Document ID: SEC-2012-1045-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2012-07-03T04:00Z

[Federal Register Volume 77, Number 128 (Tuesday, July 3, 2012)]
[Notices]
[Pages 39554-39558]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16217]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67277; File No. SR-NYSEArca-2012-39]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Change Relating to Listing and Trading the 
Global Alpha & Beta ETF Pursuant to NYSE Arca Equities Rule 8.600

June 27, 2012.

I. Introduction

    On April 30, 2012, 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 Global Alpha & Beta ETF 
(``Fund'') under NYSE Arca Equities Rule 8.600. The proposed rule 
change was published for comment in the Federal Register on May 17, 
2012.\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. 66973 (May 11, 
2012), 77 FR 29429 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade the Shares of the Fund 
pursuant to NYSE Arca Equities Rule 8.600, which governs the listing 
and trading of Managed Fund Shares on the Exchange. The Shares will be 
offered by 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

[[Page 39555]]

investment adviser to the Fund is AdvisorShares Investments, LLC 
(``Adviser''). Your Source Financial, PLC (``Sub-Adviser'') is the 
Fund's sub-adviser and provides day-to-day portfolio management of the 
Fund. Foreside Fund Services, LLC is the principal underwriter and 
distributor of the Fund's Shares. The Bank of New York Mellon serves as 
the administrator, custodian, transfer agent, and fund accounting agent 
for the Fund. The Exchange represents 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 January 30, 2012, the Trust filed with the 
Commission Form N-1A under the Securities Act of 1933 and under the 
1940 Act relating to the Fund (File Nos. 333-157876 and 811-22110) 
(``Registration Statement''). In addition, the Exchange notes that 
the Commission has issued an order granting certain exemptive relief 
to the Trust under the 1940 Act. See Investment Company Act Release 
No. 29291 (May 28, 2010) (File No. 812-13677) (``Exemptive Order'').
    \5\ 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's investment objective is long-term capital growth. The 
Fund is an exchange-traded fund (``ETF'') that is actively managed and 
thus does not seek to replicate the performance of a specific index. 
The Fund is a ``fund of funds'' that seeks to achieve its investment 
objective by investing, under normal conditions,\6\ 80% or more in 
other U.S.-listed exchange-traded products (``Underlying ETPs''),\7\ 
U.S. exchange-listed common stock of issuers of any capitalization 
range, and U.S. exchange-listed sponsored American Depositary Receipts 
(``ADRs'') \8\ that provide investment exposure to global equity 
markets and that meet certain selection criteria established by the 
Sub-Adviser.
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    \6\ ``Normal conditions'' as used herein includes, but is not 
limited to, the absence of adverse market, economic, political or 
other conditions, including extreme volatility or trading halts in 
the fixed income markets or the financial markets generally; 
operational issues causing dissemination of inaccurate market 
information; or force majeure type events such as systems failure, 
natural or man-made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption, or any similar intervening 
circumstance.
    \7\ Underlying ETPs include Investment Company Units (as 
described in NYSE Arca Equities Rule 5.2(j)(3)); 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 all will be listed and traded in the U.S. on 
registered exchanges. 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. The 
Fund intends to invest in ETFs 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 Subchapter M 
of the Internal Revenue Code of 1986, as amended (``Code'').
    \8\ ADRs are U.S. dollar denominated receipts representing 
interests in the securities of a foreign issuer, which securities 
may not necessarily be denominated in the same currency as the 
securities into which they may be converted. ADRs are receipts 
typically issued by United States banks and trust companies which 
evidence ownership of underlying securities issued by a foreign 
corporation. Generally, ADRs in registered form are designed for use 
in domestic securities markets and are traded on exchanges or over-
the-counter in the United States. The Fund may invest up to 10% of 
total assets in ADRs traded over-the-counter.
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    The Sub-Adviser will seek to achieve the Fund's investment 
objective by implementing a ``top-down'' portfolio management style. 
This management style begins with a look at the overall economic 
picture and current market conditions and then narrows its focus down 
to sectors, industries, or countries and ultimately to individual 
companies. The final step is a fundamental analysis of each individual 
security and to a lesser extent technical analysis. A ``top-down'' 
portfolio management style utilizes a tactical and globally diversified 
allocation strategy in an attempt to reduce risk and increase overall 
performance.
    Prior to making an investment for the Fund, the Sub-Adviser will 
consider two indicators: (i) The 200-day moving average of the S&P 500 
Index (``Index''); and (ii) an inverted yield curve.\9\ If the Index is 
below its 200-day moving average or if the yield curve is inverted, the 
Sub-Adviser will maintain a defensive position in the Fund's 
portfolio.\10\
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    \9\ An inverted yield curve occurs when short-term interest 
rates exceed long term rates and historically has been viewed as an 
indicator of a pending economic recession.
    \10\ Such a defensive position would be a more conservative 
allocation involving any combination of (a) reducing equity 
exposures (i.e., U.S. exchange-listed common stock and U.S. 
exchange-listed ADRs), (b) investing in inverse ETFs (the Fund may 
invest up to 10% of its total assets in leveraged, inverse, or 
inverse leveraged Underlying ETPs), and (c) increasing investments 
in short-term, high-quality debt securities and money market 
instruments, cash, and cash equivalents, including through 
increasing investments in U.S. exchange-listed Underlying ETPs 
holding short-term debt or cash and cash equivalents.
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    The Fund's asset allocation and performance baseline benchmark is 
the Index. The Index consists of ten separate industry sectors--each of 
which has a weighting in the Index as a whole. In selecting investments 
for the Fund's portfolio, the Sub-Adviser will seek to add value by 
overweighting sectors that the Sub-Adviser expects to perform well and 
underweighting sectors that it expects to perform poorly.
    The Sub-Adviser seeks to maintain diversification among and across 
economic sectors, industries, and countries. The Sub-Adviser will 
consider the following factors when selling investments in the Fund's 
portfolio: (i) Whether an equity security has reached a price 
considered to be fully valued; (ii) business or sector risk exposure to 
a specific security or class of securities; (iii) overvaluation or 
overweighting of the position in the Fund's portfolio; (iv) change in 
risk tolerance; and (v) identification of a better opportunity.

