Document ID: SEC-2012-0245-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-02-13T05:00Z

[Federal Register Volume 77, Number 29 (Monday, February 13, 2012)]
[Notices]
[Pages 7623-7626]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3215]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66342; File No. SR-NYSEArca-2011-82]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of a Proposed Rule Change, as Modified by Amendment No. 3 
Thereto, Relating to the Listing and Trading of Shares of the 
WisdomTree Emerging Markets Inflation Protection Bond Fund Under NYSE 
Arca Equities Rule 8.600

February 7, 2012.

I. Introduction

    On November 14, 2011, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade shares of the WisdomTree 
Emerging Markets Inflation Protection Bond Fund under NYSE Arca 
Equities Rule 8.600. The proposed rule change was published for comment 
in the Federal Register on December 5, 2011.\3\ On January 17, 2012, 
the Exchange filed Amendment No. 1 to the proposed rule change 
(``Amendment No. 1'').\4\ On January 18, 2012, the Exchange filed 
Amendment No. 2 to the proposed rule change (``Amendment No. 2'').\5\ 
On January 23, 2012, the Exchange further extended the time period for 
Commission action to February 8, 2012. On January 25, 2012, the 
Exchange filed Amendment No. 3 to the proposed rule change (``Amendment 
No. 3'').\6\ The Commission received no comments on the proposal. This 
order grants approval of the proposed rule change, as modified by 
Amendment No. 3.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 65846 (November 29, 
2011), 76 FR 75932 (``Notice'').
    \4\ The Exchange withdrew Amendment No. 1 on January 18, 2012 
and extended the time period for Commission action to January 25, 
2012.
    \5\ The Exchange withdrew Amendment No. 2 on January 25, 2012.
    \6\ The proposed rule change originally stated that ``[t]he Fund 
may invest up to an aggregate amount of 15% of its net assets in (a) 
illiquid securities and (2) [sic] Rule 144A securities.'' See 
Notice, 76 FR at 75936, supra note 3. Amendment No. 3 amended the 
proposed rule change by replacing the term ``invest'' with ``hold.'' 
The purpose of Amendment No. 3 was to make the proposed rule change 
more consistent with the Investment Company Act of 1940 (15 U.S.C. 
80a-1) (``1940 Act'') requirements relating to restrictions on 
holdings of illiquid securities by registered open-end management 
investment companies. Because Amendment No. 3 seeks to maintain 
consistency with the 1940 Act and rules and regulations thereunder, 
and does not materially alter the substance of the proposed rule 
change or raise any novel regulatory issues, the amendment is not 
subject to notice and comment.
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade shares (``Shares'') of the 
WisdomTree Emerging Markets Inflation Protection Bond Fund (``Fund'') 
pursuant to NYSE Arca Equities Rule 8.600, which governs the listing 
and trading of Managed Fund Shares on the Exchange. The Fund will be an 
actively-managed exchange-traded fund. The Shares will be offered by 
the WisdomTree Trust (``Trust''), which was established as a Delaware 
statutory trust on December 15, 2005. The Fund is registered with the 
Commission as an investment company, and the Fund has filed a 
registration statement on Form N-1A (``Registration Statement'') with 
the Commission.\7\ WisdomTree Asset Management, Inc. is the investment 
adviser (``Adviser'') to the Fund, and Mellon Capital Management serves 
as sub-adviser for the Fund (``Sub-Adviser''). The Bank of New York 
Mellon is the administrator, custodian, and transfer agent for the 
Trust, and ALPS Distributors, Inc. serves as the distributor for the 
Trust.\8\ The Exchange states that, while WisdomTree Asset Management 
is not affiliated with any broker-dealer, the Sub-Adviser is affiliated 
with multiple broker-dealers. As a result, the Sub-Adviser 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. In addition, Sub-Adviser personnel who 
make decisions regarding the Fund's portfolio are subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding the Fund's portfolio.\9\
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    \7\ See Post-Effective Amendment No. 54 to Registration 
Statement on Form N-1A for the Trust, dated July 1, 2011 (File Nos. 
333-132380 and 811-21864).
    \8\ The Commission has issued an order granting certain 
exemptive relief to the Trust under the 1940 Act. See Investment 
Company Act Release No. 28171 (October 27, 2008) (File No. 812-
13458) (``Exemptive Order''). 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).
    \9\ See Commentary .06 to NYSE Arca Equities Rule 8.600. The 
Exchange represents that, in the event (a) the Adviser or the Sub-
Adviser becomes newly affiliated with a broker-dealer, or (b) any 
new adviser or sub-adviser becomes affiliated with a broker-dealer, 
it will implement a fire wall with respect to such broker-dealer 
regarding access to information concerning the composition and/or 
changes to the portfolio, and will be subject to procedures designed 
to prevent the use and dissemination of material non-public 
information regarding such portfolio.
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Description of the Fund

