Document ID: SEC-2009-1301-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to Listing of Five Fixed Income Funds of the PIMCO ETF Trust
Posted Date: 2009-09-11T04:00Z

[Federal Register: September 11, 2009 (Volume 74, Number 175)]
[Notices]               
[Page 46820-46825]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11se09-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60619; File No. SR-NYSEArca-2009-79]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to Listing of Five Fixed Income Funds 
of the PIMCO ETF Trust

September 3, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that, on August 27, 2009, NYSE Arca, Inc. (``NYSE 
Arca'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) of the Exchange Act, 
NYSE Arca, through its wholly-owned subsidiary NYSE Arca Equities, Inc. 
(``NYSE Arca Equities'' or the ``Corporation''), proposes to list and 
trade the shares of the following funds of the PIMCO ETF Trust (the 
``Trust'') under NYSE Arca Equities Rule 8.600 (Managed Fund Shares): 
PIMCO Enhanced Short Maturity Strategy Fund, PIMCO Government Limited 
Maturity Strategy Fund, PIMCO Intermediate Municipal Bond Strategy 
Fund, PIMCO Prime Limited Maturity Strategy Fund, and PIMCO Short Term 
Municipal Bond Strategy Fund, (each a ``Fund'' and, collectively, the 
``Funds''). The shares of the Funds are collectively referred to herein 
as the ``Shares.''
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nyx.com, at the Exchange's principal office and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares of the Funds 
under NYSE Arca Equities Rule 8.600, which governs the listing and 
trading of Managed Fund Shares on the Exchange.\3\ Each of the Funds 
will be an actively managed exchange traded fund. The Shares will be 
offered by the Trust, which is a Delaware statutory trust. The Trust is 
registered with the Commission as an investment company.\4\
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    \3\ The Commission approved NYSE Arca Equities Rule 8.600 and 
the listing and trading of certain funds of the PowerShares Actively 
Managed Funds Trust on the Exchange pursuant to Rule 8.600 in 
Securities Exchange Act Release No. 57619 (April 4, 2008) 73 FR 
19544 (April 10, 2008) (SR-NYSEArca-2008-25). The Commission also 
previously approved listing and trading on the Exchange, or trading 
on the Exchange pursuant to unlisted trading privileges (``UTP'') of 
the following actively managed funds under Rule 8.600: Securities 
Exchange Act Release No. 57626 (April 4, 2008), 73 FR 19923 (April 
11, 2008) (SR-NYSEArca-2008-28) (order approving trading on the 
Exchange pursuant to UTP of Bear Stearns Active ETF); Securities 
Exchange Act Release No. 57801 (May 8, 2008), 73 FR 27878 (May 14, 
2008) (SR-NYSEArca-2008-31) (order approving Exchange listing and 
trading of twelve actively-managed funds of the WisdomTree Trust); 
Securities Exchange Act Release No. 59826 (April 28, 2009), 74 FR 
20512 (May 4, 2009) (SR-NYSEArca-2009-22) (order approving Exchange 
listing and trading of Grail American Beacon Large Cap Value ETF); 
Securities Exchange Act Release No. 60460 (August 7, 2009), 74 FR 
41468 (August 17, 2009) (SR-NYSEArca-2009-55) (order approving 
Exchange listing and trading of Dent Tactical ETF).
    \4\ See Registration Statement on Form N-1A for the Trust filed 
with the Securities and Exchange Commission on July 22, 2009 (File 
Nos. 333-155395 and 811-22250) (the ``Registration Statement''). The 
descriptions of the Funds and the Shares contained herein are based 
on information in the Registration Statement.
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Description of the Shares and the Funds
    Pacific Investment Management Company LLC (``PIMCO'') is the 
investment adviser (``Adviser'') to each Fund.\5\ State Street Bank & 
Trust Co. is the custodian and transfer agent for the Funds. The 
Trust's Distributor is Allianz Global Investors Distributors LLC (the 
``Distributor''), an indirect subsidiary of Allianz Global Investors of 
America L.P. (``AGI''), PIMCO's parent company. The Distributor is a 
registered broker-dealer.\6\
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    \5\ The Exchange represents that the Adviser, as the investment 
adviser of the Funds, and its 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 advisor 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 advisor 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 advisor to provide investment advice to clients unless 
such investment advisor has (i) adopted and implemented written 
policies and procedures reasonably designed to prevent violation, by 
the investment advisor 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.
    \6\ The Funds have made application for an order granting 
certain exemptive relief to the Trust under the Investment Company 
Act of 1940 (15 U.S.C. 80a-1) (``1940 Act''). In compliance with 
Commentary .05 to NYSE Arca Equities Rule 8.600, which applies to 
Managed Fund Shares based on an international or global portfolio, 
the Trust's application for exemptive relief under the 1940 Act 
states that the Funds will comply with the Federal securities laws 
in accepting securities for deposits and satisfying redemptions with 
redemption securities, including that the securities accepted for 
deposits and the securities used to satisfy redemption requests are 
sold in transactions that would be exempt from registration under 
the Securities Act of 1933 (15 U.S.C. 77a).
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    Commentary .07 to Rule 8.600 provides that, if the investment 
adviser to the Investment Company issuing Managed Fund Shares is 
affiliated with a broker-dealer, such investment adviser shall erect a 
``fire wall'' between the investment adviser and the broker-dealer with 
respect to access to

