Document ID: SEC-2011-0865-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2011-06-22T04:00Z

[Federal Register Volume 76, Number 120 (Wednesday, June 22, 2011)]
[Notices]
[Pages 36600-36603]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15608]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64690; File No. SR-NYSEArca-2011-17]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change Relating to the Listing and Trading of 
the Madrona Forward Domestic ETF, Madrona Forward International ETF, 
and Madrona Forward Global Bond ETF

June 16, 2011.

I. Introduction

    On April 13, 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 (``Shares'') of the Madrona Forward Domestic ETF, 
Madrona Forward International ETF, and Madrona Forward Global Bond ETF 
(each a ``Fund,'' and, together, the ``Funds'') under NYSE Arca 
Equities Rule 8.600. The proposed rule change was published in the 
Federal Register on May 2, 2011.\3\ The Commission received no comments 
on the proposal. This order grants approval of the proposed rule 
change.
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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. 64342 (April 26, 
2011), 76 FR 24548 (``Notice'').
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II. Description of the Proposal

    The Exchange proposes to list and trade the Shares pursuant to NYSE 
Arca Equities Rule 8.600. The Shares will be offered by the 
AdvisorShares Trust (``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.\4\ The investment advisor for 
the Funds is AdvisorShares Investments, LLC (``Adviser''). Madrona 
Funds LLC is the Funds' sub-adviser (``Sub-Adviser'') and provides day-
to-day portfolio management of the Funds. Foreside Fund Services, LLC 
(``Distributor'') is the principal underwriter and distributor of the 
Funds' Shares. The Bank of New York Mellon Corporation 
(``Administrator'') serves as administrator, custodian, and transfer 
agent for the Funds. The Exchange states that neither the Adviser nor 
the Sub-Adviser is affiliated with a broker-dealer.\5\
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    \4\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act''). On November 30, 2010, the Trust filed with the 
Commission Form N-1A under the Securities Act of 1933 (15 U.S.C. 
77a) and under the 1940 Act relating to the Funds (File Nos. 333-
157876 and 811-22110) (``Registration Statement''). The Trust has 
also filed an Application for an Order under Section 6(c) of the 
1940 Act for exemptions from various provisions of the 1940 Act and 
rules thereunder (File No. 812-13677), dated May 6, 2010 
(``Exemptive Application'').
    \5\ See Commentary .06 to NYSE Arca Equities Rule 8.600. The 
Exchange represents that, in the event (a) the Adviser or Sub-
Adviser becomes newly affiliated with a broker-dealer, or (b) any 
new adviser or sub-adviser becomes affiliated with a broker-dealer, 
such adviser and/or sub-adviser 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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    With respect to each of the Funds, the Sub-Adviser will employ a 
forward-looking fundamental investment process when making capital 
allocation decisions across investment strategies for the Funds. The 
underlying investment process for the Madrona Forward Domestic ETF and 
the Madrona Forward International ETF is based on a measure of 
forecasted earnings and projected growth relative to the price of the 
equities. The underlying investment process for the Madrona Forward 
Global Bond ETF is based on fundamental yield curve analysis and a 
measure of mean reversion for future expected yield curve trajectory. 
Each Fund will utilize a core investment allocation strategy seeking to 
replace what the Sub-Adviser's investment committee deems inefficient 
index methodologies for core investing that are prevalent in the 
marketplace. The Funds will invest in actively managed, broadly 
diversified portfolios and differ from most traditional indices in that 
the proportion, or weighting, of the securities in the Funds are based 
on forward-looking fundamental analysis rather than only on market 
capitalization of such securities. Risk management guidelines will be 
employed to protect against dramatic over- or under-weighting of 
individual securities, reducing company specific risks.

