Document ID: SEC-2012-0975-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-06-19T04:00Z

[Federal Register Volume 77, Number 118 (Tuesday, June 19, 2012)]
[Notices]
[Pages 36599-36602]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14849]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67195; File No. SR-NYSEArca-2012-51]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Accuvest Global Long Short ETF (Formerly the Mars Hill Global Relative 
Value ETF)

June 13, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on May 31, 2012, 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 substantially prepared by the Exchange. The Exchange filed 
the proposal as a ``non-controversial'' proposed rule change pursuant 
to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposal effective upon receipt of 
this filing by the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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, and the size of a Creation Unit (as described 
below) applicable to, the Accuvest Global Long Short ETF (``Fund'') 
(formerly known as the Mars Hill Global Relative Value ETF). 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 on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below.

[[Page 36600]]

The Exchange has prepared summaries, set forth in sections A, B, and C 
below, of the most significant parts of such statements.

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

1. Purpose
    The Commission has approved listing and trading on the Exchange of 
shares (``Shares'') of the Mars Hill Global Relative Value ETF, a 
series of AdvisorShares Trust (``Trust''),\5\ under NYSE Arca Equities 
Rule 8.600, which governs the listing and trading of Managed Fund 
Shares. The Shares are offered by the Trust, a statutory trust 
organized under the laws of the State of Delaware and registered with 
the Commission as an open-end management investment company.\6\
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    \5\ See Securities Exchange Act Release No. 61842 (April 5, 
2010), 75 FR 18554 (April 12, 2010) (SR-NYSEArca-2010-10) (``Prior 
Order''). See also Securities Exchange Act Release No. 61683 (March 
10, 2010), 75 FR 13194 (March 18, 2010) (SR-NYSEArca-2010-10) 
(``Prior Notice,'' and together with the Prior Order, ``Prior 
Release'').
    \6\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act'') (15 U.S.C. 80a-1). On December 1, 2011, the 
Trust filed with the Commission 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) (as amended, ``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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    The investment adviser to the Fund is AdvisorShares Investments, 
LLC (``Adviser''). On December 1, 2011, the sub-adviser to the Fund 
changed from Mars Hill Partners, LLC to Accuvest Global Advisors LLC 
(``Accuvest'' or ``Sub-Adviser''), and the name of the Fund changed to 
the Accuvest Global Long Short ETF. Shareholders of the Fund were 
notified of the change to the Sub-Adviser and the name of the Fund in 
an amendment to the Registration Statement on Form N-1A on December 1, 
2011. The Adviser and Sub-Adviser are not affiliated with a broker-
dealer.
    In this proposed rule change, the Exchange proposes to reflect a 
change in the Registration Statement to the description of the measures 
the Sub-Adviser will utilize to implement the Fund's investment 
objective.\7\ As reflected in the Prior Release, the investment 
objective of the Fund is to provide average annual returns in excess of 
the total return of the MSCI World Index (``Index''), with comparable 
volatility and little to no correlation with the Index. The 
Registration Statement states that the investment objective of the Fund 
is to provide average annual returns in excess of the total return of 
the Index, deleting the words ``with comparable volatility and little 
to no correlation with the Index.''
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    \7\ The changes described herein were effective upon filing with 
the Commission of an amendment to the Trust's Registration 
Statement, dated December 1, 2011. See note 6, supra. The Adviser 
represents that, with the exception of the increase in the size of a 
Creation Unit from 25,000 Shares to 50,000 Shares or more, as 
described in note 8, infra, the Adviser and Sub-Adviser have managed 
and will continue to manage the Fund in the manner described in the 
Prior Release, and will not implement the changes described herein 
until the instant proposed rule change is operative.
