Document ID: SEC-2010-0957-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-06-29T04:00Z

[Federal Register: June 29, 2010 (Volume 75, Number 124)]
[Notices]               
[Page 37510-37515]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29jn10-113]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62349; File No. SR-NYSEArca-2010-51]

 
Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by NYSE Arca, Inc. Relating to Listing and Trading of WisdomTree 
Dreyfus Commodity Currency Fund Under NYSE Arca Equities Rule 8.600

June 22, 2010.
    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 June 10, 2010, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the

[[Page 37511]]

Securities and Exchange Commission (the ``Commission'') the proposed 
rule change as described in Items I, II, and III below, which Items 
have been prepared by the self-regulatory organization. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the following 
fund of the WisdomTree Trust (``Trust'') under NYSE Arca Equities Rule 
8.600: WisdomTree Dreyfus Commodity Currency Fund (``Fund''). The text 
of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, and on the Exchange's Web site at 
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 self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange proposes to list and trade the Shares of the Fund 
under NYSE Arca Equities Rule 8.600, which governs the listing and 
trading of ``Managed Fund Shares'' on the Exchange.\4\ The Fund will be 
an actively managed exchange traded fund. The Shares will be offered by 
the Trust, which was established as a Delaware statutory trust on 
December 15, 2005. The Trust is registered with the Commission as an 
investment company.\5\
---------------------------------------------------------------------------

    \4\ The Commission approved NYSE Arca Equities Rule 8.600 and 
the listing and trading of certain funds of the PowerShares Actively 
Managed Funds Trust on the Exchange pursuant to Rule 8.600 in 
Securities Exchange Act Release No. 57619 (April 4, 2008) 73 FR 
19544 (April 10, 2008) (SR-NYSEArca-2008-25). The Commission also 
previously approved listing and trading on the Exchange 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); 58564 
(September 17, 2008), -- [sic] 73 FR 55194 (September 24, 2008) (SR-
NYSEArca-2008-86) (order approving Exchange listing and trading of 
WisdomTree Dreyfus Emerging Currency Fund); 60975 (November 10, 
2009), 74 FR 59590 (November 18, 2009) (SR-NYSEArca-2009-83) (order 
approving listing of Grail American Beacon International Equity 
ETF); 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).
    \5\ See Post-Effective Amendment No. 32 to Registration 
Statement on Form N-1A for the Trust, dated March 19, 2010 (File 
Nos. 333-132380 and 811-21864), as supplemented on June 8, 2010 (the 
``Registration Statement''). The descriptions of the Fund and the 
Shares contained herein are based on information in the Registration 
Statement.
---------------------------------------------------------------------------

Description of the Shares and the Fund
    WisdomTree Asset Management, Inc. (``WisdomTree Asset Management'') 
is the investment adviser (``Adviser'') to the Fund.\6\ WisdomTree 
Asset Management is not affiliated with any broker-dealer. The Dreyfus 
Corporation (``Dreyfus'') serves as sub-adviser (``Sub-Adviser'') for 
the Fund. The Bank of New York is the administrator, custodian and 
transfer agent for the Trust. ALPS Distributors, Inc. serves as the 
distributor for the Trust.\7\
---------------------------------------------------------------------------

    \6\ WisdomTree Investments, Inc. (``WisdomTree Investments'') is 
the parent company of WisdomTree Asset Management.
    \7\ The Commission has issued an order granting certain 
exemptive relief to the Trust under the Investment Company Act of 
1940 (15 U.S.C. 80a-1) (``1940 Act''). See Investment Company Act 
Release No. 28174 (February 27, 2008) (File No. 812-13470). In 
compliance with Commentary .05 to NYSE Arca Equities Rule 8.600, 
which applies to Managed Fund Shares based on an international or 
global portfolio, the Trust's application for exemptive relief under 
the 1940 Act states that the Fund will comply with the federal 
securities laws in accepting securities for deposits and satisfying 
redemptions with redemption securities, including that the 
securities accepted for deposits and the securities used to satisfy 
redemption requests are sold in transactions that would be exempt 
from registration under the Securities Act of 1933 (15 U.S.C. 77a).
---------------------------------------------------------------------------