    The Fund seeks to provide a high level of income and capital 
appreciation representative of investments in inflation-linked debt of 
emerging market issuers. The Fund intends to achieve its investment 
objectives through direct and indirect investments in inflation-
protected Fixed Income Securities \10\ of emerging market countries. 
The Fund expects that it will have at least 70% of its assets invested 
in Fixed Income Securities. The Fund will invest in Fixed Income 
Securities linked to inflation rates in emerging markets throughout the 
world. The Fund may invest in Fixed Income Securities that are not 
linked to inflation, such as U.S. or non-U.S. government bonds, as well 
as Fixed Income Securities that pay variable or floating rates. The 
Fund may also invest in Money Market Securities and derivative 
instruments, as described below.
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    \10\ For these purposes, ``Fixed Income Securities'' include 
bonds, notes, or other debt obligations, such as government or 
corporate bonds, denominated in local currencies or U.S. dollars, as 
well as issues denominated in emerging market local currencies that 
are issued by ``supranational issuers,'' such as the International 
Bank for Reconstruction and Development and the International 
Finance Corporation, as well as development agencies supported by 
other national governments.
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    The Fund intends to invest in inflation-linked Fixed Income 
Securities of issuers in the following regions: Asia, Latin America, 
Eastern Europe, Africa, and the Middle East. Within these regions, the 
Fund is likely to invest in countries such as Brazil, Chile, Colombia, 
Hungary, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland, 
Russia, South Africa, South Korea, Thailand, and Turkey, although this 
list may change as market developments occur and may include additional 
emerging market countries that conform to selected ratings, liquidity, 
and other criteria. As a general matter, and subject to the Fund's 
investment guideline to provide

[[Page 7624]]