[[Page 46821]]

information concerning the composition and/or changes to such 
Investment Company portfolio.\7\ In addition, Commentary .07 further 
requires that personnel who make decisions on the open-end fund's 
portfolio composition must be subject to procedures designed to prevent 
the use and dissemination of material nonpublic information regarding 
the open-end fund's portfolio. Commentary .07 to Rule 8.600 is similar 
to Commentary .03(a)(i) and (iii) to NYSE Arca Equities Rule 5.2(j)(3); 
however, Commentary .07 in connection with the establishment of a 
``fire wall'' between the investment adviser and the broker-dealer 
reflects the applicable open-end fund's portfolio, not an underlying 
benchmark index, as is the case with index-based funds. The Adviser is 
affiliated with a broker-dealer, Allianz Global Investors Distributors 
LLC, and has implemented a fire wall with respect to such broker-dealer 
regarding access to information concerning the composition and/or 
changes to a portfolio.
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    \7\ An 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 non-public information by an investment adviser must be 
consistent with Rule 204A-1 under the Advisers Act.
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    None of the Funds will invest in non-U.S. equity securities.
PIMCO Enhanced Short Maturity Strategy Fund
    According to the Registration Statement, the Fund's investment 
objective is to seek maximum current income, consistent with 
preservation of capital and daily liquidity.\8\
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    \8\ The investment objective of each Fund is non-fundamental and 
may be changed by the Board of Trustees without shareholder 
approval.
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    The Fund seeks to achieve its investment objective by investing 
under normal circumstances at least 65% of its total assets in a 
diversified portfolio of Fixed Income Instruments \9\ of varying 
maturities, which may be represented by forwards or derivatives such as 
options, futures contracts or swap agreements. The average portfolio 
duration of this Fund will vary based on PIMCO's forecast for interest 
rates and will normally not exceed one year. The dollar-weighted 
average portfolio maturity of the Fund is normally not expected to 
exceed three years.
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    \9\ According to the Registration Statement, ``Fixed Income 
Instruments,'' as used generally in the Registration Statement, 
includes:
     Securities issued or guaranteed by the U.S. Government, 
its agencies or government-sponsored enterprises (``U.S. Government 
Securities'');
     Corporate debt securities of U.S. and non-U.S. issuers, 
including corporate commercial paper;
     Mortgage-backed and other asset-backed securities;
     Inflation-indexed bonds issued both by governments and 
corporations;
     Structured notes, including hybrid or ``indexed'' 
securities;
     Loan participations and assignments;
     Delayed funding loans and revolving credit facilities;
     Bank certificates of deposit, fixed time deposits and 
bankers' acceptances;
     Repurchase agreements on Fixed Income Instruments and 
reverse repurchase agreements on Fixed Income Instruments;
     Debt securities issued by States or local governments 
and their agencies, authorities and other government-sponsored 
enterprises;
     Obligations of non-U.S. governments or their 
subdivisions, agencies and government-sponsored enterprises; and
     Obligations of international agencies or supranational 
entities.
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    According to the Registration Statement, the Fund primarily invests 
in U.S. dollar-denominated investment grade debt securities, rated Baa 
or higher by Moody's, or equivalently rated by S&P or Fitch, or, if 
unrated, determined by PIMCO to be of comparable quality. The Fund may 
invest, without limitation, in U.S. dollar-denominated fixed income 
securities and instruments that are economically tied to foreign (non-
U.S.) countries.\10\ The Fund may invest up to 5% of its total assets 
