11According to the Registration Statement, a 

relative value strategy will seek to exploit 

differences in valuation through the simultaneous 

purchase and sale of related financial instruments. 12According to the Registration Statement, a 

global macro strategy will seek to analyze 

macroeconomic variables to identify global asset/ 

security mispricings (i.e., securities that are trading 

higher or lower than their intrinsic or actual value) 

and forecast future moves in such asset/security 

prices on a directional or relative value basis. 

13According to the Registration Statement, an 

event driven strategy will involve investing in 

securities of companies currently or prospectively 

involved in a wide variety of corporate transactions 

or other events where the investment thesis is 

predicated on the anticipated effect of such 

transactions or events (e.g., merger arbitrage 

strategy, which involves the simultaneous purchase 

of stock in a company being acquired and the sale 

of stock in its acquirer in an attempt to profit from 

the spread in prices). 

14According to the Registration Statement, an 

opportunistic credit strategy will seek to deliver 

positive absolute returns in excess of cash 

investments regardless of economic cycle (i.e., 

downturns and upswings) or cyclical credit 

availability primarily by investing in mispriced 

credit securities (i.e., credit securities that are 

trading higher or lower than their intrinsic or actual 

value). 

15According to the Registration Statement, a 

tactical trading strategy will relate to a variety of 

strategic and opportunistic investment strategies 

not captured by one of the other enumerated 

strategies, such as short-term trading opportunities. 

16According to the Registration Statement, a 

liquid alternative beta strategy will seek to track the 

beta portion of the returns (i.e., that portion of the 

returns of hedge funds that are non-idiosyncratic, 

or unrelated to manager skill) of hedge funds that 

employ various hedge fund investment styles. 

17For purposes of this filing, ETFs include 

Investment Company Units (as described in NYSE 

Arca Equities Rule 5.2(j)(3)); Portfolio Depositary 

Receipts (as described in NYSE Arca Equities Rule 

8.100); and Managed Fund Shares (as described in 

NYSE Arca Equities Rule 8.600). The ETFs all will 

be listed and traded in the U.S. on registered 

exchanges or a non-U.S. securities exchange that is 

a member of the Intermarket Surveillance Group 

(‘‘ISG’’) or a party to a comprehensive surveillance 

sharing agreement with the Exchange. The ETFs in 

which the Fund may invest will primarily be indexbased exchange-traded funds that hold substantially 

all of their assets in securities representing a 

specific index. 

18According to the Adviser, an ETV is a noninvestment company exchange-traded vehicle that 

issues equity securities, such as an exchange-traded 

commodity pool. 

19The Adviser expects that, under normal market 

circumstances, the Fund will generally seek to 

invest in corporate bond issuances in developed 

countries that have at least $100,000,000 par 

amount outstanding and at least $200,000,000 par 

amount outstanding with respect to corporate bond 

issuances in emerging market countries. 

20The Fund will seek to gain exposure to U.S. 

agency mortgage pass-through securities primarily 

through the use of ‘‘to-be-announced securities.’’ 

‘‘To-be-announced’’ refers to a commonly used 

mechanism for the forward settlement of U.S. 

agency mortgage pass-through securities, and not to 

a separate type of mortgage-backed security. Most 

transactions in mortgage pass-through securities 

occur through the use of to-be-announced 

securities. 

21According to the Registration Statement, as a 

result of the Fund’s ability to invest in Financial 

Instruments, it may also hold U.S. Treasury Bills or 

short-term investments as collateral for the 

Financial Instruments, including money market 

funds, repurchase agreements, cash and time 

deposits. 

22According to the Registration Statement, the 

Fund may gain exposure to commodities through 

investments in other investment companies, ETFs 

or ETVs. 

Incorporated (‘‘Wilshire’’) will be a subadvisor to the Fund and, in that role, 

will evaluate and recommend strategies 

and Underlying Managers to the 

Advisor for use by the Fund. 

Additionally, according to the 

Registration Statement Wilshire will 

provide recommendations to the 

Advisor for allocating and reallocating 

Fund assets among the Underlying 

Managers. Wilshire will not directly 

manage any assets of the Fund, although 

it may provide the Advisor or an 

Underlying Manager with nondiscretionary advice on investment 

decisions and underlying positions. 