    Commentary .06 \8\ 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.\9\ In addition, 
Commentary .06 further requires that personnel who make decisions on 
the open-end fund's portfolio composition must be subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding the open-end fund's portfolio. Commentary .06 to 
Rule 8.600 is similar to Commentary .03(a)(i) and (iii) to NYSE Arca 
Equities Rule 5.2(j)(3); however, Commentary .06 in connection with the 
establishment of a ``fire wall'' between the investment adviser and the 
broker-dealer reflects the applicable open-end fund's portfolio, not an 
underlying benchmark index, as is the case with index-based funds. 
Dreyfus is affiliated with multiple broker-dealers and has implemented 
a ``fire wall'' with respect to such broker-dealers regarding access to 
information concerning the composition and/or changes to the Fund's 
portfolio.\10\
---------------------------------------------------------------------------

    \8\ See June 17, 2010 e-mail from Michael Cavalier, Exchange, to 
Joseph Morra, Commission (correcting references from Commentary .07 
of Rule 8.600 to Commentary .06 of Rule 8.600).
    \9\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and Sub-adviser 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.
    \10\ The Exchange represents that the Adviser and Sub-Adviser, 
and their related personnel, are subject to Investment Advisers Act 
Rule 204A-1. This Rule specifically requires the adoption of a code 
of ethics by an investment adviser to include, at a minimum: (i) 
Standards of business conduct that reflect the firm's/personnel 
fiduciary obligations; (ii) provisions requiring supervised persons 
to comply with applicable federal securities laws; (iii) provisions 
that require all access persons to report, and the firm to review, 
their personal securities transactions and holdings periodically as 
specifically set forth in Rule 204A-1; (iv) provisions requiring 
supervised persons to report any violations of the code of ethics 
promptly to the chief compliance officer (``CCO'') or, provided the 
CCO also receives reports of all violations, to other persons 
designated in the code of ethics; and (v) provisions requiring the 
investment adviser to provide each of the supervised persons with a 
copy of the code of ethics with an acknowledgement by said 
supervised persons. In addition, Rule 206(4)-7 under the Advisers 
Act makes it unlawful for an investment 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.
---------------------------------------------------------------------------

WisdomTree Commodity Currency Fund
    The WisdomTree Dreyfus Commodity Currency Fund (the ``Fund'') seeks 
to achieve total returns reflective of money market rates in selected 
commodity-producing countries and changes to the

[[Page 37512]]

value of such countries' currencies relative to the U.S. dollar.
    The term ``commodity currency'' generally is used to describe the 
currency of a country whose economic success is commonly identified 
with the production and export of commodities (such as precious metals, 
oil, agricultural products or other raw materials) and whose value is 
closely linked to the value of such commodities. As the demand for, or 
price of, such commodities increases money tends to flow into the 
country. Conversely, declines in the demand for, or value of, such 
commodities historically have contributed to declines in the relative 
value of these countries' currencies.
    The Fund is designed to provide exposure to both the currencies and 
money market rates available to foreign investors in selected 
commodity-producing countries. The Fund intends to invest in commodity-
producing countries such as Australia, Brazil, Canada, Chile, 
Indonesia, Mexico, New Zealand, Norway, Russia and South Africa. In 
addition to seeking broad exposure across countries and currencies, the 
Fund intends to seek exposure across currencies correlated to each of 
the key commodity groups: industrial metals, precious metals, energy, 
agriculture and livestock. The Fund generally will invest only in 
currencies that ``float'' relative to other currencies. The value of a 
floating currency is largely determined by supply and demand and 
prevailing market rates. In contrast, the value of a ``fixed'' currency 
generally is set by a government or central bank at an official 
exchange rate. The Fund generally does not intend to invest in the 
currencies of notable commodity producers, such as China, Saudi Arabia 
and the United Arab Emirates, since they are fixed or otherwise closely 
linked to the U.S. dollar. The Fund will only invest in currencies that 
it deems to be sufficiently liquid and accessible.\11\
---------------------------------------------------------------------------

    \11\ The Fund may pursue its objectives through direct 
investments in money market instruments issued by entities in the 
applicable foreign country and denominated in the applicable non-
U.S. currency when WisdomTree Asset Management believes it is in the 
best interest of the Fund to do so. The decision to secure exposure 
directly or indirectly will be a function of, among other things, 
market accessibility, credit exposure, and tax ramifications for 
foreign investors. If the Fund pursues direct investment, eligible 
investments include short-term securities issued by the applicable 
foreign government and its agencies or instrumentalities, bank debt 
obligations and time deposits, bankers' acceptances, commercial 
paper, and short-term, high-quality corporate debt obligations 
designed to provide exposure to the applicable non-U.S. currency and 
money market rates, and U.S. dollar money market instruments.
---------------------------------------------------------------------------

