Document ID: SEC-2011-1888-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2011-12-07T05:00Z

[Federal Register Volume 76, Number 235 (Wednesday, December 7, 2011)]
[Notices]
[Pages 76464-76472]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31335]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65860; File No. SR-NYSEArca-2011-85]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to the Listing and Trading of SPDR 
SSgA Real Assets ETF; SPDR SSgA Income Allocation ETF; SPDR SSgA 
Conservative Global Allocation ETF; SPDR SSgA Global Allocation ETF; 
and SPDR SSgA Aggressive Global Allocation ETF Under NYSE Arca Equities 
Rule 8.600

 December 1, 2011.
    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 November 16, 2011, NYSE Arca, Inc. 
(``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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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

    The Exchange proposes to list and trade the following under NYSE 
Arca Equities Rule 8.600 (``Managed Fund Shares''): SPDR SSgA Real 
Assets ETF; SPDR SSgA Income Allocation ETF; SPDR SSgA Conservative 
Global Allocation ETF; SPDR SSgA Global Allocation ETF; and SPDR SSgA 
Aggressive Global Allocation ETF. The text of the proposed rule change 
is available at the Exchange, the Commission's Public Reference Room, 
and http://www.nyse.com.

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

    In its filing with the Commission, the Exchange 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.

[[Page 76465]]

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

1. Purpose
    The Exchange proposes to list and trade the following Managed Fund 
Shares \3\ (``Shares'') under NYSE Arca Equities Rule 8.600: SPDR SSgA 
Real Assets ETF; SPDR SSgA Income Allocation ETF; SPDR SSgA 
Conservative Global Allocation ETF; SPDR SSgA Global Allocation ETF; 
and SPDR SSgA Aggressive Global Allocation ETF (each, a ``Fund'' and, 
collectively, ``Funds'').\4\ The Shares will be offered by SSgA Active 
ETF Trust (``Trust''), which is organized as a Massachusetts business 
trust and is registered with the Commission as an open-end management 
investment company.\5\ SSgA FM serves as the investment adviser to the 
Funds (``Adviser''). State Street Global Markets, LLC (``Distributor'') 
is the principal underwriter and distributor of the Funds' Shares. 
State Street Bank and Trust Company (``Administrator,'' ``Custodian'' 
or ``Transfer Agent'') serves as administrator, custodian and transfer 
agent for the Funds.
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    \3\ A Managed Fund Share is a security that represents an 
interest in an investment company registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment 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.
    \4\ The Commission has previously 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. 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); 60460 (August 7, 2009), 74 FR 41468 
(August 17, 2009) (SR-NYSEArcav2009-55) (order approving listing of 
Dent Tactical ETF); 61365 (January 15, 2010), 75 FR 4124 (January 
26, 2010) (SR-NYSEArca-2009-114) (order approving listing and 
trading of Grail McDonnell Fixed Income ETFs); 60981 (November 10, 
2009), 74 FR 59594 (November 18, 2009) (SR-NYSEArca-2009-79) (order 
approving listing of five fixed income funds of the PIMCO ETF 
Trust); 63076 (October 12, 2010), 75 FR 63874 (October 18, 2010) 
(SR-NYSEArca-2010-79) (order approving listing of Cambria Global 
Tactical ETF).
    \5\ The Trust is registered under the 1940 Act. On September 12, 
2011, the Trust filed with the Commission Form N-1A under the 
Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act 
relating to the Funds (File Nos. 333-173276 and 811-22542) 
(``Registration Statement''). The description of the operation of 
the Trust and the Funds 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 the1940 
Act. See Investment Company Act Release No. 29524 (December 13, 
2010) (File No. 812-13487) (``Exemptive Order'').
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    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 broker-dealer 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.\6\ 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. The 
Adviser is affiliated with a broker-dealer and has implemented a ``fire 
wall'' with respect to such broker-dealer regarding access to 
information concerning the composition and/or changes to the Funds' 
portfolios. 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 a 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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    \6\ 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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SPDR SSgA Real Assets ETF
    The SPDR SSgA Real Assets ETF will seek to achieve a real return 
consisting of capital appreciation and current income. The Fund will 
invest substantially all of its assets in the SSgA Real Assets 
Portfolio (``Real Assets Portfolio''), a separate series of the SSgA 
Master Trust with an identical investment objective as the Fund. As a 
result, the Fund will invest indirectly through the Real Assets 
Portfolio. The Adviser will invest, under normal circumstances,\7\ at 
least 80% of the Real Assets Portfolio's net assets among exchange 
traded products (``ETPs'') that provide exposure to ``real assets.'' 
The Adviser considers ``real assets'' to include the following four 
primary asset classes: (i) Inflation protected securities issued by the 
United States government, its agencies and/or instrumentalities, as 
well as inflation protected securities issued by foreign governments, 
agencies, and/or instrumentalities; (ii) domestic and international 
real estate securities; (iii) commodities; and (iv) publicly-traded 
companies in natural resources and/or commodities businesses. The Real 
Assets Portfolio will concentrate at least 25% of its assets in 
companies primarily involved in the energy sector and real estate 
industry through ETPs. The Real Assets Portfolio's allocation among 
those asset classes will be in proportions consistent with the 
Adviser's evaluation of the expected returns and risks of each asset 
class as well as the allocation that, in the Adviser's view, will best 
meet the Real Assets Portfolio's investment objective. The allocations 
to each asset class will change over time as the Adviser's expectations 
of each asset class shift. The Real Assets Portfolio's indirect 
holdings by virtue of investing in ETPs representing those asset 
classes will consist of a diversified mix of domestic and international 
equity securities, government and corporate bonds, inflation protected 
securities, commodities and real estate investment trusts (``REITs''). 
ETPs may include

