Document ID: SEC-2012-0520-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-04-03T04:00Z

[Federal Register Volume 77, Number 64 (Tuesday, April 3, 2012)]
[Notices]
[Pages 20087-20090]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7913]

[[Page 20087]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66670; File No. SR-NYSEArca-2012-09]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change Relating to the Listing and Trading of 
the PIMCO Global Advantage Inflation-Linked Bond Strategy Fund Under 
NYSE Arca Equities Rule 8.600

March 28, 2012.

I. Introduction

    On January 27, 2012, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to list and trade shares 
(``Shares'') of the PIMCO Global Advantage Inflation-Linked Bond 
Strategy Fund (``Fund'') under NYSE Arca Equities Rule 8.600. The 
proposed rule change was published for comment in the Federal Register 
on February 16, 2012.\3\ The Commission received no comments on the 
proposed rule change. This order grants approval of the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 66381 (February 10, 
2012), 77 FR 9281 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade Shares of the Fund pursuant 
to NYSE Arca Equities Rule 8.600, which governs the listing and trading 
of Managed Fund Shares on the Exchange. The Shares will be offered by 
PIMCO ETF Trust (``Trust''),\4\ a statutory trust organized under the 
laws of the State of Delaware and registered with the Commission as an 
open-end management investment company. The investment manager of the 
Fund is Pacific Investment Management Company LLC (``PIMCO'' or 
``Adviser''). State Street Bank & Trust Co. is the custodian and 
transfer agent for the Fund, and PIMCO Investments LLC is the 
distributor for the Fund. The Exchange states that the Adviser is 
affiliated with a broker-dealer and, as such, represents that the 
Adviser has implemented a fire wall with respect to its broker-dealer 
affiliate regarding access to information concerning the composition 
and/or changes to the Fund's portfolio.\5\
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    \4\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act''). On February 14, 2011, the Trust filed with the 
Commission Post-Effective Amendment No. 25 under the Securities Act 
of 1933 (15 U.S.C. 77a) (``Securities Act'') and Amendment No. 27 
under the 1940 Act to the Trust's registration statement on Form N-
1A relating to the Fund. On October 28, 2011, the Trust filed with 
the Commission Post-Effective Amendment No. 43 under the Securities 
Act and Amendment No. 45 under the 1940 Act to the Trust's 
registration statement on Form N-1A relating to the Fund (File Nos. 
333-155395 and 811-22250) (``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. 28993 (November 10, 2009) (File No. 812-13571) (``Exemptive 
Order'').
    \5\ See NYSE Arca Equities Rule 8.600, Commentary .06. In the 
event (a) the Adviser or any sub-adviser becomes newly affiliated 
with a broker-dealer, or (b) any new adviser or sub-adviser becomes 
affiliated with a broker-dealer, it will implement a fire wall with 
respect to such broker-dealer regarding access to information 
concerning the composition and/or changes to the portfolio, and will 
be subject to procedures designed to prevent the use and 
dissemination of material non-public information regarding such 
portfolio.
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PIMCO Global Advantage Inflation-Linked Bond Strategy Fund