According to the Registration 

Statement, the Fund and each of its 

Underlying Managers may use all or 

some of the following strategies in 

managing the assets of the Fund: Equity 

hedge (long/short) strategies,10 relative 

value strategies,11 global macro 

strategies,12 event driven strategies,13

opportunistic credit strategies,14 tactical 

trading strategies 15 and liquid 

alternative beta strategies.16 The Fund, 

and each of its Underlying Managers, 

may also add additional strategies in the 

future. According to the Registration 

Statement, the Advisor may allocate 0 to 

100 percent of the Fund’s assets to any 

of these strategies or any of the 

Underlying Managers at any time. 

According to the Registration 

Statement, in implementing the 

aforementioned strategies, the Fund will 

invest in a portfolio consisting of some 

or all of the following: 

Equity Securities 

The Fund may invest in exchangetraded Equity Securities, which will 

consist of: 

• Common stocks; 

• Preferred stocks; 

• Convertible securities; 

• Rights and warrants; 

• Depositary receipts; 

• Exchange-traded Funds (‘‘ETFs’’); 17

• Non-ETF exchange-traded vehicles 

(‘‘ETVs’’); 18 and 

• Partnership interests, including 

master limited partnerships. 

Fixed Income Securities 

The Fund may invest in Fixed Income 

Securities, which will consist of: 

• Debt issued by corporations; 19

• Debt issued by governments, their 

agencies, instrumentalities, sponsored 

entities, and political subdivisions; 

• Covered bonds; 

• Debt participations; 

• Convertible bonds; 

• Non-investment grade securities; 

• Senior bank loans; 

• Exchange-traded notes (‘‘ETNs’’); 

• Mortgage-backed and other assetbacked securities; and 

• To-be-announced securities.20

According to the Registration 

Statement, the Fund may also invest 

directly in currencies. 

According to the Registration 

Statement, the Fund may invest in the 

following derivative instruments: 

Futures contracts (consisting of futures 

contracts based on equity or fixed 

income securities and/or equity or fixed 

income indices, commodities, interest 

rates and currencies); swap agreements 

on any of the following asset classes: 

Equity, fixed income, currency and 

interest rates (such swaps may be based 

on the price return or total return of the 

referenced asset); credit default swaps 

(consisting of credit default swaps in 

which the referenced asset is a single 

fixed income security or a group of fixed 

income securities); options (consisting 

of long and short positions in call 

options and put options on indices 

based on equities, fixed income 

securities, interest rates, currencies or 

commodities, individual securities or 

currencies, swaptions and options on 

futures contracts); forward contracts 

(consisting of forward contracts based 

on equity or fixed income securities 

and/or equity or fixed income indices, 

currencies, interest rates, swap forwards 

and non-deliverable forwards); and 

structured securities (such derivative 

instruments, collectively ‘‘Financial 

Instruments’’).21

According to the Registration 

Statement, the Fund may use leverage 

(e.g., through the use of Financial 

Instruments) to obtain exposure in 

excess of 100% in an investment. The 

Fund may employ leverage to increase 

exposure to the Fund’s portfolio 

holdings by up to 100% of the net assets 

of the Fund to gain additional exposure 

to the Fund’s portfolio holdings, such 

that the Fund will have up to 200% net 

exposure to its investments. 

According to the Registration 

Statement, the Fund may take long and/ 

or short positions in Equity Securities, 

Fixed Income Securities, commodities 22

and currencies, among others. 

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72726 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 

23The Commission has stated that long-standing 

Commission guidelines have required open-end 

funds to hold no more than 15% of their net assets 

in illiquid securities and other illiquid assets. See 

Investment Company Act Release No. 8901 (March 

11, 2008), 73 FR 14618 (March 18, 2008), footnote 

34. See also, Investment Company Act Release No. 

5847 (October 21, 1969), 35 FR 19989 (December 

31, 1970) (Statement Regarding ‘‘Restricted 

Securities’’); Investment Company Act Release No. 

18612 (March 12, 1992), 57 FR 9828 (March 20, 

1992) (Revisions of Guidelines to Form N–1A). A 

fund’s portfolio security is illiquid if it cannot be 

disposed of in the ordinary course of business 

within seven days at approximately the value 

ascribed to it by the ETF. See Investment Company 

Act Release No. 14983 (March 12, 1986), 51 FR 

9773 (March 21, 1986) (adopting amendments to 

Rule 2a–7 under the 1940 Act); Investment 

Company Act Release No. 17452 (April 23, 1990), 

55 FR 17933 (April 30, 1990) (adopting Rule 144A 

under the Securities Act of 1933). 