Other Investments

    While the Fund will invest at least 80% in the Underlying ETPs, 
U.S. exchange-listed common stock of issuers of any capitalization 
range, and U.S. exchange-listed sponsored ADRs, on a day-to-day basis, 
the Fund may hold the remainder of its assets in, under normal 
conditions, money market instruments, cash, other cash equivalents, and 
other highly liquid instruments.
    The Fund may invest in other types of equity securities, which 
represent ownership interests in a company or partnership and consist 
not only of common stocks, which are one of the Fund's primary types of 
investments, but also preferred stocks, warrants to acquire common 
stock, securities convertible into common stock, and investments in 
master limited partnerships. The Fund also may invest in exchange-
traded notes (``ETNs''),\11\ U.S. government securities, and U.S. 
Treasury zero-coupon bonds.
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    \11\ ETNs, also called index-linked securities as would be 
listed, for example, under NYSE Arca Equities Rule 5.2(j)(6), are 
senior, unsecured, and unsubordinated debt securities issued by an 
underwriting bank that are designed to provide returns that are 
linked to a particular benchmark, less investor fees.
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    In the absence of normal conditions, the Fund may invest 100% of 
its total assets, without limitation, in high-quality debt securities 
and money market instruments either directly or through its investments 
in ETFs. The Fund may be invested in these instruments for extended 
periods, depending on the Sub-Adviser's assessment of market 
conditions. These debt securities and money market instruments include 
shares of other mutual funds, commercial paper, certificates of 
deposit, bankers' acceptances, U.S. Government

[[Page 39556]]