exposure across geographic regions and countries, the Fund generally 
will invest a higher percentage of its assets in countries with larger 
and more liquid debt markets. The Fund's exposure to any single country 
generally will be limited to 20% of the Fund's assets. The percentage 
of Fund assets invested in a specific region, country, or issuer will 
change from time to time.
    The Fund expects that it will have at least 70% of its assets 
invested in investment grade securities, and no more than 30% of its 
assets invested in non-investment grade securities. Because the debt 
ratings of issuers will change from time to time, the exact percentage 
of the Fund's investments in investment grade and non-investment grade 
Fixed Income Securities will change from time to time in response to 
economic events and changes to the credit ratings of such issuers. 
Within the non-investment grade category, some issuers and instruments 
are considered to be of lower credit quality and at higher risk of 
default. In order to limit its exposure to these more speculative 
credits, the Fund will not invest more than 10% of its assets in 
securities rated BB or below by Moody's, or equivalently rated by S&P 
or Fitch. The Fund does not intend to invest in unrated securities; 
however, it may do so to a limited extent, such as where a rated 
security becomes unrated, if such security is determined by the Adviser 
and Sub-Adviser to be of comparable quality. In determining whether a 
security is of ``comparable quality,'' the Adviser and Sub-Adviser will 
consider, for example, whether the issuer of the security has issued 
other rated securities.
    While the Fund intends to focus its investments in Fixed Income 
Securities on bonds and other obligations of governments and agencies 
of emerging market countries, the Fund may invest up to 20% of its net 
assets in corporate bonds. The Fund will invest only in corporate bonds 
that the Adviser or Sub-Adviser deems to be sufficiently liquid. 
Generally, a corporate bond must have $200 million or more par amount 
outstanding and significant par value traded to be considered as an 
eligible investment. Economic and other conditions may, from time to 
time, lead to a decrease in the average par amount outstanding of bond 
issuances. Therefore, although the Fund does not intend to do so, the 
Fund may invest up to 5% of its net assets in corporate bonds with less 
than $200 million par amount outstanding if (i) the Adviser or Sub-
Adviser deems such security to be sufficiently liquid based on its 
analysis of the market for such security (based on, for example, 
broker-dealer quotations or its analysis of the trading history of the 
security or the trading history of other securities issued by the 
issuer), (ii) such investment is deemed by the Adviser or Sub-Adviser 
to be in the best interest of the Fund, and (iii) such investment is 
deemed consistent with the Fund's goal of providing broad exposure to 
inflation-linked Fixed Income Securities.
    The Fund may invest in Fixed Income Securities with effective or 
final maturities of any length. The Fund will seek to keep the average 
effective duration of its portfolio between 2 and 8 years. Effective 
duration is an indication of an investment's interest rate risk or how 
sensitive an investment or a fund is to changes in interest rates. 
Generally, a fund or instrument with a longer effective duration is 
more sensitive to interest rate fluctuations, and, therefore, more 
volatile, than a fund with a shorter effective duration. The Fund's 
actual portfolio duration may be longer or shorter depending on market 
conditions.
    The Fund intends to invest in Fixed Income Securities of at least 
13 non-affiliated issuers and will not concentrate 25% or more of the 
value of its total assets in any one industry, as that term is used in 
the 1940 Act. The Fund further intends to qualify each year as a 
regulated investment company (``RIC'') under Subchapter M of the 
Internal Revenue Code of 1986, as amended. The Fund will invest its 
assets, and otherwise conduct its operations, in a manner that is 
intended to satisfy the qualifying income, diversification and 
distribution requirements necessary to establish and maintain RIC 
qualification under Subchapter M.
    In addition to satisfying the above-referenced RIC diversification 
requirements, no portfolio security held by the Fund (other than U.S. 
government securities and non-U.S. government securities) will 
represent more than 30% of the weight of the Fund's portfolio and the 
five highest weighted portfolio securities of the 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 the Fund's 
portfolio. For these purposes, the 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.
    The Fund intends to invest in Money Market Securities in order to 
help manage cash flows in and out of the Fund, such as in connection 
with payment of dividends or expenses, and to satisfy margin 
requirements, to provide collateral, or to otherwise back investments 
in derivative instruments. For these purposes, Money Market Securities 
include: Short-term, high-quality obligations issued or guaranteed by 
the U.S. Treasury or the agencies or instrumentalities of the U.S. 
government; short-term, high-quality securities issued or guaranteed by 
non-U.S. governments, agencies and instrumentalities; repurchase 
agreements backed by short-term U.S. government securities or non-U.S. 
government securities; money market mutual funds; and deposits and 
other obligations of U.S. and non-U.S. banks and financial 
institutions. All Money Market Securities acquired by the Fund will be 
rated investment grade. The Fund does not intend to invest in any 
unrated Money Market Securities. However, it may do so to a limited 
extent, such as where a rated Money Market Security becomes unrated, if 
such Money Market Security is determined by the Adviser and Sub-Adviser 
to be of comparable quality.
    Consistent with the Exemptive Order, the Fund may use derivative 
instruments as part of its investment strategies. Examples of 
derivative instruments include exchange-listed futures contracts, 
forward currency contracts, non-deliverable forward currency contracts, 
currency swaps, interest rate swaps, inflation rate swaps, currency 
options, options on futures contracts, swap agreements, and structured 
notes. The Fund's use of derivatives contracts (other than structured 
notes) will be collateralized or otherwise backed by investments in 
short-term, high quality U.S. Money Market Securities.
    The Fund expects that no more than 30% of the value of the Fund's 
net assets will be invested in derivative instruments. Such investments 
will be consistent with the Fund's investment objective and will not be 
used to enhance leverage. For example, the Fund may engage in swap 
transactions that provide exposure to inflation rates, inflation-linked 
bonds, inflation-sensitive indices, or interest rates.\11\ The Fund 
also may buy or sell listed futures contracts on U.S. Treasury 
securities,