[[Page 76466]]

exchange traded funds that seek to track the performance of a market 
index (``Underlying ETFs'') (including Underlying ETFs managed by the 
Adviser); exchange traded commodity trusts; and exchange traded notes 
(``ETNs'').\8\
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    \7\ The term ``under normal circumstances'' includes, but is not 
limited to, the absence of extreme volatility or trading halts in 
the equity 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.
    \8\ For each of the Funds, ETPs include Investment Company Units 
(as described in NYSE Arca Equities Rule 5.2(j)(3)); Index-Linked 
Securities (as described in NYSE Arca Equities Rule 5.2(j)(6)); 
Portfolio Depositary Receipts (as described in NYSE Arca Equities 
Rule 8.100); Trust Issued Receipts (as described in NYSE Arca 
Equities Rule 8.200); Commodity-Based Trust Shares (as described in 
NYSE Arca Equities Rule 8.201); Currency Trust Shares (as described 
in NYSE Arca Equities Rule 8.202); Commodity Index Trust Shares (as 
described in NYSE Arca Equities Rule 8.203); Trust Units (as 
described in NYSE Arca Equities Rule 8.500); Managed Fund Shares (as 
described in NYSE Arca Equities Rule 8.600), and closed-end funds. 
The ETPs all will be listed and traded in the U.S. on registered 
exchanges.
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SPDR SSgA Income Allocation ETF
    The SPDR SSgA Income Allocation ETF will seek to provide a total 
return by focusing on investments in income and yield-generating 
assets. The Fund will invest substantially all of its assets in the 
SSgA Income Portfolio (``Income Portfolio''), a separate series of the 
SSgA Master Trust with an identical investment objective as the Fund. 
As a result, the Fund will invest indirectly through the Income 
Portfolio. The Adviser will invest the assets of the Income Portfolio 
among ETPs that provide exposure to four primary asset classes: (i) 
Equity, domestic and international securities; (ii) investment grade 
and high yield debt securities; (iii) hybrid equity/debt (such as 
preferred stock and convertible securities); and (iv) REITs. The Income 
Portfolio's allocation among those asset classes will be in proportions 
consistent with the Adviser's evaluation of the expected returns and 
risks of each asset class as well as the allocation that, in the 
Adviser's view, will best meet the Income Portfolio's investment 
objective. The allocations to each asset class will change over time as 
the Adviser's expectations of each asset class shift. The Income 
Portfolio's indirect holdings by virtue of investing in ETPs 
representing these asset classes will consist of a diversified mix of 
domestic and international equity securities, investment grade and high 
yield government and corporate bonds, hybrid securities such as 
preferred stock and convertible securities, Build America Bonds, 
commodities, and REITs.
SPDR SSgA Conservative Global Allocation ETF
    The SPDR SSgA Conservative Global Allocation ETF will seek to 
provide current income, capital preservation and the avoidance of 
excessive portfolio volatility. The Fund will invest substantially all 
of its assets in the SSgA Conservative Global Allocation Portfolio 
(``Conservative Allocation Portfolio''), a separate series of the SSgA 
Master Trust with an identical investment objective as the Fund. As a 
result, the Fund will invest indirectly through the Conservative 
Allocation Portfolio. The Adviser will invest the assets of the 
Conservative Allocation Portfolio among ETPs that provide exposure to 
domestic and international debt and equity securities with a larger 
allocation to debt securities than to other asset classes. The 
Conservative Allocation Portfolio \9\ has a higher allocation to fixed 
income securities than to equity securities. These fixed income 
securities tend to be less volatile than traditional equity securities. 
The Conservative Allocation Portfolio typically will allocate 
approximately 60% of its assets to debt related securities, though this 