Investment Restrictions 

According to the Adviser, all Equity 

Securities will be listed on a U.S. 

national securities exchange or a nonU.S. securities exchange that is a 

member of the ISG or a party to a 

comprehensive surveillance sharing 

agreement with the Exchange; provided, 

however, that up to 10% of the assets 

of the Fund may be invested in non-U.S. 

listed Equity Securities that do not meet 

these requirements. 

The Adviser has represented that all 

options contracts will be listed on a U.S. 

national securities exchange or a nonU.S. securities exchange that is a 

member of ISG or a party to a 

comprehensive surveillance sharing 

agreement with the Exchange. 

The Adviser has represented that not 

more than 20% of the Fund’s assets will 

be invested, in the aggregate, in noninvestment grade securities and 

structured securities. 

According to the Registration 

Statement, up to 10% of the weight of 

the futures contracts held by the Fund 

may consist of futures contracts whose 

principal trading market is not a 

member of ISG or a party to a 

comprehensive surveillance sharing 

agreement with the Exchange. 

According to the Advisor, the Fund 

may invest up to 20% of its total assets 

in mortgage-backed securities or in 

other asset-backed securities, although 

this 20% limitation will not apply to 

U.S. government securities. 

According to the Registration 

Statement, the Fund may hold up to an 

aggregate amount of 15% of its net 

assets in illiquid assets (calculated at 

the time of investment), including Rule 

144A securities.23 The Fund will 

monitor its portfolio liquidity on an 

ongoing basis to determine whether, in 

the light of current circumstances, an 

adequate level of liquidity is being 

maintained, and will consider taking 

appropriate steps in order to maintain 

adequate liquidity if, through a change 

in values, net assets, or other 

circumstances, more than 15% of the 

Fund’s net assets are held in illiquid 

assets. 

The Fund will not invest more than 

10% of its net assets in unsponsored 

depositary receipts. 

According to the Registration 

Statement, the Fund is considered nondiversified, which means that it can 

invest a higher percentage of assets in 

securities of individual issuers than a 

diversified fund. 

Net Asset Value 

According to the Registration 

Statement, the net asset value (‘‘NAV’’) 

of the Shares of the Fund will be equal 

to the Fund’s total assets minus the 

Fund’s total liabilities divided by the 

total number of shares outstanding. The 

NAV that is published will be rounded 

to the nearest cent; however, for 

purposes of determining the price of 

Creation Units, the NAV will be 

calculated to five decimal places. 

For purposes of calculating NAV, 

portfolio securities and other assets for 

which market quotations are readily 

available will be valued at market value. 

Market value will generally be 

determined on the basis of last reported 

sales prices, or if no sales are reported, 

based on quotes obtained from a 

quotation reporting system, established 

market makers, or pricing services. 

In calculating NAV, the Fund’s 

exchange-traded Equity Securities will 

be valued at market value, which will 

generally be determined using the last 

reported official closing or last trading 

price on the exchange or market on 

which the security is primarily traded at 

the time of valuation or, if no sale has 

occurred, at the last quoted mid price on 

the primary market or exchange on 

which they are traded. Investment 

company securities (other than ETFs) 

will be valued at NAV. 

Unsponsored depositary receipts will 

be valued at the last quoted mid price 

on the primary market on which they 

are traded. Fixed Income Securities will 

be valued using market quotations when 

available or other equivalent indications 

of value provided by an independent 

third-party pricing service. Short-term 

Fixed Income Securities having a 

remaining maturity of 60 days or less 

are generally valued at amortized cost, 

which approximates market value. 

A swap on an exchange-listed security 

or securities is valued at the last 

reported sale price of the swap’s 

underlying security or securities on the 

exchange where the security or 

securities is primarily traded, or if no 

sale price is available, at the mid price 

of the security or securities underlying 

the swap on the exchange where the 

security is primarily traded. A swap on 

Fixed Income Securities will be valued 

on the price of the referenced Fixed 

Income Securities on which the swap is 

based (i.e., using market quotations 

when available or other equivalent 

indications of value provided by an 

independent third-party pricing service; 

short term Fixed Income Securities 

having a remaining maturity of 60 days 

or less are generally valued at amortized 

cost, which approximates market value). 