in U.S. dollar-denominated fixed-income securities and instruments that 
are economically tied to emerging market countries.
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    \10\ According to the Registration Statement, PIMCO generally 
considers an instrument to be economically tied to a non-U.S. 
country if the issuer is a foreign government (or any political 
subdivision, agency, authority or instrumentality of such 
government), or if the issuer is organized under the laws of a non-
U.S. country. In the case of certain money market instruments, such 
instruments will be considered economically tied to a non-U.S. 
country if either the issuer or the guarantor of such money market 
instrument is organized under the laws of a non-U.S. country. With 
respect to derivative instruments, PIMCO generally considers such 
instruments to be economically tied to non-U.S. countries if the 
underlying assets are foreign currencies (or baskets or indexes of 
such currencies), or instruments or securities that are issued by 
foreign governments or issuers organized under the laws of a non-
U.S. country (or if the underlying assets are certain money market 
instruments, if either the issuer or the guarantor of such money 
market instruments is organized under the laws of a non-U.S. 
country).
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    The Fund may invest, without limitation, in derivative instruments, 
such as options, futures contracts or swap agreements, or in mortgage- 
or asset-backed securities. The Fund may, without limitation, seek to 
obtain market exposure to the fixed income securities in which it 
primarily invests by entering into a series of purchase and sale 
contracts or by using other investment techniques (such as buy backs or 
dollar rolls).
    As described in the Registration Statement, the Enhanced Short 
Maturity Strategy Fund also may invest in the following: up to 5% of 
its total assets in any combination of mortgage-related or other asset-
backed interest-only, principal-only or inverse floater securities; 
fixed- and floating-rate loans, which investments generally will be in 
the form of loan participations and assignments of portions of such 
loans; U.S. dollar-denominated fixed income securities and instruments; 
and Brady Bonds, which are securities created through the exchange of 
existing commercial bank loans to sovereign entities for new 
obligations in connection with a debt restructuring.
    The Fund may, but is not required to, use derivative instruments 
for risk management purposes or as part of its investment strategies. 
According to the Registration Statement, generally, derivatives are 
financial contracts whose value depends upon, or is derived from, the 
value of an underlying asset, reference rate or index, and may relate 
to stocks, bonds, interest rates, currencies or currency exchange 
rates, commodities, and related indexes. Examples of derivative 
instruments include options contracts, futures contracts, options on 
futures contracts and swap agreements (including, but not limited to, 
credit default swaps and swaps on exchange traded funds).
PIMCO Government Limited Maturity Strategy Fund
    According to the Registration Statement, the Fund's investment 
objective is to seek maximum current income, consistent with 
preservation of capital and daily liquidity. The Fund seeks to achieve 
its investment objective by investing under normal circumstances at 
least 80% of its assets in a diversified portfolio of fixed income 
securities that are issued or guaranteed by the U.S. Government, its 
agencies or government-sponsored enterprises (``U.S. Government 
Securities''). Assets not invested in U.S. Government Securities may be 
invested in other types of Fixed Income Instruments.
    According to the Registration Statement, the Fund's investments in 
Fixed Income Instruments are limited to those of investment grade U.S. 
dollar-denominated securities of U.S. issuers that are rated Aa or 
higher by Moody's, or equivalently rated by S&P or Fitch, or, if 
unrated, determined by PIMCO to be of comparable quality. The average 
portfolio duration of this Fund will vary based on PIMCO's forecast for 
interest