percentage can vary based on the Adviser's tactical decisions. The 
allocations to each asset class will change over time as the Adviser's 
expectations of each asset class shift. The Conservative Allocation 
Portfolio's indirect holdings by virtue of investing in ETPs 
representing these asset classes will consist of a diversified mix of 
domestic and international, including emerging markets, equity 
securities across all market capitalizations, investment grade and high 
yield government and corporate bonds, inflation protected securities, 
mortgage pass through securities, commercial mortgage backed 
securities, asset backed securities, commodities and REITs.
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    \9\ Email from Timothy J. Malinowski, Senior Director, NYSE 
Euronext, to Edward Y. Cho, Special Counsel, Division of Trading and 
Markets, Commission, dated November 18, 2011.
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SPDR SSgA Global Allocation ETF
    The SPDR SSgA Global Allocation ETF will seek to provide current 
income and capital preservation, with a secondary emphasis on capital 
appreciation. The Fund will invest substantially all of its assets in 
the SSgA Global Allocation Portfolio (``Global Allocation Portfolio''), 
a separate series of the SSgA Master Trust with an identical investment 
objective as the Fund. As a result, the Fund will invest indirectly 
through the Global Allocation Portfolio. The Adviser will invest the 
assets of the Global Allocation Portfolio among ETPs that provide 
balanced exposure to domestic and international debt and equity 
securities. The Global Allocation Portfolio typically will allocate 
approximately 60% of its assets to equity securities, though this 
percentage can vary based on the Adviser's tactical decisions. The 
allocations to each asset class will change over time as the Adviser's 
expectations of each asset class shift. The Global Allocation 
Portfolio's indirect holdings by virtue of investing in ETPs 
representing these asset classes will consist of a diversified mix of 
domestic and international, including emerging market, equity 
securities across all market capitalizations, investment grade and high 
yield government and corporate bonds, inflation protected securities, 
mortgage pass through securities, commercial mortgage backed 
securities, asset backed securities, commodities and REITs.
SPDR SSgA Aggressive Global Allocation ETF
    The SPDR SSgA Aggressive Global Allocation ETF will seek to provide 
capital appreciation, with a secondary emphasis on current income. The 
Fund will invest substantially all of its assets in the SSgA Aggressive 
Global Allocation Portfolio (``Aggressive Allocation Portfolio'' and, 
together with the Real Assets Portfolio, Income Portfolio, Conservative 
Allocation Portfolio, and Global Allocation Portfolio, collectively, 
``Portfolios''), a separate series of the SSgA Master Trust with an 
identical investment objective as the Fund. As a result, the Fund will 
invest indirectly through the Aggressive Allocation Portfolio. The 
Adviser will invest the assets of the Aggressive Allocation Portfolio 
among ETPs that provide exposure to domestic and international debt and 
equity securities with a larger allocation to equity securities than 
the other asset classes. The Aggressive Allocation Portfolio will have 
a higher allocation to equity securities than to fixed income 
securities. These equity securities will tend to be more volatile than 
traditional equity securities. The Aggressive Allocation Portfolio 
typically will allocate approximately 80% or more of its assets to 
equity securities, though this percentage can vary based on the 
Adviser's tactical decisions. The Aggressive Allocation Portfolio's 
indirect holdings by virtue of investing in ETPs representing these 
asset classes will consist of a diversified mix of domestic and 
international, including emerging market, equity securities across all 
market capitalizations, investment grade and high yield