Madrona Forward Domestic ETF

    The investment objective of this Fund is to seek long-term capital 
appreciation above the capital appreciation of its benchmark, the S&P 
500 Index. The Sub-Adviser will seek to achieve the Fund's investment 
objective primarily by selecting a portfolio of up to 500 of the 
largest U.S. exchange-traded equity securities.\6\ The Sub-Adviser will 
select the securities for the Fund's portfolio

[[Page 36601]]

using a weighted allocation system based on a consensus of analyst 
estimates of the present value of future expected earnings relative to 
the share price of each security. The Sub-Adviser's investment 
committee will meet on a bi-weekly basis to monitor the portfolio and 
make allocation decisions. The investment committee will use third-
party analyst research and a proprietary fundamental process to make 
allocation decisions and employ guidelines to protect against dramatic 
over- or under-weighting of individual securities in the Fund's 
portfolio. The investment committee relies heavily on a stock's price 
and market cap relative to its future expected earnings in its analysis 
of individual securities. Changes to the Fund's portfolio will 
typically occur upon the reporting and analysis of individual 
securities through the earnings season and rely heavily on a stock's 
price and market cap relative to the future expected earnings.
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    \6\ The Fund may hold only equity securities traded in the U.S. 
on registered exchanges and will hold a minimum of 13 equity 
components.
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    The Fund will utilize the following investment process:
    Step 1: The Sub-Adviser will use third-party research consisting of 
analysis of the consensus analyst valuation estimates to drive the 
proprietary models that derive the present value of future expected 
earnings relative to the current stock price of each stock.
    Step 2: The Sub-Adviser will review the data on a company-by-
company basis, and the companies will be put in order from most 
attractive to least attractive, and the Fund will weigh these companies 
accordingly.
    Step 3: Risk management guidelines will be established to allocate 
the total percentage invested in each quartile of securities. Thus, 
each group of up to 125 securities will receive a certain investment 
percentage within the Sub-Adviser's established guidelines, ensuring no 
dramatic over-weighting or under-weighting of individual securities.
    Step 4: The Fund's portfolio will be consistently monitored when 
company-specific data is released, and the Sub-Adviser's models will be 
updated to drive allocation changes.

Madrona Forward International ETF

    The investment objective of the this Fund is to seek long-term 
capital appreciation above the capital appreciation of its 
international benchmarks, the MSCI EAFE Index, the Fund's primary 
benchmark, and the BNY Mellon Classic ADR Index, the Fund's secondary 
benchmark. The Fund will select a portfolio primarily composed of U.S. 
exchange-listed American Depository Receipts (``ADRs'') from among the 
largest issuers of Europe, Australasia and the Far East (``EAFE''), and 
Canada. The Fund's portfolio may also include U.S. exchange-listed 
equity securities of large-capitalization, non-U.S. issuers that 
provide exposure to certain markets deemed to be emerging markets. 
Securities are selected, weighted, and sold based upon the Sub-
Adviser's proprietary investment process. The Sub-Adviser's investment 
committee will meet on a bi-weekly basis to monitor the portfolio and 
make allocation decisions. The investment committee will use third-
party analyst research and a proprietary fundamental process to make 
allocation decisions. Changes to the Fund's portfolio will typically 
occur upon the reporting and analysis of individual securities through 
the earnings season and rely heavily on a security's price and market 
cap relative to future earnings.
    The composition of the Fund's portfolio, on a continual basis, will 
be subject to the following:
    (1) Component stocks, including component stocks underlying ADRs, 
that, in the aggregate, account for at least 90% of the weight of the 
portfolio, each shall have a minimum market value of at least $100 
million;
    (2) Component stocks, including component stocks underlying ADRs, 
that, in the aggregate, account for at least 70% of the weight of the 
portfolio, each shall have a minimum global monthly trading volume of 
250,000 shares, or minimum global notional volume traded per month of 
$25,000,000, averaged over the last six months;
    (3) A minimum of 20 component stocks, including component stocks 
underlying ADRs, of which the most heavily weighted component stock 
shall not exceed 25% of the weight of the portfolio, and the five most 
heavily weighted component stocks shall not exceed 60% of the weight of 
the portfolio; and
    (4) Each non-U.S. equity security underlying ADRs held by the Fund 
will be listed and traded on an exchange that has last-sale reporting.
    The Fund will utilize the following investment process:
    Step 1: The Sub-Adviser will use third-party research consisting of 
analysis of the consensus analyst valuation estimates to drive the 
proprietary models that derive the present value of future expected 
earnings relative to the current stock price of each stock.
    Step 2: The Sub-Adviser will review the data on a company-by-
company basis, and the companies will be put in order from most 
attractive to least attractive, and the Fund will weigh these companies 
accordingly.
    Step 3: Risk management guidelines will be established to allocate 
the total percentage invested in each quartile of securities. Each 
quartile will receive a certain investment percentage within the Sub-
Adviser's established guidelines, ensuring no dramatic over-weighting 
or under-weighting of individual securities.
    Step 4: The Fund's portfolio will be consistently monitored when 
company specific data is released, and the Sub-Adviser's models will be 
updated to drive allocation changes.