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    The Adviser seeks to make the following changes to representations 
made in the Prior Release:
    (1) According to the Prior Release, the Sub-Adviser seeks to 
achieve the Fund's investment objective by taking long positions in the 
Underlying ETFs that invest in what it believes to be the most 
relatively attractive global regions and countries within those 
regions, and by establishing an equivalent dollar amount of short 
positions in the Underlying ETFs that invest in what it believes to be 
the most relatively unattractive global regions and countries within 
those regions. The Registration Statement was amended to state that the 
Sub-Adviser seeks to achieve the Fund's investment objective by taking 
long positions in the Underlying ETFs that invest in what it believes 
to be the most relatively attractive global regions and countries 
within those regions, and by taking short positions, by entering into 
short sales, in the Underlying ETFs that invest in what it believes to 
be the most relatively unattractive global regions and countries within 
those regions. Thus, the Sub-Adviser no longer would take into account 
the dollar equivalency of the short positions. The purpose of this 
change is to provide additional flexibility to the Sub-Adviser to meet 
the Fund's investment objective by altering the Fund's long positions 
based on the Sub-Adviser's assessment of the relative attractiveness or 
unattractiveness of global regions without having to establish dollar 
equivalency with the Fund's short positions, and vice versa.
    (2) According to the Prior Release, by maintaining a core portfolio 
construction of equal long and short dollar exposure, the Sub-Adviser 
seeks to minimize the influence of directional trends and market 
exposure (``beta''), and seeks to profit from the relative performance 
between long and short positions in global regions, countries, styles, 
or sectors. The Prior Release also stated that, from time-to-time, the 
Sub-Adviser may also add directional exposure of up to 50% net long or 
net short exposure on top of its core long/short portfolio, and that, 
in doing so, the Sub-Adviser seeks to generate additional profits for 
the Fund by being net long when stock markets are rising and net short 
when markets are falling.
    In eliminating the equivalent position requirement, as described in 
(1) above, under this proposal the Sub-Adviser would no longer seek to 
minimize the influence of directional trends and beta. In addition, the 
representation in the preceding paragraph was revised in the 
Registration Statement to state that, in establishing the long and 
short positions referenced above, the Fund seeks to profit from the 
relative performance between the long and short positions in global 
regions, countries, styles, or sectors. From time to time, the Fund may 
have directional exposure to seek to profit by being net long when 
stock markets are rising and net short when markets are falling. The 
purpose of this change is to provide additional flexibility to the Sub-
Adviser to meet the Fund's investment objective by focusing on the 
relative performance between long and short positions in global 
regions, countries, styles, or sectors, rather than equal long and 
short dollar exposure. The Sub-Adviser also could establish added 
directional exposure of any amount based on the Sub-Adviser's market 
assessment, and, without the 50% net long or net short exposure 
limitation, in order to maximize potential returns, in furtherance of 
the Fund's investment objective.
    The Adviser represents that, while the Fund's investment objective 
is being slightly revised, the Adviser believes the investment 
objective is not changing in a significant way because (1) the Fund 
will continue to aim to achieve average annual returns in excess of the 
total return of the Index; (2) the Fund will continue to take long and 
short positions in the securities in which it invests, but the revised 
representations will provide additional flexibility to the Sub-Adviser 
to meet the Fund's stated investment objective by focusing on the 
relative performance between long and short positions in global 
regions, countries, styles, or sectors, rather than equal long and 
short dollar exposure or limited added directional exposure; and (3) 
the Fund will continue to assess the most relatively attractive or 
unattractive global regions and countries within those regions, 
respectively, but the