[[Page 76467]]

government and corporate bonds, inflation protected securities, 
mortgage pass through securities, commercial mortgage backed 
securities, asset backed securities, government and corporate bonds, 
commodities and REITs.
Master Feeder Structure of the Funds
    The Funds are intended to be managed in a ``master-feeder'' 
structure, under which each Fund will invest substantially all of its 
assets in a corresponding ``master fund,'' which is a separate mutual 
fund that has an identical investment objective. As a result, each Fund 
(i.e., a ``feeder fund'') will have an indirect interest in all of the 
securities owned by each corresponding master fund.\10\ Because of this 
indirect interest, each Fund's investment returns should be the same as 
those of the corresponding master fund, adjusted for the expenses of 
the feeder fund. In extraordinary instances, each Fund reserves the 
right to make direct investments in securities.
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    \10\ Each master fund is registered under the 1940 Act.
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    The Adviser will manage the investments of each respective 
Portfolio. Under the master-feeder arrangement, investment advisory 
fees charged at the master-fund level are deducted from the advisory 
fees charged at the feeder-fund level. This arrangement avoids a 
``layering'' of fees, e.g., a Fund's total annual operating expenses 
would be no higher as a result of investing in a master-feeder 
arrangement than they would be if the Fund pursued its investment 
objectives directly. In addition, each Fund may discontinue investing 
through the master-feeder arrangement and pursue its investment 
objectives directly if the Fund's Board of Trustees determines that 
doing so would be in the best interests of shareholders.
    Each Fund is classified as a ``diversified'' investment company 
under the 1940 Act.\11\
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    \11\ The diversification standard is set forth in Section 
5(b)(1) of the 1940 Act.
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    The Funds, other than the SPDR SSgA Real Assets ETF, will not 
concentrate their investments in any particular industry or sector. The 
SPDR SSgA Real Assets ETF will concentrate its investments (i.e., 
invest more than 25% of its assets) in companies primarily involved in 
the energy and real estate industries.\12\
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    \12\ See Form N-1A, Item 9. The Commission has taken the 
position that a fund is concentrated if it invests more than 25% of 
the value of its total assets in any one industry. See, e.g., 
Investment Company Act Release No. 9011 (October 30, 1975), 40 FR 
54241 (November 21, 1975).
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    The Funds intend to qualify for and to elect treatment as a 
separate regulated investment company (``RIC'') under Subchapter M of 
the Internal Revenue Code.\13\ As such, each Fund should not be subject 
to Federal income tax on its net investment income and capital gains, 
if any, to the extent that it timely distributes such income and 
capital gains to its shareholders. In order to be taxable as a RIC, a 
Fund must distribute annually to its shareholders at least 90% of its 
net investment income (generally net investment income plus the excess 
of net short-term capital gains over net long-term capital losses) and 
at least 90% of its net tax exempt interest income, for each tax year, 
if any, to its shareholders (``Distribution Requirement'') and also 
must meet several additional requirements. Among these requirements are 
the following: (i) At least 90% of the Fund's gross income each taxable 
year must be derived from dividends, interest, payments with respect to 
securities loans, gains from the sale or other disposition of stock, 
securities or foreign currencies, or other income derived with respect 
to its business of investing in such stock, securities or currencies, 
and net income derived from an interest in qualified publicly traded 
partnerships; (ii) at the end of each fiscal quarter of the Fund's 
taxable year, at least 50% of the market value of its total assets must 
be represented by cash and cash items, U.S. government securities, 
securities of other RICs and other securities, with such other 
securities limited, in respect to any one issuer, to an amount not 
greater than 5% of the value of the Fund's total assets or more than 
10% of the outstanding voting securities of such issuer, and (iii) at 
the end of each fiscal quarter of the Fund's taxable year, not more 
than 25% of the value of its total assets is invested in the securities 
(other than U.S. government securities or securities of other RICs) of 
any one issuer or the securities of two or more issuers engaged in the 
same, similar, or related trades or businesses if the Fund owns at 
least 20% of the voting power of such issuers, or the securities of one 
or more qualified publicly traded partnerships.
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    \13\ 26 U.S.C. 851 et seq.
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Other Investments
    While each Fund will invest substantially all of its assets in its 
respective Portfolio, each Fund may directly invest in certain other 
investments, as described below.
    Each Fund may (either directly or through its investments in its 
corresponding Portfolio) invest in the following types of investments: 
money market instruments, such as repurchase agreements, money market 
funds (including money market funds managed by the Adviser); variable 
rate demand notes, U.S. government and U.S. government agency 
securities; loan focused closed-end funds; and collateralized loan 
obligation debt securities.
    Each Fund may invest in preferred securities and in convertible 
securities. Convertible securities are bonds, debentures, notes, 
preferred stocks or other securities that may be converted or exchanged 
(by the holder or by the issuer) into shares of the underlying common 
stock (or cash or securities of equivalent value) at a stated exchange 
ratio. A convertible security may also be called for redemption or 
conversion by the issuer after a particular date and under certain 
circumstances (including a specified price) established upon issue. If 
a convertible security held by a Fund is called for redemption or 
conversion, the Fund could be required to tender it for redemption, 
convert it into the underlying common stock, or sell it to a third 
party.
    Each Fund may invest in bonds, including corporate bonds; high 
yield debt securities; sovereign debt; \14\ and U.S. Government 
obligations.\15\
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    \14\ Sovereign debt obligations are issued or guaranteed by 
foreign governments or their agencies. Sovereign debt may be in the 
form of conventional securities or other types of debt instruments 
such as loans or loan participations. Governmental entities 
responsible for repayment of the debt may be unable or unwilling to 
repay principal and pay interest when due, and may require 
renegotiation or reschedule of debt payments. In addition, prospects 
for repayment of principal and payment of interest may depend on 
political as well as economic factors. Although some sovereign debt, 
such as Brady Bonds, is collateralized by U.S. Government 
securities, repayment of principal and payment of interest is not 
guaranteed by the U.S. Government.
    \15\ U.S. Government obligations are a type of bond and include 
securities issued or guaranteed as to principal and interest by the 
U.S. Government, its agencies or instrumentalities.
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    Each Fund may invest in Variable Rate Demand Obligations 
(``VRDOs''). VRDOs are short-term tax exempt fixed income instruments 
whose yield is reset on a periodic basis. VRDO securities tend to be 
issued with long maturities of up to 30 or 40 years; however, they are 
considered short-term instruments because they include a put feature 
which coincides with the periodic yield reset. For example, a VRDO 
whose yield resets weekly will have a put feature that is exercisable 
upon seven days notice. VRDOs are put back to a bank or other entity 
that serves as a liquidity provider, who then tries to resell the VRDOs 
or, if unable to resell, holds them in its own inventory. VRDOs are 
generally supported by either a Letter of

[[Page 76468]]