    The Fund intends to achieve exposure to selected commodity-
producing countries available to U.S. investors by investing primarily 
in short-term U.S. money market securities and forward currency 
contracts and swaps. The combination of money market securities with 
forward currency contracts and currency swaps is designed to create a 
position economically similar to a money market instrument denominated 
in a non-U.S. currency. A forward currency contract is an agreement to 
buy or sell a specific currency at a future date at a price set at the 
time of the contract. A currency swap is an agreement between two 
parties to exchange one currency for another at a future rate.
    In order to reduce interest rate risk, the Fund generally expects 
to maintain an average portfolio maturity of 90 days or less. The 
``average portfolio maturity'' of the Fund is the average of all the 
current maturities of the individual securities in the Fund's 
portfolio. All money market securities acquired by the Fund will be 
rated in the upper two short-term ratings by at least two nationally 
recognized statistical rating organizations (``NRSROs'') or, if 
unrated, deemed by the Adviser to be of equivalent quality.
    As a matter of general policy, the Fund will invest, under normal 
circumstances, at least 80% of its net assets, plus the amount of any 
borrowings for investment purposes, in investments that are tied 
economically to selected commodity-producing countries available to 
U.S. investors that make a significant contribution to the global 
export of commodities. If, subsequent to an investment, the 80% 
requirement is no longer met, the Fund's future investments will be 
made in a manner that will bring the Fund into compliance with this 
policy.
    According to the Registration Statement, the Fund is considered to 
be ``non-diversified'' and is not limited by the 1940 Act with regard 
to the percentage of assets that may be invested in the securities of a 
single issuer. As a result, the Fund may invest more of its assets in 
the securities of a single issuer or a smaller number of issuers than 
if it were classified as a diversified fund. The Fund will maintain the 
level of diversification necessary to qualify as a regulated investment 
company (``RIC'') under Subchapter M of the Code. The Subchapter M 
diversification tests generally require that (i) a Fund invest no more 
than 25% of its total assets in securities (other than securities of 
the U.S. government or other RICs) of any one issuer or two or more 
issuers that are controlled by a Fund and that are engaged in the same, 
similar or related trades or businesses, and (ii) at least 50% of a 
Fund's total assets consist of cash and cash items, U.S. government 
securities, securities of other RICs and other securities, with 
investments in such other securities limited in respect of any one 
issuer to an amount not greater than 5% of the value of the Fund's 
total assets and 10% of the outstanding voting securities of such 
issuer. These tax requirements are generally applied at the end of each 
quarter of a Fund's taxable year.
    In addition to satisfying the above referenced RIC diversification 
requirements, no portfolio security held by a Fund (other than U.S. 
government securities and non-U.S. government securities) will 
represent more than 30% of the weight of a Fund and the five highest 
weighted portfolio securities of a Fund (other than U.S. government 
securities and/or non-U.S. government securities) will not in the 
aggregate account for more than 65% of the weight of a Fund. For these 
purposes, a Fund may treat repurchase agreements collateralized by U.S. 
government securities or non-U.S. government securities as U.S. or non-
U.S. government securities, as applicable.
    All U.S. money market securities acquired by the Fund will be rated 
in the upper two short-term ratings by at least two NRSROs or, if 
unrated, deemed to be of equivalent quality. The Fund may purchase 
short-term obligations issued or guaranteed by the U.S. Treasury or the 
agencies or instrumentalities of the U.S. government.
    The Fund may invest in short-term securities issued or guaranteed 
by non-U.S. governments, agencies and instrumentalities; and deposits 
and other obligations of U.S. and non-U.S. banks and financial 
institutions. Deposits and obligations of banks and financial 
institutions include certificates of deposit, time deposits, and 
bankers' acceptances. The Fund may purchase floating rate and 
adjustable rate obligations, such as demand notes, bonds, and 
commercial paper; and mortgage-backed and asset-backed securities.
    The Fund may engage in foreign currency transactions and may invest 
directly in foreign currencies in the form of bank and financial 
institution deposits, certificates of deposit, and bankers acceptances 
denominated in a specified non-U.S. currency and may enter into foreign 
currency exchange transactions. The Fund will conduct its foreign 
currency exchange transactions