A swap on an index is valued based on 

the publicly available index price. The 

index price, in turn, is determined by 

the applicable index calculation agent, 

which generally values the securities 

underlying the index at the last reported 

sale price. 

Currency swaps will generally be 

valued on the basis of quotes obtained 

from brokers and dealers or pricing 

services using data reflecting the earlier 

closing of the principal markets for 

those assets. Credit default swaps will 

be valued on the basis of market prices, 

generally the mid point between the 

bid/ask quotes, obtained from a thirdparty pricing service at the time the 

Fund calculates its NAV. 

Futures contracts will be valued at the 

settlement or closing price determined 

by the applicable exchange. Exchangetraded option contracts, including 

options on futures, will be valued at 

their most recent sale price. If no such 

sales are reported, these contracts will 

be valued at their last traded price. 

The Fund’s OTC-traded Financial 

Instruments that are based on exchangelisted underlying securities or for which 

exchange pricing is otherwise available 

will generally be valued at the last 

reported official closing or last traded 

price of the applicable underlying 

securities. Other OTC-traded Financial 

Instruments will normally be valued on 

the basis of quotes obtained from a third 

party broker-dealer who makes markets 

in such securities or on the basis of 

quotes obtained from an independent 

third-party pricing service. 

Foreign securities and instruments 

will be valued in their local currency 

following the methodologies described 

above. Foreign securities, instruments 

and currencies will be translated to U.S. 

dollars, based on foreign currency 

exchange rate quotations supplied by 

the London Stock Exchange. 

When market quotations are not 

readily available, are deemed unreliable 

or do not reflect material events 

occurring between the close of local 

markets and the time of valuation, 

investments will be valued using fair 

value pricing as determined in good 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 72727 

24The Bid/Ask Price of the Fund will be 

determined using the midpoint of 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. 

25Under 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. 

faith by the Adviser under procedures 

established by and under the general 

supervision and responsibility of the 

Trust’s Board of Trustees. According to 

the Registration Statement, the NAV 

will be calculated by the Administrator 

and determined each business day as of 

the close of regular trading on the 

Exchange (ordinarily 4:00 p.m., Eastern 

time (‘‘E.T.’’)). The Shares of the Fund 

will not be priced on days on which the 

Exchange is closed for trading. 

Indicative Intra-Day Value 

According to the Registration 

Statement, an independent third party 

calculator will calculate the Indicative 

Intra-Day Value (‘‘IIV’’) for the Fund 

during hours of trading on the Exchange 

by dividing the ‘‘Estimated Fund Value’’ 

as of the time of the calculation by the 

total number of outstanding Shares of 

that Fund. ‘‘Estimated Fund Value’’ is 

the sum of the estimated amount of cash 

held in the Fund’s portfolio, the 

estimated amount of accrued interest 

owed to the Fund and the estimated 

value of the assets held in the Fund’s 

portfolio, minus the estimated amount 

of the Fund’s liabilities. The IIV will be 

calculated based on the same portfolio 

holdings disclosed on the Trust’s Web 

site. All assets held by the Fund will be 

included in the IIV calculation. 

According to the Registration 

Statement, the Fund will provide the 

independent third party calculator with 

information to calculate the IIV, but the 

Fund will not be involved in the actual 

calculation of the IIV and is not 

responsible for the calculation or 

dissemination of the IIV. The Fund 

makes no warranty as to the accuracy of 

the IIV. The IIV should not be viewed 

as a ‘‘real-time’’ update of NAV because 

the IIV may not be calculated in the 

same manner as NAV, which is 

computed once per day. 

Creations and Redemptions of Shares 

According to the Registration 

Statement, the Fund will issue and 

redeem Shares on a continuous basis, at 

their NAV next determined after receipt, 

on any business day, for a creation order 

or redemption request received in 

proper form. The Fund will issue and 

redeem Shares only in blocks of 50,000 

Shares or whole multiples thereof 

(‘‘Creation Units’’). 

According to the Registration 

Statement, Creation Units will be sold 

in exchange for an in-kind basket of a 

designated portfolio of securities and a 

cash component. All orders to create 

Creation Units must be received by the 

Distributor no later than 3:00 p.m. E.T. 

on the date such order is placed, in 

order for the creation of Creation Units 

to be effected based on the NAV of 

Shares of the Fund as next determined 

on such date after receipt of the order 

in proper form. 