    The Fund seeks total return which exceeds that of its benchmark 
indexes, consistent with prudent investment management. The Fund's 
primary benchmark index is the Barclays Capital Universal Government 
Inflation-Linked Bond Index. The Fund's secondary benchmark index is 
the PIMCO Global Advantage Inflation-Linked Bond Index. The Fund seeks 
to achieve its investment objective by investing under normal 
circumstances \6\ at least 80% of its assets in a portfolio of 
inflation-linked bonds that is economically tied to at least three 
developed and/or emerging market countries (one of which may be the 
United States). The Fund's holdings may include bonds issued by issuers 
in both developed and/or emerging market countries, and the Fund is 
expected to hold bonds of issuers that are economically tied \7\ to 
many of the countries represented in the Fund's primary benchmark 
index.\8\ Assets not invested in inflation-linked bonds may be invested 
in other types of Fixed Income Instruments.\9\
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    \6\ The term ``under normal circumstances'' includes, but is not 
limited to, the absence of 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.
    \7\ 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.
    \8\ Each country's approximate weighting within the global 
inflation-linked bond market, as reflected by the approximate 
weighting of the Barclays Capital Universal Government Inflation-
Linked Bond Index (the Fund's primary benchmark), as of January 31, 
2011, is as follows: U.S. 32%, U.K. 19%, France 11%, Brazil 10%, 
Italy 7%, Canada 2%, Germany 3%, Japan 3%, Mexico 2%, Sweden 2%, 
Turkey 2%, Argentina 1%, Australia 1%, Greece 1%, South Africa 1%, 
Chile <1%, Poland <1%, Colombia <1%, and South Korea <1%. Each 
country's approximate value of outstanding inflation-linked bonds 
also as of January 31, 2011, is as follows (in $ billions): U.S. 
$642.7, U.K. $392.2, France $222.0, Brazil $209.6, Italy $143.2, 
Canada $49.9, Germany $60.9, Japan $57.0, Mexico $45.7, Sweden 
$39.1, Turkey $45.9, Argentina $20.0, Australia $17.7, Greece $11.8, 
South Africa $26.4, Chile $8.2, Poland $5.5, Colombia $2.7, and 
South Korea $3.4.
    \9\ The term ``Fixed Income Instruments'' 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 
convertible securities and 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 and event-linked bonds; 
bank capital and trust preferred 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. Securities issued by U.S. 
Government agencies or government-sponsored enterprises may not be 
guaranteed by the U.S. Treasury.
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    Inflation-linked bonds are government-issued fixed income 
securities that are structured to provide protection against inflation. 
The value of the bond's principal or the interest income paid on the 
bond is adjusted to track changes in an official inflation measure. The 
effective duration of the Fund's portfolio normally varies within two 
years (plus or minus) of the effective duration of the PIMCO Global 
Advantage Inflation-Linked Bond Index which, as of September 30, 2011, 
as converted, was 4.53 years.
    The Fund will invest under normal circumstances at least 80% of its 
assets in inflation-linked bonds issued by U.S. or foreign governments 
(or any political subdivision, agency, authority or instrumentality of 
such government).\10\

[[Page 20088]]

The secondary benchmark includes a liquidity screen to remove 
inflation-linked bonds issued by governments of countries with 
cumulative inflation-linked bond issuances below $7 billion local 
currency equivalent, in addition to liquidity screens at the issue 
level. The Exchange represents that the global inflation-linked bond 
market exceeded $2.25 trillion as of December 31, 2011.\11\
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    \10\ The value of inflation-linked bonds is expected to change 
in response to changes in real interest rates. Real interest rates 
are tied to the relationship between nominal interest rates and the 
rate of inflation. If nominal interest rates increase at a faster 
rate than inflation, real interest rates may rise, leading to a 
decrease in value of inflation-linked bonds.
    \11\ The value of the global inflation-linked bond market is 
calculated based on the total outstanding value of issues included 
in the Barclays Capital Universal Government Inflation-Linked Bond 
Index that are not expiring in less than one year.
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    The Fund primarily will invest in debt securities rated Baa or 
higher by Moody's Investors Service, Inc., or equivalently rated by 
Standard & Poor's Ratings Services or Fitch, Inc., or, if unrated, 
determined by PIMCO to be of comparable quality.\12\ The Fund may 
obtain foreign currency exposure (from non-U.S. dollar denominated debt 
securities or currencies) without limitation. The Fund may purchase and 
sell debt securities on a when-issued, delayed delivery or forward 
commitment basis. 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). The Fund may 
invest, without limitation, in debt securities and instruments of 
foreign government issuers, including debt securities and instruments 
economically tied to emerging market countries.
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    \12\ The Adviser represents that, in selecting securities for 
the Fund, PIMCO will develop an outlook for interest rates, currency 
exchange rates and the economy, analyze credit and call risks, and 
use other security selection techniques. The proportion of the 
Fund's assets committed to investment in securities with particular 
characteristics (such as quality, sector, interest rate or maturity) 
will vary based on PIMCO's outlook for the U.S. economy and the 
economies of other countries in the world, the financial markets, 
and other factors. Sophisticated proprietary software will assist in 
evaluating sectors, pricing and rating specific securities. Once 
investment opportunities are identified, PIMCO will shift assets 
among sectors and securities depending upon changes in relative 
valuations and credit spreads in a manner consistent with the Fund's 
objective and strategies. To the extent the Fund invests in unrated 
securities that PIMCO determines to be of comparable quality to 
rated securities that the Fund may purchase, the Fund's ability to 
achieve its objective may depend more heavily on PIMCO's 
creditworthiness analysis than if the Fund invested exclusively in 
rated securities.
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Other Portfolio Holdings