[[Page 46822]]

rates and will normally not exceed one year. The Fund may only invest 
in securities that mature within two years from the date of purchase.
    The Fund may, without limitation, seek to obtain market exposure to 
the fixed income securities in which it primarily invests by entering 
into a series of purchase and sale contracts or by using other 
investment techniques (such as buy backs or dollar rolls).
PIMCO Intermediate Municipal Bond Strategy Fund
    According to the Registration Statement, the Fund's investment 
objective is to seek attractive tax-exempt income, consistent with 
preservation of capital. The Fund seeks to achieve its investment 
objective by investing under normal circumstances at least 80% of its 
assets in a diversified portfolio of debt securities whose interest is, 
in the opinion of bond counsel for the issuer at the time of issuance, 
exempt from Federal income tax (``Municipal Bonds''). Municipal Bonds 
generally are issued by or on behalf of States and local governments 
and their agencies, authorities and other instrumentalities.
    According to the Registration Statement, the Fund does not intend 
to invest in securities whose interest is subject to the Federal 
alternative minimum tax. The Fund may only invest in U.S. dollar-
denominated investment grade debt securities. The Fund may invest 25% 
or more of its total assets in Municipal Bonds that finance similar 
projects, such as those relating to education, health care, housing, 
transportation, and utilities, and 25% or more of its total assets in 
industrial development bonds. The average portfolio duration of this 
Fund normally varies from three to eight years, based on PIMCO's 
forecast for interest rates. The portfolio manager focuses on bonds 
with the potential to offer attractive current income, typically 
looking for bonds that can provide consistently attractive current 
yields or that are trading at competitive market prices.
    The Fund may, without limitation, seek to obtain market exposure to 
the fixed income securities in which it primarily invests by entering 
into a series of purchase and sale contracts or by using other 
investment techniques (such as buy backs or dollar rolls).
PIMCO Prime Limited Maturity Strategy Fund
    According to the Registration Statement, the Fund's investment 
objective is to seek maximum current income, consistent with 
preservation of capital and daily liquidity. The Fund seeks to achieve 
its investment objective by investing under normal circumstances at 
least 65% of its total assets in a diversified portfolio of fixed 
income securities of varying maturities. The Fund may only invest in 
U.S. dollar-denominated securities that mature within 397 days from the 
date of purchase or floating rate U.S. government agency securities 
that mature within two years from the date of purchase. The average 
portfolio duration of this Fund will vary based on PIMCO's forecast for 
interest rates and will normally not exceed 90 days.
    According to the Registration Statement, the Fund primarily invests 
in U.S. dollar-denominated investment grade debt securities, rated A or 
higher by Moody's, or equivalently rated by S&P or Fitch, or, if 
unrated, determined by PIMCO to be of comparable quality.
    The Fund may, without limitation, seek to obtain market exposure to 
the fixed income securities in which it primarily invests by entering 
into a series of purchase and sale contracts or by using other 
investment techniques (such as buy backs or dollar rolls).
PIMCO Short Term Municipal Bond Strategy Fund
    According to the Registration Statement, the Fund's investment 
objective is to seek attractive tax-exempt income, consistent with 
preservation of capital. The Fund seeks to achieve its investment 
objective by investing under normal circumstances at least 80% of its 
assets in a diversified portfolio of Municipal Bonds.
    According to the Registration Statement, the Fund does not intend 