securities, repurchase agreements,\12\ and bonds that are rated BBB or 
higher.
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    \12\ The Fund may enter into repurchase agreements with 
financial institutions, which may be deemed to be loans. The Fund 
follows certain procedures designed to minimize the risks inherent 
in such agreements. These procedures include effecting repurchase 
transactions only with large, well-capitalized, and well-established 
financial institutions whose condition will be continually monitored 
by the Sub-Adviser. In addition, the value of the collateral 
underlying the repurchase agreement will always be at least equal to 
the repurchase price, including any accrued interest earned on the 
repurchase agreement. In the event of a default or bankruptcy by a 
selling financial institution, the Fund will seek to liquidate such 
collateral. In addition, the Fund may enter into reverse repurchase 
agreements as part of the Fund's investment strategy. Reverse 
repurchase agreements involve sales by the Fund of portfolio assets 
concurrently with an agreement by the Fund to repurchase the same 
assets at a later date at a fixed price.
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    The Fund may 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 an ADR will be 
deemed to be the issuer of the respective underlying security.
    The Fund may 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. The Fund will 
not invest 25% or more of its total assets in any investment company 
that so concentrates. This limitation does not apply to investments in 
securities issued or guaranteed by the U.S. Government, its agencies or 
instrumentalities, or shares of investment companies. For purposes of 
this policy, the issuer of ADRs will be deemed to be the issuer of the 
respective underlying security.
    The Fund will not purchase illiquid securities, including Rule 144A 
securities and loan participations.\13\ While the Fund does not 
anticipate doing so, the Fund may hold securities that become illiquid, 
including securities that are not readily marketable and Rule 144A 
securities. The Fund will not hold more than 15% of the Fund's net 
assets in illiquid securities including Rule 144A securities and loan 
participations. If the percentage of the Fund's net assets invested in 
illiquid securities exceeds 15% due to market activity, the Fund will 
take appropriate measures to reduce its holdings of illiquid 
securities.
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    \13\ See Investment Company Act Release Nos. 28193 (March 11, 
2008), 73 FR 14617 (March 18, 2008); and 14983 (March 12, 1986), 51 
FR 9773 (March 21, 1986).
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    While the Fund may invest up to 10% of its total assets in 
leveraged, inverse, or inverse leveraged Underlying ETPs, such 
investments will not be used to enhance the leverage of the Fund as a 
whole and will otherwise be consistent with the Fund's investment 
objective. In addition, consistent with the Exemptive Order, the Fund 
will not invest in options contracts, futures contracts, or swap 
agreements.\14\ The Exchange also states that the Fund will not invest 
in any non-U.S. registered equity security, including depositary 
receipts, and will seek to qualify for treatment as a Regulated 
Investment Company under the Code.
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    \14\ See supra note 4.
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    Additional information regarding the Fund, the Trust, and the 
Shares, including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings, disclosure policies, 
distributions, and taxes can be found in the Notice and Registration 
Statement, as applicable.\15\
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    \15\ See 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 \16\ and the rules and regulations thereunder applicable to a 
national securities exchange.\17\ In particular, the Commission finds 
that the proposal is consistent with Section 6(b)(5) of the Act,\18\ 
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 Fund and 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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    \16\ 15 U.S.C. 78f.
    \17\ 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).
    \18\ 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,\19\ 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 (``CTA'') high-speed line, and, for the underlying 
securities, will be available from the national securities exchange on 
which they are listed. In addition, the Portfolio Indicative Value 
(``PIV''), as defined in NYSE Arca Equities Rule 8.600(c)(3), will be 
widely disseminated by one or more major market data vendors at least 
every 15 seconds during the Exchange's Core Trading Session.\20\ On 
each business day, before commencement of trading in Shares in the Core 
Trading Session on the Exchange, the Fund will disclose on its Web site 
the Disclosed Portfolio, as defined in NYSE Arca Equities Rule 
8.600(c)(2), that will form the basis for the Fund's calculation of the 
net asset value (``NAV'') at the end of the business day.\21\ The Fund 
will calculate NAV once each business day as of the regularly scheduled 
close of trading on the New York Stock Exchange, LLC (``NYSE'') 
(normally, 4:00 p.m., Eastern Time). In addition, information regarding 
market price and trading volume of the Shares 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 for the 
Shares will be published daily in the financial section of newspapers. 
The Web site for the Fund will include a form of the prospectus for the 
Fund, additional data relating to NAV, and other applicable 
quantitative information. 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

[[Page 39557]]