[[Page 37513]]

either on a spot (i.e., cash) basis at the spot rate prevailing in the 
foreign currency exchange market, or by entering into forward currency 
contracts to purchase or sell foreign currencies or forward currency 
swaps to exchange cash flows based on the notional difference among two 
or more currencies.
    The Fund may enter into swap agreements, including interest rate 
swaps and currency swaps; may buy or sell put and call options on 
foreign currencies either on exchanges or in the over-the-counter 
market; may use futures contracts and related options: (i) To attempt 
to gain exposure to foreign currencies, and (ii) to attempt to gain 
exposure to a particular market, instrument or index; may use swap 
agreements; may enter into repurchase agreements with counterparties 
that are deemed to present acceptable credit risks; may enter into 
reverse repurchase agreements, which involve the sale of securities 
held by a [sic] Fund subject to its agreement to repurchase the 
securities at an agreed upon date or upon demand and at a price 
reflecting a market rate of interest; and may invest in the securities 
of other investment companies (including money market funds). Each 
[sic] Fund may use derivative instruments as part of its investment 
strategies, as described in the Registration Statement.
    The Fund may invest up to an aggregate amount of 10% of its net 
assets in illiquid securities. Illiquid securities include securities 
subject to contractual or other restrictions on resale and other 
instruments that lack readily available markets.
    The Fund may invest in very short-term money market securities 
denominated in various foreign currencies and/or investments designed 
to provide exposure to such currencies and money market rates. Such 
currencies include the Australian dollar; Brazilian Real; Canadian 
Dollar; Chilean Peso; Chinese Yuan; Indian Rupee; Indonesian Rupiah; 
Japanese Yen; Mexican Peso; New Zealand Dollar; Norwegian Kroner; 
Russian Ruble; South African Rand. In addition, the Funds may invest 
assets in a market or markets considered to be ``emerging'' or 
``developing'' or in securities that provide exposure to such 
market(s).\12\
---------------------------------------------------------------------------

    \12\ Data for these currencies is included in the Bank for 
International Settlements Triennial Central Bank Survey, December 
2007 (``BIS Survey''). The Fund will invest in instruments that 
provide exposure to currencies selected from the top 42 currencies 
in the chart included in the BIS Survey (``Currency distribution of 
foreign exchange turnover''), reflecting the percentage share of 
average daily turnover for the applicable month and year.
---------------------------------------------------------------------------

    The Fund will not invest in non-U.S. equity securities.
The Shares
    The Fund issues and redeems Shares on a continuous basis at net 
asset value (``NAV'') \13\ only in large blocks of shares (``Creation 
Units'') in transactions with authorized participants. Currently, 
Creation Units generally consist of 50,000 shares, though this may 
change from time to time. Creation Units are not expected to consist of 
less than 25,000 shares. The Fund generally issues and redeems Creation 
Units in exchange for a portfolio of money market securities closely 
approximating the holdings of a [sic] Fund or a designated basket of 
non-U.S. currency and/or an amount of U.S. cash. Once created, Shares 
of the Funds [sic] trade on the secondary market in amounts less than a 
Creation Unit. For more information regarding the Shares and the Fund, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings disclosure policies, distributions 
and taxes, see the Registration Statement.
---------------------------------------------------------------------------

    \13\ The NAV of the Fund's shares generally is calculated once 
daily Monday through Friday as of the close of regular trading on 
the New York Stock Exchange, generally 4:00 p.m. Eastern time (the 
``NAV Calculation Time''). NAV per share is calculated by dividing a 
Fund's net assets by the number of Fund shares outstanding. For more 
information regarding the valuation of Fund investments in 
calculating a Fund's NAV, see the Registration Statement.
---------------------------------------------------------------------------

Availability of Information
    The Fund's Web site (http://www.wisdomtree.com), which will be 
publicly available prior to the public offering of Shares, will include 
a form of the Prospectus for the Fund that may be downloaded. The Web 
site will include additional quantitative information updated on a 
daily basis, including, for the Fund: (1) The prior business day's 
reported NAV, mid-point of the bid/ask spread at the time of 
calculation of such NAV (the ``Bid/Ask Price''),\14\ 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 \15\ on the Exchange, the Trust will 
disclose on its Web site the identities and quantities of the portfolio 
of securities and other assets (the ``Disclosed Portfolio'') held by 
the Fund that will form the basis for the Fund's calculation of NAV at 
the end of the business day.\16\ The Web site and information will be 
publicly available at no charge.
---------------------------------------------------------------------------

