Document ID: SEC-2016-0219-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-02-10T05:00Z

[Federal Register Volume 81, Number 27 (Wednesday, February 10, 2016)]
[Notices]
[Pages 7161-7163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02603]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77050; File No. SR-NYSEArca-2016-23]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
AdvisorShares Athena High Dividend ETF's Investments in Sponsored and 
Unsponsored American Depositary Receipts

February 4, 2016.
    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 January 29, 2016, 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 self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to change the description of the 
AdvisorShares Athena High Dividend ETF's investments in sponsored and 
unsponsored American Depositary Receipts. The Commission has previously 
approved listing and trading on the Exchange of shares of the 
AdvisorShares Athena High Dividend ETF, and such shares are currently 
listed and traded on the Exchange under NYSE Arca Equities Rule 8.600. 
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 Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of the AdvisorShares Athena High Dividend ETF (the 
``Fund'') \4\ under NYSE Arca Equities Rule 8.600, which governs the 
listing and trading of Managed Fund Shares. The Fund is an actively 
managed exchange traded fund. The Shares are offered by the 
AdvisorShares Trust (the ``Trust'').\5\ Shares of the Fund are 
currently listed and traded on the Exchange under NYSE Arca Equities 
Rule 8.600.
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    \4\ See Securities Exchange Act Release No. 72665 (July 24, 
2014), 79 FR 44236 (July 30, 2014) (SR-NYSEArca-2014-59) (order 
approving listing and trading on the Exchange of Shares of the Fund) 
(``Prior Order''). See also Securities Exchange Act Release No. 
72298 (June 3, 2014), 79 FR 33024 (June 9, 2014) (SR-NYSEArca-2014-
59) (notice of filing of proposed rule change relating to listing 
and trading on the Exchange of Shares of the Fund (``Prior Notice'', 
and together with the Prior Order, the ``Prior Release'').
    \5\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act''). On February 18, 2014, the Trust filed with the 
Commission an amendment to its registration statement on Form N-1A 
under the Securities Act of 1933 (``Securities Act'') and the 1940 
Act relating to the Fund (File Nos. 333-157876 and 811-22110) 
(``Registration Statement''). The description of the operation of 
the Trust and the Fund herein is based, in part, on the Registration 
Statement.
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    The investment adviser to the Fund is AdvisorShares Investments, 
LLC (the ``Adviser''). AthenaInvest Advisors LLC (``Sub-Adviser'') is 
the Fund's sub-adviser.
    As stated in the Prior Release, the Fund's investment objective is 
to seek long-term capital appreciation. Under normal market conditions, 
the Fund seeks to achieve its investment objective by investing 
substantially all of the Fund's assets in (1) U.S. and foreign common 
stock of issuers of any capitalization range, and (2) American 
Depositary Receipts (``ADRs''), Global Depositary Receipts (``GDRs''), 
European Depositary Receipts (``EDRs'') and International Depository 
Receipts (``IDRs'', and together with ADRs, GDRs, and EDRs, 
``Depositary Receipts'') that provide investment exposure to global 
equity markets.\6\ The Prior Release stated that, other than 
unsponsored ADRs, all U.S. and foreign common stocks and Depositary 
Receipts in which the Fund will invest will be exchange-traded. The 
Prior Release further stated

[[Page 7162]]