According to the Registration 

Statement, beneficial owners must 

accumulate enough Shares in the 

secondary market to constitute a 

Creation Unit in order to have such 

Shares redeemed by the Trust. The 

redemption proceeds for a Creation Unit 

will consist of consideration in an 

amount equal to the NAV of the Shares 

being redeemed, as next determined 

after receipt of a request in proper form 

less a redemption transaction fee. 

Creation Units will be redeemed 

principally in-kind for securities 

included in the Fund but also including 

cash based on the then-current value of 

the securities sold short by the Fund 

and/or the Financial Instruments used 

by the Fund (as applicable). With 

respect to the Funds, the Administrator, 

through the National Securities Clearing 

Corporation (‘‘NSCC’’), will make 

available immediately prior to the 

opening of business on the Exchange 

(currently 9:30 a.m., E.T.) on each 

business day, the designated portfolio of 

securities (the ‘‘Fund Securities’’) or 

cash component, as applicable, per 

Creation Unit that will be applicable to 

redemption requests received in proper 

form on that day. An order to redeem 

Creation Units must be received by the 

Administrator not later than 3:00 p.m., 

E.T. 

Availability of Information 

The Fund’s Web site 

(www.indexiq.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’’),24 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 (9:30 a.m. E.T. 

to 4:00 p.m. E.T.) on the Exchange, the 

Fund will disclose on its Web site the 

Disclosed Portfolio that will form the 

basis for the Fund’s calculation of NAV 

at the end of the business day.25 The 

Web site information will be publicly 

available at no charge. 

On a daily basis, the Fund will 

disclose on www.indexiq.com the 

following information regarding each 

portfolio holding, as applicable to the 

type of holding: Ticker symbol, CUSIP 

number or other identifier, if any; a 

description of the holding (including 

the type of holding, such as the type of 

swap); the identity of the security, 

commodity, index or other asset or 

instrument underlying the holding, if 

any; for options, the option strike price; 

quantity held (as measured by, for 

example, par value, notional value or 

number of shares, contracts or units); 

maturity date, if any; coupon rate, if 

any; effective date, if any; market value 

of the holding; and the percentage 

weighting of the holding in the Fund’s 

portfolio. 

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 NYSE via the NSCC. The basket 

represents one Creation Unit of the 

Fund. 

Investors can also obtain the Trust’s 

Statement of Additional Information 

(‘‘SAI’’), Shareholder Reports and Form 

N–CSR. The Trust’s SAI and 

Shareholder Reports are available free 

upon request from the Trust, and those 

documents and the Form N–CSR may be 

viewed on-screen or downloaded from 

the Commission’s Web site at 

www.sec.gov. Information regarding 

market price and trading volume of the 

Shares will be continually available on 

a real-time basis throughout the day on 

brokers’ computer screens and other 

electronic services. Information 

regarding the previous day’s closing 

price and trading volume information 

for the Shares will be published daily in 

the financial section of newspapers. 

Quotation and last sale information 

for the Shares and underlying securities 

that are U.S. exchange listed will be 

mstockstill on DSK4VPTVN1PROD with NOTICES

72728 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 

26Currently, it is the Exchange’s understanding 

that several major market data vendors display and/ 

or make widely available Portfolio Indicative 

Values taken from CTA or other data feeds. 

27See NYSE Arca Equities Rule 7.12, 

Commentary .04. 

28 17 CFR 240.10A–3. 

29FINRA surveils trading on the Exchange 

pursuant to a regulatory services agreement. The 

Exchange is responsible for FINRA’s performance 

under this regulatory services agreement. 

30For a list of the current members of ISG, see 

www.isgportal.org. 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. 

available via the Consolidated Tape 

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

Quotation and last sale information for 

such U.S. exchange-listed securities as 

well as futures will be available from 

the exchange on which they are listed. 

Quotation and last sale information for 

options contracts will be available via 

the Options Price Reporting Authority. 

Quotation information for OTC-traded 

securities and OTC-traded Financial 

Instruments (such as forwards, swaps 

and currency-related derivatives), and 

investment company securities 

(excluding ETFs), may be obtained from 

brokers and dealers who make markets 

in such securities or through nationally 

recognized pricing services through 

subscription agreements. Quotation 

information from brokers and dealers or 

pricing services will be available for 

spot and forward currency transactions 

held by the Fund. 