    \14\ The Bid/Ask Price of a Fund is determined using the 
midpoint of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of such Fund's NAV. The records relating 
to Bid/Ask Prices will be retained by the Fund and its service 
providers.
    \15\ The Core Trading Session is 9:30 a.m. to 4 p.m. Eastern 
time.
    \16\ Under accounting procedures followed by the Fund, trades 
made on the prior business day (``T'') will be booked and reflected 
in NAV on the current business day (``T+1''). Notwithstanding the 
foregoing, portfolio trades that are executed prior to the opening 
of the Exchange on any business day may be booked and reflected in 
NAV on such business day. Accordingly, the Fund will be able to 
disclose at the beginning of the business day the portfolio that 
will form the basis for the NAV calculation at the end of the 
business day.
---------------------------------------------------------------------------

    In addition, for the Fund, an estimated value, defined in Rule 
8.600 as the ``Portfolio Indicative Value,'' that reflects an estimated 
intraday value of the Fund's portfolio, will be disseminated. The 
Portfolio Indicative Value will be based upon the current value for the 
components of the Disclosed Portfolio and will be updated and 
disseminated by one or more major market data vendors at least every 15 
seconds during the Core Trading Session on the Exchange. The 
dissemination of the Portfolio Indicative Value, together with the 
Disclosed Portfolio, will allow investors to determine the value of the 
underlying portfolio of the Fund on a daily basis and to provide a 
close estimate of that value throughout the trading day.
    Information regarding market price and volume of the Shares is and 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. The 
previous day's closing price and trading volume information will be 
published daily in the financial section of newspapers. Quotation and 
last sale information for the Shares will be available via the 
Consolidated Tape Association high-speed line.
Initial and Continued Listing
    The Shares will be subject to Rule 8.600(d), which sets forth the 
initial and continued listing criteria applicable to Managed Fund 
Shares. The Exchange represents that, for initial and/or continued 
listing, the Shares must be in compliance with Rule 10A-3 \17\ under 
the Exchange Act, as provided by NYSE Arca Equities Rule 5.3. A minimum 
of 100,000 Shares will be outstanding at the commencement of trading on 
the Exchange. The Exchange will obtain a

[[Page 37514]]

representation from the issuer of the Shares that the net asset value 
per share for the Fund will be calculated daily and that the net asset 
value and the Disclosed Portfolio will be made available to all market 
participants at the same time.
---------------------------------------------------------------------------

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

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 a Fund. Shares of the Fund will be halted if 
the ``circuit breaker'' parameters in NYSE Arca Equities Rule 7.12 are 
reached. Trading may be halted because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the Shares 
inadvisable. These may include: (1) The extent to which trading is not 
occurring in the securities comprising the Disclosed Portfolio and/or 
the financial instruments of a Fund; or (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present. Trading in the Shares will be subject 
to Rule 8.600(d)(2)(D), which sets forth circumstances under which 
Shares of a Fund may be halted.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. Eastern time in 
accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late 
Trading Sessions). The Exchange has appropriate rules to facilitate 
transactions in the Shares during all trading sessions. The minimum 
trading increment for Shares on the Exchange will be $0.01.
Surveillance
    The Exchange intends to utilize its existing surveillance 
procedures applicable to derivative products (which includes Managed 
Fund Shares) to monitor trading in the Shares. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws.
    The Exchange's current trading surveillance focuses on detecting 
securities trading outside their normal patterns. When such situations 
are detected, surveillance analysis follows and investigations are 
opened, where appropriate, to review the behavior of all relevant 
parties for all relevant trading violations.
    The Exchange may obtain information via the Intermarket 
Surveillance Group (``ISG'') from other exchanges who are members of 
the ISG.\18\
---------------------------------------------------------------------------

    \18\ For a list of the current members and affiliate members of 
ISG, see http://www.isgportal.org. The Exchange notes that not all 
of the components of the Disclosed Portfolio for the Fund may trade 
on exchanges that are members of the 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 
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 Fund is subject 
to various fees and expenses described in the Registration Statement. 
The Bulletin will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Exchange Act. 
The Bulletin will also disclose that the NAV for the Shares will be 
calculated after 4:00 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) \19\ that an exchange have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest. The 
Exchange believes that the proposed rule change will facilitate the 
listing and trading of an additional type of exchange-traded product 
that will enhance competition among market participants, to the benefit 
of investors and the marketplace. In addition, the listing and trading 
criteria set forth in Rule 8.600 are intended to protect investors and 
the public interest.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 Other

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

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-51 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 37515]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NYSEArca-2010-51. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for 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 such filing also will be 
available for inspection and copying at the principal office of NYSE 
Arca. 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 
publicly available. All submissions should refer to File Number SR-
NYSEArca-2010-51 and should be submitted on or before July 20, 2010.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-15750 Filed 6-28-10; 8:45 am]
BILLING CODE 8011-01-P