to invest in securities whose interest is subject to the Federal 
alternative minimum tax. The Fund may only invest in U.S. dollar-
denominated investment grade debt securities. The Fund may invest 25% 
or more of its total assets in Municipal Bonds that finance similar 
projects, such as those relating to education, health care, housing, 
transportation, and utilities, and 25% or more of its total assets in 
industrial development bonds. The average portfolio duration of this 
Fund varies based on PIMCO's forecast for interest rates and under 
normal market conditions is not expected to exceed three years. The 
dollar-weighted average portfolio maturity of the Fund is normally not 
expected to exceed three years. The portfolio manager focuses on bonds 
with the potential to offer attractive current income, typically 
looking for bonds that can provide consistently attractive current 
yields or that are trading at competitive market prices.
    The Fund may, without limitation, seek to obtain market exposure to 
the securities in which it primarily invests by entering into a series 
of purchase and sale contracts or by using other investment techniques 
(such as buy backs or dollar rolls).
    Each Fund may enter into repurchase agreements, in which the Fund 
purchases a security from a bank or broker-dealer, which agrees to 
repurchase the security at the Fund's cost plus interest within a 
specified time. In addition, each Fund may enter into reverse 
repurchase agreements and dollar rolls; may purchase securities which 
it is eligible to purchase on a when-issued basis; may purchase and 
sell such securities for delayed delivery and may make contracts to 
purchase such securities for a fixed price at a future date beyond 
normal settlement time (forward commitments); may invest in, to the 
extent permitted by Section 12(d)(1) of the 1940 Act, other affiliated 
and unaffiliated funds, such as open-end or closed-end management 
investment companies, including other exchange traded funds; may invest 
securities lending collateral in one or more money market funds to the 
extent permitted by Rule 12d1-1 under the 1940 Act; and may invest up 
to 15% of its net assets in illiquid securities.\11\
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    \11\ According to the Registration Statement, the term 
``illiquid securities'' for this purpose means securities that 
cannot be disposed of within seven days in the ordinary course of 
business at approximately the amount at which a Fund has valued the 
securities.
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The Shares
    According to the Registration Statement, Shares of a Fund that 
trade in the secondary market are ``created'' at NAV \12\ by Authorized 
Participants only in block-size Creation Units of 100,000 shares or 
multiples thereof. Each Authorized Participant enters into an 
authorized participant agreement with the Funds' Distributor. A 
creation transaction, which is subject to acceptance by the transfer 
agent, takes place when an Authorized Participant deposits into a Fund 
a specified amount of cash and/or a portfolio of securities specified 
by such Fund in exchange for a specified number of Creation Units.
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    \12\ The NAV of each Fund's shares generally is calculated once 
daily Monday through Friday as of the close of regular trading on 
the New York Stock Exchange, generally 4:00 p.m. Eastern time (the 
``NAV Calculation Time'') on any Business Day as defined in the 
Registration Statement. NAV per share is calculated by dividing a 
Fund's net assets by the number of Fund shares outstanding. For more 
information regarding the valuation of Fund investments in 
calculating a Fund's NAV, see the Registration Statement.
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    Similarly, Shares can be redeemed only in Creation Units, generally 
in-kind