publicly disseminated daily prior to the opening of the NYSE via the 
National Securities Clearing Corporation. The basket represents one 
Creation Unit of the Fund.
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    \19\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \20\ According to the Exchange, several major market data 
vendors display and/or make widely available PIVs published on the 
CTA or other data feeds.
    \21\ The Disclosed Portfolio will include, as applicable, for 
each portfolio security and other financial instrument of the Fund 
the following: Ticker symbol; name of security and financial 
instrument; the number of shares or dollar value of securities and 
financial instruments held in the portfolio; and percentage 
weighting of the security and financial instrument in the portfolio. 
The Web site information will be publicly available at no charge.
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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.\22\ 
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 Fund, or if other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\23\ The Exchange will consider the suspension of 
trading in or removal from listing of the Shares if the PIV is no 
longer calculated or available or the Disclosed Portfolio is not made 
available to all market participants at the same time.\24\ Neither the 
Adviser nor the Sub-Adviser is affiliated with a broker-dealer.\25\ The 
Commission notes that Adviser personnel who make decisions on a Fund's 
portfolio composition must be subject to procedures designed to prevent 
the use and dissemination of material non-public information regarding 
that Fund's portfolio.\26\ 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.\27\ The Exchange 
states that it has a general policy prohibiting the distribution of 
material, non-public information by its employees. The Commission also 
notes that, for surveillance purposes, the Exchange may obtain 
information via the Intermarket Surveillance Group (``ISG'') from other 
exchanges that are members of ISG or with which the Exchange has 
entered into a comprehensive surveillance sharing agreement,\28\ 
including information from the U.S. exchanges on which the Fund's 
investments in Underlying ETPs, common stock, exchange-listed ADRs, and 
other U.S. exchange-listed securities are listed and traded.
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    \22\ See NYSE Arca Equities Rule 8.600(d)(1)(B).
    \23\ With respect to trading halts, the Exchange may consider 
all relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of 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.
    \24\ See NYSE Arca Equities Rule 8.600(d)(2)(C)(ii).
    \25\ See supra note 5 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.
    \26\ See Commentary .06 to NYSE Arca Equities Rule 8.600.
    \27\ See NYSE Arca Equities Rule 8.600(d)(2)(B)(ii).
    \28\ While not all components of the Disclosed Portfolio may 
trade on markets that are members of ISG or with which the Exchange 
has in place a comprehensive surveillance sharing agreement, all 
Underlying ETPs and securities in which the Fund may invest will be 
listed on securities exchanges, all of which are members of ISG or 
are parties to a comprehensive surveillance sharing agreement with 
the Exchange, provided that the Fund may invest up to 10% of total 
assets in ADRs traded over-the-counter. See Notice, supra note 3, at 
footnote 26. See also, supra note 8.
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    The Exchange further 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 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 
(``Bulletin'') of the special characteristics and risks associated with 
trading the Shares. Specifically, the 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 Equity Trading Permit 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) For initial and/or continued listing, the Fund will be in 
compliance with Rule 10A-3 under the Act,\29\ as provided by NYSE Arca 
Equities Rule 5.3.
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    \29\ See 17 CFR 240.10A-3.
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    (6) The Fund will not purchase illiquid securities, including Rule 
144A securities and loan participations. While the Fund does not 
anticipate doing so, the Fund may hold securities that become illiquid, 
including securities that are not readily marketable, but will not hold 
more than 15% of its net assets in illiquid securities, including Rule 
144A securities and loan participations. If the percentage of the 
Fund's net assets invested in illiquid securities exceeds 15% due to 
market activity, the Fund will take appropriate measures to reduce its 
holdings of illiquid securities.
    (7) Consistent with the Exemptive Order, the Fund will not invest 
in options contracts, futures contracts, or swap agreements.
    (8) While the Fund may invest up to 10% of its total assets in 
leveraged, inverse, or inverse leveraged Underlying ETPs, such 
investments will not be used to enhance the leverage of the Fund as a 
whole and will otherwise be consistent with the Fund's investment 
objective.
    (9) All Underlying ETPs and securities in which the Fund may invest 
will be listed on securities exchanges,

[[Page 39558]]

all of which are members of ISG or are parties to a comprehensive 
surveillance sharing agreement with the Exchange, provided that the 
Fund may invest up to 10% of total assets in ADRs traded over-the-
counter.
    (10) The Fund will not invest in any non-U.S. registered equity 
security, including depositary receipts.
    (11) A minimum of 100,000 Shares will be outstanding at the 
commencement of trading on the Exchange.

This approval order is based on all of the Exchange's representations 
and description of the Fund, including those set forth above and in the 
Notice.
    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act \30\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.
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    \30\ 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,\31\ that the proposed rule change (SR-NYSEArca-2012-39) be, and it 
hereby is, approved.
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    \31\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
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    \32\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-16217 Filed 7-2-12; 8:45 am]
BILLING CODE 8011-01-P