Madrona Forward Global Bond ETF

    The investment of this Fund is to seek investment results that 
exceed the price and yield performance of its benchmark, the Barclays 
Capital Aggregate Bond Index. The Sub-Adviser will primarily select a 
portfolio of fixed income (bond) U.S. exchange-traded funds (``ETFs'') 
and other U.S. exchange-traded products (``ETPs'' and, together with 
ETFs, ``Underlying ETPs''), including but not limited to, exchange-
traded notes (``ETNs''), exchange-traded currency trusts, and exchange-
traded commodity pools.\7\ The Fund will invest in indexed Underlying 
ETPs that will invest in at least 12 distinct global bond classes, 
including, but not limited to, the following: Mortgage Backed/Agency; 
Investment Grade U.S. Corporate; Short-Term Treasury; Intermediate-Term 
Treasury; Long-Term Treasury; Inflation Protected Treasury (TIPS); 
High-Yield U.S. Corporate; International Treasury; Convertible and 
Preferred; Emerging Markets; Municipal; International Investment Grade 
Corporate;

[[Page 36602]]

International High Yield; and Build America Bonds. Each major bond 
category would have a three percent minimum percentage inclusion in the 
Fund's portfolio.
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    \7\ Underlying ETPs include Investment Company Units (as 
described in NYSE Arca Equities Rule 5.2(j)(3)); Index-Linked 
Securities (as described in NYSE Arca Equities Rule 5.2(j)(6)); 
Portfolio Depositary Receipts (as described in NYSE Arca Equities 
Rule 8.100); Trust Issued Receipts (as described in NYSE Arca 
Equities Rule 8.200); Commodity-Based Trust Shares (as described in 
NYSE Arca Equities Rule 8.201); Currency Trust Shares (as described 
in NYSE Arca Equities Rule 8.202); Commodity Index Trust Shares (as 
described in NYSE Arca Equities Rule 8.203); Trust Units (as 
described in NYSE Arca Equities Rule 8.500); Managed Fund Shares (as 
described in NYSE Arca Equities Rule 8.600); and closed-end funds. 
The Underlying ETPs will be listed and traded in the U.S. on 
registered exchanges. The Madrona Forward Global Bond ETF may invest 
in the securities of Underlying ETPs consistent with the 
requirements of Section 12(d)(1) of the 1940 Act, or any rule, 
regulation, or order of the Commission or interpretation thereof. 
The Fund will only make such investments in conformity with the 
requirements of Section 817 of the Internal Revenue Code of 1986. 
The Underlying ETPs in which the Fund may invest will primarily be 
index-based ETFs that hold substantially all of their assets in 
securities representing a specific index.
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    The Fund will invest in an Underlying ETP for each of the bond 
classes held in the portfolio. Changes to the Fund's portfolio 
typically occur upon the reporting and analysis of each bond category's 
risk assessment.
    The Fund will utilize the following investment process:
    Step 1: The Sub-Adviser will select an Underlying ETP for each bond 
category based on expense ratios and institutional strengths of each 
Underlying ETP provider to ensure efficient internal trading.
    Step 2: The Sub-Adviser will use third-party research consisting of 
analysis of the historical class by class yield-curve analysis and how 
the curve stands in relation to the current yield-curve of the 
particular bond class. Based on the research, the Sub-Adviser will 
determine which bond classes will receive higher- and lower-than-
average allocations as compared to typical bond indices.
    Step 3: Risk management guidelines will be established to allocate 
the total percentage invested in each bond class. Each class will 
receive a minimum investment within the Sub-Adviser's established 
guidelines, ensuring no dramatic over-weighting or under-weighting of 
individual bond categories.
    Step 4: The Fund's portfolio will be consistently monitored when 
bond class data is released, and the Sub-Adviser's models will be 
updated to drive allocation changes.