[[Page 46823]]

for a portfolio of securities held by a Fund and/or for a specified 
amount of cash. Except when aggregated in Creation Units, Shares are 
not redeemable by a Fund. The prices at which creations and redemptions 
occur are based on the next calculation of NAV after an order is 
received. Requirements as to the timing and form of orders are 
described in the authorized participant agreement.
    PIMCO, through the National Securities Clearing Corporation 
(``NSCC''), makes available on each Business Day, prior to the opening 
of business (subject to amendments) on the Exchange (currently 9:30 
a.m., Eastern time), the identity and the required number of shares of 
each Deposit Security and the amount of the Cash Component to be 
included in the current Fund Deposit (based on information at the end 
of the previous Business Day).
    Creations and redemptions must be made by an Authorized Participant 
or through a firm that is either a member of the Continuous Net 
Settlement System of the NSCC or a DTC participant, and in each case, 
must have executed an agreement with the Distributor with respect to 
creations and redemptions of Creation Unit aggregations.
    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. All 
terms relating to the Funds that are referred to, but not defined in, 
this proposed rule change are defined in the Registration Statement.
Availability of Information
    The Funds' Web site (http://www.pimcoetfs.com), which will be 
publicly available prior to the public offering of Shares, will include 
a form of the Prospectus for each Fund that may be downloaded. The Web 
site will include additional quantitative information updated on a 
daily basis, including, for the Funds: (1) The prior business day's 
reported NAV, mid-point of the bid/ask spread at the time of 
calculation of such NAV (the ``Bid/Ask Price''),\13\ 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 \14\ on the Exchange, the Trust will 
disclose on its Web site the identities and quantities of the portfolio 
of securities and other assets (the ``Disclosed Portfolio'') held by 
the Funds that will form the basis for the Funds' calculation of NAV at 
the end of the business day.\15\ The Web site and information will be 
publicly available at no charge.
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    \13\ The Bid/Ask Price of each Fund is determined using the 
midpoint of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of the NAV. The records relating to Bid/
Ask Prices will be retained by each Fund and its service providers.
    \14\ The Core Trading Session is 9:30 a.m. to 4 p.m. Eastern 
time.
    \15\ Under accounting procedures followed by the Funds, trades 
made on the prior business day (``T'') will be booked and reflected 
in NAV on the current business day (``T+1''). Notwithstanding the 
foregoing, portfolio trades that are executed prior to the opening 
of the Exchange on any business day may be booked and reflected in 
NAV on such business day. Accordingly, each 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.
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    In addition, for each Fund, an estimated value, defined in NYSE 
Arca Equities Rule 8.600 as the ``Portfolio Indicative Value,'' that 
reflects an estimated intraday value of the Fund's portfolio, will be 
disseminated. The Portfolio Indicative Value will be based upon the 
current value for the components of the Disclosed Portfolio and will be 
updated and disseminated by the Exchange at least every 15 seconds 
during the Core Trading Session on the Exchange through the facilities 
of the Consolidated Tape Association. The dissemination of the 
Portfolio Indicative Value, together with the Disclosed Portfolio, will 
allow investors to determine the value of the underlying portfolio of a 
Fund on a daily basis and to provide a close estimate of that value 
throughout the trading day.
    Information regarding market price and 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. 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 high-speed line.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Funds' 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.
Initial and Continued Listing
    The Shares will be subject to NYSE Arca Equities Rule 8.600(d), 
which sets forth the initial and continued listing criteria applicable 
to Managed Fund Shares. The Exchange represents that, for initial and/
or continued listing, the Shares must be in compliance with Rule 10A-3 
\16\ 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 
per Share will be calculated daily and that the net asset value and the 
Disclosed Portfolio will be made available to all market participants 
at the same time.
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    \16\ See 17 CFR 240.10A-3.
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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 Funds. Shares of the Funds will be halted 
if the ``circuit breaker'' parameters in NYSE Arca Equities Rule 7.12 
are reached. Trading may be halted because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the Shares 
inadvisable. These may include: (1) The extent to which trading is not 
occurring in the securities comprising the Disclosed Portfolio and/or 
the financial instruments of the Funds; 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 Funds 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. The minimum 
trading

[[Page 46824]]

increment for Shares on the Exchange will be $0.01.
Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (which includes 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 
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 who are members of 
ISG.\17\
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    \17\ For a list of the current members of ISG, see http://
www.isgportal.org. The Exchange notes that not all of the components 
of the Disclosed Portfolio for the Funds may trade on exchanges that 
are members of ISG.
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    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 
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 Funds are 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 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) \18\ 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 additional types of exchange-traded products 
that will enhance competition among market participants, to the benefit 
of investors and the marketplace. In addition, the listing and trading 
criteria set forth in NYSE Arca Equities Rule 8.600 are intended to 
protect investors and the public interest.
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    \18\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve the proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.
    The Exchange has requested accelerated approval of this proposed 
rule change prior to the 30th day after the date of publication of 
notice in the Federal Register. The Commission is considering granting 
accelerated approval of the proposed rule change at the end of a 15-day 
comment period.

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 rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2009-79 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-NYSEArca-2009-79. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the 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

[[Page 46825]]

Number SR-NYSEArca-2009-79 and should be submitted on or before 
September 28, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-21908 Filed 9-10-09; 8:45 am]

BILLING CODE 8010-01-P