Document ID: SEC-2014-0139-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2014-01-24T05:00Z

[Federal Register Volume 79, Number 16 (Friday, January 24, 2014)]
[Notices]
[Pages 4225-4228]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-01402]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71349; File No. SR-NYSEArca-2014-05]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Reflect a 
Change to the Means of Achieving the Investment Objective Applicable to 
the STARTM Global Buy-Write ETF

January 17, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on January 15, 2014, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the 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\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reflect a change to the means of achieving 
the investment objective applicable to the STARTM Global 
Buy-Write ETF. The shares of the Fund are currently listed and traded 
on the Exchange under NYSE Arca Equities Rule 8.600 (``Managed Fund 
Shares'').
    The text of the proposed rule change is available on the Exchange's 
Web site at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received

[[Page 4226]]

on the proposed rule change. The text of those statements may be 
examined at the places specified in Item IV below. The Exchange has 
prepared summaries, set forth in sections A, B, and C below, of the 
most significant parts of such statements.

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

1. Purpose
    The Commission has approved the listing and trading on the Exchange 
of shares (``Shares'') of the Fund under NYSE Arca Equities Rule 8.600 
\4\ (``Managed Fund Shares''.\5\ The Shares are offered by the 
AdvisorShares Trust (``Trust''), which is established as a Delaware 
statutory trust and is registered with the Commission as an open-end 
investment company.\6\ AdvisorShares Investments, LLC is the investment 
adviser (``Adviser'') to the Fund. Partnervest Advisory Services, LLC 
serves as sub-adviser for the Fund (``Sub-Adviser''). The Shares of the 
Fund are currently listed and traded on the Exchange.
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    \4\ The Commission originally approved the listing and trading 
of the Shares on the Exchange in Securities Exchange Act Release No. 
67552 (August 1, 2012), 77 FR 47131 (August 7, 2012) (SR-NYSEArca-
2012-55) (``Prior Order''). Notice of the proposed rule change was 
published in Securities Exchange Act Release No. 67183 (June 12, 
2012), 77 FR 36314 (June 18, 2012) (SR-NYSEArca-2012-55) (``Prior 
Notice'' and, together with the Prior Order, the ``Prior Release'').
    \5\ 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-1) (``1940 Act'') organized as an 
open-end investment company or similar entity that invests in a 
portfolio of securities selected by its investment advisor 
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.
    \6\ The Trust is registered under the 1940 Act. On October 28, 
2011, the Trust filed an amendment to its registration statement on 
Form N-1A under the Securities Act of 1933 (15 U.S.C. 77a) (``1933 
Act'') and under the 1940 Act relating to the Fund (File Nos. 333-
157876 and 811-22110) (``Registration Statement''). The description 
of the operation of the Trust and the Fund herein is based, in part, 
on the Registration Statement. In addition, the Commission has 
issued an order granting certain exemptive relief to the Trust under 
the 1940 Act. See Investment Company Act Release No. 28822 (July 20, 
2009) (File No. 812-13488) (``Exemptive Order'').
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    In this proposed rule change, the Exchange proposes to make the 
following change, described below, to the investment strategy the Sub-
Adviser will use to obtain the Fund's investment objective (the 
``Proposed Amendment'').\7\ As stated in the Prior Release, according 
to the Registration Statement, the Fund is a ``fund-of-funds'' and, 
under normal market conditions, intends to invest at least 60% of its 
total assets in exchange-traded funds (``ETFs'') \8\ and exchange-
traded notes (``ETNs'') \9\ that seek to track a diversified basket of 
global indices and investment sectors and in exchange-traded pooled 
investment vehicles that invest directly in commodities or currencies 
and that are registered pursuant to the 1933 Act (together with ETFs 
and ETNs, ``Underlying ETPs'').\10\
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    \7\ The Proposed Amendment described herein will be effective 
upon filing with the Commission of another amendment to the Trust's 
Registration Statement or supplement thereto. See note 6, supra. The 
Adviser represents that the Adviser and the Sub-Adviser have managed 
and will continue to manage the Fund in the manner described in the 
Prior Release, and the Fund will not implement the Proposed 
Amendment described herein until the instant proposed rule change is 
operative.
    \8\ For purposes of this proposed rule change, and as stated in 
the Prior Release, ETFs are securities registered under the 1940 Act 
such as those listed and traded on the Exchange under NYSE Arca 
Equities Rules 5.2(j)(3), 8.100, and 8.600.
    \9\ For purposes of this proposed rule change, and, as stated in 
the Prior Release, ETNs are securities that are registered pursuant 
to the 1933 Act such as those listed and traded on the Exchange 
pursuant to NYSE Arca Equities Rule 5.2(j)(6).
    \10\ Underlying ETPs include, in addition to ETFs and ETNs, the 
following securities: 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); and 
closed-end funds. The Underlying ETPs are all listed and traded in 
the U.S. on registered exchanges.
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    As stated in the Prior Release, the Fund, through its investment in 
Underlying ETPs, may purchase equity securities traded in the U.S. on 
registered exchanges or the over-the-counter market.\11\ Going forward, 
while continuing to invest, under normal market conditions, at least 
60% of its total assets in Underlying ETPs, as described above, the 
Fund proposes to also invest directly in exchange-traded equity 
securities other than Underlying ETPs. All such other exchange-traded 
equity securities will be listed and traded in the U.S. on national 
securities exchanges. As stated in the Prior Release, except for 
Underlying ETPs that may hold non-U.S. issues, the Fund will not 
otherwise invest in non-U.S.-registered issues.
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    \11\ The Prior Release also states that the Fund invests in call 
options on Underlying ETPs. All such options are traded in the U.S. 
on national securities exchanges.
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    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances, administered by the Financial 
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, 
which are designed to detect violations of Exchange rules and 
applicable federal securities laws.\12\ 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.
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    \12\ FINRA surveils trading on the Exchange pursuant to a 
regulatory services agreement. The Exchange is responsible for 
FINRA's performance under this regulatory services agreement.
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    FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in equity securities (including Underlying ETPs and 
other exchange-traded equity securities), and exchange-traded options 
with other markets and other entities that are members of the 
Intermarket Surveillance Group (``ISG''), and FINRA, on behalf of the 
Exchange, may obtain trading information regarding trading in equity 
securities (including Underlying ETPs and other exchange-traded equity 
securities), and exchange-traded options from such markets and other 
entities. In addition, the Exchange may obtain information regarding 
trading in equity securities (including Underlying ETPs and other 
exchange-traded equity securities), and exchange-traded options from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement.
    For purposes of calculating net asset value (``NAV'') of Shares of 
the Fund, price information for valuation of equity securities held by 
the Fund will be taken from the exchange where the security is 
primarily traded. Quotation and last-sale information for the equity 
securities held by the Fund will be available via the Consolidated Tape 
Association (``CTA'') high-speed line and from major market data 
vendors.
    The Adviser represents that there is no change to the Fund's 
investment objective. The Adviser also represents that the Proposed 
Amendment is consistent with the Exemptive Order under the 1940 Act and 
the rules thereunder. Except for the changes noted regarding the 
Proposed Amendment above, all other facts presented and representations 
made in the Prior Release remain unchanged.
    The Fund will continue to comply with all initial and continued 
listing requirements under NYSE Arca Equities Rule 8.600.
    Terms used herein but not otherwise defined shall have the meanings