Credit or a Stand-by Bond Purchase Agreement to provide credit 
enhancement.
    The Funds may invest in inflation-protected public obligations, 
commonly known as ``TIPS,'' of the U.S. Treasury, as well as TIPS of 
major governments and emerging market countries, excluding the United 
States. TIPS are a type of security issued by a government that are 
designed to provide inflation protection to investors.
    The Funds may conduct foreign currency transactions on a spot 
(i.e., cash) or forward basis (i.e., by entering into forward contracts 
to purchase or sell foreign currencies).
    Each Fund may invest in repurchase agreements with commercial 
banks, brokers or dealers to generate income from its excess cash 
balances and to invest securities lending cash collateral. A repurchase 
agreement is an agreement under which a Fund acquires a financial 
instrument (e.g., a security issued by the U.S. government or an agency 
thereof, a banker's acceptance or a certificate of deposit) from a 
seller, subject to resale to the seller at an agreed upon price and 
date (normally, the next business day). A repurchase agreement may be 
considered a loan collateralized by securities.
    Each Fund may enter into reverse repurchase agreements, which 
involve the sale of securities with an agreement to repurchase the 
securities at an agreed-upon price, date and interest payment and have 
the characteristics of borrowing.
    Each Fund may invest in commercial paper. Commercial paper consists 
of short-term, promissory notes issued by banks, corporations and other 
entities to finance short-term credit needs. These securities generally 
are discounted but sometimes may be interest bearing.
    In addition to repurchase agreements, each Fund may invest in 
short-term instruments, including money market instruments, (including 
money market funds advised by the Adviser), repurchase agreements, cash 
and cash equivalents, on an ongoing basis to provide liquidity or for 
other reasons.
    In certain situations or market conditions, a Fund may (either 
directly or through the corresponding Portfolio) temporarily depart 
from its normal investment policies and strategies provided that the 
alternative is consistent with the Fund's investment objective and is 
in the best interest of the Fund.\16\ For example, a Fund may hold a 
higher than normal proportion of its assets in cash in times of extreme 
market stress. Each Fund may (either directly or through its 
investments in its corresponding Portfolio) borrow money from a bank as 
permitted by the 1940 Act or other governing statute, by applicable 
rules thereunder, or by Commission or other regulatory agency with 
authority over the Fund, but only for temporary or emergency purposes.
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    \16\ Such situations and conditions include, but are not limited 
to, trading halts in the equities or fixed income markets or 
disruptions in 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.
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    In addition to ETPs, each Fund may invest in the securities of 
other investment companies, including money market funds, subject to 
applicable limitations under Section 12(d)(1) of the 1940 Act. A Fund 
may also invest in the securities of other investment companies if such 
securities are the only investment securities held by the Fund, such as 
through a master-feeder arrangement. Each Fund will pursue its 
respective investment objective through such an arrangement. To the 
extent allowed by law, regulation, each Fund's investment restrictions 
and the Trust's exemptive relief under the 1940 Act, a Fund may invest 
its assets in securities of investment companies that are money market 
funds, including those advised by the Adviser or otherwise affiliated 
with the Adviser, in excess of the limits discussed above.
    The Funds may purchase U.S. exchange listed common stocks and 
preferred securities of foreign corporations, as well as U.S. 
registered, dollar-denominated bonds of foreign corporations, 
governments, agencies and supra-national entities.
    A Fund's investments in common stock of foreign corporations may 
also be in the form of American Depositary Receipts (``ADRs''), Global 
Depositary Receipts (``GDRs'') and European Depositary Receipts 
(``EDRs'') (collectively ``Depositary Receipts''). \17\ Depositary 
Receipts are receipts, typically issued by a bank or trust company, 
which evidence ownership of underlying securities issued by a foreign 
corporation. For ADRs, the depository is typically a U.S. financial 
institution and the underlying securities are issued by a foreign 
issuer. For other Depositary Receipts, the depository may be a foreign 
or a U.S. entity, and the underlying securities may have a foreign or a 
U.S. issuer. Depositary Receipts will not necessarily be denominated in 
the same currency as their underlying securities. Generally, ADRs, in 
registered form, are designed for use in the U.S. securities market, 
and EDRs, in bearer form, are designated for use in European securities 
markets. GDRs are tradable both in the United States and in Europe and 
are designed for use throughout the world. Each Fund may invest up to 
10% of its assets in unsponsored Depositary Receipts. The issuers of 
unsponsored Depositary Receipts are not obligated to disclose material 
information in the United States, and, therefore, there may be less 
information available regarding such issuers and there may not be a 
correlation between such information and the market value of the 
Depositary Receipts.
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    \17\ The foreign equity securities in which the Funds may invest 
will be limited to securities that trade in markets that are members 
of the Intermarket Surveillance Group (``ISG''), which includes all 
U.S. national securities exchanges and certain foreign exchanges, or 
are parties to a comprehensive surveillance sharing agreement with 
the Exchange. See note 27, infra.
---------------------------------------------------------------------------

    Each Fund may invest in the aggregate up to 15% of its net assets 
(taken at the time of investment) in: (1) Illiquid securities, (2) Rule 
144A securities, and (3) loan participation interests. An illiquid 
asset is any asset which may not be sold or disposed of in the ordinary 
course of business within seven days at approximately the value at 
which a Fund has valued the investment.\18\
---------------------------------------------------------------------------

    \18\ The 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. 28193 (March 11, 2008), 73 FR 
14617 (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).
---------------------------------------------------------------------------

    In accordance with the Exemptive Order, the Funds will not invest 
in options, futures or swaps. Each Fund's investments will be 
consistent with its respective investment objective and will not be 
used to enhance leverage.
    Except for ETPs that may hold non-U.S. issues and Depositary 
Receipts,\19\ the Funds will not otherwise invest in non-U.S.-
registered issues.
---------------------------------------------------------------------------