    If PIMCO believes that economic or market conditions are 
unfavorable to investors, PIMCO may temporarily invest up to 100% of 
the Fund's assets in certain defensive strategies, including holding a 
substantial portion of the Fund's assets in cash, cash equivalents, or 
other highly rated short-term securities, including securities issued 
or guaranteed by the U.S. government, its agencies or 
instrumentalities, and affiliated money market and/or short-term bond 
funds.
    The Fund may invest in, to the extent permitted by Section 12(d)(1) 
of the 1940 Act and rules thereunder, other affiliated and unaffiliated 
funds, such as open-end or closed-end management investment companies, 
including other exchange traded funds. In addition, the Fund may enter 
into foreign currency transactions (such as currency forwards).\13\
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    \13\ The Fund may engage in these transactions primarily to: (1) 
Protect against uncertainty in the level of future foreign exchange 
rates in the purchase and sale of securities; or (2) lower currency 
deviations relative to the Fund's benchmark indexes.
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    The Fund may hold in the aggregate up to 15% of its net assets in: 
(1) Illiquid securities, which include delayed funding loans, revolving 
credit facilities, fixed- and floating-rate loans, and loan 
participations and assignments, and (2) Rule 144A securities. Certain 
illiquid securities may require pricing at fair value as determined in 
good faith under the supervision of the Fund's Board of Trustees. 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 the Fund has valued the 
securities.
    With respect to its equity securities investments, the Fund will 
invest only in U.S. registered equity securities and non-U.S.-
registered equity securities that trade in markets that are members of 
the Intermarket Surveillance Group (``ISG'') or are parties to a 
comprehensive surveillance sharing agreement with the Exchange.

Investment Limitations

    The Fund is subject to the following investment limitations:
    The Fund may not concentrate its investments in a particular 
industry, as that term is used in the 1940 Act, and as interpreted, 
modified, or otherwise permitted by regulatory authority having 
jurisdiction from time to time.\14\
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    \14\ The Fund's policy with respect to the concentration of 
investments in a particular industry is disclosed in the Trust's 
Registration Statement.
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    The Fund will be non-diversified, which means that it may invest 
its assets in a smaller number of issuers than a diversified fund.\15\
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    \15\ The minimum number of inflation-linked bonds and other 
Fixed Income Instruments and issuers in which the Fund may invest at 
any one time depends in part upon the number of securities or 
issuers comprising the Fund's benchmark indexes. In seeking to 
achieve its investment objective, the Fund's portfolio will consist 
of at least twenty-five (25) inflation-linked bonds and other Fixed 
Income Instruments on any given day, but the Fund may regularly 
invest in fifty (50) or more inflation-linked bonds and other Fixed 
Income Instruments at a time in seeking to achieve its investment 
objective. The Fund's portfolio will hold issues of at least 13 non-
affiliated issuers.
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    The Fund intends to qualify annually and elect to be treated as a 
regulated investment company under Subchapter M of the Internal Revenue 
Code.
    Consistent with the Exemptive Order, the Fund will not invest in 
options contracts, futures contracts, or swap agreements.
    The Fund's investments will be consistent with the Fund's 
investment objective and will not be used to enhance leverage. That is, 
while the Fund will be permitted to borrow as permitted under the 1940 
Act, the Fund's investments will not be used to seek performance that 
is the multiple or inverse multiple of the Fund's primary broad-based 
securities benchmark index (as defined in the Registration Statement, 
i.e., the Barclays Capital Universal Government Inflation-Linked Bond 
Index).
    The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600. The Exchange represents 
that, for initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 under the Exchange Act,\16\ as provided by 
NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares will be 
outstanding at the commencement of trading on the Exchange. The 
Exchange will obtain a representation from the issuer of the Shares 
that the net asset value (``NAV'') per Share will be calculated daily 
and that the NAV and the Disclosed Portfolio will be made available to 
all market participants at the same time.
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    \16\ 17 CFR 240.10A-3.
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    Additional information regarding the Trust, Fund, Shares, Fund's 
investment strategies, risks, creation and redemption procedures, fees, 
portfolio holdings and disclosure policies, distributions and taxes, 
availability of information, trading rules and halts, and surveillance 
procedures, among other things, can be found in the Notice and/or the 
Registration Statement, as applicable.\17\
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    \17\ See Notice and Registration Statement, supra notes 3 and 4, 
respectively.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is