[[Page 7625]]

non-U.S. government securities, and major non-U.S. currencies.
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    \11\ An inflation-linked swap is an agreement between two 
parties to exchange payments at a future date based on the 
difference between a fixed payment and a payment linked to an 
inflation rate or value at a future date. A typical interest rate 
swap involves the exchange of a floating interest rate payment for a 
fixed interest payment.
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    With respect to certain kinds of derivative transactions entered 
into by the Fund that involve obligations to make future payments to 
third parties, including, but not limited to, futures and forward 
contracts, swap contracts, the purchase of securities on a when-issued 
or delayed delivery basis, or reverse repurchase agreements, the Fund, 
in accordance with applicable federal securities laws, rules, and 
interpretations thereof, will ``set aside'' liquid assets, or engage in 
other measures to ``cover'' open positions with respect to such 
transactions. 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. The Fund may 
enter into forward currency contracts in order to ``lock in'' the 
exchange rate between the currency it will deliver and the currency it 
will receive for the duration of the contract.\12\
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    \12\ The Fund will invest only in currencies, and instruments 
that provide exposure to such currencies, that have significant 
foreign exchange turnover and are included in the Bank for 
International Settlements, Triennial Central Bank Survey, Report on 
Global Foreign Exchange Market Activity in 2010 (December 2010) 
(``BIS Survey''). The Fund may invest in currencies, and instruments 
that provide exposure to such currencies, selected from the top 40 
currencies (as measured by percentage share of average daily 
turnover for the applicable month and year) included in the BIS 
Survey.
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    The Fund may invest in the securities of other investment companies 
(including money market funds and exchange-traded funds). The Fund may 
hold up to an aggregate amount of 15% of its net assets in (a) illiquid 
securities and (b) Rule 144A securities.\13\ The Commission staff has 
interpreted the term ``illiquid'' in this context to mean a security 
that cannot be sold or disposed of within seven days in the ordinary 
course of business at approximately the amount at which a fund has 
valued such security. The Fund will not invest in any non-U.S. equity 
securities.
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    \13\ See supra note 6.
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    Additional details regarding the Trust, Shares, trading policies of 
the Fund, creations and redemptions of the Shares, Fixed Income 
Securities, Money Market Securities, investment risks, net asset value 
(``NAV'') calculation, the dissemination and availability of 
information about the underlying assets, trading halts, applicable 
trading rules, surveillance, and the Information Bulletin, among other 
things, can be found in the Notice and/or the Registration Statements, 
as applicable.\14\
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    \14\ See Notice and Registration Statement, supra notes 3 and 7, 
respectively.
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III. Discussion and Commission's Findings

    After careful consideration, the Commission finds that the proposed 
rule change to list and trade the Shares of the Fund is consistent with 
the requirements of Section 6 of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\15\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act,\16\ 
which requires, among other things, that the Exchange's rules be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The Commission notes that 
the Funds and the Shares must comply with the requirements of NYSE Arca 
Equities Rule 8.600 and Commentaries thereto to be listed and traded on 
the Exchange.
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    \15\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Commission finds that the proposal to list and trade the Shares 
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the 
Act,\17\ which sets forth Congress's finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for, and transactions in, securities. Quotation and last-
sale information for the Shares will be available via the Consolidated 
Tape Association (``CTA'') high-speed line. In addition, the Portfolio 
Indicative Value (``PIV'') for the Fund will be widely disseminated by 
one or more major market data vendors at least every 15 seconds during 
the NYSE Arca Core Trading Session.\18\ The NAV of the Fund's Shares 
generally will be 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. On each business day, before commencement of trading 
in Shares in the Core Trading Session, the Trust will disclose on its 
Web site the identities and quantities of the portfolio of securities 
and other assets (``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.\19\ The Disclosed Portfolio will include, as applicable, 
the names, quantity, percentage weighting, and market value of Fixed 
Income Securities and other assets held by the Fund and the 
characteristics of such assets. Intra-day, executable price quotations 
on emerging market Fixed Income Securities, as well as Money Market 
Securities and derivative instruments, are available from major broker-
dealer firms, as well as subscription services such as Bloomberg and 
Thomson Reuters. In addition, the Web site for the Fund will contain 
the prospectus and additional data relating to NAV and other applicable 
quantitative information calculated on a daily basis.
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    \17\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \18\ The Core Trading Session is 9:30 a.m. to 4:00 p.m. Eastern 
time. During hours when the markets for Fixed Income Securities in 
the Fund's portfolio are closed, the PIV will be updated at least 
every 15 seconds during the Core Trading Session to reflect currency 
exchange fluctuations. According to the Exchange, several major 
market data vendors display and/or make widely available PIVs 
published on CTA or other data feeds.
    \19\ Under accounting procedures to be 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.
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    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Commission notes that the Exchange will obtain a 
representation from the issuer of the Shares that the NAV per Share 
will be calculated daily and that the NAV and the Disclosed Portfolio 
will be made available to all market participants at the same time.\20\ 
The Exchange represents that the Sub-Adviser, which is affiliated with 
multiple broker-dealers, has implemented a ``fire wall'' with respect 
to such broker-dealers regarding access to information concerning the 
composition and/or changes to the