    \19\ See note 17, supra, and note 27, infra.
---------------------------------------------------------------------------

Creations and Redemptions
    Each Fund will issue and redeem Shares only in Creation Units at 
the net asset value (``NAV'') next determined

[[Page 76469]]

after receipt of an order on a continuous basis every day except 
weekends and specified holidays. The NAV of a Fund will be determined 
once each business day, normally 4 p.m. Eastern Time. Creation Unit 
sizes will be 50,000 Shares per Creation Unit. The Trust will issue and 
sell Shares of each Fund only in Creation Units on a continuous basis, 
without a sales load (but subject to transaction fees), at their NAV 
per Share next determined after receipt of an order, on any business 
day, in proper form pursuant to the terms of the authorized participant 
agreement (``Participant Agreement'').
    The consideration for purchase of a Creation Unit of each Fund 
generally will consist of either (i) The in-kind deposit of a 
designated portfolio of securities held by the corresponding master 
fund (``Deposit Securities'') per each Creation Unit and the Cash 
Component (defined below), computed as described below or (ii) the cash 
value of the Deposit Securities (``Deposit Cash'') and the ``Cash 
Component,'' computed as described below. When accepting purchases of 
Creation Units for cash, a Fund may incur additional costs associated 
with the acquisition of Deposit Securities that would otherwise be 
provided by an in-kind purchaser. Together, the Deposit Securities or 
Deposit Cash, as applicable, and the Cash Component constitute the 
``Fund Deposit,'' which represents the minimum initial and subsequent 
investment amount for a Creation Unit of any Fund. The ``Cash 
Component'' is an amount equal to the difference between the NAV of the 
Shares (per Creation Unit) and the market value of the Deposit 
Securities or Deposit Cash, as applicable. If the Cash Component is a 
positive number (i.e., the NAV per Creation Unit exceeds the market 
value of the Deposit Securities or Deposit Cash, as applicable), the 
Cash Component shall be such positive amount. If the Cash Component is 
a negative number (i.e., the NAV per Creation Unit is less than the 
market value of the Deposit Securities or Deposit Cash, as applicable), 
the Cash Component will be such negative amount and the creator will be 
entitled to receive cash in an amount equal to the Cash Component. The 
Cash Component serves the function of compensating for any differences 
between the NAV per Creation Unit and the market value of the Deposit 
Securities or Deposit Cash, as applicable.
    The Custodian, through the National Securities Clearing Corporation 
(``NSCC''), will make available on each business day, immediately prior 
to the opening of business on the Exchange's Core Trading Session (9:30 
a.m., Eastern Time), the list of the names and the required number of 
shares of each Deposit Security or the required amount of Deposit Cash, 
as applicable, to be included in the current Fund Deposit (based on 
information at the end of the previous business day) for a Fund. Such 
Fund Deposit is subject to any applicable adjustments as described in 
the Registration Statement, in order to effect purchases of Creation 
Units of a Fund until such time as the next-announced composition of 
the Deposit Securities or the required amount of Deposit Cash, as 
applicable, is made available.
    Shares may be redeemed only in Creation Units at their NAV next 
determined after receipt of a redemption request in proper form by a 
Fund through the Transfer Agent and only on a business day.
    With respect to each Fund, the Custodian, through the NSCC, will 
make available immediately prior to the opening of business on the 
Exchange (9:30 a.m. Eastern Time) on each business day, the list of the 
names and share quantities of each Fund's portfolio securities that 
will be applicable (subject to possible amendment or correction) to 
redemption requests received in proper form (as defined below) on that 
day (``Fund Securities''). Fund Securities received on redemption may 
not be identical to Deposit Securities.
    Redemption proceeds for a Creation Unit will be paid either in-kind 
or in cash or a combination thereof, as determined by the Trust. With 
respect to in-kind redemptions of a Fund, redemption proceeds for a 
Creation Unit will consist of Fund Securities as announced by the 
Custodian on the business day of the request for redemption received in 
proper form plus cash in an amount equal to the difference between the 
NAV of the Shares being redeemed, as next determined after a receipt of 
a request in proper form, and the value of the Fund Securities (``Cash 
Redemption Amount''), less a fixed redemption transaction fee and any 
applicable additional variable charge as set forth in the Registration 
Statement. In the event that the Fund Securities have a value greater 
than the NAV of the Shares, a compensating cash payment equal to the 
differential will be required to be made by or through an authorized 
participant by the redeeming shareholder. Notwithstanding the 
foregoing, at the Trust's discretion, an authorized participant may 
receive the corresponding cash value of the securities in lieu of the 
in-kind securities value representing one or more Fund Securities.
    The creation/redemption order cut-off time for Funds is expected to 
be 4 p.m. Eastern Time for purchases of Shares. On days when the 
Exchange closes earlier than normal, a Fund may require orders for 
Creation Units to be placed earlier in the day.
Net Asset Value
    The NAV per Share for each Fund of the Trust will be computed by 
dividing the value of the net assets of such Fund (i.e., the value of 
its total assets less total liabilities) by the total number of Shares 
outstanding, rounded to the nearest cent. Expenses and fees, including 
the management fees, are accrued daily and taken into account for 
purposes of determining NAV. The NAV of a Fund will be calculated by 
the Custodian and determined at the close of the regular trading 
session on the New York Stock Exchange (ordinarily 4 p.m. Eastern Time) 
on each day that such exchange is open, provided that fixed-income 
assets (and, accordingly, a Fund's NAV) may be valued as of the 
announced closing time for trading in fixed-income instruments on any 
day that the Securities Industry and Financial Markets Association (or 
the applicable exchange or market on which a Fund's investments are 
traded) announces an early closing time. Creation/redemption order cut-
off times may also be earlier on such days, but in any event earlier 
than the NAV calculation time.
    In calculating a Fund's NAV per Share, such Fund's investments will 
generally be valued using market valuations. A market valuation 
generally means a valuation (i) Obtained from an exchange, a pricing 
service, or a major market maker (or dealer), (ii) based on a price 
quotation or other equivalent indication of value supplied by an 
exchange, a pricing service, or a major market maker (or dealer) or 
(iii) based on amortized cost. In the case of shares of other funds 
that are not traded on an exchange, a market valuation means such 
fund's published NAV per share. The Adviser may use various pricing 
services, or discontinue the use of any pricing service, as approved by 
the Funds' Board of Directors from time to time. A price obtained from 
a pricing service based on such pricing service's valuation matrix may 
be considered a market valuation. Any assets or liabilities denominated 
in currencies other than the U.S. dollar will be converted into U.S. 
dollars at the current market rates on the date of valuation as quoted 
by one or more sources.