[[Page 20089]]

consistent with the requirements of Section 6 of the Act \18\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\19\ In particular, the Commission finds that the proposed 
rule change is consistent with the requirements of Section 6(b)(5) of 
the Act,\20\ which requires, among other things, that the Exchange's 
rules be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The 
Commission notes that the Fund and the Shares must comply with the 
requirements of NYSE Arca Equities Rule 8.600 to be listed and traded 
on the Exchange.
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    \18\ 15 U.S.C. 78f.
    \19\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \20\ 15 U.S.C. 78f(b)(5).
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    The Commission finds that the proposal to list and trade the Shares 
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the 
Act,\21\ which sets forth Congress's finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for, and transactions in, securities. Quotation and last-
sale information for the Shares will be available via the Consolidated 
Tape Association (``CTA'') high-speed line. In addition, the Portfolio 
Indicative Value, 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.\22\ On each 
business day, before commencement of trading in Shares in the Core 
Trading Session on the Exchange, the Fund will disclose on the Trust's 
Web site the Disclosed Portfolio, as defined in NYSE Arca Equities Rule 
8.600(c)(2), that will form the basis for the Fund's calculation of NAV 
at the end of the business day.\23\ The NAV of the Fund will normally 
be determined as of the close of the regular trading session on the New 
York Stock Exchange (``NYSE''), ordinarily 4 p.m. Eastern Time on each 
business day. 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. In addition, price information for 
the debt securities held by the Fund will be available through major 
market data vendors. The Trust's Web site will include a form of the 
prospectus for the Fund and additional data relating to NAV and other 
applicable quantitative information.
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    \21\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \22\ According to the Exchange, several major market data 
vendors display and/or make widely available Portfolio Indicative 
Values published on CTA or other data feeds.
    \23\ On a daily basis, the Adviser will disclose for each 
portfolio security or other financial instrument of the Fund the 
following information: ticker symbol (if applicable), name of 
security or financial instrument, number of shares or dollar value 
of financial instruments held in the portfolio, and percentage 
weighting of the security or financial instrument in the portfolio. 
The Web site information will be publicly available at no charge.
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    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Commission notes that the Exchange will obtain a 
representation from the issuer of the Shares that the NAV per Share 
will be calculated daily and that the NAV and the Disclosed Portfolio 
will be made available to all market participants at the same time.\24\ 
In addition, 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. The Exchange may halt trading 
in the Shares if trading is not occurring in the securities and/or the 
financial instruments comprising the Disclosed Portfolio of the Fund, 
or if other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present.\25\ Further, the 
Commission notes that the Reporting Authority that provides the 
Disclosed Portfolio must implement and maintain, or be subject to, 
procedures designed to prevent the use and dissemination of material 
non-public information regarding the actual components of the 
portfolio.\26\ The Exchange states that it has a general policy 
prohibiting the distribution of material, non-public information by its 
employees. The Exchange also states that the Adviser is affiliated with 
a broker-dealer, and the Adviser has implemented a fire wall with 
respect to its broker-dealer affiliate regarding access to information 
concerning the composition and/or changes to the portfolio.\27\
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    \24\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
    \25\ See NYSE Arca Equities Rule 8.600(d)(2)(C) (providing 
additional considerations for the suspension of trading in or 
removal from listing of Managed Fund Shares on the Exchange). With 
respect to trading halts, the Exchange may consider other relevant 
factors in exercising its discretion to halt or suspend trading in 
the Shares of the Fund. 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.
    \26\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
    \27\ See supra note 5. The Commission notes that an investment 
adviser to an open-end fund is required to be registered under the 
Investment Advisers Act of 1940 (``Advisers Act''). As a result, the 
Adviser 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 non-
public information by an investment adviser must be consistent with 
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under 
the Advisers Act makes it unlawful for an investment adviser to 
provide investment advice to clients unless such investment adviser 
has (i) adopted and implemented written policies and procedures 
reasonably designed to prevent violation, by the investment adviser 
and its supervised persons, of the Advisers Act and the Commission 
rules adopted thereunder; (ii) implemented, at a minimum, an annual 
review regarding the adequacy of the policies and procedures 
established pursuant to subparagraph (i) above and the effectiveness 
of their implementation; and (iii) designated an individual (who is 
a supervised person) responsible for administering the policies and 
procedures adopted under subparagraph (i) above.
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    The Exchange represents that the Shares are deemed to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
In support of this proposal, the Exchange has made representations, 
including:
    (1) The Shares will conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) The Exchange's surveillance procedures applicable to derivative 
products, which include Managed Fund Shares, 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.
    (4) Prior to the commencement of trading, the Exchange will inform 
its Equity Trading Permit Holders in an Information Bulletin of the 
special characteristics and risks associated with