[[Page 4227]]

ascribed to them in the Rule 19b-4 filing underlying the Prior 
Release.\13\
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    \13\ See note 4, supra.
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    The Exchange notes that the Commission has previously approved for 
listing other actively-managed exchange-traded funds that invest in 
U.S. exchange-listed equity securities.\14\
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    \14\ See, e.g., Securities Exchange Act Release No. 71067 
(December 12, 2013), 78 FR 76669 (December 18, 2013) (SR-NYSEArca-
2013-105) (order approving listing and trading on NYSE Arca of SPDR 
MFS ETFs).
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2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \15\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
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    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed on the Exchange pursuant to the initial and 
continued listing criteria in NYSE Arca Equities Rule 8.600. The 
Exchange represents that trading in the Shares will be subject to the 
existing trading surveillances, administered by FINRA on behalf of the 
Exchange, which are designed to detect violations of Exchange rules and 
applicable federal securities laws. 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.
    FINRA, on behalf of the Exchange, will communicate as needed 
regarding trading in equity securities (including Underlying ETPs and 
other exchange-traded equity securities), and exchange-traded options 
with other markets and other entities that are members of the ISG, and 
FINRA, on behalf of the Exchange, may obtain trading information 
regarding trading in equity securities (including Underlying ETPs and 
other exchange-traded equity securities), and exchange-traded options 
from such markets and other entities. In addition, the Exchange may 
obtain information regarding trading in equity securities (including 
Underlying ETPs and other exchange-traded equity securities), and 
exchange-traded options from markets and other entities that are 
members of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.
    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 Adviser represents that there is no change to the Fund's 
investment objective. The Fund will continue to comply with all initial 
and continued listing requirements under NYSE Arca Equities Rule 8.600. 
The Adviser represents that the purpose of the proposed rule change is 
to provide additional flexibility to the Sub-Adviser to meet the Fund's 
investment objective by investing directly in U.S. exchange-listed 
equity securities.
    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 continued listing and 
trading of an actively-managed exchange-traded product that will 
enhance competition among market participants, to the benefit of 
investors and the marketplace. The Fund will continue to comply with 
all initial and continued listing requirements under NYSE Arca Equities 
Rule 8.600.

(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 purpose of the Act. The Exchange believes the 
proposed rule change will permit the Adviser and Sub-Adviser additional 
flexibility in achieving the Fund's investment objective, and will 
permit the Fund to better compete with other issues of Managed Fund 
Shares that hold equity securities traded in the U.S. on national 
securities exchanges.

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

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

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\16\ and Rule 19b-4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange requests that the Commission waive 
the 30-day operative delay to accommodate certain investments by the 
Fund and Exchange trading of the Shares of the Fund without delay. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public 
interest.\18\ As stated in the proposal, the proposed changes do not 
alter the Fund's investment objective. Under the proposal, the Fund 
seeks to invest directly in exchange-traded equity securities other 
than Underlying ETPs. The Exchange states that all exchange-traded 
equity securities, in addition to Underlying ETPs, in which the Fund 
will invest will be listed and traded in the U.S. on national 
securities exchanges. In addition, the Exchange confirms that, except 
for Underlying ETPs that may hold non-U.S. issues, the Fund will not 
otherwise invest in non-U.S.-registered issues. The Exchange represents 
that, except for the changes in the proposal, all other facts and 
representations made in the Prior Release remain unchanged and that the 
Fund will continue to comply with all initial and continued listing 
requirements under NYSE Arca Equities Rule 8.600. Because the proposed 
changes do not alter the Fund's investment objective and do not raise 
any novel or unique regulatory issues, the Commission designates the 
proposed rule change as operative upon filing.
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    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of

[[Page 4228]]

investors, or otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal 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 No. SR-NYSEArca-2014-05 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 No. SR-NYSEArca-2014-05. 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 changes between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing 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-2014-05 and should be 
submitted on or before February 14, 2014.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-01402 Filed 1-23-14; 8:45 am]
BILLING CODE 8011-01-P