[[Page 36601]]

revised representations will provide a better opportunity for the Fund 
to maximize potential returns for investors based primarily on the 
Adviser's and Sub-Adviser's assessment of such relative attractiveness 
or unattractiveness. The Adviser believes the revised representations 
will permit the Adviser and Sub-Adviser, through such additional 
flexibility, to better achieve the Fund's stated investment objective 
to achieve average annual returns in excess of the total return of the 
Index.\8\
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    \8\ The Exchange notes that the Prior Notice stated that the 
Trust will issue and sell Shares of the Fund only in Creation Units 
of 25,000 Shares on a continuous basis at their net asset value next 
determined after receipt, on any Business Day (as defined in the 
Registration Statement). The size of a Creation Unit was increased 
to 50,000 Shares from 25,000 Shares prior to the Fund's initial 
offering and commencement of listing and trading on the Exchange, 
and the change was reflected in an amendment to the Trust's 
registration statement on Form N-1A under the 1933 Act and 1940 Act, 
dated March 16, 2010 (File Nos. 333-157876 and 811-22110), which 
reflects the 50,000 Share Creation Unit size. The Adviser represents 
that the 50,000 Share Creation Unit size is consistent with the 
Fund's Exemptive Order, which does not specifically limit the Fund's 
Creation Unit size. The Exchange notes that the Commission has 
approved the listing and trading of other issues of Managed Fund 
Shares that have applied a minimum Creation Unit size of 50,000 
shares or greater. See, e.g., Securities Exchange Act Release Nos. 
65458 (September 30, 2011), 76 FR 62112 (October 6, 2011) (SR-
NYSEArca-2011-54) (order approving listing and trading of WisdomTree 
Dreyfus Australia and New Zealand Debt Fund); 66112 (January 5, 
2012), 77 FR 1761 (January 11, 2012) (SR-NYSEArca-2011-80) (order 
approving listing and trading of Rockledge SectorSAM ETF).
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    Except for the changes noted above, all other representations made 
in the Prior Release remain unchanged, including representations 
regarding implementation of ``fire walls'' by any additional Fund 
advisers and sub-advisers affiliated with a broker-dealer, and 
Underlying ETFs in which the Fund invests. The Fund will continue to 
comply with all initial and continued listing requirements under NYSE 
Arca Equities Rule 8.600. All terms referenced but not defined herein 
are defined in the Prior Release.
2. Statutory Basis
    The basis under the Act \9\ for this proposed rule change is the 
requirement under Section 6(b)(5) \10\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market, 
and, in general, to protect investors and the public interest.
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    \9\ 15 U.S.C. 78a.
    \10\ 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 continue to be listed and traded on the Exchange pursuant 
to the initial and continued listing criteria in NYSE Arca Equities 
Rule 8.600. The Index, which is referenced in the Fund's investment 
objective, is a global, broad-based index of large capitalization 
companies. The Fund invests in Underlying ETFs that are primarily 
index-based ETFs that hold substantially all of their assets in 
securities representing a specific index. The Underlying ETFs in which 
the Fund invests will be traded on a U.S. national securities exchange. 
Except for Underlying ETFs that may hold non-U.S. issues, the Fund will 
not otherwise invest in non-U.S.-registered issues. The Fund will 
continue to comply with all initial and continued listing requirements 
under NYSE Arca Equities Rule 8.600.
    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, while the investment objective of the 
Fund is being slightly revised, it is not changing in a significant 
way. The Adviser represents that the purpose of the change relating to 
establishing long and short positions without reference to a dollar 
equivalency requirement is to provide additional flexibility to the 
Sub-Adviser to meet the Fund's investment objective by focusing on the 
relative performance between long and short positions in global 
regions, countries, styles, or sectors, rather than equal long and 
short dollar exposure or limited added directional exposure.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that the Fund invests in Underlying ETFs that are 
primarily index-based ETFs that hold substantially all of their assets 
in securities representing a specific index. The Underlying ETFs in 
which the Fund invests are traded on a U.S. national securities 
exchange. The additional flexibility afforded to the Adviser and Sub-
Adviser under the proposed change will permit the Adviser and Sub-
Adviser to better achieve provide [sic] the Fund's objective to achieve 
average annual returns in excess of the total return of the MSCI World 
Index. Such added flexibility also will provide a better opportunity 
for the Fund to maximize potential return for investors based primarily 
on the Adviser's and Sub-Adviser's assessment of the most relatively 
attractive or unattractive global regions and countries within those 
regions, respectively. Except for the changes noted above, all other 
representations made in the Prior Release remain unchanged.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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 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, provided that the self-regulatory 
organization has given 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 proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). The Commission notes that the 
Exchange has satisfied the five-day pre-filing notice requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission notes that, under the proposal, the Fund will 
continue to: (1) Aim to achieve average annual returns in excess of the 
total return of the Index;

[[Page 36602]]

(2) take long and short positions in the securities in which it 
invests, but with additional flexibility to meet its stated investment 
objective by focusing on the relative performance between long and 
short positions in global regions, countries, styles, or sectors, 
rather than equal long and short dollar exposure or limited added 
directional exposure; and (3) assess the most relatively attractive or 
unattractive global regions and countries within those regions, 
respectively, but with a better opportunity to maximize potential 
returns for investors based primarily on the Adviser's and Sub-
Adviser's assessment of such relative attractiveness or 
unattractiveness. The Commission further notes that, except for the 
changes noted herein, all other representations made in the Prior 
Release remain unchanged, including representations regarding 
implementation of ``fire walls'' by any additional Fund advisers and 
sub-advisers affiliated with a broker-dealer and Underlying ETFs in 
which the Fund invests. In addition, the Fund will continue to comply 
with all initial and continued listing requirements under NYSE Arca 
Equities Rule 8.600.
    For the foregoing reasons, the Commission believes that the 
proposed change does not raise novel or unique regulatory issues that 
should delay the implementation of the Fund's proposed changes. In 
addition, the Commission believes it is consistent with the protection 
of investors and the public interest to waive the 30-day operative 
delay, as a waiver would allow the Advisor and Sub-Advisor the 
flexibility to invest in ways they believe will result in greater 
returns for investors, with the goal of achieving average annual 
returns in excess of the total return of the Index, without undue 
delay.\14\ Accordingly, the Commission waives the 30-day operative 
delay requirement.
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    \14\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change'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 such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-2012-51 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-2012-51. 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 Section, 100 F Street 
NE., Washington, DC 20549, on official business days between 10:00 a.m. 
and 3:00 p.m. Copies of the filing will also be available for 
inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSEArca-2012-51 and should be submitted on or before 
July 10, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14849 Filed 6-18-12; 8:45 am]
BILLING CODE 8011-01-P