that ADRs may be sponsored or unsponsored, but unsponsored ADRs will 
not exceed 10% of the Fund's net assets.\7\
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    \6\ See note 10 of the Prior Notice.
    \7\ Id.
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    In this proposed rule change, the Exchange proposes to change the 
description of the Fund's investments in sponsored and unsponsored 
ADRs. Going forward, U.S. and foreign common stocks in which the Fund 
will invest will be exchange-traded, and non-exchange-traded ADRs will 
not exceed 10% of the Fund's net assets.\8\ The proposed change, 
therefore, would include both unsponsored ADRs (which are not exchange-
traded) and certain sponsored ADRs that are traded over-the-counter 
(``OTC'') within the 10% limit to Fund assets that may be invested in 
non-exchange-traded ADRs.
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    \8\ The Adviser and Sub-Adviser represent that the Sub-Adviser 
will not implement the changes described herein until the instant 
proposed rule change is operative.
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    While sponsored ADRs are usually exchange-traded, certain sponsored 
ADRs are traded OTC. The Prior Release did not accommodate investments 
by the Fund in sponsored ADRs that are traded OTC. The proposed change 
would allow the Fund to invest in both exchange-traded and OTC 
sponsored ADRs. However, the Fund's investments in unsponsored ADRs and 
OTC sponsored ADRs will not exceed 10% of the Fund's net assets, in the 
aggregate.
    OTC sponsored ADRs will be valued at the last reported sale price 
from the OTC Bulletin Board or OTC Link LLC on the valuation date. If 
an OTC sponsored ADR does not trade on a particular day, then the mean 
between the last quoted closing bid and asked price will be used. 
Intra-day and closing price information relating to OTC sponsored ADRs 
will be available from major market data vendors.
    In addition, the Prior Release stated that unsponsored ADRs will be 
valued on the basis of the market closing price on the exchange where 
the stock of the foreign issuer that underlies the ADR is listed. The 
Exchange proposes to change this representation to state that 
unsponsored ADRs will be valued at the last reported sale price from 
the OTC Bulletin Board or OTC Link LLC on the valuation date. If an 
unsponsored ADR does not trade on a particular day, then the mean 
between the last quoted closing bid and asked price will be used.
    The Sub-Adviser represents that there is no change to the Fund's 
investment objective. The Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 8.600.
    Except for the changes noted above, all other representations made 
in the Prior Release remain unchanged.
    All terms referenced but not defined herein are defined in the 
Prior Release.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \9\ 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.
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    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the Fund 
will continue to comply with all initial and continued listing 
requirements under NYSE Arca Equities Rule 8.600. The proposed change 
would include both unsponsored ADRs (which are not exchange-traded) and 
certain sponsored ADRs that are traded OTC within the 10% limit to Fund 
assets that may be invested in non-exchange-traded ADRs.
    The Prior Release did not accommodate investments by the Fund in 
sponsored ADRs that are traded OTC. The proposed change would provide 
the Fund with additional flexibility with respect to its investments in 
sponsored ADRs by allowing the Fund to invest in both exchange-traded 
and OTC sponsored ADRs. However, the Fund's investments in unsponsored 
ADRs and OTC sponsored ADRs will not exceed 10% of the Fund's net 
assets, in the aggregate.
    The Sub-Adviser represents that there is no change to the Fund's 
investment objective. The Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 8.600.
    Except for the changes noted above, all other representations made 
in the Prior Release remain unchanged.
    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 Sub-Adviser represents that there is no change to the Fund's 
investment objective. As noted above, the Fund's investments in 
unsponsored ADRs and OTC sponsored ADRs will not exceed 10% of the 
Fund's net assets, in the aggregate.
    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 the Fund will continue to comply with all 
initial and continued listing requirements under NYSE Arca Equities 
Rule 8.600. Except for the change noted above, all other 
representations made in the Rule 19b-4 filing underlying the Prior 
Release remain unchanged.

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. The Exchange believes the 
proposed rule change regarding investments in ADRs will promote 
competition among actively managed funds that invest in U.S. and 
foreign common stocks and Depositary Receipts, to the benefit of the 
investing public.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \12\ of the Act to

[[Page 7163]]

determine whether the proposed rule change should be approved or 
disapproved.
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    \12\ 15 U.S.C. 78s(b)(2)(B).
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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-2016-23 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2016-23. 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 offices 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-2016-
23, and should be submitted on or before March 2, 2016.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02603 Filed 2-9-16; 8:45 am]
 BILLING CODE 8011-01-P