[[Page 76470]]

    In the event that current market valuations are not readily 
available or such valuations do not reflect current market value, the 
Trust's procedures require the Trust's Pricing and Investment Committee 
to determine a security's fair value if a market price is not readily 
available.\20\ In determining such value the Pricing and Investment 
Committee may consider, among other things, (i) Price comparisons among 
multiple sources, (ii) a review of corporate actions and news events, 
and (iii) a review of relevant financial indicators (e.g., movement in 
interest rates, and market indices). In these cases, the applicable 
Fund's NAV may reflect certain portfolio securities' fair values rather 
than their market prices. Fair value pricing involves subjective 
judgments and it is possible that the fair value determination for a 
security is materially different than the value that could be realized 
upon the sale of the security.
---------------------------------------------------------------------------

    \20\ The Trust's Pricing and Investment Committee has 
implemented procedures designed to prevent the use and dissemination 
of material, non-public information regarding the Portfolios and the 
Funds.
---------------------------------------------------------------------------

    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 Funds will be in 
compliance with Rule 10A-3 under the Exchange Act,\21\ as provided by 
NYSE Arca Equities Rule 5.3. A minimum of 100,000 Shares for each Fund 
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 will be made available to all market 
participants at the same time.
---------------------------------------------------------------------------

    \21\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Availability of Information
    The Funds' Web site (http://www.spdrs.com), which will be publicly 
available prior to the public offering of Shares, will include a form 
of the prospectus for the Funds that may be downloaded. The Funds' Web 
site will include additional quantitative information updated on a 
daily basis, including, for the Funds, (1) Daily trading volume, the 
prior business day's reported closing price, NAV and mid-point of the 
bid/ask spread at the time of calculation of such NAV (``Bid/Ask 
Price''),\22\ and a calculation of the premium and discount of the Bid/
Ask Price against the NAV, and (2) data in chart format displaying the 
frequency distribution of discounts and premiums of the daily Bid/Ask 
Price against the NAV, within appropriate ranges, for each of the four 
previous calendar quarters. On each business day, before commencement 
of trading in Shares in the Core Trading Session on the Exchange, the 
Funds will disclose on their Web site the Disclosed Portfolio as 
defined in NYSE Arca Equities Rule 8.600(c)(2) that will form the basis 
for the Funds' calculation of NAV at the end of the business day.\23\
---------------------------------------------------------------------------

    \22\ The Bid/Ask Price of the Funds is determined using the 
midpoint of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of the Funds' NAV. The records relating 
to Bid/Ask Prices will be retained by the Funds and their service 
providers.
    \23\ 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''). Accordingly, the Funds 
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.
---------------------------------------------------------------------------

    On a daily basis, the Adviser will disclose for each portfolio 
security or other financial instrument of the Funds and of the 
Portfolios the following information on the Funds' Web site: Ticker 
symbol (if applicable), name of security or financial instrument, 
number of shares or dollar value of financial instruments held in the 
portfolio, and percentage weighting of the security or financial 
instrument in the portfolio. The Web site information will be publicly 
available at no charge.
    In addition, a basket composition file, which includes the security 
names and share quantities required to be delivered in exchange for a 
Fund's Shares, together with estimates and actual cash components, will 
be publicly disseminated daily prior to the opening of the NYSE via 
NSCC. The basket represents one Creation Unit of each Fund.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Funds' Shareholder Reports, and the Trust's 
Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and 
Shareholder Reports are available free upon request from the Trust, and 
those documents and the Form N-CSR and Form N-SAR may be viewed on-
screen or downloaded from the Commission's Web site at http://www.sec.gov. Information regarding market price and trading volume of 
the Shares 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 will be available via the Consolidated Tape 
Association (``CTA'') high-speed line and, for the ETPs, will be 
available from the national securities exchange on which they are 
listed. In addition, the Indicative Optimized Portfolio Value 
(``IOPV''),\24\ which is the Portfolio Indicative Value as defined in 
NYSE Arca Equities Rule 8.600 (c)(3), will be widely disseminated at 
least every 15 seconds during the Core Trading Session by one or more 
major market data vendors.\25\ 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 
Funds and of the Portfolios on a daily basis and to provide a close 
estimate of that value throughout the trading day. The intra-day, 
closing and settlement prices of the portfolio securities are also 
readily available from the national securities exchanges trading such 
securities, automated quotation systems, published or other public 
sources, or on-line information services such as Bloomberg or Reuters.
---------------------------------------------------------------------------