In addition, the Portfolio Indicative 

Value of the Fund, as defined in NYSE 

Arca Equities Rule 8.600(c)(3), will be 

widely disseminated by one or more 

major market data vendors at least every 

15 seconds during the Core Trading 

Session.26 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 (including 

money manager and other advisory or 

management fees), portfolio holdings 

disclosure policies, distributions and 

taxes is included in the Registration 

Statement. All terms relating to the 

Fund that are referred to, but not 

defined in, this proposed rule change 

are defined 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.27 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 and/or 

the financial instruments comprising 

the Disclosed Portfolio of the Fund; or 

(2) whether other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. Trading in the 

Shares 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. E.T. 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. 

The Shares will be subject to NYSE 

Arca Equities Rule 8.600, which sets 

forth the initial and continued listing 

criteria applicable to Managed Fund 

Shares. The Exchange represents that, 

for initial and/or continued listing, each 

Trust will be in compliance with Rule 

10A–3 28 under the 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 NAV per 

Share will be calculated daily and that 

the NAV and the Disclosed Portfolio as 

defined in NYSE Arca Equities Rule 

8.600(c)(2) will be made available to all 

market participants at the same time. 

Surveillance 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by the Financial Industry 

Regulatory Authority (‘‘FINRA’’) on 

behalf of the Exchange, which are 

designed to detect violations of 

Exchange rules and applicable federal 

securities laws.29 The Exchange 

represents that these procedures are 

adequate to properly monitor Exchange 

trading of the Shares in all trading 

sessions and to detect and help deter 

violations of Exchange rules and 

applicable federal securities laws. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

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. 

FINRA, on behalf of the Exchange, 

will communicate as needed regarding 

trading in the Shares, Equity Securities, 

exchange-traded options, futures 

contracts and options on futures 

contracts with other markets that are 

members of the ISG and FINRA, on 

behalf of the Exchange, may obtain 

trading information regarding trading in 

the Shares, exchange-traded equities, 

exchange-traded options, futures 

contracts and options on futures 

contracts from such markets. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares, exchange-traded equities, 

exchange-traded options, futures 

contracts and options on futures 

contracts from markets and other 

entities that are members of ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement.30 FINRA, on behalf of the 

Exchange, is able to access, as needed, 

trade information for certain fixed 

income securities held by the Fund 

reported to FINRA’s Trade Reporting 

and Compliance Engine (‘‘TRACE’’). 

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 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 72729 

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

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 

Act. The Bulletin will also disclose that 

the NAV for the Shares will be 

calculated after 4:00 p.m. E.T. each 

trading day. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 31 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 is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares will 

be listed and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in NYSE Arca Equities 

Rule 8.600. The Exchange has in place 

surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. The Exchange may obtain 

information via ISG from other 

exchanges that are members of ISG or 

with which the Exchange has entered 

into a comprehensive surveillance 

sharing agreement. All of the Equity 

Securities in which the Fund will invest 

will be listed on a U.S. national 

securities exchange or a non-U.S. 

securities exchange that is a member of 

the ISG or a party to a comprehensive 

surveillance sharing agreement with the 

Exchange; provided, however, that up to 

10% of the assets of the Fund may be 

invested in non-U.S. listed equity 

securities that do not meet these 

requirements. The Adviser has 

represented that not more than 20% of 

the Fund’s assets will be invested, in the 

aggregate, in non-investment grade 

securities and structured securities. The 

Fund’s investments will, under normal 

circumstances, be consistent with its 

investment objective. The Fund will not 

hold more than 15% of its net assets in 

illiquid securities, including Rule 144A 

securities. The Adviser is not a brokerdealer and is not affiliated with a 

broker-dealer. In the event (a) the 

Adviser becomes newly affiliated with a 

broker-dealer, or (b) any new adviser or 

subadviser is a registered broker-dealer 

or becomes affiliated with a brokerdealer it will implement a firewall with 

respect to its relevant personnel or its 

broker-dealer affiliate regarding access 

to information concerning the 

composition and/or changes to a 

portfolio, and will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 

portfolio. 