[[Page 7626]]

Fund's portfolio.\21\ The Exchange will halt trading in the Shares 
under the specific circumstances set forth in NYSE Arca Equities Rule 
8.600(d)(2)(D) and may halt trading in the Shares if trading is not 
occurring in the securities and/or the financial instruments comprising 
the Disclosed Portfolio of the Fund, or if other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\22\ Further, the Commission notes that the 
Reporting Authority that provides the Disclosed Portfolio must 
implement and maintain, or be subject to, procedures designed to 
prevent the use and dissemination of material non-public information 
regarding the actual components of the portfolio.\23\ The Exchange also 
states that it has a general policy prohibiting the distribution of 
material, non-public information by its employees.
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    \20\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
    \21\ See supra note 9 and accompanying text. The Commission 
notes that an investment adviser to an open-end fund is required to 
be registered under the Investment Advisers Act of 1940 (``Advisers 
Act''). As a result, the Adviser and Sub-Adviser and their 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.
    \22\ With respect to trading halts, the Exchange may consider 
other relevant factors in exercising its discretion to halt or 
suspend trading in the Shares of the Fund. Trading in Shares of the 
Fund will be halted if the circuit breaker parameters in NYSE Arca 
Equities Rule 7.12 have been reached. Trading also may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the Shares inadvisable.
    \23\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
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    The Exchange represents that the Shares are deemed to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
In support of this proposal, the Exchange has made representations, 
including:
    (1) The Shares will be subject to NYSE Arca Equities Rule 8.600, 
which sets forth the initial and continued listing criteria applicable 
to Managed Fund Shares.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) The Exchange's surveillance procedures applicable to derivative 
products, which include Managed Fund Shares, are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and applicable federal 
securities laws.
    (4) Prior to the commencement of trading, the Exchange will inform 
its Equity Trading Permit Holders in an Information Bulletin of the 
special characteristics and risks associated with trading the Shares. 
Specifically, the Information Bulletin will discuss the following: (a) 
The procedures for purchases and redemptions of Shares in Creation Unit 
aggregations (and that Shares are not individually redeemable); (b) 
NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence 
on its ETP Holders to learn the essential facts relating to every 
customer prior to trading the Shares; (c) the risks involved in trading 
the Shares during the Opening and Late Trading Sessions when an updated 
PIV will not be calculated or publicly disseminated; (d) how 
information regarding the PIV is disseminated; (e) 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 (f) trading information.
    (5) A minimum of 100,000 Shares will be outstanding as of the start 
of trading on the Exchange.
    (6) The Fund: (a) May hold up to an aggregate amount of 15% of its 
net assets in (i) illiquid securities and (ii) Rule 144A securities; 
(b) will not invest in any non-U.S. equity securities; and (c) expects 
that no more than 30% of the value of its net assets will be invested 
in derivative instruments, which will be consistent with the Fund's 
investment objective and will not be used to enhance leverage.
    (7) For initial and/or continued listing, the Fund must be in 
compliance with Rule 10A-3 under the Act.\24\
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    \24\ See 17 CFR 240.10A-3.
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    This approval order is based on the Exchange's representations.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 3 thereto, is consistent with 
Section 6(b)(5) of the Act \25\ and the rules and regulations 
thereunder applicable to a national securities exchange.
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    \25\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\26\ that the proposed rule change (SR-NYSEArca-2011-82), as 
modified by Amendment No. 3 thereto, be, and it hereby is, approved.
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    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-3215 Filed 2-10-12; 8:45 am]
BILLING CODE 8011-01-P