    \24\ The IOPV calculations will be estimates of the value of the 
Funds' NAV per Share using market data converted into U.S. dollars 
at the current currency rates. The IOPV price will be based on 
quotes and closing prices from the securities' local market and may 
not reflect events that occur subsequent to the local market's 
close. Premiums and discounts between the IOPV and the market price 
may occur. This should not be viewed as a ``real-time'' update of 
the NAV per Share of the Funds, which will be calculated only once a 
day.
    \25\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available 
Portfolio Indicative Values published on CTA or other data feeds.
---------------------------------------------------------------------------

    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.
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.\26\ Trading in Shares of the Funds 
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

[[Page 76471]]

is not occurring in the securities and/or the financial instruments 
comprising the Disclosed Portfolio 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.
---------------------------------------------------------------------------

    \26\ See NYSE Arca Equities Rule 7.12, Commentary .04.
---------------------------------------------------------------------------

Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern Time in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. As provided in 
NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price 
variation (``MPV'') for quoting and entry of orders in equity 
securities traded on the NYSE Arca Marketplace is $0.01, with the 
exception of securities that are priced less than $1.00 for which the 
MPV for order entry is $0.0001.
Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (which include Managed 
Fund Shares) to monitor trading in the Shares. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable Federal securities laws.
    The Exchange's current trading surveillance focuses on detecting 
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 ISG from other 
exchanges that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.\27\ In addition, 
the Exchange could obtain information from the U.S. exchanges on which 
the ETPs are listed and traded.
---------------------------------------------------------------------------

    \27\ For a list of the current members of ISG, see http://www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for the Funds may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
Equity Trading Permit (``ETP'') Holders in an Information Bulletin 
(``Bulletin'') of the special characteristics and risks associated with 
trading the Shares. Specifically, the Bulletin will discuss the 
following: (1) The procedures for purchases and redemptions of Shares 
in Creation Unit Aggregations (and that Shares are not individually 
redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty 
of due diligence on its ETP Holders to learn the essential facts 
relating to every customer prior to trading the Shares; (3) the risks 
involved in trading the Shares during the Opening and Late Trading 
Sessions when an updated Portfolio Indicative Value will not be 
calculated or publicly disseminated; (4) how information regarding the 
Portfolio Indicative Value is disseminated; (5) the requirement that 
ETP Holders deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (6) trading information.
    In addition, the Bulletin will reference that the 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) \28\ 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.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 Adviser has implemented a 
``fire wall'' with respect to its affiliated broker-dealer regarding 
access to information concerning the composition and/or changes to the 
Funds' portfolios. In addition, the Trust's Pricing and Investment 
Committee has implemented procedures designed to prevent the use and 
dissemination of material, non-public information regarding the 
Portfolios and the Funds. 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. The 
ETPs held by the Funds will be traded on U.S. national securities 
exchanges and will be subject to the rules of such exchanges, as 
approved by the Commission. Except for ETPs that may hold non-U.S. 
issues, the Funds will not otherwise invest in non-U.S.-registered 
issues.
    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 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. In addition, a large amount of 
information is publicly available regarding the Funds and the Shares, 
thereby promoting market transparency. The Funds' portfolio holdings 
will be disclosed on their 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 IOPV will be widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
Exchange's Core Trading Session. On each business day, before 
commencement of trading in Shares in the Core Trading Session on the 
Exchange, the Funds will disclose on their Web site the Disclosed 
Portfolio that will form the basis for the Funds' calculation of NAV at 
the end of the 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, and quotation and last sale information will be 
available via the CTA high-speed line. The Web

[[Page 76472]]

site for the Funds will include a form of the prospectus for the Funds 
and additional data relating to NAV 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 Funds 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 Funds may be halted. In 
addition, as noted above, investors will have ready access to 
information regarding the Funds' holdings, the IOPV, 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 Funds' holdings, 
the IOPV, 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 purposes of the Act.

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

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

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (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 shall:
    (A) By order approve or disapprove such 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-2011-85 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-2011-85. 
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 a.m. and 3 p.m. Copies of the filing will also 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 No. SR-
NYSEArca-2011-85 and should be submitted on or before December 28, 
2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31335 Filed 12-6-11; 8:45 am]
BILLING CODE 8011-01-P