[[Page 20090]]

trading the Shares. Specifically, the Information Bulletin will discuss 
the following: (a) The procedures for purchases and redemptions of 
Shares in Creation Unit aggregations (and that Shares are not 
individually redeemable); (b) NYSE Arca Equities Rule 9.2(a), which 
imposes a duty of due diligence on its ETP Holders to learn the 
essential facts relating to every customer prior to trading the Shares; 
(c) the risks involved in trading the Shares during the Opening and 
Late Trading Sessions when an updated Portfolio Indicative Value will 
not be calculated or publicly disseminated; (d) how information 
regarding the Portfolio Indicative Value is disseminated; (e) the 
requirement that Equity Trading Permit Holders deliver a prospectus to 
investors purchasing newly issued Shares prior to or concurrently with 
the confirmation of a transaction; and (f) trading information.
    (5) For initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 under the Exchange Act,\28\ as provided by 
NYSE Arca Equities Rule 5.3.
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    \28\ 17 CFR 240.10A-3.
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    (6) The Fund will invest only in U.S.-registered equity securities 
and non-U.S.-registered equity securities that trade in markets that 
are members of the ISG or are parties to a comprehensive surveillance 
sharing agreement with the Exchange; the Fund's investments will be 
consistent with its investment objective and will not be used to 
enhance leverage; and consistent with the Exemptive Order, the Fund 
will not invest in options contracts, futures contracts, or swap 
agreements.
    (7) The Fund may hold in the aggregate up to 15% of its net assets 
in: (a) Illiquid securities, which include delayed funding loans, 
revolving credit facilities, fixed- and floating-rate loans, and loan 
participations and assignments; and (b) Rule 144A securities.
    (8) A minimum of 100,000 Shares of the Fund will be outstanding at 
the commencement of trading on the Exchange.
    This approval order is based on all of the Exchange's 
representations.
    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \29\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
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    \29\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\30\ that the proposed rule change (SR-NYSEArca-2012-09) be, and it 
hereby is, approved.
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    \30\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
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    \31\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-7913 Filed 4-2-12; 8:45 am]
BILLING CODE 8011-01-P