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest in that the Adviser is not 

affiliated with broker-dealers. The 

Exchange will obtain a representation 

from the issuer of the Shares that the 

NAVs per Share will be calculated daily 

and that the NAVs and the Disclosed 

Portfolio will be made available to all 

market participants at the same time. In 

addition, a large amount of information 

is publicly available regarding the Fund 

and the Shares, thereby promoting 

market transparency. The Fund’s 

portfolio holdings will be disclosed on 

its Web site daily after the close of 

trading on the Exchange and prior to the 

opening of trading on the Exchange the 

following day. Moreover, the Portfolio 

Indicative Value will be widely 

disseminated by one or more major 

market data vendors at least every 15 

seconds during the Core Trading 

Session. Information regarding market 

price and trading volume of the Shares 

will be continually available on a realtime basis throughout the day on 

brokers’ computer screens and other 

electronic services, and quotation and 

last sale information will be available 

via the CTA high-speed line. The Web 

site for the Fund will include a form of 

the prospectus for the Fund and 

additional data relating to the Fund’s 

NAVs and other applicable quantitative 

information. Moreover, 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. Trading in Shares of 

the Fund will be halted if the circuit 

breaker parameters in NYSE Arca 

Equities Rule 7.12 have been reached or 

because of market conditions or for 

reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable, and 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. In addition, as 

noted above, investors will have ready 

access to information regarding the 

Fund’s holdings, the Portfolio Indicative 

Value, the Disclosed Portfolio, and 

quotation and last sale information for 

the Shares. 

The proposed rule change is designed 

to perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest in that 

it will facilitate the listing and trading 

of additional types of actively-managed 

exchange-traded products that will 

enhance competition among market 

participants, to the benefit of investors 

and the marketplace. As noted above, 

the Exchange has in place surveillance 

procedures relating to trading in the 

Shares and may obtain information via 

ISG from other exchanges that are 

members of ISG or with which the 

Exchange has entered into a 

comprehensive surveillance sharing 

agreement. In addition, as noted above, 

investors will have ready access to 

information regarding the Fund’s 

holdings, the Portfolio Indicative Value, 

the Disclosed Portfolio, and quotation 

and last sale information for the Shares. 

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 purpose of the Act. The Exchange 

notes that the proposed rule change will 

facilitate the listing and trading of 

additional types of actively-managed 

exchange-traded products that will 

enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

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. 

mstockstill on DSK4VPTVN1PROD with NOTICES

72730 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 

32 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4Amendment No. 1 amends the proposed rule 

change in the following ways: (1) Specifies that the 

floating rate high yield corporate bonds in which 

the Fund invests generally must have a $100 

million par amount outstanding at the time of 

investment; (2) clarifies that senior loans in which 

the Fund may invest includes leveraged loans; and 

(3) specifies that the U.S. exchange-traded futures 

contracts, U.S. exchange-traded options on futures 

contracts and U.S. exchange-traded put and call 

options in which the Fund invests will trade on 

exchanges that are members of the Intermarket 

Surveillance Group. 

5A 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–1) (‘‘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. 

6The Commission has approved listing and 

trading on the Exchange of a number of actively 

managed funds under Rule 8.600. See, e.g., 

Securities Exchange Act Release Nos. 69591 (May 

16, 2013), 78 FR 30372 (May 22, 2013) (SR– 

NYSEArca–2013–33) (order approving Exchange 

listing and trading of International Bear ETF); 69061 

(March 7, 2013), 78 FR 15990 (March 13, 2013) (SR– 

NYSEArca–2013–01) (order approving Exchange 

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 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 email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2014–134 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2014–134. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 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– 

NYSEArca–2014–134, and should be 

submitted on or before December 29, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28643 Filed 12–5–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73717; File No. SR– 

NYSEArca–2014–126] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change, as Modified by 

Amendment No. 1, Relating to the 

Listing and Trading of Shares of the 

AdvisorShares Pacific Asset Enhanced 

Floating Rate ETF Under NYSE Arca 

Equities Rule 8.600 

December 2, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

November 19, 2014, NYSE Arca, Inc. 

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

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. On 

November 26, 2014, the Exchange filed 

Amendment No. 1 to the proposal.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as modified by Amendment No. 

1, 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 shares of the following under 

NYSE Arca Equities Rule 8.600 

(‘‘Managed Fund Shares’’): 

AdvisorShares Pacific Asset Enhanced 

Floating Rate ETF. The text of the 

proposed rule change is available on the 

Exchange’s Web site at www.nyse.com, 

at the principal office of the Exchange, 

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 shares (‘‘Shares’’) of the following 

under NYSE Arca Equities Rule 8.600, 

which governs the listing and trading of 

Managed Fund Shares 5: AdvisorShares 

Pacific Asset Enhanced Floating Rate 

ETF (‘‘Fund’’).6 The Shares will be 

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