Other Investments of the Funds

    Each Fund may invest 100% of its total assets in short-term, high-
quality debt securities and money market instruments either directly or 
through Underlying ETPs to respond to adverse market, economic, or 
political conditions.\8\ A Fund may invest in such instruments for 
extended periods, depending on the Sub-Adviser's assessment of market 
conditions. These debt securities and money market instruments may 
include shares of other mutual funds, commercial paper, certificates of 
deposit, bankers' acceptances, U.S. Government securities, repurchase 
agreements, and bonds that are rated BBB or higher. The Funds also may 
invest in shares of REITs, which are pooled investment vehicles that 
invest primarily in real estate or real estate-related loans.
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    \8\ Adverse market conditions would include large downturns in 
the broad market value of two or more times current average 
volatility, where the Sub-Adviser views such downturns as likely to 
continue for an extended period of time. Adverse economic conditions 
would include significant negative results in factors deemed 
critical at the time by the Sub-Adviser, including significant 
negative results regarding unemployment, Gross Domestic Product, 
consumer spending or housing numbers. Adverse political conditions 
would include events such as government overthrows or instability, 
where the Sub-Adviser expects that such events may potentially 
create a negative market or economic condition for an extended 
period of time.
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    A Fund will not (i) With respect to 75% of its total assets, 
purchase securities of any issuer (except securities issued or 
guaranteed by the U.S. Government, its agencies or instrumentalities, 
or shares of investment companies) if, as a result, more than 5% of its 
total assets would be invested in the securities of such issuer; or 
(ii) acquire more than 10% of the outstanding voting securities of any 
one issuer. For purposes of this policy, the issuer of the underlying 
security will be deemed to be the issuer of any respective ADR.
    A Fund will not invest 25% or more of its total assets in the 
securities of one or more issuers conducting their principal business 
activities in the same industry or group of industries. This limitation 
will not apply to investments in securities issued or guaranteed by the 
U.S. Government, its agencies or instrumentalities, or shares of 
investment companies. Each Fund will not invest 25% or more of its 
total assets in any investment company that so concentrates. For 
purposes of this policy, the issuer of the underlying security will be 
deemed to be the issuer of any respective ADR.
    The Funds will not purchase illiquid securities if, in the 
aggregate, more than 15% of their net assets would be invested in 
illiquid securities. Except for Underlying ETPs that may hold non-U.S. 
issues, the Funds will not otherwise invest in non-U.S.-registered 
issues. In addition, the Funds intend to qualify for treatment as a 
Regulated Investment Company under the Internal Revenue Code.
    Pursuant to the terms of the Exemptive Application, the Funds will 
not invest in options contracts, futures contracts, or swap agreements. 
The Funds' investments will be consistent with each Fund's investment 
objective and will not be used to enhance leverage.
    Additional information regarding the Trust, the Funds, and the 
Shares, the Funds' investment strategies, risks, creation and 
redemption procedures, fees, portfolio holdings and disclosure 
policies, distributions and taxes, availability of information, trading 
rules and halts, and surveillance procedures, among other things, can 
be found in the Notice and the Registration Statement, as 
applicable.\9\
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    \9\ See Notice and Registration Statement, supra notes 3 and 4, 
respectively.
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III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of Section 6 of the 
Act \10\ and the rules and regulations thereunder applicable to a 
national securities exchange.\11\ In particular, the Commission finds 
that the proposal is consistent with Section 6(b)(5) of the Act,\12\ 
which requires, among other things, that the Exchange's rules be 
designed to promote just and equitable principles of trade, 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 Shares must comply with 
the requirements of NYSE Arca Equities Rule 8.600 to be listed and 
traded on the Exchange.
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    \10\ 15 U.S.C. 78f.
    \11\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \12\ 17 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,\13\ which sets forth Congress' 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 high-speed line. In addition, the Portfolio Indicative 
Value, as defined in NYSE Arca Equities Rule 8.600(c)(3), will be 
disseminated by the Exchange at least every 15 seconds during the Core 
Trading Session. On each business day, before commencement of trading 
in Shares in the Core Trading Session on the Exchange, the Funds will 
disclose on their Web site the Disclosed Portfolio, as defined in NYSE 
Arca Equities Rule 8.600(c)(2), that will form the basis for each 
Fund's calculation of the net asset value (``NAV'') at the end of the 
business day.\14\ The NAV of each of the

[[Page 36603]]

Funds will be determined as of the close of the regular trading session 
on the New York Stock Exchange (``NYSE'') (ordinarily 4 p.m. Eastern 
Time) on each business day. The intra-day, closing, and settlement 
prices of the portfolio securities are readily available from the 
national securities exchanges trading such securities, automated 
quotation systems, published or other public sources, or on-line 
information services such as Bloomberg or Reuters. In addition, a 
basket composition file, which includes the security names and share 
quantities required to be delivered in exchange for Fund shares, 
together with estimates and actual cash components, will be publicly 
disseminated daily prior to the opening of the NYSE via the National 
Securities Clearing Corporation. Information regarding market price and 
trading 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, and information regarding the previous day's 
closing price and trading volume information will be published daily in 
the financial section of newspapers. The Funds' Web site will also 
include a form of the prospectus for the Funds, information relating to 
NAV, and other quantitative and trading information.
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    \13\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \14\ On a daily basis, the Adviser will disclose for each 
portfolio security or other financial instrument of the Funds the 
following information: Ticker symbol (if applicable), name of 
security or financial instrument, number of shares or dollar value 
of financial instruments held in the portfolio, and percentage 
weighting of the security or financial instrument in the portfolio.
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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 will be 
calculated daily, and that the NAV and the Disclosed Portfolio will be 
made available to all market participants at the same time.\15\ In 
addition, 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 Funds, or if other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\16\ 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.\17\ The Exchange 
states that neither the Adviser nor the Sub-Adviser is affiliated with 
a broker-dealer.\18\
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    \15\ See NYSE Arca Equities Rule 8.600(d)(2)(D).
    \16\ See NYSE Arca Equities Rule 8.600(d)(2)(C)(ii). 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 Funds. Trading in Shares of the Funds will be 
halted if the circuit breaker parameters in NYSE Arca Equities Rule 
7.12 have been reached. Trading also may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable.
    \17\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
    \18\ See supra note 5. 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.
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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 conform to the initial and continued listing 
criteria under NYSE Arca Equities Rule 8.600.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) The Exchange's surveillance 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.
    (4) Prior to the commencement of trading, the Exchange will inform 
its Equity Trading Permit (``ETP'') 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 Portfolio Indicative Value will not be 
calculated or publicly disseminated; (d) how information regarding the 
Portfolio Indicative Value 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 and other information.
    (5) For initial and/or continued listing, the Funds will be in 
compliance with Rule 10A-3 under the Act,\19\ as provided by NYSE Arca 
Equities Rule 5.3.
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    \19\ See 17 CFR 240.10A-3.
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    (6) The Funds will not invest in non-U.S. equity securities (except 
for Underlying ETPs that may hold non-U.S. issues), options contracts, 
futures contracts, or swap agreements. In addition, the Funds' 
investments will be consistent with each Fund's investment objective 
and will not be used to enhance leverage.
    (7) A minimum of 100,000 Shares of each Fund will be outstanding at 
the commencement of trading on the Exchange.

This approval order is based on the Exchange's representations.
    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \20\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
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    \20\ 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,\21\ that the proposed rule change (SR-NYSEArca-2011-17) be, and it 
hereby is, approved.
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    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-15608 Filed 6-21-11; 8:45 am]
BILLING CODE 8011-01-P